HR 397
112th CONGRESS
1st Session
H. R. 397
To repeal the Patient Protection and Affordable Care Act and the
Health Care and Education Reconciliation Act of 2010 and to take meaningful
steps to lower health care costs and increase access to health insurance coverage
without raising taxes, cutting Medicare benefits for seniors, adding to the
national deficit, intervening in the doctor-patient relationship, or instituting
a government takeover of health care.
IN THE HOUSE OF REPRESENTATIVES
January 24, 2011
Mr. HERGER (for himself, Mr. SAM JOHNSON of Texas, Mr. TIBERI, Mr. REICHERT,
Mr. GERLACH, Mr. BACHUS, Mrs. BLACKBURN, Mr. DENT, Mr. HARPER, Mr. MCCAUL,
Mrs. MCMORRIS RODGERS, Mr. GARY G. MILLER of California, and Mr. SESSIONS)
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 the Workforce, the Judiciary, House Administration, Natural Resources,
Appropriations, and Rules, 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 repeal the Patient Protection and Affordable Care Act and the
Health Care and Education Reconciliation Act of 2010 and to take meaningful
steps to lower health care costs and increase access to health insurance coverage
without raising taxes, cutting Medicare benefits for seniors, adding to the
national deficit, intervening in the doctor-patient relationship, or instituting
a government takeover of health care.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE; PURPOSE; TABLE OF CONTENTS.
(a) Short Title- This Act may be cited as the `Reform Americans Can Afford
Act of 2011'.
(b) Purpose- The purpose of this Act is to take meaningful steps to lower
health care costs and increase access to health insurance coverage (especially
for individuals with preexisting conditions) without--
(2) cutting Medicare benefits for seniors;
(3) adding to the national deficit;
(4) intervening in the doctor-patient relationship; or
(5) instituting a government takeover of health care.
(c) Table of Contents- The table of contents of this Act is as follows:
Sec. 1. Short title; purpose; table of contents.
Sec. 2. Repeal of the Patient Protection and Affordable Care Act and the
Health Care and Education Reconciliation Act of 2010.
DIVISION A--MAKING HEALTH CARE COVERAGE AFFORDABLE FOR EVERY AMERICAN
TITLE I--ENSURING COVERAGE FOR INDIVIDUALS WITH PREEXISTING CONDITIONS AND
MULTIPLE HEALTH CARE NEEDS
Sec. 101. Establish universal access programs to improve high risk pools
and reinsurance markets.
Sec. 102. Elimination of certain requirements for guaranteed availability
in individual market.
Sec. 103. No annual or lifetime spending caps.
Sec. 104. Preventing unjust cancellation of insurance coverage.
TITLE II--REDUCING HEALTH CARE PREMIUMS AND THE NUMBER OF UNINSURED AMERICANS
Sec. 111. State innovation programs.
Sec. 112. Health plan finders.
Sec. 113. Administrative simplification.
DIVISION B--IMPROVING ACCESS TO HEALTH CARE
TITLE I--EXPANDING ACCESS AND LOWERING COSTS FOR SMALL BUSINESSES
Sec. 201. Rules governing association health plans.
Sec. 202. Clarification of treatment of single employer arrangements.
Sec. 203. Enforcement provisions relating to association health plans.
Sec. 204. Cooperation between Federal and State authorities.
Sec. 205. Effective date and transitional and other rules.
TITLE II--TARGETED EFFORTS TO EXPAND ACCESS
Sec. 211. Extending coverage of dependents.
Sec. 212. Allowing auto-enrollment for employer sponsored coverage.
TITLE III--EXPANDING CHOICES BY ALLOWING AMERICANS TO BUY HEALTH CARE COVERAGE
ACROSS STATE LINES
Sec. 221. Interstate purchasing of health insurance.
TITLE IV--IMPROVING HEALTH SAVINGS ACCOUNTS
Sec. 231. Saver's credit for contributions to health savings accounts.
Sec. 232. HSA funds for premiums for high deductible health plans.
Sec. 233. Requiring greater coordination between HDHP administrators and
HSA account administrators so that enrollees can enroll in both at the same
time.
Sec. 234. Special rule for certain medical expenses incurred before establishment
of account.
DIVISION C--ENACTING REAL MEDICAL LIABILITY REFORM
Sec. 301. Encouraging speedy resolution of claims.
Sec. 302. Compensating patient injury.
Sec. 303. Maximizing patient recovery.
Sec. 304. Additional health benefits.
Sec. 305. Punitive damages.
Sec. 306. Authorization of payment of future damages to claimants in health
care lawsuits.
Sec. 308. Effect on other laws.
Sec. 309. State flexibility and protection of States' rights.
Sec. 310. Applicability; effective date.
DIVISION D--PROTECTING THE DOCTOR-PATIENT RELATIONSHIP
Sec. 401. Rule of construction.
Sec. 402. Repeal of Federal Coordinating Council for Comparative Effectiveness
Research.
DIVISION E--INCENTIVIZING WELLNESS AND QUALITY IMPROVEMENTS
Sec. 501. Incentives for prevention and wellness programs.
DIVISION F--PROTECTING TAXPAYERS
Sec. 601. Provide full funding to HHS OIG and HCFAC.
Sec. 602. Prohibiting taxpayer funded abortions and conscience protections.
Sec. 603. Improved enforcement of the Medicare and Medicaid secondary payer
provisions.
Sec. 604. Strengthen Medicare provider enrollment standards and safeguards.
Sec. 605. Tracking banned providers across State lines.
DIVISION G--PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS
Sec. 701. Licensure pathway for biosimilar biological products.
Sec. 702. Fees relating to biosimilar biological products.
Sec. 703. Amendments to certain patent provisions.
SEC. 2. REPEAL OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT AND THE
HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010.
(a) Patient Protection and Affordable Care Act- Effective as of the enactment
of the Patient Protection and Affordable Care Act, such Act is repealed, and
the provisions of law amended or repealed by such Act are restored or revived
as if such Act had not been enacted.
(b) Health Care and Education Reconciliation Act of 2010- Effective as of
the enactment of the Health Care and Education Reconciliation Act of 2010,
such Act is repealed, and the provisions of law amended or repealed by such
Act are restored or revived as if such Act had not been enacted.
DIVISION A--MAKING HEALTH CARE COVERAGE AFFORDABLE FOR EVERY AMERICAN
TITLE I--ENSURING COVERAGE FOR INDIVIDUALS WITH PREEXISTING CONDITIONS AND
MULTIPLE HEALTH CARE NEEDS
SEC. 101. ESTABLISH UNIVERSAL ACCESS PROGRAMS TO IMPROVE HIGH RISK POOLS
AND REINSURANCE MARKETS.
(1) IN GENERAL- Not later than July 1, 2011, each State shall--
(A) subject to paragraph (3), operate--
(i) a qualified State reinsurance program described in subsection (b);
or
(ii) qualifying State high risk pool described in subsection (c)(1);
and
(B) subject to paragraph (3), apply to the operation of such a program
from State funds an amount equivalent to the portion of State funds derived
from State premium assessments (as defined by the Secretary) that are
not otherwise used on State health care programs.
(2) RELATION TO CURRENT QUALIFIED HIGH RISK POOL PROGRAM-
(A) STATES NOT OPERATING A QUALIFIED HIGH RISK POOL- In the case of a
State that is not operating a current section 2745 qualified high risk
pool as of the date of the enactment of this Act--
(i) the State may only meet the requirement of paragraph (1) through
the operation of a qualified State reinsurance program described in
subsection (b); and
(ii) the State's operation of such a reinsurance program shall be treated,
for purposes of section 2745 of the Public Health Service Act, as the
operation of a qualified high risk pool described in such section.
(B) STATE 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--
(i) as of July 1, 2011, such a pool shall not be treated as a qualified
high risk pool under section 2745 of the Public Health Service Act unless
the pool is a qualifying State high risk pool described in subsection
(c)(1); and
(ii) the State may use premium assessment funds described in paragraph
(1)(B) to transition from operation of such a pool to operation of a
qualified State reinsurance program described in subsection (b).
(3) APPLICATION OF FUNDS- If the program or pool operated under paragraph
(1)(A) is in strong fiscal health, as determined in accordance with standards
established by the National Association of Insurance Commissioners and as
approved by the State Insurance Commissioner involved, the requirement of
paragraph (1)(B) shall be deemed to be met.
(b) Qualified State Reinsurance Program-
(1) IN GENERAL- For purposes of this section, a `qualified State reinsurance
program' means a program operated by a State program that provides reinsurance
for health insurance coverage offered in the small group market in accordance
with the model for such a program established (as of the date of the enactment
of this Act).
(2) FORM OF PROGRAM- A qualified State reinsurance program may provide reinsurance--
(A) on a prospective or retrospective basis; and
(B) 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.
(3) SATISFACTION OF HIPAA REQUIREMENT- A qualified State reinsurance program
shall be deemed, for purposes of section 2745 of the Public Health Service
Act, to be a qualified high risk pool under such section.
(c) Qualifying State High Risk Pool-
(1) 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:
(A) The pool must provide at least two coverage options, one of which
must be a high deductible health plan coupled with a health savings account.
(B) The pool must be funded with a stable funding source.
(C) The pool must eliminate any waiting lists so that all eligible residents
who are seeking coverage through the pool should be allowed to receive
coverage through the pool.
(D) The pool must allow 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.
(E) The pool must limit the pool premiums to no more than 150 percent
of the average premium for applicable standard risk rates in that State.
(F) The pool must conduct education and outreach initiatives so that residents
and brokers understand that the pool is available to eligible residents.
(G) The pool must provide coverage for preventive services and disease
management for chronic diseases.
(2) VERIFICATION OF CITIZENSHIP OR ALIEN QUALIFICATION-
(A) IN GENERAL- Notwithstanding any other provision of law, only citizens
and nationals of the United States shall be eligible to participate in
a qualifying State high risk pool that receives funds under section 2745
of the Public Health Service Act or this section.
(B) CONDITION OF PARTICIPATION- As a condition of a State receiving such
funds, the Secretary shall require the State to certify, to the satisfaction
of the Secretary, that such State requires all applicants for coverage
in the qualifying State high risk pool to provide satisfactory documentation
of citizenship or nationality in a manner consistent with section 1903(x)
of the Social Security Act.
(C) RECORDS- The Secretary shall keep sufficient records such that a determination
of citizenship or nationality only has to be made once for any individual
under this paragraph.
(3) RELATION TO SECTION 2745- As of January 1, 2012, a pool shall not qualify
as qualified high risk pool under section 2745 of the Public Health Service
Act unless the pool is a qualifying State high risk pool described in paragraph
(1).
(d) 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.
(e) Funding- In addition to any other amounts appropriated, there is appropriated
to carry out section 2745 of the Public Health Service Act (including through
a program or pool described in subsection (a)(1))--
(1) $15,000,000,000 for the period of fiscal years 2012 through 2021; and
(2) an additional $10,000,000,000 for the period of fiscal years 2017 through
2021.
(f) Definitions- In this section:
(1) HEALTH INSURANCE COVERAGE; HEALTH INSURANCE ISSUER- The terms `health
insurance coverage' and `health insurance issuer' have the meanings given
such terms in section 2791 of the Public Health Service Act.
(2) 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 as
in effect as of the date of the enactment of this Act.
(3) SECRETARY- The term `Secretary' means Secretary of Health and Human
Services.
(4) STANDARD RISK RATE- The term `standard risk rate' means a rate that--
(A) is determined under the State high risk pool by considering the premium
rates charged by other health insurance issuers offering health insurance
coverage to individuals in the insurance market served;
(B) is established using reasonable actuarial techniques; and
(C) reflects anticipated claims experience and expenses for the coverage
involved.
(5) STATE- The term `State' means any of the 50 States or the District of
Columbia.
SEC. 102. ELIMINATION OF CERTAIN REQUIREMENTS FOR GUARANTEED AVAILABILITY
IN INDIVIDUAL MARKET.
(a) In General- Section 2741(b) of the Public Health Service Act (42 U.S.C.
300gg-41(b)) is amended--
(A) by striking `(1)(A)' and inserting `(1)'; and
(B) by striking `and (B)' and all that follows up to the semicolon at
the end;
(2) by adding `and' at the end of paragraph (2);
(A) by striking `(1)(A)' and inserting `(1)'; and
(B) by striking the semicolon at the end and inserting a period; and
(4) by striking paragraphs (4) and (5).
(b) Effective Date- The amendments made by subsection (a) shall take effect
on the date of the enactment of this Act.
SEC. 103. NO ANNUAL OR LIFETIME SPENDING CAPS.
Notwithstanding any other provision of law, a health insurance issuer (including
an entity licensed to sell insurance with respect to a State or group health
plan) may not apply an annual or lifetime aggregate spending cap on any health
insurance coverage or plan offered by such issuer. The previous sentence shall
not apply with respect to a health plan if, as of the date of the enactment
of this Act, the imposition on such plan of an annual or lifetime aggregate
spending cap would result in a significant decrease in access to benefits
under the plan or would significantly increase premiums under the plan.
SEC. 104. PREVENTING UNJUST CANCELLATION OF INSURANCE COVERAGE.
(a) 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--
(1) in its heading, by inserting `, continuation in force, including prohibition
of rescission,' after `guaranteed renewability';
(2) in subsection (a), by inserting `, including without rescission,' after
`continue in force'; and
(3) 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'.
(b) 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:
`SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL THIRD PARTY REVIEW IN
CERTAIN CASES.
`(a) 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.
`(b) 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).'.
(c) 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.
TITLE II--REDUCING HEALTH CARE PREMIUMS AND THE NUMBER OF UNINSURED AMERICANS
SEC. 111. STATE INNOVATION PROGRAMS.
(a) Programs That Reduce the Cost of Health Insurance Premiums-
(A) FOR PREMIUM REDUCTIONS IN THE SMALL GROUP MARKET- If the Secretary
determines that a State has reduced the average per capita premium for
health insurance coverage in the small group market in year 3, in year
6, or year 9 (as defined in subsection (c)) below the premium baseline
for such year (as defined paragraph (2)), the Secretary shall pay the
State an amount equal to the product of--
(i) bonus premium percentage (as defined in paragraph (3)) for the State,
market, and year; and
(ii) the maximum State premium payment amount (as defined in paragraph
(4)) for the State, market, and year
(B) FOR PREMIUM REDUCTIONS IN THE INDIVIDUAL MARKET- If the Secretary
determines that a State has reduced the average per capita premium for
health insurance coverage in the individual market in year 3, in year
6, or in year 9 below the premium baseline for such year, the Secretary
shall pay the State an amount equal to the product of--
(i) bonus premium percentage for the State, market, and year; and
(ii) the maximum State premium payment amount for the State, market,
and year.
(2) PREMIUM BASELINE- For purposes of this subsection, the term `premium
baseline' means, for a market in a State--
(A) for year 1, the average per capita premiums for health insurance coverage
in such market in the State in such year; or
(B) for a subsequent year, the baseline for the market in the State for
the previous year under this paragraph increased by a percentage specified
in accordance with a formula established by the Secretary, in consultation
with the Congressional Budget Office and the Bureau of the Census, that
takes into account at least the following:
(i) GROWTH FACTOR- The inflation in the costs of inputs to health care
services in the year.
(ii) HISTORIC PREMIUM GROWTH RATES- Historic growth rates, during the
10 years before year 1, of per capita premiums for health insurance
coverage.
(iii) DEMOGRAPHIC CONSIDERATIONS- Historic average changes in the demographics
of the population covered that impact on the rate of growth of per capita
health care costs.
(3) BONUS PREMIUM PERCENTAGE DEFINED-
(A) IN GENERAL- For purposes of this subsection, the term `bonus premium
percentage' means, for the small group market or individual market in
a State for a year, such percentage as determined in accordance with the
following table based on the State's premium performance level (as defined
in subparagraph (B)) for such market and year:
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The bonus premium percentage for a State is-- For year 3 if the premium performance level of the State is-- For year 6 if the premium performance level of the State is-- For year 9 if the premium performance level of the State is--
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100 percent at least 8.5% at least 11% at least 13.5%
50 percent at least 6.38%, but less than 8.5% at least 10.38%, but less than 11% at least 12.88%, but less than 13.5%
25 percent at least 4.25%, but less than 6.38% at least 9.75%, but less than 10.38% at least 12.25%, but less than 12.88%
0 percent less than 4.25% less than 9.75% less than 12.25%.
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(B) PREMIUM PERFORMANCE LEVEL- For purposes of this subsection, the term
`premium performance level' means, for a State, market, and year, the
percentage reduction in the average per capita premiums for health insurance
coverage for the State, market, and year, as compared to the premium baseline
for such State, market, and year.
(4) MAXIMUM STATE PREMIUM PAYMENT AMOUNT DEFINED- For purposes of this subsection,
the term `maximum State premium payment amount' means, for a State for the
small group market or the individual market for a year, the product of--
(A) the proportion (as determined by the Secretary), of the number of
nonelderly individuals lawfully residing in all the States who are enrolled
in health insurance coverage in the respective market in the year, who
are residents of the State; and
(B) the amount available for obligation from amounts appropriated under
subsection (d) for such market with respect to performance in such year.
(5) METHODOLOGY FOR CALCULATING AVERAGE PER CAPITA PREMIUMS-
(A) ESTABLISHMENT- The Secretary shall establish, by rule and consistent
with this subsection, a methodology for computing the average per capita
premiums for health insurance coverage for the small group market and
for the individual market in each State for each year beginning with year
1.
(B) ADJUSTMENTS- Under such methodology, the Secretary shall provide for
the following adjustments (in a manner determined appropriate by the Secretary):
(i) EXCLUSION OF ILLEGAL ALIENS- An adjustment so as not to take into
account enrollees who are not lawfully present in the United States
and their premium costs.
(ii) TREATING STATE PREMIUM SUBSIDIES AS PREMIUM COSTS- An adjustment
so as to increase per capita premiums to remove the impact of premium
subsidies made directly by a State to reduce health insurance premiums.
(6) CONDITIONS OF PAYMENT- As a condition of receiving a payment under paragraph
(1), a State must agree to submit aggregate, non-individually identifiable
data to the Secretary, in a form and manner specified by the Secretary,
for use by the Secretary to determine the State's premium baseline and premium
performance level for purposes of this subsection.
(b) Programs That Reduce the Number of Uninsured-
(1) IN GENERAL- If the Secretary determines that a State has reduced the
percentage of uninsured nonelderly residents in year 5, year 7, or year
9, below the uninsured baseline (as defined in paragraph (2)) for the State
for the year, the Secretary shall pay the State an amount equal to the product
of--
(A) bonus uninsured percentage (as defined in paragraph (3)) for the State
and year; and
(B) the maximum uninsured payment amount (as defined in paragraph (4))
for the State and year.
(A) IN GENERAL- For purposes of this subsection, and subject to subparagraph
(B), the term `uninsured baseline' means, for a State, the percentage
of nonelderly residents in the State who are uninsured in year 1.
(B) ADJUSTMENT- The Secretary may, at the written request of a State,
adjust the uninsured baseline for States for a year to take into account
unanticipated and exceptional changes, such as an unanticipated migration,
of nonelderly individuals into, or out of, States in a manner that does
not reflect substantially the proportion of uninsured nonelderly residents
in the States involved in year 1. Any such adjustment shall only be done
in a manner that does not result in the average of the uninsured baselines
for nonelderly residents for all States being changed.
(3) BONUS UNINSURED PERCENTAGE-
(A) BONUS UNINSURED PERCENTAGE- For purposes of this subsection, the term
`bonus uninsured percentage' means, for a State for a year, such percentage
as determined in accordance with the following table, based on the uninsured
performance level (as defined in subparagraph (B)) for such State and
year:
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The bonus uninsured percentage for a State is-- For year 5 if the uninsured performance level of the State is-- For year 7 if the uninsured performance level of the State is-- For year 9 if the uninsured performance level of the State is--
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100 percent at least 10% at least 15% at least 20%
50 percent at least 7.5%, but less than 10% at least 13.75%, but less than 15% at least 18.75%, but less than 20%
25 percent at least 5%, but less than 7.5% at least 12.5%, but less than 13.75% at least 17.5%, but less than 18.75%
0 percent less than 5% less than 12.5% less than 17.5%.
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(B) UNINSURED PERFORMANCE LEVEL- For purposes of this subsection, the
term `uninsured performance level' means, for a State for a year, the
reduction (expressed as a percentage) in the percentage of uninsured nonelderly
residents in such State in the year as compared to the uninsured baseline
for such State for such year.
(4) MAXIMUM STATE UNINSURED PAYMENT AMOUNT DEFINED- For purposes of this
subsection, the term `maximum State uninsured payment amount' means, for
a State for a year, the product of--
(A) the proportion (as determined by the Secretary), of the number of
uninsured nonelderly individuals lawfully residing in all the States in
the year, who are residents of the State; and
(B) the amount available for obligation under this subsection from amounts
appropriated under subsection (d) with respect to performance in such
year.
(5) METHODOLOGY FOR COMPUTING THE PERCENTAGE OF UNINSURED NONELDERLY RESIDENTS
IN A STATE-
(A) ESTABLISHMENT- The Secretary shall establish, by rule and consistent
with this subsection, a methodology for computing the percentage of nonelderly
residents in a State who are uninsured in each year beginning with year
1.
(i) TREATMENT OF UNINSURED- Such methodology shall treat as uninsured
those residents who do not have health insurance coverage or other creditable
coverage (as defined in section 9801(c)(1) of the Internal Revenue Code
of 1986), except that such methodology shall rely upon data on the nonelderly
and uninsured populations within each State in such year provided through
population surveys conducted by Federal agencies.
(ii) LIMITATION TO NONELDERLY- Such methodology shall exclude individuals
who are 65 years of age or older.
(iii) EXCLUSION OF ILLEGAL ALIENS- Such methodology shall exclude individuals
not lawfully present in the United States.
(6) CONDITIONS OF PAYMENT- As a condition of receiving a payment under paragraph
(1), a State must agree to submit aggregate, non-individually identifiable
data to the Secretary, in a form and manner specified by the Secretary,
for use by the Secretary in determining the State's uninsured baseline and
uninsured performance level for purposes of this subsection.
(c) Definitions- For purposes of this section:
(1) GROUP HEALTH PLAN- The term `group health plan' has the meaning given
such term in section 9832(a) of the Internal Revenue Code of 1986.
(2) HEALTH INSURANCE COVERAGE- The term `health insurance coverage' has
the meaning given such term in section 9832(b)(1) of the Internal Revenue
Code of 1986.
(3) INDIVIDUAL MARKET- Except as the Secretary may otherwise provide in
the case of group health plans that have fewer than 2 participants as current
employees on the first day of a plan year, the term `individual market'
means the market for health insurance coverage offered to individuals other
than in connection with a group health plan.
(4) SECRETARY- The term `Secretary' means the Secretary of Health and Human
Services.
(5) SMALL GROUP MARKET- The term `small group market' means the market for
health insurance coverage under which individuals obtain health insurance
coverage (directly or through any arrangement) on behalf of themselves (and
their dependents) through a group health plan maintained by an employer
who employed on average at least 2 but not more than 50 employees on business
days during a calendar year.
(6) STATE- The term `State' means any of the 50 States and the District
of Columbia.
(7) YEARS- The terms `year 1', `year 2', `year 3', and similar subsequently
numbered years mean 2012, 2013, 2014, and subsequent sequentially numbered
years.
(d) Appropriations; Payments-
(1) PAYMENTS FOR REDUCTIONS IN COST OF HEALTH INSURANCE COVERAGE-
(i) IN GENERAL- From any funds in the Treasury not otherwise appropriated,
there is appropriated for payments under subsection (a)(1)(A)--
(I) $18,000,000,000 with respect to performance in year 3;
(II) $5,000,000,000 with respect to performance in year 6; and
(III) $2,000,000,000 with respect to performance in year 9.
(ii) AVAILABILITY OF APPROPRIATED FUNDS- Funds appropriated under clause
(i) shall remain available until expended.
(i) IN GENERAL- Subject to clause (ii), from any funds in the Treasury
not otherwise appropriated, there is appropriated for payments under
subsection (a)(1)(B)--
(I) $7,000,000,000 with respect to performance in year 3;
(II) $2,000,000,000 with respect to performance in year 6; and
(III) $1,000,000,000 with respect to performance in year 9.
(ii) AVAILABILITY OF APPROPRIATED FUNDS- Of the funds appropriated under
clause (i) that are not expended or obligated by the end of the year
following the year for which the funds are appropriated--
(I) 75 percent shall remain available until expended for payments
under subsection (a)(1)(B); and
(II) 25 percent shall remain available until expended for payments
under subsection (a)(1)(A).
(2) PAYMENTS FOR REDUCTIONS IN THE PERCENTAGE OF UNINSURED-
(A) IN GENERAL- From any funds in the Treasury not otherwise appropriated,
there is appropriated for payments under subsection (b)(1)--
(i) $10,000,000,000 with respect to performance in year 5;
(ii) $3,000,000,000 with respect to performance in year 7; and
(iii) $2,000,000,000 with respect to performance in year 9.
(B) AVAILABILITY OF APPROPRIATED FUNDS- Funds appropriated under subparagraph
(A) shall remain available until expended.
(3) PAYMENT TIMING- Payments under this section shall be made in a form
and manner specified by the Secretary in the year after the performance
year involved.
SEC. 112. HEALTH PLAN FINDERS.
(a) State Plan Finders- Not later than 12 months after the date of the enactment
of this Act, each State may contract with a private entity to develop and
operate a plan finder Web site (referred to in this section as a `State plan
finder') which shall provide information to individuals in such State on plans
of health insurance coverage that are available to individuals in such State
(in this section referred to as a `health insurance plan'). Such State may
not operate a plan finder itself.
(b) Multi-State Plan Finders-
(1) IN GENERAL- A private entity may operate a multi-State finder that operates
under this section in the States involved in the same manner as a State
plan finder would operate in a single State.
(2) SHARING OF INFORMATION- States shall regulate the manner in which data
is shared between plan finders to ensure consistency and accuracy in the
information about health insurance plans contained in such finders.
(c) Requirements for Plan Finders- Each plan finder shall meet the following
requirements:
(1) The plan finder shall ensure that each health insurance plan in the
plan finder meets the requirements for such plans under subsection (d).
(2) The plan finder shall present complete information on the costs and
benefits of health insurance plans (including information on monthly premium,
copayments, and deductibles) in a uniform manner that--
(A) uses the standard definitions developed under paragraph (3); and
(B) is designed to allow consumers to easily compare such plans.
(3) The plan finder shall be available on the Internet and accessible to
all individuals in the State or, in the case of a multi-State plan finder,
in all States covered by the multi-State plan finder.
(4) The plan finder shall allow consumers to search and sort data on the
health insurance plans in the plan finder on criteria such as coverage of
specific benefits (such as coverage of disease management services or pediatric
care services), as well as data available on quality.
(5) The plan finder shall meet all relevant State laws and regulations,
including laws and regulations related to the marketing of insurance products.
In the case of a multi-State plan finder, the finder shall meet such laws
and regulations for all of the States involved.
(6) The plan finder shall meet solvency, financial, and privacy requirements
established by the State or States in which the plan finder operates or
the Secretary for multi-State finders.
(7) The plan finder and the employees of the plan finder shall be appropriately
licensed in the State or States in which the plan finder operates, if such
licensure is required by such State or States.
(8) Notwithstanding subsection (f)(1), the plan finder shall assist 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 Medicaid options, eligibility, and
how to enroll.
(d) Requirements for Plans Participating in a Plan Finder-
(1) IN GENERAL- Each State shall ensure that health insurance plans participating
in the State plan finder or in a multi-State plan finder meet the requirements
of paragraph (2) (relating to adequacy of insurance coverage, consumer protection,
and financial strength).
(2) SPECIFIC REQUIREMENTS- In order to participate in a plan finder, a health
insurance plan must meet all of the following requirements, as determined
by each State in which such plan operates:
(A) The health insurance plan shall be actuarially sound.
(B) The health insurance plan may not have a history of abusive policy
rescissions.
(C) The health insurance plan shall meet financial and solvency requirements.
(D) The health insurance plan shall disclose--
(i) all financial arrangements involving the sale and purchase of health
insurance, such as the payment of fees and commissions; and
(ii) such arrangements may not be abusive.
(E) The health insurance plan shall maintain electronic health records
that comply with the requirements of the American Recovery and Reinvestment
Act of 2009 (Public Law 111-5) related to electronic health records.
(F) The health insurance plan shall make available to plan enrollees via
the finder, whether by information provided to the finder or by a Web
site link directing the enrollee from the finder to the health insurance
plan Web site, data that includes the price and cost to the individual
of services offered by a provider according to the terms and conditions
of the health plan. Data described in this paragraph is not made public
by the finder, only made available to the individual once enrolled in
the health plan.
(1) DIRECT ENROLLMENT- The State plan finder may not directly enroll individuals
in health insurance plans.
(2) CONFLICTS OF INTEREST-
(A) COMPANIES- A health insurance issuer offering a health insurance plan
through a plan finder may not--
(i) be the private entity developing and maintaining a plan finder under
subsections (a) and (b); or
(ii) have an ownership interest in such private entity or in the plan
finder.
(B) INDIVIDUALS- An individual employed by a health insurance issuer offering
a health insurance plan through a plan finder may not serve as a director
or officer for--
(i) the private entity developing and maintaining a plan finder under
subsections (a) and (b); or
(f) Construction- Nothing in this section shall be construed to allow the
Secretary authority to regulate benefit packages or to prohibit health insurance
brokers and agents from--
(1) utilizing the plan finder for any purpose; or
(2) marketing or offering health insurance products.
(g) Plan Finder Defined- For purposes of this section, the term `plan finder'
means a State plan finder under subsection (a) or a multi-State plan finder
under subsection (b).
(h) State Defined- In this section, the term `State' has the meaning given
such term for purposes of title XIX of the Social Security Act.
SEC. 113. ADMINISTRATIVE SIMPLIFICATION.
(a) Operating Rules for Health Information Transactions-
(1) DEFINITION OF OPERATING RULES- Section 1171 of the Social Security Act
(42 U.S.C. 1320d) is amended by adding at the end the following:
`(9) OPERATING RULES- The term `operating rules' means the necessary business
rules and guidelines for the electronic exchange of information that are
not defined by a standard or its implementation specifications as adopted
for purposes of this part.'.
(2) OPERATING RULES AND COMPLIANCE- Section 1173 of the Social Security
Act (42 U.S.C. 1320d-2) is amended--
(A) in subsection (a)(2), by adding at the end the following new subparagraph:
`(J) Electronic funds transfers.'; and
(B) by adding at the end the following new subsections:
`(1) IN GENERAL- The Secretary shall adopt a single set of operating rules
for each transaction described in subsection (a)(2) with the goal of creating
as much uniformity in the implementation of the electronic standards as
possible. Such operating rules shall be consensus-based and reflect the
necessary business rules affecting health plans and health care providers
and the manner in which they operate pursuant to standards issued under
Health Insurance Portability and Accountability Act of 1996.
`(2) OPERATING RULES DEVELOPMENT- In adopting operating rules under this
subsection, the Secretary shall rely on recommendations for operating rules
developed by a qualified nonprofit entity, as selected by the Secretary,
that meets the following requirements:
`(A) The entity focuses its mission on administrative simplification.
`(B) The entity demonstrates an established multi-stakeholder and consensus-based
process for development of operating rules, including representation by
or participation from health plans, health care providers, vendors, relevant
Federal agencies, and other standard development organizations.
`(C) The entity has established a public set of guiding principles that
ensure the operating rules and process are open and transparent.
`(D) The entity coordinates its activities with the HIT Policy Committee
and the HIT Standards Committee (as established under title XXX of the
Public Health Service Act) and complements the efforts of the Office of
the National Healthcare Coordinator and its related health information
exchange goals.
`(E) The entity incorporates national standards, including the transaction
standards issued under Health Insurance Portability and Accountability
Act of 1996.
`(F) The entity supports nondiscrimination and conflict of interest policies
that demonstrate a commitment to open, fair, and nondiscriminatory practices.
`(G) The entity allows for public review and updates of the operating
rules.
`(3) REVIEW AND RECOMMENDATIONS- The National Committee on Vital and Health
Statistics shall--
`(A) review the operating rules developed by a nonprofit entity described
under paragraph (2);
`(B) determine whether such rules represent a consensus view of the health
care industry and are consistent with and do not alter current standards;
`(C) evaluate whether such rules are consistent with electronic standards
adopted for health information technology; and
`(D) submit to the Secretary a recommendation as to whether the Secretary
should adopt such rules.
`(A) IN GENERAL- The Secretary shall adopt operating rules under this
subsection, by regulation in accordance with subparagraph (C), following
consideration of the rules developed by the non-profit entity described
in paragraph (2) and the recommendation submitted by the National Committee
on Vital and Health Statistics under paragraph (3)(D) and having ensured
consultation with providers.
`(B) ADOPTION REQUIREMENTS; EFFECTIVE DATES-
`(i) ELIGIBILITY FOR A HEALTH PLAN AND HEALTH CLAIM STATUS- The set
of operating rules for transactions for eligibility for a health plan
and health claim status shall be adopted not later than July 1, 2011,
in a manner ensuring that such rules are effective not later than January
1, 2013, and may allow for the use of a machine readable identification
card.
`(ii) ELECTRONIC FUNDS TRANSFERS AND HEALTH CARE PAYMENT AND REMITTANCE
ADVICE- The set of operating rules for electronic funds transfers and
health care payment and remittance advice shall be adopted not later
than July 1, 2012, in a manner ensuring that such rules are effective
not later than January 1, 2014.
`(iii) OTHER COMPLETED TRANSACTIONS- The set of operating rules for
the remainder of the completed transactions described in subsection
(a)(2), including health claims or equivalent encounter information,
enrollment and disenrollment in a health plan, health plan premium payments,
and referral certification and authorization, shall be adopted not later
than July 1, 2014, in a manner ensuring that such rules are effective
not later than January 1, 2016.
`(C) EXPEDITED RULEMAKING- The Secretary shall promulgate an interim final
rule applying any standard or operating rule recommended by the National
Committee on Vital and Health Statistics pursuant to paragraph (3). The
Secretary shall accept public comments on any interim final rule published
under this subparagraph for 60 days after the date of such publication.
`(1) HEALTH PLAN CERTIFICATION-
`(A) ELIGIBILITY FOR A HEALTH PLAN, HEALTH CLAIM STATUS, ELECTRONIC FUNDS
TRANSFERS, HEALTH CARE PAYMENT AND REMITTANCE ADVICE- Not later than December
31, 2013, a health plan shall file a statement with the Secretary, in
such form as the Secretary may require, certifying that the data and information
systems for such plan are in compliance with any applicable standards
(as described under paragraph (7) of section 1171) and operating rules
(as described under paragraph (9) of such section) for electronic funds
transfers, eligibility for a health plan, health claim status, and health
care payment and remittance advice, respectively.
`(B) OTHER COMPLETED TRANSACTIONS- Not later than December 31, 2015, a
health plan shall file a statement with the Secretary, in such form as
the Secretary may require, certifying that the data and information systems
for such plan are in compliance with any applicable standards and operating
rules for the remainder of the completed transactions described in subsection
(a)(2), including health claims or equivalent encounter information, enrollment
and disenrollment in a health plan, health plan premium payments, and
referral certification and authorization, respectively. A health plan
shall provide the same level of documentation to certify compliance with
such transactions as is required to certify compliance with the transactions
specified in subparagraph (A).
`(2) DOCUMENTATION OF COMPLIANCE- A health plan shall provide the Secretary,
in such form as the Secretary may require, with adequate documentation of
compliance with the standards and operating rules described under paragraph
(1). A health plan shall not be considered to have provided adequate documentation
and shall not be certified as being in compliance with such standards, unless
the health plan--
`(A) demonstrates to the Secretary that the plan conducts the electronic
transactions specified in paragraph (1) in a manner that fully complies
with the regulations of the Secretary; and
`(B) provides documentation showing that the plan has completed end-to-end
testing for such transactions with their partners, such as hospitals and
physicians.
`(3) SERVICE CONTRACTS- A health plan shall be required to comply with any
applicable certification and compliance requirements (and provide the Secretary
with adequate documentation of such compliance) under this subsection for
any entities that provide services pursuant to a contract with such health
plan.
`(4) CERTIFICATION BY OUTSIDE ENTITY- The Secretary may contract with an
independent, outside entity to certify that a health plan has complied with
the requirements under this subsection, provided that the certification
standards employed by such entities are in accordance with any standards
or rules issued by the Secretary.
`(5) COMPLIANCE WITH REVISED STANDARDS AND RULES- A health plan (including
entities described under paragraph (3)) shall comply with the certification
and documentation requirements under this subsection for any interim final
rule promulgated by the Secretary under subsection (i) that amends any standard
or operating rule described under paragraph (1) of this subsection. A health
plan shall comply with such requirements not later than the effective date
of the applicable interim final rule.
`(6) AUDITS OF HEALTH PLANS- The Secretary shall conduct periodic audits
to ensure that health plans (including entities described under paragraph
(3)) are in compliance with any standards and operating rules that are described
under paragraph (1).
`(i) Review and Amendment of Standards and Rules-
`(1) ESTABLISHMENT- Not later than January 1, 2014, the Secretary shall
establish a review committee (as described under paragraph (4)).
`(2) EVALUATIONS AND REPORTS-
`(A) HEARINGS- Not later than April 1, 2014, and not less than biennially
thereafter, the Secretary, acting through the review committee, shall
conduct hearings to evaluate and review the existing standards and operating
rules established under this section.
`(B) REPORT- Not later than July 1, 2014, and not less than biennially
thereafter, the review committee shall provide recommendations for updating
and improving such standards and rules. The review committee shall recommend
a single set of operating rules per transaction standard and maintain
the goal of creating as much uniformity as possible in the implementation
of the electronic standards.
`(3) INTERIM FINAL RULEMAKING-
`(A) IN GENERAL- Any recommendations to amend existing standards and operating
rules that have been approved by the review committee and reported to
the Secretary under paragraph (2)(B) shall be adopted by the Secretary
through promulgation of an interim final rule not later than 90 days after
receipt of the committee's report.
`(i) PUBLIC COMMENT PERIOD- The Secretary shall accept public comments
on any interim final rule published under this paragraph for 60 days
after the date of such publication.
`(ii) EFFECTIVE DATE- The effective date of any amendment to existing
standards or operating rules that is adopted through an interim final
rule published under this paragraph shall be 25 months following the
close of such public comment period.
`(A) DEFINITION- For the purposes of this subsection, the term `review
committee' means a committee within the Department of Health and Human
services that has been designated by the Secretary to carry out this subsection,
including--
`(i) the National Committee on Vital and Health Statistics; or
`(ii) any appropriate committee as determined by the Secretary.
`(B) COORDINATION OF HIT STANDARDS- In developing recommendations under
this subsection, the review committee shall consider the standards approved
by the Office of the National Coordinator for Health Information Technology.
`(A) IN GENERAL- Not later than April 1, 2014, and annually thereafter,
the Secretary shall assess a penalty fee (as determined under subparagraph
(B)) against a health plan that has failed to meet the requirements under
subsection (h) with respect to certification and documentation of compliance
with the standards (and their operating rules) as described under paragraph
(1) of such subsection.
`(B) FEE AMOUNT- Subject to subparagraphs (C), (D), and (E), the Secretary
shall assess a penalty fee against a health plan in the amount of $1 per
covered life until certification is complete. The penalty shall be assessed
per person covered by the plan for which its data systems for major medical
policies are not in compliance and shall be imposed against the health
plan for each day that the plan is not in compliance with the requirements
under subsection (h).
`(C) ADDITIONAL PENALTY FOR MISREPRESENTATION- A health plan that knowingly
provides inaccurate or incomplete information in a statement of certification
or documentation of compliance under subsection (h) shall be subject to
a penalty fee that is double the amount that would otherwise be imposed
under this subsection.
`(D) ANNUAL FEE INCREASE- The amount of the penalty fee imposed under
this subsection shall be increased on an annual basis by the annual percentage
increase in total national health care expenditures, as determined by
the Secretary.
`(E) PENALTY LIMIT- A penalty fee assessed against a health plan under
this subsection shall not exceed, on an annual basis--
`(i) an amount equal to $20 per covered life under such plan; or
`(ii) an amount equal to $40 per covered life under the plan if such
plan has knowingly provided inaccurate or incomplete information (as
described under subparagraph (C)).
`(F) DETERMINATION OF COVERED INDIVIDUALS- The Secretary shall determine
the number of covered lives under a health plan based upon the most recent
statements and filings that have been submitted by such plan to the Securities
and Exchange Commission.
`(2) NOTICE AND DISPUTE PROCEDURE- The Secretary shall establish a procedure
for assessment of penalty fees under this subsection that provides a health
plan with reasonable notice and a dispute resolution procedure prior to
provision of a notice of assessment by the Secretary of the Treasury (as
described under paragraph (4)(B)).
`(3) PENALTY FEE REPORT- Not later than December 1, 2015, and annually thereafter,
the Secretary shall provide the Secretary of the Treasury with a report
identifying those health plans that have been assessed a penalty fee under
this subsection.
`(4) COLLECTION OF PENALTY FEE-
`(A) IN GENERAL- The Secretary of the Treasury, acting through the Financial
Management Service, shall administer the collection of penalty fees from
health plans that have been identified by the Secretary in the penalty
fee report provided under paragraph (3).
`(B) NOTICE- Not later than August 1, 2014, and annually thereafter, the
Secretary of the Treasury shall provide notice to each health plan that
has been assessed a penalty fee by the Secretary under this subsection.
Such notice shall include the amount of the penalty fee assessed by the
Secretary and the due date for payment of such fee to the Secretary of
the Treasury (as described in subparagraph (C)).
`(C) PAYMENT DUE DATE- Payment by a health plan for a penalty fee assessed
under this subsection shall be made to the Secretary of the Treasury not
later than November 1, 2014, and annually thereafter.
`(D) UNPAID PENALTY FEES- Any amount of a penalty fee assessed against
a health plan under this subsection for which payment has not been made
by the due date provided under subparagraph (C) shall be--
`(i) increased by the interest accrued on such amount, as determined
pursuant to the underpayment rate established under section 6601 of
the Internal Revenue Code of 1986; and
`(ii) treated as a past-due, legally enforceable debt owed to a Federal
agency for purposes of section 6402(d) of the Internal Revenue Code
of 1986.
`(E) ADMINISTRATIVE FEES- Any fee charged or allocated for collection
activities conducted by the Financial Management Service will be passed
on to a health plan on a pro-rata basis and added to any penalty fee collected
from the plan.'.
(b) Promulgation of Rules-
(1) UNIQUE HEALTH PLAN IDENTIFIER- The Secretary shall promulgate a final
rule to establish a unique health plan identifier (as described in section
1173(b) of the Social Security Act (42 U.S.C. 1320d-2(b))) based on the
input of the National Committee of Vital and Health Statistics. The Secretary
may do so on an interim final basis and such rule shall be effective not
later than October 1, 2012.
(2) ELECTRONIC FUNDS TRANSFER- The Secretary shall promulgate a final rule
to establish a standard for electronic funds transfers (as described in
section 1173(a)(2)(J) of the Social Security Act, as added by subsection
(a)(2)(A)). The Secretary may do so on an interim final basis and shall
adopt such standard not later than January 1, 2012, in a manner ensuring
that such standard is effective not later than January 1, 2014.
(c) Expansion of Electronic Transactions in Medicare- Section 1862(a) of the
Social Security Act (42 U.S.C. 1395y(a)) is amended--
(1) in paragraph (23), by striking the `or' at the end;
(2) in paragraph (24), by striking the period and inserting `; or'; and
(3) by inserting after paragraph (24) the following new paragraph:
`(25) not later than January 1, 2014, for which the payment is other than
by electronic funds transfer (EFT) or an electronic remittance in a form
as specified in ASC X12 835 Health Care Payment and Remittance Advice or
subsequent standard.'.
(d) Medicare and Medicaid Compliance Reports- Not later than July 1, 2013,
the Secretary of Health and Human Services shall submit a report to the chairs
and ranking members of the Committee on Ways and Means and the Committee on
Energy and Commerce of the House of Representatives and the chairs and ranking
members of the Committee on Health, Education, Labor, and Pensions and the
Committee on Finance of the Senate on the extent to which the Medicare program
and providers that serve beneficiaries under that program, and State Medicaid
programs and providers that serve beneficiaries under those programs, transact
electronically in accordance with transaction standards issued under the Health
Insurance Portability and Accountability Act of 1996, part C of title XI of
the Social Security Act, and regulations promulgated under such Acts.
DIVISION B--IMPROVING ACCESS TO HEALTH CARE
TITLE I--EXPANDING ACCESS AND LOWERING COSTS FOR SMALL BUSINESSES
SEC. 201. RULES GOVERNING ASSOCIATION HEALTH PLANS.
(a) 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:
`PART 8--RULES GOVERNING ASSOCIATION HEALTH PLANS
`SEC. 801. ASSOCIATION HEALTH PLANS.
`(a) 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).
`(b) Sponsorship- The sponsor of a group health plan is described in this
subsection if such sponsor--
`(1) 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;
`(2) 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
`(3) 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.
Any sponsor consisting of an association of entities which meet the requirements
of paragraphs (1), (2), and (3) shall be deemed to be a sponsor described
in this subsection.
`SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.
`(a) 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.
`(b) 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.
`(c) 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).
`(d) Requirements for Continued Certification- The applicable authority may
provide by regulation for continued certification of association health plans
under this part.
`(e) 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).
`(f) 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:
`(1) a plan which offered such coverage on the date of the enactment of
the Small Business Health Fairness Act of 2011,
`(2) 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,
or
`(3) 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.
`SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.
`(a) 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.
`(b) Board of Trustees- The requirements of this subsection are met with respect
to an association health plan if the following requirements are met:
`(1) 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.
`(2) 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.
`(3) RULES GOVERNING RELATIONSHIP TO PARTICIPATING EMPLOYERS AND TO CONTRACTORS-
`(i) 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.
`(I) 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.
`(II) 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.
`(III) 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.
`(iii) 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 2011.
`(B) 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.
`(c) 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--
`(1) 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
`(2) the requirements of section 804(a)(1) shall be deemed met.
The Secretary may by regulation define for purposes of this subsection the
terms `franchiser', `franchise network', and `franchisee'.
`SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.
`(a) 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--
`(1) each participating employer must be--
`(A) a member of the sponsor,
`(C) an affiliated member of the sponsor with respect to which the requirements
of subsection (b) are met,
except that, in the case of a sponsor which is a professional association
or other individual-based association, if at least one of the officers,
directors, or employees of an employer, or at least one of the individuals
who are partners in an employer and who actively participates in the business,
is a member or such an affiliated member of the sponsor, participating employers
may also include such employer; and
`(2) all individuals commencing coverage under the plan after certification
under this part must be--
`(A) active or retired owners (including self-employed individuals), officers,
directors, or employees of, or partners in, participating employers; or
`(B) the beneficiaries of individuals described in subparagraph (A).
`(b) 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 2011, an affiliated member of the sponsor of the plan
may be offered coverage under the plan as a participating employer only if--
`(1) the affiliated member was an affiliated member on the date of certification
under this part; or
`(2) 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.
`(c) 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.
`(d) 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--
`(1) 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 are not met;
`(2) upon request, any employer eligible to participate is furnished information
regarding all coverage options available under the plan; and
`(3) the applicable requirements of sections 701, 702, and 703 are met with
respect to the plan.
`SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION RATES,
AND BENEFIT OPTIONS.
`(a) In General- The requirements of this section are met with respect to
an association health plan if the following requirements are met:
`(1) 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--
`(A) 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));
`(B) provides that the sponsor of the plan is to serve as plan sponsor
(referred to in section 3(16)(B)); and
`(C) incorporates the requirements of section 806.
`(2) CONTRIBUTION RATES MUST BE NONDISCRIMINATORY-
`(A) 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.
`(B) 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--
`(i) setting contribution rates based on the claims experience of the
plan; or
`(ii) 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),
subject to the requirements of section 702(b) relating to contribution
rates.
`(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.
`(4) MARKETING REQUIREMENTS-
`(A) 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.
`(B) 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.
`(5) 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.
`(b) 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.
`SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR PLANS
PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH INSURANCE COVERAGE.
`(a) In General- The requirements of this section are met with respect to
an association health plan if--
`(1) the benefits under the plan consist solely of health insurance coverage;
or
`(2) if the plan provides any additional benefit options which do not consist
of health insurance coverage, the plan--
`(A) establishes and maintains reserves with respect to such additional
benefit options, in amounts recommended by the qualified actuary, consisting
of--
`(i) a reserve sufficient for unearned contributions;
`(ii) 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;
`(iii) a reserve sufficient for any other obligations of the plan; and
`(iv) a reserve sufficient for a margin of error and other fluctuations,
taking into account the specific circumstances of the plan; and
`(B) 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:
`(i) 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).
`(ii) 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).
`(iii) The plan shall secure indemnification insurance for any claims
which the plan is unable to satisfy by reason of a plan termination.
Any person issuing to a plan insurance described in clause (i), (ii), or (iii)
of subparagraph (B) shall notify the Secretary of any failure of premium payment
meriting cancellation of the policy prior to undertaking such a cancellation.
Any regulations prescribed by the applicable authority pursuant to clause
(i) or (ii) of subparagraph (B) may allow for such adjustments in the required
levels of excess/stop loss insurance as the qualified actuary may recommend,
taking into account the specific circumstances of the plan.
`(b) 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--
`(2) 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.
`(c) 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.
`(d) 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.
`(e) 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.
`(f) Measures To Ensure Continued Payment of Benefits by Certain Plans in
Distress-
`(1) PAYMENTS BY CERTAIN PLANS TO ASSOCIATION HEALTH PLAN FUND-
`(A) 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.
`(B) 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.
`(C) 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.
`(2) 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.
`(3) ASSOCIATION HEALTH PLAN FUND-
`(A) 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).
`(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.
`(g) Excess/Stop Loss Insurance- For purposes of this section--
`(1) AGGREGATE EXCESS/STOP LOSS INSURANCE- The term `aggregate excess/stop
loss insurance' means, in connection with an association health plan, a
contract--
`(A) 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;
`(B) which is guaranteed renewable; and
`(C) which allows for payment of premiums by any third party on behalf
of the insured plan.
`(2) SPECIFIC EXCESS/STOP LOSS INSURANCE- The term `specific excess/stop
loss insurance' means, in connection with an association health plan, a
contract--
`(A) 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;
`(B) which is guaranteed renewable; and
`(C) which allows for payment of premiums by any third party on behalf
of the insured plan.
`(h) Indemnification Insurance- For purposes of this section, the term `indemnification
insurance' means, in connection with an association health plan, a contract--
`(1) 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);
`(2) which is guaranteed renewable and noncancellable for any reason (except
as the applicable authority may prescribe by regulation); and
`(3) which allows for payment of premiums by any third party on behalf of
the insured plan.
`(i) 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.
`(j) Solvency Standards Working Group-
`(1) IN GENERAL- Within 90 days after the date of the enactment of the Small
Business Health Fairness Act of 2011, 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.
`(2) 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) a representative of the National Association of Insurance Commissioners;
`(B) a representative of the American Academy of Actuaries;
`(C) a representative of the State governments, or their interests;
`(D) a representative of existing self-insured arrangements, or their
interests;
`(E) a representative of associations of the type referred to in section
801(b)(1), or their interests; and
`(F) a representative of multiemployer plans that are group health plans,
or their interests.
`SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.
`(a) 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.
`(b) 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:
`(1) IDENTIFYING INFORMATION- The names and addresses of--
`(B) the members of the board of trustees of the plan.
`(2) 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.
`(3) 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.
`(4) 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.
`(5) AGREEMENTS WITH SERVICE PROVIDERS- A copy of any agreements between
the plan and contract administrators and other service providers.
`(6) 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:
`(A) 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.
`(B) 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.
`(C) 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.
`(D) 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.
`(E) 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.
`(c) 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.
`(d) 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.
`(e) 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.
`(f) 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--
`(1) are in the aggregate reasonably related to the experience of the plan
and to reasonable expectations; and
`(2) represent such actuary's best estimate of anticipated experience under
the plan.
The opinion by the qualified actuary shall be made with respect to, and shall
be made a part of, the annual report.
`SEC. 808. 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--
`(1) provides to the participants and beneficiaries a written notice of
intent to terminate stating that such termination is intended and the proposed
termination date;
`(2) 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
`(3) submits such plan in writing to the applicable authority.
Actions required under this section shall be taken in such form and manner
as may be prescribed by the applicable authority by regulation.
`SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.
`(a) 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.
`(b) Mandatory Termination- In any case in which--
`(1) 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
`(2) the applicable authority determines that there is a reasonable expectation
that the plan will continue to fail to meet the requirements of section
806,
the board of trustees of the plan shall, at the direction of the applicable
authority, terminate the plan and, in the course of the termination, take
such actions as the applicable authority may require, including satisfying
any claims referred to in section 806(a)(2)(B)(iii) and recovering for the
plan any liability under subsection (a)(2)(B)(iii) or (e) of section 806,
as necessary to ensure that the affairs of the plan will be, to the maximum
extent possible, wound up in a manner which will result in timely provision
of all benefits for which the plan is obligated.
`SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT ASSOCIATION HEALTH
PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH INSURANCE COVERAGE.
`(a) 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.
`(b) Powers as Trustee- The Secretary, upon appointment as trustee under subsection
(a), shall have the power--
`(1) 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;
`(2) to require the transfer of all (or any part) of the assets and records
of the plan to the Secretary as trustee;
`(3) 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;
`(4) 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;
`(5) to collect for the plan any amounts due the plan and to recover reasonable
expenses of the trusteeship;
`(6) to commence, prosecute, or defend on behalf of the plan any suit or
proceeding involving the plan;
`(7) 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;
`(8) 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;
`(9) to provide for the enrollment of plan participants and beneficiaries
under appropriate coverage options; and
`(10) 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.
`(c) Notice of Appointment- As soon as practicable after the Secretary's appointment
as trustee, the Secretary shall give notice of such appointment to--
`(1) the sponsor and plan administrator;
`(3) each participating employer; and
`(4) if applicable, each employee organization which, for purposes of collective
bargaining, represents plan participants.
`(d) 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.
`(e) 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.
`(f) Jurisdiction of Court-
`(1) 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.
`(2) 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.
`(g) 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.
`SEC. 811. STATE ASSESSMENT AUTHORITY.
`(a) 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 2011.
`(b) 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--
`(1) 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;
`(2) 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;
`(3) such tax is otherwise nondiscriminatory; and
`(4) 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.
`SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.
`(a) Definitions- For purposes of this part--
`(1) GROUP HEALTH PLAN- The term `group health plan' has the meaning provided
in section 733(a)(1) (after applying subsection (b) of this section).
`(2) MEDICAL CARE- The term `medical care' has the meaning provided in section
733(a)(2).
`(3) HEALTH INSURANCE COVERAGE- The term `health insurance coverage' has
the meaning provided in section 733(b)(1).
`(4) HEALTH INSURANCE ISSUER- The term `health insurance issuer' has the
meaning provided in section 733(b)(2).
`(5) 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.
`(6) HEALTH STATUS-RELATED FACTOR- The term `health status-related factor'
has the meaning provided in section 733(d)(2).
`(A) 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.
`(B) TREATMENT OF VERY SMALL GROUPS-
`(i) 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.
`(ii) 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) is regulated by such State.
`(8) 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.
`(9) 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 for the
State involved with respect to such issuer.
`(10) QUALIFIED ACTUARY- The term `qualified actuary' means an individual
who is a member of the American Academy of Actuaries.
`(11) AFFILIATED MEMBER- The term `affiliated member' means, in connection
with a sponsor--
`(A) a person who is otherwise eligible to be a member of the sponsor
but who elects an affiliated status with the sponsor,
`(B) 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
`(C) in the case of an association health plan in existence on the date
of the enactment of the Small Business Health Fairness Act of 2011, a
person eligible to be a member of the sponsor or one of its member associations.
`(12) 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.
`(13) 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.
`(b) Rules of Construction-
`(1) 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--
`(A) 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
`(B) 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.
`(2) 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.'.
(b) Conforming Amendments to Preemption Rules-
(1) 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:
`(E) 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.'.
(2) Section 514 of such Act (29 U.S.C. 1144) is amended--
(A) in subsection (b)(4), by striking `Subsection (a)' and inserting `Subsections
(a) and (d)';
(B) 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';
(C) by redesignating subsections (d) and (e) as subsections (e) and (f),
respectively; and
(D) by inserting after subsection (c) the following new subsection:
`(d)(1) 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.
`(2) Except as provided in paragraphs (4) and (5) of subsection (b) of this
section--
`(A) 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.
`(B) 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.
`(3) 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--
`(A) providing solvency standards or similar standards regarding the adequacy
of insurer capital, surplus, reserves, or contributions, or
`(B) relating to prompt payment of claims.
`(4) For additional provisions relating to association health plans, see subsections
(a)(2)(B) and (b) of section 805.
`(5) 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.'.
(3) Section 514(b)(6)(A) of such Act (29 U.S.C. 1144(b)(6)(A)) is amended--
(A) in clause (i)(II), by striking `and' at the end;
(B) 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
(C) by adding at the end the following new clause:
`(iii) 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.'.
(4) Section 514(e) of such Act (as redesignated by paragraph (2)(C)) is
amended--
(A) by striking `Nothing' and inserting `(1) Except as provided in paragraph
(2), nothing'; and
(B) by adding at the end the following new paragraph:
`(2) Nothing in any other provision of law enacted on or after the date of
the enactment of the Small Business Health Fairness Act of 2011 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.'.
(c) 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.'.
(d) 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.'.
(e) Savings Clause- Section 731(c) of such Act is amended by inserting `or
part 8' after `this part'.
(f) 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.
(g) 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.'.
SEC. 202. 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--
(1) 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,';
(2) in clause (iii), by striking `(iii) the determination' and inserting
the following:
`(iii)(I) 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
`(II) in any other case, the determination';
(3) by redesignating clauses (iv) and (v) as clauses (v) and (vi), respectively;
and
(4) by inserting after clause (iii) the following new clause:
`(iv) 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,'.
SEC. 203. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH PLANS.
(a) Criminal Penalties for Certain Willful Misrepresentations- Section 501
of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1131) is
amended--
(1) by inserting `(a)' after `Sec. 501.'; and
(2) by adding at the end the following new subsection:
`(b) 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--
`(1) being an association health plan which has been certified under part
8;
`(2) 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
`(3) being a plan or arrangement described in section 3(40)(A)(i),
shall, upon conviction, be imprisoned not more than 5 years, be fined under
title 18, United States Code, or both.'.
(b) Cease Activities Orders- Section 502 of such Act (29 U.S.C. 1132) is amended
by adding at the end the following new subsection:
`(n) Association Health Plan Cease and Desist Orders-
`(1) 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--
`(A) 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
`(B) is an association health plan certified under part 8 and is not operating
in accordance with the requirements under part 8 for such certification,
a district court of the United States shall enter an order requiring that
the plan or arrangement cease activities.
`(2) EXCEPTION- Paragraph (1) shall not apply in the case of an association
health plan or other arrangement if the plan or arrangement shows that--
`(A) all benefits under it referred to in paragraph (1) consist of health
insurance coverage; and
`(B) 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.
`(3) 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.'.
(c) 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:
`(b) 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.'.
SEC. 204. 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:
`(d) Consultation With States With Respect to Association Health Plans-
`(1) 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--
`(A) the Secretary's authority under sections 502 and 504 to enforce the
requirements for certification under part 8; and
`(B) 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.
`(2) 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--
`(A) 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
`(B) 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.'.
SEC. 205. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.
(a) Effective Date- The amendments made by this title 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 title within 1 year after the date of the enactment of this Act.
(b) Treatment of Certain Existing Health Benefits Programs-
(1) 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--
(A) such arrangement shall be deemed to be a group health plan for purposes
of title I of such Act;
(B) 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;
(C) the requirements of section 803(b) of such Act shall be deemed met,
if the arrangement is operated by a board of directors which--
(i) is elected by the participating employers, with each employer having
one vote; and
(ii) has complete fiscal control over the arrangement and which is responsible
for all operations of the arrangement;
(D) the requirements of section 804(a) of such Act shall be deemed met
with respect to such arrangement; and
(E) 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.
The provisions of this subsection shall cease to apply with respect to any
such arrangement at such time after the date of the enactment of this Act
as the applicable requirements of this subsection are not met with respect
to such arrangement.
(2) 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.
TITLE II--TARGETED EFFORTS TO EXPAND ACCESS
SEC. 211. EXTENDING COVERAGE OF DEPENDENTS.
(a) Employee Retirement Income Security Act of 1974-
(1) IN GENERAL- Part 7 of subtitle B of title I of the Employee Retirement
Income Security Act of 1974 is amended by inserting after section 2714 the
following new section:
`SEC. 715. EXTENDING COVERAGE OF DEPENDENTS.
`(a) In General- In the case of a group health plan, or health insurance coverage
offered in connection with a group health plan, that treats as a beneficiary
under the plan an individual who is a dependent child of a participant or
beneficiary under the plan, the plan or coverage shall continue to treat the
individual as a dependent child without regard to the individual's age through
at least the end of the plan year in which the individual turns an age specified
in the plan, but not less than 25 years of age.
`(b) Construction- Nothing in this section shall be construed as requiring
a group health plan to provide benefits for dependent children as beneficiaries
under the plan or to require a participant to elect coverage of dependent
children.'.
(2) CLERICAL AMENDMENT- The table of contents of such Act is amended by
inserting after the item relating to section 714 the following new item:
`Sec. 715. Extending coverage of dependents through plan year that includes
25th birthday.'.
(b) PHSA- Title XXVII of the Public Health Service Act is amended by inserting
after section 2707 the following new section:
`SEC. 2708. EXTENDING COVERAGE OF DEPENDENTS.
`(a) In General- In the case of a group health plan, or health insurance coverage
offered in connection with a group health plan, that treats as a beneficiary
under the plan an individual who is a dependent child of a participant or
beneficiary under the plan, the plan or coverage shall continue to treat the
individual as a dependent child without regard to the individual's age through
at least the end of the plan year in which the individual turns an age specified
in the plan, but not less than 25 years of age.
`(b) Construction- Nothing in this section shall be construed as requiring
a group health plan to provide benefits for dependent children as beneficiaries
under the plan or to require a participant to elect coverage of dependent
children.'.
(1) IN GENERAL- Subchapter B of chapter 100 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new section:
`SEC. 9814. EXTENDING COVERAGE OF DEPENDENTS.
`(a) In General- In the case of a group health plan that treats as a beneficiary
under the plan an individual who is a dependent child of a participant or
beneficiary under the plan, the plan shall continue to treat the individual
as a dependent child without regard to the individual's age through at least
the end of the plan year in which the individual turns an age specified in
the plan, but not less than 25 years of age.
`(b) Construction- Nothing in this section shall be construed as requiring
a group health plan to provide coverage for dependent children as beneficiaries
under the plan or to require a participant to elect coverage of dependent
children.'.
(2) CLERICAL AMENDMENT- The table of sections in such subchapter is amended
by adding at the end the following new item:
`Sec. 9814. Extending coverage of dependents through plan year that includes
25th birthday.'.
(d) Effective Date- The amendments made by this section shall apply to group
health plans for each plan year beginning more than 3 months after the date
of the enactment of this Act and shall apply to individuals who are dependent
children under a group health plan, or health insurance coverage offered in
connection with such a plan, on or after such date.
SEC. 212. ALLOWING AUTO-ENROLLMENT FOR EMPLOYER SPONSORED COVERAGE.
(a) In General- No State shall establish a law that prevents an employer from
instituting auto-enrollment for coverage of a participant or beneficiary,
including current employees, under a group health plan, or health insurance
coverage offered in connection with such a plan, so long as the participant
or beneficiary has the option of declining such coverage.
(1) NOTICE REQUIRED- Employers with auto-enrollment under a group health
plan or health insurance coverage shall provide annual notification, within
a reasonable period before the beginning of each plan year, to each employee
eligible to participate in the plan. The notice shall explain the employee
contribution to such plan and the employee's right to decline coverage.
(2) TREATMENT OF NON-ACTION- After a reasonable period of time after receipt
of the notice, if an employee fails to make an affirmative declaration declining
coverage, then such an employee may be enrolled in the group health plan
or health insurance coverage offered in connection with such a plan.'
(c) Construction- Nothing in this section shall be construed to supersede
State law which establishes, implements, or continues in effect any standard
or requirement relating to employers in connection with payroll or the sponsoring
of employer sponsored health insurance coverage except to the extent that
such standard or requirement prevents an employer from instituting the auto-enrollment
described in subsection (a).
TITLE III--EXPANDING CHOICES BY ALLOWING AMERICANS TO BUY HEALTH CARE COVERAGE
ACROSS STATE LINES
SEC. 221. INTERSTATE PURCHASING OF HEALTH INSURANCE.
(a) In General- Title XXVII of the Public Health Service Act (42 U.S.C. 300gg
et seq.) is amended by adding at the end the following new part:
`PART D--COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE COVERAGE
`SEC. 2795. DEFINITIONS.
`(1) PRIMARY STATE- The term `primary State' means, with respect to individual
health insurance coverage offered by a health insurance issuer, the State
designated by the issuer as the State whose covered laws shall govern the
health insurance issuer in the sale of such coverage under this part. An
issuer, with respect to a particular policy, may only designate one such
State as its primary State with respect to all such coverage it offers.
Such an issuer may not change the designated primary State with respect
to individual health insurance coverage once the policy is issued, except
that such a change may be made upon renewal of the policy. With respect
to such designated State, the issuer is deemed to be doing business in that
State.
`(2) SECONDARY STATE- The term `secondary State' means, with respect to
individual health insurance coverage offered by a health insurance issuer,
any State that is not the primary State. In the case of a health insurance
issuer that is selling a policy in, or to a resident of, a secondary State,
the issuer is deemed to be doing business in that secondary State.
`(3) HEALTH INSURANCE ISSUER- The term `health insurance issuer' has the
meaning given such term in section 2791(b)(2), except that such an issuer
must be licensed in the primary State and be qualified to sell individual
health insurance coverage in that State.
`(4) INDIVIDUAL HEALTH INSURANCE COVERAGE- The term `individual health insurance
coverage' means health insurance coverage offered in the individual market,
as defined in section 2791(e)(1).
`(5) APPLICABLE STATE AUTHORITY- The term `applicable State authority' means,
with respect to a health insurance issuer in a State, the State insurance
commissioner or official or officials designated by the State to enforce
the requirements of this title for the State with respect to the issuer.
`(6) HAZARDOUS FINANCIAL CONDITION- The term `hazardous financial condition'
means that, based on its present or reasonably anticipated financial condition,
a health insurance issuer is unlikely to be able--
`(A) to meet obligations to policyholders with respect to known claims
and reasonably anticipated claims; or
`(B) to pay other obligations in the normal course of business.
`(A) IN GENERAL- The term `covered laws' means the laws, rules, regulations,
agreements, and orders governing the insurance business pertaining to--
`(i) individual health insurance coverage issued by a health insurance
issuer;
`(ii) the offer, sale, rating (including medical underwriting), renewal,
and issuance of individual health insurance coverage to an individual;
`(iii) the provision to an individual in relation to individual health
insurance coverage of health care and insurance related services;
`(iv) the provision to an individual in relation to individual health
insurance coverage of management, operations, and investment activities
of a health insurance issuer; and
`(v) the provision to an individual in relation to individual health
insurance coverage of loss control and claims administration for a health
insurance issuer with respect to liability for which the issuer provides
insurance.
`(B) EXCEPTION- Such term does not include any law, rule, regulation,
agreement, or order governing the use of care or cost management techniques,
including any requirement related to provider contracting, network access
or adequacy, health care data collection, or quality assurance.
`(8) STATE- The term `State' means the 50 States and includes the District
of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and
the Northern Mariana Islands.
`(9) UNFAIR CLAIMS SETTLEMENT PRACTICES- The term `unfair claims settlement
practices' means only the following practices:
`(A) Knowingly misrepresenting to claimants and insured individuals relevant
facts or policy provisions relating to coverage at issue.
`(B) Failing to acknowledge with reasonable promptness pertinent communications
with respect to claims arising under policies.
`(C) Failing to adopt and implement reasonable standards for the prompt
investigation and settlement of claims arising under policies.
`(D) Failing to effectuate prompt, fair, and equitable settlement of claims
submitted in which liability has become reasonably clear.
`(E) Refusing to pay claims without conducting a reasonable investigation.
`(F) Failing to affirm or deny coverage of claims within a reasonable
period of time after having completed an investigation related to those
claims.
`(G) A pattern or practice of compelling insured individuals or their
beneficiaries to institute suits to recover amounts due under its policies
by offering substantially less than the amounts ultimately recovered in
suits brought by them.
`(H) A pattern or practice of attempting to settle or settling claims
for less than the amount that a reasonable person would believe the insured
individual or his or her beneficiary was entitled by reference to written
or printed advertising material accompanying or made part of an application.
`(I) Attempting to settle or settling claims on the basis of an application
that was materially altered without notice to, or knowledge or consent
of, the insured.
`(J) Failing to provide forms necessary to present claims within 15 calendar
days of a requests with reasonable explanations regarding their use.
`(K) Attempting to cancel a policy in less time than that prescribed in
the policy or by the law of the primary State.
`(10) FRAUD AND ABUSE- The term `fraud and abuse' means an act or omission
committed by a person who, knowingly and with intent to defraud, commits,
or conceals any material information concerning, one or more of the following:
`(A) Presenting, causing to be presented or preparing with knowledge or
belief that it will be presented to or by an insurer, a reinsurer, broker
or its agent, false information as part of, in support of or concerning
a fact material to one or more of the following:
`(i) An application for the issuance or renewal of an insurance policy
or reinsurance contract.
`(ii) The rating of an insurance policy or reinsurance contract.
`(iii) A claim for payment or benefit pursuant to an insurance policy
or reinsurance contract.
`(iv) Premiums paid on an insurance policy or reinsurance contract.
`(v) Payments made in accordance with the terms of an insurance policy
or reinsurance contract.
`(vi) A document filed with the commissioner or the chief insurance
regulatory official of another jurisdiction.
`(vii) The financial condition of an insurer or reinsurer.
`(viii) The formation, acquisition, merger, reconsolidation, dissolution
or withdrawal from one or more lines of insurance or reinsurance in
all or part of a State by an insurer or reinsurer.
`(ix) The issuance of written evidence of insurance.
`(x) The reinstatement of an insurance policy.
`(B) Solicitation or acceptance of new or renewal insurance risks on behalf
of an insurer reinsurer or other person engaged in the business of insurance
by a person who knows or should know that the insurer or other person
responsible for the risk is insolvent at the time of the transaction.
`(C) Transaction of the business of insurance in violation of laws requiring
a license, certificate of authority or other legal authority for the transaction
of the business of insurance.
`(D) Attempt to commit, aiding or abetting in the commission of, or conspiracy
to commit the acts or omissions specified in this paragraph.
`SEC. 2796. APPLICATION OF LAW.
`(a) In General- The covered laws of the primary State shall apply to individual
health insurance coverage offered by a health insurance issuer in the primary
State and in any secondary State, but only if the coverage and issuer comply
with the conditions of this section with respect to the offering of coverage
in any secondary State.
`(b) Exemptions From Covered Laws in a Secondary State- Except as provided
in this section, a health insurance issuer with respect to its offer, sale,
rating (including medical underwriting), renewal, and issuance of individual
health insurance coverage in any secondary State is exempt from any covered
laws of the secondary State (and any rules, regulations, agreements, or orders
sought or issued by such State under or related to such covered laws) to the
extent that such laws would--
`(1) make unlawful, or regulate, directly or indirectly, the operation of
the health insurance issuer operating in the secondary State, except that
any secondary State may require such an issuer--
`(A) to pay, on a nondiscriminatory basis, applicable premium and other
taxes (including high risk pool assessments) which are levied on insurers
and surplus lines insurers, brokers, or policyholders under the laws of
the State;
`(B) to register with and designate the State insurance commissioner as
its agent solely for the purpose of receiving service of legal documents
or process;
`(C) to submit to an examination of its financial condition by the State
insurance commissioner in any State in which the issuer is doing business
to determine the issuer's financial condition, if--
`(i) the State insurance commissioner of the primary State has not done
an examination within the period recommended by the National Association
of Insurance Commissioners; and
`(ii) any such examination is conducted in accordance with the examiners'
handbook of the National Association of Insurance Commissioners and
is coordinated to avoid unjustified duplication and unjustified repetition;
`(D) to comply with a lawful order issued--
`(i) in a delinquency proceeding commenced by the State insurance commissioner
if there has been a finding of financial impairment under subparagraph
(C); or
`(ii) in a voluntary dissolution proceeding;
`(E) to comply with an injunction issued by a court of competent jurisdiction,
upon a petition by the State insurance commissioner alleging that the
issuer is in hazardous financial condition;
`(F) to participate, on a nondiscriminatory basis, in any insurance insolvency
guaranty association or similar association to which a health insurance
issuer in the State is required to belong;
`(G) to comply with any State law regarding fraud and abuse (as defined
in section 2795(10)), except that if the State seeks an injunction regarding
the conduct described in this subparagraph, such injunction must be obtained
from a court of competent jurisdiction;
`(H) to comply with any State law regarding unfair claims settlement practices
(as defined in section 2795(9)); or
`(I) to comply with the applicable requirements for independent review
under section 2798 with respect to coverage offered in the State;
`(2) require any individual health insurance coverage issued by the issuer
to be countersigned by an insurance agent or broker residing in that Secondary
State; or
`(3) otherwise discriminate against the issuer issuing insurance in both
the primary State and in any secondary State.
`(c) Clear and Conspicuous Disclosure- A health insurance issuer shall provide
the following notice, in 12-point bold type, in any insurance coverage offered
in a secondary State under this part by such a health insurance issuer and
at renewal of the policy, with the 5 blank spaces therein being appropriately
filled with the name of the health insurance issuer, the name of primary State,
the name of the secondary State, the name of the secondary State, and the
name of the secondary State, respectively, for the coverage concerned:
THIS POLICY IS ISSUED BY XXXXX AND IS GOVERNED BY THE LAWS
AND REGULATIONS OF THE STATE OF XXXXX, 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 XXXXX,
INCLUDING COVERAGE OF SOME SERVICES OR BENEFITS MANDATED BY THE LAW OF THE
STATE OF XXXXX. ADDITIONALLY, THIS POLICY IS NOT SUBJECT TO
ALL OF THE CONSUMER PROTECTION LAWS OR RESTRICTIONS ON RATE CHANGES OF THE
STATE OF XXXXX. AS WITH ALL INSURANCE PRODUCTS, BEFORE PURCHASING
THIS POLICY, YOU SHOULD CAREFULLY REVIEW THE POLICY AND DETERMINE WHAT HEALTH
CARE SERVICES THE POLICY COVERS AND WHAT BENEFITS IT PROVIDES, INCLUDING ANY
EXCLUSIONS, LIMITATIONS, OR CONDITIONS FOR SUCH SERVICES OR BENEFITS.'.
`(d) Prohibition on Certain Reclassifications and Premium Increases-
`(1) IN GENERAL- For purposes of this section, a health insurance issuer
that provides individual health insurance coverage to an individual under
this part in a primary or secondary State may not upon renewal--
`(A) move or reclassify the individual insured under the health insurance
coverage from the class such individual is in at the time of issue of
the contract based on the health-status related factors of the individual;
or
`(B) increase the premiums assessed the individual for such coverage based
on a health status-related factor or change of a health status-related
factor or the past or prospective claim experience of the insured individual.
`(2) CONSTRUCTION- Nothing in paragraph (1) shall be construed to prohibit
a health insurance issuer--
`(A) from terminating or discontinuing coverage or a class of coverage
in accordance with subsections (b) and (c) of section 2742;
`(B) from raising premium rates for all policy holders within a class
based on claims experience;
`(C) from changing premiums or offering discounted premiums to individuals
who engage in wellness activities at intervals prescribed by the issuer,
if such premium changes or incentives--
`(i) are disclosed to the consumer in the insurance contract;
`(ii) are based on specific wellness activities that are not applicable
to all individuals; and
`(iii) are not obtainable by all individuals to whom coverage is offered;
`(D) from reinstating lapsed coverage; or
`(E) from retroactively adjusting the rates charged an insured individual
if the initial rates were set based on material misrepresentation by the
individual at the time of issue.
`(e) Prior Offering of Policy in Primary State- A health insurance issuer
may not offer for sale individual health insurance coverage in a secondary
State unless that coverage is currently offered for sale in the primary State.
`(f) Licensing of Agents or Brokers for Health Insurance Issuers- Any State
may require that a person acting, or offering to act, as an agent or broker
for a health insurance issuer with respect to the offering of individual health
insurance coverage obtain a license from that State, with commissions or other
compensation subject to the provisions of the laws of that State, except that
a State may not impose any qualification or requirement which discriminates
against a nonresident agent or broker.
`(g) Documents for Submission to State Insurance Commissioner- Each health
insurance issuer issuing individual health insurance coverage in both primary
and secondary States shall submit--
`(1) to the insurance commissioner of each State in which it intends to
offer such coverage, before it may offer individual health insurance coverage
in such State--
`(A) a copy of the plan of operation 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);
`(B) written notice of any change in its designation of its primary State;
and
`(C) written notice from the issuer of the issuer's compliance with all
the laws of the primary State; and
`(2) to the insurance commissioner of each secondary State in which it offers
individual health insurance coverage, a copy of the issuer's quarterly financial
statement submitted to the primary State, which statement shall be certified
by an independent public accountant and contain a statement of opinion on
loss and loss adjustment expense reserves made by--
`(A) a member of the American Academy of Actuaries; or
`(B) a qualified loss reserve specialist.
`(h) Power of Courts To Enjoin Conduct- Nothing in this section shall be construed
to affect the authority of any Federal or State court to enjoin--
`(1) the solicitation or sale of individual health insurance coverage by
a health insurance issuer to any person or group who is not eligible for
such insurance; or
`(2) the solicitation or sale of individual health insurance coverage that
violates the requirements of the law of a secondary State which are described
in subparagraphs (A) through (H) of section 2796(b)(1).
`(i) Power of Secondary States To Take Administrative Action- Nothing in this
section shall be construed to affect the authority of any State to enjoin
conduct in violation of that State's laws described in section 2796(b)(1).
`(j) State Powers To Enforce State Laws-
`(1) IN GENERAL- Subject to the provisions of subsection (b)(1)(G) (relating
to injunctions) and paragraph (2), nothing in this section shall be construed
to affect the authority of any State to make use of any of its powers to
enforce the laws of such State with respect to which a health insurance
issuer is not exempt under subsection (b).
`(2) COURTS OF COMPETENT JURISDICTION- If a State seeks an injunction regarding
the conduct described in paragraphs (1) and (2) of subsection (h), such
injunction must be obtained from a Federal or State court of competent jurisdiction.
`(k) States' Authority To Sue- Nothing in this section shall affect the authority
of any State to bring action in any Federal or State court.
`(l) Generally Applicable Laws- Nothing in this section shall be construed
to affect the applicability of State laws generally applicable to persons
or corporations.
`(m) Guaranteed Availability of Coverage to 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.
`SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR BEFORE ISSUER MAY SELL
INTO SECONDARY STATES.
`A health insurance issuer may not offer, sell, or issue individual health
insurance coverage in a secondary State if the State insurance commissioner
does not use a risk-based capital formula for the determination of capital
and surplus requirements for all health insurance issuers.
`SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCEDURES.
`(a) Right to External Appeal- A health insurance issuer may not offer, sell,
or issue individual health insurance coverage in a secondary State under the
provisions of this title unless--
`(1) both the secondary State and the primary State have legislation or
regulations in place establishing an independent review process for individuals
who are covered by individual health insurance coverage, or
`(2) in any case in which the requirements of 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.
`(b) Qualifications of Independent Medical Reviewers- In the case of any independent
review mechanism referred to in subsection (a)(2)--
`(1) IN GENERAL- In referring a denial of a claim to an independent medical
reviewer, or to any panel of such reviewers, to conduct independent medical
review, the issuer shall ensure that--
`(A) each independent medical reviewer meets the qualifications described
in paragraphs (2) and (3);
`(B) with respect to each review, each reviewer meets the requirements
of paragraph (4) and the reviewer, or at least 1 reviewer on the panel,
meets the requirements described in paragraph (5); and
`(C) compensation provided by the issuer to each reviewer is consistent
with paragraph (6).
`(2) LICENSURE AND EXPERTISE- Each independent medical reviewer shall be
a physician (allopathic or osteopathic) or health care professional who--
`(A) is appropriately credentialed or licensed in 1 or more States to
deliver health care services; and
`(B) typically treats the condition, makes the diagnosis, or provides
the type of treatment under review.
`(A) IN GENERAL- Subject to subparagraph (B), each independent medical
reviewer in a case shall--
`(i) not be a related party (as defined in paragraph (7));
`(ii) not have a material familial, financial, or professional relationship
with such a party; and
`(iii) not otherwise have a conflict of interest with such a party (as
determined under regulations).
`(B) EXCEPTION- Nothing in subparagraph (A) shall be construed to--
`(i) prohibit an individual, solely on the basis of affiliation with
the issuer, from serving as an independent medical reviewer if--
`(I) a non-affiliated individual is not reasonably available;
`(II) the affiliated individual is not involved in the provision of
items or services in the case under review;
`(III) the fact of such an affiliation is disclosed to the issuer
and the enrollee (or authorized representative) and neither party
objects; and
`(IV) the affiliated individual is not an employee of the issuer and
does not provide services exclusively or primarily to or on behalf
of the issuer;
`(ii) prohibit an individual who has staff privileges at the institution
where the treatment involved takes place from serving as an independent
medical reviewer merely on the basis of such affiliation if the affiliation
is disclosed to the issuer and the enrollee (or authorized representative),
and neither party objects; or
`(iii) prohibit receipt of compensation by an independent medical reviewer
from an entity if the compensation is provided consistent with paragraph
(6).
`(4) PRACTICING HEALTH CARE PROFESSIONAL IN SAME FIELD-
`(A) IN GENERAL- In a case involving treatment, or the provision of items
or services--
`(i) by a physician, a reviewer shall be a practicing physician (allopathic
or osteopathic) of the same or similar specialty, as a physician who,
acting within the appropriate scope of practice within the State in
which the service is provided or rendered, typically treats the condition,
makes the diagnosis, or provides the type of treatment under review;
or
`(ii) by a non-physician health care professional, the reviewer, or
at least 1 member of the review panel, shall be a practicing non-physician
health care professional of the same or similar specialty as the non-physician
health care professional who, acting within the appropriate scope of
practice within the State in which the service is provided or rendered,
typically treats the condition, makes the diagnosis, or provides the
type of treatment under review.
`(B) PRACTICING DEFINED- For purposes of this paragraph, the term `practicing'
means, with respect to an individual who is a physician or other health
care professional, that the individual provides health care services to
individual patients on average at least 2 days per week.
`(5) PEDIATRIC EXPERTISE- In the case of an external review relating to
a child, a reviewer shall have expertise under paragraph (2) in pediatrics.
`(6) LIMITATIONS ON REVIEWER COMPENSATION- Compensation provided by the
issuer to an independent medical reviewer in connection with a review under
this section shall--
`(A) not exceed a reasonable level; and
`(B) not be contingent on the decision rendered by the reviewer.
`(7) RELATED PARTY DEFINED- For purposes of this section, the term `related
party' means, with respect to a denial of a claim under a coverage relating
to an enrollee, any of the following:
`(A) The issuer involved, or any fiduciary, officer, director, or employee
of the issuer.
`(B) The enrollee (or authorized representative).
`(C) The health care professional that provides the items or services
involved in the denial.
`(D) The institution at which the items or services (or treatment) involved
in the denial are provided.
`(E) The manufacturer of any drug or other item that is included in the
items or services involved in the denial.
`(F) Any other party determined under any regulations to have a substantial
interest in the denial involved.
`(8) DEFINITIONS- For purposes of this subsection:
`(A) ENROLLEE- The term `enrollee' means, with respect to health insurance
coverage offered by a health insurance issuer, an individual enrolled
with the issuer to receive such coverage.
`(B) HEALTH CARE PROFESSIONAL- The term `health care professional' means
an individual who is licensed, accredited, or certified under State law
to provide specified health care services and who is operating within
the scope of such licensure, accreditation, or certification.
`SEC. 2799. ENFORCEMENT.
`(a) In General- Subject to subsection (b), with respect to specific individual
health insurance coverage the primary State for such coverage has sole jurisdiction
to enforce the primary State's covered laws in the primary State and any secondary
State.
`(b) Secondary State's Authority- Nothing in subsection (a) shall be construed
to affect the authority of a secondary State to enforce its laws as set forth
in the exception specified in section 2796(b)(1).
`(c) Court Interpretation- In reviewing action initiated by the applicable
secondary State authority, the court of competent jurisdiction shall apply
the covered laws of the primary State.
`(d) Notice of Compliance Failure- In the case of individual health insurance
coverage offered in a secondary State that fails to comply with the covered
laws of the primary State, the applicable State authority of the secondary
State may notify the applicable State authority of the primary State.'.
(b) Effective Date- The amendment made by subsection (a) shall apply to individual
health insurance coverage offered, issued, or sold after the date that is
one year after the date of the enactment of this Act.
(c) GAO Ongoing Study and Reports-
(1) STUDY- The Comptroller General of the United States shall conduct an
ongoing study concerning the effect of the amendment made by subsection
(a) on--
(A) the number of uninsured and under-insured;
(B) the availability and cost of health insurance policies for individuals
with preexisting medical conditions;
(C) the availability and cost of health insurance policies generally;
(D) the elimination or reduction of different types of benefits under
health insurance policies offered in different States; and
(E) cases of fraud or abuse relating to health insurance coverage offered
under such amendment and the resolution of such cases.
(2) ANNUAL REPORTS- The Comptroller General shall submit to Congress an
annual report, after the end of each of the 5 years following the effective
date of the amendment made by subsection (a), on the ongoing study conducted
under paragraph (1).
TITLE IV--IMPROVING HEALTH SAVINGS ACCOUNTS
SEC. 231. SAVER'S CREDIT FOR CONTRIBUTIONS TO HEALTH SAVINGS ACCOUNTS.
(a) Allowance of Credit- Subsection (a) of section 25B of the Internal Revenue
Code of 1986 is amended by inserting `aggregate qualified HSA contributions
and' after `so much of the'.
(b) Qualified HSA Contributions- Subsection (d) of section 25B of such Code
is amended by redesignating paragraph (2) as paragraph (3) and by inserting
after paragraph (1) the following new paragraph:
`(2) QUALIFIED HSA CONTRIBUTIONS- The term `qualified HSA contribution'
means, with respect to any taxable year, a contribution of the eligible
individual to a health savings account (as defined in section 223(d)(1))
for which a deduction is allowable under section 223(a) for such taxable
year.'.
(c) Conforming Amendment- The first sentence of section 25B(d)(3)(A) of such
Code (as redesignated by subsection (b)) is amended to read as follows: `The
aggregate qualified retirement savings contributions determined under paragraph
(1) and qualified HSA contributions determined under paragraph (2) shall be
reduced (but not below zero) by the aggregate distributions received by the
individual during the testing period from any entity of a type to which contributions
under paragraph (1) or paragraph (2) (as the case may be) may be made.'.
(d) Effective Date- The amendments made by this section shall apply to contributions
made after December 31, 2011.
SEC. 232. HSA FUNDS FOR PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS.
(a) In General- Subparagraph (C) of section 223(d)(2) of the Internal Revenue
Code of 1986 is amended by striking `or' at the end of clause (iii), by striking
the period at the end of clause (iv) and inserting `, or', and by adding at
the end the following:
`(v) a high deductible health plan if--
`(I) such plan is not offered in connection with a group health plan,
`(II) no portion of any premium (within the meaning of applicable
premium under section 4980B(f)(4)) for such plan is excludable from
gross income under section 106, and
`(III) the account beneficiary demonstrates, using procedures deemed
appropriate by the Secretary, that after payment of the premium for
such insurance the balance in the health savings account is at least
twice the minimum deductible in effect under subsection (c)(2)(A)(i)
which is applicable to such plan.'.
(b) Effective Date- The amendment made by subsection (a) shall apply to premiums
for a high deductible health plan for periods beginning after December 31,
2011.
SEC. 233. REQUIRING GREATER COORDINATION BETWEEN HDHP ADMINISTRATORS AND
HSA ACCOUNT ADMINISTRATORS SO THAT ENROLLEES CAN ENROLL IN BOTH AT THE SAME
TIME.
The Secretary of the Treasury, through the issuance of regulations or other
guidance, shall encourage administrators of health plans and trustees of health
savings accounts to provide for simultaneous enrollment in high deductible
health plans and setup of health savings accounts.
SEC. 234. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT
OF ACCOUNT.
(a) In General- Subsection (d) of section 223 of the Internal Revenue Code
of 1986 is amended by redesignating paragraph (4) as paragraph (5) and by
inserting after paragraph (3) the following new paragraph:
`(4) CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF ACCOUNT TREATED
AS QUALIFIED-
`(A) IN GENERAL- For purposes of paragraph (2), 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 the 60-day period beginning on the date
on which the high deductible health plan is first effective.
`(B) SPECIAL RULES- For purposes of subparagraph (A)--
`(i) an individual shall be treated as an eligible individual for any
portion of a month for which the individual is described in subsection
(c)(1), determined without regard to whether the individual is covered
under a high deductible health plan on the 1st day of such month, and
`(ii) the effective date of the health savings account is deemed to
be the date on which the high deductible health plan is first effective
after the date of the enactment of this paragraph.'.
(b) Effective Date- The amendment made by this section shall apply with respect
to insurance purchased after the date of the enactment of this Act in taxable
years beginning after such date.
DIVISION C--ENACTING REAL MEDICAL LIABILITY REFORM
SEC. 301. 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--
(2) intentional concealment; or
(3) the presence of a foreign body, which has no therapeutic or diagnostic
purpose or effect, in the person of the injured person.
Actions by a minor shall be commenced within 3 years from the date of the
alleged manifestation of injury except that actions by a minor under the full
age of 6 years shall be commenced within 3 years of manifestation of injury
or prior to the minor's 8th birthday, whichever provides a longer period.
Such time limitation shall be tolled for minors for any period during which
a parent or guardian and a health care provider or health care organization
have committed fraud or collusion in the failure to bring an action on behalf
of the injured minor.
SEC. 302. COMPENSATING PATIENT INJURY.
(a) Unlimited Amount of Damages for Actual Economic Losses in Health Care
Lawsuits- In any health care lawsuit, nothing in this title shall limit a
claimant's recovery of the full amount of the available economic damages,
notwithstanding the limitation in subsection (b).
(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.
(c) No Discount of Award for Noneconomic Damages- For purposes of applying
the limitation in subsection (b), future noneconomic damages shall not be
discounted to present value. The jury shall not be informed about the maximum
award for noneconomic damages. An award for noneconomic damages in excess
of $250,000 shall be reduced either before the entry of judgment, or by amendment
of the judgment after entry of judgment, and such reduction shall be made
before accounting for any other reduction in damages required by law. If separate
awards are rendered for past and future noneconomic damages and the combined
awards exceed $250,000, the future noneconomic damages shall be reduced first.
(d) 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.
SEC. 303. MAXIMIZING PATIENT RECOVERY.
(a) 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:
(1) Forty percent of the first $50,000 recovered by the claimant(s).
(2) Thirty-three and one-third percent of the next $50,000 recovered by
the claimant(s).
(3) Twenty-five percent of the next $500,000 recovered by the claimant(s).
(4) Fifteen percent of any amount by which the recovery by the claimant(s)
is in excess of $600,000.
(b) 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.
SEC. 304. 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.
SEC. 305. PUNITIVE DAMAGES.
(a) 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--
(1) whether punitive damages are to be awarded and the amount of such award;
and
(2) the amount of punitive damages following a determination of punitive
liability.
If a separate proceeding is requested, evidence relevant only to the claim
for punitive damages, as determined by applicable State law, shall be inadmissible
in any proceeding to determine whether compensatory damages are to be awarded.
(b) Determining Amount of Punitive Damages-
(1) 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--
(A) the severity of the harm caused by the conduct of such party;
(B) the duration of the conduct or any concealment of it by such party;
(C) the profitability of the conduct to such party;
(D) 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;
(E) any criminal penalties imposed on such party, as a result of the conduct
complained of by the claimant; and
(F) the amount of any civil fines assessed against such party as a result
of the conduct complained of by the claimant.
(2) 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.
SEC. 306. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO CLAIMANTS IN HEALTH
CARE LAWSUITS.
(a) 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.
(b) Applicability- This section applies to all actions which have not been
first set for trial or retrial before the effective date of this title.
SEC. 307. DEFINITIONS.
(1) 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.
(2) 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.
(3) 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--
(A) any State or Federal health, sickness, income-disability, accident,
or workers' compensation law;
(B) any health, sickness, income-disability, or accident insurance that
provides health benefits or income-disability coverage;
(C) 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
(D) any other publicly or privately funded program.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
(8) 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.
(9) 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.
(10) 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.
(11) 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.
(12) 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.
(13) 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.
(14) 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.
(15) 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.
(16) 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.
(17) 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.
(18) 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.
SEC. 308. EFFECT ON OTHER LAWS.
(1) To the extent that title XXI of the Public Health Service Act establishes
a Federal rule of law applicable to a civil action brought for a vaccine-related
injury or death--
(A) this title does not affect the application of the rule of law to such
an action; and
(B) any rule of law prescribed by this title in conflict with a rule of
law of such title XXI shall not apply to such action.
(2) 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 does not apply, then this title or otherwise applicable
law (as determined under this title) will apply to such aspect of such action.
(b) Other Federal Law- Except as provided in this section, nothing in this
title 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.
SEC. 309. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.
(a) Health Care Lawsuits- The provisions governing health care lawsuits set
forth in this title 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 title. The provisions governing health care
lawsuits set forth in this title supersede chapter 171 of title 28, United
States Code, to the extent that such chapter--
(1) 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 title;
or
(2) prohibits the introduction of evidence regarding collateral source benefits,
or mandates or permits subrogation or a lien on collateral source benefits.
(b) Protection of States' Rights and Other Laws- (1) Any issue that is not
governed by any provision of law established by or under this title (including
State standards of negligence) shall be governed by otherwise applicable State
or Federal law.
(2) This title 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 title or create a cause of action.
(c) State Flexibility- No provision of this title shall be construed to preempt--
(1) 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 title, notwithstanding
section 302(a); or
(2) any defense available to a party in a health care lawsuit under any
other provision of State or Federal law.
SEC. 310. APPLICABILITY; EFFECTIVE DATE.
This title 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.
DIVISION D--PROTECTING THE DOCTOR-PATIENT RELATIONSHIP
SEC. 401. RULE OF CONSTRUCTION.
Nothing in this Act shall be construed to interfere with the doctor-patient
relationship or the practice of medicine.
SEC. 402. REPEAL OF FEDERAL COORDINATING COUNCIL FOR COMPARATIVE EFFECTIVENESS
RESEARCH.
Effective on the date of the enactment of this Act, section 804 of the American
Recovery and Reinvestment Act of 2009 is repealed.
DIVISION E--INCENTIVIZING WELLNESS AND QUALITY IMPROVEMENTS
SEC. 501. INCENTIVES FOR PREVENTION AND WELLNESS PROGRAMS.
(a) Employee Retirement Income Security Act of 1974 Limitation on Exception
for Wellness Programs Under HIPAA Discrimination Rules-
(1) IN GENERAL- Section 702(b)(2) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1182(b)(2)) is amended by adding after and below
subparagraph (B) the following:
`In applying subparagraph (B), a group health plan (or a health insurance
issuer with respect to health insurance coverage) may vary premiums and
cost-sharing by up to 50 percent of the value of the benefits under the
plan (or coverage) based on participation in a standards-based wellness
program.'.
(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to plan
years beginning more than 1 year after the date of the enactment of this
Act.
(b) Conforming Amendments to PHSA-
(A) IN GENERAL- Section 2702(b)(2) of the Public Health Service Act (42
U.S.C. 300gg-1(b)(2)) is amended by adding after and below subparagraph
(B) the following:
`In applying subparagraph (B), a group health plan (or a health insurance
issuer with respect to health insurance coverage) may vary premiums and
cost-sharing by up to 50 percent of the value of the benefits under the
plan (or coverage) based on participation in a standards-based wellness
program.'.
(B) EFFECTIVE DATE- The amendment made by subparagraph (A) shall apply
to plan years beginning more than 1 year after the date of the enactment
of this Act.
(2) INDIVIDUAL MARKET RULES RELATING TO GUARANTEED AVAILABILITY-
(A) IN GENERAL- Section 2741(f) of the Public Health Service Act (42 U.S.C.
300gg-1(b)(2)) is amended by adding after and below paragraph (1) the
following:
`In applying paragraph (2), a health insurance issuer may vary premiums and
cost-sharing under health insurance coverage by up to 50 percent of the value
of the benefits under the coverage based on participation in a standards-based
wellness program.'.
(B) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to
health insurance coverage offered or renewed on and after the date that
is 1 year after the date of the enactment of this Act.
(c) Conforming Amendments to IRC-
(1) IN GENERAL- Section 9802(b)(2) of the Internal Revenue Code of 1986
is amended by adding after and below subparagraph (B) the following:
`In applying subparagraph (B), a group health plan (or a health insurance
issuer with respect to health insurance coverage) may vary premiums and
cost-sharing by up to 50 percent of the value of the benefits under the
plan (or coverage) based on participation in a standards-based wellness
program.'.
(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to plan
years beginning more than 1 year after the date of the enactment of this
Act.
DIVISION F--PROTECTING TAXPAYERS
SEC. 601. PROVIDE FULL FUNDING TO HHS OIG AND HCFAC.
(a) HCFAC Funding- Section 1817(k)(3)(A) of the Social Security Act (42 U.S.C.
1395i(k)(3)(A)) is amended--
(1) in clause (i), by amending subclause (V) to read as follows:
`(V) for each fiscal year after fiscal year 2010, $300,000,000.';
and
(2) in clause (ii)(X), 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 2011 exceeds the amount made available under clause (i)(IV)
for fiscal year 2010'.
(b) OIG Funding- There are authorized to be appropriated for each of fiscal
years 2011 through 2020 $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.
SEC. 602. PROHIBITING TAXPAYER FUNDED ABORTIONS AND CONSCIENCE PROTECTIONS.
Title 1 of the United States Code is amended by adding at the end the following
new chapter:
`CHAPTER 4--PROHIBITING TAXPAYER FUNDED ABORTIONS AND CONSCIENCE PROTECTIONS
`SEC. 301. PROHIBITION ON FUNDING FOR ABORTIONS.
`No funds authorized or appropriated by Federal law, and none of the funds
in any trust fund to which funds are authorized or appropriated by Federal
law, shall be expended for any abortion.
`SEC. 302. PROHIBITION ON FUNDING FOR HEALTH BENEFITS PLANS THAT COVER ABORTION.
`None of the funds authorized or appropriated by Federal law, and none of
the funds in any trust fund to which funds are authorized or appropriated
by Federal law, shall be expended for a health benefits plan that includes
coverage of abortion.
`SEC. 303. TREATMENT OF ABORTIONS RELATED TO RAPE, INCEST, OR PRESERVING
THE LIFE OF THE MOTHER.
`The limitations established in sections 301 and 302 shall not apply to an
abortion--
`(1) if the pregnancy is the result of an act of rape or incest; or
`(2) in the case where a woman suffers from a physical disorder, physical
injury, or physical illness that would, as certified by a physician, place
the woman in danger of death unless an abortion is performed, including
a life-endangering physical condition caused by or arising from the pregnancy
itself.
`SEC. 304. CONSTRUCTION RELATING TO SUPPLEMENTAL COVERAGE.
`Nothing in this chapter shall be construed as prohibiting any individual,
entity, or State or locality from purchasing separate supplemental abortion
plan or coverage that includes abortion so long as such plan or coverage is
paid for entirely using only funds not authorized or appropriated by Federal
law and such plan or coverage shall not be purchased using matching funds
required for a federally subsidized program, including a State's or locality's
contribution of Medicaid matching funds.
`SEC. 305. CONSTRUCTION RELATING TO THE USE OF NON-FEDERAL FUNDS FOR HEALTH
COVERAGE.
`Nothing in this chapter shall be construed as restricting the ability of
any managed care provider or other organization from offering abortion coverage
or the ability of a State to contract separately with such a provider or organization
for such coverage with funds not authorized or appropriated by Federal law
and such plan or coverage shall not be purchased using matching funds required
for a federally subsidized program, including a State's or locality's contribution
of Medicaid matching funds.
`SEC. 306. NO GOVERNMENT DISCRIMINATION AGAINST CERTAIN HEALTH CARE ENTITIES.
`(a) In General- No funds authorized or appropriated by Federal law may be
made available to a Federal agency or program, or to a State or local government,
if such agency, program, or government subjects any institutional or individual
health care entity to discrimination on the basis that the health care entity
does not provide, pay for, provide coverage of, or refer for abortions.
`(b) Health Care Entity Defined- For purposes of this section, the term `health
care entity' includes an individual physician or other health care professional,
a hospital, a provider-sponsored organization, a health maintenance organization,
a health insurance plan, or any other kind of health care facility, organization,
or plan.'.
SEC. 603. IMPROVED ENFORCEMENT OF THE MEDICARE AND MEDICAID SECONDARY PAYER
PROVISIONS.
(1) IN GENERAL- The Secretary, in coordination with the Inspector General
of the Department of Health and Human Services, shall provide through the
Coordination of Benefits Contractor for the identification of instances
where the Medicare program should be, but is not, acting as a secondary
payer to an individual's private health benefits coverage under section
1862(b) of the Social Security Act (42 U.S.C. 1395y(b)).
(2) UPDATING PROCEDURES- The Secretary shall update procedures for identifying
and resolving credit balance situations which occur under the Medicare program
when payment under such title and from other health benefit plans exceed
the providers' charges or the allowed amount.
(3) REPORT ON IMPROVED ENFORCEMENT- Not later than 1 year after the date
of the enactment of this Act, the Secretary shall submit a report to Congress
on progress made in improved enforcement of the Medicare secondary payer
provisions, including recoupment of credit balances.
(b) Medicaid- Section 1903 of the Social Security Act (42 U.S.C. 1396b) is
amended by adding at the end the following new subsection:
`(aa) Enforcement of Payer of Last Resort Provisions-
`(1) SUBMISSION OF STATE PLAN AMENDMENT- Each State shall submit, not later
than 1 year after the date of the enactment of this subsection, a State
plan amendment that details how the State will become fully compliant with
the requirements of section 1902(a)(25).
`(2) BONUS FOR COMPLIANCE- If a State submits a timely State plan amendment
under paragraph (1) that the Secretary determines provides for full compliance
of the State with the requirements of section 1902(a)(25), the Secretary
shall provide for an additional payment to the State of $1,000,000. If a
State certifies, to the Secretary's satisfaction, that it is already fully
compliant with such requirements, such amount shall be increased to $2,000,000.
`(3) REDUCTION FOR NONCOMPLIANCE- If a State does not submit such an amendment,
the Secretary shall reduce the Federal medical assistance percentage otherwise
applicable under this title by 1 percentage point until the State submits
such an amendment.
`(4) ONGOING REDUCTION- If at any time the Secretary determines that a State
is not in compliance with section 1902(a)(25), regardless of the status
of the State's submission of a State plan amendment under this subsection
or previous determinations of compliance such requirements, the Secretary
shall reduce the Federal medical assistance percentage otherwise applicable
under this title for the State by 1 percentage point during the period of
non-compliance as determined by the Secretary.'.
SEC. 604. STRENGTHEN MEDICARE PROVIDER ENROLLMENT STANDARDS AND SAFEGUARDS.
(a) Protecting Against the Fraudulent Use of Medicare Provider Numbers- Subject
to subsection (c)(2)--
(1) SCREENING NEW PROVIDERS- As a condition of a provider of services or
a supplier, including durable medical equipment suppliers and home health
agencies, applying for the first time for a provider number under the Medicare
program and before granting billing privileges under such title, the Secretary
shall screen the provider or supplier for a criminal background or other
financial or operational irregularities through fingerprinting, licensure
checks, site-visits, other database checks.
(2) APPLICATION FEES- The Secretary shall impose an application charge on
such a provider or supplier in order to cover the Secretary's costs in performing
the screening required under paragraph (1) and that is revenue neutral to
the Federal Government.
(3) PROVISIONAL APPROVAL- During an initial, provisional period (specified
by the Secretary) In which such a provider or supplier has been issued such
a number, the Secretary shall provide enhanced oversight of the activities
of such provider or supplier under the Medicare program, such as through
prepayment review and payment limitations.
(4) PENALTIES FOR FALSE STATEMENTS- In the case of a provider or supplier
that makes a false statement in an application for such a number, the Secretary
may exclude the provider or supplier from participation under the Medicare
program, or may impose a civil money penalty (in the amount described in
section 1128A(a)(4) of the Social Security Act), in the same manner as the
Secretary may impose such an exclusion or penalty under sections 1128 and
1128A, respectively, of such Act in the case of knowing presentation of
a false claim described in section 1128A(a)(1)(A) of such Act.
(5) DISCLOSURE REQUIREMENTS- With respect to approval of such an application,
the Secretary--
(A) shall require applicants to disclose previous affiliation with enrolled
entities that have uncollected debt related to the Medicare or Medicaid
programs;
(B) may deny approval if the Secretary determines that these affiliations
pose undue risk to the Medicare or Medicaid program, subject to an appeals
process for the applicant as determined by the Secretary; and
(C) may implement enhanced safeguards (such as surety bonds).
(b) Moratoria- The Secretary may impose moratoria on approval of provider
and supplier numbers under the Medicare program for new providers of services
and suppliers as determined necessary to prevent or combat fraud a period
of delay for any one applicant cannot exceed 30 days unless cause is shown
by the Secretary.
(1) IN GENERAL- There are authorized to be appropriated to carry out this
section such sums as may be necessary.
(2) CONDITION- The provisions of paragraphs (1) and (2) of subsection (a)
shall not apply unless and until funds are appropriated to carry out such
provisions.
SEC. 605. TRACKING BANNED PROVIDERS ACROSS STATE LINES.
(a) Greater Coordination- The Secretary of Health and Human Services shall
provide for increased coordination between the Administrator of the Centers
for Medicare & Medicaid Services (in this section referred to as `CMS')
and its regional offices to ensure that providers of services and suppliers
that have operated in one State and are excluded from participation in the
Medicare program are unable to begin operation and participation in the Medicare
program in another State.
(b) Improved Information Systems-
(1) IN GENERAL- The Secretary shall improve information systems to allow
greater integration between databases under the Medicare program so that--
(A) Medicare administrative contractors, fiscal intermediaries, and carriers
have immediate access to information identifying providers and suppliers
excluded from participation in the Medicare and Medicaid program and other
Federal health care programs; and
(B) such information can be shared across Federal health care programs
and agencies, including between the Departments of Health and Human Services,
the Social Security Administration, the Department of Veterans Affairs,
the Department of Defense, the Department of Justice, and the Office of
Personnel Management.
(c) Medicare/Medicaid `One PI' Database- The Secretary shall implement a database
that includes claims and payment data for all components of the Medicare program
and the Medicaid program.
(d) Authorizing Expanded Data Matching- Notwithstanding any provision of the
Computer Matching and Privacy Protection Act of 1988 to the contrary--
(1) the Secretary and the Inspector General in the Department of Health
and Human Services may perform data matching of data from the Medicare program
with data from the Medicaid program; and
(2) the Commissioner of Social Security and the Secretary may perform data
matching of data of the Social Security Administration with data from the
Medicare and Medicaid programs.
(e) Consolidation of Databases- The Secretary shall consolidate and expand
into a centralized database for individuals and entities that have been excluded
from Federal health care programs the Healthcare Integrity and Protection
Data Bank, the National Practitioner Data Bank, the List of Excluded Individuals/Entities,
and a national patient abuse/neglect registry.
(f) Comprehensive Provider Database-
(1) ESTABLISHMENT- The Secretary shall establish a comprehensive database
that includes information on providers of services, suppliers, and related
entities participating in the Medicare program, the Medicaid program, or
both. Such database shall include, information on ownership and business
relationships, history of adverse actions, results of site visits or other
monitoring by any program.
(2) USE- Prior to issuing a provider or supplier number for an entity under
the Medicare program, the Secretary shall obtain information on the entity
from such database to assure the entity qualifies for the issuance of such
a number.
(g) Comprehensive Sanctions Database- The Secretary shall establish a comprehensive
sanctions database on sanctions imposed on providers of services, suppliers,
and related entities. Such database shall be overseen by the Inspector General
of the Department of Health and Human Services and shall be linked to related
databases maintained by State licensure boards and by Federal or State law
enforcement agencies.
(h) Access to Claims and Payment Databases- The Secretary shall ensure that
the Inspector General of the Department of Health and Human Services and Federal
law enforcement agencies have direct access to all claims and payment databases
of the Secretary under the Medicare or Medicaid programs.
(i) Civil Money Penalties for Submission of Erroneous Information- In the
case of a provider of services, supplier, or other entity that submits erroneous
information that serves as a basis for payment of any entity under the Medicare
or Medicaid program, the Secretary may impose a civil money penalty of not
to exceed $50,000 for each such erroneous submission. A civil money penalty
under this subsection shall be imposed and collected in the same manner as
a civil money penalty under subsection (a) of section 1128A of the Social
Security Act is imposed and collected under that section.
DIVISION G--PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS
SEC. 701. LICENSURE PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS.
(a) Licensure of Biological Products as Biosimilar or Interchangeable- Section
351 of the Public Health Service Act (42 U.S.C. 262) is amended--
(1) in subsection (a)(1)(A), by inserting `under this subsection or subsection
(k)' after `biologics license'; and
(2) by adding at the end the following:
`(k) Licensure of Biological Products as Biosimilar or Interchangeable-
`(1) IN GENERAL- Any person may submit an application for licensure of a
biological product under this subsection.
`(i) REQUIRED INFORMATION- An application submitted under this subsection
shall include information demonstrating that--
`(I) the biological product is biosimilar to a reference product based
upon data derived from--
`(aa) analytical studies that demonstrate that the biological product
is highly similar to the reference product notwithstanding minor differences
in clinically inactive components;
`(bb) animal studies (including the assessment of toxicity); and
`(cc) a clinical study or studies (including the assessment of immunogenicity
and pharmacokinetics or pharmacodynamics) that are sufficient to demonstrate
safety, purity, and potency in 1 or more appropriate conditions of use for
which the reference product is licensed and intended to be used and for which
licensure is sought for the biological product;
`(II) the biological product and reference product utilize the same
mechanism or mechanisms of action for the condition or conditions
of use prescribed, recommended, or suggested in the proposed labeling,
but only to the extent the mechanism or mechanisms of action are known
for the reference product;
`(III) the condition or conditions of use prescribed, recommended,
or suggested in the labeling proposed for the biological product have
been previously approved for the reference product;
`(IV) the route of administration, the dosage form, and the strength
of the biological product are the same as those of the reference product;
and
`(V) the facility in which the biological product is manufactured,
processed, packed, or held meets standards designed to assure that
the biological product continues to be safe, pure, and potent.
`(ii) DETERMINATION BY SECRETARY- The Secretary may determine, in the
Secretary's discretion, that an element described in clause (i)(I) is
unnecessary in an application submitted under this subsection.
`(iii) ADDITIONAL INFORMATION- An application submitted under this subsection--
`(I) shall include publicly available information regarding the Secretary's
previous determination that the reference product is safe, pure, and
potent; and
`(II) may include any additional information in support of the application,
including publicly available information with respect to the reference
product or another biological product.
`(B) INTERCHANGEABILITY- An application (or a supplement to an application)
submitted under this subsection may include information demonstrating
that the biological product meets the standards described in paragraph
(4).
`(3) EVALUATION BY SECRETARY- Upon review of an application (or a supplement
to an application) submitted under this subsection, the Secretary shall
license the biological product under this subsection if--
`(A) the Secretary determines that the information submitted in the application
(or the supplement) is sufficient to show that the biological product--
`(i) is biosimilar to the reference product; or
`(ii) meets the standards described in paragraph (4), and therefore
is interchangeable with the reference product; and
`(B) the applicant (or other appropriate person) consents to the inspection
of the facility that is the subject of the application, in accordance
with subsection (c).
`(4) SAFETY STANDARDS FOR DETERMINING INTERCHANGEABILITY- Upon review of
an application submitted under this subsection or any supplement to such
application, the Secretary shall determine the biological product to be
interchangeable with the reference product if the Secretary determines that
the information submitted in the application (or a supplement to such application)
is sufficient to show that--
`(A) the biological product--
`(i) is biosimilar to the reference product; and
`(ii) can be expected to produce the same clinical result as the reference
product in any given patient; and
`(B) for a biological product that is administered more than once to an
individual, the risk in terms of safety or diminished efficacy of alternating
or switching between use of the biological product and the reference product
is not greater than the risk of using the reference product without such
alternation or switch.
`(A) ONE REFERENCE PRODUCT PER APPLICATION- A biological product, in an
application submitted under this subsection, may not be evaluated against
more than 1 reference product.
`(B) REVIEW- An application submitted under this subsection shall be reviewed
by the division within the Food and Drug Administration that is responsible
for the review and approval of the application under which the reference
product is licensed.
`(C) RISK EVALUATION AND MITIGATION STRATEGIES- The authority of the Secretary
with respect to risk evaluation and mitigation strategies under the Federal
Food, Drug, and Cosmetic Act shall apply to biological products licensed
under this subsection in the same manner as such authority applies to
biological products licensed under subsection (a).
`(D) RESTRICTIONS ON BIOLOGICAL PRODUCTS CONTAINING DANGEROUS INGREDIENTS-
If information in an application submitted under this subsection, in a
supplement to such an application, or otherwise available to the Secretary
shows that a biological product--
`(i) is, bears, or contains a select agent or toxin listed in section
73.3 or 73.4 of title 42, section 121.3 or 121.4 of title 9, or section
331.3 of title 7, Code of Federal Regulations (or any successor regulations);
or
`(ii) is, bears, or contains a controlled substance in schedule I or
II of section 202 of the Controlled Substances Act, as listed in part
1308 of title 21, Code of Federal Regulations (or any successor regulations);
the Secretary shall not license the biological product under this subsection
unless the Secretary determines, after consultation with appropriate national
security and drug enforcement agencies, that there would be no increased
risk to the security or health of the public from licensing such biological
product under this subsection.
`(6) EXCLUSIVITY FOR FIRST INTERCHANGEABLE BIOLOGICAL PRODUCT- Upon review
of an application submitted under this subsection relying on the same reference
product for which a prior biological product has received a determination
of interchangeability for any condition of use, the Secretary shall not
make a determination under paragraph (4) that the second or subsequent biological
product is interchangeable for any condition of use until the earlier of--
`(A) 1 year after the first commercial marketing of the first interchangeable
biosimilar biological product to be approved as interchangeable for that
reference product;
`(i) a final court decision on all patents in suit in an action instituted
under subsection (l)(5) against the applicant that submitted the application
for the first approved interchangeable biosimilar biological product;
or
`(ii) the dismissal with or without prejudice of an action instituted
under subsection (l)(5) against the applicant that submitted the application
for the first approved interchangeable biosimilar biological product;
or
`(C)(i) 42 months after approval of the first interchangeable biosimilar
biological product if the applicant that submitted such application has
been sued under subsection (l)(5) and such litigation is still ongoing
within such 42-month period; or
`(ii) 18 months after approval of the first interchangeable biosimilar
biological product if the applicant that submitted such application has
not been sued under subsection (l)(5).
For purposes of this paragraph, the term `final court decision' means a
final decision of a court from which no appeal (other than a petition to
the United States Supreme Court for a writ of certiorari) has been or can
be taken.
`(7) EXCLUSIVITY FOR REFERENCE PRODUCT-
`(A) EFFECTIVE DATE OF BIOSIMILAR APPLICATION APPROVAL- Approval of an
application under this subsection may not be made effective by the Secretary
until the date that is 12 years after the date on which the reference
product was first licensed under subsection (a).
`(B) FILING PERIOD- An application under this subsection may not be submitted
to the Secretary until the date that is 4 years after the date on which
the reference product was first licensed under subsection (a).
`(C) FIRST LICENSURE- Subparagraphs (A) and (B) shall not apply to a license
for or approval of--
`(i) a supplement for the biological product that is the reference product;
or
`(ii) a subsequent application filed by the same sponsor or manufacturer
of the biological product that is the reference product (or a licensor,
predecessor in interest, or other related entity) for--
`(I) a change (not including a modification to the structure of the
biological product) that results in a new indication, route of administration,
dosing schedule, dosage form, delivery system, delivery device, or
strength; or
`(II) a modification to the structure of the biological product that
does not result in a change in safety, purity, or potency.
`(A) EXCLUSIVITY- If, before or after licensure of the reference product
under subsection (a) of this section, the Secretary determines that information
relating to the use of such product in the pediatric population may produce
health benefits in that population, the Secretary makes a written request
for pediatric studies (which shall include a timeframe for completing
such studies), the applicant or holder of the approved application agrees
to the request, such studies are completed using appropriate formulations
for each age group for which the study is requested within any such timeframe,
and the reports thereof are submitted and accepted in accordance with
section 505A(d)(3) of the Federal Food, Drug, and Cosmetic Act the period
referred to in paragraph (7)(A) of this subsection is deemed to be 12
years and 6 months rather than 12 years.
`(B) EXCEPTION- The Secretary shall not extend the period referred to
in subparagraph (A) of this paragraph if the determination under section
505A(d)(3) of the Federal Food, Drug, and Cosmetic Act is made later than
9 months prior to the expiration of such period.
`(C) APPLICATION OF CERTAIN PROVISIONS- The provisions of subsections
(a), (d), (e), (f), (h), (j), (k), and (l) of section 505A of the Federal
Food, Drug, and Cosmetic Act shall apply with respect to the extension
of a period under subparagraph (A) of this paragraph to the same extent
and in the same manner as such provisions apply with respect to the extension
of a period under subsection (b) or (c) of section 505A of the Federal
Food, Drug, and Cosmetic Act.
`(A) IN GENERAL- The Secretary may, after opportunity for public comment,
issue guidance in accordance, except as provided in subparagraph (B)(i),
with section 701(h) of the Federal Food, Drug, and Cosmetic Act with respect
to the licensure of a biological product under this subsection. Any such
guidance may be general or specific.
`(i) IN GENERAL- The Secretary shall provide the public an opportunity
to comment on any proposed guidance issued under subparagraph (A) before
issuing final guidance.
`(ii) INPUT REGARDING MOST VALUABLE GUIDANCE- The Secretary shall establish
a process through which the public may provide the Secretary with input
regarding priorities for issuing guidance.
`(C) NO REQUIREMENT FOR APPLICATION CONSIDERATION- The issuance (or non-issuance)
of guidance under subparagraph (A) shall not preclude the review of, or
action on, an application submitted under this subsection.
`(D) REQUIREMENT FOR PRODUCT CLASS-SPECIFIC GUIDANCE- If the Secretary
issues product class-specific guidance under subparagraph (A), such guidance
shall include a description of--
`(i) the criteria that the Secretary will use to determine whether a
biological product is highly similar to a reference product in such
product class; and
`(ii) the criteria, if available, that the Secretary will use to determine
whether a biological product meets the standards described in paragraph
(4).
`(E) CERTAIN PRODUCT CLASSES-
`(i) GUIDANCE- The Secretary may indicate in a guidance document that
the science and experience, as of the date of such guidance, with respect
to a product or product class (not including any recombinant protein)
does not allow approval of an application for a license as provided
under this subsection for such product or product class.
`(ii) MODIFICATION OR REVERSAL- The Secretary may issue a subsequent
guidance document under subparagraph (A) to modify or reverse a guidance
document under clause (i).
`(iii) NO EFFECT ON ABILITY TO DENY LICENSE- Clause (i) shall not be
construed to require the Secretary to approve a product with respect
to which the Secretary has not indicated in a guidance document that
the science and experience, as described in clause (i), does not allow
approval of such an application.
`(10) NAMING- The Secretary shall ensure that the labeling and packaging
of each biological product licensed under this subsection bears a name that
uniquely identifies the biological product and distinguishes it from the
reference product and any other biological products licensed under this
subsection following evaluation against such reference product.
`(l) Patent Notices; Relationship to Final Approval-
`(1) DEFINITIONS- For the purposes of this subsection, the term--
`(A) `biosimilar product' means the biological product that is the subject
of the application under subsection (k);
`(B) `relevant patent' means a patent that--
`(i) expires after the date specified in subsection (k)(7)(A) that applies
to the reference product; and
`(ii) could reasonably be asserted against the applicant due to the
unauthorized making, use, sale, or offer for sale within the United
States, or the importation into the United States of the biosimilar
product, or materials used in the manufacture of the biosimilar product,
or due to a use of the biosimilar product in a method of treatment that
is indicated in the application;
`(C) `reference product sponsor' means the holder of an approved application
or license for the reference product; and
`(D) `interested third party' means a person other than the reference
product sponsor that owns a relevant patent, or has the right to commence
or participate in an action for infringement of a relevant patent.
`(2) HANDLING OF CONFIDENTIAL INFORMATION- Any entity receiving confidential
information pursuant to this subsection shall designate one or more individuals
to receive such information. Each individual so designated shall execute
an agreement in accordance with regulations promulgated by the Secretary.
The regulations shall require each such individual to take reasonable steps
to maintain the confidentiality of information received pursuant to this
subsection and use the information solely for purposes authorized by this
subsection. The obligations imposed on an individual who has received confidential
information pursuant to this subsection shall continue until the individual
returns or destroys the confidential information, a court imposes a protective
order that governs the use or handling of the confidential information,
or the party providing the confidential information agrees to other terms
or conditions regarding the handling or use of the confidential information.
`(3) PUBLIC NOTICE BY SECRETARY- Within 30 days of acceptance by the Secretary
of an application filed under subsection (k), the Secretary shall publish
a notice identifying--
`(A) the reference product identified in the application; and
`(B) the name and address of an agent designated by the applicant to receive
notices pursuant to paragraph (4)(B).
`(4) EXCHANGES CONCERNING PATENTS-
`(A) EXCHANGES WITH REFERENCE PRODUCT SPONSOR-
`(i) Within 30 days of the date of acceptance of the application by
the Secretary, the applicant shall provide the reference product sponsor
with a copy of the application and information concerning the biosimilar
product and its production. This information shall include a detailed
description of the biosimilar product, its method of manufacture, and
the materials used in the manufacture of the product.
`(ii) Within 60 days of the date of receipt of the information required
to be provided under clause (i), the reference product sponsor shall
provide to the applicant a list of relevant patents owned by the reference
product sponsor, or in respect of which the reference product sponsor
has the right to commence an action of infringement or otherwise has
an interest in the patent as such patent concerns the biosimilar product.
`(iii) If the reference product sponsor is issued or acquires an interest
in a relevant patent after the date on which the reference product sponsor
provides the list required by clause (ii) to the applicant, the reference
product sponsor shall identify that patent to the applicant within 30
days of the date of issue of the patent, or the date of acquisition
of the interest in the patent, as applicable.
`(B) EXCHANGES WITH INTERESTED THIRD PARTIES-
`(i) At any time after the date on which the Secretary publishes a notice
for an application under paragraph (3), any interested third party may
provide notice to the designated agent of the applicant that the interested
third party owns or has rights under 1 or more patents that may be relevant
patents. The notice shall identify at least 1 patent and shall designate
an individual who has executed an agreement in accordance with paragraph
(2) to receive confidential information from the applicant.
`(ii) Within 30 days of the date of receiving notice pursuant to clause
(i), the applicant shall send to the individual designated by the interested
third party the information specified in subparagraph (A)(i), unless
the applicant and interested third party otherwise agree.
`(iii) Within 90 days of the date of receiving information pursuant
to clause (ii), the interested third party shall provide to the applicant
a list of relevant patents which the interested third party owns, or
in respect of which the interested third party has the right to commence
or participate in an action for infringement.
`(iv) If the interested third party is issued or acquires an interest
in a relevant patent after the date on which the interested third party
provides the list required by clause (iii), the interested third party
shall identify that patent within 30 days of the date of issue of the
patent, or the date of acquisition of the interest in the patent, as
applicable.
`(C) IDENTIFICATION OF BASIS FOR INFRINGEMENT- For any patent identified
under clause (ii) or (iii) of subparagraph (A) or under clause (iii) or
(iv) of subparagraph (B), the reference product sponsor or the interested
third party, as applicable--
`(i) shall explain in writing why the sponsor or the interested third
party believes the relevant patent would be infringed by the making,
use, sale, or offer for sale within the United States, or importation
into the United States, of the biosimilar product or by a use of the
biosimilar product in treatment that is indicated in the application;
`(ii) may specify whether the relevant patent is available for licensing;
and
`(iii) shall specify the number and date of expiration of the relevant
patent.
`(D) CERTIFICATION BY APPLICANT CONCERNING IDENTIFIED RELEVANT PATENTS-
Not later than 45 days after the date on which a patent is identified
under clause (ii) or (iii) of subparagraph (A) or under clause (iii) or
(iv) of subparagraph (B), the applicant shall send a written statement
regarding each identified patent to the party that identified the patent.
Such statement shall either--
`(i) state that the applicant will not commence marketing of the biosimilar
product and has requested the Secretary to not grant final approval
of the application before the date of expiration of the noticed patent;
or
`(ii) provide a detailed written explanation setting forth the reasons
why the applicant believes--
`(I) the making, use, sale, or offer for sale within the United States,
or the importation into the United States, of the biosimilar product,
or the use of the biosimilar product in a treatment indicated in the
application, would not infringe the patent; or
`(II) the patent is invalid or unenforceable.
`(5) ACTION FOR INFRINGEMENT INVOLVING REFERENCE PRODUCT SPONSOR- If an
action for infringement concerning a relevant patent identified by the reference
product sponsor under clause (ii) or (iii) of paragraph (4)(A), or by an
interested third party under clause (iii) or (iv) of paragraph (4)(B), is
brought within 60 days of the date of receipt of a statement under paragraph
(4)(D)(ii), and the court in which such action has been commenced determines
the patent is infringed prior to the date applicable under subsection (k)(7)(A)
or (k)(8), the Secretary shall make approval of the application effective
on the day after the date of expiration of the patent that has been found
to be infringed. If more than one such patent is found to be infringed by
the court, the approval of the application shall be made effective on the
day after the date that the last such patent expires.
`(6) NOTIFICATION OF AGREEMENTS-
`(i) AGREEMENT BETWEEN BIOSIMILAR PRODUCT APPLICANT AND REFERENCE PRODUCT
SPONSOR- If a biosimilar product applicant under subsection (k) and
the reference product sponsor enter into an agreement described in subparagraph
(B), the applicant and sponsor shall each file the agreement in accordance
with subparagraph (C).
`(ii) AGREEMENT BETWEEN BIOSIMILAR PRODUCT APPLICANTS- If 2 or more
biosimilar product applicants submit an application under subsection
(k) for biosimilar products with the same reference product and enter
into an agreement described in subparagraph (B), the applicants shall
each file the agreement in accordance with subparagraph (C).
`(B) SUBJECT MATTER OF AGREEMENT- An agreement described in this subparagraph--
`(i) is an agreement between the biosimilar product applicant under
subsection (k) and the reference product sponsor or between 2 or more
biosimilar product applicants under subsection (k) regarding the manufacture,
marketing, or sale of--
`(I) the biosimilar product (or biosimilar products) for which an
application was submitted; or
`(II) the reference product;
`(ii) includes any agreement between the biosimilar product applicant
under subsection (k) and the reference product sponsor or between 2
or more biosimilar product applicants under subsection (k) that is contingent
upon, provides a contingent condition for, or otherwise relates to an
agreement described in clause (i); and
`(iii) excludes any agreement that solely concerns--
`(I) purchase orders for raw material supplies;
`(II) equipment and facility contracts;
`(III) employment or consulting contracts; or
`(IV) packaging and labeling contracts.
`(i) IN GENERAL- The text of an agreement required to be filed by subparagraph
(A) shall be filed with the Assistant Attorney General and the Federal
Trade Commission not later than--
`(I) 10 business days after the date on which the agreement is executed;
and
`(II) prior to the date of the first commercial marketing of, for
agreements described in subparagraph (A)(i), the biosimilar product
that is the subject of the application or, for agreements described
in subparagraph (A)(ii), any biosimilar product that is the subject
of an application described in such subparagraph.
`(ii) IF AGREEMENT NOT REDUCED TO TEXT- If an agreement required to
be filed by subparagraph (A) has not been reduced to text, the persons
required to file the agreement shall each file written descriptions
of the agreement that are sufficient to disclose all the terms and conditions
of the agreement.
`(iii) CERTIFICATION- The chief executive officer or the company official
responsible for negotiating any agreement required to be filed by subparagraph
(A) shall include in any filing under this paragraph a certification
as follows: `I declare under penalty of perjury that the following is
true and correct: The materials filed with the Federal Trade Commission
and the Department of Justice under section 351(l)(6) of the Public
Health Service Act, with respect to the agreement referenced in this
certification: (1) represent the complete, final, and exclusive agreement
between the parties; (2) include any ancillary agreements that are contingent
upon, provide a contingent condition for, or are otherwise related to,
the referenced agreement; and (3) include written descriptions of any
oral agreements, representations, commitments, or promises between the
parties that are responsive to such section and have not been reduced
to writing.'.
`(D) DISCLOSURE EXEMPTION- Any information or documentary material filed
with the Assistant Attorney General or the Federal Trade Commission pursuant
to this paragraph shall be exempt from disclosure under section 552 of
title 5, United States Code, and no such information or documentary material
may be made public, except as may be relevant to any administrative or
judicial action or proceeding. Nothing in this subparagraph prevents disclosure
of information or documentary material to either body of the Congress
or to any duly authorized committee or subcommittee of the Congress.
`(i) CIVIL PENALTY- Any person that violates a provision of this paragraph
shall be liable for a civil penalty of not more than $11,000 for each
day on which the violation occurs. Such penalty may be recovered in
a civil action--
`(I) brought by the United States; or
`(II) brought by the Federal Trade Commission in accordance with the
procedures established in section 16(a)(1) of the Federal Trade Commission
Act.
`(ii) COMPLIANCE AND EQUITABLE RELIEF- If any person violates any provision
of this paragraph, the United States district court may order compliance,
and may grant such other equitable relief as the court in its discretion
determines necessary or appropriate, upon application of the Assistant
Attorney General or the Federal Trade Commission.
`(F) RULEMAKING- The Federal Trade Commission, with the concurrence of
the Assistant Attorney General and by rule in accordance with section
553 of title 5, United States Code, consistent with the purposes of this
paragraph--
`(i) may define the terms used in this paragraph;
`(ii) may exempt classes of persons or agreements from the requirements
of this paragraph; and
`(iii) may prescribe such other rules as may be necessary and appropriate
to carry out the purposes of this paragraph.
`(G) SAVINGS CLAUSE- Any action taken by the Assistant Attorney General
or the Federal Trade Commission, or any failure of the Assistant Attorney
General or the Commission to take action, under this paragraph shall not
at any time bar any proceeding or any action with respect to any agreement
between a biosimilar product applicant under subsection (k) and the reference
product sponsor, or any agreement between biosimilar product applicants
under subsection (k), under any other provision of law, nor shall any
filing under this paragraph constitute or create a presumption of any
violation of any competition laws.'.
(b) Definitions- Section 351(i) of the Public Health Service Act (42 U.S.C.
262(i)) is amended--
(1) by striking `In this section, the term `biological product' means' and
inserting the following: `In this section:
`(1) The term `biological product' means';
(2) in paragraph (1), as so designated, by inserting `protein (except any
chemically synthesized polypeptide),' after `allergenic product,'; and
(3) by adding at the end the following:
`(2) The term `biosimilar' or `biosimilarity', in reference to a biological
product that is the subject of an application under subsection (k), means--
`(A) that the biological product is highly similar to the reference product
notwithstanding minor differences in clinically inactive components; and
`(B) there are no clinically meaningful differences between the biological
product and the reference product in terms of the safety, purity, and
potency of the product.
`(3) The term `interchangeable' or `interchangeability', in reference to
a biological product that is shown to meet the standards described in subsection
(k)(4), means that the biological product may be substituted for the reference
product without the intervention of the health care provider who prescribed
the reference product.
`(4) The term `reference product' means the single biological product licensed
under subsection (a) against which a biological product is evaluated in
an application submitted under subsection (k).'.
(c) Products Previously Approved Under Section 505-
(1) REQUIREMENT TO FOLLOW SECTION 351- Except as provided in paragraph (2),
an application for a biological product shall be submitted under section
351 of the Public Health Service Act (42 U.S.C. 262) (as amended by this
Act).
(2) EXCEPTION- An application for a biological product may be submitted
under section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355) if--
(A) such biological product is in a product class for which a biological
product in such product class is the subject of an application approved
under such section 505 not later than the date of enactment of this Act;
and
(i) has been submitted to the Secretary of Health and Human Services
(referred to in this Act as the `Secretary') before the date of enactment
of this Act; or
(ii) is submitted to the Secretary not later than the date that is 10
years after the date of enactment of this Act.
(3) LIMITATION- Notwithstanding paragraph (2), an application for a biological
product may not be submitted under section 505 of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 355) if there is another biological product
approved under subsection (a) of section 351 of the Public Health Service
Act that could be a reference product with respect to such application (within
the meaning of such section 351) if such application were submitted under
subsection (k) of such section 351.
(4) DEEMED APPROVED UNDER SECTION 351- An approved application for a biological
product under section 505 of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355) shall be deemed to be a license for the biological product under
such section 351 on the date that is 10 years after the date of enactment
of this Act.
(5) DEFINITIONS- For purposes of this subsection, the term `biological product'
has the meaning given such term under section 351 of the Public Health Service
Act (42 U.S.C. 262) (as amended by this Act).
SEC. 702. FEES RELATING TO BIOSIMILAR BIOLOGICAL PRODUCTS.
Subparagraph (B) of section 735(1) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 379g(1)) is amended by inserting `, including licensure of
a biological product under section 351(k) of such Act' before the period at
the end.
SEC. 703. AMENDMENTS TO CERTAIN PATENT PROVISIONS.
(a) Section 271(e)(2) of title 35, United States Code is amended--
(1) in subparagraph (A), by striking `or' after `patent,';
(2) in subparagraph (B), by adding `or' after the comma at the end;
(3) by inserting the following after subparagraph (B):
`(C) a statement under section 351(l)(4)(D)(ii) of the Public Health Service
Act,'; and
(4) in the matter following subparagraph (C) (as added by paragraph (3)),
by inserting before the period the following: `, or if the statement described
in subparagraph (C) is provided in connection with an application to obtain
a license to engage in the commercial manufacture, use, or sale of a biological
product claimed in a patent or the use of which is claimed in a patent before
the expiration of such patent'.
(b) Section 271(e)(4) of title 35, United States Code, is amended by striking
`in paragraph (2)' in both places it appears and inserting `in paragraph (2)(A)
or (2)(B)'.
END
