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AFFORDABLE HEALTH CARE FOR AMERICA ACT
(House of Representatives - November 07, 2009)

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[Pages H12623-H12968]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 AFFORDABLE HEALTH CARE FOR AMERICA ACT

  Mr. WAXMAN. Mr. Speaker, pursuant to House Resolution 903, I call up 
the bill (H.R. 3962) to provide affordable, quality health care for all 
Americans and reduce the growth in health care spending, and for other 
purposes, and ask for its immediate consideration in the House.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 903, the 
amendment printed in part A of House Report 111-330, perfected by the 
modification printed in part B of the report is adopted and the bill, 
as amended, is considered read.
  The text of the bill, as amended, is as follows:

                               H.R. 3962

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

     SECTION 1. SHORT TITLE; TABLE OF DIVISIONS, TITLES, AND 
                   SUBTITLES.

       (a) Short Title.--This Act may be cited as the ``Affordable 
     Health Care for America Act''.
       (b) Table of Divisions, Titles, and Subtitles.--This Act is 
     divided into divisions, titles, and subtitles as follows:

               DIVISION A--AFFORDABLE HEALTH CARE CHOICES

TITLE I--IMMEDIATE REFORMS
TITLE II--PROTECTIONS AND STANDARDS FOR QUALIFIED HEALTH BENEFITS PLANS
Subtitle A--General Standards
Subtitle B--Standards Guaranteeing Access to Affordable Coverage
Subtitle C--Standards Guaranteeing Access to Essential Benefits
Subtitle D--Additional Consumer Protections
Subtitle E--Governance
Subtitle F--Relation to Other Requirements; Miscellaneous
TITLE III--HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS
Subtitle A--Health Insurance Exchange
Subtitle B--Public Health Insurance Option

[[Page H12624]]

Subtitle C--Individual Affordability Credits
TITLE IV--SHARED RESPONSIBILITY
Subtitle A--Individual Responsibility
Subtitle B--Employer Responsibility
TITLE V--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986
Subtitle A--Shared Responsibility
Subtitle B--Credit for Small Business Employee Health Coverage Expenses
Subtitle C--Disclosures To Carry Out Health Insurance Exchange 
              Subsidies
Subtitle D--Other Revenue Provisions

             DIVISION B--MEDICARE AND MEDICAID IMPROVEMENTS

TITLE I--IMPROVING HEALTH CARE VALUE
Subtitle A--Provisions related to Medicare part A
Subtitle B--Provisions Related to Part B
Subtitle C--Provisions Related to Medicare Parts A and B
Subtitle D--Medicare Advantage Reforms
Subtitle E--Improvements to Medicare Part D
Subtitle F--Medicare Rural Access Protections
TITLE II--MEDICARE BENEFICIARY IMPROVEMENTS
Subtitle A--Improving and Simplifying Financial Assistance for Low 
              Income Medicare Beneficiaries
Subtitle B--Reducing Health Disparities
Subtitle C--Miscellaneous Improvements
TITLE III--PROMOTING PRIMARY CARE, MENTAL HEALTH SERVICES, AND 
              COORDINATED CARE
TITLE IV--QUALITY
Subtitle A--Comparative Effectiveness Research
Subtitle B--Nursing Home Transparency
Subtitle C--Quality Measurements
Subtitle D--Physician Payments Sunshine Provision
Subtitle E--Public Reporting on Health Care-Associated Infections
TITLE V--MEDICARE GRADUATE MEDICAL EDUCATION
TITLE VI--PROGRAM INTEGRITY
Subtitle A--Increased funding to fight waste, fraud, and abuse
Subtitle B--Enhanced penalties for fraud and abuse
Subtitle C--Enhanced Program and Provider Protections
Subtitle D--Access to Information Needed to Prevent Fraud, Waste, and 
              Abuse
TITLE VII--MEDICAID AND CHIP
Subtitle A--Medicaid and Health Reform
Subtitle B--Prevention
Subtitle C--Access
Subtitle D--Coverage
Subtitle E--Financing
Subtitle F--Waste, Fraud, and Abuse
Subtitle G--Puerto Rico and the Territories
Subtitle H--Miscellaneous
TITLE VIII--REVENUE-RELATED PROVISIONS
TITLE IX--MISCELLANEOUS PROVISIONS

          DIVISION C--PUBLIC HEALTH AND WORKFORCE DEVELOPMENT

TITLE I--COMMUNITY HEALTH CENTERS
TITLE II--WORKFORCE
Subtitle A--Primary Care Workforce
Subtitle B--Nursing Workforce
Subtitle C--Public Health Workforce
Subtitle D--Adapting Workforce to Evolving Health System Needs
TITLE III--PREVENTION AND WELLNESS
TITLE IV--QUALITY AND SURVEILLANCE
TITLE V--OTHER PROVISIONS
Subtitle A--Drug Discount for Rural and Other Hospitals; 340B Program 
              Integrity
Subtitle B--Programs
Subtitle C--Food and Drug Administration
Subtitle D--Community Living Assistance Services and Supports
Subtitle E--Miscellaneous

               DIVISION D--INDIAN HEALTH CARE IMPROVEMENT

TITLE I--AMENDMENTS TO INDIAN LAWS
TITLE II--IMPROVEMENT OF INDIAN HEALTH CARE PROVIDED UNDER THE SOCIAL 
              SECURITY ACT

               DIVISION A--AFFORDABLE HEALTH CARE CHOICES

     SEC. 100. PURPOSE; TABLE OF CONTENTS OF DIVISION; GENERAL 
                   DEFINITIONS.

       (a) Purpose.--
       (1) In general.--The purpose of this division is to provide 
     affordable, quality health care for all Americans and reduce 
     the growth in health care spending.
       (2) Building on current system.--This division achieves 
     this purpose by building on what works in today's health care 
     system, while repairing the aspects that are broken.
       (3) Insurance reforms.--This division--
       (A) enacts strong insurance market reforms;
       (B) creates a new Health Insurance Exchange, with a public 
     health insurance option alongside private plans;
       (C) includes sliding scale affordability credits; and
       (D) initiates shared responsibility among workers, 
     employers, and the Government;
     so that all Americans have coverage of essential health 
     benefits.
       (4) Health delivery reform.--This division institutes 
     health delivery system reforms both to increase quality and 
     to reduce growth in health spending so that health care 
     becomes more affordable for businesses, families, and 
     Government.
       (b) Table of Contents of Division.--The table of contents 
     of this division is as follows:

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

                       TITLE I--IMMEDIATE REFORMS

Sec. 101. National high-risk pool program.
Sec. 102. Ensuring value and lower premiums.
Sec. 103. Ending health insurance rescission abuse.
Sec. 104. Sunshine on price gouging by health insurance issuers.
Sec. 105. Requiring the option of extension of dependent coverage for 
              uninsured young adults.
Sec. 106. Limitations on preexisting condition exclusions in group 
              health plans in advance of applicability of new 
              prohibition of preexisting condition exclusions.
Sec. 107. Prohibiting acts of domestic violence from being treated as 
              preexisting conditions.
Sec. 108. Ending health insurance denials and delays of necessary 
              treatment for children with deformities.
Sec. 109. Elimination of lifetime limits.
Sec. 110. Prohibition against postretirement reductions of retiree 
              health benefits by group health plans.
Sec. 111. Reinsurance program for retirees.
Sec. 112. Wellness program grants.
Sec. 113. Extension of COBRA continuation coverage.
Sec. 114. State Health Access Program grants.
Sec. 115. Administrative simplification.

TITLE II--PROTECTIONS AND STANDARDS FOR QUALIFIED HEALTH BENEFITS PLANS

                     Subtitle A--General Standards

Sec. 201. Requirements reforming health insurance marketplace.
Sec. 202. Protecting the choice to keep current coverage.

    Subtitle B--Standards Guaranteeing Access to Affordable Coverage

Sec. 211. Prohibiting preexisting condition exclusions.
Sec. 212. Guaranteed issue and renewal for insured plans and 
              prohibiting rescissions.
Sec. 213. Insurance rating rules.
Sec. 214. Nondiscrimination in benefits; parity in mental health and 
              substance abuse disorder benefits.
Sec. 215. Ensuring adequacy of provider networks.
Sec. 216. Requiring the option of extension of dependent coverage for 
              uninsured young adults.
Sec. 217. Consistency of costs and coverage under qualified health 
              benefits plans during plan year.

    Subtitle C--Standards Guaranteeing Access to Essential Benefits

Sec. 221. Coverage of essential benefits package.
Sec. 222. Essential benefits package defined.
Sec. 223. Health Benefits Advisory Committee.
Sec. 224. Process for adoption of recommendations; adoption of benefit 
              standards.

              Subtitle D--Additional Consumer Protections

Sec. 231. Requiring fair marketing practices by health insurers.
Sec. 232. Requiring fair grievance and appeals mechanisms.
Sec. 233. Requiring information transparency and plan disclosure.
Sec. 234. Application to qualified health benefits plans not offered 
              through the Health Insurance Exchange.
Sec. 235. Timely payment of claims.
Sec. 236. Standardized rules for coordination and subrogation of 
              benefits.
Sec. 237. Application of administrative simplification.
Sec. 238. State prohibitions on discrimination against health care 
              providers.
Sec. 239. Protection of physician prescriber information.
Sec. 240. Dissemination of advance care planning information.

                         Subtitle E--Governance

Sec. 241. Health Choices Administration; Health Choices Commissioner.
Sec. 242. Duties and authority of Commissioner.
Sec. 243. Consultation and coordination.
Sec. 244. Health Insurance Ombudsman.

       Subtitle F--Relation to Other Requirements; Miscellaneous

Sec. 251. Relation to other requirements.
Sec. 252. Prohibiting discrimination in health care.
Sec. 253. Whistleblower protection.
Sec. 254. Construction regarding collective bargaining.
Sec. 255. Severability.
Sec. 256. Treatment of Hawaii Prepaid Health Care Act.
Sec. 257. Actions by State attorneys general.
Sec. 258. Application of State and Federal laws regarding abortion.
Sec. 259. Nondiscrimination on abortion and respect for rights of 
              conscience.
Sec. 260. Authority of Federal Trade Commission.
Sec. 261. Construction regarding standard of care.
Sec. 262. Restoring application of antitrust laws to health sector 
              insurers.
Sec. 263. Study and report on methods to increase EHR use by small 
              health care providers.

[[Page H12625]]

Sec. 264. Performance Assessment and Accountability; Application of 
              GPRA

      TITLE III--HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS

                 Subtitle A--Health Insurance Exchange

Sec. 301. Establishment of Health Insurance Exchange; outline of 
              duties; definitions.
Sec. 302. Exchange-eligible individuals and employers.
Sec. 303. Benefits package levels.
Sec. 304. Contracts for the offering of Exchange-participating health 
              benefits plans.
Sec. 305. Outreach and enrollment of Exchange-eligible individuals and 
              employers in Exchange-participating health benefits plan.
Sec. 306. Other functions.
Sec. 307. Health Insurance Exchange Trust Fund.
Sec. 308. Optional operation of State-based health insurance exchanges.
Sec. 309. Interstate health insurance compacts.
Sec. 310. Health insurance cooperatives.
Sec. 311. Retention of DOD and VA authority.

               Subtitle B--Public Health Insurance Option

Sec. 321. Establishment and administration of a public health insurance 
              option as an Exchange-qualified health benefits plan.
Sec. 322. Premiums and financing.
Sec. 323. Payment rates for items and services.
Sec. 324. Modernized payment initiatives and delivery system reform.
Sec. 325. Provider participation.
Sec. 326. Application of fraud and abuse provisions.
Sec. 327. Application of HIPAA insurance requirements.
Sec. 328. Application of health information privacy, security, and 
              electronic transaction requirements.
Sec. 329. Enrollment in public health insurance option is voluntary.
Sec. 330. Enrollment in public health insurance option by Members of 
              Congress.
Sec. 331. Reimbursement of Secretary of Veterans Affairs.

              Subtitle C--Individual Affordability Credits

Sec. 341. Availability through Health Insurance Exchange.
Sec. 342. Affordable credit eligible individual.
Sec. 343. Affordability premium credit.
Sec. 344. Affordability cost-sharing credit.
Sec. 345. Income determinations.
Sec. 346. Special rules for application to territories.
Sec. 347. No Federal payment for undocumented aliens.

                    TITLE IV--SHARED RESPONSIBILITY

                 Subtitle A--Individual Responsibility

Sec. 401. Individual responsibility.

                  Subtitle B--Employer Responsibility

           Part 1--Health Coverage Participation Requirements

Sec. 411. Health coverage participation requirements.
Sec. 412. Employer responsibility to contribute toward employee and 
              dependent coverage.
Sec. 413. Employer contributions in lieu of coverage.
Sec. 414. Authority related to improper steering.
Sec. 415. Impact study on employer responsibility requirements.
Sec. 416. Study on employer hardship exemption.

   Part 2--Satisfaction of Health Coverage Participation Requirements

Sec. 421. Satisfaction of health coverage participation requirements 
              under the Employee Retirement Income Security Act of 
              1974.
Sec. 422. Satisfaction of health coverage participation requirements 
              under the Internal Revenue Code of 1986.
Sec. 423. Satisfaction of health coverage participation requirements 
              under the Public Health Service Act.
Sec. 424. Additional rules relating to health coverage participation 
              requirements.

          TITLE V--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

         Subtitle A--Provisions Relating to Health Care Reform

                     Part 1--Shared Responsibility

                  subpart a--individual responsibility

Sec. 501. Tax on individuals without acceptable health care coverage.

                   subpart b--employer responsibility

Sec. 511. Election to satisfy health coverage participation 
              requirements.
Sec. 512. Health care contributions of nonelecting employers.

  Part 2--Credit for Small Business Employee Health Coverage Expenses

Sec. 521. Credit for small business employee health coverage expenses.

        Part 3--Limitations on Health Care Related Expenditures

Sec. 531. Distributions for medicine qualified only if for prescribed 
              drug or insulin.
Sec. 532. Limitation on health flexible spending arrangements under 
              cafeteria plans.
Sec. 533. Increase in penalty for nonqualified distributions from 
              health savings accounts.
Sec. 534. Denial of deduction for federal subsidies for prescription 
              drug plans which have been excluded from gross income.

     Part 4--Other Provisions to Carry Out Health Insurance Reform

Sec. 541. Disclosures to carry out health insurance exchange subsidies.
Sec. 542. Offering of exchange-participating health benefits plans 
              through cafeteria plans.
Sec. 543. Exclusion from gross income of payments made under 
              reinsurance program for retirees.
Sec. 544. CLASS program treated in same manner as long-term care 
              insurance.
Sec. 545. Exclusion from gross income for medical care provided for 
              Indians.

                  Subtitle B--Other Revenue Provisions

                       Part 1--General Provisions

Sec. 551. Surcharge on high income individuals.
Sec. 552. Excise tax on medical devices.
Sec. 553. Expansion of information reporting requirements.
Sec. 554. Repeal of Worldwide Allocation of Interest.
Sec. 555. Exclusion of Unprocessed fuel from the Cellulosic Biofuel 
              Producer Credit.

                  Part 2--Prevention of Tax Avoidance

Sec. 561. Limitation on treaty benefits for certain deductible 
              payments.
Sec. 562. Codification of economic substance doctrine; penalties.
Sec. 563. Certain large or publicly traded persons made subject to a 
              more likely than not standard for avoiding penalties on 
              underpayments.

                   Part 3--Parity in Health Benefits

Sec. 571. Certain health related benefits applicable to spouses and 
              dependents extended to eligible beneficiaries.
       (c) General Definitions.--Except as otherwise provided, in 
     this division:
       (1) Acceptable coverage.--The term ``acceptable coverage'' 
     has the meaning given such term in section 302(d)(2).
       (2) Basic plan.--The term ``basic plan'' has the meaning 
     given such term in section 303(c).
       (3) Commissioner.--The term ``Commissioner'' means the 
     Health Choices Commissioner established under section 241.
       (4) Cost-sharing.--The term ``cost-sharing'' includes 
     deductibles, coinsurance, copayments, and similar charges, 
     but does not include premiums, balance billing amounts for 
     non-network providers, or spending for non-covered services.
       (5) Dependent.--The term ``dependent'' has the meaning 
     given such term by the Commissioner and includes a spouse.
       (6) Employment-based health plan.--The term ``employment-
     based health plan''--
       (A) means a group health plan (as defined in section 
     733(a)(1) of the Employee Retirement Income Security Act of 
     1974);
       (B) includes such a plan that is the following:
       (i) Federal, state, and tribal governmental plans.--A 
     governmental plan (as defined in section 3(32) of the 
     Employee Retirement Income Security Act of 1974), including a 
     health benefits plan offered under chapter 89 of title 5, 
     United States Code.
       (ii) Church plans.--A church plan (as defined in section 
     3(33) of the Employee Retirement Income Security Act of 
     1974); and
       (C) excludes coverage described in section 302(d)(2)(E) 
     (relating to TRICARE).
       (7) Enhanced plan.--The term ``enhanced plan'' has the 
     meaning given such term in section 303(c).
       (8) Essential benefits package.--The term ``essential 
     benefits package'' is defined in section 222(a).
       (9) Exchange-participating health benefits plan.--The term 
     ``Exchange-participating health benefits plan'' means a 
     qualified health benefits plan that is offered through the 
     Health Insurance Exchange and may be purchased directly from 
     the entity offering the plan or through enrollment agents and 
     brokers.
       (10) Family.--The term ``family'' means an individual and 
     includes the individual's dependents.
       (11) Federal poverty level; fpl.--The terms ``Federal 
     poverty level'' and ``FPL'' have the meaning given the term 
     ``poverty line'' in section 673(2) of the Community Services 
     Block Grant Act (42 U.S.C. 9902(2)), including any revision 
     required by such section.
       (12) Health benefits plan.--The term ``health benefits 
     plan'' means health insurance coverage and an employment-
     based health plan and includes the public health insurance 
     option.
       (13) Health insurance coverage.--The term ``health 
     insurance coverage'' has the meaning given such term in 
     section 2791 of the Public Health Service Act, but does not 
     include coverage in relation to its provision of excepted 
     benefits--
       (A) described in paragraph (1) of subsection (c) of such 
     section; or

[[Page H12626]]

       (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.
       (14) Health insurance issuer.--The term ``health insurance 
     issuer'' has the meaning given such term in section 
     2791(b)(2) of the Public Health Service Act.
       (15) Health insurance exchange.--The term ``Health 
     Insurance Exchange'' means the Health Insurance Exchange 
     established under section 301.
       (16) Indian.--The term ``Indian'' has the meaning given 
     such term in section 4 of the Indian Health Care Improvement 
     Act (24 U.S.C. 1603).
       (17) Indian health care provider.--The term ``Indian health 
     care provider'' means a health care program operated by the 
     Indian Health Service, an Indian tribe, tribal organization, 
     or urban Indian organization as such terms are defined in 
     section 4 of the Indian Health Care Improvement Act (25 
     U.S.C. 1603).
       (18) Medicaid.--The term ``Medicaid'' means a State plan 
     under title XIX of the Social Security Act (whether or not 
     the plan is operating under a waiver under section 1115 of 
     such Act).
       (19) Medicaid eligible individual.--The term ``Medicaid 
     eligible individual'' means an individual who is eligible for 
     medical assistance under Medicaid.
       (20) Medicare.--The term ``Medicare'' means the health 
     insurance programs under title XVIII of the Social Security 
     Act.
       (21) Plan sponsor.--The term ``plan sponsor'' has the 
     meaning given such term in section 3(16)(B) of the Employee 
     Retirement Income Security Act of 1974.
       (22) Plan year.--The term ``plan year'' means--
       (A) with respect to an employment-based health plan, a plan 
     year as specified under such plan; or
       (B) with respect to a health benefits plan other than an 
     employment-based health plan, a 12-month period as specified 
     by the Commissioner.
       (23) Premium plan; premium-plus plan.--The terms ``premium 
     plan'' and ``premium-plus plan'' have the meanings given such 
     terms in section 303(c).
       (24) QHBP offering entity.--The terms ``QHBP offering 
     entity'' means, with respect to a health benefits plan that 
     is--
       (A) a group health plan (as defined, subject to subsection 
     (d), in section 733(a)(1) of the Employee Retirement Income 
     Security Act of 1974), the plan sponsor in relation to such 
     group health plan, except that, in the case of a plan 
     maintained jointly by 1 or more employers and 1 or more 
     employee organizations and with respect to which an employer 
     is the primary source of financing, such term means such 
     employer;
       (B) health insurance coverage, the health insurance issuer 
     offering the coverage;
       (C) the public health insurance option, the Secretary of 
     Health and Human Services;
       (D) a non-Federal governmental plan (as defined in section 
     2791(d) of the Public Health Service Act), the State or 
     political subdivision of a State (or agency or 
     instrumentality of such State or subdivision) which 
     establishes or maintains such plan; or
       (E) a Federal governmental plan (as defined in section 
     2791(d) of the Public Health Service Act), the appropriate 
     Federal official.
       (25) Qualified health benefits plan.--The term ``qualified 
     health benefits plan'' means a health benefits plan that--
       (A) meets the requirements for such a plan under title II 
     and includes the public health insurance option; and
       (B) is offered by a QHBP offering entity that meets the 
     applicable requirements of such title with respect to such 
     plan.
       (26) Public health insurance option.--The term ``public 
     health insurance option'' means the public health insurance 
     option as provided under subtitle B of title III.
       (27) Service area; premium rating area.--The terms 
     ``service area'' and ``premium rating area'' mean with 
     respect to health insurance coverage--
       (A) offered other than through the Health Insurance 
     Exchange, such an area as established by the QHBP offering 
     entity of such coverage in accordance with applicable State 
     law; and
       (B) offered through the Health Insurance Exchange, such an 
     area as established by such entity in accordance with 
     applicable State law and applicable rules of the Commissioner 
     for Exchange-participating health benefits plans.
       (28) State.--The term ``State'' means the 50 States and the 
     District of Columbia and includes--
       (A) for purposes of title I, Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, and the Northern Mariana 
     Islands; and
       (B) for purposes of titles II and III, as elected under and 
     subject to section 346, Puerto Rico, the Virgin Islands, 
     Guam, American Samoa, and the Northern Mariana Islands.
       (29) State medicaid agency.--The term ``State Medicaid 
     agency'' means, with respect to a Medicaid plan, the single 
     State agency responsible for administering such plan under 
     title XIX of the Social Security Act.
       (30) Y1, y2, etc.--The terms ``Y1'', ``Y2'', ``Y3'', 
     ``Y4'', ``Y5'', and similar subsequently numbered terms, mean 
     2013 and subsequent years, respectively.

                       TITLE I--IMMEDIATE REFORMS

     SEC. 101. NATIONAL HIGH-RISK POOL PROGRAM.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     establish a temporary national high-risk pool program (in 
     this section referred to as the ``program'') to provide 
     health benefits to eligible individuals during the period 
     beginning on January 1, 2010, and, subject to subsection 
     (h)(3)(B), ending on the date on which the Health Insurance 
     Exchange is established.
       (b) Administration.--The Secretary may carry out this 
     section directly or, pursuant to agreements, grants, or 
     contracts with States, through State high-risk pool programs 
     provided that the requirements of this section are met. ``For 
     a State without a high-risk pool program, the Secretary may 
     work with the State to coordinate with other forms of 
     coverage expansions, such as State public-private 
     partnerships.''.
       (c) Eligibility.--For purposes of this section, the term 
     ``eligible individual'' means an individual ``who meets the 
     requirements of subsection (i)(1)''.
       (1) who--
       (A) is not eligible for--
       (i) benefits under title XVIII, XIX, or XXI of the Social 
     Security Act; or
       (ii) coverage under an employment-based health plan (not 
     including coverage under a COBRA continuation provision, as 
     defined in section 107(d)(1)); and
       (B) who--
       (i) is an eligible individual under section 2741(b) of the 
     Public Health Service Act; or
       (ii) is medically eligible for the program by virtue of 
     being an individual described in subsection (d) at any time 
     during the 6-month period ending on the date the individual 
     applies for high-risk pool coverage under this section;
       (2) who is the spouse or dependent of an individual who is 
     described in paragraph (1);
       (3) who has not had health insurance coverage or coverage 
     under an employment-based health plan for at least the 6-
     month period immediately preceding the date of the 
     individual's application for high-risk pool coverage under 
     this section; ``or.''
       (4) who on or after October 29, 2009, had employment-based 
     retiree health coverage (as defined in subsection (i)) and 
     the annual increase in premiums for such individual under 
     such coverage (for any coverage period beginning on or after 
     such date) exceeds such excessive percentage as the Secretary 
     shall specify.
     For purposes of paragraph (1)(A)(ii), a person who is in a 
     waiting period as defined in section 2701(b)(4) of the Public 
     Health Service Act shall not be considered to be eligible for 
     coverage under an employment-based health plan.
       (d) Medically Eligible Requirements.--For purposes of 
     subsection (c)(1)(B)(ii), an individual described in this 
     subsection is an individual--
       (1) who, during the 6-month period ending on the date the 
     individual applies for high-risk pool coverage under this 
     section applied for individual health insurance coverage 
     and--
       (A) was denied such coverage because of a preexisting 
     condition or health status; or
       (B) was offered such coverage--
       (i) under terms that limit the coverage for such a 
     preexisting condition; or
       (ii) at a premium rate that is above the premium rate for 
     high risk pool coverage under this section; or
       (2) who has an eligible medical condition as defined by the 
     Secretary.
     In making a determination under paragraph (1) of whether an 
     individual was offered individual coverage at a premium rate 
     above the premium rate for high risk pool coverage, the 
     Secretary shall make adjustments to offset differences in 
     premium rating that are attributable solely to differences in 
     age rating.
       (e) Enrollment.--To enroll in coverage in the program, an 
     individual shall--
       (1) submit to the Secretary an application for 
     participation in the program, at such time, in such manner, 
     and containing such information as the Secretary shall 
     require;
       (2) attest ``, consistent with subsection (i)(2),'' that 
     the individual is an eligible individual and is a resident of 
     one of the 50 States or the District of Columbia; and
       (3) if the individual had other prior health insurance 
     coverage or coverage under an employment-based health plan 
     during the previous 6 months, provide information as to the 
     nature and source of such coverage and reasons for its 
     discontinuance.
       (f) Protection Against Dumping Risks 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 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 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--

[[Page H12627]]

       (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.
       (g) Covered Benefits, Cost-sharing, Premiums, and Consumer 
     Protections.--
       (1) Premium.--The monthly premium charged to eligible 
     individuals for coverage under the program--
       (A) may vary by age so long as the ratio of the highest 
     such premium to the lowest such premium does not exceed the 
     ratio of 2 to 1;
       (B) shall be set at a level that does not exceed 125 
     percent of the prevailing standard rate for comparable 
     coverage in the individual market; and
       (C) shall be adjusted for geographic variation in costs.
     Health insurance issuers shall provide such information as 
     the Secretary may require to determine prevailing standard 
     rates under this paragraph. The Secretary shall establish 
     standard rates in consultation with the National Association 
     of Insurance Commissioners.
       (2) Covered benefits.--Covered benefits under the program 
     shall be determined by the Secretary and shall be consistent 
     with the basic categories in the essential benefits package 
     described in section 222. Under such benefits package--
       (A) the annual deductible for such benefits may not be 
     higher than $1,500 for an individual or such higher amount 
     for a family as determined by the Secretary;
       (B) there may not be annual or lifetime limits; and
       (C) the maximum cost-sharing with respect to an individual 
     (or family) for a year shall not exceed $5,000 for an 
     individual (or $10,000 for a family).
       (3) No preexisting condition exclusion periods.--No 
     preexisting condition exclusion period shall be imposed on 
     coverage under the program.
       (4) Appeals.--The Secretary shall establish an appeals 
     process for individuals to appeal a determination of the 
     Secretary--
       (A) with respect to claims submitted under this section; 
     and
       (B) with respect to eligibility determinations made by the 
     Secretary under this section.
       (5) State contribution, maintenance of effort.--As a 
     condition of providing health benefits under this section to 
     eligible individual residing in a State--
       (A) in the case of a State in which a qualified high-risk 
     pool (as defined under section 2744(c)(2) of the Public 
     Health Service Act) was in effect as of July 1, 2009, the 
     Secretary shall require the State make a maintenance of 
     effort payment each year that the high-risk pool is in effect 
     equal to an amount not less than the amount of all sources of 
     funding for high-risk pool coverage made by that State in the 
     year ending July 1, 2009; and
       (B) in the case of a State which required health insurance 
     issuers to contribute to a State high-risk pool or similar 
     arrangement for the assessment against such issuers for pool 
     losses, the State shall maintain such a contribution 
     arrangement among such issuers.
       (6) Limiting program expenditures.--The Secretary shall, 
     with respect to the program--
       (A) establish procedures to protect against fraud, waste, 
     and abuse under the program; and
       (B) provide for other program integrity methods.
       (7) Treatment as creditable coverage.--Coverage under the 
     program shall be treated, for purposes of applying the 
     definition of ``creditable coverage'' under the provisions of 
     title XXVII of the Public Health Service Act, part 6 of 
     subtitle B of title I of Employee Retirement Income Security 
     Act of 1974, and chapter 100 of the Internal Revenue Code of 
     1986 (and any other provision of law that references such 
     provisions) in the same manner as if it were coverage under a 
     State health benefits risk pool described in section 
     2701(c)(1)(G) of the Public Health Service Act.
       (h) 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 administrative 
     costs of) the high-risk pool under this section in excess of 
     the premiums collected with respect to 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 payment 
     of expenses of the high-risk pool will be less than the 
     amount of the expenses, the Secretary shall make such 
     adjustments as are necessary to eliminate such deficit, 
     including reducing benefits, increasing premiums, or 
     establishing waiting lists.
       (3) Termination of authority.--
       (A) In general.--Except as provided in subparagraph (B), 
     coverage of eligible individuals under a high-risk pool shall 
     terminate as of the date on which the Health Insurance 
     Exchange is established.
       (B) Transition to exchange.--The Secretary shall develop 
     procedures to provide for the transition of eligible 
     individuals who are enrolled in health insurance coverage 
     offered through a high-risk pool established under this 
     section to be enrolled in acceptable coverage. Such 
     procedures shall ensure that there is no lapse in coverage 
     with respect to the individual and may extend coverage 
     offered through such a high-risk pool beyond 2012 if the 
     Secretary determines necessary to avoid such a lapse.
       (i) Application and Verification of Requirement of 
     Citizenship or Lawful Presence in the United States.--
       (1) Requirement.--No individual shall be an eligible 
     individual under this section unless the individual is a 
     citizen or national of the United States or is lawfully 
     present in a State in the United States (other than as a 
     nonimmigrant described in a subparagraph (excluding 
     subparagraphs (K), (T), (U), and (V)) of section 101(a)(15) 
     of the Immigration and Nationality Act.)
       (2) Application of verification process for affordability 
     credit.--The provisions of paragraphs (4) (other than 
     subparagraphs (F) and (H)(i)) and (5)(A) of section 341(b), 
     and of subsections (v) (other than paragraph (3)) and (x) of 
     section 205 of the Social Security Act, shall apply to the 
     verification of eligibility of an eligible individual by the 
     Secretary (or by a State agency approved by the Secretary) 
     for benefits under this section in the same manner as such 
     provisions apply to the verification of eligibility of a 
     affordable credit eligible individual for affordability 
     credits by the Commissioner under section 341(b). The 
     agreement referred to in section 205(v)(2)(A) of the Social 
     Security Act (as applied under this paragraph) shall also 
     provide for funding, to be payable for the amount made 
     available under subsection (h)(1), to the Commissioner of 
     Social Security in such amount as is agreed to by such 
     Commissioner and the Secretary.
       (j) Employment-based Retiree Health Coverage.--In this 
     section, the term ``employment-based retiree health 
     coverage'' means health insurance or other coverage of health 
     care costs (whether provided by voluntary insurance or 
     pursuant to statutory or contractual obligation) for 
     individuals (or for such individuals and their spouses and 
     dependents) under a group health plan based on their status 
     as retired participants in such plan.

     SEC. 102. ENSURING VALUE AND LOWER PREMIUMS.

       (a) Group Health Insurance Coverage.--Title XXVII of the 
     Public Health Service Act is amended by inserting after 
     section 2713 the following new section:

     ``SEC. 2714. ENSURING VALUE AND LOWER PREMIUMS.

       ``(a) In General.--Each health insurance issuer that offers 
     health insurance coverage in the small or large group market 
     shall provide that for any plan year in which the coverage 
     has a medical loss ratio below a level specified by the 
     Secretary (but not less than 85 percent), the issuer shall 
     provide in a manner specified by the Secretary for rebates to 
     enrollees of the amount by which the issuer's medical loss 
     ratio is less than the level so specified.
       ``(b) Implementation.--The Secretary shall establish a 
     uniform definition of medical loss ratio and methodology for 
     determining how to calculate it based on the average medical 
     loss ratio in a health insurance issuer's book of business 
     for the small and large group market. Such methodology shall 
     be designed to take into account the special circumstances of 
     smaller plans, different types of plans, and newer plans. In 
     determining the medical loss ratio, the Secretary shall 
     exclude State taxes and licensing or regulatory fees. Such 
     methodology shall be designed and exceptions shall be 
     established to ensure adequate participation by health 
     insurance issuers, competition in the health insurance 
     market, and value for consumers so that their premiums are 
     used for services.
       ``(c) Sunset.--Subsections (a) and (b) shall not apply to 
     health insurance coverage on and after the first date that 
     health insurance coverage is offered through the Health 
     Insurance Exchange.''.
       (b) Individual Health Insurance Coverage.--Such title is 
     further amended by inserting after section 2753 the following 
     new section:

     ``SEC. 2754. ENSURING VALUE AND LOWER PREMIUMS.

       ``The provisions of section 2714 shall apply to health 
     insurance coverage offered in the individual market in the 
     same manner as such provisions apply to health insurance 
     coverage offered in the small or large group market except to 
     the extent the Secretary determines that the application of 
     such section may destabilize the existing individual 
     market.''.
       (c) Immediate Implementation.--The amendments made by this 
     section shall apply in the group and individual market for 
     plan years beginning on or after January 1, 2010, or as soon 
     as practicable after such date.

     SEC. 103. ENDING HEALTH INSURANCE RESCISSION ABUSE.

       (a) Clarification Regarding Application of Guaranteed 
     Renewability of Individual

[[Page H12628]]

     and Group Health Insurance Coverage.--Sections 2712 and 2742 
     of the Public Health Service Act (42 U.S.C. 300gg-12, 300gg-
     42) are each amended--
       (1) in its heading, by inserting ``AND CONTINUATION IN 
     FORCE, INCLUDING PROHIBITION OF RESCISSION,'' after 
     ``GUARANTEED RENEWABILITY''; and
       (2) in subsection (a), by inserting ``, including without 
     rescission,'' after ``continue in force''.
       (b) Secretarial Guidance Regarding Rescissions.--
       (1) Group health insurance market.--Section 2712 of such 
     Act (42 U.S.C. 300gg-12) is amended by adding at the end the 
     following:
       ``(f) Rescission.--A health insurance issuer may rescind 
     group health insurance coverage only upon clear and 
     convincing evidence of fraud described in subsection (b)(2), 
     under procedures that provide for independent, external 
     third-party review.''.
       (2) Individual health market.--Section 2742 of such Act (42 
     U.S.C. 300gg-42) is amended by adding at the end the 
     following:
       ``(f) Rescission.--A health insurance issuer may rescind 
     individual health insurance coverage only upon clear and 
     convincing evidence of fraud described in subsection (b)(2), 
     under procedures that provide for independent, external 
     third-party review.''.
       (3) Guidance.--The Secretary of Health and Human Services, 
     no later than 90 days after the date of the enactment of this 
     Act, shall issue guidance implementing the amendments made by 
     paragraphs (1) and (2), including procedures for independent, 
     external third-party review.
       (c) Opportunity for Independent, External Third-party 
     Review in Certain Cases.--
       (1) Individual market.--Subpart 1 of part B of title XXVII 
     of such Act (42 U.S.C. 300gg-41 et seq.) is amended by adding 
     at the end the following:

     ``SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL THIRD-
                   PARTY REVIEW IN CASES OF RESCISSION.

       ``(a) Notice and Review Right.--If a health insurance 
     issuer determines to rescind health insurance coverage for an 
     individual in the individual market, before such rescission 
     may take effect the issuer shall provide the individual with 
     notice of such proposed rescission and an opportunity for a 
     review of such determination by an independent, external 
     third-party under procedures specified by the Secretary under 
     section 2742(f).
       ``(b) Independent Determination.--If the individual 
     requests such review by an independent, external third-party 
     of a rescission of health insurance coverage, the coverage 
     shall remain in effect until such third party determines that 
     the coverage may be rescinded under the guidance issued by 
     the Secretary under section 2742(f).''.
       (2) Application to group health insurance.--Such title is 
     further amended by adding after section 2702 the following 
     new section:

     ``SEC. 2703. OPPORTUNITY FOR INDEPENDENT, EXTERNAL THIRD-
                   PARTY REVIEW IN CASES OF RESCISSION.

       ``The provisions of section 2746 shall apply to group 
     health insurance coverage in the same manner as such 
     provisions apply to individual health insurance coverage, 
     except that any reference to section 2742(f) is deemed a 
     reference to section 2712(f).''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act 
     and shall apply to rescissions occurring on and after July 1, 
     2010, with respect to health insurance coverage issued 
     before, on, or after such date.

     SEC. 104. SUNSHINE ON PRICE GOUGING BY HEALTH INSURANCE 
                   ISSUERS.

       (a) Initial Premium Review Process.--
       (1) In General.--The Secretary of Health and Human 
     Services, in conjunction with States, shall establish a 
     process for the annual review, beginning with 2010 and 
     subject to subsection (c)(3)(A), of increases in premiums for 
     health insurance coverage.
       (2) Justification and Disclosure.--Such process shall 
     require health insurance issuers to submit a justification 
     for any premium increase prior to implementation of the 
     increase. Such issuers shall prominently post such 
     information on their websites. The Secretary shall ensure the 
     public disclosure of information on such increase and 
     justifications for all health insurance issuers.
       (b) Continuing Premium Review Process.--
       (1) Informing commissioner 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 Health Choices commissioner 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 such 
     Commissioner about whether particular health insurance 
     issuers should be excluded from participation in the Health 
     Insurance Exchange based on a pattern of excessive or 
     unjustified premium increases.
       (2) Commissioner authority regarding exchange 
     participation.--In making determinations concerning entering 
     into contracts with QHBP offering entities for the offering 
     of Exchange-participating health plans under section 304, the 
     Commissioner shall take into account the information and 
     recommendations provided under paragraph (1).
       (3) Monitoring by commissioner of premium increases.--
       (A) In general.--Beginning in 2014, the Commissioner, in 
     conjunction with the States and in place of the monitoring by 
     the Secretary under subsection (a)(1) and consistent with the 
     provisions of subsection (a)(2), shall monitor premium 
     increases of health insurance coverage offered inside the 
     Health Insurance Exchange under section 304 and outside of 
     the Exchange.
       (B) Consideration in opening exchange.--In determining 
     under section 302(e)(4) whether to make additional larger 
     employers eligible to participate in the Health Insurance 
     Exchange, the Commissioner 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.
       (c) Grants in Support of Process.--
       (1) Premium review grants during 2010 through 2014.--The 
     Secretary shall carry out a program of grants to States 
     during the 5-year period beginning with 2010 to assist them 
     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 
     Commissioner under subsection (b)(1).
       (2) Funding.--
       (A) In general.--Out of any funds in the Treasury not 
     otherwise appropriated, there are appropriated to the 
     Secretary $1,000,000,000, to be available for expenditure for 
     grants under paragraph (1) and subparagraph (B).
       (B) Further availability for insurance reform and consumer 
     protection grants.--If the amounts appropriated under 
     subparagraph (A) are not fully obligated under grants under 
     paragraph (1) by the end of 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 title II.
       (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. 105. REQUIRING THE OPTION OF EXTENSION OF DEPENDENT 
                   COVERAGE FOR UNINSURED YOUNG ADULTS.

       (a) Under Group Health Plans.--
       (1) PHSA.--Title XXVII of the Public Health Service Act is 
     amended by inserting after section 2702 the following new 
     section:

     ``SEC. 2703. REQUIRING THE OPTION OF EXTENSION OF DEPENDENT 
                   COVERAGE FOR UNINSURED YOUNG ADULTS.

       ``(a) In General.--A group health plan and a health 
     insurance issuer offering health insurance coverage in 
     connection with a group health plan that provides coverage 
     for dependent children shall make available such coverage, at 
     the option of the participant involved, for one or more 
     qualified children (as defined in subsection (b)) of the 
     participant.
       ``(b) Qualified Child Defined.--In this section, the term 
     `qualified child' means, with respect to a participant in a 
     group health plan or group health insurance coverage, an 
     individual who (but for age) would be treated as a dependent 
     child of the participant under such plan or coverage and 
     who--
       ``(1) is under 27 years of age; and
       ``(2) is not enrolled as a participant, beneficiary, or 
     enrollee (other than under this section, section 2746, or 
     section 704 of the Employee Retirement Income Security Act of 
     1974) under any health insurance coverage or group health 
     plan.
       ``(c) Premiums.--Nothing in this section shall be construed 
     as preventing a group health plan or health insurance issuer 
     with respect to group health insurance coverage from 
     increasing the premiums otherwise required for coverage 
     provided under this section consistent with standards 
     established by the Secretary based upon family size.''.
       (2) Employee retirement income security act of 1974.--
       (A) In general.--Part 7 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 is amended by 
     inserting after section 703 the following new section:

     ``SEC. 704. REQUIRING THE OPTION OF EXTENSION OF DEPENDENT 
                   COVERAGE FOR UNINSURED YOUNG ADULTS.

       ``(a) In General.--A group health plan and a health 
     insurance issuer offering health insurance coverage in 
     connection with a group health plan that provides coverage 
     for dependent children shall make available such coverage, at 
     the option of the participant involved, for one or more 
     qualified children (as defined in subsection (b)) of the 
     participant.
       ``(b) Qualified Child Defined.--In this section, the term 
     `qualified child' means, with respect to a participant in a 
     group health plan or group health insurance coverage, an 
     individual who (but for age) would be treated as a dependent 
     child of the participant under such plan or coverage and 
     who--
       ``(1) is under 27 years of age; and
       ``(2) is not enrolled as a participant, beneficiary, or 
     enrollee (other than under this section) under any health 
     insurance coverage or group health plan.
       ``(c) Premiums.--Nothing in this section shall be construed 
     as preventing a group health plan or health insurance issuer 
     with respect to group health insurance coverage

[[Page H12629]]

     from increasing the premiums otherwise required for coverage 
     provided under this section consistent with standards 
     established by the Secretary based upon family size.''.
       (B) Clerical amendment.--The table of contents of such Act 
     is amended by inserting after the item relating to section 
     703 the following new item:

``Sec. 704. Requiring the option of extension of dependent coverage for 
              uninsured young adults.''.
       (3) IRC.--
       (A) In general.--Subchapter A of chapter 100 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new section:

     ``SEC. 9804. REQUIRING THE OPTION OF EXTENSION OF DEPENDENT 
                   COVERAGE FOR UNINSURED YOUNG ADULTS.

       ``(a) In General.--A group health plan that provides 
     coverage for dependent children shall make available such 
     coverage, at the option of the participant involved, for one 
     or more qualified children (as defined in subsection (b)) of 
     the participant.
       ``(b) Qualified Child Defined.--In this section, the term 
     `qualified child' means, with respect to a participant in a 
     group health plan, an individual who (but for age) would be 
     treated as a dependent child of the participant under such 
     plan and who--
       ``(1) is under 27 years of age; and
       ``(2) is not enrolled as a participant, beneficiary, or 
     enrollee (other than under this section, section 704 of the 
     Employee Retirement Income Security Act of 1974, or section 
     2704 or 2746 of the Public Health Service Act) under any 
     health insurance coverage or group health plan.
       ``(c) Premiums.--Nothing in this section shall be construed 
     as preventing a group health plan from increasing the 
     premiums otherwise required for coverage provided under this 
     section consistent with standards established by the 
     Secretary based upon family size.''.
       (B) Clerical amendment.--The table of sections of such 
     chapter is amended by inserting after the item relating to 
     section 9803 the following:

``Sec. 9804. Requiring the option of extension of dependent coverage 
              for uninsured young adults.''.
       (b) Individual Health Insurance Coverage.--Title XXVII of 
     the Public Health Service Act is amended by inserting after 
     section 2745 the following new section:

     ``SEC. 2746. REQUIRING THE OPTION OF EXTENSION OF DEPENDENT 
                   COVERAGE FOR UNINSURED YOUNG ADULTS.

       ``The provisions of section 2703 shall apply to health 
     insurance coverage offered by a health insurance issuer in 
     the individual market in the same manner as they apply to 
     health insurance coverage offered by a health insurance 
     issuer in connection with a group health plan in the small or 
     large group market.''.
       (c) Effective Dates.--
       (1) Group health plans.--The amendments made by subsection 
     (a) shall apply to group health plans for plan years 
     beginning on or after January 1, 2010.
       (2) Individual health insurance coverage.--Section 2746 of 
     the Public Health Service Act, as inserted by subsection (b), 
     shall apply with respect to health insurance coverage 
     offered, sold, issued, renewed, in effect, or operated in the 
     individual market on or after January 1, 2010.

     SEC. 106. LIMITATIONS ON PREEXISTING CONDITION EXCLUSIONS IN 
                   GROUP HEALTH PLANS IN ADVANCE OF APPLICABILITY 
                   OF NEW PROHIBITION OF PREEXISTING CONDITION 
                   EXCLUSIONS.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Reduction in look-back period.--Section 701(a)(1) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1181(a)(1)) is amended by striking ``6-month period'' 
     and inserting ``30-day period''.
       (2) Reduction in permitted preexisting condition limitation 
     period.--Section 701(a)(2) of such Act (29 U.S.C. 1181(a)(2)) 
     is amended by striking ``12 months'' and inserting ``3 
     months'', and by striking ``18 months'' and inserting ``9 
     months''.
       (3) Sunset of interim limitation.--Section 701 of such Act 
     (29 U.S.C. 1181) is amended by adding at the end the 
     following new subsection:
       ``(h) Termination.--This section shall cease to apply to 
     any group health plan as of the date that such plan becomes 
     subject to the requirements of section 211 of the (relating 
     to prohibiting preexisting condition exclusions).''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Reduction in look-back period.--Section 9801(a)(1) of 
     the Internal Revenue Code of 1986 is amended by striking ``6-
     month period'' and inserting ``30-day period''.
       (2) Reduction in permitted preexisting condition limitation 
     period.--Section 9801(a)(2) of such Code is amended by 
     striking ``12 months'' and inserting ``3 months'', and by 
     striking ``18 months'' and inserting ``9 months''.
       (3) Sunset of interim limitation.--Section 9801 of such 
     Code is amended by adding at the end the following new 
     subsection:
       ``(g) Termination.--This section shall cease to apply to 
     any group health plan as of the date that such plan becomes 
     subject to the requirements of section 211 of the 
     ``Affordable Health Care for America Act'' (relating to 
     prohibiting preexisting condition exclusions).''.
       (c) Amendments to Public Health Service Act.--
       (1) Reduction in look-back period.--Section 2701(a)(1) of 
     the Public Health Service Act (42 U.S.C. 300gg(a)(1)) is 
     amended by striking ``6-month period'' and inserting ``30-day 
     period''.
       (2) Reduction in permitted preexisting condition limitation 
     period.--Section 2701(a)(2) of such Act (42 U.S.C. 
     300gg(a)(2)) is amended by striking ``12 months'' and 
     inserting ``3 months'', and by striking ``18 months'' and 
     inserting ``9 months''.
       (3) Sunset of interim limitation.--Section 2701 of such Act 
     (42 U.S.C. 300gg) is amended by adding at the end the 
     following new subsection:
       ``(h) Termination.--This section shall cease to apply to 
     any group health plan as of the date that such plan becomes 
     subject to the requirements of section 211 of the (relating 
     to prohibiting preexisting condition exclusions).''.
       (4) Miscellaneous technical amendment.--Section 2702(a)(2) 
     of such Act (42 U.S.C. 300gg-1) is amended by striking 
     ``701'' and inserting ``2701''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply with respect to 
     group health plans for plan years beginning on or after 
     January 1, 2010.
       (2) Special rule for collective bargaining agreements.--In 
     the case of a group health plan maintained pursuant to 1 or 
     more collective bargaining agreements between employee 
     representatives and 1 or more employers ratified before the 
     date of the enactment of this Act, the amendments made by 
     this section shall not apply to plan years beginning before 
     the earlier of--
       (A) the date on which the last of the collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of the enactment of this Act);
       (B) 3 years after the date of the enactment of this Act.

     SEC. 107. PROHIBITING ACTS OF DOMESTIC VIOLENCE FROM BEING 
                   TREATED AS PREEXISTING CONDITIONS.

       (a) ERISA.--Section 701(d)(3) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. ) is amended--
       (1) in the heading, by inserting ``or domestic violence'' 
     after ``pregnancy''; and
       (2) by inserting ``or domestic violence'' after ``relating 
     to pregnancy''.
       (b) PHSA.--
       (1) Group market.--Section 2701(d)(3) of the Public Health 
     Service Act (42 U.S.C. 300gg(d)(3)) is amended--
       (A) in the heading, by inserting ``or domestic violence'' 
     after ``pregnancy''; and
       (B) by inserting ``or domestic violence'' after ``relating 
     to pregnancy''.
       (2) Individual market.--Title XXVII of such Act is amended 
     by inserting after section 2753 the following new section:

     ``SEC. 2754. PROHIBITION ON DOMESTIC VIOLENCE AS PREEXISTING 
                   CONDITION.

       ``A health insurance issuer offering health insurance 
     coverage in the individual market may not, on the basis of 
     domestic violence, impose any preexisting condition exclusion 
     (as defined in section 2701(b)(1)(A)) with respect to such 
     coverage.''.
       (c) IRC.--Section 9801(d)(3) of the Internal Revenue Code 
     of 1986 is amended--
       (1) in the heading, by inserting ``or domestic violence'' 
     after ``pregnancy''; and
       (2) by inserting ``or domestic violence'' after ``relating 
     to pregnancy''.
       (d) Effective Dates.--
       (1) Except as otherwise provided in this subsection, the 
     amendments made by this section shall apply with respect to 
     group health plans (and health insurance issuers offering 
     group health insurance coverage) for plan years beginning on 
     or after January 1, 2010.
       (2) The amendment made by subsection (b)(2) shall apply 
     with respect to health insurance coverage offered, sold, 
     issued, renewed, in effect, or operated in the individual 
     market on or after such date.

     SEC. 108. ENDING HEALTH INSURANCE DENIALS AND DELAYS OF 
                   NECESSARY TREATMENT FOR CHILDREN WITH 
                   DEFORMITIES.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) In general.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 is 
     amended by adding at the end the following new section:

     ``SEC. 715. STANDARDS RELATING TO BENEFITS FOR MINOR CHILD'S 
                   CONGENITAL OR DEVELOPMENTAL DEFORMITY OR 
                   DISORDER.

       ``(a) Requirements for Treatment for Children With 
     Deformities.--
       ``(1) In general.--A group health plan, and a health 
     insurance issuer offering group health insurance coverage, 
     that provides coverage for surgical benefits shall provide 
     coverage for outpatient and inpatient diagnosis and treatment 
     of a minor child's congenital or developmental deformity, 
     disease, or injury. A minor child shall include any 
     individual who is 21 years of age or younger.
       ``(2) Treatment defined.--
       ``(A) In general.--In this section, the term `treatment' 
     includes reconstructive surgical procedures (procedures that 
     are generally performed to improve function, but may also be 
     performed to approximate a normal appearance) that are 
     performed on abnormal structures of the body caused by 
     congenital defects, developmental abnormalities, trauma, 
     infection, tumors, or disease, including--

[[Page H12630]]

       ``(i) procedures that do not materially affect the function 
     of the body part being treated; and
       ``(ii) procedures for secondary conditions and follow-up 
     treatment.
       ``(B) Exception.--Such term does not include cosmetic 
     surgery performed to reshape normal structures of the body to 
     improve appearance or self-esteem.
       ``(b) Notice.--A group health plan under this part shall 
     comply with the notice requirement under section 713(b) 
     (other than paragraph (3)) with respect to the requirements 
     of this section.''.
       (2) Conforming amendment.--
       (A) Subsection (c) of section 731 of such Act is amended by 
     striking ``section 711'' and inserting ``sections 711 and 
     715''.
       (B) The table of contents in section 1 of such Act is 
     amended by inserting after the item relating to section 714 
     the following new item:

``Sec. 715. Standards relating to benefits for minor child's congenital 
              or developmental deformity or disorder.''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Subchapter B of chapter 100 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new section:

     ``SEC. 9814. STANDARDS RELATING TO BENEFITS FOR MINOR CHILD'S 
                   CONGENITAL OR DEVELOPMENTAL DEFORMITY OR 
                   DISORDER.

       ``(a) Requirements for Treatment for Children With 
     Deformities.--A group health plan that provides coverage for 
     surgical benefits shall provide coverage for outpatient and 
     inpatient diagnosis and treatment of a minor child's 
     congenital or developmental deformity, disease, or injury. A 
     minor child shall include any individual who is 21 years of 
     age or younger.
       ``(b) Treatment Defined.--
       ``(1) In general.--In this section, the term `treatment' 
     includes reconstructive surgical procedures (procedures that 
     are generally performed to improve function, but may also be 
     performed to approximate a normal appearance) that are 
     performed on abnormal structures of the body caused by 
     congenital defects, developmental abnormalities, trauma, 
     infection, tumors, or disease, including--
       ``(A) procedures that do not materially affect the function 
     of the body part being treated, and
       ``(B) procedures for secondary conditions and follow-up 
     treatment.
       ``(2) Exception.--Such term does not include cosmetic 
     surgery performed to reshape normal structures of the body to 
     improve appearance or self-esteem.''.
       (2) Clerical amendment.--The table of sections for 
     subchapter B of chapter 100 of such Code is amended by adding 
     at the end the following new item:

``Sec. 9814. Standards relating to benefits for minor child's 
              congenital or developmental deformity or disorder.''.
       (c) Amendments to the Public Health Service Act.--
       (1) In general.--Subpart 2 of part A of title XXVII of the 
     Public Health Service Act is amended by adding at the end the 
     following new section:

     ``SEC. 2708. STANDARDS RELATING TO BENEFITS FOR MINOR CHILD'S 
                   CONGENITAL OR DEVELOPMENTAL DEFORMITY OR 
                   DISORDER.

       ``(a) Requirements for Treatment for Children With 
     Deformities.--
       ``(1) In general.--A group health plan, and a health 
     insurance issuer offering group health insurance coverage, 
     that provides coverage for surgical benefits shall provide 
     coverage for outpatient and inpatient diagnosis and treatment 
     of a minor child's congenital or developmental deformity, 
     disease, or injury. A minor child shall include any 
     individual who is 21 years of age or younger.
       ``(2) Treatment defined.--
       ``(A) In general.--In this section, the term `treatment' 
     includes reconstructive surgical procedures (procedures that 
     are generally performed to improve function, but may also be 
     performed to approximate a normal appearance) that are 
     performed on abnormal structures of the body caused by 
     congenital defects, developmental abnormalities, trauma, 
     infection, tumors, or disease, including--
       ``(i) procedures that do not materially affect the function 
     of the body part being treated; and
       ``(ii) procedures for secondary conditions and follow-up 
     treatment.
       ``(B) Exception.--Such term does not include cosmetic 
     surgery performed to reshape normal structures of the body to 
     improve appearance or self-esteem.
       ``(b) Notice.--A group health plan under this part shall 
     comply with the notice requirement under section 715(b) of 
     the Employee Retirement Income Security Act of 1974 with 
     respect to the requirements of this section as if such 
     section applied to such plan.''.
       (2) Individual health insurance.--Subpart 2 of part B of 
     title XXVII of the Public Health Service Act, as amended by 
     section 161(b), is further amended by adding at the end the 
     following new section:

     ``SEC. 2755. STANDARDS RELATING TO BENEFITS FOR MINOR CHILD'S 
                   CONGENITAL OR DEVELOPMENTAL DEFORMITY OR 
                   DISORDER.

       ``The provisions of section 2708 shall apply to health 
     insurance coverage offered by a health insurance issuer in 
     the individual market in the same manner as such provisions 
     apply to health insurance coverage offered by a health 
     insurance issuer in connection with a group health plan in 
     the small or large group market.''.
       (3) Conforming amendments.--
       (A) Section 2723(c) of such Act (42 U.S.C. 300gg-23(c)) is 
     amended by striking ``section 2704'' and inserting ``sections 
     2704 and 2708''.
       (B) Section 2762(b)(2) of such Act (42 U.S.C. 300gg-
     62(b)(2)) is amended by striking ``section 2751'' and 
     inserting ``sections 2751 and 2755''.
       (d) Effective Dates.--
       (1) The amendments made by this section shall apply with 
     respect to group health plans (and health insurance issuers 
     offering group health insurance coverage) for plan years 
     beginning on or after January 1, 2010.
       (2) The amendment made by subsection (c)(2) shall apply 
     with respect to health insurance coverage offered, sold, 
     issued, renewed, in effect, or operated in the individual 
     market on or after such date.
       (e) Coordination.--Section 104(1) of the Health Insurance 
     Portability and Accountability Act of 1996 is amended by 
     striking ``(and the amendments made by this subtitle and 
     section 401)'' and inserting ``, part 7 of subtitle B of 
     title I of the Employee Retirement Income Security Act of 
     1974, parts A and C of title XXVII of the Public Health 
     Service Act, and chapter 100 of the Internal Revenue Code of 
     1986''.

     SEC. 109. ELIMINATION OF LIFETIME LIMITS.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) In general.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1185 et seq.), as amended by section 108, is amended 
     by adding at the end the following:

     ``SEC. 716. ELIMINATION OF LIFETIME AGGREGATE LIMITS.

       ``(a) In General.--A group health plan and a health 
     insurance issuer providing health insurance coverage in 
     connection with a group health plan, may not impose an 
     aggregate dollar lifetime limit with respect to benefits 
     payable under the plan or coverage.
       ``(b) Definition.--In this section, the term `aggregate 
     dollar lifetime limit' means, with respect to benefits under 
     a group health plan or health insurance coverage offered in 
     connection with a group health plan, a dollar limitation on 
     the total amount that may be paid with respect to such 
     benefits under the plan or health insurance coverage with 
     respect to an individual or other coverage unit on a lifetime 
     basis.''.
       (2) Clerical amendment.--The table of contents in section 1 
     of such Act, is amended by inserting after the item relating 
     to section 715 the following new item:

``Sec. 716. Elimination of lifetime aggregate limits.''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Subchapter B of chapter 100 of the 
     Internal Revenue Code of 1986, as amended by section 108(b), 
     is amended by adding at the end the following new section:

     ``SEC. 9815. ELIMINATION OF LIFETIME AGGREGATE LIMITS.

       ``(a) In General.--A group health plan may not impose an 
     aggregate dollar lifetime limit with respect to benefits 
     payable under the plan.
       ``(b) Definition.--In this section, the term `aggregate 
     dollar lifetime limit' means, with respect to benefits under 
     a group health plan a dollar limitation on the total amount 
     that may be paid with respect to such benefits under the plan 
     with respect to an individual or other coverage unit on a 
     lifetime basis.''.
       (2) Clerical amendment.--The table of sections for 
     subchapter B of chapter 100 of such Code, as amended by 
     section 108(b), is amended by adding at the end the following 
     new item:

``Sec. 9854. Standards relating to benefits for minor child's 
              congenital or developmental deformity or disorder.''.
       (c) Amendment to the Public Health Service Act Relating to 
     the Group Market.--
       (1) In general.--Subpart 2 of part A of title XXVII of the 
     Public Health Service Act (42 U.S.C. 300gg-4 et seq.) as 
     amended by section 108(c)(1), is amended by adding at the end 
     the following:

     ``SEC. 2709. ELIMINATION OF LIFETIME AGGREGATE LIMITS.

       ``(a) In General.--A group health plan and a health 
     insurance issuer providing health insurance coverage in 
     connection with a group health plan, may not impose an 
     aggregate dollar lifetime limit with respect to benefits 
     payable under the plan or coverage.
       ``(b) Definition.--In this section, the term `aggregate 
     dollar lifetime limit' means, with respect to benefits under 
     a group health plan or health insurance coverage, a dollar 
     limitation on the total amount that may be paid with respect 
     to such benefits under the plan or health insurance coverage 
     with respect to an individual or other coverage unit on a 
     lifetime basis.''.
       (2) Individual market.--Subpart 2 of part B of title XXVII 
     of the Public Health Service Act (42 U.S.C. 300gg-51 et 
     seq.), as amended by section 108(c)(2), is amended by adding 
     at the end the following:

     ``SEC. 2756. ELIMINATION OF LIFETIME AGGREGATE LIMITS.

       ``The provisions of section 2709 shall apply to health 
     insurance coverage offered by a health insurance issuer in 
     the individual

[[Page H12631]]

     market in the same manner as they apply to health insurance 
     coverage offered by a health insurance issuer in connection 
     with a group health plan in the small or large group 
     market.''.
       (d) Effective Dates.--
       (1) The amendments made by this section shall apply with 
     respect to group health plans (and health insurance issuers 
     offering group health insurance coverage) for plan years 
     beginning on or after January 1, 2010.
       (2) The amendment made by subsection (c)(2) shall apply 
     with respect to health insurance coverage offered, sold, 
     issued, renewed, in effect, or operated in the individual 
     market on or after such date.

     SEC. 110. PROHIBITION AGAINST POSTRETIREMENT REDUCTIONS OF 
                   RETIREE HEALTH BENEFITS BY GROUP HEALTH PLANS.

       (a) In General.--Part 7 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974, as amended 
     by sections 108 and 109, is amended by inserting after 
     section 716 the following new section:

     ``SEC. 717. PROTECTION AGAINST POSTRETIREMENT REDUCTION OF 
                   RETIREE HEALTH BENEFITS.

       ``(a) In General.--Every group health plan shall contain a 
     provision which expressly bars the plan, or any fiduciary of 
     the plan, from reducing the benefits provided under the plan 
     to a retired participant, or beneficiary of such participant, 
     if such reduction affects the benefits provided to the 
     participant or beneficiary as of the date the participant 
     retired for purposes of the plan and such reduction occurs 
     after the participant's retirement unless such reduction is 
     also made with respect to active participants. Nothing in 
     this section shall prohibit a plan from enforcing a total 
     aggregate cap on amounts paid for retiree health coverage 
     that is part of the plan at the time of retirement.
       ``(b) No Reduction.--Notwithstanding that a group health 
     plan may contain a provision reserving the general power to 
     amend or terminate the plan or a provision specifically 
     authorizing the plan to make post-retirement reductions in 
     retiree health benefits, it shall be prohibited for any group 
     health plan, whether through amendment or otherwise, to 
     reduce the benefits provided to a retired participant or the 
     participant's beneficiary under the terms of the plan if such 
     reduction of benefits occurs after the date the participant 
     retired for purposes of the plan and reduces benefits that 
     were provided to the participant, or the participant's 
     beneficiary, as of the date the participant retired unless 
     such reduction is also made with respect to active 
     participants.
       ``(c) Reduction Described.-- For purposes of this section, 
     a reduction in benefits--
       ``(1) with respect to premiums occurs under a group health 
     plan when a participant's (or beneficiary's) share of the 
     total premium (or, in the case of a self-insured plan, the 
     costs of coverage) of the plan substantially increases; or
       ``(2) with respect to other cost-sharing and benefits under 
     a group health plan occurs when there is a substantial 
     decrease in the actuarial value of the benefit package under 
     the plan.
     For purposes of this section, the term `substantial' means an 
     increase in the total premium share or a decrease in the 
     actuarial value of the benefit package that is greater than 5 
     percent.''
       (b) Conforming Amendment.--The table of contents in section 
     1 of such Act, as amended by sections 108 and 109, is amended 
     by inserting after the item relating to section 716 the 
     following new item:

``Sec. 717. Protection against postretirement reduction of retiree 
              health benefits.''.
       (c) Waiver.--An employer may, in a form and manner which 
     shall be prescribed by the Secretary of Labor, apply for a 
     waiver from this provision if the employer can reasonably 
     demonstrate that meeting the requirements of this section 
     would impose an undue hardship on the employer.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 111. REINSURANCE PROGRAM FOR RETIREES.

       (a) Establishment.--
       (1) In general.--Not later than 90 days after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services shall establish a temporary reinsurance program (in 
     this section referred to as the ``reinsurance program'') to 
     provide reimbursement to assist participating employment-
     based plans with the cost of providing health benefits to 
     retirees and to eligible spouses, surviving spouses and 
     dependents of such retirees.
       (2) Definitions.--For purposes of this section:
       (A) The term ``eligible employment-based plan'' means a 
     group health plan or employment-based health plan that--
       (i) is --

       (I) maintained by one or more employers (including without 
     limitation any State or political subdivision thereof, or any 
     agency or instrumentality of any of the foregoing), former 
     employers or employee organizations or associations, or 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 retirees.
       (B) The term ``health benefits'' means medical, surgical, 
     hospital, prescription drug, and such other benefits as shall 
     be determined by the Secretary, whether self-funded or 
     delivered through the purchase of insurance or otherwise.
       (C) The term ``participating employment-based plan'' means 
     an eligible employment-based plan that is participating in 
     the reinsurance program.
       (D) The term ``retiree'' means, with respect to a 
     participating employment-benefit plan, an individual who--
       (i) is 55 years of age or older;
       (ii) is not eligible for coverage under title XVIII of the 
     Social Security Act; and
       (iii) is not an active employee of an employer maintaining 
     the plan or of any employer that makes or has made 
     substantial contributions to fund such plan.
       (E) The term ``Secretary'' means Secretary of Health and 
     Human Services.
       (b) Participation.--To be eligible to participate in the 
     reinsurance program, an eligible employment-based plan shall 
     submit to the Secretary an application for participation in 
     the program, at such time, in such manner, and containing 
     such information as the Secretary shall require.
       (c) Payment.--
       (1) Submission of claims.--
       (A) In general.--Under the reinsurance program, a 
     participating employment-based plan shall submit claims for 
     reimbursement to the Secretary which shall contain 
     documentation of the actual costs of the items and services 
     for which each claim is being submitted.
       (B) Basis for claims.--Each claim submitted under 
     subparagraph (A) shall be based on the actual amount expended 
     by the participating employment-based plan involved within 
     the plan year for the appropriate employment based health 
     benefits provided to a retiree or to the spouse, surviving 
     spouse, or dependent of a retiree. In determining the amount 
     of any claim for purposes of this subsection, the 
     participating employment-based plan shall take into account 
     any negotiated price concessions (such as discounts, direct 
     or indirect subsidies, rebates, and direct or indirect 
     remunerations) obtained by such plan with respect to such 
     health benefits. For purposes of calculating the amount of 
     any claim, the costs paid by the retiree or by the spouse, 
     surviving spouse, or dependent of the retiree in the form of 
     deductibles, copayments, and coinsurance shall be included 
     along with the amounts paid by the participating employment-
     based plan.
       (2) Program payments and limit.--If the Secretary 
     determines that a participating employment-based plan has 
     submitted a valid claim under paragraph (1), the Secretary 
     shall reimburse such plan for 80 percent of that portion of 
     the costs attributable to such claim that exceeds $15,000, 
     but is less than $90,000. Such amounts shall be adjusted each 
     year based on the percentage increase in the medical care 
     component of the Consumer Price Index (rounded to the nearest 
     multiple of $1,000) for the year involved.
       (3) Use of payments.--Amounts paid to a participating 
     employment-based plan under this subsection shall only be 
     used to reduce the costs of health care provided by the plan 
     by reducing premium costs for the employer or employee 
     association maintaining the plan, and reducing premium 
     contributions, deductibles, copayments, coinsurance, or other 
     out-of-pocket costs for plan participants and beneficiaries. 
     Where the benefits are provided by an employer to members of 
     a represented bargaining unit, the allocation of payments 
     among these purposes shall be subject to collective 
     bargaining. Amounts paid to the plan under this subsection 
     shall not be used as general revenues by the employer or 
     employee association maintaining the plan or for any other 
     purposes. The Secretary shall develop a mechanism to monitor 
     the appropriate use of such payments by such plans.
       (4) Appeals and program protections.--The Secretary shall 
     establish--
       (A) an appeals process to permit participating employment-
     based plans to appeal a determination of the Secretary with 
     respect to claims submitted under this section; and
       (B) procedures to protect against fraud, waste, and abuse 
     under the program.
       (5) Audits.--The Secretary shall conduct annual audits of 
     claims data submitted by participating employment-based plans 
     under this section to ensure that they are in compliance with 
     the requirements of this section.
       (d) Retiree Reserve Trust Fund.--
       (1) Establishment.--
       (A) In general.--There is established in the Treasury of 
     the United States a trust fund to be known as the ``Retiree 
     Reserve Trust Fund'' (referred to in this section as the 
     ``Trust Fund''), that shall consist of such amounts as may be 
     appropriated or credited to the Trust Fund as provided for in 
     this subsection to enable the Secretary to carry out the 
     reinsurance program. Such amounts shall remain available 
     until expended.
       (B) Funding.--There are hereby appropriated to the Trust 
     Fund, out of any moneys in the Treasury not otherwise 
     appropriated, an amount requested by the Secretary as 
     necessary to carry out this section, except that the total of 
     all such amounts requested shall not exceed $10,000,000,000.
       (C) Appropriations from the trust fund.--
       (i) In general.--Amounts in the Trust Fund are appropriated 
     to provide funding to carry out the reinsurance program and 
     shall be used to carry out such program.

[[Page H12632]]

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

     SEC. 112. WELLNESS PROGRAM GRANTS.

       (a) Allowance of Grant.--
       (1) In general.--For purposes of this section, the 
     Secretaries of Health and Human Services and Labor shall 
     jointly award wellness grants as determined under this 
     section. Wellness program grants shall be awarded to small 
     employers (as defined by the Secretary) for any plan year in 
     an amount equal to 50 percent of the costs paid or incurred 
     by such employers in connection with a qualified wellness 
     program during the plan year. For purposes of the preceding 
     sentence, in the case of any qualified wellness program 
     offered as part of an employment-based health plan, only 
     costs attributable to the qualified wellness program and not 
     to the health plan, or health insurance coverage offered in 
     connection with such a plan, may be taken into account.
       (2) Limitations.--
       (A) Period.--A wellness grant awarded to an employer under 
     this section shall be for up to 3 years.
       (B) Amount.--The amount of the grant under paragraph (1) 
     for an employer shall not exceed--
       (i) the product of $150 and the number of employees of the 
     employer for any plan year; and
       (ii) $50,000 for the entire period of the grant.
       (b) Qualified Wellness Program.--For purposes of this 
     section:
       (1) Qualified wellness program.--The term ``qualified 
     wellness program'' means a program that --
       (A) includes any 3 wellness components described in 
     subsection (c); and
       (B) is to be certified jointly by the Secretary of Health 
     and Human Services and the Secretary of Labor, in 
     coordination with the Director of the Centers for Disease 
     Control and Prevention, as a qualified wellness program under 
     this section.
       (2) Programs must be consistent with research and best 
     practices.--
       (A) In general.--The Secretary of Health and Human Services 
     and the Secretary of Labor shall not certify a program as a 
     qualified wellness program unless the program--
       (i) is consistent with evidence-based research and best 
     practices, as identified by persons with expertise in 
     employer health promotion and wellness programs;
       (ii) includes multiple, evidence-based strategies which are 
     based on the existing and emerging research and careful 
     scientific reviews, including the Guide to Community 
     Preventative Services, the Guide to Clinical Preventative 
     Services, and the National Registry for Effective Programs, 
     and
       (iii) includes strategies which focus on prevention and 
     support for employee populations at risk of poor health 
     outcomes.
       (B) Periodic updating and review.--The Secretaries of 
     Health and Human Services and Labor, in consultation with 
     other appropriate agencies shall jointly establish procedures 
     for periodic review, evaluation, and update of the programs 
     under this subsection.
       (3) Health literacy and accessibility.--The Secretaries of 
     Health and Human Services and Labor shall jointly, as part of 
     the certification process--
       (A) ensure that employers make the programs culturally 
     competent, physically and programmatically accessible 
     (including for individuals with disabilities), and 
     appropriate to the health literacy needs of the employees 
     covered by the programs;
       (B) require a health literacy component to provide special 
     assistance and materials to employees with low literacy 
     skills, limited English and from underserved populations; and
       (C) require the Secretaries to compile and disseminate to 
     employer health plans information on model health literacy 
     curricula, instructional programs, and effective intervention 
     strategies.
       (c) Wellness Program Components.--For purposes of this 
     section, the wellness program components described in this 
     subsection are the following:
       (1) Health awareness component.--A health awareness 
     component which provides for the following:
       (A) Health education.--The dissemination of health 
     information which addresses the specific needs and health 
     risks of employees.
       (B) Health screenings.--The opportunity for periodic 
     screenings for health problems and referrals for appropriate 
     follow-up measures.
       (2) Employee engagement component.--An employee engagement 
     component which provides for the active engagement of 
     employees in worksite wellness programs through worksite 
     assessments and program planning, onsite delivery, 
     evaluation, and improvement efforts.
       (3) Behavioral change component.--A behavioral change 
     component which encourages healthy living through counseling, 
     seminars, on-line programs, self-help materials, or other 
     programs which provide technical assistance and problem 
     solving skills. Such component may include programs relating 
     to--
       (A) tobacco use;
       (B) obesity;
       (C) stress management;
       (D) physical fitness;
       (E) nutrition;
       (F) substance abuse;
       (G) depression; and
       (H) mental health promotion.
       (4) Supportive environment component.--A supportive 
     environment component which includes the following:
       (A) On-site policies.--Policies and services at the 
     worksite which promote a healthy lifestyle, including 
     policies relating to--
       (i) tobacco use at the worksite;
       (ii) the nutrition of food available at the worksite 
     through cafeterias and vending options;
       (iii) minimizing stress and promoting positive mental 
     health in the workplace; and
       (iv) the encouragement of physical activity before, during, 
     and after work hours.
       (d) Participation Requirement.--No grant shall be allowed 
     under subsection (a) unless the Secretaries of Health and 
     Human Services and Labor, in consultation with other 
     appropriate agencies, jointly certify, as a part of any 
     certification described in subsection (b), that each wellness 
     program component of the qualified wellness program--
       (1) shall be available to all employees of the employer;
       (2) shall not mandate participation by employees; and
       (3) may provide a financial reward for participation of an 
     individual in such program so long as such reward is not tied 
     to the premium or cost-sharing of the individual under the 
     health benefits plan.
       (e) Privacy Protections.--Data gathered for purposes of the 
     employer wellness program may be used solely for the purposes 
     of administering the program. The Secretaries of Health and 
     Human Services and Labor shall develop standards to ensure 
     such data remain confidential and are not used for purposes 
     beyond those for administering the program.
       (f) Certain Costs Not Included.--For purposes of this 
     section, costs paid or incurred by an employer for food or 
     health insurance shall not be taken into account under 
     subsection (a).
       (g) Outreach.--The Secretaries of Health and Human Services 
     and Labor, in conjunction with other appropriate agencies and 
     members of the business community, shall jointly institute an 
     outreach program to inform businesses about the availability 
     of the wellness program grant as well as to educate 
     businesses on how to develop programs according to recognized 
     and promising practices and on how to measure the success of 
     implemented programs.
       (h) Effective Date.--This section shall take effect on July 
     1, 2010.
       (i) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as are necessary to carry out 
     this section.

     SEC. 113. EXTENSION OF COBRA CONTINUATION COVERAGE.

       (a) Extension of Current Periods of Continuation 
     Coverage.--
       (1) In general.--In the case of any individual who is, 
     under a COBRA continuation coverage provision, covered under 
     COBRA continuation coverage on or after the date of the 
     enactment of this Act, the required period of any such 
     coverage which has not subsequently terminated under the 
     terms of such provision for any reason other than the 
     expiration of a period of a specified number of months shall, 
     notwithstanding such provision and subject to subsection (b), 
     extend to the earlier of the date on which such individual 
     becomes eligible for acceptable coverage or the date on which 
     such individual becomes eligible for health insurance 
     coverage through the Health Insurance Exchange (or a State-
     based Health Insurance Exchange operating in a State or group 
     of States).
       (2) Notice.--As soon as practicable after the date of the 
     enactment of this Act, the Secretary of Labor, in 
     consultation with the Secretary of the Treasury and the 
     Secretary of Health and Human Services, shall, in 
     consultation with administrators of the group health plans 
     (or other entities) that provide or administer the COBRA 
     continuation coverage involved, provide rules setting forth 
     the form and manner in which prompt notice to individuals of 
     the continued availability of COBRA continuation coverage to 
     such individuals under paragraph (1).
       (b) Continued Effect of Other Terminating Events.--
     Notwithstanding subsection (a), any required period of COBRA 
     continuation coverage which is extended under such subsection 
     shall terminate upon the occurrence, prior to the date of 
     termination otherwise provided in such subsection, of any 
     terminating event specified in the applicable continuation 
     coverage provision other than the expiration of a period of a 
     specified number of months.
       (c) Access to State Health Benefits Risk Pools.--This 
     section shall supersede any provision of the law of a State 
     or political subdivision thereof to the extent that such 
     provision has the effect of limiting or precluding access by 
     a qualified beneficiary whose COBRA continuation coverage has 
     been extended under this section to a State health benefits 
     risk pool recognized by the Commissioner for purposes of this 
     section solely by reason of the extension of such coverage 
     beyond the date on which such coverage otherwise would have 
     expired.
       (d) Definitions.--For purposes of this section--
       (1) COBRA continuation coverage.--The term ``COBRA 
     continuation coverage''

[[Page H12633]]

     means continuation coverage provided pursuant to part 6 of 
     subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974 (other than under section 609), title 
     XXII of the Public Health Service Act, section 4980B of the 
     Internal Revenue Code of 1986 (other than subsection (f)(1) 
     of such section insofar as it relates to pediatric vaccines), 
     or section 905a of title 5, United States Code, or under a 
     State program that provides comparable continuation coverage. 
     Such term does not include coverage under a health flexible 
     spending arrangement under a cafeteria plan within the 
     meaning of section 125 of the Internal Revenue Code of 1986.
       (2) COBRA continuation provision.--The term ``COBRA 
     continuation provision'' means the provisions of law 
     described in paragraph (1).

     SEC. 114. STATE HEALTH ACCESS PROGRAM GRANTS.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     provide grants to States (as defined for purposes of title 
     XIX of the Social Security Act) to establish programs to 
     expand access to affordable health care coverage for the 
     uninsured populations in that State in a manner consistent 
     with reforms to take effect under this division in Y1.
       (b) Types of Programs.--The types of programs for which 
     grants are available under subsection (a) include the 
     following:
       (1) State insurance exchanges.--State insurance exchanges 
     that develop new, less expensive, portable benefit packages 
     for small employers and part-time and seasonal workers.
       (2) Community coverage program.--Community coverage with 
     shared responsibility between employers, governmental or 
     nonprofit entity, and the individual.
       (3) Reinsurance plan program.--Reinsurance plans that 
     subsidize a certain share of carrier losses within a certain 
     risk corridor health insurance premium assistance.
       (4) Transparent marketplace program.--Transparent 
     marketplace that provides an organized structure for the sale 
     of insurance products such as a Web exchange or portal.
       (5) Automated enrollment program.--Statewide or automated 
     enrollment systems for public assistance programs.
       (6) Innovative strategies.--Innovative strategies to insure 
     low-income childless adults.
       (7) Purchasing collaboratives.--Not-for-profit business, 
     consumer collaborative that provides direct contract health 
     care service purchasing options for group plan sponsors.
       (c) Eligibility and Administration.--
       (1) Implementation of key statutory or regulatory 
     changes.--In order to be awarded a grant under this section 
     for a program, a State shall demonstrate that--
       (A) it has achieved the key State and local statutory or 
     regulatory changes required to begin implementing the new 
     program within 1 year after the initiation of funding under 
     the grant; and
       (B) it will be able to sustain the program without Federal 
     funding after the end of the period of the grant.
       (2) Ineligibility.--A State that has already developed a 
     comprehensive health insurance access program is not eligible 
     for a grant under this section.
       (3) Application required.--No State shall receive a grant 
     under this section unless the State has approved by the 
     Secretary such an application, in such form and manner as the 
     Secretary specifies.
       (4) Administration based on current program.--The program 
     under this section is intended to build on the State Health 
     Access Program funded under the Omnibus Appropriations Act, 
     2009 (Public Law 111-8).
       (d) Funding Limitations.--
       (1) In general.--A grant under this section shall--
       (A) only be available for expenditures before Y1; and
       (B) only be used to supplement, and not supplant, funds 
     otherwise provided.
       (2) Matching fund requirement.--
       (A) In general.--Subject to subparagraph (B), no grant may 
     be awarded to a State unless the State demonstrates the 
     seriousness of its effort by matching at least 20 percent of 
     the grant amount through non-Federal resources, which may be 
     a combination of State, local, private dollars from insurers, 
     providers, and other private organizations.
       (B) Waiver.--The Secretary may waive the requirement of 
     subparagraph (A) if the State demonstrates to the Secretary 
     financial hardship in complying with such requirement.
       (e) Study.--The Secretary shall review, study, and 
     benchmark the progress and results of the programs funded 
     under this section.
       (f) Report.--Each State receiving a grant under this 
     section shall submit to the Secretary a report on best 
     practices and lessons learned through the grant to inform the 
     health reform coverage expansions under this division 
     beginning in Y1.
       (g) Funding.--There are authorized to be appropriated such 
     sums as may be necessary to carry out this section.

     SEC. 115. ADMINISTRATIVE SIMPLIFICATION.

       (a) Standardizing Electronic Administrative Transactions.--
       (1) In general.--Part C of title XI of the Social Security 
     Act (42 U.S.C. 1320d et seq.) is amended by inserting after 
     section 1173 the following new sections:

     ``SEC. 1173A. STANDARDIZE ELECTRONIC ADMINISTRATIVE 
                   TRANSACTIONS.

       ``(a) Standards for Financial and Administrative 
     Transactions.--
       ``(1) In general.--The Secretary shall adopt and regularly 
     update standards consistent with the goals described in 
     paragraph (2).
       ``(2) Goals for financial and administrative 
     transactions.--The goals for standards under paragraph (1) 
     are that such standards shall, to the extent practicable--
       ``(A) be unique with no conflicting or redundant standards;
       ``(B) be authoritative, permitting no additions or 
     constraints for electronic transactions, including companion 
     guides;
       ``(C) be comprehensive, efficient and robust, requiring 
     minimal augmentation by paper transactions or clarification 
     by further communications;
       ``(D) enable the real-time (or near real-time) 
     determination of an individual's financial responsibility at 
     the point of service and, to the extent possible, prior to 
     service, including whether the individual is eligible for a 
     specific service with a specific physician at a specific 
     facility, on a specific date or range of dates, include 
     utilization of a machine-readable health plan beneficiary 
     identification card or similar mechanism;
       ``(E) enable, where feasible, near real-time adjudication 
     of claims;
       ``(F) provide for timely acknowledgment, response, and 
     status reporting applicable to any electronic transaction 
     deemed appropriate by the Secretary;
       ``(G) describe all data elements (such as reason and remark 
     codes) in unambiguous terms, not permit optional fields, 
     require that data elements be either required or conditioned 
     upon set values in other fields, and prohibit additional 
     conditions except where required by (or to implement) State 
     or Federal law or to protect against fraud and abuse; and
       ``(H) harmonize all common data elements across 
     administrative and clinical transaction standards.
       ``(3) Time for adoption.--Not later than 2 years after the 
     date of the enactment of this section, the Secretary shall 
     adopt standards under this section by interim, final rule.
       ``(4) Requirements for specific standards.--The standards 
     under this section shall be developed, adopted, and enforced 
     so as to--
       ``(A) clarify, refine, complete, and expand, as needed, the 
     standards required under section 1173;
       ``(B) require paper versions of standardized transactions 
     to comply with the same standards as to data content such 
     that a fully compliant, equivalent electronic transaction can 
     be populated from the data from a paper version;
       ``(C) enable electronic funds transfers, in order to allow 
     automated reconciliation with the related health care payment 
     and remittance advice;
       ``(D) require timely and transparent claim and denial 
     management processes, including uniform claim edits, uniform 
     reason and remark denial codes, tracking, adjudication, and 
     appeal processing;
       ``(E) require the use of a standard electronic transaction 
     with which health care providers may quickly and efficiently 
     enroll with a health plan to conduct the other electronic 
     transactions provided for in this part; and
       ``(F) provide for other requirements relating to 
     administrative simplification as identified by the Secretary, 
     in consultation with stakeholders.
       ``(5) Building on existing standards.--In adopting the 
     standards under this section, the Secretary shall consider 
     existing and planned standards.
       ``(6) Implementation and enforcement.--Not later than 6 
     months after the date of the enactment of this section, the 
     Secretary shall submit to the appropriate committees of 
     Congress a plan for the implementation and enforcement, by 
     not later than 5 years after such date of enactment, of the 
     standards under this section. Such plan shall include--
       ``(A) a process and timeframe with milestones for 
     developing the complete set of standards;
       ``(B) a proposal for accommodating necessary changes 
     between version changes and a process for upgrading standards 
     as often as annually by interim, final rulemaking;
       ``(C) programs to provide incentives for, and ease the 
     burden of, implementation for certain health care providers, 
     with special consideration given to such providers serving 
     rural or underserved areas and ensure coordination with 
     standards, implementation specifications, and certification 
     criteria being adopted under the HITECH Act;
       ``(D) programs to provide incentives for, and ease the 
     burden of, health care providers who volunteer to participate 
     in the process of setting standards for electronic 
     transactions;
       ``(E) an estimate of total funds needed to ensure timely 
     completion of the implementation plan; and
       ``(F) an enforcement process that includes timely 
     investigation of complaints, random audits to ensure 
     compliance, civil monetary and programmatic penalties for 
     noncompliance consistent with existing laws and regulations, 
     and a fair and reasonable appeals process building off of 
     enforcement provisions under this part, and concurrent State 
     enforcement jurisdiction.
     The Secretary may promulgate an annual audit and 
     certification process to ensure that all health plans and 
     clearinghouses are

[[Page H12634]]

     both syntactically and functionally compliant with all the 
     standard transactions mandated pursuant to the administrative 
     simplification provisions of this part and the Health 
     Insurance Portability and Accountability Act of 1996.
       ``(b) Limitations on Use of Data.--Nothing in this section 
     shall be construed to permit the use of information collected 
     under this section in a manner that would violate State or 
     Federal law.
       ``(c) Protection of Data.--The Secretary shall ensure 
     (through the promulgation of regulations or otherwise) that 
     all data collected pursuant to subsection (a) are used and 
     disclosed in a manner that meets the HIPAA privacy and 
     security law (as defined in section 3009(a)(2) of the Public 
     Health Service Act), including any privacy or security 
     standard adopted under section 3004 of such Act.

     ``SEC. 1173B. INTERIM COMPANION GUIDES, INCLUDING OPERATING 
                   RULES.

       ``(a) In General.--The Secretary shall adopt a single, 
     binding, comprehensive companion guide, that includes 
     operating rules for each X12 Version 5010 transaction 
     described in section 1173(a)(2), to be effective until the 
     new version of these transactions which comply with section 
     1173A are adopted and implemented.
       ``(b) Companion Guide and Operating Rules Development.--In 
     adopting such interim companion guide and rules, the 
     Secretary shall comply with section 1172, except that a 
     nonprofit entity that meets the following criteria shall also 
     be consulted:
       ``(1) The entity focuses its mission on administrative 
     simplification.
       ``(2) The entity uses a multistakeholder process that 
     creates consensus-based companion guides, including operating 
     rules using a voting process that ensures balanced 
     representation by the critical stakeholders (including health 
     plans and health care providers) so that no one group 
     dominates the entity and shall include others such as 
     standards development organizations, and relevant Federal or 
     State agencies.
       ``(3) The entity has in place a public set of guiding 
     principles that ensure the companion guide and operating 
     rules and process are open and transparent.
       ``(4) The entity coordinates its activities with the HIT 
     Policy Committee, and the HIT Standards Committee 
     (established under title XXX of the Public Health Service 
     Act) and complements the efforts of the Office of the 
     National Healthcare Coordinator and its related health 
     information exchange goals.
       ``(5) The entity incorporates the standards issued under 
     Health Insurance Portability and Accountability Act of 1996 
     and this part, and in developing the companion guide and 
     operating rules does not change the definition, data 
     condition or use of a data element or segment in a standard, 
     add any elements or segments to the maximum defined data set, 
     use any codes or data elements that are either marked `not 
     used' in the standard's implementation specifications or are 
     not in the standard's implementation specifications, or 
     change the meaning or intent of the standard's implementation 
     specifications.
       ``(6) The entity uses existing market research and proven 
     best practices.
       ``(7) The entity has a set of measures that allow for the 
     evaluation of their market impact and public reporting of 
     aggregate stakeholder impact.
       ``(8) The entity supports nondiscrimination and conflict of 
     interest policies that demonstrate a commitment to open, 
     fair, and nondiscriminatory practices.
       ``(9) The entity allows for public reviews and comment on 
     updates of the companion guide, including the operating 
     rules.
       ``(c) Implementation.--The Secretary shall adopt a single, 
     binding companion guide, including operating rules under this 
     section, for each transaction, to become effective with the 
     X12 Version 5010 transaction implementation, or as soon 
     thereafter as feasible. The companion guide, including 
     operating rules for the transactions for eligibility for 
     health plan and health claims status under this section shall 
     be adopted not later than October 1, 2011, in a manner such 
     that such set of rules is effective beginning not later than 
     January 1, 2013. The companion guide, including operating 
     rules for the remainder of the transactions described in 
     section 1173(a)(2) shall be adopted not later than October 1, 
     2012, in a manner such that such set of rules is effective 
     beginning not later than January 1, 2014.''.
       (2) Definitions.--Section 1171 of such Act (42 U.S.C. 
     1320d) is amended--
       (A) in paragraph (1), by inserting ``, and associated 
     operational guidelines and instructions, as determined 
     appropriate by the Secretary'' after ``medical procedure 
     codes''; and
       (B) by adding at the end the following new paragraph:
       ``(10) Operating rules.--The term `operating rules' means 
     business rules for using and processing transactions, such as 
     service level requirements, which do not impact the 
     implementation specifications or other data content 
     requirements.''.
       (3) Conforming amendment.--Section 1179(a) of such Act (42 
     U.S.C. 1320d-8(a)) is amended, in the matter before paragraph 
     (1)--
       (A) by inserting ``on behalf of an individual'' after 
     ``1978)''; and
       (B) by inserting ``on behalf of an individual'' after ``for 
     a financial institution'' and
       (b) Standards for Claims Attachments and Coordination of 
     Benefits.--
       (1) Standard for health claims attachments.--Not later than 
     1 year after the date of the enactment of this Act, the 
     Secretary of Health and Human Services shall promulgate an 
     interim, final rule to establish a standard for health claims 
     attachment transaction described in section 1173(a)(2)(B) of 
     the Social Security Act (42 U.S.C. 1320d-2(a)(2)(B)) and 
     coordination of benefits.
       (2) Revision in processing payment transactions by 
     financial institutions.--
       (A) In general.--Section 1179 of the Social Security Act 
     (42 U.S.C. 1320d-8) is amended, in the matter before 
     paragraph (1)--
       (i) by striking ``or is engaged'' and inserting ``and is 
     engaged''; and
       (ii) by inserting ``(other than as a business associate for 
     a covered entity)'' after ``for a financial institution''.
       (B) Compliance date.--The amendments made by subparagraph 
     (A) shall apply to transactions occurring on or after such 
     date (not later than January 1, 2014) as the Secretary of 
     Health and Human Services shall specify.
       (c) Standards for First Report of Injury.--Not later than 
     January 1, 2014, the Secretary of Health and Human Services 
     shall promulgate an interim final rule to establish a 
     standard for the first report of injury transaction described 
     in section 1173(a)(2)(G) of the Social Security Act (42 
     U.S.C. 1320d-2(a)(2)(G)).
       (d) Unique Health Plan Identifier.--Not later October 1, 
     2012, the Secretary of Health and Human Services shall 
     promulgate an interim final rule to establish a unique health 
     plan identifier described in section 1173(b) of the Social 
     Security Act (42 U.S.C. 1320d-2(b)) based on the input of the 
     National Committee of Vital and Health Statistics and 
     consultation with health plans, health care providers, and 
     other interested parties.
       (e) 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 ``or'' at the end;
       (2) in paragraph (24), by striking the period and inserting 
     ``; or''; and
       (3) by inserting after paragraph (24) the following new 
     paragraph:
       ``(25) subject to subsection (h), not later than January 1, 
     2015, for which the payment is other than by electronic funds 
     transfer (EFT) so long as the Secretary has adopted and 
     implemented a standard for electronic funds transfer under 
     section 1173A.''.
       (f) Expansion of Penalties.--Section 1176 of such Act (42 
     U.S.C. 1320d-5) is amended by adding at the end the following 
     new subsection:
       ``(c) Expansion of Penalty Authority.--The Secretary may, 
     in addition to the penalties provided under subsections (a) 
     and (b), provide for the imposition of penalties for 
     violations of this part that are comparable--
       ``(1) in the case of health plans, to the sanctions the 
     Secretary is authorized to impose under part C or D of title 
     XVIII in the case of a plan that violates a provision of such 
     part; or
       ``(2) in the case of a health care provider, to the 
     sanctions the Secretary is authorized to impose under part A, 
     B, or D of title XVIII in the case of a health care provider 
     that violations a provision of such part with respect to that 
     provider.''.

TITLE II--PROTECTIONS AND STANDARDS FOR QUALIFIED HEALTH BENEFITS PLANS

                     Subtitle A--General Standards

     SEC. 201. REQUIREMENTS REFORMING HEALTH INSURANCE 
                   MARKETPLACE.

       (a) Purpose.--The purpose of this title is to establish 
     standards to ensure that new health insurance coverage and 
     employment-based health plans that are offered meet standards 
     guaranteeing access to affordable coverage, essential 
     benefits, and other consumer protections.
       (b) Requirements for Qualified Health Benefits Plans.--On 
     or after the first day of Y1, a health benefits plan shall 
     not be a qualified health benefits plan under this division 
     unless the plan meets the applicable requirements of the 
     following subtitles for the type of plan and plan year 
     involved:
       (1) Subtitle B (relating to affordable coverage).
       (2) Subtitle C (relating to essential benefits).
       (3) Subtitle D (relating to consumer protection).
       (c) Terminology.--In this division:
       (1) Enrollment in employment-based health plans.--An 
     individual shall be treated as being ``enrolled'' in an 
     employment-based health plan if the individual is a 
     participant or beneficiary (as such terms are defined in 
     section 3(7) and 3(8), respectively, of the Employee 
     Retirement Income Security Act of 1974) in such plan.
       (2) Individual and group health insurance coverage.--The 
     terms ``individual health insurance coverage'' and ``group 
     health insurance coverage'' mean health insurance coverage 
     offered in the individual market or large or small group 
     market, respectively, as defined in section 2791 of the 
     Public Health Service Act.
       (d) Treatment of Qualified Direct Primary Care Medical Home 
     Plans.--The Commissioner may permit a qualified health 
     benefits plan to provide coverage through a qualified direct 
     primary care medical home plan so long as the qualified 
     health benefits plan meets all requirements that are 
     otherwise applicable and the services covered by the medical 
     home plan are coordinated with the QHBP offering entity.

[[Page H12635]]

     SEC. 202. PROTECTING THE CHOICE TO KEEP CURRENT COVERAGE.

       (a) Grandfathered Health Insurance Coverage Defined.--
     Subject to the succeeding provisions of this section, for 
     purposes of establishing acceptable coverage under this 
     division, the term ``grandfathered health insurance 
     coverage'' means individual health insurance coverage that is 
     offered and in force and effect before the first day of Y1 if 
     the following conditions are met:
       (1) Limitation on new enrollment.--
       (A) In general.--Except as provided in this paragraph, the 
     individual health insurance issuer offering such coverage 
     does not enroll any individual in such coverage if the first 
     effective date of coverage is on or after the first day of 
     Y1.
       (B) Dependent coverage permitted.--Subparagraph (A) shall 
     not affect the subsequent enrollment of a dependent of an 
     individual who is covered as of such first day.
       (2) Limitation on changes in terms or conditions.--Subject 
     to paragraph (3) and except as required by law, the issuer 
     does not change any of its terms or conditions, including 
     benefits and cost-sharing, from those in effect as of the day 
     before the first day of Y1.
       (3) Restrictions on premium increases.--The issuer cannot 
     vary the percentage increase in the premium for a risk group 
     of enrollees in specific grandfathered health insurance 
     coverage without changing the premium for all enrollees in 
     the same risk group at the same rate, as specified by the 
     Commissioner.
       (b) Grace Period for Current Employment-Based Health 
     Plans.--
       (1) Grace period.--
       (A) In general.--The Commissioner shall establish a grace 
     period whereby, for plan years beginning after the end of the 
     5-year period beginning with Y1, an employment-based health 
     plan in operation as of the day before the first day of Y1 
     must meet the same requirements as apply to a qualified 
     health benefits plan under section 201, including the 
     essential benefit package requirement under section 221.
       (B) Exception for limited benefits plans.--Subparagraph (A) 
     shall not apply to an employment-based health plan in which 
     the coverage consists only of one or more of the following:
       (i) Any coverage described in section 3001(a)(1)(B)(ii)(IV) 
     of division B of the American Recovery and Reinvestment Act 
     of 2009 (Public Law 111-5).
       (ii) Excepted benefits (as defined in section 733(c) of the 
     Employee Retirement Income Security Act of 1974), including 
     coverage under a specified disease or illness policy 
     described in paragraph (3)(A) of such section.
       (iii) Such other limited benefits as the Commissioner may 
     specify.

     In no case shall an employment-based health plan in which the 
     coverage consists only of one or more of the coverage or 
     benefits described in clauses (i) through (iii) be treated as 
     acceptable coverage under this division.
       (2) Transitional treatment as acceptable coverage.--During 
     the grace period specified in paragraph (1)(A), an 
     employment-based health plan (which may be a high deducible 
     health plan, as defined in section 223(c)(2) of the Internal 
     Revenue Code of 1986) that is described in such paragraph 
     shall be treated as acceptable coverage under this division.
       (c) Limitation on Individual Health Insurance Coverage.--
       (1) In general.--Individual health insurance coverage that 
     is not grandfathered health insurance coverage under 
     subsection (a) may only be offered on or after the first day 
     of Y1 as an Exchange-participating health benefits plan.
       (2) Separate, excepted coverage permitted.--Nothing in--
       (A) paragraph (1) shall prevent the offering of excepted 
     benefits described in section 2791(c) of the Public Health 
     Service Act so long as such benefits are offered outside the 
     Health Insurance Exchange and are priced separately from 
     health insurance coverage; and
       (B) this division shall be construed--
       (i) to prevent the offering of a stand-alone plan that 
     offers coverage of excepted benefits described in section 
     2791(c)(2)(A) of the Public Health Service Act (relating to 
     limited scope dental or vision benefits) for individuals and 
     families from a State-licensed dental and vision carrier; or
       (ii) as applying requirements for a qualified health 
     benefits plan to such a stand-alone plan that is offered and 
     priced separately from a qualified health benefits plan.

    Subtitle B--Standards Guaranteeing Access to Affordable Coverage

     SEC. 211. PROHIBITING PREEXISTING CONDITION EXCLUSIONS.

       A qualified health benefits plan may not impose any 
     preexisting condition exclusion (as defined in section 
     2701(b)(1)(A) of the Public Health Service Act) or otherwise 
     impose any limit or condition on the coverage under the plan 
     with respect to an individual or dependent based on any of 
     the following: health status, medical condition, claims 
     experience, receipt of health care, medical history, genetic 
     information, evidence of insurability, disability, or source 
     of injury (including conditions arising out of acts of 
     domestic violence) or any similar factors.

     SEC. 212. GUARANTEED ISSUE AND RENEWAL FOR INSURED PLANS AND 
                   PROHIBITING RESCISSIONS.

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

     SEC. 213. INSURANCE RATING RULES.

       (a) In General.--The premium rate charged for a qualified 
     health benefits plan that is health insurance coverage may 
     not vary except as follows:
       (1) Limited age variation permitted.--By age (within such 
     age categories as the Commissioner shall specify) so long as 
     the ratio of the highest such premium to the lowest such 
     premium does not exceed the ratio of 2 to 1.
       (2) By area.--By premium rating area (as permitted by State 
     insurance regulators or, in the case of Exchange-
     participating health benefits plans, as specified by the 
     Commissioner in consultation with such regulators).
       (3) By family enrollment.--By family enrollment (such as 
     variations within categories and compositions of families) so 
     long as the ratio of the premium for family enrollment (or 
     enrollments) to the premium for individual enrollment is 
     uniform, as specified under State law and consistent with 
     rules of the Commissioner.
       (b) Actuarial Value of Optional Service Coverage.--
       (1) In general.--The Commissioner shall estimate the basic 
     per enrollee, per month cost, determined on an average 
     actuarial basis, for including coverage under a basic plan of 
     the services described in section 222(e)(4)(A).
       (2) Considerations.--In making such estimate the 
     Commissioner--
       (A) may take into account the impact on overall costs of 
     the inclusion of such coverage, but may not take into account 
     any cost reduction estimated to result from such services, 
     including prenatal care, delivery, or postnatal care;
       (B) shall estimate such costs as if such coverage were 
     included for the entire population covered; and
       (C) may not estimate such a cost at less than $1 per 
     enrollee, per month.
       (c) Study and Reports.--
       (1) Study.--The Commissioner, in coordination with the 
     Secretary of Health and Human Services and the Secretary of 
     Labor, shall conduct a study of the large-group-insured and 
     self-insured employer health care markets. Such study shall 
     examine the following:
       (A) The types of employers by key characteristics, 
     including size, that purchase insured products versus those 
     that self-insure.
       (B) The similarities and differences between typical 
     insured and self-insured health plans.
       (C) The financial solvency and capital reserve levels of 
     employers that self-insure by employer size.
       (D) The risk of self-insured employers not being able to 
     pay obligations or otherwise becoming financially insolvent.
       (E) The extent to which rating rules are likely to cause 
     adverse selection in the large group market or to encourage 
     small and midsize employers to self-insure.
       (2) Reports.--Not later than 18 months after the date of 
     the enactment of this Act, the Commissioner shall submit to 
     Congress and the applicable agencies a report on the study 
     conducted under paragraph (1). Such report shall include any 
     recommendations the Commissioner deems appropriate to ensure 
     that the law does not provide incentives for small and 
     midsize employers to self-insure or create adverse selection 
     in the risk pools of large group insurers and self-insured 
     employers. Not later than 18 months after the first day of 
     Y1, the Commissioner shall submit to Congress and the 
     applicable agencies an updated report on such study, 
     including updates on such recommendations.

     SEC. 214. NONDISCRIMINATION IN BENEFITS; PARITY IN MENTAL 
                   HEALTH AND SUBSTANCE ABUSE DISORDER BENEFITS.

       (a) Nondiscrimination in Benefits.--A qualified health 
     benefits plan shall comply with standards established by the 
     Commissioner to prohibit discrimination in health benefits or 
     benefit structures for qualifying health benefits plans, 
     building from section 702 of the Employee Retirement Income 
     Security Act of 1974, section 2702 of the Public Health 
     Service Act, and section 9802 of the Internal Revenue Code of 
     1986.
       (b) Parity in Mental Health and Substance Abuse Disorder 
     Benefits.--To the extent such provisions are not superceded 
     by or inconsistent with subtitle C, the provisions of section 
     2705 (other than subsections (a)(1), (a)(2), and (c)) of the 
     Public Health Service Act shall apply to a qualified health 
     benefits plan, regardless of whether it is offered in the 
     individual or group market, in the same manner as such 
     provisions apply to health insurance coverage offered in the 
     large group market.

[[Page H12636]]

     SEC. 215. ENSURING ADEQUACY OF PROVIDER NETWORKS.

       (a) In General.--A qualified health benefits plan that uses 
     a provider network for items and services shall meet such 
     standards respecting provider networks as the Commissioner 
     may establish to assure the adequacy of such networks in 
     ensuring enrollee access to such items and services and 
     transparency in the cost-sharing differentials among 
     providers participating in the network and policies for 
     accessing out-of-network providers.
       (b) Internet Access to Information.--A qualified health 
     benefits plan that uses a provider network shall provide a 
     current listing of all providers in its network on its 
     Website and such data shall be available on the Health 
     Insurance Exchange Website as a part of the basic information 
     on that plan. The Commissioner shall also establish an on-
     line system whereby an individual may select by name any 
     medical provider (as defined by the Commissioner) and be 
     informed of the plan or plans with which that provider is 
     contracting.
       (c) Provider Network Defined.--In this division, the term 
     ``provider network'' means the providers with respect to 
     which covered benefits, treatments, and services are 
     available under a health benefits plan.

     SEC. 216. REQUIRING THE OPTION OF EXTENSION OF DEPENDENT 
                   COVERAGE FOR UNINSURED YOUNG ADULTS.

       (a) In General.--A qualified health benefits plan shall 
     make available, at the option of the principal enrollee under 
     the plan, coverage for one or more qualified children (as 
     defined in subsection (b)) of the enrollee.
       (b) Qualified Child Defined.--In this section, the term 
     ``qualified child'' means, with respect to a principal 
     enrollee in a qualified health benefits plan, an individual 
     who (but for age) would be treated as a dependent child of 
     the enrollee under such plan and who--
       (1) is under 27 years of age; and
       (2) is not enrolled in a health benefits plan other than 
     under this section.
       (c) Premiums.--Nothing in this section shall be construed 
     as preventing a qualified health benefits plan from 
     increasing the premiums otherwise required for coverage 
     provided under this section consistent with standards 
     established by the Commissioner based upon family size under 
     section 213(a)(3).

     SEC. 217. CONSISTENCY OF COSTS AND COVERAGE UNDER QUALIFIED 
                   HEALTH BENEFITS PLANS DURING PLAN YEAR.

       In the case of health insurance coverage offered under a 
     qualified health benefits plan, if the coverage decreases or 
     the cost-sharing increases, the issuer of the coverage shall 
     notify enrollees of the change at least 90 days before the 
     change takes effect (or such shorter period of time in cases 
     where the change is necessary to ensure the health and safety 
     of enrollees).

    Subtitle C--Standards Guaranteeing Access to Essential Benefits

     SEC. 221. COVERAGE OF ESSENTIAL BENEFITS PACKAGE.

       (a) In General.--A qualified health benefits plan shall 
     provide coverage that at least meets the benefit standards 
     adopted under section 224 for the essential benefits package 
     described in section 222 for the plan year involved.
       (b) Choice of Coverage.--
       (1) Non-exchange-participating health benefits plans.--In 
     the case of a qualified health benefits plan that is not an 
     Exchange-participating health benefits plan, such plan may 
     offer such coverage in addition to the essential benefits 
     package as the QHBP offering entity may specify.
       (2) Exchange-participating health benefits plans.--In the 
     case of an Exchange-participating health benefits plan, such 
     plan is required under section 203 to provide specified 
     levels of benefits and, in the case of a plan offering a 
     premium-plus level of benefits, provide additional benefits.
       (3) Continuation of offering of separate excepted benefits 
     coverage.--Nothing in this division shall be construed as 
     affecting the offering outside of the Health Insurance 
     Exchange and under State law of health benefits in the form 
     of excepted benefits (described in section 202(b)(1)(B)(ii)) 
     if such benefits are offered under a separate policy, 
     contract, or certificate of insurance.
       (c) Clinical Appropriateness.--Nothing in this Act shall be 
     construed to prohibit a group health plan or health insurance 
     issuer from using medical management practices so long as 
     such management practices are based on valid medical evidence 
     and are relevant to the patient whose medical treatment is 
     under review.
       (d) Provision of Benefits.--Nothing in this division shall 
     be construed as prohibiting a qualified health benefits plan 
     from subcontracting with stand-alone health insurance issuers 
     or insurers for the provision of dental, vision, mental 
     health, and other benefits and services.

     SEC. 222. ESSENTIAL BENEFITS PACKAGE DEFINED.

       (a) In General.--In this division, the term ``essential 
     benefits package'' means health benefits coverage, consistent 
     with standards adopted under section 224, to ensure the 
     provision of quality health care and financial security, 
     that--
       (1) provides payment for the items and services described 
     in subsection (b) in accordance with generally accepted 
     standards of medical or other appropriate clinical or 
     professional practice;
       (2) limits cost-sharing for such covered health care items 
     and services in accordance with such benefit standards, 
     consistent with subsection (c);
       (3) does not impose any annual or lifetime limit on the 
     coverage of covered health care items and services;
       (4) complies with section 215(a) (relating to network 
     adequacy); and
       (5) is equivalent in its scope of benefits, as certified by 
     Office of the Actuary of the Centers for Medicare & Medicaid 
     Services, to the average prevailing employer-sponsored 
     coverage in Y1.

      In order to carry out paragraph (5), 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 Health Benefits Advisory Committee and to the 
     Secretary of Health and Human Services.
       (b) Minimum Services To Be Covered.--Subject to subsection 
     (d), the items and services described in this subsection are 
     the following:
       (1) Hospitalization.
       (2) Outpatient hospital and outpatient clinic services, 
     including emergency department services.
       (3) Professional services of physicians and other health 
     professionals.
       (4) Such services, equipment, and supplies incident to the 
     services of a physician's or a health professional's delivery 
     of care in institutional settings, physician offices, 
     patients' homes or place of residence, or other settings, as 
     appropriate.
       (5) Prescription drugs.
       (6) Rehabilitative and habilitative services.
       (7) Mental health and substance use disorder services, 
     including behavioral health treatments.
       (8) Preventive services, including those services 
     recommended with a grade of A or B by the Task Force on 
     Clinical Preventive Services and those vaccines recommended 
     for use by the Director of the Centers for Disease Control 
     and Prevention.
       (9) Maternity care.
       (10) Well-baby and well-child care and oral health, vision, 
     and hearing services, equipment, and supplies for children 
     under 21 years of age.
       (11) Durable medical equipment, prosthetics, orthotics and 
     related supplies.
       (c) Requirements Relating to Cost-Sharing and Minimum 
     Actuarial Value.--
       (1) No cost-sharing for preventive services.--There shall 
     be no cost-sharing under the essential benefits package for--
       (A) preventive items and services recommended with a grade 
     of A or B by the Task Force on Clinical Preventive Services 
     and those vaccines recommended for use by the Director of the 
     Centers for Disease Control and Prevention; or
       (B) well-baby and well-child care.
       (2) Annual limitation.--
       (A) Annual limitation.--The cost-sharing incurred under the 
     essential benefits package with respect to an individual (or 
     family) for a year does not exceed the applicable level 
     specified in subparagraph (B).
       (B) Applicable level.--The applicable level specified in 
     this subparagraph for Y1 is not to exceed $5,000 for an 
     individual and not to exceed $10,000 for a family. Such 
     levels shall be increased (rounded to the nearest $100) for 
     each subsequent year by the annual percentage increase in the 
     enrollment-weighted average of premium increases for basic 
     plans applicable to such year, except that Secretary shall 
     adjust such increase to ensure that the applicable level 
     specified in this subparagraph meets the minimum actuarial 
     value required under paragraph (3).
       (C) Use of copayments.--In establishing cost-sharing levels 
     for basic, enhanced, and premium plans under this subsection, 
     the Secretary shall, to the maximum extent possible, use only 
     copayments and not coinsurance.
       (3) Minimum actuarial value.--
       (A) In general.--The cost-sharing under the essential 
     benefits package shall be designed to provide a level of 
     coverage that is designed to provide benefits that are 
     actuarially equivalent to approximately 70 percent of the 
     full actuarial value of the benefits provided under the 
     reference benefits package described in subparagraph (B).
       (B) Reference benefits package described.--The reference 
     benefits package described in this subparagraph is the 
     essential benefits package if there were no cost-sharing 
     imposed.
       (d) Assessment and Counseling for Domestic Violence.--The 
     Secretary shall support the need for an assessment and brief 
     counseling for domestic violence as part of a behavioral 
     health assessment or primary care visit and determine the 
     appropriate coverage for such assessment and counseling.
       (e) Abortion Coverage Prohibited as Part of Minimum 
     Benefits Package.--
       (1) Prohibition of required coverage.--The Health Benefits 
     Advisory Committee may not recommend under section 223(b), 
     and the Secretary may not adopt in standards under section 
     224(b), the services described in paragraph (4)(A) or (4)(B) 
     as part of the essential benefits package and the 
     Commissioner may not require such services for qualified 
     health benefits plans to participate in the Health Insurance 
     Exchange.
       (2) Voluntary choice of coverage by plan.--In the case of a 
     qualified health benefits plan, the plan is not required (or 
     prohibited) under this Act from providing coverage of 
     services described in paragraph (4)(A) or (4)(B) and the QHBP 
     offering entity shall determine whether such coverage is 
     provided.

[[Page H12637]]

       (3) Coverage under public health insurance option.--The 
     public health insurance option shall provide coverage for 
     services described in paragraph (4)(B). Nothing in this Act 
     shall be construed as preventing the public health insurance 
     option from providing for or prohibiting coverage of services 
     described in paragraph (4)(A).
       (4) Abortion services.--
       (A) Abortions for which public funding is prohibited.--The 
     services described in this subparagraph are abortions for 
     which the expenditure of Federal funds appropriated for the 
     Department of Health and Human Services is not permitted, 
     based on the law as in effect as of the date that is 6 months 
     before the beginning of the plan year involved.
       (B) Abortions for which public funding is allowed.--The 
     services described in this subparagraph are abortions for 
     which the expenditure of Federal funds appropriated for the 
     Department of Health and Human Services is permitted, based 
     on the law as in effect as of the date that is 6 months 
     before the beginning of the plan year involved.
       (f) Report Regarding Inclusion of Oral Health Care in 
     Essential Benefits Package.--Not later than 1 year after the 
     date of the enactment of this Act, the Secretary of Health 
     and Human Services shall submit to Congress a report 
     containing the results of a study determining the need and 
     cost of providing accessible and affordable oral health care 
     to adults as part of the essential benefits package.

     SEC. 223. HEALTH BENEFITS ADVISORY COMMITTEE.

       (a) Establishment.--
       (1) In general.--There is established a private-public 
     advisory committee which shall be a panel of medical and 
     other experts to be known as the Health Benefits Advisory 
     Committee to recommend covered benefits and essential, 
     enhanced, and premium plans.
       (2) Chair.--The Surgeon General shall be a member and the 
     chair of the Health Benefits Advisory Committee.
       (3) Membership.--The Health Benefits Advisory Committee 
     shall be composed of the following members, in addition to 
     the Surgeon General:
       (A) Nine members who are not Federal employees or officers 
     and who are appointed by the President.
       (B) Nine members who are not Federal employees or officers 
     and who are appointed by the Comptroller General of the 
     United States in a manner similar to the manner in which the 
     Comptroller General appoints members to the Medicare Payment 
     Advisory Commission under section 1805(c) of the Social 
     Security Act.
       (C) Such even number of members (not to exceed 8) who are 
     Federal employees and officers, as the President may appoint.
     Such initial appointments shall be made not later than 60 
     days after the date of the enactment of this Act.
       (4) Terms.--Each member of the Health Benefits Advisory 
     Committee shall serve a 3-year term on the Committee, except 
     that the terms of the initial members shall be adjusted in 
     order to provide for a staggered term of appointment for all 
     such members.
       (5) Participation.--The membership of the Health Benefits 
     Advisory Committee shall at least reflect providers, patient 
     representatives, employers (including small employers), 
     labor, health insurance issuers, experts in health care 
     financing and delivery, experts in oral health care, experts 
     in racial and ethnic disparities, experts on health care 
     needs and disparities of individuals with disabilities, 
     representatives of relevant governmental agencies, and at 
     least one practicing physician or other health professional 
     and an expert in child and adolescent health and shall 
     represent a balance among various sectors of the health care 
     system so that no single sector unduly influences the 
     recommendations of such Committee.
       (b) Duties.--
       (1) Recommendations on benefit standards.--The Health 
     Benefits Advisory Committee shall recommend to the Secretary 
     of Health and Human Services (in this subtitle referred to as 
     the ``Secretary'') benefit standards (as defined in paragraph 
     (5)), and periodic updates to such standards. In developing 
     such recommendations, the Committee shall take into account 
     innovation in health care and consider how such standards 
     could reduce health disparities.
       (2) Deadline.--The Health Benefits Advisory Committee shall 
     recommend initial benefit standards to the Secretary not 
     later than 1 year after the date of the enactment of this 
     Act.
       (3) State input.--The Health Benefits Advisory Committee 
     shall examine the health coverage laws and benefits of each 
     State in developing recommendations under this subsection and 
     may incorporate such coverage and benefits as the Committee 
     determines to be appropriate and consistent with this Act. 
     The Health Benefits Advisory Committee shall also seek input 
     from the States and consider recommendations on how to ensure 
     quality of health coverage in all States.
       (4) Public input.--The Health Benefits Advisory Committee 
     shall allow for public input as a part of developing 
     recommendations under this subsection.
       (5) Benefit standards defined.--In this subtitle, the term 
     ``benefit standards'' means standards respecting--
       (A) the essential benefits package described in section 
     222, including categories of covered treatments, items and 
     services within benefit classes, and cost-sharing consistent 
     with subsection (e) of such section; and
       (B) the cost-sharing levels for enhanced plans and premium 
     plans (as provided under section 303(c)) consistent with 
     paragraph (5).
       (6) Levels of cost-sharing for enhanced and premium 
     plans.--
       (A) Enhanced plan.--The level of cost-sharing for enhanced 
     plans shall be designed so that such plans have benefits that 
     are actuarially equivalent to approximately 85 percent of the 
     actuarial value of the benefits provided under the reference 
     benefits package described in section 222(c)(3)(B).
       (B) Premium plan.--The level of cost-sharing for premium 
     plans shall be designed so that such plans have benefits that 
     are actuarially equivalent to approximately 95 percent of the 
     actuarial value of the benefits provided under the reference 
     benefits package described in section 222(c)(3)(B).
       (c) Operations.--
       (1) Per diem pay.--Each member of the Health Benefits 
     Advisory Committee shall receive travel expenses, including 
     per diem in accordance with applicable provisions under 
     subchapter I of chapter 57 of title 5, United States Code, 
     and shall otherwise serve without additional pay.
       (2) Members not treated as federal employees.--Members of 
     the Health Benefits Advisory Committee shall not be 
     considered employees of the Federal Government solely by 
     reason of any service on the Committee, except such members 
     shall be considered to be within the meaning of section 
     202(a) of title 18, United States Code, for the purposes of 
     disclosure and management of conflicts of interest.
       (3) Application of faca.--The Federal Advisory Committee 
     Act (5 U.S.C. App.), other than section 14, shall apply to 
     the Health Benefits Advisory Committee.
       (d) Publication.--The Secretary shall provide for 
     publication in the Federal Register and the posting on the 
     Internet Website of the Department of Health and Human 
     Services of all recommendations made by the Health Benefits 
     Advisory Committee under this section.

     SEC. 224. PROCESS FOR ADOPTION OF RECOMMENDATIONS; ADOPTION 
                   OF BENEFIT STANDARDS.

       (a) Process for Adoption of Recommendations.--
       (1) Review of recommended standards.--Not later than 45 
     days after the date of receipt of benefit standards 
     recommended under section 223 (including such standards as 
     modified under paragraph (2)(B)), the Secretary shall review 
     such standards and shall determine whether to propose 
     adoption of such standards as a package.
       (2) Determination to adopt standards.--If the Secretary 
     determines--
       (A) to propose adoption of benefit standards so recommended 
     as a package, the Secretary shall, by regulation under 
     section 553 of title 5, United States Code, propose adoption 
     of such standards; or
       (B) not to propose adoption of such standards as a package, 
     the Secretary shall notify the Health Benefits Advisory 
     Committee in writing of such determination and the reasons 
     for not proposing the adoption of such recommendation and 
     provide the Committee with a further opportunity to modify 
     its previous recommendations and submit new recommendations 
     to the Secretary on a timely basis.
       (3) Contingency.--If, because of the application of 
     paragraph (2)(B), the Secretary would otherwise be unable to 
     propose initial adoption of such recommended standards by the 
     deadline specified in subsection (b)(1), the Secretary shall, 
     by regulation under section 553 of title 5, United States 
     Code, propose adoption of initial benefit standards by such 
     deadline.
       (4) Publication.--The Secretary shall provide for 
     publication in the Federal Register of all determinations 
     made by the Secretary under this subsection.
       (b) Adoption of Standards.--
       (1) Initial standards.--Not later than 18 months after the 
     date of the enactment of this Act, the Secretary shall, 
     through the rulemaking process consistent with subsection 
     (a), adopt an initial set of benefit standards.
       (2) Periodic updating standards.--Under subsection (a), the 
     Secretary shall provide for the periodic updating of the 
     benefit standards previously adopted under this section.
       (3) Requirement.--The Secretary may not adopt any benefit 
     standards for an essential benefits package or for level of 
     cost-sharing that are inconsistent with the requirements for 
     such a package or level under sections 222 (including 
     subsection (e)) and 223(b)(5).

              Subtitle D--Additional Consumer Protections

     SEC. 231. REQUIRING FAIR MARKETING PRACTICES BY HEALTH 
                   INSURERS.

       The Commissioner shall establish uniform marketing 
     standards that all QHBP offering entities shall meet with 
     respect to qualified health benefits plans that are health 
     insurance coverage.

     SEC. 232. REQUIRING FAIR GRIEVANCE AND APPEALS MECHANISMS.

       (a) In General.--A QHBP offering entity shall provide for 
     timely grievance and appeals mechanisms with respect to 
     qualified health benefits plans that the Commissioner shall 
     establish consistent with this section. The Commissioner 
     shall establish time limits for each of such mechanisms and 
     implement them in a manner that is protective to the needs of 
     patients.
       (b) Internal Claims and Appeals Process.--Under a qualified 
     health benefits plan

[[Page H12638]]

     the QHBP offering entity shall provide an internal claims and 
     appeals process that initially incorporates the claims and 
     appeals procedures (including urgent claims) set forth at 
     section 2560.503-1 of title 29, Code of Federal Regulations, 
     as published on November 21, 2000 (65 Fed. Reg. 70246) and 
     shall update such process in accordance with any standards 
     that the Commissioner may establish.
       (c) External Review Process.--
       (1) In general.--The Commissioner shall establish an 
     external review process (including procedures for expedited 
     reviews of urgent claims) that provides for an impartial, 
     independent, and de novo review of denied claims under this 
     division.
       (2) Requiring fair grievance and appeals mechanisms.--A 
     determination made, with respect to a qualified health 
     benefits plan offered by a QHBP offering entity, under the 
     external review process established under this subsection 
     shall be binding on the plan and the entity.
       (d) Time Limits.--The Commissioner shall establish time 
     limits for each of these processes and implement them in a 
     manner that is protective to the patient.
       (e) Construction.--Nothing in this section shall be 
     construed as affecting the availability of judicial review 
     under State law for adverse decisions under subsection (b) or 
     (c), subject to section 251.

     SEC. 233. REQUIRING INFORMATION TRANSPARENCY AND PLAN 
                   DISCLOSURE.

       (a) Accurate and Timely Disclosure.--
       (1) For exchange-participating health benefits plans.--A 
     QHBP offering entity offering an Exchange-participating 
     health benefits plan shall comply with standards established 
     by the Commissioner for the accurate and timely disclosure to 
     the Commissioner and the public of plan documents, plan terms 
     and conditions, claims payment policies and practices, 
     periodic financial disclosure, data on enrollment, data on 
     disenrollment, data on the number of claims denials, data on 
     rating practices, information on cost-sharing and payments 
     with respect to any out-of-network coverage, and other 
     information as determined appropriate by the Commissioner.
       (2) Employment-based health plans.--The Secretary of Labor 
     shall update and harmonize the Secretary's rules concerning 
     the accurate and timely disclosure to participants by group 
     health plans of plan disclosure, plan terms and conditions, 
     and periodic financial disclosure with the standards 
     established by the Commissioner under paragraph (1).
       (3) Use of plain language.--
       (A) In general.--The disclosures under paragraphs (1) and 
     (2) shall be provided in plain language.
       (B) Definition.--In this paragraph, the term ``plain 
     language'' means language that the intended audience, 
     including individuals with limited English proficiency, can 
     readily understand and use because that language is concise, 
     well-organized, and follows other best practices of plain 
     language writing.
       (C) Guidance.--The Commissioner and the Secretary of Labor 
     shall jointly develop and issue guidance on best practices of 
     plain language writing.
       (4) Information on rights.--The information disclosed under 
     this subsection shall include information on enrollee and 
     participant rights under this division.
       (5) Cost-sharing transparency.--A qualified health benefits 
     plan shall allow individuals to learn the amount of cost-
     sharing (including deductibles, copayments, and coinsurance) 
     under the individual's plan or coverage that the individual 
     would be responsible for paying with respect to the 
     furnishing of a specific item or service by a participating 
     provider in a timely manner upon request. At a minimum, this 
     information shall be made available to such individual via an 
     Internet Website and other means for individuals without 
     access to the Internet.
       (b) Contracting Reimbursement.--A qualified health benefits 
     plan shall comply with standards established by the 
     Commissioner to ensure transparency to each health care 
     provider relating to reimbursement arrangements between such 
     plan and such provider.
       (c) Pharmacy Benefit Managers Transparency Requirements.--
       (1) In general.--If a QHBP offering entity contracts with a 
     pharmacy benefit manager or other entity (in this subsection 
     referred to as a ``PBM'') to manage prescription drug 
     coverage or otherwise control prescription drug costs under a 
     qualified health benefits plan, the PBM shall provide at 
     least annually to the Commissioner and to the QHBP offering 
     entity offering such plan the following information, in a 
     form and manner to be determined by the Commissioner:
       (A) Information on the number and total cost of 
     prescriptions under the contract that are filled via mail 
     order and at retail pharmacies.
       (B) An estimate of aggregate average payments under the 
     contract, per prescription (weighted by prescription volume), 
     made to mail order and retail pharmacies, and the average 
     amount, per prescription, that the PBM was paid by the plan 
     for prescriptions filled at mail order and retail 
     pharmacists.
       (C) An estimate of the aggregate average payment per 
     prescription (weighted by prescription volume) under the 
     contract received from pharmaceutical manufacturers, 
     including all rebates, discounts, prices concessions, or 
     administrative, and other payments from pharmaceutical 
     manufacturers, and a description of the types of payments, 
     and the amount of these payments that were shared with the 
     plan, and a description of the percentage of prescriptions 
     for which the PBM received such payments.
       (D) Information on the overall percentage of generic drugs 
     dispensed under the contract at retail and mail order 
     pharmacies, and the percentage of cases in which a generic 
     drug is dispensed when available.
       (E) Information on the percentage and number of cases under 
     the contract in which individuals were switched because of 
     PBM policies or at the direct or indirect control of the PBM 
     from a prescribed drug that had a lower cost for the QHBP 
     offering entity to a drug that had a higher cost for the QHBP 
     offering entity, the rationale for these switches, and a 
     description of the PBM policies governing such switches.
       (2) Confidentiality of information.--Information disclosed 
     by a PBM to the Commissioner or a QHBP offering entity under 
     this subsection is confidential and shall not be disclosed by 
     the Commissioner or the QHBP offering entity in a form which 
     discloses the identity of a specific PBM or prices charged by 
     such PBM or a specific retailer, manufacturer, or wholesaler, 
     except only by the Commissioner--
       (A) to permit State or Federal law enforcement authorities 
     to use the information provided for program compliance 
     purposes and for the purpose of combating waste, fraud, and 
     abuse;
       (B) to permit the Comptroller General, the Medicare Payment 
     Advisory Commission, or the Secretary of Health and Human 
     Services to review the information provided; and
       (C) to permit the Director of the Congressional Budget 
     Office to review the information provided.
       (3) Annual public report.--On an annual basis, the 
     Commissioner shall prepare a public report providing 
     industrywide aggregate or average information to be used in 
     assessing the overall impact of PBMs on prescription drug 
     prices and spending. Such report shall not disclose the 
     identity of a specific PBM, or prices charged by such PBM, or 
     a specific retailer, manufacturer, or wholesaler, or any 
     other confidential or trade secret information.
       (4) Penalties.--The provisions of subsection (b)(3)(C) of 
     section 1927 shall apply to a PBM that fails to provide 
     information required under subsection (a) or that knowingly 
     provides false information in the same manner as such 
     provisions apply to a manufacturer with an agreement under 
     such section that fails to provide information under 
     subsection (b)(3)(A) of such section or knowingly provides 
     false information under such section, respectively.

     SEC. 234. APPLICATION TO QUALIFIED HEALTH BENEFITS PLANS NOT 
                   OFFERED THROUGH THE HEALTH INSURANCE EXCHANGE.

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

     SEC. 235. TIMELY PAYMENT OF CLAIMS.

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

     SEC. 236. STANDARDIZED RULES FOR COORDINATION AND SUBROGATION 
                   OF BENEFITS.

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

     SEC. 237. APPLICATION OF ADMINISTRATIVE SIMPLIFICATION.

       A QHBP offering entity is required to comply with 
     administrative simplification provisions under part C of 
     title XI of the Social Security Act with respect to qualified 
     health benefits plans it offers.

     SEC. 238. STATE PROHIBITIONS ON DISCRIMINATION AGAINST HEALTH 
                   CARE PROVIDERS.

       This Act (and the amendments made by this Act) shall not be 
     construed as superseding laws, as they now or hereinafter 
     exist, of any State or jurisdiction designed to prohibit a 
     qualified health benefits plan from discriminating with 
     respect to participation, reimbursement, covered services, 
     indemnification, or related requirements under such plan 
     against a health care provider that is acting within the 
     scope of that provider's license or certification under 
     applicable State law.

     SEC. 239. PROTECTION OF PHYSICIAN PRESCRIBER INFORMATION.

       (a) Study.--The Secretary of Health and Human Services 
     shall conduct a study on the use of physician prescriber 
     information in sales and marketing practices of 
     pharmaceutical manufacturers.
       (b) Report.--Based on the study conducted under subsection 
     (a), the Secretary shall submit to Congress a report on 
     actions needed to be taken by the Congress or the Secretary 
     to protect providers from biased marketing and sales 
     practices.

     SEC. 240. DISSEMINATION OF ADVANCE CARE PLANNING INFORMATION.

       (a) In General.--The QHBP offering entity --
       (1) shall provide for the dissemination of information 
     related to end-of-life planning

[[Page H12639]]

     to individuals seeking enrollment in Exchange-participating 
     health benefits plans offered through the Exchange;
       (2) shall present such individuals with--
       (A) the option to establish advanced directives and 
     physician's orders for life sustaining treatment according to 
     the laws of the State in which the individual resides; and
       (B) information related to other planning tools; and
       (3) shall not promote suicide, assisted suicide, 
     euthanasia, or mercy killing.
     The information presented under paragraph (2) shall not 
     presume the withdrawal of treatment and shall include end-of-
     life planning information that includes options to maintain 
     all or most medical interventions.
       (b) Construction.-- Nothing in this section shall be 
     construed--
       (1) to require an individual to complete an advanced 
     directive or a physician's order for life sustaining 
     treatment or other end-of-life planning document;
       (2) to require an individual to consent to restrictions on 
     the amount, duration, or scope of medical benefits otherwise 
     covered under a qualified health benefits plan; or
       (3) to promote suicide, assisted suicide, euthanasia, or 
     mercy killing.
       (c) Advanced Directive Defined.--In this section, the term 
     ``advanced directive'' includes a living will, a comfort care 
     order, or a durable power of attorney for health care.
       (d) Prohibition on the Promotion of Assisted Suicide.--
       (1) In general.--Subject to paragraph (3), information 
     provided to meet the requirements of subsection (a)(2) shall 
     not include advanced directives or other planning tools that 
     list or describe as an option suicide, assisted suicide, 
     euthanasia, or mercy killing, regardless of legality.
       (2) Construction.--Nothing in paragraph (1) shall be 
     construed to apply to or affect any option to--
       (A) withhold or withdraw of medical treatment or medical 
     care;
       (B) withhold or withdraw of nutrition or hydration; and
       (C) provide palliative or hospice care or use an item, 
     good, benefit, or service furnished for the purpose of 
     alleviating pain or discomfort, even if such use may increase 
     the risk of death, so long as such item, good, benefit, or 
     service is not also furnished for the purpose of causing, or 
     the purpose of assisting in causing, death, for any reason.
       (3) No preemption of state law.--Nothing in this section 
     shall be construed to preempt or otherwise have any effect on 
     State laws regarding advance care planning, palliative care, 
     or end-of-life decision-making.

                         Subtitle E--Governance

     SEC. 241. HEALTH CHOICES ADMINISTRATION; HEALTH CHOICES 
                   COMMISSIONER.

       (a) In General.--There is hereby established, as an 
     independent agency in the executive branch of the Government, 
     a Health Choices Administration (in this division referred to 
     as the ``Administration'').
       (b) Commissioner.--
       (1) In general.--The Administration shall be headed by a 
     Health Choices Commissioner (in this division referred to as 
     the ``Commissioner'') who shall be appointed by the 
     President, by and with the advice and consent of the Senate.
       (2) Compensation; etc.--The provisions of paragraphs (2), 
     (5), and (7) of subsection (a) (relating to compensation, 
     terms, general powers, rulemaking, and delegation) of section 
     702 of the Social Security Act (42 U.S.C. 902) shall apply to 
     the Commissioner and the Administration in the same manner as 
     such provisions apply to the Commissioner of Social Security 
     and the Social Security Administration.
       (c) Inspector General.--For provision establishing an 
     Office of the Inspector General for the Health Choices 
     Administration, see section 1647.

     SEC. 242. DUTIES AND AUTHORITY OF COMMISSIONER.

       (a) Duties.--The Commissioner is responsible for carrying 
     out the following functions under this division:
       (1) Qualified plan standards.--The establishment of 
     qualified health benefits plan standards under this title, 
     including the enforcement of such standards in coordination 
     with State insurance regulators and the Secretaries of Labor 
     and the Treasury.
       (2) Health insurance exchange.--The establishment and 
     operation of a Health Insurance Exchange under subtitle A of 
     title III.
       (3) Individual affordability credits.--The administration 
     of individual affordability credits under subtitle C of title 
     III, including determination of eligibility for such credits.
       (4) Additional functions.--Such additional functions as may 
     be specified in this division.
       (b) Promoting Accountability.--
       (1) In general.--The Commissioner shall undertake 
     activities in accordance with this subtitle to promote 
     accountability of QHBP offering entities in meeting Federal 
     health insurance requirements, regardless of whether such 
     accountability is with respect to qualified health benefits 
     plans offered through the Health Insurance Exchange or 
     outside of such Exchange.
       (2) Compliance examination and audits.--
       (A) In general.--The Commissioner shall, in coordination 
     with States, conduct audits of qualified health benefits plan 
     compliance with Federal requirements.   Such audits may 
     include random compliance audits and targeted audits in 
     response to complaints or other suspected noncompliance.
       (B) Recoupment of costs in connection with examination and 
     audits.--The Commissioner is authorized to recoup from 
     qualified health benefits plans reimbursement for the costs 
     of such examinations and audit of such QHBP offering 
     entities.
       (c) Data Collection.--The Commissioner shall collect data 
     for purposes of carrying out the Commissioner's duties, 
     including for purposes of promoting quality and value, 
     protecting consumers, and addressing disparities in health 
     and health care and may share such data with the Secretary of 
     Health and Human Services.
       (d) Sanctions Authority.--
       (1) In general.--In the case that the Commissioner 
     determines that a QHBP offering entity violates a requirement 
     of this title, the Commissioner may, in coordination with 
     State insurance regulators and the Secretary of Labor, 
     provide, in addition to any other remedies authorized by law, 
     for any of the remedies described in paragraph (2).
       (2) Remedies.--The remedies described in this paragraph, 
     with respect to a qualified health benefits plan offered by a 
     QHBP offering entity, are--
       (A) civil money penalties of not more than the amount that 
     would be applicable under similar circumstances for similar 
     violations under section 1857(g) of the Social Security Act;
       (B) suspension of enrollment of individuals under such plan 
     after the date the Commissioner notifies the entity of a 
     determination under paragraph (1) and until the Commissioner 
     is satisfied that the basis for such determination has been 
     corrected and is not likely to recur;
       (C) in the case of an Exchange-participating health 
     benefits plan, suspension of payment to the entity under the 
     Health Insurance Exchange for individuals enrolled in such 
     plan after the date the Commissioner notifies the entity of a 
     determination under paragraph (1) and until the Secretary is 
     satisfied that the basis for such determination has been 
     corrected and is not likely to recur; or
       (D) working with State insurance regulators to terminate 
     plans for repeated failure by the offering entity to meet the 
     requirements of this title.
       (e) Standard Definitions of Insurance and Medical Terms.--
     The Commissioner shall provide for the development of 
     standards for the definitions of terms used in health 
     insurance coverage, including insurance-related terms.
       (f) Efficiency in Administration.--The Commissioner shall 
     issue regulations for the effective and efficient 
     administration of the Health Insurance Exchange and 
     affordability credits under subtitle C, including, with 
     respect to the determination of eligibility for affordability 
     credits, the use of personnel who are employed in accordance 
     with the requirements of title 5, United States Code, to 
     carry out the duties of the Commissioner or, in the case of 
     sections 308 and 341(b)(2), the use of State personnel who 
     are employed in accordance with standards prescribed by the 
     Office of Personnel Management pursuant to section 208 of the 
     Intergovernmental Personnel Act of 1970 (42 U.S.C. 4728).

     SEC. 243. CONSULTATION AND COORDINATION.

       (a) Consultation.--In carrying out the Commissioner's 
     duties under this division, the Commissioner, as appropriate, 
     shall consult at least with the following:
       (1) State attorneys general and State insurance regulators, 
     including concerning the standards for health insurance 
     coverage that is a qualified health benefits plan under this 
     title and enforcement of such standards.
       (2) The National Association of Insurance Commissioners, 
     including for purposes of using model guidelines established 
     by such association for purposes of subtitles B and D.
       (3) Appropriate State agencies, specifically concerning the 
     administration of individual affordability credits under 
     subtitle C of title III and the offering of Exchange-
     participating health benefits plans, to Medicaid eligible 
     individuals under subtitle A of such title.
       (4) The Federal Trade Commission, specifically concerning 
     the development and issuance of guidance, rules, or standards 
     regarding fair marketing practices under section 231 or 
     otherwise, or any consumer disclosure requirements under 
     section 233 or otherwise.
       (5) Other appropriate Federal agencies.
       (6) Indian tribes and tribal organizations.
       (b) Coordination.--
       (1) In general.--In carrying out the functions of the 
     Commissioner, including with respect to the enforcement of 
     the provisions of this division, the Commissioner shall work 
     in coordination with existing Federal and State entities to 
     the maximum extent feasible consistent with this division and 
     in a manner that prevents conflicts of interest in duties and 
     ensures effective enforcement.
       (2) Uniform standards.--The Commissioner, in coordination 
     with such entities, shall seek to achieve uniform standards 
     that adequately protect consumers in a manner that does not 
     unreasonably affect employers and insurers.

     SEC. 244. HEALTH INSURANCE OMBUDSMAN.

       (a) In General.--The Commissioner shall appoint within the 
     Health Choices Administration a Qualified Health Benefits 
     Plan Ombudsman who shall have expertise and experience in the 
     fields of health care and education of (and assistance to) 
     individuals.
       (b) Duties.--The Qualified Health Benefits Plan Ombudsman 
     shall, in a linguistically appropriate manner--

[[Page H12640]]

       (1) receive complaints, grievances, and requests for 
     information submitted by individuals through means such as 
     the mail, by telephone, electronically, and in person;
       (2) provide assistance with respect to complaints, 
     grievances, and requests referred to in paragraph (1), 
     including--
       (A) helping individuals determine the relevant information 
     needed to seek an appeal of a decision or determination;
       (B) assistance to such individuals in choosing a qualified 
     health benefits plan in which to enroll;
       (C) assistance to such individuals with any problems 
     arising from disenrollment from such a plan; and
       (D) assistance to such individuals in presenting 
     information under subtitle C (relating to affordability 
     credits); and
       (3) submit annual reports to Congress and the Commissioner 
     that describe the activities of the Ombudsman and that 
     include such recommendations for improvement in the 
     administration of this division as the Ombudsman determines 
     appropriate. The Ombudsman shall not serve as an advocate for 
     any increases in payments or new coverage of services, but 
     may identify issues and problems in payment or coverage 
     policies.

       Subtitle F--Relation to Other Requirements; Miscellaneous

     SEC. 251. RELATION TO OTHER REQUIREMENTS.

       (a) Coverage Not Offered Through Exchange.--
       (1) In general.--In the case of health insurance coverage 
     not offered through the Health Insurance Exchange (whether or 
     not offered in connection with an employment-based health 
     plan), and in the case of employment-based health plans, the 
     requirements of this title do not supercede any requirements 
     applicable under titles XXII and XXVII of the Public Health 
     Service Act, parts 6 and 7 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974, or State 
     law, except insofar as such requirements prevent the 
     application of a requirement of this division, as determined 
     by the Commissioner.
       (2) Construction.--Nothing in paragraphs (1) or (2) shall 
     be construed as affecting the application of section 514 of 
     the Employee Retirement Income Security Act of 1974.
       (b) Coverage Offered Through Exchange.--
       (1) In general.--In the case of health insurance coverage 
     offered through the Health Insurance Exchange--
       (A) the requirements of this title do not supercede any 
     requirements (including requirements relating to genetic 
     information nondiscrimination and mental health parity) 
     applicable under title XXVII of the Public Health Service Act 
     or under State law, except insofar as such requirements 
     prevent the application of a requirement of this division, as 
     determined by the Commissioner; and
       (B) individual rights and remedies under State laws shall 
     apply.
       (2) Construction.--In the case of coverage described in 
     paragraph (1), nothing in such paragraph shall be construed 
     as preventing the application of rights and remedies under 
     State laws to health insurance issuers generally with respect 
     to any requirement referred to in paragraph (1)(A). The 
     previous sentence shall not be construed as providing for the 
     applicability of rights or remedies under State laws with 
     respect to requirements applicable to employers or other plan 
     sponsors in connection with arrangements which are treated as 
     group health plans under section 802(a)(1) of the Employee 
     Retirement Income Security Act of 1974.

     SEC. 252. PROHIBITING DISCRIMINATION IN HEALTH CARE.

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

     SEC. 253. WHISTLEBLOWER PROTECTION.

       (a) Retaliation Prohibited.--No employer may discharge any 
     employee or otherwise discriminate against any employee with 
     respect to his compensation, terms, conditions, or other 
     privileges of employment because the employee (or any person 
     acting pursuant to a request of the employee)--
       (1) provided, caused to be provided, or is about to provide 
     or cause to be provided to the employer, the Federal 
     Government, or the attorney general of a State information 
     relating to any violation of, or any act or omission the 
     employee reasonably believes to be a violation of any 
     provision of this Act or any order, rule, or regulation 
     promulgated under this Act;
       (2) testified or is about to testify in a proceeding 
     concerning such violation;
       (3) assisted or participated or is about to assist or 
     participate in such a proceeding; or
       (4) objected to, or refused to participate in, any 
     activity, policy, practice, or assigned task that the 
     employee (or other such person) reasonably believed to be in 
     violation of any provision of this Act or any order, rule, or 
     regulation promulgated under this Act.
       (b) Enforcement Action.--An employee covered by this 
     section who alleges discrimination by an employer in 
     violation of subsection (a) may bring an action governed by 
     the rules, procedures, legal burdens of proof, and remedies 
     set forth in section 40(b) of the Consumer Product Safety Act 
     (15 U.S.C. 2087(b)).
       (c) Employer Defined.--As used in this section, the term 
     ``employer'' means any person (including one or more 
     individuals, partnerships, associations, corporations, 
     trusts, professional membership organization including a 
     certification, disciplinary, or other professional body, 
     unincorporated organizations, nongovernmental organizations, 
     or trustees) engaged in profit or nonprofit business or 
     industry whose activities are governed by this Act, and any 
     agent, contractor, subcontractor, grantee, or consultant of 
     such person.
       (d) Rule of Construction.--The rule of construction set 
     forth in section 20109(h) of title 49, United States Code, 
     shall also apply to this section.

     SEC. 254. CONSTRUCTION REGARDING COLLECTIVE BARGAINING.

       Nothing in this division shall be construed to alter or 
     supersede any statutory or other obligation to engage in 
     collective bargaining over the terms or conditions of 
     employment related to health care. Any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by this division shall not be treated as a 
     termination of such collective bargaining agreement.

     SEC. 255. SEVERABILITY.

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

     SEC. 256. TREATMENT OF HAWAII PREPAID HEALTH CARE ACT.

       (a) In General.--Subject to this section--
       (1) nothing in this division (or an amendment made by this 
     division) shall be construed to modify or limit the 
     application of the exemption for the Hawaii 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)), and such exemption shall also apply with respect 
     to the provisions of this division; and
       (2) for purposes of this division (and the amendments made 
     by this division), coverage provided pursuant to the Hawaii 
     Prepaid Health Care Act shall be treated as a qualified 
     health benefits plan providing acceptable coverage so long as 
     the Secretary of Labor determines that such coverage for 
     employees (taking into account the benefits and the cost to 
     employees for such benefits) is substantially equivalent to 
     or greater than the coverage provided for employees pursuant 
     to the essential benefits package.
       (b) Coordination With State Law of Hawaii.--The 
     Commissioner shall, based on ongoing consultation with the 
     appropriate officials of the State of Hawaii, make 
     adjustments to rules and regulations of the Commissioner 
     under this division as may be necessary, as determined by the 
     Commissioner, to most effectively coordinate the provisions 
     of this division with the provisions of the Hawaii Prepaid 
     Health Care Act, taking into account any changes made from 
     time to time to the Hawaii Prepaid Health Care Act and 
     related laws of such State.

     SEC. 257. ACTIONS BY STATE ATTORNEYS GENERAL.

       Any State attorney general may bring a civil action in the 
     name of such State as parens patriae on behalf of natural 
     persons residing in such State, in any district court of the 
     United States or State court having jurisdiction of the 
     defendant to secure monetary or equitable relief for 
     violation of any provisions of this title or regulations 
     issued thereunder. Nothing in this section shall be construed 
     as affecting the application of section 514 of the Employee 
     Retirement Income Security Act of 1974.

     SEC. 258. APPLICATION OF STATE AND FEDERAL LAWS REGARDING 
                   ABORTION.

       (a) No Preemption of State Laws Regarding Abortion.--
     Nothing in this Act shall be construed to preempt or 
     otherwise have any effect on State laws regarding the 
     prohibition of (or requirement of) coverage, funding, or 
     procedural requirements on abortions, including parental 
     notification or consent for the performance of an abortion on 
     a minor.
       (b) No Effect on Federal Laws Regarding Abortion.--
       (1) In general.--Nothing in this Act shall be construed to 
     have any effect on Federal laws regarding--
       (A) conscience protection;
       (B) willingness or refusal to provide abortion; and
       (C) discrimination on the basis of the willingness or 
     refusal to provide, pay for, cover, or refer for abortion or 
     to provide or participate in training to provide abortion.

[[Page H12641]]

       (c) No Effect on Federal Civil Rights Law.--Nothing in this 
     section shall alter the rights and obligations of employees 
     and employers under title VII of the Civil Rights Act of 
     1964.

     SEC. 259. NONDISCRIMINATION ON ABORTION AND RESPECT FOR 
                   RIGHTS OF CONSCIENCE.

        (a) Nondiscrimination.--A Federal agency or program, and 
     any State or local government that receives Federal financial 
     assistance under this Act (or an amendment made by this Act), 
     may not--
       (1) subject any individual or institutional health care 
     entity to discrimination; or
       (2) require any health plan created or regulated under this 
     Act (or an amendment made by this Act) to subject any 
     individual or institutional health care entity to 
     discrimination,

     on the basis that the health care entity does not provide, 
     pay for, provide coverage of, or refer for abortions.
       (b) Definition.--In this section, the term ``health care 
     entity'' includes an individual physician or other health 
     care professional, a hospital, a provider-sponsored 
     organization, a health maintenance organization, a health 
     insurance plan, or any other kind of health care facility, 
     organization, or plan.
       (c) Administration.--The Office for Civil Rights of the 
     Department of Health and Human Services is designated to 
     receive complaints of discrimination based on this section, 
     and coordinate the investigation of such complaints.

     SEC. 260. AUTHORITY OF FEDERAL TRADE COMMISSION.

       Section 6 of the Federal Trade Commission Act (15 U.S.C. 
     46) is amended by striking ``and prepare reports'' and all 
     that follows and inserting the following: ``and prepare 
     reports, and to share information under clauses (f) and (k), 
     relating to insurance. Notwithstanding section 4, the 
     Commission's authority shall include the authority to conduct 
     studies and prepare reports, and to share information under 
     clauses (f) and (k), relating to insurance, without regard to 
     whether the subject of such studies, reports, or information 
     is for-profit or not-for-profit entity.''.

     SEC. 261. CONSTRUCTION REGARDING STANDARD OF CARE.

       (a) In General.--The development, recognition, or 
     implementation of any guideline or other standard under a 
     provision described in subsection (b) shall not be construed 
     to establish the standard of care or duty of care owed by 
     health care providers to their patients in any medical 
     malpractice action or claim (as defined in section 431(7) of 
     the Health Care Quality Improvement Act of 1986 (42 U.S.C. 
     11151(7)).
       (b) Provisions Described.--The provisions described in this 
     subsection are the following:
       (1) Section 324 (relating to modernized payment initiatives 
     and delivery system reform under the public health option).
       (2) The amendments made by section 1151 (relating to 
     reducing potentially preventable hospital readmissions).
       (3) The amendments made by section 1751 (relating to health 
     care acquired conditions).
       (4) Section 3131 of the Public Health Service Act (relating 
     to the Task Force on Clinical Preventive Services), added by 
     section 2301.
       (5) Part D of title IX of the Public Health Service Act 
     (relating to implementation of best practices in the delivery 
     of health care), added by section 2401.
       (c) Savings Clause for State Medical Mal-practice Laws.--
     Nothing in this Act or the amendments made by this Act shall 
     be construed to modify or impair State law governing legal 
     standards or procedures used in medical malpractice cases, 
     including the authority of a State to make or implement such 
     laws.

     SEC. 262. RESTORING APPLICATION OF ANTITRUST LAWS TO HEALTH 
                   SECTOR INSURERS.

       (a) Amendment to McCarran-Ferguson Act.--Section 3 of the 
     Act of March 9, 1945 (15 U.S.C. 1013), commonly known as the 
     McCarran-Ferguson Act, is amended by adding at the end the 
     following:
       ``(c)(1) Except as provided in paragraph (2), nothing 
     contained in this Act shall modify, impair, or supersede the 
     operation of any of the antitrust laws with respect to the 
     business of health insurance or the business of medical 
     malpractice insurance.
       ``(2) Paragraph (1) shall not apply to--
       ``(A) collecting, compiling, classifying, or disseminating 
     historical loss data;
       ``(B) determining a loss development factor applicable to 
     historical loss data; or
       ``(C) performing actuarial services if doing so does not 
     involve a restraint of trade.
       ``(3) For purposes of this subsection--
       ``(A) the term `antitrust laws' has the meaning given it 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) the term `historical loss data' means information 
     respecting claims paid, or reserves held for claims reported, 
     by any person engaged in the business of insurance; and
       ``(C) the term `loss development factor' means an 
     adjustment to be made to the aggregate of losses incurred 
     during a prior period of time that have been paid, or for 
     which claims have been received and reserves are being held, 
     in order to estimate the aggregate of the losses incurred 
     during such period that will ultimately be paid.''.
       (b) Related Provision.--For purposes of section 5 of the 
     Federal Trade Commission Act (15 U.S.C. 45) to the extent 
     such section applies to unfair methods of competition, 
     section 3(c) of the McCarran-Ferguson Act shall apply with 
     respect to the business of health insurance, and with respect 
     to the business of medical malpractice insurance, without 
     regard to whether such business is carried on for profit, 
     notwithstanding the definition of ``Corporation'' contained 
     in section 4 of the Federal Trade Commission Act.
       (c) Related Preservation of Antitrust Laws.--Except as 
     provided in subsections (a) and (b), nothing in this Act, or 
     in the amendments made by this Act, shall be construed to 
     modify, impair, or supersede the operation of any of the 
     antitrust laws. For purposes of the preceding sentence, the 
     term ``antitrust laws'' has the meaning given it in 
     subsection (a) of the first section of the Clayton Act, 
     except that it includes section 5 of the Federal Trade 
     Commission Act to the extent that such section 5 applies to 
     unfair methods of competition.

     SEC. 263. STUDY AND REPORT ON METHODS TO INCREASE EHR USE BY 
                   SMALL HEALTH CARE PROVIDERS.

       (a) Study.--The Secretary of Health and Human Services 
     shall conduct a study of potential methods to increase the 
     use of qualified electronic health records (as defined in 
     section 3000(13) of the Public Health Service Act) by small 
     health care providers. Such study shall consider at least the 
     following methods:
       (1) Providing for higher rates of reimbursement or other 
     incentives for such health care providers to use electronic 
     health records (taking into consideration initiatives by 
     private health insurance companies and incentives provided 
     under Medicare under title XVIII of the Social Security Act, 
     Medicaid under title XIX of such Act, and other programs).
       (2) Promoting low-cost electronic health record software 
     packages that are available for use by such health care 
     providers, including software packages that are available to 
     health care providers through the Veterans Administration and 
     other sources.
       (3) Training and education of such health care providers on 
     the use of electronic health records.
       (4) Providing assistance to such health care providers on 
     the implementation of electronic health records.
       (b) Report.--Not later than December 31, 2013, the 
     Secretary of Health and Human Services shall submit to 
     Congress a report containing the results of the study 
     conducted under subsection (a), including recommendations for 
     legislation or administrative action to increase the use of 
     electronic health records by small health care providers that 
     include the use of both public and private funding sources.

     SEC. 264. PREFORMANCE ASSESSMENT AND ACCOUNTABILITY: 
                   APPLICATION OF GPRA.

       (a) Application of GPRA.--Section 306 of title 5, United 
     States Code, and sections 1115, 1116, 1117, and 9703 of title 
     31 of such Code (originally enacted by the Government 
     Performance and Results Act of 1993, Public Law 103-62) apply 
     to the executive agencies established by this Act, including 
     the Health Choices Administration. Under such section 306, 
     each such executive agency is required to provide for a 
     strategic plan every 3 years.
       (b) Improving Consumer Service and Streamlining 
     Procedures.--Every 3 years each such executive agency shall--
       (1)(A) assess the quality of customer service provided, (B) 
     develop a strategy for improving such service, and (C) 
     establish standards for high-quality customer service; and
       (2)(A) identify redundant rules, regulations, and 
     procedures, and (B) develop and implement a plan for 
     eliminating or streamlining such redundancies.

      TITLE III--HEALTH INSURANCE EXCHANGE AND RELATED PROVISIONS

                 Subtitle A--Health Insurance Exchange

     SEC. 301. ESTABLISHMENT OF HEALTH INSURANCE EXCHANGE; OUTLINE 
                   OF DUTIES; DEFINITIONS.

       (a) Establishment.--There is established within the Health 
     Choices Administration and under the direction of the 
     Commissioner a Health Insurance Exchange in order to 
     facilitate access of individuals and employers, through a 
     transparent process, to a variety of choices of affordable, 
     quality health insurance coverage, including a public health 
     insurance option.
       (b) Outline of Duties of Commissioner.--In accordance with 
     this subtitle and in coordination with appropriate Federal 
     and State officials as provided under section 243(b), the 
     Commissioner shall--
       (1) under section 304 establish standards for, accept bids 
     from, and negotiate and enter into contracts with, QHBP 
     offering entities for the offering of health benefits plans 
     through the Health Insurance Exchange, with different levels 
     of benefits required under section 303, and including with 
     respect to oversight and enforcement;
       (2) under section 305 facilitate outreach and enrollment in 
     such plans of Exchange-eligible individuals and employers 
     described in section 302; and
       (3) conduct such activities related to the Health Insurance 
     Exchange as required, including establishment of a risk 
     pooling mechanism under section 306 and consumer protections 
     under subtitle D of title II.

     SEC. 302. EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOYERS.

       (a) Access to Coverage.--In accordance with this section, 
     all individuals are eligible

[[Page H12642]]

     to obtain coverage through enrollment in an Exchange-
     participating health benefits plan offered through the Health 
     Insurance Exchange unless such individuals are enrolled in 
     another qualified health benefits plan or certain other 
     acceptable coverage.
       (b) Definitions.--In this division:
       (1) Exchange-eligible individual.--The term ``Exchange-
     eligible individual'' means an individual who is eligible 
     under this section to be enrolled through the Health 
     Insurance Exchange in an Exchange-participating health 
     benefits plan and, with respect to family coverage, includes 
     dependents of such individual.
       (2) Exchange-eligible employer.--The term ``Exchange-
     eligible employer'' means an employer that is eligible under 
     this section to enroll through the Health Insurance Exchange 
     employees of the employer (and their dependents) in Exchange-
     eligible health benefits plans.
       (3) Employment-related definitions.--The terms 
     ``employer'', ``employee'', ``full-time employee'', and 
     ``part-time employee'' have the meanings given such terms by 
     the Commissioner for purposes of this division.
       (c) Transition.--Individuals and employers shall only be 
     eligible to enroll or participate in the Health Insurance 
     Exchange in accordance with the following transition 
     schedule:
       (1) First year.--In Y1 (as defined in section 100(c))--
       (A) individuals described in subsection (d)(1), including 
     individuals described in subsection (d)(3); and
       (B) smallest employers described in subsection (e)(1).
       (2) Second year.--In Y2--
       (A) individuals and employers described in paragraph (1); 
     and
       (B) smaller employers described in subsection (e)(2).
       (3) Third and subsequent years.--In Y3--
       (A) individuals and employers described in paragraph (2);
       (B) small employers described in subsection (e)(3); and
       (C) larger employers as permitted by the Commissioner under 
     subsection (e)(4).
       (d) Individuals.--
       (1) Individual described.--Subject to the succeeding 
     provisions of this subsection, an individual described in 
     this paragraph is an individual who--
       (A) is not enrolled in coverage described in subparagraph 
     (C) or (D) of paragraph (2); and
       (B) is not enrolled in coverage as a full-time employee (or 
     as a dependent of such an employee) under a group health plan 
     if the coverage and an employer contribution under the plan 
     meet the requirements of section 412.

     For purposes of subparagraph (B), in the case of an 
     individual who is self-employed, who has at least 1 employee, 
     and who meets the requirements of section 412, such 
     individual shall be deemed a full-time employee described in 
     such subparagraph.
       (2) Acceptable coverage.--For purposes of this division, 
     the term ``acceptable coverage'' means any of the following:
       (A) Qualified health benefits plan coverage.--Coverage 
     under a qualified health benefits plan.
       (B) Grandfathered health insurance coverage; coverage under 
     current group health plan.--Coverage under a grandfathered 
     health insurance coverage (as defined in subsection (a) of 
     section 202) or under a current group health plan (described 
     in subsection (b) of such section).
       (C) Medicare.--Coverage under part A of title XVIII of the 
     Social Security Act.
       (D) Medicaid.--Coverage for medical assistance under title 
     XIX of the Social Security Act, excluding such coverage that 
     is only available because of the application of subsection 
     (u), (z), or (aa), or (hh) of section 1902 of such Act.
       (E) Members of the armed forces and dependents (including 
     tricare).--Coverage under chapter 55 of title 10, United 
     States Code, including similar coverage furnished under 
     section 1781 of title 38 of such Code.
       (F) VA.--Coverage under the veteran's health care program 
     under chapter 17 of title 38, United States Code.
       (G) Other coverage.--Such other health benefits coverage, 
     such as a State health benefits risk pool, as the 
     Commissioner, in coordination with the Secretary of the 
     Treasury, recognizes for purposes of this paragraph.

     The Commissioner shall make determinations under this 
     paragraph in coordination with the Secretary of the Treasury.
       (3) Continuing eligibility permitted.--
       (A) In general.--Except as provided in subparagraph (B), 
     once an individual qualifies as an Exchange-eligible 
     individual under this subsection (including as an employee or 
     dependent of an employee of an Exchange-eligible employer) 
     and enrolls under an Exchange-participating health benefits 
     plan through the Health Insurance Exchange, the individual 
     shall continue to be treated as an Exchange-eligible 
     individual until the individual is no longer enrolled with an 
     Exchange-participating health benefits plan.
       (B) Exceptions.--
       (i) In general.--Subparagraph (A) shall not apply to an 
     individual once the individual becomes eligible for 
     coverage--

       (I) under part A of the Medicare program;
       (II) under the Medicaid program as a Medicaid-eligible 
     individual, except as permitted under clause (ii); or
       (III) in such other circumstances as the Commissioner may 
     provide.

       (ii) Transition period.--In the case described in clause 
     (i)(II), the Commissioner shall permit the individual to 
     continue treatment under subparagraph (A) until such limited 
     time as the Commissioner determines it is administratively 
     feasible, consistent with minimizing disruption in the 
     individual's access to health care.
       (4) Transition for chip eligibles.--An individual who is 
     eligible for child health assistance under title XXI of the 
     Social Security Act for a period during Y1 shall not be an 
     Exchange-eligible individual during such period.
       (e) Employers.--
       (1) Smallest employer.--Subject to paragraph (5), smallest 
     employers described in this paragraph are employers with 25 
     or fewer employees.
       (2) Smaller employers.--Subject to paragraph (5), smaller 
     employers described in this paragraph are employers that are 
     not smallest employers described in paragraph (1) and have 50 
     or fewer employees.
       (3) Small employers.--Subject to paragraph (5), small 
     employers described in this paragraph are employers that are 
     not described in paragraph (1) or (2) and have 100 or fewer 
     employees.
       (4) Larger employers.--
       (A) In general.--Beginning with Y3, the Commissioner may 
     permit employers not described in paragraph (1), (2), or (3) 
     to be Exchange-eligible employers.
       (B) Phase-in.--In applying subparagraph (A), the 
     Commissioner may phase-in the application of such 
     subparagraph based on the number of full-time employees of an 
     employer and such other considerations as the Commissioner 
     deems appropriate.
       (5) Continuing eligibility.--Once an employer is permitted 
     to be an Exchange-eligible employer under this subsection and 
     enrolls employees through the Health Insurance Exchange, the 
     employer shall continue to be treated as an Exchange-eligible 
     employer for each subsequent plan year regardless of the 
     number of employees involved unless and until the employer 
     meets the requirement of section 411(a) through paragraph (1) 
     of such section by offering a group health plan and not 
     through offering an Exchange-participating health benefits 
     plan.
       (6) Employer participation and contributions.--
       (A) Satisfaction of employer responsibility.--For any year 
     in which an employer is an Exchange-eligible employer, such 
     employer may meet the requirements of section 412 with 
     respect to employees of such employer by offering such 
     employees the option of enrolling with Exchange-participating 
     health benefits plans through the Health Insurance Exchange 
     consistent with the provisions of subtitle B of title IV.
       (B) Employee choice.--Any employee offered Exchange-
     participating health benefits plans by the employer of such 
     employee under subparagraph (A) may choose coverage under any 
     such plan. That choice includes, with respect to family 
     coverage, coverage of the dependents of such employee.
       (7) Affiliated groups.--Any employer which is part of a 
     group of employers who are treated as a single employer under 
     subsection (b), (c), (m), or (o) of section 414 of the 
     Internal Revenue Code of 1986 shall be treated, for purposes 
     of this subtitle, as a single employer.
       (8) Treatment of multi-employer plans.--The plan sponsor of 
     a group health plan (as defined in section 773(a) of the 
     Employee Retirement Income Security Act of 1974) that is a 
     multi-employer plan (as defined in section 3(37) of such Act) 
     may obtain health insurance coverage with respect to 
     participants in the plan through the Exchange to the same 
     extent that an employer not described in paragraph (1) or (2) 
     is permitted by the Commissioner to obtain health insurance 
     coverage through the Exchange as an Exchange-eligible 
     employer.
       (9) Other counting rules.--The Commissioner shall establish 
     rules relating to how employees are counted for purposes of 
     carrying out this subsection.
       (f) Special Situation Authority.--The Commissioner shall 
     have the authority to establish such rules as may be 
     necessary to deal with special situations with regard to 
     uninsured individuals and employers participating as 
     Exchange-eligible individuals and employers, such as 
     transition periods for individuals and employers who gain, or 
     lose, Exchange-eligible participation status, and to 
     establish grace periods for premium payment.
       (g) Surveys of Individuals and Employers.--The Commissioner 
     shall provide for periodic surveys of Exchange-eligible 
     individuals and employers concerning satisfaction of such 
     individuals and employers with the Health Insurance Exchange 
     and Exchange-participating health benefits plans.
       (h) Exchange Access Study.--
       (1) In general.--The Commissioner shall conduct a study of 
     access to the Health Insurance Exchange for individuals and 
     for employers, including individuals and employers who are 
     not eligible and enrolled in Exchange-participating health 
     benefits plans. The goal of the study is to determine if 
     there are significant groups and types of individuals and 
     employers who are not Exchange-eligible individuals or 
     employers, but who would have improved benefits and 
     affordability if made eligible for coverage in the Exchange.
       (2) Items included in study.--Such study also shall 
     examine--
       (A) the terms, conditions, and affordability of group 
     health coverage offered by employers and QHBP offering 
     entities outside of the

[[Page H12643]]

     Exchange compared to Exchange-participating health benefits 
     plans; and
       (B) the affordability-test standard for access of certain 
     employed individuals to coverage in the Health Insurance 
     Exchange.
       (3) Report.--Not later than January 1 of Y3, in Y6, and 
     thereafter, the Commissioner shall submit to Congress a 
     report on the study conducted under this subsection and shall 
     include in such report recommendations regarding changes in 
     standards for Exchange eligibility for individuals and 
     employers.

     SEC. 303. BENEFITS PACKAGE LEVELS.

       (a) In General.--The Commissioner shall specify the 
     benefits to be made available under Exchange-participating 
     health benefits plans during each plan year, consistent with 
     subtitle C of title II and this section.
       (b) Limitation on Health Benefits Plans Offered by Offering 
     Entities.--The Commissioner may not enter into a contract 
     with a QHBP offering entity under section 304(c) for the 
     offering of an Exchange-participating health benefits plan in 
     a service area unless the following requirements are met:
       (1) Required offering of basic plan.--The entity offers 
     only one basic plan for such service area.
       (2) Optional offering of enhanced plan.--If and only if the 
     entity offers a basic plan for such service area, the entity 
     may offer one enhanced plan for such area.
       (3) Optional offering of premium plan.--If and only if the 
     entity offers an enhanced plan for such service area, the 
     entity may offer one premium plan for such area.
       (4) Optional offering of premium-plus plans.--If and only 
     if the entity offers a premium plan for such service area, 
     the entity may offer one or more premium-plus plans for such 
     area.
     All such plans may be offered under a single contract with 
     the Commissioner.
       (c) Specification of Benefit Levels for Plans.--
       (1) In general.--The Commissioner shall establish the 
     following standards consistent with this subsection and title 
     II:
       (A) Basic, enhanced, and premium plans.--Standards for 3 
     levels of Exchange-participating health benefits plans: 
     basic, enhanced, and premium (in this division referred to as 
     a ``basic plan'', ``enhanced plan'', and ``premium plan'', 
     respectively).
       (B) Premium-plus plan benefits.--Standards for additional 
     benefits that may be offered, consistent with this subsection 
     and subtitle C of title II, under a premium plan (such a plan 
     with additional benefits referred to in this division as a 
     ``premium-plus 
     plan'').
       (2) Basic plan.--
       (A) In general.--A basic plan shall offer the essential 
     benefits package required under title II for a qualified 
     health benefits plan with an actuarial value of 70 percent of 
     the full actuarial value of the benefits provided under the 
     reference benefits package.
       (B) Tiered cost-sharing for affordable credit eligible 
     individuals.--In the case of an affordable credit eligible 
     individual (as defined in section 342(a)(1)) enrolled in an 
     Exchange-participating health benefits plan, the benefits 
     under a basic plan are modified to provide for the reduced 
     cost-sharing for the income tier applicable to the individual 
     under section 324(c).
       (3) Enhanced plan.--An enhanced plan shall offer, in 
     addition to the level of benefits under the basic plan, a 
     lower level of cost-sharing as provided under title II 
     consistent with section 223(b)(5)(A).
       (4) Premium plan.--A premium plan shall offer, in addition 
     to the level of benefits under the basic plan, a lower level 
     of cost-sharing as provided under title II consistent with 
     section 223(b)(5)(B).
       (5) Premium-plus plan.--A premium-plus plan is a premium 
     plan that also provides additional benefits, such as adult 
     oral health and vision care, approved by the Commissioner. 
     The portion of the premium that is attributable to such 
     additional benefits shall be separately specified.
       (6) Range of permissible variation in cost-sharing.--The 
     Commissioner shall establish a permissible range of variation 
     of cost-sharing for each basic, enhanced, and premium plan, 
     except with respect to any benefit for which there is no 
     cost-sharing permitted under the essential benefits package. 
     Such variation shall permit a variation of not more than plus 
     (or minus) 10 percent in cost-sharing with respect to each 
     benefit category specified under section 222. Nothing in this 
     subtitle shall be construed as prohibiting tiering in cost-
     sharing, including through preferred and participating 
     providers and prescription drugs. In applying this paragraph, 
     a health benefits plan may increase the cost-sharing by 10 
     percent within each category or tier, as applicable, and may 
     decrease or eliminate cost-sharing in any category or tier as 
     compared to the essential benefits package.
       (d) Treatment of State Benefit Mandates.--Insofar as a 
     State requires a health insurance issuer offering health 
     insurance coverage to include benefits beyond the essential 
     benefits package, such requirement shall continue to apply to 
     an Exchange-participating health benefits plan, if the State 
     has entered into an arrangement satisfactory to the 
     Commissioner to reimburse the Commissioner for the amount of 
     any net increase in affordability premium credits under 
     subtitle C as a result of an increase in premium in basic 
     plans as a result of application of such requirement.
       (e) Rules Regarding Coverage of and Affordability Credits 
     for Specified Services.--
       (1) Assured availability of varied coverage through the 
     health insurance exchange.--The Commissioner shall assure 
     that, of the Exchange participating health benefits plans 
     offered in each premium rating area of the Health Insurance 
     Exchange--
       (A) there is at least one such plan that provides coverage 
     of services described in subparagraphs (A) and (B) of section 
     222(e)(4); and
       (B) there is at least one such plan that does not provide 
     coverage of services described in section 222(e)(4)(A) which 
     plan may also be one that does not provide coverage of 
     services described in section 222(e)(4)(B).
       (2) Segregation of funds.--If a qualified health benefits 
     plan provides coverage of services described in section 
     222(e)(4)(A), the plan shall provide assurances satisfactory 
     to the Commissioner that--
       (A) any affordability credits provided under subtitle C of 
     title II are not used for purposes of paying for such 
     services; and
       (B) only premium amounts attributable to the actuarial 
     value described in section 213(b) are used for such purpose.

     SEC. 304. CONTRACTS FOR THE OFFERING OF EXCHANGE-
                   PARTICIPATING HEALTH BENEFITS PLANS.

       (a) Contracting Duties.--In carrying out section 301(b)(1) 
     and consistent with this subtitle:
       (1) Offering entity and plan standards.--The Commissioner 
     shall--
       (A) establish standards necessary to implement the 
     requirements of this title and title II for--
       (i) QHBP offering entities for the offering of an Exchange-
     participating health benefits plan; and
       (ii) Exchange-participating health benefits plans; and
       (B) certify QHBP offering entities and qualified health 
     benefits plans as meeting such standards and requirements of 
     this title and title II for purposes of this subtitle.
       (2) Soliciting and negotiating bids; contracts.--
       (A) Bid solicitation.--The Commissioner shall solicit bids 
     from QHBP offering entities for the offering of Exchange-
     participating health benefits plans. Such bids shall include 
     justification for proposed premiums.
       (B) Bid review and negotiation.--The Commissioner shall, 
     based upon a review of such bids including the premiums and 
     their affordability, negotiate with such entities for the 
     offering of such plans.
       (C) Denial of excessive premiums.--The Commissioner shall 
     deny excessive premiums and premium increases.
       (D) Contracts.--The Commissioner shall enter into contracts 
     with such entities for the offering of such plans through the 
     Health Insurance Exchange under terms (consistent with this 
     title) negotiated between the Commissioner and such entities.
       (3) Federal acquisition regulation.--In carrying out this 
     subtitle, the Commissioner may waive such provisions of the 
     Federal Acquisition Regulation that the Commissioner 
     determines to be inconsistent with the furtherance of this 
     subtitle, other than provisions relating to confidentiality 
     of information. Competitive procedures shall be used in 
     awarding contracts under this subtitle to the extent that 
     such procedures are consistent with this subtitle.
       (b) Standards for QHBP Offering Entities To Offer Exchange-
     Participating Health Benefits Plans.--The standards 
     established under subsection (a)(1)(A) shall require that, in 
     order for a QHBP offering entity to offer an Exchange-
     participating health benefits plan, the entity must meet the 
     following requirements:
       (1) Licensed.--The entity shall be licensed to offer health 
     insurance coverage under State law for each State in which it 
     is offering such coverage.
       (2) Data reporting.--The entity shall provide for the 
     reporting of such information as the Commissioner may 
     specify, including information necessary to administer the 
     risk pooling mechanism described in section 306(b) and 
     information to address disparities in health and health care.
       (3) Affordability.--The entity shall provide for affordable 
     premiums.
       (4) Implementing affordability credits.--The entity shall 
     provide for implementation of the affordability credits 
     provided for enrollees under subtitle C, including the 
     reduction in cost-sharing under section 344(c).
       (5) Enrollment.--The entity shall accept all enrollments 
     under this subtitle, subject to such exceptions (such as 
     capacity limitations) in accordance with the requirements 
     under title II for a qualified health benefits plan. The 
     entity shall notify the Commissioner if the entity projects 
     or anticipates reaching such a capacity limitation that would 
     result in a limitation in enrollment.
       (6) Risk pooling participation.--The entity shall 
     participate in such risk pooling mechanism as the 
     Commissioner establishes under section 306(b).
       (7) Essential community providers.--With respect to the 
     basic plan offered by the entity, the entity shall include 
     within the plan network those essential community providers, 
     where available, that serve predominantly 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 amended 
     by section 221 of Public Law 111-8). The Commissioner shall

[[Page H12644]]

     specify the extent to which and manner in which the previous 
     sentence shall apply in the case of a basic plan with respect 
     to which the Commissioner determines provides substantially 
     all benefits through a health maintenance organization, as 
     defined in section 2791(b)(3) of the Public Health Service 
     Act. This paragraph shall not be construed to require a basic 
     plan to contract with a provider if such provider refuses to 
     accept the generally applicable payment rates of such plan.
       (8) Culturally and linguistically appropriate services and 
     communications.--The entity shall provide for culturally and 
     linguistically appropriate communication and health services.
       (9) Special rules with respect to indian enrollees and 
     indian health care providers.--
       (A) Choice of providers.--The entity shall--
       (i) demonstrate to the satisfaction of the Commissioner 
     that it has contracted with a sufficient number of Indian 
     health care providers to ensure timely access to covered 
     services furnished by such providers to individual Indians 
     through the entity's Exchange-participating health benefits 
     plan; and
       (ii) agree to pay Indian health care providers, whether 
     such providers are participating or nonparticipating 
     providers with respect to the entity, for covered services 
     provided to those enrollees who are eligible to receive 
     services from such providers at a rate that is not less than 
     the level and amount of payment which the entity would make 
     for the services of a participating provider which is not an 
     Indian health care provider.
       (B) Special rule relating to indian health care 
     providers.--Provision of services by an Indian health care 
     provider exclusively to Indians and their dependents shall 
     not constitute discrimination under this Act.
       (10) Program integrity standards.--The entity shall 
     establish and operate a program to protect and promote the 
     integrity of Exchange-participating health benefits plans it 
     offers, in accordance with standards and functions 
     established by the Commissioner.
       (11) Additional requirements.--The entity shall comply with 
     other applicable requirements of this title, as specified by 
     the Commissioner, which shall include standards regarding 
     billing and collection practices for premiums and related 
     grace periods and which may include standards to ensure that 
     the entity does not use coercive practices to force providers 
     not to contract with other entities offering coverage through 
     the Health Insurance Exchange.
       (c) Contracts.--
       (1) Bid application.--To be eligible to enter into a 
     contract under this section, a QHBP offering entity shall 
     submit to the Commissioner a bid at such time, in such 
     manner, and containing such information as the Commissioner 
     may require.
       (2) Term.--Each contract with a QHBP offering entity under 
     this section shall be for a term of not less than one year, 
     but may be made automatically renewable from term to term in 
     the absence of notice of termination by either party.
       (3) Enforcement of network adequacy.--In the case of a 
     health benefits plan of a QHBP offering entity that uses a 
     provider network, the contract under this section with the 
     entity shall provide that if--
       (A) the Commissioner determines that such provider network 
     does not meet such standards as the Commissioner shall 
     establish under section 215; and
       (B) an individual enrolled in such plan receives an item or 
     service from a provider that is not within such network;
     then any cost-sharing for such item or service shall be equal 
     to the amount of such cost-sharing that would be imposed if 
     such item or service was furnished by a provider within such 
     network.
       (4) Oversight and enforcement responsibilities.--The 
     Commissioner shall establish processes, in coordination with 
     State insurance regulators, to oversee, monitor, and enforce 
     applicable requirements of this title with respect to QHBP 
     offering entities offering Exchange-participating health 
     benefits plans, including the marketing of such plans. Such 
     processes shall include the following:
       (A) Grievance and complaint mechanisms.--The Commissioner 
     shall establish, in coordination with State insurance 
     regulators, a process under which Exchange-eligible 
     individuals and employers may file complaints concerning 
     violations of such standards.
       (B) Enforcement.--In carrying out authorities under this 
     division relating to the Health Insurance Exchange, the 
     Commissioner may impose one or more of the intermediate 
     sanctions described in section 242(d).
       (C) Termination.--
       (i) In general.--The Commissioner may terminate a contract 
     with a QHBP offering entity under this section for the 
     offering of an Exchange-participating health benefits plan if 
     such entity fails to comply with the applicable requirements 
     of this title. Any determination by the Commissioner to 
     terminate a contract shall be made in accordance with formal 
     investigation and compliance procedures established by the 
     Commissioner under which--

       (I) the Commissioner provides the entity with the 
     reasonable opportunity to develop and implement a corrective 
     action plan to correct the deficiencies that were the basis 
     of the Commissioner's determination; and
       (II) the Commissioner provides the entity with reasonable 
     notice and opportunity for hearing (including the right to 
     appeal an initial decision) before terminating the contract.

       (ii) Exception for imminent and serious risk to health.--
     Clause (i) shall not apply if the Commissioner determines 
     that a delay in termination, resulting from compliance with 
     the procedures specified in such clause prior to termination, 
     would pose an imminent and serious risk to the health of 
     individuals enrolled under the qualified health benefits plan 
     of the QHBP offering entity.
       (D) Construction.--Nothing in this subsection shall be 
     construed as preventing the application of other sanctions 
     under subtitle E of title II with respect to an entity for a 
     violation of such a requirement.
       (5) Special rule related to cost-sharing and indian health 
     care providers.--The contract under this section with a QHBP 
     offering entity for a health benefits plan shall provide that 
     if an individual who is an Indian is enrolled in such a plan 
     and such individual receives a covered item or service from 
     an Indian health care provider (regardless of whether such 
     provider is in the plan's provider network), the cost-sharing 
     for such item or service shall be equal to the amount of 
     cost-sharing that would be imposed if such item or service--
       (A) had been furnished by another provider in the plan's 
     provider network; or
       (B) in the case that the plan has no such network, was 
     furnished by a non-Indian provider.
       (6) National plan.--Nothing in this section shall be 
     construed as preventing the Commissioner from entering into a 
     contract under this subsection with a QHBP offering entity 
     for the offering of a health benefits plan with the same 
     benefits in every State so long as such entity is licensed to 
     offer such plan in each State and the benefits meet the 
     applicable requirements in each such State.
       (d) No Discrimination on the Basis of Provision of 
     Abortion.--No Exchange participating health benefits plan may 
     discriminate against any individual health care provider or 
     health care facility because of its willingness or 
     unwillingness to provide, pay for, provide coverage of, or 
     refer for abortions.

     SEC. 305. OUTREACH AND ENROLLMENT OF EXCHANGE-ELIGIBLE 
                   INDIVIDUALS AND EMPLOYERS IN EXCHANGE-
                   PARTICIPATING HEALTH BENEFITS PLAN.

       (a) In General.--
       (1) Outreach.--The Commissioner shall conduct outreach 
     activities consistent with subsection (c), including through 
     use of appropriate entities as described in paragraph (3) of 
     such subsection, to inform and educate individuals and 
     employers about the Health Insurance Exchange and Exchange-
     participating health benefits plan options. Such outreach 
     shall include outreach specific to vulnerable populations, 
     such as children, individuals with disabilities, individuals 
     with mental illness, and individuals with other cognitive 
     impairments.
       (2) Eligibility.--The Commissioner shall make timely 
     determinations of whether individuals and employers are 
     Exchange-eligible individuals and employers (as defined in 
     section 302).
       (3) Enrollment.--The Commissioner shall establish and carry 
     out an enrollment process for Exchange-eligible individuals 
     and employers, including at community locations, in 
     accordance with subsection (b).
       (b) Enrollment Process.--
       (1) In general.--The Commissioner shall establish a process 
     consistent with this title for enrollments in Exchange-
     participating health benefits plans. Such process shall 
     provide for enrollment through means such as the mail, by 
     telephone, electronically, and in person.
       (2) Enrollment periods.--
       (A) Open enrollment period.--The Commissioner shall 
     establish an annual open enrollment period during which an 
     Exchange-eligible individual or employer may elect to enroll 
     in an Exchange-participating health benefits plan for the 
     following plan year and an enrollment period for 
     affordability credits under subtitle C. Such periods shall be 
     during September through November of each year, or such other 
     time that would maximize timeliness of income verification 
     for purposes of such subtitle. The open enrollment period 
     shall not be less than 30 days.
       (B) Special enrollment.--The Commissioner shall also 
     provide for special enrollment periods to take into account 
     special circumstances of individuals and employers, such as 
     an individual who--
       (i) loses acceptable coverage;
       (ii) experiences a change in marital or other dependent 
     status;
       (iii) moves outside the service area of the Exchange-
     participating health benefits plan in which the individual is 
     enrolled; or
       (iv) experiences a significant change in income.
       (C) Enrollment information.--The Commissioner shall provide 
     for the broad dissemination of information to prospective 
     enrollees on the enrollment process, including before each 
     open enrollment period. In carrying out the previous 
     sentence, the Commissioner may work with other appropriate 
     entities to facilitate such provision of information.
       (3) Automatic enrollment for non-medicaid eligible 
     individuals.--
       (A) In general.--The Commissioner shall provide for a 
     process under which individuals

[[Page H12645]]

     who are Exchange-eligible individuals described in 
     subparagraph (B) are automatically enrolled under an 
     appropriate Exchange-participating health benefits plan. Such 
     process may involve a random assignment or some other form of 
     assignment that takes into account the health care providers 
     used by the individual involved or such other relevant 
     factors as the Commissioner may specify.
       (B) Subsidized individuals described.--An individual 
     described in this subparagraph is an Exchange-eligible 
     individual who is either of the following:
       (i) Affordability credit eligible individuals.--The 
     individual--

       (I) has applied for, and been determined eligible for, 
     affordability credits under subtitle C;
       (II) has not opted out from receiving such affordability 
     credit; and
       (III) does not otherwise enroll in another Exchange-
     participating health benefits plan.

       (ii) Individuals enrolled in a terminated plan.--The 
     individual who is enrolled in an Exchange-participating 
     health benefits plan that is terminated (during or at the end 
     of a plan year) and who does not otherwise enroll in another 
     Exchange-participating health benefits plan.
       (4) Direct payment of premiums to plans.--Under the 
     enrollment process, individuals enrolled in an Exchange-
     participating health benefits plan shall pay such plans 
     directly, and not through the Commissioner or the Health 
     Insurance Exchange.
       (c) Coverage Information and Assistance.--
       (1) Coverage information.--The Commissioner shall provide 
     for the broad dissemination of information on Exchange-
     participating health benefits plans offered under this title. 
     Such information shall be provided in a comparative manner, 
     and shall include information on benefits, premiums, cost-
     sharing, quality, provider networks, and consumer 
     satisfaction.
       (2) Consumer assistance with choice.--To provide assistance 
     to Exchange-eligible individuals and employers, the 
     Commissioner shall--
       (A) provide for the operation of a toll-free telephone 
     hotline to respond to requests for assistance and maintain an 
     Internet Web site through which individuals may obtain 
     information on coverage under Exchange-participating health 
     benefits plans and file complaints;
       (B) develop and disseminate information to Exchange-
     eligible enrollees on their rights and responsibilities;
       (C) assist Exchange-eligible individuals in selecting 
     Exchange-participating health benefits plans and obtaining 
     benefits through such plans; and
       (D) ensure that the Internet Web site described in 
     subparagraph (A) and the information described in 
     subparagraph (B) is developed using plain language (as 
     defined in section 233(a)(2)).
       (3) Use of other entities.--In carrying out this 
     subsection, the Commissioner may work with other appropriate 
     entities to facilitate the dissemination of information under 
     this subsection and to provide assistance as described in 
     paragraph (2).
       (d) Coverage for Certain Newborns Under Medicaid.--
       (1) In general.--In the case of a child born in the United 
     States who at the time of birth is not otherwise covered 
     under acceptable coverage, for the period of time beginning 
     on the date of birth and ending on the date the child 
     otherwise is covered under acceptable coverage (or, if 
     earlier, the end of the month in which the 60-day period, 
     beginning on the date of birth, ends), the child shall be 
     deemed--
       (A) to be a Medicaid eligible individual for purposes of 
     this division and Medicaid; and
       (B) to be automatically enrolled in Medicaid as a 
     traditional Medicaid eligible individual (as defined in 
     section 1943(c) of the Social Security Act).
       (2) Extended treatment as medicaid eligible individual.--In 
     the case of a child described in paragraph (1) who at the end 
     of the period referred to in such paragraph is not otherwise 
     covered under acceptable coverage, the child shall be deemed 
     (until such time as the child obtains such coverage or the 
     State otherwise makes a determination of the child's 
     eligibility for medical assistance under its Medicaid plan 
     pursuant to section 1943(b)(1) of the Social Security Act) to 
     be a Medicaid eligible individual described in section 
     1902(l)(1)(B) of such Act.
       (e) Medicaid Coverage for Medicaid Eligible Individuals.--
       (1) Medicaid enrollment obligation.--An individual may 
     apply, in the manner described in section 341(b)(1), for a 
     determination of whether the individual is a Medicaid-
     eligible individual. If the individual is determined to be so 
     eligible, the Commissioner, through the Medicaid memorandum 
     of understanding under paragraph (2), shall provide for the 
     enrollment of the individual under the State Medicaid plan in 
     accordance with such memorandum of understanding. In the case 
     of such an enrollment, the State shall provide for the same 
     periodic redetermination of eligibility under Medicaid as 
     would otherwise apply if the individual had directly applied 
     for medical assistance to the State Medicaid agency.
       (2) Coordinated enrollment with state through memorandum of 
     understanding.--The Commissioner, in consultation with the 
     Secretary of Health and Human Services, shall enter into a 
     memorandum of understanding with each State with respect to 
     coordinating enrollment of individuals in Exchange-
     participating health benefits plans and under the State's 
     Medicaid program consistent with this section and to 
     otherwise coordinate the implementation of the provisions of 
     this division with respect to the Medicaid program. Such 
     memorandum shall permit the exchange of information 
     consistent with the limitations described in section 
     1902(a)(7) of the Social Security Act. Nothing in this 
     section shall be construed as permitting such memorandum to 
     modify or vitiate any requirement of a State Medicaid plan.
       (f) Effective Culturally and Linguistically Appropriate 
     Communication.--In carrying out this section, the 
     Commissioner shall establish effective methods for 
     communicating in plain language and a culturally and 
     linguistically appropriate manner.
       (g) Role for Enrollment Agents and Brokers.--Nothing in 
     this division shall be construed to affect the role of 
     enrollment agents and brokers under State law, including with 
     regard to the enrollment of individuals and employers in 
     qualified health benefits plans including the public health 
     insurance option.
       (h) Assistance for Small Employers.--
       (1) In general.--The Commissioner, in consultation with the 
     Small Business Administration, shall establish and carry out 
     a program to provide to small employers counseling and 
     technical assistance with respect to the provision of health 
     insurance to employees of such employers through the Health 
     Insurance Exchange.
       (2) Duties.--The program established under paragraph (1) 
     shall include the following services:
       (A) Educational activities to increase awareness of the 
     Health Insurance Exchange and available small employer health 
     plan options.
       (B) Distribution of information to small employers with 
     respect to the enrollment and selection process for health 
     plans available under the Health Insurance Exchange, 
     including standardized comparative information on the health 
     plans available under the Health Insurance Exchange.
       (C) Distribution of information to small employers with 
     respect to available affordability credits or other financial 
     assistance.
       (D) Referrals to appropriate entities of complaints and 
     questions relating to the Health Insurance Exchange.
       (E) Enrollment and plan selection assistance for employers 
     with respect to the Health Insurance Exchange.
       (F) Responses to questions relating to the Health Insurance 
     Exchange and the program established under paragraph (1).
       (3) Authority to provide services directly or by 
     contract.--The Commissioner may provide services under 
     paragraph (2) directly or by contract with nonprofit entities 
     that the Commissioner determines capable of carrying out such 
     services.
       (4) Small employer defined.--In this subsection, the term 
     ``small employer'' means an employer with less than 100 
     employees.
       (i) Participation of Small Employer Benefit Arrangements.--
       (1) In general.--The Commissioner may enter into contracts 
     with small employer benefit arrangements to provide consumer 
     information, outreach, and assistance in the enrollment of 
     small employers (and their employees) who are members of such 
     an arrangement under Exchange participating health benefits 
     plans.
       (2) Small employer benefit arrangement defined.--In this 
     subsection, the term ``small employer benefit arrangement'' 
     means a not-for-profit agricultural or other cooperative 
     that--
       (A) consists solely of its members and is operated for the 
     primary purpose of providing affordable employee benefits to 
     its members;
       (B) only has as members small employers in the same 
     industry or line of business;
       (C) has no member that has more than a 5 percent voting 
     interest in the cooperative; and
       (D) is governed by a board of directors elected by its 
     members.

     SEC. 306. OTHER FUNCTIONS.

       (a) Coordination of Affordability Credits.--The 
     Commissioner shall coordinate the distribution of 
     affordability premium and cost-sharing credits under subtitle 
     C to QHBP offering entities offering Exchange-participating 
     health benefits plans.
       (b) Coordination of Risk Pooling.--The Commissioner shall 
     establish a mechanism whereby there is an adjustment made of 
     the premium amounts payable among QHBP offering entities 
     offering Exchange-participating health benefits plans of 
     premiums collected for such plans that takes into account (in 
     a manner specified by the Commissioner) the differences in 
     the risk characteristics of individuals and employees 
     enrolled under the different Exchange-participating health 
     benefits plans offered by such entities so as to minimize the 
     impact of adverse selection of enrollees among the plans 
     offered by such entities. For purposes of the previous 
     sentence, the Commissioner may utilize data regarding 
     enrollee demographics, inpatient and outpatient diagnoses (in 
     a similar manner as such data are used under parts C and D of 
     title XVIII of the Social Security Act), and such other 
     information as the Secretary determines may be necessary, 
     such as the actual medical costs of enrollees during the 
     previous year.

[[Page H12646]]

     SEC. 307. HEALTH INSURANCE EXCHANGE TRUST FUND.

       (a) Establishment of Health Insurance Exchange Trust 
     Fund.--There is created within the Treasury of the United 
     States a trust fund to be known as the ``Health Insurance 
     Exchange Trust Fund'' (in this section referred to as the 
     ``Trust Fund''), consisting of such amounts as may be 
     appropriated or credited to the Trust Fund under this section 
     or any other provision of law.
       (b) Payments From Trust Fund.--The Commissioner shall pay 
     from time to time from the Trust Fund such amounts as the 
     Commissioner determines are necessary to make payments to 
     operate the Health Insurance Exchange, including payments 
     under subtitle C (relating to affordability credits).
       (c) Transfers to Trust Fund.--
       (1) Dedicated payments.--There are hereby appropriated to 
     the Trust Fund amounts equivalent to the following:
       (A) Taxes on individuals not obtaining acceptable 
     coverage.--The amounts received in the Treasury under section 
     59B of the Internal Revenue Code of 1986 (relating to 
     requirement of health insurance coverage for individuals).
       (B) Employment taxes on employers not providing acceptable 
     coverage.--The amounts received in the Treasury under 
     sections 3111(c) and 3221(c) of the Internal Revenue Code of 
     1986 (relating to employers electing to not provide health 
     benefits).
       (C) Excise tax on failures to meet certain health coverage 
     requirements.--The amounts received in the Treasury under 
     section 4980H(b) (relating to excise tax with respect to 
     failure to meet health coverage participation requirements).
       (2) Appropriations to cover government contributions.--
     There are hereby appropriated, out of any moneys in the 
     Treasury not otherwise appropriated, to the Trust Fund, an 
     amount equivalent to the amount of payments made from the 
     Trust Fund under subsection (b) plus such amounts as are 
     necessary reduced by the amounts deposited under paragraph 
     (1).
       (d) Application of Certain Rules.--Rules similar to the 
     rules of subchapter B of chapter 98 of the Internal Revenue 
     Code of 1986 shall apply with respect to the Trust Fund.

     SEC. 308. OPTIONAL OPERATION OF STATE-BASED HEALTH INSURANCE 
                   EXCHANGES.

       (a) In General.--If--
       (1) a State (or group of States, subject to the approval of 
     the Commissioner) applies to the Commissioner for approval of 
     a State-based Health Insurance Exchange to operate in the 
     State (or group of States); and
       (2) the Commissioner approves such State-based Health 
     Insurance Exchange,
     then, subject to subsections (c) and (d), the State-based 
     Health Insurance Exchange shall operate, instead of the 
     Health Insurance Exchange, with respect to such State (or 
     group of States). The Commissioner shall approve a State-
     based Health Insurance Exchange if it meets the requirements 
     for approval under subsection (b).
       (b) Requirements for Approval.--
       (1) In general.--The Commissioner may not approve a State-
     based Health Insurance Exchange under this section unless the 
     following requirements are met:
       (A) The State-based Health Insurance Exchange must 
     demonstrate the capacity to and provide assurances 
     satisfactory to the Commissioner that the State-based Health 
     Insurance Exchange will carry out the functions specified for 
     the Health Insurance Exchange in the State (or States) 
     involved, including--
       (i) negotiating and contracting with QHBP offering entities 
     for the offering of Exchange-participating health benefits 
     plans, which satisfy the standards and requirements of this 
     title and title II;
       (ii) enrolling Exchange-eligible individuals and employers 
     in such State in such plans;
       (iii) the establishment of sufficient local offices to meet 
     the needs of Exchange-eligible individuals and employers;
       (iv) administering affordability credits under subtitle B 
     using the same methodologies (and at least the same income 
     verification methods) as would otherwise apply under such 
     subtitle and at a cost to the Federal Government which does 
     exceed the cost to the Federal Government if this section did 
     not apply; and
       (v) enforcement activities consistent with Federal 
     requirements.
       (B) There is no more than one Health Insurance Exchange 
     operating with respect to any one State.
       (C) The State provides assurances satisfactory to the 
     Commissioner that approval of such an Exchange will not 
     result in any net increase in expenditures to the Federal 
     Government.
       (D) The State provides for reporting of such information as 
     the Commissioner determines and assurances satisfactory to 
     the Commissioner that it will vigorously enforce violations 
     of applicable requirements.
       (E) Such other requirements as the Commissioner may 
     specify.
       (2) Presumption for certain state-operated exchanges.--
       (A) In general.--In the case of a State operating an 
     Exchange prior to January 1, 2010, that seeks to operate the 
     State-based Health Insurance Exchange under this section, the 
     Commissioner shall presume that such Exchange meets the 
     standards under this section unless the Commissioner 
     determines, after completion of the process established under 
     subparagraph (B), that the Exchange does not comply with such 
     standards.
       (B) Process.--The Commissioner shall establish a process to 
     work with a State described in subparagraph (A) to provide 
     assistance necessary to assure that the State's Exchange 
     comes into compliance with the standards for approval under 
     this section.
       (c) Ceasing Operation.--
       (1) In general.--A State-based Health Insurance Exchange 
     may, at the option of each State involved, and only after 
     providing timely and reasonable notice to the Commissioner, 
     cease operation as such an Exchange, in which case the Health 
     Insurance Exchange shall operate, instead of such State-based 
     Health Insurance Exchange, with respect to such State (or 
     States).
       (2) Termination; health insurance exchange resumption of 
     functions.--The Commissioner may terminate the approval (for 
     some or all functions) of a State-based Health Insurance 
     Exchange under this section if the Commissioner determines 
     that such Exchange no longer meets the requirements of 
     subsection (b) or is no longer capable of carrying out such 
     functions in accordance with the requirements of this 
     subtitle. In lieu of terminating such approval, the 
     Commissioner may temporarily assume some or all functions of 
     the State-based Health Insurance Exchange until such time as 
     the Commissioner determines the State-based Health Insurance 
     Exchange meets such requirements of subsection (b) and is 
     capable of carrying out such functions in accordance with the 
     requirements of this subtitle.
       (3) Effectiveness.--The ceasing or termination of a State-
     based Health Insurance Exchange under this subsection shall 
     be effective in such time and manner as the Commissioner 
     shall specify.
       (d) Retention of Authority.--
       (1) Authority retained.--Enforcement authorities of the 
     Commissioner shall be retained by the Commissioner.
       (2) Discretion to retain additional authority.--The 
     Commissioner may specify functions of the Health Insurance 
     Exchange that--
       (A) may not be performed by a State-based Health Insurance 
     Exchange under this section; or
       (B) may be performed by the Commissioner and by such a 
     State-based Health Insurance Exchange.
       (e) References.--In the case of a State-based Health 
     Insurance Exchange, except as the Commissioner may otherwise 
     specify under subsection (d), any references in this subtitle 
     to the Health Insurance Exchange or to the Commissioner in 
     the area in which the State-based Health Insurance Exchange 
     operates shall be deemed a reference to the State-based 
     Health Insurance Exchange and the head of such Exchange, 
     respectively.
       (f) Funding.--In the case of a State-based Health Insurance 
     Exchange, there shall be assistance provided for the 
     operation of such Exchange in the form of a matching grant 
     with a State share of expenditures required.

     SEC. 309. INTERSTATE HEALTH INSURANCE COMPACTS.

       (a) In General.--Effective January 1, 2015, 2 or more 
     States may form Health Care Choice Compacts (in this section 
     referred to as ``compacts'') to facilitate the purchase of 
     individual health insurance coverage across State lines.
       (b) Model Guidelines.--The Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall consult with the National Association of Insurance 
     Commissioners (in this section referred to as ``NAIC'') to 
     develop not later than January 1, 2014 model guidelines for 
     the creation of compacts. In developing such guidelines, the 
     Secretary shall consult with consumers, health insurance 
     issuers, and other interested parties. Such guidelines 
     shall--
       (1) provide for the sale of health insurance coverage to 
     residents of all compacting States subject to the laws and 
     regulations of a primary State designated by the compacting 
     States;
       (2) require health insurance issuers issuing health 
     insurance coverage in secondary States to maintain licensure 
     in every such State;
       (3) preserve the authority of the State of an individual's 
     residence to enforce law relating to--
       (A) market conduct;
       (B) unfair trade practices;
       (C) network adequacy;
       (D) consumer protection standards;
       (E) grievance and appeals;
       (F) fair claims payment requirements;
       (G) prompt payment of claims;
       (H) rate review; and
       (I) fraud;
       (4) permit State insurance commissioners and other State 
     agencies in secondary States access to the records of a 
     health insurance issuer to the same extent as if the policy 
     were written in that State; and
       (5) provide for clear and conspicuous disclosure to 
     consumers that the policy may not be subject to all the laws 
     and regulations of the State in which the purchaser resides.
       (c) No Requirement to Compact.--Nothing in this section 
     shall be construed to require a State to join a compact.
       (d) State Authority.--A State may not enter into a compact 
     under this subsection unless the State enacts a law after the 
     date of enactment of this Act that specifically authorizes 
     the State to enter into such compact.
       (e) Consumer Protections.--If a State enters into a compact 
     it must retain responsibility for the consumer protections of 
     its residents and its residents retain the right to bring a 
     claim in a State court in the State in which the resident 
     resides.

[[Page H12647]]

       (f) Assistance to Compacting States.--
       (1) In general.--Beginning January 1, 2015, the Secretary 
     shall make awards, from amounts appropriated under paragraph 
     (5), to States in the amount specified in paragraph (2) for 
     the uses described in paragraph (3).
       (2) Amount specified.--
       (A) In general.--For each fiscal year, the Secretary shall 
     determine the total amount that the Secretary will make 
     available for grants under this subsection.
       (B) State amount.--For each State that is awarded a grant 
     under paragraph (1), the amount of such grants shall be based 
     on a formula established by the Secretary, not to exceed $1 
     million per State, under which States shall receive an award 
     in the amount that is based on the following two components:
       (i) A minimum amount for each State.
       (ii) An additional amount based on population of the State.
       (3) Use of funds.--A State shall use amounts awarded under 
     this subsection for activities (including planning 
     activities) related regulating health insurance coverage sold 
     in secondary States.
       (4) Renewability of grant.--The Secretary may renew a grant 
     award under paragraph (1) if the State receiving the grant 
     continues to be a member of a compact.
       (5) Authorization of appropriations.--There are authorized 
     to be appropriated such sums as may be necessary to carry out 
     this subsection in each of fiscal years 2015 through 2020.

     SEC. 310. HEALTH INSURANCE COOPERATIVES.

       (a) Establishment.--Not later than 6 months after the date 
     of the enactment of this Act, the Commissioner, in 
     consultation with the Secretary of the Treasury, shall 
     establish a Consumer Operated and Oriented Plan program (in 
     this section referred to as the ``CO-OP program'') under 
     which the Commissioner may make grants and loans for the 
     establishment and initial operation of not-for-profit, 
     member-run health insurance cooperatives (in this section 
     individually referred to as a ``cooperative'') that provide 
     insurance through the Health Insurance Exchange or a State-
     based Health Insurance Exchange under section 308. Nothing in 
     this section shall be construed as requiring a State to 
     establish such a cooperative.
       (b) Start-up and Solvency Grants and Loans.--
       (1) In general.--Not later than 36 months after the date of 
     the enactment of this Act, the Commissioner, acting through 
     the CO-OP program, may make--
       (A) loans (of such period and with such terms as the 
     Secretary may specify) to cooperatives to assist such 
     cooperatives with start-up costs; and
       (B) grants to cooperatives to assist such cooperatives in 
     meeting State solvency requirements in the States in which 
     such cooperative offers or issues insurance coverage.
       (2)  Conditions.--A grant or loan may not be awarded under 
     this subsection with respect to a cooperative unless the 
     following conditions are met:
       (A) The cooperative is structured as a not-for-profit, 
     member organization under the law of each State in which such 
     cooperative offers, intends to offer, or issues insurance 
     coverage, with the membership of the cooperative being made 
     up entirely of beneficiaries of the insurance coverage 
     offered by such cooperative.
       (B) The cooperative did not offer insurance on or before 
     July 16, 2009, and the cooperative is not an affiliate or 
     successor to an insurance company offering insurance on or 
     before such date.
       (C) The governing documents of the cooperative incorporate 
     ethical and conflict of interest standards designed to 
     protect against insurance industry involvement and 
     interference in the governance of the cooperative.
       (D) The cooperative is not sponsored by a State government.
       (E) Substantially all of the activities of the cooperative 
     consist of the issuance of qualified health benefits plans 
     through the Health Insurance Exchange or a State-based health 
     insurance exchange.
       (F) The cooperative is licensed to offer insurance in each 
     State in which it offers insurance.
       (G) The governance of the cooperative must be subject to a 
     majority vote of its members.
       (H) As provided in guidance issued by the Secretary of 
     Health and Human Services, the cooperative operates with a 
     strong consumer focus, including timeliness, responsiveness, 
     and accountability to members.
       (I) Any profits made by the cooperative are used to lower 
     premiums, improve benefits, or to otherwise improve the 
     quality of health care delivered to members.
       (3) Priority.--The Commissioner, in making grants and loans 
     under this subsection, shall give priority to cooperatives 
     that--
       (A) operate on a statewide basis;
       (B) use an integrated delivery system; or
       (C) have a significant level of financial support from 
     nongovernmental sources.
       (4) Rules of construction.--Nothing in this section shall 
     be construed to prevent a cooperative established in one 
     State from integrating with a cooperative established in 
     another State the administration, issuance of coverage, or 
     other activities related to acting as a QHBP offering entity. 
     Nothing in this section shall be construed as preventing 
     State governments from taking actions to permit such 
     integration.
       (5) Amortization of grants and loans.--The Secretary shall 
     provide for the repayment of grants or loans provided under 
     this subsection to the Treasury in an amortized manner over a 
     10-year period.
       (6) Repayment for violations of terms of program.--If a 
     cooperative violates the terms of the CO-OP program and fails 
     to correct the violation within a reasonable period of time, 
     as determined by the Commissioner, the cooperative shall 
     repay the total amount of any loan or grant received by such 
     cooperative under this section, plus interest (at a rate 
     determined by the Secretary).
       (7) Authorization of appropriations.--There is authorized 
     to be appropriated $5,000,000,000 for the period of fiscal 
     years 2010 through 2014 to provide for grants and loans under 
     this subsection.
       (c) Definitions.--For purposes of this section:
       (1) State.--The term ``State'' means each of the 50 States 
     and the District of Columbia.
       (2) Member.--The term ``member'', with respect to a 
     cooperative, means an individual who, after the cooperative 
     offers health insurance coverage, is enrolled in such 
     coverage.

     SEC. 311. RETENTION OF DOD AND VA AUTHORITY.

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

               Subtitle B--Public Health Insurance Option

     SEC. 321. ESTABLISHMENT AND ADMINISTRATION OF A PUBLIC HEALTH 
                   INSURANCE OPTION AS AN EXCHANGE-QUALIFIED 
                   HEALTH BENEFITS PLAN.

       (a) Establishment.--For years beginning with Y1, the 
     Secretary of Health and Human Services (in this subtitle 
     referred to as the ``Secretary'') shall provide for the 
     offering of an Exchange-participating health benefits plan 
     (in this division referred to as the ``public health 
     insurance option'') that ensures choice, competition, and 
     stability of affordable, high quality coverage throughout the 
     United States in accordance with this subtitle. In designing 
     the option, the Secretary's primary responsibility is to 
     create a low-cost plan without compromising quality or access 
     to care.
       (b) Offering as an Exchange-participating Health Benefits 
     Plan.--
       (1) Exclusive to the exchange.--The public health insurance 
     option shall only be made available through the Health 
     Insurance Exchange.
       (2) Ensuring a level playing field.--Consistent with this 
     subtitle, the public health insurance option shall comply 
     with requirements that are applicable under this title to an 
     Exchange-participating health benefits plan, including 
     requirements related to benefits, benefit levels, provider 
     networks, notices, consumer protections, and cost-sharing.
       (3) Provision of benefit levels.--The public health 
     insurance option--
       (A) shall offer basic, enhanced, and premium plans; and
       (B) may offer premium-plus plans.
       (c) Administrative Contracting.--The Secretary may enter 
     into contracts for the purpose of performing administrative 
     functions (including functions described in subsection (a)(4) 
     of section 1874A of the Social Security Act) with respect to 
     the public health insurance option in the same manner as the 
     Secretary may enter into contracts under subsection (a)(1) of 
     such section. The Secretary has the same authority with 
     respect to the public health insurance option as the 
     Secretary has under subsections (a)(1) and (b) of section 
     1874A of the Social Security Act with respect to title XVIII 
     of such Act. Contracts under this subsection shall not 
     involve the transfer of insurance risk to such entity.
       (d) Ombudsman.--The Secretary shall establish an office of 
     the ombudsman for the public health insurance option which 
     shall have duties with respect to the public health insurance 
     option similar to the duties of the Medicare Beneficiary 
     Ombudsman under section 1808(c)(2) of the Social Security 
     Act.
       (e) Data Collection.--The Secretary shall collect such data 
     as may be required to establish premiums and payment rates 
     for the public health insurance option and for other purposes 
     under this subtitle, including to improve quality and to 
     reduce racial, ethnic, and other disparities in health and 
     health care. Nothing in this subtitle may be construed as 
     authorizing the Secretary (or any employee or contractor) to 
     create or maintain lists of non-medical personal property.
       (f) Treatment of Public Health Insurance Option.--With 
     respect to the public health insurance option, the Secretary 
     shall be treated as a QHBP offering entity offering an 
     Exchange-participating health benefits plan.
       (g) Access to Federal Courts.--The provisions of Medicare 
     (and related provisions of title II of the Social Security 
     Act) relating to access of Medicare beneficiaries to Federal 
     courts for the enforcement of rights under Medicare, 
     including with respect to amounts in controversy, shall apply 
     to the public health insurance option and individuals 
     enrolled under such option under this title in the same 
     manner as such provisions apply to Medicare and Medicare 
     beneficiaries.

     SEC. 322. PREMIUMS AND FINANCING.

       (a) Establishment of Premiums.--
       (1) In general.--The Secretary shall establish 
     geographically adjusted premium rates for the public health 
     insurance option--

[[Page H12648]]

       (A) in a manner that complies with the premium rules 
     established by the Commissioner under section 213 for 
     Exchange-participating health benefits plans; and
       (B) at a level sufficient to fully finance the costs of--
       (i) health benefits provided by the public health insurance 
     option; and
       (ii) administrative costs related to operating the public 
     health insurance option.
       (2) Contingency margin.--In establishing premium rates 
     under paragraph (1), the Secretary shall include an 
     appropriate amount for a contingency margin (which shall be 
     not less than 90 days of estimated claims). Before setting 
     such appropriate amount for years starting with Y3, the 
     Secretary shall solicit a recommendation on such amount from 
     the American Academy of Actuaries.
       (b) Account.--
       (1) Establishment.--There is established in the Treasury of 
     the United States an Account for the receipts and 
     disbursements attributable to the operation of the public 
     health insurance option, including the start-up funding under 
     paragraph (2). Section 1854(g) of the Social Security Act 
     shall apply to receipts described in the previous sentence in 
     the same manner as such section applies to payments or 
     premiums described in such section.
       (2) Start-up funding.--
       (A) In general.--In order to provide for the establishment 
     of the public health insurance option, there is hereby 
     appropriated to the Secretary, out of any funds in the 
     Treasury not otherwise appropriated, $2,000,000,000. In order 
     to provide for initial claims reserves before the collection 
     of premiums, there are hereby appropriated to the Secretary, 
     out of any funds in the Treasury not otherwise appropriated, 
     such sums as necessary to cover 90 days worth of claims 
     reserves based on projected enrollment.
       (B) Amortization of start-up funding.--The Secretary shall 
     provide for the repayment of the startup funding provided 
     under subparagraph (A) to the Treasury in an amortized manner 
     over the 10-year period beginning with Y1.
       (C) Limitation on funding.--Nothing in this section shall 
     be construed as authorizing any additional appropriations to 
     the Account, other than such amounts as are otherwise 
     provided with respect to other Exchange-participating health 
     benefits plans.
       (3) No bailouts.--In no case shall the public health 
     insurance option receive any Federal funds for purposes of 
     insolvency in any manner similar to the manner in which 
     entities receive Federal funding under the Troubled Assets 
     Relief Program of the Secretary of the Treasury.

     SEC. 323. PAYMENT RATES FOR ITEMS AND SERVICES.

       (a) Negotiation of Payment Rates.--
       (1) In general.--The Secretary shall negotiate payment for 
     the public health insurance option for health care providers 
     and items and services, including prescription drugs, 
     consistent with this section and section 324.
       (2) Manner of negotiation.--The Secretary shall negotiate 
     such rates in a manner that results in payment rates that are 
     not lower, in the aggregate, than rates under title XVIII of 
     the Social Security Act, and not higher, in the aggregate, 
     than the average rates paid by other QHBP offering entities 
     for services and health care providers.
       (3) Innovative payment methods.--Nothing in this subsection 
     shall be construed as preventing the use of innovative 
     payment methods such as those described in section 324 in 
     connection with the negotiation of payment rates under this 
     subsection.
       (4) Treatment of certain state waivers.--In the case of any 
     State operating a cost-containment waiver for health care 
     providers in accordance with section 1814(b)(3) of the Social 
     Security Act, the Secretary shall provide for payment to such 
     providers under the public health insurance option consistent 
     with the provisions and requirements of that waiver.
       (b) Establishment of a Provider Network.--
       (1) In general.--Health care providers (including 
     physicians and hospitals) participating in Medicare are 
     participating providers in the public health insurance option 
     unless they opt out in a process established by the Secretary 
     consistent with this subsection.
       (2) Requirements for opt-out process.--Under the process 
     established under paragraph (1)--
       (A) providers described in such paragraph shall be provided 
     at least a 1-year period prior to the first day of Y1 to opt 
     out of participating in the public health insurance option;
       (B) no provider shall be subject to a penalty for not 
     participating in the public health insurance option;
       (C) the Secretary shall include information on how 
     providers participating in Medicare who chose to opt out of 
     participating in the public health insurance option may opt 
     back in; and
       (D) there shall be an annual enrollment period in which 
     providers may decide whether to participate in the public 
     health insurance option.
       (3) Rulemaking.--Not later than 18 months before the first 
     day of Y1, the Secretary shall promulgate rules (pursuant to 
     notice and comment) for the process described in paragraph 
     (1).
       (c) Limitations on Review.--There shall be no 
     administrative or judicial review of a payment rate or 
     methodology established under this section or under section 
     324.

     SEC. 324. MODERNIZED PAYMENT INITIATIVES AND DELIVERY SYSTEM 
                   REFORM.

       (a) In General.--For plan years beginning with Y1, the 
     Secretary may utilize innovative payment mechanisms and 
     policies to determine payments for items and services under 
     the public health insurance option. The payment mechanisms 
     and policies under this section may include patient-centered 
     medical home and other care management payments, accountable 
     care organizations, value-based purchasing, bundling of 
     services, differential payment rates, performance or 
     utilization based payments, partial capitation, and direct 
     contracting with providers.
       (b) Requirements for Innovative Payments.--The Secretary 
     shall design and implement the payment mechanisms and 
     policies under this section in a manner that--
       (1) seeks to--
       (A) improve health outcomes;
       (B) reduce health disparities (including racial, ethnic, 
     and other disparities);
       (C) provide efficient and affordable care;
       (D) address geographic variation in the provision of health 
     services; or
       (E) prevent or manage chronic illness; and
       (2) promotes care that is integrated, patient-centered, 
     quality, and efficient.
       (c) Encouraging the Use of High Value Services.--To the 
     extent allowed by the benefit standards applied to all 
     Exchange-participating health benefits plans, the public 
     health insurance option may modify cost-sharing and payment 
     rates to encourage the use of services that promote health 
     and value.
       (d) Promotion of Delivery System Reform.--The Secretary 
     shall monitor and evaluate the progress of payment and 
     delivery system reforms under this Act and shall seek to 
     implement such reforms subject to the following:
       (1) To the extent that the Secretary finds a payment and 
     delivery system reform successful in improving quality and 
     reducing costs, the Secretary shall implement such reform on 
     as large a geographic scale as practical and economical.
       (2) The Secretary may delay the implementation of such a 
     reform in geographic areas in which such implementation would 
     place the public health insurance option at a competitive 
     disadvantage.
       (3) The Secretary may prioritize implementation of such a 
     reform in high cost geographic areas or otherwise in order to 
     reduce total program costs or to promote high value care.
       (e) Non-uniformity Permitted.--Nothing in this subtitle 
     shall prevent the Secretary from varying payments based on 
     different payment structure models (such as accountable care 
     organizations and medical homes) under the public health 
     insurance option for different geographic areas.

     SEC. 325. PROVIDER PARTICIPATION.

       (a) In General.--The Secretary shall establish conditions 
     of participation for health care providers under the public 
     health insurance option.
       (b) Licensure or Certification.--
       (1) In general.--Except as provided in paragraph (2), the 
     Secretary shall not allow a health care provider to 
     participate in the public health insurance option unless such 
     provider is appropriately licensed, certified, or otherwise 
     permitted to practice under State law.
       (2) Special rule for ihs facilities and providers.--The 
     requirements under paragraph (1) shall not apply to--
       (A) a facility that is operated by the Indian Health 
     Service;
       (B) a facility operated by an Indian Tribe or tribal 
     organization under the Indian Self-Determination Act (Public 
     Law 93-638);
       (C) a health care professional employed by the Indian 
     Health Service; or
       (D) a health care professional--
       (i) who is employed to provide health care services in a 
     facility operated by an Indian Tribe or tribal organization 
     under the Indian Self-Determination Act; and
       (ii) who is licensed or certified in any State.
       (c) Payment Terms for Providers.--
       (1) Physicians.--The Secretary shall provide for the annual 
     participation of physicians under the public health insurance 
     option, for which payment may be made for services furnished 
     during the year, in one of 2 classes:
       (A) Preferred physicians.--Those physicians who agree to 
     accept the payment under section 323 (without regard to cost-
     sharing) as the payment in full.
       (B) Participating, non-preferred physicians.--Those 
     physicians who agree not to impose charges (in relation to 
     the payment described in section 323 for such physicians) 
     that exceed the sum of the in-network cost-sharing plus 15 
     percent of the total payment for each item and service. The 
     Secretary shall reduce the payment described in section 323 
     for such physicians.
       (2) Other providers.--The Secretary shall provide for the 
     participation (on an annual or other basis specified by the 
     Secretary) of health care providers (other than physicians) 
     under the public health insurance option under which payment 
     shall only be available if the provider agrees to accept the 
     payment under section 323 (without regard to cost-sharing) as 
     the payment in full.
       (d) Exclusion of Certain Providers.--The Secretary shall 
     exclude from participation under the public health insurance 
     option a health care provider that is excluded from

[[Page H12649]]

     participation in a Federal health care program (as defined in 
     section 1128B(f) of the Social Security Act).

     SEC. 326. APPLICATION OF FRAUD AND ABUSE PROVISIONS.

       Provisions of civil law identified by the Secretary by 
     regulation, in consultation with the Inspector General of the 
     Department of Health and Human Services, that impose 
     sanctions with respect to waste, fraud, and abuse under 
     Medicare, such as sections 3729 through 3733 of title 31, 
     United States Code (commonly known as the False Claims Act), 
     shall also apply to the public health insurance option.

     SEC. 327. APPLICATION OF HIPAA INSURANCE REQUIREMENTS.

       The requirements of sections 2701 through 2792 of the 
     Public Health Service Act shall apply to the public health 
     insurance option in the same manner as they apply to health 
     insurance coverage offered by a health insurance issuer in 
     the individual market.

     SEC. 328. APPLICATION OF HEALTH INFORMATION PRIVACY, 
                   SECURITY, AND ELECTRONIC TRANSACTION 
                   REQUIREMENTS.

       Part C of title XI of the Social Security Act, relating to 
     standards for protections against the wrongful disclosure of 
     individually identifiable health information, health 
     information security, and the electronic exchange of health 
     care information, shall apply to the public health insurance 
     option in the same manner as such part applies to other 
     health plans (as defined in section 1171(5) of such Act).

     SEC. 329. ENROLLMENT IN PUBLIC HEALTH INSURANCE OPTION IS 
                   VOLUNTARY.

       Nothing in this division shall be construed as requiring 
     anyone to enroll in the public health insurance option. 
     Enrollment in such option is voluntary.

     SEC. 330. ENROLLMENT IN PUBLIC HEALTH INSURANCE OPTION BY 
                   MEMBERS OF CONGRESS.

       Notwithstanding any other provision of this Act, Members of 
     Congress may enroll in the public health insurance option.

     SEC. 331. REIMBURSEMENT OF SECRETARY OF VETERANS AFFAIRS.

       The Secretary of Health and Human Services shall seek to 
     enter into a memorandum of understanding with the Secretary 
     of Veterans Affairs regarding the recovery of costs related 
     to non-service-connected care or services provided by the 
     Secretary of Veterans Affairs to an individual covered under 
     the public health insurance option in a manner consistent 
     with recovery of costs related to non-service-connected care 
     from private health insurance plans.

              Subtitle C--Individual Affordability Credits

     SEC. 341. AVAILABILITY THROUGH HEALTH INSURANCE EXCHANGE.

       (a) In General.--Subject to the succeeding provisions of 
     this subtitle, in the case of an affordable credit eligible 
     individual enrolled in an Exchange-participating health 
     benefits plan--
       (1) the individual shall be eligible for, in accordance 
     with this subtitle, affordability credits consisting of--
       (A) an affordability premium credit under section 343 to be 
     applied against the premium for the Exchange-participating 
     health benefits plan in which the individual is enrolled; and
       (B) an affordability cost-sharing credit under section 344 
     to be applied as a reduction of the cost-sharing otherwise 
     applicable to such plan; and
       (2) the Commissioner shall pay the QHBP offering entity 
     that offers such plan from the Health Insurance Exchange 
     Trust Fund the aggregate amount of affordability credits for 
     all affordable credit eligible individuals enrolled in such 
     plan.
       (b) Application.--
       (1) In general.--An Exchange eligible individual may apply 
     to the Commissioner through the Health Insurance Exchange or 
     through another entity under an arrangement made with the 
     Commissioner, in a form and manner specified by the 
     Commissioner. The Commissioner through the Health Insurance 
     Exchange or through another public entity under an 
     arrangement made with the Commissioner shall make a 
     determination as to eligibility of an individual for 
     affordability credits under this subtitle. The Commissioner 
     shall establish a process whereby, on the basis of 
     information otherwise available, individuals may be deemed to 
     be affordable credit eligible individuals. In carrying this 
     subtitle, the Commissioner shall establish effective methods 
     that ensure that individuals with limited English proficiency 
     are able to apply for affordability credits.
       (2) Use of state medicaid agencies.--If the Commissioner 
     determines that a State Medicaid agency has the capacity to 
     make a determination of eligibility for affordability credits 
     under this subtitle and under the same standards as used by 
     the Commissioner, under the Medicaid memorandum of 
     understanding under section 305(e)(2)--
       (A) the State Medicaid agency is authorized to conduct such 
     determinations for any Exchange-eligible individual who 
     requests such a determination; and
       (B) the Commissioner shall reimburse the State Medicaid 
     agency for the costs of conducting such determinations.
       (3) Medicaid screen and enroll obligation.--In the case of 
     an application made under paragraph (1), there shall be a 
     determination of whether the individual is a Medicaid-
     eligible individual. If the individual is determined to be so 
     eligible, the Commissioner, through the Medicaid memorandum 
     of understanding under section 305(e)(2), shall provide for 
     the enrollment of the individual under the State Medicaid 
     plan in accordance with such Medicaid memorandum of 
     understanding. In the case of such an enrollment, the State 
     shall provide for the same periodic redetermination of 
     eligibility under Medicaid as would otherwise apply if the 
     individual had directly applied for medical assistance to the 
     State Medicaid agency.
       (4) Application and verification of requirement of 
     citizenship or lawful presence in the united states.--
       (A) Requirement.--No individual shall be an affordable 
     credit eligible individual (as defined in section 342(a)(1)) 
     unless the individual is a citizen or national of the United 
     States or is lawfully present in a State in the United States 
     (other than as a nonimmigrant described in a subparagraph 
     (excluding subparagraphs (K), (T), (U), and (V)) of section 
     101(a)(15) of the Immigration and Nationality Act).
       (B) Declaration of citizenship or lawful immigration 
     status.--No individual shall be an affordable credit eligible 
     individual unless there has been a declaration made, in a 
     form and manner specified by the Health Choices Commissioner 
     similar to the manner required under section 1137(d)(1) of 
     the Social Security Act and under penalty of perjury, that 
     the individual--
       (i) is a citizen or national of the United States; or
       (ii) is not such a citizen or national but is lawfully 
     present in a State in the United States (other than as a 
     nonimmigrant described in a subparagraph (excluding 
     subparagraphs (K), (T), (U), and (V)) of section 101(a)(15) 
     of the Immigration and Nationality Act).

     Such declaration shall be verified in accordance with 
     subparagraph (C) or (D), as the case may be.
       (C) Verification process for citizens.--
       (i) In general.--In the case of an individual making the 
     declaration described in subparagraph (B)(i), subject to 
     clause (ii), section 1902(ee) of the Social Security Act 
     shall apply to such declaration in the same manner as such 
     section applies to a declaration described in paragraph (1) 
     of such section.
       (ii) Special rules.--In applying section 1902(ee) of such 
     Act under clause (i)--

       (I) any reference in such section to a State is deemed a 
     reference to the Commissioner (or other public entity making 
     the eligibility determination);
       (II) any reference to medical assistance or enrollment 
     under a State plan is deemed a reference to provision of 
     affordability credits under this subtitle;
       (III) a reference to a newly enrolled individual under 
     paragraph (2)(A) of such section is deemed a reference to an 
     individual newly in receipt of an affordability credit under 
     this subtitle;
       (IV) approval by the Secretary shall not be required in 
     applying paragraph (2)(B)(ii) of such section;
       (V) paragraph (3) of such section shall not apply; and
       (VI) before the end of Y2, the Health Choices Commissioner, 
     in consultation with the Commissioner of Social Security, may 
     extend the periods specified in paragraph (1)(B)(ii) of such 
     section.

       (D) Verification process for noncitizens.--
       (i) In general.--In the case of an individual making the 
     declaration described in subparagraph (B)(ii), subject to 
     clause (ii), the verification procedures of paragraphs (2) 
     through (5) of section 1137(d) of the Social Security Act 
     shall apply to such declaration in the same manner as such 
     procedures apply to a declaration described in paragraph (1) 
     of such section.
       (ii) Special rules.--In applying such paragraphs of section 
     1137(d) of such Act under clause (i)--

       (I) any reference in such paragraphs to a State is deemed a 
     reference to the Health Choices Commissioner; and
       (II) any reference to benefits under a program is deemed a 
     reference to affordability credits under this subtitle.

       (iii) Application to state-based exchanges.--In the case of 
     the application of the verification process under this 
     subparagraph to a State-based Health Insurance Exchange 
     approved under section 308, section 1137(e) of such Act shall 
     apply to the Health Choices Commissioner in relation to the 
     State.
       (E) Annual reports.--The Health Choices Commissioner shall 
     report to Congress annually on the number of applicants for 
     affordability credits under this subtitle, their citizenship 
     or immigration status, and the disposition of their 
     applications. Such report shall be made publicly available 
     and shall include information on--
       (i) the number of applicants whose declaration of 
     citizenship or immigration status, name, or social security 
     account number was not consistent with records maintained by 
     the Commissioner of Social Security or the Department of 
     Homeland Security and, of such applicants, the number who 
     contested the inconsistency and sought to document their 
     citizenship or immigration status, name, or social security 
     account number or to correct the information maintained in 
     such records and, of those, the results of such 
     contestations; and
       (ii) the administrative costs of conducting the status 
     verification under this paragraph.
       (F) GAO report.--Not later than the end of Y2, the 
     Comptroller General of the United States shall submit to the 
     Committee on

[[Page H12650]]

     Ways and Means, the Committee on Energy and Commerce, the 
     Committee on Education and Labor, and the Committee on the 
     Judiciary of the House of Representatives and the Committee 
     on Finance, the Committee on Health, Education, Labor, and 
     Pensions, and the Committee on the Judiciary of the Senate a 
     report examining the effectiveness of the citizenship and 
     immigration verification systems applied under this 
     paragraph. Such report shall include an analysis of the 
     following:
       (i) The causes of erroneous determinations under such 
     systems.
       (ii) The effectiveness of the processes used in remedying 
     such erroneous determinations.
       (iii) The impact of such systems on individuals, health 
     care providers, and Federal and State agencies, including the 
     effect of erroneous determinations under such systems.
       (iv) The effectiveness of such systems in preventing 
     ineligible individuals from receiving for affordability 
     credits.
       (v) The characteristics of applicants described in 
     subparagraph (E)(i).
       (G) Prohibition of database.--Nothing in this paragraph or 
     the amendments made by paragraph (6) shall be construed as 
     authorizing the Health Choices Commissioner or the 
     Commissioner of Social Security to establish a database of 
     information on citizenship or immigration status.
       (H) Initial funding.--
       (i) In general.--Out of any funds in the Treasury not 
     otherwise appropriated, there is appropriated to the 
     Commissioner of Social Security $30,000,000, to be available 
     without fiscal year limit to carry out this paragraph and 
     section 205(v) of the Social Security Act.
       (ii) Funding limitation.--In no case shall funds from the 
     Social Security Administration's Limitation on Administrative 
     Expenses be used to carry out activities related to this 
     paragraph or section 205(v) of the Social Security Act.
       (5) Agreement with social security commissioner.--
       (A) In general.--The Health Choices Commissioner shall 
     enter into and maintain an agreement described in section 
     205(v)(2) of the Social Security Act with the Commissioner of 
     Social Security.
       (B) Funding.--The agreement entered into under subparagraph 
     (A) shall, for each fiscal year (beginning with fiscal year 
     2013)--
       (i) provide funds to the Commissioner of Social Security 
     for the full costs of the responsibilities of the 
     Commissioner of Social Security under paragraph (4), 
     including--

       (I) acquiring, installing, and maintaining technological 
     equipment and systems necessary for the fulfillment of the 
     responsibilities of the Commissioner of Social Security under 
     paragraph (4), but only that portion of such costs that are 
     attributable to such responsibilities; and
       (II) responding to individuals who contest with the 
     Commissioner of Social Security a reported inconsistency with 
     records maintained by the Commissioner of Social Security or 
     the Department of Homeland Security relating to citizenship 
     or immigration status, name, or social security account 
     number under paragraph (4);

       (ii) based on an estimating methodology agreed to by the 
     Commissioner of Social Security and the Health Choices 
     Commissioner, provide such funds, within 10 calendar days of 
     the beginning of the fiscal year for the first quarter and in 
     advance for all subsequent quarters in that fiscal year; and
       (iii) provide for an annual accounting and reconciliation 
     of the actual costs incurred and the funds provided under the 
     agreement.
       (C) Review of accounting.--The annual accounting and 
     reconciliation conducted pursuant to subparagraph (B)(iii) 
     shall be reviewed by the Inspectors General of the Social 
     Security Administration and the Health Choices 
     Administration, including an analysis of consistency with the 
     requirements of paragraph (4).
       (D) Contingency.--In any case in which agreement with 
     respect to the provisions required under subparagraph (B) for 
     any fiscal year has not been reached as of the first day of 
     such fiscal year, the latest agreement with respect to such 
     provisions shall be deemed in effect on an interim basis for 
     such fiscal year until such time as an agreement relating to 
     such provisions is subsequently reached. In any case in which 
     an interim agreement applies for any fiscal year under this 
     subparagraph, the Commissioner of Social Security shall, not 
     later than the first day of such fiscal year, notify the 
     appropriate Committees of the Congress of the failure to 
     reach the agreement with respect to such provisions for such 
     fiscal year. Until such time as the agreement with respect to 
     such provisions has been reached for such fiscal year, the 
     Commissioner of Social Security shall, not later than the end 
     of each 90-day period after October 1 of such fiscal year, 
     notify such Committees of the status of negotiations between 
     such Commissioner and the Health Choices Commissioner in 
     order to reach such an agreement.
       (E) Application to public entities administering 
     affordability credits.--If the Health Choices Commissioner 
     provides for the conduct of verifications under paragraph (4) 
     through a public entity, the Health Choices Commissioner 
     shall require the public entity to enter into an agreement 
     with the Commissioner of Social Security which provides the 
     same terms as the agreement described in this paragraph (and 
     section 205(v) of the Social Security Act) between the Health 
     Choices Commissioner and the Commissioner of Social Security, 
     except that the Health Choices Commissioner shall be 
     responsible for providing funds for the Commissioner of 
     Social Security in accordance with subparagraphs (B) through 
     (D).
       (6) Amendments to social security act.--
       (A) Coordination of information between social security 
     administration and health choices administration.--
       (i) In general.--Section 205 of the Social Security Act (42 
     U.S.C. 405) is amended by adding at the end the following new 
     subsection:

    ``Coordination of Information With Health Choices Administration

       ``(v)(1) The Health Choices Commissioner may collect and 
     use the names and social security account numbers of 
     individuals as required to provide for verification of 
     citizenship under subsection (b)(4)(C) of section 341 of the 
     Affordable Health Care for America Act in connection with 
     determinations of eligibility for affordability credits under 
     such section.
       ``(2)(A) The Commissioner of Social Security shall enter 
     into and maintain an agreement with the Health Choices 
     Commissioner for the purpose of establishing, in compliance 
     with the requirements of section 1902(ee) as applied pursuant 
     to section 341(b)(4)(C) of the Affordable Health Care for 
     America Act, a program for verifying information required to 
     be collected by the Health Choices Commissioner under such 
     section 341(b)(4)(C).
       ``(B) The agreement entered into pursuant to subparagraph 
     (A) shall include such safeguards as are necessary to ensure 
     the maintenance of confidentiality of any information 
     disclosed for purposes of verifying information described in 
     subparagraph (A) and to provide procedures for permitting the 
     Health Choices Commissioner to use the information for 
     purposes of maintaining the records of the Health Choices 
     Administration.
       ``(C) The agreement entered into pursuant to subparagraph 
     (A) shall provide that information provided by the 
     Commissioner of Social Security to the Health Choices 
     Commissioner pursuant to the agreement shall be provided at 
     such time, at such place, and in such manner as the 
     Commissioner of Social Security determines appropriate.
       ``(D) Information provided by the Commissioner of Social 
     Security to the Health Choices Commissioner pursuant to an 
     agreement entered into pursuant to subparagraph (A) shall be 
     considered as strictly confidential and shall be used only 
     for the purposes described in this paragraph and for carrying 
     out such agreement. Any officer or employee or former officer 
     or employee of the Health Choices Commissioner, or any 
     officer or employee or former officer or employee of a 
     contractor of the Health Choices Commissioner, who, without 
     the written authority of the Commissioner of Social Security, 
     publishes or communicates any information in such 
     individual's possession by reason of such employment or 
     position as such an officer shall be guilty of a felony and, 
     upon conviction thereof, shall be fined or imprisoned, or 
     both, as described in section 208.
       ``(3) The agreement entered into under paragraph (2) shall 
     provide for funding to the Commissioner of Social Security 
     consistent with section 341(b)(5) of Affordable Health Care 
     for America Act.
       ``(4) This subsection shall apply in the case of a public 
     entity that conducts verifications under section 341(b)(4) of 
     the Affordable Health Care for America Act and the 
     obligations of this subsection shall apply to such an entity 
     in the same manner as such obligations apply to the Health 
     Choices Commissioner when such Commissioner is conducting 
     such verifications.''.
       (ii) Conforming amendment.--Section 205(c)(2)(C) of such 
     Act (42 U.S.C. 405(c)(2)(C)) is amended by adding at the end 
     the following new clause:
       ``(x) For purposes of the administration of the 
     verification procedures described in section 341(b)(4) of the 
     Affordable Health Care for America Act, the Health Choices 
     Commissioner may collect and use social security account 
     numbers as provided for in section 205(v)(1).''.
       (B) Improving the integrity of data and effectiveness of 
     save program.--Section 1137(d) of the Social Security Act (42 
     U.S.C. 1320b-7(d)) is amended by adding at the end the 
     following new paragraphs:
       ``(6)(A) With respect to the use by any agency of the 
     system described in subsection (b) by programs specified in 
     subsection (b) or any other use of such system, the U.S. 
     Citizenship and Immigration Services and any other agency 
     charged with the management of the system shall establish 
     appropriate safeguards necessary to protect and improve the 
     integrity and accuracy of data relating to individuals by--
       ``(i) establishing a process through which such individuals 
     are provided access to, and the ability to amend, correct, 
     and update, their own personally identifiable information 
     contained within the system;
       ``(ii) providing a written response, without undue delay, 
     to any individual who has made such a request to amend, 
     correct, or update such individual's own personally 
     identifiable information contained within the system; and
       ``(iii) developing a written notice for user agencies to 
     provide to individuals who are denied a benefit due to a 
     determination of ineligibility based on a final verification 
     determination under the system.
       ``(B) The notice described in subparagraph (A)(ii) shall 
     include--

[[Page H12651]]

       ``(i) information about the reason for such notice;
       ``(ii) a description of the right of the recipient of the 
     notice under subparagraph (A)(i) to contest such notice;
       ``(iii) a description of the right of the recipient under 
     subparagraph (A)(i) to access and attempt to amend, correct, 
     and update the recipient's own personally identifiable 
     information contained within records of the system described 
     in paragraph (3); and
       ``(iv) instructions on how to contest such notice and 
     attempt to correct records of such system relating to the 
     recipient, including contact information for relevant 
     agencies.''.
       (C) Streamlining administration of verification process for 
     united states citizens.--Section 1902(ee)(2) of the Social 
     Security Act (42 U.S.C. 1396a(ee)(2)) is amended by adding at 
     the end the following:
       ``(D) In carrying out the verification procedures under 
     this subsection with respect to a State, if the Commissioner 
     of Social Security determines that the records maintained by 
     such Commissioner are not consistent with an individual's 
     allegation of United States citizenship, pursuant to 
     procedures which shall be established by the State in 
     coordination with the Commissioner of Social Security, the 
     Secretary of Homeland Security, and the Secretary of Health 
     and Human Services--
       ``(i) the Commissioner of Social Security shall inform the 
     State of the inconsistency;
       ``(ii) upon being so informed of the inconsistency, the 
     State shall submit the information on the individual to the 
     Secretary of Homeland Security for a determination of whether 
     the records of the Department of Homeland Security indicate 
     that the individual is a citizen;
       ``(iii) upon making such determination, the Department of 
     Homeland Security shall inform the State of such 
     determination; and
       ``(iv) information provided by the Commissioner of Social 
     Security shall be considered as strictly confidential and 
     shall only be used by the State and the Secretary of Homeland 
     Security for the purposes of such verification procedures.
       ``(E) Verification of status eligibility pursuant to the 
     procedures established under this subsection shall be deemed 
     a verification of status eligibility for purposes of this 
     title, title XXI, and affordability credits under section 
     341(b)(4) of the Affordable Health Care for America Act, 
     regardless of the program in which the individual is applying 
     for benefits.''.
       (c) Use of Affordability Credits.--
       (1) In general.--In Y1 and Y2 an affordable credit eligible 
     individual may use an affordability credit only with respect 
     to a basic plan.
       (2) Flexibility in plan enrollment authorized.--Beginning 
     with Y3, the Commissioner shall establish a process to allow 
     an affordability premium credit under section 343, but not 
     the affordability cost-sharing credit under section 344, to 
     be used for enrollees in enhanced or premium plans. In the 
     case of an affordable credit eligible individual who enrolls 
     in an enhanced or premium plan, the individual shall be 
     responsible for any difference between the premium for such 
     plan and the affordability credit amount otherwise applicable 
     if the individual had enrolled in a basic plan.
       (3) Prohibition of use of public funds for abortion 
     coverage.--An affordability credit may not be used for 
     payment for services described in section 222(e)(4)(A).
       (d) Access to Data.--In carrying out this subtitle, the 
     Commissioner shall request from the Secretary of the Treasury 
     consistent with section 6103 of the Internal Revenue Code of 
     1986 such information as may be required to carry out this 
     subtitle.
       (e) No Cash Rebates.--In no case shall an affordable credit 
     eligible individual receive any cash payment as a result of 
     the application of this subtitle.

     SEC. 342. AFFORDABLE CREDIT ELIGIBLE INDIVIDUAL.

       (a) Definition.--
       (1) In general.--For purposes of this division, the term 
     ``affordable credit eligible individual'' means, subject to 
     subsection (b) and section 346, an individual who is lawfully 
     present in a State in the United States (other than as a 
     nonimmigrant described in a subparagraph (excluding 
     subparagraphs (K), (T), (U), and (V)) of section 101(a)(15) 
     of the Immigration and Nationality Act)--
       (A) who is enrolled under an Exchange-participating health 
     benefits plan and is not enrolled under such plan as an 
     employee (or dependent of an employee) through an employer 
     qualified health benefits plan that meets the requirements of 
     section 412;
       (B) with modified adjusted gross income below 400 percent 
     of the Federal poverty level for a family of the size 
     involved;
       (C) who is not a Medicaid eligible individual, other than 
     an individual during a transition period under section 
     302(d)(3)(B)(ii); and
       (D) subject to paragraph (3), who is not enrolled in 
     acceptable coverage (other than an Exchange-participating 
     health benefits plan).
       (2) Treatment of family.--Except as the Commissioner may 
     otherwise provide, members of the same family who are 
     affordable credit eligible individuals shall be treated as a 
     single affordable credit individual eligible for the 
     applicable credit for such a family under this subtitle.
       (3) Special rule for indians.--Subparagraph (D) of 
     paragraph (1) shall not apply to an individual who has 
     coverage that is treated as acceptable coverage for purposes 
     of section 59B(d)(2) of the Internal Revenue Code of 1986 but 
     is not treated as acceptable coverage for purposes of this 
     division.
       (b) Limitations on Employee and Dependent 
     Disqualification.--
       (1) In general.--Subject to paragraph (2), the term 
     ``affordable credit eligible individual'' does not include a 
     full-time employee of an employer if the employer offers the 
     employee coverage (for the employee and dependents) as a 
     full-time employee under a group health plan if the coverage 
     and employer contribution under the plan meet the 
     requirements of section 412.
       (2) Exceptions.--
       (A) For certain family circumstances.--The Commissioner 
     shall establish such exceptions and special rules in the case 
     described in paragraph (1) as may be appropriate in the case 
     of a divorced or separated individual or such a dependent of 
     an employee who would otherwise be an affordable credit 
     eligible individual.
       (B) For unaffordable employer coverage.--Beginning in Y2, 
     in the case of full-time employees for which the cost of the 
     employee premium for coverage under a group health plan would 
     exceed 12 percent of current modified adjusted gross income 
     (determined by the Commissioner on the basis of verifiable 
     documentation), paragraph (1) shall not apply.
       (c) Income Defined.--
       (1) In general.--In this title, the term ``income'' means 
     modified adjusted gross income (as defined in section 59B of 
     the Internal Revenue Code of 1986).
       (2) Study of income disregards.--The Commissioner shall 
     conduct a study that examines the application of income 
     disregards for purposes of this subtitle. Not later than the 
     first day of Y2, the Commissioner shall submit to Congress a 
     report on such study and shall include such recommendations 
     as the Commissioner determines appropriate.
       (d) Clarification of Treatment of Affordability Credits.--
     Affordability credits under this subtitle shall not be 
     treated, for purposes of title IV of the Personal 
     Responsibility and Work Opportunity Reconciliation Act of 
     1996, to be a benefit provided under section 403 of such 
     title.

     SEC. 343. AFFORDABILITY PREMIUM CREDIT.

       (a) In General.--The affordability premium credit under 
     this section for an affordable credit eligible individual 
     enrolled in an Exchange-participating health benefits plan is 
     in an amount equal to the amount (if any) by which the 
     reference premium amount specified in subsection (c), exceeds 
     the affordable premium amount specified in subsection (b) for 
     the individual, except that in no case shall the affordable 
     premium credit exceed the premium for the plan.
       (b) Affordable Premium Amount.--
       (1) In general.--The affordable premium amount specified in 
     this subsection for an individual for the annual premium in a 
     plan year shall be equal to the product of--
       (A) the premium percentage limit specified in paragraph (2) 
     for the individual based upon the individual's modified 
     adjusted gross income for the plan year; and
       (B) the individual's modified adjusted gross income for 
     such plan year.
       (2) Premium percentage limits based on table.--The 
     Commissioner shall establish premium percentage limits so 
     that for individuals whose modified adjusted gross income is 
     within an income tier specified in the table in subsection 
     (d) such percentage limits shall increase, on a sliding scale 
     in a linear manner, from the initial premium percentage to 
     the final premium percentage specified in such table for such 
     income tier.
       (c) Reference Premium Amount.--The reference premium amount 
     specified in this subsection for a plan year for an 
     individual in a premium rating area is equal to the average 
     premium for the 3 basic plans in the area for the plan year 
     with the lowest premium levels. In computing such amount the 
     Commissioner may exclude plans with extremely limited 
     enrollments.
       (d) Table of Premium Percentage Limits, Actuarial Value 
     Percentages, and Out-of-pocket Limits for Y1 Based on Income 
     Tier.--
       (1) In general.--For purposes of this subtitle, subject to 
     paragraph (3) and section 346, the table specified in this 
     subsection is as follows:

 
   In the case of modified
    adjusted gross income
 (expressed as a percent of   The initial premium   The final premium   The actuarial value   The out-of-pocket
  FPL) within the following     percentage is--      percentage is--      percentage is--     limit for Y1 is--
        income tier:
 
133% through 150%             1.5%                 3.0%                 97%                  $500
150% through 200%             3.0%                 5.5%                 93%                  $1,000
200% through 250%             5.5%                 8.0%                 85%                  $2,000
250% through 300%             8.0%                 10.0%                78%                  $4,000
300% through 350%             10.0%                11.0%                72%                  $4,500
350% through 400%             11.0%                12.0%                70%                  $5,000
 



[[Page H12652]]

       (2) Special rules.--For purposes of applying the table 
     under paragraph (1):
       (A) For lowest level of income.--In the case of an 
     individual with income that does not exceed 133 percent of 
     FPL, the individual shall be considered to have income that 
     is 133 percent of FPL.
       (B) Application of higher actuarial value percentage at 
     tier transition points.--If two actuarial value percentages 
     may be determined with respect to an individual, the 
     actuarial value percentage shall be the higher of such 
     percentages.
       (3) Indexing.--For years after Y1, the Commissioner shall 
     adjust the initial and final premium percentages to maintain 
     the ratio of governmental to enrollee shares of premiums over 
     time, for each income tier identified in the table in 
     paragraph (1).

     SEC. 344. AFFORDABILITY COST-SHARING CREDIT.

       (a) In General.--The affordability cost-sharing credit 
     under this section for an affordable credit eligible 
     individual enrolled in an Exchange-participating health 
     benefits plan is in the form of the cost-sharing reduction 
     described in subsection (b) provided under this section for 
     the income tier in which the individual is classified based 
     on the individual's modified adjusted gross income.
       (b) Cost-sharing Reductions.--The Commissioner shall 
     specify a reduction in cost-sharing amounts and the annual 
     limitation on cost-sharing specified in section 222(c)(2)(B) 
     under a basic plan for each income tier specified in the 
     table under section 343(d), with respect to a year, in a 
     manner so that, as estimated by the Commissioner--
       (1) the actuarial value of the coverage with such reduced 
     cost-sharing amounts (and the reduced annual cost-sharing 
     limit) is equal to the actuarial value percentage (specified 
     in the table under section 343(d) for the income tier 
     involved) of the full actuarial value if there were no cost-
     sharing imposed under the plan; and
       (2) the annual limitation on cost-sharing specified in 
     section 222(c)(2)(B) is reduced to a level that does not 
     exceed the maximum out-of-pocket limit specified in 
     subsection (c).
       (c) Maximum Out-of-pocket Limit.--
       (1) In general.--Subject to paragraph (2), the maximum out-
     of-pocket limit specified in this subsection for an 
     individual within an income tier--
       (A) for individual coverage--
       (i) for Y1 is the out-of-pocket limit for Y1 specified in 
     subsection (c) in the table under section 343(d) for the 
     income tier involved; or
       (ii) for a subsequent year is such out-of-pocket limit for 
     the previous year under this subparagraph increased (rounded 
     to the nearest $10) for each subsequent year by the 
     percentage increase in the enrollment-weighted average of 
     premium increases for basic plans applicable to such year; or
       (B) for family coverage is twice the maximum out-of-pocket 
     limit under subparagraph (A) for the year involved.
       (2) Adjustment.--The Commissioner shall adjust the maximum 
     out-of-pocket limits under paragraph (1) to ensure that such 
     limits meet the actuarial value percentage specified in the 
     table under section 343(d) for the income tier involved.
       (d) Determination and Payment of Cost-sharing Affordability 
     Credit.--In the case of an affordable credit eligible 
     individual in a tier enrolled in an Exchange-participating 
     health benefits plan offered by a QHBP offering entity, the 
     Commissioner shall provide for payment to the offering entity 
     of an amount equivalent to the increased actuarial value of 
     the benefits under the plan provided under section 
     303(c)(2)(B) resulting from the reduction in cost-sharing 
     described in subsections (b) and (c).

     SEC. 345. INCOME DETERMINATIONS.

       (a) In General.--In applying this subtitle for an 
     affordability credit for an individual for a plan year, the 
     individual's income shall be the income (as defined in 
     section 342(c)) for the individual for the most recent 
     taxable year (as determined in accordance with rules of the 
     Commissioner). The Federal poverty level applied shall be 
     such level in effect as of the date of the application.
       (b) Program Integrity; Income Verification Procedures.--
       (1) Program integrity.--The Commissioner shall take such 
     steps as may be appropriate to ensure the accuracy of 
     determinations and redeterminations under this subtitle.
       (2) Income verification.--
       (A) In general.--Upon an initial application of an 
     individual for an affordability credit under this subtitle 
     (or in applying section 342(b)) or upon an application for a 
     change in the affordability credit based upon a significant 
     change in modified adjusted gross income described in 
     subsection (c)(1)--
       (i) the Commissioner shall request from the Secretary of 
     the Treasury the disclosure to the Commissioner of such 
     information as may be permitted to verify the information 
     contained in such application; and
       (ii) the Commissioner shall use the information so 
     disclosed to verify such information.
       (B) Alternative procedures.--The Commissioner shall 
     establish procedures for the verification of income for 
     purposes of this subtitle if no income tax return is 
     available for the most recent completed tax year.
       (c) Special Rules.--
       (1) Changes in income as a percent of fpl.--In the case 
     that an individual's income (expressed as a percentage of the 
     Federal poverty level for a family of the size involved) for 
     a plan year is expected (in a manner specified by the 
     Commissioner) to be significantly different from the income 
     (as so expressed) used under subsection (a), the Commissioner 
     shall establish rules requiring an individual to report, 
     consistent with the mechanism established under paragraph 
     (2), significant changes in such income (including a 
     significant change in family composition) to the Commissioner 
     and requiring the substitution of such income for the income 
     otherwise applicable.
       (2) Reporting of significant changes in income.--The 
     Commissioner shall establish rules under which an individual 
     determined to be an affordable credit eligible individual 
     would be required to inform the Commissioner when there is a 
     significant change in the modified adjusted gross income of 
     the individual (expressed as a percentage of the FPL for a 
     family of the size involved) and of the information regarding 
     such change. Such mechanism shall provide for guidelines that 
     specify the circumstances that qualify as a significant 
     change, the verifiable information required to document such 
     a change, and the process for submission of such information. 
     If the Commissioner receives new information from an 
     individual regarding the modified adjusted gross income of 
     the individual, the Commissioner shall provide for a 
     redetermination of the individual's eligibility to be an 
     affordable credit eligible individual.
       (3) Transition for chip.--In the case of a child described 
     in section 302(d)(4), the Commissioner shall establish rules 
     under which the modified adjusted gross income of the child 
     is deemed to be no greater than the family income of the 
     child as most recently determined before Y1 by the State 
     under title XXI of the Social Security Act.
       (4) Study of geographic variation in application of fpl.--
       (A) In general.--The Secretary of Health and Human Services 
     shall conduct a study to examine the feasibility and 
     implication of adjusting the application of the Federal 
     poverty level under this subtitle for different geographic 
     areas so as to reflect the variations in cost-of-living among 
     different areas within the United States. If the Secretary 
     determines that an adjustment is feasible, the study should 
     include a methodology to make such an adjustment. Not later 
     than the first day of Y1, the Secretary shall submit to 
     Congress a report on such study and shall include such 
     recommendations as the Secretary determines appropriate.
       (B) Inclusion of territories.--
       (i) In general.--The Secretary shall ensure that the study 
     under subparagraph (A) covers the territories of the United 
     States and that special attention is paid to the disparity 
     that exists among poverty levels and the cost of living in 
     such territories and to the impact of such disparity on 
     efforts to expand health coverage and ensure health care.
       (ii) Territories defined.--In this subparagraph, the term 
     ``territories of the United States'' includes the 
     Commonwealth of Puerto Rico, the United States Virgin 
     Islands, Guam, the Northern Mariana Islands, and any other 
     territory or possession of the United States.
       (d) Penalties for Misrepresentation.--In the case of an 
     individual who intentionally misrepresents modified adjusted 
     gross income or the individual fails (without regard to 
     intent) to disclose to the Commissioner a significant change 
     in modified adjusted gross income under subsection (c) in a 
     manner that results in the individual becoming an affordable 
     credit eligible individual when the individual is not or in 
     the amount of the affordability credit exceeding the correct 
     amount--
       (1) the individual is liable for repayment of the amount of 
     the improper affordability credit; and
       (2) in the case of such an intentional misrepresentation or 
     other egregious circumstances specified by the Commissioner, 
     the Commissioner may impose an additional penalty.

     SEC. 346. SPECIAL RULES FOR APPLICATION TO TERRITORIES.

       (a) One-time Election for Treatment and Application of 
     Funding.--
       (1) In general.--A territory may elect, in a form and 
     manner specified by the Commissioner in consultation with the 
     Secretary of Health and Human Services and the Secretary of 
     the Treasury and not later than October 1, 2012, either--
       (A) to be treated as a State for purposes of applying this 
     title and title II; or
       (B) not to be so treated but instead, to have the dollar 
     limitation otherwise applicable to the territory under 
     subsections (f) and (g) of section 1108 of the Social 
     Security Act (42 U.S.C. 1308) for a fiscal year increased by 
     a dollar amount equivalent to the cap amount determined under 
     subsection (c)(2) for the territory as applied by the 
     Secretary for the fiscal year involved.
       (2) Conditions for acceptance.--The Commissioner has the 
     nonreviewable authority to accept or reject an election 
     described in paragraph (1)(A). Any such acceptance is--
       (A) contingent upon entering into an agreement described in 
     subsection (b) between the Commissioner and the territory and 
     subsection (c); and
       (B) subject to the approval of the Secretary of Health and 
     Human Services and the Secretary of the Treasury and subject 
     to such other terms and conditions as the Commissioner, in 
     consultation with such Secretaries, may specify.
       (3) Default rule.--A territory failing to make such an 
     election (or having an election

[[Page H12653]]

     under paragraph (1)(A) not accepted under paragraph (2)) 
     shall be treated as having made the election described in 
     paragraph (1)(B).
       (b) Agreement for Substitution of Percentages for 
     Affordability Credits.--
       (1) Negotiation.--In the case of a territory making an 
     election under subsection (a)(1)(A) (in this section referred 
     to as an ``electing territory'') , the Commissioner, in 
     consultation with the Secretaries of Health and Human 
     Services and the Treasury, shall enter into negotiations with 
     the government of such territory so that, before Y1, there is 
     an agreement reached between the parties on the percentages 
     that shall be applied under paragraph (2) for that territory. 
     The Commissioner shall not enter into such an agreement 
     unless--
       (A) payments made under this subtitle with respect to 
     residents of the territory are consistent with the cap 
     established under subsection (c) for such territory and with 
     subsection (d); and
       (B) the requirements of paragraphs (3) and (4) are met.
       (2) Application of substitute percentages and dollar 
     amounts.--In the case of an electing territory, there shall 
     be substituted in section 342(a)(1)(B) and in the table in 
     section 341(d)(1) for 400 percent, 133 percent, and other 
     percentages and dollar amounts specified in such table, such 
     respective percentages and dollar amounts as are established 
     under the agreement under paragraph (1) consistent with the 
     following:
       (A) No income gap between medicaid and affordability 
     credits.--The substituted percentages shall be specified in a 
     manner so as to prevent any gap in coverage for individuals 
     between income level at which medical assistance is available 
     through Medicaid and the income level at which affordability 
     credits are available.
       (B) Adjustment for out-of-pocket responsibility for 
     premiums and cost-sharing in relation to income.--The 
     substituted percentages of FPL for income tiers under such 
     table shall be specified in a manner so that--
       (i) affordable credit eligible individuals residing in the 
     territory bear the same out-of-pocket responsibility for 
     premiums and cost-sharing in relation to average income for 
     residents in that territory, as
       (ii) the out-of-pocket responsibility for premiums and 
     cost-sharing for affordable credit eligible individuals 
     residing in the 50 States or the District of Columbia in 
     relation to average income for such residents.
       (3) Special rules with respect to application of tax and 
     penalty provisions.--The electing territory shall enact one 
     or more laws under which provisions similar to the following 
     provisions apply with respect to such territory:
       (A) Section 59B of the Internal Revenue Code of 1986, 
     except that any resident of the territory who is not an 
     affordable credit eligible individual but who would be an 
     affordable credit eligible individual if such resident were a 
     resident of one of the 50 States (and any qualifying child 
     residing with such individual) may be treated as covered by 
     acceptable coverage.
       (B) Section 4980H of the Internal Revenue Code of 1986 and 
     section 502(c)(11) of the Employee Retirement Income Security 
     Act of 1974.
       (C) Section 3121(c) of the Internal Revenue Code of 1986.
       (4) Implementation of insurance reform and consumer 
     protection requirements.--The electing territory shall enact 
     and implement such laws and regulations as may be required to 
     apply the requirements of title II with respect to health 
     insurance coverage offered in the territory.
       (c) Cap on Additional Expenditures.--
       (1) In general.--In entering into an agreement with an 
     electing territory under subsection (b), the Commissioner 
     shall ensure that the aggregate expenditures under this 
     subtitle with respect to residents of such territory during 
     the period beginning with Y1 and ending with 2019 will not 
     exceed the cap amount specified in paragraph (2) for such 
     territory. The Commissioner shall adjust from time to time 
     the percentages applicable under such agreement as needed in 
     order to carry out the previous sentence.
       (2) Cap amount.--
       (A) In general.--The cap amount specified in this 
     paragraph--
       (i) for Puerto Rico is $3,700,000,000 increased by the 
     amount (if any) elected under subparagraph (C); or
       (ii) for another territory is the portion of $300,000,000 
     negotiated for such territory under subparagraph (B).
       (B) Negotiation for certain territories.--The Commissioner 
     in consultation with the Secretary of Health and Human 
     Services shall negotiate with the governments of the 
     territories (other than Puerto Rico) to allocate the amount 
     specified in subparagraph (A)(ii) among such territories.
       (C) Optional supplementation for puerto rico.--
       (i) In general.--Puerto Rico may elect, in a form and 
     manner specified by the Secretary of Health and Human 
     Services in consultation with the Commissioner to increase 
     the dollar amount specified in subparagraph (A)(i) by up to 
     $1,000,000,000.
       (ii) Offset in medicaid cap.--If Puerto Rico makes the 
     election described in clause (i), the Secretary shall 
     decrease the dollar limitation otherwise applicable to Puerto 
     Rico under subsections (f) and (g) of section 1108 of the 
     Social Security Act (42 U.S.C. 1308) for a fiscal year by the 
     additional aggregate payments the Secretary estimates will be 
     payable under this section for the fiscal year because of 
     such election.
       (d) Limitation on Funding.--In no case shall this section 
     (including the agreement under subsection (b)) permit--
       (1) the obligation of funds for expenditures under this 
     subtitle for periods beginning on or after January 1, 2020; 
     or
       (2) any increase in the dollar limitation described in 
     subsection (a)(1)(B) for any portion of any fiscal year 
     occurring on or after such date.

     SEC. 347. NO FEDERAL PAYMENT FOR UNDOCUMENTED ALIENS.

       Nothing in this subtitle shall allow Federal payments for 
     affordability credits on behalf of individuals who are not 
     lawfully present in the United States.

                    TITLE IV--SHARED RESPONSIBILITY

                 Subtitle A--Individual Responsibility

     SEC. 401. INDIVIDUAL RESPONSIBILITY.

       For an individual's responsibility to obtain acceptable 
     coverage, see section 59B of the Internal Revenue Code of 
     1986 (as added by section 501 of this Act).

                  Subtitle B--Employer Responsibility

           PART 1--HEALTH COVERAGE PARTICIPATION REQUIREMENTS

     SEC. 411. HEALTH COVERAGE PARTICIPATION REQUIREMENTS.

       An employer meets the requirements of this section if such 
     employer does all of the following:
       (1) Offer of coverage.--The employer offers each employee 
     individual and family coverage under a qualified health 
     benefits plan (or under a current employment-based health 
     plan (within the meaning of section 202(b))) in accordance 
     with section 412.
       (2) Contribution towards coverage.--If an employee accepts 
     such offer of coverage, the employer makes timely 
     contributions towards such coverage in accordance with 
     section 412.
       (3) Contribution in lieu of coverage.--Beginning with Y2, 
     if an employee declines such offer but otherwise obtains 
     coverage in an Exchange-participating health benefits plan 
     (other than by reason of being covered by family coverage as 
     a spouse or dependent of the primary insured), the employer 
     shall make a timely contribution to the Health Insurance 
     Exchange with respect to each such employee in accordance 
     with section 413.

     SEC. 412. EMPLOYER RESPONSIBILITY TO CONTRIBUTE TOWARD 
                   EMPLOYEE AND DEPENDENT COVERAGE.

       (a) In General.--An employer meets the requirements of this 
     section with respect to an employee if the following 
     requirements are met:
       (1) Offering of coverage.--The employer offers the coverage 
     described in section 411(1). In the case of an Exchange-
     eligible employer, the employer may offer such coverage 
     either through an Exchange-participating health benefits plan 
     or other than through such a plan.
       (2) Employer required contribution.--The employer timely 
     pays to the issuer of such coverage an amount not less than 
     the employer required contribution specified in subsection 
     (b) for such coverage.
       (3) Provision of information.--The employer provides the 
     Health Choices Commissioner, the Secretary of Labor, the 
     Secretary of Health and Human Services, and the Secretary of 
     the Treasury, as applicable, with such information as the 
     Commissioner may require to ascertain compliance with the 
     requirements of this section, including the following:
       (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 a qualified health benefits plan or 
     a current employment-based health plan (within the meaning of 
     section 202(b)).
       (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 months during the calendar year for which such 
     coverage was available; and
       (ii) the monthly premium for the lowest cost option in each 
     of the enrollment categories under each such plan offered to 
     employees.
       (D) 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 plans.
       (4) Autoenrollment of employees.--The employer provides for 
     autoenrollment of the employee in accordance with subsection 
     (c).
     This subsection shall supersede any law of a State which 
     would prevent automatic payroll deduction of employee 
     contributions to an employment-based health plan.
       (b) Reduction of Employee Premiums Through Minimum Employer 
     Contribution.--
       (1) Full-time employees.--The minimum employer contribution 
     described in this subsection for coverage of a full-time 
     employee (and, if any, the employee's spouse and qualifying 
     children (as defined in section 152(c) of the Internal 
     Revenue Code of 1986)) under a qualified health benefits plan 
     (or current employment-based health plan) is equal to--
       (A) in case of individual coverage, not less than 72.5 
     percent of the applicable premium (as defined in section 
     4980B(f)(4) of such Code, subject to paragraph (2)) of the 
     lowest cost plan offered by the employer that is a

[[Page H12654]]

     qualified health benefits plan (or is such current 
     employment-based health plan); and
       (B) in the case of family coverage which includes coverage 
     of such spouse and children, not less 65 percent of such 
     applicable premium of such lowest cost plan.
       (2) Applicable premium for exchange coverage.--In this 
     subtitle, the amount of the applicable premium of the lowest 
     cost plan with respect to coverage of an employee under an 
     Exchange-participating health benefits plan is the reference 
     premium amount under section 343(c) for individual coverage 
     (or, if elected, family coverage) for the premium rating area 
     in which the individual or family resides.
       (3) Minimum employer contribution for employees other than 
     full-time employees.--In the case of coverage for an employee 
     who is not a full-time employee, the amount of the minimum 
     employer contribution under this subsection shall be a 
     proportion (as determined in accordance with rules of the 
     Health Choices Commissioner, the Secretary of Labor, the 
     Secretary of Health and Human Services, and the Secretary of 
     the Treasury, as applicable) of the minimum employer 
     contribution under this subsection with respect to a full-
     time employee that reflects the proportion of--
       (A) the average weekly hours of employment of the employee 
     by the employer, to
       (B) the minimum weekly hours specified by the Commissioner 
     for an employee to be a full-time employee.
       (4) Salary reductions not treated as employer 
     contributions.--For purposes of this section, any 
     contribution on behalf of an employee with respect to which 
     there is a corresponding reduction in the compensation of the 
     employee shall not be treated as an amount paid by the 
     employer.
       (c) Automatic Enrollment for Employer Sponsored Health 
     Benefits.--
       (1) In general.--The requirement of this subsection with 
     respect to an employer and an employee is that the employer 
     automatically enroll such employee into the employment-based 
     health benefits plan for individual coverage under the plan 
     option with the lowest applicable employee premium.
       (2) Opt-out.--In no case may an employer automatically 
     enroll an employee in a plan under paragraph (1) if such 
     employee makes an affirmative election to opt out of such 
     plan or to elect coverage under an employment-based health 
     benefits plan offered by such employer. An employer shall 
     provide an employee with a 30-day period to make such an 
     affirmative election before the employer may automatically 
     enroll the employee in such a plan.
       (3) Notice requirements.--
       (A) In general.--Each employer described in paragraph (1) 
     who automatically enrolls an employee into a plan as 
     described in such paragraph shall provide the employees, 
     within a reasonable period before the beginning of each plan 
     year (or, in the case of new employees, within a reasonable 
     period before the end of the enrollment period for such a new 
     employee), written notice of the employees' rights and 
     obligations relating to the automatic enrollment requirement 
     under such paragraph. Such notice must be comprehensive and 
     understood by the average employee to whom the automatic 
     enrollment requirement applies.
       (B) Inclusion of specific information.--The written notice 
     under subparagraph (A) must explain an employee's right to 
     opt out of being automatically enrolled in a plan and in the 
     case that more than one level of benefits or employee premium 
     level is offered by the employer involved, the notice must 
     explain which level of benefits and employee premium level 
     the employee will be automatically enrolled in the absence of 
     an affirmative election by the employee.

     SEC. 413. EMPLOYER CONTRIBUTIONS IN LIEU OF COVERAGE.

       (a) In General.--A contribution is made in accordance with 
     this section with respect to an employee if such contribution 
     is equal to an amount equal to 8 percent of the average wages 
     paid by the employer during the period of enrollment 
     (determined by taking into account all employees of the 
     employer and in such manner as the Commissioner provides, 
     including rules providing for the appropriate aggregation of 
     related employers) but not to exceed the minimum employer 
     contribution described in section 412(b)(1)(A). Any such 
     contribution--
       (1) shall be paid to the Health Choices Commissioner for 
     deposit into the Health Insurance Exchange Trust Fund; and
       (2) shall not be applied against the premium of the 
     employee under the Exchange-participating health benefits 
     plan in which the employee is enrolled.
       (b) Special Rules for Small Employers.--
       (1) In general.--In the case of any employer who is a small 
     employer for any calendar year, subsection (a) shall be 
     applied by substituting the applicable percentage determined 
     in accordance with the following table for ``8 percent'':


If the annual payroll of such employer   The applicable percentage is:
 for the preceding calendar year:
  Does not exceed $500,000.............  0 percent
  Exceeds $500,000, but does not exceed  2 percent
   $585,000.
  Exceeds $585,000, but does not exceed  4 percent
   $670,000.
  Exceeds $670,000, but does not exceed  6 percent
   $750,000.
 


       (2) Small employer.--For purposes of this subsection, the 
     term ``small employer'' means any employer for any calendar 
     year if the annual payroll of such employer for the preceding 
     calendar year does not exceed $750,000.
       (3) Annual payroll.--For purposes of this paragraph, the 
     term ``annual payroll'' means, with respect to any employer 
     for any calendar year, the aggregate wages paid by the 
     employer during such calendar year.
       (4) Aggregation rules.--Related employers and predecessors 
     shall be treated as a single employer for purposes of this 
     subsection.

     SEC. 414. AUTHORITY RELATED TO IMPROPER STEERING.

       The Health Choices Commissioner (in coordination with the 
     Secretary of Labor, the Secretary of Health and Human 
     Services, and the Secretary of the Treasury) shall have 
     authority to set standards for determining whether employers 
     or insurers are undertaking any actions to affect the risk 
     pool within the Health Insurance Exchange by inducing 
     individuals to decline coverage under a qualified health 
     benefits plan (or current employment-based health plan 
     (within the meaning of section 202(b)) offered by the 
     employer and instead to enroll in an Exchange-participating 
     health benefits plan. An employer violating such standards 
     shall be treated as not meeting the requirements of this 
     section.

     SEC. 415. IMPACT STUDY ON EMPLOYER RESPONSIBILITY 
                   REQUIREMENTS.

       (a) In General.--The Secretary of Labor shall conduct a 
     study to examine the effect of the exemptions under section 
     512(a) and coverage thresholds under this division (in this 
     section referred to collectively as ``employer responsibility 
     requirements'' on employment-based health plan sponsorship, 
     generally and within specific industries, and the effect of 
     such requirements and thresholds on employers, employment-
     based health plans, and employees in each industry.
       (b) Annual Report.--The Secretary of Labor annually shall 
     submit to Congress a report on findings on how employer 
     responsibility requirements have impacted and are likely to 
     impact employers, plans, and employees during the previous 
     year and projected trends.
       (c) Legislative Recommendations.--No later than January 1, 
     2012 and on an annual basis thereafter, the Secretary of 
     Labor shall submit legislative recommendations to Congress to 
     modify the employer responsibility requirements if the 
     Secretary determines that the requirements are detrimentally 
     affecting or will detrimentally affect employer plan 
     sponsorship or otherwise creating inequities among employers, 
     health plans, and employees. The Secretary may also submit 
     such recommendations as the Secretary determines necessary to 
     improve and strengthen employment-based health plan 
     sponsorship, employer responsibility, and related proposals 
     that would enhance the delivery of health care benefits 
     between employers and employees.

     SEC. 416. STUDY ON EMPLOYER HARDSHIP EXEMPTION.

       (a) In General.--The Secretary of Labor together with the 
     Secretary of Treasury, the Secretary of Health and Human 
     Services, and the Commissioner, shall conduct a study to 
     examine the impact of the employer responsibility 
     requirements described in section 415(a) and make a 
     recommendation to Congress about whether an employer hardship 
     exemption would be appropriate.
       (b) Items Included in Study.--Within such study the 
     Secretaries and Commissioner shall examine cases where such 
     employer responsibility requirements may pose a particular 
     hardship, and specifically look at employers by industry, 
     profit margin, length of time in business, and size. In this 
     examination, the economic conditions shall be considered, 
     including the rate of increase in business costs, the 
     availability of short-term credit lines, and abilities to 
     restructure debt. In addition, the study shall examine the 
     impact an employer hardship waiver could have on employees.
       (c) Report.--Not later than January 1, 2012, the 
     Secretaries and Commissioner shall report to Congress on 
     their findings and make a recommendation regarding the need 
     or lack of need for a partial or complete employer hardship 
     waiver. The Secretaries and Commissioner may also submit 
     recommendations about the criteria Congress should include 
     when developing eligibility requirements for the employer 
     hardship waiver and what safeguards are necessary to protect 
     the employees of that employer.

   PART 2--SATISFACTION OF HEALTH COVERAGE PARTICIPATION REQUIREMENTS

     SEC. 421. SATISFACTION OF HEALTH COVERAGE PARTICIPATION 
                   REQUIREMENTS UNDER THE EMPLOYEE RETIREMENT 
                   INCOME SECURITY ACT OF 1974.

       (a) In General.--Subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     at the end the following new part:

[[Page H12655]]

     ``PART 8--NATIONAL HEALTH COVERAGE PARTICIPATION REQUIREMENTS

     ``SEC. 801. ELECTION OF EMPLOYER TO BE SUBJECT TO NATIONAL 
                   HEALTH COVERAGE PARTICIPATION REQUIREMENTS.

       ``(a) In General.--An employer may make an election with 
     the Secretary to be subject to the health coverage 
     participation requirements.
       ``(b) Time and Manner.--An election under subsection (a) 
     may be made at such time and in such form and manner as the 
     Secretary may prescribe.

     ``SEC. 802. TREATMENT OF COVERAGE RESULTING FROM ELECTION.

       ``(a) In General.--If an employer makes an election to the 
     Secretary under section 801--
       ``(1) such election shall be treated as the establishment 
     and maintenance of a group health plan (as defined in section 
     733(a)) for purposes of this title, subject to section 251 of 
     the Affordable Health Care for America Act; and
       ``(2) the health coverage participation requirements shall 
     be deemed to be included as terms and conditions of such 
     plan.
       ``(b) Periodic Investigations To Discover Noncompliance.--
     The Secretary shall regularly audit a representative sampling 
     of employers and group health plans and conduct 
     investigations and other activities under section 504 with 
     respect to such sampling of plans so as to discover 
     noncompliance with the health coverage participation 
     requirements in connection with such plans. The Secretary 
     shall communicate findings of noncompliance made by the 
     Secretary under this subsection to the Secretary of the 
     Treasury and the Health Choices Commissioner. The Secretary 
     shall take such timely enforcement action as appropriate to 
     achieve compliance.
       ``(c) Recordkeeping.--To facilitate the audits described in 
     subsection (b), the Secretary shall promulgate recordkeeping 
     requirements for employers to account for both employees of 
     the employer and individuals whom the employer has not 
     treated as employees of the employer but with whom the 
     employer, in the course of its trade or business, has engaged 
     for the performance of labor or services. The scope and 
     content of such recordkeeping requirements shall be 
     determined by the Secretary and shall be designed to ensure 
     that employees who are not properly treated as such may be 
     identified and properly treated.

     ``SEC. 803. HEALTH COVERAGE PARTICIPATION REQUIREMENTS.

       ``For purposes of this part, the term `health coverage 
     participation requirements' means the requirements of part 1 
     of subtitle B of title IV of division A of (as in effect on 
     the date of the enactment of such Act).

     ``SEC. 804. RULES FOR APPLYING REQUIREMENTS.

       ``(a) Affiliated Groups.--In the case of any employer which 
     is part of a group of employers who are treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 of the Internal Revenue Code of 1986, the election under 
     section 801 shall be made by such employer as the Secretary 
     may provide. Any such election, once made, shall apply to all 
     members of such group.
       ``(b) Separate Elections.--Under regulations prescribed by 
     the Secretary, separate elections may be made under section 
     801 with respect to--
       ``(1) separate lines of business, and
       ``(2) full-time employees and employees who are not full-
     time employees.

     ``SEC. 805. TERMINATION OF ELECTION IN CASES OF SUBSTANTIAL 
                   NONCOMPLIANCE.

       ``The Secretary may terminate the election of any employer 
     under section 801 if the Secretary (in coordination with the 
     Health Choices Commissioner) determines that such employer is 
     in substantial noncompliance with the health coverage 
     participation requirements and shall refer any such 
     determination to the Secretary of the Treasury as 
     appropriate.

     ``SEC. 806. REGULATIONS.

       ``The Secretary may promulgate such regulations as may be 
     necessary or appropriate to carry out the provisions of this 
     part, in accordance with section 424(a) of the . The 
     Secretary may promulgate any interim final rules as the 
     Secretary determines are appropriate to carry out this 
     part.''.
       (b) Enforcement of Health Coverage Participation 
     Requirements.--Section 502 of such Act (29 U.S.C. 1132) is 
     amended--
       (1) in subsection (a)(6), by striking ``paragraph'' and all 
     that follows through ``subsection (c)'' and inserting 
     ``paragraph (2), (4), (5), (6), (7), (8), (9), (10), or (11) 
     of subsection (c)''; and
       (2) in subsection (c), by redesignating the second 
     paragraph (10) as paragraph (12) and by inserting after the 
     first paragraph (10) the following new paragraph:
       ``(11) Health coverage participation requirements.--
       ``(A) Civil penalties.--In the case of any employer who 
     fails (during any period with respect to which an election 
     under section 801(a) is in effect) to satisfy the health 
     coverage participation requirements with respect to any 
     employee, the Secretary may assess a civil penalty against 
     the employer of $100 for each day in the period beginning on 
     the date such failure first occurs and ending on the date 
     such failure is corrected.
       ``(B) Health coverage participation requirements.--For 
     purposes of this paragraph, the term `health coverage 
     participation requirements' has the meaning provided in 
     section 803.
       ``(C) Limitations on amount of penalty.--
       ``(i) Penalty not to apply where failure not discovered 
     exercising reasonable diligence.--No penalty shall be 
     assessed under subparagraph (A) with respect to any failure 
     during any period for which it is established to the 
     satisfaction of the Secretary that the employer did not know, 
     or exercising reasonable diligence would not have known, that 
     such failure existed.
       ``(ii) Penalty not to apply to failures corrected within 30 
     days.--No penalty shall be assessed under subparagraph (A) 
     with respect to any failure if--

       ``(I) such failure was due to reasonable cause and not to 
     willful neglect, and
       ``(II) such failure is corrected during the 30-day period 
     beginning on the 1st date that the employer knew, or 
     exercising reasonable diligence would have known, that such 
     failure existed.

       ``(iii) Overall limitation for unintentional failures.--In 
     the case of failures which are due to reasonable cause and 
     not to willful neglect, the penalty assessed under 
     subparagraph (A) for failures during any 1-year period shall 
     not exceed the amount equal to the lesser of--

       ``(I) 10 percent of the aggregate amount paid or incurred 
     by the employer (or predecessor employer) during the 
     preceding 1-year period for group health plans, or
       ``(II) $500,000.

       ``(D) Advance notification of failure prior to 
     assessment.--Before a reasonable time prior to the assessment 
     of any penalty under this paragraph with respect to any 
     failure by an employer, the Secretary shall inform the 
     employer in writing of such failure and shall provide the 
     employer information regarding efforts and procedures which 
     may be undertaken by the employer to correct such failure.
       ``(E) Coordination with excise tax.--Under regulations 
     prescribed in accordance with section 424 of the Affordable 
     Health Care for America Act, the Secretary and the Secretary 
     of the Treasury shall coordinate the assessment of penalties 
     under this section in connection with failures to satisfy 
     health coverage participation requirements with the 
     imposition of excise taxes on such failures under section 
     4980H(b) of the Internal Revenue Code of 1986 so as to avoid 
     duplication of penalties with respect to such failures.
       ``(F) Deposit of penalty collected.--Any amount of penalty 
     collected under this paragraph shall be deposited as 
     miscellaneous receipts in the Treasury of the United 
     States.''.
       (c) Clerical Amendments.--The table of contents in section 
     1 of such Act is amended by inserting after the item relating 
     to section 734 the following new items:

     ``Part 8--National Health Coverage Participation Requirements

``Sec. 801. Election of employer to be subject to national health 
              coverage participation requirements.
``Sec. 802. Treatment of coverage resulting from election.
``Sec. 803. Health coverage participation requirements.
``Sec. 804. Rules for applying requirements.
``Sec. 805. Termination of election in cases of substantial 
              noncompliance.
``Sec. 806. Regulations.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to periods beginning after December 31, 2012.

     SEC. 422. SATISFACTION OF HEALTH COVERAGE PARTICIPATION 
                   REQUIREMENTS UNDER THE INTERNAL REVENUE CODE OF 
                   1986.

       (a) Failure To Elect, or Substantially Comply With, Health 
     Coverage Participation Requirements.--For employment tax on 
     employers who fail to elect, or substantially comply with, 
     the health coverage participation requirements described in 
     part 1, see section 3111(c) of the Internal Revenue Code of 
     1986 (as added by section 512 of this Act).
       (b) Other Failures.--For excise tax on other failures of 
     electing employers to comply with such requirements, see 
     section 4980H of the Internal Revenue Code of 1986 (as added 
     by section 511 of this Act).

     SEC. 423. SATISFACTION OF HEALTH COVERAGE PARTICIPATION 
                   REQUIREMENTS UNDER THE PUBLIC HEALTH SERVICE 
                   ACT.

       (a) In General.--Part C of title XXVII of the Public Health 
     Service Act is amended by adding at the end the following new 
     section:

     ``SEC. 2793. NATIONAL HEALTH COVERAGE PARTICIPATION 
                   REQUIREMENTS.

       ``(a) Election of Employer To Be Subject to National Health 
     Coverage Participation Requirements.--
       ``(1) In general.--An employer may make an election with 
     the Secretary to be subject to the health coverage 
     participation requirements.
       ``(2) Time and manner.--An election under paragraph (1) may 
     be made at such time and in such form and manner as the 
     Secretary may prescribe.
       ``(b) Treatment of Coverage Resulting From Election.--
       ``(1) In general.--If an employer makes an election to the 
     Secretary under subsection (a)--
       ``(A) such election shall be treated as the establishment 
     and maintenance of a group health plan for purposes of this 
     title, subject to section 251 of the Affordable Health Care 
     for America Act; and
       ``(B) the health coverage participation requirements shall 
     be deemed to be included as terms and conditions of such 
     plan.

[[Page H12656]]

       ``(2) Periodic investigations to determine compliance with 
     health coverage participation requirements.--The Secretary 
     shall regularly audit a representative sampling of employers 
     and conduct investigations and other activities with respect 
     to such sampling of employers so as to discover noncompliance 
     with the health coverage participation requirements in 
     connection with such employers (during any period with 
     respect to which an election under subsection (a) is in 
     effect). The Secretary shall communicate findings of 
     noncompliance made by the Secretary under this subsection to 
     the Secretary of the Treasury and the Health Choices 
     Commissioner. The Secretary shall take such timely 
     enforcement action as appropriate to achieve compliance.
       ``(3) Recordkeeping.--To facilitate the audits described in 
     subsection (b), the Secretary shall promulgate recordkeeping 
     requirements for employers to account for both employees of 
     the employer and individuals whom the employer has not 
     treated as employees of the employer but with whom the 
     employer, in the course of its trade or business, has engaged 
     for the performance of labor or services. The scope and 
     content of such recordkeeping requirements shall be 
     determined by the Secretary and shall be designed to ensure 
     that employees who are not properly treated as such may be 
     identified and properly treated.
       ``(c) Health Coverage Participation Requirements.--For 
     purposes of this section, the term `health coverage 
     participation requirements' means the requirements of part 1 
     of subtitle B of title IV of division A of the (as in effect 
     on the date of the enactment of this section).
       ``(d) Separate Elections.--Under regulations prescribed by 
     the Secretary, separate elections may be made under 
     subsection (a) with respect to full-time employees and 
     employees who are not full-time employees.
       ``(e) Termination of Election in Cases of Substantial 
     Noncompliance.--The Secretary may terminate the election of 
     any employer under subsection (a) if the Secretary (in 
     coordination with the Health Choices Commissioner) determines 
     that such employer is in substantial noncompliance with the 
     health coverage participation requirements and shall refer 
     any such determination to the Secretary of the Treasury as 
     appropriate.
       ``(f) Enforcement of Health Coverage Participation 
     Requirements.--
       ``(1) Civil penalties.--In the case of any employer who 
     fails (during any period with respect to which the election 
     under subsection (a) is in effect) to satisfy the health 
     coverage participation requirements with respect to any 
     employee, the Secretary may assess a civil penalty against 
     the employer of $100 for each day in the period beginning on 
     the date such failure first occurs and ending on the date 
     such failure is corrected.
       ``(2) Limitations on amount of penalty.--
       ``(A) Penalty not to apply where failure not discovered 
     exercising reasonable diligence.--No penalty shall be 
     assessed under paragraph (1) with respect to any failure 
     during any period for which it is established to the 
     satisfaction of the Secretary that the employer did not know, 
     or exercising reasonable diligence would not have known, that 
     such failure existed.
       ``(B) Penalty not to apply to failures corrected within 30 
     days.--No penalty shall be assessed under paragraph (1) with 
     respect to any failure if--
       ``(i) such failure was due to reasonable cause and not to 
     willful neglect, and
       ``(ii) such failure is corrected during the 30-day period 
     beginning on the 1st date that the employer knew, or 
     exercising reasonable diligence would have known, that such 
     failure existed.
       ``(C) Overall limitation for unintentional failures.--In 
     the case of failures which are due to reasonable cause and 
     not to willful neglect, the penalty assessed under paragraph 
     (1) for failures during any 1-year period shall not exceed 
     the amount equal to the lesser of--
       ``(i) 10 percent of the aggregate amount paid or incurred 
     by the employer (or predecessor employer) during the 
     preceding taxable year for group health plans, or
       ``(ii) $500,000.
       ``(3) Advance notification of failure prior to 
     assessment.--Before a reasonable time prior to the assessment 
     of any penalty under paragraph (1) with respect to any 
     failure by an employer, the Secretary shall inform the 
     employer in writing of such failure and shall provide the 
     employer information regarding efforts and procedures which 
     may be undertaken by the employer to correct such failure.
       ``(4) Actions to enforce assessments.--The Secretary may 
     bring a civil action in any District Court of the United 
     States to collect any civil penalty under this subsection.
       ``(5) Coordination with excise tax.--Under regulations 
     prescribed in accordance with section 424 of the Affordable 
     Health Care for America Act, the Secretary and the Secretary 
     of the Treasury shall coordinate the assessment of penalties 
     under paragraph (1) in connection with failures to satisfy 
     health coverage participation requirements with the 
     imposition of excise taxes on such failures under section 
     4980H(b) of the Internal Revenue Code of 1986 so as to avoid 
     duplication of penalties with respect to such failures.
       ``(6) Deposit of penalty collected.--Any amount of penalty 
     collected under this subsection shall be deposited as 
     miscellaneous receipts in the Treasury of the United States.
       ``(g) Regulations.--The Secretary may promulgate such 
     regulations as may be necessary or appropriate to carry out 
     the provisions of this section, in accordance with section 
     424(a) of the . The Secretary may promulgate any interim 
     final rules as the Secretary determines are appropriate to 
     carry out this section.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to periods beginning after December 31, 2012.

     SEC. 424. ADDITIONAL RULES RELATING TO HEALTH COVERAGE 
                   PARTICIPATION REQUIREMENTS.

       (a) Assuring Coordination.--The officers consisting of the 
     Secretary of Labor, the Secretary of the Treasury, the 
     Secretary of Health and Human Services, and the Health 
     Choices Commissioner shall ensure, through the execution of 
     an interagency memorandum of understanding among such 
     officers, that--
       (1) regulations, rulings, and interpretations issued by 
     such officers relating to the same matter over which two or 
     more of such officers have responsibility under subpart B of 
     part 8 of subtitle B of title I of the Employee Retirement 
     Income Security Act of 1974, section 4980H of the Internal 
     Revenue Code of 1986, and section 2793 of the Public Health 
     Service Act are administered so as to have the same effect at 
     all times; and
       (2) coordination of policies relating to enforcing the same 
     requirements through such officers in order to have a 
     coordinated enforcement strategy that avoids duplication of 
     enforcement efforts and assigns priorities in enforcement.
       (b) Multiemployer Plans.--In the case of a group health 
     plan that is a multiemployer plan (as defined in section 
     3(37) of the Employee Retirement Income Security Act of 
     1974), the regulations prescribed in accordance with 
     subsection (a) by the officers referred to in subsection (a) 
     shall provide for the application of the health coverage 
     participation requirements to the plan sponsor and 
     contributing employers of such plan. For purposes of this 
     division, contributions made pursuant to a collective 
     bargaining agreement or other agreement to such a group 
     health plan shall be treated as amounts paid by the employer.

          TITLE V--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

         Subtitle A--Provisions Relating to Health Care Reform

                     PART 1--SHARED RESPONSIBILITY

                  Subpart A--Individual Responsibility

     SEC. 501. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE 
                   COVERAGE.

       (a) In General.--Subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new part:

                 ``PART VIII--HEALTH CARE RELATED TAXES

    ``subpart a. tax on individuals without acceptable health care 
                               coverage.

``Subpart A--Tax on Individuals Without Acceptable Health Care Coverage

``Sec. 59B. Tax on individuals without acceptable health care coverage.

     ``SEC. 59B. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE 
                   COVERAGE.

       ``(a) Tax Imposed.--In the case of any individual who does 
     not meet the requirements of subsection (d) at any time 
     during the taxable year, there is hereby imposed a tax equal 
     to 2.5 percent of the excess of--
       ``(1) the taxpayer's modified adjusted gross income for the 
     taxable year, over
       ``(2) the amount of gross income specified in section 
     6012(a)(1) with respect to the taxpayer.
       ``(b) Limitations.--
       ``(1) Tax limited to average premium.--
       ``(A) In general.--The tax imposed under subsection (a) 
     with respect to any taxpayer for any taxable year shall not 
     exceed the applicable national average premium for such 
     taxable year.
       ``(B) Applicable national average premium.--
       ``(i) In general.--For purposes of subparagraph (A), the 
     `applicable national average premium' means, with respect to 
     any taxable year, the average premium (as determined by the 
     Secretary, in coordination with the Health Choices 
     Commissioner) for self-only coverage under a basic plan which 
     is offered in a Health Insurance Exchange for the calendar 
     year in which such taxable year begins.
       ``(ii) Failure to provide coverage for more than one 
     individual.--In the case of any taxpayer who fails to meet 
     the requirements of subsection (d) with respect to more than 
     one individual during the taxable year, clause (i) shall be 
     applied by substituting `family coverage' for `self-only 
     coverage'.
       ``(2) Proration for part year failures.--The tax imposed 
     under subsection (a) with respect to any taxpayer for any 
     taxable year shall not exceed the amount which bears the same 
     ratio to the amount of tax so imposed (determined without 
     regard to this paragraph and after application of paragraph 
     (1)) as--
       ``(A) the aggregate periods during such taxable year for 
     which such individual failed to meet the requirements of 
     subsection (d), bears to
       ``(B) the entire taxable year.
       ``(c) Exceptions.--

[[Page H12657]]

       ``(1) Dependents.--Subsection (a) shall not apply to any 
     individual for any taxable year if a deduction is allowable 
     under section 151 with respect to such individual to another 
     taxpayer for any taxable year beginning in the same calendar 
     year as such taxable year.
       ``(2) Nonresident aliens.--Subsection (a) shall not apply 
     to any individual who is a nonresident alien.
       ``(3) Individuals residing outside united states.--Any 
     qualified individual (as defined in section 911(d)) (and any 
     qualifying child residing with such individual) shall be 
     treated for purposes of this section as covered by acceptable 
     coverage during the period described in subparagraph (A) or 
     (B) of section 911(d)(1), whichever is applicable.
       ``(4) Individuals residing in possessions of the united 
     states.--Any individual who is a bona fide resident of any 
     possession of the United States (as determined under section 
     937(a)) for any taxable year (and any qualifying child 
     residing with such individual) shall be treated for purposes 
     of this section as covered by acceptable coverage during such 
     taxable year.
       ``(5) Religious conscience exemption.--
       ``(A) In general.--Subsection (a) shall not apply to any 
     individual (and any qualifying child residing with such 
     individual) for any period if such individual has in effect 
     an exemption which certifies that such individual is a member 
     of a recognized religious sect or division thereof described 
     in section 1402(g)(1) and an adherent of established tenets 
     or teachings of such sect or division as described in such 
     section.
       ``(B) Exemption.--An application for the exemption 
     described in subparagraph (A) shall be filed with the 
     Secretary at such time and in such form and manner as the 
     Secretary may prescribe. The Secretary may treat an 
     application for exemption under section 1402(g)(1) as an 
     application for exemption under this section, or may 
     otherwise coordinate applications under such sections, as the 
     Secretary determines appropriate. Any such exemption granted 
     by the Secretary shall be effective for such period as the 
     Secretary determines appropriate.
       ``(d) Acceptable Coverage Requirement.--
       ``(1) In general.--The requirements of this subsection are 
     met with respect to any individual for any period if such 
     individual (and each qualifying child of such individual) is 
     covered by acceptable coverage at all times during such 
     period.
       ``(2) Acceptable coverage.--For purposes of this section, 
     the term `acceptable coverage' means any of the following:
       ``(A) Qualified health benefits plan coverage.--Coverage 
     under a qualified health benefits plan (as defined in section 
     100(c) of the ).
       ``(B) Grandfathered health insurance coverage; coverage 
     under grandfathered employment-based health plan.--Coverage 
     under a grandfathered health insurance coverage (as defined 
     in subsection (a) of section 202 of the Affordable Health 
     Care for America Act) or under a current employment-based 
     health plan (within the meaning of subsection (b) of such 
     section).
       ``(C) Medicare.--Coverage under part A of title XVIII of 
     the Social Security Act.
       ``(D) Medicaid.--Coverage for medical assistance under 
     title XIX of the Social Security Act.
       ``(E) Members of the armed forces and dependents (including 
     tricare).--Coverage under chapter 55 of title 10, United 
     States Code, including similar coverage furnished under 
     section 1781 of title 38 of such Code.
       ``(F) VA.--Coverage under the veteran's health care program 
     under chapter 17 of title 38, United States Code.
       ``(G) Members of indian tribes.--Health care services made 
     available through the Indian Health Service, a tribal 
     organization (as defined in section 4 of the Indian Health 
     Care Improvement Act), or an urban Indian organization (as 
     defined in such section) to members of an Indian tribe (as 
     defined in such section).
       ``(H) Other coverage.--Such other health benefits coverage 
     as the Secretary, in coordination with the Health Choices 
     Commissioner, recognizes for purposes of this subsection.
       ``(e) Other Definitions and Special Rules.--
       ``(1) Qualifying child.--For purposes of this section, the 
     term `qualifying child' has the meaning given such term by 
     section 152(c). With respect to any period during which 
     health coverage for a child must be provided by an individual 
     pursuant to a child support order, such child shall be 
     treated as a qualifying child of such individual (and not as 
     a qualifying child of any other individual).
       ``(2) Basic plan.--For purposes of this section, the term 
     `basic plan' has the meaning given such term under section 
     100(c) of the Affordable Health Care for America Act.
       ``(3) Health insurance exchange.--For purposes of this 
     section, the term `Health Insurance Exchange' has the meaning 
     given such term under section 100(c) of the Affordable Health 
     Care for America Act, including any State-based health 
     insurance exchange approved for operation under section 308 
     of such Act.
       ``(4) Family coverage.--For purposes of this section, the 
     term `family coverage' means any coverage other than self-
     only coverage.
       ``(5) Modified adjusted gross income.--For purposes of this 
     section, the term `modified adjusted gross income' means 
     adjusted gross income increased by--
       ``(A) any amount excluded from gross income under section 
     911, and
       ``(B) any amount of interest received or accrued by the 
     taxpayer during the taxable year which is exempt from tax.
       ``(6) Not treated as tax imposed by this chapter for 
     certain purposes.--The tax imposed under this section shall 
     not be treated as tax imposed by this chapter for purposes of 
     determining the amount of any credit under this chapter or 
     for purposes of section 55.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the purposes of this section, 
     including regulations or other guidance (developed in 
     coordination with the Health Choices Commissioner) which 
     provide--
       ``(1) exemption from the tax imposed under subsection (a) 
     in cases of de minimis lapses of acceptable coverage, and
       ``(2) a waiver of the application of subsection (a) in 
     cases of hardship, including a process for applying for such 
     a waiver.''.
       (b) Information Reporting.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 of such Code is amended by inserting after section 
     6050W the following new section:

     ``SEC. 6050X. RETURNS RELATING TO HEALTH INSURANCE COVERAGE.

       ``(a) Requirement of Reporting.--Every person who provides 
     acceptable coverage (as defined in section 59B(d)) to any 
     individual during any calendar year shall, at such time as 
     the Secretary may prescribe, make the return described in 
     subsection (b) with respect to such individual.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe, and
       ``(2) contains--
       ``(A) the name, address, and TIN of the primary insured and 
     the name of each other individual obtaining coverage under 
     the policy,
       ``(B) the period for which each such individual was 
     provided with the coverage referred to in subsection (a), and
       ``(C) such other information as the Secretary may require.
       ``(c) Statements to Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each primary insured whose name is required to be set 
     forth in such return a written statement showing--
       ``(1) the name and address of the person required to make 
     such return and the phone number of the information contact 
     for such person, and
       ``(2) the information required to be shown on the return 
     with respect to such individual.
     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) is required to be made.
       ``(d) Coverage Provided by Governmental Units.--In the case 
     of coverage provided by any governmental unit or any agency 
     or instrumentality thereof, the officer or employee who 
     enters into the agreement to provide such coverage (or the 
     person appropriately designated for purposes of this section) 
     shall make the returns and statements required by this 
     section.''.
       (2) Penalty for failure to file.--
       (A) Return.--Subparagraph (B) of section 6724(d)(1) of such 
     Code is amended by striking ``or'' at the end of clause 
     (xxii), by striking ``and'' at the end of clause (xxiii) and 
     inserting ``or'', and by adding at the end the following new 
     clause:
       ``(xxiv) section 6050X (relating to returns relating to 
     health insurance coverage), and''.
       (B) Statement.--Paragraph (2) of section 6724(d) of such 
     Code is amended by striking ``or'' at the end of subparagraph 
     (EE), by striking the period at the end of subparagraph (FF) 
     and inserting ``, or'', and by inserting after subparagraph 
     (FF) the following new subparagraph:
       ``(GG) section 6050X (relating to returns relating to 
     health insurance coverage).''.
       (c) Return Requirement.--Subsection (a) of section 6012 of 
     such Code is amended by inserting after paragraph (9) the 
     following new paragraph:
       ``(10) Every individual to whom section 59B(a) applies and 
     who fails to meet the requirements of section 59B(d) with 
     respect to such individual or any qualifying child (as 
     defined in section 152(c)) of such individual.''.
       (d) Clerical Amendments.--
       (1) The table of parts for subchapter A of chapter 1 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new item:

               ``Part VIII. Health Care Related Taxes.''.

       (2) The table of sections for subpart B of part III of 
     subchapter A of chapter 61 is amended by adding at the end 
     the following new item:

``Sec. 6050X. Returns relating to health insurance coverage.''.
       (e) Section 15 Not to Apply.--The amendment made by 
     subsection (a) shall not be treated as a change in a rate of 
     tax for purposes of section 15 of the Internal Revenue Code 
     of 1986.
       (f) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2012.

[[Page H12658]]

       (2) Returns.--The amendments made by subsection (b) shall 
     apply to calendar years beginning after December 31, 2012.

                   Subpart B--Employer Responsibility

     SEC. 511. ELECTION TO SATISFY HEALTH COVERAGE PARTICIPATION 
                   REQUIREMENTS.

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

     ``SEC. 4980H. ELECTION WITH RESPECT TO HEALTH COVERAGE 
                   PARTICIPATION REQUIREMENTS.

       ``(a) Election of Employer Responsibility to Provide Health 
     Coverage.--
       ``(1) In general.--Subsection (b) shall apply to any 
     employer with respect to whom an election under paragraph (2) 
     is in effect.
       ``(2) Time and manner.--An employer may make an election 
     under this paragraph at such time and in such form and manner 
     as the Secretary may prescribe.
       ``(3) Affiliated groups.--In the case of any employer which 
     is part of a group of employers who are treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414, the election under paragraph (2) shall be made by such 
     person as the Secretary may provide. Any such election, once 
     made, shall apply to all members of such group.
       ``(4) Separate elections.--Under regulations prescribed by 
     the Secretary, separate elections may be made under paragraph 
     (2) with respect to--
       ``(A) separate lines of business, and
       ``(B) full-time employees and employees who are not full-
     time employees.
       ``(5) Termination of election in cases of substantial 
     noncompliance.--The Secretary may terminate the election of 
     any employer under paragraph (2) if the Secretary (in 
     coordination with the Health Choices Commissioner) determines 
     that such employer is in substantial noncompliance with the 
     health coverage participation requirements.
       ``(b) Excise Tax With Respect to Failure to Meet Health 
     Coverage Participation Requirements.--
       ``(1) In general.--In the case of any employer who fails 
     (during any period with respect to which the election under 
     subsection (a) is in effect) to satisfy the health coverage 
     participation requirements with respect to any employee to 
     whom such election applies, there is hereby imposed on each 
     such failure with respect to each such employee a tax of $100 
     for each day in the period beginning on the date such failure 
     first occurs and ending on the date such failure is 
     corrected.
       ``(2) Limitations on amount of tax.--
       ``(A) Tax not to apply where failure not discovered 
     exercising reasonable diligence.--No tax shall be imposed by 
     paragraph (1) on any failure during any period for which it 
     is established to the satisfaction of the Secretary that the 
     employer neither knew, nor exercising reasonable diligence 
     would have known, that such failure existed.
       ``(B) Tax not to apply to failures corrected within 30 
     days.--No tax shall be imposed by paragraph (1) on any 
     failure if--
       ``(i) such failure was due to reasonable cause and not to 
     willful neglect, and
       ``(ii) such failure is corrected during the 30-day period 
     beginning on the 1st date that the employer knew, or 
     exercising reasonable diligence would have known, that such 
     failure existed.
       ``(C) Overall limitation for unintentional failures.--In 
     the case of failures which are due to reasonable cause and 
     not to willful neglect, the tax imposed by subsection (a) for 
     failures during the taxable year of the employer shall not 
     exceed the amount equal to the lesser of--
       ``(i) 10 percent of the aggregate amount paid or incurred 
     by the employer (or predecessor employer) during the 
     preceding taxable year for employment-based health plans, or
       ``(ii) $500,000.
       ``(D) Coordination with other enforcement provisions.--The 
     tax imposed under paragraph (1) with respect to any failure 
     shall be reduced (but not below zero) by the amount of any 
     civil penalty collected under section 502(c)(11) of the 
     Employee Retirement Income Security Act of 1974 or section 
     2793(g) of the Public Health Service Act with respect to such 
     failure.
       ``(c) Health Coverage Participation Requirements.--For 
     purposes of this section, the term `health coverage 
     participation requirements' means the requirements of part I 
     of subtitle B of title IV of the (as in effect on the date of 
     the enactment of this section).''.
       (b) Clerical Amendment.--The table of sections for chapter 
     43 of such Code is amended by adding at the end the following 
     new item:

``Sec. 4980H. Election with respect to health coverage participation 
              requirements.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to periods beginning after December 31, 2012.

     SEC. 512. HEALTH CARE CONTRIBUTIONS OF NONELECTING EMPLOYERS.

       (a) In General.--Section 3111 of the Internal Revenue Code 
     of 1986 is amended by redesignating subsection (c) as 
     subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Employers Electing Not to Provide Health Benefits.--
       ``(1) In general.--In addition to other taxes, there is 
     hereby imposed on every nonelecting employer an excise tax, 
     with respect to having individuals in his employ, equal to 8 
     percent of the wages (as defined in section 3121(a)) paid by 
     him with respect to employment (as defined in section 
     3121(b)).
       ``(2) Special rules for small employers.--
       ``(A) In general.--In the case of any employer who is small 
     employer for any calendar year, paragraph (1) shall be 
     applied by substituting the applicable percentage determined 
     in accordance with the following table for `8 percent':


``If the annual payroll of such          The applicable percentage is:
 employer for the preceding calendar
 year:
  Does not exceed $500,000.............  0 percent
  Exceeds $500,000, but does not exceed  2 percent
   $585,000.
  Exceeds $585,000, but does not exceed  4 percent
   $670,000.
  Exceeds $670,000, but does not exceed  6 percent
   $750,000.
 


       ``(B) Small employer.--For purposes of this paragraph, the 
     term `small employer' means any employer for any calendar 
     year if the annual payroll of such employer for the preceding 
     calendar year does not exceed $750,000.
       ``(C) Annual payroll.--For purposes of this paragraph, the 
     term `annual payroll' means, with respect to any employer for 
     any calendar year, the aggregate wages (as defined in section 
     3121(a)) paid by him with respect to employment (as defined 
     in section 3121(b)) during such calendar year.
       ``(3) Nonelecting employer.--For purposes of paragraph (1), 
     the term `nonelecting employer' means any employer for any 
     period with respect to which such employer does not have an 
     election under section 4980H(a) in effect.
       ``(4) Special rule for separate elections.--In the case of 
     an employer who makes a separate election described in 
     section 4980H(a)(4) for any period, paragraph (1) shall be 
     applied for such period by taking into account only the wages 
     paid to employees who are not subject to such election.
       ``(5) Aggregation; predecessors.--For purposes of this 
     subsection--
       ``(A) all persons treated as a single employer under 
     subsection (b), (c), (m), or (o) of section 414 shall be 
     treated as 1 employer, and
       ``(B) any reference to any person shall be treated as 
     including a reference to any predecessor of such person.''.
       (b) Definitions.--Section 3121 of such Code is amended by 
     adding at the end the following new subsection:
       ``(aa) Special Rules for Tax on Employers Electing Not to 
     Provide Health Benefits.--For purposes of section 3111(c)--
       ``(1) Paragraphs (1), (5), and (19) of subsection (b) shall 
     not apply.
       ``(2) Paragraph (7) of subsection (b) shall apply by 
     treating all services as not covered by the retirement 
     systems referred to in subparagraphs (C) and (F) thereof.
       ``(3) Subsection (e) shall not apply and the term `State' 
     shall include the District of Columbia.''.
       (c) Conforming Amendment.--Subsection (d) of section 3111 
     of such Code, as redesignated by this section, is amended by 
     striking ``this section'' and inserting ``subsections (a) and 
     (b)''.
       (d) Application to Railroads.--
       (1) In general.--Section 3221 of such Code is amended by 
     redesignating subsection (c) as subsection (d) and by 
     inserting after subsection (b) the following new subsection:
       ``(c) Employers Electing Not to Provide Health Benefits.--
       ``(1) In general.--In addition to other taxes, there is 
     hereby imposed on every nonelecting employer an excise tax, 
     with respect to having individuals in his employ, equal to 8 
     percent of the compensation paid during any calendar year by 
     such employer for services rendered to such employer.
       ``(2) Exception for small employers.--Rules similar to the 
     rules of section 3111(c)(2) shall apply for purposes of this 
     subsection.
       ``(3) Nonelecting employer.--For purposes of paragraph (1), 
     the term `nonelecting employer' means any employer for any 
     period with respect to which such employer does not have an 
     election under section 4980H(a) in effect.
       ``(4) Special rule for separate elections.--In the case of 
     an employer who makes a separate election described in 
     section 4980H(a)(4) for any period, subsection (a) shall be 
     applied for such period by taking into account only the 
     compensation paid to employees who are not subject to such 
     election.''.
       (2) Definitions.--Subsection (e) of section 3231 of such 
     Code is amended by adding at the end the following new 
     paragraph:

[[Page H12659]]

       ``(13) Special rules for tax on employers electing not to 
     provide health benefits.--For purposes of section 3221(c)--
       ``(A) Paragraph (1) shall be applied without regard to the 
     third sentence thereof.
       ``(B) Paragraph (2) shall not apply.''.
       (3) Conforming amendment.--Subsection (d) of section 3221 
     of such Code, as redesignated by this section, is amended by 
     striking ``subsections (a) and (b), see section 3231(e)(2)'' 
     and inserting ``this section, see paragraphs (2) and (13)(B) 
     of section 3231(e)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to periods beginning after December 31, 2012.

  PART 2--CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH COVERAGE EXPENSES

     SEC. 521. CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH COVERAGE 
                   EXPENSES.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     business-related credits) is amended by adding at the end the 
     following new section:

     ``SEC. 45R. SMALL BUSINESS EMPLOYEE HEALTH COVERAGE CREDIT.

       ``(a) In General.--For purposes of section 38, in the case 
     of a qualified small employer, the small business employee 
     health coverage credit determined under this section for the 
     taxable year is an amount equal to the applicable percentage 
     of the qualified employee health coverage expenses of such 
     employer for such taxable year.
       ``(b) Applicable Percentage.--
       ``(1) In general.--For purposes of this section, the 
     applicable percentage is 50 percent.
       ``(2) Phaseout based on average compensation of 
     employees.--In the case of an employer whose average annual 
     employee compensation for the taxable year exceeds $20,000, 
     the percentage specified in paragraph (1) shall be reduced by 
     a number of percentage points which bears the same ratio to 
     50 as such excess bears to $20,000.
       ``(c) Limitations.--
       ``(1) Phaseout based on employer size.--In the case of an 
     employer who employs more than 10 qualified employees during 
     the taxable year, the credit determined under subsection (a) 
     shall be reduced by an amount which bears the same ratio to 
     the amount of such credit (determined without regard to this 
     paragraph and after the application of the other provisions 
     of this section) as--
       ``(A) the excess of--
       ``(i) the number of qualified employees employed by the 
     employer during the taxable year, over
       ``(ii) 10, bears to
       ``(B) 15.
       ``(2) Credit not allowed with respect to certain highly 
     compensated employees.--No credit shall be determined under 
     subsection (a) with respect to qualified employee health 
     coverage expenses paid or incurred with respect to any 
     employee for any taxable year if the aggregate compensation 
     paid by the employer to such employee during such taxable 
     year exceeds $80,000.
       ``(3) Credit allowed for only 2 taxable years.--No credit 
     shall be determined under subsection (a) with respect to any 
     employer for any taxable year unless the employer elects to 
     have this section apply for such taxable year. An employer 
     may elect the application of this section with respect to not 
     more than 2 taxable years.
       ``(d) Qualified Employee Health Coverage Expenses.--For 
     purposes of this section--
       ``(1) In general.--The term `qualified employee health 
     coverage expenses' means, with respect to any employer for 
     any taxable year, the aggregate amount paid or incurred by 
     such employer during such taxable year for coverage of any 
     qualified employee of the employer (including any family 
     coverage which covers such employee) under qualified health 
     coverage.
       ``(2) Qualified health coverage.--The term `qualified 
     health coverage' means acceptable coverage (as defined in 
     section 59B(d)) which--
       ``(A) is provided pursuant to an election under section 
     4980H(a), and
       ``(B) satisfies the requirements referred to in section 
     4980H(c).
       ``(e) Other Definitions.--For purposes of this section--
       ``(1) Qualified small employer.--For purposes of this 
     section, the term `qualified small employer' means any 
     employer for any taxable year if--
       ``(A) the number of qualified employees employed by such 
     employer during the taxable year does not exceed 25, and
       ``(B) the average annual employee compensation of such 
     employer for such taxable year does not exceed the sum of the 
     dollar amounts in effect under subsection (b)(2).
       ``(2) Qualified employee.--The term `qualified employee' 
     means any employee of an employer for any taxable year of the 
     employer if such employee received at least $5,000 of 
     compensation from such employer for services performed in the 
     trade or business of such employer during such taxable year.
       ``(3) Average annual employee compensation.--The term 
     `average annual employee compensation' means, with respect to 
     any employer for any taxable year, the average amount of 
     compensation paid by such employer to qualified employees of 
     such employer during such taxable year.
       ``(4) Compensation.--The term `compensation' has the 
     meaning given such term in section 408(p)(6)(A).
       ``(5) Family coverage.--The term `family coverage' means 
     any coverage other than self-only coverage.
       ``(f) Special Rules.--For purposes of this section--
       ``(1) Special rule for partnerships and self-employed.--In 
     the case of a partnership (or a trade or business carried on 
     by an individual) which has one or more qualified employees 
     (determined without regard to this paragraph) with respect to 
     whom the election under section 4980H(a) applies, each 
     partner (or, in the case of a trade or business carried on by 
     an individual, such individual) shall be treated as an 
     employee.
       ``(2) Aggregation rule.--All persons treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 shall be treated as 1 employer.
       ``(3) Predecessors.--Any reference in this section to an 
     employer shall include a reference to any predecessor of such 
     employer.
       ``(4) Denial of double benefit.--Any deduction otherwise 
     allowable with respect to amounts paid or incurred for health 
     insurance coverage to which subsection (a) applies shall be 
     reduced by the amount of the credit determined under this 
     section.
       ``(5) Inflation adjustment.--In the case of any taxable 
     year beginning after 2013, each of the dollar amounts in 
     subsections (b)(2), (c)(2), and (e)(2) shall be increased by 
     an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost of living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins determined by substituting `calendar year 2012' 
     for `calendar year 1992' in subparagraph (B) thereof.
     If any increase determined under this paragraph is not a 
     multiple of $50, such increase shall be rounded to the next 
     lowest multiple of $50.''.
       (b) Credit to Be Part of General Business Credit.--
     Subsection (b) of section 38 of such Code (relating to 
     general business credit) is amended by striking ``plus'' at 
     the end of paragraph (34), by striking the period at the end 
     of paragraph (35) and inserting ``, plus'' , and by adding at 
     the end the following new paragraph:
       ``(36) in the case of a qualified small employer (as 
     defined in section 45R(e)), the small business employee 
     health coverage credit determined under section 45R(a).''.
       (c) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 of such Code is 
     amended by inserting after the item relating to section 45Q 
     the following new item:

``Sec. 45R. Small business employee health coverage credit.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2012.

        PART 3--LIMITATIONS ON HEALTH CARE RELATED EXPENDITURES

     SEC. 531. DISTRIBUTIONS FOR MEDICINE QUALIFIED ONLY IF FOR 
                   PRESCRIBED DRUG OR INSULIN.

       (a) HSAs.--Subparagraph (A) of section 223(d)(2) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following: ``Such term shall include an amount paid for 
     medicine or a drug only if such medicine or drug is a 
     prescribed drug or is insulin.''.
       (b) Archer MSAs.--Subparagraph (A) of section 220(d)(2) of 
     such Code is amended by adding at the end the following: 
     ``Such term shall include an amount paid for medicine or a 
     drug only if such medicine or drug is a prescribed drug or is 
     insulin.''.
       (c) Health Flexible Spending Arrangements and Health 
     Reimbursement Arrangements.--Section 106 of such Code is 
     amended by adding at the end the following new subsection:
       ``(f) Reimbursements for Medicine Restricted to Prescribed 
     Drugs and Insulin.--For purposes of this section and section 
     105, reimbursement for expenses incurred for a medicine or a 
     drug shall be treated as a reimbursement for medical expenses 
     only if such medicine or drug is a prescribed drug or is 
     insulin.''.
       (d) Effective Dates.--The amendment made by this section 
     shall apply to expenses incurred after December 31, 2010.

     SEC. 532. LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS 
                   UNDER CAFETERIA PLANS.

       (a) In General.--Section 125 of the Internal Revenue Code 
     of 1986 is amended--
       (1) by redesignating subsections (i) and (j) as subsections 
     (j) and (k), respectively, and
       (2) by inserting after subsection (h) the following new 
     subsection:
       ``(i) Limitation on Health Flexible Spending 
     Arrangements.--
       ``(1) In general.--For purposes of this section, if a 
     benefit is provided under a cafeteria plan through employer 
     contributions to a health flexible spending arrangement, such 
     benefit shall not be treated as a qualified benefit unless 
     the cafeteria plan provides that an employee may not elect 
     for any taxable year to have salary reduction contributions 
     in excess of $2,500 made to such arrangement.
       ``(2) Inflation adjustment.--In the case of any taxable 
     year beginning after 2013, the dollar amount in paragraph (1) 
     shall be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost of living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins determined by substituting `calendar year 2012' 
     for `calendar year 1992' in subparagraph (B) thereof.

[[Page H12660]]

     If any increase determined under this paragraph is not a 
     multiple of $50, such increase shall be rounded to the next 
     lowest multiple of $50.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2012.

     SEC. 533. INCREASE IN PENALTY FOR NONQUALIFIED DISTRIBUTIONS 
                   FROM HEALTH SAVINGS ACCOUNTS.

       (a) In General.--Subparagraph (A) of section 223(f)(4) of 
     the Internal Revenue Code of 1986 is amended by striking ``10 
     percent'' and inserting ``20 percent''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2010.

     SEC. 534. DENIAL OF DEDUCTION FOR FEDERAL SUBSIDIES FOR 
                   PRESCRIPTION DRUG PLANS WHICH HAVE BEEN 
                   EXCLUDED FROM GROSS INCOME.

       (a) In General.--Section 139A of the Internal Revenue Code 
     of 1986 is amended by striking the second sentence.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2012.

     PART 4--OTHER PROVISIONS TO CARRY OUT HEALTH INSURANCE REFORM

     SEC. 541. DISCLOSURES TO CARRY OUT HEALTH INSURANCE EXCHANGE 
                   SUBSIDIES.

       (a) In General.--Subsection (l) of section 6103 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new paragraph:
       ``(21) Disclosure of return information to carry out health 
     insurance exchange subsidies.--
       ``(A) In general.--The Secretary, upon written request from 
     the Health Choices Commissioner or the head of a State-based 
     health insurance exchange approved for operation under 
     section 308 of the Affordable Health Care for America Act, 
     shall disclose to officers and employees of the Health 
     Choices Administration or such State-based health insurance 
     exchange, as the case may be, return information of any 
     taxpayer whose income is relevant in determining any 
     affordability credit described in subtitle C of title III of 
     the Affordable Health Care for America 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 modified adjusted gross income of such taxpayer 
     (as defined in section 59B(e)(5)),
       ``(iv) the number of dependents of the taxpayer,
       ``(v) such other information as is prescribed by the 
     Secretary by regulation as might indicate whether the 
     taxpayer is eligible for such affordability credits (and the 
     amount thereof), and
       ``(vi) the taxable year with respect to which the preceding 
     information relates or, if applicable, the fact that such 
     information is not available.
       ``(B) Restriction on use of disclosed information.--Return 
     information disclosed under subparagraph (A) may be used by 
     officers and employees of the Health Choices Administration 
     or such State-based health insurance exchange, as the case 
     may be, only for the purposes of, and to the extent necessary 
     in, establishing and verifying the appropriate amount of any 
     affordability credit described in subtitle C of title III of 
     the Affordable Health Care for America Act and providing for 
     the repayment of any such credit which was in excess of such 
     appropriate amount.''.
       (b) Procedures and Recordkeeping Related to Disclosures.--
     Paragraph (4) of section 6103(p) of such Code is amended--
       (1) by inserting ``, or any entity described in subsection 
     (l)(21),'' after ``or (20)'' in the matter preceding 
     subparagraph (A),
       (2) by inserting ``or any entity described in subsection 
     (l)(21),'' after ``or (o)(1)(A),'' in subparagraph (F)(ii), 
     and
       (3) by inserting ``or any entity described in subsection 
     (l)(21),'' after ``or (20),'' both places it appears in the 
     matter after subparagraph (F).
       (c) Unauthorized Disclosure or Inspection.--Paragraph (2) 
     of section 7213(a) of such Code is amended by striking ``or 
     (20)'' and inserting ``(20), or (21)''.

     SEC. 542. OFFERING OF EXCHANGE-PARTICIPATING HEALTH BENEFITS 
                   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 health benefits plans 
     not qualified.--
       ``(A) In general.--The term `qualified benefit' shall not 
     include any exchange-participating health benefits plan (as 
     defined in section 101(c) of the Affordable Health Care for 
     America Act).
       ``(B) Exception for exchange-eligible employers.--
     Subparagraph (A) shall not apply with respect to any employee 
     if such employee's employer is an exchange-eligible employer 
     (as defined in section 302 of the Affordable Health Care for 
     America Act).''.
       (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, 
     2012.

     SEC. 543. EXCLUSION FROM GROSS INCOME OF PAYMENTS MADE UNDER 
                   REINSURANCE PROGRAM FOR RETIREES.

       (a) In General.--Section 139A of the Internal Revenue Code 
     of 1986 is amended--
       (1) by striking ``Gross income'' and inserting the 
     following:
       ``(a) Federal Subsidies for Prescription Drug Plans.--Gross 
     income'', and
       (2) by adding at the end the following new subsection:
       ``(b) Federal Reinsurance Program for Retirees.--A rule 
     similar to the rule of subsection (a) shall apply with 
     respect to payments made under section 111 of the Affordable 
     Health Care for America Act.''.
       (b) Conforming Amendment.--The heading of section 139A of 
     such Code (and the item relating to such section in the table 
     of sections for part III of subchapter B of chapter 1 of such 
     Code) is amended by inserting ``AND RETIREE HEALTH PLANS'' 
     after ``PRESCRIPTION DRUG PLANS''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 544. CLASS PROGRAM TREATED IN SAME MANNER AS LONG-TERM 
                   CARE INSURANCE.

       (a) In General.--Subsection (f) of section 7702B of the 
     Internal Revenue Code of 1986 is amended--
       (1) by striking ``State long-term care plan'' in paragraph 
     (1)(A) and inserting ``government long-term care plan'',
       (2) by redesignating paragraph (2) as paragraph (3), and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(2) Government long-term care plan.--For purposes of this 
     subsection, the term `government long-term care plan' means--
       ``(A) the CLASS program established under title XXXII of 
     the Public Health Service Act, and
       ``(B) any State long-term care plan.''.
       (b) Conforming Amendments.--
       (1) Paragraph (3) of section 7702B(f) of such Code, as 
     redesignated by subsection (a), is amended by striking 
     ``paragraph (1)'' and inserting ``this subsection''.
       (2) Subsection (f) of section 7702(B) of such Code is 
     amended by striking ``State-maintained'' in the heading 
     thereof and inserting ``Government''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 2010.

     SEC. 545. EXCLUSION FROM GROSS INCOME FOR MEDICAL CARE 
                   PROVIDED FOR INDIANS.

       (a) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to items 
     specifically excluded from gross income) is amended by 
     inserting after section 139C the following new section:

     ``SEC. 139D. MEDICAL CARE PROVIDED FOR INDIANS.

       ``(a) In General.--Gross income does not include--
       ``(1) health services or benefits provided or purchased by 
     the Indian Health Service, either directly or indirectly, 
     through a grant to or a contract or compact with an Indian 
     tribe or tribal organization or through programs of third 
     parties funded by the Indian Health Service,
       ``(2) medical care provided by an Indian tribe or tribal 
     organization to a member of an Indian tribe (including for 
     this purpose, to the member's spouse or dependents) through 
     any one of the following: provided or purchased medical care 
     services; accident or health insurance (or an arrangement 
     having the effect of accident or health insurance); or 
     amounts paid, directly or indirectly, to reimburse the member 
     for expenses incurred for medical care,
       ``(3) the value of accident or health plan coverage 
     provided by an Indian tribe or tribal organization for 
     medical care to a member of an Indian tribe (including for 
     this purpose, coverage that extends to such member's spouse 
     or dependents) under an accident or health plan (or through 
     an arrangement having the effect of accident or health 
     insurance), and
       ``(4) any other medical care provided by an Indian tribe 
     that supplements, replaces, or substitutes for the programs 
     and services provided by the Federal Government to Indian 
     tribes or Indians.
       ``(b) Definitions.--For purposes of this section--
       ``(1) In general.--The terms `accident or health insurance' 
     and `accident or health plan' have the same meaning as when 
     used in sections 104 and 106.
       ``(2) Medical care.--The term `medical care' has the 
     meaning given such term in section 213.
       ``(3) Dependent.--The term `dependent' has the meaning 
     given such term in section 152, determined without regard to 
     subsections (b)(1), (b)(2), and (d)(1)(B).
       ``(4) Indian tribe.--The term `Indian tribe' means any 
     Indian tribe, band, nation, pueblo, or other organized group 
     or community, including any Alaska Native village, or 
     regional or village corporation, as defined in, or 
     established pursuant to, the Alaska Native Claims Settlement 
     Act (43 U.S.C. 1601 et seq.), which is recognized as eligible 
     for the special programs and services provided by the United 
     States to Indians because of their status as Indians.

[[Page H12661]]

       ``(5) Tribal organization.--The term `tribal organization' 
     has the meaning given such term in section 4(l) of the Indian 
     Self-Determination and Education Assistance Act (25 U.S.C. 
     450b(l)).''.
       (b) Clerical Amendment.--The table of sections for such 
     part III is amended by inserting after the item relating to 
     section 139C the following new item:

``Sec. 139D. Medical care provided for Indians.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to health benefits and coverage provided after 
     the date of enactment of this Act.
       (d) No Inference.--Nothing in the amendments made by this 
     section shall be construed to create an inference with 
     respect to the exclusion from gross income of--
       (1) benefits provided by Indian tribes that are not within 
     the scope of this section, and
       (2) health benefits or coverage provided by Indian tribes 
     prior to the effective date of this section.

                  Subtitle B--Other Revenue Provisions

                       PART 1--GENERAL PROVISIONS

     SEC. 551. SURCHARGE ON HIGH INCOME INDIVIDUALS.

       (a) In General.--Part VIII of subchapter A of chapter 1 of 
     the Internal Revenue Code of 1986, as added by this title, is 
     amended by adding at the end the following new subpart:

           ``Subpart B--Surcharge on High Income Individuals

``Sec. 59C. Surcharge on high income individuals.

     ``SEC. 59C. SURCHARGE ON HIGH INCOME INDIVIDUALS.

       ``(a) General Rule.--In the case of a taxpayer other than a 
     corporation, there is hereby imposed (in addition to any 
     other tax imposed by this subtitle) a tax equal to 5.4 
     percent of so much of the modified adjusted gross income of 
     the taxpayer as exceeds $1,000,000.
       ``(b) Taxpayers Not Making a Joint Return.--In the case of 
     any taxpayer other than a taxpayer making a joint return 
     under section 6013 or a surviving spouse (as defined in 
     section 2(a)), subsection (a) shall be applied by 
     substituting `$500,000' for `$1,000,000'.
       ``(c) Modified Adjusted Gross Income.--For purposes of this 
     section, the term `modified adjusted gross income' means 
     adjusted gross income reduced by any deduction (not taken 
     into account in determining adjusted gross income) allowed 
     for investment interest (as defined in section 163(d)). In 
     the case of an estate or trust, adjusted gross income shall 
     be determined as provided in section 67(e).
       ``(d) Special Rules.--
       ``(1) Nonresident alien.--In the case of a nonresident 
     alien individual, only amounts taken into account in 
     connection with the tax imposed under section 871(b) shall be 
     taken into account under this section.
       ``(2) Citizens and residents living abroad.--The dollar 
     amount in effect under subsection (a) (after the application 
     of subsection (b)) shall be decreased by the excess of--
       ``(A) the amounts excluded from the taxpayer's gross income 
     under section 911, over
       ``(B) the amounts of any deductions or exclusions 
     disallowed under section 911(d)(6) with respect to the 
     amounts described in subparagraph (A).
       ``(3) Charitable trusts.--Subsection (a) shall not apply to 
     a trust all the unexpired interests in which are devoted to 
     one or more of the purposes described in section 
     170(c)(2)(B).
       ``(4) Not treated as tax imposed by this chapter for 
     certain purposes.--The tax imposed under this section shall 
     not be treated as tax imposed by this chapter for purposes of 
     determining the amount of any credit under this chapter or 
     for purposes of section 55.''.
       (b) Clerical Amendment.--The table of subparts for part 
     VIII of subchapter A of chapter 1 of such Code, as added by 
     this title, is amended by inserting after the item relating 
     to subpart A the following new item:

         ``subpart b. surcharge on high income individuals.''.

       (c) Section 15 Not to Apply.--The amendment made by 
     subsection (a) shall not be treated as a change in a rate of 
     tax for purposes of section 15 of the Internal Revenue Code 
     of 1986.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2010.

     SEC. 552. EXCISE TAX ON MEDICAL DEVICES.

       (a) In General.--Chapter 31 of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new 
     subchapter:

                    ``Subchapter D--Medical Devices

``Sec. 4061. Medical devices.

     ``SEC. 4061. MEDICAL DEVICES.

       ``(a) In General.--There is hereby imposed on the first 
     taxable sale of any medical device a tax equal to 2.5 percent 
     of the price for which so sold.
       ``(b) First Taxable Sale.--For purposes of this section--
       ``(1) In general.--The term `first taxable sale' means the 
     first sale, for a purpose other than for resale, after 
     production, manufacture, or importation.
       ``(2) Exception for sales at retail establishments.--Such 
     term shall not include the sale of any medical device if--
       ``(A) such sale is made at a retail establishment on terms 
     which are available to the general public, and
       ``(B) such medical device is of a type (and purchased in a 
     quantity) which is purchased by the general public.
       ``(3) Exception for exports, etc.--Rules similar to the 
     rules of sections 4221 (other than paragraphs (3), (4), (5), 
     and (6) of subsection (a) thereof) and 4222 shall apply for 
     purposes of this section. To the extent provided by the 
     Secretary, section 4222 may be extended to, and made 
     applicable with respect to, the exemption provided by 
     paragraph (2).
       ``(4) Sales to patients not treated as resales.--If a 
     medical device is sold for use in connection with providing 
     any health care service to an individual, such sale shall not 
     be treated as being for the purpose of resale (even if such 
     device is sold to such individual).
       ``(c) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Medical device.--The term `medical device' means any 
     device (as defined in section 201(h) of the Federal Food, 
     Drug, and Cosmetic Act) intended for humans.
       ``(2) Lease treated as sale.--Rules similar to the rules of 
     section 4217 shall apply.
       ``(3) Use treated as sale.--
       ``(A) In general.--If any person uses a medical device 
     before the first taxable sale of such device, then such 
     person shall be liable for tax under such subsection in the 
     same manner as if such use were the first taxable sale of 
     such device.
       ``(B) Exceptions.--The preceding sentence shall not apply 
     to--
       ``(i) use of a medical device as material in the 
     manufacture or production of, or as a component part of, 
     another medical device to be manufactured or produced by such 
     person, or
       ``(ii) use of a medical device after a sale described in 
     subsection (b)(2).
       ``(4) Determination of price.--
       ``(A) In general.--Rules similar to the rules of 
     subsections (a), (c), and (d) of section 4216 shall apply for 
     purposes of this section.
       ``(B) Constructive sale price.--If--
       ``(i) a medical device is sold (otherwise than through an 
     arm's length transaction) at less than the fair market price, 
     or
       ``(ii) a person is liable for tax for a use described in 
     paragraph (3),
     the tax under this section shall be computed on the price for 
     which such or similar devices are sold in the ordinary course 
     of trade as determined by the Secretary.
       ``(5) Resales pursuant to certain contract arrangements.--
       ``(A) In general.--In the case of a specified contract sale 
     of a medical device, the seller referred to in subparagraph 
     (B)(i) shall be entitled to recover from the producer, 
     manufacturer, or importer referred to in subparagraph (B)(ii) 
     the amount of the tax paid by such seller under this section 
     with respect to such sale.
       ``(B) Specified contract sale.--For purposes of this 
     paragraph, the term `specified contract sale' means, with 
     respect to any medical device, the first taxable sale of such 
     device if--
       ``(i) the seller is not the producer, manufacturer, or 
     importer of such device, and
       ``(ii) the price at which such device is so sold is 
     determined in accordance with a contract between the 
     producer, manufacturer, or importer of such device and the 
     person to whom such device is so sold.
       ``(C) Special rules related to credits and refunds.--In the 
     case of any credit or refund under section 6416 of the tax 
     imposed under this section on a specified contract sale of a 
     medical device--
       ``(i) such credit or refund shall be allowed or made only 
     if the seller has filed with the Secretary the written 
     consent of the producer, manufacturer, or importer referred 
     to in subparagraph (B)(ii) to the allowance of such credit or 
     the making of such refund, and
       ``(ii) the amount of tax taken into account under 
     subparagraph (A) shall be reduced by the amount of such 
     credit or refund.''.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 6416(b) of such Code is 
     amended--
       (A) by inserting ``or 4061'' after ``under section 4051'', 
     and
       (B) by adding at the end the following: ``In the case of 
     the tax imposed by section 4061, subparagraphs (B), (C), (D), 
     and (E) shall not apply.''.
       (2) The table of subchapters for chapter 31 of such Code is 
     amended by adding at the end the following new item:

                  ``subchapter d. medical devices.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to sales (and leases and uses treated as sales) 
     after December 31, 2012.

     SEC. 553. EXPANSION OF INFORMATION REPORTING REQUIREMENTS.

       (a) In General.--Section 6041 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     subsections:
       ``(h) Application to Corporations.--Notwithstanding any 
     regulation prescribed by the Secretary before the date of the 
     enactment of this subsection, for purposes of this section 
     the term `person' includes any corporation that is not an 
     organization exempt from tax under section 501(a).
       ``(i) Regulations.--The Secretary may prescribe such 
     regulations and other guidance as may be appropriate or 
     necessary to carry out the purposes of this section, 
     including rules to prevent duplicative reporting of 
     transactions.''.
       (b) Payments for Property and Other Gross Proceeds.--
     Subsection (a) of section

[[Page H12662]]

     6041 of the Internal Revenue Code of 1986 is amended--
       (1) by inserting ``amounts in consideration for property,'' 
     after ``wages,'',
       (2) by inserting ``gross proceeds,'' after ``emoluments, or 
     other'', and
       (3) by inserting ``gross proceeds,'' after ``setting forth 
     the amount of such''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to payments made after December 31, 2011.

     SEC. 554. REPEAL OF WORLDWIDE ALLOCATION OF INTEREST.

       (a) In General.--Section 864 of the Internal Revenue Code 
     of 1986 is amended by striking subsection (f) and by 
     redesignating subsection (g) as subsection (f).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2010.

     SEC. 555. EXCLUSION OF UNPROCESSED FUELS FROM THE CELLULOSIC 
                   BIOFUEL PRODUCER CREDIT.

       (a) In General.--Subparagraph (E) of section 40(b)(6) of 
     the Internal Revenue Code of 1986 is amended by adding at the 
     end the following new clause:
       ``(iii) Exclusion of unprocessed fuels.--The term 
     `cellulosic biofuel' shall not include any fuel if--
       ``(I) more than 4 percent of such fuel (determined by 
     weight) is any combination of water and sediment, or
       ``(II) the ash content of such fuel is more than 1 percent 
     (determined by weight).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to fuels sold or used after the date of the 
     enactment of this Act.

                  PART 2--PREVENTION OF TAX AVOIDANCE

     SEC. 561. LIMITATION ON TREATY BENEFITS FOR CERTAIN 
                   DEDUCTIBLE PAYMENTS.

       (a) In General.--Section 894 of the Internal Revenue Code 
     of 1986 (relating to income affected by treaty) is amended by 
     adding at the end the following new subsection:
       ``(d) Limitation on Treaty Benefits for Certain Deductible 
     Payments.--
       ``(1) In general.--In the case of any deductible related-
     party payment, any withholding tax imposed under chapter 3 
     (and any tax imposed under subpart A or B of this part) with 
     respect to such payment may not be reduced under any treaty 
     of the United States unless any such withholding tax would be 
     reduced under a treaty of the United States if such payment 
     were made directly to the foreign parent corporation.
       ``(2) Deductible related-party payment.--For purposes of 
     this subsection, the term `deductible related-party payment' 
     means any payment made, directly or indirectly, by any person 
     to any other person if the payment is allowable as a 
     deduction under this chapter and both persons are members of 
     the same foreign controlled group of entities.
       ``(3) Foreign controlled group of entities.--For purposes 
     of this subsection--
       ``(A) In general.--The term `foreign controlled group of 
     entities' means a controlled group of entities the common 
     parent of which is a foreign corporation.
       ``(B) Controlled group of entities.--The term `controlled 
     group of entities' means a controlled group of corporations 
     as defined in section 1563(a)(1), except that--
       ``(i) `more than 50 percent' shall be substituted for `at 
     least 80 percent' each place it appears therein, and
       ``(ii) the determination shall be made without regard to 
     subsections (a)(4) and (b)(2) of section 1563.
     A partnership or any other entity (other than a corporation) 
     shall be treated as a member of a controlled group of 
     entities if such entity is controlled (within the meaning of 
     section 954(d)(3)) by members of such group (including any 
     entity treated as a member of such group by reason of this 
     sentence).
       ``(4) Foreign parent corporation.--For purposes of this 
     subsection, the term `foreign parent corporation' means, with 
     respect to any deductible related-party payment, the common 
     parent of the foreign controlled group of entities referred 
     to in paragraph (3)(A).
       ``(5) Regulations.--The Secretary may prescribe such 
     regulations or other guidance as are necessary or appropriate 
     to carry out the purposes of this subsection, including 
     regulations or other guidance which provide for--
       ``(A) the treatment of two or more persons as members of a 
     foreign controlled group of entities if such persons would be 
     the common parent of such group if treated as one 
     corporation, and
       ``(B) the treatment of any member of a foreign controlled 
     group of entities as the common parent of such group if such 
     treatment is appropriate taking into account the economic 
     relationships among such entities.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to payments made after the date of the enactment 
     of this Act.

     SEC. 562. CODIFICATION OF ECONOMIC SUBSTANCE DOCTRINE; 
                   PENALTIES.

       (a) In General.--Section 7701 of the Internal Revenue Code 
     of 1986 is amended by redesignating subsection (o) as 
     subsection (p) and by inserting after subsection (n) the 
     following new subsection:
       ``(o) Clarification of Economic Substance Doctrine.--
       ``(1) Application of doctrine.--In the case of any 
     transaction to which the economic substance doctrine is 
     relevant, such transaction shall be treated as having 
     economic substance only if--
       ``(A) the transaction changes in a meaningful way (apart 
     from Federal income tax effects) the taxpayer's economic 
     position, and
       ``(B) the taxpayer has a substantial purpose (apart from 
     Federal income tax effects) for entering into such 
     transaction.
       ``(2) Special rule where taxpayer relies on profit 
     potential.--
       ``(A) In general.--The potential for profit of a 
     transaction shall be taken into account in determining 
     whether the requirements of subparagraphs (A) and (B) of 
     paragraph (1) are met with respect to the transaction only if 
     the present value of the reasonably expected pre-tax profit 
     from the transaction is substantial in relation to the 
     present value of the expected net tax benefits that would be 
     allowed if the transaction were respected.
       ``(B) Treatment of fees and foreign taxes.--Fees and other 
     transaction expenses and foreign taxes shall be taken into 
     account as expenses in determining pre-tax profit under 
     subparagraph (A).
       ``(3) State and local tax benefits.--For purposes of 
     paragraph (1), any State or local income tax effect which is 
     related to a Federal income tax effect shall be treated in 
     the same manner as a Federal income tax effect.
       ``(4) Financial accounting benefits.--For purposes of 
     paragraph (1)(B), achieving a financial accounting benefit 
     shall not be taken into account as a purpose for entering 
     into a transaction if the origin of such financial accounting 
     benefit is a reduction of Federal income tax.
       ``(5) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Economic substance doctrine.--The term `economic 
     substance doctrine' means the common law doctrine under which 
     tax benefits under subtitle A with respect to a transaction 
     are not allowable if the transaction does not have economic 
     substance or lacks a business purpose.
       ``(B) Exception for personal transactions of individuals.--
     In the case of an individual, paragraph (1) shall apply only 
     to transactions entered into in connection with a trade or 
     business or an activity engaged in for the production of 
     income.
       ``(C) Other common law doctrines not affected.--Except as 
     specifically provided in this subsection, the provisions of 
     this subsection shall not be construed as altering or 
     supplanting any other rule of law, and the requirements of 
     this subsection shall be construed as being in addition to 
     any such other rule of law.
       ``(D) Determination of application of doctrine not 
     affected.--The determination of whether the economic 
     substance doctrine is relevant to a transaction (or series of 
     transactions) shall be made in the same manner as if this 
     subsection had never been enacted.
       ``(6) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection.''.
       (b) Penalty for Underpayments Attributable to Transactions 
     Lacking Economic Substance.--
       (1) In general.--Subsection (b) of section 6662 of such 
     Code is amended by inserting after paragraph (5) the 
     following new paragraph:
       ``(6) Any disallowance of claimed tax benefits by reason of 
     a transaction lacking economic substance (within the meaning 
     of section 7701(o)) or failing to meet the requirements of 
     any similar rule of law.''.
       (2) Increased penalty for nondisclosed transactions.--
     Section 6662 of such Code is amended by adding at the end the 
     following new subsection:
       ``(i) Increase in Penalty in Case of Nondisclosed 
     Noneconomic Substance Transactions.--
       ``(1) In general.--In the case of any portion of an 
     underpayment which is attributable to one or more 
     nondisclosed noneconomic substance transactions, subsection 
     (a) shall be applied with respect to such portion by 
     substituting `40 percent' for `20 percent'.
       ``(2) Nondisclosed noneconomic substance transactions.--For 
     purposes of this subsection, the term `nondisclosed 
     noneconomic substance transaction' means any portion of a 
     transaction described in subsection (b)(6) with respect to 
     which the relevant facts affecting the tax treatment are not 
     adequately disclosed in the return nor in a statement 
     attached to the return.
       ``(3) Special rule for amended returns.--Except as provided 
     in regulations, in no event shall any amendment or supplement 
     to a return of tax be taken into account for purposes of this 
     subsection if the amendment or supplement is filed after the 
     earlier of the date the taxpayer is first contacted by the 
     Secretary regarding the examination of the return or such 
     other date as is specified by the Secretary.''.
       (3) Conforming amendment.--Subparagraph (B) of section 
     6662A(e)(2) of such Code is amended--
       (A) by striking ``section 6662(h)'' and inserting 
     ``subsections (h) or (i) of section 6662'', and
       (B) by striking ``gross valuation misstatement penalty'' in 
     the heading and inserting ``certain increased underpayment 
     penalties''.
       (c) Reasonable Cause Exception Not Applicable to 
     Noneconomic Substance Transactions and Tax Shelters.--
       (1) Reasonable cause exception for underpayments.--
     Subsection (c) of section 6664 of such Code is amended--

[[Page H12663]]

       (A) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively,
       (B) by striking ``paragraph (2)'' in paragraph (4)(A), as 
     so redesignated, and inserting ``paragraph (3)'', and
       (C) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) Exception.--Paragraph (1) shall not apply to any 
     portion of an underpayment which is attributable to one or 
     more tax shelters (as defined in section 6662(d)(2)(C)) or 
     transactions described in section 6662(b)(6).''.
       (2) Reasonable cause exception for reportable transaction 
     understatements.--Subsection (d) of section 6664 of such Code 
     is amended--
       (A) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively,
       (B) by striking ``paragraph (2)(C)'' in paragraph (4), as 
     so redesignated, and inserting ``paragraph (3)(C)'', and
       (C) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) Exception.--Paragraph (1) shall not apply to any 
     portion of a reportable transaction understatement which is 
     attributable to one or more tax shelters (as defined in 
     section 6662(d)(2)(C)) or transactions described in section 
     6662(b)(6).''.
       (d) Application of Penalty for Erroneous Claim for Refund 
     or Credit to Noneconomic Substance Transactions.--Section 
     6676 of such Code is amended by redesignating subsection (c) 
     as subsection (d) and inserting after subsection (b) the 
     following new subsection:
       ``(c) Noneconomic Substance Transactions Treated as Lacking 
     Reasonable Basis.--For purposes of this section, any 
     excessive amount which is attributable to any transaction 
     described in section 6662(b)(6) shall not be treated as 
     having a reasonable basis.''.
       (e) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to transactions entered into after the date of the enactment 
     of this Act.
       (2) Underpayments.--The amendments made by subsections (b) 
     and (c)(1) shall apply to underpayments attributable to 
     transactions entered into after the date of the enactment of 
     this Act.
       (3) Understatements.--The amendments made by subsection 
     (c)(2) shall apply to understatements attributable to 
     transactions entered into after the date of the enactment of 
     this Act.
       (4) Refunds and credits.--The amendment made by subsection 
     (d) shall apply to refunds and credits attributable to 
     transactions entered into after the date of the enactment of 
     this Act.

     SEC. 563. CERTAIN LARGE OR PUBLICLY TRADED PERSONS MADE 
                   SUBJECT TO A MORE LIKELY THAN NOT STANDARD FOR 
                   AVOIDING PENALTIES ON UNDERPAYMENTS.

       (a) In General.--Subsection (c) of section 6664 of the 
     Internal Revenue Code of 1986, as amended by section 562, is 
     amended--
       (1) by redesignating paragraphs (3) and (4) as paragraphs 
     (4) and (5), respectively,
       (2) by striking ``paragraph (3)'' in paragraph (4)(A), as 
     so redesignated, and inserting ``paragraph (4)'', and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Special rule for certain large or publicly traded 
     persons.--
       ``(A) In general.--In the case of any specified person, 
     paragraph (1) shall apply to the portion of an underpayment 
     which is attributable to any item only if such person has a 
     reasonable belief that the tax treatment of such item by such 
     person is more likely than not the proper tax treatment of 
     such item.
       ``(B) Specified person.--For purposes of this paragraph, 
     the term `specified person' means--
       ``(i) any person required to file periodic or other reports 
     under section 13 of the Securities Exchange Act of 1934, and
       ``(ii) any corporation with gross receipts in excess of 
     $100,000,000 for the taxable year involved.

     All persons treated as a single employer under section 52(a) 
     shall be treated as one person for purposes of clause 
     (ii).''.
       (b) Nonapplication of Substantial Authority and Reasonable 
     Basis Standards for Reducing Understatements.--Paragraph (2) 
     of section 6662(d) of such Code is amended by adding at the 
     end the following new subparagraph:
       ``(D) Reduction not to apply to certain large or publicly 
     traded persons.--Subparagraph (B) shall not apply to any 
     specified person (as defined in section 6664(c)(3)(B)).''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to underpayments 
     attributable to transactions entered into after the date of 
     the enactment of this Act.
       (2) Nonapplication of understatement reduction.--The 
     amendment made by subsection (b) shall apply to 
     understatements attributable to transactions entered into 
     after the date of the enactment of this Act.

                   PART 3--PARITY IN HEALTH BENEFITS

     SEC. 571. CERTAIN HEALTH RELATED BENEFITS APPLICABLE TO 
                   SPOUSES AND DEPENDENTS EXTENDED TO ELIGIBLE 
                   BENEFICIARIES.

       (a) Application of Accident and Health Plans to Eligible 
     Beneficiaries.--
       (1) Exclusion of contributions.--Section 106 of the 
     Internal Revenue Code of 1986 (relating to contributions by 
     employer to accident and health plans), as amended by section 
     531, is amended by adding at the end the following new 
     subsection:
       ``(g) Coverage Provided for Eligible Beneficiaries of 
     Employees.--
       ``(1) In general.--Subsection (a) shall apply with respect 
     to any eligible beneficiary of the employee.
       ``(2) Eligible beneficiary.--For purposes of this 
     subsection, the term `eligible beneficiary' means any 
     individual who is eligible to receive benefits or coverage 
     under an accident or health plan.''.
       (2) Exclusion of amounts expended for medical care.--The 
     first sentence of section 105(b) of such Code (relating to 
     amounts expended for medical care) is amended--
       (A) by striking ``and his dependents'' and inserting ``his 
     dependents'', and
       (B) by inserting before the period the following: ``and any 
     eligible beneficiary (within the meaning of section 106(g)) 
     with respect to the taxpayer''.
       (3) Payroll taxes.--
       (A) Section 3121(a)(2) of such Code is amended--
       (i) by striking ``or any of his dependents'' in the matter 
     preceding subparagraph (A) and inserting ``, any of his 
     dependents, or any eligible beneficiary (within the meaning 
     of section 106(g)) with respect to the employee'',
       (ii) by striking ``or any of his dependents,'' in 
     subparagraph (A) and inserting ``, any of his dependents, or 
     any eligible beneficiary (within the meaning of section 
     106(g)) with respect to the employee,'', and
       (iii) by striking ``and their dependents'' both places it 
     appears and inserting ``and such employees' dependents and 
     eligible beneficiaries (within the meaning of section 
     106(g))''.
       (B) Section 3231(e)(1) of such Code is amended--
       (i) by striking ``or any of his dependents'' and inserting 
     ``, any of his dependents, or any eligible beneficiary 
     (within the meaning of section 106(g)) with respect to the 
     employee,'', and
       (ii) by striking ``and their dependents'' both places it 
     appears and inserting ``and such employees' dependents and 
     eligible beneficiaries (within the meaning of section 
     106(g))''.
       (C) Section 3306(b)(2) of such Code is amended--
       (i) by striking ``or any of his dependents'' in the matter 
     preceding subparagraph (A) and inserting ``, any of his 
     dependents, or any eligible beneficiary (within the meaning 
     of section 106(g)) with respect to the employee,'',
       (ii) by striking ``or any of his dependents'' in 
     subparagraph (A) and inserting ``, any of his dependents, or 
     any eligible beneficiary (within the meaning of section 
     106(g)) with respect to the employee'', and
       (iii) by striking ``and their dependents'' both places it 
     appears and inserting ``and such employees' dependents and 
     eligible beneficiaries (within the meaning of section 
     106(g))''.
       (D) Section 3401(a) of such Code is amended by striking 
     ``or'' at the end of paragraph (22), by striking the period 
     at the end of paragraph (23) and inserting ``; or'', and by 
     inserting after paragraph (23) the following new paragraph:
       ``(24) for any payment made to or for the benefit of an 
     employee or any eligible beneficiary (within the meaning of 
     section 106(g)) if at the time of such payment it is 
     reasonable to believe that the employee will be able to 
     exclude such payment from income under section 106 or under 
     section 105 by reference in section 105(b) to section 
     106(g).''.
       (b) Expansion of Dependency for Purposes of Deduction for 
     Health Insurance Costs of Self-employed Individuals.--
       (1) In general.--Paragraph (1) of section 162(l) of the 
     Internal Revenue Code of 1986 (relating to special rules for 
     health insurance costs of self-employed individuals) is 
     amended to read as follows:
       ``(1) Allowance of deduction.--In the case of a taxpayer 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to the amount paid during the taxable year for 
     insurance which constitutes medical care for--
       ``(A) the taxpayer,
       ``(B) the taxpayer's spouse,
       ``(C) the taxpayer's dependents,
       ``(D) any individual who--
       ``(i) satisfies the age requirements of section 
     152(c)(3)(A),
       ``(ii) bears a relationship to the taxpayer described in 
     section 152(d)(2)(H), and
       ``(iii) meets the requirements of section 152(d)(1)(C), and
       ``(E) one individual who--
       ``(i) does not satisfy the age requirements of section 
     152(c)(3)(A),
       ``(ii) bears a relationship to the taxpayer described in 
     section 152(d)(2)(H),
       ``(iii) meets the requirements of section 152(d)(1)(D), and
       ``(iv) is not the spouse of the taxpayer and does not bear 
     any relationship to the taxpayer described in subparagraphs 
     (A) through (G) of section 152(d)(2).''.
       (2) Conforming amendment.--Subparagraph (B) of section 
     162(l)(2) of such Code is amended by inserting ``, any 
     dependent, or individual described in subparagraph (D) or (E) 
     of paragraph (1) with respect to'' after ``spouse''.
       (c) Extension to Eligible Beneficiaries of Sick and 
     Accident Benefits Provided to

[[Page H12664]]

     Members of a Voluntary Employees' Beneficiary Association and 
     Their Dependents.--Section 501(c)(9) of the Internal Revenue 
     Code of 1986 (relating to list of exempt organizations) is 
     amended by adding at the end the following new sentence: 
     ``For purposes of providing for the payment of sick and 
     accident benefits to members of such an association and their 
     dependents, the term `dependents' shall include any 
     individual who is an eligible beneficiary (within the meaning 
     of section 106(g)), as determined under the terms of a 
     medical benefit, health insurance, or other program under 
     which members and their dependents are entitled to sick and 
     accident benefits.''.
       (d) Flexible Spending Arrangements and Health Reimbursement 
     Arrangements.--The Secretary of Treasury shall issue guidance 
     of general applicability providing that medical expenses that 
     otherwise qualify--
       (1) for reimbursement from a flexible spending arrangement 
     under regulations in effect on the date of the enactment of 
     this Act may be reimbursed from an employee's flexible 
     spending arrangement, notwithstanding the fact that such 
     expenses are attributable to any individual who is not the 
     employee's spouse or dependent (within the meaning of section 
     105(b) of the Internal Revenue Code of 1986) but is an 
     eligible beneficiary (within the meaning of section 106(g) of 
     such Code) under the flexible spending arrangement with 
     respect to the employee, and
       (2) for reimbursement from a health reimbursement 
     arrangement under regulations in effect on the date of the 
     enactment of this Act may be reimbursed from an employee's 
     health reimbursement arrangement, notwithstanding the fact 
     that such expenses are attributable to an individual who is 
     not a spouse or dependent (within the meaning of section 
     105(b) of such Code) but is an eligible beneficiary (within 
     the meaning of section 106(g) of such Code) under the health 
     reimbursement arrangement with respect to the employee.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

             DIVISION B--MEDICARE AND MEDICAID IMPROVEMENTS

     SEC. 1001. TABLE OF CONTENTS OF DIVISION.

       The table of contents of this division is as follows:

Sec. 1001. Table of contents of division.

                  TITLE I--IMPROVING HEALTH CARE VALUE

           Subtitle A--Provisions Related to Medicare Part A

                     Part 1--Market Basket Updates

Sec. 1101. Skilled nursing facility payment update.
Sec. 1102. Inpatient rehabilitation facility payment update.
Sec. 1103. Incorporating productivity improvements into market basket 
              updates that do not already incorporate such 
              improvements.

                Part 2--Other Medicare Part A Provisions

Sec. 1111. Payments to skilled nursing facilities.
Sec. 1112. Medicare DSH report and payment adjustments in response to 
              coverage expansion.
Sec. 1113. Extension of hospice regulation moratorium.
Sec. 1114. Permitting physician assistants to order post-hospital 
              extended care services and to provide for recognition of 
              attending physician assistants as attending physicians to 
              serve hospice patients.

                Subtitle B--Provisions Related to Part B

                      Part 1--Physicians' Services

Sec. 1121. Resource-based feedback program for physicians in Medicare.
Sec. 1122. Misvalued codes under the physician fee schedule.
Sec. 1123. Payments for efficient areas.
Sec. 1124. Modifications to the Physician Quality Reporting Initiative 
              (PQRI).
Sec. 1125. Adjustment to Medicare payment localities.

                     Part 2--Market Basket Updates

Sec. 1131. Incorporating productivity improvements into market basket 
              updates that do not already incorporate such 
              improvements.

                        Part 3--Other Provisions

Sec. 1141. Rental and purchase of power-driven wheelchairs.
Sec. 1141A. Election to take ownership, or to decline ownership, of a 
              certain item of complex durable medical equipment after 
              the 13-month capped rental period ends.
Sec. 1142. Extension of payment rule for brachytherapy.
Sec. 1143. Home infusion therapy report to Congress.
Sec. 1144. Require ambulatory surgical centers (ASCs) to submit cost 
              data and other data.
Sec. 1145. Treatment of certain cancer hospitals.
Sec. 1146. Payment for imaging services.
Sec. 1147. Durable medical equipment program improvements.
Sec. 1148. MedPAC study and report on bone mass measurement.
Sec. 1149. Timely access to post-mastectomy items.
Sec. 1149A. Payment for biosimilar biological products.
Sec. 1149B. Study and report on DME competitive bidding process.

        Subtitle C--Provisions Related to Medicare Parts A and B

Sec. 1151. Reducing potentially preventable hospital readmissions.
Sec. 1152. Post acute care services payment reform plan and bundling 
              pilot program.
Sec. 1153. Home health payment update for 2010.
Sec. 1154. Payment adjustments for home health care.
Sec. 1155. Incorporating productivity improvements into market basket 
              update for home health services.
Sec. 1155A. MedPAC study on variation in home health margins.
Sec. 1155B. Permitting home health agencies to assign the most 
              appropriate skilled service to make the initial 
              assessment visit under a Medicare home health plan of 
              care for rehabilitation cases.
Sec. 1156. Limitation on Medicare exceptions to the prohibition on 
              certain physician referrals made to hospitals.
Sec. 1157. Institute of Medicine study of geographic adjustment factors 
              under Medicare.
Sec. 1158. Revision of medicare payment systems to address geographic 
              inequities.
Sec. 1159. Institute of Medicine study of geographic variation in 
              health care spending and promoting high-value health 
              care.
Sec. 1160. Implementation, and Congressional review, of proposal to 
              revise Medicare payments to promote high value health 
              care.

                 Subtitle D--Medicare Advantage Reforms

                   Part 1--Payment and Administration

Sec. 1161. Phase-in of payment based on fee-for-service costs; quality 
              bonus payments.
Sec. 1162. Authority for Secretarial coding intensity adjustment 
              authority.
Sec. 1163. Simplification of annual beneficiary election periods.
Sec. 1164. Extension of reasonable cost contracts.
Sec. 1165. Limitation of waiver authority for employer group plans.
Sec. 1166. Improving risk adjustment for payments.
Sec. 1167. Elimination of MA Regional Plan Stabilization Fund.
Sec. 1168. Study regarding the effects of calculating Medicare 
              Advantage payment rates on a regional average of Medicare 
              fee for service rates.

             Part 2--Beneficiary Protections and Anti-Fraud

Sec. 1171. Limitation on cost-sharing for individual health services.
Sec. 1172. Continuous open enrollment for enrollees in plans with 
              enrollment suspension.
Sec. 1173. Information for beneficiaries on MA plan administrative 
              costs.
Sec. 1174. Strengthening audit authority.
Sec. 1175. Authority to deny plan bids.
Sec. 1175A. State authority to enforce standardized marketing 
              requirements.

                Part 3--Treatment of Special Needs Plans

Sec. 1176. Limitation on enrollment outside open enrollment period of 
              individuals into chronic care specialized MA plans for 
              special needs individuals.
Sec. 1177. Extension of authority of special needs plans to restrict 
              enrollment; service area moratorium for certain SNPs.
Sec. 1178. Extension of Medicare senior housing plans.

              Subtitle E--Improvements to Medicare Part D

Sec. 1181. Elimination of coverage gap.
Sec. 1182. Discounts for certain part D drugs in original coverage gap.
Sec. 1183. Repeal of provision relating to submission of claims by 
              pharmacies located in or contracting with long-term care 
              facilities.
Sec. 1184. Including costs incurred by AIDS drug assistance programs 
              and Indian Health Service in providing prescription drugs 
              toward the annual out-of-pocket threshold under part D.
Sec. 1185. No mid-year formulary changes permitted.
Sec. 1186. Negotiation of lower covered part D drug prices on behalf of 
              Medicare beneficiaries.
Sec. 1187. Accurate dispensing in long-term care facilities.
Sec. 1188. Free generic fill.
Sec. 1189. State certification prior to waiver of licensure 
              requirements under Medicare prescription drug program.

             Subtitle F--Medicare Rural Access Protections

Sec. 1191. Telehealth expansion and enhancements.
Sec. 1192. Extension of outpatient hold harmless provision.
Sec. 1193. Extension of section 508 hospital reclassifications.

[[Page H12665]]

Sec. 1194. Extension of geographic floor for work.
Sec. 1195. Extension of payment for technical component of certain 
              physician pathology services.
Sec. 1196. Extension of ambulance add-ons.

              TITLE II--MEDICARE BENEFICIARY IMPROVEMENTS

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

Sec. 1201. Improving assets tests for Medicare Savings Program and low-
              income subsidy program.
Sec. 1202. Elimination of part D cost-sharing for certain non-
              institutionalized full-benefit dual eligible individuals.
Sec. 1203. Eliminating barriers to enrollment.
Sec. 1204. Enhanced oversight relating to reimbursements for 
              retroactive low income subsidy enrollment.
Sec. 1205. Intelligent assignment in enrollment.
Sec. 1206. Special enrollment period and automatic enrollment process 
              for certain subsidy eligible individuals.
Sec. 1207. Application of MA premiums prior to rebate and quality bonus 
              payments in calculation of low income subsidy benchmark.

                Subtitle B--Reducing Health Disparities

Sec. 1221. Ensuring effective communication in Medicare.
Sec. 1222. Demonstration to promote access for Medicare beneficiaries 
              with limited English proficiency by providing 
              reimbursement for culturally and linguistically 
              appropriate services.
Sec. 1223. IOM report on impact of language access services.
Sec. 1224. Definitions.

                 Subtitle C--Miscellaneous Improvements

Sec. 1231. Extension of therapy caps exceptions process.
Sec. 1232. Extended months of coverage of immunosuppressive drugs for 
              kidney transplant patients and other renal dialysis 
              provisions.
Sec. 1233. Voluntary advance care planning consultation.
Sec. 1234. Part B special enrollment period and waiver of limited 
              enrollment penalty for TRICARE beneficiaries.
Sec. 1235. Exception for use of more recent tax year in case of gains 
              from sale of primary residence in computing part B 
              income-related premium.
Sec. 1236. Demonstration program on use of patient decisions aids.

    TITLE III--PROMOTING PRIMARY CARE, MENTAL HEALTH SERVICES, AND 
                            COORDINATED CARE

Sec. 1301. Accountable Care Organization pilot program.
Sec. 1302. Medical home pilot program.
Sec. 1303. Payment incentive for selected primary care services.
Sec. 1304. Increased reimbursement rate for certified nurse-midwives.
Sec. 1305. Coverage and waiver of cost-sharing for preventive services.
Sec. 1306. Waiver of deductible for colorectal cancer screening tests 
              regardless of coding, subsequent diagnosis, or ancillary 
              tissue removal.
Sec. 1307. Excluding clinical social worker services from coverage 
              under the medicare skilled nursing facility prospective 
              payment system and consolidated payment.
Sec. 1308. Coverage of marriage and family therapist services and 
              mental health counselor services.
Sec. 1309. Extension of physician fee schedule mental health add-on.
Sec. 1310. Expanding access to vaccines.
Sec. 1311. Expansion of Medicare-Covered Preventive Services at 
              Federally Qualified Health Centers.
Sec. 1312. Independence at home demonstration program.
Sec. 1313. Recognition of certified diabetes educators as certified 
              providers for purposes of Medicare diabetes outpatient 
              self-management training services.

                           TITLE IV--QUALITY

             Subtitle A--Comparative Effectiveness Research

Sec. 1401. Comparative effectiveness research.

                 Subtitle B--Nursing Home Transparency

   Part 1--Improving Transparency of Information on Skilled Nursing 
  Facilities, Nursing Facilities, and Other Long-term Care Facilities

Sec. 1411. Required disclosure of ownership and additional disclosable 
              parties information.
Sec. 1412. Accountability requirements.
Sec. 1413. Nursing home compare Medicare website.
Sec. 1414. Reporting of expenditures.
Sec. 1415. Standardized complaint form.
Sec. 1416. Ensuring staffing accountability.
Sec. 1417. Nationwide program for national and State background checks 
              on direct patient access employees of long-term care 
              facilities and providers.

                     Part 2--Targeting Enforcement

Sec. 1421. Civil money penalties.
Sec. 1422. National independent monitor pilot program.
Sec. 1423. Notification of facility closure.

                    Part 3--Improving Staff Training

Sec. 1431. Dementia and abuse prevention training.
Sec. 1432. Study and report on training required for certified nurse 
              aides and supervisory staff.
Sec. 1433. Qualification of director of food services of a skilled 
              nursing facility or nursing facility.

                    Subtitle C--Quality Measurements

Sec. 1441. Establishment of national priorities for quality 
              improvement.
Sec. 1442. Development of new quality measures; GAO evaluation of data 
              collection process for quality measurement.
Sec. 1443. Multi-stakeholder pre-rulemaking input into selection of 
              quality measures.
Sec. 1444. Application of quality measures.
Sec. 1445. Consensus-based entity funding.
Sec. 1446. Quality Indicators for care of people with Alzheimers 
              disease.

           Subtitle D--Physician Payments Sunshine Provision

Sec. 1451. Reports on financial relationships between manufacturers and 
              distributors of covered drugs, devices, biologicals, or 
              medical supplies under Medicare, Medicaid, or CHIP and 
              physicians and other health care entities and between 
              physicians and other health care entities.

   Subtitle E--Public Reporting on Health Care-Associated Infections

Sec. 1461. Requirement for public reporting by hospitals and ambulatory 
              surgical centers on health care-associated infections.

              TITLE V--MEDICARE GRADUATE MEDICAL EDUCATION

Sec. 1501. Distribution of unused residency positions.
Sec. 1502. Increasing training in nonprovider settings.
Sec. 1503. Rules for counting resident time for didactic and scholarly 
              activities and other activities.
Sec. 1504. Preservation of resident cap positions from closed 
              hospitals.
Sec. 1505. Improving accountability for approved medical residency 
              training.

                      TITLE VI--PROGRAM INTEGRITY

     Subtitle A--Increased Funding to Fight Waste, Fraud, and Abuse

Sec. 1601. Increased funding and flexibility to fight fraud and abuse.

           Subtitle B--Enhanced Penalties for Fraud and Abuse

Sec. 1611. Enhanced penalties for false statements on provider or 
              supplier enrollment applications.
Sec. 1612. Enhanced penalties for submission of false statements 
              material to a false claim.
Sec. 1613. Enhanced penalties for delaying inspections.
Sec. 1614. Enhanced hospice program safeguards.
Sec. 1615. Enhanced penalties for individuals excluded from program 
              participation.
Sec. 1616. Enhanced penalties for provision of false information by 
              Medicare Advantage and part D plans.
Sec. 1617. Enhanced penalties for Medicare Advantage and part D 
              marketing violations.
Sec. 1618. Enhanced penalties for obstruction of program audits.
Sec. 1619. Exclusion of certain individuals and entities from 
              participation in Medicare and State health care programs.
Sec. 1620.  OIG authority to exclude from Federal health care programs 
              officers and owners of entities convicted of fraud.
Sec. 1621. Self-referral disclosure protocol.

         Subtitle C--Enhanced Program and Provider Protections

Sec. 1631. Enhanced CMS program protection authority.
Sec. 1632. Enhanced Medicare, Medicaid, and CHIP program disclosure 
              requirements relating to previous affiliations.
Sec. 1633. Required inclusion of payment modifier for certain 
              evaluation and management services.
Sec. 1634. Evaluations and reports required under Medicare Integrity 
              Program.
Sec. 1635. Require providers and suppliers to adopt programs to reduce 
              waste, fraud, and abuse.
Sec. 1636. Maximum period for submission of Medicare claims reduced to 
              not more than 12 months.
Sec. 1637. Physicians who order durable medical equipment or home 
              health services required to be Medicare enrolled 
              physicians or eligible professionals.
Sec. 1638. Requirement for physicians to provide documentation on 
              referrals to programs at high risk of waste and abuse.
Sec. 1639. Face-to-face encounter with patient required before 
              eligibility certifications for home health services or 
              durable medical equipment.

[[Page H12666]]

Sec. 1640. Extension of testimonial subpoena authority to program 
              exclusion investigations.
Sec. 1641. Required repayments of Medicare and Medicaid overpayments.
Sec. 1642. Expanded application of hardship waivers for OIG exclusions 
              to beneficiaries of any Federal health care program.
Sec. 1643. Access to certain information on renal dialysis facilities.
Sec. 1644. Billing agents, clearinghouses, or other alternate payees 
              required to register under Medicare.
Sec. 1645. Conforming civil monetary penalties to False Claims Act 
              amendments.
Sec. 1646. Requiring provider and supplier payments under Medicare to 
              be made through direct deposit or electronic funds 
              transfer (EFT) at insured depository institutions.
Sec. 1647. Inspector General for the Health Choices Administration.

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

Sec. 1651. Access to Information Necessary to Identify Fraud, Waste, 
              and Abuse.
Sec. 1652. Elimination of duplication between the Healthcare Integrity 
              and Protection Data Bank and the National Practitioner 
              Data Bank.
Sec. 1653. Compliance with HIPAA privacy and security standards.
Sec. 1654. Disclosure of Medicare Fraud and Abuse Hotline Number on 
              Explanation of Benefits.

                      TITLE VII--MEDICAID AND CHIP

                 Subtitle A--Medicaid and Health Reform

Sec. 1701. Eligibility for individuals with income below 150 percent of 
              the Federal poverty level.
Sec. 1702.  Requirements and special rules for certain Medicaid 
              eligible individuals.
Sec. 1703. CHIP and Medicaid maintenance of eligibility.
Sec. 1704. Reduction in Medicaid DSH.
Sec. 1705. Expanded outstationing.

                         Subtitle B--Prevention

Sec. 1711. Required coverage of preventive services.
Sec. 1712. Tobacco cessation.
Sec. 1713. Optional coverage of nurse home visitation services.
Sec. 1714. State eligibility option for family planning services.

                           Subtitle C--Access

Sec. 1721. Payments to primary care practitioners.
Sec. 1722. Medical home pilot program.
Sec. 1723. Translation or interpretation services.
Sec. 1724. Optional coverage for freestanding birth center services.
Sec. 1725. Inclusion of public health clinics under the vaccines for 
              children program.
Sec. 1726. Requiring coverage of services of podiatrists.
Sec. 1726A. Requiring coverage of services of optometrists.
Sec. 1727. Therapeutic foster care.
Sec. 1728. Assuring adequate payment levels for services.
Sec. 1729. Preserving Medicaid coverage for youths upon release from 
              public institutions.
Sec. 1730. Quality measures for maternity and adult health services 
              under Medicaid and CHIP.
Sec. 1730A. Accountable care organization pilot program.
Sec. 1730B. FQHC coverage.

                          Subtitle D--Coverage

Sec. 1731. Optional Medicaid coverage of low-income HIV-infected 
              individuals.
Sec. 1732. Extending transitional Medicaid Assistance (TMA).
Sec. 1733. Requirement of 12-month continuous coverage under certain 
              CHIP programs.
Sec. 1734. Preventing the application under CHIP of coverage waiting 
              periods for certain children.
Sec. 1735. Adult day health care services.
Sec. 1736. Medicaid coverage for citizens of Freely Associated States.
Sec. 1737. Continuing requirement of Medicaid coverage of nonemergency 
              transportation to medically necessary services.
Sec. 1738. State option to disregard certain income in providing 
              continued Medicaid coverage for certain individuals with 
              extremely high prescription costs.
Sec. 1739. Provisions relating to community living assistance services 
              and supports (CLASS).
Sec. 1739A. Sense of Congress regarding Community First Choice Option 
              to provide Medicaid Coverage of Community-Based Attendant 
              Services and Supports.

                         Subtitle E--Financing

Sec. 1741. Payments to pharmacists.
Sec. 1742. Prescription drug rebates.
Sec. 1743. Extension of prescription drug discounts to enrollees of 
              Medicaid managed care organizations.
Sec. 1744. Payments for graduate medical education.
Sec. 1745. Nursing Facility Supplemental Payment Program.
Sec. 1746. Report on Medicaid payments.
Sec. 1747. Reviews of Medicaid.
Sec. 1748. Extension of delay in managed care organization provider tax 
              elimination.
Sec. 1749. Extension of ARRA increase in FMAP.

                  Subtitle F--Waste, Fraud, and Abuse

Sec. 1751. Health care acquired conditions.
Sec. 1752. Evaluations and reports required under Medicaid Integrity 
              Program.
Sec. 1753. Require providers and suppliers to adopt programs to reduce 
              waste, fraud, and abuse.
Sec. 1754. Overpayments.
Sec. 1755. Managed care organizations.
Sec. 1756. Termination of provider participation under Medicaid and 
              CHIP if terminated under Medicare or other State plan or 
              child health plan.
Sec. 1757. Medicaid and CHIP exclusion from participation relating to 
              certain ownership, control, and management affiliations.
Sec. 1758. Requirement to report expanded set of data elements under 
              MMIS to detect fraud and abuse.
Sec. 1759. Billing agents, clearinghouses, or other alternate payees 
              required to register under Medicaid.
Sec. 1760. Denial of payments for litigation-related misconduct.
Sec. 1761. Mandatory State use of national correct coding initiative.

                Subtitle G--Payments to the Territories

Sec. 1771. Payment to territories.

                       Subtitle H--Miscellaneous

Sec. 1781. Technical corrections.
Sec. 1782. Extension of QI program.
Sec. 1783. Assuring transparency of information.
Sec. 1784. Medicaid and CHIP Payment and Access Commission.
Sec. 1785. Outreach and enrollment of Medicaid and CHIP eligible 
              individuals.
Sec. 1786. Prohibitions on Federal Medicaid and CHIP payment for 
              undocumented aliens.
Sec. 1787. Demonstration project for stabilization of emergency medical 
              conditions by institutions for mental diseases.
Sec. 1788. Application of Medicaid Improvement Fund.
Sec. 1789. Treatment of certain Medicaid brokers.
Sec. 1790. Rule for changes requiring State legislation.

                 TITLE VIII--REVENUE-RELATED PROVISIONS

Sec. 1801. Disclosures to facilitate identification of individuals 
              likely to be ineligible for the low-income assistance 
              under the Medicare prescription drug program to assist 
              Social Security Administration's outreach to eligible 
              individuals.
Sec. 1802. Comparative Effectiveness Research Trust Fund; financing for 
              Trust Fund.

                   TITLE IX--MISCELLANEOUS PROVISIONS

Sec. 1901. Repeal of trigger provision.
Sec. 1902. Repeal of comparative cost adjustment (CCA) program.
Sec. 1903. Extension of gainsharing demonstration.
Sec. 1904. Grants to States for quality home visitation programs for 
              families with young children and families expecting 
              children.
Sec. 1905. Improved coordination and protection for dual eligibles.
Sec. 1906. Assessment of medicare cost-intensive diseases and 
              conditions.
Sec. 1907. Establishment of Center for Medicare and Medicaid Innovation 
              within CMS.
Sec. 1908. Application of emergency services laws.
Sec. 1909. Disregard under the Supplemental Security Income program of 
              compensation for participation in clinical trials for 
              rare diseases or conditions.

                  TITLE I--IMPROVING HEALTH CARE VALUE

           Subtitle A--Provisions Related to Medicare Part A

                     PART 1--MARKET BASKET UPDATES

     SEC. 1101. SKILLED NURSING FACILITY PAYMENT UPDATE.

       (a) In General.--Section 1888(e)(4)(E)(ii) of the Social 
     Security Act (42 U.S.C. 1395yy(e)(4)(E)(ii)) is amended--
       (1) in subclause (III), by striking ``and'' at the end;
       (2) by redesignating subclause (IV) as subclause (VI); and
       (3) by inserting after subclause (III) the following new 
     subclauses:

       ``(IV) for each of fiscal years 2004 through 2009, the rate 
     computed for the previous fiscal year increased by the 
     skilled nursing facility market basket percentage change for 
     the fiscal year involved;
       ``(V) for fiscal year 2010, the rate computed for the 
     previous fiscal year; and''.

       (b) Delayed Effective Date.--Section 1888(e)(4)(E)(ii)(V) 
     of the Social Security Act, as inserted by subsection (a)(3), 
     shall not apply to payment for days before January 1, 2010.

     SEC. 1102. INPATIENT REHABILITATION FACILITY PAYMENT UPDATE.

       (a) In General.--Section 1886(j)(3)(C) of the Social 
     Security Act (42 U.S.C.

[[Page H12667]]

     1395ww(j)(3)(C)) is amended by striking ``and 2009'' and 
     inserting ``through 2010''.
       (b) Delayed Effective Date.--The amendment made by 
     subsection (a) shall not apply to payment units occurring 
     before January 1, 2010.

     SEC. 1103. INCORPORATING PRODUCTIVITY IMPROVEMENTS INTO 
                   MARKET BASKET UPDATES THAT DO NOT ALREADY 
                   INCORPORATE SUCH IMPROVEMENTS.

       (a) Inpatient Acute Hospitals.--Section 1886(b)(3)(B) of 
     the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)) is 
     amended--
       (1) in clause (iii)--
       (A) by striking ``(iii) For purposes of this 
     subparagraph,'' and inserting ``(iii)(I) For purposes of this 
     subparagraph, subject to the productivity adjustment 
     described in subclause (II),''; and
       (B) by adding at the end the following new subclause:
       ``(II) The productivity adjustment described in this 
     subclause, with respect to an increase or change for a fiscal 
     year or year or cost reporting period, or other annual 
     period, is a productivity offset in the form of a reduction 
     in such increase or change equal to the percentage change in 
     the 10-year moving average of annual economy-wide private 
     nonfarm business multi-factor productivity (as recently 
     published in final form before the promulgation or 
     publication of such increase for the year or period 
     involved). Except as otherwise provided, any reference to the 
     increase described in this clause shall be a reference to the 
     percentage increase described in subclause (I) minus the 
     percentage change under this subclause.'';
       (2) in the first sentence of clause (viii)(I), by inserting 
     ``(but not below zero)'' after ``shall be reduced''; and
       (3) in the first sentence of clause (ix)(I)--
       (A) by inserting ``(determined without regard to clause 
     (iii)(II))'' after ``clause (i)'' the second time it appears; 
     and
       (B) by inserting ``(but not below zero)'' after 
     ``reduced''.
       (b) Skilled Nursing Facilities.--Section 1888(e)(5)(B) of 
     such Act (42 U.S.C. 1395yy(e)(5)(B)) is amended by inserting 
     ``subject to the productivity adjustment described in section 
     1886(b)(3)(B)(iii)(II)'' after ``as calculated by the 
     Secretary''.
       (c) Long Term Care Hospitals.--Section 1886(m) of the 
     Social Security Act (42 U.S.C. 1395ww(m)) is amended by 
     adding at the end the following new paragraph:
       ``(3) Productivity adjustment.--In implementing the system 
     described in paragraph (1) for discharges occurring on or 
     after January 1, 2010, during the rate year ending in 2010 or 
     any subsequent rate year for a hospital, to the extent that 
     an annual percentage increase factor applies to a standard 
     Federal rate for such discharges for the hospital, such 
     factor shall be subject to the productivity adjustment 
     described in subsection (b)(3)(B)(iii)(II).''.
       (d) Inpatient Rehabilitation Facilities.--The second 
     sentence of section 1886(j)(3)(C) of the Social Security Act 
     (42 U.S.C. 1395ww(j)(3)(C)) is amended by inserting 
     ``(subject to the productivity adjustment described in 
     subsection (b)(3)(B)(iii)(II))'' after ``appropriate 
     percentage increase''.
       (e) Psychiatric Hospitals.--Section 1886 of the Social 
     Security Act (42 U.S.C. 1395ww) is amended by adding at the 
     end the following new subsection:
       ``(o) Prospective Payment for Psychiatric Hospitals.--
       ``(1) Reference to establishment and implementation of 
     system.--For provisions related to the establishment and 
     implementation of a prospective payment system for payments 
     under this title for inpatient hospital services furnished by 
     psychiatric hospitals (as described in clause (i) of 
     subsection (d)(1)(B) and psychiatric units (as described in 
     the matter following clause (v) of such subsection), see 
     section 124 of the Medicare, Medicaid, and SCHIP Balanced 
     Budget Refinement Act of 1999.
       ``(2) Productivity adjustment.--In implementing the system 
     described in paragraph (1) for days occurring during the rate 
     year ending in 2011 or any subsequent rate year for a 
     psychiatric hospital or unit described in such paragraph, to 
     the extent that an annual percentage increase factor applies 
     to a base rate for such days for the hospital or unit, 
     respectively, such factor shall be subject to the 
     productivity adjustment described in subsection 
     (b)(3)(B)(iii)(II).''.
       (f) Hospice Care.--Subclause (VII) of section 
     1814(i)(1)(C)(ii) of the Social Security Act (42 U.S.C. 
     1395f(i)(1)(C)(ii)) is amended by inserting after ``the 
     market basket percentage increase'' the following: ``(which 
     is subject to the productivity adjustment described in 
     section 1886(b)(3)(B)(iii)(II))''.
       (g) Effective Dates.--
       (1) IPPS.--The amendments made by subsection (a) shall 
     apply to annual increases effected for fiscal years beginning 
     with fiscal year 2010, but only with respect to discharges 
     occurring on or after January 1, 2010.
       (2) SNF and irf.--The amendments made by subsections (b) 
     and (d) shall apply to annual increases effected for fiscal 
     years beginning with fiscal year 2011.
       (3) Hospice care.--The amendment made by subsection (f) 
     shall apply to annual increases effected for fiscal years 
     beginning with fiscal year 2010, but only with respect to 
     days of care occurring on or after January 1, 2010.

                PART 2--OTHER MEDICARE PART A PROVISIONS

     SEC. 1111. PAYMENTS TO SKILLED NURSING FACILITIES.

       (a) Change in Recalibration Factor.--
       (1) Analysis.--The Secretary of Health and Human Services 
     shall conduct, using calendar year 2006 claims data, an 
     initial analysis comparing total payments under title XVIII 
     of the Social Security Act for skilled nursing facility 
     services under the RUG-53 and under the RUG-44 classification 
     systems.
       (2) Adjustment in recalibration factor.--Based on the 
     initial analysis under paragraph (1), the Secretary shall 
     adjust the case mix indexes under section 1888(e)(4)(G)(i) of 
     the Social Security Act (42 U.S.C. 1395yy(e)(4)(G)(i)) for 
     fiscal year 2010 by the appropriate recalibration factor as 
     proposed in the final rule for Medicare skilled nursing 
     facilities issued by such Secretary on August 11, 2009 (74 
     Federal Register 40287 et seq.).
       (b) Change in Payment for Nontherapy Ancillary (NTA) 
     Services and Therapy Services.--
       (1) Changes under current snf classification system.--
       (A) In general.--Subject to subparagraph (B), the Secretary 
     of Health and Human Services shall, under the system for 
     payment of skilled nursing facility services under section 
     1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)), 
     increase payment by 10 percent for non-therapy ancillary 
     services (as specified by the Secretary in the notice issued 
     on November 27, 1998 (63 Federal Register 65561 et seq.)) and 
     shall decrease payment for the therapy case mix component of 
     such rates by 5.5 percent.
       (B) Effective date.--The changes in payment described in 
     subparagraph (A) shall apply for days on or after April 1, 
     2010, and until the Secretary implements an alternative case 
     mix classification system for payment of skilled nursing 
     facility services under section 1888(e) of the Social 
     Security Act (42 U.S.C. 1395yy(e)).
       (C) Implementation.--Notwithstanding any other provision of 
     law, the Secretary may implement by program instruction or 
     otherwise the provisions of this paragraph.
       (2) Changes under a future snf case mix classification 
     system.--
       (A) Analysis.--
       (i) In general.--The Secretary of Health and Human Services 
     shall analyze payments for non-therapy ancillary services 
     under a future skilled nursing facility classification system 
     to ensure the accuracy of payment for non-therapy ancillary 
     services. Such analysis shall consider use of appropriate 
     predictors which may include age, physical and mental status, 
     ability to perform activities of daily living, prior nursing 
     home stay, diagnoses, broad RUG category, and a proxy for 
     length of stay.
       (ii) Application.--Such analysis shall be conducted in a 
     manner such that the future skilled nursing facility 
     classification system is implemented to apply to services 
     furnished during a fiscal year beginning with fiscal year 
     2011.
       (B) Consultation.--In conducting the analysis under 
     subparagraph (A), the Secretary shall consult with interested 
     parties, including the Medicare Payment Advisory Commission 
     and other interested stakeholders, to identify appropriate 
     predictors of nontherapy ancillary costs.
       (C) Rulemaking.--The Secretary shall include the result of 
     the analysis under subparagraph (A) in the fiscal year 2011 
     rulemaking cycle for purposes of implementation beginning for 
     such fiscal year.
       (D) Implementation.--Subject to subparagraph (E) and 
     consistent with subparagraph (A)(ii), the Secretary shall 
     implement changes to payments for non-therapy ancillary 
     services (which shall include a separate rate component for 
     non-therapy ancillary services and may include use of a model 
     that predicts payment amounts applicable for non-therapy 
     ancillary services) under such future skilled nursing 
     facility services classification system as the Secretary 
     determines appropriate based on the analysis conducted 
     pursuant to subparagraph (A).
       (E) Budget neutrality.--The Secretary shall implement 
     changes described in subparagraph (D) in a manner such that 
     the estimated expenditures under such future skilled nursing 
     facility services classification system for a fiscal year 
     beginning with fiscal year 2011 with such changes would be 
     equal to the estimated expenditures that would otherwise 
     occur under title XVIII of the Social Security Act under such 
     future skilled nursing facility services classification 
     system for such year without such changes.
       (c) Outlier Policy for NTA and Therapy.--Section 1888(e) of 
     the Social Security Act (42 U.S.C. 1395yy(e)) is amended by 
     adding at the end the following new paragraph:
       ``(13) Outliers for nta and therapy.--
       ``(A) In general.--With respect to outliers because of 
     unusual variations in the type or amount of medically 
     necessary care, beginning with October 1, 2010, the 
     Secretary--
       ``(i) shall provide for an addition or adjustment to the 
     payment amount otherwise made under this section with respect 
     to non-therapy ancillary services in the case of such 
     outliers; and
       ``(ii) may provide for such an addition or adjustment to 
     the payment amount otherwise made under this section with 
     respect to therapy services in the case of such outliers.
       ``(B) Outliers based on aggregate costs.--Outlier 
     adjustments or additional payments described in subparagraph 
     (A) shall be based on aggregate costs during a stay in a 
     skilled nursing facility and not on the number of days in 
     such stay.

[[Page H12668]]

       ``(C) Budget neutrality.--The Secretary shall reduce 
     estimated payments that would otherwise be made under the 
     prospective payment system under this subsection with respect 
     to a fiscal year by 2 percent. The total amount of the 
     additional payments or payment adjustments for outliers made 
     under this paragraph with respect to a fiscal year may not 
     exceed 2 percent of the total payments projected or estimated 
     to be made based on the prospective payment system under this 
     subsection for the fiscal year.''.
       (d) Conforming Amendments.--Section 1888(e)(8) of such Act 
     (42 U.S.C. 1395yy(e)(8)) is amended--
       (1) in subparagraph (A)--
       (A) by striking ``and'' before ``adjustments''; and
       (B) by inserting ``, and adjustment under section 1111(b) 
     of the Affordable Health Care for America Act'' before the 
     semicolon at the end;
       (2) in subparagraph (B), by striking ``and'';
       (3) in subparagraph (C), by striking the period and 
     inserting ``; and''; and
       (4) by adding at the end the following new subparagraph:
       ``(D) the establishment of outliers under paragraph 
     (13).''.

     SEC. 1112. MEDICARE DSH REPORT AND PAYMENT ADJUSTMENTS IN 
                   RESPONSE TO COVERAGE EXPANSION.

       (a) DSH Report.--
       (1) In general.--Not later than January 1, 2016, the 
     Secretary of Health and Human Services shall submit to 
     Congress a report on Medicare DSH taking into account the 
     impact of the health care reforms carried out under division 
     A in reducing the number of uninsured individuals. The report 
     shall include recommendations relating to the following:
       (A) The appropriate amount, targeting, and distribution of 
     Medicare DSH to compensate for higher Medicare costs 
     associated with serving low-income beneficiaries (taking into 
     account variations in the empirical justification for 
     Medicare DSH attributable to hospital characteristics, 
     including bed size), consistent with the original intent of 
     Medicare DSH.
       (B) The appropriate amount, targeting, and distribution of 
     Medicare DSH to hospitals given their continued uncompensated 
     care costs, to the extent such costs remain.
       (2) Coordination with medicaid dsh report.--The Secretary 
     shall coordinate the report under this subsection with the 
     report on Medicaid DSH under section 1704(a).
       (b) Payment Adjustments in Response to Coverage 
     Expansion.--
       (1) In general.--If there is a significant decrease in the 
     national rate of uninsurance as a result of this Act (as 
     determined under paragraph (2)(A)), then the Secretary of 
     Health and Human Services shall, beginning in fiscal year 
     2017, implement the following adjustments to Medicare DSH:
       (A) In lieu of the amount of Medicare DSH payment that 
     would otherwise be made under section 1886(d)(5)(F) of the 
     Social Security Act, the amount of Medicare DSH payment shall 
     be an amount based on the recommendations of the report under 
     subsection (a)(1)(A) and shall take into account variations 
     in the empirical justification for Medicare DSH attributable 
     to hospital characteristics, including bed size.
       (B) Subject to paragraph (3), make an additional payment to 
     a hospital by an amount that is estimated based on the amount 
     of uncompensated care provided by the hospital based on 
     criteria for uncompensated care as determined by the 
     Secretary, which shall exclude bad debt.
       (2) Significant decrease in national rate of uninsurance as 
     a result of this act.--For purposes of this subsection--
       (A) In general.--There is a ``significant decrease in the 
     national rate of uninsurance as a result of this Act'' if 
     there is a decrease in the national rate of uninsurance (as 
     defined in subparagraph (B)) from 2012 to 2014 that exceeds 8 
     percentage points.
       (B) National rate of uninsurance defined.--The term 
     ``national rate of uninsurance'' means, for a year, such rate 
     for the under-65 population for the year as determined and 
     published by the Bureau of the Census in its Current 
     Population Survey in or about September of the succeeding 
     year.
       (3) Uncompensated care increase.--
       (A) Computation of dsh savings.--For each fiscal year 
     (beginning with fiscal year 2017), the Secretary shall 
     estimate the aggregate reduction in the amount of Medicare 
     DSH payment that would be expected to result from the 
     adjustment under paragraph (1)(A).
       (B) Structure of payment increase.--The Secretary shall 
     compute the additional payment to a hospital as described in 
     paragraph (1)(B) for a fiscal year in accordance with a 
     formula established by the Secretary that provides that--
       (i) the estimated aggregate amount of such increase for the 
     fiscal year does not exceed 50 percent of the aggregate 
     reduction in Medicare DSH estimated by the Secretary for such 
     fiscal year; and
       (ii) hospitals with higher levels of uncompensated care 
     receive a greater increase.
       (c) Medicare DSH.--In this section, the term ``Medicare 
     DSH'' means adjustments in payments under section 
     1886(d)(5)(F) of the Social Security Act (42 U.S.C. 
     1395ww(d)(5)(F)) for inpatient hospital services furnished by 
     disproportionate share hospitals.

     SEC. 1113. EXTENSION OF HOSPICE REGULATION MORATORIUM.

       Section 4301(a) of division B of the American Recovery and 
     Reinvestment Act of 2009 (Public Law 111-5) is amended--
       (1) by striking ``October 1, 2009'' and inserting ``October 
     1, 2010''; and
       (2) by striking ``for fiscal year 2009'' and inserting 
     ``for fiscal years 2009 and 2010''.

     SEC. 1114. PERMITTING PHYSICIAN ASSISTANTS TO ORDER POST-
                   HOSPITAL EXTENDED CARE SERVICES AND TO PROVIDE 
                   FOR RECOGNITION OF ATTENDING PHYSICIAN 
                   ASSISTANTS AS ATTENDING PHYSICIANS TO SERVE 
                   HOSPICE PATIENTS.

       (a) Ordering Post-hospital Extended Care Services.--Section 
     1814(a) of the Social Security Act (42 U.S.C. 1395f(a)) is 
     amended--
       (1) in paragraph (2) in the matter preceding subparagraph 
     (A), is amended by striking ``nurse practitioner or clinical 
     nurse specialist'' and inserting ``nurse practitioner, a 
     clinical nurse specialist, or a physician assistant''.
       (2) in the second sentence, by striking ``or clinical nurse 
     specialist'' and inserting ``clinical nurse specialist, or 
     physician assistant''.
       (b) Recognition of Attending Physician Assistants as 
     Attending Physicians to Serve Hospice Patients.--
       (1) In general.--Section 1861(dd)(3)(B) of such Act (42 
     U.S.C. 1395x(dd)(3)(B)) is amended--
       (A) by striking ``or nurse'' and inserting ``, the nurse''; 
     and
       (B) by inserting ``or the physician assistant (as defined 
     in such subsection),'' after ``subsection (aa)(5)),''.
       (2) Conforming amendment.--Section 1814(a)(7)(A)(i)(I) of 
     such Act (42 U.S.C. 1395f(a)(7)(A)(i)(I)) is amended by 
     inserting ``or a physician assistant'' after ``a nurse 
     practitioner''.
       (3) Construction.--Nothing in the amendments made by this 
     subsection shall be construed as changing the requirements of 
     section 1842(b)(6)(C) of the Social Security Act (42 U.S.C. 
     1395u(b)(6)(C)) with respect to payment for services of 
     physician assistants under part B of title XVIII of such Act.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     January 1, 2010.

                Subtitle B--Provisions Related to Part B

                      PART 1--PHYSICIANS' SERVICES

     SEC. 1121. RESOURCE-BASED FEEDBACK PROGRAM FOR PHYSICIANS IN 
                   MEDICARE.

       Section 1848(n) of the Social Security Act (42 U.S.C. 
     1395w-4(n)) is amended by adding at the end the following new 
     paragraph:
       ``(9) Feedback implementation plan.--
       ``(A) Timeline for feedback program.--
       ``(i) Evaluation.--During 2011 the Secretary shall conduct 
     the evaluation specified in subparagraph (E)(i).
       ``(ii) Expansion.--The Secretary shall expand the Program 
     under this subsection as specified in subparagraph (E)(ii).
       ``(B) Establishment of nature of reports.--
       ``(i) In general.--The Secretary shall develop and specify 
     the nature of the reports that will be disseminated under 
     this subsection, based on results and findings from the 
     Program under this subsection as in existence before the date 
     of the enactment of this paragraph. Such reports may be based 
     on a per capita basis, an episode basis that combines 
     separate but clinically related physicians' services and 
     other items and services furnished or ordered by a physician 
     into an episode of care, as appropriate, or both.
       ``(ii) Timeline for development.--The nature of the reports 
     described in clause (i) shall be developed by not later than 
     January 1, 2012.
       ``(iii) Public availability.--The Secretary shall make the 
     details of the nature of the reports developed under clause 
     (i) available to the public.
       ``(C) Analysis of data.--The Secretary shall, for purposes 
     of preparing reports under this subsection, establish 
     methodologies as appropriate such as to--
       ``(i) attribute items and services, in whole or in part, to 
     physicians;
       ``(ii) identify appropriate physicians for purposes of 
     comparison under subparagraph (B)(i); and
       ``(iii) aggregate items and services attributed to a 
     physician under clause (i) into a composite measure per 
     individual.
       ``(D) Feedback program.--The Secretary shall engage in 
     efforts to disseminate reports under this subsection. In 
     disseminating such reports, the Secretary shall consider the 
     following:
       ``(i) Direct meetings between contracted physicians, 
     facilitated by the Secretary, to discuss the contents of 
     reports under this subsection, including any reasons for 
     divergence from local or national averages.
       ``(ii) Contract with local, non-profit entities engaged in 
     quality improvement efforts at the community level. Such 
     entities shall use the reports under this subsection, or such 
     equivalent tool as specified by the Secretary. Any exchange 
     of data under this paragraph shall be protected by 
     appropriate privacy safeguards.
       ``(iii) Mailings or other methods of communication that 
     facilitate large-scale dissemination.
       ``(iv) Other methods specified by the Secretary.
       ``(E) Evaluation and expansion.--
       ``(i) Evaluation.--The Secretary shall evaluate the methods 
     specified in subparagraph (D) with regard to their efficacy 
     in changing practice patterns to improve quality and decrease 
     costs.

[[Page H12669]]

       ``(ii) Expansion.--Taking into account the cost of each 
     method specified in subparagraph (D), the Secretary shall 
     develop a plan to disseminate reports under this subsection 
     in a significant manner in the regions and cities of the 
     country with the highest utilization of services under this 
     title. To the extent practicable, reports under this 
     subsection shall be disseminated to increasing numbers of 
     physicians each year, such that during 2014 and subsequent 
     years, reports are disseminated at least to physicians with 
     utilization rates among the highest 5 percent of the nation, 
     subject the authority to focus under paragraph (4).
       ``(F) Administration.--
       ``(i) Chapter 35 of title 44, United States Code shall not 
     apply to this paragraph.
       ``(ii) Notwithstanding any other provision of law, the 
     Secretary may implement the provisions of this paragraph by 
     program instruction or otherwise.''.

     SEC. 1122. MISVALUED CODES UNDER THE PHYSICIAN FEE SCHEDULE.

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

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

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

       ``(I) The Secretary may use existing processes to receive 
     recommendations on the review and appropriate adjustment of 
     potentially misvalued services described clause (i)(II).
       ``(II) The Secretary may conduct surveys, other data 
     collection activities, studies, or other analyses as the 
     Secretary determines to be appropriate to facilitate the 
     review and appropriate adjustment described in clause 
     (i)(II).
       ``(III) The Secretary may use analytic contractors to 
     identify and analyze services identified under clause (i)(I), 
     conduct surveys or collect data, and make recommendations on 
     the review and appropriate adjustment of services described 
     in clause (i)(II).
       ``(IV) The Secretary may coordinate the review and 
     appropriate adjustment described in clause (i)(II) with the 
     periodic review described in subparagraph (B).
       ``(V) As part of the review and adjustment described in 
     clause (i)(II), including with respect to codes with low 
     relative values described in clause (ii), the Secretary may 
     make appropriate coding revisions (including using existing 
     processes for consideration of coding changes) which may 
     include consolidation of individual services into bundled 
     codes for payment under the fee schedule under subsection 
     (b).
       ``(VI) The provisions of subparagraph (B)(ii)(II) shall 
     apply to adjustments to relative value units made pursuant to 
     this subparagraph in the same manner as such provisions apply 
     to adjustments under subparagraph (B)(ii)(II).

       ``(L) Validating relative value units.--
       ``(i) In general.--The Secretary shall establish a process 
     to validate relative value units under the fee schedule under 
     subsection (b).
       ``(ii) Components and elements of work.--The process 
     described in clause (i) may include validation of work 
     elements (such as time, mental effort and professional 
     judgment, technical skill and physical effort, and stress due 
     to risk) involved with furnishing a service and may include 
     validation of the pre, post, and intra-service components of 
     work.
       ``(iii) Scope of codes.--The validation of work relative 
     value units shall include a sampling of codes for services 
     that is the same as the codes listed under subparagraph 
     (K)(ii)
       ``(iv) Methods.--The Secretary may conduct the validation 
     under this subparagraph using methods described in subclauses 
     (I) through (V) of subparagraph (K)(iii) as the Secretary 
     determines to be appropriate.
       ``(v) Adjustments.--The Secretary shall make appropriate 
     adjustments to the work relative value units under the fee 
     schedule under subsection (b). The provisions of subparagraph 
     (B)(ii)(II) shall apply to adjustments to relative value 
     units made pursuant to this subparagraph in the same manner 
     as such provisions apply to adjustments under subparagraph 
     (B)(ii)(II).''.
       (b) Implementation.--
       (1) Funding.--For purposes of carrying out the provisions 
     of subparagraphs (K) and (L) of 1848(c)(2) of the Social 
     Security Act, as added by subsection (a), in addition to 
     funds otherwise available, out of any funds in the Treasury 
     not otherwise appropriated, there are appropriated to the 
     Secretary of Health and Human Services for the Center for 
     Medicare & Medicaid Services Program Management Account 
     $20,000,000 for fiscal year 2010 and each subsequent fiscal 
     year. Amounts appropriated under this paragraph for a fiscal 
     year shall be available until expended.
       (2) Administration.--
       (A) Chapter 35 of title 44, United States Code and the 
     provisions of the Federal Advisory Committee Act (5 U.S.C. 
     App.) shall not apply to this section or the amendment made 
     by this section.
       (B) Notwithstanding any other provision of law, the 
     Secretary may implement subparagraphs (K) and (L) of 
     1848(c)(2) of the Social Security Act, as added by subsection 
     (a), by program instruction or otherwise.
       (C) Section 4505(d) of the Balanced Budget Act of 1997 is 
     repealed.
       (D) Except for provisions related to confidentiality of 
     information, the provisions of the Federal Acquisition 
     Regulation shall not apply to this section or the amendment 
     made by this section.
       (3) Focusing cms resources on potentially overvalued 
     codes.--Section 1868(a) of the Social Security Act (42 
     1395ee(a)) is repealed.

     SEC. 1123. PAYMENTS FOR EFFICIENT AREAS.

       Section 1833 of the Social Security Act (42 U.S.C. 1395l) 
     is amended by adding at the end the following new subsection:
       ``(x) Incentive Payments for Efficient Areas.--
       ``(1) In general.--In the case of services furnished under 
     the physician fee schedule under section 1848 on or after 
     January 1, 2011, and before January 1, 2013, by a supplier 
     that is paid under such fee schedule in an efficient area (as 
     identified under paragraph (2)), in addition to the amount of 
     payment that would otherwise be made for such services under 
     this part, there also shall be paid (on a monthly or 
     quarterly basis) an amount equal to 5 percent of the payment 
     amount for the services under this part.
       ``(2) Identification of efficient areas.--
       ``(A) In general.--Based upon available data, the Secretary 
     shall identify those counties or equivalent areas in the 
     United States in the lowest fifth percentile of utilization 
     based on per capita spending under this part and part A for 
     services provided in the most recent year for which data are 
     available as of the date of the enactment of this subsection, 
     as standardized to eliminate the effect of geographic 
     adjustments in payment rates.
       ``(B) Identification of counties where service is 
     furnished..--For purposes of paying the additional amount 
     specified in paragraph (1), if the Secretary uses the 5-digit 
     postal ZIP Code where the service is furnished, the dominant 
     county of the postal ZIP Code (as determined by the United 
     States Postal Service, or otherwise) shall be used to 
     determine whether the postal ZIP Code is in a county 
     described in subparagraph (A).
       ``(C) Limitation on review.--There shall be no 
     administrative or judicial review under section 1869, 1878, 
     or otherwise, respecting--
       ``(i) the identification of a county or other area under 
     subparagraph (A); or
       ``(ii) the assignment of a postal ZIP Code to a county or 
     other area under subparagraph (B).
       ``(D) Publication of list of counties; posting on 
     website.--With respect to a year for which a county or area 
     is identified under this paragraph, the Secretary shall 
     identify such counties or areas as part of the proposed and 
     final rule to implement the physician fee schedule under 
     section 1848 for the applicable year. The Secretary shall 
     post the list of counties identified under this paragraph on 
     the Internet website of the Centers for Medicare & Medicaid 
     Services.''.

     SEC. 1124. MODIFICATIONS TO THE PHYSICIAN QUALITY REPORTING 
                   INITIATIVE (PQRI).

       (a) Feedback.--Section 1848(m)(5) of the Social Security 
     Act (42 U.S.C. 1395w-4(m)(5)) is amended by adding at the end 
     the following new subparagraph:
       ``(H) Feedback.--The Secretary shall provide timely 
     feedback to eligible professionals on the performance of the 
     eligible professional with respect to satisfactorily 
     submitting data on quality measures under this subsection.''.
       (b) Appeals.--Such section is further amended--
       (1) in subparagraph (E), by striking ``There shall be'' and 
     inserting ``Except as provided in subparagraph (I), there 
     shall be''; and
       (2) by adding at the end the following new subparagraph:
       ``(I) Informal appeals process.--By not later than January 
     1, 2011, the Secretary shall 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.''.
       (c) Integration of Physician Quality Reporting and EHR 
     Reporting.--Section 1848(m) of such Act is amended by adding 
     at the end the following new paragraph:
       ``(7) Integration of physician quality reporting and ehr 
     reporting.--Not later than January 1, 2012, the Secretary 
     shall develop a plan to integrate clinical reporting on

[[Page H12670]]

     quality measures under this subsection with reporting 
     requirements under subsection (o) relating to the meaningful 
     use of electronic health records. Such integration shall 
     consist of the following:
       ``(A) The development of measures, the reporting of which 
     would both demonstrate--
       ``(i) meaningful use of an electronic health record for 
     purposes of subsection (o); and
       ``(ii) clinical quality of care furnished to an individual.
       ``(B) The collection of health data to identify 
     deficiencies in the quality and coordination of care for 
     individuals eligible for benefits under this part.
       ``(C) Such other activities as specified by the 
     Secretary.''.
       (d) Extension of Incentive Payments.--Section 1848(m)(1) of 
     such Act (42 U.S.C. 1395w-4(m)(1)) is amended--
       (1) in subparagraph (A), by striking ``2010'' and inserting 
     ``2012''; and
       (2) in subparagraph (B)(ii), by striking ``2009 and 2010'' 
     and inserting ``for each of the years 2009 through 2012''.

     SEC. 1125. ADJUSTMENT TO MEDICARE PAYMENT LOCALITIES.

       (a) In General.--Section 1848(e) of the Social Security Act 
     (42 U.S.C.1395w-4(e)) is amended by adding at the end the 
     following new paragraph:
       ``(6) Transition to use of msas as fee schedule areas in 
     california.--
       ``(A) In general.--
       ``(i) Revision.--Subject to clause (ii) and notwithstanding 
     the previous provisions of this subsection, for services 
     furnished on or after January 1, 2011, the Secretary shall 
     revise the fee schedule areas used for payment under this 
     section applicable to the State of California using the 
     Metropolitan Statistical Area (MSA) iterative Geographic 
     Adjustment Factor methodology as follows:

       ``(I) The Secretary shall configure the physician fee 
     schedule areas using the Metropolitan Statistical Areas (each 
     in this paragraph referred to as an `MSA'), as defined by the 
     Director of the Office of Management and Budget and published 
     in the Federal Register, using the most recent available 
     decennial population data as of the date of the enactment of 
     the Affordable Health Care for America Act, as the basis for 
     the fee schedule areas.
       ``(II) For purposes of this clause, the Secretary shall 
     treat all areas not included in an MSA as a single rest of 
     the State MSA.
       ``(III) The Secretary shall list all MSAs within the State 
     by Geographic Adjustment Factor described in paragraph (2) 
     (in this paragraph referred to as a `GAF') in descending 
     order.
       ``(IV) In the first iteration, the Secretary shall compare 
     the GAF of the highest cost MSA in the State to the weighted-
     average GAF of all the remaining MSAs in the State (including 
     the rest of State MSA described in subclause (II)). If the 
     ratio of the GAF of the highest cost MSA to the weighted-
     average of the GAF of remaining lower cost MSAs is 1.05 or 
     greater, the highest cost MSA shall be a separate fee 
     schedule area.
       ``(V) In the next iteration, the Secretary shall compare 
     the GAF of the MSA with the second-highest GAF to the 
     weighted-average GAF of the all the remaining MSAs (excluding 
     MSAs that become separate fee schedule areas). If the ratio 
     of the second-highest MSA's GAF to the weighted-average of 
     the remaining lower cost MSAs is 1.05 or greater, the second-
     highest MSA shall be a separate fee schedule area. ``(VI) The 
     iterative process shall continue until the ratio of the GAF 
     of the MSA with highest remaining GAF to the weighted-average 
     of the remaining MSAs with lower GAFS is less than 1.05, and 
     the remaining group of MSAs with lower GAFS shall be treated 
     as a single fee schedule area.
       ``(VI) For purposes of the iterative process described in 
     this clause, if two MSAs have identical GAFs, they shall be 
     combined.

       ``(ii) Transition.--For services furnished on or after 
     January 1, 2011, and before January 1, 2016, in the State of 
     California, after calculating the work, practice expense, and 
     malpractice geographic indices that would otherwise be 
     determined under clauses (i), (ii), and (iii) of paragraph 
     (1)(A) for a fee schedule area determined under clause (i), 
     if the index for a county within a fee schedule area is less 
     than the index in effect for such county on December 31, 
     2010, the Secretary shall instead apply the index in effect 
     for such county on such date.
       ``(B) Subsequent revisions.--After the transition described 
     in subparagraph (A)(ii), not less than every 3 years the 
     Secretary shall review and update the fee schedule areas 
     using the methodology described in subparagraph (A)(i) and 
     any updated MSAs as defined by the Director of the Office of 
     Management and Budget and published in the Federal Register. 
     The Secretary shall review and make any changes pursuant to 
     such reviews concurrent with the application of the periodic 
     review of the adjustment factors required under paragraph 
     (1)(C) for California.
       ``(C) References to fee schedule areas.--Effective for 
     services furnished on or after January 1, 2011, for the State 
     of California, any reference in this section to a fee 
     schedule area shall be deemed a reference to an MSA in the 
     State (including the single rest of state MSA described in 
     subparagraph (A)(i)(II)).''.
       (b) Conforming Amendment to Definition of Fee Schedule 
     Area.--Section 1848(j)(2) of the Social Security Act (42 
     U.S.C. 1395w(j)(2)) is amended by striking ``The term'' and 
     inserting ``Except as provided in subsection (e)(6)(C), the 
     term''.

                     PART 2--MARKET BASKET UPDATES

     SEC. 1131. INCORPORATING PRODUCTIVITY IMPROVEMENTS INTO 
                   MARKET BASKET UPDATES THAT DO NOT ALREADY 
                   INCORPORATE SUCH IMPROVEMENTS.

       (a) Outpatient Hospitals.--
       (1) In general.--Section 1833(t)(3)(C)(iv) of the Social 
     Security Act (42 U.S.C. 1395l(t)(3)(C)(iv)) is amended----
       (A) in the first sentence--
       (i) by inserting ``(which is subject to the productivity 
     adjustment described in subclause (II) of such section)'' 
     after ``1886(b)(3)(B)(iii)''; and
       (ii) by inserting ``(but not below 0)'' after ``reduced''; 
     and
       (B) in the second sentence, by inserting ``and which is 
     subject, beginning with 2010, to the productivity adjustment 
     described in section 1886(b)(3)(B)(iii)(II)''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to increase factors for services furnished in 
     years beginning with 2010.
       (b) Ambulance Services.--Section 1834(l)(3)(B) of such Act 
     (42 U.S.C. 1395m(l)(3)(B))) is amended by inserting before 
     the period at the end the following: ``and, in the case of 
     years beginning with 2010, subject to the productivity 
     adjustment described in section 1886(b)(3)(B)(iii)(II)''.
       (c) Ambulatory Surgical Center Services.--Section 
     1833(i)(2)(D) of such Act (42 U.S.C. 1395l(i)(2)(D)) is 
     amended--
       (1) by redesignating clause (v) as clause (vi); and
       (2) by inserting after clause (iv) the following new 
     clause:
       ``(v) In implementing the system described in clause (i), 
     for services furnished during 2010 or any subsequent year, to 
     the extent that an annual percentage change factor applies, 
     such factor shall be subject to the productivity adjustment 
     described in section 1886(b)(3)(B)(iii)(II).''.
       (d) Laboratory Services.--Section 1833(h)(2)(A) of such Act 
     (42 U.S.C. 1395l(h)(2)(A)) is amended--
       (1) in clause (i), by striking ``for each of the years 2009 
     through 2013'' and inserting ``for 2009''; and
       (2) clause (ii)--
       (A) by striking ``and'' at the end of subclause (III);
       (B) by striking the period at the end of subclause (IV) and 
     inserting ``; and''; and
       (C) by adding at the end the following new subclause:
       ``(V) the annual adjustment in the fee schedules determined 
     under clause (i) for years beginning with 2010 shall be 
     subject to the productivity adjustment described in section 
     1886(b)(3)(B)(iii)(II).''.
       (e) Certain Durable Medical Equipment.--Section 1834(a)(14) 
     of such Act (42 U.S.C. 1395m(a)(14)) is amended--
       (1) in subparagraph (K), by inserting before the semicolon 
     at the end the following: ``, subject to the productivity 
     adjustment described in section 1886(b)(3)(B)(iii)(II)'';
       (2) in subparagraph (L)(i), by inserting after ``June 
     2013,'' the following: ``subject to the productivity 
     adjustment described in section 1886(b)(3)(B)(iii)(II),'';
       (3) in subparagraph (L)(ii), by inserting after ``June 
     2013'' the following: ``, subject to the productivity 
     adjustment described in section 1886(b)(3)(B)(iii)(II)''; and
       (4) in subparagraph (M), by inserting before the period at 
     the end the following: ``, subject to the productivity 
     adjustment described in section 1886(b)(3)(B)(iii)(II)''.

                        PART 3--OTHER PROVISIONS

     SEC. 1141. RENTAL AND PURCHASE OF POWER-DRIVEN WHEELCHAIRS.

       (a) In General.--Section 1834(a)(7)(A)(iii) of the Social 
     Security Act (42 U.S.C. 1395m(a)(7)(A)(iii)) is amended--
       (1) in the heading, by inserting ``certain complex 
     rehabilitative'' after ``option for''; and
       (2) by striking ``power-driven wheelchair'' and inserting 
     ``complex rehabilitative power-driven wheelchair recognized 
     by the Secretary as classified within group 3 or higher''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on January 1, 2011, and shall apply to 
     power-driven wheelchairs furnished on or after such date. 
     Such amendments shall not apply to contracts entered into 
     under section 1847 of the Social Security Act (42 U.S.C. 
     1395w-3) pursuant to a bid submitted under such section 
     before October 1, 2010, under subsection (a)(1)(B)(i)(I) of 
     such section.

     SEC. 1141A. ELECTION TO TAKE OWNERSHIP, OR TO DECLINE 
                   OWNERSHIP, OF A CERTAIN ITEM OF COMPLEX DURABLE 
                   MEDICAL EQUIPMENT AFTER THE 13-MONTH CAPPED 
                   RENTAL PERIOD ENDS.

       (a) In General.--Section 1834(a)(7)(A) of the Social 
     Security Act (42 U.S.C. 1395m(a)(7)(A)) is amended--
       (1) in clause (ii)--
       (A) by striking ``rental.--On'' and inserting ``rental.--

       ``(I) In general.--Except as provided in subclause (II), 
     on''; and

       (B) by adding at the end the following new subclause:

       ``(II) Option to accept or reject transfer of title to 
     group 3 support surface.--

       ``(aa) In general.--During the 10th continuous month during 
     which payment is made for the rental of a Group 3 Support 
     Surface under clause (i), the supplier of such item shall 
     offer the individual the option to accept or reject transfer 
     of title to a Group 3 Support Surface after the 13th 
     continuous

[[Page H12671]]

     month during which payment is made for the rental of the 
     Group 3 Support Surface under clause (i). Such title shall be 
     transferred to the individual only if the individual notifies 
     the supplier not later than 1 month after the supplier makes 
     such offer that the individual agrees to accept transfer of 
     the title to the Group 3 Support Surface. Unless the 
     individual accepts transfer of title to the Group 3 Support 
     Surface in the manner set forth in this subclause, the 
     individual shall be deemed to have rejected transfer of 
     title. If the individual agrees to accept the transfer of the 
     title to the Group 3 Support Surface, the supplier shall 
     transfer such title to the individual on the first day that 
     begins after the 13th continuous month during which payment 
     is made for the rental of the Group 3 Support Surface under 
     clause (i).
       ``(bb) Special rule.--If, on the effective date of this 
     subclause, an individual's rental period for a Group 3 
     Support Surface has exceeded 10 continuous months, but the 
     first day that begins after the 13th continuous month during 
     which payment is made for the rental under clause (i) has not 
     been reached, the supplier shall, within 1 month following 
     such effective date, offer the individual the option to 
     accept or reject transfer of title to a Group 3 Support 
     Surface. Such title shall be transferred to the individual 
     only if the individual notifies the supplier not later than 1 
     month after the supplier makes such offer that the individual 
     agrees to accept transfer of title to the Group 3 Support 
     Surface. Unless the individual accepts transfer of title to 
     the Group 3 Support Surface in the manner set forth in this 
     subclause, the individual shall be deemed to have rejected 
     transfer of title. If the individual agrees to accept the 
     transfer of the title to the Group 3 Support Surface, the 
     supplier shall transfer such title to the individual on the 
     first day that begins after the 13th continuous month during 
     which payment is made for the rental of the Group 3 Support 
     Surface under clause (i) unless that day has passed, in which 
     case the supplier shall transfer such title to the individual 
     not later than 1 month after notification that the individual 
     accepts transfer of title.
       ``(cc) Treatment of subsequent resupply within period of 
     reasonable useful lifetime of group 3 support surface in case 
     of need.--If an individual rejects transfer of title to a 
     Group 3 Support Surface under this subclause and the 
     individual requires such Support Surface at any subsequent 
     time during the period of the reasonable useful lifetime of 
     such equipment (as defined by the Secretary) beginning with 
     the first month for which payment is made for the rental of 
     such equipment under clause (i), the supplier shall supply 
     the equipment without charge to the individual or the program 
     under this title during the remainder of such period, other 
     than payment for maintenance and servicing during such period 
     which would otherwise have been paid if the individual had 
     accepted title to such equipment. The previous sentence shall 
     not affect the payment of amounts under this part for such 
     equipment after the end of such period of the reasonable 
     useful lifetime of the equipment.
       ``(dd) Payments.--Maintenance and servicing payments shall 
     be made in accordance with clause (iv), in the case of a 
     supplier that transfers title to the Group 3 Support Surface 
     under this subclause, after such transfer and, in the case of 
     an individual who rejects transfer of title under this 
     subclause, after the end of the period of medical need during 
     which payment is made under clause (i).''; and
       (2) in clause (iv), by inserting ``or, in the case of an 
     individual who rejects transfer of title to a Group 3 Support 
     Surface under clause (ii), after the end of the period of 
     medical need during which payment is made under clause (i),'' 
     after ``under clause (ii)''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to durable medical equipment not 
     later than January 1, 2011.

     SEC. 1142. EXTENSION OF PAYMENT RULE FOR BRACHYTHERAPY.

        Section 1833(t)(16)(C) of the Social Security Act (42 
     U.S.C. 1395l(t)(16)(C)), as amended by section 142 of the 
     Medicare Improvements for Patients and Providers Act of 2008 
     (Public Law 110-275), is amended by striking, the first place 
     it appears, ``January 1, 2010'' and inserting ``January 1, 
     2012''.

     SEC. 1143. HOME INFUSION THERAPY REPORT TO CONGRESS.

       Not later than July 1, 2011, the Medicare Payment Advisory 
     Commission shall submit to Congress a report on the 
     following:
       (1) The scope of coverage for home infusion therapy in the 
     fee-for-service Medicare program under title XVIII of the 
     Social Security Act, Medicare Advantage under part C of such 
     title, the veteran's health care program under chapter 17 of 
     title 38, United States Code, and among private payers, 
     including an analysis of the scope of services provided by 
     home infusion therapy providers to their patients in such 
     programs.
       (2) The benefits and costs of providing such coverage under 
     the Medicare program, including a calculation of the 
     potential savings achieved through avoided or shortened 
     hospital and nursing home stays as a result of Medicare 
     coverage of home infusion therapy.
       (3) An assessment of sources of data on the costs of home 
     infusion therapy that might be used to construct payment 
     mechanisms in the Medicare program.
       (4) Recommendations, if any, on the structure of a payment 
     system under the Medicare program for home infusion therapy, 
     including an analysis of the payment methodologies used under 
     Medicare Advantage plans and private health plans for the 
     provision of home infusion therapy and their applicability to 
     the Medicare program.

     SEC. 1144. REQUIRE AMBULATORY SURGICAL CENTERS (ASCS) TO 
                   SUBMIT COST DATA AND OTHER DATA.

       (a) Cost Reporting.--
       (1) In general.--Section 1833(i) of the Social Security Act 
     (42 U.S.C. 1395l(i)) is amended by adding at the end the 
     following new paragraph:
       ``(8) The Secretary shall require, as a condition of the 
     agreement described in section 1832(a)(2)(F)(i), the 
     submission of such cost report as the Secretary may specify, 
     taking into account the requirements for such reports under 
     section 1815 in the case of a hospital.''.
       (2) Development of cost report.--Not later than 3 years 
     after the date of the enactment of this Act, the Secretary of 
     Health and Human Services shall develop a cost report form 
     for use under section 1833(i)(8) of the Social Security Act, 
     as added by paragraph (1).
       (3) Audit requirement.--The Secretary shall provide for 
     periodic auditing of cost reports submitted under section 
     1833(i)(8) of the Social Security Act, as added by paragraph 
     (1).
       (4) Effective date.--The amendment made by paragraph (1) 
     shall apply to agreements applicable to cost reporting 
     periods beginning 18 months after the date the Secretary 
     develops the cost report form under paragraph (2).
       (b) Additional Data on Quality.--
       (1) In general.--Section 1833(i)(7) of such Act (42 U.S.C. 
     1395l(i)(7)) is amended--
       (A) in subparagraph (B), by inserting ``subject to 
     subparagraph (C),'' after ``may otherwise provide,''; and
       (B) by adding at the end the following new subparagraph:
       ``(C) Under subparagraph (B) the Secretary shall require 
     the reporting of such additional data relating to quality of 
     services furnished in an ambulatory surgical facility, 
     including data on health care associated infections, as the 
     Secretary may specify.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall to reporting for years beginning with 2012.

     SEC. 1145. TREATMENT OF CERTAIN CANCER HOSPITALS.

       Section 1833(t) of the Social Security Act (42 U.S.C. 
     1395l(t)) is amended by adding at the end the following new 
     paragraph:
       ``(18) Authorization of adjustment for cancer hospitals.--
       ``(A) Study.--The Secretary shall conduct a study to 
     determine if, under the system under this subsection, costs 
     incurred by hospitals described in section 1886(d)(1)(B)(v) 
     with respect to ambulatory payment classification groups 
     exceed those costs incurred by other hospitals furnishing 
     services under this subsection (as determined appropriate by 
     the Secretary).
       ``(B) Authorization of adjustment.--Insofar as the 
     Secretary determines under subparagraph (A) that costs 
     incurred by hospitals described in section 1886(d)(1)(B)(v) 
     exceed those costs incurred by other hospitals furnishing 
     services under this subsection, the Secretary shall provide 
     for an appropriate adjustment under paragraph (2)(E) to 
     reflect those higher costs effective for services furnished 
     on or after January 1, 2011.''.

     SEC. 1146. PAYMENT FOR IMAGING SERVICES.

       (a) Adjustment in Practice Expense to Reflect a Presumed 
     Level of Utilization.--Section 1848 of the Social Security 
     Act (42 U.S.C. 1395w-4) is amended--
       (1) in subsection (b)(4)--
       (A) in subparagraph (B), by striking ``subparagraph (A)'' 
     and inserting ``this paragraph''; and
       (B) by adding at the end the following new subparagraph:
       ``(C) Adjustment in practice expense to reflect a presumed 
     level of utilization.--Consistent with the methodology for 
     computing the number of practice expense relative value units 
     under subsection (c)(2)(C)(ii) with respect to advanced 
     diagnostic imaging services (as defined in section 
     1834(e)(1)(B)) furnished on or after January 1, 2011, the 
     Secretary shall adjust such number of units so it reflects a 
     presumed rate of utilization of imaging equipment of 75 
     percent.''; and
       (2) in subsection (c)(2)(B)(v)), by adding at the end the 
     following new subclause:

       ``(III) Change in presumed utilization level of certain 
     advanced diagnostic imaging services.--Effective for fee 
     schedules established beginning with 2011, reduced 
     expenditures attributable to the presumed utilization of 75 
     percent under subsection (b)(4)(C) instead of a presumed 
     utilization of imaging equipment of 50 percent.''.

       (b) Adjustment in Technical Component ``discount'' on 
     Single-session Imaging to Consecutive Body Parts.--Section 
     1848 of such Act (42 U.S.C. 1395w-4) is further amended--
       (1) in subsection (b)(4), by adding at the end the 
     following new subparagraph:
       ``(D) Adjustment in technical component discount on single-
     session imaging involving consecutive body parts.--For 
     services furnished on or after January 1, 2011, the Secretary 
     shall increase the reduction in expenditures attributable to 
     the multiple procedure payment reduction applicable to the 
     technical component for imaging under the final rule 
     published by the Secretary in the Federal Register on 
     November 21, 2005 (part

[[Page H12672]]

     405 of title 42, Code of Federal Regulations) from 25 percent 
     to 50 percent.''; and
       (2) in subsection (c)(2)(B)(v), by adding at the end the 
     following new subclause:

       ``(III) Additional reduced payment for multiple imaging 
     procedures.--Effective for fee schedules established 
     beginning with 2011, reduced expenditures attributable to the 
     increase in the multiple procedure payment reduction from 25 
     percent to 50 percent as described in subsection 
     (b)(4)(D).''.

     SEC. 1147. DURABLE MEDICAL EQUIPMENT PROGRAM IMPROVEMENTS.

       (a) Waiver of Surety Bond Requirement.--Section 1834(a)(16) 
     of the Social Security Act (42 U.S.C. 1395m(a)(16)) is 
     amended by adding at the end the following sentence: ``The 
     requirement for a surety bond described in subparagraph (B) 
     shall not apply in the case of a pharmacy or supplier that 
     exclusively furnishes eyeglasses or contact lenses described 
     in section 1861(s)(8) if the pharmacy or supply has been 
     enrolled under section 1866(j) as a supplier of durable 
     medical equipment, prosthetics, orthotics, and supplies and 
     has been issued (which may include renewal of) a supplier 
     number (as described in the first sentence of this paragraph) 
     for at least 5 years, and if a final adverse action (as 
     defined in section 424.57(a) of title 42, Code of Federal 
     Regulations) has never been imposed for such pharmacy or 
     supplier.''.
       (b) Ensuring Supply of Oxygen Equipment.--
       (1) In general.--Section 1834(a)(5)(F) of the Social 
     Security Act (42 U.S.C. 1395m(a)(5)(F)) is amended--
       (A) in clause (ii), by striking ``After the'' and inserting 
     ``Except as provided in clause (iii), after the''; and
       (B) by adding at the end the following new clause:
       ``(iii) Continuation of supply.--In the case of a supplier 
     furnishing such equipment to an individual under this 
     subsection as of the 27th month of the 36 months described in 
     clause (i), the supplier furnishing such equipment as of such 
     month shall continue to furnish such equipment to such 
     individual (either directly or though arrangements with other 
     suppliers of such equipment) during any subsequent period of 
     medical need for the remainder of the reasonable useful 
     lifetime of the equipment, as determined by the Secretary, 
     regardless of the location of the individual, unless another 
     supplier has accepted responsibility for continuing to 
     furnish such equipment during the remainder of such 
     period.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect as of the date of the enactment of this Act 
     and shall apply to the furnishing of equipment to individuals 
     for whom the 27th month of a continuous period of use of 
     oxygen equipment described in section 1834(a)(5)(F) of the 
     Social Security Act occurs on or after July 1, 2010.
       (c) Treatment of Current Accreditation Applications.--
     Section 1834(a)(20)(F) of such Act (42 U.S.C. 
     1395m(a)(20)(F)) is amended--
       (1) in clause (i)--
       (A) by striking ``clause (ii)'' and inserting ``clauses 
     (ii) and (iii)''; and
       (B) by striking ``and'' at the end;
       (2) by striking the period at the end of clause (ii)(II) 
     and by inserting a semicolon;
       (3) by inserting after clause (ii) the following new 
     clauses:
       ``(iii) the requirement for accreditation described in 
     clause (i) shall not apply for purposes of supplying diabetic 
     testing supplies, canes, and crutches in the case of a 
     pharmacy that is enrolled under section 1866(j) as a supplier 
     of durable medical equipment, prosthetics, orthotics, and 
     supplies; and
       ``(iv) a supplier that has submitted an application for 
     accreditation before August 1, 2009, shall retain the 
     supplier's provider or supplier number until an independent 
     accreditation organization determines if such supplier 
     complies with requirements under this paragraph.''; and
       (4) by adding at the end the following new sentence: 
     ``Nothing in clauses (iii) and (iv) shall be construed as 
     affecting the application of an accreditation requirement for 
     suppliers to qualify for bidding in a competitive acquisition 
     area under section 1847,''.
       (d) Restoring 36-month Oxygen Rental Period in Case of 
     Supplier Bankruptcy for Certain Individuals.--Section 
     1834(a)(5)(F) of such Act (42 U.S.C. 1395m(a)(5)(F)), as 
     amended by subsection (b), is further amended by adding at 
     the end the following new clause:
       ``(iv) Exception for bankruptcy.--If a supplier who 
     furnishes oxygen and oxygen equipment to an individual is 
     declared bankrupt and its assets are liquidated and at the 
     time of such declaration and liquidation more than 24 months 
     of rental payments have been made, such individual may begin 
     a new 36-month rental period under this subparagraph with 
     another supplier of oxygen.''.

     SEC. 1148. MEDPAC STUDY AND REPORT ON BONE MASS MEASUREMENT.

       (a) In General.--The Medicare Payment Advisory Commission 
     shall conduct a study regarding bone mass measurement, 
     including computed tomography, duel-energy x-ray 
     absorptriometry, and vertebral fracture assessment. The study 
     shall focus on the following:
       (1) An assessment of the adequacy of Medicare payment rates 
     for such services, taking into account costs of acquiring the 
     necessary equipment, professional work time, and practice 
     expense costs.
       (2) The impact of Medicare payment changes since 2006 on 
     beneficiary access to bone mass measurement benefits in 
     general and in rural and minority communities specifically.
       (3) A review of the clinically appropriate and recommended 
     use among Medicare beneficiaries and how usage rates among 
     such beneficiaries compares to such recommendations.
       (4) In conjunction with the findings under (3), 
     recommendations, if necessary, regarding methods for reaching 
     appropriate use of bone mass measurement studies among 
     Medicare beneficiaries.
       (b) Report.--The Commission shall submit a report to the 
     Congress, not later than 9 months after the date of the 
     enactment of this Act, containing a description of the 
     results of the study conducted under subsection (a) and the 
     conclusions and recommendations, if any, regarding each of 
     the issues described in paragraphs (1), (2) (3) and (4) of 
     such subsection.

     SEC. 1149. TIMELY ACCESS TO POST-MASTECTOMY ITEMS.

       (a) In General.--Section 1834(h)(1) of the Social Security 
     Act (42 U.S.C. 1395m) is amended--
       (1) by redesignating subparagraph (H) as subparagraph (I); 
     and
       (2) by inserting after subparagraph (G) the following new 
     subparagraph:
       ``(H) Special payment rule for post-mastectomy external 
     breast prosthesis garments.--Payment for post-mastectomy 
     external breast prosthesis garments shall be made regardless 
     of whether such items are supplied to the beneficiary prior 
     to or after the mastectomy procedure or other breast cancer 
     surgical procedure. The Secretary shall develop policies to 
     ensure appropriate beneficiary access and utilization 
     safeguards for such items supplied to a beneficiary prior to 
     the mastectomy or other breast cancer surgical procedure.''
       (b) Effective Date.--This amendment shall apply not later 
     than January 1, 2011.

     SEC. 1149A. PAYMENT FOR BIOSIMILAR BIOLOGICAL PRODUCTS.

       (a) In General.--Section 1847A of the Social Security Act 
     (42 U.S.C. 1395w-3a) is amended--
       (1) in subsection (b)(1)--
       (A) in subparagraph (A), by striking ``or'' at the end;
       (B) in subparagraph (B), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) in the case of one or more interchangeable biological 
     products (as defined in subsection (c)(6)(I)) and their 
     reference biological product (as defined in subsection 
     (c)(6)(J)), which shall be included in the same billing and 
     payment code, the sum of--
       ``(i) the average sales price as determined using the 
     methodology described in paragraph (6) applied to such 
     interchangeable and reference products for all National Drug 
     Codes assigned to such products in the same manner as such 
     paragraph (6) is applied to multiple source drugs; and
       ``(ii) 6 percent of the amount determined under clause (i);
       ``(D) in the case of a biosimilar biological product (as 
     defined in subsection (c)(6)(H)), the sum of--
       ``(i) the average sales price as determined using the 
     methodology described in paragraph (4) applied to such 
     biosimilar biological product for all National Drug Codes 
     assigned to such product in the same manner as such paragraph 
     (4) is applied to a single source drug; and
       ``(ii) 6 percent of the amount determined under paragraph 
     (4) or the amount determined under subparagraph (C)(ii), as 
     the case may be, for the reference biological product (as 
     defined in subsection (c)(6)(J)); or
       ``(E) in the case of a reference biological product for 
     both an interchangeable biological product and a biosimilar 
     product, the amount determined in subparagraph (C).''; and
       (2) in subsection (c)(6)--
       (A) by amending subparagraph (D)(i) to read as follows:
       ``(i) a biological, including a reference biological 
     product for a biosimilar product, but excluding--

       ``(I) a biosimilar biological product;
       ``(II) an interchangeable biological product;
       ``(III) a reference biological product for an 
     interchangeable biological product; and
       ``(IV) a reference biological product for both an 
     interchangeable biological product and a biosimilar product; 
     or''; and

       (B) by adding at the end the following new subparagraphs:
       ``(H) Biosimilar biological product.--The term `biosimilar 
     biological product' means a biological product licensed as a 
     biosimilar biological product under section 351(k) of the 
     Public Health Service Act.
       ``(I) Interchangeable biological product.--The term 
     `interchangeable biological product' means a biological 
     product licensed as an interchangeable biological product 
     under section 351(k) of the Public Health Service Act
       ``(J) Reference biological product.--The term `reference 
     biological product' means the biological product that is 
     referred to in the application for a biosimilar or 
     interchangeable biological product licensed under section 
     351(k) of the Public Health Service Act.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to payments for biosimilar biological products,

[[Page H12673]]

     interchangeable biological products, and reference biological 
     products beginning with the first day of the second calendar 
     quarter after the date of the enactment of this Act.

     SEC. 1149B. STUDY AND REPORT ON DME COMPETITIVE BIDDING 
                   PROCESS.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study to evaluate the potential establishment 
     of a program under Medicare under title XVIII of the Social 
     Security Act to acquire durable medical equipment and 
     supplies through a competitive bidding process among 
     manufacturers of such equipment and supplies. Such study 
     shall address the following:
       (1) Identification of types of durable medical equipment 
     and supplies that would be appropriate for bidding under such 
     a program.
       (2) Recommendations on how to structure such an acquisition 
     program in order to promote fiscal responsibility while also 
     ensuring beneficiary access to high quality equipment and 
     supplies.
       (3) Recommendations on how such a program could be phased-
     in and on what geographic level would bidding be most 
     appropriate.
       (4) In addition to price, recommendations on criteria that 
     could be factored into the bidding process.
       (5) Recommendations on how suppliers could be compensated 
     for furnishing and servicing equipment and supplies acquired 
     under such a program.
       (6) Comparison of such a program to the current competitive 
     bidding program under Medicare for durable medical equipment, 
     as well as any other similar Federal acquisition programs, 
     such as the General Services Administration's vehicle 
     purchasing program.
       (7) Any other consideration relevant to the acquisition, 
     supply, and service of durable medical equipment and supplies 
     that is deemed appropriate by the Comptroller General.
       (b) Report.--Not later than 12 months after the date of the 
     enactment of this Act, the Comptroller General of the United 
     States shall submit to Congress a report on the findings of 
     the study under subsection (a).

        Subtitle C--Provisions Related to Medicare Parts A and B

     SEC. 1151. REDUCING POTENTIALLY PREVENTABLE HOSPITAL 
                   READMISSIONS.

       (a) Hospitals.--
       (1) In general.--Section 1886 of the Social Security Act 
     (42 U.S.C. 1395ww), as amended by section 1103(a), is amended 
     by adding at the end the following new subsection:
       ``(p) Adjustment to Hospital Payments for Excess 
     Readmissions.--
       ``(1) In general.--With respect to payment for discharges 
     from an applicable hospital (as defined in paragraph (5)(C)) 
     occurring during a fiscal year beginning on or after October 
     1, 2011, in order to account for excess readmissions in the 
     hospital, the Secretary shall reduce the payments that would 
     otherwise be made to such hospital under subsection (d) (or 
     section 1814(b)(3), as the case may be) for such a discharge 
     by an amount equal to the product of--
       ``(A) the base operating DRG payment amount (as defined in 
     paragraph (2)) for the discharge; and
       ``(B) the adjustment factor (described in paragraph (3)(A)) 
     for the hospital for the fiscal year.
       ``(2) Base operating drg payment amount.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     for purposes of this subsection, the term `base operating DRG 
     payment amount' means, with respect to a hospital for a 
     fiscal year, the payment amount that would otherwise be made 
     under subsection (d) for a discharge if this subsection did 
     not apply, reduced by any portion of such amount that is 
     attributable to payments under subparagraphs (B) and (F) of 
     paragraph (5).
       ``(B) Adjustments.--For purposes of subparagraph (A), in 
     the case of a hospital that is paid under section 1814(b)(3), 
     the term `base operating DRG payment amount' means the 
     payment amount under such section.
       ``(3) Adjustment factor.--
       ``(A) In general.--For purposes of paragraph (1), the 
     adjustment factor under this paragraph for an applicable 
     hospital for a fiscal year is equal to the greater of--
       ``(i) the ratio described in subparagraph (B) for the 
     hospital for the applicable period (as defined in paragraph 
     (5)(D)) for such fiscal year; or
       ``(ii) the floor adjustment factor specified in 
     subparagraph (C).
       ``(B) Ratio.--The ratio described in this subparagraph for 
     a hospital for an applicable period is equal to 1 minus the 
     ratio of--
       ``(i) the aggregate payments for excess readmissions (as 
     defined in paragraph (4)(A)) with respect to an applicable 
     hospital for the applicable period; and
       ``(ii) the aggregate payments for all discharges (as 
     defined in paragraph (4)(B)) with respect to such applicable 
     hospital for such applicable period.
       ``(C) Floor adjustment factor.--For purposes of 
     subparagraph (A), the floor adjustment factor specified in 
     this subparagraph for--
       ``(i) fiscal year 2012 is 0.99;
       ``(ii) fiscal year 2013 is 0.98;
       ``(iii) fiscal year 2014 is 0.97; or
       ``(iv) a subsequent fiscal year is 0.95.
       ``(4) Aggregate payments, excess readmission ratio 
     defined.--For purposes of this subsection:
       ``(A) Aggregate payments for excess readmissions.--The term 
     `aggregate payments for excess readmissions' means, for a 
     hospital for a fiscal year, the sum, for applicable 
     conditions (as defined in paragraph (5)(A)), of the product, 
     for each applicable condition, of--
       ``(i) the base operating DRG payment amount for such 
     hospital for such fiscal year for such condition;
       ``(ii) the number of admissions for such condition for such 
     hospital for such fiscal year; and
       ``(iii) the excess readmissions ratio (as defined in 
     subparagraph (C)) for such hospital for the applicable period 
     for such fiscal year minus 1.
       ``(B) Aggregate payments for all discharges.--The term 
     `aggregate payments for all discharges' means, for a hospital 
     for a fiscal year, the sum of the base operating DRG payment 
     amounts for all discharges for all conditions from such 
     hospital for such fiscal year.
       ``(C) Excess readmission ratio.--
       ``(i) In general.--Subject to clauses (ii) and (iii), the 
     term `excess readmissions ratio' means, with respect to an 
     applicable condition for a hospital for an applicable period, 
     the ratio (but not less than 1.0) of--

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

       ``(ii) Exclusion of certain readmissions.--For purposes of 
     clause (i), with respect to a hospital, excess readmissions 
     shall not include readmissions for an applicable condition 
     for which there are fewer than a minimum number (as 
     determined by the Secretary) of discharges for such 
     applicable condition for the applicable period and such 
     hospital.
       ``(iii) Adjustment.--In order to promote a reduction over 
     time in the overall rate of readmissions for applicable 
     conditions, the Secretary may provide, beginning with 
     discharges for fiscal year 2014, for the determination of the 
     excess readmissions ratio under subparagraph (C) to be based 
     on a ranking of hospitals by readmission ratios (from lower 
     to higher readmission ratios) normalized to a benchmark that 
     is lower than the 50th percentile.
       ``(5) Definitions.--For purposes of this subsection:
       ``(A) Applicable condition.--The term `applicable 
     condition' means, subject to subparagraph (B), a condition or 
     procedure selected by the Secretary among conditions and 
     procedures for which--
       ``(i) readmissions (as defined in subparagraph (E)) that 
     represent conditions or procedures that are high volume or 
     high expenditures under this title (or other criteria 
     specified by the Secretary); and
       ``(ii) measures of such readmissions--

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

       ``(B) Expansion of applicable conditions.--Beginning with 
     fiscal year 2013, the Secretary shall expand the applicable 
     conditions beyond the 3 conditions for which measures have 
     been endorsed as described in subparagraph (A)(ii)(I) as of 
     the date of the enactment of this subsection to the 
     additional 4 conditions that have been so identified by the 
     Medicare Payment Advisory Commission in its report to 
     Congress in June 2007 and to other conditions and procedures 
     which may include an all-condition measure of readmissions, 
     as determined appropriate by the Secretary. In expanding such 
     applicable conditions, the Secretary shall seek the 
     endorsement described in subparagraph (A)(ii)(I) but may 
     apply such measures without such an endorsement.
       ``(C) Applicable hospital.--The term `applicable hospital' 
     means a subsection (d) hospital or a hospital that is paid 
     under section 1814(b)(3).
       ``(D) Applicable period.--The term `applicable period' 
     means, with respect to a fiscal year, such period as the 
     Secretary shall specify for purposes of determining excess 
     readmissions.
       ``(E) Readmission.--The term `readmission' means, in the 
     case of an individual who is discharged from an applicable 
     hospital, the admission of the individual to the same or 
     another applicable hospital within a time period specified by 
     the Secretary from the date of such discharge. Insofar as the 
     discharge relates to an applicable condition for which there 
     is an endorsed measure described in subparagraph (A)(ii)(I), 
     such time period (such as 30 days) shall be consistent with 
     the time period specified for such measure.
       ``(6) Limitations on review.--There shall be no 
     administrative or judicial review under section 1869, section 
     1878, or otherwise of--
       ``(A) the determination of base operating DRG payment 
     amounts;
       ``(B) the methodology for determining the adjustment factor 
     under paragraph (3), including excess readmissions ratio 
     under paragraph (4)(C), aggregate payments for excess 
     readmissions under paragraph (4)(A), and aggregate payments 
     for all discharges

[[Page H12674]]

     under paragraph (4)(B), and applicable periods and applicable 
     conditions under paragraph (5);
       ``(C) the measures of readmissions as described in 
     paragraph (5)(A)(ii); and
       ``(D) the determination of a targeted hospital under 
     paragraph (8)(B)(i), the increase in payment under paragraph 
     (8)(B)(ii), the aggregate cap under paragraph (8)(C)(i), the 
     hospital-specific limit under paragraph (8)(C)(ii), and the 
     form of payment made by the Secretary under paragraph (8)(D).
       ``(7) Monitoring inappropriate changes in admissions 
     practices.--The Secretary shall monitor the activities of 
     applicable hospitals to determine if such hospitals have 
     taken steps to avoid patients at risk in order to reduce the 
     likelihood of increasing readmissions for applicable 
     conditions or taken other inappropriate steps involving 
     readmissions or transfers. If the Secretary determines that 
     such a hospital has taken such a step, after notice to the 
     hospital and opportunity for the hospital to undertake action 
     to alleviate such steps, the Secretary may impose an 
     appropriate sanction.
       ``(8) Assistance to certain hospitals.--
       ``(A) In general.--For purposes of providing funds to 
     applicable hospitals to take steps described in subparagraph 
     (E) to address factors that may impact readmissions of 
     individuals who are discharged from such a hospital, for 
     fiscal years beginning on or after October 1, 2011, the 
     Secretary shall make a payment adjustment for a hospital 
     described in subparagraph (B), with respect to each such 
     fiscal year, by a percent estimated by the Secretary to be 
     consistent with subparagraph (C). The Secretary shall provide 
     priority to hospitals that serve Medicare beneficiaries at 
     highest risk for readmission or for a poor transition from 
     such a hospital to a post-hospital site of care.
       ``(B) Targeted hospitals.--Subparagraph (A) shall apply to 
     an applicable hospital that--
       ``(i) had (or, in the case of an 1814(b)(3) hospital, 
     otherwise would have had) a disproportionate patient 
     percentage (as defined in section 1886(d)(5)(F)) of at least 
     30 percent, using the latest available data as estimated by 
     the Secretary; and
       ``(ii) provides assurances satisfactory to the Secretary 
     that the increase in payment under this paragraph shall be 
     used for purposes described in subparagraph (E).
       ``(C) Caps.--
       ``(i) Aggregate cap.--The aggregate amount of the payment 
     adjustment under this paragraph for a fiscal year shall not 
     exceed 5 percent of the estimated difference in the spending 
     that would occur for such fiscal year with and without 
     application of the adjustment factor described in paragraph 
     (3) and applied pursuant to paragraph (1).
       ``(ii) Hospital-specific limit.--The aggregate amount of 
     the payment adjustment for a hospital under this paragraph 
     shall not exceed the estimated difference in spending that 
     would occur for such fiscal year for such hospital with and 
     without application of the adjustment factor described in 
     paragraph (3) and applied pursuant to paragraph (1).
       ``(D) Form of payment.--The Secretary may make the 
     additional payments under this paragraph on a lump sum basis, 
     a periodic basis, a claim by claim basis, or otherwise.
       ``(E) Use of additional payment.--
       ``(i) In general.--Funding under this paragraph shall be 
     used by targeted hospitals for activities designed to address 
     the patient noncompliance issues that result in higher than 
     normal readmission rates, including transitional care 
     services described in clause (ii) and any or all of the other 
     activities described in clause (iii).
       ``(ii) Transitional care services.--The transitional care 
     services described in this clause are transitional care 
     services furnished by a qualified transitional care provider, 
     such as a nurse or other health professional, who meets 
     relevant experience and training requirements as specified by 
     the Secretary that support a beneficiary under this section 
     beginning on the date of an individual's admission to a 
     hospital for inpatient hospital services and ending at the 
     latest on the last day of the 90-day period beginning on the 
     date of the individual's discharge from the applicable 
     hospital. The Secretary shall determine and update services 
     to be included in transitional care services under this 
     clause as appropriate, based on evidence of their 
     effectiveness in reducing hospital readmissions and improving 
     health outcomes. Such services shall include the following:

       ``(I) Conduct of an assessment prior to discharge, which 
     assessment may include an assessment of the individual's 
     physical and mental condition, cognitive and functional 
     capacities, medication regimen and adherence, social and 
     environmental needs, and primary caregiver needs and 
     resources.
       ``(II) Development of a evidence-based plan of transitional 
     care for the individual developed after consultation with the 
     individual and the individual's primary caregiver and other 
     health team members, as appropriate. Such plan shall include 
     a list of current therapies prescribed, treatment goals and 
     may include other items or elements as determined by the 
     Secretary, such as identifying list of potential health risks 
     and future services for both the individual and any primary 
     caregiver.

       ``(iii) Other activities.--The other activities described 
     in this clause are the following:

       ``(I) Providing other care coordination services not 
     described under clause (ii).
       ``(II) Hiring translators and interpreters.
       ``(III) Increasing services offered by discharge planners.
       ``(IV) Ensuring that individuals receive a summary of care 
     and medication orders upon discharge.
       ``(V) Developing a quality improvement plan to assess and 
     remedy preventable readmission rates.
       ``(VI) Assigning appropriate follow-up care for discharged 
     individuals.
       ``(VII) Doing other activities as determined appropriate by 
     the Secretary.

       ``(F) GAO report on use of funds.--Not later than 3 years 
     after the date on which funds are first made available under 
     this paragraph, the Comptroller General of the United States 
     shall submit to Congress a report on the use of such funds. 
     Such report shall consider information on the effective uses 
     of such funds, how the uses of such funds affected hospital 
     readmission rates (including at 6 months post-discharge), 
     health outcomes and quality, reductions in expenditures under 
     this title and the experiences of beneficiaries, primary 
     caregivers, and providers, as well as any appropriate 
     recommendations.''.
       (b) Application to Critical Access Hospitals.--Section 
     1814(l) of the Social Security Act (42 U.S.C. 1395f(l)) is 
     amended--
       (1) in paragraph (5)--
       (A) by striking ``and'' at the end of subparagraph (C);
       (B) by striking the period at the end of subparagraph (D) 
     and inserting ``; and'';
       (C) by inserting at the end the following new subparagraph:
       ``(E) the methodology for determining the adjustment factor 
     under paragraph (5), including the determination of aggregate 
     payments for actual and expected readmissions, applicable 
     periods, applicable conditions and measures of 
     readmissions.''; and
       (D) by redesignating such paragraph as paragraph (6); and
       (2) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) The adjustment factor described in section 1886(p)(3) 
     shall apply to payments with respect to a critical access 
     hospital with respect to a cost reporting period beginning in 
     fiscal year 2012 and each subsequent fiscal year (after 
     application of paragraph (4) of this subsection) in a manner 
     similar to the manner in which such section applies with 
     respect to a fiscal year to an applicable hospital as 
     described in section 1886(p)(2).''.
       (c) Post Acute Care Providers.--
       (1) Interim policy.--
       (A) In general.--With respect to a readmission to an 
     applicable hospital or a critical access hospital (as 
     described in section 1814(l) of the Social Security Act) from 
     a post acute care provider (as defined in paragraph (3)) and 
     such a readmission is not governed by section 412.531 of 
     title 42, Code of Federal Regulations, if the claim submitted 
     by such a post-acute care provider under title XVIII of the 
     Social Security Act indicates that the individual was 
     readmitted to a hospital from such a post-acute care provider 
     or admitted from home and under the care of a home health 
     agency within 30 days of an initial discharge from an 
     applicable hospital or critical access hospital, the payment 
     under such title on such claim shall be the applicable 
     percent specified in subparagraph (B) of the payment that 
     would otherwise be made under the respective payment system 
     under such title for such post-acute care provider if this 
     subsection did not apply. In applying the previous sentence, 
     the Secretary shall exclude a period of 1 day from the date 
     the individual is first admitted to or under the care of the 
     post-acute care provider.
       (B) Applicable percent defined.--For purposes of 
     subparagraph (A), the applicable percent is--
       (i) for fiscal or rate year 2012 is 0.996;
       (ii) for fiscal or rate year 2013 is 0.993; and
       (iii) for fiscal or rate year 2014 is 0.99.
       (C) Effective date.--Subparagraph (1) shall apply to 
     discharges or services furnished (as the case may be with 
     respect to the applicable post acute care provider) on or 
     after the first day of the fiscal year or rate year, 
     beginning on or after October 1, 2011, with respect to the 
     applicable post acute care provider.
       (2) Development and application of performance measures.--
       (A) In general.--The Secretary of Health and Human Services 
     shall develop appropriate measures of readmission rates for 
     post acute care providers. The Secretary shall seek 
     endorsement of such measures by the entity with a contract 
     under section 1890(a) of the Social Security Act but may 
     adopt and apply such measures under this paragraph without 
     such an endorsement. The Secretary shall expand such measures 
     in a manner similar to the manner in which applicable 
     conditions are expanded under paragraph (5)(B) of section 
     1886(p) of the Social Security Act, as added by subsection 
     (a).
       (B) Implementation.--The Secretary shall apply, on or after 
     October 1, 2014, with respect to post acute care providers, 
     policies similar to the policies applied with respect to 
     applicable hospitals and critical access hospitals under the 
     amendments made by subsection (a). The provisions of 
     paragraph (1) shall apply with respect to any period on or 
     after October 1, 2014, and before such application date 
     described in the previous sentence in the same manner as such 
     provisions apply with respect to fiscal or rate year 2014.
       (C) Monitoring and penalties.--The provisions of paragraph 
     (7) of such section 1886(p) shall apply to providers under 
     this paragraph

[[Page H12675]]

     in the same manner as they apply to hospitals under such 
     section.
       (3) Definitions.--For purposes of this subsection:
       (A) Post acute care provider.--The term ``post acute care 
     provider'' means--
       (i) a skilled nursing facility (as defined in section 
     1819(a) of the Social Security Act);
       (ii) an inpatient rehabilitation facility (described in 
     section 1886(h)(1)(A) of such Act);
       (iii) a home health agency (as defined in section 1861(o) 
     of such Act); and
       (iv) a long term care hospital (as defined in section 
     1861(ccc) of such Act).
       (B) Other terms.--The terms ``applicable condition'', 
     ``applicable hospital'', and ``readmission'' have the 
     meanings given such terms in section 1886(p)(5) of the Social 
     Security Act, as added by subsection (a)(1).
       (d) Physicians.--
       (1) Study.--The Secretary of Health and Human Services 
     shall conduct a study to determine how the readmissions 
     policy described in the previous subsections could be applied 
     to physicians.
       (2) Considerations.--In conducting the study, the Secretary 
     shall consider approaches such as--
       (A) creating a new code (or codes) and payment amount (or 
     amounts) under the fee schedule in section 1848 of the Social 
     Security Act (in a budget neutral manner) for services 
     furnished by an appropriate physician who sees an individual 
     within the first week after discharge from a hospital or 
     critical access hospital;
       (B) developing measures of rates of readmission for 
     individuals treated by physicians;
       (C) applying a payment reduction for physicians who treat 
     the patient during the initial admission that results in a 
     readmission; and
       (D) methods for attributing payments or payment reductions 
     to the appropriate physician or physicians.
       (3) Report.--The Secretary shall issue a public report on 
     such study not later than the date that is one year after the 
     date of the enactment of this Act.
       (e) Funding.--For purposes of carrying out the provisions 
     of this section, in addition to funds otherwise available, 
     out of any funds in the Treasury not otherwise appropriated, 
     there are appropriated to the Secretary of Health and Human 
     Services for the Center for Medicare & Medicaid Services 
     Program Management Account $25,000,000 for each fiscal year 
     beginning with 2010. Amounts appropriated under this 
     subsection for a fiscal year shall be available until 
     expended.

     SEC. 1152. POST ACUTE CARE SERVICES PAYMENT REFORM PLAN AND 
                   BUNDLING PILOT PROGRAM.

       (a) Plan.--
       (1) In general.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     develop a detailed plan to reform payment for post acute care 
     (PAC) services under the Medicare program under title XVIII 
     of the Social Security Act (in this section referred to as 
     the ``Medicare program)''. The goals of such payment reform 
     are to--
       (A) improve the coordination, quality, and efficiency of 
     such services; and
       (B) improve outcomes for individuals such as reducing the 
     need for readmission to hospitals from providers of such 
     services.
       (2) Bundling post acute services.--The plan described in 
     paragraph (1) shall include detailed specifications for a 
     bundled payment for post acute services (in this section 
     referred to as the ``post acute care bundle''), and may 
     include other approaches determined appropriate by the 
     Secretary.
       (3) Post acute services.--For purposes of this section, the 
     term ``post acute services'' means services for which payment 
     may be made under the Medicare program that are furnished by 
     skilled nursing facilities, inpatient rehabilitation 
     facilities, long term care hospitals, hospital based 
     outpatient rehabilitation facilities and home health agencies 
     to an individual after discharge of such individual from a 
     hospital, and such other services determined appropriate by 
     the Secretary.
       (b) Details.--The plan described in subsection (a)(1) shall 
     include consideration of the following issues:
       (1) The nature of payments under a post acute care bundle, 
     including the type of provider or entity to whom payment 
     should be made, the scope of activities and services included 
     in the bundle, whether payment for physicians' services 
     should be included in the bundle, and the period covered by 
     the bundle.
       (2) Whether the payment should be consolidated with the 
     payment under the inpatient prospective system under section 
     1886 of the Social Security Act (in this section referred to 
     as MS-DRGs) or a separate payment should be established for 
     such bundle, and if a separate payment is established, 
     whether it should be made only upon use of post acute care 
     services or for every discharge.
       (3) Whether the bundle should be applied across all 
     categories of providers of inpatient services (including 
     critical access hospitals) and post acute care services or 
     whether it should be limited to certain categories of 
     providers, services, or discharges, such as high volume or 
     high cost MS-DRGs.
       (4) The extent to which payment rates could be established 
     to achieve offsets for efficiencies that could be expected to 
     be achieved with a bundle payment, whether such rates should 
     be established on a national basis or for different 
     geographic areas, should vary according to discharge, case 
     mix, outliers, and geographic differences in wages or other 
     appropriate adjustments, and how to update such rates.
       (5) The nature of protections needed for individuals under 
     a system of bundled payments to ensure that individuals 
     receive quality care, are furnished the level and amount of 
     services needed as determined by an appropriate assessment 
     instrument, are offered choice of provider, and the extent to 
     which transitional care services would improve quality of 
     care for individuals and the functioning of a bundled post-
     acute system.
       (6) The nature of relationships that may be required 
     between hospitals and providers of post acute care services 
     to facilitate bundled payments, including the application of 
     gainsharing, anti-referral, anti-kickback, and anti-trust 
     laws.
       (7) Quality measures that would be appropriate for 
     reporting by hospitals and post acute providers (such as 
     measures that assess changes in functional status and quality 
     measures appropriate for each type of post acute services 
     provider including how the reporting of such quality measures 
     could be coordinated with other reporting of such quality 
     measures by such providers otherwise required).
       (8) How cost-sharing for a post acute care bundle should be 
     treated relative to current rules for cost-sharing for 
     inpatient hospital, home health, skilled nursing facility, 
     and other services.
       (9) How other programmatic issues should be treated in a 
     post acute care bundle, including rules specific to various 
     types of post-acute providers such as the post-acute transfer 
     policy, three-day hospital stay to qualify for services 
     furnished by skilled nursing facilities, and the coordination 
     of payments and care under the Medicare program and the 
     Medicaid program.
       (10) Such other issues as the Secretary deems appropriate.
       (c) Consultations and Analysis.--
       (1) Consultation with stakeholders.--In developing the plan 
     under subsection (a)(1), the Secretary shall consult with 
     relevant stakeholders and shall consider experience with such 
     research studies and demonstrations that the Secretary 
     determines appropriate.
       (2) Analysis and data collection.--In developing such plan, 
     the Secretary shall--
       (A) analyze the issues described in subsection (b) and 
     other issues that the Secretary determines appropriate;
       (B) analyze the impacts (including geographic impacts) of 
     post acute service reform approaches, including bundling of 
     such services on individuals, hospitals, post acute care 
     providers, and physicians;
       (C) use existing data (such as data submitted on claims) 
     and collect such data as the Secretary determines are 
     appropriate to develop such plan required in this section; 
     and
       (D) if patient functional status measures are appropriate 
     for the analysis, to the extent practical, build upon the 
     CARE tool being developed pursuant to section 5008 of the 
     Deficit Reduction Act of 2005.
       (d) Administration.--
       (1) Funding.--For purposes of carrying out the provisions 
     of this section, in addition to funds otherwise available, 
     out of any funds in the Treasury not otherwise appropriated, 
     there are appropriated to the Secretary for the Center for 
     Medicare & Medicaid Services Program Management Account 
     $15,000,000 for each of the fiscal years 2010 through 2012. 
     Amounts appropriated under this paragraph for a fiscal year 
     shall be available until expended.
       (2) Expedited data collection.--Chapter 35 of title 44, 
     United States Code shall not apply to this section.
       (e) Public Reports.--
       (1) Interim reports.--The Secretary shall issue interim 
     public reports on a periodic basis on the plan described in 
     subsection (a)(1), the issues described in subsection (b), 
     and impact analyses as the Secretary determines appropriate.
       (2) Final report.--Not later than the date that is 3 years 
     after the date of the enactment of this Act, the Secretary 
     shall issue a final public report on such plan, including 
     analysis of issues described in subsection (b) and impact 
     analyses.
       (f) Conversion of Acute Care Episode Demonstration to Pilot 
     Program and Expansion to Include Post Acute Services.--
       (1) In general.--Part E of title XVIII of the Social 
     Security Act is amended by inserting after section 1866C the 
     following new section:


 ``conversion of acute care episode demonstration to pilot program and 
                expansion to include post acute services

       ``Sec. 1866D.  (a) Conversion and Expansion.--
       ``(1) In general.--By not later than January 1, 2011, the 
     Secretary shall, for the purpose of promoting the use of 
     bundled payments to promote efficient, coordinated, and high 
     quality delivery of care--
       ``(A) convert the acute care episode demonstration program 
     conducted under section 1866C to a pilot program; and
       ``(B) subject to subsection (c), expand such program as so 
     converted to include post acute services and such other 
     services the Secretary determines to be appropriate, which 
     may include transitional services.
       ``(2) Bundled payment structures.--
       ``(A) In general.--In carrying out paragraph (1), the 
     Secretary may apply bundled payments with respect to--
       ``(i) hospitals and physicians;
       ``(ii) hospitals and post-acute care providers;

[[Page H12676]]

       ``(iii) hospitals, physicians, and post-acute care 
     providers; or
       ``(iv) combinations of post-acute providers.
       ``(B) Further application.--
       ``(i) In general.--In carrying out paragraph (1), the 
     Secretary shall apply bundled payments in a manner so as to 
     include collaborative care networks and continuing care 
     hospitals.
       ``(ii) Collaborative care network defined.--For purposes of 
     this subparagraph, the term `collaborative care network' 
     means a consortium of health care providers that provides a 
     comprehensive range of coordinated and integrated health care 
     services to low-income patient populations (including the 
     uninsured) which may include coordinated and comprehensive 
     care by safety net providers to reduce any unnecessary use of 
     items and services furnished in emergency departments, manage 
     chronic conditions, improve quality and efficiency of care, 
     increase preventive services, and promote adherence to post-
     acute and follow-up care plans.
       ``(iii) Continuing care hospital defined.--For purposes of 
     this subparagraph, the term `continuing care hospital' means 
     an entity that has demonstrated the ability to meet patient 
     care and patient safety standards and that provides under 
     common management the medical and rehabilitation services 
     provided in inpatient rehabilitation hospitals and units (as 
     defined in section 1886(d)(1)(B)(ii)), long-term care 
     hospitals (as defined in section 1886(d)(1)(B)(iv)(I)), and 
     skilled nursing facilities (as defined in section 1819(a)) 
     that are located in a hospital described in section 1886(d).
       ``(b) Scope.--The Secretary shall set specific goals for 
     the number of acute and post-acute bundling test sites under 
     the pilot program to ensure that over time the pilot program 
     is of sufficient size and scope to--
       ``(1) test the approaches under the pilot program in a 
     variety of settings, including urban, rural, and underserved 
     areas;
       ``(2) include geographic areas and additional conditions 
     that account for significant program spending, as defined by 
     the Secretary; and
       ``(3) subject to subsection (d), disseminate the pilot 
     program rapidly on a national basis.
     To the extent that the Secretary finds inpatient and post 
     acute care bundling to be successful in improving quality and 
     reducing costs, the Secretary shall implement such mechanisms 
     and reforms under the pilot program on as large a geographic 
     scale as practical and economical, consistent with subsection 
     (e). Nothing in this subsection shall be construed as 
     limiting the number of hospital and physician groups or the 
     number of hospital and post-acute provider groups that may 
     participate in the pilot program.
       ``(c) Limitation.--The Secretary shall only expand the 
     pilot program under subsection (a) if the Secretary finds 
     that--
       ``(1) the demonstration program under section 1866C and 
     pilot program under this section maintain or increase the 
     quality of care received by individuals enrolled under this 
     title; and
       ``(2) such demonstration program and pilot program reduce 
     program expenditures and, based on the certification under 
     subsection (d), that the expansion of such pilot program 
     would result in estimated spending that would be less than 
     what spending would otherwise be in the absence of this 
     section.
       ``(d) Certification.--For purposes of subsection (c), the 
     Chief Actuary of the Centers for Medicare & Medicaid Services 
     shall certify whether expansion of the pilot program under 
     this section would result in estimated spending that would be 
     less than what spending would otherwise be in the absence of 
     this section.
       ``(e) Voluntary Participation.--Nothing in this paragraph 
     shall be construed as requiring the participation of an 
     entity in the pilot program under this section.
       ``(f) Evaluation on Cost and Quality of Care.--The 
     Secretary shall conduct an evaluation of the pilot program 
     under subsection (a) to study the effect of such program on 
     costs and quality of care. The findings of such evaluation 
     shall be included in the final report required under section 
     1152(e)(2) of the Affordable Health Care for America Act.
       ``(g) Study of Additional Bundling and Episode-based 
     Payment for Physicians' Services.--
       ``(1) In general.--The Secretary shall provide for a study 
     of and development of a plan for testing additional ways to 
     increase bundling of payments for physicians in connection 
     with an episode of care, such as in connection with 
     outpatient hospital services or services rendered in 
     physicians' offices, other than those provided under the 
     pilot program.
       ``(2) Application.--The Secretary may implement such a plan 
     through a demonstration program.''.
       (2) Conforming amendment.--Section 1866C(b) of the Social 
     Security Act (42 U.S.C. 1395cc-3(b)) is amended by striking 
     ``The Secretary'' and inserting ``Subject to section 1866D, 
     the Secretary''.

     SEC. 1153. HOME HEALTH PAYMENT UPDATE FOR 2010.

       Section 1895(b)(3)(B)(ii) of the Social Security Act (42 
     U.S.C. 1395fff(b)(3)(B)(ii)) is amended--
       (1) in subclause (IV), by striking ``and'';
       (2) by redesignating subclause (V) as subclause (VII); and
       (3) by inserting after subclause (IV) the following new 
     subclauses:

       ``(V) 2007, 2008, and 2009, subject to clause (v), the home 
     health market basket percentage increase;
       ``(VI) 2010, subject to clause (v), 0 percent; and''.

     SEC. 1154. PAYMENT ADJUSTMENTS FOR HOME HEALTH CARE.

       (a) Acceleration of Adjustment for Case Mix Changes.--
     Section 1895(b)(3)(B) of the Social Security Act (42 U.S.C. 
     1395fff(b)(3)(B)) is amended--
       (1) in clause (iv), by striking ``Insofar as'' and 
     inserting ``Subject to clause (vi), insofar as''; and
       (2) by adding at the end the following new clause:
       ``(vi) Special rule for case mix changes for 2011.--

       ``(I) In general.--With respect to the case mix adjustments 
     established in section 484.220(a) of title 42, Code of 
     Federal Regulations, the Secretary shall apply, in 2010, the 
     adjustment established in paragraph (3) of such section for 
     2011, in addition to applying the adjustment established in 
     paragraph (2) for 2010.
       ``(II) Construction.--Nothing in this clause shall be 
     construed as limiting the amount of adjustment for case mix 
     for 2010 or 2011 if more recent data indicate an appropriate 
     adjustment that is greater than the amount established in the 
     section described in subclause (I).''.

       (b) Rebasing Home Health Prospective Payment Amount.--
     Section 1895(b)(3)(A) of the Social Security Act (42 U.S.C. 
     1395fff(b)(3)(A)) is amended--
       (1) in clause (i)--
       (A) in subclause (III), by inserting ``and before 2011'' 
     after ``after the period described in subclause (II)''; and
       (B) by inserting after subclause (III) the following new 
     subclauses:

       ``(IV) Subject to clause (iii)(I), for 2011, such amount 
     (or amounts) shall be adjusted by a uniform percentage 
     determined to be appropriate by the Secretary based on 
     analysis of factors such as changes in the average number and 
     types of visits in an episode, the change in intensity of 
     visits in an episode, growth in cost per episode, and other 
     factors that the Secretary considers to be relevant.
       ``(V) Subject to clause (iii)(II), for a year after 2011, 
     such a amount (or amounts) shall be equal to the amount (or 
     amounts) determined under this clause for the previous year, 
     updated under subparagraph (B).''; and

       (2) by adding at the end the following new clause:
       ``(iii) Special rule in case of inability to effect timely 
     rebasing.--

       ``(I) Application of proxy amount for 2011.--If the 
     Secretary is not able to compute the amount (or amounts) 
     under clause (i)(IV) so as to permit, on a timely basis, the 
     application of such clause for 2011, the Secretary shall 
     substitute for such amount (or amounts) 95 percent of the 
     amount (or amounts) that would otherwise be specified under 
     clause (i)(III) if it applied for 2011.
       ``(II) Adjustment for subsequent years based on data.--If 
     the Secretary applies subclause (I), the Secretary before 
     July 1, 2011, shall compare the amount (or amounts) applied 
     under such subclause with the amount (or amounts) that should 
     have been applied under clause (i)(IV). The Secretary shall 
     decrease or increase the prospective payment amount (or 
     amounts) under clause (i)(V) for 2012 (or, at the Secretary's 
     discretion, over a period of several years beginning with 
     2012) by the amount (if any) by which the amount (or amounts) 
     applied under subclause (I) is greater or less, respectively, 
     than the amount (or amounts) that should have been applied 
     under clause (i)(IV).''.

     SEC. 1155. INCORPORATING PRODUCTIVITY IMPROVEMENTS INTO 
                   MARKET BASKET UPDATE FOR HOME HEALTH SERVICES.

       (a) In General.--Section 1895(b)(3)(B) of the Social 
     Security Act (42 U.S.C. 1395fff(b)(3)(B)) is amended--
       (1) in clause (iii), by inserting ``(including being 
     subject to the productivity adjustment described in section 
     1886(b)(3)(B)(iii)(II))'' after ``in the same manner''; and
       (2) in clause (v)(I), by inserting ``(but not below 0)'' 
     after ``reduced''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to home health market basket percentage increases 
     for years beginning with 2011.

     SEC. 1155A. MEDPAC STUDY ON VARIATION IN HOME HEALTH MARGINS.

       (a) In General.--The Medicare Payment Advisory Commission 
     shall conduct a study regarding variation in performance of 
     home health agencies in an effort to explain variation in 
     Medicare margins for such agencies. Such study shall include 
     an examination of at least the following issues:
       (1) The demographic characteristics of individuals served 
     and the geographic distribution associated with 
     transportation costs.
       (2) The characteristics of such agencies, such as whether 
     such agencies operate 24 hours each day, provide charity 
     care, or are part of an integrated health system.
       (3) The socio-economic status of individuals served, such 
     as the proportion of such individuals who are dually eligible 
     for Medicare and Medicaid benefits.
       (4) The presence of severe and or chronic disease or 
     disability in individuals served, as evidenced by multiple 
     discontinuous home health episodes with a high number of 
     visits per episode.
       (5) The differences in services provided, such as therapy 
     and non-therapy services.
       (b) Report.--Not later than June 1, 2011, the Commission 
     shall submit a report to the Congress on the results of the 
     study conducted under subsection (a) and shall include

[[Page H12677]]

     in the report the Commission's conclusions and 
     recommendations, if appropriate, regarding each of the issues 
     described in paragraphs (1), (2) and (3) of such subsection.

     SEC. 1155B. PERMITTING HOME HEALTH AGENCIES TO ASSIGN THE 
                   MOST APPROPRIATE SKILLED SERVICE TO MAKE THE 
                   INITIAL ASSESSMENT VISIT UNDER A MEDICARE HOME 
                   HEALTH PLAN OF CARE FOR REHABILITATION CASES.

       (a) In General.--Notwithstanding section 484.55(a)(2) of 
     title 42 of the Code of Federal Regulations or any other 
     provision of law, a home health agency may determine the most 
     appropriate skilled therapist to make the initial assessment 
     visit for an individual who is referred (and may be eligible) 
     for home health services under title XVIII of the Social 
     Security Act but who does not require skilled nursing care as 
     long as the skilled service (for which that therapist is 
     qualified to provide the service) is included as part of the 
     plan of care for home health services for such individual.
       (b) Rule of Construction.--Nothing in subsection (a) shall 
     be construed to provide for initial eligibility for coverage 
     of home health services under title XVIII of the Social 
     Security Act on the basis of a need for occupational therapy.

     SEC. 1156. LIMITATION ON MEDICARE EXCEPTIONS TO THE 
                   PROHIBITION ON CERTAIN PHYSICIAN REFERRALS MADE 
                   TO HOSPITALS.

       (a) In General.--Section 1877 of the Social Security Act 
     (42 U.S.C. 1395nn) is amended--
       (1) in subsection (d)(2)--
       (A) in subparagraph (A), by striking ``and'' at the end;
       (B) in subparagraph (B), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) in the case where the entity is a hospital, the 
     hospital meets the requirements of paragraph (3)(D).'';
       (2) in subsection (d)(3)--
       (A) in subparagraph (B), by striking ``and'' at the end;
       (B) in subparagraph (C), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(D) the hospital meets the requirements described in 
     subsection (i)(1).'';
       (3) by amending subsection (f) to read as follows:
       ``(f) Reporting and Disclosure Requirements.--
       ``(1) In general.--Each entity providing covered items or 
     services for which payment may be made under this title shall 
     provide the Secretary with the information concerning the 
     entity's ownership, investment, and compensation 
     arrangements, including--
       ``(A) the covered items and services provided by the 
     entity, and
       ``(B) the names and unique physician identification numbers 
     of all physicians with an ownership or investment interest 
     (as described in subsection (a)(2)(A)), or with a 
     compensation arrangement (as described in subsection 
     (a)(2)(B)), in the entity, or whose immediate relatives have 
     such an ownership or investment interest or who have such a 
     compensation relationship with the entity.
     Such information shall be provided in such form, manner, and 
     at such times as the Secretary shall specify. The requirement 
     of this subsection shall not apply to designated health 
     services provided outside the United States or to entities 
     which the Secretary determines provide services for which 
     payment may be made under this title very infrequently.
       ``(2) Requirements for hospitals with physician ownership 
     or investment.--In the case of a hospital that meets the 
     requirements described in subsection (i)(1), the hospital 
     shall--
       ``(A) submit to the Secretary an initial report, and 
     periodic updates at a frequency determined by the Secretary, 
     containing a detailed description of the identity of each 
     physician owner and physician investor and any other owners 
     or investors of the hospital;
       ``(B) require that any referring physician owner or 
     investor discloses to the individual being referred, by a 
     time that permits the individual to make a meaningful 
     decision regarding the receipt of services, as determined by 
     the Secretary, the ownership or investment interest, as 
     applicable, of such referring physician in the hospital; and
       ``(C) disclose the fact that the hospital is partially or 
     wholly owned by one or more physicians or has one or more 
     physician investors--
       ``(i) on any public website for the hospital; and
       ``(ii) in any public advertising for the hospital.
     The information to be reported or disclosed under this 
     paragraph shall be provided in such form, manner, and at such 
     times as the Secretary shall specify. The requirements of 
     this paragraph shall not apply to designated health services 
     furnished outside the United States or to entities which the 
     Secretary determines provide services for which payment may 
     be made under this title very infrequently.
       ``(3) Publication of information.--The Secretary shall 
     publish, and periodically update, the information submitted 
     by hospitals under paragraph (2)(A) on the public Internet 
     website of the Centers for Medicare & Medicaid Services.'';
       (4) by amending subsection (g)(5) to read as follows:
       ``(5) Failure to report or disclose information.--
       ``(A) Reporting.--Any person who is required, but fails, to 
     meet a reporting requirement of paragraphs (1) and (2)(A) of 
     subsection (f) is subject to a civil money penalty of not 
     more than $10,000 for each day for which reporting is 
     required to have been made.
       ``(B) Disclosure.--Any physician who is required, but 
     fails, to meet a disclosure requirement of subsection 
     (f)(2)(B) or a hospital that is required, but fails, to meet 
     a disclosure requirement of subsection (f)(2)(C) is subject 
     to a civil money penalty of not more than $10,000 for each 
     case in which disclosure is required to have been made.
       ``(C) Application.--The provisions of section 1128A (other 
     than the first sentence of subsection (a) and other than 
     subsection (b)) shall apply to a civil money penalty under 
     subparagraphs (A) and (B) in the same manner as such 
     provisions apply to a penalty or proceeding under section 
     1128A(a).''; and
       (5) by adding at the end the following new subsection:
       ``(i) Requirements To Qualify for Rural Provider and 
     Hospital Ownership Exceptions to Self-referral Prohibition.--
       ``(1) Requirements described.--For purposes of subsection 
     (d)(3)(D), the requirements described in this paragraph are 
     as follows:
       ``(A) Provider agreement.--The hospital had--
       ``(i) physician ownership or investment on January 1, 2009; 
     and
       ``(ii) a provider agreement under section 1866 in effect on 
     such date.
       ``(B) Prohibition on physician ownership or investment.--
     The percentage of the total value of the ownership or 
     investment interests held in the hospital, or in an entity 
     whose assets include the hospital, by physician owners or 
     investors in the aggregate does not exceed such percentage as 
     of the date of enactment of this subsection.
       ``(C) Prohibition on expansion of facility capacity.--
     Except as provided in paragraph (2), the number of operating 
     rooms, procedure rooms, or beds of the hospital at any time 
     on or after the date of the enactment of this subsection are 
     no greater than the number of operating rooms, procedure 
     rooms, or beds, respectively, as of such date.
       ``(D) Ensuring bona fide ownership and investment.--
       ``(i) Any ownership or investment interests that the 
     hospital offers to a physician are not offered on more 
     favorable terms than the terms offered to a person who is not 
     in a position to refer patients or otherwise generate 
     business for the hospital.
       ``(ii) The hospital (or any investors in the hospital) does 
     not directly or indirectly provide loans or financing for any 
     physician owner or investor in the hospital.
       ``(iii) The hospital (or any investors in the hospital) 
     does not directly or indirectly guarantee a loan, make a 
     payment toward a loan, or otherwise subsidize a loan, for any 
     physician owner or investor or group of physician owners or 
     investors that is related to acquiring any ownership or 
     investment interest in the hospital.
       ``(iv) Ownership or investment returns are distributed to 
     each owner or investor in the hospital in an amount that is 
     directly proportional to the ownership or investment interest 
     of such owner or investor in the hospital.
       ``(v) The investment interest of the owner or investor is 
     directly proportional to the owner's or investor's capital 
     contributions made at the time the ownership or investment 
     interest is obtained.
       ``(vi) Physician owners and investors do not receive, 
     directly or indirectly, any guaranteed receipt of or right to 
     purchase other business interests related to the hospital, 
     including the purchase or lease of any property under the 
     control of other owners or investors in the hospital or 
     located near the premises of the hospital.
       ``(vii) The hospital does not offer a physician owner or 
     investor the opportunity to purchase or lease any property 
     under the control of the hospital or any other owner or 
     investor in the hospital on more favorable terms than the 
     terms offered to a person that is not a physician owner or 
     investor.
       ``(viii) The hospital does not condition any physician 
     ownership or investment interests either directly or 
     indirectly on the physician owner or investor making or 
     influencing referrals to the hospital or otherwise generating 
     business for the hospital.
       ``(E) Patient safety.--In the case of a hospital that does 
     not offer emergency services, the hospital has the capacity 
     to--
       ``(i) provide assessment and initial treatment for medical 
     emergencies; and
       ``(ii) if the hospital lacks additional capabilities 
     required to treat the emergency involved, refer and transfer 
     the patient with the medical emergency to a hospital with the 
     required capability.
       ``(F) Limitation on application to certain converted 
     facilities.--The hospital was not converted from an 
     ambulatory surgical center to a hospital on or after the date 
     of enactment of this subsection.
       ``(2) Exception to prohibition on expansion of facility 
     capacity.--
       ``(A) Process.--
       ``(i) Establishment.--The Secretary shall establish and 
     implement a process under which a hospital may apply for an 
     exception from the requirement under paragraph (1)(C).
       ``(ii) Opportunity for community input.--The process under 
     clause (i) shall provide persons and entities in the 
     community in

[[Page H12678]]

     which the hospital applying for an exception is located with 
     the opportunity to provide input with respect to the 
     application.
       ``(iii) Timing for implementation.--The Secretary shall 
     implement the process under clause (i) on the date that is 
     one month after the promulgation of regulations described in 
     clause (iv).
       ``(iv) Regulations.--Not later than the first day of the 
     month beginning 18 months after the date of the enactment of 
     this subsection, the Secretary shall promulgate regulations 
     to carry out the process under clause (i). The Secretary may 
     issue such regulations as interim final regulations.
       ``(B) Frequency.--The process described in subparagraph (A) 
     shall permit a hospital to apply for an exception up to once 
     every 2 years.
       ``(C) Permitted increase.--
       ``(i) In general.--Subject to clause (ii) and subparagraph 
     (D), a hospital granted an exception under the process 
     described in subparagraph (A) may increase the number of 
     operating rooms, procedure rooms, or beds of the hospital 
     above the baseline number of operating rooms, procedure 
     rooms, or beds, respectively, of the hospital (or, if the 
     hospital has been granted a previous exception under this 
     paragraph, above the number of operating rooms, procedure 
     rooms, or beds, respectively, of the hospital after the 
     application of the most recent increase under such an 
     exception).
       ``(ii) 100 percent increase limitation.--The Secretary 
     shall not permit an increase in the number of operating 
     rooms, procedure rooms, or beds of a hospital under clause 
     (i) to the extent such increase would result in the number of 
     operating rooms, procedure rooms, or beds of the hospital 
     exceeding 200 percent of the baseline number of operating 
     rooms, procedure rooms, or beds of the hospital.
       ``(iii) Baseline number of operating rooms, procedure 
     rooms, or beds.--In this paragraph, the term `baseline number 
     of operating rooms, procedure rooms, or beds' means the 
     number of operating rooms, procedure rooms, or beds of a 
     hospital as of the date of enactment of this subsection.
       ``(D) Increase limited to facilities on the main campus of 
     the hospital.--Any increase in the number of operating rooms, 
     procedure rooms, or beds of a hospital pursuant to this 
     paragraph may only occur in facilities on the main campus of 
     the hospital.
       ``(E) Conditions for approval of an increase in facility 
     capacity.--The Secretary may grant an exception under the 
     process described in subparagraph (A) only to a hospital 
     described in subparagraph (F) or a hospital--
       ``(i) that is located in a county in which the percentage 
     increase in the population during the most recent 5-year 
     period for which data are available is estimated to be at 
     least 150 percent of the percentage increase in the 
     population growth of the State in which the hospital is 
     located during that period, as estimated by Bureau of the 
     Census and available to the Secretary;
       ``(ii) whose annual percent of total inpatient admissions 
     that represent inpatient admissions under the program under 
     title XIX is estimated to be equal to or greater than the 
     average percent with respect to such admissions for all 
     hospitals located in the county in which the hospital is 
     located;
       ``(iii) that does not discriminate against beneficiaries of 
     Federal health care programs and does not permit physicians 
     practicing at the hospital to discriminate against such 
     beneficiaries;
       ``(iv) that is located in a State in which the average bed 
     capacity in the State is estimated to be less than the 
     national average bed capacity;
       ``(v) that has an average bed occupancy rate that is 
     estimated to be greater than the average bed occupancy rate 
     in the State in which the hospital is located; and
       ``(vi) that meets other conditions as determined by the 
     Secretary.
       ``(F) Special rule for a high medicaid facility.--A 
     hospital described in this subparagraph is a hospital that--
       ``(i) with respect to each of the 3 most recent cost 
     reporting periods for which data are available, has an annual 
     percent of total inpatient admissions that represent 
     inpatient admissions under the program under title XIX that 
     is determined by the Secretary to be greater than such 
     percent with respect to such admissions for any other 
     hospital located in the county in which the hospital is 
     located; and
       ``(ii) meets the conditions described in clauses (iii) and 
     (vi) of subparagraph (E).
       ``(G) Procedure rooms.--In this subsection, the term 
     `procedure rooms' includes rooms in which catheterizations, 
     angiographies, angiograms, and endoscopies are furnished, but 
     such term shall not include emergency rooms or departments 
     (except for rooms in which catheterizations, angiographies, 
     angiograms, and endoscopies are furnished).
       ``(H) Publication of final decisions.--Not later than 120 
     days after receiving a complete application under this 
     paragraph, the Secretary shall publish on the public Internet 
     website of the Centers for Medicare & Medicaid Services the 
     final decision with respect to such application.
       ``(I) Limitation on review.--There shall be no 
     administrative or judicial review under section 1869, section 
     1878, or otherwise of the exception process under this 
     paragraph, including the establishment of such process, and 
     any determination made under such process.
       ``(3) Physician owner or investor defined.--For purposes of 
     this subsection and subsection (f)(2), the term `physician 
     owner or investor' means a physician (or an immediate family 
     member of such physician) with a direct or an indirect 
     ownership or investment interest in the hospital.
       ``(4) Patient safety requirement.--In the case of a 
     hospital to which the requirements of paragraph (1) apply, 
     insofar as the hospital admits a patient and does not have 
     any physician available on the premises 24 hours per day, 7 
     days per week, before admitting the patient--
       ``(A) the hospital shall disclose such fact to the patient; 
     and
       ``(B) following such disclosure, the hospital shall receive 
     from the patient a signed acknowledgment that the patient 
     understands such fact.
       ``(5) Clarification.--Nothing in this subsection shall be 
     construed as preventing the Secretary from terminating a 
     hospital's provider agreement if the hospital is not in 
     compliance with regulations pursuant to section 1866.''.
       (b) Verifying Compliance.--The Secretary of Health and 
     Human Services shall establish policies and procedures to 
     verify compliance with the requirements described in 
     subsections (i)(1) and (i)(4) of section 1877 of the Social 
     Security Act, as added by subsection (a)(5). The Secretary 
     may use unannounced site reviews of hospitals and audits to 
     verify compliance with such requirements.
       (c) Implementation.--
       (1) Funding.--For purposes of carrying out the amendments 
     made by subsection (a) and the provisions of subsection (b), 
     in addition to funds otherwise available, out of any funds in 
     the Treasury not otherwise appropriated there are 
     appropriated to the Secretary of Health and Human Services 
     for the Centers for Medicare & Medicaid Services Program 
     Management Account $5,000,000 for each fiscal year beginning 
     with fiscal year 2010. Amounts appropriated under this 
     paragraph for a fiscal year shall be available until 
     expended.
       (2) Administration.--Chapter 35 of title 44, United States 
     Code, shall not apply to the amendments made by subsection 
     (a) and the provisions of subsection (b).

     SEC. 1157. INSTITUTE OF MEDICINE STUDY OF GEOGRAPHIC 
                   ADJUSTMENT FACTORS UNDER MEDICARE.

       (a) In General.--The Secretary of Health and Human Services 
     shall enter into a contract with the Institute of Medicine of 
     the National Academy of Science to conduct a comprehensive 
     empirical study, and provide recommendations as appropriate, 
     on the accuracy of the geographic adjustment factors 
     established under sections 1848(e) and 1886(d)(3)(E) of the 
     Social Security Act (42 U.S.C. 1395w-4(e), 1395ww(d)(3)(E)).
       (b) Matters Included.--Such study shall include an 
     evaluation and assessment of the following with respect to 
     such adjustment factors:
       (1) Empirical validity of the adjustment factors.
       (2) Methodology used to determine the adjustment factors.
       (3) Measures used for the adjustment factors, taking into 
     account--
       (A) timeliness of data and frequency of revisions to such 
     data;
       (B) sources of data and the degree to which such data are 
     representative of costs; and
       (C) operational costs of providers who participate in 
     Medicare.
       (c) Evaluation.--Such study shall, within the context of 
     the United States health care marketplace, evaluate and 
     consider the following:
       (1) The effect of the adjustment factors on the level and 
     distribution of the health care workforce and resources, 
     including--
       (A) recruitment and retention that takes into account 
     workforce mobility between urban and rural areas;
       (B) ability of hospitals and other facilities to maintain 
     an adequate and skilled workforce; and
       (C) patient access to providers and needed medical 
     technologies.
       (2) The effect of the adjustment factors on population 
     health and quality of care.
       (3) The effect of the adjustment factors on the ability of 
     providers to furnish efficient, high value care.
       (d) Report.--The contract under subsection (a) shall 
     provide for the Institute of Medicine to submit, not later 
     than 1 year after the date of the enactment of this Act, to 
     the Secretary and the Congress a report containing results 
     and recommendations of the study conducted under this 
     section.
       (e) Funding.--There are authorized to be appropriated to 
     carry out this section such sums as may be necessary.

     SEC. 1158. REVISION OF MEDICARE PAYMENT SYSTEMS TO ADDRESS 
                   GEOGRAPHIC INEQUITIES.

       (a) Revision of Medicare Payment Systems.--Taking into 
     account the recommendations described in the report under 
     section 1157, and notwithstanding the geographic adjustments 
     that would otherwise apply under section 1848(e) and section 
     1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395w-
     4(e), 1395ww(d)(3)(E)), the Secretary of Health and Human 
     Services shall include in proposed rules applicable to the 
     rulemaking cycle for payment systems for physicians' services 
     and inpatient hospital services under sections 1848 and 
     section 1886(d) of such Act, respectively, proposals (as the 
     Secretary determines to be appropriate) to revise the 
     geographic adjustment factors used in such systems. Such 
     proposals'

[[Page H12679]]

     rules shall be contained in the next rulemaking cycle 
     following the submission to the Secretary of the report 
     described in section 1157.
       (b) Payment Adjustments.--
       (1) Funding for improvements.--For years before 2014, the 
     Secretary shall ensure that the additional expenditures 
     resulting from the implementation of the provisions of this 
     section, as estimated by the Secretary, do not exceed 
     $8,000,000,000, and do not exceed half of such amount in any 
     payment year.
       (2) Hold harmless.--In carrying out this subsection--
       (A) for payment years before 2014, the Secretary shall not 
     reduce the geographic adjustment below the factor that 
     applied for such payment system in the payment year before 
     such changes; and
       (B) for payment years beginning with 2014, the Secretary 
     shall implement the geographic adjustment in a manner that 
     does not result in any net change in aggregate expenditures 
     under title XVIII of the Social Security Act from the amount 
     of such expenditures that the Secretary estimates would have 
     occurred if no geographic adjustment had occurred under this 
     section.
       (c) Medicare Improvement Fund.--
       (1) Amounts in the Medicare Improvement Fund under section 
     1898 of the Social Security Act, as amended by paragraph (2), 
     shall be available to the Secretary to make changes to the 
     geographic adjustments factors as described in subsections 
     (a) and (b) with respect to services furnished before January 
     1, 2014. No more than one-half of such amounts shall be 
     available with respect to services furnished in any one 
     payment year.
       (2) Section 1898(b) of the Social Security Act (42 U.S.C. 
     1395iii(b)) is amended--
       (A) by amending paragraph (1)(A) to read as follows:
       ``(A) the period beginning with fiscal year 2011 and ending 
     with fiscal year 2019, $8,000,000,000; and''; and
       (B) by adding at the end the following new paragraph:
       ``(5) Adjustment for underfunding.--For fiscal year 2014 or 
     a subsequent fiscal year specified by the Secretary, the 
     amount available to the fund under subsection (a) shall be 
     increased by the Secretary's estimate of the amount (based on 
     data on actual expenditures) by which--
       ``(A) the additional expenditures resulting from the 
     implementation of subsection (a) of section 1158 of the 
     Affordable Health Care for America Act for the period before 
     fiscal year 2014, is less than
       ``(B) the maximum amount of funds available under 
     subsection (a) of such section for funding for such 
     expenditures.''.

     SEC. 1159. INSTITUTE OF MEDICINE STUDY OF GEOGRAPHIC 
                   VARIATION IN HEALTH CARE SPENDING AND PROMOTING 
                   HIGH-VALUE HEALTH CARE.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section and the succeeding section referred to as 
     the ``Secretary'') shall enter into an agreement with the 
     Institute of Medicine of the National Academies (referred to 
     in this section as the ``Institute'') to conduct a study on 
     geographic variation and growth in volume and intensity of 
     services in per capita health care spending among the 
     Medicare, Medicaid, privately insured and uninsured 
     populations. Such study may draw on recent relevant reports 
     of the Institute and shall include each of the following:
       (1) An evaluation of the extent and range of such variation 
     using various units of geographic measurement, including 
     micro areas within larger areas.
       (2) An evaluation of the extent to which geographic 
     variation can be attributed to differences in input prices; 
     health status; practice patterns; access to medical services; 
     supply of medical services; socio-economic factors, including 
     race, ethnicity, gender, age, income and educational status; 
     and provider and payer organizational models.
       (3) An evaluation of the extent to which variations in 
     spending are correlated with patient access to care, 
     insurance status, distribution of health care resources, 
     health care outcomes, and consensus-based measures of health 
     care quality.
       (4) An evaluation of the extent to which variation can be 
     attributed to physician and practitioner discretion in making 
     treatment decisions, and the degree to which discretionary 
     treatment decisions are made that could be characterized as 
     different from the best available medical evidence.
       (5) An evaluation of the extent to which variation can be 
     attributed to patient preferences and patient compliance with 
     treatment protocols.
       (6) An assessment of the degree to which variation cannot 
     be explained by empirical evidence.
       (7) For Medicare beneficiaries, An evaluation of the extent 
     to which variations in spending are correlated with insurance 
     status prior to enrollment in the Medicare program under 
     title XVIII of the Social Security Act, and 
     institutionalization status; whether beneficiaries are dually 
     eligible for the Medicare program and Medicaid under title 
     XIX of such Act; and whether beneficiaries are enrolled in 
     fee-for-service Medicare or Medicare Advantage.
       (8) An evaluation of such other factors as the Institute 
     deems appropriate.
     The Institute shall conduct public hearings and provide an 
     opportunity for comments prior to completion of the reports 
     under subsection (e).
       (b) Recommendations.--Taking into account the findings 
     under subsection (a) and the changes to the payment systems 
     made by this Act, the Institute shall recommend changes to 
     payment for items and services under parts A and B of title 
     XVIII of the Social Security Act, for addressing variation in 
     Medicare per capita spending for items and services (not 
     including add-ons for graduate medical education, 
     disproportionate share payments, and health information 
     technology, as specified in sections 1886(d)(5)(F), 
     1886(d)(5)(B), 1886(h), 1848(o), and 1886(n), respectively, 
     of such Act) by promoting high-value care (as defined in 
     subsection (f)), with particular attention to high-volume, 
     high-cost conditions. In making such recommendations, the 
     Institute shall consider each of the following:
       (1) Measurement and reporting on quality and population 
     health.
       (2) Reducing fragmented and duplicative care.
       (3) Promoting the practice of evidence-based medicine.
       (4) Empowering patients to make value-based care decisions.
       (5) Leveraging the use of health information technology.
       (6) The role of financial and other incentives affecting 
     provision of care.
       (7) Variation in input costs.
       (8) The characteristics of the patient population, 
     including socio-economic factors (including race, ethnicity, 
     gender, age, income and educational status), and whether the 
     beneficiaries are dually eligible for the Medicare program 
     under title XVIII of the Social Security Act and Medicaid 
     under title XIX of such Act.
       (9) Other topics the Institute deems appropriate.
     In making such recommendations, the Institute shall consider 
     an appropriate phase-in that takes into account the impact of 
     payment changes on providers and facilities and preserves 
     access to care for Medicare beneficiaries.
       (c) Specific Considerations.--In making the recommendations 
     under subsection (b), the Institute shall specifically 
     address whether payment systems under title XVIII of the 
     Social Security Act for physicians and hospitals should be 
     further modified to incentivize high-value care. In so doing, 
     the Institute shall consider the adoption of a value index 
     based on a composite of appropriate measures of quality and 
     cost that would adjust provider payments on a regional or 
     provider-level basis. If the Institute finds that application 
     of such a value index would significantly incentivize 
     providers to furnish high-value care, it shall make specific 
     recommendations on how such an index would be designed and 
     implemented. In so doing, it should identify specific 
     measures of quality and cost appropriate for use in such an 
     index, and include a thorough analysis (including on a 
     geographic basis) of how payments and spending under such 
     title would be affected by such an index.
       (d) Additional Considerations.--The Institute shall 
     consider the experience of governmental and community-based 
     programs that promote high-value care.
       (e) Reports.--
       (1) Not later than April 15, 2011, the Institute shall 
     submit to the Secretary and each House of Congress a report 
     containing findings and recommendations of the study 
     conducted under this section.
       (2) Following submission of the report under paragraph (1), 
     the Institute shall use the data collected and analyzed in 
     this section to issue a subsequent report, or series of 
     reports, on how best to address geographic variation or 
     efforts to promote high-value care for items and services 
     reimbursed by private insurance or other programs. Such 
     reports shall include a comparison to the Institute's 
     findings and recommendations regarding the Medicare program. 
     Such reports, and any recommendations, would not be subject 
     to the procedures outlined in section 1160.
       (f) High-value Care Defined.--For purposes of this section, 
     the term ``high-value care'' means the efficient delivery of 
     high quality, evidence-based, patient-centered care.
       (g) Appropriations.--There is appropriated from amounts in 
     the general fund of the Treasury not otherwise appropriated 
     $10,000,000 to carry out this section. Such sums are 
     authorized to remain available until expended.

     SEC. 1160. IMPLEMENTATION, AND CONGRESSIONAL REVIEW, OF 
                   PROPOSAL TO REVISE MEDICARE PAYMENTS TO PROMOTE 
                   HIGH VALUE HEALTH CARE.

       (a) Preparation and Submission of Implementation Plans.--
       (1) Final implementation plan.--Not later than 240 days 
     after the date of receipt by the Secretary and each House of 
     Congress of the report under section 1159(e)(1), the 
     Secretary shall submit to each House of Congress a final 
     implementation plan describing proposed changes to payment 
     for items and services under parts A and B of title XVIII of 
     the Social Security Act (which may include payment for 
     inpatient and outpatient hospital services for services 
     furnished in PPS and PPS-exempt hospitals, physicians' 
     services, dialysis facility services, skilled nursing 
     facility services, home health services, hospice care, 
     clinical laboratory services, durable medical equipment, and 
     other items and services, but which shall exclude add-on 
     payments for graduate medical education, disproportionate 
     share payments, and health

[[Page H12680]]

     information technology, as specified in sections 
     1886(d)(5)(F), 1886(d)(5)(B), 1886(h), 1848(o), and 1886(n), 
     respectively, of the Social Security Act) taking into 
     consideration, as appropriate, the recommendations of the 
     report submitted under section 1159(e)(1) and the changes to 
     the payment systems made by this Act. To the extent such 
     implementation plan requires a substantial change to the 
     payment system, it shall include a transition phase-in that 
     takes into consideration possible disruption to provider 
     participation in the Medicare program under title XVIII of 
     the Social Security Act and preserves access to care for 
     Medicare beneficiaries.
       (2) Preliminary implementation plan.--Not later than 90 
     days after the date the Institute of Medicine submits to each 
     House of Congress the report under section 1159(e)(1), the 
     Secretary shall submit to each House of Congress a 
     preliminary version of the implementation plan provided for 
     under paragraph (1)(A).
       (3) No increase in budget expenditures.--The Secretary 
     shall include with the submission of the final implementation 
     plan under paragraph (1) a certification by the Chief Actuary 
     of the Centers for Medicare & Medicaid Services that over the 
     initial 10-year period in which the plan is implemented, the 
     aggregate level of net expenditures under the Medicare 
     program under title XVIII of the Social Security Act will not 
     exceed the aggregate level of such expenditures that would 
     have occurred if the plan were not implemented.
       (4) Waivers required.--To the extent the final 
     implementation plan under paragraph (1) proposes changes that 
     are not otherwise permitted under title XVIII of the Social 
     Security Act, the Secretary shall specify in the plan the 
     specific waivers required under such title to implement such 
     changes. Except as provided in subsection (c), the Secretary 
     is authorized to waive the requirements so specified in order 
     to implement such changes.
       (5) Assessment of impact.--In addition, both the 
     preliminary and final implementation plans under this 
     subsection shall include a detailed assessment of the effects 
     of the proposed payment changes by provider or supplier type 
     and State relative to the payments that would otherwise 
     apply.
       (b) Review by MedPAC and GAO.--Not later than 45 days after 
     the date the preliminary implementation plan is received by 
     each House of Congress under subsection (a)(2), the Medicare 
     Payment Advisory Committee and the Comptroller General of the 
     United States shall each evaluate such plan and submit to 
     each House of Congress a report containing its analysis and 
     recommendations regarding implementation of the plan, 
     including an analysis of the effects of the proposed changes 
     in the plan on payments and projected spending.
       (c) Implementation.--
       (1) In general.--The Secretary shall include, in applicable 
     proposed rules for the next rulemaking cycle beginning after 
     the Congressional action deadline, appropriate proposals to 
     revise payments under title XVIII of the Social Security Act 
     in accordance with the final implementation plan submitted 
     under subsection (a)(1), and the waivers specified in 
     subsection (a)(4) to the extent required to carry out such 
     plan are effective, unless a joint resolution (described in 
     subsection (d)(5)(A)) with respect to such plan is enacted by 
     not later than such deadline. If such a joint resolution is 
     enacted, the Secretary is not authorized to implement such 
     plan and the waiver authority provided under subsection 
     (a)(4) shall no longer be effective.
       (2) Congressional action deadline.--For purposes of this 
     section, the term ``Congressional action deadline'' means, 
     with respect to a final implementation plan under subsection 
     (a)(1), May 31, 2012, or, if later, the date that is 145 days 
     after the date of receipt of such plan by each House of 
     Congress under subsection (a).
       (d) Congressional Procedures.--
       (1) Introduction.--On the day on which the final 
     implementation plan is received by the House of 
     Representatives and the Senate under subsection (a), a joint 
     resolution specified in paragraph (5)(A) shall be introduced 
     in the House of Representatives by the majority leader and 
     minority leader of the House of Representatives and in the 
     Senate by the majority leader and minority leader of the 
     Senate. If either House is not in session on the day on which 
     such a plan is received, the joint resolution with respect to 
     such plan shall be introduced in that House, as provided in 
     the preceding sentence, on the first day thereafter on which 
     that House is in session.
       (2) Consideration in the house of representatives.--
       (A) Reporting and discharge.--Any committee of the House of 
     Representatives to which a joint resolution introduced under 
     paragraph (1) is referred shall report such joint resolution 
     to the House not later than 50 legislative days after the 
     applicable date of introduction of the joint resolution. If a 
     committee fails to report such joint resolution within that 
     period, a motion to discharge the committee from further 
     consideration of the joint resolution shall be in order. Such 
     a motion shall be in order only at a time designated by the 
     Speaker in the legislative schedule within two legislative 
     days after the day on which the proponent announces an 
     intention to offer the motion. Notice may not be given on an 
     anticipatory basis. Such a motion shall not be in order after 
     the last committee authorized to consider the joint 
     resolution reports it to the House or after the House has 
     disposed of a motion to discharge the joint resolution. The 
     previous question shall be considered as ordered on the 
     motion to its adoption without intervening motion except 20 
     minutes of debate equally divided and controlled by the 
     proponent and an opponent. A motion to reconsider the vote by 
     which the motion is disposed of shall not be in order.
       (B) Proceeding to consideration.--After each committee 
     authorized to consider a joint resolution reports such joint 
     resolution to the House of Representatives or has been 
     discharged from its consideration, a motion to proceed to 
     consider such joint resolution shall be in order. Such a 
     motion shall be in order only at a time designated by the 
     Speaker in the legislative schedule within two legislative 
     days after the day on which the proponent announces an 
     intention to offer the motion. Notice may not be given on an 
     anticipatory basis. Such a motion shall not be in order after 
     the House of Representatives has disposed of a motion to 
     proceed on the joint resolution. The previous question shall 
     be considered as ordered on the motion to its adoption 
     without intervening motion. A motion to reconsider the vote 
     by which the motion is disposed of shall not be in order.
       (C) Consideration.--The joint resolution shall be 
     considered in the House and shall be considered as read. All 
     points of order against a joint resolution and against its 
     consideration are waived. The previous question shall be 
     considered as ordered on the joint resolution to its passage 
     without intervening motion except two hours of debate equally 
     divided and controlled by the proponent and an opponent. A 
     motion to reconsider the vote on passage of a joint 
     resolution shall not be in order.
       (3) Consideration in the senate.--
       (A) Reporting and discharge.--Any committee of the Senate 
     to which a joint resolution introduced under paragraph (1) is 
     referred shall report such joint resolution to the Senate 
     within 50 legislative days. If a committee fails to report 
     such joint resolution at the close of the 15th legislative 
     day after its receipt by the Senate, such committee shall be 
     automatically discharged from further consideration of such 
     joint resolution and such joint resolution or joint 
     resolutions shall be placed on the calendar. A vote on final 
     passage of such joint resolution shall be taken in the Senate 
     on or before the close of the second legislative day after 
     such joint resolution is reported by the committee or 
     committees of the Senate to which it was referred, or after 
     such committee or committees have been discharged from 
     further consideration of such joint resolution.
       (B) Proceeding to consideration.--A motion in the Senate to 
     proceed to the consideration of a joint resolution shall be 
     privileged and not debatable. An amendment to such a motion 
     shall not be in order, nor shall it be in order to move to 
     reconsider the vote by which such a motion is agreed to or 
     disagreed to.
       (C) Consideration.--
       (i) Debate in the Senate on a joint resolution, and all 
     debatable motions and appeals in connection therewith, shall 
     be limited to not more than 20 hours. The time shall be 
     equally divided between, and controlled by, the majority 
     leader and the minority leader or their designees.
       (ii) Debate in the Senate on any debatable motion or appeal 
     in connection with a joint resolution shall be limited to not 
     more than 1 hour, to be equally divided between, and 
     controlled by, the mover and the manager of the resolution, 
     except that in the event the manager of the joint resolution 
     is in favor of any such motion or appeal, the time in 
     opposition thereto shall be controlled by the minority leader 
     or a designee. Such leaders, or either of them, may, from 
     time under their control on the passage of a joint 
     resolution, allot additional time to any Senator during the 
     consideration of any debatable motion or appeal.
       (iii) A motion in the Senate to further limit debate is not 
     debatable. A motion to recommit a joint resolution is not in 
     order.
       (4) Rules relating to senate and house of 
     representatives.--
       (A) Coordination with action by other house.--If, before 
     the passage by one House of a joint resolution of that House, 
     that House receives from the other House a joint resolution, 
     then the following procedures shall apply:
       (i) The joint resolution of the other House shall not be 
     referred to a committee.
       (ii) With respect to the joint resolution of the House 
     receiving the resolution, the procedure in that House shall 
     be the same as if no such joint resolution had been received 
     from the other House; but the vote on passage shall be on the 
     joint resolution of the other House.
       (B) Treatment of companion measures.--If, following passage 
     of a joint resolution in the Senate, the Senate then receives 
     the companion measure from the House of Representatives, the 
     companion measure shall not be debatable.
       (C) Rules of house of representatives and senate.--This 
     paragraph and the preceding paragraphs are enacted by 
     Congress--
       (i) as an exercise of the rulemaking power of the Senate 
     and House of Representatives, respectively, and as such it is 
     deemed a part of the rules of each House, respectively, but 
     applicable only with respect to the procedure to be followed 
     in that House in the case of a joint resolution, and it 
     supersedes other

[[Page H12681]]

     rules only to the extent that it is inconsistent with such 
     rules; and
       (ii) with full recognition of the constitutional right of 
     either House to change the rules (so far as relating to the 
     procedure of that House) at any time, in the same manner, and 
     to the same extent as in the case of any other rule of that 
     House.
       (5) Definitions.--In this section:
       (A) Joint resolution.--The term ``joint resolution'' means 
     only a joint resolution--
       (i) which does not have a preamble;
       (ii) the title of which is as follows: ``Joint resolution 
     disapproving a Medicare final implementation plan of the 
     Secretary of Health and Human Services submitted under 
     section 1160(a) of the Affordable Health Care for America 
     Act''; and
       (iii) the sole matter after the resolving clause of which 
     is as follows: ``That the Congress disapproves the final 
     implementation plan of the Secretary of Health and Human 
     Services transmitted to the Congress on----------.'', the 
     blank space being filled with the appropriate date.
       (B) Legislative day.--The term ``legislative day'' means 
     any calendar day excluding any day on which that House was 
     not in session.
       (6) Budgetary treatment.--For the purposes of consideration 
     of a joint resolution, the Chairmen of the House of 
     Representatives and Senate Committees on the Budget shall 
     exclude from the evaluation of the budgetary effects of the 
     measure, any such effects that are directly attributable to 
     disapproving a Medicare final implementation plan of the 
     Secretary submitted under subsection (a).

                 Subtitle D--Medicare Advantage Reforms

                   PART 1--PAYMENT AND ADMINISTRATION

     SEC. 1161. PHASE-IN OF PAYMENT BASED ON FEE-FOR-SERVICE 
                   COSTS; QUALITY BONUS PAYMENTS.

       (a) Phase-in of Payment Based on Fee-for-service Costs.--
     Section 1853 of the Social Security Act (42 U.S.C. 1395w-23) 
     is amended--
       (1) in subsection (j)(1)(A)--
       (A) by striking ``beginning with 2007'' and inserting ``for 
     2007, 2008, 2009, and 2010''; and
       (B) by inserting after ``(k)(1)'' the following: ``, or, 
     beginning with 2011, \1/12\ of the blended benchmark amount 
     determined under subsection (n)(1)''; and
       (2) by adding at the end the following new subsection:
       ``(n) Determination of Blended Benchmark Amount.--
       ``(1) In general.--For purposes of subsection (j), subject 
     to paragraphs (3) and (4), the term `blended benchmark 
     amount' means for an area--
       ``(A) for 2011 the sum of--
       ``(i) \2/3\ of the applicable amount (as defined in 
     subsection (k)) for the area and year; and
       ``(ii) \1/3\ of the amount specified in paragraph (2) for 
     the area and year;
       ``(B) for 2012 the sum of--
       ``(i) \1/3\ of the applicable amount for the area and year; 
     and
       ``(ii) \2/3\ of the amount specified in paragraph (2) for 
     the area and year; and
       ``(C) for a subsequent year the amount specified in 
     paragraph (2) for the area and year.
       ``(2) Specified amount.--The amount specified in this 
     paragraph for an area and year is the amount specified in 
     subsection (c)(1)(D)(i) for the area and year adjusted (in a 
     manner specified by the Secretary) to take into account the 
     phase-out in the indirect costs of medical education from 
     capitation rates described in subsection (k)(4).
       ``(3) Fee-for-service payment floor.--In no case shall the 
     blended benchmark amount for an area and year be less than 
     the amount specified in paragraph (2).
       ``(4) Exception for pace plans.--This subsection shall not 
     apply to payments to a PACE program under section 1894.''.
       (b) Quality Bonus Payments.--Section 1853 of the Social 
     Security Act (42 U.S.C. 1395w23), as amended by 
     subsection (a), is amended--
       (1) in subsection (j), by inserting ``subject to subsection 
     (o),'' after ``For purposes of this part,''; and
       (2) by adding at the end the following new subsection:
       ``(o) Quality Based Payment Adjustment.--
       ``(1) In general.--In the case of a qualifying plan in a 
     qualifying county with respect to a year beginning with 2011, 
     the blended benchmark amount under subsection (n)(1) shall be 
     increased--
       ``(A) for 2011, by 1.5 percent;
       ``(B) for 2012, by 3.0 percent; and
       ``(C) for a subsequent year, by 5.0 percent.
       ``(2) Qualifying plan and qualifying county defined.--For 
     purposes of this subsection:
       ``(A) Qualifying plan.--The term `qualifying plan' means, 
     for a year and subject to paragraph (4), a plan that, in a 
     preceding year specified by the Secretary, had a quality 
     ranking (based on the quality ranking system established by 
     the Centers for Medicare & Medicaid Services for Medicare 
     Advantage plans) of 4 stars or higher.
       ``(B) Qualifying county.--The term `qualifying county' 
     means, for a year, a county--
       ``(i) that ranked within the lowest third of counties in 
     the amount specified in subsection (n)(2) for a year 
     specified by the Secretary; and
       ``(ii) for which, as of June of a year specified by the 
     Secretary, of the Medicare Advantage eligible individuals 
     residing in the county at least 20 percent of such 
     individuals were enrolled in Medicare Advantage plans.
       ``(3) Determinations of quality.--
       ``(A) Quality performance.--The Secretary shall provide for 
     the computation of a quality performance score for each 
     Medicare Advantage plan to be applied for each year.
       ``(B) Computation of score.--
       ``(i) Quality performance sore.--For years before a year 
     specified by the Secretary, the quality performance score for 
     a Medicare Advantage plan shall be computed based on a blend 
     (as designated by the Secretary) of the plan's performance 
     on--

       ``(I) HEDIS effectiveness of care quality measures;
       ``(II) CAHPS quality measures; and
       ``(III) such other measures of clinical quality as the 
     Secretary may specify.

     Such measures shall be risk-adjusted as the Secretary deems 
     appropriate.
       ``(ii) Establishment of outcome-based measures.--By not 
     later than for a year specified by the Secretary, the 
     Secretary shall implement reporting requirements for quality 
     under this section on measures selected under clause (iii) 
     that reflect the outcomes of care experienced by individuals 
     enrolled in Medicare Advantage plans (in addition to measures 
     described in clause (i)). Such measures may include--

       ``(I) measures of rates of admission and readmission to a 
     hospital;
       ``(II) measures of prevention quality, such as those 
     established by the Agency for Healthcare Research and Quality 
     (that include hospital admission rates for specified 
     conditions);
       ``(III) measures of patient mortality and morbidity 
     following surgery;
       ``(IV) measures of health functioning (such as limitations 
     on activities of daily living) and survival for patients with 
     chronic diseases;
       ``(V) measures of patient safety; and
       ``(VI) other measure of outcomes and patient quality of 
     life as determined by the Secretary.

     Such measures shall be risk-adjusted as the Secretary deems 
     appropriate. In determining the quality measures to be used 
     under this clause, the Secretary shall take into 
     consideration the recommendations of the Medicare Payment 
     Advisory Commission in its report to Congress under section 
     168 of the Medicare Improvements for Patients and Providers 
     Act of 2008 (Public Law 110-275) and shall provide preference 
     to measures collected on and comparable to measures used in 
     measuring quality under parts A and B.
       ``(iii) Rules for selection of measures.--The Secretary 
     shall select measures for purposes of clause (ii) consistent 
     with the following:

       ``(I) The Secretary shall provide preference to clinical 
     quality measures that have been endorsed by the entity with a 
     contract with the Secretary under section 1890(a).
       ``(II) Prior to any measure being selected under this 
     clause, the Secretary shall publish in the Federal Register 
     such measure and provide for a period of public comment on 
     such measure.

       ``(iv) Transitional use of blend.--For payments for years 
     specified by the Secretary, the Secretary may compute the 
     quality performance score for a Medicare Advantage plan based 
     on a blend of the measures specified in clause (i) and the 
     measures described in clause (ii) and selected under clause 
     (iii).
       ``(v) Use of quality outcomes measures.--For payments 
     beginning with a year specified by the Secretary (beginning 
     after the years specified for section (iv)), the 
     preponderance of measures used under this paragraph shall be 
     quality outcomes measures described in clause (ii) and 
     selected under clause (iii).
       ``(C) Reporting of data.--Each Medicare Advantage 
     organization shall provide for the reporting to the Secretary 
     of quality performance data described in this paragraph (in 
     order to determine a quality performance score under this 
     paragraph) in such time and manner as the Secretary shall 
     specify.
       ``(4) Notification.--The Secretary, in the annual 
     announcement required under subsection (b)(1)(B) in 2010 and 
     each succeeding year, shall notify the Medicare Advantage 
     organization that is offering a qualifying plan in a 
     qualifying county of such identification for the year. The 
     Secretary shall provide for publication on the website for 
     the Medicare program of the information described in the 
     previous sentence.
       ``(5) Authority to disqualify deficient plans.--The 
     Secretary may determine that a Medicare Advantage plan is not 
     a qualifying plan if the Secretary has identified 
     deficiencies in the plan's compliance with rules for Medicare 
     Advantage plans under this part.''.

     SEC. 1162. AUTHORITY FOR SECRETARIAL CODING INTENSITY 
                   ADJUSTMENT AUTHORITY.

       Section 1853(a)(1)(C)(ii) of the Social Security Act (42 
     U.S.C. 1395w-23(a)(1)(C)(ii)) is amended--
       (1) in the matter before subclause (I), by striking 
     ``through 2010'' and inserting ``and each subsequent year''; 
     and
       (2) in subclause (II)--
       (A) by inserting ``periodically'' before ``conduct an 
     analysis'';
       (B) by inserting ``on a timely basis'' after ``are 
     incorporated''; and
       (C) by striking ``only for 2008, 2009, and 2010'' and 
     inserting ``for 2008 and subsequent years''.

[[Page H12682]]

     SEC. 1163. SIMPLIFICATION OF ANNUAL BENEFICIARY ELECTION 
                   PERIODS.

       (a) 2-Week Processing Period for Annual Enrollment Period 
     (AEP).--Paragraph (3)(B) of section 1851(e) of the Social 
     Security Act (42 U.S.C. 1395w-21(e)) is amended--
       (1) by striking ``and'' at the end of clause (iii);
       (2) in clause (iv)--
       (A) by striking ``and succeeding years'' and inserting ``, 
     2008, 2009, and 2010''; and
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (3) by adding at the end the following new clause:
       ``(v) with respect to 2011 and succeeding years, the period 
     beginning on November 1 and ending on December 15 of the year 
     before such year.''.
       (b) Elimination of 3-Month Additional Open Enrollment 
     Period (OEP).--Effective for plan years beginning with 2011, 
     paragraph (2) of such section is amended by striking 
     subparagraph (C).

     SEC. 1164. EXTENSION OF REASONABLE COST CONTRACTS.

       Section 1876(h)(5)(C) of the Social Security Act (42 U.S.C. 
     1395mm(h)(5)(C)) is amended--
       (1) in clause (ii), by striking ``January 1, 2010'' and 
     inserting ``January 1, 2012''; and
       (2) in clause (iii), by striking ``the service area for the 
     year'' and inserting ``the portion of the plan's service area 
     for the year that is within the service area of a reasonable 
     cost reimbursement contract''.

     SEC. 1165. LIMITATION OF WAIVER AUTHORITY FOR EMPLOYER GROUP 
                   PLANS.

       (a) In General.--The first sentence of each of paragraphs 
     (1) and (2) of section 1857(i) of the Social Security Act (42 
     U.S.C. 1395w-27(i)) is amended by inserting before the period 
     at the end the following: ``, but only if 90 percent of the 
     Medicare Advantage eligible individuals enrolled under such 
     plan reside in a county in which the MA organization offers 
     an MA local plan''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply for plan years beginning on or after January 1, 
     2011, and shall not apply to plans which were in effect as of 
     December 31, 2010.

     SEC. 1166. IMPROVING RISK ADJUSTMENT FOR PAYMENTS.

       (a) Report to Congress.--Not later than 1 year after the 
     date of the enactment of this Act, the Secretary of Health 
     and Human Services shall submit to Congress a report that 
     evaluates the adequacy of the risk adjustment system under 
     section 1853(a)(1)(C) of the Social Security Act (42 U.S.C. 
     1395-23(a)(1)(C)) in predicting costs for beneficiaries with 
     chronic or co-morbid conditions, beneficiaries dually-
     eligible for Medicare and Medicaid, and non-Medicaid eligible 
     low-income beneficiaries; and the need and feasibility of 
     including further gradations of diseases or conditions and 
     multiple years of beneficiary data.
       (b) Improvements to Risk Adjustment.--Not later than 
     January 1, 2012, the Secretary shall implement necessary 
     improvements to the risk adjustment system under section 
     1853(a)(1)(C) of the Social Security Act (42 U.S.C. 1395-
     23(a)(1)(C)), taking into account the evaluation under 
     subsection (a).

     SEC. 1167. ELIMINATION OF MA REGIONAL PLAN STABILIZATION 
                   FUND.

       (a) In General.--Section 1858 of the Social Security Act 
     (42 U.S.C. 1395w-27a) is amended by striking subsection (e).
       (b) Transition.--Any amount contained in the MA Regional 
     Plan Stabilization Fund as of the date of the enactment of 
     this Act shall be transferred to the Federal Supplementary 
     Medical Insurance Trust Fund.

     SEC. 1168. STUDY REGARDING THE EFFECTS OF CALCULATING 
                   MEDICARE ADVANTAGE PAYMENT RATES ON A REGIONAL 
                   AVERAGE OF MEDICARE FEE FOR SERVICE RATES.

       (a) In General.--The Administrator of the Centers for 
     Medicare and Medicaid Services shall conduct a study to 
     determine the potential effects of calculating Medicare 
     Advantage payment rates on a more aggregated geographic basis 
     (such as metropolitan statistical areas or other regional 
     delineations) rather than using county boundaries. In 
     conducting such study, the Administrator shall consider the 
     effect of such alternative geographic basis on the following:
       (1) The quality of care received by Medicare Advantage 
     enrollees.
       (2) The networks of Medicare Advantage plans, including any 
     implications for providers contracting with Medicare 
     Advantage plans.
       (3) The predictability of benchmark amounts for Medicare 
     advantage plans.
       (b) Consultations.--In conducting the study, the 
     Administrator shall consult with the following:
       (1) Experts in health care financing.
       (2) Representatives of foundations and other nonprofit 
     entities that have conducted or supported research on 
     Medicare financing issues.
       (3) Representatives from Medicare Advantage plans.
       (4) Such other entities or people as determined by the 
     Secretary.
       (c) Report.--Not later than one year after the date of the 
     enactment of this Act, the Administrator shall transmit a 
     report to the Congress on the study conducted under this 
     section. The report shall contain a detailed statement of 
     findings and conclusions of the study, together with its 
     recommendations for such legislation and administrative 
     actions as the Administrator considers appropriate.

             PART 2--BENEFICIARY PROTECTIONS AND ANTI-FRAUD

     SEC. 1171. LIMITATION ON COST-SHARING FOR INDIVIDUAL HEALTH 
                   SERVICES.

       (a) In General.--Section 1852(a)(1) of the Social Security 
     Act (42 U.S.C. 1395w-22(a)(1)) is amended--
       (1) in subparagraph (A), by inserting before the period at 
     the end the following: ``with cost-sharing that is no greater 
     (and may be less) than the cost-sharing that would otherwise 
     be imposed under such program option'';
       (2) in subparagraph (B)(i), by striking ``or an actuarially 
     equivalent level of cost-sharing as determined in this 
     part''; and
       (3) by amending clause (ii) of subparagraph (B) to read as 
     follows:
       ``(ii) Permitting use of flat copayment or per diem rate.--
     Nothing in clause (i) shall be construed as prohibiting a 
     Medicare Advantage plan from using a flat copayment or per 
     diem rate, in lieu of the cost-sharing that would be imposed 
     under part A or B, so long as the amount of the cost-sharing 
     imposed does not exceed the amount of the cost-sharing that 
     would be imposed under the respective part if the individual 
     were not enrolled in a plan under this part.''.
       (b) Limitation for Dual Eligibles and Qualified Medicare 
     Beneficiaries.--Section 1852(a)(7) of such Act is amended to 
     read as follows:
       ``(7) Limitation on cost-sharing for dual eligibles and 
     qualified medicare beneficiaries.--In the case of a 
     individual who is a full-benefit dual eligible individual (as 
     defined in section 1935(c)(6)) or a qualified medicare 
     beneficiary (as defined in section 1905(p)(1)) who is 
     enrolled in a Medicare Advantage plan, the plan may not 
     impose cost-sharing that exceeds the amount of cost-sharing 
     that would be permitted with respect to the individual under 
     this title and title XIX if the individual were not enrolled 
     with such plan.''.
       (c) Effective Dates.--
       (1) The amendments made by subsection (a) shall apply to 
     plan years beginning on or after January 1, 2011.
       (2) The amendments made by subsection (b) shall apply to 
     plan years beginning on or after January 1, 2011.

     SEC. 1172. CONTINUOUS OPEN ENROLLMENT FOR ENROLLEES IN PLANS 
                   WITH ENROLLMENT SUSPENSION.

       Section 1851(e)(4) of the Social Security Act (42 U.S.C. 
     1395w(e)(4)) is amended--
       (1) in subparagraph (C), by striking at the end ``or'';
       (2) in subparagraph (D)--
       (A) by inserting ``, taking into account the health or 
     well-being of the individual'' before the period; and
       (B) by redesignating such subparagraph as subparagraph (E); 
     and
       (3) by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) the individual is enrolled in an MA plan and 
     enrollment in the plan is suspended under paragraph (2)(B) or 
     (3)(C) of section 1857(g) because of a failure of the plan to 
     meet applicable requirements; or''.

     SEC. 1173. INFORMATION FOR BENEFICIARIES ON MA PLAN 
                   ADMINISTRATIVE COSTS.

       (a) Disclosure of Medical Loss Ratios and Other Expense 
     Data.--Section 1851 of the Social Security Act (42 U.S.C. 
     1395w-21), as previously amended by this subtitle, is amended 
     by adding at the end the following new subsection:
       ``(p) Publication of Medical Loss Ratios and Other Cost-
     related Information.--
       ``(1) In general.--The Secretary shall publish, not later 
     than November 1 of each year (beginning with 2011), for each 
     MA plan contract, the medical loss ratio of the plan in the 
     previous year.
       ``(2) Submission of data.--
       ``(A) In general.--Each MA organization shall submit to the 
     Secretary, in a form and manner specified by the Secretary, 
     data necessary for the Secretary to publish the medical loss 
     ratio on a timely basis.
       ``(B) Data for 2010 and 2011.--The data submitted under 
     subparagraph (A) for 2010 and for 2011 shall be consistent in 
     content with the data reported as part of the MA plan bid in 
     June 2009 for 2010.
       ``(C) Use of standardized elements and definitions.--The 
     data to be submitted under subparagraph (A) relating to 
     medical loss ratio for a year, beginning with 2012, shall be 
     submitted based on the standardized elements and definitions 
     developed under paragraph (3).
       ``(3) Development of data reporting standards.--
       ``(A) In general.--The Secretary shall develop and 
     implement standardized data elements and definitions for 
     reporting under this subsection, for contract years beginning 
     with 2012, of data necessary for the calculation of the 
     medical loss ratio for MA plans. Not later than December 31, 
     2010, the Secretary shall publish a report describing the 
     elements and definitions so developed.
       ``(B) Consultation.--The Secretary shall consult with the 
     Health Choices Commissioner, representatives of MA 
     organizations, experts on health plan accounting systems, and 
     representatives of the National Association of Insurance 
     Commissioners, in the development of such data elements and 
     definitions.
       ``(4) Medical loss ratio to be defined.--For purposes of 
     this part, the term `medical loss ratio' has the meaning 
     given such term by the Secretary, taking into account the 
     meaning given such term by the Health

[[Page H12683]]

     Choices Commissioner under section 116 of the Affordable 
     Health Care for America Act.''.
       (b) Minimum Medical Loss Ratio.--Section 1857(e) of the 
     Social Security Act (42 U.S.C. 1395w-27(e)) is amended by 
     adding at the end the following new paragraph:
       ``(4) Requirement for minimum medical loss ratio.--If the 
     Secretary determines for a contract year (beginning with 
     2014) that an MA plan has failed to have a medical loss ratio 
     (as defined in section 1851(p)(4)) of at least .85--
       ``(A) the Secretary shall require the Medicare Advantage 
     organization offering the plan to give enrollees a rebate (in 
     the second succeeding contract year) of premiums under this 
     part (or part B or part D, if applicable) by such amount as 
     would provide for a benefits ratio of at least .85;
       ``(B) for 3 consecutive contract years, the Secretary shall 
     not permit the enrollment of new enrollees under the plan for 
     coverage during the second succeeding contract year; and
       ``(C) the Secretary shall terminate the plan contract if 
     the plan fails to have such a medical loss ratio for 5 
     consecutive contract years.''.

     SEC. 1174. STRENGTHENING AUDIT AUTHORITY.

       (a) For Part C Payments Risk Adjustment.--Section 
     1857(d)(1) of the Social Security Act (42 U.S.C. 1395w-
     27(d)(1)) is amended by inserting after ``section 1858(c))'' 
     the following: ``, and data submitted with respect to risk 
     adjustment under section 1853(a)(3)''.
       (b) Enforcement of Audits and Deficiencies.--
       (1) In general.--Section 1857(e) of such Act, as amended by 
     section 1173, is amended by adding at the end the following 
     new paragraph:
       ``(5) Enforcement of audits and deficiencies.--
       ``(A) Information in contract.--The Secretary shall require 
     that each contract with an MA organization under this section 
     shall include terms that inform the organization of the 
     provisions in subsection (d).
       ``(B) Enforcement authority.--The Secretary is authorized, 
     in connection with conducting audits and other activities 
     under subsection (d), to take such actions, including pursuit 
     of financial recoveries, necessary to address deficiencies 
     identified in such audits or other activities.''.
       (2) Application under part d.--For provision applying the 
     amendment made by paragraph (1) to prescription drug plans 
     under part D, see section 1860D-12(b)(3)(D) of the Social 
     Security Act.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act 
     and shall apply to audits and activities conducted for 
     contract years beginning on or after January 1, 2011.

     SEC. 1175. AUTHORITY TO DENY PLAN BIDS.

       (a) In General.--Section 1854(a)(5) of the Social Security 
     Act (42 U.S.C. 1395w-24(a)(5)) is amended by adding at the 
     end the following new subparagraph:
       ``(C) Rejection of bids.--Nothing in this section shall be 
     construed as requiring the Secretary to accept any or every 
     bid by an MA organization under this subsection.''.
       (b) Application Under Part D.--Section 1860D-11(d) of such 
     Act (42 U.S.C. 1395w-111(d)) is amended by adding at the end 
     the following new paragraph:
       ``(3) Rejection of bids.--Paragraph (5)(C) of section 
     1854(a) shall apply with respect to bids under this section 
     in the same manner as it applies to bids by an MA 
     organization under such section.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bids for contract years beginning on or after 
     January 1, 2011.

     SEC. 1175A. STATE AUTHORITY TO ENFORCE STANDARDIZED MARKETING 
                   REQUIREMENTS.

       Section 1856(b)(3) of the Social Security Act (42 U.S.C. 
     1395w-26(b)(3)) is amended--
       (1) by striking ``The standards'' and inserting ``(A) in 
     general.--The standards'' with appropriate indentation that 
     is the same as for the subparagraph (B) added by paragraph 
     (2); and
       (2) by adding at the end the following new subparagraph:
       ``(B) Enforcement of federal standards permitted.--
       ``(i) In general.--Subject to the subsequent provision of 
     this subparagraph, nothing in this title shall be construed 
     to prohibit a State from conducting a market conduct 
     examination or from imposing civil monetary penalties, in 
     accordance with laws and procedures of the State, against 
     Medicare Advantage organizations, PDP sponsors, or agents or 
     brokers of such organizations or sponsors for violations of 
     the marketing requirements under subsections (h)(4), (h)(6), 
     and (j) of section 1851 and section 1857(g)(1)(E).
       ``(ii) Additional remedies resulting from federal-state 
     cooperation.--

       ``(I) State recommendation.--A State may recommend to the 
     Secretary the imposition of an intermediate sanction not 
     described in clause (i) (such as those available under 
     section 1857(g)) against a Medicare Advantage organization, 
     PDP sponsor, or agent or broker of such an organization or 
     sponsor for a violation described in such clause.
       ``(II) Response to recommendation.--Not later than 30 days 
     after receipt of a recommendation under subclause (I) from a 
     State, with respect to a violation described in clause (i), 
     the Secretary shall respond in writing to the State 
     indicating the progress of any investigation involving such 
     violation, whether the Secretary intends to pursue the 
     recommendation from the State, and in the case the Secretary 
     does not intend to pursue such recommendation, the reason for 
     such decision.

       ``(iii) Non-duplication of penalties.--In the case that an 
     action has been initiated against a Medicare Advantage 
     organization, PDP sponsor, or agent or broker of such an 
     organization or sponsor for a violation of a marketing 
     requirement under subsection (h)(4), (h)(6), or (j) of 
     section 1851 or section 1857(g)(1)(E)--

       ``(I) in the case such action has been initiated by the 
     Secretary, no State may bring an action under such applicable 
     subsection or section against such organization, sponsor, 
     agent, or broker with respect to such violation during the 
     pendency period of the action initiated by the Secretary and, 
     if a penalty is imposed pursuant to such action, after such 
     period; and
       ``(II) in the case such action has been initiated by a 
     State, the Secretary may not bring an action under such 
     applicable subsection or section against such organization, 
     sponsor, agent, or broker with respect to such violation 
     during the pendency period of the action initiated by the 
     Secretary and, if a penalty is imposed pursuant to such 
     action, after such period.

     Nothing in this clause shall be construed as limiting the 
     ability of the Secretary to impose any sanction other than a 
     civil monetary penalty under section 1857 against a Medicare 
     Advantage organization, PDP sponsor, or agent or broker of 
     such an organization or sponsor for a violation described in 
     clause (i).
       ``(iv) Construction.--Nothing in this subparagraph shall be 
     construed as affecting any State authority to regulate 
     brokers described in this paragraph or any other conduct of a 
     Medicare Advantage organization or PDP sponsor.''.

                PART 3--TREATMENT OF SPECIAL NEEDS PLANS

     SEC. 1176. LIMITATION ON ENROLLMENT OUTSIDE OPEN ENROLLMENT 
                   PERIOD OF INDIVIDUALS INTO CHRONIC CARE 
                   SPECIALIZED MA PLANS FOR SPECIAL NEEDS 
                   INDIVIDUALS.

       Section 1859(f)(4) of the Social Security Act (42 U.S.C. 
     1395w-28(f)(4)) is amended by adding at the end the following 
     new subparagraph:
       ``(C) The plan does not enroll an individual on or after 
     January 1, 2011, other than--
       ``(i) during an annual, coordinated open enrollment period; 
     or
       ``(ii) during a special election period consisting of the 
     period for which the individual has a chronic condition that 
     qualifies the individual as an individual described in 
     subsection (b)(6)(B)(iii) for such plan and ending on the 
     date on which the individual enrolls in such a plan on the 
     basis of such condition.

     If an individual is enrolled in such a plan on the basis of a 
     chronic condition and becomes eligible for another such plan 
     on the basis of another chronic condition, the other plan may 
     enroll the individual on the basis of such other chronic 
     condition during a special enrollment period described in 
     clause (ii). An individual is eligible to apply such clause 
     only once on the basis of any specific chronic condition.''.

     SEC. 1177. EXTENSION OF AUTHORITY OF SPECIAL NEEDS PLANS TO 
                   RESTRICT ENROLLMENT; SERVICE AREA MORATORIUM 
                   FOR CERTAIN SNPS.

       (a) In General.--Section 1859(f)(1) of the Social Security 
     Act (42 U.S.C. 1395w-28(f)(1)) is amended by striking 
     ``January 1, 2011'' and inserting ``January 1, 2013 (or 
     January 1, 2016, in the case of a plan described in section 
     1177(b)(1) of the Affordable Health Care for America Act)''.
       (b) Extension of Certain Plans.--
       (1) Plans described.--For purposes of Section 1859(f)(1) of 
     the Social Security Act (42 U.S.C. 1395w-28(f)(1)), a plan 
     described in this paragraph is a Medicare Advantage dual 
     eligible special needs plan that--
       (A) whose sponsoring Medicare Advantage organization, as of 
     the date enactment of the Affordable Health Care for America 
     Act, has a contract with a State Medicaid Agency that 
     participated in the ``Demonstrations Serving Those Dually-
     Eligible for Medicare and Medicaid'' under the Medicare 
     program; and
       (B) that has been approved by the Centers for Medicare & 
     Medicaid Services as a dual eligible special needs plan and 
     that offers integrated Medicare and Medicaid services under a 
     contract with the State Medicaid agency.
       (2) Analysis; report.--
       (A) Analysis.--The Secretary of Health and Human Services 
     shall provide, through a contract with an independent health 
     services evaluation organization, for an analysis of the 
     plans described in paragraph (1) with regard to the impact of 
     such plans on cost, quality of care, patient satisfaction, 
     and other subjects specified by the Secretary. Such report 
     also will identify statutory changes needed to simplify 
     access to needed services, improve coordination of benefits 
     and services and ensure protection for dual eligibles as 
     appropriate.
       (B) Report.--Not later than December 31, 2011, the 
     Secretary shall submit to the Congress a report on the 
     analysis under subparagraph (A) and shall include in such 
     report such recommendations with regard to the treatment of 
     such plans as the Secretary deems appropriate.

[[Page H12684]]

       (c) Extension of Service Area Moratorium for Certain 
     SNPs.--Section 164(c)(2) of the Medicare Improvements for 
     Patients and Providers Act of 2008 is amended by striking 
     ``December 31, 2010'' and inserting ``December 31, 2012''.

     SEC. 1178. EXTENSION OF MEDICARE SENIOR HOUSING PLANS.

       Section 1859 of the Social Security Act (42 U.S.C. 1395w-
     28) is amended by adding at the end the following new 
     subsection:
       ``(g) Special Rules for Senior Housing Facility Plans.--
       ``(1) In general.--Notwithstanding any other provision of 
     this part, in the case of a Medicare Advantage senior housing 
     facility plan described in paragraph (2) and for periods 
     before January 1, 2013--
       ``(A) the service area of such plan may be limited to a 
     senior housing facility in a geographic area;
       ``(B) the service area of such plan may not be expanded; 
     and
       ``(C) additional senior housing facilities may not be 
     serviced by such plan.
       ``(2) Medicare advantage senior housing facility plan 
     described.--For purposes of this subsection, a Medicare 
     Advantage senior housing facility plan is a Medicare 
     Advantage plan that--
       ``(A)(i) restricts enrollment of individuals under this 
     part to individuals who reside in a continuing care 
     retirement community (as defined in section 1852(l)(4)(B));
       ``(ii) provides primary care services onsite and has a 
     ratio of accessible providers to beneficiaries that the 
     Secretary determines is adequate, taking into consideration 
     the number of residents onsite, the health needs of those 
     residents, and the accessibility of providers offsite; and
       ``(iii) provides transportation services for beneficiaries 
     to providers outside of the facility; and
       ``(B) is offered by a Medicare Advantage organization that 
     has offered at least 1 plan described in subparagraph (A) for 
     at least 1 year prior to January 1, 2010, under a 
     demonstration project established by the Secretary.''.

              Subtitle E--Improvements to Medicare Part D

     SEC. 1181. ELIMINATION OF COVERAGE GAP.

       (a) Immediate Reduction in Coverage Gap in 2010.--Section 
     1860D-2(b) of the Social Security Act (42 U.S.C. 1395w-
     102(b)) is amended--
       (1) in paragraph (3)(A), by striking ``paragraph (4)'' and 
     inserting ``paragraphs (4) and (7)''; and
       (2) by adding at the end the following new paragraph:
       ``(7) Increase in initial coverage limit in 2010.--
       ``(A) In general.--For plan years beginning during 2010, 
     the initial coverage limit described in paragraph (3)(B) 
     otherwise applicable shall be increased by $500.
       ``(B) Application.--In applying subparagraph (A)--
       ``(i) except as otherwise provided in this subparagraph, 
     there shall be no change in the premiums, bids, or any other 
     parameters under this part or part C;
       ``(ii) costs that would be treated as incurred costs for 
     purposes of applying paragraph (4) but for the application of 
     subparagraph (A) shall continue to be treated as incurred 
     costs;
       ``(iii) the Secretary shall establish procedures, which may 
     include a reconciliation process, to fully reimburse PDP 
     sponsors with respect to prescription drug plans and MA 
     organizations with respect to MA-PD plans for the reduction 
     in beneficiary cost sharing associated with the application 
     of subparagraph (A);
       ``(iv) the Secretary shall develop an estimate of the 
     additional increased costs attributable to the application of 
     this paragraph for increased drug utilization and financing 
     and administrative costs and shall use such estimate to 
     adjust payments to PDP sponsors with respect to prescription 
     drug plans under this part and MA organizations with respect 
     to MA-PD plans under part C; and
       ``(v) the Secretary shall establish procedures for 
     retroactive reimbursement of part D eligible individuals who 
     are covered under such a plan for costs which are incurred 
     before the date of initial implementation of subparagraph (A) 
     and which would be reimbursed under such a plan if such 
     implementation occurred as of January 1, 2010.''.
       (b) Additional Closure in Gap Beginning in 2011.--Section 
     1860D-2(b) of such Act (42 U.S.C. 1395w-102(b)) as amended by 
     subsection (a), is further amended--
       (1) in paragraph (3)(A), by striking ``and (7)'' and 
     inserting ``, (7), and (8)'' ;
       (2) in paragraph (4)(B)(i), by inserting ``subject to 
     paragraph (8)'' after ``purposes of this part''; and
       (3) by adding at the end the following new paragraph:
       ``(8) Phased-in elimination of coverage gap.--
       ``(A) In general.--For each year beginning with 2011, the 
     Secretary shall consistent with this paragraph progressively 
     increase the initial coverage limit (described in subsection 
     (b)(3)) and decrease the annual out-of-pocket threshold from 
     the amounts otherwise computed until, beginning in 2019, 
     there is a continuation of coverage from the initial coverage 
     limit for expenditures incurred through the total amount of 
     expenditures at which benefits are available under paragraph 
     (4).
       ``(B) Increase in initial coverage limit.--
       ``(i) In general.--For a year beginning with 2011, subject 
     to clause (ii), the initial coverage limit otherwise computed 
     without regard to this paragraph shall be increased by the 
     cumulative ICL phase-in percentage (as defined in clause 
     (iii) for the year) times the out-of-pocket gap amount (as 
     defined in subparagraph (D)) for the year.
       ``(ii) Maintenance of 2010 initial coverage limit level.--
     If for a year the initial coverage limit otherwise computed 
     under this paragraph would be less than the initial coverage 
     limit applied during 2010, taking into account paragraph (7), 
     the initial coverage limit for that year shall be such 
     initial coverage limit as so applied during 2010.
       ``(iii) Cumulative phase-in percentage.--

       ``(I) In general.--For purposes of this paragraph, subject 
     to subclause (II), the term `cumulative ICL phase-in 
     percentage' means for a year the sum of the annual ICL phase-
     in percentage (as defined in clause (iv)) for the year and 
     the annual ICL phase-in percentages for each previous year 
     beginning with 2011.
       ``(II) Limitation.--If the sum of the cumulative ICL phase-
     in percentage and the cumulative OPT phase-in percentage (as 
     defined in subparagraph (C)(iii)) for a year would otherwise 
     exceed 100 percent, each such percentage shall be reduced in 
     a proportional amount so the sum does not exceed 100 percent.

       ``(iv) Annual icl phase-in percentage.--For purposes of 
     this paragraph, the term `annual ICL phase-in percentage' 
     means--

       ``(I) for 2011, 8.25 percent;
       ``(II) for 2012, 2013, and 2014, 4.5 percent;
       ``(III) for 2015 and 2016, 6 percent;
       ``(IV) for 2017, 7.5 percent;
       ``(V) for 2018, 8 percent; and
       ``(VI) for 2019, 8 percent, or such other percent as may be 
     necessary to provide for a full continuation of coverage as 
     described in subparagraph (A) in that year.

       ``(C) Decrease in annual out-of-pocket threshold.--
       ``(i) In general.--For a year beginning with 2011, subject 
     to clause (ii), the annual out-of-pocket threshold otherwise 
     computed without regard to this paragraph shall be decreased 
     by the cumulative OPT phase-in percentage (as defined in 
     clause (iii) for the year) of the out-of-pocket gap amount 
     for the year multiplied by 1.75.
       ``(ii) Maintenance.--The Secretary shall adjust the annual 
     out-of-pocket threshold for a year to the extent necessary to 
     ensure that the sum of the initial coverage limit described 
     in subparagraph (A) and the out-of-pocket gap amount (defined 
     in subparagraph (D)), as determined for the year pursuant to 
     the provisions of this paragraph for such year, does not 
     exceed such sum that would have applied if this paragraph did 
     not apply.
       ``(iii) Cumulative opt phase-in percentage.--For purposes 
     of this paragraph, subject to subparagraph (B)(iii)(II), the 
     term `cumulative OPT phase-in percentage' means for a year 
     the sum of the annual OPT phase-in percentage (as defined in 
     clause (iv)) for the year and the annual OPT phase-in 
     percentages for each previous year beginning with 2011.
       ``(iv) Annual opt phase-in percentage.--For purposes of 
     this paragraph, the term `annual OPT phase-in percentage' 
     means--

       ``(I) for 2011, 0 percent;
       ``(II) for 2012, 2013, and 2014, 4.5 percent;
       ``(III) for 2015 and 2016, 6 percent;
       ``(IV) for 2017, 7.5 percent; and
       ``(V) for 2018 and 2019, 8 percent.

       ``(D) Out-of-pocket gap amount.--For purposes of this 
     paragraph, the term `out-of-pocket gap amount' means for a 
     year the amount by which--
       ``(i) the annual out-of-pocket threshold specified in 
     paragraph (4)(B) for the year (as determined as if this 
     paragraph did not apply), exceeds
       ``(ii) the sum of--

       ``(I) the annual deductible under paragraph (1) for the 
     year; and
       ``(II) \1/4\ of the amount by which the initial coverage 
     limit under paragraph (3) for the year (as determined as if 
     this paragraph did not apply) exceeds such annual deductible.

       ``(E) Relation to aahca transitional increase.--Except as 
     otherwise specifically provided, this paragraph shall be 
     applied as if no increase had been made in the initial 
     coverage limit under paragraph (7).''.
       (c) Requiring Drug Manufacturers to Provide Drug Rebates 
     for Rebate Eligible Individuals.--
       (1) In general.--Section 1860D-2 of the Social Security Act 
     (42 U.S.C. 1395w-102) is amended--
       (A) in subsection (e)(1), in the matter before subparagraph 
     (A), by inserting ``and subsection (f)'' after ``this 
     subsection''; and
       (B) by adding at the end the following new subsection:
       ``(f) Prescription Drug Rebate Agreement for Rebate 
     Eligible Individuals.--
       ``(1) Requirement.--
       ``(A) In general.--For plan years beginning on or after 
     January 1, 2011, in this part, the term `covered part D drug' 
     does not include any drug or biological product that is 
     manufactured by a manufacturer that has not entered into and 
     have in effect a rebate agreement described in paragraph (2).
       ``(B) 2010 plan year requirement.--Any drug or biological 
     product manufactured by a manufacturer that declines to enter 
     into a rebate agreement described in paragraph (2) for the 
     period beginning on January 1, 2010, and ending on December 
     31, 2010, shall not be included as a `covered part D drug ` 
     for the subsequent plan year.
       ``(2) Rebate agreement.--A rebate agreement under this 
     subsection shall require the

[[Page H12685]]

     manufacturer to provide to the Secretary a rebate for each 
     rebate period (as defined in paragraph (6)(B)) ending after 
     December 31, 2009, in the amount specified in paragraph (3) 
     for any covered part D drug of the manufacturer dispensed 
     after December 31, 2009, to any rebate eligible individual 
     (as defined in paragraph (6)(A)) for which payment was made 
     by a PDP sponsor under part D or a MA organization under part 
     C for such period, including payments passed through the low-
     income and reinsurance subsidies under sections 1860D-14 and 
     1860D-15(b), respectively. Such rebate shall be paid by the 
     manufacturer to the Secretary not later than 30 days after 
     the date of receipt of the information described in section 
     1860D-12(b)(7), including as such section is applied under 
     section 1857(f)(3), or 30 days after the receipt of 
     information under subparagraph (D) of paragraph (3), as 
     determined by the Secretary. Insofar as not inconsistent with 
     this subsection, the Secretary shall establish terms and 
     conditions of such agreement relating to compliance, 
     penalties, and program evaluations, investigations, and 
     audits that are similar to the terms and conditions for 
     rebate agreements under paragraphs (3) and (4) of section 
     1927(b).
       ``(3) Rebate for rebate eligible medicare drug plan 
     enrollees.--
       ``(A) In general.--The amount of the rebate specified under 
     this paragraph for a manufacturer for a rebate period, with 
     respect to each dosage form and strength of any covered part 
     D drug provided by such manufacturer and dispensed to a 
     rebate eligible individual, shall be equal to the product 
     of--
       ``(i) the total number of units of such dosage form and 
     strength of the drug so provided and dispensed for which 
     payment was made by a PDP sponsor under part D or a MA 
     organization under part C for the rebate period, including 
     payments passed through the low-income and reinsurance 
     subsidies under sections 1860D-14 and 1860D-15(b), 
     respectively; and
       ``(ii) the amount (if any) by which--

       ``(I) the Medicaid rebate amount (as defined in 
     subparagraph (B)) for such form, strength, and period, 
     exceeds
       ``(II) the average Medicare drug program rebate eligible 
     rebate amount (as defined in subparagraph (C)) for such form, 
     strength, and period.

       ``(B) Medicaid rebate amount.--For purposes of this 
     paragraph, the term `Medicaid rebate amount' means, with 
     respect to each dosage form and strength of a covered part D 
     drug provided by the manufacturer for a rebate period--
       ``(i) in the case of a single source drug or an innovator 
     multiple source drug, the amount specified in paragraph 
     (1)(A)(ii) of section 1927(c) plus the amount, if any, 
     specified in paragraph (2)(A)(ii) of such section, for such 
     form, strength, and period; or
       ``(ii) in the case of any other covered outpatient drug, 
     the amount specified in paragraph (3)(A)(i) of such section 
     for such form, strength, and period.
       ``(C) Average medicare drug program rebate eligible rebate 
     amount.--For purposes of this subsection, the term `average 
     Medicare drug program rebate eligible rebate amount' means, 
     with respect to each dosage form and strength of a covered 
     part D drug provided by a manufacturer for a rebate period, 
     the sum, for all PDP sponsors under part D and MA 
     organizations administering a MA-PD plan under part C, of--
       ``(i) the product, for each such sponsor or organization, 
     of--

       ``(I) the sum of all rebates, discounts, or other price 
     concessions (not taking into account any rebate provided 
     under paragraph (2) for such dosage form and strength of the 
     drug dispensed, calculated on a per-unit basis, but only to 
     the extent that any such rebate, discount, or other price 
     concession applies equally to drugs dispensed to rebate 
     eligible Medicare drug plan enrollees and drugs dispensed to 
     PDP and MA-PD enrollees who are not rebate eligible 
     individuals; and
       ``(II) the number of the units of such dosage and strength 
     of the drug dispensed during the rebate period to rebate 
     eligible individuals enrolled in the prescription drug plans 
     administered by the PDP sponsor or the MA-PD plans 
     administered by the MA organization; divided by

       ``(ii) the total number of units of such dosage and 
     strength of the drug dispensed during the rebate period to 
     rebate eligible individuals enrolled in all prescription drug 
     plans administered by PDP sponsors and all MA-PD plans 
     administered by MA organizations.
       ``(D) Use of estimates.--The Secretary may establish a 
     methodology for estimating the average Medicare drug program 
     rebate eligible rebate amounts for each rebate period based 
     on bid and utilization information under this part and may 
     use these estimates as the basis for determining the rebates 
     under this section. If the Secretary elects to estimate the 
     average Medicare drug program rebate eligible rebate amounts, 
     the Secretary shall establish a reconciliation process for 
     adjusting manufacturer rebate payments not later than 3 
     months after the date that manufacturers receive the 
     information collected under section 1860D-12(b)(7)(B).
       ``(4) Length of agreement.--The provisions of paragraph (4) 
     of section 1927(b) (other than clauses (iv) and (v) of 
     subparagraph (B)) shall apply to rebate agreements under this 
     subsection in the same manner as such paragraph applies to a 
     rebate agreement under such section.
       ``(5) Other terms and conditions.--The Secretary shall 
     establish other terms and conditions of the rebate agreement 
     under this subsection, including terms and conditions related 
     to compliance, that are consistent with this subsection.
       ``(6) Definitions.--In this subsection and section 1860D-
     12(b)(7):
       ``(A) Rebate eligible individual.--The term `rebate 
     eligible individual'--
       ``(i) means a full-benefit dual eligible individual (as 
     defined in section 1935(c)(6)); and
       ``(ii) includes, for drugs dispensed after December 31, 
     2014, a subsidy eligible individual (as defined in section 
     1860D-14(a)(3)(A)).
       ``(B) Rebate period.--The term `rebate period' has the 
     meaning given such term in section 1927(k)(8).
       ``(7) Waiver.--Chapter 35 of title 44, United States Code, 
     shall not apply to the requirements under this subsection for 
     the period beginning on January 1, 2010, and ending on 
     December 31, 2010.''.
       (2) Reporting requirement for the determination and payment 
     of rebates by manufactures related to rebate for rebate 
     eligible medicare drug plan enrollees.--
       (A) Requirements for pdp sponsors.--Section 1860D-12(b) of 
     the Social Security Act (42 U.S.C. 1395w-112(b)) is amended 
     by adding at the end the following new paragraph:
       ``(7) Reporting requirement for the determination and 
     payment of rebates by manufacturers related to rebate for 
     rebate eligible medicare drug plan enrollees.--
       ``(A) In general.--For purposes of the rebate under section 
     1860D-2(f) for contract years beginning on or after January 
     1, 2011, each contract entered into with a PDP sponsor under 
     this part with respect to a prescription drug plan shall 
     require that the sponsor comply with subparagraphs (B) and 
     (C).
       ``(B) Report form and contents.--Not later than a date 
     specified by the Secretary, a PDP sponsor of a prescription 
     drug plan under this part shall report to each manufacturer--
       ``(i) information (by National Drug Code number) on the 
     total number of units of each dosage, form, and strength of 
     each drug of such manufacturer dispensed to rebate eligible 
     Medicare drug plan enrollees under any prescription drug plan 
     operated by the PDP sponsor during the rebate period;
       ``(ii) information on the price discounts, price 
     concessions, and rebates for such drugs for such form, 
     strength, and period;
       ``(iii) information on the extent to which such price 
     discounts, price concessions, and rebates apply equally to 
     rebate eligible Medicare drug plan enrollees and PDP 
     enrollees who are not rebate eligible Medicare drug plan 
     enrollees; and
       ``(iv) any additional information that the Secretary 
     determines is necessary to enable the Secretary to calculate 
     the average Medicare drug program rebate eligible rebate 
     amount (as defined in paragraph (3)(C) of such section), and 
     to determine the amount of the rebate required under this 
     section, for such form, strength, and period.

     Such report shall be in a form consistent with a standard 
     reporting format established by the Secretary.
       ``(C) Submission to secretary.--Each PDP sponsor shall 
     promptly transmit a copy of the information reported under 
     subparagraph (B) to the Secretary for the purpose of audit 
     oversight and evaluation.
       ``(D) Confidentiality of information.--The provisions of 
     subparagraph (D) of section 1927(b)(3), relating to 
     confidentiality of information, shall apply to information 
     reported by PDP sponsors under this paragraph in the same 
     manner that such provisions apply to information disclosed by 
     manufacturers or wholesalers under such section, except--
       ``(i) that any reference to `this section' in clause (i) of 
     such subparagraph shall be treated as being a reference to 
     this section;
       ``(ii) the reference to the Director of the Congressional 
     Budget Office in clause (iii) of such subparagraph shall be 
     treated as including a reference to the Medicare Payment 
     Advisory Commission; and
       ``(iii) clause (iv) of such subparagraph shall not apply.
       ``(E) Oversight.--Information reported under this paragraph 
     may be used by the Inspector General of the Department of 
     Health and Human Services for the statutorily authorized 
     purposes of audit, investigation, and evaluations.
       ``(F) Penalties for failure to provide timely information 
     and provision of false information.--In the case of a PDP 
     sponsor--
       ``(i) that fails to provide information required under 
     subparagraph (B) on a timely basis, the sponsor is subject to 
     a civil money penalty in the amount of $10,000 for each day 
     in which such information has not been provided; or
       ``(ii) that knowingly (as defined in section 1128A(i)) 
     provides false information under such subparagraph, the 
     sponsor is subject to a civil money penalty in an amount not 
     to exceed $100,000 for each item of false information.

     Such civil money penalties are in addition to other penalties 
     as may be prescribed by law. The provisions of section 1128A 
     (other than subsections (a) and (b)) shall apply to a civil 
     money penalty under this subparagraph in the same manner as 
     such provisions apply to a penalty or proceeding under 
     section 1128A(a).''.

[[Page H12686]]

       (B) Application to ma organizations.--Section 1857(f)(3) of 
     the Social Security Act (42 U.S.C. 1395w-27(f)(3)) is amended 
     by adding at the end the following:
       ``(D) Reporting requirement related to rebate for rebate 
     eligible medicare drug plan enrollees.--Section 1860D-
     12(b)(7).''.
       (3) Deposit of rebates into medicare prescription drug 
     account.--Section 1860D-16(c) of such Act (42 U.S.C. 1395w-
     116(c)) is amended by adding at the end the following new 
     paragraph:
       ``(6) Rebate for rebate eligible medicare drug plan 
     enrollees.--Amounts paid under a rebate agreement under 
     section 1860D-2(f) shall be deposited into the Account and 
     shall be used to pay for all or part of the gradual 
     elimination of the coverage gap under section 1860D-
     2(b)(7).''.

     SEC. 1182. DISCOUNTS FOR CERTAIN PART D DRUGS IN ORIGINAL 
                   COVERAGE GAP.

       Section 1860D-2 of the Social Security Act (42 U.S.C. 
     1395w-102), as amended by section 1181, is amended--
       (1) in subsection (b)(4)(C)(ii), by inserting ``subject to 
     subsection (g)(2)(C),'' after ``(ii)'';
       (2) in subsection (e)(1), in the matter before subparagraph 
     (A), by striking ``subsection (f)'' and inserting 
     ``subsections (f) and (g)'' after ``this subsection''; and
       (3) by adding at the end the following new subsection:
       ``(g) Requirement for Manufacturer Discount Agreement for 
     Certain Qualifying Drugs.--
       ``(1) In general.--In this part, the term `covered part D 
     drug' does not include any drug or biological product that is 
     manufactured by a manufacturer that has not entered into and 
     have in effect for all qualifying drugs (as defined in 
     paragraph (5)(A)) a discount agreement described in paragraph 
     (2).
       ``(2) Discount agreement.--
       ``(A) Periodic discounts.--A discount agreement under this 
     paragraph shall require the manufacturer involved to provide, 
     to each PDP sponsor with respect to a prescription drug plan 
     or each MA organization with respect to each MA-PD plan, a 
     discount in an amount specified in paragraph (3) for 
     qualifying drugs (as defined in paragraph (5)(A)) of the 
     manufacturer dispensed to a qualifying enrollee after January 
     1, 2010, insofar as the individual is in the original gap in 
     coverage (as defined in paragraph (5)(E)).
       ``(B) Discount agreement.--Insofar as not inconsistent with 
     this subsection, the Secretary shall establish terms and 
     conditions of such agreement, including terms and conditions 
     relating to compliance, similar to the terms and conditions 
     for rebate agreements under paragraphs (2), (3), and (4) of 
     section 1927(b), except that--
       ``(i) discounts shall be applied under this subsection to 
     prescription drug plans and MA-PD plans instead of State 
     plans under title XIX;
       ``(ii) PDP sponsors and MA organizations shall be 
     responsible, instead of States, for provision of necessary 
     utilization information to drug manufacturers; and
       ``(iii) sponsors and MA organizations shall be responsible 
     for reporting information on drug-component negotiated price.
       ``(C) Counting discount toward true out-of-pocket costs.--
     Under the discount agreement, in applying subsection (b)(4), 
     with regard to subparagraph (C)(i) of such subsection, if a 
     qualified enrollee purchases the qualified drug insofar as 
     the enrollee is in an actual gap of coverage (as defined in 
     paragraph (5)(D)), the amount of the discount under the 
     agreement shall be treated and counted as costs incurred by 
     the plan enrollee.
       ``(3) Discount amount.--The amount of the discount 
     specified in this paragraph for a discount period for a plan 
     is equal to 50 percent of the amount of the drug-component 
     negotiated price (as defined in paragraph (5)(C)) for 
     qualifying drugs for the period involved.
       ``(4) Additional terms.--In the case of a discount provided 
     under this subsection with respect to a prescription drug 
     plan offered by a PDP sponsor or an MA-PD plan offered by an 
     MA organization, if a qualified enrollee purchases the 
     qualified drug--
       ``(A) insofar as the enrollee is in an actual gap of 
     coverage (as defined in paragraph (5)(D)), the sponsor or 
     plan shall provide the discount to the enrollee at the time 
     the enrollee pays for the drug; and
       ``(B) insofar as the enrollee is in the portion of the 
     original gap in coverage (as defined in paragraph (5)(E)) 
     that is not in the actual gap in coverage, the discount shall 
     not be applied against the negotiated price (as defined in 
     subsection (d)(1)(B)) for the purpose of calculating the 
     beneficiary payment.
       ``(5) Definitions.--In this subsection:
       ``(A) Qualifying drug.--The term `qualifying drug' means, 
     with respect to a prescription drug plan or MA-PD plan, a 
     drug or biological product that--
       ``(i)(I) is a drug produced or distributed under an 
     original new drug application approved by the Food and Drug 
     Administration, including a drug product marketed by any 
     cross-licensed producers or distributors operating under the 
     new drug application;
       ``(II) is a drug that was originally marketed under an 
     original new drug application approved by the Food and Drug 
     Administration; or
       ``(III) is a biological product as approved under Section 
     351(a) of the Public Health Services Act;
       ``(ii) is covered under the formulary of the plan or is 
     treated as covered under the formulary of the plan as a 
     result of a coverage determination or appeal under subsection 
     (g) or (h) of section 1860D-4; and
       ``(iii) is dispensed to an individual who is in the 
     original gap in coverage.
       ``(B) Qualifying enrollee.--The term `qualifying enrollee' 
     means an individual enrolled in a prescription drug plan or 
     MA-PD plan other than such an individual who is a subsidy-
     eligible individual (as defined in section 1860D-14(a)(3)).
       ``(C) Drug-component negotiated price.--The term `drug-
     component negotiated price' means, with respect to a 
     qualifying drug, the negotiated price (as defined in section 
     423.100 of title 42, Code of Federal Regulations, as in 
     effect on the date of enactment of this subsection), as 
     determined without regard to any dispensing fee, of the drug 
     under the prescription drug plan or MA-PD plan involved.
       ``(D) Actual gap in coverage.--The term `actual gap in 
     coverage' means the gap in prescription drug coverage that 
     occurs between the initial coverage limit (as modified under 
     paragraph (7) and subparagraph (B) of paragraph (8) of 
     subsection (b)) and the annual out-of-pocket threshold (as 
     modified under subparagraph (C) of such subsection).
       ``(E) Original gap in coverage.--The term `original in gap 
     coverage' means the gap in prescription drug coverage that 
     would occur between the initial coverage limit (described in 
     subsection (b)(3)) and the out-of-pocket threshold (as 
     defined in subsection (b)(4)(B)) if subsections (b)(7) and 
     (b)(8) did not apply.
       ``(6) Special rule for 2010.--For the period beginning 
     January 1, 2010, and ending December 31, 2010, the Secretary 
     may--
       ``(A) enter into agreements with manufacturers to directly 
     receive the discount amount described in paragraph (3);
       ``(B) collect the necessary information from prescription 
     drug plans and MA-PD plans to calculate the discount amount 
     described in such paragraph; and
       ``(C) provide the discount described in such paragraph to 
     beneficiaries as close as practicable after the point of 
     sale.
       ``(7) Waiver.--Chapter 35 of title 44, United States Code, 
     shall not apply to the requirements under this subsection for 
     the period beginning on January 1, 2010, and ending on 
     December 31, 2010.''.

     SEC. 1183. REPEAL OF PROVISION RELATING TO SUBMISSION OF 
                   CLAIMS BY PHARMACIES LOCATED IN OR CONTRACTING 
                   WITH LONG-TERM CARE FACILITIES.

       (a) Part D Submission.--Section 1860D-12(b) of the Social 
     Security Act (42 U.S.C. 1395w-112(b)), as amended by section 
     172(a)(1) of Public Law 110-275, is amended by striking 
     paragraph (5) and redesignating paragraph (6) and paragraph 
     (7), as added by section 1181(c)(2)(A), as paragraph (5) and 
     paragraph (6), respectively.
       (b) Submission to MA-PD Plans.--Section 1857(f)(3) of the 
     Social Security Act (42 U.S.C. 1395w-27(f)(3)), as added by 
     section 171(b) of Public Law 110-275 and amended by section 
     172(a)(2) of such Public Law and section 1181 of this Act, is 
     amended by striking subparagraph (B) and redesignating 
     subparagraphs (C) and (D) as subparagraphs (B) and (C) 
     respectively.
       (c) Effective Date.--The amendments made by this section 
     shall apply for contract years beginning with 2010.

     SEC. 1184. INCLUDING COSTS INCURRED BY AIDS DRUG ASSISTANCE 
                   PROGRAMS AND INDIAN HEALTH SERVICE IN PROVIDING 
                   PRESCRIPTION DRUGS TOWARD THE ANNUAL OUT-OF-
                   POCKET THRESHOLD UNDER PART D.

       (a) In General.--Section 1860D-2(b)(4)(C) of the Social 
     Security Act (42 U.S.C. 1395w-102(b)(4)(C)) is amended--
       (1) in clause (i), by striking ``and'' at the end;
       (2) in clause (ii)--
       (A) by striking ``such costs shall be treated as incurred 
     only if'' and inserting ``and subject to clause (iii), such 
     costs shall be treated as incurred only if'';
       (B) by striking ``, under section 1860D-14, or under a 
     State Pharmaceutical Assistance Program''; and
       (C) by striking the period at the end and inserting ``; 
     and''; and
       (3) by inserting after clause (ii) the following new 
     clause:
       ``(iii) such costs shall be treated as incurred and shall 
     not be considered to be reimbursed under clause (ii) if such 
     costs are borne or paid--

       ``(I) under section 1860D-14;
       ``(II) under a State Pharmaceutical Assistance Program;
       ``(III) by the Indian Health Service, an Indian tribe or 
     tribal organization, or an urban Indian organization (as 
     defined in section 4 of the Indian Health Care Improvement 
     Act); or
       ``(IV) under an AIDS Drug Assistance Program under part B 
     of title XXVI of the Public Health Service Act.''.

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to costs incurred on or after January 1, 2011.

     SEC. 1185. NO MID-YEAR FORMULARY CHANGES PERMITTED.

       (a) In General.--Section 1860D-4(b)(3)(E) of the Social 
     Security Act (42 U.S.C. 1395w-104(b)(3)(E)) is amended--
       (1) in the heading, by inserting ``; certain formulary 
     changes only before initiating marketing for a plan year'' 
     after ``status of drug'';
       (2) by striking ``Any removal'' and inserting ``(i) 
     notice.--Any removal'' with the same indentation as the 
     clause added by paragraph (2);

[[Page H12687]]

       (3) by adding at the end the following new clause:
       ``(ii) Certain changes in formulary only before initiating 
     marketing for a plan year.--Any removal of a covered part D 
     drug from a formulary used by a PDP sponsor of a prescription 
     drug plan (or MA organization of a MA-PD plan) or any other 
     material change to the formulary so as to reduce the coverage 
     (or increase the cost-sharing) of the drug under the plan for 
     a plan year shall take effect by a date specified by the 
     Secretary but no later than the start of plan marketing 
     activities for the plan year. In addition to any exceptions 
     to the previous sentence specified by the Secretary, the 
     previous sentence shall not apply in the case that a drug is 
     removed from the formulary of a plan because of a recall or 
     withdrawal of the drug issued by the Food and Drug 
     Administration, because the drug is replaced with a generic 
     drug that is a therapeutic equivalent, or because of 
     utilization management applied to--

       ``(I) a drug whose labeling includes a boxed warning 
     required by the Food and Drug Administration under section 
     201.57(c)(1) of title 21, Code of Federal Regulations (or a 
     successor regulation); or
       ``(II) a drug required under subsection (c)(2) of section 
     505-1 of the Federal Food, Drug, and Cosmetic Act to have a 
     Risk Evaluation and Management Strategy that includes 
     elements under subsection (f) of such section.''.

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to contract years beginning on or after January 
     1, 2011.

     SEC. 1186. NEGOTIATION OF LOWER COVERED PART D DRUG PRICES ON 
                   BEHALF OF MEDICARE BENEFICIARIES.

       (a) Negotiation by Secretary.--Section 1860D-11 of the 
     Social Security Act (42 U.S.C. 1395w-111) is amended by 
     striking subsection (i) (relating to noninterference) and 
     inserting the following:
       ``(i) Negotiation of Lower Drug Prices.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, the Secretary shall negotiate with pharmaceutical 
     manufacturers the prices (including discounts, rebates, and 
     other price concessions) that may be charged to PDP sponsors 
     and MA organizations for covered part D drugs for part D 
     eligible individuals who are enrolled under a prescription 
     drug plan or under an MA-PD plan.
       ``(2) No change in rules for formularies.--
       ``(A) In general.--Nothing in paragraph (1) shall be 
     construed to authorize the Secretary to establish or require 
     a particular formulary.
       ``(B) Construction.--Subparagraph (A) shall not be 
     construed as affecting the Secretary's authority to ensure 
     appropriate and adequate access to covered part D drugs under 
     prescription drug plans and under MA-PD plans, including 
     compliance of such plans with formulary requirements under 
     section 1860D-4(b)(3).
       ``(3) Construction.--Nothing in this subsection shall be 
     construed as preventing the sponsor of a prescription drug 
     plan, or an organization offering an MA-PD plan, from 
     obtaining a discount or reduction of the price for a covered 
     part D drug below the price negotiated under paragraph (1).
       ``(4) Annual reports to congress.--Not later than June 1, 
     2011, and annually thereafter, the Secretary shall submit to 
     the Committees on Ways and Means, Energy and Commerce, and 
     Oversight and Government Reform of the House of 
     Representatives and the Committee on Finance of the Senate a 
     report on negotiations conducted by the Secretary to achieve 
     lower prices for Medicare beneficiaries, and the prices and 
     price discounts achieved by the Secretary as a result of such 
     negotiations.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act 
     and shall first apply to negotiations and prices for plan 
     years beginning on January 1, 2011.

     SEC. 1187. ACCURATE DISPENSING IN LONG-TERM CARE FACILITIES.

       Section 1860D-4(c) of the Social Security Act (42 U.S.C. 
     1395w-104(c)) is amended by adding at the end the following 
     new paragraph:
       ``(3) Reduction of wasteful dispensing.--
       ``(A) In general.--For plan years beginning on or after 
     January 1, 2012, a PDP sponsor offering a prescription drug 
     plan and MA organization offering a MA-PD plan under part C 
     shall have in place the utilization management techniques 
     established under subparagraph (B).
       ``(B) Requirements.--The Secretary shall establish 
     utilization management techniques, such as daily, weekly, or 
     automated dose dispensing, to apply to PDP sponsors and MA 
     organizations to reduce the quantities of covered part D 
     drugs dispensed to enrollees who are residing in long-term 
     care facilities in order to reduce waste associated with 
     unused medications.
       ``(C) Consultation.--In establishing the requirements under 
     subparagraph (A), the Secretary shall consult with the 
     Administrator of the Environmental Protection Agency, 
     Administrator of the Food and Drug Administration, 
     Administrator of the Drug Enforcement Administration, State 
     Boards of Pharmacy, pharmacy and physician organizations, and 
     other appropriate stakeholders to study and determine 
     additional methods for prescription drug plans to reduce 
     waste associated with unused prescription drugs.''.

     SEC. 1188. FREE GENERIC FILL.

       (a) In General.--Section 1128A(i)(6) of the Social Security 
     Act (42 U.S.C. 1320a-7a(i)(6)) is amended--
       (1) in subparagraph (C), by striking ``of 1996'' and all 
     that follows and inserting ``of 1996;'';
       (2) in the first subparagraph (D), by striking 
     ``promulgated'' and all that follows and inserting 
     ``promulgated;'';
       (3) by redesignating the second subparagraph (D) as a 
     subparagraph (E) and by striking the period at the end of 
     such subparagraph and inserting ``; and''; and
       (4) by adding at the end the following new subparagraph:
       ``(F) with regard to a prescription drug plan offered by a 
     PDP sponsor or an MA-PD plan offered by an MA organization, a 
     reduction in or waiver of the copayment amount under the plan 
     given to an individual to induce the individual to switch to 
     a generic, bioequivalent drug, or biosimilar.''.
       (b) Effective Date.--The amendments made by this subsection 
     shall take effect on the date of the enactment of this Act 
     and shall first apply with respect to remuneration offered, 
     paid, solicited, or received on or after January 1, 2011.

     SEC. 1189. STATE CERTIFICATION PRIOR TO WAIVER OF LICENSURE 
                   REQUIREMENTS UNDER MEDICARE PRESCRIPTION DRUG 
                   PROGRAM.

       (a) In General.--Section 1860D-12(c) of the Social Security 
     Act (42 U.S.C. 1395w-112(c)) is amended--
       (1) in paragraph (1)(A), by striking ``In the case'' and 
     inserting ``Subject to paragraph (5), in the case''; and
       (2) by adding at the end the following new paragraph:
       ``(5) State certification required.--
       ``(A) In general.--Except as provided in section 1860D-
     21(f)(4), the Secretary may only grant a waiver under 
     paragraph (1)(A) if the Secretary has received a 
     certification from the State insurance commissioner that the 
     prescription drug plan has a substantially complete 
     application pending in the State.
       ``(B) Revocation of waiver upon finding of fraud and 
     abuse.--The Secretary shall revoke a waiver granted under 
     paragraph (1)(A) if the State insurance commissioner submits 
     a certification to the Secretary that the recipient of such a 
     waiver--
       ``(i) has committed fraud or abuse with respect to such 
     waiver;
       ``(ii) has failed to make a good faith effort to satisfy 
     State licensing requirements; or
       ``(iii) was determined ineligible for licensure by the 
     State.''.
       (b) Exception for PACE Programs.--Section 1860D-21(f) of 
     such Act (42 U.S.C. 1395w-131(f)) is amended--
       (1) in paragraph (1), by striking ``paragraphs (2) and 
     (3)'' and inserting ``the succeeding paragraphs''; and
       (2) by adding at the end the following new paragraph:
       ``(4) Inapplicability of certain licensure waiver 
     requirements.--The provisions of paragraph (1) of section 
     1860D-12(c) (relating to waiver of licensure under certain 
     circumstances) shall apply without regard to paragraph (5) of 
     such section in the case of a PACE program that elects to 
     provide qualified prescription drug coverage to a part D 
     eligible individual who is enrolled under such program.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning on or after 
     January 1, 2010.

             Subtitle F--Medicare Rural Access Protections

     SEC. 1191. TELEHEALTH EXPANSION AND ENHANCEMENTS.

       (a) Additional Telehealth Site.--
       (1) In general.--Paragraph (4)(C)(ii) of section 1834(m) of 
     the Social Security Act (42 U.S.C. 1395m(m)) is amended by 
     adding at the end the following new subclause:

       ``(IX) A renal dialysis facility.''

       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to services furnished on or after January 1, 
     2011.
       (b) Telehealth Advisory Committee.--
       (1) Establishment.--Section 1868 of the Social Security Act 
     (42 U.S.C. 1395ee) is amended--
       (A) in the heading, by adding at the end the following: 
     ``telehealth advisory committee''; and
       (B) by adding at the end the following new subsection:
       ``(c) Telehealth Advisory Committee.--
       ``(1) In general.--The Secretary shall appoint a Telehealth 
     Advisory Committee (in this subsection referred to as the 
     `Advisory Committee') to make recommendations to the 
     Secretary on policies of the Centers for Medicare & Medicaid 
     Services regarding telehealth services as established under 
     section 1834(m), including the appropriate addition or 
     deletion of services (and HCPCS codes) to those specified in 
     paragraphs (4)(F)(i) and (4)(F)(ii) of such section and for 
     authorized payment under paragraph (1) of such section.
       ``(2) Membership; terms.--
       ``(A) Membership.--
       ``(i) In general.--The Advisory Committee shall be composed 
     of 9 members, to be appointed by the Secretary, of whom--

       ``(I) 5 shall be practicing physicians;
       ``(II) 2 shall be practicing non-physician health care 
     practitioners; and
       ``(III) 2 shall be administrators of telehealth programs.

       ``(ii) Requirements for appointing members.--In appointing 
     members of the Advisory Committee, the Secretary shall--

[[Page H12688]]

       ``(I) ensure that each member has prior experience with the 
     practice of telemedicine or telehealth;
       ``(II) give preference to individuals who are currently 
     providing telemedicine or telehealth services or who are 
     involved in telemedicine or telehealth programs;
       ``(III) ensure that the membership of the Advisory 
     Committee represents a balance of specialties and geographic 
     regions; and
       ``(IV) take into account the recommendations of 
     stakeholders.

       ``(B) Terms.--The members of the Advisory Committee shall 
     serve for such term as the Secretary may specify.
       ``(C) Conflicts of interest.--An advisory committee member 
     may not participate with respect to a particular matter 
     considered in an advisory committee meeting if such member 
     (or an immediate family member of such member) has a 
     financial interest that could be affected by the advice given 
     to the Secretary with respect to such matter.
       ``(3) Meetings.--The Advisory Committee shall meet twice 
     each calendar year and at such other times as the Secretary 
     may provide.
       ``(4) Permanent committee.--Section 14 of the Federal 
     Advisory Committee Act (5 U.S.C. App.) shall not apply to the 
     Advisory Committee.''
       (2) Following recommendations.--Section 1834(m)(4)(F) of 
     such Act (42 U.S.C. 1395m(m)(4)(F)) is amended by adding at 
     the end the following new clause:
       ``(iii) Recommendations of the telehealth advisory 
     committee.--In making determinations under clauses (i) and 
     (ii), the Secretary shall take into account the 
     recommendations of the Telehealth Advisory Committee 
     (established under section 1868(c)) when adding or deleting 
     services (and HCPCS codes) and in establishing policies of 
     the Centers for Medicare & Medicaid Services regarding the 
     delivery of telehealth services. If the Secretary does not 
     implement such a recommendation, the Secretary shall publish 
     in the Federal Register a statement regarding the reason such 
     recommendation was not implemented.''
       (3) Waiver of administrative limitation.--The Secretary of 
     Health and Human Services shall establish the Telehealth 
     Advisory Committee under the amendment made by paragraph (1) 
     notwithstanding any limitation that may apply to the number 
     of advisory committees that may be established (within the 
     Department of Health and Human Services or otherwise).
       (c) Hospital Credentialing of Telemedicine Physicians and 
     Practitioners.--
       (1) In general.--Not later than 60 days after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services shall issue guidance for hospitals (as defined in 
     paragraph (4)) to simplify requirements regarding compiling 
     practitioner credentials for the purpose of rendering a 
     medical staff privileging decision (under bylaws of the type 
     described in section 1861(e)(3) of the Social Security Act) 
     for physicians and practitioners (as defined in paragraph 
     (4)) delivering telehealth services that are furnished via a 
     telecommunications system.
       (2) Flexibility in accepting credentialing by another 
     medicare participating hospital.--
       (A) In general.--Such guidance shall permit a hospital to 
     accept credentialing packages compiled by another hospital 
     participating under Medicare with regard to physicians and 
     practitioners who seek medical staff privileges in the 
     hospital to provide telehealth services via a 
     telecommunications system from a site other than the hospital 
     where the patient is located.
       (B) Construction.--Nothing in this subsection shall be 
     construed to require a hospital to accept the credentialing 
     package compiled by another facility.
       (C) No oversight required.--If a hospital does accept the 
     credentialing materials prepared by another hospital, the 
     hospital shall not be required to exercise oversight over the 
     other hospital's process for compiling and verifying 
     credentials.  
       (D) Privileging.--This paragraph shall only apply to 
     credentialing and does not relieve a hospital from any 
     applicable privileging requirements.
       (3) Construction.--This subsection shall not be construed 
     as limiting the ability of the Secretary to issue additional 
     guidance regarding the requirements for the compilation of 
     credentials for physicians and practitioners not described in 
     paragraph (1).
       (4) Definitions.--In this subsection:
       (A) The term ``hospital'' has the meaning given such term 
     in subsection (e) of section 1861 of the Social Security Act 
     (42 U.S.C. 1395x) and includes a critical access hospital (as 
     defined in subsection (mm)(1) of such section).
       (B) The term ``physician'' has the meaning given such term 
     in subsection (r) of such section.
       (C) The term ``practitioner'' means a practitioner 
     described in section 1842(b)(18)(C) of the Social Security 
     Act (42 U.S.C. 1395u(b)(18)(C)).

     SEC. 1192. EXTENSION OF OUTPATIENT HOLD HARMLESS PROVISION.

        Section 1833(t)(7)(D)(i) of the Social Security Act (42 
     U.S.C. 1395l(t)(7)(D)(i)) is amended--
       (1) in subclause (II)--
       (A) in the first sentence, by striking ```2010'' and 
     inserting ``2012''; and
       (B) in the second sentence, by striking ``or 2009'' and 
     inserting ``, 2009, 2010, or 2011''; and
       (2) in subclause (III), by striking ``January 1, 2010'' and 
     inserting ``January 1, 2012''.

     SEC. 1193. EXTENSION OF SECTION 508 HOSPITAL 
                   RECLASSIFICATIONS.

       (a) In General.--Subsection (a) of section 106 of division 
     B of the Tax Relief and Health Care Act of 2006 (42 U.S.C. 
     1395 note), as amended by section 117 of the Medicare, 
     Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-
     173) and section 124 of the Medicare Improvements for 
     Patients and Providers Act of 2008 (Public Law 110-275), is 
     amended by striking ``September 30, 2009'' and inserting 
     ``September 30, 2011''.
       (b) Use of Particular Wage Index for Fiscal Year 2010.--For 
     purposes of implementation of the amendment made by 
     subsection (a) for fiscal year 2010, the Secretary shall use 
     the hospital wage index that was promulgated by the Secretary 
     in the Federal Register on August 27, 2009 (74 Fed. Reg. 
     43754), and any subsequent corrections.

     SEC. 1194. EXTENSION OF GEOGRAPHIC FLOOR FOR WORK.

       Section 1848(e)(1)(E) of the Social Security Act (42 U.S.C. 
     1395w-4(e)(1)(E)) is amended by striking ``before January 1, 
     2010'' and inserting ``before January 1, 2012''.

     SEC. 1195. EXTENSION OF PAYMENT FOR TECHNICAL COMPONENT OF 
                   CERTAIN PHYSICIAN PATHOLOGY SERVICES.

       Section 542(c) of the Medicare, Medicaid, and SCHIP 
     Benefits Improvement and Protection Act of 2000 (as enacted 
     into law by section 1(a)(6) of Public Law 106-554), as 
     amended by section 732 of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (42 U.S.C. 1395w-4 
     note), section 104 of division B of the Tax Relief and Health 
     Care Act of 2006 (42 U.S.C. 1395w-4 note), section 104 of the 
     Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public 
     Law 110-173), and section 136 of the Medicare Improvements 
     for Patients and Providers Act of 1008 (Public Law 110-275), 
     is amended by striking ``and 2009'' and inserting ``2009, 
     2010, and 2011''.

     SEC. 1196. EXTENSION OF AMBULANCE ADD-ONS.

       (a) In General.--Section 1834(l)(13) of the Social Security 
     Act (42 U.S.C. 1395m(l)(13)) is amended--
       (1) in subparagraph (A)--
       (A) in the matter preceding clause (i), by striking 
     ``before January 1, 2010'' and inserting ``before January 1, 
     2012''; and
       (B) in each of clauses (i) and (ii), by striking ``before 
     January 1, 2010'' and inserting ``before January 1, 2012''.
       (b) Air Ambulance Improvements.--Section 146(b)(1) of the 
     Medicare Improvements for Patients and Providers Act of 2008 
     (Public Law 110-275) is amended by striking ``ending on 
     December 31, 2009'' and inserting ``ending on December 31, 
     2011''.

              TITLE II--MEDICARE BENEFICIARY IMPROVEMENTS

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

     SEC. 1201. IMPROVING ASSETS TESTS FOR MEDICARE SAVINGS 
                   PROGRAM AND LOW-INCOME SUBSIDY PROGRAM.

       (a) Application of Highest Level Permitted Under LIS to All 
     Subsidy Eligible Individuals.--
       (1) In general.--Section 1860D-14(a)(1) of the Social 
     Security Act (42 U.S.C. 1395w-114(a)(1)) is amended in the 
     matter before subparagraph (A), by inserting ``(or, beginning 
     with 2012, paragraph (3)(E))'' after ``paragraph (3)(D)''.
       (2) Annual increase in lis resource test.--Section 1860D-
     14(a)(3)(E)(i) of such Act (42 U.S.C. 1395w-114(a)(3)(E)(i)) 
     is amended--
       (A) by striking ``and'' at the end of subclause (I);
       (B) in subclause (II), by inserting ``(before 2012)'' after 
     ``subsequent year'';
       (C) by striking the period at the end of subclause (II) and 
     inserting a semicolon;
       (D) by inserting after subclause (II) the following new 
     subclauses:

       ``(III) for 2012, $17,000 (or $34,000 in the case of the 
     combined value of the individual's assets or resources and 
     the assets or resources of the individual's spouse); and
       ``(IV) for a subsequent year, the dollar amounts specified 
     in this subclause (or subclause (III)) for the previous year 
     increased by the annual percentage increase in the consumer 
     price index (all items; U.S. city average) as of September of 
     such previous year.''; and

       (E) in the last sentence, by inserting ``or (IV)'' after 
     ``subclause (II)''.
       (3) Application of lis test under medicare savings 
     program.--Section 1905(p)(1)(C) of such Act (42 U.S.C. 
     1396d(p)(1)(C)) is amended--
       (A) by striking ``effective beginning with January 1, 
     2010'' and inserting ``effective for the period beginning 
     with January 1, 2010, and ending with December 31, 2011''; 
     and
       (B) by inserting before the period at the end the 
     following: ``or, effective beginning with January 1, 2012, 
     whose resources (as so determined) do not exceed the maximum 
     resource level applied for the year under subparagraph (E) of 
     section 1860D-14(a)(3) (determined without regard to the life 
     insurance policy exclusion provided under subparagraph (G) of 
     such section) applicable to an individual or to the 
     individual and the individual's spouse (as the case may 
     be)''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to eligibility determinations for income-related 
     subsidies and medicare cost-sharing furnished for periods 
     beginning on or after January 1, 2012.

[[Page H12689]]

     SEC. 1202. ELIMINATION OF PART D COST-SHARING FOR CERTAIN 
                   NON-INSTITUTIONALIZED FULL-BENEFIT DUAL 
                   ELIGIBLE INDIVIDUALS.

       (a) In General.--Section 1860D-14(a)(1)(D)(i) of the Social 
     Security Act (42 U.S.C. 1395w-114(a)(1)(D)(i)) is amended--
       (1) by striking ``Institutionalized individuals.--In'' and 
     inserting ``Elimination of cost-sharing for certain full-
     benefit dual eligible individuals.--

       ``(I) Institutionalized individuals.--In''; and

       (2) by adding at the end the following new subclause:

       ``(II) Certain other individuals.--In the case of an 
     individual who is a full-benefit dual eligible individual and 
     with respect to whom there has been a determination that but 
     for the provision of home and community based care (whether 
     under section 1915, 1932, or under a waiver under section 
     1115) the individual would require the level of care provided 
     in a hospital or a nursing facility or intermediate care 
     facility for the mentally retarded the cost of which could be 
     reimbursed under the State plan under title XIX, the 
     elimination of any beneficiary coinsurance described in 
     section 1860D-2(b)(2) (for all amounts through the total 
     amount of expenditures at which benefits are available under 
     section 1860D-2(b)(4)).''.

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to drugs dispensed on or after January 1, 2011.

     SEC. 1203. ELIMINATING BARRIERS TO ENROLLMENT.

       (a) Administrative Verification of Income and Resources 
     Under the Low-income Subsidy Program.--
       (1) In general.--Clause (iii) of section 1860D-14(a)(3)(E) 
     of the Social Security Act (42 U.S.C. 1395w-114(a)(3)(E)) is 
     amended to read as follows:
       ``(iii) Certification of income and resources.--For 
     purposes of applying this section--

       ``(I) an individual shall be permitted to apply on the 
     basis of self-certification of income and resources; and
       ``(II) matters attested to in the application shall be 
     subject to appropriate methods of verification without the 
     need of the individual to provide additional documentation, 
     except in extraordinary situations as determined by the 
     Commissioner.''.

       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply beginning January 1, 2010.
       (b) Disclosures to Facilitate Identification of Individuals 
     Likely to Be Ineligible for the Low-income Assistance Under 
     the Medicare Prescription Drug Program to Assist Social 
     Security Administration's Outreach to Eligible Individuals.--
     For provision authorizing disclosure of return information to 
     facilitate identification of individuals likely to be 
     ineligible for low-income subsidies under Medicare 
     prescription drug program, see section 1801.

     SEC. 1204. ENHANCED OVERSIGHT RELATING TO REIMBURSEMENTS FOR 
                   RETROACTIVE LOW INCOME SUBSIDY ENROLLMENT.

       (a) In General.--In the case of a retroactive LIS 
     enrollment beneficiary who is enrolled under a prescription 
     drug plan under part D of title XVIII of the Social Security 
     Act (or an MA-PD plan under part C of such title), the 
     beneficiary (or any eligible third party) is entitled to 
     reimbursement by the plan for covered drug costs incurred by 
     the beneficiary during the retroactive coverage period of the 
     beneficiary in accordance with subsection (b) and in the case 
     of such a beneficiary described in subsection (c)(4)(A)(i), 
     such reimbursement shall be made automatically by the plan 
     upon receipt of appropriate notice the beneficiary is 
     eligible for assistance described in such subsection 
     (c)(4)(A)(i) without further information required to be filed 
     with the plan by the beneficiary.
       (b) Administrative Requirements Relating to 
     Reimbursements.--
       (1) Line-item description.--Each reimbursement made by a 
     prescription drug plan or MA-PD plan under subsection (a) 
     shall include a line-item description of the items for which 
     the reimbursement is made.
       (2) Timing of reimbursements.--A prescription drug plan or 
     MA-PD plan must make a reimbursement under subsection (a) to 
     a retroactive LIS enrollment beneficiary, with respect to a 
     claim, not later than 45 days after--
       (A) in the case of a beneficiary described in subsection 
     (c)(4)(A)(i), the date on which the plan receives notice from 
     the Secretary that the beneficiary is eligible for assistance 
     described in such subsection; or
       (B) in the case of a beneficiary described in subsection 
     (c)(4)(A)(ii), the date on which the beneficiary files the 
     claim with the plan.
       (3) Reporting requirement.--For each month beginning with 
     January 2011, each prescription drug plan and each MA-PD plan 
     shall report to the Secretary the following:
       (A) The number of claims the plan has readjudicated during 
     the month due to a beneficiary becoming retroactively 
     eligible for subsidies available under section 1860D-14 of 
     the Social Security Act.
       (B) The total value of the readjudicated claim amount for 
     the month.
       (C) The Medicare Health Insurance Claims Number of 
     beneficiaries for whom claims were readjudicated.
       (D) For the claims described in subparagraphs (A) and (B), 
     an attestation to the Administrator of the Centers for 
     Medicare & Medicaid Services of the total amount of 
     reimbursement the plan has provided to beneficiaries for 
     premiums and cost-sharing that the beneficiary overpaid for 
     which the plan received payment from the Centers for Medicare 
     & Medicaid Services.
       (c) Definitions.--For purposes of this section:
       (1) Covered drug costs.--The term ``covered drug costs'' 
     means, with respect to a retroactive LIS enrollment 
     beneficiary enrolled under a prescription drug plan under 
     part D of title XVIII of the Social Security Act (or an MA-PD 
     plan under part C of such title), the amount by which--
       (A) the costs incurred by such beneficiary during the 
     retroactive coverage period of the beneficiary for covered 
     part D drugs, premiums, and cost-sharing under such title; 
     exceeds
       (B) such costs that would have been incurred by such 
     beneficiary during such period if the beneficiary had been 
     both enrolled in the plan and recognized by such plan as 
     qualified during such period for the low income subsidy under 
     section 1860D-14 of the Social Security Act to which the 
     individual is entitled.
       (2) Eligible third party.--The term ``eligible third 
     party'' means, with respect to a retroactive LIS enrollment 
     beneficiary, an organization or other third party that is 
     owed payment on behalf of such beneficiary for covered drug 
     costs incurred by such beneficiary during the retroactive 
     coverage period of such beneficiary.
       (3) Retroactive coverage period.--The term ``retroactive 
     coverage period'' means--
       (A) with respect to a retroactive LIS enrollment 
     beneficiary described in paragraph (4)(A)(i), the period--
       (i) beginning on the effective date of the assistance 
     described in such paragraph for which the individual is 
     eligible; and
       (ii) ending on the date the plan effectuates the status of 
     such individual as so eligible; and
       (B) with respect to a retroactive LIS enrollment 
     beneficiary described in paragraph (4)(A)(ii), the period--
       (i) beginning on the date the individual is both entitled 
     to benefits under part A, or enrolled under part B, of title 
     XVIII of the Social Security Act and eligible for medical 
     assistance under a State plan under title XIX of such Act; 
     and
       (ii) ending on the date the plan effectuates the status of 
     such individual as a full-benefit dual eligible individual 
     (as defined in section 1935(c)(6) of such Act).
       (4) Retroactive lis enrollment beneficiary.--
       (A) In general.--The term ``retroactive LIS enrollment 
     beneficiary'' means an individual who--
       (i) is enrolled in a prescription drug plan under part D of 
     title XVIII of the Social Security Act (or an MA-PD plan 
     under part C of such title) and subsequently becomes eligible 
     as a full-benefit dual eligible individual (as defined in 
     section 1935(c)(6) of such Act), an individual receiving a 
     low-income subsidy under section 1860D-14 of such Act, an 
     individual receiving assistance under the Medicare Savings 
     Program implemented under clauses (i), (iii), and (iv) of 
     section 1902(a)(10)(E) of such Act, or an individual 
     receiving assistance under the supplemental security income 
     program under section 1611 of such Act; or
       (ii) subject to subparagraph (B)(i), is a full-benefit dual 
     eligible individual (as defined in section 1935(c)(6) of such 
     Act) who is automatically enrolled in such a plan under 
     section 1860D-1(b)(1)(C) of such Act.
       (B) Exception for beneficiaries enrolled in rfp plan.--
       (i) In general.--In no case shall an individual described 
     in subparagraph (A)(ii) include an individual who is 
     enrolled, pursuant to a RFP contract described in clause 
     (ii), in a prescription drug plan offered by the sponsor of 
     such plan awarded such contract.
       (ii) RFP contract described.--The RFP contract described in 
     this section is a contract entered into between the Secretary 
     and a sponsor of a prescription drug plan pursuant to the 
     Centers for Medicare & Medicaid Services' request for 
     proposals issued on February 17, 2009, relating to Medicare 
     part D retroactive coverage for certain low income 
     beneficiaries, or a similar subsequent request for proposals.

     SEC. 1205. INTELLIGENT ASSIGNMENT IN ENROLLMENT.

       (a) In General.--Section 1860D-1(b)(1)(C) of the Social 
     Security Act (42 U.S.C. 1395w-101(b)(1)(C)) is amended by 
     adding after ``PDP region'' the following: ``or through use 
     of an intelligent assignment process that is designed to 
     maximize the access of such individual to necessary 
     prescription drugs while minimizing costs to such individual 
     and to the program under this part to the greatest extent 
     possible. In the case the Secretary enrolls such individuals 
     through use of an intelligent assignment process, such 
     process shall take into account the extent to which 
     prescription drugs necessary for the individual are covered 
     in the case of a PDP sponsor of a prescription drug plan that 
     uses a formulary, the use of prior authorization or other 
     restrictions on access to coverage of such prescription drugs 
     by such a sponsor, and the overall quality of a prescription 
     drug plan as measured by quality ratings established by the 
     Secretary''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect for contract years beginning with 2012.

[[Page H12690]]

     SEC. 1206. SPECIAL ENROLLMENT PERIOD AND AUTOMATIC ENROLLMENT 
                   PROCESS FOR CERTAIN SUBSIDY ELIGIBLE 
                   INDIVIDUALS.

       (a) Special Enrollment Period.--Section 1860D-1(b)(3)(D) of 
     the Social Security Act (42 U.S.C. 1395w-101(b)(3)(D)) is 
     amended to read as follows:
       ``(D) Subsidy eligible individuals.--In the case of an 
     individual (as determined by the Secretary) who is determined 
     under subparagraph (B) of section 1860D-14(a)(3) to be a 
     subsidy eligible individual.''.
       (b) Automatic Enrollment.--Section 1860D-1(b)(1) of the 
     Social Security Act (42 U.S.C. 1395w-101(b)(1)) is amended by 
     adding at the end the following new subparagraph:
       ``(D) Special rule for subsidy eligible individuals.--The 
     process established under subparagraph (A) shall include, in 
     the case of an individual described in section 1860D-
     1(b)(3)(D) who fails to enroll in a prescription drug plan or 
     an MA-PD plan during the special enrollment established under 
     such section applicable to such individual, the application 
     of the assignment process described in subparagraph (C) to 
     such individual in the same manner as such assignment process 
     applies to a part D eligible individual described in such 
     subparagraph (C). Nothing in the previous sentence shall 
     prevent an individual described in such sentence from 
     declining enrollment in a plan determined appropriate by the 
     Secretary (or in the program under this part) or from 
     changing such enrollment.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to subsidy determinations made for months 
     beginning with January 2011.

     SEC. 1207. APPLICATION OF MA PREMIUMS PRIOR TO REBATE AND 
                   QUALITY BONUS PAYMENTS IN CALCULATION OF LOW 
                   INCOME SUBSIDY BENCHMARK.

       (a) In General.--Section 1860D-14(b)(2)(B)(iii) of the 
     Social Security Act (42 U.S.C. 1395w-114(b)(2)(B)(iii)) is 
     amended by inserting before the period the following: 
     ``before the application of the monthly rebate computed under 
     section 1854(b)(1)(C)(i) for that plan and year involved and, 
     in the case of a qualifying plan in a qualifying county, 
     before the application of the increase under section 1853(o) 
     for that plan and year involved''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to subsidy determinations made for months 
     beginning with January 2011.

                Subtitle B--Reducing Health Disparities

     SEC. 1221. ENSURING EFFECTIVE COMMUNICATION IN MEDICARE.

       (a) Ensuring Effective Communication by the Centers for 
     Medicare & Medicaid Services.--
       (1) Study on medicare payments for language services.--The 
     Secretary of Health and Human Services shall conduct a study 
     that examines the extent to which Medicare service providers 
     utilize, offer, or make available language services for 
     beneficiaries who are limited English proficient and ways 
     that Medicare should develop payment systems for language 
     services.
       (2) Analyses.--The study shall include an analysis of each 
     of the following:
       (A) How to develop and structure appropriate payment 
     systems for language services for all Medicare service 
     providers.
       (B) The feasibility of adopting a payment methodology for 
     on-site interpreters, including interpreters who work as 
     independent contractors and interpreters who work for 
     agencies that provide on-site interpretation, pursuant to 
     which such interpreters could directly bill Medicare for 
     services provided in support of physician office services for 
     an LEP Medicare patient.
       (C) The feasibility of Medicare contracting directly with 
     agencies that provide off-site interpretation including 
     telephonic and video interpretation pursuant to which such 
     contractors could directly bill Medicare for the services 
     provided in support of physician office services for an LEP 
     Medicare patient.
       (D) The feasibility of modifying the existing Medicare 
     resource-based relative value scale (RBRVS) by using 
     adjustments (such as multipliers or add-ons) when a patient 
     is LEP.
       (E) How each of options described in a previous paragraph 
     would be funded and how such funding would affect physician 
     payments, a physician's practice, and beneficiary cost-
     sharing.
       (F) The extent to which providers under parts A and B of 
     title XVIII of the Social Security Act, MA organizations 
     offering Medicare Advantage plans under part C of such title 
     and PDP sponsors of a prescription drug plan under part D of 
     such title utilize, offer, or make available language 
     services for beneficiaries with limited English proficiency.
       (G) The nature and type of language services provided by 
     States under title XIX of the Social Security Act and the 
     extent to which such services could be utilized by 
     beneficiaries and providers under title XVIII of such Act.
       (H) The extent to which interpreters and translators 
     providing services to Medicare beneficiaries under title 
     XVIII of such Act are trained or accredited.
       (3) Variation in payment system described.--The payment 
     systems described in paragraph (2)(A) may allow variations 
     based upon types of service providers, available delivery 
     methods, and costs for providing language services including 
     such factors as--
       (A) the type of language services provided (such as 
     provision of health care or health care related services 
     directly in a non-English language by a bilingual provider or 
     use of an interpreter);
       (B) type of interpretation services provided (such as in-
     person, telephonic, video interpretation);
       (C) the methods and costs of providing language services 
     (including the costs of providing language services with 
     internal staff or through contract with external independent 
     contractors or agencies, or both);
       (D) providing services for languages not frequently 
     encountered in the United States; and
       (E) providing services in rural areas.
       (4) Report.--The Secretary shall submit a report on the 
     study conducted under subsection (a) to appropriate 
     committees of Congress not later than 12 months after the 
     date of the enactment of this Act.
       (5) Exemption from paperwork reduction act.--Chapter 35 of 
     title 44, United States Code (commonly known as the 
     ``Paperwork Reduction Act'' ), shall not apply for purposes 
     of carrying out this subsection.
       (6) Authorization of appropriations.--The Secretary shall 
     provide for the transfer, from the Federal Supplementary 
     Medical Insurance Trust Fund under section 1841 of the Social 
     Security Act (42 U.S.C. 1395t) of $2,000,000 for purposes of 
     carrying out this subsection.
       (b) Health Plans.--Section 1857(g)(1) of the Social 
     Security Act (42 U.S.C. 1395w-27(g)(1)) is amended--
       (1) by striking ``or'' at the end of subparagraph (F);
       (2) by adding ``or'' at the end of subparagraph (G); and
       (3) by inserting after subparagraph (G) the following new 
     subparagraph:
       ``(H) fails substantially to provide language services to 
     limited English proficient beneficiaries enrolled in the plan 
     that are required under law;''.

     SEC. 1222. DEMONSTRATION TO PROMOTE ACCESS FOR MEDICARE 
                   BENEFICIARIES WITH LIMITED ENGLISH PROFICIENCY 
                   BY PROVIDING REIMBURSEMENT FOR CULTURALLY AND 
                   LINGUISTICALLY APPROPRIATE SERVICES.

       (a) In General.--Not later than 6 months after the date of 
     the completion of the study described in section 1221(a) of 
     this Act, the Secretary, acting through the Centers for 
     Medicare & Medicaid Services and the Center for Medicare and 
     Medicaid Innovation established under section 1115A of the 
     Social Security Act (as added by section 1907) and consistent 
     with the applicable provisions of such section, shall carry 
     out a demonstration program under which the Secretary shall 
     award not fewer than 24 3-year grants to eligible Medicare 
     service providers (as described in subsection (b)(1)) to 
     improve effective communication between such providers and 
     Medicare beneficiaries who are living in communities where 
     racial and ethnic minorities, including populations that face 
     language barriers, are underserved with respect to such 
     services. In designing and carrying out the demonstration the 
     Secretary shall take into consideration the results of the 
     study conducted under section 1221(a) of this Act and adjust, 
     as appropriate, the distribution of grants so as to better 
     target Medicare beneficiaries who are in the greatest need of 
     language services. The Secretary shall not authorize a grant 
     larger than $500,000 over three years for any grantee.
       (b) Eligibility; Priority.--
       (1) Eligibility.--To be eligible to receive a grant under 
     subsection (a) an entity shall--
       (A) be--
       (i) a provider of services under part A of title XVIII of 
     the Social Security Act;
       (ii) a service provider under part B of such title;
       (iii) a part C organization offering a Medicare part C plan 
     under part C of such title; or
       (iv) a PDP sponsor of a prescription drug plan under part D 
     of such title; and
       (B) prepare and submit to the Secretary an application, at 
     such time, in such manner, and accompanied by such additional 
     information as the Secretary may require.
       (2) Priority.--
       (A) Distribution.--To the extent feasible, in awarding 
     grants under this section, the Secretary shall award--
       (i) at least 6 grants to providers of services described in 
     paragraph (1)(A)(i);
       (ii) at least 6 grants to service providers described in 
     paragraph (1)(A)(ii);
       (iii) at least 6 grants to organizations described in 
     paragraph (1)(A)(iii); and
       (iv) at least 6 grants to sponsors described in paragraph 
     (1)(A)(iv).
       (B) For community organizations.--The Secretary shall give 
     priority to applicants that have developed partnerships with 
     community organizations or with agencies with experience in 
     language access.
       (C) Variation in grantees.--The Secretary shall also ensure 
     that the grantees under this section represent, among other 
     factors--
       (i) different types of language services provided and of 
     service providers and organizations under parts A through D 
     of title XVIII of the Social Security Act;
       (ii) variations in languages needed and their frequency of 
     use;
       (iii) urban and rural settings;
       (iv) at least two geographic regions, as defined by the 
     Secretary; and
       (v) at least two large metropolitan statistical areas with 
     diverse populations.
       (c) Use of Funds.--
       (1) In general.--A grantee shall use grant funds received 
     under this section to pay for

[[Page H12691]]

     the provision of competent language services to Medicare 
     beneficiaries who are limited English proficient. Competent 
     interpreter services may be provided through on-site 
     interpretation, telephonic interpretation, or video 
     interpretation or direct provision of health care or health 
     care related services by a bilingual health care provider. A 
     grantee may use bilingual providers, staff, or contract 
     interpreters. A grantee may use grant funds to pay for 
     competent translation services. A grantee may use up to 10 
     percent of the grant funds to pay for administrative costs 
     associated with the provision of competent language services 
     and for reporting required under subsection (e).
       (2) Organizations.--Grantees that are part C organizations 
     or PDP sponsors must ensure that their network providers 
     receive at least 50 percent of the grant funds to pay for the 
     provision of competent language services to Medicare 
     beneficiaries who are limited English proficient, including 
     physicians and pharmacies.
       (3) Determination of payments for language services.--
     Payments to grantees shall be calculated based on the 
     estimated numbers of limited English proficient Medicare 
     beneficiaries in a grantee's service area utilizing--
       (A) data on the numbers of limited English proficient 
     individuals who speak English less than ``very well'' from 
     the most recently available data from the Bureau of the 
     Census or other State-based study the Secretary determines 
     likely to yield accurate data regarding the number of such 
     individuals served by the grantee; or
       (B) the grantee's own data if the grantee routinely 
     collects data on Medicare beneficiaries' primary language in 
     a manner determined by the Secretary to yield accurate data 
     and such data shows greater numbers of limited English 
     proficient individuals than the data listed in subparagraph 
     (A).
       (4) Limitations.--
       (A) Reporting.--Payments shall only be provided under this 
     section to grantees that report their costs of providing 
     language services as required under subsection (e) and may be 
     modified annually at the discretion of the Secretary. If a 
     grantee fails to provide the reports under such section for 
     the first year of a grant, the Secretary may terminate the 
     grant and solicit applications from new grantees to 
     participate in the subsequent two years of the demonstration 
     program.
       (B) Type of services.--
       (i) In general.--Subject to clause (ii), payments shall be 
     provided under this section only to grantees that utilize 
     competent bilingual staff or competent interpreter or 
     translation services which--

       (I) if the grantee operates in a State that has statewide 
     health care interpreter standards, meet the State standards 
     currently in effect; or
       (II) if the grantee operates in a State that does not have 
     statewide health care interpreter standards, utilizes 
     competent interpreters who follow the National Council on 
     Interpreting in Health Care's Code of Ethics and Standards of 
     Practice.

       (ii) Exemptions.--The requirements of clause (i) shall not 
     apply--

       (I) in the case of a Medicare beneficiary who is limited 
     English proficient (who has been informed in the 
     beneficiary's primary language of the availability of free 
     interpreter and translation services) and who requests the 
     use of family, friends, or other persons untrained in 
     interpretation or translation and the grantee documents the 
     request in the beneficiary's record; and
       (II) in the case of a medical emergency where the delay 
     directly associated with obtaining a competent interpreter or 
     translation services would jeopardize the health of the 
     patient.

     Nothing in clause (ii)(II) shall be construed to exempt 
     emergency rooms or similar entities that regularly provide 
     health care services in medical emergencies from having in 
     place systems to provide competent interpreter and 
     translation services without undue delay.
       (d) Assurances.--Grantees under this section shall--
       (1) ensure that appropriate clinical and support staff 
     receive ongoing education and training in linguistically 
     appropriate service delivery;
       (2) ensure the linguistic competence of bilingual 
     providers;
       (3) offer and provide appropriate language services at no 
     additional charge to each patient with limited English 
     proficiency at all points of contact, in a timely manner 
     during all hours of operation;
       (4) notify Medicare beneficiaries of their right to receive 
     language services in their primary language;
       (5) post signage in the languages of the commonly 
     encountered group or groups present in the service area of 
     the organization; and
       (6) ensure that--
       (A) primary language data are collected for recipients of 
     language services and are consistent with standards developed 
     under section 1709(b)(3)(B)(iv) of the Public Health Service 
     Act, as added by section 2402 of this Act, to the extent such 
     standards are available upon the initiation of the 
     demonstration; and
       (B) consistent with the privacy protections provided under 
     the regulations promulgated pursuant to section 264(c) of the 
     Health Insurance Portability and Accountability Act of 1996 
     (42 U.S.C. 1320d-2 note), if the recipient of language 
     services is a minor or is incapacitated, the primary language 
     of the parent or legal guardian is collected and utilized.
       (e) Reporting Requirements.--Grantees under this section 
     shall provide the Secretary with reports at the conclusion of 
     the each year of a grant under this section. Each report 
     shall include at least the following information:
       (1) The number of Medicare beneficiaries to whom language 
     services are provided.
       (2) The languages of those Medicare beneficiaries.
       (3) The types of language services provided (such as 
     provision of services directly in non-English language by a 
     bilingual health care provider or use of an interpreter).
       (4) Type of interpretation (such as in-person, telephonic, 
     or video interpretation).
       (5) The methods of providing language services (such as 
     staff or contract with external independent contractors or 
     agencies).
       (6) The length of time for each interpretation encounter.
       (7) The costs of providing language services (which may be 
     actual or estimated, as determined by the Secretary).
       (8) An account of the training or accreditation of 
     bilingual staff, interpreters, or translators providing 
     services under this demonstration.
       (f) No Cost Sharing.--Limited English proficient Medicare 
     beneficiaries shall not have to pay cost-sharing or co-pays 
     for language services provided through this demonstration 
     program.
       (g) Evaluation and Report.--The Secretary shall conduct an 
     evaluation of the demonstration program under this section 
     and shall submit to the appropriate committees of Congress a 
     report not later than 1 year after the completion of the 
     program. The report shall include the following:
       (1) An analysis of the patient outcomes and costs of 
     furnishing care to the limited English proficient Medicare 
     beneficiaries participating in the project as compared to 
     such outcomes and costs for limited English proficient 
     Medicare beneficiaries not participating.
       (2) The effect of delivering culturally and linguistically 
     appropriate services on beneficiary access to care, 
     utilization of services, efficiency and cost-effectiveness of 
     health care delivery, patient satisfaction, and select health 
     outcomes.
       (3) The extent to which bilingual staff, interpreters, and 
     translators providing services under such demonstration were 
     trained or accredited and the nature of accreditation or 
     training needed by type of provider, service, or other 
     category as determined by the Secretary to ensure the 
     provision of high-quality interpretation, translation, or 
     other language services to Medicare beneficiaries if such 
     services are expanded pursuant to subsection (c) of section 
     1907 of this Act.
       (4) Recommendations, if any, regarding the extension of 
     such project to the entire Medicare program.
       (h) Accreditation or Training for Providers of 
     Interpretation, Translation or Language Services in 
     Medicare.--
       (1) In general.--
       (A) Designation of standards.--If the Secretary, pursuant 
     to section 1907(c) of this Act, expands the model initially 
     developed through the demonstration program under this 
     section, the Secretary shall use the results of the study 
     under section 1221 and the demonstration under this section 
     to designate standards for training or accreditation. The 
     Secretary may designate one or more training or accreditation 
     organizations, as appropriate for the nature and type of 
     interpretation and translation services provided to Medicare 
     beneficiaries to ensure that payments are made only for 
     approved services by trained or accredited language services 
     providers.
       (B) Alternatives to training or accreditation.--If the 
     Secretary designates one or more training or accreditation 
     organizations but determines that accreditation is not 
     available in all languages for which payments may be 
     initiated, the Secretary shall provide payments for and 
     accept alternatives to training or accreditation for certain 
     languages, including languages of lesser diffusion. The 
     Secretary must ensure that the alternatives to training or 
     accreditation provide, at a minimum--
       (i) a determination that the interpreter is proficient and 
     able to communicate information accurately in both English 
     and in the language for which interpreting is needed;
       (ii) an attestation from the interpreter to comply with and 
     adhere to the role of an interpreter as defined by the 
     National Code of Ethics and National Standards of Practice as 
     published by the National Council on Interpreting in Health 
     Care; and
       (iii) an attestation to adhere to HIPAA privacy and 
     security law, as defined in section 3009(a)(2) of the Public 
     Health Service Act, to the same extent as the healthcare 
     provider for whom interpreting is provided.
       (C) Modifiers, add-ons, and other forms of payment.--If the 
     Secretary decides that modifiers, add-ons, or other forms of 
     payment may be made for the provision of services directly by 
     bilingual providers, the Secretary shall designate standards 
     to ensure the competency of such providers delivering such 
     services in a non-English language.
       (2) Consultation with stakeholders and considerations for 
     accreditation or training.--
       (A) Consultation.--In designating accreditation or training 
     requirements under this subsection, the Secretary shall 
     consult with

[[Page H12692]]

     patients, providers, organizations that advocate on behalf of 
     limited English proficient individuals, and other individuals 
     or entities determined appropriate by the Secretary.
       (B) Considerations.--In designating accreditation or 
     training requirements under this section, the Secretary shall 
     consider, as appropriate--
       (i) standards for qualifications of health care 
     interpreters who interpret infrequently encountered 
     languages;
       (ii) standards for qualifications of health care 
     interpreters who interpret in languages of lesser diffusion;
       (iii) standards for training of interpreters; and
       (iv) standards for continuing education of interpreters.
       (i) General Provisions.--Nothing in this section shall be 
     construed to limit otherwise existing obligations of 
     recipients of Federal financial assistance under title VI of 
     the Civil Rights Act of 1964 (42 U.S.C. 2000(d) et seq.) or 
     any other statute.
       (j) Appropriations.--There are appropriated to carry out 
     this section, in equal parts from the Federal Hospital 
     Insurance Trust Fund and the Federal Supplementary Medical 
     Insurance Trust Fund, $16,000,000 for each fiscal year of the 
     demonstration program.

     SEC. 1223. IOM REPORT ON IMPACT OF LANGUAGE ACCESS SERVICES.

       (a) In General.--The Secretary of Health and Human Services 
     shall enter into an arrangement with the Institute of 
     Medicine under which the Institute will prepare and publish, 
     not later than 3 years after the date of the enactment of 
     this Act, a report on the impact of language access services 
     on the health and health care of limited English proficient 
     populations.
       (b) Contents.--Such report shall include--
       (1) recommendations on the development and implementation 
     of policies and practices by health care organizations and 
     providers for limited English proficient patient populations;
       (2) a description of the effect of providing language 
     access services on quality of health care and access to care 
     and reduced medical error; and
       (3) a description of the costs associated with or savings 
     related to provision of language access services.

     SEC. 1224. DEFINITIONS.

       In this subtitle:
       (1) Bilingual.--The term ``bilingual'' with respect to an 
     individual means a person who has sufficient degree of 
     proficiency in two languages and can ensure effective 
     communication can occur in both languages.
       (2) Competent interpreter services.--The term ``competent 
     interpreter services'' means a trans-language rendition of a 
     spoken message in which the interpreter comprehends the 
     source language and can speak comprehensively in the target 
     language to convey the meaning intended in the source 
     language. The interpreter knows health and health-related 
     terminology and provides accurate interpretations by choosing 
     equivalent expressions that convey the best matching and 
     meaning to the source language and captures, to the greatest 
     possible extent, all nuances intended in the source message.
       (3) Competent translation services.--The term ``competent 
     translation services'' means a trans-language rendition of a 
     written document in which the translator comprehends the 
     source language and can write comprehensively in the target 
     language to convey the meaning intended in the source 
     language. The translator knows health and health-related 
     terminology and provides accurate translations by choosing 
     equivalent expressions that convey the best matching and 
     meaning to the source language and captures, to the greatest 
     possible extent, all nuances intended in the source document.
       (4) Effective communication.--The term ``effective 
     communication'' means an exchange of information between the 
     provider of health care or health care-related services and 
     the limited English proficient recipient of such services 
     that enables limited English proficient individuals to 
     access, understand, and benefit from health care or health 
     care-related services.
       (5) Interpreting/interpretation.--The terms 
     ``interpreting'' and ``interpretation'' mean the transmission 
     of a spoken message from one language into another, 
     faithfully, accurately, and objectively.
       (6) Health care services.--The term ``health care 
     services'' means services that address physical as well as 
     mental health conditions in all care settings.
       (7) Health care-related services.--The term ``health care-
     related services'' means human or social services programs or 
     activities that provide access, referrals or links to health 
     care.
       (8) Language access.--The term ``language access'' means 
     the provision of language services to an LEP individual 
     designed to enhance that individual's access to, 
     understanding of or benefit from health care or health care-
     related services.
       (9) Language services.--The term ``language services'' 
     means provision of health care services directly in a non-
     English language, interpretation, translation, and non-
     English signage.
       (10) Limited english proficient.--The term ``limited 
     English proficient'' or ``LEP'' with respect to an individual 
     means an individual who speaks a primary language other than 
     English and who cannot speak, read, write or understand the 
     English language at a level that permits the individual to 
     effectively communicate with clinical or nonclinical staff at 
     an entity providing health care or health care related 
     services.
       (11) Medicare beneficiary.--The term ``Medicare 
     beneficiary'' means an individual entitled to benefits under 
     part A of title XVIII of the Social Security Act or enrolled 
     under part B of such title.
       (12) Medicare program.--The term ``Medicare program'' means 
     the programs under parts A through D of title XVIII of the 
     Social Security Act.
       (13) Service provider.--The term ``service provider'' 
     includes all suppliers, providers of services, or entities 
     under contract to provide coverage, items or services under 
     any part of title XVIII of the Social Security Act.

                 Subtitle C--Miscellaneous Improvements

     SEC. 1231. EXTENSION OF THERAPY CAPS EXCEPTIONS PROCESS.

       Section 1833(g)(5) of the Social Security Act (42 U.S.C. 
     1395l(g)(5)), as amended by section 141 of the Medicare 
     Improvements for Patients and Providers Act of 2008 (Public 
     Law 110-275), is amended by striking ``December 31, 2009'' 
     and inserting ``December 31, 2011''.

     SEC. 1232. EXTENDED MONTHS OF COVERAGE OF IMMUNOSUPPRESSIVE 
                   DRUGS FOR KIDNEY TRANSPLANT PATIENTS AND OTHER 
                   RENAL DIALYSIS PROVISIONS.

       (a) Provision of Appropriate Coverage of Immunosuppressive 
     Drugs Under the Medicare Program for Kidney Transplant 
     Recipients.--
       (1) Continued entitlement to immunosuppressive drugs.--
       (A) Kidney transplant recipients.--Section 226A(b)(2) of 
     the Social Security Act (42 U.S.C. 426-1(b)(2)) is amended by 
     inserting ``(except for coverage of immunosuppressive drugs 
     under section 1861(s)(2)(J))'' before ``, with the thirty-
     sixth month''.
       (B) Application.--Section 1836 of such Act (42 U.S.C. 
     1395o) is amended--
       (i) by striking ``Every individual who'' and inserting 
     ``(a) In General.--Every individual who''; and
       (ii) by adding at the end the following new subsection:
       ``(b) Special Rules Applicable to Individuals Only Eligible 
     for Coverage of Immunosuppressive Drugs.--
       ``(1) In general.--In the case of an individual whose 
     eligibility for benefits under this title has ended on or 
     after January 1, 2012, except for the coverage of 
     immunosuppressive drugs by reason of section 226A(b)(2), the 
     following rules shall apply:
       ``(A) The individual shall be deemed to be enrolled under 
     this part for purposes of receiving coverage of such drugs.
       ``(B) The individual shall be responsible for providing for 
     payment of the portion of the premium under section 1839 
     which is not covered under the Medicare savings program (as 
     defined in section 1144(c)(7)) in order to receive such 
     coverage.
       ``(C) The provision of such drugs shall be subject to the 
     application of--
       ``(i) the deductible under section 1833(b); and
       ``(ii) the coinsurance amount applicable for such drugs (as 
     determined under this part).
       ``(D) If the individual is an inpatient of a hospital or 
     other entity, the individual is entitled to receive coverage 
     of such drugs under this part.
       ``(2) Establishment of procedures in order to implement 
     coverage.--The Secretary shall establish procedures for--
       ``(A) identifying individuals that are entitled to coverage 
     of immunosuppressive drugs by reason of section 226A(b)(2); 
     and
       ``(B) distinguishing such individuals from individuals that 
     are enrolled under this part for the complete package of 
     benefits under this part.''.
       (C) Technical amendment to correct duplicate subsection 
     designation.--Subsection (c) of section 226A of such Act (42 
     U.S.C. 426-1), as added by section 201(a)(3)(D)(ii) of the 
     Social Security Independence and Program Improvements Act of 
     1994 (Public Law 103-296; 108 Stat. 1497), is redesignated as 
     subsection (d).
       (2) Extension of secondary payer requirements for esrd 
     beneficiaries.--Section 1862(b)(1)(C) of such Act (42 U.S.C. 
     1395y(b)(1)(C)) is amended by adding at the end the following 
     new sentence: ``With regard to immunosuppressive drugs 
     furnished on or after the date of the enactment of the 
     Affordable Health Care for America Act, this subparagraph 
     shall be applied without regard to any time limitation.''.
       (b) Medicare Coverage for ESRD Patients.--Section 1881 of 
     such Act is further amended--
       (1) in subsection (b)(14)(B)(iii), by inserting ``, 
     including oral drugs that are not the oral equivalent of an 
     intravenous drug (such as oral phosphate binders and 
     calcimimetics),'' after ``other drugs and biologicals'';
       (2) in subsection (b)(14)(E)(ii)--
       (A) in the first sentence--
       (i) by striking ``a one-time election to be excluded from 
     the phase-in'' and inserting ``an election, with respect to 
     2011, 2012, or 2013, to be excluded from the phase-in (or the 
     remainder of the phase-in)''; and
       (ii) by adding before the period at the end the following: 
     ``for such year and for each subsequent year during the 
     phase-in described in clause (i)''; and
       (B) in the second sentence--
       (i) by striking ``January 1, 2011'' and inserting ``the 
     first date of such year''; and

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       (ii) by inserting ``and at a time'' after ``form and 
     manner''; and
       (3) in subsection (h)(4)(E), by striking ``lesser'' and 
     inserting ``greater''.

     SEC. 1233. VOLUNTARY ADVANCE CARE PLANNING CONSULTATION.

       (a) In General.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x) is amended--
       (1) in subsection (s)(2)--
       (A) by striking ``and'' at the end of subparagraph (DD);
       (B) by adding ``and'' at the end of subparagraph (EE); and
       (C) by adding at the end the following new subparagraph:
       ``(FF) voluntary advance care planning consultation (as 
     defined in subsection (hhh)(1));''; and
       (2) by adding at the end the following new subsection:

             ``Voluntary Advance Care Planning Consultation

       ``(hhh)(1) Subject to paragraphs (3) and (4), the term 
     `voluntary advance care planning consultation' means an 
     optional consultation between the individual and a 
     practitioner described in paragraph (2) regarding advance 
     care planning. Such consultation may include the following, 
     as specified by the Secretary:
       ``(A) An explanation by the practitioner of advance care 
     planning, including a review of key questions and 
     considerations, advance directives (including living wills 
     and durable powers of attorney) and their uses.
       ``(B) An explanation by the practitioner of the role and 
     responsibilities of a health care proxy and of the continuum 
     of end-of-life services and supports available, including 
     palliative care and hospice, and benefits for such services 
     and supports that are available under this title.
       ``(C) An explanation by the practitioner of physician 
     orders regarding life sustaining treatment or similar orders, 
     in States where such orders or similar orders exist.
       ``(2) A practitioner described in this paragraph is--
       ``(A) a physician (as defined in subsection (r)(1)); and
       ``(B) another health care professional (as specified by the 
     Secretary and who has the authority under State law to sign 
     orders for life sustaining treatments, such as a nurse 
     practitioner or physician assistant).
       ``(3) An individual may receive the voluntary advance care 
     planning care planning consultation provided for under this 
     subsection no more than once every 5 years unless there is a 
     significant change in the health or health-related condition 
     of the individual.
       ``(4) For purposes of this section, the term `order 
     regarding life sustaining treatment' means, with respect to 
     an individual, an actionable medical order relating to the 
     treatment of that individual that effectively communicates 
     the individual's preferences regarding life sustaining 
     treatment, is signed and dated by a practitioner, and is in a 
     form that permits it to be followed by health care 
     professionals across the continuum of care.''.
       (b) Construction.--The voluntary advance care planning 
     consultation described in section 1861(hhh) of the Social 
     Security Act, as added by subsection (a), shall be completely 
     optional. Nothing in this section shall--
       (1) require an individual to complete an advance directive, 
     an order for life sustaining treatment, or other advance care 
     planning document;
       (2) require an individual to consent to restrictions on the 
     amount, duration, or scope of medical benefits an individual 
     is entitled to receive under this title; or
       (3) encourage the promotion of suicide or assisted suicide.
       (c) Payment.--Section 1848(j)(3) of such Act (42 U.S.C. 
     1395w-4(j)(3)) is amended by inserting ``(2)(FF),'' after 
     ``(2)(EE),''.
       (d) Frequency Limitation.--Section 1862(a) of such Act (42 
     U.S.C. 1395y(a)) is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (N), by striking ``and'' at the end;
       (B) in subparagraph (O) by striking the semicolon at the 
     end and inserting ``, and''; and
       (C) by adding at the end the following new subparagraph:
       ``(P) in the case of voluntary advance care planning 
     consultations (as defined in paragraph (1) of section 
     1861(hhh)), which are performed more frequently than is 
     covered under such section;''; and
       (2) in paragraph (7), by striking ``or (K)'' and inserting 
     ``(K), or (P)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to consultations furnished on or after January 1, 
     2011.

     SEC. 1234. PART B SPECIAL ENROLLMENT PERIOD AND WAIVER OF 
                   LIMITED ENROLLMENT PENALTY FOR TRICARE 
                   BENEFICIARIES.

       (a) Part B Special Enrollment Period.--
       (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 
     hospital insurance benefits under 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, on the first day of the second 
     month following the last month of the individual's initial 
     enrollment period.
       ``(4) The Secretary of Defense shall establish a method for 
     identifying individuals described in paragraph (1) and 
     providing notice to them of their eligibility for enrollment 
     during the special enrollment period described in paragraph 
     (2).''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to elections made on or after the date of the 
     enactment of this Act.
       (b) Waiver of Increase of Premium.--
       (1) In general.--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''.
       (2) Effective date.--
       (A) In general.--The amendment made by paragraph (1) shall 
     apply with respect to elections made on or after the date of 
     the enactment of this Act.
       (B) Rebates for certain disabled and esrd beneficiaries.--
       (i) In general.--With respect to premiums for months on or 
     after January 2005 and before the month of the enactment of 
     this Act, no increase in the premium shall be effected for a 
     month 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 
     hospital insurance benefits under part A of title XVIII of 
     the Social Security Act under section 226(b) or 226A of such 
     Act, 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, and who enrolls under this part 
     within the 12-month period that begins on the first day of 
     the month after the month of notification of entitlement 
     under this part.
       (ii) Consultation with department of defense.--The 
     Secretary of Health and Human Services shall consult with the 
     Secretary of Defense in identifying individuals described in 
     this paragraph.
       (iii) Rebates.--The Secretary of Health and Human Services 
     shall establish a method for providing rebates of premium 
     increases paid for months on or after January 1, 2005, and 
     before the month of the enactment of this Act for which a 
     penalty was applied and collected.

     SEC. 1235. EXCEPTION FOR USE OF MORE RECENT TAX YEAR IN CASE 
                   OF GAINS FROM SALE OF PRIMARY RESIDENCE IN 
                   COMPUTING PART B INCOME-RELATED PREMIUM.

       (a) In General.--Section 1839(i)(4)(C)(ii)(II) of the 
     Social Security Act (42 U.S.C. 1395r(i)(4)(C)(ii)(II)) is 
     amended by inserting ``sale of primary residence,'' after 
     ``divorce of such individual,''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to premiums and payments for years beginning with 
     2011.

     SEC. 1236. DEMONSTRATION PROGRAM ON USE OF PATIENT DECISIONS 
                   AIDS.

       (a) In General.--The Secretary of Health and Human 
     Services, acting through the Center for Medicare and Medicaid 
     Innovation established under section 1115A of the Social 
     Security Act (as added by section 1907) and consistent with 
     the applicable provisions of such section, shall establish a 
     shared decision making demonstration program (in this 
     subsection referred to as the ``program'') under the Medicare 
     program using patient decision aids to meet the objective of 
     improving the understanding by Medicare beneficiaries of 
     their medical treatment options, as compared to comparable 
     Medicare beneficiaries who do not participate in a shared 
     decision making process using patient decision aids.
       (b) Sites.--
       (1) Enrollment.--The Secretary shall enroll in the program 
     not more than 30 eligible providers who have experience in 
     implementing, and have invested in the necessary 
     infrastructure to implement, shared decision making using 
     patient decision aids.
       (2) Application.--An eligible provider seeking to 
     participate in the program shall submit to the Secretary an 
     application at such time and containing such information as 
     the Secretary may require.
       (3) Preference.--In enrolling eligible providers in the 
     program, the Secretary shall give preference to eligible 
     providers that--
       (A) have documented experience in using patient decision 
     aids for the conditions identified by the Secretary and in 
     using shared decision making;
       (B) have the necessary information technology 
     infrastructure to collect the information required by the 
     Secretary for reporting purposes; and
       (C) are trained in how to use patient decision aids and 
     shared decision making.
       (c) Follow-up Counseling Visit.--
       (1) In general.--An eligible provider participating in the 
     program shall routinely schedule Medicare beneficiaries for a 
     counseling visit after the viewing of such a patient decision 
     aid to answer any questions

[[Page H12694]]

     the beneficiary may have with respect to the medical care of 
     the condition involved and to assist the beneficiary in 
     thinking through how their preferences and concerns relate to 
     their medical care.
       (2) Payment for follow-up counseling visit.--The Secretary 
     shall establish procedures for making payments for such 
     counseling visits provided to Medicare beneficiaries under 
     the program. Such procedures shall provide for the 
     establishment--
       (A) of a code (or codes) to represent such services; and
       (B) of a single payment amount for such service that 
     includes the professional time of the health care provider 
     and a portion of the reasonable costs of the infrastructure 
     of the eligible provider such as would be made under the 
     applicable payment systems to that provider for similar 
     covered services.
       (d) Costs of Aids.--An eligible provider participating in 
     the program shall be responsible for the costs of selecting, 
     purchasing, and incorporating such patient decision aids into 
     the provider's practice, and reporting data on quality and 
     outcome measures under the program.
       (e) Funding.--The Secretary shall provide for the transfer 
     from the Federal Supplementary Medical Insurance Trust Fund 
     established under section 1841 of the Social Security Act (42 
     U.S.C. 1395t) of such funds as are necessary for the costs of 
     carrying out the program.
       (f) Waiver Authority.--The Secretary may waive such 
     requirements of titles XI and XVIII of the Social Security 
     Act (42 U.S.C. 1301 et seq. and 1395 et seq.) as may be 
     necessary for the purpose of carrying out the program.
       (g) Report.--Not later than 12 months after the date of 
     completion of the program, the Secretary shall submit to 
     Congress a report on such program, together with 
     recommendations for such legislation and administrative 
     action as the Secretary determines to be appropriate. The 
     final report shall include an evaluation of the impact of the 
     use of the program on health quality, utilization of health 
     care services, and on improving the quality of life of such 
     beneficiaries.
       (h) Definitions.--In this section:
       (1) Eligible provider.--The term ``eligible provider'' 
     means the following:
       (A) A primary care practice.
       (B) A specialty practice.
       (C) A multispecialty group practice.
       (D) A hospital.
       (E) A rural health clinic.
       (F) A Federally qualified health center (as defined in 
     section 1861(aa)(4) of the Social Security Act (42 U.S.C. 
     1395x(aa)(4)).
       (G) An integrated delivery system.
       (H) A State cooperative entity that includes the State 
     government and at least one other health care provider which 
     is set up for the purpose of testing shared decision making 
     and patient decision aids.
       (2) Patient decision aid.--The term ``patient decision 
     aid'' means an educational tool (such as the Internet, a 
     video, or a pamphlet) that helps patients (or, if 
     appropriate, the family caregiver of the patient) understand 
     and communicate their beliefs and preferences related to 
     their treatment options, and to decide with their health care 
     provider what treatments are best for them based on their 
     treatment options, scientific evidence, circumstances, 
     beliefs, and preferences.
       (3) Shared decision making.--The term ``shared decision 
     making'' means a collaborative process between patient and 
     clinician that engages the patient in decision making, 
     provides patients with information about trade-offs among 
     treatment options, and facilitates the incorporation of 
     patient preferences and values into the medical plan.

    TITLE III--PROMOTING PRIMARY CARE, MENTAL HEALTH SERVICES, AND 
                            COORDINATED CARE

     SEC. 1301. ACCOUNTABLE CARE ORGANIZATION PILOT PROGRAM.

       Title XVIII of the Social Security Act is amended by 
     inserting after section 1866D, as added by section 1152(f), 
     the following new section:


             ``accountable care organization pilot program

       ``Sec. 1866E.  (a) Establishment.--
       ``(1) In General.--The Secretary shall conduct a pilot 
     program (in this section referred to as the `pilot program') 
     to test different payment incentive models, including (to the 
     extent practicable) the specific payment incentive models 
     described in subsection (c), designed to reduce the growth of 
     expenditures and improve health outcomes in the provision of 
     items and services under this title to applicable 
     beneficiaries (as defined in subsection (e)) by qualifying 
     accountable care organizations (as defined in subsection 
     (b)(1)) in order to--
       ``(A) promote accountability for a patient population and 
     coordinate items and services under parts A and B (and may 
     include Part D, if the Secretary determines appropriate);
       ``(B) encourage investment in infrastructure and redesigned 
     care processes for high quality and efficient service 
     delivery; and
       ``(C) reward physician practices and other physician 
     organizational models for the provision of high quality and 
     efficient health care services.
       ``(2) Scope.--The Secretary shall set specific goals for 
     the number of accountable care organizations, participating 
     practitioners, and patients served in the initial tests under 
     the pilot program to ensure that the pilot program is of 
     sufficient size and scope to--
       ``(A) test the approach involved in a variety of settings, 
     including urban, rural, and underserved areas; and
       ``(B) subject to subsection (g)(1), disseminate such 
     approach rapidly on a national basis.
     To the extent that the Secretary finds a qualifying 
     accountable care organization model to be successful in 
     improving quality and reducing costs, the Secretary shall 
     seek to implement such models on as large a geographic scale 
     as practical and economical.
       ``(b) Qualifying Accountable Care Organizations (ACOs).--
       ``(1) Qualifying aco defined.--In this section:
       ``(A) In general.--The terms `qualifying accountable care 
     organization' and `qualifying ACO' mean a group of physicians 
     or other physician organizational model (as defined in 
     subparagraph (D)) that--
       ``(i) is organized at least in part for the purpose of 
     providing physicians' services; and
       ``(ii) meets such criteria as the Secretary determines to 
     be appropriate to participate in the pilot program, including 
     the criteria specified in paragraph (2).
       ``(B) Inclusion of other providers of services and 
     suppliers.--Nothing in this subsection shall be construed as 
     preventing a qualifying ACO from including a hospital or any 
     other provider of services or supplier furnishing items or 
     services for which payment may be made under this title that 
     is affiliated with the ACO under an arrangement structured so 
     that such provider or supplier participates in the pilot 
     program and shares in any incentive payments under the pilot 
     program.
       ``(C) 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 under this title.
       ``(D) Other physician organizational model.--The term 
     `other physician organization model' means, with respect to a 
     qualifying ACO any model of organization under which 
     physicians enter into agreements with other providers of 
     services for the purposes of participation in the pilot 
     program in order to provide high quality and efficient health 
     care services and share in any incentive payments under such 
     program
       ``(E) Other services.--Nothing in this paragraph shall be 
     construed as preventing a qualifying ACO from furnishing 
     items or services, for which payment may not be made under 
     this title, for purposes of achieving performance goals under 
     the pilot program.
       ``(2) Qualifying criteria.--The following are criteria 
     described in this paragraph for an organized group of 
     physicians to be a qualifying ACO:
       ``(A) The group has a legal structure that would allow the 
     group to receive and distribute incentive payments under this 
     section.
       ``(B) The group includes a sufficient number of primary 
     care physicians (regardless of specialty) for the applicable 
     beneficiaries for whose care the group is accountable (as 
     determined by the Secretary).
       ``(C) The group reports 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).
       ``(D) The group reports 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 
     pilot program.
       ``(E) The group provides notice to applicable beneficiaries 
     regarding the pilot program (as determined appropriate by the 
     Secretary).
       ``(F) The group contributes to a best practices network or 
     website, that shall be maintained by the Secretary for the 
     purpose of sharing strategies on quality improvement, care 
     coordination, and efficiency that the groups believe are 
     effective.
       ``(G) The group utilizes patient-centered processes of 
     care, including those that emphasize patient and caregiver 
     involvement in planning and monitoring of ongoing care 
     management plan.
       ``(H) The group meets other criteria determined to be 
     appropriate by the Secretary.
       ``(c) Specific Payment Incentive Models.--The specific 
     payment incentive models described in this subsection are the 
     following:
       ``(1) Performance target model.--Under the performance 
     target model under this paragraph (in this paragraph referred 
     to as the `performance target model'):
       ``(A) In general.--A qualifying ACO qualifies to receive an 
     incentive payment if expenditures for items and services for 
     applicable beneficiaries are less than a target spending 
     level or a target rate of growth. The incentive payment shall 
     be made only if savings are greater than would result from 
     normal variation in expenditures for items and services 
     covered under parts A and B (and may include Part D, if the 
     Secretary determines appropriate).
       ``(B) Computation of performance target.--
       ``(i) In general.--The Secretary shall establish a 
     performance target for each qualifying ACO comprised of a 
     base amount (described in clause (ii)) increased to the 
     current year by an adjustment factor (described in clause 
     (iii)). Such a target may be established on a per capita 
     basis or adjusted for risk, as the Secretary determines to be 
     appropriate.

[[Page H12695]]

       ``(ii) Base amount.--For purposes of clause (i), the base 
     amount in this subparagraph is equal to the average total 
     payments (or allowed charges) under parts A and B (and may 
     include part D, if the Secretary determines appropriate) for 
     applicable beneficiaries for whom the qualifying ACO 
     furnishes items and services in a base period determined by 
     the Secretary. Such base amount may be determined on a per 
     capita basis or adjusted for risk.
       ``(iii) Adjustment factor.--For purposes of clause (i), the 
     adjustment factor in this clause may equal an annual per 
     capita amount that reflects changes in expenditures from the 
     period of the base amount to the current year that would 
     represent an appropriate performance target for applicable 
     beneficiaries (as determined by the Secretary).
       ``(iv) Rebasing.--Under this model the Secretary shall 
     periodically rebase the base expenditure amount described in 
     clause (ii).
       ``(C) Meeting target.--
       ``(i) In general.--Subject to clause (ii), a qualifying ACO 
     that meets or exceeds annual quality and performance targets 
     for a year shall receive an incentive payment for such year 
     equal to a portion (as determined appropriate by the 
     Secretary) of the amount by which payments under this title 
     for such year are estimated to be below the performance 
     target for such year, as determined by the Secretary. The 
     Secretary may establish a cap on incentive payments for a 
     year for a qualifying ACO.
       ``(ii) Limitation.--The Secretary shall limit incentive 
     payments to each qualifying ACO under this paragraph as 
     necessary to ensure that the aggregate expenditures with 
     respect to applicable beneficiaries for such ACOs under this 
     title (inclusive of incentive payments described in this 
     subparagraph) do not exceed the amount that the Secretary 
     estimates would be expended for such ACO for such 
     beneficiaries if the pilot program under this section were 
     not implemented.
       ``(D) Reporting and other requirements.--In carrying out 
     such model, the Secretary may (as the Secretary determines to 
     be appropriate) incorporate reporting requirements, incentive 
     payments, and penalties related to the physician quality 
     reporting initiative (PQRI), 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 this subparagraph shall not be included in the 
     limit described in subparagraph (C)(ii) or in the performance 
     target model described in this paragraph.
       ``(2) Partial capitation model.--
       ``(A) In general.--Subject to subparagraph (B), a partial 
     capitation model described in this paragraph (in this 
     paragraph referred to as a `partial capitation model') is a 
     model in which a qualifying ACO would be at financial risk 
     for some, but not all, of the items and services covered 
     under parts A and B (and may include part D, if the Secretary 
     determines appropriate), such as at risk for some or all 
     physicians' services or all items and services under part B. 
     The Secretary may limit a partial capitation model to ACOs 
     that are highly integrated systems of care and to ACOs 
     capable of bearing risk, as determined to be appropriate by 
     the Secretary.
       ``(B) No additional program expenditures.--Payments to a 
     qualifying ACO for items and services under this title for 
     applicable beneficiaries for a year under the partial 
     capitation model shall be established in a manner that does 
     not result in spending more for such ACO for such 
     beneficiaries than would otherwise be expended for such ACO 
     for such beneficiaries for such year if the pilot program 
     were not implemented, as estimated by the Secretary.
       ``(3) Other payment models.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary may develop other payment models that meet the 
     goals of this pilot program to improve quality and 
     efficiency.
       ``(B) No additional program expenditures.--Subparagraph (B) 
     of paragraph (2) shall apply to a payment model under 
     subparagraph (A) in a similar manner as such subparagraph (B) 
     applies to the payment model under paragraph (2).
       ``(d) Annual Quality Targets.--
       ``(1) In general.--The Secretary shall establish annual 
     quality targets that qualifying ACOs must meet to receive 
     incentive payments, operate at financial risk, or otherwise 
     participate in alternative financing models under this 
     section. The Secretary shall establish a process for 
     developing annual targets based on ACO reporting of multiple 
     quality measures. In selecting measures the Secretary shall--
       ``(A) for years one and two of each ACOs participation in 
     the pilot program established by this section, require 
     reporting of a starter set of measures focused on clinical 
     care, care coordination and patient experience of care; and
       ``(B) for each subsequent year, require reporting of a more 
     comprehensive set of clinical outcomes measures, care 
     coordination measures and patient experience of care 
     measures.
       ``(2) Measure selection.--To the extent feasible, the 
     Secretary shall select measures that reflect national 
     priorities for quality improvement and patient-centered care 
     consistent with the measures developed under section 
     1192(c)(1).
       ``(e) Applicable Beneficiaries.--
       ``(1) In general.--In this section, the term `applicable 
     beneficiary' means, with respect to a qualifying ACO, an 
     individual who--
       ``(A) is enrolled under part B and entitled to benefits 
     under part A;
       ``(B) is not enrolled in a Medicare Advantage plan under 
     part C or a PACE program under section 1894; and
       ``(C) meets such other criteria as the Secretary determines 
     appropriate, which may include criteria relating to frequency 
     of contact with physicians in the ACO
       ``(2) Following 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 ACO.
       ``(f) Implementation.--
       ``(1) Starting date.--The pilot program shall begin no 
     later than January 1, 2012. An agreement with a qualifying 
     ACO under the pilot program may cover a multi-year period of 
     between 3 and 5 years.
       ``(2) Waiver.--The Secretary may waive such provisions of 
     this title (including section 1877) and title XI in the 
     manner the Secretary determines necessary in order implement 
     the pilot program.
       ``(3) Performance results reports.--The Secretary shall 
     report performance results to qualifying ACOs under the pilot 
     program at least annually.
       ``(4) Limitations on review.--There shall be no 
     administrative or judicial review under section 1869, section 
     1878, or otherwise of--
       ``(A) the elements, parameters, scope, and duration of the 
     pilot program;
       ``(B) the selection of qualifying ACOs for the pilot 
     program;
       ``(C) the establishment of targets, measurement of 
     performance, determinations with respect to whether savings 
     have been achieved and the amount of savings;
       ``(D) determinations regarding whether, to whom, and in 
     what amounts incentive payments are paid; and
       ``(E) decisions about the extension of the program under 
     subsection (h), expansion of the program under subsection (i) 
     or extensions under subsections (j) or (k).
       ``(5) Administration.--Chapter 35 of title 44, United 
     States Code shall not apply to this section.
       ``(g) Evaluation; Monitoring.--
       ``(1) In general.--The Secretary shall evaluate the payment 
     incentive model for each qualifying ACO under the pilot 
     program to assess impacts on beneficiaries, providers of 
     services, suppliers and the program under this title. The 
     Secretary shall make such evaluation publicly available 
     within 60 days of the date of completion of such report.
       ``(2) Monitoring.--The Inspector General of the Department 
     of Health and Human Services shall provide for monitoring of 
     the operation of ACOs under the pilot program with regard to 
     violations of section 1877 (popularly known as the `Stark 
     law').
       ``(h) Extension of Pilot Agreement With Successful 
     Organizations.--
       ``(1) Reports to congress.--Not later than 2 years after 
     the date the first agreement is entered into under this 
     section, and biennially thereafter for six years, the 
     Secretary shall submit to Congress and make publicly 
     available a report on the use of ACO payment models under the 
     pilot program. Each report shall address the impact of the 
     use of those models on expenditures, access, and quality 
     under this title.
       ``(2) Extension.--Subject to the report provided under 
     paragraph (1), with respect to a qualifying ACO, the 
     Secretary may extend the duration of the agreement for such 
     ACO under the pilot program as the Secretary determines 
     appropriate if--
       ``(A) the ACO receives incentive payments with respect to 
     any of the first 4 years of the pilot agreement and is 
     consistently meeting quality standards or
       ``(B) the ACO is consistently exceeding quality standards 
     and is not increasing spending under the program.
       ``(3) Termination.--The Secretary may terminate an 
     agreement with a qualifying ACO under the pilot program if 
     such ACO did not receive incentive payments or consistently 
     failed to meet quality standards in any of the first 3 years 
     under the program.
       ``(i) Expansion to Additional ACOs.--
       ``(1) Testing and refinement of payment incentive models.--
     Subject to the evaluation described in subsection (g), the 
     Secretary may enter into agreements under the pilot program 
     with additional qualifying ACOs to further test and refine 
     payment incentive models with respect to qualifying ACOs.
       ``(2) Expanding use of successful models to program 
     implementation.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary may issue regulations to implement, on a permanent 
     basis, 1 or more models if, and to the extent that, such 
     models are beneficial to the program under this title, as 
     determined by the Secretary.
       ``(B) Certification.--The Chief Actuary of the Centers for 
     Medicare & Medicaid Services shall certify that 1 or more of 
     such models described in subparagraph (A) would result in 
     estimated spending that would be less than what spending 
     would otherwise be estimated to be in the absence of such 
     expansion.
       ``(j) Treatment of Physician Group Practice 
     Demonstration.--
       ``(1) Extension.--The Secretary may enter in to an 
     agreement with a qualifying ACO under the demonstration under 
     section

[[Page H12696]]

     1866A, subject to rebasing and other modifications deemed 
     appropriate by the Secretary, until the pilot program under 
     this section is operational.
       ``(2) Transition.--For purposes of extension of an 
     agreement with a qualifying ACO under subsection (h)(2), the 
     Secretary shall treat receipt of an incentive payment for a 
     year by an organization under the physician group practice 
     demonstration pursuant to section 1866A as a year for which 
     an incentive payment is made under such subsection, as long 
     as such practice group practice organization meets the 
     criteria under subsection (b)(2).
       ``(k) Additional Provisions.--
       ``(1) Authority for separate incentive arrangements.--The 
     Secretary may create separate incentive arrangements 
     (including using multiple years of data, varying thresholds, 
     varying shared savings amounts, and varying shared savings 
     limits) for different categories of qualifying ACOs to 
     reflect variation in average annual attributable expenditures 
     and other matters the Secretary deems appropriate.
       ``(2) Encouragement of participation of smaller 
     organizations.--In order to encourage the participation of 
     smaller accountable care organizations under the pilot 
     program, the Secretary may limit a qualifying ACO's exposure 
     to high cost patients under the program.
       ``(3) Involvement in private payer and other third party 
     arrangements.--The Secretary may give preference to ACOs who 
     are participating in similar arrangements with other payers.
       ``(4) Antidiscrimination limitation.--The Secretary shall 
     not enter into an agreement with an entity to provide health 
     care items or services under the pilot program, or with an 
     entity to administer the program, unless such entity 
     guarantees that it will not deny, limit, or condition the 
     coverage or provision of benefits under the program, for 
     individuals eligible to be enrolled under such program, based 
     on any health status-related factor described in section 
     2702(a)(1) of the Public Health Service Act.
       ``(5) Funding.--For purposes of administering and carrying 
     out the pilot program, other than for payments for items and 
     services furnished under this title and incentive payments 
     under subsection (c)(1), in addition to funds otherwise 
     appropriated, there are appropriated to the Secretary for the 
     Center for Medicare & Medicaid Services Program Management 
     Account $25,000,000 for each of fiscal years 2010 through 
     2014 and $20,000,000 for fiscal year 2015. Amounts 
     appropriated under this paragraph for a fiscal year shall be 
     available until expended.
       ``(6) No duplication in payments to physicians in multiple 
     pilots.--The Secretary shall not make payments under this 
     section to any physician group that is paid under section 
     1866F (relating to medical homes) or section 1866G (relating 
     to independence at home).''.

     SEC. 1302. MEDICAL HOME PILOT PROGRAM.

       (a) In General.--Title XVIII of the Social Security Act is 
     amended by inserting after section 1866E, as inserted by 
     section 1301, the following new section:


                      ``medical home pilot program

       ``Sec. 1866F.  (a) Establishment and Medical Home Models.--
       ``(1) Establishment of pilot program.--The Secretary shall 
     establish a medical home pilot program (in this section 
     referred to as the `pilot program') for the purpose of 
     evaluating the feasibility and advisability of reimbursing 
     qualified patient-centered medical homes for furnishing 
     medical home services (as defined under subsection (b)(1)) to 
     beneficiaries (as defined in subsection (b)(4)) and to 
     targeted high need beneficiaries (as defined in subsection 
     (c)(1)(C)).
       ``(2) Scope.--Subject to subsection (g), the Secretary 
     shall set specific goals for the number of practices and 
     communities, and the number of patients served, under the 
     pilot program in the initial tests to ensure that the pilot 
     program is of sufficient size and scope to--
       ``(A) test the approach involved in a variety of settings, 
     including urban, rural, and underserved areas; and
       ``(B) subject to subsection (e)(1), disseminate such 
     approach rapidly on a national basis.
     To the extent that the Secretary finds a medical home model 
     to be successful in improving quality and reducing costs, the 
     Secretary shall implement such model on as large a geographic 
     scale as practical and economical.
       ``(3) Models of medical homes in the pilot program.--The 
     pilot program shall evaluate each of the following medical 
     home models:
       ``(A) Independent patient-centered medical home model.--
     Independent patient-centered medical home model under 
     subsection (c).
       ``(B) Community-based medical home model.--Community-based 
     medical home model under subsection (d).
       ``(4) Participation of nurse practitioners and physician 
     assistants.--
       ``(A) Nothing in this section shall be construed as 
     preventing a nurse practitioner from leading a patient 
     centered medical home so long as--
       ``(i) all the requirements of this section are met; and
       ``(ii) the nurse practitioner is acting in a manner that is 
     consistent with State law.
       ``(B) Nothing in this section shall be construed as 
     preventing a physician assistant from participating in a 
     patient centered medical home so long as--
       ``(i) all the requirements of this section are met; and
       ``(ii) the physician assistant is acting in a manner that 
     is consistent with State law.
       ``(b) Definitions.--For purposes of this section:
       ``(1) Patient-centered medical home services.--The term 
     `patient-centered medical home services' means services 
     that--
       ``(A) provide beneficiaries with direct and ongoing access 
     to a primary care or principal care physician or nurse 
     practitioner who accepts responsibility for providing first 
     contact, continuous and comprehensive care to such 
     beneficiary;
       ``(B) coordinate the care provided to a beneficiary by a 
     team of individuals at the practice level across office, 
     provider of services, and home settings led by a primary care 
     or principal care physician or nurse practitioner, as needed 
     and appropriate;
       ``(C) provide for all the patient's health care needs or 
     take responsibility for appropriately arranging care with 
     other qualified physicians or providers for all stages of 
     life;
       ``(D) provide continuous access to care and communication 
     with participating beneficiaries;
       ``(E) provide support for patient self-management, 
     proactive and regular patient monitoring, support for family 
     caregivers, use patient-centered processes, and coordination 
     with community resources;
       ``(F) integrate readily accessible, clinically useful 
     information on participating patients that enables the 
     practice to treat such patients comprehensively and 
     systematically; and
       ``(G) implement evidence-based guidelines and apply such 
     guidelines to the identified needs of beneficiaries over time 
     and with the intensity needed by such beneficiaries.
       ``(2) Primary care.--The term `primary care' means health 
     care that is provided by a physician, nurse practitioner, or 
     physician assistant who practices in the field of family 
     medicine, general internal medicine, geriatric medicine, or 
     pediatric medicine.
       ``(3) Principal care.--The term `principal care' means 
     integrated, accessible health care that is provided by a 
     physician who is a medical specialist or subspecialist that 
     addresses the majority of the personal health care needs of 
     patients with chronic conditions requiring the specialist's 
     or subspecialist's expertise, and for whom the specialist or 
     subspecialist assumes care management.
       ``(4) Beneficiaries.--The term `beneficiaries' means, with 
     respect to a qualifying medical home, an individual who--
       ``(A) is enrolled under part B and entitled to benefits 
     under part A;
       ``(B) is not enrolled in a Medicare Advantage plan under 
     part C or a PACE program under section 1894; and
       ``(C) meets such other criteria as the Secretary determines 
     appropriate.
       ``(c) Independent Patient-centered Medical Home Model.--
       ``(1) In general.--
       ``(A) Payment authority.--Under the independent patient-
     centered medical home model under this subsection, the 
     Secretary shall make payments for medical home services 
     furnished by an independent patient-centered medical home (as 
     defined in subparagraph (B)) pursuant to paragraph (3) for 
     targeted high need beneficiaries (as defined in subparagraph 
     (C)).
       ``(B) Independent patient-centered medical home defined.--
     In this section, the term `independent patient-centered 
     medical home' means a physician-directed or nurse-
     practitioner-directed practice that is qualified under 
     paragraph (2) as--
       ``(i) providing beneficiaries with patient-centered medical 
     home services; and
       ``(ii) meets such other requirements as the Secretary may 
     specify.
       ``(C) Targeted high need beneficiary defined.--For purposes 
     of this subsection, the term `targeted high need beneficiary' 
     means a beneficiary who, based on a risk score as specified 
     by the Secretary, is generally within the upper 50th 
     percentile of Medicare beneficiaries.
       ``(D) Beneficiary election to participate.--The Secretary 
     shall determine an appropriate method of ensuring that 
     beneficiaries have agreed to participate in the pilot 
     program.
       ``(E) Implementation.--The pilot program under this 
     subsection shall begin no later than 12 months after the date 
     of the enactment of this section and shall operate for 5 
     years.
       ``(2) Qualification process for patient-centered medical 
     homes.--The Secretary shall establish a process for practices 
     to qualify as medical homes.
       ``(3)  Payment.--
       ``(A) Establishment of methodology.--The Secretary shall 
     establish a methodology for the payment for medical home 
     services furnished by independent patient-centered medical 
     homes. Under such methodology, the Secretary shall adjust 
     payments to medical homes based on beneficiary risk scores to 
     ensure that higher payments are made for higher risk 
     beneficiaries.
       ``(B) Per beneficiary per month payments.--Under such 
     payment methodology, the Secretary shall pay independent 
     patient-centered medical homes a monthly fee for each 
     targeted high need beneficiary who consents to receive 
     medical home services through such medical home.
       ``(C) Prospective payment.--The fee under subparagraph (B) 
     shall be paid on a prospective basis.

[[Page H12697]]

       ``(D) Amount of payment.--In determining the amount of such 
     fee, the Secretary shall consider the following:
       ``(i) The clinical work and practice expenses involved in 
     providing the medical home services provided by the 
     independent patient-centered medical home (such as providing 
     increased access, care coordination, population disease 
     management, and teaching self-care skills for managing 
     chronic illnesses) for which payment is not made under this 
     title as of the date of the enactment of this section.
       ``(ii) Allow for differential payments based on 
     capabilities of the independent patient-centered medical 
     home.
       ``(iii) Use appropriate risk-adjustment in determining the 
     amount of the per beneficiary per month payment under this 
     paragraph in a manner that ensures that higher payments are 
     made for higher risk beneficiaries.
       ``(4) Encouraging participation of variety of practices.--
     The pilot program under this subsection shall be designed to 
     include the participation of physicians in practices with 
     fewer than 10 full-time equivalent physicians, as well as 
     physicians in larger practices, particularly in underserved 
     and rural areas, as well as federally qualified health 
     centers, and rural health centers.
       ``(d) Community-based Medical Home Model.--
       ``(1) In general.--
       ``(A) Authority for payments.--Under the community-based 
     medical home model under this subsection (in this section 
     referred to as the `CBMH model'), the Secretary shall make 
     payments for the furnishing of medical home services by a 
     community-based medical home (as defined in subparagraph (B)) 
     pursuant to paragraph (5)(B) for beneficiaries.
       ``(B) Community-based medical home defined.--In this 
     section, the term `community-based medical home' means a 
     nonprofit community-based or State-based organization or a 
     State that is certified under paragraph (2) as meeting the 
     following requirements:
       ``(i) The organization provides beneficiaries with medical 
     home services.
       ``(ii) The organization provides medical home services 
     under the supervision of and in close collaboration with the 
     primary care or principal care physician, nurse practitioner, 
     or physician assistant designated by the beneficiary as his 
     or her community-based medical home provider.
       ``(iii) The organization employs community health workers, 
     including nurses or other non-physician practitioners, lay 
     health workers, or other persons as determined appropriate by 
     the Secretary, that assist the primary or principal care 
     physician, nurse practitioner, or physician assistant in 
     chronic care management activities such as teaching self-care 
     skills for managing chronic illnesses, transitional care 
     services, care plan setting, nutritional counseling, 
     medication therapy management services for patients with 
     multiple chronic diseases, or help beneficiaries access the 
     health care and community-based resources in their local 
     geographic area.
       ``(iv) The organization meets such other requirements as 
     the Secretary may specify.
       ``(2) Qualification process for community-based medical 
     homes.--The Secretary shall establish a process to provide 
     for the review and qualification of community-based medical 
     homes pursuant to criteria established by the Secretary.
       ``(3) Duration.--The pilot program for community-based 
     medical homes under this subsection shall start no later than 
     2 years after the date of the enactment of this section. Each 
     demonstration site under the pilot program shall operate for 
     a period of up to 5 years after the initial implementation 
     phase, without regard to the receipt of a initial 
     implementation funding under paragraph (6).
       ``(4) Preference.--In selecting sites for the CBMH model, 
     the Secretary shall give preference to applications which 
     seek to eliminate health disparities, as defined in section 
     3171 of the Public Health Service Act and may give preference 
     to any of the following:
       ``(A) Applications that propose to coordinate health care 
     items and services under this title for chronically ill 
     beneficiaries who rely, for primary care, on small physician 
     or nurse practitioner practices, federally qualified health 
     centers, rural health clinics, or other settings with limited 
     resources and scope of services.
       ``(B) Applications that include other third-party payors 
     that furnish medical home services for chronically ill 
     patients covered by such third-party payors.
       ``(C) Applications from States that propose to use the 
     medical home model to coordinate health care services for--
       ``(i) individuals enrolled under this title;
       ``(ii) individuals enrolled under title XIX; and
       ``(iii) full-benefit dual eligible individuals (as defined 
     in section 1935(c)(6)),
     with chronic diseases across a variety of health care 
     settings.
       ``(5)  Payments.--
       ``(A) Establishment of methodology.--The Secretary shall 
     establish a methodology for the payment for medical home 
     services furnished under the CBMH model.
       ``(B) Per beneficiary per month payments.--Under such 
     payment methodology, the Secretary shall make two separate 
     monthly payments for each beneficiary who consents to receive 
     medical home services through such medical home, as follows:
       ``(i) Payment to community-based organization.--One monthly 
     payment to a community-based or State-based organization or 
     State.
       ``(ii) Payment to primary or principal care practice.--One 
     monthly payment to the primary or principal care practice for 
     such beneficiary.
       ``(C) Prospective payment.--The payments under subparagraph 
     (B) shall be paid on a prospective basis.
       ``(D) Amount of payment.--In determining the amount of such 
     payment under subparagraph (B), the Secretary shall consider 
     the following:
       ``(i) The clinical work and practice expenses involved in 
     providing the medical home services provided by the primary 
     or principal care practice (such as providing increased 
     access, care coordination, care planning, population disease 
     management, and teaching self-care skills for managing 
     chronic illnesses) for which payment is not made under this 
     title as of the date of the enactment of this section.
       ``(ii) Use appropriate risk-adjustment in determining the 
     amount of the per beneficiary per month payment under this 
     paragraph.
       ``(iii) In the case of the models described in 
     subparagraphs (B) and (C) of paragraph (4), the Secretary may 
     determine an appropriate payment amount.
       ``(6) Initial implementation funding.--The Secretary may 
     make available initial implementation funding to a non-profit 
     community based or State-based organization or a State that 
     is participating in the pilot program under this subsection. 
     Such organization shall provide the Secretary with a detailed 
     implementation plan that includes how such funds will be 
     used. The Secretary shall select a territory of the United 
     States as one of the locations in which to implement the 
     pilot program under this subsection, unless no organization 
     in a territory is able to comply with the requirements under 
     paragraph (1)(B).
       ``(e) Expansion of Program.--
       ``(1) Evaluation of cost and quality.--The Secretary shall 
     evaluate the pilot program to determine--
       ``(A) the extent to which medical homes result in--
       ``(i) improvement in the quality and coordination of items 
     and services under this title, particularly with regard to 
     the care of complex patients;
       ``(ii) improvement in reducing health disparities;
       ``(iii) reductions in preventable hospitalizations;
       ``(iv) prevention of readmissions;
       ``(v) reductions in emergency room visits;
       ``(vi) improvement in health outcomes, including patient 
     functional status where applicable;
       ``(vii) improvement in patient satisfaction;
       ``(viii) improved efficiency of care such as reducing 
     duplicative diagnostic tests and laboratory tests; and
       ``(ix) reductions in health care expenditures; and
       ``(B) the feasability and advisability of reimbursing 
     medical homes for medical home services under this title on a 
     permanent basis.
       ``(2) Report.--Not later than 60 days after the date of 
     completion of the evaluation under paragraph (1), the 
     Secretary shall submit to Congress and make available to the 
     public a report on the findings of the evaluation under 
     paragraph (1) and the extent to which standards for the 
     certification of medical homes need to be periodically 
     updated.
       ``(3) Expansion of program.--
       ``(A) In general.--Subject to the results of the evaluation 
     under paragraph (1) and subparagraph (B), the Secretary may 
     issue regulations to implement, on a permanent basis, one or 
     more models, if, and to the extent that such model or models, 
     are beneficial to the program under this title, including 
     that such implementation will improve quality of care, as 
     determined by the Secretary.
       ``(B) Certification requirement.--The Secretary may not 
     issue such regulations unless the Chief Actuary of the 
     Centers for Medicare & Medicaid Services certifies that the 
     expansion of the components of the pilot program described in 
     subparagraph (A) would result in estimated spending under 
     this title that would be no more than the level of spending 
     that the Secretary estimates would otherwise be spent under 
     this title in the absence of such expansion.
       ``(C) Updated standards.--The Secretary shall periodically 
     review and update the standards for qualification as an 
     independent patient centered medical home and as a community 
     based medical home and shall establish a process for ensuring 
     that medical homes meet such updated standards, as applicable
       ``(f) Administrative Provisions.--
       ``(1) No duplication in payments for individuals in medical 
     homes.--During any month, the Secretary may not make payments 
     under this section under more than one model or through more 
     than one medical home under any model for the furnishing of 
     medical home services to an individual.
       ``(2) No effect on payment for medical visits.--Payments 
     made under this section are in addition to, and have no 
     effect on the amount of, payment for medical visits made 
     under this title
       ``(3) Administration.--Chapter 35 of title 44, United 
     States Code shall not apply to this section.
       ``(4) No duplication in physician pilot participation.--The 
     Secretary shall not

[[Page H12698]]

     make payments to an independent or community based medical 
     home both under this section and section 1866E or 1866G, 
     unless the pilot program under this section has been 
     implemented on a permanent basis under subsection (e)(3).
       ``(5) Waiver.--The Secretary may waive such provisions of 
     this title and title XI in the manner the Secretary 
     determines necessary in order to implement this section.
       ``(g) Funding.--
       ``(1) Operational costs.--For purposes of administering and 
     carrying out the pilot program (including the design, 
     implementation, technical assistance for and evaluation of 
     such program), in addition to funds otherwise available, 
     there shall be transferred from the Federal Supplementary 
     Medical Insurance Trust Fund under section 1841 to the 
     Secretary for the Centers for Medicare & Medicaid Services 
     Program Management Account $6,000,000 for each of fiscal 
     years 2010 through 2014. Amounts appropriated under this 
     paragraph for a fiscal year shall be available until 
     expended.
       ``(2) Patient-centered medical home services.--In addition 
     to funds otherwise available, there shall be available to the 
     Secretary for the Centers for Medicare & Medicaid Services, 
     from the Federal Supplementary Medical Insurance Trust Fund 
     under section 1841--
       ``(A) $200,000,000 for each of fiscal years 2010 through 
     2014 for payments for medical home services under subsection 
     (c)(3); and
       ``(B) $125,000,000 for each of fiscal years 2012 through 
     2016, for payments under subsection (d)(5).
     Amounts available under this paragraph for a fiscal year 
     shall be available until expended.
       ``(3) Initial implementation.--In addition to funds 
     otherwise available, there shall be available to the 
     Secretary for the Centers for Medicare & Medicaid Services, 
     from the Federal Supplementary Medical Insurance Trust Fund 
     under section 1841, $2,500,000 for each of fiscal years 2010 
     through 2012, under subsection (d)(6). Amounts available 
     under this paragraph for a fiscal year shall be available 
     until expended.
       ``(h) Treatment of TRHCA Medicare Medical Home 
     Demonstration Funding.--
       ``(1) In addition to funds otherwise available for payment 
     of medical home services under subsection (c)(3), there shall 
     also be available the amount provided in subsection (g) of 
     section 204 of division B of the Tax Relief and Health Care 
     Act of 2006 (42 U.S.C. 1395b-1 note), as added by section 133 
     of the Medicare Improvements for Patients and Providers Act 
     of 2008 (Public Law 110-275).
       ``(2) Notwithstanding section 1302(c) of the Affordable 
     Health Care for America Act, in addition to funds provided in 
     paragraph (1) and subsection (g)(2)(A), the funding for 
     medical home services that would otherwise have been 
     available if such section 204 medical home demonstration had 
     been implemented (without regard to subsection (g) of such 
     section) shall be available to the independent patient-
     centered medical home model described in subsection (c).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to services furnished on or after the date of the 
     enactment of this Act.
       (c) Conforming Repeal.--Section 204 of division B of the 
     Tax Relief and Health Care Act of 2006 (42 U.S.C. 1395b-1 
     note), as amended by section 133(a)(2) of the Medicare 
     Improvements for Patients and Providers Act of 2008 (Public 
     Law 110-275), is repealed.

     SEC. 1303. PAYMENT INCENTIVE FOR SELECTED PRIMARY CARE 
                   SERVICES.

       (a) In General.--Section 1833 of the Social Security Act is 
     amended by inserting after subsection (o) the following new 
     subsection:
       ``(p) Primary Care Payment Incentives.--
       ``(1) In general.--In the case of primary care services (as 
     defined in paragraph (2)) furnished on or after January 1, 
     2011, by a primary care practitioner (as defined in paragraph 
     (3)) for which amounts are payable under section 1848, in 
     addition to the amount otherwise paid under this part there 
     shall also be paid to the practitioner (or to an employer or 
     facility in the cases described in clause (A) of section 
     1842(b)(6)) (on a monthly or quarterly basis) from the 
     Federal Supplementary Medical Insurance Trust Fund an amount 
     equal 5 percent (or 10 percent if the practitioner 
     predominately furnishes such services in an area that is 
     designated (under section 332(a)(1)(A) of the Public Health 
     Service Act) as a primary care health professional shortage 
     area.
       ``(2) Primary care services defined.--In this subsection, 
     the term `primary care services'--
       ``(A) mean evaluation and management services, without 
     regard to the specialty of the physician furnishing the 
     services, that are procedure codes (for services covered 
     under this title) for--
       ``(i) services in the category designated Evaluation and 
     Management in the Health Care Common Procedure Coding System 
     (established by the Secretary under section 1848(c)(5) as of 
     December 31, 2009, and as subsequently modified by the 
     Secretary); and
       ``(ii) preventive services (as defined in section 1861(iii) 
     for which payment is made under this section; and
       ``(B) includes services furnished by another health care 
     professional that would be described in subparagraph (A) if 
     furnished by a physician.
       ``(3) Primary care practitioner defined.--In this 
     subsection, the term `primary care practitioner'--
       ``(A) means a physician or other health care practitioner 
     (including a nurse practitioner) who--
       ``(i) specializes in family medicine, general internal 
     medicine, general pediatrics, geriatrics, or obstetrics and 
     gynecology; and
       ``(ii) has allowed charges for primary care services that 
     account for at least 50 percent of the physician's or 
     practitioner's total allowed charges under section 1848, as 
     determined by the Secretary for the most recent period for 
     which data are available; and
       ``(B) includes a physician assistant who is under the 
     supervision of a physician described in subparagraph (A).
       ``(4) Limitation on review.--There shall be no 
     administrative or judicial review under section 1869, section 
     1878, or otherwise, respecting--
       ``(A) any determination or designation under this 
     subsection;
       ``(B) the identification of services as primary care 
     services under this subsection; and
       ``(C) the identification of a practitioner as a primary 
     care practitioner under this subsection.
       ``(5) Coordination with other payments.--
       ``(A) With other primary care incentives.--The provisions 
     of this subsection shall not be taken into account in 
     applying subsections (m) and (u) and any payment under such 
     subsections shall not be taken into account in computing 
     payments under this subsection.
       ``(B) With quality incentives.--Payments under this 
     subsection shall not be taken into account in determining the 
     amounts that would otherwise be paid under this part for 
     purposes of section 1834(g)(2)(B).''.
       (b) Conforming Amendments.--
       (1) Section 1833(m) of such Act (42 U.S.C. 1395l(m)) is 
     amended by redesignating paragraph (4) as paragraph (5) and 
     by inserting after paragraph (3) the following new paragraph:
       ``(4) The provisions of this subsection shall not be taken 
     into account in applying subsections (m) or (u) and any 
     payment under such subsections shall not be taken into 
     account in computing payments under this subsection.''.
       (2) Section 1848(m)(5)(B) of such Act (42 U.S.C. 1395w-
     4(m)(5)(B)) is amended by inserting ``, (p),'' after ``(m)''.
       (3) Section 1848(o)(1)(B)(iv) of such Act (42 U.S.C. 1395w-
     4(o)(1)(B)(iv)) is amended by inserting ``primary care'' 
     before ``health professional shortage area''.

     SEC. 1304. INCREASED REIMBURSEMENT RATE FOR CERTIFIED NURSE-
                   MIDWIVES.

       (a) In General.--Section 1833(a)(1)(K) of the Social 
     Security Act (42 U.S.C.1395l(a)(1)(K)) is amended by striking 
     ``(but in no event'' and all that follows through ``performed 
     by a physician)''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished on or after January 1, 
     2011.

     SEC. 1305. COVERAGE AND WAIVER OF COST-SHARING FOR PREVENTIVE 
                   SERVICES.

       (a) Medicare Covered Preventive Services Defined.--Section 
     1861 of the Social Security Act (42 U.S.C. 1395x), as amended 
     by section 1233(a)(1)(B), is amended by adding at the end the 
     following new subsection:

                 ``Medicare Covered Preventive Services

       ``(iii)(1) Subject to the succeeding provisions of this 
     subsection, the term `Medicare covered preventive services' 
     means the following:
       ``(A) Prostate cancer screening tests (as defined in 
     subsection (oo)).
       ``(B) Colorectal cancer screening tests (as defined in 
     subsection (pp).
       ``(C) Diabetes outpatient self-management training services 
     (as defined in subsection (qq)).
       ``(D) Screening for glaucoma for certain individuals (as 
     described in subsection (s)(2)(U)).
       ``(E) Medical nutrition therapy services for certain 
     individuals (as described in subsection (s)(2)(V)).
       ``(F) An initial preventive physical examination (as 
     defined in subsection (ww)).
       ``(G) Cardiovascular screening blood tests (as defined in 
     subsection (xx)(1)).
       ``(H) Diabetes screening tests (as defined in subsection 
     (yy)).
       ``(I) Ultrasound screening for abdominal aortic aneurysm 
     for certain individuals (as described in subsection 
     (s)(2)(AA)).
       ``(J) Federally approved and recommended vaccines and their 
     administration as described in subsection (s)(10).
       ``(K) Screening mammography (as defined in subsection 
     (jj)).
       ``(L) Screening pap smear and screening pelvic exam (as 
     defined in subsection (nn)).
       ``(M) Bone mass measurement (as defined in subsection 
     (rr)).
       ``(N) Kidney disease education services (as defined in 
     subsection (ggg)).
       ``(O) Additional preventive services (as defined in 
     subsection (ddd)).
       ``(2) With respect to specific Medicare covered preventive 
     services, the limitations and conditions described in the 
     provisions referenced in paragraph (1) with respect to such 
     services shall apply.''.
       (b) Payment and Elimination of Cost-sharing.--
       (1) In general.--
       (A) In general.--Section 1833(a) of the Social Security Act 
     (42 U.S.C. 1395l(a)) is amended by adding after and below 
     paragraph (9) the following:
     ``With respect to Medicare covered preventive services, in 
     any case in which the payment rate otherwise provided under 
     this part

[[Page H12699]]

     is computed as a percent of less than 100 percent of an 
     actual charge, fee schedule rate, or other rate, such 
     percentage shall be increased to 100 percent.''.
       (B) Application to sigmoidoscopies and colonoscopies.--
     Section 1834(d) of such Act (42 U.S.C. 1395m(d)) is amended--
       (i) in paragraph (2)(C), by amending clause (ii) to read as 
     follows:
       ``(ii) No coinsurance.--In the case of a beneficiary who 
     receives services described in clause (i), there shall be no 
     coinsurance applied.''; and
       (ii) in paragraph (3)(C), by amending clause (ii) to read 
     as follows:
       ``(ii) No coinsurance.--In the case of a beneficiary who 
     receives services described in clause (i), there shall be no 
     coinsurance applied.''.
       (2) Elimination of coinsurance in outpatient hospital 
     settings.--
       (A) Exclusion from opd fee schedule.--Section 
     1833(t)(1)(B)(iv) of the Social Security Act (42 U.S.C. 
     1395l(t)(1)(B)(iv)) is amended by striking ``screening 
     mammography (as defined in section 1861(jj)) and diagnostic 
     mammography'' and inserting ``diagnostic mammograms and 
     Medicare covered preventive services (as defined in section 
     1861(iii)(1))''.
       (B) Conforming amendments.--Section 1833(a)(2) of the 
     Social Security Act (42 U.S.C. 1395l(a)(2)) is amended--
       (i) in subparagraph (F), by striking ``and'' after the 
     semicolon at the end;
       (ii) in subparagraph (G), by adding ``and'' at the end; and
       (iii) by adding at the end the following new subparagraph:
       ``(H) with respect to additional preventive services (as 
     defined in section 1861(ddd)) furnished by an outpatient 
     department of a hospital, the amount determined under 
     paragraph (1)(W);''.
       (3) Waiver of application of deductible for all preventive 
     services.--The first sentence of section 1833(b) of the 
     Social Security Act (42 U.S.C. 1395l(b)) is amended--
       (A) in clause (1), by striking ``items and services 
     described in section 1861(s)(10)(A)'' and inserting 
     ``Medicare covered preventive services (as defined in section 
     1861(iii))'';
       (B) by inserting ``and'' before ``(4)''; and
       (C) by striking clauses (5) through (8).
       (4) Application to providers of services.--Section 
     1866(a)(2)(A)(ii) of such Act (42 U.S.C. 1395cc(a)(2)(A)(ii)) 
     is amended by inserting ``other than for Medicare covered 
     preventive services and'' after ``for such items and services 
     (''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     2011.
       (d) Preventive Services.--
       (1) Report to congress on barriers to preventive 
     services.--Not later than 12 months after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall report to Congress on barriers, if any, facing 
     Medicare beneficiaries in accessing the benefit to abdominal 
     aortic aneurysm screening and other preventative services 
     through the Welcome to Medicare Physical Exam.
       (2) Abdominal aortic aneurysm screen access.--The Secretary 
     shall, to the extent practical, identify and implement 
     policies promoting proper use of abdominal aortic aneurysm 
     screening among Medicare beneficiaries at risk for such 
     aneurysms.

     SEC. 1306. WAIVER OF DEDUCTIBLE FOR COLORECTAL CANCER 
                   SCREENING TESTS REGARDLESS OF CODING, 
                   SUBSEQUENT DIAGNOSIS, OR ANCILLARY TISSUE 
                   REMOVAL.

       (a) In General.--Section 1833 of the Social Security Act 
     (42 U.S.C. 1395l(b)), as amended by section 1305(b), is 
     further amended--
       (1) in subsection (a), in the sentence added by section 
     1305(b)(1)(A), by inserting ``(including services described 
     in the last sentence of section 1833(b))'' after ``preventive 
     services''; and
       (2) in subsection (b), by adding at the end the following 
     new sentence: ``Clause (1) of the first sentence of this 
     subsection shall apply with respect to a colorectal cancer 
     screening test regardless of the code that is billed for the 
     establishment of a diagnosis as a result of the test, or for 
     the removal of tissue or other matter or other procedure that 
     is furnished in connection with, as a result of, and in the 
     same clinical encounter as, the screening test.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to items and services furnished on or after 
     January 1, 2011.

     SEC. 1307. EXCLUDING CLINICAL SOCIAL WORKER SERVICES FROM 
                   COVERAGE UNDER THE MEDICARE SKILLED NURSING 
                   FACILITY PROSPECTIVE PAYMENT SYSTEM AND 
                   CONSOLIDATED PAYMENT.

       (a) In General.--Section 1888(e)(2)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1395yy(e)(2)(A)(ii)) is amended by 
     inserting ``clinical social worker services,'' after 
     ``qualified psychologist services,''.
       (b) Conforming Amendment.--Section 1861(hh)(2) of the 
     Social Security Act (42 U.S.C. 1395x(hh)(2)) is amended by 
     striking ``and other than services furnished to an inpatient 
     of a skilled nursing facility which the facility is required 
     to provide as a requirement for participation''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     October 1, 2010.

     SEC. 1308. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES 
                   AND MENTAL HEALTH COUNSELOR SERVICES.

       (a) Coverage of Marriage and Family Therapist Services.--
       (1) Coverage of services.--Section 1861(s)(2) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)), as amended by section 
     1235, is amended--
       (A) in subparagraph (EE), by striking ``and'' at the end;
       (B) in subparagraph (FF), by adding ``and'' at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(GG) marriage and family therapist services (as defined 
     in subsection (jjj));''.
       (2) Definition.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x), as amended by sections 1233 and 1305, is 
     amended by adding at the end the following new subsection:

                ``Marriage and Family Therapist Services

       ``(jjj)(1) The term `marriage and family therapist 
     services' means services performed by a marriage and family 
     therapist (as defined in paragraph (2)) for the diagnosis and 
     treatment of mental illnesses, which the marriage and family 
     therapist is legally authorized to perform under State law 
     (or the State regulatory mechanism provided by State law) of 
     the State in which such services are performed, as would 
     otherwise be covered if furnished by a physician or as 
     incident to a physician's professional service, but only if 
     no facility or other provider charges or is paid any amounts 
     with respect to the furnishing of such services.
       ``(2) The term `marriage and family therapist' means an 
     individual who--
       ``(A) possesses a master's or doctoral degree which 
     qualifies for licensure or certification as a marriage and 
     family therapist pursuant to State law;
       ``(B) after obtaining such degree has performed at least 2 
     years of clinical supervised experience in marriage and 
     family therapy; and
       ``(C) is licensed or certified as a marriage and family 
     therapist in the State in which marriage and family therapist 
     services are performed.''.
       (3) Provision for payment under part b.--Section 
     1832(a)(2)(B) of the Social Security Act (42 U.S.C. 
     1395k(a)(2)(B)) is amended by adding at the end the following 
     new clause:
       ``(v) marriage and family therapist services;''.
       (4) Amount of payment.--
       (A) In general.--Section 1833(a)(1) of the Social Security 
     Act (42 U.S.C. 1395l(a)(1)) is amended--
       (i) by striking ``and'' before ``(W)''; and
       (ii) by inserting before the semicolon at the end the 
     following: ``, and (X) with respect to marriage and family 
     therapist services under section 1861(s)(2)(GG), the amounts 
     paid shall be 80 percent of the lesser of the actual charge 
     for the services or 75 percent of the amount determined for 
     payment of a psychologist under clause (L)''.
       (B) Development of criteria with respect to consultation 
     with a health care professional.--The Secretary of Health and 
     Human Services shall, taking into consideration concerns for 
     patient confidentiality, develop criteria with respect to 
     payment for marriage and family therapist services for which 
     payment may be made directly to the marriage and family 
     therapist under part B of title XVIII of the Social Security 
     Act (42 U.S.C. 1395j et seq.) under which such a therapist 
     must agree to consult with a patient's attending or primary 
     care physician or nurse practitioner in accordance with such 
     criteria.
       (5) Exclusion of marriage and family therapist services 
     from skilled nursing facility prospective payment system.--
     Section 1888(e)(2)(A)(ii) of the Social Security Act (42 
     U.S.C. 1395yy(e)(2)(A)(ii)), as amended by section 1307(a), 
     is amended by inserting ``marriage and family therapist 
     services (as defined in subsection (jjj)(1)),'' after 
     ``clinical social worker services,''.
       (6) Coverage of marriage and family therapist services 
     provided in rural health clinics and federally qualified 
     health centers.--Section 1861(aa)(1)(B) of the Social 
     Security Act (42 U.S.C. 1395x(aa)(1)(B)) is amended by 
     striking ``or by a clinical social worker (as defined in 
     subsection (hh)(1)),'' and inserting ``, by a clinical social 
     worker (as defined in subsection (hh)(1)), or by a marriage 
     and family therapist (as defined in subsection (jjj)(2)),''.
       (7) Inclusion of marriage and family therapists as 
     practitioners for assignment of claims.--Section 
     1842(b)(18)(C) of the Social Security Act (42 U.S.C. 
     1395u(b)(18)(C)) is amended by adding at the end the 
     following new clause:
       ``(vii) A marriage and family therapist (as defined in 
     section 1861(jjj)(2)).''.
       (b) Coverage of Mental Health Counselor Services.--
       (1) Coverage of services.--Section 1861(s)(2) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)), as previously amended, 
     is further amended--
       (A) in subparagraph (FF), by striking ``and'' at the end;
       (B) in subparagraph (GG), by inserting ``and'' at the end; 
     and
       (C) by adding at the end the following new subparagraph:
       ``(HH) mental health counselor services (as defined in 
     subsection (kkk)(1));''.
       (2) Definition.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x), as previously amended, is amended by 
     adding at the end the following new subsection:

                   ``Mental Health Counselor Services

       ``(kkk)(1) The term `mental health counselor services' 
     means services performed by a

[[Page H12700]]

     mental health counselor (as defined in paragraph (2)) for the 
     diagnosis and treatment of mental illnesses which the mental 
     health counselor is legally authorized to perform under State 
     law (or the State regulatory mechanism provided by the State 
     law) of the State in which such services are performed, as 
     would otherwise be covered if furnished by a physician or as 
     incident to a physician's professional service, but only if 
     no facility or other provider charges or is paid any amounts 
     with respect to the furnishing of such services.
       ``(2) The term `mental health counselor' means an 
     individual who--
       ``(A) possesses a master's or doctor's degree which 
     qualifies the individual for licensure or certification for 
     the practice of mental health counseling in the State in 
     which the services are performed;
       ``(B) after obtaining such a degree has performed at least 
     2 years of supervised mental health counselor practice; and
       ``(C) is licensed or certified as a mental health counselor 
     or professional counselor by the State in which the services 
     are performed.''.
       (3) Provision for payment under part b.--Section 
     1832(a)(2)(B) of the Social Security Act (42 U.S.C. 
     1395k(a)(2)(B)), as amended by subsection (a)(3), is further 
     amended--
       (A) by striking ``and'' at the end of clause (iv);
       (B) by adding ``and'' at the end of clause (v); and
       (C) by adding at the end the following new clause:
       ``(vi) mental health counselor services;''.
       (4) Amount of payment.--
       (A) In general.--Section 1833(a)(1) of the Social Security 
     Act (42 U.S.C. 1395l(a)(1)), as amended by subsection (a), is 
     further amended--
       (i) by striking ``and'' before ``(X)''; and
       (ii) by inserting before the semicolon at the end the 
     following: ``, and (Y), with respect to mental health 
     counselor services under section 1861(s)(2)(HH), the amounts 
     paid shall be 80 percent of the lesser of the actual charge 
     for the services or 75 percent of the amount determined for 
     payment of a psychologist under clause (L)''.
       (B) Development of criteria with respect to consultation 
     with a physician.--The Secretary of Health and Human Services 
     shall, taking into consideration concerns for patient 
     confidentiality, develop criteria with respect to payment for 
     mental health counselor services for which payment may be 
     made directly to the mental health counselor under part B of 
     title XVIII of the Social Security Act (42 U.S.C. 1395j et 
     seq.) under which such a counselor must agree to consult with 
     a patient's attending or primary care physician in accordance 
     with such criteria.
       (5) Exclusion of mental health counselor services from 
     skilled nursing facility prospective payment system.--Section 
     1888(e)(2)(A)(ii) of the Social Security Act (42 U.S.C. 
     1395yy(e)(2)(A)(ii)), as amended by section 1307(a) and 
     subsection (a), is amended by inserting ``mental health 
     counselor services (as defined in section 1861(kkk)(1)),'' 
     after ``marriage and family therapist services (as defined in 
     subsection (jjj)(1)),''.
       (6) Coverage of mental health counselor services provided 
     in rural health clinics and federally qualified health 
     centers.--Section 1861(aa)(1)(B) of the Social Security Act 
     (42 U.S.C. 1395x(aa)(1)(B)), as amended by subsection (a), is 
     amended by striking ``or by a marriage and family therapist 
     (as defined in subsection (jjj)(2)),'' and inserting ``by a 
     marriage and family therapist (as defined in subsection 
     (jjj)(2)), or a mental health counselor (as defined in 
     subsection (kkk)(2)),''.
       (7) Inclusion of mental health counselors as practitioners 
     for assignment of claims.--Section 1842(b)(18)(C) of the 
     Social Security Act (42 U.S.C. 1395u(b)(18)(C)), as amended 
     by subsection (a)(7), is amended by adding at the end the 
     following new clause:
       ``(viii) A mental health counselor (as defined in section 
     1861(kkk)(2)).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     January 1, 2011.

     SEC. 1309. 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, 
     2011''.

     SEC. 1310. EXPANDING ACCESS TO VACCINES.

       (a) In General.--Paragraph (10) of section 1861(s) of the 
     Social Security Act (42 U.S.C. 1395w(s)) is amended to read 
     as follows:
       ``(10) federally approved and recommended vaccines (as 
     defined in subsection (lll)) and their respective 
     administration;''.
       (b) Federally Approved and Recommended Vaccines Defined.--
     Section 1861 of such Act is further amended by adding at the 
     end the following new subsection:

             ``Federally Approved and Recommended Vaccines

       ``(lll) The term `federally approved and recommended 
     vaccine' means a vaccine that--
       ``(1) is licensed under section 351 of the Public Health 
     Service Act, approved under the Federal Food, Drug, and 
     Cosmetic Act, or authorized for emergency use under section 
     564 of the Federal, Food, Drug, and Cosmetic Act; and
       ``(2) is recommended by the Director of the Centers for 
     Disease Control and Prevention.''.
       (c) Conforming Amendments.--
       (1) Section 1833 of such Act (42 U.S.C. 1395l) is amended, 
     in each of subsections (a)(1)(B), (a)(2)(G), and (a)(3)(A), 
     by striking ``1861(s)(10)(A)'' and inserting ``1861(s)(10)'' 
     each place it appears.
       (2) Section 1842(o)(1)(A)(iv) of such Act (42 U.S.C. 
     1395u(o)(1)(A)(iv)) is amended--
       (A) by striking ``subparagraph (A) or (B) of''; and
       (B) by inserting before the period the following: ``and 
     before January 1, 2011, and influenza vaccines furnished on 
     or after January 1, 2011''.
       (3) Section 1847A(c)(6) of such Act (42 U.S.C. 1395w-
     3a(c)(6)) is amended--
       (A) in subparagraph (D)(i), by inserting ``, including a 
     vaccine furnished on or after January 1, 2010''; and
       (B) by the following new paragraph:
       ``(H) Implementation.--Chapter 35 of title 44, United 
     States Code shall not apply to manufacturer provision of 
     information pursuant to section 1927(b)(3)(A)(iii) or 
     subsection (f)(2) for purposes of implementation of this 
     section.''.
       (4) Section 1860D-2(e)(1) of such Act (42 U.S.C. 1395w-
     102(e)(1)) is amended by striking ``such term includes a 
     vaccine'' and all that follows through ``its administration) 
     and''.
       (5) Section 1861(ww)(2)(A) of such Act (42 U.S.C. 
     1395x(ww)(2)(A))) is amended by striking ``Pneumococcal, 
     influenza, and hepatitis B vaccine and administration'' and 
     inserting ``federally approved or authorized vaccines (as 
     defined in subsection (lll)) and their respective 
     administration''.
       (6) Section 1927(b)(3)(A)(iii) of such Act (42 U.S.C. 
     1396r-8(b)(3)(A)(iii)) is amended, in the matter following 
     subclause (III), by inserting ``(A)(iv) (including influenza 
     vaccines furnished on or after January 1, 2011),'' after 
     ``described in subparagraph''.
       (7) Section 1847A(f) of such Act (42 U.S.C. 1395w-3a(f)) is 
     amended--
       (A) by striking ``For'' and inserting ``(1) In general.--
     For'';
       (B) by indenting paragraph (1), as redesignated in 
     subparagraph (A), 2 ems to the left; and--
       (C) by adding at the end the following new paragraph:
       ``(2) Treatment of certain manufacturers.--In the case of a 
     manufacturer of a drug or biological described in 
     subparagraphs (A)(iv), (C), (D), (E), or (G) of section 
     1842(o)(1) that does not have a rebate agreement under 
     section 1927(a), no payment may be made under this part for 
     such drug or biological if such manufacturer does not submit 
     the information described in section 1927(b)(3)(A)(iii) in 
     the same manner as if the manufacturer had such a rebate 
     agreement in effect. Subparagraphs (C) and (D) of section 
     1927(b)(3) shall apply to information reported pursuant to 
     the previous sentence in the same manner as such 
     subparagraphs apply with respect to information reported 
     pursuant to such section.''.''.
       (d) Effective Dates.--The amendments made--
       (1) by this section (other than by subsection (c)(6)) shall 
     apply to vaccines administered on or after January 1, 2011; 
     and
       (2) by subsection (c)(6) shall apply to calendar quarters 
     beginning on or after January 1, 2010.

     SEC. 1311. EXPANSION OF MEDICARE-COVERED PREVENTIVE SERVICES 
                   AT FEDERALLY QUALIFIED HEALTH CENTERS.

       (a) In General.--Section 1861(aa)(3)(A) of the Social 
     Security Act (42 U.S.C. 1395w (aa)(3)(A)) is amended to read 
     as follows:
       ``(A) services of the type described subparagraphs (A) 
     through (C) of paragraph (1) and services described in 
     section 1861(iii); and''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply not later than January 1, 2011.

     SEC. 1312. INDEPENDENCE AT HOME DEMONSTRATION PROGRAM.

       Title XVIII of the Social Security Act is amended by 
     inserting after section 1866F, as inserted by section 1302, 
     the following new section:


     ``independence at home medical practice demonstration program

       ``Sec. 1866G.  (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.--

[[Page H12701]]

       ``(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) includes at least 200 applicable beneficiaries as 
     defined in subsection (d);
       ``(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.
       ``(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.--
       ``(A) In general.--An independence at home medical practice 
     participating in the demonstration program 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) Development of quality performance standards.--The 
     Secretary shall develop quality performance standards for 
     independence at home medical practices participating in the 
     demonstration program.
       ``(c) Shared Savings Payment Methodology.--
       ``(1) Establishment of target spending level.--The 
     Secretary shall establish annual target spending levels for 
     items and services covered under parts A and B furnished to 
     applicable beneficiaries by qualifying independence at home 
     medical practices under this section. The Secretary may set 
     an aggregate target spending level for all qualifying 
     practices, or may set different target spending levels for 
     groups of practices or a single practice. Such target 
     spending levels may be determined on a per capita basis and 
     shall take into account normal variation in expenditures for 
     items and services covered under parts A and B furnished to 
     such beneficiaries. The target shall also be adjusted for the 
     size of the practice, number of practices included in the 
     target spending level, characteristics of applicable 
     beneficiaries and such other factors as the Secretary 
     determines appropriate. The Secretary may periodically adjust 
     or rebase the target spending level under this paragraph.
       ``(2) Shared savings amounts.--
       ``(A) In general.--Subject to subparagraph (B), qualifying 
     independence at home medical practices are eligible to 
     receive an incentive payment under this section if aggregate 
     expenditures for a year for applicable beneficiaries are less 
     than the target spending level for qualifying independence at 
     home medical practices 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 total payments for 
     applicable beneficiaries under parts A and B for such year 
     are estimated to be less than 5 percent less than the target 
     spending level for such year, as determined by the Secretary.
       ``(B) Apportionment of savings.--The Secretary shall 
     designate how, and to what extent, an incentive payment under 
     this section is to be apportioned among qualifying 
     independence at home medical practices, taking into account 
     the size of the practice, characteristics of the individuals 
     enrolled in each practice, performance on quality performance 
     measures, and such other factors as the Secretary determines 
     appropriate.
       ``(3) Savings to the medicare program.--The Secretary shall 
     limit incentive payments to each qualifying independence at 
     home medical practice under this paragraph, with respect to a 
     year, as necessary to ensure that the aggregate expenditures 
     for items and services under parts A and B with respect to 
     applicable beneficiaries for such independence at home 
     medical practice (inclusive of shared savings payments) do 
     not exceed the amount that the Secretary estimates would be 
     expended for such items and services for such beneficiaries 
     during such year (taking into account normal variation in 
     expenditures and other factors the Secretary deems 
     appropriate) if the demonstration program under this section 
     were not implemented, minus 5 percent.
       ``(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 
     not 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 1866D or section 1866E.
       ``(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 1866D or section 1866E.
       ``(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) Number of practices.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary shall enter into agreements with as many 
     independence at home medial practices as practicable and 
     consistent with this subsection to test the potential of the 
     independence at home medical practice model under this 
     section in order to achieve the results described in 
     subsection (a) across practices serving varying numbers of 
     applicable beneficiaries.
       ``(B) Limitation.--In selecting qualified independence at 
     home medial practices to participate under the demonstration 
     program, the Secretary shall limit the number of applicable 
     beneficiaries that may participate in the demonstration 
     program to 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.

[[Page H12702]]

       ``(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) Following 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 shared 
     savings 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 $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) Antidiscrimination Limitation.--The Secretary shall 
     not enter into an agreement with an entity to provide health 
     care items or services under the demonstration program unless 
     such entity guarantees that for individuals eligible to be 
     enrolled in such program, the entity will not deny, limit, or 
     condition the coverage or provision of benefits to which the 
     individual would have otherwise been entitled to on the basis 
     of health status if not included in this program.
       ``(j) Termination.--The Secretary may terminate an 
     agreement with an independence at home medical practice if 
     such practice does not receive incentive payments under 
     subsection (c)(2) or consistently fails to meet quality 
     standards.''.

     SEC. 1313. RECOGNITION OF CERTIFIED DIABETES EDUCATORS AS 
                   CERTIFIED PROVIDERS FOR PURPOSES OF MEDICARE 
                   DIABETES OUTPATIENT SELF-MANAGEMENT TRAINING 
                   SERVICES.

       (a) In General.--Section 1861(qq) of the Social Security 
     Act (42 U.S.C. 1395x(qq)) is amended--
       (1) in paragraph (1), by inserting ``or by a certified 
     diabetes educator (as defined in paragraph (3))'' after 
     ``paragraph (2)(B)''; and
       (2) by adding at the end the following new paragraphs:
       ``(3) For purposes of paragraph (1), the term `certified 
     diabetes educator' means an individual who--
       ``(A) is licensed or registered by the State in which the 
     services are performed as a health care professional;
       ``(B) specializes in teaching individuals with diabetes to 
     develop the necessary skills and knowledge to manage the 
     individual's diabetic condition; and
       ``(C) is certified as a diabetes educator by a recognized 
     certifying body (as defined in paragraph (4)).
       ``(4)(A) For purposes of paragraph (3)(C), the term 
     `recognized certifying body' means--
       ``(i) the National Certification Board for Diabetes 
     Educators, or
       ``(ii) a certifying body for diabetes educators, which is 
     recognized by the Secretary as authorized to grant 
     certification of diabetes educators for purposes of this 
     subsection pursuant to standards established by the 
     Secretary, if the Secretary determines such Board or body, 
     respectively, meets the requirement of subparagraph (B).
       ``(B) The National Certification Board for Diabetes 
     Educators or a certifying body for diabetes educators meets 
     the requirement of this subparagraph, with respect to the 
     certification of an individual, if the Board or body, 
     respectively, is incorporated and registered to do business 
     in the United States and requires as a condition of such 
     certification each of the following:
       ``(i) The individual has a qualifying credential in a 
     specified health care profession.
       ``(ii) The individual has professional practice experience 
     in diabetes self-management training that includes a minimum 
     number of hours and years of experience in such training.
       ``(iii) The individual has successfully completed a 
     national certification examination offered by such entity.
       ``(iv) The individual periodically renews certification 
     status following initial certification.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to diabetes outpatient self-management training 
     services furnished on or after the first day of the first 
     calendar year that is at least 6 months after the date of the 
     enactment of this Act.

                           TITLE IV--QUALITY

             Subtitle A--Comparative Effectiveness Research

     SEC. 1401. COMPARATIVE EFFECTIVENESS RESEARCH.

       (a) In General.--Title XI of the Social Security Act is 
     amended by adding at the end the following new part:

              ``Part D--Comparative Effectiveness Research


                  ``comparative effectiveness research

       ``Sec. 1181.  (a) Center for Comparative Effectiveness 
     Research Established.--
       ``(1) In general.--The Secretary shall establish within the 
     Agency for Healthcare Research and Quality a Center for 
     Comparative Effectiveness Research (in this section referred 
     to as the `Center') to conduct, support, and synthesize 
     research (including research conducted or supported under 
     section 1013 of the Medicare Prescription Drug, Improvement, 
     and Modernization Act of 2003) with respect to the outcomes, 
     effectiveness, and appropriateness of health care services 
     and procedures in order to identify the manner in which 
     diseases, disorders, and other health conditions can most 
     effectively and appropriately be prevented, diagnosed, 
     treated, and managed clinically.
       ``(2) Duties.--The Center shall--
       ``(A) conduct, support, and synthesize research relevant to 
     the comparative effectiveness of the full spectrum of health 
     care items, services and systems, including pharmaceuticals, 
     medical devices, medical and surgical procedures, and other 
     medical interventions;
       ``(B) conduct and support systematic reviews of clinical 
     research, including original research conducted subsequent to 
     the date of the enactment of this section;
       ``(C) continuously develop rigorous scientific 
     methodologies for conducting comparative effectiveness 
     studies, and use such methodologies appropriately;
       ``(D) submit to the Comparative Effectiveness Research 
     Commission, the Secretary, and Congress appropriate relevant 
     reports described in subsection (d)(2);
       ``(E) not later than one year after the date of the 
     enactment of this section, enter into an arrangement under 
     which the Institute of Medicine of the National Academy of 
     Sciences shall conduct an evaluation and report on standards 
     of evidence for highly credible research;
       ``(F) encourage, as appropriate, the development and use of 
     clinical registries and the development of clinical 
     effectiveness research data networks from electronic health 
     records, post marketing drug and medical device surveillance 
     efforts, and other forms of electronic health data; and
       ``(G) appoint clinical perspective advisory panels for 
     research priorities under this section, which shall consult 
     with patients and other stakeholders and advise the Center on 
     research questions, methods, and evidence gaps in terms of 
     clinical outcomes for the specific research inquiry to be 
     examined with respect to such priority to ensure that the 
     information produced from such research is clinically 
     relevant to decisions made by clinicians and patients at the 
     point of care.
       ``(3) Powers.--
       ``(A) Obtaining official data.--The Center may secure 
     directly from any department or agency of the United States 
     information necessary to enable it to carry out this section. 
     Upon request of the Center, the head of such department or 
     agency shall furnish that information to the Center on an 
     agreed upon schedule.
       ``(B) Data collection.--In order to carry out its 
     functions, the Center shall--
       ``(i) utilize existing information, both published and 
     unpublished, where possible, collected and assessed either by 
     its own staff or under other arrangements made in accordance 
     with this section;
       ``(ii) carry out, or award grants or contracts for, 
     original research and experimentation, where existing 
     information is inadequate; and
       ``(iii) adopt procedures allowing any interested party to 
     submit information for the use by the Center in making 
     reports and recommendations.
     In carrying out clause (ii), the Center may award grants or 
     contracts (or provide for intergovernmental transfers, as 
     applicable) to private entities and governmental agencies 
     with experience in conducting comparative effectiveness 
     research, such as the National Institutes of Health and other 
     relevant Federal health agencies.
       ``(C) Access of gao to information.--The Comptroller 
     General shall have unrestricted access to all deliberations, 
     records, and nonproprietary data of the Center and Commission 
     under subsection (b), immediately upon request.
       ``(D) Periodic audit.--The Center and Commission under 
     subsection (b) shall be subject to periodic audit by the 
     Comptroller General.
       ``(b) Comparative Effectiveness Research Commission.--
       ``(1) In general.--There is established an independent 
     Comparative Effectiveness Research Commission (in this 
     section referred to as the `Commission') to advise the Center 
     and evaluate the activities carried out by the Center under 
     subsection (a) to ensure such activities result in highly 
     credible research and information resulting from such 
     research.
       ``(2) Duties.--The Commission shall--
       ``(A)(i) recommend to the Center national priorities for 
     research described in subsection (a) which shall take into 
     account--
       ``(I) disease incidence, prevalence, and burden in the 
     United States;
       ``(II) evidence gaps in terms of clinical outcomes;

[[Page H12703]]

       ``(III) variations in practice, delivery, and outcomes by 
     geography, treatment site, provider type, disability, 
     variation in age group (including children, adolescents, 
     adults, and seniors), racial and ethnic background, gender, 
     genetic and molecular subtypes, and other appropriate 
     populations or subpopulations; and
       ``(IV) the potential for new evidence concerning certain 
     categories, health care services, or treatments to improve 
     patient health and well-being, and the quality of care; and
       ``(ii) in making such recommendations consult with a broad 
     array of public and private stakeholders, including patients 
     and health care providers and payers;
       ``(B) monitor the appropriateness of use of the CERTF 
     described in subsection (g) with respect to the timely 
     production of comparative effectiveness research recommended 
     to be a national priority under subparagraph (A);
       ``(C) identify highly credible research methods and 
     standards of evidence for such research to be considered by 
     the Center;
       ``(D) review the methodologies developed by the center 
     under subsection (a)(2)(C);
       ``(E) support forums to increase stakeholder awareness and 
     permit stakeholder feedback on the efforts of the Center to 
     advance methods and standards that promote highly credible 
     research;
       ``(F) make recommendations to the Center for policies that 
     would allow for public access of data produced under this 
     section, in accordance with appropriate privacy and 
     proprietary practices, while ensuring that the information 
     produced through such data is timely and credible;
       ``(G) make recommendations to the Center for the priority 
     for periodic reviews of previous comparative effectiveness 
     research and studies conducted by the Center under subsection 
     (a);
       ``(H) at least annually review the processes of the Center 
     and make reports to Congress and the President regarding 
     research conducted, supported, or synthesized by the Center 
     to confirm that the information produced by such research is 
     objective, credible, consistent with standards of evidence 
     developed under this section, and developed through a 
     transparent process that includes consultations with 
     appropriate stakeholders;
       ``(I) make recommendations to the Center for the broad 
     dissemination, consistent with subsection (e), of the 
     findings of research conducted and supported under this 
     section that enables clinicians, patients, consumers, and 
     payers to make more informed health care decisions that 
     improve quality and value; and
       ``(J) at least twice each year, hold a public meeting with 
     an opportunity for stakeholder input.
     The reports under subparagraph (H) shall not be submitted to 
     the Office of Management and Budget or to any other Federal 
     agency or executive department for any purpose prior to 
     transmittal to Congress and the President. Such reports shall 
     be published on the public internet website of the Commission 
     after the date of such transmittal.
       ``(3) Composition of commission.--
       ``(A) In general.--The members of the Commission shall 
     consist of--
       ``(i) the Director of the Agency for Healthcare Research 
     and Quality or their designee;
       ``(ii) the Chief Medical Officer of the Centers for 
     Medicare & Medicaid Services or their designee;
       ``(iii) the Director of the National Institutes of Health 
     or their designee; and
       ``(iv) 16 additional members who shall represent broad 
     constituencies of stakeholders including clinicians, 
     patients, researchers, third-party payers, and consumers of 
     Federal and State beneficiary programs.
     Of such members, at least 10 shall be practicing physicians, 
     health care practitioners, consumers, or patients.
       ``(B) Qualifications.--
       ``(i) Diverse representation of perspectives.--The members 
     of the Commission shall represent a broad range of 
     perspectives and shall collectively have experience in the 
     following areas:

       ``(I) Epidemiology.
       ``(II) Health services research.
       ``(III) Bioethics.
       ``(IV) Decision sciences.
       ``(V) Health disparities.
       ``(VI) Health economics.

       ``(ii) Diverse representation of health care community.--At 
     least one member shall represent each of the following health 
     care communities:

       ``(I) Patients.
       ``(II) Health care consumers.
       ``(III) Practicing Physicians, including surgeons.
       ``(IV) Other health care practitioners engaged in clinical 
     care.
       ``(V) Organizations with proven expertise in racial and 
     ethnic minority health research.
       ``(VI) Employers.
       ``(VII) Public payers.
       ``(VIII) Insurance plans.
       ``(IX) Clinical researchers who conduct research on behalf 
     of pharmaceutical or device manufacturers.

       ``(C) Limitation.--No more than 3 of the Members of the 
     Commission may be representatives of pharmaceutical or device 
     manufacturers and such representatives shall be clinical 
     researchers described under subparagraph (B)(ii)(IX).
       ``(4) Appointment.--The Comptroller General shall appoint 
     the members of the Commission.
       ``(5) Chairman; vice chairman.--The Comptroller General 
     shall designate a member of the Commission, at the time of 
     appointment of the member, as Chairman and a member as Vice 
     Chairman for that term of appointment, except that in the 
     case of vacancy of the Chairmanship or Vice Chairmanship, the 
     Comptroller General may designate another member for the 
     remainder of that member's term. The Chairman shall serve as 
     an ex officio member of the National Advisory Council of the 
     Agency for Health Care Research and Quality under section 
     931(c)(3)(B) of the Public Health Service Act.
       ``(6) Terms.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     each member of the Commission shall be appointed for a term 
     of 4 years.
       ``(B) Terms of initial appointees.--Of the members first 
     appointed--
       ``(i) 8 shall be appointed for a term of 4 years; and
       ``(ii) 8 shall be appointed for a term of 3 years.
       ``(7) Compensation.--While serving on the business of the 
     Commission (including travel time), a member of the 
     Commission shall be entitled to compensation at the per diem 
     equivalent of the rate provided for level IV of the Executive 
     Schedule under section 5315 of title 5, United States Code; 
     and while so serving away from home and the member's regular 
     place of business, a member may be allowed travel expenses, 
     as authorized by the Director of the Commission.
       ``(8) Director and staff; experts and consultants.--Subject 
     to such review as the Comptroller General deems necessary to 
     assure the efficient administration of the Commission, the 
     Commission may--
       ``(A) appoint and set the compensation for an Executive 
     Director (subject to the approval of the Comptroller General) 
     and such other personnel as Federal employees under section 
     2105 of title 5, United States Code, as may be necessary to 
     carry out its duties (without regard to the provisions of 
     title 5, United States Code, governing appointments in the 
     competitive service);
       ``(B) seek such assistance and support as may be required 
     in the performance of its duties from appropriate Federal 
     departments and agencies;
       ``(C) enter into contracts or make other arrangements, as 
     may be necessary for the conduct of the work of the 
     Commission (without regard to section 3709 of the Revised 
     Statutes (41 U.S.C. 5));
       ``(D) make advance, progress, and other payments which 
     relate to the work of the Commission;
       ``(E) provide transportation and subsistence for persons 
     serving without compensation; and
       ``(F) prescribe such rules and regulations as it deems 
     necessary with respect to the internal organization and 
     operation of the Commission.
       ``(9) Obtaining official data.--The Commission may secure 
     directly from any department or agency of the United States 
     information necessary to enable the Commission to carry out 
     this section. Upon request of the Chairman of the Commission, 
     the head of such department or agency shall furnish the 
     information to the Commission on an agreed upon schedule.
       ``(10) Availability of reports.--The Commission shall 
     transmit to the Secretary a copy of each report submitted 
     under this subsection and shall make such reports available 
     to the public.
       ``(11) Coordination.--To enhance effectiveness and 
     coordination, the Secretary is encouraged, to the greatest 
     extent possible, to seek coordination between the Commission 
     and the National Advisory Council of the Agency for 
     Healthcare Research and Quality.
       ``(12) Conflicts of interest.--
       ``(A) In general.--In appointing the members of the 
     Commission or a clinical perspective advisory panel described 
     in subsection (a)(2)(G), the Comptroller General or the 
     Secretary, respectively, shall take into consideration any 
     financial interest (as defined in subparagraph (D)), 
     consistent with this paragraph, and develop a plan for 
     managing any identified conflicts.
       ``(B) Evaluation and criteria.--When considering an 
     appointment to the Commission or a clinical perspective 
     advisory panel described subsection (a)(2)(G), the 
     Comptroller General or the Secretary, respectively, shall 
     review the expertise of the individual and the financial 
     disclosure report filed by the individual pursuant to the 
     Ethics in Government Act of 1978 for each individual under 
     consideration for the appointment, so as to reduce the 
     likelihood that an appointed individual will later require a 
     written determination as referred to in section 208(b)(1) of 
     title 18, United States Code, a written certification as 
     referred to in section 208(b)(3) of title 18, United States 
     Code, or a waiver as referred to in subparagraph (D)(iii) for 
     service on the Commission at a meeting of the Commission.
       ``(C) Disclosures; prohibitions on participation; 
     waivers.--
       ``(i) Disclosure of financial interest.--Prior to a meeting 
     of the Commission or a clinical perspective advisory panel 
     described in subsection (a)(2)(G) regarding a `particular 
     matter' (as that term is used in section 208 of title 18, 
     United States Code), each member of the Commission or the 
     clinical perspective advisory panel who is a full-time

[[Page H12704]]

     Government employee or special Government employee shall 
     disclose to the Comptroller General or Secretary, 
     respectively, financial interests in accordance with 
     requiring a waiver under section 208(b) of title 18, United 
     States Code, or other interests as deemed relevant by the 
     Secretary.
       ``(ii) Prohibitions on participation.--Except as provided 
     under clause (iii), a member of the Commission or a clinical 
     perspective advisory panel described in subsection (a)(2)(G) 
     may not participate with respect to a particular matter 
     considered in meeting of the Commission or the clinical 
     perspective advisory panel if such member has a financial 
     interest that could be affected by the advice given to the 
     Secretary with respect to such matter, excluding interests 
     exempted in regulations issued by the Director of the Office 
     of Government Ethics as too remote or inconsequential to 
     affect the integrity of the services of the Government 
     officers or employees to which such regulations apply.
       ``(iii) Waiver.--If the Comptroller General or Secretary, 
     as applicable, determines it necessary to afford the 
     Commission or a clinical perspective advisory panel described 
     in subsection (a)(2)(G) essential expertise, the Comptroller 
     General or Secretary, respectively, may grant a waiver of the 
     prohibition in clause (ii) to permit a member described in 
     such subparagraph to--

       ``(I) participate as a non-voting member with respect to a 
     particular matter considered in a meeting of the Commission 
     or a clinical perspective advisory panel, respectively; or
       ``(II) participate as a voting member with respect to a 
     particular matter considered in a meeting of the Commission.

       ``(iv) Limitation on waivers and other exceptions.--

       ``(I) Determination of allowable exceptions for the 
     commission.--The number of waivers granted to members of the 
     Commission cannot exceed one-half of the total number of 
     members for the Commission.
       ``(II) Prohibition on voting status on clinical perspective 
     advisory panels.--No voting member of any clinical 
     perspective advisory panel shall be in receipt of a waiver. 
     No more than two nonvoting members of any clinical 
     perspective advisory panel shall receive a waiver.

       ``(D) Financial interest defined.--For purposes of this 
     paragraph, the term `financial interest' means a financial 
     interest under section 208(a) of title 18, United States 
     Code.
       ``(13) Application of faca.--The Federal Advisory Committee 
     Act (other than section 14 of such Act) shall apply to the 
     Commission to the extent that the provisions of such Act do 
     not conflict with the requirements of this subsection.
       ``(c) Research Requirements.--Any research conducted, 
     supported, or synthesized under this section shall meet the 
     following requirements:
       ``(1) Ensuring transparency, credibility, and access.--
       ``(A) The establishment of a research agenda by the Center 
     shall be informed by the national priorities for research 
     recommended under subsection (b)(2)(A).
       ``(B) The establishment of the agenda and conduct of the 
     research shall be insulated from inappropriate political or 
     stakeholder influence.
       ``(C) Methods of conducting such research shall be 
     scientifically based.
       ``(D) Consistent with applicable law, all aspects of the 
     prioritization of research, conduct of the research, and 
     development of conclusions based on the research shall be 
     transparent to all stakeholders.
       ``(E) Consistent with applicable law, the process and 
     methods for conducting such research shall be publicly 
     documented and available to all stakeholders.
       ``(F) Throughout the process of such research, the Center 
     shall provide opportunities for all stakeholders involved to 
     review and provide public comment on the methods and findings 
     of such research.
       ``(G) Such research shall consider advice given to the 
     Center by the clinical perspective advisory panel for the 
     particular national research priority.
       ``(2) Stakeholder input.--
       ``(A) In general.--The Commission shall consult with 
     patients, health care providers, health care consumer 
     representatives, and other appropriate stakeholders with an 
     interest in the research through a transparent process 
     recommended by the Commission.
       ``(B) Specific areas of consultation.--Consultation shall 
     include where deemed appropriate by the Commission--
       ``(i) recommending research priorities and questions;
       ``(ii) recommending research methodologies; and
       ``(iii) advising on and assisting with efforts to 
     disseminate research findings.
       ``(C) Ombudsman.--The Secretary shall designate a patient 
     ombudsman. The ombudsman shall--
       ``(i) serve as an available point of contact for any 
     patients with an interest in proposed comparative 
     effectiveness studies by the Center; and
       ``(ii) ensure that any comments from patients regarding 
     proposed comparative effectiveness studies are reviewed by 
     the Center.
       ``(3) Taking into account potential differences.--Research 
     shall--
       ``(A) be designed, as appropriate, to take into account the 
     potential for differences in the effectiveness of health care 
     items, services, and systems used with various subpopulations 
     such as racial and ethnic minorities, women, different age 
     groups (including children, adolescents, adults, and 
     seniors), individuals with disabilities, and individuals with 
     different comorbidities and genetic and molecular subtypes; 
     and--
       ``(B) seek, as feasible and appropriate, to include members 
     of such subpopulations as subjects in the research.
       ``(d) Public Access to Comparative Effectiveness 
     Information.--
       ``(1) In general.--Not later than 90 days after receipt by 
     the Center or Commission, as applicable, of a relevant report 
     described in paragraph (2) made by the Center, Commission, or 
     clinical perspective advisory panel under this section, 
     appropriate information contained in such report shall be 
     posted on the official public Internet site of the Center and 
     of the Commission, as applicable.
       ``(2) Relevant reports described.--For purposes of this 
     section, a relevant report is each of the following submitted 
     by the Center or a grantee or contractor of the Center:
       ``(A) Any interim or progress reports as deemed appropriate 
     by the Secretary.
       ``(B) Stakeholder comments.
       ``(C) A final report.
       ``(e) Dissemination and Incorporation of Comparative 
     Effectiveness Information.--
       ``(1) Dissemination.--The Center shall provide for the 
     dissemination of appropriate findings produced by research 
     supported, conducted, or synthesized under this section to 
     health care providers, patients, vendors of health 
     information technology focused on clinical decision support, 
     relevant expert organizations (as defined in subsection 
     (i)(3)(A)), and Federal and private health plans, and other 
     relevant stakeholders. In disseminating such findings the 
     Center shall--
       ``(A) convey findings of research so that they are 
     comprehensible and useful to patients and providers in making 
     health care decisions;
       ``(B) discuss findings and other considerations specific to 
     certain sub-populations, risk factors, and comorbidities as 
     appropriate;
       ``(C) include considerations such as limitations of 
     research and what further research may be needed, as 
     appropriate;
       ``(D) not include any data that the dissemination of which 
     would violate the privacy of research participants or violate 
     any confidentiality agreements made with respect to the use 
     of data under this section; and
       ``(E) assist the users of health information technology 
     focused on clinical decision support to promote the timely 
     incorporation of such findings into clinical practices and 
     promote the ease of use of such incorporation.
       ``(2) Dissemination protocols and strategies.--The Center 
     shall develop protocols and strategies for the appropriate 
     dissemination of research findings in order to ensure 
     effective communication of findings and the use and 
     incorporation of such findings into relevant activities for 
     the purpose of informing higher quality and more effective 
     and efficient decisions regarding medical items and services. 
     In developing and adopting such protocols and strategies, the 
     Center shall consult with stakeholders concerning the types 
     of dissemination that will be most useful to the end users of 
     information and may provide for the utilization of multiple 
     formats for conveying findings to different audiences, 
     including dissemination to individuals with limited English 
     proficiency.
       ``(f) Reports to Congress.--
       ``(1) Annual reports.--Beginning not later than one year 
     after the date of the enactment of this section, the Director 
     of the Agency of Healthcare Research and Quality shall submit 
     to Congress an annual report on the activities of the Center, 
     as well as the research, conducted under this section. Each 
     such report shall include a discussion of the Center's 
     compliance with subsection (c)(3)(B), including any reasons 
     for lack of compliance with such subsection.
       ``(2) Recommendation for fair share per capita amount for 
     all-payer financing.--Beginning not later than December 31, 
     2011, the Secretary shall submit to Congress an annual 
     recommendation for a fair share per capita amount described 
     in subsection (c)(1) of section 9511 of the Internal Revenue 
     Code of 1986 for purposes of funding the CERTF under such 
     section.
       ``(3) Analysis and review.--Not later than December 31, 
     2013, the Secretary, in consultation with the Commission, 
     shall submit to Congress a report on all activities conducted 
     or supported under this section as of such date. Such report 
     shall include an evaluation of the overall costs of such 
     activities and an analysis of the backlog of any research 
     proposals approved by the Center but not funded.
       ``(g) Funding of Comparative Effectiveness Research.--For 
     fiscal year 2010 and each subsequent fiscal year, amounts in 
     the Comparative Effectiveness Research Trust Fund (referred 
     to in this section as the `CERTF') under section 9511 of the 
     Internal Revenue Code of 1986 shall be available in 
     accordance with such section, without the need for further 
     appropriations and without fiscal year limitation, to carry 
     out this section.
       ``(h) Construction.--
       ``(1) Coverage.--Nothing in this section shall be 
     construed--
       ``(A) to permit the Center or Commission to mandate 
     coverage, reimbursement, or other policies for any public or 
     private payer; or

[[Page H12705]]

       ``(B) as preventing the Secretary from covering the routine 
     costs of clinical care received by an individual entitled to, 
     or enrolled for, benefits under title XVIII, XIX, or XXI in 
     the case where such individual is participating in a clinical 
     trial and such costs would otherwise be covered under such 
     title with respect to the beneficiary.
       ``(2) Reports and findings.--None of the reports submitted 
     under this section or research findings disseminated by the 
     Center or Commission shall be construed as mandates, for 
     payment, coverage, or treatment.
       ``(3) Protecting the physician-patient relationship.--
     Nothing in this section shall be construed to authorize any 
     Federal officer or employee to exercise any supervision or 
     control over the practice of medicine.
       ``(i) Consultation With Relevant Expert Organizations.--
       ``(1) Consultation prior to initiation of research.--Prior 
     to recommending priorities or initiating research described 
     in this section, the Commission or the Center shall consult 
     with the relevant expert organizations responsible for 
     standards and protocols of clinical excellence. Such 
     consultation shall be consistent with the processes 
     established under subsection (c)(2).
       ``(2) Consultation in dissemination of research.--Any 
     dissemination of research from the Commission or the Center 
     and findings made by the Commission or the Center shall be 
     consistent with processes established under subsection (e) 
     and shall--
       ``(A) be based upon evidence-based medicine; and
       ``(B) take into consideration standards and protocols of 
     clinical excellence developed by relevant expert 
     organizations.
       ``(3) Definitions.--For purposes of this subsection:
       ``(A) Relevant expert organizations.--The term `relevant 
     expert organization' means an organization with expertise in 
     the rigorous application of evidence-based scientific methods 
     for the design of clinical studies, the interpretation of 
     clinical data, and the development of national clinical 
     practice guidelines, including a voluntary health 
     organization, clinical specialty, or other professional 
     organization that represents physicians based on the field of 
     medicine in which each such physician practices or is board 
     certified.
       ``(B) Standards and protocols of clinical excellence.--The 
     term `standards and protocols of clinical excellence' means 
     clinical or practice guidelines that consist of a set of 
     directions or principles that is based on evidence and is 
     designed to assist a health care practitioner with decisions 
     about appropriate diagnostic, therapeutic, or other clinical 
     procedures for specific clinical circumstances.
       ``(j) Research May Not Be Used To Deny or Ration Care.--
     Nothing in this section shall be construed to make more 
     stringent or otherwise change the standards or requirements 
     for coverage of items and services under this Act.''.
       (b) Comparative Effectiveness Research Trust Fund; 
     Financing for the Trust Fund.--For the provision establishing 
     a Comparative Effectiveness Research Trust Fund and financing 
     such Trust Fund, see section 1802.

                 Subtitle B--Nursing Home Transparency

   PART 1--IMPROVING TRANSPARENCY OF INFORMATION ON SKILLED NURSING 
  FACILITIES, NURSING FACILITIES, AND OTHER LONG-TERM CARE FACILITIES

     SEC. 1411. REQUIRED DISCLOSURE OF OWNERSHIP AND ADDITIONAL 
                   DISCLOSABLE PARTIES INFORMATION.

       (a) In General.--Section 1124 of the Social Security Act 
     (42 U.S.C. 1320a-3) is amended by adding at the end the 
     following new subsection:
       ``(c) Required Disclosure of Ownership and Additional 
     Disclosable Parties Information.--
       ``(1) Disclosure.--A facility (as defined in paragraph 
     (6)(B)) shall have the information described in paragraph (3) 
     available--
       ``(A) during the period beginning on the date of the 
     enactment of this subsection and ending on the date such 
     information is made available to the public under section 
     1411(b) of the Affordable Health Care for America Act, for 
     submission to the Secretary, the Inspector General of the 
     Department of Health and Human Services, the State in which 
     the facility is located, and the State long-term care 
     ombudsman in the case where the Secretary, the Inspector 
     General, the State, or the State long-term care ombudsman 
     requests such information; and
       ``(B) beginning on the effective date of the final 
     regulations promulgated under paragraph (4)(A), for reporting 
     such information in accordance with such final regulations.
     Nothing in subparagraph (A) shall be construed as authorizing 
     a facility to dispose of or delete information described in 
     such subparagraph after the effective date of the final 
     regulations promulgated under paragraph (4)(A).
       ``(2) Public availability of information.--During the 
     period described in paragraph (1)(A), a facility shall--
       ``(A) make the information described in paragraph (3) 
     available to the public upon request and update such 
     information as may be necessary to reflect changes in such 
     information; and
       ``(B) post a notice of the availability of such information 
     in the lobby of the facility in a prominent manner.
       ``(3) Information described.--
       ``(A) In general.--The following information is described 
     in this paragraph:
       ``(i) The information described in subsections (a) and (b), 
     subject to subparagraph (C).
       ``(ii) The identity of and information on--

       ``(I) each member of the governing body of the facility, 
     including the name, title, and period of service of each such 
     member;
       ``(II) each person or entity who is an officer, director, 
     member, partner, trustee, or managing employee of the 
     facility, including the name, title, and date of start of 
     service of each such person or entity; and
       ``(III) each person or entity who is an additional 
     disclosable party of the facility.

       ``(iii) A description of the organizational structure and 
     the relationship of each person and entity described in 
     subclauses (II) and (III) of clause (ii) to the facility and 
     to one another.
       ``(B) Special rule where information is already reported or 
     submitted.--To the extent that information reported by a 
     facility to the Internal Revenue Service on Form 990, 
     information submitted by a facility to the Securities and 
     Exchange Commission, or information otherwise submitted to 
     the Secretary or any other Federal agency contains the 
     information described in clauses (i), (ii), or (iii) of 
     subparagraph (A), the Secretary may allow, to the extent 
     practicable, such Form or such information to meet the 
     requirements of paragraph (1) and to be submitted in a manner 
     specified by the Secretary.
       ``(C) Special rule.--In applying subparagraph (A)(i)--
       ``(i) with respect to subsections (a) and (b), `ownership 
     or control interest' shall include direct or indirect 
     interests, including such interests in intermediate entities; 
     and
       ``(ii) subsection (a)(3)(A)(ii) shall include the owner of 
     a whole or part interest in any mortgage, deed of trust, 
     note, or other obligation secured, in whole or in part, by 
     the entity or any of the property or assets thereof, if the 
     interest is equal to or exceeds 5 percent of the total 
     property or assets of the entirety.
       ``(4) Reporting.--
       ``(A) In general.--Not later than the date that is 2 years 
     after the date of the enactment of this subsection, the 
     Secretary shall promulgate regulations requiring a facility 
     to report the information described in paragraph (3) to the 
     Secretary in a standardized format, and such other 
     regulations as are necessary to carry out this subsection. 
     Such regulations shall specify the frequency of reporting, as 
     determined by the Secretary. Such final regulations shall 
     also require--
       ``(i) the reporting of such information on or after the 
     first day of the first calendar quarter beginning after the 
     date that is 90 days after the date on which such final 
     regulations are published in the Federal Register; and--
       ``(ii) the certification, as a condition of participation 
     under the program under title XVIII or XIX, that such 
     information is accurate and current.
       ``(B) Guidance.--The Secretary shall provide guidance and 
     technical assistance to States on how to adopt the 
     standardized format under subparagraph (A).
       ``(5) No effect on existing reporting requirements.--
     Nothing in this subsection shall reduce, diminish, or alter 
     any reporting requirement for a facility that is in effect as 
     of the date of the enactment of this subsection.
       ``(6) Definitions.--In this subsection:
       ``(A) Additional disclosable party.--The term `additional 
     disclosable party' means, with respect to a facility, any 
     person or entity who, through ownership interest, partnership 
     interest, contract, or otherwise--
       ``(i) directly or indirectly exercises operational, 
     financial, administrative, or managerial control or direction 
     over the facility or a part thereof, or provides policies or 
     procedures for any of the operations of the facility, or 
     provides financial or cash management services to the 
     facility;
       ``(ii) leases or subleases real property to the facility, 
     or owns a whole or part interest equal to or exceeding 5 
     percent of the total value of such real property;
       ``(iii) lends funds or provides a financial guarantee to 
     the facility in an amount which is equal to or exceeds 
     $50,000; or
       ``(iv) provides management or administrative services, 
     clinical consulting services, or accounting or financial 
     services to the facility.
       ``(B) Facility.--The term `facility' means a disclosing 
     entity which is--
       ``(i) a skilled nursing facility (as defined in section 
     1819(a)); or
       ``(ii) a nursing facility (as defined in section 1919(a)).
       ``(C) Managing employee.--The term `managing employee' 
     means, with respect to a facility, an individual (including a 
     general manager, business manager, administrator, director, 
     or consultant) who directly or indirectly manages, advises, 
     or supervises any element of the practices, finances, or 
     operations of the facility.
       ``(D) Organizational structure.--The term `organizational 
     structure' means, in the case of--
       ``(i) a corporation, the officers, directors, and 
     shareholders of the corporation who have an ownership 
     interest in the corporation which is equal to or exceeds 5 
     percent;
       ``(ii) a limited liability company, the members and 
     managers of the limited liability company (including, as 
     applicable, what percentage each member and manager has of 
     the ownership interest in the limited liability company);

[[Page H12706]]

       ``(iii) a general partnership, the partners of the general 
     partnership;
       ``(iv) a limited partnership, the general partners and any 
     limited partners of the limited partnership who have an 
     ownership interest in the limited partnership which is equal 
     to or exceeds 10 percent;
       ``(v) a trust, the trustees of the trust;
       ``(vi) an individual, contact information for the 
     individual; and
       ``(vii) any other person or entity, such information as the 
     Secretary determines appropriate.''.
       (b) Public Availability of Information.--Not later than the 
     date that is 1 year after the date on which the final 
     regulations promulgated under section 1124(c)(4)(A) of the 
     Social Security Act, as added by subsection (a), are 
     published in the Federal Register, the information reported 
     in accordance with such final regulations shall be made 
     available to the public in accordance with procedures 
     established by the Secretary of Health and Human Services.
       (c) Conforming Amendments.--
       (1) Skilled nursing facilities.--Section 1819(d)(1) of the 
     Social Security Act (42 U.S.C. 1395i-3(d)(1)) is amended by 
     striking subparagraph (B) and redesignating subparagraph (C) 
     as subparagraph (B).
       (2) Nursing facilities.--Section 1919(d)(1) of the Social 
     Security Act (42 U.S.C. 1396r(d)(1)) is amended by striking 
     subparagraph (B) and redesignating subparagraph (C) as 
     subparagraph (B).

     SEC. 1412. ACCOUNTABILITY REQUIREMENTS.

       (a) Effective Compliance and Ethics Programs.--
       (1) Skilled nursing facilities.--Section 1819(d)(1) of the 
     Social Security Act (42 U.S.C. 1395i-3(d)(1)), as amended by 
     section 1411(c)(1), is amended by adding at the end the 
     following new subparagraph:
       ``(C) Compliance and ethics programs.--
       ``(i) Requirement.--On or after the first day of the first 
     calendar quarter beginning after the date that is 1 year 
     after the date on which regulations developed under clause 
     (ii) are published in the Federal Register, a skilled nursing 
     facility shall, with respect to the entity that operates or 
     controls the facility (in this subparagraph referred to as 
     the `operating organization' or `organization'), have in 
     operation a compliance and ethics program that is effective 
     in preventing and detecting criminal, civil, and 
     administrative violations under this Act and in promoting 
     quality of care consistent with such regulations.
       ``(ii) Development of regulations.--

       ``(I) In general.--Not later than the date that is 2 years 
     after the date of the enactment of this subparagraph, the 
     Secretary, in consultation with the Inspector General of the 
     Department of Health and Human Services, shall promulgate 
     regulations for an effective compliance and ethics program 
     for operating organizations, which may include a model 
     compliance program.
       ``(II) Design of regulations.--Such regulations with 
     respect to specific elements or formality of a program may 
     vary with the size of the organization, such that larger 
     organizations should have a more formal and rigorous program 
     and include established written policies defining the 
     standards and procedures to be followed by its employees. 
     Such requirements shall specifically apply to the corporate 
     level management of multi-unit nursing home chains.
       ``(III) Evaluation.--Not later than 3 years after the date 
     on which compliance and ethics programs established under 
     this subparagraph are in operation pursuant to clause (i), 
     the Secretary shall complete an evaluation of such programs. 
     Such evaluation shall determine if such programs led to 
     changes in deficiency citations, changes in quality 
     performance, or changes in other metrics of resident quality 
     of care. The Secretary shall submit to Congress a report on 
     such evaluation and shall include in such report such 
     recommendations regarding changes in the requirements for 
     such programs as the Secretary determines appropriate.

       ``(iii) Requirements for compliance and ethics programs.--
     In this subparagraph, the term `compliance and ethics 
     program' means, with respect to a skilled nursing facility, a 
     program of the operating organization that--

       ``(I) has been reasonably designed, implemented, and 
     enforced so that it generally will be effective in preventing 
     and detecting criminal, civil, and administrative violations 
     under this Act and in promoting quality of care; and
       ``(II) includes at least the required components specified 
     in clause (iv).

       ``(iv) Required components of program.--The required 
     components of a compliance and ethics program of an 
     organization are the following:

       ``(I) The organization must have established compliance 
     standards and procedures to be followed by its employees, 
     contractors, and other agents that are reasonably capable of 
     reducing the prospect of criminal, civil, and administrative 
     violations under this Act.
       ``(II) Specific individuals within high-level personnel of 
     the organization must have been assigned overall 
     responsibility to oversee compliance with such standards and 
     procedures and have sufficient resources and authority to 
     assure such compliance.
       ``(III) The organization must have used due care not to 
     delegate substantial discretionary authority to individuals 
     whom the organization knew, or should have known through the 
     exercise of due diligence, had a propensity to engage in 
     criminal, civil, and administrative violations under this 
     Act.
       ``(IV) The organization must have taken steps to 
     communicate effectively its standards and procedures to all 
     employees and other agents, such as by requiring 
     participation in training programs or by disseminating 
     publications that explain in a practical manner what is 
     required.
       ``(V) The organization must have taken reasonable steps to 
     achieve compliance with its standards, such as by utilizing 
     monitoring and auditing systems reasonably designed to detect 
     criminal, civil, and administrative violations under this Act 
     by its employees and other agents and by having in place and 
     publicizing a reporting system whereby employees and other 
     agents could report violations by others within the 
     organization without fear of retribution.
       ``(VI) The standards must have been consistently enforced 
     through appropriate disciplinary mechanisms, including, as 
     appropriate, discipline of individuals responsible for the 
     failure to detect an offense.
       ``(VII) After an offense has been detected, the 
     organization must have taken all reasonable steps to respond 
     appropriately to the offense and to prevent further similar 
     offenses, including repayment of any funds to which it was 
     not entitled and any necessary modification to its program to 
     prevent and detect criminal, civil, and administrative 
     violations under this Act.
       ``(VIII) The organization must periodically undertake 
     reassessment of its compliance program to identify changes 
     necessary to reflect changes within the organization and its 
     facilities.

       ``(v) Coordination.--The provisions of this subparagraph 
     shall apply with respect to a skilled nursing facility in 
     lieu of section 1874(d).''.
       (2) Nursing facilities.--Section 1919(d)(1) of the Social 
     Security Act (42 U.S.C. 1396r(d)(1)), as amended by section 
     1411(c)(2), is amended by adding at the end the following new 
     subparagraph:
       ``(C) Compliance and ethics program.--
       ``(i) Requirement.--On or after the first day of the first 
     calendar quarter beginning after the date that is 1 year 
     after the date on which regulations developed under clause 
     (ii) are published in the Federal Register, a skilled nursing 
     facility shall, with respect to the entity that operates or 
     controls the facility (in this subparagraph referred to as 
     the `operating organization' or `organization'), have in 
     operation a compliance and ethics program that is effective 
     in preventing and detecting criminal, civil, and 
     administrative violations under this Act and in promoting 
     quality of care consistent with such regulations.
       ``(iii) Development of regulations.--

       ``(I) In general.--Not later than the date that is 2 years 
     after the date of the enactment of this subparagraph, the 
     Secretary, in consultation with the Inspector General of the 
     Department of Health and Human Services, shall promulgate 
     regulations for an effective compliance and ethics program 
     for operating organizations, which may include a model 
     compliance program.
       ``(II) Design of regulations.--Such regulations with 
     respect to specific elements or formality of a program may 
     vary with the size of the organization, such that larger 
     organizations should have a more formal and rigorous program 
     and include established written policies defining the 
     standards and procedures to be followed by its employees. 
     Such requirements shall specifically apply to the corporate 
     level management of multi-unit nursing home chains.
       ``(III) Evaluation.--Not later than 3 years after the date 
     on which compliance and ethics programs established under 
     this subparagraph are in operation pursuant to clause (i), 
     the Secretary shall complete an evaluation of such programs. 
     Such evaluation shall determine if such programs led to 
     changes in deficiency citations, changes in quality 
     performance, or changes in other metrics of resident quality 
     of care. The Secretary shall submit to Congress a report on 
     such evaluation and shall include in such report such 
     recommendations regarding changes in the requirements for 
     such programs as the Secretary determines appropriate.

       ``(v) Requirements for compliance and ethics programs.--In 
     this subparagraph, the term `compliance and ethics program' 
     means, with respect to a nursing facility, a program of the 
     operating organization that--

       ``(I) has been reasonably designed, implemented, and 
     enforced so that it generally will be effective in preventing 
     and detecting criminal, civil, and administrative violations 
     under this Act and in promoting quality of care; and
       ``(II) includes at least the required components specified 
     in clause (iv).

       ``(vi) Required components of program.--The required 
     components of a compliance and ethics program of an 
     organization are the following:

       ``(I) The organization must have established compliance 
     standards and procedures to be followed by its employees and 
     other agents that are reasonably capable of reducing the 
     prospect of criminal, civil, and administrative violations 
     under this Act.
       ``(II) Specific individuals within high-level personnel of 
     the organization must have been assigned overall 
     responsibility to oversee compliance with such standards and 
     procedures and has sufficient resources and authority to 
     assure such compliance.

[[Page H12707]]

       ``(III) The organization must have used due care not to 
     delegate substantial discretionary authority to individuals 
     whom the organization knew, or should have known through the 
     exercise of due diligence, had a propensity to engage in 
     criminal, civil, and administrative violations under this 
     Act.
       ``(IV) The organization must have taken steps to 
     communicate effectively its standards and procedures to all 
     employees and other agents, such as by requiring 
     participation in training programs or by disseminating 
     publications that explain in a practical manner what is 
     required.
       ``(V) The organization must have taken reasonable steps to 
     achieve compliance with its standards, such as by utilizing 
     monitoring and auditing systems reasonably designed to detect 
     criminal, civil, and administrative violations under this Act 
     by its employees and other agents and by having in place and 
     publicizing a reporting system whereby employees and other 
     agents could report violations by others within the 
     organization without fear of retribution.
       ``(VI) The standards must have been consistently enforced 
     through appropriate disciplinary mechanisms, including, as 
     appropriate, discipline of individuals responsible for the 
     failure to detect an offense.
       ``(VII) After an offense has been detected, the 
     organization must have taken all reasonable steps to respond 
     appropriately to the offense and to prevent further similar 
     offenses, including repayment of any funds to which it was 
     not entitled and any necessary modification to its program to 
     prevent and detect criminal, civil, and administrative 
     violations under this Act.
       ``(VIII) The organization must periodically undertake 
     reassessment of its compliance program to identify changes 
     necessary to reflect changes within the organization and its 
     facilities.

       ``(vii) Coordination.--The provisions of this subparagraph 
     shall apply with respect to a nursing facility in lieu of 
     section 1902(a)(77).''.
       (b) Quality Assurance and Performance Improvement 
     Program.--
       (1) Skilled nursing facilities.--Section 1819(b)(1)(B) of 
     the Social Security Act (42 U.S.C. 1396r(b)(1)(B)) is 
     amended--
       (A) by striking ``assurance'' and inserting ``assurance and 
     quality assurance and performance improvement program'';
       (B) by designating the matter beginning with ``A skilled 
     nursing facility'' as a clause (i) with the heading ``In 
     general.--'' and the appropriate indentation;
       (C) in clause (i) (as so designated by subparagraph (B)), 
     by redesignating clauses (i) and (ii) as subclauses (I) and 
     (II), respectively; and
       (D) by adding at the end the following new clause:
       ``(ii) Quality assurance and performance improvement 
     program.--

       ``(I) In general.--Not later than December 31, 2011, the 
     Secretary shall establish and implement a quality assurance 
     and performance improvement program (in this clause referred 
     to as the `QAPI program') for skilled nursing facilities, 
     including multi-unit chains of such facilities. Under the 
     QAPI program, the Secretary shall establish standards 
     relating to such facilities and provide technical assistance 
     to such facilities on the development of best practices in 
     order to meet such standards. Not later than 1 year after the 
     date on which the regulations are promulgated under subclause 
     (II), a skilled nursing facility must submit to the Secretary 
     a plan for the facility to meet such standards and implement 
     such best practices, including how to coordinate the 
     implementation of such plan with quality assessment and 
     assurance activities conducted under clause (i).
       ``(II) Regulations.--The Secretary shall promulgate 
     regulations to carry out this clause.''.

       (2) Nursing facilities.--Section 1919(b)(1)(B) of the 
     Social Security Act (42 U.S.C. 1396r(b)(1)(B)) is amended--
       (A) by striking ``assurance'' and inserting ``assurance and 
     quality assurance and performance improvement program'';
       (B) by designating the matter beginning with ``A nursing 
     facility'' as a clause (i) with the heading ``In general.--'' 
     and the appropriate indentation; and
       (C) by adding at the end the following new clause:
       ``(ii) Quality assurance and performance improvement 
     program.--

       ``(I) In general.--Not later than December 31, 2011, the 
     Secretary shall establish and implement a quality assurance 
     and performance improvement program (in this clause referred 
     to as the `QAPI program') for nursing facilities, including 
     multi-unit chains of such facilities. Under the QAPI program, 
     the Secretary shall establish standards relating to such 
     facilities and provide technical assistance to such 
     facilities on the development of best practices in order to 
     meet such standards. Not later than 1 year after the date on 
     which the regulations are promulgated under subclause (II), a 
     nursing facility must submit to the Secretary a plan for the 
     facility to meet such standards and implement such best 
     practices, including how to coordinate the implementation of 
     such plan with quality assessment and assurance activities 
     conducted under clause (i).
       ``(II) Regulations.--The Secretary shall promulgate 
     regulations to carry out this clause.''.

       (3) Proposal to revise quality assurance and performance 
     improvement programs.--The Secretary shall implement policies 
     that modify and strengthen quality assurance and performance 
     improvement programs in skilled nursing facilities and 
     nursing facilities on a periodic basis, as determined by the 
     Secretary.
       (4) Facility plan.--Not later than 1 year after the date on 
     which the regulations are promulgated under subclause (II) of 
     clause (ii) of sections 1819(b)(1)(B) and 1919(b)(1)(B) of 
     the Social Security Act, as added by paragraphs (1) and (2), 
     a skilled nursing facility and a nursing facility must submit 
     to the Secretary a plan for the facility to meet the 
     standards under such regulations and implement such best 
     practices, including how to coordinate the implementation of 
     such plan with quality assessment and assurance activities 
     conducted under clause (i) of such sections.
       (c) GAO Study on Nursing Facility Undercapitalization.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study that examines the following:
       (A) The extent to which corporations that own or operate 
     large numbers of nursing facilities, taking into account 
     ownership type (including private equity and control 
     interests), are undercapitalizing such facilities.
       (B) The effects of such undercapitalization on quality of 
     care, including staffing and food costs, at such facilities.
       (C) Options to address such undercapitalization, such as 
     requirements relating to surety bonds, liability insurance, 
     or minimum capitalization.
       (2) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under paragraph 
     (1).
       (3) Nursing facility.--In this subsection, the term 
     ``nursing facility'' includes a skilled nursing facility.

     SEC. 1413. NURSING HOME COMPARE MEDICARE WEBSITE.

       (a) Skilled Nursing Facilities.--
       (1) In general.--Section 1819 of the Social Security Act 
     (42 U.S.C. 1395i-3) is amended--
       (A) by redesignating subsection (i) as subsection (j); and
       (B) by inserting after subsection (h) the following new 
     subsection:
       ``(i) Nursing Home Compare Website.--
       ``(1) Inclusion of additional information.--
       ``(A) In general.--The Secretary shall ensure that the 
     Department of Health and Human Services includes, as part of 
     the information provided for comparison of nursing homes on 
     the official Internet website of the Federal Government for 
     Medicare beneficiaries (commonly referred to as the `Nursing 
     Home Compare' Medicare website) (or a successor website), the 
     following information in a manner that is prominent, easily 
     accessible, readily understandable to consumers of long-term 
     care services, and searchable:
       ``(i) Information that is reported to the Secretary under 
     section 1124(c)(4).
       ``(ii) Information on the `Special Focus Facility program' 
     (or a successor program) established by the Centers for 
     Medicare and Medicaid Services, according to procedures 
     established by the Secretary. Such procedures shall provide 
     for the inclusion of information with respect to, and the 
     names and locations of, those facilities that, since the 
     previous quarter--

       ``(I) were newly enrolled in the program;
       ``(II) are enrolled in the program and have failed to 
     significantly improve;
       ``(III) are enrolled in the program and have significantly 
     improved;
       ``(IV) have graduated from the program; and
       ``(V) have closed voluntarily or no longer participate 
     under this title.

       ``(iii) Staffing data for each facility (including resident 
     census data and data on the hours of care provided per 
     resident per day) based on data submitted under subsection 
     (b)(8)(C), including information on staffing turnover and 
     tenure, in a format that is clearly understandable to 
     consumers of long-term care services and allows such 
     consumers to compare differences in staffing between 
     facilities and State and national averages for the 
     facilities. Such format shall include--

       ``(I) concise explanations of how to interpret the data 
     (such as a plain English explanation of data reflecting 
     `nursing home staff hours per resident day');
       ``(II) differences in types of staff (such as training 
     associated with different categories of staff);
       ``(III) the relationship between nurse staffing levels and 
     quality of care; and
       ``(IV) an explanation that appropriate staffing levels vary 
     based on patient case mix.

       ``(iv) Links to State internet websites with information 
     regarding State survey and certification programs, links to 
     Form 2567 State inspection reports (or a successor form) on 
     such websites, information to guide consumers in how to 
     interpret and understand such reports, and the facility plan 
     of correction or other response to such report.
       ``(v) The standardized complaint form developed under 
     subsection (f)(8), including explanatory material on what 
     complaint forms are, how they are used, and how to file a 
     complaint with the State survey and certification program and 
     the State long-term care ombudsman program.

[[Page H12708]]

       ``(vi) Summary information on the number, type, severity, 
     and outcome of substantiated complaints.
       ``(vii) The number of adjudicated instances of criminal 
     violations by employees of a nursing facility--

       ``(I) that were committed inside the facility;
       ``(II) with respect to such instances of violations or 
     crimes committed inside of the facility that were the 
     violations or crimes of abuse, neglect, and exploitation, 
     criminal sexual abuse, or other violations or crimes that 
     resulted in serious bodily injury; and

       ``(viii) The number of civil monetary penalties levied 
     against the facility, employees, contractors, and other 
     agents.
       ``(ix) Any other information that the Secretary determines 
     appropriate.

     The facility shall not make available under clause (iv) 
     identifying information on complainants or residents.
       ``(B) Deadline for provision of information.--
       ``(i) In general.--Except as provided in clause (ii), the 
     Secretary shall ensure that the information described in 
     subparagraph (A) is included on such website (or a successor 
     website) not later than 1 year after the date of the 
     enactment of this subsection.
       ``(ii) Exception.--The Secretary shall ensure that the 
     information described in subparagraph (A)(i) and (A)(iii) is 
     included on such website (or a successor website) not later 
     than 1 year after the dates on which the data are submitted 
     to the Secretary pursuant to section 1124(c)(4) and 
     subsection (b)(8)(C), respectively.
       ``(2) Review and modification of website.--
       ``(A) In general.--The Secretary shall establish a 
     process--
       ``(i) to review the accuracy, clarity of presentation, 
     timeliness, and comprehensiveness of information reported on 
     such website as of the day before the date of the enactment 
     of this subsection; and
       ``(ii) not later than 1 year after the date of the 
     enactment of this subsection, to modify or revamp such 
     website in accordance with the review conducted under clause 
     (i).
       ``(B) Consultation.--In conducting the review under 
     subparagraph (A)(i), the Secretary shall consult with--
       ``(i) State long-term care ombudsman programs;
       ``(ii) consumer advocacy groups;
       ``(iii) provider stakeholder groups; and
       ``(iv) any other representatives of programs or groups the 
     Secretary determines appropriate.''.
       (2) Timeliness of submission of survey and certification 
     information.--
       (A) In general.--Section 1819(g)(5) of the Social Security 
     Act (42 U.S.C. 1395i-3(g)(5)) is amended by adding at the end 
     the following new subparagraph:
       ``(E) Submission of survey and certification information to 
     the secretary.--In order to improve the timeliness of 
     information made available to the public under subparagraph 
     (A) and provided on the Nursing Home Compare Medicare website 
     under subsection (i), each State shall submit information 
     respecting any survey or certification recommendation made 
     respecting a skilled nursing facility (including any 
     enforcement actions taken by the State or any Federal 
     enforcement action recommended by the State) to the Secretary 
     not later than the date on which the State sends such 
     information to the facility. The Secretary shall use the 
     information submitted under the preceding sentence to update 
     the information provided on the Nursing Home Compare Medicare 
     website as expeditiously as practicable but not less 
     frequently than quarterly.''.
       (B) Effective date.--The amendment made by this paragraph 
     shall take effect 1 year after the date of the enactment of 
     this Act.
       (3) Special focus facility program.--Section 1819(f) of 
     such Act is amended by adding at the end the following new 
     paragraph:
       ``(8) Special focus facility program.--
       ``(A) In general.--The Secretary shall conduct a special 
     focus facility program for enforcement of requirements for 
     skilled nursing facilities that the Secretary has identified 
     as having a poor compliance history or that substantially 
     failed to meet applicable requirements of this Act.
       ``(B) Periodic surveys.--Under such program the Secretary 
     shall conduct surveys of each facility in the program not 
     less than once every 6 months.''.
       (b) Nursing Facilities.--
       (1) In general.--Section 1919 of the Social Security Act 
     (42 U.S.C. 1396r) is amended--
       (A) by redesignating subsection (i) as subsection (j); and
       (B) by inserting after subsection (h) the following new 
     subsection:
       ``(i) Nursing Home Compare Website.--
       ``(1) Inclusion of additional information.--
       ``(A) In general.--The Secretary shall ensure that the 
     Department of Health and Human Services includes, as part of 
     the information provided for comparison of nursing homes on 
     the official internet website of the Federal Government for 
     Medicare beneficiaries (commonly referred to as the `Nursing 
     Home Compare' Medicare website) (or a successor website), the 
     following information in a manner that is prominent, easily 
     accessible, readily understandable to consumers of long-term 
     care services, and searchable:
       ``(i) Information that is reported to the Secretary under 
     section 1124(c)(4)
       ``(ii) Information on the `Special Focus Facility program' 
     (or a successor program) established by the Centers for 
     Medicare & Medicaid Services, according to procedures 
     established by the Secretary. Such procedures shall provide 
     for the inclusion of information with respect to, and the 
     names and locations of, those facilities that, since the 
     previous quarter--

       ``(I) were newly enrolled in the program;
       ``(II) are enrolled in the program and have failed to 
     significantly improve;
       ``(III) are enrolled in the program and have significantly 
     improved;
       ``(IV) have graduated from the program; and
       ``(V) have closed voluntarily or no longer participate 
     under this title.

       ``(iii) Staffing data for each facility (including resident 
     census data and data on the hours of care provided per 
     resident per day) based on data submitted under subsection 
     (b)(8)(C)(ii), including information on staffing turnover and 
     tenure, in a format that is clearly understandable to 
     consumers of long-term care services and allows such 
     consumers to compare differences in staffing between 
     facilities and State and national averages for the 
     facilities. Such format shall include--

       ``(I) concise explanations of how to interpret the data 
     (such as plain English explanation of data reflecting 
     `nursing home staff hours per resident day');
       ``(II) differences in types of staff (such as training 
     associated with different categories of staff);
       ``(III) the relationship between nurse staffing levels and 
     quality of care; and
       ``(IV) an explanation that appropriate staffing levels vary 
     based on patient case mix.

       ``(iv) Links to State internet websites with information 
     regarding State survey and certification programs, links to 
     Form 2567 State inspection reports (or a successor form) on 
     such websites, information to guide consumers in how to 
     interpret and understand such reports, and the facility plan 
     of correction or other response to such report.
       ``(v) The standardized complaint form developed under 
     subsection (f)(10), including explanatory material on what 
     complaint forms are, how they are used, and how to file a 
     complaint with the State survey and certification program and 
     the State long-term care ombudsman program.
       ``(vi) Summary information on the number, type, severity, 
     and outcome of substantiated complaints.
       ``(vii) The number of adjudicated instances of criminal 
     violations by employees of a nursing facility--

       ``(I) that were committed inside of the facility; and
       ``(II) with respect to such instances of violations or 
     crimes committed inside of the facility that were the 
     violations or crimes of abuse, neglect, and exploitation, 
     criminal sexual abuse, or other violations or crimes that 
     resulted in serious bodily injury.

       ``(viii) the number of civil monetary penalties levied 
     against the facility, employees, contractors, and other 
     agents.
       ``(ix) Any other information that the Secretary determines 
     appropriate.

     The facility shall not make available under clause (ii) 
     identifying information about complainants or residents.
       ``(B) Deadline for provision of information.--
       ``(i) In general.--Except as provided in clause (ii), the 
     Secretary shall ensure that the information described in 
     subparagraph (A) is included on such website (or a successor 
     website) not later than 1 year after the date of the 
     enactment of this subsection.
       ``(ii) Exception.--The Secretary shall ensure that the 
     information described in subparagraph (A)(i) and (A)(iii) is 
     included on such website (or a successor website) not later 
     than 1 year after the dates on which the data are submitted 
     to the Secretary pursuant to section 1124(c)(4) and 
     subsection (b)(8)(C), respectively.
       ``(2) Review and modification of website.--
       ``(A) In general.--The Secretary shall establish a 
     process--
       ``(i) to review the accuracy, clarity of presentation, 
     timeliness, and comprehensiveness of information reported on 
     such website as of the day before the date of the enactment 
     of this subsection; and
       ``(ii) not later than 1 year after the date of the 
     enactment of this subsection, to modify or revamp such 
     website in accordance with the review conducted under clause 
     (i).
       ``(B) Consultation.--In conducting the review under 
     subparagraph (A)(i), the Secretary shall consult with--
       ``(i) State long-term care ombudsman programs;
       ``(ii) consumer advocacy groups;
       ``(iii) provider stakeholder groups;
       ``(iv) skilled nursing facility employees and their 
     representatives; and
       ``(v) any other representatives of programs or groups the 
     Secretary determines appropriate.''.
       (2) Timeliness of submission of survey and certification 
     information.--
       (A) In general.--Section 1919(g)(5) of the Social Security 
     Act (42 U.S.C. 1396r(g)(5)) is amended by adding at the end 
     the following new subparagraph:
       ``(E) Submission of survey and certification information to 
     the secretary.--In order to improve the timeliness of 
     information made available to the public under subparagraph 
     (A) and provided on the Nursing

[[Page H12709]]

     Home Compare Medicare website under subsection (i), each 
     State shall submit information respecting any survey or 
     certification recommendation made respecting a nursing 
     facility (including any enforcement actions taken by the 
     State or any Federal enforcement action recommended by the 
     State) to the Secretary not later than the date on which the 
     State sends such information to the facility. The Secretary 
     shall use the information submitted under the preceding 
     sentence to update the information provided on the Nursing 
     Home Compare Medicare website as expeditiously as practicable 
     but not less frequently than quarterly.''.
       (B) Effective date.--The amendment made by this paragraph 
     shall take effect 1 year after the date of the enactment of 
     this Act.
       (3) Special focus facility program.--Section 1919(f) of 
     such Act is amended by adding at the end of the following new 
     paragraph:
       ``(10) Special focus facility program.--
       ``(A) In general.--The Secretary shall conduct a special 
     focus facility program for enforcement of requirements for 
     nursing facilities that the Secretary has identified as 
     having a poor compliance history or that substantially failed 
     to meet applicable requirements of this Act.
       ``(B) Periodic surveys.--Under such program the Secretary 
     shall conduct surveys of each facility in the program not 
     less often than once every 6 months.''.
       (c) Availability of Reports on Surveys, Certifications, and 
     Complaint Investigations.--
       (1) Skilled nursing facilities.--Section 1819(d)(1) of the 
     Social Security Act (42 U.S.C. 1395i-3(d)(1)), as amended by 
     sections 1411 and 1412, is amended by adding at the end the 
     following new subparagraph:
       ``(D) Availability of survey, certification, and complaint 
     investigation reports.--A skilled nursing facility must--
       ``(i) have reports with respect to any surveys, 
     certifications, and complaint investigations made respecting 
     the facility during the 3 preceding years available for any 
     individual to review upon request; and
       ``(ii) post notice of the availability of such reports in 
     areas of the facility that are prominent and accessible to 
     the public.
     The facility shall not make available under clause (i) 
     identifying information about complainants or residents.''.
       (2) Nursing facilities.--Section 1919(d)(1) of the Social 
     Security Act (42 U.S.C. 1396r(d)(1)), as amended by sections 
     1411 and 1412, is amended by adding at the end the following 
     new subparagraph:
       ``(D) Availability of survey, certification, and complaint 
     investigation reports.--A nursing facility must--
       ``(i) have reports with respect to any surveys, 
     certifications, and complaint investigations made respecting 
     the facility during the 3 preceding years available for any 
     individual to review upon request; and
       ``(ii) post notice of the availability of such reports in 
     areas of the facility that are prominent and accessible to 
     the public.

     The facility shall not make available under clause (i) 
     identifying information about complainants or residents.''.
       (3) Effective date.--The amendments made by this subsection 
     shall take effect 1 year after the date of the enactment of 
     this Act.
       (d) Guidance to States on Form 2567 State Inspection 
     Reports and Complaint Investigation Reports.--
       (1) Guidance.--The Secretary of Health and Human Services 
     (in this subtitle referred to as the ``Secretary'') shall 
     provide guidance to States on how States can establish 
     electronic links to Form 2567 State inspection reports (or a 
     successor form), complaint investigation reports, and a 
     facility's plan of correction or other response to such Form 
     2567 State inspection reports (or a successor form) on the 
     Internet website of the State that provides information on 
     skilled nursing facilities and nursing facilities and the 
     Secretary shall, if possible, include such information on 
     Nursing Home Compare.
       (2) Requirement.--Section 1902(a)(9) of the Social Security 
     Act (42 U.S.C. 1396a(a)(9)) is amended--
       (A) by striking ``and'' at the end of subparagraph (B);
       (B) by striking the semicolon at the end of subparagraph 
     (C) and inserting ``, and''; and
       (C) by adding at the end the following new subparagraph:
       ``(D) that the State maintain a consumer-oriented website 
     providing useful information to consumers regarding all 
     skilled nursing facilities and all nursing facilities in the 
     State, including for each facility, Form 2567 State 
     inspection reports (or a successor form), complaint 
     investigation reports, the facility's plan of correction, and 
     such other information that the State or the Secretary 
     considers useful in assisting the public to assess the 
     quality of long term care options and the quality of care 
     provided by individual facilities;''.
       (3) Definitions.--In this subsection:
       (A) Nursing facility.--The term ``nursing facility'' has 
     the meaning given such term in section 1919(a) of the Social 
     Security Act (42 U.S.C. 1396r(a)).
       (B) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (C) Skilled nursing facility.--The term ``skilled nursing 
     facility'' has the meaning given such term in section 1819(a) 
     of the Social Security Act (42 U.S.C. 1395i-3(a)).

     SEC. 1414. REPORTING OF EXPENDITURES.

       Section 1888 of the Social Security Act (42 U.S.C. 1395yy) 
     is amended by adding at the end the following new subsection:
       ``(f) Reporting of Direct Care Expenditures.--
       ``(1) In general.--For cost reports submitted under this 
     title for cost reporting periods beginning on or after the 
     date that is no more than two years after the redesign of the 
     report specified in subparagraph (2), skilled nursing 
     facilities shall--
       ``(A) separately report expenditures for wages and benefits 
     for direct care staff (breaking out (at a minimum) registered 
     nurses, licensed professional nurses, certified nurse 
     assistants, and other medical and therapy staff); and
       ``(B) take into account agency and contract staff in a 
     manner to be determined by the Administrator.
       ``(2) Modification of form.--The Secretary, in consultation 
     with private sector accountants experienced with skilled 
     nursing facility cost reports, shall redesign such reports to 
     meet the requirement of paragraph (1) not later than 2 years 
     after the date of the enactment of this subsection.
       ``(3) Categorization by functional accounts.--Beginning 
     with cost reports submitted under paragraph (1) , the 
     Secretary, working in consultation with the Medicare Payment 
     Advisory Commission, the Inspector General of the Department 
     of Health and Human Services, and other expert parties the 
     Secretary determines appropriate, shall categorize the 
     expenditures listed on cost reports, as modified under 
     paragraph (1), submitted by skilled nursing facilities, 
     regardless of any source of payment for such expenditures, 
     for each skilled nursing facility into the following 
     functional accounts on an annual basis:
       ``(A) Spending on direct care services (including nursing, 
     therapy, and medical services).
       ``(B) Spending on indirect care (including housekeeping and 
     dietary services).
       ``(C) Capital assets (including building and land costs).
       ``(D) Administrative services costs.
       ``(4) Availability of information submitted.--The Secretary 
     shall establish procedures to make information on 
     expenditures submitted under this subsection readily 
     available to interested parties upon request, subject to such 
     requirements as the Secretary may specify under the 
     procedures established under this paragraph.''.

     SEC. 1415. STANDARDIZED COMPLAINT FORM.

       (a) Skilled Nursing Facilities.--
       (1) Development by the secretary.--Section 1819(f) of the 
     Social Security Act (42 U.S.C. 1395i-3(f)), as amended by 
     section 1413(a)(3), is amended by adding at the end the 
     following new paragraph:
       ``(9) Standardized complaint form.--The Secretary shall 
     develop a standardized complaint form for use by a resident 
     (or a person acting on the resident's behalf) in filing a 
     complaint with a State survey and certification agency and a 
     State long-term care ombudsman program with respect to a 
     skilled nursing facility.''.
       (2) State requirements.--Section 1819(e) of the Social 
     Security Act (42 U.S.C. 1395i-3(e)) is amended by adding at 
     the end the following new paragraph:
       ``(6) Complaint processes and whistle-blower protection.--
       ``(A) Complaint forms.--The State must make the 
     standardized complaint form developed under subsection (f)(9) 
     available upon request to--
       ``(i) a resident of a skilled nursing facility;
       ``(ii) any person acting on the resident's behalf; and
       ``(iii) any person who works at a skilled nursing facility 
     or is a representative of such a worker.
       ``(B) Complaint resolution process.--The State must 
     establish a complaint resolution process in order to ensure 
     that a resident, the legal representative of a resident of a 
     skilled nursing facility, or other responsible party is not 
     retaliated against if the resident, legal representative, or 
     responsible party has complained, in good faith, about the 
     quality of care or other issues relating to the skilled 
     nursing facility, that the legal representative of a resident 
     of a skilled nursing facility or other responsible party is 
     not denied access to such resident or otherwise retaliated 
     against if such representative party has complained, in good 
     faith, about the quality of care provided by the facility or 
     other issues relating to the facility, and that a person who 
     works at a skilled nursing facility is not retaliated against 
     if the worker has complained, in good faith, about quality of 
     care or services or an issue relating to the quality of care 
     or services provided at the facility, whether the resident, 
     legal representative, other responsible party, or worker used 
     the form developed under subsection (f)(9) or some other 
     method for submitting the complaint. Such complaint 
     resolution process shall include--
       ``(i) procedures to assure accurate tracking of complaints 
     received, including notification to the complainant that a 
     complaint has been received;
       ``(ii) procedures to determine the likely severity of a 
     complaint and for the investigation of the complaint;
       ``(iii) deadlines for responding to a complaint and for 
     notifying the complainant of the outcome of the 
     investigation; and
       ``(iv) procedures to ensure that the identity of the 
     complainant will be kept confidential.

[[Page H12710]]

       ``(C) Whistleblower protection.--
       ``(i) Prohibition against retaliation.--No person who works 
     at a skilled nursing facility may be penalized, 
     discriminated, or retaliated against with respect to any 
     aspect of employment, including discharge, promotion, 
     compensation, terms, conditions, or privileges of employment, 
     or have a contract for services terminated, because the 
     person (or anyone acting at the person's request) complained, 
     in good faith, about the quality of care or services provided 
     by a skilled nursing facility or about other issues relating 
     to quality of care or services, whether using the form 
     developed under subsection (f)(9) or some other method for 
     submitting the complaint.
       ``(ii) Retaliatory reporting.--A skilled nursing facility 
     may not file a complaint or a report against a person who 
     works (or has worked at the facility) with the appropriate 
     State professional disciplinary agency because the person (or 
     anyone acting at the person's request) complained in good 
     faith, as described in clause (i).
       ``(iii) Relief.--Any person aggrieved by a violation of 
     clause (i) or clause (ii) may, in a civil action, obtain all 
     appropriate relief, including reinstatement, reimbursement of 
     lost wages, compensation, and benefits, and exemplary damages 
     where warranted, and such other relief as the court deems 
     appropriate, as well as costs of suit and reasonable attorney 
     and expert witness fees.
       ``(iv) Rights not waivable.--The rights protected by this 
     paragraph may not be diminished by contract or other 
     agreement, and nothing in this paragraph shall be construed 
     to diminish any greater or additional protection provided by 
     Federal or State law or by contract or other agreement.
       ``(v) Requirement to post notice of employee rights.--Each 
     skilled nursing facility shall post conspicuously in an 
     appropriate location a sign (in a form specified by the 
     Secretary) specifying the rights of persons under this 
     paragraph and including a statement that an employee may file 
     a complaint with the Secretary against a skilled nursing 
     facility that violates the provisions of this paragraph and 
     information with respect to the manner of filing such a 
     complaint.
       ``(D) Rule of construction.--Nothing in this paragraph 
     shall be construed as preventing a resident of a skilled 
     nursing facility (or a person acting on the resident's 
     behalf) from submitting a complaint in a manner or format 
     other than by using the standardized complaint form developed 
     under subsection (f)(9) (including submitting a complaint 
     orally).
       ``(E) Good faith defined.--For purposes of this paragraph, 
     an individual shall be deemed to be acting in good faith with 
     respect to the filing of a complaint if the individual 
     reasonably believes--
       ``(i) the information reported or disclosed in the 
     complaint is true; and
       ``(ii) the violation of this title has occurred or may 
     occur in relation to such information.''.
       (b) Nursing Facilities.--
       (1) Development by the secretary.--Section 1919(f) of the 
     Social Security Act (42 U.S.C. 1395i-3(f)), as amended by 
     section 1413(b), is amended by adding at the end the 
     following new paragraph:
       ``(11) Standardized complaint form.--The Secretary shall 
     develop a standardized complaint form for use by a resident 
     (or a person acting on the resident's behalf) in filing a 
     complaint with a State survey and certification agency and a 
     State long-term care ombudsman program with respect to a 
     nursing facility.''.
       (2) State requirements.--Section 1919(e) of the Social 
     Security Act (42 U.S.C. 1395i-3(e)) is amended by adding at 
     the end the following new paragraph:
       ``(8) Complaint processes and whistleblower protection.--
       ``(A) Complaint forms.--The State must make the 
     standardized complaint form developed under subsection 
     (f)(11) available upon request to--
       ``(i) a resident of a nursing facility;
       ``(ii) any person acting on the resident's behalf; and
       ``(iii) any person who works at a nursing facility or a 
     representative of such a worker.
       ``(B) Complaint resolution process.--The State must 
     establish a complaint resolution process in order to ensure 
     that a resident, the legal representative of a resident of a 
     nursing facility, or other responsible party is not 
     retaliated against if the resident, legal representative, or 
     responsible party has complained, in good faith, about the 
     quality of care or other issues relating to the nursing 
     facility, that the legal representative of a resident of a 
     nursing facility or other responsible party is not denied 
     access to such resident or otherwise retaliated against if 
     such representative party has complained, in good faith, 
     about the quality of care provided by the facility or other 
     issues relating to the facility, and that a person who works 
     at a nursing facility is not retaliated against if the worker 
     has complained, in good faith, about quality of care or 
     services or an issue relating to the quality of care or 
     services provided at the facility, whether the resident, 
     legal representative, other responsible party, or worker used 
     the form developed under subsection (f)(11) or some other 
     method for submitting the complaint. Such complaint 
     resolution process shall include--
       ``(i) procedures to assure accurate tracking of complaints 
     received, including notification to the complainant that a 
     complaint has been received;
       ``(ii) procedures to determine the likely severity of a 
     complaint and for the investigation of the complaint;
       ``(iii) deadlines for responding to a complaint and for 
     notifying the complainant of the outcome of the 
     investigation; and
       ``(iv) procedures to ensure that the identity of the 
     complainant will be kept confidential.
       ``(C) Whistleblower protection.--
       ``(i) Prohibition against retaliation.--No person who works 
     at a nursing facility may be penalized, discriminated, or 
     retaliated against with respect to any aspect of employment, 
     including discharge, promotion, compensation, terms, 
     conditions, or privileges of employment, or have a contract 
     for services terminated, because the person (or anyone acting 
     at the person's request) complained, in good faith, about the 
     quality of care or services provided by a nursing facility or 
     about other issues relating to quality of care or services, 
     whether using the form developed under subsection (f)(11) or 
     some other method for submitting the complaint.
       ``(ii) Retaliatory reporting.--A nursing facility may not 
     file a complaint or a report against a person who works (or 
     has worked at the facility with the appropriate State 
     professional disciplinary agency because the person (or 
     anyone acting at the person's request) complained in good 
     faith, as described in clause (i).
       ``(iii) Relief.--Any person aggrieved by a violation of 
     clause (i) or clause (ii) may, in a civil action, obtain all 
     appropriate relief, including reinstatement, reimbursement of 
     lost wages, compensation, and benefits, and exemplary damages 
     where warranted, and such other relief as the court deems 
     appropriate, as well as costs of suit and reasonable attorney 
     and expert witness fees.
       ``(iv) Rights not waivable.--The rights protected by this 
     paragraph may not be diminished by contract or other 
     agreement, and nothing in this paragraph shall be construed 
     to diminish any greater or additional protection provided by 
     Federal or State law or by contract or other agreement.
       ``(v) Requirement to post notice of employee rights.--Each 
     nursing facility shall post conspicuously in an appropriate 
     location a sign (in a form specified by the Secretary) 
     specifying the rights of persons under this paragraph and 
     including a statement that an employee may file a complaint 
     with the Secretary against a nursing facility that violates 
     the provisions of this paragraph and information with respect 
     to the manner of filing such a complaint.
       ``(D) Rule of construction.--Nothing in this paragraph 
     shall be construed as preventing a resident of a nursing 
     facility (or a person acting on the resident's behalf) from 
     submitting a complaint in a manner or format other than by 
     using the standardized complaint form developed under 
     subsection (f)(11) (including submitting a complaint orally).
       ``(E) Good faith defined.--For purposes of this paragraph, 
     an individual shall be deemed to be acting in good faith with 
     respect to the filing of a complaint if the individual 
     reasonably believes--
       ``(i) the information reported or disclosed in the 
     complaint is true; and
       ``(ii) the violation of this title has occurred or may 
     occur in relation to such information.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect 1 year after the date of the enactment of 
     this Act.

     SEC. 1416. ENSURING STAFFING ACCOUNTABILITY.

       (a) Skilled Nursing Facilities.--Section 1819(b)(8) of the 
     Social Security Act (42 U.S.C. 1395i-3(b)(8)) is amended by 
     adding at the end the following new subparagraph:
       ``(C) Submission of staffing information based on payroll 
     data in a uniform format.--On and after the first day of the 
     first calendar quarter beginning after the date that is 2 
     years after the date of enactment of this subparagraph, and 
     after consulting with State long-term care ombudsman 
     programs, consumer advocacy groups, provider stakeholder 
     groups, employees and their representatives, and other 
     parties the Secretary deems appropriate, the Secretary shall 
     require a skilled nursing facility to electronically submit 
     to the Secretary direct care staffing information (including 
     information with respect to agency and contract staff) based 
     on payroll and other verifiable and auditable data in a 
     uniform format (according to specifications established by 
     the Secretary in consultation with such programs, groups, and 
     parties). Such specifications shall require that the 
     information submitted under the preceding sentence--
       ``(i) specify the category of work a certified employee 
     performs (such as whether the employee is a registered nurse, 
     licensed practical nurse, licensed vocational nurse, 
     certified nursing assistant, therapist, or other medical 
     personnel);
       ``(ii) include resident census data and information on 
     resident case mix;
       ``(iii) include a regular reporting schedule; and
       ``(iv) include information on employee turnover and tenure 
     and on the hours of care provided by each category of 
     certified employees referenced in clause (i) per resident per 
     day.
     Nothing in this subparagraph shall be construed as preventing 
     the Secretary from requiring submission of such information 
     with respect to specific categories, such as nursing staff, 
     before other categories of certified employees. Information 
     under this subparagraph with respect to agency and contract

[[Page H12711]]

     staff shall be kept separate from information on employee 
     staffing.''.
       (b) Nursing Facilities.--Section 1919(b)(8) of the Social 
     Security Act (42 U.S.C. 1396r(b)(8)) is amended by adding at 
     the end the following new subparagraph:
       ``(C) Submission of staffing information based on payroll 
     data in a uniform format.--On and after the first day of the 
     first calendar quarter beginning after the date that is 2 
     years after the date of enactment of this subparagraph, and 
     after consulting with State long-term care ombudsman 
     programs, consumer advocacy groups, provider stakeholder 
     groups, employees and their representatives, and other 
     parties the Secretary deems appropriate, the Secretary shall 
     require a nursing facility to electronically submit to the 
     Secretary direct care staffing information (including 
     information with respect to agency and contract staff) based 
     on payroll and other verifiable and auditable data in a 
     uniform format (according to specifications established by 
     the Secretary in consultation with such programs, groups, and 
     parties). Such specifications shall require that the 
     information submitted under the preceding sentence--
       ``(i) specify the category of work a certified employee 
     performs (such as whether the employee is a registered nurse, 
     licensed practical nurse, licensed vocational nurse, 
     certified nursing assistant, therapist, or other medical 
     personnel);
       ``(ii) include resident census data and information on 
     resident case mix;
       ``(iii) include a regular reporting schedule; and
       ``(iv) include information on employee turnover and tenure 
     and on the hours of care provided by each category of 
     certified employees referenced in clause (i) per resident per 
     day.

     Nothing in this subparagraph shall be construed as preventing 
     the Secretary from requiring submission of such information 
     with respect to specific categories, such as nursing staff, 
     before other categories of certified employees. Information 
     under this subparagraph with respect to agency and contract 
     staff shall be kept separate from information on employee 
     staffing.''.

     SEC. 1417. NATIONWIDE PROGRAM FOR NATIONAL AND STATE 
                   BACKGROUND CHECKS ON DIRECT PATIENT ACCESS 
                   EMPLOYEES OF LONG-TERM CARE FACILITIES AND 
                   PROVIDERS.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary''), shall 
     establish a program to identify efficient, effective, and 
     economical procedures for long term care facilities or 
     providers to conduct background checks on prospective direct 
     patient access employees on a nationwide basis (in this 
     subsection, such program shall be referred to as the 
     ``nationwide program''). The Secretary shall carry out the 
     nationwide program under similar terms and conditions as the 
     pilot program under section 307 of the Medicare Prescription 
     Drug, Improvement, and Modernization Act of 2003 (Public Law 
     108-173; 117 Stat. 2257), including the prohibition on hiring 
     abusive workers and the authorization of the imposition of 
     penalties by a participating State under subsections 
     (b)(3)(A) and (b)(6), respectively, of such section 307. The 
     program under this subsection shall contain the following 
     modifications to such pilot program:
       (1) Agreements.--
       (A) Newly participating states.--The Secretary shall enter 
     into agreements with each State--
       (i) that the Secretary has not entered into an agreement 
     with under subsection (c)(1) of such section 307;
       (ii) that agrees to conduct background checks under the 
     nationwide program on a Statewide basis; and
       (iii) that submits an application to the Secretary 
     containing such information and at such time as the Secretary 
     may specify.

     Under such an agreement a State may agree to cover and 
     reimburse each long-term care facility or provider for all 
     costs attributable to conducting background checks and 
     screening described in this subsection that were not 
     otherwise required to be conducted by such long-term care 
     facility or provider before the enactment of this subsection, 
     except that Federal funding with respect to such 
     reimbursement shall be limited to the amount made available 
     to the State from funds under subsection (b)(1).
       (B) Certain previously participating states.--The Secretary 
     shall enter into agreements with each State--
       (i) that the Secretary has entered into an agreement with 
     under such subsection (c)(1);
       (ii) that agrees to conduct background checks under the 
     nationwide program on a Statewide basis; and
       (iii) that submits an application to the Secretary 
     containing such information and at such time as the Secretary 
     may specify.

     Under such an agreement a State may agree to cover and 
     reimburse each long-term care facility or provider for all 
     costs attributable to conducting background checks and 
     screening described in this subsection that were not 
     otherwise required to be conducted by such long-term care 
     facility or provider before the enactment of this subsection, 
     except that Federal funding with respect to such 
     reimbursement shall be limited to the amount made available 
     to the State from funds under subsection (b)(1).
       (2) Nonapplication of selection criteria.--The selection 
     criteria required under subsection (c)(3)(B) of such section 
     307 shall not apply.
       (3) Required fingerprint check as part of criminal 
     background check.--The procedures established under 
     subsection (b)(1) of such section 307 shall--
       (A) require that the long-term care facility or provider 
     (or the designated agent of the long-term care facility or 
     provider) obtain State and national criminal or other 
     background checks on the prospective employee through such 
     means as the Secretary determines appropriate that utilize a 
     search of State-based abuse and neglect registries and 
     databases, including the abuse and neglect registries of 
     another State in the case where a prospective employee 
     previously resided in that State, State criminal history 
     records, the records of any proceedings in the State that may 
     contain disqualifying information about prospective employees 
     (such as proceedings conducted by State professional 
     licensing and disciplinary boards and State Medicaid Fraud 
     Control Units), and Federal criminal history records, 
     including a fingerprint check using the Integrated Automated 
     Fingerprint Identification System of the Federal Bureau of 
     Investigation; and
       (B) require States to describe and test methods that reduce 
     duplicative fingerprinting, including providing for the 
     development of ``rap back'' capability by the State such 
     that, if a direct patient access employee of a long-term care 
     facility or provider is convicted of a crime following the 
     initial criminal history background check conducted with 
     respect to such employee, and the employee's fingerprints 
     match the prints on file with the State law enforcement 
     department, the department will immediately inform the State 
     and the State will immediately inform the long-term care 
     facility or provider which employs the direct patient access 
     employee of such conviction.
       (4) State requirements.--An agreement entered into under 
     paragraph (1) shall require that a participating State--
       (A) be responsible for monitoring compliance with the 
     requirements of the nationwide program;
       (B) have procedures in place to--
       (i) conduct screening and criminal or other background 
     checks under the nationwide program in accordance with the 
     requirements of this section;
       (ii) monitor compliance by long-term care facilities and 
     providers with the procedures and requirements of the 
     nationwide program;
       (iii) as appropriate, provide for a provisional period of 
     employment by a long-term care facility or provider of a 
     direct patient access employee, not to exceed 60 days, 
     pending completion of the required criminal history 
     background check and, in the case where the employee has 
     appealed the results of such background check, pending 
     completion of the appeals process, during which the employee 
     shall be subject to direct on-site supervision (in accordance 
     with procedures established by the State to ensure that a 
     long-term care facility or provider furnishes such direct on-
     site supervision);
       (iv) provide an independent process by which a provisional 
     employee or an employee may appeal or dispute the accuracy of 
     the information obtained in a background check performed 
     under the nationwide program, including the specification of 
     criteria for appeals for direct patient access employees 
     found to have disqualifying information which shall include 
     consideration of the passage of time, extenuating 
     circumstances, demonstration of rehabilitation, and relevancy 
     of the particular disqualifying information with respect to 
     the current employment of the individual;
       (v) provide for the designation of a single State agency as 
     responsible for--

       (I) overseeing the coordination of any State and national 
     criminal history background checks requested by a long-term 
     care facility or provider (or the designated agent of the 
     long-term care facility or provider) utilizing a search of 
     State and Federal criminal history records, including a 
     fingerprint check of such records;
       (II) overseeing the design of appropriate privacy and 
     security safeguards for use in the review of the results of 
     any State or national criminal history background checks 
     conducted regarding a prospective direct patient access 
     employee to determine whether the employee has any conviction 
     for a relevant crime;
       (III) immediately reporting to the long-term care facility 
     or provider that requested the criminal history background 
     check the results of such review; and
       (IV) in the case of an employee with a conviction for a 
     relevant crime that is subject to reporting under section 
     1128E of the Social Security Act (42 U.S.C. 1320a-7e), 
     reporting the existence of such conviction to the database 
     established under that section;

       (vi) determine which individuals are direct patient access 
     employees (as defined in paragraph (6)(B)) for purposes of 
     the nationwide program;
       (vii) as appropriate, specify offenses, including 
     convictions for violent crimes, for purposes of the 
     nationwide program; and
       (viii) describe and test methods that reduce duplicative 
     fingerprinting, including providing for the development of 
     ``rap back'' capability such that, if a direct patient access 
     employee of a long-term care facility or provider is 
     convicted of a crime following the initial criminal history 
     background check conducted with respect to such employee, and 
     the employee's fingerprints match the prints on file with the 
     State law enforcement department--

[[Page H12712]]

       (I) the department will immediately inform the State agency 
     designated under clause (v) and such agency will immediately 
     inform the facility or provider which employs the direct 
     patient access employee of such conviction; and
       (II) the State will provide, or will require the facility 
     to provide, to the employee a copy of the results of the 
     criminal history background check conducted with respect to 
     the employee at no charge in the case where the individual 
     requests such a copy.

     Background checks and screenings under this subsection shall 
     be valid for a period of no longer than 2 years, as 
     determined by the State and approved by the Secretary.
       (5) Payments.--
       (A) Newly participating states.--
       (i) In general.--As part of the application submitted by a 
     State under paragraph (1)(A)(iii), the State shall guarantee, 
     with respect to the costs to be incurred by the State in 
     carrying out the nationwide program, that the State will make 
     available (directly or through donations from public or 
     private entities) a particular amount of non-Federal 
     contributions, as a condition of receiving the Federal match 
     under clause (ii).
       (ii) Federal match.--The payment amount to each State that 
     the Secretary enters into an agreement with under paragraph 
     (1)(A) shall be 3 times the amount that the State guarantees 
     to make available under clause (i).
       (B) Previously participating states.--
       (i) In general.--As part of the application submitted by a 
     State under paragraph (1)(B)(iii), the State shall guarantee, 
     with respect to the costs to be incurred by the State in 
     carrying out the nationwide program, that the State will make 
     available (directly or through donations from public or 
     private entities) a particular amount of non-Federal 
     contributions, as a condition of receiving the Federal match 
     under clause (ii).
       (ii) Federal match.--The payment amount to each State that 
     the Secretary enters into an agreement with under paragraph 
     (1)(B) shall be 3 times the amount that the State guarantees 
     to make available under clause (i).
       (6) Definitions.--Under the nationwide program:
       (A) Long-term care facility or provider.--The term ``long-
     term care facility or provider'' means the following 
     facilities or providers which receive payment for services 
     under title XVIII or XIX of the Social Security Act:
       (i) A skilled nursing facility (as defined in section 
     1819(a) of the Social Security Act (42 U.S.C. 1395i-3(a))).
       (ii) A nursing facility (as defined in section 1919(a) of 
     such Act (42 U.S.C. 1396r(a))).
       (iii) A home health agency.
       (iv) A provider of hospice care (as defined in section 
     1861(dd)(1) of such Act (42 U.S.C. 1395x(dd)(1))).
       (v) A long-term care hospital (as described in section 
     1886(d)(1)(B)(iv) of such Act (42 U.S.C. 
     1395ww(d)(1)(B)(iv))).
       (vi) A provider of personal care services.
       (vii) A provider of adult day care.
       (viii) A residential care provider that arranges for, or 
     directly provides, long-term care services, including an 
     assisted living facility that provides a nursing home level 
     of care conveyed by State licensure or State definition.
       (ix) An intermediate care facility for the mentally 
     retarded (as defined in section 1905(d) of such Act (42 
     U.S.C. 1396d(d))).
       (x) Any other facility or provider of long-term care 
     services under such titles as the participating State 
     determines appropriate.
       (B) Direct patient access employee.--The term ``direct 
     patient access employee'' means any individual who has access 
     to a patient or resident of a long-term care facility or 
     provider through employment or through a contract with such 
     facility or provider and has duties that involve (or may 
     involve) one-on-one contact with a patient or resident of the 
     facility or provider, as determined by the State for purposes 
     of the nationwide program. Such term does not include a 
     volunteer unless the volunteer has duties that are equivalent 
     to the duties of a direct patient access employee and those 
     duties involve (or may involve) one-on-one contact with a 
     patient or resident of the long-term care facility or 
     provider.
       (7) Evaluation and report.--
       (A) Evaluation.--The Inspector General of the Department of 
     Health and Human Services shall conduct an evaluation of the 
     nationwide program. Such evaluation shall include--
       (i) a review of the various procedures implemented by 
     participating States for long-term care facilities or 
     providers, including staffing agencies, to conduct background 
     checks of direct patient access employees and identify the 
     most efficient, effective, and economical procedures for 
     conducting such background checks;
       (ii) an assessment of the costs of conducting such 
     background checks (including start-up and administrative 
     costs);
       (iii) a determination of the extent to which conducting 
     such background checks leads to any unintended consequences, 
     including a reduction in the available workforce for such 
     facilities or providers;
       (iv) an assessment of the impact of the program on reducing 
     the number of incidents of neglect, abuse, and 
     misappropriation of resident property to the extent 
     practicable; and
       (v) an evaluation of other aspects of the program, as 
     determined appropriate by the Secretary.
       (B) Report.--Not later than 180 days after the completion 
     of the nationwide program, the Inspector General of the 
     Department of Health and Human Services shall submit a report 
     to Congress containing the results of the evaluation 
     conducted under subparagraph (A).
       (b) Funding.--
       (1) Notification.--The Secretary of Health and Human 
     Services shall notify the Secretary of the Treasury of the 
     amount necessary to carry out the nationwide program under 
     this section, including costs for the Department of Health 
     and Human Services to administer and evaluate the program, 
     for the period of fiscal years 2010 through 2012, except that 
     in no case shall such amount exceed $160,000,000.
       (2) Transfer of funds.--Out of any funds in the Treasury 
     not otherwise appropriated, the Secretary of the Treasury 
     shall provide for the transfer to the Secretary of Health and 
     Human Services of the amount specified as necessary to carry 
     out the nationwide program under paragraph (1). Such amount 
     shall remain available until expended.

                     PART 2--TARGETING ENFORCEMENT

     SEC. 1421. CIVIL MONEY PENALTIES.

       (a) Skilled Nursing Facilities.--
       (1) In general.--Section 1819(h)(2)(B)(ii) of the Social 
     Security Act (42 U.S.C. 1395i-3(h)(2)(B)(ii)) is amended to 
     read as follows:
       ``(ii) Authority with respect to civil money penalties.--

       ``(I) Amount.--The Secretary may impose a civil money 
     penalty in the applicable per instance or per day amount (as 
     defined in subclause (II) and (III)) for each day or 
     instance, respectively, of noncompliance (as determined 
     appropriate by the Secretary).
       ``(II) Applicable per instance amount.--In this clause, the 
     term `applicable per instance amount' means--

       ``(aa) in the case where the deficiency is found to be a 
     direct proximate cause of death of a resident of the 
     facility, an amount not to exceed $100,000.
       ``(bb) in each case of a deficiency where the facility is 
     cited for actual harm or immediate jeopardy, an amount not 
     less than $3,050 and not more than $25,000; and
       ``(cc) in each case of any other deficiency, an amount not 
     less than $250 and not to exceed $3050.

       ``(III) Applicable per day amount.--In this clause, the 
     term `applicable per day amount' means--

       ``(aa) in each case of a deficiency where the facility is 
     cited for actual harm or immediate jeopardy, an amount not 
     less than $3,050 and not more than $25,000 and
       ``(bb) in each case of any other deficiency, an amount not 
     less than $250 and not to exceed $3,050.

       ``(IV) Reduction of civil money penalties in certain 
     circumstances.--Subject to subclauses (V) and (VI), in the 
     case where a facility self-reports and promptly corrects a 
     deficiency for which a penalty was imposed under this clause 
     not later than 10 calendar days after the date of such 
     imposition, the Secretary may reduce the amount of the 
     penalty imposed by not more than 50 percent.
       ``(V) Prohibition on reduction for certain deficiencies.--

       ``(aa) Repeat deficiencies.--The Secretary may not reduce 
     under subclause (IV) the amount of a penalty if the 
     deficiency is a repeat deficiency.
       ``(bb) Certain other deficiencies.--The Secretary may not 
     reduce under subclause (IV) the amount of a penalty if the 
     penalty is imposed for a deficiency described in subclause 
     (II)(aa) or (III)(aa) and the actual harm or widespread harm 
     immediately jeopardizes the health or safety of a resident or 
     residents of the facility, or if the penalty is imposed for a 
     deficiency described in subclause (II)(bb).

       ``(VI) Limitation on aggregate reductions.--The aggregate 
     reduction in a penalty under subclause (IV) may not exceed 35 
     percent on the basis of self-reporting, on the basis of a 
     waiver of an appeal (as provided for under regulations under 
     section 488.436 of title 42, Code of Federal Regulations), or 
     on the basis of both.
       ``(VII) Collection of civil money penalties.--In the case 
     of a civil money penalty imposed under this clause, the 
     Secretary--

       ``(aa) subject to item (cc), shall, not later than 30 days 
     after the date of imposition of the penalty, provide the 
     opportunity for the facility to participate in an independent 
     informal dispute resolution process, established by the State 
     survey agency, which generates a written record prior to the 
     collection of such penalty, but such opportunity shall not 
     affect the responsibility of the State survey agency for 
     making final recommendations for such penalties;
       ``(bb) in the case where the penalty is imposed for each 
     day of noncompliance, shall not impose a penalty for any day 
     during the period beginning on the initial day of the 
     imposition of the penalty and ending on the day on which the 
     informal dispute resolution process under item (aa) is 
     completed;
       ``(cc) may provide for the collection of such civil money 
     penalty and the placement of such amounts collected in an 
     escrow account under the direction of the Secretary on the 
     earlier of the date on which the informal dispute resolution 
     process under item (aa) is completed or the date that is 90 
     days after the date of the imposition of the penalty;
       ``(dd) may provide that such amounts collected are kept in 
     such account pending the resolution of any subsequent 
     appeals;
       ``(ee) in the case where the facility successfully appeals 
     the penalty, may provide for

[[Page H12713]]

     the return of such amounts collected (plus interest) to the 
     facility; and
       ``(ff) in the case where all such appeals are unsuccessful, 
     may provide that some portion of such amounts collected may 
     be used to support activities that benefit residents, 
     including assistance to support and protect residents of a 
     facility that closes (voluntarily or involuntarily) or is 
     decertified (including offsetting costs of relocating 
     residents to home and community-based settings or another 
     facility), projects that support resident and family councils 
     and other consumer involvement in assuring quality care in 
     facilities, and facility improvement initiatives approved by 
     the Secretary (including joint training of facility staff and 
     surveyors, technical assistance for facilities under quality 
     assurance programs, the appointment of temporary management, 
     and other activities approved by the Secretary).

       ``(VIII) Procedure.--The provisions of section 1128A (other 
     than subsections (a) and (b) and except to the extent that 
     such provisions require a hearing prior to the imposition of 
     a civil money penalty) shall apply to a civil money penalty 
     under this clause in the same manner as such provisions apply 
     to a penalty or proceeding under section 1128A(a).''.

       (2) Conforming amendment.--The second sentence of section 
     1819(h)(5) of the Social Security Act (42 U.S.C. 1395i-
     3(h)(5)) is amended by inserting ``(ii),''after ``(i),''.
       (b) Nursing Facilities.--
       (1) Penalties imposed by the state.--
       (A) In general.--Section 1919(h)(2) of the Social Security 
     Act (42 U.S.C. 1396r(h)(2)) is amended--
       (i) in subparagraph (A)(ii), by striking the first sentence 
     and inserting the following: ``A civil money penalty in 
     accordance with subparagraph (G).''; and
       (ii) by adding at the end the following new subparagraph:
       ``(G) Civil money penalties.--
       ``(i) In general.--The State may impose a civil money 
     penalty under subparagraph (A)(ii) in the applicable per 
     instance or per day amount (as defined in subclause (II) and 
     (III)) for each day or instance, respectively, of 
     noncompliance (as determined appropriate by the Secretary).
       ``(ii) Applicable per instance amount.--In this 
     subparagraph, the term `applicable per instance amount' 
     means--

       ``(I) in the case where the deficiency is found to be a 
     direct proximate cause of death of a resident of the 
     facility, an amount not to exceed $100,000.
       ``(II) in each case of a deficiency where the facility is 
     cited for actual harm or immediate jeopardy, an amount not 
     less than $3,050 and not more than $25,000; and
       ``(III) in each case of any other deficiency, an amount not 
     less than $250 and not to exceed $3050.

       ``(iii) Applicable per day amount.--In this subparagraph, 
     the term `applicable per day amount' means--

       ``(I) in each case of a deficiency where the facility is 
     cited for actual harm or immediate jeopardy, an amount not 
     less than $3,050 and not more than $25,000 and
       ``(II) in each case of any other deficiency, an amount not 
     less than $250 and not to exceed $3,050.

       ``(iv) Reduction of civil money penalties in certain 
     circumstances.--Subject to clauses (v) and (vi), in the case 
     where a facility self-reports and promptly corrects a 
     deficiency for which a penalty was imposed under subparagraph 
     (A)(ii) not later than 10 calendar days after the date of 
     such imposition, the State may reduce the amount of the 
     penalty imposed by not more than 50 percent.
       ``(v) Prohibition on reduction for certain deficiencies.--

       ``(I) Repeat deficiencies.--The State may not reduce under 
     clause (iv) the amount of a penalty if the State had reduced 
     a penalty imposed on the facility in the preceding year under 
     such clause with respect to a repeat deficiency.
       ``(II) Certain other deficiencies.--The State may not 
     reduce under clause (iv) the amount of a penalty if the 
     penalty is imposed for a deficiency described in clause 
     (ii)(II) or (iii)(I) and the actual harm or widespread harm 
     that immediately jeopardizes the health or safety of a 
     resident or residents of the facility, or if the penalty is 
     imposed for a deficiency described in clause (ii)(I).
       ``(III) Limitation on aggregate reductions.--The aggregate 
     reduction in a penalty under clause (iv) may not exceed 35 
     percent on the basis of self-reporting, on the basis of a 
     waiver of an appeal (as provided for under regulations under 
     section 488.436 of title 42, Code of Federal Regulations), or 
     on the basis of both.

       ``(vi) Collection of civil money penalties.--In the case of 
     a civil money penalty imposed under subparagraph (A)(ii), the 
     State--

       ``(I) subject to subclause (III), shall, not later than 30 
     days after the date of imposition of the penalty, provide the 
     opportunity for the facility to participate in an independent 
     informal dispute resolution process, established by the State 
     survey agency, which generates a written record prior to the 
     collection of such penalty, but such opportunity shall not 
     affect the responsibility of the State survey agency for 
     making final recommendations for such penalties;
       ``(II) in the case where the penalty is imposed for each 
     day of noncompliance, shall not impose a penalty for any day 
     during the period beginning on the initial day of the 
     imposition of the penalty and ending on the day on which the 
     informal dispute resolution process under subclause (I) is 
     completed;
       ``(III) may provide for the collection of such civil money 
     penalty and the placement of such amounts collected in an 
     escrow account under the direction of the State on the 
     earlier of the date on which the informal dispute resolution 
     process under subclause (I) is completed or the date that is 
     90 days after the date of the imposition of the penalty;
       ``(IV) may provide that such amounts collected are kept in 
     such account pending the resolution of any subsequent 
     appeals;
       ``(V) in the case where the facility successfully appeals 
     the penalty, may provide for the return of such amounts 
     collected (plus interest) to the facility; and
       ``(VI) in the case where all such appeals are unsuccessful, 
     may provide that such funds collected shall be used for the 
     purposes described in the second sentence of subparagraph 
     (A)(ii).''.

       (B) Conforming amendment.--The second sentence of section 
     1919(h)(2)(A)(ii) of the Social Security Act (42 U.S.C. 
     1396r(h)(2)(A)(ii)) is amended by inserting before the period 
     at the end the following: ``, and some portion of such funds 
     may be used to support activities that benefit residents, 
     including assistance to support and protect residents of a 
     facility that closes (voluntarily or involuntarily) or is 
     decertified (including offsetting costs of relocating 
     residents to home and community-based settings or another 
     facility), projects that support resident and family councils 
     and other consumer involvement in assuring quality care in 
     facilities, and facility improvement initiatives approved by 
     the Secretary (including joint training of facility staff and 
     surveyors, providing technical assistance to facilities under 
     quality assurance programs, the appointment of temporary 
     management, and other activities approved by the 
     Secretary)''.
       (2) Penalties imposed by the secretary.--
       (A) In general.--Section 1919(h)(3)(C)(ii) of the Social 
     Security Act (42 U.S.C. 1396r(h)(3)(C)) is amended to read as 
     follows:
       ``(ii) Authority with respect to civil money penalties.--

       ``(I) Amount.--Subject to subclause (II), the Secretary may 
     impose a civil money penalty in an amount not to exceed 
     $10,000 for each day or each instance of noncompliance (as 
     determined appropriate by the Secretary).
       ``(II) Reduction of civil money penalties in certain 
     circumstances.--Subject to subclause (III), in the case where 
     a facility self-reports and promptly corrects a deficiency 
     for which a penalty was imposed under this clause not later 
     than 10 calendar days after the date of such imposition, the 
     Secretary may reduce the amount of the penalty imposed by not 
     more than 50 percent.
       ``(III) Prohibition on reduction for repeat deficiencies.--
     The Secretary may not reduce the amount of a penalty under 
     subclause (II) if the Secretary had reduced a penalty imposed 
     on the facility in the preceding year under such subclause 
     with respect to a repeat deficiency.
       ``(IV) Collection of civil money penalties.--In the case of 
     a civil money penalty imposed under this clause, the 
     Secretary--

       ``(aa) subject to item (bb), shall, not later than 30 days 
     after the date of imposition of the penalty, provide the 
     opportunity for the facility to participate in an independent 
     informal dispute resolution process which generates a written 
     record prior to the collection of such penalty;
       ``(bb) in the case where the penalty is imposed for each 
     day of noncompliance, shall not impose a penalty for any day 
     during the period beginning on the initial day of the 
     imposition of the penalty and ending on the day on which the 
     informal dispute resolution process under item (aa) is 
     completed;
       ``(cc) may provide for the collection of such civil money 
     penalty and the placement of such amounts collected in an 
     escrow account under the direction of the Secretary on the 
     earlier of the date on which the informal dispute resolution 
     process under item (aa) is completed or the date that is