HR 3200 IH
111th CONGRESS
1st Session
H. R. 3200
To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
July 14, 2009
Mr. DINGELL (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
A BILL
To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 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
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 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--Puerto Rico and 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--School-Based Health Clinics
Subtitle C--National Medical Device Registry
Subtitle D--Grants for Comprehensive Programs To Provide Education to Nurses and Create a Pipeline to Nursing
Subtitle E--States Failing To Adhere to Certain Employment Obligations
DIVISION A--AFFORDABLE HEALTH CARE CHOICES
SEC. 100. PURPOSE; TABLE OF CONTENTS OF DIVISION; GENERAL DEFINITIONS.
(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;
(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 pre-existing 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.
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.
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.
Subtitle G--Early Investments
Sec. 161. Ensuring value and lower premiums.
Sec. 162. Ending health insurance rescission abuse.
Sec. 163. Administrative simplification.
Sec. 164. Reinsurance program for retirees.
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 plan.
Sec. 206. Other functions.
Sec. 207. Health Insurance Exchange Trust Fund.
Sec. 208. Optional operation of State-based health insurance exchanges.
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. 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.
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.
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.
(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;
(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.
(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.
TITLE I--PROTECTIONS AND STANDARDS FOR QUALIFIED HEALTH BENEFITS PLANS
Subtitle A--General Standards
SEC. 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.
SEC. 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-
(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 (Public Law 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.
Subtitle B--Standards Guaranteeing Access to Affordable Coverage
SEC. 111. PROHIBITING PRE-EXISTING CONDITION EXCLUSIONS.
A qualified health benefits plan may not impose any pre-existing 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.
SEC. 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, 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 enrollees 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.
SEC. 113. INSURANCE RATING RULES.
(a) In General- The premium rate charged for an insured qualified health benefits plan may not vary except as follows:
(1) LIMITED AGE VARIATION PERMITTED- By age (within such age categories as the Commissioner shall specify) so long as the ratio of the highest such premium to the lowest such premium does not exceed the ratio of 2 to 1.
(2) BY AREA- By premium rating area (as permitted by State insurance regulators or, in the case of Exchange-participating health benefits plans, as specified by the Commissioner in consultation with such regulators).
(3) BY FAMILY ENROLLMENT- By family enrollment (such as variations within categories and compositions of families) so long as the ratio of the premium for family enrollment (or enrollments) to the premium for individual enrollment is uniform, as specified under State law and consistent with rules of the Commissioner.
(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.
SEC. 114. NONDISCRIMINATION IN BENEFITS; PARITY IN MENTAL HEALTH AND SUBSTANCE ABUSE DISORDER BENEFITS.
(a) Nondiscrimination in Benefits- A qualified health benefits plan 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.
SEC. 115. ENSURING ADEQUACY OF PROVIDER NETWORKS.
(a) In General- A qualified health benefits plan 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.
SEC. 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.
Subtitle C--Standards Guaranteeing Access to Essential Benefits
SEC. 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.
(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.
SEC. 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- The items and services described in this subsection are the following:
(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.
(6) Rehabilitative and habilitative services.
(7) Mental health and substance use disorder services.
(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.
(10) Well baby and well child care 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.
(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.
SEC. 123. HEALTH BENEFITS ADVISORY COMMITTEE.
(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.
(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; 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).
(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.
SEC. 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 and 123(b)(5).
Subtitle D--Additional Consumer Protections
SEC. 131. REQUIRING FAIR MARKETING PRACTICES BY HEALTH INSURERS.
The Commissioner shall establish uniform marketing standards that all insured QHBP offering entities shall meet.
SEC. 132. REQUIRING FAIR GRIEVANCE AND APPEALS MECHANISMS.
(a) In General- A QHBP offering entity shall provide for timely grievance and appeals mechanisms that the Commissioner shall establish.
(b) Internal Claims and Appeals Process- Under a qualified health benefits plan the QHBP offering entity shall provide an internal claims and appeals process that initially incorporates the claims and appeals procedures (including urgent claims) set forth at section 2560.503-1 of title 29, Code of Federal Regulations, as published on November 21, 2000 (65 Fed. Reg. 70246) and shall update such process in accordance with any standards that the Commissioner may establish.
(c) External Review Process-
(1) IN GENERAL- The Commissioner shall establish an external review process (including procedures for expedited reviews of urgent claims) that provides for an impartial, independent, and de novo review of denied claims under this division.
(2) REQUIRING FAIR GRIEVANCE AND APPEALS MECHANISMS- A determination made, with respect to a qualified health benefits plan offered by a QHBP offering entity, under the external review process established under this subsection shall be binding on the plan and the entity.
(d) Construction- Nothing in this section shall be construed as affecting the availability of judicial review under State law for adverse decisions under subsection (b) or (c), subject to section 151.
SEC. 133. REQUIRING INFORMATION TRANSPARENCY AND PLAN DISCLOSURE.
(a) Accurate and Timely Disclosure-
(1) IN GENERAL- A qualified health benefits plan 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 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 shall not be made without such reasonable and timely advance notice to enrollees of such change.
SEC. 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.
SEC. 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.
SEC. 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.
SEC. 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, added by section 163(a).
Subtitle E--Governance
SEC. 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').
(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.
SEC. 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.
(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).
SEC. 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.
(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.
SEC. 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.
Subtitle F--Relation to Other Requirements; Miscellaneous
SEC. 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).
SEC. 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.
SEC. 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.
SEC. 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.
SEC. 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.
Subtitle G--Early Investments
SEC. 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:
`SEC. 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:
`SEC. 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.
SEC. 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:
`SEC. 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.
SEC. 163. 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 section:
`SEC. 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.'.
(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(a) of such Act (42 U.S.C. 1320d-8(a)) 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.
SEC. 164. REINSURANCE PROGRAM FOR RETIREES.
(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.
(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-
(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.
TITLE II--HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS
Subtitle A--Health Insurance Exchange
SEC. 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.
SEC. 202. EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOYERS.
(a) Access to Coverage- 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).
(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).
(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.
(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.
(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.
(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 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 for individuals and employers.
SEC. 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').
(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- A 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.
SEC. 204. CONTRACTS FOR THE OFFERING OF EXCHANGE-PARTICIPATING HEALTH BENEFITS PLANS.
(a) Contracting Duties- In carrying out section 201(b)(1) and consistent with this subtitle:
(1) OFFERING ENTITY AND PLAN 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.
(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).
(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.
SEC. 205. OUTREACH AND ENROLLMENT OF EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOYERS IN EXCHANGE-PARTICIPATING HEALTH BENEFITS PLAN.
(1) OUTREACH- The Commissioner shall conduct outreach activities consistent with subsection (c), including through use of appropriate entities as described in paragraph (4) 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).
(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.
(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-partcipating 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-
(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 (4).
(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.
SEC. 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.
SEC. 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.
SEC. 208. OPTIONAL OPERATION OF STATE-BASED HEALTH INSURANCE EXCHANGES.
(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- The Commissioner may not approve a State-based Health Insurance Exchange under this section unless the following requirements are met:
(1) 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--
(A) 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;
(B) enrolling Exchange-eligible individuals and employers in such State in such plans;
(C) the establishment of sufficient local offices to meet the needs of Exchange-eligible individuals and employers;
(D) 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
(E) enforcement activities consistent with federal requirements.
(2) There is no more than one Health Insurance Exchange operating with respect to any one State.
(3) 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.
(4) 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.
(5) Such other requirements as the Commissioner may specify.
(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.
Subtitle B--Public Health Insurance Option
SEC. 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 comprimising 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.
SEC. 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.
(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.
(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.
SEC. 223. PAYMENT RATES FOR ITEMS AND SERVICES.
(a) Rates Established by Secretary-
(1) IN GENERAL- The Secretary shall establish payment rates for the public health insurance option for services and health care providers consistent with this section and may change such payment rates in accordance with section 224.
(2) INITIAL PAYMENT RULES-
(A) IN GENERAL- Except as provided in subparagraph (B) and subsection (b)(1), during Y1, Y2, and Y3, the Secretary shall base the payment rates under this section for services and providers described in paragraph (1) on the payment rates for similar services and providers under parts A and B of Medicare.
(i) Practitioners' SERVICES- Payment rates for practitioners' services otherwise established under the fee schedule under section 1848 of the Social Security Act shall be applied without regard to the provisions under subsection (f) of such section and the update under subsection (d)(4) under such section for a year as applied under this paragraph shall be not less than 1 percent.
(ii) ADJUSTMENTS- The Secretary may determine the extent to which Medicare adjustments applicable to base payment rates under parts A and B of Medicare shall apply under this subtitle.
(3) FOR NEW SERVICES- The Secretary shall modify payment rates described in paragraph (2) in order to accommodate payments for services, such as well-child visits, that are not otherwise covered under Medicare.
(4) PRESCRIPTION DRUGS- Payment rates under this section for prescription drugs that are not paid for under part A or part B of Medicare shall be at rates negotiated by the Secretary.
(b) Incentives for Participating Providers-
(1) INITIAL INCENTIVE PERIOD-
(A) IN GENERAL- The Secretary shall provide, in the case of services described in subparagraph (B) furnished during Y1, Y2, and Y3, for payment rates that are 5 percent greater than the rates established under subsection (a).
(B) SERVICES DESCRIBED- The services described in this subparagraph are items and professional services, under the public health insurance option by a physician or other health care practitioner who participates in both Medicare and the public health insurance option.
(C) SPECIAL RULES- A pediatrician and any other health care practitioner who is a type of practitioner that does not typically participate in Medicare (as determined by the Secretary) shall also be eligible for the increased payment rates under subparagraph (A).
(2) SUBSEQUENT PERIODS- Beginning with Y4 and for subsequent years, the Secretary shall continue to use an administrative process to set such rates in order to promote payment accuracy, to ensure adequate beneficiary access to providers, and to promote affordablility and the efficient delivery of medical care consistent with section 221(a). Such rates shall not be set at levels expected to increase overall medical costs under the option beyond what would be expected if the process under subsection (a)(2) and paragraph (1) of this subsection were continued.
(3) ESTABLISHMENT OF A PROVIDER NETWORK- Health care providers participating under Medicare are participating providers in the public health insurance option unless they opt out in a process established by the Secretary.
(c) Administrative Process for Setting Rates- Chapter 5 of title 5, United States Code shall apply to the process for the initial establishment of payment rates under this section but not to the specific methodology for establishing such rates or the calculation of such rates.
(d) Construction- Nothing in this subtitle shall be construed as limiting the Secretary's authority to correct for payments that are excessive or deficient, taking into account the provisions of section 221(a) and the amounts paid for similar health care providers and services under other Exchange-participating health benefits plans.
(e) Construction- Nothing in this subtitle shall be construed as affecting the authority of the Secretary to establish payment rates, including payments to provide for the more efficient delivery of services, such as the initiatives provided for under section 224.
(f) 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.
SEC. 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--
(A) improve health outcomes;
(B) reduce health disparities (including racial, ethnic, and other disparities);
(C) provide efficent 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) 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.
SEC. 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-
(1) PHYSICIANS- The Secretary shall provide for the annual participation of physicians under the public health insurance option, for which payment may be made for services furnished during the year, in one of 2 classes:
(A) PREFERRED PHYSICIANS- Those physicians who agree to accept the payment rate established under section 223 (without regard to cost-sharing) as the payment in full.
(B) PARTICIPATING, NON-PREFERRED PHYSICIANS- Those physicians who agree not to impose charges (in relation to the payment rate described in section 223 for such physicians) that exceed the ratio permitted under section 1848(g)(2)(C) of the Social Security Act.
(2) OTHER PROVIDERS- The Secretary shall provide for the participation (on an annual or other basis specified by the Secretary) of health care providers (other than physicians) under the public health insurance option under which payment shall only be available if the provider agrees to accept the payment rate established under section 223 (without regard to cost-sharing) as the payment in full.
(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).
SEC. 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.
Subtitle C--Individual Affordability Credits
SEC. 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.
(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.
(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.
SEC. 242. AFFORDABLE CREDIT ELIGIBLE INDIVIDUAL.
(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.
(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.
(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 11 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.
(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- Affordabilty 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.
SEC. 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, the table specified in this subsection is as follows:
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The initial premium percentage is-- The final premium percentage is-- The actuarial value percentage is--
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133% through 150% 1.5% 3% 97%
150% through 200% 3% 5% 93%
200% through 250% 5% 7% 85%
250% through 300% 7% 9% 78%
300% through 350% 9% 10% 72%
350% through 400% 10% 11% 70%
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(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 percent 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.
SEC. 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).
SEC. 245. INCOME DETERMINATIONS.
(a) In General- In applying this subtitle for an affordability credit for an individual for a plan year, the individual's income shall be the income (as defined in section 242(c)) for the individual for the most recent taxable year (as determined in accordance with rules of the Commissioner). The Federal poverty level applied shall be such level in effect as of the date of the application.
(b) Program Integrity; Income Verification Procedures-
(1) PROGRAM INTEGRITY- The Commissioner shall take such steps as may be appropriate to ensure the accuracy of determinations and redeterminations under this subtitle.
(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.
(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 202(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- 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.
(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.
SEC. 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.
TITLE III--SHARED RESPONSIBILITY
Subtitle A--Individual Responsibility
SEC. 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).
Subtitle B--Employer Responsibility
PART 1--HEALTH COVERAGE PARTICIPATION REQUIREMENTS
SEC. 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.
SEC. 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 suchs 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.
(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.
SEC. 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':
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If the annual payroll of such employer for the preceding calendar year: The applicable percentage is:
Does not exceed $250,000 0 percent
Exceeds $250,000, but does not exceed $300,000 2 percent
Exceeds $300,000, but does not exceed $350,000 4 percent
Exceeds $350,000, but does not exceed $400,000 6 percent
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(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.
SEC. 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.
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.
(a) In General- Subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new part:
`PART 8--NATIONAL HEALTH COVERAGE PARTICIPATION REQUIREMENTS
`SEC. 801. ELECTION OF EMPLOYER TO BE SUBJECT TO NATIONAL HEALTH COVERAGE PARTICIPATION REQUIREMENTS.
`(a) In General- An employer may make an election with the Secretary to be subject to the health coverage participation requirements.
`(b) Time and Manner- An election under subsection (a) may be made at such time and in such form and manner as the Secretary may prescribe.
`SEC. 802. TREATMENT OF COVERAGE RESULTING FROM ELECTION.
`(a) In General- If an employer makes an election to the Secretary under section 801--
`(1) such election shall be treated as the establishment and maintenance of a group health plan (as defined in section 733(a)) for purposes of this title, subject to section 151 of the America's Affordable Health Choices Act of 2009, and
`(2) the health coverage participation requirements shall be deemed to be included as terms and conditions of such plan.
`(b) Periodic Investigations To Discover Noncompliance- The Secretary shall regularly audit a representative sampling of employers and group health plans and conduct investigations and other activities under section 504 with respect to such sampling of plans so as to discover noncompliance with the health coverage participation requirements in connection with such plans. 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.
`SEC. 803. HEALTH COVERAGE PARTICIPATION REQUIREMENTS.
`For purposes of this part, the term `health coverage participation requirements' means the requirements of part 1 of subtitle B of title III of division A of America's Affordable Health Choices Act of 2009 (as in effect on the date of the enactment of such Act).
`SEC. 804. RULES FOR APPLYING REQUIREMENTS.
`(a) Affiliated Groups- In the case of 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, the election under section 801 shall be made by such employer as the Secretary may provide. Any such election, once made, shall apply to all members of such group.
`(b) Separate Elections- Under regulations prescribed by the Secretary, separate elections may be made under section 801 with respect to--
`(1) separate lines of business, and
`(2) full-time employees and employees who are not full-time employees.
`SEC. 805. TERMINATION OF ELECTION IN CASES OF SUBSTANTIAL NONCOMPLIANCE.
`The Secretary may terminate the election of any employer under section 801 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.
`SEC. 806. REGULATIONS.
`The Secretary may promulgate such regulations as may be necessary or appropriate to carry out the provisions of this part, 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 part.'.
(b) Enforcement of Health Coverage Participation Requirements- Section 502 of such Act (29 U.S.C. 1132) is amended--
(1) in subsection (a)(6), by striking `paragraph' and all that follows through `subsection (c)' and inserting `paragraph (2), (4), (5), (6), (7), (8), (9), (10), or (11) of subsection (c)'; and
(2) in subsection (c), by redesignating the second paragraph (10) as paragraph (12) and by inserting after the first paragraph (10) the following new paragraph:
`(11) HEALTH COVERAGE PARTICIPATION REQUIREMENTS-
`(A) CIVIL PENALTIES- In the case of any employer who fails (during any period with respect to which an election under section 801(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.
`(B) HEALTH COVERAGE PARTICIPATION REQUIREMENTS- For purposes of this paragraph, the term `health coverage participation requirements' has the meaning provided in section 803.
`(C) LIMITATIONS ON AMOUNT OF PENALTY-
`(i) PENALTY NOT TO APPLY WHERE FAILURE NOT DISCOVERED EXERCISING REASONABLE DILIGENCE- No penalty shall be assessed under subparagraph (A) 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.
`(ii) PENALTY NOT TO APPLY TO FAILURES CORRECTED WITHIN 30 DAYS- No penalty shall be assessed under subparagraph (A) 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.
`(iii) 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 subparagraph (A) 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 1-year period for group health plans, or
`(D) ADVANCE NOTIFICATION OF FAILURE PRIOR TO ASSESSMENT- Before a reasonable time prior to the assessment of any penalty under this paragraph 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.
`(E) 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 this section 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.
`(F) DEPOSIT OF PENALTY COLLECTED- Any amount of penalty collected under this paragraph shall be deposited as miscellaneous receipts in the Treasury of the United States.'.
(c) Clerical Amendments- The table of contents in section 1 of such Act is amended by inserting after the item relating to section 734 the following new items:
`Part 8--National Health Coverage Participation Requirements
`Sec. 801. Election of employer to be subject to national health coverage participation requirements.
`Sec. 802. Treatment of coverage resulting from election.
`Sec. 803. Health coverage participation requirements.
`Sec. 804. Rules for applying requirements.
`Sec. 805. Termination of election in cases of substantial noncompliance.
`Sec. 806. Regulations.'.
(d) Effective Date- The amendments made by this section shall apply to periods beginning after December 31, 2012.
SEC. 322. SATISFACTION OF HEALTH COVERAGE PARTICIPATION REQUIREMENTS UNDER THE INTERNAL REVENUE CODE OF 1986.
(a) Failure To Elect, or Substantially Comply With, Health Coverage Participation Requirements- For employment tax on employers who fail to elect, or substantially comply with, the health coverage participation requirements described in part 1, see section 3111(c) of the Internal Revenue Code of 1986 (as added by section 412 of this Act).
(b) Other Failures- For excise tax on other failures of electing employers to comply with such requirements, see section 4980H of the Internal Revenue Code of 1986 (as added by section 411 of this Act).
SEC. 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:
`SEC. 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
`(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.
SEC. 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.
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.
(a) In General- Subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new part:
`PART VIII--HEALTH CARE RELATED TAXES
`subpart a. tax on individuals without acceptable health care coverage.
`Subpart A--Tax on Individuals Without Acceptable Health Care Coverage
`Sec. 59B. Tax on individuals without acceptable health care coverage.
`SEC. 59B. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE.
`(a) Tax Imposed- In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of--
`(1) the taxpayer's modified adjusted gross income for the taxable year, over
`(2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer.
`(1) TAX LIMITED TO AVERAGE PREMIUM-
`(A) IN GENERAL- The tax imposed under subsection (a) with respect to any taxpayer for any taxable year shall not exceed the applicable national average premium for such taxable year.
`(B) APPLICABLE NATIONAL AVERAGE PREMIUM-
`(i) IN GENERAL- For purposes of subparagraph (A), the `applicable national average premium' means, with respect to any taxable year, the average premium (as determined by the Secretary, in coordination with the Health Choices Commissioner) for self-only coverage under a basic plan which is offered in a Health Insurance Exchange for the calendar year in which such taxable year begins.
`(ii) FAILURE TO PROVIDE COVERAGE FOR MORE THAN ONE INDIVIDUAL- In the case of any taxpayer who fails to meet the requirements of subsection (e) with respect to more than one individual during the taxable year, clause (i) shall be applied by substituting `family coverage' for `self-only coverage'.
`(2) PRORATION FOR PART YEAR FAILURES- The tax imposed under subsection (a) with respect to any taxpayer for any taxable year shall not exceed the amount which bears the same ratio to the amount of tax so imposed (determined without regard to this paragraph and after application of paragraph (1)) as--
`(A) the aggregate periods during such taxable year for which such individual failed to meet the requirements of subsection (d), bears to
`(B) the entire taxable year.
`(1) DEPENDENTS- Subsection (a) shall not apply to any individual for any taxable year if a deduction is allowable under section 151 with respect to such individual to another taxpayer for any taxable year beginning in the same calendar year as such taxable year.
`(2) NONRESIDENT ALIENS- Subsection (a) shall not apply to any individual who is a nonresident alien.
`(3) INDIVIDUALS RESIDING OUTSIDE UNITED STATES- Any qualified individual (as defined in section 911(d)) (and any qualifying child residing with such individual) shall be treated for purposes of this section as covered by acceptable coverage during the period described in subparagraph (A) or (B) of section 911(d)(1), whichever is applicable.
`(4) INDIVIDUALS RESIDING IN POSSESSIONS OF THE UNITED STATES- Any individual who is a bona fide resident of any possession of the United States (as determined under section 937(a)) for any taxable year (and any qualifying child residing with such individual) shall be treated for purposes of this section as covered by acceptable coverage during such taxable year.
`(5) RELIGIOUS CONSCIENCE EXEMPTION-
`(A) IN GENERAL- Subsection (a) shall not apply to any individual (and any qualifying child residing with such individual) for any period if such individual has in effect an exemption which certifies that such individual is a member of a recognized religious sect or division thereof described in section 1402(g)(1) and an adherent of established tenets or teachings of such sect or division as described in such section.
`(B) EXEMPTION- An application for the exemption described in subparagraph (A) shall be filed with the Secretary at such time and in such form and manner as the Secretary may prescribe. Any such exemption granted by the Secretary shall be effective for such period as the Secretary determines appropriate.
`(d) Acceptable Coverage Requirement-
`(1) IN GENERAL- The requirements of this subsection are met with respect to any individual for any period if such individual (and each qualifying child of such individual) is covered by acceptable coverage at all times during such period.
`(2) ACCEPTABLE COVERAGE- For purposes of this section, the term `acceptable coverage' means any of the following:
`(A) QUALIFIED HEALTH BENEFITS PLAN COVERAGE- Coverage under a qualified health benefits plan (as defined in section 100(c) of the America's Affordable Health Choices Act of 2009).
`(B) GRANDFATHERED HEALTH INSURANCE COVERAGE; COVERAGE UNDER GRANDFATHERED EMPLOYMENT-BASED HEALTH PLAN- Coverage under a grandfathered health insurance coverage (as defined in subsection (a) of section 102 of the America's Affordable Health Choices Act of 2009) or under a current employment-based health plan (within the meaning of 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.
`(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 Secretary in coordination with the Health Choices Commissioner to be not less than the level specified by the Secretary of the Treasury, in coordination with the Secretary of Veteran's Affairs and the Health Choices Commissioner, 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 as the Secretary, in coordination with the Health Choices Commissioner, recognizes for purposes of this subsection.
`(e) Other Definitions and Special Rules-
`(1) QUALIFYING CHILD- For purposes of this section, the term `qualifying child' has the meaning given such term by section 152(c).
`(2) BASIC PLAN- For purposes of this section, the term `basic plan' has the meaning given such term under section 100(c) of the America's Affordable Health Choices Act of 2009.
`(3) HEALTH INSURANCE EXCHANGE- For purposes of this section, the term `Health Insurance Exchange' has the meaning given such term under section 100(c) of the America's Affordable Health Choices Act of 2009, including any State-based health insurance exchange approved for operation under section 208 of such Act.
`(4) FAMILY COVERAGE- For purposes of this section, the term `family coverage' means any coverage other than self-only coverage.
`(5) MODIFIED ADJUSTED GROSS INCOME- For purposes of this section, the term `modified adjusted gross income' means adjusted gross income--
`(A) determined without regard to section 911, and
`(B) increased by the amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax.
`(6) NOT TREATED AS TAX IMPOSED BY THIS CHAPTER FOR CERTAIN PURPOSES- The tax imposed under this section shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55.
`(f) Regulations- The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance (developed in coordination with the Health Choices Commissioner) which provide--
`(1) exemption from the tax imposed under subsection (a) in cases of de minimis lapses of acceptable coverage, and
`(2) a process for applying for a waiver of the application of subsection (a) in cases of hardship.'.
(b) Information Reporting-
(1) IN GENERAL- Subpart B of part III of subchapter A of chapter 61 of such Code is amended by inserting after section 6050W the following new section:
`SEC. 6050X. RETURNS RELATING TO HEALTH INSURANCE COVERAGE.
`(a) Requirement of Reporting- Every person who provides acceptable coverage (as defined in section 59B(d)) to any individual during any calendar year shall, at such time as the Secretary may prescribe, make the return described in subsection (b) with respect to such individual.
`(b) Form and Manner of Returns- A return is described in this subsection if such return--
`(1) is in such form as the Secretary may prescribe, and
`(A) the name, address, and TIN of the primary insured and the name of each other individual obtaining coverage under the policy,
`(B) the period for which each such individual was provided with the coverage referred to in subsection (a), and
`(C) such other information as the Secretary may require.
`(c) Statements To Be Furnished to Individuals With Respect to Whom Information Is Required- Every person required to make a return under subsection (a) shall furnish to each primary insured whose name is required to be set forth in such return a written statement showing--
`(1) the name and address of the person required to make such return and the phone number of the information contact for such person, and
`(2) the information required to be shown on the return with respect to such individual.
The written statement required under the preceding sentence shall be furnished on or before January 31 of the year following the calendar year for which the return under subsection (a) is required to be made.
`(d) Coverage Provided by Governmental Units- In the case of coverage provided by any governmental unit or any agency or instrumentality thereof, the officer or employee who enters into the agreement to provide such coverage (or the person appropriately designated for purposes of this section) shall make the returns and statements required by this section.'.
(2) PENALTY FOR FAILURE TO FILE-
(A) RETURN- Subparagraph (B) of section 6724(d)(1) of such Code is amended by striking `or' at the end of clause (xxii), by striking `and' at the end of clause (xxiii) and inserting `or', and by adding at the end the following new clause:
`(xxiv) section 6050X (relating to returns relating to health insurance coverage), and'.
(B) STATEMENT- Paragraph (2) of section 6724(d) of such Code is amended by striking `or' at the end of subparagraph (EE), by striking the period at the end of subparagraph (FF) and inserting `, or', and by inserting after subparagraph (FF) the following new subparagraph:
`(GG) section 6050X (relating to returns relating to health insurance coverage).'.
(c) Return Requirement- Subsection (a) of section 6012 of such Code is amended by inserting after paragraph (9) the following new paragraph:
`(10) Every individual to whom section 59B(a) applies and who fails to meet the requirements of section 59B(d) with respect to such individual or any qualifying child (as defined in section 152(c)) of such individual.'.
(1) The table of parts for subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
`Part VIII. Health Care Related Taxes.'.
(2) The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by adding at the end the following new item:
`Sec. 6050X. Returns relating to health insurance coverage.'.
(e) Section 15 Not To Apply- The amendment made by subsection (a) shall not be treated as a change in a rate of tax for purposes of section 15 of the Internal Revenue Code of 1986.
(1) IN GENERAL- The amendments made by this section shall apply to taxable years beginning after December 31, 2012.
(2) RETURNS- The amendments made by subsection (b) shall apply to calendar years beginning after December 31, 2012.
PART 2--EMPLOYER RESPONSIBILITY
SEC. 411. ELECTION TO SATISFY HEALTH COVERAGE PARTICIPATION REQUIREMENTS.
(a) In General- Chapter 43 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
`SEC. 4980H. ELECTION WITH RESPECT TO HEALTH COVERAGE PARTICIPATION REQUIREMENTS.
`(a) Election of Employer Responsibility To Provide Health Coverage-
`(1) IN GENERAL- Subsection (b) shall apply to any employer with respect to whom an election under paragraph (2) is in effect.
`(2) TIME AND MANNER- An employer may make an election under this paragraph at such time and in such form and manner as the Secretary may prescribe.
`(3) AFFILIATED GROUPS- In the case of 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, the election under paragraph (2) shall be made by such person as the Secretary may provide. Any such election, once made, shall apply to all members of such group.
`(4) SEPARATE ELECTIONS- Under regulations prescribed by the Secretary, separate elections may be made under paragraph (2) with respect to--
`(A) separate lines of business, and
`(B) full-time employees and employees who are not full-time employees.
`(5) TERMINATION OF ELECTION IN CASES OF SUBSTANTIAL NONCOMPLIANCE- The Secretary may terminate the election of any employer under paragraph (2) if the Secretary (in coordination with the Health Choices Commissioner) determines that such employer is in substantial noncompliance with the health coverage participation requirements.
`(b) Excise Tax With Respect to Failure To Meet Health Coverage Participation Requirements-
`(1) IN GENERAL- 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 to whom such election applies, there is hereby imposed on each such failure with respect to each such employee a tax 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 TAX-
`(A) TAX NOT TO APPLY WHERE FAILURE NOT DISCOVERED EXERCISING REASONABLE DILIGENCE- No tax shall be imposed by paragraph (1) on any failure during any period for which it is established to the satisfaction of the Secretary that the employer neither knew, nor exercising reasonable diligence would have known, that such failure existed.
`(B) TAX NOT TO APPLY TO FAILURES CORRECTED WITHIN 30 DAYS- No tax shall be imposed by paragraph (1) on 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 tax imposed by subsection (a) for failures during the taxable year of the employer 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 employment-based health plans, or
`(D) COORDINATION WITH OTHER ENFORCEMENT PROVISIONS- The tax imposed under paragraph (1) with respect to any failure shall be reduced (but not below zero) by the amount of any civil penalty collected under section 502(c)(11) of the Employee Retirement Income Security Act of 1974 or section 2793(g) of the Public Health Service Act with respect to such failure.
`(c) Health Coverage Participation Requirements- For purposes of this section, the term `health coverage participation requirements' means the requirements of part I of subtitle B of title III of the America's Affordable Health Choices Act of 2009 (as in effect on the date of the enactment of this section).'.
(b) Clerical Amendment- The table of sections for chapter 43 of such Code is amended by adding at the end the following new item:
`Sec. 4980H. Election to satisfy health coverage participation requirements.'.
(c) Effective Date- The amendments made by this section shall apply to periods beginning after December 31, 2012.
SEC. 412. RESPONSIBILITIES OF NONELECTING EMPLOYERS.
(a) In General- Section 3111 of the Internal Revenue Code of 1986 is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:
`(c) Employers Electing to Not Provide Health Benefits-
`(1) IN GENERAL- In addition to other taxes, there is hereby imposed on every nonelecting employer an excise tax, with respect to having individuals in his employ, equal to 8 percent of the wages (as defined in section 3121(a)) paid by him with respect to employment (as defined in section 3121(b)).
`(2) SPECIAL RULES FOR SMALL EMPLOYERS-
`(A) IN GENERAL- In the case of any employer who is small employer for any calendar year, paragraph (1) shall be applied by substituting the applicable percentage determined in accordance with the following table for `8 percent':
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`If the annual payroll of such employer for the preceding calendar year: The applicable percentage is:
Does not exceed $250,000 0 percent
Exceeds $250,000, but does not exceed $300,000 2 percent
Exceeds $300,000, but does not exceed $350,000 4 percent
Exceeds $350,000, but does not exceed $400,000 6 percent
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`(B) SMALL EMPLOYER- For purposes of this paragraph, 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.
`(C) ANNUAL PAYROLL- For purposes of this paragraph, the term `annual payroll' means, with respect to any employer for any calendar year, the aggregate wages (as defined in section 3121(a)) paid by him with respect to employment (as defined in section 3121(b)) during such calendar year.
`(3) NONELECTING EMPLOYER- For purposes of paragraph (1), the term `nonelecting employer' means any employer for any period with respect to which such employer does not have an election under section 4980H(a) in effect.
`(4) SPECIAL RULE FOR SEPARATE ELECTIONS- In the case of an employer who makes a separate election described in section 4980H(a)(4) for any period, paragraph (1) shall be applied for such period by taking into account only the wages paid to employees who are not subject to such election.
`(5) AGGREGATION; PREDECESSORS- For purposes of this subsection--
`(A) all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer, and
`(B) any reference to any person shall be treated as including a reference to any predecessor of such person.'.
(b) Definitions- Section 3121 of such Code is amended by adding at the end the following new subsection:
`(aa) Special Rules for Tax on Employers Electing Not To Provide Health Benefits- For purposes of section 3111(c)--
`(1) Paragraphs (1), (5), and (19) of subsection (b) shall not apply.
`(2) Paragraph (7) of subsection (b) shall apply by treating all services as not covered by the retirement systems referred to in subparagraphs (C) and (F) thereof.
`(3) Subsection (e) shall not apply and the term `State' shall include the District of Columbia.'.
(c) Conforming Amendment- Subsection (d) of section 3111 of such Code, as redesignated by this section, is amended by striking `this section' and inserting `subsections (a) and (b)'.
(d) Application to Railroads-
(1) IN GENERAL- Section 3221 of such Code is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:
`(c) Employers Electing to Not Provide Health Benefits-
`(1) IN GENERAL- In addition to other taxes, there is hereby imposed on every nonelecting employer an excise tax, with respect to having individuals in his employ, equal to 8 percent of the compensation paid during any calendar year by such employer for services rendered to such employer.
`(2) EXCEPTION FOR SMALL EMPLOYERS- Rules similar to the rules of section 3111(c)(2) shall apply for purposes of this subsection.
`(3) NONELECTING EMPLOYER- For purposes of paragraph (1), the term `nonelecting employer' means any employer for any period with respect to which such employer does not have an election under section 4980H(a) in effect.
`(4) SPECIAL RULE FOR SEPARATE ELECTIONS- In the case of an employer who makes a separate election described in section 4980H(a)(4) for any period, subsection (a) shall be applied for such period by taking into account only the wages paid to employees who are not subject to such election.'.
(2) DEFINITIONS- Subsection (e) of section 3231 of such Code is amended by adding at the end the following new paragraph:
`(13) SPECIAL RULES FOR TAX ON EMPLOYERS ELECTING NOT TO PROVIDE HEALTH BENEFITS- For purposes of section 3221(c)--
`(A) Paragraph (1) shall be applied without regard to the third sentence thereof.
`(B) Paragraph (2) shall not apply.'.
(3) CONFORMING AMENDMENT- Subsection (d) of section 3221 of such Code, as redesignated by this section, is amended by striking `subsections (a) and (b), see section 3231(e)(2)' and inserting `this section, see paragraphs (2) and (13)(B) of section 3231(e)'.
(e) Effective Date- The amendments made by this section shall apply to periods beginning after December 31, 2012.
Subtitle B--Credit for Small Business Employee Health Coverage Expenses
SEC. 421. CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH COVERAGE EXPENSES.
(a) In General- Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business-related credits) is amended by adding at the end the following new section:
`SEC. 45R. SMALL BUSINESS EMPLOYEE HEALTH COVERAGE CREDIT.
`(a) In General- For purposes of section 38, in the case of a qualified small employer, the small business employee health coverage credit determined under this section for the taxable year is an amount equal to the applicable percentage of the qualified employee health coverage expenses of such employer for such taxable year.
`(b) Applicable Percentage-
`(1) IN GENERAL- For purposes of this section, the applicable percentage is 50 percent.
`(2) PHASEOUT BASED ON AVERAGE COMPENSATION OF EMPLOYEES- In the case of an employer whose average annual employee compensation for the taxable year exceeds $20,000, the percentage specified in paragraph (1) shall be reduced by a number of percentage points which bears the same ratio to 50 as such excess bears to $20,000.
`(1) PHASEOUT BASED ON EMPLOYER SIZE- In the case of an employer who employs more than 10 qualified employees during the taxable year, the credit determined under subsection (a) shall be reduced by an amount which bears the same ratio to the amount of such credit (determined without regard to this paragraph and after the application of the other provisions of this section) as--
`(i) the number of qualified employees employed by the employer during the taxable year, over
`(2) CREDIT NOT ALLOWED WITH RESPECT TO CERTAIN HIGHLY COMPENSATED EMPLOYEES- No credit shall be allowed under subsection (a) with respect to qualified employee health coverage expenses paid or incurred with respect to any employee for any taxable year if the aggregate compensation paid by the employer to such employee during such taxable year exceeds $80,000.
`(d) Qualified Employee Health Coverage Expenses- For purposes of this section--
`(1) IN GENERAL- The term `qualified employee health coverage expenses' means, with respect to any employer for any taxable year, the aggregate amount paid or incurred by such employer during such taxable year for coverage of any qualified employee of the employer (including any family coverage which covers such employee) under qualified health coverage.
`(2) QUALIFIED HEALTH COVERAGE- The term `qualified health coverage' means acceptable coverage (as defined in section 59B(d)) which--
`(A) is provided pursuant to an election under section 4980H(a), and
`(B) satisfies the requirements referred to in section 4980H(c).
`(e) Other Definitions- For purposes of this section--
`(1) QUALIFIED SMALL EMPLOYER- For purposes of this section, the term `qualified small employer' means any employer for any taxable year if--
`(A) the number of qualified employees employed by such employer during the taxable year does not exceed 25, and
`(B) the average annual employee compensation of such employer for such taxable year does not exceed the sum of the dollar amounts in effect under subsection (b)(2).
`(2) QUALIFIED EMPLOYEE- The term `qualified employee' means any employee of an employer for any taxable year of the employer if such employee received at least $5,000 of compensation from such employer during such taxable year.
`(3) AVERAGE ANNUAL EMPLOYEE COMPENSATION- The term `average annual employee compensation' means, with respect to any employer for any taxable year, the average amount of compensation paid by such employer to qualified employees of such employer during such taxable year.
`(4) COMPENSATION- The term `compensation' has the meaning given such term in section 408(p)(6)(A).
`(5) FAMILY COVERAGE- The term `family coverage' means any coverage other than self-only coverage.
`(f) Special Rules- For purposes of this section--
`(1) SPECIAL RULE FOR PARTNERSHIPS AND SELF-EMPLOYED- In the case of a partnership (or a trade or business carried on by an individual) which has one or more qualified employees (determined without regard to this paragraph) with respect to whom the election under 4980H(a) applies, each partner (or, in the case of a trade or business carried on by an individual, such individual) shall be treated as an employee.
`(2) AGGREGATION RULE- All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer.
`(3) DENIAL OF DOUBLE BENEFIT- Any deduction otherwise allowable with respect to amounts paid or incurred for health insurance coverage to which subsection (a) applies shall be reduced by the amount of the credit determined under this section.
`(4) INFLATION ADJUSTMENT- In the case of any taxable year beginning after 2013, each of the dollar amounts in subsections (b)(2), (c)(2), and (e)(2) shall be increased by an amount equal to--
`(A) such dollar amount, multiplied by
`(B) the cost of living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins determined by substituting `calendar year 2012' for `calendar year 1992' in subparagraph (B) thereof.
If any increase determined under this paragraph is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.'.
(b) Credit To Be Part of General Business Credit- Subsection (b) of section 38 of such Code (relating to general business credit) is amended by striking `plus' at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting `, plus', and by adding at the end the following new paragraph:
`(36) in the case of a qualified small employer (as defined in section 45R(e)), the small business employee health coverage credit determined under section 45R(a).'.
(c) Clerical Amendment- The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 45Q the following new item:
`Sec. 45R. Small business employee health coverage credit.'.
(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2012.
Subtitle C--Disclosures To Carry Out Health Insurance Exchange Subsidies
SEC. 431. DISCLOSURES TO CARRY OUT HEALTH INSURANCE EXCHANGE SUBSIDIES.
(a) In General- Subsection (l) of section 6103 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
`(21) DISCLOSURE OF RETURN INFORMATION TO CARRY OUT HEALTH INSURANCE EXCHANGE SUBSIDIES-
`(A) IN GENERAL- The Secretary, upon written request from the Health Choices Commissioner or the head of a State-based health insurance exchange approved for operation under section 208 of the America's Affordable Health Choices Act of 2009, shall disclose to officers and employees of the Health Choices Administration or such State-based health insurance exchange, as the case may be, return information of any taxpayer whose income is relevant in determining any affordability credit described in subtitle C of title II of the America's Affordable Health Choices Act of 2009. Such return information shall be limited to--
`(i) taxpayer identity information with respect to such taxpayer,
`(ii) the filing status of such taxpayer,
`(iii) the modified adjusted gross income of such taxpayer (as defined in section 59B(e)(5)),
`(iv) the number of dependents of the taxpayer,
`(v) such other information as is prescribed by the Secretary by regulation as might indicate whether the taxpayer is eligible for such affordability credits (and the amount thereof), and
`(vi) the taxable year with respect to which the preceding information relates or, if applicable, the fact that such information is not available.
`(B) RESTRICTION ON USE OF DISCLOSED INFORMATION- Return information disclosed under subparagraph (A) may be used by officers and employees of the Health Choices Administration or such State-based health insurance exchange, as the case may be, only for the purposes of, and to the extent necessary in, establishing and verifying the appropriate amount of any affordability credit described in subtitle C of title II of the America's Affordable Health Choices Act of 2009 and providing for the repayment of any such credit which was in excess of such appropriate amount.'.
(b) Procedures and Recordkeeping Related to Disclosures- Paragraph (4) of section 6103(p) of such Code is amended--
(1) by inserting `, or any entity described in subsection (l)(21),' after `or (20)' in the matter preceding subparagraph (A),
(2) by inserting `or any entity described in subsection (l)(21),' after `or (o)(1)(A)' in subparagraph (F)(ii), and
(3) by inserting `or any entity described in subsection (l)(21),' after `or (20)' both places it appears in the matter after subparagraph (F).
(c) Unauthorized Disclosure or Inspection- Paragraph (2) of section 7213(a) of such Code is amended by striking `or (20)' and inserting `(20), or (21)'.
Subtitle D--Other Revenue Provisions
PART 1--GENERAL PROVISIONS
SEC. 441. SURCHARGE ON HIGH INCOME INDIVIDUALS.
(a) In General- Part VIII of subchapter A of chapter 1 of the Internal Revenue Code of 1986, as added by this title, is amended by adding at the end the following new subpart:
`Subpart B--Surcharge on High Income Individuals
`Sec. 59C. Surcharge on high income individuals.
`SEC. 59C. SURCHARGE ON HIGH INCOME INDIVIDUALS.
`(a) General Rule- In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to--
`(1) 1 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $350,000 but does not exceed $500,000,
`(2) 1.5 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $500,000 but does not exceed $1,000,000, and
`(3) 5.4 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $1,000,000.
`(b) Taxpayers Not Making a Joint Return- In the case of any taxpayer other than a taxpayer making a joint return under section 6013 or a surviving spouse (as defined in section 2(a)), subsection (a) shall be applied by substituting for each of the dollar amounts therein (after any increase determined under subsection (e)) a dollar amount equal to--
`(1) 50 percent of the dollar amount so in effect in the case of a married individual filing a separate return, and
`(2) 80 percent of the dollar amount so in effect in any other case.
`(c) Adjustments Based on Federal Health Reform Savings-
`(1) IN GENERAL- Except as provided in paragraph (2), in the case of any taxable year beginning after December 31, 2012, subsection (a) shall be applied--
`(A) by substituting `2 percent' for `1 percent', and
`(B) by substituting `3 percent' for `1.5 percent'.
`(2) ADJUSTMENTS BASED ON EXCESS FEDERAL HEALTH REFORM SAVINGS-
`(A) EXCEPTION IF FEDERAL HEALTH REFORM SAVINGS SIGNIFICANTLY EXCEEDS BASE AMOUNT- If the excess Federal health reform savings is more than $150,000,000,000 but not more than $175,000,000,000, paragraph (1) shall not apply.
`(B) FURTHER ADJUSTMENT FOR ADDITIONAL FEDERAL HEALTH REFORM SAVINGS- If the excess Federal health reform savings is more than $175,000,000,000, paragraphs (1) and (2) of subsection (a) (and paragraph (1) of this subsection) shall not apply to any taxable year beginning after December 31, 2012.
`(C) EXCESS FEDERAL HEALTH REFORM SAVINGS- For purposes of this subsection, the term `excess Federal health reform savings' means the excess of--
`(i) the Federal health reform savings, over
`(D) FEDERAL HEALTH REFORM SAVINGS- The term `Federal health reform savings' means the sum of the amounts described in subparagraphs (A) and (B) of paragraph (3).
`(3) DETERMINATION OF FEDERAL HEALTH REFORM SAVINGS- Not later than December 1, 2012, the Director of the Office of Management and Budget shall--
`(A) determine, on the basis of the study conducted under paragraph (4), the aggregate reductions in Federal expenditures which have been achieved as a result of the provisions of, and amendments made by, division B of the America's Affordable Health Choices Act of 2009 during the period beginning on October 1, 2009, and ending with the latest date with respect to which the Director has sufficient data to make such determination, and
`(B) estimate, on the basis of such study and the determination under subparagraph (A), the aggregate reductions in Federal expenditures which will be achieved as a result of such provisions and amendments during so much of the period beginning with fiscal year 2010 and ending with fiscal year 2019 as is not taken into account under subparagraph (A).
`(4) STUDY OF FEDERAL HEALTH REFORM SAVINGS- The Director of the Office of Management and Budget shall conduct a study of the reductions in Federal expenditures during fiscal years 2010 through 2019 which are attributable to the provisions of, and amendments made by, division B of the America's Affordable Health Choices Act of 2009. The Director shall complete such study not later than December 1, 2012.
`(5) REDUCTIONS IN FEDERAL EXPENDITURES DETERMINED WITHOUT REGARD TO PROGRAM INVESTMENTS- For purposes of paragraphs (3) and (4), reductions in Federal expenditures shall be determined without regard to section 1121 of the America's Affordable Health Choices Act of 2009 and other program investments under division B thereof.
`(d) Modified Adjusted Gross Income- For purposes of this section, the term `modified adjusted gross income' means adjusted gross income reduced by any deduction allowed for investment interest (as defined in section 163(d)). In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e).
`(e) Inflation Adjustments-
`(1) IN GENERAL- In the case of taxable years beginning after 2011, the dollar amounts in subsection (a) shall be increased by an amount equal to--
`(A) such dollar amount, multiplied by
`(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting `calendar year 2010' for `calendar year 1992' in subparagraph (B) thereof.
`(2) ROUNDING- If any amount as adjusted under paragraph (1) is not a multiple of $5,000, such amount shall be rounded to the next lowest multiple of $5,000.
`(1) NONRESIDENT ALIEN- In the case of a nonresident alien individual, only amounts taken into account in connection with the tax imposed under section 871(b) shall be taken into account under this section.
`(2) CITIZENS AND RESIDENTS LIVING ABROAD- The dollar amounts in effect under subsection (a) (after the application of subsections (b) and (e)) shall be decreased by the excess of--
`(A) the amounts excluded from the taxpayer's gross income under section 911, over
`(B) the amounts of any deductions or exclusions disallowed under section 911(d)(6) with respect to the amounts described in subparagraph (A).
`(3) CHARITABLE TRUSTS- Subsection (a) shall not apply to a trust all the unexpired interests in which are devoted to one or more of the purposes described in section 170(c)(2)(B).
`(4) NOT TREATED AS TAX IMPOSED BY THIS CHAPTER FOR CERTAIN PURPOSES- The tax imposed under this section shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55.'.
(b) Clerical Amendment- The table of subparts for part VIII of subchapter A of chapter 1 of such Code, as added by this title, is amended by inserting after the item relating to subpart A the following new item:
`subpart b. surcharge on high income individuals.'.
(c) Section 15 Not To Apply- The amendment made by subsection (a) shall not be treated as a change in a rate of tax for purposes of section 15 of the Internal Revenue Code of 1986.
(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.
SEC. 442. DELAY IN APPLICATION OF WORLDWIDE ALLOCATION OF INTEREST.
(a) In General- Paragraphs (5)(D) and (6) of section 864(f) of the Internal Revenue Code of 1986 are each amended by striking `December 31, 2010' and inserting `December 31, 2019'.
(b) Transition- Subsection (f) of section 864 of such Code is amended by striking paragraph (7).
PART 2--PREVENTION OF TAX AVOIDANCE
SEC. 451. LIMITATION ON TREATY BENEFITS FOR CERTAIN DEDUCTIBLE PAYMENTS.
(a) In General- Section 894 of the Internal Revenue Code of 1986 (relating to income affected by treaty) is amended by adding at the end the following new subsection:
`(d) Limitation on Treaty Benefits for Certain Deductible Payments-
`(1) IN GENERAL- In the case of any deductible related-party payment, any withholding tax imposed under chapter 3 (and any tax imposed under subpart A or B of this part) with respect to such payment may not be reduced under any treaty of the United States unless any such withholding tax would be reduced under a treaty of the United States if such payment were made directly to the foreign parent corporation.
`(2) DEDUCTIBLE RELATED-PARTY PAYMENT- For purposes of this subsection, the term `deductible related-party payment' means any payment made, directly or indirectly, by any person to any other person if the payment is allowable as a deduction under this chapter and both persons are members of the same foreign controlled group of entities.
`(3) FOREIGN CONTROLLED GROUP OF ENTITIES- For purposes of this subsection--
`(A) IN GENERAL- The term `foreign controlled group of entities' means a controlled group of entities the common parent of which is a foreign corporation.
`(B) CONTROLLED GROUP OF ENTITIES- The term `controlled group of entities' means a controlled group of corporations as defined in section 1563(a)(1), except that--
`(i) `more than 50 percent' shall be substituted for `at least 80 percent' each place it appears therein, and
`(ii) the determination shall be made without regard to subsections (a)(4) and (b)(2) of section 1563.
A partnership or any other entity (other than a corporation) shall be treated as a member of a controlled group of entities if such entity is controlled (within the meaning of section 954(d)(3)) by members of such group (including any entity treated as a member of such group by reason of this sentence).
`(4) FOREIGN PARENT CORPORATION- For purposes of this subsection, the term `foreign parent corporation' means, with respect to any deductible related-party payment, the common parent of the foreign controlled group of entities referred to in paragraph (3)(A).
`(5) REGULATIONS- The Secretary may prescribe such regulations or other guidance as are necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provide for--
`(A) the treatment of two or more persons as members of a foreign controlled group of entities if such persons would be the common parent of such group if treated as one corporation, and
`(B) the treatment of any member of a foreign controlled group of entities as the common parent of such group if such treatment is appropriate taking into account the economic relationships among such entities.'.
(b) Effective Date- The amendment made by this section shall apply to payments made after the date of the enactment of this Act.
SEC. 452. CODIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.
(a) In General- Section 7701 of the Internal Revenue Code of 1986 is amended by redesignating subsection (o) as subsection (p) and by inserting after subsection (n) the following new subsection:
`(o) Clarification of Economic Substance Doctrine-
`(1) APPLICATION OF DOCTRINE- In the case of any transaction to which the economic substance doctrine is relevant, such transaction shall be treated as having economic substance only if--
`(A) the transaction changes in a meaningful way (apart from Federal income tax effects) the taxpayer's economic position, and
`(B) the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into such transaction.
`(2) SPECIAL RULE WHERE TAXPAYER RELIES ON PROFIT POTENTIAL-
`(A) IN GENERAL- The potential for profit of a transaction shall be taken into account in determining whether the requirements of subparagraphs (A) and (B) of paragraph (1) are met with respect to the transaction only if the present value of the reasonably expected pre-tax profit from the transaction is substantial in relation to the present value of the expected net tax benefits that would be allowed if the transaction were respected.
`(B) TREATMENT OF FEES AND FOREIGN TAXES- Fees and other transaction expenses and foreign taxes shall be taken into account as expenses in determining pre-tax profit under subparagraph (A).
`(3) STATE AND LOCAL TAX BENEFITS- For purposes of paragraph (1), any State or local income tax effect which is related to a Federal income tax effect shall be treated in the same manner as a Federal income tax effect.
`(4) FINANCIAL ACCOUNTING BENEFITS- For purposes of paragraph (1)(B), achieving a financial accounting benefit shall not be taken into account as a purpose for entering into a transaction if the origin of such financial accounting benefit is a reduction of Federal income tax.
`(5) DEFINITIONS AND SPECIAL RULES- For purposes of this subsection--
`(A) ECONOMIC SUBSTANCE DOCTRINE- The term `economic substance doctrine' means the common law doctrine under which tax benefits under subtitle A with respect to a transaction are not allowable if the transaction does not have economic substance or lacks a business purpose.
`(B) EXCEPTION FOR PERSONAL TRANSACTIONS OF INDIVIDUALS- In the case of an individual, paragraph (1) shall apply only to transactions entered into in connection with a trade or business or an activity engaged in for the production of income.
`(C) OTHER COMMON LAW DOCTRINES NOT AFFECTED- Except as specifically provided in this subsection, the provisions of this subsection shall not be construed as altering or supplanting any other rule of law, and the requirements of this subsection shall be construed as being in addition to any such other rule of law.
`(D) DETERMINATION OF APPLICATION OF DOCTRINE NOT AFFECTED- The determination of whether the economic substance doctrine is relevant to a transaction (or series of transactions) shall be made in the same manner as if this subsection had never been enacted.
`(6) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection.'.
(b) Effective Date- The amendments made by this section shall apply to transactions entered into after the date of the enactment of this Act.
SEC. 453. PENALTIES FOR UNDERPAYMENTS.
(a) Penalty for Underpayments Attributable to Transactions Lacking Economic Substance-
(1) IN GENERAL- Subsection (b) of section 6662 of the Internal Revenue Code of 1986 is amended by inserting after paragraph (5) the following new paragraph:
`(6) Any disallowance of claimed tax benefits by reason of a transaction lacking economic substance (within the meaning of section 7701(o)) or failing to meet the requirements of any similar rule of law.'.
(2) INCREASED PENALTY FOR NONDISCLOSED TRANSACTIONS- Section 6662 of such Code is amended by adding at the end the following new subsection:
`(i) Increase in Penalty in Case of Nondisclosed Noneconomic Substance Transactions-
`(1) IN GENERAL- In the case of any portion of an underpayment which is attributable to one or more nondisclosed noneconomic substance transactions, subsection (a) shall be applied with respect to such portion by substituting `40 percent' for `20 percent'.
`(2) NONDISCLOSED NONECONOMIC SUBSTANCE TRANSACTIONS- For purposes of this subsection, the term `nondisclosed noneconomic substance transaction' means any portion of a transaction described in subsection (b)(6) with respect to which the relevant facts affecting the tax treatment are not adequately disclosed in the return nor in a statement attached to the return.
`(3) SPECIAL RULE FOR AMENDED RETURNS- Except as provided in regulations, in no event shall any amendment or supplement to a return of tax be taken into account for purposes of this subsection if the amendment or supplement is filed after the earlier of the date the taxpayer is first contacted by the Secretary regarding the examination of the return or such other date as is specified by the Secretary.'.
(3) CONFORMING AMENDMENT- Subparagraph (B) of section 6662A(e)(2) of such Code is amended--
(A) by striking `section 6662(h)' and inserting `subsections (h) or (i) of section 6662', and
(B) by striking `GROSS VALUATION MISSTATEMENT PENALTY' in the heading and inserting `CERTAIN INCREASED UNDERPAYMENT PENALTIES'.
(b) Reasonable Cause Exception Not Applicable to Noneconomic Substance Transactions, Tax Shelters, and Certain Large or Publicly Traded Persons- Subsection (c) of section 6664 of such Code is amended--
(1) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively,
(2) by striking `paragraph (2)' in paragraph (4), as so redesignated, and inserting `paragraph (3)', and
(3) by inserting after paragraph (1) the following new paragraph:
`(2) EXCEPTION- Paragraph (1) shall not apply to--
`(A) to any portion of an underpayment which is attributable to one or more tax shelters (as defined in section 6662(d)(2)(C)) or transactions described in section 6662(b)(6), and
`(B) to any taxpayer if such taxpayer is a specified person (as defined in section 6662(d)(2)(D)(ii)).'.
(c) Application of Penalty for Erroneous Claim for Refund or Credit to Noneconomic Substance Transactions- Section 6676 of such Code is amended by redesignating subsection (c) as subsection (d) and inserting after subsection (b) the following new subsection:
`(c) Noneconomic Substance Transactions Treated as Lacking Reasonable Basis- For purposes of this section, any excessive amount which is attributable to any transaction described in section 6662(b)(6) shall not be treated as having a reasonable basis.'.
(d) Special Understatement Reduction Rule for Certain Large or Publicly Traded Persons-
(1) IN GENERAL- Paragraph (2) of section 6662(d) of such Code is amended by adding at the end the following new subparagraph:
`(D) SPECIAL REDUCTION RULE FOR CERTAIN LARGE OR PUBLICLY TRADED PERSONS-
`(i) IN GENERAL- In the case of any specified person--
`(I) subparagraph (B) shall not apply, and
`(II) the amount of the understatement under subparagraph (A) shall be reduced by that portion of the understatement which is attributable to any item with respect to which the taxpayer has a reasonable belief that the tax treatment of such item by the taxpayer is more likely than not the proper tax treatment of such item.
`(ii) SPECIFIED PERSON- For purposes of this subparagraph, the term `specified person' means--
`(I) any person required to file periodic or other reports under section 13 of the Securities Exchange Act of 1934, and
`(II) any corporation with gross receipts in excess of $100,000,000 for the taxable year involved.
All persons treated as a single employer under section 52(a) shall be treated as one person for purposes of subclause (II).'.
(2) CONFORMING AMENDMENT- Subparagraph (C) of section 6662(d)(2) of such Code is amended by striking `Subparagraph (B)' and inserting `Subparagraphs (B) and (D)(i)(II)'.
(e) Effective Date- The amendments made by this section shall apply to transactions entered into after the date of the enactment of this Act.
DIVISION B--MEDICARE AND MEDICAID IMPROVEMENTS
SEC. 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 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.
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. 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.
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.
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.
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.
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 non-institutionalized 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.
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. Payment incentive for selected primary care services.
Sec. 1304. Increased reimbursement rate for certified nurse-midwives.
Sec. 1305. Coverage and waiver of cost-sharing for preventive services.
Sec. 1306. Waiver of deductible for colorectal cancer screening tests regardless of coding, subsequent diagnosis, or ancillary tissue removal.
Sec. 1307. Excluding clinical social worker services from coverage under the medicare skilled nursing facility prospective payment system and consolidated payment.
Sec. 1308. Coverage of marriage and family therapist services and mental health counselor services.
Sec. 1309. Extension of physician fee schedule mental health add-on.
Sec. 1310. Expanding access to vaccines.
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.
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. Multi-stakeholder pre-rulemaking input into selection of quality measures.
Sec. 1444. Application of quality measures.
Sec. 1445. Consensus-based entity funding.
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 133 1/3 percent of the Federal poverty level.
Sec. 1702. Requirements and special rules for certain Medicaid eligible individuals.
Sec. 1703. CHIP and Medicaid maintenance of effort.
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.
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.
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.
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. 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.
Subtitle G--Puerto Rico and the Territories
Sec. 1771. Puerto Rico and territories.
Subtitle H--Miscellaneous
Sec. 1781. Technical corrections.
Sec. 1782. Extension of QI program.
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.
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.
(a) In General- Section 1888(e)(4)(E)(ii) of the Social Security Act (42 U.S.C. 1395yy(e)(4)(E)(ii)) is amended--
(1) in subclause (III), by striking `and' at the end;
(2) by redesignating subclause (IV) as subclause (VI); and
(3) by inserting after subclause (III) the following new subclauses:
`(IV) for each of fiscal years 2004 through 2009, the rate computed for the previous fiscal year increased by the skilled nursing facility market basket percentage change for the fiscal year involved;
`(V) for fiscal year 2010, the rate computed for the previous fiscal year; and'.
(b) Delayed Effective Date- Section 1888(e)(4)(E)(ii)(V) of the Social Security Act, as inserted by subsection (a)(3), shall not apply to payment for days before January 1, 2010.
SEC. 1102. INPATIENT REHABILITATION FACILITY PAYMENT UPDATE.
(a) In General- Section 1886(j)(3)(C) of the Social Security Act (42 U.S.C. 1395ww(j)(3)(C)) is amended by striking `and 2009' and inserting `through 2010'.
(b) Delayed Effective Date- The amendment made by subsection (a) shall not apply to payment units occurring before January 1, 2010.
SEC. 1103. INCORPORATING PRODUCTIVITY IMPROVEMENTS INTO MARKET BASKET UPDATES THAT DO NOT ALREADY INCORPORATE SUCH IMPROVEMENTS.
(a) Inpatient Acute Hospitals- Section 1886(b)(3)(B) of the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)) is amended--
(A) by striking `(iii) For purposes of this subparagraph,' and inserting `(iii)(I) For purposes of this subparagraph, subject to the productivity adjustment described in subclause (II),'; and
(B) by adding at the end the following new subclause:
`(II) The productivity adjustment described in this subclause, with respect to an increase or change for a fiscal year or year or cost reporting period, or other annual period, is a productivity offset equal to the percentage change in the 10-year moving average of annual economy-wide private nonfarm business multi-factor productivity (as recently published before the promulgation of such increase for the year or period involved). Except as otherwise provided, any reference to the increase described in this clause shall be a reference to the percentage increase described in subclause (I) minus the percentage change under this subclause.';
(2) in the first sentence of clause (viii)(I), by inserting `(but not below zero)' after `shall be reduced'; and
(3) in the first sentence of clause (ix)(I)--
(A) by inserting `(determined without regard to clause (iii)(II)' after `clause (i)' the second time it appears; and
(B) by inserting `(but not below zero)' after `reduced'.
(b) Skilled Nursing Facilities- Section 1888(e)(5)(B) of such Act (42 U.S.C. 1395yy(e)(5)(B)) is amended by inserting `subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II)' after `as calculated by the Secretary'.
(c) Long-Term Care Hospitals- Section 1886(m) of the Social Security Act (42 U.S.C. 1395ww(m)) is amended by adding at the end the following new paragraph:
`(3) PRODUCTIVITY ADJUSTMENT- In implementing the system described in paragraph (1) for discharges occurring during the rate year ending in 2010 or any subsequent rate year for a hospital, to the extent that an annual percentage increase factor applies to a base rate for such discharges for the hospital, such factor shall be subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II).'.
(d) Inpatient Rehabilitation Facilities- The second sentence of section 1886(j)(3)(C) of the Social Security Act (42 U.S.C. 1395ww(j)(3)(C)) is amended by inserting `(subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II))' after `appropriate percentage increase'.
(e) Psychiatric Hospitals- Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended by adding at the end the following new subsection:
`(o) Prospective Payment for Psychiatric Hospitals-
`(1) REFERENCE TO ESTABLISHMENT AND IMPLEMENTATION OF SYSTEM- For provisions related to the establishment and implementation of a prospective payment system for payments under this title for inpatient hospital services furnished by psychiatric hospitals (as described in clause (i) of subsection (d)(1)(B)) and psychiatric units (as described in the matter following clause (v) of such subsection), see section 124 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999.
`(2) PRODUCTIVITY ADJUSTMENT- In implementing the system described in paragraph (1) for discharges occurring during the rate year ending in 2011 or any subsequent rate year for a psychiatric hospital or unit described in such paragraph, to the extent that an annual percentage increase factor applies to a base rate for such discharges for the hospital or unit, respectively, such factor shall be subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II).'.
(f) Hospice Care- Subclause (VII) of section 1814(i)(1)(C)(ii) of the Social Security Act (42 U.S.C. 1395f(i)(1)(C)(ii)) is amended by inserting after `the market basket percentage increase' the following: `(which is subject to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II))'.
(g) Effective Date- The amendments made by subsections (a), (b), (d), and (f) shall apply to annual increases effected for fiscal years beginning with fiscal year 2010.
PART 2--OTHER MEDICARE PART A PROVISIONS
SEC. 1111. PAYMENTS TO SKILLED NURSING FACILITIES.
(a) Change in Recalibration Factor-
(1) ANALYSIS- The Secretary of Health and Human Services shall conduct, using calendar year 2006 claims data, an initial analysis comparing total payments under title XVIII of the Social Security Act for skilled nursing facility services under the RUG-53 and under the RUG-44 classification systems.
(2) ADJUSTMENT IN RECALIBRATION FACTOR- Based on the initial analysis under paragraph (1), the Secretary shall adjust the case mix indexes under section 1888(e)(4)(G)(i) of the Social Security Act (42 U.S.C. 1395yy(e)(4)(G)(i)) for fiscal year 2010 by the appropriate recalibration factor as proposed in the proposed rule for Medicare skilled nursing facilities issued by such Secretary on May 12, 2009 (74 Federal Register 22214 et seq.).
(b) Change in Payment for Nontherapy Ancillary (NTA) Services and Therapy Services-
(1) CHANGES UNDER CURRENT SNF CLASSIFICATION SYSTEM-
(A) IN GENERAL- Subject to subparagraph (B), the Secretary of Health and Human Services shall, under the system for payment of skilled nursing facility services under section 1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)), increase payment by 10 percent for non-therapy ancillary services (as specified by the Secretary in the notice issued on November 27, 1998 (63 Federal Register 65561 et seq.)) and shall decrease payment for the therapy case mix component of such rates by 5.5 percent.
(B) EFFECTIVE DATE- The changes in payment described in subparagraph (A) shall apply for days on or after January 1, 2010, and until the Secretary implements an alternative case mix classification system for payment of skilled nursing facility services under section 1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)).
(C) IMPLEMENTATION- Notwithstanding any other provision of law, the Secretary may implement by program instruction or otherwise the provisions of this paragraph.
(2) CHANGES UNDER A FUTURE SNF CASE MIX CLASSIFICATION SYSTEM-
(i) IN GENERAL- The Secretary of Health and Human Services shall analyze payments for non-therapy ancillary services under a future skilled nursing facility classification system to ensure the accuracy of payment for non-therapy ancillary services. Such analysis shall consider use of appropriate indicators which may include age, physical and mental status, ability to perform activities of daily living, prior nursing home stay, broad RUG category, and a proxy for length of stay.
(ii) APPLICATION- Such analysis shall be conducted in a manner such that the future skilled nursing facility classification system is implemented to apply to services furnished during a fiscal year beginning with fiscal year 2011.
(B) CONSULTATION- In conducting the analysis under subparagraph (A), the Secretary shall consult with interested parties, including the Medicare Payment Advisory Commission and other interested stakeholders, to identify appropriate predictors of nontherapy ancillary costs.
(C) RULEMAKING- The Secretary shall include the result of the analysis under subparagraph (A) in the fiscal year 2011 rulemaking cycle for purposes of implementation beginning for such fiscal year.
(D) IMPLEMENTATION- Subject to subparagraph (E) and consistent with subparagraph (A)(ii), the Secretary shall implement changes to payments for non-therapy ancillary services (which may include a separate rate component for non-therapy ancillary services and may include use of a model that predicts payment amounts applicable for non-therapy ancillary services) under such future skilled nursing facility services classification system as the Secretary determines appropriate based on the analysis conducted pursuant to subparagraph (A).
(E) BUDGET NEUTRALITY- The Secretary shall implement changes described in subparagraph (D) in a manner such that the estimated expenditures under such future skilled nursing facility services classification system for a fiscal year beginning with fiscal year 2011 with such changes would be equal to the estimated expenditures that would otherwise occur under title XVIII of the Social Security Act under such future skilled nursing facility services classification system for such year without such changes.
(c) Outlier Policy for NTA and Therapy- Section 1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)) is amended by adding at the end the following new paragraph:
`(13) OUTLIERS FOR NTA AND THERAPY-
`(A) IN GENERAL- With respect to outliers because of unusual variations in the type or amount of medically necessary care, beginning with October 1, 2010, the Secretary--
`(i) shall provide for an addition or adjustment to the payment amount otherwise made under this section with respect to non-therapy ancillary services in the case of such outliers; and
`(ii) may provide for such an addition or adjustment to the payment amount otherwise made under this section with respect to therapy services in the case of such outliers.
`(B) OUTLIERS BASED ON AGGREGATE COSTS- Outlier adjustments or additional payments described in subparagraph (A) shall be based on aggregate costs during a stay in a skilled nursing facility and not on the number of days in such stay.
`(C) BUDGET NEUTRALITY- The Secretary shall reduce estimated payments that would otherwise be made under the prospective payment system under this subsection with respect to a fiscal year by 2 percent. The total amount of the additional payments or payment adjustments for outliers made under this paragraph with respect to a fiscal year may not exceed 2 percent of the total payments projected or estimated to be made based on the prospective payment system under this subsection for the fiscal year.'.
(d) Conforming Amendments- Section 1888(e)(8) of such Act (42 U.S.C. 1395yy(e)(8)) is amended--
(1) in subparagraph (A), by inserting `and adjustment under section 1111(b) of the America's Affordable Health Choices Act of 2009;
(2) in subparagraph (B), by striking `and';
(3) in subparagraph (C), by striking the period and inserting `; and'; and
(4) by adding at the end the following new subparagraph:
`(D) the establishment of outliers under paragraph (13).'.
SEC. 1112. MEDICARE DSH REPORT AND PAYMENT ADJUSTMENTS IN RESPONSE TO COVERAGE EXPANSION.
(1) IN GENERAL- Not later than January 1, 2016, the Secretary of Health and Human Services shall submit to Congress a report on Medicare DSH taking into account the impact of the health care reforms carried out under division A in reducing the number of uninsured individuals. The report shall include recommendations relating to the following:
(A) The appropriate amount, targeting, and distribution of Medicare DSH to compensate for higher Medicare costs associated with serving low-income beneficiaries (taking into account variations in the empirical justification for Medicare DSH attributable to hospital characteristics, including bed size), consistent with the original intent of Medicare DSH.
(B) The appropriate amount, targeting, and distribution of Medicare DSH to hospitals given their continued uncompensated care costs, to the extent such costs remain.
(2) COORDINATION WITH MEDICAID DSH REPORT- The Secretary shall coordinate the report under this subsection with the report on Medicaid DSH under section 1704(a).
(b) Payment Adjustments in Response to Coverage Expansion-
(1) IN GENERAL- If there is a significant decrease in the national rate of uninsurance as a result of this Act (as determined under paragraph (2)(A)), then the Secretary of Health and Human Services shall, beginning in fiscal year 2017, implement the following adjustments to Medicare DSH:
(A) The amount of Medicare DSH shall be adjusted based on the recommendations of the report under subsection (a)(1)(A) and shall take into account variations in the empirical justification for Medicare DSH attributable to hospital characteristics, including bed size.
(B) Subject to paragraph (3), increase Medicare DSH for a hospital by an additional amount that is based on the amount of uncompensated care provided by the hospital based on criteria for uncompensated care as determined by the Secretary, which shall exclude bad debt.
(2) SIGNIFICANT DECREASE IN NATIONAL RATE OF UNINSURANCE AS A RESULT OF THIS ACT- For purposes of this subsection--
(A) IN GENERAL- There is a `significant decrease in the national rate of uninsurance as a result of this Act' if there is a decrease in the national rate of uninsurance (as defined in subparagraph (B)) from 2012 to 2014 that exceeds 8 percentage points.
(B) NATIONAL RATE OF UNINSURANCE DEFINED- The term `national rate of uninsurance' means, for a year, such rate for the under-65 population for the year as determined and published by the Bureau of the Census in its Current Population Survey in or about September of the succeeding year.
(3) UNCOMPENSATED CARE INCREASE-
(A) COMPUTATION OF DSH SAVINGS- For each fiscal year (beginning with fiscal year 2017), the Secretary shall estimate the aggregate reduction in Medicare DSH that will result from the adjustment under paragraph (1)(A).
(B) STRUCTURE OF PAYMENT INCREASE- The Secretary shall compute the increase in Medicare DSH under paragraph (1)(B) for a fiscal year in accordance with a formula established by the Secretary that provides that--
(i) the aggregate amount of such increase for the fiscal year does not exceed 50 percent of the aggregate reduction in Medicare DSH estimated by the Secretary for such fiscal year; and
(ii) hospitals with higher levels of uncompensated care receive a greater increase.
(c) Medicare DSH- In this section, the term `Medicare DSH' means adjustments in payments under section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(F)) for inpatient hospital services furnished by disproportionate share hospitals.
Subtitle B--Provisions Related to Part B
PART 1--PHYSICIANS' SERVICES
SEC. 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 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 `for 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) 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 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.
SEC. 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).'.
(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.
(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 U.S.C. 1395ee(a)) is repealed.
SEC. 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.'.
SEC. 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 `for each of the years 2009 through 2012'.
SEC. 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-
`(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'.
PART 2--MARKET BASKET UPDATES
SEC. 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 years 2009 through 2013' and inserting `for 2009'; and
(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)'.
PART 3--OTHER PROVISIONS
SEC. 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.
SEC. 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'.
SEC. 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.
SEC. 1144. REQUIRE AMBULATORY SURGICAL CENTERS (ASCS) TO SUBMIT COST DATA AND OTHER DATA.
(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.
SEC. 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.'.
SEC. 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'.
SEC. 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.
SEC. 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--
(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:
`(iii) 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.'.
SEC. 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.
Subtitle C--Provisions Related to Medicare Parts A and B
SEC. 1151. REDUCING POTENTIALLY PREVENTABLE HOSPITAL READMISSIONS.
(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.
`(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).
`(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--
(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-
(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).
(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.
SEC. 1152. POST ACUTE CARE SERVICES PAYMENT REFORM PLAN AND BUNDLING PILOT PROGRAM.
(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.
(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.
(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:
`SEC. 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 pilot program under subsection (a) may include additional geographic areas and additional conditions which account for significant program spending, as defined by the Secretary. Nothing in this subsection shall be construed as limiting the number of hospital and physician groups or the number of hospital and post-acute provider groups that may participate in the pilot program.
`(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'.
SEC. 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'.
SEC. 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--
(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).'.
SEC. 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.
SEC. 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-
`(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.
`(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.
(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).
SEC. 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.
SEC. 1158. REVISION OF MEDICARE PAYMENT SYSTEMS TO ADDRESS GEOGRAPHIC INEQUITIES.
(a) In General- The Secretary of Health and Human Services, taking into account the recommendations made in the report under section 1157(d), shall include in the proposed rules published to implement changes to payment systems for physicians and hospitals under sections 1848(e) and 1886(d)(3)(E), respectively, of the Social Security Act, proposals to revise geographic adjustment factors for such payment systems for services furnished under the Medicare program. Such proposed rules shall be published in the rulemaking period immediately following submission of the report under section 1157(d).
(1) FUNDING FOR IMPROVEMENTS- In making any changes to the geographic adjustment factors in accordance with subsection (a), the Secretary shall use funds made available for such purposes under subsection (c).
(2) ENSURING FAIRNESS- In carrying out this subsection, the Secretary shall not change payment rates to be less than they would have been had this section not been enacted.
(c) Funding- Amounts in the Medicare Improvement Fund under section 1898 of the Social Security Act (42 U.S.C. 1395iii), as amended by section 1146, shall be available to the Secretary to make changes to the geographic adjustments factors established under sections 1848(e) and 1886(d)(3)(E) of the Social Security Act. For such purpose, such funds shall be available for expenditure for services furnished before January 1, 2014, and shall not exceed the total amounts available under such Fund for such period. No more than one-half of such amounts shall be available for expenditure for services furnished in any one payment year.
Subtitle D--Medicare Advantage Reforms
PART 1--PAYMENT AND ADMINISTRATION
SEC. 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.'.
SEC. 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.
`(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.'.
SEC. 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
(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'.
SEC. 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);
(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).
SEC. 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'.
SEC. 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.
SEC. 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).
SEC. 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.
PART 2--BENEFICIARY PROTECTIONS AND ANTI-FRAUD
SEC. 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 by adding at the end the following new paragraph:
`(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.'.
(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.
SEC. 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'.
SEC. 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.
`(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.'.
SEC. 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.
SEC. 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.
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.
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).'.
SEC. 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.
Subtitle E--Improvements to Medicare Part D
SEC. 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 1/2 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 1/2 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
`(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(b) 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).'.
SEC. 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(a), 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)' after `this subsection'; 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).
`(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 out-of-pocket threshold (as defined in subsection (b)(4))(B) if subsection (b)(7) did not apply.'.
SEC. 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, is amended by striking subparagraph (B) and redesignating subparagraph (C) as subparagraph (B).
(c) Effective Date- The amendments made by this section shall apply for contract years beginning with 2010.
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.
(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;
(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.
SEC. 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.
Subtitle F--Medicare Rural Access Protections
SEC. 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.
`(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).
SEC. 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--
(A) in the first sentence, by striking
131`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'.
SEC. 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'.
SEC. 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'.
SEC. 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'.
SEC. 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'.
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.
(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.
SEC. 1202. ELIMINATION OF PART D COST-SHARING FOR CERTAIN NON-INSTITUTIONALIZED 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.
SEC. 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.
SEC. 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.
SEC. 1205. INTELLIGENT ASSIGNMENT IN ENROLLMENT.
(a) In General- Section 1860D-1(b)(1)(C) of the Social Security Act (42 U.S.C. 1395w-101(b)(1)(C)) is amended by adding after `PDP region' the following: `or through use of an intelligent assignment process that is designed to maximize the access of such individual to necessary prescription drugs while minimizing costs to such individual and to the program under this part to the greatest extent possible. In the case the Secretary enrolls such individuals through use of an intelligent assignment process, such process shall take into account the extent to which prescription drugs necessary for the individual are covered in the case of a PDP sponsor of a prescription drug plan that uses a formulary, the use of prior authorization or other restrictions on access to coverage of such prescription drugs by such a sponsor, and the overall quality of a prescription drug plan as measured by quality ratings established by the Secretary.'
(b) Effective Date- The amendment made by subsection (a) shall take effect for contract years beginning with 2012.
SEC. 1206. SPECIAL ENROLLMENT PERIOD AND AUTOMATIC ENROLLMENT PROCESS FOR CERTAIN SUBSIDY ELIGIBLE INDIVIDUALS.
(a) Special Enrollment Period- Section 1860D-1(b)(3)(D) of the Social Security Act (42 U.S.C. 1395w-101(b)(3)(D)) is amended to read as follows:
`(D) SUBSIDY ELIGIBLE INDIVIDUALS- In the case of an individual (as determined by the Secretary) who is determined under subparagraph (B) of section 1860D-14(a)(3) to be a subsidy eligible individual.'.
(b) Automatic Enrollment- Section 1860D-1(b)(1) of the Social Security Act (42 U.S.C. 1395w-101(b)(1)) is amended by adding at the end the following new subparagraph:
`(D) SPECIAL RULE FOR SUBSIDY ELIGIBLE INDIVIDUALS- The process established under subparagraph (A) shall include, in the case of an individual described in section 1860D-1(b)(3)(D) who fails to enroll in a prescription drug plan or an MA-PD plan during the special enrollment established under such section applicable to such individual, the application of the assignment process described in subparagraph (C) to such individual in the same manner as such assignment process applies to a part D eligible individual described in such subparagraph (C). Nothing in the previous sentence shall prevent an individual described in such sentence from declining enrollment in a plan determined appropriate by the Secretary (or in the program under this part) or from changing such enrollment.'.
(c) Effective Date- The amendments made by this section shall apply to subsidy determinations made for months beginning with January 2011.
SEC. 1207. APPLICATION OF MA PREMIUMS PRIOR TO REBATE IN CALCULATION OF LOW INCOME SUBSIDY BENCHMARK.
(a) In General- Section 1860D-14(b)(2)(B)(iii) of the Social Security Act (42 U.S.C. 1395w-114(b)(2)(B)(iii)) is amended by inserting before the period the following: `before the application of the monthly rebate computed under section 1854(b)(1)(C)(i) for that plan and year involved'.
(b) Effective Date- The amendment made by subsection (a) shall apply to subsidy determinations made for months beginning with January 2011.
Subtitle B--Reducing Health Disparities
SEC. 1221. ENSURING EFFECTIVE COMMUNICATION IN MEDICARE.
(a) Ensuring Effective Communication by the Centers for Medicare & Medicaid Services-
(1) STUDY ON MEDICARE PAYMENTS FOR LANGUAGE SERVICES- The Secretary of Health and Human Services shall conduct a study that examines the extent to which Medicare service providers utilize, offer, or make available language services for beneficiaries who are limited English proficient and ways that Medicare should develop payment systems for language services.
(2) ANALYSES- The study shall include an analysis of each of the following:
(A) How to develop and structure appropriate payment systems for language services for all Medicare service providers.
(B) The feasibility of adopting a payment methodology for on-site interpreters, including interpreters who work as independent contractors and interpreters who work for agencies that provide on-site interpretation, pursuant to which such interpreters could directly bill Medicare for services provided in support of physician office services for an LEP Medicare patient.
(C) The feasibility of Medicare contracting directly with agencies that provide off-site interpretation including telephonic and video interpretation pursuant to which such contractors could directly bill Medicare for the services provided in support of physician office services for an LEP Medicare patient.
(D) The feasibility of modifying the existing Medicare resource-based relative value scale (RBRVS) by using adjustments (such as multipliers or add-ons) when a patient is LEP.
(E) How each of options described in a previous paragraph would be funded and how such funding would affect physician payments, a physician's practice, and beneficiary cost-sharing.
(F) The extent to which providers under parts A and B of title XVIII of the Social Security Act, MA organizations offering Medicare Advantage plans under part C of such title and PDP sponsors of a prescription drug plan under part D of such title utilize, offer, or make available language services for beneficiaries with limited English proficiency.
(G) The nature and type of language services provided by States under title XIX of the Social Security Act and the extent to which such services could be utilized by beneficiaries and providers under title XVIII of such Act.
(3) VARIATION IN PAYMENT SYSTEM DESCRIBED- The payment systems described in paragraph (2)(A) may allow variations based upon types of service providers, available delivery methods, and costs for providing language services including such factors as--
(A) the type of language services provided (such as provision of health care or health care related services directly in a non-English language by a bilingual provider or use of an interpreter);
(B) type of interpretation services provided (such as in-person, telephonic, video interpretation);
(C) the methods and costs of providing language services (including the costs of providing language services with internal staff or through contract with external independent contractors or agencies, or both);
(D) providing services for languages not frequently encountered in the United States; and
(E) providing services in rural areas.
(4) REPORT- The Secretary shall submit a report on the study conducted under subsection (a) to appropriate committees of Congress not later than 12 months after the date of the enactment of this Act.
(5) EXEMPTION FROM PAPERWORK REDUCTION ACT- Chapter 35 of title 44, United States Code (commonly known as the `Paperwork Reduction Act'), shall not apply for purposes of carrying out this subsection.
(6) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this subsection such sums as are necessary.
(b) Health Plans- Section 1857(g)(1) of the Social Security Act (42 U.S.C. 1395w-27(g)(1)) is amended--
(1) by striking `or' at the end of subparagraph (F);
(2) by adding `or' at the end of subparagraph (G); and
(3) by inserting after subparagraph (G) the following new subparagraph:
`(H) fails substantially to provide language services to limited English proficient beneficiaries enrolled in the plan that are required under law;'.
SEC. 1222. DEMONSTRATION TO PROMOTE ACCESS FOR MEDICARE BENEFICIARIES WITH LIMITED ENGLISH PROFICIENCY BY PROVIDING REIMBURSEMENT FOR CULTURALLY AND LINGUISTICALLY APPROPRIATE SERVICES.
(a) In General- Not later than 6 months after the date of the completion of the study described in section 1221(a), the Secretary, acting through the Centers for Medicare & Medicaid Services, shall carry out a demonstration program under which the Secretary shall award not fewer than 24 3-year grants to eligible Medicare service providers (as described in subsection (b)(1)) to improve effective communication between such providers and Medicare beneficiaries who are living in communities where racial and ethnic minorities, including populations that face language barriers, are underserved with respect to such services. In designing and carrying out the demonstration the Secretary shall take into consideration the results of the study conducted under section 1221(a) and adjust, as appropriate, the distribution of grants so as to better target Medicare beneficiaries who are in the greatest need of language services. The Secretary shall not authorize a grant larger than $500,000 over three years for any grantee.
(b) Eligibility; Priority-
(1) ELIGIBILITY- To be eligible to receive a grant under subsection (a) an entity shall--
(i) a provider of services under part A of title XVIII of the Social Security Act;
(ii) a service provider under part B of such title;
(iii) a part C organization offering a Medicare part C plan under part C of such title; or
(iv) a PDP sponsor of a prescription drug plan under part D of such title; and
(B) prepare and submit to the Secretary an application, at such time, in such manner, and accompanied by such additional information as the Secretary may require.
(A) DISTRIBUTION- To the extent feasible, in awarding grants under this section, the Secretary shall award--
(i) at least 6 grants to providers of services described in paragraph (1)(A)(i);
(ii) at least 6 grants to service providers described in paragraph (1)(A)(ii);
(iii) at least 6 grants to organizations described in paragraph (1)(A)(iii); and
(iv) at least 6 grants to sponsors described in paragraph (1)(A)(iv).
(B) FOR COMMUNITY ORGANIZATIONS- The Secretary shall give priority to applicants that have developed partnerships with community organizations or with agencies with experience in language access.
(C) VARIATION IN GRANTEES- The Secretary shall also ensure that the grantees under this section represent, among other factors, variations in--
(i) different types of language services provided and of service providers and organizations under parts A through D of title XVIII of the Social Security Act;
(ii) languages needed and their frequency of use;
(iii) urban and rural settings;
(iv) at least two geographic regions, as defined by the Secretary; and
(v) at least two large metropolitan statistical areas with diverse populations.
(1) IN GENERAL- A grantee shall use grant funds received under this section to pay for the provision of competent language services to Medicare beneficiaries who are limited English proficient. Competent interpreter services may be provided through on-site interpretation, telephonic interpretation, or video interpretation or direct provision of health care or health care related services by a bilingual health care provider. A grantee may use bilingual providers, staff, or contract interpreters. A grantee may use grant funds to pay for competent translation services. A grantee may use up to 10 percent of the grant funds to pay for administrative costs associated with the provision of competent language services and for reporting required under subsection (e).
(2) ORGANIZATIONS- Grantees that are part C organizations or PDP sponsors must ensure that their network providers receive at least 50 percent of the grant funds to pay for the provision of competent language services to Medicare beneficiaries who are limited English proficient, including physicians and pharmacies.
(3) DETERMINATION OF PAYMENTS FOR LANGUAGE SERVICES- Payments to grantees shall be calculated based on the estimated numbers of limited English proficient Medicare beneficiaries in a grantee's service area utilizing--
(A) data on the numbers of limited English proficient individuals who speak English less than `very well' from the most recently available data from the Bureau of the Census or other State-based study the Secretary determines likely to yield accurate data regarding the number of such individuals served by the grantee; or
(B) the grantee's own data if the grantee routinely collects data on Medicare beneficiaries' primary language in a manner determined by the Secretary to yield accurate data and such data shows greater numbers of limited English proficient individuals than the data listed in subparagraph (A).
(A) REPORTING- Payments shall only be provided under this section to grantees that report their costs of providing language services as required under subsection (e) and may be modified annually at the discretion of the Secretary. If a grantee fails to provide the reports under such section for the first year of a grant, the Secretary may terminate the grant and solicit applications from new grantees to participate in the subsequent two years of the demonstration program.
(i) IN GENERAL- Subject to clause (ii), payments shall be provided under this section only to grantees that utilize competent bilingual staff or competent interpreter or translation services which--
(I) if the grantee operates in a State that has statewide health care interpreter standards, meet the State standards currently in effect; or
(II) if the grantee operates in a State that does not have statewide health care interpreter standards, utilizes competent interpreters who follow the National Council on Interpreting in Health Care's Code of Ethics and Standards of Practice.
(ii) EXEMPTIONS- The requirements of clause (i) shall not apply--
(I) in the case of a Medicare beneficiary who is limited English proficient (who has been informed in the beneficiary's primary language of the availability of free interpreter and translation services) and who requests the use of family, friends, or other persons untrained in interpretation or translation and the grantee documents the request in the beneficiary's record; and
(II) in the case of a medical emergency where the delay directly associated with obtaining a competent interpreter or translation services would jeopardize the health of the patient.
Nothing in clause (ii)(II) shall be construed to exempt emergency rooms or similar entities that regularly provide health care services in medical emergencies from having in place systems to provide competent interpreter and translation services without undue delay.
(d) Assurances- Grantees under this section shall--
(1) ensure that appropriate clinical and support staff receive ongoing education and training in linguistically appropriate service delivery;
(2) ensure the linguistic competence of bilingual providers;
(3) offer and provide appropriate language services at no additional charge to each patient with limited English proficiency at all points of contact, in a timely manner during all hours of operation;
(4) notify Medicare beneficiaries of their right to receive language services in their primary language;
(5) post signage in the languages of the commonly encountered group or groups present in the service area of the organization; and
(A) primary language data are collected for recipients of language services; and
(B) consistent with the privacy protections provided under the regulations promulgated pursuant to section 264(c) of the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. 1320d-2 note), if the recipient of language services is a minor or is incapacitated, the primary language of the parent or legal guardian is collected and utilized.
(e) Reporting Requirements- Grantees under this section shall provide the Secretary with reports at the conclusion of the each year of a grant under this section. Each report shall include at least the following information:
(1) The number of Medicare beneficiaries to whom language services are provided.
(2) The languages of those Medicare beneficiaries.
(3) The types of language services provided (such as provision of services directly in non-English language by a bilingual health care provider or use of an interpreter).
(4) Type of interpretation (such as in-person, telephonic, or video interpretation).
(5) The methods of providing language services (such as staff or contract with external independent contractors or agencies).
(6) The length of time for each interpretation encounter.
(7) The costs of providing language services (which may be actual or estimated, as determined by the Secretary).
(f) No Cost Sharing- Limited English proficient Medicare beneficiaries shall not have to pay cost-sharing or co-pays for language services provided through this demonstration program.
(g) Evaluation and Report- The Secretary shall conduct an evaluation of the demonstration program under this section and shall submit to the appropriate committees of Congress a report not later than 1 year after the completion of the program. The report shall include the following:
(1) An analysis of the patient outcomes and costs of furnishing care to the limited English proficient Medicare beneficiaries participating in the project as compared to such outcomes and costs for limited English proficient Medicare beneficiaries not participating.
(2) The effect of delivering culturally and linguistically appropriate services on beneficiary access to care, utilization of services, efficiency and cost-effectiveness of health care delivery, patient satisfaction, and select health outcomes.
(3) Recommendations, if any, regarding the extension of such project to the entire Medicare program.
(h) General Provisions- Nothing in this section shall be construed to limit otherwise existing obligations of recipients of Federal financial assistance under title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000(d) et seq.) or any other statute.
(i) Authorization of Appropriations- There are authorized to be appropriated to carry out this section $16,000,000 for each fiscal year of the demonstration program.
SEC. 1223. IOM REPORT ON IMPACT OF LANGUAGE ACCESS SERVICES.
(a) In General- The Secretary of Health and Human Services shall enter into an arrangement with the Institute of Medicine under which the Institute will prepare and publish, not later than 3 years after the date of the enactment of this Act, a report on the impact of language access services on the health and health care of limited English proficient populations.
(b) Contents- Such report shall include--
(1) recommendations on the development and implementation of policies and practices by health care organizations and providers for limited English proficient patient populations;
(2) a description of the effect of providing language access services on quality of health care and access to care and reduced medical error; and
(3) a description of the costs associated with or savings related to provision of language access services.
SEC. 1224. DEFINITIONS.
(1) BILINGUAL- The term `bilingual' with respect to an individual means a person who has sufficient degree of proficiency in two languages and can ensure effective communication can occur in both languages.
(2) COMPETENT INTERPRETER SERVICES- The term `competent interpreter services' means a trans-language rendition of a spoken message in which the interpreter comprehends the source language and can speak comprehensively in the target language to convey the meaning intended in the source language. The interpreter knows health and health-related terminology and provides accurate interpretations by choosing equivalent expressions that convey the best matching and meaning to the source language and captures, to the greatest possible extent, all nuances intended in the source message.
(3) COMPETENT TRANSLATION SERVICES- The term `competent translation services' means a trans-language rendition of a written document in which the translator comprehends the source language and can write comprehensively in the target language to convey the meaning intended in the source language. The translator knows health and health-related terminology and provides accurate translations by choosing equivalent expressions that convey the best matching and meaning to the source language and captures, to the greatest possible extent, all nuances intended in the source document.
(4) EFFECTIVE COMMUNICATION- The term `effective communication' means an exchange of information between the provider of health care or health care-related services and the limited English proficient recipient of such services that enables limited English proficient individuals to access, understand, and benefit from health care or health care-related services.
(5) INTERPRETING/INTERPRETATION- The terms `interpreting' and `interpretation' mean the transmission of a spoken message from one language into another, faithfully, accurately, and objectively.
(6) HEALTH CARE SERVICES- The term `health care services' means services that address physical as well as mental health conditions in all care settings.
(7) HEALTH CARE-RELATED SERVICES- The term `health care-related services' means human or social services programs or activities that provide access, referrals or links to health care.
(8) LANGUAGE ACCESS- The term `language access' means the provision of language services to an LEP individual designed to enhance that individual's access to, understanding of or benefit from health care or health care-related services.
(9) LANGUAGE SERVICES- The term `language services' means provision of health care services directly in a non-English language, interpretation, translation, and non-English signage.
(10) LIMITED ENGLISH PROFICIENT- The term `limited English proficient' or `LEP' with respect to an individual means an individual who speaks a primary language other than English and who cannot speak, read, write or understand the English language at a level that permits the individual to effectively communicate with clinical or nonclinical staff at an entity providing health care or health care related services.
(11) MEDICARE BENEFICIARY- The term `Medicare beneficiary' means an individual entitled to benefits under part A of title XVIII of the Social Security Act or enrolled under part B of such title.
(12) MEDICARE PROGRAM- The term `Medicare program' means the programs under parts A through D of title XVIII of the Social Security Act.
(13) SERVICE PROVIDER- The term `service provider' includes all suppliers, providers of services, or entities under contract to provide coverage, items or services under any part of title XVIII of the Social Security Act.
Subtitle C--Miscellaneous Improvements
SEC. 1231. EXTENSION OF THERAPY CAPS EXCEPTIONS PROCESS.
Section 1833(g)(5) of the Social Security Act (42 U.S.C. 1395l(g)(5)), as amended by section 141 of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110-275), is amended by striking `December 31, 2009' and inserting `December 31, 2011'.
SEC. 1232. EXTENDED MONTHS OF COVERAGE OF IMMUNOSUPPRESSIVE DRUGS FOR KIDNEY TRANSPLANT PATIENTS AND OTHER RENAL DIALYSIS PROVISIONS.
(a) Provision of Appropriate Coverage of Immunosuppressive Drugs Under the Medicare Program for Kidney Transplant Recipients-
(1) CONTINUED ENTITLEMENT TO IMMUNOSUPPRESSIVE DRUGS-
(A) KIDNEY TRANSPLANT RECIPIENTS- Section 226A(b)(2) of the Social Security Act (42 U.S.C. 426-1(b)(2)) is amended by inserting `(except for coverage of immunosuppressive drugs under section 1861(s)(2)(J))' before `, with the thirty-sixth month'.
(B) APPLICATION- Section 1836 of such Act (42 U.S.C. 1395o) is amended--
(i) by striking `Every individual who' and inserting `(a) IN GENERAL- Every individual who'; and
(ii) by adding at the end the following new subsection:
`(b) Special Rules Applicable to Individuals Only Eligible for Coverage of Immunosuppressive Drugs-
`(1) IN GENERAL- In the case of an individual whose eligibility for benefits under this title has ended on or after January 1, 2012, except for the coverage of immunosuppressive drugs by reason of section 226A(b)(2), the following rules shall apply:
`(A) The individual shall be deemed to be enrolled under this part for purposes of receiving coverage of such drugs.
`(B) The individual shall be responsible for providing for payment of the portion of the premium under section 1839 which is not covered under the Medicare savings program (as defined in section 1144(c)(7)) in order to receive such coverage.
`(C) The provision of such drugs shall be subject to the application of--
`(i) the deductible under section 1833(b); and
`(ii) the coinsurance amount applicable for such drugs (as determined under this part).
`(D) If the individual is an inpatient of a hospital or other entity, the individual is entitled to receive coverage of such drugs under this part.
`(2) ESTABLISHMENT OF PROCEDURES IN ORDER TO IMPLEMENT COVERAGE- The Secretary shall establish procedures for--
`(A) identifying individuals that are entitled to coverage of immunosuppressive drugs by reason of section 226A(b)(2); and
`(B) distinguishing such individuals from individuals that are enrolled under this part for the complete package of benefits under this part.'.
(C) TECHNICAL AMENDMENT TO CORRECT DUPLICATE SUBSECTION DESIGNATION- Subsection (d) of section 226A of such Act (42 U.S.C. 426-1), as added by section 201(a)(3)(D)(ii) of the Social Security Independence and Program Improvements Act of 1994 (Public Law 103-296; 108 Stat. 1497), is redesignated as subsection (d).
(2) EXTENSION OF SECONDARY PAYER REQUIREMENTS FOR ESRD BENEFICIARIES- Section 1862(b)(1)(C) of such Act (42 U.S.C. 1395y(b)(1)(C)) is amended by adding at the end the following new sentence: `With regard to immunosuppressive drugs furnished on or after the date of the enactment of the America's Affordable Health Choices Act of 2009, this subparagraph shall be applied without regard to any time limitation.'.
(b) Medicare Coverage for ESRD Patients- Section 1881 of such Act is further amended--
(1) in subsection (b)(14)(B)(iii), by inserting `, including oral drugs that are not the oral equivalent of an intravenous drug (such as oral phosphate binders and calcimimetics),' after `other drugs and biologicals';
(2) in subsection (b)(14)(E)(ii)--
(A) in the first sentence--
(i) by striking `a one-time election to be excluded from the phase-in' and inserting `an election, with respect to 2011, 2012, or 2013, to be excluded from the phase-in (or the remainder of the phase-in)'; and
(ii) by adding at the end the following: `for such year and for each subsequent year during the phase-in described in clause (i)'; and
(B) in the second sentence--
(i) by striking `January 1, 2011' and inserting `the first date of such year'; and
(ii) by inserting `and at a time' after `form and manner'; and
(3) in subsection (h)(4)(E), by striking `lesser' and inserting `greater'.
SEC. 1233. ADVANCE CARE PLANNING CONSULTATION.
(1) IN GENERAL- Section 1861 of the Social Security Act (42 U.S.C. 1395x) is amended--
(A) in subsection (s)(2)--
(i) by striking `and' at the end of subparagraph (DD);
(ii) by adding `and' at the end of subparagraph (EE); and
(iii) by adding at the end the following new subparagraph:
`(FF) advance care planning consultation (as defined in subsection (hhh)(1));'; and
(B) by adding at the end the following new subsection:
`Advance Care Planning Consultation
`(hhh)(1) Subject to paragraphs (3) and (4), the term `advance care planning consultation' means a consultation between the individual and a practitioner described in paragraph (2) regarding advance care planning, if, subject to paragraph (3), the individual involved has not had such a consultation within the last 5 years. Such consultation shall include the following:
`(A) An explanation by the practitioner of advance care planning, including key questions and considerations, important steps, and suggested people to talk to.
`(B) An explanation by the practitioner of advance directives, including living wills and durable powers of attorney, and their uses.
`(C) An explanation by the practitioner of the role and responsibilities of a health care proxy.
`(D) The provision by the practitioner of a list of national and State-specific resources to assist consumers and their families with advance care planning, including the national toll-free hotline, the advance care planning clearinghouses, and State legal service organizations (including those funded through the Older Americans Act of 1965).
`(E) An explanation by the practitioner of the continuum of end-of-life services and supports available, including palliative care and hospice, and benefits for such services and supports that are available under this title.
`(F)(i) Subject to clause (ii), an explanation of orders regarding life sustaining treatment or similar orders, which shall include--
`(I) the reasons why the development of such an order is beneficial to the individual and the individual's family and the reasons why such an order should be updated periodically as the health of the individual changes;
`(II) the information needed for an individual or legal surrogate to make informed decisions regarding the completion of such an order; and
`(III) the identification of resources that an individual may use to determine the requirements of the State in which such individual resides so that the treatment wishes of that individual will be carried out if the individual is unable to communicate those wishes, including requirements regarding the designation of a surrogate decisionmaker (also known as a health care proxy).
`(ii) The Secretary shall limit the requirement for explanations under clause (i) to consultations furnished in a State--
`(I) in which all legal barriers have been addressed for enabling orders for life sustaining treatment to constitute a set of medical orders respected across all care settings; and
`(II) that has in effect a program for orders for life sustaining treatment described in clause (iii).
`(iii) A program for orders for life sustaining treatment for a States described in this clause is a program that--
`(I) ensures such orders are standardized and uniquely identifiable throughout the State;
`(II) distributes or makes accessible such orders to physicians and other health professionals that (acting within the scope of the professional's authority under State law) may sign orders for life sustaining treatment;
`(III) provides training for health care professionals across the continuum of care about the goals and use of orders for life sustaining treatment; and
`(IV) is guided by a coalition of stakeholders includes representatives from emergency medical services, emergency department physicians or nurses, state long-term care association, state medical association, state surveyors, agency responsible for senior services, state department of health, state hospital association, home health association, state bar association, and state hospice association.
`(2) A practitioner described in this paragraph is--
`(A) a physician (as defined in subsection (r)(1)); and
`(B) a nurse practitioner or physician's assistant who has the authority under State law to sign orders for life sustaining treatments.
`(3)(A) An initial preventive physical examination under subsection (WW), including any related discussion during such examination, shall not be considered an advance care planning consultation for purposes of applying the 5-year limitation under paragraph (1).
`(B) An advance care planning consultation with respect to an individual may be conducted more frequently than provided under paragraph (1) if there is a significant change in the health condition of the individual, including diagnosis of a chronic, progressive, life-limiting disease, a life-threatening or terminal diagnosis or life-threatening injury, or upon admission to a skilled nursing facility, a long-term care facility (as defined by the Secretary), or a hospice program.
`(4) A consultation under this subsection may include the formulation of an order regarding life sustaining treatment or a similar order.
`(5)(A) For purposes of this section, the term `order regarding life sustaining treatment' means, with respect to an individual, an actionable medical order relating to the treatment of that individual that--
`(i) is signed and dated by a physician (as defined in subsection (r)(1)) or another health care professional (as specified by the Secretary and who is acting within the scope of the professional's authority under State law in signing such an order, including a nurse practitioner or physician assistant) and is in a form that permits it to stay with the individual and be followed by health care professionals and providers across the continuum of care;
`(ii) effectively communicates the individual's preferences regarding life sustaining treatment, including an indication of the treatment and care desired by the individual;
`(iii) is uniquely identifiable and standardized within a given locality, region, or State (as identified by the Secretary); and
`(iv) may incorporate any advance directive (as defined in section 1866(f)(3)) if executed by the individual.
`(B) The level of treatment indicated under subparagraph (A)(ii) may range from an indication for full treatment to an indication to limit some or all or specified interventions. Such indicated levels of treatment may include indications respecting, among other items--
`(i) the intensity of medical intervention if the patient is pulse less, apneic, or has serious cardiac or pulmonary problems;
`(ii) the individual's desire regarding transfer to a hospital or remaining at the current care setting;
`(iii) the use of antibiotics; and
`(iv) the use of artificially administered nutrition and hydration.'.
(2) PAYMENT- Section 1848(j)(3) of such Act (42 U.S.C. 1395w-4(j)(3)) is amended by inserting `(2)(FF),' after `(2)(EE),'.
(3) FREQUENCY LIMITATION- Section 1862(a) of such Act (42 U.S.C. 1395y(a)) is amended--
(i) in subparagraph (N), by striking `and' at the end;
(ii) in subparagraph (O) by striking the semicolon at the end and inserting `, and'; and
(iii) by adding at the end the following new subparagraph:
`(P) in the case of advance care planning consultations (as defined in section 1861(hhh)(1)), which are performed more frequently than is covered under such section;'; and
(B) in paragraph (7), by striking `or (K)' and inserting `(K), or (P)'.
(4) EFFECTIVE DATE- The amendments made by this subsection shall apply to consultations furnished on or after January 1, 2011.
(b) Expansion of Physician Quality Reporting Initiative for End of Life Care-
(1) Physician'S QUALITY REPORTING INITIATIVE- Section 1848(k)(2) of the Social Security Act (42 U.S.C. 1395w-4(k)(2)) is amended by adding at the end the following new paragraphs:
`(3) Physician'S QUALITY REPORTING INITIATIVE-
`(A) IN GENERAL- For purposes of reporting data on quality measures for covered professional services furnished during 2011 and any s