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

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[Congressional Bills 111th Congress]
[From the U.S. Government Printing Office]
[H.R. 3590 Enrolled Bill (ENR)]

        H.R.3590

                      One Hundred Eleventh Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
             the fifth day of January, two thousand and ten


                                 An Act


 
        Entitled The Patient Protection and Affordable Care Act.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short 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.
    ``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.

            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.
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.
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.
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.
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.
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.

                   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.
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.
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.
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 as sections 
    2725 through 2728, respectively;
        (3) by redesignating sections 2711 through 2713 as sections 
    2731 through 2733, respectively;
        (4) by redesignating sections 2721 through 2723 as sections 
    2735 through 2737, respectively; and
        (5) by inserting after section 2702, the following:

                    ``Subpart II--Improving Coverage

``SEC. 2711. 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. 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. 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 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. 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. DEVELOPMENT AND UTILIZATION OF UNIFORM EXPLANATION OF 
              COVERAGE DOCUMENTS AND STANDARDIZED DEFINITIONS.

    ``(a) In 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:
        ``(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 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 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 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 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 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.
        ``(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. 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. 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.--
            ``(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 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 DOWN THE COST OF HEALTH CARE COVERAGE.

    ``(a) Clear Accounting for Costs.--A health insurance issuer 
offering group or individual health insurance coverage shall, with 
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 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. 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;
        ``(2) provide 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. HEALTH INSURANCE CONSUMER INFORMATION.

    ``(a) In 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.
    ``(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. ENSURING THAT CONSUMERS GET VALUE FOR THEIR DOLLARS.

    ``(a) Initial Premium Review Process.--
        ``(1) In 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 
    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 with plan years beginning in 
        2014, the Secretary, in conjunction with the States 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. 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.

     Subtitle B--Immediate Actions to Preserve and Expand Coverage

SEC. 1101. IMMEDIATE ACCESS TO INSURANCE FOR UNINSURED INDIVIDUALS WITH 
              A PREEXISTING CONDITION.

    (a) In General.--Not 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);
                (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 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 
    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 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. REINSURANCE FOR EARLY RETIREES.

    (a) Administration.--
        (1) In general.--Not 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, 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 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 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).

SEC. 1103. IMMEDIATE 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 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.--
        (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:
            ``(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 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 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
                    ``(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 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 plan certification.--
            ``(A) Eligibility for a health plan, health claim status, 
        electronic funds transfers, health care payment and remittance 
        advice.--Not later than December 31, 2013, a health plan shall 
        file a statement with the Secretary, in such form as the 
        Secretary may require, certifying that the data and information 
        systems for such plan are in compliance with any applicable 
        standards (as described under paragraph (7) of section 1171) 
        and 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 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 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 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.
            ``(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 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
                ``(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 later than August 1, 2014, and annually 
        thereafter, the Secretary of the Treasury shall provide notice 
        to each health plan that has been assessed a penalty fee by the 
        Secretary under this subsection. Such notice shall include the 
        amount of the penalty fee assessed by the Secretary and the due 
        date for payment of such fee to the Secretary of the Treasury 
        (as described in subparagraph (C)).
            ``(C) Payment due date.--Payment by a health plan for a 
        penalty fee assessed under this subsection shall be made to the 
        Secretary of the Treasury not later than November 1, 2014, and 
        annually thereafter.
            ``(D) Unpaid penalty fees.--Any amount of a penalty fee 
        assessed against a health plan under this subsection for which 
        payment has not been made by the due date provided under 
        subparagraph (C) shall be--
                ``(i) increased by the interest accrued on such amount, 
            as determined pursuant to the underpayment rate established 
            under section 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 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 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)). 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 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;
        (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. 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 transferring such section (as amended by subparagraph 
    (A)) so as to appear after the section 2703 added by paragraph (4);
        (3)(A) in 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)--
                (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 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 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) 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 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 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 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 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 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.
            ``(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 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 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--

                    ``(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 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 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.

``SEC. 2707. COMPREHENSIVE 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 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 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).
    (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 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. 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 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;
                (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 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.
            (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 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 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 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 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--
                (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.
            (B) Exceptions.--Such term does not include premiums, 
        balance billing amounts for non-network providers, or spending 
        for non-covered services.
        (4) Premium 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.--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.
        (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. 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
                (ii) 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 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) 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 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.--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. 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 (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;
        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.

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

SEC. 1311. AFFORDABLE CHOICES OF HEALTH BENEFIT PLANS.

    (a) Assistance to States to Establish American Health Benefit 
Exchanges.--
        (1) Planning and establishment grants.--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.--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 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 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 if the Exchange has 
    adequate resources to assist such individuals and employers.
    (c) Responsibilities of the Secretary.--
        (1) In general.--The 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.
        (2) Rule of construction.--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) an initial open enrollment, as determined by the 
        Secretary (such determination to be made not later than July 1, 
        2012);
            (B) 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) special monthly enrollment periods for Indians (as 
        defined in section 4 of the Indian Health Care Improvement 
        Act).
    (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 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) 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) provide for the operation of a toll-free telephone 
        hotline to respond to requests for assistance;
            (C) 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 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) 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) 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.--
            (A) No federal funds for continued operations.--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.--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) 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. 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 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.--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;
            (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.--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.--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) 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 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.--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.

SEC. 1312. 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 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.--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:
            (A) In general.--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.--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.--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. FINANCIAL INTEGRITY.

    (a) Accounting for Expenditures.--
        (1) In general.--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.--An Exchange shall be subject to annual audits by 
    the Secretary.
        (4) Pattern of abuse.--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.--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.--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.

           PART III--STATE FLEXIBILITY RELATING TO EXCHANGES

SEC. 1321. STATE FLEXIBILITY IN OPERATION AND ENFORCEMENT OF EXCHANGES 
              AND RELATED REQUIREMENTS.

    (a) Establishment of Standards.--
        (1) In general.--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.--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) 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.
        (2) Enforcement authority.--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.--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. 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 
            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) 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.--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.

            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.--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) Advisory board.--
            (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.--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.--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--
            (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 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 (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.--Subparagraph (A) shall 
        apply to an organization only if--
                ``(i) 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) 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.''.
        (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.--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. 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 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.--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.--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 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) 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.
            (C) Consumer protections.--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.--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) 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 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) 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''.
        (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) 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.--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.
            (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.--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.
    (h) Authorization of Appropriations.--There is authorized to be 
appropriated such sums as may be necessary to carry out this section.

SEC. 1324. 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. 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 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.--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.
            (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) 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 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) 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);
            (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.--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. WAIVER FOR STATE INNOVATION.

    (a) Application.--
        (1) 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).
        (2) Requirements.--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.--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.
            (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) 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.--The Secretary shall make a 
    determination under subsection (a)(1) not later than 180 days after 
    the receipt of an application from a State under such subsection.
        (2) Effect of determination.--
            (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) 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. PROVISIONS RELATING TO OFFERING OF PLANS IN MORE THAN ONE 
              STATE.

    (a) Health Care Choice Compacts.--
        (1) In general.--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) 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) 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) 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;
            (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) 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. TRANSITIONAL REINSURANCE PROGRAM FOR INDIVIDUAL AND SMALL 
              GROUP MARKETS IN EACH STATE.

    (a) In General.--Each State shall, not later than January 1, 2014--
        (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) 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) 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.--
            (A) In general.--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) 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.
    (c) Applicable Reinsurance Entity.--For purposes of this section--
        (1) In general.--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. 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.
        (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. 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 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. 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.--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
                ``(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 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--
                ``(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 respect to 
                the plan exceeds 9.8 percent of the applicable 
                taxpayer's household income.

            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--
                ``(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.--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 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 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.''.
    (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) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2013.

SEC. 1402. 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) 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).
    (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 
    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 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) 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 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) 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 1412 and not the 
    taxable year for which the credit under section 36B of such Code is 
    allowed.

                 Subpart B--Eligibility Determinations

SEC. 1411. 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.
        (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.
            (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) 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) In general.--The Secretary, in consultation with the 
        Secretary of the Treasury, the Secretary of Homeland 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. 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) 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 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) 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) 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 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) 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--
                (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.
        (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. 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) 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--
                (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) 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--
                (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. 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;
                (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.
        (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.

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 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--
                ``(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 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 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. 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-related 
credits) is amended by inserting after section 45Q the following:

``SEC. 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.
        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) 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.
    ``(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) 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--
                ``(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) 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) 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 (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:
        ``(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) 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) 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. 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).
        (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 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. 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.--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 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.--
                ``(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.--
            ``(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) 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) 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 was not 
        covered by minimum essential coverage for a continuous period 
        of less than 3 months.
            ``(B) 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) 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 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) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2013.

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. 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 (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 (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.--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:

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

    (e) 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. 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. NOTICE TO EMPLOYEES.

    ``(a) In General.--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.
    ``(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. 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 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.
        ``(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.--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..--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.''.
    (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). 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) 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. 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) 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,
            ``(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, 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 (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) 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 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) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2013.

                  Subtitle G--Miscellaneous Provisions

SEC. 1551. 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. TRANSPARENCY IN GOVERNMENT.

    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).

SEC. 1553. 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) 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. 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.

SEC. 1555. 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) 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. 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). 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.

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. 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. 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. 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.
    (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. HEALTH INFORMATION TECHNOLOGY ENROLLMENT STANDARDS AND 
              PROTOCOLS.

    ``(a) In General.--
        ``(1) Standards and protocols.--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.
        ``(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.
            ``(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 (42 U.S.C. 300gg), as so redesignated by 
    section 1201(2)--
            (A) in subsection (c)--
                (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 (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 (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)--
                (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 (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 (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 (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'';
                        (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 (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'';
                    (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 (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)--
            (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) 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) 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) 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) 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.
    (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. 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. 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.
        (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.--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) 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), 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) 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:

 
------------------------------------------------------------------------
                            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.--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.
            ``(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)), is amended by 
        inserting after paragraph (1) the following:
    ``(2) 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) 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''.
            (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 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.--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.--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 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),'';
            (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.--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) 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 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.--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) 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, 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. 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 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 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.--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.
            ``(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) 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.
    (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) 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) 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'';
        (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) 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) 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 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) 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) 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''.

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

SEC. 2101. ADDITIONAL FEDERAL FINANCIAL PARTICIPATION FOR CHIP.

    (a) In General.--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.--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.--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 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) 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) 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 implemented under title XIX or 
XXI, or both, of the Social Security Act).

SEC. 2102. TECHNICAL CORRECTIONS.

    (a) 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, 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 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)), 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 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).
    (b) 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. ENROLLMENT SIMPLIFICATION AND COORDINATION WITH STATE 
              HEALTH INSURANCE EXCHANGES.

    ``(a) Condition for Participation in Medicaid.--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.--A State shall establish procedures for--
            ``(A) 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 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).
        ``(4) Enrollment website requirements.--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) 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 of 
    presumptive eligibility made by a hospital that elects under 
    section 1902(a)(47)(B) to be a qualified entity for such purpose''.
    (c) 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) 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) 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 matter 
preceding clause (i) by striking ``and (21)'' and inserting ``, (21), 
and (28)''.
    (c) Effective Date.--
        (1) In general.--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.--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:
    ``(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.  (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 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) 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.--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.
    ``(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.--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''.

 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.--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) 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, 
        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) 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 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) 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 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.
            ``(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) Oversight and Assessment of the Administration of Home and 
Community-based Services.--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
        (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.
        ``(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.--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), 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) 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''.
        (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) Effective date.--The amendments made by this subsection 
    take effect 30 days after the date of enactment of this Act.

SEC. 2404. PROTECTION FOR RECIPIENTS OF HOME AND COMMUNITY-BASED 
              SERVICES AGAINST SPOUSAL IMPOVERISHMENT.

    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 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.
                    ``(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.--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.

            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
            (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) 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.''.
    (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) 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).
        (2) 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) 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:
            ``(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 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) 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)'';
        (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.--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.--For purposes of subparagraph 
        (A), the fiscal year described in this subparagraph with 
        respect to a State is the first fiscal year that 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.--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) 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) 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.
    ``(B) 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. PROVIDING FEDERAL COVERAGE AND PAYMENT COORDINATION FOR DUAL 
              ELIGIBLE BENEFICIARIES.

    (a) Establishment of Federal Coordinated Health Care Office.--
        (1) In general.--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) 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.
        (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 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. ADULT HEALTH QUALITY MEASURES.

    ``(a) Development of Core Set of Health Care Quality Measures for 
Adults Eligible for Benefits Under Medicaid.--The 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.--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.--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 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.--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.--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. PAYMENT ADJUSTMENT FOR HEALTH CARE-ACQUIRED CONDITIONS.

    (a) In General.--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.
    (b) Health Care-Acquired Condition.--In this section. the term 
``health care-acquired condition'' means a medical condition for which 
an individual was diagnosed that could be identified 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) 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. State Option To Provide Coordinated Care Through a 
Health Home for Individuals With Chronic Conditions.--
    ``(a) 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--
                ``(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) 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 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 
    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.--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) 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
                (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. 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) 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 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. 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. The Secretary shall select not more than 5 States to participate 
in the demonstration project.
    (c) Eligible Safety Net Hospital System or Network.--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 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. 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) Minimum participation period.--A provider desiring to be 
    recognized as an accountable care organization under 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. 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)). 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 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 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)--
            (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 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 ``, 
        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 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.''.
        (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, 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) 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) 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.--The amendments made by this section shall 
apply to items or services furnished on or after January 1, 2010.

             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. 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.--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 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) 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 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.--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.--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).
            ``(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--

                        ``(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.
            ``(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 
        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.--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) 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--
                ``(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.
        ``(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) 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 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.
            ``(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.''.

SEC. 2952. 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 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. 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 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.

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. 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 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 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) 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:
                ``(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 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)).
        ``(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) 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 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) 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;
                    ``(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 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 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) 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.--
                ``(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 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.--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.
                ``(iii) Website.--Such information shall be posted on 
            the Hospital Compare Internet website in an easily 
            understandable format.
            ``(B) Aggregate information.--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--
            (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) 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) 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) 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 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.
            (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) Value-Based Purchasing Demonstration Programs.--
        (1) Value-based purchasing demonstration program for inpatient 
    critical access hospitals.--
            (A) Establishment.--
                (i) In general.--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.
        (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.--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--
        (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.

            ``(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) 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.--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
        (2) by adding at the end the following new subparagraph:
            ``(I) Informal appeals process.--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 
            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 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.
            ``(E) Public availability of data submitted.--The Secretary 
        shall establish procedures for making data submitted under 
        subparagraph (C) available to the public. Such 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. 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 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 
            fiscal year 2014.
            ``(E) Public availability of data submitted.--The Secretary 
        shall establish procedures for making data submitted under 
        subparagraph (C) available to the public. Such 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. 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).
                ``(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 
            fiscal year 2014.
            ``(E) Public availability of data submitted.--The Secretary 
        shall establish procedures for making data submitted under 
        subparagraph (C) available to the public. Such 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. 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 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.--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.--The Secretary 
    shall establish procedures for making data submitted under 
    paragraph (4) available to the public. 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. 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, 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
        (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.--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 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) beginning on January 1, 2015, with respect to 
                specific physicians and groups of physicians the 
                Secretary determines appropriate; and
                    ``(II) 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.--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.--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). 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.--
    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.
        ``(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) 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) 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.--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.
        ``(3) 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.--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 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. 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
                ``(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--
                ``(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.--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. INTERAGENCY WORKING GROUP ON HEALTH CARE QUALITY.

    (a) 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;
            (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.--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) 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. QUALITY MEASURE DEVELOPMENT.

    ``(a) Quality Measure.--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.
    ``(b) Identification of Quality Measures.--
        ``(1) 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.--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
            ``(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) 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 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.--
                ``(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.--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.  (a) Multi-stakeholder Group Input Into Selection of 
Quality Measures.--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.
        ``(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.--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) 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
            ``(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. COLLECTION AND ANALYSIS OF DATA FOR QUALITY AND RESOURCE 
              USE MEASURES.

    ``(a) In General.--The Secretary shall collect and aggregate 
consistent data on quality and resource use measures from information 
systems used to support health care delivery to implement the public 
reporting of performance information, as described in section 399JJ, 
and may award grants or contracts for this purpose. The Secretary shall 
ensure that such collection, aggregation, and analysis systems span an 
increasingly broad range of patient populations, providers, and 
geographic areas over time.
    ``(b) Grants or Contracts for Data Collection.--
        ``(1) In general.--The Secretary may award grants or contracts 
    to eligible entities to support new, or improve existing, efforts 
    to collect and aggregate quality and resource use measures 
    described under subsection (c).
        ``(2) Eligible entities.--To be eligible for a grant or 
    contract under this subsection, an entity shall--
            ``(A) be--
                ``(i) a multi-stakeholder entity that coordinates the 
            development of methods and implementation plans for the 
            consistent reporting of summary quality and cost 
            information;
                ``(ii) an entity capable of submitting such summary 
            data for a particular population and providers, such as a 
            disease registry, regional collaboration, health plan 
            collaboration, or other population-wide source; or
                ``(iii) a Federal Indian Health Service program or a 
            health program operated by an Indian tribe (as defined in 
            section 4 of the Indian Health Care Improvement Act);
            ``(B) promote the use of the systems that provide data to 
        improve and coordinate patient care;
            ``(C) support the provision of timely, consistent quality 
        and resource use information to health care providers, and 
        other groups and organizations as appropriate, with an 
        opportunity for providers to correct inaccurate measures; and
            ``(D) agree to report, as determined by the Secretary, 
        measures on quality and resource use to the public in 
        accordance with the public reporting process established under 
        section 399JJ.
    ``(c) Consistent Data Aggregation.--The Secretary may award grants 
or contracts under this section only to entities that enable summary 
data that can be integrated and compared across multiple sources. The 
Secretary shall provide standards for the protection of the security 
and privacy of patient data.
    ``(d) Matching Funds.--The Secretary may not award a grant or 
contract under this section to an entity unless the entity agrees that 
it will make available (directly or through contributions from other 
public or private entities) non-Federal contributions toward the 
activities to be carried out under the grant or contract in an amount 
equal to $1 for each $5 of Federal funds provided under the grant or 
contract. Such non-Federal matching funds may be provided directly or 
through donations from public or private entities and may be in cash or 
in-kind, fairly evaluated, including plant, equipment, or services.
    ``(e) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated such sums as may be necessary 
for fiscal years 2010 through 2014.

``SEC. 399JJ. PUBLIC REPORTING OF PERFORMANCE INFORMATION.

    ``(a) Development of Performance Websites.--The Secretary shall 
make available to the public, through standardized Internet websites, 
performance information summarizing data on quality measures. Such 
information shall be tailored to respond to the differing needs of 
hospitals and other institutional health care providers, physicians and 
other clinicians, patients, consumers, researchers, policymakers, 
States, and other stakeholders, as the Secretary may specify.
    ``(b) Information on Conditions.--The performance information made 
publicly available on an Internet website, as described in subsection 
(a), shall include information regarding clinical conditions to the 
extent such information is available, and the information shall, where 
appropriate, be provider-specific and sufficiently disaggregated and 
specific to meet the needs of patients with different clinical 
conditions.
    ``(c) Consultation.--
        ``(1) In general.--In carrying out this section, the Secretary 
    shall consult with the entity with a contract under section 1890(a) 
    of the Social Security Act, and other entities, as appropriate, to 
    determine the type of information that is useful to stakeholders 
    and the format that best facilitates use of the reports and of 
    performance reporting Internet websites.
        ``(2) Consultation with stakeholders.--The entity with a 
    contract under section 1890(a) of the Social Security Act shall 
    convene multi-stakeholder groups, as described in such section, to 
    review the design and format of each Internet website made 
    available under subsection (a) and shall transmit to the Secretary 
    the views of such multi-stakeholder groups with respect to each 
    such design and format.
    ``(d) Coordination.--Where appropriate, the Secretary shall 
coordinate the manner in which data are presented through Internet 
websites described in subsection (a) and for public reporting of other 
quality measures by the Secretary, including such quality measures 
under title XVIII of the Social Security Act.
    ``(e) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated such sums as may be necessary 
for fiscal years 2010 through 2014.''.

      PART III--ENCOURAGING DEVELOPMENT OF NEW PATIENT CARE MODELS

SEC. 3021. ESTABLISHMENT OF CENTER FOR MEDICARE AND MEDICAID INNOVATION 
              WITHIN CMS.

    (a) In General.--Title XI of the Social Security Act is amended by 
inserting after section 1115 the following new section:


              ``center for medicare and medicaid innovation

    ``Sec. 1115A.  (a) Center for Medicare and Medicaid Innovation 
Established.--
        ``(1) In general.--There is created within the Centers for 
    Medicare & Medicaid Services a Center for Medicare and Medicaid 
    Innovation (in this section referred to as the `CMI') to carry out 
    the duties described in this section. The purpose of the CMI is to 
    test innovative payment and service delivery models to reduce 
    program expenditures under the applicable titles while preserving 
    or enhancing the quality of care furnished to individuals under 
    such titles. In selecting such models, the Secretary shall give 
    preference to models that also improve the coordination, quality, 
    and efficiency of health care services furnished to applicable 
    individuals defined in paragraph (4)(A).
        ``(2) Deadline.--The Secretary shall ensure that the CMI is 
    carrying out the duties described in this section by not later than 
    January 1, 2011.
        ``(3) Consultation.--In carrying out the duties under this 
    section, the CMI shall consult representatives of relevant Federal 
    agencies, and clinical and analytical experts with expertise in 
    medicine and health care management. The CMI shall use open door 
    forums or other mechanisms to seek input from interested parties.
        ``(4) Definitions.--In this section:
            ``(A) Applicable individual.--The term `applicable 
        individual' means--
                ``(i) an individual who is entitled to, or enrolled 
            for, benefits under part A of title XVIII or enrolled for 
            benefits under part B of such title;
                ``(ii) an individual who is eligible for medical 
            assistance under title XIX, under a State plan or waiver; 
            or
                ``(iii) an individual who meets the criteria of both 
            clauses (i) and (ii).
            ``(B) Applicable title.--The term `applicable title' means 
        title XVIII, title XIX, or both.
    ``(b) Testing of Models (Phase I).--
        ``(1) In general.--The CMI shall test payment and service 
    delivery models in accordance with selection criteria under 
    paragraph (2) to determine the effect of applying such models under 
    the applicable title (as defined in subsection (a)(4)(B)) on 
    program expenditures under such titles and the quality of care 
    received by individuals receiving benefits under such title.
        ``(2) Selection of models to be tested.--
            ``(A) In general.--The Secretary shall select models to be 
        tested from models where the Secretary determines that there is 
        evidence that the model addresses a defined population for 
        which there are deficits in care leading to poor clinical 
        outcomes or potentially avoidable expenditures. The models 
        selected under the preceding sentence may include the models 
        described in subparagraph (B).
            ``(B) Opportunities.--The models described in this 
        subparagraph are the following models:
                ``(i) Promoting broad payment and practice reform in 
            primary care, including patient-centered medical home 
            models for high-need applicable individuals, medical homes 
            that address women's unique health care needs, and models 
            that transition primary care practices away from fee-for-
            service based reimbursement and toward comprehensive 
            payment or salary-based payment.
                ``(ii) Contracting directly with groups of providers of 
            services and suppliers to promote innovative care delivery 
            models, such as through risk-based comprehensive payment or 
            salary-based payment.
                ``(iii) Utilizing geriatric assessments and 
            comprehensive care plans to coordinate the care (including 
            through interdisciplinary teams) of applicable individuals 
            with multiple chronic conditions and at least one of the 
            following:

                    ``(I) An inability to perform 2 or more activities 
                of daily living.
                    ``(II) Cognitive impairment, including dementia.

                ``(iv) Promote care coordination between providers of 
            services and suppliers that transition health care 
            providers away from fee-for-service based reimbursement and 
            toward salary-based payment.
                ``(v) Supporting care coordination for chronically-ill 
            applicable individuals at high risk of hospitalization 
            through a health information technology-enabled provider 
            network that includes care coordinators, a chronic disease 
            registry, and home tele-health technology.
                ``(vi) Varying payment to physicians who order advanced 
            diagnostic imaging services (as defined in section 
            1834(e)(1)(B)) according to the physician's adherence to 
            appropriateness criteria for the ordering of such services, 
            as determined in consultation with physician specialty 
            groups and other relevant stakeholders.
                ``(vii) Utilizing medication therapy management 
            services, such as those described in section 935 of the 
            Public Health Service Act.
                ``(viii) Establishing community-based health teams to 
            support small-practice medical homes by assisting the 
            primary care practitioner in chronic care management, 
            including patient self-management, activities.
                ``(ix) Assisting applicable individuals in making 
            informed health care choices by paying providers of 
            services and suppliers for using patient decision-support 
            tools, including tools that meet the standards developed 
            and identified under section 936(c)(2)(A) of the Public 
            Health Service Act, that improve applicable individual and 
            caregiver understanding of medical treatment options.
                ``(x) Allowing States to test and evaluate fully 
            integrating care for dual eligible individuals in the 
            State, including the management and oversight of all funds 
            under the applicable titles with respect to such 
            individuals.
                ``(xi) Allowing States to test and evaluate systems of 
            all-payer payment reform for the medical care of residents 
            of the State, including dual eligible individuals.
                ``(xii) Aligning nationally recognized, evidence-based 
            guidelines of cancer care with payment incentives under 
            title XVIII in the areas of treatment planning and follow-
            up care planning for applicable individuals described in 
            clause (i) or (iii) of subsection (a)(4)(A) with cancer, 
            including the identification of gaps in applicable quality 
            measures.
                ``(xiii) Improving post-acute care through continuing 
            care hospitals that offer inpatient rehabilitation, long-
            term care hospitals, and home health or skilled nursing 
            care during an inpatient stay and the 30 days immediately 
            following discharge.
                ``(xiv) Funding home health providers who offer chronic 
            care management services to applicable individuals in 
            cooperation with interdisciplinary teams.
                ``(xv) Promoting improved quality and reduced cost by 
            developing a collaborative of high-quality, low-cost health 
            care institutions that is responsible for--

                    ``(I) developing, documenting, and disseminating 
                best practices and proven care methods;
                    ``(II) implementing such best practices and proven 
                care methods within such institutions to demonstrate 
                further improvements in quality and efficiency; and
                    ``(III) providing assistance to other health care 
                institutions on how best to employ such best practices 
                and proven care methods to improve health care quality 
                and lower costs.

                ``(xvi) Facilitate inpatient care, including intensive 
            care, of hospitalized applicable individuals at their local 
            hospital through the use of electronic monitoring by 
            specialists, including intensivists and critical care 
            specialists, based at integrated health systems.
                ``(xvii) Promoting greater efficiencies and timely 
            access to outpatient services (such as outpatient physical 
            therapy services) through models that do not require a 
            physician or other health professional to refer the service 
            or be involved in establishing the plan of care for the 
            service, when such service is furnished by a health 
            professional who has the authority to furnish the service 
            under existing State law.
                ``(xviii) Establishing comprehensive payments to 
            Healthcare Innovation Zones, consisting of groups of 
            providers that include a teaching hospital, physicians, and 
            other clinical entities, that, through their structure, 
            operations, and joint-activity deliver a full spectrum of 
            integrated and comprehensive health care services to 
            applicable individuals while also incorporating innovative 
            methods for the clinical training of future health care 
            professionals.
            ``(C) Additional factors for consideration.--In selecting 
        models for testing under subparagraph (A), the CMI may consider 
        the following additional factors:
                ``(i) Whether the model includes a regular process for 
            monitoring and updating patient care plans in a manner that 
            is consistent with the needs and preferences of applicable 
            individuals.
                ``(ii) Whether the model places the applicable 
            individual, including family members and other informal 
            caregivers of the applicable individual, at the center of 
            the care team of the applicable individual.
                ``(iii) Whether the model provides for in-person 
            contact with applicable individuals.
                ``(iv) Whether the model utilizes technology, such as 
            electronic health records and patient-based remote 
            monitoring systems, to coordinate care over time and across 
            settings.
                ``(v) Whether the model provides for the maintenance of 
            a close relationship between care coordinators, primary 
            care practitioners, specialist physicians, community-based 
            organizations, and other providers of services and 
            suppliers.
                ``(vi) Whether the model relies on a team-based 
            approach to interventions, such as comprehensive care 
            assessments, care planning, and self-management coaching.
                ``(vii) Whether, under the model, providers of services 
            and suppliers are able to share information with patients, 
            caregivers, and other providers of services and suppliers 
            on a real time basis.
        ``(3) Budget neutrality.--
            ``(A) Initial period.--The Secretary shall not require, as 
        a condition for testing a model under paragraph (1), that the 
        design of such model ensure that such model is budget neutral 
        initially with respect to expenditures under the applicable 
        title.
            ``(B) Termination or modification.--The Secretary shall 
        terminate or modify the design and implementation of a model 
        unless the Secretary determines (and the Chief Actuary of the 
        Centers for Medicare & Medicaid Services, with respect to 
        program spending under the applicable title, certifies), after 
        testing has begun, that the model is expected to--
                ``(i) improve the quality of care (as determined by the 
            Administrator of the Centers for Medicare & Medicaid 
            Services) without increasing spending under the applicable 
            title;
                ``(ii) reduce spending under the applicable title 
            without reducing the quality of care; or
                ``(iii) improve the quality of care and reduce 
            spending.
        Such termination may occur at any time after such testing has 
        begun and before completion of the testing.
        ``(4) Evaluation.--
            ``(A) In general.--The Secretary shall conduct an 
        evaluation of each model tested under this subsection. Such 
        evaluation shall include an analysis of--
                ``(i) the quality of care furnished under the model, 
            including the measurement of patient-level outcomes and 
            patient-centeredness criteria determined appropriate by the 
            Secretary; and
                ``(ii) the changes in spending under the applicable 
            titles by reason of the model.
            ``(B) Information.--The Secretary shall make the results of 
        each evaluation under this paragraph available to the public in 
        a timely fashion and may establish requirements for States and 
        other entities participating in the testing of models under 
        this section to collect and report information that the 
        Secretary determines is necessary to monitor and evaluate such 
        models.
    ``(c) Expansion of Models (Phase II).--Taking into account the 
evaluation under subsection (b)(4), the Secretary may, through 
rulemaking, expand (including implementation on a nationwide basis) the 
duration and the scope of a model that is being tested under subsection 
(b) or a demonstration project under section 1866C, to the extent 
determined appropriate by the Secretary, if--
        ``(1) the Secretary determines that such expansion is expected 
    to--
            ``(A) reduce spending under applicable title without 
        reducing the quality of care; or
            ``(B) improve the quality of care and reduce spending; and
        ``(2) the Chief Actuary of the Centers for Medicare & Medicaid 
    Services certifies that such expansion would reduce program 
    spending under applicable titles.
    ``(d) Implementation.--
        ``(1) Waiver authority.--The Secretary may waive such 
    requirements of titles XI and XVIII and of sections 1902(a)(1), 
    1902(a)(13), and 1903(m)(2)(A)(iii) as may be necessary solely for 
    purposes of carrying out this section with respect to testing 
    models described in subsection (b).
        ``(2) Limitations on review.--There shall be no administrative 
    or judicial review under section 1869, section 1878, or otherwise 
    of--
            ``(A) the selection of models for testing or expansion 
        under this section;
            ``(B) the selection of organizations, sites, or 
        participants to test those models selected;
            ``(C) the elements, parameters, scope, and duration of such 
        models for testing or dissemination;
            ``(D) determinations regarding budget neutrality under 
        subsection (b)(3);
            ``(E) the termination or modification of the design and 
        implementation of a model under subsection (b)(3)(B); and
            ``(F) determinations about expansion of the duration and 
        scope of a model under subsection (c), including the 
        determination that a model is not expected to meet criteria 
        described in paragraph (1) or (2) of such subsection.
        ``(3) Administration.--Chapter 35 of title 44, United States 
    Code, shall not apply to the testing and evaluation of models or 
    expansion of such models under this section.
    ``(e) Application to CHIP.--The Center may carry out activities 
under this section with respect to title XXI in the same manner as 
provided under this section with respect to the program under the 
applicable titles.
    ``(f) Funding.--
        ``(1) In general.--There are appropriated, from amounts in the 
    Treasury not otherwise appropriated--
            ``(A) $5,000,000 for the design, implementation, and 
        evaluation of models under subsection (b) for fiscal year 2010;
            ``(B) $10,000,000,000 for the activities initiated under 
        this section for the period of fiscal years 2011 through 2019; 
        and
            ``(C) the amount described in subparagraph (B) for the 
        activities initiated under this section for each subsequent 10-
        year fiscal period (beginning with the 10-year fiscal period 
        beginning with fiscal year 2020).
    Amounts appropriated under the preceding sentence shall remain 
    available until expended.
        ``(2) Use of certain funds.--Out of amounts appropriated under 
    subparagraphs (B) and (C) of paragraph (1), not less than 
    $25,000,000 shall be made available each such fiscal year to 
    design, implement, and evaluate models under subsection (b).
    ``(g) Report to Congress.--Beginning in 2012, and not less than 
once every other year thereafter, the Secretary shall submit to 
Congress a report on activities under this section. Each such report 
shall describe the models tested under subsection (b), including the 
number of individuals described in subsection (a)(4)(A)(i) and of 
individuals described in subsection (a)(4)(A)(ii) participating in such 
models and payments made under applicable titles for services on behalf 
of such individuals, any models chosen for expansion under subsection 
(c), and the results from evaluations under subsection (b)(4). In 
addition, each such report shall provide such recommendations as the 
Secretary determines are appropriate for legislative action to 
facilitate the development and expansion of successful payment 
models.''.
    (b) Medicaid Conforming Amendment.--Section 1902(a) of the Social 
Security Act (42 U.S.C. 1396a(a)), as amended by section 8002(b), is 
amended--
        (1) in paragraph (81), by striking ``and'' at the end;
        (2) in paragraph (82), by striking the period at the end and 
    inserting ``; and''; and
        (3) by inserting after paragraph (82) the following new 
    paragraph:
        ``(83) provide for implementation of the payment models 
    specified by the Secretary under section 1115A(c) for 
    implementation on a nationwide basis unless the State demonstrates 
    to the satisfaction of the Secretary that implementation would not 
    be administratively feasible or appropriate to the health care 
    delivery system of the State.''.
    (c) Revisions to Health Care Quality Demonstration Program.--
Subsections (b) and (f) of section 1866C of the Social Security Act (42 
U.S.C. 1395cc-3) are amended by striking ``5-year'' each place it 
appears.

SEC. 3022. MEDICARE SHARED SAVINGS PROGRAM.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is 
amended by adding at the end the following new section:


                         ``shared savings program

    ``Sec. 1899.  (a) Establishment.--
        ``(1) In general.--Not later than January 1, 2012, the 
    Secretary shall establish a shared savings program (in this section 
    referred to as the `program') that promotes accountability for a 
    patient population and coordinates items and services under parts A 
    and B, and encourages investment in infrastructure and redesigned 
    care processes for high quality and efficient service delivery. 
    Under such program--
            ``(A) groups of providers of services and suppliers meeting 
        criteria specified by the Secretary may work together to manage 
        and coordinate care for Medicare fee-for-service beneficiaries 
        through an accountable care organization (referred to in this 
        section as an `ACO'); and
            ``(B) ACOs that meet quality performance standards 
        established by the Secretary are eligible to receive payments 
        for shared savings under subsection (d)(2).
    ``(b) Eligible ACOs.--
        ``(1) In general.--Subject to the succeeding provisions of this 
    subsection, as determined appropriate by the Secretary, the 
    following groups of providers of services and suppliers which have 
    established a mechanism for shared governance are eligible to 
    participate as ACOs under the program under this section:
            ``(A) ACO professionals in group practice arrangements.
            ``(B) Networks of individual practices of ACO 
        professionals.
            ``(C) Partnerships or joint venture arrangements between 
        hospitals and ACO professionals.
            ``(D) Hospitals employing ACO professionals.
            ``(E) Such other groups of providers of services and 
        suppliers as the Secretary determines appropriate.
        ``(2) Requirements.--An ACO shall meet the following 
    requirements:
            ``(A) The ACO shall be willing to become accountable for 
        the quality, cost, and overall care of the Medicare fee-for-
        service beneficiaries assigned to it.
            ``(B) The ACO shall enter into an agreement with the 
        Secretary to participate in the program for not less than a 3-
        year period (referred to in this section as the `agreement 
        period').
            ``(C) The ACO shall have a formal legal structure that 
        would allow the organization to receive and distribute payments 
        for shared savings under subsection (d)(2) to participating 
        providers of services and suppliers.
            ``(D) The ACO shall include primary care ACO professionals 
        that are sufficient for the number of Medicare fee-for-service 
        beneficiaries assigned to the ACO under subsection (c). At a 
        minimum, the ACO shall have at least 5,000 such beneficiaries 
        assigned to it under subsection (c) in order to be eligible to 
        participate in the ACO program.
            ``(E) The ACO shall provide the Secretary with such 
        information regarding ACO professionals participating in the 
        ACO as the Secretary determines necessary to support the 
        assignment of Medicare fee-for-service beneficiaries to an ACO, 
        the implementation of quality and other reporting requirements 
        under paragraph (3), and the determination of payments for 
        shared savings under subsection (d)(2).
            ``(F) The ACO shall have in place a leadership and 
        management structure that includes clinical and administrative 
        systems.
            ``(G) The ACO shall define processes to promote evidence-
        based medicine and patient engagement, report on quality and 
        cost measures, and coordinate care, such as through the use of 
        telehealth, remote patient monitoring, and other such enabling 
        technologies.
            ``(H) The ACO shall demonstrate to the Secretary that it 
        meets patient-centeredness criteria specified by the Secretary, 
        such as the use of patient and caregiver assessments or the use 
        of individualized care plans.
        ``(3) Quality and other reporting requirements.--
            ``(A) In general.--The Secretary shall determine 
        appropriate measures to assess the quality of care furnished by 
        the ACO, such as measures of--
                ``(i) clinical processes and outcomes;
                ``(ii) patient and, where practicable, caregiver 
            experience of care; and
                ``(iii) utilization (such as rates of hospital 
            admissions for ambulatory care sensitive conditions).
            ``(B) Reporting requirements.--An ACO shall submit data in 
        a form and manner specified by the Secretary on measures the 
        Secretary determines necessary for the ACO to report in order 
        to evaluate the quality of care furnished by the ACO. Such data 
        may include care transitions across health care settings, 
        including hospital discharge planning and post-hospital 
        discharge follow-up by ACO professionals, as the Secretary 
        determines appropriate.
            ``(C) Quality performance standards.--The Secretary shall 
        establish quality performance standards to assess the quality 
        of care furnished by ACOs. The Secretary shall seek to improve 
        the quality of care furnished by ACOs over time by specifying 
        higher standards, new measures, or both for purposes of 
        assessing such quality of care.
            ``(D) Other reporting requirements.--The Secretary may, as 
        the Secretary determines appropriate, incorporate reporting 
        requirements and incentive payments related to the physician 
        quality reporting initiative (PQRI) under section 1848, 
        including such requirements and such payments related to 
        electronic prescribing, electronic health records, and other 
        similar initiatives under section 1848, and may use alternative 
        criteria than would otherwise apply under such section for 
        determining whether to make such payments. The incentive 
        payments described in the preceding sentence shall not be taken 
        into consideration when calculating any payments otherwise made 
        under subsection (d).
        ``(4) No duplication in participation in shared savings 
    programs.--A provider of services or supplier that participates in 
    any of the following shall not be eligible to participate in an ACO 
    under this section:
            ``(A) A model tested or expanded under section 1115A that 
        involves shared savings under this title, or any other program 
        or demonstration project that involves such shared savings.
            ``(B) The independence at home medical practice pilot 
        program under section 1866E.
    ``(c) Assignment of Medicare Fee-for-service Beneficiaries to 
ACOs.--The Secretary shall determine an appropriate method to assign 
Medicare fee-for-service beneficiaries to an ACO based on their 
utilization of primary care services provided under this title by an 
ACO professional described in subsection (h)(1)(A).
    ``(d) Payments and Treatment of Savings.--
        ``(1) Payments.--
            ``(A) In general.--Under the program, subject to paragraph 
        (3), payments shall continue to be made to providers of 
        services and suppliers participating in an ACO under the 
        original Medicare fee-for-service program under parts A and B 
        in the same manner as they would otherwise be made except that 
        a participating ACO is eligible to receive payment for shared 
        savings under paragraph (2) if--
                ``(i) the ACO meets quality performance standards 
            established by the Secretary under subsection (b)(3); and
                ``(ii) the ACO meets the requirement under subparagraph 
            (B)(i).
            ``(B) Savings requirement and benchmark.--
                ``(i) Determining savings.--In each year of the 
            agreement period, an ACO shall be eligible to receive 
            payment for shared savings under paragraph (2) only if the 
            estimated average per capita Medicare expenditures under 
            the ACO for Medicare fee-for-service beneficiaries for 
            parts A and B services, adjusted for beneficiary 
            characteristics, is at least the percent specified by the 
            Secretary below the applicable benchmark under clause (ii). 
            The Secretary shall determine the appropriate percent 
            described in the preceding sentence to account for normal 
            variation in expenditures under this title, based upon the 
            number of Medicare fee-for-service beneficiaries assigned 
            to an ACO.
                ``(ii) Establish and update benchmark.--The Secretary 
            shall estimate a benchmark for each agreement period for 
            each ACO using the most recent available 3 years of per-
            beneficiary expenditures for parts A and B services for 
            Medicare fee-for-service beneficiaries assigned to the ACO. 
            Such benchmark shall be adjusted for beneficiary 
            characteristics and such other factors as the Secretary 
            determines appropriate and updated by the projected 
            absolute amount of growth in national per capita 
            expenditures for parts A and B services under the original 
            Medicare fee-for-service program, as estimated by the 
            Secretary. Such benchmark shall be reset at the start of 
            each agreement period.
        ``(2) Payments for shared savings.--Subject to performance with 
    respect to the quality performance standards established by the 
    Secretary under subsection (b)(3), if an ACO meets the requirements 
    under paragraph (1), a percent (as determined appropriate by the 
    Secretary) of the difference between such estimated average per 
    capita Medicare expenditures in a year, adjusted for beneficiary 
    characteristics, under the ACO and such benchmark for the ACO may 
    be paid to the ACO as shared savings and the remainder of such 
    difference shall be retained by the program under this title. The 
    Secretary shall establish limits on the total amount of shared 
    savings that may be paid to an ACO under this paragraph.
        ``(3) Monitoring avoidance of at-risk patients.--If the 
    Secretary determines that an ACO has taken steps to avoid patients 
    at risk in order to reduce the likelihood of increasing costs to 
    the ACO the Secretary may impose an appropriate sanction on the 
    ACO, including termination from the program.
        ``(4) Termination.--The Secretary may terminate an agreement 
    with an ACO if it does not meet the quality performance standards 
    established by the Secretary under subsection (b)(3).
    ``(e) Administration.--Chapter 35 of title 44, United States Code, 
shall not apply to the program.
    ``(f) Waiver Authority.--The Secretary may waive such requirements 
of sections 1128A and 1128B and title XVIII of this Act as may be 
necessary to carry out the provisions of this section.
    ``(g) Limitations on Review.--There shall be no administrative or 
judicial review under section 1869, section 1878, or otherwise of--
        ``(1) the specification of criteria under subsection (a)(1)(B);
        ``(2) the assessment of the quality of care furnished by an ACO 
    and the establishment of performance standards under subsection 
    (b)(3);
        ``(3) the assignment of Medicare fee-for-service beneficiaries 
    to an ACO under subsection (c);
        ``(4) the determination of whether an ACO is eligible for 
    shared savings under subsection (d)(2) and the amount of such 
    shared savings, including the determination of the estimated 
    average per capita Medicare expenditures under the ACO for Medicare 
    fee-for-service beneficiaries assigned to the ACO and the average 
    benchmark for the ACO under subsection (d)(1)(B);
        ``(5) the percent of shared savings specified by the Secretary 
    under subsection (d)(2) and any limit on the total amount of shared 
    savings established by the Secretary under such subsection; and
        ``(6) the termination of an ACO under subsection (d)(4).
    ``(h) Definitions.--In this section:
        ``(1) ACO professional.--The term `ACO professional' means--
            ``(A) a physician (as defined in section 1861(r)(1)); and
            ``(B) a practitioner described in section 
        1842(b)(18)(C)(i).
        ``(2) Hospital.--The term `hospital' means a subsection (d) 
    hospital (as defined in section 1886(d)(1)(B)).
        ``(3) Medicare fee-for-service beneficiary.--The term `Medicare 
    fee-for-service beneficiary' means an individual who is enrolled in 
    the original Medicare fee-for-service program under parts A and B 
    and is not enrolled in an MA plan under part C, an eligible 
    organization under section 1876, or a PACE program under section 
    1894.''.

SEC. 3023. NATIONAL PILOT PROGRAM ON PAYMENT BUNDLING.

    Title XVIII of the Social Security Act, as amended by section 3021, 
is amended by inserting after section 1886C the following new section:


               ``national pilot program on payment bundling

    ``Sec. 1866D.  (a) Implementation.--
        ``(1) In general.--The Secretary shall establish a pilot 
    program for integrated care during an episode of care provided to 
    an applicable beneficiary around a hospitalization in order to 
    improve the coordination, quality, and efficiency of health care 
    services under this title.
        ``(2) Definitions.--In this section:
            ``(A) Applicable beneficiary.--The term `applicable 
        beneficiary' means an individual who--
                ``(i) is entitled to, or enrolled for, benefits under 
            part A and enrolled for benefits under part B of such 
            title, but not enrolled under part C or a PACE program 
            under section 1894; and
                ``(ii) is admitted to a hospital for an applicable 
            condition.
            ``(B) Applicable condition.--The term `applicable 
        condition' means 1 or more of 8 conditions selected by the 
        Secretary. In selecting conditions under the preceding 
        sentence, the Secretary shall take into consideration the 
        following factors:
                ``(i) Whether the conditions selected include a mix of 
            chronic and acute conditions.
                ``(ii) Whether the conditions selected include a mix of 
            surgical and medical conditions.
                ``(iii) Whether a condition is one for which there is 
            evidence of an opportunity for providers of services and 
            suppliers to improve the quality of care furnished while 
            reducing total expenditures under this title.
                ``(iv) Whether a condition has significant variation 
            in--

                    ``(I) the number of readmissions; and
                    ``(II) the amount of expenditures for post-acute 
                care spending under this title.

                ``(v) Whether a condition is high-volume and has high 
            post-acute care expenditures under this title.
                ``(vi) Which conditions the Secretary determines are 
            most amenable to bundling across the spectrum of care given 
            practice patterns under this title.
            ``(C) Applicable services.--The term `applicable services' 
        means the following:
                ``(i) Acute care inpatient services.
                ``(ii) Physicians' services delivered in and outside of 
            an acute care hospital setting.
                ``(iii) Outpatient hospital services, including 
            emergency department services.
                ``(iv) Post-acute care services, including home health 
            services, skilled nursing services, inpatient 
            rehabilitation services, and inpatient hospital services 
            furnished by a long-term care hospital.
                ``(v) Other services the Secretary determines 
            appropriate.
            ``(D) Episode of care.--
                ``(i) In general.--Subject to clause (ii), the term 
            `episode of care' means, with respect to an applicable 
            condition and an applicable beneficiary, the period that 
            includes--

                    ``(I) the 3 days prior to the admission of the 
                applicable beneficiary to a hospital for the applicable 
                condition;
                    ``(II) the length of stay of the applicable 
                beneficiary in such hospital; and
                    ``(III) the 30 days following the discharge of the 
                applicable beneficiary from such hospital.

                ``(ii) Establishment of period by the secretary.--The 
            Secretary, as appropriate, may establish a period (other 
            than the period described in clause (i)) for an episode of 
            care under the pilot program.
            ``(E) Physicians' services.--The term `physicians' 
        services' has the meaning given such term in section 1861(q).
            ``(F) Pilot program.--The term `pilot program' means the 
        pilot program under this section.
            ``(G) Provider of services.--The term `provider of 
        services' has the meaning given such term in section 1861(u).
            ``(H) Readmission.--The term `readmission' has the meaning 
        given such term in section 1886(q)(5)(E).
            ``(I) Supplier.--The term `supplier' has the meaning given 
        such term in section 1861(d).
        ``(3) Deadline for implementation.--The Secretary shall 
    establish the pilot program not later than January 1, 2013.
    ``(b) Developmental Phase.--
        ``(1) Determination of patient assessment instrument.--The 
    Secretary shall determine which patient assessment instrument (such 
    as the Continuity Assessment Record and Evaluation (CARE) tool) 
    shall be used under the pilot program to evaluate the applicable 
    condition of an applicable beneficiary for purposes of determining 
    the most clinically appropriate site for the provision of post-
    acute care to the applicable beneficiary.
        ``(2) Development of quality measures for an episode of care 
    and for post-acute care.--
            ``(A) In general.--The Secretary, in consultation with the 
        Agency for Healthcare Research and Quality and the entity with 
        a contract under section 1890(a) of the Social Security Act, 
        shall develop quality measures for use in the pilot program--
                ``(i) for episodes of care; and
                ``(ii) for post-acute care.
            ``(B) Site-neutral post-acute care quality measures.--Any 
        quality measures developed under subparagraph (A)(ii) shall be 
        site-neutral.
            ``(C) Coordination with quality measure development and 
        endorsement procedures.--The Secretary shall ensure that the 
        development of quality measures under subparagraph (A) is done 
        in a manner that is consistent with the measures developed and 
        endorsed under section 1890 and 1890A that are applicable to 
        all post-acute care settings.
    ``(c) Details.--
        ``(1) Duration.--
            ``(A) In general.--Subject to subparagraph (B), the pilot 
        program shall be conducted for a period of 5 years.
            ``(B) Extension.--The Secretary may extend the duration of 
        the pilot program for providers of services and suppliers 
        participating in the pilot program as of the day before the end 
        of the 5-year period described in subparagraph (A), for a 
        period determined appropriate by the Secretary, if the 
        Secretary determines that such extension will result in 
        improving or not reducing the quality of patient care and 
        reducing spending under this title.
        ``(2) Participating providers of services and suppliers.--
            ``(A) In general.--An entity comprised of providers of 
        services and suppliers, including a hospital, a physician 
        group, a skilled nursing facility, and a home health agency, 
        who are otherwise participating under this title, may submit an 
        application to the Secretary to provide applicable services to 
        applicable individuals under this section.
            ``(B) Requirements.--The Secretary shall develop 
        requirements for entities to participate in the pilot program 
        under this section. Such requirements shall ensure that 
        applicable beneficiaries have an adequate choice of providers 
        of services and suppliers under the pilot program.
        ``(3) Payment methodology.--
            ``(A) In general.--
                ``(i) Establishment of payment methods.--The Secretary 
            shall develop payment methods for the pilot program for 
            entities participating in the pilot program. Such payment 
            methods may include bundled payments and bids from entities 
            for episodes of care. The Secretary shall make payments to 
            the entity for services covered under this section.
                ``(ii) No additional program expenditures.--Payments 
            under this section for applicable items and services under 
            this title (including payment for services described in 
            subparagraph (B)) for applicable beneficiaries for a year 
            shall be established in a manner that does not result in 
            spending more for such entity for such beneficiaries than 
            would otherwise be expended for such entity for such 
            beneficiaries for such year if the pilot program were not 
            implemented, as estimated by the Secretary.
            ``(B) Inclusion of certain services.--A payment methodology 
        tested under the pilot program shall include payment for the 
        furnishing of applicable services and other appropriate 
        services, such as care coordination, medication reconciliation, 
        discharge planning, transitional care services, and other 
        patient-centered activities as determined appropriate by the 
        Secretary.
            ``(C) Bundled payments.--
                ``(i) In general.--A bundled payment under the pilot 
            program shall--

                    ``(I) be comprehensive, covering the costs of 
                applicable services and other appropriate services 
                furnished to an individual during an episode of care 
                (as determined by the Secretary); and
                    ``(II) be made to the entity which is participating 
                in the pilot program.

                ``(ii) Requirement for provision of applicable services 
            and other appropriate services.--Applicable services and 
            other appropriate services for which payment is made under 
            this subparagraph shall be furnished or directed by the 
            entity which is participating in the pilot program.
            ``(D) Payment for post-acute care services after the 
        episode of care.--The Secretary shall establish procedures, in 
        the case where an applicable beneficiary requires continued 
        post-acute care services after the last day of the episode of 
        care, under which payment for such services shall be made.
        ``(4) Quality measures.--
            ``(A) In general.--The Secretary shall establish quality 
        measures (including quality measures of process, outcome, and 
        structure) related to care provided by entities participating 
        in the pilot program. Quality measures established under the 
        preceding sentence shall include measures of the following:
                ``(i) Functional status improvement.
                ``(ii) Reducing rates of avoidable hospital 
            readmissions.
                ``(iii) Rates of discharge to the community.
                ``(iv) Rates of admission to an emergency room after a 
            hospitalization.
                ``(v) Incidence of health care acquired infections.
                ``(vi) Efficiency measures.
                ``(vii) Measures of patient-centeredness of care.
                ``(viii) Measures of patient perception of care.
                ``(ix) Other measures, including measures of patient 
            outcomes, determined appropriate by the Secretary.
            ``(B) Reporting on quality measures.--
                ``(i) In general.--A entity shall submit data to the 
            Secretary on quality measures established under 
            subparagraph (A) during each year of the pilot program (in 
            a form and manner, subject to clause (iii), specified by 
            the Secretary).
                ``(ii) Submission of data through electronic health 
            record.--To the extent practicable, the Secretary shall 
            specify that data on measures be submitted under clause (i) 
            through the use of an qualified electronic health record 
            (as defined in section 3000(13) of the Public Health 
            Service Act (42 U.S.C. 300jj-11(13)) in a manner specified 
            by the Secretary.
    ``(d) Waiver.--The Secretary may waive such provisions of this 
title and title XI as may be necessary to carry out the pilot program.
    ``(e) Independent Evaluation and Reports on Pilot Program.--
        ``(1) Independent evaluation.--The Secretary shall conduct an 
    independent evaluation of the pilot program, including the extent 
    to which the pilot program has--
            ``(A) improved quality measures established under 
        subsection (c)(4)(A);
            ``(B) improved health outcomes;
            ``(C) improved applicable beneficiary access to care; and
            ``(D) reduced spending under this title.
        ``(2) Reports.--
            ``(A) Interim report.--Not later than 2 years after the 
        implementation of the pilot program, the Secretary shall submit 
        to Congress a report on the initial results of the independent 
        evaluation conducted under paragraph (1).
            ``(B) Final report.--Not later than 3 years after the 
        implementation of the pilot program, the Secretary shall submit 
        to Congress a report on the final results of the independent 
        evaluation conducted under paragraph (1).
    ``(f) Consultation.--The Secretary shall consult with 
representatives of small rural hospitals, including critical access 
hospitals (as defined in section 1861(mm)(1)), regarding their 
participation in the pilot program. Such consultation shall include 
consideration of innovative methods of implementing bundled payments in 
hospitals described in the preceding sentence, taking into 
consideration any difficulties in doing so as a result of the low 
volume of services provided by such hospitals.
    ``(g) Implementation Plan.--
        ``(1) In general.--Not later than January 1, 2016, the 
    Secretary shall submit a plan for the implementation of an 
    expansion of the pilot program if the Secretary determines that 
    such expansion will result in improving or not reducing the quality 
    of patient care and reducing spending under this title.
    ``(h) Administration.--Chapter 35 of title 44, United States Code, 
shall not apply to the selection, testing, and evaluation of models or 
the expansion of such models under this section.''.

SEC. 3024. INDEPENDENCE AT HOME DEMONSTRATION PROGRAM.

    Title XVIII of the Social Security Act is amended by inserting 
after section 1866D, as inserted by section 3023, the following new 
section:


      ``independence at home medical practice demonstration program

    ``Sec. 1866D.  (a) Establishment.--
        ``(1) In general.--The Secretary shall conduct a demonstration 
    program (in this section referred to as the `demonstration 
    program') to test a payment incentive and service delivery model 
    that utilizes physician and nurse practitioner directed home-based 
    primary care teams designed to reduce expenditures and improve 
    health outcomes in the provision of items and services under this 
    title to applicable beneficiaries (as defined in subsection (d)).
        ``(2) Requirement.--The demonstration program shall test 
    whether a model described in paragraph (1), which is accountable 
    for providing comprehensive, coordinated, continuous, and 
    accessible care to high-need populations at home and coordinating 
    health care across all treatment settings, results in--
            ``(A) reducing preventable hospitalizations;
            ``(B) preventing hospital readmissions;
            ``(C) reducing emergency room visits;
            ``(D) improving health outcomes commensurate with the 
        beneficiaries' stage of chronic illness;
            ``(E) improving the efficiency of care, such as by reducing 
        duplicative diagnostic and laboratory tests;
            ``(F) reducing the cost of health care services covered 
        under this title; and
            ``(G) achieving beneficiary and family caregiver 
        satisfaction.
    ``(b) Independence at Home Medical Practice.--
        ``(1) Independence at home medical practice defined.--In this 
    section:
            ``(A) In general.--The term `independence at home medical 
        practice' means a legal entity that--
                ``(i) is comprised of an individual physician or nurse 
            practitioner or group of physicians and nurse practitioners 
            that provides care as part of a team that includes 
            physicians, nurses, physician assistants, pharmacists, and 
            other health and social services staff as appropriate who 
            have experience providing home-based primary care to 
            applicable beneficiaries, make in-home visits, and are 
            available 24 hours per day, 7 days per week to carry out 
            plans of care that are tailored to the individual 
            beneficiary's chronic conditions and designed to achieve 
            the results in subsection (a);
                ``(ii) is organized at least in part for the purpose of 
            providing physicians' services;
                ``(iii) has documented experience in providing home-
            based primary care services to high-cost chronically ill 
            beneficiaries, as determined appropriate by the Secretary;
                ``(iv) furnishes services to at least 200 applicable 
            beneficiaries (as defined in subsection (d)) during each 
            year of the demonstration program;
                ``(v) has entered into an agreement with the Secretary;
                ``(vi) uses electronic health information systems, 
            remote monitoring, and mobile diagnostic technology; and
                ``(vii) meets such other criteria as the Secretary 
            determines to be appropriate to participate in the 
            demonstration program.
        The entity shall report on quality measures (in such form, 
        manner, and frequency as specified by the Secretary, which may 
        be for the group, for providers of services and suppliers, or 
        both) and report to the Secretary (in a form, manner, and 
        frequency as specified by the Secretary) such data as the 
        Secretary determines appropriate to monitor and evaluate the 
        demonstration program.
            ``(B) Physician.--The term `physician' includes, except as 
        the Secretary may otherwise provide, any individual who 
        furnishes services for which payment may be made as physicians' 
        services and has the medical training or experience to fulfill 
        the physician's role described in subparagraph (A)(i).
        ``(2) Participation of nurse practitioners and physician 
    assistants.--Nothing in this section shall be construed to prevent 
    a nurse practitioner or physician assistant from participating in, 
    or leading, a home-based primary care team as part of an 
    independence at home medical practice if--
            ``(A) all the requirements of this section are met;
            ``(B) the nurse practitioner or physician assistant, as the 
        case may be, is acting consistent with State law; and
            ``(C) the nurse practitioner or physician assistant has the 
        medical training or experience to fulfill the nurse 
        practitioner or physician assistant role described in paragraph 
        (1)(A)(i).
        ``(3) Inclusion of providers and practitioners.--Nothing in 
    this subsection shall be construed as preventing an independence at 
    home medical practice from including a provider of services or a 
    participating practitioner described in section 1842(b)(18)(C) that 
    is affiliated with the practice under an arrangement structured so 
    that such provider of services or practitioner participates in the 
    demonstration program and shares in any savings under the 
    demonstration program.
        ``(4) Quality and performance standards.--The Secretary shall 
    develop quality performance standards for independence at home 
    medical practices participating in the demonstration program.
    ``(c) Payment Methodology.--
        ``(1) Establishment of target spending level.--The Secretary 
    shall establish an estimated annual spending target, for the amount 
    the Secretary estimates would have been spent in the absence of the 
    demonstration, for items and services covered under parts A and B 
    furnished to applicable beneficiaries for each qualifying 
    independence at home medical practice under this section. Such 
    spending targets shall be determined on a per capita basis. Such 
    spending targets shall include a risk corridor that takes into 
    account normal variation in expenditures for items and services 
    covered under parts A and B furnished to such beneficiaries with 
    the size of the corridor being related to the number of applicable 
    beneficiaries furnished services by each independence at home 
    medical practice. The spending targets may also be adjusted for 
    other factors as the Secretary determines appropriate.
        ``(2) Incentive payments.--Subject to performance on quality 
    measures, a qualifying independence at home medical practice is 
    eligible to receive an incentive payment under this section if 
    actual expenditures for a year for the applicable beneficiaries it 
    enrolls are less than the estimated spending target established 
    under paragraph (1) for such year. An incentive payment for such 
    year shall be equal to a portion (as determined by the Secretary) 
    of the amount by which actual expenditures (including incentive 
    payments under this paragraph) for applicable beneficiaries under 
    parts A and B for such year are estimated to be less than 5 percent 
    less than the estimated spending target for such year, as 
    determined under paragraph (1).
    ``(d) Applicable Beneficiaries.--
        ``(1) Definition.--In this section, the term `applicable 
    beneficiary' means, with respect to a qualifying independence at 
    home medical practice, an individual who the practice has 
    determined--
            ``(A) is entitled to benefits under part A and enrolled for 
        benefits under part B;
            ``(B) is not enrolled in a Medicare Advantage plan under 
        part C or a PACE program under section 1894;
            ``(C) has 2 or more chronic illnesses, such as congestive 
        heart failure, diabetes, other dementias designated by the 
        Secretary, chronic obstructive pulmonary disease, ischemic 
        heart disease, stroke, Alzheimer's Disease and 
        neurodegenerative diseases, and other diseases and conditions 
        designated by the Secretary which result in high costs under 
        this title;
            ``(D) within the past 12 months has had a nonelective 
        hospital admission;
            ``(E) within the past 12 months has received acute or 
        subacute rehabilitation services;
            ``(F) has 2 or more functional dependencies requiring the 
        assistance of another person (such as bathing, dressing, 
        toileting, walking, or feeding); and
            ``(G) meets such other criteria as the Secretary determines 
        appropriate.
        ``(2) Patient election to participate.--The Secretary shall 
    determine an appropriate method of ensuring that applicable 
    beneficiaries have agreed to enroll in an independence at home 
    medical practice under the demonstration program. Enrollment in the 
    demonstration program shall be voluntary.
        ``(3) Beneficiary access to services.--Nothing in this section 
    shall be construed as encouraging physicians or nurse practitioners 
    to limit applicable beneficiary access to services covered under 
    this title and applicable beneficiaries shall not be required to 
    relinquish access to any benefit under this title as a condition of 
    receiving services from an independence at home medical practice.
    ``(e) Implementation.--
        ``(1) Starting date.--The demonstration program shall begin no 
    later than January 1, 2012. An agreement with an independence at 
    home medical practice under the demonstration program may cover not 
    more than a 3-year period.
        ``(2) No physician duplication in demonstration 
    participation.--The Secretary shall not pay an independence at home 
    medical practice under this section that participates in section 
    1899.
        ``(3) No beneficiary duplication in demonstration 
    participation.--The Secretary shall ensure that no applicable 
    beneficiary enrolled in an independence at home medical practice 
    under this section is participating in the programs under section 
    1899.
        ``(4) Preference.--In approving an independence at home medical 
    practice, the Secretary shall give preference to practices that 
    are--
            ``(A) located in high-cost areas of the country;
            ``(B) have experience in furnishing health care services to 
        applicable beneficiaries in the home; and
            ``(C) use electronic medical records, health information 
        technology, and individualized plans of care.
        ``(5) Limitation on number of practices.--In selecting 
    qualified independence at home medical practices to participate 
    under the demonstration program, the Secretary shall limit the 
    number of such practices so that the number of applicable 
    beneficiaries that may participate in the demonstration program 
    does not exceed 10,000.
        ``(6) Waiver.--The Secretary may waive such provisions of this 
    title and title XI as the Secretary determines necessary in order 
    to implement the demonstration program.
        ``(7) Administration.--Chapter 35 of title 44, United States 
    Code, shall not apply to this section.
    ``(f) Evaluation and Monitoring.--
        ``(1) In general.--The Secretary shall evaluate each 
    independence at home medical practice under the demonstration 
    program to assess whether the practice achieved the results 
    described in subsection (a).
        ``(2) Monitoring applicable beneficiaries.--The Secretary may 
    monitor data on expenditures and quality of services under this 
    title after an applicable beneficiary discontinues receiving 
    services under this title through a qualifying independence at home 
    medical practice.
    ``(g) Reports to Congress.--The Secretary shall conduct an 
independent evaluation of the demonstration program and submit to 
Congress a final report, including best practices under the 
demonstration program. Such report shall include an analysis of the 
demonstration program on coordination of care, expenditures under this 
title, applicable beneficiary access to services, and the quality of 
health care services provided to applicable beneficiaries.
    ``(h) Funding.--For purposes of administering and carrying out the 
demonstration program, other than for payments for items and services 
furnished under this title and incentive payments under subsection (c), 
in addition to funds otherwise appropriated, there shall be transferred 
to the Secretary for the Center for Medicare & Medicaid Services 
Program Management Account from the Federal Hospital Insurance Trust 
Fund under section 1817 and the Federal Supplementary Medical Insurance 
Trust Fund under section 1841 (in proportions determined appropriate by 
the Secretary) $5,000,000 for each of fiscal years 2010 through 2015. 
Amounts transferred under this subsection for a fiscal year shall be 
available until expended.
    ``(i) Termination.--
        ``(1) Mandatory termination.--The Secretary shall terminate an 
    agreement with an independence at home medical practice if--
            ``(A) the Secretary estimates or determines that such 
        practice will not receive an incentive payment for the second 
        of 2 consecutive years under the demonstration program; or
            ``(B) such practice fails to meet quality standards during 
        any year of the demonstration program.
        ``(2) Permissive termination.--The Secretary may terminate an 
    agreement with an independence at home medical practice for such 
    other reasons determined appropriate by the Secretary.''.

SEC. 3025. HOSPITAL READMISSIONS REDUCTION PROGRAM.

    (a) In General.--Section 1886 of the Social Security Act (42 U.S.C. 
1395ww), as amended by sections 3001 and 3008, is amended by adding at 
the end the following new subsection:
    ``(q) Hospital Readmissions Reduction Program.--
        ``(1) In general.--With respect to payment for discharges from 
    an applicable hospital (as defined in paragraph (5)(C)) occurring 
    during a fiscal year beginning on or after October 1, 2012, in 
    order to account for excess readmissions in the hospital, the 
    Secretary shall reduce the payments that would otherwise be made to 
    such hospital under subsection (d) (or section 1814(b)(3), as the 
    case may be) for such a discharge by an amount equal to the product 
    of--
            ``(A) the base operating DRG payment amount (as defined in 
        paragraph (2)) for the discharge; and
            ``(B) the adjustment factor (described in paragraph (3)(A)) 
        for the hospital for the fiscal year.
        ``(2) Base operating drg payment amount defined.--
            ``(A) In general.--Except as provided in subparagraph (B), 
        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 regard to 
            subsection (o)) for a discharge if this subsection did not 
            apply; reduced by
                ``(ii) any portion of such payment amount that is 
            attributable to payments under paragraphs (5)(A), (5)(B), 
            (5)(F), and (12) of subsection (d).
            ``(B) 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 years 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 
            Secretary may exempt such hospitals provided that States 
            paid under such section submit 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 herein with respect to this 
            section.
        ``(3) Adjustment factor.--
            ``(A) In general.--For purposes of paragraph (1), the 
        adjustment factor under this paragraph for an applicable 
        hospital for a fiscal year is equal to the greater of--
                ``(i) the ratio described in subparagraph (B) for the 
            hospital for the applicable period (as defined in paragraph 
            (5)(D)) for such fiscal year; or
                ``(ii) the floor adjustment factor specified in 
            subparagraph (C).
            ``(B) Ratio.--The ratio described in this subparagraph for 
        a hospital for an applicable period is equal to 1 minus the 
        ratio of--
                ``(i) the aggregate payments for excess readmissions 
            (as defined in paragraph (4)(A)) with respect to an 
            applicable hospital for the applicable period; and
                ``(ii) the aggregate payments for all discharges (as 
            defined in paragraph (4)(B)) with respect to such 
            applicable hospital for such applicable period.
            ``(C) Floor adjustment factor.--For purposes of 
        subparagraph (A), the floor adjustment factor specified in this 
        subparagraph for--
                ``(i) fiscal year 2013 is 0.99;
                ``(ii) fiscal year 2014 is 0.98; or
                ``(iii) fiscal year 2015 and subsequent fiscal years is 
            0.97.
        ``(4) Aggregate payments, excess readmission ratio defined.--
    For purposes of this subsection:
            ``(A) Aggregate payments for excess readmissions.--The term 
        `aggregate payments for excess readmissions' means, for a 
        hospital for an applicable period, the sum, for applicable 
        conditions (as defined in paragraph (5)(A)), of the product, 
        for each applicable condition, of--
                ``(i) the base operating DRG payment amount for such 
            hospital for such applicable period for such condition;
                ``(ii) the number of admissions for such condition for 
            such hospital for such applicable period; and
                ``(iii) the excess readmissions ratio (as defined in 
            subparagraph (C)) for such hospital for such applicable 
            period minus 1.
            ``(B) Aggregate payments for all discharges.--The term 
        `aggregate payments for all discharges' means, for a hospital 
        for an applicable period, the sum of the base operating DRG 
        payment amounts for all discharges for all conditions from such 
        hospital for such applicable period.
            ``(C) Excess readmission ratio.--
                ``(i) In general.--Subject to clause (ii), the term 
            `excess readmissions ratio' means, with respect to an 
            applicable condition for a hospital for an applicable 
            period, the ratio (but not less than 1.0) of--

                    ``(I) the risk adjusted readmissions based on 
                actual readmissions, as determined consistent with a 
                readmission measure methodology that has been endorsed 
                under paragraph (5)(A)(ii)(I), for an applicable 
                hospital for such condition with respect to such 
                applicable period; to
                    ``(II) the risk adjusted expected readmissions (as 
                determined consistent with such a methodology) for such 
                hospital for such condition with respect to such 
                applicable period.

                ``(ii) Exclusion of certain readmissions.--For purposes 
            of clause (i), with respect to a hospital, excess 
            readmissions shall not include readmissions for an 
            applicable condition for which there are fewer than a 
            minimum number (as determined by the Secretary) of 
            discharges for such applicable condition for the applicable 
            period and such hospital.
        ``(5) Definitions.--For purposes of this subsection:
            ``(A) Applicable condition.--The term `applicable 
        condition' means, subject to subparagraph (B), a condition or 
        procedure selected by the Secretary among conditions and 
        procedures for which--
                ``(i) readmissions (as defined in subparagraph (E)) 
            that represent conditions or procedures that are high 
            volume or high expenditures under this title (or other 
            criteria specified by the Secretary); and
                ``(ii) measures of such readmissions--

                    ``(I) have been endorsed by the entity with a 
                contract under section 1890(a); and
                    ``(II) such endorsed measures have exclusions for 
                readmissions that are unrelated to the prior discharge 
                (such as a planned readmission or transfer to another 
                applicable hospital).

            ``(B) Expansion of applicable conditions.--Beginning with 
        fiscal year 2015, the Secretary shall, to the extent 
        practicable, expand the applicable conditions beyond the 3 
        conditions for which measures have been endorsed as described 
        in subparagraph (A)(ii)(I) as of the date of the enactment of 
        this subsection to the additional 4 conditions that have been 
        identified by the Medicare Payment Advisory Commission in its 
        report to Congress in June 2007 and to other conditions and 
        procedures as determined appropriate by the Secretary. In 
        expanding such applicable conditions, the Secretary shall seek 
        the endorsement described in subparagraph (A)(ii)(I) but may 
        apply such measures without such an endorsement 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) as long as due consideration is given to measures that 
        have been endorsed or adopted by a consensus organization 
        identified by the Secretary.
            ``(C) Applicable hospital.--The term `applicable hospital' 
        means a subsection (d) hospital or a hospital that is paid 
        under section 1814(b)(3), as the case may be.
            ``(D) Applicable period.--The term `applicable period' 
        means, with respect to a fiscal year, such period as the 
        Secretary shall specify.
            ``(E) Readmission.--The term `readmission' means, in the 
        case of an individual who is discharged from an applicable 
        hospital, the admission of the individual to the same or 
        another applicable hospital within a time period specified by 
        the Secretary from the date of such discharge. Insofar as the 
        discharge relates to an applicable condition for which there is 
        an endorsed measure described in subparagraph (A)(ii)(I), such 
        time period (such as 30 days) shall be consistent with the time 
        period specified for such measure.
        ``(6) Reporting hospital specific information.--
            ``(A) In general.--The Secretary shall make information 
        available to the public regarding readmission rates of each 
        subsection (d) hospital under the program.
            ``(B) Opportunity to review and submit corrections.--The 
        Secretary shall ensure that a subsection (d) 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 determination of base operating DRG payment 
        amounts.
            ``(B) The methodology for determining the adjustment factor 
        under paragraph (3), including excess readmissions ratio under 
        paragraph (4)(C), aggregate payments for excess readmissions 
        under paragraph (4)(A), and aggregate payments for all 
        discharges under paragraph (4)(B), and applicable periods and 
        applicable conditions under paragraph (5).
            ``(C) The measures of readmissions as described in 
        paragraph (5)(A)(ii).
        ``(8) Readmission rates for all patients.--
            ``(A) Calculation of readmission.--The Secretary shall 
        calculate readmission rates for all patients (as defined in 
        subparagraph (D)) for a specified hospital (as defined in 
        subparagraph (D)(ii)) for an applicable condition (as defined 
        in paragraph (5)(B)) and other conditions deemed appropriate by 
        the Secretary for an applicable period (as defined in paragraph 
        (5)(D)) in the same manner as used to calculate such 
        readmission rates for hospitals with respect to this title and 
        posted on the CMS Hospital Compare website.
            ``(B) Posting of hospital specific all patient readmission 
        rates.--The Secretary shall make information on all patient 
        readmission rates calculated under subparagraph (A) available 
        on the CMS Hospital Compare website in a form and manner 
        determined appropriate by the Secretary. The Secretary may also 
        make other information determined appropriate by the Secretary 
        available on such website.
            ``(C) Hospital submission of all patient data.--
                ``(i) Except as provided for in clause (ii), each 
            specified hospital (as defined in subparagraph (D)(ii)) 
            shall submit to the Secretary, in a form, manner and time 
            specified by the Secretary, data and information determined 
            necessary by the Secretary for the Secretary to calculate 
            the all patient readmission rates described in subparagraph 
            (A).
                ``(ii) Instead of a specified hospital submitting to 
            the Secretary the data and information described in clause 
            (i), such data and information may be submitted to the 
            Secretary, on behalf of such a specified hospital, by a 
            state or an entity determined appropriate by the Secretary.
            ``(D) Definitions.--For purposes of this paragraph:
                ``(i) The term `all patients' means patients who are 
            treated on an inpatient basis and discharged from a 
            specified hospital (as defined in clause (ii)).
                ``(ii) The term `specified hospital' means a subsection 
            (d) hospital, hospitals described in clauses (i) through 
            (v) of subsection (d)(1)(B) and, as determined feasible and 
            appropriate by the Secretary, other hospitals not otherwise 
            described in this subparagraph.''.
    (b) Quality Improvement.--Part S of title III of the Public Health 
Service Act, as amended by section 3015, is further amended by adding 
at the end the following:

``SEC. 399KK. QUALITY IMPROVEMENT PROGRAM FOR HOSPITALS WITH A HIGH 
              SEVERITY ADJUSTED READMISSION RATE.

    ``(a) Establishment.--
        ``(1) In general.--Not later than 2 years after the date of 
    enactment of this section, the Secretary shall make available a 
    program for eligible hospitals to improve their readmission rates 
    through the use of patient safety organizations (as defined in 
    section 921(4)).
        ``(2) Eligible hospital defined.--In this subsection, the term 
    `eligible hospital' means a hospital that the Secretary determines 
    has a high rate of risk adjusted readmissions for the conditions 
    described in section 1886(q)(8)(A) of the Social Security Act and 
    has not taken appropriate steps to reduce such readmissions and 
    improve patient safety as evidenced through historically high rates 
    of readmissions, as determined by the Secretary.
        ``(3) Risk adjustment.--The Secretary shall utilize appropriate 
    risk adjustment measures to determine eligible hospitals.
    ``(b) Report to the Secretary.--As determined appropriate by the 
Secretary, eligible hospitals and patient safety organizations working 
with those hospitals shall report to the Secretary on the processes 
employed by the hospital to improve readmission rates and the impact of 
such processes on readmission rates.''.

SEC. 3026. COMMUNITY-BASED CARE TRANSITIONS PROGRAM.

    (a) In General.--The Secretary shall establish a Community-Based 
Care Transitions Program under which the Secretary provides funding to 
eligible entities that furnish improved care transition services to 
high-risk Medicare beneficiaries.
    (b) Definitions.--In this section:
        (1) Eligible entity.--The term ``eligible entity'' means the 
    following:
            (A) A subsection (d) hospital (as defined in section 
        1886(d)(1)(B) of the Social Security Act (42 U.S.C. 
        1395ww(d)(1)(B))) identified by the Secretary as having a high 
        readmission rate, such as under section 1886(q) of the Social 
        Security Act, as added by section 3025.
            (B) An appropriate community-based organization that 
        provides care transition services under this section across a 
        continuum of care through arrangements with subsection (d) 
        hospitals (as so defined) to furnish the services described in 
        subsection (c)(2)(B)(i) and whose governing body includes 
        sufficient representation of multiple health care stakeholders 
        (including consumers).
        (2) High-risk medicare beneficiary.--The term ``high-risk 
    Medicare beneficiary'' means a Medicare beneficiary who has 
    attained a minimum hierarchical condition category score, as 
    determined by the Secretary, based on a diagnosis of multiple 
    chronic conditions or other risk factors associated with a hospital 
    readmission or substandard transition into post-hospitalization 
    care, which may include 1 or more of the following:
            (A) Cognitive impairment.
            (B) Depression.
            (C) A history of multiple readmissions.
            (D) Any other chronic disease or risk factor as determined 
        by the Secretary.
        (3) Medicare beneficiary.--The term ``Medicare beneficiary'' 
    means an individual who is entitled to benefits under part A of 
    title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) and 
    enrolled under part B of such title, but not enrolled under part C 
    of such title.
        (4) Program.--The term ``program'' means the program conducted 
    under this section.
        (5) Readmission.--The term ``readmission'' has the meaning 
    given such term in section 1886(q)(5)(E) of the Social Security 
    Act, as added by section 3025.
        (6) Secretary.--The term ``Secretary'' means the Secretary of 
    Health and Human Services.
    (c) Requirements.--
        (1) Duration.--
            (A) In general.--The program shall be conducted for a 5-
        year period, beginning January 1, 2011.
            (B) Expansion.--The Secretary may expand the duration and 
        the scope of the program, to the extent determined appropriate 
        by the Secretary, if the Secretary determines (and the Chief 
        Actuary of the Centers for Medicare & Medicaid Services, with 
        respect to spending under this title, certifies) that such 
        expansion would reduce spending under this title without 
        reducing quality.
        (2) Application; participation.--
            (A) In general.--
                (i) Application.--An eligible entity seeking to 
            participate in the program shall submit an application to 
            the Secretary at such time, in such manner, and containing 
            such information as the Secretary may require.
                (ii) Partnership.--If an eligible entity is a hospital, 
            such hospital shall enter into a partnership with a 
            community-based organization to participate in the program.
            (B) Intervention proposal.--Subject to subparagraph (C), an 
        application submitted under subparagraph (A)(i) shall include a 
        detailed proposal for at least 1 care transition intervention, 
        which may include the following:
                (i) Initiating care transition services for a high-risk 
            Medicare beneficiary not later than 24 hours prior to the 
            discharge of the beneficiary from the eligible entity.
                (ii) Arranging timely post-discharge follow-up services 
            to the high-risk Medicare beneficiary to provide the 
            beneficiary (and, as appropriate, the primary caregiver of 
            the beneficiary) with information regarding responding to 
            symptoms that may indicate additional health problems or a 
            deteriorating condition.
                (iii) Providing the high-risk Medicare beneficiary 
            (and, as appropriate, the primary caregiver of the 
            beneficiary) with assistance to ensure productive and 
            timely interactions between patients and post-acute and 
            outpatient providers.
                (iv) Assessing and actively engaging with a high-risk 
            Medicare beneficiary (and, as appropriate, the primary 
            caregiver of the beneficiary) through the provision of 
            self-management support and relevant information that is 
            specific to the beneficiary's condition.
                (v) Conducting comprehensive medication review and 
            management (including, if appropriate, counseling and self-
            management support).
            (C) Limitation.--A care transition intervention proposed 
        under subparagraph (B) may not include payment for services 
        required under the discharge planning process described in 
        section 1861(ee) of the Social Security Act (42 U.S.C. 
        1395x(ee)).
        (3) Selection.--In selecting eligible entities to participate 
    in the program, the Secretary shall give priority to eligible 
    entities that--
            (A) participate in a program administered by the 
        Administration on Aging to provide concurrent care transitions 
        interventions with multiple hospitals and practitioners; or
            (B) provide services to medically underserved populations, 
        small communities, and rural areas.
    (d) Implementation.--Notwithstanding any other provision of law, 
the Secretary may implement the provisions of this section by program 
instruction or otherwise.
    (e) 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 program.
    (f) Funding.--For purposes of carrying out this section, the 
Secretary of Health and Human Services 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 
$500,000,000, to the Centers for Medicare & Medicaid Services Program 
Management Account for the period of fiscal years 2011 through 2015. 
Amounts transferred under the preceding sentence shall remain available 
until expended.

SEC. 3027. EXTENSION OF GAINSHARING DEMONSTRATION.

    (a) In General.--Subsection (d)(3) of section 5007 of the Deficit 
Reduction Act of 2005 (Public Law 109-171) is amended by inserting 
``(or September 30, 2011, in the case of a demonstration project in 
operation as of October 1, 2008)'' after ``December 31, 2009''.
    (b) Funding.--
        (1) In general.--Subsection (f)(1) of such section is amended 
    by inserting ``and for fiscal year 2010, $1,600,000,'' after 
    ``$6,000,000,''.
        (2) Availability.--Subsection (f)(2) of such section is amended 
    by striking ``2010'' and inserting ``2014 or until expended''.
    (c) Reports.--
        (1) Quality improvement and savings.--Subsection (e)(3) of such 
    section is amended by striking ``December 1, 2008'' and inserting 
    ``March 31, 2011''.
        (2) Final report.--Subsection (e)(4) of such section is amended 
    by striking ``May 1, 2010'' and inserting ``March 31, 2013''.

       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.

    Section 1848(d) of the Social Security Act (42 U.S.C. 1395w-4(d)) 
is amended by adding at the end the following new paragraph:
        ``(10) Update for 2010.--
            ``(A) In general.--Subject to paragraphs (7)(B), (8)(B), 
        and (9)(B), in lieu of the update to the single conversion 
        factor established in paragraph (1)(C) that would otherwise 
        apply for 2010, the update to the single conversion factor 
        shall be 0.5 percent.
            ``(B) No effect on computation of conversion factor for 
        2011 and subsequent years.--The conversion factor under this 
        subsection shall be computed under paragraph (1)(A) for 2011 
        and subsequent years as if subparagraph (A) had never 
        applied.''.

SEC. 3102. EXTENSION OF THE WORK GEOGRAPHIC INDEX FLOOR AND REVISIONS 
              TO THE PRACTICE EXPENSE GEOGRAPHIC ADJUSTMENT UNDER THE 
              MEDICARE PHYSICIAN FEE SCHEDULE.

    (a) Extension of Work GPCI Floor.--Section 1848(e)(1)(E) of the 
Social Security Act (42 U.S.C. 1395w-4(e)(1)(E)) is amended by striking 
``before January 1, 2010'' and inserting ``before January 1, 2011''.
    (b) Practice Expense Geographic Adjustment for 2010 and Subsequent 
Years.--Section 1848(e)(1) of the Social Security Act (42 U.S.C. 
1395w4(e)(1)) is amended--
        (1) in subparagraph (A), by striking ``and (G)'' and inserting 
    ``(G), and (H)''; and
        (2) by adding at the end the following new subparagraph:
            ``(H) Practice expense geographic adjustment for 2010 and 
        subsequent years.--
                ``(i) For 2010.--Subject to clause (iii), for services 
            furnished during 2010, the employee wage and rent portions 
            of the practice expense geographic index described in 
            subparagraph (A)(i) shall reflect \3/4\ of the difference 
            between the relative costs of employee wages and rents in 
            each of the different fee schedule areas and the national 
            average of such employee wages and rents.
                ``(ii) For 2011.--Subject to clause (iii), for services 
            furnished during 2011, the employee wage and rent portions 
            of the practice expense geographic index described in 
            subparagraph (A)(i) shall reflect \1/2\ of the difference 
            between the relative costs of employee wages and rents in 
            each of the different fee schedule areas and the national 
            average of such employee wages and rents.
                ``(iii) Hold harmless.--The practice expense portion of 
            the geographic adjustment factor applied in a fee schedule 
            area for services furnished in 2010 or 2011 shall not, as a 
            result of the application of clause (i) or (ii), be reduced 
            below the practice expense portion of the geographic 
            adjustment factor under subparagraph (A)(i) (as calculated 
            prior to the application of such clause (i) or (ii), 
            respectively) for such area for such year.
                ``(iv) Analysis.--The Secretary shall analyze current 
            methods of establishing practice expense geographic 
            adjustments under subparagraph (A)(i) and evaluate data 
            that fairly and reliably establishes distinctions in the 
            costs of operating a medical practice in the different fee 
            schedule areas. Such analysis shall include an evaluation 
            of the following:

                    ``(I) The feasibility of using actual data or 
                reliable survey data developed by medical organizations 
                on the costs of operating a medical practice, including 
                office rents and non-physician staff wages, in 
                different fee schedule areas.
                    ``(II) The office expense portion of the practice 
                expense geographic adjustment described in subparagraph 
                (A)(i), including the extent to which types of office 
                expenses are determined in local markets instead of 
                national markets.
                    ``(III) The weights assigned to each of the 
                categories within the practice expense geographic 
                adjustment described in subparagraph (A)(i).

                ``(v) Revision for 2012 and subsequent years.--As a 
            result of the analysis described in clause (iv), the 
            Secretary shall, not later than January 1, 2012, make 
            appropriate adjustments to the practice expense geographic 
            adjustment described in subparagraph (A)(i) to ensure 
            accurate geographic adjustments across fee schedule areas, 
            including--

                    ``(I) basing the office rents component and its 
                weight on office expenses that vary among fee schedule 
                areas; and
                    ``(II) considering a representative range of 
                professional and non-professional personnel employed in 
                a medical office based on the use of the American 
                Community Survey data or other reliable data for wage 
                adjustments.

            Such adjustments shall be made without regard to 
            adjustments made pursuant to clauses (i) and (ii) and shall 
            be made in a budget neutral manner.''.

SEC. 3103. EXTENSION OF EXCEPTIONS PROCESS FOR MEDICARE THERAPY CAPS.

    Section 1833(g)(5) of the Social Security Act (42 U.S.C. 
1395l(g)(5)) is amended by striking ``December 31, 2009'' and inserting 
``December 31, 2010''.

SEC. 3104. EXTENSION OF PAYMENT FOR TECHNICAL COMPONENT OF CERTAIN 
              PHYSICIAN PATHOLOGY SERVICES.

    Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (as enacted into law by section 
1(a)(6) of Public Law 106-554), as amended by section 732 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(42 U.S.C. 1395w-4 note), section 104 of division B of the Tax Relief 
and Health Care Act of 2006 (42 U.S.C. 1395w-4 note), section 104 of 
the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 
110-173), and section 136 of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110-275), is amended by striking 
``and 2009'' and inserting ``2009, and 2010''.

SEC. 3105. EXTENSION OF AMBULANCE ADD-ONS.

    (a) Ground Ambulance.--Section 1834(l)(13)(A) of the Social 
Security Act (42 U.S.C. 1395m(l)(13)(A)) is amended--
        (1) in the matter preceding clause (i)--
            (A) by striking ``2007, and for'' and inserting ``2007, 
        for''; and
            (B) by striking ``2010'' and inserting ``2010, and for such 
        services furnished on or after April 1, 2010, and before 
        January 1, 2011,''; and
        (2) in each of clauses (i) and (ii), by inserting ``, and on or 
    after April 1, 2010, and before January 1, 2011'' after ``January 
    1, 2010'' each place it appears.
    (b) Air Ambulance.--Section 146(b)(1) of the Medicare Improvements 
for Patients and Providers Act of 2008 (Public Law 110-275) is amended 
by striking ``December 31, 2009'' and inserting ``December 31, 2009, 
and during the period beginning on April 1, 2010, and ending on January 
1, 2011''.
    (c) Super Rural Ambulance.--Section 1834(l)(12)(A) of the Social 
Security Act (42 U.S.C. 1395m(l)(12)(A)) is amended by striking 
``2010'' and inserting ``2010, and on or after April 1, 2010, and 
before January 1, 2011''.

SEC. 3106. EXTENSION OF CERTAIN PAYMENT RULES FOR LONG-TERM CARE 
              HOSPITAL SERVICES AND OF MORATORIUM ON THE ESTABLISHMENT 
              OF CERTAIN HOSPITALS AND FACILITIES.

    (a) Extension of Certain Payment Rules.--Section 114(c) of the 
Medicare, Medicaid, and SCHIP Extension Act of 2007 (42 U.S.C. 1395ww 
note), as amended by section 4302(a) of the American Recovery and 
Reinvestment Act (Public Law 111-5), is further amended by striking 
``3-year period'' each place it appears and inserting ``4-year 
period''.
    (b) Extension of Moratorium.--Section 114(d)(1) of such Act (42 
U.S.C. 1395ww note), in the matter preceding subparagraph (A), is 
amended by striking ``3-year period'' and inserting ``4-year period''.

SEC. 3107. EXTENSION OF PHYSICIAN FEE SCHEDULE MENTAL HEALTH ADD-ON.

    Section 138(a)(1) of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110-275) is amended by striking 
``December 31, 2009'' and inserting ``December 31, 2010''.

SEC. 3108. PERMITTING PHYSICIAN ASSISTANTS TO ORDER POST-HOSPITAL 
              EXTENDED CARE SERVICES.

    (a) Ordering Post-Hospital Extended Care Services.--
        (1) In general.--Section 1814(a)(2) of the Social Security Act 
    (42 U.S.C. 1395f(a)(2)), in the matter preceding subparagraph (A), 
    is amended by striking ``or clinical nurse specialist'' and 
    inserting ``, a clinical nurse specialist, or a physician assistant 
    (as those terms are defined in section 1861(aa)(5))'' after ``nurse 
    practitioner''.
        (2) Conforming amendment.--Section 1814(a) of the Social 
    Security Act (42 U.S.C. 1395f(a)) is amended, in the second 
    sentence, by striking ``or clinical nurse specialist'' and 
    inserting ``clinical nurse specialist, or physician assistant'' 
    after ``nurse practitioner,''.
    (b) Effective Date.--The amendments made by this section shall 
apply to items and services furnished on or after January 1, 2011.

SEC. 3109. EXEMPTION OF CERTAIN PHARMACIES FROM ACCREDITATION 
              REQUIREMENTS.

    (a) In General.--Section 1834(a)(20) of the Social Security Act (42 
U.S.C. 1395m(a)(20)), as added by section 154(b)(1)(A) of the Medicare 
Improvements for Patients and Providers Act of 2008 (Public Law 100-
275), is amended--
        (1) in subparagraph (F)(i)--
            (A) by inserting ``and subparagraph (G)'' after ``clause 
        (ii)''; and
            (B) by inserting ``, except that the Secretary shall not 
        require a pharmacy to have submitted to the Secretary such 
        evidence of accreditation prior to January 1, 2011'' before the 
        semicolon at the end; and
        (2) by adding at the end the following new subparagraph:
            ``(G) Application of accreditation requirement to certain 
        pharmacies.--
                ``(i) In general.--With respect to items and services 
            furnished on or after January 1, 2011, in implementing 
            quality standards under this paragraph--

                    ``(I) subject to subclause (II), in applying such 
                standards and the accreditation requirement of 
                subparagraph (F)(i) with respect to pharmacies 
                described in clause (ii) furnishing such items and 
                services, such standards and accreditation requirement 
                shall not apply to such pharmacies; and
                    ``(II) the Secretary may apply to such pharmacies 
                an alternative accreditation requirement established by 
                the Secretary if the Secretary determines such 
                alternative accreditation requirement is more 
                appropriate for such pharmacies.

                ``(ii) Pharmacies described.--A pharmacy described in 
            this clause is a pharmacy that meets each of the following 
            criteria:

                    ``(I) The total billings by the pharmacy for such 
                items and services under this title are less than 5 
                percent of total pharmacy sales, as determined based on 
                the average total pharmacy sales for the previous 3 
                calendar years, 3 fiscal years, or other yearly period 
                specified by the Secretary.
                    ``(II) The pharmacy has been enrolled under section 
                1866(j) as a supplier of durable medical equipment, 
                prosthetics, orthotics, and supplies, has been issued 
                (which may include the renewal of) a provider number 
                for at least 5 years, and for which a final adverse 
                action (as defined in section 424.57(a) of title 42, 
                Code of Federal Regulations) has not been imposed in 
                the past 5 years.
                    ``(III) The pharmacy submits to the Secretary an 
                attestation, in a form and manner, and at a time, 
                specified by the Secretary, that the pharmacy meets the 
                criteria described in subclauses (I) and (II). Such 
                attestation shall be subject to section 1001 of title 
                18, United States Code.
                    ``(IV) The pharmacy agrees to submit materials as 
                requested by the Secretary, or during the course of an 
                audit conducted on a random sample of pharmacies 
                selected annually, to verify that the pharmacy meets 
                the criteria described in subclauses (I) and (II). 
                Materials submitted under the preceding sentence shall 
                include a certification by an accountant on behalf of 
                the pharmacy or the submission of tax returns filed by 
                the pharmacy during the relevant periods, as requested 
                by the Secretary.''.

    (b) Administration.--Notwithstanding any other provision of law, 
the Secretary may implement the amendments made by subsection (a) by 
program instruction or otherwise.
    (c) Rule of Construction.--Nothing in the provisions of or 
amendments made by this section shall be construed as affecting the 
application of an accreditation requirement for pharmacies to qualify 
for bidding in a competitive acquisition area under section 1847 of the 
Social Security Act (42 U.S.C. 1395w-3).

SEC. 3110. PART B SPECIAL ENROLLMENT PERIOD FOR DISABLED TRICARE 
              BENEFICIARIES.

    (a) In General.--
        (1) In general.--Section 1837 of the Social Security Act (42 
    U.S.C. 1395p) is amended by adding at the end the following new 
    subsection:
    ``(l)(1) In the case of any individual who is a covered beneficiary 
(as defined in section 1072(5) of title 10, United States Code) at the 
time the individual is entitled to part A under section 226(b) or 
section 226A and who is eligible to enroll but who has elected not to 
enroll (or to be deemed enrolled) during the individual's initial 
enrollment period, there shall be a special enrollment period described 
in paragraph (2).
    ``(2) The special enrollment period described in this paragraph, 
with respect to an individual, is the 12-month period beginning on the 
day after the last day of the initial enrollment period of the 
individual or, if later, the 12-month period beginning with the month 
the individual is notified of enrollment under this section.
    ``(3) In the case of an individual who enrolls during the special 
enrollment period provided under paragraph (1), the coverage period 
under this part shall begin on the first day of the month in which the 
individual enrolls, or, at the option of the individual, the first 
month after the end of the individual's initial enrollment period.
    ``(4) An individual may only enroll during the special enrollment 
period provided under paragraph (1) one time during the individual's 
lifetime.
    ``(5) The Secretary shall ensure that the materials relating to 
coverage under this part that are provided to an individual described 
in paragraph (1) prior to the individual's initial enrollment period 
contain information concerning the impact of not enrolling under this 
part, including the impact on health care benefits under the TRICARE 
program under chapter 55 of title 10, United States Code.
    ``(6) The Secretary of Defense shall collaborate with the Secretary 
of Health and Human Services and the Commissioner of Social Security to 
provide for the accurate identification of individuals described in 
paragraph (1). The Secretary of Defense shall provide such individuals 
with notification with respect to this subsection. The Secretary of 
Defense shall collaborate with the Secretary of Health and Human 
Services and the Commissioner of Social Security to ensure appropriate 
follow up pursuant to any notification provided under the preceding 
sentence.''.
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to elections made with respect to initial enrollment periods 
    that end after the date of the enactment of this Act.
    (b) Waiver of Increase of Premium.--Section 1839(b) of the Social 
Security Act (42 U.S.C. 1395r(b)) is amended by striking ``section 
1837(i)(4)'' and inserting ``subsection (i)(4) or (l) of section 
1837''.

SEC. 3111. PAYMENT FOR BONE DENSITY TESTS.

    (a) Payment.--
        (1) In general.--Section 1848 of the Social Security Act (42 
    U.S.C. 1395w-4) is amended--
            (A) in subsection (b)--
                (i) in paragraph (4)(B), by inserting ``, and for 2010 
            and 2011, dual-energy x-ray absorptiometry services (as 
            described in paragraph (6))'' before the period at the end; 
            and
                (ii) by adding at the end the following new paragraph:
        ``(6) Treatment of bone mass scans.--For dual-energy x-ray 
    absorptiometry services (identified in 2006 by HCPCS codes 76075 
    and 76077 (and any succeeding codes)) furnished during 2010 and 
    2011, instead of the payment amount that would otherwise be 
    determined under this section for such years, the payment amount 
    shall be equal to 70 percent of the product of--
            ``(A) the relative value for the service (as determined in 
        subsection (c)(2)) for 2006;
            ``(B) the conversion factor (established under subsection 
        (d)) for 2006; and
            ``(C) the geographic adjustment factor (established under 
        subsection (e)(2)) for the service for the fee schedule area 
        for 2010 and 2011, respectively.''; and
            (B) in subsection (c)(2)(B)(iv)--
                (i) in subclause (II), by striking ``and'' at the end;
                (ii) in subclause (III), by striking the period at the 
            end and inserting ``; and''; and
                (iii) by adding at the end the following new subclause:

                    ``(IV) subsection (b)(6) shall not be taken into 
                account in applying clause (ii)(II) for 2010 or 
                2011.''.

        (2) Implementation.--Notwithstanding any other provision of 
    law, the Secretary may implement the amendments made by paragraph 
    (1) by program instruction or otherwise.
    (b) Study and Report by the Institute of Medicine.--
        (1) In general.--The Secretary of Health and Human Services is 
    authorized to enter into an agreement with the Institute of 
    Medicine of the National Academies to conduct a study on the 
    ramifications of Medicare payment reductions for dual-energy x-ray 
    absorptiometry (as described in section 1848(b)(6) of the Social 
    Security Act, as added by subsection (a)(1)) during 2007, 2008, and 
    2009 on beneficiary access to bone mass density tests.
        (2) Report.--An agreement entered into under paragraph (1) 
    shall provide for the Institute of Medicine to submit to the 
    Secretary and to Congress a report containing the results of the 
    study conducted under such paragraph.

SEC. 3112. REVISION TO THE MEDICARE IMPROVEMENT FUND.

    Section 1898(b)(1)(A) of the Social Security Act (42 U.S.C. 
1395iii) is amended by striking ``$22,290,000,000'' and inserting 
``$0''.

SEC. 3113. TREATMENT OF CERTAIN COMPLEX DIAGNOSTIC LABORATORY TESTS.

    (a) Demonstration Project.--
        (1) In general.--The Secretary of Health and Human Services (in 
    this section referred to as the ``Secretary'') shall conduct a 
    demonstration project under part B title XVIII of the Social 
    Security Act under which separate payments are made under such part 
    for complex diagnostic laboratory tests provided to individuals 
    under such part. Under the demonstration project, the Secretary 
    shall establish appropriate payment rates for such tests.
        (2) Covered complex diagnostic laboratory test defined.--In 
    this section, the term ``complex diagnostic laboratory test'' means 
    a diagnostic laboratory test--
            (A) that is an analysis of gene protein expression, 
        topographic genotyping, or a cancer chemotherapy sensitivity 
        assay;
            (B) that is determined by the Secretary to be a laboratory 
        test for which there is not an alternative test having 
        equivalent performance characteristics;
            (C) which is billed using a Health Care Procedure Coding 
        System (HCPCS) code other than a not otherwise classified code 
        under such Coding System;
            (D) which is approved or cleared by the Food and Drug 
        Administration or is covered under title XVIII of the Social 
        Security Act; and
            (E) is described in section 1861(s)(3) of the Social 
        Security Act (42 U.S.C. 1395x(s)(3)).
        (3) Separate payment defined.--In this section, the term 
    ``separate payment'' means direct payment to a laboratory 
    (including a hospital-based or independent laboratory) that 
    performs a complex diagnostic laboratory test with respect to a 
    specimen collected from an individual during a period in which the 
    individual is a patient of a hospital if the test is performed 
    after such period of hospitalization and if separate payment would 
    not otherwise be made under title XVIII of the Social Security Act 
    by reason of sections 1862(a)(14) and 1866(a)(1)(H)(i) of the such 
    Act (42 U.S.C. 1395y(a)(14); 42 U.S.C. 1395cc(a)(1)(H)(i)).
    (b) Duration.--Subject to subsection (c)(2), the Secretary shall 
conduct the demonstration project under this section for the 2-year 
period beginning on July 1, 2011.
    (c) Payments and Limitation.--Payments under the demonstration 
project under this section shall--
        (1) be made from the Federal Supplemental Medical Insurance 
    Trust Fund under section 1841 of the Social Security Act (42 U.S.C. 
    1395t); and
        (2) may not exceed $100,000,000.
    (d) Report.--Not later than 2 years after the completion of the 
demonstration project under this section, the Secretary shall submit to 
Congress a report on the project. Such report shall include--
        (1) an assessment of the impact of the demonstration project on 
    access to care, quality of care, health outcomes, and expenditures 
    under title XVIII of the Social Security Act (including any savings 
    under such title); and
        (2) such recommendations as the Secretary determines 
    appropriate.
    (e) Implementation Funding.--For purposes of administering this 
section (including preparing and submitting the report under subsection 
(d)), the Secretary shall provide for the transfer, from the Federal 
Supplemental Medical Insurance Trust Fund under section 1841 of the 
Social Security Act (42 U.S.C. 1395t), to the Centers for Medicare & 
Medicaid Services Program Management Account, of $5,000,000. Amounts 
transferred under the preceding sentence shall remain available until 
expended.

SEC. 3114. IMPROVED ACCESS FOR CERTIFIED NURSE-MIDWIFE SERVICES.

    Section 1833(a)(1)(K) of the Social Security Act (42 U.S.C. 
1395l(a)(1)(K)) is amended by inserting ``(or 100 percent for services 
furnished on or after January 1, 2011)'' after ``1992, 65 percent''.

                       PART II--RURAL PROTECTIONS

SEC. 3121. EXTENSION OF OUTPATIENT HOLD HARMLESS PROVISION.

    (a) In General.--Section 1833(t)(7)(D)(i) of the Social Security 
Act (42 U.S.C. 1395l(t)(7)(D)(i)) is amended--
        (1) in subclause (II)--
            (A) in the first sentence, by striking ``2010''and 
        inserting ``2011''; and
            (B) in the second sentence, by striking ``or 2009'' and 
        inserting ``, 2009, or 2010''; and
        (2) in subclause (III), by striking ``January 1, 2010'' and 
    inserting ``January 1, 2011''.
    (b) Permitting All Sole Community Hospitals To Be Eligible for Hold 
Harmless.--Section 1833(t)(7)(D)(i)(III) of the Social Security Act (42 
U.S.C. 1395l(t)(7)(D)(i)(III)) is amended by adding at the end the 
following new sentence: ``In the case of covered OPD services furnished 
on or after January 1, 2010, and before January 1, 2011, the preceding 
sentence shall be applied without regard to the 100-bed limitation.''.

SEC. 3122. EXTENSION OF MEDICARE REASONABLE COSTS PAYMENTS FOR CERTAIN 
              CLINICAL DIAGNOSTIC LABORATORY TESTS FURNISHED TO 
              HOSPITAL PATIENTS IN CERTAIN RURAL AREAS.

    Section 416(b) of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (42 U.S.C. 1395l-4), as amended by section 
105 of division B of the Tax Relief and Health Care Act of 2006 (42 
U.S.C. 1395l note) and section 107 of the Medicare, Medicaid, and SCHIP 
Extension Act of 2007 (42 U.S.C. 1395l note), is amended by inserting 
``or during the 1-year period beginning on July 1, 2010'' before the 
period at the end.

SEC. 3123. EXTENSION OF THE RURAL COMMUNITY HOSPITAL DEMONSTRATION 
              PROGRAM.

    (a) One-year Extension.--Section 410A of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173; 
117 Stat. 2272) is amended by adding at the end the following new 
subsection:
    ``(g) One-Year Extension of Demonstration Program.--
        ``(1) In general.--Subject to the succeeding provisions of this 
    subsection, the Secretary shall conduct the demonstration program 
    under this section for an additional 1-year period (in this section 
    referred to as the `1-year extension period') that begins on the 
    date immediately following the last day of the initial 5-year 
    period under subsection (a)(5).
        ``(2) Expansion of demonstration states.--Notwithstanding 
    subsection (a)(2), during the 1-year extension period, the 
    Secretary shall expand the number of States with low population 
    densities determined by the Secretary under such subsection to 20. 
    In determining which States to include in such expansion, the 
    Secretary shall use the same criteria and data that the Secretary 
    used to determine the States under such subsection for purposes of 
    the initial 5-year period.
        ``(3) Increase in maximum number of hospitals participating in 
    the demonstration program.--Notwithstanding subsection (a)(4), 
    during the 1-year extension period, not more than 30 rural 
    community hospitals may participate in the demonstration program 
    under this section.
        ``(4) No affect on hospitals in demonstration program on date 
    of enactment.--In the case of a rural community hospital that is 
    participating in the demonstration program under this section as of 
    the last day of the initial 5-year period, the Secretary shall 
    provide for the continued participation of such rural community 
    hospital in the demonstration program during the 1-year extension 
    period unless the rural community hospital makes an election, in 
    such form and manner as the Secretary may specify, to discontinue 
    such participation.''.
    (b) Conforming Amendments.--Subsection (a)(5) of section 410A of 
the Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 (Public Law 108-173; 117 Stat. 2272) is amended by inserting ``(in 
this section referred to as the `initial 5-year period') and, as 
provided in subsection (g), for the 1-year extension period'' after 
``5-year period''.
    (c) Technical Amendments.--
        (1) Subsection (b) of section 410A of the Medicare Prescription 
    Drug, Improvement, and Modernization Act of 2003 (Public Law 108-
    173; 117 Stat. 2272) is amended--
            (A) in paragraph (1)(B)(ii), by striking ``2)'' and 
        inserting ``2))''; and
            (B) in paragraph (2), by inserting ``cost'' before 
        ``reporting period'' the first place such term appears in each 
        of subparagraphs (A) and (B).
        (2) Subsection (f)(1) of section 410A of the Medicare 
    Prescription Drug, Improvement, and Modernization Act of 2003 
    (Public Law 108-173; 117 Stat. 2272) is amended--
            (A) in subparagraph (A)(ii), by striking ``paragraph (2)'' 
        and inserting ``subparagraph (B)''; and
            (B) in subparagraph (B), by striking ``paragraph (1)(B)'' 
        and inserting ``subparagraph (A)(ii)''.

SEC. 3124. EXTENSION OF THE MEDICARE-DEPENDENT HOSPITAL (MDH) PROGRAM.

    (a) Extension of Payment Methodology.--Section 1886(d)(5)(G) of the 
Social Security Act (42 U.S.C. 1395ww(d)(5)(G)) is amended--
        (1) in clause (i), by striking ``October 1, 2011'' and 
    inserting ``October 1, 2012''; and
        (2) in clause (ii)(II), by striking ``October 1, 2011'' and 
    inserting ``October 1, 2012''.
    (b) Conforming Amendments.--
        (1) Extension of target amount.--Section 1886(b)(3)(D) of the 
    Social Security Act (42 U.S.C. 1395ww(b)(3)(D)) is amended--
            (A) in the matter preceding clause (i), by striking 
        ``October 1, 2011'' and inserting ``October 1, 2012''; and
            (B) in clause (iv), by striking ``through fiscal year 
        2011'' and inserting ``through fiscal year 2012''.
        (2) Permitting hospitals to decline reclassification.--Section 
    13501(e)(2) of the Omnibus Budget Reconciliation Act of 1993 (42 
    U.S.C. 1395ww note) is amended by striking ``through fiscal year 
    2011'' and inserting ``through fiscal year 2012''.

SEC. 3125. TEMPORARY IMPROVEMENTS TO THE MEDICARE INPATIENT HOSPITAL 
              PAYMENT ADJUSTMENT FOR LOW-VOLUME HOSPITALS.

    Section 1886(d)(12) of the Social Security Act (42 U.S.C. 
1395ww(d)(12)) is amended--
        (1) in subparagraph (A), by inserting ``or (D)'' after 
    ``subparagraph (B)'';
        (2) in subparagraph (B), in the matter preceding clause (i), by 
    striking ``The Secretary'' and inserting ``For discharges occurring 
    in fiscal years 2005 through 2010 and for discharges occurring in 
    fiscal year 2013 and subsequent fiscal years, the Secretary'';
        (3) in subparagraph (C)(i)--
            (A) by inserting ``(or, with respect to fiscal years 2011 
        and 2012, 15 road miles)'' after ``25 road miles''; and
            (B) by inserting ``(or, with respect to fiscal years 2011 
        and 2012, 1,500 discharges of individuals entitled to, or 
        enrolled for, benefits under part A)'' after ``800 
        discharges''; and
        (4) by adding at the end the following new subparagraph:
            ``(D) Temporary applicable percentage increase.--For 
        discharges occurring in fiscal years 2011 and 2012, the 
        Secretary shall determine an applicable percentage increase for 
        purposes of subparagraph (A) using a continuous linear sliding 
        scale ranging from 25 percent for low-volume hospitals with 200 
        or fewer discharges of individuals entitled to, or enrolled 
        for, benefits under part A in the fiscal year to 0 percent for 
        low-volume hospitals with greater than 1,500 discharges of such 
        individuals in the fiscal year.''.

SEC. 3126. IMPROVEMENTS TO THE DEMONSTRATION PROJECT ON COMMUNITY 
              HEALTH INTEGRATION MODELS IN CERTAIN RURAL COUNTIES.

    (a) Removal of Limitation on Number of Eligible Counties 
Selected.--Subsection (d)(3) of section 123 of the Medicare 
Improvements for Patients and Providers Act of 2008 (42 U.S.C. 1395i-4 
note) is amended by striking ``not more than 6''.
    (b) Removal of References to Rural Health Clinic Services and 
Inclusion of Physicians' Services in Scope of Demonstration Project.--
Such section 123 is amended--
        (1) in subsection (d)(4)(B)(i)(3), by striking subclause (III); 
    and
        (2) in subsection (j)--
            (A) in paragraph (8), by striking subparagraph (B) and 
        inserting the following:
            ``(B) Physicians' services (as defined in section 1861(q) 
        of the Social Security Act (42 U.S.C. 1395x(q)).'';
            (B) by striking paragraph (9); and
            (C) by redesignating paragraph (10) as paragraph (9).

SEC. 3127. MEDPAC STUDY ON ADEQUACY OF MEDICARE PAYMENTS FOR HEALTH 
              CARE PROVIDERS SERVING IN RURAL AREAS.

    (a) Study.--The Medicare Payment Advisory Commission shall conduct 
a study on the adequacy of payments for items and services furnished by 
providers of services and suppliers in rural areas under the Medicare 
program under title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.). Such study shall include an analysis of--
        (1) any adjustments in payments to providers of services and 
    suppliers that furnish items and services in rural areas;
        (2) access by Medicare beneficiaries to items and services in 
    rural areas;
        (3) the adequacy of payments to providers of services and 
    suppliers that furnish items and services in rural areas; and
        (4) the quality of care furnished in rural areas.
    (b) Report.--Not later than January 1, 2011, the Medicare Payment 
Advisory Commission shall submit to Congress a report containing the 
results of the study conducted under subsection (a). Such report shall 
include recommendations on appropriate modifications to any adjustments 
in payments to providers of services and suppliers that furnish items 
and services in rural areas, together with recommendations for such 
legislation and administrative action as the Medicare Payment Advisory 
Commission determines appropriate.

SEC. 3128. TECHNICAL CORRECTION RELATED TO CRITICAL ACCESS HOSPITAL 
              SERVICES.

    (a) In General.--Subsections (g)(2)(A) and (l)(8) of section 1834 
of the Social Security Act (42 U.S.C. 1395m) are each amended by 
inserting ``101 percent of'' before ``the reasonable costs''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect as if included in the enactment of section 405(a) of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(Public Law 108-173; 117 Stat. 2266).

SEC. 3129. EXTENSION OF AND REVISIONS TO MEDICARE RURAL HOSPITAL 
              FLEXIBILITY PROGRAM.

    (a) Authorization.--Section 1820(j) of the Social Security Act (42 
U.S.C. 1395i-4(j)) is amended--
        (1) by striking ``2010, and for'' and inserting ``2010, for''; 
    and
        (2) by inserting ``and for making grants to all States under 
    subsection (g), such sums as may be necessary in each of fiscal 
    years 2011 and 2012, to remain available until expended'' before 
    the period at the end.
    (b) Use of Funds.--Section 1820(g)(3) of the Social Security Act 
(42 U.S.C. 1395i-4(g)(3)) is amended--
        (1) in subparagraph (A), by inserting ``and to assist such 
    hospitals in participating in delivery system reforms under the 
    provisions of and amendments made by the Patient Protection and 
    Affordable Care Act, such as value-based purchasing programs, 
    accountable care organizations under section 1899, the National 
    pilot program on payment bundling under section 1866D, and other 
    delivery system reform programs determined appropriate by the 
    Secretary'' before the period at the end; and
        (2) in subparagraph (E)--
            (A) by striking ``, and to offset'' and inserting ``, to 
        offset''; and
            (B) by inserting ``and to participate in delivery system 
        reforms under the provisions of and amendments made by the 
        Patient Protection and Affordable Care Act, such as value-based 
        purchasing programs, accountable care organizations under 
        section 1899, the National pilot program on payment bundling 
        under section 1866D, and other delivery system reform programs 
        determined appropriate by the Secretary'' before the period at 
        the end.
    (c) Effective Date.--The amendments made by this section shall 
apply to grants made on or after January 1, 2010.

                  PART III--IMPROVING PAYMENT ACCURACY

SEC. 3131. PAYMENT ADJUSTMENTS FOR HOME HEALTH CARE.

    (a) Rebasing Home Health Prospective Payment Amount.--
        (1) In general.--Section 1895(b)(3)(A) of the Social Security 
    Act (42 U.S.C. 1395fff(b)(3)(A)) is amended--
            (A) in clause (i)(III), by striking ``For periods'' and 
        inserting ``Subject to clause (iii), for periods''; and
            (B) by adding at the end the following new clause:
                ``(iii) Adjustment for 2013 and subsequent years.--

                    ``(I) In general.--Subject to subclause (II), for 
                2013 and subsequent years, the amount (or amounts) that 
                would otherwise be applicable under clause (i)(III) 
                shall be adjusted by a percentage determined 
                appropriate by the Secretary to reflect such factors as 
                changes in the number of visits in an episode, the mix 
                of services in an episode, the level of intensity of 
                services in an episode, the average cost of providing 
                care per episode, and other factors that the Secretary 
                considers to be relevant. In conducting the analysis 
                under the preceding sentence, the Secretary may 
                consider differences between hospital-based and 
                freestanding agencies, between for-profit and nonprofit 
                agencies, and between the resource costs of urban and 
                rural agencies. Such adjustment shall be made before 
                the update under subparagraph (B) is applied for the 
                year.
                    ``(II) Transition.--The Secretary shall provide for 
                a 4-year phase-in (in equal increments) of the 
                adjustment under subclause (I), with such adjustment 
                being fully implemented for 2016. During each year of 
                such phase-in, the amount of any adjustment under 
                subclause (I) for the year may not exceed 3.5 percent 
                of the amount (or amounts) applicable under clause 
                (i)(III) as of the date of enactment of the Patient 
                Protection and Affordable Care Act.''.

        (2) MedPAC study and report.--
            (A) Study.--The Medicare Payment Advisory Commission shall 
        conduct a study on the implementation of the amendments made by 
        paragraph (1). Such study shall include an analysis of the 
        impact of such amendments on--
                (i) access to care;
                (ii) quality outcomes;
                (iii) the number of home health agencies; and
                (iv) rural agencies, urban agencies, for-profit 
            agencies, and nonprofit agencies.
            (B) Report.--Not later than January 1, 2015, the Medicare 
        Payment Advisory Commission shall submit to Congress a report 
        on the study conducted under subparagraph (A), together with 
        recommendations for such legislation and administrative action 
        as the Commission determines appropriate.
    (b) Program-specific Outlier Cap.--Section 1895(b) of the Social 
Security Act (42 U.S.C. 1395fff(b)) is amended--
        (1) in paragraph (3)(C), by striking ``the aggregate'' and all 
    that follows through the period at the end and inserting ``5 
    percent of the total payments estimated to be made based on the 
    prospective payment system under this subsection for the period.''; 
    and
        (2) in paragraph (5)--
            (A) by striking ``Outliers.--The Secretary'' and inserting 
        the following: ``Outliers.--
            ``(A) In general.--Subject to subparagraph (B), the 
        Secretary'';
            (B) in subparagraph (A), as added by subparagraph (A), by 
        striking ``5 percent'' and inserting ``2.5 percent''; and
            (C) by adding at the end the following new subparagraph:
            ``(B) Program specific outlier cap.--The estimated total 
        amount of additional payments or payment adjustments made under 
        subparagraph (A) with respect to a home health agency for a 
        year (beginning with 2011) may not exceed an amount equal to 10 
        percent of the estimated total amount of payments made under 
        this section (without regard to this paragraph) with respect to 
        the home health agency for the year.''.
    (c) Application of the Medicare Rural Home Health Add-on Policy.--
Section 421 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2283), as 
amended by section 5201(b) of the Deficit Reduction Act of 2005 (Public 
Law 109-171; 120 Stat. 46), is amended--
        (1) in the section heading, by striking ``one-year'' and 
    inserting ``temporary''; and
        (2) in subsection (a)--
            (A) by striking ``, and episodes'' and inserting ``, 
        episodes'';
            (B) by inserting ``and episodes and visits ending on or 
        after April 1, 2010, and before January 1, 2016,'' after 
        ``January 1, 2007,''; and
            (C) by inserting ``(or, in the case of episodes and visits 
        ending on or after April 1, 2010, and before January 1, 2016, 3 
        percent)'' before the period at the end.
    (d) Study and Report on the Development of Home Health Payment 
Reforms in Order To Ensure Access to Care and Quality Services.--
        (1) In general.--The Secretary of Health and Human Services (in 
    this section referred to as the ``Secretary'') shall conduct a 
    study to evaluate the costs and quality of care among efficient 
    home health agencies relative to other such agencies in providing 
    ongoing access to care and in treating Medicare beneficiaries with 
    varying severity levels of illness. Such study shall include an 
    analysis of the following:
            (A) Methods to revise the home health prospective payment 
        system under section 1895 of the Social Security Act (42 U.S.C. 
        1395fff) to more accurately account for the costs related to 
        patient severity of illness or to improving beneficiary access 
        to care, including--
                (i) payment adjustments for services that may be under- 
            or over-valued;
                (ii) necessary changes to reflect the resource use 
            relative to providing home health services to low-income 
            Medicare beneficiaries or Medicare beneficiaries living in 
            medically underserved areas;
                (iii) ways the outlier payment may be improved to more 
            accurately reflect the cost of treating Medicare 
            beneficiaries with high severity levels of illness;
                (iv) the role of quality of care incentives and 
            penalties in driving provider and patient behavior;
                (v) improvements in the application of a wage index; 
            and
                (vi) other areas determined appropriate by the 
            Secretary.
            (B) The validity and reliability of responses on the OASIS 
        instrument with particular emphasis on questions that relate to 
        higher payment under the home health prospective payment system 
        and higher outcome scores under Home Care Compare.
            (C) Additional research or payment revisions under the home 
        health prospective payment system that may be necessary to set 
        the payment rates for home health services based on costs of 
        high-quality and efficient home health agencies or to improve 
        Medicare beneficiary access to care.
            (D) A timetable for implementation of any appropriate 
        changes based on the analysis of the matters described in 
        subparagraphs (A), (B), and (C).
            (E) Other areas determined appropriate by the Secretary.
        (2) Considerations.--In conducting the study under paragraph 
    (1), the Secretary shall consider whether certain factors should be 
    used to measure patient severity of illness and access to care, 
    such as--
            (A) population density and relative patient access to care;
            (B) variations in service costs for providing care to 
        individuals who are dually eligible under the Medicare and 
        Medicaid programs;
            (C) the presence of severe or chronic diseases, as 
        evidenced by multiple, discontinuous home health episodes;
            (D) poverty status, as evidenced by the receipt of 
        Supplemental Security Income under title XVI of the Social 
        Security Act;
            (E) the absence of caregivers;
            (F) language barriers;
            (G) atypical transportation costs;
            (H) security costs; and
            (I) other factors determined appropriate by the Secretary.
        (3) Report.--Not later than March 1, 2011, the Secretary shall 
    submit to Congress a report on the study conducted under paragraph 
    (1), together with recommendations for such legislation and 
    administrative action as the Secretary determines appropriate.
        (4) Consultations.--In conducting the study under paragraph (1) 
    and preparing the report under paragraph (3), the Secretary shall 
    consult with--
            (A) stakeholders representing home health agencies;
            (B) groups representing Medicare beneficiaries;
            (C) the Medicare Payment Advisory Commission;
            (D) the Inspector General of the Department of Health and 
        Human Services; and
            (E) the Comptroller General of the United States.

SEC. 3132. HOSPICE REFORM.

    (a) Hospice Care Payment Reforms.--
        (1) In general.--Section 1814(i) of the Social Security Act (42 
    U.S.C. 1395f(i)), as amended by section 3004(c), is amended--
            (A) by redesignating paragraph (6) as paragraph (7); and
            (B) by inserting after paragraph (5) the following new 
        paragraph:
        ``(6)(A) The Secretary shall collect additional data and 
    information as the Secretary determines appropriate to revise 
    payments for hospice care under this subsection pursuant to 
    subparagraph (D) and for other purposes as determined appropriate 
    by the Secretary. The Secretary shall begin to collect such data by 
    not later than January 1, 2011.
        ``(B) The additional data and information to be collected under 
    subparagraph (A) may include data and information on--
            ``(i) charges and payments;
            ``(ii) the number of days of hospice care which are 
        attributable to individuals who are entitled to, or enrolled 
        for, benefits under part A; and
            ``(iii) with respect to each type of service included in 
        hospice care--
                ``(I) the number of days of hospice care attributable 
            to the type of service;
                ``(II) the cost of the type of service; and
                ``(III) the amount of payment for the type of service;
            ``(iv) charitable contributions and other revenue of the 
        hospice program;
            ``(v) the number of hospice visits;
            ``(vi) the type of practitioner providing the visit; and
            ``(vii) the length of the visit and other basic information 
        with respect to the visit.
        ``(C) The Secretary may collect the additional data and 
    information under subparagraph (A) on cost reports, claims, or 
    other mechanisms as the Secretary determines to be appropriate.
        ``(D)(i) Notwithstanding the preceding paragraphs of this 
    subsection, not earlier than October 1, 2013, the Secretary shall, 
    by regulation, implement revisions to the methodology for 
    determining the payment rates for routine home care and other 
    services included in hospice care under this part, as the Secretary 
    determines to be appropriate. Such revisions may be based on an 
    analysis of data and information collected under subparagraph (A). 
    Such revisions may include adjustments to per diem payments that 
    reflect changes in resource intensity in providing such care and 
    services during the course of the entire episode of hospice care.
        ``(ii) Revisions in payment implemented pursuant to clause (i) 
    shall result in the same estimated amount of aggregate expenditures 
    under this title for hospice care furnished in the fiscal year in 
    which such revisions in payment are implemented as would have been 
    made under this title for such care in such fiscal year if such 
    revisions had not been implemented.
        ``(E) The Secretary shall consult with hospice programs and the 
    Medicare Payment Advisory Commission regarding the additional data 
    and information to be collected under subparagraph (A) and the 
    payment revisions under subparagraph (D).''.
        (2) Conforming amendments.--Section 1814(i)(1)(C) of the Social 
    Security Act (42 U.S.C. 1395f(i)(1)(C)) is amended--
            (A) in clause (ii)--
                (i) in the matter preceding subclause (I), by inserting 
            ``(before the first fiscal year in which the payment 
            revisions described in paragraph (6)(D) are implemented)'' 
            after ``subsequent fiscal year''; and
                (ii) in subclause (VII), by inserting ``(before the 
            first fiscal year in which the payment revisions described 
            in paragraph (6)(D) are implemented), subject to clause 
            (iv),'' after ``subsequent fiscal year''; and
            (B) by adding at the end the following new clause:
                ``(iii) With respect to routine home care and other 
            services included in hospice care furnished during fiscal 
            years subsequent to the first fiscal year in which payment 
            revisions described in paragraph (6)(D) are implemented, 
            the payment rates for such care and services shall be the 
            payment rates in effect under this clause during the 
            preceding fiscal year increased by, subject to clause (iv), 
            the market basket percentage increase (as defined in 
            section 1886(b)(3)(B)(iii)) for the fiscal year.''.
    (b) Adoption of MedPAC Hospice Program Eligibility Recertification 
Recommendations.--Section 1814(a)(7) of the Social Security Act (42 
U.S.C. 1395f(a)(7)) is amended--
        (1) in subparagraph (B), by striking ``and'' at the end; and
        (2) by adding at the end the following new subparagraph:
            ``(D) on and after January 1, 2011--
                ``(i) a hospice physician or nurse practitioner has a 
            face-to-face encounter with the individual to determine 
            continued eligibility of the individual for hospice care 
            prior to the 180th-day recertification and each subsequent 
            recertification under subparagraph (A)(ii) and attests that 
            such visit took place (in accordance with procedures 
            established by the Secretary); and
                ``(ii) in the case of hospice care provided an 
            individual for more than 180 days by a hospice program for 
            which the number of such cases for such program comprises 
            more than a percent (specified by the Secretary) of the 
            total number of such cases for all programs under this 
            title, the hospice care provided to such individual is 
            medically reviewed (in accordance with procedures 
            established by the Secretary); and''.

SEC. 3133. IMPROVEMENT TO MEDICARE DISPROPORTIONATE SHARE HOSPITAL 
              (DSH) PAYMENTS.

    Section 1886 of the Social Security Act (42 U.S.C. 1395ww), as 
amended by sections 3001, 3008, and 3025, is amended--
        (1) in subsection (d)(5)(F)(i), by striking ``For'' and 
    inserting ``Subject to subsection (r), for''; and
        (2) by adding at the end the following new subsection:
    ``(r) Adjustments to Medicare DSH Payments.--
        ``(1) Empirically justified dsh payments.--For fiscal year 2015 
    and each subsequent fiscal year, instead of the amount of 
    disproportionate share hospital payment that would otherwise be 
    made under subsection (d)(5)(F) to a subsection (d) hospital for 
    the fiscal year, the Secretary shall pay to the subsection (d) 
    hospital 25 percent of such amount (which represents the 
    empirically justified amount for such payment, as determined by the 
    Medicare Payment Advisory Commission in its March 2007 Report to 
    the Congress).
        ``(2) Additional payment.--In addition to the payment made to a 
    subsection (d) hospital under paragraph (1), for fiscal year 2015 
    and each subsequent fiscal year, the Secretary shall pay to such 
    subsection (d) hospitals an additional amount equal to the product 
    of the following factors:
            ``(A) Factor one.--A factor equal to the difference 
        between--
                ``(i) the aggregate amount of payments that would be 
            made to subsection (d) hospitals under subsection (d)(5)(F) 
            if this subsection did not apply for such fiscal year (as 
            estimated by the Secretary); and
                ``(ii) the aggregate amount of payments that are made 
            to subsection (d) hospitals under paragraph (1) for such 
            fiscal year (as so estimated).
            ``(B) Factor two.--
                ``(i) Fiscal years 2015, 2016, and 2017.--For each of 
            fiscal years 2015, 2016, and 2017, a factor equal to 1 
            minus the percent change (divided by 100) in the percent of 
            individuals under the age of 65 who are uninsured, as 
            determined by comparing the percent of such individuals--

                    ``(I) who are uninsured in 2012, the last year 
                before coverage expansion under the Patient Protection 
                and Affordable Care Act (as calculated by the Secretary 
                based on the most recent estimates available from the 
                Director of the Congressional Budget Office before a 
                vote in either House on such Act that, if determined in 
                the affirmative, would clear such Act for enrollment); 
                and
                    ``(II) who are uninsured in the most recent period 
                for which data is available (as so calculated).

                ``(ii) 2018 and subsequent years.--For fiscal year 2018 
            and each subsequent fiscal year, a factor equal to 1 minus 
            the percent change (divided by 100) in the percent of 
            individuals who are uninsured, as determined by comparing 
            the percent of individuals--

                    ``(I) who are uninsured in 2012 (as estimated by 
                the Secretary, based on data from the Census Bureau or 
                other sources the Secretary determines appropriate, and 
                certified by the Chief Actuary of the Centers for 
                Medicare & Medicaid Services); and
                    ``(II) who are uninsured in the most recent period 
                for which data is available (as so estimated and 
                certified).

            ``(C) Factor three.--A factor equal to the percent, for 
        each subsection (d) hospital, that represents the quotient of--
                ``(i) the amount of uncompensated care for such 
            hospital for a period selected by the Secretary (as 
            estimated by the Secretary, based on appropriate data 
            (including, in the case where the Secretary determines that 
            alternative data is available which is a better proxy for 
            the costs of subsection (d) hospitals for treating the 
            uninsured, the use of such alternative data)); and
                ``(ii) the aggregate amount of uncompensated care for 
            all subsection (d) hospitals that receive a payment under 
            this subsection for such period (as so estimated, based on 
            such data).
        ``(3) Limitations on review.--There shall be no administrative 
    or judicial review under section 1869, section 1878, or otherwise 
    of the following:
            ``(A) Any estimate of the Secretary for purposes of 
        determining the factors described in paragraph (2).
            ``(B) Any period selected by the Secretary for such 
        purposes.''.

SEC. 3134. MISVALUED CODES UNDER THE PHYSICIAN FEE SCHEDULE.

    (a) In General.--Section 1848(c)(2) of the Social Security Act (42 
U.S.C. 1395w-4(c)(2)) is amended by adding at the end the following new 
subparagraphs:
            ``(K) Potentially misvalued codes.--
                ``(i) In general.--The Secretary shall--

                    ``(I) periodically identify services as being 
                potentially misvalued using criteria specified in 
                clause (ii); and
                    ``(II) review and make appropriate adjustments to 
                the relative values established under this paragraph 
                for services identified as being potentially misvalued 
                under subclause (I).

                ``(ii) Identification of potentially misvalued codes.--
            For purposes of identifying potentially misvalued services 
            pursuant to clause (i)(I), the Secretary shall examine (as 
            the Secretary determines to be appropriate) codes (and 
            families of codes as appropriate) for which there has been 
            the fastest growth; codes (and families of codes as 
            appropriate) that have experienced substantial changes in 
            practice expenses; codes for new technologies or services 
            within an appropriate period (such as 3 years) after the 
            relative values are initially established for such codes; 
            multiple codes that are frequently billed in conjunction 
            with furnishing a single service; codes with low relative 
            values, particularly those that are often billed multiple 
            times for a single treatment; codes which have not been 
            subject to review since the implementation of the RBRVS 
            (the so-called `Harvard-valued codes'); and such other 
            codes determined to be appropriate by the Secretary.
                ``(iii) Review and adjustments.--