S.Amdt. 3398

SA 3398. Mr. DeMINT submitted an amendment intended to be proposed to
amendment SA 3336 proposed by Mr. Baucus to the bill H.R. 4213, to
amend the Internal Revenue Code of 1986 to extend certain expiring
provisions, and for other purposes; which was ordered to lie on the
table; as follows:

After section 431, insert the following:

Subtitle E--Cooperative Governing of Individual Health Insurance
Coverage

SEC. 441. SHORT TITLE.

This subtitle may be cited as the ``Health Care Choice Act
of 2010''.

SEC. 442. SPECIFICATION OF CONSTITUTIONAL AUTHORITY FOR
ENACTMENT OF LAW.

This subtitle is enacted pursuant to the power granted
Congress under article I, section 8, clause 3, of the United
States Constitution.

SEC. 443. FINDINGS.

Congress finds the following:
(1) The application of numerous and significant variations
in State law impacts the ability of insurers to offer, and
individuals to obtain, affordable individual health insurance
coverage, thereby impeding commerce in individual health
insurance coverage.
(2) Individual health insurance coverage is increasingly
offered through the Internet, other electronic means, and by
mail, all of which are inherently part of interstate
commerce.
(3) In response to these issues, it is appropriate to
encourage increased efficiency in the offering of individual
health insurance coverage through a collaborative approach by
the States in regulating this coverage.
(4) The establishment of risk-retention groups has provided
a successful model for the sale of insurance across State
lines, as the acts establishing those groups allow insurance
to be sold in multiple States but regulated by a single
State.

SEC. 444. COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH
INSURANCE COVERAGE.

(a) In General.--Title XXVII of the Public Health Service
Act (42 U.S.C. 300gg et seq.) is amended by adding at the end
the following:

``PART D--COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE COVERAGE

``SEC. 2795. DEFINITIONS.

``In this part:
``(1) Primary state.--The term `primary State' means, with
respect to individual health insurance coverage offered by a
health insurance issuer, the State designated by the issuer
as the State whose covered laws shall govern the health
insurance issuer in the sale of such coverage under this
part. An issuer, with respect to a particular policy, may
only designate one such State as its primary State with
respect to all such coverage it offers. Such an issuer may
not change the designated primary State with respect to
individual health insurance coverage once the policy is
issued, except that such a change may be made upon renewal of
the policy. With respect to such designated State, the issuer
is deemed to be doing business in that State.
``(2) Secondary state.--The term `secondary State' means,
with respect to individual health insurance coverage offered
by a health insurance issuer, any State that is not the
primary State. In the case of a health insurance issuer that
is selling a policy in, or to a resident of, a secondary
State, the issuer is deemed to be doing business in that
secondary State.
``(3) Health insurance issuer.--The term `health insurance
issuer' has the meaning given such term in section
2791(b)(2), except that such an issuer must be licensed in
the primary State and be qualified to sell individual health
insurance coverage in that State.
``(4) Individual health insurance coverage.--The term
`individual health insurance coverage' means health insurance
coverage offered in the individual market, as defined in
section 2791(e)(1).
``(5) Applicable state authority.--The term `applicable
State authority' means, with respect to a health insurance
issuer in a State, the State insurance commissioner or
official or officials designated by the State to enforce the
requirements of this title for the State with respect to the
issuer.
``(6) Hazardous financial condition.--The term `hazardous
financial condition' means that, based on its present or
reasonably anticipated financial condition, a health
insurance issuer is unlikely to be able--
``(A) to meet obligations to policyholders with respect to
known claims and reasonably anticipated claims; or
``(B) to pay other obligations in the normal course of
business.
``(7) Covered laws.--
``(A) In general.--The term `covered laws' means the laws,
rules, regulations, agreements, and orders governing the
insurance business pertaining to--
``(i) individual health insurance coverage issued by a
health insurance issuer;
``(ii) the offer, sale, rating (including medical
underwriting), renewal, and issuance of individual health
insurance coverage to an individual;
``(iii) the provision to an individual in relation to
individual health insurance coverage of health care and
insurance related services;
``(iv) the provision to an individual in relation to
individual health insurance coverage of management,
operations, and investment activities of a health insurance
issuer; and
``(v) the provision to an individual in relation to
individual health insurance coverage of loss control and
claims administration for a health insurance issuer with
respect to liability for which the issuer provides insurance.
``(B) Exception.--Such term does not include any law, rule,
regulation, agreement, or order governing the use of care or
cost management techniques, including any requirement related
to provider contracting, network access or adequacy, health
care data collection, or quality assurance.
``(8) State.--The term `State' means the 50 States and
includes the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands.
``(9) Unfair claims settlement practices.--The term `unfair
claims settlement practices' means only the following
practices:
``(A) Knowingly misrepresenting to claimants and insured
individuals relevant facts or policy provisions relating to
coverage at issue.
``(B) Failing to acknowledge with reasonable promptness
pertinent communications with respect to claims arising under
policies.
``(C) Failing to adopt and implement reasonable standards
for the prompt investigation and settlement of claims arising
under policies.
``(D) Failing to effectuate prompt, fair, and equitable
settlement of claims submitted in which liability has become
reasonably clear.
``(E) Refusing to pay claims without conducting a
reasonable investigation.
``(F) Failing to affirm or deny coverage of claims within a
reasonable period of time after having completed an
investigation related to those claims.
``(G) A pattern or practice of compelling insured
individuals or their beneficiaries to institute suits to
recover amounts due under its policies by offering
substantially less than the amounts ultimately recovered in
suits brought by them.
``(H) A pattern or practice of attempting to settle or
settling claims for less than the amount that a reasonable
person would believe the insured individual or the
individual's beneficiary was entitled by reference to written
or printed advertising material accompanying or made part of
an application.
``(I) Attempting to settle or settling claims on the basis
of an application that was materially altered without notice
to, or knowledge or consent of, the insured.
``(J) Failing to provide forms necessary to present claims
within 15 calendar days of a requests with reasonable
explanations regarding their use.
``(K) Attempting to cancel a policy in less time than that
prescribed in the policy or by the law of the primary State.
``(10) Fraud and abuse.--The term `fraud and abuse' means
an act or omission committed by a person who, knowingly and
with intent to defraud, commits, or conceals any material
information concerning, one or more of the following:
``(A) Presenting, causing to be presented, or preparing
with knowledge or belief that it will be presented to or by
an insurer, a reinsurer, broker, or its agent, false
information as part of, in support of, or concerning a fact
material to one or more of the following:
``(i) An application for the issuance or renewal of an
insurance policy or reinsurance contract.
``(ii) The rating of an insurance policy or reinsurance
contract.
``(iii) A claim for payment or benefit pursuant to an
insurance policy or reinsurance contract.
``(iv) Premiums paid on an insurance policy or reinsurance
contract.
``(v) Payments made in accordance with the terms of an
insurance policy or reinsurance contract.
``(vi) A document filed with the commissioner or the chief
insurance regulatory official of another jurisdiction.
``(vii) The financial condition of an insurer or reinsurer.
``(viii) The formation, acquisition, merger,
reconsolidation, dissolution, or withdrawal from one or more
lines of insurance or reinsurance in all or part of a State
by an insurer or reinsurer.
``(ix) The issuance of written evidence of insurance.
``(x) The reinstatement of an insurance policy.
``(B) Solicitation or acceptance of new or renewal
insurance risks on behalf of an insurer, reinsurer, or other
person engaged in the business of insurance by a person who
knows or should know that the insurer or other person
responsible for the risk is insolvent at the time of the
transaction.
``(C) Transaction of the business of insurance in violation
of laws requiring a license,

[[Page S1109]]

certificate of authority, or other legal authority for the
transaction of the business of insurance.
``(D) Attempt to commit, aiding or abetting in the
commission of, or conspiracy to commit the acts or omissions
specified in this paragraph.

``SEC. 2796. APPLICATION OF LAW.

``(a) In General.--The covered laws of the primary State
shall apply to individual health insurance coverage offered
by a health insurance issuer in the primary State and in any
secondary State, but only if the coverage and issuer comply
with the conditions of this section with respect to the
offering of coverage in any secondary State.
``(b) Exemptions From Covered Laws in a Secondary State.--
Except as provided in this section, a health insurance issuer
with respect to its offer, sale, rating (including medical
underwriting), renewal, and issuance of individual health
insurance coverage in any secondary State is exempt from any
covered laws of the secondary State (and any rules,
regulations, agreements, or orders sought or issued by such
State under or related to such covered laws) to the extent
that such laws would--
``(1) make unlawful, or regulate, directly or indirectly,
the operation of the health insurance issuer operating in the
secondary State, except that any secondary State may require
such an issuer--
``(A) to pay, on a nondiscriminatory basis, applicable
premium and other taxes (including high risk pool
assessments) which are levied on insurers and surplus lines
insurers, brokers, or policyholders under the laws of the
State;
``(B) to register with and designate the State insurance
commissioner as its agent solely for the purpose of receiving
service of legal documents or process;
``(C) to submit to an examination of its financial
condition by the State insurance commissioner in any State in
which the issuer is doing business to determine the issuer's
financial condition, if--
``(i) the State insurance commissioner of the primary State
has not done an examination within the period recommended by
the National Association of Insurance Commissioners; and
``(ii) any such examination is conducted in accordance with
the examiners' handbook of the National Association of
Insurance Commissioners and is coordinated to avoid
unjustified duplication and unjustified repetition;
``(D) to comply with a lawful order issued--
``(i) in a delinquency proceeding commenced by the State
insurance commissioner if there has been a finding of
financial impairment under subparagraph (C); or
``(ii) in a voluntary dissolution proceeding;
``(E) to comply with an injunction issued by a court of
competent jurisdiction, upon a petition by the State
insurance commissioner alleging that the issuer is in
hazardous financial condition;
``(F) to participate, on a nondiscriminatory basis, in any
insurance insolvency guaranty association or similar
association to which a health insurance issuer in the State
is required to belong;
``(G) to comply with any State law regarding fraud and
abuse (as defined in section 2795(10)), except that if the
State seeks an injunction regarding the conduct described in
this subparagraph, such injunction must be obtained from a
court of competent jurisdiction;
``(H) to comply with any State law regarding unfair claims
settlement practices (as defined in section 2795(9)); or
``(I) to comply with the applicable requirements for
independent review under section 2798 with respect to
coverage offered in the State;
``(2) require any individual health insurance coverage
issued by the issuer to be countersigned by an insurance
agent or broker residing in that secondary State; or
``(3) otherwise discriminate against the issuer issuing
insurance in both the primary State and in any secondary
State.
``(c) Clear and Conspicuous Disclosure.--A health insurance
issuer shall provide the following notice, in 12-point bold
type, in any insurance coverage offered in a secondary State
under this part by such a health insurance issuer and at
renewal of the policy, with the 5 blank spaces therein being
appropriately filled with the name of the health insurance
issuer, the name of primary State, the name of the secondary
State, the name of the secondary State, and the name of the
secondary State, respectively, for the coverage concerned:
This policy is issued by _____, and is governed by the laws
and regulations of the State of _____, and it has met all the
laws of that State as determined by that State's Department
of Insurance. This policy may be less expensive than others
because it is not subject to all of the insurance laws and
regulations of the State of _____, including coverage of some
services or benefits mandated by the law of the State of
_____. Additionally, this policy is not subject to all of the
consumer protection laws or restrictions on rate changes of
the State of _____. As with all insurance products, before
purchasing this policy, you should carefully review the
policy and determine what health care services the policy
covers and what benefits it provides, including any
exclusions, limitations, or conditions for such services or
benefits.''.
``(d) Prohibition on Certain Reclassifications and Premium
Increases.--
``(1) In general.--For purposes of this section, a health
insurance issuer that provides individual health insurance
coverage to an individual under this part in a primary or
secondary State may not upon renewal--
``(A) move or reclassify the individual insured under the
health insurance coverage from the class such individual is
in at the time of issue of the contract based on the health-
status related factors of the individual; or
``(B) increase the premiums assessed the individual for
such coverage based on a health status-related factor or
change of a health status-related factor or the past or
prospective claim experience of the insured individual.
``(2) Construction.--Nothing in paragraph (1) shall be
construed to prohibit a health insurance issuer--
``(A) from terminating or discontinuing coverage or a class
of coverage in accordance with subsections (b) and (c) of
section 2742;
``(B) from raising premium rates for all policy holders
within a class based on claims experience;
``(C) from changing premiums or offering discounted
premiums to individuals who engage in wellness activities at
intervals prescribed by the issuer, if such premium changes
or incentives--
``(i) are disclosed to the consumer in the insurance
contract;
``(ii) are based on specific wellness activities that are
not applicable to all individuals; and
``(iii) are not obtainable by all individuals to whom
coverage is offered;
``(D) from reinstating lapsed coverage; or
``(E) from retroactively adjusting the rates charged an
insured individual if the initial rates were set based on
material misrepresentation by the individual at the time of
issue.
``(e) Prior Offering of Policy in Primary State.--A health
insurance issuer may not offer for sale individual health
insurance coverage in a secondary State unless that coverage
is currently offered for sale in the primary State.
``(f) Licensing of Agents or Brokers for Health Insurance
Issuers.--Any State may require that a person acting, or
offering to act, as an agent or broker for a health insurance
issuer with respect to the offering of individual health
insurance coverage obtain a license from that State, with
commissions or other compensation subject to the provisions
of the laws of that State, except that a State may not impose
any qualification or requirement which discriminates against
a nonresident agent or broker.
``(g) Documents for Submission to State Insurance
Commissioner.--Each health insurance issuer issuing
individual health insurance coverage in both primary and
secondary States shall submit--
``(1) to the insurance commissioner of each State in which
it intends to offer such coverage, before it may offer
individual health insurance coverage in such State--
``(A) a copy of the plan of operation, feasibility study,
or any similar statement of the policy being offered and its
coverage (which shall include the name of its primary State
and its principal place of business);
``(B) written notice of any change in its designation of
its primary State; and
``(C) written notice from the issuer of the issuer's
compliance with all the laws of the primary State; and
``(2) to the insurance commissioner of each secondary State
in which it offers individual health insurance coverage, a
copy of the issuer's quarterly financial statement submitted
to the primary State, which statement shall be certified by
an independent public accountant and contain a statement of
opinion on loss and loss adjustment expense reserves made
by--
``(A) a member of the American Academy of Actuaries; or
``(B) a qualified loss reserve specialist.
``(h) Power of Courts To Enjoin Conduct.--Nothing in this
section shall be construed to affect the authority of any
Federal or State court to enjoin--
``(1) the solicitation or sale of individual health
insurance coverage by a health insurance issuer to any person
or group who is not eligible for such insurance; or
``(2) the solicitation or sale of individual health
insurance coverage that violates the requirements of the law
of a secondary State which are described in subparagraphs (A)
through (H) of subsection (b)(1).
``(i) Power of Secondary States To Take Administrative
Action.--Nothing in this section shall be construed to affect
the authority of any State to enjoin conduct in violation of
that State's laws described in subsection (b)(1).
``(j) State Powers To Enforce State Laws.--
``(1) In general.--Subject to the provisions of subsection
(b)(1)(G) (relating to injunctions) and paragraph (2),
nothing in this section shall be construed to affect the
authority of any State to make use of any of its powers to
enforce the laws of such State with respect to which a health
insurance issuer is not exempt under subsection (b).
``(2) Courts of competent jurisdiction.--If a State seeks
an injunction regarding the conduct described in paragraphs
(1) and (2) of subsection (h), such injunction must be
obtained from a Federal or State court of competent
jurisdiction.
``(k) States' Authority To Sue.--Nothing in this section
shall affect the authority of any State to bring action in
any Federal or State court.

[[Page S1110]]

``(l) Generally Applicable Laws.--Nothing in this section
shall be construed to affect the applicability of State laws
generally applicable to persons or corporations.
``(m) Guaranteed Availability of Coverage to HIPPA Eligible
Individuals.--To the extent that a health insurance issuer is
offering coverage in a primary State that does not
accommodate residents of secondary States or does not provide
a working mechanism for residents of a secondary State, and
the issuer is offering coverage under this part in such
secondary State which has not adopted a qualified high risk
pool as its acceptable alternative mechanism (as defined in
section 2744(c)(2)), the issuer shall, with respect to any
individual health insurance coverage offered in a secondary
State under this part, comply with the guaranteed
availability requirements for eligible individuals in section
2741.

``SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR BEFORE
ISSUER MAY SELL INTO SECONDARY STATES.

``A health insurance issuer may not offer, sell, or issue
individual health insurance coverage in a secondary State if
the State insurance commissioner does not use a risk-based
capital formula for the determination of capital and surplus
requirements for all health insurance issuers.

``SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCEDURES.

``(a) Right to External Appeal.--A health insurance issuer
may not offer, sell, or issue individual health insurance
coverage in a secondary State under the provisions of this
title unless--
``(1) both the secondary State and the primary State have
legislation or regulations in place establishing an
independent review process for individuals who are covered by
individual health insurance coverage, or
``(2) in any case in which the requirements of paragraph
(1) are not met with respect to either of such States, the
issuer provides an independent review mechanism substantially
identical (as determined by the applicable State authority of
such State) to that prescribed in the `Health Carrier
External Review Model Act' of the National Association of
Insurance Commissioners for all individuals who purchase
insurance coverage under the terms of this part, except that,
under such mechanism, the review is conducted by an
independent medical reviewer, or a panel of such reviewers,
with respect to whom the requirements of subsection (b) are
met.
``(b) Qualifications of Independent Medical Reviewers.--In
the case of any independent review mechanism referred to in
subsection (a)(2), the following provisions shall apply:
``(1) In general.--In referring a denial of a claim to an
independent medical reviewer, or to any panel of such
reviewers, to conduct independent medical review, the issuer
shall ensure that--
``(A) each independent medical reviewer meets the
qualifications described in paragraphs (2) and (3);
``(B) with respect to each review, each reviewer meets the
requirements of paragraph (4) and the reviewer, or at least 1
reviewer on the panel, meets the requirements described in
paragraph (5); and
``(C) compensation provided by the issuer to each reviewer
is consistent with paragraph (6).
``(2) Licensure and expertise.--Each independent medical
reviewer shall be a physician (allopathic or osteopathic) or
health care professional who--
``(A) is appropriately credentialed or licensed in 1 or
more States to deliver health care services; and
``(B) typically treats the condition, makes the diagnosis,
or provides the type of treatment under review.
``(3) Independence.--
``(A) In general.--Subject to subparagraph (B), each
independent medical reviewer in a case shall--
``(i) not be a related party (as defined in paragraph (7));
``(ii) not have a material familial, financial, or
professional relationship with such a party; and
``(iii) not otherwise have a conflict of interest with such
a party (as determined under regulations).
``(B) Exception.--Nothing in subparagraph (A) shall be
construed to--
``(i) prohibit an individual, solely on the basis of
affiliation with the issuer, from serving as an independent
medical reviewer if--

``(I) a non-affiliated individual is not reasonably
available;
``(II) the affiliated individual is not involved in the
provision of items or services in the case under review;
``(III) the fact of such an affiliation is disclosed to the
issuer and the enrollee (or authorized representative) and
neither party objects; and
``(IV) the affiliated individual is not an employee of the
issuer and does not provide services exclusively or primarily
to or on behalf of the issuer;

``(ii) prohibit an individual who has staff privileges at
the institution where the treatment involved takes place from
serving as an independent medical reviewer merely on the
basis of such affiliation if the affiliation is disclosed to
the issuer and the enrollee (or authorized representative)
and neither party objects; or
``(iii) prohibit receipt of compensation by an independent
medical reviewer from an entity if the compensation is
provided consistent with paragraph (6).
``(4) Practicing health care professional in same field.--
``(A) In general.--In a case involving treatment, or the
provision of items or services--
``(i) by a physician, a reviewer shall be a practicing
physician (allopathic or osteopathic) of the same or similar
specialty, as a physician who, acting within the appropriate
scope of practice within the State in which the service is
provided or rendered, typically treats the condition, makes
the diagnosis, or provides the type of treatment under
review; or
``(ii) by a non-physician health care professional, the
reviewer, or at least 1 member of the review panel, shall be
a practicing non-physician health care professional of the
same or similar specialty as the non-physician health care
professional who, acting within the appropriate scope of
practice within the State in which the service is provided or
rendered, typically treats the condition, makes the
diagnosis, or provides the type of treatment under review.
``(B) Practicing defined.--For purposes of this paragraph,
the term `practicing' means, with respect to an individual
who is a physician or other health care professional, that
the individual provides health care services to individual
patients on average at least 2 days per week.
``(5) Pediatric expertise.--In the case of an external
review relating to a child, a reviewer shall have expertise
under paragraph (2) in pediatrics.
``(6) Limitations on reviewer compensation.--Compensation
provided by the issuer to an independent medical reviewer in
connection with a review under this section shall--
``(A) not exceed a reasonable level; and
``(B) not be contingent on the decision rendered by the
reviewer.
``(7) Related party defined.--For purposes of this section,
the term `related party' means, with respect to a denial of a
claim under a coverage relating to an enrollee, any of the
following:
``(A) The issuer involved, or any fiduciary, officer,
director, or employee of the issuer.
``(B) The enrollee (or authorized representative).
``(C) The health care professional that provides the items
or services involved in the denial.
``(D) The institution at which the items or services (or
treatment) involved in the denial are provided.
``(E) The manufacturer of any drug or other item that is
included in the items or services involved in the denial.
``(F) Any other party determined under any regulations to
have a substantial interest in the denial involved.
``(8) Definitions.--For purposes of this subsection:
``(A) Enrollee.--The term `enrollee' means, with respect to
health insurance coverage offered by a health insurance
issuer, an individual enrolled with the issuer to receive
such coverage.
``(B) Health care professional.--The term `health care
professional' means an individual who is licensed,
accredited, or certified under State law to provide specified
health care services and who is operating within the scope of
such licensure, accreditation, or certification.

``SEC. 2799. ENFORCEMENT.

``(a) In General.--Subject to subsection (b), with respect
to specific individual health insurance coverage, the primary
State for such coverage has sole jurisdiction to enforce the
primary State's covered laws in the primary State and any
secondary State.
``(b) Secondary State's Authority.--Nothing in subsection
(a) shall be construed to affect the authority of a secondary
State to enforce its laws as set forth in the exception
specified in section 2796(b)(1).
``(c) Court Interpretation.--In reviewing action initiated
by the applicable secondary State authority, the court of
competent jurisdiction shall apply the covered laws of the
primary State.
``(d) Notice of Compliance Failure.--In the case of
individual health insurance coverage offered in a secondary
State that fails to comply with the covered laws of the
primary State, the applicable State authority of the
secondary State may notify the applicable State authority of
the primary State.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to individual health insurance coverage offered,
issued, or sold after the date that is one year after the
date of the enactment of this Act.
(c) GAO Ongoing Study and Reports.--
(1) Study.--The Comptroller General of the United States
shall conduct an ongoing study concerning the effect of the
amendment made by subsection (a) on--
(A) the number of uninsured and under-insured;
(B) the availability and cost of health insurance policies
for individuals with pre-existing medical conditions;
(C) the availability and cost of health insurance policies
generally;
(D) the elimination or reduction of different types of
benefits under health insurance policies offered in different
States; and
(E) cases of fraud or abuse relating to health insurance
coverage offered under such amendment and the resolution of
such cases.
(2) Annual reports.--The Comptroller General shall submit
to Congress an annual report, after the end of each of the 5
years following the effective date of the amendment made by
subsection (a), on the ongoing study conducted under
paragraph (1).

[[Page S1111]]

SEC. 445. SEVERABILITY.

If any provision of this subtitle or the application of
such provision to any person or circumstance is held to be
unconstitutional, the remainder of this subtitle and the
application of the provisions of such to any other person or
circumstance shall not be affected.
______