H.R. 3200 (111th): America’s Affordable Health Choices Act of 2009

111th Congress, 2009–2010. Text as of Oct 14, 2009 (Reported by House Committee).

Status & Summary | PDF | Source: GPO

IB

Union Calendar No. 168

111th CONGRESS

1st Session

H. R. 3200

[Report No. 111–299, Parts I, II, and III]

IN THE HOUSE OF REPRESENTATIVES

July 14, 2009

(for himself, Mr. Rangel, Mr. Waxman, Mr. George Miller of California, Mr. Stark, Mr. Pallone, and Mr. Andrews) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Education and Labor, Oversight and Government Reform, and the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

October 14, 2009

Additional sponsors: Mr. Kildee, Mrs. Maloney, and Mr. Baca

October 14, 2009

Reported from the Committee on Energy and Commerce with an amendment

Strike out all after the enacting clause (other than sections 321 and 322, title IV of division A, subtitle A of title I of division B, and title VIII of division B) and insert the part printed in italic

For text of sections 321 and 322, title IV of division A, subtitle A of title I of division B, and title VIII of division B, see copy of bill as introduced on July 14, 2009

October 14, 2009

Reported from the Committee on Ways and Means with an amendment

Strike out all after the enacting clause (other than title VII of division B and division C) and insert the part printed in boldface roman

For text of title VII of division B and for division C (and the original sections of the bill that fall within the jurisdiction of the Committee on Ways and Means), see copy of bill as introduced on July 14, 2009

October 14, 2009

Reported from the Committee on Education and Labor with an amendment

Strike out all after the enacting clause (other than sections 161 through 163, 322, and 323 and title IV of division A, division B, section 2002 and titles I through IV of division C, and subtitles A, B, C, and E of title V of division C) and insert the part printed in boldface italic

For text of sections 161 through 163, 322, and 323 and title IV of division A, division B, section 2002 and titles I through IV of division C, and subtitles A, B, C, and E of title V of division C, see copy of bill as introduced on July 14, 2009

October 14, 2009

Committees on Oversight and Government Reform and the Budget discharged; committed to the Committee of the Whole House on the State of the Union and ordered to be printed

A BILL

To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.


1.

Short title; table of divisions, titles, and subtitles

(a)

Short title

This Act may be cited as the America’s Affordable Health Choices Act of 2009.

(b)

Table of divisions, titles, and subtitles

This Act is divided into divisions, titles, and subtitles as follows:

Division A—Affordable Health Care Choices

Title I—Protections and Standards for Qualified Health Benefits Plans

Subtitle A—General Standards

Subtitle B—Standards Guaranteeing Access to Affordable Coverage

Subtitle C—Standards Guaranteeing Access to Essential Benefits

Subtitle D—Additional Consumer Protections

Subtitle E—Governance

Subtitle F—Relation to Other Requirements; Miscellaneous

Subtitle G—Early Investments

Title II—Health Insurance Exchange and Related Provisions

Subtitle A—Health Insurance Exchange

Subtitle B—Public Health Insurance Option

Subtitle C—Individual Affordability Credits

Subtitle D—Health Insurance Cooperatives

Title III—Shared Responsibility

Subtitle A—Individual Responsibility

Subtitle B—Employer Responsibility

Title IV—Amendments to Internal Revenue Code of 1986

Subtitle A—Shared Responsibility

Subtitle B—Credit for Small Business Employee Health Coverage Expenses

Subtitle C—Disclosures To Carry Out Health Insurance Exchange Subsidies

Subtitle D—Other Revenue Provisions

Division B—Medicare and Medicaid Improvements

Title I—Improving Health Care Value

Subtitle A—Provisions Related to Medicare Part A

Subtitle B—Provisions Related to Medicare Part B

Subtitle C—Provisions Related to Medicare Parts A and B

Subtitle D—Medicare Advantage Reforms

Subtitle E—Improvements to Medicare Part D

Subtitle F—Medicare Rural Access Protections

Title II—Medicare Beneficiary Improvements

Subtitle A—Improving and Simplifying Financial Assistance for Low Income Medicare Beneficiaries

Subtitle B—Reducing Health Disparities

Subtitle C—Miscellaneous Improvements

Title III—Promoting Primary Care, Mental Health Services, and Coordinated Care

Title IV—Quality

Subtitle A—Comparative Effectiveness Research

Subtitle B—Nursing Home Transparency

Subtitle C—Quality Measurements

Subtitle D—Physician Payments Sunshine Provision

Subtitle E—Public Reporting on Health Care-Associated Infections

Title V—Medicare Graduate Medical Education

Title VI—Program Integrity

Subtitle A—Increased Funding To Fight Waste, Fraud, and Abuse

Subtitle B—Enhanced Penalties for Fraud and Abuse

Subtitle C—Enhanced Program and Provider Protections

Subtitle D—Access to Information Needed To Prevent Fraud, Waste, and Abuse

Title VII—Medicaid and CHIP

Subtitle A—Medicaid and Health Reform

Subtitle B—Prevention

Subtitle C—Access

Subtitle D—Coverage

Subtitle E—Financing

Subtitle F—Waste, Fraud, and Abuse

Subtitle G—Payments to the Territories

Subtitle H—Miscellaneous

Title VIII—Revenue-related provisions

Title IX—Miscellaneous Provisions

Division C—Public Health and Workforce Development

Title I—Community Health Centers

Title II—Workforce

Subtitle A—Primary Care Workforce

Subtitle B—Nursing Workforce

Subtitle C—Public Health Workforce

Subtitle D—Adapting Workforce to Evolving Health System Needs

Title III—Prevention and Wellness

Title IV—Quality and Surveillance

Title V—Other Provisions

Subtitle A—Drug Discount for Rural and Other Hospitals

Subtitle B—Programs

Subtitle C—Food and Drug Administration

Subtitle D—Community Living Assistance Services and Supports

Subtitle E—Miscellaneous

A

Affordable Health Care Choices

100.

Purpose; table of contents of division; general definitions

(a)

Purpose

(1)

In general

The purpose of this division is to provide affordable, quality health care for all Americans and reduce the growth in health care spending.

(2)

Building on current system

This division achieves this purpose by building on what works in today’s health care system, while repairing the aspects that are broken.

(3)

Insurance reforms

This division—

(A)

enacts strong insurance market reforms;

(B)

creates a new Health Insurance Exchange, with a public health insurance option alongside private plans and cooperatives under subtitle D of title II;

(C)

includes sliding scale affordability credits; and

(D)

initiates shared responsibility among workers, employers, and the government;

so that all Americans have coverage of essential health benefits.
(4)

Health delivery reform

This division institutes health delivery system reforms both to increase quality and to reduce growth in health spending so that health care becomes more affordable for businesses, families, and government.

(b)

Table of contents of division

The table of contents of this division is as follows:

Sec. 100. Purpose; table of contents of division; general definitions.

Title I—Protections and Standards for Qualified Health Benefits Plans

Subtitle A—General Standards

Sec. 101. Requirements reforming health insurance marketplace.

Sec. 102. Protecting the choice to keep current coverage.

Subtitle B—Standards Guaranteeing Access to Affordable Coverage

Sec. 111. Prohibiting preexisting condition exclusions.

Sec. 112. Guaranteed issue and renewal for insured plans.

Sec. 113. Insurance rating rules.

Sec. 114. Nondiscrimination in benefits; parity in mental health and substance abuse disorder benefits.

Sec. 115. Ensuring adequacy of provider networks.

Sec. 116. Ensuring value and lower premiums.

Subtitle C—Standards Guaranteeing Access to Essential Benefits

Sec. 121. Coverage of essential benefits package.

Sec. 122. Essential benefits package defined.

Sec. 123. Health Benefits Advisory Committee.

Sec. 124. Process for adoption of recommendations; adoption of benefit standards.

Sec. 125. Prohibition of discrimination in health care services based on religious or spiritual content.

Subtitle D—Additional Consumer Protections

Sec. 131. Requiring fair marketing practices by health insurers.

Sec. 132. Requiring fair grievance and appeals mechanisms.

Sec. 133. Requiring information transparency and plan disclosure.

Sec. 134. Application to qualified health benefits plans not offered through the Health Insurance Exchange.

Sec. 135. Timely payment of claims.

Sec. 136. Standardized rules for coordination and subrogation of benefits.

Sec. 137. Application of administrative simplification.

Sec. 138. Information on end-of-life planning.

Sec. 139. Utilization review activities.

Sec. 139A. Internal appeals procedures.

Sec. 139B. External appeals procedures.

Subtitle E—Governance

Sec. 141. Health Choices Administration; Health Choices Commissioner.

Sec. 142. Duties and authority of Commissioner.

Sec. 143. Consultation and coordination.

Sec. 144.  Health Insurance Ombudsman.

Subtitle F—Relation to other requirements; Miscellaneous

Sec. 151. Relation to other requirements.

Sec. 152. Prohibiting discrimination in health care.

Sec. 153. Whistleblower protection.

Sec. 154. Construction regarding collective bargaining.

Sec. 155. Severability.

Sec. 156. Application of State and Federal laws regarding abortion.

Sec. 157. Non-discrimination on abortion and respect for rights of conscience.

Subtitle G—Early Investments

Sec. 161. Ensuring value and lower premiums.

Sec. 162. Ending health insurance rescission abuse.

Sec. 163. Ending health insurance denials and delays of necessary treatment for children with deformities.

Sec. 164. Administrative simplification.

Sec. 165. Expansion of electronic transactions in medicare.

Sec. 166. Reinsurance program for retirees.

Sec. 167. Limitations on preexisting condition exclusions in group health plans and health insurance coverage in the group and individual markets in advance of applicability of new prohibition of preexisting condition exclusions.

Title II—Health Insurance Exchange and Related Provisions

Subtitle A—Health Insurance Exchange

Sec. 201. Establishment of Health Insurance Exchange; outline of duties; definitions.

Sec. 202. Exchange-eligible individuals and employers.

Sec. 203. Benefits package levels.

Sec. 204. Contracts for the offering of Exchange-participating health benefits plans.

Sec. 205. Outreach and enrollment of Exchange-eligible individuals and employers in Exchange-participating health benefits plans.

Sec. 206. Other functions.

Sec. 207. Health Insurance Exchange Trust Fund.

Sec. 208. Optional operation of State-based health insurance exchanges.

Sec. 209. Limitation on premium increases under Exchange-participating health benefits plans.

Subtitle B—Public health insurance option

Sec. 221. Establishment and administration of a public health insurance option as an Exchange-qualified health benefits plan.

Sec. 222. Premiums and financing.

Sec. 223. Negotiated payment rates for items and services.

Sec. 224. Modernized payment initiatives and delivery system reform.

Sec. 225. Provider participation.

Sec. 226. Application of fraud and abuse provisions.

Sec. 227. Application of HIPAA insurance requirements.

Sec. 228. Application of health information privacy, security, and electronic transaction requirements.

Sec. 229. Enrollment in public health insurance option is voluntary.

Subtitle C—Individual Affordability Credits

Sec. 241. Availability through Health Insurance Exchange.

Sec. 242. Affordable credit eligible individual.

Sec. 243. Affordable premium credit.

Sec. 244. Affordability cost-sharing credit.

Sec. 245. Income determinations.

Sec. 246. No Federal payment for undocumented aliens.

Subtitle D—Health Insurance Cooperatives

Sec. 251. Establishment.

Sec. 252. Start-up and solvency grants and loans.

Sec. 253. Definitions.

Title III—Shared responsibility

Subtitle A—Individual responsibility

Sec. 301. Individual responsibility.

Subtitle B—Employer Responsibility

Part 1—Health coverage participation requirements

Sec. 311. Health coverage participation requirements.

Sec. 312. Employer responsibility to contribute towards employee and dependent coverage.

Sec. 313. Employer contributions in lieu of coverage.

Sec. 314. Authority related to improper steering.

Part 2—Satisfaction of Health Coverage Participation Requirements

Sec. 321. Satisfaction of health coverage participation requirements under the Employee Retirement Income Security Act of 1974.

Sec. 322. Satisfaction of health coverage participation requirements under the Internal Revenue Code of 1986.

Sec. 323. Satisfaction of health coverage participation requirements under the Public Health Service Act.

Sec. 324. Additional rules relating to health coverage participation requirements.

Title IV—Amendments to Internal Revenue Code of 1986

Subtitle A—Shared responsibility

Part 1—Individual responsibility

Sec. 401. Tax on individuals without acceptable health care coverage.

Part 2—Employer Responsibility

Sec. 411. Election to satisfy health coverage participation requirements.

Sec. 412. Responsibilities of nonelecting employers.

Subtitle B—Credit for small business employee health coverage expenses

Sec. 421. Credit for small business employee health coverage expenses.

Subtitle C—Disclosures To carry out health insurance exchange subsidies

Sec. 431. Disclosures to carry out health insurance exchange subsidies.

Subtitle D—Other revenue provisions

Part 1—General provisions

Sec. 441. Surcharge on high income individuals.

Sec. 442. Delay in application of worldwide allocation of interest.

Part 2—Prevention of tax avoidance

Sec. 451. Limitation on treaty benefits for certain deductible payments.

Sec. 452. Codification of economic substance doctrine.

Sec. 453. Penalties for underpayments.

(c)

General definitions

Except as otherwise provided, in this division:

(1)

Acceptable coverage

The term acceptable coverage has the meaning given such term in section 202(d)(2).

(2)

Basic plan

The term basic plan has the meaning given such term in section 203(c).

(3)

Commissioner

The term Commissioner means the Health Choices Commissioner established under section 141.

(4)

Cost-sharing

The term cost-sharing includes deductibles, coinsurance, copayments, and similar charges but does not include premiums or any network payment differential for covered services or spending for non-covered services.

(5)

Dependent

The term dependent has the meaning given such term by the Commissioner and includes a spouse.

(6)

Employment-based health plan

The term employment-based health plan

(A)

means a group health plan (as defined in section 733(a)(1) of the Employee Retirement Income Security Act of 1974); and

(B)

includes such a plan that is the following:

(i)

Federal, state, and tribal governmental plans

A governmental plan (as defined in section 3(32) of the Employee Retirement Income Security Act of 1974), including a health benefits plan offered under chapter 89 of title 5, United States Code.

(ii)

Church plans

A church plan (as defined in section 3(33) of the Employee Retirement Income Security Act of 1974).

(7)

Enhanced plan

The term enhanced plan has the meaning given such term in section 203(c).

(8)

Essential benefits package

The term essential benefits package is defined in section 122(a).

(9)

Family

The term family means an individual and includes the individual’s dependents.

(10)

Federal poverty level; FPL

The terms Federal poverty level and FPL have the meaning given the term poverty line in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)), including any revision required by such section.

(11)

Health benefits plan

The terms health benefits plan means health insurance coverage and an employment-based health plan and includes the public health insurance option and cooperatives under subtitle D of title II.

(12)

Health insurance coverage; health insurance issuer

The terms health insurance coverage and health insurance issuer have the meanings given such terms in section 2791 of the Public Health Service Act.

(13)

Health Insurance Exchange

The term Health Insurance Exchange means the Health Insurance Exchange established under section 201.

(14)

Medicaid

The term Medicaid means a State plan under title XIX of the Social Security Act (whether or not the plan is operating under a waiver under section 1115 of such Act).

(15)

Medicare

The term Medicare means the health insurance programs under title XVIII of the Social Security Act.

(16)

Plan sponsor

The term plan sponsor has the meaning given such term in section 3(16)(B) of the Employee Retirement Income Security Act of 1974.

(17)

Plan year

The term plan year means—

(A)

with respect to an employment-based health plan, a plan year as specified under such plan; or

(B)

with respect to a health benefits plan other than an employment-based health plan, a 12-month period as specified by the Commissioner.

(18)

Premium plan; premium-plus plan

The terms premium plan and premium-plus plan have the meanings given such terms in section 203(c).

(19)

QHBP offering entity

The terms QHBP offering entity means, with respect to a health benefits plan that is—

(A)

a group health plan (as defined, subject to subsection (d), in section 733(a)(1) of the Employee Retirement Income Security Act of 1974), the plan sponsor in relation to such group health plan, except that, in the case of a plan maintained jointly by 1 or more employers and 1 or more employee organizations and with respect to which an employer is the primary source of financing, such term means such employer;

(B)

health insurance coverage, the health insurance issuer offering the coverage, including a cooperative under subtitle D of title II;

(C)

the public health insurance option, the Secretary of Health and Human Services;

(D)

a non-Federal governmental plan (as defined in section 2791(d) of the Public Health Service Act), the State or political subdivision of a State (or agency or instrumentality of such State or subdivision) which establishes or maintains such plan; or

(E)

a Federal governmental plan (as defined in section 2791(d) of the Public Health Service Act), the appropriate Federal official.

(20)

Qualified health benefits plan

The term qualified health benefits plan means a health benefits plan that meets the requirements for such a plan under title I and includes the public health insurance option and cooperatives under subtitle D of title II.

(21)

Public health insurance option

The term public health insurance option means the public health insurance option as provided under subtitle B of title II.

(22)

Service area; premium rating area

The terms service area and premium rating area mean with respect to health insurance coverage—

(A)

offered other than through the Health Insurance Exchange, such an area as established by the QHBP offering entity of such coverage in accordance with applicable State law; and

(B)

offered through the Health Insurance Exchange, such an area as established by such entity in accordance with applicable State law and applicable rules of the Commissioner for Exchange-participating health benefits plans.

(23)

State

The term State means the 50 States and the District of Columbia.

(24)

State Medicaid agency

The term State Medicaid agency means, with respect to a Medicaid plan, the single State agency responsible for administering such plan under title XIX of the Social Security Act.

(25)

Y1, Y2, etc.

The terms Y1 , Y2, Y3, Y4, Y5, and similar subsequently numbered terms, mean 2013 and subsequent years, respectively.

I

Protections and Standards for Qualified Health Benefits Plans

A

General Standards

101.

Requirements reforming health insurance marketplace

(a)

Purpose

The purpose of this title is to establish standards to ensure that new health insurance coverage and employment-based health plans that are offered meet standards guaranteeing access to affordable coverage, essential benefits, and other consumer protections.

(b)

Requirements for qualified health benefits plans

On or after the first day of Y1, a health benefits plan shall not be a qualified health benefits plan under this division unless the plan meets the applicable requirements of the following subtitles for the type of plan and plan year involved:

(1)

Subtitle B (relating to affordable coverage).

(2)

Subtitle C (relating to essential benefits).

(3)

Subtitle D (relating to consumer protection).

(c)

Terminology

In this division:

(1)

Enrollment in employment-based health plans

An individual shall be treated as being enrolled in an employment-based health plan if the individual is a participant or beneficiary (as such terms are defined in section 3(7) and 3(8), respectively, of the Employee Retirement Income Security Act of 1974) in such plan.

(2)

Individual and group health insurance coverage

The terms individual health insurance coverage and group health insurance coverage mean health insurance coverage offered in the individual market or large or small group market, respectively, as defined in section 2791 of the Public Health Service Act.

102.

Protecting the choice to keep current 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.

(3)

Restrictions on premium increases

The issuer cannot vary the percentage increase in the premium for a risk group of enrollees in specific grandfathered health insurance coverage without changing the premium for all enrollees in the same risk group at the same rate, as specified by the Commissioner.

(b)

Grace period for current employment-based health plans

(1)

Grace period

(A)

In general

The Commissioner shall establish a grace period whereby, for plan years beginning after the end of the 5-year period beginning with Y1, an employment-based health plan in operation as of the day before the first day of Y1 must meet the same requirements as apply to a qualified health benefits plan under section 101, including the essential benefit package requirement under section 121.

(B)

Exception for limited benefits plans

Subparagraph (A) shall not apply to an employment-based health plan in which the coverage consists only of one or more of the following:

(i)

Any coverage described in section 3001(a)(1)(B)(ii)(IV) of division B of the American Recovery and Reinvestment Act of 2009 (PL 111–5).

(ii)

Excepted benefits (as defined in section 733(c) of the Employee Retirement Income Security Act of 1974), including coverage under a specified disease or illness policy described in paragraph (3)(A) of such section.

(iii)

Such other limited benefits as the Commissioner may specify.

In no case shall an employment-based health plan in which the coverage consists only of one or more of the coverage or benefits described in clauses (i) through (iii) be treated as acceptable coverage under this division
(2)

Transitional treatment as acceptable coverage

During the grace period specified in paragraph (1)(A), an employment-based health plan that is described in such paragraph shall be treated as acceptable coverage under this division.

(c)

Limitation on individual health insurance coverage

(1)

In general

Individual health insurance coverage that is not grandfathered health insurance coverage under subsection (a) may only be offered on or after the first day of Y1 as an Exchange-participating health benefits plan.

(2)

Separate, excepted coverage permitted

Excepted benefits (as defined in section 2791(c) of the Public Health Service Act) are not included within the definition of health insurance coverage. Nothing in paragraph (1) shall prevent the offering, other than through the Health Insurance Exchange, of excepted benefits so long as it is offered and priced separately from health insurance coverage.

(3)

Stand-alone dental and vision coverage permitted

Nothing in this division shall be construed—

(A)

to prevent the offering of a stand-alone plans that offer coverage of excepted benefits described in section 2791(c)(2)(A) of the Public Health Service Act (relating to limited scope dental or vision benefits)for individuals and families from a State licensed dental and vision carrier; or

(B)

as applying requirements for a qualified health benefits plan to such stand-alone plans that is offered and priced separately from a qualified health benefits plan.

B

Standards Guaranteeing Access to Affordable Coverage

111.

Prohibiting preexisting condition exclusions

A qualified health benefits plan may not impose any preexisting condition exclusion (as defined in section 2701(b)(1)(A) of the Public Health Service Act) or otherwise impose any limit or condition on the coverage under the plan with respect to an individual or dependent based on any health status-related factors (as defined in section 2791(d)(9) of the Public Health Service Act) in relation to the individual or dependent.

112.

Guaranteed issue and renewal for insured plans

The requirements of sections 2711 (other than subsections (c) and (e)) and 2712 (other than paragraphs (3), and (6) of subsection (b) and subsection (e)) of the Public Health Service Act, relating to guaranteed availability and renewability of health insurance coverage, shall apply to individuals and employers in all individual and group health insurance coverage, whether offered to individuals or employers through the Health Insurance Exchange, through any employment-based health plan, or otherwise, and shall apply to the public health insurance option, in the same manner as such sections apply to employers and health insurance coverage offered in the small group market, except that such section 2712(b)(1) shall apply only if, before nonrenewal or discontinuation of coverage, the issuer has provided the enrollee with notice of non-payment of premiums and there is a grace period during which the enrollee has an opportunity to correct such nonpayment. Rescissions of such coverage shall be prohibited except in cases of fraud as defined in sections 2712(b)(2) of such Act.

113.

Insurance rating rules

(a)

In general

The premium rate charged for an insured qualified health benefits plan and for coverage under the public health insurance option 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)

Actuarial value of optional service coverage

(1)

In general

The Commissioner shall estimate the basic per enrollee, per month cost, determined on an average actuarial basis, for including coverage under a basic plan of the services described in section 122(d)(4)(A).

(2)

Considerations

In making such estimate the Commissioner—

(A)

may take into account the impact on overall costs of the inclusion of such coverage, but may not take into account any cost reduction estimated to result from such services, including prenatal care, delivery, or postnatal care;

(B)

shall estimate such costs as if such coverage were included for the entire population covered; and

(C)

may not estimate such a cost at less than $1 per enrollee, per month.

(c)

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 employer health care markets. Such study shall examine the following:

(A)

The types of employers by key characteristics, including size, that purchase insured products versus those that self-insure.

(B)

The similarities and differences between typical insured and self-insured health plans.

(C)

The financial solvency and capital reserve levels of employers that self-insure by employer size.

(D)

The risk of self-insured employers not being able to pay obligations or otherwise becoming financially insolvent.

(E)

The extent to which rating rules are likely to cause adverse selection in the large group market or to encourage small and mid size employers to self-insure

(2)

Reports

Not later than 18 months after the date of the enactment of this Act, the Commissioner shall submit to Congress and the applicable agencies a report on the study conducted under paragraph (1). Such report shall include any recommendations the Commissioner deems appropriate to ensure that the law does not provide incentives for small and mid-size employers to self-insure or create adverse selection in the risk pools of large group insurers and self-insured employers. Not later than 18 months after the first day of Y1, the Commissioner shall submit to Congress and the applicable agencies an updated report on such study, including updates on such recommendations.

114.

Nondiscrimination in benefits; parity in mental health and substance abuse disorder benefits

(a)

Nondiscrimination in benefits

A qualified health benefits plan (including the public health insurance option) shall comply with standards established by the Commissioner to prohibit discrimination in health benefits or benefit structures for qualifying health benefits plans, building from sections 702 of Employee Retirement Income Security Act of 1974, 2702 of the Public Health Service Act, and section 9802 of the Internal Revenue Code of 1986.

(b)

Parity in mental health and substance abuse disorder benefits

To the extent such provisions are not superceded by or inconsistent with subtitle C, the provisions of section 2705 (other than subsections (a)(1), (a)(2), and (c)) of section 2705 of the Public Health Service Act shall apply to a qualified health benefits plan, regardless of whether it is offered in the individual or group market, in the same manner as such provisions apply to health insurance coverage offered in the large group market.

115.

Ensuring adequacy of provider networks

(a)

In general

A qualified health benefits plan (including the public health insurance option) that uses a provider network for items and services shall meet such standards respecting provider networks as the Commissioner may establish to assure the adequacy of such networks in ensuring enrollee access to such items and services and transparency in the cost-sharing differentials between in-network coverage and out-of-network coverage.

(b)

Provider network defined

In this division, the term provider network means the providers with respect to which covered benefits, treatments, and services are available under a health benefits plan.

116.

Ensuring value and lower premiums

(a)

In general

A qualified health benefits plan shall meet a medical loss ratio as defined by the Commissioner. For any plan year in which the qualified health benefits plan does not meet such medical loss ratio, QHBP offering entity shall provide in a manner specified by the Commissioner for rebates to enrollees of payment sufficient to meet such loss ratio.

(b)

Building on interim rules

In implementing subsection (a), the Commissioner shall build on the definition and methodology developed by the Secretary of Health and Human Services under the amendments made by section 161 for determining how to calculate the medical loss ratio. Such methodology shall be set at the highest level medical loss ratio possible that is designed to ensure adequate participation by QHBP offering entities, competition in the health insurance market in and out of the Health Insurance Exchange, and value for consumers so that their premiums are used for services.

C

Standards Guaranteeing Access to Essential Benefits

121.

Coverage of essential benefits package

(a)

In general

A qualified health benefits plan shall provide coverage that at least meets the benefit standards adopted under section 124 for the essential benefits package described in section 122 for the plan year involved.

(b)

Choice of coverage

(1)

Non-exchange-participating health benefits plans

In the case of a qualified health benefits plan that is not an Exchange-participating health benefits plan, such plan may offer such coverage in addition to the essential benefits package as the QHBP offering entity may specify.

(2)

Exchange-participating health benefits plans

In the case of an Exchange-participating health benefits plan, such plan is required under section 203 to provide specified levels of benefits and, in the case of a plan offering a premium-plus level of benefits, provide additional benefits.

(3)

Continuation of offering of separate excepted benefits coverage

Nothing in this division shall be construed as affecting the offering of health benefits in the form of excepted benefits (described in section 102(b)(1)(B)(ii)) if such benefits are offered under a separate policy, contract, or certificate of insurance.

(c)

No restrictions on coverage unrelated to clinical appropriateness

A qualified health benefits plan may not impose any restriction (other than cost-sharing) unrelated to clinical appropriateness on the coverage of the health care items and services.

122.

Essential benefits package defined

(a)

In general

In this division, the term essential benefits package means health benefits coverage, consistent with standards adopted under section 124 to ensure the provision of quality health care and financial security, that—

(1)

provides payment for the items and services described in subsection (b) in accordance with generally accepted standards of medical or other appropriate clinical or professional practice;

(2)

limits cost-sharing for such covered health care items and services in accordance with such benefit standards, consistent with subsection (c);

(3)

does not impose any annual or lifetime limit on the coverage of covered health care items and services;

(4)

complies with section 115(a) (relating to network adequacy); and

(5)

is equivalent, as certified by Office of the Actuary of the Centers for Medicare & Medicaid Services, to the average prevailing employer-sponsored coverage.

(b)

Minimum services to be covered

Subject to subsection (d), the items and services described in this subsection are the following:

(1)

Hospitalization.

(2)

Outpatient hospital and outpatient clinic services, including emergency department services.

(3)

Professional services of physicians and other health professionals.

(4)

Such services, equipment, and supplies incident to the services of a physician’s or a health professional’s delivery of care in institutional settings, physician offices, patients’ homes or place of residence, or other settings, as appropriate.

(5)

Prescription drugs.

(6)

Rehabilitative and habilitative services.

(7)

Mental health and substance use disorder services, including behavioral health treatments.

(8)

Preventive services, including those services recommended with a grade of A or B by the Task Force on Clinical Preventive Services and those vaccines recommended for use by the Director of the Centers for Disease Control and Prevention.

(9)

Maternity care.

(10)

Well baby and well child care; treatment of a congenital or developmental deformity, disease, or injury; and oral health, vision, and hearing services, equipment, and supplies at least for children under 21 years of age.

(c)

Requirements relating to cost-sharing and minimum actuarial value

(1)

No cost-sharing for preventive services

There shall be no cost-sharing under the essential benefits package for preventive items and services (as specified under the benefit standards), including well baby and well child care.

(2)

Annual limitation

(A)

Annual limitation

The cost-sharing incurred under the essential benefits package with respect to an individual (or family) for a year does not exceed the applicable level specified in subparagraph (B).

(B)

Applicable level

The applicable level specified in this subparagraph for Y1 is $5,000 for an individual and $10,000 for a family. Such levels shall be increased (rounded to the nearest $100) for each subsequent year by the annual percentage increase in the Consumer Price Index (United States city average) applicable to such year.

(C)

Use of copayments

In establishing cost-sharing levels for basic, enhanced, and premium plans under this subsection, the Secretary shall, to the maximum extent possible, use only copayments and not coinsurance.

(3)

Minimum actuarial value

(A)

In general

The cost-sharing under the essential benefits package shall be designed to provide a level of coverage that is designed to provide benefits that are actuarially equivalent to approximately 70 percent of the full actuarial value of the benefits provided under the reference benefits package described in subparagraph (B).

(B)

Reference benefits package described

The reference benefits package described in this subparagraph is the essential benefits package if there were no cost-sharing imposed.

(d)

Abortion coverage prohibited as part of minimum benefits package

(1)

Prohibition of required coverage

The Health Benefits Advisory Committee may not recommend under section 123(b) and the Secretary may not adopt in standards under section 124(b), the services described in paragraph (4)(A) or (4)(B) as part of the essential benefits package and the Commissioner may not require such services for qualified health benefits plans to participate in the Health Insurance Exchange.

(2)

Voluntary choice of coverage by plan

In the case of a qualified health benefits plan, the plan is not required (or prohibited) under this Act from providing coverage of services described in paragraph (4)(A) or (4)(B) and the QHBP offering entity shall determine whether such coverage is provided.

(3)

Coverage under public health insurance option

The public health insurance option shall provide coverage for services described in paragraph (4)(B). Nothing in this Act shall be construed as preventing the public health insurance option from providing for or prohibiting coverage of services described in paragraph (4)(A).

(4)

Abortion services

(A)

Abortions for which public funding is prohibited

The services described in this subparagraph are abortions for which the expenditure of Federal funds appropriated for the Department of Health and Human Services is not permitted, based on the law as in effect as of the date that is 6 months before the beginning of the plan year involved.

(B)

Abortions for which public funding is allowed

The services described in this subparagraph are abortions for which the expenditure of Federal funds appropriated for the Department of Health and Human Services is permitted, based on the law as in effect as of the date that is 6 months before the beginning of the plan year involved.

(e)

Stand-alone coverage

(1)

No application to adult coverage

Nothing in this subtitle shall be construed as requiring an individual who is 21 years of age or older to be provided stand-alone dental-only or vision-only coverage.

(2)

Treatment of combined coverage

The combination of stand-alone coverage described in paragraph (1) and a qualified health benefits plan without coverage of such oral and vision services shall be treated as satisfying the essential benefits package under this division.

123.

Health Benefits Advisory Committee

(a)

Establishment

(1)

In general

There is established a private-public advisory committee which shall be a panel of medical and other experts to be known as the Health Benefits Advisory Committee to recommend covered benefits and essential, enhanced, and premium plans.

(2)

Chair

The Surgeon General shall be a member and the chair of the Health Benefits Advisory Committee.

(3)

Membership

The Health Benefits Advisory Committee shall be composed of the following members, in addition to the Surgeon General:

(A)

9 members who are not Federal employees or officers and who are appointed by the President.

(B)

9 members who are not Federal employees or officers and who are appointed by the Comptroller General of the United States in a manner similar to the manner in which the Comptroller General appoints members to the Medicare Payment Advisory Commission under section 1805(c) of the Social Security Act.

(C)

Such even number of members (not to exceed 8) who are Federal employees and officers, as the President may appoint.

Such initial appointments shall be made not later than 60 days after the date of the enactment of this Act.
(4)

Terms

Each member of the Health Benefits Advisory Committee shall serve a 3-year term on the Committee, except that the terms of the initial members shall be adjusted in order to provide for a staggered term of appointment for all such members.

(5)

Participation

The membership of the Health Benefits Advisory Committee shall at least reflect providers, consumer representatives, employers, labor, health insurance issuers, experts in health care financing and delivery, experts in racial and ethnic disparities, experts in care for those with disabilities, representatives of relevant governmental agencies. and at least one practicing physician or other health professional and an expert on children’s health and shall represent a balance among various sectors of the health care system so that no single sector unduly influences the recommendations of such Committee. Not less than 25 percent of the members of the Committee shall be practicing health care practitioners who, as of the date of their appointment, practice in a rural area and who have practiced in a rural area for at least the 5-year period preceding such date.

(b)

Duties

(1)

Recommendations on benefit standards

The Health Benefits Advisory Committee shall recommend to the Secretary of Health and Human Services (in this subtitle referred to as the Secretary) benefit standards (as defined in paragraph (4)), and periodic updates to such standards. In developing such recommendations, the Committee shall take into account innovation in health care and consider how such standards could reduce health disparities.

(2)

Deadline

The Health Benefits Advisory Committee shall recommend initial benefit standards to the Secretary not later than 1 year after the date of the enactment of this Act.

(3)

Public input

The Health Benefits Advisory Committee shall allow for public input as a part of developing recommendations under this subsection.

(4)

Benefit standards defined

In this subtitle, the term benefit standards means standards respecting—

(A)

the essential benefits package described in section 122, including categories of covered treatments, items and services within benefit classes, and cost-sharing consistent with subsection (d) of such section; and

(B)

the cost-sharing levels for enhanced plans and premium plans (as provided under section 203(c)) consistent with paragraph (5).

(5)

Levels of cost-sharing for enhanced and premium plans

(A)

Enhanced plan

The level of cost-sharing for enhanced plans shall be designed so that such plans have benefits that are actuarially equivalent to approximately 85 percent of the actuarial value of the benefits provided under the reference benefits package described in section 122(c)(3)(B).

(B)

Premium plan

The level of cost-sharing for premium plans shall be designed so that such plans have benefits that are actuarially equivalent to approximately 95 percent of the actuarial value of the benefits provided under the reference benefits package described in section 122(c)(3)(B).

(c)

Operations

(1)

Per diem pay

Each member of the Health Benefits Advisory Committee shall receive travel expenses, including per diem in accordance with applicable provisions under subchapter I of chapter 57 of title 5, United States Code, and shall otherwise serve without additional pay.

(2)

Members not treated as Federal employees

Members of the Health Benefits Advisory Committee shall not be considered employees of the Federal government solely by reason of any service on the Committee.

(3)

Application of FACA

The Federal Advisory Committee Act (5 U.S.C. App.), other than section 14, shall apply to the Health Benefits Advisory Committee.

(d)

Publication

The Secretary shall provide for publication in the Federal Register and the posting on the Internet website of the Department of Health and Human Services of all recommendations made by the Health Benefits Advisory Committee under this section.

124.

Process for adoption of recommendations; adoption of benefit standards

(a)

Process for Adoption of Recommendations

(1)

Review of recommended standards

Not later than 45 days after the date of receipt of benefit standards recommended under section 123 (including such standards as modified under paragraph (2)(B)), the Secretary shall review such standards and shall determine whether to propose adoption of such standards as a package.

(2)

Determination to adopt standards

If the Secretary determines—

(A)

to propose adoption of benefit standards so recommended as a package, the Secretary shall, by regulation under section 553 of title 5, United States Code, propose adoption such standards; or

(B)

not to propose adoption of such standards as a package, the Secretary shall notify the Health Benefits Advisory Committee in writing of such determination and the reasons for not proposing the adoption of such recommendation and provide the Committee with a further opportunity to modify its previous recommendations and submit new recommendations to the Secretary on a timely basis.

(3)

Contingency

If, because of the application of paragraph (2)(B), the Secretary would otherwise be unable to propose initial adoption of such recommended standards by the deadline specified in subsection (b)(1), the Secretary shall, by regulation under section 553 of title 5, United States Code, propose adoption of initial benefit standards by such deadline.

(4)

Publication

The Secretary shall provide for publication in the Federal Register of all determinations made by the Secretary under this subsection.

(b)

Adoption of Standards

(1)

Initial standards

Not later than 18 months after the date of the enactment of this Act, the Secretary shall, through the rulemaking process consistent with subsection (a), adopt an initial set of benefit standards.

(2)

Periodic updating standards

Under subsection (a), the Secretary shall provide for the periodic updating of the benefit standards previously adopted under this section.

(3)

Requirement

The Secretary may not adopt any benefit standards for an essential benefits package or for level of cost-sharing that are inconsistent with the requirements for such a package or level under sections 122 (including subsection (d)) and 123(b)(5).

125.

Prohibition of discrimination in health care services based on religious or spiritual content

Neither the Commissioner nor any health insurance issuer offering health insurance coverage through the Health Insurance Exchange shall discriminate in approving or covering a health care service on the basis of its religious or spiritual content if expenditures for such a health care service are allowable as a deduction under section 213(d) of the Internal Revenue Code of 1986, as in effect on January 1, 2009.

D

Additional Consumer Protections

131.

Requiring fair marketing practices by health insurers

The Commissioner shall establish uniform marketing standards that all insured QHBP offering entities shall meet.

132.

Requiring fair grievance and appeals mechanisms

A QHBP offering entity shall provide for timely grievance and appeals mechanisms as the Commissioner shall establish consistent with sections 139 through 139B.

133.

Requiring information transparency and plan disclosure

(a)

Accurate and timely disclosure

(1)

In general

A qualified health benefits plan (including the public health insurance option) shall comply with standards established by the Commissioner for the accurate and timely disclosure of plan documents, plan terms and conditions, claims payment policies and practices, periodic financial disclosure, data on enrollment, data on disenrollment, data on the number of claims denials, data on rating practices, information on cost-sharing and payments with respect to any out-of-network coverage, and other information as determined appropriate by the Commissioner. The Commissioner shall require that such disclosure be provided in plain language.

(2)

Plain language

In this subsection, the term plain language means language that the intended audience, including individuals with limited English proficiency, can readily understand and use because that language is clean, concise, well-organized, and follows other best practices of plain language writing.

(3)

Guidance

The Commissioner shall develop and issue guidance on best practices of plain language writing.

(b)

Contracting reimbursement

A qualified health benefits plan (including the public health insurance option) shall comply with standards established by the Commissioner to ensure transparency to each health care provider relating to reimbursement arrangements between such plan and such provider.

(c)

Advance notice of plan changes

A change in a qualified health benefits plan (including the public health insurance option) shall not be made without such reasonable and timely advance notice to enrollees of such change.

(d)

Pharmacy benefit managers transparency requirements

(1)

In general

Notwithstanding any other provision of law, a qualified health benefits plan shall enter into a contract with a pharmacy benefit managers (in this subsection referred to as a PBM) to manage the prescription drug coverage provided under such plan, or to control the costs of such prescription drug coverage, only if as a condition of such contract the PBM is required to provide at least annually to the Commissioner and to the QHBP offering entity offering such plan the following information:

(A)

Information on the volume of prescriptions under the contract that are filled via mail order and at retail pharmacies.

(B)

An estimate of aggregate average payments under the contract, per prescription (weighted by prescription volume), made to mail order and retail pharmacists, and the average amount, per prescription, that the PBM was paid by the plan for prescriptions filled at mail order and retail pharmacists.

(C)

An estimate of the aggregate average payment per prescription (weighted by prescription volume) under the contract received from pharmaceutical manufacturers, including all rebates, discounts, prices concessions, or administrative, and other payments from pharmaceutical manufacturers, and a description of the types of payments, and the amount of these payments that were shared with the plan, and a description of the percentage of prescriptions for which the PBM received such payments.

(D)

Information on the overall percentage of generic drugs dispensed under the contract at retail and mail order pharmacies, and the percentage of cases in which a generic drug is dispensed when available.

(E)

Information on the percentage and number of cases under the contract in which individuals were switched from a prescribed drug that was less expensive to a drug that was more expensive, the rationale for these switches, and a description of the PBM policies governing such switches.

(2)

Confidentiality of information

Notwithstanding any other provision of law, information disclosed by a PBM to the Commissioner or a QHBP offering entity under this subsection is confidential and shall not be disclosed by the Commissioner or the QHBP offering entity in a form which discloses the identity of a specific PBM or prices charged by such PBM or a specific retailer, manufacturer, or wholesaler, except—

(A)

as the Commissioner determines to be necessary to carry out this subsection;

(B)

to permit the Comptroller General to review the information provided;

(C)

to permit the Director of the Congressional Budget Office to review the information provided; and

(D)

to permit the Commissioner to disclose industry-wide aggregate or average information to be used in assessing the overall impact of PBMs on prescription drug prices and spending.

134.

Application to qualified health benefits plans not offered through the Health Insurance Exchange

The requirements of the previous provisions of this subtitle shall apply to qualified health benefits plans that are not being offered through the Health Insurance Exchange only to the extent specified by the Commissioner.

135.

Timely payment of claims

A QHBP offering entity shall comply with the requirements of section 1857(f) of the Social Security Act with respect to a qualified health benefits plan it offers in the same manner an Medicare Advantage organization is required to comply with such requirements with respect to a Medicare Advantage plan it offers under part C of Medicare.

136.

Standardized rules for coordination and subrogation of benefits

The Commissioner shall establish standards for the coordination and subrogation of benefits and reimbursement of payments in cases involving individuals and multiple plan coverage.

137.

Application of administrative simplification

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

138.

Information on end-of-life planning

(a)

In general

The QHBP offering entity —

(1)

shall provide for the dissemination of information related to end-of-life planning to individuals seeking enrollment in Exchange-participating health benefits plans offered through the Exchange;

(2)

shall present such individuals with—

(A)

the option to establish advanced directives and physician’s orders for life sustaining treatment according to the laws of the State in which the individual resides; and

(B)

information related to other planning tools; and

(3)

shall not promote suicide, assisted suicide, or the active hastening of death.

The information presented under paragraph (2) shall not presume the withdrawal of treatment and shall include end-of-life planning information that includes options to maintain all or most medical interventions.
(b)

Construction

Nothing in this section shall be construed—

(1)

to require an individual to complete an advanced directive or a physician’s order for life sustaining treatment or other end-of-life planning document;

(2)

to require an individual to consent to restrictions on the amount, duration, or scope of medical benefits otherwise covered under a qualified health benefits plan; or

(3)

to encourage the hastening of death or the promotion of assisted suicide.

(c)

Advanced directive defined

In this section, the term advanced directive includes a living will, a comfort care order, or a durable power of attorney for health care

(d)

Prohibition on the promotion of assisted suicide

(1)

In general

Subject to paragraph (3), information provided to meet the requirements of subsection (a)(2) shall not include advanced directives or other planning tools that list or describe as an option suicide, assisted suicide or the intentional hastening of death regardless of legality.

(2)

Construction

Nothing in paragraph (1) shall be construed to apply to or affect any option to—

(A)

the withhold or withdraw of medical treatment or medical care;

(B)

withhold or withdraw of nutrition or hydration; and

(C)

provide palliative or hospice care or use an item, good, benefit, or service furnished for the purpose of alleviating pain or discomfort, even if such use may increase the risk of death, so long as such item, good, benefit, or service is not also furnished for the purpose of causing, or the purpose of assisting in causing, death, for any reason.

(3)

Exemption

The requirements of subsection (a) shall not apply to any State that as of August 1, 2009, requires the inclusion of information prohibited in such paragraph in advanced directives or other planning tools.

139.

Utilization review activities

(a)

Compliance with requirements

(1)

In general

A qualified health benefits plan, and a QHBP offering entity that offers such plan, shall conduct utilization review activities in connection with the provision of benefits under such plan only in accordance with a utilization review program that meets the requirements of this section.

(2)

Use of outside agents

Nothing in this section shall be construed as preventing a qualified health benefits plan or QHBP offering entity from arranging through a contract or otherwise for persons or entities to conduct utilization review activities on behalf of the plan entity, so long as such activities are conducted in accordance with a utilization review program that meets the requirements of this section.

(3)

Utilization review defined

For purposes of this section, the terms utilization review and utilization review activities mean procedures used to monitor or evaluate the use or coverage, clinical necessity, appropriateness, efficacy, or efficiency of health care services, procedures or settings, and includes prospective review, concurrent review, second opinions, case management, discharge planning, or retrospective review.

(b)

Written policies and criteria

(1)

Written policies

A utilization review program shall be conducted consistent with written policies and procedures that govern all aspects of the program.

(2)

Use of written criteria

(A)

In general

Such a program shall utilize written clinical review criteria developed with input from a range of appropriate actively practicing health care professionals, as determined by the plan, pursuant to the program. Such criteria shall include written clinical review criteria that are based on valid clinical evidence where available and that are directed specifically at meeting the needs of at-risk populations and covered individuals with chronic conditions or severe illnesses, including gender-specific criteria and pediatric-specific criteria where available and appropriate.

(B)

Continuing use of standards in retrospective review

If a health care service has been specifically pre-authorized or approved for an enrollee under such a program, the program shall not, pursuant to retrospective review, revise or modify the specific standards, criteria, or procedures used for the utilization review for procedures, treatment, and services delivered to the enrollee during the same course of treatment.

(C)

Review of sample of claims denials

Such a program shall provide for an evaluation of the clinical appropriateness of at least a sample of denials of claims for benefits.

(c)

Conduct of program activities

(1)

Administration by health care professionals

A utilization review program shall be administered by qualified health care professionals who shall oversee review decisions.

(2)

Use of qualified, independent personnel

(A)

In general

A utilization review program shall provide for the conduct of utilization review activities only through personnel who are qualified and have received appropriate training in the conduct of such activities under the program.

(B)

Prohibition of contingent compensation arrangements

Such a program shall not, with respect to utilization review activities, permit or provide compensation or anything of value to its employees, agents, or contractors in a manner that encourages denials of claims for benefits.

(C)

Prohibition of conflicts

Such a program shall not permit a health care professional who is providing health care services to an individual to perform utilization review activities in connection with the health care services being provided to the individual.

(3)

Accessibility of review

Such a program shall provide that appropriate personnel performing utilization review activities under the program, including the utilization review administrator, are reasonably accessible by toll-free telephone during normal business hours to discuss patient care and allow response to telephone requests, and that appropriate provision is made to receive and respond promptly to calls received during other hours.

(4)

Limits on frequency

Such a program shall not provide for the performance of utilization review activities with respect to a class of services furnished to an individual more frequently than is reasonably required to assess whether the services under review are medically necessary or appropriate.

(d)

Deadline for determinations

(1)

Prior authorization services

(A)

In general

Except as provided in paragraph (2), in the case of a utilization review activity involving the prior authorization of health care items and services for an individual, the utilization review program shall make a determination concerning such authorization, and provide notice of the determination to the individual or the individual’s designee and the individual’s health care provider by telephone and in printed form, as soon as possible in accordance with the medical exigencies of the case, and in no event later than the deadline specified in subparagraph (B).

(B)

Deadline

(i)

In general

Subject to clauses (ii), (iii), and (iv), the deadline specified in this subparagraph is 14 days after the date of receipt of the request for prior authorization, but in no event later than 3 business days after the date of receipt of information that is reasonably necessary to make such determination.

(ii)

Extension permitted where notice of additional information required

If a utilization review program—

(I)

receives a request for a prior authorization;

(II)

determines that additional information is necessary to complete the review and make the determination on the request; and

(III)

notifies the requester, not later than 5 business days after the date of receiving the request, of the need for such specified additional information;

the deadline specified in this subparagraph is 14 days after the date the program receives the specified additional information, but in no case later than 28 days after the date of receipt of the request for the prior authorization. This clause shall not apply if the deadline is specified in clause (iii).
(iii)

Expedited cases

In the case of a situation described in section 139A(c)(1)(A), the deadline specified in this subparagraph is 72 hours after the time of the request for prior authorization.

(iv)

Exception for emergency services

No prior approval shall be required in the case of emergency services provided by a hospital.

(2)

Ongoing care

(A)

Concurrent review

(i)

In general

Subject to subparagraph (B), in the case of a concurrent review of ongoing care (including hospitalization), which results in a termination or reduction of such care, the plan must provide by telephone and in printed form notice of the concurrent review determination to the individual or the individual’s designee and the individual’s health care provider as soon as possible in accordance with the medical exigencies of the case, and in no event later than 1 business day after the date of receipt of information that is reasonably necessary to make such determination, with sufficient time prior to the termination or reduction to allow for an appeal under section 139A(c)(1)(A) to be completed before the termination or reduction takes effect.

(ii)

Contents of notice

Such notice shall include, with respect to ongoing health care items and services, the number of ongoing services approved, the new total of approved services, the date of onset of services, and the next review date, if any, as well as a statement of the individual"s rights to further appeal.

(B)

Exception

Subparagraph (A) shall not be interpreted as requiring plans or issuers to provide coverage of care that would exceed the coverage limitations for such care.

(3)

Previously provided services

In the case of a utilization review activity involving retrospective review of health care services previously provided for an individual, the utilization review program shall make a determination concerning such services, and provide notice of the determination to the individual or the individual’s designee and the individual’s health care provider by telephone and in printed form, within 30 days of the date of receipt of information that is reasonably necessary to make such determination, but in no case later than 60 days after the date of receipt of the claim for benefits.

(4)

Failure to meet deadline

In a case in which a qualified health benefits plan or QHBP offering entity fails to make a determination on a claim for benefit under paragraph (1), (2)(A), or (3) by the applicable deadline established under the respective paragraph, the failure shall be treated under this subtitle as a denial of the claim as of the date of the deadline.

(e)

Notice of denials of claims for benefits

(1)

In general

Notice of a denial of claims for benefits under a utilization review program shall be provided in printed form and written in a manner calculated to be understood by the participant, beneficiary, or enrollee and shall include—

(A)

the reasons for the denial (including the clinical rationale);

(B)

instructions on how to initiate an appeal under section 139A; and

(C)

notice of the availability, upon request of the individual (or the individual"s designee) of the clinical review criteria relied upon to make such denial.

(2)

Specification of any additional information

Such a notice shall also specify what (if any) additional necessary information must be provided to, or obtained by, the person making the denial in order to make a decision on such an appeal.

(f)

Claim for benefits and denial of claim for benefits defined

For purposes of this subtitle:

(1)

Claim for benefits

The term claim for benefits means any request for coverage (including authorization of coverage), for eligibility, or for payment in whole or in part, for an item or service under a qualified health benefits plan.

(2)

Denial of claim for benefits

The term denial means, with respect to a claim for benefits, means a denial, or a failure to act on a timely basis upon, in whole or in part, the claim for benefits and includes a failure to provide benefits (including items and services) required to be provided under this title.

139A.

Internal appeals procedures

(a)

Right of review

(1)

In general

Each qualified health benefits plan, and each QHBP offering entity offering such plan—

(A)

shall provide adequate notice in writing to any participant or beneficiary under such plan, or enrollee under such coverage, whose claim for benefits under the plan has been denied (within the meaning of section 139(f)(2)), setting forth the specific reasons for such denial of claim for benefits and rights to any further review or appeal, written in a manner calculated to be understood by the participant, beneficiary, or enrollee; and

(B)

shall afford such a participant, beneficiary, or enrollee (and any provider or other person acting on behalf of such an individual with the individual"s consent or without such consent if the individual is medically unable to provide such consent) who is dissatisfied with such a denial of claim for benefits a reasonable opportunity (of not less than 180 days) to request and obtain a full and fair review by a named fiduciary (with respect to such plan) or named appropriate individual (with respect to such coverage) of the decision denying the claim.

(2)

Treatment of oral requests

The request for review under paragraph (1)(B) may be made orally, but, in the case of an oral request, shall be followed by a request in writing.

(b)

Internal review process

(1)

Conduct of review

(A)

In general

A review of a denial of claim under this section shall be made by an individual who—

(i)

in a case involving medical judgment, shall be a physician or, in the case of limited scope coverage (as defined in subparagraph (B), shall be an appropriate specialist;

(ii)

has been selected by the plan or entity; and

(iii)

did not make the initial denial in the internally appealable decision.

(B)

Limited scope coverage defined

For purposes of subparagraph (A), the term limited scope coverage means a qualified health benefits plan the only benefits under which are for benefits described in section 2791(c)(2)(A) of the Public Health Service Act (42 U.S.C. 300gg-91(c)(2)).

(2)

Time limits for internal reviews

(A)

In general

Having received such a request for review of a denial of claim, the QHBP offering entity offering a qualified health benefits plan, in accordance with the medical exigencies of the case but not later than the deadline specified in subparagraph (B), complete the review on the denial and transmit to the participant, beneficiary, enrollee, or other person involved a decision that affirms, reverses, or modifies the denial. If the decision does not reverse the denial, the plan or issuer shall transmit, in printed form, a notice that sets forth the grounds for such decision and that includes a description of rights to any further appeal. Such decision shall be treated as the final decision of the plan. Failure to issue such a decision by such deadline shall be treated as a final decision affirming the denial of claim.

(B)

Deadline

(i)

In general

Subject to clauses (ii) and (iii), the deadline specified in this subparagraph is 14 days after the date of receipt of the request for internal review.

(ii)

Extension permitted where notice of additional information required

If a qualified health benefits plan of QHBP offering entity—

(I)

receives a request for internal review,

(II)

determines that additional information is necessary to complete the review and make the determination on the request, and

(III)

notifies the requester, not later than 5 business days after the date of receiving the request, of the need for such specified additional information,

the deadline specified in this subparagraph is 14 days after the date the plan or entity receives the specified additional information, but in no case later than 28 days after the date of receipt of the request for the internal review. This clause shall not apply if the deadline is specified in clause (iii).
(iii)

Expedited cases

In the case of a situation described in subsection (c)(1)(A), the deadline specified in this subparagraph is 72 hours after the time of the request for review.

(c)

Expedited review process

(1)

In general

A qualified health benefits plan, and a QHBP offering entity, shall establish procedures in writing for the expedited consideration of requests for review under subsection (b) in situations—

(A)

in which, as determined by the plan or issuer or as certified in writing by a treating health care professional, the application of the normal timeframe for making a determination could seriously jeopardize the life or health of the participant, beneficiary, or enrollee or such an individual"s ability to regain maximum function; or

(B)

described in section 139(d)(2) (relating to requests for continuation of ongoing care which would otherwise be reduced or terminated).

(2)

Process

Under such procedures—

(A)

the request for expedited review may be submitted orally or in writing by an individual or provider who is otherwise entitled to request the review;

(B)

all necessary information, including the plan’s or entity’s decision, shall be transmitted between the plan or issuer and the requester by telephone, facsimile, or other similarly expeditious available method; and

(C)

the plan or issuer shall expedite the review in the case of any of the situations described in subparagraph (A) or (B) of paragraph (1).

(3)

Deadline for decision

The decision on the expedited review must be made and communicated to the parties as soon as possible in accordance with the medical exigencies of the case, and in no event later than 72 hours after the time of receipt of the request for expedited review, except that in a case described in paragraph (1)(B), the decision must be made before the end of the approved period of care.

(d)

Waiver of process

A plan or entity may waive its rights for an internal review under subsection (b). In such case the participant, beneficiary, or enrollee involved (and any designee or provider involved) shall be relieved of any obligation to complete the review involved and may, at the option of such participant, beneficiary, enrollee, designee, or provider, proceed directly to seek further appeal through any applicable external appeals process.

139B.

External appeals procedures

(a)

Right to external appeal

(1)

In general

A qualified health benefits plan, and a QHBP offering entity, shall provide for an external appeals process that meets the requirements of this section in the case of an externally appealable decision described in paragraph (2), for which a timely appeal is made either by the plan or entity or by the participant, beneficiary, or enrollee (and any provider or other person acting on behalf of such an individual with the individual’s consent or without such consent if such an individual is medically unable to provide such consent). The appropriate Secretary shall establish standards to carry out such requirements.

(2)

Externally appealable decision defined

(A)

In general

For purposes of this section, the term externally appealable decision means a denial of claim for benefits (as defined in section 139(f)(2))—

(i)

that is based in whole or in part on a decision that the item or service is not medically necessary or appropriate or is investigational or experimental; or

(ii)

in which the decision as to whether a benefit is covered involves a medical judgment.

(B)

Inclusion

Such term also includes a failure to meet an applicable deadline for internal review under section 139A.

(C)

Exclusions

Such term does not include—

(i)

specific exclusions or express limitations on the amount, duration, or scope of coverage that do not involve medical judgment; or

(ii)

a decision regarding whether an individual is a participant, beneficiary, or enrollee under the plan.

(3)

Exhaustion of internal review process

Except as provided under section 139A(d), a plan or entity may condition the use of an external appeal process in the case of an externally appealable decision upon a final decision in an internal review under section 140, but only if the decision is made in a timely basis consistent with the deadlines provided under this subtitle.

(4)

Filing fee requirement

(A)

In general

Subject to subparagraph (B), a plan or entity may condition the use of an external appeal process upon payment to the plan or entity of a filing fee that does not exceed $25.

(B)

Exception for indigency

The plan or issuer may not require payment of the filing fee in the case of an individual participant, beneficiary, or enrollee who certifies (in a form and manner specified in guidelines established by the Secretary of Health and Human Services) that the individual is indigent (as defined in such guidelines).

(C)

Refunding fee in case of successful appeals

The plan or entity shall refund payment of the filing fee under this paragraph if the recommendation of the external appeal entity is to reverse or modify the denial of a claim for benefits which is the subject of the appeal.

(b)

General elements of external appeals process

(1)

Contract with qualified external appeal entity

(A)

Contract requirement

Except as provided in subparagraph (D), the external appeal process under this section of a plan or entity shall be conducted under a contract between the plan or issuer and one or more qualified external appeal entities (as defined in subsection (c)).

(B)

Limitation on plan or issuer selection

The applicable authority shall implement procedures—

(i)

to assure that the selection process among qualified external appeal entities will not create any incentives for external appeal entities to make a decision in a biased manner, and

(ii)

for auditing a sample of decisions by such entities to assure that no such decisions are made in a biased manner.

(C)

Other terms and conditions

The terms and conditions of a contract under this paragraph shall be consistent with the standards the appropriate Secretary shall establish to assure there is no real or apparent conflict of interest in the conduct of external appeal activities. Such contract shall provide that all costs of the process (except those incurred by the participant, beneficiary, enrollee, or treating professional in support of the appeal) shall be paid by the plan or entity, and not by the participant, beneficiary, or enrollee. The previous sentence shall not be construed as applying to the imposition of a filing fee under subsection (a)(4).

(D)

State authority with respect to qualified external appeal entity for health insurance issuers

With respect to QHBP offering entities offering qualified health benefits plans in a State, the State may provide for external review activities to be conducted by a qualified external appeal entity that is designated by the State or that is selected by the State in a manner determined by the State to assure an unbiased determination.

(2)

Elements of process

An external appeal process shall be conducted consistent with standards established by the appropriate Secretary that include at least the following:

(A)

Fair and de novo determination

The process shall provide for a fair, de novo determination. However, nothing in this paragraph shall be construed as providing for coverage of items and services for which benefits are specifically excluded under the plan.

(B)

Standard of review

An external appeal entity shall determine whether the plan’s or issuer’s decision is in accordance with the medical needs of the patient involved (as determined by the entity) taking into account, as of the time of the entity’s determination, the patient’s medical condition and any relevant and reliable evidence the entity obtains under subparagraph (D). If the entity determines the decision is in accordance with such needs, the entity shall affirm the decision and to the extent that the entity determines the decision is not in accordance with such needs, the entity shall reverse or modify the decision.

(C)

Consideration of plan or coverage definitions

In making such determination, the external appeal entity shall consider (but not be bound by) any language in the plan or coverage document relating to the definitions of the terms medical necessity, medically necessary or appropriate, or experimental, investigational, or related terms.

(D)

Evidence

(i)

In general

An external appeal entity shall include, among the evidence taken into consideration—

(I)

the decision made by the plan or QHBP offering entity upon internal review under section 140 and any guidelines or standards used by the plan or QHBP offering entity in reaching such decision;

(II)

any personal health and medical information supplied with respect to the individual whose denial of claim for benefits has been appealed; and

(III)

the opinion of the individual’s treating physician or health care professional.

(ii)

Additional evidence

Such external appeal entity may also take into consideration but not be limited to the following evidence (to the extent available):

(I)

The results of studies that meet professionally recognized standards of validity and replicability or that have been published in peer-reviewed journals.

(II)

The results of professional consensus conferences conducted or financed in whole or in part by one or more government agencies.

(III)

Practice and treatment guidelines prepared or financed in whole or in part by government agencies.

(IV)

Government-issued coverage and treatment policies.

(V)

Community standard of care and generally accepted principles of professional medical practice.

(VI)

To the extent that the entity determines it to be free of any conflict of interest, the opinions of individuals who are qualified as experts in one or more fields of health care which are directly related to the matters under appeal.

(VII)

To the extent that the entity determines it to be free of any conflict of interest, the results of peer reviews conducted by the plan involved.

(E)

Determination concerning externally appealable decisions

A qualified external appeal entity shall determine—

(i)

whether a denial of claim for benefits is an externally appealable decision (within the meaning of subsection (a)(2));

(ii)

whether an externally appealable decision involves an expedited appeal; and

(iii)

for purposes of initiating an external review, whether the internal review process has been completed.

(F)

Opportunity to submit evidence

Each party to an externally appealable decision may submit evidence related to the issues in dispute.

(G)

Provision of information

The plan or issuer involved shall provide timely access to the external appeal entity to information and to provisions of the plan relating to the matter of the externally appealable decision, as determined by the entity.

(H)

Timely decisions

A determination by the external appeal entity on the decision shall—

(i)

be made orally or in writing and, if it is made orally, shall be supplied to the parties in writing as soon as possible;

(ii)

be made in accordance with the medical exigencies of the case involved, but in no event later than 21 days after the date (or, in the case of an expedited appeal, 72 hours after the time) of requesting an external appeal of the decision;

(iii)

state, in layperson’s language, the basis for the determination, including, if relevant, any basis in the terms or conditions of the plan; and

(iv)

inform the participant, beneficiary, or enrollee of the individual’s rights (including any limitation on such rights) to seek further review by the courts (or other process) of the external appeal determination.

(I)

Compliance with determination

If the external appeal entity reverses or modifies the denial of a claim for benefits, the plan shall—

(i)

upon the receipt of the determination, authorize benefits in accordance with such determination;

(ii)

take such actions as may be necessary to provide benefits (including items or services) in a timely manner consistent with such determination; and

(iii)

submit information to the entity documenting compliance with the entity’s determination and this subparagraph.

(c)

Qualifications of external appeal entities

(1)

In general

For purposes of this section, the term qualified external appeal entity means, in relation to a plan or issuer, an entity that is certified under paragraph (2) as meeting the following requirements:

(A)

The entity meets the independence requirements of paragraph (3).

(B)

The entity conducts external appeal activities through a panel of not fewer than 3 clinical peers.

(C)

The entity has sufficient medical, legal, and other expertise and sufficient staffing to conduct external appeal activities for the plan on a timely basis consistent with subsection (b)(2)(G).

(D)

The entity meets such other requirements as the appropriate Secretary may impose.

(2)

Initial certification of external appeal entities

(A)

In general

In order to be treated as a qualified external appeal entity with respect to—

(i)

a qualified health benefits plan that is a group health plan, the entity must be certified (and, in accordance with subparagraph (B), periodically recertified) as meeting the requirements of paragraph (1)—

(I)

by the Secretary of Labor;

(II)

under a process recognized or approved by the Secretary of Labor; or

(III)

to the extent provided in subparagraph (C)(i), by a qualified private standard-setting organization (certified under such subparagraph); or

(ii)

a QHBP offering entity that is a health insurance issuer operating in a State, the qualified external appeal entity must be certified (and, in accordance with subparagraph (B), periodically recertified) as meeting such requirements—

(I)

by the applicable State authority (or under a process recognized or approved by such authority); or

(II)

if the State has not established a certification and recertification process for such entities, by the Secretary of Health and Human Services, under a process recognized or approved by such Secretary, or to the extent provided in subparagraph (C)(ii), by a qualified private standard-setting organization (certified under such subparagraph).

(B)

Recertification process

The appropriate Secretary shall develop standards for the recertification of external appeal entities. Such standards shall include a review of—

(i)

the number of cases reviewed;

(ii)

a summary of the disposition of those cases;

(iii)

the length of time in making determinations on those cases;

(iv)

updated information of what was required to be submitted as a condition of certification for the entity’s performance of external appeal activities; and

(v)

such information as may be necessary to assure the independence of the entity from the plans or issuers for which external appeal activities are being conducted.

(C)

Certification of qualified private standard-setting organizations

(i)

For external reviews of group health plans

For purposes of subparagraph (A)(i)(III), the Secretary of Labor may provide for a process for certification (and periodic recertification) of qualified private standard-setting organizations which provide for certification of external review entities. Such an organization shall only be certified if the organization does not certify an external review entity unless it meets standards required for certification of such an entity by such Secretary under subparagraph (A)(i)(I).

(ii)

For external reviews of health insurance issuers

For purposes of subparagraph (A)(ii)(II), the Secretary of Health and Human Services may provide for a process for certification (and periodic recertification) of qualified private standard-setting organizations which provide for certification of external review entities. Such an organization shall only be certified if the organization does not certify an external review entity unless it meets standards required for certification of such an entity by such Secretary under subparagraph (A)(ii)(II).

(3)

Independence requirements

(A)

In general

A clinical peer or other entity meets the independence requirements of this paragraph if—

(i)

the peer or entity does not have a familial, financial, or professional relationship with any related party;

(ii)

any compensation received by such peer or entity in connection with the external review is reasonable and not contingent on any decision rendered by the peer or entity;

(iii)

except as provided in paragraph (4), the plan and the issuer have no recourse against the peer or entity in connection with the external review; and

(iv)

the peer or entity does not otherwise have a conflict of interest with a related party as determined under any regulations which the Secretary may prescribe.

(B)

Related party

For purposes of this paragraph, the term related party means—

(i)

with respect to—

(I)

a qualified health benefits plan that is a group health plan, the plan or QHBP offering entity of such plan; or

(II)

a qualified health benefits plan that is individual health insurance coverage, the health insurance issuer offering such coverage, or any plan sponsor, fiduciary, officer, director, or management employee of such plan or issuer;

(ii)

the health care professional that provided the health care involved in the coverage decision;

(iii)

the institution at which the health care involved in the coverage decision is provided;

(iv)

the manufacturer of any drug or other item that was included in the health care involved in the coverage decision; or

(v)

any other party determined under any regulations which the Secretary may prescribe to have a substantial interest in the coverage decision.

(4)

Limitation on liability of reviewers

No qualified external appeal entity having a contract with a qualified health benefits plan under this part and no person who is employed by any such entity or who furnishes professional services to such entity, shall be held by reason of the performance of any duty, function, or activity required or authorized pursuant to this section, to have violated any criminal law, or to be civilly liable under any law of the United States or of any State (or political subdivision thereof) if due care was exercised in the performance of such duty, function, or activity and there was no actual malice or gross misconduct in the performance of such duty, function, or activity.

(d)

External appeal determination binding on plan

The determination by an external appeal entity under this section is binding on the plan involved in the determination.

(e)

Penalties against authorized officials for refusing to authorize the determination of an external review entity

(1)

Monetary penalties

In any case in which the determination of an external review entity is not followed by a qualified health benefits plan, any person who, acting in the capacity of authorizing the benefit, causes such refusal may, in the discretion in a court of competent jurisdiction, be liable to an aggrieved participant, beneficiary, or enrollee for a civil penalty in an amount of up to $1,000 a day from the date on which the determination was transmitted to the plan by the external review entity until the date the refusal to provide the benefit is corrected.

(2)

Cease and desist order and order of attorney"s fees

In any action described in paragraph (1) brought by a participant, beneficiary, or enrollee with respect to a qualified health benefits plan, in which a plaintiff alleges that a person referred to in such paragraph has taken an action resulting in a refusal of a benefit determined by an external appeal entity in violation of such terms of the plan, coverage, or this subtitle, or has failed to take an action for which such person is responsible under the plan or this title and which is necessary under the plan or coverage for authorizing a benefit, the court shall cause to be served on the defendant an order requiring the defendant—

(A)

to cease and desist from the alleged action or failure to act; and

(B)

to pay to the plaintiff a reasonable attorney’s fee and other reasonable costs relating to the prosecution of the action on the charges on which the plaintiff prevails.

(3)

Additional civil penalties

(A)

In general

In addition to any penalty imposed under paragraph (1) or (2), the appropriate Secretary may assess a civil penalty against a person acting in the capacity of authorizing a benefit determined by an external review entity for one or more qualified health benefits plans, for—

(i)

any pattern or practice of repeated refusal to authorize a benefit determined by an external appeal entity in violation of the terms of such a plan, or this title; or

(ii)

any pattern or practice of repeated violations of the requirements of this section with respect to such plan or plans.

(B)

Standard of proof and amount of penalty

Such penalty shall be payable only upon proof by clear and convincing evidence of such pattern or practice and shall be in an amount not to exceed the lesser of—

(i)

25 percent of the aggregate value of benefits shown by the appropriate Secretary to have not been provided, or unlawfully delayed, in violation of this section under such pattern or practice, or

(ii)

$500,000.

(4)

Removal and disqualification

Any person acting in the capacity of authorizing benefits who has engaged in any such pattern or practice described in paragraph (3)(A) with respect to a plan or coverage, upon the petition of the appropriate Secretary, may be removed by the court from such position, and from any other involvement, with respect to such a plan or coverage, and may be precluded from returning to any such position or involvement for a period determined by the court.

(f)

Protection of legal rights

Nothing in this subtitle shall be construed as altering or eliminating any cause of action or legal rights or remedies of participants, beneficiaries, enrollees, and others under State or Federal law (including sections 502 and 503 of the Employee Retirement Income Security Act of 1974), including the right to file judicial actions to enforce actions.

(g)

Application to all acceptable coverage

The provisions of this section shall apply with respect to all acceptable coverage in the same manner as such provisions apply with respect to qualified health benefits plans under this section.

E

Governance

141.

Health Choices Administration; Health 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, rulemaking, 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 Commissioner of Social Security and the Social Security Administration.

142.

Duties and authority of Commissioner

(a)

Duties

The Commissioner is responsible for carrying out the following functions under this division:

(1)

Qualified plan standards

The establishment of qualified health benefits plan standards under this title, including the enforcement of such standards in coordination with State insurance regulators and the Secretaries of Labor and the Treasury.

(2)

Health Insurance Exchange

The establishment and operation of a Health Insurance Exchange under subtitle A of title II.

(3)

Individual affordability credits

The administration of individual affordability credits under subtitle C of title II, including determination of eligibility for such credits.

(4)

Additional functions

Such additional functions as may be specified in this division.

(b)

Promoting accountability

(1)

In general

The Commissioner shall undertake activities in accordance with this subtitle to promote accountability of QHBP offering entities in meeting Federal health insurance requirements, regardless of whether such accountability is with respect to qualified health benefits plans offered through the Health Insurance Exchange or outside of such Exchange.

(2)

Compliance examination and audits

(A)

In general

The commissioner shall, in coordination with States, conduct audits of qualified health benefits plan compliance with Federal requirements.  Such audits may include random compliance audits and targeted audits in response to complaints or other suspected non-compliance.

(B)

Recoupment of costs in connection with examination and audits

The Commissioner is authorized to recoup from qualified health benefits plans reimbursement for the costs of such examinations and audit of such QHBP offering entities.

(c)

Data collection

The Commissioner shall collect data for purposes of carrying out the Commissioner’s duties, including for purposes of promoting quality and value, protecting consumers, and addressing disparities in health and health care and may share such data with the Secretary of Health and Human Services.

(d)

Sanctions authority

(1)

In general

In the case that the Commissioner determines that a QHBP offering entity violates a requirement of this title, the Commissioner may, in coordination with State insurance regulators and the Secretary of Labor, provide, in addition to any other remedies authorized by law, for any of the remedies described in paragraph (2).

(2)

Remedies

The remedies described in this paragraph, with respect to a qualified health benefits plan offered by a QHBP offering entity, are—

(A)

civil money penalties of not more than the amount that would be applicable under similar circumstances for similar violations under section 1857(g) of the Social Security Act;

(B)

suspension of enrollment of individuals under such plan after the date the Commissioner notifies the entity of a determination under paragraph (1) and until the Commissioner is satisfied that the basis for such determination has been corrected and is not likely to recur;

(C)

in the case of an Exchange-participating health benefits plan, suspension of payment to the entity under the Health Insurance Exchange for individuals enrolled in such plan after the date the Commissioner notifies the entity of a determination under paragraph (1) and until the Secretary is satisfied that the basis for such determination has been corrected and is not likely to recur; or

(D)

working with State insurance regulators to terminate plans for repeated failure by the offering entity to meet the requirements of this title.

(e)

Standard definitions of insurance and medical terms

The Commissioner shall provide for the development of standards for the definitions of terms used in health insurance coverage, including insurance-related terms.

(f)

Efficiency in administration

The Commissioner shall issue regulations for the effective and efficient administration of the Health Insurance Exchange and affordability credits under subtitle C, including, with respect to the determination of eligibility for affordability credits, the use of personnel who are employed in accordance with the requirements of title 5, United States Code, to carry out the duties of the Commissioner or, in the case of sections 208 and 241(b)(2), the use of State personnel who are employed in accordance with standards prescribed by the Office of Personnel Management pursuant to section 208 of the Intergovernmental Personnel Act of 1970 (42 U.S.C. 4728).

143.

Consultation and coordination

(a)

Consultation

In carrying out the Commissioner’s duties under this division, the Commissioner, as appropriate, shall consult with at least with the following:

(1)

The National Association of Insurance Commissioners, State attorneys general, and State insurance regulators, including concerning the standards for insured qualified health benefits plans under this title and enforcement of such standards.

(2)

Appropriate State agencies, specifically concerning the administration of individual affordability credits under subtitle C of title II and the offering of Exchange-participating health benefits plans, to Medicaid eligible individuals under subtitle A of such title.

(3)

Other appropriate Federal agencies.

(4)

Indian tribes and tribal organizations.

(5)

The National Association of Insurance Commissioners for purposes of using model guidelines established by such association for purposes of subtitles B and D.

(b)

Coordination

(1)

In general

In carrying out the functions of the Commissioner, including with respect to the enforcement of the provisions of this division, the Commissioner shall work in coordination with existing Federal and State entities to the maximum extent feasible consistent with this division and in a manner that prevents conflicts of interest in duties and ensures effective enforcement.

(2)

Uniform standards

The Commissioner, in coordination with such entities, shall seek to achieve uniform standards that adequately protect consumers in a manner that does not unreasonably affect employers and insurers.

144.

Health Insurance Ombudsman

(a)

In general

The Commissioner shall appoint within the Health Choices Administration a Qualified Health Benefits Plan Ombudsman who shall have expertise and experience in the fields of health care and education of (and assistance to) individuals.

(b)

Duties

The Qualified Health Benefits Plan Ombudsman shall, in a linguistically appropriate manner—

(1)

receive complaints, grievances, and requests for information submitted by individuals;

(2)

provide assistance with respect to complaints, grievances, and requests referred to in paragraph (1), including—

(A)

helping individuals determine the relevant information needed to seek an appeal of a decision or determination;

(B)

assistance to such individuals with any problems arising from disenrollment from such a plan;

(C)

assistance to such individuals in choosing a qualified health benefits plan in which to enroll; and

(D)

assistance to such individuals in presenting information under subtitle C (relating to affordability credits); and

(3)

submit annual reports to Congress and the Commissioner that describe the activities of the Ombudsman and that include such recommendations for improvement in the administration of this division as the Ombudsman determines appropriate. The Ombudsman shall not serve as an advocate for any increases in payments or new coverage of services, but may identify issues and problems in payment or coverage policies.

F

Relation to other requirements; Miscellaneous

151.

Relation to other requirements

(a)

Coverage not offered through Exchange

(1)

In general

In the case of health insurance coverage not offered through the Health Insurance Exchange (whether or not offered in connection with an employment-based health plan), and in the case of employment-based health plans, the requirements of this title do not supercede any requirements applicable under titles XXII and XXVII of the Public Health Service Act, parts 6 and 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, or State law, except insofar as such requirements prevent the application of a requirement of this division, as determined by the Commissioner.

(2)

Construction

Nothing in paragraph (1) shall be construed as affecting the application of section 514 of the Employee Retirement Income Security Act of 1974.

(b)

Coverage offered through Exchange

(1)

In general

In the case of health insurance coverage offered through the Health Insurance Exchange—

(A)

the requirements of this title do not supercede any requirements (including requirements relating to genetic information nondiscrimination and mental health) applicable under title XXVII of the Public Health Service Act or under State law, except insofar as such requirements prevent the application of a requirement of this division, as determined by the Commissioner; and

(B)

individual rights and remedies under State laws shall apply.

(2)

Construction

In the case of coverage described in paragraph (1), nothing in such paragraph shall be construed as preventing the application of rights and remedies under State laws with respect to any requirement referred to in paragraph (1)(A).

152.

Prohibiting discrimination in health care

(a)

In general

Except as otherwise explicitly permitted by this Act and by subsequent regulations consistent with this Act, all health care and related services (including insurance coverage and public health activities) covered by this Act shall be provided without regard to personal characteristics extraneous to the provision of high quality health care or related services.

(b)

Implementation

To implement the requirement set forth in subsection (a), the Secretary of Health and Human Services shall, not later than 18 months after the date of the enactment of this Act, promulgate such regulations as are necessary or appropriate to insure that all health care and related services (including insurance coverage and public health activities) covered by this Act are provided (whether directly or through contractual, licensing, or other arrangements) without regard to personal characteristics extraneous to the provision of high quality health care or related services.

153.

Whistleblower protection

(a)

Retaliation prohibited

No employer may discharge any employee or otherwise discriminate against any employee with respect to his compensation, terms, conditions, or other privileges of employment because the employee (or any person acting pursuant to a request of the employee)—

(1)

provided, caused to be provided, or is about to provide or cause to be provided to the employer, the Federal Government, or the attorney general of a State information relating to any violation of, or any act or omission the employee reasonably believes to be a violation of any provision of this Act or any order, rule, or regulation promulgated under this Act;

(2)

testified or is about to testify in a proceeding concerning such violation;

(3)

assisted or participated or is about to assist or participate in such a proceeding; or

(4)

objected to, or refused to participate in, any activity, policy, practice, or assigned task that the employee (or other such person) reasonably believed to be in violation of any provision of this Act or any order, rule, or regulation promulgated under this Act.

(b)

Enforcement action

An employee covered by this section who alleges discrimination by an employer in violation of subsection (a) may bring an action governed by the rules, procedures, legal burdens of proof, and remedies set forth in section 40(b) of the Consumer Product Safety Act (15 U.S.C. 2087(b)).

(c)

Employer defined

As used in this section, the term employer means any person (including one or more individuals, partnerships, associations, corporations, trusts, professional membership organization including a certification, disciplinary, or other professional body, unincorporated organizations, nongovernmental organizations, or trustees) engaged in profit or nonprofit business or industry whose activities are governed by this Act, and any agent, contractor, subcontractor, grantee, or consultant of such person.

(d)

Rule of construction

The rule of construction set forth in section 20109(h) of title 49, United States Code, shall also apply to this section.

154.

Construction regarding collective bargaining

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

155.

Severability

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

156.

Application of State and Federal laws regarding abortion

(a)

No preemption of State laws regarding abortion

Nothing in this Act shall be construed to preempt or otherwise have any effect on State laws regarding the prohibition of (or requirement of) coverage, funding, or procedural requirements on abortions, including parental notification or consent for the performance of an abortion on a minor.

(b)

No effect on Federal laws regarding abortion

(1)

In general

Nothing in this Act shall be construed to have any effect on Federal laws regarding—

(A)

conscience protection;

(B)

willingness or refusal to provide abortion; and

(C)

discrimination on the basis of the willingness or refusal to provide, pay for, cover, or refer for abortion or to provide or participate in training to provide abortion.

(c)

No effect on federal civil rights law

Nothing in this section shall alter the rights and obligations of employees and employers under title VII of the Civil Rights Act of 1964.

157.

Non-Discrimination on Abortion and Respect for Rights of Conscience

(a)

Non-discrimination

A Federal agency or program, and any State or local government that receives Federal financial assistance under this Act (or an amendment made by this Act), may not—

(1)

subject any individual or institutional health care entity to discrimination, or

(2)

require any health plan created or regulated under this Act (or an amendment made by this Act) to subject any individual or institutional health care entity to discrimination,

on the basis that the health care entity does not provide, pay for, provide coverage of, or refer for abortions.
(b)

Definition

In this section, the term health care entity includes an individual physician or other health care professional, a hospital, a provider-sponsored organization, a health maintenance organization, a health insurance plan, or any other kind of health care facility, organization, or plan.

(c)

Administration

The Office for Civil Rights of the Department of Health and Human Services is designated to receive complaints of discrimination based on this section, and coordinate the investigation of such complaints.

G

Early Investments

161.

Ensuring value and lower premiums

(a)

Group health insurance coverage

Title XXVII of the Public Health Service Act is amended by inserting after section 2713 the following new section:

2714.

Ensuring value and lower premiums

(a)

In general

Each health insurance issuer that offers health insurance coverage in the small or large group market shall provide that for any plan year in which the coverage has a medical loss ratio below a level specified by the Secretary, the issuer shall provide in a manner specified by the Secretary for rebates to enrollees of payment sufficient to meet such loss ratio. Such methodology shall be set at the highest level medical loss ratio possible that is designed to ensure adequate participation by issuers, competition in the health insurance market, and value for consumers so that their premiums are used for services.

(b)

Uniform definitions

The Secretary shall establish a uniform definition of medical loss ratio and methodology for determining how to calculate the medical loss ratio. Such methodology shall be designed to take into account the special circumstances of smaller plans, different types of plans, and newer plans.

.

(b)

Individual health insurance coverage

Such title is further amended by inserting after section 2753 the following new section:

2754.

Ensuring value and lower premiums

The provisions of section 2714 shall apply to health insurance coverage offered in the individual market in the same manner as such provisions apply to health insurance coverage offered in the small or large group market.

.

(c)

Immediate implementation

The amendments made by this section shall apply in the group and individual market for plan years beginning on or after January 1, 2011.

162.

Ending health insurance rescission abuse

(a)

Clarification regarding application of guaranteed renewability of individual health insurance coverage

Section 2742 of the Public Health Service Act (42 U.S.C. 300gg–42) is amended—

(1)

in its heading, by inserting and continuation in force, including prohibition of rescission, after guaranteed renewability; and

(2)

in subsection (a), by inserting , including without rescission, after continue in force.

(b)

Secretarial guidance regarding rescissions

Section 2742 of such Act (42 U.S.C. 300gg–42) is amended by adding at the end the following:

(f)

Rescission

A health insurance issuer may rescind health insurance coverage only upon clear and convincing evidence of fraud described in subsection (b)(2). The Secretary, no later than July 1, 2010, shall issue guidance implementing this requirement, including procedures for independent, external third party review.

.

(c)

Opportunity for independent, external third party review in certain cases

Subpart 1 of part B of title XXVII of such Act (42 U.S.C. 300gg–41 et seq.) is amended by adding at the end the following:

2746.

Opportunity for independent, external third party review in cases of rescission

(a)

Notice and review right

If a health insurance issuer determines to rescind health insurance coverage for an individual in the individual market, before such rescission may take effect the issuer shall provide the individual with notice of such proposed rescission and an opportunity for a review of such determination by an independent, external third party under procedures specified by the Secretary under section 2742(f).

(b)

Independent determination

If the individual requests such review by an independent, external third party of a rescission of health insurance coverage, the coverage shall remain in effect until such third party determines that the coverage may be rescinded under the guidance issued by the Secretary under section 2742(f).

.

(d)

Effective Date

The amendments made by this section shall apply on and after October 1, 2010, with respect to health insurance coverage issued before, on, or after such date.

163.

Ending health insurance denials and delays of necessary treatment for children with deformities

(a)

In general

Subpart 2 of part A of title XXVII of the Public Health Service Act is amended by adding at the end the following new section:

2708.

Standards relating to benefits for minor child’s congenital or developmental deformity or disorder

(a)

Requirements for treatment for children with deformities

(1)

In general

A group health plan, and a health insurance issuer offering group health insurance coverage, that provides coverage for surgical benefits shall provide coverage for outpatient and inpatient diagnosis and treatment of a minor child’s congenital or developmental deformity, disease, or injury. A minor child shall include any individual who 21 years of age or younger.

(2)

Requirements

Any coverage provided under paragraph (1) shall be subject to pre-authorization or pre-certification as required by the plan or issuer, and such coverage shall include any surgical treatment which, in the opinion of the treating physician, is medically necessary to approximate a normal appearance.

(3)

Treatment defined

(A)

In general

In this section, the term treatment includes reconstructive surgical procedures (procedures that are generally performed to improve function, but may also be performed to approximate a normal appearance) that are performed on abnormal structures of the body caused by congenital defects, developmental abnormalities, trauma, infection, tumors, or disease, including—

(i)

procedures that do not materially affect the function of the body part being treated; and

(ii)

procedures for secondary conditions and follow-up treatment.

(B)

Exception

Such term does not include cosmetic surgery performed to reshape normal structures of the body to improve appearance or self-esteem.

(b)

Notice

A group health plan under this part shall comply with the notice requirement under section 714(b) of the Employee Retirement Income Security Act of 1974 with respect to the requirements of this section as if such section applied to such plan.

.

(b)

Individual health insurance

Subpart 2 of part B of title XXVII of the Public Health Service Act, as amended by section 161(b), is further amended by adding at the end the following new section:

2755.

Standards relating to benefits for minor child’s congenital or developmental deformity or disorder

(a)

Requirements for reconstructive surgery

(1)

In general

A health insurance issuer offering health insurance coverage in the individual market that provides coverage for surgical benefits shall provide coverage for outpatient and inpatient diagnosis and treatment of a minor child’s congenital or developmental deformity, disease, or injury. A minor child shall include any individual through 21 years of age.

(2)

Requirements

Any coverage provided under paragraph (1) shall be subject to pre-authorization or pre-certification as required by the insurance issuer offering such coverage, and such coverage shall include any surgical treatment which, in the opinion of the treating physician, is medically necessary to approximate a normal appearance.

(3)

Treatment defined

(A)

In general

In this section, the term ‘treatment’ includes reconstructive surgical procedures (procedures that are generally performed to improve function, but may also be performed to approximate a normal appearance) that are performed on abnormal structures of the body caused by congenital defects, developmental abnormalities, trauma, infection, tumors, or disease, including—

(i)

procedures that do not materially affect the function of the body part being treated; and

(ii)

procedures for secondary conditions and follow-up treatment.

(B)

Exception

Such term does not include cosmetic surgery performed to reshape normal structures of the body to improve appearance or self-esteem.

(b)

Notice

A health insurance issuer under this part shall comply with the notice requirement under section 714(b) of the Employee Retirement Income Security Act of 1974 with respect to the requirements referred to in subsection (a) as if such section applied to such issuer and such issuer were a group health plan.

.

(c)

Conforming amendments

(1)

Section 2723(c) of such Act (42 U.S.C. 300gg–23(c)) is amended by striking section 2704 and inserting sections 2704 and 2708.

(2)

Section 2762(b)(2) of such Act (42 U.S.C. 300gg–62(b)(2)) is amended by striking section 2751 and inserting sections 2751 and 2754.

(d)

Effective dates

(1)

The amendments made by subsection (a) shall apply with respect to group health plans for plan years beginning on or after January 1, 2010.

(2)

The amendment made by subsection (b) shall apply with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market on or after such date.

(e)

Coordination rules

(1)

The amendments made by subsection (a) shall remain in effect until such time as benefit standards are adopted subject to section 124 of this title.

(2)

Section 104(1) of the Health Insurance Portability and Accountability Act of 1996 is amended by striking this subtitle (and the amendments made by this subtitle and section 401) and inserting the provisions of part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, the provisions of parts A and C of title XXVII of the Public Health Service Act, and chapter 100 of the Internal Revenue Code of 1986.

164.

Administrative simplification

(a)

Standardizing electronic administrative transactions

(1)

In general

Part C of title XI of the Social Security Act (42 U.S.C. 1320d et seq.) is amended by inserting after section 1173 the following new sections:

1173A.

Standardize electronic administrative transactions

(a)

Standards for financial and administrative transactions

(1)

In general

The Secretary shall adopt and regularly update standards consistent with the goals described in paragraph (2).

(2)

Goals for financial and administrative transactions

The goals for standards under paragraph (1) are that such standards shall—

(A)

be unique with no conflicting or redundant standards;

(B)

be authoritative, permitting no additions or constraints for electronic transactions, including companion guides;

(C)

be comprehensive, efficient and robust, requiring minimal augmentation by paper transactions or clarification by further communications;

(D)

enable the real-time (or near real-time) determination of an individual’s financial responsibility at the point of service and, to the extent possible, prior to service, including whether the individual is eligible for a specific service with a specific physician at a specific facility, which may include utilization of a machine-readable health plan beneficiary identification card;

(E)

enable, where feasible, near real-time adjudication of claims;

(F)

provide for timely acknowledgment, response, and status reporting applicable to any electronic transaction deemed appropriate by the Secretary;

(G)

describe all data elements (such as reason and remark codes) in unambiguous terms, not permit optional fields, require that data elements be either required or conditioned upon set values in other fields, and prohibit additional conditions; and

(H)

harmonize all common data elements across administrative and clinical transaction standards.

(3)

Time for adoption

Not later than 2 years after the date of implementation of the X12 Version 5010 transaction standards implemented under this part, the Secretary shall adopt standards under this section.

(4)

Requirements for specific standards

The standards under this section shall be developed, adopted, and enforced so as to—

(A)

clarify, refine, complete, and expand, as needed, the standards required under section 1173;

(B)

require paper versions of standardized transactions to comply with the same standards as to data content such that a fully compliant, equivalent electronic transaction can be populated from the data from a paper version;

(C)

enable electronic funds transfers, in order to allow automated reconciliation with the related health care payment and remittance advice;

(D)

require timely and transparent claim and denial management processes, including tracking, adjudication, and appeal processing;

(E)

require the use of a standard electronic transaction with which health care providers may quickly and efficiently enroll with a health plan to conduct the other electronic transactions provided for in this part; and

(F)

provide for other requirements relating to administrative simplification as identified by the Secretary, in consultation with stakeholders.

(5)

Building on existing standards

In developing the standards under this section, the Secretary shall build upon existing and planned standards.

(6)

Implementation and enforcement

Not later than 6 months after the date of the enactment of this section, the Secretary shall submit to the appropriate committees of Congress a plan for the implementation and enforcement, by not later than 5 years after such date of enactment, of the standards under this section. Such plan shall include—

(A)

a process and timeframe with milestones for developing the complete set of standards;

(B)

an expedited upgrade program for continually developing and approving additions and modifications to the standards as often as annually to improve their quality and extend their functionality to meet evolving requirements in health care;

(C)

programs to provide incentives for, and ease the burden of, implementation for certain health care providers, with special consideration given to such providers serving rural or underserved areas and ensure coordination with standards, implementation specifications, and certification criteria being adopted under the HITECH Act;

(D)

programs to provide incentives for, and ease the burden of, health care providers who volunteer to participate in the process of setting standards for electronic transactions;

(E)

an estimate of total funds needed to ensure timely completion of the implementation plan; and

(F)

an enforcement process that includes timely investigation of complaints, random audits to ensure compliance, civil monetary and programmatic penalties for non-compliance consistent with existing laws and regulations, and a fair and reasonable appeals process building off of enforcement provisions under this part.

(b)

Limitations on use of data

Nothing in this section shall be construed to permit the use of information collected under this section in a manner that would adversely affect any individual.

(c)

Protection of data

The Secretary shall ensure (through the promulgation of regulations or otherwise) that all data collected pursuant to subsection (a) are—

(1)

used and disclosed in a manner that meets the HIPAA privacy and security law (as defined in section 3009(a)(2) of the Public Health Service Act), including any privacy or security standard adopted under section 3004 of such Act; and

(2)

protected from all inappropriate internal use by any entity that collects, stores, or receives the data, including use of such data in determinations of eligibility (or continued eligibility) in health plans, and from other inappropriate uses, as defined by the Secretary.

1173B.

Operating rules

(a)

In general

The Secretary shall adopt operating rules for each transaction described in section 1173(a)(2) of the Social Security Act (42 U.S.C. 1320d-2(a))

(b)

Operating rules development

In adopting such rules, the Secretary shall take into account the development of operating rules that have been developed by a nonprofit entity that meets the following criteria:

(1)

The entity focuses its mission on administrative simplification.

(2)

The entity demonstrates a established multi-stakeholder process that creates consensus based operating rules using a voting policy with balanced representation by the critical stakeholders (including health plans and health care providers) so that no one group dominates the entity and shall include others such as standards development organizations, and relevant Federal agencies.

(3)

The entity has in place a public set of guiding principles that ensure the operating rules and process are open and transparent.

(4)

The entity shall coordinate its activities with the HIT Policy Committee and the HIT Standards Committee (established under title XXX of the Public Health Service Act) and complements the efforts of the Office of the National Healthcare Coordinator and its related health information exchange goals.

(5)

The entity incorporates national standards, including the transaction standards issued under Health Insurance Portability and Accountability Act of 1996.

(6)

The entity uses existing market research and proven best practices.

(7)

The entity has a set of measures that allow for the evaluation of their market impact and public reporting of aggregate stakeholder impact.

(8)

The entity supports nondiscrimination and conflict of interest policies that demonstrate a commitment to open, fair, and nondiscriminatory practices.

(9)

The entity allows for public reviews and updates of the operating rules.

(c)

Implementation

The Secretary shall adopt operating rules under this section, by regulation or otherwise, only after taking into account the rules developed by the entity under subsection (b) and having ensured consultation with providers. The first set of operating rules for the transactions for eligibility for health plan and health claims status under this section shall be adopted not later than October 1, 2011, in a manner such that such set of rules is effective beginning not later than January 1, 2013. The second set of operating rules for the remainder of the transactions described in section 1173(a)(2) of the Social Security Act (42 U.S.C. 1320d-2(a)) shall be adopted not later than October 1, 2012, in a manner such that such set of rules is effective beginning not later than January 1, 2014.

.

(2)

Definitions

Section 1171 of such Act (42 U.S.C. 1320d) is amended—

(A)

in paragraph (7), by striking with reference to and all that follows and inserting with reference to a transaction or data element of health information in section 1173 means implementation specifications, certification criteria, operating rules, messaging formats, codes, and code sets adopted or established by the Secretary for the electronic exchange and use of information.; and

(B)

by adding at the end the following new paragraph:

(9)

Operating rules

The term operating rules means business rules for using and processing transactions. Operating rules should address the following:

(A)

Requirements for data content using available and established national standards.

(B)

Infrastructure requirements that establish best practices for streamlining data flow to yield timely execution of transactions.

(C)

Policies defining the transaction related rights and responsibilities for entities that are transmitting or receiving data.

.

(3)

Conforming amendment

Section 1179 of such Act (42 U.S.C. 1320d–8) is amended, in the matter before paragraph (1)—

(A)

by inserting on behalf of an individual after 1978); and

(B)

by inserting on behalf of an individual after for a financial institution.

(b)

Standards for claims attachments and coordination of benefits

(1)

Standard for health claims attachments

Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall promulgate a final rule to establish a standard for health claims attachment transaction described in section 1173(a)(2)(B) of the Social Security Act (42 U.S.C. 1320d-2(a)(2)(B)) and coordination of benefits.

(2)

Revision in processing payment transactions by financial institutions

(A)

In general

Section 1179 of the Social Security Act (42 U.S.C. 1320d–8) is amended, in the matter before paragraph (1)—

(i)

by striking or is engaged and inserting and is engaged; and

(ii)

by inserting (other than as a business associate for a covered entity) after for a financial institution.

(B)

Effective date

The amendments made by paragraph (1) shall apply to transactions occurring on or after such date (not later than 6 months after the date of the enactment of this Act) as the Secretary of Health and Human Services shall specify.

(c)

Unique health plan identifier

Not later than 2 years after the date of the enactment of this Act, the Secretary of Health and Human Services shall promulgate a final rule to establish a unique health plan identifier described in section 1173(b) of the Social Security Act (42 U.S.C. 1320d-2(b)) based on the input of the National Committee of Vital and Health Statistics and consultation with health plans. The Secretary may do so on an interim final basis and effective not later than October 1, 2012.

165.

Expansion of electronic transactions in medicare

(a)

In general

Section 1862(a) of the Social Security Act (42 U.S.C. 1395y(a)) is amended—

(1)

in paragraph (23), by striking the or at the end;

(2)

in paragraph (24), by striking the period and inserting ; or; and

(3)

by inserting after paragraph (24) the following new paragraph:

(25)

subject to subsection (h), not later than January 1, 2015, for which the payment is other than by electronic funds transfer (EFT) or an electronic remittance in a form as specified in ASC X12 835 Health Care Payment and Remittance Advice or subsequent standard.

.

(b)

Effective date

The amendments made by subsection (a) shall take effect upon the date of the enactment of this Act.

166.

Reinsurance program for retirees

(a)

Establishment

(1)

In general

Not later than 90 days after the date of the enactment of this Act, the Secretary of Health and Human Services shall establish a temporary reinsurance program (in this section referred to as the reinsurance program) to provide reimbursement to assist participating employment-based plans with the cost of providing health benefits to retirees and to eligible spouses, surviving spouses and dependents of such retirees.

(2)

Definitions

For purposes of this section:

(A)

The term eligible employment-based plan means a group health benefits plan that—

(i)

is maintained by one or more employers, former employers or employee associations, or a voluntary employees’ beneficiary association, or a committee or board of individuals appointed to administer such plan, and

(ii)

provides health benefits to retirees.

(B)

The term health benefits means medical, surgical, hospital, prescription drug, and such other benefits as shall be determined by the Secretary, whether self-funded or delivered through the purchase of insurance or otherwise.

(C)

The term participating employment-based plan means an eligible employment-based plan that is participating in the reinsurance program.

(D)

The term retiree means, with respect to a participating employment-benefit plan, an individual who—

(i)

is 55 years of age or older;

(ii)

is not eligible for coverage under title XVIII of the Social Security Act; and

(iii)

is not an active employee of an employer maintaining the plan or of any employer that makes or has made substantial contributions to fund such plan.

(E)

The term Secretary means Secretary of Health and Human Services.

(b)

Participation

To be eligible to participate in the reinsurance program, an eligible employment-based plan shall submit to the Secretary an application for participation in the program, at such time, in such manner, and containing such information as the Secretary shall require.

(c)

Payment

(1)

Submission of claims

(A)

In general

Under the reinsurance program, a participating employment-based plan shall submit claims for reimbursement to the Secretary which shall contain documentation of the actual costs of the items and services for which each claim is being submitted.

(B)

Basis for claims

Each claim submitted under subparagraph (A) shall be based on the actual amount expended by the participating employment-based plan involved within the plan year for the appropriate employment based health benefits provided to a retiree or to the spouse, surviving spouse, or dependent of a retiree. In determining the amount of any claim for purposes of this subsection, the participating employment-based plan shall take into account any negotiated price concessions (such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations) obtained by such plan with respect to such health benefits. For purposes of calculating the amount of any claim, the costs paid by the retiree or by the spouse, surviving spouse, or dependent of the retiree in the form of deductibles, co-payments, and co-insurance shall be included along with the amounts paid by the participating employment-based plan.

(2)

Program payments and limit

If the Secretary determines that a participating employment-based plan has submitted a valid claim under paragraph (1), the Secretary shall reimburse such plan for 80 percent of that portion of the costs attributable to such claim that exceeds $15,000, but is less than $90,000. Such amounts shall be adjusted each year based on the percentage increase in the medical care component of the Consumer Price Index (rounded to the nearest multiple of $1,000) for the year involved.

(3)

Use of payments

Amounts paid to a participating employment-based plan under this subsection shall be used to lower the costs borne directly by the participants and beneficiaries for health benefits provided under such plan in the form of premiums, co-payments, deductibles, co-insurance, or other out-of-pocket costs. Such payments shall not be used to reduce the costs of an employer maintaining the participating employment-based plan. The Secretary shall develop a mechanism to monitor the appropriate use of such payments by such plans.

(4)

Appeals and program protections

The Secretary shall establish—

(A)

an appeals process to permit participating employment-based plans to appeal a determination of the Secretary with respect to claims submitted under this section; and

(B)

procedures to protect against fraud, waste, and abuse under the program.

(5)

Audits

The Secretary shall conduct annual audits of claims data submitted by participating employment-based plans under this section to ensure that they are in compliance with the requirements of this section.

(d)

Retiree Reserve Trust Fund

(1)

Establishment

(A)

In general

There is established in the Treasury of the United States a trust fund to be known as the Retiree Reserve Trust Fund (referred to in this section as the Trust Fund), that shall consist of such amounts as may be appropriated or credited to the Trust Fund as provided for in this subsection to enable the Secretary to carry out the reinsurance program. Such amounts shall remain available until expended.

(B)

Funding

There are hereby appropriated to the Trust Fund, out of any moneys in the Treasury not otherwise appropriated, an amount requested by the Secretary as necessary to carry out this section, except that the total of all such amounts requested shall not exceed $10,000,000,000.

(C)

Appropriations from the Trust Fund

(i)

In general

Amounts in the Trust Fund are appropriated to provide funding to carry out the reinsurance program and shall be used to carry out such program.

(ii)

Budgetary implications

Amounts appropriated under clause (i), and outlays flowing from such appropriations, shall not be taken into account for purposes of any budget enforcement procedures including allocations under section 302(a) and (b) of the Balanced Budget and Emergency Deficit Control Act and budget resolutions for fiscal years during which appropriations are made from the Trust Fund.

(iii)

Limitation to available funds

The Secretary has the authority to stop taking applications for participation in the program or take such other steps in reducing expenditures under the reinsurance program in order to ensure that expenditures under the reinsurance program do not exceed the funds available under this subsection.

167.

Limitations on preexisting condition exclusions in group health plans and health insurance coverage in the group and individual markets in advance of applicability of new prohibition of preexisting condition exclusions

(a)

Amendments relating to preexisting condition exclusions under group health plans

(1)

Reduction in look-back period

Section 2701(a)(1) of the Public Health Service Act (42 U.S.C. 300gg(a)(1)) is amended by striking 6-month period and inserting 30-day period.

(2)

Reduction in permitted preexisting condition limitation period

Section 2701(a)(2) of such Act (42 U.S.C. 300gg(a)(2)) is amended by striking 12 months and inserting 3 months, and by striking 18 months and inserting 9 months.

(3)

Effective date

(A)

In general

Except as provided in subparagraph (B), the amendments made by this subsection shall apply with respect to group health plans for plan years beginning after the end of the 6th calendar month following the date of the enactment of this Act.

(B)

Special rule for collective bargaining agreements

In the case of a group health plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified before the date of the enactment of this Act, the amendments made by this subsection shall not apply to plan years beginning before the earlier of—

(i)

the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act), or

(ii)

3 years after the date of the enactment of this Act.

For purposes of clause (i), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by the amendments made by this section shall not be treated as a termination of such collective bargaining agreement.
(b)

Amendments relating to preexisting condition exclusions in health insurance coverage in the individual market under grandfathered health insurance coverage

(1)

Applicability of group health insurance limitations on imposition of preexisting condition exclusions

(A)

In general

Section 2741 of the Public Health Service Act (42 U.S.C. 300gg–41) is amended—

(i)

by redesignating the second subsection (e) (relating to market requirements) and subsection (f) as subsections (f) and (g), respectively; and

(ii)

by adding at the end the following new subsection:

(h)

Application of group health insurance limitations on imposition of preexisting condition exclusions

(1)

In general

Subject to paragraph (2), a health insurance issuer that provides individual health insurance coverage may not impose a preexisting condition exclusion (as defined in subsection (b)(1)(A) of section 2701) with respect to such coverage except to the extent that such exclusion could be imposed consistent with such section if such coverage were group health insurance coverage.

(2)

Limitation

In the case of an individual who—

(A)

is enrolled in individual health insurance coverage;

(B)

during the period of such enrollment has a condition for which no medical advice, diagnosis, care, or treatment had been recommended or received as of the enrollment date; and

(C)

seeks to enroll under other individual health insurance coverage which provides benefits different from those provided under the coverage referred to in subparagraph (A) with respect to such condition,

the issuer of the individual health insurance coverage described in subparagraph (C) may impose a preexisting condition exclusion with respect to such condition and any benefits in addition to those provided under the coverage referred to in subparagraph (A), but such exclusion may not extend for a period of more than 3 months.

.

(B)

Elimination of COBRA requirement

Subsection (b) of such section is amended—

(i)

by adding and at the end of paragraph (2);

(ii)

by striking the semicolon at the end of paragraph (3) and inserting a period; and

(iii)

by striking paragraphs (4) and (5).

(C)

Conforming amendment

Section 2744(a)(1) of such Act (42 U.S.C. 300gg–44(a)(1)) is amended by inserting (other than subsection (h)) after section 2741 .

(2)

Effective date

The amendments made by this subsection shall apply with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market beginning after the end of the 6th calendar month following the date of the enactment of this Act.

(c)

Inapplicability of interim limitations upon applicability of total prohibition of exclusion

Section 2701 of such Act and the amendments made by subsection (b) of this section to sections 2741 and 2744 of such Act shall cease to be effective in the case of any health benefits plan as of the date on which such plan becomes subject to the requirements of section 111 of this Act (relating to prohibiting preexisting condition exclusions).

II

Health Insurance Exchange and Related Provisions

A

Health Insurance Exchange

201.

Establishment of Health Insurance Exchange; outline of duties; definitions

(a)

Establishment

There is established within the Health Choices Administration and under the direction of the Commissioner a Health Insurance Exchange in order to facilitate access of individuals and employers, through a transparent process, to a variety of choices of affordable, quality health insurance coverage, including a public health insurance option.

(b)

Outline of duties of Commissioner

In accordance with this subtitle and in coordination with appropriate Federal and State officials as provided under section 143(b), the Commissioner shall—

(1)

under section 204 establish standards for, accept bids from, and negotiate and enter into contracts with, QHBP offering entities for the offering of health benefits plans through the Health Insurance Exchange, with different levels of benefits required under section 203, and including with respect to oversight and enforcement;

(2)

under section 205 facilitate outreach and enrollment in such plans of Exchange-eligible individuals and employers described in section 202; and

(3)

conduct such activities related to the Health Insurance Exchange as required, including establishment of a risk pooling mechanism under section 206 and consumer protections under subtitle D of title I.

(c)

Exchange-participating health benefits plan defined

In this division, the term Exchange-participating health benefits plan means a qualified health benefits plan that is offered through the Health Insurance Exchange.

202.

Exchange-eligible individuals and employers

(a)

Access to coverage

Except as provided in subsection (i) and in accordance with this section, all individuals are eligible to obtain coverage through enrollment in an Exchange-participating health benefits plan offered through the Health Insurance Exchange unless such individuals are enrolled in another qualified health benefits plan or other acceptable coverage.

(b)

Definitions

In this division:

(1)

Exchange-eligible individual

The term Exchange-eligible individual means an individual who is eligible under this section to be enrolled through the Health Insurance Exchange in an Exchange-participating health benefits plan and, with respect to family coverage, includes dependents of such individual.

(2)

Exchange-eligible employer

The term Exchange-eligible employer means an employer that is eligible under this section to enroll through the Health Insurance Exchange employees of the employer (and their dependents) in Exchange-eligible health benefits plans.

(3)

Employment-related definitions

The terms employer, employee, full-time employee, and part-time employee have the meanings given such terms by the Commissioner for purposes of this division.

(c)

Transition

Individuals and employers shall only be eligible to enroll or participate in the Health Insurance Exchange in accordance with the following transition schedule:

(1)

First year

In Y1 (as defined in section 100(c))—

(A)

individuals described in subsection (d)(1), including individuals described in paragraphs (3) and (4) of subsection (d); and

(B)

smallest employers described in subsection (e)(1).

(2)

Second year

In Y2—

(A)

individuals and employers described in paragraph (1); and

(B)

smaller employers described in subsection (e)(2).

(3)

Third and subsequent years

In Y3 and subsequent years—

(A)

individuals and employers described in paragraph (2); and

(B)

larger employers as permitted by the Commissioner under subsection (e)(3).

(d)

Individuals

(1)

Individual described

Subject to the succeeding provisions of this subsection, an individual described in this paragraph is an individual who—

(A)

is not enrolled in coverage described in subparagraphs (C) through (F) of paragraph (2); and

(B)

is not enrolled in coverage as a full-time employee (or as a dependent of such an employee) under a group health plan if the coverage and an employer contribution under the plan meet the requirements of section 312.

For purposes of subparagraph (B), in the case of an individual who is self-employed, who has at least 1 employee, and who meets the requirements of section 312, such individual shall be deemed a full-time employee described in such subparagraph.
(2)

Acceptable coverage

For purposes of this division, the term acceptable coverage means any of the following:

(A)

Qualified health benefits plan coverage

Coverage under a qualified health benefits plan.

(B)

Grandfathered health insurance coverage; coverage under current group health plan

Coverage under a grandfathered health insurance coverage (as defined in subsection (a) of section 102) or under a current group health plan (described in subsection (b) of such section).

(C)

Medicare

Coverage under part A of title XVIII of the Social Security Act.

(D)

Medicaid

Coverage for medical assistance under title XIX of the Social Security Act, excluding such coverage that is only available because of the application of subsection (u), (z), or (aa) of section 1902 of such Act

(E)

Members of the Armed Forces and dependents (including TRICARE)

Coverage under chapter 55 of title 10, United States Code, including similar coverage furnished under section 1781 of title 38 of such Code.

(F)

VA

Coverage under the veteran’s health care program under chapter 17 of title 38, United States Code, but only if the coverage for the individual involved is determined by the Commissioner in coordination with the Secretary of Treasury to be not less than a level specified by the Commissioner and Secretary of Veteran’s Affairs, in coordination with the Secretary of Treasury, based on the individual’s priority for services as provided under section 1705(a) of such title.

(G)

Other coverage

Such other health benefits coverage, such as a State health benefits risk pool, as the Commissioner, in coordination with the Secretary of the Treasury, recognizes for purposes of this paragraph.

The Commissioner shall make determinations under this paragraph in coordination with the Secretary of the Treasury.
(3)

Treatment of certain non-traditional Medicaid eligible individuals

An individual who is a non-traditional Medicaid eligible individual (as defined in section 205(e)(4)(C)) in a State may be an Exchange-eligible individual if the individual was enrolled in a qualified health benefits plan, grandfathered health insurance coverage, or current group health plan during the 6 months before the individual became a non-traditional Medicaid eligible individual. During the period in which such an individual has chosen to enroll in an Exchange-participating health benefits plan, the individual is not also eligible for medical assistance under Medicaid.

(4)

Continuing eligibility permitted

(A)

In general

Except as provided in subparagraph (B), once an individual qualifies as an Exchange-eligible individual under this subsection (including as an employee or dependent of an employee of an Exchange-eligible employer) and enrolls under an Exchange-participating health benefits plan through the Health Insurance Exchange, the individual shall continue to be treated as an Exchange-eligible individual until the individual is no longer enrolled with an Exchange-participating health benefits plan.

(B)

Exceptions

(i)

In general

Subparagraph (A) shall not apply to an individual once the individual becomes eligible for coverage—

(I)

under part A of the Medicare program;

(II)

under the Medicaid program as a Medicaid eligible individual, except as permitted under paragraph (3) or clause (ii); or

(III)

in such other circumstances as the Commissioner may provide.

(ii)

Transition period

In the case described in clause (i)(II), the Commissioner shall permit the individual to continue treatment under subparagraph (A) until such limited time as the Commissioner determines it is administratively feasible, consistent with minimizing disruption in the individual’s access to health care.

(e)

Employers

(1)

Smallest employer

Subject to paragraph (4), smallest employers described in this paragraph are employers with 10 or fewer employees.

(2)

Smaller employers

Subject to paragraph (4), smaller employers described in this paragraph are employers that are not smallest employers described in paragraph (1) and have 20 or fewer employees.

(3)

Larger employers

(A)

In general

Beginning with Y3, the Commissioner may permit employers not described in paragraph (1) or (2) to be Exchange-eligible employers.

(B)

Phase-in

In applying subparagraph (A), the Commissioner may phase-in the application of such subparagraph based on the number of full-time employees of an employer and such other considerations as the Commissioner deems appropriate.

(4)

Continuing eligibility

Once an employer is permitted to be an Exchange-eligible employer under this subsection and enrolls employees through the Health Insurance Exchange, the employer shall continue to be treated as an Exchange-eligible employer for each subsequent plan year regardless of the number of employees involved unless and until the employer meets the requirement of section 311(a) through paragraph (1) of such section by offering a group health plan and not through offering an Exchange-participating health benefits plan.

(5)

Employer participation and contributions

(A)

Satisfaction of employer responsibility

For any year in which an employer is an Exchange-eligible employer, such employer may meet the requirements of section 312 with respect to employees of such employer by offering such employees the option of enrolling with Exchange-participating health benefits plans through the Health Insurance Exchange consistent with the provisions of subtitle B of title III.

(B)

Employee choice

Any employee offered Exchange-participating health benefits plans by the employer of such employee under subparagraph (A) may choose coverage under any such plan. That choice includes, with respect to family coverage, coverage of the dependents of such employee.

(6)

Affiliated groups

Any employer which is part of a group of employers who are treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986 shall be treated, for purposes of this subtitle, as a single employer.

(7)

Other counting rules

The Commissioner shall establish rules relating to how employees are counted for purposes of carrying out this subsection.

(f)

Special situation authority

The Commissioner shall have the authority to establish such rules as may be necessary to deal with special situations with regard to uninsured individuals and employers participating as Exchange-eligible individuals and employers, such as transition periods for individuals and employers who gain, or lose, Exchange-eligible participation status, and to establish grace periods for premium payment.

(g)

Surveys of individuals and employers

The Commissioner shall provide for periodic surveys of Exchange-eligible individuals and employers concerning satisfaction of such individuals and employers with the Health Insurance Exchange and Exchange-participating health benefits plans.

(h)

Exchange access study

(1)

In general

The Commissioner shall conduct a study of access to the Health Insurance Exchange for individuals and for employers, including individuals and employers who are not eligible and enrolled in Exchange-participating health benefits plans. The goal of the study is to determine if there are significant groups and types of individuals and employers who are not Exchange-eligible individuals or employers, but who would have improved benefits and affordability if made eligible for coverage in the Exchange.

(2)

Items included in study

Such study also shall examine—

(A)

the terms, conditions, and affordability of group health coverage offered by employers and QHBP offering entities outside of the Exchange compared to Exchange-participating health benefits plans; and

(B)

the affordability-test standard for access of certain employed individuals to coverage in the Health Insurance Exchange.

(3)

Report

Not later than January 1 of Y3, in Y6, and thereafter, the Commissioner shall submit to Congress on the study conducted under this subsection and shall include in such report recommendations regarding changes in standards for Exchange eligibility for individuals and employers.

(i)

Exception for veterans and members of Armed Forces

Notwithstanding any other provision of this Act, an individual with acceptable coverage described in subparagraph (E) or (F) of subsection (d)(2) is eligible to obtain coverage through enrollment in an Exchange-participating health benefits plan offered through the Health Insurance Exchange.

(j)

Department of Veterans Affairs and Department of Defense Health Programs

Nothing in this section shall be construed as affecting any authority under title 38, United States Code, or chapter 55 of title 10, United States Code.

(k)

Report on comparable coverage for CHIP children; special rule for CHIP children

(1)

Report

No later than December 31, 2011, the Secretary of Health and Human Services shall submit to Congress a report that compares the benefits packages offered in 2011 to an average State child health plan under title XXI of the Social Security Act and to the benefit standards adopted under section 124 for the essential benefits package and the affordability credits under subtitle C.

(2)

Certification of Secretary

Notwithstanding the previous provisions of this section, no child who would be eligible for coverage under title XXI of the Social Security Act shall be enrolled in an Exchange participating health benefits plan until the Secretary of Health and Human Services has certified, based on the findings in the report under paragraph (1) and changes made pursuant to the recommendations in the report, if any, that the coverage (as described in section 121(a)) is at least comparable to the coverage provided to children under an average State child health plan under such title as in effect in 2011.

203.

Benefits package levels

(a)

In general

The Commissioner shall specify the benefits to be made available under Exchange-participating health benefits plans during each plan year, consistent with subtitle C of title I and this section.

(b)

Limitation on health benefits plans offered by offering entities

The Commissioner may not enter into a contract with a QHBP offering entity under section 204(c) for the offering of an Exchange-participating health benefits plan in a service area unless the following requirements are met:

(1)

Required offering of basic plan

The entity offers only one basic plan for such service area.

(2)

Optional offering of enhanced plan

If and only if the entity offers a basic plan for such service area, the entity may offer one enhanced plan for such area.

(3)

Optional offering of premium plan

If and only if the entity offers an enhanced plan for such service area, the entity may offer one premium plan for such area.

(4)

Optional offering of premium-plus plans

If and only if the entity offers a premium plan for such service area, the entity may offer one or more premium-plus plans for such area.

All such plans may be offered under a single contract with the Commissioner.
(c)

Specification of benefit levels for plans

(1)

In general

The Commissioner shall establish the following standards consistent with this subsection and title I:

(A)

Basic, enhanced, and premium plans

Standards for 3 levels of Exchange-participating health benefits plans: basic, enhanced, and premium (in this division referred to as a basic plan, enhanced plan, and premium plan, respectively).

(B)

Premium-plus plan benefits

Standards for additional benefits that may be offered, consistent with this subsection and subtitle C of title I, under a premium plan (such a plan with additional benefits referred to in this division as a premium-plus plan) .

(2)

Basic plan

(A)

In general

A basic plan shall offer the essential benefits package required under title I for a qualified health benefits plan.

(B)

Tiered cost-sharing for affordable credit eligible individuals

In the case of an affordable credit eligible individual (as defined in section 242(a)(1)) enrolled in an Exchange-participating health benefits plan, the benefits under a basic plan are modified to provide for the reduced cost-sharing for the income tier applicable to the individual under section 244(c).

(3)

Enhanced plan

An enhanced plan shall offer, in addition to the level of benefits under the basic plan, a lower level of cost-sharing as provided under title I consistent with section 123(b)(5)(A).

(4)

Premium plan

A premium plan shall offer, in addition to the level of benefits under the basic plan, a lower level of cost-sharing as provided under title I consistent with section 123(b)(5)(B).

(5)

Premium-plus plan

A premium-plus plan is a premium plan that also provides additional benefits, such as adult oral health and vision care, approved by the Commissioner. The portion of the premium that is attributable to such additional benefits shall be separately specified.

(6)

Range of permissible variation in cost-sharing

The Commissioner shall establish a permissible range of variation of cost-sharing for each basic, enhanced, and premium plan, except with respect to any benefit for which there is no cost-sharing permitted under the essential benefits package. Such variation shall permit a variation of not more than plus (or minus) 10 percent in cost-sharing with respect to each benefit category specified under section 122.

(d)

Treatment of State benefit mandates

Insofar as a State requires a health insurance issuer offering health insurance coverage to include benefits beyond the essential benefits package, such requirement shall continue to apply to an Exchange-participating health benefits plan, if the State has entered into an arrangement satisfactory to the Commissioner to reimburse the Commissioner for the amount of any net increase in affordability premium credits under subtitle C as a result of an increase in premium in basic plans as a result of application of such requirement.

(e)

Rules regarding coverage of and affordability credits for specified services

(1)

Assured availability of varied coverage through the Health Insurance Exchange

The Commissioner shall assure that, of the Exchange participating health benefits plan offered in each premium rating area of the Health Insurance Exchange—

(A)

there is at least one such plan that provides coverage of services described in subparagraphs (A) and (B) of section 122(d)(4); and

(B)

there is at least one such plan that does not provide coverage of services described in section 122(d)(4)(A) which plan may also be one that does not provide coverage of services described in section 122(d)(4)(B).

(2)

Segregation of funds

If a qualified health benefits plan provides coverage of services described in section 122(d)(4)(A), the plan shall provide assurances satisfactory to the Commissioner that—

(A)

any affordability credits provided under subtitle C of title II are not used for purposes of paying for such services; and

(B)

only premium amounts attributable to the actuarial value described in section 113(b) are used for such purpose.

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 standards

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; contracts

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

(C)

enter into contracts with such entities for the offering of such plans through the Health Insurance Exchange under terms (consistent with this title) negotiated between the Commissioner and such entities.

(3)

FAR not applicable

The provisions of the Federal Acquisition Regulation shall not apply to contracts between the Commissioner and QHBP offering entities for the offering of Exchange-participating health benefits plans under this title.

(b)

Standards for QHBP offering entities to offer Exchange-participating health benefits plans

The standards established under subsection (a)(1)(A) shall require that, in order for a QHBP offering entity to offer an Exchange-participating health benefits plan, the entity must meet the following requirements:

(1)

Licensed

The entity shall be licensed to offer health insurance coverage under State law for each State in which it is offering such coverage.

(2)

Data reporting

The entity shall provide for the reporting of such information as the Commissioner may specify, including information necessary to administer the risk pooling mechanism described in section 206(b) and information to address disparities in health and health care.

(3)

Implementing affordability credits

The entity shall provide for implementation of the affordability credits provided for enrollees under subtitle C, including the reduction in cost-sharing under section 244(c).

(4)

Enrollment

The entity shall accept all enrollments under this subtitle, subject to such exceptions (such as capacity limitations) in accordance with the requirements under title I for a qualified health benefits plan. The entity shall notify the Commissioner if the entity projects or anticipates reaching such a capacity limitation that would result in a limitation in enrollment.

(5)

Risk pooling participation

The entity shall participate in such risk pooling mechanism as the Commissioner establishes under section 206(b).

(6)

Essential community providers

With respect to the basic plan offered by the entity, the entity shall contract for outpatient services with covered entities (as defined in section 340B(a)(4) of the Public Health Service Act, as in effect as of July 1, 2009). The Commissioner shall specify the extent to which and manner in which the previous sentence shall apply in the case of a basic plan with respect to which the Commissioner determines provides substantially all benefits through a health maintenance organization, as defined in section 2791(b)(3) of the Public Health Service Act.

(7)

Culturally and linguistically appropriate services and communications

The entity shall provide for culturally and linguistically appropriate communication and health services.

(8)

Additional requirements

The entity shall comply with other applicable requirements of this title, as specified by the Commissioner, which shall include standards regarding billing and collection practices for premiums and related grace periods and which may include standards to ensure that the entity does not use coercive practices to force providers not to contract with other entities offering coverage through the Health Insurance Exchange.

(c)

Contracts

(1)

Bid application

To be eligible to enter into a contract under this section, a QHBP offering entity shall submit to the Commissioner a bid at such time, in such manner, and containing such information as the Commissioner may require.

(2)

Term

Each contract with a QHBP offering entity under this section shall be for a term of not less than one year, but may be made automatically renewable from term to term in the absence of notice of termination by either party.

(3)

Enforcement of network adequacy

In the case of a health benefits plan of a QHBP offering entity that uses a provider network, the contract under this section with the entity shall provide that if—

(A)

the Commissioner determines that such provider network does not meet such standards as the Commissioner shall establish under section 115; and

(B)

an individual enrolled in such plan receives an item or service from a provider that is not within such network;

then any cost-sharing for such item or service shall be equal to the amount of such cost-sharing that would be imposed if such item or service was furnished by a provider within such network.
(4)

Oversight and enforcement responsibilities

The Commissioner shall establish processes, in coordination with State insurance regulators, to oversee, monitor, and enforce applicable requirements of this title with respect to QHBP offering entities offering Exchange-participating health benefits plans and such plans, including the marketing of such plans. Such processes shall include the following:

(A)

Grievance and complaint mechanisms

The Commissioner shall establish, in coordination with State insurance regulators, a process under which Exchange-eligible individuals and employers may file complaints concerning violations of such standards.

(B)

Enforcement

In carrying out authorities under this division relating to the Health Insurance Exchange, the Commissioner may impose one or more of the intermediate sanctions described in section 142(c).

(C)

Termination

(i)

In general

The Commissioner may terminate a contract with a QHBP offering entity under this section for the offering of an Exchange-participating health benefits plan if such entity fails to comply with the applicable requirements of this title. Any determination by the Commissioner to terminate a contract shall be made in accordance with formal investigation and compliance procedures established by the Commissioner under which—

(I)

the Commissioner provides the entity with the reasonable opportunity to develop and implement a corrective action plan to correct the deficiencies that were the basis of the Commissioner’s determination; and

(II)

the Commissioner provides the entity with reasonable notice and opportunity for hearing (including the right to appeal an initial decision) before terminating the contract.

(ii)

Exception for imminent and serious risk to health

Clause (i) shall not apply if the Commissioner determines that a delay in termination, resulting from compliance with the procedures specified in such clause prior to termination, would pose an imminent and serious risk to the health of individuals enrolled under the qualified health benefits plan of the QHBP offering entity.

(D)

Construction

Nothing in this subsection shall be construed as preventing the application of other sanctions under subtitle E of title I with respect to an entity for a violation of such a requirement.

(d)

No Discrimination on the Basis of Provision of Abortion

No Exchange participating health benefits plan may discriminate against any individual health care provider or health care facility because of its willingness or unwillingness to provide, pay for, provide coverage of, or refer for abortions.

205.

Outreach and enrollment of Exchange-eligible individuals and employers in Exchange-participating health benefits plans

(a)

In general

(1)

Outreach

The Commissioner shall conduct outreach activities consistent with subsection (c), including through use of appropriate entities as described in paragraph (3) of such subsection, to inform and educate individuals and employers about the Health Insurance Exchange and Exchange-participating health benefits plan options. Such outreach shall include outreach specific to vulnerable populations, such as children, individuals with disabilities, individuals with mental illness, and individuals with other cognitive impairments.

(2)

Eligibility

The Commissioner shall make timely determinations of whether individuals and employers are Exchange-eligible individuals and employers (as defined in section 202).

(3)

Enrollment

The Commissioner shall establish and carry out an enrollment process for Exchange-eligible individuals and employers, including at community locations, in accordance with subsection (b).

(b)

Enrollment process

(1)

In general

The Commissioner shall establish a process consistent with this title for enrollments in Exchange-participating health benefits plans. Such process shall provide for enrollment through means such as the mail, by telephone, electronically, and in person.

(2)

Enrollment periods

(A)

Open enrollment period

The Commissioner shall establish an annual open enrollment period during which an Exchange-eligible individual or employer may elect to enroll in an Exchange-participating health benefits plan for the following plan year and an enrollment period for affordability credits under subtitle C. Such periods shall be during September through November of each year, or such other time that would maximize timeliness of income verification for purposes of such subtitle. The open enrollment period shall not be less than 30 days.

(B)

Special enrollment

The Commissioner shall also provide for special enrollment periods to take into account special circumstances of individuals and employers, such as an individual who—

(i)

loses acceptable coverage;

(ii)

experiences a change in marital or other dependent status;

(iii)

moves outside the service area of the Exchange-participating health benefits plan in which the individual is enrolled; or

(iv)

experiences a significant change in income.

(C)

Enrollment Information

The Commissioner shall provide for the broad dissemination of information to prospective enrollees on the enrollment process, including before each open enrollment period. In carrying out the previous sentence, the Commissioner may work with other appropriate entities to facilitate such provision of information.

(3)

Automatic enrollment for non-Medicaid eligible individuals

(A)

In general

The Commissioner shall provide for a process under which individuals who are Exchange-eligible individuals described in subparagraph (B) are automatically enrolled under an appropriate Exchange-participating health benefits plan. Such process may involve a random assignment or some other form of assignment that takes into account the health care providers used by the individual involved or such other relevant factors as the Commissioner may specify.

(B)

Subsidized individuals described

An individual described in this subparagraph is an Exchange-eligible individual who is either of the following:

(i)

Affordability credit eligible individuals

The individual—

(I)

has applied for, and been determined eligible for, affordability credits under subtitle C;

(II)

has not opted out from receiving such affordability credit; and

(III)

does not otherwise enroll in another Exchange-participating health benefits plan.

(ii)

Individuals enrolled in a terminated plan

The individual is enrolled in an Exchange-participating health benefits plan that is terminated (during or at the end of a plan year) and who does not otherwise enroll in another Exchange-participating health benefits plan.

(4)

Direct payment of premiums to plans

Under the enrollment process, individuals enrolled in an Exchange-participating health benefits plan shall pay such plans directly, and not through the Commissioner or the Health Insurance Exchange.

(c)

Coverage information and assistance

(1)

Coverage information

The Commissioner shall provide for the broad dissemination of information on Exchange-participating health benefits plans offered under this title. Such information shall be provided in a comparative manner, and shall include information on benefits, premiums, cost-sharing, quality, provider networks, and consumer satisfaction.

(2)

Consumer assistance with choice

To provide assistance to Exchange-eligible individuals and employers, the Commissioner shall—

(A)

provide for the operation of a toll-free telephone hotline to respond to requests for assistance and maintain an Internet website through which individuals may obtain information on coverage under Exchange-participating health benefits plans and file complaints;

(B)

develop and disseminate information to Exchange-eligible enrollees on their rights and responsibilities;

(C)

assist Exchange-eligible individuals in selecting Exchange-participating health benefits plans and obtaining benefits through such plans; and

(D)

ensure that the Internet website described in subparagraph (A) and the information described in subparagraph (B) is developed using plain language (as defined in section 133(a)(2)).

(3)

Use of other entities

In carrying out this subsection, the Commissioner may work with other appropriate entities to facilitate the dissemination of information under this subsection and to provide assistance as described in paragraph (2).

(d)

Special duties related to Medicaid and CHIP

(1)

Coverage for certain newborns

(A)

In general

In the case of a child born in the United States who at the time of birth is not otherwise covered under acceptable coverage, for the period of time beginning on the date of birth and ending on the date the child otherwise is covered under acceptable coverage (or, if earlier, the end of the month in which the 60-day period, beginning on the date of birth, ends), the child shall be deemed—

(i)

to be a non-traditional Medicaid eligible individual (as defined in subsection (e)(5)) for purposes of this division and Medicaid; and

(ii)

to have elected to enroll in Medicaid through the application of paragraph (3).

(B)

Extended treatment as traditional Medicaid eligible individual

In the case of a child described in subparagraph (A) who at the end of the period referred to in such subparagraph is not otherwise covered under acceptable coverage, the child shall be deemed (until such time as the child obtains such coverage or the State otherwise makes a determination of the child’s eligibility for medical assistance under its Medicaid plan pursuant to section 1943(c)(1) of the Social Security Act) to be a traditional Medicaid eligible individual described in section 1902(l)(1)(B) of such Act.

(2)

CHIP transition

A child who, as of the day before the first day of Y1, is eligible for child health assistance under title XXI of the Social Security Act (including a child receiving coverage under an arrangement described in section 2101(a)(2) of such Act) is deemed as of such first day to be an Exchange-eligible individual unless the individual is a traditional Medicaid eligible individual as of such day.

(3)

Automatic enrollment of Medicaid eligible individuals into Medicaid

The Commissioner shall provide for a process under which an individual who is described in section 202(d)(3) and has not elected to enroll in an Exchange-participating health benefits plan is automatically enrolled under Medicaid.

(4)

Notifications

The Commissioner shall notify each State in Y1 and for purposes of section 1902(gg)(1) of the Social Security Act (as added by section 1703(a)) whether the Health Insurance Exchange can support enrollment of children described in paragraph (2) in such State in such year.

(e)

Medicaid coverage for Medicaid eligible individuals

(1)

In general

(A)

Choice for limited Exchange-eligible individuals

As part of the enrollment process under subsection (b), the Commissioner shall provide the option, in the case of an Exchange-eligible individual described in section 202(d)(3), for the individual to elect to enroll under Medicaid instead of under an Exchange-participating health benefits plan. Such an individual may change such election during an enrollment period under subsection (b)(2).

(B)

Medicaid enrollment obligation

An Exchange eligible individual may apply, in the manner described in section 241(b)(1), for a determination of whether the individual is a Medicaid-eligible individual. If the individual is determined to be so eligible, the Commissioner, through the Medicaid memorandum of understanding, shall provide for the enrollment of the individual under the State Medicaid plan in accordance with the Medicaid memorandum of understanding under paragraph (4). In the case of such an enrollment, the State shall provide for the same periodic redetermination of eligibility under Medicaid as would otherwise apply if the individual had directly applied for medical assistance to the State Medicaid agency.

(2)

Non-traditional Medicaid eligible individuals

In the case of a non-traditional Medicaid eligible individual described in section 202(d)(3) who elects to enroll under Medicaid under paragraph (1)(A), the Commissioner shall provide for the enrollment of the individual under the State Medicaid plan in accordance with the Medicaid memorandum of understanding under paragraph (3).

(3)

Coordinated enrollment with State through memorandum of understanding

The Commissioner, in consultation with the Secretary of Health and Human Services, shall enter into a memorandum of understanding with each State (each in this division referred to as a Medicaid memorandum of understanding) with respect to coordinating enrollment of individuals in Exchange-participating health benefits plans and under the State’s Medicaid program consistent with this section and to otherwise coordinate the implementation of the provisions of this division with respect to the Medicaid program. Such memorandum shall permit the exchange of information consistent with the limitations described in section 1902(a)(7) of the Social Security Act. Nothing in this section shall be construed as permitting such memorandum to modify or vitiate any requirement of a State Medicaid plan.

(4)

Medicaid eligible individuals

For purposes of this division:

(A)

Medicaid eligible individual

The term Medicaid eligible individual means an individual who is eligible for medical assistance under Medicaid.

(B)

Traditional Medicaid eligible individual

The term traditional Medicaid eligible individual means a Medicaid eligible individual other than an individual who is—

(i)

a Medicaid eligible individual by reason of the application of subclause (VIII) of section 1902(a)(10)(A)(i) of the Social Security Act; or

(ii)

a childless adult not described in section 1902(a)(10)(A) or (C) of such Act (as in effect as of the day before the date of the enactment of this Act).

(C)

Non-traditional Medicaid eligible individual

The term non-traditional Medicaid eligible individual means a Medicaid eligible individual who is not a traditional Medicaid eligible individual.

(f)

Effective culturally and linguistically appropriate communication

In carrying out this section, the Commissioner shall establish effective methods for communicating in plain language and a culturally and linguistically appropriate manner.

(g)

Role for enrollment agents and brokers

Nothing in this division shall be construed to affect the role of enrollment agents and brokers under State law, including with regard to the enrollment of individuals and employers in qualified health benefits plans including the public health insurance option.

206.

Other functions

(a)

Coordination of affordability credits

The Commissioner shall coordinate the distribution of affordability premium and cost-sharing credits under subtitle C to QHBP offering entities offering Exchange-participating health benefits plans.

(b)

Coordination of risk pooling

The Commissioner shall establish a mechanism whereby there is an adjustment made of the premium amounts payable among QHBP offering entities offering Exchange-participating health benefits plans of premiums collected for such plans that takes into account (in a manner specified by the Commissioner) the differences in the risk characteristics of individuals and employers enrolled under the different Exchange-participating health benefits plans offered by such entities so as to minimize the impact of adverse selection of enrollees among the plans offered by such entities.

(c)

Special Inspector General for the Health Insurance Exchange

(1)

Establishment; appointment

There is hereby established the Office of the Special Inspector General for the Health Insurance Exchange, to be headed by a Special Inspector General for the Health Insurance Exchange (in this subsection referred to as the Special Inspector General) to be appointed by the President, by and with the advice and consent of the Senate. The nomination of an individual as Special Inspector General shall be made as soon as practicable after the establishment of the program under this subtitle.

(2)

Duties

The Special Inspector General shall—

(A)

conduct, supervise, and coordinate audits, evaluations and investigations of the Health Insurance Exchange to protect the integrity of the Health Insurance Exchange, as well as the health and welfare of participants in the Exchange;

(B)

report both to the Commissioner and to the Congress regarding program and management problems and recommendations to correct them;

(C)

have other duties (described in paragraphs (2) and (3) of section 121 of division A of Public Law 110–343) in relation to the duties described in the previous subparagraphs; and

(D)

have the authorities provided in section 6 of the Inspector General Act of 1978 in carrying out duties under this paragraph.

(3)

Application of other special inspector general provisions

The provisions of subsections (b) (other than paragraphs (1) and (3)), (d) (other than paragraph (1)), and (e) of section 121 of division A of the Emergency Economic Stabilization Act of 2009 (Public Law 110–343) shall apply to the Special Inspector General under this subsection in the same manner as such provisions apply to the Special Inspector General under such section.

(4)

Reports

Not later than one year after the confirmation of the Special Inspector General, and annually thereafter, the Special Inspector General shall submit to the appropriate committees of Congress a report summarizing the activities of the Special Inspector General during the one year period ending on the date such report is submitted.

(5)

Termination

The Office of the Special Inspector General shall terminate five years after the date of the enactment of this Act.

207.

Health Insurance Exchange Trust Fund

(a)

Establishment of Health Insurance Exchange Trust Fund

There is created within the Treasury of the United States a trust fund to be known as the Health Insurance Exchange Trust Fund (in this section referred to as the Trust Fund), consisting of such amounts as may be appropriated or credited to the Trust Fund under this section or any other provision of law.

(b)

Payments from Trust Fund

The Commissioner shall pay from time to time from the Trust Fund such amounts as the Commissioner determines are necessary to make payments to operate the Health Insurance Exchange, including payments under subtitle C (relating to affordability credits).

(c)

Transfers to Trust Fund

(1)

Dedicated payments

There is hereby appropriated to the Trust Fund amounts equivalent to the following:

(A)

Taxes on individuals not obtaining acceptable coverage

The amounts received in the Treasury under section 59B of the Internal Revenue Code of 1986 (relating to requirement of health insurance coverage for individuals).

(B)

Employment taxes on employers not providing acceptable coverage

The amounts received in the Treasury under section 3111(c) of the Internal Revenue Code of 1986 (relating to employers electing to not provide health benefits).

(C)

Excise tax on failures to meet certain health coverage requirements

The amounts received in the Treasury under section 4980H(b) (relating to excise tax with respect to failure to meet health coverage participation requirements).

(2)

Appropriations to cover government contributions

There are hereby appropriated, out of any moneys in the Treasury not otherwise appropriated, to the Trust Fund, an amount equivalent to the amount of payments made from the Trust Fund under subsection (b) plus such amounts as are necessary reduced by the amounts deposited under paragraph (1).

(d)

Application of certain rules

Rules similar to the rules of subchapter B of chapter 98 of the Internal Revenue Code of 1986 shall apply with respect to the Trust Fund.

208.

Optional operation of State-based health insurance exchanges

(a)

In general

If—

(1)

a State (or group of States, subject to the approval of the Commissioner) applies to the Commissioner for approval of a State-based Health Insurance Exchange to operate in the State (or group of States); and

(2)

the Commissioner approves such State-based Health Insurance Exchange,

then, subject to subsections (c) and (d), the State-based Health Insurance Exchange shall operate, instead of the Health Insurance Exchange, with respect to such State (or group of States). The Commissioner shall approve a State-based Health Insurance Exchange if it meets the requirements for approval under subsection (b).
(b)

Requirements for approval

(1)

In general

The Commissioner may not approve a State-based Health Insurance Exchange under this section unless the following requirements are met:

(A)

The State-based Health Insurance Exchange must demonstrate the capacity to and provide assurances satisfactory to the Commissioner that the State-based Health Insurance Exchange will carry out the functions specified for the Health Insurance Exchange in the State (or States) involved, including—

(i)

negotiating and contracting with QHBP offering entities for the offering of Exchange-participating health benefits plan, which satisfy the standards and requirements of this title and title I;

(ii)

enrolling Exchange-eligible individuals and employers in such State in such plans;

(iii)

the establishment of sufficient local offices to meet the needs of Exchange-eligible individuals and employers;

(iv)

administering affordability credits under subtitle B using the same methodologies (and at least the same income verification methods) as would otherwise apply under such subtitle and at a cost to the Federal Government which does exceed the cost to the Federal Government if this section did not apply; and

(v)

enforcement activities consistent with federal requirements.

(B)

There is no more than one Health Insurance Exchange operating with respect to any one State.

(C)

The State provides assurances satisfactory to the Commissioner that approval of such an Exchange will not result in any net increase in expenditures to the Federal Government.

(D)

The State provides for reporting of such information as the Commissioner determines and assurances satisfactory to the Commissioner that it will vigorously enforce violations of applicable requirements.

(E)

The State is eligible to receive an incentive payment for enacting and implementing medical liability reforms as specified in subsection (g).

(F)

Such other requirements as the Commissioner may specify.

(2)

Presumption for certain State-operated Exchanges

(A)

In general

In the case of a State operating an Exchange prior to January 1, 2010 that seeks to operate the State-based Health Insurance Exchange under this section, the Commissioner shall presume that such Exchange meets the standards under this section unless the Commissioner determines, after completion of the process established under subparagraph (B), that the Exchange does not comply with such standards.

(B)

Process

The Commissioner shall establish a process to work with a State described in subparagraph (A) to provide assistance necessary to assure that the State’s Exchange comes into compliance with the standards for approval under this section.

(c)

Ceasing operation

(1)

In general

A State-based Health Insurance Exchange may, at the option of each State involved, and only after providing timely and reasonable notice to the Commissioner, cease operation as such an Exchange, in which case the Health Insurance Exchange shall operate, instead of such State-based Health Insurance Exchange, with respect to such State (or States).

(2)

Termination; Health Insurance Exchange resumption of functions

The Commissioner may terminate the approval (for some or all functions) of a State-based Health Insurance Exchange under this section if the Commissioner determines that such Exchange no longer meets the requirements of subsection (b) or is no longer capable of carrying out such functions in accordance with the requirements of this subtitle. In lieu of terminating such approval, the Commissioner may temporarily assume some or all functions of the State-based Health Insurance Exchange until such time as the Commissioner determines the State-based Health Insurance Exchange meets such requirements of subsection (b) and is capable of carrying out such functions in accordance with the requirements of this subtitle.

(3)

Effectiveness

The ceasing or termination of a State-based Health Insurance Exchange under this subsection shall be effective in such time and manner as the Commissioner shall specify.

(d)

Retention of authority

(1)

Authority retained

Enforcement authorities of the Commissioner shall be retained by the Commissioner.

(2)

Discretion to retain additional authority

The Commissioner may specify functions of the Health Insurance Exchange that—

(A)

may not be performed by a State-based Health Insurance Exchange under this section; or

(B)

may be performed by the Commissioner and by such a State-based Health Insurance Exchange.

(e)

References

In the case of a State-based Health Insurance Exchange, except as the Commissioner may otherwise specify under subsection (d), any references in this subtitle to the Health Insurance Exchange or to the Commissioner in the area in which the State-based Health Insurance Exchange operates shall be deemed a reference to the State-based Health Insurance Exchange and the head of such Exchange, respectively.

(f)

Funding

In the case of a State-based Health Insurance Exchange, there shall be assistance provided for the operation of such Exchange in the form of a matching grant with a State share of expenditures required.

(g)

Medical Liability Alternatives

(1)

Purposes

The purposes of this subsection are—

(A)

to ensure quality healthcare is readily available by providing an alternative framework to reduce the costs of defensive medicine and allow victims of malpractice to be fairly compensated; and

(B)

to do the above without limiting attorneys fees or imposing caps on damages.

(2)

Incentive payments for medical liability reform

(A)

In general

Each State is eligible to receive an incentive payment, in an amount determined by the Secretary subject to the availability of appropriations, if the State enacts after the date of the enactment of this subsection, and is implementing, an alternative medical liability law that complies with this subsection.

(B)

Determination by Secretary

The Secretary shall determine that a State’s alternative medical liability law complies with this subsection if the Secretary is satisfied that the State—

(i)

has enacted and is currently implementing that law; and

(ii)

that law is effective.

(C)

Considerations for determination

In making a determination of the effectiveness of a law, the Secretary shall consider whether the law—

(i)

makes the medical liability system more reliable through prevention of or prompt and fair resolution of disputes;

(ii)

encourages the disclosure of health care errors; and

(iii)

maintains access to affordable liability insurance.

(D)

Optional contents of alternative medical liability law

An alternative medical liability law shall contain any one or a combination of the following litigation alternatives:

(i)

Certificate of Merit.

(ii)

Early offer.

(E)

Use of Incentive Payments

The State shall use an incentive payment received under this subsection to improve health care in that State.

(3)

Application

Each State seeking an incentive payment under this subsection shall submit to the Secretary an application, at such time, in such manner, and containing such information as the Secretary may require.

(4)

Technical assistance

The Secretary may provide technical assistance to the States applying for or awarded an incentive payment under this subsection.

(5)

Reports

Beginning not later than one year after the date of the enactment of this subsection, the Secretary shall submit to Congress an annual report on the progress States have made in adopting and implementing alternative medical liability laws that comply with this subsection. Such reports shall contain sufficient documentation regarding the effectiveness of such laws to enable an objective comparative analysis of them.

(6)

Rulemaking

The Secretary may make rules to carry out this subsection.

(7)

Definition

In this subsection—

(A)

the term Secretary means the Secretary of Health and Human Services; and

(B)

the term State includes the District of Columbia, Puerto Rico, and each other territory or possession of the United States.

(8)

Authorization of appropriations

There are authorized to be appropriated to carry out this subsection such sums as may be necessary, to remain available until expended.

209.

Limitation on premium increases under Exchange-participating health benefits plans

(a)

In general

The annual increase in the premiums charged under any Exchange-participating health benefits plan may not exceed 150 percent of the annual percentage increase in medical inflation for the 12-month period ending in June of the prior year, unless the plan receives approval for a higher rate increase in accordance with subsection (b) or (c).

(b)

Exception for additional required benefits

If the Health Choices Commissioner requires Exchange-participating health benefits plans to provide additional benefits, the annual increase permitted under subsection (a) with respect to the first year to which such benefits are required shall be increased to take into account the costs of such additional benefits.

(c)

Exception to where financial viability threatened

Subsection (a) shall not apply to any Exchange-participating health benefits plan for any year if such plan demonstrates to the Commissioner (or, if determined appropriate by the Commissioner, the insurance commissioner for the State in which the plan is offered) that complying with subsection (a) for such year would threaten its financial viability or its ability to provide timely benefits to plan participants.

(d)

Non-preemption

Nothing in this section shall be construed as preempting existing State prior approval laws.

B

Public health insurance option

221.

Establishment and administration of a public health insurance option as an Exchange-qualified health benefits plan

(a)

Establishment

For years beginning with Y1, the Secretary of Health and Human Services (in this subtitle referred to as the Secretary) shall provide for the offering of an Exchange-participating health benefits plan (in this division referred to as the public health insurance option) that ensures choice, competition, and stability of affordable, high quality coverage throughout the United States in accordance with this subtitle. In designing the option, the Secretary’s primary responsibility is to create a low-cost plan without compromising quality or access to care.

(b)

Offering as an Exchange-participating health benefits plan

(1)

Exclusive to the Exchange

The public health insurance option shall only be made available through the Health Insurance Exchange.

(2)

Ensuring a level playing field

Consistent with this subtitle, the public health insurance option shall comply with requirements that are applicable under this title to an Exchange-participating health benefits plan, including requirements related to benefits, benefit levels, provider networks, notices, consumer protections, and cost sharing.

(3)

Provision of benefit levels

The public health insurance option—

(A)

shall offer basic, enhanced, and premium plans; and

(B)

may offer premium-plus plans.

(c)

Administrative contracting

The Secretary may enter into contracts for the purpose of performing administrative functions (including functions described in subsection (a)(4) of section 1874A of the Social Security Act) with respect to the public health insurance option in the same manner as the Secretary may enter into contracts under subsection (a)(1) of such section. The Secretary has the same authority with respect to the public health insurance option as the Secretary has under subsections (a)(1) and (b) of section 1874A of the Social Security Act with respect to title XVIII of such Act. Contracts under this subsection shall not involve the transfer of insurance risk to such entity.

(d)

Ombudsman

The Secretary shall establish an office of the ombudsman for the public health insurance option which shall have duties with respect to the public health insurance option similar to the duties of the Medicare Beneficiary Ombudsman under section 1808(c)(2) of the Social Security Act.

(e)

Data collection

The Secretary shall collect such data as may be required to establish premiums and payment rates for the public health insurance option and for other purposes under this subtitle, including to improve quality and to reduce racial, ethnic, and other disparities in health and health care.

(f)

Treatment of public health insurance option

With respect to the public health insurance option, the Secretary shall be treated as a QHBP offering entity offering an Exchange-participating health benefits plan.

(g)

Access to Federal courts

The provisions of Medicare (and related provisions of title II of the Social Security Act) relating to access of Medicare beneficiaries to Federal courts for the enforcement of rights under Medicare, including with respect to amounts in controversy, shall apply to the public health insurance option and individuals enrolled under such option under this title in the same manner as such provisions apply to Medicare and Medicare beneficiaries.

222.

Premiums and financing

(a)

Establishment of premiums

(1)

In general

The Secretary shall establish geographically-adjusted premium rates for the public health insurance option in a manner—

(A)

that complies with the premium rules established by the Commissioner under section 113 for Exchange-participating health benefit plans; and

(B)

at a level sufficient to fully finance the costs of—

(i)

health benefits provided by the public health insurance option; and

(ii)

administrative costs related to operating the public health insurance option.

(2)

Contingency margin

In establishing premium rates under paragraph (1), the Secretary shall include an appropriate amount for a contingency margin (which shall be not less than 90 days of estimated claims). Before setting such appropriate amount for years starting with Y3, the Secretary shall solicit a recommendation on such amount from the American Academy of Actuaries.

(b)

Account

(1)

Establishment

There is established in the Treasury of the United States an Account for the receipts and disbursements attributable to the operation of the public health insurance option, including the start-up funding under paragraph (2). Section 1854(g) of the Social Security Act shall apply to receipts described in the previous sentence in the same manner as such section applies to payments or premiums described in such section.

(2)

Start-up funding

(A)

In general

In order to provide for the establishment of the public health insurance option there is hereby appropriated to the Secretary, out of any funds in the Treasury not otherwise appropriated, $2,000,000,000. In order to provide for initial claims reserves before the collection of premiums, there is hereby appropriated to the Secretary, out of any funds in the Treasury not otherwise appropriated, such sums as necessary to cover 90 days worth of claims reserves based on projected enrollment.

(B)

Amortization of start-up funding

The Secretary shall provide for the repayment of the startup funding provided under subparagraph (A) to the Treasury in an amortized manner over the 10-year period beginning with Y1.

(C)

Limitation on funding

Nothing in this section shall be construed as authorizing any additional appropriations to the Account, other than such amounts as are otherwise provided with respect to other Exchange-participating health benefits plans.

(3)

No bailouts

In no case shall the public health insurance option receive any Federal funds for purposes of insolvency in any manner similar to the manner in which entities receive Federal funding under the Troubled Assets Relief Program of the Secretary of the Treasury.

223.

Negotiated payment rates for items and services

(a)

Negotiation of payment rates

(1)

In general

The Secretary shall negotiate payment rates for the public health insurance option for services and health care providers consistent with this section and section 224.

(2)

Manner of negotiation

The Secretary shall negotiate such rates in a manner that results in payment rates that are not lower, in the aggregate, than rates under title XVIII of the Social Security Act, and not higher, in the aggregate, than the average rates paid by other QHBP offering entities for services and health care providers.

(3)

Innovative payment methods

Nothing in this subsection shall be construed as preventing the use of innovative payment methods such as those described in section 224 in connection with the negotiation of payment rates under this subsection.

(4)

Prescription drugs

Notwithstanding any other provision of law, the Secretary shall establish a particular formulary for prescription drugs under the public health insurance option.

(b)

Establishment of a provider network

(1)

In general

Health care providers (including physicians and hospitals) participating in Medicare are participating providers in the public health insurance option unless they opt out in a process established by the Secretary consistent with this subsection.

(2)

Requirements for opt-out process

Under the process established under paragraph (1)—

(A)

providers described in such subparagraph shall be provided at least a 1-year period prior to the first day of Y1 to opt out of participating in the public health insurance option;

(B)

no provider shall be subject to a penalty for not participating in the public health insurance option;

(C)

the Secretary shall include information on how providers participating in Medicare who chose to opt out of participating in the public health insurance option may opt back in; and

(D)

there shall be an annual enrollment period in which providers may decide whether to participate in the public health insurance option.

(3)

Rulemaking

Not later than 18 months before the first day of Y1, the Secretary shall promulgate rules (pursuant to notice and comment) for the process described in paragraph (1).

(c)

Limitations on review

There shall be no administrative or judicial review of a payment rate or methodology established under this section or under section 224.

224.

Modernized payment initiatives and delivery system reform

(a)

In general

For plan years beginning with Y1, the Secretary may utilize innovative payment mechanisms and policies to determine payments for items and services under the public health insurance option. The payment mechanisms and policies under this section may include patient-centered medical home and other care management payments, accountable care organizations, value-based purchasing, bundling of services, differential payment rates, performance or utilization based payments, partial capitation, and direct contracting with providers.

(b)

Requirements for innovative payments

The Secretary shall design and implement the payment mechanisms and policies under this section in a manner that—

(1)

seeks to—

(A)

improve health outcomes;

(B)

reduce health disparities (including racial, ethnic, and other disparities);

(C)

provide efficient and affordable care;

(D)

address geographic variation in the provision of health services; or

(E)

prevent or manage chronic illness; and

(2)

promotes care that is integrated, patient-centered, quality, and efficient.

(c)

Encouraging the use of high value services

To the extent allowed by the benefit standards applied to all Exchange-participating health benefits plans, the public health insurance option may modify cost sharing and payment rates to encourage the use of services that promote health and value.

(d)

Promotion of delivery system reform

The Secretary shall monitor and evaluate the progress of payment and delivery system reforms under this section and shall seek to implement such reforms subject to the following:

(1)

To the extent that the Secretary finds a payment and delivery system reform successful in improving quality and reducing costs, the Secretary shall implement such reform on as large a geographic scale as practical and economical.

(2)

The Secretary may delay the implementation of such a reform in geographic areas in which such implementation would place the public health insurance option at a competitive disadvantage.

(3)

The Secretary may prioritize implementation of such a reform in high cost geographic areas or otherwise in order to reduce total program costs or to promote high value care.

(e)

Non-uniformity permitted

Nothing in this subtitle shall prevent the Secretary from varying payments based on different payment structure models (such as accountable care organizations and medical homes) under the public health insurance option for different geographic areas.

225.

Provider participation

(a)

In general

The Secretary shall establish conditions of participation for health care providers under the public health insurance option.

(b)

Licensure or certification

The Secretary shall not allow a health care provider to participate in the public health insurance option unless such provider is appropriately licensed or certified under State law.

(c)

Payment terms for providers

The Secretary shall establish terms and conditions for the participation (on an annual or other basis specified by the Secretary) of physicians and other health care providers under the public health insurance option, for which payment may be made for services furnished during the year.

(d)

Exclusion of certain providers

The Secretary shall exclude from participation under the public health insurance option a health care provider that is excluded from participation in a Federal health care program (as defined in section 1128B(f) of the Social Security Act).

226.

Application of fraud and abuse provisions

Provisions of law (other than criminal law provisions) identified by the Secretary by regulation, in consultation with the Inspector General of the Department of Health and Human Services, that impose sanctions with respect to waste, fraud, and abuse under Medicare, such as the False Claims Act (31 U.S.C. 3729 et seq.), shall also apply to the public health insurance option.

227.

Application of HIPAA insurance requirements

The requirements of sections 2701 through 2792 of the Public Health Service Act shall apply to the public health insurance option in the same manner as they apply to health insurance coverage offered by a health insurance issuer in the individual market.

228.

Application of health information privacy, security, and electronic transaction requirements

Part C of title XI of the Social Security Act, relating to standards for protections against the wrongful disclosure of individually identifiable health information, health information security, and the electronic exchange of health care information, shall apply to the public health insurance option in the same manner as such part applies to other health plans (as defined in section 1171(5) of such Act).

229.

Enrollment in public health insurance option is voluntary

Nothing in this division shall be construed as requiring anyone to enroll in the public health insurance option. Enrollment in such option is voluntary.

C

Individual Affordability Credits

241.

Availability through Health Insurance Exchange

(a)

In general

Subject to the succeeding provisions of this subtitle, in the case of an affordable credit eligible individual enrolled in an Exchange-participating health benefits plan—

(1)

the individual shall be eligible for, in accordance with this subtitle, affordability credits consisting of—

(A)

an affordability premium credit under section 243 to be applied against the premium for the Exchange-participating health benefits plan in which the individual is enrolled; and

(B)

an affordability cost-sharing credit under section 244 to be applied as a reduction of the cost-sharing otherwise applicable to such plan; and

(2)

the Commissioner shall pay the QHBP offering entity that offers such plan from the Health Insurance Exchange Trust Fund the aggregate amount of affordability credits for all affordable credit eligible individuals enrolled in such plan.

(b)

Application

(1)

In general

An Exchange eligible individual may apply to the Commissioner through the Health Insurance Exchange or through another entity under an arrangement made with the Commissioner, in a form and manner specified by the Commissioner. The Commissioner through the Health Insurance Exchange or through another public entity under an arrangement made with the Commissioner shall make a determination as to eligibility of an individual for affordability credits under this subtitle. The Commissioner shall establish a process whereby, on the basis of information otherwise available, individuals may be deemed to be affordable credit eligible individuals. In carrying this subtitle, the Commissioner shall establish effective methods that ensure that individuals with limited English proficiency are able to apply for affordability credits.

(2)

Use of State Medicaid agencies

If the Commissioner determines that a State Medicaid agency has the capacity to make a determination of eligibility for affordability credits under this subtitle and under the same standards as used by the Commissioner, under the Medicaid memorandum of understanding (as defined in section 205(c)(4))—

(A)

the State Medicaid agency is authorized to conduct such determinations for any Exchange-eligible individual who requests such a determination; and

(B)

the Commissioner shall reimburse the State Medicaid agency for the costs of conducting such determinations.

(3)

Medicaid screen and enroll obligation

In the case of an application made under paragraph (1), there shall be a determination of whether the individual is a Medicaid-eligible individual. If the individual is determined to be so eligible, the Commissioner, through the Medicaid memorandum of understanding, shall provide for the enrollment of the individual under the State Medicaid plan in accordance with the Medicaid memorandum of understanding. In the case of such an enrollment, the State shall provide for the same periodic redetermination of eligibility under Medicaid as would otherwise apply if the individual had directly applied for medical assistance to the State Medicaid agency.

(c)

Use of affordability credits

(1)

In general

In Y1 and Y2 an affordable credit eligible individual may use an affordability credit only with respect to a basic plan.

(2)

Flexibility in plan enrollment authorized

Beginning with Y3, the Commissioner shall establish a process to allow an affordability credit to be used for enrollees in enhanced or premium plans. In the case of an affordable credit eligible individual who enrolls in an enhanced or premium plan, the individual shall be responsible for any difference between the premium for such plan and the affordable credit amount otherwise applicable if the individual had enrolled in a basic plan.

(3)

Prohibition of use of public funds for abortion coverage

An affordability credit may not be used for payment for services described in section 122(d)(4)(A).

(d)

Access to data

In carrying out this subtitle, the Commissioner shall request from the Secretary of the Treasury consistent with section 6103 of the Internal Revenue Code of 1986 such information as may be required to carry out this subtitle.

(e)

No cash rebates

In no case shall an affordable credit eligible individual receive any cash payment as a result of the application of this subtitle.

242.

Affordable credit eligible individual

(a)

Definition

(1)

In general

For purposes of this division, the term affordable credit eligible individual means, subject to subsection (b), an individual who is lawfully present in a State in the United States (other than as a nonimmigrant described in a subparagraph (excluding subparagraphs (K), (T), (U), and (V)) of section 101(a)(15) of the Immigration and Nationality Act)—

(A)

who is enrolled under an Exchange-participating health benefits plan and is not enrolled under such plan as an employee (or dependent of an employee) through an employer qualified health benefits plan that meets the requirements of section 312;

(B)

with family income below 400 percent of the Federal poverty level for a family of the size involved; and

(C)

who is not a Medicaid eligible individual, other than an individual described in section 202(d)(3) or an individual during a transition period under section 202(d)(4)(B)(ii).

(2)

Treatment of family

Except as the Commissioner may otherwise provide, members of the same family who are affordable credit eligible individuals shall be treated as a single affordable credit individual eligible for the applicable credit for such a family under this subtitle.

(3)

Equal treatment of certain employed individuals

(A)

In general

For purposes of applying this section with respect to an individual who is an employee of an employer that has an annual payroll (for the preceding calendar year) which does not exceed $750,000 and that makes the contribution which would be required under section 313(a) if the table specified in subparagraph (B) were substituted for the table specified in section 313(b)(1) (and if, in applying section 313(b)(2), $750,000 were substituted for $400,000), such individual shall be treated in the same manner as an employee of an employer that makes the contribution described in section 313(a) (without regard to this paragraph).

(B)

Table

The table specified in this subparagraph is the following:

If the annual payroll of such employer for the preceding calendar year:The applicable percentage is:
Does not exceed $500,0000 percent
Exceeds $500,000, but does not exceed $585,0002 percent
Exceeds $585,000, but does not exceed $670,0004 percent
Exceeds $670,000, but does not exceed $750,0006 percent
(b)

Limitations on employee and dependent disqualification

(1)

In general

Subject to paragraph (2), the term affordable credit eligible individual does not include a full-time employee of an employer if the employer offers the employee coverage (for the employee and dependents) as a full-time employee under a group health plan if the coverage and employer contribution under the plan meet the requirements of section 312.

(2)

Exceptions

(A)

For certain family circumstances

The Commissioner shall establish such exceptions and special rules in the case described in paragraph (1) as may be appropriate in the case of a divorced or separated individual or such a dependent of an employee who would otherwise be an affordable credit eligible individual.

(B)

For unaffordable employer coverage

Beginning in Y2, in the case of full-time employees for which the cost of the employee premium for coverage under a group health plan would exceed 12 percent of current family income (determined by the Commissioner on the basis of verifiable documentation and without regard to section 245), paragraph (1) shall not apply.

(c)

Income defined

(1)

In general

In this title, the term income means modified adjusted gross income (as defined in section 59B of the Internal Revenue Code of 1986).

(2)

Study of income disregards

The Commissioner shall conduct a study that examines the application of income disregards for purposes of this subtitle. Not later than the first day of Y2, the Commissioner shall submit to Congress a report on such study and shall include such recommendations as the Commissioner determines appropriate.

(d)

Clarification of treatment of affordability credits

Affordability credits under this subtitle shall not be treated, for purposes of title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, to be a benefit provided under section 403 of such title.

243.

Affordable premium credit

(a)

In general

The affordability premium credit under this section for an affordable credit eligible individual enrolled in an Exchange-participating health benefits plan is in an amount equal to the amount (if any) by which the premium for the plan (or, if less, the reference premium amount specified in subsection (c)), exceeds the affordable premium amount specified in subsection (b) for the individual.

(b)

Affordable premium amount

(1)

In general

The affordable premium amount specified in this subsection for an individual for monthly premium in a plan year shall be equal to 1/12 of the product of—

(A)

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

(B)

the individual’s family income for such plan year.

(2)

Premium percentage limits based on table

The Commissioner shall establish premium percentage limits so that for individuals whose family income is within an income tier specified in the table in subsection (d) such percentage limits shall increase, on a sliding scale in a linear manner, from the initial premium percentage to the final premium percentage specified in such table for such income tier.

(c)

Reference premium amount

The reference premium amount specified in this subsection for a plan year for an individual in a premium rating area is equal to the average premium for the 3 basic plans in the area for the plan year with the lowest premium levels. In computing such amount the Commissioner may exclude plans with extremely limited enrollments.

(d)

Table of premium percentage limits and actuarial value percentages based on income tier

(1)

In general

For purposes of this subtitle, subject to paragraphs (3) and (4), the table specified in this subsection is as follows:

In the case of family income (expressed as a percent of FPL) within the following income tier: The initial premium percentage is—The final premium percentage is—The actuarial value percentage is—
133% through 150%1.5%3.0%97%
150% through 200%3.0%5.5%93%
200% through 250%5.5%8%85%
250% through 300%8%10%78%
300% through 350%10%11%72%
350% through 400%11%12%70%
(2)

Special rules

For purposes of applying the table under paragraph (1)—

(A)

For lowest level of income

In the case of an individual with income that does not exceed 133 percent of FPL, the individual shall be considered to have income that is 133% of FPL.

(B)

Application of higher actuarial value percentage at tier transition points

If two actuarial value percentages may be determined with respect to an individual, the actuarial value percentage shall be the higher of such percentages.

(3)

Indexing

For years after Y1, the Commissioner shall adjust the initial and final premium percentages to maintain the ratio of governmental to enrollee shares of premiums over time, for each income tier identified in the table in paragraph (1).

(4)

Contingent adjustment for additional savings

(A)

In general

Before the beginning of each year beginning with Y2—

(i)

the Chief Actuary of the Centers of Medicare & Medicaid Services shall estimate the amount of savings in the previous year under this division resulting from the application of the provisions described in subparagraph (B) and shall report such estimate to the Commissioner; and

(ii)

the Commissioner, based upon such estimate, shall provide for an appropriate increase in the initial and final premium percentages in the table specified in paragraph (1) in a manner that is designed to result in an increase in aggregate affordability credits equivalent to the amount so estimated.

(B)

Provisions described

The provisions described in this subparagraph are as follows:

(i)

Formulary under public option

Section 223(a)(4).

(ii)

PBM transparency

Section 133(d).

(iii)

ACO in medicaid

Section 1730.

(iv)

Administrative simplification

(I)

Section 1173A of the Social Security Act, as added by section 163(a)(1).

(II)

Section 163(c).

(III)

Section 164.

(v)

Limitation on premium increases in Exchange-participating plans

Section 209.

(vi)

Negotiation of lower part D drug prices

Section 1186.

244.

Affordability cost-sharing credit

(a)

In general

The affordability cost-sharing credit under this section for an affordable credit eligible individual enrolled in an Exchange-participating health benefits plan is in the form of the cost-sharing reduction described in subsection (b) provided under this section for the income tier in which the individual is classified based on the individual’s family income.

(b)

Cost-sharing reductions

The Commissioner shall specify a reduction in cost-sharing amounts and the annual limitation on cost-sharing specified in section 122(c)(2)(B) under a basic plan for each income tier specified in the table under section 243(d), with respect to a year, in a manner so that, as estimated by the Commissioner, the actuarial value of the coverage with such reduced cost-sharing amounts (and the reduced annual cost-sharing limit) is equal to the actuarial value percentage (specified in the table under section 243(d) for the income tier involved) of the full actuarial value if there were no cost-sharing imposed under the plan.

(c)

Determination and payment of cost-sharing affordability credit

In the case of an affordable credit eligible individual in a tier enrolled in an Exchange-participating health benefits plan offered by a QHBP offering entity, the Commissioner shall provide for payment to the offering entity of an amount equivalent to the increased actuarial value of the benefits under the plan provided under section 203(c)(2)(B) resulting from the reduction in cost-sharing described in subsection (b).

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 information contained in such application; and

(ii)

the Commissioner shall use the information so disclosed to verify such information.

(B)

Alternative procedures

The Commissioner shall establish procedures for the verification of income for purposes of this subtitle if no income tax return is available for the most recent completed tax year.

(c)

Special rules

(1)

Changes in income as a percent of FPL

In the case that an individual’s income (expressed as a percentage of the Federal poverty level for a family of the size involved) for a plan year is expected (in a manner specified by the Commissioner) to be significantly different from the income (as so expressed) used under subsection (a), the Commissioner shall establish rules requiring an individual to report, consistent with the mechanism established under paragraph (2), significant changes in such income (including a significant change in family composition) to the Commissioner and requiring the substitution of such income for the income otherwise applicable.

(2)

Reporting of significant changes in income

The Commissioner shall establish rules under which an individual determined to be an affordable credit eligible individual would be required to inform the Commissioner when there is a significant change in the family income of the individual (expressed as a percentage of the FPL for a family of the size involved) and of the information regarding such change. Such mechanism shall provide for guidelines that specify the circumstances that qualify as a significant change, the verifiable information required to document such a change, and the process for submission of such information. If the Commissioner receives new information from an individual regarding the family income of the individual, the Commissioner shall provide for a redetermination of the individual’s eligibility to be an affordable credit eligible individual.

(3)

Transition for CHIP

In the case of a child described in section 205(d)(2), the Commissioner shall establish rules under which the family income of the child is deemed to be no greater than the family income of the child as most recently determined before Y1 by the State under title XXI of the Social Security Act.

(4)

Study of geographic variation in application of FPL

(A)

In general

The Commissioner shall examine the feasibility and implication of adjusting the application of the Federal poverty level under this subtitle for different geographic areas so as to reflect the variations in cost-of-living among different areas within the United States. If the Commissioner determines that an adjustment is feasible, the study should include a methodology to make such an adjustment. Not later than the first day of Y2, the Commissioner shall submit to Congress a report on such study and shall include such recommendations as the Commissioner determines appropriate.

(B)

Inclusion of territories

(i)

In general

The Commissioner shall ensure that the study under subparagraph (A) covers the territories of the United States and that special attention is paid to the disparity that exists among poverty levels and the cost of living in such territories and to the impact of such disparity on efforts to expand health coverage and ensure health care.

(ii)

Territories defined

In this subparagraph, the term territories of the United States includes the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, the Northern Mariana Islands, and any other territory or possession of the United States.

(d)

Penalties for misrepresentation

In the case of an individual intentionally misrepresents family income or the individual fails (without regard to intent) to disclose to the Commissioner a significant change in family income under subsection (c) in a manner that results in the individual becoming an affordable credit eligible individual when the individual is not or in the amount of the affordability credit exceeding the correct amount—

(1)

the individual is liable for repayment of the amount of the improper affordability credit; ;and

(2)

in the case of such an intentional misrepresentation or other egregious circumstances specified by the Commissioner, the Commissioner may impose an additional penalty.

246.

No Federal payment for undocumented aliens

Nothing in this subtitle shall allow Federal payments for affordability credits on behalf of individuals who are not lawfully present in the United States.

D

Health Insurance Cooperatives

251.

Establishment

Not later than 6 months after the date of the enactment of this Act, the Commissioner, in consultation with the Secretary of the Treasury, shall establish a Consumer Operated and Oriented Plan program (in this subtitle referred to as the CO–OP program) under which the Commissioner may make grants and loans for the establishment and initial operation of not-for-profit, member–run health insurance cooperatives (in this subtitle individually referred to as a cooperative) that provide insurance through the Health Insurance Exchange or a State-based Health Insurance Exchange under section 208. Nothing in this subtitle shall be construed as requiring a State to establish such a cooperative.

252.

Start-up and solvency grants and loans

(a)

In general

Not later than 36 months after the date of the enactment of this Act, the Commissioner, acting through the CO–OP program, may make—

(1)

loans (of such period and with such terms as the Secretary may specify) to cooperatives to assist such cooperatives with start-up costs; and

(2)

grants to cooperatives to assist such cooperatives in meeting State solvency requirements in the States in which such cooperative offers or issues insurance coverage.

(b)

Conditions

A grant or loan may not be awarded under this section with respect to a cooperative unless the following conditions are met:

(1)

The cooperative is structured as a not-for-profit, member organization under the law of each State in which such cooperative offers, intends to offer, or issues insurance coverage, with the membership of the cooperative being made up entirely of beneficiaries of the insurance coverage offered by such cooperative.

(2)

The cooperative did not offer insurance on or before July 16, 2009, and the cooperatives is not an affiliate or successor to an insurance company offering insurance on or before such date.

(3)

The governing documents of the cooperatives incorporate ethical and conflict of interest standards designed to protect against insurance industry involvement and interference in the governance of the cooperative.

(4)

The cooperative is not sponsored by a State government.

(5)

Substantially all of the activities of the cooperative consist of the issuance of qualified health benefit plans through the Health Insurance Exchange or a State-based health insurance exchange.

(6)

The cooperative is licenced to offer insurance in each State in which it offers insurance.

(7)

The governance of the cooperative must be subject to a majority vote of its members.

(8)

As provided in guidance issued by the Secretary of Health and Human Services, the cooperative operates with a strong consumer focus, including timeliness, responsiveness, and accountability to members.

(9)

Any profits made by the cooperative are used to lower premiums, improve benefits, or to otherwise improve the quality of health care delivered to members.

(c)

Priority

The Commissioner, in making grants and loans under this section, shall give priority to cooperatives that—

(1)

operate on a Statewide basis;

(2)

use an integrated delivery system; or

(3)

have a significant level of financial support from non-governmental sources.

(d)

Rules of construction

Nothing in this subtitle shall be construed to prevent a cooperative established in one State from integrating with a cooperative established in another State the administration, issuance of coverage, or other activities related to acting as a QHBP offering entity. Nothing in this subtitle shall be construed as preventing State governments from taking actions to permit such integration.

(e)

Repayment for violations of terms of program

If a cooperative violates the terms of the CO–OP program and fails to correct the violation within a reasonable period of time, as determined by the Commissioner, the cooperative shall repay the total amount of any loan or grant received by such cooperative under this section, plus interest (at a rate determined by the Secretary).

(f)

Authorization of appropriations

There are authorized to be appropriated $5,000,000,000 for the period of fiscal years 2010 through 2014 to provide for grants and loans under this section.

253.

Definitions

For purposes of this subtitle:

(1)

State

The term State means each of the 50 States and the District of Columbia.

(2)

Member

The term member, with respect to a cooperative, means an individual who, after the cooperative offers health insurance coverage, is enrolled in such coverage.

III

Shared responsibility

A

Individual responsibility

301.

Individual responsibility

For an individual’s responsibility to obtain acceptable coverage, see section 59B of the Internal Revenue Code of 1986 (as added by section 401 of this Act).

B

Employer Responsibility

1

Health coverage participation requirements

311.

Health coverage participation requirements

An employer meets the requirements of this section if such employer does all of the following:

(1)

Offer of coverage

The employer offers each employee individual and family coverage under a qualified health benefits plan (or under a current employment-based health plan (within the meaning of section 102(b))) in accordance with section 312.

(2)

Contribution towards coverage

If an employee accepts such offer of coverage, the employer makes timely contributions towards such coverage in accordance with section 312.

(3)

Contribution in lieu of coverage

Beginning with Y2, if an employee declines such offer but otherwise obtains coverage in an Exchange-participating health benefits plan (other than by reason of being covered by family coverage as a spouse or dependent of the primary insured), the employer shall make a timely contribution to the Health Insurance Exchange with respect to each such employee in accordance with section 313.

312.

Employer responsibility to contribute towards employee and dependent coverage

(a)

In general

An employer meets the requirements of this section with respect to an employee if the following requirements are met:

(1)

Offering of coverage

The employer offers the coverage described in section 311(1) either through an Exchange-participating health benefits plan or other than through such a plan.

(2)

Employer required contribution

The employer timely pays to the issuer of such coverage an amount not less than the employer required contribution specified in subsection (b) for such coverage.

(3)

Provision of information

The employer provides the Health Choices Commissioner, the Secretary of Labor, the Secretary of Health and Human Services, and the Secretary of the Treasury, as applicable, with such information as the Commissioner may require to ascertain compliance with the requirements of this section.

(4)

Autoenrollment of employees

The employer provides for autoenrollment of the employee in accordance with subsection (c).

(b)

Reduction of employee premiums through minimum employer contribution

(1)

Full-time employees

The minimum employer contribution described in this subsection for coverage of a full-time employee (and, if any, the employee’s spouse and qualifying children (as defined in section 152(c) of the Internal Revenue Code of 1986) under a qualified health benefits plan (or current employment-based health plan) is equal to—

(A)

in case of individual coverage, not less than 72.5 percent of the applicable premium (as defined in section 4980B(f)(4) of such Code, subject to paragraph (2)) of the lowest cost plan offered by the employer that is a qualified health benefits plan (or is such current employment-based health plan); and

(B)

in the case of family coverage which includes coverage of such spouse and children, not less 65 percent of such applicable premium of such lowest cost plan.

(2)

Applicable premium for Exchange coverage

In this subtitle, the amount of the applicable premium of the lowest cost plan with respect to coverage of an employee under an Exchange-participating health benefits plan is the reference premium amount under section 243(c) for individual coverage (or, if elected, family coverage) for the premium rating area in which the individual or family resides.

(3)

Minimum employer contribution for employees other than full-time employees

In the case of coverage for an employee who is not a full-time employee, the amount of the minimum employer contribution under this subsection shall be a proportion (as determined in accordance with rules of the Health Choices Commissioner, the Secretary of Labor, the Secretary of Health and Human Services, and the Secretary of the Treasury, as applicable) of the minimum employer contribution under this subsection with respect to a full-time employee that reflects the proportion of—

(A)

the average weekly hours of employment of the employee by the employer, to

(B)

the minimum weekly hours specified by the Commissioner for an employee to be a full-time employee.

(4)

Salary reductions not treated as employer contributions

For purposes of this section, any contribution on behalf of an employee with respect to which there is a corresponding reduction in the compensation of the employee shall not be treated as an amount paid by the employer.

(c)

Automatic enrollment for employer sponsored health benefits

(1)

In general

The requirement of this subsection with respect to an employer and an employee is that the employer automatically enroll such employee into the employment-based health benefits plan for individual coverage under the plan option with the lowest applicable employee premium.

(2)

Opt-out

In no case may an employer automatically enroll an employee in a plan under paragraph (1) if such employee makes an affirmative election to opt out of such plan or to elect coverage under an employment-based health benefits plan offered by such employer. An employer shall provide an employee with a 30-day period to make such an affirmative election before the employer may automatically enroll the employee in such a plan.

(3)

Notice requirements

(A)

In general

Each employer described in paragraph (1) who automatically enrolls an employee into a plan as described in such paragraph shall provide the employees, within a reasonable period before the beginning of each plan year (or, in the case of new employees, within a reasonable period before the end of the enrollment period for such a new employee), written notice of the employees’ rights and obligations relating to the automatic enrollment requirement under such paragraph. Such notice must be comprehensive and understood by the average employee to whom the automatic enrollment requirement applies.

(B)

Inclusion of specific information

The written notice under subparagraph (A) must explain an employee’s right to opt out of being automatically enrolled in a plan and in the case that more than one level of benefits or employee premium level is offered by the employer involved, the notice must explain which level of benefits and employee premium level the employee will be automatically enrolled in the absence of an affirmative election by the employee.

313.

Employer contributions in lieu of coverage

(a)

In general

A contribution is made in accordance with this section with respect to an employee if such contribution is equal to an amount equal to 8 percent of the average wages paid by the employer during the period of enrollment (determined by taking into account all employees of the employer and in such manner as the Commissioner provides, including rules providing for the appropriate aggregation of related employers). Any such contribution—

(1)

shall be paid to the Health Choices Commissioner for deposit into the Health Insurance Exchange Trust Fund, and

(2)

shall not be applied against the premium of the employee under the Exchange-participating health benefits plan in which the employee is enrolled.

(b)

Special rules for small employers

(1)

In general

In the case of any employer who is a small employer for any calendar year, subsection (a) shall be applied by substituting the applicable percentage determined in accordance with the following table for 8 percent:

If the annual payroll of such employer for the preceding calendar year:The applicable percentage is:
Does not exceed $250,0000 percent
Exceeds $250,000, but does not exceed $300,0002 percent
Exceeds $300,000, but does not exceed $350,0004 percent
Exceeds $350,000, but does not exceed $400,0006 percent
(2)

Small employer

For purposes of this subsection, the term small employer means any employer for any calendar year if the annual payroll of such employer for the preceding calendar year does not exceed $400,000.

(3)

Annual payroll

For purposes of this paragraph, the term annual payroll means, with respect to any employer for any calendar year, the aggregate wages paid by the employer during such calendar year.

(4)

Aggregation rules

Related employers and predecessors shall be treated as a single employer for purposes of this subsection.

314.

Authority related to improper steering

The Health Choices Commissioner (in coordination with the Secretary of Labor, the Secretary of Health and Human Services, and the Secretary of the Treasury) shall have authority to set standards for determining whether employers or insurers are undertaking any actions to affect the risk pool within the Health Insurance Exchange by inducing individuals to decline coverage under a qualified health benefits plan (or current employment-based health plan (within the meaning of section 102(b)) offered by the employer and instead to enroll in an Exchange-participating health benefits plan. An employer violating such standards shall be treated as not meeting the requirements of this section.

2

Satisfaction of Health Coverage Participation Requirements

For sections 321 and 322, see text of bill as introduced on July 14, 2009.

323.

Satisfaction of health coverage participation requirements under the Public Health Service Act

(a)

In general

Part C of title XXVII of the Public Health Service Act is amended by adding at the end the following new section:

2793.

National health coverage participation requirements

(a)

Election of employer to be subject to national health coverage participation requirements

(1)

In general

An employer may make an election with the Secretary to be subject to the health coverage participation requirements.

(2)

Time and manner

An election under paragraph (1) may be made at such time and in such form and manner as the Secretary may prescribe.

(b)

Treatment of coverage resulting from election

(1)

In general

If an employer makes an election to the Secretary under subsection (a)—

(A)

such election shall be treated as the establishment and maintenance of a group health plan for purposes of this title, subject to section 151 of the America’s Affordable Health Choices Act of 2009, and

(B)

the health coverage participation requirements shall be deemed to be included as terms and conditions of such plan.

(2)

Periodic investigations to determine compliance with health coverage participation requirements

The Secretary shall regularly audit a representative sampling of employers and conduct investigations and other activities with respect to such sampling of employers so as to discover noncompliance with the health coverage participation requirements in connection with such employers (during any period with respect to which an election under subsection (a) is in effect). The Secretary shall communicate findings of noncompliance made by the Secretary under this subsection to the Secretary of the Treasury and the Health Choices Commissioner. The Secretary shall take such timely enforcement action as appropriate to achieve compliance.

(c)

Health coverage participation requirements

For purposes of this section, the term health coverage participation requirements means the requirements of part 1 of subtitle B of title III of division A of the America’s Affordable Health Choices Act of 2009 (as in effect on the date of the enactment of this section).

(d)

Separate elections

Under regulations prescribed by the Secretary, separate elections may be made under subsection (a) with respect to full-time employees and employees who are not full-time employees.

(e)

Termination of election in cases of substantial noncompliance

The Secretary may terminate the election of any employer under subsection (a) if the Secretary (in coordination with the Health Choices Commissioner) determines that such employer is in substantial noncompliance with the health coverage participation requirements and shall refer any such determination to the Secretary of the Treasury as appropriate.

(f)

Enforcement of health coverage participation requirements

(1)

Civil penalties

In the case of any employer who fails (during any period with respect to which the election under subsection (a) is in effect) to satisfy the health coverage participation requirements with respect to any employee, the Secretary may assess a civil penalty against the employer of $100 for each day in the period beginning on the date such failure first occurs and ending on the date such failure is corrected.

(2)

Limitations on amount of penalty

(A)

Penalty not to apply where failure not discovered exercising reasonable diligence

No penalty shall be assessed under paragraph (1) with respect to any failure during any period for which it is established to the satisfaction of the Secretary that the employer did not know, or exercising reasonable diligence would not have known, that such failure existed.

(B)

Penalty not to apply to failures corrected within 30 days

No penalty shall be assessed under paragraph (1) with respect to any failure if—

(i)

such failure was due to reasonable cause and not to willful neglect, and

(ii)

such failure is corrected during the 30-day period beginning on the 1st date that the employer knew, or exercising reasonable diligence would have known, that such failure existed.

(C)

Overall limitation for unintentional failures

In the case of failures which are due to reasonable cause and not to willful neglect, the penalty assessed under paragraph (1) for failures during any 1-year period shall not exceed the amount equal to the lesser of—

(i)

10 percent of the aggregate amount paid or incurred by the employer (or predecessor employer) during the preceding taxable year for group health plans, or

(ii)

$500,000.

(3)

Advance notification of failure prior to assessment

Before a reasonable time prior to the assessment of any penalty under paragraph (1) with respect to any failure by an employer, the Secretary shall inform the employer in writing of such failure and shall provide the employer information regarding efforts and procedures which may be undertaken by the employer to correct such failure.

(4)

Actions to enforce assessments

The Secretary may bring a civil action in any District Court of the United States to collect any civil penalty under this subsection.

(5)

Coordination with excise tax

Under regulations prescribed in accordance with section 324 of the America’s Affordable Health Choices Act of 2009, the Secretary and the Secretary of the Treasury shall coordinate the assessment of penalties under paragraph (1) in connection with failures to satisfy health coverage participation requirements with the imposition of excise taxes on such failures under section 4980H(b) of the Internal Revenue Code of 1986 so as to avoid duplication of penalties with respect to such failures.

(6)

Deposit of penalty collected

Any amount of penalty collected under this subsection shall be deposited as miscellaneous receipts in the Treasury of the United States.

(g)

Regulations

The Secretary may promulgate such regulations as may be necessary or appropriate to carry out the provisions of this section, in accordance with section 324(a) of the America’s Affordable Health Choices Act of 2009. The Secretary may promulgate any interim final rules as the Secretary determines are appropriate to carry out this section.

.

(b)

Effective date

The amendments made by subsection (a) shall apply to periods beginning after December 31, 2012.

324.

Additional rules relating to health coverage participation requirements

(a)

Assuring coordination

The officers consisting of the Secretary of Labor, the Secretary of the Treasury, the Secretary of Health and Human Services, and the Health Choices Commissioner shall ensure, through the execution of an interagency memorandum of understanding among such officers, that—

(1)

regulations, rulings, and interpretations issued by such officers relating to the same matter over which two or more of such officers have responsibility under subpart B of part 6 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, section 4980H of the Internal Revenue Code of 1986, and section 2793 of the Public Health Service Act are administered so as to have the same effect at all times; and

(2)

coordination of policies relating to enforcing the same requirements through such officers in order to have a coordinated enforcement strategy that avoids duplication of enforcement efforts and assigns priorities in enforcement.

(b)

Multiemployer plans

In the case of a group health plan that is a multiemployer plan (as defined in section 3(37) of the Employee Retirement Income Security Act of 1974), the regulations prescribed in accordance with subsection (a) by the officers referred to in subsection (a) shall provide for the application of the health coverage participation requirements to the plan sponsor and contributing sponsors of such plan.

IV

Amendments to Internal Revenue Code of 1986

For title IV, see text of bill as introduced on July 14, 2009.

B

Medicare and Medicaid Improvements

1001.

Table of contents of division

The table of contents for this division is as follows:

Division B—Medicare and Medicaid Improvements

Sec. 1001. Table of contents of division.

Title I—Improving Health Care Value

Subtitle A—Provisions related to Medicare part A

Part 1—Market basket updates

Sec. 1101. Skilled nursing facility payment update.

Sec. 1102. Inpatient rehabilitation facility payment update.

Sec. 1103. Incorporating productivity improvements into market basket updates that do not already incorporate such improvements.

Part 2—Other Medicare part A provisions

Sec. 1111. Payments to skilled nursing facilities.

Sec. 1112. Medicare DSH report and payment adjustments in response to coverage expansion.

Subtitle B—Provisions Related to Medicare Part B

Part 1—Physicians’ Services

Sec. 1121. Sustainable growth rate reform.

Sec. 1122. Misvalued codes under the physician fee schedule.

Sec. 1123. Payments for efficient areas.

Sec. 1124. Modifications to the Physician Quality Reporting Initiative (PQRI).

Sec. 1125. Adjustment to Medicare payment localities.

Sec. 1126. Resource-based feedback program for physicians in Medicare.

Part 2—Market basket updates

Sec. 1131. Incorporating productivity improvements into market basket updates that do not already incorporate such improvements.

Part 3—Other Provisions

Sec. 1141. Rental and purchase of power-driven wheelchairs.

Sec. 1141A. Election to take ownership, or to decline ownership, of a certain item of complex durable medical equipment after the 13-month capped rental period ends.

Sec. 1142. Extension of payment rule for brachytherapy.

Sec. 1143. Home infusion therapy report to congress.

Sec. 1144. Require ambulatory surgical centers (ASCs) to submit cost data and other data.

Sec. 1145. Treatment of certain cancer hospitals.

Sec. 1146. Medicare Improvement Fund.

Sec. 1147. Payment for imaging services.

Sec. 1148. Durable medical equipment program improvements.

Sec. 1149. MedPAC study and report on bone mass measurement.

Sec. 1149A. Exclusion of customary prompt pay discounts extended to wholesalers from manufacturer’s average sales price for payments for drugs and biologicals under Medicare part B.

Sec. 1149B. Timely access to postmastectomy items.

Sec. 1149C. Moratorium on Medicare reductions in payment rates for certain interventional pain management procedures covered under the ASC fee schedule.

Sec. 1149D. Medicare coverage of services of qualified respiratory therapists performed under the general supervision of a physician.

Subtitle C—Provisions Related to Medicare Parts A and B

Sec. 1151. Reducing potentially preventable hospital readmissions.

Sec. 1152. Post acute care services payment reform plan and bundling pilot program.

Sec. 1153. Home health payment update for 2010.

Sec. 1154. Payment adjustments for home health care.

Sec. 1155. Incorporating productivity improvements into market basket update for home health services.

Sec. 1156. Limitation on Medicare exceptions to the prohibition on certain physician referrals made to hospitals.

Sec. 1157. Institute of Medicine study of geographic adjustment factors under Medicare.

Sec. 1158. Revision of Medicare payment systems to address geographic inequities.

Subtitle D—Medicare Advantage Reforms

Part 1—Payment and Administration

Sec. 1161. Phase-in of payment based on fee-for-service costs.

Sec. 1162. Quality bonus payments.

Sec. 1163. Extension of Secretarial coding intensity adjustment authority.

Sec. 1164. Simplification of annual beneficiary election periods.

Sec. 1165. Extension of reasonable cost contracts.

Sec. 1166. Limitation of waiver authority for employer group plans.

Sec. 1167. Improving risk adjustment for payments.

Sec. 1168. Elimination of MA Regional Plan Stabilization Fund.

Sec. 1169. Study regarding the effects of calculating Medicare Advantage payment rates on a regional average of Medicare fee for service rates.

Part 2—Beneficiary Protections and Anti-Fraud

Sec. 1171. Limitation on cost-sharing for individual health services.

Sec. 1172. Continuous open enrollment for enrollees in plans with enrollment suspension.

Sec. 1173. Information for beneficiaries on MA plan administrative costs.

Sec. 1174. Strengthening audit authority.

Sec. 1175. Authority to deny plan bids.

Part 3—Treatment of special needs plans

Sec. 1176. Limitation on enrollment outside open enrollment period of individuals into chronic care specialized MA plans for special needs individuals.

Sec. 1177. Extension of authority of special needs plans to restrict enrollment.

Subtitle E—Improvements to Medicare Part D

Sec. 1181. Elimination of coverage gap.

Sec. 1182. Discounts for certain part D drugs in original coverage gap.

Sec. 1183. Repeal of provision relating to submission of claims by pharmacies located in or contracting with long-term care facilities.

Sec. 1184. Including costs incurred by AIDS drug assistance programs and Indian Health Service in providing prescription drugs toward the annual out-of-pocket threshold under part D.

Sec. 1185. Permitting mid-year changes in enrollment for formulary changes that adversely impact an enrollee.

Sec. 1186. Negotiation of lower covered part D drug prices on behalf of Medicare beneficiaries.

Sec. 1187. State certification prior to waiver of licensure requirements under Medicare prescription drug program.

Subtitle F—Medicare Rural Access Protections

Sec. 1191. Telehealth expansion and enhancements.

Sec. 1192. Extension of outpatient hold harmless provision.

Sec. 1193. Extension of section 508 hospital reclassifications.

Sec. 1194. Extension of geographic floor for work.

Sec. 1195. Extension of payment for technical component of certain physician pathology services.

Sec. 1196. Extension of ambulance add-ons.

Sec. 1197. Ensuring proportional representation of interests of rural areas on MedPAC.

Title II—Medicare Beneficiary Improvements

Subtitle A—Improving and Simplifying Financial Assistance for Low Income Medicare Beneficiaries

Sec. 1201. Improving assets tests for Medicare Savings Program and low-income subsidy program.

Sec. 1202. Elimination of part D cost-sharing for certain noninstitutionalized full-benefit dual eligible individuals.

Sec. 1203. Eliminating barriers to enrollment.

Sec. 1204. Enhanced oversight relating to reimbursements for retroactive low income subsidy enrollment.

Sec. 1205. Intelligent assignment in enrollment.

Sec. 1206. Special enrollment period and automatic enrollment process for certain subsidy eligible individuals.

Sec. 1207. Application of MA premiums prior to rebate in calculation of low income subsidy benchmark.

Subtitle B—Reducing Health Disparities

Sec. 1221. Ensuring effective communication in Medicare.

Sec. 1222. Demonstration to promote access for Medicare beneficiaries with limited-English proficiency by providing reimbursement for culturally and linguistically appropriate services.

Sec. 1223. IOM report on impact of language access services.

Sec. 1224. Definitions.

Subtitle C—Miscellaneous Improvements

Sec. 1231. Extension of therapy caps exceptions process.

Sec. 1232. Extended months of coverage of immunosuppressive drugs for kidney transplant patients and other renal dialysis provisions.

Sec. 1233. Advance care planning consultation.

Sec. 1234. Part B special enrollment period and waiver of limited enrollment penalty for TRICARE beneficiaries.

Sec. 1235. Exception for use of more recent tax year in case of gains from sale of primary residence in computing part B income-related premium.

Sec. 1236. Demonstration program on use of patient decisions aids.

Title III—Promoting Primary Care, Mental Health Services, and Coordinated Care

Sec. 1301. Accountable Care Organization pilot program.

Sec. 1302. Medical home pilot program.

Sec. 1303. Independence at home pilot program.

Sec. 1304. Payment incentive for selected primary care services.

Sec. 1305. Increased reimbursement rate for certified nurse-midwives.

Sec. 1306. Coverage and waiver of cost-sharing for preventive services.

Sec. 1307. Waiver of deductible for colorectal cancer screening tests regardless of coding, subsequent diagnosis, or ancillary tissue removal.

Sec. 1308. Excluding clinical social worker services from coverage under the Medicare skilled nursing facility prospective payment system and consolidated payment.

Sec. 1309. Coverage of marriage and family therapist services and mental health counselor services.

Sec. 1310. Extension of physician fee schedule mental health add-on.

Sec. 1311. Expanding access to vaccines.

Sec. 1312. Recognition of certified diabetes educators as certified providers for purposes of Medicare diabetes outpatient self-management training servicesdegett6-7.

Title IV—Quality

Subtitle A—Comparative Effectiveness Research

Sec. 1401. Comparative effectiveness research.

Subtitle B—Nursing Home Transparency

Part 1—Improving transparency of information on skilled nursing facilities and nursing facilities

Sec. 1411. Required disclosure of ownership and additional disclosable parties information.

Sec. 1412. Accountability requirements.

Sec. 1413. Nursing home compare Medicare website.

Sec. 1414. Reporting of expenditures.

Sec. 1415. Standardized complaint form.

Sec. 1416. Ensuring staffing accountability.

Part 2—Targeting Enforcement

Sec. 1421. Civil money penalties.

Sec. 1422. National independent monitor pilot program.

Sec. 1423. Notification of facility closure.

Part 3—Improving staff training

Sec. 1431. Dementia and abuse prevention training.

Sec. 1432. Study and report on training required for certified nurse aides and supervisory staff.

Sec. 1433. Qualification of director of food services of a Medicaid nursing facility.

Subtitle C—Quality Measurements

Sec. 1441. Establishment of national priorities for quality improvement.

Sec. 1442. Development of new quality measures; GAO evaluation of data collection process for quality measurement.

Sec. 1443. Multistakeholder prerulemaking input into selection of quality measures.

Sec. 1444. Application of quality measures.

Sec. 1445. Consensus-based entity funding.

Sec. 1446. Quality indicators for care of people with Alzheimer’s disease.

Sec. 1447. Study on five star quality rating system.

Subtitle D—Physician Payments Sunshine Provision

Sec. 1451. Reports on financial relationships between manufacturers and distributors of covered drugs, devices, biologicals, or medical supplies under Medicare, Medicaid, or CHIP and physicians and other health care entities and between physicians and other health care entities.

Subtitle E—Public Reporting on Health Care-Associated Infections

Sec. 1461. Requirement for public reporting by hospitals and ambulatory surgical centers on health care-associated infections.

Title V—Medicare Graduate Medical Education

Sec. 1501. Distribution of unused residency positions.

Sec. 1502. Increasing training in nonprovider settings.

Sec. 1503. Rules for counting resident time for didactic and scholarly activities and other activities.

Sec. 1504. Preservation of resident cap positions from closed hospitals.

Sec. 1505. Improving accountability for approved medical residency training.

Title VI—Program Integrity

Subtitle A—Increased funding To fight waste, fraud, and abuse

Sec. 1601. Increased funding and flexibility to fight fraud and abuse.

Subtitle B—Enhanced penalties for fraud and abuse

Sec. 1611. Enhanced penalties for false statements on provider or supplier enrollment applications.

Sec. 1612. Enhanced penalties for submission of false statements material to a false claim.

Sec. 1613. Enhanced penalties for delaying inspections.

Sec. 1614. Enhanced hospice program safeguards.

Sec. 1615. Enhanced penalties for individuals excluded from program participation.

Sec. 1616. Enhanced penalties for provision of false information by Medicare Advantage and part D plans.

Sec. 1617. Enhanced penalties for Medicare Advantage and part D marketing violations.

Sec. 1618. Enhanced penalties for obstruction of program audits.

Sec. 1619. Exclusion of certain individuals and entities from participation in Medicare and State health care programs.

Subtitle C—Enhanced Program and Provider Protections

Sec. 1631. Enhanced CMS program protection authority.

Sec. 1632. Enhanced Medicare, Medicaid, and CHIP program disclosure requirements relating to previous affiliations.

Sec. 1633. Required inclusion of payment modifier for certain evaluation and management services.

Sec. 1634. Evaluations and reports required under Medicare Integrity Program.

Sec. 1635. Require providers and suppliers to adopt programs to reduce waste, fraud, and abuse.

Sec. 1636. Maximum period for submission of Medicare claims reduced to not more than 12 months.

Sec. 1637. Physicians who order durable medical equipment or home health services required to be Medicare-enrolled physicians or eligible professionals.

Sec. 1638. Requirement for physicians to provide documentation on referrals to programs at high risk of waste and abuse.

Sec. 1639. Face-to-face encounter with patient required before physicians may certify eligibility for home health services or durable medical equipment under Medicare.

Sec. 1640. Extension of testimonial subpoena authority to program exclusion investigations.

Sec. 1641. Required repayments of Medicare and Medicaid overpayments.

Sec. 1642. Expanded application of hardship waivers for OIG exclusions to beneficiaries of any Federal health care program.

Sec. 1643. Access to certain information on renal dialysis facilities.

Sec. 1644. Billing agents, clearinghouses, or other alternate payees required to register under Medicare.

Sec. 1645. Conforming civil monetary penalties to False Claims Act amendments.

Subtitle D—Access to Information Needed To Prevent Fraud, Waste, and Abuse

Sec. 1651. Access to information necessary to identify fraud, waste, and abuse.

Sec. 1652. Elimination of duplication between the Healthcare Integrity and Protection Data Bank and the National Practitioner Data Bank.

Sec. 1653. Compliance with HIPAA privacy and security standards.

Title VII—Medicaid and CHIP

Subtitle A—Medicaid and Health Reform

Sec. 1701. Eligibility for individuals with income below 1331/3 percent of the Federal poverty level.

Sec. 1702.  Requirements and special rules for certain Medicaid eligible individuals.

Sec. 1703. CHIP and Medicaid maintenance of eligibility.

Sec. 1704. Reduction in Medicaid DSH.

Sec. 1705. Expanded outstationing.

Subtitle B—Prevention

Sec. 1711. Required coverage of preventive services.

Sec. 1712. Tobacco cessation.

Sec. 1713. Optional coverage of nurse home visitation services.

Sec. 1714. State eligibility option for family planning services.

Subtitle C—Access

Sec. 1721. Payments to primary care practitioners.

Sec. 1722. Medical home pilot program.

Sec. 1723. Translation or interpretation services.

Sec. 1724. Optional coverage for freestanding birth center services.

Sec. 1725. Inclusion of public health clinics under the vaccines for children program.

Sec. 1726. Requiring coverage of services of podiatrists.

Sec. 1726A. Requiring coverage of services of optometrists.

Sec. 1727. Therapeutic foster care.

Sec. 1728. Assuring adequate payment levels for services.

Sec. 1729. Preserving Medicaid coverage for youths upon release from public institutions.

Sec. 1730. Quality measures for maternity and adult health services under Medicaid and CHIP.

Sec. 1730A. Accountable care organization pilot program.

Subtitle D—Coverage

Sec. 1731. Optional Medicaid coverage of low-income HIV-infected individuals.

Sec. 1732. Extending transitional Medicaid Assistance (TMA).

Sec. 1733. Requirement of 12-month continuous coverage under certain CHIP programs.

Sec. 1734. Preventing the application under CHIP of coverage waiting periods for certain children.

Sec. 1735. Adult day health care services.

Sec. 1736. Medicaid coverage for citizens of Freely Associated States.

Sec. 1737. Continuing requirement of Medicaid coverage of nonemergency transportation to medically necessary services.

Sec. 1738. State option to disregard certain income in providing continued Medicaid coverage for certain individuals with extremely high prescription costs.

Subtitle E—Financing

Sec. 1741. Payments to pharmacists.

Sec. 1742. Prescription drug rebates.

Sec. 1743. Extension of prescription drug discounts to enrollees of Medicaid managed care organizations.

Sec. 1744. Payments for graduate medical education.

Sec. 1745. Report on Medicaid payments.

Sec. 1746. Reviews of Medicaid.

Sec. 1747. Extension of delay in managed care organization provider tax elimination.

Subtitle F—Waste, Fraud, and Abuse

Sec. 1751. Health care acquired conditions.

Sec. 1752. Evaluations and reports required under Medicaid Integrity Program.

Sec. 1753. Require providers and suppliers to adopt programs to reduce waste, fraud, and abuse.

Sec. 1754. Overpayments.

Sec. 1755. Managed care organizations.

Sec. 1756. Termination of provider participation under Medicaid and CHIP if terminated under Medicare or other State plan or child health plan.

Sec. 1757.  Medicaid and CHIP exclusion from participation relating to certain ownership, control, and management affiliations.

Sec. 1758.  Requirement to report expanded set of data elements under MMIS to detect fraud and abuse.

Sec. 1759. Billing agents, clearinghouses, or other alternate payees required to register under Medicaid.

Sec. 1760. Denial of payments for litigation-related misconduct.

Sec. 1761. Mandatory State use of national correct coding initiative.

Subtitle G—Payments to the Territories

Sec. 1771. Payment to territories.

Subtitle H—Miscellaneous

Sec. 1781. Technical corrections.

Sec. 1782. Extension of QI program.

Sec. 1783. Outreach and enrollment of Medicaid and CHIP eligible individuals.

Sec. 1784. Prohibitions on Federal Medicaid and CHIP payment for undocumented aliens.

Sec. 1785. Demonstration project for stabilization of emergency medical conditions by nonpublicly owned or operated institutions for mental diseases.

Title VIII—Revenue-related provisions

Sec. 1801. Disclosures to facilitate identification of individuals likely to be ineligible for the low-income assistance under the Medicare prescription drug program to assist Social Security Administration’s outreach to eligible individuals.

Sec. 1802. Comparative Effectiveness Research Trust Fund; financing for Trust Fund.

Title IX—Miscellaneous Provisions

Sec. 1901. Repeal of trigger provision.

Sec. 1902. Repeal of comparative cost adjustment (CCA) program.

Sec. 1903. Extension of gainsharing demonstration.

Sec. 1904. Grants to States for quality home visitation programs for families with young children and families expecting children.

Sec. 1905. Improved coordination and protection for dual eligibles.

Sec. 1906. Standardized marketing requirements under the Medicare Advantage and Medicare prescription drug programs.

Sec. 1907. NAIC recommendations on the establishment of standardized benefit packages for Medicare Advantage plans and prescription drug plans.

Sec. 1908. Application of emergency services laws.

Sec. 1909. Nationwide program for national and State background checks on direct patient access employees of long-term care facilities and providers.

Sec. 1910. Establishment of Center for Medicare and Medicaid Payment Innovation within CMS.

I

Improving Health Care Value

A

Provisions related to Medicare part A

For subtitle A of title I of division B, see text of bill as introduced on July 14, 2009.

B

Provisions Related to Medicare Part B

1

Physicians’ Services

1121.

Sustainable growth rate reform

(a)

Transitional update for 2010

Section 1848(d) of the Social Security Act (42 U.S.C. 1395w–4(d)) is amended by adding at the end the following new paragraph:

(10)

Update for 2010

The update to the single conversion factor established in paragraph (1)(C) for 2010 shall be the percentage increase in the MEI (as defined in section 1842(i)(3)) for that year.

.

(b)

Rebasing SGR using 2009; limitation on cumulative adjustment period

Section 1848(d)(4) of such Act (42 U.S.C. 1395w–4(d)(4)) is amended—

(1)

in subparagraph (B), by striking subparagraph (D) and inserting subparagraphs (D) and (G); and

(2)

by adding at the end the following new subparagraph:

(G)

Rebasing using 2009 for future update adjustments

In determining the update adjustment factor under subparagraph (B) for 2011 and subsequent years—

(i)

the allowed expenditures for 2009 shall be equal to the amount of the actual expenditures for physicians’ services during 2009; and

(ii)

the reference in subparagraph (B)(ii)(I) to April 1, 1996 shall be treated as a reference to January 1, 2009 (or, if later, the first day of the fifth year before the year involved).

.

(c)

Limitation on physicians’ services included in target growth rate computation to services covered under physician fee schedule

Effective for services furnished on or after January 1, 2009, section 1848(f)(4)(A) of such Act is amended by striking (such as clinical and all that follows through in a physician’s office and inserting for which payment under this part is made under the fee schedule under this section, for services for practitioners described in section 1842(b)(18)(C) on a basis related to such fee schedule, or for services described in section 1861(p) (other than such services when furnished in the facility of a provider of services).

(d)

Establishment of separate target growth rates for categories of services

(1)

Establishment of service categories

Subsection (j) of section 1848 of the Social Security Act (42 U.S.C. 1395w–4) is amended by adding at the end the following new paragraph:

(5)

Service categories

For services furnished on or after January 1, 2009, each of the following categories of physicians’ services (as defined in paragraph (3)) shall be treated as a separate service category:

(A)

Evaluation and management services that are procedure codes (for services covered under this title) for—

(i)

services in the category designated Evaluation and Management in the Health Care Common Procedure Coding System (established by the Secretary under subsection (c)(5) as of December 31, 2009, and as subsequently modified by the Secretary); and

(ii)

preventive services (as defined in section 1861(iii)) for which payment is made under this section.

(B)

All other services not described in subparagraph (A).

Service categories established under this paragraph shall apply without regard to the specialty of the physician furnishing the service.

.

(2)

Establishment of separate conversion factors for each service category

Subsection (d)(1) of section 1848 of the Social Security Act (42 U.S.C. 1395w–4) is amended—

(A)

in subparagraph (A)—

(i)

by designating the sentence beginning The conversion factor as clause (i) with the heading Application of single conversion factor.— and with appropriate indentation;

(ii)

by striking The conversion factor and inserting Subject to clause (ii), the conversion factor; and

(iii)

by adding at the end the following new clause:

(ii)

Application of multiple conversion factors beginning with 2011

(I)

In general

In applying clause (i) for years beginning with 2011, separate conversion factors shall be established for each service category of physicians’ services (as defined in subsection (j)(5)) and any reference in this section to a conversion factor for such years shall be deemed to be a reference to the conversion factor for each of such categories.

(II)

Initial conversion factors

Such factors for 2011 shall be based upon the single conversion factor for the previous year multiplied by the update established under paragraph (11) for such category for 2011.

(III)

Updating of conversion factors

Such factor for a service category for a subsequent year shall be based upon the conversion factor for such category for the previous year and adjusted by the update established for such category under paragraph (11) for the year involved.

; and

(B)

in subparagraph (D), by striking other physicians’ services and inserting physicians’ services described in the service category described in subsection (j)(5)(B).

(3)

Establishing updates for conversion factors for service categories

Section 1848(d) of the Social Security Act (42 U.S.C. 1395w–4(d)), as amended by subsection (a), is amended—

(A)

in paragraph (4)(C)(iii), by striking The allowed and inserting Subject to paragraph (11)(B), the allowed; and

(B)

by adding at the end the following new paragraph:

(11)

Updates for service categories beginning with 2011

(A)

In general

In applying paragraph (4) for a year beginning with 2011, the following rules apply:

(i)

Application of separate update adjustments for each service category

Pursuant to paragraph (1)(A)(ii)(I), the update shall be made to the conversion factor for each service category (as defined in subsection (j)(5)) based upon an update adjustment factor for the respective category and year and the update adjustment factor shall be computed, for a year, separately for each service category.

(ii)

Computation of allowed and actual expenditures based on service categories

In computing the prior year adjustment component and the cumulative adjustment component under clauses (i) and (ii) of paragraph (4)(B), the following rules apply:

(I)

Application based on service categories

The allowed expenditures and actual expenditures shall be the allowed and actual expenditures for the service category, as determined under subparagraph (B).

(II)

Application of category specific target growth rate

The growth rate applied under clause (ii)(II) of such paragraph shall be the target growth rate for the service category involved under subsection (f)(5).

(B)

Determination of allowed expenditures

In applying paragraph (4) for a year beginning with 2010, notwithstanding subparagraph (C)(iii) of such paragraph, the allowed expenditures for a service category for a year is an amount computed by the Secretary as follows:

(i)

For 2010

For 2010:

(I)

Total 2009 actual expenditures for all services included in SGR computation for each service category

Compute total actual expenditures for physicians’ services (as defined in subsection (f)(4)(A)) for 2009 for each service category.

(II)

Increase by growth rate to obtain 2010 allowed expenditures for service category

Compute allowed expenditures for the service category for 2010 by increasing the allowed expenditures for the service category for 2009 computed under subclause (I) by the target growth rate for such service category under subsection (f) for 2010.

(ii)

For subsequent years

For a subsequent year, take the amount of allowed expenditures for such category for the preceding year (under clause (i) or this clause) and increase it by the target growth rate determined under subsection (f) for such category and year.

.

(4)

Application of separate target growth rates for each category

(A)

In general

Section 1848(f) of the Social Security Act (42 U.S.C. 1395w–4(f)) is amended by adding at the end the following new paragraph:

(5)

Application of separate target growth rates for each service category beginning with 2010

The target growth rate for a year beginning with 2010 shall be computed and applied separately under this subsection for each service category (as defined in subsection (j)(5)) and shall be computed using the same method for computing the target growth rate except that the factor described in paragraph (2)(C) for—

(A)

the service category described in subsection (j)(5)(A) shall be increased by 0.02; and

(B)

the service category described in subsection (j)(5)(B) shall be increased by 0.01.

.

(B)

Use of target growth rates

Section 1848 of such Act is further amended—

(i)

in subsection (d)—

(I)

in paragraph (1)(E)(ii), by inserting or target after sustainable; and

(II)

in paragraph (4)(B)(ii)(II), by inserting or target after sustainable; and

(ii)

in the heading of subsection (f), by inserting and target growth rate after sustainable growth rate;

(iii)

in subsection (f)(1)—

(I)

by striking and at the end of subparagraph (A);

(II)

in subparagraph (B), by inserting before 2010 after each succeeding year and by striking the period at the end and inserting ; and; and

(III)

by adding at the end the following new subparagraph:

(C)

November 1 of each succeeding year the target growth rate for such succeeding year and each of the 2 preceding years.

; and

(iv)

in subsection (f)(2), in the matter before subparagraph (A), by inserting after beginning with 2000 the following: and ending with 2009.

(e)

Application to accountable care organization pilot program

In applying the target growth rate under subsections (d) and (f) of section 1848 of the Social Security Act to services furnished by a practitioner to beneficiaries who are attributable to an accountable care organization under the pilot program provided under section 1866D of such Act, the Secretary of Health and Human Services shall develop, not later than January 1, 2012, for application beginning with 2012, a method that—

(1)

allows each such organization to have its own expenditure targets and updates for such practitioners, with respect to beneficiaries who are attributable to that organization, that are consistent with the methodologies described in such subsection (f); and

(2)

provides that the target growth rate applicable to other physicians shall not apply to such physicians to the extent that the physicians’ services are furnished through the accountable care organization.

In applying paragraph (1), the Secretary of Health and Human Services may apply the difference in the update under such paragraph on a claim-by-claim or lump sum basis and such a payment shall be taken into account under the pilot program.
1122.

Misvalued codes under the physician fee schedule

(a)

In general

Section 1848(c)(2) of the Social Security Act (42 U.S.C. 1395w-4(c)(2)) is amended by adding at the end the following new subparagraphs:

(K)

Potentially misvalued codes

(i)

In general

The Secretary shall—

(I)

periodically identify services as being potentially misvalued using criteria specified in clause (ii); and

(II)

review and make appropriate adjustments to the relative values established under this paragraph for services identified as being potentially misvalued under subclause (I).

(ii)

Identification of potentially misvalued codes

For purposes of identifying potentially misvalued services pursuant to clause (i)(I), the Secretary shall examine (as the Secretary determines to be appropriate) codes (and families of codes as appropriate) for which there has been the fastest growth; codes (and families of codes as appropriate) that have experienced substantial changes in practice expenses; codes for new technologies or services within an appropriate period (such as three years) after the relative values are initially established for such codes; multiple codes that are frequently billed in conjunction with furnishing a single service; codes with low relative values, particularly those that are often billed multiple times for a single treatment; codes which have not been subject to review since the implementation of the RBRVS (the so-called Harvard-valued codes); and such other codes determined to be appropriate by the Secretary.

(iii)

Review and adjustments

(I)

The Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services described clause (i)(II).

(II)

The Secretary may conduct surveys, other data collection activities, studies, or other analyses as the Secretary determines to be appropriate to facilitate the review and appropriate adjustment described in clause (i)(II).

(III)

The Secretary may use analytic contractors to identify and analyze services identified under clause (i)(I), conduct surveys or collect data, and make recommendations on the review and appropriate adjustment of services described in clause (i)(II).

(IV)

The Secretary may coordinate the review and appropriate adjustment described in clause (i)(II) with the periodic review described in subparagraph (B).

(V)

As part of the review and adjustment described in clause (i)(II), including with respect to codes with low relative values described in clause (ii), the Secretary may make appropriate coding revisions (including using existing processes for consideration of coding changes) which may include consolidation of individual services into bundled codes for payment under the fee schedule under subsection (b).

(VI)

The provisions of subparagraph (B)(ii)(II) shall apply to adjustments to relative value units made pursuant to this subparagraph in the same manner as such provisions apply to adjustments under subparagraph (B)(ii)(II).

(L)

Validating relative value units

(i)

In general

The Secretary shall establish a process to validate relative value units under the fee schedule under subsection (b).

(ii)

Components and elements of work

The process described in clause (i) may include validation of work elements (such as time, mental effort and professional judgment, technical skill and physical effort, and stress due to risk) involved with furnishing a service and may include validation of the pre, post, and intra-service components of work.

(iii)

Scope of codes

The validation of work relative value units shall include a sampling of codes for services that is the same as the codes listed under subparagraph (K)(ii)

(iv)

Methods

The Secretary may conduct the validation under this subparagraph using methods described in subclauses (I) through (V) of subparagraph (K)(iii) as the Secretary determines to be appropriate.

(v)

Adjustments

The Secretary shall make appropriate adjustments to the work relative value units under the fee schedule under subsection (b). The provisions of subparagraph (B)(ii)(II) shall apply to adjustments to relative value units made pursuant to this subparagraph in the same manner as such provisions apply to adjustments under subparagraph (B)(ii)(II).

.

(b)

Implementation

(1)

Funding

For purposes of carrying out the provisions of subparagraphs (K) and (L) of 1848(c)(2) of the Social Security Act, as added by subsection (a), in addition to funds otherwise available, out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Secretary of Health and Human Services for the Center for Medicare & Medicaid Services Program Management Account $20,000,000 for fiscal year 2010 and each subsequent fiscal year. Amounts appropriated under this paragraph for a fiscal year shall be available until expended.

(2)

Administration

(A)

Chapter 35 of title 44, United States Code and the provisions of the Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to this section or the amendment made by this section.

(B)

Notwithstanding any other provision of law, the Secretary may implement subparagraphs (K) and (L) of 1848(c)(2) of the Social Security Act, as added by subsection (a), by program instruction or otherwise.

(C)

Section 4505(d) of the Balanced Budget Act of 1997 is repealed.

(D)

Except for provisions related to confidentiality of information, the provisions of the Federal Acquisition Regulation shall not apply to this section or the amendment made by this section.

(3)

Focusing CMS resources on potentially overvalued codes

Section 1868(a) of the Social Security Act (42 1395ee(a)) is repealed.

1123.

Payments for efficient areas

Section 1833 of the Social Security Act (42 U.S.C. 1395l) is amended by adding at the end the following new subsection:

(x)

Incentive Payments for Efficient areas

(1)

In general

In the case of services furnished under the physician fee schedule under section 1848 on or after January 1, 2011, and before January 1, 2013, by a supplier that is paid under such fee schedule in an efficient area (as identified under paragraph (2)), in addition to the amount of payment that would otherwise be made for such services under this part, there also shall be paid (on a monthly or quarterly basis) an amount equal to 5 percent of the payment amount for the services under this part.

(2)

Identification of efficient areas

(A)

In general

Based upon available data, the Secretary shall identify those counties or equivalent areas in the United States in the lowest fifth percentile of utilization based on per capita spending under this part and part A for services provided in the most recent year for which data are available as of the date of the enactment of this subsection, as standardized to eliminate the effect of geographic adjustments in payment rates.

(B)

Identification of counties where service is furnished.

For purposes of paying the additional amount specified in paragraph (1), if the Secretary uses the 5-digit postal ZIP Code where the service is furnished, the dominant county of the postal ZIP Code (as determined by the United States Postal Service, or otherwise) shall be used to determine whether the postal ZIP Code is in a county described in subparagraph (A).

(C)

Limitation on review

There shall be no administrative or judicial review under section 1869, 1878, or otherwise, respecting—

(i)

the identification of a county or other area under subparagraph (A); or

(ii)

the assignment of a postal ZIP Code to a county or other area under subparagraph (B).

(D)

Publication of list of counties; posting on website

With respect to a year for which a county or area is identified under this paragraph, the Secretary shall identify such counties or areas as part of the proposed and final rule to implement the physician fee schedule under section 1848 for the applicable year. The Secretary shall post the list of counties identified under this paragraph on the Internet website of the Centers for Medicare & Medicaid Services.

.

1124.

Modifications to the Physician Quality Reporting Initiative (PQRI)

(a)

Feedback

Section 1848(m)(5) of the Social Security Act (42 U.S.C. 1395w–4(m)(5)) is amended by adding at the end the following new subparagraph:

(H)

Feedback

The Secretary shall provide timely feedback to eligible professionals on the performance of the eligible professional with respect to satisfactorily submitting data on quality measures under this subsection.

.

(b)

Appeals

Such section is further amended—

(1)

in subparagraph (E), by striking There shall be and inserting Subject to subparagraph (I), there shall be; and

(2)

by adding at the end the following new subparagraph:

(I)

Informal appeals process

Notwithstanding subparagraph (E), by not later than January 1, 2011, the Secretary shall establish and have in place an informal process for eligible professionals to appeal the determination that an eligible professional did not satisfactorily submit data on quality measures under this subsection.

.

(c)

Integration of physician quality reporting and EHR reporting

Section 1848(m) of such Act is amended by adding at the end the following new paragraph:

(7)

Integration of physician quality reporting and EHR reporting

Not later than January 1, 2012, the Secretary shall develop a plan to integrate clinical reporting on quality measures under this subsection with reporting requirements under subsection (o) relating to the meaningful use of electronic health records. Such integration shall consist of the following:

(A)

The development of measures, the reporting of which would both demonstrate—

(i)

meaningful use of an electronic health record for purposes of subsection (o); and

(ii)

clinical quality of care furnished to an individual.

(B)

The collection of health data to identify deficiencies in the quality and coordination of care for individuals eligible for benefits under this part.

(C)

Such other activities as specified by the Secretary.

.

(d)

Extension of incentive payments

Section 1848(m)(1) of such Act (42 U.S.C. 1395w–4(m)(1)) is amended—

(1)

in subparagraph (A), by striking 2010 and inserting 2012; and

(2)

in subparagraph (B)(ii), by striking 2009 and 2010 and inserting each of the years 2009 through 2012.

1125.

Adjustment to Medicare payment localities

(a)

In general

Section 1848(e) of the Social Security Act (42 U.S.C.1395w–4(e)) is amended by adding at the end the following new paragraph:

(6)

Transition to use of MSAs as fee schedule areas in California

(A)

In general

(i)

Revision

Subject to clause (ii) and notwithstanding the previous provisions of this subsection, for services furnished on or after January 1, 2011, the Secretary shall revise the fee schedule areas used for payment under this section applicable to the State of California using the Metropolitan Statistical Area (MSA) iterative Geographic Adjustment Factor methodology as follows:

(I)

The Secretary shall configure the physician fee schedule areas using the Core-Based Statistical Areas-Metropolitan Statistical Areas (each in this paragraph referred to as an MSA), as defined by the Director of the Office of Management and Budget, as the basis for the fee schedule areas. The Secretary shall employ an iterative process to transition fee schedule areas. First, the Secretary shall list all MSAs within the State by Geographic Adjustment Factor described in paragraph (2) (in this paragraph referred to as a GAF) in descending order. In the first iteration, the Secretary shall compare the GAF of the highest cost MSA in the State to the weighted-average GAF of the group of remaining MSAs in the State. If the ratio of the GAF of the highest cost MSA to the weighted-average GAF of the rest of State is 1.05 or greater then the highest cost MSA becomes a separate fee schedule area.

(II)

In the next iteration, the Secretary shall compare the MSA of the second-highest GAF to the weighted-average GAF of the group of remaining MSAs. If the ratio of the second-highest MSA’s GAF to the weighted-average of the remaining lower cost MSAs is 1.05 or greater, the second-highest MSA becomes a separate fee schedule area. The iterative process continues until the ratio of the GAF of the highest-cost remaining MSA to the weighted-average of the remaining lower-cost MSAs is less than 1.05, and the remaining group of lower cost MSAs form a single fee schedule area. If two MSAs have identical GAFs, they shall be combined in the iterative comparison.

(ii)

Transition

For services furnished on or after January 1, 2011, and before January 1, 2016, in the State of California, after calculating the work, practice expense, and malpractice geographic indices described in clauses (i), (ii), and (iii) of paragraph (1)(A) that would otherwise apply through application of this paragraph, the Secretary shall increase any such index to the county-based fee schedule area value on December 31, 2009, if such index would otherwise be less than the value on January 1, 2010.

(B)

Subsequent revisions

(i)

Periodic review and adjustments in fee schedule areas

Subsequent to the process outlined in paragraph (1)(C), not less often than every three years, the Secretary shall review and update the California Rest-of-State fee schedule area using MSAs as defined by the Director of the Office of Management and Budget and the iterative methodology described in subparagraph (A)(i).

(ii)

Link with geographic index data revision

The revision described in clause (i) shall be made effective concurrently with the application of the periodic review of the adjustment factors required under paragraph (1)(C) for California for 2012 and subsequent periods. Upon request, the Secretary shall make available to the public any county-level or MSA derived data used to calculate the geographic practice cost index.

(C)

References to fee schedule areas

Effective for services furnished on or after January 1, 2010, for the State of California, any reference in this section to a fee schedule area shall be deemed a reference to an MSA in the State.

.

(b)

Conforming amendment to definition of fee schedule area

Section 1848(j)(2) of the Social Security Act (42 U.S.C. 1395w(j)(2)) is amended by striking The term and inserting Except as provided in subsection (e)(6)(C), the term.

1126.

Resource-based feedback program for physicians in Medicare

(a)

In general

The Secretary of Health and Human Services (in this section referred to as the Secretary) shall provide for the measurement and confidential communication of reports (each in this section referred to as a feedback report) to physicians and other practitioners regarding the utilization of services under the Medicare program under title XVIII of the Social Security Act. Such reports shall be based upon claims data and shall include quality data reported under section 1848(m)(5) of such Act (42 U.S.C. 1395w-4(m)(5)) and such other information as the Secretary determines appropriate.

(b)

Timeline for feedback program

(1)

Analysis tool

Not later than December 31, 2010, the Secretary shall initially develop an episode grouper or other initial resource analysis tool described in subsection (c)(4).

(2)

Evaluation

During 2011 the Secretary shall conduct the evaluation specified in subsection (e)(1).

(3)

Expansion

The Secretary shall expand the program as specified in subsection (e)(2).

(c)

Feedback reports

(1)

Comparison of resource use patterns

Feedback reports shall include information allowing the comparison of a physician’s resource use pattern to such pattern for peers. Such reports may include resource use data on—

(A)

a per capita basis;

(B)

a per episode basis; or

(C)

both.

(2)

Peer comparison

Reports under this section shall include information regarding nationwide groups of similarly situated physicians (taking into consideration specialty, practice setting, and such other criteria as the Secretary finds appropriate) and comparing the pattern of services of each physician in the group to the group average pattern of services.

(3)

Detailed information

The Secretary shall include in feedback reports details about the services, procedures, and relevant clinical information to identify factors that may account for significant variation of a physician from national norms, such as high rates of elective surgeries, diagnostic services, or other utilization attributable to the judgment of the physician.

(4)

Development of episode grouper

The Secretary shall, in consultation with physicians and others as the Secretary determines to be appropriate, develop an episode grouper or other resource analysis tool that could be used to measure physician resource use. The Secretary may update such grouper from time to time as appropriate.

(d)

Feedback program

The Secretary shall engage in efforts to disseminate feedback reports. In disseminating such reports, the Secretary shall seek to estalish their validity and credibility to physicians and shall experiment with communications methods such as the following:

(1)

Direct meetings between contracted physicians, facilitated by the Secretary, to discuss the contents of feedback reports, including any reasons for divergence from national averages.

(2)

Contracts with local, non-profit entities engaged in quality improvement efforts at the community level. Such entities shall use the feedback reports, or such equivalent tool as specified by the Secretary. Any exchange of data under this paragraph shall be protected by appropriate privacy safeguards.

(3)

Mailings or other methods of communication that facilitate large-scale dissemination.

(4)

Other methods specified by the Secretary.

(e)

Evaluation and expansion

(1)

Evaluation

The Secretary shall evaluate the methods specified in subsection (d) with regard to their efficacy in changing practice patterns to improve quality and decrease costs.

(2)

Expansion

Taking into account the cost of each method, the Secretary shall develop a plan to disseminate such reports in a significant manner in the regions and cities of the country with the highest utilization of services under Medicare. The Secretary shall disseminate, to the extent practicable, feedback reports in a manner consistent with the following:

(A)

During 2011, at least 1,000 reports.

(B)

During 2012, at least 10,000 reports.

(C)

During 2013, at least 25,000 reports.

(D)

During 2014 and subsequent years, reports to the physicians with utilization within the highest 5 percent of physicians, subject to the authority to focus under subsection (f).

(3)

Opt out

The Secretary shall establish a process by which a physician may opt not to receive feedback reports under this section.

(f)

Authority to focus program application

The secretary may focus the application of the program under this section and dissemination of feedback reports on physicians, as appropriate, such as on physicians who—

(1)

practice in geographic areas that account for unusually high rates of spending per capita;

(2)

treat conditions that have a high cost or volume under Medicare;

(3)

use a high amount of resources compared to other physicians; or

(4)

treat at least a minimum number of Medicare beneficiaries.

(g)

Inclusion of certain practitioners

For purposes of this section, the term physician includes a practitioner who furnishes services for which payment is made under Medicare and for which such payment would be made if furnished by a physician.

(h)

Administration

(1)

Chapter 35 of title 44, United States Code shall not apply to this section.

(2)

Notwithstanding any other provision of law, the Secretary may implement the provisions of this section by program instruction or otherwise.

2

Market basket updates

1131.

Incorporating productivity improvements into market basket updates that do not already incorporate such improvements

(a)

Outpatient hospitals

(1)

In general

The first sentence of section 1833(t)(3)(C)(iv) of the Social Security Act (42 U.S.C. 1395l(t)(3)(C)(iv)) is amended—

(A)

by inserting (which is subject to the productivity adjustment described in subclause (II) of such section) after 1886(b)(3)(B)(iii); and

(B)

by inserting (but not below 0) after reduced.

(2)

Effective date

The amendments made by paragraph (1) shall apply to increase factors for services furnished in years beginning with 2010.

(b)

Ambulance services

Section 1834(l)(3)(B) of such Act (42 U.S.C. 1395m(l)(3)(B))) is amended by inserting before the period at the end the following: and, in the case of years beginning with 2010, subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II).

(c)

Ambulatory surgical center services

Section 1833(i)(2)(D) of such Act (42 U.S.C. 1395l(i)(2)(D)) is amended—

(1)

by redesignating clause (v) as clause (vi); and

(2)

by inserting after clause (iv) the following new clause:

(v)

In implementing the system described in clause (i), for services furnished during 2010 or any subsequent year, to the extent that an annual percentage change factor applies, such factor shall be subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II).

.

(d)

Laboratory services

Section 1833(h)(2)(A) of such Act (42 U.S.C. 1395l(h)(2)(A)) is amended—

(1)

in clause (i), by striking for each of the years 2009 through 2013 and inserting for 2009; and

(2)

clause (ii)—

(A)

by striking and at the end of subclause (III);

(B)

by striking the period at the end of subclause (IV) and inserting ; and; and

(C)

by adding at the end the following new subclause:

(V)

the annual adjustment in the fee schedules determined under clause (i) for years beginning with 2010 shall be subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II).

.

(e)

Certain durable medical equipment

Section 1834(a)(14) of such Act (42 U.S.C. 1395m(a)(14)) is amended—

(1)

in subparagraph (K), by inserting before the semicolon at the end the following: , subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II);

(2)

in subparagraph (L)(i), by inserting after June 2013, the following: subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II),;

(3)

in subparagraph (L)(ii), by inserting after June 2013 the following: , subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II); and

(4)

in subparagraph (M), by inserting before the period at the end the following: , subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II).

3

Other Provisions

1141.

Rental and purchase of power-driven wheelchairs

(a)

In general

Section 1834(a)(7)(A)(iii) of the Social Security Act (42 U.S.C. 1395m(a)(7)(A)(iii)) is amended—

(1)

in the heading, by inserting certain complex rehabilitative after option for; and

(2)

by striking power-driven wheelchair and inserting complex rehabilitative power-driven wheelchair recognized by the Secretary as classified within group 3 or higher.

(b)

Effective date

The amendments made by subsection (a) shall take effect on January 1, 2011, and shall apply to power-driven wheelchairs furnished on or after such date. Such amendments shall not apply to contracts entered into under section 1847 of the Social Security Act (42 U.S.C. 1395w–3) pursuant to a bid submitted under such section before October 1, 2010, under subsection (a)(1)(B)(i)(I) of such section.

1141A.

Election to take ownership, or to decline ownership, of a certain item of complex durable medical equipment after the 13-month capped rental period ends

(a)

In general

Section 1834(a)(7)(A) of the Social Security Act (42 U.S.C. 1395m(a)(7)(A)) is amended—

(1)

in clause (ii)—

(A)

by striking rental.—On and inserting “rental.—

(I)

In general

Except as provided in subclause (II), on

; and

(B)

by adding at the end the following new subclause:

(II)

Option to accept or reject transfer of title to Group 3 Support Surface

(aa)

In general

During the 10th continuous month during which payment is made for the rental of a Group 3 Support Surface under clause (i), the supplier of such item shall offer the individual the option to accept or reject transfer of title to a Group 3 Support Surface after the 13th continuous month during which payment is made for the rental of the Group 3 Support Surface under clause (i). Such title shall be transferred to the individual only if the individual notifies the supplier not later than 1 month after the supplier makes such offer that the individual agrees to accept transfer of the title to the Group 3 Support Surface. Unless the individual accepts transfer of title to the Group 3 Support Surface in the manner set forth in this subclause, the individual shall be deemed to have rejected transfer of title. If the individual agrees to accept the transfer of the title to the Group 3 Support Surface, the supplier shall transfer such title to the individual on the first day that begins after the 13th continuous month during which payment is made for the rental of the Group 3 Support Surface under clause (i). If the supplier transfers title to the Group 3 Support Surface under this subclause, payments for maintenance and servicing after the transfer of title shall be made in accordance with clause (iv). If the individual rejects transfer of title under this subclause, payments for maintenance and servicing after the end of the period of medical need during which payment is made under clause (i) shall be made in accordance with clause (v).

(bb)

Special rule

If, on the effective date of this subclause, an individual’s rental period for a Group 3 Support Surface has exceeded 10 continuous months, but the first day that begins after the 13th continuous month during which payment is made for the rental under clause (i) has not been reached, the supplier shall, within 1 month following such effective date, offer the individual the option to accept or reject transfer of title to a Group 3 Support Surface. Such title shall be transferred to the individual only if the individual notifies the supplier not later than 1 month after the supplier makes such offer that the individual agrees to accept transfer of title to the Group 3 Support Surface. Unless the individual accepts transfer of title to the Group 3 Support Surface in the manner set forth in this subclause, the individual shall be deemed to have rejected transfer of title. If the individual agrees to accept the transfer of the title to the Group 3 Support Surface, the supplier shall transfer such title to the individual on the first day that begins after the 13th continuous month during which payment is made for the rental of the Group 3 Support Surface under clause (i) unless that day has passed, in which case the supplier shall transfer such title to the individual not later than 1 month after notification that the individual accepts transfer of title. If the supplier transfers title to the Group 3 Support Surface under this subclause, payments for maintenance and servicing after the transfer of title shall be made in accordance with clause (iv). If the individual rejects transfer of title under this subclause, payments for maintenance and servicing after the end of the period of medical need during which payment is made under clause (i) shall be made in accordance with clause (v).

;

(2)

in clause (iv), in the heading, by inserting after transfer of title after servicing; and

(3)

by adding at the end the following new clause:

(v)

Maintenance and servicing of Group 3 Support Surface if individual rejects transfer of title

In the case of a Group 3 Support Surface for which the individual has rejected transfer of title under subclause (ii)(II)—

(I)

during the first 6-month period of medical need that follows the period of medical need during which payment is made under clause (i), no payment shall be made for rental or maintenance and servicing of the Group 3 Support Surface; and

(II)

during the first month of each succeeding 6-month period of medical need, a maintenance and servicing payment may be made (for parts and labor not covered by the supplier’s or manufacturer’s warranty, as determined by the Secretary to be appropriate for the Group 3 Support Surface) and the amount recognized for each such 6-month period is the lower of—

(aa)

a reasonable and necessary maintenance and servicing fee or fees established by the Secretary; or

(bb)

10 percent of the total of the purchase price recognized under paragraph (8) with respect to the Group 3 Support Surface.

.

(b)

Effective date

The amendments made by this section shall take effect on the date of enactment of this Act.

1142.

Extension of payment rule for brachytherapy

Section 1833(t)(16)(C) of the Social Security Act (42 U.S.C. 1395l(t)(16)(C)), as amended by section 142 of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110–275), is amended by striking, the first place it appears, January 1, 2010 and inserting January 1, 2012.

1143.

Home infusion therapy report to congress

Not later than 12 months after the date of enactment of this Act, the Medicare Payment Advisory Commission shall submit to Congress a report on the following:

(1)

The scope of coverage for home infusion therapy in the fee-for-service Medicare program under title XVIII of the Social Security Act, Medicare Advantage under part C of such title, the veteran’s health care program under chapter 17 of title 38, United States Code, and among private payers, including an analysis of the scope of services provided by home infusion therapy providers to their patients in such programs.

(2)

The benefits and costs of providing such coverage under the Medicare program, including a calculation of the potential savings achieved through avoided or shortened hospital and nursing home stays as a result of Medicare coverage of home infusion therapy.

(3)

An assessment of sources of data on the costs of home infusion therapy that might be used to construct payment mechanisms in the Medicare program.

(4)

Recommendations, if any, on the structure of a payment system under the Medicare program for home infusion therapy, including an analysis of the payment methodologies used under Medicare Advantage plans and private health plans for the provision of home infusion therapy and their applicability to the Medicare program.

1144.

Require ambulatory surgical centers (ASCs) to submit cost data and other data

(a)

Cost reporting

(1)

In general

Section 1833(i) of the Social Security Act (42 U.S.C. 1395l(i)) is amended by adding at the end the following new paragraph:

(8)

The Secretary shall require, as a condition of the agreement described in section 1832(a)(2)(F)(i), the submission of such cost report as the Secretary may specify, taking into account the requirements for such reports under section 1815 in the case of a hospital.

.

(2)

Development of cost report

Not later than 3 years after the date of the enactment of this Act, the Secretary of Health and Human Services shall develop a cost report form for use under section 1833(i)(8) of the Social Security Act, as added by paragraph (1).

(3)

Audit requirement

The Secretary shall provide for periodic auditing of cost reports submitted under section 1833(i)(8) of the Social Security Act, as added by paragraph (1).

(4)

Effective date

The amendment made by paragraph (1) shall apply to agreements applicable to cost reporting periods beginning 18 months after the date the Secretary develops the cost report form under paragraph (2).

(b)

Additional data on quality

(1)

In general

Section 1833(i)(7) of such Act (42 U.S.C. 1395l(i)(7)) is amended—

(A)

in subparagraph (B), by inserting subject to subparagraph (C), after may otherwise provide,; and

(B)

by adding at the end the following new subparagraph:

(C)

Under subparagraph (B) the Secretary shall require the reporting of such additional data relating to quality of services furnished in an ambulatory surgical facility, including data on health care associated infections, as the Secretary may specify.

.

(2)

Effective date

The amendment made by paragraph (1) shall to reporting for years beginning with 2012.

1145.

Treatment of certain cancer hospitals

Section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t)) is amended by adding at the end the following new paragraph:

(18)

Authorization of adjustment for cancer hospitals

(A)

Study

The Secretary shall conduct a study to determine if, under the system under this subsection, costs incurred by hospitals described in section 1886(d)(1)(B)(v) with respect to ambulatory payment classification groups exceed those costs incurred by other hospitals furnishing services under this subsection (as determined appropriate by the Secretary).

(B)

Authorization of adjustment

Insofar as the Secretary determines under subparagraph (A) that costs incurred by hospitals described in section 1886(d)(1)(B)(v) exceed those costs incurred by other hospitals furnishing services under this subsection, the Secretary shall provide for an appropriate adjustment under paragraph (2)(E) to reflect those higher costs effective for services furnished on or after January 1, 2011.

.

1146.

Medicare Improvement Fund

Section 1898(b)(1)(A) of the Social Security Act (42 U.S.C. 1395iii(b)(1)(A)) is amended to read as follows:

(A)

the period beginning with fiscal year 2011 and ending with fiscal year 2019, $8,000,000,000; and

.

1147.

Payment for imaging services

(a)

Adjustment in practice expense to reflect higher presumed utilization

Section 1848 of the Social Security Act (42 U.S.C. 1395w) is amended—

(1)

in subsection (b)(4)—

(A)

in subparagraph (B), by striking subparagraph (A) and inserting this paragraph; and

(B)

by adding at the end the following new subparagraph:

(C)

Adjustment in practice expense to reflect higher presumed utilization

In computing the number of practice expense relative value units under subsection (c)(2)(C)(ii) with respect to advanced diagnostic imaging services (as defined in section 1834(e)(1)(B)) , the Secretary shall adjust such number of units so it reflects a 75 percent (rather than 50 percent) presumed rate of utilization of imaging equipment.

; and

(2)

in subsection (c)(2)(B)(v)(II), by inserting and other provisions after OPD payment cap.

(b)

Adjustment in technical component “discount” on single-session imaging to consecutive body parts

Section 1848(b)(4) of such Act is further amended by adding at the end the following new subparagraph:

(D)

Adjustment in technical component discount on single-session imaging involving consecutive body parts

The Secretary shall increase the reduction in expenditures attributable to the multiple procedure payment reduction applicable to the technical component for imaging under the final rule published by the Secretary in the Federal Register on November 21, 2005 (part 405 of title 42, Code of Federal Regulations) from 25 percent to 50 percent.

.

(c)

Effective date

Except as otherwise provided, this section, and the amendments made by this section, shall apply to services furnished on or after January 1, 2011.

1148.

Durable medical equipment program improvements

(a)

Waiver of surety bond requirement

Section 1834(a)(16) of the Social Security Act (42 U.S.C. 1395m(a)(16)) is amended by adding at the end the following: The requirement for a surety bond described in subparagraph (B) shall not apply in the case of a pharmacy (i) that has been enrolled under section 1866(j) as a supplier of durable medical equipment, prosthetics, orthotics, and supplies and has been issued (which may include renewal of) a provider number (as described in the first sentence of this paragraph) for at least 5 years, and (ii) for which a final adverse action (as defined in section 424.57(a) of title 42, Code of Federal Regulations) has never been imposed..

(b)

Ensuring supply of oxygen equipment

(1)

In general

Section 1834(a)(5)(F) of the Social Security Act (42 U.S.C. 1395m(a)(5)(F)) is amended—

(A)

in clause (ii), by striking After the and inserting Except as provided in clause (iii), after the; and

(B)

by adding at the end the following new clause:

(iii)

Continuation of supply

In the case of a supplier furnishing such equipment to an individual under this subsection as of the 27th month of the 36 months described in clause (i), the supplier furnishing such equipment as of such month shall continue to furnish such equipment to such individual (either directly or though arrangements with other suppliers of such equipment) during any subsequent period of medical need for the remainder of the reasonable useful lifetime of the equipment, as determined by the Secretary, regardless of the location of the individual, unless another supplier has accepted responsibility for continuing to furnish such equipment during the remainder of such period.

.

(2)

Effective date

The amendments made by paragraph (1) shall take effect as of the date of the enactment of this Act and shall apply to the furnishing of equipment to individuals for whom the 27th month of a continuous period of use of oxygen equipment described in section 1834(a)(5)(F) of the Social Security Act occurs on or after July 1, 2010.

(c)

Treatment of current accreditation applications

Section 1834(a)(20)(F) of such Act (42 U.S.C. 1395m(a)(20)(F)) is amended—

(1)

in clause (i)—

(A)

by striking clause (ii) and inserting clauses (ii) and (iii); and

(B)

by striking and at the end;

(2)

by striking the period at the end of clause (ii)(II) and by inserting ; and; and

(3)

by adding at the end the following:

(iii)

the requirement for accreditation described in clause (i) shall not apply for purposes of supplying diabetic testing supplies, canes, and crutches in the case of a pharmacy that is enrolled under section 1866(j) as a supplier of durable medical equipment, prosthetics, orthotics, and supplies.

Any supplier that has submitted an application for accreditation before August 1, 2009, shall be deemed as meeting applicable standards and accreditation requirement under this subparagraph until such time as the independent accreditation organization takes action on the supplier’s application.

.

(d)

Restoring 36-month oxygen rental period in case of supplier bankruptcy for certain individuals

Section 1834(a)(5)(F) of such Act (42 U.S.C. 1395m(a)(5)(F)) is amended by adding at the end the following new clause:

(iv)

Exception for bankruptcy

If a supplier of oxygen to an individual is declared bankrupt and its assets are liquidated and at the time of such declaration and liquidation more than 24 months of rental payments have been made, the individual may begin under this subparagraph a new 36-month rental period with another supplier of oxygen.

.

(e)

Payment adjustment

Section 1834(a)(14)(K) of such Act (42 U.S.C. 1395m(a)(14)(K)), as amended by section 1131(e), is amended by inserting before the semicolon at the end the following: , -0.5 percent.

1149.

MedPAC study and report on bone mass measurement

(a)

In general

The Medicare Payment Advisory Commission shall conduct a study regarding bone mass measurement, including computed tomography, duel-energy x-ray absorptriometry, and vertebral fracture assessment. The study shall focus on the following:

(1)

An assessment of the adequacy of Medicare payment rates for such services, taking into account costs of acquiring the necessary equipment, professional work time, and practice expense costs.

(2)

The impact of Medicare payment changes since 2006 on beneficiary access to bone mass measurement benefits in general and in rural and minority communities specifically.

(3)

A review of the clinically appropriate and recommended use among Medicare beneficiaries and how usage rates among such beneficiaries compares to such recommendations.

(4)

In conjunction with the findings under (3), recommendations, if necessary, regarding methods for reaching appropriate use of bone mass measurement studies among Medicare beneficiaries.

(b)

Report

The Commission shall submit a report to the Congress, not later than 9 months after the date of the enactment of this Act, containing a description of the results of the study conducted under subsection (a) and the conclusions and recommendations, if any, regarding each of the issues described in paragraphs (1), (2) (3) and (4) of such subsection.

1149A.

Exclusion of customary prompt pay discounts extended to wholesalers from manufacturer’s average sales price for payments for drugs and biologicals under Medicare part B

Section 1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w–3a(c)(3)) is amended—

(1)

in the first sentence, by inserting after prompt pay discounts the following: (other than, for drugs and biologicals that are sold on or after January 1, 2011, and before January 1, 2016, customary prompt pay discounts extended to wholesalers, but only to the extent such discounts do not exceed 2 percent of the wholesale acquisition cost); and

(2)

in the second sentence, by inserting after other price concessions the following: (other than, for drugs and biologicals that are sold on or after January 1, 2011, and before January 1, 2016, customary prompt pay discounts extended to wholesalers, but only to the extent such discounts do not exceed 2 percent of the wholesale acquisition cost).

1149B.

Timely access to postmastectomy items

(a)

In general

Section 1834(h)(1) of the Social Security Act (42 U.S.C. 1395m(h)(1)) is amended—

(1)

by redesignating subparagraph (H) as subparagraph (I); and

(2)

by inserting after subparagraph (G) the following new subparagraph:

(H)

Special payment rule for postmastectomy external breast prosthesis garments

Payment for postmastectomy external breast prosthesis garments shall be made regardless of whether such items are supplied to the beneficiary prior to or after the mastectomy procedure or other breast cancer surgical procedure. The Secretary shall develop policies to ensure appropriate beneficiary access and utilization safeguards for such items supplied to a beneficiary prior to the mastectomy or other breast cancer surgical procedure.

(b)

Effective date

The amendment made by subsection (a) shall take effect the date of the enactment of this Act.

1149C.

Moratorium on Medicare reductions in payment rates for certain interventional pain management procedures covered under the ASC fee schedule

(a)

In general

Notwithstanding any other provision of law, the payment rate applied under section 1833(i)(2) of the Social Security Act (42 U.S.C. 13951(i)(2)) for interventional pain management procedures specified in subsection (b) which are furnished on or after January 1, 2010, and before January 1, 2012, shall not be less than the payment rate applied under such section for such procedures in effect as of January 1, 2007.

(b)

Procedures specified

For purposes of this section, the interventional pain management procedures specified in this subsection are the following:

(1)

Epidural injections (CPT 62310, 62311, 64483, 64484).

(2)

Facet joint injections (CPT 64470, 64472, 64475, 64476).

(3)

Sacroiliac joint injection (CPT 27096).

1149D.

Medicare coverage of services of qualified respiratory therapists performed under the general supervision of a physician

(a)

In general

Section 1861 of the Social Security Act (42 U.S.C. 1395x), as amended by sections 1233(a) and 1309, is amended—

(1)

in subsection (s)(2)—

(A)

by striking and at the end of subparagraph (GG);

(B)

by adding and at the end of subparagraph (HH); and

(C)

by adding at the end the following new subparagraph:

(II)

respiratory therapy services which would be physicians’ services if furnished by a physician (as defined in subsection (r)(1)) for the diagnosis and treatment of respiratory illnesses and which are performed by a respiratory therapist (as defined in subsection (mmm)) under the general supervision of a physician and which the respiratory therapist is legally authorized to perform by the State in which the services are performed, but only if no facility or other provider charges or is paid any amounts with respect to the furnishing of such services;

; and

(2)

by adding after subsection (lll) the following new subsection:

(mmm)

Respiratory Therapist

For purposes of subsection (s)(2)(II) and section 1833(a)(1)(X) only, the term ‘respiratory therapist’ means an individual who—

(1)

is credentialed by a national credentialing board recognized by the Secretary;

(2)
(A)

is licensed to practice respiratory therapy in the State in which the respiratory therapy services are performed, or

(B)

in the case of an individual in a State which does not provide for such licensure, is legally authorized to perform respiratory therapy services (in the State in which the individual performed such services) under State law (or the State regulatory mechanism provided by State law);

(3)

is a registered respiratory therapist; and

(4)

holds a bachelor’s degree.

.

(b)

Payment

Section 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)), as amended by sections 1309(a)(4) and 1309(b)(4), is amended—

(1)

by striking and before (Y); and

(2)

by inserting before the semicolon at the end the following: , and (Z) with respect to services described in section 1861(s)(2)(II) (relating to services furnished by a respiratory therapist) that are furnished by a respiratory therapist (as defined in section 1861(mmm)), the amount paid shall be equal to 80 percent of the lesser of the actual charge for the services or 85 percent of the fee schedule amount provided under section 1848 for the same services if furnished by a physician.

(c)

Effective date

The amendments made by this section shall apply to services furnished on or after January 1, 2010.

C

Provisions Related to Medicare Parts A and B

1151.

Reducing potentially preventable hospital readmissions

(a)

Hospitals

(1)

In general

Section 1886 of the Social Security Act (42 U.S.C. 1395ww), as amended by section 1103(a), is amended by adding at the end the following new subsection:

(p)

Adjustment to hospital payments for excess readmissions

(1)

In general

With respect to payment for discharges from an applicable hospital (as defined in paragraph (5)(C)) occurring during a fiscal year beginning on or after October 1, 2011, in order to account for excess readmissions in the hospital, the Secretary shall reduce the payments that would otherwise be made to such hospital under subsection (d) (or section 1814(b)(3), as the case may be) for such a discharge by an amount equal to the product of—

(A)

the base operating DRG payment amount (as defined in paragraph (2)) for the discharge; and

(B)

the adjustment factor (described in paragraph (3)(A)) for the hospital for the fiscal year.

(2)

Base operating drg payment amount

(A)

In general

Except as provided in subparagraph (B), for purposes of this subsection, the term base operating DRG payment amount means, with respect to a hospital for a fiscal year, the payment amount that would otherwise be made under subsection (d) for a discharge if this subsection did not apply, reduced by any portion of such amount that is attributable to payments under subparagraphs (B) and (F) of paragraph (5).

(B)

Adjustments

For purposes of subparagraph (A), in the case of a hospital that is paid under section 1814(b)(3), the term base operating DRG payment amount means the payment amount under such section.

(3)

Adjustment factor

(A)

In general

For purposes of paragraph (1), the adjustment factor under this paragraph for an applicable hospital for a fiscal year is equal to the greater of—

(i)

the ratio described in subparagraph (B) for the hospital for the applicable period (as defined in paragraph (5)(D)) for such fiscal year; or

(ii)

the floor adjustment factor specified in subparagraph (C).

(B)

Ratio

The ratio described in this subparagraph for a hospital for an applicable period is equal to 1 minus the ratio of—

(i)

the aggregate payments for excess readmissions (as defined in paragraph (4)(A)) with respect to an applicable hospital for the applicable period; and

(ii)

the aggregate payments for all discharges (as defined in paragraph (4)(B)) with respect to such applicable hospital for such applicable period.

(C)

Floor adjustment factor

For purposes of subparagraph (A), the floor adjustment factor specified in this subparagraph for—

(i)

fiscal year 2012 is 0.99;

(ii)

fiscal year 2013 is 0.98;

(iii)

fiscal year 2014 is 0.97; or

(iv)

a subsequent fiscal year is 0.95.

(4)

Aggregate payments, excess readmission ratio defined

For purposes of this subsection:

(A)

Aggregate payments for excess readmissions

The term aggregate payments for excess readmissions means, for a hospital for a fiscal year, the sum, for applicable conditions (as defined in paragraph (5)(A)), of the product, for each applicable condition, of—

(i)

the base operating DRG payment amount for such hospital for such fiscal year for such condition;

(ii)

the number of admissions for such condition for such hospital for such fiscal year; and

(iii)

the excess readmissions ratio (as defined in subparagraph (C)) for such hospital for the applicable period for such fiscal year minus 1.

(B)

Aggregate payments for all discharges

The term aggregate payments for all discharges means, for a hospital for a fiscal year, the sum of the base operating DRG payment amounts for all discharges for all conditions from such hospital for such fiscal year.

(C)

Excess readmission ratio

(i)

In general

Subject to clauses (ii) and (iii), the term excess readmissions ratio means, with respect to an applicable condition for a hospital for an applicable period, the ratio (but not less than 1.0) of—

(I)

the risk adjusted readmissions based on actual readmissions, as determined consistent with a readmission measure methodology that has been endorsed under paragraph (5)(A)(ii)(I), for an applicable hospital for such condition with respect to the applicable period; to

(II)

the risk adjusted expected readmissions (as determined consistent with such a methodology) for such hospital for such condition with respect to such applicable period.

(ii)

Exclusion of certain readmissions

For purposes of clause (i), with respect to a hospital, excess readmissions shall not include readmissions for an applicable condition for which there are fewer than a minimum number (as determined by the Secretary) of discharges for such applicable condition for the applicable period and such hospital.

(iii)

Adjustment

In order to promote a reduction over time in the overall rate of readmissions for applicable conditions, the Secretary may provide, beginning with discharges for fiscal year 2014, for the determination of the excess readmissions ratio under subparagraph (C) to be based on a ranking of hospitals by readmission ratios (from lower to higher readmission ratios) normalized to a benchmark that is lower than the 50th percentile.

(5)

Definitions

For purposes of this subsection:

(A)

Applicable condition

The term applicable condition means, subject to subparagraph (B), a condition or procedure selected by the Secretary among conditions and procedures for which—

(i)

readmissions (as defined in subparagraph (E)) that represent conditions or procedures that are high volume or high expenditures under this title (or other criteria specified by the Secretary); and

(ii)

measures of such readmissions—

(I)

have been endorsed by the entity with a contract under section 1890(a); and

(II)

such endorsed measures have appropriate exclusions for readmissions that are unrelated to the prior discharge (such as a planned readmission or transfer to another applicable hospital).

(B)

Expansion of applicable conditions

Beginning with fiscal year 2013, the Secretary shall expand the applicable conditions beyond the 3 conditions for which measures have been endorsed as described in subparagraph (A)(ii)(I) as of the date of the enactment of this subsection to the additional 4 conditions that have been so identified by the Medicare Payment Advisory Commission in its report to Congress in June 2007 and to other conditions and procedures which may include an all-condition measure of readmissions, as determined appropriate by the Secretary. In expanding such applicable conditions, the Secretary shall seek the endorsement described in subparagraph (A)(ii)(I) but may apply such measures without such an endorsement.

(C)

Applicable hospital

The term applicable hospital means a subsection (d) hospital or a hospital that is paid under section 1814(b)(3).

(D)

Applicable period

The term applicable period means, with respect to a fiscal year, such period as the Secretary shall specify for purposes of determining excess readmissions.

(E)

Readmission

The term readmission means, in the case of an individual who is discharged from an applicable hospital, the admission of the individual to the same or another applicable hospital within a time period specified by the Secretary from the date of such discharge. Insofar as the discharge relates to an applicable condition for which there is an endorsed measure described in subparagraph (A)(ii)(I), such time period (such as 30 days) shall be consistent with the time period specified for such measure.

(6)

Limitations on review

There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of—

(A)

the determination of base operating DRG payment amounts;

(B)

the methodology for determining the adjustment factor under paragraph (3), including excess readmissions ratio under paragraph (4)(C), aggregate payments for excess readmissions under paragraph (4)(A), and aggregate payments for all discharges under paragraph (4)(B), and applicable periods and applicable conditions under paragraph (5);

(C)

the measures of readmissions as described in paragraph (5)(A)(ii); and

(D)

the determination of a targeted hospital under paragraph (8)(B)(i), the increase in payment under paragraph (8)(B)(ii), the aggregate cap under paragraph (8)(C)(i), the hospital-specific limit under paragraph (8)(C)(ii), and the form of payment made by the Secretary under paragraph (8)(D).

(7)

Monitoring inappropriate changes in admissions practices

The Secretary shall monitor the activities of applicable hospitals to determine if such hospitals have taken steps to avoid patients at risk in order to reduce the likelihood of increasing readmissions for applicable conditions. If the Secretary determines that such a hospital has taken such a step, after notice to the hospital and opportunity for the hospital to undertake action to alleviate such steps, the Secretary may impose an appropriate sanction.

(8)

Assistance to certain hospitals

(A)

In general

For purposes of providing funds to applicable hospitals to take steps described in subparagraph (E) to address factors that may impact readmissions of individuals who are discharged from such a hospital, for fiscal years beginning on or after October 1, 2011, the Secretary shall make a payment adjustment for a hospital described in subparagraph (B), with respect to each such fiscal year, by a percent estimated by the Secretary to be consistent with subparagraph (C).

(B)

Targeted hospitals

Subparagraph (A) shall apply to an applicable hospital that—

(i)

received (or, in the case of an 1814(b)(3) hospital, otherwise would have been eligible to receive) $10,000,000 or more in disproportionate share payments using the latest available data as estimated by the Secretary; and

(ii)

provides assurances satisfactory to the Secretary that the increase in payment under this paragraph shall be used for purposes described in subparagraph (E).

(C)

Caps

(i)

Aggregate cap

The aggregate amount of the payment adjustment under this paragraph for a fiscal year shall not exceed 5 percent of the estimated difference in the spending that would occur for such fiscal year with and without application of the adjustment factor described in paragraph (3) and applied pursuant to paragraph (1).

(ii)

Hospital-specific limit

The aggregate amount of the payment adjustment for a hospital under this paragraph shall not exceed the estimated difference in spending that would occur for such fiscal year for such hospital with and without application of the adjustment factor described in paragraph (3) and applied pursuant to paragraph (1).

(D)

Form of payment

The Secretary may make the additional payments under this paragraph on a lump sum basis, a periodic basis, a claim by claim basis, or otherwise.

(E)

Use of additional payment

Funding under this paragraph shall be used by targeted hospitals for transitional care activities designed to address the patient noncompliance issues that result in higher than normal readmission rates, such as one or more of the following:

(i)

Providing care coordination services to assist in transitions from the targeted hospital to other settings.

(ii)

Hiring translators and interpreters.

(iii)

Increasing services offered by discharge planners.

(iv)

Ensuring that individuals receive a summary of care and medication orders upon discharge.

(v)

Developing a quality improvement plan to assess and remedy preventable readmission rates.

(vi)

Assigning discharged individuals to a medical home.

(vii)

Doing other activities as determined appropriate by the Secretary.

(F)

GAO report on use of funds

Not later than 3 years after the date on which funds are first made available under this paragraph, the Comptroller General of the United States shall submit to Congress a report on the use of such funds.

(G)

Disproportionate share hospital payment

In this paragraph, the term disproportionate share hospital payment means an additional payment amount under subsection (d)(5)(F).

.

(b)

Application to critical access hospitals

Section 1814(l) of the Social Security Act (42 U.S.C. 1395f(l)) is amended—

(1)

in paragraph (5)—

(A)

by striking and at the end of subparagraph (C);

(B)

by striking the period at the end of subparagraph (D) and inserting ; and;

(C)

by inserting at the end the following new subparagraph:

(E)

the methodology for determining the adjustment factor under paragraph (5), including the determination of aggregate payments for actual and expected readmissions, applicable periods, applicable conditions and measures of readmissions.

; and

(D)

by redesignating such paragraph as paragraph (6); and

(2)

by inserting after paragraph (4) the following new paragraph:

(5)

The adjustment factor described in section 1886(p)(3) shall apply to payments with respect to a critical access hospital with respect to a cost reporting period beginning in fiscal year 2012 and each subsequent fiscal year (after application of paragraph (4) of this subsection) in a manner similar to the manner in which such section applies with respect to a fiscal year to an applicable hospital as described in section 1886(p)(2).

.

(c)

Post acute care providers

(1)

Interim policy

(A)

In general

With respect to a readmission to an applicable hospital or a critical access hospital (as described in section 1814(l) of the Social Security Act) from a post acute care provider (as defined in paragraph (3)) and such a readmission is not governed by section 412.531 of title 42, Code of Federal Regulations, if the claim submitted by such a post-acute care provider under title XVIII of the Social Security Act indicates that the individual was readmitted to a hospital from such a post-acute care provider or admitted from home and under the care of a home health agency within 30 days of an initial discharge from an applicable hospital or critical access hospital, the payment under such title on such claim shall be the applicable percent specified in subparagraph (B) of the payment that would otherwise be made under the respective payment system under such title for such post-acute care provider if this subsection did not apply.

(B)

Applicable percent defined

For purposes of subparagraph (A), the applicable percent is—

(i)

for fiscal or rate year 2012 is 0.996;

(ii)

for fiscal or rate year 2013 is 0.993; and

(iii)

for fiscal or rate year 2014 is 0.99.

(C)

Effective date

Subparagraph (1) shall apply to discharges or services furnished (as the case may be with respect to the applicable post acute care provider) on or after the first day of the fiscal year or rate year, beginning on or after October 1, 2011, with respect to the applicable post acute care provider.

(2)

Development and application of performance measures

(A)

In general

The Secretary of Health and Human Services shall develop appropriate measures of readmission rates for post acute care providers. The Secretary shall seek endorsement of such measures by the entity with a contract under section 1890(a) of the Social Security Act but may adopt and apply such measures under this paragraph without such an endorsement. The Secretary shall expand such measures in a manner similar to the manner in which applicable conditions are expanded under paragraph (5)(B) of section 1886(p) of the Social Security Act, as added by subsection (a).

(B)

Implementation

The Secretary shall apply, on or after October 1, 2014, with respect to post acute care providers, policies similar to the policies applied with respect to applicable hospitals and critical access hospitals under the amendments made by subsection (a). The provisions of paragraph (1) shall apply with respect to any period on or after October 1, 2014, and before such application date described in the previous sentence in the same manner as such provisions apply with respect to fiscal or rate year 2014.

(C)

Monitoring and penalties

The provisions of paragraph (7) of such section 1886(p) shall apply to providers under this paragraph in the same manner as they apply to hospitals under such section.

(3)

Definitions

For purposes of this subsection:

(A)

Post acute care provider

The term post acute care provider means—

(i)

a skilled nursing facility (as defined in section 1819(a) of the Social Security Act);

(ii)

an inpatient rehabilitation facility (described in section 1886(h)(1)(A) of such Act);

(iii)

a home health agency (as defined in section 1861(o) of such Act); and

(iv)

a long term care hospital (as defined in section 1861(ccc) of such Act).

(B)

Other terms

The terms applicable condition, applicable hospital, and readmission have the meanings given such terms in section 1886(p)(5) of the Social Security Act, as added by subsection (a)(1).

(d)

Physicians

(1)

Study

The Secretary of Health and Human Services shall conduct a study to determine how the readmissions policy described in the previous subsections could be applied to physicians.

(2)

Considerations

In conducting the study, the Secretary shall consider approaches such as—

(A)

creating a new code (or codes) and payment amount (or amounts) under the fee schedule in section 1848 of the Social Security Act (in a budget neutral manner) for services furnished by an appropriate physician who sees an individual within the first week after discharge from a hospital or critical access hospital;

(B)

developing measures of rates of readmission for individuals treated by physicians;

(C)

applying a payment reduction for physicians who treat the patient during the initial admission that results in a readmission; and

(D)

methods for attributing payments or payment reductions to the appropriate physician or physicians.

(3)

Report

The Secretary shall issue a public report on such study not later than the date that is one year after the date of the enactment of this Act.

(e)

Funding

For purposes of carrying out the provisions of this section, in addition to funds otherwise available, out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Secretary of Health and Human Services for the Center for Medicare & Medicaid Services Program Management Account $25,000,000 for each fiscal year beginning with 2010. Amounts appropriated under this subsection for a fiscal year shall be available until expended.

1152.

Post acute care services payment reform plan and bundling pilot program

(a)

Plan

(1)

In general

The Secretary of Health and Human Services (in this section referred to as the Secretary) shall develop a detailed plan to reform payment for post acute care (PAC) services under the Medicare program under title XVIII of the Social Security Act (in this section referred to as the Medicare program). The goals of such payment reform are to—

(A)

improve the coordination, quality, and efficiency of such services; and

(B)

improve outcomes for individuals such as reducing the need for readmission to hospitals from providers of such services.

(2)

Bundling post acute services

The plan described in paragraph (1) shall include detailed specifications for a bundled payment for post acute services (in this section referred to as the post acute care bundle), and may include other approaches determined appropriate by the Secretary.

(3)

Post acute services

For purposes of this section, the term post acute services means services for which payment may be made under the Medicare program that are furnished by skilled nursing facilities, inpatient rehabilitation facilities, long term care hospitals, hospital based outpatient rehabilitation facilities and home health agencies to an individual after discharge of such individual from a hospital, and such other services determined appropriate by the Secretary.

(b)

Details

The plan described in subsection (a)(1) shall include consideration of the following issues:

(1)

The nature of payments under a post acute care bundle, including the type of provider or entity to whom payment should be made, the scope of activities and services included in the bundle, whether payment for physicians’ services should be included in the bundle, and the period covered by the bundle.

(2)

Whether the payment should be consolidated with the payment under the inpatient prospective system under section 1886 of the Social Security Act (in this section referred to as MS-DRGs) or a separate payment should be established for such bundle, and if a separate payment is established, whether it should be made only upon use of post acute care services or for every discharge.

(3)

Whether the bundle should be applied across all categories of providers of inpatient services (including critical access hospitals) and post acute care services or whether it should be limited to certain categories of providers, services, or discharges, such as high volume or high cost MS-DRGs.

(4)

The extent to which payment rates could be established to achieve offsets for efficiencies that could be expected to be achieved with a bundle payment, whether such rates should be established on a national basis or for different geographic areas, should vary according to discharge, case mix, outliers, and geographic differences in wages or other appropriate adjustments, and how to update such rates.

(5)

The nature of protections needed for individuals under a system of bundled payments to ensure that individuals receive quality care, are furnished the level and amount of services needed as determined by an appropriate assessment instrument, are offered choice of provider, and the extent to which transitional care services would improve quality of care for individuals and the functioning of a bundled post-acute system.

(6)

The nature of relationships that may be required between hospitals and providers of post acute care services to facilitate bundled payments, including the application of gainsharing, anti-referral, anti-kickback, and anti-trust laws.

(7)

Quality measures that would be appropriate for reporting by hospitals and post acute providers (such as measures that assess changes in functional status and quality measures appropriate for each type of post acute services provider including how the reporting of such quality measures could be coordinated with other reporting of such quality measures by such providers otherwise required).

(8)

How cost-sharing for a post acute care bundle should be treated relative to current rules for cost-sharing for inpatient hospital, home health, skilled nursing facility, and other services.

(9)

How other programmatic issues should be treated in a post acute care bundle, including rules specific to various types of post-acute providers such as the post-acute transfer policy, three-day hospital stay to qualify for services furnished by skilled nursing facilities, and the coordination of payments and care under the Medicare program and the Medicaid program.

(10)

Such other issues as the Secretary deems appropriate.

(c)

Consultations and analysis

(1)

Consultation with stakeholders

In developing the plan under subsection (a)(1), the Secretary shall consult with relevant stakeholders and shall consider experience with such research studies and demonstrations that the Secretary determines appropriate.

(2)

Analysis and data collection

In developing such plan, the Secretary shall—

(A)

analyze the issues described in subsection (b) and other issues that the Secretary determines appropriate;

(B)

analyze the impacts (including geographic impacts) of post acute service reform approaches, including bundling of such services on individuals, hospitals, post acute care providers, and physicians;

(C)

use existing data (such as data submitted on claims) and collect such data as the Secretary determines are appropriate to develop such plan required in this section; and

(D)

if patient functional status measures are appropriate for the analysis, to the extent practical, build upon the CARE tool being developed pursuant to section 5008 of the Deficit Reduction Act of 2005.

(d)

Administration

(1)

Funding

For purposes of carrying out the provisions of this section, in addition to funds otherwise available, out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Secretary for the Center for Medicare & Medicaid Services Program Management Account $15,000,000 for each of the fiscal years 2010 through 2012. Amounts appropriated under this paragraph for a fiscal year shall be available until expended.

(2)

Expedited data collection

Chapter 35 of title 44, United States Code shall not apply to this section.

(e)

Public reports

(1)

Interim reports

The Secretary shall issue interim public reports on a periodic basis on the plan described in subsection (a)(1), the issues described in subsection (b), and impact analyses as the Secretary determines appropriate.

(2)

Final report

Not later than the date that is 3 years after the date of the enactment of this Act, the Secretary shall issue a final public report on such plan, including analysis of issues described in subsection (b) and impact analyses.

(f)

Conversion of Acute Care Episode Demonstration to Pilot Program and Expansion to Include Post Acute Services

(1)

In general

Part E of title XVIII of the Social Security Act is amended by inserting after section 1866C the following new section:

1866D.

Conversion of Acute Care Episode Demonstration to Pilot Program and Expansion to Include Post Acute Services

(a)

In general

By not later than January 1, 2011, the Secretary shall, for the purpose of promoting the use of bundled payments to promote efficient and high quality delivery of care—

(1)

convert the acute care episode demonstration program conducted under section 1866C to a pilot program; and

(2)

subject to subsection (c), expand such program as so converted to include post acute services and such other services the Secretary determines to be appropriate, which may include transitional services.

(b)

Scope

The Secretary shall set specific goals for the number of acute and post-acute bundling test sites under the pilot program to ensure that the pilot program is of sufficient size and scope to—

(1)

test the approaches under the pilot program in a variety of settings, including urban, rural, and underserved areas;

(2)

include geographic areas and additional conditions that account for significant program spending, as defined by the Secretary; and

(3)

subject to subsection (d), disseminate the pilot program rapidly on a national basis.

To the extent that the Secretary finds inpatient and post-acute care bundling to be successful in improving quality and reducing costs, the Secretary shall implement such mechanisms and reforms under the pilot program on as large a geographic scale as practical and economical, consistent with subsection (e).
(c)

Limitation

The Secretary shall only expand the pilot program under subsection (a)(2) if the Secretary finds that—

(1)

the demonstration program under section 1866C and pilot program under this section maintain or increase the quality of care received by individuals enrolled under this title; and

(2)

such demonstration program and pilot program reduce program expenditures and, based on the certification under subsection (d), that the expansion of such pilot program would result in estimated spending that would be less than what spending would otherwise be in the absence of this section.

(d)

Certification

For purposes of subsection (c), the Chief Actuary of the Centers for Medicare & Medicaid Services shall certify whether expansion of the pilot program under this section would result in estimated spending that would be less than what spending would otherwise be in the absence of this section.

(e)

Voluntary participation

Nothing in this paragraph shall be construed as requiring the participation of an entity in the pilot program under this section.

.

(2)

Conforming amendment

Section 1866C(b) of the Social Security Act (42 U.S.C. 1395cc–3(b)) is amended by striking The Secretary and inserting Subject to section 1866D, the Secretary.

1153.

Home health payment update for 2010

Section 1895(b)(3)(B)(ii) of the Social Security Act (42 U.S.C. 1395fff(b)(3)(B)(ii)) is amended—

(1)

in subclause (IV), by striking and;

(2)

by redesignating subclause (V) as subclause (VII); and

(3)

by inserting after subclause (IV) the following new subclauses:

(V)

2007, 2008, and 2009, subject to clause (v), the home health market basket percentage increase;

(VI)

2010, subject to clause (v), 0 percent; and

.

1154.

Payment adjustments for home health care

(a)

Acceleration of adjustment for case mix changes

Section 1895(b)(3)(B) of the Social Security Act (42 U.S.C. 1395fff(b)(3)(B)) is amended—

(1)

in clause (iv), by striking “Insofar as” and inserting “Subject to clause (vi), insofar as”; and

(2)

by adding at the end the following new clause:

(vi)

Special rule for case mix changes for 2011

(I)

In general

With respect to the case mix adjustments established in section 484.220(a) of title 42, Code of Federal Regulations, the Secretary shall apply, in 2010, the adjustment established in paragraph (3) of such section for 2011, in addition to applying the adjustment established in paragraph (2) for 2010.

(II)

Construction

Nothing in this clause shall be construed as limiting the amount of adjustment for case mix for 2010 or 2011 if more recent data indicate an appropriate adjustment that is greater than the amount established in the section described in subclause (I).

.

(b)

Rebasing home health prospective payment amount

Section 1895(b)(3)(A) of the Social Security Act (42 U.S.C. 1395fff(b)(3)(A)) is amended—

(1)

in clause (i)—

(A)

in subclause (III), by inserting and before 2011 after after the period described in subclause (II); and

(B)

by inserting after subclause (III) the following new subclauses:

(IV)

Subject to clause (iii)(I), for 2011, such amount (or amounts) shall be adjusted by a uniform percentage determined to be appropriate by the Secretary based on analysis of factors such as changes in the average number and types of visits in an episode, the change in intensity of visits in an episode, growth in cost per episode, and other factors that the Secretary considers to be relevant.

(V)

Subject to clause (iii)(II), for a year after 2011, such a amount (or amounts) shall be equal to the amount (or amounts) determined under this clause for the previous year, updated under subparagraph (B).

; and

(2)

by adding at the end the following new clause:

(iii)

Special rule in case of inability to effect timely rebasing

(I)

Application of proxy amount for 2011

If the Secretary is not able to compute the amount (or amounts) under clause (i)(IV) so as to permit, on a timely basis, the application of such clause for 2011, the Secretary shall substitute for such amount (or amounts) 95 percent of the amount (or amounts) that would otherwise be specified under clause (i)(III) if it applied for 2011.

(II)

Adjustment for subsequent years based on data

If the Secretary applies subclause (I), the Secretary before July 1, 2011, shall compare the amount (or amounts) applied under such subclause with the amount (or amounts) that should have been applied under clause (i)(IV). The Secretary shall decrease or increase the prospective payment amount (or amounts) under clause (i)(V) for 2012 (or, at the Secretary’s discretion, over a period of several years beginning with 2012) by the amount (if any) by which the amount (or amounts) applied under subclause (I) is greater or less, respectively, than the amount (or amounts) that should have been applied under clause (i)(IV).

.

1155.

Incorporating productivity improvements into market basket update for home health services

(a)

In general

Section 1895(b)(3)(B) of the Social Security Act (42 U.S.C. 1395fff(b)(3)(B)) is amended—

(1)

in clause (iii), by inserting (including being subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II)) after in the same manner; and

(2)

in clause (v)(I), by inserting (but not below 0) after reduced.

(b)

Effective date

The amendment made by subsection (a) shall apply to home health market basket percentage increases for years beginning with 2010.

1156.

Limitation on Medicare exceptions to the prohibition on certain physician referrals made to hospitals

(a)

In general

Section 1877 of the Social Security Act (42 U.S.C. 1395nn) is amended—

(1)

in subsection (d)(2)—

(A)

in subparagraph (A), by striking and at the end;

(B)

in subparagraph (B), by striking the period at the end and inserting ; and; and

(C)

by adding at the end the following new subparagraph:

(C)

in the case where the entity is a hospital, the hospital meets the requirements of paragraph (3)(D).

;

(2)

in subsection (d)(3)—

(A)

in subparagraph (B), by striking and at the end;

(B)

in subparagraph (C), by striking the period at the end and inserting ; and; and

(C)

by adding at the end the following new subparagraph:

(D)

the hospital meets the requirements described in subsection (i)(1).

;

(3)

by amending subsection (f) to read as follows:

(f)

Reporting and disclosure requirements

(1)

In general

Each entity providing covered items or services for which payment may be made under this title shall provide the Secretary with the information concerning the entity's ownership, investment, and compensation arrangements, including—

(A)

the covered items and services provided by the entity, and

(B)

the names and unique physician identification numbers of all physicians with an ownership or investment interest (as described in subsection (a)(2)(A)), or with a compensation arrangement (as described in subsection (a)(2)(B)), in the entity, or whose immediate relatives have such an ownership or investment interest or who have such a compensation relationship with the entity.

Such information shall be provided in such form, manner, and at such times as the Secretary shall specify. The requirement of this subsection shall not apply to designated health services provided outside the United States or to entities which the Secretary determines provide services for which payment may be made under this title very infrequently.
(2)

Requirements for hospitals with physician ownership or investment

In the case of a hospital that meets the requirements described in subsection (i)(1), the hospital shall—

(A)

submit to the Secretary an initial report, and periodic updates at a frequency determined by the Secretary, containing a detailed description of the identity of each physician owner and physician investor and any other owners or investors of the hospital;

(B)

require that any referring physician owner or investor discloses to the individual being referred, by a time that permits the individual to make a meaningful decision regarding the receipt of services, as determined by the Secretary, the ownership or investment interest, as applicable, of such referring physician in the hospital; and

(C)

disclose the fact that the hospital is partially or wholly owned by one or more physicians or has one or more physician investors—

(i)

on any public website for the hospital; and

(ii)

in any public advertising for the hospital.

The information to be reported or disclosed under this paragraph shall be provided in such form, manner, and at such times as the Secretary shall specify. The requirements of this paragraph shall not apply to designated health services furnished outside the United States or to entities which the Secretary determines provide services for which payment may be made under this title very infrequently.
(3)

Publication of information

The Secretary shall publish, and periodically update, the information submitted by hospitals under paragraph (2)(A) on the public Internet website of the Centers for Medicare & Medicaid Services.

;

(4)

by amending subsection (g)(5) to read as follows:

(5)

Failure to report or disclose information

(A)

Reporting

Any person who is required, but fails, to meet a reporting requirement of paragraphs (1) and (2)(A) of subsection (f) is subject to a civil money penalty of not more than $10,000 for each day for which reporting is required to have been made.

(B)

Disclosure

Any physician who is required, but fails, to meet a disclosure requirement of subsection (f)(2)(B) or a hospital that is required, but fails, to meet a disclosure requirement of subsection (f)(2)(C) is subject to a civil money penalty of not more than $10,000 for each case in which disclosure is required to have been made.

(C)

Application

The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b)) shall apply to a civil money penalty under subparagraphs (A) and (B) in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).

; and

(5)

by adding at the end the following new subsection:

(i)

Requirements to qualify for rural provider and hospital ownership exceptions to self-referral prohibition

(1)

Requirements described

For purposes of subsection (d)(3)(D), the requirements described in this paragraph are as follows:

(A)

Provider agreement

The hospital had—

(i)

physician ownership or investment on January 1, 2009; and

(ii)

a provider agreement under section 1866 in effect on such date.

(B)

Prohibition on physician ownership or investment

The percentage of the total value of the ownership or investment interests held in the hospital, or in an entity whose assets include the hospital, by physician owners or investors in the aggregate does not exceed such percentage as of the date of enactment of this subsection.

(C)

Prohibition on expansion of facility capacity

Except as provided in paragraph (2), the number of operating rooms, procedure rooms, or beds of the hospital at any time on or after the date of the enactment of this subsection are no greater than the number of operating rooms, procedure rooms, or beds, respectively, as of such date.

(D)

Ensuring bona fide ownership and investment

(i)

Any ownership or investment interests that the hospital offers to a physician are not offered on more favorable terms than the terms offered to a person who is not in a position to refer patients or otherwise generate business for the hospital.

(ii)

The hospital (or any investors in the hospital) does not directly or indirectly provide loans or financing for any physician owner or investor in the hospital.

(iii)

The hospital (or any investors in the hospital) does not directly or indirectly guarantee a loan, make a payment toward a loan, or otherwise subsidize a loan, for any physician owner or investor or group of physician owners or investors that is related to acquiring any ownership or investment interest in the hospital.

(iv)

Ownership or investment returns are distributed to each owner or investor in the hospital in an amount that is directly proportional to the ownership or investment interest of such owner or investor in the hospital.

(v)

The investment interest of the owner or investor is directly proportional to the owner’s or investor’s capital contributions made at the time the ownership or investment interest is obtained.

(vi)

Physician owners and investors do not receive, directly or indirectly, any guaranteed receipt of or right to purchase other business interests related to the hospital, including the purchase or lease of any property under the control of other owners or investors in the hospital or located near the premises of the hospital.

(vii)

The hospital does not offer a physician owner or investor the opportunity to purchase or lease any property under the control of the hospital or any other owner or investor in the hospital on more favorable terms than the terms offered to a person that is not a physician owner or investor.

(viii)

The hospital does not condition any physician ownership or investment interests either directly or indirectly on the physician owner or investor making or influencing referrals to the hospital or otherwise generating business for the hospital.

(E)

Patient safety

In the case of a hospital that does not offer emergency services, the hospital has the capacity to—

(i)

provide assessment and initial treatment for medical emergencies; and

(ii)

if the hospital lacks additional capabilities required to treat the emergency involved, refer and transfer the patient with the medical emergency to a hospital with the required capability.

(F)

Limitation on application to certain converted facilities

The hospital was not converted from an ambulatory surgical center to a hospital on or after the date of enactment of this subsection.

(2)

Exception to prohibition on expansion of facility capacity

(A)

Process

(i)

Establishment

The Secretary shall establish and implement a process under which a hospital may apply for an exception from the requirement under paragraph (1)(C).

(ii)

Opportunity for community input

The process under clause (i) shall provide persons and entities in the community in which the hospital applying for an exception is located with the opportunity to provide input with respect to the application.

(iii)

Timing for implementation

The Secretary shall implement the process under clause (i) on the date that is one month after the promulgation of regulations described in clause (iv).

(iv)

Regulations

Not later than the first day of the month beginning 18 months after the date of the enactment of this subsection, the Secretary shall promulgate regulations to carry out the process under clause (i). The Secretary may issue such regulations as interim final regulations.

(B)

Frequency

The process described in subparagraph (A) shall permit a hospital to apply for an exception up to once every 2 years.

(C)

Permitted increase

(i)

In general

Subject to clause (ii) and subparagraph (D), a hospital granted an exception under the process described in subparagraph (A) may increase the number of operating rooms, procedure rooms, or beds of the hospital above the baseline number of operating rooms, procedure rooms, or beds, respectively, of the hospital (or, if the hospital has been granted a previous exception under this paragraph, above the number of operating rooms, procedure rooms, or beds, respectively, of the hospital after the application of the most recent increase under such an exception).

(ii)

100 percent increase limitation

The Secretary shall not permit an increase in the number of operating rooms, procedure rooms, or beds of a hospital under clause (i) to the extent such increase would result in the number of operating rooms, procedure rooms, or beds of the hospital exceeding 200 percent of the baseline number of operating rooms, procedure rooms, or beds of the hospital.

(iii)

Baseline number of operating rooms, procedure rooms, or beds

In this paragraph, the term baseline number of operating rooms, procedure rooms, or beds means the number of operating rooms, procedure rooms, or beds of a hospital as of the date of enactment of this subsection.

(D)

Increase limited to facilities on the main campus of the hospital

Any increase in the number of operating rooms, procedure rooms, or beds of a hospital pursuant to this paragraph may only occur in facilities on the main campus of the hospital.

(E)

Conditions for approval of an increase in facility capacity

The Secretary may grant an exception under the process described in subparagraph (A) only to a hospital—

(i)

that is located in a county in which the percentage increase in the population during the most recent 5-year period for which data are available is estimated to be at least 150 percent of the percentage increase in the population growth of the State in which the hospital is located during that period, as estimated by Bureau of the Census and available to the Secretary;

(ii)

whose annual percent of total inpatient admissions that represent inpatient admissions under the program under title XIX is estimated to be equal to or greater than the average percent with respect to such admissions for all hospitals located in the county in which the hospital is located;

(iii)

that does not discriminate against beneficiaries of Federal health care programs and does not permit physicians practicing at the hospital to discriminate against such beneficiaries;

(iv)

that is located in a State in which the average bed capacity in the State is estimated to be less than the national average bed capacity;

(v)

that has an average bed occupancy rate that is estimated to be greater than the average bed occupancy rate in the State in which the hospital is located; and

(vi)

that meets other conditions as determined by the Secretary.

(F)

Procedure rooms

In this subsection, the term procedure rooms includes rooms in which catheterizations, angiographies, angiograms, and endoscopies are furnished, but such term shall not include emergency rooms or departments (except for rooms in which catheterizations, angiographies, angiograms, and endoscopies are furnished).

(G)

Publication of final decisions

Not later than 120 days after receiving a complete application under this paragraph, the Secretary shall publish on the public Internet website of the Centers for Medicare & Medicaid Services the final decision with respect to such application.

(H)

Limitation on review

There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the exception process under this paragraph, including the establishment of such process, and any determination made under such process.

(3)

Physician owner or investor defined

For purposes of this subsection and subsection (f)(2), the term physician owner or investor means a physician (or an immediate family member of such physician) with a direct or an indirect ownership or investment interest in the hospital.

(4)

Patient safety requirement

In the case of a hospital to which the requirements of paragraph (1) apply, insofar as the hospital admits a patient and does not have any physician available on the premises 24 hours per day, 7 days per week, before admitting the patient—

(A)

the hospital shall disclose such fact to the patient; and

(B)

following such disclosure, the hospital shall receive from the patient a signed acknowledgment that the patient understands such fact.

(5)

Clarification

Nothing in this subsection shall be construed as preventing the Secretary from terminating a hospital’s provider agreement if the hospital is not in compliance with regulations pursuant to section 1866.

.

(b)

Verifying compliance

The Secretary of Health and Human Services shall establish policies and procedures to verify compliance with the requirements described in subsections (i)(1) and (i)(4) of section 1877 of the Social Security Act, as added by subsection (a)(5). The Secretary may use unannounced site reviews of hospitals and audits to verify compliance with such requirements.

(c)

Implementation

(1)

Funding

For purposes of carrying out the amendments made by subsection (a) and the provisions of subsection (b), in addition to funds otherwise available, out of any funds in the Treasury not otherwise appropriated there are appropriated to the Secretary of Health and Human Services for the Centers for Medicare & Medicaid Services Program Management Account $5,000,000 for each fiscal year beginning with fiscal year 2010. Amounts appropriated under this paragraph for a fiscal year shall be available until expended.

(2)

Administration

Chapter 35 of title 44, United States Code, shall not apply to the amendments made by subsection (a) and the provisions of subsection (b).

1157.

Institute of Medicine study of geographic adjustment factors under Medicare

(a)

In general

The Secretary of Health and Human Services shall enter into a contract with the Institute of Medicine of the National Academy of Science to conduct a comprehensive empirical study, and provide recommendations as appropriate, on the accuracy of the geographic adjustment factors established under sections 1848(e) and 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395w–4(e), 11395ww(d)(3)).

(b)

Matters included

Such study shall include an evaluation and assessment of the following with respect to such adjustment factors:

(1)

Empirical validity of the adjustment factors.

(2)

Methodology used to determine the adjustment factors.

(3)

Measures used for the adjustment factors, taking into account—

(A)

timeliness of data and frequency of revisions to such data;

(B)

sources of data and the degree to which such data are representative of costs; and

(C)

operational costs of providers who participate in Medicare.

(c)

Evaluation

Such study shall, within the context of the United States health care marketplace, evaluate and consider the following:

(1)

The effect of the adjustment factors on the level and distribution of the health care workforce and resources, including—

(A)

recruitment and retention that takes into account workforce mobility between urban and rural areas;

(B)

ability of hospitals and other facilities to maintain an adequate and skilled workforce; and

(C)

patient access to providers and needed medical technologies.

(2)

The effect of the adjustment factors on population health and quality of care.

(3)

The effect of the adjustment factors on the ability of providers to furnish efficient, high value care.

(d)

Report

The contract under subsection (a) shall provide for the Institute of Medicine to submit, not later than one year after the date of the enactment of this Act, to the Secretary and the Congress a report containing results and recommendations of the study conducted under this section.

(e)

Funding

There are authorized to be appropriated to carry out this section such sums as may be necessary.

1158.

Revision of Medicare payment systems to address geographic inequities

.

(a)

In general

Taking into account the recommendations described in the report under section 1157(d), and notwithstanding the geographic adjustments that would otherwise apply under sections 1848(e) and 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395w–4(e), 1395ww(d)(3)(E)), the Secretary of Health and Human Services shall include in proposed rules applicable to the rulemaking cycle for payment systems for physicians’ services and inpatient hospital services under sections 1848 and 1886(d) of such Act, respectively, proposals (as the Secretary determines to be appropriate) to revise the geographic adjustment factors used in such systems. Such proposals shall be contained in the next rulemaking cycle following the submission to the Secretary of the report under section 1157(d).

(b)

Payment adjustments

(1)

Funding for improvements

The Secretary shall use funds as provided under subsection (c) in making changes to the geographic adjustment factors pursuant to subsection (a). In making such changes to such geographic adjustment factors, the Secretary shall ensure that the estimated increased expenditures resulting from such changes does not exceed the amounts provided under subsection (c).

(2)

Ensuring fairness

In carrying out this subsection, the Secretary shall not reduce the geographic adjustment below the factor that applied for such payment system in the payment year before such changes.

(c)

Funding

Amounts in the Medicare Improvement Fund under section 1898, as amended by section 1146, shall be available to the Secretary to make changes to the geographic adjustments factors as described in subsections (a) and (b) with respect to services furnished before January 1, 2014. No more than one-half of such amounts shall be available with respect to services furnished in any one payment year.

D

Medicare Advantage Reforms

1

Payment and Administration

1161.

Phase-in of payment based on fee-for-service costs

Section 1853 of the Social Security Act (42 U.S.C. 1395w–23) is amended—

(1)

in subsection (j)(1)(A)—

(A)

by striking beginning with 2007 and inserting for 2007, 2008, 2009, and 2010; and

(B)

by inserting after (k)(1) the following: , or, beginning with 2011, 1/12 of the blended benchmark amount determined under subsection (n)(1); and

(2)

by adding at the end the following new subsection:

(n)

Determination of blended benchmark amount

(1)

In general

For purposes of subsection (j), subject to paragraphs (3) and (4), the term blended benchmark amount means for an area—

(A)

for 2011 the sum of—

(i)

2/3 of the applicable amount (as defined in subsection (k)) for the area and year; and

(ii)

1/3 of the amount specified in paragraph (2) for the area and year;

(B)

for 2012 the sum of—

(i)

1/3 of the applicable amount for the area and year; and

(ii)

2/3 of the amount specified in paragraph (2) for the area and year; and

(C)

for a subsequent year the amount specified in paragraph (2) for the area and year.

(2)

Specified amount

The amount specified in this paragraph for an area and year is the amount specified in subsection (c)(1)(D)(i) for the area and year adjusted (in a manner specified by the Secretary) to take into account the phase-out in the indirect costs of medical education from capitation rates described in subsection (k)(4).

(3)

Fee-for-service payment floor

In no case shall the blended benchmark amount for an area and year be less than the amount specified in paragraph (2).

(4)

Exception for PACE plans

This subsection shall not apply to payments to a PACE program under section 1894.

.

1162.

Quality bonus payments

(a)

In general

Section 1853 of the Social Security Act (42 U.S.C. 1395w-23), as amended by section 1161, is amended—

(1)

in subsection (j), by inserting subject to subsection (o), after For purposes of this part,; and

(2)

by adding at the end the following new subsection:

(o)

Quality based payment adjustment

(1)

High quality plan adjustment

For years beginning with 2011, in the case of a Medicare Advantage plan that is identified (under paragraph (3)(E)(ii)) as a high quality MA plan with respect to the year, the blended benchmark amount under subsection (n)(1) shall be increased—

(A)

for 2011, by 1.0 percent;

(B)

for 2012, by 2.0 percent; and

(C)

for a subsequent year, by 3.0 percent.

(2)

Improved quality plan adjustment

For years beginning with 2011, in the case of a Medicare Advantage plan that is identified (under paragraph (3)(E)(iii)) as an improved quality MA plan with respect to the year, blended benchmark amount under subsection (n)(1) shall be increased—

(A)

for 2011, by 0.33 percent;

(B)

for 2012, by 0.66 percent; and

(C)

for a subsequent year, by 1.0 percent.

(3)

Determinations of quality

(A)

Quality performance

The Secretary shall provide for the computation of a quality performance score for each Medicare Advantage plan to be applied for each year beginning with 2010.

(B)

Computation of score

(i)

For years before 2014

For years before 2014, the quality performance score for a Medicare Advantage plan shall be computed based on a blend (as designated by the Secretary) of the plan’s performance on—

(I)

HEDIS effectiveness of care quality measures;

(II)

CAHPS quality measures; and

(III)

such other measures of clinical quality as the Secretary may specify.

Such measures shall be risk-adjusted as the Secretary deems appropriate.
(ii)

Establishment of outcome-based measures

By not later than for 2013 the Secretary shall implement reporting requirements for quality under this section on measures selected under clause (iii) that reflect the outcomes of care experienced by individuals enrolled in Medicare Advantage plans (in addition to measures described in clause (i)). Such measures may include—

(I)

measures of rates of admission and readmission to a hospital;

(II)

measures of prevention quality, such as those established by the Agency for Healthcare Research and Quality (that include hospital admission rates for specified conditions);

(III)

measures of patient mortality and morbidity following surgery;

(IV)

measures of health functioning (such as limitations on activities of daily living) and survival for patients with chronic diseases;

(V)

measures of patient safety; and

(VI)

other measure of outcomes and patient quality of life as determined by the Secretary.

Such measures shall be risk-adjusted as the Secretary deems appropriate. In determining the quality measures to be used under this clause, the Secretary shall take into consideration the recommendations of the Medicare Payment Advisory Commission in its report to Congress under section 168 of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110–275) and shall provide preference to measures collected on and comparable to measures used in measuring quality under parts A and B.
(iii)

Rules for selection of measures

The Secretary shall select measures for purposes of clause (ii) consistent with the following:

(I)

The Secretary shall provide preference to clinical quality measures that have been endorsed by the entity with a contract with the Secretary under section 1890(a).

(II)

Prior to any measure being selected under this clause, the Secretary shall publish in the Federal Register such measure and provide for a period of public comment on such measure.

(iv)

Transitional use of blend

For payments for 2014 and 2015, the Secretary may compute the quality performance score for a Medicare Advantage plan based on a blend of the measures specified in clause (i) and the measures described in clause (ii) and selected under clause (iii).

(v)

Use of quality outcomes measures

For payments beginning with 2016, the preponderance of measures used under this paragraph shall be quality outcomes measures described in clause (ii) and selected under clause (iii).

(C)

Data used in computing score

Such score for application for—

(i)

payments in 2011 shall be based on quality performance data for plans for 2009; and

(ii)

payments in 2012 and a subsequent year shall be based on quality performance data for plans for the second preceding year.

(D)

Reporting of data

Each Medicare Advantage organization shall provide for the reporting to the Secretary of quality performance data described in subparagraph (B) (in order to determine a quality performance score under this paragraph) in such time and manner as the Secretary shall specify.

(E)

Ranking of plans

(i)

Initial ranking

Based on the quality performance score described in subparagraph (B) achieved with respect to a year, the Secretary shall rank plan performance—

(I)

from highest to lowest based on absolute scores; and

(II)

from highest to lowest based on percentage improvement in the score for the plan from the previous year.

A plan which does not report quality performance data under subparagraph (D) shall be counted, for purposes of such ranking, as having the lowest plan performance and lowest percentage improvement.
(ii)

Identification of high quality plans in top quintile based on projected enrollment

The Secretary shall, based on the scores for each plan under clause (i)(I) and the Secretary’s projected enrollment for each plan and subject to clause (iv), identify those Medicare Advantage plans with the highest score that, based upon projected enrollment, are projected to include in the aggregate 20 percent of the total projected enrollment for the year. For purposes of this subsection, a plan so identified shall be referred to in this subsection as a high quality MA plan.

(iii)

Identification of improved quality plans in top quintile based on projected enrollment

The Secretary shall, based on the percentage improvement score for each plan under clause (i)(II) and the Secretary’s projected enrollment for each plan and subject to clause (iv), identify those Medicare Advantage plans with the greatest percentage improvement score that, based upon projected enrollment, are projected to include in the aggregate 20 percent of the total projected enrollment for the year. For purposes of this subsection, a plan so identified that is not a high quality plan for the year shall be referred to in this subsection as an improved quality MA plan.

(iv)

Authority to disqualify certain plans

In applying clauses (ii) and (iii), the Secretary may determine not to identify a Medicare Advantage plan if the Secretary has identified deficiencies in the plan’s compliance with rules for such plans under this part.

(F)

Notification

The Secretary, in the annual announcement required under subsection (b)(1)(B) in 2011 and each succeeding year, shall notify the Medicare Advantage organization that is offering a high quality plan or an improved quality plan of such identification for the year and the quality performance payment adjustment for such plan for the year. The Secretary shall provide for publication on the website for the Medicare program of the information described in the previous sentence.

.

1163.

Extension of Secretarial coding intensity adjustment authority

Section 1853(a)(1)(C)(ii) of the Social Security Act (42 U.S.C. 1395w–23(a)(1)(C)(ii) is amended—

(1)

in the matter before subclause (I), by striking through 2010 and inserting and each subsequent year; and

(2)

in subclause (II)—

(A)

by inserting periodically before conduct an analysis;

(B)

by inserting on a timely basis after are incorporated; and

(C)

by striking only for 2008, 2009, and 2010 and inserting for 2008 and subsequent years.

1164.

Simplification of annual beneficiary election periods

(a)

2 week processing period for annual enrollment period (AEP)

Paragraph (3)(B) of section 1851(e) of the Social Security Act (42 U.S.C. 1395w–21(e)) is amended—

(1)

by striking and at the end of clause (iii);

(2)

in clause (iv)—

(A)

by striking and succeeding years and inserting , 2008, 2009, and 2010; and

(B)

by striking the period at the end and inserting ; and; and

(3)

by adding at the end the following new clause:

(v)

with respect to 2011 and succeeding years, the period beginning on November 1 and ending on December 15 of the year before such year.

.

(b)

Elimination of 3-month additional open enrollment period (OEP)

Effective for plan years beginning with 2011, paragraph (2) of such section is amended by striking subparagraph (C).

1165.

Extension of reasonable cost contracts

Section 1876(h)(5)(C) of the Social Security Act (42 U.S.C. 1395mm(h)(5)(C)) is amended—

(1)

in clause (ii), by striking January 1, 2010 and inserting January 1, 2012; and

(2)

in clause (iii), by striking the service area for the year and inserting the portion of the plan’s service area for the year that is within the service area of a reasonable cost reimbursement contract.

1166.

Limitation of waiver authority for employer group plans

(a)

In general

The first sentence of paragraph (2) of section 1857(i) of the Social Security Act (42 U.S.C. 1395w–27(i)) is amended by inserting before the period at the end the following: , but only if 90 percent of the Medicare Advantage eligible individuals enrolled under such plan reside in a county in which the MA organization offers an MA local plan.

(b)

Effective date

The amendment made by subsection (a) shall apply for plan years beginning on or after January 1, 2011, and shall not apply to plans which were in effect as of December 31, 2010.

1167.

Improving risk adjustment for payments

(a)

Report to Congress

Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall submit to Congress a report that evaluates the adequacy of the risk adjustment system under section 1853(a)(1)(C) of the Social Security Act (42 U.S.C. 1395-23(a)(1)(C)) in predicting costs for beneficiaries with chronic or co-morbid conditions, beneficiaries dually-eligible for Medicare and Medicaid, and non-Medicaid eligible low-income beneficiaries; and the need and feasibility of including further gradations of diseases or conditions and multiple years of beneficiary data.

(b)

Improvements to Risk Adjustment

Not later than January 1, 2012, the Secretary shall implement necessary improvements to the risk adjustment system under section 1853(a)(1)(C) of the Social Security Act (42 U.S.C. 1395–23(a)(1)(C)), taking into account the evaluation under subsection (a).

1168.

Elimination of MA Regional Plan Stabilization Fund

(a)

In general

Section 1858 of the Social Security Act (42 U.S.C. 1395w–27a) is amended by striking subsection (e).

(b)

Transition

Any amount contained in the MA Regional Plan Stabilization Fund as of the date of the enactment of this Act shall be transferred to the Federal Supplementary Medical Insurance Trust Fund.

1169.

Study regarding the effects of calculating Medicare Advantage payment rates on a regional average of Medicare fee for service rates

(a)

In general

The Administrator of the Centers for Medicare and Medicaid Services shall conduct a study to determine the potential effects of calculating Medicare Advantage payment rates on a more aggregated geographic basis (such as metropolitan statistical areas or other regional delineations) rather than using county boundaries. In conducting such study, the Administrator shall consider whether such alternative geographic basis would result in the following:

(1)

Improvements in the quality of care.

(2)

Greater equity among providers.

(3)

More predictable benchmark amounts for Medicare advantage plans.

(b)

Consultations

In conducting the study, the Administrator shall consult with the following:

(1)

Experts in health care financing.

(2)

Representatives of foundations and other nonprofit entities that have conducted or supported research on Medicare financing issues.

(3)

Representatives from Medicare Advantage plans.

(4)

Such other entities or people as determined by the Secretary.

(c)

Report

Not later than one year after the date of the enactment of this Act, the Administrator shall transmit a report to the Congress on the study conducted under this section. The report shall contain a detailed statement of findings and conclusions of the study, together with its recommendations for such legislation and administrative actions as the Administrator considers appropriate.

2

Beneficiary Protections and Anti-Fraud

1171.

Limitation on cost-sharing for individual health services

(a)

In general

Section 1852(a)(1) of the Social Security Act (42 U.S.C. 1395w–22(a)(1)) is amended—

(1)

in subparagraph (A), by inserting before the period at the end the following: with cost-sharing that is no greater (and may be less) than the cost-sharing that would otherwise be imposed under such program option;

(2)

in subparagraph (B)(i), by striking or an actuarially equivalent level of cost-sharing as determined in this part; and

(3)

by amending clause (ii) of subparagraph (B) to read as follows:

(ii)

Permitting use of flat copayment or per diem rate

Nothing in clause (i) shall be construed as prohibiting a Medicare Advantage plan from using a flat copayment or per diem rate, in lieu of the cost-sharing that would be imposed under part A or B, so long as the amount of the cost-sharing imposed does not exceed the amount of the cost-sharing that would be imposed under the respective part if the individual were not enrolled in a plan under this part.

.

(b)

Limitation for dual eligibles and qualified medicare beneficiaries

Section 1852(a) of such Act is amended to read as follows:

(7)

Limitation on cost-sharing for dual eligibles and qualified medicare beneficiaries

In the case of a individual who is a full-benefit dual eligible individual (as defined in section 1935(c)(6)) or a qualified medicare beneficiary (as defined in section 1905(p)(1)) who is enrolled in a Medicare Advantage plan, the plan may not impose cost-sharing that exceeds the amount of cost-sharing that would be permitted with respect to the individual under this title and title XIX if the individual were not enrolled with such plan.

.

(c)

Effective dates

(1)

The amendments made by subsection (a) shall apply to plan years beginning on or after January 1, 2011.

(2)

The amendments made by subsection (b) shall apply to plan years beginning on or after January 1, 2011.

1172.

Continuous open enrollment for enrollees in plans with enrollment suspension

Section 1851(e)(4) of the Social Security Act (42 U.S.C. 1395w(e)(4)) is amended—

(1)

in subparagraph (C), by striking at the end or;

(2)

in subparagraph (D)—

(A)

by inserting , taking into account the health or well-being of the individual before the period; and

(B)

by redesignating such subparagraph as subparagraph (E); and

(3)

by inserting after subparagraph (C) the following new subparagraph:

(D)

the individual is enrolled in an MA plan and enrollment in the plan is suspended under paragraph (2)(B) or (3)(C) of section 1857(g) because of a failure of the plan to meet applicable requirements; or

.

1173.

Information for beneficiaries on MA plan administrative costs

(a)

Disclosure of medical loss ratios and other expense data

Section 1851 of the Social Security Act (42 U.S.C. 1395w–21), as previously amended by this subtitle, is amended by adding at the end the following new subsection:

(p)

Publication of medical loss ratios and other cost-related information

(1)

In general

The Secretary shall publish, not later than November 1 of each year (beginning with 2011), for each MA plan contract, the medical loss ratio of the plan in the previous year.

(2)

Submission of data

(A)

In general

Each MA organization shall submit to the Secretary, in a form and manner specified by the Secretary, data necessary for the Secretary to publish the medical loss ratio on a timely basis.

(B)

Data for 2010 and 2011

The data submitted under subparagraph (A) for 2010 and for 2011 shall be consistent in content with the data reported as part of the MA plan bid in June 2009 for 2010.

(C)

Use of standardized elements and definitions

The data to be submitted under subparagraph (A) relating to medical loss ratio for a year, beginning with 2012, shall be submitted based on the standardized elements and definitions developed under paragraph (3).

(3)

Development of data reporting standards

(A)

In general

The Secretary shall develop and implement standardized data elements and definitions for reporting under this subsection, for contract years beginning with 2012, of data necessary for the calculation of the medical loss ratio for MA plans. Not later than December 31, 2010, the Secretary shall publish a report describing the elements and definitions so developed.

(B)

Consultation

The Secretary shall consult with the Health Choices Commissioner, representatives of MA organizations, experts on health plan accounting systems, and representatives of the National Association of Insurance Commissioners, in the development of such data elements and definitions.

(4)

Medical loss ratio to be defined

For purposes of this part, the term medical loss ratio has the meaning given such term by the Secretary, taking into account the meaning given such term by the Health Choices Commissioner under section 116 of the America’s Affordable Health Choices Act of 2009.

.

(b)

Minimum medical loss ratio

Section 1857(e) of the Social Security Act (42 U.S.C. 1395w–27(e)) is amended by adding at the end the following new paragraph:

(4)

Requirement for minimum medical loss ratio

If the Secretary determines for a contract year (beginning with 2014) that an MA plan has failed to have a medical loss ratio (as defined in section 1851(p)(4)) of at least .85—

(A)

the Secretary shall require the Medicare Advantage organization offering the plan to give enrollees a rebate (in the second succeeding contract year) of premiums under this part (or part B or part D, if applicable) by such amount as would provide for a benefits ratio of at least .85;

(B)

for 3 consecutive contract years, the Secretary shall not permit the enrollment of new enrollees under the plan for coverage during the second succeeding contract year; and

(C)

the Secretary shall terminate the plan contract if the plan fails to have such a medical loss ratio for 5 consecutive contract years.

.

1174.

Strengthening audit authority

(a)

For part C payments risk adjustment

Section 1857(d)(1) of the Social Security Act (42 U.S.C. 1395w–27(d)(1)) is amended by inserting after section 1858(c)) the following: , and data submitted with respect to risk adjustment under section 1853(a)(3).

(b)

Enforcement of audits and deficiencies

(1)

In general

Section 1857(e) of such Act, as amended by section 1173, is amended by adding at the end the following new paragraph:

(5)

Enforcement of audits and deficiencies

(A)

Information in contract

The Secretary shall require that each contract with an MA organization under this section shall include terms that inform the organization of the provisions in subsection (d).

(B)

Enforcement authority

The Secretary is authorized, in connection with conducting audits and other activities under subsection (d), to take such actions, including pursuit of financial recoveries, necessary to address deficiencies identified in such audits or other activities.

.

(2)

Application under part D

For provision applying the amendment made by paragraph (1) to prescription drug plans under part D, see section 1860D–12(b)(3)(D) of the Social Security Act.

(c)

Effective date

The amendments made by this section shall take effect on the date of the enactment of this Act and shall apply to audits and activities conducted for contract years beginning on or after January 1, 2011.

1175.

Authority to deny plan bids

(a)

In general

Section 1854(a)(5) of the Social Security Act (42 U.S.C. 1395w–24(a)(5)) is amended by adding at the end the following new subparagraph:

(C)

Rejection of bids

Nothing in this section shall be construed as requiring the Secretary to accept any or every bid by an MA organization under this subsection.

.

(b)

Application under part D

Section 1860D–11(d) of such Act (42 U.S.C. 1395w–111(d)) is amended by adding at the end the following new paragraph:

(3)

Rejection of bids

Paragraph (5)(C) of section 1854(a) shall apply with respect to bids under this section in the same manner as it applies to bids by an MA organization under such section.

.

(c)

Effective date

The amendments made by this section shall apply to bids for contract years beginning on or after January 1, 2011.

3

Treatment of special needs plans

1176.

Limitation on enrollment outside open enrollment period of individuals into chronic care specialized MA plans for special needs individuals

Section 1859(f)(4) of the Social Security Act (42 U.S.C. 1395w–28(f)(4)) is amended by adding at the end the following new subparagraph:

(C)

The plan does not enroll an individual on or after January 1, 2011, other than during an annual, coordinated open enrollment period or when at the time of the diagnosis of the disease or condition that qualifies the individual as an individual described in subsection (b)(6)(B)(iii).

.

1177.

Extension of authority of special needs plans to restrict enrollment

(a)

In general

Section 1859(f)(1) of the Social Security Act (42 U.S.C. 1395w–28(f)(1)) is amended by striking January 1, 2011 and inserting January 1, 2013 (or January 1, 2016, in the case of a plan described in section 1177(b)(1) of the America’s Affordable Health Choices Act of 2009).

(b)

Grandfathering of certain plans

(1)

Plans described

For purposes of section 1859(f)(1) of the Social Security Act (42 U.S.C. 1395w–28(f)(1)), a plan described in this paragraph is a plan that had a contract with a State that had a State program to operate an integrated Medicaid-Medicare program that had been approved by the Centers for Medicare & Medicaid Services as of January 1, 2004.

(2)

Analysis; report

The Secretary of Health and Human Services shall provide, through a contract with an independent health services evaluation organization, for an analysis of the plans described in paragraph (1) with regard to the impact of such plans on cost, quality of care, patient satisfaction, and other subjects as specified by the Secretary. Not later than December 31, 2011, the Secretary shall submit to Congress a report on such analysis and shall include in such report such recommendations with regard to the treatment of such plans as the Secretary deems appropriate.

E

Improvements to Medicare Part D

1181.

Elimination of coverage gap

(a)

In general

Section 1860D–2(b) of such Act (42 U.S.C. 1395w–102(b)) is amended—

(1)

in paragraph (3)(A), by striking paragraph (4) and inserting paragraphs (4) and (7);

(2)

in paragraph (4)(B)(i), by inserting subject to paragraph (7), after purposes of this part,; and

(3)

by adding at the end the following new paragraph:

(7)

Phased-in elimination of coverage gap

(A)

In general

For each year beginning with 2011, the Secretary shall consistent with this paragraph progressively increase the initial coverage limit (described in subsection (b)(3)) and decrease the annual out-of-pocket threshold from the amounts otherwise computed until there is a continuation of coverage from the initial coverage limit for expenditures incurred through the total amount of expenditures at which benefits are available under paragraph (4).

(B)

Increase in initial coverage limit

For a year beginning with 2011, the initial coverage limit otherwise computed without regard to this paragraph shall be increased by ½ of the cumulative phase-in percentage (as defined in subparagraph (D)(ii) for the year) times the out-of-pocket gap amount (as defined in subparagraph (E)) for the year.

(C)

Decrease in annual out-of-pocket threshold

For a year beginning with 2011, the annual out-of-pocket threshold otherwise computed without regard to this paragraph shall be decreased by ½ of the cumulative phase-in percentage of the out-of-pocket gap amount for the year multiplied by 1.75.

(D)

Phase–in

For purposes of this paragraph:

(i)

Annual phase-in percentage

The term annual phase-in percentage means—

(I)

for 2011, 13 percent;

(II)

for 2012, 2013, 2014, and 2015, 5 percent;

(III)

for 2016 through 2018, 7.5 percent; and

(IV)

for 2019 and each subsequent year, 10 percent.

(ii)

Cumulative phase-in percentage

The term cumulative phase-in percentage means for a year the sum of the annual phase-in percentage for the year and the annual phase-in percentages for each previous year beginning with 2011, but in no case more than 100 percent.

(E)

Out-of-pocket gap amount

For purposes of this paragraph, the term out-of-pocket gap amount means for a year the amount by which—

(i)

the annual out-of-pocket threshold specified in paragraph (4)(B) for the year (as determined as if this paragraph did not apply), exceeds

(ii)

the sum of—

(I)

the annual deductible under paragraph (1) for the year; and

(II)

1/4 of the amount by which the initial coverage limit under paragraph (3) for the year (as determined as if this paragraph did not apply) exceeds such annual deductible.

.

(b)

Requiring drug manufacturers to provide drug rebates for full-benefit dual eligibles

(1)

In general

Section 1860D–2 of the Social Security Act (42 U.S.C. 1396r–8) is amended—

(A)

in subsection (e)(1), in the matter before subparagraph (A), by inserting and subsection (f) after this subsection; and

(B)

by adding at the end the following new subsection:

(f)

Prescription drug rebate agreement for full-benefit dual eligible individuals

(1)

In general

In this part, the term covered part D drug does not include any drug or biologic that is manufactured by a manufacturer that has not entered into and have in effect a rebate agreement described in paragraph (2).

(2)

Rebate agreement

A rebate agreement under this subsection shall require the manufacturer to provide to the Secretary a rebate for each rebate period (as defined in paragraph (6)(B)) ending after December 31, 2010, in the amount specified in paragraph (3) for any covered part D drug of the manufacturer dispensed after December 31, 2010, to any full-benefit dual eligible individual (as defined in paragraph (6)(A)) for which payment was made by a PDP sponsor under part D or a MA organization under part C for such period. Such rebate shall be paid by the manufacturer to the Secretary not later than 30 days after the date of receipt of the information described in section 1860D–12(b)(7), including as such section is applied under section 1857(f)(3).

(3)

Rebate for full-benefit dual eligible Medicare drug plan enrollees

(A)

In general

The amount of the rebate specified under this paragraph for a manufacturer for a rebate period, with respect to each dosage form and strength of any covered part D drug provided by such manufacturer and dispensed to a full-benefit dual eligible individual, shall be equal to the product of—

(i)

the total number of units of such dosage form and strength of the drug so provided and dispensed for which payment was made by a PDP sponsor under part D or a MA organization under part C for the rebate period (as reported under section 1860D–12(b)(7), including as such section is applied under section 1857(f)(3)); and

(ii)

the amount (if any) by which—

(I)

the Medicaid rebate amount (as defined in subparagraph (B)) for such form, strength, and period, exceeds

(II)

the average Medicare drug program full-benefit dual eligible rebate amount (as defined in subparagraph (C)) for such form, strength, and period.

(B)

Medicaid rebate amount

For purposes of this paragraph, the term Medicaid rebate amount means, with respect to each dosage form and strength of a covered part D drug provided by the manufacturer for a rebate period—

(i)

in the case of a single source drug or an innovator multiple source drug, the amount specified in paragraph (1)(A)(ii) of section 1927(c) plus the amount, if any, specified in paragraph (2)(A)(ii) of such section, for such form, strength, and period; or

(ii)

in the case of any other covered outpatient drug, the amount specified in paragraph (3)(A)(i) of such section for such form, strength, and period.

(C)

Average Medicare drug program full-benefit dual eligible rebate amount

For purposes of this subsection, the term average Medicare drug program full-benefit dual eligible rebate amount means, with respect to each dosage form and strength of a covered part D drug provided by a manufacturer for a rebate period, the sum, for all PDP sponsors under part D and MA organizations administering a MA–PD plan under part C, of—

(i)

the product, for each such sponsor or organization, of—

(I)

the sum of all rebates, discounts, or other price concessions (not taking into account any rebate provided under paragraph (2) for such dosage form and strength of the drug dispensed, calculated on a per-unit basis, but only to the extent that any such rebate, discount, or other price concession applies equally to drugs dispensed to full-benefit dual eligible Medicare drug plan enrollees and drugs dispensed to PDP and MA–PD enrollees who are not full-benefit dual eligible individuals; and

(II)

the number of the units of such dosage and strength of the drug dispensed during the rebate period to full-benefit dual eligible individuals enrolled in the prescription drug plans administered by the PDP sponsor or the MA–PD plans administered by the MA–PD organization; divided by

(ii)

the total number of units of such dosage and strength of the drug dispensed during the rebate period to full-benefit dual eligible individuals enrolled in all prescription drug plans administered by PDP sponsors and all MA–PD plans administered by MA–PD organizations.

(4)

Length of agreement

The provisions of paragraph (4) of section 1927(b) (other than clauses (iv) and (v) of subparagraph (B)) shall apply to rebate agreements under this subsection in the same manner as such paragraph applies to a rebate agreement under such section.

(5)

Other terms and conditions

The Secretary shall establish other terms and conditions of the rebate agreement under this subsection, including terms and conditions related to compliance, that are consistent with this subsection.

(6)

Definitions

In this subsection and section 1860D–12(b)(7):

(A)

Full-benefit dual eligible individual

The term full-benefit dual eligible individual has the meaning given such term in section 1935(c)(6).

(B)

Rebate period

The term rebate period has the meaning given such term in section 1927(k)(8).

.

(2)

Reporting requirement for the determination and payment of rebates by manufactures related to rebate for full-benefit dual eligible Medicare drug plan enrollees

(A)

Requirements for PDP sponsors

Section 1860D–12(b) of the Social Security Act (42 U.S.C. 1395w–112(b)) is amended by adding at the end the following new paragraph:

(7)

Reporting requirement for the determination and payment of rebates by manufacturers related to rebate for full-benefit dual eligible Medicare drug plan enrollees

(A)

In general

For purposes of the rebate under section 1860D–2(f) for contract years beginning on or after January 1, 2011, each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan shall require that the sponsor comply with subparagraphs (B) and (C).

(B)

Report form and contents

Not later than 60 days after the end of each rebate period (as defined in section 1860D–2(f)(6)(B)) within such a contract year to which such section applies, a PDP sponsor of a prescription drug plan under this part shall report to each manufacturer—

(i)

information (by National Drug Code number) on the total number of units of each dosage, form, and strength of each drug of such manufacturer dispensed to full-benefit dual eligible Medicare drug plan enrollees under any prescription drug plan operated by the PDP sponsor during the rebate period;

(ii)

information on the price discounts, price concessions, and rebates for such drugs for such form, strength, and period;

(iii)

information on the extent to which such price discounts, price concessions, and rebates apply equally to full-benefit dual eligible Medicare drug plan enrollees and PDP enrollees who are not full-benefit dual eligible Medicare drug plan enrollees; and

(iv)

any additional information that the Secretary determines is necessary to enable the Secretary to calculate the average Medicare drug program full-benefit dual eligible rebate amount (as defined in paragraph (3)(C) of such section), and to determine the amount of the rebate required under this section, for such form, strength, and period.

Such report shall be in a form consistent with a standard reporting format established by the Secretary.
(C)

Submission to Secretary

Each PDP sponsor shall promptly transmit a copy of the information reported under subparagraph (B) to the Secretary for the purpose of audit oversight and evaluation.

(D)

Confidentiality of information

The provisions of subparagraph (D) of section 1927(b)(3), relating to confidentiality of information, shall apply to information reported by PDP sponsors under this paragraph in the same manner that such provisions apply to information disclosed by manufacturers or wholesalers under such section, except—

(i)

that any reference to this section in clause (i) of such subparagraph shall be treated as being a reference to this section;

(ii)

the reference to the Director of the Congressional Budget Office in clause (iii) of such subparagraph shall be treated as including a reference to the Medicare Payment Advisory Commission; and

(iii)

clause (iv) of such subparagraph shall not apply.

(E)

Oversight

Information reported under this paragraph may be used by the Inspector General of the Department of Health and Human Services for the statutorily authorized purposes of audit, investigation, and evaluations.

(F)

Penalties for failure to provide timely information and provision of false information

In the case of a PDP sponsor—

(i)

that fails to provide information required under subparagraph (B) on a timely basis, the sponsor is subject to a civil money penalty in the amount of $10,000 for each day in which such information has not been provided; or

(ii)

that knowingly (as defined in section 1128A(i)) provides false information under such subparagraph, the sponsor is subject to a civil money penalty in an amount not to exceed $100,000 for each item of false information.

Such civil money penalties are in addition to other penalties as may be prescribed by law. The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this subparagraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).

.

(B)

Application to MA organizations

Section 1857(f)(3) of the Social Security Act (42 U.S.C. 1395w–27(f)(3)) is amended by adding at the end the following:

(D)

Reporting requirement related to rebate for full-benefit dual eligible Medicare drug plan enrollees

Section 1860D–12(b)(7).

.

(3)

Deposit of rebates into Medicare Prescription Drug Account

Section 1860D–16(c) of such Act (42 U.S.C. 1395w–116(c)) is amended by adding at the end the following new paragraph:

(6)

Rebate for full-benefit dual eligible Medicare drug plan enrollees

Amounts paid under a rebate agreement under section 1860D–2(f) shall be deposited into the Account and shall be used to pay for all or part of the gradual elimination of the coverage gap under section 1860D–2(b)(7).

.

1182.

Discounts for certain part D drugs in original coverage gap

Section 1860D–2 of the Social Security Act (42 U.S.C. 1395w–102), as amended by section 1181, is amended—

(1)

in subsection (b)(4)(C)(ii), by inserting subject to subsection (g)(2)(C), after (ii);

(2)

in subsection (e)(1), in the matter before subparagraph (A), by striking subsection (f) and inserting subsections (f) and (g); and

(3)

by adding at the end the following new subsection:

(g)

Requirement for manufacturer discount agreement for certain qualifying drugs

(1)

In general

In this part, the term covered part D drug does not include any drug or biologic that is manufactured by a manufacturer that has not entered into and have in effect for all qualifying drugs (as defined in paragraph (5)(A)) a discount agreement described in paragraph (2).

(2)

Discount agreement

(A)

Periodic discounts

A discount agreement under this paragraph shall require the manufacturer involved to provide, to each PDP sponsor with respect to a prescription drug plan or each MA organization with respect to each MA-PD plan, a discount in an amount specified in paragraph (3) for qualifying drugs (as defined in paragraph (5)(A)) of the manufacturer dispensed to a qualifying enrollee after December 31, 2010, insofar as the individual is in the original gap in coverage (as defined in paragraph (5)(E)).

(B)

Discount agreement

Insofar as not inconsistent with this subsection, the Secretary shall establish terms and conditions of such agreement, including terms and conditions relating to compliance, similar to the terms and conditions for rebate agreements under paragraphs (2), (3), and (4) of section 1927(b), except that—

(i)

discounts shall be applied under this subsection to prescription drug plans and MA-PD plans instead of State plans under title XIX;

(ii)

PDP sponsors and MA organizations shall be responsible, instead of States, for provision of necessary utilization information to drug manufacturers; and

(iii)

sponsors and MA organizations shall be responsible for reporting information on drug-component negotiated price, instead of other manufacturer prices.

(C)

Counting discount toward true out-of-pocket costs

Under the discount agreement, in applying subsection (b)(4), with regard to subparagraph (C)(i) of such subsection, if a qualified enrollee purchases the qualified drug insofar as the enrollee is in an actual gap of coverage (as defined in paragraph (5)(D)), the amount of the discount under the agreement shall be treated and counted as costs incurred by the plan enrollee.

(3)

Discount amount

The amount of the discount specified in this paragraph for a discount period for a plan is equal to 50 percent of the amount of the drug-component negotiated price (as defined in paragraph (5)(C)) for qualifying drugs for the period involved.

(4)

Additional terms

In the case of a discount provided under this subsection with respect to a prescription drug plan offered by a PDP sponsor or an MA-PD plan offered by an MA organization, if a qualified enrollee purchases the qualified drug—

(A)

insofar as the enrollee is in an actual gap of coverage (as defined in paragraph (5)(D)), the sponsor or plan shall provide the discount to the enrollee at the time the enrollee pays for the drug; and

(B)

insofar as the enrollee is in the portion of the original gap in coverage (as defined in paragraph (5)(E)) that is not in the actual gap in coverage, the discount shall not be applied against the negotiated price (as defined in subsection (d)(1)(B)) for the purpose of calculating the beneficiary payment.

(5)

Definitions

In this subsection:

(A)

Qualifying drug

The term qualifying drug means, with respect to a prescription drug plan or MA-PD plan, a drug or biological product that—

(i)
(I)

is a drug produced or distributed under an original new drug application approved by the Food and Drug Administration, including a drug product marketed by any cross-licensed producers or distributors operating under the new drug application;

(II)

is a drug that was originally marketed under an original new drug application approved by the Food and Drug Administration; or

(III)

is a biological product as approved under section 351(a) of the Public Health Services Act;

(ii)

is covered under the formulary of the plan; and

(iii)

is dispensed to an individual who is in the original gap in coverage.

(B)

Qualifying enrollee

The term qualifying enrollee means an individual enrolled in a prescription drug plan or MA-PD plan other than such an individual who is a subsidy-eligible individual (as defined in section 1860D–14(a)(3)).

(C)

Drug-component negotiated price

The term drug-component negotiated price means, with respect to a qualifying drug, the negotiated price (as defined in subsection (d)(1)(B)), as determined without regard to any dispensing fee, of the drug under the prescription drug plan or MA-PD plan involved.

(D)

Actual gap in coverage

The term actual gap in coverage means the gap in prescription drug coverage that occurs between the initial coverage limit (as modified under subparagraph (B) of subsection (b)(7)) and the annual out-of-pocket threshold (as modified under subparagraph (C) of such subsection).

(E)

Original gap in coverage

The term original in gap coverage means the gap in prescription drug coverage that would occur between the initial coverage limit (described in subsection (b)(3)) and the annual out-of-pocket threshold (as defined in subsection (b)(4)(B)) if subsection (b)(7) did not apply.

.

1183.

Repeal of provision relating to submission of claims by pharmacies located in or contracting with long-term care facilities

(a)

Part D submission

Section 1860D–12(b) of the Social Security Act (42 U.S.C. 1395w–112(b)), as amended by section 172(a)(1) of Public Law 110-275, is amended by striking paragraph (5) and redesignating paragraph (6) and paragraph (7), as added by section 1181(b)(2), as paragraph (5) and paragraph (6), respectively.

(b)

Submission to MA-PD plans

Section 1857(f)(3) of the Social Security Act (42 U.S.C. 1395w-27(f)(3)), as added by section 171(b) of Public Law 110-275 and amended by section 172(a)(2) of such Public Law and section 1181 of this Act, is amended by striking subparagraph (B) and redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively.

(c)

Effective date

The amendments made by this section shall apply for contract years beginning with 2010.

1184.

Including costs incurred by AIDS drug assistance programs and Indian Health Service in providing prescription drugs toward the annual out-of-pocket threshold under part D

(a)

In general

Section 1860D–2(b)(4)(C) of the Social Security Act (42 U.S.C. 1395w–102(b)(4)(C)) is amended—

(1)

in clause (i), by striking and at the end;

(2)

in clause (ii)—

(A)

by striking such costs shall be treated as incurred only if and inserting subject to clause (iii), such costs shall be treated as incurred only if;

(B)

by striking , under section 1860D–14, or under a State Pharmaceutical Assistance Program; and

(C)

by striking the period at the end and inserting ; and; and

(3)

by inserting after clause (ii) the following new clause:

(iii)

such costs shall be treated as incurred and shall not be considered to be reimbursed under clause (ii) if such costs are borne or paid—

(I)

under section 1860D–14;

(II)

under a State Pharmaceutical Assistance Program;

(III)

by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization (as defined in section 4 of the Indian Health Care Improvement Act); or

(IV)

under an AIDS Drug Assistance Program under part B of title XXVI of the Public Health Service Act.

.

(b)

Effective date

The amendments made by subsection (a) shall apply to costs incurred on or after January 1, 2011.

1185.

Permitting mid-year changes in enrollment for formulary changes that adversely impact an enrollee

(a)

In general

Section 1860D–1(b)(3) of the Social Security Act (42 U.S.C. 1395w–101(b)(3)) is amended by adding at the end the following new subparagraph:

(F)

Change in formulary resulting in increase in cost-sharing

(i)

In general

Except as provided in clause (ii), in the case of an individual enrolled in a prescription drug plan (or MA–PD plan) who has been prescribed and is using a covered part D drug while so enrolled, if the formulary of the plan is materially changed (other than at the end of a contract year) so to reduce the coverage (or increase the cost-sharing) of the drug under the plan.

(ii)

Exception

Clause (i) shall not apply in the case that a drug is removed from the formulary of a plan because of a recall or withdrawal of the drug issued by the Food and Drug Administration, because the drug is replaced with a generic drug that is a therapeutic equivalent, or because of utilization management applied to—

(I)

a drug whose labeling includes a boxed warning required by the Food and Drug Administration under section 210.57(c)(1) of title 21, Code of Federal Regulations (or a successor regulation); or

(II)

a drug required under subsection (c)(2) of section 505–1 of the Federal Food, Drug, and Cosmetic Act to have a Risk Evaluation and Management Strategy that includes elements under subsection (f) of such section.

.

(b)

Effective date

The amendment made by subsection (a) shall apply to contract years beginning on or after January 1, 2011.

1186.

Negotiation of lower covered part D drug prices on behalf of Medicare beneficiaries

(a)

Negotiation by Secretary

Section 1860D–11 of the Social Security Act (42 U.S.C. 1395w–111) is amended by striking subsection (i) (relating to noninterference) and inserting the following:

(i)

Negotiation of Lower Drug Prices

(1)

In general

Notwithstanding any other provision of law, the Secretary shall negotiate with pharmaceutical manufacturers the prices (including discounts, rebates, and other price concessions) that may be charged to PDP sponsors and MA organizations for covered part D drugs for part D eligible individuals who are enrolled under a prescription drug plan or under an MA-PD plan.

(2)

No change in rules for formularies

(A)

In general

Nothing in paragraph (1) shall be construed to authorize the Secretary to establish or require a particular formulary.

(B)

Construction

Subparagraph (A) shall not be construed as affecting the Secretary’s authority to ensure appropriate and adequate access to covered part D drugs under prescription drug plans and under MA-PD plans, including compliance of such plans with formulary requirements under section 1860D–4(b)(3).

(3)

Construction

Nothing in this subsection shall be construed as preventing the sponsor of a prescription drug plan, or an organization offering an MA-PD plan, from obtaining a discount or reduction of the price for a covered part D drug below the price negotiated under paragraph (1).

(4)

Semi-annual reports to congress

Not later than June 1, 2011, and every six months thereafter, the Secretary shall submit to the Committees on Ways and Means, Energy and Commerce, and Oversight and Government Reform of the House of Representatives and the Committee on Finance of the Senate a report on negotiations conducted by the Secretary to achieve lower prices for Medicare beneficiaries, and the prices and price discounts achieved by the Secretary as a result of such negotiations.

.

(b)

Effective date

The amendment made by subsection (a) shall take effect on the date of the enactment of this Act and shall first apply to negotiations and prices for plan years beginning on January 1, 2011.

1187.

State certification prior to waiver of licensure requirements under Medicare prescription drug program

(a)

In general

Section 1860D–12(c) of the Social Security Act (42 U.S.C. 1395w–112(c)) is amended—

(1)

in paragraph (1)(A), by striking In the case and inserting Subject to paragraph (5), in the case; and

(2)

by adding at the end the following new paragraph:

(5)

State certification required

(A)

In general

The Secretary may only grant a waiver under paragraph (1)(A) if the Secretary has received a certification from the State insurance commissioner that the prescription drug plan has a substantially complete application pending in the State.

(B)

Revocation of waiver upon finding of fraud and abuse

The Secretary shall revoke a waiver granted under paragraph (1)(A) if the State insurance commissioner submits a certification to the Secretary that the recipient of such a waiver—

(i)

has committed fraud or abuse with respect to such waiver;

(ii)

has failed to make a good faith effort to satisfy State licensing requirements; or

(iii)

was determined ineligible for licensure by the State.

.

(b)

Effective date

The amendments made by subsection (a) shall apply with respect to plan years beginning on or after January 1, 2010.

F

Medicare Rural Access Protections

1191.

Telehealth expansion and enhancements

.

(a)

Additional telehealth site

(1)

In general

Paragraph (4)(C)(ii) of section 1834(m) of the Social Security Act (42 U.S.C. 1395m(m)) is amended by adding at the end the following new subclause:

(IX)

A renal dialysis facility.

(2)

Effective date

The amendment made by paragraph (1) shall apply to services furnished on or after January 1, 2011.

(b)

Telehealth Advisory Committee

(1)

Establishment

Section 1868 of the Social Security Act (42 U.S.C. 1395ee) is amended—

(A)

in the heading, by adding at the end the following: telehealth advisory committee; and

(B)

by adding at the end the following new subsection:

(c)

Telehealth advisory committee

(1)

In general

The Secretary shall appoint a Telehealth Advisory Committee (in this subsection referred to as the Advisory Committee) to make recommendations to the Secretary on policies of the Centers for Medicare & Medicaid Services regarding telehealth services as established under section 1834(m), including the appropriate addition or deletion of services (and HCPCS codes) to those specified in paragraphs (4)(F)(i) and (4)(F)(ii) of such section and for authorized payment under paragraph (1) of such section.

(2)

Membership; terms

(A)

Membership

(i)

In general

The Advisory Committee shall be composed of 9 members, to be appointed by the Secretary, of whom—

(I)

5 shall be practicing physicians;

(II)

2 shall be practicing non-physician health care practitioners; and

(III)

2 shall be administrators of telehealth programs.

(ii)

Requirements for appointing members

In appointing members of the Advisory Committee, the Secretary shall—

(I)

ensure that each member has prior experience with the practice of telemedicine or telehealth;

(II)

give preference to individuals who are currently providing telemedicine or telehealth services or who are involved in telemedicine or telehealth programs;

(III)

ensure that the membership of the Advisory Committee represents a balance of specialties and geographic regions; and

(IV)

take into account the recommendations of stakeholders.

(B)

Terms

The members of the Advisory Committee shall serve for such term as the Secretary may specify.

(C)

Conflicts of interest

An advisory committee member may not participate with respect to a particular matter considered in an advisory committee meeting if such member (or an immediate family member of such member) has a financial interest that could be affected by the advice given to the Secretary with respect to such matter.

(3)

Meetings

The Advisory Committee shall meet twice each calendar year and at such other times as the Secretary may provide.

(4)

Permanent committee

Section 14 of the Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Advisory Committee.

(2)

Following recommendations

Section 1834(m)(4)(F) of such Act (42 U.S.C. 1395m(m)(4)(F)) is amended by adding at the end the following new clause:

(iii)

Recommendations of the telehealth advisory committee

In making determinations under clauses (i) and (ii), the Secretary shall take into account the recommendations of the Telehealth Advisory Committee (established under section 1868(c)) when adding or deleting services (and HCPCS codes) and in establishing policies of the Centers for Medicare & Medicaid Services regarding the delivery of telehealth services. If the Secretary does not implement such a recommendation, the Secretary shall publish in the Federal Register a statement regarding the reason such recommendation was not implemented.

(3)

Waiver of administrative limitation

The Secretary of Health and Human Services shall establish the Telehealth Advisory Committee under the amendment made by paragraph (1) notwithstanding any limitation that may apply to the number of advisory committees that may be established (within the Department of Health and Human Services or otherwise).

1192.

Extension of outpatient hold harmless provision

Section 1833(t)(7)(D)(i) of the Social Security Act (42 U.S.C. 1395l(t)(7)(D)(i)) is amended—

(1)

in subclause (II)—

(A)

in the first sentence, by striking `2010 and inserting 2012; and

(B)

in the second sentence, by striking or 2009 and inserting , 2009, 2010, or 2011; and

(2)

in subclause (III), by striking January 1, 2010 and inserting January 1, 2012.

1193.

Extension of section 508 hospital reclassifications

Subsection (a) of section 106 of division B of the Tax Relief and Health Care Act of 2006 (42 U.S.C. 1395 note), as amended by section 117 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 110–173) and section 124 of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110–275), is amended by striking September 30, 2009 and inserting September 30, 2011.

1194.

Extension of geographic floor for work

Section 1848(e)(1)(E) of the Social Security Act (42 U.S.C. 1395w–4(e)(1)(E)) is amended by striking before January 1, 2010 and inserting before January 1, 2012.

1195.

Extension of payment for technical component of certain physician pathology services

Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (as enacted into law by section 1(a)(6) of Public Law 106–554), as amended by section 732 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (42 U.S.C. 1395w–4 note), section 104 of division B of the Tax Relief and Health Care Act of 2006 (42 U.S.C. 1395w–4 note), section 104 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 110–173), and section 136 of the Medicare Improvements for Patients and Providers Act of 1008 (Public Law 110–275), is amended by striking and 2009 and inserting 2009, 2010, and 2011.

1196.

Extension of ambulance add-ons

(a)

In general

Section 1834(l)(13) of the Social Security Act (42 U.S.C. 1395m(l)(13)) is amended—

(1)

in subparagraph (A)—

(A)

in the matter preceding clause (i), by striking before January 1, 2010 and inserting before January 1, 2012; and

(B)

in each of clauses (i) and (ii), by striking before January 1, 2010 and inserting before January 1, 2012.

(b)

Air Ambulance Improvements

Section 146(b)(1) of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110–275) is amended by striking ending on December 31, 2009 and inserting ending on December 31, 2011.

1197.

Ensuring proportional representation of interests of rural areas on MedPAC

(a)

In General

Section 1805(c)(2) of the Social Security Act (42 U.S.C. 1395b-6(c)(2)) is amended—

(1)

in subparagraph (A), by inserting consistent with subparagraph (E) after rural representatives; and

(2)

by adding at the end the following new subparagraph:

(E)

Proportional representation of interests of rural areas

In order to provide a balance between urban and rural representatives under subparagraph (A), the proportion of members of the Commission who represent the interests of health care providers and Medicare beneficiaries located in rural areas shall be no less than the proportion of the total number of Medicare beneficiaries who reside in rural areas.

.

(b)

Effective Date

The amendments made by subsection (a) shall apply to appointments to the Medicare Payment Advisory Commission made after the date of the enactment of this Act.

II

Medicare Beneficiary Improvements

A

Improving and Simplifying Financial Assistance for Low Income Medicare Beneficiaries

1201.

Improving assets tests for Medicare Savings Program and low-income subsidy program

(a)

Application of highest level permitted under LIS to all subsidy eligible individuals

(1)

In general

Section 1860D–14(a)(1) of the Social Security Act (42 U.S.C. 1395w–114(a)(1)) is amended in the matter before subparagraph (A), by inserting (or, beginning with 2012, paragraph (3)(E)) after paragraph (3)(D).

(2)

Annual increase in LIS resource test

Section 1860D–14(a)(3)(E)(i) of such Act (42 U.S.C. 1395w–114(a)(3)(E)(i)) is amended—

(A)

by striking and at the end of subclause (I);

(B)

in subclause (II), by inserting (before 2012) after subsequent year;

(C)

by striking the period at the end of subclause (II) and inserting a semicolon;

(D)

by inserting after subclause (II) the following new subclauses:

(III)

for 2012, $17,000 (or $34,000 in the case of the combined value of the individual's assets or resources and the assets or resources of the individual's spouse); and

(IV)

for a subsequent year, the dollar amounts specified in this subclause (or subclause (III)) for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.

; and

(E)

in the last sentence, by inserting or (IV) after subclause (II).

(3)

Application of LIS test under Medicare Savings Program

Section 1905(p)(1)(C) of such Act (42 U.S.C. 1396d(p)(1)(C)) is amended—

(A)

by striking effective beginning with January 1, 2010 and inserting effective for the period beginning with January 1, 2010, and ending with December 31, 2011; and

(B)

by inserting before the period at the end the following: or, effective beginning with January 1, 2012, whose resources (as so determined) do not exceed the maximum resource level applied for the year under subparagraph (E) of section 1860D–14(a)(3) (determined without regard to the life insurance policy exclusion provided under subparagraph (G) of such section) applicable to an individual or to the individual and the individual’s spouse (as the case may be).

(b)

Effective date

The amendments made by subsection (a) shall apply to eligibility determinations for income-related subsidies and medicare cost-sharing furnished for periods beginning on or after January 1, 2012.

1202.

Elimination of part D cost-sharing for certain noninstitutionalized full-benefit dual eligible individuals

(a)

In general

Section 1860D–14(a)(1)(D)(i) of the Social Security Act (42 U.S.C. 1395w–114(a)(1)(D)(i)) is amended—

(1)

by striking Institutionalized individuals.—In and inserting

Elimination of cost-sharing for certain full-benefit dual eligible individuals.—

(I)

Institutionalized individuals

In

; and

(2)

by adding at the end the following new subclause:

(II)

Certain other individuals

In the case of an individual who is a full-benefit dual eligible individual and with respect to whom there has been a determination that but for the provision of home and community based care (whether under section 1915, 1932, or under a waiver under section 1115) the individual would require the level of care provided in a hospital or a nursing facility or intermediate care facility for the mentally retarded the cost of which could be reimbursed under the State plan under title XIX, the elimination of any beneficiary coinsurance described in section 1860D–2(b)(2) (for all amounts through the total amount of expenditures at which benefits are available under section 1860D–2(b)(4)).

.

(b)

Effective date

The amendments made by subsection (a) shall apply to drugs dispensed on or after January 1, 2011.

1203.

Eliminating barriers to enrollment

(a)

Administrative verification of income and resources under the low-income subsidy program

(1)

In general

Clause (iii) of section 1860D–14(a)(3)(E) of the Social Security Act (42 U.S.C. 1395w–114(a)(3)(E)) is amended to read as follows:

(iii)

Certification of income and resources

For purposes of applying this section—

(I)

an individual shall be permitted to apply on the basis of self-certification of income and resources; and

(II)

matters attested to in the application shall be subject to appropriate methods of verification without the need of the individual to provide additional documentation, except in extraordinary situations as determined by the Commissioner.

.

(2)

Effective date

The amendment made by paragraph (1) shall apply beginning January 1, 2010.

(b)

Disclosures to facilitate identification of individuals likely to be ineligible for the low-income assistance under the medicare prescription drug program to assist social security administration’s outreach to eligible individuals

For provision authorizing disclosure of return information to facilitate identification of individuals likely to be ineligible for low-income subsidies under Medicare prescription drug program, see section 1801.

1204.

Enhanced oversight relating to reimbursements for retroactive low income subsidy enrollment

(a)

In general

In the case of a retroactive LIS enrollment beneficiary who is enrolled under a prescription drug plan under part D of title XVIII of the Social Security Act (or an MA-PD plan under part C of such title), the beneficiary (or any eligible third party) is entitled to reimbursement by the plan for covered drug costs incurred by the beneficiary during the retroactive coverage period of the beneficiary in accordance with subsection (b) and in the case of such a beneficiary described in subsection (c)(4)(A)(i), such reimbursement shall be made automatically by the plan upon receipt of appropriate notice the beneficiary is eligible for assistance described in such subsection (c)(4)(A)(i) without further information required to be filed with the plan by the beneficiary.

(b)

Administrative Requirements Relating to Reimbursements

(1)

Line-item description

Each reimbursement made by a prescription drug plan or MA-PD plan under subsection (a) shall include a line-item description of the items for which the reimbursement is made.

(2)

Timing of reimbursements

A prescription drug plan or MA-PD plan must make a reimbursement under subsection (a) to a retroactive LIS enrollment beneficiary, with respect to a claim, not later than 45 days after—

(A)

in the case of a beneficiary described in subsection (c)(4)(A)(i), the date on which the plan receives notice from the Secretary that the beneficiary is eligible for assistance described in such subsection; or

(B)

in the case of a beneficiary described in subsection (c)(4)(A)(ii), the date on which the beneficiary files the claim with the plan.

(3)

Reporting requirement

For each month beginning with January 2011, each prescription drug plan and each MA-PD plan shall report to the Secretary the following:

(A)

The number of claims the plan has readjudicated during the month due to a beneficiary becoming retroactively eligible for subsidies available under section 1860D-14 of the Social Security Act.

(B)

The total value of the readjudicated claim amount for the month.

(C)

The Medicare Health Insurance Claims Number of beneficiaries for whom claims were readjudicated.

(D)

For the claims described in subparagraphs (A) and (B), an attestation to the Administrator of the Centers for Medicare & Medicaid Services of the total amount of reimbursement the plan has provided to beneficiaries for premiums and cost-sharing that the beneficiary overpaid for which the plan received payment from the Centers for Medicare & Medicaid Services.

(c)

Definitions

For purposes of this section:

(1)

Covered drug costs

The term covered drug costs means, with respect to a retroactive LIS enrollment beneficiary enrolled under a prescription drug plan under part D of title XVIII of the Social Security Act (or an MA-PD plan under part C of such title), the amount by which—

(A)

the costs incurred by such beneficiary during the retroactive coverage period of the beneficiary for covered part D drugs, premiums, and cost-sharing under such title; exceeds

(B)

such costs that would have been incurred by such beneficiary during such period if the beneficiary had been both enrolled in the plan and recognized by such plan as qualified during such period for the low income subsidy under section 1860D-14 of the Social Security Act to which the individual is entitled.

(2)

Eligible third party

The term eligible third party means, with respect to a retroactive LIS enrollment beneficiary, an organization or other third party that is owed payment on behalf of such beneficiary for covered drug costs incurred by such beneficiary during the retroactive coverage period of such beneficiary.

(3)

Retroactive coverage period

The term retroactive coverage period means—

(A)

with respect to a retroactive LIS enrollment beneficiary described in paragraph (4)(A)(i), the period—

(i)

beginning on the effective date of the assistance described in such paragraph for which the individual is eligible; and

(ii)

ending on the date the plan effectuates the status of such individual as so eligible; and

(B)

with respect to a retroactive LIS enrollment beneficiary described in paragraph (4)(A)(ii), the period—

(i)

beginning on the date the individual is both entitled to benefits under part A, or enrolled under part B, of title XVIII of the Social Security Act and eligible for medical assistance under a State plan under title XIX of such Act; and

(ii)

ending on the date the plan effectuates the status of such individual as a full-benefit dual eligible individual (as defined in section 1935(c)(6) of such Act).

(4)

Retroactive LIS enrollment beneficiary

(A)

In general

The term retroactive LIS enrollment beneficiary means an individual who—

(i)

is enrolled in a prescription drug plan under part D of title XVIII of the Social Security Act (or an MA-PD plan under part C of such title) and subsequently becomes eligible as a full-benefit dual eligible individual (as defined in section 1935(c)(6) of such Act), an individual receiving a low-income subsidy under section 1860D-14 of such Act, an individual receiving assistance under the Medicare Savings Program implemented under clauses (i), (iii), and (iv) of section 1902(a)(10)(E) of such Act, or an individual receiving assistance under the supplemental security income program under section 1611 of such Act; or

(ii)

subject to subparagraph (B)(i), is a full-benefit dual eligible individual (as defined in section 1935(c)(6) of such Act) who is automatically enrolled in such a plan under section 1860D-1(b)(1)(C) of such Act.

(B)

Exception for beneficiaries enrolled in RFP plan

(i)

In general

In no case shall an individual described in subparagraph (A)(ii) include an individual who is enrolled, pursuant to a RFP contract described in clause (ii), in a prescription drug plan offered by the sponsor of such plan awarded such contract.

(ii)

RFP contract described

The RFP contract described in this section is a contract entered into between the Secretary and a sponsor of a prescription drug plan pursuant to the Centers for Medicare & Medicaid Services' request for proposals issued on February 17, 2009, relating to Medicare part D retroactive coverage for certain low income beneficiaries, or a similar subsequent request for proposals.

1205.