Text: H.R.3590 — 111th Congress (2009-2010)All Bill Information (Except Text)

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Public Law No: 111-148 (03/23/2010)

 
[111th Congress Public Law 148]
[From the U.S. Government Printing Office]



[[Page 124 STAT. 119]]

Public Law 111-148
111th Congress

                                 An Act


 
 Entitled The Patient Protection and Affordable Care Act. <<NOTE: Mar. 
                       23, 2010 -  [H.R. 3590]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Patient 
Protection and Affordable Care Act.>> 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short <<NOTE: 42 USC 18001 note.>> Title.--This Act may be cited 
as the ``Patient Protection and Affordable Care Act''.

    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

       TITLE I--QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS

   Subtitle A--Immediate Improvements in Health Care Coverage for All 
                                Americans

Sec. 1001. Amendments to the Public Health Service Act.

              ``PART A--Individual and Group Market Reforms

                    ``subpart ii--improving coverage

        ``Sec. 2711. No lifetime or annual limits.
        ``Sec. 2712. Prohibition on rescissions.
        ``Sec. 2713. Coverage of preventive health services.
        ``Sec. 2714. Extension of dependent coverage.
        ``Sec. 2715. Development and utilization of uniform explanation 
                            of coverage documents and standardized 
                            definitions.
        ``Sec. 2716. Prohibition of discrimination based on salary.
        ``Sec. 2717. Ensuring the quality of care.
        ``Sec. 2718. Bringing down the cost of health care coverage.
        ``Sec. 2719. Appeals process.
Sec. 1002. Health insurance consumer information.
Sec. 1003. Ensuring that consumers get value for their dollars.
Sec. 1004. Effective dates.

      Subtitle B--Immediate Actions to Preserve and Expand Coverage

Sec. 1101. Immediate access to insurance for uninsured individuals with 
           a preexisting condition.
Sec. 1102. Reinsurance for early retirees.
Sec. 1103. Immediate information that allows consumers to identify 
           affordable coverage options.
Sec. 1104. Administrative simplification.
Sec. 1105. Effective date.

     Subtitle C--Quality Health Insurance Coverage for All Americans

                 PART I--Health Insurance Market Reforms

Sec. 1201. Amendment to the Public Health Service Act.

                       ``subpart i--general reform

        ``Sec. 2704. Prohibition of preexisting condition exclusions or 
                            other discrimination based on health status.
        ``Sec. 2701. Fair health insurance premiums.
        ``Sec. 2702. Guaranteed availability of coverage.

[[Page 124 STAT. 120]]

        ``Sec. 2703. Guaranteed renewability of coverage.
        ``Sec. 2705. Prohibiting discrimination against individual 
                            participants and beneficiaries based on 
                            health status.
        ``Sec. 2706. Non-discrimination in health care.
        ``Sec. 2707. Comprehensive health insurance coverage.
        ``Sec. 2708. Prohibition on excessive waiting periods.

                        PART II--Other Provisions

Sec. 1251. Preservation of right to maintain existing coverage.
Sec. 1252. Rating reforms must apply uniformly to all health insurance 
           issuers and group health plans.
Sec. 1253. Effective dates.

        Subtitle D--Available Coverage Choices for All Americans

             PART I--Establishment of Qualified Health Plans

Sec. 1301. Qualified health plan defined.
Sec. 1302. Essential health benefits requirements.
Sec. 1303. Special rules.
Sec. 1304. Related definitions.

   PART II--Consumer Choices and Insurance Competition Through Health 
                            Benefit Exchanges

Sec. 1311. Affordable choices of health benefit plans.
Sec. 1312. Consumer choice.
Sec. 1313. Financial integrity.

            PART III--State Flexibility Relating to Exchanges

Sec. 1321. State flexibility in operation and enforcement of Exchanges 
           and related requirements.
Sec. 1322. Federal program to assist establishment and operation of 
           nonprofit, member-run health insurance issuers.
Sec. 1323. Community health insurance option.
Sec. 1324. Level playing field.

      PART IV--State Flexibility to Establish Alternative Programs

Sec. 1331. State flexibility to establish basic health programs for low-
           income individuals not eligible for Medicaid.
Sec. 1332. Waiver for State innovation.
Sec. 1333. Provisions relating to offering of plans in more than one 
           State.

                 PART V--Reinsurance and Risk Adjustment

Sec. 1341. Transitional reinsurance program for individual and small 
           group markets in each State.
Sec. 1342. Establishment of risk corridors for plans in individual and 
           small group markets.
Sec. 1343. Risk adjustment.

        Subtitle E--Affordable Coverage Choices for All Americans

         PART I--Premium Tax Credits and Cost-sharing Reductions

       subpart a--premium tax credits and cost-sharing reductions

Sec. 1401. Refundable tax credit providing premium assistance for 
           coverage under a qualified health plan.
Sec. 1402. Reduced cost-sharing for individuals enrolling in qualified 
           health plans.

                  subpart b--eligibility determinations

Sec. 1411. Procedures for determining eligibility for Exchange 
           participation, premium tax credits and reduced cost-sharing, 
           and individual responsibility exemptions.
Sec. 1412. Advance determination and payment of premium tax credits and 
           cost-sharing reductions.
Sec. 1413. Streamlining of procedures for enrollment through an exchange 
           and State Medicaid, CHIP, and health subsidy programs.
Sec. 1414. Disclosures to carry out eligibility requirements for certain 
           programs.
Sec. 1415. Premium tax credit and cost-sharing reduction payments 
           disregarded for Federal and Federally-assisted programs.

                   PART II--Small Business Tax Credit

Sec. 1421. Credit for employee health insurance expenses of small 
           businesses.

[[Page 124 STAT. 121]]

            Subtitle F--Shared Responsibility for Health Care

                    PART I--Individual Responsibility

Sec. 1501. Requirement to maintain minimum essential coverage.
Sec. 1502. Reporting of health insurance coverage.

                   PART II--Employer Responsibilities

Sec. 1511. Automatic enrollment for employees of large employers.
Sec. 1512. Employer requirement to inform employees of coverage options.
Sec. 1513. Shared responsibility for employers.
Sec. 1514. Reporting of employer health insurance coverage.
Sec. 1515. Offering of Exchange-participating qualified health plans 
           through cafeteria plans.

                  Subtitle G--Miscellaneous Provisions

Sec. 1551. Definitions.
Sec. 1552. Transparency in government.
Sec. 1553. Prohibition against discrimination on assisted suicide.
Sec. 1554. Access to therapies.
Sec. 1555. Freedom not to participate in Federal health insurance 
           programs.
Sec. 1556. Equity for certain eligible survivors.
Sec. 1557. Nondiscrimination.
Sec. 1558. Protections for employees.
Sec. 1559. Oversight.
Sec. 1560. Rules of construction.
Sec. 1561. Health information technology enrollment standards and 
           protocols.
Sec. 1562. Conforming amendments.
Sec. 1563. Sense of the Senate promoting fiscal responsibility.

                    TITLE II--ROLE OF PUBLIC PROGRAMS

                 Subtitle A--Improved Access to Medicaid

Sec. 2001. Medicaid coverage for the lowest income populations.
Sec. 2002. Income eligibility for nonelderly determined using modified 
           gross income.
Sec. 2003. Requirement to offer premium assistance for employer-
           sponsored insurance.
Sec. 2004. Medicaid coverage for former foster care children.
Sec. 2005. Payments to territories.
Sec. 2006. Special adjustment to FMAP determination for certain States 
           recovering from a major disaster.
Sec. 2007. Medicaid Improvement Fund rescission.

Subtitle B--Enhanced Support for the Children's Health Insurance Program

Sec. 2101. Additional federal financial participation for CHIP.
Sec. 2102. Technical corrections.

         Subtitle C--Medicaid and CHIP Enrollment Simplification

Sec. 2201. Enrollment Simplification and coordination with State Health 
           Insurance Exchanges.
Sec. 2202. Permitting hospitals to make presumptive eligibility 
           determinations for all Medicaid eligible populations.

              Subtitle D--Improvements to Medicaid Services

Sec. 2301. Coverage for freestanding birth center services.
Sec. 2302. Concurrent care for children.
Sec. 2303. State eligibility option for family planning services.
Sec. 2304. Clarification of definition of medical assistance.

  Subtitle E--New Options for States to Provide Long-Term Services and 
                                Supports

Sec. 2401. Community First Choice Option.
Sec. 2402. Removal of barriers to providing home and community-based 
           services.
Sec. 2403. Money Follows the Person Rebalancing Demonstration.
Sec. 2404. Protection for recipients of home and community-based 
           services against spousal impoverishment.
Sec. 2405. Funding to expand State Aging and Disability Resource 
           Centers.
Sec. 2406. Sense of the Senate regarding long-term care.

             Subtitle F--Medicaid Prescription Drug Coverage

Sec. 2501. Prescription drug rebates.

[[Page 124 STAT. 122]]

Sec. 2502. Elimination of exclusion of coverage of certain drugs.
Sec. 2503. Providing adequate pharmacy reimbursement.

   Subtitle G--Medicaid Disproportionate Share Hospital (DSH) Payments

Sec. 2551. Disproportionate share hospital payments.

    Subtitle H--Improved Coordination for Dual Eligible Beneficiaries

Sec. 2601. 5-year period for demonstration projects.
Sec. 2602. Providing Federal coverage and payment coordination for dual 
           eligible beneficiaries.

Subtitle I--Improving the Quality of Medicaid for Patients and Providers

Sec. 2701. Adult health quality measures.
Sec. 2702. Payment Adjustment for Health Care-Acquired Conditions.
Sec. 2703. State option to provide health homes for enrollees with 
           chronic conditions.
Sec. 2704. Demonstration project to evaluate integrated care around a 
           hospitalization.
Sec. 2705. Medicaid Global Payment System Demonstration Project.
Sec. 2706. Pediatric Accountable Care Organization Demonstration 
           Project.
Sec. 2707. Medicaid emergency psychiatric demonstration project.

  Subtitle J--Improvements to the Medicaid and CHIP Payment and Access 
                           Commission (MACPAC)

Sec. 2801. MACPAC assessment of policies affecting all Medicaid 
           beneficiaries.

     Subtitle K--Protections for American Indians and Alaska Natives

Sec. 2901. Special rules relating to Indians.
Sec. 2902. Elimination of sunset for reimbursement for all medicare part 
           B services furnished by certain indian hospitals and clinics.

             Subtitle L--Maternal and Child Health Services

Sec. 2951. Maternal, infant, and early childhood home visiting programs.
Sec. 2952. Support, education, and research for postpartum depression.
Sec. 2953. Personal responsibility education.
Sec. 2954. Restoration of funding for abstinence education.
Sec. 2955. Inclusion of information about the importance of having a 
           health care power of attorney in transition planning for 
           children aging out of foster care and independent living 
           programs.

     TITLE III--IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH CARE

        Subtitle A--Transforming the Health Care Delivery System

 PART I--Linking Payment to Quality Outcomes Under the Medicare Program

Sec. 3001. Hospital Value-Based purchasing program.
Sec. 3002. Improvements to the physician quality reporting system.
Sec. 3003. Improvements to the physician feedback program.
Sec. 3004. Quality reporting for long-term care hospitals, inpatient 
           rehabilitation hospitals, and hospice programs.
Sec. 3005. Quality reporting for PPS-exempt cancer hospitals.
Sec. 3006. Plans for a Value-Based purchasing program for skilled 
           nursing facilities and home health agencies.
Sec. 3007. Value-based payment modifier under the physician fee 
           schedule.
Sec. 3008. Payment adjustment for conditions acquired in hospitals.

        PART II--National Strategy to Improve Health Care Quality

Sec. 3011. National strategy.
Sec. 3012. Interagency Working Group on Health Care Quality.
Sec. 3013. Quality measure development.
Sec. 3014. Quality measurement.
Sec. 3015. Data collection; public reporting.

      PART III--Encouraging Development of New Patient Care Models

Sec. 3021. Establishment of Center for Medicare and Medicaid Innovation 
           within CMS.
Sec. 3022. Medicare shared savings program.
Sec. 3023. National pilot program on payment bundling.
Sec. 3024. Independence at home demonstration program.
Sec. 3025. Hospital readmissions reduction program.

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Sec. 3026. Community-Based Care Transitions Program.
Sec. 3027. Extension of gainsharing demonstration.

        Subtitle B--Improving Medicare for Patients and Providers

PART I--Ensuring Beneficiary Access to Physician Care and Other Services

Sec. 3101. Increase in the physician payment update.
Sec. 3102. Extension of the work geographic index floor and revisions to 
           the practice expense geographic adjustment under the Medicare 
           physician fee schedule.
Sec. 3103. Extension of exceptions process for Medicare therapy caps.
Sec. 3104. Extension of payment for technical component of certain 
           physician pathology services.
Sec. 3105. Extension of ambulance add-ons.
Sec. 3106. Extension of certain payment rules for long-term care 
           hospital services and of moratorium on the establishment of 
           certain hospitals and facilities.
Sec. 3107. Extension of physician fee schedule mental health add-on.
Sec. 3108. Permitting physician assistants to order post-Hospital 
           extended care services.
Sec. 3109. Exemption of certain pharmacies from accreditation 
           requirements.
Sec. 3110. Part B special enrollment period for disabled TRICARE 
           beneficiaries.
Sec. 3111. Payment for bone density tests.
Sec. 3112. Revision to the Medicare Improvement Fund.
Sec. 3113. Treatment of certain complex diagnostic laboratory tests.
Sec. 3114. Improved access for certified nurse-midwife services.

                       PART II--Rural Protections

Sec. 3121. Extension of outpatient hold harmless provision.
Sec. 3122. Extension of Medicare reasonable costs payments for certain 
           clinical diagnostic laboratory tests furnished to hospital 
           patients in certain rural areas.
Sec. 3123. Extension of the Rural Community Hospital Demonstration 
           Program.
Sec. 3124. Extension of the Medicare-dependent hospital (MDH) program.
Sec. 3125. Temporary improvements to the Medicare inpatient hospital 
           payment adjustment for low-volume hospitals.
Sec. 3126. Improvements to the demonstration project on community health 
           integration models in certain rural counties.
Sec. 3127. MedPAC study on adequacy of Medicare payments for health care 
           providers serving in rural areas.
Sec. 3128. Technical correction related to critical access hospital 
           services.
Sec. 3129. Extension of and revisions to Medicare rural hospital 
           flexibility program.

                  PART III--Improving Payment Accuracy

Sec. 3131. Payment adjustments for home health care.
Sec. 3132. Hospice reform.
Sec. 3133. Improvement to medicare disproportionate share hospital (DSH) 
           payments.
Sec. 3134. Misvalued codes under the physician fee schedule.
Sec. 3135. Modification of equipment utilization factor for advanced 
           imaging services.
Sec. 3136. Revision of payment for power-driven wheelchairs.
Sec. 3137. Hospital wage index improvement.
Sec. 3138. Treatment of certain cancer hospitals.
Sec. 3139. Payment for biosimilar biological products.
Sec. 3140. Medicare hospice concurrent care demonstration program.
Sec. 3141. Application of budget neutrality on a national basis in the 
           calculation of the Medicare hospital wage index floor.
Sec. 3142. HHS study on urban Medicare-dependent hospitals.
Sec. 3143. Protecting home health benefits.

                Subtitle C--Provisions Relating to Part C

Sec. 3201. Medicare Advantage payment.
Sec. 3202. Benefit protection and simplification.
Sec. 3203. Application of coding intensity adjustment during MA payment 
           transition.
Sec. 3204. Simplification of annual beneficiary election periods.
Sec. 3205. Extension for specialized MA plans for special needs 
           individuals.
Sec. 3206. Extension of reasonable cost contracts.
Sec. 3207. Technical correction to MA private fee-for-service plans.
Sec. 3208. Making senior housing facility demonstration permanent.

[[Page 124 STAT. 124]]

Sec. 3209. Authority to deny plan bids.
Sec. 3210. Development of new standards for certain Medigap plans.

Subtitle D--Medicare Part D Improvements for Prescription Drug Plans and 
                               MA-PD Plans

Sec. 3301. Medicare coverage gap discount program.
Sec. 3302. Improvement in determination of Medicare part D low-income 
           benchmark premium.
Sec. 3303. Voluntary de minimis policy for subsidy eligible individuals 
           under prescription drug plans and MA-PD plans.
Sec. 3304. Special rule for widows and widowers regarding eligibility 
           for low-income assistance.
Sec. 3305. Improved information for subsidy eligible individuals 
           reassigned to prescription drug plans and MA-PD plans.
Sec. 3306. Funding outreach and assistance for low-income programs.
Sec. 3307. Improving formulary requirements for prescription drug plans 
           and MA-PD plans with respect to certain categories or classes 
           of drugs.
Sec. 3308. Reducing part D premium subsidy for high-income 
           beneficiaries.
Sec. 3309. Elimination of cost sharing for certain dual eligible 
           individuals.
Sec. 3310. Reducing wasteful dispensing of outpatient prescription drugs 
           in long-term care facilities under prescription drug plans 
           and MA-PD plans.
Sec. 3311. Improved Medicare prescription drug plan and MA-PD plan 
           complaint system.
Sec. 3312. Uniform exceptions and appeals process for prescription drug 
           plans and MA-PD plans.
Sec. 3313. Office of the Inspector General studies and reports.
Sec. 3314. 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. 3315. Immediate reduction in coverage gap in 2010.

              Subtitle E--Ensuring Medicare Sustainability

Sec. 3401. Revision of certain market basket updates and incorporation 
           of productivity improvements into market basket updates that 
           do not already incorporate such improvements.
Sec. 3402. Temporary adjustment to the calculation of part B premiums.
Sec. 3403. Independent Medicare Advisory Board.

              Subtitle F--Health Care Quality Improvements

Sec. 3501. Health care delivery system research; Quality improvement 
           technical assistance.
Sec. 3502. Establishing community health teams to support the patient-
           centered medical home.
Sec. 3503. Medication management services in treatment of chronic 
           disease.
Sec. 3504. Design and implementation of regionalized systems for 
           emergency care.
Sec. 3505. Trauma care centers and service availability.
Sec. 3506. Program to facilitate shared decisionmaking.
Sec. 3507. Presentation of prescription drug benefit and risk 
           information.
Sec. 3508. Demonstration program to integrate quality improvement and 
           patient safety training into clinical education of health 
           professionals.
Sec. 3509. Improving women's health.
Sec. 3510. Patient navigator program.
Sec. 3511. Authorization of appropriations.

    Subtitle G--Protecting and Improving Guaranteed Medicare Benefits

Sec. 3601. Protecting and improving guaranteed Medicare benefits.
Sec. 3602. No cuts in guaranteed benefits.

   TITLE IV--PREVENTION OF CHRONIC DISEASE AND IMPROVING PUBLIC HEALTH

  Subtitle A--Modernizing Disease Prevention and Public Health Systems

Sec. 4001. National Prevention, Health Promotion and Public Health 
           Council.
Sec. 4002. Prevention and Public Health Fund.
Sec. 4003. Clinical and community preventive services.
Sec. 4004. Education and outreach campaign regarding preventive 
           benefits.

      Subtitle B--Increasing Access to Clinical Preventive Services

Sec. 4101. School-based health centers.
Sec. 4102. Oral healthcare prevention activities.

[[Page 124 STAT. 125]]

Sec. 4103. Medicare coverage of annual wellness visit providing a 
           personalized prevention plan.
Sec. 4104. Removal of barriers to preventive services in Medicare.
Sec. 4105. Evidence-based coverage of preventive services in Medicare.
Sec. 4106. Improving access to preventive services for eligible adults 
           in Medicaid.
Sec. 4107. Coverage of comprehensive tobacco cessation services for 
           pregnant women in Medicaid.
Sec. 4108. Incentives for prevention of chronic diseases in medicaid.

               Subtitle C--Creating Healthier Communities

Sec. 4201. Community transformation grants.
Sec. 4202. Healthy aging, living well; evaluation of community-based 
           prevention and wellness programs for Medicare beneficiaries.
Sec. 4203. Removing barriers and improving access to wellness for 
           individuals with disabilities.
Sec. 4204. Immunizations.
Sec. 4205. Nutrition labeling of standard menu items at chain 
           restaurants.
Sec. 4206. Demonstration project concerning individualized wellness 
           plan.
Sec. 4207. Reasonable break time for nursing mothers.

     Subtitle D--Support for Prevention and Public Health Innovation

Sec. 4301. Research on optimizing the delivery of public health 
           services.
Sec. 4302. Understanding health disparities: data collection and 
           analysis.
Sec. 4303. CDC and employer-based wellness programs.
Sec. 4304. Epidemiology-Laboratory Capacity Grants.
Sec. 4305. Advancing research and treatment for pain care management.
Sec. 4306. Funding for Childhood Obesity Demonstration Project.

                  Subtitle E--Miscellaneous Provisions

Sec. 4401. Sense of the Senate concerning CBO scoring.
Sec. 4402. Effectiveness of Federal health and wellness initiatives.

                     TITLE V--HEALTH CARE WORKFORCE

                   Subtitle A--Purpose and Definitions

Sec. 5001. Purpose.
Sec. 5002. Definitions.

          Subtitle B--Innovations in the Health Care Workforce

Sec. 5101. National health care workforce commission.
Sec. 5102. State health care workforce development grants.
Sec. 5103. Health care workforce assessment.

     Subtitle C--Increasing the Supply of the Health Care Workforce

Sec. 5201. Federally supported student loan funds.
Sec. 5202. Nursing student loan program.
Sec. 5203. Health care workforce loan repayment programs.
Sec. 5204. Public health workforce recruitment and retention programs.
Sec. 5205. Allied health workforce recruitment and retention programs.
Sec. 5206. Grants for State and local programs.
Sec. 5207. Funding for National Health Service Corps.
Sec. 5208. Nurse-managed health clinics.
Sec. 5209. Elimination of cap on commissioned corps.
Sec. 5210. Establishing a Ready Reserve Corps.

   Subtitle D--Enhancing Health Care Workforce Education and Training

Sec. 5301. Training in family medicine, general internal medicine, 
           general pediatrics, and physician assistantship.
Sec. 5302. Training opportunities for direct care workers.
Sec. 5303. Training in general, pediatric, and public health dentistry.
Sec. 5304. Alternative dental health care providers demonstration 
           project.
Sec. 5305. Geriatric education and training; career awards; 
           comprehensive geriatric education.
Sec. 5306. Mental and behavioral health education and training grants.
Sec. 5307. Cultural competency, prevention, and public health and 
           individuals with disabilities training.
Sec. 5308. Advanced nursing education grants.
Sec. 5309. Nurse education, practice, and retention grants.
Sec. 5310. Loan repayment and scholarship program.
Sec. 5311. Nurse faculty loan program.

[[Page 124 STAT. 126]]

Sec. 5312. Authorization of appropriations for parts B through D of 
           title VIII.
Sec. 5313. Grants to promote the community health workforce.
Sec. 5314. Fellowship training in public health.
Sec. 5315. United States Public Health Sciences Track.

        Subtitle E--Supporting the Existing Health Care Workforce

Sec. 5401. Centers of excellence.
Sec. 5402. Health care professionals training for diversity.
Sec. 5403. Interdisciplinary, community-based linkages.
Sec. 5404. Workforce diversity grants.
Sec. 5405. Primary care extension program.

 Subtitle F--Strengthening Primary Care and Other Workforce Improvements

Sec. 5501. Expanding access to primary care services and general surgery 
           services.
Sec. 5502. Medicare Federally qualified health center improvements.
Sec. 5503. Distribution of additional residency positions.
Sec. 5504. Counting resident time in nonprovider settings.
Sec. 5505. Rules for counting resident time for didactic and scholarly 
           activities and other activities.
Sec. 5506. Preservation of resident cap positions from closed hospitals.
Sec. 5507. Demonstration projects To address health professions 
           workforce needs; extension of family-to-family health 
           information centers.
Sec. 5508. Increasing teaching capacity.
Sec. 5509. Graduate nurse education demonstration.

          Subtitle G--Improving Access to Health Care Services

Sec. 5601. Spending for Federally Qualified Health Centers (FQHCs).
Sec. 5602. Negotiated rulemaking for development of methodology and 
           criteria for designating medically underserved populations 
           and health professions shortage areas.
Sec. 5603. Reauthorization of the Wakefield Emergency Medical Services 
           for Children Program.
Sec. 5604. Co-locating primary and specialty care in community-based 
           mental health settings.
Sec. 5605. Key National indicators.

                     Subtitle H--General Provisions

Sec. 5701. Reports.

              TITLE VI--TRANSPARENCY AND PROGRAM INTEGRITY

         Subtitle A--Physician Ownership and Other Transparency

Sec. 6001. Limitation on Medicare exception to the prohibition on 
           certain physician referrals for hospitals.
Sec. 6002. Transparency reports and reporting of physician ownership or 
           investment interests.
Sec. 6003. Disclosure requirements for in-office ancillary services 
           exception to the prohibition on physician self-referral for 
           certain imaging services.
Sec. 6004. Prescription drug sample transparency.
Sec. 6005. Pharmacy benefit managers transparency requirements.

          Subtitle B--Nursing Home Transparency and Improvement

              PART I--Improving Transparency of Information

Sec. 6101. Required disclosure of ownership and additional disclosable 
           parties information.
Sec. 6102. Accountability requirements for skilled nursing facilities 
           and nursing facilities.
Sec. 6103. Nursing home compare Medicare website.
Sec. 6104. Reporting of expenditures.
Sec. 6105. Standardized complaint form.
Sec. 6106. Ensuring staffing accountability.
Sec. 6107. GAO study and report on Five-Star Quality Rating System.

                     PART II--Targeting Enforcement

Sec. 6111. Civil money penalties.
Sec. 6112. National independent monitor demonstration project.
Sec. 6113. Notification of facility closure.
Sec. 6114. National demonstration projects on culture change and use of 
           information technology in nursing homes.

[[Page 124 STAT. 127]]

                   PART III--Improving Staff Training

Sec. 6121. Dementia and abuse prevention training.

Subtitle C--Nationwide Program for National and State Background Checks 
  on Direct Patient Access Employees of Long-term Care Facilities and 
                                Providers

Sec. 6201. Nationwide program for National and State background checks 
           on direct patient access employees of long-term care 
           facilities and providers.

             Subtitle D--Patient-Centered Outcomes Research

Sec. 6301. Patient-Centered Outcomes Research.
Sec. 6302. Federal coordinating council for comparative effectiveness 
           research.

  Subtitle E--Medicare, Medicaid, and CHIP Program Integrity Provisions

Sec. 6401. Provider screening and other enrollment requirements under 
           Medicare, Medicaid, and CHIP.
Sec. 6402. Enhanced Medicare and Medicaid program integrity provisions.
Sec. 6403. Elimination of duplication between the Healthcare Integrity 
           and Protection Data Bank and the National Practitioner Data 
           Bank.
Sec. 6404. Maximum period for submission of Medicare claims reduced to 
           not more than 12 months.
Sec. 6405. Physicians who order items or services required to be 
           Medicare enrolled physicians or eligible professionals.
Sec. 6406. Requirement for physicians to provide documentation on 
           referrals to programs at high risk of waste and abuse.
Sec. 6407. Face to face encounter with patient required before 
           physicians may certify eligibility for home health services 
           or durable medical equipment under Medicare.
Sec. 6408. Enhanced penalties.
Sec. 6409. Medicare self-referral disclosure protocol.
Sec. 6410. Adjustments to the Medicare durable medical equipment, 
           prosthetics, orthotics, and supplies competitive acquisition 
           program.
Sec. 6411. Expansion of the Recovery Audit Contractor (RAC) program.

      Subtitle F--Additional Medicaid Program Integrity Provisions

Sec. 6501. Termination of provider participation under Medicaid if 
           terminated under Medicare or other State plan.
Sec. 6502. Medicaid exclusion from participation relating to certain 
           ownership, control, and management affiliations.
Sec. 6503. Billing agents, clearinghouses, or other alternate payees 
           required to register under Medicaid.
Sec. 6504. Requirement to report expanded set of data elements under 
           MMIS to detect fraud and abuse.
Sec. 6505. Prohibition on payments to institutions or entities located 
           outside of the United States.
Sec. 6506. Overpayments.
Sec. 6507. Mandatory State use of national correct coding initiative.
Sec. 6508. General effective date.

           Subtitle G--Additional Program Integrity Provisions

Sec. 6601. Prohibition on false statements and representations.
Sec. 6602. Clarifying definition.
Sec. 6603. Development of model uniform report form.
Sec. 6604. Applicability of State law to combat fraud and abuse.
Sec. 6605. Enabling the Department of Labor to issue administrative 
           summary cease and desist orders and summary seizures orders 
           against plans that are in financially hazardous condition.
Sec. 6606. MEWA plan registration with Department of Labor.
Sec. 6607. Permitting evidentiary privilege and confidential 
           communications.

                      Subtitle H--Elder Justice Act

Sec. 6701. Short title of subtitle.
Sec. 6702. Definitions.
Sec. 6703. Elder Justice.

      Subtitle I--Sense of the Senate Regarding Medical Malpractice

Sec. 6801. Sense of the Senate regarding medical malpractice.

       TITLE VII--IMPROVING ACCESS TO INNOVATIVE MEDICAL THERAPIES

         Subtitle A--Biologics Price Competition and Innovation

Sec. 7001. Short title.

[[Page 124 STAT. 128]]

Sec. 7002. Approval pathway for biosimilar biological products.
Sec. 7003. Savings.

   Subtitle B--More Affordable Medicines for Children and Underserved 
                               Communities

Sec. 7101. Expanded participation in 340B program.
Sec. 7102. Improvements to 340B program integrity.
Sec. 7103. GAO study to make recommendations on improving the 340B 
           program.

                          TITLE VIII--CLASS ACT

Sec. 8001. Short title of title.
Sec. 8002. Establishment of national voluntary insurance program for 
           purchasing community living assistance services and support.

                      TITLE IX--REVENUE PROVISIONS

                  Subtitle A--Revenue Offset Provisions

Sec. 9001. Excise tax on high cost employer-sponsored health coverage.
Sec. 9002. Inclusion of cost of employer-sponsored health coverage on W-
           2.
Sec. 9003. Distributions for medicine qualified only if for prescribed 
           drug or insulin.
Sec. 9004. Increase in additional tax on distributions from HSAs and 
           Archer MSAs not used for qualified medical expenses.
Sec. 9005. Limitation on health flexible spending arrangements under 
           cafeteria plans.
Sec. 9006. Expansion of information reporting requirements.
Sec. 9007. Additional requirements for charitable hospitals.
Sec. 9008. Imposition of annual fee on branded prescription 
           pharmaceutical manufacturers and importers.
Sec. 9009. Imposition of annual fee on medical device manufacturers and 
           importers.
Sec. 9010. Imposition of annual fee on health insurance providers.
Sec. 9011. Study and report of effect on veterans health care.
Sec. 9012. Elimination of deduction for expenses allocable to Medicare 
           Part D subsidy.
Sec. 9013. Modification of itemized deduction for medical expenses.
Sec. 9014. Limitation on excessive remuneration paid by certain health 
           insurance providers.
Sec. 9015. Additional hospital insurance tax on high-income taxpayers.
Sec. 9016. Modification of section 833 treatment of certain health 
           organizations.
Sec. 9017. Excise tax on elective cosmetic medical procedures.

                      Subtitle B--Other Provisions

Sec. 9021. Exclusion of health benefits provided by Indian tribal 
           governments.
Sec. 9022. Establishment of simple cafeteria plans for small businesses.
Sec. 9023. Qualifying therapeutic discovery project credit.

TITLE X--STRENGTHENING QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS

               Subtitle A--Provisions Relating to Title I

Sec. 10101. Amendments to subtitle A.
Sec. 10102. Amendments to subtitle B.
Sec. 10103. Amendments to subtitle C.
Sec. 10104. Amendments to subtitle D.
Sec. 10105. Amendments to subtitle E.
Sec. 10106. Amendments to subtitle F.
Sec. 10107. Amendments to subtitle G.
Sec. 10108. Free choice vouchers.
Sec. 10109. Development of standards for financial and administrative 
           transactions.

               Subtitle B--Provisions Relating to Title II

                        PART I--Medicaid and CHIP

Sec. 10201. Amendments to the Social Security Act and title II of this 
           Act.
Sec. 10202. Incentives for States to offer home and community-based 
           services as a long-term care alternative to nursing homes.
Sec. 10203. Extension of funding for CHIP through fiscal year 2015 and 
           other CHIP-related provisions.

       PART II--Support for Pregnant and Parenting Teens and Women

Sec. 10211. Definitions.

[[Page 124 STAT. 129]]

Sec. 10212. Establishment of pregnancy assistance fund.
Sec. 10213. Permissible uses of Fund.
Sec. 10214. Appropriations.

                PART III--Indian Health Care Improvement

Sec. 10221. Indian health care improvement.

              Subtitle C--Provisions Relating to Title III

Sec. 10301. Plans for a Value-Based purchasing program for ambulatory 
           surgical centers.
Sec. 10302. Revision to national strategy for quality improvement in 
           health care.
Sec. 10303. Development of outcome measures.
Sec. 10304. Selection of efficiency measures.
Sec. 10305. Data collection; public reporting.
Sec. 10306. Improvements under the Center for Medicare and Medicaid 
           Innovation.
Sec. 10307. Improvements to the Medicare shared savings program.
Sec. 10308. Revisions to national pilot program on payment bundling.
Sec. 10309. Revisions to hospital readmissions reduction program.
Sec. 10310. Repeal of physician payment update.
Sec. 10311. Revisions to extension of ambulance add-ons.
Sec. 10312. Certain payment rules for long-term care hospital services 
           and moratorium on the establishment of certain hospitals and 
           facilities.
Sec. 10313. Revisions to the extension for the rural community hospital 
           demonstration program.
Sec. 10314. Adjustment to low-volume hospital provision.
Sec. 10315. Revisions to home health care provisions.
Sec. 10316. Medicare DSH.
Sec. 10317. Revisions to extension of section 508 hospital provisions.
Sec. 10318. Revisions to transitional extra benefits under Medicare 
           Advantage.
Sec. 10319. Revisions to market basket adjustments.
Sec. 10320. Expansion of the scope of, and additional improvements to, 
           the Independent Medicare Advisory Board.
Sec. 10321. Revision to community health teams.
Sec. 10322. Quality reporting for psychiatric hospitals.
Sec. 10323. Medicare coverage for individuals exposed to environmental 
           health hazards.
Sec. 10324. Protections for frontier States.
Sec. 10325. Revision to skilled nursing facility prospective payment 
           system.
Sec. 10326. Pilot testing pay-for-performance programs for certain 
           Medicare providers.
Sec. 10327. Improvements to the physician quality reporting system.
Sec. 10328. Improvement in part D medication therapy management (MTM) 
           programs.
Sec. 10329. Developing methodology to assess health plan value.
Sec. 10330. Modernizing computer and data systems of the Centers for 
           Medicare & Medicaid services to support improvements in care 
           delivery.
Sec. 10331. Public reporting of performance information.
Sec. 10332. Availability of medicare data for performance measurement.
Sec. 10333. Community-based collaborative care networks.
Sec. 10334. Minority health.
Sec. 10335. Technical correction to the hospital value-based purchasing 
           program.
Sec. 10336. GAO study and report on Medicare beneficiary access to high-
           quality dialysis services.

               Subtitle D--Provisions Relating to Title IV

Sec. 10401. Amendments to subtitle A.
Sec. 10402. Amendments to subtitle B.
Sec. 10403. Amendments to subtitle C.
Sec. 10404. Amendments to subtitle D.
Sec. 10405. Amendments to subtitle E.
Sec. 10406. Amendment relating to waiving coinsurance for preventive 
           services.
Sec. 10407. Better diabetes care.
Sec. 10408. Grants for small businesses to provide comprehensive 
           workplace wellness programs.
Sec. 10409. Cures Acceleration Network.
Sec. 10410. Centers of Excellence for Depression.
Sec. 10411. Programs relating to congenital heart disease.
Sec. 10412. Automated Defibrillation in Adam's Memory Act.
Sec. 10413. Young women's breast health awareness and support of young 
           women diagnosed with breast cancer.

               Subtitle E--Provisions Relating to Title V

Sec. 10501. Amendments to the Public Health Service Act, the Social 
           Security Act, and title V of this Act.

[[Page 124 STAT. 130]]

Sec. 10502. Infrastructure to Expand Access to Care.
Sec. 10503. Community Health Centers and the National Health Service 
           Corps Fund.
Sec. 10504. Demonstration project to provide access to affordable care.

               Subtitle F--Provisions Relating to Title VI

Sec. 10601. Revisions to limitation on medicare exception to the 
           prohibition on certain physician referrals for hospitals.
Sec. 10602. Clarifications to patient-centered outcomes research.
Sec. 10603. Striking provisions relating to individual provider 
           application fees.
Sec. 10604. Technical correction to section 6405.
Sec. 10605. Certain other providers permitted to conduct face to face 
           encounter for home health services.
Sec. 10606. Health care fraud enforcement.
Sec. 10607. State demonstration programs to evaluate alternatives to 
           current medical tort litigation.
Sec. 10608. Extension of medical malpractice coverage to free clinics.
Sec. 10609. Labeling changes.

              Subtitle G--Provisions Relating to Title VIII

Sec. 10801. Provisions relating to title VIII.

               Subtitle H--Provisions Relating to Title IX

Sec. 10901. Modifications to excise tax on high cost employer-sponsored 
           health coverage.
Sec. 10902. Inflation adjustment of limitation on health flexible 
           spending arrangements under cafeteria plans.
Sec. 10903. Modification of limitation on charges by charitable 
           hospitals.
Sec. 10904. Modification of annual fee on medical device manufacturers 
           and importers.
Sec. 10905. Modification of annual fee on health insurance providers.
Sec. 10906. Modifications to additional hospital insurance tax on high-
           income taxpayers.
Sec. 10907. Excise tax on indoor tanning services in lieu of elective 
           cosmetic medical procedures.
Sec. 10908. Exclusion for assistance provided to participants in State 
           student loan repayment programs for certain health 
           professionals.
Sec. 10909. Expansion of adoption credit and adoption assistance 
           programs.

       TITLE I--QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS

   Subtitle A--Immediate Improvements in Health Care Coverage for All 
                                Americans

SEC. 1001. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT.

    Part A of title XXVII of the Public Health Service Act (42 U.S.C. 
300gg et seq.) is amended--
            (1) by striking the part heading and inserting the 
        following:

            ``PART A--INDIVIDUAL AND GROUP MARKET REFORMS'';

            (2) by redesignating sections 2704 through 2707 <<NOTE: 42 
        USC 300gg-4-- 300gg-7, 300gg-25-- 300gg-28.>> as sections 2725 
        through 2728, respectively;
            (3) by redesignating sections 2711 through 2713 <<NOTE: 42 
        USC 300gg-11-- 300gg-13, 300gg-9.>> as sections 2731 through 
        2733, respectively;
            (4) by redesignating sections 2721 through 2723 <<NOTE: 42 
        USC 300gg-21-- 300gg-23.>> as sections 2735 through 2737, 
        respectively; and
            (5) by inserting after section 2702, the following:

[[Page 124 STAT. 131]]

                    ``Subpart II--Improving Coverage

``SEC. 2711. <<NOTE: 42 USC 300gg-11.>> NO LIFETIME OR ANNUAL LIMITS.

    ``(a) In General.--A group health plan and a health insurance issuer 
offering group or individual health insurance coverage may not 
establish--
            ``(1) lifetime limits on the dollar value of benefits for 
        any participant or beneficiary; or
            ``(2) unreasonable annual limits (within the meaning of 
        section 223 of the Internal Revenue Code of 1986) on the dollar 
        value of benefits for any participant or beneficiary.

    ``(b) Per Beneficiary Limits.--Subsection (a) shall not be construed 
to prevent a group health plan or health insurance coverage that is not 
required to provide essential health benefits under section 1302(b) of 
the Patient Protection and Affordable Care Act from placing annual or 
lifetime per beneficiary limits on specific covered benefits to the 
extent that such limits are otherwise permitted under Federal or State 
law.

``SEC. 2712. <<NOTE: 42 USC 300gg-12.>> PROHIBITION ON RESCISSIONS.

    ``A group health plan and a health insurance issuer offering group 
or individual health insurance coverage shall not rescind such plan or 
coverage with respect to an enrollee once the enrollee is covered under 
such plan or coverage involved, except that this section shall not apply 
to a covered individual who has performed an act or practice that 
constitutes fraud or makes an intentional misrepresentation of material 
fact as prohibited by the terms of the plan or coverage. Such plan or 
coverage may not be cancelled except with prior notice to the enrollee, 
and only as permitted under section 2702(c) or 2742(b).

``SEC. 2713. <<NOTE: 42 USC 300gg-13.>> COVERAGE OF PREVENTIVE HEALTH 
            SERVICES.

    ``(a) In General.--A group health plan and a health insurance issuer 
offering group or individual health insurance coverage shall, at a 
minimum provide coverage for and shall not impose any cost sharing 
requirements for--
            ``(1) evidence-based items or services that have in effect a 
        rating of `A' or `B' in the current recommendations of the 
        United States Preventive Services Task Force;
            ``(2) immunizations that have in effect a recommendation 
        from the Advisory Committee on Immunization Practices of the 
        Centers for Disease Control and Prevention with respect to the 
        individual involved; and
            ``(3) with respect to infants, children, and adolescents, 
        evidence-informed preventive care and screenings provided for in 
        the comprehensive guidelines supported by the Health Resources 
        and Services Administration.
            ``(4) with respect to women, such additional preventive care 
        and screenings not described in paragraph (1) as provided for in 
        comprehensive guidelines supported by the Health Resources and 
        Services Administration for purposes of this paragraph.
            ``(5) for the purposes of this Act, and for the purposes of 
        any other provision of law, the current recommendations of the 
        United States Preventive Service Task Force regarding breast 
        cancer screening, mammography, and prevention shall

[[Page 124 STAT. 132]]

        be considered the most current other than those issued in or 
        around November 2009.

Nothing in this subsection shall be construed to prohibit a plan or 
issuer from providing coverage for services in addition to those 
recommended by United States Preventive Services Task Force or to deny 
coverage for services that are not recommended by such Task Force.
    ``(b) Interval.--
            ``(1) In general.--The Secretary shall establish a minimum 
        interval between the date on which a recommendation described in 
        subsection (a)(1) or (a)(2) or a guideline under subsection 
        (a)(3) is issued and the plan year with respect to which the 
        requirement described in subsection (a) is effective with 
        respect to the service described in such recommendation or 
        guideline.
            ``(2) Minimum.--The interval described in paragraph (1) 
        shall not be less than 1 year.

    ``(c) Value-based Insurance Design.--The Secretary may develop 
guidelines to permit a group health plan and a health insurance issuer 
offering group or individual health insurance coverage to utilize value-
based insurance designs.

``SEC. 2714. <<NOTE: 42 USC 300gg-14.>> EXTENSION OF DEPENDENT COVERAGE.

    ``(a) In General.--A group health plan and a health insurance issuer 
offering group or individual health insurance coverage that provides 
dependent coverage of children shall continue to make such coverage 
available for an adult child (who is not married) until the child turns 
26 years of age. Nothing in this section shall require a health plan or 
a health insurance issuer described in the preceding sentence to make 
coverage available for a child of a child receiving dependent coverage.
    ``(b) Regulations.--The Secretary shall promulgate regulations to 
define the dependents to which coverage shall be made available under 
subsection (a).
    ``(c) Rule of Construction.--Nothing in this section shall be 
construed to modify the definition of `dependent' as used in the 
Internal Revenue Code of 1986 with respect to the tax treatment of the 
cost of coverage.

``SEC. 2715. <<NOTE: 42 USC 300gg-15.>> DEVELOPMENT AND UTILIZATION OF 
            UNIFORM EXPLANATION OF COVERAGE DOCUMENTS AND STANDARDIZED 
            DEFINITIONS.

    ``(a) In <<NOTE: Deadline.>> General.--Not later than 12 months 
after the date of enactment of the Patient Protection and Affordable 
Care Act, the Secretary shall develop standards for use by a group 
health plan and a health insurance issuer offering group or individual 
health insurance coverage, in compiling and providing to enrollees a 
summary of benefits and coverage explanation that accurately describes 
the benefits and coverage under the applicable plan or coverage. In 
developing such standards, the Secretary shall consult with the National 
Association of Insurance Commissioners (referred to in this section as 
the `NAIC'), a working group composed of representatives of health 
insurance-related consumer advocacy organizations, health insurance 
issuers, health care professionals, patient advocates including those 
representing individuals with limited English proficiency, and other 
qualified individuals.

    ``(b) Requirements.--The standards for the summary of benefits and 
coverage developed under subsection (a) shall provide for the following:

[[Page 124 STAT. 133]]

            ``(1) Appearance.--The standards shall ensure that the 
        summary of benefits and coverage is presented in a uniform 
        format that does not exceed 4 pages in length and does not 
        include print smaller than 12-point font.
            ``(2) Language.--The standards shall ensure that the summary 
        is presented in a culturally and linguistically appropriate 
        manner and utilizes terminology understandable by the average 
        plan enrollee.
            ``(3) Contents.--The standards shall ensure that the summary 
        of benefits and coverage includes--
                    ``(A) uniform definitions of standard insurance 
                terms and medical terms (consistent with subsection (g)) 
                so that consumers may compare health insurance coverage 
                and understand the terms of coverage (or exception to 
                such coverage);
                    ``(B) a description of the coverage, including cost 
                sharing for--
                          ``(i) each of the categories of the essential 
                      health benefits described in subparagraphs (A) 
                      through (J) of section 1302(b)(1) of the Patient 
                      Protection and Affordable Care Act; and
                          ``(ii) other benefits, as identified by the 
                      Secretary;
                    ``(C) the exceptions, reductions, and limitations on 
                coverage;
                    ``(D) the cost-sharing provisions, including 
                deductible, coinsurance, and co-payment obligations;
                    ``(E) the renewability and continuation of coverage 
                provisions;
                    ``(F) a coverage facts label that includes examples 
                to illustrate common benefits scenarios, including 
                pregnancy and serious or chronic medical conditions and 
                related cost sharing, such scenarios to be based on 
                recognized clinical practice guidelines;
                    ``(G) a statement of whether the plan or coverage--
                          ``(i) provides minimum essential coverage (as 
                      defined under section 5000A(f) of the Internal 
                      Revenue Code 1986); and
                          ``(ii) ensures that the plan or coverage share 
                      of the total allowed costs of benefits provided 
                      under the plan or coverage is not less than 60 
                      percent of such costs;
                    ``(H) a statement that the outline is a summary of 
                the policy or certificate and that the coverage document 
                itself should be consulted to determine the governing 
                contractual provisions; and
                    ``(I) a contact number for the consumer to call with 
                additional questions and an Internet web address where a 
                copy of the actual individual coverage policy or group 
                certificate of coverage can be reviewed and obtained.

    ``(c) Periodic Review and Updating.--The Secretary shall 
periodically review and update, as appropriate, the standards developed 
under this section.
    ``(d) Requirement To Provide.--
            ``(1) In general.--Not later <<NOTE: Deadline.>> than 24 
        months after the date of enactment of the Patient Protection and 
        Affordable Care Act, each entity described in paragraph (3) 
        shall provide, prior

[[Page 124 STAT. 134]]

        to any enrollment restriction, a summary of benefits and 
        coverage explanation pursuant    to the standards developed by 
        the Secretary under subsection (a) to--
                    ``(A) an applicant at the time of application;
                    ``(B) an enrollee prior to the time of enrollment or 
                reenrollment, as applicable; and
                    ``(C) a policyholder or certificate holder at the 
                time of issuance of the policy or delivery of the 
                certificate.
            ``(2) Compliance.--An entity described in paragraph (3) is 
        deemed to be in compliance with this section if the summary of 
        benefits and coverage described in subsection (a) is provided in 
        paper or electronic form.
            ``(3) Entities in general.--An entity described in this 
        paragraph is--
                    ``(A) a health insurance issuer (including a group 
                health plan that is not a self-insured plan) offering 
                health insurance coverage within the United States; or
                    ``(B) in the case of a self-insured group health 
                plan, the plan sponsor or designated administrator of 
                the plan (as such terms are defined in section 3(16) of 
                the Employee Retirement Income Security Act of 1974).
            ``(4) Notice <<NOTE: Deadline.>> of modifications.--If a 
        group health plan or health insurance issuer makes any material 
        modification in any of the terms of the plan or coverage 
        involved (as defined for purposes of section 102 of the Employee 
        Retirement Income Security Act of 1974) that is not reflected in 
        the most recently provided summary of benefits and coverage, the 
        plan or issuer shall provide notice of such modification to 
        enrollees not later than 60 days prior to the date on which such 
        modification will become effective.

    ``(e) Preemption.--The standards developed under subsection (a) 
shall preempt any related State standards that require a summary of 
benefits and coverage that provides less information to consumers than 
that required to be provided under this section, as determined by the 
Secretary.
    ``(f) Failure To Provide.--An entity <<NOTE: Fine.>> described in 
subsection (d)(3) that willfully fails to provide the information 
required under this section shall be subject to a fine of not more than 
$1,000 for each such failure. Such failure with respect to each enrollee 
shall constitute a separate offense for purposes of this subsection.

    ``(g) Development of Standard Definitions.--
            ``(1) In general.--The 
        Secretary <<NOTE: Regulations.>> shall, by regulation, provide 
        for the development of standards for the definitions of terms 
        used in health insurance coverage, including the insurance-
        related terms described in paragraph (2) and the medical terms 
        described in paragraph (3).
            ``(2) Insurance-related terms.--The insurance-related terms 
        described in this paragraph are premium, deductible, co-
        insurance, co-payment, out-of-pocket limit, preferred provider, 
        non-preferred provider, out-of-network co-payments, UCR (usual, 
        customary and reasonable) fees, excluded services, grievance and 
        appeals, and such other terms as the Secretary determines are 
        important to define so that consumers may compare health 
        insurance coverage and understand the terms of their coverage.

[[Page 124 STAT. 135]]

            ``(3) Medical terms.--The medical terms described in this 
        paragraph are hospitalization, hospital outpatient care, 
        emergency room care, physician services, prescription drug 
        coverage, durable medical equipment, home health care, skilled 
        nursing care, rehabilitation services, hospice services, 
        emergency medical transportation, and such other terms as the 
        Secretary determines are important to define so that consumers 
        may compare the medical benefits offered by health insurance and 
        understand the extent of those medical benefits (or exceptions 
        to those benefits).

``SEC. 2716. <<NOTE: 42 USC 300gg-16.>> PROHIBITION OF DISCRIMINATION 
            BASED ON SALARY.

    ``(a) In General.--The plan sponsor of a group health plan (other 
than a self-insured plan) may not establish rules relating to the health 
insurance coverage eligibility (including continued eligibility) of any 
full-time employee under the terms of the plan that are based on the 
total hourly or annual salary of the employee or otherwise establish 
eligibility rules that have the effect of discriminating in favor of 
higher wage employees.
    ``(b) Limitation.--Subsection (a) shall not be construed to prohibit 
a plan sponsor from establishing contribution requirements for 
enrollment in the plan or coverage that provide for the payment by 
employees with lower hourly or annual compensation of a lower dollar or 
percentage contribution than the payment required of similarly situated 
employees with a higher hourly or annual compensation.

``SEC. 2717. <<NOTE: 42 USC 300gg-17.>> ENSURING THE QUALITY OF CARE.

    ``(a) Quality Reporting.--
            ``(1) In general.--Not later than 2 years after the date of 
        enactment of the Patient Protection and Affordable Care Act, the 
        Secretary, in consultation with experts in health care quality 
        and stakeholders, shall develop reporting requirements for use 
        by a group health plan, and a health insurance issuer offering 
        group or individual health insurance coverage, with respect to 
        plan or coverage benefits and health care provider reimbursement 
        structures that--
                    ``(A) improve health outcomes through the 
                implementation of activities such as quality reporting, 
                effective case management, care coordination, chronic 
                disease management, and medication and care compliance 
                initiatives, including through the use of the medical 
                homes model as defined for purposes of section 3602 of 
                the Patient Protection and Affordable Care Act, for 
                treatment or services under the plan or coverage;
                    ``(B) implement activities to prevent hospital 
                readmissions through a comprehensive program for 
                hospital discharge that includes patient-centered 
                education and counseling, comprehensive discharge 
                planning, and post discharge reinforcement by an 
                appropriate health care professional;
                    ``(C) implement activities to improve patient safety 
                and reduce medical errors through the appropriate use of 
                best clinical practices, evidence based medicine, and 
                health information technology under the plan or 
                coverage; and
                    ``(D) implement wellness and health promotion 
                activities.
            ``(2) Reporting requirements.--

[[Page 124 STAT. 136]]

                    ``(A) In general.--A group health plan and a health 
                insurance issuer offering group or individual health 
                insurance coverage shall annually submit to the 
                Secretary, and to enrollees under the plan or coverage, 
                a report on whether the benefits under the plan or 
                coverage satisfy the elements described in subparagraphs 
                (A) through (D) of paragraph (1).
                    ``(B) Timing of reports.--A report under 
                subparagraph (A) shall be made available to an enrollee 
                under the plan or coverage during each open enrollment 
                period.
                    ``(C) Availability of reports.--The Secretary shall 
                make reports submitted under subparagraph (A) available 
                to the public through an Internet website.
                    ``(D) Penalties.--In developing the reporting 
                requirements under paragraph (1), the Secretary may 
                develop and impose appropriate penalties for non-
                compliance with such requirements.
                    ``(E) Exceptions.--In developing the reporting 
                requirements under paragraph (1), the Secretary may 
                provide for exceptions to such requirements for group 
                health plans and health insurance issuers that 
                substantially meet the goals of this section.

    ``(b) Wellness and Prevention Programs.--For purposes of subsection 
(a)(1)(D), wellness and health promotion activities may include 
personalized wellness and prevention services, which are coordinated, 
maintained or delivered by a health care provider, a wellness and 
prevention plan manager, or a health, wellness or prevention services 
organization that conducts health risk assessments or offers ongoing 
face-to-face, telephonic or web-based intervention efforts for each of 
the program's participants, and which may include the following wellness 
and prevention efforts:
            ``(1) Smoking cessation.
            ``(2) Weight management.
            ``(3) Stress management.
            ``(4) Physical fitness.
            ``(5) Nutrition.
            ``(6) Heart disease prevention.
            ``(7) Healthy lifestyle support.
            ``(8) Diabetes prevention.

    ``(c) Regulations.--Not <<NOTE: Deadline.>> later than 2 years after 
the date of enactment of the Patient Protection and Affordable Care Act, 
the Secretary shall promulgate regulations that provide criteria for 
determining whether a reimbursement structure is described in subsection 
(a).

    ``(d) Study and Report.--Not later than 180 days after the date on 
which regulations are promulgated under subsection (c), the Government 
Accountability Office shall review such regulations and conduct a study 
and submit to the Committee on Health, Education, Labor, and Pensions of 
the Senate and the Committee on Energy and Commerce of the House of 
Representatives a report regarding the impact the activities under this 
section have had on the quality and cost of health care.

``SEC. 2718. BRINGING <<NOTE: 42 USC 300gg-18.>> DOWN THE COST OF HEALTH 
            CARE COVERAGE.

    ``(a) Clear <<NOTE: Reports.>> Accounting for Costs.--A health 
insurance issuer offering group or individual health insurance coverage 
shall, with

[[Page 124 STAT. 137]]

respect to each plan year, submit to the Secretary a report concerning 
the percentage of total premium revenue that such coverage expends--
            ``(1) on reimbursement for clinical services provided to 
        enrollees under such coverage;
            ``(2) for activities that improve health care quality; and
            ``(3) on all other non-claims costs, including an 
        explanation of the nature of such costs, and excluding State 
        taxes and licensing or regulatory fees.

The <<NOTE: Public information. Web posting.>> Secretary shall make 
reports received under this section available to the public on the 
Internet website of the Department of Health and Human Services.

    ``(b) Ensuring That Consumers Receive Value for Their Premium 
Payments.--
            ``(1) Requirement to provide value for premium payments.--A 
        health insurance issuer offering group or individual health 
        insurance coverage shall, with respect to each plan year, 
        provide an annual rebate to each enrollee under such coverage, 
        on a pro rata basis, in an amount that is equal to the amount by 
        which premium revenue expended by the issuer on activities 
        described in subsection (a)(3) exceeds--
                    ``(A) with respect to a health insurance issuer 
                offering coverage in the group market, 20 percent, or 
                such lower percentage as a State may by regulation 
                determine; or
                    ``(B) with respect to a health insurance issuer 
                offering coverage in the individual market, 25 percent, 
                or such lower percentage as a State may by regulation 
                determine, except that such percentage shall be adjusted 
                to the extent the Secretary determines that the 
                application of such percentage with a State may 
                destabilize the existing individual market in such 
                State.
            ``(2) Consideration in setting percentages.--In determining 
        the percentages under paragraph (1), a State shall seek to 
        ensure adequate participation by health insurance issuers, 
        competition in the health insurance market in the State, and 
        value for consumers so that premiums are used for clinical 
        services and quality improvements.
            ``(3) Termination.--The provisions of this subsection shall 
        have no force or effect after December 31, 2013.

    ``(c) Standard Hospital Charges.--Each hospital operating within the 
United States shall for each year establish (and update) and make public 
(in accordance with guidelines developed by the Secretary) a list of the 
hospital's standard charges for items and services provided by the 
hospital, including for diagnosis-related groups established under 
section 1886(d)(4) of the Social Security Act.
    ``(d) Definitions.--The Secretary, in consultation with the National 
Association of Insurance Commissions, shall establish uniform 
definitions for the activities reported under subsection (a).

``SEC. 2719. <<NOTE: 42 USC 300gg-19.>> APPEALS PROCESS.

    ``A group health plan and a health insurance issuer offering group 
or individual health insurance coverage shall implement an effective 
appeals process for appeals of coverage determinations and claims, under 
which the plan or issuer shall, at a minimum--
            ``(1) have in effect an internal claims appeal process;

[[Page 124 STAT. 138]]

            ``(2) provide <<NOTE: Notification.>> notice to enrollees, 
        in a culturally and linguistically appropriate manner, of 
        available internal and external appeals processes, and the 
        availability of any applicable office of health insurance 
        consumer assistance or ombudsman established under section 2793 
        to assist such enrollees with the appeals processes;
            ``(3) allow an enrollee to review their file, to present 
        evidence and testimony as part of the appeals process, and to 
        receive continued coverage pending the outcome of the appeals 
        process; and
            ``(4) provide an external review process for such plans and 
        issuers that, at a minimum, includes the consumer protections 
        set forth in the Uniform External Review Model Act promulgated 
        by the National Association of Insurance Commissioners and is 
        binding on such plans.''.

SEC. 1002. HEALTH INSURANCE CONSUMER INFORMATION.

    Part C of title XXVII of the Public Health Service Act (42 U.S.C. 
300gg-91 et seq.) is amended by adding at the end the following:

``SEC. 2793. <<NOTE: 42 USC 300gg-93.>> HEALTH INSURANCE CONSUMER 
            INFORMATION.

    ``(a) In <<NOTE: Grants.>> General.--The Secretary shall award 
grants to States to enable such States (or the Exchanges operating in 
such States) to establish, expand, or provide support for--
            ``(1) offices of health insurance consumer assistance; or
            ``(2) health insurance ombudsman programs.

    ``(b) Eligibility.--
            ``(1) In general.--To be eligible to receive a grant, a 
        State shall designate an independent office of health insurance 
        consumer assistance, or an ombudsman, that, directly or in 
        coordination with State health insurance regulators and consumer 
        assistance organizations, receives and responds to inquiries and 
        complaints concerning health insurance coverage with respect to 
        Federal health insurance requirements and under State law.
            ``(2) Criteria.--A State that receives a grant under this 
        section shall comply with criteria established by the Secretary 
        for carrying out activities under such grant.

    ``(c) Duties.--The office of health insurance consumer assistance or 
health insurance ombudsman shall--
            ``(1) assist with the filing of complaints and appeals, 
        including filing appeals with the internal appeal or grievance 
        process of the group health plan or health insurance issuer 
        involved and providing information about the external appeal 
        process;
            ``(2) collect, track, and quantify problems and inquiries 
        encountered by consumers;
            ``(3) educate consumers on their rights and responsibilities 
        with respect to group health plans and health insurance 
        coverage;
            ``(4) assist consumers with enrollment in a group health 
        plan or health insurance coverage by providing information, 
        referral, and assistance; and
            ``(5) resolve problems with obtaining premium tax credits 
        under section 36B of the Internal Revenue Code of 1986.

[[Page 124 STAT. 139]]

    ``(d) Data Collection.--As a condition of receiving a grant under 
subsection (a), an office of health insurance consumer assistance or 
ombudsman program shall be required to collect and report data to the 
Secretary on the types of problems and inquiries encountered by 
consumers. The Secretary shall utilize such data to identify areas where 
more enforcement action is necessary and shall share such information 
with State insurance regulators, the Secretary of Labor, and the 
Secretary of the Treasury for use in the enforcement activities of such 
agencies.
    ``(e) Funding.--
            ``(1) Initial funding.--There is hereby appropriated to the 
        Secretary, out of any funds in the Treasury not otherwise 
        appropriated, $30,000,000 for the first fiscal year for which 
        this section applies to carry out this section. Such amount 
        shall remain available without fiscal year limitation.
            ``(2) Authorization for subsequent years.--There is 
        authorized to be appropriated to the Secretary for each fiscal 
        year following the fiscal year described in paragraph (1), such 
        sums as may be necessary to carry out this section.''.

SEC. 1003. ENSURING THAT CONSUMERS GET VALUE FOR THEIR DOLLARS.

    Part C of title XXVII of the Public Health Service Act (42 U.S.C. 
300gg-91 et seq.), as amended by section 1002, is further amended by 
adding at the end the following:

``SEC. 2794. <<NOTE: 42 USC 300gg-94.>> ENSURING THAT CONSUMERS GET 
            VALUE FOR THEIR DOLLARS.

    ``(a) Initial Premium Review Process.--
            ``(1) In <<NOTE: Effective date.>> general.--The Secretary, 
        in conjunction with States, shall establish a process for the 
        annual review, beginning with the 2010 plan year and subject to 
        subsection (b)(2)(A), of unreasonable increases in premiums for 
        health insurance coverage.
            ``(2) Justification and disclosure.--The process established 
        under paragraph (1) shall require health insurance issuers to 
        submit to the Secretary and the relevant State a justification 
        for an unreasonable premium increase prior to the implementation 
        of the <<NOTE: Web posting.>> increase. Such issuers shall 
        prominently post such information on their Internet websites. 
        The Secretary shall ensure the public disclosure of information 
        on such increases and justifications for all health insurance 
        issuers.

    ``(b) Continuing Premium Review Process.--
            ``(1) Informing secretary of premium increase patterns.--As 
        a condition of receiving a grant under subsection (c)(1), a 
        State, through its Commissioner of Insurance, shall--
                    ``(A) provide the Secretary with information about 
                trends in premium increases in health insurance coverage 
                in premium rating areas in the State; and
                    ``(B) make recommendations, as appropriate, to the 
                State Exchange about whether particular health insurance 
                issuers should be excluded from participation in the 
                Exchange based on a pattern or practice of excessive or 
                unjustified premium increases.
            ``(2) Monitoring by secretary of premium increases.--
                    ``(A) In general.--Beginning <<NOTE: Effective 
                date.>> with plan years beginning in 2014, the 
                Secretary, in conjunction with the States

[[Page 124 STAT. 140]]

                and consistent with the provisions of subsection (a)(2), 
                shall monitor premium increases of health insurance 
                coverage offered through an Exchange and outside of an 
                Exchange.
                    ``(B) Consideration in opening exchange.--In 
                determining under section 1312(f)(2)(B) of the Patient 
                Protection and Affordable Care Act whether to offer 
                qualified health plans in the large group market through 
                an Exchange, the State shall take into account any 
                excess of premium growth outside of the Exchange as 
                compared to the rate of such growth inside the Exchange.

    ``(c) Grants in Support of Process.--
            ``(1) Premium review grants during 2010 through 2014.--The 
        Secretary shall carry out a program to award grants to States 
        during the 5-year period beginning with fiscal year 2010 to 
        assist such States in carrying out subsection (a), including--
                    ``(A) in reviewing and, if appropriate under State 
                law, approving premium increases for health insurance 
                coverage; and
                    ``(B) in providing information and recommendations 
                to the Secretary under subsection (b)(1).
            ``(2) Funding.--
                    ``(A) In general.--Out of all funds in the Treasury 
                not otherwise appropriated, there are appropriated to 
                the Secretary $250,000,000, to be available for 
                expenditure for grants under paragraph (1) and 
                subparagraph (B).
                    ``(B) Further availability for insurance reform and 
                consumer protection.--If the amounts appropriated under 
                subparagraph (A) are not fully obligated under grants 
                under paragraph (1) by the end of fiscal year 2014, any 
                remaining funds shall remain available to the Secretary 
                for grants to States for planning and implementing the 
                insurance reforms and consumer protections under part A.
                    ``(C) Allocation.--The Secretary shall establish a 
                formula for determining the amount of any grant to a 
                State under this subsection. Under such formula--
                          ``(i) the Secretary shall consider the number 
                      of plans of health insurance coverage offered in 
                      each State and the population of the State; and
                          ``(ii) no State qualifying for a grant under 
                      paragraph (1) shall receive less than $1,000,000, 
                      or more than $5,000,000 for a grant year.''.

SEC. 1004. <<NOTE: 42 USC 300gg-11 note.>> EFFECTIVE DATES.

    (a) In General.--Except as provided for in subsection (b), this 
subtitle (and the amendments made by this subtitle) shall become 
effective for plan years beginning on or after the date that is 6 months 
after the date of enactment of this Act, except that the amendments made 
by sections 1002 and 1003 shall become effective for fiscal years 
beginning with fiscal year 2010.
    (b) Special Rule.--The amendments made by sections 1002 and 1003 
shall take effect on the date of enactment of this Act.

[[Page 124 STAT. 141]]

      Subtitle B--Immediate Actions to Preserve and Expand Coverage

SEC. 1101. IMMEDIATE <<NOTE: 42 USC 18001.>> ACCESS TO INSURANCE FOR 
            UNINSURED INDIVIDUALS WITH A PREEXISTING CONDITION.

    (a) In General.--Not <<NOTE: Deadline. Time period.>> later than 90 
days after the date of enactment of this Act, the Secretary shall 
establish a temporary high risk health insurance pool program to provide 
health insurance coverage for eligible individuals during the period 
beginning on the date on which such program is established and ending on 
January 1, 2014.

    (b) Administration.--
            (1) In general.--The Secretary may carry out the program 
        under this section directly or through contracts to eligible 
        entities.
            (2) Eligible entities.--To be eligible for a contract under 
        paragraph (1), an entity shall--
                    (A) be a State or nonprofit private entity;
                    (B) submit to the Secretary an application at such 
                time, in such manner, and containing such information as 
                the Secretary may require; and
                    (C) agree to utilize contract funding to establish 
                and administer a qualified high risk pool for eligible 
                individuals.
            (3) Maintenance of effort.--To be eligible to enter into a 
        contract with the Secretary under this subsection, a State shall 
        agree not to reduce the annual amount the State expended for the 
        operation of one or more State high risk pools during the year 
        preceding the year in which such contract is entered into.

    (c) Qualified High Risk Pool.--
            (1) In general.--Amounts made available under this section 
        shall be used to establish a qualified high risk pool that meets 
        the requirements of paragraph (2).
            (2) Requirements.--A qualified high risk pool meets the 
        requirements of this paragraph if such pool--
                    (A) provides to all eligible individuals health 
                insurance coverage that does not impose any preexisting 
                condition exclusion with respect to such coverage;
                    (B) provides health insurance coverage--
                          (i) in which the issuer's share of the total 
                      allowed costs of benefits provided under such 
                      coverage is not less than 65 percent of such 
                      costs; and
                          (ii) that has an out of pocket limit not 
                      greater than the applicable amount described in 
                      section 223(c)(2) of the Internal Revenue Code of 
                      1986 for the year involved, except that the 
                      Secretary may modify such limit if necessary to 
                      ensure the pool meets the actuarial value limit 
                      under clause (i);
                    (C) ensures that with respect to the premium rate 
                charged for health insurance coverage offered to 
                eligible individuals through the high risk pool, such 
                rate shall--
                          (i) except as provided in clause (ii), vary 
                      only as provided for under section 2701 of the 
                      Public Health Service Act (as amended by this Act 
                      and notwithstanding the date on which such 
                      amendments take effect);

[[Page 124 STAT. 142]]

                          (ii) vary on the basis of age by a factor of 
                      not greater than 4 to 1; and
                          (iii) be established at a standard rate for a 
                      standard population; and
                    (D) meets any other requirements determined 
                appropriate by the Secretary.

    (d) Eligible Individual.--An individual shall be deemed to be an 
eligible individual for purposes of this section if such individual--
            (1) is a citizen or national of the United States or is 
        lawfully present in the United States (as determined in 
        accordance with section 1411);
            (2) has not been covered under creditable coverage (as 
        defined in section 2701(c)(1) of the Public Health Service Act 
        as in effect on the date of enactment of this Act) during the 6-
        month period prior to the date on which such individual is 
        applying for coverage through the high risk pool; and
            (3) has a pre-existing condition, as determined in a manner 
        consistent with guidance issued by the Secretary.

    (e) Protection Against Dumping Risk by Insurers.--
            (1) In general.--The <<NOTE: Criteria.>> Secretary shall 
        establish criteria for determining whether health insurance 
        issuers and employment-based health plans have discouraged an 
        individual from remaining enrolled in prior coverage based on 
        that individual's health status.
            (2) Sanctions.--An issuer or employment-based health plan 
        shall be responsible for reimbursing the program under this 
        section for the medical expenses incurred by the program for an 
        individual who, based on criteria established by the Secretary, 
        the Secretary finds was encouraged by the issuer to disenroll 
        from health benefits coverage prior to enrolling in coverage 
        through the program. The criteria shall include at least the 
        following circumstances:
                    (A) In the case of prior coverage obtained through 
                an employer, the provision by the employer, group health 
                plan, or the issuer of money or other financial 
                consideration for disenrolling from the coverage.
                    (B) In the case of prior coverage obtained directly 
                from an issuer or under an employment-based health 
                plan--
                          (i) the provision by the issuer or plan of 
                      money or other financial consideration for 
                      disenrolling from the coverage; or
                          (ii) in the case of an individual whose 
                      premium for the prior coverage exceeded the 
                      premium required by the program (adjusted based on 
                      the age factors applied to the prior coverage)--
                                    (I) the prior coverage is a policy 
                                that is no longer being actively 
                                marketed (as defined by the Secretary) 
                                by the issuer; or
                                    (II) the prior coverage is a policy 
                                for which duration of coverage form 
                                issue or health status are factors that 
                                can be considered in determining 
                                premiums at renewal.
            (3) Construction.--Nothing in this subsection shall be 
        construed as constituting exclusive remedies for violations of 
        criteria established under paragraph (1) or as preventing States

[[Page 124 STAT. 143]]

        from applying or enforcing such paragraph or other provisions 
        under law with respect to health insurance issuers.

    (f) Oversight.--The Secretary shall establish--
            (1) an appeals process to enable individuals to appeal a 
        determination under this section; and
            (2) procedures to protect against waste, fraud, and abuse.

    (g) Funding; Termination of Authority.--
            (1) In general.--There is appropriated to the Secretary, out 
        of any moneys in the Treasury not otherwise appropriated, 
        $5,000,000,000 to pay claims against (and the administrative 
        costs of) the high risk pool under this section that are in 
        excess of the amount of premiums collected from eligible 
        individuals enrolled in the high risk pool. Such funds shall be 
        available without fiscal year limitation.
            (2) Insufficient funds.--If the Secretary estimates for any 
        fiscal year that the aggregate amounts available for the payment 
        of the expenses of the high risk pool will be less than the 
        actual amount of such expenses, the Secretary shall make such 
        adjustments as are necessary to eliminate such deficit.
            (3) Termination of authority.--
                    (A) In general.--Except as provided in subparagraph 
                (B), coverage of eligible individuals under a high risk 
                pool in a State shall terminate on January 1, 2014.
                    (B) Transition <<NOTE: Procedures.>> to exchange.--
                The Secretary shall develop procedures to provide for 
                the transition of eligible individuals enrolled in 
                health insurance coverage offered through a high risk 
                pool established under this section into qualified 
                health plans offered through an Exchange. Such 
                procedures shall ensure that there is no lapse in 
                coverage with respect to the individual and may extend 
                coverage after the termination of the risk pool 
                involved, if the Secretary determines necessary to avoid 
                such a lapse.
            (4) Limitations.--The Secretary has the authority to stop 
        taking applications for participation in the program under this 
        section to comply with the funding limitation provided for in 
        paragraph (1).
            (5) Relation to state laws.--The standards established under 
        this section shall supersede any State law or regulation (other 
        than State licensing laws or State laws relating to plan 
        solvency) with respect to qualified high risk pools which are 
        established in accordance with this section.

SEC. 1102. <<NOTE: 42 USC 18002.>> REINSURANCE FOR EARLY RETIREES.

    (a) Administration.--
            (1) In general.--Not <<NOTE: Deadline. Time period.>> later 
        than 90 days after the date of enactment of this Act, the 
        Secretary shall establish a temporary reinsurance program to 
        provide reimbursement to participating employment-based plans 
        for a portion of the cost of providing health insurance coverage 
        to early retirees (and to the eligible spouses, surviving 
        spouses, and dependents of such retirees) during the period 
        beginning on the date on which such program is established and 
        ending on January 1, 2014.
            (2) Reference.--In this section:
                    (A) Health benefits.--The term ``health benefits'' 
                means medical, surgical, hospital, prescription drug, 
                and such other benefits as shall be determined by the 
                Secretary,

[[Page 124 STAT. 144]]

                whether self-funded, or delivered through the purchase 
                of insurance or otherwise.
                    (B) Employment-based plan.--The term ``employment-
                based plan'' means a group health benefits plan that--
                          (i) is--
                                    (I) maintained by one or more 
                                current or former employers (including 
                                without limitation any State or local 
                                government or political subdivision 
                                thereof), employee organization, a 
                                voluntary employees' beneficiary 
                                association, or a committee or board of 
                                individuals appointed to administer such 
                                plan; or
                                    (II) a multiemployer plan (as 
                                defined in section 3(37) of the Employee 
                                Retirement Income Security Act of 1974); 
                                and
                          (ii) provides health benefits to early 
                      retirees.
                    (C) Early retirees.--The term ``early retirees'' 
                means individuals who are age 55 and older but are not 
                eligible for coverage under title XVIII of the Social 
                Security Act, and who are not active employees of an 
                employer maintaining, or currently contributing to, the 
                employment-based plan or of any employer that has made 
                substantial contributions to fund such plan.

    (b) Participation.--
            (1) Employment-based plan eligibility.--A participating 
        employment-based plan is an employment-based plan that--
                    (A) meets the requirements of paragraph (2) with 
                respect to health benefits provided under the plan; and
                    (B) submits 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.
            (2) Employment-based health benefits.--An employment-based 
        plan meets the requirements of this paragraph if the plan--
                    (A) implements programs and procedures to generate 
                cost-savings with respect to participants with chronic 
                and high-cost conditions;
                    (B) provides documentation of the actual cost of 
                medical claims involved; and
                    (C) is certified <<NOTE: Certification.>> by the 
                Secretary.

    (c) Payments.--
            (1) Submission of claims.--
                    (A) In general.--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.--Claims 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 health benefits 
                provided to an early retiree or the spouse, surviving 
                spouse, or dependent of such retiree. In determining the 
                amount of a claim for purposes of this subsection, the 
                participating

[[Page 124 STAT. 145]]

                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 benefit. For purposes of determining the 
                amount of any such claim, the costs paid by the early 
                retiree or the retiree's spouse, surviving spouse, or 
                dependent in the form of deductibles, co-payments, or 
                co-insurance shall be included in the amounts paid by 
                the participating employment-based plan.
            (2) Program payments.--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 exceed $15,000, subject to the limits contained in 
        paragraph (3).
            (3) Limit.--To be eligible for reimbursement under the 
        program, a claim submitted by a participating employment-based 
        plan shall not be less than $15,000 nor greater than $90,000. 
        Such amounts shall be adjusted each fiscal year based on the 
        percentage increase in the Medical Care Component of the 
        Consumer Price Index for all urban consumers (rounded to the 
        nearest multiple of $1,000) for the year involved.
            (4) Use of payments.--Amounts paid to a participating 
        employment-based plan under this subsection shall be used to 
        lower costs for the plan. Such payments may be used to reduce 
        premium costs for an entity described in subsection (a)(2)(B)(i) 
        or to reduce premium contributions, co-payments, deductibles, 
        co-insurance, or other out-of-pocket costs for plan 
        participants. Such payments shall not be used as general 
        revenues for an entity described in subsection (a)(2)(B)(i). The 
        Secretary shall develop a mechanism to monitor the appropriate 
        use of such payments by such entities.
            (5) Payments not treated as income.--Payments received under 
        this subsection shall not be included in determining the gross 
        income of an entity described in subsection (a)(2)(B)(i) that is 
        maintaining or currently contributing to a participating 
        employment-based plan.
            (6) Appeals.--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.

    (d) Audits.--The Secretary shall conduct annual audits of claims 
data submitted by participating employment-based plans under this 
section to ensure that such plans are in compliance with the 
requirements of this section.
    (e) Funding.--There is appropriated to the Secretary, out of any 
moneys in the Treasury not otherwise appropriated, $5,000,000,000 to 
carry out the program under this section. Such funds shall be available 
without fiscal year limitation.
    (f) Limitation.--The Secretary has the authority to stop taking 
applications for participation in the program based on the availability 
of funding under subsection (e).

[[Page 124 STAT. 146]]

SEC. 1103. IMMEDIATE <<NOTE: Deadlines. 42 USC 18003.>> INFORMATION THAT 
            ALLOWS CONSUMERS TO IDENTIFY AFFORDABLE COVERAGE OPTIONS.

    (a) Internet Portal to Affordable Coverage Options.--
            (1) Immediate establishment.--Not later than July 1, 2010, 
        the Secretary, in consultation with the States, shall establish 
        a mechanism, including an Internet website, through which a 
        resident of any State may identify affordable health insurance 
        coverage options in that State.
            (2) Connecting to affordable coverage.--An Internet website 
        established under paragraph (1) shall, to the extent 
        practicable, provide ways for residents of any State to receive 
        information on at least the following coverage options:
                    (A) Health insurance coverage offered by health 
                insurance issuers, other than coverage that provides 
                reimbursement only for the treatment or mitigation of--
                          (i) a single disease or condition; or
                          (ii) an unreasonably limited set of diseases 
                      or conditions (as determined by the Secretary);
                    (B) Medicaid coverage under title XIX of the Social 
                Security Act.
                    (C) Coverage under title XXI of the Social Security 
                Act.
                    (D) A State health benefits high risk pool, to the 
                extent that such high risk pool is offered in such 
                State; and
                    (E) Coverage under a high risk pool under section 
                1101.

    (b) Enhancing Comparative Purchasing Options.--
            (1) In general.--Not later <<NOTE: Deadline. Standard 
        format.>> than 60 days after the date of enactment of this Act, 
        the Secretary shall develop a standardized format to be used for 
        the presentation of information relating to the coverage options 
        described in subsection (a)(2). Such format shall, at a minimum, 
        require the inclusion of information on the percentage of total 
        premium revenue expended on nonclinical costs (as reported under 
        section 2718(a) of the Public Health Service Act), eligibility, 
        availability, premium rates, and cost sharing with respect to 
        such coverage options and be consistent with the standards 
        adopted for the uniform explanation of coverage as provided for 
        in section 2715 of the Public Health Service Act.
            (2) Use of format.--The Secretary shall utilize the format 
        developed under paragraph (1) in compiling information 
        concerning coverage options on the Internet website established 
        under subsection (a).

    (c) Authority To Contract.--The Secretary may carry out this section 
through contracts entered into with qualified entities.

SEC. 1104. ADMINISTRATIVE SIMPLIFICATION.

    (a) Purpose of Administrative Simplification.--Section 261 of the 
Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. 
1320d note) is amended--
            (1) by inserting ``uniform'' before ``standards''; and
            (2) by inserting ``and to reduce the clerical burden on 
        patients, health care providers, and health plans'' before the 
        period at the end.

    (b) Operating Rules for Health Information Transactions.--

[[Page 124 STAT. 147]]

            (1) Definition of operating rules.--Section 1171 of the 
        Social Security Act (42 U.S.C. 1320d) is amended by adding at 
        the end the following:
            ``(9) Operating rules.--The term `operating rules' means the 
        necessary business rules and guidelines for the electronic 
        exchange of information that are not defined by a standard or 
        its implementation specifications as adopted for purposes of 
        this part.''.
            (2) Transaction standards; operating rules and compliance.--
        Section 1173 of the Social Security Act (42 U.S.C. 1320d-2) is 
        amended--
                    (A) in subsection (a)(2), by adding at the end the 
                following new subparagraph:
                    ``(J) Electronic funds transfers.'';
                    (B) in subsection (a), by adding at the end the 
                following new paragraph:
            ``(4) Requirements for financial and administrative 
        transactions.--
                    ``(A) In general.--The standards and associated 
                operating rules adopted by the Secretary shall--
                          ``(i) to the extent feasible and appropriate, 
                      enable determination of an individual's 
                      eligibility and financial responsibility for 
                      specific services prior to or at the point of 
                      care;
                          ``(ii) be comprehensive, requiring minimal 
                      augmentation by paper or other communications;
                          ``(iii) provide for timely acknowledgment, 
                      response, and status reporting that supports a 
                      transparent claims and denial management process 
                      (including adjudication and appeals); and
                          ``(iv) describe all data elements (including 
                      reason and remark codes) in unambiguous terms, 
                      require that such data elements be required or 
                      conditioned upon set values in other fields, and 
                      prohibit additional conditions (except where 
                      necessary to implement State or Federal law, or to 
                      protect against fraud and abuse).
                    ``(B) Reduction of clerical burden.--In adopting 
                standards and operating rules for the transactions 
                referred to under paragraph (1), the Secretary shall 
                seek to reduce the number and complexity of forms 
                (including paper and electronic forms) and data entry 
                required by patients and providers.''; and
                    (C) by adding at the end the following new 
                subsections:

    ``(g) Operating Rules.--
            ``(1) In general.--The Secretary shall adopt a single set of 
        operating rules for each transaction referred to under 
        subsection (a)(1) with the goal of creating as much uniformity 
        in the implementation of the electronic standards as possible. 
        Such operating rules shall be consensus-based and reflect the 
        necessary business rules affecting health plans and health care 
        providers and the manner in which they operate pursuant to 
        standards issued under Health Insurance Portability and 
        Accountability Act of 1996.
            ``(2) Operating rules development.--In adopting operating 
        rules under this subsection, the Secretary shall consider 
        recommendations for operating rules developed by a qualified 
        nonprofit entity that meets the following requirements:

[[Page 124 STAT. 148]]

                    ``(A) The entity focuses its mission on 
                administrative simplification.
                    ``(B) The entity demonstrates a multi-stakeholder 
                and consensus-based process for development of operating 
                rules, including representation by or participation from 
                health plans, health care providers, vendors, relevant 
                Federal agencies, and other standard development 
                organizations.
                    ``(C) The entity has a public set of guiding 
                principles that ensure the operating rules and process 
                are open and transparent, and supports nondiscrimination 
                and conflict of interest policies that demonstrate a 
                commitment to open, fair, and nondiscriminatory 
                practices.
                    ``(D) The entity builds on the transaction standards 
                issued under Health Insurance Portability and 
                Accountability Act of 1996.
                    ``(E) The entity allows for public review and 
                updates of the operating rules.
            ``(3) Review and recommendations.--The National Committee on 
        Vital and Health Statistics shall--
                    ``(A) advise the Secretary as to whether a nonprofit 
                entity meets the requirements under paragraph (2);
                    ``(B) review the operating rules developed and 
                recommended by such nonprofit entity;
                    ``(C) determine whether such operating rules 
                represent a consensus view of the health care 
                stakeholders and are consistent with and do not conflict 
                with other existing standards;
                    ``(D) evaluate whether such operating rules are 
                consistent with electronic standards adopted for health 
                information technology; and
                    ``(E) submit to the Secretary a recommendation as to 
                whether the Secretary should adopt such operating rules.
            ``(4) Implementation.--
                    ``(A) In general.--
                The <<NOTE: Regulations.>> Secretary shall adopt 
                operating rules under this subsection, by regulation in 
                accordance with subparagraph (C), following 
                consideration of the operating rules developed by the 
                non-profit entity described in paragraph (2) and the 
                recommendation submitted by the National Committee on 
                Vital and Health Statistics under paragraph (3)(E) and 
                having ensured consultation with providers.
                    ``(B) Adoption <<NOTE: Deadlines.>> requirements; 
                effective dates.--
                          ``(i) Eligibility for a health plan and health 
                      claim status.--The set of operating rules for 
                      eligibility for a health plan and health claim 
                      status transactions shall be adopted not later 
                      than July 1, 2011, in a manner ensuring that such 
                      operating rules are effective not later than 
                      January 1, 2013, and may allow for the use of a 
                      machine readable identification card.
                          ``(ii) Electronic funds transfers and health 
                      care payment and remittance advice.--The set of 
                      operating rules for electronic funds transfers and 
                      health care payment and remittance advice 
                      transactions shall--
                                    ``(I) allow for automated 
                                reconciliation of the electronic payment 
                                with the remittance advice; and

[[Page 124 STAT. 149]]

                                    ``(II) be adopted not later than 
                                July 1, 2012, in a manner ensuring that 
                                such operating rules are effective not 
                                later than January 1, 2014.
                          ``(iii) Health claims or equivalent encounter 
                      information, enrollment and disenrollment in a 
                      health plan, health plan premium payments, 
                      referral certification and authorization.--The set 
                      of operating rules for health claims or equivalent 
                      encounter information, enrollment and 
                      disenrollment in a health plan, health plan 
                      premium payments, and referral certification and 
                      authorization transactions shall be adopted not 
                      later than July 1, 2014, in a manner ensuring that 
                      such operating rules are effective not later than 
                      January 1, 2016.
                    ``(C) Expedited rulemaking.--The Secretary shall 
                promulgate an interim final rule applying any standard 
                or operating rule recommended by the National Committee 
                on Vital and Health Statistics pursuant to paragraph 
                (3). The Secretary <<NOTE: Public comments.>> shall 
                accept and consider public comments on any interim final 
                rule published under this subparagraph for 60 days after 
                the date of such publication.

    ``(h) Compliance.--
            ``(1) Health <<NOTE: Deadlines.>> plan certification.--
                    ``(A) Eligibility for a health plan, health claim 
                status, electronic funds transfers, health care payment 
                and remittance advice.--
                Not <<NOTE: Certification.>> later than December 31, 
                2013, a health plan shall file a statement with the 
                Secretary, in such form as the Secretary may require, 
                certifying that the data and information systems for 
                such plan are in compliance with any applicable 
                standards (as described under paragraph (7) of section 
                1171) and associated operating rules (as described under 
                paragraph (9) of such section) for electronic funds 
                transfers, eligibility for a health plan, health claim 
                status, and health care payment and remittance advice, 
                respectively.
                    ``(B) Health claims or equivalent encounter 
                information, enrollment and disenrollment in a health 
                plan, health plan premium payments, health claims 
                attachments, referral certification and authorization.--
                Not later than December 31, 2015, a health plan shall 
                file a statement with the Secretary, in such form as the 
                Secretary may require, certifying that the data and 
                information systems for such plan are in compliance with 
                any applicable standards and associated operating rules 
                for health claims or equivalent encounter information, 
                enrollment and disenrollment in a health plan, health 
                plan premium payments, health claims attachments, and 
                referral certification and authorization, respectively. 
                A health plan shall provide the same level of 
                documentation to certify compliance with such 
                transactions as is required to certify compliance with 
                the transactions specified in subparagraph (A).
            ``(2) Documentation of compliance.--A health plan shall 
        provide the Secretary, in such form as the Secretary may 
        require, with adequate documentation of compliance with the 
        standards and operating rules described under paragraph (1). A 
        health plan shall not be considered to have provided adequate

[[Page 124 STAT. 150]]

        documentation and shall not be certified as being in compliance 
        with such standards, unless the health plan--
                    ``(A) demonstrates to the Secretary that the plan 
                conducts the electronic transactions specified in 
                paragraph (1) in a manner that fully complies with the 
                regulations of the Secretary; and
                    ``(B) provides documentation showing that the plan 
                has completed end-to-end testing for such transactions 
                with their partners, such as hospitals and physicians.
            ``(3) Service contracts.--A health plan shall be required to 
        ensure that any entities that provide services pursuant to a 
        contract with such health plan shall comply with any applicable 
        certification and compliance requirements (and provide the 
        Secretary with adequate documentation of such compliance) under 
        this subsection.
            ``(4) Certification by outside entity.--The Secretary may 
        designate independent, outside entities to certify that a health 
        plan has complied with the requirements under this subsection, 
        provided that the certification standards employed by such 
        entities are in accordance with any standards or operating rules 
        issued by the Secretary.
            ``(5) Compliance with revised standards and operating 
        rules.--
                    ``(A) In general.--A <<NOTE: Certification.>> health 
                plan (including entities described under paragraph (3)) 
                shall file a statement with the Secretary, in such form 
                as the Secretary may require, certifying that the data 
                and information systems for such plan are in compliance 
                with any applicable revised standards and associated 
                operating rules under this subsection for any interim 
                final rule promulgated by the Secretary under subsection 
                (i) that--
                          ``(i) amends any standard or operating rule 
                      described under paragraph (1) of this subsection; 
                      or
                          ``(ii) establishes a standard (as described 
                      under subsection (a)(1)(B)) or associated 
                      operating rules (as described under subsection 
                      (i)(5)) for any other financial and administrative 
                      transactions.
                    ``(B) Date of compliance.--A health plan shall 
                comply with such requirements not later than the 
                effective date of the applicable standard or operating 
                rule.
            ``(6) Audits of health plans.--The Secretary shall conduct 
        periodic audits to ensure that health plans (including entities 
        described under paragraph (3)) are in compliance with any 
        standards and operating rules that are described under paragraph 
        (1) or subsection (i)(5).

    ``(i) Review <<NOTE: Deadlines.>> and Amendment of Standards and 
Operating Rules.--
            ``(1) Establishment.--Not later than January 1, 2014, the 
        Secretary shall establish a review committee (as described under 
        paragraph (4)).
            ``(2) Evaluations and reports.--
                    ``(A) Hearings.--Not later than April 1, 2014, and 
                not less than biennially thereafter, the Secretary, 
                acting through the review committee, shall conduct 
                hearings to evaluate and review the adopted standards 
                and operating rules established under this section.

[[Page 124 STAT. 151]]

                    ``(B) Report.--Not later than July 1, 2014, and not 
                less than biennially thereafter, the review committee 
                shall provide recommendations for updating and improving 
                such standards and operating rules. The review committee 
                shall recommend a single set of operating rules per 
                transaction standard and maintain the goal of creating 
                as much uniformity as possible in the implementation of 
                the electronic standards.
            ``(3) Interim final rulemaking.--
                    ``(A) In general.--Any recommendations to amend 
                adopted standards and operating rules that have been 
                approved by the review committee and reported to the 
                Secretary under paragraph (2)(B) shall be adopted by the 
                Secretary through promulgation of an interim final rule 
                not later than 90 days after receipt of the committee's 
                report.
                    ``(B) Public comment.--
                          ``(i) Public comment period.--The Secretary 
                      shall accept and consider public comments on any 
                      interim final rule published under this paragraph 
                      for 60 days after the date of such publication.
                          ``(ii) Effective date.--The effective date of 
                      any amendment to existing standards or operating 
                      rules that is adopted through an interim final 
                      rule published under this paragraph shall be 25 
                      months following the close of such public comment 
                      period.
            ``(4) Review committee.--
                    ``(A) Definition.--For the purposes of this 
                subsection, the term `review committee' means a 
                committee chartered by or within the Department of 
                Health and Human services that has been designated by 
                the Secretary to carry out this subsection, including--
                          ``(i) the National Committee on Vital and 
                      Health Statistics; or
                          ``(ii) any appropriate committee as determined 
                      by the Secretary.
                    ``(B) Coordination of hit standards.--In developing 
                recommendations under this subsection, the review 
                committee shall ensure coordination, as appropriate, 
                with the standards that support the certified electronic 
                health record technology approved by the Office of the 
                National Coordinator for Health Information Technology.
            ``(5) Operating rules for other standards adopted by the 
        secretary.--The Secretary shall adopt a single set of operating 
        rules (pursuant to the process described under subsection (g)) 
        for any transaction for which a standard had been adopted 
        pursuant to subsection (a)(1)(B).

    ``(j) Penalties.--
            ``(1) Penalty fee.--
                    ``(A) In general.--Not <<NOTE: Deadline.>> later 
                than April 1, 2014, and annually thereafter, the 
                Secretary shall assess a penalty fee (as determined 
                under subparagraph (B)) against a health plan that has 
                failed to meet the requirements under subsection (h) 
                with respect to certification and documentation of 
                compliance with--
                          ``(i) the standards and associated operating 
                      rules described under paragraph (1) of such 
                      subsection; and

[[Page 124 STAT. 152]]

                          ``(ii) a standard (as described under 
                      subsection (a)(1)(B)) and associated operating 
                      rules (as described under subsection (i)(5)) for 
                      any other financial and administrative 
                      transactions.
                    ``(B) Fee amount.--Subject to subparagraphs (C), 
                (D), and (E), the Secretary shall assess a penalty fee 
                against a health plan in the amount of $1 per covered 
                life until certification is complete. The penalty shall 
                be assessed per person covered by the plan for which its 
                data systems for major medical policies are not in 
                compliance and shall be imposed against the health plan 
                for each day that the plan is not in compliance with the 
                requirements under subsection (h).
                    ``(C) Additional penalty for misrepresentation.--A 
                health plan that knowingly provides inaccurate or 
                incomplete information in a statement of certification 
                or documentation of compliance under subsection (h) 
                shall be subject to a penalty fee that is double the 
                amount that would otherwise be imposed under this 
                subsection.
                    ``(D) Annual fee increase.--The amount of the 
                penalty fee imposed under this subsection shall be 
                increased on an annual basis by the annual percentage 
                increase in total national health care expenditures, as 
                determined by the Secretary.
                    ``(E) Penalty limit.--A penalty fee assessed against 
                a health plan under this subsection shall not exceed, on 
                an annual basis--
                          ``(i) an amount equal to $20 per covered life 
                      under such plan; or
                          ``(ii) an amount equal to $40 per covered life 
                      under the plan if such plan has knowingly provided 
                      inaccurate or incomplete information (as described 
                      under subparagraph (C)).
                    ``(F) Determination of covered individuals.--The 
                Secretary shall determine the number of covered lives 
                under a health plan based upon the most recent 
                statements and filings that have been submitted by such 
                plan to the Securities and Exchange Commission.
            ``(2) Notice and dispute procedure.--The Secretary shall 
        establish a procedure for assessment of penalty fees under this 
        subsection that provides a health plan with reasonable notice 
        and a dispute resolution procedure prior to provision of a 
        notice of assessment by the Secretary of the Treasury (as 
        described under paragraph (4)(B)).
            ``(3) Penalty fee report.--Not later than May 1, 2014, and 
        annually thereafter, the Secretary shall provide the Secretary 
        of the Treasury with a report identifying those health plans 
        that have been assessed a penalty fee under this subsection.
            ``(4) Collection of penalty fee.--
                    ``(A) In general.--The Secretary of the Treasury, 
                acting through the Financial Management Service, shall 
                administer the collection of penalty fees from health 
                plans that have been identified by the Secretary in the 
                penalty fee report provided under paragraph (3).
                    ``(B) Notice.--Not <<NOTE: Deadline.>> later than 
                August 1, 2014, and annually thereafter, the Secretary 
                of the Treasury shall

[[Page 124 STAT. 153]]

                provide notice to each health plan that has been 
                assessed a penalty fee by the Secretary under this 
                subsection. Such notice shall include the amount of the 
                penalty fee assessed by the Secretary and the due date 
                for payment of such fee to the Secretary of the Treasury 
                (as described in subparagraph (C)).
                    ``(C) Payment due date.--Payment by a health plan 
                for a penalty fee assessed under this subsection shall 
                be made to the Secretary of the Treasury not later than 
                November 1, 2014, and annually thereafter.
                    ``(D) Unpaid penalty fees.--Any amount of a penalty 
                fee assessed against a health plan under this subsection 
                for which payment has not been made by the due date 
                provided under subparagraph (C) shall be--
                          ``(i) increased by the interest accrued on 
                      such amount, as determined pursuant to the 
                      underpayment rate established under section 6621 
                      of the Internal Revenue Code of 1986; and
                          ``(ii) treated as a past-due, legally 
                      enforceable debt owed to a Federal agency for 
                      purposes of section 6402(d) of the Internal 
                      Revenue Code of 1986.
                    ``(E) Administrative fees.--Any fee charged or 
                allocated for collection activities conducted by the 
                Financial Management Service will be passed on to a 
                health plan on a pro-rata basis and added to any penalty 
                fee collected from the plan.''.

    (c) Promulgation <<NOTE: 42 USC 1320d-2 note.>> of Rules.--
            (1) Unique health plan identifier.--The Secretary shall 
        promulgate a final rule to establish a unique health plan 
        identifier (as described in section 1173(b) of the Social 
        Security Act (42 U.S.C. 1320d-2(b))) based on the input of the 
        National Committee on Vital and Health <<NOTE: Effective 
        date.>> Statistics. The Secretary may do so on an interim final 
        basis and such rule shall be effective not later than October 1, 
        2012.
            (2) Electronic funds transfer.--The Secretary shall 
        promulgate a final rule to establish a standard for electronic 
        funds transfers (as described in section 1173(a)(2)(J) of the 
        Social Security Act, as added by subsection 
        (b)(2)(A)). <<NOTE: Deadline. Effective date.>> The Secretary 
        may do so on an interim final basis and shall adopt such 
        standard not later than January 1, 2012, in a manner ensuring 
        that such standard is effective not later than January 1, 2014.
            (3) Health claims attachments.--The Secretary shall 
        promulgate a final rule to establish a transaction standard and 
        a single set of associated operating rules for health claims 
        attachments (as described in section 1173(a)(2)(B) of the Social 
        Security Act (42 U.S.C. 1320d-2(a)(2)(B))) that is consistent 
        with the X12 Version 5010 
        transaction <<NOTE: Deadline. Effective date.>> standards. The 
        Secretary may do so on an interim final basis and shall adopt a 
        transaction standard and a single set of associated operating 
        rules not later than January 1, 2014, in a manner ensuring that 
        such standard is effective not later than January 1, 2016.

    (d) Expansion of Electronic Transactions in Medicare.--Section 
1862(a) of the Social Security Act (42 U.S.C. 1395y(a)) is amended--
            (1) in paragraph (23), by striking the ``or'' at the end;

[[Page 124 STAT. 154]]

            (2) in paragraph (24), by striking the period and inserting 
        ``; or''; and
            (3) by inserting after paragraph (24) the following new 
        paragraph:
            ``(25) not later than January 1, 2014, for which the payment 
        is other than by electronic funds transfer (EFT) or an 
        electronic remittance in a form as specified in ASC X12 835 
        Health Care Payment and Remittance Advice or subsequent 
        standard.''.

SEC. 1105. <<NOTE: 42 USC 1320d note.>> EFFECTIVE DATE.

    This subtitle shall take effect on the date of enactment of this 
Act.

     Subtitle C--Quality Health Insurance Coverage for All Americans

                 PART I--HEALTH INSURANCE MARKET REFORMS

SEC. 1201. AMENDMENT TO THE PUBLIC HEALTH SERVICE ACT.

    Part A of title XXVII of the Public Health Service Act (42 U.S.C. 
300gg et seq.), as amended by section 1001, is further amended--
            (1) by striking the heading for subpart 1 and inserting the 
        following:

                     ``Subpart I--General Reform'';

            (2)(A) in section 2701 (42 U.S.C. 300gg), by striking the 
        section heading and subsection (a) and inserting the following:

``SEC. 2704. PROHIBITION OF PREEXISTING CONDITION EXCLUSIONS OR OTHER 
            DISCRIMINATION BASED ON HEALTH STATUS.

    ``(a) In General.--A group health plan and a health insurance issuer 
offering group or individual health insurance coverage may not impose 
any preexisting condition exclusion with respect to such plan or 
coverage.''; and
            (B) by <<NOTE: 42 USC 300gg-3.>> transferring such section 
        (as amended by subparagraph (A)) so as to appear after the 
        section 2703 added by paragraph (4);
            (3)(A) in <<NOTE: 42 USC 300gg-1, 300gg-4.>> section 2702 
        (42 U.S.C. 300gg-1)--
                    (i) by striking the section heading and all that 
                follows through subsection (a);
                    (ii) in subsection (b)--
                          (I) by striking ``health insurance issuer 
                      offering health insurance coverage in connection 
                      with a group health plan'' each place that such 
                      appears and inserting ``health insurance issuer 
                      offering group or individual health insurance 
                      coverage''; and
                          (II) in paragraph (2)(A)--
                                    (aa) by inserting ``or individual'' 
                                after ``employer''; and
                                    (bb) by inserting ``or individual 
                                health coverage, as the case may be'' 
                                before the semicolon; and
                    (iii) in subsection (e)--

[[Page 124 STAT. 155]]

                          (I) by striking ``(a)(1)(F)'' and inserting 
                      ``(a)(6)'';
                          (II) by striking ``2701'' and inserting 
                      ``2704''; and
                          (III) by striking ``2721(a)'' and inserting 
                      ``2735(a)''; and
                    (B) by transferring such section (as amended by 
                subparagraph (A)) to appear after section 2705(a) as 
                added by paragraph (4); and
            (4) by inserting after the subpart heading (as added by 
        paragraph (1)) the following:

``SEC. 2701. FAIR <<NOTE: 42 USC 300gg.>> HEALTH INSURANCE PREMIUMS.

    ``(a) Prohibiting Discriminatory Premium Rates.--
            ``(1) In general.--With respect to the premium rate charged 
        by a health insurance issuer for health insurance coverage 
        offered in the individual or small group market--
                    ``(A) such rate shall vary with respect to the 
                particular plan or coverage involved only by--
                          ``(i) whether such plan or coverage covers an 
                      individual or family;
                          ``(ii) rating area, as established in 
                      accordance with paragraph (2);
                          ``(iii) age, except that such rate shall not 
                      vary by more than 3 to 1 for adults (consistent 
                      with section 2707(c)); and
                          ``(iv) tobacco use, except that such rate 
                      shall not vary by more than 1.5 to 1; and
                    ``(B) such rate shall not vary with respect to the 
                particular plan or coverage involved by any other factor 
                not described in subparagraph (A).
            ``(2) Rating area.--
                    ``(A) In general.--Each State shall establish 1 or 
                more rating areas within that State for purposes of 
                applying the requirements of this title.
                    ``(B) Secretarial review.--The Secretary shall 
                review the rating areas established by each State under 
                subparagraph (A) to ensure the adequacy of such areas 
                for purposes of carrying out the requirements of this 
                title. If the Secretary determines a State's rating 
                areas are not adequate, or that a State does not 
                establish such areas, the Secretary may establish rating 
                areas for that State.
            ``(3) Permissible <<NOTE: Definition.>> age bands.--The 
        Secretary, in consultation with the National Association of 
        Insurance Commissioners, shall define the permissible age bands 
        for rating purposes under paragraph (1)(A)(iii).
            ``(4) Application of variations based on age or tobacco 
        use.--With respect to family coverage under a group health plan 
        or health insurance coverage, the rating variations permitted 
        under clauses (iii) and (iv) of paragraph (1)(A) shall be 
        applied based on the portion of the premium that is attributable 
        to each family member covered under the plan or coverage.
            ``(5) Special rule for large group market.--If a State 
        permits health insurance issuers that offer coverage in the 
        large group market in the State to offer such coverage through 
        the State Exchange (as provided for under section 1312(f)(2)(B)

[[Page 124 STAT. 156]]

        of the Patient Protection and Affordable Care Act), the 
        provisions of this subsection shall apply to all coverage 
        offered in such market in the State.

``SEC. 2702. GUARANTEED <<NOTE: 42 USC 300gg-1.>> AVAILABILITY OF 
            COVERAGE.

    ``(a) Guaranteed Issuance of Coverage in the Individual and Group 
Market.--Subject to subsections (b) through (e), each health insurance 
issuer that offers health insurance coverage in the individual or group 
market in a State must accept every employer and individual in the State 
that applies for such coverage.
    ``(b) Enrollment.--
            ``(1) Restriction.--A health insurance issuer described in 
        subsection (a) may restrict enrollment in coverage described in 
        such subsection to open or special enrollment periods.
            ``(2) Establishment.--A health insurance issuer described in 
        subsection (a) shall, in accordance with the regulations 
        promulgated under paragraph (3), establish special enrollment 
        periods for qualifying events (under section 603 of the Employee 
        Retirement Income Security Act of 1974).
            ``(3) Regulations.--The Secretary shall promulgate 
        regulations with respect to enrollment periods under paragraphs 
        (1) and (2).

``SEC. 2703. GUARANTEED <<NOTE: 42 USC 300gg-2.>> RENEWABILITY OF 
            COVERAGE.

    ``(a) In General.--Except as provided in this section, if a health 
insurance issuer offers health insurance coverage in the individual or 
group market, the issuer must renew or continue in force such coverage 
at the option of the plan sponsor or the individual, as applicable.

``SEC. 2705. PROHIBITING <<NOTE: 42 USC 300gg-4.>> DISCRIMINATION 
            AGAINST INDIVIDUAL PARTICIPANTS AND BENEFICIARIES BASED ON 
            HEALTH STATUS.

    ``(a) In General.--A group health plan and a health insurance issuer 
offering group or individual health insurance coverage may not establish 
rules for eligibility (including continued eligibility) of any 
individual to enroll under the terms of the plan or coverage based on 
any of the following health status-related factors in relation to the 
individual or a dependent of the individual:
            ``(1) Health status.
            ``(2) Medical condition (including both physical and mental 
        illnesses).
            ``(3) Claims experience.
            ``(4) Receipt of health care.
            ``(5) Medical history.
            ``(6) Genetic information.
            ``(7) Evidence of insurability (including conditions arising 
        out of acts of domestic violence).
            ``(8) Disability.
            ``(9) Any other health status-related factor determined 
        appropriate by the Secretary.

    ``(j) Programs of Health Promotion or Disease Prevention.--
            ``(1) General provisions.--
                    ``(A) General rule.--For purposes of subsection 
                (b)(2)(B), a program of health promotion or disease 
                prevention (referred to in this subsection as a 
                `wellness program') shall be a program offered by an 
                employer that is designed

[[Page 124 STAT. 157]]

                to promote health or prevent disease that meets the 
                applicable requirements of this subsection.
                    ``(B) No conditions based on health status factor.--
                If none of the conditions for obtaining a premium 
                discount or rebate or other reward for participation in 
                a wellness program is based on an individual satisfying 
                a standard that is related to a health status factor, 
                such wellness program shall not violate this section if 
                participation in the program is made available to all 
                similarly situated individuals and the requirements of 
                paragraph (2) are complied with.
                    ``(C) Conditions based on health status factor.--If 
                any of the conditions for obtaining a premium discount 
                or rebate or other reward for participation in a 
                wellness program is based on an individual satisfying a 
                standard that is related to a health status factor, such 
                wellness program shall not violate this section if the 
                requirements of paragraph (3) are complied with.
            ``(2) Wellness programs not subject to requirements.--If 
        none of the conditions for obtaining a premium discount or 
        rebate or other reward under a wellness program as described in 
        paragraph (1)(B) are based on an individual satisfying a 
        standard that is related to a health status factor (or if such a 
        wellness program does not provide such a reward), the wellness 
        program shall not violate this section if participation in the 
        program is made available to all similarly situated individuals. 
        The following programs shall not have to comply with the 
        requirements of paragraph (3) if participation in the program is 
        made available to all similarly situated individuals:
                    ``(A) A program that reimburses all or part of the 
                cost for memberships in a fitness center.
                    ``(B) A diagnostic testing program that provides a 
                reward for participation and does not base any part of 
                the reward on outcomes.
                    ``(C) A program that encourages preventive care 
                related to a health condition through the waiver of the 
                copayment or deductible requirement under group health 
                plan for the costs of certain items or services related 
                to a health condition (such as prenatal care or well-
                baby visits).
                    ``(D) A program that reimburses individuals for the 
                costs of smoking cessation programs without regard to 
                whether the individual quits smoking.
                    ``(E) A program that provides a reward to 
                individuals for attending a periodic health education 
                seminar.
            ``(3) Wellness programs subject to requirements.--If any of 
        the conditions for obtaining a premium discount, rebate, or 
        reward under a wellness program as described in paragraph (1)(C) 
        is based on an individual satisfying a standard that is related 
        to a health status factor, the wellness program shall not 
        violate this section if the following requirements are complied 
        with:
                    ``(A) The reward for the wellness program, together 
                with the reward for other wellness programs with respect 
                to the plan that requires satisfaction of a standard 
                related to a health status factor, shall not exceed 30 
                percent of the cost of employee-only coverage under the 
                plan. If, in

[[Page 124 STAT. 158]]

                addition to employees or individuals, any class of 
                dependents (such as spouses or spouses and dependent 
                children) may participate fully in the wellness program, 
                such reward shall not exceed 30 percent of the cost of 
                the coverage in which an employee or individual and any 
                dependents are enrolled. For purposes of this paragraph, 
                the cost of coverage shall be determined based on the 
                total amount of employer and employee contributions for 
                the benefit package under which the employee is (or the 
                employee and any dependents are) receiving coverage. A 
                reward may be in the form of a discount or rebate of a 
                premium or contribution, a waiver of all or part of a 
                cost-sharing mechanism (such as deductibles, copayments, 
                or coinsurance), the absence of a surcharge, or the 
                value of a benefit that would otherwise not be provided 
                under the plan. The Secretaries of Labor, Health and 
                Human Services, and the Treasury may increase the reward 
                available under this subparagraph to up to 50 percent of 
                the cost of coverage if the Secretaries determine that 
                such an increase is appropriate.
                    ``(B) The wellness program shall be reasonably 
                designed to promote health or prevent disease. A program 
                complies with the preceding sentence if the program has 
                a reasonable chance of improving the health of, or 
                preventing disease in, participating individuals and it 
                is not overly burdensome, is not a subterfuge for 
                discriminating based on a health status factor, and is 
                not highly suspect in the method chosen to promote 
                health or prevent disease.
                    ``(C) The plan shall give individuals eligible for 
                the program the opportunity to qualify for the reward 
                under the program at least once each year.
                    ``(D) The full reward under the wellness program 
                shall be made available to all similarly situated 
                individuals. For such purpose, among other things:
                          ``(i) The reward is not available to all 
                      similarly situated individuals for a period unless 
                      the wellness program allows--
                                    ``(I) for a reasonable alternative 
                                standard (or waiver of the otherwise 
                                applicable standard) for obtaining the 
                                reward for any individual for whom, for 
                                that period, it is unreasonably 
                                difficult due to a medical condition to 
                                satisfy the otherwise applicable 
                                standard; and
                                    ``(II) for a reasonable alternative 
                                standard (or waiver of the otherwise 
                                applicable standard) for obtaining the 
                                reward for any individual for whom, for 
                                that period, it is medically inadvisable 
                                to attempt to satisfy the otherwise 
                                applicable standard.
                          ``(ii) If reasonable under the circumstances, 
                      the plan or issuer may seek verification, such as 
                      a statement from an individual's physician, that a 
                      health status factor makes it unreasonably 
                      difficult or medically inadvisable for the 
                      individual to satisfy or attempt to satisfy the 
                      otherwise applicable standard.

[[Page 124 STAT. 159]]

                    ``(E) The plan or issuer involved shall disclose in 
                all plan materials describing the terms of the wellness 
                program the availability of a reasonable alternative 
                standard (or the possibility of waiver of the otherwise 
                applicable standard) required under subparagraph (D). If 
                plan materials disclose that such a program is 
                available, without describing its terms, the disclosure 
                under this subparagraph shall not be required.

    ``(k) Existing Programs.--Nothing in this section shall prohibit a 
program of health promotion or disease prevention that was established 
prior to the date of enactment of this section and applied with all 
applicable regulations, and that is operating on such date, from 
continuing to be carried out for as long as such regulations remain in 
effect.
    ``(l) Wellness Program Demonstration Project.--
            ``(1) In general.--Not <<NOTE: Deadline.>> later than July 
        1, 2014, the Secretary, in consultation with the Secretary of 
        the Treasury and the Secretary of Labor, shall establish a 10-
        State demonstration project under which participating States 
        shall apply the provisions of subsection (j) to programs of 
        health promotion offered by a health insurance issuer that 
        offers health insurance coverage in the individual market in 
        such State.
            ``(2) Expansion of demonstration <<NOTE: Expansion 
        date.>> project.--If the Secretary, in consultation with the 
        Secretary of the Treasury and the Secretary of Labor, determines 
        that the demonstration project described in paragraph (1) is 
        effective, such Secretaries may, beginning on July 1, 2017 
        expand such demonstration project to include additional 
        participating States.
            ``(3) Requirements.--
                    ``(A) Maintenance of coverage.--The Secretary, in 
                consultation with the Secretary of the Treasury and the 
                Secretary of Labor, shall not approve the participation 
                of a State in the demonstration project under this 
                section unless the Secretaries determine that the 
                State's project is designed in a manner that--
                          ``(i) will not result in any decrease in 
                      coverage; and
                          ``(ii) will not increase the cost to the 
                      Federal Government in providing credits under 
                      section 36B of the Internal Revenue Code of 1986 
                      or cost-sharing assistance under section 1402 of 
                      the Patient Protection and Affordable Care Act.
                    ``(B) Other requirements.--States that participate 
                in the demonstration project under this subsection--
                          ``(i) may permit premium discounts or rebates 
                      or the modification of otherwise applicable 
                      copayments or deductibles for adherence to, or 
                      participation in, a reasonably designed program of 
                      health promotion and disease prevention;
                          ``(ii) shall ensure that requirements of 
                      consumer protection are met in programs of health 
                      promotion in the individual market;
                          ``(iii) shall require verification from health 
                      insurance issuers that offer health insurance 
                      coverage in the individual market of such State 
                      that premium discounts--

[[Page 124 STAT. 160]]

                                    ``(I) do not create undue burdens 
                                for individuals insured in the 
                                individual market;
                                    ``(II) do not lead to cost shifting; 
                                and
                                    ``(III) are not a subterfuge for 
                                discrimination;
                          ``(iv) shall ensure that consumer data is 
                      protected in accordance with the requirements of 
                      section 264(c) of the Health Insurance Portability 
                      and Accountability Act of 1996 (42 U.S.C. 1320d-2 
                      note); and
                          ``(v) shall ensure and demonstrate to the 
                      satisfaction of the Secretary that the discounts 
                      or other rewards provided under the project 
                      reflect the expected level of participation in the 
                      wellness program involved and the anticipated 
                      effect the program will have on utilization or 
                      medical claim costs.

    ``(m) Report.--
            ``(1) In general.--Not later than 3 years after the date of 
        enactment of the Patient Protection and Affordable Care Act, the 
        Secretary, in consultation with the Secretary of the Treasury 
        and the Secretary of Labor, shall submit a report to the 
        appropriate committees of Congress concerning--
                    ``(A) the effectiveness of wellness programs (as 
                defined in subsection (j)) in promoting health and 
                preventing disease;
                    ``(B) the impact of such wellness programs on the 
                access to care and affordability of coverage for 
                participants and non-participants of such programs;
                    ``(C) the impact of premium-based and cost-sharing 
                incentives on participant behavior and the role of such 
                programs in changing behavior; and
                    ``(D) the effectiveness of different types of 
                rewards.
            ``(2) Data collection.--In preparing the report described in 
        paragraph (1), the Secretaries shall gather relevant information 
        from employers who provide employees with access to wellness 
        programs, including State and Federal agencies.

    ``(n) Regulations.--Nothing in this section shall be construed as 
prohibiting the Secretaries of Labor, Health and Human Services, or the 
Treasury from promulgating regulations in connection with this section.

``SEC. 2706. NON-DISCRIMINATION <<NOTE: 42 USC 300gg-5.>> IN HEALTH 
            CARE.

    ``(a) Providers.--A group health plan and a health insurance issuer 
offering group or individual health insurance coverage shall not 
discriminate with respect to participation under the plan or coverage 
against any health care provider who is acting within the scope of that 
provider's license or certification under applicable State law. This 
section shall not require that a group health plan or health insurance 
issuer contract with any health care provider willing to abide by the 
terms and conditions for participation established by the plan or 
issuer. Nothing in this section shall be construed as preventing a group 
health plan, a health insurance issuer, or the Secretary from 
establishing varying reimbursement rates based on quality or performance 
measures.
    ``(b) Individuals.--The <<NOTE: Applicability.>> provisions of 
section 1558 of the Patient Protection and Affordable Care Act (relating 
to non-discrimination) shall apply with respect to a group health plan 
or health insurance issuer offering group or individual health insurance 
coverage.

[[Page 124 STAT. 161]]

``SEC. 2707. COMPREHENSIVE <<NOTE: 42 USC 300gg-6.>> HEALTH INSURANCE 
            COVERAGE.

    ``(a) Coverage for Essential Health Benefits Package.--A health 
insurance issuer that offers health insurance coverage in the individual 
or small group market shall ensure that such coverage includes the 
essential health benefits package required under section 1302(a) of the 
Patient Protection and Affordable Care Act.
    ``(b) Cost-sharing Under Group Health Plans.--A group health plan 
shall ensure that any annual cost-sharing imposed under the plan does 
not exceed the limitations provided for under paragraphs (1) and (2) of 
section 1302(c).
    ``(c) Child-only Plans.--If a health insurance issuer offers health 
insurance coverage in any level of coverage specified under section 
1302(d) of the Patient Protection and Affordable Care Act, the issuer 
shall also offer such coverage in that level as a plan in which the only 
enrollees are individuals who, as of the beginning of a plan year, have 
not attained the age of 21.
    ``(d) Dental Only.--This section shall not apply to a plan described 
in section 1302(d)(2)(B)(ii)(I).

``SEC. 2708. PROHIBITION <<NOTE: 42 USC 300gg-7.>> ON EXCESSIVE WAITING 
            PERIODS.

    ``A group health plan and a health insurance issuer offering group 
or individual health insurance coverage shall not apply any waiting 
period (as defined in section 2704(b)(4)) that exceeds 90 days.''.

                        PART II--OTHER PROVISIONS

SEC. 1251. PRESERVATION <<NOTE: 42 USC 18011.>> OF RIGHT TO MAINTAIN 
            EXISTING COVERAGE.

    (a) No Changes to Existing Coverage.--
            (1) In general.--Nothing in this Act (or an amendment made 
        by this Act) shall be construed to require that an individual 
        terminate coverage under a group health plan or health insurance 
        coverage in which such individual was enrolled on the date of 
        enactment of this Act.
            (2) Continuation of coverage.--With respect to a group 
        health plan or health insurance coverage in which an individual 
        was enrolled on the date of enactment of this Act, this subtitle 
        and subtitle A (and the amendments made by such subtitles) shall 
        not apply to such plan or coverage, regardless of whether the 
        individual renews such coverage after such date of enactment.

    (b) Allowance for Family Members To Join Current Coverage.--With 
respect to a group health plan or health insurance coverage in which an 
individual was enrolled on the date of enactment of this Act and which 
is renewed after such date, family members of such individual shall be 
permitted to enroll in such plan or coverage if such enrollment is 
permitted under the terms of the plan in effect as of such date of 
enactment.
    (c) Allowance for New Employees To Join Current Plan.--A group 
health plan that provides coverage on the date of enactment of this Act 
may provide for the enrolling of new employees (and their families) in 
such plan, and this subtitle and subtitle A (and the amendments made by 
such subtitles) shall not apply with respect to such plan and such new 
employees (and their families).

[[Page 124 STAT. 162]]

    (d) Effect on Collective Bargaining Agreements.--In the case of 
health insurance coverage maintained pursuant to one or more collective 
bargaining agreements between employee representatives and one or more 
employers that was ratified before the date of enactment of this Act, 
the provisions of this subtitle and subtitle A (and the amendments made 
by such subtitles) shall not apply until the date on which the last of 
the collective bargaining agreements relating to the coverage 
terminates. Any coverage amendment made pursuant to a collective 
bargaining agreement relating to the coverage which amends the coverage 
solely to conform to any requirement added by this subtitle or subtitle 
A (or amendments) shall not be treated as a termination of such 
collective bargaining agreement.
    (e) Definition.--In this title, the term ``grandfathered health 
plan'' means any group health plan or health insurance coverage to which 
this section applies.

SEC. 1252. RATING REFORMS <<NOTE: 42 USC 18012.>> MUST APPLY UNIFORMLY 
            TO ALL HEALTH INSURANCE ISSUERS AND GROUP HEALTH PLANS.

    Any standard or requirement adopted by a State pursuant to this 
title, or any amendment made by this title, shall be applied uniformly 
to all health plans in each insurance market to which the standard and 
requirements apply. The preceding sentence shall also apply to a State 
standard or requirement relating to the standard or requirement required 
by this title (or any such amendment) that is not the same as the 
standard or requirement but that is not preempted under section 1321(d).

SEC. 1253. <<NOTE: 42 USC 300gg note.>> EFFECTIVE DATES.

    This subtitle (and the amendments made by this subtitle) shall 
become effective for plan years beginning on or after January 1, 2014.

        Subtitle D--Available Coverage Choices for All Americans

             PART I--ESTABLISHMENT OF QUALIFIED HEALTH PLANS

SEC. 1301. QUALIFIED <<NOTE: 42 USC 18021.>> HEALTH PLAN DEFINED.

    (a) Qualified Health Plan.--In this title:
            (1) In general.--The term ``qualified health plan'' means a 
        health plan that--
                    (A) has in effect a certification (which may include 
                a seal or other indication of approval) that such plan 
                meets the criteria for certification described in 
                section 1311(c) issued or recognized by each Exchange 
                through which such plan is offered;
                    (B) provides the essential health benefits package 
                described in section 1302(a); and
                    (C) is offered by a health insurance issuer that--
                          (i) is licensed and in good standing to offer 
                      health insurance coverage in each State in which 
                      such issuer offers health insurance coverage under 
                      this title;

[[Page 124 STAT. 163]]

                          (ii) agrees to offer at least one qualified 
                      health plan in the silver level and at least one 
                      plan in the gold level in each such Exchange;
                          (iii) agrees to charge the same premium rate 
                      for each qualified health plan of the issuer 
                      without regard to whether the plan is offered 
                      through an Exchange or whether the plan is offered 
                      directly from the issuer or through an agent; and
                          (iv) complies with the regulations developed 
                      by the Secretary under section 1311(d) and such 
                      other requirements as an applicable Exchange may 
                      establish.
            (2) Inclusion of co-op plans and community health insurance 
        option.--Any reference in this title to a qualified health plan 
        shall be deemed to include a qualified health plan offered 
        through the CO-OP program under section 1322 or a community 
        health insurance option under section 1323, unless specifically 
        provided for otherwise.

    (b) Terms Relating to Health Plans.--In this title:
            (1) Health plan.--
                    (A) In general.--The term ``health plan'' means 
                health insurance coverage and a group health plan.
                    (B) Exception for self-insured plans and mewas.--
                Except to the extent specifically provided by this 
                title, the term ``health plan'' shall not include a 
                group health plan or multiple employer welfare 
                arrangement to the extent the plan or arrangement is not 
                subject to State insurance regulation under section 514 
                of the Employee Retirement Income Security Act of 1974.
            (2) Health insurance coverage and issuer.--The terms 
        ``health insurance coverage'' and ``health insurance issuer'' 
        have the meanings given such terms by section 2791(b) of the 
        Public Health Service Act.
            (3) Group health plan.--The term ``group health plan'' has 
        the meaning given such term by section 2791(a) of the Public 
        Health Service Act.

SEC. 1302. ESSENTIAL <<NOTE: 42 USC 18022.>> HEALTH BENEFITS 
            REQUIREMENTS.

    (a) Essential Health Benefits Package.--In this title, the term 
``essential health benefits package'' means, with respect to any health 
plan, coverage that--
            (1) provides for the essential health benefits defined by 
        the Secretary under subsection (b);
            (2) limits cost-sharing for such coverage in accordance with 
        subsection (c); and
            (3) subject to subsection (e), provides either the bronze, 
        silver, gold, or platinum level of coverage described in 
        subsection (d).

    (b) Essential Health Benefits.--
            (1) In general.--Subject to paragraph (2), the Secretary 
        shall define the essential health benefits, except that such 
        benefits shall include at least the following general categories 
        and the items and services covered within the categories:
                    (A) Ambulatory patient services.
                    (B) Emergency services.
                    (C) Hospitalization.
                    (D) Maternity and newborn care.

[[Page 124 STAT. 164]]

                    (E) Mental health and substance use disorder 
                services, including behavioral health treatment.
                    (F) Prescription drugs.
                    (G) Rehabilitative and habilitative services and 
                devices.
                    (H) Laboratory services.
                    (I) Preventive and wellness services and chronic 
                disease management.
                    (J) Pediatric services, including oral and vision 
                care.
            (2) Limitation.--
                    (A) In general.--
                The <<NOTE: Determination.>> Secretary shall ensure that 
                the scope of the essential health benefits under 
                paragraph (1) is equal to the scope of benefits provided 
                under a typical employer plan, as determined by the 
                Secretary. To <<NOTE: Survey. Reports.>> inform this 
                determination, the Secretary of Labor shall conduct a 
                survey of employer-sponsored coverage to determine the 
                benefits typically covered by employers, including 
                multiemployer plans, and provide a report on such survey 
                to the Secretary.
                    (B) Certification.--In <<NOTE: Reports.>> defining 
                the essential health benefits described in paragraph 
                (1), and in revising the benefits under paragraph 
                (4)(H), the Secretary shall submit a report to the 
                appropriate committees of Congress containing a 
                certification from the Chief Actuary of the Centers for 
                Medicare & Medicaid Services that such essential health 
                benefits meet the limitation described in paragraph (2).
            (3) Notice and hearing.--In defining the essential health 
        benefits described in paragraph (1), and in revising the 
        benefits under paragraph (4)(H), the Secretary shall provide 
        notice and an opportunity for public comment.
            (4) Required elements for consideration.--In defining the 
        essential health benefits under paragraph (1), the Secretary 
        shall--
                    (A) ensure that such essential health benefits 
                reflect an appropriate balance among the categories 
                described in such subsection, so that benefits are not 
                unduly weighted toward any category;
                    (B) not make coverage decisions, determine 
                reimbursement rates, establish incentive programs, or 
                design benefits in ways that discriminate against 
                individuals because of their age, disability, or 
                expected length of life;
                    (C) take into account the health care needs of 
                diverse segments of the population, including women, 
                children, persons with disabilities, and other groups;
                    (D) ensure that health benefits established as 
                essential not be subject to denial to individuals 
                against their wishes on the basis of the individuals' 
                age or expected length of life or of the individuals' 
                present or predicted disability, degree of medical 
                dependency, or quality of life;
                    (E) provide that a qualified health plan shall not 
                be treated as providing coverage for the essential 
                health benefits described in paragraph (1) unless the 
                plan provides that--
                          (i) coverage for emergency department services 
                      will be provided without imposing any requirement 
                      under the plan for prior authorization of services 
                      or any limitation on coverage where the provider 
                      of services does not have a contractual 
                      relationship with the plan

[[Page 124 STAT. 165]]

                      for the providing of services that is more 
                      restrictive than the requirements or limitations 
                      that apply to emergency department services 
                      received from providers who do have such a 
                      contractual relationship with the plan; and
                          (ii) if such services are provided out-of-
                      network, the cost-sharing requirement (expressed 
                      as a copayment amount or coinsurance rate) is the 
                      same requirement that would apply if such services 
                      were provided in-network;
                    (F) provide that if a plan described in section 
                1311(b)(2)(B)(ii) (relating to stand-alone dental 
                benefits plans) is offered through an Exchange, another 
                health plan offered through such Exchange shall not fail 
                to be treated as a qualified health plan solely because 
                the plan does not offer coverage of benefits offered 
                through the stand-alone plan that are otherwise required 
                under paragraph (1)(J); and
                    (G) periodically review the essential health 
                benefits under paragraph (1), and provide a report to 
                Congress and the public that contains--
                          (i) an assessment of whether enrollees are 
                      facing any difficulty accessing needed services 
                      for reasons of coverage or cost;
                          (ii) an assessment of whether the essential 
                      health benefits needs to be modified or updated to 
                      account for changes in medical evidence or 
                      scientific advancement;
                          (iii) information on how the essential health 
                      benefits will be modified to address any such gaps 
                      in access or changes in the evidence base;
                          (iv) an assessment of the potential of 
                      additional or expanded benefits to increase costs 
                      and the interactions between the addition or 
                      expansion of benefits and reductions in existing 
                      benefits to meet actuarial limitations described 
                      in paragraph (2); and
                    (H) periodically update the essential health 
                benefits under paragraph (1) to address any gaps in 
                access to coverage or changes in the evidence base the 
                Secretary identifies in the review conducted under 
                subparagraph (G).
            (5) Rule of construction.--Nothing in this title shall be 
        construed to prohibit a health plan from providing benefits in 
        excess of the essential health benefits described in this 
        subsection.

    (c) Requirements Relating to Cost-Sharing.--
            (1) Annual limitation on cost-sharing.--
                    (A) 2014.--The cost-sharing incurred under a health 
                plan with respect to self-only coverage or coverage 
                other than self-only coverage for a plan year beginning 
                in 2014 shall not exceed the dollar amounts in effect 
                under section 223(c)(2)(A)(ii) of the Internal Revenue 
                Code of 1986 for self-only and family coverage, 
                respectively, for taxable years beginning in 2014.
                    (B) 2015 and later.--In the case of any plan year 
                beginning in a calendar year after 2014, the limitation 
                under this paragraph shall--

[[Page 124 STAT. 166]]

                          (i) in the case of self-only coverage, be 
                      equal to the dollar amount under subparagraph (A) 
                      for self-only coverage for plan years beginning in 
                      2014, increased by an amount equal to the product 
                      of that amount and the premium adjustment 
                      percentage under paragraph (4) for the calendar 
                      year; and
                          (ii) in the case of other coverage, twice the 
                      amount in effect under clause (i).
                If the amount of any increase under clause (i) is not a 
                multiple of $50, such increase shall be rounded to the 
                next lowest multiple of $50.
            (2) Annual limitation on deductibles for employer-sponsored 
        plans.--
                    (A) In general.--In the case of a health plan 
                offered in the small group market, the deductible under 
                the plan shall not exceed--
                          (i) $2,000 in the case of a plan covering a 
                      single individual; and
                          (ii) $4,000 in the case of any other plan.
                The amounts under clauses (i) and (ii) may be increased 
                by the maximum amount of reimbursement which is 
                reasonably available to a participant under a flexible 
                spending arrangement described in section 106(c)(2) of 
                the Internal Revenue Code of 1986 (determined without 
                regard to any salary reduction arrangement).
                    (B) Indexing of limits.--In the case of any plan 
                year beginning in a calendar year after 2014--
                          (i) the dollar amount under subparagraph 
                      (A)(i) shall be increased by an amount equal to 
                      the product of that amount and the premium 
                      adjustment percentage under paragraph (4) for the 
                      calendar year; and
                          (ii) the dollar amount under subparagraph 
                      (A)(ii) shall be increased to an amount equal to 
                      twice the amount in effect under subparagraph 
                      (A)(i) for plan years beginning in the calendar 
                      year, determined after application of clause (i).
                If the amount of any increase under clause (i) is not a 
                multiple of $50, such increase shall be rounded to the 
                next lowest multiple of $50.
                    (C) Actuarial value.--The limitation under this 
                paragraph shall be applied in such a manner so as to not 
                affect the actuarial value of any health plan, including 
                a plan in the bronze level.
                    (D) Coordination with preventive limits.--Nothing in 
                this paragraph shall be construed to allow a plan to 
                have a deductible under the plan apply to benefits 
                described in section 2713 of the Public Health Service 
                Act.
            (3) Cost-sharing.--In this title--
                    (A) In general.--The term ``cost-sharing'' 
                includes--
                          (i) deductibles, coinsurance, copayments, or 
                      similar charges; and
                          (ii) any other expenditure required of an 
                      insured individual which is a qualified medical 
                      expense (within the meaning of section 223(d)(2) 
                      of the Internal Revenue Code of 1986) with respect 
                      to essential health benefits covered under the 
                      plan.

[[Page 124 STAT. 167]]

                    (B) Exceptions.--Such term does not include 
                premiums, balance billing amounts for non-network 
                providers, or spending for non-covered services.
            (4) Premium <<NOTE: Determination. Deadline.>> adjustment 
        percentage.--For purposes of paragraphs (1)(B)(i) and (2)(B)(i), 
        the premium adjustment percentage for any calendar year is the 
        percentage (if any) by which the average per capita premium for 
        health insurance coverage in the United States for the preceding 
        calendar year (as estimated by the Secretary no later than 
        October 1 of such preceding calendar year) exceeds such average 
        per capita premium for 2013 (as determined by the Secretary).

    (d) Levels of Coverage.--
            (1) Levels of coverage defined.--The levels of coverage 
        described in this subsection are as follows:
                    (A) Bronze level.--A plan in the bronze level shall 
                provide a level of coverage that is designed to provide 
                benefits that are actuarially equivalent to 60 percent 
                of the full actuarial value of the benefits provided 
                under the plan.
                    (B) Silver level.--A plan in the silver level shall 
                provide a level of coverage that is designed to provide 
                benefits that are actuarially equivalent to 70 percent 
                of the full actuarial value of the benefits provided 
                under the plan.
                    (C) Gold level.--A plan in the gold level shall 
                provide a level of coverage that is designed to provide 
                benefits that are actuarially equivalent to 80 percent 
                of the full actuarial value of the benefits provided 
                under the plan.
                    (D) Platinum level.--A plan in the platinum level 
                shall provide a level of coverage that is designed to 
                provide benefits that are actuarially equivalent to 90 
                percent of the full actuarial value of the benefits 
                provided under the plan.
            (2) Actuarial value.--
                    (A) In general.--Under regulations issued by the 
                Secretary, the level of coverage of a plan shall be 
                determined on the basis that the essential health 
                benefits described in subsection (b) shall be provided 
                to a standard population (and without regard to the 
                population the plan may actually provide benefits to).
                    (B) Employer contributions.--The Secretary may issue 
                regulations under which employer contributions to a 
                health savings account (within the meaning of section 
                223 of the Internal Revenue Code of 1986) may be taken 
                into account in determining the level of coverage for a 
                plan of the employer.
                    (C) Application.--In determining under this title, 
                the Public Health Service Act, or the Internal Revenue 
                Code of 1986 the percentage of the total allowed costs 
                of benefits provided under a group health plan or health 
                insurance coverage that are provided by such plan or 
                coverage, the rules contained in the regulations under 
                this paragraph shall apply.
            (3) Allowable variance.-- <<NOTE: Guidelines.>> The 
        Secretary shall develop guidelines to provide for a de minimis 
        variation in the actuarial valuations used in determining the 
        level of coverage of a plan to account for differences in 
        actuarial estimates.

[[Page 124 STAT. 168]]

            (4) Plan reference.--In this title, any reference to a 
        bronze, silver, gold, or platinum plan shall be treated as a 
        reference to a qualified health plan providing a bronze, silver, 
        gold, or platinum level of coverage, as the case may be.

    (e) Catastrophic Plan.--
            (1) In general.--A health plan not providing a bronze, 
        silver, gold, or platinum level of coverage shall be treated as 
        meeting the requirements of subsection (d) with respect to any 
        plan year if--
                    (A) the only individuals who are eligible to enroll 
                in the plan are individuals described in paragraph (2); 
                and
                    (B) the plan provides--
                          (i) except as provided in clause (ii), the 
                      essential health benefits determined under 
                      subsection (b), except that the plan provides no 
                      benefits for any plan year until the individual 
                      has incurred cost-sharing expenses in an amount 
                      equal to the annual limitation in effect under 
                      subsection (c)(1) for the plan year (except as 
                      provided for in section 2713); and
                          (ii) coverage for at least three primary care 
                      visits.
            (2) Individuals eligible for enrollment.--An individual is 
        described in this paragraph for any plan year if the 
        individual--
                    (A) has not attained the age of 30 before the 
                beginning of the plan year; or
                    (B) has a certification in effect for any plan year 
                under this title that the individual is exempt from the 
                requirement under section 5000A of the Internal Revenue 
                Code of 1986 by reason of--
                          (i) section 5000A(e)(1) of such Code (relating 
                      to individuals without affordable coverage); or
                          (ii) section 5000A(e)(5) of such Code 
                      (relating to individuals with hardships).
            (3) Restriction to individual market.--If a health insurance 
        issuer offers a health plan described in this subsection, the 
        issuer may only offer the plan in the individual market.

    (f) Child-only Plans.--If a qualified health plan is offered through 
the Exchange in any level of coverage specified under subsection (d), 
the issuer shall also offer that plan through the Exchange in that level 
as a plan in which the only enrollees are individuals who, as of the 
beginning of a plan year, have not attained the age of 21, and such plan 
shall be treated as a qualified health plan.

SEC. 1303. <<NOTE: 42 USC 18023.>> SPECIAL RULES.

    (a) Special Rules Relating to Coverage of Abortion Services.--
            (1) Voluntary choice of coverage of abortion services.--
                    (A) In general.--Notwithstanding any other provision 
                of this title (or any amendment made by this title), and 
                subject to subparagraphs (C) and (D)--
                          (i) nothing in this title (or any amendment 
                      made by this title), shall be construed to require 
                      a qualified health plan to provide coverage of 
                      services described in subparagraph (B)(i) or 
                      (B)(ii) as part of its essential health benefits 
                      for any plan year; and

[[Page 124 STAT. 169]]

                          (ii) <<NOTE: Determination.>> the issuer of a 
                      qualified health plan shall determine whether or 
                      not the plan provides coverage of services 
                      described in subparagraph (B)(i) or (B)(ii) as 
                      part of such benefits for the plan year.
                    (B) Abortion services.--
                          (i) Abortions for which public funding is 
                      prohibited.--The services described in this clause 
                      are abortions for which the expenditure of Federal 
                      funds appropriated for the Department of Health 
                      and Human Services is not permitted, based on the 
                      law as in effect as of the date that is 6 months 
                      before the beginning of the plan year involved.
                          (ii) Abortions for which public funding is 
                      allowed.--The services described in this clause 
                      are abortions for which the expenditure of Federal 
                      funds appropriated for the Department of Health 
                      and Human Services is permitted, based on the law 
                      as in effect as of the date that is 6 months 
                      before the beginning of the plan year involved.
                    (C) Prohibition on federal funds for abortion 
                services in community health insurance option.--
                          (i) Determination by secretary.--The Secretary 
                      may not determine, in accordance with subparagraph 
                      (A)(ii), that the community health insurance 
                      option established under section 1323 shall 
                      provide coverage of services described in 
                      subparagraph (B)(i) as part of benefits for the 
                      plan year unless the Secretary--
                                    (I) assures compliance with the 
                                requirements of paragraph (2);
                                    (II) assures, in accordance with 
                                applicable provisions of generally 
                                accepted accounting requirements, 
                                circulars on funds management of the 
                                Office of Management and Budget, and 
                                guidance on accounting of the Government 
                                Accountability Office, that no Federal 
                                funds are used for such coverage; and
                                    (III) notwithstanding section 
                                1323(e)(1)(C) or any other provision of 
                                this title, takes all necessary steps to 
                                assure that the United States does not 
                                bear the insurance risk for a community 
                                health insurance option's coverage of 
                                services described in subparagraph 
                                (B)(i).
                          (ii) State requirement.--If a State requires, 
                      in addition to the essential health benefits 
                      required under section 1323(b)(3) (A), coverage of 
                      services described in subparagraph (B)(i) for 
                      enrollees of a community health insurance option 
                      offered in such State, the State shall assure that 
                      no funds flowing through or from the community 
                      health insurance option, and no other Federal 
                      funds, pay or defray the cost of providing 
                      coverage of services described in subparagraph 
                      (B)(i). The United States shall not bear the 
                      insurance risk for a State's required coverage of 
                      services described in subparagraph (B)(i).
                          (iii) Exceptions.--Nothing in this 
                      subparagraph shall apply to coverage of services 
                      described in subparagraph (B)(ii) by the community 
                      health insurance

[[Page 124 STAT. 170]]

                      option. Services described in subparagraph (B)(ii) 
                      shall be covered to the same extent as such 
                      services are covered under title XIX of the Social 
                      Security Act.
                    (D) Assured availability of varied coverage through 
                exchanges.--
                          (i) In general.--The Secretary shall assure 
                      that with respect to qualified health plans 
                      offered in any Exchange established pursuant to 
                      this title--
                                    (I) there is at least one such plan 
                                that provides coverage of services 
                                described in clauses (i) and (ii) of 
                                subparagraph (B); and
                                    (II) there is at least one such plan 
                                that does not provide coverage of 
                                services described in subparagraph 
                                (B)(i).
                          (ii) Special rules.--For purposes of clause 
                      (i)--
                                    (I) a plan shall be treated as 
                                described in clause (i)(II) if the plan 
                                does not provide coverage of services 
                                described in either subparagraph (B)(i) 
                                or (B)(ii); and
                                    (II) if a State has one Exchange 
                                covering more than 1 insurance market, 
                                the Secretary shall meet the 
                                requirements of clause (i) separately 
                                with respect to each such market.
            (2) Prohibition on the use of federal funds.--
                    (A) In general.--If a qualified health plan provides 
                coverage of services described in paragraph (1)(B)(i), 
                the issuer of the plan shall not use any amount 
                attributable to any of the following for purposes of 
                paying for such services:
                          (i) The credit under section 36B of the 
                      Internal Revenue Code of 1986 (and the amount (if 
                      any) of the advance payment of the credit under 
                      section 1412 of the Patient Protection and 
                      Affordable Care Act).
                          (ii) Any cost-sharing reduction under section 
                      1402 of thePatient Protection and Affordable Care 
                      Act (and the amount (if any) of the advance 
                      payment of the reduction under section 1412 of the 
                      Patient Protection and Affordable Care Act).
                    (B) Segregation of funds.--In the case of a plan to 
                which subparagraph (A) applies, the issuer of the plan 
                shall, out of amounts not described in subparagraph (A), 
                segregate an amount equal to the actuarial amounts 
                determined under subparagraph (C) for all enrollees from 
                the amounts described in subparagraph (A).
                    (C) <<NOTE: Cost estimate.>>  Actuarial value of 
                optional service coverage.--
                          (i) In general.--The Secretary shall estimate 
                      the basic per enrollee, per month cost, determined 
                      on an average actuarial basis, for including 
                      coverage under a qualified health plan of the 
                      services described in paragraph (1)(B)(i).
                          (ii) Considerations.--In making such estimate, 
                      the Secretary--
                                    (I) may take into account the impact 
                                on overall costs of the inclusion of 
                                such coverage, but may not take into 
                                account any cost reduction estimated

[[Page 124 STAT. 171]]

                                to result from such services, including 
                                prenatal care, delivery, or postnatal 
                                care;
                                    (II) shall estimate such costs as if 
                                such coverage were included for the 
                                entire population covered; and
                                    (III) may not estimate such a cost 
                                at less than $1 per enrollee, per month.
            (3) Provider conscience protections.-- 
        <<NOTE: Abortions.>> No individual health care provider or 
        health care facility may be discriminated against because of a 
        willingness or an unwillingness, if doing so is contrary to the 
        religious or moral beliefs of the provider or facility, to 
        provide, pay for, provide coverage of, or refer for abortions.

    (b) Application of State and Federal Laws Regarding Abortion.--
            (1) No preemption of state laws regarding abortion.--Nothing 
        in this Act shall be construed to preempt or otherwise have any 
        effect on State laws regarding the prohibition of (or 
        requirement of) coverage, funding, or procedural requirements on 
        abortions, including parental notification or consent for the 
        performance of an abortion on a minor.
            (2) No effect on federal laws regarding abortion.--
                    (A) In general.--Nothing in this Act shall be 
                construed to have any effect on Federal laws regarding--
                          (i) conscience protection;
                          (ii) willingness or refusal to provide 
                      abortion; and
                          (iii) discrimination on the basis of the 
                      willingness or refusal to provide, pay for, cover, 
                      or refer for abortion or to provide or participate 
                      in training to provide abortion.
            (3) No effect on federal civil rights law.--Nothing in this 
        subsection shall alter the rights and obligations of employees 
        and employers under title VII of the Civil Rights Act of 1964.

    (c) Application of Emergency Services Laws.--Nothing in this Act 
shall be construed to relieve any health care provider from providing 
emergency services as required by State or Federal law, including 
section 1867 of the Social Security Act (popularly known as ``EMTALA'').

SEC. 1304. <<NOTE: 42 USC 18024.>> RELATED DEFINITIONS.

    (a) Definitions Relating to Markets.--In this title:
            (1) Group market.--The term ``group market'' means the 
        health insurance market under which individuals obtain health 
        insurance coverage (directly or through any arrangement) on 
        behalf of themselves (and their dependents) through a group 
        health plan maintained by an employer.
            (2) Individual market.--The term ``individual market'' means 
        the market for health insurance coverage offered to individuals 
        other than in connection with a group health plan.
            (3) Large and small group markets.--The terms ``large group 
        market'' and ``small group market'' mean the health insurance 
        market under which individuals obtain health insurance coverage 
        (directly or through any arrangement) on behalf of themselves 
        (and their dependents) through a group health plan maintained by 
        a large employer (as defined in subsection

[[Page 124 STAT. 172]]

        (b)(1)) or by a small employer (as defined in subsection 
        (b)(2)), respectively.

    (b) Employers.--In this title:
            (1) Large employer.--The term ``large employer'' means, in 
        connection with a group health plan with respect to a calendar 
        year and a plan year, an employer who employed an average of at 
        least 101 employees on business days during the preceding 
        calendar year and who employs at least 1 employee on the first 
        day of the plan year.
            (2) Small employer.--The term ``small employer'' means, in 
        connection with a group health plan with respect to a calendar 
        year and a plan year, an employer who employed an average of at 
        least 1 but not more than 100 employees on business days during 
        the preceding calendar year and who employs at least 1 employee 
        on the first day of the plan year.
            (3) State option to treat 50 employees as small.--In the 
        case of plan years beginning before January 1, 2016, a State may 
        elect to apply this subsection by substituting ``51 employees'' 
        for ``101 employees'' in paragraph (1) and by substituting ``50 
        employees'' for ``100 employees'' in paragraph (2).
            (4) Rules for determining employer size.--For purposes of 
        this subsection--
                    (A) Application of aggregation rule for employers.--
                All persons 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 as 1 
                employer.
                    (B) Employers not in existence in preceding year.--
                In the case of an employer which was not in existence 
                throughout the preceding calendar year, the 
                determination of whether such employer is a small or 
                large employer shall be based on the average number of 
                employees that it is reasonably expected such employer 
                will employ on business days in the current calendar 
                year.
                    (C) Predecessors.--Any reference in this subsection 
                to an employer shall include a reference to any 
                predecessor of such employer.
                    (D) Continuation of participation for growing small 
                employers.--If--
                          (i) a qualified employer that is a small 
                      employer makes enrollment in qualified health 
                      plans offered in the small group market available 
                      to its employees through an Exchange; and
                          (ii) the employer ceases to be a small 
                      employer by reason of an increase in the number of 
                      employees of such employer;
                <<NOTE: Time period.>> the employer shall continue to be 
                treated as a small employer for purposes of this 
                subtitle for the period beginning with the increase and 
                ending with the first day on which the employer does not 
                make such enrollment available to its employees.

    (c) Secretary.--In this title, the term ``Secretary'' means the 
Secretary of Health and Human Services.
    (d) State.--In this title, the term ``State'' means each of the 50 
States and the District of Columbia.

[[Page 124 STAT. 173]]

   PART II--CONSUMER CHOICES AND INSURANCE COMPETITION THROUGH HEALTH 
                            BENEFIT EXCHANGES

SEC. 1311. <<NOTE: 42 USC 18031.>> AFFORDABLE CHOICES OF HEALTH BENEFIT 
            PLANS.

    (a) Assistance to States to Establish American Health Benefit 
Exchanges.--
            (1) Planning and establishment grants.-- 
        <<NOTE: Deadline.>> There shall be appropriated to the 
        Secretary, out of any moneys in the Treasury not otherwise 
        appropriated, an amount necessary to enable the Secretary to 
        make awards, not later than 1 year after the date of enactment 
        of this Act, to States in the amount specified in paragraph (2) 
        for the uses described in paragraph (3).
            (2) Amount specified.-- <<NOTE: Determination.>> For each 
        fiscal year, the Secretary shall determine the total amount that 
        the Secretary will make available to each State for grants under 
        this subsection.
            (3) Use of funds.--A State shall use amounts awarded under 
        this subsection for activities (including planning activities) 
        related to establishing an American Health Benefit Exchange, as 
        described in subsection (b).
            (4) Renewability of grant.--
                    (A) In general.--Subject to subsection (d)(4), the 
                Secretary may renew a grant awarded under paragraph (1) 
                if the State recipient of such grant--
                          (i) is making progress, as determined by the 
                      Secretary, toward--
                                    (I) establishing an Exchange; and
                                    (II) implementing the reforms 
                                described in subtitles A and C (and the 
                                amendments made by such subtitles); and
                          (ii) is meeting such other benchmarks as the 
                      Secretary may establish.
                    (B) Limitation.--No <<NOTE: Deadline.>> grant shall 
                be awarded under this subsection after January 1, 2015.
            (5) Technical assistance to facilitate participation in shop 
        exchanges.--The Secretary shall provide technical assistance to 
        States to facilitate the participation of qualified small 
        businesses in such States in SHOP Exchanges.

    (b) American Health Benefit Exchanges.--
            (1) In general.--
        Each <<NOTE: Establishment. Deadline.>> State shall, not later 
        than January 1, 2014, establish an American Health Benefit 
        Exchange (referred to in this title as an ``Exchange'') for the 
        State that--
                    (A) facilitates the purchase of qualified health 
                plans;
                    (B) provides for the establishment of a Small 
                Business Health Options Program (in this title referred 
                to as a ``SHOP Exchange'') that is designed to assist 
                qualified employers in the State who are small employers 
                in facilitating the enrollment of their employees in 
                qualified health plans offered in the small group market 
                in the State; and
                    (C) meets the requirements of subsection (d).
            (2) Merger of individual and shop exchanges.--A State may 
        elect to provide only one Exchange in the State for providing 
        both Exchange and SHOP Exchange services to both qualified 
        individuals and qualified small employers, but only

[[Page 124 STAT. 174]]

        if the Exchange has adequate resources to assist such 
        individuals and employers.

    (c) Responsibilities of the Secretary.--
            (1) In general.--The <<NOTE: Regulations.>> Secretary shall, 
        by regulation, establish criteria for the certification of 
        health plans as qualified health plans. Such criteria shall 
        require that, to be certified, a plan shall, at a minimum--
                    (A) meet marketing requirements, and not employ 
                marketing practices or benefit designs that have the 
                effect of discouraging the enrollment in such plan by 
                individuals with significant health needs;
                    (B) ensure a sufficient choice of providers (in a 
                manner consistent with applicable network adequacy 
                provisions under section 2702(c) of the Public Health 
                Service Act), and provide information to enrollees and 
                prospective enrollees on the availability of in-network 
                and out-of-network providers;
                    (C) include within health insurance plan networks 
                those essential community providers, where available, 
                that serve predominately low-income, medically-
                underserved individuals, such as health care providers 
                defined in section 340B(a)(4) of the Public Health 
                Service Act and providers described in section 
                1927(c)(1)(D)(i)(IV) of the Social Security Act as set 
                forth by section 221 of Public Law 111-8, except that 
                nothing in this subparagraph shall be construed to 
                require any health plan to provide coverage for any 
                specific medical procedure;
                    (D)(i) be accredited with respect to local 
                performance on clinical quality measures such as the 
                Healthcare Effectiveness Data and Information Set, 
                patient experience ratings on a standardized Consumer 
                Assessment of Healthcare Providers and Systems survey, 
                as well as consumer access, utilization management, 
                quality assurance, provider credentialing, complaints 
                and appeals, network adequacy and access, and patient 
                information programs by any entity recognized by the 
                Secretary for the accreditation of health insurance 
                issuers or plans (so long as any such entity has 
                transparent and rigorous methodological and scoring 
                criteria); or
                    (ii) receive such accreditation within a period 
                established by an Exchange for such accreditation that 
                is applicable to all qualified health plans;
                    (E) implement a quality improvement strategy 
                described in subsection (g)(1);
                    (F) utilize a uniform enrollment form that qualified 
                individuals and qualified employers may use (either 
                electronically or on paper) in enrolling in qualified 
                health plans offered through such Exchange, and that 
                takes into account criteria that the National 
                Association of Insurance Commissioners develops and 
                submits to the Secretary;
                    (G) utilize the standard format established for 
                presenting health benefits plan options; and
                    (H) provide information to enrollees and prospective 
                enrollees, and to each Exchange in which the plan is 
                offered, on any quality measures for health plan 
                performance endorsed under section 399JJ of the Public 
                Health Service Act, as applicable.

[[Page 124 STAT. 175]]

            (2) Rule of construction.-- <<NOTE: Contracts.>> Nothing in 
        paragraph (1)(C) shall be construed to require a qualified 
        health plan to contract with a provider described in such 
        paragraph if such provider refuses to accept the generally 
        applicable payment rates of such plan.
            (3) Rating system.--The Secretary shall develop a rating 
        system that would rate qualified health plans offered through an 
        Exchange in each benefits level on the basis of the relative 
        quality and price. The Exchange shall include the quality rating 
        in the information provided to individuals and employers through 
        the Internet portal established under paragraph (4).
            (4) Enrollee satisfaction system.--The Secretary shall 
        develop an enrollee satisfaction survey system that would 
        evaluate the level of enrollee satisfaction with qualified 
        health plans offered through an Exchange, for each such 
        qualified health plan that had more than 500 enrollees in the 
        previous year. The Exchange shall include enrollee satisfaction 
        information in the information provided to individuals and 
        employers through the Internet portal established under 
        paragraph (5) in a manner that allows individuals to easily 
        compare enrollee satisfaction levels between comparable plans.
            (5) Internet portals.--The Secretary shall--
                    (A) continue to operate, maintain, and update the 
                Internet portal developed under section 1103(a) and to 
                assist States in developing and maintaining their own 
                such portal; and
                    (B) make available for use by Exchanges a model 
                template for an Internet portal that may be used to 
                direct qualified individuals and qualified employers to 
                qualified health plans, to assist such individuals and 
                employers in determining whether they are eligible to 
                participate in an Exchange or eligible for a premium tax 
                credit or cost-sharing reduction, and to present 
                standardized information (including quality ratings) 
                regarding qualified health plans offered through an 
                Exchange to assist consumers in making easy health 
                insurance choices.
        Such template shall include, with respect to each qualified 
        health plan offered through the Exchange in each rating area, 
        access to the uniform outline of coverage the plan is required 
        to provide under section 2716 of the Public Health Service Act 
        and to a copy of the plan's written policy.
            (6) Enrollment periods.--The Secretary shall require an 
        Exchange to provide for--
                    (A) <<NOTE: Determination.>> an initial open 
                enrollment, as determined by the Secretary (such 
                determination to be made not later than July 1, 2012);
                    (B) <<NOTE: Determination.>> annual open enrollment 
                periods, as determined by the Secretary for calendar 
                years after the initial enrollment period;
                    (C) special enrollment periods specified in section 
                9801 of the Internal Revenue Code of 1986 and other 
                special enrollment periods under circumstances similar 
                to such periods under part D of title XVIII of the 
                Social Security Act; and
                    (D) <<NOTE: Native Americans.>> special monthly 
                enrollment periods for Indians (as defined in section 4 
                of the Indian Health Care Improvement Act).

[[Page 124 STAT. 176]]

    (d) Requirements.--
            (1) In general.--An Exchange shall be a governmental agency 
        or nonprofit entity that is established by a State.
            (2) Offering of coverage.--
                    (A) In general.--An Exchange shall make available 
                qualified health plans to qualified individuals and 
                qualified employers.
                    (B) Limitation.--
                          (i) In general.--An Exchange may not make 
                      available any health plan that is not a qualified 
                      health plan.
                          (ii) Offering of stand-alone dental 
                      benefits.--Each Exchange within a State shall 
                      allow an issuer of a plan that only provides 
                      limited scope dental benefits meeting the 
                      requirements of section 9832(c)(2)(A) of the 
                      Internal Revenue Code of 1986 to offer the plan 
                      through the Exchange (either separately or in 
                      conjunction with a qualified health plan) if the 
                      plan provides pediatric dental benefits meeting 
                      the requirements of section 1302(b)(1)(J)).
            (3) Rules relating to additional required benefits.--
                    (A) In general.--Except as provided in subparagraph 
                (B), an Exchange may make available a qualified health 
                plan notwithstanding any provision of law that may 
                require benefits other than the essential health 
                benefits specified under section 1302(b).
                    (B) States may require additional benefits.--
                          (i) In general.--Subject to the requirements 
                      of clause (ii), a State may require that a 
                      qualified health plan offered in such State offer 
                      benefits in addition to the essential health 
                      benefits specified under section 1302(b).
                          (ii) State must assume cost.--
                      A <<NOTE: Payments.>> State shall make payments to 
                      or on behalf of an individual eligible for the 
                      premium tax credit under section 36B of the 
                      Internal Revenue Code of 1986 and any cost-sharing 
                      reduction under section 1402 to defray the cost to 
                      the individual of any additional benefits 
                      described in clause (i) which are not eligible for 
                      such credit or reduction under section 
                      36B(b)(3)(D) of such Code and section 1402(c)(4).
            (4) Functions.--An Exchange shall, at a minimum--
                    (A) <<NOTE: Procedures.>> implement procedures for 
                the certification, recertification, and decertification, 
                consistent with guidelines developed by the Secretary 
                under subsection (c), of health plans as qualified 
                health plans;
                    (B) <<NOTE: Hotline.>> provide for the operation of 
                a toll-free telephone hotline to respond to requests for 
                assistance;
                    (C) <<NOTE: Web site.>> maintain an Internet website 
                through which enrollees and prospective enrollees of 
                qualified health plans may obtain standardized 
                comparative information on such plans;
                    (D) assign a rating to each qualified health plan 
                offered through such Exchange in accordance with the 
                criteria developed by the Secretary under subsection 
                (c)(3);
                    (E) utilize a standardized format for presenting 
                health benefits plan options in the Exchange, including 
                the use

[[Page 124 STAT. 177]]

                of the uniform outline of coverage established under 
                section 2715 of the Public Health Service Act;
                    (F) in accordance with section 1413, inform 
                individuals of eligibility requirements for the medicaid 
                program under title XIX of the Social Security Act, the 
                CHIP program under title XXI of such Act, or any 
                applicable State or local public program and if through 
                screening of the application by the Exchange, the 
                Exchange determines that such individuals are eligible 
                for any such program, enroll such individuals in such 
                program;
                    (G) establish and make available by electronic means 
                a calculator to determine the actual cost of coverage 
                after the application of any premium tax credit under 
                section 36B of the Internal Revenue Code of 1986 and any 
                cost-sharing reduction under section 1402;
                    (H) <<NOTE: Certification.>> subject to section 
                1411, grant a certification attesting that, for purposes 
                of the individual responsibility penalty under section 
                5000A of the Internal Revenue Code of 1986, an 
                individual is exempt from the individual requirement or 
                from the penalty imposed by such section because--
                          (i) there is no affordable qualified health 
                      plan available through the Exchange, or the 
                      individual's employer, covering the individual; or
                          (ii) the individual meets the requirements for 
                      any other such exemption from the individual 
                      responsibility requirement or penalty;
                    (I) transfer to the Secretary of the Treasury--
                          (i) <<NOTE: Lists.>> a list of the individuals 
                      who are issued a certification under subparagraph 
                      (H), including the name and taxpayer 
                      identification number of each individual;
                          (ii) the name and taxpayer identification 
                      number of each individual who was an employee of 
                      an employer but who was determined to be eligible 
                      for the premium tax credit under section 36B of 
                      the Internal Revenue Code of 1986 because--
                                    (I) the employer did not provide 
                                minimum essential coverage; or
                                    (II) the employer provided such 
                                minimum essential coverage but it was 
                                determined under section 36B(c)(2)(C) of 
                                such Code to either be unaffordable to 
                                the employee or not provide the required 
                                minimum actuarial value; and
                          (iii) the name and taxpayer identification 
                      number of each individual who notifies the 
                      Exchange under section 1411(b)(4) that they have 
                      changed employers and of each individual who 
                      ceases coverage under a qualified health plan 
                      during a plan year (and the effective date of such 
                      cessation);
                    (J) provide to each employer the name of each 
                employee of the employer described in subparagraph 
                (I)(ii) who ceases coverage under a qualified health 
                plan during a plan year (and the effective date of such 
                cessation); and
                    (K) establish the Navigator program described in 
                subsection (i).
            (5) Funding limitations.--

[[Page 124 STAT. 178]]

                    (A) No federal funds for continued 
                operations. <<NOTE: Effective date.>> --In establishing 
                an Exchange under this section, the State shall ensure 
                that such Exchange is self-sustaining beginning on 
                January 1, 2015, including allowing the Exchange to 
                charge assessments or user fees to participating health 
                insurance issuers, or to otherwise generate funding, to 
                support its operations.
                    (B) Prohibiting wasteful use of funds.--In carrying 
                out activities under this subsection, an Exchange shall 
                not utilize any funds intended for the administrative 
                and operational expenses of the Exchange for staff 
                retreats, promotional giveaways, excessive executive 
                compensation, or promotion of Federal or State 
                legislative and regulatory modifications.
            (6) Consultation.--An Exchange shall consult with 
        stakeholders relevant to carrying out the activities under this 
        section, including--
                    (A) health care consumers who are enrollees in 
                qualified health plans;
                    (B) individuals and entities with experience in 
                facilitating enrollment in qualified health plans;
                    (C) representatives of small businesses and self-
                employed individuals;
                    (D) State Medicaid offices; and
                    (E) advocates for enrolling hard to reach 
                populations.
            (7) Publication of costs.-- <<NOTE: Web site.>> An Exchange 
        shall publish the average costs of licensing, regulatory fees, 
        and any other payments required by the Exchange, and the 
        administrative costs of such Exchange, on an Internet website to 
        educate consumers on such costs. Such information shall also 
        include monies lost to waste, fraud, and abuse.

    (e) Certification.--
            (1) In general.--An Exchange may certify a health plan as a 
        qualified health plan if--
                    (A) such health plan meets the requirements for 
                certification as promulgated by the Secretary under 
                subsection (c)(1); and
                    (B) <<NOTE: Determination.>> the Exchange determines 
                that making available such health plan through such 
                Exchange is in the interests of qualified individuals 
                and qualified employers in the State or States in which 
                such Exchange operates, except that the Exchange may not 
                exclude a health plan--
                          (i) on the basis that such plan is a fee-for-
                      service plan;
                          (ii) through the imposition of premium price 
                      controls; or
                          (iii) on the basis that the plan provides 
                      treatments necessary to prevent patients' deaths 
                      in circumstances the Exchange determines are 
                      inappropriate or too costly.
            (2) Premium considerations.--The Exchange shall require 
        health plans seeking certification as qualified health plans to 
        submit a justification for any premium increase prior to 
        implementation of the increase. <<NOTE: Web site.>> Such plans 
        shall prominently post such information on their websites. The 
        Exchange may take this information, and the information and the 
        recommendations provided to the Exchange by the State under

[[Page 124 STAT. 179]]

        section 2794(b)(1) of the Public Health Service Act (relating to 
        patterns or practices of excessive or unjustified premium 
        increases), into consideration when determining whether to make 
        such health plan available through the Exchange. The Exchange 
        shall take into account any excess of premium growth outside the 
        Exchange as compared to the rate of such growth inside the 
        Exchange, including information reported by the States.

    (f) Flexibility.--
            (1) Regional or other interstate exchanges.--An Exchange may 
        operate in more than one State if--
                    (A) each State in which such Exchange operates 
                permits such operation; and
                    (B) the Secretary approves such regional or 
                interstate Exchange.
            (2) Subsidiary exchanges.--A State may establish one or more 
        subsidiary Exchanges if--
                    (A) each such Exchange serves a geographically 
                distinct area; and
                    (B) the area served by each such Exchange is at 
                least as large as a rating area described in section 
                2701(a) of the Public Health Service Act.
            (3) Authority to contract.--
                    (A) In general.--A State may elect to authorize an 
                Exchange established by the State under this section to 
                enter into an agreement with an eligible entity to carry 
                out 1 or more responsibilities of the Exchange.
                    (B) Eligible entity. <<NOTE: Definition.>> --In this 
                paragraph, the term ``eligible entity'' means--
                          (i) a person--
                                    (I) incorporated under, and subject 
                                to the laws of, 1 or more States;
                                    (II) that has demonstrated 
                                experience on a State or regional basis 
                                in the individual and small group health 
                                insurance markets and in benefits 
                                coverage; and
                                    (III) that is not a health insurance 
                                issuer or that is treated under 
                                subsection (a) or (b) of section 52 of 
                                the Internal Revenue Code of 1986 as a 
                                member of the same controlled group of 
                                corporations (or under common control 
                                with) as a health insurance issuer; or
                          (ii) the State medicaid agency under title XIX 
                      of the Social Security Act.

    (g) Rewarding Quality Through Market-Based Incentives.--
            (1) Strategy described.--A strategy described in this 
        paragraph is a payment structure that provides increased 
        reimbursement or other incentives for--
                    (A) improving health outcomes through the 
                implementation of activities that shall include quality 
                reporting, effective case management, care coordination, 
                chronic disease management, medication and care 
                compliance initiatives, including through the use of the 
                medical home model, for treatment or services under the 
                plan or coverage;

[[Page 124 STAT. 180]]

                    (B) the implementation of activities to prevent 
                hospital readmissions through a comprehensive program 
                for hospital discharge that includes patient-centered 
                education and counseling, comprehensive discharge 
                planning, and post discharge reinforcement by an 
                appropriate health care professional;
                    (C) the implementation of activities to improve 
                patient safety and reduce medical errors through the 
                appropriate use of best clinical practices, evidence 
                based medicine, and health information technology under 
                the plan or coverage; and
                    (D) the implementation of wellness and health 
                promotion activities.
            (2) Guidelines.--The Secretary, in consultation with experts 
        in health care quality and stakeholders, shall develop 
        guidelines concerning the matters described in paragraph (1).
            (3) Requirements.-- <<NOTE: Reports.>> The guidelines 
        developed under paragraph (2) shall require the periodic 
        reporting to the applicable Exchange of the activities that a 
        qualified health plan has conducted to implement a strategy 
        described in paragraph (1).

    (h) Quality Improvement.--
            (1) Enhancing patient safety.-- <<NOTE: Effective 
        date.>> Beginning on January 1, 2015, a qualified health plan 
        may contract with--
                    (A) a hospital with greater than 50 beds only if 
                such hospital--
                          (i) utilizes a patient safety evaluation 
                      system as described in part C of title IX of the 
                      Public Health Service Act; and
                          (ii) implements a mechanism to ensure that 
                      each patient receives a comprehensive program for 
                      hospital discharge that includes patient-centered 
                      education and counseling, comprehensive discharge 
                      planning, and post discharge reinforcement by an 
                      appropriate health care professional; or
                    (B) a health care provider only if such provider 
                implements such mechanisms to improve health care 
                quality as the Secretary may by regulation require.
            (2) Exceptions.--The Secretary may establish reasonable 
        exceptions to the requirements described in paragraph (1).
            (3) Adjustment.--The Secretary may by regulation adjust the 
        number of beds described in paragraph (1)(A).

    (i) Navigators.--
            (1) <<NOTE: Grants.>>  In general.--An Exchange shall 
        establish a program under which it awards grants to entities 
        described in paragraph (2) to carry out the duties described in 
        paragraph (3).
            (2) Eligibility.--
                    (A) In general.--To be eligible to receive a grant 
                under paragraph (1), an entity shall demonstrate to the 
                Exchange involved that the entity has existing 
                relationships, or could readily establish relationships, 
                with employers and employees, consumers (including 
                uninsured and underinsured consumers), or self-employed 
                individuals likely to be qualified to enroll in a 
                qualified health plan.
                    (B) Types.--Entities described in subparagraph (A) 
                may include trade, industry, and professional 
                associations, commercial fishing industry organizations, 
                ranching and farming organizations, community and 
                consumer-focused

[[Page 124 STAT. 181]]

                nonprofit groups, chambers of commerce, unions, small 
                business development centers, other licensed insurance 
                agents and brokers, and other entities that--
                          (i) are capable of carrying out the duties 
                      described in paragraph (3);
                          (ii) meet the standards described in paragraph 
                      (4); and
                          (iii) provide information consistent with the 
                      standards developed under paragraph (5).
            (3) Duties.--An entity that serves as a navigator under a 
        grant under this subsection shall--
                    (A) conduct public education activities to raise 
                awareness of the availability of qualified health plans;
                    (B) distribute fair and impartial information 
                concerning enrollment in qualified health plans, and the 
                availability of premium tax credits under section 36B of 
                the Internal Revenue Code of 1986 and cost-sharing 
                reductions under section 1402;
                    (C) facilitate enrollment in qualified health plans;
                    (D) provide referrals to any applicable office of 
                health insurance consumer assistance or health insurance 
                ombudsman established under section 2793 of the Public 
                Health Service Act, or any other appropriate State 
                agency or agencies, for any enrollee with a grievance, 
                complaint, or question regarding their health plan, 
                coverage, or a determination under such plan or 
                coverage; and
                    (E) provide information in a manner that is 
                culturally and linguistically appropriate to the needs 
                of the population being served by the Exchange or 
                Exchanges.
            (4) Standards.--
                    (A) In general.--The Secretary shall establish 
                standards for navigators under this subsection, 
                including provisions to ensure that any private or 
                public entity that is selected as a navigator is 
                qualified, and licensed if appropriate, to engage in the 
                navigator activities described in this subsection and to 
                avoid conflicts of interest. Under such standards, a 
                navigator shall not--
                          (i) be a health insurance issuer; or
                          (ii) receive any consideration directly or 
                      indirectly from any health insurance issuer in 
                      connection with the enrollment of any qualified 
                      individuals or employees of a qualified employer 
                      in a qualified health plan.
            (5) Fair and impartial information and services.-- 
        <<NOTE: Standards.>> The Secretary, in collaboration with 
        States, shall develop standards to ensure that information made 
        available by navigators is fair, accurate, and impartial.
            (6) Funding.--Grants under this subsection shall be made 
        from the operational funds of the Exchange and not Federal funds 
        received by the State to establish the Exchange.

    (j) Applicability of Mental Health Parity.--Section 2726 of the 
Public Health Service Act shall apply to qualified health plans in the 
same manner and to the same extent as such section applies to health 
insurance issuers and group health plans.
    (k) Conflict.--An Exchange may not establish rules that conflict 
with or prevent the application of regulations promulgated by the 
Secretary under this subtitle.

[[Page 124 STAT. 182]]

SEC. 1312. <<NOTE: 42 USC 18032.>>  CONSUMER CHOICE.

    (a) Choice.--
            (1) Qualified individuals.--A qualified individual may 
        enroll in any qualified health plan available to such 
        individual.
            (2) Qualified employers.--
                    (A) Employer may specify level.--A qualified 
                employer may provide support for coverage of employees 
                under a qualified health plan by selecting any level of 
                coverage under section 1302(d) to be made available to 
                employees through an Exchange.
                    (B) Employee may choose plans within a level.--Each 
                employee of a qualified employer that elects a level of 
                coverage under subparagraph (A) may choose to enroll in 
                a qualified health plan that offers coverage at that 
                level.

    (b) Payment of Premiums by Qualified Individuals.--A qualified 
individual enrolled in any qualified health plan may pay any applicable 
premium owed by such individual to the health insurance issuer issuing 
such qualified health plan.
    (c) Single Risk Pool.--
            (1) Individual market.--A health insurance issuer shall 
        consider all enrollees in all health plans (other than 
        grandfathered health plans) offered by such issuer in the 
        individual market, including those enrollees who do not enroll 
        in such plans through the Exchange, to be members of a single 
        risk pool.
            (2) Small group market.--A health insurance issuer shall 
        consider all enrollees in all health plans (other than 
        grandfathered health plans) offered by such issuer in the small 
        group market, including those enrollees who do not enroll in 
        such plans through the Exchange, to be members of a single risk 
        pool.
            (3) Merger of markets.--A State may require the individual 
        and small group insurance markets within a State to be merged if 
        the State determines appropriate.
            (4) State law.--A State law requiring grandfathered health 
        plans to be included in a pool described in paragraph (1) or (2) 
        shall not apply.

    (d) Empowering Consumer Choice.--
            (1) Continued operation of market outside exchanges.--
        Nothing in this title shall be construed to prohibit--
                    (A) a health insurance issuer from offering outside 
                of an Exchange a health plan to a qualified individual 
                or qualified employer; and
                    (B) a qualified individual from enrolling in, or a 
                qualified employer from selecting for its employees, a 
                health plan offered outside of an Exchange.
            (2) Continued operation of state benefit requirements.--
        Nothing in this title shall be construed to terminate, abridge, 
        or limit the operation of any requirement under State law with 
        respect to any policy or plan that is offered outside of an 
        Exchange to offer benefits.
            (3) Voluntary nature of an exchange.--
                    (A) Choice to enroll or not to enroll.--Nothing in 
                this title shall be construed to restrict the choice of

[[Page 124 STAT. 183]]

                a qualified individual to enroll or not to enroll in a 
                qualified health plan or to participate in an Exchange.
                    (B) Prohibition against compelled enrollment.--
                Nothing in this title shall be construed to compel an 
                individual to enroll in a qualified health plan or to 
                participate in an Exchange.
                    (C) Individuals allowed to enroll in any plan.--A 
                qualified individual may enroll in any qualified health 
                plan, except that in the case of a catastrophic plan 
                described in section 1302(e), a qualified individual may 
                enroll in the plan only if the individual is eligible to 
                enroll in the plan under section 1302(e)(2).
                    (D) Members of congress in the exchange.--
                          (i) Requirement.--Notwithstanding any other 
                      provision of law, after the effective date of this 
                      subtitle, the only health plans that the Federal 
                      Government may make available to Members of 
                      Congress and congressional staff with respect to 
                      their service as a Member of Congress or 
                      congressional staff shall be health plans that 
                      are--
                                    (I) created under this Act (or an 
                                amendment made by this Act); or
                                    (II) offered through an Exchange 
                                established under this Act (or an 
                                amendment made by this Act).
                          (ii) Definitions.--In this section:
                                    (I) Member of congress.--The term 
                                ``Member of Congress'' means any member 
                                of the House of Representatives or the 
                                Senate.
                                    (II) Congressional staff.--The term 
                                ``congressional staff'' means all full-
                                time and part-time employees employed by 
                                the official office of a Member of 
                                Congress, whether in Washington, DC or 
                                outside of Washington, DC.
            (4) No penalty for transferring to minimum essential 
        coverage outside exchange.--An Exchange, or a qualified health 
        plan offered through an Exchange, shall not impose any penalty 
        or other fee on an individual who cancels enrollment in a plan 
        because the individual becomes eligible for minimum essential 
        coverage (as defined in section 5000A(f) of the Internal Revenue 
        Code of 1986 without regard to paragraph (1)(C) or (D) thereof) 
        or such coverage becomes affordable (within the meaning of 
        section 36B(c)(2)(C) of such Code).

    (e) Enrollment Through Agents or Brokers. <<NOTE: Procedures.>> --
The Secretary shall establish procedures under which a State may allow 
agents or brokers--
            (1) to enroll individuals in any qualified health plans in 
        the individual or small group market as soon as the plan is 
        offered through an Exchange in the State; and
            (2) to assist individuals in applying for premium tax 
        credits and cost-sharing reductions for plans sold through an 
        Exchange.

Such procedures may include the establishment of rate schedules for 
broker commissions paid by health benefits plans offered through an 
exchange.
    (f) Qualified Individuals and Employers; Access Limited to Citizens 
and Lawful Residents.--
            (1) Qualified individuals.--In this title:

[[Page 124 STAT. 184]]

                    (A) In general. <<NOTE: Definition.>> --The term 
                ``qualified individual'' means, with respect to an 
                Exchange, an individual who--
                          (i) is seeking to enroll in a qualified health 
                      plan in the individual market offered through the 
                      Exchange; and
                          (ii) resides in the State that established the 
                      Exchange (except with respect to territorial 
                      agreements under section 1312(f)).
                    (B) Incarcerated individuals excluded.--An 
                individual shall not be treated as a qualified 
                individual if, at the time of enrollment, the individual 
                is incarcerated, other than incarceration pending the 
                disposition of charges.
            (2) Qualified employer.--In this title:
                    (A) In general. <<NOTE: Definition.>> --The term 
                ``qualified employer'' means a small employer that 
                elects to make all full-time employees of such employer 
                eligible for 1 or more qualified health plans offered in 
                the small group market through an Exchange that offers 
                qualified health plans.
                    (B) Extension to large groups.--
                          (i) In general. <<NOTE: Effective date.>> --
                      Beginning in 2017, each State may allow issuers of 
                      health insurance coverage in the large group 
                      market in the State to offer qualified health 
                      plans in such market through an Exchange. Nothing 
                      in this subparagraph shall be construed as 
                      requiring the issuer to offer such plans through 
                      an Exchange.
                          (ii) Large employers eligible.--If a State 
                      under clause (i) allows issuers to offer qualified 
                      health plans in the large group market through an 
                      Exchange, the term ``qualified employer'' shall 
                      include a large employer that elects to make all 
                      full-time employees of such employer eligible for 
                      1 or more qualified health plans offered in the 
                      large group market through the Exchange.
            (3) Access limited to lawful residents.--If an individual is 
        not, or is not reasonably expected to be for the entire period 
        for which enrollment is sought, a citizen or national of the 
        United States or an alien lawfully present in the United States, 
        the individual shall not be treated as a qualified individual 
        and may not be covered under a qualified health plan in the 
        individual market that is offered through an Exchange.

SEC. 1313. <<NOTE: 42 USC 18033.>> FINANCIAL INTEGRITY.

    (a) Accounting for Expenditures.--
            (1) In general.-- <<NOTE: Deadline. Reports.>> An Exchange 
        shall keep an accurate accounting of all activities, receipts, 
        and expenditures and shall annually submit to the Secretary a 
        report concerning such accountings.
            (2) Investigations.--The Secretary, in coordination with the 
        Inspector General of the Department of Health and Human 
        Services, may investigate the affairs of an Exchange, may 
        examine the properties and records of an Exchange, and may 
        require periodic reports in relation to activities undertaken by 
        an Exchange. An Exchange shall fully cooperate in any 
        investigation conducted under this paragraph.
            (3) Audits.-- <<NOTE: Deadline.>> An Exchange shall be 
        subject to annual audits by the Secretary.

[[Page 124 STAT. 185]]

            (4) Pattern of abuse.-- <<NOTE: Determination.>> If the 
        Secretary determines that an Exchange or a State has engaged in 
        serious misconduct with respect to compliance with the 
        requirements of, or carrying out of activities required under, 
        this title, the Secretary may rescind from payments otherwise 
        due to such State involved under this or any other Act 
        administered by the Secretary an amount not to exceed 1 percent 
        of such payments per year until corrective actions are taken by 
        the State that are determined to be adequate by the Secretary.
            (5) Protections against fraud and abuse.--With respect to 
        activities carried out under this title, the Secretary shall 
        provide for the efficient and non-discriminatory administration 
        of Exchange activities and implement any measure or procedure 
        that--
                    (A) the Secretary determines is appropriate to 
                reduce fraud and abuse in the administration of this 
                title; and
                    (B) the Secretary has authority to implement under 
                this title or any other Act.
            (6) Application of the false claims act.--
                    (A) In general.--Payments made by, through, or in 
                connection with an Exchange are subject to the False 
                Claims Act (31 U.S.C. 3729 et seq.) if those payments 
                include any Federal funds. Compliance with the 
                requirements of this Act concerning eligibility for a 
                health insurance issuer to participate in the Exchange 
                shall be a material condition of an issuer's entitlement 
                to receive payments, including payments of premium tax 
                credits and cost-sharing reductions, through the 
                Exchange.
                    (B) Damages <<NOTE: Penalty.>> .--Notwithstanding 
                paragraph (1) of section 3729(a) of title 31, United 
                States Code, and subject to paragraph (2) of such 
                section, the civil penalty assessed under the False 
                Claims Act on any person found liable under such Act as 
                described in subparagraph (A) shall be increased by not 
                less than 3 times and not more than 6 times the amount 
                of damages which the Government sustains because of the 
                act of that person.

    (b) GAO Oversight. <<NOTE: Deadline. Study.>> --Not later than 5 
years after the first date on which Exchanges are required to be 
operational under this title, the Comptroller General shall conduct an 
ongoing study of Exchange activities and the enrollees in qualified 
health plans offered through Exchanges. Such study shall review--
            (1) the operations and administration of Exchanges, 
        including surveys and reports of qualified health plans offered 
        through Exchanges and on the experience of such plans (including 
        data on enrollees in Exchanges and individuals purchasing health 
        insurance coverage outside of Exchanges), the expenses of 
        Exchanges, claims statistics relating to qualified health plans, 
        complaints data relating to such plans, and the manner in which 
        Exchanges meet their goals;
            (2) any significant observations regarding the utilization 
        and adoption of Exchanges;
            (3) where appropriate, recommendations for improvements in 
        the operations or policies of Exchanges; and
            (4) how many physicians, by area and specialty, are not 
        taking or accepting new patients enrolled in Federal Government 
        health care programs, and the adequacy of provider networks of 
        Federal Government health care programs.

[[Page 124 STAT. 186]]

            PART III--STATE FLEXIBILITY RELATING TO EXCHANGES

SEC. 1321. <<NOTE: 42 USC 18041.>> STATE FLEXIBILITY IN OPERATION AND 
            ENFORCEMENT OF EXCHANGES AND RELATED REQUIREMENTS.

    (a) Establishment of Standards.--
            (1) In general.-- <<NOTE: Regulations.>> The Secretary 
        shall, as soon as practicable after the date of enactment of 
        this Act, issue regulations setting standards for meeting the 
        requirements under this title, and the amendments made by this 
        title, with respect to--
                    (A) the establishment and operation of Exchanges 
                (including SHOP Exchanges);
                    (B) the offering of qualified health plans through 
                such Exchanges;
                    (C) the establishment of the reinsurance and risk 
                adjustment programs under part V; and
                    (D) such other requirements as the Secretary 
                determines appropriate.
        The preceding sentence shall not apply to standards for 
        requirements under subtitles A and C (and the amendments made by 
        such subtitles) for which the Secretary issues regulations under 
        the Public Health Service Act.
            (2) Consultation.--In issuing the regulations under 
        paragraph (1), the Secretary shall consult with the National 
        Association of Insurance Commissioners and its members and with 
        health insurance issuers, consumer organizations, and such other 
        individuals as the Secretary selects in a manner designed to 
        ensure balanced representation among interested parties.

    (b) State Action <<NOTE: Deadline.>> .--Each State that elects, at 
such time and in such manner as the Secretary may prescribe, to apply 
the requirements described in subsection (a) shall, not later than 
January 1, 2014, adopt and have in effect--
            (1) the Federal standards established under subsection (a); 
        or
            (2) a State law or regulation that the Secretary determines 
        implements the standards within the State.

    (c) Failure To Establish Exchange or Implement Requirements.--
            (1) In general.--If--
                    (A) a State is not an electing State under 
                subsection (b); or
                    (B) <<NOTE: Determination. Deadline.>> the Secretary 
                determines, on or before January 1, 2013, that an 
                electing State--
                          (i) will not have any required Exchange 
                      operational by January 1, 2014; or
                          (ii) has not taken the actions the Secretary 
                      determines necessary to implement--
                                    (I) the other requirements set forth 
                                in the standards under subsection (a); 
                                or
                                    (II) the requirements set forth in 
                                subtitles A and C and the amendments 
                                made by such subtitles;
        the Secretary shall (directly or through agreement with a not-
        for-profit entity) establish and operate such Exchange within 
        the State and the Secretary shall take such actions as are 
        necessary to implement such other requirements.

[[Page 124 STAT. 187]]

            (2) Enforcement authority.-- <<NOTE: Applicability.>> The 
        provisions of section 2736(b) of the Public Health Services Act 
        shall apply to the enforcement under paragraph (1) of 
        requirements of subsection (a)(1) (without regard to any 
        limitation on the application of those provisions to group 
        health plans).

    (d) No Interference With State Regulatory Authority.--Nothing in 
this title shall be construed to preempt any State law that does not 
prevent the application of the provisions of this title.
    (e) Presumption for Certain State-Operated Exchanges.--
            (1) In general.-- <<NOTE: Determination.>> In the case of a 
        State operating an Exchange before January 1, 2010, and which 
        has insured a percentage of its population not less than the 
        percentage of the population projected to be covered nationally 
        after the implementation of this Act, that seeks to operate an 
        Exchange under this section, the Secretary shall presume that 
        such Exchange meets the standards under this section unless the 
        Secretary determines, after completion of the process 
        established under paragraph (2), that the Exchange does not 
        comply with such standards.
            (2) Process.--The Secretary shall establish a process to 
        work with a State described in paragraph (1) to provide 
        assistance necessary to assist the State's Exchange in coming 
        into compliance with the standards for approval under this 
        section.

SEC. 1322. <<NOTE: 42 USC 18042.>> FEDERAL PROGRAM TO ASSIST 
            ESTABLISHMENT AND OPERATION OF NONPROFIT, MEMBER-RUN HEALTH 
            INSURANCE ISSUERS.

    (a) Establishment of Program.--
            (1) In general.--The Secretary shall establish a program to 
        carry out the purposes of this section to be known as the 
        Consumer Operated and Oriented Plan (CO-OP) program.
            (2) Purpose.--It is the purpose of the CO-OP program to 
        foster the creation of qualified nonprofit health insurance 
        issuers to offer qualified health plans in the individual and 
        small group markets in the States in which the issuers are 
        licensed to offer such plans.

    (b) Loans and Grants Under the CO-OP Program.--
            (1) In general.--The Secretary shall provide through the CO-
        OP program for the awarding to persons applying to become 
        qualified nonprofit health insurance issuers of--
                    (A) loans to provide assistance to such person in 
                meeting its start-up costs; and
                    (B) grants to provide assistance to such person in 
                meeting any solvency requirements of States in which the 
                person seeks to be licensed to issue qualified health 
                plans.
            (2) Requirements for awarding loans and grants.--
                    (A) In general.--In awarding loans and grants under 
                the CO-OP program, the Secretary shall--
                          (i) take into account the recommendations of 
                      the advisory board established under paragraph 
                      (3);
                          (ii) give priority to applicants that will 
                      offer qualified health plans on a Statewide basis, 
                      will utilize integrated care models, and have 
                      significant private support; and
                          (iii) ensure that there is sufficient funding 
                      to establish at least 1 qualified nonprofit health 
                      insurance

[[Page 124 STAT. 188]]

                      issuer in each State, except that nothing in this 
                      clause shall prohibit the Secretary from funding 
                      the establishment of multiple qualified nonprofit 
                      health insurance issuers in any State if the 
                      funding is sufficient to do so.
                    (B) States without issuers in program.--If no health 
                insurance issuer applies to be a qualified nonprofit 
                health insurance issuer within a State, the Secretary 
                may use amounts appropriated under this section for the 
                awarding of grants to encourage the establishment of a 
                qualified nonprofit health insurance issuer within the 
                State or the expansion of a qualified nonprofit health 
                insurance issuer from another State to the State.
                    (C) Agreement.--
                          (i) In general.--The Secretary shall require 
                      any person receiving a loan or grant under the CO-
                      OP program to enter into an agreement with the 
                      Secretary which requires such person to meet (and 
                      to continue to meet)--
                                    (I) any requirement under this 
                                section for such person to be treated as 
                                a qualified nonprofit health insurance 
                                issuer; and
                                    (II) any requirements contained in 
                                the agreement for such person to receive 
                                such loan or grant.
                          (ii) Restrictions on use of federal funds.--
                      The agreement shall include a requirement that no 
                      portion of the funds made available by any loan or 
                      grant under this section may be used--
                                    (I) <<NOTE: Lobbying.>> for carrying 
                                on propaganda, or otherwise attempting, 
                                to influence legislation; or
                                    (II) for marketing.
                      Nothing in this clause shall be construed to allow 
                      a person to take any action prohibited by section 
                      501(c)(29) of the Internal Revenue Code of 1986.
                          (iii) Failure to meet 
                      requirements <<NOTE: Determination. Payments.>> .--
                      If the Secretary determines that a person has 
                      failed to meet any requirement described in clause 
                      (i) or (ii) and has failed to correct such failure 
                      within a reasonable period of time of when the 
                      person first knows (or reasonably should have 
                      known) of such failure, such person shall repay to 
                      the Secretary an amount equal to the sum of--
                                    (I) 110 percent of the aggregate 
                                amount of loans and grants received 
                                under this section; plus
                                    (II) interest on the aggregate 
                                amount of loans and grants received 
                                under this section for the period the 
                                loans or grants were outstanding.
                      <<NOTE: Notification.>> The Secretary shall notify 
                      the Secretary of the Treasury of any determination 
                      under this section of a failure that results in 
                      the termination of an issuer's tax-exempt status 
                      under section 501(c)(29) of such Code.
                    (D) Time for awarding loans and 
                grants. <<NOTE: Deadline.>> --The Secretary shall not 
                later than July 1, 2013, award the loans and grants 
                under the CO-OP program and begin the distribution of 
                amounts awarded under such loans and grants.
            (3) <<NOTE: Establishment.>>  Advisory board.--

[[Page 124 STAT. 189]]

                    (A) In general.--The advisory board under this 
                paragraph shall consist of 15 members appointed by the 
                Comptroller General of the United States from among 
                individuals with qualifications described in section 
                1805(c)(2) of the Social Security Act.
                    (B) Rules relating to appointments.--
                          (i) Standards.--Any individual appointed under 
                      subparagraph (A) shall meet ethics and conflict of 
                      interest standards protecting against insurance 
                      industry involvement and interference.
                          (ii) Original 
                      appointments. <<NOTE: Deadline.>> --The original 
                      appointment of board members under subparagraph 
                      (A)(ii) shall be made no later than 3 months after 
                      the date of enactment of this Act.
                    (C) Vacancy.--Any vacancy on the advisory board 
                shall be filled in the same manner as the original 
                appointment.
                    (D) Pay and reimbursement.--
                          (i) No compensation for members of advisory 
                      board.--Except as provided in clause (ii), a 
                      member of the advisory board may not receive pay, 
                      allowances, or benefits by reason of their service 
                      on the board.
                          (ii) Travel expenses.--Each member shall 
                      receive travel expenses, including per diem in 
                      lieu of subsistence under subchapter I of chapter 
                      57 of title 5, United States Code.
                    (E) Application of faca.--The Federal Advisory 
                Committee Act (5 U.S.C. App.) shall apply to the 
                advisory board, except that section 14 of such Act shall 
                not apply.
                    (F) Termination.--The advisory board shall terminate 
                on the earlier of the date that it completes its duties 
                under this section or December 31, 2015.

    (c) Qualified Nonprofit Health Insurance Issuer.--For purposes of 
this section--
            (1) In general.-- <<NOTE: Definition.>> The term ``qualified 
        nonprofit health insurance issuer'' means a health insurance 
        issuer that is an organization--
                    (A) that is organized under State law as a 
                nonprofit, member corporation;
                    (B) substantially all of the activities of which 
                consist of the issuance of qualified health plans in the 
                individual and small group markets in each State in 
                which it is licensed to issue such plans; and
                    (C) that meets the other requirements of this 
                subsection.
            (2) Certain organizations prohibited.--An organization shall 
        not be treated as a qualified nonprofit health insurance issuer 
        if--
                    (A) the organization or a related entity (or any 
                predecessor of either) was a health insurance issuer on 
                July 16, 2009; or
                    (B) the organization is sponsored by a State or 
                local government, any political subdivision thereof, or 
                any instrumentality of such government or political 
                subdivision.
            (3) Governance requirements.--An organization shall not be 
        treated as a qualified nonprofit health insurance issuer 
        unless--

[[Page 124 STAT. 190]]

                    (A) the governance of the organization is subject to 
                a majority vote of its members;
                    (B) its governing documents incorporate ethics and 
                conflict of interest standards protecting against 
                insurance industry involvement and interference; and
                    (C) as provided in regulations promulgated by the 
                Secretary, the organization is required to operate with 
                a strong consumer focus, including timeliness, 
                responsiveness, and accountability to members.
            (4) Profits inure to benefit of members.--An organization 
        shall not be treated as a qualified nonprofit health insurance 
        issuer unless any profits made by the organization are required 
        to be used to lower premiums, to improve benefits, or for other 
        programs intended to improve the quality of health care 
        delivered to its members.
            (5) Compliance with state insurance laws.--An organization 
        shall not be treated as a qualified nonprofit health insurance 
        issuer unless the organization meets all the requirements that 
        other issuers of qualified health plans are required to meet in 
        any State where the issuer offers a qualified health plan, 
        including solvency and licensure requirements, rules on payments 
        to providers, and compliance with network adequacy rules, rate 
        and form filing rules, any applicable State premium assessments 
        and any other State law described in section 1324(b).
            (6) Coordination with state insurance reforms.--An 
        organization shall not be treated as a qualified nonprofit 
        health insurance issuer unless the organization does not offer a 
        health plan in a State until that State has in effect (or the 
        Secretary has implemented for the State) the market reforms 
        required by part A of title XXVII of the Public Health Service 
        Act (as amended by subtitles A and C of this Act).

    (d) Establishment of Private Purchasing Council.--
            (1) In general.--Qualified nonprofit health insurance 
        issuers participating in the CO-OP program under this section 
        may establish a private purchasing council to enter into 
        collective purchasing arrangements for items and services that 
        increase administrative and other cost efficiencies, including 
        claims administration, administrative services, health 
        information technology, and actuarial services.
            (2) Council may not set payment rates.--The private 
        purchasing council established under paragraph (1) shall not set 
        payment rates for health care facilities or providers 
        participating in health insurance coverage provided by qualified 
        nonprofit health insurance issuers.
            (3) Continued application of antitrust laws.--
                    (A) In general.--Nothing in this section shall be 
                construed to limit the application of the antitrust laws 
                to any private purchasing council (whether or not 
                established under this subsection) or to any qualified 
                nonprofit health insurance issuer participating in such 
                a council.
                    (B) Antitrust laws.--For purposes of this 
                subparagraph, the term ``antitrust laws'' has the 
                meaning given the term in subsection (a) of the first 
                section of the Clayton Act (15 U.S.C. 12(a)). Such term 
                also includes section 5 of the Federal Trade Commission 
                Act (15 U.S.C. 45) to

[[Page 124 STAT. 191]]

                the extent that such section 5 applies to unfair methods 
                of competition.

    (e) Limitation on Participation.--No representative of any Federal, 
State, or local government (or of any political subdivision or 
instrumentality thereof), and no representative of a person described in 
subsection (c)(2)(A), may serve on the board of directors of a qualified 
nonprofit health insurance issuer or with a private purchasing council 
established under subsection (d).
    (f) Limitations on Secretary.--
            (1) In general.--The Secretary shall not--
                    (A) participate in any negotiations between 1 or 
                more qualified nonprofit health insurance issuers (or a 
                private purchasing council established under subsection 
                (d)) and any health care facilities or providers, 
                including any drug manufacturer, pharmacy, or hospital; 
                and
                    (B) establish or maintain a price structure for 
                reimbursement of any health benefits covered by such 
                issuers.
            (2) Competition.--Nothing in this section shall be construed 
        as authorizing the Secretary to interfere with the competitive 
        nature of providing health benefits through qualified nonprofit 
        health insurance issuers.

    (g) Appropriations.--There are hereby appropriated, out of any funds 
in the Treasury not otherwise appropriated, $6,000,000,000 to carry out 
this section.
    (h) Tax Exemption for Qualified Nonprofit Health Insurance Issuer.--
            (1) In general.--Section 501(c) of the Internal Revenue Code 
        of 1986 <<NOTE: 26 USC 501.>>  (relating to list of exempt 
        organizations) is amended by adding at the end the following:
            ``(29) CO-OP health insurance issuers.--
                    ``(A) In general.--A qualified nonprofit health 
                insurance issuer (within the meaning of section 1322 of 
                the Patient Protection and Affordable Care Act) which 
                has received a loan or grant under the CO-OP program 
                under such section, but only with respect to periods for 
                which the issuer is in compliance with the requirements 
                of such section and any agreement with respect to the 
                loan or grant.
                    ``(B) Conditions for 
                exemption <<NOTE: Applicability.>> .--Subparagraph (A) 
                shall apply to an organization only if--
                          ``(i) <<NOTE: Notice.>> the organization has 
                      given notice to the Secretary, in such manner as 
                      the Secretary may by regulations prescribe, that 
                      it is applying for recognition of its status under 
                      this paragraph,
                          ``(ii) except as provided in section 
                      1322(c)(4) of the Patient Protection and 
                      Affordable Care Act, no part of the net earnings 
                      of which inures to the benefit of any private 
                      shareholder or individual,
                          ``(iii) <<NOTE: Lobbying.>> no substantial 
                      part of the activities of which is carrying on 
                      propaganda, or otherwise attempting, to influence 
                      legislation, and
                          ``(iv) the organization does not participate 
                      in, or intervene in (including the publishing or 
                      distributing of statements), any political 
                      campaign on behalf of (or in opposition to) any 
                      candidate for public office.''.

[[Page 124 STAT. 192]]

            (2) Additional reporting requirement.--Section 6033 of such 
        Code (relating to returns by exempt organizations) is amended by 
        redesignating subsection (m) as subsection (n) and by inserting 
        after subsection (l) the following:

    ``(m) Additional Information Required From CO-OP Insurers.--An 
organization described in section 501(c)(29) shall include on the return 
required under subsection (a) the following information:
            ``(1) The amount of the reserves required by each State in 
        which the organization is licensed to issue qualified health 
        plans.
            ``(2) The amount of reserves on hand.''.
            (3) Application of tax on excess benefit transactions.--
        Section 4958(e)(1) of such Code (defining applicable tax-exempt 
        organization) is amended by striking ``paragraph (3) or (4)'' 
        and inserting ``paragraph (3), (4), or (29)''.

    (i) GAO Study and Report.--
            (1) Study.--The Comptroller General of the General 
        Accountability Office shall conduct an ongoing study on 
        competition and market concentration in the health insurance 
        market in the United States after the implementation of the 
        reforms in such market under the provisions of, and the 
        amendments made by, this Act. Such study shall include an 
        analysis of new issuers of health insurance in such market.
            (2) Report.-- <<NOTE: Effective date.>> The Comptroller 
        General shall, not later than December 31 of each even-numbered 
        year (beginning with 2014), report to the appropriate committees 
        of the Congress the results of the study conducted under 
        paragraph (1), including any recommendations for administrative 
        or legislative changes the Comptroller General determines 
        necessary or appropriate to increase competition in the health 
        insurance market.

SEC. 1323. <<NOTE: 42 USC 18043.>> COMMUNITY HEALTH INSURANCE OPTION.

    (a) Voluntary Nature.--
            (1) No requirement for health care providers to 
        participate.--Nothing in this section shall be construed to 
        require a health care provider to participate in a community 
        health insurance option, or to impose any penalty for non-
        participation.
            (2) No requirement for individuals to join.--Nothing in this 
        section shall be construed to require an individual to 
        participate in a community health insurance option, or to impose 
        any penalty for non-participation.
            (3) State opt out.--
                    (A) In general.--A State may elect to prohibit 
                Exchanges in such State from offering a community health 
                insurance option if such State enacts a law to provide 
                for such prohibition.
                    (B) Termination of opt out.--A State may repeal a 
                law described in subparagraph (A) and provide for the 
                offering of such an option through the Exchange.

    (b) Establishment of Community Health Insurance Option.--
            (1) Establishment.--The Secretary shall establish a 
        community health insurance option to offer, through the 
        Exchanges established under this title (other than Exchanges

[[Page 124 STAT. 193]]

        in States that elect to opt out as provided for in subsection 
        (a)(3)), health care coverage that provides value, choice, 
        competition, and stability of affordable, high quality coverage 
        throughout the United States.
            (2) Community health insurance option.-- 
        <<NOTE: Definition.>> In this section, the term ``community 
        health insurance option'' means health insurance coverage that--
                    (A) except as specifically provided for in this 
                section, complies with the requirements for being a 
                qualified health plan;
                    (B) provides high value for the premium charged;
                    (C) reduces administrative costs and promotes 
                administrative simplification for beneficiaries;
                    (D) promotes high quality clinical care;
                    (E) provides high quality customer service to 
                beneficiaries;
                    (F) offers a sufficient choice of providers; and
                    (G) complies with State laws (if any), except as 
                otherwise provided for in this title, relating to the 
                laws described in section 1324(b).
            (3) Essential health benefits.--
                    (A) General rule.--Except as provided in 
                subparagraph (B), a community health insurance option 
                offered under this section shall provide coverage only 
                for the essential health benefits described in section 
                1302(b).
                    (B) States may offer additional benefits.--Nothing 
                in this section shall preclude a State from requiring 
                that benefits in addition to the essential health 
                benefits required under subparagraph (A) be provided to 
                enrollees of a community health insurance option offered 
                in such State.
                    (C) Credits.--
                          (i) In general.--An individual enrolled in a 
                      community health insurance option under this 
                      section shall be eligible for credits under 
                      section 36B of the Internal Revenue Code of 1986 
                      in the same manner as an individual who is 
                      enrolled in a qualified health plan.
                          (ii) No additional federal cost.--A 
                      requirement by a State under subparagraph (B) that 
                      benefits in addition to the essential health 
                      benefits required under subparagraph (A) be 
                      provided to enrollees of a community health 
                      insurance option shall not affect the amount of a 
                      premium tax credit provided under section 36B of 
                      the Internal Revenue Code of 1986 with respect to 
                      such plan.
                    (D) State must assume cost <<NOTE: Payments.>> .--A 
                State shall make payments to or on behalf of an eligible 
                individual to defray the cost of any additional benefits 
                described in subparagraph (B).
                    (E) Ensuring access to all services.--Nothing in 
                this Act shall prohibit an individual enrolled in a 
                community health insurance option from paying out-of-
                pocket the full cost of any item or service not included 
                as an essential health benefit or otherwise covered as a 
                benefit by a health plan. Nothing in subparagraph (B) 
                shall prohibit any type of medical provider from 
                accepting an out-of-pocket payment from an individual 
                enrolled in a community health

[[Page 124 STAT. 194]]

                insurance option for a service otherwise not included as 
                an essential health benefit.
                    (F) Protecting access to end of life care.--A 
                community health insurance option offered under this 
                section shall be prohibited from limiting access to end 
                of life care.
            (4) Cost sharing.--A community health insurance option shall 
        offer coverage at each of the levels of coverage described in 
        section 1302(d).
            (5) Premiums.--
                    (A) Premiums sufficient to cover costs.--The 
                Secretary shall establish geographically adjusted 
                premium rates in an amount sufficient to cover expected 
                costs (including claims and administrative costs) using 
                methods in general use by qualified health plans.
                    (B) Applicable rules.--The provisions of title XXVII 
                of the Public Health Service Act relating to premiums 
                shall apply to community health insurance options under 
                this section, including modified community rating 
                provisions under section 2701 of such Act.
                    (C) Collection of data.--The Secretary shall collect 
                data as necessary to set premium rates under 
                subparagraph (A).
                    (D) National pooling.--Notwithstanding any other 
                provision of law, the Secretary may treat all enrollees 
                in community health insurance options as members of a 
                single pool.
                    (E) Contingency margin.--In establishing premium 
                rates under subparagraph (A), the Secretary shall 
                include an appropriate amount for a contingency margin.
            (6) Reimbursement rates.--
                    (A) Negotiated rates.--The Secretary shall negotiate 
                rates for the reimbursement of health care providers for 
                benefits covered under a community health insurance 
                option.
                    (B) Limitation.--The rates described in subparagraph 
                (A) shall not be higher, in aggregate, than the average 
                reimbursement rates paid by health insurance issuers 
                offering qualified health plans through the Exchange.
                    (C) Innovation.--Subject to the limits contained in 
                subparagraph (A), a State Advisory Council established 
                or designated under subsection (d) may develop or 
                encourage the use of innovative payment policies that 
                promote quality, efficiency and savings to consumers.
            (7) Solvency and consumer protection.--
                    (A) <<NOTE: Standard.>>  Solvency.--The Secretary 
                shall establish a Federal solvency standard to be 
                applied with respect to a community health insurance 
                option. A community health insurance option shall also 
                be subject to the solvency standard of each State in 
                which such community health insurance option is offered.
                    (B) Minimum required.--In establishing the standard 
                described under subparagraph (A), the Secretary shall 
                require a reserve fund that shall be equal to at least 
                the dollar value of the incurred but not reported claims 
                of a community health insurance option.

[[Page 124 STAT. 195]]

                    (C) Consumer 
                protections <<NOTE: Applicability.>> .--The consumer 
                protection laws of a State shall apply to a community 
                health insurance option.
            (8) Requirements established in partnership with insurance 
        commissioners.--
                    (A) In general.--The Secretary, in collaboration 
                with the National Association of Insurance Commissioners 
                (in this paragraph referred to as the ``NAIC''), may 
                promulgate regulations to establish additional 
                requirements for a community health insurance option.
                    (B) Applicability <<NOTE: Effective date.>> .--Any 
                requirement promulgated under subparagraph (A) shall be 
                applicable to such option beginning 90 days after the 
                date on which the regulation involved becomes final.

    (c) Start-up Fund.--
            (1) Establishment of fund.--
                    (A) In general.--There is established in the 
                Treasury of the United States a trust fund to be known 
                as the ``Health Benefit Plan Start-Up Fund'' (referred 
                to in this section as the ``Start-Up Fund''), that shall 
                consist of such amounts as may be appropriated or 
                credited to the Start-Up Fund as provided for in this 
                subsection to provide loans for the initial operations 
                of a community health insurance option. Such amounts 
                shall remain available until expended.
                    (B) Funding.--There is hereby appropriated to the 
                Start-Up Fund, out of any moneys in the Treasury not 
                otherwise appropriated an amount requested by the 
                Secretary of Health and Human Services as necessary to--
                          (i) pay the start-up costs associated with the 
                      initial operations of a community health insurance 
                      option; and
                          (ii) pay the costs of making payments on 
                      claims submitted during the period that is not 
                      more than 90 days from the date on which such 
                      option is offered.
            (2) Use of start-up fund.--The Secretary shall use amounts 
        contained in the Start-Up Fund to make payments (subject to the 
        repayment requirements in paragraph (4)) for the purposes 
        described in paragraph (1)(B).
            (3) Pass through of rebates.--The Secretary may establish 
        procedures for reducing the amount of payments to a contracting 
        administrator to take into account any rebates or price 
        concessions.
            (4) Repayment.--
                    (A) <<NOTE: Deadline.>>  In general.--A community 
                health insurance option shall be required to repay the 
                Secretary of the Treasury (on such terms as the 
                Secretary may require) for any payments made under 
                paragraph (1)(B) by the date that is not later than 9 
                years after the date on which the payment is made. The 
                Secretary may require the payment of interest with 
                respect to such repayments at rates that do not exceed 
                the market interest rate (as determined by the 
                Secretary).
                    (B) Sanctions in case of for-profit conversion.--In 
                any case in which the Secretary enters into a contract 
                with a qualified entity for the offering of a community 
                health insurance option and such entity is determined to

[[Page 124 STAT. 196]]

                be a for-profit entity by the Secretary, such entity 
                shall be--
                          (i) immediately liable to the Secretary for 
                      any payments received by such entity from the 
                      Start-Up Fund; and
                          (ii) permanently ineligible to offer a 
                      qualified health plan.

    (d) State Advisory Council.--
            (1) Establishment.--A State (other than a State that elects 
        to opt out as provided for in subsection (a)(3)) shall establish 
        or designate a public or non-profit private entity to serve as 
        the State Advisory Council to provide recommendations to the 
        Secretary on the operations and policies of a community health 
        insurance option in the State. Such Council shall provide 
        recommendations on at least the following:
                    (A) policies and procedures to integrate quality 
                improvement and cost containment mechanisms into the 
                health care delivery system;
                    (B) mechanisms to facilitate public awareness of the 
                availability of a community health insurance option; and
                    (C) alternative payment structures under a community 
                health insurance option for health care providers that 
                encourage quality improvement and cost control.
            (2) Members.--The members of the State Advisory Council 
        shall be representatives of the public and shall include health 
        care consumers and providers.
            (3) Applicability of recommendations.--The Secretary may 
        apply the recommendations of a State Advisory Council to a 
        community health insurance option in that State, in any other 
        State, or in all States.

    (e) Authority To Contract; Terms of Contract.--
            (1) Authority.--
                    (A) In general.--The Secretary may enter into a 
                contract or contracts with one or more qualified 
                entities 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 a community health insurance option in the 
                same manner as the Secretary may enter into contracts 
                under subsection (a)(1) of such section. The Secretary 
                shall have the same authority with respect to a 
                community health insurance option under this section 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.
                    (B) Requirements apply.--If the Secretary enters 
                into a contract with a qualified entity to offer a 
                community health insurance option, under such contract 
                such entity--
                          (i) shall meet the criteria established under 
                      paragraph (2); and
                          (ii) <<NOTE: Fee.>> shall receive an 
                      administrative fee under paragraph (7).
                    (C) Limitation.--Contracts under this subsection 
                shall not involve the transfer of insurance risk to the 
                contracting administrator.
                    (D) Reference.--An entity with which the Secretary 
                has entered into a contract under this paragraph shall 
                be referred to as a ``contracting administrator''.

[[Page 124 STAT. 197]]

            (2) Qualified entity.--To be qualified to be selected by the 
        Secretary to offer a community health insurance option, an 
        entity shall--
                    (A) meet the criteria established under section 
                1874A(a)(2) of the Social Security Act;
                    (B) be a nonprofit entity for purposes of offering 
                such option;
                    (C) meet the solvency standards applicable under 
                subsection (b)(7);
                    (D) be eligible to offer health insurance or health 
                benefits coverage;
                    (E) meet quality standards specified by the 
                Secretary;
                    (F) have in place effective procedures to control 
                fraud, abuse, and waste; and
                    (G) meet such other requirements as the Secretary 
                may impose.
        Procedures described under subparagraph (F) shall include the 
        implementation of procedures to use beneficiary identifiers to 
        identify individuals entitled to benefits so that such an 
        individual's social security account number is not used, and 
        shall also include procedures for the use of technology 
        (including front-end, prepayment intelligent data-matching 
        technology similar to that used by hedge funds, investment 
        funds, and banks) to provide real-time data analysis of claims 
        for payment under this title to identify and investigate unusual 
        billing or order practices under this title that could indicate 
        fraud or abuse.
            (3) Term.--A contract provided for under paragraph (1) shall 
        be for a term of at least 5 years but not more than 10 years, as 
        determined by the Secretary. At the end of each such term, the 
        Secretary shall conduct a competitive bidding process for the 
        purposes of renewing existing contracts or selecting new 
        qualified entities with which to enter into contracts under such 
        paragraph.
            (4) <<NOTE: Determination.>>  Limitation.--A contract may 
        not be renewed under this subsection unless the Secretary 
        determines that the contracting administrator has met 
        performance requirements established by the Secretary in the 
        areas described in paragraph (7)(B).
            (5) Audits.--The Inspector General shall conduct periodic 
        audits with respect to contracting administrators under this 
        subsection to ensure that the administrator involved is in 
        compliance with this section.
            (6) Revocation.-- <<NOTE: Notification.>> A contract awarded 
        under this subsection shall be revoked by the Secretary, upon 
        the recommendation of the Inspector General, only after notice 
        to the contracting administrator involved and an opportunity for 
        a hearing. The Secretary may revoke such contract if the 
        Secretary determines that such administrator has engaged in 
        fraud, deception, waste, abuse of power, negligence, 
        mismanagement of taxpayer dollars, or gross mismanagement. An 
        entity that has had a contract revoked under this paragraph 
        shall not be qualified to enter into a subsequent contract under 
        this subsection.
            (7) Fee for administration.--
                    (A) In general.--The Secretary shall pay the 
                contracting administrator a fee for the management, 
                administration, and delivery of the benefits under this 
                section.

[[Page 124 STAT. 198]]

                    (B) Requirement for high quality administration.--
                The Secretary may increase the fee described in 
                subparagraph (A) by not more than 10 percent, or reduce 
                the fee described in subparagraph (A) by not more than 
                50 percent, based on the extent to which the contracting 
                administrator, in the determination of the Secretary, 
                meets performance requirements established by the 
                Secretary, in at least the following areas:
                          (i) Maintaining low premium costs and low cost 
                      sharing requirements, provided that such 
                      requirements are consistent with section 1302.
                          (ii) Reducing administrative costs and 
                      promoting administrative simplification for 
                      beneficiaries.
                          (iii) Promoting high quality clinical care.
                          (iv) Providing high quality customer service 
                      to beneficiaries.
                    (C) Non-renewal.--The Secretary may not renew a 
                contract to offer a community health insurance option 
                under this section with any contracting entity that has 
                been assessed more than one reduction under subparagraph 
                (B) during the contract period.
            (8) Limitation.--Notwithstanding the terms of a contract 
        under this subsection, the Secretary shall negotiate the 
        reimbursement rates for purposes of subsection (b)(6).

    (f) Report by HHS and Insolvency Warnings.--
            (1) In general.--On an annual basis, the Secretary shall 
        conduct a study on the solvency of a community health insurance 
        option and submit to Congress a report describing the results of 
        such study.
            (2) Result.--If, in any year, the result of the study under 
        paragraph (1) is that a community health insurance option is 
        insolvent, such result shall be treated as a community health 
        insurance option solvency warning.
            (3) Submission of plan and procedure.--
                    (A) In general <<NOTE: President. Deadline.>> .--If 
                there is a community health insurance option solvency 
                warning under paragraph (2) made in a year, the 
                President shall submit to Congress, within the 15-day 
                period beginning on the date of the budget submission to 
                Congress under section 1105(a) of title 31, United 
                States Code, for the succeeding year, proposed 
                legislation to respond to such warning.
                    (B) Procedure.--In the case of a legislative 
                proposal submitted by the President pursuant to 
                subparagraph (A), such proposal shall be considered by 
                Congress using the same procedures described under 
                sections 803 and 804 of the Medicare Prescription Drug, 
                Improvement, and Modernization Act of 2003 that shall be 
                used for a medicare funding warning.

    (g) Marketing Parity.--In a facility controlled by the Federal 
Government, or by a State, where marketing or promotional materials 
related to a community health insurance option are made available to the 
public, making available marketing or promotional materials relating to 
private health insurance plans shall not be prohibited. Such materials 
include informational pamphlets, guidebooks, enrollment forms, or other 
materials determined reasonable for display.

[[Page 124 STAT. 199]]

    (h) Authorization of Appropriations.--There is authorized to be 
appropriated such sums as may be necessary to carry out this section.

SEC. 1324. <<NOTE: 42 USC 18044.>>  LEVEL PLAYING FIELD.

    (a) In General.--Notwithstanding any other provision of law, any 
health insurance coverage offered by a private health insurance issuer 
shall not be subject to any Federal or State law described in subsection 
(b) if a qualified health plan offered under the Consumer Operated and 
Oriented Plan program under section 1322, a community health insurance 
option under section 1323, or a nationwide qualified health plan under 
section 1333(b), is not subject to such law.
    (b) Laws Described.--The Federal and State laws described in this 
subsection are those Federal and State laws relating to--
            (1) guaranteed renewal;
            (2) rating;
            (3) preexisting conditions;
            (4) non-discrimination;
            (5) quality improvement and reporting;
            (6) fraud and abuse;
            (7) solvency and financial requirements;
            (8) market conduct;
            (9) prompt payment;
            (10) appeals and grievances;
            (11) privacy and confidentiality;
            (12) licensure; and
            (13) benefit plan material or information.

      PART IV--STATE FLEXIBILITY TO ESTABLISH ALTERNATIVE PROGRAMS

SEC. 1331. <<NOTE: 42 USC 18051.>> STATE FLEXIBILITY TO ESTABLISH BASIC 
            HEALTH PROGRAMS FOR LOW-INCOME INDIVIDUALS NOT ELIGIBLE FOR 
            MEDICAID.

    (a) Establishment of Program.--
            (1) In general.--The Secretary shall establish a basic 
        health program meeting the requirements of this section under 
        which a State may enter into contracts to offer 1 or more 
        standard health plans providing at least the essential health 
        benefits described in section 1302(b) to eligible individuals in 
        lieu of offering such individuals coverage through an Exchange.
            (2) Certifications as to benefit coverage and costs.--Such 
        program shall provide that a State may not establish a basic 
        health program under this section unless the State establishes 
        to the satisfaction of the Secretary, and the Secretary 
        certifies, that--
                    (A) in the case of an eligible individual enrolled 
                in a standard health plan offered through the program, 
                the State provides--
                          (i) that the amount of the monthly premium an 
                      eligible individual is required to pay for 
                      coverage under the standard health plan for the 
                      individual and the individual's dependents does 
                      not exceed the amount of the monthly premium that 
                      the eligible individual would have been required 
                      to pay (in the rating area in which the individual 
                      resides) if the individual had

[[Page 124 STAT. 200]]

                      enrolled in the applicable second lowest cost 
                      silver plan (as defined in section 36B(b)(3)(B) of 
                      the Internal Revenue Code of 1986) offered to the 
                      individual through an Exchange; and
                          (ii) that the cost-sharing an eligible 
                      individual is required to pay under the standard 
                      health plan does not exceed--
                                    (I) the cost-sharing required under 
                                a platinum plan in the case of an 
                                eligible individual with household 
                                income not in excess of 150 percent of 
                                the poverty line for the size of the 
                                family involved; and
                                    (II) the cost-sharing required under 
                                a gold plan in the case of an eligible 
                                individual not described in subclause 
                                (I); and
                    (B) the benefits provided under the standard health 
                plans offered through the program cover at least the 
                essential health benefits described in section 1302(b).
        For purposes of subparagraph (A)(i), the amount of the monthly 
        premium an individual is required to pay under either the 
        standard health plan or the applicable second lowest cost silver 
        plan shall be determined after reduction for any premium tax 
        credits and cost-sharing reductions allowable with respect to 
        either plan.

    (b) Standard Health Plan. <<NOTE: Definition.>> --In this section, 
the term ``standard heath plan'' means a health benefits plan that the 
State contracts with under this section--
            (1) under which the only individuals eligible to enroll are 
        eligible individuals;
            (2) that provides at least the essential health benefits 
        described in section 1302(b); and
            (3) in the case of a plan that provides health insurance 
        coverage offered by a health insurance issuer, that has a 
        medical loss ratio of at least 85 percent.

    (c) Contracting Process.--
            (1) In general.--A State basic health program shall 
        establish a competitive process for entering into contracts with 
        standard health plans under subsection (a), including 
        negotiation of premiums and cost-sharing and negotiation of 
        benefits in addition to the essential health benefits described 
        in section 1302(b).
            (2) Specific items to be considered.--A State shall, as part 
        of its competitive process under paragraph (1), include at least 
        the following:
                    (A) Innovation.--Negotiation with offerors of a 
                standard health plan for the inclusion of innovative 
                features in the plan, including--
                          (i) care coordination and care management for 
                      enrollees, especially for those with chronic 
                      health conditions;
                          (ii) incentives for use of preventive 
                      services; and
                          (iii) the establishment of relationships 
                      between providers and patients that maximize 
                      patient involvement in health care decision-
                      making, including providing incentives for 
                      appropriate utilization under the plan.

[[Page 124 STAT. 201]]

                    (B) Health and resource differences.--Consideration 
                of, and the making of suitable allowances for, 
                differences in health care needs of enrollees and 
                differences in local availability of, and access to, 
                health care providers. Nothing in this subparagraph 
                shall be construed as allowing discrimination on the 
                basis of pre-existing conditions or other health status-
                related factors.
                    (C) Managed care.--Contracting with managed care 
                systems, or with systems that offer as many of the 
                attributes of managed care as are feasible in the local 
                health care market.
                    (D) Performance measures.--Establishing specific 
                performance measures and standards for issuers of 
                standard health plans that focus on quality of care and 
                improved health outcomes, requiring such plans to report 
                to the State with respect to the measures and standards, 
                and making the performance and quality information 
                available to enrollees in a useful form.
            (3) Enhanced availability.--
                    (A) Multiple plans.--A State shall, to the maximum 
                extent feasible, seek to make multiple standard health 
                plans available to eligible individuals within a State 
                to ensure individuals have a choice of such plans.
                    (B) Regional compacts.--A State may negotiate a 
                regional compact with other States to include coverage 
                of eligible individuals in all such States in agreements 
                with issuers of standard health plans.
            (4) Coordination with other state programs.--A State shall 
        seek to coordinate the administration of, and provision of 
        benefits under, its program under this section with the State 
        medicaid program under title XIX of the Social Security Act, the 
        State child health plan under title XXI of such Act, and other 
        State-administered health programs to maximize the efficiency of 
        such programs and to improve the continuity of care.

    (d) Transfer of Funds to States.--
            (1) <<NOTE: Determination.>>  In general.--If the Secretary 
        determines that a State electing the application of this section 
        meets the requirements of the program established under 
        subsection (a), the Secretary shall transfer to the State for 
        each fiscal year for which 1 or more standard health plans are 
        operating within the State the amount determined under paragraph 
        (3).
            (2) Use of funds.--A State shall establish a trust for the 
        deposit of the amounts received under paragraph (1) and amounts 
        in the trust fund shall only be used to reduce the premiums and 
        cost-sharing of, or to provide additional benefits for, eligible 
        individuals enrolled in standard health plans within the State. 
        Amounts in the trust fund, and expenditures of such amounts, 
        shall not be included in determining the amount of any non-
        Federal funds for purposes of meeting any matching or 
        expenditure requirement of any federally-funded program.
            (3) Amount of payment.--
                    (A) Secretarial determination.--
                          (i) In general.--The amount determined under 
                      this paragraph for any fiscal year is the amount 
                      the Secretary determines is equal to 85 percent of 
                      the premium tax credits under section 36B of the 
                      Internal

[[Page 124 STAT. 202]]

                      Revenue Code of 1986, and the cost-sharing 
                      reductions under section 1402, that would have 
                      been provided for the fiscal year to eligible 
                      individuals enrolled in standard health plans in 
                      the State if such eligible individuals were 
                      allowed to enroll in qualified health plans 
                      through an Exchange established under this 
                      subtitle.
                          (ii) Specific requirements.--The Secretary 
                      shall make the determination under clause (i) on a 
                      per enrollee basis and shall take into account all 
                      relevant factors necessary to determine the value 
                      of the premium tax credits and cost-sharing 
                      reductions that would have been provided to 
                      eligible individuals described in clause (i), 
                      including the age and income of the enrollee, 
                      whether the enrollment is for self-only or family 
                      coverage, geographic differences in average 
                      spending for health care across rating areas, the 
                      health status of the enrollee for purposes of 
                      determining risk adjustment payments and 
                      reinsurance payments that would have been made if 
                      the enrollee had enrolled in a qualified health 
                      plan through an Exchange, and whether any 
                      reconciliation of the credit or cost-sharing 
                      reductions would have occurred if the enrollee had 
                      been so enrolled. This determination shall take 
                      into consideration the experience of other States 
                      with respect to participation in an Exchange and 
                      such credits and reductions provided to residents 
                      of the other States, with a special focus on 
                      enrollees with income below 200 percent of 
                      poverty.
                          (iii) Certification.--The Chief Actuary of the 
                      Centers for Medicare & Medicaid Services, in 
                      consultation with the Office of Tax Analysis of 
                      the Department of the Treasury, shall certify 
                      whether the methodology used to make 
                      determinations under this subparagraph, and such 
                      determinations, meet the requirements of clause 
                      (ii). Such certifications shall be based on 
                      sufficient data from the State and from comparable 
                      States about their experience with programs 
                      created by this Act.
                    (B) Corrections.--The Secretary shall adjust the 
                payment for any fiscal year to reflect any error in the 
                determinations under subparagraph (A) for any preceding 
                fiscal year.
            (4) Application of special rules.--The provisions of section 
        1303 shall apply to a State basic health program, and to 
        standard health plans offered through such program, in the same 
        manner as such rules apply to qualified health plans.

    (e) Eligible Individual.--
            (1) <<NOTE: Definition.>>  In general.--In this section, the 
        term ``eligible individual'' means, with respect to any State, 
        an individual--
                    (A) who a resident of the State who is not eligible 
                to enroll in the State's medicaid program under title 
                XIX of the Social Security Act for benefits that at a 
                minimum consist of the essential health benefits 
                described in section 1302(b);

[[Page 124 STAT. 203]]

                    (B) whose household income exceeds 133 percent but 
                does not exceed 200 percent of the poverty line for the 
                size of the family involved;
                    (C) who is not eligible for minimum essential 
                coverage (as defined in section 5000A(f) of the Internal 
                Revenue Code of 1986) or is eligible for an employer-
                sponsored plan that is not affordable coverage (as 
                determined under section 5000A(e)(2) of such Code); and
                    (D) who has not attained age 65 as of the beginning 
                of the plan year.
        Such term shall not include any individual who is not a 
        qualified individual under section 1312 who is eligible to be 
        covered by a qualified health plan offered through an Exchange.
            (2) Eligible individuals may not use exchange.--An eligible 
        individual shall not be treated as a qualified individual under 
        section 1312 eligible for enrollment in a qualified health plan 
        offered through an Exchange established under section 1311.

    (f) Secretarial Oversight <<NOTE: Review.>> .--The Secretary shall 
each year conduct a review of each State program to ensure compliance 
with the requirements of this section, including ensuring that the State 
program meets--
            (1) eligibility verification requirements for participation 
        in the program;
            (2) the requirements for use of Federal funds received by 
        the program; and
            (3) the quality and performance standards under this 
        section.

    (g) Standard Health Plan Offerors.--A State may provide that persons 
eligible to offer standard health plans under a basic health program 
established under this section may include a licensed health maintenance 
organization, a licensed health insurance insurer, or a network of 
health care providers established to offer services under the program.
    (h) Definitions.--Any term used in this section which is also used 
in section 36B of the Internal Revenue Code of 1986 shall have the 
meaning given such term by such section.

SEC. 1332. <<NOTE: 42 USC 18052.>>  WAIVER FOR STATE INNOVATION.

    (a) Application.--
            (1) <<NOTE: Effective date.>>  In general.--A State may 
        apply to the Secretary for the waiver of all or any requirements 
        described in paragraph (2) with respect to health insurance 
        coverage within that State for plan years beginning on or after 
        January 1, 2017. Such application shall--
                    (A) be filed at such time and in such manner as the 
                Secretary may require;
                    (B) contain such information as the Secretary may 
                require, including--
                          (i) a comprehensive description of the State 
                      legislation and program to implement a plan 
                      meeting the requirements for a waiver under this 
                      section; and
                          (ii) a 10-year budget plan for such plan that 
                      is budget neutral for the Federal Government; and
                    (C) provide an assurance that the State has enacted 
                the law described in subsection (b)(2).

[[Page 124 STAT. 204]]

            (2) Requirements.-- <<NOTE: Effective date.>> The 
        requirements described in this paragraph with respect to health 
        insurance coverage within the State for plan years beginning on 
        or after January 1, 2014, are as follows:
                    (A) Part I of subtitle D.
                    (B) Part II of subtitle D.
                    (C) Section 1402.
                    (D) Sections 36B, 4980H, and 5000A of the Internal 
                Revenue Code of 1986.
            (3) Pass through of funding.--With respect to a State waiver 
        under paragraph (1), under which, due to the structure of the 
        State plan, individuals and small employers in the State would 
        not qualify for the premium tax credits, cost-sharing 
        reductions, or small business credits under sections 36B of the 
        Internal Revenue Code of 1986 or under part I of subtitle E for 
        which they would otherwise be eligible, the Secretary shall 
        provide for an alternative means by which the aggregate amount 
        of such credits or reductions that would have been paid on 
        behalf of participants in the Exchanges established under this 
        title had the State not received such waiver, shall be paid to 
        the State for purposes of implementing the State plan under the 
        waiver. Such amount shall be determined annually by the 
        Secretary, taking into consideration the experience of other 
        States with respect to participation in an Exchange and credits 
        and reductions provided under such provisions to residents of 
        the other States.
            (4) Waiver consideration and transparency.--
                    (A) In general.--An application for a waiver under 
                this section shall be considered by the Secretary in 
                accordance with the regulations described in 
                subparagraph (B).
                    (B) Regulations <<NOTE: Deadline.>> .--Not later 
                than 180 days after the date of enactment of this Act, 
                the Secretary shall promulgate regulations relating to 
                waivers under this section that provide--
                          (i) a process for public notice and comment at 
                      the State level, including public hearings, 
                      sufficient to ensure a meaningful level of public 
                      input;
                          (ii) a process for the submission of an 
                      application that ensures the disclosure of--
                                    (I) the provisions of law that the 
                                State involved seeks to waive; and
                                    (II) the specific plans of the State 
                                to ensure that the waiver will be in 
                                compliance with subsection (b);
                          (iii) a process for providing public notice 
                      and comment after the application is received by 
                      the Secretary, that is sufficient to ensure a 
                      meaningful level of public input and that does not 
                      impose requirements that are in addition to, or 
                      duplicative of, requirements imposed under the 
                      Administrative Procedures Act, or requirements 
                      that are unreasonable or unnecessarily burdensome 
                      with respect to State compliance;
                          (iv) a process for the submission to the 
                      Secretary of periodic reports by the State 
                      concerning the implementation of the program under 
                      the waiver; and
                          (v) a process for the periodic evaluation by 
                      the Secretary of the program under the waiver.

[[Page 124 STAT. 205]]

                    (C) Report.--The Secretary shall annually report to 
                Congress concerning actions taken by the Secretary with 
                respect to applications for waivers under this section.
            (5) Coordinated waiver process.--The Secretary shall develop 
        a process for coordinating and consolidating the State waiver 
        processes applicable under the provisions of this section, and 
        the existing waiver processes applicable under titles XVIII, 
        XIX, and XXI of the Social Security Act, and any other Federal 
        law relating to the provision of health care items or services. 
        Such process shall permit a State to submit a single application 
        for a waiver under any or all of such provisions.
            (6) Definition.--In this section, the term ``Secretary'' 
        means--
                    (A) the Secretary of Health and Human Services with 
                respect to waivers relating to the provisions described 
                in subparagraph (A) through (C) of paragraph (2); and
                    (B) the Secretary of the Treasury with respect to 
                waivers relating to the provisions described in 
                paragraph (2)(D).

    (b) Granting of Waivers.--
            (1) In general.--The Secretary may grant a request for a 
        waiver under subsection (a)(1) only if the Secretary determines 
        that the State plan--
                    (A) will provide coverage that is at least as 
                comprehensive as the coverage defined in section 1302(b) 
                and offered through Exchanges established under this 
                title as certified by Office of the Actuary of the 
                Centers for Medicare & Medicaid Services based on 
                sufficient data from the State and from comparable 
                States about their experience with programs created by 
                this Act and the provisions of this Act that would be 
                waived;
                    (B) will provide coverage and cost sharing 
                protections against excessive out-of-pocket spending 
                that are at least as affordable as the provisions of 
                this title would provide;
                    (C) will provide coverage to at least a comparable 
                number of its residents as the provisions of this title 
                would provide; and
                    (D) will not increase the Federal deficit.
            (2) Requirement to enact a law.--
                    (A) In general.--A law described in this paragraph 
                is a State law that provides for State actions under a 
                waiver under this section, including the implementation 
                of the State plan under subsection (a)(1)(B).
                    (B) Termination of opt out.--A State may repeal a 
                law described in subparagraph (A) and terminate the 
                authority provided under the waiver with respect to the 
                State.

    (c) Scope of Waiver.--
            (1) <<NOTE: Determination.>>  In general.--The Secretary 
        shall determine the scope of a waiver of a requirement described 
        in subsection (a)(2) granted to a State under subsection (a)(1).
            (2) Limitation.--The Secretary may not waive under this 
        section any Federal law or requirement that is not within the 
        authority of the Secretary.

    (d) Determinations by Secretary.--
            (1) Time for determination.-- <<NOTE: Deadline.>> The 
        Secretary shall make a determination under subsection (a)(1) not 
        later than 180

[[Page 124 STAT. 206]]

        days after the receipt of an application from a State under such 
        subsection.
            (2) Effect of determination.-- <<NOTE: Notification.>> 
                    (A) Granting of waivers.--If the Secretary 
                determines to grant a waiver under subsection (a)(1), 
                the Secretary shall notify the State involved of such 
                determination and the terms and effectiveness of such 
                waiver.
                    (B) Denial of waiver.--If the Secretary determines a 
                waiver should not be granted under subsection (a)(1), 
                the Secretary shall notify the State involved, and the 
                appropriate committees of Congress of such determination 
                and the reasons therefore.

    (e) <<NOTE: Deadline. Notification.>>  Term of Waiver.--No waiver 
under this section may extend over a period of longer than 5 years 
unless the State requests continuation of such waiver, and such request 
shall be deemed granted unless the Secretary, within 90 days after the 
date of its submission to the Secretary, either denies such request in 
writing or informs the State in writing with respect to any additional 
information which is needed in order to make a final determination with 
respect to the request.

SEC. 1333. <<NOTE: 42 USC 18053.>>  PROVISIONS RELATING TO OFFERING OF 
            PLANS IN MORE THAN ONE STATE.

    (a) Health Care Choice Compacts.--
            (1) In general.-- <<NOTE: Deadline. Regulations.>> Not later 
        than July 1, 2013, the Secretary shall, in consultation with the 
        National Association of Insurance Commissioners, issue 
        regulations for the creation of health care choice compacts 
        under which 2 or more States may enter into an agreement under 
        which--
                    (A) 1 or more qualified health plans could be 
                offered in the individual markets in all such States 
                but, except as provided in subparagraph (B), only be 
                subject to the laws and regulations of the State in 
                which the plan was written or issued;
                    (B) the issuer of any qualified health plan to which 
                the compact applies--
                          (i) would continue to be subject to market 
                      conduct, unfair trade practices, network adequacy, 
                      and consumer protection standards (including 
                      standards relating to rating), including 
                      addressing disputes as to the performance of the 
                      contract, of the State in which the purchaser 
                      resides;
                          (ii) would be required to be licensed in each 
                      State in which it offers the plan under the 
                      compact or to submit to the jurisdiction of each 
                      such State with regard to the standards described 
                      in clause (i) (including allowing access to 
                      records as if the insurer were licensed in the 
                      State); and
                          (iii) <<NOTE: Notification.>> must clearly 
                      notify consumers that the policy may not be 
                      subject to all the laws and regulations of the 
                      State in which the purchaser resides.
            (2) State authority.--A State may not enter into an 
        agreement under this subsection unless the State enacts a law 
        after the date of the enactment of this title that specifically 
        authorizes the State to enter into such agreements.
            (3) Approval of compacts.--The Secretary may approve 
        interstate health care choice compacts under paragraph (1)

[[Page 124 STAT. 207]]

        only if the Secretary determines that such health care choice 
        compact--
                    (A) will provide coverage that is at least as 
                comprehensive as the coverage defined in section 1302(b) 
                and offered through Exchanges established under this 
                title;
                    (B) will provide coverage and cost sharing 
                protections against excessive out-of-pocket spending 
                that are at least as affordable as the provisions of 
                this title would provide;
                    (C) will provide coverage to at least a comparable 
                number of its residents as the provisions of this title 
                would provide;
                    (D) will not increase the Federal deficit; and
                    (E) will not weaken enforcement of laws and 
                regulations described in paragraph (1)(B)(i) in any 
                State that is included in such compact.
            (4) Effective date.--A health care choice compact described 
        in paragraph (1) shall not take effect before January 1, 2016.

    (b) Authority for Nationwide Plans.--
            (1) In general.--Except as provided in paragraph (2), if an 
        issuer (including a group of health insurance issuers affiliated 
        either by common ownership and control or by the common use of a 
        nationally licensed service mark) of a qualified health plan in 
        the individual or small group market meets the requirements of 
        this subsection (in this subsection a ``nationwide qualified 
        health plan'')--
                    (A) the issuer of the plan may offer the nationwide 
                qualified health plan in the individual or small group 
                market in more than 1 State; and
                    (B) <<NOTE: Applicability.>> with respect to State 
                laws mandating benefit coverage by a health plan, only 
                the State laws of the State in which such plan is 
                written or issued shall apply to the nationwide 
                qualified health plan.
            (2) State opt-out.--A State may, by specific reference in a 
        law enacted after the date of enactment of this title, provide 
        that this subsection shall not apply to that State. Such opt-out 
        shall be effective until such time as the State by law revokes 
        it.
            (3) Plan requirements.--An issuer meets the requirements of 
        this subsection with respect to a nationwide qualified health 
        plan if, in the determination of the Secretary--
                    (A) the plan offers a benefits package that is 
                uniform in each State in which the plan is offered and 
                meets the requirements set forth in paragraphs (4) 
                through (6);
                    (B) the issuer is licensed in each State in which it 
                offers the plan and is subject to all requirements of 
                State law not inconsistent with this section, including 
                but not limited to, the standards and requirements that 
                a State imposes that do not prevent the application of a 
                requirement of part A of title XXVII of the Public 
                Health Service Act or a requirement of this title;
                    (C) the issuer meets all requirements of this title 
                with respect to a qualified health plan, including the 
                requirement to offer the silver and gold levels of the 
                plan in each Exchange in the State for the market in 
                which the plan is offered;

[[Page 124 STAT. 208]]

                    (D) the issuer determines the premiums for the plan 
                in any State on the basis of the rating rules in effect 
                in that State for the rating areas in which it is 
                offered;
                    (E) the issuer offers the nationwide qualified 
                health plan in at least 60 percent of the participating 
                States in the first year in which the plan is offered, 
                65 percent of such States in the second year, 70 percent 
                of such States in the third year, 75 percent of such 
                States in the fourth year, and 80 percent of such States 
                in the fifth and subsequent years;
                    (F) the issuer shall offer the plan in participating 
                States across the country, in all geographic regions, 
                and in all States that have adopted adjusted community 
                rating before the date of enactment of this Act; and
                    (G) the issuer clearly notifies consumers that the 
                policy may not contain some benefits otherwise mandated 
                for plans in the State in which the purchaser resides 
                and provides a detailed statement of the benefits 
                offered and the benefit differences in that State, in 
                accordance with rules promulgated by the Secretary.
            (4) <<NOTE: Deadline.>>  Form review for nationwide plans.--
        Notwithstanding any contrary provision of State law, at least 3 
        months before any nationwide qualified health plan is offered, 
        the issuer shall file all nationwide qualified health plan forms 
        with the regulator in each participating State in which the plan 
        will be offered. An issuer may appeal the disapproval of a 
        nationwide qualified health plan form to the Secretary.
            (5) Applicable rules.--The Secretary shall, in consultation 
        with the National Association of Insurance Commissioners, issue 
        rules for the offering of nationwide qualified health plans 
        under this subsection. Nationwide qualified health plans may be 
        offered only after such rules have taken effect.
            (6) Coverage.--The Secretary shall provide that the health 
        benefits coverage provided to an individual through a nationwide 
        qualified health plan under this subsection shall include at 
        least the essential benefits package described in section 1302.
            (7) State law mandating benefit coverage by a health 
        benefits plan.--For the purposes of this subsection, a State law 
        mandating benefit coverage by a health plan is a law that 
        mandates health insurance coverage or the offer of health 
        insurance coverage for specific health services or specific 
        diseases. A law that mandates health insurance coverage or 
        reimbursement for services provided by certain classes of 
        providers of health care services, or a law that mandates that 
        certain classes of individuals must be covered as a group or as 
        dependents, is not a State law mandating benefit coverage by a 
        health benefits plan.

                 PART V--REINSURANCE AND RISK ADJUSTMENT

SEC. 1341. <<NOTE: 42 USC 18061.>>  TRANSITIONAL REINSURANCE PROGRAM FOR 
            INDIVIDUAL AND SMALL GROUP MARKETS IN EACH STATE.

    (a) In General <<NOTE: Deadline.>> .--Each State shall, not later 
than January 1, 2014--

[[Page 124 STAT. 209]]

            (1) include in the Federal standards or State law or 
        regulation the State adopts and has in effect under section 
        1321(b) the provisions described in subsection (b); and
            (2) <<NOTE: Contracts.>> establish (or enter into a contract 
        with) 1 or more applicable reinsurance entities to carry out the 
        reinsurance program under this section.

    (b) Model Regulation.--
            (1) In general.--In establishing the Federal standards under 
        section 1321(a), the Secretary, in consultation with the 
        National Association of Insurance Commissioners (the ``NAIC''), 
        shall include provisions that enable States to establish and 
        maintain a program under which--
                    (A) <<NOTE: Effective date. Time period.>> health 
                insurance issuers, and third party administrators on 
                behalf of group health plans, are required to make 
                payments to an applicable reinsurance entity for any 
                plan year beginning in the 3-year period beginning 
                January 1, 2014 (as specified in paragraph (3); and
                    (B) the applicable reinsurance entity collects 
                payments under subparagraph (A) and uses amounts so 
                collected to make reinsurance payments to health 
                insurance issuers described in subparagraph (A) that 
                cover high risk individuals in the individual market 
                (excluding grandfathered health plans) for any plan year 
                beginning in such 3-year period.
            (2) High-risk individual; payment amounts.--The Secretary 
        shall include the following in the provisions under paragraph 
        (1):
                    (A) Determination of high-risk individuals.--The 
                method by which individuals will be identified as high 
                risk individuals for purposes of the reinsurance program 
                established under this section. Such method shall 
                provide for identification of individuals as high-risk 
                individuals on the basis of--
                          (i) a list of at least 50 but not more than 
                      100 medical conditions that are identified as 
                      high-risk conditions and that may be based on the 
                      identification of diagnostic and procedure codes 
                      that are indicative of individuals with pre-
                      existing, high-risk conditions; or
                          (ii) any other comparable objective method of 
                      identification recommended by the American Academy 
                      of Actuaries.
                    (B) Payment amount.--The formula for determining the 
                amount of payments that will be paid to health insurance 
                issuers described in paragraph (1)(A) that insure high-
                risk individuals. Such formula shall provide for the 
                equitable allocation of available funds through 
                reconciliation and may be designed--
                          (i) to provide a schedule of payments that 
                      specifies the amount that will be paid for each of 
                      the conditions identified under subparagraph (A); 
                      or
                          (ii) to use any other comparable method for 
                      determining payment amounts that is recommended by 
                      the American Academy of Actuaries and that 
                      encourages the use of care coordination and care 
                      management programs for high risk conditions.
            (3) Determination of required contributions.--

[[Page 124 STAT. 210]]

                    (A) In general <<NOTE: Effective date. Time 
                period.>> .--The Secretary shall include in the 
                provisions under paragraph (1) the method for 
                determining the amount each health insurance issuer and 
                group health plan described in paragraph (1)(A) 
                contributing to the reinsurance program under this 
                section is required to contribute under such paragraph 
                for each plan year beginning in the 36-month period 
                beginning January 1, 2014. The contribution amount for 
                any plan year may be based on the percentage of revenue 
                of each issuer and the total costs of providing benefits 
                to enrollees in self-insured plans or on a specified 
                amount per enrollee and may be required to be paid in 
                advance or periodically throughout the plan year.
                    (B) Specific requirements.--The method under this 
                paragraph shall be designed so that--
                          (i) the contribution amount for each issuer 
                      proportionally reflects each issuer's fully 
                      insured commercial book of business for all major 
                      medical products and the total value of all fees 
                      charged by the issuer and the costs of coverage 
                      administered by the issuer as a third party 
                      administrator;
                          (ii) the contribution amount can include an 
                      additional amount to fund the administrative 
                      expenses of the applicable reinsurance entity;
                          (iii) the aggregate contribution amounts for 
                      all States shall, based on the best estimates of 
                      the NAIC and without regard to amounts described 
                      in clause (ii), equal $10,000,000,000 for plan 
                      years beginning in 2014, $6,000,000,000 for plan 
                      years beginning 2015, and $4,000,000,000 for plan 
                      years beginning in 2016; and
                          (iv) in addition to the aggregate contribution 
                      amounts under clause (iii), each issuer's 
                      contribution amount for any calendar year under 
                      clause (iii) reflects its proportionate share of 
                      an additional $2,000,000,000 for 2014, an 
                      additional $2,000,000,000 for 2015, and an 
                      additional $1,000,000,000 for 2016.
                Nothing in this subparagraph shall be construed to 
                preclude a State from collecting additional amounts from 
                issuers on a voluntary basis.
            (4) Expenditure of funds.--The provisions under paragraph 
        (1) shall provide that--
                    (A) the contribution amounts collected for any 
                calendar year may be allocated and used in any of the 
                three calendar years for which amounts are collected 
                based on the reinsurance needs of a particular period or 
                to reflect experience in a prior period; and
                    (B) <<NOTE: Time period. Effective date.>> amounts 
                remaining unexpended as of December, 2016, may be used 
                to make payments under any reinsurance program of a 
                State in the individual market in effect in the 2-year 
                period beginning on January 1, 2017.
        Notwithstanding the preceding sentence, any contribution amounts 
        described in paragraph (3)(B)(iv) shall be deposited into the 
        general fund of the Treasury of the United States and may not be 
        used for the program established under this section.

[[Page 124 STAT. 211]]

    (c) Applicable Reinsurance Entity.--For purposes of this section--
            (1) In general.-- <<NOTE: Definition.>> The term 
        ``applicable reinsurance entity'' means a not-for-profit 
        organization--
                    (A) the purpose of which is to help stabilize 
                premiums for coverage in the individual and small group 
                markets in a State during the first 3 years of operation 
                of an Exchange for such markets within the State when 
                the risk of adverse selection related to new rating 
                rules and market changes is greatest; and
                    (B) the duties of which shall be to carry out the 
                reinsurance program under this section by coordinating 
                the funding and operation of the risk-spreading 
                mechanisms designed to implement the reinsurance 
                program.
            (2) State discretion.--A State may have more than 1 
        applicable reinsurance entity to carry out the reinsurance 
        program under this section within the State and 2 or more States 
        may enter into agreements to provide for an applicable 
        reinsurance entity to carry out such program in all such States.
            (3) Entities are tax-exempt.--An applicable reinsurance 
        entity established under this section shall be exempt from 
        taxation under chapter 1 of the Internal Revenue Code of 1986. 
        The preceding sentence shall not apply to the tax imposed by 
        section 511 such Code (relating to tax on unrelated business 
        taxable income of an exempt organization).

    (d) Coordination With State High-risk Pools.--The State shall 
eliminate or modify any State high-risk pool to the extent necessary to 
carry out the reinsurance program established under this section. The 
State may coordinate the State high-risk pool with such program to the 
extent not inconsistent with the provisions of this section.

SEC. 1342. <<NOTE: 42 USC 18062.>> ESTABLISHMENT OF RISK CORRIDORS FOR 
            PLANS IN INDIVIDUAL AND SMALL GROUP MARKETS.

    (a) In General.--The Secretary shall establish and administer a 
program of risk corridors for calendar years 2014, 2015, and 2016 under 
which a qualified health plan offered in the individual or small group 
market shall participate in a payment adjustment system based on the 
ratio of the allowable costs of the plan to the plan's aggregate 
premiums. Such program shall be based on the program for regional 
participating provider organizations under part D of title XVIII of the 
Social Security Act.
    (b) Payment Methodology.--
            (1) Payments out.--The Secretary shall provide under the 
        program established under subsection (a) that if--
                    (A) a participating plan's allowable costs for any 
                plan year are more than 103 percent but not more than 
                108 percent of the target amount, the Secretary shall 
                pay to the plan an amount equal to 50 percent of the 
                target amount in excess of 103 percent of the target 
                amount; and
                    (B) a participating plan's allowable costs for any 
                plan year are more than 108 percent of the target 
                amount, the Secretary shall pay to the plan an amount 
                equal to the sum of 2.5 percent of the target amount 
                plus 80 percent of allowable costs in excess of 108 
                percent of the target amount.

[[Page 124 STAT. 212]]

            (2) Payments in.--The Secretary shall provide under the 
        program established under subsection (a) that if--
                    (A) a participating plan's allowable costs for any 
                plan year are less than 97 percent but not less than 92 
                percent of the target amount, the plan shall pay to the 
                Secretary an amount equal to 50 percent of the excess of 
                97 percent of the target amount over the allowable 
                costs; and
                    (B) a participating plan's allowable costs for any 
                plan year are less than 92 percent of the target amount, 
                the plan shall pay to the Secretary an amount equal to 
                the sum of 2.5 percent of the target amount plus 80 
                percent of the excess of 92 percent of the target amount 
                over the allowable costs.

    (c) Definitions.--In this section:
            (1) Allowable costs.--
                    (A) In general.--The amount of allowable costs of a 
                plan for any year is an amount equal to the total costs 
                (other than administrative costs) of the plan in 
                providing benefits covered by the plan.
                    (B) Reduction for risk adjustment and reinsurance 
                payments.--Allowable costs shall reduced by any risk 
                adjustment and reinsurance payments received under 
                section 1341 and 1343.
            (2) Target amount.--The target amount of a plan for any year 
        is an amount equal to the total premiums (including any premium 
        subsidies under any governmental program), reduced by the 
        administrative costs of the plan.

SEC. 1343. <<NOTE: 42 USC 18063.>> RISK ADJUSTMENT.

    (a) In General.--
            (1) Low actuarial risk plans.--Using the criteria and 
        methods developed under subsection (b), each State shall assess 
        a charge on health plans and health insurance issuers (with 
        respect to health insurance coverage) described in subsection 
        (c) if the actuarial risk of the enrollees of such plans or 
        coverage for a year is less than the average actuarial risk of 
        all enrollees in all plans or coverage in such State for such 
        year that are not self-insured group health plans (which are 
        subject to the provisions of the Employee Retirement Income 
        Security Act of 1974).
            (2) High actuarial risk plans.--Using the criteria and 
        methods developed under subsection (b), each State shall provide 
        a payment to health plans and health insurance issuers (with 
        respect to health insurance coverage) described in subsection 
        (c) if the actuarial risk of the enrollees of such plans or 
        coverage for a year is greater than the average actuarial risk 
        of all enrollees in all plans and coverage in such State for 
        such year that are not self-insured group health plans (which 
        are subject to the provisions of the Employee Retirement Income 
        Security Act of 1974).

    (b) Criteria and Methods.--The Secretary, in consultation with 
States, shall establish criteria and methods to be used in carrying out 
the risk adjustment activities under this section. The Secretary may 
utilize criteria and methods similar to the criteria and methods 
utilized under part C or D of title XVIII of the Social Security Act. 
Such criteria and methods shall be included

[[Page 124 STAT. 213]]

in the standards and requirements the Secretary prescribes under section 
1321.
    (c) Scope.--A health plan or a health insurance issuer is described 
in this subsection if such health plan or health insurance issuer 
provides coverage in the individual or small group market within the 
State. This subsection shall not apply to a grandfathered health plan or 
the issuer of a grandfathered health plan with respect to that plan.

        Subtitle E--Affordable Coverage Choices for All Americans

         PART I--PREMIUM TAX CREDITS AND COST-SHARING REDUCTIONS

       Subpart A--Premium Tax Credits and Cost-sharing Reductions

SEC. 1401. REFUNDABLE TAX CREDIT PROVIDING PREMIUM ASSISTANCE FOR 
            COVERAGE UNDER A QUALIFIED HEALTH PLAN.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) is 
amended by inserting after section 36A the following new section:

``SEC. 36B. <<NOTE: 26 USC 36.>>  REFUNDABLE CREDIT FOR COVERAGE UNDER A 
            QUALIFIED HEALTH PLAN.

    ``(a) In General.--In the case of an applicable taxpayer, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for any taxable year an amount equal to the premium assistance credit 
amount of the taxpayer for the taxable year.
    ``(b) Premium Assistance Credit Amount.--For purposes of this 
section--
            ``(1) In general.-- <<NOTE: Definition.>> The term `premium 
        assistance credit amount' means, with respect to any taxable 
        year, the sum of the premium assistance amounts determined under 
        paragraph (2) with respect to all coverage months of the 
        taxpayer occurring during the taxable year.
            ``(2) Premium assistance amount.--The premium assistance 
        amount determined under this subsection with respect to any 
        coverage month is the amount equal to the lesser of--
                    ``(A) the monthly premiums for such month for 1 or 
                more qualified health plans offered in the individual 
                market within a State which cover the taxpayer, the 
                taxpayer's spouse, or any dependent (as defined in 
                section 152) of the taxpayer and which were enrolled in 
                through an Exchange established by the State under 1311 
                of the Patient Protection and Affordable Care Act, or
                    ``(B) the excess (if any) of--
                          ``(i) the adjusted monthly premium for such 
                      month for the applicable second lowest cost silver 
                      plan with respect to the taxpayer, over

[[Page 124 STAT. 214]]

                          ``(ii) an amount equal to 1/12 of the product 
                      of the applicable percentage and the taxpayer's 
                      household income for the taxable year.
            ``(3) Other terms and rules relating to premium assistance 
        amounts.--For purposes of paragraph (2)--
                    ``(A) Applicable percentage.--
                          ``(i) In general.--Except as provided in 
                      clause (ii), the applicable percentage with 
                      respect to any taxpayer for any taxable year is 
                      equal to 2.8 percent, increased by the number of 
                      percentage points (not greater than 7) which bears 
                      the same ratio to 7 percentage points as--
                                    ``(I) the taxpayer's household 
                                income for the taxable year in excess of 
                                100 percent of the poverty line for a 
                                family of the size involved, bears to
                                    ``(II) an amount equal to 200 
                                percent of the poverty line for a family 
                                of the size involved.
                          ``(ii) Special rule for taxpayers under 133 
                      percent of poverty line.--If a taxpayer's 
                      household income for the taxable year is in excess 
                      of 100 percent, but not more than 133 percent, of 
                      the poverty line for a family of the size 
                      involved, the taxpayer's applicable percentage 
                      shall be 2 percent.
                          ``(iii) Indexing.--In the case of taxable 
                      years beginning in any calendar year after 2014, 
                      the Secretary shall adjust the initial and final 
                      applicable percentages under clause (i), and the 2 
                      percent under clause (ii), for the calendar year 
                      to reflect the excess of the rate of premium 
                      growth between the preceding calendar year and 
                      2013 over the rate of income growth for such 
                      period.
                    ``(B) Applicable second lowest cost silver plan.--
                The applicable second lowest cost silver plan with 
                respect to any applicable taxpayer is the second lowest 
                cost silver plan of the individual market in the rating 
                area in which the taxpayer resides which--
                          ``(i) is offered through the same Exchange 
                      through which the qualified health plans taken 
                      into account under paragraph (2)(A) were offered, 
                      and
                          ``(ii) provides--
                                    ``(I) self-only coverage in the case 
                                of an applicable taxpayer--
                                            ``(aa) whose tax for the 
                                        taxable year is determined under 
                                        section 1(c) (relating to 
                                        unmarried individuals other than 
                                        surviving spouses and heads of 
                                        households) and who is not 
                                        allowed a deduction under 
                                        section 151 for the taxable year 
                                        with respect to a dependent, or
                                            ``(bb) who is not described 
                                        in item (aa) but who purchases 
                                        only self-only coverage, and
                                    ``(II) family coverage in the case 
                                of any other applicable taxpayer.
                If a taxpayer files a joint return and no credit is 
                allowed under this section with respect to 1 of the 
                spouses by reason of subsection (e), the taxpayer shall 
                be treated as described in clause (ii)(I) unless a 
                deduction is allowed

[[Page 124 STAT. 215]]

                under section 151 for the taxable year with respect to a 
                dependent other than either spouse and subsection (e) 
                does not apply to the dependent.
                    ``(C) Adjusted monthly premium.--The adjusted 
                monthly premium for an applicable second lowest cost 
                silver plan is the monthly premium which would have been 
                charged (for the rating area with respect to which the 
                premiums under paragraph (2)(A) were determined) for the 
                plan if each individual covered under a qualified health 
                plan taken into account under paragraph (2)(A) were 
                covered by such silver plan and the premium was adjusted 
                only for the age of each such individual in the manner 
                allowed under section 2701 of the Public Health Service 
                Act. In the case of a State participating in the 
                wellness discount demonstration project under section 
                2705(d) of the Public Health Service Act, the adjusted 
                monthly premium shall be determined without regard to 
                any premium discount or rebate under such project.
                    ``(D) Additional benefits.--If--
                          ``(i) a qualified health plan under section 
                      1302(b)(5) of the Patient Protection and 
                      Affordable Care Act offers benefits in addition to 
                      the essential health benefits required to be 
                      provided by the plan, or
                          ``(ii) a State requires a qualified health 
                      plan under section 1311(d)(3)(B) of such Act to 
                      cover benefits in addition to the essential health 
                      benefits required to be provided by the plan,
                the portion of the premium for the plan properly 
                allocable (under rules prescribed by the Secretary of 
                Health and Human Services) to such additional benefits 
                shall not be taken into account in determining either 
                the monthly premium or the adjusted monthly premium 
                under paragraph (2).
                    ``(E) Special rule for pediatric dental coverage.--
                For purposes of determining the amount of any monthly 
                premium, if an individual enrolls in both a qualified 
                health plan and a plan described in section 
                1311(d)(2)(B)(ii)(I) of the Patient Protection and 
                Affordable Care Act for any plan year, the portion of 
                the premium for the plan described in such section that 
                (under regulations prescribed by the Secretary) is 
                properly allocable to pediatric dental benefits which 
                are included in the essential health benefits required 
                to be provided by a qualified health plan under section 
                1302(b)(1)(J) of such Act shall be treated as a premium 
                payable for a qualified health plan.

    ``(c) Definition and Rules Relating to Applicable Taxpayers, 
Coverage Months, and Qualified Health Plan.--For purposes of this 
section--
            ``(1) Applicable taxpayer.--
                    ``(A) In general.--The term `applicable taxpayer' 
                means, with respect to any taxable year, a taxpayer 
                whose household income for the taxable year exceeds 100 
                percent but does not exceed 400 percent of an amount 
                equal to the poverty line for a family of the size 
                involved.
                    ``(B) Special rule for certain individuals lawfully 
                present in the united states.--If--

[[Page 124 STAT. 216]]

                          ``(i) a taxpayer has a household income which 
                      is not greater than 100 percent of an amount equal 
                      to the poverty line for a family of the size 
                      involved, and
                          ``(ii) the taxpayer is an alien lawfully 
                      present in the United States, but is not eligible 
                      for the medicaid program under title XIX of the 
                      Social Security Act by reason of such alien 
                      status,
                the taxpayer shall, for purposes of the credit under 
                this section, be treated as an applicable taxpayer with 
                a household income which is equal to 100 percent of the 
                poverty line for a family of the size involved.
                    ``(C) Married couples must file joint return.--If 
                the taxpayer is married (within the meaning of section 
                7703) at the close of the taxable year, the taxpayer 
                shall be treated as an applicable taxpayer only if the 
                taxpayer and the taxpayer's spouse file a joint return 
                for the taxable year.
                    ``(D) Denial of credit to dependents.--No credit 
                shall be allowed under this section to any individual 
                with respect to whom a deduction under section 151 is 
                allowable to another taxpayer for a taxable year 
                beginning in the calendar year in which such 
                individual's taxable year begins.
            ``(2) Coverage month.--For purposes of this subsection--
                    ``(A) In general.--The term `coverage month' means, 
                with respect to an applicable taxpayer, any month if--
                          ``(i) as of the first day of such month the 
                      taxpayer, the taxpayer's spouse, or any dependent 
                      of the taxpayer is covered by a qualified health 
                      plan described in subsection (b)(2)(A) that was 
                      enrolled in through an Exchange established by the 
                      State under section 1311 of the Patient Protection 
                      and Affordable Care Act, and
                          ``(ii) the premium for coverage under such 
                      plan for such month is paid by the taxpayer (or 
                      through advance payment of the credit under 
                      subsection (a) under section 1412 of the Patient 
                      Protection and Affordable Care Act).
                    ``(B) Exception for minimum essential coverage.--
                          ``(i) In general.--The term `coverage month' 
                      shall not include any month with respect to an 
                      individual if for such month the individual is 
                      eligible for minimum essential coverage other than 
                      eligibility for coverage described in section 
                      5000A(f)(1)(C) (relating to coverage in the 
                      individual market).
                          ``(ii) Minimum essential coverage.--The term 
                      `minimum essential coverage' has the meaning given 
                      such term by section 5000A(f).
                    ``(C) Special rule for employer-sponsored minimum 
                essential coverage.--For purposes of subparagraph (B)--
                          ``(i) Coverage must be affordable.--Except as 
                      provided in clause (iii), an employee shall not be 
                      treated as eligible for minimum essential coverage 
                      if such coverage--
                                    ``(I) consists of an eligible 
                                employer-sponsored plan (as defined in 
                                section 5000A(f)(2)), and
                                    ``(II) the employee's required 
                                contribution (within the meaning of 
                                section 5000A(e)(1)(B)) with

[[Page 124 STAT. 217]]

                                respect to the plan exceeds 9.8 percent 
                                of the applicable taxpayer's household 
                                income.
                      <<NOTE: Applicability.>> This clause shall also 
                      apply to an individual who is eligible to enroll 
                      in the plan by reason of a relationship the 
                      individual bears to the employee.
                          ``(ii) Coverage must provide minimum value.--
                      Except as provided in clause (iii), an employee 
                      shall not be treated as eligible for minimum 
                      essential coverage if such coverage consists of an 
                      eligible employer-sponsored plan (as defined in 
                      section 5000A(f)(2)) and the plan's share of the 
                      total allowed costs of benefits provided under the 
                      plan is less than 60 percent of such costs.
                          ``(iii) Employee or family must not be covered 
                      under employer plan.--Clauses (i) and (ii) shall 
                      not apply if the employee (or any individual 
                      described in the last sentence of clause (i)) is 
                      covered under the eligible employer-sponsored plan 
                      or the grandfathered health plan.
                          ``(iv) Indexing.--In the case of plan years 
                      beginning in any calendar year after 2014, the 
                      Secretary shall adjust the 9.8 percent under 
                      clause (i)(II) in the same manner as the 
                      percentages are adjusted under subsection 
                      (b)(3)(A)(ii).
            ``(3) Definitions and other rules.--
                    ``(A) Qualified health plan.--The term `qualified 
                health plan' has the meaning given such term by section 
                1301(a) of the Patient Protection and Affordable Care 
                Act, except that such term shall not include a qualified 
                health plan which is a catastrophic plan described in 
                section 1302(e) of such Act.
                    ``(B) Grandfathered health plan.--The term 
                `grandfathered health plan' has the meaning given such 
                term by section 1251 of the Patient Protection and 
                Affordable Care Act.

    ``(d) Terms Relating to Income and Families.--For purposes of this 
section--
            ``(1) Family size.--The family size involved with respect to 
        any taxpayer shall be equal to the number of individuals for 
        whom the taxpayer is allowed a deduction under section 151 
        (relating to allowance of deduction for personal exemptions) for 
        the taxable year.
            ``(2) Household income.--
                    ``(A) Household income.--The term `household income' 
                means, with respect to any taxpayer, an amount equal to 
                the sum of--
                          ``(i) the modified gross income of the 
                      taxpayer, plus
                          ``(ii) the aggregate modified gross incomes of 
                      all other individuals who--
                                    ``(I) were taken into account in 
                                determining the taxpayer's family size 
                                under paragraph (1), and
                                    ``(II) were required to file a 
                                return of tax imposed by section 1 for 
                                the taxable year.
                    ``(B) Modified gross income.--The term `modified 
                gross income' means gross income--

[[Page 124 STAT. 218]]

                          ``(i) decreased by the amount of any deduction 
                      allowable under paragraph (1), (3), (4), or (10) 
                      of section 62(a),
                          ``(ii) increased by the amount of interest 
                      received or accrued during the taxable year which 
                      is exempt from tax imposed by this chapter, and
                          ``(iii) determined without regard to sections 
                      911, 931, and 933.
            ``(3) Poverty line.--
                    ``(A) In general.--The term `poverty line' has the 
                meaning given that term in section 2110(c)(5) of the 
                Social Security Act (42 U.S.C. 1397jj(c)(5)).
                    ``(B) Poverty line used.--In the case of any 
                qualified health plan offered through an Exchange for 
                coverage during a taxable year beginning in a calendar 
                year, the poverty line used shall be the most recently 
                published poverty line as of the 1st day of the regular 
                enrollment period for coverage during such calendar 
                year.

    ``(e) Rules for Individuals Not Lawfully Present.--
            ``(1) In general.--If 1 or more individuals for whom a 
        taxpayer is allowed a deduction under section 151 (relating to 
        allowance of deduction for personal exemptions) for the taxable 
        year (including the taxpayer or his spouse) are individuals who 
        are not lawfully present--
                    ``(A) the aggregate amount of premiums otherwise 
                taken into account under clauses (i) and (ii) of 
                subsection (b)(2)(A) shall be reduced by the portion (if 
                any) of such premiums which is attributable to such 
                individuals, and
                    ``(B) for purposes of applying this section, the 
                determination as to what percentage a taxpayer's 
                household income bears to the poverty level for a family 
                of the size involved shall be made under one of the 
                following methods:
                          ``(i) A method under which--
                                    ``(I) the taxpayer's family size is 
                                determined by not taking such 
                                individuals into account, and
                                    ``(II) the taxpayer's household 
                                income is equal to the product of the 
                                taxpayer's household income (determined 
                                without regard to this subsection) and a 
                                fraction--
                                            ``(aa) the numerator of 
                                        which is the poverty line for 
                                        the taxpayer's family size 
                                        determined after application of 
                                        subclause (I), and
                                            ``(bb) the denominator of 
                                        which is the poverty line for 
                                        the taxpayer's family size 
                                        determined without regard to 
                                        subclause (I).
                          ``(ii) A comparable method reaching the same 
                      result as the method under clause (i).
            ``(2) Lawfully present.--For purposes of this section, an 
        individual shall be treated as lawfully present only if the 
        individual is, and is reasonably expected to be for the entire 
        period of enrollment for which the credit under this section is 
        being claimed, a citizen or national of the United States or an 
        alien lawfully present in the United States.
            ``(3) Secretarial authority.-- <<NOTE: Regulations.>> The 
        Secretary of Health and Human Services, in consultation with the 
        Secretary, shall prescribe rules setting forth the methods by 
        which calculations of family size and household income are made 
        for purposes

[[Page 124 STAT. 219]]

        of this subsection. Such rules shall be designed to ensure that 
        the least burden is placed on individuals enrolling in qualified 
        health plans through an Exchange and taxpayers eligible for the 
        credit allowable under this section.

    ``(f) Reconciliation of Credit and Advance Credit.--
            ``(1) In general.--The amount of the credit allowed under 
        this section for any taxable year shall be reduced (but not 
        below zero) by the amount of any advance payment of such credit 
        under section 1412 of the Patient Protection and Affordable Care 
        Act.
            ``(2) Excess advance payments.--
                    ``(A) In general.--If the advance payments to a 
                taxpayer under section 1412 of the Patient Protection 
                and Affordable Care Act for a taxable year exceed the 
                credit allowed by this section (determined without 
                regard to paragraph (1)), the tax imposed by this 
                chapter for the taxable year shall be increased by the 
                amount of such excess.
                    ``(B) Limitation on increase where income less than 
                400 percent of poverty line.--
                          ``(i) In general.--In the case of an 
                      applicable taxpayer whose household income is less 
                      than 400 percent of the poverty line for the size 
                      of the family involved for the taxable year, the 
                      amount of the increase under subparagraph (A) 
                      shall in no event exceed $400 ($250 in the case of 
                      a taxpayer whose tax is determined under section 
                      1(c) for the taxable year).
                          ``(ii) Indexing of amount.--In the case of any 
                      calendar year beginning after 2014, each of the 
                      dollar amounts under clause (i) shall be increased 
                      by an amount equal to--
                                    ``(I) such dollar amount, multiplied 
                                by
                                    ``(II) the cost-of-living adjustment 
                                determined under section 1(f)(3) for the 
                                calendar year, determined by 
                                substituting `calendar year 2013' for 
                                `calendar year 1992' in subparagraph (B) 
                                thereof.
                      If the amount of any increase under clause (i) is 
                      not a multiple of $50, such increase shall be 
                      rounded to the next lowest multiple of $50.

    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the provisions of this section, 
including regulations which provide for--
            ``(1) the coordination of the credit allowed under this 
        section with the program for advance payment of the credit under 
        section 1412 of the Patient Protection and Affordable Care Act, 
        and
            ``(2) the application of subsection (f) where the filing 
        status of the taxpayer for a taxable year is different from such 
        status used for determining the advance payment of the 
        credit.''.

    (b) Disallowance of Deduction.--Section 280C of the Internal Revenue 
Code of 1986 <<NOTE: 26 USC 280C.>>  is amended by adding at the end the 
following new subsection:

    ``(g) Credit for Health Insurance Premiums.--No deduction shall be 
allowed for the portion of the premiums paid by the taxpayer for 
coverage of 1 or more individuals under a qualified health plan which is 
equal to the amount of the credit determined for the taxable year under 
section 36B(a) with respect to such premiums.''.

[[Page 124 STAT. 220]]

    (c) Study on Affordable Coverage.--
            (1) Study and report.--
                    (A) In general.--Not later than 5 years after the 
                date of the enactment of this Act, the Comptroller 
                General shall conduct a study on the affordability of 
                health insurance coverage, including--
                          (i) the impact of the tax credit for qualified 
                      health insurance coverage of individuals under 
                      section 36B of the Internal Revenue Code of 1986 
                      and the tax credit for employee health insurance 
                      expenses of small employers under section 45R of 
                      such Code on maintaining and expanding the health 
                      insurance coverage of individuals;
                          (ii) the availability of affordable health 
                      benefits plans, including a study of whether the 
                      percentage of household income used for purposes 
                      of section 36B(c)(2)(C) of the Internal Revenue 
                      Code of 1986 (as added by this section) is the 
                      appropriate level for determining whether 
                      employer-provided coverage is affordable for an 
                      employee and whether such level may be lowered 
                      without significantly increasing the costs to the 
                      Federal Government and reducing employer-provided 
                      coverage; and
                          (iii) the ability of individuals to maintain 
                      essential health benefits coverage (as defined in 
                      section 5000A(f) of the Internal Revenue Code of 
                      1986).
                    (B) Report.--The Comptroller General shall submit to 
                the appropriate committees of Congress a report on the 
                study conducted under subparagraph (A), together with 
                legislative recommendations relating to the matters 
                studied under such subparagraph.
            (2) Appropriate committees of congress.--In this subsection, 
        the term ``appropriate committees of Congress'' means the 
        Committee on Ways and Means, the Committee on Education and 
        Labor, and the Committee on Energy and Commerce of the House of 
        Representatives and the Committee on Finance and the Committee 
        on Health, Education, Labor and Pensions of the Senate.

    (d) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``36B,'' after ``36A,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 36A 
        the following new item:

``Sec. 36B. Refundable credit for coverage under a qualified health 
           plan.''.

    (e) <<NOTE: 26 USC 36B note.>>  Effective Date.--The amendments made 
by this section shall apply to taxable years ending after December 31, 
2013.

SEC. 1402. <<NOTE: 42 USC 18071.>> REDUCED COST-SHARING FOR INDIVIDUALS 
            ENROLLING IN QUALIFIED HEALTH PLANS.

    (a) In General.--In the case of an eligible insured enrolled in a 
qualified health plan--
            (1) <<NOTE: Notification.>>  the Secretary shall notify the 
        issuer of the plan of such eligibility; and
            (2) the issuer shall reduce the cost-sharing under the plan 
        at the level and in the manner specified in subsection (c).

[[Page 124 STAT. 221]]

    (b) Eligible Insured.--In this section, the term ``eligible 
insured'' means an individual--
            (1) who enrolls in a qualified health plan in the silver 
        level of coverage in the individual market offered through an 
        Exchange; and
            (2) whose household income exceeds 100 percent but does not 
        exceed 400 percent of the poverty line for a family of the size 
        involved.

In the case of an individual described in section 36B(c)(1)(B) of the 
Internal Revenue Code of 1986, the individual shall be treated as having 
household income equal to 100 percent for purposes of applying this 
section.
    (c) Determination of Reduction in Cost-sharing.--
            (1) Reduction in out-of-pocket limit.--
                    (A) In general.--The reduction in cost-sharing under 
                this subsection shall first be achieved by reducing the 
                applicable out-of pocket limit under section 1302(c)(1) 
                in the case of--
                          (i) an eligible insured whose household income 
                      is more than 100 percent but not more than 200 
                      percent of the poverty line for a family of the 
                      size involved, by two-thirds;
                          (ii) an eligible insured whose household 
                      income is more than 200 percent but not more than 
                      300 percent of the poverty line for a family of 
                      the size involved, by one-half; and
                          (iii) an eligible insured whose household 
                      income is more than 300 percent but not more than 
                      400 percent of the poverty line for a family of 
                      the size involved, by one-third.
                    (B) Coordination with actuarial value limits.--
                          (i) In general.--The Secretary shall ensure 
                      the reduction under this paragraph shall not 
                      result in an increase in the plan's share of the 
                      total allowed costs of benefits provided under the 
                      plan above--
                                    (I) 90 percent in the case of an 
                                eligible insured described in paragraph 
                                (2)(A);
                                    (II) 80 percent in the case of an 
                                eligible insured described in paragraph 
                                (2)(B); and
                                    (III) 70 percent in the case of an 
                                eligible insured described in clause 
                                (ii) or (iii) of subparagraph (A).
                          (ii) Adjustment.--The Secretary shall adjust 
                      the out-of pocket limits under paragraph (1) if 
                      necessary to ensure that such limits do not cause 
                      the respective actuarial values to exceed the 
                      levels specified in clause (i).
            (2) Additional reduction for lower income insureds.--
        The <<NOTE: Procedures.>> Secretary shall establish procedures 
        under which the issuer of a qualified health plan to which this 
        section applies shall further reduce cost-sharing under the plan 
        in a manner sufficient to--
                    (A) in the case of an eligible insured whose 
                household income is not less than 100 percent but not 
                more than 150 percent of the poverty line for a family 
                of the size involved, increase the plan's share of the 
                total allowed

[[Page 124 STAT. 222]]

                costs of benefits provided under the plan to 90 percent 
                of such costs; and
                    (B) in the case of an eligible insured whose 
                household income is more than 150 percent but not more 
                than 200 percent of the poverty line for a family of the 
                size involved, increase the plan's share of the total 
                allowed costs of benefits provided under the plan to 80 
                percent of such costs.
            (3) Methods for reducing cost-sharing.--
                    (A) <<NOTE: Notification.>>  In general.--An issuer 
                of a qualified health plan making reductions under this 
                subsection shall notify the Secretary of such reductions 
                and the Secretary shall make periodic and timely 
                payments to the issuer equal to the value of the 
                reductions.
                    (B) Capitated payments.--The Secretary may establish 
                a capitated payment system to carry out the payment of 
                cost-sharing reductions under this section. Any such 
                system shall take into account the value of the 
                reductions and make appropriate risk adjustments to such 
                payments.
            (4) Additional benefits.--If a qualified health plan under 
        section 1302(b)(5) offers benefits in addition to the essential 
        health benefits required to be provided by the plan, or a State 
        requires a qualified health plan under section 1311(d)(3)(B) to 
        cover benefits in addition to the essential health benefits 
        required to be provided by the plan, the reductions in cost-
        sharing under this section shall not apply to such additional 
        benefits.
            (5) Special rule for pediatric dental plans.--If an 
        individual enrolls in both a qualified health plan and a plan 
        described in section 1311(d)(2)(B)(ii)(I) for any plan year, 
        subsection (a) shall not apply to that portion of any reduction 
        in cost-sharing under subsection (c) that (under regulations 
        prescribed by the Secretary) is properly allocable to pediatric 
        dental benefits which are included in the essential health 
        benefits required to be provided by a qualified health plan 
        under section 1302(b)(1)(J).

    (d) Special Rules for Indians.--
            (1) Indians under 300 percent of poverty.--If an individual 
        enrolled in any qualified health plan in the individual market 
        through an Exchange is an Indian (as defined in section 4(d) of 
        the Indian Self-Determination and Education Assistance Act (25 
        U.S.C. 450b(d))) whose household income is not more than 300 
        percent of the poverty line for a family of the size involved, 
        then, for purposes of this section--
                    (A) such individual shall be treated as an eligible 
                insured; and
                    (B) the issuer of the plan shall eliminate any cost-
                sharing under the plan.
            (2) Items or services furnished through indian health 
        providers.--If an Indian (as so defined) enrolled in a qualified 
        health plan is furnished an item or service directly by the 
        Indian Health Service, an Indian Tribe, Tribal Organization, or 
        Urban Indian Organization or through referral under contract 
        health services--
                    (A) no cost-sharing under the plan shall be imposed 
                under the plan for such item or service; and
                    (B) the issuer of the plan shall not reduce the 
                payment to any such entity for such item or service by 
                the amount

[[Page 124 STAT. 223]]

                of any cost-sharing that would be due from the Indian 
                but for subparagraph (A).
            (3) Payment.--The Secretary shall pay to the issuer of a 
        qualified health plan the amount necessary to reflect the 
        increase in actuarial value of the plan required by reason of 
        this subsection.

    (e) Rules for Individuals Not Lawfully Present.--
            (1) In general.--If an individual who is an eligible insured 
        is not lawfully present--
                    (A) no cost-sharing reduction under this section 
                shall apply with respect to the individual; and
                    (B) for purposes of applying this section, the 
                determination as to what percentage a taxpayer's 
                household income bears to the poverty level for a family 
                of the size involved shall be made under one of the 
                following methods:
                          (i) A method under which--
                                    (I) the taxpayer's family size is 
                                determined by not taking such 
                                individuals into account, and
                                    (II) the taxpayer's household income 
                                is equal to the product of the 
                                taxpayer's household income (determined 
                                without regard to this subsection) and a 
                                fraction--
                                            (aa) the numerator of which 
                                        is the poverty line for the 
                                        taxpayer's family size 
                                        determined after application of 
                                        subclause (I), and
                                            (bb) the denominator of 
                                        which is the poverty line for 
                                        the taxpayer's family size 
                                        determined without regard to 
                                        subclause (I).
                          (ii) A comparable method reaching the same 
                      result as the method under clause (i).
            (2) Lawfully present.--For purposes of this section, an 
        individual shall be treated as lawfully present only if the 
        individual is, and is reasonably expected to be for the entire 
        period of enrollment for which the cost-sharing reduction under 
        this section is being claimed, a citizen or national of the 
        United States or an alien lawfully present in the United States.
            (3) <<NOTE: Regulations.>>  Secretarial authority.--The 
        Secretary, in consultation with the Secretary of the Treasury, 
        shall prescribe rules setting forth the methods by which 
        calculations of family size and household income are made for 
        purposes of this subsection. Such rules shall be designed to 
        ensure that the least burden is placed on individuals enrolling 
        in qualified health plans through an Exchange and taxpayers 
        eligible for the credit allowable under this section.

    (f) Definitions and Special Rules.--In this section:
            (1) In general.--Any term used in this section which is also 
        used in section 36B of the Internal Revenue Code of 1986 shall 
        have the meaning given such term by such section.
            (2) Limitations on reduction.--No cost-sharing reduction 
        shall be allowed under this section with respect to coverage for 
        any month unless the month is a coverage month with respect to 
        which a credit is allowed to the insured (or an applicable 
        taxpayer on behalf of the insured) under section 36B of such 
        Code.
            (3) Data used for eligibility.--Any determination under this 
        section shall be made on the basis of the taxable year for which 
        the advance determination is made under section

[[Page 124 STAT. 224]]

        1412 and not the taxable year for which the credit under section 
        36B of such Code is allowed.

                  Subpart B--Eligibility Determinations

SEC. 1411. <<NOTE: 42 USC 18081.>> PROCEDURES FOR DETERMINING 
            ELIGIBILITY FOR EXCHANGE PARTICIPATION, PREMIUM TAX CREDITS 
            AND REDUCED COST-SHARING, AND INDIVIDUAL RESPONSIBILITY 
            EXEMPTIONS.

    (a) Establishment of Program.--The Secretary shall establish a 
program meeting the requirements of this section for determining--
            (1) whether an individual who is to be covered in the 
        individual market by a qualified health plan offered through an 
        Exchange, or who is claiming a premium tax credit or reduced 
        cost-sharing, meets the requirements of sections 1312(f)(3), 
        1402(e), and 1412(d) of this title and section 36B(e) of the 
        Internal Revenue Code of 1986 that the individual be a citizen 
        or national of the United States or an alien lawfully present in 
        the United States;
            (2) in the case of an individual claiming a premium tax 
        credit or reduced cost-sharing under section 36B of such Code or 
        section 1402--
                    (A) whether the individual meets the income and 
                coverage requirements of such sections; and
                    (B) the amount of the tax credit or reduced cost-
                sharing;
            (3) whether an individual's coverage under an employer-
        sponsored health benefits plan is treated as unaffordable under 
        sections 36B(c)(2)(C) and 5000A(e)(2); and
            (4) whether to grant a certification under section 
        1311(d)(4)(H) attesting that, for purposes of the individual 
        responsibility requirement under section 5000A of the Internal 
        Revenue Code of 1986, an individual is entitled to an exemption 
        from either the individual responsibility requirement or the 
        penalty imposed by such section.

    (b) Information Required To Be Provided by Applicants.--
            (1) In general.--An applicant for enrollment in a qualified 
        health plan offered through an Exchange in the individual market 
        shall provide--
                    (A) the name, address, and date of birth of each 
                individual who is to be covered by the plan (in this 
                subsection referred to as an ``enrollee''); and
                    (B) the information required by any of the following 
                paragraphs that is applicable to an enrollee.
            (2) Citizenship or immigration status.--The following 
        information shall be provided with respect to every enrollee:
                    (A) In the case of an enrollee whose eligibility is 
                based on an attestation of citizenship of the enrollee, 
                the enrollee's social security number.
                    (B) In the case of an individual whose eligibility 
                is based on an attestation of the enrollee's immigration 
                status, the enrollee's social security number (if 
                applicable) and such identifying information with 
                respect to the enrollee's immigration status as the 
                Secretary, after consultation with the Secretary of 
                Homeland Security, determines appropriate.

[[Page 124 STAT. 225]]

            (3) Eligibility and amount of tax credit or reduced cost-
        sharing.--In the case of an enrollee with respect to whom a 
        premium tax credit or reduced cost-sharing under section 36B of 
        such Code or section 1402 is being claimed, the following 
        information:
                    (A) Information regarding income and family size.--
                The information described in section 6103(l)(21) for the 
                taxable year ending with or within the second calendar 
                year preceding the calendar year in which the plan year 
                begins.
                    (B) Changes in circumstances.--The information 
                described in section 1412(b)(2), including information 
                with respect to individuals who were not required to 
                file an income tax return for the taxable year described 
                in subparagraph (A) or individuals who experienced 
                changes in marital status or family size or significant 
                reductions in income.
            (4) Employer-sponsored coverage.--In the case of an enrollee 
        with respect to whom eligibility for a premium tax credit under 
        section 36B of such Code or cost-sharing reduction under section 
        1402 is being established on the basis that the enrollee's (or 
        related individual's) employer is not treated under section 
        36B(c)(2)(C) of such Code as providing minimum essential 
        coverage or affordable minimum essential coverage, the following 
        information:
                    (A) The name, address, and employer identification 
                number (if available) of the employer.
                    (B) Whether the enrollee or individual is a full-
                time employee and whether the employer provides such 
                minimum essential coverage.
                    (C) If the employer provides such minimum essential 
                coverage, the lowest cost option for the enrollee's or 
                individual's enrollment status and the enrollee's or 
                individual's required contribution (within the meaning 
                of section 5000A(e)(1)(B) of such Code) under the 
                employer-sponsored plan.
                    (D) If an enrollee claims an employer's minimum 
                essential coverage is unaffordable, the information 
                described in paragraph (3).
        If an enrollee changes employment or obtains additional 
        employment while enrolled in a qualified health plan for which 
        such credit or reduction is allowed, the enrollee shall notify 
        the Exchange of such change or additional employment and provide 
        the information described in this paragraph with respect to the 
        new employer.
            (5) Exemptions from individual responsibility 
        requirements.--In the case of an individual who is seeking an 
        exemption certificate under section 1311(d)(4)(H) from any 
        requirement or penalty imposed by section 5000A, the following 
        information:
                    (A) In the case of an individual seeking exemption 
                based on the individual's status as a member of an 
                exempt religious sect or division, as a member of a 
                health care sharing ministry, as an Indian, or as an 
                individual eligible for a hardship exemption, such 
                information as the Secretary shall prescribe.

[[Page 124 STAT. 226]]

                    (B) In the case of an individual seeking exemption 
                based on the lack of affordable coverage or the 
                individual's status as a taxpayer with household income 
                less than 100 percent of the poverty line, the 
                information described in paragraphs (3) and (4), as 
                applicable.

    (c) Verification of Information Contained in Records of Specific 
Federal Officials.--
            (1) Information transferred to secretary.--An Exchange shall 
        submit the information provided by an applicant under subsection 
        (b) to the Secretary for verification in accordance with the 
        requirements of this subsection and subsection (d).
            (2) Citizenship or immigration status.--
                    (A) Commissioner of social security.--The Secretary 
                shall submit to the Commissioner of Social Security the 
                following information for a determination as to whether 
                the information provided is consistent with the 
                information in the records of the Commissioner:
                          (i) The name, date of birth, and social 
                      security number of each individual for whom such 
                      information was provided under subsection (b)(2).
                          (ii) The attestation of an individual that the 
                      individual is a citizen.
                    (B) Secretary of homeland security.--
                          (i) <<NOTE: Submission.>>  In general.--In the 
                      case of an individual--
                                    (I) who attests that the individual 
                                is an alien lawfully present in the 
                                United States; or
                                    (II) who attests that the individual 
                                is a citizen but with respect to whom 
                                the Commissioner of Social Security has 
                                notified the Secretary under subsection 
                                (e)(3) that the attestation is 
                                inconsistent with information in the 
                                records maintained by the Commissioner;
                      the Secretary shall submit to the Secretary of 
                      Homeland Security the information described in 
                      clause (ii) for a determination as to whether the 
                      information provided is consistent with the 
                      information in the records of the Secretary of 
                      Homeland Security.
                          (ii) Information.--The information described 
                      in clause (ii) is the following:
                                    (I) The name, date of birth, and any 
                                identifying information with respect to 
                                the individual's immigration status 
                                provided under subsection (b)(2).
                                    (II) The attestation that the 
                                individual is an alien lawfully present 
                                in the United States or in the case of 
                                an individual described in clause 
                                (i)(II), the attestation that the 
                                individual is a citizen.
            (3) Eligibility for tax credit and cost-sharing reduction.--
        The Secretary shall submit the information described in 
        subsection (b)(3)(A) provided under paragraph (3), (4), or (5) 
        of subsection (b) to the Secretary of the Treasury for 
        verification of household income and family size for purposes of 
        eligibility.
            (4) Methods.--
                    (A) <<NOTE: Electronic submission.>>  In general.--
                The Secretary, in consultation with the Secretary of the 
                Treasury, the Secretary of Homeland

[[Page 124 STAT. 227]]

                Security, and the Commissioner of Social Security, shall 
                provide that verifications and determinations under this 
                subsection shall be done--
                          (i) through use of an on-line system or 
                      otherwise for the electronic submission of, and 
                      response to, the information submitted under this 
                      subsection with respect to an applicant; or
                          (ii) by determining the consistency of the 
                      information submitted with the information 
                      maintained in the records of the Secretary of the 
                      Treasury, the Secretary of Homeland Security, or 
                      the Commissioner of Social Security through such 
                      other method as is approved by the Secretary.
                    (B) Flexibility.--The Secretary may modify the 
                methods used under the program established by this 
                section for the Exchange and verification of information 
                if the Secretary determines such modifications would 
                reduce the administrative costs and burdens on the 
                applicant, including allowing an applicant to request 
                the Secretary of the Treasury to provide the information 
                described in paragraph (3) directly to the Exchange or 
                to the Secretary. The Secretary shall not make any such 
                modification unless the Secretary determines that any 
                applicable requirements under this section and section 
                6103 of the Internal Revenue Code of 1986 with respect 
                to the confidentiality, disclosure, maintenance, or use 
                of information will be met.

    (d) Verification by Secretary.--In the case of information provided 
under subsection (b) that is not required under subsection (c) to be 
submitted to another person for verification, the Secretary shall verify 
the accuracy of such information in such manner as the Secretary 
determines appropriate, including delegating responsibility for 
verification to the Exchange.
    (e) Actions Relating to Verification.--
            (1) In general.--Each person to whom the Secretary provided 
        information under subsection (c) shall report to the Secretary 
        under the method established under subsection (c)(4) the results 
        of its verification and the Secretary shall notify the Exchange 
        of such results. <<NOTE: Reports.>> Each person to whom the 
        Secretary provided information under subsection (d) shall report 
        to the Secretary in such manner as the Secretary determines 
        appropriate.
            (2) Verification.--
                    (A) Eligibility for enrollment and premium tax 
                credits and cost-sharing reductions.--If information 
                provided by an applicant under paragraphs (1), (2), (3), 
                and (4) of subsection (b) is verified under subsections 
                (c) and (d)--
                          (i) the individual's eligibility to enroll 
                      through the Exchange and to apply for premium tax 
                      credits and cost-sharing reductions shall be 
                      satisfied; and
                          (ii) <<NOTE: Notification.>>  the Secretary 
                      shall, if applicable, notify the Secretary of the 
                      Treasury under section 1412(c) of the amount of 
                      any advance payment to be made.
                    (B) Exemption from individual responsibility.--If 
                information provided by an applicant under subsection 
                (b)(5) is verified under subsections (c) and (d), the 
                Secretary

[[Page 124 STAT. 228]]

                shall issue the certification of exemption described in 
                section 1311(d)(4)(H).
            (3) Inconsistencies involving attestation of citizenship or 
        lawful presence.--If the information provided by any applicant 
        under subsection (b)(2) is inconsistent with information in the 
        records maintained by the Commissioner of Social Security or 
        Secretary of Homeland Security, whichever is applicable, the 
        applicant's eligibility will be determined in the same manner as 
        an individual's eligibility under the medicaid program is 
        determined under section 1902(ee) of the Social Security Act (as 
        in effect on January 1, 2010).
            (4) <<NOTE: Notifications.>>  Inconsistencies involving 
        other information.--
                    (A) In general.--If the information provided by an 
                applicant under subsection (b) (other than subsection 
                (b)(2)) is inconsistent with information in the records 
                maintained by persons under subsection (c) or is not 
                verified under subsection (d), the Secretary shall 
                notify the Exchange and the Exchange shall take the 
                following actions:
                          (i) Reasonable effort.--The Exchange shall 
                      make a reasonable effort to identify and address 
                      the causes of such inconsistency, including 
                      through typographical or other clerical errors, by 
                      contacting the applicant to confirm the accuracy 
                      of the information, and by taking such additional 
                      actions as the Secretary, through regulation or 
                      other guidance, may identify.
                          (ii) Notice and opportunity to correct.--In 
                      the case the inconsistency or inability to verify 
                      is not resolved under subparagraph (A), the 
                      Exchange shall--
                                    (I) notify the applicant of such 
                                fact;
                                    (II) <<NOTE: Time period.>>  provide 
                                the applicant an opportunity to either 
                                present satisfactory documentary 
                                evidence or resolve the inconsistency 
                                with the person verifying the 
                                information under subsection (c) or (d) 
                                during the 90-day period beginning the 
                                date on which the notice required under 
                                subclause (I) is sent to the applicant.
                      The Secretary may extend the 90-day period under 
                      subclause (II) for enrollments occurring during 
                      2014.
                    (B) Specific actions not involving citizenship or 
                lawful presence.--
                          (i) In general.--Except as provided in 
                      paragraph (3), the Exchange shall, during any 
                      period before the close of the period under 
                      subparagraph (A)(ii)(II), make any determination 
                      under paragraphs (2), (3), and (4) of subsection 
                      (a) on the basis of the information contained on 
                      the application.
                          (ii) Eligibility or amount of credit or 
                      reduction.--If an inconsistency involving the 
                      eligibility for, or amount of, any premium tax 
                      credit or cost-sharing reduction is unresolved 
                      under this subsection as of the close of the 
                      period under subparagraph (A)(ii)(II), the 
                      Exchange shall notify the applicant of the amount 
                      (if any) of the credit or reduction that is 
                      determined on the basis of the records maintained 
                      by persons under subsection (c).
                          (iii) Employer affordability.--If the 
                      Secretary notifies an Exchange that an enrollee is 
                      eligible for

[[Page 124 STAT. 229]]

                      a premium tax credit under section 36B of such 
                      Code or cost-sharing reduction under section 1402 
                      because the enrollee's (or related individual's) 
                      employer does not provide minimum essential 
                      coverage through an employer-sponsored plan or 
                      that the employer does provide that coverage but 
                      it is not affordable coverage, the Exchange shall 
                      notify the employer of such fact and that the 
                      employer may be liable for the payment assessed 
                      under section 4980H of such Code.
                          (iv) Exemption.--In any case where the 
                      inconsistency involving, or inability to verify, 
                      information provided under subsection (b)(5) is 
                      not resolved as of the close of the period under 
                      subparagraph (A)(ii)(II), the Exchange shall 
                      notify an applicant that no certification of 
                      exemption from any requirement or payment under 
                      section 5000A of such Code will be issued.
                    (C) Appeals process.--The Exchange shall also notify 
                each person receiving notice under this paragraph of the 
                appeals processes established under subsection (f).

    (f) Appeals and Redeterminations.--
            (1) <<NOTE: Procedures.>>  In general.--The Secretary, in 
        consultation with the Secretary of the Treasury, the Secretary 
        of Homeland Security, and the Commissioner of Social Security, 
        shall establish procedures by which the Secretary or one of such 
        other Federal officers--
                    (A) hears and makes decisions with respect to 
                appeals of any determination under subsection (e); and
                    (B) redetermines eligibility on a periodic basis in 
                appropriate circumstances.
            (2) Employer liability.--
                    (A) In general.--The Secretary shall establish a 
                separate appeals process for employers who are notified 
                under subsection (e)(4)(C) that the employer may be 
                liable for a tax imposed by section 4980H of the 
                Internal Revenue Code of 1986 with respect to an 
                employee because of a determination that the employer 
                does not provide minimum essential coverage through an 
                employer-sponsored plan or that the employer does 
                provide that coverage but it is not affordable coverage 
                with respect to an employee. Such process shall provide 
                an employer the opportunity to--
                          (i) present information to the Exchange for 
                      review of the determination either by the Exchange 
                      or the person making the determination, including 
                      evidence of the employer-sponsored plan and 
                      employer contributions to the plan; and
                          (ii) have access to the data used to make the 
                      determination to the extent allowable by law.
                Such process shall be in addition to any rights of 
                appeal the employer may have under subtitle F of such 
                Code.
                    (B) Confidentiality.--Notwithstanding any provision 
                of this title (or the amendments made by this title) or 
                section 6103 of the Internal Revenue Code of 1986, an 
                employer shall not be entitled to any taxpayer return 
                information with respect to an employee for purposes of 
                determining whether the employer is subject to the 
                penalty under section 4980H of such Code with respect to 
                the employee, except that--

[[Page 124 STAT. 230]]

                          (i) the employer may be notified as to the 
                      name of an employee and whether or not the 
                      employee's income is above or below the threshold 
                      by which the affordability of an employer's health 
                      insurance coverage is measured; and
                          (ii) this subparagraph shall not apply to an 
                      employee who provides a waiver (at such time and 
                      in such manner as the Secretary may prescribe) 
                      authorizing an employer to have access to the 
                      employee's taxpayer return information.

    (g) Confidentiality of Applicant Information.--
            (1) In general.--An applicant for insurance coverage or for 
        a premium tax credit or cost-sharing reduction shall be required 
        to provide only the information strictly necessary to 
        authenticate identity, determine eligibility, and determine the 
        amount of the credit or reduction.
            (2) Receipt of information.--Any person who receives 
        information provided by an applicant under subsection (b) 
        (whether directly or by another person at the request of the 
        applicant), or receives information from a Federal agency under 
        subsection (c), (d), or (e), shall--
                    (A) use the information only for the purposes of, 
                and to the extent necessary in, ensuring the efficient 
                operation of the Exchange, including verifying the 
                eligibility of an individual to enroll through an 
                Exchange or to claim a premium tax credit or cost-
                sharing reduction or the amount of the credit or 
                reduction; and
                    (B) not disclose the information to any other person 
                except as provided in this section.

    (h) Penalties.--
            (1) False or fraudulent information.--
                    (A) Civil penalty.--
                          (i) In general.--If--
                                    (I) any person fails to provides 
                                correct information under subsection 
                                (b); and
                                    (II) such failure is attributable to 
                                negligence or disregard of any rules or 
                                regulations of the Secretary,
                      such person shall be subject, in addition to any 
                      other penalties that may be prescribed by law, to 
                      a civil penalty of not more than $25,000 with 
                      respect to any failures involving an application 
                      for a plan year. For purposes of this 
                      subparagraph, the terms ``negligence'' and 
                      ``disregard'' shall have the same meanings as when 
                      used in section 6662 of the Internal Revenue Code 
                      of 1986.
                          (ii) Reasonable cause exception.--No penalty 
                      shall be imposed under clause (i) if the Secretary 
                      determines that there was a reasonable cause for 
                      the failure and that the person acted in good 
                      faith.
                    (B) Knowing and willful violations.--Any person who 
                knowingly and willfully provides false or fraudulent 
                information under subsection (b) shall be subject, in 
                addition to any other penalties that may be prescribed 
                by law, to a civil penalty of not more than $250,000.

[[Page 124 STAT. 231]]

            (2) Improper use or disclosure of information.--Any person 
        who knowingly and willfully uses or discloses information in 
        violation of subsection (g) shall be subject, in addition to any 
        other penalties that may be prescribed by law, to a civil 
        penalty of not more than $25,000.
            (3) Limitations on liens and levies.--The Secretary (or, if 
        applicable, the Attorney General of the United States) shall 
        not--
                    (A) file notice of lien with respect to any property 
                of a person by reason of any failure to pay the penalty 
                imposed by this subsection; or
                    (B) levy on any such property with respect to such 
                failure.

    (i) Study of Administration of Employer Responsibility.--
            (1) In general.--The Secretary of Health and Human Services 
        shall, in consultation with the Secretary of the Treasury, 
        conduct a study of the procedures that are necessary to ensure 
        that in the administration of this title and section 4980H of 
        the Internal Revenue Code of 1986 (as added by section 1513) 
        that the following rights are protected:
                    (A) The rights of employees to preserve their right 
                to confidentiality of their taxpayer return information 
                and their right to enroll in a qualified health plan 
                through an Exchange if an employer does not provide 
                affordable coverage.
                    (B) The rights of employers to adequate due process 
                and access to information necessary to accurately 
                determine any payment assessed on employers.
            (2) Report.--Not later than January 1, 2013, the Secretary 
        of Health and Human Services shall report the results of the 
        study conducted under paragraph (1), including any 
        recommendations for legislative changes, to the Committees on 
        Finance and Health, Education, Labor and Pensions of the Senate 
        and the Committees of Education and Labor and Ways and Means of 
        the House of Representatives.

SEC. 1412. <<NOTE: 42 USC 18082.>>  ADVANCE DETERMINATION AND PAYMENT OF 
            PREMIUM TAX CREDITS AND COST-SHARING REDUCTIONS.

    (a) In General.--The Secretary, in consultation with the Secretary 
of the Treasury, shall establish a program under which--
            (1) upon request of an Exchange, advance determinations are 
        made under section 1411 with respect to the income eligibility 
        of individuals enrolling in a qualified health plan in the 
        individual market through the Exchange for the premium tax 
        credit allowable under section 36B of the Internal Revenue Code 
        of 1986 and the cost-sharing reductions under section 1402;
            (2) <<NOTE: Notification.>>  the Secretary notifies--
                    (A) the Exchange and the Secretary of the Treasury 
                of the advance determinations; and
                    (B) the Secretary of the Treasury of the name and 
                employer identification number of each employer with 
                respect to whom 1 or more employee of the employer were 
                determined to be eligible for the premium tax credit 
                under section 36B of the Internal Revenue Code of 1986 
                and the cost-sharing reductions under section 1402 
                because--

[[Page 124 STAT. 232]]

                          (i) the employer did not provide minimum 
                      essential coverage; or
                          (ii) the employer provided such minimum 
                      essential coverage but it was determined under 
                      section 36B(c)(2)(C) of such Code to either be 
                      unaffordable to the employee or not provide the 
                      required minimum actuarial value; and
            (3) the Secretary of the Treasury makes advance payments of 
        such credit or reductions to the issuers of the qualified health 
        plans in order to reduce the premiums payable by individuals 
        eligible for such credit.

    (b) Advance Determinations.--
            (1) In general.--The Secretary shall provide under the 
        program established under subsection (a) that advance 
        determination of eligibility with respect to any individual 
        shall be made--
                    (A) during the annual open enrollment period 
                applicable to the individual (or such other enrollment 
                period as may be specified by the Secretary); and
                    (B) on the basis of the individual's household 
                income for the most recent taxable year for which the 
                Secretary, after consultation with the Secretary of the 
                Treasury, determines information is available.
            (2) Changes in circumstances.--The Secretary shall provide 
        procedures for making advance determinations on the basis of 
        information other than that described in paragraph (1)(B) in 
        cases where information included with an application form 
        demonstrates substantial changes in income, changes in family 
        size or other household circumstances, change in filing status, 
        the filing of an application for unemployment benefits, or other 
        significant changes affecting eligibility, including--
                    (A) allowing an individual claiming a decrease of 20 
                percent or more in income, or filing an application for 
                unemployment benefits, to have eligibility for the 
                credit determined on the basis of household income for a 
                later period or on the basis of the individual's 
                estimate of such income for the taxable year; and
                    (B) the determination of household income in cases 
                where the taxpayer was not required to file a return of 
                tax imposed by this chapter for the second preceding 
                taxable year.

    (c) <<NOTE: Notifications.>>  Payment of Premium Tax Credits and 
Cost-sharing Reductions.--
            (1) In general.--The Secretary shall notify the Secretary of 
        the Treasury and the Exchange through which the individual is 
        enrolling of the advance determination under section 1411.
            (2) Premium tax credit.--
                    (A) In general.--The Secretary of the Treasury shall 
                make the advance payment under this section of any 
                premium tax credit allowed under section 36B of the 
                Internal Revenue Code of 1986 to the issuer of a 
                qualified health plan on a monthly basis (or such other 
                periodic basis as the Secretary may provide).
                    (B) Issuer responsibilities.--An issuer of a 
                qualified health plan receiving an advance payment with 
                respect to an individual enrolled in the plan shall--

[[Page 124 STAT. 233]]

                          (i) reduce the premium charged the insured for 
                      any period by the amount of the advance payment 
                      for the period;
                          (ii) notify the Exchange and the Secretary of 
                      such reduction;
                          (iii) include with each billing statement the 
                      amount by which the premium for the plan has been 
                      reduced by reason of the advance payment; and
                          (iv) in the case of any nonpayment of premiums 
                      by the insured--
                                    (I) notify the Secretary of such 
                                nonpayment; and
                                    (II) allow a 3-month grace period 
                                for nonpayment of premiums before 
                                discontinuing coverage.
            (3) Cost-sharing reductions.--The Secretary shall also 
        notify the Secretary of the Treasury and the Exchange under 
        paragraph (1) if an advance payment of the cost-sharing 
        reductions under section 1402 is to be made to the issuer of any 
        qualified health plan with respect to any individual enrolled in 
        the plan. The Secretary of the Treasury shall make such advance 
        payment at such time and in such amount as the Secretary 
        specifies in the notice.

    (d) No Federal Payments for Individuals Not Lawfully Present.--
Nothing in this subtitle or the amendments made by this subtitle allows 
Federal payments, credits, or cost-sharing reductions for individuals 
who are not lawfully present in the United States.
    (e) State Flexibility.--Nothing in this subtitle or the amendments 
made by this subtitle shall be construed to prohibit a State from making 
payments to or on behalf of an individual for coverage under a qualified 
health plan offered through an Exchange that are in addition to any 
credits or cost-sharing reductions allowable to the individual under 
this subtitle and such amendments.

SEC. 1413. <<NOTE: 42 USC 18083.>>  STREAMLINING OF PROCEDURES FOR 
            ENROLLMENT THROUGH AN EXCHANGE AND STATE MEDICAID, CHIP, AND 
            HEALTH SUBSIDY PROGRAMS.

    (a) In General.--The Secretary shall establish a system meeting the 
requirements of this section under which residents of each State may 
apply for enrollment in, receive a determination of eligibility for 
participation in, and continue participation in, applicable State health 
subsidy programs. Such system shall ensure that if an individual 
applying to an Exchange is found through screening to be eligible for 
medical assistance under the State medicaid plan under title XIX, or 
eligible for enrollment under a State children's health insurance 
program (CHIP) under title XXI of such Act, the individual is enrolled 
for assistance under such plan or program.
    (b) Requirements Relating to Forms and Notice.--
            (1) Requirements relating to forms.--
                    (A) In general.--The Secretary shall develop and 
                provide to each State a single, streamlined form that--
                          (i) may be used to apply for all applicable 
                      State health subsidy programs within the State;
                          (ii) may be filed online, in person, by mail, 
                      or by telephone;

[[Page 124 STAT. 234]]

                          (iii) may be filed with an Exchange or with 
                      State officials operating one of the other 
                      applicable State health subsidy programs; and
                          (iv) is structured to maximize an applicant's 
                      ability to complete the form satisfactorily, 
                      taking into account the characteristics of 
                      individuals who qualify for applicable State 
                      health subsidy programs.
                    (B) State authority to establish form.--A State may 
                develop and use its own single, streamlined form as an 
                alternative to the form developed under subparagraph (A) 
                if the alternative form is consistent with standards 
                promulgated by the Secretary under this section.
                    (C) Supplemental eligibility forms.--The Secretary 
                may allow a State to use a supplemental or alternative 
                form in the case of individuals who apply for 
                eligibility that is not determined on the basis of the 
                household income (as defined in section 36B of the 
                Internal Revenue Code of 1986).
            (2) Notice.--The Secretary shall provide that an applicant 
        filing a form under paragraph (1) shall receive notice of 
        eligibility for an applicable State health subsidy program 
        without any need to provide additional information or paperwork 
        unless such information or paperwork is specifically required by 
        law when information provided on the form is inconsistent with 
        data used for the electronic verification under paragraph (3) or 
        is otherwise insufficient to determine eligibility.

    (c) Requirements Relating to Eligibility Based on Data Exchanges.--
            (1) Development of secure interfaces.--Each State shall 
        develop for all applicable State health subsidy programs a 
        secure, electronic interface allowing an exchange of data 
        (including information contained in the application forms 
        described in subsection (b)) that allows a determination of 
        eligibility for all such programs based on a single application. 
        Such interface shall be compatible with the method established 
        for data verification under section 1411(c)(4).
            (2) Data matching program.--Each applicable State health 
        subsidy program shall participate in a data matching arrangement 
        for determining eligibility for participation in the program 
        under paragraph (3) that--
                    (A) provides access to data described in paragraph 
                (3);
                    (B) applies only to individuals who--
                          (i) receive assistance from an applicable 
                      State health subsidy program; or
                          (ii) apply for such assistance--
                                    (I) by filing a form described in 
                                subsection (b); or
                                    (II) by requesting a determination 
                                of eligibility and authorizing 
                                disclosure of the information described 
                                in paragraph (3) to applicable State 
                                health coverage subsidy programs for 
                                purposes of determining and establishing 
                                eligibility; and
                    (C) consistent with standards promulgated by the 
                Secretary, including the privacy and data security 
                safeguards described in section 1942 of the Social 
                Security Act or that are otherwise applicable to such 
                programs.

[[Page 124 STAT. 235]]

            (3) Determination of eligibility.--
                    (A) In general.--Each applicable State health 
                subsidy program shall, to the maximum extent 
                practicable--
                          (i) establish, verify, and update eligibility 
                      for participation in the program using the data 
                      matching arrangement under paragraph (2); and
                          (ii) determine such eligibility on the basis 
                      of reliable, third party data, including 
                      information described in sections 1137, 453(i), 
                      and 1942(a) of the Social Security Act, obtained 
                      through such arrangement.
                    (B) Exception.--This paragraph shall not apply in 
                circumstances with respect to which the Secretary 
                determines that the administrative and other costs of 
                use of the data matching arrangement under paragraph (2) 
                outweigh its expected gains in accuracy, efficiency, and 
                program participation.
            (4) Secretarial standards.--The Secretary shall, after 
        consultation with persons in possession of the data to be 
        matched and representatives of applicable State health subsidy 
        programs, promulgate standards governing the timing, contents, 
        and procedures for data matching described in this subsection. 
        Such standards shall take into account administrative and other 
        costs and the value of data matching to the establishment, 
        verification, and updating of eligibility for applicable State 
        health subsidy programs.

    (d) Administrative Authority.--
            (1) Agreements.--Subject to section 1411 and section 
        6103(l)(21) of the Internal Revenue Code of 1986 and any other 
        requirement providing safeguards of privacy and data integrity, 
        the Secretary may establish model agreements, and enter into 
        agreements, for the sharing of data under this section.
            (2) Authority of exchange to contract out.--Nothing in this 
        section shall be construed to--
                    (A) prohibit contractual arrangements through which 
                a State medicaid agency determines eligibility for all 
                applicable State health subsidy programs, but only if 
                such agency complies with the Secretary's requirements 
                ensuring reduced administrative costs, eligibility 
                errors, and disruptions in coverage; or
                    (B) change any requirement under title XIX that 
                eligibility for participation in a State's medicaid 
                program must be determined by a public agency.

    (e) Applicable State Health Subsidy Program.--In this section, the 
term ``applicable State health subsidy program'' means--
            (1) the program under this title for the enrollment in 
        qualified health plans offered through an Exchange, including 
        the premium tax credits under section 36B of the Internal 
        Revenue Code of 1986 and cost-sharing reductions under section 
        1402;
            (2) a State medicaid program under title XIX of the Social 
        Security Act;
            (3) a State children's health insurance program (CHIP) under 
        title XXI of such Act; and
            (4) a State program under section 1331 establishing 
        qualified basic health plans.

[[Page 124 STAT. 236]]

SEC. 1414. DISCLOSURES TO CARRY OUT ELIGIBILITY REQUIREMENTS FOR CERTAIN 
            PROGRAMS.

    (a) Disclosure of Taxpayer Return Information and Social Security 
Numbers.--
            (1) Taxpayer return information.--Subsection (l) of section 
        6103 of the Internal Revenue Code of 1986 <<NOTE: 26 USC 
        6103.>> is amended by adding at the end the following new 
        paragraph:
            ``(21) Disclosure of return information to carry out 
        eligibility requirements for certain programs.--
                    ``(A) In general.--The Secretary, upon written 
                request from the Secretary of Health and Human Services, 
                shall disclose to officers, employees, and contractors 
                of the Department of Health and Human Services return 
                information of any taxpayer whose income is relevant in 
                determining any premium tax credit under section 36B or 
                any cost-sharing reduction under section 1402 of the 
                Patient Protection and Affordable Care Act or 
                eligibility for participation in a State medicaid 
                program under title XIX of the Social Security Act, a 
                State's children's health insurance program under title 
                XXI of the Social Security Act, or a basic health 
                program under section 1331 of Patient Protection and 
                Affordable Care Act. 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 number of individuals for whom a 
                      deduction is allowed under section 151 with 
                      respect to the taxpayer (including the taxpayer 
                      and the taxpayer's spouse),
                          ``(iv) the modified gross income (as defined 
                      in section 36B) of such taxpayer and each of the 
                      other individuals included under clause (iii) who 
                      are required to file a return of tax imposed by 
                      chapter 1 for the taxable year,
                          ``(v) such other information as is prescribed 
                      by the Secretary by regulation as might indicate 
                      whether the taxpayer is eligible for such credit 
                      or reduction (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) Information to exchange and state agencies.--
                The Secretary of Health and Human Services may disclose 
                to an Exchange established under the Patient Protection 
                and Affordable Care Act or its contractors, or to a 
                State agency administering a State program described in 
                subparagraph (A) or its contractors, any inconsistency 
                between the information provided by the Exchange or 
                State agency to the Secretary and the information 
                provided to the Secretary under subparagraph (A).
                    ``(C) Restriction on use of disclosed information.--
                Return information disclosed under subparagraph (A) or 
                (B) may be used by officers, employees, and contractors 
                of the Department of Health and Human Services, an 
                Exchange, or a State agency only for the purposes of, 
                and to the extent necessary in--

[[Page 124 STAT. 237]]

                          ``(i) establishing eligibility for 
                      participation in the Exchange, and verifying the 
                      appropriate amount of, any credit or reduction 
                      described in subparagraph (A),
                          ``(ii) determining eligibility for 
                      participation in the State programs described in 
                      subparagraph (A).''.
            (2) Social security numbers.--Section 205(c)(2)(C) of the 
        Social Security Act <<NOTE: 42 USC 405.>>  is amended by adding 
        at the end the following new clause:
                          ``(x) The Secretary of Health and Human 
                      Services, and the Exchanges established under 
                      section 1311 of the Patient Protection and 
                      Affordable Care Act, are authorized to collect and 
                      use the names and social security account numbers 
                      of individuals as required to administer the 
                      provisions of, and the amendments made by, the 
                      such Act.''.

    (b) Confidentiality and Disclosure.--Paragraph (3) of section 
6103(a) of such Code <<NOTE: 26 USC 6103.>>  is amended by striking ``or 
(20)'' and inserting ``(20), or (21)''.

    (c) 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).

    (d) Unauthorized Disclosure or Inspection.--Paragraph (2) of section 
7213(a) of such Code is amended by striking ``or (20)'' and inserting 
``(20), or (21)''.

SEC. 1415. <<NOTE: 42 USC 18084.>>  PREMIUM TAX CREDIT AND COST-SHARING 
            REDUCTION PAYMENTS DISREGARDED FOR FEDERAL AND FEDERALLY-
            ASSISTED PROGRAMS.

    For purposes of determining the eligibility of any individual for 
benefits or assistance, or the amount or extent of benefits or 
assistance, under any Federal program or under any State or local 
program financed in whole or in part with Federal funds--
            (1) any credit or refund allowed or made to any individual 
        by reason of section 36B of the Internal Revenue Code of 1986 
        (as added by section 1401) shall not be taken into account as 
        income and shall not be taken into account as resources for the 
        month of receipt and the following 2 months; and
            (2) any cost-sharing reduction payment or advance payment of 
        the credit allowed under such section 36B that is made under 
        section 1402 or 1412 shall be treated as made to the qualified 
        health plan in which an individual is enrolled and not to that 
        individual.

                   PART II--SMALL BUSINESS TAX CREDIT

SEC. 1421. CREDIT FOR EMPLOYEE HEALTH INSURANCE EXPENSES OF SMALL 
            BUSINESSES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business-

[[Page 124 STAT. 238]]

related credits) is amended by inserting after section 45Q the 
following:

``SEC. 45R. <<NOTE: 26 USC 45R.>>  EMPLOYEE HEALTH INSURANCE EXPENSES OF 
            SMALL EMPLOYERS.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible small employer, the small employer health insurance credit 
determined under this section for any taxable year in the credit period 
is the amount determined under subsection (b).
    ``(b) Health Insurance Credit Amount.--Subject to subsection (c), 
the amount determined under this subsection with respect to any eligible 
small employer is equal to 50 percent (35 percent in the case of a tax-
exempt eligible small employer) of the lesser of--
            ``(1) the aggregate amount of nonelective contributions the 
        employer made on behalf of its employees during the taxable year 
        under the arrangement described in subsection (d)(4) for 
        premiums for qualified health plans offered by the employer to 
        its employees through an Exchange, or
            ``(2) the aggregate amount of nonelective contributions 
        which the employer would have made during the taxable year under 
        the arrangement if each employee taken into account under 
        paragraph (1) had enrolled in a qualified health plan which had 
        a premium equal to the average premium (as determined by the 
        Secretary of Health and Human Services) for the small group 
        market in the rating area in which the employee enrolls for 
        coverage.

    ``(c) Phaseout of Credit Amount Based on Number of Employees and 
Average Wages.--The amount of the credit determined under subsection (b) 
without regard to this subsection shall be reduced (but not below zero) 
by the sum of the following amounts:
            ``(1) Such amount multiplied by a fraction the numerator of 
        which is the total number of full-time equivalent employees of 
        the employer in excess of 10 and the denominator of which is 15.
            ``(2) Such amount multiplied by a fraction the numerator of 
        which is the average annual wages of the employer in excess of 
        the dollar amount in effect under subsection (d)(3)(B) and the 
        denominator of which is such dollar amount.

    ``(d) Eligible Small Employer.--For purposes of this section--
            ``(1) In general.--The term `eligible small employer' means, 
        with respect to any taxable year, an employer--
                    ``(A) which has no more than 25 full-time equivalent 
                employees for the taxable year,
                    ``(B) the average annual wages of which do not 
                exceed an amount equal to twice the dollar amount in 
                effect under paragraph (3)(B) for the taxable year, and
                    ``(C) which has in effect an arrangement described 
                in paragraph (4).
            ``(2) Full-time equivalent employees.--
                    ``(A) In general.--The term `full-time equivalent 
                employees' means a number of employees equal to the 
                number determined by dividing--
                          ``(i) the total number of hours of service for 
                      which wages were paid by the employer to employees 
                      during the taxable year, by
                          ``(ii) 2,080.

[[Page 124 STAT. 239]]

                Such number shall be rounded to the next lowest whole 
                number if not otherwise a whole number.
                    ``(B) Excess hours not counted.--If an employee 
                works in excess of 2,080 hours of service during any 
                taxable year, such excess shall not be taken into 
                account under subparagraph (A).
                    ``(C) <<NOTE: Regulations.>>  Hours of service.--The 
                Secretary, in consultation with the Secretary of Labor, 
                shall prescribe such regulations, rules, and guidance as 
                may be necessary to determine the hours of service of an 
                employee, including rules for the application of this 
                paragraph to employees who are not compensated on an 
                hourly basis.
            ``(3) Average annual wages.--
                    ``(A) In general.--The average annual wages of an 
                eligible small employer for any taxable year is the 
                amount determined by dividing--
                          ``(i) the aggregate amount of wages which were 
                      paid by the employer to employees during the 
                      taxable year, by
                          ``(ii) the number of full-time equivalent 
                      employees of the employee determined under 
                      paragraph (2) for the taxable year.
                Such amount shall be rounded to the next lowest multiple 
                of $1,000 if not otherwise such a multiple.
                    ``(B) Dollar amount.--For purposes of paragraph 
                (1)(B)--
                          ``(i) 2011, 2012, and 2013.--The dollar amount 
                      in effect under this paragraph for taxable years 
                      beginning in 2011, 2012, or 2013 is $20,000.
                          ``(ii) Subsequent years.--In the case of a 
                      taxable year beginning in a calendar year after 
                      2013, the dollar amount in effect under this 
                      paragraph shall be equal to $20,000, multiplied by 
                      the cost-of-living adjustment determined under 
                      section 1(f)(3) for the calendar year, determined 
                      by substituting `calendar year 2012' for `calendar 
                      year 1992' in subparagraph (B) thereof.
            ``(4) Contribution arrangement.--An arrangement is described 
        in this paragraph if it requires an eligible small employer to 
        make a nonelective contribution on behalf of each employee who 
        enrolls in a qualified health plan offered to employees by the 
        employer through an exchange in an amount equal to a uniform 
        percentage (not less than 50 percent) of the premium cost of the 
        qualified health plan.
            ``(5) Seasonal worker hours and wages not counted.--For 
        purposes of this subsection--
                    ``(A) In general.--The number of hours of service 
                worked by, and wages paid to, a seasonal worker of an 
                employer shall not be taken into account in determining 
                the full-time equivalent employees and average annual 
                wages of the employer unless the worker works for the 
                employer on more than 120 days during the taxable year.
                    ``(B) Definition of seasonal worker.--The term 
                `seasonal worker' means a worker who performs labor or 
                services on a seasonal basis as defined by the Secretary 
                of Labor, including workers covered by section 
                500.20(s)(1) of title 29, Code of Federal Regulations 
                and retail workers employed exclusively during holiday 
                seasons.

[[Page 124 STAT. 240]]

    ``(e) Other Rules and Definitions.--For purposes of this section--
            ``(1) Employee.--
                    ``(A) Certain employees excluded.--The term 
                `employee' shall not include--
                          ``(i) an employee within the meaning of 
                      section 401(c)(1),
                          ``(ii) any 2-percent shareholder (as defined 
                      in section 1372(b)) of an eligible small business 
                      which is an S corporation,
                          ``(iii) any 5-percent owner (as defined in 
                      section 416(i)(1)(B)(i)) of an eligible small 
                      business, or
                          ``(iv) any individual who bears any of the 
                      relationships described in subparagraphs (A) 
                      through (G) of section 152(d)(2) to, or is a 
                      dependent described in section 152(d)(2)(H) of, an 
                      individual described in clause (i), (ii), or 
                      (iii).
                    ``(B) Leased employees.--The term `employee' shall 
                include a leased employee within the meaning of section 
                414(n).
            ``(2) Credit period.--The term `credit period' means, with 
        respect to any eligible small employer, the 2-consecutive-
        taxable year period beginning with the 1st taxable year in which 
        the employer (or any predecessor) offers 1 or more qualified 
        health plans to its employees through an Exchange.
            ``(3) Nonelective contribution.--The term `nonelective 
        contribution' means an employer contribution other than an 
        employer contribution pursuant to a salary reduction 
        arrangement.
            ``(4) Wages.--The term `wages' has the meaning given such 
        term by section 3121(a) (determined without regard to any dollar 
        limitation contained in such section).
            ``(5) Aggregation and other rules made applicable.--
                    ``(A) Aggregation rules.--All employers treated as a 
                single employer under subsection (b), (c), (m), or (o) 
                of section 414 shall be treated as a single employer for 
                purposes of this section.
                    ``(B) <<NOTE: Applicability.>>  Other rules.--Rules 
                similar to the rules of subsections (c), (d), and (e) of 
                section 52 shall apply.

    ``(f) Credit Made Available to Tax-exempt Eligible Small 
Employers.--
            ``(1) In general.--In the case of a tax-exempt eligible 
        small employer, there shall be treated as a credit allowable 
        under subpart C (and not allowable under this subpart) the 
        lesser of--
                    ``(A) the amount of the credit determined under this 
                section with respect to such employer, or
                    ``(B) the amount of the payroll taxes of the 
                employer during the calendar year in which the taxable 
                year begins.
            ``(2) Tax-exempt eligible small employer.--For purposes of 
        this section, the term `tax-exempt eligible small employer' 
        means an eligible small employer which is any organization 
        described in section 501(c) which is exempt from taxation under 
        section 501(a).
            ``(3) Payroll taxes.--For purposes of this subsection--
                    ``(A) In general.--The term `payroll taxes' means--

[[Page 124 STAT. 241]]

                          ``(i) amounts required to be withheld from the 
                      employees of the tax-exempt eligible small 
                      employer under section 3401(a),
                          ``(ii) amounts required to be withheld from 
                      such employees under section 3101(b), and
                          ``(iii) amounts of the taxes imposed on the 
                      tax-exempt eligible small employer under section 
                      3111(b).
                    ``(B) <<NOTE: Applicability.>>  Special rule.--A 
                rule similar to the rule of section 24(d)(2)(C) shall 
                apply for purposes of subparagraph (A).

    ``(g) Application of Section for Calendar Years 2011, 2012, and 
2013.--In the case of any taxable year beginning in 2011, 2012, or 2013, 
the following modifications to this section shall apply in determining 
the amount of the credit under subsection (a):
            ``(1) No credit period required.--The credit shall be 
        determined without regard to whether the taxable year is in a 
        credit period and for purposes of applying this section to 
        taxable years beginning after 2013, no credit period shall be 
        treated as beginning with a taxable year beginning before 2014.
            ``(2) Amount of credit.--The amount of the credit determined 
        under subsection (b) shall be determined--
                    ``(A) by substituting `35 percent (25 percent in the 
                case of a tax-exempt eligible small employer)' for `50 
                percent (35 percent in the case of a tax-exempt eligible 
                small employer)',
                    ``(B) by reference to an eligible small employer's 
                nonelective contributions for premiums paid for health 
                insurance coverage (within the meaning of section 
                9832(b)(1)) of an employee, and
                    ``(C) <<NOTE: Determination.>>  by substituting for 
                the average premium determined under subsection (b)(2) 
                the amount the Secretary of Health and Human Services 
                determines is the average premium for the small group 
                market in the State in which the employer is offering 
                health insurance coverage (or for such area within the 
                State as is specified by the Secretary).
            ``(3) Contribution arrangement.--An arrangement shall not 
        fail to meet the requirements of subsection (d)(4) solely 
        because it provides for the offering of insurance outside of an 
        Exchange.

    ``(h) Insurance Definitions.--Any term used in this section which is 
also used in the Public Health Service Act or subtitle A of title I of 
the Patient Protection and Affordable Care Act shall have the meaning 
given such term by such Act or subtitle.
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the provisions of this section, 
including regulations to prevent the avoidance of the 2-year limit on 
the credit period through the use of successor entities and the 
avoidance of the limitations under subsection (c) through the use of 
multiple entities.''.
    (b) Credit To Be Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 <<NOTE: 26 USC 38.>>  (relating to 
current year 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 inserting after paragraph (35) the 
following:

[[Page 124 STAT. 242]]

            ``(36) the small employer health insurance credit determined 
        under section 45R.''.

    (c) Credit Allowed Against Alternative Minimum Tax.--Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 (defining specified 
credits) <<NOTE: 26 USC 38.>>  is amended by redesignating clauses (vi), 
(vii), and (viii) as clauses (vii), (viii), and (ix), respectively, and 
by inserting after clause (v) the following new clause:
                          ``(vi) the credit determined under section 
                      45R,''.

    (d) Disallowance of Deduction for Certain Expenses for Which Credit 
Allowed.--
            (1) In general.--Section 280C of the Internal Revenue Code 
        of 1986 (relating to disallowance of deduction for certain 
        expenses for which credit allowed), as amended by section 
        1401(b), is amended by adding at the end the following new 
        subsection:

    ``(h) Credit for Employee Health Insurance Expenses of Small 
Employers.--No deduction shall be allowed for that portion of the 
premiums for qualified health plans (as defined in section 1301(a) of 
the Patient Protection and Affordable Care Act), or for health insurance 
coverage in the case of taxable years beginning in 2011, 2012, or 2013, 
paid by an employer which is equal to the amount of the credit 
determined under section 45R(a) with respect to the premiums.''.
            (2) Deduction for expiring credits.--Section 196(c) of such 
        Code is amended by striking ``and'' at the end of paragraph 
        (12), by striking the period at the end of paragraph (13) and 
        inserting ``, and'', and by adding at the end the following new 
        paragraph:
            ``(14) the small employer health insurance credit determined 
        under section 45R(a).''.

    (e) Clerical Amendment.--The table of sections for subpart D of part 
IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following:

``Sec. 45R. Employee health insurance expenses of small employers.''.

    (f) <<NOTE: Applicability. 26 USC 38 note.>>  Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to amounts paid or incurred in taxable years beginning 
        after December 31, 2010.
            (2) Minimum tax.--The amendments made by subsection (c) 
        shall apply to credits determined under section 45R of the 
        Internal Revenue Code of 1986 in taxable years beginning after 
        December 31, 2010, and to carrybacks of such credits.

            Subtitle F--Shared Responsibility for Health Care

                    PART I--INDIVIDUAL RESPONSIBILITY

SEC. 1501. <<NOTE: 42 USC 18091.>>  REQUIREMENT TO MAINTAIN MINIMUM 
            ESSENTIAL COVERAGE.

    (a) Findings.--Congress makes the following findings:
            (1) In general.--The individual responsibility requirement 
        provided for in this section (in this subsection referred to as 
        the ``requirement'') is commercial and economic in nature, and 
        substantially affects interstate commerce, as a result of the 
        effects described in paragraph (2).

[[Page 124 STAT. 243]]

            (2) Effects on the national economy and interstate 
        commerce.--The effects described in this paragraph are the 
        following:
                    (A) The requirement regulates activity that is 
                commercial and economic in nature: economic and 
                financial decisions about how and when health care is 
                paid for, and when health insurance is purchased.
                    (B) Health insurance and health care services are a 
                significant part of the national economy. National 
                health spending is projected to increase from 
                $2,500,000,000,000, or 17.6 percent of the economy, in 
                2009 to $4,700,000,000,000 in 2019. Private health 
                insurance spending is projected to be $854,000,000,000 
                in 2009, and pays for medical supplies, drugs, and 
                equipment that are shipped in interstate commerce. Since 
                most health insurance is sold by national or regional 
                health insurance companies, health insurance is sold in 
                interstate commerce and claims payments flow through 
                interstate commerce.
                    (C) The requirement, together with the other 
                provisions of this Act, will add millions of new 
                consumers to the health insurance market, increasing the 
                supply of, and demand for, health care services. 
                According to the Congressional Budget Office, the 
                requirement will increase the number and share of 
                Americans who are insured.
                    (D) The requirement achieves near-universal coverage 
                by building upon and strengthening the private employer-
                based health insurance system, which covers 176,000,000 
                Americans nationwide. In Massachusetts, a similar 
                requirement has strengthened private employer-based 
                coverage: despite the economic downturn, the number of 
                workers offered employer-based coverage has actually 
                increased.
                    (E) Half of all personal bankruptcies are caused in 
                part by medical expenses. By significantly increasing 
                health insurance coverage, the requirement, together 
                with the other provisions of this Act, will improve 
                financial security for families.
                    (F) Under the Employee Retirement Income Security 
                Act of 1974 (29 U.S.C. 1001 et seq.), the Public Health 
                Service Act (42 U.S.C. 201 et seq.), and this Act, the 
                Federal Government has a significant role in regulating 
                health insurance which is in interstate commerce.
                    (G) Under sections 2704 and 2705 of the Public 
                Health Service Act (as added by section 1201 of this 
                Act), if there were no requirement, many individuals 
                would wait to purchase health insurance until they 
                needed care. By significantly increasing health 
                insurance coverage, the requirement, together with the 
                other provisions of this Act, will minimize this adverse 
                selection and broaden the health insurance risk pool to 
                include healthy individuals, which will lower health 
                insurance premiums. The requirement is essential to 
                creating effective health insurance markets in which 
                improved health insurance products that are guaranteed 
                issue and do not exclude coverage of pre-existing 
                conditions can be sold.
                    (H) Administrative costs for private health 
                insurance, which were $90,000,000,000 in 2006, are 26 to 
                30 percent of premiums in the current individual and 
                small group

[[Page 124 STAT. 244]]

                markets. By significantly increasing health insurance 
                coverage and the size of purchasing pools, which will 
                increase economies of scale, the requirement, together 
                with the other provisions of this Act, will 
                significantly reduce administrative costs and lower 
                health insurance premiums. The requirement is essential 
                to creating effective health insurance markets that do 
                not require underwriting and eliminate its associated 
                administrative costs.
            (3) Supreme court ruling.--In United States v. South-Eastern 
        Underwriters Association (322 U.S. 533 (1944)), the Supreme 
        Court of the United States ruled that insurance is interstate 
        commerce subject to Federal regulation.

    (b) In General.--Subtitle D of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new chapter:

         ``CHAPTER 48--MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE

``Sec. 5000A. Requirement to maintain minimum essential coverage.

``SEC. 5000A. <<NOTE: 26 USC 5000A.>>  REQUIREMENT TO MAINTAIN MINIMUM 
            ESSENTIAL COVERAGE.

    ``(a) Requirement To Maintain Minimum Essential Coverage.--An 
applicable individual shall for each month beginning after 2013 ensure 
that the individual, and any dependent of the individual who is an 
applicable individual, is covered under minimum essential coverage for 
such month.
    ``(b) Shared Responsibility Payment.--
            ``(1) In general.-- <<NOTE: Penalty.>> If an applicable 
        individual fails to meet the requirement of subsection (a) for 1 
        or more months during any calendar year beginning after 2013, 
        then, except as provided in subsection (d), there is hereby 
        imposed a penalty with respect to the individual in the amount 
        determined under subsection (c).
            ``(2) Inclusion with return.--Any penalty imposed by this 
        section with respect to any month shall be included with a 
        taxpayer's return under chapter 1 for the taxable year which 
        includes such month.
            ``(3) Payment of penalty.--If an individual with respect to 
        whom a penalty is imposed by this section for any month--
                    ``(A) is a dependent (as defined in section 152) of 
                another taxpayer for the other taxpayer's taxable year 
                including such month, such other taxpayer shall be 
                liable for such penalty, or
                    ``(B) files a joint return for the taxable year 
                including such month, such individual and the spouse of 
                such individual shall be jointly liable for such 
                penalty.

    ``(c) Amount of Penalty.--
            ``(1) In general.--The penalty determined under this 
        subsection for any month with respect to any individual is an 
        amount equal to \1/12\ of the applicable dollar amount for the 
        calendar year.
            ``(2) Dollar limitation.--The amount of the penalty imposed 
        by this section on any taxpayer for any taxable year with 
        respect to all individuals for whom the taxpayer is liable under 
        subsection (b)(3) shall not exceed an amount equal to 300 
        percent the applicable dollar amount (determined without

[[Page 124 STAT. 245]]

        regard to paragraph (3)(C)) for the calendar year with or within 
        which the taxable year ends.
            ``(3) Applicable dollar amount.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), the applicable dollar amount 
                is $750.
                    ``(B) Phase in.--The applicable dollar amount is $95 
                for 2014 and $350 for 2015.
                    ``(C) Special rule for individuals under age 18.--If 
                an applicable individual has not attained the age of 18 
                as of the beginning of a month, the applicable dollar 
                amount with respect to such individual for the month 
                shall be equal to one-half of the applicable dollar 
                amount for the calendar year in which the month occurs.
                    ``(D) Indexing of amount.--In the case of any 
                calendar year beginning after 2016, the applicable 
                dollar amount shall be equal to $750, increased by an 
                amount equal to--
                          ``(i) $750, multiplied by
                          ``(ii) the cost-of-living adjustment 
                      determined under section 1(f)(3) for the calendar 
                      year, determined by substituting `calendar year 
                      2015' for `calendar year 1992' in subparagraph (B) 
                      thereof.
                If the amount of any increase under clause (i) is not a 
                multiple of $50, such increase shall be rounded to the 
                next lowest multiple of $50.
            ``(4) Terms relating to income and families.--For purposes 
        of this section--
                    ``(A) Family size.--The family size involved with 
                respect to any taxpayer shall be equal to the number of 
                individuals for whom the taxpayer is allowed a deduction 
                under section 151 (relating to allowance of deduction 
                for personal exemptions) for the taxable year.
                    ``(B) Household income.--The term `household income' 
                means, with respect to any taxpayer for any taxable 
                year, an amount equal to the sum of--
                          ``(i) the modified gross income of the 
                      taxpayer, plus
                          ``(ii) the aggregate modified gross incomes of 
                      all other individuals who--
                                    ``(I) were taken into account in 
                                determining the taxpayer's family size 
                                under paragraph (1), and
                                    ``(II) were required to file a 
                                return of tax imposed by section 1 for 
                                the taxable year.
                    ``(C) Modified gross income.--The term `modified 
                gross income' means gross income--
                          ``(i) decreased by the amount of any deduction 
                      allowable under paragraph (1), (3), (4), or (10) 
                      of section 62(a),
                          ``(ii) increased by the amount of interest 
                      received or accrued during the taxable year which 
                      is exempt from tax imposed by this chapter, and
                          ``(iii) determined without regard to sections 
                      911, 931, and 933.
                    ``(D) Poverty line.--

[[Page 124 STAT. 246]]

                          ``(i) In general.--The term `poverty line' has 
                      the meaning given that term in section 2110(c)(5) 
                      of the Social Security Act (42 U.S.C. 
                      1397jj(c)(5)).
                          ``(ii) Poverty line used.--In the case of any 
                      taxable year ending with or within a calendar 
                      year, the poverty line used shall be the most 
                      recently published poverty line as of the 1st day 
                      of such calendar year.

    ``(d) Applicable Individual.--For purposes of this section--
            ``(1) In general.--The term `applicable individual' means, 
        with respect to any month, an individual other than an 
        individual described in paragraph (2), (3), or (4).
            ``(2) Religious exemptions.--
                    ``(A) Religious conscience exemption.--Such term 
                shall not include any individual for any month if such 
                individual has in effect an exemption under section 
                1311(d)(4)(H) of the Patient Protection and Affordable 
                Care Act 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) Health care sharing ministry.--
                          ``(i) In general.--Such term shall not include 
                      any individual for any month if such individual is 
                      a member of a health care sharing ministry for the 
                      month.
                          ``(ii) Health care sharing ministry.--The term 
                      `health care sharing ministry' means an 
                      organization--
                                    ``(I) which is described in section 
                                501(c)(3) and is exempt from taxation 
                                under section 501(a),
                                    ``(II) members of which share a 
                                common set of ethical or religious 
                                beliefs and share medical expenses among 
                                members in accordance with those beliefs 
                                and without regard to the State in which 
                                a member resides or is employed,
                                    ``(III) members of which retain 
                                membership even after they develop a 
                                medical condition,
                                    ``(IV) which (or a predecessor of 
                                which) has been in existence at all 
                                times since December 31, 1999, and 
                                medical expenses of its members have 
                                been shared continuously and without 
                                interruption since at least December 31, 
                                1999, and
                                    ``(V) which conducts an annual audit 
                                which is performed by an independent 
                                certified public accounting firm in 
                                accordance with generally accepted 
                                accounting principles and which is made 
                                available to the public upon request.
            ``(3) Individuals not lawfully present.--Such term shall not 
        include an individual for any month if for the month the 
        individual is not a citizen or national of the United States or 
        an alien lawfully present in the United States.
            ``(4) Incarcerated individuals.--Such term shall not include 
        an individual for any month if for the month the individual is 
        incarcerated, other than incarceration pending the disposition 
        of charges.

    ``(e) Exemptions.--No penalty shall be imposed under subsection (a) 
with respect to--
            ``(1) Individuals who cannot afford coverage.--

[[Page 124 STAT. 247]]

                    ``(A) In general.--Any applicable individual for any 
                month if the applicable individual's required 
                contribution (determined on an annual basis) for 
                coverage for the month exceeds 8 percent of such 
                individual's household income for the taxable year 
                described in section 1412(b)(1)(B) of the Patient 
                Protection and Affordable Care Act. For purposes of 
                applying this subparagraph, the taxpayer's household 
                income shall be increased by any exclusion from gross 
                income for any portion of the required contribution made 
                through a salary reduction arrangement.
                    ``(B) <<NOTE: Definition.>>  Required 
                contribution.--For purposes of this paragraph, the term 
                `required contribution' means--
                          ``(i) in the case of an individual eligible to 
                      purchase minimum essential coverage consisting of 
                      coverage through an eligible-employer-sponsored 
                      plan, the portion of the annual premium which 
                      would be paid by the individual (without regard to 
                      whether paid through salary reduction or 
                      otherwise) for self-only coverage, or
                          ``(ii) in the case of an individual eligible 
                      only to purchase minimum essential coverage 
                      described in subsection (f)(1)(C), the annual 
                      premium for the lowest cost bronze plan available 
                      in the individual market through the Exchange in 
                      the State in the rating area in which the 
                      individual resides (without regard to whether the 
                      individual purchased a qualified health plan 
                      through the Exchange), reduced by the amount of 
                      the credit allowable under section 36B for the 
                      taxable year (determined as if the individual was 
                      covered by a qualified health plan offered through 
                      the Exchange for the entire taxable year).
                    ``(C) Special rules for individuals related to 
                employees.--For purposes of subparagraph (B)(i), if an 
                applicable individual is eligible for minimum essential 
                coverage through an employer by reason of a relationship 
                to an employee, the determination shall be made by 
                reference to the affordability of the coverage to the 
                employee.
                    ``(D) <<NOTE: Applicability. Determination.>>  
                Indexing.--In the case of plan years beginning in any 
                calendar year after 2014, subparagraph (A) shall be 
                applied by substituting for `8 percent' the percentage 
                the Secretary of Health and Human Services determines 
                reflects the excess of the rate of premium growth 
                between the preceding calendar year and 2013 over the 
                rate of income growth for such period.
            ``(2) Taxpayers with income under 100 percent of poverty 
        line.--Any applicable individual for any month during a calendar 
        year if the individual's household income for the taxable year 
        described in section 1412(b)(1)(B) of the Patient Protection and 
        Affordable Care Act is less than 100 percent of the poverty line 
        for the size of the family involved (determined in the same 
        manner as under subsection (b)(4)).
            ``(3) Members of indian tribes.--Any applicable individual 
        for any month during which the individual is a member of an 
        Indian tribe (as defined in section 45A(c)(6)).
            ``(4) Months during short coverage gaps.--
                    ``(A) In general.--Any month the last day of which 
                occurred during a period in which the applicable 
                individual

[[Page 124 STAT. 248]]

                was not covered by minimum essential coverage for a 
                continuous period of less than 3 months.
                    ``(B) <<NOTE: Applicability.>>  Special rules.--For 
                purposes of applying this paragraph--
                          ``(i) the length of a continuous period shall 
                      be determined without regard to the calendar years 
                      in which months in such period occur,
                          ``(ii) if a continuous period is greater than 
                      the period allowed under subparagraph (A), no 
                      exception shall be provided under this paragraph 
                      for any month in the period, and
                          ``(iii) if there is more than 1 continuous 
                      period described in subparagraph (A) covering 
                      months in a calendar year, the exception provided 
                      by this paragraph shall only apply to months in 
                      the first of such periods.
                The Secretary shall prescribe rules for the collection 
                of the penalty imposed by this section in cases where 
                continuous periods include months in more than 1 taxable 
                year.
            ``(5) Hardships.--Any applicable individual who for any 
        month is determined by the Secretary of Health and Human 
        Services under section 1311(d)(4)(H) to have suffered a hardship 
        with respect to the capability to obtain coverage under a 
        qualified health plan.

    ``(f) Minimum Essential Coverage.--For purposes of this section--
            ``(1) <<NOTE: Definition.>>  In general.--The term `minimum 
        essential coverage' means any of the following:
                    ``(A) Government sponsored programs.--Coverage 
                under--
                          ``(i) the Medicare program under part A of 
                      title XVIII of the Social Security Act,
                          ``(ii) the Medicaid program under title XIX of 
                      the Social Security Act,
                          ``(iii) the CHIP program under title XXI of 
                      the Social Security Act,
                          ``(iv) the TRICARE for Life program,
                          ``(v) the veteran's health care program under 
                      chapter 17 of title 38, United States Code, or
                          ``(vi) a health plan under section 2504(e) of 
                      title 22, United States Code (relating to Peace 
                      Corps volunteers).
                    ``(B) Employer-sponsored plan.--Coverage under an 
                eligible employer-sponsored plan.
                    ``(C) Plans in the individual market.--Coverage 
                under a health plan offered in the individual market 
                within a State.
                    ``(D) Grandfathered health plan.--Coverage under a 
                grandfathered health plan.
                    ``(E) Other coverage.--Such other health benefits 
                coverage, such as a State health benefits risk pool, as 
                the Secretary of Health and Human Services, in 
                coordination with the Secretary, recognizes for purposes 
                of this subsection.
            ``(2) Eligible employer-sponsored plan.--The term `eligible 
        employer-sponsored plan' means, with respect to any

[[Page 124 STAT. 249]]

        employee, a group health plan or group health insurance coverage 
        offered by an employer to the employee which is--
                    ``(A) a governmental plan (within the meaning of 
                section 2791(d)(8) of the Public Health Service Act), or
                    ``(B) any other plan or coverage offered in the 
                small or large group market within a State.
        Such term shall include a grandfathered health plan described in 
        paragraph (1)(D) offered in a group market.
            ``(3) Excepted benefits not treated as minimum essential 
        coverage.--The term `minimum essential coverage' shall not 
        include health insurance coverage which consists of coverage of 
        excepted benefits--
                    ``(A) described in paragraph (1) of subsection (c) 
                of section 2791 of the Public Health Service Act; or
                    ``(B) described in paragraph (2), (3), or (4) of 
                such subsection if the benefits are provided under a 
                separate policy, certificate, or contract of insurance.
            ``(4) Individuals residing outside united states or 
        residents of territories.--Any applicable individual shall be 
        treated as having minimum essential coverage for any month--
                    ``(A) if such month occurs during any period 
                described in subparagraph (A) or (B) of section 
                911(d)(1) which is applicable to the individual, or
                    ``(B) if such individual is a bona fide resident of 
                any possession of the United States (as determined under 
                section 937(a)) for such month.
            ``(5) Insurance-related terms.--Any term used in this 
        section which is also used in title I of the Patient Protection 
        and Affordable Care Act shall have the same meaning as when used 
        in such title.

    ``(g) Administration and Procedure.--
            ``(1) In general.--The penalty provided by this section 
        shall be paid upon notice and demand by the Secretary, and 
        except as provided in paragraph (2), shall be assessed and 
        collected in the same manner as an assessable penalty under 
        subchapter B of chapter 68.
            ``(2) Special rules.--Notwithstanding any other provision of 
        law--
                    ``(A) Waiver of criminal penalties.--In the case of 
                any failure by a taxpayer to timely pay any penalty 
                imposed by this section, such taxpayer shall not be 
                subject to any criminal prosecution or penalty with 
                respect to such failure.
                    ``(B) Limitations on liens and levies.--The 
                Secretary shall not--
                          ``(i) file notice of lien with respect to any 
                      property of a taxpayer by reason of any failure to 
                      pay the penalty imposed by this section, or
                          ``(ii) levy on any such property with respect 
                      to such failure.''.

    (c) Clerical Amendment.--The table of chapters for subtitle D of the 
Internal Revenue Code of 1986 is amended by inserting after the item 
relating to chapter 47 the following new item:

       ``Chapter 48--Maintenance of Minimum Essential Coverage.''.

    (d) <<NOTE: 26 USC 5000A note.>>  Effective Date.--The amendments 
made by this section shall apply to taxable years ending after December 
31, 2013.

[[Page 124 STAT. 250]]

SEC. 1502. REPORTING OF HEALTH INSURANCE COVERAGE.

    (a) In General.--Part III of subchapter A of chapter 61 of the 
Internal Revenue Code of 1986 is amended by inserting after subpart C 
the following new subpart:

      ``Subpart D--Information Regarding Health Insurance Coverage

``Sec. 6055. Reporting of health insurance coverage.

``SEC. 6055. <<NOTE: 26 USC 6055.>> REPORTING OF HEALTH INSURANCE 
            COVERAGE.

    ``(a) In General.--Every person who provides minimum essential 
coverage to an individual during a calendar year shall, at such time as 
the Secretary may prescribe, make a return described in subsection (b).
    ``(b) Form and Manner of Return.--
            ``(1) In general.--A return is described in this subsection 
        if such return--
                    ``(A) is in such form as the Secretary may 
                prescribe, and
                    ``(B) contains--
                          ``(i) the name, address and TIN of the primary 
                      insured and the name and TIN of each other 
                      individual obtaining coverage under the policy,
                          ``(ii) the dates during which such individual 
                      was covered under minimum essential coverage 
                      during the calendar year,
                          ``(iii) in the case of minimum essential 
                      coverage which consists of health insurance 
                      coverage, information concerning--
                                    ``(I) whether or not the coverage is 
                                a qualified health plan offered through 
                                an Exchange established under section 
                                1311 of the Patient Protection and 
                                Affordable Care Act, and
                                    ``(II) in the case of a qualified 
                                health plan, the amount (if any) of any 
                                advance payment under section 1412 of 
                                the Patient Protection and Affordable 
                                Care Act of any cost-sharing reduction 
                                under section 1402 of such Act or of any 
                                premium tax credit under section 36B 
                                with respect to such coverage, and
                          ``(iv) such other information as the Secretary 
                      may require.
            ``(2) Information relating to employer-provided coverage.--
        If minimum essential coverage provided to an individual under 
        subsection (a) consists of health insurance coverage of a health 
        insurance issuer provided through a group health plan of an 
        employer, a return described in this subsection shall include--
                    ``(A) the name, address, and employer identification 
                number of the employer maintaining the plan,
                    ``(B) the portion of the premium (if any) required 
                to be paid by the employer, and
                    ``(C) if the health insurance coverage is a 
                qualified health plan in the small group market offered 
                through an Exchange, such other information as the 
                Secretary may require for administration of the credit 
                under section 45R

[[Page 124 STAT. 251]]

                (relating to credit for employee health insurance 
                expenses of small employers).

    ``(c) Statements To Be Furnished to Individuals With Respect to Whom 
Information Is Reported.--
            ``(1) In general.--Every person required to make a return 
        under subsection (a) shall furnish to each individual whose name 
        is required to be set forth in such return a written statement 
        showing--
                    ``(A) the name and address of the person required to 
                make such return and the phone number of the information 
                contact for such person, and
                    ``(B) the information required to be shown on the 
                return with respect to such individual.
            ``(2) Time for furnishing statements.--The written statement 
        required under paragraph (1) shall be furnished on or before 
        January 31 of the year following the calendar year for which the 
        return under subsection (a) was 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.
    ``(e) Minimum Essential Coverage.--For purposes of this section, the 
term `minimum essential coverage' has the meaning given such term by 
section 5000A(f).''.
    (b) Assessable Penalties.--
            (1) Subparagraph (B) of section 6724(d)(1) of the Internal 
        Revenue Code of 1986 <<NOTE: 26 USC 6724.>>  (relating to 
        definitions) 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 inserting after clause (xxiii) the 
        following new clause:
                          ``(xxiv) section 6055 (relating to returns 
                      relating to information regarding health insurance 
                      coverage), and''.
            (2) 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 6055(c) (relating to statements 
                relating to information regarding health insurance 
                coverage).''.

    (c) Notification of Nonenrollment.-- <<NOTE: Deadline. 42 USC 
18092.>> Not later than June 30 of each year, the Secretary of the 
Treasury, acting through the Internal Revenue Service and in 
consultation with the Secretary of Health and Human Services, shall send 
a notification to each individual who files an individual income tax 
return and who is not enrolled in minimum essential coverage (as defined 
in section 5000A of the Internal Revenue Code of 1986). Such 
notification shall contain information on the services available through 
the Exchange operating in the State in which such individual resides.

    (d) Conforming Amendment.--The table of subparts for part III of 
subchapter A of chapter 61 of such Code is amended by inserting after 
the item relating to subpart C the following new item:

[[Page 124 STAT. 252]]

     ``subpart d--information regarding health insurance coverage''.

    (e) <<NOTE: 26 USC 6055 note.>>  Effective Date.--The amendments 
made by this section shall apply to calendar years beginning after 2013.

                   PART II--EMPLOYER RESPONSIBILITIES

SEC. 1511. AUTOMATIC ENROLLMENT FOR EMPLOYEES OF LARGE EMPLOYERS.

    The Fair Labor Standards Act of 1938 is amended by inserting after 
section 18 (29 U.S.C. 218) the following:

``SEC. 18A. <<NOTE: 29 USC 218A.>>  AUTOMATIC ENROLLMENT FOR EMPLOYEES 
            OF LARGE EMPLOYERS.

    ``In accordance with regulations promulgated by the Secretary, an 
employer to which this Act applies that has more than 200 full-time 
employees and that offers employees enrollment in 1 or more health 
benefits plans shall automatically enroll new full-time employees in one 
of the plans offered (subject to any waiting period authorized by law) 
and to continue the enrollment of current employees in a health benefits 
plan offered through the employer. Any automatic enrollment program 
shall include adequate notice and the opportunity for an employee to opt 
out of any coverage the individual or employee were automatically 
enrolled in. Nothing in this section shall be construed to supersede any 
State law which establishes, implements, or continues in effect any 
standard or requirement relating to employers in connection with payroll 
except to the extent that such standard or requirement prevents an 
employer from instituting the automatic enrollment program under this 
section.''.

SEC. 1512. EMPLOYER REQUIREMENT TO INFORM EMPLOYEES OF COVERAGE OPTIONS.

    The Fair Labor Standards Act of 1938 is amended by inserting after 
section 18A (as added by section 1513) the following:

``SEC. 18B. <<NOTE: 29 USC 218B.>>  NOTICE TO EMPLOYEES.

    ``(a) In General.-- <<NOTE: Deadline.>> In accordance with 
regulations promulgated by the Secretary, an employer to which this Act 
applies, shall provide to each employee at the time of hiring (or with 
respect to current employees, not later than March 1, 2013), written 
notice--
            ``(1) informing the employee of the existence of an 
        Exchange, including a description of the services provided by 
        such Exchange, and the manner in which the employee may contact 
        the Exchange to request assistance;
            ``(2) if the employer plan's share of the total allowed 
        costs of benefits provided under the plan is less than 60 
        percent of such costs, that the employee may be eligible for a 
        premium tax credit under section 36B of the Internal Revenue 
        Code of 1986 and a cost sharing reduction under section 1402 of 
        the Patient Protection and Affordable Care Act if the employee 
        purchases a qualified health plan through the Exchange; and
            ``(3) if the employee purchases a qualified health plan 
        through the Exchange, the employee will lose the employer 
        contribution (if any) to any health benefits plan offered by the 
        employer and that all or a portion of such contribution may be 
        excludable from income for Federal income tax purposes.

[[Page 124 STAT. 253]]

    ``(b) Effective Date.--Subsection (a) shall take effect with respect 
to employers in a State beginning on March 1, 2013.''.

SEC. 1513. SHARED RESPONSIBILITY FOR EMPLOYERS.

    (a) In General.--Chapter 43 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following:

``SEC. 4980H. <<NOTE: 26 USC 4980H.>>  SHARED RESPONSIBILITY FOR 
            EMPLOYERS REGARDING HEALTH COVERAGE.

    ``(a) Large Employers Not Offering Health Coverage.--If--
            ``(1) any applicable large employer fails to offer to its 
        full-time employees (and their dependents) the opportunity to 
        enroll in minimum essential coverage under an eligible employer-
        sponsored plan (as defined in section 5000A(f)(2)) for any 
        month, and
            ``(2) at least one full-time employee of the applicable 
        large employer has been certified to the employer under section 
        1411 of the Patient Protection and Affordable Care Act as having 
        enrolled for such month in a qualified health plan with respect 
        to which an applicable premium tax credit or cost-sharing 
        reduction is allowed or paid with respect to the employee,

then there is hereby imposed on the employer an assessable payment equal 
to the product of the applicable payment amount and the number of 
individuals employed by the employer as full-time employees during such 
month.
    ``(b) Large Employers With Waiting Periods Exceeding 30 Days.--
            ``(1) In general.--In the case of any applicable large 
        employer which requires an extended waiting period to enroll in 
        any minimum essential coverage under an employer-sponsored plan 
        (as defined in section 5000A(f)(2)), there is hereby imposed on 
        the employer an assessable payment, in the amount specified in 
        paragraph (2), for each full-time employee of the employer to 
        whom the extended waiting period applies.
            ``(2) Amount.--For purposes of paragraph (1), the amount 
        specified in this paragraph for a full-time employee is--
                    ``(A) in the case of an extended waiting period 
                which exceeds 30 days but does not exceed 60 days, $400, 
                and
                    ``(B) in the case of an extended waiting period 
                which exceeds 60 days, $600.
            ``(3) Extended waiting period.--The term `extended waiting 
        period' means any waiting period (as defined in section 
        2701(b)(4) of the Public Health Service Act) which exceeds 30 
        days.

    ``(c) Large Employers Offering Coverage With Employees Who Qualify 
for Premium Tax Credits or Cost-sharing Reductions.--
            ``(1) In general.--If--
                    ``(A) an applicable large employer offers to its 
                full-time employees (and their dependents) the 
                opportunity to enroll in minimum essential coverage 
                under an eligible employer-sponsored plan (as defined in 
                section 5000A(f)(2)) for any month, and
                    ``(B) 1 or more full-time employees of the 
                applicable large employer has been certified to the 
                employer under section 1411 of the Patient Protection 
                and Affordable Care Act as having enrolled for such 
                month in a qualified health

[[Page 124 STAT. 254]]

                plan with respect to which an applicable premium tax 
                credit or cost-sharing reduction is allowed or paid with 
                respect to the employee,
        then there is hereby imposed on the employer an assessable 
        payment equal to the product of the number of full-time 
        employees of the applicable large employer described in 
        subparagraph (B) for such month and 400 percent of the 
        applicable payment amount.
            ``(2) Overall limitation.--The aggregate amount of tax 
        determined under paragraph (1) with respect to all employees of 
        an applicable large employer for any month shall not exceed the 
        product of the applicable payment amount and the number of 
        individuals employed by the employer as full-time employees 
        during such month.

    ``(d) Definitions and Special Rules.--For purposes of this section--
            ``(1) Applicable payment amount.--The term `applicable 
        payment amount' means, with respect to any month, \1/12\ of 
        $750.
            ``(2) Applicable large employer.--
                    ``(A) In general.--The term `applicable large 
                employer' means, with respect to a calendar year, an 
                employer who employed an average of at least 50 full-
                time employees on business days during the preceding 
                calendar year.
                    ``(B) Exemption for certain employers.--
                          ``(i) In general.--An employer shall not be 
                      considered to employ more than 50 full-time 
                      employees if--
                                    ``(I) the employer's workforce 
                                exceeds 50 full-time employees for 120 
                                days or fewer during the calendar year, 
                                and
                                    ``(II) the employees in excess of 50 
                                employed during such 120-day period were 
                                seasonal workers.
                          ``(ii) Definition of seasonal workers.--The 
                      term `seasonal worker' means a worker who performs 
                      labor or services on a seasonal basis as defined 
                      by the Secretary of Labor, including workers 
                      covered by section 500.20(s)(1) of title 29, Code 
                      of Federal Regulations and retail workers employed 
                      exclusively during holiday seasons.
                    ``(C) Rules for determining employer size.--For 
                purposes of this paragraph--
                          ``(i) Application of aggregation rule for 
                      employers.--All persons 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 as 1 employer.
                          ``(ii) Employers not in existence in preceding 
                      year.--In the case of an employer which was not in 
                      existence throughout the preceding calendar year, 
                      the determination of whether such employer is an 
                      applicable large employer shall be based on the 
                      average number of employees that it is reasonably 
                      expected such employer will employ on business 
                      days in the current calendar year.
                          ``(iii) Predecessors.--Any reference in this 
                      subsection to an employer shall include a 
                      reference to any predecessor of such employer.

[[Page 124 STAT. 255]]

            ``(3) Applicable premium tax credit and cost-sharing 
        reduction.--The term `applicable premium tax credit and cost-
        sharing reduction' means--
                    ``(A) any premium tax credit allowed under section 
                36B,
                    ``(B) any cost-sharing reduction under section 1402 
                of the Patient Protection and Affordable Care Act, and
                    ``(C) any advance payment of such credit or 
                reduction under section 1412 of such Act.
            ``(4) Full-time employee.--
                    ``(A) In general.--The term `full-time employee' 
                means an employee who is employed on average at least 30 
                hours of service per week.
                    ``(B) Hours of service.-- 
                <<NOTE: Regulations. Guidance.>> The Secretary, in 
                consultation with the Secretary of Labor, shall 
                prescribe such regulations, rules, and guidance as may 
                be necessary to determine the hours of service of an 
                employee, including rules for the application of this 
                paragraph to employees who are not compensated on an 
                hourly basis.
            ``(5) Inflation adjustment.--
                    ``(A) In general.--In the case of any calendar year 
                after 2014, each of the dollar amounts in subsection 
                (b)(2) and (d)(1) shall be increased by an amount equal 
                to the product of--
                          ``(i) such dollar amount, and
                          ``(ii) the premium adjustment percentage (as 
                      defined in section 1302(c)(4) of the Patient 
                      Protection and Affordable Care Act) for the 
                      calendar year.
                    ``(B) Rounding.--If the amount of any increase under 
                subparagraph (A) is not a multiple of $10, such increase 
                shall be rounded to the next lowest multiple of $10.
            ``(6) Other definitions.--Any term used in this section 
        which is also used in the Patient Protection and Affordable Care 
        Act shall have the same meaning as when used in such Act.
            ``(7) Tax nondeductible.--For denial of deduction for the 
        tax imposed by this section, see section 275(a)(6).

    ``(e) Administration and Procedure.--
            ``(1) In general.--Any assessable payment provided by this 
        section shall be paid upon notice and demand by the Secretary, 
        and shall be assessed and collected in the same manner as an 
        assessable penalty under subchapter B of chapter 68.
            ``(2) Time for payment.--The Secretary may provide for the 
        payment of any assessable payment provided by this section on an 
        annual, monthly, or other periodic basis as the Secretary may 
        prescribe.
            ``(3) Coordination with credits, etc..-- 
        <<NOTE: Regulations. Guidance.>> The Secretary shall prescribe 
        rules, regulations, or guidance for the repayment of any 
        assessable payment (including interest) if such payment is based 
        on the allowance or payment of an applicable premium tax credit 
        or cost-sharing reduction with respect to an employee, such 
        allowance or payment is subsequently disallowed, and the 
        assessable payment would not have been required to be made but 
        for such allowance or payment.''.

[[Page 124 STAT. 256]]

    (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. Shared responsibility for employers regarding health 
           coverage.''.

    (c) Study and Report of Effect of Tax on Workers' Wages.--
            (1) In general.--The Secretary of Labor shall conduct a 
        study to determine whether employees' wages are reduced by 
        reason of the application of the assessable payments under 
        section 4980H of the Internal Revenue Code of 1986 (as added by 
        the amendments made by this section). <<NOTE: Determination.>>  
        The Secretary shall make such determination on the basis of the 
        National Compensation Survey published by the Bureau of Labor 
        Statistics.
            (2) Report.--The Secretary shall report the results of the 
        study under paragraph (1) to the Committee on Ways and Means of 
        the House of Representatives and to the Committee on Finance of 
        the Senate.

    (d) <<NOTE: 26 USC 4980H note.>>  Effective Date.--The amendments 
made by this section shall apply to months beginning after December 31, 
2013.

SEC. 1514. REPORTING OF EMPLOYER HEALTH INSURANCE COVERAGE.

    (a) In General.--Subpart D of part III of subchapter A of chapter 61 
of the Internal Revenue Code of 1986, as added by section 1502, is 
amended by inserting after section 6055 the following new section:

``SEC. 6056. <<NOTE: 26 USC 6056.>>  LARGE EMPLOYERS REQUIRED TO REPORT 
            ON HEALTH INSURANCE COVERAGE.

    ``(a) In General.--Every applicable large employer required to meet 
the requirements of section 4980H with respect to its full-time 
employees during a calendar year shall, at such time as the Secretary 
may prescribe, make a return described in subsection (b).
    ``(b) Form and Manner of Return.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains--
                    ``(A) the name, date, and employer identification 
                number of the employer,
                    ``(B) a certification as to whether the employer 
                offers to its full-time employees (and their dependents) 
                the opportunity to enroll in minimum essential coverage 
                under an eligible employer-sponsored plan (as defined in 
                section 5000A(f)(2)),
                    ``(C) <<NOTE: Certification.>>  if the employer 
                certifies that the employer did offer to its full-time 
                employees (and their dependents) the opportunity to so 
                enroll--
                          ``(i) the length of any waiting period (as 
                      defined in section 2701(b)(4) of the Public Health 
                      Service Act) with respect to such coverage,
                          ``(ii) the months during the calendar year for 
                      which coverage under the plan was available,
                          ``(iii) the monthly premium for the lowest 
                      cost option in each of the enrollment categories 
                      under the plan, and
                          ``(iv) the applicable large employer's share 
                      of the total allowed costs of benefits provided 
                      under the plan,

[[Page 124 STAT. 257]]

                    ``(D) the number of full-time employees for each 
                month during the calendar year,
                    ``(E) the name, address, and TIN of each full-time 
                employee during the calendar year and the months (if 
                any) during which such employee (and any dependents) 
                were covered under any such health benefits plans, and
                    ``(F) such other information as the Secretary may 
                require.

    ``(c) Statements To Be Furnished to Individuals With Respect to Whom 
Information Is Reported.--
            ``(1) In general.--Every person required to make a return 
        under subsection (a) shall furnish to each full-time employee 
        whose name is required to be set forth in such return under 
        subsection (b)(2)(E) a written statement showing--
                    ``(A) the name and address of the person required to 
                make such return and the phone number of the information 
                contact for such person, and
                    ``(B) the information required to be shown on the 
                return with respect to such individual.
            ``(2) Time for furnishing statements.--The written statement 
        required under paragraph (1) shall be furnished on or before 
        January 31 of the year following the calendar year for which the 
        return under subsection (a) was required to be made.

    ``(d) Coordination With Other Requirements.--To the maximum extent 
feasible, the Secretary may provide that--
            ``(1) any return or statement required to be provided under 
        this section may be provided as part of any return or statement 
        required under section 6051 or 6055, and
            ``(2) in the case of an applicable large employer offering 
        health insurance coverage of a health insurance issuer, the 
        employer may enter into an agreement with the issuer to include 
        information required under this section with the return and 
        statement required to be provided by the issuer under section 
        6055.

    ``(e) Coverage Provided by Governmental Units.--In the case of any 
applicable large employer which is a governmental unit or any agency or 
instrumentality thereof, the person appropriately designated for 
purposes of this section shall make the returns and statements required 
by this section.
    ``(f) Definitions.--For purposes of this section, any term used in 
this section which is also used in section 4980H shall have the meaning 
given such term by section 4980H.''.
    (b) Assessable Penalties.--
            (1) Subparagraph (B) of section 6724(d)(1) of the Internal 
        Revenue Code of 1986 (relating to definitions), as amended by 
        section 1502, <<NOTE: 26 USC 6724.>>  is amended by striking 
        ``or'' at the end of clause (xxiii), by striking ``and'' at the 
        end of clause (xxiv) and inserting ``or'', and by inserting 
        after clause (xxiv) the following new clause:
                          ``(xxv) section 6056 (relating to returns 
                      relating to large employers required to report on 
                      health insurance coverage), and''.
            (2) Paragraph (2) of section 6724(d) of such Code, as so 
        amended, is amended by striking ``or'' at the end of 
        subparagraph (FF), by striking the period at the end of 
        subparagraph

[[Page 124 STAT. 258]]

        (GG) and inserting ``, or'' and by inserting after subparagraph 
        (GG) the following new subparagraph:
                    ``(HH) section 6056(c) (relating to statements 
                relating to large employers required to report on health 
                insurance coverage).''.

    (c) Conforming Amendment.--The table of sections for subpart D of 
part III of subchapter A of chapter 61 of such Code, as added by section 
1502, is amended by adding at the end the following new item:

``Sec. 6056. Large employers required to report on health insurance 
           coverage.''.

    (d) <<NOTE: 26 USC 6056 note.>>  Effective Date.--The amendments 
made by this section shall apply to periods beginning after December 31, 
2013.

SEC. 1515. OFFERING OF EXCHANGE-PARTICIPATING QUALIFIED HEALTH PLANS 
            THROUGH CAFETERIA PLANS.

    (a) In General.--Subsection (f) of section 125 of the Internal 
Revenue Code of 1986 <<NOTE: 26 USC 125.>>  is amended by adding at the 
end the following new paragraph:
            ``(3) Certain exchange-participating qualified health plans 
        not qualified.--
                    ``(A) In general.--The term `qualified benefit' 
                shall not include any qualified health plan (as defined 
                in section 1301(a) of the Patient Protection and 
                Affordable Care Act) offered through an Exchange 
                established under section 1311 of such Act.
                    ``(B) Exception for exchange-eligible employers.--
                Subparagraph (A) shall not apply with respect to any 
                employee if such employee's employer is a qualified 
                employer (as defined in section 1312(f)(2) of the 
                Patient Protection and Affordable Care Act) offering the 
                employee the opportunity to enroll through such an 
                Exchange in a qualified health plan in a group 
                market.''.

    (b) Conforming Amendments.--Subsection (f) of section 125 of such 
Code is amended--
            (1) by striking ``For purposes of this section, the term'' 
        and inserting ``For purposes of this section--

    ``(1) In General.--The term'', and
            (2) by striking ``Such term shall not include'' and 
        inserting the following:
            ``(2) Long-term care insurance not qualified.--The term 
        `qualified benefit' shall not include''.

    (c) <<NOTE: 26 USC 125 note.>>  Effective Date.--The amendments made 
by this section shall apply to taxable years beginning after December 
31, 2013.

                  Subtitle G--Miscellaneous Provisions

SEC. 1551. <<NOTE: Applicability. 42 USC 18111.>>  DEFINITIONS.

    Unless specifically provided for otherwise, the definitions 
contained in section 2791 of the Public Health Service Act (42 U.S.C. 
300gg-91) shall apply with respect to this title.

SEC. 1552. <<NOTE: 42 USC 18112.>>  TRANSPARENCY IN GOVERNMENT.

     <<NOTE: Deadline. Web posting.>> Not later than 30 days after the 
date of enactment of this Act, the Secretary of Health and Human 
Services shall publish on the Internet website of the Department of 
Health and Human Services, a list of all of the authorities provided to 
the Secretary under this Act (and the amendments made by this Act).

[[Page 124 STAT. 259]]

SEC. 1553. <<NOTE: 42 USC 18113.>>  PROHIBITION AGAINST DISCRIMINATION 
            ON ASSISTED SUICIDE.

    (a) In General.--The Federal Government, and any State or local 
government or health care provider that receives Federal financial 
assistance under this Act (or under an amendment made by this Act) or 
any health plan created under this Act (or under an amendment made by 
this Act), may not subject an individual or institutional health care 
entity to discrimination on the basis that the entity does not provide 
any health care item or service furnished for the purpose of causing, or 
for the purpose of assisting in causing, the death of any individual, 
such as by assisted suicide, euthanasia, or mercy killing.
    (b) Definition.--In this section, the term ``health care entity'' 
includes an individual physician or other health care professional, a 
hospital, a provider-sponsored organization, a health maintenance 
organization, a health insurance plan, or any other kind of health care 
facility, organization, or plan.
    (c) Construction and Treatment of Certain Services.--Nothing in 
subsection (a) shall be construed to apply to, or to affect, any 
limitation relating to--
            (1) the withholding or withdrawing of medical treatment or 
        medical care;
            (2) the withholding or withdrawing of nutrition or 
        hydration;
            (3) <<NOTE: Abortion.>>  abortion; or
            (4) the use of an item, good, benefit, or service furnished 
        for the purpose of alleviating pain or discomfort, even if such 
        use may increase the risk of death, so long as such item, good, 
        benefit, or service is not also furnished for the purpose of 
        causing, or the purpose of assisting in causing, death, for any 
        reason.

    (d) Administration.--The Office for Civil Rights of the Department 
of Health and Human Services is designated to receive complaints of 
discrimination based on this section.

SEC. 1554. <<NOTE: 42 USC 18114.>>  ACCESS TO THERAPIES.

    Notwithstanding any other provision of this Act, the Secretary of 
Health and Human Services shall not promulgate any regulation that--
            (1) creates any unreasonable barriers to the ability of 
        individuals to obtain appropriate medical care;
            (2) impedes timely access to health care services;
            (3) interferes with communications regarding a full range of 
        treatment options between the patient and the provider;
            (4) restricts the ability of health care providers to 
        provide full disclosure of all relevant information to patients 
        making health care decisions;
            (5) violates the principles of informed consent and the 
        ethical standards of health care professionals; or
            (6) limits the availability of health care treatment for the 
        full duration of a patient's medical needs.

[[Page 124 STAT. 260]]

SEC. 1555. <<NOTE: 42 USC 18115.>>  FREEDOM NOT TO PARTICIPATE IN 
            FEDERAL HEALTH INSURANCE PROGRAMS.

    No individual, company, business, nonprofit entity, or health 
insurance issuer offering group or individual health insurance coverage 
shall be required to participate in any Federal health insurance program 
created under this Act (or any amendments made by this Act), or in any 
Federal health insurance program expanded by this Act (or any such 
amendments), and there shall be no penalty or fine imposed upon any such 
issuer for choosing not to participate in such programs.

SEC. 1556. EQUITY FOR CERTAIN ELIGIBLE SURVIVORS.

    (a) Rebuttable Presumption.--Section 411(c)(4) of the Black Lung 
Benefits Act (30 U.S.C. 921(c)(4)) is amended by striking the last 
sentence.
    (b) Continuation of Benefits.--Section 422(l) of the Black Lung 
Benefits Act (30 U.S.C. 932(l)) is amended by striking ``, except with 
respect to a claim filed under this part on or after the effective date 
of the Black Lung Benefits Amendments of 1981''.
    (c) <<NOTE: Applicability. 30 USC 921 note.>>  Effective Date.--The 
amendments made by this section shall apply with respect to claims filed 
under part B or part C of the Black Lung Benefits Act (30 U.S.C. 921 et 
seq., 931 et seq.) after January 1, 2005, that are pending on or after 
the date of enactment of this Act.

SEC. 1557. <<NOTE: 42 USC 18116.>>  NONDISCRIMINATION.

    (a) In General.--Except as otherwise provided for in this title (or 
an amendment made by this title), an individual shall not, on the ground 
prohibited under title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d et seq.), title IX of the Education Amendments of 1972 (20 U.S.C. 
1681 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et 
seq.), or section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), 
be excluded from participation in, be denied the benefits of, or be 
subjected to discrimination under, any health program or activity, any 
part of which is receiving Federal financial assistance, including 
credits, subsidies, or contracts of insurance, or under any program or 
activity that is administered by an Executive Agency or any entity 
established under this title (or amendments). <<NOTE: Applicability.>>  
The enforcement mechanisms provided for and available under such title 
VI, title IX, section 504, or such Age Discrimination Act shall apply 
for purposes of violations of this subsection.

    (b) Continued Application of Laws.--Nothing in this title (or an 
amendment made by this title) shall be construed to invalidate or limit 
the rights, remedies, procedures, or legal standards available to 
individuals aggrieved under title VI of the Civil Rights Act of 1964 (42 
U.S.C. 2000d et seq.), title VII of the Civil Rights Act of 1964 (42 
U.S.C. 2000e et seq.), title IX of the Education Amendments of 1972 (20 
U.S.C. 1681 et seq.), section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794), or the Age Discrimination Act of 1975 (42 U.S.C. 611 et 
seq.), or to supersede State laws that provide additional protections 
against discrimination on any basis described in subsection (a).
    (c) Regulations.--The Secretary may promulgate regulations to 
implement this section.

[[Page 124 STAT. 261]]

SEC. 1558. PROTECTIONS FOR EMPLOYEES.

    The Fair Labor Standards Act of 1938 is amended by inserting after 
section 18B (as added by section 1512) the following:

``SEC. 18C. <<NOTE: 29 USC 218C.>>  PROTECTIONS FOR EMPLOYEES.

    ``(a) Prohibition.--No employer shall discharge or in any manner 
discriminate against any employee with respect to his or her 
compensation, terms, conditions, or other privileges of employment 
because the employee (or an individual acting at the request of the 
employee) has--
            ``(1) received a credit under section 36B of the Internal 
        Revenue Code of 1986 or a subsidy under section 1402 of this 
        Act;
            ``(2) 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 title (or an amendment made by this title);
            ``(3) testified or is about to testify in a proceeding 
        concerning such violation;
            ``(4) assisted or participated, or is about to assist or 
        participate, in such a proceeding; or
            ``(5) 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 title (or amendment), or any order, rule, 
        regulation, standard, or ban under this title (or amendment).

    ``(b) Complaint Procedure.--
            ``(1) In general.--An employee who believes that he or she 
        has been discharged or otherwise discriminated against by any 
        employer in violation of this section may seek relief in 
        accordance with the procedures, notifications, burdens of proof, 
        remedies, and statutes of limitation set forth in section 
        2087(b) of title 15, United States Code.
            ``(2) No limitation on rights.--Nothing in this section 
        shall be deemed to diminish the rights, privileges, or remedies 
        of any employee under any Federal or State law or under any 
        collective bargaining agreement. The rights and remedies in this 
        section may not be waived by any agreement, policy, form, or 
        condition of employment.''.

SEC. 1559. <<NOTE: 42 USC 18117.>>  OVERSIGHT.

    The Inspector General of the Department of Health and Human Services 
shall have oversight authority with respect to the administration and 
implementation of this title as it relates to such Department.

SEC. 1560. <<NOTE: 42 USC 18118.>>  RULES OF CONSTRUCTION.

    (a) No Effect on Antitrust Laws.--Nothing in this title (or an 
amendment made by this title) shall be construed to modify, impair, or 
supersede the operation of any of the antitrust laws. For the purposes 
of this section, the term ``antitrust laws'' has the meaning given such 
term in subsection (a) of the first section of the Clayton Act, except 
that such term includes section 5 of the Federal Trade Commission Act to 
the extent that such section 5 applies to unfair methods of competition.

[[Page 124 STAT. 262]]

    (b) Rule of Construction Regarding Hawaii's Prepaid Health Care 
Act.--Nothing in this title (or an amendment made by this title) shall 
be construed to modify or limit the application of the exemption for 
Hawaii's Prepaid Health Care Act (Haw. Rev. Stat. Sec. Sec.  393-1 et 
seq.) as provided for under section 514(b)(5) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1144(b)(5)).
    (c) Student Health Insurance Plans.--Nothing in this title (or an 
amendment made by this title) shall be construed to prohibit an 
institution of higher education (as such term is defined for purposes of 
the Higher Education Act of 1965) from offering a student health 
insurance plan, to the extent that such requirement is otherwise 
permitted under applicable Federal, State or local law.
    (d) No Effect on Existing Requirements.--Nothing in this title (or 
an amendment made by this title, unless specified by direct statutory 
reference) shall be construed to modify any existing Federal requirement 
concerning the State agency responsible for determining eligibility for 
programs identified in section 1413.

SEC. 1561. HEALTH INFORMATION TECHNOLOGY ENROLLMENT STANDARDS AND 
            PROTOCOLS.

    Title XXX of the Public Health Service Act (42 U.S.C. 300jj et seq.) 
is amended by adding at the end the following:

                     ``Subtitle C--Other Provisions

``SEC. 3021. <<NOTE: 42 USC 300jj-51.>>  HEALTH INFORMATION TECHNOLOGY 
            ENROLLMENT STANDARDS AND PROTOCOLS.

    ``(a) In General.--
            ``(1) Standards and protocols.-- 
        <<NOTE: Deadline. Determination.>> Not later than 180 days after 
        the date of enactment of this title, the Secretary, in 
        consultation with the HIT Policy Committee and the HIT Standards 
        Committee, shall develop interoperable and secure standards and 
        protocols that facilitate enrollment of individuals in Federal 
        and State health and human services programs, as determined by 
        the Secretary.
            ``(2) Methods.--The Secretary shall facilitate enrollment in 
        such programs through methods determined appropriate by the 
        Secretary, which shall include providing individuals and third 
        parties authorized by such individuals and their designees 
        notification of eligibility and verification of eligibility 
        required under such programs.

    ``(b) Content.--The standards and protocols for electronic 
enrollment in the Federal and State programs described in subsection (a) 
shall allow for the following:
            ``(1) Electronic matching against existing Federal and State 
        data, including vital records, employment history, enrollment 
        systems, tax records, and other data determined appropriate by 
        the Secretary to serve as evidence of eligibility and in lieu of 
        paper-based documentation.
            ``(2) Simplification and submission of electronic 
        documentation, digitization of documents, and systems 
        verification of eligibility.
            ``(3) Reuse of stored eligibility information (including 
        documentation) to assist with retention of eligible individuals.

[[Page 124 STAT. 263]]

            ``(4) Capability for individuals to apply, recertify and 
        manage their eligibility information online, including at home, 
        at points of service, and other community-based locations.
            ``(5) Ability to expand the enrollment system to integrate 
        new programs, rules, and functionalities, to operate at 
        increased volume, and to apply streamlined verification and 
        eligibility processes to other Federal and State programs, as 
        appropriate.
            ``(6) Notification of eligibility, recertification, and 
        other needed communication regarding eligibility, which may 
        include communication via email and cellular phones.
            ``(7) Other functionalities necessary to provide eligibles 
        with streamlined enrollment process.

    ``(c) Approval and Notification.--With respect to any standard or 
protocol developed under subsection (a) that has been approved by the 
HIT Policy Committee and the HIT Standards Committee, the Secretary--
            ``(1) shall notify States of such standards or protocols; 
        and
            ``(2) may require, as a condition of receiving Federal funds 
        for the health information technology investments, that States 
        or other entities incorporate such standards and protocols into 
        such investments.

    ``(d) Grants for Implementation of Appropriate Enrollment HIT.--
            ``(1) In general.--The Secretary shall award grant to 
        eligible entities to develop new, and adapt existing, technology 
        systems to implement the HIT enrollment standards and protocols 
        developed under subsection (a) (referred to in this subsection 
        as `appropriate HIT technology').
            ``(2) Eligible entities.--To be eligible for a grant under 
        this subsection, an entity shall--
                    ``(A) be a State, political subdivision of a State, 
                or a local governmental entity; and
                    ``(B) submit to the Secretary an application at such 
                time, in such manner, and containing--
                          ``(i) a plan to adopt and implement 
                      appropriate enrollment technology that includes--
                                    ``(I) proposed reduction in 
                                maintenance costs of technology systems;
                                    ``(II) elimination or updating of 
                                legacy systems; and
                                    ``(III) demonstrated collaboration 
                                with other entities that may receive a 
                                grant under this section that are 
                                located in the same State, political 
                                subdivision, or locality;
                          ``(ii) an assurance that the entity will share 
                      such appropriate enrollment technology in 
                      accordance with paragraph (4); and
                          ``(iii) such other information as the 
                      Secretary may require.
            ``(3) Sharing.--
                    ``(A) In general.--The Secretary shall ensure that 
                appropriate enrollment HIT adopted under grants under 
                this subsection is made available to other qualified 
                State, qualified political subdivisions of a State, or 
                other appropriate qualified entities (as described in 
                subparagraph (B)) at no cost.

[[Page 124 STAT. 264]]

                    ``(B) Qualified entities.--The Secretary shall 
                determine what entities are qualified to receive 
                enrollment HIT under subparagraph (A), taking into 
                consideration the recommendations of the HIT Policy 
                Committee and the HIT Standards Committee.''.

SEC. 1562. CONFORMING AMENDMENTS.

    (a) Applicability.--Section 2735 of the Public Health Service Act 
(42 U.S.C. 300gg-21), as so redesignated by section 1001(4), is 
amended--
            (1) by striking subsection (a);
            (2) in subsection (b)--
                    (A) in paragraph (1), by striking ``1 through 3'' 
                and inserting ``1 and 2''; and
                    (B) in paragraph (2)--
                          (i) in subparagraph (A), by striking 
                      ``subparagraph (D)'' and inserting ``subparagraph 
                      (D) or (E)'';
                          (ii) by striking ``1 through 3'' and inserting 
                      ``1 and 2''; and
                          (iii) by adding at the end the following:
                    ``(E) Election not applicable.--The election 
                described in subparagraph (A) shall not be available 
                with respect to the provisions of subpart 1.'';
            (3) in subsection (c), by striking ``1 through 3 shall not 
        apply to any group'' and inserting ``1 and 2 shall not apply to 
        any individual coverage or any group''; and
            (4) in subsection (d)--
                    (A) in paragraph (1), by striking ``1 through 3 
                shall not apply to any group'' and inserting ``1 and 2 
                shall not apply to any individual coverage or any 
                group'';
                    (B) in paragraph (2)--
                          (i) in the matter preceding subparagraph (A), 
                      by striking ``1 through 3 shall not apply to any 
                      group'' and inserting ``1 and 2 shall not apply to 
                      any individual coverage or any group''; and
                          (ii) in subparagraph (C), by inserting ``or, 
                      with respect to individual coverage, under any 
                      health insurance coverage maintained by the same 
                      health insurance issuer''; and
                    (C) in paragraph (3), by striking ``any group'' and 
                inserting ``any individual coverage or any group''.

    (b) Definitions.--Section 2791(d) of the Public Health Service Act 
(42 U.S.C. 300gg-91(d)) is amended by adding at the end the following:
            ``(20) Qualified health plan.--The term `qualified health 
        plan' has the meaning given such term in section 1301(a) of the 
        Patient Protection and Affordable Care Act.
            ``(21) Exchange.--The term `Exchange' means an American 
        Health Benefit Exchange established under section 1311 of the 
        Patient Protection and Affordable Care Act.''.

    (c) Technical and Conforming Amendments.--Title XXVII of the Public 
Health Service Act (42 U.S.C. 300gg et seq.) is amended--
            (1) in section 2704 <<NOTE: 42 USC 300gg-3.>> (42 U.S.C. 
        300gg), as so redesignated by section 1201(2)--
                    (A) in subsection (c)--

[[Page 124 STAT. 265]]

                          (i) in paragraph (2), by striking ``group 
                      health plan'' each place that such term appears 
                      and inserting ``group or individual health plan''; 
                      and
                          (ii) in paragraph (3)--
                                    (I) by striking ``group health 
                                insurance'' each place that such term 
                                appears and inserting ``group or 
                                individual health insurance''; and
                                    (II) in subparagraph (D), by 
                                striking ``small or large'' and 
                                inserting ``individual or group'';
                    (B) in subsection (d), by striking ``group health 
                insurance'' each place that such term appears and 
                inserting ``group or individual health insurance''; and
                    (C) in subsection (e)(1)(A), by striking ``group 
                health insurance'' and inserting ``group or individual 
                health insurance'';
            (2) by striking the second heading for subpart 2 of part A 
        (relating to other requirements);
            (3) in section 2725 <<NOTE: 42 USC 300gg-25.>>  (42 U.S.C. 
        300gg-4), as so redesignated by section 1001(2)--
                    (A) in subsection (a), by striking ``health 
                insurance issuer offering group health insurance 
                coverage'' and inserting ``health insurance issuer 
                offering group or individual health insurance 
                coverage'';
                    (B) in subsection (b)--
                          (i) by striking ``health insurance issuer 
                      offering group health insurance coverage in 
                      connection with a group health plan'' in the 
                      matter preceding paragraph (1) and inserting 
                      ``health insurance issuer offering group or 
                      individual health insurance coverage''; and
                          (ii) in paragraph (1), by striking ``plan'' 
                      and inserting ``plan or coverage'';
                    (C) in subsection (c)--
                          (i) in paragraph (2), by striking ``group 
                      health insurance coverage offered by a health 
                      insurance issuer'' and inserting ``health 
                      insurance issuer offering group or individual 
                      health insurance coverage''; and
                          (ii) in paragraph (3), by striking ``issuer'' 
                      and inserting ``health insurance issuer''; and
                    (D) in subsection (e), by striking ``health 
                insurance issuer offering group health insurance 
                coverage'' and inserting ``health insurance issuer 
                offering group or individual health insurance 
                coverage'';
            (4) in section 2726 <<NOTE: 42 USC 300gg-26.>>  (42 U.S.C. 
        300gg-5), as so redesignated by section 1001(2)--
                    (A) in subsection (a), by striking ``(or health 
                insurance coverage offered in connection with such a 
                plan)'' each place that such term appears and inserting 
                ``or a health insurance issuer offering group or 
                individual health insurance coverage'';
                    (B) in subsection (b), by striking ``(or health 
                insurance coverage offered in connection with such a 
                plan)'' each place that such term appears and inserting 
                ``or a health insurance issuer offering group or 
                individual health insurance coverage''; and
                    (C) in subsection (c)--

[[Page 124 STAT. 266]]

                          (i) in paragraph (1), by striking ``(and group 
                      health insurance coverage offered in connection 
                      with a group health plan)'' and inserting ``and a 
                      health insurance issuer offering group or 
                      individual health insurance coverage'';
                          (ii) in paragraph (2), by striking ``(or 
                      health insurance coverage offered in connection 
                      with such a plan)'' each place that such term 
                      appears and inserting ``or a health insurance 
                      issuer offering group or individual health 
                      insurance coverage'';
            (5) in section 2727 <<NOTE: 42 USC 300gg-27.>> (42 U.S.C. 
        300gg-6), as so redesignated by section 1001(2), by striking 
        ``health insurance issuers providing health insurance coverage 
        in connection with group health plans'' and inserting ``and 
        health insurance issuers offering group or individual health 
        insurance coverage'';
            (6) in section 2728 <<NOTE: 42 USC 300gg-28.>> (42 U.S.C. 
        300gg-7), as so redesignated by section 1001(2)--
                    (A) in subsection (a), by striking ``health 
                insurance coverage offered in connection with such 
                plan'' and inserting ``individual health insurance 
                coverage'';
                    (B) in subsection (b)--
                          (i) in paragraph (1), by striking ``or a 
                      health insurance issuer that provides health 
                      insurance coverage in connection with a group 
                      health plan'' and inserting ``or a health 
                      insurance issuer that offers group or individual 
                      health insurance coverage'';
                          (ii) in paragraph (2), by striking ``health 
                      insurance coverage offered in connection with the 
                      plan'' and inserting ``individual health insurance 
                      coverage''; and
                          (iii) in paragraph (3), by striking ``health 
                      insurance coverage offered by an issuer in 
                      connection with such plan'' and inserting 
                      ``individual health insurance coverage'';
                    (C) in subsection (c), by striking ``health 
                insurance issuer providing health insurance coverage in 
                connection with a group health plan'' and inserting 
                ``health insurance issuer that offers group or 
                individual health insurance coverage''; and
                    (D) in subsection (e)(1), by striking ``health 
                insurance coverage offered in connection with such a 
                plan'' and inserting ``individual health insurance 
                coverage'';
            (7) by striking the heading for subpart 3;
            (8) in section 2731 <<NOTE: 42 USC 300gg-1.>> (42 U.S.C. 
        300gg-11), as so redesignated by section 1001(3)--
                    (A) by striking the section heading and all that 
                follows through subsection (b);
                    (B) in subsection (c)--
                          (i) in paragraph (1)--
                                    (I) in the matter preceding 
                                subparagraph (A), by striking ``small 
                                group'' and inserting ``group and 
                                individual''; and
                                    (II) in subparagraph (B)--
                                            (aa) in the matter preceding 
                                        clause (i), by inserting ``and 
                                        individuals'' after 
                                        ``employers'';

[[Page 124 STAT. 267]]

                                            (bb) in clause (i), by 
                                        inserting ``or any additional 
                                        individuals'' after ``additional 
                                        groups''; and
                                            (cc) in clause (ii), by 
                                        striking ``without regard to the 
                                        claims experience of those 
                                        employers and their employees 
                                        (and their dependents) or any 
                                        health status-related factor 
                                        relating to such'' and inserting 
                                        ``and individuals without regard 
                                        to the claims experience of 
                                        those individuals, employers and 
                                        their employees (and their 
                                        dependents) or any health 
                                        status-related factor relating 
                                        to such individuals''; and
                          (ii) in paragraph (2), by striking ``small 
                      group'' and inserting ``group or individual'';
                    (C) in subsection (d)--
                          (i) by striking ``small group'' each place 
                      that such appears and inserting ``group or 
                      individual''; and
                          (ii) in paragraph (1)(B)--
                                    (I) by striking ``all employers'' 
                                and inserting ``all employers and 
                                individuals'';
                                    (II) by striking ``those employers'' 
                                and inserting ``those individuals, 
                                employers''; and
                                    (III) by striking ``such employees'' 
                                and inserting ``such individuals, 
                                employees'';
                    (D) by striking subsection (e);
                    (E) by striking subsection (f); and
                    (F) by transferring such section (as amended by this 
                paragraph) to appear at the end of section 2702 (as 
                added by section 1001(4));
            (9) in section 2732 <<NOTE: 42 USC 300gg-2.>> (42 U.S.C. 
        300gg-12), as so redesignated by section 1001(3)--
                    (A) by striking the section heading and all that 
                follows through subsection (a);
                    (B) in subsection (b)--
                          (i) in the matter preceding paragraph (1), by 
                      striking ``group health plan in the small or large 
                      group market'' and inserting ``health insurance 
                      coverage offered in the group or individual 
                      market'';
                          (ii) in paragraph (1), by inserting ``, or 
                      individual, as applicable,'' after ``plan 
                      sponsor'';
                          (iii) in paragraph (2), by inserting ``, or 
                      individual, as applicable,'' after ``plan 
                      sponsor''; and
                          (iv) by striking paragraph (3) and inserting 
                      the following:
            ``(3) Violation of participation or contribution rates.--In 
        the case of a group health plan, the plan sponsor has failed to 
        comply with a material plan provision relating to employer 
        contribution or group participation rules, pursuant to 
        applicable State law.'';
                    (C) in subsection (c)--
                          (i) in paragraph (1)--
                                    (I) in the matter preceding 
                                subparagraph (A), by striking ``group 
                                health insurance coverage offered in the 
                                small or large group market'' and 
                                inserting ``group or individual health 
                                insurance coverage'';

[[Page 124 STAT. 268]]

                                    (II) in subparagraph (A), by 
                                inserting ``or individual, as 
                                applicable,'' after ``plan sponsor'';
                                    (III) in subparagraph (B)--
                                            (aa) by inserting ``or 
                                        individual, as applicable,'' 
                                        after ``plan sponsor''; and
                                            (bb) by inserting ``or 
                                        individual health insurance 
                                        coverage''; and
                                    (IV) in subparagraph (C), by 
                                inserting ``or individuals, as 
                                applicable,'' after ``those sponsors''; 
                                and
                          (ii) in paragraph (2)(A)--
                                    (I) in the matter preceding clause 
                                (i), by striking ``small group market or 
                                the large group market, or both 
                                markets,'' and inserting ``individual or 
                                group market, or all markets,''; and
                                    (II) in clause (i), by inserting 
                                ``or individual, as applicable,'' after 
                                ``plan sponsor''; and
                    (D) by transferring such section (as amended by this 
                paragraph) to appear at the end of section 2703 (as 
                added by section 1001(4));
            (10) in section 2733 <<NOTE: 42 USC 300gg-9.>>  (42 U.S.C. 
        300gg-13), as so redesignated by section 1001(4)--
                    (A) in subsection (a)--
                          (i) in the matter preceding paragraph (1), by 
                      striking ``small employer'' and inserting ``small 
                      employer or an individual'';
                          (ii) in paragraph (1), by inserting ``, or 
                      individual, as applicable,'' after ``employer'' 
                      each place that such appears; and
                          (iii) in paragraph (2), by striking ``small 
                      employer'' and inserting ``employer, or 
                      individual, as applicable,'';
                    (B) in subsection (b)--
                          (i) in paragraph (1)--
                                    (I) in the matter preceding 
                                subparagraph (A), by striking ``small 
                                employer'' and inserting ``employer, or 
                                individual, as applicable,'';
                                    (II) in subparagraph (A), by adding 
                                ``and'' at the end;
                                    (III) by striking subparagraphs (B) 
                                and (C); and
                                    (IV) in subparagraph (D)--
                                            (aa) by inserting ``, or 
                                        individual, as applicable,'' 
                                        after ``employer''; and
                                            (bb) by redesignating such 
                                        subparagraph as subparagraph 
                                        (B);
                          (ii) in paragraph (2)--
                                    (I) by striking ``small employers'' 
                                each place that such term appears and 
                                inserting ``employers, or individuals, 
                                as applicable,''; and
                                    (II) by striking ``small employer'' 
                                and inserting ``employer, or individual, 
                                as applicable,''; and
                    (C) by redesignating such section (as amended by 
                this paragraph) as section 2709 and transferring such 
                section to appear after section 2708 (as added by 
                section 1001(5));
            (11) by redesignating subpart 4 as subpart 2;
            (12) in section 2735 (42 U.S.C. 300gg-21), as so 
        redesignated by section 1001(4)--

[[Page 124 STAT. 269]]

                    (A) by striking subsection (a);
                    (B) by striking ``subparts 1 through 3'' each place 
                that such appears and inserting ``subpart 1'';
                    (C) by redesignating subsections (b) through (e) as 
                subsections (a) through (d), respectively; and
                    (D) by redesignating such section (as amended by 
                this paragraph) <<NOTE: 42 USC 300gg-21.>>  as section 
                2722;
            (13) in section 2736 (42 U.S.C. 300gg-22), as so 
        redesignated by section 1001(4)--
                    (A) in subsection (a)--
                          (i) in paragraph (1), by striking ``small or 
                      large group markets'' and inserting ``individual 
                      or group market''; and
                          (ii) in paragraph (2), by inserting ``or 
                      individual health insurance coverage'' after 
                      ``group health plans'';
                    (B) in subsection (b)(1)(B), by inserting 
                ``individual health insurance coverage or'' after 
                ``respect to''; and
                    (C) by redesignating such section (as amended by 
                this paragraph) <<NOTE: 42 USC 300gg-22.>>  as section 
                2723;
            (14) in section 2737(a)(1) (42 U.S.C. 300gg-23), as so 
        redesignated by section 1001(4)--
                    (A) by inserting ``individual or'' before ``group 
                health insurance''; and
                    (B) by redesignating such section(as amended by this 
                paragraph) <<NOTE: 42 USC 300gg-23.>>  as section 2724;
            (15) in section 2762 (42 U.S.C. 300gg-62)--
                    (A) in the section heading by inserting ``and 
                application'' before the period; and
                    (B) by adding at the end the following:

    ``(c) Application of Part A Provisions.--
            ``(1) In general.--The provisions of part A shall apply to 
        health insurance issuers providing health insurance coverage in 
        the individual market in a State as provided for in such part.
            ``(2) Clarification.--To the extent that any provision of 
        this part conflicts with a provision of part A with respect to 
        health insurance issuers providing health insurance coverage in 
        the individual market in a State, the provisions of such part A 
        shall apply.''; and
            (16) in section 2791(e) (42 U.S.C. 300gg-91(e))--
                    (A) in paragraph (2), by striking ``51'' and 
                inserting ``101''; and
                    (B) in paragraph (4)--
                          (i) by striking ``at least 2'' each place that 
                      such appears and inserting ``at least 1''; and
                          (ii) by striking ``50'' and inserting ``100''.

    (d) <<NOTE: 42 USC 18120.>>  Application.--Notwithstanding any other 
provision of the Patient Protection and Affordable Care Act, nothing in 
such Act (or an amendment made by such Act) shall be construed to--
            (1) prohibit (or authorize the Secretary of Health and Human 
        Services to promulgate regulations that prohibit) a group health 
        plan or health insurance issuer from carrying out utilization 
        management techniques that are commonly used as of the date of 
        enactment of this Act; or
            (2) restrict the application of the amendments made by this 
        subtitle.

[[Page 124 STAT. 270]]

    (e) Technical Amendment to the Employee Retirement Income Security 
Act of 1974.--Subpart B of part 7 of subtitle A of title I of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181 et. 
seq.) is amended, by adding at the end the following:

``SEC. 715. <<NOTE: Applicability. 29 USC 1185d.>> ADDITIONAL MARKET 
            REFORMS.

    ``(a) General Rule.--Except as provided in subsection (b)--
            ``(1) the provisions of part A of title XXVII of the Public 
        Health Service Act (as amended by the Patient Protection and 
        Affordable Care Act) shall apply to group health plans, and 
        health insurance issuers providing health insurance coverage in 
        connection with group health plans, as if included in this 
        subpart; and
            ``(2) to the extent that any provision of this part 
        conflicts with a provision of such part A with respect to group 
        health plans, or health insurance issuers providing health 
        insurance coverage in connection with group health plans, the 
        provisions of such part A shall apply.

    ``(b) Exception.--Notwithstanding subsection (a), the provisions of 
sections 2716 and 2718 of title XXVII of the Public Health Service Act 
(as amended by the Patient Protection and Affordable Care Act) shall not 
apply with respect to self-insured group health plans, and the 
provisions of this part shall continue to apply to such plans as if such 
sections of the Public Health Service Act (as so amended) had not been 
enacted.''.
    (f) Technical Amendment to the Internal Revenue Code of 1986.--
Subchapter B of chapter 100 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following:

``SEC. 9815. <<NOTE: Applicability. 29 USC 9815.>> ADDITIONAL MARKET 
            REFORMS.

    ``(a) General Rule.--Except as provided in subsection (b)--
            ``(1) the provisions of part A of title XXVII of the Public 
        Health Service Act (as amended by the Patient Protection and 
        Affordable Care Act) shall apply to group health plans, and 
        health insurance issuers providing health insurance coverage in 
        connection with group health plans, as if included in this 
        subchapter; and
            ``(2) to the extent that any provision of this subchapter 
        conflicts with a provision of such part A with respect to group 
        health plans, or health insurance issuers providing health 
        insurance coverage in connection with group health plans, the 
        provisions of such part A shall apply.

    ``(b) Exception.--Notwithstanding subsection (a), the provisions of 
sections 2716 and 2718 of title XXVII of the Public Health Service Act 
(as amended by the Patient Protection and Affordable Care Act) shall not 
apply with respect to self-insured group health plans, and the 
provisions of this subchapter shall continue to apply to such plans as 
if such sections of the Public Health Service Act (as so amended) had 
not been enacted.''.

SEC. 1563. SENSE OF THE SENATE PROMOTING FISCAL RESPONSIBILITY.

    (a) Findings.--The Senate makes the following findings:
            (1) Based on Congressional Budget Office (CBO) estimates, 
        this Act will reduce the Federal deficit between 2010 and 2019.
            (2) CBO projects this Act will continue to reduce budget 
        deficits after 2019.

[[Page 124 STAT. 271]]

            (3) Based on CBO estimates, this Act will extend the 
        solvency of the Medicare HI Trust Fund.
            (4) This Act will increase the surplus in the Social 
        Security Trust Fund, which should be reserved to strengthen the 
        finances of Social Security.
            (5) The initial net savings generated by the Community 
        Living Assistance Services and Supports (CLASS) program are 
        necessary to ensure the long-term solvency of that program.

    (b) Sense of the Senate.--It is the sense of the Senate that--
            (1) the additional surplus in the Social Security Trust Fund 
        generated by this Act should be reserved for Social Security and 
        not spent in this Act for other purposes; and
            (2) the net savings generated by the CLASS program should be 
        reserved for the CLASS program and not spent in this Act for 
        other purposes.

                    TITLE II--ROLE OF PUBLIC PROGRAMS

                 Subtitle A--Improved Access to Medicaid

SEC. 2001. MEDICAID COVERAGE FOR THE LOWEST INCOME POPULATIONS.

    (a) Coverage for Individuals With Income at or Below 133 Percent of 
the Poverty Line.--
            (1) Beginning 2014.-- <<NOTE: Effective date.>> Section 
        1902(a)(10)(A)(i) of the Social Security Act (42 U.S.C. 1396a) 
        is amended--
                    (A) by striking ``or'' at the end of subclause (VI);
                    (B) by adding ``or'' at the end of subclause (VII); 
                and
                    (C) by inserting after subclause (VII) the 
                following:
                                    ``(VIII) beginning January 1, 2014, 
                                who are under 65 years of age, not 
                                pregnant, not entitled to, or enrolled 
                                for, benefits under part A of title 
                                XVIII, or enrolled for benefits under 
                                part B of title XVIII, and are not 
                                described in a previous subclause of 
                                this clause, and whose income (as 
                                determined under subsection (e)(14)) 
                                does not exceed 133 percent of the 
                                poverty line (as defined in section 
                                2110(c)(5)) applicable to a family of 
                                the size involved, subject to subsection 
                                (k);''.
            (2) Provision of at least minimum essential coverage.--
                    (A) In general.--Section 1902 of such Act (42 U.S.C. 
                1396a) is amended by inserting after subsection (j) the 
                following:

    ``(k)(1) The medical assistance provided to an individual described 
in subclause (VIII) of subsection (a)(10)(A)(i) shall consist of 
benchmark coverage described in section 1937(b)(1) or benchmark 
equivalent coverage described in section 1937(b)(2). Such medical 
assistance shall be provided subject to the requirements of section 
1937, without regard to whether a State otherwise has elected the option 
to provide medical assistance through coverage under that section, 
unless an individual described in subclause (VIII) of subsection 
(a)(10)(A)(i) is also an individual for whom, under subparagraph (B) of 
section 1937(a)(2), the State may not require enrollment in benchmark 
coverage described in subsection (b)(1)

[[Page 124 STAT. 272]]

of section 1937 or benchmark equivalent coverage described in subsection 
(b)(2) of that section.''.
                    (B) Conforming amendment.--Section 1903(i) of the 
                Social Security Act, as amended by section 
                6402(c), <<NOTE: 42 USC 13966.>>  is amended--
                          (i) in paragraph (24), by striking ``or'' at 
                      the end;
                          (ii) in paragraph (25), by striking the period 
                      and inserting ``; or''; and
                          (iii) by adding at the end the following:
            ``(26) with respect to any amounts expended for medical 
        assistance for individuals described in subclause (VIII) of 
        subsection (a)(10)(A)(i) other than medical assistance provided 
        through benchmark coverage described in section 1937(b)(1) or 
        benchmark equivalent coverage described in section 
        1937(b)(2).''.
            (3) Federal funding for cost of covering newly eligible 
        individuals.--Section 1905 of the Social Security Act (42 U.S.C. 
        1396d), is amended--
                    (A) in subsection (b), in the first sentence, by 
                inserting ``subsection (y) and'' before ``section 
                1933(d)''; and
                    (B) by adding at the end the following new 
                subsection:

    ``(y) Increased FMAP for Medical Assistance for Newly Eligible 
Mandatory Individuals.--
            ``(1) <<NOTE: Time periods.>>  Amount of increase.--
                    ``(A) 100 percent fmap.--During the period that 
                begins on January 1, 2014, and ends on December 31, 
                2016, notwithstanding subsection (b), the Federal 
                medical assistance percentage determined for a State 
                that is one of the 50 States or the District of Columbia 
                for each fiscal year occurring during that period with 
                respect to amounts expended for medical assistance for 
                newly eligible individuals described in subclause (VIII) 
                of section 1902(a)(10)(A)(i) shall be equal to 100 
                percent.
                    ``(B) 2017 and 2018.--
                          ``(i) In general.--During the period that 
                      begins on January 1, 2017, and ends on December 
                      31, 2018, notwithstanding subsection (b) and 
                      subject to subparagraph (D), the Federal medical 
                      assistance percentage determined for a State that 
                      is one of the 50 States or the District of 
                      Columbia for each fiscal year occurring during 
                      that period with respect to amounts expended for 
                      medical assistance for newly eligible individuals 
                      described in subclause (VIII) of section 
                      1902(a)(10)(A)(i), shall be increased by the 
                      applicable percentage point increase specified in 
                      clause (ii) for the quarter and the State.
                          ``(ii) Applicable percentage point increase.--
                                    ``(I) In general.--For purposes of 
                                clause (i), the applicable percentage 
                                point increase for a quarter is the 
                                following:

[[Page 124 STAT. 273]]



 
------------------------------------------------------------------------
                            If the State is an    If the State is not an
 ``For any fiscal year     expansion State, the    expansion State, the
  quarter occurring in    applicable percentage    applicable percentage
   the calendar year:       point increase is:      point increase is:
------------------------------------------------------------------------
2017                     30.3                     34.3
------------------------------------------------------------------------
2018                     31.3                     33.3
------------------------------------------------------------------------

                                    ``(II) Expansion state defined.--For 
                                purposes of the table in subclause (I), 
                                a State is an expansion State if, on the 
                                date of the enactment of the Patient 
                                Protection and Affordable Care Act, the 
                                State offers health benefits coverage 
                                statewide to parents and nonpregnant, 
                                childless adults whose income is at 
                                least 100 percent of the poverty line, 
                                that is not dependent on access to 
                                employer coverage, employer 
                                contribution, or employment and is not 
                                limited to premium assistance, hospital-
                                only benefits, a high deductible health 
                                plan, or alternative benefits under a 
                                demonstration program authorized under 
                                section 1938. A State that offers health 
                                benefits coverage to only parents or 
                                only nonpregnant childless adults 
                                described in the preceding sentence 
                                shall not be considered to be an 
                                expansion State.
                    ``(C) 2019 and succeeding years. <<NOTE: Effective 
                date.>> --Beginning January 1, 2019, notwithstanding 
                subsection (b) but subject to subparagraph (D), the 
                Federal medical assistance percentage determined for a 
                State that is one of the 50 States or the District of 
                Columbia for each fiscal year quarter occurring during 
                that period with respect to amounts expended for medical 
                assistance for newly eligible individuals described in 
                subclause (VIII) of section 1902(a)(10)(A)(i), shall be 
                increased by 32.3 percentage points.
                    ``(D) Limitation.--The Federal medical assistance 
                percentage determined for a State under subparagraph (B) 
                or (C) shall in no case be more than 95 percent.
            ``(2) Definitions.--In this subsection:
                    ``(A) Newly eligible.--The term `newly eligible' 
                means, with respect to an individual described in 
                subclause (VIII) of section 1902(a)(10)(A)(i), an 
                individual who is not under 19 years of age (or such 
                higher age as the State may have elected) and who, on 
                the date of enactment of the Patient Protection and 
                Affordable Care Act, is not eligible under the State 
                plan or under a waiver of the plan for full benefits or 
                for benchmark coverage described in subparagraph (A), 
                (B), or (C) of section 1937(b)(1) or benchmark 
                equivalent coverage described in section 1937(b)(2) that 
                has an aggregate actuarial value that is at least 
                actuarially equivalent to benchmark coverage described 
                in subparagraph (A), (B), or (C) of section 1937(b)(1), 
                or is eligible but not enrolled (or is on a waiting 
                list) for such benefits or coverage through a waiver 
                under the plan that has a capped or limited enrollment 
                that is full.

[[Page 124 STAT. 274]]

                    ``(B) Full benefits.--The term `full benefits' 
                means, with respect to an individual, medical assistance 
                for all services covered under the State plan under this 
                title that is not less in amount, duration, or scope, or 
                is determined by the Secretary to be substantially 
                equivalent, to the medical assistance available for an 
                individual described in section 1902(a)(10)(A)(i).''.
            (4) State options to offer coverage earlier and presumptive 
        eligibility; children required to have coverage for parents to 
        be eligible.--
                    (A) In general.--Subsection (k) of section 1902 of 
                the Social Security Act (as added by paragraph 
                (2)), <<NOTE: 42 USC 1396a.>>  is amended by inserting 
                after paragraph (1) the following:

    ``(2) <<NOTE: Effective date. Time period.>>  Beginning with the 
first day of any fiscal year quarter that begins on or after January 1, 
2011, and before January 1, 2014, a State may elect through a State plan 
amendment to provide medical assistance to individuals who would be 
described in subclause (VIII) of subsection (a)(10)(A)(i) if that 
subclause were effective before January 1, 2014. A State may elect to 
phase-in the extension of eligibility for medical assistance to such 
individuals based on income, so long as the State does not extend such 
eligibility to individuals described in such subclause with higher 
income before making individuals described in such subclause with lower 
income eligible for medical assistance.

    ``(3) If an individual described in subclause (VIII) of subsection 
(a)(10)(A)(i) is the parent of a child who is under 19 years of age (or 
such higher age as the State may have elected) who is eligible for 
medical assistance under the State plan or under a waiver of such plan 
(under that subclause or under a State plan amendment under paragraph 
(2), the individual may not be enrolled under the State plan unless the 
individual's child is enrolled under the State plan or under a waiver of 
the plan or is enrolled in other health insurance coverage. For purposes 
of the preceding sentence, the term `parent' includes an individual 
treated as a caretaker relative for purposes of carrying out section 
1931.''.
                    (B) Presumptive eligibility.--Section 1920 of the 
                Social Security Act (42 U.S.C. 1396r-1) is amended by 
                adding at the end the following:

    ``(e) <<NOTE: Guidelines.>>  If the State has elected the option to 
provide a presumptive eligibility period under this section or section 
1920A, the State may elect to provide a presumptive eligibility period 
(as defined in subsection (b)(1)) for individuals who are eligible for 
medical assistance under clause (i)(VIII) of subsection (a)(10)(A) or 
section 1931 in the same manner as the State provides for such a period 
under this section or section 1920A, subject to such guidance as the 
Secretary shall establish.''.
            (5) Conforming amendments.--
                    (A) Section 1902(a)(10) of such Act (42 U.S.C. 
                1396a(a)(10)) is amended in the matter following 
                subparagraph (G), by striking ``and (XIV)'' and 
                inserting ``(XIV)'' and by inserting ``and (XV) the 
                medical assistance made available to an individual 
                described in subparagraph (A)(i)(VIII) shall be limited 
                to medical assistance described in subsection (k)(1)'' 
                before the semicolon.
                    (B) Section 1902(l)(2)(C) of such Act (42 U.S.C. 
                1396a(l)(2)(C)) is amended by striking ``100'' and 
                inserting ``133''.

[[Page 124 STAT. 275]]

                    (C) Section 1905(a) of such Act (42 U.S.C. 1396d(a)) 
                is amended in the matter preceding paragraph (1)--
                          (i) by striking ``or'' at the end of clause 
                      (xii);
                          (ii) by inserting ``or'' at the end of clause 
                      (xiii); and
                          (iii) by inserting after clause (xiii) the 
                      following:
            ``(xiv) individuals described in section 
        1902(a)(10)(A)(i)(VIII),''.
                    (D) Section 1903(f)(4) of such Act (42 U.S.C. 
                1396b(f)(4)) is amended by inserting 
                ``1902(a)(10)(A)(i)(VIII),'' after 
                ``1902(a)(10)(A)(i)(VII),''.
                    (E) Section 1937(a)(1)(B) of such Act (42 U.S.C. 
                1396u-7(a)(1)(B)) is amended by inserting ``subclause 
                (VIII) of section 1902(a)(10)(A)(i) or under'' after 
                ``eligible under''.

    (b) Maintenance of Medicaid Income Eligibility.--Section 1902 of the 
Social Security Act (42 U.S.C. 1396a) is amended--
            (1) in subsection (a)--
                    (A) by striking ``and'' at the end of paragraph 
                (72);
                    (B) by striking the period at the end of paragraph 
                (73) and inserting ``; and''; and
                    (C) by inserting after paragraph (73) the following 
                new paragraph:
            ``(74) provide for maintenance of effort under the State 
        plan or under any waiver of the plan in accordance with 
        subsection (gg).''; and
            (2) by adding at the end the following new subsection:

    ``(gg) Maintenance of Effort.--
            ``(1) General requirement to maintain eligibility standards 
        until state exchange is fully operational.--Subject <<NOTE: Time 
        period. Determination.>>  to the succeeding paragraphs of this 
        subsection, during the period that begins on the date of 
        enactment of the Patient Protection and Affordable Care Act and 
        ends on the date on which the Secretary determines that an 
        Exchange established by the State under section 1311 of the 
        Patient Protection and Affordable Care Act is fully operational, 
        as a condition for receiving any Federal payments under section 
        1903(a) for calendar quarters occurring during such period, a 
        State shall not have in effect eligibility standards, 
        methodologies, or procedures under the State plan under this 
        title or under any waiver of such plan that is in effect during 
        that period, that are more restrictive than the eligibility 
        standards, methodologies, or procedures, respectively, under the 
        plan or waiver that are in effect on the date of enactment of 
        the Patient Protection and Affordable Care Act.
            ``(2) Continuation of eligibility standards for children 
        until october 1, 2019.-- <<NOTE: Applicability.>> The 
        requirement under paragraph (1) shall continue to apply to a 
        State through September 30, 2019, with respect to the 
        eligibility standards, methodologies, and procedures under the 
        State plan under this title or under any waiver of such plan 
        that are applicable to determining the eligibility for medical 
        assistance of any child who is under 19 years of age (or such 
        higher age as the State may have elected).
            ``(3) Nonapplication.-- <<NOTE: Time 
        period. Deadline. Certification.>> During the period that begins 
        on January 1, 2011, and ends on December 31, 2013, the 
        requirement under paragraph (1) shall not apply to a State with 
        respect to nonpregnant, nondisabled adults who are eligible

[[Page 124 STAT. 276]]

        for medical assistance under the State plan or under a waiver of 
        the plan at the option of the State and whose income exceeds 133 
        percent of the poverty line (as defined in section 2110(c)(5)) 
        applicable to a family of the size involved if, on or after 
        December 31, 2010, the State certifies to the Secretary that, 
        with respect to the State fiscal year during which the 
        certification is made, the State has a budget deficit, or with 
        respect to the succeeding State fiscal year, the State is 
        projected to have a budget deficit. Upon submission of such a 
        certification to the Secretary, the requirement under paragraph 
        (1) shall not apply to the State with respect to any remaining 
        portion of the period described in the preceding sentence.
            ``(4) Determination of compliance.--
                    ``(A) States shall apply modified gross income.--A 
                State's determination of income in accordance with 
                subsection (e)(14) shall not be considered to be 
                eligibility standards, methodologies, or procedures that 
                are more restrictive than the standards, methodologies, 
                or procedures in effect under the State plan or under a 
                waiver of the plan on the date of enactment of the 
                Patient Protection and Affordable Care Act for purposes 
                of determining compliance with the requirements of 
                paragraph (1), (2), or (3).
                    ``(B) States may expand eligibility or move waivered 
                populations into coverage under the state plan.--With 
                respect to any period applicable under paragraph (1), 
                (2), or (3), a State that applies eligibility standards, 
                methodologies, or procedures under the State plan under 
                this title or under any waiver of the plan that are less 
                restrictive than the eligibility standards, 
                methodologies, or procedures, applied under the State 
                plan or under a waiver of the plan on the date of 
                enactment of the Patient Protection and Affordable Care 
                Act, or that makes individuals who, on such date of 
                enactment, are eligible for medical assistance under a 
                waiver of the State plan, after such date of enactment 
                eligible for medical assistance through a State plan 
                amendment with an income eligibility level that is not 
                less than the income eligibility level that applied 
                under the waiver, or as a result of the application of 
                subclause (VIII) of section 1902(a)(10)(A)(i), shall not 
                be considered to have in effect eligibility standards, 
                methodologies, or procedures that are more restrictive 
                than the standards, methodologies, or procedures in 
                effect under the State plan or under a waiver of the 
                plan on the date of enactment of the Patient Protection 
                and Affordable Care Act for purposes of determining 
                compliance with the requirements of paragraph (1), (2), 
                or (3).''.

    (c) Medicaid Benchmark Benefits Must Consist of at Least Minimum 
Essential Coverage.--Section 1937(b) of such Act (42 U.S.C. 1396u-7(b)) 
is amended--
            (1) in paragraph (1), in the matter preceding subparagraph 
        (A), by inserting ``subject to paragraphs (5) and (6),'' before 
        ``each'';
            (2) in paragraph (2)--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``subject to paragraphs (5) and (6)'' after 
                ``subsection (a)(1),'';

[[Page 124 STAT. 277]]

                    (B) in subparagraph (A)--
                          (i) by redesignating clauses (iv) and (v) as 
                      clauses (vi) and (vii), respectively; and
                          (ii) by inserting after clause (iii), the 
                      following:
                          ``(iv) Coverage of prescription drugs.
                          ``(v) Mental health services.''; and
                    (C) in subparagraph (C)--
                          (i) by striking clauses (i) and (ii); and
                          (ii) by redesignating clauses (iii) and (iv) 
                      as clauses (i) and (ii), respectively; and
            (3) by adding at the end the following new paragraphs:
            ``(5) Minimum standards.-- <<NOTE: Effective 
        date.>> Effective January 1, 2014, any benchmark benefit package 
        under paragraph (1) or benchmark equivalent coverage under 
        paragraph (2) must provide at least essential health benefits as 
        described in section 1302(b) of the Patient Protection and 
        Affordable Care Act.
            ``(6) Mental health services parity.--
                    ``(A) In general.--In the case of any benchmark 
                benefit package under paragraph (1) or benchmark 
                equivalent coverage under paragraph (2) that is offered 
                by an entity that is not a medicaid managed care 
                organization and that provides both medical and surgical 
                benefits and mental health or substance use disorder 
                benefits, the entity shall ensure that the financial 
                requirements and treatment limitations applicable to 
                such mental health or substance use disorder benefits 
                comply with the requirements of section 2705(a) of the 
                Public Health Service Act in the same manner as such 
                requirements apply to a group health plan.
                    ``(B) Deemed compliance.--Coverage provided with 
                respect to an individual described in section 
                1905(a)(4)(B) and covered under the State plan under 
                section 1902(a)(10)(A) of the services described in 
                section 1905(a)(4)(B) (relating to early and periodic 
                screening, diagnostic, and treatment services defined in 
                section 1905(r)) and provided in accordance with section 
                1902(a)(43), shall be deemed to satisfy the requirements 
                of subparagraph (A).''.

    (d) Annual Reports on Medicaid Enrollment.--
            (1) State reports.--Section 1902(a) of the Social Security 
        Act (42 U.S.C. 1396a(a)), as amended by subsection (b), is 
        amended--
                    (A) by striking ``and'' at the end of paragraph 
                (73);
                    (B) by striking the period at the end of paragraph 
                (74) and inserting ``; and''; and
                    (C) by inserting after paragraph (74) the following 
                new paragraph:
            ``(75) <<NOTE: Effective date.>>  provide that, beginning 
        January 2015, and annually thereafter, the State shall submit a 
        report to the Secretary that contains--
                    ``(A) the total number of enrolled and newly 
                enrolled individuals in the State plan or under a waiver 
                of the plan for the fiscal year ending on September 30 
                of the preceding calendar year, disaggregated by 
                population, including children, parents, nonpregnant 
                childless adults, disabled individuals, elderly 
                individuals, and such other

[[Page 124 STAT. 278]]

                categories or sub-categories of individuals eligible for 
                medical assistance under the State plan or under a 
                waiver of the plan as the Secretary may require;
                    ``(B) a description, which may be specified by 
                population, of the outreach and enrollment processes 
                used by the State during such fiscal year; and
                    ``(C) any other data reporting determined necessary 
                by the Secretary to monitor enrollment and retention of 
                individuals eligible for medical assistance under the 
                State plan or under a waiver of the plan.''.
            (2) Reports to congress.-- <<NOTE: Effective date. 42 USC 
        1396a note.>> Beginning April 2015, and annually thereafter, the 
        Secretary of Health and Human Services shall submit a report to 
        the appropriate committees of Congress on the total enrollment 
        and new enrollment in Medicaid for the fiscal year ending on 
        September 30 of the preceding calendar year on a national and 
        State-by-State basis, and shall include in each such report such 
        recommendations for administrative or legislative changes to 
        improve enrollment in the Medicaid program as the Secretary 
        determines appropriate.

    (e) State Option for Coverage for Individuals With Income That 
Exceeds 133 Percent of the Poverty Line.--
            (1) Coverage as optional categorically needy group.--Section 
        1902 of the Social Security Act (42 U.S.C. 1396a) is amended--
                    (A) in subsection (a)(10)(A)(ii)--
                          (i) in subclause (XVIII), by striking ``or'' 
                      at the end;
                          (ii) in subclause (XIX), by adding ``or'' at 
                      the end; and
                          (iii) by adding at the end the following new 
                      subclause:
                                    ``(XX) <<NOTE: Effective 
                                date.>> beginning January 1, 2014, who 
                                are under 65 years of age and are not 
                                described in or enrolled under a 
                                previous subclause of this clause, and 
                                whose income (as determined under 
                                subsection (e)(14)) exceeds 133 percent 
                                of the poverty line (as defined in 
                                section 2110(c)(5)) applicable to a 
                                family of the size involved but does not 
                                exceed the highest income eligibility 
                                level established under the State plan 
                                or under a waiver of the plan, subject 
                                to subsection (hh);'' and
                    (B) by adding at the end the following new 
                subsection:

    ``(hh)(1) A State may elect to phase-in the extension of eligibility 
for medical assistance to individuals described in subclause (XX) of 
subsection (a)(10)(A)(ii) based on the categorical group (including 
nonpregnant childless adults) or income, so long as the State does not 
extend such eligibility to individuals described in such subclause with 
higher income before making individuals described in such subclause with 
lower income eligible for medical assistance.
    ``(2) If an individual described in subclause (XX) of subsection 
(a)(10)(A)(ii) is the parent of a child who is under 19 years of age (or 
such higher age as the State may have elected) who is eligible for 
medical assistance under the State plan or under a waiver of such plan, 
the individual may not be enrolled under the State plan unless the 
individual's child is enrolled under the State plan or under a waiver of 
the plan or is enrolled in other health insurance coverage. For purposes 
of the preceding sentence,

[[Page 124 STAT. 279]]

the term `parent' includes an individual treated as a caretaker relative 
for purposes of carrying out section 1931.''.
            (2) Conforming amendments.--
                    (A) Section 1905(a) of such Act (42 U.S.C. 
                1396d(a)), as amended by subsection (a)(5)(C), is 
                amended in the matter preceding paragraph (1)--
                          (i) by striking ``or'' at the end of clause 
                      (xiii);
                          (ii) by inserting ``or'' at the end of clause 
                      (xiv); and
                          (iii) by inserting after clause (xiv) the 
                      following:
            ``(xv) individuals described in section 
        1902(a)(10)(A)(ii)(XX),''.
                    (B) Section 1903(f)(4) of such Act (42 U.S.C. 
                1396b(f)(4)) is amended by inserting 
                ``1902(a)(10)(A)(ii)(XX),'' after 
                ``1902(a)(10)(A)(ii)(XIX),''.
                    (C) Section 1920(e) of such Act (42 U.S.C. 1396r-
                1(e)), as added by subsection (a)(4)(B), is amended by 
                inserting ``or clause (ii)(XX)'' after ``clause 
                (i)(VIII)''.

SEC. 2002. INCOME ELIGIBILITY FOR NONELDERLY DETERMINED USING MODIFIED 
            GROSS INCOME.

    (a) In General.--Section 1902(e) of the Social Security Act (42 
U.S.C. 1396a(e)) is amended by adding at the end the following:
            ``(14) Income determined using modified gross income.--
                    ``(A) In general.--Notwithstanding subsection (r) or 
                any other provision of this title, except as provided in 
                subparagraph (D), for purposes of determining income 
                eligibility for medical assistance under the State plan 
                or under any waiver of such plan and for any other 
                purpose applicable under the plan or waiver for which a 
                determination of income is required, including with 
                respect to the imposition of premiums and cost-sharing, 
                a State shall use the modified gross income of an 
                individual and, in the case of an individual in a family 
                greater than 1, the household income of such family. A 
                State shall establish income eligibility thresholds for 
                populations to be eligible for medical assistance under 
                the State plan or a waiver of the plan using modified 
                gross income and household income that are not less than 
                the effective income eligibility levels that applied 
                under the State plan or waiver on the date of enactment 
                of the Patient Protection and Affordable Care Act. For 
                purposes of complying with the maintenance of effort 
                requirements under subsection (gg) during the transition 
                to modified gross income and household income, a State 
                shall, working with the Secretary, establish an 
                equivalent income test that ensures individuals eligible 
                for medical assistance under the State plan or under a 
                waiver of the plan on the date of enactment of the 
                Patient Protection and Affordable Care Act, do not lose 
                coverage under the State plan or under a waiver of the 
                plan. <<NOTE: Waiver authority.>> The Secretary may 
                waive such provisions of this title and title XXI as are 
                necessary to ensure that States establish income and 
                eligibility determination systems that protect 
                beneficiaries.
                    ``(B) No income or expense disregards.--No type of 
                expense, block, or other income disregard shall be 
                applied

[[Page 124 STAT. 280]]

                by a State to determine income eligibility for medical 
                assistance under the State plan or under any waiver of 
                such plan or for any other purpose applicable under the 
                plan or waiver for which a determination of income is 
                required.
                    ``(C) No assets test.--A State shall not apply any 
                assets or resources test for purposes of determining 
                eligibility for medical assistance under the State plan 
                or under a waiver of the plan.
                    ``(D) Exceptions.--
                          ``(i) Individuals eligible because of other 
                      aid or assistance, elderly individuals, medically 
                      needy individuals, and individuals eligible for 
                      medicare cost-sharing.--Subparagraphs (A), (B), 
                      and (C) shall not apply to the determination of 
                      eligibility under the State plan or under a waiver 
                      for medical assistance for the following:
                                    ``(I) Individuals who are eligible 
                                for medical assistance under the State 
                                plan or under a waiver of the plan on a 
                                basis that does not require a 
                                determination of income by the State 
                                agency administering the State plan or 
                                waiver, including as a result of 
                                eligibility for, or receipt of, other 
                                Federal or State aid or assistance, 
                                individuals who are eligible on the 
                                basis of receiving (or being treated as 
                                if receiving) supplemental security 
                                income benefits under title XVI, and 
                                individuals who are eligible as a result 
                                of being or being deemed to be a child 
                                in foster care under the responsibility 
                                of the State.
                                    ``(II) Individuals who have attained 
                                age 65.
                                    ``(III) Individuals who qualify for 
                                medical assistance under the State plan 
                                or under any waiver of such plan on the 
                                basis of being blind or disabled (or 
                                being treated as being blind or 
                                disabled) without regard to whether the 
                                individual is eligible for supplemental 
                                security income benefits under title XVI 
                                on the basis of being blind or disabled 
                                and including an individual who is 
                                eligible for medical assistance on the 
                                basis of section 1902(e)(3).
                                    ``(IV) Individuals described in 
                                subsection (a)(10)(C).
                                    ``(V) Individuals described in any 
                                clause of subsection (a)(10)(E).
                          ``(ii) Express lane agency findings.--In the 
                      case of a State that elects the Express Lane 
                      option under paragraph (13), notwithstanding 
                      subparagraphs (A), (B), and (C), the State may 
                      rely on a finding made by an Express Lane agency 
                      in accordance with that paragraph relating to the 
                      income of an individual for purposes of 
                      determining the individual's eligibility for 
                      medical assistance under the State plan or under a 
                      waiver of the plan.
                          ``(iii) Medicare prescription drug subsidies 
                      determinations.--Subparagraphs (A), (B), and (C) 
                      shall not apply to any determinations of 
                      eligibility for premium and cost-sharing subsidies 
                      under and in

[[Page 124 STAT. 281]]

                      accordance with section 1860D-14 made by the State 
                      pursuant to section 1935(a)(2).
                          ``(iv) Long-term care.--Subparagraphs (A), 
                      (B), and (C) shall not apply to any determinations 
                      of eligibility of individuals for purposes of 
                      medical assistance for nursing facility services, 
                      a level of care in any institution equivalent to 
                      that of nursing facility services, home or 
                      community-based services furnished under a waiver 
                      or State plan amendment under section 1915 or a 
                      waiver under section 1115, and services described 
                      in section 1917(c)(1)(C)(ii).
                          ``(v) Grandfather of current enrollees until 
                      date of next regular redetermination.--An 
                      individual who, on January 1, 2014, is enrolled in 
                      the State plan or under a waiver of the plan and 
                      who would be determined ineligible for medical 
                      assistance solely because of the application of 
                      the modified gross income or household income 
                      standard described in subparagraph (A), shall 
                      remain eligible for medical assistance under the 
                      State plan or waiver (and subject to the same 
                      premiums and cost-sharing as applied to the 
                      individual on that date) through March 31, 2014, 
                      or the date on which the individual's next 
                      regularly scheduled redetermination of eligibility 
                      is to occur, whichever is later.
                    ``(E) Transition planning and oversight.-- 
                <<NOTE: Submission.>> Each State shall submit to the 
                Secretary for the Secretary's approval the income 
                eligibility thresholds proposed to be established using 
                modified gross income and household income, the 
                methodologies and procedures to be used to determine 
                income eligibility using modified gross income and 
                household income and, if applicable, a State plan 
                amendment establishing an optional eligibility category 
                under subsection (a)(10)(A)(ii)(XX). To the extent 
                practicable, the State shall use the same methodologies 
                and procedures for purposes of making such 
                determinations as the State used on the date of 
                enactment of the Patient Protection and Affordable Care 
                Act. The Secretary shall ensure that the income 
                eligibility thresholds proposed to be established using 
                modified gross income and household income, including 
                under the eligibility category established under 
                subsection (a)(10)(A)(ii)(XX), and the methodologies and 
                procedures proposed to be used to determine income 
                eligibility, will not result in children who would have 
                been eligible for medical assistance under the State 
                plan or under a waiver of the plan on the date of 
                enactment of the Patient Protection and Affordable Care 
                Act no longer being eligible for such assistance.
                    ``(F) Limitation on secretarial authority.--The 
                Secretary shall not waive compliance with the 
                requirements of this paragraph except to the extent 
                necessary to permit a State to coordinate eligibility 
                requirements for dual eligible individuals (as defined 
                in section 1915(h)(2)(B)) under the State plan or under 
                a waiver of the plan and under title XVIII and 
                individuals who require the level of care provided in a 
                hospital, a nursing facility, or an intermediate care 
                facility for the mentally retarded.

[[Page 124 STAT. 282]]

                    ``(G) Definitions of modified gross income and 
                household income.--In this paragraph, the terms 
                `modified gross income' and `household income' have the 
                meanings given such terms in section 36B(d)(2) of the 
                Internal Revenue Code of 1986.
                    ``(H) Continued application of medicaid rules 
                regarding point-in-time income and sources of income.--
                The requirement under this paragraph for States to use 
                modified gross income and household income to determine 
                income eligibility for medical assistance under the 
                State plan or under any waiver of such plan and for any 
                other purpose applicable under the plan or waiver for 
                which a determination of income is required shall not be 
                construed as affecting or limiting the application of--
                          ``(i) the requirement under this title and 
                      under the State plan or a waiver of the plan to 
                      determine an individual's income as of the point 
                      in time at which an application for medical 
                      assistance under the State plan or a waiver of the 
                      plan is processed; or
                          ``(ii) any rules established under this title 
                      or under the State plan or a waiver of the plan 
                      regarding sources of countable income.''.

    (b) Conforming Amendment.--Section 1902(a)(17) of such Act (42 
U.S.C. 1396a(a)(17)) is amended by inserting ``(e)(14),'' before 
``(l)(3)''.
    (c) <<NOTE: 42 USC 1396a note.>>  Effective Date.--The amendments 
made by subsections (a) and (b) take effect on January 1, 2014.

SEC. 2003. REQUIREMENT TO OFFER PREMIUM ASSISTANCE FOR EMPLOYER-
            SPONSORED INSURANCE.

    (a) In General.--Section 1906A of such Act (42 U.S.C. 1396e-1) is 
amended--
            (1) in subsection (a)--
                    (A) by striking ``may elect to'' and inserting 
                ``shall'';
                    (B) by striking ``under age 19''; and
                    (C) by inserting ``, in the case of an individual 
                under age 19,'' after ``(and'';
            (2) in subsection (c), in the first sentence, by striking 
        ``under age 19''; and
            (3) in subsection (d)--
                    (A) in paragraph (2)--
                          (i) in the first sentence, by striking ``under 
                      age 19''; and
                          (ii) by striking the third sentence and 
                      inserting ``A State may not require, as a 
                      condition of an individual (or the individual's 
                      parent) being or remaining eligible for medical 
                      assistance under this title, that the individual 
                      (or the individual's parent) apply for enrollment 
                      in qualified employer-sponsored coverage under 
                      this section.''; and
                    (B) in paragraph (3), by striking ``the parent of an 
                individual under age 19'' and inserting ``an individual 
                (or the parent of an individual)''; and
            (4) in subsection (e), by striking ``under age 19'' each 
        place it appears.

[[Page 124 STAT. 283]]

    (b) Conforming Amendment.--The heading for section 1906A of such Act 
(42 U.S.C. 1396e-1) is amended by striking ``option for children''.
    (c) <<NOTE: 42 USC 1396e-1 note.>>  Effective Date.--The amendments 
made by this section take effect on January 1, 2014.

SEC. 2004. MEDICAID COVERAGE FOR FORMER FOSTER CARE CHILDREN.

    (a) In General.--Section 1902(a)(10)(A)(i) of the Social Security 
Act (42 U.S.C. 1396a), as amended by section 2001(a)(1), is amended--
            (1) by striking ``or'' at the end of subclause (VII);
            (2) by adding ``or'' at the end of subclause (VIII); and
            (3) by inserting after subclause (VIII) the following:
                                    ``(IX) who were in foster care under 
                                the responsibility of a State for more 
                                than 6 months (whether or not 
                                consecutive) but are no longer in such 
                                care, who are not described in any of 
                                subclauses (I) through (VII) of this 
                                clause, and who are under 25 years of 
                                age;''.

    (b) Option To Provide Presumptive Eligibility.--Section 1920(e) of 
such Act (42 U.S.C. 1396r-1(e)), as added by section 2001(a)(4)(B) and 
amended by section 2001(e)(2)(C), is amended by inserting ``, clause 
(i)(IX),'' after ``clause (i)(VIII)''.
    (c) Conforming Amendments.--
            (1) Section 1903(f)(4) of such Act (42 U.S.C. 1396b(f)(4)), 
        as amended by section 2001(a)(5)(D), is amended by inserting 
        ``1902(a)(10)(A)(i)(IX),'' after ``1902(a)(10)(A)(i)(VIII),''.
            (2) Section 1937(a)(2)(B)(viii) of such Act (42 U.S.C. 
        1396u-7(a)(2)(B)(viii)) is amended by inserting ``, or the 
        individual qualifies for medical assistance on the basis of 
        section 1902(a)(10)(A)(i)(IX)'' before the period.

    (d) <<NOTE: 42 USC 1396a note.>>  Effective Date.--The amendments 
made by this section take effect on January 1, 2019.

SEC. 2005. PAYMENTS TO TERRITORIES.

    (a) Increase in Limit on Payments.--Section 1108(g) of the Social 
Security Act (42 U.S.C. 1308(g)) is amended--
            (1) in paragraph (2), in the matter preceding subparagraph 
        (A), by striking ``paragraph (3)'' and inserting ``paragraphs 
        (3) and (5)'';
            (2) in paragraph (4), by striking ``and (3)'' and inserting 
        ``(3), and (4)''; and
            (3) by adding at the end the following paragraph:
            ``(5) Fiscal year 2011 and thereafter.--The amounts 
        otherwise determined under this subsection for Puerto Rico, the 
        Virgin Islands, Guam, the Northern Mariana Islands, and American 
        Samoa for the second, third, and fourth quarters of fiscal year 
        2011, and for each fiscal year after fiscal year 2011 (after the 
        application of subsection (f) and the preceding paragraphs of 
        this subsection), shall be increased by 30 percent.''.

    (b) Disregard of Payments for Mandatory Expanded Enrollment.--
Section 1108(g)(4) of such Act (42 U.S.C. 1308(g)(4)) is amended--
            (1) by striking ``to fiscal years beginning'' and inserting 
        ``to--
                    ``(A) fiscal years beginning'';

[[Page 124 STAT. 284]]

            (2) by striking the period at the end and inserting ``; 
        and''; and
            (3) by adding at the end the following:
                    ``(B) fiscal years beginning with fiscal year 2014, 
                payments made to Puerto Rico, the Virgin Islands, Guam, 
                the Northern Mariana Islands, or American Samoa with 
                respect to amounts expended for medical assistance for 
                newly eligible (as defined in section 1905(y)(2)) 
                nonpregnant childless adults who are eligible under 
                subclause (VIII) of section 1902(a)(10)(A)(i) and whose 
                income (as determined under section 1902(e)(14)) does 
                not exceed (in the case of each such commonwealth and 
                territory respectively) the income eligibility level in 
                effect for that population under title XIX or under a 
                waiver on the date of enactment of the Patient 
                Protection and Affordable Care Act, shall not be taken 
                into account in applying subsection (f) (as increased in 
                accordance with paragraphs (1), (2), (3), and (5) of 
                this subsection) to such commonwealth or territory for 
                such fiscal year.''.

    (c) Increased FMAP.--
            (1) In general.--The first sentence of section 1905(b) of 
        the Social Security Act (42 U.S.C. 1396d(b)) is amended by 
        striking ``shall be 50 per centum'' and inserting ``shall be 55 
        percent''.
            (2) <<NOTE: 42 USC 1396d note.>>  Effective date.--The 
        amendment made by paragraph (1) takes effect on January 1, 2011.

SEC. 2006. SPECIAL ADJUSTMENT TO FMAP DETERMINATION FOR CERTAIN STATES 
            RECOVERING FROM A MAJOR DISASTER.

    Section 1905 of the Social Security Act (42 U.S.C. 1396d), as 
amended by sections 2001(a)(3) and 2001(b)(2), is amended--
            (1) in subsection (b), in the first sentence, by striking 
        ``subsection (y)'' and inserting ``subsections (y) and (aa)''; 
        and
            (2) by adding at the end the following new subsection:

    ``(aa)(1) <<NOTE: Effective date.>> Notwithstanding subsection (b), 
beginning January 1, 2011, the Federal medical assistance percentage for 
a fiscal year for a disaster-recovery FMAP adjustment State shall be 
equal to the following:
            ``(A) In the case of the first fiscal year (or part of a 
        fiscal year) for which this subsection applies to the State, the 
        Federal medical assistance percentage determined for the fiscal 
        year without regard to this subsection and subsection (y), 
        increased by 50 percent of the number of percentage points by 
        which the Federal medical assistance percentage determined for 
        the State for the fiscal year without regard to this subsection 
        and subsection (y), is less than the Federal medical assistance 
        percentage determined for the State for the preceding fiscal 
        year after the application of only subsection (a) of section 
        5001 of Public Law 111-5 (if applicable to the preceding fiscal 
        year) and without regard to this subsection, subsection (y), and 
        subsections (b) and (c) of section 5001 of Public Law 111-5.
            ``(B) In the case of the second or any succeeding fiscal 
        year for which this subsection applies to the State, the Federal 
        medical assistance percentage determined for the preceding 
        fiscal year under this subsection for the State, increased by 25 
        percent of the number of percentage points by which the Federal 
        medical assistance percentage determined for the State

[[Page 124 STAT. 285]]

        for the fiscal year without regard to this subsection and 
        subsection (y), is less than the Federal medical assistance 
        percentage determined for the State for the preceding fiscal 
        year under this subsection.

    ``(2) <<NOTE: Definition.>>  In this subsection, the term `disaster-
recovery FMAP adjustment State' means a State that is one of the 50 
States or the District of Columbia, for which, at any time during the 
preceding 7 fiscal years, the President has declared a major disaster 
under section 401 of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act and determined as a result of such disaster 
that every county or parish in the State warrant individual and public 
assistance or public assistance from the Federal Government under such 
Act and for which--
            ``(A) in the case of the first fiscal year (or part of a 
        fiscal year) for which this subsection applies to the State, the 
        Federal medical assistance percentage determined for the State 
        for the fiscal year without regard to this subsection and 
        subsection (y), is less than the Federal medical assistance 
        percentage determined for the State for the preceding fiscal 
        year after the application of only subsection (a) of section 
        5001 of Public Law 111-5 (if applicable to the preceding fiscal 
        year) and without regard to this subsection, subsection (y), and 
        subsections (b) and (c) of section 5001 of Public Law 111-5, by 
        at least 3 percentage points; and
            ``(B) in the case of the second or any succeeding fiscal 
        year for which this subsection applies to the State, the Federal 
        medical assistance percentage determined for the State for the 
        fiscal year without regard to this subsection and subsection 
        (y), is less than the Federal medical assistance percentage 
        determined for the State for the preceding fiscal year under 
        this subsection by at least 3 percentage points.

    ``(3) <<NOTE: Applicability.>>  The Federal medical assistance 
percentage determined for a disaster-recovery FMAP adjustment State 
under paragraph (1) shall apply for purposes of this title (other than 
with respect to disproportionate share hospital payments described in 
section 1923 and payments under this title that are based on the 
enhanced FMAP described in 2105(b)) and shall not apply with respect to 
payments under title IV (other than under part E of title IV) or 
payments under title XXI.''.

SEC. 2007. MEDICAID IMPROVEMENT FUND RESCISSION.

    (a) Rescission.--Any amounts available to the Medicaid Improvement 
Fund established under section 1941 of the Social Security Act (42 
U.S.C. 1396w-1) for any of fiscal years 2014 through 2018 that are 
available for expenditure from the Fund and that are not so obligated as 
of the date of the enactment of this Act are rescinded.
    (b) Conforming Amendments.--Section 1941(b)(1) of the Social 
Security Act (42 U.S.C. 1396w-1(b)(1)) is amended--
            (1) in subparagraph (A), by striking ``$100,000,000'' and 
        inserting ``$0''; and
            (2) in subparagraph (B), by striking ``$150,000,000'' and 
        inserting ``$0''.

[[Page 124 STAT. 286]]

Subtitle B--Enhanced Support for the Children's Health Insurance Program

SEC. 2101. ADDITIONAL FEDERAL FINANCIAL PARTICIPATION FOR CHIP.

    (a) In General.-- <<NOTE: Time period.>> Section 2105(b) of the 
Social Security Act (42 U.S.C. 1397ee(b)) is amended by adding at the 
end the following: ``Notwithstanding the preceding sentence, during the 
period that begins on October 1, 2013, and ends on September 30, 2019, 
the enhanced FMAP determined for a State for a fiscal year (or for any 
portion of a fiscal year occurring during such period) shall be 
increased by 23 percentage points, but in no case shall exceed 100 
percent. The increase in the enhanced FMAP under the preceding sentence 
shall not apply with respect to determining the payment to a State under 
subsection (a)(1) for expenditures described in subparagraph (D)(iv), 
paragraphs (8), (9), (11) of subsection (c), or clause (4) of the first 
sentence of section 1905(b).''.

    (b) Maintenance of Effort.--
            (1) In general.--Section 2105(d) of the Social Security Act 
        (42 U.S.C. 1397ee(d)) is amended by adding at the end the 
        following:
            ``(3) Continuation of eligibility standards for children 
        until october 1, 2019.--
                    ``(A) In general.-- <<NOTE: Time period.>> During 
                the period that begins on the date of enactment of the 
                Patient Protection and Affordable Care Act and ends on 
                September 30, 2019, a State shall not have in effect 
                eligibility standards, methodologies, or procedures 
                under its State child health plan (including any waiver 
                under such plan) for children (including children 
                provided medical assistance for which payment is made 
                under section 2105(a)(1)(A)) that are more restrictive 
                than the eligibility standards, methodologies, or 
                procedures, respectively, under such plan (or waiver) as 
                in effect on the date of enactment of that Act. The 
                preceding sentence shall not be construed as preventing 
                a State during such period from--
                          ``(i) applying eligibility standards, 
                      methodologies, or procedures for children under 
                      the State child health plan or under any waiver of 
                      the plan that are less restrictive than the 
                      eligibility standards, methodologies, or 
                      procedures, respectively, for children under the 
                      plan or waiver that are in effect on the date of 
                      enactment of such Act; or
                          ``(ii) imposing a limitation described in 
                      section 2112(b)(7) for a fiscal year in order to 
                      limit expenditures under the State child health 
                      plan to those for which Federal financial 
                      participation is available under this section for 
                      the fiscal year.
                    ``(B) Assurance of exchange coverage for targeted 
                low-income children unable to be provided child health 
                assistance as a result of funding 
                shortfalls. <<NOTE: Procedures.>> --In the event that 
                allotments provided under section 2104 are insufficient 
                to provide coverage to all children who are eligible to 
                be targeted low-income children under the State child 
                health plan under this title, a State shall

[[Page 124 STAT. 287]]

                establish procedures to ensure that such children are 
                provided coverage through an Exchange established by the 
                State under section 1311 of the Patient Protection and 
                Affordable Care Act.''.
            (2) Conforming amendment to title xxi medicaid maintenance 
        of effort.--Section 2105(d)(1) of the Social Security Act (42 
        U.S.C. 1397ee(d)(1)) is amended by adding before the period ``, 
        except as required under section 1902(e)(14)''.

    (c) No Enrollment Bonus Payments for Children Enrolled After Fiscal 
Year 2013.--Section 2105(a)(3)(F)(iii) of the Social Security Act (42 
U.S.C. 1397ee(a)(3)(F)(iii)) is amended by inserting ``or any children 
enrolled on or after October 1, 2013'' before the period.
    (d) Income Eligibility Determined Using Modified Gross Income.--
            (1) State plan requirement.--Section 2102(b)(1)(B) of the 
        Social Security Act (42 U.S.C. 1397bb(b)(1)(B)) is amended--
                    (A) in clause (iii), by striking ``and'' after the 
                semicolon;
                    (B) in clause (iv), by striking the period and 
                inserting ``; and''; and
                    (C) by adding at the end the following:
                          ``(v) <<NOTE: Effective date.>>  shall, 
                      beginning January 1, 2014, use modified gross 
                      income and household income (as defined in section 
                      36B(d)(2) of the Internal Revenue Code of 1986) to 
                      determine eligibility for child health assistance 
                      under the State child health plan or under any 
                      waiver of such plan and for any other purpose 
                      applicable under the plan or waiver for which a 
                      determination of income is required, including 
                      with respect to the imposition of premiums and 
                      cost-sharing, consistent with section 
                      1902(e)(14).''.
            (2) Conforming amendment.--Section 2107(e)(1) of the Social 
        Security Act (42 U.S.C. 1397gg(e)(1)) is amended--
                    (A) by redesignating subparagraphs (E) through (L) 
                as subparagraphs (F) through (M), respectively; and
                    (B) by inserting after subparagraph (D), the 
                following:
                    ``(E) Section 1902(e)(14) (relating to income 
                determined using modified gross income and household 
                income).''.

    (e) Application of Streamlined Enrollment System.--Section 
2107(e)(1) of the Social Security Act (42 U.S.C. 1397gg(e)(1)), as 
amended by subsection (d)(2), is amended by adding at the end the 
following:
                    ``(N) Section 1943(b) (relating to coordination with 
                State Exchanges and the State Medicaid agency).''.

    (f) <<NOTE: 42 USC 1397jj note.>>  CHIP Eligibility for Children 
Ineligible for Medicaid as a Result of Elimination of Disregards.--
Notwithstanding any other provision of law, a State shall treat any 
child who is determined to be ineligible for medical assistance under 
the State Medicaid plan or under a waiver of the plan as a result of the 
elimination of the application of an income disregard based on expense 
or type of income, as required under section 1902(e)(14) of the Social 
Security Act (as added by this Act), as a targeted low-income child 
under section 2110(b) (unless the child is excluded under paragraph (2) 
of that section) and shall provide child health assistance to the child 
under the State child health plan (whether

[[Page 124 STAT. 288]]

implemented under title XIX or XXI, or both, of the Social Security 
Act).

SEC. 2102. TECHNICAL CORRECTIONS.

    (a) <<NOTE: Effective date. 42 USC 1396b note.>>  CHIPRA.--Effective 
as if included in the enactment of the Children's Health Insurance 
Program Reauthorization Act of 2009 (Public Law 111-3) (in this section 
referred to as ``CHIPRA''):
            (1) Section 2104(m) of the Social Security Act, as added by 
        section 102 of CHIPRA, <<NOTE: 42 USC 1397dd.>>  is amended--
                    (A) by redesignating paragraph (7) as paragraph (8); 
                and
                    (B) by inserting after paragraph (6), the following:
            ``(7) Adjustment of fiscal year 2010 allotments to account 
        for changes in projected spending for certain previously 
        approved expansion programs.--For purposes of recalculating the 
        fiscal year 2010 allotment, in the case of one of the 50 States 
        or the District of Columbia that has an approved State plan 
        amendment effective January 1, 2006, to provide child health 
        assistance through the provision of benefits under the State 
        plan under title XIX for children from birth through age 5 whose 
        family income does not exceed 200 percent of the poverty line, 
        the Secretary shall increase the allotment by an amount that 
        would be equal to the Federal share of expenditures that would 
        have been claimed at the enhanced FMAP rate rather than the 
        Federal medical assistance percentage matching rate for such 
        population.''.
            (2) Section 605 of CHIPRA <<NOTE: 42 USC 1396 note.>>  is 
        amended by striking ``legal residents'' and insert ``lawfully 
        residing in the United States''.
            (3) Subclauses (I) and (II) of paragraph (3)(C)(i) of 
        section 2105(a) of the Social Security Act (42 U.S.C. 
        1397ee(a)(3)(ii)), as added by section 104 of CHIPRA, are each 
        amended by striking ``, respectively''.
            (4) Section 2105(a)(3)(E)(ii) of the Social Security Act (42 
        U.S.C. 1397ee(a)(3)(E)(ii)), as added by section 104 of CHIPRA, 
        is amended by striking subclause (IV).
            (5) Section 2105(c)(9)(B) of the Social Security Act (42 
        U.S.C. 1397e(c)(9)(B)), <<NOTE: 42 USC 1397ee.>>  as added by 
        section 211(c)(1) of CHIPRA, is amended by striking ``section 
        1903(a)(3)(F)'' and inserting ``section 1903(a)(3)(G)''.
            (6) Section 2109(b)(2)(B) of the Social Security Act (42 
        U.S.C. 1397ii(b)(2)(B)), as added by section 602 of CHIPRA, is 
        amended by striking ``the child population growth factor under 
        section 2104(m)(5)(B)'' and inserting ``a high-performing State 
        under section 2111(b)(3)(B)''.
            (7) Section 2110(c)(9)(B)(v) of the Social Security Act (42 
        U.S.C. 1397jj(c)(9)(B)(v)), as added by section 505(b) of 
        CHIPRA, is amended by striking ``school or school system'' and 
        inserting ``local educational agency (as defined under section 
        9101 of the Elementary and Secondary Education Act of 1965''.
            (8) Section 211(a)(1)(B) of CHIPRA <<NOTE: 42 USC 1396b.>>  
        is amended--
                    (A) by striking ``is amended'' and all that follows 
                through ``adding'' and inserting ``is amended by 
                adding''; and
                    (B) by redesignating the new subparagraph to be 
                added by such section to section 1903(a)(3) of the 
                Social Security Act as a new subparagraph (H).

[[Page 124 STAT. 289]]

    (b) <<NOTE: 42 USC 13960-1 note.>>  ARRA.--Effective as if included 
in the enactment of section 5006(a) of division B of the American 
Recovery and Reinvestment Act of 2009 (Public Law 111-5), the second 
sentence of section 1916A(a)(1) of the Social Security Act (42 U.S.C. 
1396o-1(a)(1)) is amended by striking ``or (i)'' and inserting ``, (i), 
or (j)''.

         Subtitle C--Medicaid and CHIP Enrollment Simplification

SEC. 2201. ENROLLMENT SIMPLIFICATION AND COORDINATION WITH STATE HEALTH 
            INSURANCE EXCHANGES.

    Title XIX of the Social Security Act (42 U.S.C. 1397aa et seq.) is 
amended by adding at the end the following:

``SEC. 1943. <<NOTE: 42 USC 1396w-3.>>  ENROLLMENT SIMPLIFICATION AND 
            COORDINATION WITH STATE HEALTH INSURANCE EXCHANGES.

    ``(a) Condition for Participation in Medicaid. <<NOTE: Effective 
date.>> --As a condition of the State plan under this title and receipt 
of any Federal financial assistance under section 1903(a) for calendar 
quarters beginning after January 1, 2014, a State shall ensure that the 
requirements of subsection (b) is met.

    ``(b) Enrollment Simplification and Coordination With State Health 
Insurance Exchanges and Chip.--
            ``(1) In general.-- <<NOTE: Procedures.>> A State shall 
        establish procedures for--
                    ``(A) <<NOTE: Web site.>>  enabling individuals, 
                through an Internet website that meets the requirements 
                of paragraph (4), to apply for medical assistance under 
                the State plan or under a waiver of the plan, to be 
                enrolled in the State plan or waiver, to renew their 
                enrollment in the plan or waiver, and to consent to 
                enrollment or reenrollment in the State plan through 
                electronic signature;
                    ``(B) enrolling, without any further determination 
                by the State and through such website, individuals who 
                are identified by an Exchange established by the State 
                under section 1311 of the Patient Protection and 
                Affordable Care Act as being eligible for--
                          ``(i) medical assistance under the State plan 
                      or under a waiver of the plan; or
                          ``(ii) child health assistance under the State 
                      child health plan under title XXI;
                    ``(C) ensuring that individuals who apply for but 
                are determined to be ineligible for medical assistance 
                under the State plan or a waiver or ineligible for child 
                health assistance under the State child health plan 
                under title XXI, are screened for eligibility for 
                enrollment in qualified health plans offered through 
                such an Exchange and, if applicable, premium assistance 
                for the purchase of a qualified health plan under 
                section 36B of the Internal Revenue Code of 1986 (and, 
                if applicable, advance payment of such assistance under 
                section 1412 of the Patient Protection and Affordable 
                Care Act), and, if eligible, enrolled in such a plan 
                without having to submit an additional or separate 
                application, and that such individuals receive 
                information regarding reduced cost-sharing for eligible 
                individuals under section 1402 of the Patient Protection 
                and Affordable

[[Page 124 STAT. 290]]

                Care Act, and any other assistance or subsidies 
                available for coverage obtained through the Exchange;
                    ``(D) ensuring that the State agency responsible for 
                administering the State plan under this title (in this 
                section referred to as the `State Medicaid agency'), the 
                State agency responsible for administering the State 
                child health plan under title XXI (in this section 
                referred to as the `State CHIP agency') and an Exchange 
                established by the State under section 1311 of the 
                Patient Protection and Affordable Care Act utilize a 
                secure electronic interface sufficient to allow for a 
                determination of an individual's eligibility for such 
                medical assistance, child health assistance, or premium 
                assistance, and enrollment in the State plan under this 
                title, title XXI, or a qualified health plan, as 
                appropriate;
                    ``(E) coordinating, for individuals who are enrolled 
                in the State plan or under a waiver of the plan and who 
                are also enrolled in a qualified health plan offered 
                through such an Exchange, and for individuals who are 
                enrolled in the State child health plan under title XXI 
                and who are also enrolled in a qualified health plan, 
                the provision of medical assistance or child health 
                assistance to such individuals with the coverage 
                provided under the qualified health plan in which they 
                are enrolled, including services described in section 
                1905(a)(4)(B) (relating to early and periodic screening, 
                diagnostic, and treatment services defined in section 
                1905(r)) and provided in accordance with the 
                requirements of section 1902(a)(43); and
                    ``(F) conducting outreach to and enrolling 
                vulnerable and underserved populations eligible for 
                medical assistance under this title XIX or for child 
                health assistance under title XXI, including children, 
                unaccompanied homeless youth, children and youth with 
                special health care needs, pregnant women, racial and 
                ethnic minorities, rural populations, victims of abuse 
                or trauma, individuals with mental health or substance-
                related disorders, and individuals with HIV/AIDS.
            ``(2) Agreements with state health insurance exchanges.--The 
        State Medicaid agency and the State CHIP agency may enter into 
        an agreement with an Exchange established by the State under 
        section 1311 of the Patient Protection and Affordable Care Act 
        under which the State Medicaid agency or State CHIP agency may 
        determine whether a State resident is eligible for premium 
        assistance for the purchase of a qualified health plan under 
        section 36B of the Internal Revenue Code of 1986 (and, if 
        applicable, advance payment of such assistance under section 
        1412 of the Patient Protection and Affordable Care Act), so long 
        as the agreement meets such conditions and requirements as the 
        Secretary of the Treasury may prescribe to reduce administrative 
        costs and the likelihood of eligibility errors and disruptions 
        in coverage.
            ``(3) Streamlined enrollment system.--The State Medicaid 
        agency and State CHIP agency shall participate in and comply 
        with the requirements for the system established under section 
        1413 of the Patient Protection and Affordable Care Act (relating 
        to streamlined procedures for enrollment through an Exchange, 
        Medicaid, and CHIP).

[[Page 124 STAT. 291]]

            ``(4) Enrollment website requirements.-- 
        <<NOTE: Deadline.>> The procedures established by State under 
        paragraph (1) shall include establishing and having in 
        operation, not later than January 1, 2014, an Internet website 
        that is linked to any website of an Exchange established by the 
        State under section 1311 of the Patient Protection and 
        Affordable Care Act and to the State CHIP agency (if different 
        from the State Medicaid agency) and allows an individual who is 
        eligible for medical assistance under the State plan or under a 
        waiver of the plan and who is eligible to receive premium credit 
        assistance for the purchase of a qualified health plan under 
        section 36B of the Internal Revenue Code of 1986 to compare the 
        benefits, premiums, and cost-sharing applicable to the 
        individual under the State plan or waiver with the benefits, 
        premiums, and cost-sharing available to the individual under a 
        qualified health plan offered through such an Exchange, 
        including, in the case of a child, the coverage that would be 
        provided for the child through the State plan or waiver with the 
        coverage that would be provided to the child through enrollment 
        in family coverage under that plan and as supplemental coverage 
        by the State under the State plan or waiver.
            ``(5) Continued need for assessment for home and community-
        based services.--Nothing in paragraph (1) shall limit or modify 
        the requirement that the State assess an individual for purposes 
        of providing home and community-based services under the State 
        plan or under any waiver of such plan for individuals described 
        in subsection (a)(10)(A)(ii)(VI).''.

SEC. 2202. PERMITTING HOSPITALS TO MAKE PRESUMPTIVE ELIGIBILITY 
            DETERMINATIONS FOR ALL MEDICAID ELIGIBLE POPULATIONS.

    (a) In General.--Section 1902(a)(47) of the Social Security Act (42 
U.S.C. 1396a(a)(47)) is amended--
            (1) by striking ``at the option of the State, provide'' and 
        inserting ``provide--
                    ``(A) at the option of the State,'';
            (2) by inserting ``and'' after the semicolon; and
            (3) by adding at the end the following:
                    ``(B) <<NOTE: Guidelines.>>  that any hospital that 
                is a participating provider under the State plan may 
                elect to be a qualified entity for purposes of 
                determining, on the basis of preliminary information, 
                whether any individual is eligible for medical 
                assistance under the State plan or under a waiver of the 
                plan for purposes of providing the individual with 
                medical assistance during a presumptive eligibility 
                period, in the same manner, and subject to the same 
                requirements, as apply to the State options with respect 
                to populations described in section 1920, 1920A, or 
                1920B (but without regard to whether the State has 
                elected to provide for a presumptive eligibility period 
                under any such sections), subject to such guidance as 
                the Secretary shall establish;''.

    (b) Conforming Amendment.--Section 1903(u)(1)(D)(v) of such Act (42 
U.S.C. 1396b(u)(1)(D)v)) is amended--
            (1) by striking ``or for'' and inserting ``for''; and
            (2) by inserting before the period at the end the following: 
        ``, or for medical assistance provided to an individual during a 
        presumptive eligibility period resulting from a determination

[[Page 124 STAT. 292]]

        of presumptive eligibility made by a hospital that elects under 
        section 1902(a)(47)(B) to be a qualified entity for such 
        purpose''.

    (c) <<NOTE: Applicability. 42 USC 1396a note.>>  Effective Date.--
The amendments made by this section take effect on January 1, 2014, and 
apply to services furnished on or after that date.

              Subtitle D--Improvements to Medicaid Services

SEC. 2301. COVERAGE FOR FREESTANDING BIRTH CENTER SERVICES.

    (a) In General.--Section 1905 of the Social Security Act (42 U.S.C. 
1396d), is amended--
            (1) in subsection (a)--
                    (A) in paragraph (27), by striking ``and'' at the 
                end;
                    (B) by redesignating paragraph (28) as paragraph 
                (29); and
                    (C) by inserting after paragraph (27) the following 
                new paragraph:
            ``(28) freestanding birth center services (as defined in 
        subsection (l)(3)(A)) and other ambulatory services that are 
        offered by a freestanding birth center (as defined in subsection 
        (l)(3)(B)) and that are otherwise included in the plan; and''; 
        and
            (2) in subsection (l), by adding at the end the following 
        new paragraph:

    ``(3)(A) <<NOTE: Definitions.>>  The term `freestanding birth center 
services' means services furnished to an individual at a freestanding 
birth center (as defined in subparagraph (B)) at such center.

    ``(B) The term `freestanding birth center' means a health facility--
            ``(i) that is not a hospital;
            ``(ii) where childbirth is planned to occur away from the 
        pregnant woman's residence;
            ``(iii) that is licensed or otherwise approved by the State 
        to provide prenatal labor and delivery or postpartum care and 
        other ambulatory services that are included in the plan; and
            ``(iv) that complies with such other requirements relating 
        to the health and safety of individuals furnished services by 
        the facility as the State shall establish.

    ``(C) <<NOTE: Payments.>>  A State shall provide separate payments 
to providers administering prenatal labor and delivery or postpartum 
care in a freestanding birth center (as defined in subparagraph (B)), 
such as nurse midwives and other providers of services such as birth 
attendants recognized under State law, as determined appropriate by the 
Secretary. For purposes of the preceding sentence, the term `birth 
attendant' means an individual who is recognized or registered by the 
State involved to provide health care at childbirth and who provides 
such care within the scope of practice under which the individual is 
legally authorized to perform such care under State law (or the State 
regulatory mechanism provided by State law), regardless of whether the 
individual is under the supervision of, or associated with, a physician 
or other health care provider. Nothing in this subparagraph shall be 
construed as changing State law requirements applicable to a birth 
attendant.''.

    (b) Conforming Amendment.--Section 1902(a)(10)(A) of the Social 
Security Act (42 U.S.C. 1396a(a)(10)(A)), is amended in the

[[Page 124 STAT. 293]]

matter preceding clause (i) by striking ``and (21)'' and inserting ``, 
(21), and (28)''.
    (c) <<NOTE: 42 USC 1396a note.>>  Effective Date.--
            (1) In general.-- <<NOTE: Applicability.>> Except as 
        provided in paragraph (2), the amendments made by this section 
        shall take effect on the date of the enactment of this Act and 
        shall apply to services furnished on or after such date.
            (2) Exception if state legislation required.-- 
        <<NOTE: Determination.>> In the case of a State plan for medical 
        assistance under title XIX of the Social Security Act which the 
        Secretary of Health and Human Services determines requires State 
        legislation (other than legislation appropriating funds) in 
        order for the plan to meet the additional requirement imposed by 
        the amendments made by this section, the State plan shall not be 
        regarded as failing to comply with the requirements of such 
        title solely on the basis of its failure to meet this additional 
        requirement before the first day of the first calendar quarter 
        beginning after the close of the first regular session of the 
        State legislature that begins after the date of the enactment of 
        this Act. For purposes of the previous sentence, in the case of 
        a State that has a 2-year legislative session, each year of such 
        session shall be deemed to be a separate regular session of the 
        State legislature.

SEC. 2302. CONCURRENT CARE FOR CHILDREN.

    (a) In General.--Section 1905(o)(1) of the Social Security Act (42 
U.S.C. 1396d(o)(1)) is amended--
            (1) in subparagraph (A), by striking ``subparagraph (B)'' 
        and inserting ``subparagraphs (B) and (C)''; and
            (2) by adding at the end the following new subparagraph:

    ``(C) A voluntary election to have payment made for hospice care for 
a child (as defined by the State) shall not constitute a waiver of any 
rights of the child to be provided with, or to have payment made under 
this title for, services that are related to the treatment of the 
child's condition for which a diagnosis of terminal illness has been 
made.''.
    (b) Application to CHIP.--Section 2110(a)(23) of the Social Security 
Act (42 U.S.C. 1397jj(a)(23)) is amended by inserting ``(concurrent, in 
the case of an individual who is a child, with care related to the 
treatment of the child's condition with respect to which a diagnosis of 
terminal illness has been made'' after ``hospice care''.

SEC. 2303. STATE ELIGIBILITY OPTION FOR FAMILY PLANNING SERVICES.

    (a) Coverage as Optional Categorically Needy Group.--
            (1) In general.--Section 1902(a)(10)(A)(ii) of the Social 
        Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)), as amended by 
        section 2001(e), is amended--
                    (A) in subclause (XIX), by striking ``or'' at the 
                end;
                    (B) in subclause (XX), by adding ``or'' at the end; 
                and
                    (C) by adding at the end the following new 
                subclause:
                                    ``(XXI) who are described in 
                                subsection (ii) (relating to individuals 
                                who meet certain income standards);''.
            (2) Group described.--Section 1902 of such Act (42 U.S.C. 
        1396a), as amended by section 2001(d), is amended by adding at 
        the end the following new subsection:

[[Page 124 STAT. 294]]

    ``(ii)(1) Individuals described in this subsection are individuals--
                    ``(A) whose income does not exceed an income 
                eligibility level established by the State that does not 
                exceed the highest income eligibility level established 
                under the State plan under this title (or under its 
                State child health plan under title XXI) for pregnant 
                women; and
                    ``(B) who are not pregnant.
            ``(2) At the option of a State, individuals described in 
        this subsection may include individuals who, had individuals 
        applied on or before January 1, 2007, would have been made 
        eligible pursuant to the standards and processes imposed by that 
        State for benefits described in clause (XV) of the matter 
        following subparagraph (G) of section subsection (a)(10) 
        pursuant to a waiver granted under section 1115.
            ``(3) At the option of a State, for purposes of subsection 
        (a)(17)(B), in determining eligibility for services under this 
        subsection, the State may consider only the income of the 
        applicant or recipient.''.
            (3) Limitation on benefits.--Section 1902(a)(10) of the 
        Social Security Act (42 U.S.C. 1396a(a)(10)), as amended by 
        section 2001(a)(5)(A), is amended in the matter following 
        subparagraph (G)--
                    (A) by striking ``and (XV)'' and inserting ``(XV)''; 
                and
                    (B) by inserting ``, and (XVI) the medical 
                assistance made available to an individual described in 
                subsection (ii) shall be limited to family planning 
                services and supplies described in section 1905(a)(4)(C) 
                including medical diagnosis and treatment services that 
                are provided pursuant to a family planning service in a 
                family planning setting'' before the semicolon.
            (4) Conforming amendments.--
                    (A) Section 1905(a) of the Social Security Act (42 
                U.S.C. 1396d(a)), as amended by section 2001(e)(2)(A), 
                is amended in the matter preceding paragraph (1)--
                          (i) in clause (xiv), by striking ``or'' at the 
                      end;
                          (ii) in clause (xv), by adding ``or'' at the 
                      end; and
                          (iii) by inserting after clause (xv) the 
                      following:
                          ``(xvi) individuals described in section 
                      1902(ii),''.
                    (B) Section 1903(f)(4) of such Act (42 U.S.C. 
                1396b(f)(4)), as amended by section 2001(e)(2)(B), is 
                amended by inserting ``1902(a)(10)(A)(ii)(XXI),'' after 
                ``1902(a)(10)(A)(ii)(XX),''.

    (b) Presumptive Eligibility.--
            (1) In general.--Title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.) is amended by inserting after section 1920B 
        the following:


         ``presumptive eligibility for family planning services


    ``Sec. 1920C.  <<NOTE: 42 USC 1396r-1c.>>  (a) State Option.--State 
plan approved under section 1902 may provide for making medical 
assistance available to an individual described in section 1902(ii) 
(relating to individuals who meet certain income eligibility standard) 
during a presumptive eligibility period. In the case of an individual 
described in section 1902(ii), such medical assistance shall be limited 
to family planning services and supplies described in 1905(a)(4)(C) and, 
at the State's option, medical diagnosis and treatment services that are 
provided

[[Page 124 STAT. 295]]

in conjunction with a family planning service in a family planning 
setting.

    ``(b) Definitions.--For purposes of this section:
            ``(1) Presumptive eligibility period.--The term `presumptive 
        eligibility period' means, with respect to an individual 
        described in subsection (a), the period that--
                    ``(A) begins with the date on which a qualified 
                entity determines, on the basis of preliminary 
                information, that the individual is described in section 
                1902(ii); and
                    ``(B) ends with (and includes) the earlier of--
                          ``(i) the day on which a determination is made 
                      with respect to the eligibility of such individual 
                      for services under the State plan; or
                          ``(ii) in the case of such an individual who 
                      does not file an application by the last day of 
                      the month following the month during which the 
                      entity makes the determination referred to in 
                      subparagraph (A), such last day.
            ``(2) Qualified entity.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                term `qualified entity' means any entity that--
                          ``(i) is eligible for payments under a State 
                      plan approved under this title; and
                          ``(ii) is determined by the State agency to be 
                      capable of making determinations of the type 
                      described in paragraph (1)(A).
                    ``(B) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing a State from 
                limiting the classes of entities that may become 
                qualified entities in order to prevent fraud and abuse.

    ``(c) Administration.--
            ``(1) In general.--The State agency shall provide qualified 
        entities with--
                    ``(A) such forms as are necessary for an application 
                to be made by an individual described in subsection (a) 
                for medical assistance under the State plan; and
                    ``(B) information on how to assist such individuals 
                in completing and filing such forms.
            ``(2) Notification requirements.--A qualified entity that 
        determines under subsection (b)(1)(A) that an individual 
        described in subsection (a) is presumptively eligible for 
        medical assistance under a State plan shall--
                    ``(A) <<NOTE: Deadline.>>  notify the State agency 
                of the determination within 5 working days after the 
                date on which determination is made; and
                    ``(B) inform such individual at the time the 
                determination is made that an application for medical 
                assistance is required to be made by not later than the 
                last day of the month following the month during which 
                the determination is made.
            ``(3) Application for medical assistance.-- 
        <<NOTE: Deadline.>> In the case of an individual described in 
        subsection (a) who is determined by a qualified entity to be 
        presumptively eligible for medical assistance under a State 
        plan, the individual shall apply for medical assistance by not 
        later than the last day of the month following the month during 
        which the determination is made.

[[Page 124 STAT. 296]]

    ``(d) Payment.--Notwithstanding any other provision of law, medical 
assistance that--
            ``(1) is furnished to an individual described in subsection 
        (a)--
                    ``(A) during a presumptive eligibility period; and
                    ``(B) by a entity that is eligible for payments 
                under the State plan; and
            ``(2) is included in the care and services covered by the 
        State plan,

shall be treated as medical assistance provided by such plan for 
purposes of clause (4) of the first sentence of section 1905(b).''.
            (2) Conforming amendments.--
                    (A) Section 1902(a)(47) of the Social Security Act 
                (42 U.S.C. 1396a(a)(47)), as amended by section 2202(a), 
                is amended--
                          (i) in subparagraph (A), by inserting before 
                      the semicolon at the end the following: ``and 
                      provide for making medical assistance available to 
                      individuals described in subsection (a) of section 
                      1920C during a presumptive eligibility period in 
                      accordance with such section''; and
                          (ii) in subparagraph (B), by striking ``or 
                      1920B'' and inserting ``1920B, or 1920C''.
                    (B) Section 1903(u)(1)(D)(v) of such Act (42 U.S.C. 
                1396b(u)(1)(D)(v)), as amended by section 2202(b), is 
                amended by inserting ``or for medical assistance 
                provided to an individual described in subsection (a) of 
                section 1920C during a presumptive eligibility period 
                under such section,'' after ``1920B during a presumptive 
                eligibility period under such section,''.

    (c) Clarification of Coverage of Family Planning Services and 
Supplies.--Section 1937(b) of the Social Security Act (42 U.S.C. 1396u-
7(b)), as amended by section 2001(c), is amended by adding at the end 
the following:
            ``(7) Coverage of family planning services and supplies.--
        Notwithstanding the previous provisions of this section, a State 
        may not provide for medical assistance through enrollment of an 
        individual with benchmark coverage or benchmark-equivalent 
        coverage under this section unless such coverage includes for 
        any individual described in section 1905(a)(4)(C), medical 
        assistance for family planning services and supplies in 
        accordance with such section.''.

    (d) Effective Date. <<NOTE: Applicability. 42 USC 1396a note.>> --
The amendments made by this section take effect on the date of the 
enactment of this Act and shall apply to items and services furnished on 
or after such date.

SEC. 2304. CLARIFICATION OF DEFINITION OF MEDICAL ASSISTANCE.

    Section 1905(a) of the Social Security Act (42 U.S.C. 1396d(a)) is 
amended by inserting ``or the care and services themselves, or both'' 
before ``(if provided in or after''.

[[Page 124 STAT. 297]]

  Subtitle E--New Options for States to Provide Long-Term Services and 
                                Supports

SEC. 2401. COMMUNITY FIRST CHOICE OPTION.

    Section 1915 of the Social Security Act (42 U.S.C. 1396n) is amended 
by adding at the end the following:
    ``(k) State Plan Option To Provide Home and Community-based 
Attendant Services and Supports.--
            ``(1) In general.-- <<NOTE: Effective date.>> Subject to the 
        succeeding provisions of this subsection, beginning October 1, 
        2010, a State may provide through a State plan amendment for the 
        provision of medical assistance for home and community-based 
        attendant services and supports for individuals who are eligible 
        for medical assistance under the State plan whose income does 
        not exceed 150 percent of the poverty line (as defined in 
        section 2110(c)(5)) or, if greater, the income level applicable 
        for an individual who has been determined to require an 
        institutional level of care to be eligible for nursing facility 
        services under the State plan and with respect to whom there has 
        been a determination that, but for the provision of such 
        services, the individuals would require the level of care 
        provided in a hospital, a nursing facility, an intermediate care 
        facility for the mentally retarded, or an institution for mental 
        diseases, the cost of which could be reimbursed under the State 
        plan, but only if the individual chooses to receive such home 
        and community-based attendant services and supports, and only if 
        the State meets the following requirements:
                    ``(A) Availability.--The State shall make available 
                home and community-based attendant services and supports 
                to eligible individuals, as needed, to assist in 
                accomplishing activities of daily living, instrumental 
                activities of daily living, and health-related tasks 
                through hands-on assistance, supervision, or cueing--
                          ``(i) <<NOTE: Contracts.>>  under a person-
                      centered plan of services and supports that is 
                      based on an assessment of functional need and that 
                      is agreed to in writing by the individual or, as 
                      appropriate, the individual's representative;
                          ``(ii) in a home or community setting, which 
                      does not include a nursing facility, institution 
                      for mental diseases, or an intermediate care 
                      facility for the mentally retarded;
                          ``(iii) under an agency-provider model or 
                      other model (as defined in paragraph (6)(C )); and
                          ``(iv) the furnishing of which--
                                    ``(I) is selected, managed, and 
                                dismissed by the individual, or, as 
                                appropriate, with assistance from the 
                                individual's representative;
                                    ``(II) is controlled, to the maximum 
                                extent possible, by the individual or 
                                where appropriate, the individual's 
                                representative, regardless of who may 
                                act as the employer of record; and
                                    ``(III) provided by an individual 
                                who is qualified to provide such 
                                services, including family members (as 
                                defined by the Secretary).
                    ``(B) Included services and supports.--In addition 
                to assistance in accomplishing activities of daily 
                living,

[[Page 124 STAT. 298]]

                instrumental activities of daily living, and health 
                related tasks, the home and community-based attendant 
                services and supports made available include--
                          ``(i) the acquisition, maintenance, and 
                      enhancement of skills necessary for the individual 
                      to accomplish activities of daily living, 
                      instrumental activities of daily living, and 
                      health related tasks;
                          ``(ii) back-up systems or mechanisms (such as 
                      the use of beepers or other electronic devices) to 
                      ensure continuity of services and supports; and
                          ``(iii) voluntary training on how to select, 
                      manage, and dismiss attendants.
                    ``(C) Excluded services and supports.--Subject to 
                subparagraph (D), the home and community-based attendant 
                services and supports made available do not include--
                          ``(i) room and board costs for the individual;
                          ``(ii) special education and related services 
                      provided under the Individuals with Disabilities 
                      Education Act and vocational rehabilitation 
                      services provided under the Rehabilitation Act of 
                      1973;
                          ``(iii) assistive technology devices and 
                      assistive technology services other than those 
                      under (1)(B)(ii);
                          ``(iv) medical supplies and equipment; or
                          ``(v) home modifications.
                    ``(D) Permissible services and supports.--The home 
                and community-based attendant services and supports may 
                include--
                          ``(i) expenditures for transition costs such 
                      as rent and utility deposits, first month's rent 
                      and utilities, bedding, basic kitchen supplies, 
                      and other necessities required for an individual 
                      to make the transition from a nursing facility, 
                      institution for mental diseases, or intermediate 
                      care facility for the mentally retarded to a 
                      community-based home setting where the individual 
                      resides; and
                          ``(ii) expenditures relating to a need 
                      identified in an individual's person-centered plan 
                      of services that increase independence or 
                      substitute for human assistance, to the extent 
                      that expenditures would otherwise be made for the 
                      human assistance.
            ``(2) Increased federal financial participation.--For 
        purposes of payments to a State under section 1903(a)(1), with 
        respect to amounts expended by the State to provide medical 
        assistance under the State plan for home and community-based 
        attendant services and supports to eligible individuals in 
        accordance with this subsection during a fiscal year quarter 
        occurring during the period described in paragraph (1), the 
        Federal medical assistance percentage applicable to the State 
        (as determined under section 1905(b)) shall be increased by 6 
        percentage points.
            ``(3) State requirements.--In order for a State plan 
        amendment to be approved under this subsection, the State 
        shall--
                    ``(A) <<NOTE: Establishment.>>  develop and 
                implement such amendment in collaboration with a 
                Development and Implementation Council established by 
                the State that includes a majority of members with 
                disabilities, elderly individuals, and their

[[Page 124 STAT. 299]]

                representatives and consults and collaborates with such 
                individuals;
                    ``(B) provide consumer controlled home and 
                community-based attendant services and supports to 
                individuals on a statewide basis, in a manner that 
                provides such services and supports in the most 
                integrated setting appropriate to the individual's 
                needs, and without regard to the individual's age, type 
                or nature of disability, severity of disability, or the 
                form of home and community-based attendant services and 
                supports that the individual requires in order to lead 
                an independent life;
                    ``(C) with respect to expenditures during the first 
                full fiscal year in which the State plan amendment is 
                implemented, maintain or exceed the level of State 
                expenditures for medical assistance that is provided 
                under section 1905(a), section 1915, section 1115, or 
                otherwise to individuals with disabilities or elderly 
                individuals attributable to the preceding fiscal year;
                    ``(D) establish and maintain a comprehensive, 
                continuous quality assurance system with respect to 
                community- based attendant services and supports that--
                          ``(i) includes standards for agency-based and 
                      other delivery models with respect to training, 
                      appeals for denials and reconsideration procedures 
                      of an individual plan, and other factors as 
                      determined by the Secretary;
                          ``(ii) incorporates feedback from consumers 
                      and their representatives, disability 
                      organizations, providers, families of disabled or 
                      elderly individuals, members of the community, and 
                      others and maximizes consumer independence and 
                      consumer control;
                          ``(iii) monitors the health and well-being of 
                      each individual who receives home and community-
                      based attendant services and supports, including a 
                      process for the mandatory reporting, 
                      investigation, and resolution of allegations of 
                      neglect, abuse, or exploitation in connection with 
                      the provision of such services and supports; and
                          ``(iv) provides information about the 
                      provisions of the quality assurance required under 
                      clauses (i) through (iii) to each individual 
                      receiving such services; and
                    ``(E) <<NOTE: Reports. Determination.>>  collect and 
                report information, as determined necessary by the 
                Secretary, for the purposes of approving the State plan 
                amendment, providing Federal oversight, and conducting 
                an evaluation under paragraph (5)(A), including data 
                regarding how the State provides home and community-
                based attendant services and supports and other home and 
                community-based services, the cost of such services and 
                supports, and how the State provides individuals with 
                disabilities who otherwise qualify for institutional 
                care under the State plan or under a waiver the choice 
                to instead receive home and community-based services in 
                lieu of institutional care.
            ``(4) Compliance with certain laws.--A State shall ensure 
        that, regardless of whether the State uses an agency-provider 
        model or other models to provide home and community-based 
        attendant services and supports under a State plan

[[Page 124 STAT. 300]]

        amendment under this subsection, such services and supports are 
        provided in accordance with the requirements of the Fair Labor 
        Standards Act of 1938 and applicable Federal and State laws 
        regarding--
                    ``(A) withholding and payment of Federal and State 
                income and payroll taxes;
                    ``(B) the provision of unemployment and workers 
                compensation insurance;
                    ``(C) maintenance of general liability insurance; 
                and
                    ``(D) occupational health and safety.
            ``(5) Evaluation, data collection, and report to congress.--
                    ``(A) Evaluation.--The Secretary shall conduct an 
                evaluation of the provision of home and community-based 
                attendant services and supports under this subsection in 
                order to determine the effectiveness of the provision of 
                such services and supports in allowing the individuals 
                receiving such services and supports to lead an 
                independent life to the maximum extent possible; the 
                impact on the physical and emotional health of the 
                individuals who receive such services; and an 
                comparative analysis of the costs of services provided 
                under the State plan amendment under this subsection and 
                those provided under institutional care in a nursing 
                facility, institution for mental diseases, or an 
                intermediate care facility for the mentally retarded.
                    ``(B) Data collection.--The State shall provide the 
                Secretary with the following information regarding the 
                provision of home and community-based attendant services 
                and supports under this subsection for each fiscal year 
                for which such services and supports are provided:
                          ``(i) The number of individuals who are 
                      estimated to receive home and community-based 
                      attendant services and supports under this 
                      subsection during the fiscal year.
                          ``(ii) The number of individuals that received 
                      such services and supports during the preceding 
                      fiscal year.
                          ``(iii) The specific number of individuals 
                      served by type of disability, age, gender, 
                      education level, and employment status.
                          ``(iv) Whether the specific individuals have 
                      been previously served under any other home and 
                      community based services program under the State 
                      plan or under a waiver.
                    ``(C) Reports.--Not later than--
                          ``(i) December 31, 2013, the Secretary shall 
                      submit to Congress and make available to the 
                      public an interim report on the findings of the 
                      evaluation under subparagraph (A); and
                          ``(ii) December 31, 2015, the Secretary shall 
                      submit to Congress and make available to the 
                      public a final report on the findings of the 
                      evaluation under subparagraph (A).
            ``(6) Definitions.--In this subsection:
                    ``(A) Activities of daily living.--The term 
                `activities of daily living' includes tasks such as 
                eating, toileting, grooming, dressing, bathing, and 
                transferring.

[[Page 124 STAT. 301]]

                    ``(B) Consumer controlled.--The term `consumer 
                controlled' means a method of selecting and providing 
                services and supports that allow the individual, or 
                where appropriate, the individual's representative, 
                maximum control of the home and community-based 
                attendant services and supports, regardless of who acts 
                as the employer of record.
                    ``(C) Delivery models.--
                          ``(i) Agency-provider model.--The term 
                      `agency-provider model' means, with respect to the 
                      provision of home and community-based attendant 
                      services and supports for an individual, subject 
                      to paragraph (4), a method of providing consumer 
                      controlled services and supports under which 
                      entities contract for the provision of such 
                      services and supports.
                          ``(ii) Other models.--The term `other models' 
                      means, subject to paragraph (4), methods, other 
                      than an agency-provider model, for the provision 
                      of consumer controlled services and supports. Such 
                      models may include the provision of vouchers, 
                      direct cash payments, or use of a fiscal agent to 
                      assist in obtaining services.
                    ``(D) Health-related tasks.--The term `health-
                related tasks' means specific tasks related to the needs 
                of an individual, which can be delegated or assigned by 
                licensed health-care professionals under State law to be 
                performed by an attendant.
                    ``(E) Individual's representative.--The term 
                `individual's representative' means a parent, family 
                member, guardian, advocate, or other authorized 
                representative of an individual
                    ``(F) Instrumental activities of daily living.--The 
                term `instrumental activities of daily living' includes 
                (but is not limited to) meal planning and preparation, 
                managing finances, shopping for food, clothing, and 
                other essential items, performing essential household 
                chores, communicating by phone or other media, and 
                traveling around and participating in the community.''.

SEC. 2402. REMOVAL OF BARRIERS TO PROVIDING HOME AND COMMUNITY-BASED 
            SERVICES.

    (a) <<NOTE: 42 USC 1396n note.>>  Oversight and Assessment of the 
Administration of Home and Community-based Services.-- 
<<NOTE: Regulations.>> The Secretary of Health and Human Services shall 
promulgate regulations to ensure that all States develop service systems 
that are designed to--
            (1) allocate resources for services in a manner that is 
        responsive to the changing needs and choices of beneficiaries 
        receiving non-institutionally-based long-term services and 
        supports (including such services and supports that are provided 
        under programs other the State Medicaid program), and that 
        provides strategies for beneficiaries receiving such services to 
        maximize their independence, including through the use of 
        client-employed providers;
            (2) provide the support and coordination needed for a 
        beneficiary in need of such services (and their family 
        caregivers or representative, if applicable) to design an 
        individualized, self-directed, community-supported life; and

[[Page 124 STAT. 302]]

            (3) improve coordination among, and the regulation of, all 
        providers of such services under federally and State-funded 
        programs in order to--
                    (A) achieve a more consistent administration of 
                policies and procedures across programs in relation to 
                the provision of such services; and
                    (B) oversee and monitor all service system functions 
                to assure--
                          (i) coordination of, and effectiveness of, 
                      eligibility determinations and individual 
                      assessments;
                          (ii) development and service monitoring of a 
                      complaint system, a management system, a system to 
                      qualify and monitor providers, and systems for 
                      role-setting and individual budget determinations; 
                      and
                          (iii) an adequate number of qualified direct 
                      care workers to provide self-directed personal 
                      assistance services.

    (b) Additional State Options.--Section 1915(i) of the Social 
Security Act (42 U.S.C. 1396n(i)) is amended by adding at the end the 
following new paragraphs:
            ``(6) State option to provide home and community-based 
        services to individuals eligible for services under a waiver.--
                    ``(A) In general.--A State that provides home and 
                community-based services in accordance with this 
                subsection to individuals who satisfy the needs-based 
                criteria for the receipt of such services established 
                under paragraph (1)(A) may, in addition to continuing to 
                provide such services to such individuals, elect to 
                provide home and community-based services in accordance 
                with the requirements of this paragraph to individuals 
                who are eligible for home and community-based services 
                under a waiver approved for the State under subsection 
                (c), (d), or (e) or under section 1115 to provide such 
                services, but only for those individuals whose income 
                does not exceed 300 percent of the supplemental security 
                income benefit rate established by section 1611(b)(1).
                    ``(B) Application of same requirements for 
                individuals satisfying needs-based criteria.--Subject to 
                subparagraph (C), a State shall provide home and 
                community-based services to individuals under this 
                paragraph in the same manner and subject to the same 
                requirements as apply under the other paragraphs of this 
                subsection to the provision of home and community-based 
                services to individuals who satisfy the needs-based 
                criteria established under paragraph (1)(A).
                    ``(C) Authority to offer different type, amount, 
                duration, or scope of home and community-based 
                services.--A State may offer home and community-based 
                services to individuals under this paragraph that differ 
                in type, amount, duration, or scope from the home and 
                community-based services offered for individuals who 
                satisfy the needs-based criteria established under 
                paragraph (1)(A), so long as such services are within 
                the scope of services described in paragraph (4)(B) of 
                subsection (c) for which the Secretary has the authority 
                to approve a waiver and do not include room or board.

[[Page 124 STAT. 303]]

            ``(7) State option to offer home and community-based 
        services to specific, targeted populations.--
                    ``(A) In general.--A State may elect in a State plan 
                amendment under this subsection to target the provision 
                of home and community-based services under this 
                subsection to specific populations and to differ the 
                type, amount, duration, or scope of such services to 
                such specific populations.
                    ``(B) 5-year term.--
                          ``(i) In general.--An election by a State 
                      under this paragraph shall be for a period of 5 
                      years.
                          ``(ii) Phase-in of services and eligibility 
                      permitted during initial 5-year period.--A State 
                      making an election under this paragraph may, 
                      during the first 5-year period for which the 
                      election is made, phase-in the enrollment of 
                      eligible individuals, or the provision of services 
                      to such individuals, or both, so long as all 
                      eligible individuals in the State for such 
                      services are enrolled, and all such services are 
                      provided, before the end of the initial 5-year 
                      period.
                    ``(C) Renewal. <<NOTE: Time 
                period. Determination. Deadline.>> --An election by a 
                State under this paragraph may be renewed for additional 
                5-year terms if the Secretary determines, prior to 
                beginning of each such renewal period, that the State 
                has--
                          ``(i) adhered to the requirements of this 
                      subsection and paragraph in providing services 
                      under such an election; and
                          ``(ii) met the State's objectives with respect 
                      to quality improvement and beneficiary 
                      outcomes.''.

    (c) Removal of Limitation on Scope of Services.--Paragraph (1) of 
section 1915(i) of the Social Security Act (42 U.S.C. 1396n(i)), as 
amended by subsection (a), is amended by striking ``or such other 
services requested by the State as the Secretary may approve''.
    (d) Optional Eligibility Category To Provide Full Medicaid Benefits 
to Individuals Receiving Home and Community-based Services Under a State 
Plan Amendment.--
            (1) In general.--Section 1902(a)(10)(A)(ii) of the Social 
        Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)), as amended by 
        section 2304(a)(1), is amended--
                    (A) in subclause (XX), by striking ``or'' at the 
                end;
                    (B) in subclause (XXI), by adding ``or'' at the end; 
                and
                    (C) by inserting after subclause (XXI), the 
                following new subclause:
                                    ``(XXII) who are eligible for home 
                                and community-based services under 
                                needs-based criteria established under 
                                paragraph (1)(A) of section 1915(i), or 
                                who are eligible for home and community-
                                based services under paragraph (6) of 
                                such section, and who will receive home 
                                and community-based services pursuant to 
                                a State plan amendment under such 
                                subsection;''.
            (2) Conforming amendments.--
                    (A) Section 1903(f)(4) of the Social Security Act 
                (42 U.S.C. 1396b(f)(4)), as amended by section 
                2304(a)(4)(B), is amended in the matter preceding 
                subparagraph (A),

[[Page 124 STAT. 304]]

                by inserting ``1902(a)(10)(A)(ii)(XXII),'' after 
                ``1902(a)(10)(A)(ii)(XXI),''.
                    (B) Section 1905(a) of the Social Security Act (42 
                U.S.C. 1396d(a)), as so amended, is amended in the 
                matter preceding paragraph (1)--
                          (i) in clause (xv), by striking ``or'' at the 
                      end;
                          (ii) in clause (xvi), by adding ``or'' at the 
                      end; and
                          (iii) by inserting after clause (xvi) the 
                      following new clause:
            ``(xvii) individuals who are eligible for home and 
        community-based services under needs-based criteria established 
        under paragraph (1)(A) of section 1915(i), or who are eligible 
        for home and community-based services under paragraph (6) of 
        such section, and who will receive home and community-based 
        services pursuant to a State plan amendment under such 
        subsection,''.

    (e) Elimination of Option To Limit Number of Eligible Individuals or 
Length of Period for Grandfathered Individuals if Eligibility Criteria 
Is Modified.--Paragraph (1) of section 1915(i) of such Act (42 U.S.C. 
1396n(i)) is amended--
            (1) by striking subparagraph (C) and inserting the 
        following:
                    ``(C) Projection of number of individuals to be 
                provided home and community-based services.--The State 
                submits to the Secretary, in such form and manner, and 
                upon such frequency as the Secretary shall specify, the 
                projected number of individuals to be provided home and 
                community-based services.''; and
            (2) in subclause (II) of subparagraph (D)(ii), by striking 
        ``to be eligible for such services for a period of at least 12 
        months beginning on the date the individual first received 
        medical assistance for such services'' and inserting ``to 
        continue to be eligible for such services after the effective 
        date of the modification and until such time as the individual 
        no longer meets the standard for receipt of such services under 
        such pre-modified criteria''.

    (f) Elimination of Option To Waive Statewideness; Addition of Option 
To Waive Comparability.--Paragraph (3) of section 1915(i) of such Act 
(42 U.S.C. 1396n(3)) is amended by striking ``1902(a)(1) (relating to 
statewideness)'' and inserting ``1902(a)(10)(B) (relating to 
comparability)''.
    (g) <<NOTE: 42 USC 1396a note.>>  Effective Date.--The amendments 
made by subsections (b) through (f) take effect on the first day of the 
first fiscal year quarter that begins after the date of enactment of 
this Act.

SEC. 2403. MONEY FOLLOWS THE PERSON REBALANCING DEMONSTRATION.

    (a) Extension of Demonstration.--
            (1) In general.--Section 6071(h) of the Deficit Reduction 
        Act of 2005 (42 U.S.C. 1396a note) is amended--
                    (A) in paragraph (1)(E), by striking ``fiscal year 
                2011'' and inserting ``each of fiscal years 2011 through 
                2016''; and
                    (B) in paragraph (2), by striking ``2011'' and 
                inserting ``2016''.

[[Page 124 STAT. 305]]

            (2) Evaluation.--Paragraphs (2) and (3) of section 6071(g) 
        of such Act is amended are each amended by striking ``2011'' and 
        inserting ``2016''.

    (b) Reduction of Institutional Residency Period.--
            (1) In general.--Section 6071(b)(2) of the Deficit Reduction 
        Act of 2005 (42 U.S.C. 1396a note) is amended--
                    (A) in subparagraph (A)(i), by striking ``, for a 
                period of not less than 6 months or for such longer 
                minimum period, not to exceed 2 years, as may be 
                specified by the State'' and inserting ``for a period of 
                not less than 90 consecutive days''; and
                    (B) by adding at the end the following:
        ``Any days that an individual resides in an institution on the 
        basis of having been admitted solely for purposes of receiving 
        short-term rehabilitative services for a period for which 
        payment for such services is limited under title XVIII shall not 
        be taken into account for purposes of determining the 90-day 
        period required under subparagraph (A)(i).''.
            (2) <<NOTE: 42 USC 1396a note.>>  Effective date.--The 
        amendments made by this subsection take effect 30 days after the 
        date of enactment of this Act.

SEC. 2404. <<NOTE: 42 USC 1396r-5 note.>>  PROTECTION FOR RECIPIENTS OF 
            HOME AND COMMUNITY-BASED SERVICES AGAINST SPOUSAL 
            IMPOVERISHMENT.

     <<NOTE: Time period. Applicability.>> During the 5-year period that 
begins on January 1, 2014, section 1924(h)(1)(A) of the Social Security 
Act (42 U.S.C. 1396r-5(h)(1)(A)) shall be applied as though ``is 
eligible for medical assistance for home and community-based services 
provided under subsection (c), (d), or (i) of section 1915, under a 
waiver approved under section 1115, or who is eligible for such medical 
assistance by reason of being determined eligible under section 
1902(a)(10)(C) or by reason of section 1902(f) or otherwise on the basis 
of a reduction of income based on costs incurred for medical or other 
remedial care, or who is eligible for medical assistance for home and 
community-based attendant services and supports under section 1915(k)'' 
were substituted in such section for ``(at the option of the State) is 
described in section 1902(a)(10)(A)(ii)(VI)''.

SEC. 2405. FUNDING TO EXPAND STATE AGING AND DISABILITY RESOURCE 
            CENTERS.

    Out of any funds in the Treasury not otherwise appropriated, there 
is appropriated to the Secretary of Health and Human Services, acting 
through the Assistant Secretary for Aging, $10,000,000 for each of 
fiscal years 2010 through 2014, to carry out subsections (a)(20)(B)(iii) 
and (b)(8) of section 202 of the Older Americans Act of 1965 (42 U.S.C. 
3012).

SEC. 2406. SENSE OF THE SENATE REGARDING LONG-TERM CARE.

    (a) Findings.--The Senate makes the following findings:
            (1) Nearly 2 decades have passed since Congress seriously 
        considered long-term care reform. The United States Bipartisan 
        Commission on Comprehensive Health Care, also know as the 
        ``Pepper Commission'', released its ``Call for Action'' 
        blueprint for health reform in September 1990. In the 20 years 
        since those recommendations were made, Congress has never acted 
        on the report.
            (2) In 1999, under the United States Supreme Court's 
        decision in Olmstead v. L.C., 527 U.S. 581 (1999), individuals

[[Page 124 STAT. 306]]

        with disabilities have the right to choose to receive their 
        long-term services and supports in the community, rather than in 
        an institutional setting.
            (3) Despite the Pepper Commission and Olmstead decision, the 
        long-term care provided to our Nation's elderly and disabled has 
        not improved. In fact, for many, it has gotten far worse.
            (4) In 2007, 69 percent of Medicaid long-term care spending 
        for elderly individuals and adults with physical disabilities 
        paid for institutional services. Only 6 states spent 50 percent 
        or more of their Medicaid long-term care dollars on home and 
        community-based services for elderly individuals and adults with 
        physical disabilities while \1/2\ of the States spent less than 
        25 percent. This disparity continues even though, on average, it 
        is estimated that Medicaid dollars can support nearly 3 elderly 
        individuals and adults with physical disabilities in home and 
        community-based services for every individual in a nursing home. 
        Although every State has chosen to provide certain services 
        under home and community-based waivers, these services are 
        unevenly available within and across States, and reach a small 
        percentage of eligible individuals.

    (b) Sense of the Senate.--It is the sense of the Senate that--
            (1) during the 111th session of Congress, Congress should 
        address long-term services and supports in a comprehensive way 
        that guarantees elderly and disabled individuals the care they 
        need; and
            (2) long term services and supports should be made available 
        in the community in addition to in institutions.

             Subtitle F--Medicaid Prescription Drug Coverage

SEC. 2501. PRESCRIPTION DRUG REBATES.

    (a) Increase in Minimum Rebate Percentage for Single Source Drugs 
and Innovator Multiple Source Drugs.--
            (1) In general.--Section 1927(c)(1)(B) of the Social 
        Security Act (42 U.S.C. 1396r-8(c)(1)(B)) is amended--
                    (A) in clause (i)--
                          (i) in subclause (IV), by striking ``and'' at 
                      the end;
                          (ii) in subclause (V)--
                                    (I) by inserting ``and before 
                                January 1, 2010'' after ``December 31, 
                                1995,''; and
                                    (II) by striking the period at the 
                                end and inserting ``; and''; and
                          (iii) by adding at the end the following new 
                      subclause:
                                    ``(VI) except as provided in clause 
                                (iii), after December 31, 2009, 23.1 
                                percent.''; and
                    (B) by adding at the end the following new clause:
                          ``(iii) Minimum rebate percentage for certain 
                      drugs.--
                                    ``(I) In general.--In the case of a 
                                single source drug or an innovator 
                                multiple source drug described in 
                                subclause (II), the minimum rebate 
                                percentage for rebate periods specified 
                                in clause (i)(VI) is 17.1 percent.

[[Page 124 STAT. 307]]

                                    ``(II) Drug described.--For purposes 
                                of subclause (I), a single source drug 
                                or an innovator multiple source drug 
                                described in this subclause is any of 
                                the following drugs:
                                            ``(aa) A clotting factor for 
                                        which a separate furnishing 
                                        payment is made under section 
                                        1842(o)(5) and which is included 
                                        on a list of such factors 
                                        specified and updated regularly 
                                        by the Secretary.
                                            ``(bb) A drug approved by 
                                        the Food and Drug Administration 
                                        exclusively for pediatric 
                                        indications.''.
            (2) Recapture of total savings due to increase.--Section 
        1927(b)(1) of such Act (42 U.S.C. 1396r-8(b)(1)) is amended by 
        adding at the end the following new subparagraph:
                    ``(C) Special rule for increased minimum rebate 
                percentage.--
                          ``(i) In general. <<NOTE: Time period.>> --In 
                      addition to the amounts applied as a reduction 
                      under subparagraph (B), for rebate periods 
                      beginning on or after January 1, 2010, during a 
                      fiscal year, the Secretary shall reduce payments 
                      to a State under section 1903(a) in the manner 
                      specified in clause (ii), in an amount equal to 
                      the product of--
                                    ``(I) 100 percent minus the Federal 
                                medical assistance percentage applicable 
                                to the rebate period for the State; and
                                    ``(II) the amounts received by the 
                                State under such subparagraph that are 
                                attributable (as estimated by the 
                                Secretary based on utilization and other 
                                data) to the increase in the minimum 
                                rebate percentage effected by the 
                                amendments made by subsections (a)(1), 
                                (b), and (d) of section 2501 of the 
                                Patient Protection and Affordable Care 
                                Act, taking into account the additional 
                                drugs included under the amendments made 
                                by subsection (c) of section 2501 of 
                                such Act.
                      <<NOTE: Determination.>> The Secretary shall 
                      adjust such payment reduction for a calendar 
                      quarter to the extent the Secretary determines, 
                      based upon subsequent utilization and other data, 
                      that the reduction for such quarter was greater or 
                      less than the amount of payment reduction that 
                      should have been made.
                          ``(ii) Manner of payment reduction.--The 
                      amount of the payment reduction under clause (i) 
                      for a State for a quarter shall be deemed an 
                      overpayment to the State under this title to be 
                      disallowed against the State's regular quarterly 
                      draw for all Medicaid spending under section 
                      1903(d)(2). Such a disallowance is not subject to 
                      a reconsideration under section 1116(d).''.

    (b) Increase in Rebate for Other Drugs.--Section 1927(c)(3)(B) of 
such Act (42 U.S.C. 1396r-8(c)(3)(B)) is amended--
            (1) in clause (i), by striking ``and'' at the end;
            (2) in clause (ii)--
                    (A) by inserting ``and before January 1, 2010,'' 
                after ``December 31, 1993,''; and

[[Page 124 STAT. 308]]

                    (B) by striking the period and inserting ``; and''; 
                and
            (3) by adding at the end the following new clause:
                          ``(iii) after December 31, 2009, is 13 
                      percent.''.

    (c) Extension of Prescription Drug Discounts to Enrollees of 
Medicaid Managed Care Organizations.--
            (1) In general.--Section 1903(m)(2)(A) of such Act (42 
        U.S.C. 1396b(m)(2)(A)) is amended--
                    (A) in clause (xi), by striking ``and'' at the end;
                    (B) in clause (xii), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
                          
                      ``(xiii) <<NOTE: Contracts. Reports. Determination.
                      >>  such contract provides that (I) covered 
                      outpatient drugs dispensed to individuals eligible 
                      for medical assistance who are enrolled with the 
                      entity shall be subject to the same rebate 
                      required by the agreement entered into under 
                      section 1927 as the State is subject to and that 
                      the State shall collect such rebates from 
                      manufacturers, (II) capitation rates paid to the 
                      entity shall be based on actual cost experience 
                      related to rebates and subject to the Federal 
                      regulations requiring actuarially sound rates, and 
                      (III) the entity shall report to the State, on 
                      such timely and periodic basis as specified by the 
                      Secretary in order to include in the information 
                      submitted by the State to a manufacturer and the 
                      Secretary under section 1927(b)(2)(A), information 
                      on the total number of units of each dosage form 
                      and strength and package size by National Drug 
                      Code of each covered outpatient drug dispensed to 
                      individuals eligible for medical assistance who 
                      are enrolled with the entity and for which the 
                      entity is responsible for coverage of such drug 
                      under this subsection (other than covered 
                      outpatient drugs that under subsection (j)(1) of 
                      section 1927 are not subject to the requirements 
                      of that section) and such other data as the 
                      Secretary determines necessary to carry out this 
                      subsection.''.
            (2) Conforming amendments.--Section 1927 (42 U.S.C. 1396r-8) 
        is amended--
                    (A) in subsection (b)--
                          (i) in paragraph (1)(A), in the first 
                      sentence, by inserting ``, including such drugs 
                      dispensed to individuals enrolled with a medicaid 
                      managed care organization if the organization is 
                      responsible for coverage of such drugs'' before 
                      the period; and
                          (ii) in paragraph (2)(A), by inserting 
                      ``including such information reported by each 
                      medicaid managed care organization,'' after ``for 
                      which payment was made under the plan during the 
                      period,''; and
                    (B) in subsection (j), by striking paragraph (1) and 
                inserting the following:
            ``(1) Covered outpatient drugs are not subject to the 
        requirements of this section if such drugs are--
                    ``(A) dispensed by health maintenance organizations, 
                including Medicaid managed care organizations that 
                contract under section 1903(m); and
                    ``(B) subject to discounts under section 340B of the 
                Public Health Service Act.''.

[[Page 124 STAT. 309]]

    (d) Additional Rebate for New Formulations of Existing Drugs.--
            (1) In general.--Section 1927(c)(2) of the Social Security 
        Act (42 U.S.C. 1396r-8(c)(2)) is amended by adding at the end 
        the following new subparagraph:
                    ``(C) Treatment of new formulations.--
                          ``(i) In general.--Except as provided in 
                      clause (ii), in the case of a drug that is a new 
                      formulation, such as an extended-release 
                      formulation, of a single source drug or an 
                      innovator multiple source drug, the rebate 
                      obligation with respect to the drug under this 
                      section shall be the amount computed under this 
                      section for the new formulation of the drug or, if 
                      greater, the product of--
                                    ``(I) the average manufacturer price 
                                for each dosage form and strength of the 
                                new formulation of the single source 
                                drug or innovator multiple source drug;
                                    ``(II) the highest additional rebate 
                                (calculated as a percentage of average 
                                manufacturer price) under this section 
                                for any strength of the original single 
                                source drug or innovator multiple source 
                                drug; and
                                    ``(III) the total number of units of 
                                each dosage form and strength of the new 
                                formulation paid for under the State 
                                plan in the rebate period (as reported 
                                by the State).
                          ``(ii) No application to new formulations of 
                      orphan drugs.--Clause (i) shall not apply to a new 
                      formulation of a covered outpatient drug that is 
                      or has been designated under section 526 of the 
                      Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                      360bb) for a rare disease or condition, without 
                      regard to whether the period of market exclusivity 
                      for the drug under section 527 of such Act has 
                      expired or the specific indication for use of the 
                      drug.''.
            (2) <<NOTE: 42 USC 1396r-8 note.>>  Effective date.--The 
        amendment made by paragraph (1) shall apply to drugs that are 
        paid for by a State after December 31, 2009.

    (e) Maximum Rebate Amount.--Section 1927(c)(2) of such Act (42 
U.S.C. 1396r-8(c)(2)), as amended by subsection (d), is amended by 
adding at the end the following new subparagraph:
                    ``(D) Maximum rebate amount.--In no case shall the 
                sum of the amounts applied under paragraph (1)(A)(ii) 
                and this paragraph with respect to each dosage form and 
                strength of a single source drug or an innovator 
                multiple source drug for a rebate period beginning after 
                December 31, 2009, exceed 100 percent of the average 
                manufacturer price of the drug.''.

    (f) Conforming Amendments.--
            (1) In general.--Section 340B of the Public Health Service 
        Act (42 U.S.C. 256b) is amended--
                    (A) in subsection (a)(2)(B)(i), by striking 
                ``1927(c)(4)'' and inserting ``1927(c)(3)''; and
                    (B) by striking subsection (c); and
                    (C) redesignating subsection (d) as subsection (c).

[[Page 124 STAT. 310]]

            (2) <<NOTE: 42 USC 256b note.>>  Effective date.--The 
        amendments made by this subsection take effect on January 1, 
        2010.

SEC. 2502. ELIMINATION OF EXCLUSION OF COVERAGE OF CERTAIN DRUGS.

    (a) In General.--Section 1927(d) of the Social Security Act (42 
U.S.C. 1397r-8(d)) is amended--
            (1) in paragraph (2)--
                    (A) by striking subparagraphs (E), (I), and (J), 
                respectively; and
                    (B) by redesignating subparagraphs (F), (G), (H), 
                and (K) as subparagraphs (E), (F), (G), and (H), 
                respectively; and
            (2) by adding at the end the following new paragraph:
            ``(7) Non-excludable drugs.--The following drugs or classes 
        of drugs, or their medical uses, shall not be excluded from 
        coverage:
                    ``(A) Agents when used to promote smoking cessation, 
                including agents approved by the Food and Drug 
                Administration under the over-the-counter monograph 
                process for purposes of promoting, and when used to 
                promote, tobacco cessation.
                    ``(B) Barbiturates.
                    ``(C) Benzodiazepines.''.

    (b) <<NOTE: 42 USC 1396r-8 note.>>  Effective Date.--The amendments 
made by this section shall apply to services furnished on or after 
January 1, 2014.

SEC. 2503. PROVIDING ADEQUATE PHARMACY REIMBURSEMENT.

    (a) Pharmacy Reimbursement Limits.--
            (1) In general.--Section 1927(e) of the Social Security Act 
        (42 U.S.C. 1396r-8(e)) is amended--
                    (A) in paragraph (4), by striking ``(or, effective 
                January 1, 2007, two or more)''; and
                    (B) by striking paragraph (5) and inserting the 
                following:
            ``(5) Use of amp in upper payment limits.--The Secretary 
        shall calculate the Federal upper reimbursement limit 
        established under paragraph (4) as no less than 175 percent of 
        the weighted average (determined on the basis of utilization) of 
        the most recently reported monthly average manufacturer prices 
        for pharmaceutically and therapeutically equivalent multiple 
        source drug products that are available for purchase by retail 
        community pharmacies on a nationwide basis. The Secretary shall 
        implement a smoothing process for average manufacturer prices. 
        Such process shall be similar to the smoothing process used in 
        determining the average sales price of a drug or biological 
        under section 1847A.''.
            (2) Definition of amp.--Section 1927(k)(1) of such Act (42 
        U.S.C. 1396r-8(k)(1)) is amended--
                    (A) in subparagraph (A), by striking ``by'' and all 
                that follows through the period and inserting ``by--
                          ``(i) wholesalers for drugs distributed to 
                      retail community pharmacies; and
                          ``(ii) retail community pharmacies that 
                      purchase drugs directly from the manufacturer.''; 
                      and
                    (B) by striking subparagraph (B) and inserting the 
                following:

[[Page 124 STAT. 311]]

                    ``(B) Exclusion of customary prompt pay discounts 
                and other payments.--
                          ``(i) In general.--The average manufacturer 
                      price for a covered outpatient drug shall 
                      exclude--
                                    ``(I) customary prompt pay discounts 
                                extended to wholesalers;
                                    ``(II) bona fide service fees paid 
                                by manufacturers to wholesalers or 
                                retail community pharmacies, including 
                                (but not limited to) distribution 
                                service fees, inventory management fees, 
                                product stocking allowances, and fees 
                                associated with administrative services 
                                agreements and patient care programs 
                                (such as medication compliance programs 
                                and patient education programs);
                                    ``(III) reimbursement by 
                                manufacturers for recalled, damaged, 
                                expired, or otherwise unsalable returned 
                                goods, including (but not limited to) 
                                reimbursement for the cost of the goods 
                                and any reimbursement of costs 
                                associated with return goods handling 
                                and processing, reverse logistics, and 
                                drug destruction; and
                                    ``(IV) payments received from, and 
                                rebates or discounts provided to, 
                                pharmacy benefit managers, managed care 
                                organizations, health maintenance 
                                organizations, insurers, hospitals, 
                                clinics, mail order pharmacies, long 
                                term care providers, manufacturers, or 
                                any other entity that does not conduct 
                                business as a wholesaler or a retail 
                                community pharmacy.
                          ``(ii) Inclusion of other discounts and 
                      payments.--Notwithstanding clause (i), any other 
                      discounts, rebates, payments, or other financial 
                      transactions that are received by, paid by, or 
                      passed through to, retail community pharmacies 
                      shall be included in the average manufacturer 
                      price for a covered outpatient drug.''; and
                    (C) in subparagraph (C), by striking ``the retail 
                pharmacy class of trade'' and inserting ``retail 
                community pharmacies''.
            (3) Definition of multiple source drug.--Section 1927(k)(7) 
        of such Act (42 U.S.C. 1396r-8(k)(7)) is amended--
                    (A) in subparagraph (A)(i)(III), by striking ``the 
                State'' and inserting ``the United States''; and
                    (B) in subparagraph (C)--
                          (i) in clause (i), by inserting ``and'' after 
                      the semicolon;
                          (ii) in clause (ii), by striking ``; and'' and 
                      inserting a period; and
                          (iii) by striking clause (iii).
            (4) Definitions of retail community pharmacy; wholesaler.--
        Section 1927(k) of such Act (42 U.S.C. 1396r-8(k)) is amended by 
        adding at the end the following new paragraphs:
            ``(10) Retail community pharmacy.--The term `retail 
        community pharmacy' means an independent pharmacy, a chain 
        pharmacy, a supermarket pharmacy, or a mass merchandiser 
        pharmacy that is licensed as a pharmacy by the State and that 
        dispenses medications to the general public at retail

[[Page 124 STAT. 312]]

        prices. Such term does not include a pharmacy that dispenses 
        prescription medications to patients primarily through the mail, 
        nursing home pharmacies, long-term care facility pharmacies, 
        hospital pharmacies, clinics, charitable or not-for-profit 
        pharmacies, government pharmacies, or pharmacy benefit managers.
            ``(11) Wholesaler.--The term `wholesaler' means a drug 
        wholesaler that is engaged in wholesale distribution of 
        prescription drugs to retail community pharmacies, including 
        (but not limited to) manufacturers, repackers, distributors, 
        own-label distributors, private-label distributors, jobbers, 
        brokers, warehouses (including manufacturer's and distributor's 
        warehouses, chain drug warehouses, and wholesale drug 
        warehouses) independent wholesale drug traders, and retail 
        community pharmacies that conduct wholesale distributions.''.

    (b) Disclosure of Price Information to the Public.--Section 
1927(b)(3) of such Act (42 U.S.C. 1396r-8(b)(3)) is amended--
            (1) in subparagraph (A)--
                    (A) in the first sentence, by inserting after clause 
                (iii) the following:
                          ``(iv) not later than 30 days after the last 
                      day of each month of a rebate period under the 
                      agreement, on the manufacturer's total number of 
                      units that are used to calculate the monthly 
                      average manufacturer price for each covered 
                      outpatient drug;''; and
                    (B) in the second sentence, by inserting ``(relating 
                to the weighted average of the most recently reported 
                monthly average manufacturer prices)'' after ``(D)(v)''; 
                and
            (2) in subparagraph (D)(v), by striking ``average 
        manufacturer prices'' and inserting ``the weighted average of 
        the most recently reported monthly average manufacturer prices 
        and the average retail survey price determined for each multiple 
        source drug in accordance with subsection (f)''.

    (c) Clarification of Application of Survey of Retail Prices.--
Section 1927(f)(1) of such Act (42 U.S.C. 1396r-8(b)(1)) is amended--
            (1) in subparagraph (A)(i), by inserting ``with respect to a 
        retail community pharmacy,'' before ``the determination''; and
            (2) in subparagraph (C)(ii), by striking ``retail 
        pharmacies'' and inserting ``retail community pharmacies''.

    (d) <<NOTE: 42 USC 1396r-8 note.>>  Effective Date.--The amendments 
made by this section shall take effect on the first day of the first 
calendar year quarter that begins at least 180 days after the date of 
enactment of this Act, without regard to whether or not final 
regulations to carry out such amendments have been promulgated by such 
date.

   Subtitle G--Medicaid Disproportionate Share Hospital (DSH) Payments

SEC. 2551. DISPROPORTIONATE SHARE HOSPITAL PAYMENTS.

    (a) In General.--Section 1923(f) of the Social Security Act (42 
U.S.C. 1396r-4(f)) is amended--
            (1) in paragraph (1), by striking ``and (3)'' and inserting 
        ``, (3), and (7)'';
            (2) in paragraph (3)(A), by striking ``paragraph (6)'' and 
        inserting ``paragraphs (6) and (7)'';

[[Page 124 STAT. 313]]

            (3) by redesignating paragraph (7) as paragraph (8); and
            (4) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) Reduction of state dsh allotments once reduction in 
        uninsured threshold reached.--
                    ``(A) In general.--Subject to subparagraph (E), the 
                DSH allotment for a State for fiscal years beginning 
                with the fiscal year described in subparagraph (C) (with 
                respect to the State), is equal to--
                          ``(i) in the case of the first fiscal year 
                      described in subparagraph (C) with respect to a 
                      State, the DSH allotment that would be determined 
                      under this subsection for the State for the fiscal 
                      year without application of this paragraph (but 
                      after the application of subparagraph (D)), 
                      reduced by the applicable percentage determined 
                      for the State for the fiscal year under 
                      subparagraph (B)(i); and
                          ``(ii) in the case of any subsequent fiscal 
                      year with respect to the State, the DSH allotment 
                      determined under this paragraph for the State for 
                      the preceding fiscal year, reduced by the 
                      applicable percentage determined for the State for 
                      the fiscal year under subparagraph (B)(ii).
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage for a State 
                for a fiscal year is the following:
                          ``(i) Uninsured reduction threshold fiscal 
                      year.--In the case of the first fiscal year 
                      described in subparagraph (C) with respect to the 
                      State--
                                    ``(I) if the State is a low DSH 
                                State described in paragraph (5)(B), the 
                                applicable percentage is equal to 25 
                                percent; and
                                    ``(II) if the State is any other 
                                State, the applicable percentage is 50 
                                percent.
                          ``(ii) Subsequent fiscal years in which the 
                      percentage of uninsured 
                      decreases <<NOTE: Determination.>> .--In the case 
                      of any fiscal year after the first fiscal year 
                      described in subparagraph (C) with respect to a 
                      State, if the Secretary determines on the basis of 
                      the most recent American Community Survey of the 
                      Bureau of the Census, that the percentage of 
                      uncovered individuals residing in the State is 
                      less than the percentage of such individuals 
                      determined for the State for the preceding fiscal 
                      year--
                                    ``(I) if the State is a low DSH 
                                State described in paragraph (5)(B), the 
                                applicable percentage is equal to the 
                                product of the percentage reduction in 
                                uncovered individuals for the fiscal 
                                year from the preceding fiscal year and 
                                25 percent; and
                                    ``(II) if the State is any other 
                                State, the applicable percentage is 
                                equal to the product of the percentage 
                                reduction in uncovered individuals for 
                                the fiscal year from the preceding 
                                fiscal year and 50 percent.
                    ``(C) Fiscal year 
                described. <<NOTE: Determination.>> --For purposes of 
                subparagraph (A), the fiscal year described in this 
                subparagraph with respect to a State is the first fiscal 
                year that

[[Page 124 STAT. 314]]

                occurs after fiscal year 2012 for which the Secretary 
                determines, on the basis of the most recent American 
                Community Survey of the Bureau of the Census, that the 
                percentage of uncovered individuals residing in the 
                State is at least 45 percent less than the percentage of 
                such individuals determined for the State for fiscal 
                year 2009.
                    ``(D) Exclusion of portions diverted for coverage 
                expansions.--For purposes of applying the applicable 
                percentage reduction under subparagraph (A) to the DSH 
                allotment for a State for a fiscal year, the DSH 
                allotment for a State that would be determined under 
                this subsection for the State for the fiscal year 
                without the application of this paragraph (and prior to 
                any such reduction) shall not include any portion of the 
                allotment for which the Secretary has approved the 
                State's diversion to the costs of providing medical 
                assistance or other health benefits coverage under a 
                waiver that is in effect on July 2009.
                    ``(E) Minimum allotment.--In no event shall the DSH 
                allotment determined for a State in accordance with this 
                paragraph for fiscal year 2013 or any succeeding fiscal 
                year be less than the amount equal to 35 percent of the 
                DSH allotment determined for the State for fiscal year 
                2012 under this subsection (and after the application of 
                this paragraph, if applicable), increased by the 
                percentage change in the consumer price index for all 
                urban consumers (all items, U.S. city average) for each 
                previous fiscal year occurring before the fiscal year.
                    ``(F) Uncovered 
                individuals. <<NOTE: Definition.>> --In this paragraph, 
                the term `uncovered individuals' means individuals with 
                no health insurance coverage at any time during a year 
                (as determined by the Secretary based on the most recent 
                data available).''.

    (b) <<NOTE: 42 USC 1396r-4 note.>>  Effective Date.--The amendments 
made by subsection (a) take effect on October 1, 2011.

    Subtitle H--Improved Coordination for Dual Eligible Beneficiaries

SEC. 2601. 5-YEAR PERIOD FOR DEMONSTRATION PROJECTS.

    (a) In General.--Section 1915(h) of the Social Security Act (42 
U.S.C. 1396n(h)) is amended--
            (1) by inserting ``(1)'' after ``(h)'';
            (2) by inserting ``, or a waiver described in paragraph 
        (2)'' after ``(e)''; and
            (3) by adding at the end the following new paragraph:

    ``(2)(A) <<NOTE: Determination.>>  Notwithstanding subsections 
(c)(3) and (d) (3), any waiver under subsection (b), (c), or (d), or a 
waiver under section 1115, that provides medical assistance for dual 
eligible individuals (including any such waivers under which non dual 
eligible individuals may be enrolled in addition to dual eligible 
individuals) may be conducted for a period of 5 years and, upon the 
request of the State, may be extended for additional 5-year periods 
unless the Secretary determines that for the previous waiver period the 
conditions for the waiver have not been met or it would no longer be 
cost-effective and efficient, or consistent with the purposes of this 
title, to extend the waiver.

[[Page 124 STAT. 315]]

    ``(B) <<NOTE: Definition.>>  In this paragraph, the term `dual 
eligible individual' means an individual who is entitled to, or enrolled 
for, benefits under part A of title XVIII, or enrolled for benefits 
under part B of title XVIII, and is eligible for medical assistance 
under the State plan under this title or under a waiver of such plan.''.

    (b) Conforming Amendments.--
            (1) Section 1915 of such Act (42 U.S.C. 1396n) is amended--
                    (A) in subsection (b), by adding at the end the 
                following new sentence: ``Subsection (h)(2) shall apply 
                to a waiver under this subsection.'';
                    (B) in subsection (c)(3), in the second sentence, by 
                inserting ``(other than a waiver described in subsection 
                (h)(2))'' after ``A waiver under this subsection'';
                    (C) in subsection (d)(3), in the second sentence, by 
                inserting ``(other than a waiver described in subsection 
                (h)(2))'' after ``A waiver under this subsection''.
            (2) Section 1115 of such Act (42 U.S.C. 1315) is amended--
                    (A) in subsection (e)(2), by inserting ``(5 years, 
                in the case of a waiver described in section 
                1915(h)(2))'' after ``3 years''; and
                    (B) in subsection (f)(6), by inserting ``(5 years, 
                in the case of a waiver described in section 
                1915(h)(2))'' after ``3 years''.

SEC. 2602. <<NOTE: 42 USC 1315b.>>  PROVIDING FEDERAL COVERAGE AND 
            PAYMENT COORDINATION FOR DUAL ELIGIBLE BENEFICIARIES.

    (a) Establishment of Federal Coordinated Health Care Office.--
            (1) In general.-- <<NOTE: Deadline.>> Not later than March 
        1, 2010, the Secretary of Health and Human Services (in this 
        section referred to as the ``Secretary'') shall establish a 
        Federal Coordinated Health Care Office.
            (2) Establishment and reporting to cms administrator.--The 
        Federal Coordinated Health Care Office--
                    (A) shall be established within the Centers for 
                Medicare & Medicaid Services; and
                    (B) <<NOTE: Appointment.>>  have as the Office a 
                Director who shall be appointed by, and be in direct 
                line of authority to, the Administrator of the Centers 
                for Medicare & Medicaid Services.

    (b) Purpose.--The purpose of the Federal Coordinated Health Care 
Office is to bring together officers and employees of the Medicare and 
Medicaid programs at the Centers for Medicare & Medicaid Services in 
order to--
            (1) more effectively integrate benefits under the Medicare 
        program under title XVIII of the Social Security Act and the 
        Medicaid program under title XIX of such Act; and
            (2) improve the coordination between the Federal Government 
        and States for individuals eligible for benefits under both such 
        programs in order to ensure that such individuals get full 
        access to the items and services to which they are entitled 
        under titles XVIII and XIX of the Social Security Act.

    (c) Goals.--The goals of the Federal Coordinated Health Care Office 
are as follows:
            (1) Providing dual eligible individuals full access to the 
        benefits to which such individuals are entitled under the 
        Medicare and Medicaid programs.

[[Page 124 STAT. 316]]

            (2) Simplifying the processes for dual eligible individuals 
        to access the items and services they are entitled to under the 
        Medicare and Medicaid programs.
            (3) Improving the quality of health care and long-term 
        services for dual eligible individuals.
            (4) Increasing dual eligible individuals' understanding of 
        and satisfaction with coverage under the Medicare and Medicaid 
        programs.
            (5) Eliminating regulatory conflicts between rules under the 
        Medicare and Medicaid programs.
            (6) Improving care continuity and ensuring safe and 
        effective care transitions for dual eligible individuals.
            (7) Eliminating cost-shifting between the Medicare and 
        Medicaid program and among related health care providers.
            (8) Improving the quality of performance of providers of 
        services and suppliers under the Medicare and Medicaid programs.

    (d) Specific Responsibilities.--The specific responsibilities of the 
Federal Coordinated Health Care Office are as follows:
            (1) Providing States, specialized MA plans for special needs 
        individuals (as defined in section 1859(b)(6) of the Social 
        Security Act (42 U.S.C. 1395w-28(b)(6))), physicians and other 
        relevant entities or individuals with the education and tools 
        necessary for developing programs that align benefits under the 
        Medicare and Medicaid programs for dual eligible individuals.
            (2) Supporting State efforts to coordinate and align acute 
        care and long-term care services for dual eligible individuals 
        with other items and services furnished under the Medicare 
        program.
            (3) Providing support for coordination of contracting and 
        oversight by States and the Centers for Medicare & Medicaid 
        Services with respect to the integration of the Medicare and 
        Medicaid programs in a manner that is supportive of the goals 
        described in paragraph (3).
            (4) To consult and coordinate with the Medicare Payment 
        Advisory Commission established under section 1805 of the Social 
        Security Act (42 U.S.C. 1395b-6) and the Medicaid and CHIP 
        Payment and Access Commission established under section 1900 of 
        such Act (42 U.S.C. 1396) with respect to policies relating to 
        the enrollment in, and provision of, benefits to dual eligible 
        individuals under the Medicare program under title XVIII of the 
        Social Security Act and the Medicaid program under title XIX of 
        such Act.
            (5) To study the provision of drug coverage for new full-
        benefit dual eligible individuals (as defined in section 
        1935(c)(6) of the Social Security Act (42 U.S.C. 1396u-5(c)(6)), 
        as well as to monitor and report annual total expenditures, 
        health outcomes, and access to benefits for all dual eligible 
        individuals.

    (e) Report.--The Secretary shall, as part of the budget transmitted 
under section 1105(a) of title 31, United States Code, submit to 
Congress an annual report containing recommendations for legislation 
that would improve care coordination and benefits for dual eligible 
individuals.
    (f) Dual Eligible Defined.--In this section, the term ``dual 
eligible individual'' means an individual who is entitled to, or 
enrolled for, benefits under part A of title XVIII of the Social 
Security Act, or enrolled for benefits under part B of title XVIII

[[Page 124 STAT. 317]]

of such Act, and is eligible for medical assistance under a State plan 
under title XIX of such Act or under a waiver of such plan.

Subtitle I--Improving the Quality of Medicaid for Patients and Providers

SEC. 2701. ADULT HEALTH QUALITY MEASURES.

    Title XI of the Social Security Act (42 U.S.C. 1301 et seq.), as 
amended by section 401 of the Children's Health Insurance Program 
Reauthorization Act of 2009 (Public Law 111-3), is amended by inserting 
after section 1139A the following new section:

``SEC. 1139B. <<NOTE: 42 USC 1320b-9b.>>  ADULT HEALTH QUALITY MEASURES.

    ``(a) Development of Core Set of Health Care Quality Measures for 
Adults Eligible for Benefits Under Medicaid.--
The <<NOTE: Publication.>> Secretary shall identify and publish a 
recommended core set of adult health quality measures for Medicaid 
eligible adults in the same manner as the Secretary identifies and 
publishes a core set of child health quality measures under section 
1139A, including with respect to identifying and publishing existing 
adult health quality measures that are in use under public and privately 
sponsored health care coverage arrangements, or that are part of 
reporting systems that measure both the presence and duration of health 
insurance coverage over time, that may be applicable to Medicaid 
eligible adults.

    ``(b) Deadlines.--
            ``(1) Recommended measures.-- <<NOTE: Publication.>> Not 
        later than January 1, 2011, the Secretary shall identify and 
        publish for comment a recommended core set of adult health 
        quality measures for Medicaid eligible adults.
            ``(2) Dissemination.-- <<NOTE: Publication.>> Not later than 
        January 1, 2012, the Secretary shall publish an initial core set 
        of adult health quality measures that are applicable to Medicaid 
        eligible adults.
            ``(3) Standardized reporting.--Not later than January 1, 
        2013, the Secretary, in consultation with States, shall develop 
        a standardized format for reporting information based on the 
        initial core set of adult health quality measures and create 
        procedures to encourage States to use such measures to 
        voluntarily report information regarding the quality of health 
        care for Medicaid eligible adults.
            ``(4) Reports to congress.--Not later than January 1, 2014, 
        and every 3 years thereafter, the Secretary shall include in the 
        report to Congress required under section 1139A(a)(6) 
        information similar to the information required under that 
        section with respect to the measures established under this 
        section.
            ``(5) Establishment of medicaid quality measurement 
        program.--
                    ``(A) In general.--Not later than 12 months after 
                the release of the recommended core set of adult health 
                quality measures under paragraph (1)), the Secretary 
                shall establish a Medicaid Quality Measurement Program 
                in the same manner as the Secretary establishes the 
                pediatric quality measures program under section 
                1139A(b). The aggregate amount awarded by the Secretary 
                for grants and contracts for the development, testing, 
                and validation of emerging

[[Page 124 STAT. 318]]

                and innovative evidence-based measures under such 
                program shall equal the aggregate amount awarded by the 
                Secretary for grants under section 1139A(b)(4)(A)
                    ``(B) Revising, strengthening, and improving initial 
                core measures. <<NOTE: Publication.>> --Beginning not 
                later than 24 months after the establishment of the 
                Medicaid Quality Measurement Program, and annually 
                thereafter, the Secretary shall publish recommended 
                changes to the initial core set of adult health quality 
                measures that shall reflect the results of the testing, 
                validation, and consensus process for the development of 
                adult health quality measures.

    ``(c) Construction.--Nothing in this section shall be construed as 
supporting the restriction of coverage, under title XIX or XXI or 
otherwise, to only those services that are evidence-based, or in anyway 
limiting available services.
    ``(d) Annual State Reports Regarding State-Specific Quality of Care 
Measures Applied Under Medicaid.--
            ``(1) Annual state reports.--Each State with a State plan or 
        waiver approved under title XIX shall annually report 
        (separately or as part of the annual report required under 
        section 1139A(c)), to the Secretary on the--
                    ``(A) State-specific adult health quality measures 
                applied by the State under the such plan, including 
                measures described in subsection (a)(5); and
                    ``(B) State-specific information on the quality of 
                health care furnished to Medicaid eligible adults under 
                such plan, including information collected through 
                external quality reviews of managed care organizations 
                under section 1932 and benchmark plans under section 
                1937.
            ``(2) Publication.-- <<NOTE: Deadlines. Public 
        information.>> Not later than September 30, 2014, and annually 
        thereafter, the Secretary shall collect, analyze, and make 
        publicly available the information reported by States under 
        paragraph (1).

    ``(e) Appropriation.--Out of any funds in the Treasury not otherwise 
appropriated, there is appropriated for each of fiscal years 2010 
through 2014, $60,000,000 for the purpose of carrying out this section. 
Funds appropriated under this subsection shall remain available until 
expended.''.

SEC. 2702. <<NOTE: 42 USC 1396b-1.>>  PAYMENT ADJUSTMENT FOR HEALTH 
            CARE-ACQUIRED CONDITIONS.

    (a) In General. <<NOTE: Determination. Regulations.      Effective 
date.>> --The Secretary of Health and Human Services (in this subsection 
referred to as the ``Secretary'') shall identify current State practices 
that prohibit payment for health care-acquired conditions and shall 
incorporate the practices identified, or elements of such practices, 
which the Secretary determines appropriate for application to the 
Medicaid program in regulations. Such regulations shall be effective as 
of July 1, 2011, and shall prohibit payments to States under section 
1903 of the Social Security Act for any amounts expended for providing 
medical assistance for health care-acquired conditions specified in the 
regulations. The regulations shall ensure that the prohibition on 
payment for health care-acquired conditions shall not result in a loss 
of access to care or services for Medicaid beneficiaries.

Effective 
date.

    (b) Health Care-Acquired Condition. <<NOTE: Definition.>> --In this 
section. the term ``health care-acquired condition'' means a medical 
condition for which an individual was diagnosed that could be identified

[[Page 124 STAT. 319]]

by a secondary diagnostic code described in section 1886(d)(4)(D)(iv) of 
the Social Security Act (42 U.S.C. 1395ww(d)(4)(D)(iv)).

    (c) <<NOTE: Applicability.>> Medicare Provisions.--In carrying out 
this section, the Secretary shall apply to State plans (or waivers) 
under title XIX of the Social Security Act the regulations promulgated 
pursuant to section 1886(d)(4)(D) of such Act (42 U.S.C. 
1395ww(d)(4)(D)) relating to the prohibition of payments based on the 
presence of a secondary diagnosis code specified by the Secretary in 
such regulations, as appropriate for the Medicaid program. The Secretary 
may exclude certain conditions identified under title XVIII of the 
Social Security Act for non-payment under title XIX of such Act when the 
Secretary finds the inclusion of such conditions to be inapplicable to 
beneficiaries under title XIX.

SEC. 2703. STATE OPTION TO PROVIDE HEALTH HOMES FOR ENROLLEES WITH 
            CHRONIC CONDITIONS.

    (a) State Plan Amendment.--Title XIX of the Social Security Act (42 
U.S.C. 1396a et seq.), as amended by sections 2201 and 2305, is amended 
by adding at the end the following new section:
    ``Sec. 1945. <<NOTE: 42 USC 1396w-4.>>  State Option To Provide 
Coordinated Care Through a Health Home for Individuals With Chronic 
Conditions.--

    ``(a) <<NOTE: Determination. Effective date.>> In General.--
Notwithstanding section 1902(a)(1) (relating to statewideness), section 
1902(a)(10)(B) (relating to comparability), and any other provision of 
this title for which the Secretary determines it is necessary to waive 
in order to implement this section, beginning January 1, 2011, a State, 
at its option as a State plan amendment, may provide for medical 
assistance under this title to eligible individuals with chronic 
conditions who select a designated provider (as described under 
subsection (h)(5)), a team of health care professionals (as described 
under subsection (h)(6)) operating with such a provider, or a health 
team (as described under subsection (h)(7)) as the individual's health 
home for purposes of providing the individual with health home services.

    ``(b) Health Home Qualification Standards.--The Secretary shall 
establish standards for qualification as a designated provider for the 
purpose of being eligible to be a health home for purposes of this 
section.
    ``(c) Payments.--
            ``(1) In general.--A State shall provide a designated 
        provider, a team of health care professionals operating with 
        such a provider, or a health team with payments for the 
        provision of health home services to each eligible individual 
        with chronic conditions that selects such provider, team of 
        health care professionals, or health team as the individual's 
        health home. Payments made to a designated provider, a team of 
        health care professionals operating with such a provider, or a 
        health team for such services shall be treated as medical 
        assistance for purposes of section 1903(a), except that, during 
        the first 8 fiscal year quarters that the State plan amendment 
        is in effect, the Federal medical assistance percentage 
        applicable to such payments shall be equal to 90 percent.
            ``(2) Methodology.--
                    ``(A) In general.--The State shall specify in the 
                State plan amendment the methodology the State will use 
                for determining payment for the provision of health home 
                services. Such methodology for determining payment--

[[Page 124 STAT. 320]]

                          ``(i) may be tiered to reflect, with respect 
                      to each eligible individual with chronic 
                      conditions provided such services by a designated 
                      provider, a team of health care professionals 
                      operating with such a provider, or a health team, 
                      as well as the severity or number of each such 
                      individual's chronic conditions or the specific 
                      capabilities of the provider, team of health care 
                      professionals, or health team; and
                          ``(ii) shall be established consistent with 
                      section 1902(a)(30)(A).
                    ``(B) Alternate models of payment.--The methodology 
                for determining payment for provision of health home 
                services under this section shall not be limited to a 
                per-member per-month basis and may provide (as proposed 
                by the State and subject to approval by the Secretary) 
                for alternate models of payment.
            ``(3) Planning grants.--
                    ``(A) <<NOTE: Effective date.>> In general.--
                Beginning January 1, 2011, the Secretary may award 
                planning grants to States for purposes of developing a 
                State plan amendment under this section. A planning 
                grant awarded to a State under this paragraph shall 
                remain available until expended.
                    ``(B) State contribution.--A State awarded a 
                planning grant shall contribute an amount equal to the 
                State percentage determined under section 1905(b) 
                (without regard to section 5001 of Public Law 111-5) for 
                each fiscal year for which the grant is awarded.
                    ``(C) Limitation.--The total amount of payments made 
                to States under this paragraph shall not exceed 
                $25,000,000.

    ``(d) Hospital Referrals.--A State shall include in the State plan 
amendment a requirement for hospitals that are participating providers 
under the State plan or a waiver of such plan to establish procedures 
for referring any eligible individuals with chronic conditions who seek 
or need treatment in a hospital emergency department to designated 
providers.
    ``(e) Coordination.--A State shall consult and coordinate, as 
appropriate, with the Substance Abuse and Mental Health Services 
Administration in addressing issues regarding the prevention and 
treatment of mental illness and substance abuse among eligible 
individuals with chronic conditions.
    ``(f) Monitoring.--A State shall include in the State plan 
amendment--
            ``(1) a methodology for tracking avoidable hospital 
        readmissions and calculating savings that result from improved 
        chronic care coordination and management under this section; and
            ``(2) a proposal for use of health information technology in 
        providing health home services under this section and improving 
        service delivery and coordination across the care continuum 
        (including the use of wireless patient technology to improve 
        coordination and management of care and patient adherence to 
        recommendations made by their provider).

    ``(g) Report on Quality Measures.--As a condition for receiving 
payment for health home services provided to an eligible individual with 
chronic conditions, a designated provider shall report to the State, in 
accordance with such requirements as the Secretary shall specify, on all 
applicable measures for determining

[[Page 124 STAT. 321]]

the quality of such services. When appropriate and feasible, a 
designated provider shall use health information technology in providing 
the State with such information.
    ``(h) Definitions.--In this section:
            ``(1) Eligible individual with chronic conditions.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                term `eligible individual with chronic conditions' means 
                an individual who--
                          ``(i) is eligible for medical assistance under 
                      the State plan or under a waiver of such plan; and
                          ``(ii) has at least--
                                    ``(I) 2 chronic conditions;
                                    ``(II) 1 chronic condition and is at 
                                risk of having a second chronic 
                                condition; or
                                    ``(III) 1 serious and persistent 
                                mental health condition.
                    ``(B) Rule of construction.--Nothing in this 
                paragraph shall prevent the Secretary from establishing 
                higher levels as to the number or severity of chronic or 
                mental health conditions for purposes of determining 
                eligibility for receipt of health home services under 
                this section.
            ``(2) Chronic condition.--The term `chronic condition' has 
        the meaning given that term by the Secretary and shall include, 
        but is not limited to, the following:
                    ``(A) A mental health condition.
                    ``(B) Substance use disorder.
                    ``(C) Asthma.
                    ``(D) Diabetes.
                    ``(E) Heart disease.
                    ``(F) Being overweight, as evidenced by having a 
                Body Mass Index (BMI) over 25.
            ``(3) Health home.--The term `health home' means a 
        designated provider (including a provider that operates in 
        coordination with a team of health care professionals) or a 
        health team selected by an eligible individual with chronic 
        conditions to provide health home services.
            ``(4) Health home services.--
                    ``(A) In general.--The term `health home services' 
                means comprehensive and timely high-quality services 
                described in subparagraph (B) that are provided by a 
                designated provider, a team of health care professionals 
                operating with such a provider, or a health team.
                    ``(B) Services described.--The services described in 
                this subparagraph are--
                          ``(i) comprehensive care management;
                          ``(ii) care coordination and health promotion;
                          ``(iii) comprehensive transitional care, 
                      including appropriate follow-up, from inpatient to 
                      other settings;
                          ``(iv) patient and family support (including 
                      authorized representatives);
                          ``(v) referral to community and social support 
                      services, if relevant; and
                          ``(vi) use of health information technology to 
                      link services, as feasible and appropriate.
            ``(5) Designated provider.--The term `designated provider' 
        means a physician, clinical practice or clinical group practice, 
        rural clinic, community health center, community mental health

[[Page 124 STAT. 322]]

        center, home health agency, or any other entity or provider 
        (including pediatricians, gynecologists, and obstetricians) that 
        is determined by the State and approved by the Secretary to be 
        qualified to be a health home for eligible individuals with 
        chronic conditions on the basis of documentation evidencing that 
        the physician, practice, or clinic--
                    ``(A) has the systems and infrastructure in place to 
                provide health home services; and
                    ``(B) satisfies the qualification standards 
                established by the Secretary under subsection (b).
            ``(6) Team of health care professionals.--The term `team of 
        health care professionals' means a team of health professionals 
        (as described in the State plan amendment) that may--
                    ``(A) include physicians and other professionals, 
                such as a nurse care coordinator, nutritionist, social 
                worker, behavioral health professional, or any 
                professionals deemed appropriate by the State; and
                    ``(B) be free standing, virtual, or based at a 
                hospital, community health center, community mental 
                health center, rural clinic, clinical practice or 
                clinical group practice, academic health center, or any 
                entity deemed appropriate by the State and approved by 
                the Secretary.
            ``(7) Health team.--The term `health team' has the meaning 
        given such term for purposes of section 3502 of the Patient 
        Protection and Affordable Care Act.''.

    (b) Evaluation.--
            (1) Independent evaluation.--
                    (A) In general.-- <<NOTE: Contracts.>> The Secretary 
                shall enter into a contract with an independent entity 
                or organization to conduct an evaluation and assessment 
                of the States that have elected the option to provide 
                coordinated care through a health home for Medicaid 
                beneficiaries with chronic conditions under section 1945 
                of the Social Security Act (as added by subsection (a)) 
                for the purpose of determining the effect of such option 
                on reducing hospital admissions, emergency room visits, 
                and admissions to skilled nursing facilities.
                    (B) Evaluation report.--Not later than January 1, 
                2017, the Secretary shall report to Congress on the 
                evaluation and assessment conducted under subparagraph 
                (A).
            (2) <<NOTE: 42 USC 1396w-4 note.>> Survey and interim 
        report.--
                    (A) In general.--Not later than January 1, 2014, the 
                Secretary of Health and Human Services shall survey 
                States that have elected the option under section 1945 
                of the Social Security Act (as added by subsection (a)) 
                and report to Congress on the nature, extent, and use of 
                such option, particularly as it pertains to--
                          (i) hospital admission rates;
                          (ii) chronic disease management;
                          (iii) coordination of care for individuals 
                      with chronic conditions;
                          (iv) assessment of program implementation;
                          (v) processes and lessons learned (as 
                      described in subparagraph (B));
                          (vi) assessment of quality improvements and 
                      clinical outcomes under such option; and

[[Page 124 STAT. 323]]

                          (vii) estimates of cost savings.
                    (B)  Implementation reporting.--A State that has 
                elected the option under section 1945 of the Social 
                Security Act (as added by subsection (a)) shall report 
                to the Secretary, as necessary, on processes that have 
                been developed and lessons learned regarding provision 
                of coordinated care through a health home for Medicaid 
                beneficiaries with chronic conditions under such option.

SEC. 2704. <<NOTE: 42 USC 1396a note.>> DEMONSTRATION PROJECT TO 
            EVALUATE INTEGRATED CARE AROUND A HOSPITALIZATION.

    (a) Authority To Conduct Project.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        establish a demonstration project under title XIX of the Social 
        Security Act to evaluate the use of bundled payments for the 
        provision of integrated care for a Medicaid beneficiary--
                    (A) with respect to an episode of care that includes 
                a hospitalization; and
                    (B) for concurrent physicians services provided 
                during a hospitalization.
            (2) Duration.--The demonstration project shall begin on 
        January 1, 2012, and shall end on December 31, 2016.

    (b) Requirements.--The demonstration project shall be conducted in 
accordance with the following:
            (1) <<NOTE: Determination.>>  The demonstration project 
        shall be conducted in up to 8 States, determined by the 
        Secretary based on consideration of the potential to lower costs 
        under the Medicaid program while improving care for Medicaid 
        beneficiaries. A State selected to participate in the 
        demonstration project may target the demonstration project to 
        particular categories of beneficiaries, beneficiaries with 
        particular diagnoses, or particular geographic regions of the 
        State, but the Secretary shall insure that, as a whole, the 
        demonstration project is, to the greatest extent possible, 
        representative of the demographic and geographic composition of 
        Medicaid beneficiaries nationally.
            (2) The demonstration project shall focus on conditions 
        where there is evidence of an opportunity for providers of 
        services and suppliers to improve the quality of care furnished 
        to Medicaid beneficiaries while reducing total expenditures 
        under the State Medicaid programs selected to participate, as 
        determined by the Secretary.
            (3) A State selected to participate in the demonstration 
        project shall specify the 1 or more episodes of care the State 
        proposes to address in the project, the services to be included 
        in the bundled payments, and the rationale for the selection of 
        such episodes of care and services. The Secretary may modify the 
        episodes of care as well as the services to be included in the 
        bundled payments prior to or after approving the project. The 
        Secretary may also vary such factors among the different States 
        participating in the demonstration project.
            (4) The Secretary shall ensure that payments made under the 
        demonstration project are adjusted for severity of illness and 
        other characteristics of Medicaid beneficiaries within a 
        category or having a diagnosis targeted as part of the 
        demonstration project. States shall ensure that Medicaid 
        beneficiaries are not liable for any additional cost sharing 
        than

[[Page 124 STAT. 324]]

        if their care had not been subject to payment under the 
        demonstration project.
            (5) Hospitals participating in the demonstration project 
        shall have or establish robust discharge planning programs to 
        ensure that Medicaid beneficiaries requiring post-acute care are 
        appropriately placed in, or have ready access to, post-acute 
        care settings.
            (6) The Secretary and each State selected to participate in 
        the demonstration project shall ensure that the demonstration 
        project does not result in the Medicaid beneficiaries whose care 
        is subject to payment under the demonstration project being 
        provided with less items and services for which medical 
        assistance is provided under the State Medicaid program than the 
        items and services for which medical assistance would have been 
        provided to such beneficiaries under the State Medicaid program 
        in the absence of the demonstration project.

    (c) Waiver of Provisions.--Notwithstanding section 1115(a) of the 
Social Security Act (42 U.S.C. 1315(a)), the Secretary may waive such 
provisions of titles XIX, XVIII, and XI of that Act as may be necessary 
to accomplish the goals of the demonstration, ensure beneficiary access 
to acute and post-acute care, and maintain quality of care.
    (d) Evaluation and Report.--
            (1) Data.--Each State selected to participate in the 
        demonstration project under this section shall provide to the 
        Secretary, in such form and manner as the Secretary shall 
        specify, relevant data necessary to monitor outcomes, costs, and 
        quality, and evaluate the rationales for selection of the 
        episodes of care and services specified by States under 
        subsection (b)(3).
            (2) Report.--Not later than 1 year after the conclusion of 
        the demonstration project, the Secretary shall submit a report 
        to Congress on the results of the demonstration project.

SEC. 2705. <<NOTE: 42 USC 1315a note.>>  MEDICAID GLOBAL PAYMENT SYSTEM 
            DEMONSTRATION PROJECT.

    (a) In General.--The Secretary of Health and Human Services 
(referred to in this section as the ``Secretary'') shall, in 
coordination with the Center for Medicare and Medicaid Innovation (as 
established under section 1115A of the Social Security Act, as added by 
section 3021 of this Act), establish the Medicaid Global Payment System 
Demonstration Project under which a participating State shall adjust the 
payments made to an eligible safety net hospital system or network from 
a fee-for-service payment structure to a global capitated payment model.
    (b) Duration and Scope.--The demonstration project conducted under 
this section shall operate during a period of fiscal years 2010 through 
2012. <<NOTE: Selection.>>  The Secretary shall select not more than 5 
States to participate in the demonstration project.

    (c) Eligible Safety Net Hospital System or 
Network. <<NOTE: Definition.>> --For purposes of this section, the term 
``eligible safety net hospital system or network'' means a large, safety 
net hospital system or network (as defined by the Secretary) that 
operates within a State selected by the Secretary under subsection (b).

    (d) Evaluation.--
            (1) Testing.--The Innovation Center shall test and evaluate 
        the demonstration project conducted under this section

[[Page 124 STAT. 325]]

        to examine any changes in health care quality outcomes and 
        spending by the eligible safety net hospital systems or 
        networks.
            (2) Budget neutrality.--During the testing period under 
        paragraph (1), any budget neutrality requirements under section 
        1115A(b)(3) of the Social Security Act (as so added) shall not 
        be applicable.
            (3) Modification.--During the testing period under paragraph 
        (1), the Secretary may, in the Secretary's discretion, modify or 
        terminate the demonstration project conducted under this 
        section.

    (e) Report.--Not later than 12 months after the date of completion 
of the demonstration project under this section, the Secretary shall 
submit to Congress a report containing the results of the evaluation and 
testing conducted under subsection (d), together with recommendations 
for such legislation and administrative action as the Secretary 
determines appropriate.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

SEC. 2706. <<NOTE: 42 USC 1396a note.>> PEDIATRIC ACCOUNTABLE CARE 
            ORGANIZATION DEMONSTRATION PROJECT.

    (a) Authority To Conduct Demonstration.--
            (1) In general.--The Secretary of Health and Human Services 
        (referred to in this section as the ``Secretary'') shall 
        establish the Pediatric Accountable Care Organization 
        Demonstration Project to authorize a participating State to 
        allow pediatric medical providers that meet specified 
        requirements to be recognized as an accountable care 
        organization for purposes of receiving incentive payments (as 
        described under subsection (d)), in the same manner as an 
        accountable care organization is recognized and provided with 
        incentive payments under section 1899 of the Social Security Act 
        (as added by section 3022).
            (2) Duration.--The demonstration project shall begin on 
        January 1, 2012, and shall end on December 31, 2016.

    (b) Application.--A State that desires to participate in the 
demonstration project under this section shall submit to the Secretary 
an application at such time, in such manner, and containing such 
information as the Secretary may require.
    (c) Requirements.--
            (1) Performance guidelines.--The Secretary, in consultation 
        with the States and pediatric providers, shall establish 
        guidelines to ensure that the quality of care delivered to 
        individuals by a provider recognized as an accountable care 
        organization under this section is not less than the quality of 
        care that would have otherwise been provided to such 
        individuals.
            (2) Savings requirement.--A participating State, in 
        consultation with the Secretary, shall establish an annual 
        minimal level of savings in expenditures for items and services 
        covered under the Medicaid program under title XIX of the Social 
        Security Act and the CHIP program under title XXI of such Act 
        that must be reached by an accountable care organization in 
        order for such organization to receive an incentive payment 
        under subsection (d).
            (3) <<NOTE: Contracts.>> Minimum participation period.--A 
        provider desiring to be recognized as an accountable care 
        organization under

[[Page 124 STAT. 326]]

        the demonstration project shall enter into an agreement with the 
        State to participate in the project for not less than a 3-year 
        period.

    (d) Incentive Payment.--An accountable care organization that meets 
the performance guidelines established by the Secretary under subsection 
(c)(1) and achieves savings greater than the annual minimal savings 
level established by the State under subsection (c)(2) shall receive an 
incentive payment for such year equal to a portion (as determined 
appropriate by the Secretary) of the amount of such excess savings. The 
Secretary may establish an annual cap on incentive payments for an 
accountable care organization.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

SEC. 2707. <<NOTE: 42 USC 1396a note.>> MEDICAID EMERGENCY PSYCHIATRIC 
            DEMONSTRATION PROJECT.

    (a) Authority To Conduct Demonstration Project.--The Secretary of 
Health and Human Services (in this section referred to as the 
``Secretary'') shall establish a demonstration project under which an 
eligible State (as described in subsection (c)) shall provide payment 
under the State Medicaid plan under title XIX of the Social Security Act 
to an institution for mental diseases that is not publicly owned or 
operated and that is subject to the requirements of section 1867 of the 
Social Security Act (42 U.S.C. 1395dd) for the provision of medical 
assistance available under such plan to individuals who--
            (1) have attained age 21, but have not attained age 65;
            (2) are eligible for medical assistance under such plan; and
            (3) require such medical assistance to stabilize an 
        emergency medical condition.

    (b) Stabilization Review.--A State shall specify in its application 
described in subsection (c)(1) establish a mechanism for how it will 
ensure that institutions participating in the demonstration will 
determine whether or not such individuals have been stabilized (as 
defined in subsection (h)(5)). <<NOTE: Commencement date.>> This 
mechanism shall commence before the third day of the inpatient stay. 
States participating in the demonstration project may manage the 
provision of services for the stabilization of medical emergency 
conditions through utilization review, authorization, or management 
practices, or the application of medical necessity and appropriateness 
criteria applicable to behavioral health.

    (c) Eligible State Defined.--
            (1) In general.--An eligible State is a State that has made 
        an application and has been selected pursuant to paragraphs (2) 
        and (3).
            (2) Application.--A State seeking to participate in the 
        demonstration project under this section shall submit to the 
        Secretary, at such time and in such format as the Secretary 
        requires, an application that includes such information, 
        provisions, and assurances, as the Secretary may require.
            (3) Selection.--A State shall be determined eligible for the 
        demonstration by the Secretary on a competitive basis among 
        States with applications meeting the requirements of

[[Page 124 STAT. 327]]

        paragraph (1). In selecting State applications for the 
        demonstration project, the Secretary shall seek to achieve an 
        appropriate national balance in the geographic distribution of 
        such projects.

    (d) Length of Demonstration Project.--The demonstration project 
established under this section shall be conducted for a period of 3 
consecutive years.
    (e) Limitations on Federal Funding.--
            (1) Appropriation.--
                    (A) In general.--Out of any funds in the Treasury 
                not otherwise appropriated, there is appropriated to 
                carry out this section, $75,000,000 for fiscal year 
                2011.
                    (B) Budget authority.--Subparagraph (A) constitutes 
                budget authority in advance of appropriations Act and 
                represents the obligation of the Federal Government to 
                provide for the payment of the amounts appropriated 
                under that subparagraph.
            (2) 5-year availability.--Funds appropriated under paragraph 
        (1) shall remain available for obligation through December 31, 
        2015.
            (3) Limitation on payments.--In no case may--
                    (A) the aggregate amount of payments made by the 
                Secretary to eligible States under this section exceed 
                $75,000,000; or
                    (B) payments be provided by the Secretary under this 
                section after December 31, 2015.
            (4) Funds allocated to states.--Funds shall be allocated to 
        eligible States on the basis of criteria, including a State's 
        application and the availability of funds, as determined by the 
        Secretary.
            (5) Payments to states.--The Secretary shall pay to each 
        eligible State, from its allocation under paragraph (4), an 
        amount each quarter equal to the Federal medical assistance 
        percentage of expenditures in the quarter for medical assistance 
        described in subsection (a). As a condition of receiving 
        payment, a State shall collect and report information, as 
        determined necessary by the Secretary, for the purposes of 
        providing Federal oversight and conducting an evaluation under 
        subsection (f)(1).

    (f) Evaluation and Report to Congress.--
            (1) Evaluation.--The Secretary shall conduct an evaluation 
        of the demonstration project in order to determine the impact on 
        the functioning of the health and mental health service system 
        and on individuals enrolled in the Medicaid program and shall 
        include the following:
                    (A) An assessment of access to inpatient mental 
                health services under the Medicaid program; average 
                lengths of inpatient stays; and emergency room visits.
                    (B) An assessment of discharge planning by 
                participating hospitals.
                    (C) An assessment of the impact of the demonstration 
                project on the costs of the full range of mental health 
                services (including inpatient, emergency and ambulatory 
                care).
                    (D) An analysis of the percentage of consumers with 
                Medicaid coverage who are admitted to inpatient 
                facilities as a result of the demonstration project as 
                compared to

[[Page 124 STAT. 328]]

                those admitted to these same facilities through other 
                means.
                    (E) A recommendation regarding whether the 
                demonstration project should be continued after December 
                31, 2013, and expanded on a national basis.
            (2) Report.--Not later than December 31, 2013, the Secretary 
        shall submit to Congress and make available to the public a 
        report on the findings of the evaluation under paragraph (1).

    (g) Waiver Authority.--
            (1) In general.--The Secretary shall waive the limitation of 
        subdivision (B) following paragraph (28) of section 1905(a) of 
        the Social Security Act (42 U.S.C. 1396d(a)) (relating to 
        limitations on payments for care or services for individuals 
        under 65 years of age who are patients in an institution for 
        mental diseases) for purposes of carrying out the demonstration 
        project under this section.
            (2) Limited other waiver authority.--The Secretary may waive 
        other requirements of titles XI and XIX of the Social Security 
        Act (including the requirements of sections 1902(a)(1) (relating 
        to statewideness) and 1902(1)(10)(B) (relating to 
        comparability)) only to extent necessary to carry out the 
        demonstration project under this section.

    (h) Definitions.--In this section:
            (1) Emergency medical condition.--The term ``emergency 
        medical condition'' means, with respect to an individual, an 
        individual who expresses suicidal or homicidal thoughts or 
        gestures, if determined dangerous to self or others.
            (2) Federal medical assistance percentage.--The term 
        ``Federal medical assistance percentage'' has the meaning given 
        that term with respect to a State under section 1905(b) of the 
        Social Security Act (42 U.S.C. 1396d(b)).
            (3) Institution for mental diseases.--The term ``institution 
        for mental diseases'' has the meaning given to that term in 
        section 1905(i) of the Social Security Act (42 U.S.C. 1396d(i)).
            (4) Medical assistance.--The term ``medical assistance'' has 
        the meaning given that term in section 1905(a) of the Social 
        Security Act (42 U.S.C. 1396d(a)).
            (5) Stabilized.--The term ``stabilized'' means, with respect 
        to an individual, that the emergency medical condition no longer 
        exists with respect to the individual and the individual is no 
        longer dangerous to self or others.
            (6) State.--The term ``State'' has the meaning given that 
        term for purposes of title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.).

  Subtitle J--Improvements to the Medicaid and CHIP Payment and Access 
                           Commission (MACPAC)

SEC. 2801. MACPAC ASSESSMENT OF POLICIES AFFECTING ALL MEDICAID 
            BENEFICIARIES.

    (a) In General.--Section 1900 of the Social Security Act (42 U.S.C. 
1396) is amended--
            (1) in subsection (b)--

[[Page 124 STAT. 329]]

                    (A) in paragraph (1)--
                          (i) in the paragraph heading, by inserting 
                      ``for all states'' before ``and annual''; and
                          (ii) in subparagraph (A), by striking 
                      ``children's'';
                          (iii) in subparagraph (B), by inserting ``, 
                      the Secretary, and States'' after ``Congress'';
                          (iv) in subparagraph (C), by striking ``March 
                      1'' and inserting ``March 15''; and
                          (v) in subparagraph (D), by striking ``June 
                      1'' and inserting ``June 15'';
                    (B) in paragraph (2)--
                          (i) in subparagraph (A)--
                                    (I) in clause (i)--
                                            (aa) by inserting ``the 
                                        efficient provision of'' after 
                                        ``expenditures for''; and
                                            (bb) by striking ``hospital, 
                                        skilled nursing facility, 
                                        physician, Federally-qualified 
                                        health center, rural health 
                                        center, and other fees'' and 
                                        inserting ``payments to medical, 
                                        dental, and health 
                                        professionals, hospitals, 
                                        residential and long-term care 
                                        providers, providers of home and 
                                        community based services, 
                                        Federally-qualified health 
                                        centers and rural health 
                                        clinics, managed care entities, 
                                        and providers of other covered 
                                        items and services''; and
                                    (II) in clause (iii), by inserting 
                                ``(including how such factors and 
                                methodologies enable such beneficiaries 
                                to obtain the services for which they 
                                are eligible, affect provider supply, 
                                and affect providers that serve a 
                                disproportionate share of low-income and 
                                other vulnerable populations)'' after 
                                ``beneficiaries'';
                          (ii) by redesignating subparagraphs (B) and 
                      (C) as subparagraphs (F) and (H), respectively;
                          (iii) by inserting after subparagraph (A), the 
                      following:
                    ``(B) Eligibility policies.--Medicaid and CHIP 
                eligibility policies, including a determination of the 
                degree to which Federal and State policies provide 
                health care coverage to needy populations.
                    ``(C) Enrollment and retention processes.--Medicaid 
                and CHIP enrollment and retention processes, including a 
                determination of the degree to which Federal and State 
                policies encourage the enrollment of individuals who are 
                eligible for such programs and screen out individuals 
                who are ineligible, while minimizing the share of 
                program expenses devoted to such processes.
                    ``(D) Coverage policies.--Medicaid and CHIP benefit 
                and coverage policies, including a determination of the 
                degree to which Federal and State policies provide 
                access to the services enrollees require to improve and 
                maintain their health and functional status.
                    ``(E) Quality of care.--Medicaid and CHIP policies 
                as they relate to the quality of care provided under 
                those programs, including a determination of the degree 
                to which Federal and State policies achieve their stated 
                goals and

[[Page 124 STAT. 330]]

                interact with similar goals established by other 
                purchasers of health care services.'';
                          (iv) by inserting after subparagraph (F) (as 
                      redesignated by clause (ii) of this subparagraph), 
                      the following:
                    ``(G) Interactions with medicare and medicaid.--
                Consistent with paragraph (11), the interaction of 
                policies under Medicaid and the Medicare program under 
                title XVIII, including with respect to how such 
                interactions affect access to services, payments, and 
                dual eligible individuals.'' and
                          (v) in subparagraph (H) (as so redesignated), 
                      by inserting ``and preventive, acute, and long-
                      term services and supports'' after ``barriers'';
                    (C) by redesignating paragraphs (3) through (9) as 
                paragraphs (4) through (10), respectively;
                    (D) by inserting after paragraph (2), the following 
                new paragraph:
            ``(3) Recommendations and reports of state-specific data.--
        MACPAC shall--
                    ``(A) review national and State-specific Medicaid 
                and CHIP data; and
                    ``(B) submit reports and recommendations to 
                Congress, the Secretary, and States based on such 
                reviews.'';
                    (E) in paragraph (4), as redesignated by 
                subparagraph (C), by striking ``or any other problems'' 
                and all that follows through the period and inserting 
                ``, as well as other factors that adversely affect, or 
                have the potential to adversely affect, access to care 
                by, or the health care status of, Medicaid and CHIP 
                beneficiaries. MACPAC shall include in the annual report 
                required under paragraph (1)(D) a description of all 
                such areas or problems identified with respect to the 
                period addressed in the report.'';
                    (F) in paragraph (5), as so redesignated,--
                          (i) in the paragraph heading, by inserting 
                      ``and regulations'' after ``reports''; and
                          (ii) by striking ``If'' and inserting the 
                      following:
                    ``(A) Certain secretarial reports.--If''; and
                          (iii) in the second sentence, by inserting 
                      ``and the Secretary'' after ``appropriate 
                      committees of Congress''; and
                          (iv) by adding at the end the following:
                    ``(B) Regulations.--MACPAC shall review Medicaid and 
                CHIP regulations and may comment through submission of a 
                report to the appropriate committees of Congress and the 
                Secretary, on any such regulations that affect access, 
                quality, or efficiency of health care.'';
                    (G) in paragraph (10), as so redesignated, by 
                inserting `` <<NOTE: Reports.>> , and shall submit with 
                any recommendations, a report on the Federal and State-
                specific budget consequences of the recommendations'' 
                before the period; and
                    (H) by adding at the end the following:
            ``(11) Consultation and coordination with medpac.--
                    ``(A) In general.--MACPAC shall consult with the 
                Medicare Payment Advisory Commission (in this paragraph 
                referred to as `MedPAC') established under section 1805 
                in carrying out its duties under this section, as 
                appropriate and particularly with respect to the issues 
                specified in

[[Page 124 STAT. 331]]

                paragraph (2) as they relate to those Medicaid 
                beneficiaries who are dually eligible for Medicaid and 
                the Medicare program under title XVIII, adult Medicaid 
                beneficiaries (who are not dually eligible for 
                Medicare), and beneficiaries under Medicare. 
                Responsibility for analysis of and recommendations to 
                change Medicare policy regarding Medicare beneficiaries, 
                including Medicare beneficiaries who are dually eligible 
                for Medicare and Medicaid, shall rest with MedPAC.
                    ``(B) Information sharing.--MACPAC and MedPAC shall 
                have access to deliberations and records of the other 
                such entity, respectively, upon the request of the other 
                such entity.
            ``(12) Consultation with states.--MACPAC shall regularly 
        consult with States in carrying out its duties under this 
        section, including with respect to developing processes for 
        carrying out such duties, and shall ensure that input from 
        States is taken into account and represented in MACPAC's 
        recommendations and reports.
            ``(13) Coordinate and consult with the federal coordinated 
        health care office.--MACPAC shall coordinate and consult with 
        the Federal Coordinated Health Care Office established under 
        section 2081 of the Patient Protection and Affordable Care Act 
        before making any recommendations regarding dual eligible 
        individuals.
            ``(14) Programmatic oversight vested in the secretary.--
        MACPAC's authority to make recommendations in accordance with 
        this section shall not affect, or be considered to duplicate, 
        the Secretary's authority to carry out Federal responsibilities 
        with respect to Medicaid and CHIP.'';
            (2) in subsection (c)(2)--
                    (A) by striking subparagraphs (A) and (B) and 
                inserting the following:
                    ``(A) In general.--The membership of MACPAC shall 
                include individuals who have had direct experience as 
                enrollees or parents or caregivers of enrollees in 
                Medicaid or CHIP and individuals with national 
                recognition for their expertise in Federal safety net 
                health programs, health finance and economics, actuarial 
                science, health plans and integrated delivery systems, 
                reimbursement for health care, health information 
                technology, and other providers of health services, 
                public health, and other related fields, who provide a 
                mix of different professions, broad geographic 
                representation, and a balance between urban and rural 
                representation.
                    ``(B) Inclusion.--The membership of MACPAC shall 
                include (but not be limited to) physicians, dentists, 
                and other health professionals, employers, third-party 
                payers, and individuals with expertise in the delivery 
                of health services. Such membership shall also include 
                representatives of children, pregnant women, the 
                elderly, individuals with disabilities, caregivers, and 
                dual eligible individuals, current or former 
                representatives of State agencies responsible for 
                administering Medicaid, and current or former 
                representatives of State agencies responsible for 
                administering CHIP.''.

[[Page 124 STAT. 332]]

            (3) in subsection (d)(2), by inserting ``and State'' after 
        ``Federal'';
            (4) in subsection (e)(1), in the first sentence, by 
        inserting ``and, as a condition for receiving payments under 
        sections 1903(a) and 2105(a), from any State agency responsible 
        for administering Medicaid or CHIP,'' after ``United States''; 
        and
            (5) in subsection (f)--
                    (A) in the subsection heading, by striking 
                ``Authorization of Appropriations'' and inserting 
                ``Funding'';
                    (B) in paragraph (1), by inserting ``(other than for 
                fiscal year 2010)'' before ``in the same manner''; and
                    (C) by adding at the end the following:
            ``(3) Funding for fiscal year 2010.--
                    ``(A) In general.--Out of any funds in the Treasury 
                not otherwise appropriated, there is appropriated to 
                MACPAC to carry out the provisions of this section for 
                fiscal year 2010, $9,000,000.
                    ``(B) Transfer of funds.--Notwithstanding section 
                2104(a)(13), from the amounts appropriated in such 
                section for fiscal year 2010, $2,000,000 is hereby 
                transferred and made available in such fiscal year to 
                MACPAC to carry out the provisions of this section.
            ``(4) Availability.--Amounts made available under paragraphs 
        (2) and (3) to MACPAC to carry out the provisions of this 
        section shall remain available until expended.''.

    (b) Conforming MedPAC Amendments.--Section 1805(b) of the Social 
Security Act (42 U.S.C. 1395b-6(b)), is amended--
            (1) in paragraph (1)(C), by striking ``March 1 of each year 
        (beginning with 1998)'' and inserting ``March 15'';
            (2) in paragraph (1)(D), by inserting ``, and (beginning 
        with 2012) containing an examination of the topics described in 
        paragraph (9), to the extent feasible'' before the period; and
            (3) by adding at the end the following:
            ``(9) Review and annual report on medicaid and commercial 
        trends.--The Commission shall review and report on aggregate 
        trends in spending, utilization, and financial performance under 
        the Medicaid program under title XIX and the private market for 
        health care services with respect to providers for which, on an 
        aggregate national basis, a significant portion of revenue or 
        services is associated with the Medicaid program. Where 
        appropriate, the Commission shall conduct such review in 
        consultation with the Medicaid and CHIP Payment and Access 
        Commission established under section 1900 (in this section 
        referred to as `MACPAC').
            ``(10) Coordinate and consult with the federal coordinated 
        health care office.--The Commission shall coordinate and consult 
        with the Federal Coordinated Health Care Office established 
        under section 2081 of the Patient Protection and Affordable Care 
        Act before making any recommendations regarding dual eligible 
        individuals.
            ``(11) Interaction of medicaid and medicare.--The Commission 
        shall consult with MACPAC in carrying out its duties under this 
        section, as appropriate. Responsibility for analysis of and 
        recommendations to change Medicare policy regarding Medicare 
        beneficiaries, including Medicare beneficiaries who are dually 
        eligible for Medicare and Medicaid,

[[Page 124 STAT. 333]]

        shall rest with the Commission. Responsibility for analysis of 
        and recommendations to change Medicaid policy regarding Medicaid 
        beneficiaries, including Medicaid beneficiaries who are dually 
        eligible for Medicare and Medicaid, shall rest with MACPAC.''.

     Subtitle K--Protections for American Indians and Alaska Natives

SEC. 2901. SPECIAL RULES RELATING TO INDIANS.

    (a) <<NOTE: 25 USC 1623.>> No Cost-sharing for Indians With Income 
at or Below 300 Percent of Poverty Enrolled in Coverage Through a State 
Exchange.--For provisions prohibiting cost sharing for Indians enrolled 
in any qualified health plan in the individual market through an 
Exchange, see section 1402(d) of the Patient Protection and Affordable 
Care Act.

    (b) <<NOTE: 25 USC 1623.>> Payer of Last Resort.--Health programs 
operated by the Indian Health Service, Indian tribes, tribal 
organizations, and Urban Indian organizations (as those terms are 
defined in section 4 of the Indian Health Care Improvement Act (25 
U.S.C. 1603)) shall be the payer of last resort for services provided by 
such Service, tribes, or organizations to individuals eligible for 
services through such programs, notwithstanding any Federal, State, or 
local law to the contrary.

    (c) Facilitating Enrollment of Indians Under the Express Lane 
Option.--Section 1902(e)(13)(F)(ii) of the Social Security Act (42 
U.S.C. 1396a(e)(13)(F)(ii)) is amended--
            (1) in the clause heading, by inserting ``and indian tribes 
        and tribal organizations'' after ``agencies''; and
            (2) by adding at the end the following:
                                    ``(IV) The Indian Health Service, an 
                                Indian Tribe, Tribal Organization, or 
                                Urban Indian Organization (as defined in 
                                section 1139(c)).''.

    (d) Technical Corrections.--Section 1139(c) of the Social Security 
Act (42 U.S.C. 1320b-9(c)) is amended by striking ``In this section'' 
and inserting ``For purposes of this section, title XIX, and title 
XXI''.

SEC. 2902. ELIMINATION OF SUNSET FOR REIMBURSEMENT FOR ALL MEDICARE PART 
            B SERVICES FURNISHED BY CERTAIN INDIAN HOSPITALS AND 
            CLINICS.

    (a) Reimbursement for All Medicare Part B Services Furnished by 
Certain Indian Hospitals and Clinics.--Section 1880(e)(1)(A) of the 
Social Security Act (42 U.S.C. 1395qq(e)(1)(A)) is amended by striking 
``during the 5-year period beginning on'' and inserting ``on or after''.
    (b) Effective Date.-- <<NOTE: Applicability. 42 USC 1395qq 
note.>> The amendments made by this section shall apply to items or 
services furnished on or after January 1, 2010.

[[Page 124 STAT. 334]]

             Subtitle L--Maternal and Child Health Services

SEC. 2951. MATERNAL, INFANT, AND EARLY CHILDHOOD HOME VISITING PROGRAMS.

    Title V of the Social Security Act (42 U.S.C. 701 et seq.) is 
amended by adding at the end the following new section:

``SEC. 511. <<NOTE: 42 USC 711.>> MATERNAL, INFANT, AND EARLY CHILDHOOD 
            HOME VISITING PROGRAMS.

    ``(a) Purposes.--The purposes of this section are--
            ``(1) to strengthen and improve the programs and activities 
        carried out under this title;
            ``(2) to improve coordination of services for at risk 
        communities; and
            ``(3) to identify and provide comprehensive services to 
        improve outcomes for families who reside in at risk communities.

    ``(b) Requirement for All States To Assess Statewide Needs and 
Identify at Risk Communities.--
            ``(1) In general.-- <<NOTE: Deadline.>> Not later than 6 
        months after the date of enactment of this section, each State 
        shall, as a condition of receiving payments from an allotment 
        for the State under section 502 for fiscal year 2011, conduct a 
        statewide needs assessment (which shall be separate from the 
        statewide needs assessment required under section 505(a)) that 
        identifies--
                    ``(A) communities with concentrations of--
                          ``(i) premature birth, low-birth weight 
                      infants, and infant mortality, including infant 
                      death due to neglect, or other indicators of at-
                      risk prenatal, maternal, newborn, or child health;
                          ``(ii) poverty;
                          ``(iii) crime;
                          ``(iv) domestic violence;
                          ``(v) high rates of high-school drop-outs;
                          ``(vi) substance abuse;
                          ``(vii) unemployment; or
                          ``(viii) child maltreatment;
                    ``(B) the quality and capacity of existing programs 
                or initiatives for early childhood home visitation in 
                the State including--
                          ``(i) the number and types of individuals and 
                      families who are receiving services under such 
                      programs or initiatives;
                          ``(ii) the gaps in early childhood home 
                      visitation in the State; and
                          ``(iii) the extent to which such programs or 
                      initiatives are meeting the needs of eligible 
                      families described in subsection (k)(2); and
                    ``(C) the State's capacity for providing substance 
                abuse treatment and counseling services to individuals 
                and families in need of such treatment or services.
            ``(2) Coordination with other assessments.--In conducting 
        the statewide needs assessment required under paragraph (1), the 
        State shall coordinate with, and take into account, other 
        appropriate needs assessments conducted by

[[Page 124 STAT. 335]]

        the State, as determined by the Secretary, including the needs 
        assessment required under section 505(a) (both the most recently 
        completed assessment and any such assessment in progress), the 
        communitywide strategic planning and needs assessments conducted 
        in accordance with section 640(g)(1)(C) of the Head Start Act, 
        and the inventory of current unmet needs and current community-
        based and prevention-focused programs and activities to prevent 
        child abuse and neglect, and other family resource services 
        operating in the State required under section 205(3) of the 
        Child Abuse Prevention and Treatment Act.
            ``(3) Submission to the secretary.--Each State shall submit 
        to the Secretary, in such form and manner as the Secretary shall 
        require--
                    ``(A) the results of the statewide needs assessment 
                required under paragraph (1); and
                    ``(B) a description of how the State intends to 
                address needs identified by the assessment, particularly 
                with respect to communities identified under paragraph 
                (1)(A), which may include applying for a grant to 
                conduct an early childhood home visitation program in 
                accordance with the requirements of this section.

    ``(c) Grants for Early Childhood Home Visitation Programs.--
            ``(1) Authority to make grants.--In addition to any other 
        payments made under this title to a State, the Secretary shall 
        make grants to eligible entities to enable the entities to 
        deliver services under early childhood home visitation programs 
        that satisfy the requirements of subsection (d) to eligible 
        families in order to promote improvements in maternal and 
        prenatal health, infant health, child health and development, 
        parenting related to child development outcomes, school 
        readiness, and the socioeconomic status of such families, and 
        reductions in child abuse, neglect, and injuries.
            ``(2) Authority to use initial grant funds for planning or 
        implementation.--An eligible entity that receives a grant under 
        paragraph (1) may use a portion of the funds made available to 
        the entity during the first 6 months of the period for which the 
        grant is made for planning or implementation activities to 
        assist with the establishment of early childhood home visitation 
        programs that satisfy the requirements of subsection (d).
            ``(3) <<NOTE: Determination.>> Grant duration.--The 
        Secretary shall determine the period of years for which a grant 
        is made to an eligible entity under paragraph (1).
            ``(4) Technical assistance.--The Secretary shall provide an 
        eligible entity that receives a grant under paragraph (1) with 
        technical assistance in administering programs or activities 
        conducted in whole or in part with grant funds.

    ``(d) Requirements.--The requirements of this subsection for an 
early childhood home visitation program conducted with a grant made 
under this section are as follows:
            ``(1) Quantifiable, measurable improvement in benchmark 
        areas.--
                    ``(A) In general.--The eligible entity establishes, 
                subject to the approval of the Secretary, quantifiable, 
                measurable 3- and 5-year benchmarks for demonstrating 
                that the

[[Page 124 STAT. 336]]

                program results in improvements for the eligible 
                families participating in the program in each of the 
                following areas:
                          ``(i) Improved maternal and newborn health.
                          ``(ii) Prevention of child injuries, child 
                      abuse, neglect, or maltreatment, and reduction of 
                      emergency department visits.
                          ``(iii) Improvement in school readiness and 
                      achievement.
                          ``(iv) Reduction in crime or domestic 
                      violence.
                          ``(v) Improvements in family economic self-
                      sufficiency.
                          ``(vi) Improvements in the coordination and 
                      referrals for other community resources and 
                      supports.
                    ``(B) Demonstration of improvements after 3 years.--
                          ``(i) Report to the secretary.--Not later than 
                      30 days after the end of the 3rd year in which the 
                      eligible entity conducts the program, the entity 
                      submits to the Secretary a report demonstrating 
                      improvement in at least 4 of the areas specified 
                      in subparagraph (A).
                          ``(ii) Corrective action plan.--If the report 
                      submitted by the eligible entity under clause (i) 
                      fails to demonstrate improvement in at least 4 of 
                      the areas specified in subparagraph (A), the 
                      entity shall develop and implement a plan to 
                      improve outcomes in each of the areas specified in 
                      subparagraph (A), subject to approval by the 
                      Secretary. The plan shall include provisions for 
                      the Secretary to monitor implementation of the 
                      plan and conduct continued oversight of the 
                      program, including through submission by the 
                      entity of regular reports to the Secretary.
                          ``(iii) Technical assistance.--
                                    ``(I) In general.--The Secretary 
                                shall provide an eligible entity 
                                required to develop and implement an 
                                improvement plan under clause (ii) with 
                                technical assistance to develop and 
                                implement the plan. The Secretary may 
                                provide the technical assistance 
                                directly or through grants, contracts, 
                                or cooperative agreements.
                                    ``(II) Advisory 
                                panel. <<NOTE: Establishment.>> --The 
                                Secretary shall establish an advisory 
                                panel for purposes of obtaining 
                                recommendations regarding the technical 
                                assistance provided to entities in 
                                accordance with subclause (I).
                          ``(iv) No improvement or failure to submit 
                      report. <<NOTE: Determination. Termination.>> --If 
                      the Secretary determines after a period of time 
                      specified by the Secretary that an eligible entity 
                      implementing an improvement plan under clause (ii) 
                      has failed to demonstrate any improvement in the 
                      areas specified in subparagraph (A), or if the 
                      Secretary determines that an eligible entity has 
                      failed to submit the report required under clause 
                      (i), the Secretary shall terminate the entity's 
                      grant and may include any unexpended grant funds 
                      in grants made to nonprofit organizations under 
                      subsection (h)(2)(B).

[[Page 124 STAT. 337]]

                    ``(C) Final report.--Not later than December 31, 
                2015, the eligible entity shall submit a report to the 
                Secretary demonstrating improvements (if any) in each of 
                the areas specified in subparagraph (A).
            ``(2) Improvements in outcomes for individual families.--
                    ``(A) In general.--The program is designed, with 
                respect to an eligible family participating in the 
                program, to result in the participant outcomes described 
                in subparagraph (B) that the eligible entity identifies 
                on the basis of an individualized assessment of the 
                family, are relevant for that family.
                    ``(B) Participant outcomes.--The participant 
                outcomes described in this subparagraph are the 
                following:
                          ``(i) Improvements in prenatal, maternal, and 
                      newborn health, including improved pregnancy 
                      outcomes
                          ``(ii) Improvements in child health and 
                      development, including the prevention of child 
                      injuries and maltreatment and improvements in 
                      cognitive, language, social-emotional, and 
                      physical developmental indicators.
                          ``(iii) Improvements in parenting skills.
                          ``(iv) Improvements in school readiness and 
                      child academic achievement.
                          ``(v) Reductions in crime or domestic 
                      violence.
                          ``(vi) Improvements in family economic self-
                      sufficiency.
                          ``(vii) Improvements in the coordination of 
                      referrals for, and the provision of, other 
                      community resources and supports for eligible 
                      families, consistent with State child welfare 
                      agency training.
            ``(3) Core components.--The program includes the following 
        core components:
                    ``(A) Service delivery model or models.--
                          ``(i) In general.--Subject to clause (ii), the 
                      program is conducted using 1 or more of the 
                      service delivery models described in item (aa) or 
                      (bb) of subclause (I) or in subclause (II) 
                      selected by the eligible entity:
                                    ``(I) The model conforms to a clear 
                                consistent home visitation model that 
                                has been in existence for at least 3 
                                years and is research-based, grounded in 
                                relevant empirically-based knowledge, 
                                linked to program determined outcomes, 
                                associated with a national organization 
                                or institution of higher education that 
                                has comprehensive home visitation 
                                program standards that ensure high 
                                quality service delivery and continuous 
                                program quality improvement, and has 
                                demonstrated significant, (and in the 
                                case of the service delivery model 
                                described in item (aa), sustained) 
                                positive outcomes, as described in the 
                                benchmark areas specified in paragraph 
                                (1)(A) and the participant outcomes 
                                described in paragraph (2)(B), when 
                                evaluated using well-designed and 
                                rigorous--

[[Page 124 STAT. 338]]

                                            ``(aa) randomized controlled 
                                        research designs, and the 
                                        evaluation results have been 
                                        published in a peer-reviewed 
                                        journal; or
                                            ``(bb) quasi-experimental 
                                        research designs.
                                    ``(II) The model conforms to a 
                                promising and new approach to achieving 
                                the benchmark areas specified in 
                                paragraph (1)(A) and the participant 
                                outcomes described in paragraph (2)(B), 
                                has been developed or identified by a 
                                national organization or institution of 
                                higher education, and will be evaluated 
                                through well-designed and rigorous 
                                process.
                          ``(ii) Majority of grant funds used for 
                      evidence-based models.--An eligible entity shall 
                      use not more than 25 percent of the amount of the 
                      grant paid to the entity for a fiscal year for 
                      purposes of conducting a program using the service 
                      delivery model described in clause (i)(II).
                          ``(iii) Criteria for evidence of effectiveness 
                      of models.--The Secretary shall establish criteria 
                      for evidence of effectiveness of the service 
                      delivery models and shall ensure that the process 
                      for establishing the criteria is transparent and 
                      provides the opportunity for public comment.
                    ``(B) Additional requirements.--
                          ``(i) The program adheres to a clear, 
                      consistent model that satisfies the requirements 
                      of being grounded in empirically-based knowledge 
                      related to home visiting and linked to the 
                      benchmark areas specified in paragraph (1)(A) and 
                      the participant outcomes described in paragraph 
                      (2)(B) related to the purposes of the program.
                          ``(ii) The program employs well-trained and 
                      competent staff, as demonstrated by education or 
                      training, such as nurses, social workers, 
                      educators, child development specialists, or other 
                      well-trained and competent staff, and provides 
                      ongoing and specific training on the model being 
                      delivered.
                          ``(iii) The program maintains high quality 
                      supervision to establish home visitor 
                      competencies.
                          ``(iv) The program demonstrates strong 
                      organizational capacity to implement the 
                      activities involved.
                          ``(v) The program establishes appropriate 
                      linkages and referral networks to other community 
                      resources and supports for eligible families.
                          ``(vi) The program monitors the fidelity of 
                      program implementation to ensure that services are 
                      delivered pursuant to the specified model.
            ``(4) Priority for serving high-risk populations.--The 
        eligible entity gives priority to providing services under the 
        program to the following:
                    ``(A) Eligible families who reside in communities in 
                need of such services, as identified in the statewide 
                needs assessment required under subsection (b)(1)(A).
                    ``(B) Low-income eligible families.
                    ``(C) Eligible families who are pregnant women who 
                have not attained age 21.

[[Page 124 STAT. 339]]

                    ``(D) Eligible families that have a history of child 
                abuse or neglect or have had interactions with child 
                welfare services.
                    ``(E) Eligible families that have a history of 
                substance abuse or need substance abuse treatment.
                    ``(F) Eligible families that have users of tobacco 
                products in the home.
                    ``(G) Eligible families that are or have children 
                with low student achievement.
                    ``(H) Eligible families with children with 
                developmental delays or disabilities.
                    ``(I) Eligible families who, or that include 
                individuals who, are serving or formerly served in the 
                Armed Forces, including such families that have members 
                of the Armed Forces who have had multiple deployments 
                outside of the United States.

    ``(e) Application Requirements.--An eligible entity desiring a grant 
under this section shall submit an application to the Secretary for 
approval, in such manner as the Secretary may require, that includes the 
following:
            ``(1) A description of the populations to be served by the 
        entity, including specific information regarding how the entity 
        will serve high risk populations described in subsection (d)(4).
            ``(2) An assurance that the entity will give priority to 
        serving low-income eligible families and eligible families who 
        reside in at risk communities identified in the statewide needs 
        assessment required under subsection (b)(1)(A).
            ``(3) The service delivery model or models described in 
        subsection (d)(3)(A) that the entity will use under the program 
        and the basis for the selection of the model or models.
            ``(4) A statement identifying how the selection of the 
        populations to be served and the service delivery model or 
        models that the entity will use under the program for such 
        populations is consistent with the results of the statewide 
        needs assessment conducted under subsection (b).
            ``(5) The quantifiable, measurable benchmarks established by 
        the State to demonstrate that the program contributes to 
        improvements in the areas specified in subsection (d)(1)(A).
            ``(6) An assurance that the entity will obtain and submit 
        documentation or other appropriate evidence from the 
        organization or entity that developed the service delivery model 
        or models used under the program to verify that the program is 
        implemented and services are delivered according to the model 
        specifications.
            ``(7) Assurances that the entity will establish procedures 
        to ensure that--
                    ``(A) the participation of each eligible family in 
                the program is voluntary; and
                    ``(B) services are provided to an eligible family in 
                accordance with the individual assessment for that 
                family.
            ``(8) Assurances that the entity will--
                    ``(A) submit annual reports to the Secretary 
                regarding the program and activities carried out under 
                the program that include such information and data as 
                the Secretary shall require; and
                    ``(B) participate in, and cooperate with, data and 
                information collection necessary for the evaluation 
                required

[[Page 124 STAT. 340]]

                under subsection (g)(2) and other research and 
                evaluation activities carried out under subsection 
                (h)(3).
            ``(9) A description of other State programs that include 
        home visitation services, including, if applicable to the State, 
        other programs carried out under this title with funds made 
        available from allotments under section 502(c), programs funded 
        under title IV, title II of the Child Abuse Prevention and 
        Treatment Act (relating to community-based grants for the 
        prevention of child abuse and neglect), and section 645A of the 
        Head Start Act (relating to Early Head Start programs).
            ``(10) Other information as required by the Secretary.

    ``(f) Maintenance of Effort.--Funds provided to an eligible entity 
receiving a grant under this section shall supplement, and not supplant, 
funds from other sources for early childhood home visitation programs or 
initiatives.
    ``(g) Evaluation.--
            ``(1) Independent, expert advisory 
        panel. <<NOTE: Establishment.>> --The Secretary, in accordance 
        with subsection (h)(1)(A), shall appoint an independent advisory 
        panel consisting of experts in program evaluation and research, 
        education, and early childhood development--
                    ``(A) to review, and make recommendations on, the 
                design and plan for the evaluation required under 
                paragraph (2) within 1 year after the date of enactment 
                of this section;
                    ``(B) to maintain and advise the Secretary regarding 
                the progress of the evaluation; and
                    ``(C) to comment, if the panel so desires, on the 
                report submitted under paragraph (3).
            ``(2) <<NOTE: Grants. Contracts.>> Authority to conduct 
        evaluation.--On the basis of the recommendations of the advisory 
        panel under paragraph (1), the Secretary shall, by grant, 
        contract, or interagency agreement, conduct an evaluation of the 
        statewide needs assessments submitted under subsection (b) and 
        the grants made under subsections (c) and (h)(3)(B). The 
        evaluation shall include--
                    ``(A) an analysis, on a State-by-State basis, of the 
                results of such assessments, including indicators of 
                maternal and prenatal health and infant health and 
                mortality, and State actions in response to the 
                assessments; and
                    ``(B) an assessment of <<NOTE: Assessment.>> --
                          ``(i) the effect of early childhood home 
                      visitation programs on child and parent outcomes, 
                      including with respect to each of the benchmark 
                      areas specified in subsection (d)(1)(A) and the 
                      participant outcomes described in subsection 
                      (d)(2)(B);
                          ``(ii) the effectiveness of such programs on 
                      different populations, including the extent to 
                      which the ability of programs to improve 
                      participant outcomes varies across programs and 
                      populations; and
                          ``(iii) the potential for the activities 
                      conducted under such programs, if scaled broadly, 
                      to improve health care practices, eliminate health 
                      disparities, and improve health care system 
                      quality, efficiencies, and reduce costs.

[[Page 124 STAT. 341]]

            ``(3) Report.--Not later than March 31, 2015, the Secretary 
        shall submit a report to Congress on the results of the 
        evaluation conducted under paragraph (2) and shall make the 
        report publicly available.

    ``(h) Other Provisions.--
            ``(1) Intra-agency collaboration.--The Secretary shall 
        ensure that the Maternal and Child Health Bureau and the 
        Administration for Children and Families collaborate with 
        respect to carrying out this section, including with respect 
        to--
                    ``(A) reviewing and analyzing the statewide needs 
                assessments required under subsection (b), the awarding 
                and oversight of grants awarded under this section, the 
                establishment of the advisory panels required under 
                subsections (d)(1)(B)(iii)(II) and (g)(1), and the 
                evaluation and report required under subsection (g); and
                    ``(B) consulting with other Federal agencies with 
                responsibility for administering or evaluating programs 
                that serve eligible families to coordinate and 
                collaborate with respect to research related to such 
                programs and families, including the Office of the 
                Assistant Secretary for Planning and Evaluation of the 
                Department of Health and Human Services, the Centers for 
                Disease Control and Prevention, the National Institute 
                of Child Health and Human Development of the National 
                Institutes of Health, the Office of Juvenile Justice and 
                Delinquency Prevention of the Department of Justice, and 
                the Institute of Education Sciences of the Department of 
                Education.
            ``(2) <<NOTE: Requirements.>> Grants to eligible entities 
        that are not states.--
                    ``(A) Indian tribes, tribal organizations, or urban 
                indian organizations.--The Secretary shall specify 
                requirements for eligible entities that are Indian 
                Tribes (or a consortium of Indian Tribes), Tribal 
                Organizations, or Urban Indian Organizations to apply 
                for and conduct an early childhood home visitation 
                program with a grant under this section. Such 
                requirements shall, to the greatest extent practicable, 
                be consistent with the requirements applicable to 
                eligible entities that are States and shall require an 
                Indian Tribe (or consortium), Tribal Organization, or 
                Urban Indian Organization to--
                          ``(i) conduct a needs assessment similar to 
                      the assessment required for all States under 
                      subsection (b); and
                          ``(ii) establish quantifiable, measurable 3- 
                      and 5-year benchmarks consistent with subsection 
                      (d)(1)(A).
                    ``(B) Nonprofit organizations.--If, as of the 
                beginning of fiscal year 2012, a State has not applied 
                or been approved for a grant under this section, the 
                Secretary may use amounts appropriated under paragraph 
                (1) of subsection (j) that are available for expenditure 
                under paragraph (3) of that subsection to make a grant 
                to an eligible entity that is a nonprofit organization 
                described in subsection (k)(1)(B) to conduct an early 
                childhood home visitation program in the State. The 
                Secretary shall specify the requirements for such an 
                organization to apply for and conduct the program which 
                shall, to the greatest extent practicable, be consistent 
                with the requirements applicable

[[Page 124 STAT. 342]]

                to eligible entities that are States and shall require 
                the organization to--
                          ``(i) carry out the program based on the needs 
                      assessment conducted by the State under subsection 
                      (b); and
                          ``(ii) establish quantifiable, measurable 3- 
                      and 5-year benchmarks consistent with subsection 
                      (d)(1)(A).
            ``(3) Research and other evaluation activities.--
                    ``(A) In general.--The Secretary shall carry out a 
                continuous program of research and evaluation activities 
                in order to increase knowledge about the implementation 
                and effectiveness of home visiting programs, using 
                random assignment designs to the maximum extent 
                feasible. The Secretary may carry out such activities 
                directly, or through grants, cooperative agreements, or 
                contracts.
                    ``(B) Requirements.--The Secretary shall ensure 
                that--
                          ``(i) evaluation of a specific program or 
                      project is conducted by persons or individuals not 
                      directly involved in the operation of such program 
                      or project; and
                          ``(ii) the conduct of research and evaluation 
                      activities includes consultation with independent 
                      researchers, State officials, and developers and 
                      providers of home visiting programs on topics 
                      including research design and administrative data 
                      matching.
            ``(4) Report and recommendation.--Not later than December 
        31, 2015, the Secretary shall submit a report to Congress 
        regarding the programs conducted with grants under this section. 
        The report required under this paragraph shall include--
                    ``(A) information regarding the extent to which 
                eligible entities receiving grants under this section 
                demonstrated improvements in each of the areas specified 
                in subsection (d)(1)(A);
                    ``(B) information regarding any technical assistance 
                provided under subsection (d)(1)(B)(iii)(I), including 
                the type of any such assistance provided; and
                    ``(C) recommendations for such legislative or 
                administrative action as the Secretary determines 
                appropriate.

    ``(i) Application of Other Provisions of Title.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        other provisions of this title shall not apply to a grant made 
        under this section.
            ``(2) Exceptions.--The following provisions of this title 
        shall apply to a grant made under this section to the same 
        extent and in the same manner as such provisions apply to 
        allotments made under section 502(c):
                    ``(A) Section 504(b)(6) (relating to prohibition on 
                payments to excluded individuals and entities).
                    ``(B) Section 504(c) (relating to the use of funds 
                for the purchase of technical assistance).
                    ``(C) Section 504(d) (relating to a limitation on 
                administrative expenditures).
                    ``(D) Section 506 (relating to reports and audits), 
                but only to the extent determined by the Secretary to be 
                appropriate for grants made under this section.

[[Page 124 STAT. 343]]

                    ``(E) Section 507 (relating to penalties for false 
                statements).
                    ``(F) Section 508 (relating to nondiscrimination).
                    ``(G) Section 509(a) (relating to the administration 
                of the grant program).

    ``(j) Appropriations.--
            ``(1) In general.--Out of any funds in the Treasury not 
        otherwise appropriated, there are appropriated to the Secretary 
        to carry out this section--
                    ``(A) $100,000,000 for fiscal year 2010;
                    ``(B) $250,000,000 for fiscal year 2011;
                    ``(C) $350,000,000 for fiscal year 2012;
                    ``(D) $400,000,000 for fiscal year 2013; and
                    ``(E) $400,000,000 for fiscal year 2014.
            ``(2) Reservations.--Of the amount appropriated under this 
        subsection for a fiscal year, the Secretary shall reserve--
                    ``(A) 3 percent of such amount for purposes of 
                making grants to eligible entities that are Indian 
                Tribes (or a consortium of Indian Tribes), Tribal 
                Organizations, or Urban Indian Organizations; and
                    ``(B) 3 percent of such amount for purposes of 
                carrying out subsections (d)(1)(B)(iii), (g), and 
                (h)(3).
            ``(3) Availability.--Funds made available to an eligible 
        entity under this section for a fiscal year shall remain 
        available for expenditure by the eligible entity through the end 
        of the second succeeding fiscal year after award. Any funds that 
        are not expended by the eligible entity during the period in 
        which the funds are available under the preceding sentence may 
        be used for grants to nonprofit organizations under subsection 
        (h)(2)(B).

    ``(k) Definitions.--In this section:
            ``(1) Eligible entity.--
                    ``(A) In general.--The term `eligible entity' means 
                a State, an Indian Tribe, Tribal Organization, or Urban 
                Indian Organization, Puerto Rico, Guam, the Virgin 
                Islands, the Northern Mariana Islands, and American 
                Samoa.
                    ``(B) Nonprofit organizations.--Only for purposes of 
                awarding grants under subsection (h)(2)(B), such term 
                shall include a nonprofit organization with an 
                established record of providing early childhood home 
                visitation programs or initiatives in a State or several 
                States.
            ``(2) Eligible family.--The term `eligible family' means--
                    ``(A) a woman who is pregnant, and the father of the 
                child if the father is available; or
                    ``(B) a parent or primary caregiver of a child, 
                including grandparents or other relatives of the child, 
                and foster parents, who are serving as the child's 
                primary caregiver from birth to kindergarten entry, and 
                including a noncustodial parent who has an ongoing 
                relationship with, and at times provides physical care 
                for, the child.
            ``(3) Indian tribe; tribal organization.--The terms `Indian 
        Tribe' and `Tribal Organization', and `Urban Indian 
        Organization' have the meanings given such terms in section 4 of 
        the Indian Health Care Improvement Act.''.

[[Page 124 STAT. 344]]

SEC. 2952. <<NOTE: 42 USC 712 note.>> SUPPORT, EDUCATION, AND RESEARCH 
            FOR POSTPARTUM DEPRESSION.

    (a) Research on Postpartum Conditions.--
            (1) Expansion and intensification of activities.--The 
        Secretary of Health and Human Services (in this subsection and 
        subsection (c) referred to as the ``Secretary'') is encouraged 
        to continue activities on postpartum depression or postpartum 
        psychosis (in this subsection and subsection (c) referred to as 
        ``postpartum conditions''), including research to expand the 
        understanding of the causes of, and treatments for, postpartum 
        conditions. Activities under this paragraph shall include 
        conducting and supporting the following:
                    (A) Basic research concerning the etiology and 
                causes of the conditions.
                    (B) Epidemiological studies to address the frequency 
                and natural history of the conditions and the 
                differences among racial and ethnic groups with respect 
                to the conditions.
                    (C) The development of improved screening and 
                diagnostic techniques.
                    (D) Clinical research for the development and 
                evaluation of new treatments.
                    (E) Information and education programs for health 
                care professionals and the public, which may include a 
                coordinated national campaign to increase the awareness 
                and knowledge of postpartum conditions. Activities under 
                such a national campaign may--
                          (i) include public service announcements 
                      through television, radio, and other means; and
                          (ii) focus on--
                                    (I) raising awareness about 
                                screening;
                                    (II) educating new mothers and their 
                                families about postpartum conditions to 
                                promote earlier diagnosis and treatment; 
                                and
                                    (III) ensuring that such education 
                                includes complete information concerning 
                                postpartum conditions, including its 
                                symptoms, methods of coping with the 
                                illness, and treatment resources.
            (2) Sense of congress regarding longitudinal study of 
        relative mental health consequences for women of resolving a 
        pregnancy.--
                    (A) Sense of congress.--It is the sense of Congress 
                that the Director of the National Institute of Mental 
                Health may conduct a nationally representative 
                longitudinal study (during the period of fiscal years 
                2010 through 2019) of the relative mental health 
                consequences for women of resolving a pregnancy 
                (intended and unintended) in various ways, including 
                carrying the pregnancy to term and parenting the child, 
                carrying the pregnancy to term and placing the child for 
                adoption, miscarriage, and having an abortion. This 
                study may assess the incidence, timing, magnitude, and 
                duration of the immediate and long-term mental health 
                consequences (positive or negative) of these pregnancy 
                outcomes.
                    (B) Report.--Subject to the completion of the study 
                under subsection (a), beginning not later than 5 years 
                after the date of the enactment of this Act, and 
                periodically

[[Page 124 STAT. 345]]

                thereafter for the duration of the study, such Director 
                may prepare and submit to the Congress reports on the 
                findings of the study.

    (b) Grants To Provide Services to Individuals With a Postpartum 
Condition and Their Families.--Title V of the Social Security Act (42 
U.S.C. 701 et seq.), as amended by section 2951, is amended by adding at 
the end the following new section:

``SEC. 512. <<NOTE: 42 USC 712.>> SERVICES TO INDIVIDUALS WITH A 
            POSTPARTUM CONDITION AND THEIR FAMILIES.

    ``(a) In General.--In addition to any other payments made under this 
title to a State, the Secretary may make grants to eligible entities for 
projects for the establishment, operation, and coordination of effective 
and cost-efficient systems for the delivery of essential services to 
individuals with or at risk for postpartum conditions and their 
families.
    ``(b) Certain Activities.--To the extent practicable and 
appropriate, the Secretary shall ensure that projects funded under 
subsection (a) provide education and services with respect to the 
diagnosis and management of postpartum conditions for individuals with 
or at risk for postpartum conditions and their families. The Secretary 
may allow such projects to include the following:
            ``(1) Delivering or enhancing outpatient and home-based 
        health and support services, including case management and 
        comprehensive treatment services.
            ``(2) Delivering or enhancing inpatient care management 
        services that ensure the well-being of the mother and family and 
        the future development of the infant.
            ``(3) Improving the quality, availability, and organization 
        of health care and support services (including transportation 
        services, attendant care, homemaker services, day or respite 
        care, and providing counseling on financial assistance and 
        insurance).
            ``(4) Providing education about postpartum conditions to 
        promote earlier diagnosis and treatment. Such education may 
        include--
                    ``(A) providing complete information on postpartum 
                conditions, symptoms, methods of coping with the 
                illness, and treatment resources; and
                    ``(B) in the case of a grantee that is a State, 
                hospital, or birthing facility--
                          ``(i) providing education to new mothers and 
                      fathers, and other family members as appropriate, 
                      concerning postpartum conditions before new 
                      mothers leave the health facility; and
                          ``(ii) ensuring that training programs 
                      regarding such education are carried out at the 
                      health facility.

    ``(c) Integration With Other Programs.--To the extent practicable 
and appropriate, the Secretary may integrate the grant program under 
this section with other grant programs carried out by the Secretary, 
including the program under section 330 of the Public Health Service 
Act.
    ``(d) Requirements.--The Secretary shall establish requirements for 
grants made under this section that include a limit on the amount of 
grants funds that may be used for administration, accounting, reporting, 
or program oversight functions and a requirement for each eligible 
entity that receives a grant to submit, for

[[Page 124 STAT. 346]]

each grant period, a report to the Secretary that describes how grant 
funds were used during such period.
    ``(e) Technical Assistance.--The Secretary may provide technical 
assistance to entities seeking a grant under this section in order to 
assist such entities in complying with the requirements of this section.
    ``(f) Application of Other Provisions of Title.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        other provisions of this title shall not apply to a grant made 
        under this section.
            ``(2) Exceptions.--The following provisions of this title 
        shall apply to a grant made under this section to the same 
        extent and in the same manner as such provisions apply to 
        allotments made under section 502(c):
                    ``(A) Section 504(b)(6) (relating to prohibition on 
                payments to excluded individuals and entities).
                    ``(B) Section 504(c) (relating to the use of funds 
                for the purchase of technical assistance).
                    ``(C) Section 504(d) (relating to a limitation on 
                administrative expenditures).
                    ``(D) Section 506 (relating to reports and audits), 
                but only to the extent determined by the Secretary to be 
                appropriate for grants made under this section.
                    ``(E) Section 507 (relating to penalties for false 
                statements).
                    ``(F) Section 508 (relating to nondiscrimination).
                    ``(G) Section 509(a) (relating to the administration 
                of the grant program).

    ``(g) Definitions.--In this section:
            ``(1) The term `eligible entity'--
                    ``(A) means a public or nonprofit private entity; 
                and
                    ``(B) includes a State or local government, public-
                private partnership, recipient of a grant under section 
                330H of the Public Health Service Act (relating to the 
                Healthy Start Initiative), public or nonprofit private 
                hospital, community-based organization, hospice, 
                ambulatory care facility, community health center, 
                migrant health center, public housing primary care 
                center, or homeless health center.
            ``(2) The term `postpartum condition' means postpartum 
        depression or postpartum psychosis.''.

    (c) General Provisions.--
            (1) Authorization of appropriations.--To carry out this 
        section and the amendment made by subsection (b), there are 
        authorized to be appropriated, in addition to such other sums as 
        may be available for such purpose--
                    (A) $3,000,000 for fiscal year 2010; and
                    (B) such sums as may be necessary for fiscal years 
                2011 and 2012.
            (2) Report by the secretary.--
                    (A) Study.--The Secretary shall conduct a study on 
                the benefits of screening for postpartum conditions.
                    (B) Report.--Not later than 2 years after the date 
                of the enactment of this Act, the Secretary shall 
                complete the study required by subparagraph (A) and 
                submit a report to the Congress on the results of such 
                study.

[[Page 124 STAT. 347]]

SEC. 2953. PERSONAL RESPONSIBILITY EDUCATION.

    Title V of the Social Security Act (42 U.S.C. 701 et seq.), as 
amended by sections 2951 and 2952(c), is amended by adding at the end 
the following:

``SEC. 513. <<NOTE: 42 USC 713.>> PERSONAL RESPONSIBILITY EDUCATION.

    ``(a) Allotments to States.--
            ``(1) Amount.--
                    ``(A) In general.--For the purpose described in 
                subsection (b), subject to the succeeding provisions of 
                this section, for each of fiscal years 2010 through 
                2014, the Secretary shall allot to each State an amount 
                equal to the product of--
                          ``(i) the amount appropriated under subsection 
                      (f) for the fiscal year and available for 
                      allotments to States after the application of 
                      subsection (c); and
                          ``(ii) the State youth population percentage 
                      determined under paragraph (2).
                    ``(B) Minimum allotment.--
                          ``(i) In general.--Each State allotment under 
                      this paragraph for a fiscal year shall be at least 
                      $250,000.
                          ``(ii) Pro rata adjustments.--The Secretary 
                      shall adjust on a pro rata basis the amount of the 
                      State allotments determined under this paragraph 
                      for a fiscal year to the extent necessary to 
                      comply with clause (i).
                    ``(C) Application required to access allotments.--
                          ``(i) In general.--A State shall not be paid 
                      from its allotment for a fiscal year unless the 
                      State submits an application to the Secretary for 
                      the fiscal year and the Secretary approves the 
                      application (or requires changes to the 
                      application that the State satisfies) and meets 
                      such additional requirements as the Secretary may 
                      specify.
                          ``(ii) Requirements.--The State application 
                      shall contain an assurance that the State has 
                      complied with the requirements of this section in 
                      preparing and submitting the application and shall 
                      include the following as well as such additional 
                      information as the Secretary may require:
                                    ``(I) Based on data from the Centers 
                                for Disease Control and Prevention 
                                National Center for Health Statistics, 
                                the most recent pregnancy rates for the 
                                State for youth ages 10 to 14 and youth 
                                ages 15 to 19 for which data are 
                                available, the most recent birth rates 
                                for such youth populations in the State 
                                for which data are available, and trends 
                                in those rates for the most recently 
                                preceding 5-year period for which such 
                                data are available.
                                    ``(II) State-established goals for 
                                reducing the pregnancy rates and birth 
                                rates for such youth populations.
                                    ``(III) A description of the State's 
                                plan for using the State allotments 
                                provided under this section to achieve 
                                such goals, especially among youth

[[Page 124 STAT. 348]]

                                populations that are the most high-risk 
                                or vulnerable for pregnancies or 
                                otherwise have special circumstances, 
                                including youth in foster care, homeless 
                                youth, youth with HIV/AIDS, pregnant 
                                youth who are under 21 years of age, 
                                mothers who are under 21 years of age, 
                                and youth residing in areas with high 
                                birth rates for youth.
            ``(2) State youth population percentage.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(A)(ii), the State youth population percentage is, 
                with respect to a State, the proportion (expressed as a 
                percentage) of--
                          ``(i) the number of individuals who have 
                      attained age 10 but not attained age 20 in the 
                      State; to
                          ``(ii) the number of such individuals in all 
                      States.
                    ``(B) Determination of number of youth.--The number 
                of individuals described in clauses (i) and (ii) of 
                subparagraph (A) in a State shall be determined on the 
                basis of the most recent Bureau of the Census data.
            ``(3) Availability of state allotments.--Subject to 
        paragraph (4)(A), amounts allotted to a State pursuant to this 
        subsection for a fiscal year shall remain available for 
        expenditure by the State through the end of the second 
        succeeding fiscal year.
            ``(4) Authority to award grants from state allotments to 
        local organizations and entities in nonparticipating states.--
                    ``(A) Grants from unexpended allotments.--If a State 
                does not submit an application under this section for 
                fiscal year 2010 or 2011, the State shall no longer be 
                eligible to submit an application to receive funds from 
                the amounts allotted for the State for each of fiscal 
                years 2010 through 2014 and such amounts shall be used 
                by the Secretary to award grants under this paragraph 
                for each of fiscal years 2012 through 2014. The 
                Secretary also shall use any amounts from the allotments 
                of States that submit applications under this section 
                for a fiscal year that remain unexpended as of the end 
                of the period in which the allotments are available for 
                expenditure under paragraph (3) for awarding grants 
                under this paragraph.
                    ``(B) 3-year grants.--
                          ``(i) In general.--The Secretary shall solicit 
                      applications to award 3-year grants in each of 
                      fiscal years 2012, 2013, and 2014 to local 
                      organizations and entities to conduct, consistent 
                      with subsection (b), programs and activities in 
                      States that do not submit an application for an 
                      allotment under this section for fiscal year 2010 
                      or 2011.
                          ``(ii) Faith-based organizations or 
                      consortia.--The Secretary may solicit and award 
                      grants under this paragraph to faith-based 
                      organizations or consortia.
                    ``(C) Evaluation.--An organization or entity awarded 
                a grant under this paragraph shall agree to participate 
                in a rigorous Federal evaluation.
            ``(5) Maintenance of effort.--No payment shall be made to a 
        State from the allotment determined for the State under this 
        subsection or to a local organization or entity awarded

[[Page 124 STAT. 349]]

        a grant under paragraph (4), if the expenditure of non-federal 
        funds by the State, organization, or entity for activities, 
        programs, or initiatives for which amounts from allotments and 
        grants under this subsection may be expended is less than the 
        amount expended by the State, organization, or entity for such 
        programs or initiatives for fiscal year 2009.
            ``(6) Data collection and reporting.--A State or local 
        organization or entity receiving funds under this section shall 
        cooperate with such requirements relating to the collection of 
        data and information and reporting on outcomes regarding the 
        programs and activities carried out with such funds, as the 
        Secretary shall specify.

    ``(b) Purpose.--
            ``(1) In general.--The purpose of an allotment under 
        subsection (a)(1) to a State is to enable the State (or, in the 
        case of grants made under subsection (a)(4)(B), to enable a 
        local organization or entity) to carry out personal 
        responsibility education programs consistent with this 
        subsection.
            ``(2) Personal responsibility education programs.--
                    ``(A) <<NOTE: Definition.>> In general.--In this 
                section, the term `personal responsibility education 
                program' means a program that is designed to educate 
                adolescents on--
                          ``(i) both abstinence and contraception for 
                      the prevention of pregnancy and sexually 
                      transmitted infections, including HIV/AIDS, 
                      consistent with the requirements of subparagraph 
                      (B); and
                          ``(ii) at least 3 of the adulthood preparation 
                      subjects described in subparagraph (C).
                    ``(B) Requirements.--The requirements of this 
                subparagraph are the following:
                          ``(i) The program replicates evidence-based 
                      effective programs or substantially incorporates 
                      elements of effective programs that have been 
                      proven on the basis of rigorous scientific 
                      research to change behavior, which means delaying 
                      sexual activity, increasing condom or 
                      contraceptive use for sexually active youth, or 
                      reducing pregnancy among youth.
                          ``(ii) The program is medically-accurate and 
                      complete.
                          ``(iii) The program includes activities to 
                      educate youth who are sexually active regarding 
                      responsible sexual behavior with respect to both 
                      abstinence and the use of contraception.
                          ``(iv) The program places substantial emphasis 
                      on both abstinence and contraception for the 
                      prevention of pregnancy among youth and sexually 
                      transmitted infections.
                          ``(v) The program provides age-appropriate 
                      information and activities.
                          ``(vi) The information and activities carried 
                      out under the program are provided in the cultural 
                      context that is most appropriate for individuals 
                      in the particular population group to which they 
                      are directed.
                    ``(C) Adulthood preparation subjects.--The adulthood 
                preparation subjects described in this subparagraph are 
                the following:

[[Page 124 STAT. 350]]

                          ``(i) Healthy relationships, such as positive 
                      self-esteem and relationship dynamics, 
                      friendships, dating, romantic involvement, 
                      marriage, and family interactions.
                          ``(ii) Adolescent development, such as the 
                      development of healthy attitudes and values about 
                      adolescent growth and development, body image, 
                      racial and ethnic diversity, and other related 
                      subjects.
                          ``(iii) Financial literacy.
                          ``(iv) Parent-child communication.
                          ``(v) Educational and career success, such as 
                      developing skills for employment preparation, job 
                      seeking, independent living, financial self-
                      sufficiency, and workplace productivity.
                          ``(vi) Healthy life skills, such as goal-
                      setting, decision making, negotiation, 
                      communication and interpersonal skills, and stress 
                      management.

    ``(c) Reservations of Funds.--
            ``(1) Grants to implement innovative strategies.--From the 
        amount appropriated under subsection (f) for the fiscal year, 
        the Secretary shall reserve $10,000,000 of such amount for 
        purposes of awarding grants to entities to implement innovative 
        youth pregnancy prevention strategies and target services to 
        high-risk, vulnerable, and culturally under-represented youth 
        populations, including youth in foster care, homeless youth, 
        youth with HIV/AIDS, pregnant women who are under 21 years of 
        age and their partners, mothers who are under 21 years of age 
        and their partners, and youth residing in areas with high birth 
        rates for youth. An entity awarded a grant under this paragraph 
        shall agree to participate in a rigorous Federal evaluation of 
        the activities carried out with grant funds.
            ``(2) Other reservations.--From the amount appropriated 
        under subsection (f) for the fiscal year that remains after the 
        application of paragraph (1), the Secretary shall reserve the 
        following amounts:
                    ``(A) Grants for indian tribes or tribal 
                organizations.--The Secretary shall reserve 5 percent of 
                such remainder for purposes of awarding grants to Indian 
                tribes and tribal organizations in such manner, and 
                subject to such requirements, as the Secretary, in 
                consultation with Indian tribes and tribal 
                organizations, determines appropriate.
                    ``(B) Secretarial responsibilities.--
                          ``(i) Reservation of funds.--The Secretary 
                      shall reserve 10 percent of such remainder for 
                      expenditures by the Secretary for the activities 
                      described in clauses (ii) and (iii).
                          ``(ii) Program support.--The Secretary shall 
                      provide, directly or through a competitive grant 
                      process, research, training and technical 
                      assistance, including dissemination of research 
                      and information regarding effective and promising 
                      practices, providing consultation and resources on 
                      a broad array of teen pregnancy prevention 
                      strategies, including abstinence and 
                      contraception, and developing resources and 
                      materials to support the activities of recipients 
                      of grants and other State, tribal, and community 
                      organizations working

[[Page 124 STAT. 351]]

                      to reduce teen pregnancy. In carrying out such 
                      functions, the Secretary shall collaborate with a 
                      variety of entities that have expertise in the 
                      prevention of teen pregnancy, HIV and sexually 
                      transmitted infections, healthy relationships, 
                      financial literacy, and other topics addressed 
                      through the personal responsibility education 
                      programs.
                          ``(iii) Evaluation.--The Secretary shall 
                      evaluate the programs and activities carried out 
                      with funds made available through allotments or 
                      grants under this section.

    ``(d) Administration.--
            ``(1) In general.--The Secretary shall administer this 
        section through the Assistant Secretary for the Administration 
        for Children and Families within the Department of Health and 
        Human Services.
            ``(2) Application of other provisions of title.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the other provisions of this title 
                shall not apply to allotments or grants made under this 
                section.
                    ``(B) Exceptions.--The following provisions of this 
                title shall apply to allotments and grants made under 
                this section to the same extent and in the same manner 
                as such provisions apply to allotments made under 
                section 502(c):
                          ``(i) Section 504(b)(6) (relating to 
                      prohibition on payments to excluded individuals 
                      and entities).
                          ``(ii) Section 504(c) (relating to the use of 
                      funds for the purchase of technical assistance).
                          ``(iii) Section 504(d) (relating to a 
                      limitation on administrative expenditures).
                          ``(iv) Section 506 (relating to reports and 
                      audits), but only to the extent determined by the 
                      Secretary to be appropriate for grants made under 
                      this section.
                          ``(v) Section 507 (relating to penalties for 
                      false statements).
                          ``(vi) Section 508 (relating to 
                      nondiscrimination).

    ``(e) Definitions.--In this section:
            ``(1) Age-appropriate.--The term `age-appropriate', with 
        respect to the information in pregnancy prevention, means 
        topics, messages, and teaching methods suitable to particular 
        ages or age groups of children and adolescents, based on 
        developing cognitive, emotional, and behavioral capacity typical 
        for the age or age group.
            ``(2) Medically accurate and complete.--The term `medically 
        accurate and complete' means verified or supported by the weight 
        of research conducted in compliance with accepted scientific 
        methods and--
                    ``(A) published in peer-reviewed journals, where 
                applicable; or
                    ``(B) comprising information that leading 
                professional organizations and agencies with relevant 
                expertise in the field recognize as accurate, objective, 
                and complete.
            ``(3) Indian tribes; tribal organizations.--The terms 
        `Indian tribe' and `Tribal organization' have the meanings given 
        such terms in section 4 of the Indian Health Care Improvement 
        Act (25 U.S.C. 1603)).

[[Page 124 STAT. 352]]

            ``(4) Youth.--The term `youth' means an individual who has 
        attained age 10 but has not attained age 20.

    ``(f) Appropriation.--For the purpose of carrying out this section, 
there is appropriated, out of any money in the Treasury not otherwise 
appropriated, $75,000,000 for each of fiscal years 2010 through 2014. 
Amounts appropriated under this subsection shall remain available until 
expended.''.

SEC. 2954. RESTORATION OF FUNDING FOR ABSTINENCE EDUCATION.

    Section 510 of the Social Security Act (42 U.S.C. 710) is amended--
            (1) in subsection (a), by striking ``fiscal year 1998 and 
        each subsequent fiscal year'' and inserting ``each of fiscal 
        years 2010 through 2014''; and
            (2) in subsection (d)--
                    (A) in the first sentence, by striking ``1998 
                through 2003'' and inserting ``2010 through 2014''; and
                    (B) in the second sentence, by inserting ``(except 
                that such appropriation shall be made on the date of 
                enactment of the Patient Protection and Affordable Care 
                Act in the case of fiscal year 2010)'' before the 
                period.

SEC. 2955. INCLUSION OF INFORMATION ABOUT THE IMPORTANCE OF HAVING A 
            HEALTH CARE POWER OF ATTORNEY IN TRANSITION PLANNING FOR 
            CHILDREN AGING OUT OF FOSTER CARE AND INDEPENDENT LIVING 
            PROGRAMS.

    (a) Transition Planning.--Section 475(5)(H) of the Social Security 
Act (42 U.S.C. 675(5)(H)) is amended by inserting ``includes information 
about the importance of designating another individual to make health 
care treatment decisions on behalf of the child if the child becomes 
unable to participate in such decisions and the child does not have, or 
does not want, a relative who would otherwise be authorized under State 
law to make such decisions, and provides the child with the option to 
execute a health care power of attorney, health care proxy, or other 
similar document recognized under State law,'' after ``employment 
services,''.
    (b) Independent Living Education.--Section 477(b)(3) of such Act (42 
U.S.C. 677(b)(3)) is amended by adding at the end the following:
                    ``(K) <<NOTE: Certification.>> A certification by 
                the chief executive officer of the State that the State 
                will ensure that an adolescent participating in the 
                program under this section are provided with education 
                about the importance of designating another individual 
                to make health care treatment decisions on behalf of the 
                adolescent if the adolescent becomes unable to 
                participate in such decisions and the adolescent does 
                not have, or does not want, a relative who would 
                otherwise be authorized under State law to make such 
                decisions, whether a health care power of attorney, 
                health care proxy, or other similar document is 
                recognized under State law, and how to execute such a 
                document if the adolescent wants to do so.''.

    (c) Health Oversight and Coordination Plan.--Section 422(b)(15)(A) 
of such Act (42 U.S.C. 622(b)(15)(A)) is amended--
            (1) in clause (v), by striking ``and'' at the end; and
            (2) by adding at the end the following:
                          ``(vii) steps to ensure that the components of 
                      the transition plan development process required 
                      under

[[Page 124 STAT. 353]]

                      section 475(5)(H) that relate to the health care 
                      needs of children aging out of foster care, 
                      including the requirements to include options for 
                      health insurance, information about a health care 
                      power of attorney, health care proxy, or other 
                      similar document recognized under State law, and 
                      to provide the child with the option to execute 
                      such a document, are met; and''.

    (d) <<NOTE: 42 USC 622 note.>> Effective Date.--The amendments made 
by this section take effect on October 1, 2010.

     TITLE III--IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH CARE

        Subtitle A--Transforming the Health Care Delivery System

 PART I--LINKING PAYMENT TO QUALITY OUTCOMES UNDER THE MEDICARE PROGRAM

SEC. 3001. HOSPITAL VALUE-BASED PURCHASING PROGRAM.

    (a) Program.--
            (1) In general.--Section 1886 of the Social Security Act (42 
        U.S.C. 1395ww), as amended by section 4102(a) of the HITECH Act 
        (Public Law 111-5), is amended by adding at the end the 
        following new subsection:

    ``(o) Hospital Value-Based Purchasing Program.--
            ``(1) Establishment.--
                    ``(A) In general.--Subject to the succeeding 
                provisions of this subsection, the Secretary shall 
                establish a hospital value-based purchasing program (in 
                this subsection referred to as the `Program') under 
                which value-based incentive payments are made in a 
                fiscal year to hospitals that meet the performance 
                standards under paragraph (3) for the performance period 
                for such fiscal year (as established under paragraph 
                (4)).
                    ``(B) Program to begin in fiscal year 2013.--The 
                Program shall apply to payments for discharges occurring 
                on or after October 1, 2012.
                    ``(C) Applicability of program to hospitals.--
                          ``(i) In general.--For purposes of this 
                      subsection, subject to clause (ii), the term 
                      `hospital' means a subsection (d) hospital (as 
                      defined in subsection (d)(1)(B)).
                          ``(ii) Exclusions.--The term `hospital' shall 
                      not include, with respect to a fiscal year, a 
                      hospital--
                                    ``(I) that is subject to the payment 
                                reduction under subsection 
                                (b)(3)(B)(viii)(I) for such fiscal year;
                                    ``(II) for which, during the 
                                performance period for such fiscal year, 
                                the Secretary has cited deficiencies 
                                that pose immediate jeopardy to the 
                                health or safety of patients;

[[Page 124 STAT. 354]]

                                    ``(III) for which there are not a 
                                minimum number (as determined by the 
                                Secretary) of measures that apply to the 
                                hospital for the performance period for 
                                such fiscal year; or
                                    ``(IV) for which there are not a 
                                minimum number (as determined by the 
                                Secretary) of cases for the measures 
                                that apply to the hospital for the 
                                performance period for such fiscal year.
                          ``(iii) Independent analysis.--For purposes of 
                      determining the minimum numbers under subclauses 
                      (III) and (IV) of clause (ii), the Secretary shall 
                      have conducted an independent analysis of what 
                      numbers are appropriate.
                          ``(iv) Exemption.--In the case of a hospital 
                      that is paid under section 1814(b)(3), the 
                      Secretary may exempt such hospital from the 
                      application of this subsection if the State which 
                      is paid under such section submits an annual 
                      report to the Secretary describing how a similar 
                      program in the State for a participating hospital 
                      or hospitals achieves or surpasses the measured 
                      results in terms of patient health outcomes and 
                      cost savings established under this subsection.
            ``(2) Measures.--
                    ``(A) In general.--The Secretary shall select 
                measures for purposes of the Program. Such measures 
                shall be selected from the measures specified under 
                subsection (b)(3)(B)(viii).
                    ``(B) Requirements.--
                          ``(i) For fiscal year 2013.--For value-based 
                      incentive payments made with respect to discharges 
                      occurring during fiscal year 2013, the Secretary 
                      shall ensure the following:
                                    ``(I) Conditions or procedures.--
                                Measures are selected under subparagraph 
                                (A) that cover at least the following 5 
                                specific conditions or procedures:
                                            ``(aa) Acute myocardial 
                                        infarction (AMI).
                                            ``(bb) Heart failure.
                                            ``(cc) Pneumonia.
                                            ``(dd) Surgeries, as 
                                        measured by the Surgical Care 
                                        Improvement Project (formerly 
                                        referred to as `Surgical 
                                        Infection Prevention' for 
                                        discharges occurring before July 
                                        2006).
                                            ``(ee) Healthcare-associated 
                                        infections, as measured by the 
                                        prevention metrics and targets 
                                        established in the HHS Action 
                                        Plan to Prevent Healthcare-
                                        Associated Infections (or any 
                                        successor plan) of the 
                                        Department of Health and Human 
                                        Services.
                                    ``(II) HCAHPS.--Measures selected 
                                under subparagraph (A) shall be related 
                                to the Hospital Consumer Assessment of 
                                Healthcare Providers and Systems survey 
                                (HCAHPS).
                          ``(ii) Inclusion of efficiency measures.--For 
                      value-based incentive payments made with respect 
                      to

[[Page 124 STAT. 355]]

                      discharges occurring during fiscal year 2014 or a 
                      subsequent fiscal year, the Secretary shall ensure 
                      that measures selected under subparagraph (A) 
                      include efficiency measures, including measures of 
                      `Medicare spending per beneficiary'. Such measures 
                      shall be adjusted for factors such as age, sex, 
                      race, severity of illness, and other factors that 
                      the Secretary determines appropriate.
                    ``(C) Limitations.--
                          ``(i) Time requirement for prior reporting and 
                      notice.--The Secretary may not select a measure 
                      under subparagraph (A) for use under the Program 
                      with respect to a performance period for a fiscal 
                      year (as established under paragraph (4)) unless 
                      such measure has been specified under subsection 
                      (b)(3)(B)(viii) and included on the Hospital 
                      Compare Internet website for at least 1 year prior 
                      to the beginning of such performance period.
                          ``(ii) Measure not applicable unless hospital 
                      furnishes services appropriate to the measure.--A 
                      measure selected under subparagraph (A) shall not 
                      apply to a hospital if such hospital does not 
                      furnish services appropriate to such measure.
                    ``(D) Replacing measures.--Subclause (VI) of 
                subsection (b)(3)(B)(viii) shall apply to measures 
                selected under subparagraph (A) in the same manner as 
                such subclause applies to measures selected under such 
                subsection.
            ``(3) Performance standards.--
                    ``(A) Establishment.--The Secretary shall establish 
                performance standards with respect to measures selected 
                under paragraph (2) for a performance period for a 
                fiscal year (as established under paragraph (4)).
                    ``(B) Achievement and improvement.--The performance 
                standards established under subparagraph (A) shall 
                include levels of achievement and improvement.
                    ``(C) Timing.--The Secretary shall establish and 
                announce the performance standards under subparagraph 
                (A) not later than 60 days prior to the beginning of the 
                performance period for the fiscal year involved.
                    ``(D) Considerations in establishing standards.--In 
                establishing performance standards with respect to 
                measures under this paragraph, the Secretary shall take 
                into account appropriate factors, such as--
                          ``(i) practical experience with the measures 
                      involved, including whether a significant 
                      proportion of hospitals failed to meet the 
                      performance standard during previous performance 
                      periods;
                          ``(ii) historical performance standards;
                          ``(iii) improvement rates; and
                          ``(iv) the opportunity for continued 
                      improvement.
            ``(4) Performance period.--For purposes of the Program, the 
        Secretary shall establish the performance period for a fiscal 
        year. Such performance period shall begin and end prior to the 
        beginning of such fiscal year.
            ``(5) Hospital performance score.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall develop a methodology for assessing the

[[Page 124 STAT. 356]]

                total performance of each hospital based on performance 
                standards with respect to the measures selected under 
                paragraph (2) for a performance period (as established 
                under paragraph (4)). Using such methodology, the 
                Secretary shall provide for an assessment (in this 
                subsection referred to as the `hospital performance 
                score') for each hospital for each performance period.
                    ``(B) Application.--
                          ``(i) Appropriate distribution.--The Secretary 
                      shall ensure that the application of the 
                      methodology developed under subparagraph (A) 
                      results in an appropriate distribution of value-
                      based incentive payments under paragraph (6) among 
                      hospitals achieving different levels of hospital 
                      performance scores, with hospitals achieving the 
                      highest hospital performance scores receiving the 
                      largest value-based incentive payments.
                          ``(ii) Higher of achievement or improvement.--
                      The methodology developed under subparagraph (A) 
                      shall provide that the hospital performance score 
                      is determined using the higher of its achievement 
                      or improvement score for each measure.
                          ``(iii) Weights.--The methodology developed 
                      under subparagraph (A) shall provide for the 
                      assignment of weights for categories of measures 
                      as the Secretary determines appropriate.
                          ``(iv) No minimum performance standard.--The 
                      Secretary shall not set a minimum performance 
                      standard in determining the hospital performance 
                      score for any hospital.
                          ``(v) Reflection of measures applicable to the 
                      hospital.--The hospital performance score for a 
                      hospital shall reflect the measures that apply to 
                      the hospital.
            ``(6) Calculation of value-based incentive payments.--
                    ``(A) <<NOTE: Determination.>> In general.--In the 
                case of a hospital that the Secretary determines meets 
                (or exceeds) the performance standards under paragraph 
                (3) for the performance period for a fiscal year (as 
                established under paragraph (4)), the Secretary shall 
                increase the base operating DRG payment amount (as 
                defined in paragraph (7)(D)), as determined after 
                application of paragraph (7)(B)(i), for a hospital for 
                each discharge occurring in such fiscal year by the 
                value-based incentive payment amount.
                    ``(B) Value-based incentive payment amount.--The 
                value-based incentive payment amount for each discharge 
                of a hospital in a fiscal year shall be equal to the 
                product of--
                          ``(i) the base operating DRG payment amount 
                      (as defined in paragraph (7)(D)) for the discharge 
                      for the hospital for such fiscal year; and
                          ``(ii) the value-based incentive payment 
                      percentage specified under subparagraph (C) for 
                      the hospital for such fiscal year.
                    ``(C) Value-based incentive payment percentage.--

[[Page 124 STAT. 357]]

                          ``(i) In general.--The Secretary shall specify 
                      a value-based incentive payment percentage for a 
                      hospital for a fiscal year.
                          ``(ii) Requirements.--In specifying the value-
                      based incentive payment percentage for each 
                      hospital for a fiscal year under clause (i), the 
                      Secretary shall ensure that--
                                    ``(I) such percentage is based on 
                                the hospital performance score of the 
                                hospital under paragraph (5); and
                                    ``(II) the total amount of value-
                                based incentive payments under this 
                                paragraph to all hospitals in such 
                                fiscal year is equal to the total amount 
                                available for value-based incentive 
                                payments for such fiscal year under 
                                paragraph (7)(A), as estimated by the 
                                Secretary.
            ``(7) Funding for value-based incentive payments.--
                    ``(A) Amount.--The total amount available for value-
                based incentive payments under paragraph (6) for all 
                hospitals for a fiscal year shall be equal to the total 
                amount of reduced payments for all hospitals under 
                subparagraph (B) for such fiscal year, as estimated by 
                the Secretary.
                    ``(B) Adjustment to payments.--
                          ``(i) In general.--The Secretary shall reduce 
                      the base operating DRG payment amount (as defined 
                      in subparagraph (D)) for a hospital for each 
                      discharge in a fiscal year (beginning with fiscal 
                      year 2013) by an amount equal to the applicable 
                      percent (as defined in subparagraph (C)) of the 
                      base operating DRG payment amount for the 
                      discharge for the hospital for such fiscal year. 
                      The Secretary shall make such reductions for all 
                      hospitals in the fiscal year involved, regardless 
                      of whether or not the hospital has been determined 
                      by the Secretary to have earned a value-based 
                      incentive payment under paragraph (6) for such 
                      fiscal year.
                          ``(ii) No effect on other payments.--Payments 
                      described in items (aa) and (bb) of subparagraph 
                      (D)(i)(II) for a hospital shall be determined as 
                      if this subsection had not been enacted.
                    ``(C) Applicable percent defined.--For purposes of 
                subparagraph (B), the term `applicable percent' means--
                          ``(i) with respect to fiscal year 2013, 1.0 
                      percent;
                          ``(ii) with respect to fiscal year 2014, 1.25 
                      percent;
                          ``(iii) with respect to fiscal year 2015, 1.5 
                      percent;
                          ``(iv) with respect to fiscal year 2016, 1.75 
                      percent; and
                          ``(v) with respect to fiscal year 2017 and 
                      succeeding fiscal years, 2 percent.
                    ``(D) Base operating drg payment amount defined.--
                          ``(i) In general.--Except as provided in 
                      clause (ii), in this subsection, the term `base 
                      operating DRG payment amount' means, with respect 
                      to a hospital for a fiscal year--
                                    ``(I) the payment amount that would 
                                otherwise be made under subsection (d) 
                                (determined without

[[Page 124 STAT. 358]]

                                regard to subsection (q)) for a 
                                discharge if this subsection did not 
                                apply; reduced by
                                    ``(II) any portion of such payment 
                                amount that is attributable to--
                                            ``(aa) payments under 
                                        paragraphs (5)(A), (5)(B), 
                                        (5)(F), and (12) of subsection 
                                        (d); and
                                            ``(bb) such other payments 
                                        under subsection (d) determined 
                                        appropriate by the Secretary.
                          ``(ii) Special rules for certain hospitals.--
                                    ``(I) Sole community hospitals and 
                                medicare-dependent, small rural 
                                hospitals.--In the case of a medicare-
                                dependent, small rural hospital (with 
                                respect to discharges occurring during 
                                fiscal year 2012 and 2013) or a sole 
                                community hospital, in applying 
                                subparagraph (A)(i), the payment amount 
                                that would otherwise be made under 
                                subsection (d) shall be determined 
                                without regard to subparagraphs (I) and 
                                (L) of subsection (b)(3) and 
                                subparagraphs (D) and (G) of subsection 
                                (d)(5).
                                    ``(II) Hospitals paid under section 
                                1814.--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.
            ``(8) Announcement of net result of 
        adjustments. <<NOTE: Deadline.>> --Under the Program, the 
        Secretary shall, not later than 60 days prior to the fiscal year 
        involved, inform each hospital of the adjustments to payments to 
        the hospital for discharges occurring in such fiscal year under 
        paragraphs (6) and (7)(B)(i).
            ``(9) No effect in subsequent fiscal years.--The value-based 
        incentive payment under paragraph (6) and the payment reduction 
        under paragraph (7)(B)(i) shall each apply only with respect to 
        the fiscal year involved, and the Secretary shall not take into 
        account such value-based incentive payment or payment reduction 
        in making payments to a hospital under this section in a 
        subsequent fiscal year.
            ``(10) Public reporting.--
                    ``(A) Hospital specific information.--
                          ``(i) In general.--The Secretary shall make 
                      information available to the public regarding the 
                      performance of individual hospitals under the 
                      Program, including--
                                    ``(I) the performance of the 
                                hospital with respect to each measure 
                                that applies to the hospital;
                                    ``(II) the performance of the 
                                hospital with respect to each condition 
                                or procedure; and
                                    ``(III) the hospital performance 
                                score assessing the total performance of 
                                the hospital.
                          ``(ii) Opportunity to review and submit 
                      corrections.--The Secretary shall ensure that a 
                      hospital has the opportunity to review, and submit 
                      corrections for, the information to be made public 
                      with respect to the hospital under clause (i) 
                      prior to such information being made public.

[[Page 124 STAT. 359]]

                          ``(iii) Website.--Such information shall be 
                      posted on the Hospital Compare Internet website in 
                      an easily understandable format.
                    ``(B) Aggregate information.-- <<NOTE: Web 
                posting.>> The Secretary shall periodically post on the 
                Hospital Compare Internet website aggregate information 
                on the Program, including--
                          ``(i) the number of hospitals receiving value-
                      based incentive payments under paragraph (6) and 
                      the range and total amount of such value-based 
                      incentive payments; and
                          ``(ii) the number of hospitals receiving less 
                      than the maximum value-based incentive payment 
                      available to the hospital for the fiscal year 
                      involved and the range and amount of such 
                      payments.
            ``(11) Implementation.--
                    ``(A) Appeals.--The Secretary shall establish a 
                process by which hospitals may appeal the calculation of 
                a hospital's performance assessment with respect to the 
                performance standards established under paragraph (3)(A) 
                and the hospital performance score under paragraph (5). 
                The Secretary shall ensure that such process provides 
                for resolution of such appeals in a timely manner.
                    ``(B) Limitation on review.--Except as provided in 
                subparagraph (A), there shall be no administrative or 
                judicial review under section 1869, section 1878, or 
                otherwise of the following:
                          ``(i) The methodology used to determine the 
                      amount of the value-based incentive payment under 
                      paragraph (6) and the determination of such 
                      amount.
                          ``(ii) The determination of the amount of 
                      funding available for such value-based incentive 
                      payments under paragraph (7)(A) and the payment 
                      reduction under paragraph (7)(B)(i).
                          ``(iii) The establishment of the performance 
                      standards under paragraph (3) and the performance 
                      period under paragraph (4).
                          ``(iv) The measures specified under subsection 
                      (b)(3)(B)(viii) and the measures selected under 
                      paragraph (2).
                          ``(v) The methodology developed under 
                      paragraph (5) that is used to calculate hospital 
                      performance scores and the calculation of such 
                      scores.
                          ``(vi) The validation methodology specified in 
                      subsection (b)(3)(B)(viii)(XI).
                    ``(C) Consultation with small hospitals.--The 
                Secretary shall consult with small rural and urban 
                hospitals on the application of the Program to such 
                hospitals.
            ``(12) Promulgation of regulations.--The Secretary shall 
        promulgate regulations to carry out the Program, including the 
        selection of measures under paragraph (2), the methodology 
        developed under paragraph (5) that is used to calculate hospital 
        performance scores, and the methodology used to determine the 
        amount of value-based incentive payments under paragraph (6).''.
            (2) Amendments for reporting of hospital quality 
        information.--Section 1886(b)(3)(B)(viii) of the Social Security 
        Act (42 U.S.C. 1395ww(b)(3)(B)(viii)) is amended--

[[Page 124 STAT. 360]]

                    (A) in subclause (II), by adding at the end the 
                following sentence: ``The Secretary may require 
                hospitals to submit data on measures that are not used 
                for the determination of value-based incentive payments 
                under subsection (o).'';
                    (B) in subclause (V), by striking ``beginning with 
                fiscal year 2008'' and inserting ``for fiscal years 2008 
                through 2012'';
                    (C) in subclause (VII), in the first sentence, by 
                striking ``data submitted'' and inserting ``information 
                regarding measures submitted''; and
                    (D) by adding at the end the following new 
                subclauses:

    ``(VIII) <<NOTE: Effective date.>> Effective for payments beginning 
with fiscal year 2013, with respect to quality measures for outcomes of 
care, the Secretary shall provide for such risk adjustment as the 
Secretary determines to be appropriate to maintain incentives for 
hospitals to treat patients with severe illnesses or conditions.

    ``(IX)(aa) Subject to item (bb), effective for payments beginning 
with fiscal year 2013, each measure specified by the Secretary under 
this clause shall be endorsed by the entity with a contract under 
section 1890(a).
    ``(bb) In the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical measure 
has not been endorsed by the entity with a contract under section 
1890(a), the Secretary may specify a measure that is not so endorsed as 
long as due consideration is given to measures that have been endorsed 
or adopted by a consensus organization identified by the Secretary.
    ``(X) To the extent practicable, the Secretary shall, with input 
from consensus organizations and other stakeholders, take steps to 
ensure that the measures specified by the Secretary under this clause 
are coordinated and aligned with quality measures applicable to--
            ``(aa) physicians under section 1848(k); and
            ``(bb) other providers of services and suppliers under this 
        title.

    ``(XI) <<NOTE: Validation process.>> The Secretary shall establish a 
process to validate measures specified under this clause as appropriate. 
Such process shall include the auditing of a number of randomly selected 
hospitals sufficient to ensure validity of the reporting program under 
this clause as a whole and shall provide a hospital with an opportunity 
to appeal the validation of measures reported by such hospital.''.
            (3) Website improvements.--Section 1886(b)(3)(B) of the 
        Social Security Act (42 U.S.C. 1395ww(b)(3)(B)), as amended by 
        section 4102(b) of the HITECH Act (Public Law 111-5), is amended 
        by adding at the end the following new clause:

    ``(x)(I) <<NOTE: Web posting. Reports.>> The Secretary shall develop 
standard Internet website reports tailored to meet the needs of various 
stakeholders such as hospitals, patients, researchers, and policymakers. 
The Secretary shall seek input from such stakeholders in determining the 
type of information that is useful and the formats that best facilitate 
the use of the information.

    ``(II) The Secretary shall modify the Hospital Compare Internet 
website to make the use and navigation of that website readily available 
to individuals accessing it.''.
            (4) GAO study and report.--
                    (A) Study.--The Comptroller General of the United 
                States shall conduct a study on the performance of the

[[Page 124 STAT. 361]]

                hospital value-based purchasing program established 
                under section 1886(o) of the Social Security Act, as 
                added by paragraph (1). Such study shall include an 
                analysis of the impact of such program on--
                          (i) the quality of care furnished to Medicare 
                      beneficiaries, including diverse Medicare 
                      beneficiary populations (such as diverse in terms 
                      of race, ethnicity, and socioeconomic status);
                          (ii) expenditures under the Medicare program, 
                      including any reduced expenditures under Part A of 
                      title XVIII of such Act that are attributable to 
                      the improvement in the delivery of inpatient 
                      hospital services by reason of such hospital 
                      value-based purchasing program;
                          (iii) the quality performance among safety net 
                      hospitals and any barriers such hospitals face in 
                      meeting the performance standards applicable under 
                      such hospital value-based purchasing program; and
                          (iv) the quality performance among small rural 
                      and small urban hospitals and any barriers such 
                      hospitals face in meeting the performance 
                      standards applicable under such hospital value-
                      based purchasing program.
                    (B) Reports.--
                          (i) Interim report.--Not later than October 1, 
                      2015, the Comptroller General of the United States 
                      shall submit to Congress an interim report 
                      containing the results of the study conducted 
                      under subparagraph (A), together with 
                      recommendations for such legislation and 
                      administrative action as the Comptroller General 
                      determines appropriate.
                          (ii) Final report.--Not later than July 1, 
                      2017, the Comptroller General of the United States 
                      shall submit to Congress a report containing the 
                      results of the study conducted under subparagraph 
                      (A), together with recommendations for such 
                      legislation and administrative action as the 
                      Comptroller General determines appropriate.
            (5) HHS study and report.--
                    (A) Study.--The Secretary of Health and Human 
                Services shall conduct a study on the performance of the 
                hospital value-based purchasing program established 
                under section 1886(o) of the Social Security Act, as 
                added by paragraph (1). Such study shall include an 
                analysis--
                          (i) of ways to improve the hospital value-
                      based purchasing program and ways to address any 
                      unintended consequences that may occur as a result 
                      of such program;
                          (ii) of whether the hospital value-based 
                      purchasing program resulted in lower spending 
                      under the Medicare program under title XVIII of 
                      such Act or other financial savings to hospitals;
                          (iii) the appropriateness of the Medicare 
                      program sharing in any savings generated through 
                      the hospital value-based purchasing program; and
                          (iv) any other area determined appropriate by 
                      the Secretary.

[[Page 124 STAT. 362]]

                    (B) Report.--Not later than January 1, 2016, the 
                Secretary of Health and Human Services shall submit to 
                Congress a report containing the results of the study 
                conducted under subparagraph (A), together with 
                recommendations for such legislation and administrative 
                action as the Secretary determines appropriate.

    (b) <<NOTE: 42 USC 1395ww note.>> Value-Based Purchasing 
Demonstration Programs.--
            (1) Value-based purchasing demonstration program for 
        inpatient critical access hospitals.--
                    (A) Establishment.--
                          (i) In general.-- <<NOTE: Deadline.>> Not 
                      later than 2 years after the date of enactment of 
                      this Act, the Secretary of Health and Human 
                      Services (in this subsection referred to as the 
                      ``Secretary'') shall establish a demonstration 
                      program under which the Secretary establishes a 
                      value-based purchasing program under the Medicare 
                      program under title XVIII of the Social Security 
                      Act for critical access hospitals (as defined in 
                      paragraph (1) of section 1861(mm) of such Act (42 
                      U.S.C. 1395x(mm))) with respect to inpatient 
                      critical access hospital services (as defined in 
                      paragraph (2) of such section) in order to test 
                      innovative methods of measuring and rewarding 
                      quality and efficient health care furnished by 
                      such hospitals.
                          (ii) Duration.--The demonstration program 
                      under this paragraph shall be conducted for a 3-
                      year period.
                          (iii) Sites.--The Secretary shall conduct the 
                      demonstration program under this paragraph at an 
                      appropriate number (as determined by the 
                      Secretary) of critical access hospitals. The 
                      Secretary shall ensure that such hospitals are 
                      representative of the spectrum of such hospitals 
                      that participate in the Medicare program.
                    (B) Waiver authority.--The Secretary may waive such 
                requirements of titles XI and XVIII of the Social 
                Security Act as may be necessary to carry out the 
                demonstration program under this paragraph.
                    (C) Budget neutrality requirement.--In conducting 
                the demonstration program under this section, the 
                Secretary shall ensure that the aggregate payments made 
                by the Secretary do not exceed the amount which the 
                Secretary would have paid if the demonstration program 
                under this section was not implemented.
                    (D) Report.--Not later than 18 months after the 
                completion of the demonstration program under this 
                paragraph, the Secretary shall submit to Congress a 
                report on the demonstration program together with--
                          (i) recommendations on the establishment of a 
                      permanent value-based purchasing program under the 
                      Medicare program for critical access hospitals 
                      with respect to inpatient critical access hospital 
                      services; and
                          (ii) recommendations for such other 
                      legislation and administrative action as the 
                      Secretary determines appropriate.

[[Page 124 STAT. 363]]

            (2) Value-based purchasing demonstration program for 
        hospitals excluded from hospital value-based purchasing program 
        as a result of insufficient numbers of measures and cases.--
                    (A) Establishment.--
                          (i) In general.-- <<NOTE: Deadline.>> Not 
                      later than 2 years after the date of enactment of 
                      this Act, the Secretary shall establish a 
                      demonstration program under which the Secretary 
                      establishes a value-based purchasing program under 
                      the Medicare program under title XVIII of the 
                      Social Security Act for applicable hospitals (as 
                      defined in clause (ii)) with respect to inpatient 
                      hospital services (as defined in section 1861(b) 
                      of the Social Security Act (42 U.S.C. 1395x(b))) 
                      in order to test innovative methods of measuring 
                      and rewarding quality and efficient health care 
                      furnished by such hospitals.
                          (ii) Applicable hospital defined.--For 
                      purposes of this paragraph, the term ``applicable 
                      hospital'' means a hospital described in subclause 
                      (III) or (IV) of section 1886(o)(1)(C)(ii) of the 
                      Social Security Act, as added by subsection 
                      (a)(1).
                          (iii) Duration.--The demonstration program 
                      under this paragraph shall be conducted for a 3-
                      year period.
                          (iv) Sites.--The Secretary shall conduct the 
                      demonstration program under this paragraph at an 
                      appropriate number (as determined by the 
                      Secretary) of applicable hospitals. The Secretary 
                      shall ensure that such hospitals are 
                      representative of the spectrum of such hospitals 
                      that participate in the Medicare program.
                    (B) Waiver authority.--The Secretary may waive such 
                requirements of titles XI and XVIII of the Social 
                Security Act as may be necessary to carry out the 
                demonstration program under this paragraph.
                    (C) Budget neutrality requirement.--In conducting 
                the demonstration program under this section, the 
                Secretary shall ensure that the aggregate payments made 
                by the Secretary do not exceed the amount which the 
                Secretary would have paid if the demonstration program 
                under this section was not implemented.
                    (D) Report.--Not later than 18 months after the 
                completion of the demonstration program under this 
                paragraph, the Secretary shall submit to Congress a 
                report on the demonstration program together with--
                          (i) recommendations on the establishment of a 
                      permanent value-based purchasing program under the 
                      Medicare program for applicable hospitals with 
                      respect to inpatient hospital services; and
                          (ii) recommendations for such other 
                      legislation and administrative action as the 
                      Secretary determines appropriate.

SEC. 3002. IMPROVEMENTS TO THE PHYSICIAN QUALITY REPORTING SYSTEM.

    (a) Extension.--Section 1848(m) of the Social Security Act (42 
U.S.C. 1395w-4(m)) is amended--

[[Page 124 STAT. 364]]

            (1) in paragraph (1)--
                    (A) in subparagraph (A), in the matter preceding 
                clause (i), by striking ``2010'' and inserting ``2014''; 
                and
                    (B) in subparagraph (B)--
                          (i) in clause (i), by striking ``and'' at the 
                      end;
                          (ii) in clause (ii), by striking the period at 
                      the end and inserting a semicolon; and
                          (iii) by adding at the end the following new 
                      clauses:
                          ``(iii) for 2011, 1.0 percent; and
                          ``(iv) for 2012, 2013, and 2014, 0.5 
                      percent.'';
            (2) in paragraph (3)--
                    (A) in subparagraph (A), in the matter preceding 
                clause (i), by inserting ``(or, for purposes of 
                subsection (a)(8), for the quality reporting period for 
                the year)'' after ``reporting period''; and
                    (B) in subparagraph (C)(i), by inserting ``, or, for 
                purposes of subsection (a)(8), for a quality reporting 
                period for the year'' after ``(a)(5), for a reporting 
                period for a year'';
            (3) in paragraph (5)(E)(iv), by striking ``subsection 
        (a)(5)(A)'' and inserting ``paragraphs (5)(A) and (8)(A) of 
        subsection (a)''; and
            (4) in paragraph (6)(C)--
                    (A) in clause (i)(II), by striking ``, 2009, 2010, 
                and 2011'' and inserting ``and subsequent years''; and
                    (B) in clause (iii)--
                          (i) by inserting ``(a)(8)'' after ``(a)(5)''; 
                      and
                          (ii) by striking ``under subparagraph (D)(iii) 
                      of such subsection'' and inserting ``under 
                      subsection (a)(5)(D)(iii) or the quality reporting 
                      period under subsection (a)(8)(D)(iii), 
                      respectively''.

    (b) Incentive Payment Adjustment for Quality Reporting.--Section 
1848(a) of the Social Security Act (42 U.S.C. 1395w-4(a)) is amended by 
adding at the end the following new paragraph:
            ``(8) Incentives for quality reporting.--
                    ``(A) Adjustment.--
                          ``(i) In general.--With respect to covered 
                      professional services furnished by an eligible 
                      professional during 2015 or any subsequent year, 
                      if the eligible professional does not 
                      satisfactorily submit data on quality measures for 
                      covered professional services for the quality 
                      reporting period for the year (as determined under 
                      subsection (m)(3)(A)), the fee schedule amount for 
                      such services furnished by such professional 
                      during the year (including the fee schedule amount 
                      for purposes of determining a payment based on 
                      such amount) shall be equal to the applicable 
                      percent of the fee schedule amount that would 
                      otherwise apply to such services under this 
                      subsection (determined after application of 
                      paragraphs (3), (5), and (7), but without regard 
                      to this paragraph).
                          ``(ii) Applicable percent.--For purposes of 
                      clause (i), the term `applicable percent' means--
                                    ``(I) for 2015, 98.5 percent; and
                                    ``(II) for 2016 and each subsequent 
                                year, 98 percent.

[[Page 124 STAT. 365]]

                    ``(B) Application.--
                          ``(i) Physician reporting system rules.--
                      Paragraphs (5), (6), and (8) of subsection (k) 
                      shall apply for purposes of this paragraph in the 
                      same manner as they apply for purposes of such 
                      subsection.
                          ``(ii) Incentive payment validation rules.--
                      Clauses (ii) and (iii) of subsection (m)(5)(D) 
                      shall apply for purposes of this paragraph in a 
                      similar manner as they apply for purposes of such 
                      subsection.
                    ``(C) Definitions.--For purposes of this paragraph:
                          ``(i) Eligible professional; covered 
                      professional services.--The terms `eligible 
                      professional' and `covered professional services' 
                      have the meanings given such terms in subsection 
                      (k)(3).
                          ``(ii) Physician reporting system.--The term 
                      `physician reporting system' means the system 
                      established under subsection (k).
                          ``(iii) Quality reporting period.--The term 
                      `quality reporting period' means, with respect to 
                      a year, a period specified by the Secretary.''.

    (c) Maintenance of Certification Programs.--
            (1) In general.--Section 1848(k)(4) of the Social Security 
        Act (42 U.S.C. 1395w-4(k)(4)) is amended by inserting ``or 
        through a Maintenance of Certification program operated by a 
        specialty body of the American Board of Medical Specialties that 
        meets the criteria for such a registry'' after ``Database)''.
            (2) <<NOTE: 42 USC 1395w-4 note.>> Effective date.--The 
        amendment made by paragraph (1) shall apply for years after 
        2010.

    (d) Integration of Physician Quality Reporting and EHR Reporting.--
Section 1848(m) of the Social Security Act (42 U.S.C. 1395w-4(m)) is 
amended by adding at the end the following new paragraph:
            ``(7) Integration of physician quality reporting and ehr 
        reporting. <<NOTE: Plan.>> --Not later than January 1, 2012, the 
        Secretary shall develop a plan to integrate 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 selection of measures, the reporting of 
                which would both demonstrate--
                          ``(i) meaningful use of an electronic health 
                      record for purposes of subsection (o); and
                          ``(ii) quality of care furnished to an 
                      individual.
                    ``(B) Such other activities as specified by the 
                Secretary.''.

    (e) 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.''.

    (f) Appeals.--Such section is further amended--
            (1) in subparagraph (E), by striking ``There shall'' and 
        inserting ``Except as provided in subparagraph (I), there 
        shall''; and

[[Page 124 STAT. 366]]

            (2) by adding at the end the following new subparagraph:
                    ``(I) Informal appeals process.-- 
                <<NOTE: Deadline.>> The Secretary shall, by not later 
                than January 1, 2011, establish and have in place an 
                informal process for eligible professionals to seek a 
                review of the determination that an eligible 
                professional did not satisfactorily submit data on 
                quality measures under this subsection.''.

SEC. 3003. IMPROVEMENTS TO THE PHYSICIAN FEEDBACK PROGRAM.

    (a) In General.--Section 1848(n) of the Social Security Act (42 
U.S.C. 1395w-4(n)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A)--
                          (i) by striking ``general.--The Secretary'' 
                      and inserting ``general.--
                          ``(i) Establishment.--The Secretary'';
                          (ii) in clause (i), as added by clause (i), by 
                      striking ``the `Program')'' and all that follows 
                      through the period at the end of the second 
                      sentence and inserting ``the `Program').''; and
                          (iii) by adding at the end the following new 
                      clauses:
                          ``(ii) Reports on resources.--The Secretary 
                      shall use claims data under this title (and may 
                      use other data) to provide confidential reports to 
                      physicians (and, as determined appropriate by the 
                      Secretary, to groups of physicians) that measure 
                      the resources involved in furnishing care to 
                      individuals under this title.
                          ``(iii) Inclusion of certain information.--If 
                      determined appropriate by the Secretary, the 
                      Secretary may include information on the quality 
                      of care furnished to individuals under this title 
                      by the physician (or group of physicians) in such 
                      reports.''; and
                    (B) in subparagraph (B), by striking ``subparagraph 
                (A)'' and inserting ``subparagraph (A)(ii)'';
            (2) in paragraph (4)--
                    (A) in the heading, by inserting ``initial'' after 
                ``focus''; and
                    (B) in the matter preceding subparagraph (A), by 
                inserting ``initial'' after ``focus the'';
            (3) in paragraph (6), by adding at the end the following new 
        sentence: ``For adjustments for reports on utilization under 
        paragraph (9), see subparagraph (D) of such paragraph.''; and
            (4) by adding at the end the following new paragraphs:
            ``(9) Reports on utilization.--
                    ``(A) Development of episode grouper.--
                          ``(i) In general.--The Secretary shall develop 
                      an episode grouper that combines separate but 
                      clinically related items and services into an 
                      episode of care for an individual, as appropriate.
                          ``(ii) Timeline for development.--The episode 
                      grouper described in subparagraph (A) shall be 
                      developed by not later than January 1, 2012.
                          ``(iii) Public availability.--The Secretary 
                      shall make the details of the episode grouper 
                      described in subparagraph (A) available to the 
                      public.
                          ``(iv) Endorsement.--The Secretary shall seek 
                      endorsement of the episode grouper described in

[[Page 124 STAT. 367]]

                      subparagraph (A) by the entity with a contract 
                      under section 1890(a).
                    ``(B) Reports on utilization.--Effective beginning 
                with 2012, the Secretary shall provide reports to 
                physicians that compare, as determined appropriate by 
                the Secretary, patterns of resource use of the 
                individual physician to such patterns of other 
                physicians.
                    ``(C) Analysis of data.--The Secretary shall, for 
                purposes of preparing reports under this paragraph, 
                establish methodologies as appropriate, such as to--
                          ``(i) attribute episodes of care, in whole or 
                      in part, to physicians;
                          ``(ii) identify appropriate physicians for 
                      purposes of comparison under subparagraph (B); and
                          ``(iii) aggregate episodes of care attributed 
                      to a physician under clause (i) into a composite 
                      measure per individual.
                    ``(D) Data adjustment.--In preparing reports under 
                this paragraph, the Secretary shall make appropriate 
                adjustments, including adjustments--
                          ``(i) to account for differences in 
                      socioeconomic and demographic characteristics, 
                      ethnicity, and health status of individuals (such 
                      as to recognize that less healthy individuals may 
                      require more intensive interventions); and
                          ``(ii) to eliminate the effect of geographic 
                      adjustments in payment rates (as described in 
                      subsection (e)).
                    ``(E) Public availability of methodology.--The 
                Secretary shall make available to the public--
                          ``(i) the methodologies established under 
                      subparagraph (C);
                          ``(ii) information regarding any adjustments 
                      made to data under subparagraph (D); and
                          ``(iii) aggregate reports with respect to 
                      physicians.
                    ``(F) Definition of physician.--In this paragraph:
                          ``(i) In general.--The term `physician' has 
                      the meaning given that term in section 1861(r)(1).
                          ``(ii) Treatment of groups.--Such term 
                      includes, as the Secretary determines appropriate, 
                      a group of physicians.
                    ``(G) Limitations on review.--There shall be no 
                administrative or judicial review under section 1869, 
                section 1878, or otherwise of the establishment of the 
                methodology under subparagraph (C), including the 
                determination of an episode of care under such 
                methodology.
            ``(10) Coordination with other value-based purchasing 
        reforms.--The Secretary shall coordinate the Program with the 
        value-based payment modifier established under subsection (p) 
        and, as the Secretary determines appropriate, other similar 
        provisions of this title.''.

    (b) Conforming Amendment.--Section 1890(b) of the Social Security 
Act (42 U.S.C. 1395aaa(b)) is amended by adding at the end the following 
new paragraph:
            ``(6) Review and endorsement of episode grouper under the 
        physician feedback program.--The entity shall provide for the 
        review and, as appropriate, the endorsement of the

[[Page 124 STAT. 368]]

        episode grouper developed by the Secretary under section 
        1848(n)(9)(A). Such review shall be conducted on an expedited 
        basis.''.

SEC. 3004. QUALITY REPORTING FOR LONG-TERM CARE HOSPITALS, INPATIENT 
            REHABILITATION HOSPITALS, AND HOSPICE PROGRAMS.

    (a) Long-term Care Hospitals.--Section 1886(m) of the Social 
Security Act (42 U.S.C. 1395ww(m)), as amended by section 3401(c), is 
amended by adding at the end the following new paragraph:
            ``(5) Quality reporting.--
                    ``(A) Reduction in update for failure to report.--
                          ``(i) In general.--Under the system described 
                      in paragraph (1), for rate year 2014 and each 
                      subsequent rate year, in the case of a long-term 
                      care hospital that does not submit data to the 
                      Secretary in accordance with subparagraph (C) with 
                      respect to such a rate year, any annual update to 
                      a standard Federal rate for discharges for the 
                      hospital during the rate year, and after 
                      application of paragraph (3), shall be reduced by 
                      2 percentage points.
                          ``(ii) Special rule.--The application of this 
                      subparagraph may result in such annual update 
                      being less than 0.0 for a rate year, and may 
                      result in payment rates under the system described 
                      in paragraph (1) for a rate year being less than 
                      such payment rates for the preceding rate year.
                    ``(B) Noncumulative application.--Any reduction 
                under subparagraph (A) shall apply only with respect to 
                the rate year involved and the Secretary shall not take 
                into account such reduction in computing the payment 
                amount under the system described in paragraph (1) for a 
                subsequent rate year.
                    ``(C) Submission of quality data.--For rate year 
                2014 and each subsequent rate year, each long-term care 
                hospital shall submit to the Secretary data on quality 
                measures specified under subparagraph (D). Such data 
                shall be submitted in a form and manner, and at a time, 
                specified by the Secretary for purposes of this 
                subparagraph.
                    ``(D) Quality measures.--
                          ``(i) In general.--Subject to clause (ii), any 
                      measure specified by the Secretary under this 
                      subparagraph must have been endorsed by the entity 
                      with a contract under section 1890(a).
                          ``(ii) Exception.--In the case of a specified 
                      area or medical topic determined appropriate by 
                      the Secretary for which a feasible and practical 
                      measure has not been endorsed by the entity with a 
                      contract under section 1890(a), the Secretary may 
                      specify a measure that is not so endorsed as long 
                      as due consideration is given to measures that 
                      have been endorsed or adopted by a consensus 
                      organization identified by the Secretary.
                          ``(iii) Time frame.--Not later than October 1, 
                      2012, the Secretary shall publish the measures 
                      selected under this subparagraph that will be 
                      applicable with respect to rate year 2014.

[[Page 124 STAT. 369]]

                    ``(E) Public availability of data 
                submitted. <<NOTE: Procedures.>> --The Secretary shall 
                establish procedures for making data submitted under 
                subparagraph (C) available to the public. 
                Such <<NOTE: Review.>>  procedures shall ensure that a 
                long-term care hospital has the opportunity to review 
                the data that is to be made public with respect to the 
                hospital prior to such data being made 
                public. <<NOTE: Web posting.>> The Secretary shall 
                report quality measures that relate to services 
                furnished in inpatient settings in long-term care 
                hospitals on the Internet website of the Centers for 
                Medicare & Medicaid Services.''.

    (b) Inpatient Rehabilitation Hospitals.--Section 1886(j) of the 
Social Security Act (42 U.S.C. 1395ww(j)) is amended--
            (1) by redesignating paragraph (7) as paragraph (8); and
            (2) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) Quality reporting.--
                    ``(A) Reduction in update for failure to report.--
                          ``(i) In general.--For purposes of fiscal year 
                      2014 and each subsequent fiscal year, in the case 
                      of a rehabilitation facility that does not submit 
                      data to the Secretary in accordance with 
                      subparagraph (C) with respect to such a fiscal 
                      year, after determining the increase factor 
                      described in paragraph (3)(C), and after 
                      application of paragraph (3)(D), the Secretary 
                      shall reduce such increase factor for payments for 
                      discharges occurring during such fiscal year by 2 
                      percentage points.
                          ``(ii) Special rule.--The application of this 
                      subparagraph may result in the increase factor 
                      described in paragraph (3)(C) being less than 0.0 
                      for a fiscal year, and may result in payment rates 
                      under this subsection for a fiscal year being less 
                      than such payment rates for the preceding fiscal 
                      year.
                    ``(B) Noncumulative application.--Any reduction 
                under subparagraph (A) shall apply only with respect to 
                the fiscal year involved and the Secretary shall not 
                take into account such reduction in computing the 
                payment amount under this subsection for a subsequent 
                fiscal year.
                    ``(C) Submission of quality data.--For fiscal year 
                2014 and each subsequent rate year, each rehabilitation 
                facility shall submit to the Secretary data on quality 
                measures specified under subparagraph (D). Such data 
                shall be submitted in a form and manner, and at a time, 
                specified by the Secretary for purposes of this 
                subparagraph.
                    ``(D) Quality measures.--
                          ``(i) In general.--Subject to clause (ii), any 
                      measure specified by the Secretary under this 
                      subparagraph must have been endorsed by the entity 
                      with a contract under section 1890(a).
                          ``(ii) Exception.--In the case of a specified 
                      area or medical topic determined appropriate by 
                      the Secretary for which a feasible and practical 
                      measure has not been endorsed by the entity with a 
                      contract under section 1890(a), the Secretary may 
                      specify a measure that is not so endorsed as long 
                      as due consideration is given to measures that 
                      have been endorsed or

[[Page 124 STAT. 370]]

                      adopted by a consensus organization identified by 
                      the Secretary.
                          ``(iii) Time frame. <<NOTE: Publication.>> --
                      Not later than October 1, 2012, the Secretary 
                      shall publish the measures selected under this 
                      subparagraph that will be applicable with respect 
                      to fiscal year 2014.
                    ``(E) Public availability of data 
                submitted. <<NOTE: Procedures.>> --The Secretary shall 
                establish procedures for making data submitted under 
                subparagraph (C) available to the public. 
                Such <<NOTE: Review.>>  procedures shall ensure that a 
                rehabilitation facility has the opportunity to review 
                the data that is to be made public with respect to the 
                facility prior to such data being made 
                public. <<NOTE: Web posting.>>  The Secretary shall 
                report quality measures that relate to services 
                furnished in inpatient settings in rehabilitation 
                facilities on the Internet website of the Centers for 
                Medicare & Medicaid Services.''.

    (c) Hospice Programs.--Section 1814(i) of the Social Security Act 
(42 U.S.C. 1395f(i)) is amended--
            (1) by redesignating paragraph (5) as paragraph (6); and
            (2) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) Quality reporting.--
                    ``(A) Reduction in update for failure to report.--
                          ``(i) In general.--For purposes of fiscal year 
                      2014 and each subsequent fiscal year, in the case 
                      of a hospice program that does not submit data to 
                      the Secretary in accordance with subparagraph (C) 
                      with respect to such a fiscal year, after 
                      determining the market basket percentage increase 
                      under paragraph (1)(C)(ii)(VII) or paragraph 
                      (1)(C)(iii), as applicable, and after application 
                      of paragraph (1)(C)(iv), with respect to the 
                      fiscal year, the Secretary shall reduce such 
                      market basket percentage increase by 2 percentage 
                      points.
                          ``(ii) Special rule.--The application of this 
                      subparagraph may result in the market basket 
                      percentage increase under paragraph 
                      (1)(C)(ii)(VII) or paragraph (1)(C)(iii), as 
                      applicable, being less than 0.0 for a fiscal year, 
                      and may result in payment rates under this 
                      subsection for a fiscal year being less than such 
                      payment rates for the preceding fiscal year.
                    ``(B) Noncumulative application.--Any reduction 
                under subparagraph (A) shall apply only with respect to 
                the fiscal year involved and the Secretary shall not 
                take into account such reduction in computing the 
                payment amount under this subsection for a subsequent 
                fiscal year.
                    ``(C) Submission of quality data.--For fiscal year 
                2014 and each subsequent fiscal year, each hospice 
                program shall submit to the Secretary data on quality 
                measures specified under subparagraph (D). Such data 
                shall be submitted in a form and manner, and at a time, 
                specified by the Secretary for purposes of this 
                subparagraph.
                    ``(D) Quality measures.--
                          ``(i) In general.--Subject to clause (ii), any 
                      measure specified by the Secretary under this 
                      subparagraph must have been endorsed by the entity 
                      with a contract under section 1890(a).

[[Page 124 STAT. 371]]

                          ``(ii) Exception.--In the case of a specified 
                      area or medical topic determined appropriate by 
                      the Secretary for which a feasible and practical 
                      measure has not been endorsed by the entity with a 
                      contract under section 1890(a), the Secretary may 
                      specify a measure that is not so endorsed as long 
                      as due consideration is given to measures that 
                      have been endorsed or adopted by a consensus 
                      organization identified by the Secretary.
                          ``(iii) Time frame. <<NOTE: Publication.>> --
                      Not later than October 1, 2012, the Secretary 
                      shall publish the measures selected under this 
                      subparagraph that will be applicable with respect 
                      to fiscal year 2014.
                    ``(E) Public availability of data submitted.-- 
                <<NOTE: Procedures.>> The Secretary shall establish 
                procedures for making data submitted under subparagraph 
                (C) available to the public. 
                Such <<NOTE: Review.>> procedures shall ensure that a 
                hospice program has the opportunity to review the data 
                that is to be made public with respect to the hospice 
                program prior to such data being made 
                public. <<NOTE: Web posting.>>  The Secretary shall 
                report quality measures that relate to hospice care 
                provided by hospice programs on the Internet website of 
                the Centers for Medicare & Medicaid Services.''.

SEC. 3005. QUALITY REPORTING FOR PPS-EXEMPT CANCER HOSPITALS.

    Section 1866 of the Social Security Act (42 U.S.C. 1395cc) is 
amended--
            (1) in subsection (a)(1)--
                    (A) in subparagraph (U), by striking ``and'' at the 
                end;
                    (B) in subparagraph (V), by striking the period at 
                the end and inserting ``, and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(W) in the case of a hospital described in section 
                1886(d)(1)(B)(v), to report quality data to the 
                Secretary in accordance with subsection (k).''; and
            (2) by adding at the end the following new subsection:

    ``(k) Quality Reporting by Cancer Hospitals.--
            ``(1) In general.--For purposes of fiscal year 2014 and each 
        subsequent fiscal year, a hospital described in section 
        1886(d)(1)(B)(v) shall submit data to the Secretary in 
        accordance with paragraph (2) with respect to such a fiscal 
        year.
            ``(2) Submission of quality data.--For fiscal year 2014 and 
        each subsequent fiscal year, each hospital described in such 
        section shall submit to the Secretary data on quality measures 
        specified under paragraph (3). Such data shall be submitted in a 
        form and manner, and at a time, specified by the Secretary for 
        purposes of this subparagraph.
            ``(3) Quality measures.--
                    ``(A) In general.--Subject to subparagraph (B), any 
                measure specified by the Secretary under this paragraph 
                must have been endorsed by the entity with a contract 
                under section 1890(a).
                    ``(B) Exception.--In the case of a specified area or 
                medical topic determined appropriate by the Secretary 
                for which a feasible and practical measure has not been

[[Page 124 STAT. 372]]

                endorsed by the entity with a contract under section 
                1890(a), the Secretary may specify a measure that is not 
                so endorsed as long as due consideration is given to 
                measures that have been endorsed or adopted by a 
                consensus organization identified by the Secretary.
                    ``(C) Time frame. <<NOTE: Publication.>> --Not later 
                than October 1, 2012, the Secretary shall publish the 
                measures selected under this paragraph that will be 
                applicable with respect to fiscal year 2014.
            ``(4) Public availability of data 
        submitted. <<NOTE: Procedures.>> --The Secretary shall establish 
        procedures for making data submitted under paragraph (4) 
        available to the public. <<NOTE: Review.>> Such procedures shall 
        ensure that a hospital described in section 1886(d)(1)(B)(v) has 
        the opportunity to review the data that is to be made public 
        with respect to the hospital prior to such data being made 
        public. <<NOTE: Web posting.>>  The Secretary shall report 
        quality measures of process, structure, outcome, patients' 
        perspective on care, efficiency, and costs of care that relate 
        to services furnished in such hospitals on the Internet website 
        of the Centers for Medicare & Medicaid Services.''.

SEC. 3006. PLANS FOR A VALUE-BASED PURCHASING PROGRAM FOR SKILLED 
            NURSING FACILITIES AND HOME HEALTH AGENCIES.

    (a) Skilled Nursing Facilities.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall develop 
        a plan to implement a value-based purchasing program for 
        payments under the Medicare program under title XVIII of the 
        Social Security Act for skilled nursing facilities (as defined 
        in section 1819(a) of such Act (42 U.S.C. 1395i-3(a))).
            (2) Details.--In developing the plan under paragraph (1), 
        the Secretary shall consider the following issues:
                    (A) The ongoing development, selection, and 
                modification process for measures (including under 
                section 1890 of the Social Security Act (42 U.S.C. 
                1395aaa) and section 1890A such Act, as added by section 
                3014), to the extent feasible and practicable, of all 
                dimensions of quality and efficiency in skilled nursing 
                facilities.
                          (i) In general.--Subject to clause (ii), any 
                      measure specified by the Secretary under 
                      subparagraph (A)(iii) must have been endorsed by 
                      the entity with a contract under section 1890(a).
                          (ii) Exception.--In the case of a specified 
                      area or medical topic determined appropriate by 
                      the Secretary for which a feasible and practical 
                      measure has not been endorsed by the entity with a 
                      contract under section 1890(a), the Secretary may 
                      specify a measure that is not so endorsed as long 
                      as due consideration is given to measures that 
                      have been endorsed or adopted by a consensus 
                      organization identified by the Secretary.
                    (B) The reporting, collection, and validation of 
                quality data.
                    (C) The structure of value-based payment 
                adjustments, including the determination of thresholds 
                or improvements in quality that would substantiate a 
                payment adjustment,

[[Page 124 STAT. 373]]

                the size of such payments, and the sources of funding 
                for the value-based bonus payments.
                    (D) Methods for the public disclosure of information 
                on the performance of skilled nursing facilities.
                    (E) Any other issues determined appropriate by the 
                Secretary.
            (3) Consultation.--In developing the plan under paragraph 
        (1), the Secretary shall--
                    (A) consult with relevant affected parties; and
                    (B) consider experience with such demonstrations 
                that the Secretary determines are relevant to the value-
                based purchasing program described in paragraph (1).
            (4) Report to congress.--Not later than October 1, 2011, the 
        Secretary shall submit to Congress a report containing the plan 
        developed under paragraph (1).

    (b) Home Health Agencies.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall develop 
        a plan to implement a value-based purchasing program for 
        payments under the Medicare program under title XVIII of the 
        Social Security Act for home health agencies (as defined in 
        section 1861(o) of such Act (42 U.S.C. 1395x(o))).
            (2) Details.--In developing the plan under paragraph (1), 
        the Secretary shall consider the following issues:
                    (A) The ongoing development, selection, and 
                modification process for measures (including under 
                section 1890 of the Social Security Act (42 U.S.C. 
                1395aaa) and section 1890A such Act, as added by section 
                3014), to the extent feasible and practicable, of all 
                dimensions of quality and efficiency in home health 
                agencies.
                    (B) The reporting, collection, and validation of 
                quality data.
                    (C) The structure of value-based payment 
                adjustments, including the determination of thresholds 
                or improvements in quality that would substantiate a 
                payment adjustment, the size of such payments, and the 
                sources of funding for the value-based bonus payments.
                    (D) Methods for the public disclosure of information 
                on the performance of home health agencies.
                    (E) Any other issues determined appropriate by the 
                Secretary.
            (3) Consultation.--In developing the plan under paragraph 
        (1), the Secretary shall--
                    (A) consult with relevant affected parties; and
                    (B) consider experience with such demonstrations 
                that the Secretary determines are relevant to the value-
                based purchasing program described in paragraph (1).
            (4) Report to congress.--Not later than October 1, 2011, the 
        Secretary shall submit to Congress a report containing the plan 
        developed under paragraph (1).

SEC. 3007. VALUE-BASED PAYMENT MODIFIER UNDER THE PHYSICIAN FEE 
            SCHEDULE.

    Section 1848 of the Social Security Act (42 U.S.C. 1395w-4) is 
amended--
            (1) in subsection (b)(1), by inserting ``subject to 
        subsection (p),'' after ``1998,''; and

[[Page 124 STAT. 374]]

            (2) by adding at the end the following new subsection:

    ``(p) Establishment of Value-based Payment Modifier.--
            ``(1) In general.--The Secretary shall establish a payment 
        modifier that provides for differential payment to a physician 
        or a group of physicians under the fee schedule established 
        under subsection (b) based upon the quality of care furnished 
        compared to cost (as determined under paragraphs (2) and (3), 
        respectively) during a performance period. Such payment modifier 
        shall be separate from the geographic adjustment factors 
        established under subsection (e).
            ``(2) Quality.--
                    ``(A) In general.--For purposes of paragraph (1), 
                quality of care shall be evaluated, to the extent 
                practicable, based on a composite of measures of the 
                quality of care furnished (as established by the 
                Secretary under subparagraph (B)).
                    ``(B) Measures.--
                          ``(i) The Secretary shall establish 
                      appropriate measures of the quality of care 
                      furnished by a physician or group of physicians to 
                      individuals enrolled under this part, such as 
                      measures that reflect health outcomes. Such 
                      measures shall be risk adjusted as determined 
                      appropriate by the Secretary.
                          ``(ii) The Secretary shall seek endorsement of 
                      the measures established under this subparagraph 
                      by the entity with a contract under section 
                      1890(a).
            ``(3) Costs.--For purposes of paragraph (1), costs shall be 
        evaluated, to the extent practicable, based on a composite of 
        appropriate measures of costs established by the Secretary (such 
        as the composite measure under the methodology established under 
        subsection (n)(9)(C)(iii)) that eliminate the effect of 
        geographic adjustments in payment rates (as described in 
        subsection (e)), and take into account risk factors (such as 
        socioeconomic and demographic characteristics, ethnicity, and 
        health status of individuals (such as to recognize that less 
        healthy individuals may require more intensive interventions) 
        and other factors determined appropriate by the Secretary.
            ``(4) Implementation.--
                    ``(A) Publication of measures, dates of 
                implementation, performance period.-- 
                <<NOTE: Deadline.>> Not later than January 1, 2012, the 
                Secretary shall publish the following:
                          ``(i) The measures of quality of care and 
                      costs established under paragraphs (2) and (3), 
                      respectively.
                          ``(ii) The dates for implementation of the 
                      payment modifier (as determined under subparagraph 
                      (B)).
                          ``(iii) The initial performance period (as 
                      specified under subparagraph (B)(ii)).
                    ``(B) Deadlines for implementation.--
                          ``(i) Initial implementation.--Subject to the 
                      preceding provisions of this subparagraph, the 
                      Secretary shall begin implementing the payment 
                      modifier established under this subsection through 
                      the rulemaking process during 2013 for the 
                      physician fee schedule established under 
                      subsection (b).
                          ``(ii) Initial performance period.--
                                    ``(I) In general.--The Secretary 
                                shall specify an initial performance 
                                period for application of

[[Page 124 STAT. 375]]

                                the payment modifier established under 
                                this subsection with respect to 2015.
                                    ``(II) Provision of information 
                                during initial performance period.--
                                During the initial performance period, 
                                the Secretary shall, to the extent 
                                practicable, provide information to 
                                physicians and groups of physicians 
                                about the quality of care furnished by 
                                the physician or group of physicians to 
                                individuals enrolled under this part 
                                compared to cost (as determined under 
                                paragraphs (2) and (3), respectively) 
                                with respect to the performance period.
                          ``(iii) Application.--The Secretary shall 
                      apply the payment modifier established under this 
                      subsection for items and services furnished--
                                    ``(I) <<NOTE: Effective date.>>  
                                beginning on January 1, 2015, with 
                                respect to specific physicians and 
                                groups of physicians the Secretary 
                                determines appropriate; and
                                    ``(II) <<NOTE: Deadline.>>  
                                beginning not later than January 1, 
                                2017, with respect to all physicians and 
                                groups of physicians.
                    ``(C) Budget neutrality.--The payment modifier 
                established under this subsection shall be implemented 
                in a budget neutral manner.
            ``(5) Systems-based care.-- <<NOTE: Applicability.>> The 
        Secretary shall, as appropriate, apply the payment modifier 
        established under this subsection in a manner that promotes 
        systems-based care.
            ``(6) Consideration of special circumstances of certain 
        providers.--In applying the payment modifier under this 
        subsection, the Secretary shall, as appropriate, take into 
        account the special circumstances of physicians or groups of 
        physicians in rural areas and other underserved communities.
            ``(7) Application.-- <<NOTE: Time period.>> For purposes of 
        the initial application of the payment modifier established 
        under this subsection during the period beginning on January 1, 
        2015, and ending on December 31, 2016, the term `physician' has 
        the meaning given such term in section 
        1861(r). <<NOTE: Effective date. Determination.>> On or after 
        January 1, 2017, the Secretary may apply this subsection to 
        eligible professionals (as defined in subsection (k)(3)(B)) as 
        the Secretary determines appropriate.
            ``(8) Definitions.--For purposes of this subsection:
                    ``(A) Costs.--The term `costs' means expenditures 
                per individual as determined appropriate by the 
                Secretary. In making the determination under the 
                preceding sentence, the Secretary may take into account 
                the amount of growth in expenditures per individual for 
                a physician compared to the amount of such growth for 
                other physicians.
                    ``(B) Performance period.--The term `performance 
                period' means a period specified by the Secretary.
            ``(9) Coordination with other value-based purchasing 
        reforms.-- <<NOTE: Determination.>> The Secretary shall 
        coordinate the value-based payment modifier established under 
        this subsection with the Physician Feedback Program under 
        subsection (n) and, as the Secretary determines appropriate, 
        other similar provisions of this title.

[[Page 124 STAT. 376]]

            ``(10) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of--
                    ``(A) the establishment of the value-based payment 
                modifier under this subsection;
                    ``(B) the evaluation of quality of care under 
                paragraph (2), including the establishment of 
                appropriate measures of the quality of care under 
                paragraph (2)(B);
                    ``(C) the evaluation of costs under paragraph (3), 
                including the establishment of appropriate measures of 
                costs under such paragraph;
                    ``(D) the dates for implementation of the value-
                based payment modifier;
                    ``(E) the specification of the initial performance 
                period and any other performance period under paragraphs 
                (4)(B)(ii) and (8)(B), respectively;
                    ``(F) the application of the value-based payment 
                modifier under paragraph (7); and
                    ``(G) the determination of costs under paragraph 
                (8)(A).''.

SEC. 3008. PAYMENT ADJUSTMENT FOR CONDITIONS ACQUIRED IN HOSPITALS.

    (a) In General.--Section 1886 of the Social Security Act (42 U.S.C. 
1395ww), as amended by section 3001, is amended by adding at the end the 
following new subsection:
    ``(p) Adjustment to Hospital Payments for Hospital Acquired 
Conditions.--
            ``(1) In general.--In order to provide an incentive for 
        applicable hospitals to reduce hospital acquired conditions 
        under this title, with respect to discharges from an applicable 
        hospital occurring during fiscal year 2015 or a subsequent 
        fiscal year, the amount of payment under this section or section 
        1814(b)(3), as applicable, for such discharges during the fiscal 
        year shall be equal to 99 percent of the amount of payment that 
        would otherwise apply to such discharges under this section or 
        section 1814(b)(3) (determined after the application of 
        subsections (o) and (q) and section 1814(l)(4) but without 
        regard to this subsection).
            ``(2) Applicable hospitals.--
                    ``(A) <<NOTE: Definition.>> In general.--For 
                purposes of this subsection, the term `applicable 
                hospital' means a subsection (d) hospital that meets the 
                criteria described in subparagraph (B).
                    ``(B) Criteria described.--
                          ``(i) <<NOTE: Determined.>> In general.--The 
                      criteria described in this subparagraph, with 
                      respect to a subsection (d) hospital, is that the 
                      subsection (d) hospital is in the top quartile of 
                      all subsection (d) hospitals, relative to the 
                      national average, of hospital acquired conditions 
                      during the applicable period, as determined by the 
                      Secretary.
                          ``(ii) Risk adjustment.--In carrying out 
                      clause (i), the Secretary shall establish and 
                      apply an appropriate risk adjustment methodology.
                    ``(C) Exemption. <<NOTE: Deadline. Reports.>> --In 
                the case of a hospital that is paid under section 
                1814(b)(3), the Secretary may exempt such hospital from 
                the application of this subsection if the State which is 
                paid under such section submits an

[[Page 124 STAT. 377]]

                annual report to the Secretary describing how a similar 
                program in the State for a participating hospital or 
                hospitals achieves or surpasses the measured results in 
                terms of patient health outcomes and cost savings 
                established under this subsection.
            ``(3) <<NOTE: Definition.>>  Hospital acquired conditions.--
        For purposes of this subsection, the term `hospital acquired 
        condition' means a condition identified for purposes of 
        subsection (d)(4)(D)(iv) and any other condition determined 
        appropriate by the Secretary that an individual acquires during 
        a stay in an applicable hospital, as determined by the 
        Secretary.
            ``(4) Applicable period.--In this subsection, the term 
        `applicable period' means, with respect to a fiscal year, a 
        period specified by the Secretary.
            ``(5) Reporting to hospitals.--Prior to fiscal year 2015 and 
        each subsequent fiscal year, the Secretary shall provide 
        confidential reports to applicable hospitals with respect to 
        hospital acquired conditions of the applicable hospital during 
        the applicable period.
            ``(6) Reporting hospital specific information.--
                    ``(A) In general. <<NOTE: Public information.>> --
                The Secretary shall make information available to the 
                public regarding hospital acquired conditions of each 
                applicable hospital.
                    ``(B) Opportunity to review and submit 
                corrections.--The Secretary shall ensure that an 
                applicable hospital has the opportunity to review, and 
                submit corrections for, the information to be made 
                public with respect to the hospital under subparagraph 
                (A) prior to such information being made public.
                    ``(C) Website.--Such information shall be posted on 
                the Hospital Compare Internet website in an easily 
                understandable format.
            ``(7) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of the following:
                    ``(A) The criteria described in paragraph (2)(A).
                    ``(B) The specification of hospital acquired 
                conditions under paragraph (3).
                    ``(C) The specification of the applicable period 
                under paragraph (4).
                    ``(D) The provision of reports to applicable 
                hospitals under paragraph (5) and the information made 
                available to the public under paragraph (6).''.

    (b) Study and Report on Expansion of Healthcare Acquired Conditions 
Policy to Other Providers.--
            (1) Study.--The Secretary of Health and Human Services shall 
        conduct a study on expanding the healthcare acquired conditions 
        policy under subsection (d)(4)(D) of section 1886 of the Social 
        Security Act (42 U.S.C. 1395ww) to payments made to other 
        facilities under the Medicare program under title XVIII of the 
        Social Security Act, including such payments made to inpatient 
        rehabilitation facilities, long-term care hospitals (as 
        described in subsection(d)(1)(B)(iv) of such section), hospital 
        outpatient departments, and other hospitals excluded from the 
        inpatient prospective payment system under such section, skilled 
        nursing facilities, ambulatory surgical centers, and health 
        clinics. Such study shall include an analysis of

[[Page 124 STAT. 378]]

        how such policies could impact quality of patient care, patient 
        safety, and spending under the Medicare program.
            (2) Report.--Not later than January 1, 2012, the Secretary 
        shall submit to Congress a report containing the results of the 
        study conducted under paragraph (1), together with 
        recommendations for such legislation and administrative action 
        as the Secretary determines appropriate.

        PART II--NATIONAL STRATEGY TO IMPROVE HEALTH CARE QUALITY

SEC. 3011. NATIONAL STRATEGY.

    Title III of the Public Health Service Act (42 U.S.C. 241 et seq.) 
is amended by adding at the end the following:

                 ``PART S--HEALTH CARE QUALITY PROGRAMS

  ``Subpart I--National Strategy for Quality Improvement in Health Care

``SEC. 399HH. <<NOTE: 42 USC 280j.>> NATIONAL STRATEGY FOR QUALITY 
            IMPROVEMENT IN HEALTH CARE.

    ``(a) Establishment of National Strategy and Priorities.--
            ``(1) National strategy.--The Secretary, through a 
        transparent collaborative process, shall establish a national 
        strategy to improve the delivery of health care services, 
        patient health outcomes, and population health.
            ``(2) Identification of priorities.--
                    ``(A) In general.--The Secretary shall identify 
                national priorities for improvement in developing the 
                strategy under paragraph (1).
                    ``(B) Requirements.--The Secretary shall ensure that 
                priorities identified under subparagraph (A) will--
                          ``(i) have the greatest potential for 
                      improving the health outcomes, efficiency, and 
                      patient-centeredness of health care for all 
                      populations, including children and vulnerable 
                      populations;
                          ``(ii) identify areas in the delivery of 
                      health care services that have the potential for 
                      rapid improvement in the quality and efficiency of 
                      patient care;
                          ``(iii) address gaps in quality, efficiency, 
                      comparative effectiveness information, and health 
                      outcomes measures and data aggregation techniques;
                          ``(iv) improve Federal payment policy to 
                      emphasize quality and efficiency;
                          ``(v) enhance the use of health care data to 
                      improve quality, efficiency, transparency, and 
                      outcomes;
                          ``(vi) address the health care provided to 
                      patients with high-cost chronic diseases;
                          ``(vii) improve research and dissemination of 
                      strategies and best practices to improve patient 
                      safety and reduce medical errors, preventable 
                      admissions and readmissions, and health care-
                      associated infections;
                          ``(viii) reduce health disparities across 
                      health disparity populations (as defined in 
                      section 485E) and geographic areas; and

[[Page 124 STAT. 379]]

                          ``(ix) address other areas as determined 
                      appropriate by the Secretary.
                    ``(C) Considerations.--In identifying priorities 
                under subparagraph (A), the Secretary shall take into 
                consideration the recommendations submitted by the 
                entity with a contract under section 1890(a) of the 
                Social Security Act and other stakeholders.
                    ``(D) Coordination with state agencies.--The 
                Secretary shall collaborate, coordinate, and consult 
                with State agencies responsible for administering the 
                Medicaid program under title XIX of the Social Security 
                Act and the Children's Health Insurance Program under 
                title XXI of such Act with respect to developing and 
                disseminating strategies, goals, models, and timetables 
                that are consistent with the national priorities 
                identified under subparagraph (A).

    ``(b) Strategic Plan.--
            ``(1) In general.--The national strategy shall include a 
        comprehensive strategic plan to achieve the priorities described 
        in subsection (a).
            ``(2) Requirements.--The strategic plan shall include 
        provisions for addressing, at a minimum, the following:
                    ``(A) Coordination among agencies within the 
                Department, which shall include steps to minimize 
                duplication of efforts and utilization of common quality 
                measures, where available. Such common quality measures 
                shall be measures identified by the Secretary under 
                section 1139A or 1139B of the Social Security Act or 
                endorsed under section 1890 of such Act.
                    ``(B) Agency-specific strategic plans to achieve 
                national priorities.
                    ``(C) Establishment of annual benchmarks for each 
                relevant agency to achieve national priorities.
                    ``(D) A process for regular reporting by the 
                agencies to the Secretary on the implementation of the 
                strategic plan.
                    ``(E) Strategies to align public and private payers 
                with regard to quality and patient safety efforts.
                    ``(F) Incorporating quality improvement and 
                measurement in the strategic plan for health information 
                technology required by the American Recovery and 
                Reinvestment Act of 2009 (Public Law 111-5).

    ``(c) Periodic Update of National Strategy.--The Secretary shall 
update the national strategy not less than annually. Any such update 
shall include a review of short- and long-term goals.
    ``(d) Submission and Availability of National Strategy and 
Updates.--
            ``(1) Deadline for initial submission of national 
        strategy.--Not later than January 1, 2011, the Secretary shall 
        submit to the relevant committees of Congress the national 
        strategy described in subsection (a).
            ``(2) Updates.--
                    ``(A) In general.--The Secretary shall submit to the 
                relevant committees of Congress an annual update to the 
                strategy described in paragraph (1).
                    ``(B) Information submitted.--Each update submitted 
                under subparagraph (A) shall include--

[[Page 124 STAT. 380]]

                          ``(i) a review of the short- and long-term 
                      goals of the national strategy and any gaps in 
                      such strategy;
                          ``(ii) an analysis of the progress, or lack of 
                      progress, in meeting such goals and any barriers 
                      to such progress;
                          ``(iii) the information reported under section 
                      1139A of the Social Security Act, consistent with 
                      the reporting requirements of such section; and
                          ``(iv) in the case of an update required to be 
                      submitted on or after January 1, 2014, the 
                      information reported under section 1139B(b)(4) of 
                      the Social Security Act, consistent with the 
                      reporting requirements of such section.
                    ``(C) Satisfaction of other reporting 
                requirements.--Compliance with the requirements of 
                clauses (iii) and (iv) of subparagraph (B) shall satisfy 
                the reporting requirements under sections 1139A(a)(6) 
                and 1139B(b)(4), respectively, of the Social Security 
                Act.

    ``(e) Health Care Quality Internet Website.-- 
<<NOTE: Deadline. Public information.>> Not later than January 1, 2011, 
the Secretary shall create an Internet website to make public 
information regarding--
            ``(1) the national priorities for health care quality 
        improvement established under subsection (a)(2);
            ``(2) the agency-specific strategic plans for health care 
        quality described in subsection (b)(2)(B); and
            ``(3) other information, as the Secretary determines to be 
        appropriate.''.

SEC. 3012. <<NOTE: 42 USC 280j note.>> INTERAGENCY WORKING GROUP ON 
            HEALTH CARE QUALITY.

    (a) <<NOTE: President. Establishment.>> In General.--The President 
shall convene a working group to be known as the Interagency Working 
Group on Health Care Quality (referred to in this section as the 
``Working Group'').

    (b) Goals.--The goals of the Working Group shall be to achieve the 
following:
            (1) Collaboration, cooperation, and consultation between 
        Federal departments and agencies with respect to developing and 
        disseminating strategies, goals, models, and timetables that are 
        consistent with the national priorities identified under section 
        399HH(a)(2) of the Public Health Service Act (as added by 
        section 3011).
            (2) Avoidance of inefficient duplication of quality 
        improvement efforts and resources, where practicable, and a 
        streamlined process for quality reporting and compliance 
        requirements.
            (3) Assess alignment of quality efforts in the public sector 
        with private sector initiatives.

    (c) Composition.--
            (1) In general.--The Working Group shall be composed of 
        senior level representatives of--
                    (A) the Department of Health and Human Services;
                    (B) the Centers for Medicare & Medicaid Services;
                    (C) the National Institutes of Health;
                    (D) the Centers for Disease Control and Prevention;
                    (E) the Food and Drug Administration;
                    (F) the Health Resources and Services 
                Administration;
                    (G) the Agency for Healthcare Research and Quality;

[[Page 124 STAT. 381]]

                    (H) the Office of the National Coordinator for 
                Health Information Technology;
                    (I) the Substance Abuse and Mental Health Services 
                Administration;
                    (J) the Administration for Children and Families;
                    (K) the Department of Commerce;
                    (L) the Office of Management and Budget;
                    (M) the United States Coast Guard;
                    (N) the Federal Bureau of Prisons;
                    (O) the National Highway Traffic Safety 
                Administration;
                    (P) the Federal Trade Commission;
                    (Q) the Social Security Administration;
                    (R) the Department of Labor;
                    (S) the United States Office of Personnel 
                Management;
                    (T) the Department of Defense;
                    (U) the Department of Education;
                    (V) the Department of Veterans Affairs;
                    (W) the Veterans Health Administration; and
                    (X) any other Federal agencies and departments with 
                activities relating to improving health care quality and 
                safety, as determined by the President.
            (2) Chair and vice-chair.--
                    (A) Chair.--The Working Group shall be chaired by 
                the Secretary of Health and Human Services.
                    (B) Vice chair.--Members of the Working Group, other 
                than the Secretary of Health and Human Services, shall 
                serve as Vice Chair of the Group on a rotating basis, as 
                determined by the Group.

    (d) Report to Congress.-- <<NOTE: Public information. Web 
posting.>> Not later than December 31, 2010, and annually thereafter, 
the Working Group shall submit to the relevant Committees of Congress, 
and make public on an Internet website, a report describing the progress 
and recommendations of the Working Group in meeting the goals described 
in subsection (b).

SEC. 3013. QUALITY MEASURE DEVELOPMENT.

    (a) Public Health Service Act.--Title IX of the Public Health 
Service Act (42 U.S.C. 299 et seq.) is amended--
            (1) by redesignating part D as part E;
            (2) <<NOTE: 42 USC 299c--299c-7.>> by redesignating sections 
        931 through 938 as sections 941 through 948, respectively;
            (3) in section 948(1), as so redesignated, by striking 
        ``931'' and inserting ``941''; and
            (4) by inserting after section 926 the following:

                ``PART D--HEALTH CARE QUALITY IMPROVEMENT

                ``Subpart I--Quality Measure Development

``SEC. 931. <<NOTE: 42 USC 299b-31.>>  QUALITY MEASURE DEVELOPMENT.

    ``(a) Quality Measure.-- <<NOTE: Definition.>> In this subpart, the 
term `quality measure' means a standard for measuring the performance 
and improvement of population health or of health plans, providers of 
services, and other clinicians in the delivery of health care services.

[[Page 124 STAT. 382]]

    ``(b) Identification of Quality Measures.--
            ``(1) <<NOTE: Consultation.>> Identification.--The 
        Secretary, in consultation with the Director of the Agency for 
        Healthcare Research and Quality and the Administrator of the 
        Centers for Medicare & Medicaid Services, shall identify, not 
        less often than triennially, gaps where no quality measures 
        exist and existing quality measures that need improvement, 
        updating, or expansion, consistent with the national strategy 
        under section 399HH, to the extent available, for use in Federal 
        health programs. In identifying such gaps and existing quality 
        measures that need improvement, the Secretary shall take into 
        consideration--
                    ``(A) the gaps identified by the entity with a 
                contract under section 1890(a) of the Social Security 
                Act and other stakeholders;
                    ``(B) quality measures identified by the pediatric 
                quality measures program under section 1139A of the 
                Social Security Act; and
                    ``(C) quality measures identified through the 
                Medicaid Quality Measurement Program under section 1139B 
                of the Social Security Act.
            ``(2) Publication.-- <<NOTE: Public information. Web 
        posting. Reports.>> The Secretary shall make available to the 
        public on an Internet website a report on any gaps identified 
        under paragraph (1) and the process used to make such 
        identification.

    ``(c) Grants or Contracts for Quality Measure Development.--
            ``(1) In general.--The Secretary shall award grants, 
        contracts, or intergovernmental agreements to eligible entities 
        for purposes of developing, improving, updating, or expanding 
        quality measures identified under subsection (b).
            ``(2) Prioritization in the development of quality 
        measures.--In awarding grants, contracts, or agreements under 
        this subsection, the Secretary shall give priority to the 
        development of quality measures that allow the assessment of--
                    ``(A) health outcomes and functional status of 
                patients;
                    ``(B) the management and coordination of health care 
                across episodes of care and care transitions for 
                patients across the continuum of providers, health care 
                settings, and health plans;
                    ``(C) the experience, quality, and use of 
                information provided to and used by patients, 
                caregivers, and authorized representatives to inform 
                decisionmaking about treatment options, including the 
                use of shared decisionmaking tools and preference 
                sensitive care (as defined in section 936);
                    ``(D) the meaningful use of health information 
                technology;
                    ``(E) the safety, effectiveness, patient-
                centeredness, appropriateness, and timeliness of care;
                    ``(F) the efficiency of care;
                    ``(G) the equity of health services and health 
                disparities across health disparity populations (as 
                defined in section 485E) and geographic areas;
                    ``(H) patient experience and satisfaction;
                    ``(I) the use of innovative strategies and 
                methodologies identified under section 933; and

[[Page 124 STAT. 383]]

                    ``(J) other areas determined appropriate by the 
                Secretary.
            ``(3) Eligible entities.--To be eligible for a grant or 
        contract under this subsection, an entity shall--
                    ``(A) have demonstrated expertise and capacity in 
                the development and evaluation of quality measures;
                    ``(B) have adopted procedures to include in the 
                quality measure development process--
                          ``(i) the views of those providers or payers 
                      whose performance will be assessed by the measure; 
                      and
                          ``(ii) the views of other parties who also 
                      will use the quality measures (such as patients, 
                      consumers, and health care purchasers);
                    ``(C) collaborate with the entity with a contract 
                under section 1890(a) of the Social Security Act and 
                other stakeholders, as practicable, and the Secretary so 
                that quality measures developed by the eligible entity 
                will meet the requirements to be considered for 
                endorsement by the entity with a contract under such 
                section 1890(a);
                    ``(D) have transparent policies regarding governance 
                and conflicts of interest; and
                    ``(E) submit an application to the Secretary at such 
                time and in such manner, as the Secretary may require.
            ``(4) <<NOTE: Requirements.>> Use of funds.--An entity that 
        receives a grant, contract, or agreement under this subsection 
        shall use such award to develop quality measures that meet the 
        following requirements:
                    ``(A) Such measures support measures required to be 
                reported under the Social Security Act, where 
                applicable, and in support of gaps and existing quality 
                measures that need improvement, as described in 
                subsection (b)(1)(A).
                    ``(B) Such measures support measures developed under 
                section 1139A of the Social Security Act and the 
                Medicaid Quality Measurement Program under section 1139B 
                of such Act, where applicable.
                    ``(C) To the extent practicable, data on such 
                quality measures is able to be collected using health 
                information technologies.
                    ``(D) Each quality measure is free of charge to 
                users of such measure.
                    ``(E) Each quality measure is publicly available on 
                an Internet website.

    ``(d) Other Activities by the Secretary.--The Secretary may use 
amounts available under this section to update and test, where 
applicable, quality measures endorsed by the entity with a contract 
under section 1890(a) of the Social Security Act or adopted by the 
Secretary.
    ``(e) Coordination of Grants.--The Secretary shall ensure that 
grants or contracts awarded under this section are coordinated with 
grants and contracts awarded under sections 1139A(5) and 1139B(4)(A) of 
the Social Security Act.''.
    (b) Social Security Act.--Section 1890A of the Social Security Act, 
as added by section 3014(b), is amended by adding at the end the 
following new subsection:
    ``(e) Development of Quality Measures.--The Administrator of the 
Center for Medicare & Medicaid Services shall through contracts develop 
quality measures (as determined appropriate by

[[Page 124 STAT. 384]]

the Administrator) for use under this Act. In developing such measures, 
the Administrator shall consult with the Director of the Agency for 
Healthcare Research and Quality.''.
    (c) Funding.--There are authorized to be appropriated to the 
Secretary of Health and Human Services to carry out this section, 
$75,000,000 for each of fiscal years 2010 through 2014. Of the amounts 
appropriated under the preceding sentence in a fiscal year, not less 
than 50 percent of such amounts shall be used pursuant to subsection (e) 
of section 1890A of the Social Security Act, as added by subsection (b), 
with respect to programs under such Act. Amounts appropriated under this 
subsection for a fiscal year shall remain available until expended.

SEC. 3014. QUALITY MEASUREMENT.

    (a) New Duties for Consensus-based Entity.--
            (1) Multi-stakeholder group input.--Section 1890(b) of the 
        Social Security Act (42 U.S.C. 1395aaa(b)), as amended by 
        section 3003, is amended by adding at the end the following new 
        paragraphs:
            ``(7) Convening multi-stakeholder groups.--
                    ``(A) In general.--The entity shall convene multi-
                stakeholder groups to provide input on--
                          ``(i) the selection of quality measures 
                      described in subparagraph (B), from among--
                                    ``(I) such measures that have been 
                                endorsed by the entity; and
                                    ``(II) such measures that have not 
                                been considered for endorsement by such 
                                entity but are used or proposed to be 
                                used by the Secretary for the collection 
                                or reporting of quality measures; and
                          ``(ii) national priorities (as identified 
                      under section 399HH of the Public Health Service 
                      Act) for improvement in population health and in 
                      the delivery of health care services for 
                      consideration under the national strategy 
                      established under section 399HH of the Public 
                      Health Service Act.
                    ``(B) Quality measures.--
                          ``(i) In general.--Subject to clause (ii), the 
                      quality measures described in this subparagraph 
                      are quality measures--
                                    ``(I) for use pursuant to sections 
                                1814(i)(5)(D), 1833(i)(7), 1833(t)(17), 
                                1848(k)(2)(C), 1866(k)(3), 
                                1881(h)(2)(A)(iii), 1886(b)(3)(B)(viii), 
                                1886(j)(7)(D), 1886(m)(5)(D), 
                                1886(o)(2), and 1895(b)(3)(B)(v);
                                    ``(II) for use in reporting 
                                performance information to the public; 
                                and
                                    ``(III) for use in health care 
                                programs other than for use under this 
                                Act.
                          ``(ii) Exclusion.--Data sets (such as the 
                      outcome and assessment information set for home 
                      health services and the minimum data set for 
                      skilled nursing facility services) that are used 
                      for purposes of classification systems used in 
                      establishing payment rates under this title shall 
                      not be quality measures described in this 
                      subparagraph.
                    ``(C) Requirement for transparency in process.--

[[Page 124 STAT. 385]]

                          ``(i) In general.--In convening multi-
                      stakeholder groups under subparagraph (A) with 
                      respect to the selection of quality measures, the 
                      entity shall provide for an open and transparent 
                      process for the activities conducted pursuant to 
                      such convening.
                          ``(ii) Selection of organizations 
                      participating in multi-stakeholder groups.--The 
                      process described in clause (i) shall ensure that 
                      the selection of representatives comprising such 
                      groups provides for public nominations for, and 
                      the opportunity for public comment on, such 
                      selection.
                    ``(D) Multi-stakeholder group defined.--In this 
                paragraph, the term `multi-stakeholder group' means, 
                with respect to a quality measure, a voluntary 
                collaborative of organizations representing a broad 
                group of stakeholders interested in or affected by the 
                use of such quality measure.
            ``(8) Transmission of multi-stakeholder input.-- 
        <<NOTE: Deadline.>> Not later than February 1 of each year 
        (beginning with 2012), the entity shall transmit to the 
        Secretary the input of multi-stakeholder groups provided under 
        paragraph (7).''.
            (2) Annual report.--Section 1890(b)(5)(A) of the Social 
        Security Act (42 U.S.C. 1395aaa(b)(5)(A)) is amended--
                    (A) in clause (ii), by striking ``and'' at the end;
                    (B) in clause (iii), by striking the period at the 
                end and inserting a semicolon; and
                    (C) by adding at the end the following new clauses:
                          ``(iv) gaps in endorsed quality measures, 
                      which shall include measures that are within 
                      priority areas identified by the Secretary under 
                      the national strategy established under section 
                      399HH of the Public Health Service Act, and where 
                      quality measures are unavailable or inadequate to 
                      identify or address such gaps;
                          ``(v) areas in which evidence is insufficient 
                      to support endorsement of quality measures in 
                      priority areas identified by the Secretary under 
                      the national strategy established under section 
                      399HH of the Public Health Service Act and where 
                      targeted research may address such gaps; and
                          ``(vi) the matters described in clauses (i) 
                      and (ii) of paragraph (7)(A).''.

    (b) Multi-stakeholder Group Input Into Selection of Quality 
Measures.--Title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.) is amended by inserting after section 1890 the following:


                          ``quality measurement


    ``Sec. 1890A.  <<NOTE: Deadlines. 42 USC 1395aaa-1.>> (a) Multi-
stakeholder Group Input Into Selection of Quality Measures.-- 
<<NOTE: Regulations.>> The Secretary shall establish a pre-rulemaking 
process under which the following steps occur with respect to the 
selection of quality measures described in section 1890(b)(7)(B):
            ``(1) Input.--Pursuant to section 1890(b)(7), the entity 
        with a contract under section 1890 shall convene multi-
        stakeholder groups to provide input to the Secretary on the 
        selection of quality measures described in subparagraph (B) of 
        such paragraph.

[[Page 124 STAT. 386]]

            ``(2) Public availability of measures considered for 
        selection.--Not later than December 1 of each year (beginning 
        with 2011), the Secretary shall make available to the public a 
        list of quality measures described in section 1890(b)(7)(B) that 
        the Secretary is considering under this title.
            ``(3) Transmission of multi-stakeholder input.--Pursuant to 
        section 1890(b)(8), not later than February 1 of each year 
        (beginning with 2012), the entity shall transmit to the 
        Secretary the input of multi-stakeholder groups described in 
        paragraph (1).
            ``(4) Consideration of multi-stakeholder input.--The 
        Secretary shall take into consideration the input from multi-
        stakeholder groups described in paragraph (1) in selecting 
        quality measures described in section 1890(b)(7)(B) that have 
        been endorsed by the entity with a contract under section 1890 
        and measures that have not been endorsed by such entity.
            ``(5) Rationale for use of quality measures.-- 
        <<NOTE: Federal Register, publication.>> The Secretary shall 
        publish in the Federal Register the rationale for the use of any 
        quality measure described in section 1890(b)(7)(B) that has not 
        been endorsed by the entity with a contract under section 1890.
            ``(6) Assessment of impact.--Not later than March 1, 2012, 
        and at least once every three years thereafter, the Secretary 
        shall--
                    ``(A) conduct an assessment of the quality impact of 
                the use of endorsed measures described in section 
                1890(b)(7)(B); and
                    ``(B) <<NOTE: Public information.>> make such 
                assessment available to the public.

    ``(b) Process for Dissemination of Measures Used by the Secretary.--
            ``(1) In general.--The Secretary shall establish a process 
        for disseminating quality measures used by the Secretary. Such 
        process shall include the following:
                    ``(A) The incorporation of such measures, where 
                applicable, in workforce programs, training curricula, 
                and any other means of dissemination determined 
                appropriate by the Secretary.
                    ``(B) The dissemination of such quality measures 
                through the national strategy developed under section 
                399HH of the Public Health Service Act.
            ``(2) Existing methods.--To the extent practicable, the 
        Secretary shall utilize and expand existing dissemination 
        methods in disseminating quality measures under the process 
        established under paragraph (1).

    ``(c) Review of Quality Measures Used by the Secretary.--
            ``(1) In general.--The Secretary shall--
                    ``(A) periodically (but in no case less often than 
                once every 3 years) review quality measures described in 
                section 1890(b)(7)(B); and
                    ``(B) with respect to each such measure, determine 
                whether to--
                          ``(i) maintain the use of such measure; or
                          ``(ii) phase out such measure.
            ``(2) Considerations.--In conducting the review under 
        paragraph (1), the Secretary shall take steps to--
                    ``(A) seek to avoid duplication of measures used; 
                and

[[Page 124 STAT. 387]]

                    ``(B) take into consideration current innovative 
                methodologies and strategies for quality improvement 
                practices in the delivery of health care services that 
                represent best practices for such quality improvement 
                and measures endorsed by the entity with a contract 
                under section 1890 since the previous review by the 
                Secretary.

    ``(d) Rule of Construction.--Nothing in this section shall preclude 
a State from using the quality measures identified under sections 1139A 
and 1139B.''.
    (c) Funding.--For purposes of carrying out the amendments made by 
this section, the Secretary shall provide for the transfer, from the 
Federal Hospital Insurance Trust Fund under section 1817 of the Social 
Security Act (42 U.S.C. 1395i) and the Federal Supplementary Medical 
Insurance Trust Fund under section 1841 of such Act (42 U.S.C. 1395t), 
in such proportion as the Secretary determines appropriate, of 
$20,000,000, to the Centers for Medicare & Medicaid Services Program 
Management Account for each of fiscal years 2010 through 2014. Amounts 
transferred under the preceding sentence shall remain available until 
expended.

SEC. 3015. DATA COLLECTION; PUBLIC REPORTING.

    Title III of the Public Health Service Act (42 U.S.C. 241 et seq.), 
as amended by section 3011, is further amended by adding at the end the 
following:

``SEC. 399II. <<NOTE: 42 USC 280j-1.>> COLLECTION AND ANALYSIS OF DATA 
            FOR QUALITY AND RESOURCE USE MEASURES.

    ``(a) In General.--The Secretary shall collect and ag