COVERAGE.

(a) GRANDFATHERED HEALTH INSURANCE COVERAGE DEFINED.—Subject to the succeeding provisions of this section, for purposes of establishing acceptable coverage under this division, the term ‘‘grandfathered health insurance coverage’’ means individual health insurance coverage that is offered and in force and effect before the first day of Y1 if the following conditions are met:

(1)

LIMITATION ON NEW ENROLLMENT.—

(A)

IN GENERAL.—Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day of Y1.

(B)

DEPENDENT COVERAGE PERMITTED.—Subparagraph (A) shall not affect the subsequent enrollment of a dependent of an individual who is covered as of such first day.

(2) LIMITATION ON CHANGES IN TERMS OR CONDITIONS.—Subject to paragraph (3) and except as required by law, the issuer does not change any of its terms or conditions, including benefits and cost-sharing, from those in effect as of the day before the first day of Y1.

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1 (3) RESTRICTIONS ON PREMIUM INCREASES.— 2 The issuer cannot vary the percentage increase in 3 the premium for a risk group of enrollees in specific 4 grandfathered health insurance coverage without 5 changing the premium for all enrollees in the same 6 risk group at the same rate, as specified by the 7 Commissioner. 8 (b) GRACE PERIOD FOR CURRENT EMPLOYMENT-9 BASED HEALTH PLANS.— 10 (1) GRACE PERIOD.— 11 (A) IN GENERAL.—The Commissioner 12 shall establish a grace period whereby, for plan 13 years beginning after the end of the 5-year pe14 riod beginning with Y1, an employment-based 15 health plan in operation as of the day before 16 the first day of Y1 must meet the same require17 ments as apply to a qualified health benefits 18 plan under section 101, including the essential 19 benefit package requirement under section 121. 20 (B) EXCEPTION FOR LIMITED BENEFITS 21 PLANS.—Subparagraph (A) shall not apply to 22 an employment-based health plan in which the 23 coverage consists only of one or more of the fol24 lowing:

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1 (i) Any coverage described in section 2 3001(a)(1)(B)(ii)(IV) of division B of the 3 American Recovery and Reinvestment Act 4 of 2009 (Public Law 111–5). 5 (ii) Excepted benefits (as defined in 6 section 733(c) of the Employee Retirement 7 Income Security Act of 1974), including 8 coverage under a specified disease or ill9 ness policy described in paragraph (3)(A) 10 of such section. 11 (iii) Such other limited benefits as the 12 Commissioner may specify. 13 In no case shall an employment-based health 14 plan in which the coverage consists only of one 15 or more of the coverage or benefits described in 16 clauses (i) through (iii) be treated as acceptable 17 coverage under this division 18 (2) TRANSITIONAL TREATMENT AS ACCEPT19 ABLE COVERAGE.—During the grace period specified 20 in paragraph (1)(A), an employment-based health 21 plan that is described in such paragraph shall be 22 treated as acceptable coverage under this division. 23 (c) LIMITATION ON INDIVIDUAL HEALTH INSURANCE 24 COVERAGE.—

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1 (1) IN GENERAL.—Individual health insurance 2 coverage that is not grandfathered health insurance 3 coverage under subsection (a) may only be offered 4 on or after the first day of Y1 as an Exchange-participating health benefits plan. 6 (2) SEPARATE, EXCEPTED COVERAGE PER7 MITTED.—Excepted benefits (as defined in section 8 2791(c) of the Public Health Service Act) are not 9 included within the definition of health insurance coverage. Nothing in paragraph (1) shall prevent the 11 offering, other than through the Health Insurance 12 Exchange, of excepted benefits so long as it is of13 fered and priced separately from health insurance 14 coverage.

3 SEC. 112. GUARANTEED ISSUE AND RENEWAL FOR IN

4 SURED PLANS.

5 The requirements of sections 2711 (other than sub

6 sections (c) and (e)) and 2712 (other than paragraphs (3),

7 and (6) of subsection (b) and subsection (e)) of the Public

8 Health Service Act, relating to guaranteed availability and

9 renewability of health insurance coverage, shall apply to 10 individuals and employers in all individual and group 11 health insurance coverage, whether offered to individuals 12 or employers through the Health Insurance Exchange, 13 through any employment-based health plan, or otherwise, 14 in the same manner as such sections apply to employers 15 and health insurance coverage offered in the small group 16 market, except that such section 2712(b)(1) shall apply 17 only if, before nonrenewal or discontinuation of coverage, 18 the issuer has provided the enrollee with notice of non-19 payment of premiums and there is a grace period during 20 which the enrollees has an opportunity to correct such 21 nonpayment. Rescissions of such coverage shall be prohib22 ited except in cases of fraud as defined in sections 23 2712(b)(2) of such Act.

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SEC. 113. INSURANCE RATING RULES.

(a) IN GENERAL.—The premium rate charged for an insured qualified health benefits plan may not vary except as follows:

(1)

LIMITED AGE VARIATION PERMITTED.—By age (within such age categories as the Commissioner shall specify) so long as the ratio of the highest such premium to the lowest such premium does not exceed the ratio of 2 to 1.

(2)

BY AREA.—By premium rating area (as permitted by State insurance regulators or, in the case of Exchange-participating health benefits plans, as specified by the Commissioner in consultation with such regulators).

(3)

BY FAMILY ENROLLMENT.—By family enrollment (such as variations within categories and compositions of families) so long as the ratio of the premium for family enrollment (or enrollments) to the premium for individual enrollment is uniform, as specified under State law and consistent with rules of the Commissioner.

(b)

STUDY AND REPORTS.—

(1)

STUDY.—The Commissioner, in coordination with the Secretary of Health and Human Services and the Secretary of Labor, shall conduct a study of the large group insured and self-insured

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1 employer health care markets. Such study shall ex2 amine the following: 3 (A) The types of employers by key charac4 teristics, including size, that purchase insured products versus those that self-insure. 6 (B) The similarities and differences be7 tween typical insured and self-insured health 8 plans. 9 (C) The financial solvency and capital reserve levels of employers that self-insure by em11 ployer size. 12 (D) The risk of self-insured employers not 13 being able to pay obligations or otherwise be14 coming financially insolvent.

(E) The extent to which rating rules are 16 likely to cause adverse selection in the large 17 group market or to encourage small and mid 18 size employers to self-insure 19 (2) REPORTS.—Not later than 18 months after the date of the enactment of this Act, the Commis21 sioner shall submit to Congress and the applicable 22 agencies a report on the study conducted under 23 paragraph (1). Such report shall include any rec24 ommendations the Commissioner deems appropriate to ensure that the law does not provide incentives

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1 for small and mid-size employers to self-insure or 2 create adverse selection in the risk pools of large 3 group insurers and self-insured employers. Not later 4 than 18 months after the first day of Y1, the Commissioner shall submit to Congress and the applica6 ble agencies an updated report on such study, in7 cluding updates on such recommendations. 8 SEC. 114. NONDISCRIMINATION IN BENEFITS; PARITY IN 9 MENTAL HEALTH AND SUBSTANCE ABUSE DISORDER BENEFITS.

11 (a) NONDISCRIMINATION IN BENEFITS.—A qualified 12 health benefits plan shall comply with standards estab13 lished by the Commissioner to prohibit discrimination in 14 health benefits or benefit structures for qualifying health benefits plans, building from sections 702 of Employee 16 Retirement Income Security Act of 1974, 2702 of the 17 Public Health Service Act, and section 9802 of the Inter18 nal Revenue Code of 1986. 19 (b) PARITY IN MENTAL HEALTH AND SUBSTANCE ABUSE DISORDER BENEFITS.—To the extent such provi21 sions are not superceded by or inconsistent with subtitle 22 C, the provisions of section 2705 (other than subsections 23 (a)(1), (a)(2), and (c)) of section 2705 of the Public 24 Health Service Act shall apply to a qualified health benefits plan, regardless of whether it is offered in the indi

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1 vidual or group market, in the same manner as such provi2 sions apply to health insurance coverage offered in the 3 large group market. 4 SEC. 115. ENSURING ADEQUACY OF PROVIDER NETWORKS. 5 (a) IN GENERAL.—A qualified health benefits plan 6 that uses a provider network for items and services shall 7 meet such standards respecting provider networks as the 8 Commissioner may establish to assure the adequacy of 9 such networks in ensuring enrollee access to such items 10 and services and transparency in the cost-sharing differen11 tials between in-network coverage and out-of-network cov12 erage. 13 (b) PROVIDER NETWORK DEFINED.—In this divi14 sion, the term ‘‘provider network’’ means the providers 15 with respect to which covered benefits, treatments, and 16 services are available under a health benefits plan. 17 SEC. 116. ENSURING VALUE AND LOWER PREMIUMS. 18 (a) IN GENERAL.—A qualified health benefits plan 19 shall meet a medical loss ratio as defined by the Commis20 sioner. For any plan year in which the qualified health 21 benefits plan does not meet such medical loss ratio, QHBP 22 offering entity shall provide in a manner specified by the 23 Commissioner for rebates to enrollees of payment suffi24 cient to meet such loss ratio.

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1 (b) BUILDING ON INTERIM RULES.—In imple2 menting subsection (a), the Commissioner shall build on 3 the definition and methodology developed by the Secretary 4 of Health and Human Services under the amendments made by section 161 for determining how to calculate the 6 medical loss ratio. Such methodology shall be set at the 7 highest level medical loss ratio possible that is designed 8 to ensure adequate participation by QHBP offering enti9 ties, competition in the health insurance market in and out of the Health Insurance Exchange, and value for con11 sumers so that their premiums are used for services. 12 Subtitle C—Standards Guaran13 teeing Access to Essential Bene14 fits

SEC. 121. COVERAGE OF ESSENTIAL BENEFITS PACKAGE.

16 (a) IN GENERAL.—A qualified health benefits plan 17 shall provide coverage that at least meets the benefit 18 standards adopted under section 124 for the essential ben19 efits package described in section 122 for the plan year involved. 21 (b) CHOICE OF COVERAGE.— 22 (1) NON-EXCHANGE-PARTICIPATING HEALTH 23 BENEFITS PLANS.—In the case of a qualified health 24 benefits plan that is not an Exchange-participating health benefits plan, such plan may offer such cov

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1 erage in addition to the essential benefits package as 2 the QHBP offering entity may specify. 3 (2) EXCHANGE-PARTICIPATING HEALTH BENE4 FITS PLANS.—In the case of an Exchange-partici5 pating health benefits plan, such plan is required 6 under section 203 to provide specified levels of bene7 fits and, in the case of a plan offering a premium-8 plus level of benefits, provide additional benefits. 9 (3) CONTINUATION OF OFFERING OF SEPARATE 10 EXCEPTED BENEFITS COVERAGE.—Nothing in this 11 division shall be construed as affecting the offering 12 of health benefits in the form of excepted benefits 13 (described in section 102(b)(1)(B)(ii)) if such bene14 fits are offered under a separate policy, contract, or 15 certificate of insurance. 16 (c) NO RESTRICTIONS ON COVERAGE UNRELATED 17 TO CLINICAL APPROPRIATENESS.—A qualified health ben18 efits plan may not impose any restriction (other than cost-19 sharing) unrelated to clinical appropriateness on the cov20 erage of the health care items and services. 21 SEC. 122. ESSENTIAL BENEFITS PACKAGE DEFINED. 22 (a) IN GENERAL.—In this division, the term ‘‘essen23 tial benefits package’’ means health benefits coverage, 24 consistent with standards adopted under section 124 to

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1 ensure the provision of quality health care and financial 2 security, that— 3 (1) provides payment for the items and services 4 described in subsection (b) in accordance with gen5 erally accepted standards of medical or other appro6 priate clinical or professional practice; 7 (2) limits cost-sharing for such covered health 8 care items and services in accordance with such ben9 efit standards, consistent with subsection (c); 10 (3) does not impose any annual or lifetime limit 11 on the coverage of covered health care items and 12 services; 13 (4) complies with section 115(a) (relating to 14 network adequacy); and 15 (5) is equivalent, as certified by Office of the 16 Actuary of the Centers for Medicare & Medicaid 17 Services, to the average prevailing employer-spon18 sored coverage. 19 (b) MINIMUM SERVICES TO BE COVERED.—The 20 items and services described in this subsection are the fol21 lowing: 22 (1) Hospitalization. 23 (2) Outpatient hospital and outpatient clinic 24 services, including emergency department services.

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1 (3) Professional services of physicians and other 2 health professionals. 3 (4) Such services, equipment, and supplies inci4 dent to the services of a physician’s or a health professional’s delivery of care in institutional settings, 6 physician offices, patients’ homes or place of resi7 dence, or other settings, as appropriate. 8 (5) Prescription drugs. 9 (6) Rehabilitative and habilitative services.

(7) Mental health and substance use disorder 11 services. 12 (8) Preventive services, including those services 13 recommended with a grade of A or B by the Task 14 Force on Clinical Preventive Services and those vaccines recommended for use by the Director of the 16 Centers for Disease Control and Prevention. 17 (9) Maternity care. 18 (10) Well baby and well child care and oral 19 health, vision, and hearing services, equipment, and supplies at least for children under 21 years of age. 21 (c) REQUIREMENTS RELATING TO COST-SHARING 22 AND MINIMUM ACTUARIAL VALUE.— 23 (1) NO COST-SHARING FOR PREVENTIVE SERV24 ICES.—There shall be no cost-sharing under the essential benefits package for preventive items and

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1 services (as specified under the benefit standards), 2 including well baby and well child care. 3 (2) ANNUAL LIMITATION.— 4 (A) ANNUAL LIMITATION.—The cost-sharing incurred under the essential benefits pack6 age with respect to an individual (or family) for 7 a year does not exceed the applicable level spec8 ified in subparagraph (B). 9 (B) APPLICABLE LEVEL.—The applicable level specified in this subparagraph for Y1 is 11 $5,000 for an individual and $10,000 for a 12 family. Such levels shall be increased (rounded 13 to the nearest $100) for each subsequent year 14 by the annual percentage increase in the Consumer Price Index (United States city average) 16 applicable to such year. 17 (C) USE OF COPAYMENTS.—In establishing 18 cost-sharing levels for basic, enhanced, and pre19 mium plans under this subsection, the Secretary shall, to the maximum extent possible, 21 use only copayments and not coinsurance. 22 (3) MINIMUM ACTUARIAL VALUE.— 23 (A) IN GENERAL.—The cost-sharing under 24 the essential benefits package shall be designed to provide a level of coverage that is designed

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1 to provide benefits that are actuarially equiva2 lent to approximately 70 percent of the full ac3 tuarial value of the benefits provided under the 4 reference benefits package described in sub5 paragraph (B). 6 (B) REFERENCE BENEFITS PACKAGE DE7 SCRIBED.—The reference benefits package de8 scribed in this subparagraph is the essential 9 benefits package if there were no cost-sharing 10 imposed. 11 SEC. 123. HEALTH BENEFITS ADVISORY COMMITTEE. 12 (a) ESTABLISHMENT.— 13 (1) IN GENERAL.—There is established a pri14 vate-public advisory committee which shall be a 15 panel of medical and other experts to be known as 16 the Health Benefits Advisory Committee to rec17 ommend covered benefits and essential, enhanced, 18 and premium plans. 19 (2) CHAIR.—The Surgeon General shall be a 20 member and the chair of the Health Benefits Advi21 sory Committee. 22 (3) MEMBERSHIP.—The Health Benefits Advi23 sory Committee shall be composed of the following 24 members, in addition to the Surgeon General:

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1 (A) 9 members who are not Federal em2 ployees or officers and who are appointed by 3 the President. 4 (B) 9 members who are not Federal employees or officers and who are appointed by 6 the Comptroller General of the United States in 7 a manner similar to the manner in which the 8 Comptroller General appoints members to the 9 Medicare Payment Advisory Commission under section 1805(c) of the Social Security Act. 11 (C) Such even number of members (not to 12 exceed 8) who are Federal employees and offi13 cers, as the President may appoint. 14 Such initial appointments shall be made not later than 60 days after the date of the enactment of this 16 Act. 17 (4) TERMS.—Each member of the Health Bene18 fits Advisory Committee shall serve a 3-year term on 19 the Committee, except that the terms of the initial members shall be adjusted in order to provide for a 21 staggered term of appointment for all such mem22 bers. 23 (5) PARTICIPATION.—The membership of the 24 Health Benefits Advisory Committee shall at least reflect providers, consumer representatives, employ

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1 ers, labor, health insurance issuers, experts in health 2 care financing and delivery, experts in racial and 3 ethnic disparities, experts in care for those with dis4 abilities, representatives of relevant governmental agencies. and at least one practicing physician or 6 other health professional and an expert on children’s 7 health and shall represent a balance among various 8 sectors of the health care system so that no single 9 sector unduly influences the recommendations of such Committee. 11 (b) DUTIES.— 12 (1) RECOMMENDATIONS ON BENEFIT STAND13 ARDS.—The Health Benefits Advisory Committee 14 shall recommend to the Secretary of Health and Human Services (in this subtitle referred to as the 16 ‘‘Secretary’’) benefit standards (as defined in para17 graph (4)), and periodic updates to such standards. 18 In developing such recommendations, the Committee 19 shall take into account innovation in health care and consider how such standards could reduce health dis21 parities. 22 (2) DEADLINE.—The Health Benefits Advisory 23 Committee shall recommend initial benefit standards 24 to the Secretary not later than 1 year after the date of the enactment of this Act.

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1 (3) PUBLIC INPUT.—The Health Benefits Advi2 sory Committee shall allow for public input as a part 3 of developing recommendations under this sub4 section.

(4) BENEFIT STANDARDS DEFINED.—In this 6 subtitle, the term ‘‘benefit standards’’ means stand7 ards respecting— 8 (A) the essential benefits package de9 scribed in section 122, including categories of covered treatments, items and services within 11 benefit classes, and cost-sharing; and 12 (B) the cost-sharing levels for enhanced 13 plans and premium plans (as provided under 14 section 203(c)) consistent with paragraph (5).

(5) LEVELS OF COST-SHARING FOR ENHANCED 16 AND PREMIUM PLANS.— 17 (A) ENHANCED PLAN.—The level of cost-18 sharing for enhanced plans shall be designed so 19 that such plans have benefits that are actuarially equivalent to approximately 85 percent of 21 the actuarial value of the benefits provided 22 under the reference benefits package described 23 in section 122(c)(3)(B). 24 (B) PREMIUM PLAN.—The level of cost-sharing for premium plans shall be designed so

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1 that such plans have benefits that are actuari2 ally equivalent to approximately 95 percent of 3 the actuarial value of the benefits provided 4 under the reference benefits package described 5 in section 122(c)(3)(B). 6 (c) OPERATIONS.— 7 (1) PER DIEM PAY.—Each member of the 8 Health Benefits Advisory Committee shall receive 9 travel expenses, including per diem in accordance 10 with applicable provisions under subchapter I of 11 chapter 57 of title 5, United States Code, and shall 12 otherwise serve without additional pay. 13 (2) MEMBERS NOT TREATED AS FEDERAL EM14 PLOYEES.—Members of the Health Benefits Advi15 sory Committee shall not be considered employees of 16 the Federal government solely by reason of any serv17 ice on the Committee. 18 (3) APPLICATION OF FACA.—The Federal Advi19 sory Committee Act (5 U.S.C. App.), other than sec20 tion 14, shall apply to the Health Benefits Advisory 21 Committee. 22 (d) PUBLICATION.—The Secretary shall provide for 23 publication in the Federal Register and the posting on the 24 Internet website of the Department of Health and Human

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1 Services of all recommendations made by the Health Ben2 efits Advisory Committee under this section. 3 SEC. 124. PROCESS FOR ADOPTION OF RECOMMENDA4 TIONS; ADOPTION OF BENEFIT STANDARDS.

(a) PROCESS FOR ADOPTION OF RECOMMENDA6 TIONS.— 7 (1) REVIEW OF RECOMMENDED STANDARDS.— 8 Not later than 45 days after the date of receipt of 9 benefit standards recommended under section 123 (including such standards as modified under para11 graph (2)(B)), the Secretary shall review such 12 standards and shall determine whether to propose 13 adoption of such standards as a package. 14 (2) DETERMINATION TO ADOPT STANDARDS.— If the Secretary determines— 16 (A) to propose adoption of benefit stand17 ards so recommended as a package, the Sec18 retary shall, by regulation under section 553 of 19 title 5, United States Code, propose adoption such standards; or 21 (B) not to propose adoption of such stand22 ards as a package, the Secretary shall notify 23 the Health Benefits Advisory Committee in 24 writing of such determination and the reasons for not proposing the adoption of such rec

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1 ommendation and provide the Committee with a 2 further opportunity to modify its previous rec3 ommendations and submit new recommenda4 tions to the Secretary on a timely basis. 5 (3) CONTINGENCY.—If, because of the applica6 tion of paragraph (2)(B), the Secretary would other7 wise be unable to propose initial adoption of such 8 recommended standards by the deadline specified in 9 subsection (b)(1), the Secretary shall, by regulation 10 under section 553 of title 5, United States Code, 11 propose adoption of initial benefit standards by such 12 deadline. 13 (4) PUBLICATION.—The Secretary shall provide 14 for publication in the Federal Register of all deter15 minations made by the Secretary under this sub16 section. 17 (b) ADOPTION OF STANDARDS.— 18 (1) INITIAL STANDARDS.—Not later than 18 19 months after the date of the enactment of this Act, 20 the Secretary shall, through the rulemaking process 21 consistent with subsection (a), adopt an initial set of 22 benefit standards. 23 (2) PERIODIC UPDATING STANDARDS.—Under 24 subsection (a), the Secretary shall provide for the

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1 periodic updating of the benefit standards previously 2 adopted under this section. 3 (3) REQUIREMENT.—The Secretary may not 4 adopt any benefit standards for an essential benefits package or for level of cost-sharing that are incon6 sistent with the requirements for such a package or 7 level under sections 122 and 123(b)(5). 8 Subtitle D—Additional Consumer 9 Protections

SEC. 131. REQUIRING FAIR MARKETING PRACTICES BY

11 HEALTH INSURERS. 12 The Commissioner shall establish uniform marketing 13 standards that all insured QHBP offering entities shall 14 meet.

SEC. 132. REQUIRING FAIR GRIEVANCE AND APPEALS 16 MECHANISMS. 17 (a) IN GENERAL.—A QHBP offering entity shall pro18 vide for timely grievance and appeals mechanisms that the 19 Commissioner shall establish.

(b) INTERNAL CLAIMS AND APPEALS PROCESS.— 21 Under a qualified health benefits plan the QHBP offering 22 entity shall provide an internal claims and appeals process 23 that initially incorporates the claims and appeals proce24 dures (including urgent claims) set forth at section 2560.503–1 of title 29, Code of Federal Regulations, as

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1 published on November 21, 2000 (65 Fed. Reg. 70246) 2 and shall update such process in accordance with any 3 standards that the Commissioner may establish. 4 (c) EXTERNAL REVIEW PROCESS.—

(1) IN GENERAL.—The Commissioner shall es6 tablish an external review process (including proce7 dures for expedited reviews of urgent claims) that 8 provides for an impartial, independent, and de novo 9 review of denied claims under this division.

(2) REQUIRING FAIR GRIEVANCE AND APPEALS 11 MECHANISMS.—A determination made, with respect 12 to a qualified health benefits plan offered by a 13 QHBP offering entity, under the external review 14 process established under this subsection shall be binding on the plan and the entity. 16 (d) CONSTRUCTION.—Nothing in this section shall be 17 construed as affecting the availability of judicial review 18 under State law for adverse decisions under subsection (b) 19 or (c), subject to section 151.

SEC. 133. REQUIRING INFORMATION TRANSPARENCY AND 21 PLAN DISCLOSURE. 22 (a) ACCURATE AND TIMELY DISCLOSURE.— 23 (1) IN GENERAL.—A qualified health benefits 24 plan shall comply with standards established by the Commissioner for the accurate and timely disclosure

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1 of plan documents, plan terms and conditions, 2 claims payment policies and practices, periodic fi3 nancial disclosure, data on enrollment, data on 4 disenrollment, data on the number of claims denials, data on rating practices, information on cost-sharing 6 and payments with respect to any out-of-network 7 coverage, and other information as determined ap8 propriate by the Commissioner. The Commissioner 9 shall require that such disclosure be provided in plain language. 11 (2) PLAIN LANGUAGE.—In this subsection, the 12 term ‘‘plain language’’ means language that the in13 tended audience, including individuals with limited 14 English proficiency, can readily understand and use because that language is clean, concise, well-orga16 nized, and follows other best practices of plain lan17 guage writing. 18 (3) GUIDANCE.—The Commissioner shall de19 velop and issue guidance on best practices of plain language writing. 21 (b) CONTRACTING REIMBURSEMENT.—A qualified 22 health benefits plan shall comply with standards estab23 lished by the Commissioner to ensure transparency to each 24 health care provider relating to reimbursement arrangements between such plan and such provider.

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1 (c) ADVANCE NOTICE OF PLAN CHANGES.—A 2 change in a qualified health benefits plan shall not be 3 made without such reasonable and timely advance notice 4 to enrollees of such change.

SEC. 134. APPLICATION TO QUALIFIED HEALTH BENEFITS 6 PLANS NOT OFFERED THROUGH THE 7 HEALTH INSURANCE EXCHANGE. 8 The requirements of the previous provisions of this 9 subtitle shall apply to qualified health benefits plans that are not being offered through the Health Insurance Ex11 change only to the extent specified by the Commissioner. 12 SEC. 135. TIMELY PAYMENT OF CLAIMS. 13 A QHBP offering entity shall comply with the re14 quirements of section 1857(f) of the Social Security Act with respect to a qualified health benefits plan it offers 16 in the same manner an Medicare Advantage organization 17 is required to comply with such requirements with respect 18 to a Medicare Advantage plan it offers under part C of 19 Medicare.

SEC. 136. STANDARDIZED RULES FOR COORDINATION AND 21 SUBROGATION OF BENEFITS. 22 The Commissioner shall establish standards for the 23 coordination and subrogation of benefits and reimburse24 ment of payments in cases involving individuals and multiple plan coverage.

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SEC. 137. APPLICATION OF ADMINISTRATIVE SIMPLIFICA

TION.

A QHBP offering entity is required to comply with standards for electronic financial and administrative transactions under section 1173A of the Social Security Act, added by section 163(a).

CHOICES COMMISSIONER.

(a) IN GENERAL.—There is hereby established, as an independent agency in the executive branch of the Government, a Health Choices Administration (in this division referred to as the ‘‘Administration’’).

(b)

COMMISSIONER.—

(1)

IN GENERAL.—The Administration shall be headed by a Health Choices Commissioner (in this division referred to as the ‘‘Commissioner’’) who shall be appointed by the President, by and with the advice and consent of the Senate.

(2)

COMPENSATION; ETC.—The provisions of paragraphs (2), (5), and (7) of subsection (a) (relating to compensation, terms, general powers, rule-making, and delegation) of section 702 of the Social Security Act (42 U.S.C. 902) shall apply to the Commissioner and the Administration in the same manner as such provisions apply to the Commis

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1 sioner of Social Security and the Social Security Ad2 ministration. 3 SEC. 142. DUTIES AND AUTHORITY OF COMMISSIONER. 4 (a) DUTIES.—The Commissioner is responsible for carrying out the following functions under this division: 6 (1) QUALIFIED PLAN STANDARDS.—The estab7 lishment of qualified health benefits plan standards 8 under this title, including the enforcement of such 9 standards in coordination with State insurance regulators and the Secretaries of Labor and the Treas11 ury. 12 (2) HEALTH INSURANCE EXCHANGE.—The es13 tablishment and operation of a Health Insurance 14 Exchange under subtitle A of title II.

(3) INDIVIDUAL AFFORDABILITY CREDITS.— 16 The administration of individual affordability credits 17 under subtitle C of title II, including determination 18 of eligibility for such credits. 19 (4) ADDITIONAL FUNCTIONS.—Such additional functions as may be specified in this division. 21 (b) PROMOTING ACCOUNTABILITY.— 22 (1) IN GENERAL.—The Commissioner shall un23 dertake activities in accordance with this subtitle to 24 promote accountability of QHBP offering entities in meeting Federal health insurance requirements, re

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1 gardless of whether such accountability is with re2 spect to qualified health benefits plans offered 3 through the Health Insurance Exchange or outside 4 of such Exchange.

(2) COMPLIANCE EXAMINATION AND AUDITS.— 6 (A) IN GENERAL.—The commissioner 7 shall, in coordination with States, conduct au8 dits of qualified health benefits plan compliance 9 with Federal requirements. Such audits may include random compliance audits and targeted 11 audits in response to complaints or other sus12 pected non-compliance. 13 (B) RECOUPMENT OF COSTS IN CONNEC14 TION WITH EXAMINATION AND AUDITS.—The Commissioner is authorized to recoup from 16 qualified health benefits plans reimbursement 17 for the costs of such examinations and audit of 18 such QHBP offering entities. 19 (c) DATA COLLECTION.—The Commissioner shall collect data for purposes of carrying out the Commis21 sioner’s duties, including for purposes of promoting qual22 ity and value, protecting consumers, and addressing dis23 parities in health and health care and may share such data 24 with the Secretary of Health and Human Services.

(d) SANCTIONS AUTHORITY.—

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1 (1) IN GENERAL.—In the case that the Com2 missioner determines that a QHBP offering entity 3 violates a requirement of this title, the Commis4 sioner may, in coordination with State insurance regulators and the Secretary of Labor, provide, in 6 addition to any other remedies authorized by law, 7 for any of the remedies described in paragraph (2). 8 (2) REMEDIES.—The remedies described in this 9 paragraph, with respect to a qualified health benefits plan offered by a QHBP offering entity, are— 11 (A) civil money penalties of not more than 12 the amount that would be applicable under 13 similar circumstances for similar violations 14 under section 1857(g) of the Social Security Act; 16 (B) suspension of enrollment of individuals 17 under such plan after the date the Commis18 sioner notifies the entity of a determination 19 under paragraph (1) and until the Commissioner is satisfied that the basis for such deter21 mination has been corrected and is not likely to 22 recur; 23 (C) in the case of an Exchange-partici24 pating health benefits plan, suspension of payment to the entity under the Health Insurance

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1 Exchange for individuals enrolled in such plan 2 after the date the Commissioner notifies the en3 tity of a determination under paragraph (1) 4 and until the Secretary is satisfied that the basis for such determination has been corrected 6 and is not likely to recur; or 7 (D) working with State insurance regu8 lators to terminate plans for repeated failure by 9 the offering entity to meet the requirements of this title. 11 (e) STANDARD DEFINITIONS OF INSURANCE AND 12 MEDICAL TERMS.—The Commissioner shall provide for 13 the development of standards for the definitions of terms 14 used in health insurance coverage, including insurance-related terms. 16 (f) EFFICIENCY IN ADMINISTRATION.—The Commis17 sioner shall issue regulations for the effective and efficient 18 administration of the Health Insurance Exchange and af19 fordability credits under subtitle C, including, with respect to the determination of eligibility for affordability credits, 21 the use of personnel who are employed in accordance with 22 the requirements of title 5, United States Code, to carry 23 out the duties of the Commissioner or, in the case of sec24 tions 208 and 241(b)(2), the use of State personnel who are employed in accordance with standards prescribed by

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1 the Office of Personnel Management pursuant to section 2 208 of the Intergovernmental Personnel Act of 1970 (42 3 U.S.C. 4728). 4 SEC. 143. CONSULTATION AND COORDINATION.

(a) CONSULTATION.—In carrying out the Commis6 sioner’s duties under this division, the Commissioner, as 7 appropriate, shall consult with at least with the following: 8 (1) The National Association of Insurance 9 Commissioners, State attorneys general, and State insurance regulators, including concerning the 11 standards for insured qualified health benefits plans 12 under this title and enforcement of such standards. 13 (2) Appropriate State agencies, specifically con14 cerning the administration of individual affordability credits under subtitle C of title II and the offering 16 of Exchange-participating health benefits plans, to 17 Medicaid eligible individuals under subtitle A of such 18 title. 19 (3) Other appropriate Federal agencies.

(4) Indian tribes and tribal organizations. 21 (5) The National Association of Insurance 22 Commissioners for purposes of using model guide23 lines established by such association for purposes of 24 subtitles B and D.

(b) COORDINATION.—

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1 (1) IN GENERAL.—In carrying out the func2 tions of the Commissioner, including with respect to 3 the enforcement of the provisions of this division, 4 the Commissioner shall work in coordination with 5 existing Federal and State entities to the maximum 6 extent feasible consistent with this division and in a 7 manner that prevents conflicts of interest in duties 8 and ensures effective enforcement. 9 (2) UNIFORM STANDARDS.—The Commissioner, 10 in coordination with such entities, shall seek to 11 achieve uniform standards that adequately protect 12 consumers in a manner that does not unreasonably 13 affect employers and insurers. 14 SEC. 144. HEALTH INSURANCE OMBUDSMAN. 15 (a) IN GENERAL.—The Commissioner shall appoint 16 within the Health Choices Administration a Qualified 17 Health Benefits Plan Ombudsman who shall have exper18 tise and experience in the fields of health care and edu19 cation of (and assistance to) individuals. 20 (b) DUTIES.—The Qualified Health Benefits Plan 21 Ombudsman shall, in a linguistically appropriate man22 ner— 23 (1) receive complaints, grievances, and requests 24 for information submitted by individuals;

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1 (2) provide assistance with respect to com2 plaints, grievances, and requests referred to in para3 graph (1), including— 4 (A) helping individuals determine the rel5 evant information needed to seek an appeal of 6 a decision or determination; 7 (B) assistance to such individuals with any 8 problems arising from disenrollment from such 9 a plan; 10 (C) assistance to such individuals in choos11 ing a qualified health benefits plan in which to 12 enroll; and 13 (D) assistance to such individuals in pre14 senting information under subtitle C (relating 15 to affordability credits); and 16 (3) submit annual reports to Congress and the 17 Commissioner that describe the activities of the Om18 budsman and that include such recommendations for 19 improvement in the administration of this division as 20 the Ombudsman determines appropriate. The Om21 budsman shall not serve as an advocate for any in22 creases in payments or new coverage of services, but 23 may identify issues and problems in payment or cov24 erage policies.

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3 SEC. 151. RELATION TO OTHER REQUIREMENTS.

4 (a) COVERAGE NOT OFFERED THROUGH EX

5 CHANGE.—

6 (1) IN GENERAL.—In the case of health insur

7 ance coverage not offered through the Health Insur

8 ance Exchange (whether or not offered in connection

9 with an employment-based health plan), and in the 10 case of employment-based health plans, the require11 ments of this title do not supercede any require12 ments applicable under titles XXII and XXVII of 13 the Public Health Service Act, parts 6 and 7 of sub14 title B of title I of the Employee Retirement Income 15 Security Act of 1974, or State law, except insofar as 16 such requirements prevent the application of a re17 quirement of this division, as determined by the 18 Commissioner. 19 (2) CONSTRUCTION.—Nothing in paragraph (1) 20 shall be construed as affecting the application of sec21 tion 514 of the Employee Retirement Income Secu22 rity Act of 1974. 23 (b) COVERAGE OFFERED THROUGH EXCHANGE.—

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1 (1) IN GENERAL.—In the case of health insur2 ance coverage offered through the Health Insurance 3 Exchange— 4 (A) the requirements of this title do not supercede any requirements (including require6 ments relating to genetic information non7 discrimination and mental health) applicable 8 under title XXVII of the Public Health Service 9 Act or under State law, except insofar as such requirements prevent the application of a re11 quirement of this division, as determined by the 12 Commissioner; and 13 (B) individual rights and remedies under 14 State laws shall apply.

(2) CONSTRUCTION.—In the case of coverage 16 described in paragraph (1), nothing in such para17 graph shall be construed as preventing the applica18 tion of rights and remedies under State laws with 19 respect to any requirement referred to in paragraph (1)(A).

21 SEC. 152. PROHIBITING DISCRIMINATION IN HEALTH CARE. 22 (a) IN GENERAL.—Except as otherwise explicitly per23 mitted by this Act and by subsequent regulations con24 sistent with this Act, all health care and related services (including insurance coverage and public health activities)

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1 covered by this Act shall be provided without regard to 2 personal characteristics extraneous to the provision of 3 high quality health care or related services. 4 (b) IMPLEMENTATION.—To implement the requirement set forth in subsection (a), the Secretary of Health 6 and Human Services shall, not later than 18 months after 7 the date of the enactment of this Act, promulgate such 8 regulations as are necessary or appropriate to insure that 9 all health care and related services (including insurance coverage and public health activities) covered by this Act 11 are provided (whether directly or through contractual, li12 censing, or other arrangements) without regard to per13 sonal characteristics extraneous to the provision of high 14 quality health care or related services.

SEC. 153. WHISTLEBLOWER PROTECTION.

16 (a) RETALIATION PROHIBITED.—No employer may 17 discharge any employee or otherwise discriminate against 18 any employee with respect to his compensation, terms, 19 conditions, or other privileges of employment because the employee (or any person acting pursuant to a request of 21 the employee)— 22 (1) provided, caused to be provided, or is about 23 to provide or cause to be provided to the employer, 24 the Federal Government, or the attorney general of a State information relating to any violation of, or

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1 any act or omission the employee reasonably believes 2 to be a violation of any provision of this Act or any 3 order, rule, or regulation promulgated under this 4 Act;

(2) testified or is about to testify in a pro6 ceeding concerning such violation; 7 (3) assisted or participated or is about to assist 8 or participate in such a proceeding; or 9 (4) objected to, or refused to participate in, any activity, policy, practice, or assigned task that the 11 employee (or other such person) reasonably believed 12 to be in violation of any provision of this Act or any 13 order, rule, or regulation promulgated under this 14 Act.

(b) ENFORCEMENT ACTION.—An employee covered 16 by this section who alleges discrimination by an employer 17 in violation of subsection (a) may bring an action governed 18 by the rules, procedures, legal burdens of proof, and rem19 edies set forth in section 40(b) of the Consumer Product Safety Act (15 U.S.C. 2087(b)). 21 (c) EMPLOYER DEFINED.—As used in this section, 22 the term ‘‘employer’’ means any person (including one or 23 more individuals, partnerships, associations, corporations, 24 trusts, professional membership organization including a certification, disciplinary, or other professional body, unin

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1 corporated organizations, nongovernmental organizations, 2 or trustees) engaged in profit or nonprofit business or in3 dustry whose activities are governed by this Act, and any 4 agent, contractor, subcontractor, grantee, or consultant of such person. 6 (d) RULE OF CONSTRUCTION.—The rule of construc7 tion set forth in section 20109(h) of title 49, United 8 States Code, shall also apply to this section. 9 SEC. 154. CONSTRUCTION REGARDING COLLECTIVE BARGAINING.

11 Nothing in this division shall be construed to alter 12 of supercede any statutory or other obligation to engage 13 in collective bargaining over the terms and conditions of 14 employment related to health care.

SEC. 155. SEVERABILITY.

16 If any provision of this Act, or any application of such 17 provision to any person or circumstance, is held to be un18 constitutional, the remainder of the provisions of this Act 19 and the application of the provision to any other person or circumstance shall not be affected.

21 Subtitle G—Early Investments 22 SEC. 161. ENSURING VALUE AND LOWER PREMIUMS. 23 (a) GROUP HEALTH INSURANCE COVERAGE.—Title 24 XXVII of the Public Health Service Act is amended by inserting after section 2713 the following new section:

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1 ‘‘SEC. 2714. ENSURING VALUE AND LOWER PREMIUMS. 2 ‘‘(a) IN GENERAL.—Each health insurance issuer 3 that offers health insurance coverage in the small or large 4 group market shall provide that for any plan year in which the coverage has a medical loss ratio below a level specified 6 by the Secretary, the issuer shall provide in a manner 7 specified by the Secretary for rebates to enrollees of pay8 ment sufficient to meet such loss ratio. Such methodology 9 shall be set at the highest level medical loss ratio possible that is designed to ensure adequate participation by 11 issuers, competition in the health insurance market, and 12 value for consumers so that their premiums are used for 13 services. 14 ‘‘(b) UNIFORM DEFINITIONS.—The Secretary shall establish a uniform definition of medical loss ratio and 16 methodology for determining how to calculate the medical 17 loss ratio. Such methodology shall be designed to take into 18 account the special circumstances of smaller plans, dif19 ferent types of plans, and newer plans.’’.

(b) INDIVIDUAL HEALTH INSURANCE COVERAGE.— 21 Such title is further amended by inserting after section 22 2753 the following new section: 23 ‘‘SEC. 2754. ENSURING VALUE AND LOWER PREMIUMS. 24 ‘‘The provisions of section 2714 shall apply to health insurance coverage offered in the individual market in the

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1 same manner as such provisions apply to health insurance 2 coverage offered in the small or large group market.’’. 3 (c) IMMEDIATE IMPLEMENTATION.—The amend4 ments made by this section shall apply in the group and 5 individual market for plan years beginning on or after 6 January 1, 2011. 7 SEC. 162. ENDING HEALTH INSURANCE RESCISSION ABUSE. 8 (a) CLARIFICATION REGARDING APPLICATION OF 9 GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH 10 INSURANCE COVERAGE.—Section 2742 of the Public 11 Health Service Act (42 U.S.C. 300gg–42) is amended— 12 (1) in its heading, by inserting ‘‘AND CON13 TINUATION IN FORCE, INCLUDING PROHIBI14 TION OF RESCISSION,’’ after ‘‘GUARANTEED RE15 NEWABILITY’’; and 16 (2) in subsection (a), by inserting ‘‘, including 17 without rescission,’’ after ‘‘continue in force’’. 18 (b) SECRETARIAL GUIDANCE REGARDING RESCIS19 SIONS.—Section 2742 of such Act (42 U.S.C. 300gg–42) 20 is amended by adding at the end the following: 21 ‘‘(f) RESCISSION.—A health insurance issuer may re22 scind health insurance coverage only upon clear and con23 vincing evidence of fraud described in subsection (b)(2). 24 The Secretary, no later than July 1, 2010, shall issue

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1 guidance implementing this requirement, including proce

2 dures for independent, external third party review.’’.

3 (c) OPPORTUNITY FOR INDEPENDENT, EXTERNAL

4 THIRD PARTY REVIEW IN CERTAIN CASES.—Subpart 1

of part B of title XXVII of such Act (42 U.S.C. 300gg–

6 41 et seq.) is amended by adding at the end the following:

7 ‘‘SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL

8 THIRD PARTY REVIEW IN CASES OF RESCIS

9 SION.

‘‘(a) NOTICE AND REVIEW RIGHT.—If a health in11 surance issuer determines to rescind health insurance cov12 erage for an individual in the individual market, before 13 such rescission may take effect the issuer shall provide the 14 individual with notice of such proposed rescission and an opportunity for a review of such determination by an inde16 pendent, external third party under procedures specified 17 by the Secretary under section 2742(f). 18 ‘‘(b) INDEPENDENT DETERMINATION.—If the indi19 vidual requests such review by an independent, external third party of a rescission of health insurance coverage, 21 the coverage shall remain in effect until such third party 22 determines that the coverage may be rescinded under the 23 guidance issued by the Secretary under section 2742(f).’’. 24 (d) EFFECTIVE DATE.—The amendments made by this section shall apply on and after October 1, 2010, with

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1 respect to health insurance coverage issued before, on, or 2 after such date. 3 SEC. 163. ADMINISTRATIVE SIMPLIFICATION. 4 (a) STANDARDIZING ELECTRONIC ADMINISTRATIVE 5 TRANSACTIONS.— 6 (1) IN GENERAL.—Part C of title XI of the So7 cial Security Act (42 U.S.C. 1320d et seq.) is 8 amended by inserting after section 1173 the fol9 lowing new section: 10 ‘‘SEC. 1173A. STANDARDIZE ELECTRONIC ADMINISTRATIVE 11 TRANSACTIONS. 12 ‘‘(a) STANDARDS FOR FINANCIAL AND ADMINISTRA13 TIVE TRANSACTIONS.— 14 ‘‘(1) IN GENERAL.—The Secretary shall adopt 15 and regularly update standards consistent with the 16 goals described in paragraph (2). 17 ‘‘(2) GOALS FOR FINANCIAL AND ADMINISTRA18 TIVE TRANSACTIONS.—The goals for standards 19 under paragraph (1) are that such standards shall— 20 ‘‘(A) be unique with no conflicting or re21 dundant standards; 22 ‘‘(B) be authoritative, permitting no addi23 tions or constraints for electronic transactions, 24 including companion guides;

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1 ‘‘(C) be comprehensive, efficient and ro2 bust, requiring minimal augmentation by paper 3 transactions or clarification by further commu4 nications; ‘‘(D) enable the real-time (or near real-6 time) determination of an individual’s financial 7 responsibility at the point of service and, to the 8 extent possible, prior to service, including 9 whether the individual is eligible for a specific service with a specific physician at a specific fa11 cility, which may include utilization of a ma12 chine-readable health plan beneficiary identi13 fication card; 14 ‘‘(E) enable, where feasible, near real-time adjudication of claims; 16 ‘‘(F) provide for timely acknowledgment, 17 response, and status reporting applicable to any 18 electronic transaction deemed appropriate by 19 the Secretary; ‘‘(G) describe all data elements (such as 21 reason and remark codes) in unambiguous 22 terms, not permit optional fields, require that 23 data elements be either required or conditioned 24 upon set values in other fields, and prohibit additional conditions; and

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1 ‘‘(H) harmonize all common data elements 2 across administrative and clinical transaction 3 standards. 4 ‘‘(3) TIME FOR ADOPTION.—Not later than 2 5 years after the date of implementation of the X12 6 Version 5010 transaction standards implemented 7 under this part, the Secretary shall adopt standards 8 under this section. 9 ‘‘(4) REQUIREMENTS FOR SPECIFIC STAND10 ARDS.—The standards under this section shall be 11 developed, adopted and enforced so as to— 12 ‘‘(A) clarify, refine, complete, and expand, 13 as needed, the standards required under section 14 1173; 15 ‘‘(B) require paper versions of standard16 ized transactions to comply with the same 17 standards as to data content such that a fully 18 compliant, equivalent electronic transaction can 19 be populated from the data from a paper 20 version; 21 ‘‘(C) enable electronic funds transfers, in 22 order to allow automated reconciliation with the 23 related health care payment and remittance ad24 vice;

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1 ‘‘(D) require timely and transparent claim 2 and denial management processes, including 3 tracking, adjudication, and appeal processing; 4 ‘‘(E) require the use of a standard elec5 tronic transaction with which health care pro6 viders may quickly and efficiently enroll with a 7 health plan to conduct the other electronic 8 transactions provided for in this part; and 9 ‘‘(F) provide for other requirements relat10 ing to administrative simplification as identified 11 by the Secretary, in consultation with stake12 holders. 13 ‘‘(5) BUILDING ON EXISTING STANDARDS.—In 14 developing the standards under this section, the Sec15 retary shall build upon existing and planned stand16 ards. 17 ‘‘(6) IMPLEMENTATION AND ENFORCEMENT.— 18 Not later than 6 months after the date of the enact19 ment of this section, the Secretary shall submit to 20 the appropriate committees of Congress a plan for 21 the implementation and enforcement, by not later 22 than 5 years after such date of enactment, of the 23 standards under this section. Such plan shall in24 clude—

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1 ‘‘(A) a process and timeframe with mile2 stones for developing the complete set of stand3 ards; 4 ‘‘(B) an expedited upgrade program for 5 continually developing and approving additions 6 and modifications to the standards as often as 7 annually to improve their quality and extend 8 their functionality to meet evolving require9 ments in health care; 10 ‘‘(C) programs to provide incentives for, 11 and ease the burden of, implementation for cer12 tain health care providers, with special consid13 eration given to such providers serving rural or 14 underserved areas and ensure coordination with 15 standards, implementation specifications, and 16 certification criteria being adopted under the 17 HITECH Act; 18 ‘‘(D) programs to provide incentives for, 19 and ease the burden of, health care providers 20 who volunteer to participate in the process of 21 setting standards for electronic transactions; 22 ‘‘(E) an estimate of total funds needed to 23 ensure timely completion of the implementation 24 plan; and

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1 ‘‘(F) an enforcement process that includes 2 timely investigation of complaints, random au3 dits to ensure compliance, civil monetary and 4 programmatic penalties for non-compliance con5 sistent with existing laws and regulations, and 6 a fair and reasonable appeals process building 7 off of enforcement provisions under this part. 8 ‘‘(b) LIMITATIONS ON USE OF DATA.—Nothing in 9 this section shall be construed to permit the use of infor10 mation collected under this section in a manner that would 11 adversely affect any individual. 12 ‘‘(c) PROTECTION OF DATA.—The Secretary shall en13 sure (through the promulgation of regulations or other14 wise) that all data collected pursuant to subsection (a) 15 are— 16 ‘‘(1) used and disclosed in a manner that meets 17 the HIPAA privacy and security law (as defined in 18 section 3009(a)(2) of the Public Health Service 19 Act), including any privacy or security standard 20 adopted under section 3004 of such Act; and 21 ‘‘(2) protected from all inappropriate internal 22 use by any entity that collects, stores, or receives the 23 data, including use of such data in determinations of 24 eligibility (or continued eligibility) in health plans,

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1 and from other inappropriate uses, as defined by the 2 Secretary.’’. 3 (2) DEFINITIONS.—Section 1171 of such Act 4 (42 U.S.C. 1320d) is amended— 5 (A) in paragraph (7), by striking ‘‘with 6 reference to’’ and all that follows and inserting 7 ‘‘with reference to a transaction or data ele8 ment of health information in section 1173 9 means implementation specifications, certifi10 cation criteria, operating rules, messaging for11 mats, codes, and code sets adopted or estab12 lished by the Secretary for the electronic ex13 change and use of information’’; and 14 (B) by adding at the end the following new 15 paragraph: 16 ‘‘(9) OPERATING RULES.—The term ‘operating 17 rules’ means business rules for using and processing 18 transactions. Operating rules should address the fol19 lowing: 20 ‘‘(A) Requirements for data content using 21 available and established national standards. 22 ‘‘(B) Infrastructure requirements that es23 tablish best practices for streamlining data flow 24 to yield timely execution of transactions.

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1 ‘‘(C) Policies defining the transaction re2 lated rights and responsibilities for entities that 3 are transmitting or receiving data.’’. 4 (3) CONFORMING AMENDMENT.—Section 1179(a) of such Act (42 U.S.C. 1320d–8(a)) is 6 amended, in the matter before paragraph (1)— 7 (A) by inserting ‘‘on behalf of an indi8 vidual’’ after ‘‘1978)’’; and 9 (B) by inserting ‘‘on behalf of an individual’’ after ‘‘for a financial institution.’’ 11 (b) STANDARDS FOR CLAIMS ATTACHMENTS AND 12 COORDINATION OF BENEFITS .— 13 (1) STANDARD FOR HEALTH CLAIMS ATTACH14 MENTS.—Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and 16 Human Services shall promulgate a final rule to es17 tablish a standard for health claims attachment 18 transaction described in section 1173(a)(2)(B) of the 19 Social Security Act (42 U.S.C. 1320d–2(a)(2)(B)) and coordination of benefits. 21 (2) REVISION IN PROCESSING PAYMENT TRANS22 ACTIONS BY FINANCIAL INSTITUTIONS.— 23 (A) IN GENERAL.—Section 1179 of the So24 cial Security Act (42 U.S.C. 1320d–8) is amended, in the matter before paragraph (1)—

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1 (i) by striking ‘‘or is engaged’’ and in2 serting ‘‘and is engaged’’; and 3 (ii) by inserting ‘‘(other than as a 4 business associate for a covered entity)’’ 5 after ‘‘for a financial institution’’. 6 (B) EFFECTIVE DATE.—The amendments 7 made by paragraph (1) shall apply to trans8 actions occurring on or after such date (not 9 later than 6 months after the date of the enact10 ment of this Act) as the Secretary of Health 11 and Human Services shall specify. 12 SEC. 164. REINSURANCE PROGRAM FOR RETIREES. 13 (a) ESTABLISHMENT.— 14 (1) IN GENERAL.—Not later than 90 days after 15 the date of the enactment of this Act, the Secretary 16 of Health and Human Services shall establish a tem17 porary reinsurance program (in this section referred 18 to as the ‘‘reinsurance program’’) to provide reim19 bursement to assist participating employment-based 20 plans with the cost of providing health benefits to 21 retirees and to eligible spouses, surviving spouses 22 and dependents of such retirees. 23 (2) DEFINITIONS.—For purposes of this sec24 tion:

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1 (A) The term ‘‘eligible employment-based

2 plan’’ means a group health benefits plan

3 that—

4 (i) is maintained by one or more em

ployers, former employers or employee as

6 sociations, or a voluntary employees’ bene

7 ficiary association, or a committee or board

8 of individuals appointed to administer such

9 plan, and

(ii) provides health benefits to retir11 ees. 12 (B) The term ‘‘health benefits’’ means 13 medical, surgical, hospital, prescription drug, 14 and such other benefits as shall be determined by the Secretary, whether self-funded or deliv16 ered through the purchase of insurance or oth17 erwise. 18 (C) The term ‘‘participating employment-19 based plan’’ means an eligible employment-based plan that is participating in the reinsur21 ance program. 22 (D) The term ‘‘retiree’’ means, with re23 spect to a participating employment-benefit 24 plan, an individual who—

(i) is 55 years of age or older;

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1 (ii) is not eligible for coverage under 2 title XVIII of the Social Security Act; and 3 (iii) is not an active employee of an 4 employer maintaining the plan or of any employer that makes or has made substan6 tial contributions to fund such plan. 7 (E) The term ‘‘Secretary’’ means Sec8 retary of Health and Human Services. 9 (b) PARTICIPATION.—To be eligible to participate in the reinsurance program, an eligible employment-based 11 plan shall submit to the Secretary an application for par12 ticipation in the program, at such time, in such manner, 13 and containing such information as the Secretary shall re14 quire.

(c) PAYMENT.— 16 (1) SUBMISSION OF CLAIMS.— 17 (A) IN GENERAL.—Under the reinsurance 18 program, a participating employment-based 19 plan shall submit claims for reimbursement to the Secretary which shall contain documenta21 tion of the actual costs of the items and serv22 ices for which each claim is being submitted. 23 (B) BASIS FOR CLAIMS.—Each claim sub24 mitted under subparagraph (A) shall be based on the actual amount expended by the partici

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1 pating employment-based plan involved within 2 the plan year for the appropriate employment 3 based health benefits provided to a retiree or to 4 the spouse, surviving spouse, or dependent of a retiree. In determining the amount of any claim 6 for purposes of this subsection, the partici7 pating employment-based plan shall take into 8 account any negotiated price concessions (such 9 as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations) ob11 tained by such plan with respect to such health 12 benefits. For purposes of calculating the 13 amount of any claim, the costs paid by the re14 tiree or by the spouse, surviving spouse, or dependent of the retiree in the form of 16 deductibles, co-payments, and co-insurance shall 17 be included along with the amounts paid by the 18 participating employment-based plan. 19 (2) PROGRAM PAYMENTS AND LIMIT.—If the Secretary determines that a participating employ21 ment-based plan has submitted a valid claim under 22 paragraph (1), the Secretary shall reimburse such 23 plan for 80 percent of that portion of the costs at24 tributable to such claim that exceeds $15,000, but is less than $90,000. Such amounts shall be adjusted

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1 each year based on the percentage increase in the 2 medical care component of the Consumer Price 3 Index (rounded to the nearest multiple of $1,000) 4 for the year involved.

(3) USE OF PAYMENTS.—Amounts paid to a 6 participating employment-based plan under this sub7 section shall be used to lower the costs borne di8 rectly by the participants and beneficiaries for health 9 benefits provided under such plan in the form of premiums, co-payments, deductibles, co-insurance, or 11 other out-of-pocket costs. Such payments shall not 12 be used to reduce the costs of an employer maintain13 ing the participating employment-based plan. The 14 Secretary shall develop a mechanism to monitor the appropriate use of such payments by such plans. 16 (4) APPEALS AND PROGRAM PROTECTIONS.— 17 The Secretary shall establish— 18 (A) an appeals process to permit partici19 pating employment-based plans to appeal a determination of the Secretary with respect to 21 claims submitted under this section; and 22 (B) procedures to protect against fraud, 23 waste, and abuse under the program. 24 (5) AUDITS.—The Secretary shall conduct annual audits of claims data submitted by partici

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1 pating employment-based plans under this section to 2 ensure that they are in compliance with the require3 ments of this section. 4 (d) RETIREE RESERVE TRUST FUND.— 5 (1) ESTABLISHMENT.— 6 (A) IN GENERAL.—There is established in 7 the Treasury of the United States a trust fund 8 to be known as the ‘‘Retiree Reserve Trust 9 Fund’’ (referred to in this section as the ‘‘Trust 10 Fund’’), that shall consist of such amounts as 11 may be appropriated or credited to the Trust 12 Fund as provided for in this subsection to en13 able the Secretary to carry out the reinsurance 14 program. Such amounts shall remain available 15 until expended. 16 (B) FUNDING.—There are hereby appro17 priated to the Trust Fund, out of any moneys 18 in the Treasury not otherwise appropriated, an 19 amount requested by the Secretary as necessary 20 to carry out this section, except that the total 21 of all such amounts requested shall not exceed 22 $10,000,000,000. 23 (C) APPROPRIATIONS FROM THE TRUST 24 FUND.—

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1 (i) IN GENERAL.—Amounts in the 2 Trust Fund are appropriated to provide 3 funding to carry out the reinsurance pro4 gram and shall be used to carry out such program. 6 (ii) BUDGETARY IMPLICATIONS.— 7 Amounts appropriated under clause (i), 8 and outlays flowing from such appropria9 tions, shall not be taken into account for purposes of any budget enforcement proce11 dures including allocations under section 12 302(a) and (b) of the Balanced Budget 13 and Emergency Deficit Control Act and 14 budget resolutions for fiscal years during which appropriations are made from the 16 Trust Fund. 17 (iii) LIMITATION TO AVAILABLE 18 FUNDS.—The Secretary has the authority 19 to stop taking applications for participation in the program or take such other 21 steps in reducing expenditures under the 22 reinsurance program in order to ensure 23 that expenditures under the reinsurance 24 program do not exceed the funds available under this subsection.

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1 TITLE II—HEALTH INSURANCE 2 EXCHANGE AND RELATED 3 PROVISIONS 4 Subtitle A—Health Insurance Exchange

6 SEC. 201. ESTABLISHMENT OF HEALTH INSURANCE EX7 CHANGE; OUTLINE OF DUTIES; DEFINITIONS. 8 (a) ESTABLISHMENT.—There is established within 9 the Health Choices Administration and under the direction of the Commissioner a Health Insurance Exchange 11 in order to facilitate access of individuals and employers, 12 through a transparent process, to a variety of choices of 13 affordable, quality health insurance coverage, including a 14 public health insurance option.

(b) OUTLINE OF DUTIES OF COMMISSIONER.—In ac16 cordance with this subtitle and in coordination with appro17 priate Federal and State officials as provided under sec18 tion 143(b), the Commissioner shall— 19 (1) under section 204 establish standards for, accept bids from, and negotiate and enter into con21 tracts with, QHBP offering entities for the offering 22 of health benefits plans through the Health Insur23 ance Exchange, with different levels of benefits re24 quired under section 203, and including with respect to oversight and enforcement;

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1 (2) under section 205 facilitate outreach and 2 enrollment in such plans of Exchange-eligible indi3 viduals and employers described in section 202; and 4 (3) conduct such activities related to the Health Insurance Exchange as required, including establish6 ment of a risk pooling mechanism under section 206 7 and consumer protections under subtitle D of title I. 8 (c) EXCHANGE-PARTICIPATING HEALTH BENEFITS 9 PLAN DEFINED.—In this division, the term ‘‘Exchange-participating health benefits plan’’ means a qualified 11 health benefits plan that is offered through the Health In12 surance Exchange. 13 SEC. 202. EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOY14 ERS.

(a) ACCESS TO COVERAGE.—In accordance with this 16 section, all individuals are eligible to obtain coverage 17 through enrollment in an Exchange-participating health 18 benefits plan offered through the Health Insurance Ex19 change unless such individuals are enrolled in another qualified health benefits plan or other acceptable coverage. 21 (b) DEFINITIONS.—In this division: 22 (1) EXCHANGE-ELIGIBLE INDIVIDUAL.—The 23 term ‘‘Exchange-eligible individual’’ means an indi24 vidual who is eligible under this section to be enrolled through the Health Insurance Exchange in an

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1 Exchange-participating health benefits plan and,

2 with respect to family coverage, includes dependents

3 of such individual.

4 (2) EXCHANGE-ELIGIBLE EMPLOYER.—The

term ‘‘Exchange-eligible employer’’ means an em6 ployer that is eligible under this section to enroll 7 through the Health Insurance Exchange employees 8 of the employer (and their dependents) in Exchange-9 eligible health benefits plans.

(3) EMPLOYMENT-RELATED DEFINITIONS.— 11 The terms ‘‘employer’’, ‘‘employee’’, ‘‘full-time em12 ployee’’, and ‘‘part-time employee’’ have the mean13 ings given such terms by the Commissioner for pur14 poses of this division.

(c) TRANSITION.—Individuals and employers shall 16 only be eligible to enroll or participate in the Health Insur17 ance Exchange in accordance with the following transition 18 schedule: 19 (1) FIRST YEAR.—In Y1 (as defined in section 100(c))— 21 (A) individuals described in subsection 22 (d)(1), including individuals described in para23 graphs (3) and (4) of subsection (d); and 24 (B) smallest employers described in subsection (e)(1).

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1 (2) SECOND YEAR.—In Y2— 2 (A) individuals and employers described in 3 paragraph (1); and 4 (B) smaller employers described in sub5 section (e)(2). 6 (3) THIRD AND SUBSEQUENT YEARS.—In Y3 7 and subsequent years— 8 (A) individuals and employers described in 9 paragraph (2); and 10 (B) larger employers as permitted by the 11 Commissioner under subsection (e)(3). 12 (d) INDIVIDUALS.— 13 (1) INDIVIDUAL DESCRIBED.—Subject to the 14 succeeding provisions of this subsection, an indi15 vidual described in this paragraph is an individual 16 who— 17 (A) is not enrolled in coverage described in 18 subparagraphs (C) through (F) of paragraph 19 (2); and 20 (B) is not enrolled in coverage as a full-21 time employee (or as a dependent of such an 22 employee) under a group health plan if the cov23 erage and an employer contribution under the 24 plan meet the requirements of section 312.

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1 For purposes of subparagraph (B), in the case of an 2 individual who is self-employed, who has at least 1 3 employee, and who meets the requirements of section 4 312, such individual shall be deemed a full-time employee described in such subparagraph. 6 (2) ACCEPTABLE COVERAGE.—For purposes of 7 this division, the term ‘‘acceptable coverage’’ means 8 any of the following: 9 (A) QUALIFIED HEALTH BENEFITS PLAN COVERAGE.—Coverage under a qualified health 11 benefits plan. 12 (B) GRANDFATHERED HEALTH INSURANCE 13 COVERAGE; COVERAGE UNDER CURRENT GROUP 14 HEALTH PLAN.—Coverage under a grand-fathered health insurance coverage (as defined 16 in subsection (a) of section 102) or under a 17 current group health plan (described in sub18 section (b) of such section). 19 (C) MEDICARE.—Coverage under part A of title XVIII of the Social Security Act. 21 (D) MEDICAID.—Coverage for medical as22 sistance under title XIX of the Social Security 23 Act, excluding such coverage that is only avail24 able because of the application of subsection (u), (z), or (aa) of section 1902 of such Act.

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1 (E) MEMBERS OF THE ARMED FORCES 2 AND DEPENDENTS (INCLUDING TRICARE).— 3 Coverage under chapter 55 of title 10, United 4 States Code, including similar coverage furnished under section 1781 of title 38 of such 6 Code. 7 (F) VA.—Coverage under the veteran’s 8 health care program under chapter 17 of title 9 38, United States Code, but only if the coverage for the individual involved is determined 11 by the Commissioner in coordination with the 12 Secretary of Treasury to be not less than a level 13 specified by the Commissioner and Secretary of 14 Veteran’s Affairs, in coordination with the Secretary of Treasury, based on the individual’s 16 priority for services as provided under section 17 1705(a) of such title. 18 (G) OTHER COVERAGE.—Such other health 19 benefits coverage, such as a State health benefits risk pool, as the Commissioner, in coordina21 tion with the Secretary of the Treasury, recog22 nizes for purposes of this paragraph. 23 The Commissioner shall make determinations under 24 this paragraph in coordination with the Secretary of the Treasury.

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1 (3) TREATMENT OF CERTAIN NON-TRADI2 TIONAL MEDICAID ELIGIBLE INDIVIDUALS.—An indi3 vidual who is a non-traditional Medicaid eligible in4 dividual (as defined in section 205(e)(4)(C)) in a State may be an Exchange-eligible individual if the 6 individual was enrolled in a qualified health benefits 7 plan, grandfathered health insurance coverage, or 8 current group health plan during the 6 months be9 fore the individual became a non-traditional Medicaid eligible individual. During the period in which 11 such an individual has chosen to enroll in an Ex12 change-participating health benefits plan, the indi13 vidual is not also eligible for medical assistance 14 under Medicaid.

(4) CONTINUING ELIGIBILITY PERMITTED.— 16 (A) IN GENERAL.—Except as provided in 17 subparagraph (B), once an individual qualifies 18 as an Exchange-eligible individual under this 19 subsection (including as an employee or dependent of an employee of an Exchange-eligible em21 ployer) and enrolls under an Exchange-partici22 pating health benefits plan through the Health 23 Insurance Exchange, the individual shall con24 tinue to be treated as an Exchange-eligible individual until the individual is no longer enrolled

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1 with an Exchange-participating health benefits 2 plan. 3 (B) EXCEPTIONS.— 4 (i) IN GENERAL.—Subparagraph (A) 5 shall not apply to an individual once the 6 individual becomes eligible for coverage— 7 (I) under part A of the Medicare 8 program; 9 (II) under the Medicaid program 10 as a Medicaid eligible individual, ex11 cept as permitted under paragraph 12 (3) or clause (ii); or 13 (III) in such other circumstances 14 as the Commissioner may provide. 15 (ii) TRANSITION PERIOD.—In the case 16 described in clause (i)(II), the Commis17 sioner shall permit the individual to con18 tinue treatment under subparagraph (A) 19 until such limited time as the Commis20 sioner determines it is administratively fea21 sible, consistent with minimizing disruption 22 in the individual’s access to health care. 23 (e) EMPLOYERS.—

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1 (1) SMALLEST EMPLOYER.—Subject to para2 graph (4), smallest employers described in this para3 graph are employers with 10 or fewer employees. 4 (2) SMALLER EMPLOYERS.—Subject to paragraph (4), smaller employers described in this para6 graph are employers that are not smallest employers 7 described in paragraph (1) and have 20 or fewer em8 ployees. 9 (3) LARGER EMPLOYERS.—

(A) IN GENERAL.—Beginning with Y3, the 11 Commissioner may permit employers not de12 scribed in paragraph (1) or (2) to be Exchange-13 eligible employers. 14 (B) PHASE-IN.—In applying subparagraph (A), the Commissioner may phase-in the appli16 cation of such subparagraph based on the num17 ber of full-time employees of an employer and 18 such other considerations as the Commissioner 19 deems appropriate.

(4) CONTINUING ELIGIBILITY.—Once an em21 ployer is permitted to be an Exchange-eligible em22 ployer under this subsection and enrolls employees 23 through the Health Insurance Exchange, the em24 ployer shall continue to be treated as an Exchange-eligible employer for each subsequent plan year re

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1 gardless of the number of employees involved unless 2 and until the employer meets the requirement of sec3 tion 311(a) through paragraph (1) of such section 4 by offering a group health plan and not through of5 fering Exchange-participating health benefits plan. 6 (5) EMPLOYER PARTICIPATION AND CONTRIBU7 TIONS.— 8 (A) SATISFACTION OF EMPLOYER RESPON9 SIBILITY.—For any year in which an employer 10 is an Exchange-eligible employer, such employer 11 may meet the requirements of section 312 with 12 respect to employees of such employer by offer13 ing such employees the option of enrolling with 14 Exchange-participating health benefits plans 15 through the Health Insurance Exchange con16 sistent with the provisions of subtitle B of title 17 III. 18 (B) EMPLOYEE CHOICE.—Any employee 19 offered Exchange-participating health benefits 20 plans by the employer of such employee under 21 subparagraph (A) may choose coverage under 22 any such plan. That choice includes, with re23 spect to family coverage, coverage of the de24 pendents of such employee.

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1 (6) AFFILIATED GROUPS.—Any employer which 2 is part of a group of employers who are treated as 3 a single employer under subsection (b), (c), (m), or 4 (o) of section 414 of the Internal Revenue Code of 1986 shall be treated, for purposes of this subtitle, 6 as a single employer. 7 (7) OTHER COUNTING RULES.—The Commis8 sioner shall establish rules relating to how employees 9 are counted for purposes of carrying out this subsection. 11 (f) SPECIAL SITUATION AUTHORITY.—The Commis12 sioner shall have the authority to establish such rules as 13 may be necessary to deal with special situations with re14 gard to uninsured individuals and employers participating as Exchange-eligible individuals and employers, such as 16 transition periods for individuals and employers who gain, 17 or lose, Exchange-eligible participation status, and to es18 tablish grace periods for premium payment. 19 (g) SURVEYS OF INDIVIDUALS AND EMPLOYERS.— The Commissioner shall provide for periodic surveys of 21 Exchange-eligible individuals and employers concerning 22 satisfaction of such individuals and employers with the 23 Health Insurance Exchange and Exchange-participating 24 health benefits plans.

(h) EXCHANGE ACCESS STUDY.—

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1 (1) IN GENERAL.—The Commissioner shall con2 duct a study of access to the Health Insurance Ex3 change for individuals and for employers, including 4 individuals and employers who are not eligible and enrolled in Exchange-participating health benefits 6 plans. The goal of the study is to determine if there 7 are significant groups and types of individuals and 8 employers who are not Exchange eligible individuals 9 or employers, but who would have improved benefits and affordability if made eligible for coverage in the 11 Exchange. 12 (2) ITEMS INCLUDED IN STUDY.—Such study 13 also shall examine— 14 (A) the terms, conditions, and affordability of group health coverage offered by employers 16 and QHBP offering entities outside of the Ex17 change compared to Exchange-participating 18 health benefits plans; and 19 (B) the affordability-test standard for access of certain employed individuals to coverage 21 in the Health Insurance Exchange. 22 (3) REPORT.—Not later than January 1 of Y3, 23 in Y6, and thereafter, the Commissioner shall sub24 mit to Congress on the study conducted under this subsection and shall include in such report rec

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1 ommendations regarding changes in standards for 2 Exchange eligibility for for individuals and employ3 ers. 4 SEC. 203. BENEFITS PACKAGE LEVELS.

(a) IN GENERAL.—The Commissioner shall specify 6 the benefits to be made available under Exchange-partici7 pating health benefits plans during each plan year, con8 sistent with subtitle C of title I and this section. 9 (b) LIMITATION ON HEALTH BENEFITS PLANS OFFERED BY OFFERING ENTITIES.—The Commissioner may 11 not enter into a contract with a QHBP offering entity 12 under section 204(c) for the offering of an Exchange-par13 ticipating health benefits plan in a service area unless the 14 following requirements are met:

(1) REQUIRED OFFERING OF BASIC PLAN.—The 16 entity offers only one basic plan for such service 17 area. 18 (2) OPTIONAL OFFERING OF ENHANCED 19 PLAN.—If and only if the entity offers a basic plan for such service area, the entity may offer one en21 hanced plan for such area. 22 (3) OPTIONAL OFFERING OF PREMIUM PLAN.— 23 If and only if the entity offers an enhanced plan for 24 such service area, the entity may offer one premium plan for such area.

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1 (4) OPTIONAL OFFERING OF PREMIUM-PLUS 2 PLANS.—If and only if the entity offers a premium 3 plan for such service area, the entity may offer one 4 or more premium-plus plans for such area. 5 All such plans may be offered under a single contract with 6 the Commissioner. 7 (c) SPECIFICATION OF BENEFIT LEVELS FOR 8 PLANS.— 9 (1) IN GENERAL.—The Commissioner shall es10 tablish the following standards consistent with this 11 subsection and title I: 12 (A) BASIC, ENHANCED, AND PREMIUM 13 PLANS.—Standards for 3 levels of Exchange-14 participating health benefits plans: basic, en15 hanced, and premium (in this division referred 16 to as a ‘‘basic plan’’, ‘‘enhanced plan’’, and 17 ‘‘premium plan’’, respectively). 18 (B) PREMIUM-PLUS PLAN BENEFITS.— 19 Standards for additional benefits that may be 20 offered, consistent with this subsection and sub21 title C of title I, under a premium plan (such 22 a plan with additional benefits referred to in 23 this division as a ‘‘premium-plus plan’’). 24 (2) BASIC PLAN.—

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1 (A) IN GENERAL.—A basic plan shall offer 2 the essential benefits package required under 3 title I for a qualified health benefits plan. 4 (B) TIERED COST-SHARING FOR AFFORD5 ABLE CREDIT ELIGIBLE INDIVIDUALS.—In the 6 case of an affordable credit eligible individual 7 (as defined in section 242(a)(1)) enrolled in an 8 Exchange-participating health benefits plan, the 9 benefits under a basic plan are modified to pro10 vide for the reduced cost-sharing for the income 11 tier applicable to the individual under section 12 244(c). 13 (3) ENHANCED PLAN.—A enhanced plan shall 14 offer, in addition to the level of benefits under the 15 basic plan, a lower level of cost-sharing as provided 16 under title I consistent with section 123(b)(5)(A). 17 (4) PREMIUM PLAN.—A premium plan shall 18 offer, in addition to the level of benefits under the 19 basic plan, a lower level of cost-sharing as provided 20 under title I consistent with section 123(b)(5)(B). 21 (5) PREMIUM-PLUS PLAN.—A premium-plus 22 plan is a premium plan that also provides additional 23 benefits, such as adult oral health and vision care, 24 approved by the Commissioner. The portion of the

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1 premium that is attributable to such additional ben2 efits shall be separately specified. 3 (6) RANGE OF PERMISSIBLE VARIATION IN 4 COST-SHARING.—The Commissioner shall establish a 5 permissible range of variation of cost-sharing for 6 each basic, enhanced, and premium plan, except with 7 respect to any benefit for which there is no cost-8 sharing permitted under the essential benefits pack9 age. Such variation shall permit a variation of not 10 more than plus (or minus) 10 percent in cost-shar11 ing with respect to each benefit category specified 12 under section 122. 13 (d) TREATMENT OF STATE BENEFIT MANDATES.— 14 Insofar as a State requires a health insurance issuer offer15 ing health insurance coverage to include benefits beyond 16 the essential benefits package, such requirement shall con17 tinue to apply to an Exchange-participating health bene18 fits plan, if the State has entered into an arrangement 19 satisfactory to the Commissioner to reimburse the Com20 missioner for the amount of any net increase in afford21 ability premium credits under subtitle C as a result of an 22 increase in premium in basic plans as a result of applica23 tion of such requirement.

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SEC. 204. CONTRACTS FOR THE OFFERING OF EXCHANGE-

PARTICIPATING HEALTH BENEFITS PLANS.

(a) CONTRACTING DUTIES.—In carrying out section 201(b)(1) and consistent with this subtitle:

(1)

OFFERING ENTITY AND PLAN STAND-ARDS.—The Commissioner shall—

(A)

establish standards necessary to implement the requirements of this title and title I for—

(i)

QHBP offering entities for the offering of an Exchange-participating health benefits plan; and

(ii)

for Exchange-participating health benefits plans; and

(B)

certify QHBP offering entities and qualified health benefits plans as meeting such standards and requirements of this title and title I for purposes of this subtitle.

(2)

SOLICITING AND NEGOTIATING BIDS; CON-TRACTS.—The Commissioner shall—

(A)

solicit bids from QHBP offering entities for the offering of Exchange-participating health benefits plans;

(B)

based upon a review of such bids, negotiate with such entities for the offering of such plans; and

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1 (C) enter into contracts with such entities 2 for the offering of such plans through the 3 Health Insurance Exchange under terms (con4 sistent with this title) negotiated between the Commissioner and such entities. 6 (3) FAR NOT APPLICABLE.—The provisions of 7 the Federal Acquisition Regulation shall not apply to 8 contracts between the Commissioner and QHBP of9 fering entities for the offering of Exchange-participating health benefits plans under this title. 11 (b) STANDARDS FOR QHBP OFFERING ENTITIES TO 12 OFFER EXCHANGE-PARTICIPATING HEALTH BENEFITS 13 PLANS.—The standards established under subsection 14 (a)(1)(A) shall require that, in order for a QHBP offering entity to offer an Exchange-participating health benefits 16 plan, the entity must meet the following requirements: 17 (1) LICENSED.—The entity shall be licensed to 18 offer health insurance coverage under State law for 19 each State in which it is offering such coverage.

(2) DATA REPORTING.—The entity shall pro21 vide for the reporting of such information as the 22 Commissioner may specify, including information 23 necessary to administer the risk pooling mechanism 24 described in section 206(b) and information to address disparities in health and health care.

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1 (3) IMPLEMENTING AFFORDABILITY CRED2 ITS.—The entity shall provide for implementation of 3 the affordability credits provided for enrollees under 4 subtitle C, including the reduction in cost-sharing under section 244(c). 6 (4) ENROLLMENT.—The entity shall accept all 7 enrollments under this subtitle, subject to such ex8 ceptions (such as capacity limitations) in accordance 9 with the requirements under title I for a qualified health benefits plan. The entity shall notify the 11 Commissioner if the entity projects or anticipates 12 reaching such a capacity limitation that would result 13 in a limitation in enrollment. 14 (5) RISK POOLING PARTICIPATION.—The entity shall participate in such risk pooling mechanism as 16 the Commissioner establishes under section 206(b). 17 (6) ESSENTIAL COMMUNITY PROVIDERS.—With 18 respect to the basic plan offered by the entity, the 19 entity shall contract for outpatient services with covered entities (as defined in section 340B(a)(4) of the 21 Public Health Service Act, as in effect as of July 1, 22 2009). The Commissioner shall specify the extent to 23 which and manner in which the previous sentence 24 shall apply in the case of a basic plan with respect to which the Commissioner determines provides sub

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1 stantially all benefits through a health maintenance 2 organization, as defined in section 2791(b)(3) of the 3 Public Health Service Act. 4 (7) CULTURALLY AND LINGUISTICALLY APPROPRIATE SERVICES AND COMMUNICATIONS.—The en6 tity shall provide for culturally and linguistically ap7 propriate communication and health services. 8 (8) ADDITIONAL REQUIREMENTS.—The entity 9 shall comply with other applicable requirements of this title, as specified by the Commissioner, which 11 shall include standards regarding billing and collec12 tion practices for premiums and related grace peri13 ods and which may include standards to ensure that 14 the entity does not use coercive practices to force providers not to contract with other entities offering 16 coverage through the Health Insurance Exchange. 17 (c) CONTRACTS.— 18 (1) BID APPLICATION.—To be eligible to enter 19 into a contract under this section, a QHBP offering entity shall submit to the Commissioner a bid at 21 such time, in such manner, and containing such in22 formation as the Commissioner may require. 23 (2) TERM.—Each contract with a QHBP offer24 ing entity under this section shall be for a term of not less than one year, but may be made automati

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1 cally renewable from term to term in the absence of 2 notice of termination by either party. 3 (3) ENFORCEMENT OF NETWORK ADEQUACY.— 4 In the case of a health benefits plan of a QHBP offering entity that uses a provider network, the con6 tract under this section with the entity shall provide 7 that if— 8 (A) the Commissioner determines that 9 such provider network does not meet such standards as the Commissioner shall establish 11 under section 115; and 12 (B) an individual enrolled in such plan re13 ceives an item or service from a provider that 14 is not within such network; then any cost-sharing for such item or service shall 16 be equal to the amount of such cost-sharing that 17 would be imposed if such item or service was fur18 nished by a provider within such network. 19 (4) OVERSIGHT AND ENFORCEMENT RESPON-SIBILITIES.—The Commissioner shall establish proc21 esses, in coordination with State insurance regu22 lators, to oversee, monitor, and enforce applicable re23 quirements of this title with respect to QHBP offer24 ing entities offering Exchange-participating health benefits plans and such plans, including the mar

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1 keting of such plans. Such processes shall include 2 the following: 3 (A) GRIEVANCE AND COMPLAINT MECHA4 NISMS.—The Commissioner shall establish, in coordination with State insurance regulators, a 6 process under which Exchange-eligible individ7 uals and employers may file complaints con8 cerning violations of such standards. 9 (B) ENFORCEMENT.—In carrying out authorities under this division relating to the 11 Health Insurance Exchange, the Commissioner 12 may impose one or more of the intermediate 13 sanctions described in section 142(c). 14 (C) TERMINATION.—

(i) IN GENERAL.—The Commissioner 16 may terminate a contract with a QHBP of17 fering entity under this section for the of18 fering of an Exchange-participating health 19 benefits plan if such entity fails to comply with the applicable requirements of this 21 title. Any determination by the Commis22 sioner to terminate a contract shall be 23 made in accordance with formal investiga24 tion and compliance procedures established by the Commissioner under which—

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1 (I) the Commissioner provides 2 the entity with the reasonable oppor3 tunity to develop and implement a 4 corrective action plan to correct the 5 deficiencies that were the basis of the 6 Commissioner’s determination; and 7 (II) the Commissioner provides 8 the entity with reasonable notice and 9 opportunity for hearing (including the 10 right to appeal an initial decision) be11 fore terminating the contract. 12 (ii) EXCEPTION FOR IMMINENT AND 13 SERIOUS RISK TO HEALTH.—Clause (i) 14 shall not apply if the Commissioner deter15 mines that a delay in termination, result16 ing from compliance with the procedures 17 specified in such clause prior to termi18 nation, would pose an imminent and seri19 ous risk to the health of individuals en20 rolled under the qualified health benefits 21 plan of the QHBP offering entity. 22 (D) CONSTRUCTION.—Nothing in this sub23 section shall be construed as preventing the ap24 plication of other sanctions under subtitle E of

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1 title I with respect to an entity for a violation 2 of such a requirement. 3 SEC. 205. OUTREACH AND ENROLLMENT OF EXCHANGE-EL4 IGIBLE INDIVIDUALS AND EMPLOYERS IN EXCHANGE-PARTICIPATING HEALTH BENEFITS 6 PLAN. 7 (a) IN GENERAL.— 8 (1) OUTREACH.—The Commissioner shall con9 duct outreach activities consistent with subsection (c), including through use of appropriate entities as 11 described in paragraph (4) of such subsection, to in12 form and educate individuals and employers about 13 the Health Insurance Exchange and Exchange-par14 ticipating health benefits plan options. Such outreach shall include outreach specific to vulnerable 16 populations, such as children, individuals with dis17 abilities, individuals with mental illness, and individ18 uals with other cognitive impairments. 19 (2) ELIGIBILITY.—The Commissioner shall make timely determinations of whether individuals 21 and employers are Exchange-eligible individuals and 22 employers (as defined in section 202). 23 (3) ENROLLMENT.—The Commissioner shall es24 tablish and carry out an enrollment process for Exchange-eligible individuals and employers, including

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1 at community locations, in accordance with sub2 section (b). 3 (b) ENROLLMENT PROCESS.— 4 (1) IN GENERAL.—The Commissioner shall establish a process consistent with this title for enroll6 ments in Exchange-participating health benefits 7 plans. Such process shall provide for enrollment 8 through means such as the mail, by telephone, elec9 tronically, and in person.

(2) ENROLLMENT PERIODS.— 11 (A) OPEN ENROLLMENT PERIOD.—The 12 Commissioner shall establish an annual open 13 enrollment period during which an Exchange-el14 igible individual or employer may elect to enroll in an Exchange-participating health benefits 16 plan for the following plan year and an enroll17 ment period for affordability credits under sub18 title C. Such periods shall be during September 19 through November of each year, or such other time that would maximize timeliness of income 21 verification for purposes of such subtitle. The 22 open enrollment period shall not be less than 30 23 days. 24 (B) SPECIAL ENROLLMENT.—The Commissioner shall also provide for special enroll

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1 ment periods to take into account special cir2 cumstances of individuals and employers, such 3 as an individual who— 4 (i) loses acceptable coverage;

(ii) experiences a change in marital or 6 other dependent status; 7 (iii) moves outside the service area of 8 the Exchange-participating health benefits 9 plan in which the individual is enrolled; or

(iv) experiences a significant change 11 in income. 12 (C) ENROLLMENT INFORMATION.—The 13 Commissioner shall provide for the broad dis14 semination of information to prospective enrollees on the enrollment process, including before 16 each open enrollment period. In carrying out 17 the previous sentence, the Commissioner may 18 work with other appropriate entities to facilitate 19 such provision of information.

(3) AUTOMATIC ENROLLMENT FOR NON-MED21 ICAID ELIGIBLE INDIVIDUALS.— 22 (A) IN GENERAL.—The Commissioner 23 shall provide for a process under which individ24 uals who are Exchange-eligible individuals described in subparagraph (B) are automatically

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1 enrolled under an appropriate Exchange-partici2 pating health benefits plan. Such process may 3 involve a random assignment or some other 4 form of assignment that takes into account the health care providers used by the individual in6 volved or such other relevant factors as the 7 Commissioner may specify. 8 (B) SUBSIDIZED INDIVIDUALS DE9 SCRIBED.—An individual described in this subparagraph is an Exchange-eligible individual 11 who is either of the following: 12 (i) AFFORDABILITY CREDIT ELIGIBLE 13 INDIVIDUALS.—The individual— 14 (I) has applied for, and been determined eligible for, affordability 16 credits under subtitle C; 17 (II) has not opted out from re18 ceiving such affordability credit; and 19 (III) does not otherwise enroll in another Exchange-participating health 21 benefits plan. 22 (ii) INDIVIDUALS ENROLLED IN A 23 TERMINATED PLAN.—The individual is en24 rolled in an Exchange-participating health benefits plan that is terminated (during or

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1 at the end of a plan year) and who does

2 not otherwise enroll in another Exchange-

3 participating health benefits plan.

4 (4) DIRECT PAYMENT OF PREMIUMS TO

PLANS.—Under the enrollment process, individuals 6 enrolled in an Exchange-partcipating health benefits 7 plan shall pay such plans directly, and not through 8 the Commissioner or the Health Insurance Ex9 change.

(c) COVERAGE INFORMATION AND ASSISTANCE.— 11 (1) COVERAGE INFORMATION.—The Commis12 sioner shall provide for the broad dissemination of 13 information on Exchange-participating health bene14 fits plans offered under this title. Such information shall be provided in a comparative manner, and shall 16 include information on benefits, premiums, cost-17 sharing, quality, provider networks, and consumer 18 satisfaction. 19 (2) CONSUMER ASSISTANCE WITH CHOICE.—To provide assistance to Exchange-eligible individuals 21 and employers, the Commissioner shall— 22 (A) provide for the operation of a toll-free 23 telephone hotline to respond to requests for as24 sistance and maintain an Internet website through which individuals may obtain informa

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1 tion on coverage under Exchange-participating 2 health benefits plans and file complaints; 3 (B) develop and disseminate information to 4 Exchange-eligible enrollees on their rights and responsibilities; 6 (C) assist Exchange-eligible individuals in 7 selecting Exchange-participating health benefits 8 plans and obtaining benefits through such 9 plans; and

(D) ensure that the Internet website de11 scribed in subparagraph (A) and the informa12 tion described in subparagraph (B) is developed 13 using plain language (as defined in section 14 133(a)(2)).

(3) USE OF OTHER ENTITIES.—In carrying out 16 this subsection, the Commissioner may work with 17 other appropriate entities to facilitate the dissemina18 tion of information under this subsection and to pro19 vide assistance as described in paragraph (2).

(d) SPECIAL DUTIES RELATED TO MEDICAID AND 21 CHIP.— 22 (1) COVERAGE FOR CERTAIN NEWBORNS.— 23 (A) IN GENERAL.—In the case of a child 24 born in the United States who at the time of birth is not otherwise covered under acceptable

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1 coverage, for the period of time beginning on 2 the date of birth and ending on the date the 3 child otherwise is covered under acceptable cov4 erage (or, if earlier, the end of the month in which the 60-day period, beginning on the date 6 of birth, ends), the child shall be deemed— 7 (i) to be a non-traditional Medicaid el8 igible individual (as defined in subsection 9 (e)(5)) for purposes of this division and Medicaid; and 11 (ii) to have elected to enroll in Med12 icaid through the application of paragraph 13 (3). 14 (B) EXTENDED TREATMENT AS TRADITIONAL MEDICAID ELIGIBLE INDIVIDUAL.—In 16 the case of a child described in subparagraph 17 (A) who at the end of the period referred to in 18 such subparagraph is not otherwise covered 19 under acceptable coverage, the child shall be deemed (until such time as the child obtains 21 such coverage or the State otherwise makes a 22 determination of the child’s eligibility for med23 ical assistance under its Medicaid plan pursuant 24 to section 1943(c)(1) of the Social Security Act) to be a traditional Medicaid eligible indi

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1 vidual described in section 1902(l)(1)(B) of 2 such Act. 3 (2) CHIP TRANSITION.—A child who, as of the 4 day before the first day of Y1, is eligible for child 5 health assistance under title XXI of the Social Secu6 rity Act (including a child receiving coverage under 7 an arrangement described in section 2101(a)(2) of 8 such Act) is deemed as of such first day to be an 9 Exchange-eligible individual unless the individual is 10 a traditional Medicaid eligible individual as of such 11 day. 12 (3) AUTOMATIC ENROLLMENT OF MEDICAID EL13 IGIBLE INDIVIDUALS INTO MEDICAID.—The Com14 missioner shall provide for a process under which an 15 individual who is described in section 202(d)(3) and 16 has not elected to enroll in an Exchange-partici17 pating health benefits plan is automatically enrolled 18 under Medicaid. 19 (4) NOTIFICATIONS.—The Commissioner shall 20 notify each State in Y1 and for purposes of section 21 1902(gg)(1) of the Social Security Act (as added by 22 section 1703(a)) whether the Health Insurance Ex23 change can support enrollment of children described 24 in paragraph (2) in such State in such year.

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1 (e) MEDICAID COVERAGE FOR MEDICAID ELIGIBLE 2 INDIVIDUALS.— 3 (1) IN GENERAL.— 4 (A) CHOICE FOR LIMITED EXCHANGE-ELIGIBLE INDIVIDUALS.—As part of the enrollment 6 process under subsection (b), the Commissioner 7 shall provide the option, in the case of an Ex8 change-eligible individual described in section 9 202(d)(3), for the individual to elect to enroll under Medicaid instead of under an Exchange-11 participating health benefits plan. Such an indi12 vidual may change such election during an en13 rollment period under subsection (b)(2). 14 (B) MEDICAID ENROLLMENT OBLIGA-TION.—An Exchange eligible individual may 16 apply, in the manner described in section 17 241(b)(1), for a determination of whether the 18 individual is a Medicaid-eligible individual. If 19 the individual is determined to be so eligible, the Commissioner, through the Medicaid memo21 randum of understanding, shall provide for the 22 enrollment of the individual under the State 23 Medicaid plan in accordance with the Medicaid 24 memorandum of understanding under paragraph (4). In the case of such an enrollment,

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1 the State shall provide for the same periodic re2 determination of eligibility under Medicaid as 3 would otherwise apply if the individual had di4 rectly applied for medical assistance to the State Medicaid agency. 6 (2) NON-TRADITIONAL MEDICAID ELIGIBLE IN7 DIVIDUALS.—In the case of a non-traditional Med8 icaid eligible individual described in section 9 202(d)(3) who elects to enroll under Medicaid under paragraph (1)(A), the Commissioner shall provide 11 for the enrollment of the individual under the State 12 Medicaid plan in accordance with the Medicaid 13 memorandum of understanding under paragraph 14 (4).

(3) COORDINATED ENROLLMENT WITH STATE 16 THROUGH MEMORANDUM OF UNDERSTANDING.— 17 The Commissioner, in consultation with the Sec18 retary of Health and Human Services, shall enter 19 into a memorandum of understanding with each State (each in this division referred to as a ‘‘Med21 icaid memorandum of understanding’’) with respect 22 to coordinating enrollment of individuals in Ex23 change-participating health benefits plans and under 24 the State’s Medicaid program consistent with this section and to otherwise coordinate the implementa

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1 tion of the provisions of this division with respect to 2 the Medicaid program. Such memorandum shall per3 mit the exchange of information consistent with the 4 limitations described in section 1902(a)(7) of the So5 cial Security Act. Nothing in this section shall be 6 construed as permitting such memorandum to mod7 ify or vitiate any requirement of a State Medicaid 8 plan. 9 (4) MEDICAID ELIGIBLE INDIVIDUALS.—For 10 purposes of this division: 11 (A) MEDICAID ELIGIBLE INDIVIDUAL.— 12 The term ‘‘Medicaid eligible individual’’ means 13 an individual who is eligible for medical assist14 ance under Medicaid. 15 (B) TRADITIONAL MEDICAID ELIGIBLE IN16 DIVIDUAL.—The term ‘‘traditional Medicaid eli17 gible individual’’ means a Medicaid eligible indi18 vidual other than an individual who is— 19 (i) a Medicaid eligible individual by 20 reason of the application of subclause 21 (VIII) of section 1902(a)(10)(A)(i) of the 22 Social Security Act; or 23 (ii) a childless adult not described in 24 section 1902(a)(10) (A) or (C) of such Act

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1 (as in effect as of the day before the date 2 of the enactment of this Act). 3 (C) NON-TRADITIONAL MEDICAID ELIGI4 BLE INDIVIDUAL.—The term ‘‘non-traditional Medicaid eligible individual’’ means a Medicaid 6 eligible individual who is not a traditional Med7 icaid eligible individual. 8 (f) EFFECTIVE CULTURALLY AND LINGUISTICALLY 9 APPROPRIATE COMMUNICATION.—In carrying out this section, the Commissioner shall establish effective methods 11 for communicating in plain language and a culturally and 12 linguistically appropriate manner. 13 SEC. 206. OTHER FUNCTIONS. 14 (a) COORDINATION OF AFFORDABILITY CREDITS.— The Commissioner shall coordinate the distribution of af16 fordability premium and cost-sharing credits under sub17 title C to QHBP offering entities offering Exchange-par18 ticipating health benefits plans. 19 (b) COORDINATION OF RISK POOLING.—The Commissioner shall establish a mechanism whereby there is an 21 adjustment made of the premium amounts payable among 22 QHBP offering entities offering Exchange-participating 23 health benefits plans of premiums collected for such plans 24 that takes into account (in a manner specified by the Commissioner) the differences in the risk characteristics of in

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1 dividuals and employers enrolled under the different Ex2 change-participating health benefits plans offered by such 3 entities so as to minimize the impact of adverse selection 4 of enrollees among the plans offered by such entities.

(c) SPECIAL INSPECTOR GENERAL FOR THE HEALTH 6 INSURANCE EXCHANGE.— 7 (1) ESTABLISHMENT; APPOINTMENT.—There is 8 hereby established the Office of the Special Inspec9 tor General for the Health Insurance Exchange, to be headed by a Special Inspector General for the 11 Health Insurance Exchange (in this subsection re12 ferred to as the ‘‘Special Inspector General’’) to be 13 appointed by the President, by and with the advice 14 and consent of the Senate. The nomination of an individual as Special Inspector General shall be made 16 as soon as practicable after the establishment of the 17 program under this subtitle. 18 (2) DUTIES.—The Special Inspector General 19 shall—

(A) conduct, supervise, and coordinate au21 dits, evaluations and investigations of the 22 Health Insurance Exchange to protect the in23 tegrity of the Health Insurance Exchange, as 24 well as the health and welfare of participants in the Exchange;

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1 (B) report both to the Commissioner and 2 to the Congress regarding program and man3 agement problems and recommendations to cor4 rect them;

(C) have other duties (described in para6 graphs (2) and (3) of section 121 of division A 7 of Public Law 110–343) in relation to the du8 ties described in the previous subparagraphs; 9 and

(D) have the authorities provided in sec11 tion 6 of the Inspector General Act of 1978 in 12 carrying out duties under this paragraph. 13 (3) APPLICATION OF OTHER SPECIAL INSPEC14 TOR GENERAL PROVISIONS.—The provisions of subsections (b) (other than paragraphs (1) and (3)), (d) 16 (other than paragraph (1)), and (e) of section 121 17 of division A of the Emergency Economic Stabiliza18 tion Act of 2009 (Public Law 110–343) shall apply 19 to the Special Inspector General under this subsection in the same manner as such provisions apply 21 to the Special Inspector General under such section. 22 (4) REPORTS.—Not later than one year after 23 the confirmation of the Special Inspector General, 24 and annually thereafter, the Special Inspector General shall submit to the appropriate committees of

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1 Congress a report summarizing the activities of the 2 Special Inspector General during the one year period 3 ending on the date such report is submitted. 4 (5) TERMINATION.—The Office of the Special Inspector General shall terminate five years after 6 the date of the enactment of this Act. 7 SEC. 207. HEALTH INSURANCE EXCHANGE TRUST FUND. 8 (a) ESTABLISHMENT OF HEALTH INSURANCE EX9 CHANGE TRUST FUND.—There is created within the Treasury of the United States a trust fund to be known 11 as the ‘‘Health Insurance Exchange Trust Fund’’ (in this 12 section referred to as the ‘‘Trust Fund’’), consisting of 13 such amounts as may be appropriated or credited to the 14 Trust Fund under this section or any other provision of law. 16 (b) PAYMENTS FROM TRUST FUND.—The Commis17 sioner shall pay from time to time from the Trust Fund 18 such amounts as the Commissioner determines are nec19 essary to make payments to operate the Health Insurance Exchange, including payments under subtitle C (relating 21 to affordability credits). 22 (c) TRANSFERS TO TRUST FUND.— 23 (1) DEDICATED PAYMENTS.—There is hereby 24 appropriated to the Trust Fund amounts equivalent to the following:

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1 (A) TAXES ON INDIVIDUALS NOT OBTAIN2 ING ACCEPTABLE COVERAGE.—The amounts re3 ceived in the Treasury under section 59B of the 4 Internal Revenue Code of 1986 (relating to re5 quirement of health insurance coverage for indi6 viduals). 7 (B) EMPLOYMENT TAXES ON EMPLOYERS 8 NOT PROVIDING ACCEPTABLE COVERAGE.—The 9 amounts received in the Treasury under section 10 3111(c) of the Internal Revenue Code of 1986 11 (relating to employers electing to not provide 12 health benefits). 13 (C) EXCISE TAX ON FAILURES TO MEET 14 CERTAIN HEALTH COVERAGE REQUIRE15 MENTS.—The amounts received in the Treasury 16 under section 4980H(b) (relating to excise tax 17 with respect to failure to meet health coverage 18 participation requirements). 19 (2) APPROPRIATIONS TO COVER GOVERNMENT 20 CONTRIBUTIONS.—There are hereby appropriated, 21 out of any moneys in the Treasury not otherwise ap22 propriated, to the Trust Fund, an amount equivalent 23 to the amount of payments made from the Trust 24 Fund under subsection (b) plus such amounts as are

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1 necessary reduced by the amounts deposited under 2 paragraph (1). 3 (d) APPLICATION OF CERTAIN RULES.—Rules simi4 lar to the rules of subchapter B of chapter 98 of the Inter5 nal Revenue Code of 1986 shall apply with respect to the 6 Trust Fund. 7 SEC. 208. OPTIONAL OPERATION OF STATE-BASED HEALTH 8 INSURANCE EXCHANGES. 9 (a) IN GENERAL.—If— 10 (1) a State (or group of States, subject to the 11 approval of the Commissioner) applies to the Com12 missioner for approval of a State-based Health In13 surance Exchange to operate in the State (or group 14 of States); and 15 (2) the Commissioner approves such State-16 based Health Insurance Exchange, 17 then, subject to subsections (c) and (d), the State-based 18 Health Insurance Exchange shall operate, instead of the 19 Health Insurance Exchange, with respect to such State 20 (or group of States). The Commissioner shall approve a 21 State-based Health Insurance Exchange if it meets the re22 quirements for approval under subsection (b). 23 (b) REQUIREMENTS FOR APPROVAL.—The Commis24 sioner may not approve a State-based Health Insurance

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1 Exchange under this section unless the following require2 ments are met: 3 (1) The State-based Health Insurance Ex4 change must demonstrate the capacity to and pro5 vide assurances satisfactory to the Commissioner 6 that the State-based Health Insurance Exchange will 7 carry out the functions specified for the Health In8 surance Exchange in the State (or States) involved, 9 including— 10 (A) negotiating and contracting with 11 QHBP offering entities for the offering of Ex12 change-participating health benefits plan, which 13 satisfy the standards and requirements of this 14 title and title I; 15 (B) enrolling Exchange-eligible individuals 16 and employers in such State in such plans; 17 (C) the establishment of sufficient local of18 fices to meet the needs of Exchange-eligible in19 dividuals and employers; 20 (D) administering affordability credits 21 under subtitle B using the same methodologies 22 (and at least the same income verification 23 methods) as would otherwise apply under such 24 subtitle and at a cost to the Federal Govern

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1 ment which does exceed the cost to the Federal 2 Government if this section did not apply; and 3 (E) enforcement activities consistent with 4 federal requirements.

(2) There is no more than one Health Insur6 ance Exchange operating with respect to any one 7 State. 8 (3) The State provides assurances satisfactory 9 to the Commissioner that approval of such an Exchange will not result in any net increase in expendi11 tures to the Federal Government. 12 (4) The State provides for reporting of such in13 formation as the Commissioner determines and as14 surances satisfactory to the Commissioner that it will vigorously enforce violations of applicable re16 quirements. 17 (5) Such other requirements as the Commis18 sioner may specify. 19 (c) CEASING OPERATION.—

(1) IN GENERAL.—A State-based Health Insur21 ance Exchange may, at the option of each State in22 volved, and only after providing timely and reason23 able notice to the Commissioner, cease operation as 24 such an Exchange, in which case the Health Insurance Exchange shall operate, instead of such State-

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1 based Health Insurance Exchange, with respect to 2 such State (or States). 3 (2) TERMINATION; HEALTH INSURANCE EX4 CHANGE RESUMPTION OF FUNCTIONS.—The Com5 missioner may terminate the approval (for some or 6 all functions) of a State-based Health Insurance Ex7 change under this section if the Commissioner deter8 mines that such Exchange no longer meets the re9 quirements of subsection (b) or is no longer capable 10 of carrying out such functions in accordance with 11 the requirements of this subtitle. In lieu of termi12 nating such approval, the Commissioner may tempo13 rarily assume some or all functions of the State-14 based Health Insurance Exchange until such time as 15 the Commissioner determines the State-based 16 Health Insurance Exchange meets such require17 ments of subsection (b) and is capable of carrying 18 out such functions in accordance with the require19 ments of this subtitle. 20 (3) EFFECTIVENESS.—The ceasing or termi21 nation of a State-based Health Insurance Exchange 22 under this subsection shall be effective in such time 23 and manner as the Commissioner shall specify. 24 (d) RETENTION OF AUTHORITY.—

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1 (1) AUTHORITY RETAINED.—Enforcement au2 thorities of the Commissioner shall be retained by 3 the Commissioner. 4 (2) DISCRETION TO RETAIN ADDITIONAL AU5 THORITY.—The Commissioner may specify functions 6 of the Health Insurance Exchange that— 7 (A) may not be performed by a State-8 based Health Insurance Exchange under this 9 section; or 10 (B) may be performed by the Commis11 sioner and by such a State-based Health Insur12 ance Exchange. 13 (e) REFERENCES.—In the case of a State-based 14 Health Insurance Exchange, except as the Commissioner 15 may otherwise specify under subsection (d), any references 16 in this subtitle to the Health Insurance Exchange or to 17 the Commissioner in the area in which the State-based 18 Health Insurance Exchange operates shall be deemed a 19 reference to the State-based Health Insurance Exchange 20 and the head of such Exchange, respectively. 21 (f) FUNDING.—In the case of a State-based Health 22 Insurance Exchange, there shall be assistance provided for 23 the operation of such Exchange in the form of a matching 24 grant with a State share of expenditures required.

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1 Subtitle B—Public Health 2 Insurance Option 3 SEC. 221. ESTABLISHMENT AND ADMINISTRATION OF A 4 PUBLIC HEALTH INSURANCE OPTION AS AN EXCHANGE-QUALIFIED HEALTH BENEFITS

6 PLAN. 7 (a) ESTABLISHMENT.—For years beginning with Y1, 8 the Secretary of Health and Human Services (in this sub9 title referred to as the ‘‘Secretary’’) shall provide for the offering of an Exchange-participating health benefits plan 11 (in this division referred to as the ‘‘public health insurance 12 option’’) that ensures choice, competition, and stability of 13 affordable, high quality coverage throughout the United 14 States in accordance with this subtitle. In designing the option, the Secretary’s primary responsibility is to create 16 a low-cost plan without comprimising quality or access to 17 care. 18 (b) OFFERING AS AN EXCHANGE-PARTICIPATING 19 HEALTH BENEFITS PLAN.—

(1) EXCLUSIVE TO THE EXCHANGE.—The pub21 lic health insurance option shall only be made avail22 able through the Health Insurance Exchange. 23 (2) ENSURING A LEVEL PLAYING FIELD.—Con24 sistent with this subtitle, the public health insurance option shall comply with requirements that are ap

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1 plicable under this title to an Exchange-participating 2 health benefits plan, including requirements related 3 to benefits, benefit levels, provider networks, notices, 4 consumer protections, and cost sharing.

(3) PROVISION OF BENEFIT LEVELS.—The pub6 lic health insurance option— 7 (A) shall offer basic, enhanced, and pre8 mium plans; and 9 (B) may offer premium-plus plans.

(c) ADMINISTRATIVE CONTRACTING.—The Secretary 11 may enter into contracts for the purpose of performing 12 administrative functions (including functions described in 13 subsection (a)(4) of section 1874A of the Social Security 14 Act) with respect to the public health insurance option in the same manner as the Secretary may enter into con16 tracts under subsection (a)(1) of such section. The Sec17 retary has the same authority with respect to the public 18 health insurance option as the Secretary has under sub19 sections (a)(1) and (b) of section 1874A of the Social Security Act with respect to title XVIII of such Act. Con21 tracts under this subsection shall not involve the transfer 22 of insurance risk to such entity. 23 (d) OMBUDSMAN.—The Secretary shall establish an 24 office of the ombudsman for the public health insurance option which shall have duties with respect to the public

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1 health insurance option similar to the duties of the Medi2 care Beneficiary Ombudsman under section 1808(c)(2) of 3 the Social Security Act. 4 (e) DATA COLLECTION.—The Secretary shall collect 5 such data as may be required to establish premiums and 6 payment rates for the public health insurance option and 7 for other purposes under this subtitle, including to im8 prove quality and to reduce racial, ethnic, and other dis9 parities in health and health care. 10 (f) TREATMENT OF PUBLIC HEALTH INSURANCE OP11 TION.—With respect to the public health insurance option, 12 the Secretary shall be treated as a QHBP offering entity 13 offering an Exchange-participating health benefits plan. 14 (g) ACCESS TO FEDERAL COURTS.—The provisions 15 of Medicare (and related provisions of title II of the Social 16 Security Act) relating to access of Medicare beneficiaries 17 to Federal courts for the enforcement of rights under 18 Medicare, including with respect to amounts in con19 troversy, shall apply to the public health insurance option 20 and individuals enrolled under such option under this title 21 in the same manner as such provisions apply to Medicare 22 and Medicare beneficiaries. 23 SEC. 222. PREMIUMS AND FINANCING. 24 (a) ESTABLISHMENT OF PREMIUMS.—

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1 (1) IN GENERAL.—The Secretary shall establish 2 geographically-adjusted premium rates for the public 3 health insurance option in a manner— 4 (A) that complies with the premium rules established by the Commissioner under section 6 113 for Exchange-participating health benefit 7 plans; and 8 (B) at a level sufficient to fully finance the 9 costs of—

(i) health benefits provided by the 11 public health insurance option; and 12 (ii) administrative costs related to op13 erating the public health insurance option. 14 (2) CONTINGENCY MARGIN.—In establishing premium rates under paragraph (1), the Secretary 16 shall include an appropriate amount for a contin17 gency margin. 18 (b) ACCOUNT.— 19 (1) ESTABLISHMENT.—There is established in the Treasury of the United States an Account for 21 the receipts and disbursements attributable to the 22 operation of the public health insurance option, in23 cluding the start-up funding under paragraph (2). 24 Section 1854(g) of the Social Security Act shall apply to receipts described in the previous sentence

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1 in the same manner as such section applies to pay2 ments or premiums described in such section. 3 (2) START-UP FUNDING.— 4 (A) IN GENERAL.—In order to provide for the establishment of the public health insurance 6 option there is hereby appropriated to the Sec7 retary, out of any funds in the Treasury not 8 otherwise appropriated, $2,000,000,000. In 9 order to provide for initial claims reserves before the collection of premiums, there is hereby 11 appropriated to the Secretary, out of any funds 12 in the Treasury not otherwise appropriated, 13 such sums as necessary to cover 90 days worth 14 of claims reserves based on projected enrollment. 16 (B) AMORTIZATION OF START-UP FUND17 ING.—The Secretary shall provide for the re18 payment of the startup funding provided under 19 subparagraph (A) to the Treasury in an amortized manner over the 10-year period beginning 21 with Y1. 22 (C) LIMITATION ON FUNDING.—Nothing in 23 this section shall be construed as authorizing 24 any additional appropriations to the Account, other than such amounts as are otherwise pro

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1 vided with respect to other Exchange-partici2 pating health benefits plans. 3 SEC. 223. PAYMENT RATES FOR ITEMS AND SERVICES. 4 (a) RATES ESTABLISHED BY SECRETARY.—

(1) IN GENERAL.—The Secretary shall establish 6 payment rates for the public health insurance option 7 for services and health care providers consistent with 8 this section and may change such payment rates in 9 accordance with section 224.

(2) INITIAL PAYMENT RULES.— 11 (A) IN GENERAL.—Except as provided in 12 subparagraph (B) and subsection (b)(1), during 13 Y1, Y2, and Y3, the Secretary shall base the 14 payment rates under this section for services and providers described in paragraph (1) on the 16 payment rates for similar services and providers 17 under parts A and B of Medicare. 18 (B) EXCEPTIONS.— 19 (i) PRACTITIONERS’ SERVICES.—Payment rates for practitioners’ services other21 wise established under the fee schedule 22 under section 1848 of the Social Security 23 Act shall be applied without regard to the 24 provisions under subsection (f) of such section and the update under subsection

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1 (d)(4) under such section for a year as ap2 plied under this paragraph shall be not less 3 than 1 percent. 4 (ii) ADJUSTMENTS.—The Secretary may determine the extent to which Medi6 care adjustments applicable to base pay7 ment rates under parts A and B of Medi8 care shall apply under this subtitle. 9 (3) FOR NEW SERVICES.—The Secretary shall modify payment rates described in paragraph (2) in 11 order to accommodate payments for services, such as 12 well-child visits, that are not otherwise covered 13 under Medicare. 14 (4) PRESCRIPTION DRUGS.—Payment rates under this section for prescription drugs that are not 16 paid for under part A or part B of Medicare shall 17 be at rates negotiated by the Secretary. 18 (b) INCENTIVES FOR PARTICIPATING PROVIDERS.— 19 (1) INITIAL INCENTIVE PERIOD.—

(A) IN GENERAL.—The Secretary shall 21 provide, in the case of services described in sub22 paragraph (B) furnished during Y1, Y2, and 23 Y3, for payment rates that are 5 percent great24 er than the rates established under subsection (a).

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1 (B) SERVICES DESCRIBED.—The services 2 described in this subparagraph are items and 3 professional services, under the public health in4 surance option by a physician or other health 5 care practitioner who participates in both Medi6 care and the public health insurance option. 7 (C) SPECIAL RULES.—A pediatrician and 8 any other health care practitioner who is a type 9 of practitioner that does not typically partici10 pate in Medicare (as determined by the Sec11 retary) shall also be eligible for the increased 12 payment rates under subparagraph (A). 13 (2) SUBSEQUENT PERIODS.—Beginning with 14 Y4 and for subsequent years, the Secretary shall 15 continue to use an administrative process to set such 16 rates in order to promote payment accuracy, to en17 sure adequate beneficiary access to providers, and to 18 promote affordablility and the efficient delivery of 19 medical care consistent with section 221(a). Such 20 rates shall not be set at levels expected to increase 21 overall medical costs under the option beyond what 22 would be expected if the process under subsection 23 (a)(2) and paragraph (1) of this subsection were 24 continued.

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1 (3) ESTABLISHMENT OF A PROVIDER NET2 WORK.—Health care providers participating under 3 Medicare are participating providers in the public 4 health insurance option unless they opt out in a process established by the Secretary. 6 (c) ADMINISTRATIVE PROCESS FOR SETTING 7 RATES.—Chapter 5 of title 5, United States Code shall 8 apply to the process for the initial establishment of pay9 ment rates under this section but not to the specific methodology for establishing such rates or the calculation of 11 such rates. 12 (d) CONSTRUCTION.—Nothing in this subtitle shall 13 be construed as limiting the Secretary’s authority to cor14 rect for payments that are excessive or deficient, taking into account the provisions of section 221(a) and the 16 amounts paid for similar health care providers and serv17 ices under other Exchange-participating health benefits 18 plans. 19 (e) CONSTRUCTION.—Nothing in this subtitle shall be construed as affecting the authority of the Secretary to 21 establish payment rates, including payments to provide for 22 the more efficient delivery of services, such as the initia23 tives provided for under section 224. 24 (f) LIMITATIONS ON REVIEW.—There shall be no administrative or judicial review of a payment rate or meth

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1 odology established under this section or under section 2 224. 3 SEC. 224. MODERNIZED PAYMENT INITIATIVES AND DELIV4 ERY SYSTEM REFORM.

(a) IN GENERAL.—For plan years beginning with Y1, 6 the Secretary may utilize innovative payment mechanisms 7 and policies to determine payments for items and services 8 under the public health insurance option. The payment 9 mechanisms and policies under this section may include patient-centered medical home and other care manage11 ment payments, accountable care organizations, value-12 based purchasing, bundling of services, differential pay13 ment rates, performance or utilization based payments, 14 partial capitation, and direct contracting with providers.

(b) REQUIREMENTS FOR INNOVATIVE PAYMENTS.— 16 The Secretary shall design and implement the payment 17 mechanisms and policies under this section in a manner 18 that— 19 (1) seeks to—

(A) improve health outcomes; 21 (B) reduce health disparities (including ra22 cial, ethnic, and other disparities); 23 (C) provide efficent and affordable care; 24 (D) address geographic variation in the provision of health services; or

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1 (E) prevent or manage chronic illness; and 2 (2) promotes care that is integrated, patient-3 centered, quality, and efficient. 4 (c) ENCOURAGING THE USE OF HIGH VALUE SERV5 ICES.—To the extent allowed by the benefit standards ap6 plied to all Exchange-participating health benefits plans, 7 the public health insurance option may modify cost shar8 ing and payment rates to encourage the use of services 9 that promote health and value. 10 (d) NON-UNIFORMITY PERMITTED.—Nothing in this 11 subtitle shall prevent the Secretary from varying payments 12 based on different payment structure models (such as ac13 countable care organizations and medical homes) under 14 the public health insurance option for different geographic 15 areas. 16 SEC. 225. PROVIDER PARTICIPATION. 17 (a) IN GENERAL.—The Secretary shall establish con18 ditions of participation for health care providers under the 19 public health insurance option. 20 (b) LICENSURE OR CERTIFICATION.—The Secretary 21 shall not allow a health care provider to participate in the 22 public health insurance option unless such provider is ap23 propriately licensed or certified under State law. 24 (c) PAYMENT TERMS FOR PROVIDERS.—

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1 (1) PHYSICIANS.—The Secretary shall provide 2 for the annual participation of physicians under the 3 public health insurance option, for which payment 4 may be made for services furnished during the year, 5 in one of 2 classes: 6 (A) PREFERRED PHYSICIANS.—Those phy7 sicians who agree to accept the payment rate 8 established under section 223 (without regard 9 to cost-sharing) as the payment in full. 10 (B) PARTICIPATING, NON-PREFERRED 11 PHYSICIANS.—Those physicians who agree not 12 to impose charges (in relation to the payment 13 rate described in section 223 for such physi14 cians) that exceed the ratio permitted under 15 section 1848(g)(2)(C) of the Social Security 16 Act. 17 (2) OTHER PROVIDERS.—The Secretary shall 18 provide for the participation (on an annual or other 19 basis specified by the Secretary) of health care pro20 viders (other than physicians) under the public 21 health insurance option under which payment shall 22 only be available if the provider agrees to accept the 23 payment rate established under section 223 (without 24 regard to cost-sharing) as the payment in full.

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1 (d) EXCLUSION OF CERTAIN PROVIDERS.—The Sec2 retary shall exclude from participation under the public 3 health insurance option a health care provider that is ex4 cluded from participation in a Federal health care pro5 gram (as defined in section 1128B(f) of the Social Secu6 rity Act). 7 SEC. 226. APPLICATION OF FRAUD AND ABUSE PROVI8 SIONS. 9 Provisions of law (other than criminal law provisions) 10 identified by the Secretary by regulation, in consultation 11 with the Inspector General of the Department of Health 12 and Human Services, that impose sanctions with respect 13 to waste, fraud, and abuse under Medicare, such as the 14 False Claims Act (31 U.S.C. 3729 et seq.), shall also 15 apply to the public health insurance option. 16 Subtitle C—Individual 17 Affordability Credits 18 SEC. 241. AVAILABILITY THROUGH HEALTH INSURANCE EX19 CHANGE. 20 (a) IN GENERAL.—Subject to the succeeding provi21 sions of this subtitle, in the case of an affordable credit 22 eligible individual enrolled in an Exchange-participating 23 health benefits plan—

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1 (1) the individual shall be eligible for, in accord2 ance with this subtitle, affordability credits con3 sisting of— 4 (A) an affordability premium credit under section 243 to be applied against the premium 6 for the Exchange-participating health benefits 7 plan in which the individual is enrolled; and 8 (B) an affordability cost-sharing credit 9 under section 244 to be applied as a reduction of the cost-sharing otherwise applicable to such 11 plan; and 12 (2) the Commissioner shall pay the QHBP of13 fering entity that offers such plan from the Health 14 Insurance Exchange Trust Fund the aggregate amount of affordability credits for all affordable 16 credit eligible individuals enrolled in such plan. 17 (b) APPLICATION.— 18 (1) IN GENERAL.—An Exchange eligible indi19 vidual may apply to the Commissioner through the Health Insurance Exchange or through another enti21 ty under an arrangement made with the Commis22 sioner, in a form and manner specified by the Com23 missioner. The Commissioner through the Health 24 Insurance Exchange or through another public entity under an arrangement made with the Commis

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1 sioner shall make a determination as to eligibility of 2 an individual for affordability credits under this sub3 title. The Commissioner shall establish a process 4 whereby, on the basis of information otherwise available, individuals may be deemed to be affordable 6 credit eligible individuals. In carrying this subtitle, 7 the Commissioner shall establish effective methods 8 that ensure that individuals with limited English 9 proficiency are able to apply for affordability credits.

(2) USE OF STATE MEDICAID AGENCIES.—If 11 the Commissioner determines that a State Medicaid 12 agency has the capacity to make a determination of 13 eligibility for affordability credits under this subtitle 14 and under the same standards as used by the Commissioner, under the Medicaid memorandum of un16 derstanding (as defined in section 205(c)(4))— 17 (A) the State Medicaid agency is author18 ized to conduct such determinations for any Ex19 change-eligible individual who requests such a determination; and 21 (B) the Commissioner shall reimburse the 22 State Medicaid agency for the costs of con23 ducting such determinations. 24 (3) MEDICAID SCREEN AND ENROLL OBLIGA-TION.—In the case of an application made under

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1 paragraph (1), there shall be a determination of 2 whether the individual is a Medicaid-eligible indi3 vidual. If the individual is determined to be so eligi4 ble, the Commissioner, through the Medicaid memo5 randum of understanding, shall provide for the en6 rollment of the individual under the State Medicaid 7 plan in accordance with the Medicaid memorandum 8 of understanding. In the case of such an enrollment, 9 the State shall provide for the same periodic redeter10 mination of eligibility under Medicaid as would oth11 erwise apply if the individual had directly applied for 12 medical assistance to the State Medicaid agency. 13 (c) USE OF AFFORDABILITY CREDITS.— 14 (1) IN GENERAL.—In Y1 and Y2 an affordable 15 credit eligible individual may use an affordability 16 credit only with respect to a basic plan. 17 (2) FLEXIBILITY IN PLAN ENROLLMENT AU18 THORIZED.—Beginning with Y3, the Commissioner 19 shall establish a process to allow an affordability 20 credit to be used for enrollees in enhanced or pre21 mium plans. In the case of an affordable credit eligi22 ble individual who enrolls in an enhanced or pre23 mium plan, the individual shall be responsible for 24 any difference between the premium for such plan

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1 and the affordable credit amount otherwise applica2 ble if the individual had enrolled in a basic plan. 3 (d) ACCESS TO DATA.—In carrying out this subtitle, 4 the Commissioner shall request from the Secretary of the 5 Treasury consistent with section 6103 of the Internal Rev6 enue Code of 1986 such information as may be required 7 to carry out this subtitle. 8 (e) NO CASH REBATES.—In no case shall an afford9 able credit eligible individual receive any cash payment as 10 a result of the application of this subtitle. 11 SEC. 242. AFFORDABLE CREDIT ELIGIBLE INDIVIDUAL. 12 (a) DEFINITION.— 13 (1) IN GENERAL.—For purposes of this divi14 sion, the term ‘‘affordable credit eligible individual’’ 15 means, subject to subsection (b), an individual who 16 is lawfully present in a State in the United States 17 (other than as a nonimmigrant described in a sub18 paragraph (excluding subparagraphs (K), (T), (U), 19 and (V)) of section 101(a)(15) of the Immigration 20 and Nationality Act)— 21 (A) who is enrolled under an Exchange-22 participating health benefits plan and is not en23 rolled under such plan as an employee (or de24 pendent of an employee) through an employer

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1 qualified health benefits plan that meets the re2 quirements of section 312; 3 (B) with family income below 400 percent 4 of the Federal poverty level for a family of the size involved; and 6 (C) who is not a Medicaid eligible indi7 vidual, other than an individual described in 8 section 202(d)(3) or an individual during a 9 transition period under section 202(d)(4)(B)(ii).

(2) TREATMENT OF FAMILY.—Except as the 11 Commissioner may otherwise provide, members of 12 the same family who are affordable credit eligible in13 dividuals shall be treated as a single affordable cred14 it individual eligible for the applicable credit for such a family under this subtitle. 16 (b) LIMITATIONS ON EMPLOYEE AND DEPENDENT 17 DISQUALIFICATION.— 18 (1) IN GENERAL.—Subject to paragraph (2), 19 the term ‘‘affordable credit eligible individual’’ does not include a full-time employee of an employer if 21 the employer offers the employee coverage (for the 22 employee and dependents) as a full-time employee 23 under a group health plan if the coverage and em24 ployer contribution under the plan meet the requirements of section 312.

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1 (2) EXCEPTIONS.—

2 (A) FOR CERTAIN FAMILY CIR

3 CUMSTANCES.—The Commissioner shall estab

4 lish such exceptions and special rules in the

case described in paragraph (1) as may be ap

6 propriate in the case of a divorced or separated

7 individual or such a dependent of an employee

8 who would otherwise be an affordable credit eli

9 gible individual.

(B) FOR UNAFFORDABLE EMPLOYER COV11 ERAGE.—Beginning in Y2, in the case of full-12 time employees for which the cost of the em13 ployee premium for coverage under a group 14 health plan would exceed 11 percent of current family income (determined by the Commissioner 16 on the basis of verifiable documentation and 17 without regard to section 245), paragraph (1) 18 shall not apply. 19 (c) INCOME DEFINED.—

(1) IN GENERAL.—In this title, the term ‘‘in21 come’’ means modified adjusted gross income (as de22 fined in section 59B of the Internal Revenue Code 23 of 1986). 24 (2) STUDY OF INCOME DISREGARDS.—The Commissioner shall conduct a study that examines

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1 the application of income disregards for purposes of 2 this subtitle. Not later than the first day of Y2, the 3 Commissioner shall submit to Congress a report on 4 such study and shall include such recommendations as the Commissioner determines appropriate. 6 (d) CLARIFICATION OF TREATMENT OF AFFORD7 ABILITY CREDITS.—Affordabilty credits under this sub8 title shall not be treated, for purposes of title IV of the 9 Personal Responsibility and Work Opportunity Reconciliation Act of 1996, to be a benefit provided under section 11 403 of such title. 12 SEC. 243. AFFORDABLE PREMIUM CREDIT. 13 (a) IN GENERAL.—The affordability premium credit 14 under this section for an affordable credit eligible individual enrolled in an Exchange-participating health bene16 fits plan is in an amount equal to the amount (if any) 17 by which the premium for the plan (or, if less, the ref18 erence premium amount specified in subsection (c)), ex19 ceeds the affordable premium amount specified in subsection (b) for the individual. 21 (b) AFFORDABLE PREMIUM AMOUNT.— 22 (1) IN GENERAL.—The affordable premium 23 amount specified in this subsection for an individual 24 for monthly premium in a plan year shall be equal to ¹/12 of the product of—

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1 (A) the premium percentage limit specified 2 in paragraph (2) for the individual based upon 3 the individual’s family income for the plan year; 4 and

(B) the individual’s family income for such 6 plan year. 7 (2) PREMIUM PERCENTAGE LIMITS BASED ON 8 TABLE.—The Commissioner shall establish premium 9 percentage limits so that for individuals whose family income is within an income tier specified in the 11 table in subsection (d) such percentage limits shall 12 increase, on a sliding scale in a linear manner, from 13 the initial premium percentage to the final premium 14 percentage specified in such table for such income tier. 16 (c) REFERENCE PREMIUM AMOUNT.—The reference 17 premium amount specified in this subsection for a plan 18 year for an individual in a premium rating area is equal 19 to the average premium for the 3 basic plans in the area for the plan year with the lowest premium levels. In com21 puting such amount the Commissioner may exclude plans 22 with extremely limited enrollments. 23 (d) TABLE OF PREMIUM PERCENTAGE LIMITS AND 24 ACTUARIAL VALUE PERCENTAGES BASED ON INCOME TIER.—

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1 (1) IN GENERAL.—For purposes of this sub2 title, the table specified in this subsection is as fol3 lows:

In the case of family in

come (expressed as a The initial pre-The final pre-The actuarial percent of FPL) within mium percent-mium percent-value percent-the following income age is— age is— age is— tier:

133% through 150% 1.5% 3% 97% 150% through 200% 3% 5% 93% 200% through 250% 5% 7% 85% 250% through 300% 7% 9% 78% 300% through 350% 9% 10% 72% 350% through 400% 10% 11% 70%

4 (2) SPECIAL RULES.—For purposes of applying 5 the table under paragraph (1)— 6 (A) FOR LOWEST LEVEL OF INCOME.—In 7 the case of an individual with income that does 8 not exceed 133 percent of FPL, the individual 9 shall be considered to have income that is 133

10 percent of FPL. 11 (B) APPLICATION OF HIGHER ACTUARIAL 12 VALUE PERCENTAGE AT TIER TRANSITION 13 POINTS.—If two actuarial value percentages 14 may be determined with respect to an indi15 vidual, the actuarial value percentage shall be 16 the higher of such percentages. 17 SEC. 244. AFFORDABILITY COST-SHARING CREDIT. 18 (a) IN GENERAL.—The affordability cost-sharing 19 credit under this section for an affordable credit eligible 20 individual enrolled in an Exchange-participating health

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1 benefits plan is in the form of the cost-sharing reduction 2 described in subsection (b) provided under this section for 3 the income tier in which the individual is classified based 4 on the individual’s family income.

(b) COST-SHARING REDUCTIONS.—The Commis6 sioner shall specify a reduction in cost-sharing amounts 7 and the annual limitation on cost-sharing specified in sec8 tion 122(c)(2)(B) under a basic plan for each income tier 9 specified in the table under section 243(d), with respect to a year, in a manner so that, as estimated by the Com11 missioner, the actuarial value of the coverage with such 12 reduced cost-sharing amounts (and the reduced annual 13 cost-sharing limit) is equal to the actuarial value percent14 age (specified in the table under section 243(d) for the income tier involved) of the full actuarial value if there 16 were no cost-sharing imposed under the plan. 17 (c) DETERMINATION AND PAYMENT OF COST-SHAR18 ING AFFORDABILITY CREDIT.—In the case of an afford19 able credit eligible individual in a tier enrolled in an Exchange-participating health benefits plan offered by a 21 QHBP offering entity, the Commissioner shall provide for 22 payment to the offering entity of an amount equivalent 23 to the increased actuarial value of the benefits under the 24 plan provided under section 203(c)(2)(B) resulting from the reduction in cost-sharing described in subsection (b).

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SEC. 245. INCOME DETERMINATIONS.

(a)

IN GENERAL.—In applying this subtitle for an affordability credit for an individual for a plan year, the individual’s income shall be the income (as defined in section 242(c)) for the individual for the most recent taxable year (as determined in accordance with rules of the Commissioner). The Federal poverty level applied shall be such level in effect as of the date of the application.

(b)

PROGRAM INTEGRITY; INCOME VERIFICATION PROCEDURES.—

(1) PROGRAM INTEGRITY.—The Commissioner shall take such steps as may be appropriate to ensure the accuracy of determinations and redeterminations under this subtitle.

(2)

INCOME VERIFICATION.—

(A)

IN GENERAL.—Upon an initial application of an individual for an affordability credit under this subtitle (or in applying section 242(b)) or upon an application for a change in the affordability credit based upon a significant change in family income described in subparagraph (A)—

(i) the Commissioner shall request from the Secretary of the Treasury the disclosure to the Commissioner of such information as may be permitted to verify the

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1 information contained in such application; 2 and 3 (ii) the Commissioner shall use the in4 formation so disclosed to verify such information. 6 (B) ALTERNATIVE PROCEDURES.—The 7 Commissioner shall establish procedures for the 8 verification of income for purposes of this sub9 title if no income tax return is available for the most recent completed tax year. 11 (c) SPECIAL RULES.— 12 (1) CHANGES IN INCOME AS A PERCENT OF 13 FPL.—In the case that an individual’s income (ex14 pressed as a percentage of the Federal poverty level for a family of the size involved) for a plan year is 16 expected (in a manner specified by the Commis17 sioner) to be significantly different from the income 18 (as so expressed) used under subsection (a), the 19 Commissioner shall establish rules requiring an individual to report, consistent with the mechanism es21 tablished under paragraph (2), significant changes 22 in such income (including a significant change in 23 family composition) to the Commissioner and requir24 ing the substitution of such income for the income otherwise applicable.

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1 (2) REPORTING OF SIGNIFICANT CHANGES IN 2 INCOME.—The Commissioner shall establish rules 3 under which an individual determined to be an af4 fordable credit eligible individual would be required to inform the Commissioner when there is a signifi6 cant change in the family income of the individual 7 (expressed as a percentage of the FPL for a family 8 of the size involved) and of the information regard9 ing such change. Such mechanism shall provide for guidelines that specify the circumstances that qual11 ify as a significant change, the verifiable information 12 required to document such a change, and the process 13 for submission of such information. If the Commis14 sioner receives new information from an individual regarding the family income of the individual, the 16 Commissioner shall provide for a redetermination of 17 the individual’s eligibility to be an affordable credit 18 eligible individual. 19 (3) TRANSITION FOR CHIP.—In the case of a child described in section 202(d)(2), the Commis21 sioner shall establish rules under which the family 22 income of the child is deemed to be no greater than 23 the family income of the child as most recently de24 termined before Y1 by the State under title XXI of the Social Security Act.

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1 (4) STUDY OF GEOGRAPHIC VARIATION IN AP2 PLICATION OF FPL.—The Commissioner shall exam3 ine the feasibility and implication of adjusting the 4 application of the Federal poverty level under this subtitle for different geographic areas so as to re6 flect the variations in cost-of-living among different 7 areas within the United States. If the Commissioner 8 determines that an adjustment is feasible, the study 9 should include a methodology to make such an adjustment. Not later than the first day of Y2, the 11 Commissioner shall submit to Congress a report on 12 such study and shall include such recommendations 13 as the Commissioner determines appropriate. 14 (d) PENALTIES FOR MISREPRESENTATION.—In the case of an individual intentionally misrepresents family in16 come or the individual fails (without regard to intent) to 17 disclose to the Commissioner a significant change in fam18 ily income under subsection (c) in a manner that results 19 in the individual becoming an affordable credit eligible individual when the individual is not or in the amount of 21 the affordability credit exceeding the correct amount— 22 (1) the individual is liable for repayment of the 23 amount of the improper affordability credit; and 24 (2) in the case of such an intentional misrepresentation or other egregious circumstances specified

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1 by the Commissioner, the Commissioner may impose 2 an additional penalty. 3 SEC. 246. NO FEDERAL PAYMENT FOR UNDOCUMENTED 4 ALIENS.

Nothing in this subtitle shall allow Federal payments 6 for affordability credits on behalf of individuals who are 7 not lawfully present in the United States. 8 TITLE III—SHARED 9 RESPONSIBILITY Subtitle A—Individual 11 Responsibility 12 SEC. 301. INDIVIDUAL RESPONSIBILITY. 13 For an individual’s responsibility to obtain acceptable 14 coverage, see section 59B of the Internal Revenue Code of 1986 (as added by section 401 of this Act).

16 Subtitle B—Employer 17 Responsibility 18 PART 1—HEALTH COVERAGE PARTICIPATION 19 REQUIREMENTS

SEC. 311. HEALTH COVERAGE PARTICIPATION REQUIRE

21 MENTS. 22 An employer meets the requirements of this section 23 if such employer does all of the following: 24 (1) OFFER OF COVERAGE.—The employer offers each employee individual and family coverage

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1 under a qualified health benefits plan (or under a 2 current employment-based health plan (within the 3 meaning of section 102(b))) in accordance with sec4 tion 312.

(2) CONTRIBUTION TOWARDS COVERAGE.—If 6 an employee accepts such offer of coverage, the em7 ployer makes timely contributions towards such cov8 erage in accordance with section 312. 9 (3) CONTRIBUTION IN LIEU OF COVERAGE.— Beginning with Y2, if an employee declines such 11 offer but otherwise obtains coverage in an Exchange-12 participating health benefits plan (other than by rea13 son of being covered by family coverage as a spouse 14 or dependent of the primary insured), the employer shall make a timely contribution to the Health In16 surance Exchange with respect to each such em17 ployee in accordance with section 313. 18 SEC. 312. EMPLOYER RESPONSIBILITY TO CONTRIBUTE TO19 WARDS EMPLOYEE AND DEPENDENT COVERAGE.

21 (a) IN GENERAL.—An employer meets the require22 ments of this section with respect to an employee if the 23 following requirements are met: 24 (1) OFFERING OF COVERAGE.—The employer offers the coverage described in section 311(1) either

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1 through an Exchange-participating health benefits 2 plan or other than through such a plan. 3 (2) EMPLOYER REQUIRED CONTRIBUTION.— 4 The employer timely pays to the issuer of such cov5 erage an amount not less than the employer required 6 contribution specified in subsection (b) for such cov7 erage. 8 (3) PROVISION OF INFORMATION.—The em9 ployer provides the Health Choices Commissioner, 10 the Secretary of Labor, the Secretary of Health and 11 Human Services, and the Secretary of the Treasury, 12 as applicable, with such information as the Commis13 sioner may require to ascertain compliance with the 14 requirements of this section. 15 (4) AUTOENROLLMENT OF EMPLOYEES.—The 16 employer provides for autoenrollment of the em17 ployee in accordance with subsection (c). 18 (b) REDUCTION OF EMPLOYEE PREMIUMS THROUGH 19 MINIMUM EMPLOYER CONTRIBUTION.— 20 (1) FULL-TIME EMPLOYEES.—The minimum 21 employer contribution described in this subsection 22 for coverage of a full-time employee (and, if any, the 23 employee’s spouse and qualifying children (as de24 fined in section 152(c) of the Internal Revenue Code

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1 of 1986) under a qualified health benefits plan (or

2 current employment-based health plan) is equal to—

3 (A) in case of individual coverage, not less

4 than 72.5 percent of the applicable premium

(as defined in section 4980B(f)(4) of such

6 Code, subject to paragraph (2)) of the lowest

7 cost plan offered by the employer that is a

8 qualified health benefits plan (or is such cur

9 rent employment-based health plan); and

(B) in the case of family coverage which 11 includes coverage of such spouse and children, 12 not less 65 percent of such applicable premium 13 of such lowest cost plan. 14 (2) APPLICABLE PREMIUM FOR EXCHANGE COV-ERAGE.—In this subtitle, the amount of the applica16 ble premium of the lowest cost plan with respect to 17 coverage of an employee under an Exchange-partici18 pating health benefits plan is the reference premium 19 amount under section 243(c) for individual coverage (or, if elected, family coverage) for the premium rat21 ing area in which the individual or family resides. 22 (3) MINIMUM EMPLOYER CONTRIBUTION FOR 23 EMPLOYEES OTHER THAN FULL-TIME EMPLOY24 EES.—In the case of coverage for an employee who is not a full-time employee, the amount of the min

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1 imum employer contribution under this subsection 2 shall be a proportion (as determined in accordance 3 with rules of the Health Choices Commissioner, the 4 Secretary of Labor, the Secretary of Health and Human Services, and the Secretary of the Treasury, 6 as applicable) of the minimum employer contribution 7 under this subsection with respect to a full-time em8 ployee that reflects the proportion of— 9 (A) the average weekly hours of employment of the employee by the employer, to 11 (B) the minimum weekly hours specified 12 by the Commissioner for an employee to be a 13 full-time employee. 14 (4) SALARY REDUCTIONS NOT TREATED AS EMPLOYER CONTRIBUTIONS.—For purposes of this sec16 tion, any contribution on behalf of an employee with 17 respect to which there is a corresponding reduction 18 in the compensation of the employee shall not be 19 treated as an amount paid by the employer.

(c) AUTOMATIC ENROLLMENT FOR EMPLOYER SPON21 SORED HEALTH BENEFITS.— 22 (1) IN GENERAL.—The requirement of this sub23 section with respect to an employer and an employee 24 is that the employer automatically enroll suchs employee into the employment-based health benefits

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1 plan for individual coverage under the plan option 2 with the lowest applicable employee premium. 3 (2) OPT-OUT.—In no case may an employer 4 automatically enroll an employee in a plan under 5 paragraph (1) if such employee makes an affirmative 6 election to opt out of such plan or to elect coverage 7 under an employment-based health benefits plan of8 fered by such employer. An employer shall provide 9 an employee with a 30-day period to make such an 10 affirmative election before the employer may auto11 matically enroll the employee in such a plan. 12 (3) NOTICE REQUIREMENTS.— 13 (A) IN GENERAL.—Each employer de14 scribed in paragraph (1) who automatically en15 rolls an employee into a plan as described in 16 such paragraph shall provide the employees, 17 within a reasonable period before the beginning 18 of each plan year (or, in the case of new em19 ployees, within a reasonable period before the 20 end of the enrollment period for such a new em21 ployee), written notice of the employees’ rights 22 and obligations relating to the automatic enroll23 ment requirement under such paragraph. Such 24 notice must be comprehensive and understood

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1 by the average employee to whom the automatic 2 enrollment requirement applies. 3 (B) INCLUSION OF SPECIFIC INFORMA4 TION.—The written notice under subparagraph 5 (A) must explain an employee’s right to opt out 6 of being automatically enrolled in a plan and in 7 the case that more than one level of benefits or 8 employee premium level is offered by the em9 ployer involved, the notice must explain which 10 level of benefits and employee premium level the 11 employee will be automatically enrolled in the 12 absence of an affirmative election by the em13 ployee. 14 SEC. 313. EMPLOYER CONTRIBUTIONS IN LIEU OF COV15 ERAGE. 16 (a) IN GENERAL.—A contribution is made in accord17 ance with this section with respect to an employee if such 18 contribution is equal to an amount equal to 8 percent of 19 the average wages paid by the employer during the period 20 of enrollment (determined by taking into account all em21 ployees of the employer and in such manner as the Com22 missioner provides, including rules providing for the ap23 propriate aggregation of related employers). Any such con24 tribution—

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1 (1) shall be paid to the Health Choices Com2 missioner for deposit into the Health Insurance Ex3 change Trust Fund, and 4 (2) shall not be applied against the premium of 5 the employee under the Exchange-participating 6 health benefits plan in which the employee is en7 rolled. 8 (b) SPECIAL RULES FOR SMALL EMPLOYERS.— 9 (1) IN GENERAL.—In the case of any employer 10 who is a small employer for any calendar year, sub11 section (a) shall be applied by substituting the appli12 cable percentage determined in accordance with the 13 following table for ‘‘8 percent’’:

If the annual payroll of such employer for The applicable the preceding calendar year: percentage is:

Does not exceed $250,000 ..................................... 0 percent Exceeds $250,000, but does not exceed $300,000 2 percent Exceeds $300,000, but does not exceed $350,000 4 percent Exceeds $350,000, but does not exceed $400,000 6 percent

14 (2) SMALL EMPLOYER.—For purposes of this 15 subsection, the term ‘‘small employer’’ means any 16 employer for any calendar year if the annual payroll 17 of such employer for the preceding calendar year 18 does not exceed $400,000. 19 (3) ANNUAL PAYROLL.—For purposes of this 20 paragraph, the term ‘‘annual payroll’’ means, with 21 respect to any employer for any calendar year, the

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1 aggregate wages paid by the employer during such 2 calendar year. 3 (4) AGGREGATION RULES.—Related employers 4 and predecessors shall be treated as a single em5 ployer for purposes of this subsection. 6 SEC. 314. AUTHORITY RELATED TO IMPROPER STEERING. 7 The Health Choices Commissioner (in coordination 8 with the Secretary of Labor, the Secretary of Health and 9 Human Services, and the Secretary of the Treasury) shall 10 have authority to set standards for determining whether 11 employers or insurers are undertaking any actions to af12 fect the risk pool within the Health Insurance Exchange 13 by inducing individuals to decline coverage under a quali14 fied health benefits plan (or current employment-based 15 health plan (within the meaning of section 102(b))) of16 fered by the employer and instead to enroll in an Ex17 change-participating health benefits plan. An employer 18 violating such standards shall be treated as not meeting 19 the requirements of this section.

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