I
111th CONGRESS
1st Session
H. R. 3713
IN THE HOUSE OF REPRESENTATIVES
October 1, 2009
Mr. Rogers of Michigan (for himself, Mrs. Blackburn, Mr. Shimkus, Mr. Pitts, Mrs. Myrick, Mrs. Bono Mack, Mr. Buyer, Mr. Upton, and Mr. Hall of Texas) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Education and Labor, Appropriations, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
A BILL
To provide bipartisan solutions to lower health costs, increase access to affordable coverage, and give patients more choices and control.
Short title; table of contents
Short title
This Act may be cited
as the American Health Care Solutions
Act of 2009
.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Rule of construction regarding prohibition on authority to ration health care.
Title I—Expanding Access to Coverage
Subtitle A—Protecting Affordability Through Reinsurance or High Risk Pooling
Sec. 101. Ensuring affordability for all through special pooling of cost for those with pre-existing conditions and many health care needs.
Subtitle B—Individual membership associations
Sec. 111. Expansion of access and choice of health insurance coverage through individual membership associations (IMAs).
Subtitle C—Association health plans
Sec. 121. Rules governing association health plans.
Sec. 122. Clarification of treatment of single employer arrangements.
Sec. 123. Enforcement provisions relating to association health plans.
Sec. 124. Cooperation between Federal and State authorities.
Sec. 125. Effective date and transitional and other rules.
Subtitle D—Purchasing insurance across State lines
Sec. 131. Cooperative governing of individual health insurance coverage.
Sec. 132. Severability.
Subtitle E—Protecting Patients from Rescissions
Sec. 141. Opportunity for independent, external third party reviews of certain nonrenewals and discontinuations, including rescissions, of individual health insurance coverage.
Title II—Promoting patient choice
Subtitle A—Credit for small employers adopting auto-Enrollment and defined contribution options
Sec. 201. Credit for small employers adopting auto-enrollment and defined contribution options.
Subtitle B—Tax incentives for long-Term care insurance
Sec. 211. Treatment of premiums on qualified long-term care insurance contracts.
Sec. 212. Credit for taxpayers with long-term care needs.
Sec. 213. Additional consumer protections for long-term care insurance.
Subtitle C—Comparative effectiveness research
Sec. 221. Prohibition on Certain Uses of Data Obtained from Comparative Effectiveness Research; Accounting for Personalized Medicine and Differences in Patient Treatment Response.
Subtitle D—Programs of health promotion or disease prevention
Sec. 231. Programs of health promotion or disease prevention.
Title III—Strengthening safety net programs
Subtitle A—Beneficiary choice under Medicaid and SCHIP
Sec. 301. Easing administrative barriers to State cooperation with employer-sponsored insurance coverage.
Sec. 302. Improving beneficiary choice in SCHIP.
Sec. 303. Application to Medicaid.
Sec. 304. Expansion of health opportunity account program.
Sec. 305. Verification requirements to prevent illegal aliens from receiving Medicaid benefits.
Subtitle B—Community Health Centers
Sec. 311. Increased funding.
Title IV—Expanding health savings accounts
Sec. 401. Allow both spouses to make catch-up contributions to the same HSA account.
Sec. 402. Provisions relating to Medicare.
Sec. 403. Individuals eligible for veterans benefits for a service-connected disability.
Sec. 404. Individuals eligible for Indian Health Service assistance.
Sec. 405. FSA and HRA termination to fund HSAS.
Sec. 406. Purchase of health insurance from HSA account.
Sec. 407. Special rule for certain medical expenses incurred before establishment of account.
Sec. 408. Preventive care prescription drug clarification.
Sec. 409. Qualified medical expenses.
Title V—Medical liability reform
Subtitle A—Medical liability
Sec. 501. Encouraging speedy resolution of claims.
Sec. 502. Compensating patient injury.
Sec. 503. Maximizing patient recovery.
Sec. 504. Additional health benefits.
Sec. 505. Punitive damages.
Sec. 506. Authorization of payment of future damages to claimants in HEALTH care lawsuits.
Sec. 507. Definitions.
Sec. 508. Effect on other laws.
Sec. 509. State flexibility and protection of states’ rights.
Sec. 510. Applicability; effective date.
Sec. 511. Sense of Congress.
Subtitle B—Liability protection for Community Health Center volunteers
Sec. 521. Health centers under Public Health Service Act; liability protections for volunteer practitioners.
Title VI—Miscellaneous
Subtitle A—Fighting fraud and abuse
Sec. 601. Provide adequate funding to HHS OIG and HCFAC.
Sec. 602. Increased civil money penalties and criminal fines for Medicare fraud and abuse.
Sec. 603. Increased sentences for felonies involving Medicare fraud and abuse.
Sec. 604. Illegal distribution of a Medicare or Medicaid beneficiary identification or provider number.
Sec. 605. Use of technology for real-time data review.
Subtitle B—State transparency plan portal
Sec. 611. Providing information on health coverage options and health care providers.
Sec. 612. Establishment of performance-based quality measures.
Subtitle C—Medicare Accountable Care Organization demonstration program
Sec. 621. Medicare Accountable Care Organization demonstration program.
Subtitle D—Repeal of Unused Stimulus Funds
Sec. 631. Rescission and repeal in ARRA.
Rule of construction regarding prohibition on authority to ration health care
Nothing in this Act may be construed to authorize the Federal Government to ration health care for the American people.
Expanding Access to Coverage
Protecting Affordability Through Reinsurance or High Risk Pooling
Ensuring affordability for all through special pooling of cost for those with pre-existing conditions and many health care needs
State requirement
In general
Not later than 2 years after the date of the enactment of this Act, each State shall ensure an adequate financial backstop to mitigate the cost of high risk individuals in the State through—
a qualified State reinsurance program described in subsection (b); or
a qualifying State high risk pool described in subsection (c)(1); and
subject to paragraph (4), contribute to the ongoing stability of the arrangement through State assessments or allocation of other State funds that are not otherwise used on State health care programs.
Preference
Beginning 3 years after the date of the enactment of this Act, the Secretary, in awarding any competitive grant and for which only States are eligible to apply, shall give preference to a State with a program that meets the requirements of paragraph (1).
Relation to current qualified high risk pool program operating a qualified high risk pool
In the case of a State that is operating a current section 2745 qualified high risk pool as of the date of the enactment of this Act—
as of the date that is 2 years after the date of the enactment of this Act, such a pool shall not be treated as a qualified high risk pool under section 2745 of the Public Health Service Act (42 U.S.C. 300gg–45) unless the pool is a qualifying State high risk pool described in subsection (c)(1); and
current funding sources may be used to transition from operation of such a pool to operation of a qualified State reinsurance program described in subsection (b).
Application of funds
If the program or pool operated under paragraph (1)(A) is in sound financial condition as demonstrated by audited financial statements and actuarial certification and is approved as an appropriate financial backstop by the State Insurance Commissioner involved, the requirement of paragraph (1)(C) shall be waived.
Qualified State reinsurance program
Form of program
A qualified State reinsurance program may provide reinsurance—
on a prospective or retrospective basis; and
on a basis that protects health insurance issuers against the annual aggregate spending of their enrollees as well as purchase protection against individual catastrophic costs.
Satisfaction of hipaa requirement
A qualified State reinsurance program shall be deemed, for purposes of section 2745 of the Public Health Service Act (42 U.S.C. 300gg–45), to be a qualified high-risk pool under such section.
Qualifying State high risk pool
In general
A qualifying State high risk pool described in this subsection means a current section 2745 qualified high risk pool that meets the following requirements:
The pool offers assistance to low-income individuals as applicable and may incorporate applicable Federal and State programs for eligible individuals to meet this purpose.
The pool provides a variety of coverage options, one of which must be a high deductible health plan that may be coupled with a health savings account.
The pool is funded with a stable funding source that is not solely dependent on an appropriation from a State legislature.
The pool eliminates waiting lists and pre-existing conditions exclusionary periods so that all eligible residents who are seeking coverage through the pool can receive coverage through the pool.
The pool allows for coverage of individuals who, but for the 24-month disability waiting period under section 226(b) of the Social Security Act, would be eligible for Medicare during the period of such waiting period.
The pool does not charge participants more than 150 percent of the average premium for individual market coverage in that State.
The pool conducts education and outreach initiatives so that residents and brokers understand that the pool is available to eligible residents.
The pool does not impose lifetime or annual limits on benefits.
Relation to section 2745
As of the date that is 2 years after the date of the enactment of this Act, a pool shall not qualify as a qualified high risk pool under section 2745 of the Public Health Service Act (42 U.S.C. 300gg–45) unless the pool is a qualifying State high risk pool described in paragraph (1).
Waivers
In order to accommodate new and innovative programs, the Secretary may waive such requirements of this section for qualified State reinsurance programs and for qualifying State high risk pools as the Secretary deems appropriate.
Funding
In addition to any other amounts appropriated, there are authorized to be appropriated to carry out section 2745 of the Public Health Service Act (42 U.S.C. 300gg–45) (including through a program or pool described in subsection (a)(1)), $20,000,000,000 for Fiscal Years 2010 through 2019 to carry out this section.
Definitions
In this section:
Current section 2745 qualified high risk pool
The term current section 2745 qualified high risk pool has the meaning given the term qualified high risk pool under section 2745(g) of the Public Health Service Act (42 U.S.C. 300gg–45(g)) as in effect as of the date of the enactment of this Act.
Health insurance coverage
The term health insurance coverage has the meaning given such term in section 2791 of the Public Health Service Act (42 U.S.C. 300gg–91).
Health insurance issuer
The term health insurance issuer has the meaning given such term in section 2791 of the Public Health Service Act (42 U.S.C. 300gg–91).
Qualified State reinsurance program
The term qualified State reinsurance program means a program operated by a State or a State authorized program that provides reinsurance for health insurance coverage offered in the individual or the small group market in accordance with the model for such a program established (as of the date of the enactment of this Act).
Secretary
The term Secretary means the Secretary of Health and Human Services.
State
The term State has the meaning given such term for purposes of title XIX of the Social Security Act.
Individual membership associations
Expansion of access and choice of health insurance coverage through individual membership associations (IMAs)
The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by adding at the end the following new title:
Individual Membership Associations
Definition of individual membership association (IMA)
In General
For purposes of this title, the terms individual membership association and IMA mean a legal entity that meets the following requirements:
Organization
The IMA is an organization operated under the direction of an association (as defined in section 3104(1)).
Offering health benefits coverage
Different groups
The IMA, in conjunction with those health insurance issuers that offer health benefits coverage through the IMA, makes available health benefits coverage in the manner described in subsection (b) to all members of the IMA and the dependents of such members in the manner described in subsection (c)(2) at rates that are established by the health insurance issuer on a policy or product specific basis and that may vary only as permissible under State law.
Nondiscrimination in coverage offered
In General
Subject to clause (ii), the IMA may not offer health benefits coverage to a member of an IMA unless the same coverage is offered to all such members of the IMA.
Construction
Nothing in this title shall be construed as requiring or permitting a health insurance issuer to provide coverage outside the service area of the issuer, as approved under State law, or requiring a health insurance issuer from excluding or limiting the coverage on any individual, subject to the requirement of section 2741.
No financial underwriting
The IMA provides health benefits coverage only through contracts with health insurance issuers and does not assume insurance risk with respect to such coverage.
Geographic areas
Nothing in this title shall be construed as preventing the establishment and operation of more than one IMA in a geographic area or as limiting the number of IMAs that may operate in any area.
Provision of administrative services to purchasers
In General
The IMA may provide administrative services for members. Such services may include accounting, billing, and enrollment information.
Construction
Nothing in this subsection shall be construed as preventing an IMA from serving as an administrative service organization to any entity.
Filing information
The IMA files with the Secretary information that demonstrates the IMA’s compliance with the applicable requirements of this title.
Health benefits coverage requirements
Compliance with consumer protection requirements
Any health benefits coverage offered through an IMA shall—
be underwritten by a health insurance issuer that—
is licensed (or otherwise regulated) under State law, and
meets all applicable State standards relating to consumer protection, subject to section 3002(b), and
subject to paragraph (2), be approved or otherwise permitted to be offered under State law.
Examples of types of coverage
The benefits coverage made available through an IMA may include, but is not limited to, any of the following if it meets the other applicable requirements of this title:
Coverage through a health maintenance organization.
Coverage in connection with a preferred provider organization.
Coverage in connection with a licensed provider-sponsored organization.
Indemnity coverage through an insurance company.
Coverage offered in connection with a contribution into a medical savings account, health savings account, or flexible spending account.
Coverage that includes a point-of-service option.
Any combination of such types of coverage.
Wellness bonuses for health promotion
Nothing in this title shall be construed as precluding a health insurance issuer offering health benefits coverage through an IMA from establishing premium discounts or rebates for members or from modifying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention so long as such programs are agreed to in advance by the IMA and comply with all other provisions of this title and do not discriminate among similarly situated members.
Members; health insurance issuers
Members
In General
Under rules established to carry out this title, with respect to an individual who is a member of an IMA, the individual may enroll for health benefits coverage (including coverage for dependents of such individual) offered by a health insurance issuer through the IMA.
Rules for enrollment
Nothing in this paragraph shall preclude an IMA from establishing rules of enrollment and reenrollment of members. Such rules shall be applied consistently to all members within the IMA and shall not be based in any manner on health status-related factors.
Health insurance issuers
The contract between an IMA and a health insurance issuer shall provide, with respect to a member enrolled with health benefits coverage offered by the issuer through the IMA, for the payment of the premiums collected by the issuer.
Application of certain laws and requirements
State laws insofar as they relate to any of the following are superseded and shall not apply to health benefits coverage made available through an IMA:
Benefit requirements for health benefits coverage offered through an IMA, including (but not limited to) requirements relating to coverage of specific providers, specific services or conditions, or the amount, duration, or scope of benefits, but not including requirements to the extent required to implement title XXVII or other Federal law and to the extent the requirement prohibits an exclusion of a specific disease from such coverage.
Any other requirements (including limitations on compensation arrangements) that, directly or indirectly, preclude (or have the effect of precluding) the offering of such coverage through an IMA, if the IMA meets the requirements of this title.
Administration
In General
The Secretary shall administer this title and is
authorized to issue such regulations as may be required to carry out this
title. Such regulations shall be subject to Congressional review under the
provisions of chapter 8 of title 5, United States Code. The Secretary shall
incorporate the process of deemed file and use
with respect to
the information filed under section 3001(a)(5)(A) and shall determine whether
information filed by an IMA demonstrates compliance with the applicable
requirements of this title. The Secretary shall exercise authority under this
title in a manner that fosters and promotes the development of IMAs in order to
improve access to health care coverage and services.
Periodic reports
The Secretary shall submit to Congress a report every 30 months, during the 10-year period beginning on the effective date of the rules promulgated by the Secretary to carry out this title, on the effectiveness of this title in promoting coverage of uninsured individuals. The Secretary may provide for the production of such reports through one or more contracts with appropriate private entities.
Definitions
For purposes of this title:
Association
The term association means, with respect to health insurance coverage offered in a State, an association which—
has been actively in existence for at least 5 years;
has been formed and maintained in good faith for purposes other than obtaining insurance;
does not condition membership in the association on any health status-related factor relating to an individual (including an employee of an employer or a dependent of an employee); and
does not make health insurance coverage offered through the association available other than in connection with a member of the association.
Dependent
The term dependent, as applied to health insurance coverage offered by a health insurance issuer licensed (or otherwise regulated) in a State, shall have the meaning applied to such term with respect to such coverage under the laws of the State relating to such coverage and such an issuer. Such term may include the spouse and children of the individual involved.
Health benefits coverage
The term health benefits coverage has the meaning given the term health insurance coverage in section 2791(b)(1).
Health insurance issuer
The term health insurance issuer has the meaning given such term in section 2791(b)(2).
Health status-related factor
The term health status-related factor has the meaning given such term in section 2791(d)(9).
IMA; individual membership association
The terms IMA and individual membership association are defined in section 3101(a).
Member
The term member means, with respect to an IMA, an individual who is a member of the association to which the IMA is offering coverage.
.
Association health plans
Rules governing association health plans
In General
Subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by adding after part 7 the following new part:
RULES GOVERNING ASSOCIATION HEALTH PLANS
Association health plans
In General
For purposes of this part, the term association health plan means a group health plan whose sponsor is (or is deemed under this part to be) described in subsection (b).
Sponsorship
The sponsor of a group health plan is described in this subsection if such sponsor—
is organized and maintained in good faith, with a constitution and bylaws specifically stating its purpose and providing for periodic meetings on at least an annual basis, as a bona fide trade association, a bona fide industry association (including a rural electric cooperative association or a rural telephone cooperative association), a bona fide professional association, or a bona fide chamber of commerce (or similar bona fide business association, including a corporation or similar organization that operates on a cooperative basis (within the meaning of section 1381 of the Internal Revenue Code of 1986)), for substantial purposes other than that of obtaining or providing medical care;
is established as a permanent entity which receives the active support of its members and requires for membership payment on a periodic basis of dues or payments necessary to maintain eligibility for membership in the sponsor; and
does not condition membership, such dues or payments, or coverage under the plan on the basis of health status-related factors with respect to the employees of its members (or affiliated members), or the dependents of such employees, and does not condition such dues or payments on the basis of group health plan participation.
Certification of association health plans
In General
The applicable authority shall prescribe by regulation a procedure under which, subject to subsection (b), the applicable authority shall certify association health plans which apply for certification as meeting the requirements of this part.
Standards
Under the procedure prescribed pursuant to subsection (a), in the case of an association health plan that provides at least one benefit option which does not consist of health insurance coverage, the applicable authority shall certify such plan as meeting the requirements of this part only if the applicable authority is satisfied that the applicable requirements of this part are met (or, upon the date on which the plan is to commence operations, will be met) with respect to the plan.
Requirements Applicable to Certified Plans
An association health plan with respect to which certification under this part is in effect shall meet the applicable requirements of this part, effective on the date of certification (or, if later, on the date on which the plan is to commence operations).
Requirements for Continued Certification
The applicable authority may provide by regulation for continued certification of association health plans under this part.
Class Certification for Fully Insured Plans
The applicable authority shall establish a class certification procedure for association health plans under which all benefits consist of health insurance coverage. Under such procedure, the applicable authority shall provide for the granting of certification under this part to the plans in each class of such association health plans upon appropriate filing under such procedure in connection with plans in such class and payment of the prescribed fee under section 807(a).
Certification of Self-Insured Association Health Plans
An association health plan which offers one or more benefit options which do not consist of health insurance coverage may be certified under this part only if such plan consists of any of the following:
A plan which offered such coverage on the date of the enactment of the Small Business Health Fairness Act of 2009.
A plan under which the sponsor does not restrict membership to one or more trades and businesses or industries and whose eligible participating employers represent a broad cross-section of trades and businesses or industries.
A plan whose eligible participating employers represent one or more trades or businesses, or one or more industries, consisting of any of the following: agriculture; equipment and automobile dealerships; barbering and cosmetology; certified public accounting practices; child care; construction; dance, theatrical and orchestra productions; disinfecting and pest control; financial services; fishing; food service establishments; hospitals; labor organizations; logging; manufacturing (metals); mining; medical and dental practices; medical laboratories; professional consulting services; sanitary services; transportation (local and freight); warehousing; wholesaling/distributing; or any other trade or business or industry which has been indicated as having average or above-average risk or health claims experience by reason of State rate filings, denials of coverage, proposed premium rate levels, or other means demonstrated by such plan in accordance with regulations.
Requirements relating to sponsors and boards of trustees
Sponsor
The requirements of this subsection are met with respect to an association health plan if the sponsor has met (or is deemed under this part to have met) the requirements of section 801(b) for a continuous period of not less than 3 years ending with the date of the application for certification under this part.
Board of Trustees
The requirements of this subsection are met with respect to an association health plan if the following requirements are met:
Fiscal control
The plan is operated, pursuant to a trust agreement, by a board of trustees which has complete fiscal control over the plan and which is responsible for all operations of the plan.
Rules of operation and financial controls
The board of trustees has in effect rules of operation and financial controls, based on a 3-year plan of operation, adequate to carry out the terms of the plan and to meet all requirements of this title applicable to the plan.
Rules governing relationship to participating employers and to contractors
Board membership
In general
Except as provided in clauses (ii) and (iii), the members of the board of trustees are individuals selected from individuals who are the owners, officers, directors, or employees of the participating employers or who are partners in the participating employers and actively participate in the business.
Limitation
General rule
Except as provided in subclauses (II) and (III), no such member is an owner, officer, director, or employee of, or partner in, a contract administrator or other service provider to the plan.
Limited exception for providers of services solely on behalf of the sponsor
Officers or employees of a sponsor which is a service provider (other than a contract administrator) to the plan may be members of the board if they constitute not more than 25 percent of the membership of the board and they do not provide services to the plan other than on behalf of the sponsor.
Treatment of providers of medical care
In the case of a sponsor which is an association whose membership consists primarily of providers of medical care, subclause (I) shall not apply in the case of any service provider described in subclause (I) who is a provider of medical care under the plan.
Certain plans excluded
Clause (i) shall not apply to an association health plan which is in existence on the date of the enactment of the Small Business Health Fairness Act of 2009.
Sole authority
The board has sole authority under the plan to approve applications for participation in the plan and to contract with a service provider to administer the day-to-day affairs of the plan.
Treatment of Franchise Networks
In the case of a group health plan which is established and maintained by a franchiser for a franchise network consisting of its franchisees—
the requirements of subsection (a) and section 801(a) shall be deemed met if such requirements would otherwise be met if the franchiser were deemed to be the sponsor referred to in section 801(b), such network were deemed to be an association described in section 801(b), and each franchisee were deemed to be a member (of the association and the sponsor) referred to in section 801(b); and
the requirements of section 804(a)(1) shall be deemed met.
Participation and coverage requirements
Covered Employers and Individuals
The requirements of this subsection are met with respect to an association health plan if, under the terms of the plan—
each participating employer must be—
a member of the sponsor,
the sponsor, or
an affiliated member of the sponsor with respect to which the requirements of subsection (b) are met,
all individuals commencing coverage under the plan after certification under this part must be—
active or retired owners (including self-employed individuals), officers, directors, or employees of, or partners in, participating employers; or
the beneficiaries of individuals described in subparagraph (A).
Coverage of Previously Uninsured Employees
In the case of an association health plan in existence on the date of the enactment of the Small Business Health Fairness Act of 2009, an affiliated member of the sponsor of the plan may be offered coverage under the plan as a participating employer only if—
the affiliated member was an affiliated member on the date of certification under this part; or
during the 12-month period preceding the date of the offering of such coverage, the affiliated member has not maintained or contributed to a group health plan with respect to any of its employees who would otherwise be eligible to participate in such association health plan.
Individual Market Unaffected
The requirements of this subsection are met with respect to an association health plan if, under the terms of the plan, no participating employer may provide health insurance coverage in the individual market for any employee not covered under the plan which is similar to the coverage contemporaneously provided to employees of the employer under the plan, if such exclusion of the employee from coverage under the plan is based on a health status-related factor with respect to the employee and such employee would, but for such exclusion on such basis, be eligible for coverage under the plan.
Prohibition of Discrimination Against Employers and Employees Eligible To Participate
The requirements of this subsection are met with respect to an association health plan if—
under the terms of the plan, all employers meeting the preceding requirements of this section are eligible to qualify as participating employers for all geographically available coverage options, unless, in the case of any such employer, participation or contribution requirements of the type referred to in section 2711 of the Public Health Service Act (42 U.S.C. 300gg–11) are not met;
upon request, any employer eligible to participate is furnished information regarding all coverage options available under the plan; and
the applicable requirements of sections 701, 702, and 703 are met with respect to the plan.
Other requirements relating to plan documents, contribution rates, and benefit options
In General
The requirements of this section are met with respect to an association health plan if the following requirements are met:
Contents of governing instruments
The instruments governing the plan include a written instrument, meeting the requirements of an instrument required under section 402(a)(1), which—
provides that the board of trustees serves as the named fiduciary required for plans under section 402(a)(1) and serves in the capacity of a plan administrator (referred to in section 3(16)(A));
provides that the sponsor of the plan is to serve as plan sponsor (referred to in section 3(16)(B)); and
incorporates the requirements of section 806.
Contribution rates must be nondiscriminatory
The contribution rates for any participating small employer do not vary on the basis of any health status-related factor in relation to employees of such employer or their beneficiaries and do not vary on the basis of the type of business or industry in which such employer is engaged.
Nothing in this title or any other provision of law shall be construed to preclude an association health plan, or a health insurance issuer offering health insurance coverage in connection with an association health plan, from—
setting contribution rates based on the claims experience of the plan; or
varying contribution rates for small employers in a State to the extent that such rates could vary using the same methodology employed in such State for regulating premium rates in the small group market with respect to health insurance coverage offered in connection with bona fide associations (within the meaning of section 2791(d)(3) of the Public Health Service Act (42 U.S.C. 300gg–91(d)(3))),
Floor for number of covered individuals with respect to certain plans
If any benefit option under the plan does not consist of health insurance coverage, the plan has as of the beginning of the plan year not fewer than 1,000 participants and beneficiaries.
Marketing requirements
In general
If a benefit option which consists of health insurance coverage is offered under the plan, State-licensed insurance agents shall be used to distribute to small employers coverage which does not consist of health insurance coverage in a manner comparable to the manner in which such agents are used to distribute health insurance coverage.
State-licensed insurance agents
For purposes of subparagraph (A), the term State-licensed insurance agents means one or more agents who are licensed in a State and are subject to the laws of such State relating to licensure, qualification, testing, examination, and continuing education of persons authorized to offer, sell, or solicit health insurance coverage in such State.
Regulatory requirements
Such other requirements as the applicable authority determines are necessary to carry out the purposes of this part, which shall be prescribed by the applicable authority by regulation.
Ability of Association Health Plans To Design Benefit Options
Subject to section 514(d), nothing in this part or any provision of State law (as defined in section 514(c)(1)) shall be construed to preclude an association health plan, or a health insurance issuer offering health insurance coverage in connection with an association health plan, from exercising its sole discretion in selecting the specific items and services consisting of medical care to be included as benefits under such plan or coverage, except (subject to section 514) in the case of (1) any law to the extent that it is not preempted under section 731(a)(1) with respect to matters governed by section 711, 712, or 713, or (2) any law of the State with which filing and approval of a policy type offered by the plan was initially obtained to the extent that such law prohibits an exclusion of a specific disease from such coverage.
Maintenance of reserves and provisions for solvency for plans providing health benefits in addition to health insurance coverage
In General
The requirements of this section are met with respect to an association health plan if—
the benefits under the plan consist solely of health insurance coverage; or
if the plan provides any additional benefit options which do not consist of health insurance coverage, the plan—
establishes and maintains reserves with respect to such additional benefit options, in amounts recommended by the qualified actuary, consisting of—
a reserve sufficient for unearned contributions;
a reserve sufficient for benefit liabilities which have been incurred, which have not been satisfied, and for which risk of loss has not yet been transferred, and for expected administrative costs with respect to such benefit liabilities;
a reserve sufficient for any other obligations of the plan; and
a reserve sufficient for a margin of error and other fluctuations, taking into account the specific circumstances of the plan; and
establishes and maintains aggregate and specific excess/stop loss insurance and solvency indemnification, with respect to such additional benefit options for which risk of loss has not yet been transferred, as follows:
The plan shall secure aggregate excess/stop loss insurance for the plan with an attachment point which is not greater than 125 percent of expected gross annual claims. The applicable authority may by regulation provide for upward adjustments in the amount of such percentage in specified circumstances in which the plan specifically provides for and maintains reserves in excess of the amounts required under subparagraph (A).
The plan shall secure specific excess/stop loss insurance for the plan with an attachment point which is at least equal to an amount recommended by the plan’s qualified actuary. The applicable authority may by regulation provide for adjustments in the amount of such insurance in specified circumstances in which the plan specifically provides for and maintains reserves in excess of the amounts required under subparagraph (A).
The plan shall secure indemnification insurance for any claims which the plan is unable to satisfy by reason of a plan termination.
Minimum Surplus in Addition to Claims Reserves
In the case of any association health plan described in subsection (a)(2), the requirements of this subsection are met if the plan establishes and maintains surplus in an amount at least equal to—
$500,000, or
such greater amount (but not greater than $2,000,000) as may be set forth in regulations prescribed by the applicable authority, considering the level of aggregate and specific excess/stop loss insurance provided with respect to such plan and other factors related to solvency risk, such as the plan’s projected levels of participation or claims, the nature of the plan’s liabilities, and the types of assets available to assure that such liabilities are met.
Additional Requirements
In the case of any association health plan described in subsection (a)(2), the applicable authority may provide such additional requirements relating to reserves, excess/stop loss insurance, and indemnification insurance as the applicable authority considers appropriate. Such requirements may be provided by regulation with respect to any such plan or any class of such plans.
Adjustments for Excess/Stop Loss Insurance
The applicable authority may provide for adjustments to the levels of reserves otherwise required under subsections (a) and (b) with respect to any plan or class of plans to take into account excess/stop loss insurance provided with respect to such plan or plans.
Alternative Means of Compliance
The applicable authority may permit an association health plan described in subsection (a)(2) to substitute, for all or part of the requirements of this section (except subsection (a)(2)(B)(iii)), such security, guarantee, hold-harmless arrangement, or other financial arrangement as the applicable authority determines to be adequate to enable the plan to fully meet all its financial obligations on a timely basis and is otherwise no less protective of the interests of participants and beneficiaries than the requirements for which it is substituted. The applicable authority may take into account, for purposes of this subsection, evidence provided by the plan or sponsor which demonstrates an assumption of liability with respect to the plan. Such evidence may be in the form of a contract of indemnification, lien, bonding, insurance, letter of credit, recourse under applicable terms of the plan in the form of assessments of participating employers, security, or other financial arrangement.
Measures To Ensure Continued Payment of Benefits by Certain Plans in Distress
Payments by certain plans to association health plan fund
In general
In the case of an association health plan described in subsection (a)(2), the requirements of this subsection are met if the plan makes payments into the Association Health Plan Fund under this subparagraph when they are due. Such payments shall consist of annual payments in the amount of $5,000, and, in addition to such annual payments, such supplemental payments as the Secretary may determine to be necessary under paragraph (2). Payments under this paragraph are payable to the Fund at the time determined by the Secretary. Initial payments are due in advance of certification under this part. Payments shall continue to accrue until a plan’s assets are distributed pursuant to a termination procedure.
Penalties for failure to make payments
If any payment is not made by a plan when it is due, a late payment charge of not more than 100 percent of the payment which was not timely paid shall be payable by the plan to the Fund.
Continued duty of the secretary
The Secretary shall not cease to carry out the provisions of paragraph (2) on account of the failure of a plan to pay any payment when due.
Payments by secretary to continue excess/stop loss insurance coverage and indemnification insurance coverage for certain plans
In any case in which the applicable authority determines that there is, or that there is reason to believe that there will be: (A) a failure to take necessary corrective actions under section 809(a) with respect to an association health plan described in subsection (a)(2); or (B) a termination of such a plan under section 809(b) or 810(b)(8) (and, if the applicable authority is not the Secretary, certifies such determination to the Secretary), the Secretary shall determine the amounts necessary to make payments to an insurer (designated by the Secretary) to maintain in force excess/stop loss insurance coverage or indemnification insurance coverage for such plan, if the Secretary determines that there is a reasonable expectation that, without such payments, claims would not be satisfied by reason of termination of such coverage. The Secretary shall, to the extent provided in advance in appropriation Acts, pay such amounts so determined to the insurer designated by the Secretary.
Association health plan fund
In general
There is established on the books of the Treasury a fund
to be known as the Association Health Plan Fund
. The Fund shall
be available for making payments pursuant to paragraph (2). The Fund shall be
credited with payments received pursuant to paragraph (1)(A), penalties
received pursuant to paragraph (1)(B); and earnings on investments of amounts
of the Fund under subparagraph (B).
Investment
Whenever the Secretary determines that the moneys of the fund are in excess of current needs, the Secretary may request the investment of such amounts as the Secretary determines advisable by the Secretary of the Treasury in obligations issued or guaranteed by the United States.
Excess/Stop Loss Insurance
For purposes of this section—
Aggregate excess/stop loss insurance
The term aggregate excess/stop loss insurance means, in connection with an association health plan, a contract—
under which an insurer (meeting such minimum standards as the applicable authority may prescribe by regulation) provides for payment to the plan with respect to aggregate claims under the plan in excess of an amount or amounts specified in such contract;
which is guaranteed renewable; and
which allows for payment of premiums by any third party on behalf of the insured plan.
Specific excess/stop loss insurance
The term specific excess/stop loss insurance means, in connection with an association health plan, a contract—
under which an insurer (meeting such minimum standards as the applicable authority may prescribe by regulation) provides for payment to the plan with respect to claims under the plan in connection with a covered individual in excess of an amount or amounts specified in such contract in connection with such covered individual;
which is guaranteed renewable; and
which allows for payment of premiums by any third party on behalf of the insured plan.
Indemnification Insurance
For purposes of this section, the term indemnification insurance means, in connection with an association health plan, a contract—
under which an insurer (meeting such minimum standards as the applicable authority may prescribe by regulation) provides for payment to the plan with respect to claims under the plan which the plan is unable to satisfy by reason of a termination pursuant to section 809(b) (relating to mandatory termination);
which is guaranteed renewable and noncancellable for any reason (except as the applicable authority may prescribe by regulation); and
which allows for payment of premiums by any third party on behalf of the insured plan.
Reserves
For purposes of this section, the term reserves means, in connection with an association health plan, plan assets which meet the fiduciary standards under part 4 and such additional requirements regarding liquidity as the applicable authority may prescribe by regulation.
Solvency Standards Working Group
In general
Within 90 days after the date of the enactment of the Small Business Health Fairness Act of 2009, the applicable authority shall establish a Solvency Standards Working Group. In prescribing the initial regulations under this section, the applicable authority shall take into account the recommendations of such Working Group.
Membership
The Working Group shall consist of not more than 15 members appointed by the applicable authority. The applicable authority shall include among persons invited to membership on the Working Group at least one of each of the following:
A representative of the National Association of Insurance Commissioners.
A representative of the American Academy of Actuaries.
A representative of the State governments, or their interests.
A representative of existing self-insured arrangements, or their interests.
A representative of associations of the type referred to in section 801(b)(1), or their interests.
A representative of multiemployer plans that are group health plans, or their interests.
Requirements for application and related requirements
Filing Fee
Under the procedure prescribed pursuant to section 802(a), an association health plan shall pay to the applicable authority at the time of filing an application for certification under this part a filing fee in the amount of $5,000, which shall be available in the case of the Secretary, to the extent provided in appropriation Acts, for the sole purpose of administering the certification procedures applicable with respect to association health plans.
Information To Be Included in Application for Certification
An application for certification under this part meets the requirements of this section only if it includes, in a manner and form which shall be prescribed by the applicable authority by regulation, at least the following information:
Identifying information
The names and addresses of—
the sponsor; and
the members of the board of trustees of the plan.
States in which plan intends to do business
The States in which participants and beneficiaries under the plan are to be located and the number of them expected to be located in each such State.
Bonding requirements
Evidence provided by the board of trustees that the bonding requirements of section 412 will be met as of the date of the application or (if later) commencement of operations.
Plan documents
A copy of the documents governing the plan (including any bylaws and trust agreements), the summary plan description, and other material describing the benefits that will be provided to participants and beneficiaries under the plan.
Agreements with service providers
A copy of any agreements between the plan and contract administrators and other service providers.
Funding report
In the case of association health plans providing benefits options in addition to health insurance coverage, a report setting forth information with respect to such additional benefit options determined as of a date within the 120-day period ending with the date of the application, including the following:
Reserves
A statement, certified by the board of trustees of the plan, and a statement of actuarial opinion, signed by a qualified actuary, that all applicable requirements of section 806 are or will be met in accordance with regulations which the applicable authority shall prescribe.
Adequacy of contribution rates
A statement of actuarial opinion, signed by a qualified actuary, which sets forth a description of the extent to which contribution rates are adequate to provide for the payment of all obligations and the maintenance of required reserves under the plan for the 12-month period beginning with such date within such 120-day period, taking into account the expected coverage and experience of the plan. If the contribution rates are not fully adequate, the statement of actuarial opinion shall indicate the extent to which the rates are inadequate and the changes needed to ensure adequacy.
Current and projected value of assets and liabilities
A statement of actuarial opinion signed by a qualified actuary, which sets forth the current value of the assets and liabilities accumulated under the plan and a projection of the assets, liabilities, income, and expenses of the plan for the 12-month period referred to in subparagraph (B). The income statement shall identify separately the plan’s administrative expenses and claims.
Costs of coverage to be charged and other expenses
A statement of the costs of coverage to be charged, including an itemization of amounts for administration, reserves, and other expenses associated with the operation of the plan.
Other information
Any other information as may be determined by the applicable authority, by regulation, as necessary to carry out the purposes of this part.
Filing Notice of Certification With States
A certification granted under this part to an association health plan shall not be effective unless written notice of such certification is filed with the applicable State authority of each State in which at least 25 percent of the participants and beneficiaries under the plan are located. For purposes of this subsection, an individual shall be considered to be located in the State in which a known address of such individual is located or in which such individual is employed.
Notice of Material Changes
In the case of any association health plan certified under this part, descriptions of material changes in any information which was required to be submitted with the application for the certification under this part shall be filed in such form and manner as shall be prescribed by the applicable authority by regulation. The applicable authority may require by regulation prior notice of material changes with respect to specified matters which might serve as the basis for suspension or revocation of the certification.
Reporting Requirements for Certain Association Health Plans
An association health plan certified under this part which provides benefit options in addition to health insurance coverage for such plan year shall meet the requirements of section 103 by filing an annual report under such section which shall include information described in subsection (b)(6) with respect to the plan year and, notwithstanding section 104(a)(1)(A), shall be filed with the applicable authority not later than 90 days after the close of the plan year (or on such later date as may be prescribed by the applicable authority). The applicable authority may require by regulation such interim reports as it considers appropriate.
Engagement of Qualified Actuary
The board of trustees of each association health plan which provides benefits options in addition to health insurance coverage and which is applying for certification under this part or is certified under this part shall engage, on behalf of all participants and beneficiaries, a qualified actuary who shall be responsible for the preparation of the materials comprising information necessary to be submitted by a qualified actuary under this part. The qualified actuary shall utilize such assumptions and techniques as are necessary to enable such actuary to form an opinion as to whether the contents of the matters reported under this part—
are in the aggregate reasonably related to the experience of the plan and to reasonable expectations; and
represent such actuary’s best estimate of anticipated experience under the plan.
Notice requirements for voluntary termination
Except as provided in section 809(b), an association health plan which is or has been certified under this part may terminate (upon or at any time after cessation of accruals in benefit liabilities) only if the board of trustees, not less than 60 days before the proposed termination date—
provides to the participants and beneficiaries a written notice of intent to terminate stating that such termination is intended and the proposed termination date;
develops a plan for winding up the affairs of the plan in connection with such termination in a manner which will result in timely payment of all benefits for which the plan is obligated; and
submits such plan in writing to the applicable authority.
Corrective actions and mandatory termination
Actions To Avoid Depletion of Reserves
An association health plan which is certified under this part and which provides benefits other than health insurance coverage shall continue to meet the requirements of section 806, irrespective of whether such certification continues in effect. The board of trustees of such plan shall determine quarterly whether the requirements of section 806 are met. In any case in which the board determines that there is reason to believe that there is or will be a failure to meet such requirements, or the applicable authority makes such a determination and so notifies the board, the board shall immediately notify the qualified actuary engaged by the plan, and such actuary shall, not later than the end of the next following month, make such recommendations to the board for corrective action as the actuary determines necessary to ensure compliance with section 806. Not later than 30 days after receiving from the actuary recommendations for corrective actions, the board shall notify the applicable authority (in such form and manner as the applicable authority may prescribe by regulation) of such recommendations of the actuary for corrective action, together with a description of the actions (if any) that the board has taken or plans to take in response to such recommendations. The board shall thereafter report to the applicable authority, in such form and frequency as the applicable authority may specify to the board, regarding corrective action taken by the board until the requirements of section 806 are met.
Mandatory Termination
In any case in which—
the applicable authority has been notified under subsection (a) (or by an issuer of excess/stop loss insurance or indemnity insurance pursuant to section 806(a)) of a failure of an association health plan which is or has been certified under this part and is described in section 806(a)(2) to meet the requirements of section 806 and has not been notified by the board of trustees of the plan that corrective action has restored compliance with such requirements; and
the applicable authority determines that there is a reasonable expectation that the plan will continue to fail to meet the requirements of section 806,
Trusteeship by the Secretary of insolvent association health plans providing health benefits in addition to health insurance coverage
Appointment of Secretary as Trustee for Insolvent Plans
Whenever the Secretary determines that an association health plan which is or has been certified under this part and which is described in section 806(a)(2) will be unable to provide benefits when due or is otherwise in a financially hazardous condition, as shall be defined by the Secretary by regulation, the Secretary shall, upon notice to the plan, apply to the appropriate United States district court for appointment of the Secretary as trustee to administer the plan for the duration of the insolvency. The plan may appear as a party and other interested persons may intervene in the proceedings at the discretion of the court. The court shall appoint such Secretary trustee if the court determines that the trusteeship is necessary to protect the interests of the participants and beneficiaries or providers of medical care or to avoid any unreasonable deterioration of the financial condition of the plan. The trusteeship of such Secretary shall continue until the conditions described in the first sentence of this subsection are remedied or the plan is terminated.
Powers as Trustee
The Secretary, upon appointment as trustee under subsection (a), shall have the power—
to do any act authorized by the plan, this title, or other applicable provisions of law to be done by the plan administrator or any trustee of the plan;
to require the transfer of all (or any part) of the assets and records of the plan to the Secretary as trustee;
to invest any assets of the plan which the Secretary holds in accordance with the provisions of the plan, regulations prescribed by the Secretary, and applicable provisions of law;
to require the sponsor, the plan administrator, any participating employer, and any employee organization representing plan participants to furnish any information with respect to the plan which the Secretary as trustee may reasonably need in order to administer the plan;
to collect for the plan any amounts due the plan and to recover reasonable expenses of the trusteeship;
to commence, prosecute, or defend on behalf of the plan any suit or proceeding involving the plan;
to issue, publish, or file such notices, statements, and reports as may be required by the Secretary by regulation or required by any order of the court;
to terminate the plan (or provide for its termination in accordance with section 809(b)) and liquidate the plan assets, to restore the plan to the responsibility of the sponsor, or to continue the trusteeship;
to provide for the enrollment of plan participants and beneficiaries under appropriate coverage options; and
to do such other acts as may be necessary to comply with this title or any order of the court and to protect the interests of plan participants and beneficiaries and providers of medical care.
Notice of Appointment
As soon as practicable after the Secretary’s appointment as trustee, the Secretary shall give notice of such appointment to—
the sponsor and plan administrator;
each participant;
each participating employer; and
if applicable, each employee organization which, for purposes of collective bargaining, represents plan participants.
Additional Duties
Except to the extent inconsistent with the provisions of this title, or as may be otherwise ordered by the court, the Secretary, upon appointment as trustee under this section, shall be subject to the same duties as those of a trustee under section 704 of title 11, United States Code, and shall have the duties of a fiduciary for purposes of this title.
Other Proceedings
An application by the Secretary under this subsection may be filed notwithstanding the pendency in the same or any other court of any bankruptcy, mortgage foreclosure, or equity receivership proceeding, or any proceeding to reorganize, conserve, or liquidate such plan or its property, or any proceeding to enforce a lien against property of the plan.
Jurisdiction of Court
In general
Upon the filing of an application for the appointment as trustee or the issuance of a decree under this section, the court to which the application is made shall have exclusive jurisdiction of the plan involved and its property wherever located with the powers, to the extent consistent with the purposes of this section, of a court of the United States having jurisdiction over cases under chapter 11 of title 11, United States Code. Pending an adjudication under this section such court shall stay, and upon appointment by it of the Secretary as trustee, such court shall continue the stay of, any pending mortgage foreclosure, equity receivership, or other proceeding to reorganize, conserve, or liquidate the plan, the sponsor, or property of such plan or sponsor, and any other suit against any receiver, conservator, or trustee of the plan, the sponsor, or property of the plan or sponsor. Pending such adjudication and upon the appointment by it of the Secretary as trustee, the court may stay any proceeding to enforce a lien against property of the plan or the sponsor or any other suit against the plan or the sponsor.
Venue
An action under this section may be brought in the judicial district where the sponsor or the plan administrator resides or does business or where any asset of the plan is situated. A district court in which such action is brought may issue process with respect to such action in any other judicial district.
Personnel
In accordance with regulations which shall be prescribed by the Secretary, the Secretary shall appoint, retain, and compensate accountants, actuaries, and other professional service personnel as may be necessary in connection with the Secretary’s service as trustee under this section.
State assessment authority
In General
Notwithstanding section 514, a State may impose by law a contribution tax on an association health plan described in section 806(a)(2), if the plan commenced operations in such State after the date of the enactment of the Small Business Health Fairness Act of 2009.
Contribution Tax
For purposes of this section, the term contribution tax imposed by a State on an association health plan means any tax imposed by such State if—
such tax is computed by applying a rate to the amount of premiums or contributions, with respect to individuals covered under the plan who are residents of such State, which are received by the plan from participating employers located in such State or from such individuals;
the rate of such tax does not exceed the rate of any tax imposed by such State on premiums or contributions received by insurers or health maintenance organizations for health insurance coverage offered in such State in connection with a group health plan;
such tax is otherwise nondiscriminatory; and
the amount of any such tax assessed on the plan is reduced by the amount of any tax or assessment otherwise imposed by the State on premiums, contributions, or both received by insurers or health maintenance organizations for health insurance coverage, aggregate excess/stop loss insurance (as defined in section 806(g)(1)), specific excess/stop loss insurance (as defined in section 806(g)(2)), other insurance related to the provision of medical care under the plan, or any combination thereof provided by such insurers or health maintenance organizations in such State in connection with such plan.
Definitions and rules of construction
Definitions
For purposes of this part:
Group health plan
The term group health plan has the meaning provided in section 733(a)(1) (after applying subsection (b) of this section).
Medical care
The term medical care has the meaning provided in section 733(a)(2).
Health insurance coverage
The term health insurance coverage has the meaning provided in section 733(b)(1).
Health insurance issuer
The term health insurance issuer has the meaning provided in section 733(b)(2).
Applicable authority
The term applicable authority means the Secretary, except that, in connection with any exercise of the Secretary’s authority regarding which the Secretary is required under section 506(d) to consult with a State, such term means the Secretary, in consultation with such State.
Health status-related factor
The term health status-related factor has the meaning provided in section 733(d)(2).
Individual market
In general
The term individual market means the market for health insurance coverage offered to individuals other than in connection with a group health plan.
Treatment of very small groups
In general
Subject to clause (ii), such term includes coverage offered in connection with a group health plan that has fewer than 2 participants as current employees or participants described in section 732(d)(3) on the first day of the plan year.
State exception
Clause (i) shall not apply in the case of health insurance coverage offered in a State if such State regulates the coverage described in such clause in the same manner and to the same extent as coverage in the small group market (as defined in section 2791(e)(5) of the Public Health Service Act (42 U.S.C. 300gg–91(e)(5)) is regulated by such State.
Participating employer
The term participating employer means, in connection with an association health plan, any employer, if any individual who is an employee of such employer, a partner in such employer, or a self-employed individual who is such employer (or any dependent, as defined under the terms of the plan, of such individual) is or was covered under such plan in connection with the status of such individual as such an employee, partner, or self-employed individual in relation to the plan.
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 title XXVII of the Public Health Service Act (42 U.S.C. 300hh et seq.) for the State involved with respect to such issuer.
Qualified actuary
The term qualified actuary means an individual who is a member of the American Academy of Actuaries.
Affiliated member
The term affiliated member means, in connection with a sponsor—
a person who is otherwise eligible to be a member of the sponsor but who elects an affiliated status with the sponsor,
in the case of a sponsor with members which consist of associations, a person who is a member of any such association and elects an affiliated status with the sponsor, or
in the case of an association health plan in existence on the date of the enactment of the Small Business Health Fairness Act of 2009, a person eligible to be a member of the sponsor or one of its member associations.
Large employer
The term large employer means, in connection with a group health plan with respect to a plan year, an employer who employed an average of at least 51 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year.
Small employer
The term small employer means, in connection with a group health plan with respect to a plan year, an employer who is not a large employer.
Rules of Construction
Employers and employees
For purposes of determining whether a plan, fund, or program is an employee welfare benefit plan which is an association health plan, and for purposes of applying this title in connection with such plan, fund, or program so determined to be such an employee welfare benefit plan—
in the case of a partnership, the term employer (as defined in section 3(5)) includes the partnership in relation to the partners, and the term employee (as defined in section 3(6)) includes any partner in relation to the partnership; and
in the case of a self-employed individual, the term employer (as defined in section 3(5)) and the term employee (as defined in section 3(6)) shall include such individual.
Plans, funds, and programs treated as employee welfare benefit plans
In the case of any plan, fund, or program which was established or is maintained for the purpose of providing medical care (through the purchase of insurance or otherwise) for employees (or their dependents) covered thereunder and which demonstrates to the Secretary that all requirements for certification under this part would be met with respect to such plan, fund, or program if such plan, fund, or program were a group health plan, such plan, fund, or program shall be treated for purposes of this title as an employee welfare benefit plan on and after the date of such demonstration.
.
Conforming Amendments to Preemption Rules
Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is amended by adding at the end the following new subparagraph:
The preceding subparagraphs of this paragraph do not apply with respect to any State law in the case of an association health plan which is certified under part 8.
.
Section 514 of such Act (29 U.S.C. 1144) is amended—
in subsection
(b)(4), by striking Subsection (a)
and inserting
Subsections (a) and (d)
;
in subsection
(b)(5), by striking subsection (a)
in subparagraph (A) and
inserting subsection (a) of this section and subsections (a)(2)(B) and
(b) of section 805
, and by striking subsection (a)
in
subparagraph (B) and inserting subsection (a) of this section or
subsection (a)(2)(B) or (b) of section 805
;
by redesignating subsection (d) as subsection (e); and
by inserting after subsection (c) the following new subsection:
Except as provided in subsection (b)(4), the provisions of this title shall supersede any and all State laws insofar as they may now or hereafter preclude, or have the effect of precluding, a health insurance issuer from offering health insurance coverage in connection with an association health plan which is certified under part 8.
Except as provided in paragraphs (4) and (5) of subsection (b) of this section—
In any case in which health insurance coverage of any policy type is offered under an association health plan certified under part 8 to a participating employer operating in such State, the provisions of this title shall supersede any and all laws of such State insofar as they may preclude a health insurance issuer from offering health insurance coverage of the same policy type to other employers operating in the State which are eligible for coverage under such association health plan, whether or not such other employers are participating employers in such plan.
In any case in which health insurance coverage of any policy type is offered in a State under an association health plan certified under part 8 and the filing, with the applicable State authority (as defined in section 812(a)(9)), of the policy form in connection with such policy type is approved by such State authority, the provisions of this title shall supersede any and all laws of any other State in which health insurance coverage of such type is offered, insofar as they may preclude, upon the filing in the same form and manner of such policy form with the applicable State authority in such other State, the approval of the filing in such other State.
Nothing in subsection (b)(6)(E) or the preceding provisions of this subsection shall be construed, with respect to health insurance issuers or health insurance coverage, to supersede or impair the law of any State—
providing solvency standards or similar standards regarding the adequacy of insurer capital, surplus, reserves, or contributions, or
relating to prompt payment of claims.
For additional provisions relating to association health plans, see subsections (a)(2)(B) and (b) of section 805.
For purposes of this subsection, the term association health plan has the meaning provided in section 801(a), and the terms health insurance coverage, participating employer, and health insurance issuer have the meanings provided such terms in section 812, respectively.
.
Section 514(b)(6)(A) of such Act (29 U.S.C. 1144(b)(6)(A)) is amended—
in clause (i)(II),
by striking and
at the end;
in clause (ii), by
inserting and which does not provide medical care (within the meaning of
section 733(a)(2)),
after arrangement,
, and by striking
title.
and inserting title, and
; and
by adding at the end the following new clause:
subject to subparagraph (E), in the case of any other employee welfare benefit plan which is a multiple employer welfare arrangement and which provides medical care (within the meaning of section 733(a)(2)), any law of any State which regulates insurance may apply.
.
Section 514(e) of such Act (as redesignated by paragraph (2)(C)) is amended—
by striking
Nothing
and inserting (1) Except as provided in paragraph
(2), nothing
; and
by adding at the end the following new paragraph:
Nothing in any other provision of law enacted on or after the date of the enactment of the Small Business Health Fairness Act of 2009 shall be construed to alter, amend, modify, invalidate, impair, or supersede any provision of this title, except by specific cross-reference to the affected section.
.
Plan Sponsor
Section 3(16)(B) of such Act (29 U.S.C. 102(16)(B)) is
amended by adding at the end the following new sentence: Such term also
includes a person serving as the sponsor of an association health plan under
part 8.
.
Disclosure of Solvency Protections Related to Self-Insured and Fully Insured Options Under Association Health Plans
Section 102(b) of such Act (29 U.S.C.
102(b)) is amended by adding at the end the following: An association
health plan shall include in its summary plan description, in connection with
each benefit option, a description of the form of solvency or guarantee fund
protection secured pursuant to this Act or applicable State law, if
any.
.
Savings Clause
Section 731(c) of such Act is amended by inserting
or part 8
after this part
.
Report to the Congress Regarding Certification of Self-Insured Association Health Plans
Not later than January 1, 2012, the Secretary of Labor shall report to the Committee on Education and the Workforce of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate the effect association health plans have had, if any, on reducing the number of uninsured individuals.
Clerical Amendment
The table of contents in section 1 of the Employee Retirement Income Security Act of 1974 is amended by inserting after the item relating to section 734 the following new items:
Part 8—Rules Governing Association Health Plans
801. Association health plans.
802. Certification of association health plans.
803. Requirements relating to sponsors and boards of trustees.
804. Participation and coverage requirements.
805. Other requirements relating to plan documents, contribution rates, and benefit options.
806. Maintenance of reserves and provisions for solvency for plans providing health benefits in addition to health insurance coverage.
807. Requirements for application and related requirements.
808. Notice requirements for voluntary termination.
809. Corrective actions and mandatory termination.
810. Trusteeship by the Secretary of insolvent association health plans providing health benefits in addition to health insurance coverage.
811. State assessment authority.
812. Definitions and rules of construction.
.
Clarification of treatment of single employer arrangements
Section 3(40)(B) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amended—
in clause (i), by
inserting after control group,
the following: except
that, in any case in which the benefit referred to in subparagraph (A) consists
of medical care (as defined in section 812(a)(2)), two or more trades or
businesses, whether or not incorporated, shall be deemed a single employer for
any plan year of such plan, or any fiscal year of such other arrangement, if
such trades or businesses are within the same control group during such year or
at any time during the preceding 1-year period,
;
in clause (iii),
by striking (iii) the determination
and inserting the
following:
in any case in which the
benefit referred to in subparagraph (A) consists of medical care (as defined in
section 812(a)(2)), the determination of whether a trade or business is under
common control
with another trade or business shall be
determined under regulations of the Secretary applying principles consistent
and coextensive with the principles applied in determining whether employees of
two or more trades or businesses are treated as employed by a single employer
under section 4001(b), except that, for purposes of this paragraph, an interest
of greater than 25 percent may not be required as the minimum interest
necessary for common control, or
in any other case, the determination
;
by redesignating clauses (iv) and (v) as clauses (v) and (vi), respectively; and
by inserting after clause (iii) the following new clause:
in any case in which the benefit referred to in subparagraph (A) consists of medical care (as defined in section 812(a)(2)), in determining, after the application of clause (i), whether benefits are provided to employees of two or more employers, the arrangement shall be treated as having only one participating employer if, after the application of clause (i), the number of individuals who are employees and former employees of any one participating employer and who are covered under the arrangement is greater than 75 percent of the aggregate number of all individuals who are employees or former employees of participating employers and who are covered under the arrangement,
.
Enforcement provisions relating to association health plans
Criminal Penalties for Certain Willful Misrepresentations
Section 501 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1131) is amended—
by inserting
(a)
after Sec. 501.
; and
by adding at the end the following new subsection:
Any person who willfully falsely represents, to any employee, any employee’s beneficiary, any employer, the Secretary, or any State, a plan or other arrangement established or maintained for the purpose of offering or providing any benefit described in section 3(1) to employees or their beneficiaries as—
being an association health plan which has been certified under part 8;
having been established or maintained under or pursuant to one or more collective bargaining agreements which are reached pursuant to collective bargaining described in section 8(d) of the National Labor Relations Act (29 U.S.C. 158(d)) or paragraph Fourth of section 2 of the Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or which are reached pursuant to labor-management negotiations under similar provisions of State public employee relations laws; or
being a plan or arrangement described in section 3(40)(A)(i),
.
Cease Activities Orders
Section 502 of such Act (29 U.S.C. 1132) is amended by adding at the end the following new subsection:
Association Health Plan Cease and Desist Orders
In general
Subject to paragraph (2), upon application by the Secretary showing the operation, promotion, or marketing of an association health plan (or similar arrangement providing benefits consisting of medical care (as defined in section 733(a)(2))) that—
is not certified under part 8, is subject under section 514(b)(6) to the insurance laws of any State in which the plan or arrangement offers or provides benefits, and is not licensed, registered, or otherwise approved under the insurance laws of such State; or
is an association health plan certified under part 8 and is not operating in accordance with the requirements under part 8 for such certification,
Exception
Paragraph (1) shall not apply in the case of an association health plan or other arrangement if the plan or arrangement shows that—
all benefits under it referred to in paragraph (1) consist of health insurance coverage; and
with respect to each State in which the plan or arrangement offers or provides benefits, the plan or arrangement is operating in accordance with applicable State laws that are not superseded under section 514.
Additional equitable relief
The court may grant such additional equitable relief, including any relief available under this title, as it deems necessary to protect the interests of the public and of persons having claims for benefits against the plan.
.
Responsibility for Claims Procedure
Section 503 of such Act (29 U.S.C. 1133) is
amended by inserting (a) In general.—
before In
accordance
, and by adding at the end the following new
subsection:
Association Health Plans
The terms of each association health plan which is or has been certified under part 8 shall require the board of trustees or the named fiduciary (as applicable) to ensure that the requirements of this section are met in connection with claims filed under the plan.
.
Cooperation between Federal and State authorities
Section 506 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1136) is amended by adding at the end the following new subsection:
Consultation With States With Respect to Association Health Plans
Agreements with states
The Secretary shall consult with the State recognized under paragraph (2) with respect to an association health plan regarding the exercise of—
the Secretary’s authority under sections 502 and 504 to enforce the requirements for certification under part 8; and
the Secretary’s authority to certify association health plans under part 8 in accordance with regulations of the Secretary applicable to certification under part 8.
Recognition of primary domicile state
In carrying out paragraph (1), the Secretary shall ensure that only one State will be recognized, with respect to any particular association health plan, as the State with which consultation is required. In carrying out this paragraph—
in the case of a plan which provides health insurance coverage (as defined in section 812(a)(3)), such State shall be the State with which filing and approval of a policy type offered by the plan was initially obtained, and
in any other case, the Secretary shall take into account the places of residence of the participants and beneficiaries under the plan and the State in which the trust is maintained.
.
Effective date and transitional and other rules
Effective Date
The amendments made by this subtitle shall take effect 1 year after the date of the enactment of this Act. The Secretary of Labor shall first issue all regulations necessary to carry out the amendments made by this subtitle within 1 year after the date of the enactment of this Act.
Treatment of Certain Existing Health Benefits Programs
In general
In any case in which, as of the date of the enactment of this Act, an arrangement is maintained in a State for the purpose of providing benefits consisting of medical care for the employees and beneficiaries of its participating employers, at least 200 participating employers make contributions to such arrangement, such arrangement has been in existence for at least 10 years, and such arrangement is licensed under the laws of one or more States to provide such benefits to its participating employers, upon the filing with the applicable authority (as defined in section 812(a)(5) of the Employee Retirement Income Security Act of 1974 (as amended by this subtitle)) by the arrangement of an application for certification of the arrangement under part 8 of subtitle B of title I of such Act—
such arrangement shall be deemed to be a group health plan for purposes of title I of such Act;
the requirements of sections 801(a) and 803(a) of the Employee Retirement Income Security Act of 1974 shall be deemed met with respect to such arrangement;
the requirements of section 803(b) of such Act shall be deemed met, if the arrangement is operated by a board of directors which—
is elected by the participating employers, with each employer having one vote; and
has complete fiscal control over the arrangement and which is responsible for all operations of the arrangement;
the requirements of section 804(a) of such Act shall be deemed met with respect to such arrangement; and
the arrangement may be certified by any applicable authority with respect to its operations in any State only if it operates in such State on the date of certification.
Definitions
For
purposes of this subsection, the terms group health plan,
medical care, and participating employer shall have
the meanings provided in section 812 of the Employee Retirement Income Security Act of
1974, except that the reference in paragraph (7) of such section to
an association health plan
shall be deemed a reference to an
arrangement referred to in this subsection.
Purchasing insurance across State lines
Cooperative governing of individual health insurance coverage
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 new part:
Cooperative Governing of Individual Health Insurance Coverage
Definitions
In this part:
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.
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.
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.
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).
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.
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—
to meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or
to pay other obligations in the normal course of business.
Covered laws
In general
The term covered laws means the laws, rules, regulations, agreements, and orders governing the insurance business pertaining to—
individual health insurance coverage issued by a health insurance issuer;
the offer, sale, rating (including medical underwriting), renewal, and issuance of individual health insurance coverage to an individual;
the provision to an individual in relation to individual health insurance coverage of health care and insurance related services;
the provision to an individual in relation to individual health insurance coverage of management, operations, and investment activities of a health insurance issuer; and
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.
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.
State
The term State means the 50 States and includes the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.
Unfair claims settlement practices
The term unfair claims settlement practices means only the following practices:
Knowingly misrepresenting to claimants and insured individuals relevant facts or policy provisions relating to coverage at issue.
Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under policies.
Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims arising under policies.
Failing to effectuate prompt, fair, and equitable settlement of claims submitted in which liability has become reasonably clear.
Refusing to pay claims without conducting a reasonable investigation.
Failing to affirm or deny coverage of claims within a reasonable period of time after having completed an investigation related to those claims.
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.
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 his or her beneficiary was entitled by reference to written or printed advertising material accompanying or made part of an application.
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.
Failing to provide forms necessary to present claims within 15 calendar days of a requests with reasonable explanations regarding their use.
Attempting to cancel a policy in less time than that prescribed in the policy or by the law of the primary State.
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:
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:
An application for the issuance or renewal of an insurance policy or reinsurance contract.
The rating of an insurance policy or reinsurance contract.
A claim for payment or benefit pursuant to an insurance policy or reinsurance contract.
Premiums paid on an insurance policy or reinsurance contract.
Payments made in accordance with the terms of an insurance policy or reinsurance contract.
A document filed with the commissioner or the chief insurance regulatory official of another jurisdiction.
The financial condition of an insurer or reinsurer.
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.
The issuance of written evidence of insurance.
The reinstatement of an insurance policy.
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.
Transaction of the business of insurance in violation of laws requiring a license, certificate of authority or other legal authority for the transaction of the business of insurance.
Attempt to commit, aiding or abetting in the commission of, or conspiracy to commit the acts or omissions specified in this paragraph.
Application of law
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.
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—
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—
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;
to register with and designate the State insurance commissioner as its agent solely for the purpose of receiving service of legal documents or process;
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—
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
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;
to comply with a lawful order issued—
in a delinquency proceeding commenced by the State insurance commissioner if there has been a finding of financial impairment under subparagraph (C); or
in a voluntary dissolution proceeding;
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;
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;
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;
to comply with any State law regarding unfair claims settlement practices (as defined in section 2795(9)); or
to comply with the applicable requirements for independent review under section 2798 with respect to coverage offered in the State;
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
otherwise discriminate against the issuer issuing insurance in both the primary State and in any secondary State.
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:
Notice 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.
.
Prohibition on Certain Reclassifications and Premium Increases
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—
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
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.
Construction
Nothing in paragraph (1) shall be construed to prohibit a health insurance issuer—
from terminating or discontinuing coverage or a class of coverage in accordance with subsections (b) and (c) of section 2742;
from raising premium rates for all policy holders within a class based on claims experience;
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—
are disclosed to the consumer in the insurance contract;
are based on specific wellness activities that are not applicable to all individuals; and
are not obtainable by all individuals to whom coverage is offered;
from reinstating lapsed coverage; or
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.
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.
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.
Documents for Submission to State Insurance Commissioner
Each health insurance issuer issuing individual health insurance coverage in both primary and secondary States shall submit—
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 copy of the plan of operation or 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);
written notice of any change in its designation of its primary State; and
written notice from the issuer of the issuer’s compliance with all the laws of the primary State; and
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 member of the American Academy of Actuaries; or
a qualified loss reserve specialist.
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—
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
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 section 2796(b)(1).
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 section 2796(b)(1).
State Powers To Enforce State Laws
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).
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.
States’ Authority To Sue
Nothing in this section shall affect the authority of any State to bring action in any Federal or State court.
Generally Applicable Laws
Nothing in this section shall be construed to affect the applicability of State laws generally applicable to persons or corporations.
Guaranteed Availability of Coverage to HIPAA 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.
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.
Independent external appeals procedures
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—
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
in any case in
which the requirements of subparagraph (A) are not met with respect to the
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.
Qualifications of Independent Medical Reviewers
In the case of any independent review mechanism referred to in subsection (a)(2)—
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—
each independent medical reviewer meets the qualifications described in paragraphs (2) and (3);
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
compensation provided by the issuer to each reviewer is consistent with paragraph (6).
Licensure and expertise
Each independent medical reviewer shall be a physician (allopathic or osteopathic) or health care professional who—
is appropriately credentialed or licensed in 1 or more States to deliver health care services; and
typically treats the condition, makes the diagnosis, or provides the type of treatment under review.
Independence
In general
Subject to subparagraph (B), each independent medical reviewer in a case shall—
not be a related party (as defined in paragraph (7));
not have a material familial, financial, or professional relationship with such a party; and
not otherwise have a conflict of interest with such a party (as determined under regulations).
Exception
Nothing in subparagraph (A) shall be construed to—
prohibit an individual, solely on the basis of affiliation with the issuer, from serving as an independent medical reviewer if—
a non-affiliated individual is not reasonably available;
the affiliated individual is not involved in the provision of items or services in the case under review;
the fact of such an affiliation is disclosed to the issuer and the enrollee (or authorized representative) and neither party objects; and
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;
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
prohibit receipt of compensation by an independent medical reviewer from an entity if the compensation is provided consistent with paragraph (6).
Practicing health care professional in same field
In general
In a case involving treatment, or the provision of items or services—
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
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.
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.
Pediatric expertise
In the case of an external review relating to a child, a reviewer shall have expertise under paragraph (2) in pediatrics.
Limitations on reviewer compensation
Compensation provided by the issuer to an independent medical reviewer in connection with a review under this section shall—
not exceed a reasonable level; and
not be contingent on the decision rendered by the reviewer.
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:
The issuer involved, or any fiduciary, officer, director, or employee of the issuer.
The enrollee (or authorized representative).
The health care professional that provides the items or services involved in the denial.
The institution at which the items or services (or treatment) involved in the denial are provided.
The manufacturer of any drug or other item that is included in the items or services involved in the denial.
Any other party determined under any regulations to have a substantial interest in the denial involved.
Definitions
For purposes of this subsection:
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.
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.
Enforcement
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.
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).
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.
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.
.
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.
GAO Ongoing Study and Reports
Study
The Comptroller General of the United States shall conduct an ongoing study concerning the effect of the amendment made by subsection (a) on—
the number of uninsured and under-insured;
the availability and cost of health insurance policies for individuals with pre-existing medical conditions;
the availability and cost of health insurance policies generally;
the elimination or reduction of different types of benefits under health insurance policies offered in different States; and
cases of fraud or abuse relating to health insurance coverage offered under such amendment and the resolution of such cases.
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).
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.
Protecting Patients from Rescissions
Opportunity for independent, external third party reviews of certain nonrenewals and discontinuations, including rescissions, of individual health insurance coverage
Clarification regarding application of guaranteed renewability of individual health insurance coverage
Section 2742 of the Public Health Service Act (42 U.S.C. 300gg–42) is amended—
in its heading, by
inserting , continuation in force, including prohibition of
rescission,
after guaranteed renewability
;
in subsection (a),
by inserting , including without rescission,
after
continue in force
; and
in subsection
(b)(2), by inserting before the period at the end the following: ,
including intentional concealment of material facts regarding a health
condition related to the condition for which coverage is being
claimed
.
Opportunity for independent, external third party review in certain cases
Subpart 1 of part B of title XXVII of the Public Health Service Act is amended by adding at the end the following new section:
Opportunity for independent, external third party review in certain cases
Notice and review right
If a health insurance issuer determines to nonrenew or not continue in force, including rescind, health insurance coverage for an individual in the individual market on the basis described in section 2742(b)(2) before such nonrenewal, discontinuation, or rescission, may take effect the issuer shall provide the individual with notice of such proposed nonrenewal, discontinuation, or rescission and an opportunity for a review of such determination by an independent, external third party under procedures specified by the Secretary.
Independent determination
If the individual requests such review by an independent, external third party of a nonrenewal, discontinuation, or rescission of health insurance coverage, the coverage shall remain in effect until such third party determines that the coverage may be nonrenewed, discontinued, or rescinded under section 2742(b)(2).
.
Effective date
The amendments made by this section shall apply after the date of the enactment of this Act with respect to health insurance coverage issued before, on, or after such date.
Promoting patient choice
Credit for small employers adopting auto-Enrollment and defined contribution options
Credit for small employers adopting auto-enrollment and defined contribution options
In general
Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business-related credits) is amended by adding at the end the following new section:
Auto-enrollment and defined contribution option for health benefits plans of small employers
In general
For purposes of section 38, in the case of a small employer, the health benefits plan implementation credit determined under this section for the taxable year is an amount equal to 100 percent of the amount paid or incurred by the taxpayer during the taxable year for qualified health benefits expenses.
Limitation
The credit determined under subsection (a) with respect to any taxpayer for any taxable year shall not exceed the excess of—
$1,500, over
sum of the credits determined under subsection (a) with respect to such taxpayer for all preceding taxable years.
Qualified health benefits expenses
For purposes of this section, the term qualified health benefits auto-enrollment expenses means, with respect to any taxable year, amounts paid or incurred by the taxpayer during such taxable year for—
establishing auto-enrollment which meets the requirements of section 107 of the for coverage of a participant or beneficiary under a group health plan, or health insurance coverage offered in connection with such a plan, and
implementing the employer contribution option for health insurance coverage pursuant to section 5000(e)(2).
Qualified small employer
For purposes of this section, the term qualified small employer means any employer for any taxable year if the number of employees employed by such employer during such taxable year does not exceed 50. All employers treated as a single employer under subsection (a) or (b) of section 52 shall be treated as a single employer for purposes of this section.
No double benefit
No deduction or credit shall be allowed under any other provision of this chapter with respect to the amount of the credit determined under this section.
Termination
Subsection (a) shall not apply to any taxable year beginning after the date which is 2 years after the date of the enactment of this section.
.
Credit To be part of general business credit
Subsection (b) of section 38 of
such Code (relating to general business credit) is amended by striking
plus
at the end of paragraph (34), by striking the period at the
end of paragraph (35) and inserting , plus
, and by adding at
the end the following new paragraph:
in the case of a small employer (as defined in section 45R(d)), the health benefits plan implementation credit determined under section 45R(a).
.
Clerical amendment
The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 45Q the following new item:
Sec. 45R. Auto-enrollment and defined contribution option for health benefits plans of small employers.
.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Tax incentives for long-Term care insurance
Treatment of premiums on qualified long-term care insurance contracts
In general
Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to additional itemized deductions) is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section:
Premiums on qualified long-term care insurance contracts
In general
In the case of an individual, there shall be allowed as a deduction an amount equal to the applicable percentage of eligible long-term care premiums (as defined in section 213(d)(10)) paid during the taxable year for coverage for the taxpayer and the taxpayer’s spouse and dependents under a qualified long-term care insurance contract (as defined in section 7702B(b)).
Applicable percentage
For purposes of subsection (a), the applicable percentage shall be determined in accordance with the following table:
| For taxable years beginning | The applicable |
| in calendar year— | percentage is— |
| 2010 or 2011 | 25 |
| 2012 | 35 |
| 2013 | 65 |
| 2014 or thereafter | 100. |
Coordination with other deductions
Any amount paid by a taxpayer for any qualified long-term care insurance contract to which subsection (a) applies shall not be taken into account in computing the amount allowable to the taxpayer as a deduction under section 162(l) or 213(a).
.
Long-Term care insurance permitted To be offered under cafeteria plans and flexible spending arrangements
Cafeteria plans
The last sentence of section 125(f) of such Code (defining
qualified benefits) is amended by inserting before the period at the end
; except that such term shall include the payment of premiums for any
qualified long-term care insurance contract (as defined in section 7702B) to
the extent the amount of such payment does not exceed the eligible long-term
care premiums (as defined in section 213(d)(10)) for such
contract
.
Flexible spending arrangements
Section 106 of such Code (relating to contributions by an employer to accident and health plans) is amended by striking subsection (c) and redesignating subsections (d) and (e) as subsections (c) and (d), respectively.
Conforming amendments
Section 62(a) of such Code is amended by inserting before the last sentence at the end the following new paragraph:
Premiums on qualified long-term care insurance contracts
The deduction allowed by section 224.
.
Sections
223(b)(4)(B), 223(d)(4)(C), 223(f)(3)(B), 3231(e)(11), 3306(b)(18),
3401(a)(22), 4973(g)(1), and 4973(g)(2)(B)(i) of such Code are each amended by
striking section 106(d)
and inserting section
106(c)
.
Section
223(c)(1)(B)(iii)(II) of such Code is amended by striking 106(e)
and inserting 106(d)
.
Section 6041 of such Code is amended—
in subsection (f)(1) by striking (as
defined in section 106(c)(2))
, and
by adding at the end the following new subsection:
Flexible spending arrangement defined
For purposes of this section, a flexible spending arrangement is a benefit program which provides employees with coverage under which—
specified incurred expenses may be reimbursed (subject to reimbursement maximums and other reasonable conditions), and
the maximum amount of reimbursement which is reasonably available to a participant for such coverage is less than 500 percent of the value of such coverage.
.
The table of sections for part VII of subchapter B of chapter 1 of such Code is amended by striking the last item and inserting the following new items:
Sec. 224. Premiums on qualified long-term care insurance contracts.
Sec. 225. Cross reference.
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2009.
Credit for taxpayers with long-term care needs
In general
Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25D the following new section:
Credit for taxpayers with long-term care needs
Allowance of credit
In general
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable credit amount multiplied by the number of applicable individuals with respect to whom the taxpayer is an eligible caregiver for the taxable year.
Applicable credit amount
For purposes of paragraph (1), the applicable credit amount shall be determined in accordance with the following table:
| For taxable years beginning | The applicable |
| in calendar year— | credit amount is— |
| 2010 | 1,500 |
| 2011 | 2,000 |
| 2012 | 2,500 |
| 2013 or thereafter | 3,000. |
Limitation based on adjusted gross income
In general
The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $100 for each $1,000 (or fraction thereof) by which the taxpayer’s modified adjusted gross income exceeds the threshold amount. For purposes of the preceding sentence, the term modified adjusted gross income means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.
Threshold amount
For purposes of paragraph (1), the term threshold amount means—
$150,000 in the case of a joint return, and
$75,000 in any other case.
Indexing
In the case of any taxable year beginning in a calendar year after 2010, each dollar amount contained in paragraph (2) shall be increased by an amount equal to the product of—
such dollar amount, and
the medical care
cost adjustment determined under section 213(d)(10)(B)(ii) for the calendar
year in which the taxable year begins, determined by substituting August
2009
for August 1996
in subclause (II) thereof.
Definitions
For purposes of this section:
Applicable individual
In general
The term applicable individual means, with respect to any taxable year, any individual who has been certified, before the due date for filing the return of tax for the taxable year (without extensions), by a physician (as defined in section 1861(r)(1) of the Social Security Act) as being an individual with long-term care needs described in subparagraph (B) for a period—
which is at least 180 consecutive days, and
a portion of which occurs within the taxable year.
Individuals with long-term care needs
An individual is described in this subparagraph if the individual meets any of the following requirements:
The individual is at least 6 years of age and—
is unable to perform (without substantial assistance from another individual) at least 3 activities of daily living (as defined in section 7702B(c)(2)(B)) due to a loss of functional capacity, or
requires substantial supervision to protect such individual from threats to health and safety due to severe cognitive impairment and is unable to perform, without reminding or cuing assistance, at least 1 activity of daily living (as so defined) or to the extent provided in regulations prescribed by the Secretary (in consultation with the Secretary of Health and Human Services), is unable to engage in age appropriate activities.
The individual is at least 2 but not 6 years of age and is unable due to a loss of functional capacity to perform (without substantial assistance from another individual) at least 2 of the following activities: eating, transferring, or mobility.
The individual is under 2 years of age and requires specific durable medical equipment by reason of a severe health condition or requires a skilled practitioner trained to address the individual’s condition to be available if the individual’s parents or guardians are absent.
Eligible caregiver
In general
A taxpayer shall be treated as an eligible caregiver for any taxable year with respect to the following individuals:
The taxpayer.
The taxpayer’s spouse.
An individual with respect to whom the taxpayer is allowed a deduction under section 151(c) for the taxable year.
An individual who would be described in clause (iii) for the taxable year if section 151(c) were applied by substituting for the exemption amount an amount equal to the sum of the exemption amount, the standard deduction under section 63(c)(2)(C), and any additional standard deduction under section 63(c)(3) which would be applicable to the individual if clause (iii) applied.
An individual who would be described in clause (iii) for the taxable year if—
the requirements of clause (iv) are met with respect to the individual, and
the requirements of subparagraph (B) are met with respect to the individual in lieu of the support test under subsection (c)(1)(D) or (d)(1)(C) of section 152.
Residency test
The requirements of this subparagraph are met if an individual has as his principal place of abode the home of the taxpayer and—
in the case of an individual who is an ancestor or descendant of the taxpayer or the taxpayer’s spouse, is a member of the taxpayer’s household for over half the taxable year, or
in the case of any other individual, is a member of the taxpayer’s household for the entire taxable year.
Special rules where more than 1 eligible caregiver
In general
If more than 1 individual is an eligible caregiver with respect to the same applicable individual for taxable years ending with or within the same calendar year, a taxpayer shall be treated as the eligible caregiver if each such individual (other than the taxpayer) files a written declaration (in such form and manner as the Secretary may prescribe) that such individual will not claim such applicable individual for the credit under this section.
No agreement
If each individual required under clause (i) to file a written declaration under clause (i) does not do so, the individual with the highest adjusted gross income shall be treated as the eligible caregiver.
Married individuals filing separately
In the case of married individuals filing separately, the determination under this subparagraph as to whether the husband or wife is the eligible caregiver shall be made under the rules of clause (ii) (whether or not one of them has filed a written declaration under clause (i)).
Identification requirement
No credit shall be allowed under this section to a taxpayer with respect to any applicable individual unless the taxpayer includes the name and taxpayer identification number of such individual, and the identification number of the physician certifying such individual, on the return of tax for the taxable year.
Taxable year must be full taxable year
Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.
.
Conforming amendments
Section 6213(g)(2)
of such Code is amended by striking and
at the end of
subparagraph (L), by striking the period at the end of subparagraph (M) and
inserting , and
, and by inserting after subparagraph (M) the
following new subparagraph:
an omission of a correct TIN or physician identification required under section 25E(d) (relating to credit for taxpayers with long-term care needs) to be included on a return.
.
The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 25D the following new item:
Sec. 25E. Credit for taxpayers with long-term care needs.
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2009.
Additional consumer protections for long-term care insurance
Additional protections applicable to long-Term care insurance
Subparagraphs (A) and (B) of section 7702B(g)(2) of the Internal Revenue Code of 1986 (relating to requirements of model regulation and Act) are amended to read as follows:
In general
The requirements of this paragraph are met with respect to any contract if such contract meets—
Model regulation
The following requirements of the model regulation:
Section 6A (relating to guaranteed renewal or noncancellability), other than paragraph (5) thereof, and the requirements of section 6B of the model Act relating to such section 6A.
Section 6B (relating to prohibitions on limitations and exclusions) other than paragraph (7) thereof.
Section 6C (relating to extension of benefits).
Section 6D (relating to continuation or conversion of coverage).
Section 6E (relating to discontinuance and replacement of policies).
Section 7 (relating to unintentional lapse).
Section 8 (relating to disclosure), other than sections 8F, 8G, 8H, and 8I thereof.
Section 11 (relating to prohibitions against post-claims underwriting).
Section 12 (relating to minimum standards).
Section 13 (relating to requirement to offer inflation protection).
Section 25 (relating to prohibition against preexisting conditions and probationary periods in replacement policies or certificates).
The provisions of section 26 relating to contingent nonforfeiture benefits, if the policyholder declines the offer of a nonforfeiture provision described in paragraph (4).
Model Act
The following requirements of the model Act:
Section 6C (relating to preexisting conditions).
Section 6D (relating to prior hospitalization).
The provisions of section 8 relating to contingent nonforfeiture benefits, if the policyholder declines the offer of a nonforfeiture provision described in paragraph (4).
Definitions
For purposes of this paragraph:
Model provisions
The terms model regulation and model Act mean the long-term care insurance model regulation, and the long-term care insurance model Act, respectively, promulgated by the National Association of Insurance Commissioners (as adopted as of December 31, 2008).
Coordination
Any provision of the model regulation or model Act listed under clause (i) or (ii) of subparagraph (A) shall be treated as including any other provision of such regulation or Act necessary to implement the provision.
Determination
For purposes of this section and section 4980C, the determination of whether any requirement of a model regulation or the model Act has been met shall be made by the Secretary.
.
Excise tax
Paragraph (1) of section 4980C(c) of the Internal Revenue Code of 1986 (relating to requirements of model provisions) is amended to read as follows:
Requirements of model provisions
Model regulation
The following requirements of the model regulation must be met:
Section 9 (relating to required disclosure of rating practices to consumer).
Section 14 (relating to application forms and replacement coverage).
Section 15 (relating to reporting requirements).
Section 22 (relating to filing requirements for marketing).
Section 23 (relating to standards for marketing), including inaccurate completion of medical histories, other than paragraphs (1), (6), and (9) of section 23C.
Section 24 (relating to suitability).
Section 29 (relating to standard format outline of coverage).
Section 30 (relating to requirement to deliver shopper's guide).
Model Act
The following requirements of the model Act must be met:
Section 6F (relating to right to return).
Section 6G (relating to outline of coverage).
Section 6H (relating to requirements for certificates under group plans).
Section 6J (relating to policy summary).
Section 6K (relating to monthly reports on accelerated death benefits).
Section 7 (relating to incontestability period).
Definitions
For purposes of this paragraph, the terms model regulation and model Act have the meanings given such terms by section 7702B(g)(2)(B).
.
Effective date
The amendments made by this section shall apply to policies issued after December 31, 2009.
Comparative effectiveness research
Prohibition on Certain Uses of Data Obtained from Comparative Effectiveness Research; Accounting for Personalized Medicine and Differences in Patient Treatment Response
In general
Notwithstanding any other provision of law, the Secretary of Health and Human Services—
shall not use data obtained from the conduct of comparative effectiveness research, including such research that is conducted or supported using funds appropriated under the American Recovery and Reinvestment Act of 2009 (Public Law 111–5), to deny coverage of an item or service under a Federal health care program (as defined in section 1128B(f) of the Social Security Act (42 U.S.C. 1320a–7b(f))); and
shall ensure that comparative effectiveness research conducted or supported by the Federal Government accounts for factors contributing to differences in the treatment response and treatment preferences of patients, including patient-reported outcomes, genomics and personalized medicine, the unique needs of health disparity populations, and indirect patient benefits.
Rule of construction
Nothing in this section shall be construed as affecting the authority of the Commissioner of Food and Drugs under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) or the Public Health Service Act (42 U.S.C. 201 et seq.).
Programs of health promotion or disease prevention
Programs of health promotion or disease prevention
In general
Nothing in the Public Health Service Act, Employee Retirement Income Security Act of 1974, or the Internal Revenue Code of 1986 (or any amendment made by this Act) shall be applied, administered, or interpreted to prevent an employer from establishing premium discounts or rebates, or modifying copayments or deductibles, in the case of employees who adhere to, or participate in, a program of health promotion or disease prevention which meets the requirements of subsection (b).
Programs of health promotion or disease prevention to which section applies
General provisions
General rule
For purposes of paragraph (2)(B), a program of health
promotion or disease prevention (referred to in this subsection as a
wellness program
) shall be a program that is designed to promote
health or prevent disease that meets the applicable requirements of this
subsection.
No conditions based on health status factor
If none of the conditions for obtaining a premium discount or rebate or other reward for participation in a wellness program is based on an individual satisfying a standard that is related to a health status factor, such wellness program shall not violate this section if participation in the program is made available to all similarly situated individuals and the requirements of paragraph (2) are complied with.
Conditions based on health status factor
If any of the conditions for obtaining a premium discount or rebate or other reward for participation in a wellness program is based on an individual satisfying a standard that is related to a health status factor, such wellness program shall not violate this section if the requirements of paragraph (3) are complied with.
Wellness programs not subject to requirements
If none of the conditions for obtaining a premium discount or rebate or other reward under a wellness program as described in paragraph (1)(B) are based on an individual satisfying a standard that is related to a health status factor (or if such a wellness program does not provide such a reward), the wellness program shall not violate this section if participation in the program is made available to all similarly situated individuals. The following programs shall not have to comply with the requirements of paragraph (3) if participation in the program is made available to all similarly situated individuals:
A program that reimburses all or part of the cost for memberships in a fitness center.
A diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes.
A program that encourages preventive care related to a health condition through the waiver of the copayment or deductible requirement under an individual or group health plan for the costs of certain items or services related to a health condition (such as prenatal care or well-baby visits).
A program that reimburses individuals for the costs of smoking cessation programs without regard to whether the individual quits smoking.
A program that provides a reward to individuals for attending a periodic health education seminar.
Wellness programs subject to requirements
If any of the conditions for obtaining a premium discount, rebate, or reward under a wellness program as described in paragraph (1)(C) is based on an individual satisfying a standard that is related to a health status factor, the wellness program shall not violate this section if the following requirements are complied with:
The reward for the wellness program, together with the reward for other wellness programs with respect to the plan that requires satisfaction of a standard related to a health status factor, shall not exceed 50 percent of the cost of employee-only coverage under the plan. If, in addition to employees or individuals, any class of dependents (such as spouses or spouses and dependent children) may participate fully in the wellness program, such reward shall not exceed 50 percent of the cost of the coverage in which an employee or individual and any dependents are enrolled. For purposes of this paragraph, the cost of coverage shall be determined based on the total amount of employer and employee contributions for the benefit package under which the employee is (or the employee and any dependents are) receiving coverage. A reward may be in the form of a discount or rebate of a premium or contribution, a waiver of all or part of a cost-sharing mechanism (such as deductibles, copayments, or coinsurance), the absence of a surcharge, or the value of a benefit that would otherwise not be provided under the plan.
The wellness program shall be reasonably designed to promote health or prevent disease. A program complies with the preceding sentence if the program has a reasonable chance of improving the health of, or preventing disease in, participating individuals and it is not overly burdensome, is not a subterfuge for discriminating based on a health status factor, and is not highly suspect in the method chosen to promote health or prevent disease. The plan or issuer shall evaluate the program’s reasonableness at least once per year.
The plan shall give individuals eligible for the program the opportunity to qualify for the reward under the program at least once each year.
The full reward under the wellness program shall be made available to all similarly situated individuals. For such purpose, the following applies:
The reward is not available to all similarly situated individuals for a period unless the wellness program allows—
for a reasonable alternative standard (or waiver of the otherwise applicable standard) for obtaining the reward for any individual for whom, for that period, it is unreasonably difficult due to a medical condition to satisfy the otherwise applicable standard; and
for a reasonable alternative standard (or waiver of the otherwise applicable standard) for obtaining the reward for any individual for whom, for that period, it is medically inadvisable to attempt to satisfy the otherwise applicable standard.
If reasonable under the circumstances, the plan or issuer may seek verification, such as a statement from an individual’s physician, that a health status factor makes it unreasonably difficult or medically inadvisable for the individual to satisfy or attempt to satisfy the otherwise applicable standard.
The plan or issuer involved shall disclose in all plan materials describing the terms of the wellness program the availability of a reasonable alternative standard (or the possibility of waiver of the otherwise applicable standard) required under subparagraph (D). If plan materials disclose that such a program is available, without describing its terms, the disclosure under this subparagraph shall not be required.
Existing programs
Nothing in this section shall prohibit a program of health promotion or disease prevention that was established prior to the date of enactment of this section and applied with all applicable regulations, and that is operating on such date, from continuing to be carried out for as long as such regulations remain in effect.
Regulations
Nothing in this section shall be construed as prohibiting the Secretaries of Labor, Health and Human Services, or the Treasury from promulgating regulations in connection with this section.
Strengthening safety net programs
Beneficiary choice under Medicaid and SCHIP
Easing administrative barriers to State cooperation with employer-sponsored insurance coverage
Requiring some coverage for employer-Sponsored insurance
In general
Section 2102(a) of the Social Security Act (42 U.S.C. 1397b(a)) is amended—
in paragraph (6),
by striking and
at the end;
in paragraph (7),
by striking the period at the end and inserting ; and
;
and
by adding at the end the following new paragraph:
effective for plan years beginning on or after October 1, 2010, how the plan will provide for child health assistance with respect to targeted low-income children who have access to coverage under a group health plan.
.
Effective date
The amendments made by paragraph (1) shall apply beginning with fiscal year 2011.
Federal financial participation for employer-Sponsored insurance
Section 2105 of such Act (42 U.S.C. 1397d) is amended—
in subsection
(a)(1)(C), by inserting before the semicolon at the end the following:
and, subject to paragraph (3)(C) of subsection (c), in the form of
payment of the premiums for coverage under a group health plan that includes
coverage of targeted low-income children and benefits supplemental to such
coverage
; and
by amending paragraph (3) of subsection (c) to read as follows:
Purchase of employer-sponsored insurance
In general
Payment may be made to a State under subsection (a)(1)(C), subject to the provisions of this paragraph, for the purchase of family coverage under a group health plan that includes coverage of targeted low-income children unless such coverage would otherwise substitute for coverage that would be provided to such children but for the purchase of family coverage.
Waiver of certain provisions
With respect to coverage described in subparagraph (A)—
notwithstanding section 2102, no minimum benefits requirement (other than those otherwise applicable with respect to services within the categories of basic services described in section 2103(c)(1) and emergency services) under this title shall apply; and
no limitation on beneficiary cost-sharing otherwise applicable under this title or title XIX shall apply.
Required provision of supplemental benefits
If the coverage described in subparagraph (A) does not provide coverage for the services in each of the categories of basic services described in section 2103(c)(1) and for emergency services, the State child health plan shall provide coverage of such services as supplemental benefits.
Limitation on FFP
The amount of the payment under subsection (a)(1)(C) for coverage described in subparagraph (A) (and supplemental benefits under subparagraph (C) for individuals so covered) during a fiscal year may not exceed the product of—
the national per capita expenditure under this title (taking into account both Federal and State expenditures) for the previous fiscal year (as determined by the Secretary using the best available data);
the enhanced FMAP for the State and fiscal year involved; and
the number of targeted low-income children for whom such coverage is provided.
Voluntary enrollment
A State child health plan—
may not require a targeted low-income child to enroll in family coverage described in subparagraph (A) in order to obtain child health assistance under this title;
before providing such child health assistance for such coverage of a child, shall make available (which may be through an Internet website or other means) to the parent or guardian of the child information on the coverage available under this title, including benefits and cost-sharing; and
shall provide at least one opportunity per fiscal year for beneficiaries to switch coverage under this title from coverage described in subparagraph (A) to the coverage that is otherwise made available under this title.
Information on coverage options
A State child health plan shall—
describe how the State will notify potential beneficiaries of coverage described in subparagraph (A);
provide such notification in writing at least during the initial application for enrollment under this title and during redeterminations of eligibility if the individual was enrolled before October 1, 2009; and
post a description of these coverage options on any official Internet website that may be established by the State in connection with the plan.
Semiannual verification of coverage
If coverage described in subparagraph (A) is provided under a group health plan with respect to a targeted low-income child, the State child health plan shall provide for the collection, at least once every six months, of proof from the plan that the child is enrolled in such coverage.
Rule of construction
Nothing in this section is to be construed to prohibit a State from—
offering wrap around benefits in order for a group health plan to meet any State-established minimum benefit requirements;
establishing a cost-effectiveness test to qualify for coverage under such a plan;
establishing limits on beneficiary cost-sharing under such a plan;
paying all or part of a beneficiary’s cost-sharing requirements under such a plan;
paying less than the full cost of the employee’s share of the premium under such a plan, including prorating the cost of the premium to pay for only what the State determines is the portion of the premium that covers targeted low-income children;
using State funds to pay for benefits above the Federal upper limit established under subparagraph (D);
allowing beneficiaries enrolled in group health plans from changing plans to another coverage option available under this title at any time; or
providing any guidance or information it deems appropriate in order to help beneficiaries make an informed decision regarding the option to enroll in coverage described in subparagraph (A).
Group health plan defined
In this paragraph, the term group health plan has the meaning given such term in section 2791(a)(1) of the Public Health Service Act (42 U.S.C. 300gg–91(a)(1)).
Attestation requirement for certain higher income children
Effective October 1, 2011, any State that provides for child health assistance under this title for children in families with gross income (as determined without regard to any income disregards or expense exclusions) that exceeds 200 percent of the poverty line shall require, as a condition of eligibility for child health assistance under this title (other than in the form of premium assistance under this paragraph) that there must be executed an attestation (under penalty of perjury) that the child is not eligible for coverage under any group health plan.
.
Improving beneficiary choice in SCHIP
Requiring offering of alternative coverage options
Section 2102 of the Social Security Act (42 U.S.C. 1397b), as amended by section 1781, is amended—
in subsection (a)—
in paragraph (7),
by striking and
at the end;
in paragraph (8),
by striking the period at the end and inserting ; and
;
and
by adding at the end the following new paragraph:
effective for plan years beginning on or after October 1, 2010, how the plan will provide for child health assistance with respect to targeted low-income children through alternative coverage options in accordance with subsection (d).
; and
by adding at the end the following new subsection:
Alternative coverage options
In general
Effective October 1, 2010, a State child health plan shall provide for the offering of any qualified alternative coverage that a qualified entity seeks to offer to targeted low-income children through the plan in the State.
Application of uniform financial limitation for all alternative coverage options
With respect to all qualified alternative coverage offered in a State, the State child health plan shall establish a uniform dollar limitation on the per capita monthly amount that will be paid by the State to the qualified entity with respect to such coverage provided to a targeted low-income child. Such limitation may not be less than 90 percent of the per capita monthly payment made for coverage offered under the State child health plan that is not in the form of an alternative coverage option. Nothing in this paragraph shall be construed—
as requiring a State to provide for the full payment of premiums for qualified alternative coverage;
as preventing a State from charging additional premiums to cover the difference between the cost of qualified alternative coverage and the amount of such payment limitation; and
as preventing a State from using its own funds to provide a dollar limitation that exceeds the Federal financial participation as limited under section 2105(c)(8).
Qualified alternative coverage defined
In this section, the term qualified alternative coverage means health insurance coverage that—
meets the coverage requirements of section 2103 (other than cost-sharing requirements of such section); and
is offered by a qualified insurer, and not directly by the State.
Qualified insurer defined
In this section, the term qualified insurer means, with respect to a State, an entity that is licensed to offer health insurance coverage in the State.
.
Federal financial participation for qualified alternative coverage
Section 2105 of such Act (42 U.S.C. 1397d), as amended by sections 301(a) and 601(a) of the Children’s Health Insurance Program Reauthorization Act of 2009 (Public Law 111–5), is amended—
in subsection
(a)(1)(C), as amended by section 1781(b)(1), by inserting before the semicolon
at the end the following: and, subject to subsection (c)(12)(C), in the
form of payment of the premiums for coverage for qualified alternative
coverage
; and
by adding at the end of subsection (c) the following new paragraph:
Purchase of qualified alternative coverage
In general
Payment may be made to a State under subsection (a)(1)(C), subject to the provisions of this paragraph, for the purchase of qualified alternative coverage.
Waiver of certain provisions
With respect to coverage described in subparagraph (A), no limitation on beneficiary cost-sharing otherwise applicable under this title or title XIX shall apply.
Limitation on FFP
The amount of the payment under paragraph (1)(C) for coverage described in subparagraph (A) during a fiscal year in the aggregate for all such coverage in the State may not exceed the product of—
the national per capita expenditure under this title (taking into account both Federal and State expenditures) for the previous fiscal year (as determined by the Secretary using the best available data);
the enhanced FMAP for the State and fiscal year involved; and
the number of targeted low-income children for whom such coverage is provided.
Voluntary enrollment
A State child health plan—
may not require a targeted low-income child to enroll in coverage described in subparagraph (A) in order to obtain child health assistance under this title;
before providing such child health assistance for such coverage of a child, shall make available (which may be through an Internet website or other means) to the parent or guardian of the child information on the coverage available under this title, including benefits and cost-sharing; and
shall provide at least one opportunity per fiscal year for beneficiaries to switch coverage under this title from coverage described in subparagraph (A) to the coverage that is otherwise made available under this title.
Information on coverage options
A State child health plan shall—
describe how the State will notify potential beneficiaries of coverage described in subparagraph (A);
provide such notification in writing at least during the initial application for enrollment under this title and during redeterminations of eligibility if the individual was enrolled before October 1, 2009; and
post a description of these coverage options on any official website that may be established by the State in connection with the plan.
Rule of construction
Nothing in this section is to be construed to prohibit a State from—
establishing limits on beneficiary cost-sharing under such alternative coverage;
paying all or part of a beneficiary’s cost-sharing requirements under such coverage;
paying less than the full cost of a child’s share of the premium under such coverage, insofar as the premium for such coverage exceeds the limitation established by the State under subparagraph (C);
using State funds to pay for benefits above the Federal upper limit established under subparagraph (C); or
providing any guidance or information it deems appropriate in order to help beneficiaries make an informed decision regarding the option to enroll in coverage described in subparagraph (A).
.
Application to Medicaid
In accordance with rules established by the Secretary of Health and Human Services, the requirements imposed under a State child health plan under title XXI of the Social Security Act under the amendments made by the preceding sections of this subtitle shall apply in the same manner to a State plan under title XIX of such Act, except that—
such requirements shall not apply to individuals whose eligibility for medical assistance under such title is based on being aged, blind, or disabled or to individuals with a category of individuals described in section 1937(a)(2)(B) of such Act; and
the national per capita expenditures shall be determined based on a benchmark coverage described in section 1937(b)(1) of such Act but without regard to expenditures for individuals described in paragraph (1) or for nursing facility services and other long-term care services (as determined by the Secretary).
Expansion of health opportunity account program
In general
Section 613 of the Children’s Health Insurance Program Reauthorization Act of 2009 (Public Law 111–3) is repealed.
Expansion
Section 1938(a)(2) of the Social Security Act (42 U.S.C. 1396u–8(a)(2)) is amended—
in subparagraph (A) by striking everything following the first sentence; and
by striking subparagraph (B).
Verification requirements to prevent illegal aliens from receiving Medicaid benefits
Section 1904 of the Social Security Act (42 U.S.C. 1396c) is amended—
by striking
If the Secretary
and inserting the following:
Oversight
If the Secretary
; and
by adding at the end the following new subsection:
Preventing illegal aliens from receiving medicaid benefits
Verification as condition on funding
Notwithstanding any other provision of law, subject to paragraphs (3) and (4), the Secretary shall not provide funding under 1903(a) for medical assistance provided to an individual (other than emergency services unless such individual has been determined to be eligible for medical assistance under this title on the basis of—
United States citizenship or nationality through the verification process described in section 1903(x); or
qualified alien status through the immigration status verification system described in section 1137(d).
Rule of construction
Nothing in the America’s Affordable Health Choices Act of 2009 or the amendments made by that Act shall be construed as exempting any individual from the eligibility verification requirements specified in paragraph (1).
No application to DSH
Paragraph (1) shall not apply to or affect the payments described in section 1923(f) (relating to disproportionate share hospital payments).
No application to emergency medical services
Paragraph (1) shall not apply to emergency medical services described in section 1903(f), regardless of the status of the individual for whom such services are provided.
No impact on EMTALA
Nothing in this subsection shall be construed as affecting the application of the requirements of section 1867.
.
Community Health Centers
Increased funding
Section 330 of the Public Health Service Act (42 U.S.C. 254b) is amended—
in subsection (r)(1)—
in subparagraph
(D), by striking and
at the end;
in subparagraph
(E), by striking the period at the end and inserting ; and
;
and
by inserting at the end the following:
Such sums as may be necessary for each of fiscal years 2013 and 2019.
; and
by inserting after subsection (r) the following:
Additional funding
For the purpose of carrying out this section, in addition to any other amounts authorized to be appropriated for such purpose, there are authorized to be appropriated, out of any monies in the Public Health Investment Fund, the following:
For fiscal year 2010, $1,000,000,000.
For fiscal year 2011, $1,500,000,000.
For fiscal year 2012, $2,500,000,000.
For fiscal year 2013, $3,000,000,000.
For fiscal year 2014, $4,000,000,000.
For fiscal year 2015, $4,400,000,000.
For fiscal year 2016, $4,800,000,000.
For fiscal year 2017, $5,300,000,000.
For fiscal year 2018, $5,900,000,000.
For fiscal year 2019, $6,400,000,000.
.
Expanding health savings accounts
Allow both spouses to make catch-up contributions to the same HSA account
In general
Paragraph (3) of section 223(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
Special rule where both spouses are eligible individuals with 1 account
If—
an individual and the individual's spouse have both attained age 55 before the close of the taxable year, and
the spouse is not an account beneficiary of a health savings account as of the close of such year,
.
Effective date
The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Provisions relating to Medicare
Individuals over age 65 only enrolled in Medicare Part A
Section 223(b)(7) of the
Internal Revenue Code of 1986 (relating to contribution limitation on Medicare
eligible individuals) is amended by adding at the end the following new
sentence: This paragraph shall not apply to any individual during any
period the individual's only entitlement to such benefits is an entitlement to
hospital insurance benefits under part A of title XVIII of such Act pursuant to
an enrollment for such hospital insurance benefits under section 226(a)(1) of
such Act.
.
Medicare beneficiaries participating in Medicare advantage MSA may contribute their own money to their MSA
Subsection (b) of section 138 of such Code is amended by striking paragraph (2) and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Individuals eligible for veterans benefits for a service-connected disability
In general
Section 223(c)(1) of the Internal Revenue Code of 1986 (defining eligible individual) is amended by adding at the end the following new subparagraph:
Special rule for individuals eligible for certain veterans benefits
For purposes of subparagraph (A)(ii), an individual shall not be treated as covered under a health plan described in such subparagraph merely because the individual receives periodic hospital care or medical services for a service-connected disability under any law administered by the Secretary of Veterans Affairs but only if the individual is not eligible to receive such care or services for any condition other than a service-connected disability.
.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Individuals eligible for Indian Health Service assistance
In general
Section 223(c)(1) of the Internal Revenue Code of 1986, as amended by this title, is amended by adding at the end the following new subparagraph:
Special rule for individuals eligible for assistance under Indian Health Service programs
For purposes of subparagraph (A)(ii), an individual shall not be treated as covered under a health plan described in such subparagraph merely because the individual receives hospital care or medical services under a medical care program of the Indian Health Service or of a tribal organization.
.
Effective date
The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
FSA and HRA termination to fund HSAS
Eligible individuals include FSA and HRA participants
Section 223(c)(1)(B) of the Internal Revenue Code of 1986 is amended—
by striking
and
at the end of clause (ii),
by striking the
period at the end of clause (iii) and inserting , and
,
and
by inserting after clause (iii) the following new clause:
coverage under a health flexible spending arrangement or a health reimbursement arrangement in the plan year a qualified HSA distribution as described in section 106(e) is made on behalf of the individual if after the qualified HSA distribution is made and for the remaining duration of the plan year, the coverage provided under the health flexible spending arrangement or health reimbursement arrangement is converted to—
coverage that does not pay or reimburse any medical expense incurred before the minimum annual deductible under section 223(c)(2)(A)(i) (prorated for the period occurring after the qualified HSA distribution is made) is satisfied,
coverage that, after the qualified HSA distribution is made, does not pay or reimburse any medical expense incurred after the qualified HSA distribution is made other than preventive care as defined in section 223(c)(2)(3),
coverage that, after the qualified HSA distribution is made, pays or reimburses benefits for coverage described in section 223(c)(1)(B)(ii) (but not through insurance or for long-term care services),
coverage that, after the qualified HSA distribution is made, pays or reimburses benefits for permitted insurance as defined in section 223(c)(1)(B)(i) or coverage described in section 223(c)(1)(B)(ii) (but not for long-term care services),
coverage that, after the qualified HSA distribution is made, pays or reimburses only those medical expenses incurred after an individual’s retirement (and no expenses incurred before retirement), or
coverage that, after the qualified HSA distribution is made, is suspended, pursuant to an election made on or before the date the individual elects a qualified HSA distribution or, if later, on the date of the individual enrolls in a high deductible health plan (as defined in section 223(c)(2)), that does not pay or reimburse, at any time, any medical expense incurred during the suspension period except as defined in subclauses (I) through (V) above.
.
Qualified HSA distribution shall not affect flexible spending arrangement
Section 106(e)(1) of such Code is amended to read as follows:
In general
A plan shall not fail to be treated as a health flexible spending arrangement under this section, section 105, or section 125, or as a health reimbursement arrangement under this section or section 105, merely because such plan provides for a qualified HSA distribution.
.
FSA balances at year end shall not forfeit
Section 125(d)(2) of such Code is amended by adding at the end the following new subparagraph:
Exception for qualified HSA distributions
Subparagraph (A) shall not apply to the extent that there is an amount remaining in a health flexible spending account at the end of a plan year that an individual elects to contribute to a health savings account pursuant to a qualified HSA distribution (as defined in section 106(e)(2)).
.
Simplification of limitations on FSA and HRA rollovers
Section 106(e)(2) of such Code (relating to qualified HSA distribution) is amended to read as follows:
Qualified HSA distribution
In general
The term qualified HSA distribution means a distribution from a health flexible spending arrangement or health reimbursement arrangement to the extent that such distribution does not exceed the lesser of—
the balance in such arrangement as of the date of such distribution, or
the amount determined under subparagraph (B).
Dollar limitations
Distributions from a health flexible spending arrangement
A qualified HSA distribution from a health flexible spending arrangement shall not exceed the applicable amount.
Distributions from a health reimbursement arrangement
A qualified HSA distribution from a health reimbursement arrangement shall not exceed—
the applicable amount divided by 12, multiplied by
the number of months during which the individual is a participant in the health reimbursement arrangement.
Applicable amount
For purposes of this subparagraph, the applicable amount is—
$2,250 in the case of an eligible individual who has self-only coverage under a high deductible health plan at the time of such distribution, and
$4,500 in the case of an eligible individual who has family coverage under a high deductible health plan at the time of such distribution.
.
Elimination of additional tax for failure To maintain high deductible health plan coverage
Section 106(e) of such Code is amended—
by striking paragraph (3) and redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively, and
by striking subparagraph (A) of paragraph (3), as so redesignated, and redesignating subparagraphs (B) and (C) of such paragraph as subparagraphs (A) and (B) thereof, respectively.
Limited purpose FSAs and HRAs
Section 106(e) of such Code, as amended by this section, is amended by adding at the end the following new paragraph:
Limited purpose FSAs and HRAs
A plan shall not fail to be a health flexible spending arrangement or health reimbursement arrangement under this section or section 105 merely because the plan converts coverage for individuals who enroll in a high deductible health plan described in section 223(c)(2) to coverage described in section 223(c)(1)(B)(iv). Coverage for such individuals may be converted as of the date of enrollment in the high deductible health plan, without regard to the period of coverage under the health flexible spending arrangement or health reimbursement arrangement, and without requiring any change in coverage to individuals who do not enroll in a high deductible health plan.
.
Distribution amounts adjusted for cost-of-Living
Section 106(e) of such Code, as amended by this section, is amended by adding at the end the following new paragraph:
Cost-of-living adjustment
In general
In the case of any taxable year beginning after December
31, 2010, each of the dollar amounts in paragraph (2)(B)(iii) shall be
increased by an amount equal to such dollar amount, multiplied by the
cost-of-living adjustment determined under section 1(f)(3) for the calendar
year in which such taxable year begins by substituting calendar year
2009
for calendar year 1992
in subparagraph (B)
thereof.
Rounding
If any increase under paragraph (1) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.
.
Disclaimer of disqualifying coverage
Section 223(c)(1)(B) of such Code, as amended by this section, is amended—
by striking
and
at the end of clause (iii),
by striking the
period at the end of clause (iv) and inserting , and
, and
by inserting after clause (iv) the following new clause:
any coverage (including prospective coverage) under a health plan that is not a high deductible health plan which is disclaimed in writing, at the time of the creation or organization of the health savings account, including by execution of a trust described in subsection (d)(1) through a governing instrument that includes such a disclaimer, or by acceptance of an amendment to such a trust that includes such a disclaimer.
.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Purchase of health insurance from HSA account
In general
Paragraph (2) of section 223(d) of the Internal Revenue Code of 1986 (defining qualified medical expenses) is amended—
by striking subparagraphs (B) and (C), and
by inserting
and including payment for insurance)
after section
213(d)
.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Special rule for certain medical expenses incurred before establishment of account
In general
Paragraph (2) of section 223(d) of the Internal Revenue Code of 1986, as amended by this title, is amended by adding at the end the following new subparagraph:
Certain medical expenses incurred before establishment of account treated as qualified
An expense shall not fail to be treated as a qualified medical expense solely because such expense was incurred before the establishment of the health savings account if such expense was incurred—
during either—
the taxable year in which the health savings account was established, or
the preceding taxable year in the case of a health savings account established after the taxable year in which such expense was incurred but before the time prescribed by law for filing the return for such taxable year (not including extensions thereof), and
for medical care of an individual during a period that such individual was covered by a high deductible health plan and met the requirements of subsection (c)(1)(A)(ii) (after application of subsection (c)(1)(B)).
.
Effective date
The amendment made by this section shall apply to health savings accounts established during taxable years beginning after the date of the enactment of this Act.
Preventive care prescription drug clarification
Clarify use of drugs in preventive care
Subparagraph (C) of section 223(c)(2) of
the Internal Revenue Code of 1986 is amended by adding at the end the
following: Preventive care shall include prescription and
over-the-counter drugs and medicines which have the primary purpose of
preventing the onset of, further deterioration from, or complications
associated with chronic conditions, illnesses, or diseases.
.
Effective date
The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Qualified medical expenses
Certain exercise equipment and physical fitness programs treated as medical care
In general
Subsection (d) of section 213 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
Exercise equipment and physical fitness programs
In general
The term medical care shall include amounts paid—
to purchase or use equipment used in a program (including a self-directed program) of physical exercise,
to participate, or receive instruction, in a program of physical exercise, and
for membership dues in a fitness club the primary purpose of which is to provide access to equipment and facilities for physical exercise.
Limitation
Amounts treated as medical care under subparagraph (A) shall not exceed $1,000 with respect to any individual for any taxable year.
.
Effective date
The amendment made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.
Certain nutritional and dietary supplements To be treated as medical care
In general
Subsection (d) of section 213 of such Code, as amended by subsection (a), is amended by adding at the end the following new paragraph:
Nutritional and dietary supplements
In general
The term medical care shall include amounts paid to purchase herbs, vitamins, minerals, homeopathic remedies, meal replacement products, and other dietary and nutritional supplements.
Limitation
Amounts treated as medical care under subparagraph (A) shall not exceed $1,000 with respect to any individual for any taxable year.
Meal replacement product
For purposes of this paragraph, the term meal replacement product means any product that—
is permitted to bear labeling making a claim described in section 403(r)(3) of the Federal Food, Drug, and Cosmetic Act, and
is permitted to claim under such section that such product is low in fat and is a good source of protein, fiber, and multiple essential vitamins and minerals.
.
Effective date
The amendment made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.
Medical liability reform
Medical liability
Encouraging speedy resolution of claims
The time for the commencement of a health care lawsuit shall be 3 years after the date of manifestation of injury or 1 year after the claimant discovers, or through the use of reasonable diligence should have discovered, the injury, whichever occurs first. In no event shall the time for commencement of a health care lawsuit exceed 3 years after the date of manifestation of injury unless tolled for any of the following—
upon proof of fraud;
intentional concealment; or
the presence of a foreign body, which has no therapeutic or diagnostic purpose or effect, in the person of the injured person
Compensating patient injury
Unlimited Amount of Damages for Actual Economic Losses in Health Care Lawsuits
In any health care lawsuit, nothing in this subtitle shall limit a claimant’s recovery of the full amount of the available economic damages, notwithstanding the limitation in subsection (b).
Additional Noneconomic Damages
In any health care lawsuit, the amount of noneconomic damages, if available, may be as much as $250,000, regardless of the number of parties against whom the action is brought or the number of separate claims or actions brought with respect to the same injury.
No Discount of Award for Noneconomic Damages
Fair Share Rule
In any health care lawsuit, each party shall be liable for that party’s several share of any damages only and not for the share of any other person. Each party shall be liable only for the amount of damages allocated to such party in direct proportion to such party’s percentage of responsibility. Whenever a judgment of liability is rendered as to any party, a separate judgment shall be rendered against each such party for the amount allocated to such party. For purposes of this section, the trier of fact shall determine the proportion of responsibility of each party for the claimant’s harm.
Maximizing patient recovery
Court Supervision of Share of Damages Actually Paid to Claimants
In any health care lawsuit, the court shall supervise the arrangements for payment of damages to protect against conflicts of interest that may have the effect of reducing the amount of damages awarded that are actually paid to claimants. In particular, in any health care lawsuit in which the attorney for a party claims a financial stake in the outcome by virtue of a contingent fee, the court shall have the power to restrict the payment of a claimant’s damage recovery to such attorney, and to redirect such damages to the claimant based upon the interests of justice and principles of equity. In no event shall the total of all contingent fees for representing all claimants in a health care lawsuit exceed the following limits:
40 percent of the first $50,000 recovered by the claimant(s).
331/3 percent of the next $50,000 recovered by the claimant(s).
25 percent of the next $500,000 recovered by the claimant(s).
15 percent of any amount by which the recovery by the claimant(s) is in excess of $600,000.
Applicability
The limitations in this section shall apply whether the recovery is by judgment, settlement, mediation, arbitration, or any other form of alternative dispute resolution. In a health care lawsuit involving a minor or incompetent person, a court retains the authority to authorize or approve a fee that is less than the maximum permitted under this section. The requirement for court supervision in the first two sentences of subsection (a) applies only in civil actions.
Additional health benefits
In any health care lawsuit involving injury or wrongful death, any party may introduce evidence of collateral source benefits. If a party elects to introduce such evidence, any opposing party may introduce evidence of any amount paid or contributed or reasonably likely to be paid or contributed in the future by or on behalf of the opposing party to secure the right to such collateral source benefits. No provider of collateral source benefits shall recover any amount against the claimant or receive any lien or credit against the claimant’s recovery or be equitably or legally subrogated to the right of the claimant in a health care lawsuit involving injury or wrongful death. This section shall apply to any health care lawsuit that is settled as well as a health care lawsuit that is resolved by a fact finder. This section shall not apply to section 1862(b) (42 U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 1396a(a)(25)) of the Social Security Act.
Punitive damages
In General
Punitive damages may, if otherwise permitted by applicable State or Federal law, be awarded against any person in a health care lawsuit only if it is proven by clear and convincing evidence that such person acted with malicious intent to injure the claimant, or that such person deliberately failed to avoid unnecessary injury that such person knew the claimant was substantially certain to suffer. In any health care lawsuit where no judgment for compensatory damages is rendered against such person, no punitive damages may be awarded with respect to the claim in such lawsuit. No demand for punitive damages shall be included in a health care lawsuit as initially filed. A court may allow a claimant to file an amended pleading for punitive damages only upon a motion by the claimant and after a finding by the court, upon review of supporting and opposing affidavits or after a hearing, after weighing the evidence, that the claimant has established by a substantial probability that the claimant will prevail on the claim for punitive damages. At the request of any party in a health care lawsuit, the trier of fact shall consider in a separate proceeding—
whether punitive damages are to be awarded and the amount of such award; and
the amount of punitive damages following a determination of punitive liability.
Determining Amount of Punitive Damages
Factors considered
In determining the amount of punitive damages, if awarded, in a health care lawsuit, the trier of fact shall consider only the following—
the severity of the harm caused by the conduct of such party;
the duration of the conduct or any concealment of it by such party;
the profitability of the conduct to such party;
the number of products sold or medical procedures rendered for compensation, as the case may be, by such party, of the kind causing the harm complained of by the claimant;
any criminal penalties imposed on such party, as a result of the conduct complained of by the claimant; and
the amount of any civil fines assessed against such party as a result of the conduct complained of by the claimant.
Maximum award
The amount of punitive damages, if awarded, in a health care lawsuit may be as much as $250,000 or as much as two times the amount of economic damages awarded, whichever is greater. The jury shall not be informed of this limitation.
No Punitive Damages for Products That Comply With FDA Standards
In general
No punitive damages may be awarded against the manufacturer or distributor of a medical product, or a supplier of any component or raw material of such medical product, based on a claim that such product caused the claimant’s harm where—
such medical product was subject to premarket approval, clearance, or licensure by the Food and Drug Administration with respect to the safety of the formulation or performance of the aspect of such medical product which caused the claimant’s harm or the adequacy of the packaging or labeling of such medical product; and
such medical product was so approved, cleared, or licensed; or
such medical product is generally recognized among qualified experts as safe and effective pursuant to conditions established by the Food and Drug Administration and applicable Food and Drug Administration regulations, including without limitation those related to packaging and labeling, unless the Food and Drug Administration has determined that such medical product was not manufactured or distributed in substantial compliance with applicable Food and Drug Administration statutes and regulations.
Rule of construction
Liability of health care providers
A health care provider who prescribes, or who dispenses pursuant to a prescription, a medical product approved, licensed, or cleared by the Food and Drug Administration shall not be named as a party to a product liability lawsuit involving such product and shall not be liable to a claimant in a class action lawsuit against the manufacturer, distributor, or seller of such product. Nothing in this paragraph prevents a court from consolidating cases involving health care providers and cases involving products liability claims against the manufacturer, distributor, or product seller of such medical product.
Packaging
In a health care lawsuit for harm which is alleged to relate to the adequacy of the packaging or labeling of a drug which is required to have tamper-resistant packaging under regulations of the Secretary of Health and Human Services (including labeling regulations related to such packaging), the manufacturer or product seller of the drug shall not be held liable for punitive damages unless such packaging or labeling is found by the trier of fact by clear and convincing evidence to be substantially out of compliance with such regulations.
Exception
Paragraph (1) shall not apply in any health care lawsuit in which—
a person, before or after premarket approval, clearance, or licensure of such medical product, knowingly misrepresented to or withheld from the Food and Drug Administration information that is required to be submitted under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) or section 351 of the Public Health Service Act (42 U.S.C. 262) that is material and is causally related to the harm which the claimant allegedly suffered; or
a person made an illegal payment to an official of the Food and Drug Administration for the purpose of either securing or maintaining approval, clearance, or licensure of such medical product.
Authorization of payment of future damages to claimants in HEALTH care lawsuits
In General
In any health care lawsuit, if an award of future damages, without reduction to present value, equaling or exceeding $50,000 is made against a party with sufficient insurance or other assets to fund a periodic payment of such a judgment, the court shall, at the request of any party, enter a judgment ordering that the future damages be paid by periodic payments. In any health care lawsuit, the court may be guided by the Uniform Periodic Payment of Judgments Act promulgated by the National Conference of Commissioners on Uniform State Laws.
Applicability
This section applies to all actions which have not been first set for trial or retrial before the effective date of this subtitle.
Definitions
In this subtitle:
Alternative dispute resolution system; ADR
The term alternative dispute resolution system or ADR means a system that provides for the resolution of health care lawsuits in a manner other than through a civil action brought in a State or Federal court.
Claimant
The term claimant means any person who brings a health care lawsuit, including a person who asserts or claims a right to legal or equitable contribution, indemnity, or subrogation, arising out of a health care liability claim or action, and any person on whose behalf such a claim is asserted or such an action is brought, whether deceased, incompetent, or a minor.
Collateral source benefits
The term collateral source benefits means any amount paid or reasonably likely to be paid in the future to or on behalf of the claimant, or any service, product, or other benefit provided or reasonably likely to be provided in the future to or on behalf of the claimant, as a result of the injury or wrongful death, pursuant to—
any State or Federal health, sickness, income-disability, accident, or workers’ compensation law;
any health, sickness, income-disability, or accident insurance that provides health benefits or income-disability coverage;
any contract or agreement of any group, organization, partnership, or corporation to provide, pay for, or reimburse the cost of medical, hospital, dental, or income-disability benefits; and
any other publicly or privately funded program.
Compensatory damages
The term compensatory damages means objectively verifiable monetary losses incurred as a result of the provision of, use of, or payment for (or failure to provide, use, or pay for) health care services or medical products, such as past and future medical expenses, loss of past and future earnings, cost of obtaining domestic services, loss of employment, and loss of business or employment opportunities, damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature. The term compensatory damages includes economic damages and noneconomic damages, as such terms are defined in this section.
Contingent fee
The term contingent fee includes all compensation to any person or persons which is payable only if a recovery is effected on behalf of one or more claimants.
Economic damages
The term economic damages means objectively verifiable monetary losses incurred as a result of the provision of, use of, or payment for (or failure to provide, use, or pay for) health care services or medical products, such as past and future medical expenses, loss of past and future earnings, cost of obtaining domestic services, loss of employment, and loss of business or employment opportunities.
Health care lawsuit
The term health care lawsuit means any health care liability claim concerning the provision of health care goods or services or any medical product affecting interstate commerce, or any health care liability action concerning the provision of health care goods or services or any medical product affecting interstate commerce, brought in a State or Federal court or pursuant to an alternative dispute resolution system, against a health care provider, a health care organization, or the manufacturer, distributor, supplier, marketer, promoter, or seller of a medical product, regardless of the theory of liability on which the claim is based, or the number of claimants, plaintiffs, defendants, or other parties, or the number of claims or causes of action, in which the claimant alleges a health care liability claim. Such term does not include a claim or action which is based on criminal liability; which seeks civil fines or penalties paid to Federal, State, or local government; or which is grounded in antitrust.
Health care liability action
The term health care liability action means a civil action brought in a State or Federal court or pursuant to an alternative dispute resolution system, against a health care provider, a health care organization, or the manufacturer, distributor, supplier, marketer, promoter, or seller of a medical product, regardless of the theory of liability on which the claim is based, or the number of plaintiffs, defendants, or other parties, or the number of causes of action, in which the claimant alleges a health care liability claim.
Health care liability claim
The term health care liability claim means a demand by any person, whether or not pursuant to ADR, against a health care provider, health care organization, or the manufacturer, distributor, supplier, marketer, promoter, or seller of a medical product, including, but not limited to, third-party claims, cross-claims, counter-claims, or contribution claims, which are based upon the provision of, use of, or payment for (or the failure to provide, use, or pay for) health care services or medical products, regardless of the theory of liability on which the claim is based, or the number of plaintiffs, defendants, or other parties, or the number of causes of action.
Health care organization
The term health care organization means any person or entity which is obligated to provide or pay for health benefits under any health plan, including any person or entity acting under a contract or arrangement with a health care organization to provide or administer any health benefit.
Health care provider
The term health care provider means any person or entity required by State or Federal laws or regulations to be licensed, registered, or certified to provide health care services, and being either so licensed, registered, or certified, or exempted from such requirement by other statute or regulation.
Health care goods or services
The term health care goods or services means any goods or services provided by a health care organization, provider, or by any individual working under the supervision of a health care provider, that relates to the diagnosis, prevention, or treatment of any human disease or impairment, or the assessment or care of the health of human beings.
Malicious intent to injure
The term malicious intent to injure means intentionally causing or attempting to cause physical injury other than providing health care goods or services.
Medical product
The term medical product means a drug, device, or biological product intended for humans, and the terms drug, device, and biological product have the meanings given such terms in sections 201(g)(1) and 201(h) of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321(g)(1) and (h)) and section 351(a) of the Public Health Service Act (42 U.S.C. 262(a)), respectively, including any component or raw material used therein, but excluding health care services.
Noneconomic damages
The term noneconomic damages means damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature.
Punitive damages
The term punitive damages means damages awarded, for the purpose of punishment or deterrence, and not solely for compensatory purposes, against a health care provider, health care organization, or a manufacturer, distributor, or supplier of a medical product. Punitive damages are neither economic nor noneconomic damages.
Recovery
The term recovery means the net sum recovered after deducting any disbursements or costs incurred in connection with prosecution or settlement of the claim, including all costs paid or advanced by any person. Costs of health care incurred by the plaintiff and the attorneys’ office overhead costs or charges for legal services are not deductible disbursements or costs for such purpose.
State
The term State means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, the Trust Territory of the Pacific Islands, and any other territory or possession of the United States, or any political subdivision thereof.
Effect on other laws
Vaccine Injury
To the extent that title XXI of the Public Health Service Act (42 U.S.C. 300aa–1 et seq.) establishes a Federal rule of law applicable to a civil action brought for a vaccine-related injury or death—
this subtitle does not affect the application of the rule of law to such an action; and
any rule of law prescribed by this subtitle in conflict with a rule of law of such title XXI shall not apply to such action.
If there is an aspect of a civil action brought for a vaccine-related injury or death to which a Federal rule of law under title XXI of the Public Health Service Act (42 U.S.C. 300aa–1 et seq.) does not apply, then this subtitle or otherwise applicable law (as determined under this subtitle) will apply to such aspect of such action.
Other Federal Law
Except as provided in this section, nothing in this subtitle shall be deemed to affect any defense available to a defendant in a health care lawsuit or action under any other provision of Federal law.
State flexibility and protection of states’ rights
Health Care Lawsuits
The provisions governing health care lawsuits set forth in this subtitle preempt, subject to subsections (b) and (c), State law to the extent that State law prevents the application of any provisions of law established by or under this subtitle. The provisions governing health care lawsuits set forth in this subtitle supersede chapter 171 of title 28, United States Code, to the extent that such chapter—
provides for a greater amount of damages or contingent fees, a longer period in which a health care lawsuit may be commenced, or a reduced applicability or scope of periodic payment of future damages, than provided in this subtitle; or
prohibits the introduction of evidence regarding collateral source benefits, or mandates or permits subrogation or a lien on collateral source benefits.
Protection of States’ Rights and Other Laws
Any issue that is not governed by any provision of law established by or under this subtitle (including State standards of negligence) shall be governed by otherwise applicable State or Federal law.
This subtitle shall not preempt or supersede any State or Federal law that imposes greater procedural or substantive protections for health care providers and health care organizations from liability, loss, or damages than those provided by this subtitle or create a cause of action.
State Flexibility
No provision of this subtitle shall be construed to preempt—
any State law (whether effective before, on, or after the date of the enactment of this Act) that specifies a particular monetary amount of compensatory or punitive damages (or the total amount of damages) that may be awarded in a health care lawsuit, regardless of whether such monetary amount is greater or lesser than is provided for under this subtitle, notwithstanding section 502(a); or
any defense available to a party in a health care lawsuit under any other provision of State or Federal law.
Applicability; effective date
This subtitle shall apply to any health care lawsuit brought in a Federal or State court, or subject to an alternative dispute resolution system, that is initiated on or after the date of the enactment of this Act, except that any health care lawsuit arising from an injury occurring prior to the date of the enactment of this Act shall be governed by the applicable statute of limitations provisions in effect at the time the injury occurred.
Sense of Congress
It is the sense of Congress that a health insurer should be liable for damages for harm caused when it makes a decision as to what care is medically necessary and appropriate.
Liability protection for Community Health Center volunteers
Health centers under Public Health Service Act; liability protections for volunteer practitioners
In general
Section 224 of the Public Health Service Act (42 U.S.C. 233) is amended—
in subsection (g)(1)(A)—
in the first
sentence, by striking or employee
and inserting employee,
or (subject to subsection (k)(4)) volunteer practitioner
; and
in the second
sentence, by inserting and subsection (k)(4)
after
subject to paragraph (5)
; and
in each of subsections (g), (i), (j), (k), (l), and (m)—
by striking the
term employee, or contractor each place such term appears and
inserting employee, volunteer practitioner, or
contractor
;
by striking the
term employee, and contractor each place such term appears and
inserting employee, volunteer practitioner, and
contractor
;
by striking the
term employee, or any contractor each place such term appears and
inserting employee, volunteer practitioner, or contractor
;
and
by striking the
term employees, or contractors each place such term appears and
inserting employees, volunteer practitioners, or
contractors
.
Applicability; definition
Section 224(k) of the Public Health Service Act (42 U.S.C. 233(k)) is amended by adding at the end the following paragraph:
Subsections (g) through (m) apply with respect to volunteer practitioners beginning with the first fiscal year for which an appropriations Act provides that amounts in the fund under paragraph (2) are available with respect to such practitioners.
For purposes of subsections (g) through (m), the term volunteer practitioner means a practitioner who, with respect to an entity described in subsection (g)(4), meets the following conditions:
The practitioner is a licensed physician or a licensed clinical psychologist.
At the request of such entity, the practitioner provides services to patients of the entity, at a site at which the entity operates or at a site designated by the entity. The weekly number of hours of services provided to the patients by the practitioner is not a factor with respect to meeting conditions under this subparagraph.
The practitioner does not for the provision of such services receive any compensation from such patients, from the entity, or from third-party payors (including reimbursement under any insurance policy or health plan, or under any Federal or State health benefits program).
.
Miscellaneous
Fighting fraud and abuse
Provide adequate funding to HHS OIG and HCFAC
HCFAC funding
Section 1817(k)(3)(A) of the Social Security Act (42 U.S.C. 1395i(k)(3)(A)) is amended—
in clause (i)—
in subclause (IV),
by striking 2009, and 2010
and inserting and
2009
; and
by amending subclause (V) to read as follows:
for each fiscal year after fiscal year 2009, $300,000,000.
; and
in clause (ii)—
in subclause (IX),
by striking 2009, and 2010
and inserting and
2009
; and
in subclause (X),
by striking 2010
and inserting 2009
and by
inserting before the period at the end the following: , plus the amount
by which the amount made available under clause (i)(V) for fiscal year 2010
exceeds the amount made available under clause (i)(IV) for 2009
.
OIG funding
There are authorized to be appropriated for each of fiscal years 2010 through 2019 $100,000,000 for the Office of the Inspector General of the Department of Health and Human Services for fraud prevention activities under the Medicare and Medicaid programs.
Increased civil money penalties and criminal fines for Medicare fraud and abuse
Increased civil money penalties
Section 1128A of the Social Security Act (42 U.S.C. 1320a–7a) is amended—
in subsection (a), in the flush matter following paragraph (7)—
by striking $10,000
each
place it appears and inserting $20,000
;
by striking
$15,000
and inserting $30,000
; and
by striking
$50,000
and inserting $100,000
; and
in subsection (b)—
in paragraph (1),
in the flush matter following subparagraph (B), by striking
$2,000
and inserting $4,000
;
in paragraph (2),
by striking $2,000
and inserting $4,000
;
and
in paragraph
(3)(A)(i), by striking $5,000
and inserting
$10,000
.
Increased Criminal Fines
Section 1128B of the Social Security Act (42 U.S.C. 1320a–7b) is amended—
in subsection (a), in the flush matter following paragraph (6)—
by striking
$25,000
and inserting $100,000
; and
by striking
$10,000
and inserting $20,000
;
in subsection (b)—
in paragraph (1),
in the flush matter following subparagraph (B), by striking
$25,000
and inserting $100,000
; and
in paragraph (2),
in the flush matter following subparagraph (B), by striking
$25,000
and inserting $100,000
;
in subsection (c),
by striking $25,000
and inserting
$100,000
;
in subsection (d),
in the second flush matter following subparagraph (B), by striking
$25,000
and inserting $100,000
; and
in subsection (e),
by striking $2,000
and inserting $4,000
.
Effective Date
The amendments made by this section shall apply to civil money penalties and fines imposed for actions taken on or after the date of enactment of this Act.
Increased sentences for felonies involving Medicare fraud and abuse
False Statements and Representations
Section 1128B(a) of the Social Security Act
(42 U.S.C. 1320a–7b(a)) is amended, in clause (i) of the flush matter following
paragraph (6), by striking not more than 5 years
and inserting
not more than 10 years
.
Anti-Kickback
Section 1128B(b) of the Social Security Act (42 U.S.C. 1320a–7b(b)) is amended—
in paragraph (1),
in the flush matter following subparagraph (B), by striking not more
than 5 years
and inserting not more than 10 years
;
and
in paragraph (2),
in the flush matter following subparagraph (B), by striking not more
than 5 years
and inserting not more than 10
years
.
False Statement or Representation With Respect to Conditions or Operations of Facilities
Section 1128B(c) of the Social Security Act (42 U.S.C.
1320a–7b(c)) is amended by striking not more than 5 years
and
inserting not more than 10 years
.
Excess Charges
Section 1128B(d) of the Social Security Act (42 U.S.C.
1320a–7b(d)) is amended, in the second flush matter following subparagraph (B),
by striking not more than 5 years
and inserting not more
than 10 years
.
Effective Date
The amendments made by this section shall apply to criminal penalties imposed for actions taken on or after the date of enactment of this Act.
Illegal distribution of a Medicare or Medicaid beneficiary identification or provider number
Section 1128B(b) of the Social Security Act (42 U.S.C. 1320a–7b(b)), as amended by section 4(b), is amended by adding at the end the following:
Whoever knowingly, intentionally, and with the intent to defraud purchases, sells or distributes, or arranges for the purchase, sale, or distribution of two or more Medicare or Medicaid beneficiary identification numbers or provider numbers shall be imprisoned for not more than three years or fined under title 18, United States Code (or, if greater, an amount equal to the monetary loss to the Federal and any State government as a result of such acts), or both.
.
Use of technology for real-time data review
Title XVIII of the Social Security Act is amended by adding at the end the following new section:
Use of technology for real-time data review
In general
The Secretary shall establish procedures for the use of technology (including front-end, pre-payment technology similar to that used by hedge funds, investment funds, and banks) to provide real-time data analysis of claims for payment under this title to identify and investigate unusual billing or order practices under this title that could indicate fraud or abuse.
Competitive bidding
The procedures established under subsection (a) shall ensure that the implementation of such technology is conducted through a competitive bidding process.
.
State transparency plan portal
Providing information on health coverage options and health care providers
State-Based portal
A State (by itself or
jointly with other States) may contract with a private entity to establish a
Health Plan and Provider Portal website (referred to in this section as a
plan portal
) for the purposes of providing standardized
information—
on health insurance plans that have been certified to be available for purchase in that State; and
on price and quality information on health care providers (including physicians, hospitals, and other health care institutions).
Pilot program
In general
Not later than 90 days after the date of the enactment of this Act the Secretary of Health and Human Services shall work with States to establish no later than 2011, consistent with this title, a website that will serve as a pilot program for a national portal for information structured in a manner so individuals may directly link to the State plan portal for the State in which they reside.
Contracts with State
The Secretary shall enter into contracts with States, in a number and distribution determined by the Secretary, to develop State plan portals that follow the applicable standards and regulations under this section.
Common standards for plan portals
In general
In connection with such website, the Secretary shall establish standards for interoperability and consistency for State plan portals so that individuals can access and view information in a similar manner on plan portals of different States. Such standards shall include standard definitions for health insurance plan benefits so that individuals can accurately compare health insurance plans within such portals and standards for the inclusion of information described in subsection (c).
Consultation
The Secretary shall consult with a group consisting of a balanced representation of the critical stakeholders (including States, health insurance issuers, the National Association of Insurance Commissioners, qualified health care provider-based entities (including physicians, hospitals, and other health care institutions), and a standards development organization) to develop such standards.
Issuance
In general
Not later than 6 months after the date of the enactment of this Act, the Secretary shall issue, by regulation, after notice and opportunity for public comment, standards that are consistent with the recommendations made by the group under subparagraph (B).
Dissemination
The Secretary shall broadly disseminate the standards so issued.
Review
One year after the date of establishment of the pilot program under this subsection, the Secretary, in consultation with stakeholder group described in subparagraph (B), shall review the standards established and make such changes in such standards as may be appropriate.
Authorization of appropriations
There are authorized to be appropriated to the Secretary such amounts as may be necessary for—
the development and operation of the national website under this subsection; and
contracts with States under paragraph (2) to assist in the development and initial operation of plan portals in accordance with standards established under paragraph (3) and other applicable provisions of this section.
Information in plan portals
The standards for plan portals under subsection (b)(3) shall include the following:
Health insurance information
Each plan portal shall meet the following requirements with respect to information on health insurance plans:
The plan portal shall present complete information on the costs and benefits of health insurance plans (including information on monthly premium, copayments, deductibles, and covered benefits) in a uniform manner that—
uses the standard definitions developed under subsection (b)(3); and
is designed to allow consumers to easily compare such plans.
The plan portal shall be available on the Internet and accessible to all individuals in the United States.
The plan portal shall allow consumers to search and sort data on the health insurance plans in the plan portal on criteria such as coverage of specific benefits (such as coverage of disease management services or pediatric care services), as well as data available respecting quality of plans.
The plan portal shall meet all relevant State laws and regulations, including laws and regulations related to the marketing of insurance products.
Notwithstanding subsection (d)(1), the plan portal shall provide information to individuals who are eligible for the Medicaid program under title XIX of the Social Security Act or State Children’s Health Insurance Program under title XXI of such Act by including information on options, eligibility, and how to enroll through providing a link to a website maintained with respect to such State programs.
The plan portal shall provide support to individuals who are eligible for tax credits and deductions under the amendments made by this Act to enhance such individual’s ability to access such credits and deductions.
The plan portal shall allow consumers to access quality data on providers as made available through a website once that data is available.
Provider information
Each plan portal shall meet the following requirements with respect to information on health care providers:
Identifying and licensure information.
Self-pay prices charged, including variation in such prices.
Tax credit and deduction information
Each plan portal shall also include information on tax credits and deductions that may be available for purpose of qualified health plans.
Inclusion of quality information
The Secretary, after collaboration with States and health care providers (including practicing physicians, hospitals, and other health care institutions), shall submit to Congress recommendations on how to include on plan portals information on performance-based quality measures obtained under section 612.
Prohibitions
Direct Enrollment
A plan portal may not directly enroll individuals in health insurance plans or under a State Medicaid plan or a State children’s health insurance plan.
Conflicts of interest
Companies
A health insurance issuer offering a health insurance plan through a plan portal may not—
be the private entity developing and maintaining a plan portal under this section; or
have an ownership interest in such private entity or in the plan portal.
Individuals
An individual employed by a health insurance issuer offering a health insurance plan through a plan portal may not serve as a director or officer for—
the private entity developing and maintaining a plan portal under this section; or
the plan portal.
Construction
Nothing in this section shall be construed to prohibit health insurance brokers and agents from—
utilizing the plan portal for any purpose; or
marketing or offering health insurance products.
State defined
In this section, the term State has the meaning given such term for purposes of title XIX of the Social Security Act.
Establishment of performance-based quality measures
Not later than January 1, 2010, the Secretary of Health and Human Services shall submit to Congress a proposal for a formalized process for the development of performance-based quality measures that could be applied to physicians' services under the Medicare program. Such proposal shall be in concert and agreement with the Physician Consortium for Performance Improvement and shall only utilize measures agreed upon by each physician specialty organization.
Medicare Accountable Care Organization demonstration program
Medicare Accountable Care Organization demonstration program
Establishment
In general
In order to promote innovative care coordination and
delivery that is cost-effective, the Secretary of Health and Human Services (in
this section referred to as the Secretary
) shall conduct a
demonstration program under the Medicare program under which—
groups of
providers meeting certain criteria may work together to manage and coordinate
care for Medicare fee-for-service beneficiaries through an Accountable Care
Organization (in this section referred to as an ACO
); and
providers in participating ACOs are eligible for bonuses based on performance.
Medicare fee-for-service beneficiary defined
In this section, the term Medicare fee-for-service beneficiary means an individual who is enrolled in the original Medicare fee-for-service program under parts A and B of title XVIII of the Social Security Act and not enrolled in an MA plan under part C of such title.
Eligible ACOs
In general
Subject to paragraph (2), the following provider groups are eligible to participate as ACOs under the demonstration program under this section:
Physicians in group practice arrangements.
Networks of individual physician practices.
Partnerships or joint venture arrangements between hospitals and physicians.
Partnerships or joint ventures, which may include pharmacists providing medication therapy management.
Hospitals employing physicians.
Integrated delivery systems.
Community-based coalitions of providers.
Requirements
An ACO shall meet the following requirements:
The ACO shall have a formal legal structure that would allow the organization to receive and distribute bonuses to participating providers.
The ACO shall include the primary care providers of at least 5,000 Medicare fee-for-service beneficiaries.
The ACO shall be willing to become accountable for the overall care of the Medicare fee-for-service beneficiaries.
The ACO shall provide the Secretary with a list of primary care and specialist physicians participating in the ACO to support the beneficiary assignment, implementation of performance measures, and the determination of bonus payments under the demonstration program.
The ACO shall have in place contracts with a core group of key specialist physicians, a leadership and management structure, and processes to promote evidence-based medicine and to coordinate care.
Assignment of Medicare fee-for-service beneficiaries
In general
Under the demonstration program under this section, each Medicare fee-for-service Medicare beneficiary shall be automatically assigned to a primary care provider. Such assignment shall be based on the physician from whom the beneficiary received the most primary care in the preceding year.
Beneficiaries may continue to see providers outside of the ACO
Under the demonstration program under this section, a Medicare fee-for-service Medicare beneficiary may continue to see providers in and outside of the ACO to which they have been assigned.
Bonus payments
In general
Under the demonstration program, Medicare payments shall continue to be made to providers under the original Medicare fee-for-service program in the same manner as they would otherwise be made except that a participating ACO is eligible for bonuses if—
it meets certain quality performance measures; and
spending for their Medicare fee-for-service beneficiaries meets the requirement under paragraph (3).
Quality
Under the demonstration program under this section, providers meet the requirement under paragraph (1)(A) if they generally follow consensus-based guidelines established by non-government professional medical societies. Patient satisfaction and risk-adjusted outcomes shall be determined through an independent entity with medical expertise.
Requirement relating to spending
In general
An ACO shall only be eligible to receive a bonus payment if the average Medicare expenditures under the ACO for Medicare fee-for-service beneficiaries over a two-year period is at least 2 percent below the average benchmark for the corresponding two-year period. The benchmark for each ACO shall be set using the most recent three years of total per-beneficiary spending for Medicare fee-for-service beneficiaries assigned to the ACO. Such benchmark shall be updated by the projected rate of growth in national per capita spending for the original Medicare fee-for-service program, as projected (using the most recent three years of data) by the Chief Actuary of the Centers for Medicare & Medicaid Services.
Amount of bonus payments
The amount of the bonus payment to a participating ACO shall be one-half of the percentage point difference between the two-year average of their patients’ Medicare expenditures and 98 percent of the two-year average benchmark. The bonus amount, in dollars, shall be equal to the bonus share multiplied by the benchmark for the most recent year.
Limitation
Bonus payments may only be made to an ACO if the primary care provider to which the Medicare fee-for-service beneficiary has been assigned under subsection (c) elects to participate in such ACO.
Waiver authority
The Secretary may waive such requirements of titles XI and XVIII of the Social Security Act (42 U.S.C. 1301 et seq.; 1395 et seq.) as may be appropriate for the purpose of carrying out the demonstration program under this section.
Report
Upon completion of the demonstration program under this section, the Secretary shall submit to Congress a report on the program together with such recommendations as the Secretary determines appropriate.
Repeal of Unused Stimulus Funds
Rescission and repeal in ARRA
Rescission
Of the discretionary appropriations made available in division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5), all unobligated balances are rescinded.
Repeal
Subtitles B and C of title II and titles III through VII of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) are repealed.