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[From the U.S. Government Printing Office via GPO Access]
[DOCID: h3590pp.txt]
[Public Print]
                           December 24, 2009

                    Ordered to be printed as passed

  
  
  
  
  
  
  
  
  
  
  

                  In the Senate of the United States,

                                                     December 24, 2009.
      Resolved, That the bill from the House of Representatives (H.R. 
3590) entitled ``An Act to amend the Internal Revenue Code of 1986 to 
modify the first-time homebuyers credit in the case of members of the 
Armed Forces and certain other Federal employees, and for other 
purposes.'', do pass with the following

                              AMENDMENTS:

            Strike out all after the enacting clause and insert:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patient Protection 
and Affordable Care Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

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

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

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

             ``PART A--Individual and Group Market Reforms

                    ``subpart ii--improving coverage

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

     Subtitle B--Immediate Actions to Preserve and Expand Coverage

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

    Subtitle C--Quality Health Insurance Coverage for All Americans

                PART I--Health Insurance Market Reforms

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

                      ``subpart i--general reform

        ``Sec. 2704. Prohibition of preexisting condition exclusions or 
                            other discrimination based on health 
                            status.
        ``Sec. 2701. Fair health insurance premiums.
        ``Sec. 2702. Guaranteed availability of coverage.
        ``Sec. 2703. Guaranteed renewability of coverage.
        ``Sec. 2705. Prohibiting discrimination against individual 
                            participants and beneficiaries based on 
                            health status.
        ``Sec. 2706. Non-discrimination in health care.
        ``Sec. 2707. Comprehensive health insurance coverage.
        ``Sec. 2708. Prohibition on excessive waiting periods.

                       PART II--Other Provisions

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

        Subtitle D--Available Coverage Choices for All Americans

            PART I--Establishment of Qualified Health Plans

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

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

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

           PART III--State Flexibility Relating to Exchanges

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

      PART IV--State Flexibility to Establish Alternative Programs

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

                PART V--Reinsurance and Risk Adjustment

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

       Subtitle E--Affordable Coverage Choices for All Americans

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

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

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

                 subpart b--eligibility determinations

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

                   PART II--Small Business Tax Credit

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

           Subtitle F--Shared Responsibility for Health Care

                   PART I--Individual Responsibility

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

                   PART II--Employer Responsibilities

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

                  Subtitle G--Miscellaneous Provisions

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

                   TITLE II--ROLE OF PUBLIC PROGRAMS

                Subtitle A--Improved Access to Medicaid

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

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

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

        Subtitle C--Medicaid and CHIP Enrollment Simplification

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

             Subtitle D--Improvements to Medicaid Services

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

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

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

            Subtitle F--Medicaid Prescription Drug Coverage

Sec. 2501. Prescription drug rebates.
Sec. 2502. Elimination of exclusion of coverage of certain drugs.
Sec. 2503. Providing adequate pharmacy reimbursement.

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

Sec. 2551. Disproportionate share hospital payments.

   Subtitle H--Improved Coordination for Dual Eligible Beneficiaries

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

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

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

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

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

    Subtitle K--Protections for American Indians and Alaska Natives

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

             Subtitle L--Maternal and Child Health Services

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

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

        Subtitle A--Transforming the Health Care Delivery System

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

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

       PART II--National Strategy to Improve Health Care Quality

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

      PART III--Encouraging Development of New Patient Care Models

Sec. 3021. Establishment of Center for Medicare and Medicaid Innovation 
                            within CMS.
Sec. 3022. Medicare shared savings program.
Sec. 3023. National pilot program on payment bundling.
Sec. 3024. Independence at home demonstration program.
Sec. 3025. Hospital readmissions reduction program.
Sec. 3026. Community-Based Care Transitions Program.
Sec. 3027. Extension of gainsharing demonstration.

       Subtitle B--Improving Medicare for Patients and Providers

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

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

                       PART II--Rural Protections

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

                  PART III--Improving Payment Accuracy

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

               Subtitle C--Provisions Relating to Part C

Sec. 3201. Medicare Advantage payment.
Sec. 3202. Benefit protection and simplification.
Sec. 3203. Application of coding intensity adjustment during MA payment 
                            transition.
Sec. 3204. Simplification of annual beneficiary election periods.
Sec. 3205. Extension for specialized MA plans for special needs 
                            individuals.
Sec. 3206. Extension of reasonable cost contracts.
Sec. 3207. Technical correction to MA private fee-for-service plans.
Sec. 3208. Making senior housing facility demonstration permanent.
Sec. 3209. Authority to deny plan bids.
Sec. 3210. Development of new standards for certain Medigap plans.

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

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

              Subtitle E--Ensuring Medicare Sustainability

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

              Subtitle F--Health Care Quality Improvements

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

   Subtitle G--Protecting and Improving Guaranteed Medicare Benefits

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

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

  Subtitle A--Modernizing Disease Prevention and Public Health Systems

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

     Subtitle B--Increasing Access to Clinical Preventive Services

Sec. 4101. School-based health centers.
Sec. 4102. Oral healthcare prevention activities.
Sec. 4103. Medicare coverage of annual wellness visit providing a 
                            personalized prevention plan.
Sec. 4104. Removal of barriers to preventive services in Medicare.
Sec. 4105. Evidence-based coverage of preventive services in Medicare.
Sec. 4106. Improving access to preventive services for eligible adults 
                            in Medicaid.
Sec. 4107. Coverage of comprehensive tobacco cessation services for 
                            pregnant women in Medicaid.
Sec. 4108. Incentives for prevention of chronic diseases in medicaid.

               Subtitle C--Creating Healthier Communities

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

    Subtitle D--Support for Prevention and Public Health Innovation

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

                  Subtitle E--Miscellaneous Provisions

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

                     TITLE V--HEALTH CARE WORKFORCE

                  Subtitle A--Purpose and Definitions

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

          Subtitle B--Innovations in the Health Care Workforce

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

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

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

   Subtitle D--Enhancing Health Care Workforce Education and Training

Sec. 5301. Training in family medicine, general internal medicine, 
                            general pediatrics, and physician 
                            assistantship.
Sec. 5302. Training opportunities for direct care workers.
Sec. 5303. Training in general, pediatric, and public health dentistry.
Sec. 5304. Alternative dental health care providers demonstration 
                            project.
Sec. 5305. Geriatric education and training; career awards; 
                            comprehensive geriatric education.
Sec. 5306. Mental and behavioral health education and training grants.
Sec. 5307. Cultural competency, prevention, and public health and 
                            individuals with disabilities training.
Sec. 5308. Advanced nursing education grants.
Sec. 5309. Nurse education, practice, and retention grants.
Sec. 5310. Loan repayment and scholarship program.
Sec. 5311. Nurse faculty loan program.
Sec. 5312. Authorization of appropriations for parts B through D of 
                            title VIII.
Sec. 5313. Grants to promote the community health workforce.
Sec. 5314. Fellowship training in public health.
Sec. 5315. United States Public Health Sciences Track.

       Subtitle E--Supporting the Existing Health Care Workforce

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

Subtitle F--Strengthening Primary Care and Other Workforce Improvements

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

          Subtitle G--Improving Access to Health Care Services

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

                     Subtitle H--General Provisions

Sec. 5701. Reports.

              TITLE VI--TRANSPARENCY AND PROGRAM INTEGRITY

         Subtitle A--Physician Ownership and Other Transparency

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

         Subtitle B--Nursing Home Transparency and Improvement

             PART I--Improving Transparency of Information

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

                     PART II--Targeting Enforcement

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

                   PART III--Improving Staff Training

Sec. 6121. Dementia and abuse prevention training.

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

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

             Subtitle D--Patient-Centered Outcomes Research

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

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

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

      Subtitle F--Additional Medicaid Program Integrity Provisions

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

          Subtitle G--Additional Program Integrity Provisions

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

                     Subtitle H--Elder Justice Act

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

     Subtitle I--Sense of the Senate Regarding Medical Malpractice

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

      TITLE VII--IMPROVING ACCESS TO INNOVATIVE MEDICAL THERAPIES

         Subtitle A--Biologics Price Competition and Innovation

Sec. 7001. Short title.
Sec. 7002. Approval pathway for biosimilar biological products.
Sec. 7003. Savings.

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

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

                         TITLE VIII--CLASS ACT

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

                      TITLE IX--REVENUE PROVISIONS

                 Subtitle A--Revenue Offset Provisions

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

                      Subtitle B--Other Provisions

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

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

               Subtitle A--Provisions Relating to Title I

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

              Subtitle B--Provisions Relating to Title II

                       PART I--Medicaid and CHIP

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

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

Sec. 10211. Definitions.
Sec. 10212. Establishment of pregnancy assistance fund.
Sec. 10213. Permissible uses of Fund.
Sec. 10214. Appropriations.

                PART III--Indian Health Care Improvement

Sec. 10221. Indian health care improvement.

              Subtitle C--Provisions Relating to Title III

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

              Subtitle D--Provisions Relating to Title IV

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

               Subtitle E--Provisions Relating to Title V

Sec. 10501. Amendments to the Public Health Service Act, the Social 
                            Security Act, and title V of this Act.
Sec. 10502. Infrastructure to Expand Access to Care.
Sec. 10503. Community Health Centers and the National Health Service 
                            Corps Fund.
Sec. 10504. Demonstration project to provide access to affordable care.

              Subtitle F--Provisions Relating to Title VI

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

             Subtitle G--Provisions Relating to Title VIII

Sec. 10801. Provisions relating to title VIII.

              Subtitle H--Provisions Relating to Title IX

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

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

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

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

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

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

            (2) by redesignating sections 2704 through 2707 as sections 
        2725 through 2728, respectively;
            (3) by redesignating sections 2711 through 2713 as sections 
        2731 through 2733, respectively;
            (4) by redesignating sections 2721 through 2723 as sections 
        2735 through 2737, respectively; and
            (5) by inserting after section 2702, the following:

                    ``Subpart II--Improving Coverage

``SEC. 2711. NO LIFETIME OR ANNUAL LIMITS.

    ``(a) In General.--A group health plan and a health insurance 
issuer offering group or individual health insurance coverage may not 
establish--
            ``(1) lifetime limits on the dollar value of benefits for 
        any participant or beneficiary; or
            ``(2) unreasonable annual limits (within the meaning of 
        section 223 of the Internal Revenue Code of 1986) on the dollar 
        value of benefits for any participant or beneficiary.
    ``(b) Per Beneficiary Limits.--Subsection (a) shall not be 
construed to prevent a group health plan or health insurance coverage 
that is not required to provide essential health benefits under section 
1302(b) of the Patient Protection and Affordable Care Act from placing 
annual or lifetime per beneficiary limits on specific covered benefits 
to the extent that such limits are otherwise permitted under Federal or 
State law.

``SEC. 2712. PROHIBITION ON RESCISSIONS.

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

``SEC. 2713. COVERAGE OF PREVENTIVE HEALTH SERVICES.

    ``(a) In General.--A group health plan and a health insurance 
issuer offering group or individual health insurance coverage shall, at 
a minimum provide coverage for and shall not impose any cost sharing 
requirements for--
            ``(1) evidence-based items or services that have in effect 
        a rating of `A' or `B' in the current recommendations of the 
        United States Preventive Services Task Force;
            ``(2) immunizations that have in effect a recommendation 
        from the Advisory Committee on Immunization Practices of the 
        Centers for Disease Control and Prevention with respect to the 
        individual involved; and
            ``(3) with respect to infants, children, and adolescents, 
        evidence-informed preventive care and screenings provided for 
        in the comprehensive guidelines supported by the Health 
        Resources and Services Administration.
            ``(4) with respect to women, such additional preventive 
        care and screenings not described in paragraph (1) as provided 
        for in comprehensive guidelines supported by the Health 
        Resources and Services Administration for purposes of this 
        paragraph.
            ``(5) for the purposes of this Act, and for the purposes of 
        any other provision of law, the current recommendations of the 
        United States Preventive Service Task Force regarding breast 
        cancer screening, mammography, and prevention shall be 
        considered the most current other than those issued in or 
        around November 2009.
Nothing in this subsection shall be construed to prohibit a plan or 
issuer from providing coverage for services in addition to those 
recommended by United States Preventive Services Task Force or to deny 
coverage for services that are not recommended by such Task Force.
    ``(b) Interval.--
            ``(1) In general.--The Secretary shall establish a minimum 
        interval between the date on which a recommendation described 
        in subsection (a)(1) or (a)(2) or a guideline under subsection 
        (a)(3) is issued and the plan year with respect to which the 
        requirement described in subsection (a) is effective with 
        respect to the service described in such recommendation or 
        guideline.
            ``(2) Minimum.--The interval described in paragraph (1) 
        shall not be less than 1 year.
    ``(c) Value-based Insurance Design.--The Secretary may develop 
guidelines to permit a group health plan and a health insurance issuer 
offering group or individual health insurance coverage to utilize 
value-based insurance designs.

``SEC. 2714. EXTENSION OF DEPENDENT COVERAGE.

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

``SEC. 2715. DEVELOPMENT AND UTILIZATION OF UNIFORM EXPLANATION OF 
              COVERAGE DOCUMENTS AND STANDARDIZED DEFINITIONS.

    ``(a) In General.--Not later than 12 months after the date of 
enactment of the Patient Protection and Affordable Care Act, the 
Secretary shall develop standards for use by a group health plan and a 
health insurance issuer offering group or individual health insurance 
coverage, in compiling and providing to enrollees a summary of benefits 
and coverage explanation that accurately describes the benefits and 
coverage under the applicable plan or coverage. In developing such 
standards, the Secretary shall consult with the National Association of 
Insurance Commissioners (referred to in this section as the `NAIC'), a 
working group composed of representatives of health insurance-related 
consumer advocacy organizations, health insurance issuers, health care 
professionals, patient advocates including those representing 
individuals with limited English proficiency, and other qualified 
individuals.
    ``(b) Requirements.--The standards for the summary of benefits and 
coverage developed under subsection (a) shall provide for the 
following:
            ``(1) Appearance.--The standards shall ensure that the 
        summary of benefits and coverage is presented in a uniform 
        format that does not exceed 4 pages in length and does not 
        include print smaller than 12-point font.
            ``(2) Language.--The standards shall ensure that the 
        summary is presented in a culturally and linguistically 
        appropriate manner and utilizes terminology understandable by 
        the average plan enrollee.
            ``(3) Contents.--The standards shall ensure that the 
        summary of benefits and coverage includes--
                    ``(A) uniform definitions of standard insurance 
                terms and medical terms (consistent with subsection 
                (g)) so that consumers may compare health insurance 
                coverage and understand the terms of coverage (or 
                exception to such coverage);
                    ``(B) a description of the coverage, including cost 
                sharing for--
                            ``(i) each of the categories of the 
                        essential health benefits described in 
                        subparagraphs (A) through (J) of section 
                        1302(b)(1) of the Patient Protection and 
                        Affordable Care Act; and
                            ``(ii) other benefits, as identified by the 
                        Secretary;
                    ``(C) the exceptions, reductions, and limitations 
                on coverage;
                    ``(D) the cost-sharing provisions, including 
                deductible, coinsurance, and co-payment obligations;
                    ``(E) the renewability and continuation of coverage 
                provisions;
                    ``(F) a coverage facts label that includes examples 
                to illustrate common benefits scenarios, including 
                pregnancy and serious or chronic medical conditions and 
                related cost sharing, such scenarios to be based on 
                recognized clinical practice guidelines;
                    ``(G) a statement of whether the plan or coverage--
                            ``(i) provides minimum essential coverage 
                        (as defined under section 5000A(f) of the 
                        Internal Revenue Code 1986); and
                            ``(ii) ensures that the plan or coverage 
                        share of the total allowed costs of benefits 
                        provided under the plan or coverage is not less 
                        than 60 percent of such costs;
                    ``(H) a statement that the outline is a summary of 
                the policy or certificate and that the coverage 
                document itself should be consulted to determine the 
                governing contractual provisions; and
                    ``(I) a contact number for the consumer to call 
                with additional questions and an Internet web address 
                where a copy of the actual individual coverage policy 
                or group certificate of coverage can be reviewed and 
                obtained.
    ``(c) Periodic Review and Updating.--The Secretary shall 
periodically review and update, as appropriate, the standards developed 
under this section.
    ``(d) Requirement To Provide.--
            ``(1) In general.--Not later than 24 months after the date 
        of enactment of the Patient Protection and Affordable Care Act, 
        each entity described in paragraph (3) shall provide, prior to 
        any enrollment restriction, a summary of benefits and coverage 
        explanation pursuant    to the standards developed by the 
        Secretary under subsection (a) to--
                    ``(A) an applicant at the time of application;
                    ``(B) an enrollee prior to the time of enrollment 
                or reenrollment, as applicable; and
                    ``(C) a policyholder or certificate holder at the 
                time of issuance of the policy or delivery of the 
                certificate.
            ``(2) Compliance.--An entity described in paragraph (3) is 
        deemed to be in compliance with this section if the summary of 
        benefits and coverage described in subsection (a) is provided 
        in paper or electronic form.
            ``(3) Entities in general.--An entity described in this 
        paragraph is--
                    ``(A) a health insurance issuer (including a group 
                health plan that is not a self-insured plan) offering 
                health insurance coverage within the United States; or
                    ``(B) in the case of a self-insured group health 
                plan, the plan sponsor or designated administrator of 
                the plan (as such terms are defined in section 3(16) of 
                the Employee Retirement Income Security Act of 1974).
            ``(4) Notice of modifications.--If a group health plan or 
        health insurance issuer makes any material modification in any 
        of the terms of the plan or coverage involved (as defined for 
        purposes of section 102 of the Employee Retirement Income 
        Security Act of 1974) that is not reflected in the most 
        recently provided summary of benefits and coverage, the plan or 
        issuer shall provide notice of such modification to enrollees 
        not later than 60 days prior to the date on which such 
        modification will become effective.
    ``(e) Preemption.--The standards developed under subsection (a) 
shall preempt any related State standards that require a summary of 
benefits and coverage that provides less information to consumers than 
that required to be provided under this section, as determined by the 
Secretary.
    ``(f) Failure To Provide.--An entity described in subsection (d)(3) 
that willfully fails to provide the information required under this 
section shall be subject to a fine of not more than $1,000 for each 
such failure. Such failure with respect to each enrollee shall 
constitute a separate offense for purposes of this subsection.
    ``(g) Development of Standard Definitions.--
            ``(1) In general.--The Secretary shall, by regulation, 
        provide for the development of standards for the definitions of 
        terms used in health insurance coverage, including the 
        insurance-related terms described in paragraph (2) and the 
        medical terms described in paragraph (3).
            ``(2) Insurance-related terms.--The insurance-related terms 
        described in this paragraph are premium, deductible, co-
        insurance, co-payment, out-of-pocket limit, preferred provider, 
        non-preferred provider, out-of-network co-payments, UCR (usual, 
        customary and reasonable) fees, excluded services, grievance 
        and appeals, and such other terms as the Secretary determines 
        are important to define so that consumers may compare health 
        insurance coverage and understand the terms of their coverage.
            ``(3) Medical terms.--The medical terms described in this 
        paragraph are hospitalization, hospital outpatient care, 
        emergency room care, physician services, prescription drug 
        coverage, durable medical equipment, home health care, skilled 
        nursing care, rehabilitation services, hospice services, 
        emergency medical transportation, and such other terms as the 
        Secretary determines are important to define so that consumers 
        may compare the medical benefits offered by health insurance 
        and understand the extent of those medical benefits (or 
        exceptions to those benefits).

``SEC. 2716. PROHIBITION OF DISCRIMINATION BASED ON SALARY.

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

``SEC. 2717. ENSURING THE QUALITY OF CARE.

    ``(a) Quality Reporting.--
            ``(1) In general.--Not later than 2 years after the date of 
        enactment of the Patient Protection and Affordable Care Act, 
        the Secretary, in consultation with experts in health care 
        quality and stakeholders, shall develop reporting requirements 
        for use by a group health plan, and a health insurance issuer 
        offering group or individual health insurance coverage, with 
        respect to plan or coverage benefits and health care provider 
        reimbursement structures that--
                    ``(A) improve health outcomes through the 
                implementation of activities such as quality reporting, 
                effective case management, care coordination, chronic 
                disease management, and medication and care compliance 
                initiatives, including through the use of the medical 
                homes model as defined for purposes of section 3602 of 
                the Patient Protection and Affordable Care Act, for 
                treatment or services under the plan or coverage;
                    ``(B) implement activities to prevent hospital 
                readmissions through a comprehensive program for 
                hospital discharge that includes patient-centered 
                education and counseling, comprehensive discharge 
                planning, and post discharge reinforcement by an 
                appropriate health care professional;
                    ``(C) implement activities to improve patient 
                safety and reduce medical errors through the 
                appropriate use of best clinical practices, evidence 
                based medicine, and health information technology under 
                the plan or coverage; and
                    ``(D) implement wellness and health promotion 
                activities.
            ``(2) Reporting requirements.--
                    ``(A) In general.--A group health plan and a health 
                insurance issuer offering group or individual health 
                insurance coverage shall annually submit to the 
                Secretary, and to enrollees under the plan or coverage, 
                a report on whether the benefits under the plan or 
                coverage satisfy the elements described in 
                subparagraphs (A) through (D) of paragraph (1).
                    ``(B) Timing of reports.--A report under 
                subparagraph (A) shall be made available to an enrollee 
                under the plan or coverage during each open enrollment 
                period.
                    ``(C) Availability of reports.--The Secretary shall 
                make reports submitted under subparagraph (A) available 
                to the public through an Internet website.
                    ``(D) Penalties.--In developing the reporting 
                requirements under paragraph (1), the Secretary may 
                develop and impose appropriate penalties for non-
                compliance with such requirements.
                    ``(E) Exceptions.--In developing the reporting 
                requirements under paragraph (1), the Secretary may 
                provide for exceptions to such requirements for group 
                health plans and health insurance issuers that 
                substantially meet the goals of this section.
    ``(b) Wellness and Prevention Programs.--For purposes of subsection 
(a)(1)(D), wellness and health promotion activities may include 
personalized wellness and prevention services, which are coordinated, 
maintained or delivered by a health care provider, a wellness and 
prevention plan manager, or a health, wellness or prevention services 
organization that conducts health risk assessments or offers ongoing 
face-to-face, telephonic or web-based intervention efforts for each of 
the program's participants, and which may include the following 
wellness and prevention efforts:
            ``(1) Smoking cessation.
            ``(2) Weight management.
            ``(3) Stress management.
            ``(4) Physical fitness.
            ``(5) Nutrition.
            ``(6) Heart disease prevention.
            ``(7) Healthy lifestyle support.
            ``(8) Diabetes prevention.
    ``(c) Regulations.--Not later than 2 years after the date of 
enactment of the Patient Protection and Affordable Care Act, the 
Secretary shall promulgate regulations that provide criteria for 
determining whether a reimbursement structure is described in 
subsection (a).
    ``(d) Study and Report.--Not later than 180 days after the date on 
which regulations are promulgated under subsection (c), the Government 
Accountability Office shall review such regulations and conduct a study 
and submit to the Committee on Health, Education, Labor, and Pensions 
of the Senate and the Committee on Energy and Commerce of the House of 
Representatives a report regarding the impact the activities under this 
section have had on the quality and cost of health care.

``SEC. 2718. BRINGING DOWN THE COST OF HEALTH CARE COVERAGE.

    ``(a) Clear Accounting for Costs.--A health insurance issuer 
offering group or individual health insurance coverage shall, with 
respect to each plan year, submit to the Secretary a report concerning 
the percentage of total premium revenue that such coverage expends--
            ``(1) on reimbursement for clinical services provided to 
        enrollees under such coverage;
            ``(2) for activities that improve health care quality; and
            ``(3) on all other non-claims costs, including an 
        explanation of the nature of such costs, and excluding State 
        taxes and licensing or regulatory fees.
The Secretary shall make reports received under this section available 
to the public on the Internet website of the Department of Health and 
Human Services.
    ``(b) Ensuring That Consumers Receive Value for Their Premium 
Payments.--
            ``(1) Requirement to provide value for premium payments.--A 
        health insurance issuer offering group or individual health 
        insurance coverage shall, with respect to each plan year, 
        provide an annual rebate to each enrollee under such coverage, 
        on a pro rata basis, in an amount that is equal to the amount 
        by which premium revenue expended by the issuer on activities 
        described in subsection (a)(3) exceeds--
                    ``(A) with respect to a health insurance issuer 
                offering coverage in the group market, 20 percent, or 
                such lower percentage as a State may by regulation 
                determine; or
                    ``(B) with respect to a health insurance issuer 
                offering coverage in the individual market, 25 percent, 
                or such lower percentage as a State may by regulation 
                determine, except that such percentage shall be 
                adjusted to the extent the Secretary determines that 
                the application of such percentage with a State may 
                destabilize the existing individual market in such 
                State.
            ``(2) Consideration in setting percentages.--In determining 
        the percentages under paragraph (1), a State shall seek to 
        ensure adequate participation by health insurance issuers, 
        competition in the health insurance market in the State, and 
        value for consumers so that premiums are used for clinical 
        services and quality improvements.
            ``(3) Termination.--The provisions of this subsection shall 
        have no force or effect after December 31, 2013.
    ``(c) Standard Hospital Charges.--Each hospital operating within 
the United States shall for each year establish (and update) and make 
public (in accordance with guidelines developed by the Secretary) a 
list of the hospital's standard charges for items and services provided 
by the hospital, including for diagnosis-related groups established 
under section 1886(d)(4) of the Social Security Act.
    ``(d) Definitions.--The Secretary, in consultation with the 
National Association of Insurance Commissions, shall establish uniform 
definitions for the activities reported under subsection (a).

``SEC. 2719. APPEALS PROCESS.

    ``A group health plan and a health insurance issuer offering group 
or individual health insurance coverage shall implement an effective 
appeals process for appeals of coverage determinations and claims, 
under which the plan or issuer shall, at a minimum--
            ``(1) have in effect an internal claims appeal process;
            ``(2) provide notice to enrollees, in a culturally and 
        linguistically appropriate manner, of available internal and 
        external appeals processes, and the availability of any 
        applicable office of health insurance consumer assistance or 
        ombudsman established under section 2793 to assist such 
        enrollees with the appeals processes;
            ``(3) allow an enrollee to review their file, to present 
        evidence and testimony as part of the appeals process, and to 
        receive continued coverage pending the outcome of the appeals 
        process; and
            ``(4) provide an external review process for such plans and 
        issuers that, at a minimum, includes the consumer protections 
        set forth in the Uniform External Review Model Act promulgated 
        by the National Association of Insurance Commissioners and is 
        binding on such plans.''.

SEC. 1002. HEALTH INSURANCE CONSUMER INFORMATION.

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

``SEC. 2793. HEALTH INSURANCE CONSUMER INFORMATION.

    ``(a) In General.--The Secretary shall award grants to States to 
enable such States (or the Exchanges operating in such States) to 
establish, expand, or provide support for--
            ``(1) offices of health insurance consumer assistance; or
            ``(2) health insurance ombudsman programs.
    ``(b) Eligibility.--
            ``(1) In general.--To be eligible to receive a grant, a 
        State shall designate an independent office of health insurance 
        consumer assistance, or an ombudsman, that, directly or in 
        coordination with State health insurance regulators and 
        consumer assistance organizations, receives and responds to 
        inquiries and complaints concerning health insurance coverage 
        with respect to Federal health insurance requirements and under 
        State law.
            ``(2) Criteria.--A State that receives a grant under this 
        section shall comply with criteria established by the Secretary 
        for carrying out activities under such grant.
    ``(c) Duties.--The office of health insurance consumer assistance 
or health insurance ombudsman shall--
            ``(1) assist with the filing of complaints and appeals, 
        including filing appeals with the internal appeal or grievance 
        process of the group health plan or health insurance issuer 
        involved and providing information about the external appeal 
        process;
            ``(2) collect, track, and quantify problems and inquiries 
        encountered by consumers;
            ``(3) educate consumers on their rights and 
        responsibilities with respect to group health plans and health 
        insurance coverage;
            ``(4) assist consumers with enrollment in a group health 
        plan or health insurance coverage by providing information, 
        referral, and assistance; and
            ``(5) resolve problems with obtaining premium tax credits 
        under section 36B of the Internal Revenue Code of 1986.
    ``(d) Data Collection.--As a condition of receiving a grant under 
subsection (a), an office of health insurance consumer assistance or 
ombudsman program shall be required to collect and report data to the 
Secretary on the types of problems and inquiries encountered by 
consumers. The Secretary shall utilize such data to identify areas 
where more enforcement action is necessary and shall share such 
information with State insurance regulators, the Secretary of Labor, 
and the Secretary of the Treasury for use in the enforcement activities 
of such agencies.
    ``(e) Funding.--
            ``(1) Initial funding.--There is hereby appropriated to the 
        Secretary, out of any funds in the Treasury not otherwise 
        appropriated, $30,000,000 for the first fiscal year for which 
        this section applies to carry out this section. Such amount 
        shall remain available without fiscal year limitation.
            ``(2) Authorization for subsequent years.--There is 
        authorized to be appropriated to the Secretary for each fiscal 
        year following the fiscal year described in paragraph (1), such 
        sums as may be necessary to carry out this section.''.

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

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

``SEC. 2794. ENSURING THAT CONSUMERS GET VALUE FOR THEIR DOLLARS.

    ``(a) Initial Premium Review Process.--
            ``(1) In general.--The Secretary, in conjunction with 
        States, shall establish a process for the annual review, 
        beginning with the 2010 plan year and subject to subsection 
        (b)(2)(A), of unreasonable increases in premiums for health 
        insurance coverage.
            ``(2) Justification and disclosure.--The process 
        established under paragraph (1) shall require health insurance 
        issuers to submit to the Secretary and the relevant State a 
        justification for an unreasonable premium increase prior to the 
        implementation of the increase. Such issuers shall prominently 
        post such information on their Internet websites. The Secretary 
        shall ensure the public disclosure of information on such 
        increases and justifications for all health insurance issuers.
    ``(b) Continuing Premium Review Process.--
            ``(1) Informing secretary of premium increase patterns.--As 
        a condition of receiving a grant under subsection (c)(1), a 
        State, through its Commissioner of Insurance, shall--
                    ``(A) provide the Secretary with information about 
                trends in premium increases in health insurance 
                coverage in premium rating areas in the State; and
                    ``(B) make recommendations, as appropriate, to the 
                State Exchange about whether particular health 
                insurance issuers should be excluded from participation 
                in the Exchange based on a pattern or practice of 
                excessive or unjustified premium increases.
            ``(2) Monitoring by secretary of premium increases.--
                    ``(A) In general.--Beginning with plan years 
                beginning in 2014, the Secretary, in conjunction with 
                the States and consistent with the provisions of 
                subsection (a)(2), shall monitor premium increases of 
                health insurance coverage offered through an Exchange 
                and outside of an Exchange.
                    ``(B) Consideration in opening exchange.--In 
                determining under section 1312(f)(2)(B) of the Patient 
                Protection and Affordable Care Act whether to offer 
                qualified health plans in the large group market 
                through an Exchange, the State shall take into account 
                any excess of premium growth outside of the Exchange as 
                compared to the rate of such growth inside the 
                Exchange.
    ``(c) Grants in Support of Process.--
            ``(1) Premium review grants during 2010 through 2014.--The 
        Secretary shall carry out a program to award grants to States 
        during the 5-year period beginning with fiscal year 2010 to 
        assist such States in carrying out subsection (a), including--
                    ``(A) in reviewing and, if appropriate under State 
                law, approving premium increases for health insurance 
                coverage; and
                    ``(B) in providing information and recommendations 
                to the Secretary under subsection (b)(1).
            ``(2) Funding.--
                    ``(A) In general.--Out of all funds in the Treasury 
                not otherwise appropriated, there are appropriated to 
                the Secretary $250,000,000, to be available for 
                expenditure for grants under paragraph (1) and 
                subparagraph (B).
                    ``(B) Further availability for insurance reform and 
                consumer protection.--If the amounts appropriated under 
                subparagraph (A) are not fully obligated under grants 
                under paragraph (1) by the end of fiscal year 2014, any 
                remaining funds shall remain available to the Secretary 
                for grants to States for planning and implementing the 
                insurance reforms and consumer protections under part 
                A.
                    ``(C) Allocation.--The Secretary shall establish a 
                formula for determining the amount of any grant to a 
                State under this subsection. Under such formula--
                            ``(i) the Secretary shall consider the 
                        number of plans of health insurance coverage 
                        offered in each State and the population of the 
                        State; and
                            ``(ii) no State qualifying for a grant 
                        under paragraph (1) shall receive less than 
                        $1,000,000, or more than $5,000,000 for a grant 
                        year.''.

SEC. 1004. EFFECTIVE DATES.

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

     Subtitle B--Immediate Actions to Preserve and Expand Coverage

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

    (a) In General.--Not later than 90 days after the date of enactment 
of this Act, the Secretary shall establish a temporary high risk health 
insurance pool program to provide health insurance coverage for 
eligible individuals during the period beginning on the date on which 
such program is established and ending on January 1, 2014.
    (b) Administration.--
            (1) In general.--The Secretary may carry out the program 
        under this section directly or through contracts to eligible 
        entities.
            (2) Eligible entities.--To be eligible for a contract under 
        paragraph (1), an entity shall--
                    (A) be a State or nonprofit private entity;
                    (B) submit to the Secretary an application at such 
                time, in such manner, and containing such information 
                as the Secretary may require; and
                    (C) agree to utilize contract funding to establish 
                and administer a qualified high risk pool for eligible 
                individuals.
            (3) Maintenance of effort.--To be eligible to enter into a 
        contract with the Secretary under this subsection, a State 
        shall agree not to reduce the annual amount the State expended 
        for the operation of one or more State high risk pools during 
        the year preceding the year in which such contract is entered 
        into.
    (c) Qualified High Risk Pool.--
            (1) In general.--Amounts made available under this section 
        shall be used to establish a qualified high risk pool that 
        meets the requirements of paragraph (2).
            (2) Requirements.--A qualified high risk pool meets the 
        requirements of this paragraph if such pool--
                    (A) provides to all eligible individuals health 
                insurance coverage that does not impose any preexisting 
                condition exclusion with respect to such coverage;
                    (B) provides health insurance coverage--
                            (i) in which the issuer's share of the 
                        total allowed costs of benefits provided under 
                        such coverage is not less than 65 percent of 
                        such costs; and
                            (ii) that has an out of pocket limit not 
                        greater than the applicable amount described in 
                        section 223(c)(2) of the Internal Revenue Code 
                        of 1986 for the year involved, except that the 
                        Secretary may modify such limit if necessary to 
                        ensure the pool meets the actuarial value limit 
                        under clause (i);
                    (C) ensures that with respect to the premium rate 
                charged for health insurance coverage offered to 
                eligible individuals through the high risk pool, such 
                rate shall--
                            (i) except as provided in clause (ii), vary 
                        only as provided for under section 2701 of the 
                        Public Health Service Act (as amended by this 
                        Act and notwithstanding the date on which such 
                        amendments take effect);
                            (ii) vary on the basis of age by a factor 
                        of not greater than 4 to 1; and
                            (iii) be established at a standard rate for 
                        a standard population; and
                    (D) meets any other requirements determined 
                appropriate by the Secretary.
    (d) Eligible Individual.--An individual shall be deemed to be an 
eligible individual for purposes of this section if such individual--
            (1) is a citizen or national of the United States or is 
        lawfully present in the United States (as determined in 
        accordance with section 1411);
            (2) has not been covered under creditable coverage (as 
        defined in section 2701(c)(1) of the Public Health Service Act 
        as in effect on the date of enactment of this Act) during the 
        6-month period prior to the date on which such individual is 
        applying for coverage through the high risk pool; and
            (3) has a pre-existing condition, as determined in a manner 
        consistent with guidance issued by the Secretary.
    (e) Protection Against Dumping Risk by Insurers.--
            (1) In general.--The Secretary shall establish criteria for 
        determining whether health insurance issuers and employment-
        based health plans have discouraged an individual from 
        remaining enrolled in prior coverage based on that individual's 
        health status.
            (2) Sanctions.--An issuer or employment-based health plan 
        shall be responsible for reimbursing the program under this 
        section for the medical expenses incurred by the program for an 
        individual who, based on criteria established by the Secretary, 
        the Secretary finds was encouraged by the issuer to disenroll 
        from health benefits coverage prior to enrolling in coverage 
        through the program. The criteria shall include at least the 
        following circumstances:
                    (A) In the case of prior coverage obtained through 
                an employer, the provision by the employer, group 
                health plan, or the issuer of money or other financial 
                consideration for disenrolling from the coverage.
                    (B) In the case of prior coverage obtained directly 
                from an issuer or under an employment-based health 
                plan--
                            (i) the provision by the issuer or plan of 
                        money or other financial consideration for 
                        disenrolling from the coverage; or
                            (ii) in the case of an individual whose 
                        premium for the prior coverage exceeded the 
                        premium required by the program (adjusted based 
                        on the age factors applied to the prior 
                        coverage)--
                                    (I) the prior coverage is a policy 
                                that is no longer being actively 
                                marketed (as defined by the Secretary) 
                                by the issuer; or
                                    (II) the prior coverage is a policy 
                                for which duration of coverage form 
                                issue or health status are factors that 
                                can be considered in determining 
                                premiums at renewal.
            (3) Construction.--Nothing in this subsection shall be 
        construed as constituting exclusive remedies for violations of 
        criteria established under paragraph (1) or as preventing 
        States from applying or enforcing such paragraph or other 
        provisions under law with respect to health insurance issuers.
    (f) Oversight.--The Secretary shall establish--
            (1) an appeals process to enable individuals to appeal a 
        determination under this section; and
            (2) procedures to protect against waste, fraud, and abuse.
    (g) Funding; Termination of Authority.--
            (1) In general.--There is appropriated to the Secretary, 
        out of any moneys in the Treasury not otherwise appropriated, 
        $5,000,000,000 to pay claims against (and the administrative 
        costs of) the high risk pool under this section that are in 
        excess of the amount of premiums collected from eligible 
        individuals enrolled in the high risk pool. Such funds shall be 
        available without fiscal year limitation.
            (2) Insufficient funds.--If the Secretary estimates for any 
        fiscal year that the aggregate amounts available for the 
        payment of the expenses of the high risk pool will be less than 
        the actual amount of such expenses, the Secretary shall make 
        such adjustments as are necessary to eliminate such deficit.
            (3) Termination of authority.--
                    (A) In general.--Except as provided in subparagraph 
                (B), coverage of eligible individuals under a high risk 
                pool in a State shall terminate on January 1, 2014.
                    (B) Transition to exchange.--The Secretary shall 
                develop procedures to provide for the transition of 
                eligible individuals enrolled in health insurance 
                coverage offered through a high risk pool established 
                under this section into qualified health plans offered 
                through an Exchange. Such procedures shall ensure that 
                there is no lapse in coverage with respect to the 
                individual and may extend coverage after the 
                termination of the risk pool involved, if the Secretary 
                determines necessary to avoid such a lapse.
            (4) Limitations.--The Secretary has the authority to stop 
        taking applications for participation in the program under this 
        section to comply with the funding limitation provided for in 
        paragraph (1).
            (5) Relation to state laws.--The standards established 
        under this section shall supersede any State law or regulation 
        (other than State licensing laws or State laws relating to plan 
        solvency) with respect to qualified high risk pools which are 
        established in accordance with this section.

SEC. 1102. REINSURANCE FOR EARLY RETIREES.

    (a) Administration.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Secretary shall establish a 
        temporary reinsurance program to provide reimbursement to 
        participating employment-based plans for a portion of the cost 
        of providing health insurance coverage to early retirees (and 
        to the eligible spouses, surviving spouses, and dependents of 
        such retirees) during the period beginning on the date on which 
        such program is established and ending on January 1, 2014.
            (2) Reference.--In this section:
                    (A) Health benefits.--The term ``health benefits'' 
                means medical, surgical, hospital, prescription drug, 
                and such other benefits as shall be determined by the 
                Secretary, whether self-funded, or delivered through 
                the purchase of insurance or otherwise.
                    (B) Employment-based plan.--The term ``employment-
                based plan'' means a group health benefits plan that--
                            (i) is--
                                    (I) maintained by one or more 
                                current or former employers (including 
                                without limitation any State or local 
                                government or political subdivision 
                                thereof), employee organization, a 
                                voluntary employees' beneficiary 
                                association, or a committee or board of 
                                individuals appointed to administer 
                                such plan; or
                                    (II) a multiemployer plan (as 
                                defined in section 3(37) of the 
                                Employee Retirement Income Security Act 
                                of 1974); and
                            (ii) provides health benefits to early 
                        retirees.
                    (C) Early retirees.--The term ``early retirees'' 
                means individuals who are age 55 and older but are not 
                eligible for coverage under title XVIII of the Social 
                Security Act, and who are not active employees of an 
                employer maintaining, or currently contributing to, the 
                employment-based plan or of any employer that has made 
                substantial contributions to fund such plan.
    (b) Participation.--
            (1) Employment-based plan eligibility.--A participating 
        employment-based plan is an employment-based plan that--
                    (A) meets the requirements of paragraph (2) with 
                respect to health benefits provided under the plan; and
                    (B) submits to the Secretary an application for 
                participation in the program, at such time, in such 
                manner, and containing such information as the 
                Secretary shall require.
            (2) Employment-based health benefits.--An employment-based 
        plan meets the requirements of this paragraph if the plan--
                    (A) implements programs and procedures to generate 
                cost-savings with respect to participants with chronic 
                and high-cost conditions;
                    (B) provides documentation of the actual cost of 
                medical claims involved; and
                    (C) is certified by the Secretary.
    (c) Payments.--
            (1) Submission of claims.--
                    (A) In general.--A participating employment-based 
                plan shall submit claims for reimbursement to the 
                Secretary which shall contain documentation of the 
                actual costs of the items and services for which each 
                claim is being submitted.
                    (B) Basis for claims.--Claims submitted under 
                subparagraph (A) shall be based on the actual amount 
                expended by the participating employment-based plan 
                involved within the plan year for the health benefits 
                provided to an early retiree or the spouse, surviving 
                spouse, or dependent of such retiree. In determining 
                the amount of a claim for purposes of this subsection, 
                the participating employment-based plan shall take into 
                account any negotiated price concessions (such as 
                discounts, direct or indirect subsidies, rebates, and 
                direct or indirect remunerations) obtained by such plan 
                with respect to such health benefit. For purposes of 
                determining the amount of any such claim, the costs 
                paid by the early retiree or the retiree's spouse, 
                surviving spouse, or dependent in the form of 
                deductibles, co-payments, or co-insurance shall be 
                included in the amounts paid by the participating 
                employment-based plan.
            (2) Program payments.--If the Secretary determines that a 
        participating employment-based plan has submitted a valid claim 
        under paragraph (1), the Secretary shall reimburse such plan 
        for 80 percent of that portion of the costs attributable to 
        such claim that exceed $15,000, subject to the limits contained 
        in paragraph (3).
            (3) Limit.--To be eligible for reimbursement under the 
        program, a claim submitted by a participating employment-based 
        plan shall not be less than $15,000 nor greater than $90,000. 
        Such amounts shall be adjusted each fiscal year based on the 
        percentage increase in the Medical Care Component of the 
        Consumer Price Index for all urban consumers (rounded to the 
        nearest multiple of $1,000) for the year involved.
            (4) Use of payments.--Amounts paid to a participating 
        employment-based plan under this subsection shall be used to 
        lower costs for the plan. Such payments may be used to reduce 
        premium costs for an entity described in subsection 
        (a)(2)(B)(i) or to reduce premium contributions, co-payments, 
        deductibles, co-insurance, or other out-of-pocket costs for 
        plan participants. Such payments shall not be used as general 
        revenues for an entity described in subsection (a)(2)(B)(i). 
        The Secretary shall develop a mechanism to monitor the 
        appropriate use of such payments by such entities.
            (5) Payments not treated as income.--Payments received 
        under this subsection shall not be included in determining the 
        gross income of an entity described in subsection (a)(2)(B)(i) 
        that is maintaining or currently contributing to a 
        participating employment-based plan.
            (6) Appeals.--The Secretary shall establish--
                    (A) an appeals process to permit participating 
                employment-based plans to appeal a determination of the 
                Secretary with respect to claims submitted under this 
                section; and
                    (B) procedures to protect against fraud, waste, and 
                abuse under the program.
    (d) Audits.--The Secretary shall conduct annual audits of claims 
data submitted by participating employment-based plans under this 
section to ensure that such plans are in compliance with the 
requirements of this section.
    (e) Funding.--There is appropriated to the Secretary, out of any 
moneys in the Treasury not otherwise appropriated, $5,000,000,000 to 
carry out the program under this section. Such funds shall be available 
without fiscal year limitation.
    (f) Limitation.--The Secretary has the authority to stop taking 
applications for participation in the program based on the availability 
of funding under subsection (e).

SEC. 1103. IMMEDIATE INFORMATION THAT ALLOWS CONSUMERS TO IDENTIFY 
              AFFORDABLE COVERAGE OPTIONS.

    (a) Internet Portal to Affordable Coverage Options.--
            (1) Immediate establishment.--Not later than July 1, 2010, 
        the Secretary, in consultation with the States, shall establish 
        a mechanism, including an Internet website, through which a 
        resident of any State may identify affordable health insurance 
        coverage options in that State.
            (2) Connecting to affordable coverage.--An Internet website 
        established under paragraph (1) shall, to the extent 
        practicable, provide ways for residents of any State to receive 
        information on at least the following coverage options:
                    (A) Health insurance coverage offered by health 
                insurance issuers, other than coverage that provides 
                reimbursement only for the treatment or mitigation of--
                            (i) a single disease or condition; or
                            (ii) an unreasonably limited set of 
                        diseases or conditions (as determined by the 
                        Secretary);
                    (B) Medicaid coverage under title XIX of the Social 
                Security Act.
                    (C) Coverage under title XXI of the Social Security 
                Act.
                    (D) A State health benefits high risk pool, to the 
                extent that such high risk pool is offered in such 
                State; and
                    (E) Coverage under a high risk pool under section 
                1101.
    (b) Enhancing Comparative Purchasing Options.--
            (1) In general.--Not later than 60 days after the date of 
        enactment of this Act, the Secretary shall develop a 
        standardized format to be used for the presentation of 
        information relating to the coverage options described in 
        subsection (a)(2). Such format shall, at a minimum, require the 
        inclusion of information on the percentage of total premium 
        revenue expended on nonclinical costs (as reported under 
        section 2718(a) of the Public Health Service Act), eligibility, 
        availability, premium rates, and cost sharing with respect to 
        such coverage options and be consistent with the standards 
        adopted for the uniform explanation of coverage as provided for 
        in section 2715 of the Public Health Service Act.
            (2) Use of format.--The Secretary shall utilize the format 
        developed under paragraph (1) in compiling information 
        concerning coverage options on the Internet website established 
        under subsection (a).
    (c) Authority To Contract.--The Secretary may carry out this 
section through contracts entered into with qualified entities.

SEC. 1104. ADMINISTRATIVE SIMPLIFICATION.

    (a) Purpose of Administrative Simplification.--Section 261 of the 
Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. 
1320d note) is amended--
            (1) by inserting ``uniform'' before ``standards''; and
            (2) by inserting ``and to reduce the clerical burden on 
        patients, health care providers, and health plans'' before the 
        period at the end.
    (b) Operating Rules for Health Information Transactions.--
            (1) Definition of operating rules.--Section 1171 of the 
        Social Security Act (42 U.S.C. 1320d) is amended by adding at 
        the end the following:
            ``(9) Operating rules.--The term `operating rules' means 
        the necessary business rules and guidelines for the electronic 
        exchange of information that are not defined by a standard or 
        its implementation specifications as adopted for purposes of 
        this part.''.
            (2) Transaction standards; operating rules and 
        compliance.--Section 1173 of the Social Security Act (42 U.S.C. 
        1320d-2) is amended--
                    (A) in subsection (a)(2), by adding at the end the 
                following new subparagraph:
                    ``(J) Electronic funds transfers.'';
                    (B) in subsection (a), by adding at the end the 
                following new paragraph:
            ``(4) Requirements for financial and administrative 
        transactions.--
                    ``(A) In general.--The standards and associated 
                operating rules adopted by the Secretary shall--
                            ``(i) to the extent feasible and 
                        appropriate, enable determination of an 
                        individual's eligibility and financial 
                        responsibility for specific services prior to 
                        or at the point of care;
                            ``(ii) be comprehensive, requiring minimal 
                        augmentation by paper or other communications;
                            ``(iii) provide for timely acknowledgment, 
                        response, and status reporting that supports a 
                        transparent claims and denial management 
                        process (including adjudication and appeals); 
                        and
                            ``(iv) describe all data elements 
                        (including reason and remark codes) in 
                        unambiguous terms, require that such data 
                        elements be required or conditioned upon set 
                        values in other fields, and prohibit additional 
                        conditions (except where necessary to implement 
                        State or Federal law, or to protect against 
                        fraud and abuse).
                    ``(B) Reduction of clerical burden.--In adopting 
                standards and operating rules for the transactions 
                referred to under paragraph (1), the Secretary shall 
                seek to reduce the number and complexity of forms 
                (including paper and electronic forms) and data entry 
                required by patients and providers.''; and
                    (C) by adding at the end the following new 
                subsections:
    ``(g) Operating Rules.--
            ``(1) In general.--The Secretary shall adopt a single set 
        of operating rules for each transaction referred to under 
        subsection (a)(1) with the goal of creating as much uniformity 
        in the implementation of the electronic standards as possible. 
        Such operating rules shall be consensus-based and reflect the 
        necessary business rules affecting health plans and health care 
        providers and the manner in which they operate pursuant to 
        standards issued under Health Insurance Portability and 
        Accountability Act of 1996.
            ``(2) Operating rules development.--In adopting operating 
        rules under this subsection, the Secretary shall consider 
        recommendations for operating rules developed by a qualified 
        nonprofit entity that meets the following requirements:
                    ``(A) The entity focuses its mission on 
                administrative simplification.
                    ``(B) The entity demonstrates a multi-stakeholder 
                and consensus-based process for development of 
                operating rules, including representation by or 
                participation from health plans, health care providers, 
                vendors, relevant Federal agencies, and other standard 
                development organizations.
                    ``(C) The entity has a public set of guiding 
                principles that ensure the operating rules and process 
                are open and transparent, and supports 
                nondiscrimination and conflict of interest policies 
                that demonstrate a commitment to open, fair, and 
                nondiscriminatory practices.
                    ``(D) The entity builds on the transaction 
                standards issued under Health Insurance Portability and 
                Accountability Act of 1996.
                    ``(E) The entity allows for public review and 
                updates of the operating rules.
            ``(3) Review and recommendations.--The National Committee 
        on Vital and Health Statistics shall--
                    ``(A) advise the Secretary as to whether a 
                nonprofit entity meets the requirements under paragraph 
                (2);
                    ``(B) review the operating rules developed and 
                recommended by such nonprofit entity;
                    ``(C) determine whether such operating rules 
                represent a consensus view of the health care 
                stakeholders and are consistent with and do not 
                conflict with other existing standards;
                    ``(D) evaluate whether such operating rules are 
                consistent with electronic standards adopted for health 
                information technology; and
                    ``(E) submit to the Secretary a recommendation as 
                to whether the Secretary should adopt such operating 
                rules.
            ``(4) Implementation.--
                    ``(A) In general.--The Secretary shall adopt 
                operating rules under this subsection, by regulation in 
                accordance with subparagraph (C), following 
                consideration of the operating rules developed by the 
                non-profit entity described in paragraph (2) and the 
                recommendation submitted by the National Committee on 
                Vital and Health Statistics under paragraph (3)(E) and 
                having ensured consultation with providers.
                    ``(B) Adoption requirements; effective dates.--
                            ``(i) Eligibility for a health plan and 
                        health claim status.--The set of operating 
                        rules for eligibility for a health plan and 
                        health claim status transactions shall be 
                        adopted not later than July 1, 2011, in a 
                        manner ensuring that such operating rules are 
                        effective not later than January 1, 2013, and 
                        may allow for the use of a machine readable 
                        identification card.
                            ``(ii) Electronic funds transfers and 
                        health care payment and remittance advice.--The 
                        set of operating rules for electronic funds 
                        transfers and health care payment and 
                        remittance advice transactions shall--
                                    ``(I) allow for automated 
                                reconciliation of the electronic 
                                payment with the remittance advice; and
                                    ``(II) be adopted not later than 
                                July 1, 2012, in a manner ensuring that 
                                such operating rules are effective not 
                                later than January 1, 2014.
                            ``(iii) Health claims or equivalent 
                        encounter information, enrollment and 
                        disenrollment in a health plan, health plan 
                        premium payments, referral certification and 
                        authorization.--The set of operating rules for 
                        health claims or equivalent encounter 
                        information, enrollment and disenrollment in a 
                        health plan, health plan premium payments, and 
                        referral certification and authorization 
                        transactions shall be adopted not later than 
                        July 1, 2014, in a manner ensuring that such 
                        operating rules are effective not later than 
                        January 1, 2016.
                    ``(C) Expedited rulemaking.--The Secretary shall 
                promulgate an interim final rule applying any standard 
                or operating rule recommended by the National Committee 
                on Vital and Health Statistics pursuant to paragraph 
                (3). The Secretary shall accept and consider public 
                comments on any interim final rule published under this 
                subparagraph for 60 days after the date of such 
                publication.
    ``(h) Compliance.--
            ``(1) Health plan certification.--
                    ``(A) Eligibility for a health plan, health claim 
                status, electronic funds transfers, health care payment 
                and remittance advice.--Not later than December 31, 
                2013, a health plan shall file a statement with the 
                Secretary, in such form as the Secretary may require, 
                certifying that the data and information systems for 
                such plan are in compliance with any applicable 
                standards (as described under paragraph (7) of section 
                1171) and associated operating rules (as described 
                under paragraph (9) of such section) for electronic 
                funds transfers, eligibility for a health plan, health 
                claim status, and health care payment and remittance 
                advice, respectively.
                    ``(B) Health claims or equivalent encounter 
                information, enrollment and disenrollment in a health 
                plan, health plan premium payments, health claims 
                attachments, referral certification and 
                authorization.--Not later than December 31, 2015, a 
                health plan shall file a statement with the Secretary, 
                in such form as the Secretary may require, certifying 
                that the data and information systems for such plan are 
                in compliance with any applicable standards and 
                associated operating rules for health claims or 
                equivalent encounter information, enrollment and 
                disenrollment in a health plan, health plan premium 
                payments, health claims attachments, and referral 
                certification and authorization, respectively. A health 
                plan shall provide the same level of documentation to 
                certify compliance with such transactions as is 
                required to certify compliance with the transactions 
                specified in subparagraph (A).
            ``(2) Documentation of compliance.--A health plan shall 
        provide the Secretary, in such form as the Secretary may 
        require, with adequate documentation of compliance with the 
        standards and operating rules described under paragraph (1). A 
        health plan shall not be considered to have provided adequate 
        documentation and shall not be certified as being in compliance 
        with such standards, unless the health plan--
                    ``(A) demonstrates to the Secretary that the plan 
                conducts the electronic transactions specified in 
                paragraph (1) in a manner that fully complies with the 
                regulations of the Secretary; and
                    ``(B) provides documentation showing that the plan 
                has completed end-to-end testing for such transactions 
                with their partners, such as hospitals and physicians.
            ``(3) Service contracts.--A health plan shall be required 
        to ensure that any entities that provide services pursuant to a 
        contract with such health plan shall comply with any applicable 
        certification and compliance requirements (and provide the 
        Secretary with adequate documentation of such compliance) under 
        this subsection.
            ``(4) Certification by outside entity.--The Secretary may 
        designate independent, outside entities to certify that a 
        health plan has complied with the requirements under this 
        subsection, provided that the certification standards employed 
        by such entities are in accordance with any standards or 
        operating rules issued by the Secretary.
            ``(5) Compliance with revised standards and operating 
        rules.--
                    ``(A) In general.--A health plan (including 
                entities described under paragraph (3)) shall file a 
                statement with the Secretary, in such form as the 
                Secretary may require, certifying that the data and 
                information systems for such plan are in compliance 
                with any applicable revised standards and associated 
                operating rules under this subsection for any interim 
                final rule promulgated by the Secretary under 
                subsection (i) that--
                            ``(i) amends any standard or operating rule 
                        described under paragraph (1) of this 
                        subsection; or
                            ``(ii) establishes a standard (as described 
                        under subsection (a)(1)(B)) or associated 
                        operating rules (as described under subsection 
                        (i)(5)) for any other financial and 
                        administrative transactions.
                    ``(B) Date of compliance.--A health plan shall 
                comply with such requirements not later than the 
                effective date of the applicable standard or operating 
                rule.
            ``(6) Audits of health plans.--The Secretary shall conduct 
        periodic audits to ensure that health plans (including entities 
        described under paragraph (3)) are in compliance with any 
        standards and operating rules that are described under 
        paragraph (1) or subsection (i)(5).
    ``(i) Review and Amendment of Standards and Operating Rules.--
            ``(1) Establishment.--Not later than January 1, 2014, the 
        Secretary shall establish a review committee (as described 
        under paragraph (4)).
            ``(2) Evaluations and reports.--
                    ``(A) Hearings.--Not later than April 1, 2014, and 
                not less than biennially thereafter, the Secretary, 
                acting through the review committee, shall conduct 
                hearings to evaluate and review the adopted standards 
                and operating rules established under this section.
                    ``(B) Report.--Not later than July 1, 2014, and not 
                less than biennially thereafter, the review committee 
                shall provide recommendations for updating and 
                improving such standards and operating rules. The 
                review committee shall recommend a single set of 
                operating rules per transaction standard and maintain 
                the goal of creating as much uniformity as possible in 
                the implementation of the electronic standards.
            ``(3) Interim final rulemaking.--
                    ``(A) In general.--Any recommendations to amend 
                adopted standards and operating rules that have been 
                approved by the review committee and reported to the 
                Secretary under paragraph (2)(B) shall be adopted by 
                the Secretary through promulgation of an interim final 
                rule not later than 90 days after receipt of the 
                committee's report.
                    ``(B) Public comment.--
                            ``(i) Public comment period.--The Secretary 
                        shall accept and consider public comments on 
                        any interim final rule published under this 
                        paragraph for 60 days after the date of such 
                        publication.
                            ``(ii) Effective date.--The effective date 
                        of any amendment to existing standards or 
                        operating rules that is adopted through an 
                        interim final rule published under this 
                        paragraph shall be 25 months following the 
                        close of such public comment period.
            ``(4) Review committee.--
                    ``(A) Definition.--For the purposes of this 
                subsection, the term `review committee' means a 
                committee chartered by or within the Department of 
                Health and Human services that has been designated by 
                the Secretary to carry out this subsection, including--
                            ``(i) the National Committee on Vital and 
                        Health Statistics; or
                            ``(ii) any appropriate committee as 
                        determined by the Secretary.
                    ``(B) Coordination of hit standards.--In developing 
                recommendations under this subsection, the review 
                committee shall ensure coordination, as appropriate, 
                with the standards that support the certified 
                electronic health record technology approved by the 
                Office of the National Coordinator for Health 
                Information Technology.
            ``(5) Operating rules for other standards adopted by the 
        secretary.--The Secretary shall adopt a single set of operating 
        rules (pursuant to the process described under subsection (g)) 
        for any transaction for which a standard had been adopted 
        pursuant to subsection (a)(1)(B).
    ``(j) Penalties.--
            ``(1) Penalty fee.--
                    ``(A) In general.--Not later than April 1, 2014, 
                and annually thereafter, the Secretary shall assess a 
                penalty fee (as determined under subparagraph (B)) 
                against a health plan that has failed to meet the 
                requirements under subsection (h) with respect to 
                certification and documentation of compliance with--
                            ``(i) the standards and associated 
                        operating rules described under paragraph (1) 
                        of such subsection; and
                            ``(ii) a standard (as described under 
                        subsection (a)(1)(B)) and associated operating 
                        rules (as described under subsection (i)(5)) 
                        for any other financial and administrative 
                        transactions.
                    ``(B) Fee amount.--Subject to subparagraphs (C), 
                (D), and (E), the Secretary shall assess a penalty fee 
                against a health plan in the amount of $1 per covered 
                life until certification is complete. The penalty shall 
                be assessed per person covered by the plan for which 
                its data systems for major medical policies are not in 
                compliance and shall be imposed against the health plan 
                for each day that the plan is not in compliance with 
                the requirements under subsection (h).
                    ``(C) Additional penalty for misrepresentation.--A 
                health plan that knowingly provides inaccurate or 
                incomplete information in a statement of certification 
                or documentation of compliance under subsection (h) 
                shall be subject to a penalty fee that is double the 
                amount that would otherwise be imposed under this 
                subsection.
                    ``(D) Annual fee increase.--The amount of the 
                penalty fee imposed under this subsection shall be 
                increased on an annual basis by the annual percentage 
                increase in total national health care expenditures, as 
                determined by the Secretary.
                    ``(E) Penalty limit.--A penalty fee assessed 
                against a health plan under this subsection shall not 
                exceed, on an annual basis--
                            ``(i) an amount equal to $20 per covered 
                        life under such plan; or
                            ``(ii) an amount equal to $40 per covered 
                        life under the plan if such plan has knowingly 
                        provided inaccurate or incomplete information 
                        (as described under subparagraph (C)).
                    ``(F) Determination of covered individuals.--The 
                Secretary shall determine the number of covered lives 
                under a health plan based upon the most recent 
                statements and filings that have been submitted by such 
                plan to the Securities and Exchange Commission.
            ``(2) Notice and dispute procedure.--The Secretary shall 
        establish a procedure for assessment of penalty fees under this 
        subsection that provides a health plan with reasonable notice 
        and a dispute resolution procedure prior to provision of a 
        notice of assessment by the Secretary of the Treasury (as 
        described under paragraph (4)(B)).
            ``(3) Penalty fee report.--Not later than May 1, 2014, and 
        annually thereafter, the Secretary shall provide the Secretary 
        of the Treasury with a report identifying those health plans 
        that have been assessed a penalty fee under this subsection.
            ``(4) Collection of penalty fee.--
                    ``(A) In general.--The Secretary of the Treasury, 
                acting through the Financial Management Service, shall 
                administer the collection of penalty fees from health 
                plans that have been identified by the Secretary in the 
                penalty fee report provided under paragraph (3).
                    ``(B) Notice.--Not later than August 1, 2014, and 
                annually thereafter, the Secretary of the Treasury 
                shall provide notice to each health plan that has been 
                assessed a penalty fee by the Secretary under this 
                subsection. Such notice shall include the amount of the 
                penalty fee assessed by the Secretary and the due date 
                for payment of such fee to the Secretary of the 
                Treasury (as described in subparagraph (C)).
                    ``(C) Payment due date.--Payment by a health plan 
                for a penalty fee assessed under this subsection shall 
                be made to the Secretary of the Treasury not later than 
                November 1, 2014, and annually thereafter.
                    ``(D) Unpaid penalty fees.--Any amount of a penalty 
                fee assessed against a health plan under this 
                subsection for which payment has not been made by the 
                due date provided under subparagraph (C) shall be--
                            ``(i) increased by the interest accrued on 
                        such amount, as determined pursuant to the 
                        underpayment rate established under section 
                        6621 of the Internal Revenue Code of 1986; and
                            ``(ii) treated as a past-due, legally 
                        enforceable debt owed to a Federal agency for 
                        purposes of section 6402(d) of the Internal 
                        Revenue Code of 1986.
                    ``(E) Administrative fees.--Any fee charged or 
                allocated for collection activities conducted by the 
                Financial Management Service will be passed on to a 
                health plan on a pro-rata basis and added to any 
                penalty fee collected from the plan.''.
    (c) Promulgation of Rules.--
            (1) Unique health plan identifier.--The Secretary shall 
        promulgate a final rule to establish a unique health plan 
        identifier (as described in section 1173(b) of the Social 
        Security Act (42 U.S.C. 1320d-2(b))) based on the input of the 
        National Committee on Vital and Health Statistics. The 
        Secretary may do so on an interim final basis and such rule 
        shall be effective not later than October 1, 2012.
            (2) Electronic funds transfer.--The Secretary shall 
        promulgate a final rule to establish a standard for electronic 
        funds transfers (as described in section 1173(a)(2)(J) of the 
        Social Security Act, as added by subsection (b)(2)(A)). The 
        Secretary may do so on an interim final basis and shall adopt 
        such standard not later than January 1, 2012, in a manner 
        ensuring that such standard is effective not later than January 
        1, 2014.
            (3) Health claims attachments.--The Secretary shall 
        promulgate a final rule to establish a transaction standard and 
        a single set of associated operating rules for health claims 
        attachments (as described in section 1173(a)(2)(B) of the 
        Social Security Act (42 U.S.C. 1320d-2(a)(2)(B))) that is 
        consistent with the X12 Version 5010 transaction standards. The 
        Secretary may do so on an interim final basis and shall adopt a 
        transaction standard and a single set of associated operating 
        rules not later than January 1, 2014, in a manner ensuring that 
        such standard is effective not later than January 1, 2016.
    (d) Expansion of Electronic Transactions in Medicare.--Section 
1862(a) of the Social Security Act (42 U.S.C. 1395y(a)) is amended--
            (1) in paragraph (23), by striking the ``or'' at the end;
            (2) in paragraph (24), by striking the period and inserting 
        ``; or''; and
            (3) by inserting after paragraph (24) the following new 
        paragraph:
            ``(25) not later than January 1, 2014, for which the 
        payment is other than by electronic funds transfer (EFT) or an 
        electronic remittance in a form as specified in ASC X12 835 
        Health Care Payment and Remittance Advice or subsequent 
        standard.''.

SEC. 1105. EFFECTIVE DATE.

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

    Subtitle C--Quality Health Insurance Coverage for All Americans

                PART I--HEALTH INSURANCE MARKET REFORMS

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

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

                     ``Subpart I--General Reform'';

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

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

    ``(a) In General.--A group health plan and a health insurance 
issuer offering group or individual health insurance coverage may not 
impose any preexisting condition exclusion with respect to such plan or 
coverage.''; and
            (B) by transferring such section (as amended by 
        subparagraph (A)) so as to appear after the section 2703 added 
        by paragraph (4);
            (3)(A) in section 2702 (42 U.S.C. 300gg-1)--
                    (i) by striking the section heading and all that 
                follows through subsection (a);
                    (ii) in subsection (b)--
                            (I) by striking ``health insurance issuer 
                        offering health insurance coverage in 
                        connection with a group health plan'' each 
                        place that such appears and inserting ``health 
                        insurance issuer offering group or individual 
                        health insurance coverage''; and
                            (II) in paragraph (2)(A)--
                                    (aa) by inserting ``or individual'' 
                                after ``employer''; and
                                    (bb) by inserting ``or individual 
                                health coverage, as the case may be'' 
                                before the semicolon; and
                    (iii) in subsection (e)--
                            (I) by striking ``(a)(1)(F)'' and inserting 
                        ``(a)(6)'';
                            (II) by striking ``2701'' and inserting 
                        ``2704''; and
                            (III) by striking ``2721(a)'' and inserting 
                        ``2735(a)''; and
                    (B) by transferring such section (as amended by 
                subparagraph (A)) to appear after section 2705(a) as 
                added by paragraph (4); and
            (4) by inserting after the subpart heading (as added by 
        paragraph (1)) the following:

``SEC. 2701. FAIR HEALTH INSURANCE PREMIUMS.

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

``SEC. 2702. GUARANTEED AVAILABILITY OF COVERAGE.

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

``SEC. 2703. GUARANTEED RENEWABILITY OF COVERAGE.

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

``SEC. 2705. PROHIBITING DISCRIMINATION AGAINST INDIVIDUAL PARTICIPANTS 
              AND BENEFICIARIES BASED ON HEALTH STATUS.

    ``(a) In General.--A group health plan and a health insurance 
issuer offering group or individual health insurance coverage may not 
establish rules for eligibility (including continued eligibility) of 
any individual to enroll under the terms of the plan or coverage based 
on any of the following health status-related factors in relation to 
the individual or a dependent of the individual:
            ``(1) Health status.
            ``(2) Medical condition (including both physical and mental 
        illnesses).
            ``(3) Claims experience.
            ``(4) Receipt of health care.
            ``(5) Medical history.
            ``(6) Genetic information.
            ``(7) Evidence of insurability (including conditions 
        arising out of acts of domestic violence).
            ``(8) Disability.
            ``(9) Any other health status-related factor determined 
        appropriate by the Secretary.
    ``(j) Programs of Health Promotion or Disease Prevention.--
            ``(1) General provisions.--
                    ``(A) General rule.--For purposes of subsection 
                (b)(2)(B), a program of health promotion or disease 
                prevention (referred to in this subsection as a 
                `wellness program') shall be a program offered by an 
                employer that is designed to promote health or prevent 
                disease that meets the applicable requirements of this 
                subsection.
                    ``(B) No conditions based on health status 
                factor.--If none of the conditions for obtaining a 
                premium discount or rebate or other reward for 
                participation in a wellness program is based on an 
                individual satisfying a standard that is related to a 
                health status factor, such wellness program shall not 
                violate this section if participation in the program is 
                made available to all similarly situated individuals 
                and the requirements of paragraph (2) are complied 
                with.
                    ``(C) Conditions based on health status factor.--If 
                any of the conditions for obtaining a premium discount 
                or rebate or other reward for participation in a 
                wellness program is based on an individual satisfying a 
                standard that is related to a health status factor, 
                such wellness program shall not violate this section if 
                the requirements of paragraph (3) are complied with.
            ``(2) Wellness programs not subject to requirements.--If 
        none of the conditions for obtaining a premium discount or 
        rebate or other reward under a wellness program as described in 
        paragraph (1)(B) are based on an individual satisfying a 
        standard that is related to a health status factor (or if such 
        a wellness program does not provide such a reward), the 
        wellness program shall not violate this section if 
        participation in the program is made available to all similarly 
        situated individuals. The following programs shall not have to 
        comply with the requirements of paragraph (3) if participation 
        in the program is made available to all similarly situated 
        individuals:
                    ``(A) A program that reimburses all or part of the 
                cost for memberships in a fitness center.
                    ``(B) A diagnostic testing program that provides a 
                reward for participation and does not base any part of 
                the reward on outcomes.
                    ``(C) A program that encourages preventive care 
                related to a health condition through the waiver of the 
                copayment or deductible requirement under group health 
                plan for the costs of certain items or services related 
                to a health condition (such as prenatal care or well-
                baby visits).
                    ``(D) A program that reimburses individuals for the 
                costs of smoking cessation programs without regard to 
                whether the individual quits smoking.
                    ``(E) A program that provides a reward to 
                individuals for attending a periodic health education 
                seminar.
            ``(3) Wellness programs subject to requirements.--If any of 
        the conditions for obtaining a premium discount, rebate, or 
        reward under a wellness program as described in paragraph 
        (1)(C) is based on an individual satisfying a standard that is 
        related to a health status factor, the wellness program shall 
        not violate this section if the following requirements are 
        complied with:
                    ``(A) The reward for the wellness program, together 
                with the reward for other wellness programs with 
                respect to the plan that requires satisfaction of a 
                standard related to a health status factor, shall not 
                exceed 30 percent of the cost of employee-only coverage 
                under the plan. If, in addition to employees or 
                individuals, any class of dependents (such as spouses 
                or spouses and dependent children) may participate 
                fully in the wellness program, such reward shall not 
                exceed 30 percent of the cost of the coverage in which 
                an employee or individual and any dependents are 
                enrolled. For purposes of this paragraph, the cost of 
                coverage shall be determined based on the total amount 
                of employer and employee contributions for the benefit 
                package under which the employee is (or the employee 
                and any dependents are) receiving coverage. A reward 
                may be in the form of a discount or rebate of a premium 
                or contribution, a waiver of all or part of a cost-
                sharing mechanism (such as deductibles, copayments, or 
                coinsurance), the absence of a surcharge, or the value 
                of a benefit that would otherwise not be provided under 
                the plan. The Secretaries of Labor, Health and Human 
                Services, and the Treasury may increase the reward 
                available under this subparagraph to up to 50 percent 
                of the cost of coverage if the Secretaries determine 
                that such an increase is appropriate.
                    ``(B) The wellness program shall be reasonably 
                designed to promote health or prevent disease. A 
                program complies with the preceding sentence if the 
                program has a reasonable chance of improving the health 
                of, or preventing disease in, participating individuals 
                and it is not overly burdensome, is not a subterfuge 
                for discriminating based on a health status factor, and 
                is not highly suspect in the method chosen to promote 
                health or prevent disease.
                    ``(C) The plan shall give individuals eligible for 
                the program the opportunity to qualify for the reward 
                under the program at least once each year.
                    ``(D) The full reward under the wellness program 
                shall be made available to all similarly situated 
                individuals. For such purpose, among other things:
                            ``(i) The reward is not available to all 
                        similarly situated individuals for a period 
                        unless the wellness program allows--
                                    ``(I) for a reasonable alternative 
                                standard (or waiver of the otherwise 
                                applicable standard) for obtaining the 
                                reward for any individual for whom, for 
                                that period, it is unreasonably 
                                difficult due to a medical condition to 
                                satisfy the otherwise applicable 
                                standard; and
                                    ``(II) for a reasonable alternative 
                                standard (or waiver of the otherwise 
                                applicable standard) for obtaining the 
                                reward for any individual for whom, for 
                                that period, it is medically 
                                inadvisable to attempt to satisfy the 
                                otherwise applicable standard.
                            ``(ii) If reasonable under the 
                        circumstances, the plan or issuer may seek 
                        verification, such as a statement from an 
                        individual's physician, that a health status 
                        factor makes it unreasonably difficult or 
                        medically inadvisable for the individual to 
                        satisfy or attempt to satisfy the otherwise 
                        applicable standard.
                    ``(E) The plan or issuer involved shall disclose in 
                all plan materials describing the terms of the wellness 
                program the availability of a reasonable alternative 
                standard (or the possibility of waiver of the otherwise 
                applicable standard) required under subparagraph (D). 
                If plan materials disclose that such a program is 
                available, without describing its terms, the disclosure 
                under this subparagraph shall not be required.
    ``(k) Existing Programs.--Nothing in this section shall prohibit a 
program of health promotion or disease prevention that was established 
prior to the date of enactment of this section and applied with all 
applicable regulations, and that is operating on such date, from 
continuing to be carried out for as long as such regulations remain in 
effect.
    ``(l) Wellness Program Demonstration Project.--
            ``(1) In general.--Not later than July 1, 2014, the 
        Secretary, in consultation with the Secretary of the Treasury 
        and the Secretary of Labor, shall establish a 10-State 
        demonstration project under which participating States shall 
        apply the provisions of subsection (j) to programs of health 
        promotion offered by a health insurance issuer that offers 
        health insurance coverage in the individual market in such 
        State.
            ``(2) Expansion of demonstration project.--If the 
        Secretary, in consultation with the Secretary of the Treasury 
        and the Secretary of Labor, determines that the demonstration 
        project described in paragraph (1) is effective, such 
        Secretaries may, beginning on July 1, 2017 expand such 
        demonstration project to include additional participating 
        States.
            ``(3) Requirements.--
                    ``(A) Maintenance of coverage.--The Secretary, in 
                consultation with the Secretary of the Treasury and the 
                Secretary of Labor, shall not approve the participation 
                of a State in the demonstration project under this 
                section unless the Secretaries determine that the 
                State's project is designed in a manner that--
                            ``(i) will not result in any decrease in 
                        coverage; and
                            ``(ii) will not increase the cost to the 
                        Federal Government in providing credits under 
                        section 36B of the Internal Revenue Code of 
                        1986 or cost-sharing assistance under section 
                        1402 of the Patient Protection and Affordable 
                        Care Act.
                    ``(B) Other requirements.--States that participate 
                in the demonstration project under this subsection--
                            ``(i) may permit premium discounts or 
                        rebates or the modification of otherwise 
                        applicable copayments or deductibles for 
                        adherence to, or participation in, a reasonably 
                        designed program of health promotion and 
                        disease prevention;
                            ``(ii) shall ensure that requirements of 
                        consumer protection are met in programs of 
                        health promotion in the individual market;
                            ``(iii) shall require verification from 
                        health insurance issuers that offer health 
                        insurance coverage in the individual market of 
                        such State that premium discounts--
                                    ``(I) do not create undue burdens 
                                for individuals insured in the 
                                individual market;
                                    ``(II) do not lead to cost 
                                shifting; and
                                    ``(III) are not a subterfuge for 
                                discrimination;
                            ``(iv) shall ensure that consumer data is 
                        protected in accordance with the requirements 
                        of section 264(c) of the Health Insurance 
                        Portability and Accountability Act of 1996 (42 
                        U.S.C. 1320d-2 note); and
                            ``(v) shall ensure and demonstrate to the 
                        satisfaction of the Secretary that the 
                        discounts or other rewards provided under the 
                        project reflect the expected level of 
                        participation in the wellness program involved 
                        and the anticipated effect the program will 
                        have on utilization or medical claim costs.
    ``(m) Report.--
            ``(1) In general.--Not later than 3 years after the date of 
        enactment of the Patient Protection and Affordable Care Act, 
        the Secretary, in consultation with the Secretary of the 
        Treasury and the Secretary of Labor, shall submit a report to 
        the appropriate committees of Congress concerning--
                    ``(A) the effectiveness of wellness programs (as 
                defined in subsection (j)) in promoting health and 
                preventing disease;
                    ``(B) the impact of such wellness programs on the 
                access to care and affordability of coverage for 
                participants and non-participants of such programs;
                    ``(C) the impact of premium-based and cost-sharing 
                incentives on participant behavior and the role of such 
                programs in changing behavior; and
                    ``(D) the effectiveness of different types of 
                rewards.
            ``(2) Data collection.--In preparing the report described 
        in paragraph (1), the Secretaries shall gather relevant 
        information from employers who provide employees with access to 
        wellness programs, including State and Federal agencies.
    ``(n) Regulations.--Nothing in this section shall be construed as 
prohibiting the Secretaries of Labor, Health and Human Services, or the 
Treasury from promulgating regulations in connection with this section.

``SEC. 2706. NON-DISCRIMINATION IN HEALTH CARE.

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

``SEC. 2707. COMPREHENSIVE HEALTH INSURANCE COVERAGE.

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

``SEC. 2708. PROHIBITION ON EXCESSIVE WAITING PERIODS.

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

                       PART II--OTHER PROVISIONS

SEC. 1251. PRESERVATION OF RIGHT TO MAINTAIN EXISTING COVERAGE.

    (a) No Changes to Existing Coverage.--
            (1) In general.--Nothing in this Act (or an amendment made 
        by this Act) shall be construed to require that an individual 
        terminate coverage under a group health plan or health 
        insurance coverage in which such individual was enrolled on the 
        date of enactment of this Act.
            (2) Continuation of coverage.--With respect to a group 
        health plan or health insurance coverage in which an individual 
        was enrolled on the date of enactment of this Act, this 
        subtitle and subtitle A (and the amendments made by such 
        subtitles) shall not apply to such plan or coverage, regardless 
        of whether the individual renews such coverage after such date 
        of enactment.
    (b) Allowance for Family Members To Join Current Coverage.--With 
respect to a group health plan or health insurance coverage in which an 
individual was enrolled on the date of enactment of this Act and which 
is renewed after such date, family members of such individual shall be 
permitted to enroll in such plan or coverage if such enrollment is 
permitted under the terms of the plan in effect as of such date of 
enactment.
    (c) Allowance for New Employees To Join Current Plan.--A group 
health plan that provides coverage on the date of enactment of this Act 
may provide for the enrolling of new employees (and their families) in 
such plan, and this subtitle and subtitle A (and the amendments made by 
such subtitles) shall not apply with respect to such plan and such new 
employees (and their families).
    (d) Effect on Collective Bargaining Agreements.--In the case of 
health insurance coverage maintained pursuant to one or more collective 
bargaining agreements between employee representatives and one or more 
employers that was ratified before the date of enactment of this Act, 
the provisions of this subtitle and subtitle A (and the amendments made 
by such subtitles) shall not apply until the date on which the last of 
the collective bargaining agreements relating to the coverage 
terminates. Any coverage amendment made pursuant to a collective 
bargaining agreement relating to the coverage which amends the coverage 
solely to conform to any requirement added by this subtitle or subtitle 
A (or amendments) shall not be treated as a termination of such 
collective bargaining agreement.
    (e) Definition.--In this title, the term ``grandfathered health 
plan'' means any group health plan or health insurance coverage to 
which this section applies.

SEC. 1252. RATING REFORMS MUST APPLY UNIFORMLY TO ALL HEALTH INSURANCE 
              ISSUERS AND GROUP HEALTH PLANS.

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

SEC. 1253. EFFECTIVE DATES.

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

        Subtitle D--Available Coverage Choices for All Americans

            PART I--ESTABLISHMENT OF QUALIFIED HEALTH PLANS

SEC. 1301. QUALIFIED HEALTH PLAN DEFINED.

    (a) Qualified Health Plan.--In this title:
            (1) In general.--The term ``qualified health plan'' means a 
        health plan that--
                    (A) has in effect a certification (which may 
                include a seal or other indication of approval) that 
                such plan meets the criteria for certification 
                described in section 1311(c) issued or recognized by 
                each Exchange through which such plan is offered;
                    (B) provides the essential health benefits package 
                described in section 1302(a); and
                    (C) is offered by a health insurance issuer that--
                            (i) is licensed and in good standing to 
                        offer health insurance coverage in each State 
                        in which such issuer offers health insurance 
                        coverage under this title;
                            (ii) agrees to offer at least one qualified 
                        health plan in the silver level and at least 
                        one plan in the gold level in each such 
                        Exchange;
                            (iii) agrees to charge the same premium 
                        rate for each qualified health plan of the 
                        issuer without regard to whether the plan is 
                        offered through an Exchange or whether the plan 
                        is offered directly from the issuer or through 
                        an agent; and
                            (iv) complies with the regulations 
                        developed by the Secretary under section 
                        1311(d) and such other requirements as an 
                        applicable Exchange may establish.
            (2) Inclusion of co-op plans and community health insurance 
        option.--Any reference in this title to a qualified health plan 
        shall be deemed to include a qualified health plan offered 
        through the CO-OP program under section 1322 or a community 
        health insurance option under section 1323, unless specifically 
        provided for otherwise.
    (b) Terms Relating to Health Plans.--In this title:
            (1) Health plan.--
                    (A) In general.--The term ``health plan'' means 
                health insurance coverage and a group health plan.
                    (B) Exception for self-insured plans and mewas.--
                Except to the extent specifically provided by this 
                title, the term ``health plan'' shall not include a 
                group health plan or multiple employer welfare 
                arrangement to the extent the plan or arrangement is 
                not subject to State insurance regulation under section 
                514 of the Employee Retirement Income Security Act of 
                1974.
            (2) Health insurance coverage and issuer.--The terms 
        ``health insurance coverage'' and ``health insurance issuer'' 
        have the meanings given such terms by section 2791(b) of the 
        Public Health Service Act.
            (3) Group health plan.--The term ``group health plan'' has 
        the meaning given such term by section 2791(a) of the Public 
        Health Service Act.

SEC. 1302. ESSENTIAL HEALTH BENEFITS REQUIREMENTS.

    (a) Essential Health Benefits Package.--In this title, the term 
``essential health benefits package'' means, with respect to any health 
plan, coverage that--
            (1) provides for the essential health benefits defined by 
        the Secretary under subsection (b);
            (2) limits cost-sharing for such coverage in accordance 
        with subsection (c); and
            (3) subject to subsection (e), provides either the bronze, 
        silver, gold, or platinum level of coverage described in 
        subsection (d).
    (b) Essential Health Benefits.--
            (1) In general.--Subject to paragraph (2), the Secretary 
        shall define the essential health benefits, except that such 
        benefits shall include at least the following general 
        categories and the items and services covered within the 
        categories:
                    (A) Ambulatory patient services.
                    (B) Emergency services.
                    (C) Hospitalization.
                    (D) Maternity and newborn care.
                    (E) Mental health and substance use disorder 
                services, including behavioral health treatment.
                    (F) Prescription drugs.
                    (G) Rehabilitative and habilitative services and 
                devices.
                    (H) Laboratory services.
                    (I) Preventive and wellness services and chronic 
                disease management.
                    (J) Pediatric services, including oral and vision 
                care.
            (2) Limitation.--
                    (A) In general.--The Secretary shall ensure that 
                the scope of the essential health benefits under 
                paragraph (1) is equal to the scope of benefits 
                provided under a typical employer plan, as determined 
                by the Secretary. To inform this determination, the 
                Secretary of Labor shall conduct a survey of employer-
                sponsored coverage to determine the benefits typically 
                covered by employers, including multiemployer plans, 
                and provide a report on such survey to the Secretary.
                    (B) Certification.--In defining the essential 
                health benefits described in paragraph (1), and in 
                revising the benefits under paragraph (4)(H), the 
                Secretary shall submit a report to the appropriate 
                committees of Congress containing a certification from 
                the Chief Actuary of the Centers for Medicare & 
                Medicaid Services that such essential health benefits 
                meet the limitation described in paragraph (2).
            (3) Notice and hearing.--In defining the essential health 
        benefits described in paragraph (1), and in revising the 
        benefits under paragraph (4)(H), the Secretary shall provide 
        notice and an opportunity for public comment.
            (4) Required elements for consideration.--In defining the 
        essential health benefits under paragraph (1), the Secretary 
        shall--
                    (A) ensure that such essential health benefits 
                reflect an appropriate balance among the categories 
                described in such subsection, so that benefits are not 
                unduly weighted toward any category;
                    (B) not make coverage decisions, determine 
                reimbursement rates, establish incentive programs, or 
                design benefits in ways that discriminate against 
                individuals because of their age, disability, or 
                expected length of life;
                    (C) take into account the health care needs of 
                diverse segments of the population, including women, 
                children, persons with disabilities, and other groups;
                    (D) ensure that health benefits established as 
                essential not be subject to denial to individuals 
                against their wishes on the basis of the individuals' 
                age or expected length of life or of the individuals' 
                present or predicted disability, degree of medical 
                dependency, or quality of life;
                    (E) provide that a qualified health plan shall not 
                be treated as providing coverage for the essential 
                health benefits described in paragraph (1) unless the 
                plan provides that--
                            (i) coverage for emergency department 
                        services will be provided without imposing any 
                        requirement under the plan for prior 
                        authorization of services or any limitation on 
                        coverage where the provider of services does 
                        not have a contractual relationship with the 
                        plan for the providing of services that is more 
                        restrictive than the requirements or 
                        limitations that apply to emergency department 
                        services received from providers who do have 
                        such a contractual relationship with the plan; 
                        and
                            (ii) if such services are provided out-of-
                        network, the cost-sharing requirement 
                        (expressed as a copayment amount or coinsurance 
                        rate) is the same requirement that would apply 
                        if such services were provided in-network;
                    (F) provide that if a plan described in section 
                1311(b)(2)(B)(ii) (relating to stand-alone dental 
                benefits plans) is offered through an Exchange, another 
                health plan offered through such Exchange shall not 
                fail to be treated as a qualified health plan solely 
                because the plan does not offer coverage of benefits 
                offered through the stand-alone plan that are otherwise 
                required under paragraph (1)(J); and
                    (G) periodically review the essential health 
                benefits under paragraph (1), and provide a report to 
                Congress and the public that contains--
                            (i) an assessment of whether enrollees are 
                        facing any difficulty accessing needed services 
                        for reasons of coverage or cost;
                            (ii) an assessment of whether the essential 
                        health benefits needs to be modified or updated 
                        to account for changes in medical evidence or 
                        scientific advancement;
                            (iii) information on how the essential 
                        health benefits will be modified to address any 
                        such gaps in access or changes in the evidence 
                        base;
                            (iv) an assessment of the potential of 
                        additional or expanded benefits to increase 
                        costs and the interactions between the addition 
                        or expansion of benefits and reductions in 
                        existing benefits to meet actuarial limitations 
                        described in paragraph (2); and
                    (H) periodically update the essential health 
                benefits under paragraph (1) to address any gaps in 
                access to coverage or changes in the evidence base the 
                Secretary identifies in the review conducted under 
                subparagraph (G).
            (5) Rule of construction.--Nothing in this title shall be 
        construed to prohibit a health plan from providing benefits in 
        excess of the essential health benefits described in this 
        subsection.
    (c) Requirements Relating to Cost-Sharing.--
            (1) Annual limitation on cost-sharing.--
                    (A) 2014.--The cost-sharing incurred under a health 
                plan with respect to self-only coverage or coverage 
                other than self-only coverage for a plan year beginning 
                in 2014 shall not exceed the dollar amounts in effect 
                under section 223(c)(2)(A)(ii) of the Internal Revenue 
                Code of 1986 for self-only and family coverage, 
                respectively, for taxable years beginning in 2014.
                    (B) 2015 and later.--In the case of any plan year 
                beginning in a calendar year after 2014, the limitation 
                under this paragraph shall--
                            (i) in the case of self-only coverage, be 
                        equal to the dollar amount under subparagraph 
                        (A) for self-only coverage for plan years 
                        beginning in 2014, increased by an amount equal 
                        to the product of that amount and the premium 
                        adjustment percentage under paragraph (4) for 
                        the calendar year; and
                            (ii) in the case of other coverage, twice 
                        the amount in effect under clause (i).
                If the amount of any increase under clause (i) is not a 
                multiple of $50, such increase shall be rounded to the 
                next lowest multiple of $50.
            (2) Annual limitation on deductibles for employer-sponsored 
        plans.--
                    (A) In general.--In the case of a health plan 
                offered in the small group market, the deductible under 
                the plan shall not exceed--
                            (i) $2,000 in the case of a plan covering a 
                        single individual; and
                            (ii) $4,000 in the case of any other plan.
                The amounts under clauses (i) and (ii) may be increased 
                by the maximum amount of reimbursement which is 
                reasonably available to a participant under a flexible 
                spending arrangement described in section 106(c)(2) of 
                the Internal Revenue Code of 1986 (determined without 
                regard to any salary reduction arrangement).
                    (B) Indexing of limits.--In the case of any plan 
                year beginning in a calendar year after 2014--
                            (i) the dollar amount under subparagraph 
                        (A)(i) shall be increased by an amount equal to 
                        the product of that amount and the premium 
                        adjustment percentage under paragraph (4) for 
                        the calendar year; and
                            (ii) the dollar amount under subparagraph 
                        (A)(ii) shall be increased to an amount equal 
                        to twice the amount in effect under 
                        subparagraph (A)(i) for plan years beginning in 
                        the calendar year, determined after application 
                        of clause (i).
                If the amount of any increase under clause (i) is not a 
                multiple of $50, such increase shall be rounded to the 
                next lowest multiple of $50.
                    (C) Actuarial value.--The limitation under this 
                paragraph shall be applied in such a manner so as to 
                not affect the actuarial value of any health plan, 
                including a plan in the bronze level.
                    (D) Coordination with preventive limits.--Nothing 
                in this paragraph shall be construed to allow a plan to 
                have a deductible under the plan apply to benefits 
                described in section 2713 of the Public Health Service 
                Act.
            (3) Cost-sharing.--In this title--
                    (A) In general.--The term ``cost-sharing'' 
                includes--
                            (i) deductibles, coinsurance, copayments, 
                        or similar charges; and
                            (ii) any other expenditure required of an 
                        insured individual which is a qualified medical 
                        expense (within the meaning of section 
                        223(d)(2) of the Internal Revenue Code of 1986) 
                        with respect to essential health benefits 
                        covered under the plan.
                    (B) Exceptions.--Such term does not include 
                premiums, balance billing amounts for non-network 
                providers, or spending for non-covered services.
            (4) Premium adjustment percentage.--For purposes of 
        paragraphs (1)(B)(i) and (2)(B)(i), the premium adjustment 
        percentage for any calendar year is the percentage (if any) by 
        which the average per capita premium for health insurance 
        coverage in the United States for the preceding calendar year 
        (as estimated by the Secretary no later than October 1 of such 
        preceding calendar year) exceeds such average per capita 
        premium for 2013 (as determined by the Secretary).
    (d) Levels of Coverage.--
            (1) Levels of coverage defined.--The levels of coverage 
        described in this subsection are as follows:
                    (A) Bronze level.--A plan in the bronze level shall 
                provide a level of coverage that is designed to provide 
                benefits that are actuarially equivalent to 60 percent 
                of the full actuarial value of the benefits provided 
                under the plan.
                    (B) Silver level.--A plan in the silver level shall 
                provide a level of coverage that is designed to provide 
                benefits that are actuarially equivalent to 70 percent 
                of the full actuarial value of the benefits provided 
                under the plan.
                    (C) Gold level.--A plan in the gold level shall 
                provide a level of coverage that is designed to provide 
                benefits that are actuarially equivalent to 80 percent 
                of the full actuarial value of the benefits provided 
                under the plan.
                    (D) Platinum level.--A plan in the platinum level 
                shall provide a level of coverage that is designed to 
                provide benefits that are actuarially equivalent to 90 
                percent of the full actuarial value of the benefits 
                provided under the plan.
            (2) Actuarial value.--
                    (A) In general.--Under regulations issued by the 
                Secretary, the level of coverage of a plan shall be 
                determined on the basis that the essential health 
                benefits described in subsection (b) shall be provided 
                to a standard population (and without regard to the 
                population the plan may actually provide benefits to).
                    (B) Employer contributions.--The Secretary may 
                issue regulations under which employer contributions to 
                a health savings account (within the meaning of section 
                223 of the Internal Revenue Code of 1986) may be taken 
                into account in determining the level of coverage for a 
                plan of the employer.
                    (C) Application.--In determining under this title, 
                the Public Health Service Act, or the Internal Revenue 
                Code of 1986 the percentage of the total allowed costs 
                of benefits provided under a group health plan or 
                health insurance coverage that are provided by such 
                plan or coverage, the rules contained in the 
                regulations under this paragraph shall apply.
            (3) Allowable variance.--The Secretary shall develop 
        guidelines to provide for a de minimis variation in the 
        actuarial valuations used in determining the level of coverage 
        of a plan to account for differences in actuarial estimates.
            (4) Plan reference.--In this title, any reference to a 
        bronze, silver, gold, or platinum plan shall be treated as a 
        reference to a qualified health plan providing a bronze, 
        silver, gold, or platinum level of coverage, as the case may 
        be.
    (e) Catastrophic Plan.--
            (1) In general.--A health plan not providing a bronze, 
        silver, gold, or platinum level of coverage shall be treated as 
        meeting the requirements of subsection (d) with respect to any 
        plan year if--
                    (A) the only individuals who are eligible to enroll 
                in the plan are individuals described in paragraph (2); 
                and
                    (B) the plan provides--
                            (i) except as provided in clause (ii), the 
                        essential health benefits determined under 
                        subsection (b), except that the plan provides 
                        no benefits for any plan year until the 
                        individual has incurred cost-sharing expenses 
                        in an amount equal to the annual limitation in 
                        effect under subsection (c)(1) for the plan 
                        year (except as provided for in section 2713); 
                        and
                            (ii) coverage for at least three primary 
                        care visits.
            (2) Individuals eligible for enrollment.--An individual is 
        described in this paragraph for any plan year if the 
        individual--
                    (A) has not attained the age of 30 before the 
                beginning of the plan year; or
                    (B) has a certification in effect for any plan year 
                under this title that the individual is exempt from the 
                requirement under section 5000A of the Internal Revenue 
                Code of 1986 by reason of--
                            (i) section 5000A(e)(1) of such Code 
                        (relating to individuals without affordable 
                        coverage); or
                            (ii) section 5000A(e)(5) of such Code 
                        (relating to individuals with hardships).
            (3) Restriction to individual market.--If a health 
        insurance issuer offers a health plan described in this 
        subsection, the issuer may only offer the plan in the 
        individual market.
    (f) Child-only Plans.--If a qualified health plan is offered 
through the Exchange in any level of coverage specified under 
subsection (d), the issuer shall also offer that plan through the 
Exchange in that level as a plan in which the only enrollees are 
individuals who, as of the beginning of a plan year, have not attained 
the age of 21, and such plan shall be treated as a qualified health 
plan.

SEC. 1303. SPECIAL RULES.

    (a) Special Rules Relating to Coverage of Abortion Services.--
            (1) Voluntary choice of coverage of abortion services.--
                    (A) In general.--Notwithstanding any other 
                provision of this title (or any amendment made by this 
                title), and subject to subparagraphs (C) and (D)--
                            (i) nothing in this title (or any amendment 
                        made by this title), shall be construed to 
                        require a qualified health plan to provide 
                        coverage of services described in subparagraph 
                        (B)(i) or (B)(ii) as part of its essential 
                        health benefits for any plan year; and
                            (ii) the issuer of a qualified health plan 
                        shall determine whether or not the plan 
                        provides coverage of services described in 
                        subparagraph (B)(i) or (B)(ii) as part of such 
                        benefits for the plan year.
                    (B) Abortion services.--
                            (i) Abortions for which public funding is 
                        prohibited.--The services described in this 
                        clause are abortions for which the expenditure 
                        of Federal funds appropriated for the 
                        Department of Health and Human Services is not 
                        permitted, based on the law as in effect as of 
                        the date that is 6 months before the beginning 
                        of the plan year involved.
                            (ii) Abortions for which public funding is 
                        allowed.--The services described in this clause 
                        are abortions for which the expenditure of 
                        Federal funds appropriated for the Department 
                        of Health and Human Services is permitted, 
                        based on the law as in effect as of the date 
                        that is 6 months before the beginning of the 
                        plan year involved.
                    (C) Prohibition on federal funds for abortion 
                services in community health insurance option.--
                            (i) Determination by secretary.--The 
                        Secretary may not determine, in accordance with 
                        subparagraph (A)(ii), that the community health 
                        insurance option established under section 1323 
                        shall provide coverage of services described in 
                        subparagraph (B)(i) as part of benefits for the 
                        plan year unless the Secretary--
                                    (I) assures compliance with the 
                                requirements of paragraph (2);
                                    (II) assures, in accordance with 
                                applicable provisions of generally 
                                accepted accounting requirements, 
                                circulars on funds management of the 
                                Office of Management and Budget, and 
                                guidance on accounting of the 
                                Government Accountability Office, that 
                                no Federal funds are used for such 
                                coverage; and
                                    (III) notwithstanding section 
                                1323(e)(1)(C) or any other provision of 
                                this title, takes all necessary steps 
                                to assure that the United States does 
                                not bear the insurance risk for a 
                                community health insurance option's 
                                coverage of services described in 
                                subparagraph (B)(i).
                            (ii) State requirement.--If a State 
                        requires, in addition to the essential health 
                        benefits required under section 1323(b)(3) (A), 
                        coverage of services described in subparagraph 
                        (B)(i) for enrollees of a community health 
                        insurance option offered in such State, the 
                        State shall assure that no funds flowing 
                        through or from the community health insurance 
                        option, and no other Federal funds, pay or 
                        defray the cost of providing coverage of 
                        services described in subparagraph (B)(i). The 
                        United States shall not bear the insurance risk 
                        for a State's required coverage of services 
                        described in subparagraph (B)(i).
                            (iii) Exceptions.--Nothing in this 
                        subparagraph shall apply to coverage of 
                        services described in subparagraph (B)(ii) by 
                        the community health insurance option. Services 
                        described in subparagraph (B)(ii) shall be 
                        covered to the same extent as such services are 
                        covered under title XIX of the Social Security 
                        Act.
                    (D) Assured availability of varied coverage through 
                exchanges.--
                            (i) In general.--The Secretary shall assure 
                        that with respect to qualified health plans 
                        offered in any Exchange established pursuant to 
                        this title--
                                    (I) there is at least one such plan 
                                that provides coverage of services 
                                described in clauses (i) and (ii) of 
                                subparagraph (B); and
                                    (II) there is at least one such 
                                plan that does not provide coverage of 
                                services described in subparagraph 
                                (B)(i).
                            (ii) Special rules.--For purposes of clause 
                        (i)--
                                    (I) a plan shall be treated as 
                                described in clause (i)(II) if the plan 
                                does not provide coverage of services 
                                described in either subparagraph (B)(i) 
                                or (B)(ii); and
                                    (II) if a State has one Exchange 
                                covering more than 1 insurance market, 
                                the Secretary shall meet the 
                                requirements of clause (i) separately 
                                with respect to each such market.
            (2) Prohibition on the use of federal funds.--
                    (A) In general.--If a qualified health plan 
                provides coverage of services described in paragraph 
                (1)(B)(i), the issuer of the plan shall not use any 
                amount attributable to any of the following for 
                purposes of paying for such services:
                            (i) The credit under section 36B of the 
                        Internal Revenue Code of 1986 (and the amount 
                        (if any) of the advance payment of the credit 
                        under section 1412 of the Patient Protection 
                        and Affordable Care Act).
                            (ii) Any cost-sharing reduction under 
                        section 1402 of thePatient Protection and 
                        Affordable Care Act (and the amount (if any) of 
                        the advance payment of the reduction under 
                        section 1412 of the Patient Protection and 
                        Affordable Care Act).
                    (B) Segregation of funds.--In the case of a plan to 
                which subparagraph (A) applies, the issuer of the plan 
                shall, out of amounts not described in subparagraph 
                (A), segregate an amount equal to the actuarial amounts 
                determined under subparagraph (C) for all enrollees 
                from the amounts described in subparagraph (A).
                    (C) Actuarial value of optional service coverage.--
                            (i) In general.--The Secretary shall 
                        estimate the basic per enrollee, per month 
                        cost, determined on an average actuarial basis, 
                        for including coverage under a qualified health 
                        plan of the services described in paragraph 
                        (1)(B)(i).
                            (ii) Considerations.--In making such 
                        estimate, the Secretary--
                                    (I) may take into account the 
                                impact on overall costs of the 
                                inclusion of such coverage, but may not 
                                take into account any cost reduction 
                                estimated to result from such services, 
                                including prenatal care, delivery, or 
                                postnatal care;
                                    (II) shall estimate such costs as 
                                if such coverage were included for the 
                                entire population covered; and
                                    (III) may not estimate such a cost 
                                at less than $1 per enrollee, per 
                                month.
            (3) Provider conscience protections.--No individual health 
        care provider or health care facility may be discriminated 
        against because of a willingness or an unwillingness, if doing 
        so is contrary to the religious or moral beliefs of the 
        provider or facility, to provide, pay for, provide coverage of, 
        or refer for abortions.
    (b) Application of State and Federal Laws Regarding Abortion.--
            (1) No preemption of state laws regarding abortion.--
        Nothing in this Act shall be construed to preempt or otherwise 
        have any effect on State laws regarding the prohibition of (or 
        requirement of) coverage, funding, or procedural requirements 
        on abortions, including parental notification or consent for 
        the performance of an abortion on a minor.
            (2) No effect on federal laws regarding abortion.--
                    (A) In general.--Nothing in this Act shall be 
                construed to have any effect on Federal laws 
                regarding--
                            (i) conscience protection;
                            (ii) willingness or refusal to provide 
                        abortion; and
                            (iii) discrimination on the basis of the 
                        willingness or refusal to provide, pay for, 
                        cover, or refer for abortion or to provide or 
                        participate in training to provide abortion.
            (3) No effect on federal civil rights law.--Nothing in this 
        subsection shall alter the rights and obligations of employees 
        and employers under title VII of the Civil Rights Act of 1964.
    (c) Application of Emergency Services Laws.--Nothing in this Act 
shall be construed to relieve any health care provider from providing 
emergency services as required by State or Federal law, including 
section 1867 of the Social Security Act (popularly known as 
``EMTALA'').

SEC. 1304. RELATED DEFINITIONS.

    (a) Definitions Relating to Markets.--In this title:
            (1) Group market.--The term ``group market'' means the 
        health insurance market under which individuals obtain health 
        insurance coverage (directly or through any arrangement) on 
        behalf of themselves (and their dependents) through a group 
        health plan maintained by an employer.
            (2) Individual market.--The term ``individual market'' 
        means the market for health insurance coverage offered to 
        individuals other than in connection with a group health plan.
            (3) Large and small group markets.--The terms ``large group 
        market'' and ``small group market'' mean the health insurance 
        market under which individuals obtain health insurance coverage 
        (directly or through any arrangement) on behalf of themselves 
        (and their dependents) through a group health plan maintained 
        by a large employer (as defined in subsection (b)(1)) or by a 
        small employer (as defined in subsection (b)(2)), respectively.
    (b) Employers.--In this title:
            (1) Large employer.--The term ``large employer'' means, in 
        connection with a group health plan with respect to a calendar 
        year and a plan year, an employer who employed an average of at 
        least 101 employees on business days during the preceding 
        calendar year and who employs at least 1 employee on the first 
        day of the plan year.
            (2) Small employer.--The term ``small employer'' means, in 
        connection with a group health plan with respect to a calendar 
        year and a plan year, an employer who employed an average of at 
        least 1 but not more than 100 employees on business days during 
        the preceding calendar year and who employs at least 1 employee 
        on the first day of the plan year.
            (3) State option to treat 50 employees as small.--In the 
        case of plan years beginning before January 1, 2016, a State 
        may elect to apply this subsection by substituting ``51 
        employees'' for ``101 employees'' in paragraph (1) and by 
        substituting ``50 employees'' for ``100 employees'' in 
        paragraph (2).
            (4) Rules for determining employer size.--For purposes of 
        this subsection--
                    (A) Application of aggregation rule for 
                employers.--All persons treated as a single employer 
                under subsection (b), (c), (m), or (o) of section 414 
                of the Internal Revenue Code of 1986 shall be treated 
                as 1 employer.
                    (B) Employers not in existence in preceding year.--
                In the case of an employer which was not in existence 
                throughout the preceding calendar year, the 
                determination of whether such employer is a small or 
                large employer shall be based on the average number of 
                employees that it is reasonably expected such employer 
                will employ on business days in the current calendar 
                year.
                    (C) Predecessors.--Any reference in this subsection 
                to an employer shall include a reference to any 
                predecessor of such employer.
                    (D) Continuation of participation for growing small 
                employers.--If--
                            (i) a qualified employer that is a small 
                        employer makes enrollment in qualified health 
                        plans offered in the small group market 
                        available to its employees through an Exchange; 
                        and
                            (ii) the employer ceases to be a small 
                        employer by reason of an increase in the number 
                        of employees of such employer;
                the employer shall continue to be treated as a small 
                employer for purposes of this subtitle for the period 
                beginning with the increase and ending with the first 
                day on which the employer does not make such enrollment 
                available to its employees.
    (c) Secretary.--In this title, the term ``Secretary'' means the 
Secretary of Health and Human Services.
    (d) State.--In this title, the term ``State'' means each of the 50 
States and the District of Columbia.

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

SEC. 1311. AFFORDABLE CHOICES OF HEALTH BENEFIT PLANS.

    (a) Assistance to States to Establish American Health Benefit 
Exchanges.--
            (1) Planning and establishment grants.--There shall be 
        appropriated to the Secretary, out of any moneys in the 
        Treasury not otherwise appropriated, an amount necessary to 
        enable the Secretary to make awards, not later than 1 year 
        after the date of enactment of this Act, to States in the 
        amount specified in paragraph (2) for the uses described in 
        paragraph (3).
            (2) Amount specified.--For each fiscal year, the Secretary 
        shall determine the total amount that the Secretary will make 
        available to each State for grants under this subsection.
            (3) Use of funds.--A State shall use amounts awarded under 
        this subsection for activities (including planning activities) 
        related to establishing an American Health Benefit Exchange, as 
        described in subsection (b).
            (4) Renewability of grant.--
                    (A) In general.--Subject to subsection (d)(4), the 
                Secretary may renew a grant awarded under paragraph (1) 
                if the State recipient of such grant--
                            (i) is making progress, as determined by 
                        the Secretary, toward--
                                    (I) establishing an Exchange; and
                                    (II) implementing the reforms 
                                described in subtitles A and C (and the 
                                amendments made by such subtitles); and
                            (ii) is meeting such other benchmarks as 
                        the Secretary may establish.
                    (B) Limitation.--No grant shall be awarded under 
                this subsection after January 1, 2015.
            (5) Technical assistance to facilitate participation in 
        shop exchanges.--The Secretary shall provide technical 
        assistance to States to facilitate the participation of 
        qualified small businesses in such States in SHOP Exchanges.
    (b) American Health Benefit Exchanges.--
            (1) In general.--Each State shall, not later than January 
        1, 2014, establish an American Health Benefit Exchange 
        (referred to in this title as an ``Exchange'') for the State 
        that--
                    (A) facilitates the purchase of qualified health 
                plans;
                    (B) provides for the establishment of a Small 
                Business Health Options Program (in this title referred 
                to as a ``SHOP Exchange'') that is designed to assist 
                qualified employers in the State who are small 
                employers in facilitating the enrollment of their 
                employees in qualified health plans offered in the 
                small group market in the State; and
                    (C) meets the requirements of subsection (d).
            (2) Merger of individual and shop exchanges.--A State may 
        elect to provide only one Exchange in the State for providing 
        both Exchange and SHOP Exchange services to both qualified 
        individuals and qualified small employers, but only if the 
        Exchange has adequate resources to assist such individuals and 
        employers.
    (c) Responsibilities of the Secretary.--
            (1) In general.--The Secretary shall, by regulation, 
        establish criteria for the certification of health plans as 
        qualified health plans. Such criteria shall require that, to be 
        certified, a plan shall, at a minimum--
                    (A) meet marketing requirements, and not employ 
                marketing practices or benefit designs that have the 
                effect of discouraging the enrollment in such plan by 
                individuals with significant health needs;
                    (B) ensure a sufficient choice of providers (in a 
                manner consistent with applicable network adequacy 
                provisions under section 2702(c) of the Public Health 
                Service Act), and provide information to enrollees and 
                prospective enrollees on the availability of in-network 
                and out-of-network providers;
                    (C) include within health insurance plan networks 
                those essential community providers, where available, 
                that serve predominately low-income, medically-
                underserved individuals, such as health care providers 
                defined in section 340B(a)(4) of the Public Health 
                Service Act and providers described in section 
                1927(c)(1)(D)(i)(IV) of the Social Security Act as set 
                forth by section 221 of Public Law 111-8, except that 
                nothing in this subparagraph shall be construed to 
                require any health plan to provide coverage for any 
                specific medical procedure;
                    (D)(i) be accredited with respect to local 
                performance on clinical quality measures such as the 
                Healthcare Effectiveness Data and Information Set, 
                patient experience ratings on a standardized Consumer 
                Assessment of Healthcare Providers and Systems survey, 
                as well as consumer access, utilization management, 
                quality assurance, provider credentialing, complaints 
                and appeals, network adequacy and access, and patient 
                information programs by any entity recognized by the 
                Secretary for the accreditation of health insurance 
                issuers or plans (so long as any such entity has 
                transparent and rigorous methodological and scoring 
                criteria); or
                    (ii) receive such accreditation within a period 
                established by an Exchange for such accreditation that 
                is applicable to all qualified health plans;
                    (E) implement a quality improvement strategy 
                described in subsection (g)(1);
                    (F) utilize a uniform enrollment form that 
                qualified individuals and qualified employers may use 
                (either electronically or on paper) in enrolling in 
                qualified health plans offered through such Exchange, 
                and that takes into account criteria that the National 
                Association of Insurance Commissioners develops and 
                submits to the Secretary;
                    (G) utilize the standard format established for 
                presenting health benefits plan options; and
                    (H) provide information to enrollees and 
                prospective enrollees, and to each Exchange in which 
                the plan is offered, on any quality measures for health 
                plan performance endorsed under section 399JJ of the 
                Public Health Service Act, as applicable.
            (2) Rule of construction.--Nothing in paragraph (1)(C) 
        shall be construed to require a qualified health plan to 
        contract with a provider described in such paragraph if such 
        provider refuses to accept the generally applicable payment 
        rates of such plan.
            (3) Rating system.--The Secretary shall develop a rating 
        system that would rate qualified health plans offered through 
        an Exchange in each benefits level on the basis of the relative 
        quality and price. The Exchange shall include the quality 
        rating in the information provided to individuals and employers 
        through the Internet portal established under paragraph (4).
            (4) Enrollee satisfaction system.--The Secretary shall 
        develop an enrollee satisfaction survey system that would 
        evaluate the level of enrollee satisfaction with qualified 
        health plans offered through an Exchange, for each such 
        qualified health plan that had more than 500 enrollees in the 
        previous year. The Exchange shall include enrollee satisfaction 
        information in the information provided to individuals and 
        employers through the Internet portal established under 
        paragraph (5) in a manner that allows individuals to easily 
        compare enrollee satisfaction levels between comparable plans.
            (5) Internet portals.--The Secretary shall--
                    (A) continue to operate, maintain, and update the 
                Internet portal developed under section 1103(a) and to 
                assist States in developing and maintaining their own 
                such portal; and
                    (B) make available for use by Exchanges a model 
                template for an Internet portal that may be used to 
                direct qualified individuals and qualified employers to 
                qualified health plans, to assist such individuals and 
                employers in determining whether they are eligible to 
                participate in an Exchange or eligible for a premium 
                tax credit or cost-sharing reduction, and to present 
                standardized information (including quality ratings) 
                regarding qualified health plans offered through an 
                Exchange to assist consumers in making easy health 
                insurance choices.
        Such template shall include, with respect to each qualified 
        health plan offered through the Exchange in each rating area, 
        access to the uniform outline of coverage the plan is required 
        to provide under section 2716 of the Public Health Service Act 
        and to a copy of the plan's written policy.
            (6) Enrollment periods.--The Secretary shall require an 
        Exchange to provide for--
                    (A) an initial open enrollment, as determined by 
                the Secretary (such determination to be made not later 
                than July 1, 2012);
                    (B) annual open enrollment periods, as determined 
                by the Secretary for calendar years after the initial 
                enrollment period;
                    (C) special enrollment periods specified in section 
                9801 of the Internal Revenue Code of 1986 and other 
                special enrollment periods under circumstances similar 
                to such periods under part D of title XVIII of the 
                Social Security Act; and
                    (D) special monthly enrollment periods for Indians 
                (as defined in section 4 of the Indian Health Care 
                Improvement Act).
    (d) Requirements.--
            (1) In general.--An Exchange shall be a governmental agency 
        or nonprofit entity that is established by a State.
            (2) Offering of coverage.--
                    (A) In general.--An Exchange shall make available 
                qualified health plans to qualified individuals and 
                qualified employers.
                    (B) Limitation.--
                            (i) In general.--An Exchange may not make 
                        available any health plan that is not a 
                        qualified health plan.
                            (ii) Offering of stand-alone dental 
                        benefits.--Each Exchange within a State shall 
                        allow an issuer of a plan that only provides 
                        limited scope dental benefits meeting the 
                        requirements of section 9832(c)(2)(A) of the 
                        Internal Revenue Code of 1986 to offer the plan 
                        through the Exchange (either separately or in 
                        conjunction with a qualified health plan) if 
                        the plan provides pediatric dental benefits 
                        meeting the requirements of section 
                        1302(b)(1)(J)).
            (3) Rules relating to additional required benefits.--
                    (A) In general.--Except as provided in subparagraph 
                (B), an Exchange may make available a qualified health 
                plan notwithstanding any provision of law that may 
                require benefits other than the essential health 
                benefits specified under section 1302(b).
                    (B) States may require additional benefits.--
                            (i) In general.--Subject to the 
                        requirements of clause (ii), a State may 
                        require that a qualified health plan offered in 
                        such State offer benefits in addition to the 
                        essential health benefits specified under 
                        section 1302(b).
                            (ii) State must assume cost.--A State shall 
                        make payments to or on behalf of an individual 
                        eligible for the premium tax credit under 
                        section 36B of the Internal Revenue Code of 
                        1986 and any cost-sharing reduction under 
                        section 1402 to defray the cost to the 
                        individual of any additional benefits described 
                        in clause (i) which are not eligible for such 
                        credit or reduction under section 36B(b)(3)(D) 
                        of such Code and section 1402(c)(4).
            (4) Functions.--An Exchange shall, at a minimum--
                    (A) implement procedures for the certification, 
                recertification, and decertification, consistent with 
                guidelines developed by the Secretary under subsection 
                (c), of health plans as qualified health plans;
                    (B) provide for the operation of a toll-free 
                telephone hotline to respond to requests for 
                assistance;
                    (C) maintain an Internet website through which 
                enrollees and prospective enrollees of qualified health 
                plans may obtain standardized comparative information 
                on such plans;
                    (D) assign a rating to each qualified health plan 
                offered through such Exchange in accordance with the 
                criteria developed by the Secretary under subsection 
                (c)(3);
                    (E) utilize a standardized format for presenting 
                health benefits plan options in the Exchange, including 
                the use of the uniform outline of coverage established 
                under section 2715 of the Public Health Service Act;
                    (F) in accordance with section 1413, inform 
                individuals of eligibility requirements for the 
                medicaid program under title XIX of the Social Security 
                Act, the CHIP program under title XXI of such Act, or 
                any applicable State or local public program and if 
                through screening of the application by the Exchange, 
                the Exchange determines that such individuals are 
                eligible for any such program, enroll such individuals 
                in such program;
                    (G) establish and make available by electronic 
                means a calculator to determine the actual cost of 
                coverage after the application of any premium tax 
                credit under section 36B of the Internal Revenue Code 
                of 1986 and any cost-sharing reduction under section 
                1402;
                    (H) subject to section 1411, grant a certification 
                attesting that, for purposes of the individual 
                responsibility penalty under section 5000A of the 
                Internal Revenue Code of 1986, an individual is exempt 
                from the individual requirement or from the penalty 
                imposed by such section because--
                            (i) there is no affordable qualified health 
                        plan available through the Exchange, or the 
                        individual's employer, covering the individual; 
                        or
                            (ii) the individual meets the requirements 
                        for any other such exemption from the 
                        individual responsibility requirement or 
                        penalty;
                    (I) transfer to the Secretary of the Treasury--
                            (i) a list of the individuals who are 
                        issued a certification under subparagraph (H), 
                        including the name and taxpayer identification 
                        number of each individual;
                            (ii) the name and taxpayer identification 
                        number of each individual who was an employee 
                        of an employer but who was determined to be 
                        eligible for the premium tax credit under 
                        section 36B of the Internal Revenue Code of 
                        1986 because--
                                    (I) the employer did not provide 
                                minimum essential coverage; or
                                    (II) the employer provided such 
                                minimum essential coverage but it was 
                                determined under section 36B(c)(2)(C) 
                                of such Code to either be unaffordable 
                                to the employee or not provide the 
                                required minimum actuarial value; and
                            (iii) the name and taxpayer identification 
                        number of each individual who notifies the 
                        Exchange under section 1411(b)(4) that they 
                        have changed employers and of each individual 
                        who ceases coverage under a qualified health 
                        plan during a plan year (and the effective date 
                        of such cessation);
                    (J) provide to each employer the name of each 
                employee of the employer described in subparagraph 
                (I)(ii) who ceases coverage under a qualified health 
                plan during a plan year (and the effective date of such 
                cessation); and
                    (K) establish the Navigator program described in 
                subsection (i).
            (5) Funding limitations.--
                    (A) No federal funds for continued operations.--In 
                establishing an Exchange under this section, the State 
                shall ensure that such Exchange is self-sustaining 
                beginning on January 1, 2015, including allowing the 
                Exchange to charge assessments or user fees to 
                participating health insurance issuers, or to otherwise 
                generate funding, to support its operations.
                    (B) Prohibiting wasteful use of funds.--In carrying 
                out activities under this subsection, an Exchange shall 
                not utilize any funds intended for the administrative 
                and operational expenses of the Exchange for staff 
                retreats, promotional giveaways, excessive executive 
                compensation, or promotion of Federal or State 
                legislative and regulatory modifications.
            (6) Consultation.--An Exchange shall consult with 
        stakeholders relevant to carrying out the activities under this 
        section, including--
                    (A) health care consumers who are enrollees in 
                qualified health plans;
                    (B) individuals and entities with experience in 
                facilitating enrollment in qualified health plans;
                    (C) representatives of small businesses and self-
                employed individuals;
                    (D) State Medicaid offices; and
                    (E) advocates for enrolling hard to reach 
                populations.
            (7) Publication of costs.--An Exchange shall publish the 
        average costs of licensing, regulatory fees, and any other 
        payments required by the Exchange, and the administrative costs 
        of such Exchange, on an Internet website to educate consumers 
        on such costs. Such information shall also include monies lost 
        to waste, fraud, and abuse.
    (e) Certification.--
            (1) In general.--An Exchange may certify a health plan as a 
        qualified health plan if--
                    (A) such health plan meets the requirements for 
                certification as promulgated by the Secretary under 
                subsection (c)(1); and
                    (B) the Exchange determines that making available 
                such health plan through such Exchange is in the 
                interests of qualified individuals and qualified 
                employers in the State or States in which such Exchange 
                operates, except that the Exchange may not exclude a 
                health plan--
                            (i) on the basis that such plan is a fee-
                        for-service plan;
                            (ii) through the imposition of premium 
                        price controls; or
                            (iii) on the basis that the plan provides 
                        treatments necessary to prevent patients' 
                        deaths in circumstances the Exchange determines 
                        are inappropriate or too costly.
            (2) Premium considerations.--The Exchange shall require 
        health plans seeking certification as qualified health plans to 
        submit a justification for any premium increase prior to 
        implementation of the increase. Such plans shall prominently 
        post such information on their websites. The Exchange may take 
        this information, and the information and the recommendations 
        provided to the Exchange by the State under section 2794(b)(1) 
        of the Public Health Service Act (relating to patterns or 
        practices of excessive or unjustified premium increases), into 
        consideration when determining whether to make such health plan 
        available through the Exchange. The Exchange shall take into 
        account any excess of premium growth outside the Exchange as 
        compared to the rate of such growth inside the Exchange, 
        including information reported by the States.
    (f) Flexibility.--
            (1) Regional or other interstate exchanges.--An Exchange 
        may operate in more than one State if--
                    (A) each State in which such Exchange operates 
                permits such operation; and
                    (B) the Secretary approves such regional or 
                interstate Exchange.
            (2) Subsidiary exchanges.--A State may establish one or 
        more subsidiary Exchanges if--
                    (A) each such Exchange serves a geographically 
                distinct area; and
                    (B) the area served by each such Exchange is at 
                least as large as a rating area described in section 
                2701(a) of the Public Health Service Act.
            (3) Authority to contract.--
                    (A) In general.--A State may elect to authorize an 
                Exchange established by the State under this section to 
                enter into an agreement with an eligible entity to 
                carry out 1 or more responsibilities of the Exchange.
                    (B) Eligible entity.--In this paragraph, the term 
                ``eligible entity'' means--
                            (i) a person--
                                    (I) incorporated under, and subject 
                                to the laws of, 1 or more States;
                                    (II) that has demonstrated 
                                experience on a State or regional basis 
                                in the individual and small group 
                                health insurance markets and in 
                                benefits coverage; and
                                    (III) that is not a health 
                                insurance issuer or that is treated 
                                under subsection (a) or (b) of section 
                                52 of the Internal Revenue Code of 1986 
                                as a member of the same controlled 
                                group of corporations (or under common 
                                control with) as a health insurance 
                                issuer; or
                            (ii) the State medicaid agency under title 
                        XIX of the Social Security Act.
    (g) Rewarding Quality Through Market-Based Incentives.--
            (1) Strategy described.--A strategy described in this 
        paragraph is a payment structure that provides increased 
        reimbursement or other incentives for--
                    (A) improving health outcomes through the 
                implementation of activities that shall include quality 
                reporting, effective case management, care 
                coordination, chronic disease management, medication 
                and care compliance initiatives, including through the 
                use of the medical home model, for treatment or 
                services under the plan or coverage;
                    (B) the implementation of activities to prevent 
                hospital readmissions through a comprehensive program 
                for hospital discharge that includes patient-centered 
                education and counseling, comprehensive discharge 
                planning, and post discharge reinforcement by an 
                appropriate health care professional;
                    (C) the implementation of activities to improve 
                patient safety and reduce medical errors through the 
                appropriate use of best clinical practices, evidence 
                based medicine, and health information technology under 
                the plan or coverage; and
                    (D) the implementation of wellness and health 
                promotion activities.
            (2) Guidelines.--The Secretary, in consultation with 
        experts in health care quality and stakeholders, shall develop 
        guidelines concerning the matters described in paragraph (1).
            (3) Requirements.--The guidelines developed under paragraph 
        (2) shall require the periodic reporting to the applicable 
        Exchange of the activities that a qualified health plan has 
        conducted to implement a strategy described in paragraph (1).
    (h) Quality Improvement.--
            (1) Enhancing patient safety.--Beginning on January 1, 
        2015, a qualified health plan may contract with--
                    (A) a hospital with greater than 50 beds only if 
                such hospital--
                            (i) utilizes a patient safety evaluation 
                        system as described in part C of title IX of 
                        the Public Health Service Act; and
                            (ii) implements a mechanism to ensure that 
                        each patient receives a comprehensive program 
                        for hospital discharge that includes patient-
                        centered education and counseling, 
                        comprehensive discharge planning, and post 
                        discharge reinforcement by an appropriate 
                        health care professional; or
                    (B) a health care provider only if such provider 
                implements such mechanisms to improve health care 
                quality as the Secretary may by regulation require.
            (2) Exceptions.--The Secretary may establish reasonable 
        exceptions to the requirements described in paragraph (1).
            (3) Adjustment.--The Secretary may by regulation adjust the 
        number of beds described in paragraph (1)(A).
    (i) Navigators.--
            (1) In general.--An Exchange shall establish a program 
        under which it awards grants to entities described in paragraph 
        (2) to carry out the duties described in paragraph (3).
            (2) Eligibility.--
                    (A) In general.--To be eligible to receive a grant 
                under paragraph (1), an entity shall demonstrate to the 
                Exchange involved that the entity has existing 
                relationships, or could readily establish 
                relationships, with employers and employees, consumers 
                (including uninsured and underinsured consumers), or 
                self-employed individuals likely to be qualified to 
                enroll in a qualified health plan.
                    (B) Types.--Entities described in subparagraph (A) 
                may include trade, industry, and professional 
                associations, commercial fishing industry 
                organizations, ranching and farming organizations, 
                community and consumer-focused nonprofit groups, 
                chambers of commerce, unions, small business 
                development centers, other licensed insurance agents 
                and brokers, and other entities that--
                            (i) are capable of carrying out the duties 
                        described in paragraph (3);
                            (ii) meet the standards described in 
                        paragraph (4); and
                            (iii) provide information consistent with 
                        the standards developed under paragraph (5).
            (3) Duties.--An entity that serves as a navigator under a 
        grant under this subsection shall--
                    (A) conduct public education activities to raise 
                awareness of the availability of qualified health 
                plans;
                    (B) distribute fair and impartial information 
                concerning enrollment in qualified health plans, and 
                the availability of premium tax credits under section 
                36B of the Internal Revenue Code of 1986 and cost-
                sharing reductions under section 1402;
                    (C) facilitate enrollment in qualified health 
                plans;
                    (D) provide referrals to any applicable office of 
                health insurance consumer assistance or health 
                insurance ombudsman established under section 2793 of 
                the Public Health Service Act, or any other appropriate 
                State agency or agencies, for any enrollee with a 
                grievance, complaint, or question regarding their 
                health plan, coverage, or a determination under such 
                plan or coverage; and
                    (E) provide information in a manner that is 
                culturally and linguistically appropriate to the needs 
                of the population being served by the Exchange or 
                Exchanges.
            (4) Standards.--
                    (A) In general.--The Secretary shall establish 
                standards for navigators under this subsection, 
                including provisions to ensure that any private or 
                public entity that is selected as a navigator is 
                qualified, and licensed if appropriate, to engage in 
                the navigator activities described in this subsection 
                and to avoid conflicts of interest. Under such 
                standards, a navigator shall not--
                            (i) be a health insurance issuer; or
                            (ii) receive any consideration directly or 
                        indirectly from any health insurance issuer in 
                        connection with the enrollment of any qualified 
                        individuals or employees of a qualified 
                        employer in a qualified health plan.
            (5) Fair and impartial information and services.--The 
        Secretary, in collaboration with States, shall develop 
        standards to ensure that information made available by 
        navigators is fair, accurate, and impartial.
            (6) Funding.--Grants under this subsection shall be made 
        from the operational funds of the Exchange and not Federal 
        funds received by the State to establish the Exchange.
    (j) Applicability of Mental Health Parity.--Section 2726 of the 
Public Health Service Act shall apply to qualified health plans in the 
same manner and to the same extent as such section applies to health 
insurance issuers and group health plans.
    (k) Conflict.--An Exchange may not establish rules that conflict 
with or prevent the application of regulations promulgated by the 
Secretary under this subtitle.

SEC. 1312. CONSUMER CHOICE.

    (a) Choice.--
            (1) Qualified individuals.--A qualified individual may 
        enroll in any qualified health plan available to such 
        individual.
            (2) Qualified employers.--
                    (A) Employer may specify level.--A qualified 
                employer may provide support for coverage of employees 
                under a qualified health plan by selecting any level of 
                coverage under section 1302(d) to be made available to 
                employees through an Exchange.
                    (B) Employee may choose plans within a level.--Each 
                employee of a qualified employer that elects a level of 
                coverage under subparagraph (A) may choose to enroll in 
                a qualified health plan that offers coverage at that 
                level.
    (b) Payment of Premiums by Qualified Individuals.--A qualified 
individual enrolled in any qualified health plan may pay any applicable 
premium owed by such individual to the health insurance issuer issuing 
such qualified health plan.
    (c) Single Risk Pool.--
            (1) Individual market.--A health insurance issuer shall 
        consider all enrollees in all health plans (other than 
        grandfathered health plans) offered by such issuer in the 
        individual market, including those enrollees who do not enroll 
        in such plans through the Exchange, to be members of a single 
        risk pool.
            (2) Small group market.--A health insurance issuer shall 
        consider all enrollees in all health plans (other than 
        grandfathered health plans) offered by such issuer in the small 
        group market, including those enrollees who do not enroll in 
        such plans through the Exchange, to be members of a single risk 
        pool.
            (3) Merger of markets.--A State may require the individual 
        and small group insurance markets within a State to be merged 
        if the State determines appropriate.
            (4) State law.--A State law requiring grandfathered health 
        plans to be included in a pool described in paragraph (1) or 
        (2) shall not apply.
    (d) Empowering Consumer Choice.--
            (1) Continued operation of market outside exchanges.--
        Nothing in this title shall be construed to prohibit--
                    (A) a health insurance issuer from offering outside 
                of an Exchange a health plan to a qualified individual 
                or qualified employer; and
                    (B) a qualified individual from enrolling in, or a 
                qualified employer from selecting for its employees, a 
                health plan offered outside of an Exchange.
            (2) Continued operation of state benefit requirements.--
        Nothing in this title shall be construed to terminate, abridge, 
        or limit the operation of any requirement under State law with 
        respect to any policy or plan that is offered outside of an 
        Exchange to offer benefits.
            (3) Voluntary nature of an exchange.--
                    (A) Choice to enroll or not to enroll.--Nothing in 
                this title shall be construed to restrict the choice of 
                a qualified individual to enroll or not to enroll in a 
                qualified health plan or to participate in an Exchange.
                    (B) Prohibition against compelled enrollment.--
                Nothing in this title shall be construed to compel an 
                individual to enroll in a qualified health plan or to 
                participate in an Exchange.
                    (C) Individuals allowed to enroll in any plan.--A 
                qualified individual may enroll in any qualified health 
                plan, except that in the case of a catastrophic plan 
                described in section 1302(e), a qualified individual 
                may enroll in the plan only if the individual is 
                eligible to enroll in the plan under section 
                1302(e)(2).
                    (D) Members of congress in the exchange.--
                            (i) Requirement.--Notwithstanding any other 
                        provision of law, after the effective date of 
                        this subtitle, the only health plans that the 
                        Federal Government may make available to 
                        Members of Congress and congressional staff 
                        with respect to their service as a Member of 
                        Congress or congressional staff shall be health 
                        plans that are--
                                    (I) created under this Act (or an 
                                amendment made by this Act); or
                                    (II) offered through an Exchange 
                                established under this Act (or an 
                                amendment made by this Act).
                            (ii) Definitions.--In this section:
                                    (I) Member of congress.--The term 
                                ``Member of Congress'' means any member 
                                of the House of Representatives or the 
                                Senate.
                                    (II) Congressional staff.--The term 
                                ``congressional staff'' means all full-
                                time and part-time employees employed 
                                by the official office of a Member of 
                                Congress, whether in Washington, DC or 
                                outside of Washington, DC.
            (4) No penalty for transferring to minimum essential 
        coverage outside exchange.--An Exchange, or a qualified health 
        plan offered through an Exchange, shall not impose any penalty 
        or other fee on an individual who cancels enrollment in a plan 
        because the individual becomes eligible for minimum essential 
        coverage (as defined in section 5000A(f) of the Internal 
        Revenue Code of 1986 without regard to paragraph (1)(C) or (D) 
        thereof) or such coverage becomes affordable (within the 
        meaning of section 36B(c)(2)(C) of such Code).
    (e) Enrollment Through Agents or Brokers.--The Secretary shall 
establish procedures under which a State may allow agents or brokers--
            (1) to enroll individuals in any qualified health plans in 
        the individual or small group market as soon as the plan is 
        offered through an Exchange in the State; and
            (2) to assist individuals in applying for premium tax 
        credits and cost-sharing reductions for plans sold through an 
        Exchange.
Such procedures may include the establishment of rate schedules for 
broker commissions paid by health benefits plans offered through an 
exchange.
    (f) Qualified Individuals and Employers; Access Limited to Citizens 
and Lawful Residents.--
            (1) Qualified individuals.--In this title:
                    (A) In general.--The term ``qualified individual'' 
                means, with respect to an Exchange, an individual who--
                            (i) is seeking to enroll in a qualified 
                        health plan in the individual market offered 
                        through the Exchange; and
                            (ii) resides in the State that established 
                        the Exchange (except with respect to 
                        territorial agreements under section 1312(f)).
                    (B) Incarcerated individuals excluded.--An 
                individual shall not be treated as a qualified 
                individual if, at the time of enrollment, the 
                individual is incarcerated, other than incarceration 
                pending the disposition of charges.
            (2) Qualified employer.--In this title:
                    (A) In general.--The term ``qualified employer'' 
                means a small employer that elects to make all full-
                time employees of such employer eligible for 1 or more 
                qualified health plans offered in the small group 
                market through an Exchange that offers qualified health 
                plans.
                    (B) Extension to large groups.--
                            (i) In general.--Beginning in 2017, each 
                        State may allow issuers of health insurance 
                        coverage in the large group market in the State 
                        to offer qualified health plans in such market 
                        through an Exchange. Nothing in this 
                        subparagraph shall be construed as requiring 
                        the issuer to offer such plans through an 
                        Exchange.
                            (ii) Large employers eligible.--If a State 
                        under clause (i) allows issuers to offer 
                        qualified health plans in the large group 
                        market through an Exchange, the term 
                        ``qualified employer'' shall include a large 
                        employer that elects to make all full-time 
                        employees of such employer eligible for 1 or 
                        more qualified health plans offered in the 
                        large group market through the Exchange.
            (3) Access limited to lawful residents.--If an individual 
        is not, or is not reasonably expected to be for the entire 
        period for which enrollment is sought, a citizen or national of 
        the United States or an alien lawfully present in the United 
        States, the individual shall not be treated as a qualified 
        individual and may not be covered under a qualified health plan 
        in the individual market that is offered through an Exchange.

SEC. 1313. FINANCIAL INTEGRITY.

    (a) Accounting for Expenditures.--
            (1) In general.--An Exchange shall keep an accurate 
        accounting of all activities, receipts, and expenditures and 
        shall annually submit to the Secretary a report concerning such 
        accountings.
            (2) Investigations.--The Secretary, in coordination with 
        the Inspector General of the Department of Health and Human 
        Services, may investigate the affairs of an Exchange, may 
        examine the properties and records of an Exchange, and may 
        require periodic reports in relation to activities undertaken 
        by an Exchange. An Exchange shall fully cooperate in any 
        investigation conducted under this paragraph.
            (3) Audits.--An Exchange shall be subject to annual audits 
        by the Secretary.
            (4) Pattern of abuse.--If the Secretary determines that an 
        Exchange or a State has engaged in serious misconduct with 
        respect to compliance with the requirements of, or carrying out 
        of activities required under, this title, the Secretary may 
        rescind from payments otherwise due to such State involved 
        under this or any other Act administered by the Secretary an 
        amount not to exceed 1 percent of such payments per year until 
        corrective actions are taken by the State that are determined 
        to be adequate by the Secretary.
            (5) Protections against fraud and abuse.--With respect to 
        activities carried out under this title, the Secretary shall 
        provide for the efficient and non-discriminatory administration 
        of Exchange activities and implement any measure or procedure 
        that--
                    (A) the Secretary determines is appropriate to 
                reduce fraud and abuse in the administration of this 
                title; and
                    (B) the Secretary has authority to implement under 
                this title or any other Act.
            (6) Application of the false claims act.--
                    (A) In general.--Payments made by, through, or in 
                connection with an Exchange are subject to the False 
                Claims Act (31 U.S.C. 3729 et seq.) if those payments 
                include any Federal funds. Compliance with the 
                requirements of this Act concerning eligibility for a 
                health insurance issuer to participate in the Exchange 
                shall be a material condition of an issuer's 
                entitlement to receive payments, including payments of 
                premium tax credits and cost-sharing reductions, 
                through the Exchange.
                    (B) Damages.--Notwithstanding paragraph (1) of 
                section 3729(a) of title 31, United States Code, and 
                subject to paragraph (2) of such section, the civil 
                penalty assessed under the False Claims Act on any 
                person found liable under such Act as described in 
                subparagraph (A) shall be increased by not less than 3 
                times and not more than 6 times the amount of damages 
                which the Government sustains because of the act of 
                that person.
    (b) GAO Oversight.--Not later than 5 years after the first date on 
which Exchanges are required to be operational under this title, the 
Comptroller General shall conduct an ongoing study of Exchange 
activities and the enrollees in qualified health plans offered through 
Exchanges. Such study shall review--
            (1) the operations and administration of Exchanges, 
        including surveys and reports of qualified health plans offered 
        through Exchanges and on the experience of such plans 
        (including data on enrollees in Exchanges and individuals 
        purchasing health insurance coverage outside of Exchanges), the 
        expenses of Exchanges, claims statistics relating to qualified 
        health plans, complaints data relating to such plans, and the 
        manner in which Exchanges meet their goals;
            (2) any significant observations regarding the utilization 
        and adoption of Exchanges;
            (3) where appropriate, recommendations for improvements in 
        the operations or policies of Exchanges; and
            (4) how many physicians, by area and specialty, are not 
        taking or accepting new patients enrolled in Federal Government 
        health care programs, and the adequacy of provider networks of 
        Federal Government health care programs.

           PART III--STATE FLEXIBILITY RELATING TO EXCHANGES

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

    (a) Establishment of Standards.--
            (1) In general.--The Secretary shall, as soon as 
        practicable after the date of enactment of this Act, issue 
        regulations setting standards for meeting the requirements 
        under this title, and the amendments made by this title, with 
        respect to--
                    (A) the establishment and operation of Exchanges 
                (including SHOP Exchanges);
                    (B) the offering of qualified health plans through 
                such Exchanges;
                    (C) the establishment of the reinsurance and risk 
                adjustment programs under part V; and
                    (D) such other requirements as the Secretary 
                determines appropriate.
        The preceding sentence shall not apply to standards for 
        requirements under subtitles A and C (and the amendments made 
        by such subtitles) for which the Secretary issues regulations 
        under the Public Health Service Act.
            (2) Consultation.--In issuing the regulations under 
        paragraph (1), the Secretary shall consult with the National 
        Association of Insurance Commissioners and its members and with 
        health insurance issuers, consumer organizations, and such 
        other individuals as the Secretary selects in a manner designed 
        to ensure balanced representation among interested parties.
    (b) State Action.--Each State that elects, at such time and in such 
manner as the Secretary may prescribe, to apply the requirements 
described in subsection (a) shall, not later than January 1, 2014, 
adopt and have in effect--
            (1) the Federal standards established under subsection (a); 
        or
            (2) a State law or regulation that the Secretary determines 
        implements the standards within the State.
    (c) Failure To Establish Exchange or Implement Requirements.--
            (1) In general.--If--
                    (A) a State is not an electing State under 
                subsection (b); or
                    (B) the Secretary determines, on or before January 
                1, 2013, that an electing State--
                            (i) will not have any required Exchange 
                        operational by January 1, 2014; or
                            (ii) has not taken the actions the 
                        Secretary determines necessary to implement--
                                    (I) the other requirements set 
                                forth in the standards under subsection 
                                (a); or
                                    (II) the requirements set forth in 
                                subtitles A and C and the amendments 
                                made by such subtitles;
        the Secretary shall (directly or through agreement with a not-
        for-profit entity) establish and operate such Exchange within 
        the State and the Secretary shall take such actions as are 
        necessary to implement such other requirements.
            (2) Enforcement authority.--The provisions of section 
        2736(b) of the Public Health Services Act shall apply to the 
        enforcement under paragraph (1) of requirements of subsection 
        (a)(1) (without regard to any limitation on the application of 
        those provisions to group health plans).
    (d) No Interference With State Regulatory Authority.--Nothing in 
this title shall be construed to preempt any State law that does not 
prevent the application of the provisions of this title.
    (e) Presumption for Certain State-Operated Exchanges.--
            (1) In general.--In the case of a State operating an 
        Exchange before January 1, 2010, and which has insured a 
        percentage of its population not less than the percentage of 
        the population projected to be covered nationally after the 
        implementation of this Act, that seeks to operate an Exchange 
        under this section, the Secretary shall presume that such 
        Exchange meets the standards under this section unless the 
        Secretary determines, after completion of the process 
        established under paragraph (2), that the Exchange does not 
        comply with such standards.
            (2) Process.--The Secretary shall establish a process to 
        work with a State described in paragraph (1) to provide 
        assistance necessary to assist the State's Exchange in coming 
        into compliance with the standards for approval under this 
        section.

SEC. 1322. FEDERAL PROGRAM TO ASSIST ESTABLISHMENT AND OPERATION OF 
              NONPROFIT, MEMBER-RUN HEALTH INSURANCE ISSUERS.

    (a) Establishment of Program.--
            (1) In general.--The Secretary shall establish a program to 
        carry out the purposes of this section to be known as the 
        Consumer Operated and Oriented Plan (CO-OP) program.
            (2) Purpose.--It is the purpose of the CO-OP program to 
        foster the creation of qualified nonprofit health insurance 
        issuers to offer qualified health plans in the individual and 
        small group markets in the States in which the issuers are 
        licensed to offer such plans.
    (b) Loans and Grants Under the CO-OP Program.--
            (1) In general.--The Secretary shall provide through the 
        CO-OP program for the awarding to persons applying to become 
        qualified nonprofit health insurance issuers of--
                    (A) loans to provide assistance to such person in 
                meeting its start-up costs; and
                    (B) grants to provide assistance to such person in 
                meeting any solvency requirements of States in which 
                the person seeks to be licensed to issue qualified 
                health plans.
            (2) Requirements for awarding loans and grants.--
                    (A) In general.--In awarding loans and grants under 
                the CO-OP program, the Secretary shall--
                            (i) take into account the recommendations 
                        of the advisory board established under 
                        paragraph (3);
                            (ii) give priority to applicants that will 
                        offer qualified health plans on a Statewide 
                        basis, will utilize integrated care models, and 
                        have significant private support; and
                            (iii) ensure that there is sufficient 
                        funding to establish at least 1 qualified 
                        nonprofit health insurance issuer in each 
                        State, except that nothing in this clause shall 
                        prohibit the Secretary from funding the 
                        establishment of multiple qualified nonprofit 
                        health insurance issuers in any State if the 
                        funding is sufficient to do so.
                    (B) States without issuers in program.--If no 
                health insurance issuer applies to be a qualified 
                nonprofit health insurance issuer within a State, the 
                Secretary may use amounts appropriated under this 
                section for the awarding of grants to encourage the 
                establishment of a qualified nonprofit health insurance 
                issuer within the State or the expansion of a qualified 
                nonprofit health insurance issuer from another State to 
                the State.
                    (C) Agreement.--
                            (i) In general.--The Secretary shall 
                        require any person receiving a loan or grant 
                        under the CO-OP program to enter into an 
                        agreement with the Secretary which requires 
                        such person to meet (and to continue to meet)--
                                    (I) any requirement under this 
                                section for such person to be treated 
                                as a qualified nonprofit health 
                                insurance issuer; and
                                    (II) any requirements contained in 
                                the agreement for such person to 
                                receive such loan or grant.
                            (ii) Restrictions on use of federal 
                        funds.--The agreement shall include a 
                        requirement that no portion of the funds made 
                        available by any loan or grant under this 
                        section may be used--
                                    (I) for carrying on propaganda, or 
                                otherwise attempting, to influence 
                                legislation; or
                                    (II) for marketing.
                        Nothing in this clause shall be construed to 
                        allow a person to take any action prohibited by 
                        section 501(c)(29) of the Internal Revenue Code 
                        of 1986.
                            (iii) Failure to meet requirements.--If the 
                        Secretary determines that a person has failed 
                        to meet any requirement described in clause (i) 
                        or (ii) and has failed to correct such failure 
                        within a reasonable period of time of when the 
                        person first knows (or reasonably should have 
                        known) of such failure, such person shall repay 
                        to the Secretary an amount equal to the sum 
                        of--
                                    (I) 110 percent of the aggregate 
                                amount of loans and grants received 
                                under this section; plus
                                    (II) interest on the aggregate 
                                amount of loans and grants received 
                                under this section for the period the 
                                loans or grants were outstanding.
                        The Secretary shall notify the Secretary of the 
                        Treasury of any determination under this 
                        section of a failure that results in the 
                        termination of an issuer's tax-exempt status 
                        under section 501(c)(29) of such Code.
                    (D) Time for awarding loans and grants.--The 
                Secretary shall not later than July 1, 2013, award the 
                loans and grants under the CO-OP program and begin the 
                distribution of amounts awarded under such loans and 
                grants.
            (3) Advisory board.--
                    (A) In general.--The advisory board under this 
                paragraph shall consist of 15 members appointed by the 
                Comptroller General of the United States from among 
                individuals with qualifications described in section 
                1805(c)(2) of the Social Security Act.
                    (B) Rules relating to appointments.--
                            (i) Standards.--Any individual appointed 
                        under subparagraph (A) shall meet ethics and 
                        conflict of interest standards protecting 
                        against insurance industry involvement and 
                        interference.
                            (ii) Original appointments.--The original 
                        appointment of board members under subparagraph 
                        (A)(ii) shall be made no later than 3 months 
                        after the date of enactment of this Act.
                    (C) Vacancy.--Any vacancy on the advisory board 
                shall be filled in the same manner as the original 
                appointment.
                    (D) Pay and reimbursement.--
                            (i) No compensation for members of advisory 
                        board.--Except as provided in clause (ii), a 
                        member of the advisory board may not receive 
                        pay, allowances, or benefits by reason of their 
                        service on the board.
                            (ii) Travel expenses.--Each member shall 
                        receive travel expenses, including per diem in 
                        lieu of subsistence under subchapter I of 
                        chapter 57 of title 5, United States Code.
                    (E) Application of faca.--The Federal Advisory 
                Committee Act (5 U.S.C. App.) shall apply to the 
                advisory board, except that section 14 of such Act 
                shall not apply.
                    (F) Termination.--The advisory board shall 
                terminate on the earlier of the date that it completes 
                its duties under this section or December 31, 2015.
    (c) Qualified Nonprofit Health Insurance Issuer.--For purposes of 
this section--
            (1) In general.--The term ``qualified nonprofit health 
        insurance issuer'' means a health insurance issuer that is an 
        organization--
                    (A) that is organized under State law as a 
                nonprofit, member corporation;
                    (B) substantially all of the activities of which 
                consist of the issuance of qualified health plans in 
                the individual and small group markets in each State in 
                which it is licensed to issue such plans; and
                    (C) that meets the other requirements of this 
                subsection.
            (2) Certain organizations prohibited.--An organization 
        shall not be treated as a qualified nonprofit health insurance 
        issuer if--
                    (A) the organization or a related entity (or any 
                predecessor of either) was a health insurance issuer on 
                July 16, 2009; or
                    (B) the organization is sponsored by a State or 
                local government, any political subdivision thereof, or 
                any instrumentality of such government or political 
                subdivision.
            (3) Governance requirements.--An organization shall not be 
        treated as a qualified nonprofit health insurance issuer 
        unless--
                    (A) the governance of the organization is subject 
                to a majority vote of its members;
                    (B) its governing documents incorporate ethics and 
                conflict of interest standards protecting against 
                insurance industry involvement and interference; and
                    (C) as provided in regulations promulgated by the 
                Secretary, the organization is required to operate with 
                a strong consumer focus, including timeliness, 
                responsiveness, and accountability to members.
            (4) Profits inure to benefit of members.--An organization 
        shall not be treated as a qualified nonprofit health insurance 
        issuer unless any profits made by the organization are required 
        to be used to lower premiums, to improve benefits, or for other 
        programs intended to improve the quality of health care 
        delivered to its members.
            (5) Compliance with state insurance laws.--An organization 
        shall not be treated as a qualified nonprofit health insurance 
        issuer unless the organization meets all the requirements that 
        other issuers of qualified health plans are required to meet in 
        any State where the issuer offers a qualified health plan, 
        including solvency and licensure requirements, rules on 
        payments to providers, and compliance with network adequacy 
        rules, rate and form filing rules, any applicable State premium 
        assessments and any other State law described in section 
        1324(b).
            (6) Coordination with state insurance reforms.--An 
        organization shall not be treated as a qualified nonprofit 
        health insurance issuer unless the organization does not offer 
        a health plan in a State until that State has in effect (or the 
        Secretary has implemented for the State) the market reforms 
        required by part A of title XXVII of the Public Health Service 
        Act (as amended by subtitles A and C of this Act).
    (d) Establishment of Private Purchasing Council.--
            (1) In general.--Qualified nonprofit health insurance 
        issuers participating in the CO-OP program under this section 
        may establish a private purchasing council to enter into 
        collective purchasing arrangements for items and services that 
        increase administrative and other cost efficiencies, including 
        claims administration, administrative services, health 
        information technology, and actuarial services.
            (2) Council may not set payment rates.--The private 
        purchasing council established under paragraph (1) shall not 
        set payment rates for health care facilities or providers 
        participating in health insurance coverage provided by 
        qualified nonprofit health insurance issuers.
            (3) Continued application of antitrust laws.--
                    (A) In general.--Nothing in this section shall be 
                construed to limit the application of the antitrust 
                laws to any private purchasing council (whether or not 
                established under this subsection) or to any qualified 
                nonprofit health insurance issuer participating in such 
                a council.
                    (B) Antitrust laws.--For purposes of this 
                subparagraph, the term ``antitrust laws'' has the 
                meaning given the term in subsection (a) of the first 
                section of the Clayton Act (15 U.S.C. 12(a)). Such term 
                also includes section 5 of the Federal Trade Commission 
                Act (15 U.S.C. 45) to the extent that such section 5 
                applies to unfair methods of competition.
    (e) Limitation on Participation.--No representative of any Federal, 
State, or local government (or of any political subdivision or 
instrumentality thereof), and no representative of a person described 
in subsection (c)(2)(A), may serve on the board of directors of a 
qualified nonprofit health insurance issuer or with a private 
purchasing council established under subsection (d).
    (f) Limitations on Secretary.--
            (1) In general.--The Secretary shall not--
                    (A) participate in any negotiations between 1 or 
                more qualified nonprofit health insurance issuers (or a 
                private purchasing council established under subsection 
                (d)) and any health care facilities or providers, 
                including any drug manufacturer, pharmacy, or hospital; 
                and
                    (B) establish or maintain a price structure for 
                reimbursement of any health benefits covered by such 
                issuers.
            (2) Competition.--Nothing in this section shall be 
        construed as authorizing the Secretary to interfere with the 
        competitive nature of providing health benefits through 
        qualified nonprofit health insurance issuers.
    (g) Appropriations.--There are hereby appropriated, out of any 
funds in the Treasury not otherwise appropriated, $6,000,000,000 to 
carry out this section.
    (h) Tax Exemption for Qualified Nonprofit Health Insurance 
Issuer.--
            (1) In general.--Section 501(c) of the Internal Revenue 
        Code of 1986 (relating to list of exempt organizations) is 
        amended by adding at the end the following:
            ``(29) CO-OP health insurance issuers.--
                    ``(A) In general.--A qualified nonprofit health 
                insurance issuer (within the meaning of section 1322 of 
                the Patient Protection and Affordable Care Act) which 
                has received a loan or grant under the CO-OP program 
                under such section, but only with respect to periods 
                for which the issuer is in compliance with the 
                requirements of such section and any agreement with 
                respect to the loan or grant.
                    ``(B) Conditions for exemption.--Subparagraph (A) 
                shall apply to an organization only if--
                            ``(i) the organization has given notice to 
                        the Secretary, in such manner as the Secretary 
                        may by regulations prescribe, that it is 
                        applying for recognition of its status under 
                        this paragraph,
                            ``(ii) except as provided in section 
                        1322(c)(4) of the Patient Protection and 
                        Affordable Care Act, no part of the net 
                        earnings of which inures to the benefit of any 
                        private shareholder or individual,
                            ``(iii) no substantial part of the 
                        activities of which is carrying on propaganda, 
                        or otherwise attempting, to influence 
                        legislation, and
                            ``(iv) the organization does not 
                        participate in, or intervene in (including the 
                        publishing or distributing of statements), any 
                        political campaign on behalf of (or in 
                        opposition to) any candidate for public 
                        office.''.
            (2) Additional reporting requirement.--Section 6033 of such 
        Code (relating to returns by exempt organizations) is amended 
        by redesignating subsection (m) as subsection (n) and by 
        inserting after subsection (l) the following:
    ``(m) Additional Information Required From CO-OP Insurers.--An 
organization described in section 501(c)(29) shall include on the 
return required under subsection (a) the following information:
            ``(1) The amount of the reserves required by each State in 
        which the organization is licensed to issue qualified health 
        plans.
            ``(2) The amount of reserves on hand.''.
            (3) Application of tax on excess benefit transactions.--
        Section 4958(e)(1) of such Code (defining applicable tax-exempt 
        organization) is amended by striking ``paragraph (3) or (4)'' 
        and inserting ``paragraph (3), (4), or (29)''.
    (i) GAO Study and Report.--
            (1) Study.--The Comptroller General of the General 
        Accountability Office shall conduct an ongoing study on 
        competition and market concentration in the health insurance 
        market in the United States after the implementation of the 
        reforms in such market under the provisions of, and the 
        amendments made by, this Act. Such study shall include an 
        analysis of new issuers of health insurance in such market.
            (2) Report.--The Comptroller General shall, not later than 
        December 31 of each even-numbered year (beginning with 2014), 
        report to the appropriate committees of the Congress the 
        results of the study conducted under paragraph (1), including 
        any recommendations for administrative or legislative changes 
        the Comptroller General determines necessary or appropriate to 
        increase competition in the health insurance market.

SEC. 1323. COMMUNITY HEALTH INSURANCE OPTION.

    (a) Voluntary Nature.--
            (1) No requirement for health care providers to 
        participate.--Nothing in this section shall be construed to 
        require a health care provider to participate in a community 
        health insurance option, or to impose any penalty for non-
        participation.
            (2) No requirement for individuals to join.--Nothing in 
        this section shall be construed to require an individual to 
        participate in a community health insurance option, or to 
        impose any penalty for non-participation.
            (3) State opt out.--
                    (A) In general.--A State may elect to prohibit 
                Exchanges in such State from offering a community 
                health insurance option if such State enacts a law to 
                provide for such prohibition.
                    (B) Termination of opt out.--A State may repeal a 
                law described in subparagraph (A) and provide for the 
                offering of such an option through the Exchange.
    (b) Establishment of Community Health Insurance Option.--
            (1) Establishment.--The Secretary shall establish a 
        community health insurance option to offer, through the 
        Exchanges established under this title (other than Exchanges in 
        States that elect to opt out as provided for in subsection 
        (a)(3)), health care coverage that provides value, choice, 
        competition, and stability of affordable, high quality coverage 
        throughout the United States.
            (2) Community health insurance option.--In this section, 
        the term ``community health insurance option'' means health 
        insurance coverage that--
                    (A) except as specifically provided for in this 
                section, complies with the requirements for being a 
                qualified health plan;
                    (B) provides high value for the premium charged;
                    (C) reduces administrative costs and promotes 
                administrative simplification for beneficiaries;
                    (D) promotes high quality clinical care;
                    (E) provides high quality customer service to 
                beneficiaries;
                    (F) offers a sufficient choice of providers; and
                    (G) complies with State laws (if any), except as 
                otherwise provided for in this title, relating to the 
                laws described in section 1324(b).
            (3) Essential health benefits.--
                    (A) General rule.--Except as provided in 
                subparagraph (B), a community health insurance option 
                offered under this section shall provide coverage only 
                for the essential health benefits described in section 
                1302(b).
                    (B) States may offer additional benefits.--Nothing 
                in this section shall preclude a State from requiring 
                that benefits in addition to the essential health 
                benefits required under subparagraph (A) be provided to 
                enrollees of a community health insurance option 
                offered in such State.
                    (C) Credits.--
                            (i) In general.--An individual enrolled in 
                        a community health insurance option under this 
                        section shall be eligible for credits under 
                        section 36B of the Internal Revenue Code of 
                        1986 in the same manner as an individual who is 
                        enrolled in a qualified health plan.
                            (ii) No additional federal cost.--A 
                        requirement by a State under subparagraph (B) 
                        that benefits in addition to the essential 
                        health benefits required under subparagraph (A) 
                        be provided to enrollees of a community health 
                        insurance option shall not affect the amount of 
                        a premium tax credit provided under section 36B 
                        of the Internal Revenue Code of 1986 with 
                        respect to such plan.
                    (D) State must assume cost.--A State shall make 
                payments to or on behalf of an eligible individual to 
                defray the cost of any additional benefits described in 
                subparagraph (B).
                    (E) Ensuring access to all services.--Nothing in 
                this Act shall prohibit an individual enrolled in a 
                community health insurance option from paying out-of-
                pocket the full cost of any item or service not 
                included as an essential health benefit or otherwise 
                covered as a benefit by a health plan. Nothing in 
                subparagraph (B) shall prohibit any type of medical 
                provider from accepting an out-of-pocket payment from 
                an individual enrolled in a community health insurance 
                option for a service otherwise not included as an 
                essential health benefit.
                    (F) Protecting access to end of life care.--A 
                community health insurance option offered under this 
                section shall be prohibited from limiting access to end 
                of life care.
            (4) Cost sharing.--A community health insurance option 
        shall offer coverage at each of the levels of coverage 
        described in section 1302(d).
            (5) Premiums.--
                    (A) Premiums sufficient to cover costs.--The 
                Secretary shall establish geographically adjusted 
                premium rates in an amount sufficient to cover expected 
                costs (including claims and administrative costs) using 
                methods in general use by qualified health plans.
                    (B) Applicable rules.--The provisions of title 
                XXVII of the Public Health Service Act relating to 
                premiums shall apply to community health insurance 
                options under this section, including modified 
                community rating provisions under section 2701 of such 
                Act.
                    (C) Collection of data.--The Secretary shall 
                collect data as necessary to set premium rates under 
                subparagraph (A).
                    (D) National pooling.--Notwithstanding any other 
                provision of law, the Secretary may treat all enrollees 
                in community health insurance options as members of a 
                single pool.
                    (E) Contingency margin.--In establishing premium 
                rates under subparagraph (A), the Secretary shall 
                include an appropriate amount for a contingency margin.
            (6) Reimbursement rates.--
                    (A) Negotiated rates.--The Secretary shall 
                negotiate rates for the reimbursement of health care 
                providers for benefits covered under a community health 
                insurance option.
                    (B) Limitation.--The rates described in 
                subparagraph (A) shall not be higher, in aggregate, 
                than the average reimbursement rates paid by health 
                insurance issuers offering qualified health plans 
                through the Exchange.
                    (C) Innovation.--Subject to the limits contained in 
                subparagraph (A), a State Advisory Council established 
                or designated under subsection (d) may develop or 
                encourage the use of innovative payment policies that 
                promote quality, efficiency and savings to consumers.
            (7) Solvency and consumer protection.--
                    (A) Solvency.--The Secretary shall establish a 
                Federal solvency standard to be applied with respect to 
                a community health insurance option. A community health 
                insurance option shall also be subject to the solvency 
                standard of each State in which such community health 
                insurance option is offered.
                    (B) Minimum required.--In establishing the standard 
                described under subparagraph (A), the Secretary shall 
                require a reserve fund that shall be equal to at least 
                the dollar value of the incurred but not reported 
                claims of a community health insurance option.
                    (C) Consumer protections.--The consumer protection 
                laws of a State shall apply to a community health 
                insurance option.
            (8) Requirements established in partnership with insurance 
        commissioners.--
                    (A) In general.--The Secretary, in collaboration 
                with the National Association of Insurance 
                Commissioners (in this paragraph referred to as the 
                ``NAIC''), may promulgate regulations to establish 
                additional requirements for a community health 
                insurance option.
                    (B) Applicability.--Any requirement promulgated 
                under subparagraph (A) shall be applicable to such 
                option beginning 90 days after the date on which the 
                regulation involved becomes final.
    (c) Start-up Fund.--
            (1) Establishment of fund.--
                    (A) In general.--There is established in the 
                Treasury of the United States a trust fund to be known 
                as the ``Health Benefit Plan Start-Up Fund'' (referred 
                to in this section as the ``Start-Up Fund''), that 
                shall consist of such amounts as may be appropriated or 
                credited to the Start-Up Fund as provided for in this 
                subsection to provide loans for the initial operations 
                of a community health insurance option. Such amounts 
                shall remain available until expended.
                    (B) Funding.--There is hereby appropriated to the 
                Start-Up Fund, out of any moneys in the Treasury not 
                otherwise appropriated an amount requested by the 
                Secretary of Health and Human Services as necessary 
                to--
                            (i) pay the start-up costs associated with 
                        the initial operations of a community health 
                        insurance option; and
                            (ii) pay the costs of making payments on 
                        claims submitted during the period that is not 
                        more than 90 days from the date on which such 
                        option is offered.
            (2) Use of start-up fund.--The Secretary shall use amounts 
        contained in the Start-Up Fund to make payments (subject to the 
        repayment requirements in paragraph (4)) for the purposes 
        described in paragraph (1)(B).
            (3) Pass through of rebates.--The Secretary may establish 
        procedures for reducing the amount of payments to a contracting 
        administrator to take into account any rebates or price 
        concessions.
            (4) Repayment.--
                    (A) In general.--A community health insurance 
                option shall be required to repay the Secretary of the 
                Treasury (on such terms as the Secretary may require) 
                for any payments made under paragraph (1)(B) by the 
                date that is not later than 9 years after the date on 
                which the payment is made. The Secretary may require 
                the payment of interest with respect to such repayments 
                at rates that do not exceed the market interest rate 
                (as determined by the Secretary).
                    (B) Sanctions in case of for-profit conversion.--In 
                any case in which the Secretary enters into a contract 
                with a qualified entity for the offering of a community 
                health insurance option and such entity is determined 
                to be a for-profit entity by the Secretary, such entity 
                shall be--
                            (i) immediately liable to the Secretary for 
                        any payments received by such entity from the 
                        Start-Up Fund; and
                            (ii) permanently ineligible to offer a 
                        qualified health plan.
    (d) State Advisory Council.--
            (1) Establishment.--A State (other than a State that elects 
        to opt out as provided for in subsection (a)(3)) shall 
        establish or designate a public or non-profit private entity to 
        serve as the State Advisory Council to provide recommendations 
        to the Secretary on the operations and policies of a community 
        health insurance option in the State. Such Council shall 
        provide recommendations on at least the following:
                    (A) policies and procedures to integrate quality 
                improvement and cost containment mechanisms into the 
                health care delivery system;
                    (B) mechanisms to facilitate public awareness of 
                the availability of a community health insurance 
                option; and
                    (C) alternative payment structures under a 
                community health insurance option for health care 
                providers that encourage quality improvement and cost 
                control.
            (2) Members.--The members of the State Advisory Council 
        shall be representatives of the public and shall include health 
        care consumers and providers.
            (3) Applicability of recommendations.--The Secretary may 
        apply the recommendations of a State Advisory Council to a 
        community health insurance option in that State, in any other 
        State, or in all States.
    (e) Authority To Contract; Terms of Contract.--
            (1) Authority.--
                    (A) In general.--The Secretary may enter into a 
                contract or contracts with one or more qualified 
                entities for the purpose of performing administrative 
                functions (including functions described in subsection 
                (a)(4) of section 1874A of the Social Security Act) 
                with respect to a community health insurance option in 
                the same manner as the Secretary may enter into 
                contracts under subsection (a)(1) of such section. The 
                Secretary shall have the same authority with respect to 
                a community health insurance option under this section 
                as the Secretary has under subsections (a)(1) and (b) 
                of section 1874A of the Social Security Act with 
                respect to title XVIII of such Act.
                    (B) Requirements apply.--If the Secretary enters 
                into a contract with a qualified entity to offer a 
                community health insurance option, under such contract 
                such entity--
                            (i) shall meet the criteria established 
                        under paragraph (2); and
                            (ii) shall receive an administrative fee 
                        under paragraph (7).
                    (C) Limitation.--Contracts under this subsection 
                shall not involve the transfer of insurance risk to the 
                contracting administrator.
                    (D) Reference.--An entity with which the Secretary 
                has entered into a contract under this paragraph shall 
                be referred to as a ``contracting administrator''.
            (2) Qualified entity.--To be qualified to be selected by 
        the Secretary to offer a community health insurance option, an 
        entity shall--
                    (A) meet the criteria established under section 
                1874A(a)(2) of the Social Security Act;
                    (B) be a nonprofit entity for purposes of offering 
                such option;
                    (C) meet the solvency standards applicable under 
                subsection (b)(7);
                    (D) be eligible to offer health insurance or health 
                benefits coverage;
                    (E) meet quality standards specified by the 
                Secretary;
                    (F) have in place effective procedures to control 
                fraud, abuse, and waste; and
                    (G) meet such other requirements as the Secretary 
                may impose.
        Procedures described under subparagraph (F) shall include the 
        implementation of procedures to use beneficiary identifiers to 
        identify individuals entitled to benefits so that such an 
        individual's social security account number is not used, and 
        shall also include procedures for the use of technology 
        (including front-end, prepayment intelligent data-matching 
        technology similar to that used by hedge funds, investment 
        funds, and banks) to provide real-time data analysis of claims 
        for payment under this title to identify and investigate 
        unusual billing or order practices under this title that could 
        indicate fraud or abuse.
            (3) Term.--A contract provided for under paragraph (1) 
        shall be for a term of at least 5 years but not more than 10 
        years, as determined by the Secretary. At the end of each such 
        term, the Secretary shall conduct a competitive bidding process 
        for the purposes of renewing existing contracts or selecting 
        new qualified entities with which to enter into contracts under 
        such paragraph.
            (4) Limitation.--A contract may not be renewed under this 
        subsection unless the Secretary determines that the contracting 
        administrator has met performance requirements established by 
        the Secretary in the areas described in paragraph (7)(B).
            (5) Audits.--The Inspector General shall conduct periodic 
        audits with respect to contracting administrators under this 
        subsection to ensure that the administrator involved is in 
        compliance with this section.
            (6) Revocation.--A contract awarded under this subsection 
        shall be revoked by the Secretary, upon the recommendation of 
        the Inspector General, only after notice to the contracting 
        administrator involved and an opportunity for a hearing. The 
        Secretary may revoke such contract if the Secretary determines 
        that such administrator has engaged in fraud, deception, waste, 
        abuse of power, negligence, mismanagement of taxpayer dollars, 
        or gross mismanagement. An entity that has had a contract 
        revoked under this paragraph shall not be qualified to enter 
        into a subsequent contract under this subsection.
            (7) Fee for administration.--
                    (A) In general.--The Secretary shall pay the 
                contracting administrator a fee for the management, 
                administration, and delivery of the benefits under this 
                section.
                    (B) Requirement for high quality administration.--
                The Secretary may increase the fee described in 
                subparagraph (A) by not more than 10 percent, or reduce 
                the fee described in subparagraph (A) by not more than 
                50 percent, based on the extent to which the 
                contracting administrator, in the determination of the 
                Secretary, meets performance requirements established 
                by the Secretary, in at least the following areas:
                            (i) Maintaining low premium costs and low 
                        cost sharing requirements, provided that such 
                        requirements are consistent with section 1302.
                            (ii) Reducing administrative costs and 
                        promoting administrative simplification for 
                        beneficiaries.
                            (iii) Promoting high quality clinical care.
                            (iv) Providing high quality customer 
                        service to beneficiaries.
                    (C) Non-renewal.--The Secretary may not renew a 
                contract to offer a community health insurance option 
                under this section with any contracting entity that has 
                been assessed more than one reduction under 
                subparagraph (B) during the contract period.
            (8) Limitation.--Notwithstanding the terms of a contract 
        under this subsection, the Secretary shall negotiate the 
        reimbursement rates for purposes of subsection (b)(6).
    (f) Report by HHS and Insolvency Warnings.--
            (1) In general.--On an annual basis, the Secretary shall 
        conduct a study on the solvency of a community health insurance 
        option and submit to Congress a report describing the results 
        of such study.
            (2) Result.--If, in any year, the result of the study under 
        paragraph (1) is that a community health insurance option is 
        insolvent, such result shall be treated as a community health 
        insurance option solvency warning.
            (3) Submission of plan and procedure.--
                    (A) In general.--If there is a community health 
                insurance option solvency warning under paragraph (2) 
                made in a year, the President shall submit to Congress, 
                within the 15-day period beginning on the date of the 
                budget submission to Congress under section 1105(a) of 
                title 31, United States Code, for the succeeding year, 
                proposed legislation to respond to such warning.
                    (B) Procedure.--In the case of a legislative 
                proposal submitted by the President pursuant to 
                subparagraph (A), such proposal shall be considered by 
                Congress using the same procedures described under 
                sections 803 and 804 of the Medicare Prescription Drug, 
                Improvement, and Modernization Act of 2003 that shall 
                be used for a medicare funding warning.
    (g) Marketing Parity.--In a facility controlled by the Federal 
Government, or by a State, where marketing or promotional materials 
related to a community health insurance option are made available to 
the public, making available marketing or promotional materials 
relating to private health insurance plans shall not be prohibited. 
Such materials include informational pamphlets, guidebooks, enrollment 
forms, or other materials determined reasonable for display.
    (h) Authorization of Appropriations.--There is authorized to be 
appropriated such sums as may be necessary to carry out this section.

SEC. 1324. LEVEL PLAYING FIELD.

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

      PART IV--STATE FLEXIBILITY TO ESTABLISH ALTERNATIVE PROGRAMS

SEC. 1331. STATE FLEXIBILITY TO ESTABLISH BASIC HEALTH PROGRAMS FOR 
              LOW-INCOME INDIVIDUALS NOT ELIGIBLE FOR MEDICAID.

    (a) Establishment of Program.--
            (1) In general.--The Secretary shall establish a basic 
        health program meeting the requirements of this section under 
        which a State may enter into contracts to offer 1 or more 
        standard health plans providing at least the essential health 
        benefits described in section 1302(b) to eligible individuals 
        in lieu of offering such individuals coverage through an 
        Exchange.
            (2) Certifications as to benefit coverage and costs.--Such 
        program shall provide that a State may not establish a basic 
        health program under this section unless the State establishes 
        to the satisfaction of the Secretary, and the Secretary 
        certifies, that--
                    (A) in the case of an eligible individual enrolled 
                in a standard health plan offered through the program, 
                the State provides--
                            (i) that the amount of the monthly premium 
                        an eligible individual is required to pay for 
                        coverage under the standard health plan for the 
                        individual and the individual's dependents does 
                        not exceed the amount of the monthly premium 
                        that the eligible individual would have been 
                        required to pay (in the rating area in which 
                        the individual resides) if the individual had 
                        enrolled in the applicable second lowest cost 
                        silver plan (as defined in section 36B(b)(3)(B) 
                        of the Internal Revenue Code of 1986) offered 
                        to the individual through an Exchange; and
                            (ii) that the cost-sharing an eligible 
                        individual is required to pay under the 
                        standard health plan does not exceed--
                                    (I) the cost-sharing required under 
                                a platinum plan in the case of an 
                                eligible individual with household 
                                income not in excess of 150 percent of 
                                the poverty line for the size of the 
                                family involved; and
                                    (II) the cost-sharing required 
                                under a gold plan in the case of an 
                                eligible individual not described in 
                                subclause (I); and
                    (B) the benefits provided under the standard health 
                plans offered through the program cover at least the 
                essential health benefits described in section 1302(b).
        For purposes of subparagraph (A)(i), the amount of the monthly 
        premium an individual is required to pay under either the 
        standard health plan or the applicable second lowest cost 
        silver plan shall be determined after reduction for any premium 
        tax credits and cost-sharing reductions allowable with respect 
        to either plan.
    (b) Standard Health Plan.--In this section, the term ``standard 
heath plan'' means a health benefits plan that the State contracts with 
under this section--
            (1) under which the only individuals eligible to enroll are 
        eligible individuals;
            (2) that provides at least the essential health benefits 
        described in section 1302(b); and
            (3) in the case of a plan that provides health insurance 
        coverage offered by a health insurance issuer, that has a 
        medical loss ratio of at least 85 percent.
    (c) Contracting Process.--
            (1) In general.--A State basic health program shall 
        establish a competitive process for entering into contracts 
        with standard health plans under subsection (a), including 
        negotiation of premiums and cost-sharing and negotiation of 
        benefits in addition to the essential health benefits described 
        in section 1302(b).
            (2) Specific items to be considered.--A State shall, as 
        part of its competitive process under paragraph (1), include at 
        least the following:
                    (A) Innovation.--Negotiation with offerors of a 
                standard health plan for the inclusion of innovative 
                features in the plan, including--
                            (i) care coordination and care management 
                        for enrollees, especially for those with 
                        chronic health conditions;
                            (ii) incentives for use of preventive 
                        services; and
                            (iii) the establishment of relationships 
                        between providers and patients that maximize 
                        patient involvement in health care decision-
                        making, including providing incentives for 
                        appropriate utilization under the plan.
                    (B) Health and resource differences.--Consideration 
                of, and the making of suitable allowances for, 
                differences in health care needs of enrollees and 
                differences in local availability of, and access to, 
                health care providers. Nothing in this subparagraph 
                shall be construed as allowing discrimination on the 
                basis of pre-existing conditions or other health 
                status-related factors.
                    (C) Managed care.--Contracting with managed care 
                systems, or with systems that offer as many of the 
                attributes of managed care as are feasible in the local 
                health care market.
                    (D) Performance measures.--Establishing specific 
                performance measures and standards for issuers of 
                standard health plans that focus on quality of care and 
                improved health outcomes, requiring such plans to 
                report to the State with respect to the measures and 
                standards, and making the performance and quality 
                information available to enrollees in a useful form.
            (3) Enhanced availability.--
                    (A) Multiple plans.--A State shall, to the maximum 
                extent feasible, seek to make multiple standard health 
                plans available to eligible individuals within a State 
                to ensure individuals have a choice of such plans.
                    (B) Regional compacts.--A State may negotiate a 
                regional compact with other States to include coverage 
                of eligible individuals in all such States in 
                agreements with issuers of standard health plans.
            (4) Coordination with other state programs.--A State shall 
        seek to coordinate the administration of, and provision of 
        benefits under, its program under this section with the State 
        medicaid program under title XIX of the Social Security Act, 
        the State child health plan under title XXI of such Act, and 
        other State-administered health programs to maximize the 
        efficiency of such programs and to improve the continuity of 
        care.
    (d) Transfer of Funds to States.--
            (1) In general.--If the Secretary determines that a State 
        electing the application of this section meets the requirements 
        of the program established under subsection (a), the Secretary 
        shall transfer to the State for each fiscal year for which 1 or 
        more standard health plans are operating within the State the 
        amount determined under paragraph (3).
            (2) Use of funds.--A State shall establish a trust for the 
        deposit of the amounts received under paragraph (1) and amounts 
        in the trust fund shall only be used to reduce the premiums and 
        cost-sharing of, or to provide additional benefits for, 
        eligible individuals enrolled in standard health plans within 
        the State. Amounts in the trust fund, and expenditures of such 
        amounts, shall not be included in determining the amount of any 
        non-Federal funds for purposes of meeting any matching or 
        expenditure requirement of any federally-funded program.
            (3) Amount of payment.--
                    (A) Secretarial determination.--
                            (i) In general.--The amount determined 
                        under this paragraph for any fiscal year is the 
                        amount the Secretary determines is equal to 85 
                        percent of the premium tax credits under 
                        section 36B of the Internal Revenue Code of 
                        1986, and the cost-sharing reductions under 
                        section 1402, that would have been provided for 
                        the fiscal year to eligible individuals 
                        enrolled in standard health plans in the State 
                        if such eligible individuals were allowed to 
                        enroll in qualified health plans through an 
                        Exchange established under this subtitle.
                            (ii) Specific requirements.--The Secretary 
                        shall make the determination under clause (i) 
                        on a per enrollee basis and shall take into 
                        account all relevant factors necessary to 
                        determine the value of the premium tax credits 
                        and cost-sharing reductions that would have 
                        been provided to eligible individuals described 
                        in clause (i), including the age and income of 
                        the enrollee, whether the enrollment is for 
                        self-only or family coverage, geographic 
                        differences in average spending for health care 
                        across rating areas, the health status of the 
                        enrollee for purposes of determining risk 
                        adjustment payments and reinsurance payments 
                        that would have been made if the enrollee had 
                        enrolled in a qualified health plan through an 
                        Exchange, and whether any reconciliation of the 
                        credit or cost-sharing reductions would have 
                        occurred if the enrollee had been so enrolled. 
                        This determination shall take into 
                        consideration the experience of other States 
                        with respect to participation in an Exchange 
                        and such credits and reductions provided to 
                        residents of the other States, with a special 
                        focus on enrollees with income below 200 
                        percent of poverty.
                            (iii) Certification.--The Chief Actuary of 
                        the Centers for Medicare & Medicaid Services, 
                        in consultation with the Office of Tax Analysis 
                        of the Department of the Treasury, shall 
                        certify whether the methodology used to make 
                        determinations under this subparagraph, and 
                        such determinations, meet the requirements of 
                        clause (ii). Such certifications shall be based 
                        on sufficient data from the State and from 
                        comparable States about their experience with 
                        programs created by this Act.
                    (B) Corrections.--The Secretary shall adjust the 
                payment for any fiscal year to reflect any error in the 
                determinations under subparagraph (A) for any preceding 
                fiscal year.
            (4) Application of special rules.--The provisions of 
        section 1303 shall apply to a State basic health program, and 
        to standard health plans offered through such program, in the 
        same manner as such rules apply to qualified health plans.
    (e) Eligible Individual.--
            (1) In general.--In this section, the term ``eligible 
        individual'' means, with respect to any State, an individual--
                    (A) who a resident of the State who is not eligible 
                to enroll in the State's medicaid program under title 
                XIX of the Social Security Act for benefits that at a 
                minimum consist of the essential health benefits 
                described in section 1302(b);
                    (B) whose household income exceeds 133 percent but 
                does not exceed 200 percent of the poverty line for the 
                size of the family involved;
                    (C) who is not eligible for minimum essential 
                coverage (as defined in section 5000A(f) of the 
                Internal Revenue Code of 1986) or is eligible for an 
                employer-sponsored plan that is not affordable coverage 
                (as determined under section 5000A(e)(2) of such Code); 
                and
                    (D) who has not attained age 65 as of the beginning 
                of the plan year.
        Such term shall not include any individual who is not a 
        qualified individual under section 1312 who is eligible to be 
        covered by a qualified health plan offered through an Exchange.
            (2) Eligible individuals may not use exchange.--An eligible 
        individual shall not be treated as a qualified individual under 
        section 1312 eligible for enrollment in a qualified health plan 
        offered through an Exchange established under section 1311.
    (f) Secretarial Oversight.--The Secretary shall each year conduct a 
review of each State program to ensure compliance with the requirements 
of this section, including ensuring that the State program meets--
            (1) eligibility verification requirements for participation 
        in the program;
            (2) the requirements for use of Federal funds received by 
        the program; and
            (3) the quality and performance standards under this 
        section.
    (g) Standard Health Plan Offerors.--A State may provide that 
persons eligible to offer standard health plans under a basic health 
program established under this section may include a licensed health 
maintenance organization, a licensed health insurance insurer, or a 
network of health care providers established to offer services under 
the program.
    (h) Definitions.--Any term used in this section which is also used 
in section 36B of the Internal Revenue Code of 1986 shall have the 
meaning given such term by such section.

SEC. 1332. WAIVER FOR STATE INNOVATION.

    (a) Application.--
            (1) In general.--A State may apply to the Secretary for the 
        waiver of all or any requirements described in paragraph (2) 
        with respect to health insurance coverage within that State for 
        plan years beginning on or after January 1, 2017. Such 
        application shall--
                    (A) be filed at such time and in such manner as the 
                Secretary may require;
                    (B) contain such information as the Secretary may 
                require, including--
                            (i) a comprehensive description of the 
                        State legislation and program to implement a 
                        plan meeting the requirements for a waiver 
                        under this section; and
                            (ii) a 10-year budget plan for such plan 
                        that is budget neutral for the Federal 
                        Government; and
                    (C) provide an assurance that the State has enacted 
                the law described in subsection (b)(2).
            (2) Requirements.--The requirements described in this 
        paragraph with respect to health insurance coverage within the 
        State for plan years beginning on or after January 1, 2014, are 
        as follows:
                    (A) Part I of subtitle D.
                    (B) Part II of subtitle D.
                    (C) Section 1402.
                    (D) Sections 36B, 4980H, and 5000A of the Internal 
                Revenue Code of 1986.
            (3) Pass through of funding.--With respect to a State 
        waiver under paragraph (1), under which, due to the structure 
        of the State plan, individuals and small employers in the State 
        would not qualify for the premium tax credits, cost-sharing 
        reductions, or small business credits under sections 36B of the 
        Internal Revenue Code of 1986 or under part I of subtitle E for 
        which they would otherwise be eligible, the Secretary shall 
        provide for an alternative means by which the aggregate amount 
        of such credits or reductions that would have been paid on 
        behalf of participants in the Exchanges established under this 
        title had the State not received such waiver, shall be paid to 
        the State for purposes of implementing the State plan under the 
        waiver. Such amount shall be determined annually by the 
        Secretary, taking into consideration the experience of other 
        States with respect to participation in an Exchange and credits 
        and reductions provided under such provisions to residents of 
        the other States.
            (4) Waiver consideration and transparency.--
                    (A) In general.--An application for a waiver under 
                this section shall be considered by the Secretary in 
                accordance with the regulations described in 
                subparagraph (B).
                    (B) Regulations.--Not later than 180 days after the 
                date of enactment of this Act, the Secretary shall 
                promulgate regulations relating to waivers under this 
                section that provide--
                            (i) a process for public notice and comment 
                        at the State level, including public hearings, 
                        sufficient to ensure a meaningful level of 
                        public input;
                            (ii) a process for the submission of an 
                        application that ensures the disclosure of--
                                    (I) the provisions of law that the 
                                State involved seeks to waive; and
                                    (II) the specific plans of the 
                                State to ensure that the waiver will be 
                                in compliance with subsection (b);
                            (iii) a process for providing public notice 
                        and comment after the application is received 
                        by the Secretary, that is sufficient to ensure 
                        a meaningful level of public input and that 
                        does not impose requirements that are in 
                        addition to, or duplicative of, requirements 
                        imposed under the Administrative Procedures 
                        Act, or requirements that are unreasonable or 
                        unnecessarily burdensome with respect to State 
                        compliance;
                            (iv) a process for the submission to the 
                        Secretary of periodic reports by the State 
                        concerning the implementation of the program 
                        under the waiver; and
                            (v) a process for the periodic evaluation 
                        by the Secretary of the program under the 
                        waiver.
                    (C) Report.--The Secretary shall annually report to 
                Congress concerning actions taken by the Secretary with 
                respect to applications for waivers under this section.
            (5) Coordinated waiver process.--The Secretary shall 
        develop a process for coordinating and consolidating the State 
        waiver processes applicable under the provisions of this 
        section, and the existing waiver processes applicable under 
        titles XVIII, XIX, and XXI of the Social Security Act, and any 
        other Federal law relating to the provision of health care 
        items or services. Such process shall permit a State to submit 
        a single application for a waiver under any or all of such 
        provisions.
            (6) Definition.--In this section, the term ``Secretary'' 
        means--
                    (A) the Secretary of Health and Human Services with 
                respect to waivers relating to the provisions described 
                in subparagraph (A) through (C) of paragraph (2); and
                    (B) the Secretary of the Treasury with respect to 
                waivers relating to the provisions described in 
                paragraph (2)(D).
    (b) Granting of Waivers.--
            (1) In general.--The Secretary may grant a request for a 
        waiver under subsection (a)(1) only if the Secretary determines 
        that the State plan--
                    (A) will provide coverage that is at least as 
                comprehensive as the coverage defined in section 
                1302(b) and offered through Exchanges established under 
                this title as certified by Office of the Actuary of the 
                Centers for Medicare & Medicaid Services based on 
                sufficient data from the State and from comparable 
                States about their experience with programs created by 
                this Act and the provisions of this Act that would be 
                waived;
                    (B) will provide coverage and cost sharing 
                protections against excessive out-of-pocket spending 
                that are at least as affordable as the provisions of 
                this title would provide;
                    (C) will provide coverage to at least a comparable 
                number of its residents as the provisions of this title 
                would provide; and
                    (D) will not increase the Federal deficit.
            (2) Requirement to enact a law.--
                    (A) In general.--A law described in this paragraph 
                is a State law that provides for State actions under a 
                waiver under this section, including the implementation 
                of the State plan under subsection (a)(1)(B).
                    (B) Termination of opt out.--A State may repeal a 
                law described in subparagraph (A) and terminate the 
                authority provided under the waiver with respect to the 
                State.
    (c) Scope of Waiver.--
            (1) In general.--The Secretary shall determine the scope of 
        a waiver of a requirement described in subsection (a)(2) 
        granted to a State under subsection (a)(1).
            (2) Limitation.--The Secretary may not waive under this 
        section any Federal law or requirement that is not within the 
        authority of the Secretary.
    (d) Determinations by Secretary.--
            (1) Time for determination.--The Secretary shall make a 
        determination under subsection (a)(1) not later than 180 days 
        after the receipt of an application from a State under such 
        subsection.
            (2) Effect of determination.--
                    (A) Granting of waivers.--If the Secretary 
                determines to grant a waiver under subsection (a)(1), 
                the Secretary shall notify the State involved of such 
                determination and the terms and effectiveness of such 
                waiver.
                    (B) Denial of waiver.--If the Secretary determines 
                a waiver should not be granted under subsection (a)(1), 
                the Secretary shall notify the State involved, and the 
                appropriate committees of Congress of such 
                determination and the reasons therefore.
    (e) Term of Waiver.--No waiver under this section may extend over a 
period of longer than 5 years unless the State requests continuation of 
such waiver, and such request shall be deemed granted unless the 
Secretary, within 90 days after the date of its submission to the 
Secretary, either denies such request in writing or informs the State 
in writing with respect to any additional information which is needed 
in order to make a final determination with respect to the request.

SEC. 1333. PROVISIONS RELATING TO OFFERING OF PLANS IN MORE THAN ONE 
              STATE.

    (a) Health Care Choice Compacts.--
            (1) In general.--Not later than July 1, 2013, the Secretary 
        shall, in consultation with the National Association of 
        Insurance Commissioners, issue regulations for the creation of 
        health care choice compacts under which 2 or more States may 
        enter into an agreement under which--
                    (A) 1 or more qualified health plans could be 
                offered in the individual markets in all such States 
                but, except as provided in subparagraph (B), only be 
                subject to the laws and regulations of the State in 
                which the plan was written or issued;
                    (B) the issuer of any qualified health plan to 
                which the compact applies--
                            (i) would continue to be subject to market 
                        conduct, unfair trade practices, network 
                        adequacy, and consumer protection standards 
                        (including standards relating to rating), 
                        including addressing disputes as to the 
                        performance of the contract, of the State in 
                        which the purchaser resides;
                            (ii) would be required to be licensed in 
                        each State in which it offers the plan under 
                        the compact or to submit to the jurisdiction of 
                        each such State with regard to the standards 
                        described in clause (i) (including allowing 
                        access to records as if the insurer were 
                        licensed in the State); and
                            (iii) must clearly notify consumers that 
                        the policy may not be subject to all the laws 
                        and regulations of the State in which the 
                        purchaser resides.
            (2) State authority.--A State may not enter into an 
        agreement under this subsection unless the State enacts a law 
        after the date of the enactment of this title that specifically 
        authorizes the State to enter into such agreements.
            (3) Approval of compacts.--The Secretary may approve 
        interstate health care choice compacts under paragraph (1) only 
        if the Secretary determines that such health care choice 
        compact--
                    (A) will provide coverage that is at least as 
                comprehensive as the coverage defined in section 
                1302(b) and offered through Exchanges established under 
                this title;
                    (B) will provide coverage and cost sharing 
                protections against excessive out-of-pocket spending 
                that are at least as affordable as the provisions of 
                this title would provide;
                    (C) will provide coverage to at least a comparable 
                number of its residents as the provisions of this title 
                would provide;
                    (D) will not increase the Federal deficit; and
                    (E) will not weaken enforcement of laws and 
                regulations described in paragraph (1)(B)(i) in any 
                State that is included in such compact.
            (4) Effective date.--A health care choice compact described 
        in paragraph (1) shall not take effect before January 1, 2016.
    (b) Authority for Nationwide Plans.--
            (1) In general.--Except as provided in paragraph (2), if an 
        issuer (including a group of health insurance issuers 
        affiliated either by common ownership and control or by the 
        common use of a nationally licensed service mark) of a 
        qualified health plan in the individual or small group market 
        meets the requirements of this subsection (in this subsection a 
        ``nationwide qualified health plan'')--
                    (A) the issuer of the plan may offer the nationwide 
                qualified health plan in the individual or small group 
                market in more than 1 State; and
                    (B) with respect to State laws mandating benefit 
                coverage by a health plan, only the State laws of the 
                State in which such plan is written or issued shall 
                apply to the nationwide qualified health plan.
            (2) State opt-out.--A State may, by specific reference in a 
        law enacted after the date of enactment of this title, provide 
        that this subsection shall not apply to that State. Such opt-
        out shall be effective until such time as the State by law 
        revokes it.
            (3) Plan requirements.--An issuer meets the requirements of 
        this subsection with respect to a nationwide qualified health 
        plan if, in the determination of the Secretary--
                    (A) the plan offers a benefits package that is 
                uniform in each State in which the plan is offered and 
                meets the requirements set forth in paragraphs (4) 
                through (6);
                    (B) the issuer is licensed in each State in which 
                it offers the plan and is subject to all requirements 
                of State law not inconsistent with this section, 
                including but not limited to, the standards and 
                requirements that a State imposes that do not prevent 
                the application of a requirement of part A of title 
                XXVII of the Public Health Service Act or a requirement 
                of this title;
                    (C) the issuer meets all requirements of this title 
                with respect to a qualified health plan, including the 
                requirement to offer the silver and gold levels of the 
                plan in each Exchange in the State for the market in 
                which the plan is offered;
                    (D) the issuer determines the premiums for the plan 
                in any State on the basis of the rating rules in effect 
                in that State for the rating areas in which it is 
                offered;
                    (E) the issuer offers the nationwide qualified 
                health plan in at least 60 percent of the participating 
                States in the first year in which the plan is offered, 
                65 percent of such States in the second year, 70 
                percent of such States in the third year, 75 percent of 
                such States in the fourth year, and 80 percent of such 
                States in the fifth and subsequent years;
                    (F) the issuer shall offer the plan in 
                participating States across the country, in all 
                geographic regions, and in all States that have adopted 
                adjusted community rating before the date of enactment 
                of this Act; and
                    (G) the issuer clearly notifies consumers that the 
                policy may not contain some benefits otherwise mandated 
                for plans in the State in which the purchaser resides 
                and provides a detailed statement of the benefits 
                offered and the benefit differences in that State, in 
                accordance with rules promulgated by the Secretary.
            (4) Form review for nationwide plans.--Notwithstanding any 
        contrary provision of State law, at least 3 months before any 
        nationwide qualified health plan is offered, the issuer shall 
        file all nationwide qualified health plan forms with the 
        regulator in each participating State in which the plan will be 
        offered. An issuer may appeal the disapproval of a nationwide 
        qualified health plan form to the Secretary.
            (5) Applicable rules.--The Secretary shall, in consultation 
        with the National Association of Insurance Commissioners, issue 
        rules for the offering of nationwide qualified health plans 
        under this subsection. Nationwide qualified health plans may be 
        offered only after such rules have taken effect.
            (6) Coverage.--The Secretary shall provide that the health 
        benefits coverage provided to an individual through a 
        nationwide qualified health plan under this subsection shall 
        include at least the essential benefits package described in 
        section 1302.
            (7) State law mandating benefit coverage by a health 
        benefits plan.--For the purposes of this subsection, a State 
        law mandating benefit coverage by a health plan is a law that 
        mandates health insurance coverage or the offer of health 
        insurance coverage for specific health services or specific 
        diseases. A law that mandates health insurance coverage or 
        reimbursement for services provided by certain classes of 
        providers of health care services, or a law that mandates that 
        certain classes of individuals must be covered as a group or as 
        dependents, is not a State law mandating benefit coverage by a 
        health benefits plan.

                PART V--REINSURANCE AND RISK ADJUSTMENT

SEC. 1341. TRANSITIONAL REINSURANCE PROGRAM FOR INDIVIDUAL AND SMALL 
              GROUP MARKETS IN EACH STATE.

    (a) In General.--Each State shall, not later than January 1, 2014--
            (1) include in the Federal standards or State law or 
        regulation the State adopts and has in effect under section 
        1321(b) the provisions described in subsection (b); and
            (2) establish (or enter into a contract with) 1 or more 
        applicable reinsurance entities to carry out the reinsurance 
        program under this section.
    (b) Model Regulation.--
            (1) In general.--In establishing the Federal standards 
        under section 1321(a), the Secretary, in consultation with the 
        National Association of Insurance Commissioners (the ``NAIC''), 
        shall include provisions that enable States to establish and 
        maintain a program under which--
                    (A) health insurance issuers, and third party 
                administrators on behalf of group health plans, are 
                required to make payments to an applicable reinsurance 
                entity for any plan year beginning in the 3-year period 
                beginning January 1, 2014 (as specified in paragraph 
                (3); and
                    (B) the applicable reinsurance entity collects 
                payments under subparagraph (A) and uses amounts so 
                collected to make reinsurance payments to health 
                insurance issuers described in subparagraph (A) that 
                cover high risk individuals in the individual market 
                (excluding grandfathered health plans) for any plan 
                year beginning in such 3-year period.
            (2) High-risk individual; payment amounts.--The Secretary 
        shall include the following in the provisions under paragraph 
        (1):
                    (A) Determination of high-risk individuals.--The 
                method by which individuals will be identified as high 
                risk individuals for purposes of the reinsurance 
                program established under this section. Such method 
                shall provide for identification of individuals as 
                high-risk individuals on the basis of--
                            (i) a list of at least 50 but not more than 
                        100 medical conditions that are identified as 
                        high-risk conditions and that may be based on 
                        the identification of diagnostic and procedure 
                        codes that are indicative of individuals with 
                        pre-existing, high-risk conditions; or
                            (ii) any other comparable objective method 
                        of identification recommended by the American 
                        Academy of Actuaries.
                    (B) Payment amount.--The formula for determining 
                the amount of payments that will be paid to health 
                insurance issuers described in paragraph (1)(A) that 
                insure high-risk individuals. Such formula shall 
                provide for the equitable allocation of available funds 
                through reconciliation and may be designed--
                            (i) to provide a schedule of payments that 
                        specifies the amount that will be paid for each 
                        of the conditions identified under subparagraph 
                        (A); or
                            (ii) to use any other comparable method for 
                        determining payment amounts that is recommended 
                        by the American Academy of Actuaries and that 
                        encourages the use of care coordination and 
                        care management programs for high risk 
                        conditions.
            (3) Determination of required contributions.--
                    (A) In general.--The Secretary shall include in the 
                provisions under paragraph (1) the method for 
                determining the amount each health insurance issuer and 
                group health plan described in paragraph (1)(A) 
                contributing to the reinsurance program under this 
                section is required to contribute under such paragraph 
                for each plan year beginning in the 36-month period 
                beginning January 1, 2014. The contribution amount for 
                any plan year may be based on the percentage of revenue 
                of each issuer and the total costs of providing 
                benefits to enrollees in self-insured plans or on a 
                specified amount per enrollee and may be required to be 
                paid in advance or periodically throughout the plan 
                year.
                    (B) Specific requirements.--The method under this 
                paragraph shall be designed so that--
                            (i) the contribution amount for each issuer 
                        proportionally reflects each issuer's fully 
                        insured commercial book of business for all 
                        major medical products and the total value of 
                        all fees charged by the issuer and the costs of 
                        coverage administered by the issuer as a third 
                        party administrator;
                            (ii) the contribution amount can include an 
                        additional amount to fund the administrative 
                        expenses of the applicable reinsurance entity;
                            (iii) the aggregate contribution amounts 
                        for all States shall, based on the best 
                        estimates of the NAIC and without regard to 
                        amounts described in clause (ii), equal 
                        $10,000,000,000 for plan years beginning in 
                        2014, $6,000,000,000 for plan years beginning 
                        2015, and $4,000,000,000 for plan years 
                        beginning in 2016; and
                            (iv) in addition to the aggregate 
                        contribution amounts under clause (iii), each 
                        issuer's contribution amount for any calendar 
                        year under clause (iii) reflects its 
                        proportionate share of an additional 
                        $2,000,000,000 for 2014, an additional 
                        $2,000,000,000 for 2015, and an additional 
                        $1,000,000,000 for 2016.
                Nothing in this subparagraph shall be construed to 
                preclude a State from collecting additional amounts 
                from issuers on a voluntary basis.
            (4) Expenditure of funds.--The provisions under paragraph 
        (1) shall provide that--
                    (A) the contribution amounts collected for any 
                calendar year may be allocated and used in any of the 
                three calendar years for which amounts are collected 
                based on the reinsurance needs of a particular period 
                or to reflect experience in a prior period; and
                    (B) amounts remaining unexpended as of December, 
                2016, may be used to make payments under any 
                reinsurance program of a State in the individual market 
                in effect in the 2-year period beginning on January 1, 
                2017.
        Notwithstanding the preceding sentence, any contribution 
        amounts described in paragraph (3)(B)(iv) shall be deposited 
        into the general fund of the Treasury of the United States and 
        may not be used for the program established under this section.
    (c) Applicable Reinsurance Entity.--For purposes of this section--
            (1) In general.--The term ``applicable reinsurance entity'' 
        means a not-for-profit organization--
                    (A) the purpose of which is to help stabilize 
                premiums for coverage in the individual and small group 
                markets in a State during the first 3 years of 
                operation of an Exchange for such markets within the 
                State when the risk of adverse selection related to new 
                rating rules and market changes is greatest; and
                    (B) the duties of which shall be to carry out the 
                reinsurance program under this section by coordinating 
                the funding and operation of the risk-spreading 
                mechanisms designed to implement the reinsurance 
                program.
            (2) State discretion.--A State may have more than 1 
        applicable reinsurance entity to carry out the reinsurance 
        program under this section within the State and 2 or more 
        States may enter into agreements to provide for an applicable 
        reinsurance entity to carry out such program in all such 
        States.
            (3) Entities are tax-exempt.--An applicable reinsurance 
        entity established under this section shall be exempt from 
        taxation under chapter 1 of the Internal Revenue Code of 1986. 
        The preceding sentence shall not apply to the tax imposed by 
        section 511 such Code (relating to tax on unrelated business 
        taxable income of an exempt organization).
    (d) Coordination With State High-risk Pools.--The State shall 
eliminate or modify any State high-risk pool to the extent necessary to 
carry out the reinsurance program established under this section. The 
State may coordinate the State high-risk pool with such program to the 
extent not inconsistent with the provisions of this section.

SEC. 1342. ESTABLISHMENT OF RISK CORRIDORS FOR PLANS IN INDIVIDUAL AND 
              SMALL GROUP MARKETS.

    (a) In General.--The Secretary shall establish and administer a 
program of risk corridors for calendar years 2014, 2015, and 2016 under 
which a qualified health plan offered in the individual or small group 
market shall participate in a payment adjustment system based on the 
ratio of the allowable costs of the plan to the plan's aggregate 
premiums. Such program shall be based on the program for regional 
participating provider organizations under part D of title XVIII of the 
Social Security Act.
    (b) Payment Methodology.--
            (1) Payments out.--The Secretary shall provide under the 
        program established under subsection (a) that if--
                    (A) a participating plan's allowable costs for any 
                plan year are more than 103 percent but not more than 
                108 percent of the target amount, the Secretary shall 
                pay to the plan an amount equal to 50 percent of the 
                target amount in excess of 103 percent of the target 
                amount; and
                    (B) a participating plan's allowable costs for any 
                plan year are more than 108 percent of the target 
                amount, the Secretary shall pay to the plan an amount 
                equal to the sum of 2.5 percent of the target amount 
                plus 80 percent of allowable costs in excess of 108 
                percent of the target amount.
            (2) Payments in.--The Secretary shall provide under the 
        program established under subsection (a) that if--
                    (A) a participating plan's allowable costs for any 
                plan year are less than 97 percent but not less than 92 
                percent of the target amount, the plan shall pay to the 
                Secretary an amount equal to 50 percent of the excess 
                of 97 percent of the target amount over the allowable 
                costs; and
                    (B) a participating plan's allowable costs for any 
                plan year are less than 92 percent of the target 
                amount, the plan shall pay to the Secretary an amount 
                equal to the sum of 2.5 percent of the target amount 
                plus 80 percent of the excess of 92 percent of the 
                target amount over the allowable costs.
    (c) Definitions.--In this section:
            (1) Allowable costs.--
                    (A) In general.--The amount of allowable costs of a 
                plan for any year is an amount equal to the total costs 
                (other than administrative costs) of the plan in 
                providing benefits covered by the plan.
                    (B) Reduction for risk adjustment and reinsurance 
                payments.--Allowable costs shall reduced by any risk 
                adjustment and reinsurance payments received under 
                section 1341 and 1343.
            (2) Target amount.--The target amount of a plan for any 
        year is an amount equal to the total premiums (including any 
        premium subsidies under any governmental program), reduced by 
        the administrative costs of the plan.

SEC. 1343. RISK ADJUSTMENT.

    (a) In General.--
            (1) Low actuarial risk plans.--Using the criteria and 
        methods developed under subsection (b), each State shall assess 
        a charge on health plans and health insurance issuers (with 
        respect to health insurance coverage) described in subsection 
        (c) if the actuarial risk of the enrollees of such plans or 
        coverage for a year is less than the average actuarial risk of 
        all enrollees in all plans or coverage in such State for such 
        year that are not self-insured group health plans (which are 
        subject to the provisions of the Employee Retirement Income 
        Security Act of 1974).
            (2) High actuarial risk plans.--Using the criteria and 
        methods developed under subsection (b), each State shall 
        provide a payment to health plans and health insurance issuers 
        (with respect to health insurance coverage) described in 
        subsection (c) if the actuarial risk of the enrollees of such 
        plans or coverage for a year is greater than the average 
        actuarial risk of all enrollees in all plans and coverage in 
        such State for such year that are not self-insured group health 
        plans (which are subject to the provisions of the Employee 
        Retirement Income Security Act of 1974).
    (b) Criteria and Methods.--The Secretary, in consultation with 
States, shall establish criteria and methods to be used in carrying out 
the risk adjustment activities under this section. The Secretary may 
utilize criteria and methods similar to the criteria and methods 
utilized under part C or D of title XVIII of the Social Security Act. 
Such criteria and methods shall be included in the standards and 
requirements the Secretary prescribes under section 1321.
    (c) Scope.--A health plan or a health insurance issuer is described 
in this subsection if such health plan or health insurance issuer 
provides coverage in the individual or small group market within the 
State. This subsection shall not apply to a grandfathered health plan 
or the issuer of a grandfathered health plan with respect to that plan.

       Subtitle E--Affordable Coverage Choices for All Americans

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

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

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

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

``SEC. 36B. REFUNDABLE CREDIT FOR COVERAGE UNDER A QUALIFIED HEALTH 
              PLAN.

    ``(a) In General.--In the case of an applicable taxpayer, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for any taxable year an amount equal to the premium assistance credit 
amount of the taxpayer for the taxable year.
    ``(b) Premium Assistance Credit Amount.--For purposes of this 
section--
            ``(1) In general.--The term `premium assistance credit 
        amount' means, with respect to any taxable year, the sum of the 
        premium assistance amounts determined under paragraph (2) with 
        respect to all coverage months of the taxpayer occurring during 
        the taxable year.
            ``(2) Premium assistance amount.--The premium assistance 
        amount determined under this subsection with respect to any 
        coverage month is the amount equal to the lesser of--
                    ``(A) the monthly premiums for such month for 1 or 
                more qualified health plans offered in the individual 
                market within a State which cover the taxpayer, the 
                taxpayer's spouse, or any dependent (as defined in 
                section 152) of the taxpayer and which were enrolled in 
                through an Exchange established by the State under 1311 
                of the Patient Protection and Affordable Care Act, or
                    ``(B) the excess (if any) of--
                            ``(i) the adjusted monthly premium for such 
                        month for the applicable second lowest cost 
                        silver plan with respect to the taxpayer, over
                            ``(ii) an amount equal to 1/12 of the 
                        product of the applicable percentage and the 
                        taxpayer's household income for the taxable 
                        year.
            ``(3) Other terms and rules relating to premium assistance 
        amounts.--For purposes of paragraph (2)--
                    ``(A) Applicable percentage.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the applicable percentage with 
                        respect to any taxpayer for any taxable year is 
                        equal to 2.8 percent, increased by the number 
                        of percentage points (not greater than 7) which 
                        bears the same ratio to 7 percentage points 
                        as--
                                    ``(I) the taxpayer's household 
                                income for the taxable year in excess 
                                of 100 percent of the poverty line for 
                                a family of the size involved, bears to
                                    ``(II) an amount equal to 200 
                                percent of the poverty line for a 
                                family of the size involved.
                            ``(ii) Special rule for taxpayers under 133 
                        percent of poverty line.--If a taxpayer's 
                        household income for the taxable year is in 
                        excess of 100 percent, but not more than 133 
                        percent, of the poverty line for a family of 
                        the size involved, the taxpayer's applicable 
                        percentage shall be 2 percent.
                            ``(iii) Indexing.--In the case of taxable 
                        years beginning in any calendar year after 
                        2014, the Secretary shall adjust the initial 
                        and final applicable percentages under clause 
                        (i), and the 2 percent under clause (ii), for 
                        the calendar year to reflect the excess of the 
                        rate of premium growth between the preceding 
                        calendar year and 2013 over the rate of income 
                        growth for such period.
                    ``(B) Applicable second lowest cost silver plan.--
                The applicable second lowest cost silver plan with 
                respect to any applicable taxpayer is the second lowest 
                cost silver plan of the individual market in the rating 
                area in which the taxpayer resides which--
                            ``(i) is offered through the same Exchange 
                        through which the qualified health plans taken 
                        into account under paragraph (2)(A) were 
                        offered, and
                            ``(ii) provides--
                                    ``(I) self-only coverage in the 
                                case of an applicable taxpayer--
                                            ``(aa) whose tax for the 
                                        taxable year is determined 
                                        under section 1(c) (relating to 
                                        unmarried individuals other 
                                        than surviving spouses and 
                                        heads of households) and who is 
                                        not allowed a deduction under 
                                        section 151 for the taxable 
                                        year with respect to a 
                                        dependent, or
                                            ``(bb) who is not described 
                                        in item (aa) but who purchases 
                                        only self-only coverage, and
                                    ``(II) family coverage in the case 
                                of any other applicable taxpayer.
                If a taxpayer files a joint return and no credit is 
                allowed under this section with respect to 1 of the 
                spouses by reason of subsection (e), the taxpayer shall 
                be treated as described in clause (ii)(I) unless a 
                deduction is allowed under section 151 for the taxable 
                year with respect to a dependent other than either 
                spouse and subsection (e) does not apply to the 
                dependent.
                    ``(C) Adjusted monthly premium.--The adjusted 
                monthly premium for an applicable second lowest cost 
                silver plan is the monthly premium which would have 
                been charged (for the rating area with respect to which 
                the premiums under paragraph (2)(A) were determined) 
                for the plan if each individual covered under a 
                qualified health plan taken into account under 
                paragraph (2)(A) were covered by such silver plan and 
                the premium was adjusted only for the age of each such 
                individual in the manner allowed under section 2701 of 
                the Public Health Service Act. In the case of a State 
                participating in the wellness discount demonstration 
                project under section 2705(d) of the Public Health 
                Service Act, the adjusted monthly premium shall be 
                determined without regard to any premium discount or 
                rebate under such project.
                    ``(D) Additional benefits.--If--
                            ``(i) a qualified health plan under section 
                        1302(b)(5) of the Patient Protection and 
                        Affordable Care Act offers benefits in addition 
                        to the essential health benefits required to be 
                        provided by the plan, or
                            ``(ii) a State requires a qualified health 
                        plan under section 1311(d)(3)(B) of such Act to 
                        cover benefits in addition to the essential 
                        health benefits required to be provided by the 
                        plan,
                the portion of the premium for the plan properly 
                allocable (under rules prescribed by the Secretary of 
                Health and Human Services) to such additional benefits 
                shall not be taken into account in determining either 
                the monthly premium or the adjusted monthly premium 
                under paragraph (2).
                    ``(E) Special rule for pediatric dental coverage.--
                For purposes of determining the amount of any monthly 
                premium, if an individual enrolls in both a qualified 
                health plan and a plan described in section 
                1311(d)(2)(B)(ii)(I) of the Patient Protection and 
                Affordable Care Act for any plan year, the portion of 
                the premium for the plan described in such section that 
                (under regulations prescribed by the Secretary) is 
                properly allocable to pediatric dental benefits which 
                are included in the essential health benefits required 
                to be provided by a qualified health plan under section 
                1302(b)(1)(J) of such Act shall be treated as a premium 
                payable for a qualified health plan.
    ``(c) Definition and Rules Relating to Applicable Taxpayers, 
Coverage Months, and Qualified Health Plan.--For purposes of this 
section--
            ``(1) Applicable taxpayer.--
                    ``(A) In general.--The term `applicable taxpayer' 
                means, with respect to any taxable year, a taxpayer 
                whose household income for the taxable year exceeds 100 
                percent but does not exceed 400 percent of an amount 
                equal to the poverty line for a family of the size 
                involved.
                    ``(B) Special rule for certain individuals lawfully 
                present in the united states.--If--
                            ``(i) a taxpayer has a household income 
                        which is not greater than 100 percent of an 
                        amount equal to the poverty line for a family 
                        of the size involved, and
                            ``(ii) the taxpayer is an alien lawfully 
                        present in the United States, but is not 
                        eligible for the medicaid program under title 
                        XIX of the Social Security Act by reason of 
                        such alien status,
                the taxpayer shall, for purposes of the credit under 
                this section, be treated as an applicable taxpayer with 
                a household income which is equal to 100 percent of the 
                poverty line for a family of the size involved.
                    ``(C) Married couples must file joint return.--If 
                the taxpayer is married (within the meaning of section 
                7703) at the close of the taxable year, the taxpayer 
                shall be treated as an applicable taxpayer only if the 
                taxpayer and the taxpayer's spouse file a joint return 
                for the taxable year.
                    ``(D) Denial of credit to dependents.--No credit 
                shall be allowed under this section to any individual 
                with respect to whom a deduction under section 151 is 
                allowable to another taxpayer for a taxable year 
                beginning in the calendar year in which such 
                individual's taxable year begins.
            ``(2) Coverage month.--For purposes of this subsection--
                    ``(A) In general.--The term `coverage month' means, 
                with respect to an applicable taxpayer, any month if--
                            ``(i) as of the first day of such month the 
                        taxpayer, the taxpayer's spouse, or any 
                        dependent of the taxpayer is covered by a 
                        qualified health plan described in subsection 
                        (b)(2)(A) that was enrolled in through an 
                        Exchange established by the State under section 
                        1311 of the Patient Protection and Affordable 
                        Care Act, and
                            ``(ii) the premium for coverage under such 
                        plan for such month is paid by the taxpayer (or 
                        through advance payment of the credit under 
                        subsection (a) under section 1412 of the 
                        Patient Protection and Affordable Care Act).
                    ``(B) Exception for minimum essential coverage.--
                            ``(i) In general.--The term `coverage 
                        month' shall not include any month with respect 
                        to an individual if for such month the 
                        individual is eligible for minimum essential 
                        coverage other than eligibility for coverage 
                        described in section 5000A(f)(1)(C) (relating 
                        to coverage in the individual market).
                            ``(ii) Minimum essential coverage.--The 
                        term `minimum essential coverage' has the 
                        meaning given such term by section 5000A(f).
                    ``(C) Special rule for employer-sponsored minimum 
                essential coverage.--For purposes of subparagraph (B)--
                            ``(i) Coverage must be affordable.--Except 
                        as provided in clause (iii), an employee shall 
                        not be treated as eligible for minimum 
                        essential coverage if such coverage--
                                    ``(I) consists of an eligible 
                                employer-sponsored plan (as defined in 
                                section 5000A(f)(2)), and
                                    ``(II) the employee's required 
                                contribution (within the meaning of 
                                section 5000A(e)(1)(B)) with respect to 
                                the plan exceeds 9.8 percent of the 
                                applicable taxpayer's household income.
                        This clause shall also apply to an individual 
                        who is eligible to enroll in the plan by reason 
                        of a relationship the individual bears to the 
                        employee.
                            ``(ii) Coverage must provide minimum 
                        value.--Except as provided in clause (iii), an 
                        employee shall not be treated as eligible for 
                        minimum essential coverage if such coverage 
                        consists of an eligible employer-sponsored plan 
                        (as defined in section 5000A(f)(2)) and the 
                        plan's share of the total allowed costs of 
                        benefits provided under the plan is less than 
                        60 percent of such costs.
                            ``(iii) Employee or family must not be 
                        covered under employer plan.--Clauses (i) and 
                        (ii) shall not apply if the employee (or any 
                        individual described in the last sentence of 
                        clause (i)) is covered under the eligible 
                        employer-sponsored plan or the grandfathered 
                        health plan.
                            ``(iv) Indexing.--In the case of plan years 
                        beginning in any calendar year after 2014, the 
                        Secretary shall adjust the 9.8 percent under 
                        clause (i)(II) in the same manner as the 
                        percentages are adjusted under subsection 
                        (b)(3)(A)(ii).
            ``(3) Definitions and other rules.--
                    ``(A) Qualified health plan.--The term `qualified 
                health plan' has the meaning given such term by section 
                1301(a) of the Patient Protection and Affordable Care 
                Act, except that such term shall not include a 
                qualified health plan which is a catastrophic plan 
                described in section 1302(e) of such Act.
                    ``(B) Grandfathered health plan.--The term 
                `grandfathered health plan' has the meaning given such 
                term by section 1251 of the Patient Protection and 
                Affordable Care Act.
    ``(d) Terms Relating to Income and Families.--For purposes of this 
section--
            ``(1) Family size.--The family size involved with respect 
        to any taxpayer shall be equal to the number of individuals for 
        whom the taxpayer is allowed a deduction under section 151 
        (relating to allowance of deduction for personal exemptions) 
        for the taxable year.
            ``(2) Household income.--
                    ``(A) Household income.--The term `household 
                income' means, with respect to any taxpayer, an amount 
                equal to the sum of--
                            ``(i) the modified gross income of the 
                        taxpayer, plus
                            ``(ii) the aggregate modified gross incomes 
                        of all other individuals who--
                                    ``(I) were taken into account in 
                                determining the taxpayer's family size 
                                under paragraph (1), and
                                    ``(II) were required to file a 
                                return of tax imposed by section 1 for 
                                the taxable year.
                    ``(B) Modified gross income.--The term `modified 
                gross income' means gross income--
                            ``(i) decreased by the amount of any 
                        deduction allowable under paragraph (1), (3), 
                        (4), or (10) of section 62(a),
                            ``(ii) increased by the amount of interest 
                        received or accrued during the taxable year 
                        which is exempt from tax imposed by this 
                        chapter, and
                            ``(iii) determined without regard to 
                        sections 911, 931, and 933.
            ``(3) Poverty line.--
                    ``(A) In general.--The term `poverty line' has the 
                meaning given that term in section 2110(c)(5) of the 
                Social Security Act (42 U.S.C. 1397jj(c)(5)).
                    ``(B) Poverty line used.--In the case of any 
                qualified health plan offered through an Exchange for 
                coverage during a taxable year beginning in a calendar 
                year, the poverty line used shall be the most recently 
                published poverty line as of the 1st day of the regular 
                enrollment period for coverage during such calendar 
                year.
    ``(e) Rules for Individuals Not Lawfully Present.--
            ``(1) In general.--If 1 or more individuals for whom a 
        taxpayer is allowed a deduction under section 151 (relating to 
        allowance of deduction for personal exemptions) for the taxable 
        year (including the taxpayer or his spouse) are individuals who 
        are not lawfully present--
                    ``(A) the aggregate amount of premiums otherwise 
                taken into account under clauses (i) and (ii) of 
                subsection (b)(2)(A) shall be reduced by the portion 
                (if any) of such premiums which is attributable to such 
                individuals, and
                    ``(B) for purposes of applying this section, the 
                determination as to what percentage a taxpayer's 
                household income bears to the poverty level for a 
                family of the size involved shall be made under one of 
                the following methods:
                            ``(i) A method under which--
                                    ``(I) the taxpayer's family size is 
                                determined by not taking such 
                                individuals into account, and
                                    ``(II) the taxpayer's household 
                                income is equal to the product of the 
                                taxpayer's household income (determined 
                                without regard to this subsection) and 
                                a fraction--
                                            ``(aa) the numerator of 
                                        which is the poverty line for 
                                        the taxpayer's family size 
                                        determined after application of 
                                        subclause (I), and
                                            ``(bb) the denominator of 
                                        which is the poverty line for 
                                        the taxpayer's family size 
                                        determined without regard to 
                                        subclause (I).
                            ``(ii) A comparable method reaching the 
                        same result as the method under clause (i).
            ``(2) Lawfully present.--For purposes of this section, an 
        individual shall be treated as lawfully present only if the 
        individual is, and is reasonably expected to be for the entire 
        period of enrollment for which the credit under this section is 
        being claimed, a citizen or national of the United States or an 
        alien lawfully present in the United States.
            ``(3) Secretarial authority.--The Secretary of Health and 
        Human Services, in consultation with the Secretary, shall 
        prescribe rules setting forth the methods by which calculations 
        of family size and household income are made for purposes of 
        this subsection. Such rules shall be designed to ensure that 
        the least burden is placed on individuals enrolling in 
        qualified health plans through an Exchange and taxpayers 
        eligible for the credit allowable under this section.
    ``(f) Reconciliation of Credit and Advance Credit.--
            ``(1) In general.--The amount of the credit allowed under 
        this section for any taxable year shall be reduced (but not 
        below zero) by the amount of any advance payment of such credit 
        under section 1412 of the Patient Protection and Affordable 
        Care Act.
            ``(2) Excess advance payments.--
                    ``(A) In general.--If the advance payments to a 
                taxpayer under section 1412 of the Patient Protection 
                and Affordable Care Act for a taxable year exceed the 
                credit allowed by this section (determined without 
                regard to paragraph (1)), the tax imposed by this 
                chapter for the taxable year shall be increased by the 
                amount of such excess.
                    ``(B) Limitation on increase where income less than 
                400 percent of poverty line.--
                            ``(i) In general.--In the case of an 
                        applicable taxpayer whose household income is 
                        less than 400 percent of the poverty line for 
                        the size of the family involved for the taxable 
                        year, the amount of the increase under 
                        subparagraph (A) shall in no event exceed $400 
                        ($250 in the case of a taxpayer whose tax is 
                        determined under section 1(c) for the taxable 
                        year).
                            ``(ii) Indexing of amount.--In the case of 
                        any calendar year beginning after 2014, each of 
                        the dollar amounts under clause (i) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year, 
                                determined by substituting `calendar 
                                year 2013' for `calendar year 1992' in 
                                subparagraph (B) thereof.
                        If the amount of any increase under clause (i) 
                        is not a multiple of $50, such increase shall 
                        be rounded to the next lowest multiple of $50.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the provisions of this section, 
including regulations which provide for--
            ``(1) the coordination of the credit allowed under this 
        section with the program for advance payment of the credit 
        under section 1412 of the Patient Protection and Affordable 
        Care Act, and
            ``(2) the application of subsection (f) where the filing 
        status of the taxpayer for a taxable year is different from 
        such status used for determining the advance payment of the 
        credit.''.
    (b) Disallowance of Deduction.--Section 280C of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subsection:
    ``(g) Credit for Health Insurance Premiums.--No deduction shall be 
allowed for the portion of the premiums paid by the taxpayer for 
coverage of 1 or more individuals under a qualified health plan which 
is equal to the amount of the credit determined for the taxable year 
under section 36B(a) with respect to such premiums.''.
    (c) Study on Affordable Coverage.--
            (1) Study and report.--
                    (A) In general.--Not later than 5 years after the 
                date of the enactment of this Act, the Comptroller 
                General shall conduct a study on the affordability of 
                health insurance coverage, including--
                            (i) the impact of the tax credit for 
                        qualified health insurance coverage of 
                        individuals under section 36B of the Internal 
                        Revenue Code of 1986 and the tax credit for 
                        employee health insurance expenses of small 
                        employers under section 45R of such Code on 
                        maintaining and expanding the health insurance 
                        coverage of individuals;
                            (ii) the availability of affordable health 
                        benefits plans, including a study of whether 
                        the percentage of household income used for 
                        purposes of section 36B(c)(2)(C) of the 
                        Internal Revenue Code of 1986 (as added by this 
                        section) is the appropriate level for 
                        determining whether employer-provided coverage 
                        is affordable for an employee and whether such 
                        level may be lowered without significantly 
                        increasing the costs to the Federal Government 
                        and reducing employer-provided coverage; and
                            (iii) the ability of individuals to 
                        maintain essential health benefits coverage (as 
                        defined in section 5000A(f) of the Internal 
                        Revenue Code of 1986).
                    (B) Report.--The Comptroller General shall submit 
                to the appropriate committees of Congress a report on 
                the study conducted under subparagraph (A), together 
                with legislative recommendations relating to the 
                matters studied under such subparagraph.
            (2) Appropriate committees of congress.--In this 
        subsection, the term ``appropriate committees of Congress'' 
        means the Committee on Ways and Means, the Committee on 
        Education and Labor, and the Committee on Energy and Commerce 
        of the House of Representatives and the Committee on Finance 
        and the Committee on Health, Education, Labor and Pensions of 
        the Senate.
    (d) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``36B,'' after ``36A,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 36A 
        the following new item:

``Sec. 36B. Refundable credit for coverage under a qualified health 
                            plan.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2013.

SEC. 1402. REDUCED COST-SHARING FOR INDIVIDUALS ENROLLING IN QUALIFIED 
              HEALTH PLANS.

    (a) In General.--In the case of an eligible insured enrolled in a 
qualified health plan--
            (1) the Secretary shall notify the issuer of the plan of 
        such eligibility; and
            (2) the issuer shall reduce the cost-sharing under the plan 
        at the level and in the manner specified in subsection (c).
    (b) Eligible Insured.--In this section, the term ``eligible 
insured'' means an individual--
            (1) who enrolls in a qualified health plan in the silver 
        level of coverage in the individual market offered through an 
        Exchange; and
            (2) whose household income exceeds 100 percent but does not 
        exceed 400 percent of the poverty line for a family of the size 
        involved.
In the case of an individual described in section 36B(c)(1)(B) of the 
Internal Revenue Code of 1986, the individual shall be treated as 
having household income equal to 100 percent for purposes of applying 
this section.
    (c) Determination of Reduction in Cost-sharing.--
            (1) Reduction in out-of-pocket limit.--
                    (A) In general.--The reduction in cost-sharing 
                under this subsection shall first be achieved by 
                reducing the applicable out-of pocket limit under 
                section 1302(c)(1) in the case of--
                            (i) an eligible insured whose household 
                        income is more than 100 percent but not more 
                        than 200 percent of the poverty line for a 
                        family of the size involved, by two-thirds;
                            (ii) an eligible insured whose household 
                        income is more than 200 percent but not more 
                        than 300 percent of the poverty line for a 
                        family of the size involved, by one-half; and
                            (iii) an eligible insured whose household 
                        income is more than 300 percent but not more 
                        than 400 percent of the poverty line for a 
                        family of the size involved, by one-third.
                    (B) Coordination with actuarial value limits.--
                            (i) In general.--The Secretary shall ensure 
                        the reduction under this paragraph shall not 
                        result in an increase in the plan's share of 
                        the total allowed costs of benefits provided 
                        under the plan above--
                                    (I) 90 percent in the case of an 
                                eligible insured described in paragraph 
                                (2)(A);
                                    (II) 80 percent in the case of an 
                                eligible insured described in paragraph 
                                (2)(B); and
                                    (III) 70 percent in the case of an 
                                eligible insured described in clause 
                                (ii) or (iii) of subparagraph (A).
                            (ii) Adjustment.--The Secretary shall 
                        adjust the out-of pocket limits under paragraph 
                        (1) if necessary to ensure that such limits do 
                        not cause the respective actuarial values to 
                        exceed the levels specified in clause (i).
            (2) Additional reduction for lower income insureds.--The 
        Secretary shall establish procedures under which the issuer of 
        a qualified health plan to which this section applies shall 
        further reduce cost-sharing under the plan in a manner 
        sufficient to--
                    (A) in the case of an eligible insured whose 
                household income is not less than 100 percent but not 
                more than 150 percent of the poverty line for a family 
                of the size involved, increase the plan's share of the 
                total allowed costs of benefits provided under the plan 
                to 90 percent of such costs; and
                    (B) in the case of an eligible insured whose 
                household income is more than 150 percent but not more 
                than 200 percent of the poverty line for a family of 
                the size involved, increase the plan's share of the 
                total allowed costs of benefits provided under the plan 
                to 80 percent of such costs.
            (3) Methods for reducing cost-sharing.--
                    (A) In general.--An issuer of a qualified health 
                plan making reductions under this subsection shall 
                notify the Secretary of such reductions and the 
                Secretary shall make periodic and timely payments to 
                the issuer equal to the value of the reductions.
                    (B) Capitated payments.--The Secretary may 
                establish a capitated payment system to carry out the 
                payment of cost-sharing reductions under this section. 
                Any such system shall take into account the value of 
                the reductions and make appropriate risk adjustments to 
                such payments.
            (4) Additional benefits.--If a qualified health plan under 
        section 1302(b)(5) offers benefits in addition to the essential 
        health benefits required to be provided by the plan, or a State 
        requires a qualified health plan under section 1311(d)(3)(B) to 
        cover benefits in addition to the essential health benefits 
        required to be provided by the plan, the reductions in cost-
        sharing under this section shall not apply to such additional 
        benefits.
            (5) Special rule for pediatric dental plans.--If an 
        individual enrolls in both a qualified health plan and a plan 
        described in section 1311(d)(2)(B)(ii)(I) for any plan year, 
        subsection (a) shall not apply to that portion of any reduction 
        in cost-sharing under subsection (c) that (under regulations 
        prescribed by the Secretary) is properly allocable to pediatric 
        dental benefits which are included in the essential health 
        benefits required to be provided by a qualified health plan 
        under section 1302(b)(1)(J).
    (d) Special Rules for Indians.--
            (1) Indians under 300 percent of poverty.--If an individual 
        enrolled in any qualified health plan in the individual market 
        through an Exchange is an Indian (as defined in section 4(d) of 
        the Indian Self-Determination and Education Assistance Act (25 
        U.S.C. 450b(d))) whose household income is not more than 300 
        percent of the poverty line for a family of the size involved, 
        then, for purposes of this section--
                    (A) such individual shall be treated as an eligible 
                insured; and
                    (B) the issuer of the plan shall eliminate any 
                cost-sharing under the plan.
            (2) Items or services furnished through indian health 
        providers.--If an Indian (as so defined) enrolled in a 
        qualified health plan is furnished an item or service directly 
        by the Indian Health Service, an Indian Tribe, Tribal 
        Organization, or Urban Indian Organization or through referral 
        under contract health services--
                    (A) no cost-sharing under the plan shall be imposed 
                under the plan for such item or service; and
                    (B) the issuer of the plan shall not reduce the 
                payment to any such entity for such item or service by 
                the amount of any cost-sharing that would be due from 
                the Indian but for subparagraph (A).
            (3) Payment.--The Secretary shall pay to the issuer of a 
        qualified health plan the amount necessary to reflect the 
        increase in actuarial value of the plan required by reason of 
        this subsection.
    (e) Rules for Individuals Not Lawfully Present.--
            (1) In general.--If an individual who is an eligible 
        insured is not lawfully present--
                    (A) no cost-sharing reduction under this section 
                shall apply with respect to the individual; and
                    (B) for purposes of applying this section, the 
                determination as to what percentage a taxpayer's 
                household income bears to the poverty level for a 
                family of the size involved shall be made under one of 
                the following methods:
                            (i) A method under which--
                                    (I) the taxpayer's family size is 
                                determined by not taking such 
                                individuals into account, and
                                    (II) the taxpayer's household 
                                income is equal to the product of the 
                                taxpayer's household income (determined 
                                without regard to this subsection) and 
                                a fraction--
                                            (aa) the numerator of which 
                                        is the poverty line for the 
                                        taxpayer's family size 
                                        determined after application of 
                                        subclause (I), and
                                            (bb) the denominator of 
                                        which is the poverty line for 
                                        the taxpayer's family size 
                                        determined without regard to 
                                        subclause (I).
                            (ii) A comparable method reaching the same 
                        result as the method under clause (i).
            (2) Lawfully present.--For purposes of this section, an 
        individual shall be treated as lawfully present only if the 
        individual is, and is reasonably expected to be for the entire 
        period of enrollment for which the cost-sharing reduction under 
        this section is being claimed, a citizen or national of the 
        United States or an alien lawfully present in the United 
        States.
            (3) Secretarial authority.--The Secretary, in consultation 
        with the Secretary of the Treasury, shall prescribe rules 
        setting forth the methods by which calculations of family size 
        and household income are made for purposes of this subsection. 
        Such rules shall be designed to ensure that the least burden is 
        placed on individuals enrolling in qualified health plans 
        through an Exchange and taxpayers eligible for the credit 
        allowable under this section.
    (f) Definitions and Special Rules.--In this section:
            (1) In general.--Any term used in this section which is 
        also used in section 36B of the Internal Revenue Code of 1986 
        shall have the meaning given such term by such section.
            (2) Limitations on reduction.--No cost-sharing reduction 
        shall be allowed under this section with respect to coverage 
        for any month unless the month is a coverage month with respect 
        to which a credit is allowed to the insured (or an applicable 
        taxpayer on behalf of the insured) under section 36B of such 
        Code.
            (3) Data used for eligibility.--Any determination under 
        this section shall be made on the basis of the taxable year for 
        which the advance determination is made under section 1412 and 
        not the taxable year for which the credit under section 36B of 
        such Code is allowed.

                 Subpart B--Eligibility Determinations

SEC. 1411. PROCEDURES FOR DETERMINING ELIGIBILITY FOR EXCHANGE 
              PARTICIPATION, PREMIUM TAX CREDITS AND REDUCED COST-
              SHARING, AND INDIVIDUAL RESPONSIBILITY EXEMPTIONS.

    (a) Establishment of Program.--The Secretary shall establish a 
program meeting the requirements of this section for determining--
            (1) whether an individual who is to be covered in the 
        individual market by a qualified health plan offered through an 
        Exchange, or who is claiming a premium tax credit or reduced 
        cost-sharing, meets the requirements of sections 1312(f)(3), 
        1402(e), and 1412(d) of this title and section 36B(e) of the 
        Internal Revenue Code of 1986 that the individual be a citizen 
        or national of the United States or an alien lawfully present 
        in the United States;
            (2) in the case of an individual claiming a premium tax 
        credit or reduced cost-sharing under section 36B of such Code 
        or section 1402--
                    (A) whether the individual meets the income and 
                coverage requirements of such sections; and
                    (B) the amount of the tax credit or reduced cost-
                sharing;
            (3) whether an individual's coverage under an employer-
        sponsored health benefits plan is treated as unaffordable under 
        sections 36B(c)(2)(C) and 5000A(e)(2); and
            (4) whether to grant a certification under section 
        1311(d)(4)(H) attesting that, for purposes of the individual 
        responsibility requirement under section 5000A of the Internal 
        Revenue Code of 1986, an individual is entitled to an exemption 
        from either the individual responsibility requirement or the 
        penalty imposed by such section.
    (b) Information Required To Be Provided by Applicants.--
            (1) In general.--An applicant for enrollment in a qualified 
        health plan offered through an Exchange in the individual 
        market shall provide--
                    (A) the name, address, and date of birth of each 
                individual who is to be covered by the plan (in this 
                subsection referred to as an ``enrollee''); and
                    (B) the information required by any of the 
                following paragraphs that is applicable to an enrollee.
            (2) Citizenship or immigration status.--The following 
        information shall be provided with respect to every enrollee:
                    (A) In the case of an enrollee whose eligibility is 
                based on an attestation of citizenship of the enrollee, 
                the enrollee's social security number.
                    (B) In the case of an individual whose eligibility 
                is based on an attestation of the enrollee's 
                immigration status, the enrollee's social security 
                number (if applicable) and such identifying information 
                with respect to the enrollee's immigration status as 
                the Secretary, after consultation with the Secretary of 
                Homeland Security, determines appropriate.
            (3) Eligibility and amount of tax credit or reduced cost-
        sharing.--In the case of an enrollee with respect to whom a 
        premium tax credit or reduced cost-sharing under section 36B of 
        such Code or section 1402 is being claimed, the following 
        information:
                    (A) Information regarding income and family size.--
                The information described in section 6103(l)(21) for 
                the taxable year ending with or within the second 
                calendar year preceding the calendar year in which the 
                plan year begins.
                    (B) Changes in circumstances.--The information 
                described in section 1412(b)(2), including information 
                with respect to individuals who were not required to 
                file an income tax return for the taxable year 
                described in subparagraph (A) or individuals who 
                experienced changes in marital status or family size or 
                significant reductions in income.
            (4) Employer-sponsored coverage.--In the case of an 
        enrollee with respect to whom eligibility for a premium tax 
        credit under section 36B of such Code or cost-sharing reduction 
        under section 1402 is being established on the basis that the 
        enrollee's (or related individual's) employer is not treated 
        under section 36B(c)(2)(C) of such Code as providing minimum 
        essential coverage or affordable minimum essential coverage, 
        the following information:
                    (A) The name, address, and employer identification 
                number (if available) of the employer.
                    (B) Whether the enrollee or individual is a full-
                time employee and whether the employer provides such 
                minimum essential coverage.
                    (C) If the employer provides such minimum essential 
                coverage, the lowest cost option for the enrollee's or 
                individual's enrollment status and the enrollee's or 
                individual's required contribution (within the meaning 
                of section 5000A(e)(1)(B) of such Code) under the 
                employer-sponsored plan.
                    (D) If an enrollee claims an employer's minimum 
                essential coverage is unaffordable, the information 
                described in paragraph (3).
        If an enrollee changes employment or obtains additional 
        employment while enrolled in a qualified health plan for which 
        such credit or reduction is allowed, the enrollee shall notify 
        the Exchange of such change or additional employment and 
        provide the information described in this paragraph with 
        respect to the new employer.
            (5) Exemptions from individual responsibility 
        requirements.--In the case of an individual who is seeking an 
        exemption certificate under section 1311(d)(4)(H) from any 
        requirement or penalty imposed by section 5000A, the following 
        information:
                    (A) In the case of an individual seeking exemption 
                based on the individual's status as a member of an 
                exempt religious sect or division, as a member of a 
                health care sharing ministry, as an Indian, or as an 
                individual eligible for a hardship exemption, such 
                information as the Secretary shall prescribe.
                    (B) In the case of an individual seeking exemption 
                based on the lack of affordable coverage or the 
                individual's status as a taxpayer with household income 
                less than 100 percent of the poverty line, the 
                information described in paragraphs (3) and (4), as 
                applicable.
    (c) Verification of Information Contained in Records of Specific 
Federal Officials.--
            (1) Information transferred to secretary.--An Exchange 
        shall submit the information provided by an applicant under 
        subsection (b) to the Secretary for verification in accordance 
        with the requirements of this subsection and subsection (d).
            (2) Citizenship or immigration status.--
                    (A) Commissioner of social security.--The Secretary 
                shall submit to the Commissioner of Social Security the 
                following information for a determination as to whether 
                the information provided is consistent with the 
                information in the records of the Commissioner:
                            (i) The name, date of birth, and social 
                        security number of each individual for whom 
                        such information was provided under subsection 
                        (b)(2).
                            (ii) The attestation of an individual that 
                        the individual is a citizen.
                    (B) Secretary of homeland security.--
                            (i) In general.--In the case of an 
                        individual--
                                    (I) who attests that the individual 
                                is an alien lawfully present in the 
                                United States; or
                                    (II) who attests that the 
                                individual is a citizen but with 
                                respect to whom the Commissioner of 
                                Social Security has notified the 
                                Secretary under subsection (e)(3) that 
                                the attestation is inconsistent with 
                                information in the records maintained 
                                by the Commissioner;
                        the Secretary shall submit to the Secretary of 
                        Homeland Security the information described in 
                        clause (ii) for a determination as to whether 
                        the information provided is consistent with the 
                        information in the records of the Secretary of 
                        Homeland Security.
                            (ii) Information.--The information 
                        described in clause (ii) is the following:
                                    (I) The name, date of birth, and 
                                any identifying information with 
                                respect to the individual's immigration 
                                status provided under subsection 
                                (b)(2).
                                    (II) The attestation that the 
                                individual is an alien lawfully present 
                                in the United States or in the case of 
                                an individual described in clause 
                                (i)(II), the attestation that the 
                                individual is a citizen.
            (3) Eligibility for tax credit and cost-sharing 
        reduction.--The Secretary shall submit the information 
        described in subsection (b)(3)(A) provided under paragraph (3), 
        (4), or (5) of subsection (b) to the Secretary of the Treasury 
        for verification of household income and family size for 
        purposes of eligibility.
            (4) Methods.--
                    (A) In general.--The Secretary, in consultation 
                with the Secretary of the Treasury, the Secretary of 
                Homeland Security, and the Commissioner of Social 
                Security, shall provide that verifications and 
                determinations under this subsection shall be done--
                            (i) through use of an on-line system or 
                        otherwise for the electronic submission of, and 
                        response to, the information submitted under 
                        this subsection with respect to an applicant; 
                        or
                            (ii) by determining the consistency of the 
                        information submitted with the information 
                        maintained in the records of the Secretary of 
                        the Treasury, the Secretary of Homeland 
                        Security, or the Commissioner of Social 
                        Security through such other method as is 
                        approved by the Secretary.
                    (B) Flexibility.--The Secretary may modify the 
                methods used under the program established by this 
                section for the Exchange and verification of 
                information if the Secretary determines such 
                modifications would reduce the administrative costs and 
                burdens on the applicant, including allowing an 
                applicant to request the Secretary of the Treasury to 
                provide the information described in paragraph (3) 
                directly to the Exchange or to the Secretary. The 
                Secretary shall not make any such modification unless 
                the Secretary determines that any applicable 
                requirements under this section and section 6103 of the 
                Internal Revenue Code of 1986 with respect to the 
                confidentiality, disclosure, maintenance, or use of 
                information will be met.
    (d) Verification by Secretary.--In the case of information provided 
under subsection (b) that is not required under subsection (c) to be 
submitted to another person for verification, the Secretary shall 
verify the accuracy of such information in such manner as the Secretary 
determines appropriate, including delegating responsibility for 
verification to the Exchange.
    (e) Actions Relating to Verification.--
            (1) In general.--Each person to whom the Secretary provided 
        information under subsection (c) shall report to the Secretary 
        under the method established under subsection (c)(4) the 
        results of its verification and the Secretary shall notify the 
        Exchange of such results. Each person to whom the Secretary 
        provided information under subsection (d) shall report to the 
        Secretary in such manner as the Secretary determines 
        appropriate.
            (2) Verification.--
                    (A) Eligibility for enrollment and premium tax 
                credits and cost-sharing reductions.--If information 
                provided by an applicant under paragraphs (1), (2), 
                (3), and (4) of subsection (b) is verified under 
                subsections (c) and (d)--
                            (i) the individual's eligibility to enroll 
                        through the Exchange and to apply for premium 
                        tax credits and cost-sharing reductions shall 
                        be satisfied; and
                            (ii) the Secretary shall, if applicable, 
                        notify the Secretary of the Treasury under 
                        section 1412(c) of the amount of any advance 
                        payment to be made.
                    (B) Exemption from individual responsibility.--If 
                information provided by an applicant under subsection 
                (b)(5) is verified under subsections (c) and (d), the 
                Secretary shall issue the certification of exemption 
                described in section 1311(d)(4)(H).
            (3) Inconsistencies involving attestation of citizenship or 
        lawful presence.--If the information provided by any applicant 
        under subsection (b)(2) is inconsistent with information in the 
        records maintained by the Commissioner of Social Security or 
        Secretary of Homeland Security, whichever is applicable, the 
        applicant's eligibility will be determined in the same manner 
        as an individual's eligibility under the medicaid program is 
        determined under section 1902(ee) of the Social Security Act 
        (as in effect on January 1, 2010).
            (4) Inconsistencies involving other information.--
                    (A) In general.--If the information provided by an 
                applicant under subsection (b) (other than subsection 
                (b)(2)) is inconsistent with information in the records 
                maintained by persons under subsection (c) or is not 
                verified under subsection (d), the Secretary shall 
                notify the Exchange and the Exchange shall take the 
                following actions:
                            (i) Reasonable effort.--The Exchange shall 
                        make a reasonable effort to identify and 
                        address the causes of such inconsistency, 
                        including through typographical or other 
                        clerical errors, by contacting the applicant to 
                        confirm the accuracy of the information, and by 
                        taking such additional actions as the 
                        Secretary, through regulation or other 
                        guidance, may identify.
                            (ii) Notice and opportunity to correct.--In 
                        the case the inconsistency or inability to 
                        verify is not resolved under subparagraph (A), 
                        the Exchange shall--
                                    (I) notify the applicant of such 
                                fact;
                                    (II) provide the applicant an 
                                opportunity to either present 
                                satisfactory documentary evidence or 
                                resolve the inconsistency with the 
                                person verifying the information under 
                                subsection (c) or (d) during the 90-day 
                                period beginning the date on which the 
                                notice required under subclause (I) is 
                                sent to the applicant.
                        The Secretary may extend the 90-day period 
                        under subclause (II) for enrollments occurring 
                        during 2014.
                    (B) Specific actions not involving citizenship or 
                lawful presence.--
                            (i) In general.--Except as provided in 
                        paragraph (3), the Exchange shall, during any 
                        period before the close of the period under 
                        subparagraph (A)(ii)(II), make any 
                        determination under paragraphs (2), (3), and 
                        (4) of subsection (a) on the basis of the 
                        information contained on the application.
                            (ii) Eligibility or amount of credit or 
                        reduction.--If an inconsistency involving the 
                        eligibility for, or amount of, any premium tax 
                        credit or cost-sharing reduction is unresolved 
                        under this subsection as of the close of the 
                        period under subparagraph (A)(ii)(II), the 
                        Exchange shall notify the applicant of the 
                        amount (if any) of the credit or reduction that 
                        is determined on the basis of the records 
                        maintained by persons under subsection (c).
                            (iii) Employer affordability.--If the 
                        Secretary notifies an Exchange that an enrollee 
                        is eligible for a premium tax credit under 
                        section 36B of such Code or cost-sharing 
                        reduction under section 1402 because the 
                        enrollee's (or related individual's) employer 
                        does not provide minimum essential coverage 
                        through an employer-sponsored plan or that the 
                        employer does provide that coverage but it is 
                        not affordable coverage, the Exchange shall 
                        notify the employer of such fact and that the 
                        employer may be liable for the payment assessed 
                        under section 4980H of such Code.
                            (iv) Exemption.--In any case where the 
                        inconsistency involving, or inability to 
                        verify, information provided under subsection 
                        (b)(5) is not resolved as of the close of the 
                        period under subparagraph (A)(ii)(II), the 
                        Exchange shall notify an applicant that no 
                        certification of exemption from any requirement 
                        or payment under section 5000A of such Code 
                        will be issued.
                    (C) Appeals process.--The Exchange shall also 
                notify each person receiving notice under this 
                paragraph of the appeals processes established under 
                subsection (f).
    (f) Appeals and Redeterminations.--
            (1) In general.--The Secretary, in consultation with the 
        Secretary of the Treasury, the Secretary of Homeland Security, 
        and the Commissioner of Social Security, shall establish 
        procedures by which the Secretary or one of such other Federal 
        officers--
                    (A) hears and makes decisions with respect to 
                appeals of any determination under subsection (e); and
                    (B) redetermines eligibility on a periodic basis in 
                appropriate circumstances.
            (2) Employer liability.--
                    (A) In general.--The Secretary shall establish a 
                separate appeals process for employers who are notified 
                under subsection (e)(4)(C) that the employer may be 
                liable for a tax imposed by section 4980H of the 
                Internal Revenue Code of 1986 with respect to an 
                employee because of a determination that the employer 
                does not provide minimum essential coverage through an 
                employer-sponsored plan or that the employer does 
                provide that coverage but it is not affordable coverage 
                with respect to an employee. Such process shall provide 
                an employer the opportunity to--
                            (i) present information to the Exchange for 
                        review of the determination either by the 
                        Exchange or the person making the 
                        determination, including evidence of the 
                        employer-sponsored plan and employer 
                        contributions to the plan; and
                            (ii) have access to the data used to make 
                        the determination to the extent allowable by 
                        law.
                Such process shall be in addition to any rights of 
                appeal the employer may have under subtitle F of such 
                Code.
                    (B) Confidentiality.--Notwithstanding any provision 
                of this title (or the amendments made by this title) or 
                section 6103 of the Internal Revenue Code of 1986, an 
                employer shall not be entitled to any taxpayer return 
                information with respect to an employee for purposes of 
                determining whether the employer is subject to the 
                penalty under section 4980H of such Code with respect 
                to the employee, except that--
                            (i) the employer may be notified as to the 
                        name of an employee and whether or not the 
                        employee's income is above or below the 
                        threshold by which the affordability of an 
                        employer's health insurance coverage is 
                        measured; and
                            (ii) this subparagraph shall not apply to 
                        an employee who provides a waiver (at such time 
                        and in such manner as the Secretary may 
                        prescribe) authorizing an employer to have 
                        access to the employee's taxpayer return 
                        information.
    (g) Confidentiality of Applicant Information.--
            (1) In general.--An applicant for insurance coverage or for 
        a premium tax credit or cost-sharing reduction shall be 
        required to provide only the information strictly necessary to 
        authenticate identity, determine eligibility, and determine the 
        amount of the credit or reduction.
            (2) Receipt of information.--Any person who receives 
        information provided by an applicant under subsection (b) 
        (whether directly or by another person at the request of the 
        applicant), or receives information from a Federal agency under 
        subsection (c), (d), or (e), shall--
                    (A) use the information only for the purposes of, 
                and to the extent necessary in, ensuring the efficient 
                operation of the Exchange, including verifying the 
                eligibility of an individual to enroll through an 
                Exchange or to claim a premium tax credit or cost-
                sharing reduction or the amount of the credit or 
                reduction; and
                    (B) not disclose the information to any other 
                person except as provided in this section.
    (h) Penalties.--
            (1) False or fraudulent information.--
                    (A) Civil penalty.--
                            (i) In general.--If--
                                    (I) any person fails to provides 
                                correct information under subsection 
                                (b); and
                                    (II) such failure is attributable 
                                to negligence or disregard of any rules 
                                or regulations of the Secretary,
                        such person shall be subject, in addition to 
                        any other penalties that may be prescribed by 
                        law, to a civil penalty of not more than 
                        $25,000 with respect to any failures involving 
                        an application for a plan year. For purposes of 
                        this subparagraph, the terms ``negligence'' and 
                        ``disregard'' shall have the same meanings as 
                        when used in section 6662 of the Internal 
                        Revenue Code of 1986.
                            (ii) Reasonable cause exception.--No 
                        penalty shall be imposed under clause (i) if 
                        the Secretary determines that there was a 
                        reasonable cause for the failure and that the 
                        person acted in good faith.
                    (B) Knowing and willful violations.--Any person who 
                knowingly and willfully provides false or fraudulent 
                information under subsection (b) shall be subject, in 
                addition to any other penalties that may be prescribed 
                by law, to a civil penalty of not more than $250,000.
            (2) Improper use or disclosure of information.--Any person 
        who knowingly and willfully uses or discloses information in 
        violation of subsection (g) shall be subject, in addition to 
        any other penalties that may be prescribed by law, to a civil 
        penalty of not more than $25,000.
            (3) Limitations on liens and levies.--The Secretary (or, if 
        applicable, the Attorney General of the United States) shall 
        not--
                    (A) file notice of lien with respect to any 
                property of a person by reason of any failure to pay 
                the penalty imposed by this subsection; or
                    (B) levy on any such property with respect to such 
                failure.
    (i) Study of Administration of Employer Responsibility.--
            (1) In general.--The Secretary of Health and Human Services 
        shall, in consultation with the Secretary of the Treasury, 
        conduct a study of the procedures that are necessary to ensure 
        that in the administration of this title and section 4980H of 
        the Internal Revenue Code of 1986 (as added by section 1513) 
        that the following rights are protected:
                    (A) The rights of employees to preserve their right 
                to confidentiality of their taxpayer return information 
                and their right to enroll in a qualified health plan 
                through an Exchange if an employer does not provide 
                affordable coverage.
                    (B) The rights of employers to adequate due process 
                and access to information necessary to accurately 
                determine any payment assessed on employers.
            (2) Report.--Not later than January 1, 2013, the Secretary 
        of Health and Human Services shall report the results of the 
        study conducted under paragraph (1), including any 
        recommendations for legislative changes, to the Committees on 
        Finance and Health, Education, Labor and Pensions of the Senate 
        and the Committees of Education and Labor and Ways and Means of 
        the House of Representatives.

SEC. 1412. ADVANCE DETERMINATION AND PAYMENT OF PREMIUM TAX CREDITS AND 
              COST-SHARING REDUCTIONS.

    (a) In General.--The Secretary, in consultation with the Secretary 
of the Treasury, shall establish a program under which--
            (1) upon request of an Exchange, advance determinations are 
        made under section 1411 with respect to the income eligibility 
        of individuals enrolling in a qualified health plan in the 
        individual market through the Exchange for the premium tax 
        credit allowable under section 36B of the Internal Revenue Code 
        of 1986 and the cost-sharing reductions under section 1402;
            (2) the Secretary notifies--
                    (A) the Exchange and the Secretary of the Treasury 
                of the advance determinations; and
                    (B) the Secretary of the Treasury of the name and 
                employer identification number of each employer with 
                respect to whom 1 or more employee of the employer were 
                determined to be eligible for the premium tax credit 
                under section 36B of the Internal Revenue Code of 1986 
                and the cost-sharing reductions under section 1402 
                because--
                            (i) the employer did not provide minimum 
                        essential coverage; or
                            (ii) the employer provided such minimum 
                        essential coverage but it was determined under 
                        section 36B(c)(2)(C) of such Code to either be 
                        unaffordable to the employee or not provide the 
                        required minimum actuarial value; and
            (3) the Secretary of the Treasury makes advance payments of 
        such credit or reductions to the issuers of the qualified 
        health plans in order to reduce the premiums payable by 
        individuals eligible for such credit.
    (b) Advance Determinations.--
            (1) In general.--The Secretary shall provide under the 
        program established under subsection (a) that advance 
        determination of eligibility with respect to any individual 
        shall be made--
                    (A) during the annual open enrollment period 
                applicable to the individual (or such other enrollment 
                period as may be specified by the Secretary); and
                    (B) on the basis of the individual's household 
                income for the most recent taxable year for which the 
                Secretary, after consultation with the Secretary of the 
                Treasury, determines information is available.
            (2) Changes in circumstances.--The Secretary shall provide 
        procedures for making advance determinations on the basis of 
        information other than that described in paragraph (1)(B) in 
        cases where information included with an application form 
        demonstrates substantial changes in income, changes in family 
        size or other household circumstances, change in filing status, 
        the filing of an application for unemployment benefits, or 
        other significant changes affecting eligibility, including--
                    (A) allowing an individual claiming a decrease of 
                20 percent or more in income, or filing an application 
                for unemployment benefits, to have eligibility for the 
                credit determined on the basis of household income for 
                a later period or on the basis of the individual's 
                estimate of such income for the taxable year; and
                    (B) the determination of household income in cases 
                where the taxpayer was not required to file a return of 
                tax imposed by this chapter for the second preceding 
                taxable year.
    (c) Payment of Premium Tax Credits and Cost-sharing Reductions.--
            (1) In general.--The Secretary shall notify the Secretary 
        of the Treasury and the Exchange through which the individual 
        is enrolling of the advance determination under section 1411.
            (2) Premium tax credit.--
                    (A) In general.--The Secretary of the Treasury 
                shall make the advance payment under this section of 
                any premium tax credit allowed under section 36B of the 
                Internal Revenue Code of 1986 to the issuer of a 
                qualified health plan on a monthly basis (or such other 
                periodic basis as the Secretary may provide).
                    (B) Issuer responsibilities.--An issuer of a 
                qualified health plan receiving an advance payment with 
                respect to an individual enrolled in the plan shall--
                            (i) reduce the premium charged the insured 
                        for any period by the amount of the advance 
                        payment for the period;
                            (ii) notify the Exchange and the Secretary 
                        of such reduction;
                            (iii) include with each billing statement 
                        the amount by which the premium for the plan 
                        has been reduced by reason of the advance 
                        payment; and
                            (iv) in the case of any nonpayment of 
                        premiums by the insured--
                                    (I) notify the Secretary of such 
                                nonpayment; and
                                    (II) allow a 3-month grace period 
                                for nonpayment of premiums before 
                                discontinuing coverage.
            (3) Cost-sharing reductions.--The Secretary shall also 
        notify the Secretary of the Treasury and the Exchange under 
        paragraph (1) if an advance payment of the cost-sharing 
        reductions under section 1402 is to be made to the issuer of 
        any qualified health plan with respect to any individual 
        enrolled in the plan. The Secretary of the Treasury shall make 
        such advance payment at such time and in such amount as the 
        Secretary specifies in the notice.
    (d) No Federal Payments for Individuals Not Lawfully Present.--
Nothing in this subtitle or the amendments made by this subtitle allows 
Federal payments, credits, or cost-sharing reductions for individuals 
who are not lawfully present in the United States.
    (e) State Flexibility.--Nothing in this subtitle or the amendments 
made by this subtitle shall be construed to prohibit a State from 
making payments to or on behalf of an individual for coverage under a 
qualified health plan offered through an Exchange that are in addition 
to any credits or cost-sharing reductions allowable to the individual 
under this subtitle and such amendments.

SEC. 1413. STREAMLINING OF PROCEDURES FOR ENROLLMENT THROUGH AN 
              EXCHANGE AND STATE MEDICAID, CHIP, AND HEALTH SUBSIDY 
              PROGRAMS.

    (a) In General.--The Secretary shall establish a system meeting the 
requirements of this section under which residents of each State may 
apply for enrollment in, receive a determination of eligibility for 
participation in, and continue participation in, applicable State 
health subsidy programs. Such system shall ensure that if an individual 
applying to an Exchange is found through screening to be eligible for 
medical assistance under the State medicaid plan under title XIX, or 
eligible for enrollment under a State children's health insurance 
program (CHIP) under title XXI of such Act, the individual is enrolled 
for assistance under such plan or program.
    (b) Requirements Relating to Forms and Notice.--
            (1) Requirements relating to forms.--
                    (A) In general.--The Secretary shall develop and 
                provide to each State a single, streamlined form that--
                            (i) may be used to apply for all applicable 
                        State health subsidy programs within the State;
                            (ii) may be filed online, in person, by 
                        mail, or by telephone;
                            (iii) may be filed with an Exchange or with 
                        State officials operating one of the other 
                        applicable State health subsidy programs; and
                            (iv) is structured to maximize an 
                        applicant's ability to complete the form 
                        satisfactorily, taking into account the 
                        characteristics of individuals who qualify for 
                        applicable State health subsidy programs.
                    (B) State authority to establish form.--A State may 
                develop and use its own single, streamlined form as an 
                alternative to the form developed under subparagraph 
                (A) if the alternative form is consistent with 
                standards promulgated by the Secretary under this 
                section.
                    (C) Supplemental eligibility forms.--The Secretary 
                may allow a State to use a supplemental or alternative 
                form in the case of individuals who apply for 
                eligibility that is not determined on the basis of the 
                household income (as defined in section 36B of the 
                Internal Revenue Code of 1986).
            (2) Notice.--The Secretary shall provide that an applicant 
        filing a form under paragraph (1) shall receive notice of 
        eligibility for an applicable State health subsidy program 
        without any need to provide additional information or paperwork 
        unless such information or paperwork is specifically required 
        by law when information provided on the form is inconsistent 
        with data used for the electronic verification under paragraph 
        (3) or is otherwise insufficient to determine eligibility.
    (c) Requirements Relating to Eligibility Based on Data Exchanges.--
            (1) Development of secure interfaces.--Each State shall 
        develop for all applicable State health subsidy programs a 
        secure, electronic interface allowing an exchange of data 
        (including information contained in the application forms 
        described in subsection (b)) that allows a determination of 
        eligibility for all such programs based on a single 
        application. Such interface shall be compatible with the method 
        established for data verification under section 1411(c)(4).
            (2) Data matching program.--Each applicable State health 
        subsidy program shall participate in a data matching 
        arrangement for determining eligibility for participation in 
        the program under paragraph (3) that--
                    (A) provides access to data described in paragraph 
                (3);
                    (B) applies only to individuals who--
                            (i) receive assistance from an applicable 
                        State health subsidy program; or
                            (ii) apply for such assistance--
                                    (I) by filing a form described in 
                                subsection (b); or
                                    (II) by requesting a determination 
                                of eligibility and authorizing 
                                disclosure of the information described 
                                in paragraph (3) to applicable State 
                                health coverage subsidy programs for 
                                purposes of determining and 
                                establishing eligibility; and
                    (C) consistent with standards promulgated by the 
                Secretary, including the privacy and data security 
                safeguards described in section 1942 of the Social 
                Security Act or that are otherwise applicable to such 
                programs.
            (3) Determination of eligibility.--
                    (A) In general.--Each applicable State health 
                subsidy program shall, to the maximum extent 
                practicable--
                            (i) establish, verify, and update 
                        eligibility for participation in the program 
                        using the data matching arrangement under 
                        paragraph (2); and
                            (ii) determine such eligibility on the 
                        basis of reliable, third party data, including 
                        information described in sections 1137, 453(i), 
                        and 1942(a) of the Social Security Act, 
                        obtained through such arrangement.
                    (B) Exception.--This paragraph shall not apply in 
                circumstances with respect to which the Secretary 
                determines that the administrative and other costs of 
                use of the data matching arrangement under paragraph 
                (2) outweigh its expected gains in accuracy, 
                efficiency, and program participation.
            (4) Secretarial standards.--The Secretary shall, after 
        consultation with persons in possession of the data to be 
        matched and representatives of applicable State health subsidy 
        programs, promulgate standards governing the timing, contents, 
        and procedures for data matching described in this subsection. 
        Such standards shall take into account administrative and other 
        costs and the value of data matching to the establishment, 
        verification, and updating of eligibility for applicable State 
        health subsidy programs.
    (d) Administrative Authority.--
            (1) Agreements.--Subject to section 1411 and section 
        6103(l)(21) of the Internal Revenue Code of 1986 and any other 
        requirement providing safeguards of privacy and data integrity, 
        the Secretary may establish model agreements, and enter into 
        agreements, for the sharing of data under this section.
            (2) Authority of exchange to contract out.--Nothing in this 
        section shall be construed to--
                    (A) prohibit contractual arrangements through which 
                a State medicaid agency determines eligibility for all 
                applicable State health subsidy programs, but only if 
                such agency complies with the Secretary's requirements 
                ensuring reduced administrative costs, eligibility 
                errors, and disruptions in coverage; or
                    (B) change any requirement under title XIX that 
                eligibility for participation in a State's medicaid 
                program must be determined by a public agency.
    (e) Applicable State Health Subsidy Program.--In this section, the 
term ``applicable State health subsidy program'' means--
            (1) the program under this title for the enrollment in 
        qualified health plans offered through an Exchange, including 
        the premium tax credits under section 36B of the Internal 
        Revenue Code of 1986 and cost-sharing reductions under section 
        1402;
            (2) a State medicaid program under title XIX of the Social 
        Security Act;
            (3) a State children's health insurance program (CHIP) 
        under title XXI of such Act; and
            (4) a State program under section 1331 establishing 
        qualified basic health plans.

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

    (a) Disclosure of Taxpayer Return Information and Social Security 
Numbers.--
            (1) Taxpayer return information.--Subsection (l) of section 
        6103 of the Internal Revenue Code of 1986 is amended by adding 
        at the end the following new paragraph:
            ``(21) Disclosure of return information to carry out 
        eligibility requirements for certain programs.--
                    ``(A) In general.--The Secretary, upon written 
                request from the Secretary of Health and Human 
                Services, shall disclose to officers, employees, and 
                contractors of the Department of Health and Human 
                Services return information of any taxpayer whose 
                income is relevant in determining any premium tax 
                credit under section 36B or any cost-sharing reduction 
                under section 1402 of the Patient Protection and 
                Affordable Care Act or eligibility for participation in 
                a State medicaid program under title XIX of the Social 
                Security Act, a State's children's health insurance 
                program under title XXI of the Social Security Act, or 
                a basic health program under section 1331 of Patient 
                Protection and Affordable Care Act. Such return 
                information shall be limited to--
                            ``(i) taxpayer identity information with 
                        respect to such taxpayer,
                            ``(ii) the filing status of such taxpayer,
                            ``(iii) the number of individuals for whom 
                        a deduction is allowed under section 151 with 
                        respect to the taxpayer (including the taxpayer 
                        and the taxpayer's spouse),
                            ``(iv) the modified gross income (as 
                        defined in section 36B) of such taxpayer and 
                        each of the other individuals included under 
                        clause (iii) who are required to file a return 
                        of tax imposed by chapter 1 for the taxable 
                        year,
                            ``(v) such other information as is 
                        prescribed by the Secretary by regulation as 
                        might indicate whether the taxpayer is eligible 
                        for such credit or reduction (and the amount 
                        thereof), and
                            ``(vi) the taxable year with respect to 
                        which the preceding information relates or, if 
                        applicable, the fact that such information is 
                        not available.
                    ``(B) Information to exchange and state agencies.--
                The Secretary of Health and Human Services may disclose 
                to an Exchange established under the Patient Protection 
                and Affordable Care Act or its contractors, or to a 
                State agency administering a State program described in 
                subparagraph (A) or its contractors, any inconsistency 
                between the information provided by the Exchange or 
                State agency to the Secretary and the information 
                provided to the Secretary under subparagraph (A).
                    ``(C) Restriction on use of disclosed 
                information.--Return information disclosed under 
                subparagraph (A) or (B) may be used by officers, 
                employees, and contractors of the Department of Health 
                and Human Services, an Exchange, or a State agency only 
                for the purposes of, and to the extent necessary in--
                            ``(i) establishing eligibility for 
                        participation in the Exchange, and verifying 
                        the appropriate amount of, any credit or 
                        reduction described in subparagraph (A),
                            ``(ii) determining eligibility for 
                        participation in the State programs described 
                        in subparagraph (A).''.
            (2) Social security numbers.--Section 205(c)(2)(C) of the 
        Social Security Act is amended by adding at the end the 
        following new clause:
                            ``(x) The Secretary of Health and Human 
                        Services, and the Exchanges established under 
                        section 1311 of the Patient Protection and 
                        Affordable Care Act, are authorized to collect 
                        and use the names and social security account 
                        numbers of individuals as required to 
                        administer the provisions of, and the 
                        amendments made by, the such Act.''.
    (b) Confidentiality and Disclosure.--Paragraph (3) of section 
6103(a) of such Code is amended by striking ``or (20)'' and inserting 
``(20), or (21)''.
    (c) Procedures and Recordkeeping Related to Disclosures.--Paragraph 
(4) of section 6103(p) of such Code is amended--
            (1) by inserting ``, or any entity described in subsection 
        (l)(21),'' after ``or (20)'' in the matter preceding 
        subparagraph (A),
            (2) by inserting ``or any entity described in subsection 
        (l)(21),'' after ``or (o)(1)(A)'' in subparagraph (F)(ii), and
            (3) by inserting ``or any entity described in subsection 
        (l)(21),'' after ``or (20)'' both places it appears in the 
        matter after subparagraph (F).
    (d) Unauthorized Disclosure or Inspection.--Paragraph (2) of 
section 7213(a) of such Code is amended by striking ``or (20)'' and 
inserting ``(20), or (21)''.

SEC. 1415. PREMIUM TAX CREDIT AND COST-SHARING REDUCTION PAYMENTS 
              DISREGARDED FOR FEDERAL AND FEDERALLY-ASSISTED PROGRAMS.

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

                   PART II--SMALL BUSINESS TAX CREDIT

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

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business-related 
credits) is amended by inserting after section 45Q the following:

``SEC. 45R. EMPLOYEE HEALTH INSURANCE EXPENSES OF SMALL EMPLOYERS.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible small employer, the small employer health insurance credit 
determined under this section for any taxable year in the credit period 
is the amount determined under subsection (b).
    ``(b) Health Insurance Credit Amount.--Subject to subsection (c), 
the amount determined under this subsection with respect to any 
eligible small employer is equal to 50 percent (35 percent in the case 
of a tax-exempt eligible small employer) of the lesser of--
            ``(1) the aggregate amount of nonelective contributions the 
        employer made on behalf of its employees during the taxable 
        year under the arrangement described in subsection (d)(4) for 
        premiums for qualified health plans offered by the employer to 
        its employees through an Exchange, or
            ``(2) the aggregate amount of nonelective contributions 
        which the employer would have made during the taxable year 
        under the arrangement if each employee taken into account under 
        paragraph (1) had enrolled in a qualified health plan which had 
        a premium equal to the average premium (as determined by the 
        Secretary of Health and Human Services) for the small group 
        market in the rating area in which the employee enrolls for 
        coverage.
    ``(c) Phaseout of Credit Amount Based on Number of Employees and 
Average Wages.--The amount of the credit determined under subsection 
(b) without regard to this subsection shall be reduced (but not below 
zero) by the sum of the following amounts:
            ``(1) Such amount multiplied by a fraction the numerator of 
        which is the total number of full-time equivalent employees of 
        the employer in excess of 10 and the denominator of which is 
        15.
            ``(2) Such amount multiplied by a fraction the numerator of 
        which is the average annual wages of the employer in excess of 
        the dollar amount in effect under subsection (d)(3)(B) and the 
        denominator of which is such dollar amount.
    ``(d) Eligible Small Employer.--For purposes of this section--
            ``(1) In general.--The term `eligible small employer' 
        means, with respect to any taxable year, an employer--
                    ``(A) which has no more than 25 full-time 
                equivalent employees for the taxable year,
                    ``(B) the average annual wages of which do not 
                exceed an amount equal to twice the dollar amount in 
                effect under paragraph (3)(B) for the taxable year, and
                    ``(C) which has in effect an arrangement described 
                in paragraph (4).
            ``(2) Full-time equivalent employees.--
                    ``(A) In general.--The term `full-time equivalent 
                employees' means a number of employees equal to the 
                number determined by dividing--
                            ``(i) the total number of hours of service 
                        for which wages were paid by the employer to 
                        employees during the taxable year, by
                            ``(ii) 2,080.
                Such number shall be rounded to the next lowest whole 
                number if not otherwise a whole number.
                    ``(B) Excess hours not counted.--If an employee 
                works in excess of 2,080 hours of service during any 
                taxable year, such excess shall not be taken into 
                account under subparagraph (A).
                    ``(C) Hours of service.--The Secretary, in 
                consultation with the Secretary of Labor, shall 
                prescribe such regulations, rules, and guidance as may 
                be necessary to determine the hours of service of an 
                employee, including rules for the application of this 
                paragraph to employees who are not compensated on an 
                hourly basis.
            ``(3) Average annual wages.--
                    ``(A) In general.--The average annual wages of an 
                eligible small employer for any taxable year is the 
                amount determined by dividing--
                            ``(i) the aggregate amount of wages which 
                        were paid by the employer to employees during 
                        the taxable year, by
                            ``(ii) the number of full-time equivalent 
                        employees of the employee determined under 
                        paragraph (2) for the taxable year.
                Such amount shall be rounded to the next lowest 
                multiple of $1,000 if not otherwise such a multiple.
                    ``(B) Dollar amount.--For purposes of paragraph 
                (1)(B)--
                            ``(i) 2011, 2012, and 2013.--The dollar 
                        amount in effect under this paragraph for 
                        taxable years beginning in 2011, 2012, or 2013 
                        is $20,000.
                            ``(ii) Subsequent years.--In the case of a 
                        taxable year beginning in a calendar year after 
                        2013, the dollar amount in effect under this 
                        paragraph shall be equal to $20,000, multiplied 
                        by the cost-of-living adjustment determined 
                        under section 1(f)(3) for the calendar year, 
                        determined by substituting `calendar year 2012' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
            ``(4) Contribution arrangement.--An arrangement is 
        described in this paragraph if it requires an eligible small 
        employer to make a nonelective contribution on behalf of each 
        employee who enrolls in a qualified health plan offered to 
        employees by the employer through an exchange in an amount 
        equal to a uniform percentage (not less than 50 percent) of the 
        premium cost of the qualified health plan.
            ``(5) Seasonal worker hours and wages not counted.--For 
        purposes of this subsection--
                    ``(A) In general.--The number of hours of service 
                worked by, and wages paid to, a seasonal worker of an 
                employer shall not be taken into account in determining 
                the full-time equivalent employees and average annual 
                wages of the employer unless the worker works for the 
                employer on more than 120 days during the taxable year.
                    ``(B) Definition of seasonal worker.--The term 
                `seasonal worker' means a worker who performs labor or 
                services on a seasonal basis as defined by the 
                Secretary of Labor, including workers covered by 
                section 500.20(s)(1) of title 29, Code of Federal 
                Regulations and retail workers employed exclusively 
                during holiday seasons.
    ``(e) Other Rules and Definitions.--For purposes of this section--
            ``(1) Employee.--
                    ``(A) Certain employees excluded.--The term 
                `employee' shall not include--
                            ``(i) an employee within the meaning of 
                        section 401(c)(1),
                            ``(ii) any 2-percent shareholder (as 
                        defined in section 1372(b)) of an eligible 
                        small business which is an S corporation,
                            ``(iii) any 5-percent owner (as defined in 
                        section 416(i)(1)(B)(i)) of an eligible small 
                        business, or
                            ``(iv) any individual who bears any of the 
                        relationships described in subparagraphs (A) 
                        through (G) of section 152(d)(2) to, or is a 
                        dependent described in section 152(d)(2)(H) of, 
                        an individual described in clause (i), (ii), or 
                        (iii).
                    ``(B) Leased employees.--The term `employee' shall 
                include a leased employee within the meaning of section 
                414(n).
            ``(2) Credit period.--The term `credit period' means, with 
        respect to any eligible small employer, the 2-consecutive-
        taxable year period beginning with the 1st taxable year in 
        which the employer (or any predecessor) offers 1 or more 
        qualified health plans to its employees through an Exchange.
            ``(3) Nonelective contribution.--The term `nonelective 
        contribution' means an employer contribution other than an 
        employer contribution pursuant to a salary reduction 
        arrangement.
            ``(4) Wages.--The term `wages' has the meaning given such 
        term by section 3121(a) (determined without regard to any 
        dollar limitation contained in such section).
            ``(5) Aggregation and other rules made applicable.--
                    ``(A) Aggregation rules.--All employers treated as 
                a single employer under subsection (b), (c), (m), or 
                (o) of section 414 shall be treated as a single 
                employer for purposes of this section.
                    ``(B) Other rules.--Rules similar to the rules of 
                subsections (c), (d), and (e) of section 52 shall 
                apply.
    ``(f) Credit Made Available to Tax-exempt Eligible Small 
Employers.--
            ``(1) In general.--In the case of a tax-exempt eligible 
        small employer, there shall be treated as a credit allowable 
        under subpart C (and not allowable under this subpart) the 
        lesser of--
                    ``(A) the amount of the credit determined under 
                this section with respect to such employer, or
                    ``(B) the amount of the payroll taxes of the 
                employer during the calendar year in which the taxable 
                year begins.
            ``(2) Tax-exempt eligible small employer.--For purposes of 
        this section, the term `tax-exempt eligible small employer' 
        means an eligible small employer which is any organization 
        described in section 501(c) which is exempt from taxation under 
        section 501(a).
            ``(3) Payroll taxes.--For purposes of this subsection--
                    ``(A) In general.--The term `payroll taxes' means--
                            ``(i) amounts required to be withheld from 
                        the employees of the tax-exempt eligible small 
                        employer under section 3401(a),
                            ``(ii) amounts required to be withheld from 
                        such employees under section 3101(b), and
                            ``(iii) amounts of the taxes imposed on the 
                        tax-exempt eligible small employer under 
                        section 3111(b).
                    ``(B) Special rule.--A rule similar to the rule of 
                section 24(d)(2)(C) shall apply for purposes of 
                subparagraph (A).
    ``(g) Application of Section for Calendar Years 2011, 2012, and 
2013.--In the case of any taxable year beginning in 2011, 2012, or 
2013, the following modifications to this section shall apply in 
determining the amount of the credit under subsection (a):
            ``(1) No credit period required.--The credit shall be 
        determined without regard to whether the taxable year is in a 
        credit period and for purposes of applying this section to 
        taxable years beginning after 2013, no credit period shall be 
        treated as beginning with a taxable year beginning before 2014.
            ``(2) Amount of credit.--The amount of the credit 
        determined under subsection (b) shall be determined--
                    ``(A) by substituting `35 percent (25 percent in 
                the case of a tax-exempt eligible small employer)' for 
                `50 percent (35 percent in the case of a tax-exempt 
                eligible small employer)',
                    ``(B) by reference to an eligible small employer's 
                nonelective contributions for premiums paid for health 
                insurance coverage (within the meaning of section 
                9832(b)(1)) of an employee, and
                    ``(C) by substituting for the average premium 
                determined under subsection (b)(2) the amount the 
                Secretary of Health and Human Services determines is 
                the average premium for the small group market in the 
                State in which the employer is offering health 
                insurance coverage (or for such area within the State 
                as is specified by the Secretary).
            ``(3) Contribution arrangement.--An arrangement shall not 
        fail to meet the requirements of subsection (d)(4) solely 
        because it provides for the offering of insurance outside of an 
        Exchange.
    ``(h) Insurance Definitions.--Any term used in this section which 
is also used in the Public Health Service Act or subtitle A of title I 
of the Patient Protection and Affordable Care Act shall have the 
meaning given such term by such Act or subtitle.
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the provisions of this section, 
including regulations to prevent the avoidance of the 2-year limit on 
the credit period through the use of successor entities and the 
avoidance of the limitations under subsection (c) through the use of 
multiple entities.''.
    (b) Credit To Be Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``plus'' at the end of paragraph (34), 
by striking the period at the end of paragraph (35) and inserting ``, 
plus'', and by inserting after paragraph (35) the following:
            ``(36) the small employer health insurance credit 
        determined under section 45R.''.
    (c) Credit Allowed Against Alternative Minimum Tax.--Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 (defining specified 
credits) is amended by redesignating clauses (vi), (vii), and (viii) as 
clauses (vii), (viii), and (ix), respectively, and by inserting after 
clause (v) the following new clause:
                            ``(vi) the credit determined under section 
                        45R,''.
    (d) Disallowance of Deduction for Certain Expenses for Which Credit 
Allowed.--
            (1) In general.--Section 280C of the Internal Revenue Code 
        of 1986 (relating to disallowance of deduction for certain 
        expenses for which credit allowed), as amended by section 
        1401(b), is amended by adding at the end the following new 
        subsection:
    ``(h) Credit for Employee Health Insurance Expenses of Small 
Employers.--No deduction shall be allowed for that portion of the 
premiums for qualified health plans (as defined in section 1301(a) of 
the Patient Protection and Affordable Care Act), or for health 
insurance coverage in the case of taxable years beginning in 2011, 
2012, or 2013, paid by an employer which is equal to the amount of the 
credit determined under section 45R(a) with respect to the premiums.''.
            (2) Deduction for expiring credits.--Section 196(c) of such 
        Code is amended by striking ``and'' at the end of paragraph 
        (12), by striking the period at the end of paragraph (13) and 
        inserting ``, and'', and by adding at the end the following new 
        paragraph:
            ``(14) the small employer health insurance credit 
        determined under section 45R(a).''.
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following:

``Sec. 45R. Employee health insurance expenses of small employers.''.
    (f) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to amounts paid or incurred in taxable years beginning 
        after December 31, 2010.
            (2) Minimum tax.--The amendments made by subsection (c) 
        shall apply to credits determined under section 45R of the 
        Internal Revenue Code of 1986 in taxable years beginning after 
        December 31, 2010, and to carrybacks of such credits.

           Subtitle F--Shared Responsibility for Health Care

                   PART I--INDIVIDUAL RESPONSIBILITY

SEC. 1501. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.

    (a) Findings.--Congress makes the following findings:
            (1) In general.--The individual responsibility requirement 
        provided for in this section (in this subsection referred to as 
        the ``requirement'') is commercial and economic in nature, and 
        substantially affects interstate commerce, as a result of the 
        effects described in paragraph (2).
            (2) Effects on the national economy and interstate 
        commerce.--The effects described in this paragraph are the 
        following:
                    (A) The requirement regulates activity that is 
                commercial and economic in nature: economic and 
                financial decisions about how and when health care is 
                paid for, and when health insurance is purchased.
                    (B) Health insurance and health care services are a 
                significant part of the national economy. National 
                health spending is projected to increase from 
                $2,500,000,000,000, or 17.6 percent of the economy, in 
                2009 to $4,700,000,000,000 in 2019. Private health 
                insurance spending is projected to be $854,000,000,000 
                in 2009, and pays for medical supplies, drugs, and 
                equipment that are shipped in interstate commerce. 
                Since most health insurance is sold by national or 
                regional health insurance companies, health insurance 
                is sold in interstate commerce and claims payments flow 
                through interstate commerce.
                    (C) The requirement, together with the other 
                provisions of this Act, will add millions of new 
                consumers to the health insurance market, increasing 
                the supply of, and demand for, health care services. 
                According to the Congressional Budget Office, the 
                requirement will increase the number and share of 
                Americans who are insured.
                    (D) The requirement achieves near-universal 
                coverage by building upon and strengthening the private 
                employer-based health insurance system, which covers 
                176,000,000 Americans nationwide. In Massachusetts, a 
                similar requirement has strengthened private employer-
                based coverage: despite the economic downturn, the 
                number of workers offered employer-based coverage has 
                actually increased.
                    (E) Half of all personal bankruptcies are caused in 
                part by medical expenses. By significantly increasing 
                health insurance coverage, the requirement, together 
                with the other provisions of this Act, will improve 
                financial security for families.
                    (F) Under the Employee Retirement Income Security 
                Act of 1974 (29 U.S.C. 1001 et seq.), the Public Health 
                Service Act (42 U.S.C. 201 et seq.), and this Act, the 
                Federal Government has a significant role in regulating 
                health insurance which is in interstate commerce.
                    (G) Under sections 2704 and 2705 of the Public 
                Health Service Act (as added by section 1201 of this 
                Act), if there were no requirement, many individuals 
                would wait to purchase health insurance until they 
                needed care. By significantly increasing health 
                insurance coverage, the requirement, together with the 
                other provisions of this Act, will minimize this 
                adverse selection and broaden the health insurance risk 
                pool to include healthy individuals, which will lower 
                health insurance premiums. The requirement is essential 
                to creating effective health insurance markets in which 
                improved health insurance products that are guaranteed 
                issue and do not exclude coverage of pre-existing 
                conditions can be sold.
                    (H) Administrative costs for private health 
                insurance, which were $90,000,000,000 in 2006, are 26 
                to 30 percent of premiums in the current individual and 
                small group markets. By significantly increasing health 
                insurance coverage and the size of purchasing pools, 
                which will increase economies of scale, the 
                requirement, together with the other provisions of this 
                Act, will significantly reduce administrative costs and 
                lower health insurance premiums. The requirement is 
                essential to creating effective health insurance 
                markets that do not require underwriting and eliminate 
                its associated administrative costs.
            (3) Supreme court ruling.--In United States v. South-
        Eastern Underwriters Association (322 U.S. 533 (1944)), the 
        Supreme Court of the United States ruled that insurance is 
        interstate commerce subject to Federal regulation.
    (b) In General.--Subtitle D of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new chapter:

        ``CHAPTER 48--MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE

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

``SEC. 5000A. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.

    ``(a) Requirement To Maintain Minimum Essential Coverage.--An 
applicable individual shall for each month beginning after 2013 ensure 
that the individual, and any dependent of the individual who is an 
applicable individual, is covered under minimum essential coverage for 
such month.
    ``(b) Shared Responsibility Payment.--
            ``(1) In general.--If an applicable individual fails to 
        meet the requirement of subsection (a) for 1 or more months 
        during any calendar year beginning after 2013, then, except as 
        provided in subsection (d), there is hereby imposed a penalty 
        with respect to the individual in the amount determined under 
        subsection (c).
            ``(2) Inclusion with return.--Any penalty imposed by this 
        section with respect to any month shall be included with a 
        taxpayer's return under chapter 1 for the taxable year which 
        includes such month.
            ``(3) Payment of penalty.--If an individual with respect to 
        whom a penalty is imposed by this section for any month--
                    ``(A) is a dependent (as defined in section 152) of 
                another taxpayer for the other taxpayer's taxable year 
                including such month, such other taxpayer shall be 
                liable for such penalty, or
                    ``(B) files a joint return for the taxable year 
                including such month, such individual and the spouse of 
                such individual shall be jointly liable for such 
                penalty.
    ``(c) Amount of Penalty.--
            ``(1) In general.--The penalty determined under this 
        subsection for any month with respect to any individual is an 
        amount equal to \1/12\ of the applicable dollar amount for the 
        calendar year.
            ``(2) Dollar limitation.--The amount of the penalty imposed 
        by this section on any taxpayer for any taxable year with 
        respect to all individuals for whom the taxpayer is liable 
        under subsection (b)(3) shall not exceed an amount equal to 300 
        percent the applicable dollar amount (determined without regard 
        to paragraph (3)(C)) for the calendar year with or within which 
        the taxable year ends.
            ``(3) Applicable dollar amount.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), the applicable dollar amount 
                is $750.
                    ``(B) Phase in.--The applicable dollar amount is 
                $95 for 2014 and $350 for 2015.
                    ``(C) Special rule for individuals under age 18.--
                If an applicable individual has not attained the age of 
                18 as of the beginning of a month, the applicable 
                dollar amount with respect to such individual for the 
                month shall be equal to one-half of the applicable 
                dollar amount for the calendar year in which the month 
                occurs.
                    ``(D) Indexing of amount.--In the case of any 
                calendar year beginning after 2016, the applicable 
                dollar amount shall be equal to $750, increased by an 
                amount equal to--
                            ``(i) $750, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year, determined by substituting 
                        `calendar year 2015' for `calendar year 1992' 
                        in subparagraph (B) thereof.
                If the amount of any increase under clause (i) is not a 
                multiple of $50, such increase shall be rounded to the 
                next lowest multiple of $50.
            ``(4) Terms relating to income and families.--For purposes 
        of this section--
                    ``(A) Family size.--The family size involved with 
                respect to any taxpayer shall be equal to the number of 
                individuals for whom the taxpayer is allowed a 
                deduction under section 151 (relating to allowance of 
                deduction for personal exemptions) for the taxable 
                year.
                    ``(B) Household income.--The term `household 
                income' means, with respect to any taxpayer for any 
                taxable year, an amount equal to the sum of--
                            ``(i) the modified gross income of the 
                        taxpayer, plus
                            ``(ii) the aggregate modified gross incomes 
                        of all other individuals who--
                                    ``(I) were taken into account in 
                                determining the taxpayer's family size 
                                under paragraph (1), and
                                    ``(II) were required to file a 
                                return of tax imposed by section 1 for 
                                the taxable year.
                    ``(C) Modified gross income.--The term `modified 
                gross income' means gross income--
                            ``(i) decreased by the amount of any 
                        deduction allowable under paragraph (1), (3), 
                        (4), or (10) of section 62(a),
                            ``(ii) increased by the amount of interest 
                        received or accrued during the taxable year 
                        which is exempt from tax imposed by this 
                        chapter, and
                            ``(iii) determined without regard to 
                        sections 911, 931, and 933.
                    ``(D) Poverty line.--
                            ``(i) In general.--The term `poverty line' 
                        has the meaning given that term in section 
                        2110(c)(5) of the Social Security Act (42 
                        U.S.C. 1397jj(c)(5)).
                            ``(ii) Poverty line used.--In the case of 
                        any taxable year ending with or within a 
                        calendar year, the poverty line used shall be 
                        the most recently published poverty line as of 
                        the 1st day of such calendar year.
    ``(d) Applicable Individual.--For purposes of this section--
            ``(1) In general.--The term `applicable individual' means, 
        with respect to any month, an individual other than an 
        individual described in paragraph (2), (3), or (4).
            ``(2) Religious exemptions.--
                    ``(A) Religious conscience exemption.--Such term 
                shall not include any individual for any month if such 
                individual has in effect an exemption under section 
                1311(d)(4)(H) of the Patient Protection and Affordable 
                Care Act which certifies that such individual is a 
                member of a recognized religious sect or division 
                thereof described in section 1402(g)(1) and an adherent 
                of established tenets or teachings of such sect or 
                division as described in such section.
                    ``(B) Health care sharing ministry.--
                            ``(i) In general.--Such term shall not 
                        include any individual for any month if such 
                        individual is a member of a health care sharing 
                        ministry for the month.
                            ``(ii) Health care sharing ministry.--The 
                        term `health care sharing ministry' means an 
                        organization--
                                    ``(I) which is described in section 
                                501(c)(3) and is exempt from taxation 
                                under section 501(a),
                                    ``(II) members of which share a 
                                common set of ethical or religious 
                                beliefs and share medical expenses 
                                among members in accordance with those 
                                beliefs and without regard to the State 
                                in which a member resides or is 
                                employed,
                                    ``(III) members of which retain 
                                membership even after they develop a 
                                medical condition,
                                    ``(IV) which (or a predecessor of 
                                which) has been in existence at all 
                                times since December 31, 1999, and 
                                medical expenses of its members have 
                                been shared continuously and without 
                                interruption since at least December 
                                31, 1999, and
                                    ``(V) which conducts an annual 
                                audit which is performed by an 
                                independent certified public accounting 
                                firm in accordance with generally 
                                accepted accounting principles and 
                                which is made available to the public 
                                upon request.
            ``(3) Individuals not lawfully present.--Such term shall 
        not include an individual for any month if for the month the 
        individual is not a citizen or national of the United States or 
        an alien lawfully present in the United States.
            ``(4) Incarcerated individuals.--Such term shall not 
        include an individual for any month if for the month the 
        individual is incarcerated, other than incarceration pending 
        the disposition of charges.
    ``(e) Exemptions.--No penalty shall be imposed under subsection (a) 
with respect to--
            ``(1) Individuals who cannot afford coverage.--
                    ``(A) In general.--Any applicable individual for 
                any month if the applicable individual's required 
                contribution (determined on an annual basis) for 
                coverage for the month exceeds 8 percent of such 
                individual's household income for the taxable year 
                described in section 1412(b)(1)(B) of the Patient 
                Protection and Affordable Care Act. For purposes of 
                applying this subparagraph, the taxpayer's household 
                income shall be increased by any exclusion from gross 
                income for any portion of the required contribution 
                made through a salary reduction arrangement.
                    ``(B) Required contribution.--For purposes of this 
                paragraph, the term `required contribution' means--
                            ``(i) in the case of an individual eligible 
                        to purchase minimum essential coverage 
                        consisting of coverage through an eligible-
                        employer-sponsored plan, the portion of the 
                        annual premium which would be paid by the 
                        individual (without regard to whether paid 
                        through salary reduction or otherwise) for 
                        self-only coverage, or
                            ``(ii) in the case of an individual 
                        eligible only to purchase minimum essential 
                        coverage described in subsection (f)(1)(C), the 
                        annual premium for the lowest cost bronze plan 
                        available in the individual market through the 
                        Exchange in the State in the rating area in 
                        which the individual resides (without regard to 
                        whether the individual purchased a qualified 
                        health plan through the Exchange), reduced by 
                        the amount of the credit allowable under 
                        section 36B for the taxable year (determined as 
                        if the individual was covered by a qualified 
                        health plan offered through the Exchange for 
                        the entire taxable year).
                    ``(C) Special rules for individuals related to 
                employees.--For purposes of subparagraph (B)(i), if an 
                applicable individual is eligible for minimum essential 
                coverage through an employer by reason of a 
                relationship to an employee, the determination shall be 
                made by reference to the affordability of the coverage 
                to the employee.
                    ``(D) Indexing.--In the case of plan years 
                beginning in any calendar year after 2014, subparagraph 
                (A) shall be applied by substituting for `8 percent' 
                the percentage the Secretary of Health and Human 
                Services determines reflects the excess of the rate of 
                premium growth between the preceding calendar year and 
                2013 over the rate of income growth for such period.
            ``(2) Taxpayers with income under 100 percent of poverty 
        line.--Any applicable individual for any month during a 
        calendar year if the individual's household income for the 
        taxable year described in section 1412(b)(1)(B) of the Patient 
        Protection and Affordable Care Act is less than 100 percent of 
        the poverty line for the size of the family involved 
        (determined in the same manner as under subsection (b)(4)).
            ``(3) Members of indian tribes.--Any applicable individual 
        for any month during which the individual is a member of an 
        Indian tribe (as defined in section 45A(c)(6)).
            ``(4) Months during short coverage gaps.--
                    ``(A) In general.--Any month the last day of which 
                occurred during a period in which the applicable 
                individual was not covered by minimum essential 
                coverage for a continuous period of less than 3 months.
                    ``(B) Special rules.--For purposes of applying this 
                paragraph--
                            ``(i) the length of a continuous period 
                        shall be determined without regard to the 
                        calendar years in which months in such period 
                        occur,
                            ``(ii) if a continuous period is greater 
                        than the period allowed under subparagraph (A), 
                        no exception shall be provided under this 
                        paragraph for any month in the period, and
                            ``(iii) if there is more than 1 continuous 
                        period described in subparagraph (A) covering 
                        months in a calendar year, the exception 
                        provided by this paragraph shall only apply to 
                        months in the first of such periods.
                The Secretary shall prescribe rules for the collection 
                of the penalty imposed by this section in cases where 
                continuous periods include months in more than 1 
                taxable year.
            ``(5) Hardships.--Any applicable individual who for any 
        month is determined by the Secretary of Health and Human 
        Services under section 1311(d)(4)(H) to have suffered a 
        hardship with respect to the capability to obtain coverage 
        under a qualified health plan.
    ``(f) Minimum Essential Coverage.--For purposes of this section--
            ``(1) In general.--The term `minimum essential coverage' 
        means any of the following:
                    ``(A) Government sponsored programs.--Coverage 
                under--
                            ``(i) the Medicare program under part A of 
                        title XVIII of the Social Security Act,
                            ``(ii) the Medicaid program under title XIX 
                        of the Social Security Act,
                            ``(iii) the CHIP program under title XXI of 
                        the Social Security Act,
                            ``(iv) the TRICARE for Life program,
                            ``(v) the veteran's health care program 
                        under chapter 17 of title 38, United States 
                        Code, or
                            ``(vi) a health plan under section 2504(e) 
                        of title 22, United States Code (relating to 
                        Peace Corps volunteers).
                    ``(B) Employer-sponsored plan.--Coverage under an 
                eligible employer-sponsored plan.
                    ``(C) Plans in the individual market.--Coverage 
                under a health plan offered in the individual market 
                within a State.
                    ``(D) Grandfathered health plan.--Coverage under a 
                grandfathered health plan.
                    ``(E) Other coverage.--Such other health benefits 
                coverage, such as a State health benefits risk pool, as 
                the Secretary of Health and Human Services, in 
                coordination with the Secretary, recognizes for 
                purposes of this subsection.
            ``(2) Eligible employer-sponsored plan.--The term `eligible 
        employer-sponsored plan' means, with respect to any employee, a 
        group health plan or group health insurance coverage offered by 
        an employer to the employee which is--
                    ``(A) a governmental plan (within the meaning of 
                section 2791(d)(8) of the Public Health Service Act), 
                or
                    ``(B) any other plan or coverage offered in the 
                small or large group market within a State.
        Such term shall include a grandfathered health plan described 
        in paragraph (1)(D) offered in a group market.
            ``(3) Excepted benefits not treated as minimum essential 
        coverage.--The term `minimum essential coverage' shall not 
        include health insurance coverage which consists of coverage of 
        excepted benefits--
                    ``(A) described in paragraph (1) of subsection (c) 
                of section 2791 of the Public Health Service Act; or
                    ``(B) described in paragraph (2), (3), or (4) of 
                such subsection if the benefits are provided under a 
                separate policy, certificate, or contract of insurance.
            ``(4) Individuals residing outside united states or 
        residents of territories.--Any applicable individual shall be 
        treated as having minimum essential coverage for any month--
                    ``(A) if such month occurs during any period 
                described in subparagraph (A) or (B) of section 
                911(d)(1) which is applicable to the individual, or
                    ``(B) if such individual is a bona fide resident of 
                any possession of the United States (as determined 
                under section 937(a)) for such month.
            ``(5) Insurance-related terms.--Any term used in this 
        section which is also used in title I of the Patient Protection 
        and Affordable Care Act shall have the same meaning as when 
        used in such title.
    ``(g) Administration and Procedure.--
            ``(1) In general.--The penalty provided by this section 
        shall be paid upon notice and demand by the Secretary, and 
        except as provided in paragraph (2), shall be assessed and 
        collected in the same manner as an assessable penalty under 
        subchapter B of chapter 68.
            ``(2) Special rules.--Notwithstanding any other provision 
        of law--
                    ``(A) Waiver of criminal penalties.--In the case of 
                any failure by a taxpayer to timely pay any penalty 
                imposed by this section, such taxpayer shall not be 
                subject to any criminal prosecution or penalty with 
                respect to such failure.
                    ``(B) Limitations on liens and levies.--The 
                Secretary shall not--
                            ``(i) file notice of lien with respect to 
                        any property of a taxpayer by reason of any 
                        failure to pay the penalty imposed by this 
                        section, or
                            ``(ii) levy on any such property with 
                        respect to such failure.''.
    (c) Clerical Amendment.--The table of chapters for subtitle D of 
the Internal Revenue Code of 1986 is amended by inserting after the 
item relating to chapter 47 the following new item:

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

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

SEC. 1502. REPORTING OF HEALTH INSURANCE COVERAGE.

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

      ``Subpart D--Information Regarding Health Insurance Coverage

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

``SEC. 6055. REPORTING OF HEALTH INSURANCE COVERAGE.

    ``(a) In General.--Every person who provides minimum essential 
coverage to an individual during a calendar year shall, at such time as 
the Secretary may prescribe, make a return described in subsection (b).
    ``(b) Form and Manner of Return.--
            ``(1) In general.--A return is described in this subsection 
        if such return--
                    ``(A) is in such form as the Secretary may 
                prescribe, and
                    ``(B) contains--
                            ``(i) the name, address and TIN of the 
                        primary insured and the name and TIN of each 
                        other individual obtaining coverage under the 
                        policy,
                            ``(ii) the dates during which such 
                        individual was covered under minimum essential 
                        coverage during the calendar year,
                            ``(iii) in the case of minimum essential 
                        coverage which consists of health insurance 
                        coverage, information concerning--
                                    ``(I) whether or not the coverage 
                                is a qualified health plan offered 
                                through an Exchange established under 
                                section 1311 of the Patient Protection 
                                and Affordable Care Act, and
                                    ``(II) in the case of a qualified 
                                health plan, the amount (if any) of any 
                                advance payment under section 1412 of 
                                the Patient Protection and Affordable 
                                Care Act of any cost-sharing reduction 
                                under section 1402 of such Act or of 
                                any premium tax credit under section 
                                36B with respect to such coverage, and
                            ``(iv) such other information as the 
                        Secretary may require.
            ``(2) Information relating to employer-provided coverage.--
        If minimum essential coverage provided to an individual under 
        subsection (a) consists of health insurance coverage of a 
        health insurance issuer provided through a group health plan of 
        an employer, a return described in this subsection shall 
        include--
                    ``(A) the name, address, and employer 
                identification number of the employer maintaining the 
                plan,
                    ``(B) the portion of the premium (if any) required 
                to be paid by the employer, and
                    ``(C) if the health insurance coverage is a 
                qualified health plan in the small group market offered 
                through an Exchange, such other information as the 
                Secretary may require for administration of the credit 
                under section 45R (relating to credit for employee 
                health insurance expenses of small employers).
    ``(c) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Reported.--
            ``(1) In general.--Every person required to make a return 
        under subsection (a) shall furnish to each individual whose 
        name is required to be set forth in such return a written 
        statement showing--
                    ``(A) the name and address of the person required 
                to make such return and the phone number of the 
                information contact for such person, and
                    ``(B) the information required to be shown on the 
                return with respect to such individual.
            ``(2) Time for furnishing statements.--The written 
        statement required under paragraph (1) shall be furnished on or 
        before January 31 of the year following the calendar year for 
        which the return under subsection (a) was required to be made.
    ``(d) Coverage Provided by Governmental Units.--In the case of 
coverage provided by any governmental unit or any agency or 
instrumentality thereof, the officer or employee who enters into the 
agreement to provide such coverage (or the person appropriately 
designated for purposes of this section) shall make the returns and 
statements required by this section.
    ``(e) Minimum Essential Coverage.--For purposes of this section, 
the term `minimum essential coverage' has the meaning given such term 
by section 5000A(f).''.
    (b) Assessable Penalties.--
            (1) Subparagraph (B) of section 6724(d)(1) of the Internal 
        Revenue Code of 1986 (relating to definitions) is amended by 
        striking ``or'' at the end of clause (xxii), by striking 
        ``and'' at the end of clause (xxiii) and inserting ``or'', and 
        by inserting after clause (xxiii) the following new clause:
                            ``(xxiv) section 6055 (relating to returns 
                        relating to information regarding health 
                        insurance coverage), and''.
            (2) Paragraph (2) of section 6724(d) of such Code is 
        amended by striking ``or'' at the end of subparagraph (EE), by 
        striking the period at the end of subparagraph (FF) and 
        inserting ``, or'' and by inserting after subparagraph (FF) the 
        following new subparagraph:
                    ``(GG) section 6055(c) (relating to statements 
                relating to information regarding health insurance 
                coverage).''.
    (c) Notification of Nonenrollment.--Not later than June 30 of each 
year, the Secretary of the Treasury, acting through the Internal 
Revenue Service and in consultation with the Secretary of Health and 
Human Services, shall send a notification to each individual who files 
an individual income tax return and who is not enrolled in minimum 
essential coverage (as defined in section 5000A of the Internal Revenue 
Code of 1986). Such notification shall contain information on the 
services available through the Exchange operating in the State in which 
such individual resides.
    (d) Conforming Amendment.--The table of subparts for part III of 
subchapter A of chapter 61 of such Code is amended by inserting after 
the item relating to subpart C the following new item:

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

    (e) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after 2013.

                   PART II--EMPLOYER RESPONSIBILITIES

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

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

``SEC. 18A. AUTOMATIC ENROLLMENT FOR EMPLOYEES OF LARGE EMPLOYERS.

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

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

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

``SEC. 18B. NOTICE TO EMPLOYEES.

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

SEC. 1513. SHARED RESPONSIBILITY FOR EMPLOYERS.

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

``SEC. 4980H. SHARED RESPONSIBILITY FOR EMPLOYERS REGARDING HEALTH 
              COVERAGE.

    ``(a) Large Employers Not Offering Health Coverage.--If--
            ``(1) any applicable large employer fails to offer to its 
        full-time employees (and their dependents) the opportunity to 
        enroll in minimum essential coverage under an eligible 
        employer-sponsored plan (as defined in section 5000A(f)(2)) for 
        any month, and
            ``(2) at least one full-time employee of the applicable 
        large employer has been certified to the employer under section 
        1411 of the Patient Protection and Affordable Care Act as 
        having enrolled for such month in a qualified health plan with 
        respect to which an applicable premium tax credit or cost-
        sharing reduction is allowed or paid with respect to the 
        employee,
then there is hereby imposed on the employer an assessable payment 
equal to the product of the applicable payment amount and the number of 
individuals employed by the employer as full-time employees during such 
month.
    ``(b) Large Employers With Waiting Periods Exceeding 30 Days.--
            ``(1) In general.--In the case of any applicable large 
        employer which requires an extended waiting period to enroll in 
        any minimum essential coverage under an employer-sponsored plan 
        (as defined in section 5000A(f)(2)), there is hereby imposed on 
        the employer an assessable payment, in the amount specified in 
        paragraph (2), for each full-time employee of the employer to 
        whom the extended waiting period applies.
            ``(2) Amount.--For purposes of paragraph (1), the amount 
        specified in this paragraph for a full-time employee is--
                    ``(A) in the case of an extended waiting period 
                which exceeds 30 days but does not exceed 60 days, 
                $400, and
                    ``(B) in the case of an extended waiting period 
                which exceeds 60 days, $600.
            ``(3) Extended waiting period.--The term `extended waiting 
        period' means any waiting period (as defined in section 
        2701(b)(4) of the Public Health Service Act) which exceeds 30 
        days.
    ``(c) Large Employers Offering Coverage With Employees Who Qualify 
for Premium Tax Credits or Cost-sharing Reductions.--
            ``(1) In general.--If--
                    ``(A) an applicable large employer offers to its 
                full-time employees (and their dependents) the 
                opportunity to enroll in minimum essential coverage 
                under an eligible employer-sponsored plan (as defined 
                in section 5000A(f)(2)) for any month, and
                    ``(B) 1 or more full-time employees of the 
                applicable large employer has been certified to the 
                employer under section 1411 of the Patient Protection 
                and Affordable Care Act as having enrolled for such 
                month in a qualified health plan with respect to which 
                an applicable premium tax credit or cost-sharing 
                reduction is allowed or paid with respect to the 
                employee,
        then there is hereby imposed on the employer an assessable 
        payment equal to the product of the number of full-time 
        employees of the applicable large employer described in 
        subparagraph (B) for such month and 400 percent of the 
        applicable payment amount.
            ``(2) Overall limitation.--The aggregate amount of tax 
        determined under paragraph (1) with respect to all employees of 
        an applicable large employer for any month shall not exceed the 
        product of the applicable payment amount and the number of 
        individuals employed by the employer as full-time employees 
        during such month.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Applicable payment amount.--The term `applicable 
        payment amount' means, with respect to any month, \1/12\ of 
        $750.
            ``(2) Applicable large employer.--
                    ``(A) In general.--The term `applicable large 
                employer' means, with respect to a calendar year, an 
                employer who employed an average of at least 50 full-
                time employees on business days during the preceding 
                calendar year.
                    ``(B) Exemption for certain employers.--
                            ``(i) In general.--An employer shall not be 
                        considered to employ more than 50 full-time 
                        employees if--
                                    ``(I) the employer's workforce 
                                exceeds 50 full-time employees for 120 
                                days or fewer during the calendar year, 
                                and
                                    ``(II) the employees in excess of 
                                50 employed during such 120-day period 
                                were seasonal workers.
                            ``(ii) Definition of seasonal workers.--The 
                        term `seasonal worker' means a worker who 
                        performs labor or services on a seasonal basis 
                        as defined by the Secretary of Labor, including 
                        workers covered by section 500.20(s)(1) of 
                        title 29, Code of Federal Regulations and 
                        retail workers employed exclusively during 
                        holiday seasons.
                    ``(C) Rules for determining employer size.--For 
                purposes of this paragraph--
                            ``(i) Application of aggregation rule for 
                        employers.--All persons treated as a single 
                        employer under subsection (b), (c), (m), or (o) 
                        of section 414 of the Internal Revenue Code of 
                        1986 shall be treated as 1 employer.
                            ``(ii) Employers not in existence in 
                        preceding year.--In the case of an employer 
                        which was not in existence throughout the 
                        preceding calendar year, the determination of 
                        whether such employer is an applicable large 
                        employer shall be based on the average number 
                        of employees that it is reasonably expected 
                        such employer will employ on business days in 
                        the current calendar year.
                            ``(iii) Predecessors.--Any reference in 
                        this subsection to an employer shall include a 
                        reference to any predecessor of such employer.
            ``(3) Applicable premium tax credit and cost-sharing 
        reduction.--The term `applicable premium tax credit and cost-
        sharing reduction' means--
                    ``(A) any premium tax credit allowed under section 
                36B,
                    ``(B) any cost-sharing reduction under section 1402 
                of the Patient Protection and Affordable Care Act, and
                    ``(C) any advance payment of such credit or 
                reduction under section 1412 of such Act.
            ``(4) Full-time employee.--
                    ``(A) In general.--The term `full-time employee' 
                means an employee who is employed on average at least 
                30 hours of service per week.
                    ``(B) Hours of service.--The Secretary, in 
                consultation with the Secretary of Labor, shall 
                prescribe such regulations, rules, and guidance as may 
                be necessary to determine the hours of service of an 
                employee, including rules for the application of this 
                paragraph to employees who are not compensated on an 
                hourly basis.
            ``(5) Inflation adjustment.--
                    ``(A) In general.--In the case of any calendar year 
                after 2014, each of the dollar amounts in subsection 
                (b)(2) and (d)(1) shall be increased by an amount equal 
                to the product of--
                            ``(i) such dollar amount, and
                            ``(ii) the premium adjustment percentage 
                        (as defined in section 1302(c)(4) of the 
                        Patient Protection and Affordable Care Act) for 
                        the calendar year.
                    ``(B) Rounding.--If the amount of any increase 
                under subparagraph (A) is not a multiple of $10, such 
                increase shall be rounded to the next lowest multiple 
                of $10.
            ``(6) Other definitions.--Any term used in this section 
        which is also used in the Patient Protection and Affordable 
        Care Act shall have the same meaning as when used in such Act.
            ``(7) Tax nondeductible.--For denial of deduction for the 
        tax imposed by this section, see section 275(a)(6).
    ``(e) Administration and Procedure.--
            ``(1) In general.--Any assessable payment provided by this 
        section shall be paid upon notice and demand by the Secretary, 
        and shall be assessed and collected in the same manner as an 
        assessable penalty under subchapter B of chapter 68.
            ``(2) Time for payment.--The Secretary may provide for the 
        payment of any assessable payment provided by this section on 
        an annual, monthly, or other periodic basis as the Secretary 
        may prescribe.
            ``(3) Coordination with credits, etc..--The Secretary shall 
        prescribe rules, regulations, or guidance for the repayment of 
        any assessable payment (including interest) if such payment is 
        based on the allowance or payment of an applicable premium tax 
        credit or cost-sharing reduction with respect to an employee, 
        such allowance or payment is subsequently disallowed, and the 
        assessable payment would not have been required to be made but 
        for such allowance or payment.''.
    (b) Clerical Amendment.--The table of sections for chapter 43 of 
such Code is amended by adding at the end the following new item:

``Sec. 4980H. Shared responsibility for employers regarding health 
                            coverage.''.
    (c) Study and Report of Effect of Tax on Workers' Wages.--
            (1) In general.--The Secretary of Labor shall conduct a 
        study to determine whether employees' wages are reduced by 
        reason of the application of the assessable payments under 
        section 4980H of the Internal Revenue Code of 1986 (as added by 
        the amendments made by this section). The Secretary shall make 
        such determination on the basis of the National Compensation 
        Survey published by the Bureau of Labor Statistics.
            (2) Report.--The Secretary shall report the results of the 
        study under paragraph (1) to the Committee on Ways and Means of 
        the House of Representatives and to the Committee on Finance of 
        the Senate.
    (d) Effective Date.--The amendments made by this section shall 
apply to months beginning after December 31, 2013.

SEC. 1514. REPORTING OF EMPLOYER HEALTH INSURANCE COVERAGE.

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

``SEC. 6056. LARGE EMPLOYERS REQUIRED TO REPORT ON HEALTH INSURANCE 
              COVERAGE.

    ``(a) In General.--Every applicable large employer required to meet 
the requirements of section 4980H with respect to its full-time 
employees during a calendar year shall, at such time as the Secretary 
may prescribe, make a return described in subsection (b).
    ``(b) Form and Manner of Return.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains--
                    ``(A) the name, date, and employer identification 
                number of the employer,
                    ``(B) a certification as to whether the employer 
                offers to its full-time employees (and their 
                dependents) the opportunity to enroll in minimum 
                essential coverage under an eligible employer-sponsored 
                plan (as defined in section 5000A(f)(2)),
                    ``(C) if the employer certifies that the employer 
                did offer to its full-time employees (and their 
                dependents) the opportunity to so enroll--
                            ``(i) the length of any waiting period (as 
                        defined in section 2701(b)(4) of the Public 
                        Health Service Act) with respect to such 
                        coverage,
                            ``(ii) the months during the calendar year 
                        for which coverage under the plan was 
                        available,
                            ``(iii) the monthly premium for the lowest 
                        cost option in each of the enrollment 
                        categories under the plan, and
                            ``(iv) the applicable large employer's 
                        share of the total allowed costs of benefits 
                        provided under the plan,
                    ``(D) the number of full-time employees for each 
                month during the calendar year,
                    ``(E) the name, address, and TIN of each full-time 
                employee during the calendar year and the months (if 
                any) during which such employee (and any dependents) 
                were covered under any such health benefits plans, and
                    ``(F) such other information as the Secretary may 
                require.
    ``(c) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Reported.--
            ``(1) In general.--Every person required to make a return 
        under subsection (a) shall furnish to each full-time employee 
        whose name is required to be set forth in such return under 
        subsection (b)(2)(E) a written statement showing--
                    ``(A) the name and address of the person required 
                to make such return and the phone number of the 
                information contact for such person, and
                    ``(B) the information required to be shown on the 
                return with respect to such individual.
            ``(2) Time for furnishing statements.--The written 
        statement required under paragraph (1) shall be furnished on or 
        before January 31 of the year following the calendar year for 
        which the return under subsection (a) was required to be made.
    ``(d) Coordination With Other Requirements.--To the maximum extent 
feasible, the Secretary may provide that--
            ``(1) any return or statement required to be provided under 
        this section may be provided as part of any return or statement 
        required under section 6051 or 6055, and
            ``(2) in the case of an applicable large employer offering 
        health insurance coverage of a health insurance issuer, the 
        employer may enter into an agreement with the issuer to include 
        information required under this section with the return and 
        statement required to be provided by the issuer under section 
        6055.
    ``(e) Coverage Provided by Governmental Units.--In the case of any 
applicable large employer which is a governmental unit or any agency or 
instrumentality thereof, the person appropriately designated for 
purposes of this section shall make the returns and statements required 
by this section.
    ``(f) Definitions.--For purposes of this section, any term used in 
this section which is also used in section 4980H shall have the meaning 
given such term by section 4980H.''.
    (b) Assessable Penalties.--
            (1) Subparagraph (B) of section 6724(d)(1) of the Internal 
        Revenue Code of 1986 (relating to definitions), as amended by 
        section 1502, is amended by striking ``or'' at the end of 
        clause (xxiii), by striking ``and'' at the end of clause (xxiv) 
        and inserting ``or'', and by inserting after clause (xxiv) the 
        following new clause:
                            ``(xxv) section 6056 (relating to returns 
                        relating to large employers required to report 
                        on health insurance coverage), and''.
            (2) Paragraph (2) of section 6724(d) of such Code, as so 
        amended, is amended by striking ``or'' at the end of 
        subparagraph (FF), by striking the period at the end of 
        subparagraph (GG) and inserting ``, or'' and by inserting after 
        subparagraph (GG) the following new subparagraph:
                    ``(HH) section 6056(c) (relating to statements 
                relating to large employers required to report on 
                health insurance coverage).''.
    (c) Conforming Amendment.--The table of sections for subpart D of 
part III of subchapter A of chapter 61 of such Code, as added by 
section 1502, is amended by adding at the end the following new item:

``Sec. 6056. Large employers required to report on health insurance 
                            coverage.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods beginning after December 31, 2013.

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

    (a) In General.--Subsection (f) of section 125 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(3) Certain exchange-participating qualified health plans 
        not qualified.--
                    ``(A) In general.--The term `qualified benefit' 
                shall not include any qualified health plan (as defined 
                in section 1301(a) of the Patient Protection and 
                Affordable Care Act) offered through an Exchange 
                established under section 1311 of such Act.
                    ``(B) Exception for exchange-eligible employers.--
                Subparagraph (A) shall not apply with respect to any 
                employee if such employee's employer is a qualified 
                employer (as defined in section 1312(f)(2) of the 
                Patient Protection and Affordable Care Act) offering 
                the employee the opportunity to enroll through such an 
                Exchange in a qualified health plan in a group 
                market.''.
    (b) Conforming Amendments.--Subsection (f) of section 125 of such 
Code is amended--
            (1) by striking ``For purposes of this section, the term'' 
        and inserting ``For purposes of this section--
    ``(1) In General.--The term'', and
            (2) by striking ``Such term shall not include'' and 
        inserting the following:
            ``(2) Long-term care insurance not qualified.--The term 
        `qualified benefit' shall not include''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2013.

                  Subtitle G--Miscellaneous Provisions

SEC. 1551. DEFINITIONS.

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

SEC. 1552. TRANSPARENCY IN GOVERNMENT.

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

SEC. 1553. PROHIBITION AGAINST DISCRIMINATION ON ASSISTED SUICIDE.

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

SEC. 1554. ACCESS TO THERAPIES.

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

SEC. 1555. FREEDOM NOT TO PARTICIPATE IN FEDERAL HEALTH INSURANCE 
              PROGRAMS.

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

SEC. 1556. EQUITY FOR CERTAIN ELIGIBLE SURVIVORS.

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

SEC. 1557. NONDISCRIMINATION.

    (a) In General.--Except as otherwise provided for in this title (or 
an amendment made by this title), an individual shall not, on the 
ground prohibited under title VI of the Civil Rights Act of 1964 (42 
U.S.C. 2000d et seq.), title IX of the Education Amendments of 1972 (20 
U.S.C. 1681 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 
6101 et seq.), or section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794), be excluded from participation in, be denied the benefits 
of, or be subjected to discrimination under, any health program or 
activity, any part of which is receiving Federal financial assistance, 
including credits, subsidies, or contracts of insurance, or under any 
program or activity that is administered by an Executive Agency or any 
entity established under this title (or amendments). The enforcement 
mechanisms provided for and available under such title VI, title IX, 
section 504, or such Age Discrimination Act shall apply for purposes of 
violations of this subsection.
    (b) Continued Application of Laws.--Nothing in this title (or an 
amendment made by this title) shall be construed to invalidate or limit 
the rights, remedies, procedures, or legal standards available to 
individuals aggrieved under title VI of the Civil Rights Act of 1964 
(42 U.S.C. 2000d et seq.), title VII of the Civil Rights Act of 1964 
(42 U.S.C. 2000e et seq.), title IX of the Education Amendments of 1972 
(20 U.S.C. 1681 et seq.), section 504 of the Rehabilitation Act of 1973 
(29 U.S.C. 794), or the Age Discrimination Act of 1975 (42 U.S.C. 611 
et seq.), or to supersede State laws that provide additional 
protections against discrimination on any basis described in subsection 
(a).
    (c) Regulations.--The Secretary may promulgate regulations to 
implement this section.

SEC. 1558. PROTECTIONS FOR EMPLOYEES.

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

``SEC. 18C. PROTECTIONS FOR EMPLOYEES.

    ``(a) Prohibition.--No employer shall discharge or in any manner 
discriminate against any employee with respect to his or her 
compensation, terms, conditions, or other privileges of employment 
because the employee (or an individual acting at the request of the 
employee) has--
            ``(1) received a credit under section 36B of the Internal 
        Revenue Code of 1986 or a subsidy under section 1402 of this 
        Act;
            ``(2) provided, caused to be provided, or is about to 
        provide or cause to be provided to the employer, the Federal 
        Government, or the attorney general of a State information 
        relating to any violation of, or any act or omission the 
        employee reasonably believes to be a violation of, any 
        provision of this title (or an amendment made by this title);
            ``(3) testified or is about to testify in a proceeding 
        concerning such violation;
            ``(4) assisted or participated, or is about to assist or 
        participate, in such a proceeding; or
            ``(5) objected to, or refused to participate in, any 
        activity, policy, practice, or assigned task that the employee 
        (or other such person) reasonably believed to be in violation 
        of any provision of this title (or amendment), or any order, 
        rule, regulation, standard, or ban under this title (or 
        amendment).
    ``(b) Complaint Procedure.--
            ``(1) In general.--An employee who believes that he or she 
        has been discharged or otherwise discriminated against by any 
        employer in violation of this section may seek relief in 
        accordance with the procedures, notifications, burdens of 
        proof, remedies, and statutes of limitation set forth in 
        section 2087(b) of title 15, United States Code.
            ``(2) No limitation on rights.--Nothing in this section 
        shall be deemed to diminish the rights, privileges, or remedies 
        of any employee under any Federal or State law or under any 
        collective bargaining agreement. The rights and remedies in 
        this section may not be waived by any agreement, policy, form, 
        or condition of employment.''.

SEC. 1559. OVERSIGHT.

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

SEC. 1560. RULES OF CONSTRUCTION.

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

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

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

                     ``Subtitle C--Other Provisions

``SEC. 3021. HEALTH INFORMATION TECHNOLOGY ENROLLMENT STANDARDS AND 
              PROTOCOLS.

    ``(a) In General.--
            ``(1) Standards and protocols.--Not later than 180 days 
        after the date of enactment of this title, the Secretary, in 
        consultation with the HIT Policy Committee and the HIT 
        Standards Committee, shall develop interoperable and secure 
        standards and protocols that facilitate enrollment of 
        individuals in Federal and State health and human services 
        programs, as determined by the Secretary.
            ``(2) Methods.--The Secretary shall facilitate enrollment 
        in such programs through methods determined appropriate by the 
        Secretary, which shall include providing individuals and third 
        parties authorized by such individuals and their designees 
        notification of eligibility and verification of eligibility 
        required under such programs.
    ``(b) Content.--The standards and protocols for electronic 
enrollment in the Federal and State programs described in subsection 
(a) shall allow for the following:
            ``(1) Electronic matching against existing Federal and 
        State data, including vital records, employment history, 
        enrollment systems, tax records, and other data determined 
        appropriate by the Secretary to serve as evidence of 
        eligibility and in lieu of paper-based documentation.
            ``(2) Simplification and submission of electronic 
        documentation, digitization of documents, and systems 
        verification of eligibility.
            ``(3) Reuse of stored eligibility information (including 
        documentation) to assist with retention of eligible 
        individuals.
            ``(4) Capability for individuals to apply, recertify and 
        manage their eligibility information online, including at home, 
        at points of service, and other community-based locations.
            ``(5) Ability to expand the enrollment system to integrate 
        new programs, rules, and functionalities, to operate at 
        increased volume, and to apply streamlined verification and 
        eligibility processes to other Federal and State programs, as 
        appropriate.
            ``(6) Notification of eligibility, recertification, and 
        other needed communication regarding eligibility, which may 
        include communication via email and cellular phones.
            ``(7) Other functionalities necessary to provide eligibles 
        with streamlined enrollment process.
    ``(c) Approval and Notification.--With respect to any standard or 
protocol developed under subsection (a) that has been approved by the 
HIT Policy Committee and the HIT Standards Committee, the Secretary--
            ``(1) shall notify States of such standards or protocols; 
        and
            ``(2) may require, as a condition of receiving Federal 
        funds for the health information technology investments, that 
        States or other entities incorporate such standards and 
        protocols into such investments.
    ``(d) Grants for Implementation of Appropriate Enrollment HIT.--
            ``(1) In general.--The Secretary shall award grant to 
        eligible entities to develop new, and adapt existing, 
        technology systems to implement the HIT enrollment standards 
        and protocols developed under subsection (a) (referred to in 
        this subsection as `appropriate HIT technology').
            ``(2) Eligible entities.--To be eligible for a grant under 
        this subsection, an entity shall--
                    ``(A) be a State, political subdivision of a State, 
                or a local governmental entity; and
                    ``(B) submit to the Secretary an application at 
                such time, in such manner, and containing--
                            ``(i) a plan to adopt and implement 
                        appropriate enrollment technology that 
                        includes--
                                    ``(I) proposed reduction in 
                                maintenance costs of technology 
                                systems;
                                    ``(II) elimination or updating of 
                                legacy systems; and
                                    ``(III) demonstrated collaboration 
                                with other entities that may receive a 
                                grant under this section that are 
                                located in the same State, political 
                                subdivision, or locality;
                            ``(ii) an assurance that the entity will 
                        share such appropriate enrollment technology in 
                        accordance with paragraph (4); and
                            ``(iii) such other information as the 
                        Secretary may require.
            ``(3) Sharing.--
                    ``(A) In general.--The Secretary shall ensure that 
                appropriate enrollment HIT adopted under grants under 
                this subsection is made available to other qualified 
                State, qualified political subdivisions of a State, or 
                other appropriate qualified entities (as described in 
                subparagraph (B)) at no cost.
                    ``(B) Qualified entities.--The Secretary shall 
                determine what entities are qualified to receive 
                enrollment HIT under subparagraph (A), taking into 
                consideration the recommendations of the HIT Policy 
                Committee and the HIT Standards Committee.''.

SEC. 1562. CONFORMING AMENDMENTS.

    (a) Applicability.--Section 2735 of the Public Health Service Act 
(42 U.S.C. 300gg-21), as so redesignated by section 1001(4), is 
amended--
            (1) by striking subsection (a);
            (2) in subsection (b)--
                    (A) in paragraph (1), by striking ``1 through 3'' 
                and inserting ``1 and 2''; and
                    (B) in paragraph (2)--
                            (i) in subparagraph (A), by striking 
                        ``subparagraph (D)'' and inserting 
                        ``subparagraph (D) or (E)'';
                            (ii) by striking ``1 through 3'' and 
                        inserting ``1 and 2''; and
                            (iii) by adding at the end the following:
                    ``(E) Election not applicable.--The election 
                described in subparagraph (A) shall not be available 
                with respect to the provisions of subpart 1.'';
            (3) in subsection (c), by striking ``1 through 3 shall not 
        apply to any group'' and inserting ``1 and 2 shall not apply to 
        any individual coverage or any group''; and
            (4) in subsection (d)--
                    (A) in paragraph (1), by striking ``1 through 3 
                shall not apply to any group'' and inserting ``1 and 2 
                shall not apply to any individual coverage or any 
                group'';
                    (B) in paragraph (2)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``1 through 3 shall not apply 
                        to any group'' and inserting ``1 and 2 shall 
                        not apply to any individual coverage or any 
                        group''; and
                            (ii) in subparagraph (C), by inserting 
                        ``or, with respect to individual coverage, 
                        under any health insurance coverage maintained 
                        by the same health insurance issuer''; and
                    (C) in paragraph (3), by striking ``any group'' and 
                inserting ``any individual coverage or any group''.
    (b) Definitions.--Section 2791(d) of the Public Health Service Act 
(42 U.S.C. 300gg-91(d)) is amended by adding at the end the following:
            ``(20) Qualified health plan.--The term `qualified health 
        plan' has the meaning given such term in section 1301(a) of the 
        Patient Protection and Affordable Care Act.
            ``(21) Exchange.--The term `Exchange' means an American 
        Health Benefit Exchange established under section 1311 of the 
        Patient Protection and Affordable Care Act.''.
    (c) Technical and Conforming Amendments.--Title XXVII of the Public 
Health Service Act (42 U.S.C. 300gg et seq.) is amended--
            (1) in section 2704 (42 U.S.C. 300gg), as so redesignated 
        by section 1201(2)--
                    (A) in subsection (c)--
                            (i) in paragraph (2), by striking ``group 
                        health plan'' each place that such term appears 
                        and inserting ``group or individual health 
                        plan''; and
                            (ii) in paragraph (3)--
                                    (I) by striking ``group health 
                                insurance'' each place that such term 
                                appears and inserting ``group or 
                                individual health insurance''; and
                                    (II) in subparagraph (D), by 
                                striking ``small or large'' and 
                                inserting ``individual or group'';
                    (B) in subsection (d), by striking ``group health 
                insurance'' each place that such term appears and 
                inserting ``group or individual health insurance''; and
                    (C) in subsection (e)(1)(A), by striking ``group 
                health insurance'' and inserting ``group or individual 
                health insurance'';
            (2) by striking the second heading for subpart 2 of part A 
        (relating to other requirements);
            (3) in section 2725 (42 U.S.C. 300gg-4), as so redesignated 
        by section 1001(2)--
                    (A) in subsection (a), by striking ``health 
                insurance issuer offering group health insurance 
                coverage'' and inserting ``health insurance issuer 
                offering group or individual health insurance 
                coverage'';
                    (B) in subsection (b)--
                            (i) by striking ``health insurance issuer 
                        offering group health insurance coverage in 
                        connection with a group health plan'' in the 
                        matter preceding paragraph (1) and inserting 
                        ``health insurance issuer offering group or 
                        individual health insurance coverage''; and
                            (ii) in paragraph (1), by striking ``plan'' 
                        and inserting ``plan or coverage'';
                    (C) in subsection (c)--
                            (i) in paragraph (2), by striking ``group 
                        health insurance coverage offered by a health 
                        insurance issuer'' and inserting ``health 
                        insurance issuer offering group or individual 
                        health insurance coverage''; and
                            (ii) in paragraph (3), by striking 
                        ``issuer'' and inserting ``health insurance 
                        issuer''; and
                    (D) in subsection (e), by striking ``health 
                insurance issuer offering group health insurance 
                coverage'' and inserting ``health insurance issuer 
                offering group or individual health insurance 
                coverage'';
            (4) in section 2726 (42 U.S.C. 300gg-5), as so redesignated 
        by section 1001(2)--
                    (A) in subsection (a), by striking ``(or health 
                insurance coverage offered in connection with such a 
                plan)'' each place that such term appears and inserting 
                ``or a health insurance issuer offering group or 
                individual health insurance coverage'';
                    (B) in subsection (b), by striking ``(or health 
                insurance coverage offered in connection with such a 
                plan)'' each place that such term appears and inserting 
                ``or a health insurance issuer offering group or 
                individual health insurance coverage''; and
                    (C) in subsection (c)--
                            (i) in paragraph (1), by striking ``(and 
                        group health insurance coverage offered in 
                        connection with a group health plan)'' and 
                        inserting ``and a health insurance issuer 
                        offering group or individual health insurance 
                        coverage'';
                            (ii) in paragraph (2), by striking ``(or 
                        health insurance coverage offered in connection 
                        with such a plan)'' each place that such term 
                        appears and inserting ``or a health insurance 
                        issuer offering group or individual health 
                        insurance coverage'';
            (5) in section 2727 (42 U.S.C. 300gg-6), as so redesignated 
        by section 1001(2), by striking ``health insurance issuers 
        providing health insurance coverage in connection with group 
        health plans'' and inserting ``and health insurance issuers 
        offering group or individual health insurance coverage'';
            (6) in section 2728 (42 U.S.C. 300gg-7), as so redesignated 
        by section 1001(2)--
                    (A) in subsection (a), by striking ``health 
                insurance coverage offered in connection with such 
                plan'' and inserting ``individual health insurance 
                coverage'';
                    (B) in subsection (b)--
                            (i) in paragraph (1), by striking ``or a 
                        health insurance issuer that provides health 
                        insurance coverage in connection with a group 
                        health plan'' and inserting ``or a health 
                        insurance issuer that offers group or 
                        individual health insurance coverage'';
                            (ii) in paragraph (2), by striking ``health 
                        insurance coverage offered in connection with 
                        the plan'' and inserting ``individual health 
                        insurance coverage''; and
                            (iii) in paragraph (3), by striking 
                        ``health insurance coverage offered by an 
                        issuer in connection with such plan'' and 
                        inserting ``individual health insurance 
                        coverage'';
                    (C) in subsection (c), by striking ``health 
                insurance issuer providing health insurance coverage in 
                connection with a group health plan'' and inserting 
                ``health insurance issuer that offers group or 
                individual health insurance coverage''; and
                    (D) in subsection (e)(1), by striking ``health 
                insurance coverage offered in connection with such a 
                plan'' and inserting ``individual health insurance 
                coverage'';
            (7) by striking the heading for subpart 3;
            (8) in section 2731 (42 U.S.C. 300gg-11), as so 
        redesignated by section 1001(3)--
                    (A) by striking the section heading and all that 
                follows through subsection (b);
                    (B) in subsection (c)--
                            (i) in paragraph (1)--
                                    (I) in the matter preceding 
                                subparagraph (A), by striking ``small 
                                group'' and inserting ``group and 
                                individual''; and
                                    (II) in subparagraph (B)--
                                            (aa) in the matter 
                                        preceding clause (i), by 
                                        inserting ``and individuals'' 
                                        after ``employers'';
                                            (bb) in clause (i), by 
                                        inserting ``or any additional 
                                        individuals'' after 
                                        ``additional groups''; and
                                            (cc) in clause (ii), by 
                                        striking ``without regard to 
                                        the claims experience of those 
                                        employers and their employees 
                                        (and their dependents) or any 
                                        health status-related factor 
                                        relating to such'' and 
                                        inserting ``and individuals 
                                        without regard to the claims 
                                        experience of those 
                                        individuals, employers and 
                                        their employees (and their 
                                        dependents) or any health 
                                        status-related factor relating 
                                        to such individuals''; and
                            (ii) in paragraph (2), by striking ``small 
                        group'' and inserting ``group or individual'';
                    (C) in subsection (d)--
                            (i) by striking ``small group'' each place 
                        that such appears and inserting ``group or 
                        individual''; and
                            (ii) in paragraph (1)(B)--
                                    (I) by striking ``all employers'' 
                                and inserting ``all employers and 
                                individuals'';
                                    (II) by striking ``those 
                                employers'' and inserting ``those 
                                individuals, employers''; and
                                    (III) by striking ``such 
                                employees'' and inserting ``such 
                                individuals, employees'';
                    (D) by striking subsection (e);
                    (E) by striking subsection (f); and
                    (F) by transferring such section (as amended by 
                this paragraph) to appear at the end of section 2702 
                (as added by section 1001(4));
            (9) in section 2732 (42 U.S.C. 300gg-12), as so 
        redesignated by section 1001(3)--
                    (A) by striking the section heading and all that 
                follows through subsection (a);
                    (B) in subsection (b)--
                            (i) in the matter preceding paragraph (1), 
                        by striking ``group health plan in the small or 
                        large group market'' and inserting ``health 
                        insurance coverage offered in the group or 
                        individual market'';
                            (ii) in paragraph (1), by inserting ``, or 
                        individual, as applicable,'' after ``plan 
                        sponsor'';
                            (iii) in paragraph (2), by inserting ``, or 
                        individual, as applicable,'' after ``plan 
                        sponsor''; and
                            (iv) by striking paragraph (3) and 
                        inserting the following:
            ``(3) Violation of participation or contribution rates.--In 
        the case of a group health plan, the plan sponsor has failed to 
        comply with a material plan provision relating to employer 
        contribution or group participation rules, pursuant to 
        applicable State law.'';
                    (C) in subsection (c)--
                            (i) in paragraph (1)--
                                    (I) in the matter preceding 
                                subparagraph (A), by striking ``group 
                                health insurance coverage offered in 
                                the small or large group market'' and 
                                inserting ``group or individual health 
                                insurance coverage'';
                                    (II) in subparagraph (A), by 
                                inserting ``or individual, as 
                                applicable,'' after ``plan sponsor'';
                                    (III) in subparagraph (B)--
                                            (aa) by inserting ``or 
                                        individual, as applicable,'' 
                                        after ``plan sponsor''; and
                                            (bb) by inserting ``or 
                                        individual health insurance 
                                        coverage''; and
                                    (IV) in subparagraph (C), by 
                                inserting ``or individuals, as 
                                applicable,'' after ``those sponsors''; 
                                and
                            (ii) in paragraph (2)(A)--
                                    (I) in the matter preceding clause 
                                (i), by striking ``small group market 
                                or the large group market, or both 
                                markets,'' and inserting ``individual 
                                or group market, or all markets,''; and
                                    (II) in clause (i), by inserting 
                                ``or individual, as applicable,'' after 
                                ``plan sponsor''; and
                    (D) by transferring such section (as amended by 
                this paragraph) to appear at the end of section 2703 
                (as added by section 1001(4));
            (10) in section 2733 (42 U.S.C. 300gg-13), as so 
        redesignated by section 1001(4)--
                    (A) in subsection (a)--
                            (i) in the matter preceding paragraph (1), 
                        by striking ``small employer'' and inserting 
                        ``small employer or an individual'';
                            (ii) in paragraph (1), by inserting ``, or 
                        individual, as applicable,'' after ``employer'' 
                        each place that such appears; and
                            (iii) in paragraph (2), by striking ``small 
                        employer'' and inserting ``employer, or 
                        individual, as applicable,'';
                    (B) in subsection (b)--
                            (i) in paragraph (1)--
                                    (I) in the matter preceding 
                                subparagraph (A), by striking ``small 
                                employer'' and inserting ``employer, or 
                                individual, as applicable,'';
                                    (II) in subparagraph (A), by adding 
                                ``and'' at the end;
                                    (III) by striking subparagraphs (B) 
                                and (C); and
                                    (IV) in subparagraph (D)--
                                            (aa) by inserting ``, or 
                                        individual, as applicable,'' 
                                        after ``employer''; and
                                            (bb) by redesignating such 
                                        subparagraph as subparagraph 
                                        (B);
                            (ii) in paragraph (2)--
                                    (I) by striking ``small employers'' 
                                each place that such term appears and 
                                inserting ``employers, or individuals, 
                                as applicable,''; and
                                    (II) by striking ``small employer'' 
                                and inserting ``employer, or 
                                individual, as applicable,''; and
                    (C) by redesignating such section (as amended by 
                this paragraph) as section 2709 and transferring such 
                section to appear after section 2708 (as added by 
                section 1001(5));
            (11) by redesignating subpart 4 as subpart 2;
            (12) in section 2735 (42 U.S.C. 300gg-21), as so 
        redesignated by section 1001(4)--
                    (A) by striking subsection (a);
                    (B) by striking ``subparts 1 through 3'' each place 
                that such appears and inserting ``subpart 1'';
                    (C) by redesignating subsections (b) through (e) as 
                subsections (a) through (d), respectively; and
                    (D) by redesignating such section (as amended by 
                this paragraph) as section 2722;
            (13) in section 2736 (42 U.S.C. 300gg-22), as so 
        redesignated by section 1001(4)--
                    (A) in subsection (a)--
                            (i) in paragraph (1), by striking ``small 
                        or large group markets'' and inserting 
                        ``individual or group market''; and
                            (ii) in paragraph (2), by inserting ``or 
                        individual health insurance coverage'' after 
                        ``group health plans'';
                    (B) in subsection (b)(1)(B), by inserting 
                ``individual health insurance coverage or'' after 
                ``respect to''; and
                    (C) by redesignating such section (as amended by 
                this paragraph) as section 2723;
            (14) in section 2737(a)(1) (42 U.S.C. 300gg-23), as so 
        redesignated by section 1001(4)--
                    (A) by inserting ``individual or'' before ``group 
                health insurance''; and
                    (B) by redesignating such section(as amended by 
                this paragraph) as section 2724;
            (15) in section 2762 (42 U.S.C. 300gg-62)--
                    (A) in the section heading by inserting ``and 
                application'' before the period; and
                    (B) by adding at the end the following:
    ``(c) Application of Part A Provisions.--
            ``(1) In general.--The provisions of part A shall apply to 
        health insurance issuers providing health insurance coverage in 
        the individual market in a State as provided for in such part.
            ``(2) Clarification.--To the extent that any provision of 
        this part conflicts with a provision of part A with respect to 
        health insurance issuers providing health insurance coverage in 
        the individual market in a State, the provisions of such part A 
        shall apply.''; and
            (16) in section 2791(e) (42 U.S.C. 300gg-91(e))--
                    (A) in paragraph (2), by striking ``51'' and 
                inserting ``101''; and
                    (B) in paragraph (4)--
                            (i) by striking ``at least 2'' each place 
                        that such appears and inserting ``at least 1''; 
                        and
                            (ii) by striking ``50'' and inserting 
                        ``100''.
    (d) Application.--Notwithstanding any other provision of the 
Patient Protection and Affordable Care Act, nothing in such Act (or an 
amendment made by such Act) shall be construed to--
            (1) prohibit (or authorize the Secretary of Health and 
        Human Services to promulgate regulations that prohibit) a group 
        health plan or health insurance issuer from carrying out 
        utilization management techniques that are commonly used as of 
        the date of enactment of this Act; or
            (2) restrict the application of the amendments made by this 
        subtitle.
    (e) Technical Amendment to the Employee Retirement Income Security 
Act of 1974.--Subpart B of part 7 of subtitle A of title I of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181 et. 
seq.) is amended, by adding at the end the following:

``SEC. 715. ADDITIONAL MARKET REFORMS.

    ``(a) General Rule.--Except as provided in subsection (b)--
            ``(1) the provisions of part A of title XXVII of the Public 
        Health Service Act (as amended by the Patient Protection and 
        Affordable Care Act) shall apply to group health plans, and 
        health insurance issuers providing health insurance coverage in 
        connection with group health plans, as if included in this 
        subpart; and
            ``(2) to the extent that any provision of this part 
        conflicts with a provision of such part A with respect to group 
        health plans, or health insurance issuers providing health 
        insurance coverage in connection with group health plans, the 
        provisions of such part A shall apply.
    ``(b) Exception.--Notwithstanding subsection (a), the provisions of 
sections 2716 and 2718 of title XXVII of the Public Health Service Act 
(as amended by the Patient Protection and Affordable Care Act) shall 
not apply with respect to self-insured group health plans, and the 
provisions of this part shall continue to apply to such plans as if 
such sections of the Public Health Service Act (as so amended) had not 
been enacted.''.
    (f) Technical Amendment to the Internal Revenue Code of 1986.--
Subchapter B of chapter 100 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following:

``SEC. 9815. ADDITIONAL MARKET REFORMS.

    ``(a) General Rule.--Except as provided in subsection (b)--
            ``(1) the provisions of part A of title XXVII of the Public 
        Health Service Act (as amended by the Patient Protection and 
        Affordable Care Act) shall apply to group health plans, and 
        health insurance issuers providing health insurance coverage in 
        connection with group health plans, as if included in this 
        subchapter; and
            ``(2) to the extent that any provision of this subchapter 
        conflicts with a provision of such part A with respect to group 
        health plans, or health insurance issuers providing health 
        insurance coverage in connection with group health plans, the 
        provisions of such part A shall apply.
    ``(b) Exception.--Notwithstanding subsection (a), the provisions of 
sections 2716 and 2718 of title XXVII of the Public Health Service Act 
(as amended by the Patient Protection and Affordable Care Act) shall 
not apply with respect to self-insured group health plans, and the 
provisions of this subchapter shall continue to apply to such plans as 
if such sections of the Public Health Service Act (as so amended) had 
not been enacted.''.

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

    (a) Findings.--The Senate makes the following findings:
            (1) Based on Congressional Budget Office (CBO) estimates, 
        this Act will reduce the Federal deficit between 2010 and 2019.
            (2) CBO projects this Act will continue to reduce budget 
        deficits after 2019.
            (3) Based on CBO estimates, this Act will extend the 
        solvency of the Medicare HI Trust Fund.
            (4) This Act will increase the surplus in the Social 
        Security Trust Fund, which should be reserved to strengthen the 
        finances of Social Security.
            (5) The initial net savings generated by the Community 
        Living Assistance Services and Supports (CLASS) program are 
        necessary to ensure the long-term solvency of that program.
    (b) Sense of the Senate.--It is the sense of the Senate that--
            (1) the additional surplus in the Social Security Trust 
        Fund generated by this Act should be reserved for Social 
        Security and not spent in this Act for other purposes; and
            (2) the net savings generated by the CLASS program should 
        be reserved for the CLASS program and not spent in this Act for 
        other purposes.

                   TITLE II--ROLE OF PUBLIC PROGRAMS

                Subtitle A--Improved Access to Medicaid

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

    (a) Coverage for Individuals With Income at or Below 133 Percent of 
the Poverty Line.--
            (1) Beginning 2014.--Section 1902(a)(10)(A)(i) of the 
        Social Security Act (42 U.S.C. 1396a) is amended--
                    (A) by striking ``or'' at the end of subclause 
                (VI);
                    (B) by adding ``or'' at the end of subclause (VII); 
                and
                    (C) by inserting after subclause (VII) the 
                following:
                                    ``(VIII) beginning January 1, 2014, 
                                who are under 65 years of age, not 
                                pregnant, not entitled to, or enrolled 
                                for, benefits under part A of title 
                                XVIII, or enrolled for benefits under 
                                part B of title XVIII, and are not 
                                described in a previous subclause of 
                                this clause, and whose income (as 
                                determined under subsection (e)(14)) 
                                does not exceed 133 percent of the 
                                poverty line (as defined in section 
                                2110(c)(5)) applicable to a family of 
                                the size involved, subject to 
                                subsection (k);''.
            (2) Provision of at least minimum essential coverage.--
                    (A) In general.--Section 1902 of such Act (42 
                U.S.C. 1396a) is amended by inserting after subsection 
                (j) the following:
    ``(k)(1) The medical assistance provided to an individual described 
in subclause (VIII) of subsection (a)(10)(A)(i) shall consist of 
benchmark coverage described in section 1937(b)(1) or benchmark 
equivalent coverage described in section 1937(b)(2). Such medical 
assistance shall be provided subject to the requirements of section 
1937, without regard to whether a State otherwise has elected the 
option to provide medical assistance through coverage under that 
section, unless an individual described in subclause (VIII) of 
subsection (a)(10)(A)(i) is also an individual for whom, under 
subparagraph (B) of section 1937(a)(2), the State may not require 
enrollment in benchmark coverage described in subsection (b)(1) of 
section 1937 or benchmark equivalent coverage described in subsection 
(b)(2) of that section.''.
                    (B) Conforming amendment.--Section 1903(i) of the 
                Social Security Act, as amended by section 6402(c), is 
                amended--
                            (i) in paragraph (24), by striking ``or'' 
                        at the end;
                            (ii) in paragraph (25), by striking the 
                        period and inserting ``; or''; and
                            (iii) by adding at the end the following:
            ``(26) with respect to any amounts expended for medical 
        assistance for individuals described in subclause (VIII) of 
        subsection (a)(10)(A)(i) other than medical assistance provided 
        through benchmark coverage described in section 1937(b)(1) or 
        benchmark equivalent coverage described in section 
        1937(b)(2).''.
            (3) Federal funding for cost of covering newly eligible 
        individuals.--Section 1905 of the Social Security Act (42 
        U.S.C. 1396d), is amended--
                    (A) in subsection (b), in the first sentence, by 
                inserting ``subsection (y) and'' before ``section 
                1933(d)''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(y) Increased FMAP for Medical Assistance for Newly Eligible 
Mandatory Individuals.--
            ``(1) Amount of increase.--
                    ``(A) 100 percent fmap.--During the period that 
                begins on January 1, 2014, and ends on December 31, 
                2016, notwithstanding subsection (b), the Federal 
                medical assistance percentage determined for a State 
                that is one of the 50 States or the District of 
                Columbia for each fiscal year occurring during that 
                period with respect to amounts expended for medical 
                assistance for newly eligible individuals described in 
                subclause (VIII) of section 1902(a)(10)(A)(i) shall be 
                equal to 100 percent.
                    ``(B) 2017 and 2018.--
                            ``(i) In general.--During the period that 
                        begins on January 1, 2017, and ends on December 
                        31, 2018, notwithstanding subsection (b) and 
                        subject to subparagraph (D), the Federal 
                        medical assistance percentage determined for a 
                        State that is one of the 50 States or the 
                        District of Columbia for each fiscal year 
                        occurring during that period with respect to 
                        amounts expended for medical assistance for 
                        newly eligible individuals described in 
                        subclause (VIII) of section 1902(a)(10)(A)(i), 
                        shall be increased by the applicable percentage 
                        point increase specified in clause (ii) for the 
                        quarter and the State.
                            ``(ii) Applicable percentage point 
                        increase.--
                                    ``(I) In general.--For purposes of 
                                clause (i), the applicable percentage 
                                point increase for a quarter is the 
                                following:


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

                                    ``(II) Expansion state defined.--
                                For purposes of the table in subclause 
                                (I), a State is an expansion State if, 
                                on the date of the enactment of the 
                                Patient Protection and Affordable Care 
                                Act, the State offers health benefits 
                                coverage statewide to parents and 
                                nonpregnant, childless adults whose 
                                income is at least 100 percent of the 
                                poverty line, that is not dependent on 
                                access to employer coverage, employer 
                                contribution, or employment and is not 
                                limited to premium assistance, 
                                hospital-only benefits, a high 
                                deductible health plan, or alternative 
                                benefits under a demonstration program 
                                authorized under section 1938. A State 
                                that offers health benefits coverage to 
                                only parents or only nonpregnant 
                                childless adults described in the 
                                preceding sentence shall not be 
                                considered to be an expansion State.
                    ``(C) 2019 and succeeding years.--Beginning January 
                1, 2019, notwithstanding subsection (b) but subject to 
                subparagraph (D), the Federal medical assistance 
                percentage determined for a State that is one of the 50 
                States or the District of Columbia for each fiscal year 
                quarter occurring during that period with respect to 
                amounts expended for medical assistance for newly 
                eligible individuals described in subclause (VIII) of 
                section 1902(a)(10)(A)(i), shall be increased by 32.3 
                percentage points.
                    ``(D) Limitation.--The Federal medical assistance 
                percentage determined for a State under subparagraph 
                (B) or (C) shall in no case be more than 95 percent.
            ``(2) Definitions.--In this subsection:
                    ``(A) Newly eligible.--The term `newly eligible' 
                means, with respect to an individual described in 
                subclause (VIII) of section 1902(a)(10)(A)(i), an 
                individual who is not under 19 years of age (or such 
                higher age as the State may have elected) and who, on 
                the date of enactment of the Patient Protection and 
                Affordable Care Act, is not eligible under the State 
                plan or under a waiver of the plan for full benefits or 
                for benchmark coverage described in subparagraph (A), 
                (B), or (C) of section 1937(b)(1) or benchmark 
                equivalent coverage described in section 1937(b)(2) 
                that has an aggregate actuarial value that is at least 
                actuarially equivalent to benchmark coverage described 
                in subparagraph (A), (B), or (C) of section 1937(b)(1), 
                or is eligible but not enrolled (or is on a waiting 
                list) for such benefits or coverage through a waiver 
                under the plan that has a capped or limited enrollment 
                that is full.
                    ``(B) Full benefits.--The term `full benefits' 
                means, with respect to an individual, medical 
                assistance for all services covered under the State 
                plan under this title that is not less in amount, 
                duration, or scope, or is determined by the Secretary 
                to be substantially equivalent, to the medical 
                assistance available for an individual described in 
                section 1902(a)(10)(A)(i).''.
            (4) State options to offer coverage earlier and presumptive 
        eligibility; children required to have coverage for parents to 
        be eligible.--
                    (A) In general.--Subsection (k) of section 1902 of 
                the Social Security Act (as added by paragraph (2)), is 
                amended by inserting after paragraph (1) the following:
    ``(2) Beginning with the first day of any fiscal year quarter that 
begins on or after January 1, 2011, and before January 1, 2014, a State 
may elect through a State plan amendment to provide medical assistance 
to individuals who would be described in subclause (VIII) of subsection 
(a)(10)(A)(i) if that subclause were effective before January 1, 2014. 
A State may elect to phase-in the extension of eligibility for medical 
assistance to such individuals based on income, so long as the State 
does not extend such eligibility to individuals described in such 
subclause with higher income before making individuals described in 
such subclause with lower income eligible for medical assistance.
    ``(3) If an individual described in subclause (VIII) of subsection 
(a)(10)(A)(i) is the parent of a child who is under 19 years of age (or 
such higher age as the State may have elected) who is eligible for 
medical assistance under the State plan or under a waiver of such plan 
(under that subclause or under a State plan amendment under paragraph 
(2), the individual may not be enrolled under the State plan unless the 
individual's child is enrolled under the State plan or under a waiver 
of the plan or is enrolled in other health insurance coverage. For 
purposes of the preceding sentence, the term `parent' includes an 
individual treated as a caretaker relative for purposes of carrying out 
section 1931.''.
                    (B) Presumptive eligibility.--Section 1920 of the 
                Social Security Act (42 U.S.C. 1396r-1) is amended by 
                adding at the end the following:
    ``(e) If the State has elected the option to provide a presumptive 
eligibility period under this section or section 1920A, the State may 
elect to provide a presumptive eligibility period (as defined in 
subsection (b)(1)) for individuals who are eligible for medical 
assistance under clause (i)(VIII) of subsection (a)(10)(A) or section 
1931 in the same manner as the State provides for such a period under 
this section or section 1920A, subject to such guidance as the 
Secretary shall establish.''.
            (5) Conforming amendments.--
                    (A) Section 1902(a)(10) of such Act (42 U.S.C. 
                1396a(a)(10)) is amended in the matter following 
                subparagraph (G), by striking ``and (XIV)'' and 
                inserting ``(XIV)'' and by inserting ``and (XV) the 
                medical assistance made available to an individual 
                described in subparagraph (A)(i)(VIII) shall be limited 
                to medical assistance described in subsection (k)(1)'' 
                before the semicolon.
                    (B) Section 1902(l)(2)(C) of such Act (42 U.S.C. 
                1396a(l)(2)(C)) is amended by striking ``100'' and 
                inserting ``133''.
                    (C) Section 1905(a) of such Act (42 U.S.C. 
                1396d(a)) is amended in the matter preceding paragraph 
                (1)--
                            (i) by striking ``or'' at the end of clause 
                        (xii);
                            (ii) by inserting ``or'' at the end of 
                        clause (xiii); and
                            (iii) by inserting after clause (xiii) the 
                        following:
            ``(xiv) individuals described in section 
        1902(a)(10)(A)(i)(VIII),''.
                    (D) Section 1903(f)(4) of such Act (42 U.S.C. 
                1396b(f)(4)) is amended by inserting 
                ``1902(a)(10)(A)(i)(VIII),'' after 
                ``1902(a)(10)(A)(i)(VII),''.
                    (E) Section 1937(a)(1)(B) of such Act (42 U.S.C. 
                1396u-7(a)(1)(B)) is amended by inserting ``subclause 
                (VIII) of section 1902(a)(10)(A)(i) or under'' after 
                ``eligible under''.
    (b) Maintenance of Medicaid Income Eligibility.--Section 1902 of 
the Social Security Act (42 U.S.C. 1396a) is amended--
            (1) in subsection (a)--
                    (A) by striking ``and'' at the end of paragraph 
                (72);
                    (B) by striking the period at the end of paragraph 
                (73) and inserting ``; and''; and
                    (C) by inserting after paragraph (73) the following 
                new paragraph:
            ``(74) provide for maintenance of effort under the State 
        plan or under any waiver of the plan in accordance with 
        subsection (gg).''; and
            (2) by adding at the end the following new subsection:
    ``(gg) Maintenance of Effort.--
            ``(1) General requirement to maintain eligibility standards 
        until state exchange is fully operational.--Subject to the 
        succeeding paragraphs of this subsection, during the period 
        that begins on the date of enactment of the Patient Protection 
        and Affordable Care Act and ends on the date on which the 
        Secretary determines that an Exchange established by the State 
        under section 1311 of the Patient Protection and Affordable 
        Care Act is fully operational, as a condition for receiving any 
        Federal payments under section 1903(a) for calendar quarters 
        occurring during such period, a State shall not have in effect 
        eligibility standards, methodologies, or procedures under the 
        State plan under this title or under any waiver of such plan 
        that is in effect during that period, that are more restrictive 
        than the eligibility standards, methodologies, or procedures, 
        respectively, under the plan or waiver that are in effect on 
        the date of enactment of the Patient Protection and Affordable 
        Care Act.
            ``(2) Continuation of eligibility standards for children 
        until october 1, 2019.--The requirement under paragraph (1) 
        shall continue to apply to a State through September 30, 2019, 
        with respect to the eligibility standards, methodologies, and 
        procedures under the State plan under this title or under any 
        waiver of such plan that are applicable to determining the 
        eligibility for medical assistance of any child who is under 19 
        years of age (or such higher age as the State may have 
        elected).
            ``(3) Nonapplication.--During the period that begins on 
        January 1, 2011, and ends on December 31, 2013, the requirement 
        under paragraph (1) shall not apply to a State with respect to 
        nonpregnant, nondisabled adults who are eligible for medical 
        assistance under the State plan or under a waiver of the plan 
        at the option of the State and whose income exceeds 133 percent 
        of the poverty line (as defined in section 2110(c)(5)) 
        applicable to a family of the size involved if, on or after 
        December 31, 2010, the State certifies to the Secretary that, 
        with respect to the State fiscal year during which the 
        certification is made, the State has a budget deficit, or with 
        respect to the succeeding State fiscal year, the State is 
        projected to have a budget deficit. Upon submission of such a 
        certification to the Secretary, the requirement under paragraph 
        (1) shall not apply to the State with respect to any remaining 
        portion of the period described in the preceding sentence.
            ``(4) Determination of compliance.--
                    ``(A) States shall apply modified gross income.--A 
                State's determination of income in accordance with 
                subsection (e)(14) shall not be considered to be 
                eligibility standards, methodologies, or procedures 
                that are more restrictive than the standards, 
                methodologies, or procedures in effect under the State 
                plan or under a waiver of the plan on the date of 
                enactment of the Patient Protection and Affordable Care 
                Act for purposes of determining compliance with the 
                requirements of paragraph (1), (2), or (3).
                    ``(B) States may expand eligibility or move 
                waivered populations into coverage under the state 
                plan.--With respect to any period applicable under 
                paragraph (1), (2), or (3), a State that applies 
                eligibility standards, methodologies, or procedures 
                under the State plan under this title or under any 
                waiver of the plan that are less restrictive than the 
                eligibility standards, methodologies, or procedures, 
                applied under the State plan or under a waiver of the 
                plan on the date of enactment of the Patient Protection 
                and Affordable Care Act, or that makes individuals who, 
                on such date of enactment, are eligible for medical 
                assistance under a waiver of the State plan, after such 
                date of enactment eligible for medical assistance 
                through a State plan amendment with an income 
                eligibility level that is not less than the income 
                eligibility level that applied under the waiver, or as 
                a result of the application of subclause (VIII) of 
                section 1902(a)(10)(A)(i), shall not be considered to 
                have in effect eligibility standards, methodologies, or 
                procedures that are more restrictive than the 
                standards, methodologies, or procedures in effect under 
                the State plan or under a waiver of the plan on the 
                date of enactment of the Patient Protection and 
                Affordable Care Act for purposes of determining 
                compliance with the requirements of paragraph (1), (2), 
                or (3).''.
    (c) Medicaid Benchmark Benefits Must Consist of at Least Minimum 
Essential Coverage.--Section 1937(b) of such Act (42 U.S.C. 1396u-7(b)) 
is amended--
            (1) in paragraph (1), in the matter preceding subparagraph 
        (A), by inserting ``subject to paragraphs (5) and (6),'' before 
        ``each'';
            (2) in paragraph (2)--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``subject to paragraphs (5) and (6)'' after 
                ``subsection (a)(1),'';
                    (B) in subparagraph (A)--
                            (i) by redesignating clauses (iv) and (v) 
                        as clauses (vi) and (vii), respectively; and
                            (ii) by inserting after clause (iii), the 
                        following:
                            ``(iv) Coverage of prescription drugs.
                            ``(v) Mental health services.''; and
                    (C) in subparagraph (C)--
                            (i) by striking clauses (i) and (ii); and
                            (ii) by redesignating clauses (iii) and 
                        (iv) as clauses (i) and (ii), respectively; and
            (3) by adding at the end the following new paragraphs:
            ``(5) Minimum standards.--Effective January 1, 2014, any 
        benchmark benefit package under paragraph (1) or benchmark 
        equivalent coverage under paragraph (2) must provide at least 
        essential health benefits as described in section 1302(b) of 
        the Patient Protection and Affordable Care Act.
            ``(6) Mental health services parity.--
                    ``(A) In general.--In the case of any benchmark 
                benefit package under paragraph (1) or benchmark 
                equivalent coverage under paragraph (2) that is offered 
                by an entity that is not a medicaid managed care 
                organization and that provides both medical and 
                surgical benefits and mental health or substance use 
                disorder benefits, the entity shall ensure that the 
                financial requirements and treatment limitations 
                applicable to such mental health or substance use 
                disorder benefits comply with the requirements of 
                section 2705(a) of the Public Health Service Act in the 
                same manner as such requirements apply to a group 
                health plan.
                    ``(B) Deemed compliance.--Coverage provided with 
                respect to an individual described in section 
                1905(a)(4)(B) and covered under the State plan under 
                section 1902(a)(10)(A) of the services described in 
                section 1905(a)(4)(B) (relating to early and periodic 
                screening, diagnostic, and treatment services defined 
                in section 1905(r)) and provided in accordance with 
                section 1902(a)(43), shall be deemed to satisfy the 
                requirements of subparagraph (A).''.
    (d) Annual Reports on Medicaid Enrollment.--
            (1) State reports.--Section 1902(a) of the Social Security 
        Act (42 U.S.C. 1396a(a)), as amended by subsection (b), is 
        amended--
                    (A) by striking ``and'' at the end of paragraph 
                (73);
                    (B) by striking the period at the end of paragraph 
                (74) and inserting ``; and''; and
                    (C) by inserting after paragraph (74) the following 
                new paragraph:
            ``(75) provide that, beginning January 2015, and annually 
        thereafter, the State shall submit a report to the Secretary 
        that contains--
                    ``(A) the total number of enrolled and newly 
                enrolled individuals in the State plan or under a 
                waiver of the plan for the fiscal year ending on 
                September 30 of the preceding calendar year, 
                disaggregated by population, including children, 
                parents, nonpregnant childless adults, disabled 
                individuals, elderly individuals, and such other 
                categories or sub-categories of individuals eligible 
                for medical assistance under the State plan or under a 
                waiver of the plan as the Secretary may require;
                    ``(B) a description, which may be specified by 
                population, of the outreach and enrollment processes 
                used by the State during such fiscal year; and
                    ``(C) any other data reporting determined necessary 
                by the Secretary to monitor enrollment and retention of 
                individuals eligible for medical assistance under the 
                State plan or under a waiver of the plan.''.
            (2) Reports to congress.--Beginning April 2015, and 
        annually thereafter, the Secretary of Health and Human Services 
        shall submit a report to the appropriate committees of Congress 
        on the total enrollment and new enrollment in Medicaid for the 
        fiscal year ending on September 30 of the preceding calendar 
        year on a national and State-by-State basis, and shall include 
        in each such report such recommendations for administrative or 
        legislative changes to improve enrollment in the Medicaid 
        program as the Secretary determines appropriate.
    (e) State Option for Coverage for Individuals With Income That 
Exceeds 133 Percent of the Poverty Line.--
            (1) Coverage as optional categorically needy group.--
        Section 1902 of the Social Security Act (42 U.S.C. 1396a) is 
        amended--
                    (A) in subsection (a)(10)(A)(ii)--
                            (i) in subclause (XVIII), by striking 
                        ``or'' at the end;
                            (ii) in subclause (XIX), by adding ``or'' 
                        at the end; and
                            (iii) by adding at the end the following 
                        new subclause:
                                    ``(XX) beginning January 1, 2014, 
                                who are under 65 years of age and are 
                                not described in or enrolled under a 
                                previous subclause of this clause, and 
                                whose income (as determined under 
                                subsection (e)(14)) exceeds 133 percent 
                                of the poverty line (as defined in 
                                section 2110(c)(5)) applicable to a 
                                family of the size involved but does 
                                not exceed the highest income 
                                eligibility level established under the 
                                State plan or under a waiver of the 
                                plan, subject to subsection (hh);'' and
                    (B) by adding at the end the following new 
                subsection:
    ``(hh)(1) A State may elect to phase-in the extension of 
eligibility for medical assistance to individuals described in 
subclause (XX) of subsection (a)(10)(A)(ii) based on the categorical 
group (including nonpregnant childless adults) or income, so long as 
the State does not extend such eligibility to individuals described in 
such subclause with higher income before making individuals described 
in such subclause with lower income eligible for medical assistance.
    ``(2) If an individual described in subclause (XX) of subsection 
(a)(10)(A)(ii) is the parent of a child who is under 19 years of age 
(or such higher age as the State may have elected) who is eligible for 
medical assistance under the State plan or under a waiver of such plan, 
the individual may not be enrolled under the State plan unless the 
individual's child is enrolled under the State plan or under a waiver 
of the plan or is enrolled in other health insurance coverage. For 
purposes of the preceding sentence, the term `parent' includes an 
individual treated as a caretaker relative for purposes of carrying out 
section 1931.''.
            (2) Conforming amendments.--
                    (A) Section 1905(a) of such Act (42 U.S.C. 
                1396d(a)), as amended by subsection (a)(5)(C), is 
                amended in the matter preceding paragraph (1)--
                            (i) by striking ``or'' at the end of clause 
                        (xiii);
                            (ii) by inserting ``or'' at the end of 
                        clause (xiv); and
                            (iii) by inserting after clause (xiv) the 
                        following:
            ``(xv) individuals described in section 
        1902(a)(10)(A)(ii)(XX),''.
                    (B) Section 1903(f)(4) of such Act (42 U.S.C. 
                1396b(f)(4)) is amended by inserting 
                ``1902(a)(10)(A)(ii)(XX),'' after 
                ``1902(a)(10)(A)(ii)(XIX),''.
                    (C) Section 1920(e) of such Act (42 U.S.C. 1396r-
                1(e)), as added by subsection (a)(4)(B), is amended by 
                inserting ``or clause (ii)(XX)'' after ``clause 
                (i)(VIII)''.

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

    (a) In General.--Section 1902(e) of the Social Security Act (42 
U.S.C. 1396a(e)) is amended by adding at the end the following:
            ``(14) Income determined using modified gross income.--
                    ``(A) In general.--Notwithstanding subsection (r) 
                or any other provision of this title, except as 
                provided in subparagraph (D), for purposes of 
                determining income eligibility for medical assistance 
                under the State plan or under any waiver of such plan 
                and for any other purpose applicable under the plan or 
                waiver for which a determination of income is required, 
                including with respect to the imposition of premiums 
                and cost-sharing, a State shall use the modified gross 
                income of an individual and, in the case of an 
                individual in a family greater than 1, the household 
                income of such family. A State shall establish income 
                eligibility thresholds for populations to be eligible 
                for medical assistance under the State plan or a waiver 
                of the plan using modified gross income and household 
                income that are not less than the effective income 
                eligibility levels that applied under the State plan or 
                waiver on the date of enactment of the Patient 
                Protection and Affordable Care Act. For purposes of 
                complying with the maintenance of effort requirements 
                under subsection (gg) during the transition to modified 
                gross income and household income, a State shall, 
                working with the Secretary, establish an equivalent 
                income test that ensures individuals eligible for 
                medical assistance under the State plan or under a 
                waiver of the plan on the date of enactment of the 
                Patient Protection and Affordable Care Act, do not lose 
                coverage under the State plan or under a waiver of the 
                plan. The Secretary may waive such provisions of this 
                title and title XXI as are necessary to ensure that 
                States establish income and eligibility determination 
                systems that protect beneficiaries.
                    ``(B) No income or expense disregards.--No type of 
                expense, block, or other income disregard shall be 
                applied by a State to determine income eligibility for 
                medical assistance under the State plan or under any 
                waiver of such plan or for any other purpose applicable 
                under the plan or waiver for which a determination of 
                income is required.
                    ``(C) No assets test.--A State shall not apply any 
                assets or resources test for purposes of determining 
                eligibility for medical assistance under the State plan 
                or under a waiver of the plan.
                    ``(D) Exceptions.--
                            ``(i) Individuals eligible because of other 
                        aid or assistance, elderly individuals, 
                        medically needy individuals, and individuals 
                        eligible for medicare cost-sharing.--
                        Subparagraphs (A), (B), and (C) shall not apply 
                        to the determination of eligibility under the 
                        State plan or under a waiver for medical 
                        assistance for the following:
                                    ``(I) Individuals who are eligible 
                                for medical assistance under the State 
                                plan or under a waiver of the plan on a 
                                basis that does not require a 
                                determination of income by the State 
                                agency administering the State plan or 
                                waiver, including as a result of 
                                eligibility for, or receipt of, other 
                                Federal or State aid or assistance, 
                                individuals who are eligible on the 
                                basis of receiving (or being treated as 
                                if receiving) supplemental security 
                                income benefits under title XVI, and 
                                individuals who are eligible as a 
                                result of being or being deemed to be a 
                                child in foster care under the 
                                responsibility of the State.
                                    ``(II) Individuals who have 
                                attained age 65.
                                    ``(III) Individuals who qualify for 
                                medical assistance under the State plan 
                                or under any waiver of such plan on the 
                                basis of being blind or disabled (or 
                                being treated as being blind or 
                                disabled) without regard to whether the 
                                individual is eligible for supplemental 
                                security income benefits under title 
                                XVI on the basis of being blind or 
                                disabled and including an individual 
                                who is eligible for medical assistance 
                                on the basis of section 1902(e)(3).
                                    ``(IV) Individuals described in 
                                subsection (a)(10)(C).
                                    ``(V) Individuals described in any 
                                clause of subsection (a)(10)(E).
                            ``(ii) Express lane agency findings.--In 
                        the case of a State that elects the Express 
                        Lane option under paragraph (13), 
                        notwithstanding subparagraphs (A), (B), and 
                        (C), the State may rely on a finding made by an 
                        Express Lane agency in accordance with that 
                        paragraph relating to the income of an 
                        individual for purposes of determining the 
                        individual's eligibility for medical assistance 
                        under the State plan or under a waiver of the 
                        plan.
                            ``(iii) Medicare prescription drug 
                        subsidies determinations.--Subparagraphs (A), 
                        (B), and (C) shall not apply to any 
                        determinations of eligibility for premium and 
                        cost-sharing subsidies under and in accordance 
                        with section 1860D-14 made by the State 
                        pursuant to section 1935(a)(2).
                            ``(iv) Long-term care.--Subparagraphs (A), 
                        (B), and (C) shall not apply to any 
                        determinations of eligibility of individuals 
                        for purposes of medical assistance for nursing 
                        facility services, a level of care in any 
                        institution equivalent to that of nursing 
                        facility services, home or community-based 
                        services furnished under a waiver or State plan 
                        amendment under section 1915 or a waiver under 
                        section 1115, and services described in section 
                        1917(c)(1)(C)(ii).
                            ``(v) Grandfather of current enrollees 
                        until date of next regular redetermination.--An 
                        individual who, on January 1, 2014, is enrolled 
                        in the State plan or under a waiver of the plan 
                        and who would be determined ineligible for 
                        medical assistance solely because of the 
                        application of the modified gross income or 
                        household income standard described in 
                        subparagraph (A), shall remain eligible for 
                        medical assistance under the State plan or 
                        waiver (and subject to the same premiums and 
                        cost-sharing as applied to the individual on 
                        that date) through March 31, 2014, or the date 
                        on which the individual's next regularly 
                        scheduled redetermination of eligibility is to 
                        occur, whichever is later.
                    ``(E) Transition planning and oversight.--Each 
                State shall submit to the Secretary for the Secretary's 
                approval the income eligibility thresholds proposed to 
                be established using modified gross income and 
                household income, the methodologies and procedures to 
                be used to determine income eligibility using modified 
                gross income and household income and, if applicable, a 
                State plan amendment establishing an optional 
                eligibility category under subsection 
                (a)(10)(A)(ii)(XX). To the extent practicable, the 
                State shall use the same methodologies and procedures 
                for purposes of making such determinations as the State 
                used on the date of enactment of the Patient Protection 
                and Affordable Care Act. The Secretary shall ensure 
                that the income eligibility thresholds proposed to be 
                established using modified gross income and household 
                income, including under the eligibility category 
                established under subsection (a)(10)(A)(ii)(XX), and 
                the methodologies and procedures proposed to be used to 
                determine income eligibility, will not result in 
                children who would have been eligible for medical 
                assistance under the State plan or under a waiver of 
                the plan on the date of enactment of the Patient 
                Protection and Affordable Care Act no longer being 
                eligible for such assistance.
                    ``(F) Limitation on secretarial authority.--The 
                Secretary shall not waive compliance with the 
                requirements of this paragraph except to the extent 
                necessary to permit a State to coordinate eligibility 
                requirements for dual eligible individuals (as defined 
                in section 1915(h)(2)(B)) under the State plan or under 
                a waiver of the plan and under title XVIII and 
                individuals who require the level of care provided in a 
                hospital, a nursing facility, or an intermediate care 
                facility for the mentally retarded.
                    ``(G) Definitions of modified gross income and 
                household income.--In this paragraph, the terms 
                `modified gross income' and `household income' have the 
                meanings given such terms in section 36B(d)(2) of the 
                Internal Revenue Code of 1986.
                    ``(H) Continued application of medicaid rules 
                regarding point-in-time income and sources of income.--
                The requirement under this paragraph for States to use 
                modified gross income and household income to determine 
                income eligibility for medical assistance under the 
                State plan or under any waiver of such plan and for any 
                other purpose applicable under the plan or waiver for 
                which a determination of income is required shall not 
                be construed as affecting or limiting the application 
                of--
                            ``(i) the requirement under this title and 
                        under the State plan or a waiver of the plan to 
                        determine an individual's income as of the 
                        point in time at which an application for 
                        medical assistance under the State plan or a 
                        waiver of the plan is processed; or
                            ``(ii) any rules established under this 
                        title or under the State plan or a waiver of 
                        the plan regarding sources of countable 
                        income.''.
    (b) Conforming Amendment.--Section 1902(a)(17) of such Act (42 
U.S.C. 1396a(a)(17)) is amended by inserting ``(e)(14),'' before 
``(l)(3)''.
    (c) Effective Date.--The amendments made by subsections (a) and (b) 
take effect on January 1, 2014.

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

    (a) In General.--Section 1906A of such Act (42 U.S.C. 1396e-1) is 
amended--
            (1) in subsection (a)--
                    (A) by striking ``may elect to'' and inserting 
                ``shall'';
                    (B) by striking ``under age 19''; and
                    (C) by inserting ``, in the case of an individual 
                under age 19,'' after ``(and'';
            (2) in subsection (c), in the first sentence, by striking 
        ``under age 19''; and
            (3) in subsection (d)--
                    (A) in paragraph (2)--
                            (i) in the first sentence, by striking 
                        ``under age 19''; and
                            (ii) by striking the third sentence and 
                        inserting ``A State may not require, as a 
                        condition of an individual (or the individual's 
                        parent) being or remaining eligible for medical 
                        assistance under this title, that the 
                        individual (or the individual's parent) apply 
                        for enrollment in qualified employer-sponsored 
                        coverage under this section.''; and
                    (B) in paragraph (3), by striking ``the parent of 
                an individual under age 19'' and inserting ``an 
                individual (or the parent of an individual)''; and
            (4) in subsection (e), by striking ``under age 19'' each 
        place it appears.
    (b) Conforming Amendment.--The heading for section 1906A of such 
Act (42 U.S.C. 1396e-1) is amended by striking ``option for children''.
    (c) Effective Date.--The amendments made by this section take 
effect on January 1, 2014.

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

    (a) In General.--Section 1902(a)(10)(A)(i) of the Social Security 
Act (42 U.S.C. 1396a), as amended by section 2001(a)(1), is amended--
            (1) by striking ``or'' at the end of subclause (VII);
            (2) by adding ``or'' at the end of subclause (VIII); and
            (3) by inserting after subclause (VIII) the following:
                                    ``(IX) who were in foster care 
                                under the responsibility of a State for 
                                more than 6 months (whether or not 
                                consecutive) but are no longer in such 
                                care, who are not described in any of 
                                subclauses (I) through (VII) of this 
                                clause, and who are under 25 years of 
                                age;''.
    (b) Option To Provide Presumptive Eligibility.--Section 1920(e) of 
such Act (42 U.S.C. 1396r-1(e)), as added by section 2001(a)(4)(B) and 
amended by section 2001(e)(2)(C), is amended by inserting ``, clause 
(i)(IX),'' after ``clause (i)(VIII)''.
    (c) Conforming Amendments.--
            (1) Section 1903(f)(4) of such Act (42 U.S.C. 1396b(f)(4)), 
        as amended by section 2001(a)(5)(D), is amended by inserting 
        ``1902(a)(10)(A)(i)(IX),'' after ``1902(a)(10)(A)(i)(VIII),''.
            (2) Section 1937(a)(2)(B)(viii) of such Act (42 U.S.C. 
        1396u-7(a)(2)(B)(viii)) is amended by inserting ``, or the 
        individual qualifies for medical assistance on the basis of 
        section 1902(a)(10)(A)(i)(IX)'' before the period.
    (d) Effective Date.--The amendments made by this section take 
effect on January 1, 2019.

SEC. 2005. PAYMENTS TO TERRITORIES.

    (a) Increase in Limit on Payments.--Section 1108(g) of the Social 
Security Act (42 U.S.C. 1308(g)) is amended--
            (1) in paragraph (2), in the matter preceding subparagraph 
        (A), by striking ``paragraph (3)'' and inserting ``paragraphs 
        (3) and (5)'';
            (2) in paragraph (4), by striking ``and (3)'' and inserting 
        ``(3), and (4)''; and
            (3) by adding at the end the following paragraph:
            ``(5) Fiscal year 2011 and thereafter.--The amounts 
        otherwise determined under this subsection for Puerto Rico, the 
        Virgin Islands, Guam, the Northern Mariana Islands, and 
        American Samoa for the second, third, and fourth quarters of 
        fiscal year 2011, and for each fiscal year after fiscal year 
        2011 (after the application of subsection (f) and the preceding 
        paragraphs of this subsection), shall be increased by 30 
        percent.''.
    (b) Disregard of Payments for Mandatory Expanded Enrollment.--
Section 1108(g)(4) of such Act (42 U.S.C. 1308(g)(4)) is amended--
            (1) by striking ``to fiscal years beginning'' and inserting 
        ``to--
                    ``(A) fiscal years beginning'';
            (2) by striking the period at the end and inserting ``; 
        and''; and
            (3) by adding at the end the following:
                    ``(B) fiscal years beginning with fiscal year 2014, 
                payments made to Puerto Rico, the Virgin Islands, Guam, 
                the Northern Mariana Islands, or American Samoa with 
                respect to amounts expended for medical assistance for 
                newly eligible (as defined in section 1905(y)(2)) 
                nonpregnant childless adults who are eligible under 
                subclause (VIII) of section 1902(a)(10)(A)(i) and whose 
                income (as determined under section 1902(e)(14)) does 
                not exceed (in the case of each such commonwealth and 
                territory respectively) the income eligibility level in 
                effect for that population under title XIX or under a 
                waiver on the date of enactment of the Patient 
                Protection and Affordable Care Act, shall not be taken 
                into account in applying subsection (f) (as increased 
                in accordance with paragraphs (1), (2), (3), and (5) of 
                this subsection) to such commonwealth or territory for 
                such fiscal year.''.
    (c) Increased FMAP.--
            (1) In general.--The first sentence of section 1905(b) of 
        the Social Security Act (42 U.S.C. 1396d(b)) is amended by 
        striking ``shall be 50 per centum'' and inserting ``shall be 55 
        percent''.
            (2) Effective date.--The amendment made by paragraph (1) 
        takes effect on January 1, 2011.

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

    Section 1905 of the Social Security Act (42 U.S.C. 1396d), as 
amended by sections 2001(a)(3) and 2001(b)(2), is amended--
            (1) in subsection (b), in the first sentence, by striking 
        ``subsection (y)'' and inserting ``subsections (y) and (aa)''; 
        and
            (2) by adding at the end the following new subsection:
    ``(aa)(1) Notwithstanding subsection (b), beginning January 1, 
2011, the Federal medical assistance percentage for a fiscal year for a 
disaster-recovery FMAP adjustment State shall be equal to the 
following:
            ``(A) In the case of the first fiscal year (or part of a 
        fiscal year) for which this subsection applies to the State, 
        the Federal medical assistance percentage determined for the 
        fiscal year without regard to this subsection and subsection 
        (y), increased by 50 percent of the number of percentage points 
        by which the Federal medical assistance percentage determined 
        for the State for the fiscal year without regard to this 
        subsection and subsection (y), is less than the Federal medical 
        assistance percentage determined for the State for the 
        preceding fiscal year after the application of only subsection 
        (a) of section 5001 of Public Law 111-5 (if applicable to the 
        preceding fiscal year) and without regard to this subsection, 
        subsection (y), and subsections (b) and (c) of section 5001 of 
        Public Law 111-5.
            ``(B) In the case of the second or any succeeding fiscal 
        year for which this subsection applies to the State, the 
        Federal medical assistance percentage determined for the 
        preceding fiscal year under this subsection for the State, 
        increased by 25 percent of the number of percentage points by 
        which the Federal medical assistance percentage determined for 
        the State for the fiscal year without regard to this subsection 
        and subsection (y), is less than the Federal medical assistance 
        percentage determined for the State for the preceding fiscal 
        year under this subsection.
    ``(2) In this subsection, the term `disaster-recovery FMAP 
adjustment State' means a State that is one of the 50 States or the 
District of Columbia, for which, at any time during the preceding 7 
fiscal years, the President has declared a major disaster under section 
401 of the Robert T. Stafford Disaster Relief and Emergency Assistance 
Act and determined as a result of such disaster that every county or 
parish in the State warrant individual and public assistance or public 
assistance from the Federal Government under such Act and for which--
            ``(A) in the case of the first fiscal year (or part of a 
        fiscal year) for which this subsection applies to the State, 
        the Federal medical assistance percentage determined for the 
        State for the fiscal year without regard to this subsection and 
        subsection (y), is less than the Federal medical assistance 
        percentage determined for the State for the preceding fiscal 
        year after the application of only subsection (a) of section 
        5001 of Public Law 111-5 (if applicable to the preceding fiscal 
        year) and without regard to this subsection, subsection (y), 
        and subsections (b) and (c) of section 5001 of Public Law 111-
        5, by at least 3 percentage points; and
            ``(B) in the case of the second or any succeeding fiscal 
        year for which this subsection applies to the State, the 
        Federal medical assistance percentage determined for the State 
        for the fiscal year without regard to this subsection and 
        subsection (y), is less than the Federal medical assistance 
        percentage determined for the State for the preceding fiscal 
        year under this subsection by at least 3 percentage points.
    ``(3) The Federal medical assistance percentage determined for a 
disaster-recovery FMAP adjustment State under paragraph (1) shall apply 
for purposes of this title (other than with respect to disproportionate 
share hospital payments described in section 1923 and payments under 
this title that are based on the enhanced FMAP described in 2105(b)) 
and shall not apply with respect to payments under title IV (other than 
under part E of title IV) or payments under title XXI.''.

SEC. 2007. MEDICAID IMPROVEMENT FUND RESCISSION.

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

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

SEC. 2101. ADDITIONAL FEDERAL FINANCIAL PARTICIPATION FOR CHIP.

    (a) In General.--Section 2105(b) of the Social Security Act (42 
U.S.C. 1397ee(b)) is amended by adding at the end the following: 
``Notwithstanding the preceding sentence, during the period that begins 
on October 1, 2013, and ends on September 30, 2019, the enhanced FMAP 
determined for a State for a fiscal year (or for any portion of a 
fiscal year occurring during such period) shall be increased by 23 
percentage points, but in no case shall exceed 100 percent. The 
increase in the enhanced FMAP under the preceding sentence shall not 
apply with respect to determining the payment to a State under 
subsection (a)(1) for expenditures described in subparagraph (D)(iv), 
paragraphs (8), (9), (11) of subsection (c), or clause (4) of the first 
sentence of section 1905(b).''.
    (b) Maintenance of Effort.--
            (1) In general.--Section 2105(d) of the Social Security Act 
        (42 U.S.C. 1397ee(d)) is amended by adding at the end the 
        following:
            ``(3) Continuation of eligibility standards for children 
        until october 1, 2019.--
                    ``(A) In general.--During the period that begins on 
                the date of enactment of the Patient Protection and 
                Affordable Care Act and ends on September 30, 2019, a 
                State shall not have in effect eligibility standards, 
                methodologies, or procedures under its State child 
                health plan (including any waiver under such plan) for 
                children (including children provided medical 
                assistance for which payment is made under section 
                2105(a)(1)(A)) that are more restrictive than the 
                eligibility standards, methodologies, or procedures, 
                respectively, under such plan (or waiver) as in effect 
                on the date of enactment of that Act. The preceding 
                sentence shall not be construed as preventing a State 
                during such period from--
                            ``(i) applying eligibility standards, 
                        methodologies, or procedures for children under 
                        the State child health plan or under any waiver 
                        of the plan that are less restrictive than the 
                        eligibility standards, methodologies, or 
                        procedures, respectively, for children under 
                        the plan or waiver that are in effect on the 
                        date of enactment of such Act; or
                            ``(ii) imposing a limitation described in 
                        section 2112(b)(7) for a fiscal year in order 
                        to limit expenditures under the State child 
                        health plan to those for which Federal 
                        financial participation is available under this 
                        section for the fiscal year.
                    ``(B) Assurance of exchange coverage for targeted 
                low-income children unable to be provided child health 
                assistance as a result of funding shortfalls.--In the 
                event that allotments provided under section 2104 are 
                insufficient to provide coverage to all children who 
                are eligible to be targeted low-income children under 
                the State child health plan under this title, a State 
                shall establish procedures to ensure that such children 
                are provided coverage through an Exchange established 
                by the State under section 1311 of the Patient 
                Protection and Affordable Care Act.''.
            (2) Conforming amendment to title xxi medicaid maintenance 
        of effort.--Section 2105(d)(1) of the Social Security Act (42 
        U.S.C. 1397ee(d)(1)) is amended by adding before the period ``, 
        except as required under section 1902(e)(14)''.
    (c) No Enrollment Bonus Payments for Children Enrolled After Fiscal 
Year 2013.--Section 2105(a)(3)(F)(iii) of the Social Security Act (42 
U.S.C. 1397ee(a)(3)(F)(iii)) is amended by inserting ``or any children 
enrolled on or after October 1, 2013'' before the period.
    (d) Income Eligibility Determined Using Modified Gross Income.--
            (1) State plan requirement.--Section 2102(b)(1)(B) of the 
        Social Security Act (42 U.S.C. 1397bb(b)(1)(B)) is amended--
                    (A) in clause (iii), by striking ``and'' after the 
                semicolon;
                    (B) in clause (iv), by striking the period and 
                inserting ``; and''; and
                    (C) by adding at the end the following:
                            ``(v) shall, beginning January 1, 2014, use 
                        modified gross income and household income (as 
                        defined in section 36B(d)(2) of the Internal 
                        Revenue Code of 1986) to determine eligibility 
                        for child health assistance under the State 
                        child health plan or under any waiver of such 
                        plan and for any other purpose applicable under 
                        the plan or waiver for which a determination of 
                        income is required, including with respect to 
                        the imposition of premiums and cost-sharing, 
                        consistent with section 1902(e)(14).''.
            (2) Conforming amendment.--Section 2107(e)(1) of the Social 
        Security Act (42 U.S.C. 1397gg(e)(1)) is amended--
                    (A) by redesignating subparagraphs (E) through (L) 
                as subparagraphs (F) through (M), respectively; and
                    (B) by inserting after subparagraph (D), the 
                following:
                    ``(E) Section 1902(e)(14) (relating to income 
                determined using modified gross income and household 
                income).''.
    (e) Application of Streamlined Enrollment System.--Section 
2107(e)(1) of the Social Security Act (42 U.S.C. 1397gg(e)(1)), as 
amended by subsection (d)(2), is amended by adding at the end the 
following:
                    ``(N) Section 1943(b) (relating to coordination 
                with State Exchanges and the State Medicaid agency).''.
    (f) CHIP Eligibility for Children Ineligible for Medicaid as a 
Result of Elimination of Disregards.--Notwithstanding any other 
provision of law, a State shall treat any child who is determined to be 
ineligible for medical assistance under the State Medicaid plan or 
under a waiver of the plan as a result of the elimination of the 
application of an income disregard based on expense or type of income, 
as required under section 1902(e)(14) of the Social Security Act (as 
added by this Act), as a targeted low-income child under section 
2110(b) (unless the child is excluded under paragraph (2) of that 
section) and shall provide child health assistance to the child under 
the State child health plan (whether implemented under title XIX or 
XXI, or both, of the Social Security Act).

SEC. 2102. TECHNICAL CORRECTIONS.

    (a) CHIPRA.--Effective as if included in the enactment of the 
Children's Health Insurance Program Reauthorization Act of 2009 (Public 
Law 111-3) (in this section referred to as ``CHIPRA''):
            (1) Section 2104(m) of the Social Security Act, as added by 
        section 102 of CHIPRA, is amended--
                    (A) by redesignating paragraph (7) as paragraph 
                (8); and
                    (B) by inserting after paragraph (6), the 
                following:
            ``(7) Adjustment of fiscal year 2010 allotments to account 
        for changes in projected spending for certain previously 
        approved expansion programs.--For purposes of recalculating the 
        fiscal year 2010 allotment, in the case of one of the 50 States 
        or the District of Columbia that has an approved State plan 
        amendment effective January 1, 2006, to provide child health 
        assistance through the provision of benefits under the State 
        plan under title XIX for children from birth through age 5 
        whose family income does not exceed 200 percent of the poverty 
        line, the Secretary shall increase the allotment by an amount 
        that would be equal to the Federal share of expenditures that 
        would have been claimed at the enhanced FMAP rate rather than 
        the Federal medical assistance percentage matching rate for 
        such population.''.
            (2) Section 605 of CHIPRA is amended by striking ``legal 
        residents'' and insert ``lawfully residing in the United 
        States''.
            (3) Subclauses (I) and (II) of paragraph (3)(C)(i) of 
        section 2105(a) of the Social Security Act (42 U.S.C. 
        1397ee(a)(3)(ii)), as added by section 104 of CHIPRA, are each 
        amended by striking ``, respectively''.
            (4) Section 2105(a)(3)(E)(ii) of the Social Security Act 
        (42 U.S.C. 1397ee(a)(3)(E)(ii)), as added by section 104 of 
        CHIPRA, is amended by striking subclause (IV).
            (5) Section 2105(c)(9)(B) of the Social Security Act (42 
        U.S.C. 1397e(c)(9)(B)), as added by section 211(c)(1) of 
        CHIPRA, is amended by striking ``section 1903(a)(3)(F)'' and 
        inserting ``section 1903(a)(3)(G)''.
            (6) Section 2109(b)(2)(B) of the Social Security Act (42 
        U.S.C. 1397ii(b)(2)(B)), as added by section 602 of CHIPRA, is 
        amended by striking ``the child population growth factor under 
        section 2104(m)(5)(B)'' and inserting ``a high-performing State 
        under section 2111(b)(3)(B)''.
            (7) Section 2110(c)(9)(B)(v) of the Social Security Act (42 
        U.S.C. 1397jj(c)(9)(B)(v)), as added by section 505(b) of 
        CHIPRA, is amended by striking ``school or school system'' and 
        inserting ``local educational agency (as defined under section 
        9101 of the Elementary and Secondary Education Act of 1965''.
            (8) Section 211(a)(1)(B) of CHIPRA is amended--
                    (A) by striking ``is amended'' and all that follows 
                through ``adding'' and inserting ``is amended by 
                adding''; and
                    (B) by redesignating the new subparagraph to be 
                added by such section to section 1903(a)(3) of the 
                Social Security Act as a new subparagraph (H).
    (b) ARRA.--Effective as if included in the enactment of section 
5006(a) of division B of the American Recovery and Reinvestment Act of 
2009 (Public Law 111-5), the second sentence of section 1916A(a)(1) of 
the Social Security Act (42 U.S.C. 1396o-1(a)(1)) is amended by 
striking ``or (i)'' and inserting ``, (i), or (j)''.

        Subtitle C--Medicaid and CHIP Enrollment Simplification

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

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

``SEC. 1943. ENROLLMENT SIMPLIFICATION AND COORDINATION WITH STATE 
              HEALTH INSURANCE EXCHANGES.

    ``(a) Condition for Participation in Medicaid.--As a condition of 
the State plan under this title and receipt of any Federal financial 
assistance under section 1903(a) for calendar quarters beginning after 
January 1, 2014, a State shall ensure that the requirements of 
subsection (b) is met.
    ``(b) Enrollment Simplification and Coordination With State Health 
Insurance Exchanges and Chip.--
            ``(1) In general.--A State shall establish procedures for--
                    ``(A) enabling individuals, through an Internet 
                website that meets the requirements of paragraph (4), 
                to apply for medical assistance under the State plan or 
                under a waiver of the plan, to be enrolled in the State 
                plan or waiver, to renew their enrollment in the plan 
                or waiver, and to consent to enrollment or reenrollment 
                in the State plan through electronic signature;
                    ``(B) enrolling, without any further determination 
                by the State and through such website, individuals who 
                are identified by an Exchange established by the State 
                under section 1311 of the Patient Protection and 
                Affordable Care Act as being eligible for--
                            ``(i) medical assistance under the State 
                        plan or under a waiver of the plan; or
                            ``(ii) child health assistance under the 
                        State child health plan under title XXI;
                    ``(C) ensuring that individuals who apply for but 
                are determined to be ineligible for medical assistance 
                under the State plan or a waiver or ineligible for 
                child health assistance under the State child health 
                plan under title XXI, are screened for eligibility for 
                enrollment in qualified health plans offered through 
                such an Exchange and, if applicable, premium assistance 
                for the purchase of a qualified health plan under 
                section 36B of the Internal Revenue Code of 1986 (and, 
                if applicable, advance payment of such assistance under 
                section 1412 of the Patient Protection and Affordable 
                Care Act), and, if eligible, enrolled in such a plan 
                without having to submit an additional or separate 
                application, and that such individuals receive 
                information regarding reduced cost-sharing for eligible 
                individuals under section 1402 of the Patient 
                Protection and Affordable Care Act, and any other 
                assistance or subsidies available for coverage obtained 
                through the Exchange;
                    ``(D) ensuring that the State agency responsible 
                for administering the State plan under this title (in 
                this section referred to as the `State Medicaid 
                agency'), the State agency responsible for 
                administering the State child health plan under title 
                XXI (in this section referred to as the `State CHIP 
                agency') and an Exchange established by the State under 
                section 1311 of the Patient Protection and Affordable 
                Care Act utilize a secure electronic interface 
                sufficient to allow for a determination of an 
                individual's eligibility for such medical assistance, 
                child health assistance, or premium assistance, and 
                enrollment in the State plan under this title, title 
                XXI, or a qualified health plan, as appropriate;
                    ``(E) coordinating, for individuals who are 
                enrolled in the State plan or under a waiver of the 
                plan and who are also enrolled in a qualified health 
                plan offered through such an Exchange, and for 
                individuals who are enrolled in the State child health 
                plan under title XXI and who are also enrolled in a 
                qualified health plan, the provision of medical 
                assistance or child health assistance to such 
                individuals with the coverage provided under the 
                qualified health plan in which they are enrolled, 
                including services described in section 1905(a)(4)(B) 
                (relating to early and periodic screening, diagnostic, 
                and treatment services defined in section 1905(r)) and 
                provided in accordance with the requirements of section 
                1902(a)(43); and
                    ``(F) conducting outreach to and enrolling 
                vulnerable and underserved populations eligible for 
                medical assistance under this title XIX or for child 
                health assistance under title XXI, including children, 
                unaccompanied homeless youth, children and youth with 
                special health care needs, pregnant women, racial and 
                ethnic minorities, rural populations, victims of abuse 
                or trauma, individuals with mental health or substance-
                related disorders, and individuals with HIV/AIDS.
            ``(2) Agreements with state health insurance exchanges.--
        The State Medicaid agency and the State CHIP agency may enter 
        into an agreement with an Exchange established by the State 
        under section 1311 of the Patient Protection and Affordable 
        Care Act under which the State Medicaid agency or State CHIP 
        agency may determine whether a State resident is eligible for 
        premium assistance for the purchase of a qualified health plan 
        under section 36B of the Internal Revenue Code of 1986 (and, if 
        applicable, advance payment of such assistance under section 
        1412 of the Patient Protection and Affordable Care Act), so 
        long as the agreement meets such conditions and requirements as 
        the Secretary of the Treasury may prescribe to reduce 
        administrative costs and the likelihood of eligibility errors 
        and disruptions in coverage.
            ``(3) Streamlined enrollment system.--The State Medicaid 
        agency and State CHIP agency shall participate in and comply 
        with the requirements for the system established under section 
        1413 of the Patient Protection and Affordable Care Act 
        (relating to streamlined procedures for enrollment through an 
        Exchange, Medicaid, and CHIP).
            ``(4) Enrollment website requirements.--The procedures 
        established by State under paragraph (1) shall include 
        establishing and having in operation, not later than January 1, 
        2014, an Internet website that is linked to any website of an 
        Exchange established by the State under section 1311 of the 
        Patient Protection and Affordable Care Act and to the State 
        CHIP agency (if different from the State Medicaid agency) and 
        allows an individual who is eligible for medical assistance 
        under the State plan or under a waiver of the plan and who is 
        eligible to receive premium credit assistance for the purchase 
        of a qualified health plan under section 36B of the Internal 
        Revenue Code of 1986 to compare the benefits, premiums, and 
        cost-sharing applicable to the individual under the State plan 
        or waiver with the benefits, premiums, and cost-sharing 
        available to the individual under a qualified health plan 
        offered through such an Exchange, including, in the case of a 
        child, the coverage that would be provided for the child 
        through the State plan or waiver with the coverage that would 
        be provided to the child through enrollment in family coverage 
        under that plan and as supplemental coverage by the State under 
        the State plan or waiver.
            ``(5) Continued need for assessment for home and community-
        based services.--Nothing in paragraph (1) shall limit or modify 
        the requirement that the State assess an individual for 
        purposes of providing home and community-based services under 
        the State plan or under any waiver of such plan for individuals 
        described in subsection (a)(10)(A)(ii)(VI).''.

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

    (a) In General.--Section 1902(a)(47) of the Social Security Act (42 
U.S.C. 1396a(a)(47)) is amended--
            (1) by striking ``at the option of the State, provide'' and 
        inserting ``provide--
                    ``(A) at the option of the State,'';
            (2) by inserting ``and'' after the semicolon; and
            (3) by adding at the end the following:
                    ``(B) that any hospital that is a participating 
                provider under the State plan may elect to be a 
                qualified entity for purposes of determining, on the 
                basis of preliminary information, whether any 
                individual is eligible for medical assistance under the 
                State plan or under a waiver of the plan for purposes 
                of providing the individual with medical assistance 
                during a presumptive eligibility period, in the same 
                manner, and subject to the same requirements, as apply 
                to the State options with respect to populations 
                described in section 1920, 1920A, or 1920B (but without 
                regard to whether the State has elected to provide for 
                a presumptive eligibility period under any such 
                sections), subject to such guidance as the Secretary 
                shall establish;''.
    (b) Conforming Amendment.--Section 1903(u)(1)(D)(v) of such Act (42 
U.S.C. 1396b(u)(1)(D)v)) is amended--
            (1) by striking ``or for'' and inserting ``for''; and
            (2) by inserting before the period at the end the 
        following: ``, or for medical assistance provided to an 
        individual during a presumptive eligibility period resulting 
        from a determination of presumptive eligibility made by a 
        hospital that elects under section 1902(a)(47)(B) to be a 
        qualified entity for such purpose''.
    (c) Effective Date.--The amendments made by this section take 
effect on January 1, 2014, and apply to services furnished on or after 
that date.

             Subtitle D--Improvements to Medicaid Services

SEC. 2301. COVERAGE FOR FREESTANDING BIRTH CENTER SERVICES.

    (a) In General.--Section 1905 of the Social Security Act (42 U.S.C. 
1396d), is amended--
            (1) in subsection (a)--
                    (A) in paragraph (27), by striking ``and'' at the 
                end;
                    (B) by redesignating paragraph (28) as paragraph 
                (29); and
                    (C) by inserting after paragraph (27) the following 
                new paragraph:
            ``(28) freestanding birth center services (as defined in 
        subsection (l)(3)(A)) and other ambulatory services that are 
        offered by a freestanding birth center (as defined in 
        subsection (l)(3)(B)) and that are otherwise included in the 
        plan; and''; and
            (2) in subsection (l), by adding at the end the following 
        new paragraph:
    ``(3)(A) The term `freestanding birth center services' means 
services furnished to an individual at a freestanding birth center (as 
defined in subparagraph (B)) at such center.
    ``(B) The term `freestanding birth center' means a health 
facility--
            ``(i) that is not a hospital;
            ``(ii) where childbirth is planned to occur away from the 
        pregnant woman's residence;
            ``(iii) that is licensed or otherwise approved by the State 
        to provide prenatal labor and delivery or postpartum care and 
        other ambulatory services that are included in the plan; and
            ``(iv) that complies with such other requirements relating 
        to the health and safety of individuals furnished services by 
        the facility as the State shall establish.
    ``(C) A State shall provide separate payments to providers 
administering prenatal labor and delivery or postpartum care in a 
freestanding birth center (as defined in subparagraph (B)), such as 
nurse midwives and other providers of services such as birth attendants 
recognized under State law, as determined appropriate by the Secretary. 
For purposes of the preceding sentence, the term `birth attendant' 
means an individual who is recognized or registered by the State 
involved to provide health care at childbirth and who provides such 
care within the scope of practice under which the individual is legally 
authorized to perform such care under State law (or the State 
regulatory mechanism provided by State law), regardless of whether the 
individual is under the supervision of, or associated with, a physician 
or other health care provider. Nothing in this subparagraph shall be 
construed as changing State law requirements applicable to a birth 
attendant.''.
    (b) Conforming Amendment.--Section 1902(a)(10)(A) of the Social 
Security Act (42 U.S.C. 1396a(a)(10)(A)), is amended in the matter 
preceding clause (i) by striking ``and (21)'' and inserting ``, (21), 
and (28)''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall take effect on the date 
        of the enactment of this Act and shall apply to services 
        furnished on or after such date.
            (2) Exception if state legislation required.--In the case 
        of a State plan for medical assistance under title XIX of the 
        Social Security Act which the Secretary of Health and Human 
        Services determines requires State legislation (other than 
        legislation appropriating funds) in order for the plan to meet 
        the additional requirement imposed by the amendments made by 
        this section, the State plan shall not be regarded as failing 
        to comply with the requirements of such title solely on the 
        basis of its failure to meet this additional requirement before 
        the first day of the first calendar quarter beginning after the 
        close of the first regular session of the State legislature 
        that begins after the date of the enactment of this Act. For 
        purposes of the previous sentence, in the case of a State that 
        has a 2-year legislative session, each year of such session 
        shall be deemed to be a separate regular session of the State 
        legislature.

SEC. 2302. CONCURRENT CARE FOR CHILDREN.

    (a) In General.--Section 1905(o)(1) of the Social Security Act (42 
U.S.C. 1396d(o)(1)) is amended--
            (1) in subparagraph (A), by striking ``subparagraph (B)'' 
        and inserting ``subparagraphs (B) and (C)''; and
            (2) by adding at the end the following new subparagraph:
    ``(C) A voluntary election to have payment made for hospice care 
for a child (as defined by the State) shall not constitute a waiver of 
any rights of the child to be provided with, or to have payment made 
under this title for, services that are related to the treatment of the 
child's condition for which a diagnosis of terminal illness has been 
made.''.
    (b) Application to CHIP.--Section 2110(a)(23) of the Social 
Security Act (42 U.S.C. 1397jj(a)(23)) is amended by inserting 
``(concurrent, in the case of an individual who is a child, with care 
related to the treatment of the child's condition with respect to which 
a diagnosis of terminal illness has been made'' after ``hospice care''.

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

    (a) Coverage as Optional Categorically Needy Group.--
            (1) In general.--Section 1902(a)(10)(A)(ii) of the Social 
        Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)), as amended by 
        section 2001(e), is amended--
                    (A) in subclause (XIX), by striking ``or'' at the 
                end;
                    (B) in subclause (XX), by adding ``or'' at the end; 
                and
                    (C) by adding at the end the following new 
                subclause:
                                    ``(XXI) who are described in 
                                subsection (ii) (relating to 
                                individuals who meet certain income 
                                standards);''.
            (2) Group described.--Section 1902 of such Act (42 U.S.C. 
        1396a), as amended by section 2001(d), is amended by adding at 
        the end the following new subsection:
    ``(ii)(1) Individuals described in this subsection are 
individuals--
                    ``(A) whose income does not exceed an income 
                eligibility level established by the State that does 
                not exceed the highest income eligibility level 
                established under the State plan under this title (or 
                under its State child health plan under title XXI) for 
                pregnant women; and
                    ``(B) who are not pregnant.
            ``(2) At the option of a State, individuals described in 
        this subsection may include individuals who, had individuals 
        applied on or before January 1, 2007, would have been made 
        eligible pursuant to the standards and processes imposed by 
        that State for benefits described in clause (XV) of the matter 
        following subparagraph (G) of section subsection (a)(10) 
        pursuant to a waiver granted under section 1115.
            ``(3) At the option of a State, for purposes of subsection 
        (a)(17)(B), in determining eligibility for services under this 
        subsection, the State may consider only the income of the 
        applicant or recipient.''.
            (3) Limitation on benefits.--Section 1902(a)(10) of the 
        Social Security Act (42 U.S.C. 1396a(a)(10)), as amended by 
        section 2001(a)(5)(A), is amended in the matter following 
        subparagraph (G)--
                    (A) by striking ``and (XV)'' and inserting 
                ``(XV)''; and
                    (B) by inserting ``, and (XVI) the medical 
                assistance made available to an individual described in 
                subsection (ii) shall be limited to family planning 
                services and supplies described in section 
                1905(a)(4)(C) including medical diagnosis and treatment 
                services that are provided pursuant to a family 
                planning service in a family planning setting'' before 
                the semicolon.
            (4) Conforming amendments.--
                    (A) Section 1905(a) of the Social Security Act (42 
                U.S.C. 1396d(a)), as amended by section 2001(e)(2)(A), 
                is amended in the matter preceding paragraph (1)--
                            (i) in clause (xiv), by striking ``or'' at 
                        the end;
                            (ii) in clause (xv), by adding ``or'' at 
                        the end; and
                            (iii) by inserting after clause (xv) the 
                        following:
                            ``(xvi) individuals described in section 
                        1902(ii),''.
                    (B) Section 1903(f)(4) of such Act (42 U.S.C. 
                1396b(f)(4)), as amended by section 2001(e)(2)(B), is 
                amended by inserting ``1902(a)(10)(A)(ii)(XXI),'' after 
                ``1902(a)(10)(A)(ii)(XX),''.
    (b) Presumptive Eligibility.--
            (1) In general.--Title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.) is amended by inserting after section 
        1920B the following:

         ``presumptive eligibility for family planning services

    ``Sec. 1920C.  (a) State Option.--State plan approved under section 
1902 may provide for making medical assistance available to an 
individual described in section 1902(ii) (relating to individuals who 
meet certain income eligibility standard) during a presumptive 
eligibility period. In the case of an individual described in section 
1902(ii), such medical assistance shall be limited to family planning 
services and supplies described in 1905(a)(4)(C) and, at the State's 
option, medical diagnosis and treatment services that are provided in 
conjunction with a family planning service in a family planning 
setting.
    ``(b) Definitions.--For purposes of this section:
            ``(1) Presumptive eligibility period.--The term 
        `presumptive eligibility period' means, with respect to an 
        individual described in subsection (a), the period that--
                    ``(A) begins with the date on which a qualified 
                entity determines, on the basis of preliminary 
                information, that the individual is described in 
                section 1902(ii); and
                    ``(B) ends with (and includes) the earlier of--
                            ``(i) the day on which a determination is 
                        made with respect to the eligibility of such 
                        individual for services under the State plan; 
                        or
                            ``(ii) in the case of such an individual 
                        who does not file an application by the last 
                        day of the month following the month during 
                        which the entity makes the determination 
                        referred to in subparagraph (A), such last day.
            ``(2) Qualified entity.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                term `qualified entity' means any entity that--
                            ``(i) is eligible for payments under a 
                        State plan approved under this title; and
                            ``(ii) is determined by the State agency to 
                        be capable of making determinations of the type 
                        described in paragraph (1)(A).
                    ``(B) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing a State from 
                limiting the classes of entities that may become 
                qualified entities in order to prevent fraud and abuse.
    ``(c) Administration.--
            ``(1) In general.--The State agency shall provide qualified 
        entities with--
                    ``(A) such forms as are necessary for an 
                application to be made by an individual described in 
                subsection (a) for medical assistance under the State 
                plan; and
                    ``(B) information on how to assist such individuals 
                in completing and filing such forms.
            ``(2) Notification requirements.--A qualified entity that 
        determines under subsection (b)(1)(A) that an individual 
        described in subsection (a) is presumptively eligible for 
        medical assistance under a State plan shall--
                    ``(A) notify the State agency of the determination 
                within 5 working days after the date on which 
                determination is made; and
                    ``(B) inform such individual at the time the 
                determination is made that an application for medical 
                assistance is required to be made by not later than the 
                last day of the month following the month during which 
                the determination is made.
            ``(3) Application for medical assistance.--In the case of 
        an individual described in subsection (a) who is determined by 
        a qualified entity to be presumptively eligible for medical 
        assistance under a State plan, the individual shall apply for 
        medical assistance by not later than the last day of the month 
        following the month during which the determination is made.
    ``(d) Payment.--Notwithstanding any other provision of law, medical 
assistance that--
            ``(1) is furnished to an individual described in subsection 
        (a)--
                    ``(A) during a presumptive eligibility period; and
                    ``(B) by a entity that is eligible for payments 
                under the State plan; and
            ``(2) is included in the care and services covered by the 
        State plan,
shall be treated as medical assistance provided by such plan for 
purposes of clause (4) of the first sentence of section 1905(b).''.
            (2) Conforming amendments.--
                    (A) Section 1902(a)(47) of the Social Security Act 
                (42 U.S.C. 1396a(a)(47)), as amended by section 
                2202(a), is amended--
                            (i) in subparagraph (A), by inserting 
                        before the semicolon at the end the following: 
                        ``and provide for making medical assistance 
                        available to individuals described in 
                        subsection (a) of section 1920C during a 
                        presumptive eligibility period in accordance 
                        with such section''; and
                            (ii) in subparagraph (B), by striking ``or 
                        1920B'' and inserting ``1920B, or 1920C''.
                    (B) Section 1903(u)(1)(D)(v) of such Act (42 U.S.C. 
                1396b(u)(1)(D)(v)), as amended by section 2202(b), is 
                amended by inserting ``or for medical assistance 
                provided to an individual described in subsection (a) 
                of section 1920C during a presumptive eligibility 
                period under such section,'' after ``1920B during a 
                presumptive eligibility period under such section,''.
    (c) Clarification of Coverage of Family Planning Services and 
Supplies.--Section 1937(b) of the Social Security Act (42 U.S.C. 1396u-
7(b)), as amended by section 2001(c), is amended by adding at the end 
the following:
            ``(7) Coverage of family planning services and supplies.--
        Notwithstanding the previous provisions of this section, a 
        State may not provide for medical assistance through enrollment 
        of an individual with benchmark coverage or benchmark-
        equivalent coverage under this section unless such coverage 
        includes for any individual described in section 1905(a)(4)(C), 
        medical assistance for family planning services and supplies in 
        accordance with such section.''.
    (d) Effective Date.--The amendments made by this section take 
effect on the date of the enactment of this Act and shall apply to 
items and services furnished on or after such date.

SEC. 2304. CLARIFICATION OF DEFINITION OF MEDICAL ASSISTANCE.

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

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

SEC. 2401. COMMUNITY FIRST CHOICE OPTION.

    Section 1915 of the Social Security Act (42 U.S.C. 1396n) is 
amended by adding at the end the following:
    ``(k) State Plan Option To Provide Home and Community-based 
Attendant Services and Supports.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, beginning October 1, 2010, a State may provide 
        through a State plan amendment for the provision of medical 
        assistance for home and community-based attendant services and 
        supports for individuals who are eligible for medical 
        assistance under the State plan whose income does not exceed 
        150 percent of the poverty line (as defined in section 
        2110(c)(5)) or, if greater, the income level applicable for an 
        individual who has been determined to require an institutional 
        level of care to be eligible for nursing facility services 
        under the State plan and with respect to whom there has been a 
        determination that, but for the provision of such services, the 
        individuals would require the level of care provided in a 
        hospital, a nursing facility, an intermediate care facility for 
        the mentally retarded, or an institution for mental diseases, 
        the cost of which could be reimbursed under the State plan, but 
        only if the individual chooses to receive such home and 
        community-based attendant services and supports, and only if 
        the State meets the following requirements:
                    ``(A) Availability.--The State shall make available 
                home and community-based attendant services and 
                supports to eligible individuals, as needed, to assist 
                in accomplishing activities of daily living, 
                instrumental activities of daily living, and health-
                related tasks through hands-on assistance, supervision, 
                or cueing--
                            ``(i) under a person-centered plan of 
                        services and supports that is based on an 
                        assessment of functional need and that is 
                        agreed to in writing by the individual or, as 
                        appropriate, the individual's representative;
                            ``(ii) in a home or community setting, 
                        which does not include a nursing facility, 
                        institution for mental diseases, or an 
                        intermediate care facility for the mentally 
                        retarded;
                            ``(iii) under an agency-provider model or 
                        other model (as defined in paragraph (6)(C )); 
                        and
                            ``(iv) the furnishing of which--
                                    ``(I) is selected, managed, and 
                                dismissed by the individual, or, as 
                                appropriate, with assistance from the 
                                individual's representative;
                                    ``(II) is controlled, to the 
                                maximum extent possible, by the 
                                individual or where appropriate, the 
                                individual's representative, regardless 
                                of who may act as the employer of 
                                record; and
                                    ``(III) provided by an individual 
                                who is qualified to provide such 
                                services, including family members (as 
                                defined by the Secretary).
                    ``(B) Included services and supports.--In addition 
                to assistance in accomplishing activities of daily 
                living, instrumental activities of daily living, and 
                health related tasks, the home and community-based 
                attendant services and supports made available 
                include--
                            ``(i) the acquisition, maintenance, and 
                        enhancement of skills necessary for the 
                        individual to accomplish activities of daily 
                        living, instrumental activities of daily 
                        living, and health related tasks;
                            ``(ii) back-up systems or mechanisms (such 
                        as the use of beepers or other electronic 
                        devices) to ensure continuity of services and 
                        supports; and
                            ``(iii) voluntary training on how to 
                        select, manage, and dismiss attendants.
                    ``(C) Excluded services and supports.--Subject to 
                subparagraph (D), the home and community-based 
                attendant services and supports made available do not 
                include--
                            ``(i) room and board costs for the 
                        individual;
                            ``(ii) special education and related 
                        services provided under the Individuals with 
                        Disabilities Education Act and vocational 
                        rehabilitation services provided under the 
                        Rehabilitation Act of 1973;
                            ``(iii) assistive technology devices and 
                        assistive technology services other than those 
                        under (1)(B)(ii);
                            ``(iv) medical supplies and equipment; or
                            ``(v) home modifications.
                    ``(D) Permissible services and supports.--The home 
                and community-based attendant services and supports may 
                include--
                            ``(i) expenditures for transition costs 
                        such as rent and utility deposits, first 
                        month's rent and utilities, bedding, basic 
                        kitchen supplies, and other necessities 
                        required for an individual to make the 
                        transition from a nursing facility, institution 
                        for mental diseases, or intermediate care 
                        facility for the mentally retarded to a 
                        community-based home setting where the 
                        individual resides; and
                            ``(ii) expenditures relating to a need 
                        identified in an individual's person-centered 
                        plan of services that increase independence or 
                        substitute for human assistance, to the extent 
                        that expenditures would otherwise be made for 
                        the human assistance.
            ``(2) Increased federal financial participation.--For 
        purposes of payments to a State under section 1903(a)(1), with 
        respect to amounts expended by the State to provide medical 
        assistance under the State plan for home and community-based 
        attendant services and supports to eligible individuals in 
        accordance with this subsection during a fiscal year quarter 
        occurring during the period described in paragraph (1), the 
        Federal medical assistance percentage applicable to the State 
        (as determined under section 1905(b)) shall be increased by 6 
        percentage points.
            ``(3) State requirements.--In order for a State plan 
        amendment to be approved under this subsection, the State 
        shall--
                    ``(A) develop and implement such amendment in 
                collaboration with a Development and Implementation 
                Council established by the State that includes a 
                majority of members with disabilities, elderly 
                individuals, and their representatives and consults and 
                collaborates with such individuals;
                    ``(B) provide consumer controlled home and 
                community-based attendant services and supports to 
                individuals on a statewide basis, in a manner that 
                provides such services and supports in the most 
                integrated setting appropriate to the individual's 
                needs, and without regard to the individual's age, type 
                or nature of disability, severity of disability, or the 
                form of home and community-based attendant services and 
                supports that the individual requires in order to lead 
                an independent life;
                    ``(C) with respect to expenditures during the first 
                full fiscal year in which the State plan amendment is 
                implemented, maintain or exceed the level of State 
                expenditures for medical assistance that is provided 
                under section 1905(a), section 1915, section 1115, or 
                otherwise to individuals with disabilities or elderly 
                individuals attributable to the preceding fiscal year;
                    ``(D) establish and maintain a comprehensive, 
                continuous quality assurance system with respect to 
                community- based attendant services and supports that--
                            ``(i) includes standards for agency-based 
                        and other delivery models with respect to 
                        training, appeals for denials and 
                        reconsideration procedures of an individual 
                        plan, and other factors as determined by the 
                        Secretary;
                            ``(ii) incorporates feedback from consumers 
                        and their representatives, disability 
                        organizations, providers, families of disabled 
                        or elderly individuals, members of the 
                        community, and others and maximizes consumer 
                        independence and consumer control;
                            ``(iii) monitors the health and well-being 
                        of each individual who receives home and 
                        community-based attendant services and 
                        supports, including a process for the mandatory 
                        reporting, investigation, and resolution of 
                        allegations of neglect, abuse, or exploitation 
                        in connection with the provision of such 
                        services and supports; and
                            ``(iv) provides information about the 
                        provisions of the quality assurance required 
                        under clauses (i) through (iii) to each 
                        individual receiving such services; and
                    ``(E) collect and report information, as determined 
                necessary by the Secretary, for the purposes of 
                approving the State plan amendment, providing Federal 
                oversight, and conducting an evaluation under paragraph 
                (5)(A), including data regarding how the State provides 
                home and community-based attendant services and 
                supports and other home and community-based services, 
                the cost of such services and supports, and how the 
                State provides individuals with disabilities who 
                otherwise qualify for institutional care under the 
                State plan or under a waiver the choice to instead 
                receive home and community-based services in lieu of 
                institutional care.
            ``(4) Compliance with certain laws.--A State shall ensure 
        that, regardless of whether the State uses an agency-provider 
        model or other models to provide home and community-based 
        attendant services and supports under a State plan amendment 
        under this subsection, such services and supports are provided 
        in accordance with the requirements of the Fair Labor Standards 
        Act of 1938 and applicable Federal and State laws regarding--
                    ``(A) withholding and payment of Federal and State 
                income and payroll taxes;
                    ``(B) the provision of unemployment and workers 
                compensation insurance;
                    ``(C) maintenance of general liability insurance; 
                and
                    ``(D) occupational health and safety.
            ``(5) Evaluation, data collection, and report to 
        congress.--
                    ``(A) Evaluation.--The Secretary shall conduct an 
                evaluation of the provision of home and community-based 
                attendant services and supports under this subsection 
                in order to determine the effectiveness of the 
                provision of such services and supports in allowing the 
                individuals receiving such services and supports to 
                lead an independent life to the maximum extent 
                possible; the impact on the physical and emotional 
                health of the individuals who receive such services; 
                and an comparative analysis of the costs of services 
                provided under the State plan amendment under this 
                subsection and those provided under institutional care 
                in a nursing facility, institution for mental diseases, 
                or an intermediate care facility for the mentally 
                retarded.
                    ``(B) Data collection.--The State shall provide the 
                Secretary with the following information regarding the 
                provision of home and community-based attendant 
                services and supports under this subsection for each 
                fiscal year for which such services and supports are 
                provided:
                            ``(i) The number of individuals who are 
                        estimated to receive home and community-based 
                        attendant services and supports under this 
                        subsection during the fiscal year.
                            ``(ii) The number of individuals that 
                        received such services and supports during the 
                        preceding fiscal year.
                            ``(iii) The specific number of individuals 
                        served by type of disability, age, gender, 
                        education level, and employment status.
                            ``(iv) Whether the specific individuals 
                        have been previously served under any other 
                        home and community based services program under 
                        the State plan or under a waiver.
                    ``(C) Reports.--Not later than--
                            ``(i) December 31, 2013, the Secretary 
                        shall submit to Congress and make available to 
                        the public an interim report on the findings of 
                        the evaluation under subparagraph (A); and
                            ``(ii) December 31, 2015, the Secretary 
                        shall submit to Congress and make available to 
                        the public a final report on the findings of 
                        the evaluation under subparagraph (A).
            ``(6) Definitions.--In this subsection:
                    ``(A) Activities of daily living.--The term 
                `activities of daily living' includes tasks such as 
                eating, toileting, grooming, dressing, bathing, and 
                transferring.
                    ``(B) Consumer controlled.--The term `consumer 
                controlled' means a method of selecting and providing 
                services and supports that allow the individual, or 
                where appropriate, the individual's representative, 
                maximum control of the home and community-based 
                attendant services and supports, regardless of who acts 
                as the employer of record.
                    ``(C) Delivery models.--
                            ``(i) Agency-provider model.--The term 
                        `agency-provider model' means, with respect to 
                        the provision of home and community-based 
                        attendant services and supports for an 
                        individual, subject to paragraph (4), a method 
                        of providing consumer controlled services and 
                        supports under which entities contract for the 
                        provision of such services and supports.
                            ``(ii) Other models.--The term `other 
                        models' means, subject to paragraph (4), 
                        methods, other than an agency-provider model, 
                        for the provision of consumer controlled 
                        services and supports. Such models may include 
                        the provision of vouchers, direct cash 
                        payments, or use of a fiscal agent to assist in 
                        obtaining services.
                    ``(D) Health-related tasks.--The term `health-
                related tasks' means specific tasks related to the 
                needs of an individual, which can be delegated or 
                assigned by licensed health-care professionals under 
                State law to be performed by an attendant.
                    ``(E) Individual's representative.--The term 
                `individual's representative' means a parent, family 
                member, guardian, advocate, or other authorized 
                representative of an individual
                    ``(F) Instrumental activities of daily living.--The 
                term `instrumental activities of daily living' includes 
                (but is not limited to) meal planning and preparation, 
                managing finances, shopping for food, clothing, and 
                other essential items, performing essential household 
                chores, communicating by phone or other media, and 
                traveling around and participating in the community.''.

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

    (a) Oversight and Assessment of the Administration of Home and 
Community-based Services.--The Secretary of Health and Human Services 
shall promulgate regulations to ensure that all States develop service 
systems that are designed to--
            (1) allocate resources for services in a manner that is 
        responsive to the changing needs and choices of beneficiaries 
        receiving non-institutionally-based long-term services and 
        supports (including such services and supports that are 
        provided under programs other the State Medicaid program), and 
        that provides strategies for beneficiaries receiving such 
        services to maximize their independence, including through the 
        use of client-employed providers;
            (2) provide the support and coordination needed for a 
        beneficiary in need of such services (and their family 
        caregivers or representative, if applicable) to design an 
        individualized, self-directed, community-supported life; and
            (3) improve coordination among, and the regulation of, all 
        providers of such services under federally and State-funded 
        programs in order to--
                    (A) achieve a more consistent administration of 
                policies and procedures across programs in relation to 
                the provision of such services; and
                    (B) oversee and monitor all service system 
                functions to assure--
                            (i) coordination of, and effectiveness of, 
                        eligibility determinations and individual 
                        assessments;
                            (ii) development and service monitoring of 
                        a complaint system, a management system, a 
                        system to qualify and monitor providers, and 
                        systems for role-setting and individual budget 
                        determinations; and
                            (iii) an adequate number of qualified 
                        direct care workers to provide self-directed 
                        personal assistance services.
    (b) Additional State Options.--Section 1915(i) of the Social 
Security Act (42 U.S.C. 1396n(i)) is amended by adding at the end the 
following new paragraphs:
            ``(6) State option to provide home and community-based 
        services to individuals eligible for services under a waiver.--
                    ``(A) In general.--A State that provides home and 
                community-based services in accordance with this 
                subsection to individuals who satisfy the needs-based 
                criteria for the receipt of such services established 
                under paragraph (1)(A) may, in addition to continuing 
                to provide such services to such individuals, elect to 
                provide home and community-based services in accordance 
                with the requirements of this paragraph to individuals 
                who are eligible for home and community-based services 
                under a waiver approved for the State under subsection 
                (c), (d), or (e) or under section 1115 to provide such 
                services, but only for those individuals whose income 
                does not exceed 300 percent of the supplemental 
                security income benefit rate established by section 
                1611(b)(1).
                    ``(B) Application of same requirements for 
                individuals satisfying needs-based criteria.--Subject 
                to subparagraph (C), a State shall provide home and 
                community-based services to individuals under this 
                paragraph in the same manner and subject to the same 
                requirements as apply under the other paragraphs of 
                this subsection to the provision of home and community-
                based services to individuals who satisfy the needs-
                based criteria established under paragraph (1)(A).
                    ``(C) Authority to offer different type, amount, 
                duration, or scope of home and community-based 
                services.--A State may offer home and community-based 
                services to individuals under this paragraph that 
                differ in type, amount, duration, or scope from the 
                home and community-based services offered for 
                individuals who satisfy the needs-based criteria 
                established under paragraph (1)(A), so long as such 
                services are within the scope of services described in 
                paragraph (4)(B) of subsection (c) for which the 
                Secretary has the authority to approve a waiver and do 
                not include room or board.
            ``(7) State option to offer home and community-based 
        services to specific, targeted populations.--
                    ``(A) In general.--A State may elect in a State 
                plan amendment under this subsection to target the 
                provision of home and community-based services under 
                this subsection to specific populations and to differ 
                the type, amount, duration, or scope of such services 
                to such specific populations.
                    ``(B) 5-year term.--
                            ``(i) In general.--An election by a State 
                        under this paragraph shall be for a period of 5 
                        years.
                            ``(ii) Phase-in of services and eligibility 
                        permitted during initial 5-year period.--A 
                        State making an election under this paragraph 
                        may, during the first 5-year period for which 
                        the election is made, phase-in the enrollment 
                        of eligible individuals, or the provision of 
                        services to such individuals, or both, so long 
                        as all eligible individuals in the State for 
                        such services are enrolled, and all such 
                        services are provided, before the end of the 
                        initial 5-year period.
                    ``(C) Renewal.--An election by a State under this 
                paragraph may be renewed for additional 5-year terms if 
                the Secretary determines, prior to beginning of each 
                such renewal period, that the State has--
                            ``(i) adhered to the requirements of this 
                        subsection and paragraph in providing services 
                        under such an election; and
                            ``(ii) met the State's objectives with 
                        respect to quality improvement and beneficiary 
                        outcomes.''.
    (c) Removal of Limitation on Scope of Services.--Paragraph (1) of 
section 1915(i) of the Social Security Act (42 U.S.C. 1396n(i)), as 
amended by subsection (a), is amended by striking ``or such other 
services requested by the State as the Secretary may approve''.
    (d) Optional Eligibility Category To Provide Full Medicaid Benefits 
to Individuals Receiving Home and Community-based Services Under a 
State Plan Amendment.--
            (1) In general.--Section 1902(a)(10)(A)(ii) of the Social 
        Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)), as amended by 
        section 2304(a)(1), is amended--
                    (A) in subclause (XX), by striking ``or'' at the 
                end;
                    (B) in subclause (XXI), by adding ``or'' at the 
                end; and
                    (C) by inserting after subclause (XXI), the 
                following new subclause:
                                    ``(XXII) who are eligible for home 
                                and community-based services under 
                                needs-based criteria established under 
                                paragraph (1)(A) of section 1915(i), or 
                                who are eligible for home and 
                                community-based services under 
                                paragraph (6) of such section, and who 
                                will receive home and community-based 
                                services pursuant to a State plan 
                                amendment under such subsection;''.
            (2) Conforming amendments.--
                    (A) Section 1903(f)(4) of the Social Security Act 
                (42 U.S.C. 1396b(f)(4)), as amended by section 
                2304(a)(4)(B), is amended in the matter preceding 
                subparagraph (A), by inserting 
                ``1902(a)(10)(A)(ii)(XXII),'' after 
                ``1902(a)(10)(A)(ii)(XXI),''.
                    (B) Section 1905(a) of the Social Security Act (42 
                U.S.C. 1396d(a)), as so amended, is amended in the 
                matter preceding paragraph (1)--
                            (i) in clause (xv), by striking ``or'' at 
                        the end;
                            (ii) in clause (xvi), by adding ``or'' at 
                        the end; and
                            (iii) by inserting after clause (xvi) the 
                        following new clause:
            ``(xvii) individuals who are eligible for home and 
        community-based services under needs-based criteria established 
        under paragraph (1)(A) of section 1915(i), or who are eligible 
        for home and community-based services under paragraph (6) of 
        such section, and who will receive home and community-based 
        services pursuant to a State plan amendment under such 
        subsection,''.
    (e) Elimination of Option To Limit Number of Eligible Individuals 
or Length of Period for Grandfathered Individuals if Eligibility 
Criteria Is Modified.--Paragraph (1) of section 1915(i) of such Act (42 
U.S.C. 1396n(i)) is amended--
            (1) by striking subparagraph (C) and inserting the 
        following:
                    ``(C) Projection of number of individuals to be 
                provided home and community-based services.--The State 
                submits to the Secretary, in such form and manner, and 
                upon such frequency as the Secretary shall specify, the 
                projected number of individuals to be provided home and 
                community-based services.''; and
            (2) in subclause (II) of subparagraph (D)(ii), by striking 
        ``to be eligible for such services for a period of at least 12 
        months beginning on the date the individual first received 
        medical assistance for such services'' and inserting ``to 
        continue to be eligible for such services after the effective 
        date of the modification and until such time as the individual 
        no longer meets the standard for receipt of such services under 
        such pre-modified criteria''.
    (f) Elimination of Option To Waive Statewideness; Addition of 
Option To Waive Comparability.--Paragraph (3) of section 1915(i) of 
such Act (42 U.S.C. 1396n(3)) is amended by striking ``1902(a)(1) 
(relating to statewideness)'' and inserting ``1902(a)(10)(B) (relating 
to comparability)''.
    (g) Effective Date.--The amendments made by subsections (b) through 
(f) take effect on the first day of the first fiscal year quarter that 
begins after the date of enactment of this Act.

SEC. 2403. MONEY FOLLOWS THE PERSON REBALANCING DEMONSTRATION.

    (a) Extension of Demonstration.--
            (1) In general.--Section 6071(h) of the Deficit Reduction 
        Act of 2005 (42 U.S.C. 1396a note) is amended--
                    (A) in paragraph (1)(E), by striking ``fiscal year 
                2011'' and inserting ``each of fiscal years 2011 
                through 2016''; and
                    (B) in paragraph (2), by striking ``2011'' and 
                inserting ``2016''.
            (2) Evaluation.--Paragraphs (2) and (3) of section 6071(g) 
        of such Act is amended are each amended by striking ``2011'' 
        and inserting ``2016''.
    (b) Reduction of Institutional Residency Period.--
            (1) In general.--Section 6071(b)(2) of the Deficit 
        Reduction Act of 2005 (42 U.S.C. 1396a note) is amended--
                    (A) in subparagraph (A)(i), by striking ``, for a 
                period of not less than 6 months or for such longer 
                minimum period, not to exceed 2 years, as may be 
                specified by the State'' and inserting ``for a period 
                of not less than 90 consecutive days''; and
                    (B) by adding at the end the following:
        ``Any days that an individual resides in an institution on the 
        basis of having been admitted solely for purposes of receiving 
        short-term rehabilitative services for a period for which 
        payment for such services is limited under title XVIII shall 
        not be taken into account for purposes of determining the 90-
        day period required under subparagraph (A)(i).''.
            (2) Effective date.--The amendments made by this subsection 
        take effect 30 days after the date of enactment of this Act.

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

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

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

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

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

    (a) Findings.--The Senate makes the following findings:
            (1) Nearly 2 decades have passed since Congress seriously 
        considered long-term care reform. The United States Bipartisan 
        Commission on Comprehensive Health Care, also know as the 
        ``Pepper Commission'', released its ``Call for Action'' 
        blueprint for health reform in September 1990. In the 20 years 
        since those recommendations were made, Congress has never acted 
        on the report.
            (2) In 1999, under the United States Supreme Court's 
        decision in Olmstead v. L.C., 527 U.S. 581 (1999), individuals 
        with disabilities have the right to choose to receive their 
        long-term services and supports in the community, rather than 
        in an institutional setting.
            (3) Despite the Pepper Commission and Olmstead decision, 
        the long-term care provided to our Nation's elderly and 
        disabled has not improved. In fact, for many, it has gotten far 
        worse.
            (4) In 2007, 69 percent of Medicaid long-term care spending 
        for elderly individuals and adults with physical disabilities 
        paid for institutional services. Only 6 states spent 50 percent 
        or more of their Medicaid long-term care dollars on home and 
        community-based services for elderly individuals and adults 
        with physical disabilities while \1/2\ of the States spent less 
        than 25 percent. This disparity continues even though, on 
        average, it is estimated that Medicaid dollars can support 
        nearly 3 elderly individuals and adults with physical 
        disabilities in home and community-based services for every 
        individual in a nursing home. Although every State has chosen 
        to provide certain services under home and community-based 
        waivers, these services are unevenly available within and 
        across States, and reach a small percentage of eligible 
        individuals.
    (b) Sense of the Senate.--It is the sense of the Senate that--
            (1) during the 111th session of Congress, Congress should 
        address long-term services and supports in a comprehensive way 
        that guarantees elderly and disabled individuals the care they 
        need; and
            (2) long term services and supports should be made 
        available in the community in addition to in institutions.

            Subtitle F--Medicaid Prescription Drug Coverage

SEC. 2501. PRESCRIPTION DRUG REBATES.

    (a) Increase in Minimum Rebate Percentage for Single Source Drugs 
and Innovator Multiple Source Drugs.--
            (1) In general.--Section 1927(c)(1)(B) of the Social 
        Security Act (42 U.S.C. 1396r-8(c)(1)(B)) is amended--
                    (A) in clause (i)--
                            (i) in subclause (IV), by striking ``and'' 
                        at the end;
                            (ii) in subclause (V)--
                                    (I) by inserting ``and before 
                                January 1, 2010'' after ``December 31, 
                                1995,''; and
                                    (II) by striking the period at the 
                                end and inserting ``; and''; and
                            (iii) by adding at the end the following 
                        new subclause:
                                    ``(VI) except as provided in clause 
                                (iii), after December 31, 2009, 23.1 
                                percent.''; and
                    (B) by adding at the end the following new clause:
                            ``(iii) Minimum rebate percentage for 
                        certain drugs.--
                                    ``(I) In general.--In the case of a 
                                single source drug or an innovator 
                                multiple source drug described in 
                                subclause (II), the minimum rebate 
                                percentage for rebate periods specified 
                                in clause (i)(VI) is 17.1 percent.
                                    ``(II) Drug described.--For 
                                purposes of subclause (I), a single 
                                source drug or an innovator multiple 
                                source drug described in this subclause 
                                is any of the following drugs:
                                            ``(aa) A clotting factor 
                                        for which a separate furnishing 
                                        payment is made under section 
                                        1842(o)(5) and which is 
                                        included on a list of such 
                                        factors specified and updated 
                                        regularly by the Secretary.
                                            ``(bb) A drug approved by 
                                        the Food and Drug 
                                        Administration exclusively for 
                                        pediatric indications.''.
            (2) Recapture of total savings due to increase.--Section 
        1927(b)(1) of such Act (42 U.S.C. 1396r-8(b)(1)) is amended by 
        adding at the end the following new subparagraph:
                    ``(C) Special rule for increased minimum rebate 
                percentage.--
                            ``(i) In general.--In addition to the 
                        amounts applied as a reduction under 
                        subparagraph (B), for rebate periods beginning 
                        on or after January 1, 2010, during a fiscal 
                        year, the Secretary shall reduce payments to a 
                        State under section 1903(a) in the manner 
                        specified in clause (ii), in an amount equal to 
                        the product of--
                                    ``(I) 100 percent minus the Federal 
                                medical assistance percentage 
                                applicable to the rebate period for the 
                                State; and
                                    ``(II) the amounts received by the 
                                State under such subparagraph that are 
                                attributable (as estimated by the 
                                Secretary based on utilization and 
                                other data) to the increase in the 
                                minimum rebate percentage effected by 
                                the amendments made by subsections 
                                (a)(1), (b), and (d) of section 2501 of 
                                the Patient Protection and Affordable 
                                Care Act, taking into account the 
                                additional drugs included under the 
                                amendments made by subsection (c) of 
                                section 2501 of such Act.
                        The Secretary shall adjust such payment 
                        reduction for a calendar quarter to the extent 
                        the Secretary determines, based upon subsequent 
                        utilization and other data, that the reduction 
                        for such quarter was greater or less than the 
                        amount of payment reduction that should have 
                        been made.
                            ``(ii) Manner of payment reduction.--The 
                        amount of the payment reduction under clause 
                        (i) for a State for a quarter shall be deemed 
                        an overpayment to the State under this title to 
                        be disallowed against the State's regular 
                        quarterly draw for all Medicaid spending under 
                        section 1903(d)(2). Such a disallowance is not 
                        subject to a reconsideration under section 
                        1116(d).''.
    (b) Increase in Rebate for Other Drugs.--Section 1927(c)(3)(B) of 
such Act (42 U.S.C. 1396r-8(c)(3)(B)) is amended--
            (1) in clause (i), by striking ``and'' at the end;
            (2) in clause (ii)--
                    (A) by inserting ``and before January 1, 2010,'' 
                after ``December 31, 1993,''; and
                    (B) by striking the period and inserting ``; and''; 
                and
            (3) by adding at the end the following new clause:
                            ``(iii) after December 31, 2009, is 13 
                        percent.''.
    (c) Extension of Prescription Drug Discounts to Enrollees of 
Medicaid Managed Care Organizations.--
            (1) In general.--Section 1903(m)(2)(A) of such Act (42 
        U.S.C. 1396b(m)(2)(A)) is amended--
                    (A) in clause (xi), by striking ``and'' at the end;
                    (B) in clause (xii), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
                            ``(xiii) such contract provides that (I) 
                        covered outpatient drugs dispensed to 
                        individuals eligible for medical assistance who 
                        are enrolled with the entity shall be subject 
                        to the same rebate required by the agreement 
                        entered into under section 1927 as the State is 
                        subject to and that the State shall collect 
                        such rebates from manufacturers, (II) 
                        capitation rates paid to the entity shall be 
                        based on actual cost experience related to 
                        rebates and subject to the Federal regulations 
                        requiring actuarially sound rates, and (III) 
                        the entity shall report to the State, on such 
                        timely and periodic basis as specified by the 
                        Secretary in order to include in the 
                        information submitted by the State to a 
                        manufacturer and the Secretary under section 
                        1927(b)(2)(A), information on the total number 
                        of units of each dosage form and strength and 
                        package size by National Drug Code of each 
                        covered outpatient drug dispensed to 
                        individuals eligible for medical assistance who 
                        are enrolled with the entity and for which the 
                        entity is responsible for coverage of such drug 
                        under this subsection (other than covered 
                        outpatient drugs that under subsection (j)(1) 
                        of section 1927 are not subject to the 
                        requirements of that section) and such other 
                        data as the Secretary determines necessary to 
                        carry out this subsection.''.
            (2) Conforming amendments.--Section 1927 (42 U.S.C. 1396r-
        8) is amended--
                    (A) in subsection (b)--
                            (i) in paragraph (1)(A), in the first 
                        sentence, by inserting ``, including such drugs 
                        dispensed to individuals enrolled with a 
                        medicaid managed care organization if the 
                        organization is responsible for coverage of 
                        such drugs'' before the period; and
                            (ii) in paragraph (2)(A), by inserting 
                        ``including such information reported by each 
                        medicaid managed care organization,'' after 
                        ``for which payment was made under the plan 
                        during the period,''; and
                    (B) in subsection (j), by striking paragraph (1) 
                and inserting the following:
            ``(1) Covered outpatient drugs are not subject to the 
        requirements of this section if such drugs are--
                    ``(A) dispensed by health maintenance 
                organizations, including Medicaid managed care 
                organizations that contract under section 1903(m); and
                    ``(B) subject to discounts under section 340B of 
                the Public Health Service Act.''.
    (d) Additional Rebate for New Formulations of Existing Drugs.--
            (1) In general.--Section 1927(c)(2) of the Social Security 
        Act (42 U.S.C. 1396r-8(c)(2)) is amended by adding at the end 
        the following new subparagraph:
                    ``(C) Treatment of new formulations.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), in the case of a drug that is a 
                        new formulation, such as an extended-release 
                        formulation, of a single source drug or an 
                        innovator multiple source drug, the rebate 
                        obligation with respect to the drug under this 
                        section shall be the amount computed under this 
                        section for the new formulation of the drug or, 
                        if greater, the product of--
                                    ``(I) the average manufacturer 
                                price for each dosage form and strength 
                                of the new formulation of the single 
                                source drug or innovator multiple 
                                source drug;
                                    ``(II) the highest additional 
                                rebate (calculated as a percentage of 
                                average manufacturer price) under this 
                                section for any strength of the 
                                original single source drug or 
                                innovator multiple source drug; and
                                    ``(III) the total number of units 
                                of each dosage form and strength of the 
                                new formulation paid for under the 
                                State plan in the rebate period (as 
                                reported by the State).
                            ``(ii) No application to new formulations 
                        of orphan drugs.--Clause (i) shall not apply to 
                        a new formulation of a covered outpatient drug 
                        that is or has been designated under section 
                        526 of the Federal Food, Drug, and Cosmetic Act 
                        (21 U.S.C. 360bb) for a rare disease or 
                        condition, without regard to whether the period 
                        of market exclusivity for the drug under 
                        section 527 of such Act has expired or the 
                        specific indication for use of the drug.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to drugs that are paid for by a State after 
        December 31, 2009.
    (e) Maximum Rebate Amount.--Section 1927(c)(2) of such Act (42 
U.S.C. 1396r-8(c)(2)), as amended by subsection (d), is amended by 
adding at the end the following new subparagraph:
                    ``(D) Maximum rebate amount.--In no case shall the 
                sum of the amounts applied under paragraph (1)(A)(ii) 
                and this paragraph with respect to each dosage form and 
                strength of a single source drug or an innovator 
                multiple source drug for a rebate period beginning 
                after December 31, 2009, exceed 100 percent of the 
                average manufacturer price of the drug.''.
    (f) Conforming Amendments.--
            (1) In general.--Section 340B of the Public Health Service 
        Act (42 U.S.C. 256b) is amended--
                    (A) in subsection (a)(2)(B)(i), by striking 
                ``1927(c)(4)'' and inserting ``1927(c)(3)''; and
                    (B) by striking subsection (c); and
                    (C) redesignating subsection (d) as subsection (c).
            (2) Effective date.--The amendments made by this subsection 
        take effect on January 1, 2010.

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

    (a) In General.--Section 1927(d) of the Social Security Act (42 
U.S.C. 1397r-8(d)) is amended--
            (1) in paragraph (2)--
                    (A) by striking subparagraphs (E), (I), and (J), 
                respectively; and
                    (B) by redesignating subparagraphs (F), (G), (H), 
                and (K) as subparagraphs (E), (F), (G), and (H), 
                respectively; and
            (2) by adding at the end the following new paragraph:
            ``(7) Non-excludable drugs.--The following drugs or classes 
        of drugs, or their medical uses, shall not be excluded from 
        coverage:
                    ``(A) Agents when used to promote smoking 
                cessation, including agents approved by the Food and 
                Drug Administration under the over-the-counter 
                monograph process for purposes of promoting, and when 
                used to promote, tobacco cessation.
                    ``(B) Barbiturates.
                    ``(C) Benzodiazepines.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after January 1, 2014.

SEC. 2503. PROVIDING ADEQUATE PHARMACY REIMBURSEMENT.

    (a) Pharmacy Reimbursement Limits.--
            (1) In general.--Section 1927(e) of the Social Security Act 
        (42 U.S.C. 1396r-8(e)) is amended--
                    (A) in paragraph (4), by striking ``(or, effective 
                January 1, 2007, two or more)''; and
                    (B) by striking paragraph (5) and inserting the 
                following:
            ``(5) Use of amp in upper payment limits.--The Secretary 
        shall calculate the Federal upper reimbursement limit 
        established under paragraph (4) as no less than 175 percent of 
        the weighted average (determined on the basis of utilization) 
        of the most recently reported monthly average manufacturer 
        prices for pharmaceutically and therapeutically equivalent 
        multiple source drug products that are available for purchase 
        by retail community pharmacies on a nationwide basis. The 
        Secretary shall implement a smoothing process for average 
        manufacturer prices. Such process shall be similar to the 
        smoothing process used in determining the average sales price 
        of a drug or biological under section 1847A.''.
            (2) Definition of amp.--Section 1927(k)(1) of such Act (42 
        U.S.C. 1396r-8(k)(1)) is amended--
                    (A) in subparagraph (A), by striking ``by'' and all 
                that follows through the period and inserting ``by--
                            ``(i) wholesalers for drugs distributed to 
                        retail community pharmacies; and
                            ``(ii) retail community pharmacies that 
                        purchase drugs directly from the 
                        manufacturer.''; and
                    (B) by striking subparagraph (B) and inserting the 
                following:
                    ``(B) Exclusion of customary prompt pay discounts 
                and other payments.--
                            ``(i) In general.--The average manufacturer 
                        price for a covered outpatient drug shall 
                        exclude--
                                    ``(I) customary prompt pay 
                                discounts extended to wholesalers;
                                    ``(II) bona fide service fees paid 
                                by manufacturers to wholesalers or 
                                retail community pharmacies, including 
                                (but not limited to) distribution 
                                service fees, inventory management 
                                fees, product stocking allowances, and 
                                fees associated with administrative 
                                services agreements and patient care 
                                programs (such as medication compliance 
                                programs and patient education 
                                programs);
                                    ``(III) reimbursement by 
                                manufacturers for recalled, damaged, 
                                expired, or otherwise unsalable 
                                returned goods, including (but not 
                                limited to) reimbursement for the cost 
                                of the goods and any reimbursement of 
                                costs associated with return goods 
                                handling and processing, reverse 
                                logistics, and drug destruction; and
                                    ``(IV) payments received from, and 
                                rebates or discounts provided to, 
                                pharmacy benefit managers, managed care 
                                organizations, health maintenance 
                                organizations, insurers, hospitals, 
                                clinics, mail order pharmacies, long 
                                term care providers, manufacturers, or 
                                any other entity that does not conduct 
                                business as a wholesaler or a retail 
                                community pharmacy.
                            ``(ii) Inclusion of other discounts and 
                        payments.--Notwithstanding clause (i), any 
                        other discounts, rebates, payments, or other 
                        financial transactions that are received by, 
                        paid by, or passed through to, retail community 
                        pharmacies shall be included in the average 
                        manufacturer price for a covered outpatient 
                        drug.''; and
                    (C) in subparagraph (C), by striking ``the retail 
                pharmacy class of trade'' and inserting ``retail 
                community pharmacies''.
            (3) Definition of multiple source drug.--Section 1927(k)(7) 
        of such Act (42 U.S.C. 1396r-8(k)(7)) is amended--
                    (A) in subparagraph (A)(i)(III), by striking ``the 
                State'' and inserting ``the United States''; and
                    (B) in subparagraph (C)--
                            (i) in clause (i), by inserting ``and'' 
                        after the semicolon;
                            (ii) in clause (ii), by striking ``; and'' 
                        and inserting a period; and
                            (iii) by striking clause (iii).
            (4) Definitions of retail community pharmacy; wholesaler.--
        Section 1927(k) of such Act (42 U.S.C. 1396r-8(k)) is amended 
        by adding at the end the following new paragraphs:
            ``(10) Retail community pharmacy.--The term `retail 
        community pharmacy' means an independent pharmacy, a chain 
        pharmacy, a supermarket pharmacy, or a mass merchandiser 
        pharmacy that is licensed as a pharmacy by the State and that 
        dispenses medications to the general public at retail prices. 
        Such term does not include a pharmacy that dispenses 
        prescription medications to patients primarily through the 
        mail, nursing home pharmacies, long-term care facility 
        pharmacies, hospital pharmacies, clinics, charitable or not-
        for-profit pharmacies, government pharmacies, or pharmacy 
        benefit managers.
            ``(11) Wholesaler.--The term `wholesaler' means a drug 
        wholesaler that is engaged in wholesale distribution of 
        prescription drugs to retail community pharmacies, including 
        (but not limited to) manufacturers, repackers, distributors, 
        own-label distributors, private-label distributors, jobbers, 
        brokers, warehouses (including manufacturer's and distributor's 
        warehouses, chain drug warehouses, and wholesale drug 
        warehouses) independent wholesale drug traders, and retail 
        community pharmacies that conduct wholesale distributions.''.
    (b) Disclosure of Price Information to the Public.--Section 
1927(b)(3) of such Act (42 U.S.C. 1396r-8(b)(3)) is amended--
            (1) in subparagraph (A)--
                    (A) in the first sentence, by inserting after 
                clause (iii) the following:
                            ``(iv) not later than 30 days after the 
                        last day of each month of a rebate period under 
                        the agreement, on the manufacturer's total 
                        number of units that are used to calculate the 
                        monthly average manufacturer price for each 
                        covered outpatient drug;''; and
                    (B) in the second sentence, by inserting 
                ``(relating to the weighted average of the most 
                recently reported monthly average manufacturer 
                prices)'' after ``(D)(v)''; and
            (2) in subparagraph (D)(v), by striking ``average 
        manufacturer prices'' and inserting ``the weighted average of 
        the most recently reported monthly average manufacturer prices 
        and the average retail survey price determined for each 
        multiple source drug in accordance with subsection (f)''.
    (c) Clarification of Application of Survey of Retail Prices.--
Section 1927(f)(1) of such Act (42 U.S.C. 1396r-8(b)(1)) is amended--
            (1) in subparagraph (A)(i), by inserting ``with respect to 
        a retail community pharmacy,'' before ``the determination''; 
        and
            (2) in subparagraph (C)(ii), by striking ``retail 
        pharmacies'' and inserting ``retail community pharmacies''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the first day of the first calendar year quarter that begins 
at least 180 days after the date of enactment of this Act, without 
regard to whether or not final regulations to carry out such amendments 
have been promulgated by such date.

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

SEC. 2551. DISPROPORTIONATE SHARE HOSPITAL PAYMENTS.

    (a) In General.--Section 1923(f) of the Social Security Act (42 
U.S.C. 1396r-4(f)) is amended--
            (1) in paragraph (1), by striking ``and (3)'' and inserting 
        ``, (3), and (7)'';
            (2) in paragraph (3)(A), by striking ``paragraph (6)'' and 
        inserting ``paragraphs (6) and (7)'';
            (3) by redesignating paragraph (7) as paragraph (8); and
            (4) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) Reduction of state dsh allotments once reduction in 
        uninsured threshold reached.--
                    ``(A) In general.--Subject to subparagraph (E), the 
                DSH allotment for a State for fiscal years beginning 
                with the fiscal year described in subparagraph (C) 
                (with respect to the State), is equal to--
                            ``(i) in the case of the first fiscal year 
                        described in subparagraph (C) with respect to a 
                        State, the DSH allotment that would be 
                        determined under this subsection for the State 
                        for the fiscal year without application of this 
                        paragraph (but after the application of 
                        subparagraph (D)), reduced by the applicable 
                        percentage determined for the State for the 
                        fiscal year under subparagraph (B)(i); and
                            ``(ii) in the case of any subsequent fiscal 
                        year with respect to the State, the DSH 
                        allotment determined under this paragraph for 
                        the State for the preceding fiscal year, 
                        reduced by the applicable percentage determined 
                        for the State for the fiscal year under 
                        subparagraph (B)(ii).
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage for a State 
                for a fiscal year is the following:
                            ``(i) Uninsured reduction threshold fiscal 
                        year.--In the case of the first fiscal year 
                        described in subparagraph (C) with respect to 
                        the State--
                                    ``(I) if the State is a low DSH 
                                State described in paragraph (5)(B), 
                                the applicable percentage is equal to 
                                25 percent; and
                                    ``(II) if the State is any other 
                                State, the applicable percentage is 50 
                                percent.
                            ``(ii) Subsequent fiscal years in which the 
                        percentage of uninsured decreases.--In the case 
                        of any fiscal year after the first fiscal year 
                        described in subparagraph (C) with respect to a 
                        State, if the Secretary determines on the basis 
                        of the most recent American Community Survey of 
                        the Bureau of the Census, that the percentage 
                        of uncovered individuals residing in the State 
                        is less than the percentage of such individuals 
                        determined for the State for the preceding 
                        fiscal year--
                                    ``(I) if the State is a low DSH 
                                State described in paragraph (5)(B), 
                                the applicable percentage is equal to 
                                the product of the percentage reduction 
                                in uncovered individuals for the fiscal 
                                year from the preceding fiscal year and 
                                25 percent; and
                                    ``(II) if the State is any other 
                                State, the applicable percentage is 
                                equal to the product of the percentage 
                                reduction in uncovered individuals for 
                                the fiscal year from the preceding 
                                fiscal year and 50 percent.
                    ``(C) Fiscal year described.--For purposes of 
                subparagraph (A), the fiscal year described in this 
                subparagraph with respect to a State is the first 
                fiscal year that occurs after fiscal year 2012 for 
                which the Secretary determines, on the basis of the 
                most recent American Community Survey of the Bureau of 
                the Census, that the percentage of uncovered 
                individuals residing in the State is at least 45 
                percent less than the percentage of such individuals 
                determined for the State for fiscal year 2009.
                    ``(D) Exclusion of portions diverted for coverage 
                expansions.--For purposes of applying the applicable 
                percentage reduction under subparagraph (A) to the DSH 
                allotment for a State for a fiscal year, the DSH 
                allotment for a State that would be determined under 
                this subsection for the State for the fiscal year 
                without the application of this paragraph (and prior to 
                any such reduction) shall not include any portion of 
                the allotment for which the Secretary has approved the 
                State's diversion to the costs of providing medical 
                assistance or other health benefits coverage under a 
                waiver that is in effect on July 2009.
                    ``(E) Minimum allotment.--In no event shall the DSH 
                allotment determined for a State in accordance with 
                this paragraph for fiscal year 2013 or any succeeding 
                fiscal year be less than the amount equal to 35 percent 
                of the DSH allotment determined for the State for 
                fiscal year 2012 under this subsection (and after the 
                application of this paragraph, if applicable), 
                increased by the percentage change in the consumer 
                price index for all urban consumers (all items, U.S. 
                city average) for each previous fiscal year occurring 
                before the fiscal year.
                    ``(F) Uncovered individuals.--In this paragraph, 
                the term `uncovered individuals' means individuals with 
                no health insurance coverage at any time during a year 
                (as determined by the Secretary based on the most 
                recent data available).''.
    (b) Effective Date.--The amendments made by subsection (a) take 
effect on October 1, 2011.

   Subtitle H--Improved Coordination for Dual Eligible Beneficiaries

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

    (a) In General.--Section 1915(h) of the Social Security Act (42 
U.S.C. 1396n(h)) is amended--
            (1) by inserting ``(1)'' after ``(h)'';
            (2) by inserting ``, or a waiver described in paragraph 
        (2)'' after ``(e)''; and
            (3) by adding at the end the following new paragraph:
    ``(2)(A) Notwithstanding subsections (c)(3) and (d) (3), any waiver 
under subsection (b), (c), or (d), or a waiver under section 1115, that 
provides medical assistance for dual eligible individuals (including 
any such waivers under which non dual eligible individuals may be 
enrolled in addition to dual eligible individuals) may be conducted for 
a period of 5 years and, upon the request of the State, may be extended 
for additional 5-year periods unless the Secretary determines that for 
the previous waiver period the conditions for the waiver have not been 
met or it would no longer be cost-effective and efficient, or 
consistent with the purposes of this title, to extend the waiver.
    ``(B) In this paragraph, the term `dual eligible individual' means 
an individual who is entitled to, or enrolled for, benefits under part 
A of title XVIII, or enrolled for benefits under part B of title XVIII, 
and is eligible for medical assistance under the State plan under this 
title or under a waiver of such plan.''.
    (b) Conforming Amendments.--
            (1) Section 1915 of such Act (42 U.S.C. 1396n) is amended--
                    (A) in subsection (b), by adding at the end the 
                following new sentence: ``Subsection (h)(2) shall apply 
                to a waiver under this subsection.'';
                    (B) in subsection (c)(3), in the second sentence, 
                by inserting ``(other than a waiver described in 
                subsection (h)(2))'' after ``A waiver under this 
                subsection'';
                    (C) in subsection (d)(3), in the second sentence, 
                by inserting ``(other than a waiver described in 
                subsection (h)(2))'' after ``A waiver under this 
                subsection''.
            (2) Section 1115 of such Act (42 U.S.C. 1315) is amended--
                    (A) in subsection (e)(2), by inserting ``(5 years, 
                in the case of a waiver described in section 
                1915(h)(2))'' after ``3 years''; and
                    (B) in subsection (f)(6), by inserting ``(5 years, 
                in the case of a waiver described in section 
                1915(h)(2))'' after ``3 years''.

SEC. 2602. PROVIDING FEDERAL COVERAGE AND PAYMENT COORDINATION FOR DUAL 
              ELIGIBLE BENEFICIARIES.

    (a) Establishment of Federal Coordinated Health Care Office.--
            (1) In general.--Not later than March 1, 2010, the 
        Secretary of Health and Human Services (in this section 
        referred to as the ``Secretary'') shall establish a Federal 
        Coordinated Health Care Office.
            (2) Establishment and reporting to cms administrator.--The 
        Federal Coordinated Health Care Office--
                    (A) shall be established within the Centers for 
                Medicare & Medicaid Services; and
                    (B) have as the Office a Director who shall be 
                appointed by, and be in direct line of authority to, 
                the Administrator of the Centers for Medicare & 
                Medicaid Services.
    (b) Purpose.--The purpose of the Federal Coordinated Health Care 
Office is to bring together officers and employees of the Medicare and 
Medicaid programs at the Centers for Medicare & Medicaid Services in 
order to--
            (1) more effectively integrate benefits under the Medicare 
        program under title XVIII of the Social Security Act and the 
        Medicaid program under title XIX of such Act; and
            (2) improve the coordination between the Federal Government 
        and States for individuals eligible for benefits under both 
        such programs in order to ensure that such individuals get full 
        access to the items and services to which they are entitled 
        under titles XVIII and XIX of the Social Security Act.
    (c) Goals.--The goals of the Federal Coordinated Health Care Office 
are as follows:
            (1) Providing dual eligible individuals full access to the 
        benefits to which such individuals are entitled under the 
        Medicare and Medicaid programs.
            (2) Simplifying the processes for dual eligible individuals 
        to access the items and services they are entitled to under the 
        Medicare and Medicaid programs.
            (3) Improving the quality of health care and long-term 
        services for dual eligible individuals.
            (4) Increasing dual eligible individuals' understanding of 
        and satisfaction with coverage under the Medicare and Medicaid 
        programs.
            (5) Eliminating regulatory conflicts between rules under 
        the Medicare and Medicaid programs.
            (6) Improving care continuity and ensuring safe and 
        effective care transitions for dual eligible individuals.
            (7) Eliminating cost-shifting between the Medicare and 
        Medicaid program and among related health care providers.
            (8) Improving the quality of performance of providers of 
        services and suppliers under the Medicare and Medicaid 
        programs.
    (d) Specific Responsibilities.--The specific responsibilities of 
the Federal Coordinated Health Care Office are as follows:
            (1) Providing States, specialized MA plans for special 
        needs individuals (as defined in section 1859(b)(6) of the 
        Social Security Act (42 U.S.C. 1395w-28(b)(6))), physicians and 
        other relevant entities or individuals with the education and 
        tools necessary for developing programs that align benefits 
        under the Medicare and Medicaid programs for dual eligible 
        individuals.
            (2) Supporting State efforts to coordinate and align acute 
        care and long-term care services for dual eligible individuals 
        with other items and services furnished under the Medicare 
        program.
            (3) Providing support for coordination of contracting and 
        oversight by States and the Centers for Medicare & Medicaid 
        Services with respect to the integration of the Medicare and 
        Medicaid programs in a manner that is supportive of the goals 
        described in paragraph (3).
            (4) To consult and coordinate with the Medicare Payment 
        Advisory Commission established under section 1805 of the 
        Social Security Act (42 U.S.C. 1395b-6) and the Medicaid and 
        CHIP Payment and Access Commission established under section 
        1900 of such Act (42 U.S.C. 1396) with respect to policies 
        relating to the enrollment in, and provision of, benefits to 
        dual eligible individuals under the Medicare program under 
        title XVIII of the Social Security Act and the Medicaid program 
        under title XIX of such Act.
            (5) To study the provision of drug coverage for new full-
        benefit dual eligible individuals (as defined in section 
        1935(c)(6) of the Social Security Act (42 U.S.C. 1396u-
        5(c)(6)), as well as to monitor and report annual total 
        expenditures, health outcomes, and access to benefits for all 
        dual eligible individuals.
    (e) Report.--The Secretary shall, as part of the budget transmitted 
under section 1105(a) of title 31, United States Code, submit to 
Congress an annual report containing recommendations for legislation 
that would improve care coordination and benefits for dual eligible 
individuals.
    (f) Dual Eligible Defined.--In this section, the term ``dual 
eligible individual'' means an individual who is entitled to, or 
enrolled for, benefits under part A of title XVIII of the Social 
Security Act, or enrolled for benefits under part B of title XVIII of 
such Act, and is eligible for medical assistance under a State plan 
under title XIX of such Act or under a waiver of such plan.

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

SEC. 2701. ADULT HEALTH QUALITY MEASURES.

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

``SEC. 1139B. ADULT HEALTH QUALITY MEASURES.

    ``(a) Development of Core Set of Health Care Quality Measures for 
Adults Eligible for Benefits Under Medicaid.--The Secretary shall 
identify and publish a recommended core set of adult health quality 
measures for Medicaid eligible adults in the same manner as the 
Secretary identifies and publishes a core set of child health quality 
measures under section 1139A, including with respect to identifying and 
publishing existing adult health quality measures that are in use under 
public and privately sponsored health care coverage arrangements, or 
that are part of reporting systems that measure both the presence and 
duration of health insurance coverage over time, that may be applicable 
to Medicaid eligible adults.
    ``(b) Deadlines.--
            ``(1) Recommended measures.--Not later than January 1, 
        2011, the Secretary shall identify and publish for comment a 
        recommended core set of adult health quality measures for 
        Medicaid eligible adults.
            ``(2) Dissemination.--Not later than January 1, 2012, the 
        Secretary shall publish an initial core set of adult health 
        quality measures that are applicable to Medicaid eligible 
        adults.
            ``(3) Standardized reporting.--Not later than January 1, 
        2013, the Secretary, in consultation with States, shall develop 
        a standardized format for reporting information based on the 
        initial core set of adult health quality measures and create 
        procedures to encourage States to use such measures to 
        voluntarily report information regarding the quality of health 
        care for Medicaid eligible adults.
            ``(4) Reports to congress.--Not later than January 1, 2014, 
        and every 3 years thereafter, the Secretary shall include in 
        the report to Congress required under section 1139A(a)(6) 
        information similar to the information required under that 
        section with respect to the measures established under this 
        section.
            ``(5) Establishment of medicaid quality measurement 
        program.--
                    ``(A) In general.--Not later than 12 months after 
                the release of the recommended core set of adult health 
                quality measures under paragraph (1)), the Secretary 
                shall establish a Medicaid Quality Measurement Program 
                in the same manner as the Secretary establishes the 
                pediatric quality measures program under section 
                1139A(b). The aggregate amount awarded by the Secretary 
                for grants and contracts for the development, testing, 
                and validation of emerging and innovative evidence-
                based measures under such program shall equal the 
                aggregate amount awarded by the Secretary for grants 
                under section 1139A(b)(4)(A)
                    ``(B) Revising, strengthening, and improving 
                initial core measures.--Beginning not later than 24 
                months after the establishment of the Medicaid Quality 
                Measurement Program, and annually thereafter, the 
                Secretary shall publish recommended changes to the 
                initial core set of adult health quality measures that 
                shall reflect the results of the testing, validation, 
                and consensus process for the development of adult 
                health quality measures.
    ``(c) Construction.--Nothing in this section shall be construed as 
supporting the restriction of coverage, under title XIX or XXI or 
otherwise, to only those services that are evidence-based, or in anyway 
limiting available services.
    ``(d) Annual State Reports Regarding State-Specific Quality of Care 
Measures Applied Under Medicaid.--
            ``(1) Annual state reports.--Each State with a State plan 
        or waiver approved under title XIX shall annually report 
        (separately or as part of the annual report required under 
        section 1139A(c)), to the Secretary on the--
                    ``(A) State-specific adult health quality measures 
                applied by the State under the such plan, including 
                measures described in subsection (a)(5); and
                    ``(B) State-specific information on the quality of 
                health care furnished to Medicaid eligible adults under 
                such plan, including information collected through 
                external quality reviews of managed care organizations 
                under section 1932 and benchmark plans under section 
                1937.
            ``(2) Publication.--Not later than September 30, 2014, and 
        annually thereafter, the Secretary shall collect, analyze, and 
        make publicly available the information reported by States 
        under paragraph (1).
    ``(e) Appropriation.--Out of any funds in the Treasury not 
otherwise appropriated, there is appropriated for each of fiscal years 
2010 through 2014, $60,000,000 for the purpose of carrying out this 
section. Funds appropriated under this subsection shall remain 
available until expended.''.

SEC. 2702. PAYMENT ADJUSTMENT FOR HEALTH CARE-ACQUIRED CONDITIONS.

    (a) In General.--The Secretary of Health and Human Services (in 
this subsection referred to as the ``Secretary'') shall identify 
current State practices that prohibit payment for health care-acquired 
conditions and shall incorporate the practices identified, or elements 
of such practices, which the Secretary determines appropriate for 
application to the Medicaid program in regulations. Such regulations 
shall be effective as of July 1, 2011, and shall prohibit payments to 
States under section 1903 of the Social Security Act for any amounts 
expended for providing medical assistance for health care-acquired 
conditions specified in the regulations. The regulations shall ensure 
that the prohibition on payment for health care-acquired conditions 
shall not result in a loss of access to care or services for Medicaid 
beneficiaries.
    (b) Health Care-Acquired Condition.--In this section. the term 
``health care-acquired condition'' means a medical condition for which 
an individual was diagnosed that could be identified by a secondary 
diagnostic code described in section 1886(d)(4)(D)(iv) of the Social 
Security Act (42 U.S.C. 1395ww(d)(4)(D)(iv)).
    (c) Medicare Provisions.--In carrying out this section, the 
Secretary shall apply to State plans (or waivers) under title XIX of 
the Social Security Act the regulations promulgated pursuant to section 
1886(d)(4)(D) of such Act (42 U.S.C. 1395ww(d)(4)(D)) relating to the 
prohibition of payments based on the presence of a secondary diagnosis 
code specified by the Secretary in such regulations, as appropriate for 
the Medicaid program. The Secretary may exclude certain conditions 
identified under title XVIII of the Social Security Act for non-payment 
under title XIX of such Act when the Secretary finds the inclusion of 
such conditions to be inapplicable to beneficiaries under title XIX.

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

    (a) State Plan Amendment.--Title XIX of the Social Security Act (42 
U.S.C. 1396a et seq.), as amended by sections 2201 and 2305, is amended 
by adding at the end the following new section:
    ``Sec. 1945. State Option To Provide Coordinated Care Through a 
Health Home for Individuals With Chronic Conditions.--
    ``(a) In General.--Notwithstanding section 1902(a)(1) (relating to 
statewideness), section 1902(a)(10)(B) (relating to comparability), and 
any other provision of this title for which the Secretary determines it 
is necessary to waive in order to implement this section, beginning 
January 1, 2011, a State, at its option as a State plan amendment, may 
provide for medical assistance under this title to eligible individuals 
with chronic conditions who select a designated provider (as described 
under subsection (h)(5)), a team of health care professionals (as 
described under subsection (h)(6)) operating with such a provider, or a 
health team (as described under subsection (h)(7)) as the individual's 
health home for purposes of providing the individual with health home 
services.
    ``(b) Health Home Qualification Standards.--The Secretary shall 
establish standards for qualification as a designated provider for the 
purpose of being eligible to be a health home for purposes of this 
section.
    ``(c) Payments.--
            ``(1) In general.--A State shall provide a designated 
        provider, a team of health care professionals operating with 
        such a provider, or a health team with payments for the 
        provision of health home services to each eligible individual 
        with chronic conditions that selects such provider, team of 
        health care professionals, or health team as the individual's 
        health home. Payments made to a designated provider, a team of 
        health care professionals operating with such a provider, or a 
        health team for such services shall be treated as medical 
        assistance for purposes of section 1903(a), except that, during 
        the first 8 fiscal year quarters that the State plan amendment 
        is in effect, the Federal medical assistance percentage 
        applicable to such payments shall be equal to 90 percent.
            ``(2) Methodology.--
                    ``(A) In general.--The State shall specify in the 
                State plan amendment the methodology the State will use 
                for determining payment for the provision of health 
                home services. Such methodology for determining 
                payment--
                            ``(i) may be tiered to reflect, with 
                        respect to each eligible individual with 
                        chronic conditions provided such services by a 
                        designated provider, a team of health care 
                        professionals operating with such a provider, 
                        or a health team, as well as the severity or 
                        number of each such individual's chronic 
                        conditions or the specific capabilities of the 
                        provider, team of health care professionals, or 
                        health team; and
                            ``(ii) shall be established consistent with 
                        section 1902(a)(30)(A).
                    ``(B) Alternate models of payment.--The methodology 
                for determining payment for provision of health home 
                services under this section shall not be limited to a 
                per-member per-month basis and may provide (as proposed 
                by the State and subject to approval by the Secretary) 
                for alternate models of payment.
            ``(3) Planning grants.--
                    ``(A) In general.--Beginning January 1, 2011, the 
                Secretary may award planning grants to States for 
                purposes of developing a State plan amendment under 
                this section. A planning grant awarded to a State under 
                this paragraph shall remain available until expended.
                    ``(B) State contribution.--A State awarded a 
                planning grant shall contribute an amount equal to the 
                State percentage determined under section 1905(b) 
                (without regard to section 5001 of Public Law 111-5) 
                for each fiscal year for which the grant is awarded.
                    ``(C) Limitation.--The total amount of payments 
                made to States under this paragraph shall not exceed 
                $25,000,000.
    ``(d) Hospital Referrals.--A State shall include in the State plan 
amendment a requirement for hospitals that are participating providers 
under the State plan or a waiver of such plan to establish procedures 
for referring any eligible individuals with chronic conditions who seek 
or need treatment in a hospital emergency department to designated 
providers.
    ``(e) Coordination.--A State shall consult and coordinate, as 
appropriate, with the Substance Abuse and Mental Health Services 
Administration in addressing issues regarding the prevention and 
treatment of mental illness and substance abuse among eligible 
individuals with chronic conditions.
    ``(f) Monitoring.--A State shall include in the State plan 
amendment--
            ``(1) a methodology for tracking avoidable hospital 
        readmissions and calculating savings that result from improved 
        chronic care coordination and management under this section; 
        and
            ``(2) a proposal for use of health information technology 
        in providing health home services under this section and 
        improving service delivery and coordination across the care 
        continuum (including the use of wireless patient technology to 
        improve coordination and management of care and patient 
        adherence to recommendations made by their provider).
    ``(g) Report on Quality Measures.--As a condition for receiving 
payment for health home services provided to an eligible individual 
with chronic conditions, a designated provider shall report to the 
State, in accordance with such requirements as the Secretary shall 
specify, on all applicable measures for determining the quality of such 
services. When appropriate and feasible, a designated provider shall 
use health information technology in providing the State with such 
information.
    ``(h) Definitions.--In this section:
            ``(1) Eligible individual with chronic conditions.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                term `eligible individual with chronic conditions' 
                means an individual who--
                            ``(i) is eligible for medical assistance 
                        under the State plan or under a waiver of such 
                        plan; and
                            ``(ii) has at least--
                                    ``(I) 2 chronic conditions;
                                    ``(II) 1 chronic condition and is 
                                at risk of having a second chronic 
                                condition; or
                                    ``(III) 1 serious and persistent 
                                mental health condition.
                    ``(B) Rule of construction.--Nothing in this 
                paragraph shall prevent the Secretary from establishing 
                higher levels as to the number or severity of chronic 
                or mental health conditions for purposes of determining 
                eligibility for receipt of health home services under 
                this section.
            ``(2) Chronic condition.--The term `chronic condition' has 
        the meaning given that term by the Secretary and shall include, 
        but is not limited to, the following:
                    ``(A) A mental health condition.
                    ``(B) Substance use disorder.
                    ``(C) Asthma.
                    ``(D) Diabetes.
                    ``(E) Heart disease.
                    ``(F) Being overweight, as evidenced by having a 
                Body Mass Index (BMI) over 25.
            ``(3) Health home.--The term `health home' means a 
        designated provider (including a provider that operates in 
        coordination with a team of health care professionals) or a 
        health team selected by an eligible individual with chronic 
        conditions to provide health home services.
            ``(4) Health home services.--
                    ``(A) In general.--The term `health home services' 
                means comprehensive and timely high-quality services 
                described in subparagraph (B) that are provided by a 
                designated provider, a team of health care 
                professionals operating with such a provider, or a 
                health team.
                    ``(B) Services described.--The services described 
                in this subparagraph are--
                            ``(i) comprehensive care management;
                            ``(ii) care coordination and health 
                        promotion;
                            ``(iii) comprehensive transitional care, 
                        including appropriate follow-up, from inpatient 
                        to other settings;
                            ``(iv) patient and family support 
                        (including authorized representatives);
                            ``(v) referral to community and social 
                        support services, if relevant; and
                            ``(vi) use of health information technology 
                        to link services, as feasible and appropriate.
            ``(5) Designated provider.--The term `designated provider' 
        means a physician, clinical practice or clinical group 
        practice, rural clinic, community health center, community 
        mental health center, home health agency, or any other entity 
        or provider (including pediatricians, gynecologists, and 
        obstetricians) that is determined by the State and approved by 
        the Secretary to be qualified to be a health home for eligible 
        individuals with chronic conditions on the basis of 
        documentation evidencing that the physician, practice, or 
        clinic--
                    ``(A) has the systems and infrastructure in place 
                to provide health home services; and
                    ``(B) satisfies the qualification standards 
                established by the Secretary under subsection (b).
            ``(6) Team of health care professionals.--The term `team of 
        health care professionals' means a team of health professionals 
        (as described in the State plan amendment) that may--
                    ``(A) include physicians and other professionals, 
                such as a nurse care coordinator, nutritionist, social 
                worker, behavioral health professional, or any 
                professionals deemed appropriate by the State; and
                    ``(B) be free standing, virtual, or based at a 
                hospital, community health center, community mental 
                health center, rural clinic, clinical practice or 
                clinical group practice, academic health center, or any 
                entity deemed appropriate by the State and approved by 
                the Secretary.
            ``(7) Health team.--The term `health team' has the meaning 
        given such term for purposes of section 3502 of the Patient 
        Protection and Affordable Care Act.''.
    (b) Evaluation.--
            (1) Independent evaluation.--
                    (A) In general.--The Secretary shall enter into a 
                contract with an independent entity or organization to 
                conduct an evaluation and assessment of the States that 
                have elected the option to provide coordinated care 
                through a health home for Medicaid beneficiaries with 
                chronic conditions under section 1945 of the Social 
                Security Act (as added by subsection (a)) for the 
                purpose of determining the effect of such option on 
                reducing hospital admissions, emergency room visits, 
                and admissions to skilled nursing facilities.
                    (B) Evaluation report.--Not later than January 1, 
                2017, the Secretary shall report to Congress on the 
                evaluation and assessment conducted under subparagraph 
                (A).
            (2) Survey and interim report.--
                    (A) In general.--Not later than January 1, 2014, 
                the Secretary of Health and Human Services shall survey 
                States that have elected the option under section 1945 
                of the Social Security Act (as added by subsection (a)) 
                and report to Congress on the nature, extent, and use 
                of such option, particularly as it pertains to--
                            (i) hospital admission rates;
                            (ii) chronic disease management;
                            (iii) coordination of care for individuals 
                        with chronic conditions;
                            (iv) assessment of program implementation;
                            (v) processes and lessons learned (as 
                        described in subparagraph (B));
                            (vi) assessment of quality improvements and 
                        clinical outcomes under such option; and
                            (vii) estimates of cost savings.
                    (B)  Implementation reporting.--A State that has 
                elected the option under section 1945 of the Social 
                Security Act (as added by subsection (a)) shall report 
                to the Secretary, as necessary, on processes that have 
                been developed and lessons learned regarding provision 
                of coordinated care through a health home for Medicaid 
                beneficiaries with chronic conditions under such 
                option.

SEC. 2704. DEMONSTRATION PROJECT TO EVALUATE INTEGRATED CARE AROUND A 
              HOSPITALIZATION.

    (a) Authority To Conduct Project.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        establish a demonstration project under title XIX of the Social 
        Security Act to evaluate the use of bundled payments for the 
        provision of integrated care for a Medicaid beneficiary--
                    (A) with respect to an episode of care that 
                includes a hospitalization; and
                    (B) for concurrent physicians services provided 
                during a hospitalization.
            (2) Duration.--The demonstration project shall begin on 
        January 1, 2012, and shall end on December 31, 2016.
    (b) Requirements.--The demonstration project shall be conducted in 
accordance with the following:
            (1) The demonstration project shall be conducted in up to 8 
        States, determined by the Secretary based on consideration of 
        the potential to lower costs under the Medicaid program while 
        improving care for Medicaid beneficiaries. A State selected to 
        participate in the demonstration project may target the 
        demonstration project to particular categories of 
        beneficiaries, beneficiaries with particular diagnoses, or 
        particular geographic regions of the State, but the Secretary 
        shall insure that, as a whole, the demonstration project is, to 
        the greatest extent possible, representative of the demographic 
        and geographic composition of Medicaid beneficiaries 
        nationally.
            (2) The demonstration project shall focus on conditions 
        where there is evidence of an opportunity for providers of 
        services and suppliers to improve the quality of care furnished 
        to Medicaid beneficiaries while reducing total expenditures 
        under the State Medicaid programs selected to participate, as 
        determined by the Secretary.
            (3) A State selected to participate in the demonstration 
        project shall specify the 1 or more episodes of care the State 
        proposes to address in the project, the services to be included 
        in the bundled payments, and the rationale for the selection of 
        such episodes of care and services. The Secretary may modify 
        the episodes of care as well as the services to be included in 
        the bundled payments prior to or after approving the project. 
        The Secretary may also vary such factors among the different 
        States participating in the demonstration project.
            (4) The Secretary shall ensure that payments made under the 
        demonstration project are adjusted for severity of illness and 
        other characteristics of Medicaid beneficiaries within a 
        category or having a diagnosis targeted as part of the 
        demonstration project. States shall ensure that Medicaid 
        beneficiaries are not liable for any additional cost sharing 
        than if their care had not been subject to payment under the 
        demonstration project.
            (5) Hospitals participating in the demonstration project 
        shall have or establish robust discharge planning programs to 
        ensure that Medicaid beneficiaries requiring post-acute care 
        are appropriately placed in, or have ready access to, post-
        acute care settings.
            (6) The Secretary and each State selected to participate in 
        the demonstration project shall ensure that the demonstration 
        project does not result in the Medicaid beneficiaries whose 
        care is subject to payment under the demonstration project 
        being provided with less items and services for which medical 
        assistance is provided under the State Medicaid program than 
        the items and services for which medical assistance would have 
        been provided to such beneficiaries under the State Medicaid 
        program in the absence of the demonstration project.
    (c) Waiver of Provisions.--Notwithstanding section 1115(a) of the 
Social Security Act (42 U.S.C. 1315(a)), the Secretary may waive such 
provisions of titles XIX, XVIII, and XI of that Act as may be necessary 
to accomplish the goals of the demonstration, ensure beneficiary access 
to acute and post-acute care, and maintain quality of care.
    (d) Evaluation and Report.--
            (1) Data.--Each State selected to participate in the 
        demonstration project under this section shall provide to the 
        Secretary, in such form and manner as the Secretary shall 
        specify, relevant data necessary to monitor outcomes, costs, 
        and quality, and evaluate the rationales for selection of the 
        episodes of care and services specified by States under 
        subsection (b)(3).
            (2) Report.--Not later than 1 year after the conclusion of 
        the demonstration project, the Secretary shall submit a report 
        to Congress on the results of the demonstration project.

SEC. 2705. MEDICAID GLOBAL PAYMENT SYSTEM DEMONSTRATION PROJECT.

    (a) In General.--The Secretary of Health and Human Services 
(referred to in this section as the ``Secretary'') shall, in 
coordination with the Center for Medicare and Medicaid Innovation (as 
established under section 1115A of the Social Security Act, as added by 
section 3021 of this Act), establish the Medicaid Global Payment System 
Demonstration Project under which a participating State shall adjust 
the payments made to an eligible safety net hospital system or network 
from a fee-for-service payment structure to a global capitated payment 
model.
    (b) Duration and Scope.--The demonstration project conducted under 
this section shall operate during a period of fiscal years 2010 through 
2012. The Secretary shall select not more than 5 States to participate 
in the demonstration project.
    (c) Eligible Safety Net Hospital System or Network.--For purposes 
of this section, the term ``eligible safety net hospital system or 
network'' means a large, safety net hospital system or network (as 
defined by the Secretary) that operates within a State selected by the 
Secretary under subsection (b).
    (d) Evaluation.--
            (1) Testing.--The Innovation Center shall test and evaluate 
        the demonstration project conducted under this section to 
        examine any changes in health care quality outcomes and 
        spending by the eligible safety net hospital systems or 
        networks.
            (2) Budget neutrality.--During the testing period under 
        paragraph (1), any budget neutrality requirements under section 
        1115A(b)(3) of the Social Security Act (as so added) shall not 
        be applicable.
            (3) Modification.--During the testing period under 
        paragraph (1), the Secretary may, in the Secretary's 
        discretion, modify or terminate the demonstration project 
        conducted under this section.
    (e) Report.--Not later than 12 months after the date of completion 
of the demonstration project under this section, the Secretary shall 
submit to Congress a report containing the results of the evaluation 
and testing conducted under subsection (d), together with 
recommendations for such legislation and administrative action as the 
Secretary determines appropriate.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

SEC. 2706. PEDIATRIC ACCOUNTABLE CARE ORGANIZATION DEMONSTRATION 
              PROJECT.

    (a) Authority To Conduct Demonstration.--
            (1) In general.--The Secretary of Health and Human Services 
        (referred to in this section as the ``Secretary'') shall 
        establish the Pediatric Accountable Care Organization 
        Demonstration Project to authorize a participating State to 
        allow pediatric medical providers that meet specified 
        requirements to be recognized as an accountable care 
        organization for purposes of receiving incentive payments (as 
        described under subsection (d)), in the same manner as an 
        accountable care organization is recognized and provided with 
        incentive payments under section 1899 of the Social Security 
        Act (as added by section 3022).
            (2) Duration.--The demonstration project shall begin on 
        January 1, 2012, and shall end on December 31, 2016.
    (b) Application.--A State that desires to participate in the 
demonstration project under this section shall submit to the Secretary 
an application at such time, in such manner, and containing such 
information as the Secretary may require.
    (c) Requirements.--
            (1) Performance guidelines.--The Secretary, in consultation 
        with the States and pediatric providers, shall establish 
        guidelines to ensure that the quality of care delivered to 
        individuals by a provider recognized as an accountable care 
        organization under this section is not less than the quality of 
        care that would have otherwise been provided to such 
        individuals.
            (2) Savings requirement.--A participating State, in 
        consultation with the Secretary, shall establish an annual 
        minimal level of savings in expenditures for items and services 
        covered under the Medicaid program under title XIX of the 
        Social Security Act and the CHIP program under title XXI of 
        such Act that must be reached by an accountable care 
        organization in order for such organization to receive an 
        incentive payment under subsection (d).
            (3) Minimum participation period.--A provider desiring to 
        be recognized as an accountable care organization under the 
        demonstration project shall enter into an agreement with the 
        State to participate in the project for not less than a 3-year 
        period.
    (d) Incentive Payment.--An accountable care organization that meets 
the performance guidelines established by the Secretary under 
subsection (c)(1) and achieves savings greater than the annual minimal 
savings level established by the State under subsection (c)(2) shall 
receive an incentive payment for such year equal to a portion (as 
determined appropriate by the Secretary) of the amount of such excess 
savings. The Secretary may establish an annual cap on incentive 
payments for an accountable care organization.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

SEC. 2707. MEDICAID EMERGENCY PSYCHIATRIC DEMONSTRATION PROJECT.

    (a) Authority To Conduct Demonstration Project.--The Secretary of 
Health and Human Services (in this section referred to as the 
``Secretary'') shall establish a demonstration project under which an 
eligible State (as described in subsection (c)) shall provide payment 
under the State Medicaid plan under title XIX of the Social Security 
Act to an institution for mental diseases that is not publicly owned or 
operated and that is subject to the requirements of section 1867 of the 
Social Security Act (42 U.S.C. 1395dd) for the provision of medical 
assistance available under such plan to individuals who--
            (1) have attained age 21, but have not attained age 65;
            (2) are eligible for medical assistance under such plan; 
        and
            (3) require such medical assistance to stabilize an 
        emergency medical condition.
    (b) Stabilization Review.--A State shall specify in its application 
described in subsection (c)(1) establish a mechanism for how it will 
ensure that institutions participating in the demonstration will 
determine whether or not such individuals have been stabilized (as 
defined in subsection (h)(5)). This mechanism shall commence before the 
third day of the inpatient stay. States participating in the 
demonstration project may manage the provision of services for the 
stabilization of medical emergency conditions through utilization 
review, authorization, or management practices, or the application of 
medical necessity and appropriateness criteria applicable to behavioral 
health.
    (c) Eligible State Defined.--
            (1) In general.--An eligible State is a State that has made 
        an application and has been selected pursuant to paragraphs (2) 
        and (3).
            (2) Application.--A State seeking to participate in the 
        demonstration project under this section shall submit to the 
        Secretary, at such time and in such format as the Secretary 
        requires, an application that includes such information, 
        provisions, and assurances, as the Secretary may require.
            (3) Selection.--A State shall be determined eligible for 
        the demonstration by the Secretary on a competitive basis among 
        States with applications meeting the requirements of paragraph 
        (1). In selecting State applications for the demonstration 
        project, the Secretary shall seek to achieve an appropriate 
        national balance in the geographic distribution of such 
        projects.
    (d) Length of Demonstration Project.--The demonstration project 
established under this section shall be conducted for a period of 3 
consecutive years.
    (e) Limitations on Federal Funding.--
            (1) Appropriation.--
                    (A) In general.--Out of any funds in the Treasury 
                not otherwise appropriated, there is appropriated to 
                carry out this section, $75,000,000 for fiscal year 
                2011.
                    (B) Budget authority.--Subparagraph (A) constitutes 
                budget authority in advance of appropriations Act and 
                represents the obligation of the Federal Government to 
                provide for the payment of the amounts appropriated 
                under that subparagraph.
            (2) 5-year availability.--Funds appropriated under 
        paragraph (1) shall remain available for obligation through 
        December 31, 2015.
            (3) Limitation on payments.--In no case may--
                    (A) the aggregate amount of payments made by the 
                Secretary to eligible States under this section exceed 
                $75,000,000; or
                    (B) payments be provided by the Secretary under 
                this section after December 31, 2015.
            (4) Funds allocated to states.--Funds shall be allocated to 
        eligible States on the basis of criteria, including a State's 
        application and the availability of funds, as determined by the 
        Secretary.
            (5) Payments to states.--The Secretary shall pay to each 
        eligible State, from its allocation under paragraph (4), an 
        amount each quarter equal to the Federal medical assistance 
        percentage of expenditures in the quarter for medical 
        assistance described in subsection (a). As a condition of 
        receiving payment, a State shall collect and report 
        information, as determined necessary by the Secretary, for the 
        purposes of providing Federal oversight and conducting an 
        evaluation under subsection (f)(1).
    (f) Evaluation and Report to Congress.--
            (1) Evaluation.--The Secretary shall conduct an evaluation 
        of the demonstration project in order to determine the impact 
        on the functioning of the health and mental health service 
        system and on individuals enrolled in the Medicaid program and 
        shall include the following:
                    (A) An assessment of access to inpatient mental 
                health services under the Medicaid program; average 
                lengths of inpatient stays; and emergency room visits.
                    (B) An assessment of discharge planning by 
                participating hospitals.
                    (C) An assessment of the impact of the 
                demonstration project on the costs of the full range of 
                mental health services (including inpatient, emergency 
                and ambulatory care).
                    (D) An analysis of the percentage of consumers with 
                Medicaid coverage who are admitted to inpatient 
                facilities as a result of the demonstration project as 
                compared to those admitted to these same facilities 
                through other means.
                    (E) A recommendation regarding whether the 
                demonstration project should be continued after 
                December 31, 2013, and expanded on a national basis.
            (2) Report.--Not later than December 31, 2013, the 
        Secretary shall submit to Congress and make available to the 
        public a report on the findings of the evaluation under 
        paragraph (1).
    (g) Waiver Authority.--
            (1) In general.--The Secretary shall waive the limitation 
        of subdivision (B) following paragraph (28) of section 1905(a) 
        of the Social Security Act (42 U.S.C. 1396d(a)) (relating to 
        limitations on payments for care or services for individuals 
        under 65 years of age who are patients in an institution for 
        mental diseases) for purposes of carrying out the demonstration 
        project under this section.
            (2) Limited other waiver authority.--The Secretary may 
        waive other requirements of titles XI and XIX of the Social 
        Security Act (including the requirements of sections 1902(a)(1) 
        (relating to statewideness) and 1902(1)(10)(B) (relating to 
        comparability)) only to extent necessary to carry out the 
        demonstration project under this section.
    (h) Definitions.--In this section:
            (1) Emergency medical condition.--The term ``emergency 
        medical condition'' means, with respect to an individual, an 
        individual who expresses suicidal or homicidal thoughts or 
        gestures, if determined dangerous to self or others.
            (2) Federal medical assistance percentage.--The term 
        ``Federal medical assistance percentage'' has the meaning given 
        that term with respect to a State under section 1905(b) of the 
        Social Security Act (42 U.S.C. 1396d(b)).
            (3) Institution for mental diseases.--The term 
        ``institution for mental diseases'' has the meaning given to 
        that term in section 1905(i) of the Social Security Act (42 
        U.S.C. 1396d(i)).
            (4) Medical assistance.--The term ``medical assistance'' 
        has the meaning given that term in section 1905(a) of the 
        Social Security Act (42 U.S.C. 1396d(a)).
            (5) Stabilized.--The term ``stabilized'' means, with 
        respect to an individual, that the emergency medical condition 
        no longer exists with respect to the individual and the 
        individual is no longer dangerous to self or others.
            (6) State.--The term ``State'' has the meaning given that 
        term for purposes of title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.).

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

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

    (a) In General.--Section 1900 of the Social Security Act (42 U.S.C. 
1396) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) in the paragraph heading, by inserting 
                        ``for all states'' before ``and annual''; and
                            (ii) in subparagraph (A), by striking 
                        ``children's'';
                            (iii) in subparagraph (B), by inserting ``, 
                        the Secretary, and States'' after ``Congress'';
                            (iv) in subparagraph (C), by striking 
                        ``March 1'' and inserting ``March 15''; and
                            (v) in subparagraph (D), by striking ``June 
                        1'' and inserting ``June 15'';
                    (B) in paragraph (2)--
                            (i) in subparagraph (A)--
                                    (I) in clause (i)--
                                            (aa) by inserting ``the 
                                        efficient provision of'' after 
                                        ``expenditures for''; and
                                            (bb) by striking 
                                        ``hospital, skilled nursing 
                                        facility, physician, Federally-
                                        qualified health center, rural 
                                        health center, and other fees'' 
                                        and inserting ``payments to 
                                        medical, dental, and health 
                                        professionals, hospitals, 
                                        residential and long-term care 
                                        providers, providers of home 
                                        and community based services, 
                                        Federally-qualified health 
                                        centers and rural health 
                                        clinics, managed care entities, 
                                        and providers of other covered 
                                        items and services''; and
                                    (II) in clause (iii), by inserting 
                                ``(including how such factors and 
                                methodologies enable such beneficiaries 
                                to obtain the services for which they 
                                are eligible, affect provider supply, 
                                and affect providers that serve a 
                                disproportionate share of low-income 
                                and other vulnerable populations)'' 
                                after ``beneficiaries'';
                            (ii) by redesignating subparagraphs (B) and 
                        (C) as subparagraphs (F) and (H), respectively;
                            (iii) by inserting after subparagraph (A), 
                        the following:
                    ``(B) Eligibility policies.--Medicaid and CHIP 
                eligibility policies, including a determination of the 
                degree to which Federal and State policies provide 
                health care coverage to needy populations.
                    ``(C) Enrollment and retention processes.--Medicaid 
                and CHIP enrollment and retention processes, including 
                a determination of the degree to which Federal and 
                State policies encourage the enrollment of individuals 
                who are eligible for such programs and screen out 
                individuals who are ineligible, while minimizing the 
                share of program expenses devoted to such processes.
                    ``(D) Coverage policies.--Medicaid and CHIP benefit 
                and coverage policies, including a determination of the 
                degree to which Federal and State policies provide 
                access to the services enrollees require to improve and 
                maintain their health and functional status.
                    ``(E) Quality of care.--Medicaid and CHIP policies 
                as they relate to the quality of care provided under 
                those programs, including a determination of the degree 
                to which Federal and State policies achieve their 
                stated goals and interact with similar goals 
                established by other purchasers of health care 
                services.'';
                            (iv) by inserting after subparagraph (F) 
                        (as redesignated by clause (ii) of this 
                        subparagraph), the following:
                    ``(G) Interactions with medicare and medicaid.--
                Consistent with paragraph (11), the interaction of 
                policies under Medicaid and the Medicare program under 
                title XVIII, including with respect to how such 
                interactions affect access to services, payments, and 
                dual eligible individuals.'' and
                            (v) in subparagraph (H) (as so 
                        redesignated), by inserting ``and preventive, 
                        acute, and long-term services and supports'' 
                        after ``barriers'';
                    (C) by redesignating paragraphs (3) through (9) as 
                paragraphs (4) through (10), respectively;
                    (D) by inserting after paragraph (2), the following 
                new paragraph:
            ``(3) Recommendations and reports of state-specific data.--
        MACPAC shall--
                    ``(A) review national and State-specific Medicaid 
                and CHIP data; and
                    ``(B) submit reports and recommendations to 
                Congress, the Secretary, and States based on such 
                reviews.'';
                    (E) in paragraph (4), as redesignated by 
                subparagraph (C), by striking ``or any other problems'' 
                and all that follows through the period and inserting 
                ``, as well as other factors that adversely affect, or 
                have the potential to adversely affect, access to care 
                by, or the health care status of, Medicaid and CHIP 
                beneficiaries. MACPAC shall include in the annual 
                report required under paragraph (1)(D) a description of 
                all such areas or problems identified with respect to 
                the period addressed in the report.'';
                    (F) in paragraph (5), as so redesignated,--
                            (i) in the paragraph heading, by inserting 
                        ``and regulations'' after ``reports''; and
                            (ii) by striking ``If'' and inserting the 
                        following:
                    ``(A) Certain secretarial reports.--If''; and
                            (iii) in the second sentence, by inserting 
                        ``and the Secretary'' after ``appropriate 
                        committees of Congress''; and
                            (iv) by adding at the end the following:
                    ``(B) Regulations.--MACPAC shall review Medicaid 
                and CHIP regulations and may comment through submission 
                of a report to the appropriate committees of Congress 
                and the Secretary, on any such regulations that affect 
                access, quality, or efficiency of health care.'';
                    (G) in paragraph (10), as so redesignated, by 
                inserting ``, and shall submit with any 
                recommendations, a report on the Federal and State-
                specific budget consequences of the recommendations'' 
                before the period; and
                    (H) by adding at the end the following:
            ``(11) Consultation and coordination with medpac.--
                    ``(A) In general.--MACPAC shall consult with the 
                Medicare Payment Advisory Commission (in this paragraph 
                referred to as `MedPAC') established under section 1805 
                in carrying out its duties under this section, as 
                appropriate and particularly with respect to the issues 
                specified in paragraph (2) as they relate to those 
                Medicaid beneficiaries who are dually eligible for 
                Medicaid and the Medicare program under title XVIII, 
                adult Medicaid beneficiaries (who are not dually 
                eligible for Medicare), and beneficiaries under 
                Medicare. Responsibility for analysis of and 
                recommendations to change Medicare policy regarding 
                Medicare beneficiaries, including Medicare 
                beneficiaries who are dually eligible for Medicare and 
                Medicaid, shall rest with MedPAC.
                    ``(B) Information sharing.--MACPAC and MedPAC shall 
                have access to deliberations and records of the other 
                such entity, respectively, upon the request of the 
                other such entity.
            ``(12) Consultation with states.--MACPAC shall regularly 
        consult with States in carrying out its duties under this 
        section, including with respect to developing processes for 
        carrying out such duties, and shall ensure that input from 
        States is taken into account and represented in MACPAC's 
        recommendations and reports.
            ``(13) Coordinate and consult with the federal coordinated 
        health care office.--MACPAC shall coordinate and consult with 
        the Federal Coordinated Health Care Office established under 
        section 2081 of the Patient Protection and Affordable Care Act 
        before making any recommendations regarding dual eligible 
        individuals.
            ``(14) Programmatic oversight vested in the secretary.--
        MACPAC's authority to make recommendations in accordance with 
        this section shall not affect, or be considered to duplicate, 
        the Secretary's authority to carry out Federal responsibilities 
        with respect to Medicaid and CHIP.'';
            (2) in subsection (c)(2)--
                    (A) by striking subparagraphs (A) and (B) and 
                inserting the following:
                    ``(A) In general.--The membership of MACPAC shall 
                include individuals who have had direct experience as 
                enrollees or parents or caregivers of enrollees in 
                Medicaid or CHIP and individuals with national 
                recognition for their expertise in Federal safety net 
                health programs, health finance and economics, 
                actuarial science, health plans and integrated delivery 
                systems, reimbursement for health care, health 
                information technology, and other providers of health 
                services, public health, and other related fields, who 
                provide a mix of different professions, broad 
                geographic representation, and a balance between urban 
                and rural representation.
                    ``(B) Inclusion.--The membership of MACPAC shall 
                include (but not be limited to) physicians, dentists, 
                and other health professionals, employers, third-party 
                payers, and individuals with expertise in the delivery 
                of health services. Such membership shall also include 
                representatives of children, pregnant women, the 
                elderly, individuals with disabilities, caregivers, and 
                dual eligible individuals, current or former 
                representatives of State agencies responsible for 
                administering Medicaid, and current or former 
                representatives of State agencies responsible for 
                administering CHIP.''.
            (3) in subsection (d)(2), by inserting ``and State'' after 
        ``Federal'';
            (4) in subsection (e)(1), in the first sentence, by 
        inserting ``and, as a condition for receiving payments under 
        sections 1903(a) and 2105(a), from any State agency responsible 
        for administering Medicaid or CHIP,'' after ``United States''; 
        and
            (5) in subsection (f)--
                    (A) in the subsection heading, by striking 
                ``Authorization of Appropriations'' and inserting 
                ``Funding'';
                    (B) in paragraph (1), by inserting ``(other than 
                for fiscal year 2010)'' before ``in the same manner''; 
                and
                    (C) by adding at the end the following:
            ``(3) Funding for fiscal year 2010.--
                    ``(A) In general.--Out of any funds in the Treasury 
                not otherwise appropriated, there is appropriated to 
                MACPAC to carry out the provisions of this section for 
                fiscal year 2010, $9,000,000.
                    ``(B) Transfer of funds.--Notwithstanding section 
                2104(a)(13), from the amounts appropriated in such 
                section for fiscal year 2010, $2,000,000 is hereby 
                transferred and made available in such fiscal year to 
                MACPAC to carry out the provisions of this section.
            ``(4) Availability.--Amounts made available under 
        paragraphs (2) and (3) to MACPAC to carry out the provisions of 
        this section shall remain available until expended.''.
    (b) Conforming MedPAC Amendments.--Section 1805(b) of the Social 
Security Act (42 U.S.C. 1395b-6(b)), is amended--
            (1) in paragraph (1)(C), by striking ``March 1 of each year 
        (beginning with 1998)'' and inserting ``March 15'';
            (2) in paragraph (1)(D), by inserting ``, and (beginning 
        with 2012) containing an examination of the topics described in 
        paragraph (9), to the extent feasible'' before the period; and
            (3) by adding at the end the following:
            ``(9) Review and annual report on medicaid and commercial 
        trends.--The Commission shall review and report on aggregate 
        trends in spending, utilization, and financial performance 
        under the Medicaid program under title XIX and the private 
        market for health care services with respect to providers for 
        which, on an aggregate national basis, a significant portion of 
        revenue or services is associated with the Medicaid program. 
        Where appropriate, the Commission shall conduct such review in 
        consultation with the Medicaid and CHIP Payment and Access 
        Commission established under section 1900 (in this section 
        referred to as `MACPAC').
            ``(10) Coordinate and consult with the federal coordinated 
        health care office.--The Commission shall coordinate and 
        consult with the Federal Coordinated Health Care Office 
        established under section 2081 of the Patient Protection and 
        Affordable Care Act before making any recommendations regarding 
        dual eligible individuals.
            ``(11) Interaction of medicaid and medicare.--The 
        Commission shall consult with MACPAC in carrying out its duties 
        under this section, as appropriate. Responsibility for analysis 
        of and recommendations to change Medicare policy regarding 
        Medicare beneficiaries, including Medicare beneficiaries who 
        are dually eligible for Medicare and Medicaid, shall rest with 
        the Commission. Responsibility for analysis of and 
        recommendations to change Medicaid policy regarding Medicaid 
        beneficiaries, including Medicaid beneficiaries who are dually 
        eligible for Medicare and Medicaid, shall rest with MACPAC.''.

    Subtitle K--Protections for American Indians and Alaska Natives

SEC. 2901. SPECIAL RULES RELATING TO INDIANS.

    (a) No Cost-sharing for Indians With Income at or Below 300 Percent 
of Poverty Enrolled in Coverage Through a State Exchange.--For 
provisions prohibiting cost sharing for Indians enrolled in any 
qualified health plan in the individual market through an Exchange, see 
section 1402(d) of the Patient Protection and Affordable Care Act.
    (b) Payer of Last Resort.--Health programs operated by the Indian 
Health Service, Indian tribes, tribal organizations, and Urban Indian 
organizations (as those terms are defined in section 4 of the Indian 
Health Care Improvement Act (25 U.S.C. 1603)) shall be the payer of 
last resort for services provided by such Service, tribes, or 
organizations to individuals eligible for services through such 
programs, notwithstanding any Federal, State, or local law to the 
contrary.
    (c) Facilitating Enrollment of Indians Under the Express Lane 
Option.--Section 1902(e)(13)(F)(ii) of the Social Security Act (42 
U.S.C. 1396a(e)(13)(F)(ii)) is amended--
            (1) in the clause heading, by inserting ``and indian tribes 
        and tribal organizations'' after ``agencies''; and
            (2) by adding at the end the following:
                                    ``(IV) The Indian Health Service, 
                                an Indian Tribe, Tribal Organization, 
                                or Urban Indian Organization (as 
                                defined in section 1139(c)).''.
    (d) Technical Corrections.--Section 1139(c) of the Social Security 
Act (42 U.S.C. 1320b-9(c)) is amended by striking ``In this section'' 
and inserting ``For purposes of this section, title XIX, and title 
XXI''.

SEC. 2902. ELIMINATION OF SUNSET FOR REIMBURSEMENT FOR ALL MEDICARE 
              PART B SERVICES FURNISHED BY CERTAIN INDIAN HOSPITALS AND 
              CLINICS.

    (a) Reimbursement for All Medicare Part B Services Furnished by 
Certain Indian Hospitals and Clinics.--Section 1880(e)(1)(A) of the 
Social Security Act (42 U.S.C. 1395qq(e)(1)(A)) is amended by striking 
``during the 5-year period beginning on'' and inserting ``on or 
after''.
    (b) Effective Date.--The amendments made by this section shall 
apply to items or services furnished on or after January 1, 2010.

             Subtitle L--Maternal and Child Health Services

SEC. 2951. MATERNAL, INFANT, AND EARLY CHILDHOOD HOME VISITING 
              PROGRAMS.

    Title V of the Social Security Act (42 U.S.C. 701 et seq.) is 
amended by adding at the end the following new section:

``SEC. 511. MATERNAL, INFANT, AND EARLY CHILDHOOD HOME VISITING 
              PROGRAMS.

    ``(a) Purposes.--The purposes of this section are--
            ``(1) to strengthen and improve the programs and activities 
        carried out under this title;
            ``(2) to improve coordination of services for at risk 
        communities; and
            ``(3) to identify and provide comprehensive services to 
        improve outcomes for families who reside in at risk 
        communities.
    ``(b) Requirement for All States To Assess Statewide Needs and 
Identify at Risk Communities.--
            ``(1) In general.--Not later than 6 months after the date 
        of enactment of this section, each State shall, as a condition 
        of receiving payments from an allotment for the State under 
        section 502 for fiscal year 2011, conduct a statewide needs 
        assessment (which shall be separate from the statewide needs 
        assessment required under section 505(a)) that identifies--
                    ``(A) communities with concentrations of--
                            ``(i) premature birth, low-birth weight 
                        infants, and infant mortality, including infant 
                        death due to neglect, or other indicators of 
                        at-risk prenatal, maternal, newborn, or child 
                        health;
                            ``(ii) poverty;
                            ``(iii) crime;
                            ``(iv) domestic violence;
                            ``(v) high rates of high-school drop-outs;
                            ``(vi) substance abuse;
                            ``(vii) unemployment; or
                            ``(viii) child maltreatment;
                    ``(B) the quality and capacity of existing programs 
                or initiatives for early childhood home visitation in 
                the State including--
                            ``(i) the number and types of individuals 
                        and families who are receiving services under 
                        such programs or initiatives;
                            ``(ii) the gaps in early childhood home 
                        visitation in the State; and
                            ``(iii) the extent to which such programs 
                        or initiatives are meeting the needs of 
                        eligible families described in subsection 
                        (k)(2); and
                    ``(C) the State's capacity for providing substance 
                abuse treatment and counseling services to individuals 
                and families in need of such treatment or services.
            ``(2) Coordination with other assessments.--In conducting 
        the statewide needs assessment required under paragraph (1), 
        the State shall coordinate with, and take into account, other 
        appropriate needs assessments conducted by the State, as 
        determined by the Secretary, including the needs assessment 
        required under section 505(a) (both the most recently completed 
        assessment and any such assessment in progress), the 
        communitywide strategic planning and needs assessments 
        conducted in accordance with section 640(g)(1)(C) of the Head 
        Start Act, and the inventory of current unmet needs and current 
        community-based and prevention-focused programs and activities 
        to prevent child abuse and neglect, and other family resource 
        services operating in the State required under section 205(3) 
        of the Child Abuse Prevention and Treatment Act.
            ``(3) Submission to the secretary.--Each State shall submit 
        to the Secretary, in such form and manner as the Secretary 
        shall require--
                    ``(A) the results of the statewide needs assessment 
                required under paragraph (1); and
                    ``(B) a description of how the State intends to 
                address needs identified by the assessment, 
                particularly with respect to communities identified 
                under paragraph (1)(A), which may include applying for 
                a grant to conduct an early childhood home visitation 
                program in accordance with the requirements of this 
                section.
    ``(c) Grants for Early Childhood Home Visitation Programs.--
            ``(1) Authority to make grants.--In addition to any other 
        payments made under this title to a State, the Secretary shall 
        make grants to eligible entities to enable the entities to 
        deliver services under early childhood home visitation programs 
        that satisfy the requirements of subsection (d) to eligible 
        families in order to promote improvements in maternal and 
        prenatal health, infant health, child health and development, 
        parenting related to child development outcomes, school 
        readiness, and the socioeconomic status of such families, and 
        reductions in child abuse, neglect, and injuries.
            ``(2) Authority to use initial grant funds for planning or 
        implementation.--An eligible entity that receives a grant under 
        paragraph (1) may use a portion of the funds made available to 
        the entity during the first 6 months of the period for which 
        the grant is made for planning or implementation activities to 
        assist with the establishment of early childhood home 
        visitation programs that satisfy the requirements of subsection 
        (d).
            ``(3) Grant duration.--The Secretary shall determine the 
        period of years for which a grant is made to an eligible entity 
        under paragraph (1).
            ``(4) Technical assistance.--The Secretary shall provide an 
        eligible entity that receives a grant under paragraph (1) with 
        technical assistance in administering programs or activities 
        conducted in whole or in part with grant funds.
    ``(d) Requirements.--The requirements of this subsection for an 
early childhood home visitation program conducted with a grant made 
under this section are as follows:
            ``(1) Quantifiable, measurable improvement in benchmark 
        areas.--
                    ``(A) In general.--The eligible entity establishes, 
                subject to the approval of the Secretary, quantifiable, 
                measurable 3- and 5-year benchmarks for demonstrating 
                that the program results in improvements for the 
                eligible families participating in the program in each 
                of the following areas:
                            ``(i) Improved maternal and newborn health.
                            ``(ii) Prevention of child injuries, child 
                        abuse, neglect, or maltreatment, and reduction 
                        of emergency department visits.
                            ``(iii) Improvement in school readiness and 
                        achievement.
                            ``(iv) Reduction in crime or domestic 
                        violence.
                            ``(v) Improvements in family economic self-
                        sufficiency.
                            ``(vi) Improvements in the coordination and 
                        referrals for other community resources and 
                        supports.
                    ``(B) Demonstration of improvements after 3 
                years.--
                            ``(i) Report to the secretary.--Not later 
                        than 30 days after the end of the 3rd year in 
                        which the eligible entity conducts the program, 
                        the entity submits to the Secretary a report 
                        demonstrating improvement in at least 4 of the 
                        areas specified in subparagraph (A).
                            ``(ii) Corrective action plan.--If the 
                        report submitted by the eligible entity under 
                        clause (i) fails to demonstrate improvement in 
                        at least 4 of the areas specified in 
                        subparagraph (A), the entity shall develop and 
                        implement a plan to improve outcomes in each of 
                        the areas specified in subparagraph (A), 
                        subject to approval by the Secretary. The plan 
                        shall include provisions for the Secretary to 
                        monitor implementation of the plan and conduct 
                        continued oversight of the program, including 
                        through submission by the entity of regular 
                        reports to the Secretary.
                            ``(iii) Technical assistance.--
                                    ``(I) In general.--The Secretary 
                                shall provide an eligible entity 
                                required to develop and implement an 
                                improvement plan under clause (ii) with 
                                technical assistance to develop and 
                                implement the plan. The Secretary may 
                                provide the technical assistance 
                                directly or through grants, contracts, 
                                or cooperative agreements.
                                    ``(II) Advisory panel.--The 
                                Secretary shall establish an advisory 
                                panel for purposes of obtaining 
                                recommendations regarding the technical 
                                assistance provided to entities in 
                                accordance with subclause (I).
                            ``(iv) No improvement or failure to submit 
                        report.--If the Secretary determines after a 
                        period of time specified by the Secretary that 
                        an eligible entity implementing an improvement 
                        plan under clause (ii) has failed to 
                        demonstrate any improvement in the areas 
                        specified in subparagraph (A), or if the 
                        Secretary determines that an eligible entity 
                        has failed to submit the report required under 
                        clause (i), the Secretary shall terminate the 
                        entity's grant and may include any unexpended 
                        grant funds in grants made to nonprofit 
                        organizations under subsection (h)(2)(B).
                    ``(C) Final report.--Not later than December 31, 
                2015, the eligible entity shall submit a report to the 
                Secretary demonstrating improvements (if any) in each 
                of the areas specified in subparagraph (A).
            ``(2) Improvements in outcomes for individual families.--
                    ``(A) In general.--The program is designed, with 
                respect to an eligible family participating in the 
                program, to result in the participant outcomes 
                described in subparagraph (B) that the eligible entity 
                identifies on the basis of an individualized assessment 
                of the family, are relevant for that family.
                    ``(B) Participant outcomes.--The participant 
                outcomes described in this subparagraph are the 
                following:
                            ``(i) Improvements in prenatal, maternal, 
                        and newborn health, including improved 
                        pregnancy outcomes
                            ``(ii) Improvements in child health and 
                        development, including the prevention of child 
                        injuries and maltreatment and improvements in 
                        cognitive, language, social-emotional, and 
                        physical developmental indicators.
                            ``(iii) Improvements in parenting skills.
                            ``(iv) Improvements in school readiness and 
                        child academic achievement.
                            ``(v) Reductions in crime or domestic 
                        violence.
                            ``(vi) Improvements in family economic 
                        self-sufficiency.
                            ``(vii) Improvements in the coordination of 
                        referrals for, and the provision of, other 
                        community resources and supports for eligible 
                        families, consistent with State child welfare 
                        agency training.
            ``(3) Core components.--The program includes the following 
        core components:
                    ``(A) Service delivery model or models.--
                            ``(i) In general.--Subject to clause (ii), 
                        the program is conducted using 1 or more of the 
                        service delivery models described in item (aa) 
                        or (bb) of subclause (I) or in subclause (II) 
                        selected by the eligible entity:
                                    ``(I) The model conforms to a clear 
                                consistent home visitation model that 
                                has been in existence for at least 3 
                                years and is research-based, grounded 
                                in relevant empirically-based 
                                knowledge, linked to program determined 
                                outcomes, associated with a national 
                                organization or institution of higher 
                                education that has comprehensive home 
                                visitation program standards that 
                                ensure high quality service delivery 
                                and continuous program quality 
                                improvement, and has demonstrated 
                                significant, (and in the case of the 
                                service delivery model described in 
                                item (aa), sustained) positive 
                                outcomes, as described in the benchmark 
                                areas specified in paragraph (1)(A) and 
                                the participant outcomes described in 
                                paragraph (2)(B), when evaluated using 
                                well-designed and rigorous--
                                            ``(aa) randomized 
                                        controlled research designs, 
                                        and the evaluation results have 
                                        been published in a peer-
                                        reviewed journal; or
                                            ``(bb) quasi-experimental 
                                        research designs.
                                    ``(II) The model conforms to a 
                                promising and new approach to achieving 
                                the benchmark areas specified in 
                                paragraph (1)(A) and the participant 
                                outcomes described in paragraph (2)(B), 
                                has been developed or identified by a 
                                national organization or institution of 
                                higher education, and will be evaluated 
                                through well-designed and rigorous 
                                process.
                            ``(ii) Majority of grant funds used for 
                        evidence-based models.--An eligible entity 
                        shall use not more than 25 percent of the 
                        amount of the grant paid to the entity for a 
                        fiscal year for purposes of conducting a 
                        program using the service delivery model 
                        described in clause (i)(II).
                            ``(iii) Criteria for evidence of 
                        effectiveness of models.--The Secretary shall 
                        establish criteria for evidence of 
                        effectiveness of the service delivery models 
                        and shall ensure that the process for 
                        establishing the criteria is transparent and 
                        provides the opportunity for public comment.
                    ``(B) Additional requirements.--
                            ``(i) The program adheres to a clear, 
                        consistent model that satisfies the 
                        requirements of being grounded in empirically-
                        based knowledge related to home visiting and 
                        linked to the benchmark areas specified in 
                        paragraph (1)(A) and the participant outcomes 
                        described in paragraph (2)(B) related to the 
                        purposes of the program.
                            ``(ii) The program employs well-trained and 
                        competent staff, as demonstrated by education 
                        or training, such as nurses, social workers, 
                        educators, child development specialists, or 
                        other well-trained and competent staff, and 
                        provides ongoing and specific training on the 
                        model being delivered.
                            ``(iii) The program maintains high quality 
                        supervision to establish home visitor 
                        competencies.
                            ``(iv) The program demonstrates strong 
                        organizational capacity to implement the 
                        activities involved.
                            ``(v) The program establishes appropriate 
                        linkages and referral networks to other 
                        community resources and supports for eligible 
                        families.
                            ``(vi) The program monitors the fidelity of 
                        program implementation to ensure that services 
                        are delivered pursuant to the specified model.
            ``(4) Priority for serving high-risk populations.--The 
        eligible entity gives priority to providing services under the 
        program to the following:
                    ``(A) Eligible families who reside in communities 
                in need of such services, as identified in the 
                statewide needs assessment required under subsection 
                (b)(1)(A).
                    ``(B) Low-income eligible families.
                    ``(C) Eligible families who are pregnant women who 
                have not attained age 21.
                    ``(D) Eligible families that have a history of 
                child abuse or neglect or have had interactions with 
                child welfare services.
                    ``(E) Eligible families that have a history of 
                substance abuse or need substance abuse treatment.
                    ``(F) Eligible families that have users of tobacco 
                products in the home.
                    ``(G) Eligible families that are or have children 
                with low student achievement.
                    ``(H) Eligible families with children with 
                developmental delays or disabilities.
                    ``(I) Eligible families who, or that include 
                individuals who, are serving or formerly served in the 
                Armed Forces, including such families that have members 
                of the Armed Forces who have had multiple deployments 
                outside of the United States.
    ``(e) Application Requirements.--An eligible entity desiring a 
grant under this section shall submit an application to the Secretary 
for approval, in such manner as the Secretary may require, that 
includes the following:
            ``(1) A description of the populations to be served by the 
        entity, including specific information regarding how the entity 
        will serve high risk populations described in subsection 
        (d)(4).
            ``(2) An assurance that the entity will give priority to 
        serving low-income eligible families and eligible families who 
        reside in at risk communities identified in the statewide needs 
        assessment required under subsection (b)(1)(A).
            ``(3) The service delivery model or models described in 
        subsection (d)(3)(A) that the entity will use under the program 
        and the basis for the selection of the model or models.
            ``(4) A statement identifying how the selection of the 
        populations to be served and the service delivery model or 
        models that the entity will use under the program for such 
        populations is consistent with the results of the statewide 
        needs assessment conducted under subsection (b).
            ``(5) The quantifiable, measurable benchmarks established 
        by the State to demonstrate that the program contributes to 
        improvements in the areas specified in subsection (d)(1)(A).
            ``(6) An assurance that the entity will obtain and submit 
        documentation or other appropriate evidence from the 
        organization or entity that developed the service delivery 
        model or models used under the program to verify that the 
        program is implemented and services are delivered according to 
        the model specifications.
            ``(7) Assurances that the entity will establish procedures 
        to ensure that--
                    ``(A) the participation of each eligible family in 
                the program is voluntary; and
                    ``(B) services are provided to an eligible family 
                in accordance with the individual assessment for that 
                family.
            ``(8) Assurances that the entity will--
                    ``(A) submit annual reports to the Secretary 
                regarding the program and activities carried out under 
                the program that include such information and data as 
                the Secretary shall require; and
                    ``(B) participate in, and cooperate with, data and 
                information collection necessary for the evaluation 
                required under subsection (g)(2) and other research and 
                evaluation activities carried out under subsection 
                (h)(3).
            ``(9) A description of other State programs that include 
        home visitation services, including, if applicable to the 
        State, other programs carried out under this title with funds 
        made available from allotments under section 502(c), programs 
        funded under title IV, title II of the Child Abuse Prevention 
        and Treatment Act (relating to community-based grants for the 
        prevention of child abuse and neglect), and section 645A of the 
        Head Start Act (relating to Early Head Start programs).
            ``(10) Other information as required by the Secretary.
    ``(f) Maintenance of Effort.--Funds provided to an eligible entity 
receiving a grant under this section shall supplement, and not 
supplant, funds from other sources for early childhood home visitation 
programs or initiatives.
    ``(g) Evaluation.--
            ``(1) Independent, expert advisory panel.--The Secretary, 
        in accordance with subsection (h)(1)(A), shall appoint an 
        independent advisory panel consisting of experts in program 
        evaluation and research, education, and early childhood 
        development--
                    ``(A) to review, and make recommendations on, the 
                design and plan for the evaluation required under 
                paragraph (2) within 1 year after the date of enactment 
                of this section;
                    ``(B) to maintain and advise the Secretary 
                regarding the progress of the evaluation; and
                    ``(C) to comment, if the panel so desires, on the 
                report submitted under paragraph (3).
            ``(2) Authority to conduct evaluation.--On the basis of the 
        recommendations of the advisory panel under paragraph (1), the 
        Secretary shall, by grant, contract, or interagency agreement, 
        conduct an evaluation of the statewide needs assessments 
        submitted under subsection (b) and the grants made under 
        subsections (c) and (h)(3)(B). The evaluation shall include--
                    ``(A) an analysis, on a State-by-State basis, of 
                the results of such assessments, including indicators 
                of maternal and prenatal health and infant health and 
                mortality, and State actions in response to the 
                assessments; and
                    ``(B) an assessment of--
                            ``(i) the effect of early childhood home 
                        visitation programs on child and parent 
                        outcomes, including with respect to each of the 
                        benchmark areas specified in subsection 
                        (d)(1)(A) and the participant outcomes 
                        described in subsection (d)(2)(B);
                            ``(ii) the effectiveness of such programs 
                        on different populations, including the extent 
                        to which the ability of programs to improve 
                        participant outcomes varies across programs and 
                        populations; and
                            ``(iii) the potential for the activities 
                        conducted under such programs, if scaled 
                        broadly, to improve health care practices, 
                        eliminate health disparities, and improve 
                        health care system quality, efficiencies, and 
                        reduce costs.
            ``(3) Report.--Not later than March 31, 2015, the Secretary 
        shall submit a report to Congress on the results of the 
        evaluation conducted under paragraph (2) and shall make the 
        report publicly available.
    ``(h) Other Provisions.--
            ``(1) Intra-agency collaboration.--The Secretary shall 
        ensure that the Maternal and Child Health Bureau and the 
        Administration for Children and Families collaborate with 
        respect to carrying out this section, including with respect 
        to--
                    ``(A) reviewing and analyzing the statewide needs 
                assessments required under subsection (b), the awarding 
                and oversight of grants awarded under this section, the 
                establishment of the advisory panels required under 
                subsections (d)(1)(B)(iii)(II) and (g)(1), and the 
                evaluation and report required under subsection (g); 
                and
                    ``(B) consulting with other Federal agencies with 
                responsibility for administering or evaluating programs 
                that serve eligible families to coordinate and 
                collaborate with respect to research related to such 
                programs and families, including the Office of the 
                Assistant Secretary for Planning and Evaluation of the 
                Department of Health and Human Services, the Centers 
                for Disease Control and Prevention, the National 
                Institute of Child Health and Human Development of the 
                National Institutes of Health, the Office of Juvenile 
                Justice and Delinquency Prevention of the Department of 
                Justice, and the Institute of Education Sciences of the 
                Department of Education.
            ``(2) Grants to eligible entities that are not states.--
                    ``(A) Indian tribes, tribal organizations, or urban 
                indian organizations.--The Secretary shall specify 
                requirements for eligible entities that are Indian 
                Tribes (or a consortium of Indian Tribes), Tribal 
                Organizations, or Urban Indian Organizations to apply 
                for and conduct an early childhood home visitation 
                program with a grant under this section. Such 
                requirements shall, to the greatest extent practicable, 
                be consistent with the requirements applicable to 
                eligible entities that are States and shall require an 
                Indian Tribe (or consortium), Tribal Organization, or 
                Urban Indian Organization to--
                            ``(i) conduct a needs assessment similar to 
                        the assessment required for all States under 
                        subsection (b); and
                            ``(ii) establish quantifiable, measurable 
                        3- and 5-year benchmarks consistent with 
                        subsection (d)(1)(A).
                    ``(B) Nonprofit organizations.--If, as of the 
                beginning of fiscal year 2012, a State has not applied 
                or been approved for a grant under this section, the 
                Secretary may use amounts appropriated under paragraph 
                (1) of subsection (j) that are available for 
                expenditure under paragraph (3) of that subsection to 
                make a grant to an eligible entity that is a nonprofit 
                organization described in subsection (k)(1)(B) to 
                conduct an early childhood home visitation program in 
                the State. The Secretary shall specify the requirements 
                for such an organization to apply for and conduct the 
                program which shall, to the greatest extent 
                practicable, be consistent with the requirements 
                applicable to eligible entities that are States and 
                shall require the organization to--
                            ``(i) carry out the program based on the 
                        needs assessment conducted by the State under 
                        subsection (b); and
                            ``(ii) establish quantifiable, measurable 
                        3- and 5-year benchmarks consistent with 
                        subsection (d)(1)(A).
            ``(3) Research and other evaluation activities.--
                    ``(A) In general.--The Secretary shall carry out a 
                continuous program of research and evaluation 
                activities in order to increase knowledge about the 
                implementation and effectiveness of home visiting 
                programs, using random assignment designs to the 
                maximum extent feasible. The Secretary may carry out 
                such activities directly, or through grants, 
                cooperative agreements, or contracts.
                    ``(B) Requirements.--The Secretary shall ensure 
                that--
                            ``(i) evaluation of a specific program or 
                        project is conducted by persons or individuals 
                        not directly involved in the operation of such 
                        program or project; and
                            ``(ii) the conduct of research and 
                        evaluation activities includes consultation 
                        with independent researchers, State officials, 
                        and developers and providers of home visiting 
                        programs on topics including research design 
                        and administrative data matching.
            ``(4) Report and recommendation.--Not later than December 
        31, 2015, the Secretary shall submit a report to Congress 
        regarding the programs conducted with grants under this 
        section. The report required under this paragraph shall 
        include--
                    ``(A) information regarding the extent to which 
                eligible entities receiving grants under this section 
                demonstrated improvements in each of the areas 
                specified in subsection (d)(1)(A);
                    ``(B) information regarding any technical 
                assistance provided under subsection (d)(1)(B)(iii)(I), 
                including the type of any such assistance provided; and
                    ``(C) recommendations for such legislative or 
                administrative action as the Secretary determines 
                appropriate.
    ``(i) Application of Other Provisions of Title.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        other provisions of this title shall not apply to a grant made 
        under this section.
            ``(2) Exceptions.--The following provisions of this title 
        shall apply to a grant made under this section to the same 
        extent and in the same manner as such provisions apply to 
        allotments made under section 502(c):
                    ``(A) Section 504(b)(6) (relating to prohibition on 
                payments to excluded individuals and entities).
                    ``(B) Section 504(c) (relating to the use of funds 
                for the purchase of technical assistance).
                    ``(C) Section 504(d) (relating to a limitation on 
                administrative expenditures).
                    ``(D) Section 506 (relating to reports and audits), 
                but only to the extent determined by the Secretary to 
                be appropriate for grants made under this section.
                    ``(E) Section 507 (relating to penalties for false 
                statements).
                    ``(F) Section 508 (relating to nondiscrimination).
                    ``(G) Section 509(a) (relating to the 
                administration of the grant program).
    ``(j) Appropriations.--
            ``(1) In general.--Out of any funds in the Treasury not 
        otherwise appropriated, there are appropriated to the Secretary 
        to carry out this section--
                    ``(A) $100,000,000 for fiscal year 2010;
                    ``(B) $250,000,000 for fiscal year 2011;
                    ``(C) $350,000,000 for fiscal year 2012;
                    ``(D) $400,000,000 for fiscal year 2013; and
                    ``(E) $400,000,000 for fiscal year 2014.
            ``(2) Reservations.--Of the amount appropriated under this 
        subsection for a fiscal year, the Secretary shall reserve--
                    ``(A) 3 percent of such amount for purposes of 
                making grants to eligible entities that are Indian 
                Tribes (or a consortium of Indian Tribes), Tribal 
                Organizations, or Urban Indian Organizations; and
                    ``(B) 3 percent of such amount for purposes of 
                carrying out subsections (d)(1)(B)(iii), (g), and 
                (h)(3).
            ``(3) Availability.--Funds made available to an eligible 
        entity under this section for a fiscal year shall remain 
        available for expenditure by the eligible entity through the 
        end of the second succeeding fiscal year after award. Any funds 
        that are not expended by the eligible entity during the period 
        in which the funds are available under the preceding sentence 
        may be used for grants to nonprofit organizations under 
        subsection (h)(2)(B).
    ``(k) Definitions.--In this section:
            ``(1) Eligible entity.--
                    ``(A) In general.--The term `eligible entity' means 
                a State, an Indian Tribe, Tribal Organization, or Urban 
                Indian Organization, Puerto Rico, Guam, the Virgin 
                Islands, the Northern Mariana Islands, and American 
                Samoa.
                    ``(B) Nonprofit organizations.--Only for purposes 
                of awarding grants under subsection (h)(2)(B), such 
                term shall include a nonprofit organization with an 
                established record of providing early childhood home 
                visitation programs or initiatives in a State or 
                several States.
            ``(2) Eligible family.--The term `eligible family' means--
                    ``(A) a woman who is pregnant, and the father of 
                the child if the father is available; or
                    ``(B) a parent or primary caregiver of a child, 
                including grandparents or other relatives of the child, 
                and foster parents, who are serving as the child's 
                primary caregiver from birth to kindergarten entry, and 
                including a noncustodial parent who has an ongoing 
                relationship with, and at times provides physical care 
                for, the child.
            ``(3) Indian tribe; tribal organization.--The terms `Indian 
        Tribe' and `Tribal Organization', and `Urban Indian 
        Organization' have the meanings given such terms in section 4 
        of the Indian Health Care Improvement Act.''.

SEC. 2952. SUPPORT, EDUCATION, AND RESEARCH FOR POSTPARTUM DEPRESSION.

    (a) Research on Postpartum Conditions.--
            (1) Expansion and intensification of activities.--The 
        Secretary of Health and Human Services (in this subsection and 
        subsection (c) referred to as the ``Secretary'') is encouraged 
        to continue activities on postpartum depression or postpartum 
        psychosis (in this subsection and subsection (c) referred to as 
        ``postpartum conditions''), including research to expand the 
        understanding of the causes of, and treatments for, postpartum 
        conditions. Activities under this paragraph shall include 
        conducting and supporting the following:
                    (A) Basic research concerning the etiology and 
                causes of the conditions.
                    (B) Epidemiological studies to address the 
                frequency and natural history of the conditions and the 
                differences among racial and ethnic groups with respect 
                to the conditions.
                    (C) The development of improved screening and 
                diagnostic techniques.
                    (D) Clinical research for the development and 
                evaluation of new treatments.
                    (E) Information and education programs for health 
                care professionals and the public, which may include a 
                coordinated national campaign to increase the awareness 
                and knowledge of postpartum conditions. Activities 
                under such a national campaign may--
                            (i) include public service announcements 
                        through television, radio, and other means; and
                            (ii) focus on--
                                    (I) raising awareness about 
                                screening;
                                    (II) educating new mothers and 
                                their families about postpartum 
                                conditions to promote earlier diagnosis 
                                and treatment; and
                                    (III) ensuring that such education 
                                includes complete information 
                                concerning postpartum conditions, 
                                including its symptoms, methods of 
                                coping with the illness, and treatment 
                                resources.
            (2) Sense of congress regarding longitudinal study of 
        relative mental health consequences for women of resolving a 
        pregnancy.--
                    (A) Sense of congress.--It is the sense of Congress 
                that the Director of the National Institute of Mental 
                Health may conduct a nationally representative 
                longitudinal study (during the period of fiscal years 
                2010 through 2019) of the relative mental health 
                consequences for women of resolving a pregnancy 
                (intended and unintended) in various ways, including 
                carrying the pregnancy to term and parenting the child, 
                carrying the pregnancy to term and placing the child 
                for adoption, miscarriage, and having an abortion. This 
                study may assess the incidence, timing, magnitude, and 
                duration of the immediate and long-term mental health 
                consequences (positive or negative) of these pregnancy 
                outcomes.
                    (B) Report.--Subject to the completion of the study 
                under subsection (a), beginning not later than 5 years 
                after the date of the enactment of this Act, and 
                periodically thereafter for the duration of the study, 
                such Director may prepare and submit to the Congress 
                reports on the findings of the study.
    (b) Grants To Provide Services to Individuals With a Postpartum 
Condition and Their Families.--Title V of the Social Security Act (42 
U.S.C. 701 et seq.), as amended by section 2951, is amended by adding 
at the end the following new section:

``SEC. 512. SERVICES TO INDIVIDUALS WITH A POSTPARTUM CONDITION AND 
              THEIR FAMILIES.

    ``(a) In General.--In addition to any other payments made under 
this title to a State, the Secretary may make grants to eligible 
entities for projects for the establishment, operation, and 
coordination of effective and cost-efficient systems for the delivery 
of essential services to individuals with or at risk for postpartum 
conditions and their families.
    ``(b) Certain Activities.--To the extent practicable and 
appropriate, the Secretary shall ensure that projects funded under 
subsection (a) provide education and services with respect to the 
diagnosis and management of postpartum conditions for individuals with 
or at risk for postpartum conditions and their families. The Secretary 
may allow such projects to include the following:
            ``(1) Delivering or enhancing outpatient and home-based 
        health and support services, including case management and 
        comprehensive treatment services.
            ``(2) Delivering or enhancing inpatient care management 
        services that ensure the well-being of the mother and family 
        and the future development of the infant.
            ``(3) Improving the quality, availability, and organization 
        of health care and support services (including transportation 
        services, attendant care, homemaker services, day or respite 
        care, and providing counseling on financial assistance and 
        insurance).
            ``(4) Providing education about postpartum conditions to 
        promote earlier diagnosis and treatment. Such education may 
        include--
                    ``(A) providing complete information on postpartum 
                conditions, symptoms, methods of coping with the 
                illness, and treatment resources; and
                    ``(B) in the case of a grantee that is a State, 
                hospital, or birthing facility--
                            ``(i) providing education to new mothers 
                        and fathers, and other family members as 
                        appropriate, concerning postpartum conditions 
                        before new mothers leave the health facility; 
                        and
                            ``(ii) ensuring that training programs 
                        regarding such education are carried out at the 
                        health facility.
    ``(c) Integration With Other Programs.--To the extent practicable 
and appropriate, the Secretary may integrate the grant program under 
this section with other grant programs carried out by the Secretary, 
including the program under section 330 of the Public Health Service 
Act.
    ``(d) Requirements.--The Secretary shall establish requirements for 
grants made under this section that include a limit on the amount of 
grants funds that may be used for administration, accounting, 
reporting, or program oversight functions and a requirement for each 
eligible entity that receives a grant to submit, for each grant period, 
a report to the Secretary that describes how grant funds were used 
during such period.
    ``(e) Technical Assistance.--The Secretary may provide technical 
assistance to entities seeking a grant under this section in order to 
assist such entities in complying with the requirements of this 
section.
    ``(f) Application of Other Provisions of Title.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        other provisions of this title shall not apply to a grant made 
        under this section.
            ``(2) Exceptions.--The following provisions of this title 
        shall apply to a grant made under this section to the same 
        extent and in the same manner as such provisions apply to 
        allotments made under section 502(c):
                    ``(A) Section 504(b)(6) (relating to prohibition on 
                payments to excluded individuals and entities).
                    ``(B) Section 504(c) (relating to the use of funds 
                for the purchase of technical assistance).
                    ``(C) Section 504(d) (relating to a limitation on 
                administrative expenditures).
                    ``(D) Section 506 (relating to reports and audits), 
                but only to the extent determined by the Secretary to 
                be appropriate for grants made under this section.
                    ``(E) Section 507 (relating to penalties for false 
                statements).
                    ``(F) Section 508 (relating to nondiscrimination).
                    ``(G) Section 509(a) (relating to the 
                administration of the grant program).
    ``(g) Definitions.--In this section:
            ``(1) The term `eligible entity'--
                    ``(A) means a public or nonprofit private entity; 
                and
                    ``(B) includes a State or local government, public-
                private partnership, recipient of a grant under section 
                330H of the Public Health Service Act (relating to the 
                Healthy Start Initiative), public or nonprofit private 
                hospital, community-based organization, hospice, 
                ambulatory care facility, community health center, 
                migrant health center, public housing primary care 
                center, or homeless health center.
            ``(2) The term `postpartum condition' means postpartum 
        depression or postpartum psychosis.''.
    (c) General Provisions.--
            (1) Authorization of appropriations.--To carry out this 
        section and the amendment made by subsection (b), there are 
        authorized to be appropriated, in addition to such other sums 
        as may be available for such purpose--
                    (A) $3,000,000 for fiscal year 2010; and
                    (B) such sums as may be necessary for fiscal years 
                2011 and 2012.
            (2) Report by the secretary.--
                    (A) Study.--The Secretary shall conduct a study on 
                the benefits of screening for postpartum conditions.
                    (B) Report.--Not later than 2 years after the date 
                of the enactment of this Act, the Secretary shall 
                complete the study required by subparagraph (A) and 
                submit a report to the Congress on the results of such 
                study.

SEC. 2953. PERSONAL RESPONSIBILITY EDUCATION.

    Title V of the Social Security Act (42 U.S.C. 701 et seq.), as 
amended by sections 2951 and 2952(c), is amended by adding at the end 
the following:

``SEC. 513. PERSONAL RESPONSIBILITY EDUCATION.

    ``(a) Allotments to States.--
            ``(1) Amount.--
                    ``(A) In general.--For the purpose described in 
                subsection (b), subject to the succeeding provisions of 
                this section, for each of fiscal years 2010 through 
                2014, the Secretary shall allot to each State an amount 
                equal to the product of--
                            ``(i) the amount appropriated under 
                        subsection (f) for the fiscal year and 
                        available for allotments to States after the 
                        application of subsection (c); and
                            ``(ii) the State youth population 
                        percentage determined under paragraph (2).
                    ``(B) Minimum allotment.--
                            ``(i) In general.--Each State allotment 
                        under this paragraph for a fiscal year shall be 
                        at least $250,000.
                            ``(ii) Pro rata adjustments.--The Secretary 
                        shall adjust on a pro rata basis the amount of 
                        the State allotments determined under this 
                        paragraph for a fiscal year to the extent 
                        necessary to comply with clause (i).
                    ``(C) Application required to access allotments.--
                            ``(i) In general.--A State shall not be 
                        paid from its allotment for a fiscal year 
                        unless the State submits an application to the 
                        Secretary for the fiscal year and the Secretary 
                        approves the application (or requires changes 
                        to the application that the State satisfies) 
                        and meets such additional requirements as the 
                        Secretary may specify.
                            ``(ii) Requirements.--The State application 
                        shall contain an assurance that the State has 
                        complied with the requirements of this section 
                        in preparing and submitting the application and 
                        shall include the following as well as such 
                        additional information as the Secretary may 
                        require:
                                    ``(I) Based on data from the 
                                Centers for Disease Control and 
                                Prevention National Center for Health 
                                Statistics, the most recent pregnancy 
                                rates for the State for youth ages 10 
                                to 14 and youth ages 15 to 19 for which 
                                data are available, the most recent 
                                birth rates for such youth populations 
                                in the State for which data are 
                                available, and trends in those rates 
                                for the most recently preceding 5-year 
                                period for which such data are 
                                available.
                                    ``(II) State-established goals for 
                                reducing the pregnancy rates and birth 
                                rates for such youth populations.
                                    ``(III) A description of the 
                                State's plan for using the State 
                                allotments provided under this section 
                                to achieve such goals, especially among 
                                youth populations that are the most 
                                high-risk or vulnerable for pregnancies 
                                or otherwise have special 
                                circumstances, including youth in 
                                foster care, homeless youth, youth with 
                                HIV/AIDS, pregnant youth who are under 
                                21 years of age, mothers who are under 
                                21 years of age, and youth residing in 
                                areas with high birth rates for youth.
            ``(2) State youth population percentage.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(A)(ii), the State youth population percentage is, 
                with respect to a State, the proportion (expressed as a 
                percentage) of--
                            ``(i) the number of individuals who have 
                        attained age 10 but not attained age 20 in the 
                        State; to
                            ``(ii) the number of such individuals in 
                        all States.
                    ``(B) Determination of number of youth.--The number 
                of individuals described in clauses (i) and (ii) of 
                subparagraph (A) in a State shall be determined on the 
                basis of the most recent Bureau of the Census data.
            ``(3) Availability of state allotments.--Subject to 
        paragraph (4)(A), amounts allotted to a State pursuant to this 
        subsection for a fiscal year shall remain available for 
        expenditure by the State through the end of the second 
        succeeding fiscal year.
            ``(4) Authority to award grants from state allotments to 
        local organizations and entities in nonparticipating states.--
                    ``(A) Grants from unexpended allotments.--If a 
                State does not submit an application under this section 
                for fiscal year 2010 or 2011, the State shall no longer 
                be eligible to submit an application to receive funds 
                from the amounts allotted for the State for each of 
                fiscal years 2010 through 2014 and such amounts shall 
                be used by the Secretary to award grants under this 
                paragraph for each of fiscal years 2012 through 2014. 
                The Secretary also shall use any amounts from the 
                allotments of States that submit applications under 
                this section for a fiscal year that remain unexpended 
                as of the end of the period in which the allotments are 
                available for expenditure under paragraph (3) for 
                awarding grants under this paragraph.
                    ``(B) 3-year grants.--
                            ``(i) In general.--The Secretary shall 
                        solicit applications to award 3-year grants in 
                        each of fiscal years 2012, 2013, and 2014 to 
                        local organizations and entities to conduct, 
                        consistent with subsection (b), programs and 
                        activities in States that do not submit an 
                        application for an allotment under this section 
                        for fiscal year 2010 or 2011.
                            ``(ii) Faith-based organizations or 
                        consortia.--The Secretary may solicit and award 
                        grants under this paragraph to faith-based 
                        organizations or consortia.
                    ``(C) Evaluation.--An organization or entity 
                awarded a grant under this paragraph shall agree to 
                participate in a rigorous Federal evaluation.
            ``(5) Maintenance of effort.--No payment shall be made to a 
        State from the allotment determined for the State under this 
        subsection or to a local organization or entity awarded a grant 
        under paragraph (4), if the expenditure of non-federal funds by 
        the State, organization, or entity for activities, programs, or 
        initiatives for which amounts from allotments and grants under 
        this subsection may be expended is less than the amount 
        expended by the State, organization, or entity for such 
        programs or initiatives for fiscal year 2009.
            ``(6) Data collection and reporting.--A State or local 
        organization or entity receiving funds under this section shall 
        cooperate with such requirements relating to the collection of 
        data and information and reporting on outcomes regarding the 
        programs and activities carried out with such funds, as the 
        Secretary shall specify.
    ``(b) Purpose.--
            ``(1) In general.--The purpose of an allotment under 
        subsection (a)(1) to a State is to enable the State (or, in the 
        case of grants made under subsection (a)(4)(B), to enable a 
        local organization or entity) to carry out personal 
        responsibility education programs consistent with this 
        subsection.
            ``(2) Personal responsibility education programs.--
                    ``(A) In general.--In this section, the term 
                `personal responsibility education program' means a 
                program that is designed to educate adolescents on--
                            ``(i) both abstinence and contraception for 
                        the prevention of pregnancy and sexually 
                        transmitted infections, including HIV/AIDS, 
                        consistent with the requirements of 
                        subparagraph (B); and
                            ``(ii) at least 3 of the adulthood 
                        preparation subjects described in subparagraph 
                        (C).
                    ``(B) Requirements.--The requirements of this 
                subparagraph are the following:
                            ``(i) The program replicates evidence-based 
                        effective programs or substantially 
                        incorporates elements of effective programs 
                        that have been proven on the basis of rigorous 
                        scientific research to change behavior, which 
                        means delaying sexual activity, increasing 
                        condom or contraceptive use for sexually active 
                        youth, or reducing pregnancy among youth.
                            ``(ii) The program is medically-accurate 
                        and complete.
                            ``(iii) The program includes activities to 
                        educate youth who are sexually active regarding 
                        responsible sexual behavior with respect to 
                        both abstinence and the use of contraception.
                            ``(iv) The program places substantial 
                        emphasis on both abstinence and contraception 
                        for the prevention of pregnancy among youth and 
                        sexually transmitted infections.
                            ``(v) The program provides age-appropriate 
                        information and activities.
                            ``(vi) The information and activities 
                        carried out under the program are provided in 
                        the cultural context that is most appropriate 
                        for individuals in the particular population 
                        group to which they are directed.
                    ``(C) Adulthood preparation subjects.--The 
                adulthood preparation subjects described in this 
                subparagraph are the following:
                            ``(i) Healthy relationships, such as 
                        positive self-esteem and relationship dynamics, 
                        friendships, dating, romantic involvement, 
                        marriage, and family interactions.
                            ``(ii) Adolescent development, such as the 
                        development of healthy attitudes and values 
                        about adolescent growth and development, body 
                        image, racial and ethnic diversity, and other 
                        related subjects.
                            ``(iii) Financial literacy.
                            ``(iv) Parent-child communication.
                            ``(v) Educational and career success, such 
                        as developing skills for employment 
                        preparation, job seeking, independent living, 
                        financial self-sufficiency, and workplace 
                        productivity.
                            ``(vi) Healthy life skills, such as goal-
                        setting, decision making, negotiation, 
                        communication and interpersonal skills, and 
                        stress management.
    ``(c) Reservations of Funds.--
            ``(1) Grants to implement innovative strategies.--From the 
        amount appropriated under subsection (f) for the fiscal year, 
        the Secretary shall reserve $10,000,000 of such amount for 
        purposes of awarding grants to entities to implement innovative 
        youth pregnancy prevention strategies and target services to 
        high-risk, vulnerable, and culturally under-represented youth 
        populations, including youth in foster care, homeless youth, 
        youth with HIV/AIDS, pregnant women who are under 21 years of 
        age and their partners, mothers who are under 21 years of age 
        and their partners, and youth residing in areas with high birth 
        rates for youth. An entity awarded a grant under this paragraph 
        shall agree to participate in a rigorous Federal evaluation of 
        the activities carried out with grant funds.
            ``(2) Other reservations.--From the amount appropriated 
        under subsection (f) for the fiscal year that remains after the 
        application of paragraph (1), the Secretary shall reserve the 
        following amounts:
                    ``(A) Grants for indian tribes or tribal 
                organizations.--The Secretary shall reserve 5 percent 
                of such remainder for purposes of awarding grants to 
                Indian tribes and tribal organizations in such manner, 
                and subject to such requirements, as the Secretary, in 
                consultation with Indian tribes and tribal 
                organizations, determines appropriate.
                    ``(B) Secretarial responsibilities.--
                            ``(i) Reservation of funds.--The Secretary 
                        shall reserve 10 percent of such remainder for 
                        expenditures by the Secretary for the 
                        activities described in clauses (ii) and (iii).
                            ``(ii) Program support.--The Secretary 
                        shall provide, directly or through a 
                        competitive grant process, research, training 
                        and technical assistance, including 
                        dissemination of research and information 
                        regarding effective and promising practices, 
                        providing consultation and resources on a broad 
                        array of teen pregnancy prevention strategies, 
                        including abstinence and contraception, and 
                        developing resources and materials to support 
                        the activities of recipients of grants and 
                        other State, tribal, and community 
                        organizations working to reduce teen pregnancy. 
                        In carrying out such functions, the Secretary 
                        shall collaborate with a variety of entities 
                        that have expertise in the prevention of teen 
                        pregnancy, HIV and sexually transmitted 
                        infections, healthy relationships, financial 
                        literacy, and other topics addressed through 
                        the personal responsibility education programs.
                            ``(iii) Evaluation.--The Secretary shall 
                        evaluate the programs and activities carried 
                        out with funds made available through 
                        allotments or grants under this section.
    ``(d) Administration.--
            ``(1) In general.--The Secretary shall administer this 
        section through the Assistant Secretary for the Administration 
        for Children and Families within the Department of Health and 
        Human Services.
            ``(2) Application of other provisions of title.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the other provisions of this title 
                shall not apply to allotments or grants made under this 
                section.
                    ``(B) Exceptions.--The following provisions of this 
                title shall apply to allotments and grants made under 
                this section to the same extent and in the same manner 
                as such provisions apply to allotments made under 
                section 502(c):
                            ``(i) Section 504(b)(6) (relating to 
                        prohibition on payments to excluded individuals 
                        and entities).
                            ``(ii) Section 504(c) (relating to the use 
                        of funds for the purchase of technical 
                        assistance).
                            ``(iii) Section 504(d) (relating to a 
                        limitation on administrative expenditures).
                            ``(iv) Section 506 (relating to reports and 
                        audits), but only to the extent determined by 
                        the Secretary to be appropriate for grants made 
                        under this section.
                            ``(v) Section 507 (relating to penalties 
                        for false statements).
                            ``(vi) Section 508 (relating to 
                        nondiscrimination).
    ``(e) Definitions.--In this section:
            ``(1) Age-appropriate.--The term `age-appropriate', with 
        respect to the information in pregnancy prevention, means 
        topics, messages, and teaching methods suitable to particular 
        ages or age groups of children and adolescents, based on 
        developing cognitive, emotional, and behavioral capacity 
        typical for the age or age group.
            ``(2) Medically accurate and complete.--The term `medically 
        accurate and complete' means verified or supported by the 
        weight of research conducted in compliance with accepted 
        scientific methods and--
                    ``(A) published in peer-reviewed journals, where 
                applicable; or
                    ``(B) comprising information that leading 
                professional organizations and agencies with relevant 
                expertise in the field recognize as accurate, 
                objective, and complete.
            ``(3) Indian tribes; tribal organizations.--The terms 
        `Indian tribe' and `Tribal organization' have the meanings 
        given such terms in section 4 of the Indian Health Care 
        Improvement Act (25 U.S.C. 1603)).
            ``(4) Youth.--The term `youth' means an individual who has 
        attained age 10 but has not attained age 20.
    ``(f) Appropriation.--For the purpose of carrying out this section, 
there is appropriated, out of any money in the Treasury not otherwise 
appropriated, $75,000,000 for each of fiscal years 2010 through 2014. 
Amounts appropriated under this subsection shall remain available until 
expended.''.

SEC. 2954. RESTORATION OF FUNDING FOR ABSTINENCE EDUCATION.

    Section 510 of the Social Security Act (42 U.S.C. 710) is amended--
            (1) in subsection (a), by striking ``fiscal year 1998 and 
        each subsequent fiscal year'' and inserting ``each of fiscal 
        years 2010 through 2014''; and
            (2) in subsection (d)--
                    (A) in the first sentence, by striking ``1998 
                through 2003'' and inserting ``2010 through 2014''; and
                    (B) in the second sentence, by inserting ``(except 
                that such appropriation shall be made on the date of 
                enactment of the Patient Protection and Affordable Care 
                Act in the case of fiscal year 2010)'' before the 
                period.

SEC. 2955. INCLUSION OF INFORMATION ABOUT THE IMPORTANCE OF HAVING A 
              HEALTH CARE POWER OF ATTORNEY IN TRANSITION PLANNING FOR 
              CHILDREN AGING OUT OF FOSTER CARE AND INDEPENDENT LIVING 
              PROGRAMS.

    (a) Transition Planning.--Section 475(5)(H) of the Social Security 
Act (42 U.S.C. 675(5)(H)) is amended by inserting ``includes 
information about the importance of designating another individual to 
make health care treatment decisions on behalf of the child if the 
child becomes unable to participate in such decisions and the child 
does not have, or does not want, a relative who would otherwise be 
authorized under State law to make such decisions, and provides the 
child with the option to execute a health care power of attorney, 
health care proxy, or other similar document recognized under State 
law,'' after ``employment services,''.
    (b) Independent Living Education.--Section 477(b)(3) of such Act 
(42 U.S.C. 677(b)(3)) is amended by adding at the end the following:
                    ``(K) A certification by the chief executive 
                officer of the State that the State will ensure that an 
                adolescent participating in the program under this 
                section are provided with education about the 
                importance of designating another individual to make 
                health care treatment decisions on behalf of the 
                adolescent if the adolescent becomes unable to 
                participate in such decisions and the adolescent does 
                not have, or does not want, a relative who would 
                otherwise be authorized under State law to make such 
                decisions, whether a health care power of attorney, 
                health care proxy, or other similar document is 
                recognized under State law, and how to execute such a 
                document if the adolescent wants to do so.''.
    (c) Health Oversight and Coordination Plan.--Section 422(b)(15)(A) 
of such Act (42 U.S.C. 622(b)(15)(A)) is amended--
            (1) in clause (v), by striking ``and'' at the end; and
            (2) by adding at the end the following:
                            ``(vii) steps to ensure that the components 
                        of the transition plan development process 
                        required under section 475(5)(H) that relate to 
                        the health care needs of children aging out of 
                        foster care, including the requirements to 
                        include options for health insurance, 
                        information about a health care power of 
                        attorney, health care proxy, or other similar 
                        document recognized under State law, and to 
                        provide the child with the option to execute 
                        such a document, are met; and''.
    (d) Effective Date.--The amendments made by this section take 
effect on October 1, 2010.

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

        Subtitle A--Transforming the Health Care Delivery System

 PART I--LINKING PAYMENT TO QUALITY OUTCOMES UNDER THE MEDICARE PROGRAM

SEC. 3001. HOSPITAL VALUE-BASED PURCHASING PROGRAM.

    (a) Program.--
            (1) In general.--Section 1886 of the Social Security Act 
        (42 U.S.C. 1395ww), as amended by section 4102(a) of the HITECH 
        Act (Public Law 111-5), is amended by adding at the end the 
        following new subsection:
    ``(o) Hospital Value-Based Purchasing Program.--
            ``(1) Establishment.--
                    ``(A) In general.--Subject to the succeeding 
                provisions of this subsection, the Secretary shall 
                establish a hospital value-based purchasing program (in 
                this subsection referred to as the `Program') under 
                which value-based incentive payments are made in a 
                fiscal year to hospitals that meet the performance 
                standards under paragraph (3) for the performance 
                period for such fiscal year (as established under 
                paragraph (4)).
                    ``(B) Program to begin in fiscal year 2013.--The 
                Program shall apply to payments for discharges 
                occurring on or after October 1, 2012.
                    ``(C) Applicability of program to hospitals.--
                            ``(i) In general.--For purposes of this 
                        subsection, subject to clause (ii), the term 
                        `hospital' means a subsection (d) hospital (as 
                        defined in subsection (d)(1)(B)).
                            ``(ii) Exclusions.--The term `hospital' 
                        shall not include, with respect to a fiscal 
                        year, a hospital--
                                    ``(I) that is subject to the 
                                payment reduction under subsection 
                                (b)(3)(B)(viii)(I) for such fiscal 
                                year;
                                    ``(II) for which, during the 
                                performance period for such fiscal 
                                year, the Secretary has cited 
                                deficiencies that pose immediate 
                                jeopardy to the health or safety of 
                                patients;
                                    ``(III) for which there are not a 
                                minimum number (as determined by the 
                                Secretary) of measures that apply to 
                                the hospital for the performance period 
                                for such fiscal year; or
                                    ``(IV) for which there are not a 
                                minimum number (as determined by the 
                                Secretary) of cases for the measures 
                                that apply to the hospital for the 
                                performance period for such fiscal 
                                year.
                            ``(iii) Independent analysis.--For purposes 
                        of determining the minimum numbers under 
                        subclauses (III) and (IV) of clause (ii), the 
                        Secretary shall have conducted an independent 
                        analysis of what numbers are appropriate.
                            ``(iv) Exemption.--In the case of a 
                        hospital that is paid under section 1814(b)(3), 
                        the Secretary may exempt such hospital from the 
                        application of this subsection if the State 
                        which is paid under such section submits an 
                        annual report to the Secretary describing how a 
                        similar program in the State for a 
                        participating hospital or hospitals achieves or 
                        surpasses the measured results in terms of 
                        patient health outcomes and cost savings 
                        established under this subsection.
            ``(2) Measures.--
                    ``(A) In general.--The Secretary shall select 
                measures for purposes of the Program. Such measures 
                shall be selected from the measures specified under 
                subsection (b)(3)(B)(viii).
                    ``(B) Requirements.--
                            ``(i) For fiscal year 2013.--For value-
                        based incentive payments made with respect to 
                        discharges occurring during fiscal year 2013, 
                        the Secretary shall ensure the following:
                                    ``(I) Conditions or procedures.--
                                Measures are selected under 
                                subparagraph (A) that cover at least 
                                the following 5 specific conditions or 
                                procedures:
                                            ``(aa) Acute myocardial 
                                        infarction (AMI).
                                            ``(bb) Heart failure.
                                            ``(cc) Pneumonia.
                                            ``(dd) Surgeries, as 
                                        measured by the Surgical Care 
                                        Improvement Project (formerly 
                                        referred to as `Surgical 
                                        Infection Prevention' for 
                                        discharges occurring before 
                                        July 2006).
                                            ``(ee) Healthcare-
                                        associated infections, as 
                                        measured by the prevention 
                                        metrics and targets established 
                                        in the HHS Action Plan to 
                                        Prevent Healthcare-Associated 
                                        Infections (or any successor 
                                        plan) of the Department of 
                                        Health and Human Services.
                                    ``(II) HCAHPS.--Measures selected 
                                under subparagraph (A) shall be related 
                                to the Hospital Consumer Assessment of 
                                Healthcare Providers and Systems survey 
                                (HCAHPS).
                            ``(ii) Inclusion of efficiency measures.--
                        For value-based incentive payments made with 
                        respect to discharges occurring during fiscal 
                        year 2014 or a subsequent fiscal year, the 
                        Secretary shall ensure that measures selected 
                        under subparagraph (A) include efficiency 
                        measures, including measures of `Medicare 
                        spending per beneficiary'. Such measures shall 
                        be adjusted for factors such as age, sex, race, 
                        severity of illness, and other factors that the 
                        Secretary determines appropriate.
                    ``(C) Limitations.--
                            ``(i) Time requirement for prior reporting 
                        and notice.--The Secretary may not select a 
                        measure under subparagraph (A) for use under 
                        the Program with respect to a performance 
                        period for a fiscal year (as established under 
                        paragraph (4)) unless such measure has been 
                        specified under subsection (b)(3)(B)(viii) and 
                        included on the Hospital Compare Internet 
                        website for at least 1 year prior to the 
                        beginning of such performance period.
                            ``(ii) Measure not applicable unless 
                        hospital furnishes services appropriate to the 
                        measure.--A measure selected under subparagraph 
                        (A) shall not apply to a hospital if such 
                        hospital does not furnish services appropriate 
                        to such measure.
                    ``(D) Replacing measures.--Subclause (VI) of 
                subsection (b)(3)(B)(viii) shall apply to measures 
                selected under subparagraph (A) in the same manner as 
                such subclause applies to measures selected under such 
                subsection.
            ``(3) Performance standards.--
                    ``(A) Establishment.--The Secretary shall establish 
                performance standards with respect to measures selected 
                under paragraph (2) for a performance period for a 
                fiscal year (as established under paragraph (4)).
                    ``(B) Achievement and improvement.--The performance 
                standards established under subparagraph (A) shall 
                include levels of achievement and improvement.
                    ``(C) Timing.--The Secretary shall establish and 
                announce the performance standards under subparagraph 
                (A) not later than 60 days prior to the beginning of 
                the performance period for the fiscal year involved.
                    ``(D) Considerations in establishing standards.--In 
                establishing performance standards with respect to 
                measures under this paragraph, the Secretary shall take 
                into account appropriate factors, such as--
                            ``(i) practical experience with the 
                        measures involved, including whether a 
                        significant proportion of hospitals failed to 
                        meet the performance standard during previous 
                        performance periods;
                            ``(ii) historical performance standards;
                            ``(iii) improvement rates; and
                            ``(iv) the opportunity for continued 
                        improvement.
            ``(4) Performance period.--For purposes of the Program, the 
        Secretary shall establish the performance period for a fiscal 
        year. Such performance period shall begin and end prior to the 
        beginning of such fiscal year.
            ``(5) Hospital performance score.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall develop a methodology for assessing the 
                total performance of each hospital based on performance 
                standards with respect to the measures selected under 
                paragraph (2) for a performance period (as established 
                under paragraph (4)). Using such methodology, the 
                Secretary shall provide for an assessment (in this 
                subsection referred to as the `hospital performance 
                score') for each hospital for each performance period.
                    ``(B) Application.--
                            ``(i) Appropriate distribution.--The 
                        Secretary shall ensure that the application of 
                        the methodology developed under subparagraph 
                        (A) results in an appropriate distribution of 
                        value-based incentive payments under paragraph 
                        (6) among hospitals achieving different levels 
                        of hospital performance scores, with hospitals 
                        achieving the highest hospital performance 
                        scores receiving the largest value-based 
                        incentive payments.
                            ``(ii) Higher of achievement or 
                        improvement.--The methodology developed under 
                        subparagraph (A) shall provide that the 
                        hospital performance score is determined using 
                        the higher of its achievement or improvement 
                        score for each measure.
                            ``(iii) Weights.--The methodology developed 
                        under subparagraph (A) shall provide for the 
                        assignment of weights for categories of 
                        measures as the Secretary determines 
                        appropriate.
                            ``(iv) No minimum performance standard.--
                        The Secretary shall not set a minimum 
                        performance standard in determining the 
                        hospital performance score for any hospital.
                            ``(v) Reflection of measures applicable to 
                        the hospital.--The hospital performance score 
                        for a hospital shall reflect the measures that 
                        apply to the hospital.
            ``(6) Calculation of value-based incentive payments.--
                    ``(A) In general.--In the case of a hospital that 
                the Secretary determines meets (or exceeds) the 
                performance standards under paragraph (3) for the 
                performance period for a fiscal year (as established 
                under paragraph (4)), the Secretary shall increase the 
                base operating DRG payment amount (as defined in 
                paragraph (7)(D)), as determined after application of 
                paragraph (7)(B)(i), for a hospital for each discharge 
                occurring in such fiscal year by the value-based 
                incentive payment amount.
                    ``(B) Value-based incentive payment amount.--The 
                value-based incentive payment amount for each discharge 
                of a hospital in a fiscal year shall be equal to the 
                product of--
                            ``(i) the base operating DRG payment amount 
                        (as defined in paragraph (7)(D)) for the 
                        discharge for the hospital for such fiscal 
                        year; and
                            ``(ii) the value-based incentive payment 
                        percentage specified under subparagraph (C) for 
                        the hospital for such fiscal year.
                    ``(C) Value-based incentive payment percentage.--
                            ``(i) In general.--The Secretary shall 
                        specify a value-based incentive payment 
                        percentage for a hospital for a fiscal year.
                            ``(ii) Requirements.--In specifying the 
                        value-based incentive payment percentage for 
                        each hospital for a fiscal year under clause 
                        (i), the Secretary shall ensure that--
                                    ``(I) such percentage is based on 
                                the hospital performance score of the 
                                hospital under paragraph (5); and
                                    ``(II) the total amount of value-
                                based incentive payments under this 
                                paragraph to all hospitals in such 
                                fiscal year is equal to the total 
                                amount available for value-based 
                                incentive payments for such fiscal year 
                                under paragraph (7)(A), as estimated by 
                                the Secretary.
            ``(7) Funding for value-based incentive payments.--
                    ``(A) Amount.--The total amount available for 
                value-based incentive payments under paragraph (6) for 
                all hospitals for a fiscal year shall be equal to the 
                total amount of reduced payments for all hospitals 
                under subparagraph (B) for such fiscal year, as 
                estimated by the Secretary.
                    ``(B) Adjustment to payments.--
                            ``(i) In general.--The Secretary shall 
                        reduce the base operating DRG payment amount 
                        (as defined in subparagraph (D)) for a hospital 
                        for each discharge in a fiscal year (beginning 
                        with fiscal year 2013) by an amount equal to 
                        the applicable percent (as defined in 
                        subparagraph (C)) of the base operating DRG 
                        payment amount for the discharge for the 
                        hospital for such fiscal year. The Secretary 
                        shall make such reductions for all hospitals in 
                        the fiscal year involved, regardless of whether 
                        or not the hospital has been determined by the 
                        Secretary to have earned a value-based 
                        incentive payment under paragraph (6) for such 
                        fiscal year.
                            ``(ii) No effect on other payments.--
                        Payments described in items (aa) and (bb) of 
                        subparagraph (D)(i)(II) for a hospital shall be 
                        determined as if this subsection had not been 
                        enacted.
                    ``(C) Applicable percent defined.--For purposes of 
                subparagraph (B), the term `applicable percent' means--
                            ``(i) with respect to fiscal year 2013, 1.0 
                        percent;
                            ``(ii) with respect to fiscal year 2014, 
                        1.25 percent;
                            ``(iii) with respect to fiscal year 2015, 
                        1.5 percent;
                            ``(iv) with respect to fiscal year 2016, 
                        1.75 percent; and
                            ``(v) with respect to fiscal year 2017 and 
                        succeeding fiscal years, 2 percent.
                    ``(D) Base operating drg payment amount defined.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), in this subsection, the term `base 
                        operating DRG payment amount' means, with 
                        respect to a hospital for a fiscal year--
                                    ``(I) the payment amount that would 
                                otherwise be made under subsection (d) 
                                (determined without regard to 
                                subsection (q)) for a discharge if this 
                                subsection did not apply; reduced by
                                    ``(II) any portion of such payment 
                                amount that is attributable to--
                                            ``(aa) payments under 
                                        paragraphs (5)(A), (5)(B), 
                                        (5)(F), and (12) of subsection 
                                        (d); and
                                            ``(bb) such other payments 
                                        under subsection (d) determined 
                                        appropriate by the Secretary.
                            ``(ii) Special rules for certain 
                        hospitals.--
                                    ``(I) Sole community hospitals and 
                                medicare-dependent, small rural 
                                hospitals.--In the case of a medicare-
                                dependent, small rural hospital (with 
                                respect to discharges occurring during 
                                fiscal year 2012 and 2013) or a sole 
                                community hospital, in applying 
                                subparagraph (A)(i), the payment amount 
                                that would otherwise be made under 
                                subsection (d) shall be determined 
                                without regard to subparagraphs (I) and 
                                (L) of subsection (b)(3) and 
                                subparagraphs (D) and (G) of subsection 
                                (d)(5).
                                    ``(II) Hospitals paid under section 
                                1814.--In the case of a hospital that 
                                is paid under section 1814(b)(3), the 
                                term `base operating DRG payment 
                                amount' means the payment amount under 
                                such section.
            ``(8) Announcement of net result of adjustments.--Under the 
        Program, the Secretary shall, not later than 60 days prior to 
        the fiscal year involved, inform each hospital of the 
        adjustments to payments to the hospital for discharges 
        occurring in such fiscal year under paragraphs (6) and 
        (7)(B)(i).
            ``(9) No effect in subsequent fiscal years.--The value-
        based incentive payment under paragraph (6) and the payment 
        reduction under paragraph (7)(B)(i) shall each apply only with 
        respect to the fiscal year involved, and the Secretary shall 
        not take into account such value-based incentive payment or 
        payment reduction in making payments to a hospital under this 
        section in a subsequent fiscal year.
            ``(10) Public reporting.--
                    ``(A) Hospital specific information.--
                            ``(i) In general.--The Secretary shall make 
                        information available to the public regarding 
                        the performance of individual hospitals under 
                        the Program, including--
                                    ``(I) the performance of the 
                                hospital with respect to each measure 
                                that applies to the hospital;
                                    ``(II) the performance of the 
                                hospital with respect to each condition 
                                or procedure; and
                                    ``(III) the hospital performance 
                                score assessing the total performance 
                                of the hospital.
                            ``(ii) Opportunity to review and submit 
                        corrections.--The Secretary shall ensure that a 
                        hospital has the opportunity to review, and 
                        submit corrections for, the information to be 
                        made public with respect to the hospital under 
                        clause (i) prior to such information being made 
                        public.
                            ``(iii) Website.--Such information shall be 
                        posted on the Hospital Compare Internet website 
                        in an easily understandable format.
                    ``(B) Aggregate information.--The Secretary shall 
                periodically post on the Hospital Compare Internet 
                website aggregate information on the Program, 
                including--
                            ``(i) the number of hospitals receiving 
                        value-based incentive payments under paragraph 
                        (6) and the range and total amount of such 
                        value-based incentive payments; and
                            ``(ii) the number of hospitals receiving 
                        less than the maximum value-based incentive 
                        payment available to the hospital for the 
                        fiscal year involved and the range and amount 
                        of such payments.
            ``(11) Implementation.--
                    ``(A) Appeals.--The Secretary shall establish a 
                process by which hospitals may appeal the calculation 
                of a hospital's performance assessment with respect to 
                the performance standards established under paragraph 
                (3)(A) and the hospital performance score under 
                paragraph (5). The Secretary shall ensure that such 
                process provides for resolution of such appeals in a 
                timely manner.
                    ``(B) Limitation on review.--Except as provided in 
                subparagraph (A), there shall be no administrative or 
                judicial review under section 1869, section 1878, or 
                otherwise of the following:
                            ``(i) The methodology used to determine the 
                        amount of the value-based incentive payment 
                        under paragraph (6) and the determination of 
                        such amount.
                            ``(ii) The determination of the amount of 
                        funding available for such value-based 
                        incentive payments under paragraph (7)(A) and 
                        the payment reduction under paragraph 
                        (7)(B)(i).
                            ``(iii) The establishment of the 
                        performance standards under paragraph (3) and 
                        the performance period under paragraph (4).
                            ``(iv) The measures specified under 
                        subsection (b)(3)(B)(viii) and the measures 
                        selected under paragraph (2).
                            ``(v) The methodology developed under 
                        paragraph (5) that is used to calculate 
                        hospital performance scores and the calculation 
                        of such scores.
                            ``(vi) The validation methodology specified 
                        in subsection (b)(3)(B)(viii)(XI).
                    ``(C) Consultation with small hospitals.--The 
                Secretary shall consult with small rural and urban 
                hospitals on the application of the Program to such 
                hospitals.
            ``(12) Promulgation of regulations.--The Secretary shall 
        promulgate regulations to carry out the Program, including the 
        selection of measures under paragraph (2), the methodology 
        developed under paragraph (5) that is used to calculate 
        hospital performance scores, and the methodology used to 
        determine the amount of value-based incentive payments under 
        paragraph (6).''.
            (2) Amendments for reporting of hospital quality 
        information.--Section 1886(b)(3)(B)(viii) of the Social 
        Security Act (42 U.S.C. 1395ww(b)(3)(B)(viii)) is amended--
                    (A) in subclause (II), by adding at the end the 
                following sentence: ``The Secretary may require 
                hospitals to submit data on measures that are not used 
                for the determination of value-based incentive payments 
                under subsection (o).'';
                    (B) in subclause (V), by striking ``beginning with 
                fiscal year 2008'' and inserting ``for fiscal years 
                2008 through 2012'';
                    (C) in subclause (VII), in the first sentence, by 
                striking ``data submitted'' and inserting ``information 
                regarding measures submitted''; and
                    (D) by adding at the end the following new 
                subclauses:
    ``(VIII) Effective for payments beginning with fiscal year 2013, 
with respect to quality measures for outcomes of care, the Secretary 
shall provide for such risk adjustment as the Secretary determines to 
be appropriate to maintain incentives for hospitals to treat patients 
with severe illnesses or conditions.
    ``(IX)(aa) Subject to item (bb), effective for payments beginning 
with fiscal year 2013, each measure specified by the Secretary under 
this clause shall be endorsed by the entity with a contract under 
section 1890(a).
    ``(bb) In the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical measure 
has not been endorsed by the entity with a contract under section 
1890(a), the Secretary may specify a measure that is not so endorsed as 
long as due consideration is given to measures that have been endorsed 
or adopted by a consensus organization identified by the Secretary.
    ``(X) To the extent practicable, the Secretary shall, with input 
from consensus organizations and other stakeholders, take steps to 
ensure that the measures specified by the Secretary under this clause 
are coordinated and aligned with quality measures applicable to--
            ``(aa) physicians under section 1848(k); and
            ``(bb) other providers of services and suppliers under this 
        title.
    ``(XI) The Secretary shall establish a process to validate measures 
specified under this clause as appropriate. Such process shall include 
the auditing of a number of randomly selected hospitals sufficient to 
ensure validity of the reporting program under this clause as a whole 
and shall provide a hospital with an opportunity to appeal the 
validation of measures reported by such hospital.''.
            (3) Website improvements.--Section 1886(b)(3)(B) of the 
        Social Security Act (42 U.S.C. 1395ww(b)(3)(B)), as amended by 
        section 4102(b) of the HITECH Act (Public Law 111-5), is 
        amended by adding at the end the following new clause:
    ``(x)(I) The Secretary shall develop standard Internet website 
reports tailored to meet the needs of various stakeholders such as 
hospitals, patients, researchers, and policymakers. The Secretary shall 
seek input from such stakeholders in determining the type of 
information that is useful and the formats that best facilitate the use 
of the information.
    ``(II) The Secretary shall modify the Hospital Compare Internet 
website to make the use and navigation of that website readily 
available to individuals accessing it.''.
            (4) GAO study and report.--
                    (A) Study.--The Comptroller General of the United 
                States shall conduct a study on the performance of the 
                hospital value-based purchasing program established 
                under section 1886(o) of the Social Security Act, as 
                added by paragraph (1). Such study shall include an 
                analysis of the impact of such program on--
                            (i) the quality of care furnished to 
                        Medicare beneficiaries, including diverse 
                        Medicare beneficiary populations (such as 
                        diverse in terms of race, ethnicity, and 
                        socioeconomic status);
                            (ii) expenditures under the Medicare 
                        program, including any reduced expenditures 
                        under Part A of title XVIII of such Act that 
                        are attributable to the improvement in the 
                        delivery of inpatient hospital services by 
                        reason of such hospital value-based purchasing 
                        program;
                            (iii) the quality performance among safety 
                        net hospitals and any barriers such hospitals 
                        face in meeting the performance standards 
                        applicable under such hospital value-based 
                        purchasing program; and
                            (iv) the quality performance among small 
                        rural and small urban hospitals and any 
                        barriers such hospitals face in meeting the 
                        performance standards applicable under such 
                        hospital value-based purchasing program.
                    (B) Reports.--
                            (i) Interim report.--Not later than October 
                        1, 2015, the Comptroller General of the United 
                        States shall submit to Congress an interim 
                        report containing the results of the study 
                        conducted under subparagraph (A), together with 
                        recommendations for such legislation and 
                        administrative action as the Comptroller 
                        General determines appropriate.
                            (ii) Final report.--Not later than July 1, 
                        2017, the Comptroller General of the United 
                        States shall submit to Congress a report 
                        containing the results of the study conducted 
                        under subparagraph (A), together with 
                        recommendations for such legislation and 
                        administrative action as the Comptroller 
                        General determines appropriate.
            (5) HHS study and report.--
                    (A) Study.--The Secretary of Health and Human 
                Services shall conduct a study on the performance of 
                the hospital value-based purchasing program established 
                under section 1886(o) of the Social Security Act, as 
                added by paragraph (1). Such study shall include an 
                analysis--
                            (i) of ways to improve the hospital value-
                        based purchasing program and ways to address 
                        any unintended consequences that may occur as a 
                        result of such program;
                            (ii) of whether the hospital value-based 
                        purchasing program resulted in lower spending 
                        under the Medicare program under title XVIII of 
                        such Act or other financial savings to 
                        hospitals;
                            (iii) the appropriateness of the Medicare 
                        program sharing in any savings generated 
                        through the hospital value-based purchasing 
                        program; and
                            (iv) any other area determined appropriate 
                        by the Secretary.
                    (B) Report.--Not later than January 1, 2016, the 
                Secretary of Health and Human Services shall submit to 
                Congress a report containing the results of the study 
                conducted under subparagraph (A), together with 
                recommendations for such legislation and administrative 
                action as the Secretary determines appropriate.
    (b) Value-Based Purchasing Demonstration Programs.--
            (1) Value-based purchasing demonstration program for 
        inpatient critical access hospitals.--
                    (A) Establishment.--
                            (i) In general.--Not later than 2 years 
                        after the date of enactment of this Act, the 
                        Secretary of Health and Human Services (in this 
                        subsection referred to as the ``Secretary'') 
                        shall establish a demonstration program under 
                        which the Secretary establishes a value-based 
                        purchasing program under the Medicare program 
                        under title XVIII of the Social Security Act 
                        for critical access hospitals (as defined in 
                        paragraph (1) of section 1861(mm) of such Act 
                        (42 U.S.C. 1395x(mm))) with respect to 
                        inpatient critical access hospital services (as 
                        defined in paragraph (2) of such section) in 
                        order to test innovative methods of measuring 
                        and rewarding quality and efficient health care 
                        furnished by such hospitals.
                            (ii) Duration.--The demonstration program 
                        under this paragraph shall be conducted for a 
                        3-year period.
                            (iii) Sites.--The Secretary shall conduct 
                        the demonstration program under this paragraph 
                        at an appropriate number (as determined by the 
                        Secretary) of critical access hospitals. The 
                        Secretary shall ensure that such hospitals are 
                        representative of the spectrum of such 
                        hospitals that participate in the Medicare 
                        program.
                    (B) Waiver authority.--The Secretary may waive such 
                requirements of titles XI and XVIII of the Social 
                Security Act as may be necessary to carry out the 
                demonstration program under this paragraph.
                    (C) Budget neutrality requirement.--In conducting 
                the demonstration program under this section, the 
                Secretary shall ensure that the aggregate payments made 
                by the Secretary do not exceed the amount which the 
                Secretary would have paid if the demonstration program 
                under this section was not implemented.
                    (D) Report.--Not later than 18 months after the 
                completion of the demonstration program under this 
                paragraph, the Secretary shall submit to Congress a 
                report on the demonstration program together with--
                            (i) recommendations on the establishment of 
                        a permanent value-based purchasing program 
                        under the Medicare program for critical access 
                        hospitals with respect to inpatient critical 
                        access hospital services; and
                            (ii) recommendations for such other 
                        legislation and administrative action as the 
                        Secretary determines appropriate.
            (2) Value-based purchasing demonstration program for 
        hospitals excluded from hospital value-based purchasing program 
        as a result of insufficient numbers of measures and cases.--
                    (A) Establishment.--
                            (i) In general.--Not later than 2 years 
                        after the date of enactment of this Act, the 
                        Secretary shall establish a demonstration 
                        program under which the Secretary establishes a 
                        value-based purchasing program under the 
                        Medicare program under title XVIII of the 
                        Social Security Act for applicable hospitals 
                        (as defined in clause (ii)) with respect to 
                        inpatient hospital services (as defined in 
                        section 1861(b) of the Social Security Act (42 
                        U.S.C. 1395x(b))) in order to test innovative 
                        methods of measuring and rewarding quality and 
                        efficient health care furnished by such 
                        hospitals.
                            (ii) Applicable hospital defined.--For 
                        purposes of this paragraph, the term 
                        ``applicable hospital'' means a hospital 
                        described in subclause (III) or (IV) of section 
                        1886(o)(1)(C)(ii) of the Social Security Act, 
                        as added by subsection (a)(1).
                            (iii) Duration.--The demonstration program 
                        under this paragraph shall be conducted for a 
                        3-year period.
                            (iv) Sites.--The Secretary shall conduct 
                        the demonstration program under this paragraph 
                        at an appropriate number (as determined by the 
                        Secretary) of applicable hospitals. The 
                        Secretary shall ensure that such hospitals are 
                        representative of the spectrum of such 
                        hospitals that participate in the Medicare 
                        program.
                    (B) Waiver authority.--The Secretary may waive such 
                requirements of titles XI and XVIII of the Social 
                Security Act as may be necessary to carry out the 
                demonstration program under this paragraph.
                    (C) Budget neutrality requirement.--In conducting 
                the demonstration program under this section, the 
                Secretary shall ensure that the aggregate payments made 
                by the Secretary do not exceed the amount which the 
                Secretary would have paid if the demonstration program 
                under this section was not implemented.
                    (D) Report.--Not later than 18 months after the 
                completion of the demonstration program under this 
                paragraph, the Secretary shall submit to Congress a 
                report on the demonstration program together with--
                            (i) recommendations on the establishment of 
                        a permanent value-based purchasing program 
                        under the Medicare program for applicable 
                        hospitals with respect to inpatient hospital 
                        services; and
                            (ii) recommendations for such other 
                        legislation and administrative action as the 
                        Secretary determines appropriate.

SEC. 3002. IMPROVEMENTS TO THE PHYSICIAN QUALITY REPORTING SYSTEM.

    (a) Extension.--Section 1848(m) of the Social Security Act (42 
U.S.C. 1395w-4(m)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A), in the matter preceding 
                clause (i), by striking ``2010'' and inserting 
                ``2014''; and
                    (B) in subparagraph (B)--
                            (i) in clause (i), by striking ``and'' at 
                        the end;
                            (ii) in clause (ii), by striking the period 
                        at the end and inserting a semicolon; and
                            (iii) by adding at the end the following 
                        new clauses:
                            ``(iii) for 2011, 1.0 percent; and
                            ``(iv) for 2012, 2013, and 2014, 0.5 
                        percent.'';
            (2) in paragraph (3)--
                    (A) in subparagraph (A), in the matter preceding 
                clause (i), by inserting ``(or, for purposes of 
                subsection (a)(8), for the quality reporting period for 
                the year)'' after ``reporting period''; and
                    (B) in subparagraph (C)(i), by inserting ``, or, 
                for purposes of subsection (a)(8), for a quality 
                reporting period for the year'' after ``(a)(5), for a 
                reporting period for a year'';
            (3) in paragraph (5)(E)(iv), by striking ``subsection 
        (a)(5)(A)'' and inserting ``paragraphs (5)(A) and (8)(A) of 
        subsection (a)''; and
            (4) in paragraph (6)(C)--
                    (A) in clause (i)(II), by striking ``, 2009, 2010, 
                and 2011'' and inserting ``and subsequent years''; and
                    (B) in clause (iii)--
                            (i) by inserting ``(a)(8)'' after 
                        ``(a)(5)''; and
                            (ii) by striking ``under subparagraph 
                        (D)(iii) of such subsection'' and inserting 
                        ``under subsection (a)(5)(D)(iii) or the 
                        quality reporting period under subsection 
                        (a)(8)(D)(iii), respectively''.
    (b) Incentive Payment Adjustment for Quality Reporting.--Section 
1848(a) of the Social Security Act (42 U.S.C. 1395w-4(a)) is amended by 
adding at the end the following new paragraph:
            ``(8) Incentives for quality reporting.--
                    ``(A) Adjustment.--
                            ``(i) In general.--With respect to covered 
                        professional services furnished by an eligible 
                        professional during 2015 or any subsequent 
                        year, if the eligible professional does not 
                        satisfactorily submit data on quality measures 
                        for covered professional services for the 
                        quality reporting period for the year (as 
                        determined under subsection (m)(3)(A)), the fee 
                        schedule amount for such services furnished by 
                        such professional during the year (including 
                        the fee schedule amount for purposes of 
                        determining a payment based on such amount) 
                        shall be equal to the applicable percent of the 
                        fee schedule amount that would otherwise apply 
                        to such services under this subsection 
                        (determined after application of paragraphs 
                        (3), (5), and (7), but without regard to this 
                        paragraph).
                            ``(ii) Applicable percent.--For purposes of 
                        clause (i), the term `applicable percent' 
                        means--
                                    ``(I) for 2015, 98.5 percent; and
                                    ``(II) for 2016 and each subsequent 
                                year, 98 percent.
                    ``(B) Application.--
                            ``(i) Physician reporting system rules.--
                        Paragraphs (5), (6), and (8) of subsection (k) 
                        shall apply for purposes of this paragraph in 
                        the same manner as they apply for purposes of 
                        such subsection.
                            ``(ii) Incentive payment validation 
                        rules.--Clauses (ii) and (iii) of subsection 
                        (m)(5)(D) shall apply for purposes of this 
                        paragraph in a similar manner as they apply for 
                        purposes of such subsection.
                    ``(C) Definitions.--For purposes of this paragraph:
                            ``(i) Eligible professional; covered 
                        professional services.--The terms `eligible 
                        professional' and `covered professional 
                        services' have the meanings given such terms in 
                        subsection (k)(3).
                            ``(ii) Physician reporting system.--The 
                        term `physician reporting system' means the 
                        system established under subsection (k).
                            ``(iii) Quality reporting period.--The term 
                        `quality reporting period' means, with respect 
                        to a year, a period specified by the 
                        Secretary.''.
    (c) Maintenance of Certification Programs.--
            (1) In general.--Section 1848(k)(4) of the Social Security 
        Act (42 U.S.C. 1395w-4(k)(4)) is amended by inserting ``or 
        through a Maintenance of Certification program operated by a 
        specialty body of the American Board of Medical Specialties 
        that meets the criteria for such a registry'' after 
        ``Database)''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply for years after 2010.
    (d) Integration of Physician Quality Reporting and EHR Reporting.--
Section 1848(m) of the Social Security Act (42 U.S.C. 1395w-4(m)) is 
amended by adding at the end the following new paragraph:
            ``(7) Integration of physician quality reporting and ehr 
        reporting.--Not later than January 1, 2012, the Secretary shall 
        develop a plan to integrate reporting on quality measures under 
        this subsection with reporting requirements under subsection 
        (o) relating to the meaningful use of electronic health 
        records. Such integration shall consist of the following:
                    ``(A) The selection of measures, the reporting of 
                which would both demonstrate--
                            ``(i) meaningful use of an electronic 
                        health record for purposes of subsection (o); 
                        and
                            ``(ii) quality of care furnished to an 
                        individual.
                    ``(B) Such other activities as specified by the 
                Secretary.''.
    (e) Feedback.--Section 1848(m)(5) of the Social Security Act (42 
U.S.C. 1395w-4(m)(5)) is amended by adding at the end the following new 
subparagraph:
                    ``(H) Feedback.--The Secretary shall provide timely 
                feedback to eligible professionals on the performance 
                of the eligible professional with respect to 
                satisfactorily submitting data on quality measures 
                under this subsection.''.
    (f) Appeals.--Such section is further amended--
            (1) in subparagraph (E), by striking ``There shall'' and 
        inserting ``Except as provided in subparagraph (I), there 
        shall''; and
            (2) by adding at the end the following new subparagraph:
                    ``(I) Informal appeals process.--The Secretary 
                shall, by not later than January 1, 2011, establish and 
                have in place an informal process for eligible 
                professionals to seek a review of the determination 
                that an eligible professional did not satisfactorily 
                submit data on quality measures under this 
                subsection.''.

SEC. 3003. IMPROVEMENTS TO THE PHYSICIAN FEEDBACK PROGRAM.

    (a) In General.--Section 1848(n) of the Social Security Act (42 
U.S.C. 1395w-4(n)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A)--
                            (i) by striking ``general.--The Secretary'' 
                        and inserting ``general.--
                            ``(i) Establishment.--The Secretary'';
                            (ii) in clause (i), as added by clause (i), 
                        by striking ``the `Program')'' and all that 
                        follows through the period at the end of the 
                        second sentence and inserting ``the 
                        `Program').''; and
                            (iii) by adding at the end the following 
                        new clauses:
                            ``(ii) Reports on resources.--The Secretary 
                        shall use claims data under this title (and may 
                        use other data) to provide confidential reports 
                        to physicians (and, as determined appropriate 
                        by the Secretary, to groups of physicians) that 
                        measure the resources involved in furnishing 
                        care to individuals under this title.
                            ``(iii) Inclusion of certain information.--
                        If determined appropriate by the Secretary, the 
                        Secretary may include information on the 
                        quality of care furnished to individuals under 
                        this title by the physician (or group of 
                        physicians) in such reports.''; and
                    (B) in subparagraph (B), by striking ``subparagraph 
                (A)'' and inserting ``subparagraph (A)(ii)'';
            (2) in paragraph (4)--
                    (A) in the heading, by inserting ``initial'' after 
                ``focus''; and
                    (B) in the matter preceding subparagraph (A), by 
                inserting ``initial'' after ``focus the'';
            (3) in paragraph (6), by adding at the end the following 
        new sentence: ``For adjustments for reports on utilization 
        under paragraph (9), see subparagraph (D) of such paragraph.''; 
        and
            (4) by adding at the end the following new paragraphs:
            ``(9) Reports on utilization.--
                    ``(A) Development of episode grouper.--
                            ``(i) In general.--The Secretary shall 
                        develop an episode grouper that combines 
                        separate but clinically related items and 
                        services into an episode of care for an 
                        individual, as appropriate.
                            ``(ii) Timeline for development.--The 
                        episode grouper described in subparagraph (A) 
                        shall be developed by not later than January 1, 
                        2012.
                            ``(iii) Public availability.--The Secretary 
                        shall make the details of the episode grouper 
                        described in subparagraph (A) available to the 
                        public.
                            ``(iv) Endorsement.--The Secretary shall 
                        seek endorsement of the episode grouper 
                        described in subparagraph (A) by the entity 
                        with a contract under section 1890(a).
                    ``(B) Reports on utilization.--Effective beginning 
                with 2012, the Secretary shall provide reports to 
                physicians that compare, as determined appropriate by 
                the Secretary, patterns of resource use of the 
                individual physician to such patterns of other 
                physicians.
                    ``(C) Analysis of data.--The Secretary shall, for 
                purposes of preparing reports under this paragraph, 
                establish methodologies as appropriate, such as to--
                            ``(i) attribute episodes of care, in whole 
                        or in part, to physicians;
                            ``(ii) identify appropriate physicians for 
                        purposes of comparison under subparagraph (B); 
                        and
                            ``(iii) aggregate episodes of care 
                        attributed to a physician under clause (i) into 
                        a composite measure per individual.
                    ``(D) Data adjustment.--In preparing reports under 
                this paragraph, the Secretary shall make appropriate 
                adjustments, including adjustments--
                            ``(i) to account for differences in 
                        socioeconomic and demographic characteristics, 
                        ethnicity, and health status of individuals 
                        (such as to recognize that less healthy 
                        individuals may require more intensive 
                        interventions); and
                            ``(ii) to eliminate the effect of 
                        geographic adjustments in payment rates (as 
                        described in subsection (e)).
                    ``(E) Public availability of methodology.--The 
                Secretary shall make available to the public--
                            ``(i) the methodologies established under 
                        subparagraph (C);
                            ``(ii) information regarding any 
                        adjustments made to data under subparagraph 
                        (D); and
                            ``(iii) aggregate reports with respect to 
                        physicians.
                    ``(F) Definition of physician.--In this paragraph:
                            ``(i) In general.--The term `physician' has 
                        the meaning given that term in section 
                        1861(r)(1).
                            ``(ii) Treatment of groups.--Such term 
                        includes, as the Secretary determines 
                        appropriate, a group of physicians.
                    ``(G) Limitations on review.--There shall be no 
                administrative or judicial review under section 1869, 
                section 1878, or otherwise of the establishment of the 
                methodology under subparagraph (C), including the 
                determination of an episode of care under such 
                methodology.
            ``(10) Coordination with other value-based purchasing 
        reforms.--The Secretary shall coordinate the Program with the 
        value-based payment modifier established under subsection (p) 
        and, as the Secretary determines appropriate, other similar 
        provisions of this title.''.
    (b) Conforming Amendment.--Section 1890(b) of the Social Security 
Act (42 U.S.C. 1395aaa(b)) is amended by adding at the end the 
following new paragraph:
            ``(6) Review and endorsement of episode grouper under the 
        physician feedback program.--The entity shall provide for the 
        review and, as appropriate, the endorsement of the episode 
        grouper developed by the Secretary under section 1848(n)(9)(A). 
        Such review shall be conducted on an expedited basis.''.

SEC. 3004. QUALITY REPORTING FOR LONG-TERM CARE HOSPITALS, INPATIENT 
              REHABILITATION HOSPITALS, AND HOSPICE PROGRAMS.

    (a) Long-term Care Hospitals.--Section 1886(m) of the Social 
Security Act (42 U.S.C. 1395ww(m)), as amended by section 3401(c), is 
amended by adding at the end the following new paragraph:
            ``(5) Quality reporting.--
                    ``(A) Reduction in update for failure to report.--
                            ``(i) In general.--Under the system 
                        described in paragraph (1), for rate year 2014 
                        and each subsequent rate year, in the case of a 
                        long-term care hospital that does not submit 
                        data to the Secretary in accordance with 
                        subparagraph (C) with respect to such a rate 
                        year, any annual update to a standard Federal 
                        rate for discharges for the hospital during the 
                        rate year, and after application of paragraph 
                        (3), shall be reduced by 2 percentage points.
                            ``(ii) Special rule.--The application of 
                        this subparagraph may result in such annual 
                        update being less than 0.0 for a rate year, and 
                        may result in payment rates under the system 
                        described in paragraph (1) for a rate year 
                        being less than such payment rates for the 
                        preceding rate year.
                    ``(B) Noncumulative application.--Any reduction 
                under subparagraph (A) shall apply only with respect to 
                the rate year involved and the Secretary shall not take 
                into account such reduction in computing the payment 
                amount under the system described in paragraph (1) for 
                a subsequent rate year.
                    ``(C) Submission of quality data.--For rate year 
                2014 and each subsequent rate year, each long-term care 
                hospital shall submit to the Secretary data on quality 
                measures specified under subparagraph (D). Such data 
                shall be submitted in a form and manner, and at a time, 
                specified by the Secretary for purposes of this 
                subparagraph.
                    ``(D) Quality measures.--
                            ``(i) In general.--Subject to clause (ii), 
                        any measure specified by the Secretary under 
                        this subparagraph must have been endorsed by 
                        the entity with a contract under section 
                        1890(a).
                            ``(ii) Exception.--In the case of a 
                        specified area or medical topic determined 
                        appropriate by the Secretary for which a 
                        feasible and practical measure has not been 
                        endorsed by the entity with a contract under 
                        section 1890(a), the Secretary may specify a 
                        measure that is not so endorsed as long as due 
                        consideration is given to measures that have 
                        been endorsed or adopted by a consensus 
                        organization identified by the Secretary.
                            ``(iii) Time frame.--Not later than October 
                        1, 2012, the Secretary shall publish the 
                        measures selected under this subparagraph that 
                        will be applicable with respect to rate year 
                        2014.
                    ``(E) Public availability of data submitted.--The 
                Secretary shall establish procedures for making data 
                submitted under subparagraph (C) available to the 
                public. Such procedures shall ensure that a long-term 
                care hospital has the opportunity to review the data 
                that is to be made public with respect to the hospital 
                prior to such data being made public. The Secretary 
                shall report quality measures that relate to services 
                furnished in inpatient settings in long-term care 
                hospitals on the Internet website of the Centers for 
                Medicare & Medicaid Services.''.
    (b) Inpatient Rehabilitation Hospitals.--Section 1886(j) of the 
Social Security Act (42 U.S.C. 1395ww(j)) is amended--
            (1) by redesignating paragraph (7) as paragraph (8); and
            (2) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) Quality reporting.--
                    ``(A) Reduction in update for failure to report.--
                            ``(i) In general.--For purposes of fiscal 
                        year 2014 and each subsequent fiscal year, in 
                        the case of a rehabilitation facility that does 
                        not submit data to the Secretary in accordance 
                        with subparagraph (C) with respect to such a 
                        fiscal year, after determining the increase 
                        factor described in paragraph (3)(C), and after 
                        application of paragraph (3)(D), the Secretary 
                        shall reduce such increase factor for payments 
                        for discharges occurring during such fiscal 
                        year by 2 percentage points.
                            ``(ii) Special rule.--The application of 
                        this subparagraph may result in the increase 
                        factor described in paragraph (3)(C) being less 
                        than 0.0 for a fiscal year, and may result in 
                        payment rates under this subsection for a 
                        fiscal year being less than such payment rates 
                        for the preceding fiscal year.
                    ``(B) Noncumulative application.--Any reduction 
                under subparagraph (A) shall apply only with respect to 
                the fiscal year involved and the Secretary shall not 
                take into account such reduction in computing the 
                payment amount under this subsection for a subsequent 
                fiscal year.
                    ``(C) Submission of quality data.--For fiscal year 
                2014 and each subsequent rate year, each rehabilitation 
                facility shall submit to the Secretary data on quality 
                measures specified under subparagraph (D). Such data 
                shall be submitted in a form and manner, and at a time, 
                specified by the Secretary for purposes of this 
                subparagraph.
                    ``(D) Quality measures.--
                            ``(i) In general.--Subject to clause (ii), 
                        any measure specified by the Secretary under 
                        this subparagraph must have been endorsed by 
                        the entity with a contract under section 
                        1890(a).
                            ``(ii) Exception.--In the case of a 
                        specified area or medical topic determined 
                        appropriate by the Secretary for which a 
                        feasible and practical measure has not been 
                        endorsed by the entity with a contract under 
                        section 1890(a), the Secretary may specify a 
                        measure that is not so endorsed as long as due 
                        consideration is given to measures that have 
                        been endorsed or adopted by a consensus 
                        organization identified by the Secretary.
                            ``(iii) Time frame.--Not later than October 
                        1, 2012, the Secretary shall publish the 
                        measures selected under this subparagraph that 
                        will be applicable with respect to fiscal year 
                        2014.
                    ``(E) Public availability of data submitted.--The 
                Secretary shall establish procedures for making data 
                submitted under subparagraph (C) available to the 
                public. Such procedures shall ensure that a 
                rehabilitation facility has the opportunity to review 
                the data that is to be made public with respect to the 
                facility prior to such data being made public. The 
                Secretary shall report quality measures that relate to 
                services furnished in inpatient settings in 
                rehabilitation facilities on the Internet website of 
                the Centers for Medicare & Medicaid Services.''.
    (c) Hospice Programs.--Section 1814(i) of the Social Security Act 
(42 U.S.C. 1395f(i)) is amended--
            (1) by redesignating paragraph (5) as paragraph (6); and
            (2) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) Quality reporting.--
                    ``(A) Reduction in update for failure to report.--
                            ``(i) In general.--For purposes of fiscal 
                        year 2014 and each subsequent fiscal year, in 
                        the case of a hospice program that does not 
                        submit data to the Secretary in accordance with 
                        subparagraph (C) with respect to such a fiscal 
                        year, after determining the market basket 
                        percentage increase under paragraph 
                        (1)(C)(ii)(VII) or paragraph (1)(C)(iii), as 
                        applicable, and after application of paragraph 
                        (1)(C)(iv), with respect to the fiscal year, 
                        the Secretary shall reduce such market basket 
                        percentage increase by 2 percentage points.
                            ``(ii) Special rule.--The application of 
                        this subparagraph may result in the market 
                        basket percentage increase under paragraph 
                        (1)(C)(ii)(VII) or paragraph (1)(C)(iii), as 
                        applicable, being less than 0.0 for a fiscal 
                        year, and may result in payment rates under 
                        this subsection for a fiscal year being less 
                        than such payment rates for the preceding 
                        fiscal year.
                    ``(B) Noncumulative application.--Any reduction 
                under subparagraph (A) shall apply only with respect to 
                the fiscal year involved and the Secretary shall not 
                take into account such reduction in computing the 
                payment amount under this subsection for a subsequent 
                fiscal year.
                    ``(C) Submission of quality data.--For fiscal year 
                2014 and each subsequent fiscal year, each hospice 
                program shall submit to the Secretary data on quality 
                measures specified under subparagraph (D). Such data 
                shall be submitted in a form and manner, and at a time, 
                specified by the Secretary for purposes of this 
                subparagraph.
                    ``(D) Quality measures.--
                            ``(i) In general.--Subject to clause (ii), 
                        any measure specified by the Secretary under 
                        this subparagraph must have been endorsed by 
                        the entity with a contract under section 
                        1890(a).
                            ``(ii) Exception.--In the case of a 
                        specified area or medical topic determined 
                        appropriate by the Secretary for which a 
                        feasible and practical measure has not been 
                        endorsed by the entity with a contract under 
                        section 1890(a), the Secretary may specify a 
                        measure that is not so endorsed as long as due 
                        consideration is given to measures that have 
                        been endorsed or adopted by a consensus 
                        organization identified by the Secretary.
                            ``(iii) Time frame.--Not later than October 
                        1, 2012, the Secretary shall publish the 
                        measures selected under this subparagraph that 
                        will be applicable with respect to fiscal year 
                        2014.
                    ``(E) Public availability of data submitted.--The 
                Secretary shall establish procedures for making data 
                submitted under subparagraph (C) available to the 
                public. Such procedures shall ensure that a hospice 
                program has the opportunity to review the data that is 
                to be made public with respect to the hospice program 
                prior to such data being made public. The Secretary 
                shall report quality measures that relate to hospice 
                care provided by hospice programs on the Internet 
                website of the Centers for Medicare & Medicaid 
                Services.''.

SEC. 3005. QUALITY REPORTING FOR PPS-EXEMPT CANCER HOSPITALS.

    Section 1866 of the Social Security Act (42 U.S.C. 1395cc) is 
amended--
            (1) in subsection (a)(1)--
                    (A) in subparagraph (U), by striking ``and'' at the 
                end;
                    (B) in subparagraph (V), by striking the period at 
                the end and inserting ``, and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(W) in the case of a hospital described in 
                section 1886(d)(1)(B)(v), to report quality data to the 
                Secretary in accordance with subsection (k).''; and
            (2) by adding at the end the following new subsection:
    ``(k) Quality Reporting by Cancer Hospitals.--
            ``(1) In general.--For purposes of fiscal year 2014 and 
        each subsequent fiscal year, a hospital described in section 
        1886(d)(1)(B)(v) shall submit data to the Secretary in 
        accordance with paragraph (2) with respect to such a fiscal 
        year.
            ``(2) Submission of quality data.--For fiscal year 2014 and 
        each subsequent fiscal year, each hospital described in such 
        section shall submit to the Secretary data on quality measures 
        specified under paragraph (3). Such data shall be submitted in 
        a form and manner, and at a time, specified by the Secretary 
        for purposes of this subparagraph.
            ``(3) Quality measures.--
                    ``(A) In general.--Subject to subparagraph (B), any 
                measure specified by the Secretary under this paragraph 
                must have been endorsed by the entity with a contract 
                under section 1890(a).
                    ``(B) Exception.--In the case of a specified area 
                or medical topic determined appropriate by the 
                Secretary for which a feasible and practical measure 
                has not been endorsed by the entity with a contract 
                under section 1890(a), the Secretary may specify a 
                measure that is not so endorsed as long as due 
                consideration is given to measures that have been 
                endorsed or adopted by a consensus organization 
                identified by the Secretary.
                    ``(C) Time frame.--Not later than October 1, 2012, 
                the Secretary shall publish the measures selected under 
                this paragraph that will be applicable with respect to 
                fiscal year 2014.
            ``(4) Public availability of data submitted.--The Secretary 
        shall establish procedures for making data submitted under 
        paragraph (4) available to the public. Such procedures shall 
        ensure that a hospital described in section 1886(d)(1)(B)(v) 
        has the opportunity to review the data that is to be made 
        public with respect to the hospital prior to such data being 
        made public. The Secretary shall report quality measures of 
        process, structure, outcome, patients' perspective on care, 
        efficiency, and costs of care that relate to services furnished 
        in such hospitals on the Internet website of the Centers for 
        Medicare & Medicaid Services.''.

SEC. 3006. PLANS FOR A VALUE-BASED PURCHASING PROGRAM FOR SKILLED 
              NURSING FACILITIES AND HOME HEALTH AGENCIES.

    (a) Skilled Nursing Facilities.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        develop a plan to implement a value-based purchasing program 
        for payments under the Medicare program under title XVIII of 
        the Social Security Act for skilled nursing facilities (as 
        defined in section 1819(a) of such Act (42 U.S.C. 1395i-3(a))).
            (2) Details.--In developing the plan under paragraph (1), 
        the Secretary shall consider the following issues:
                    (A) The ongoing development, selection, and 
                modification process for measures (including under 
                section 1890 of the Social Security Act (42 U.S.C. 
                1395aaa) and section 1890A such Act, as added by 
                section 3014), to the extent feasible and practicable, 
                of all dimensions of quality and efficiency in skilled 
                nursing facilities.
                            (i) In general.--Subject to clause (ii), 
                        any measure specified by the Secretary under 
                        subparagraph (A)(iii) must have been endorsed 
                        by the entity with a contract under section 
                        1890(a).
                            (ii) Exception.--In the case of a specified 
                        area or medical topic determined appropriate by 
                        the Secretary for which a feasible and 
                        practical measure has not been endorsed by the 
                        entity with a contract under section 1890(a), 
                        the Secretary may specify a measure that is not 
                        so endorsed as long as due consideration is 
                        given to measures that have been endorsed or 
                        adopted by a consensus organization identified 
                        by the Secretary.
                    (B) The reporting, collection, and validation of 
                quality data.
                    (C) The structure of value-based payment 
                adjustments, including the determination of thresholds 
                or improvements in quality that would substantiate a 
                payment adjustment, the size of such payments, and the 
                sources of funding for the value-based bonus payments.
                    (D) Methods for the public disclosure of 
                information on the performance of skilled nursing 
                facilities.
                    (E) Any other issues determined appropriate by the 
                Secretary.
            (3) Consultation.--In developing the plan under paragraph 
        (1), the Secretary shall--
                    (A) consult with relevant affected parties; and
                    (B) consider experience with such demonstrations 
                that the Secretary determines are relevant to the 
                value-based purchasing program described in paragraph 
                (1).
            (4) Report to congress.--Not later than October 1, 2011, 
        the Secretary shall submit to Congress a report containing the 
        plan developed under paragraph (1).
    (b) Home Health Agencies.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        develop a plan to implement a value-based purchasing program 
        for payments under the Medicare program under title XVIII of 
        the Social Security Act for home health agencies (as defined in 
        section 1861(o) of such Act (42 U.S.C. 1395x(o))).
            (2) Details.--In developing the plan under paragraph (1), 
        the Secretary shall consider the following issues:
                    (A) The ongoing development, selection, and 
                modification process for measures (including under 
                section 1890 of the Social Security Act (42 U.S.C. 
                1395aaa) and section 1890A such Act, as added by 
                section 3014), to the extent feasible and practicable, 
                of all dimensions of quality and efficiency in home 
                health agencies.
                    (B) The reporting, collection, and validation of 
                quality data.
                    (C) The structure of value-based payment 
                adjustments, including the determination of thresholds 
                or improvements in quality that would substantiate a 
                payment adjustment, the size of such payments, and the 
                sources of funding for the value-based bonus payments.
                    (D) Methods for the public disclosure of 
                information on the performance of home health agencies.
                    (E) Any other issues determined appropriate by the 
                Secretary.
            (3) Consultation.--In developing the plan under paragraph 
        (1), the Secretary shall--
                    (A) consult with relevant affected parties; and
                    (B) consider experience with such demonstrations 
                that the Secretary determines are relevant to the 
                value-based purchasing program described in paragraph 
                (1).
            (4) Report to congress.--Not later than October 1, 2011, 
        the Secretary shall submit to Congress a report containing the 
        plan developed under paragraph (1).

SEC. 3007. VALUE-BASED PAYMENT MODIFIER UNDER THE PHYSICIAN FEE 
              SCHEDULE.

    Section 1848 of the Social Security Act (42 U.S.C. 1395w-4) is 
amended--
            (1) in subsection (b)(1), by inserting ``subject to 
        subsection (p),'' after ``1998,''; and
            (2) by adding at the end the following new subsection:
    ``(p) Establishment of Value-based Payment Modifier.--
            ``(1) In general.--The Secretary shall establish a payment 
        modifier that provides for differential payment to a physician 
        or a group of physicians under the fee schedule established 
        under subsection (b) based upon the quality of care furnished 
        compared to cost (as determined under paragraphs (2) and (3), 
        respectively) during a performance period. Such payment 
        modifier shall be separate from the geographic adjustment 
        factors established under subsection (e).
            ``(2) Quality.--
                    ``(A) In general.--For purposes of paragraph (1), 
                quality of care shall be evaluated, to the extent 
                practicable, based on a composite of measures of the 
                quality of care furnished (as established by the 
                Secretary under subparagraph (B)).
                    ``(B) Measures.--
                            ``(i) The Secretary shall establish 
                        appropriate measures of the quality of care 
                        furnished by a physician or group of physicians 
                        to individuals enrolled under this part, such 
                        as measures that reflect health outcomes. Such 
                        measures shall be risk adjusted as determined 
                        appropriate by the Secretary.
                            ``(ii) The Secretary shall seek endorsement 
                        of the measures established under this 
                        subparagraph by the entity with a contract 
                        under section 1890(a).
            ``(3) Costs.--For purposes of paragraph (1), costs shall be 
        evaluated, to the extent practicable, based on a composite of 
        appropriate measures of costs established by the Secretary 
        (such as the composite measure under the methodology 
        established under subsection (n)(9)(C)(iii)) that eliminate the 
        effect of geographic adjustments in payment rates (as described 
        in subsection (e)), and take into account risk factors (such as 
        socioeconomic and demographic characteristics, ethnicity, and 
        health status of individuals (such as to recognize that less 
        healthy individuals may require more intensive interventions) 
        and other factors determined appropriate by the Secretary.
            ``(4) Implementation.--
                    ``(A) Publication of measures, dates of 
                implementation, performance period.--Not later than 
                January 1, 2012, the Secretary shall publish the 
                following:
                            ``(i) The measures of quality of care and 
                        costs established under paragraphs (2) and (3), 
                        respectively.
                            ``(ii) The dates for implementation of the 
                        payment modifier (as determined under 
                        subparagraph (B)).
                            ``(iii) The initial performance period (as 
                        specified under subparagraph (B)(ii)).
                    ``(B) Deadlines for implementation.--
                            ``(i) Initial implementation.--Subject to 
                        the preceding provisions of this subparagraph, 
                        the Secretary shall begin implementing the 
                        payment modifier established under this 
                        subsection through the rulemaking process 
                        during 2013 for the physician fee schedule 
                        established under subsection (b).
                            ``(ii) Initial performance period.--
                                    ``(I) In general.--The Secretary 
                                shall specify an initial performance 
                                period for application of the payment 
                                modifier established under this 
                                subsection with respect to 2015.
                                    ``(II) Provision of information 
                                during initial performance period.--
                                During the initial performance period, 
                                the Secretary shall, to the extent 
                                practicable, provide information to 
                                physicians and groups of physicians 
                                about the quality of care furnished by 
                                the physician or group of physicians to 
                                individuals enrolled under this part 
                                compared to cost (as determined under 
                                paragraphs (2) and (3), respectively) 
                                with respect to the performance period.
                            ``(iii) Application.--The Secretary shall 
                        apply the payment modifier established under 
                        this subsection for items and services 
                        furnished--
                                    ``(I) beginning on January 1, 2015, 
                                with respect to specific physicians and 
                                groups of physicians the Secretary 
                                determines appropriate; and
                                    ``(II) beginning not later than 
                                January 1, 2017, with respect to all 
                                physicians and groups of physicians.
                    ``(C) Budget neutrality.--The payment modifier 
                established under this subsection shall be implemented 
                in a budget neutral manner.
            ``(5) Systems-based care.--The Secretary shall, as 
        appropriate, apply the payment modifier established under this 
        subsection in a manner that promotes systems-based care.
            ``(6) Consideration of special circumstances of certain 
        providers.--In applying the payment modifier under this 
        subsection, the Secretary shall, as appropriate, take into 
        account the special circumstances of physicians or groups of 
        physicians in rural areas and other underserved communities.
            ``(7) Application.--For purposes of the initial application 
        of the payment modifier established under this subsection 
        during the period beginning on January 1, 2015, and ending on 
        December 31, 2016, the term `physician' has the meaning given 
        such term in section 1861(r). On or after January 1, 2017, the 
        Secretary may apply this subsection to eligible professionals 
        (as defined in subsection (k)(3)(B)) as the Secretary 
        determines appropriate.
            ``(8) Definitions.--For purposes of this subsection:
                    ``(A) Costs.--The term `costs' means expenditures 
                per individual as determined appropriate by the 
                Secretary. In making the determination under the 
                preceding sentence, the Secretary may take into account 
                the amount of growth in expenditures per individual for 
                a physician compared to the amount of such growth for 
                other physicians.
                    ``(B) Performance period.--The term `performance 
                period' means a period specified by the Secretary.
            ``(9) Coordination with other value-based purchasing 
        reforms.--The Secretary shall coordinate the value-based 
        payment modifier established under this subsection with the 
        Physician Feedback Program under subsection (n) and, as the 
        Secretary determines appropriate, other similar provisions of 
        this title.
            ``(10) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of--
                    ``(A) the establishment of the value-based payment 
                modifier under this subsection;
                    ``(B) the evaluation of quality of care under 
                paragraph (2), including the establishment of 
                appropriate measures of the quality of care under 
                paragraph (2)(B);
                    ``(C) the evaluation of costs under paragraph (3), 
                including the establishment of appropriate measures of 
                costs under such paragraph;
                    ``(D) the dates for implementation of the value-
                based payment modifier;
                    ``(E) the specification of the initial performance 
                period and any other performance period under 
                paragraphs (4)(B)(ii) and (8)(B), respectively;
                    ``(F) the application of the value-based payment 
                modifier under paragraph (7); and
                    ``(G) the determination of costs under paragraph 
                (8)(A).''.

SEC. 3008. PAYMENT ADJUSTMENT FOR CONDITIONS ACQUIRED IN HOSPITALS.

    (a) In General.--Section 1886 of the Social Security Act (42 U.S.C. 
1395ww), as amended by section 3001, is amended by adding at the end 
the following new subsection:
    ``(p) Adjustment to Hospital Payments for Hospital Acquired 
Conditions.--
            ``(1) In general.--In order to provide an incentive for 
        applicable hospitals to reduce hospital acquired conditions 
        under this title, with respect to discharges from an applicable 
        hospital occurring during fiscal year 2015 or a subsequent 
        fiscal year, the amount of payment under this section or 
        section 1814(b)(3), as applicable, for such discharges during 
        the fiscal year shall be equal to 99 percent of the amount of 
        payment that would otherwise apply to such discharges under 
        this section or section 1814(b)(3) (determined after the 
        application of subsections (o) and (q) and section 1814(l)(4) 
        but without regard to this subsection).
            ``(2) Applicable hospitals.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `applicable hospital' means a subsection (d) 
                hospital that meets the criteria described in 
                subparagraph (B).
                    ``(B) Criteria described.--
                            ``(i) In general.--The criteria described 
                        in this subparagraph, with respect to a 
                        subsection (d) hospital, is that the subsection 
                        (d) hospital is in the top quartile of all 
                        subsection (d) hospitals, relative to the 
                        national average, of hospital acquired 
                        conditions during the applicable period, as 
                        determined by the Secretary.
                            ``(ii) Risk adjustment.--In carrying out 
                        clause (i), the Secretary shall establish and 
                        apply an appropriate risk adjustment 
                        methodology.
                    ``(C) Exemption.--In the case of a hospital that is 
                paid under section 1814(b)(3), the Secretary may exempt 
                such hospital from the application of this subsection 
                if the State which is paid under such section submits 
                an annual report to the Secretary describing how a 
                similar program in the State for a participating 
                hospital or hospitals achieves or surpasses the 
                measured results in terms of patient health outcomes 
                and cost savings established under this subsection.
            ``(3) Hospital acquired conditions.--For purposes of this 
        subsection, the term `hospital acquired condition' means a 
        condition identified for purposes of subsection (d)(4)(D)(iv) 
        and any other condition determined appropriate by the Secretary 
        that an individual acquires during a stay in an applicable 
        hospital, as determined by the Secretary.
            ``(4) Applicable period.--In this subsection, the term 
        `applicable period' means, with respect to a fiscal year, a 
        period specified by the Secretary.
            ``(5) Reporting to hospitals.--Prior to fiscal year 2015 
        and each subsequent fiscal year, the Secretary shall provide 
        confidential reports to applicable hospitals with respect to 
        hospital acquired conditions of the applicable hospital during 
        the applicable period.
            ``(6) Reporting hospital specific information.--
                    ``(A) In general.--The Secretary shall make 
                information available to the public regarding hospital 
                acquired conditions of each applicable hospital.
                    ``(B) Opportunity to review and submit 
                corrections.--The Secretary shall ensure that an 
                applicable hospital has the opportunity to review, and 
                submit corrections for, the information to be made 
                public with respect to the hospital under subparagraph 
                (A) prior to such information being made public.
                    ``(C) Website.--Such information shall be posted on 
                the Hospital Compare Internet website in an easily 
                understandable format.
            ``(7) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of the following:
                    ``(A) The criteria described in paragraph (2)(A).
                    ``(B) The specification of hospital acquired 
                conditions under paragraph (3).
                    ``(C) The specification of the applicable period 
                under paragraph (4).
                    ``(D) The provision of reports to applicable 
                hospitals under paragraph (5) and the information made 
                available to the public under paragraph (6).''.
    (b) Study and Report on Expansion of Healthcare Acquired Conditions 
Policy to Other Providers.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study on expanding the healthcare acquired 
        conditions policy under subsection (d)(4)(D) of section 1886 of 
        the Social Security Act (42 U.S.C. 1395ww) to payments made to 
        other facilities under the Medicare program under title XVIII 
        of the Social Security Act, including such payments made to 
        inpatient rehabilitation facilities, long-term care hospitals 
        (as described in subsection(d)(1)(B)(iv) of such section), 
        hospital outpatient departments, and other hospitals excluded 
        from the inpatient prospective payment system under such 
        section, skilled nursing facilities, ambulatory surgical 
        centers, and health clinics. Such study shall include an 
        analysis of how such policies could impact quality of patient 
        care, patient safety, and spending under the Medicare program.
            (2) Report.--Not later than January 1, 2012, the Secretary 
        shall submit to Congress a report containing the results of the 
        study conducted under paragraph (1), together with 
        recommendations for such legislation and administrative action 
        as the Secretary determines appropriate.

       PART II--NATIONAL STRATEGY TO IMPROVE HEALTH CARE QUALITY

SEC. 3011. NATIONAL STRATEGY.

    Title III of the Public Health Service Act (42 U.S.C. 241 et seq.) 
is amended by adding at the end the following:

                 ``PART S--HEALTH CARE QUALITY PROGRAMS

 ``Subpart I--National Strategy for Quality Improvement in Health Care

``SEC. 399HH. NATIONAL STRATEGY FOR QUALITY IMPROVEMENT IN HEALTH CARE.

    ``(a) Establishment of National Strategy and Priorities.--
            ``(1) National strategy.--The Secretary, through a 
        transparent collaborative process, shall establish a national 
        strategy to improve the delivery of health care services, 
        patient health outcomes, and population health.
            ``(2) Identification of priorities.--
                    ``(A) In general.--The Secretary shall identify 
                national priorities for improvement in developing the 
                strategy under paragraph (1).
                    ``(B) Requirements.--The Secretary shall ensure 
                that priorities identified under subparagraph (A) 
                will--
                            ``(i) have the greatest potential for 
                        improving the health outcomes, efficiency, and 
                        patient-centeredness of health care for all 
                        populations, including children and vulnerable 
                        populations;
                            ``(ii) identify areas in the delivery of 
                        health care services that have the potential 
                        for rapid improvement in the quality and 
                        efficiency of patient care;
                            ``(iii) address gaps in quality, 
                        efficiency, comparative effectiveness 
                        information, and health outcomes measures and 
                        data aggregation techniques;
                            ``(iv) improve Federal payment policy to 
                        emphasize quality and efficiency;
                            ``(v) enhance the use of health care data 
                        to improve quality, efficiency, transparency, 
                        and outcomes;
                            ``(vi) address the health care provided to 
                        patients with high-cost chronic diseases;
                            ``(vii) improve research and dissemination 
                        of strategies and best practices to improve 
                        patient safety and reduce medical errors, 
                        preventable admissions and readmissions, and 
                        health care-associated infections;
                            ``(viii) reduce health disparities across 
                        health disparity populations (as defined in 
                        section 485E) and geographic areas; and
                            ``(ix) address other areas as determined 
                        appropriate by the Secretary.
                    ``(C) Considerations.--In identifying priorities 
                under subparagraph (A), the Secretary shall take into 
                consideration the recommendations submitted by the 
                entity with a contract under section 1890(a) of the 
                Social Security Act and other stakeholders.
                    ``(D) Coordination with state agencies.--The 
                Secretary shall collaborate, coordinate, and consult 
                with State agencies responsible for administering the 
                Medicaid program under title XIX of the Social Security 
                Act and the Children's Health Insurance Program under 
                title XXI of such Act with respect to developing and 
                disseminating strategies, goals, models, and timetables 
                that are consistent with the national priorities 
                identified under subparagraph (A).
    ``(b) Strategic Plan.--
            ``(1) In general.--The national strategy shall include a 
        comprehensive strategic plan to achieve the priorities 
        described in subsection (a).
            ``(2) Requirements.--The strategic plan shall include 
        provisions for addressing, at a minimum, the following:
                    ``(A) Coordination among agencies within the 
                Department, which shall include steps to minimize 
                duplication of efforts and utilization of common 
                quality measures, where available. Such common quality 
                measures shall be measures identified by the Secretary 
                under section 1139A or 1139B of the Social Security Act 
                or endorsed under section 1890 of such Act.
                    ``(B) Agency-specific strategic plans to achieve 
                national priorities.
                    ``(C) Establishment of annual benchmarks for each 
                relevant agency to achieve national priorities.
                    ``(D) A process for regular reporting by the 
                agencies to the Secretary on the implementation of the 
                strategic plan.
                    ``(E) Strategies to align public and private payers 
                with regard to quality and patient safety efforts.
                    ``(F) Incorporating quality improvement and 
                measurement in the strategic plan for health 
                information technology required by the American 
                Recovery and Reinvestment Act of 2009 (Public Law 111-
                5).
    ``(c) Periodic Update of National Strategy.--The Secretary shall 
update the national strategy not less than annually. Any such update 
shall include a review of short- and long-term goals.
    ``(d) Submission and Availability of National Strategy and 
Updates.--
            ``(1) Deadline for initial submission of national 
        strategy.--Not later than January 1, 2011, the Secretary shall 
        submit to the relevant committees of Congress the national 
        strategy described in subsection (a).
            ``(2) Updates.--
                    ``(A) In general.--The Secretary shall submit to 
                the relevant committees of Congress an annual update to 
                the strategy described in paragraph (1).
                    ``(B) Information submitted.--Each update submitted 
                under subparagraph (A) shall include--
                            ``(i) a review of the short- and long-term 
                        goals of the national strategy and any gaps in 
                        such strategy;
                            ``(ii) an analysis of the progress, or lack 
                        of progress, in meeting such goals and any 
                        barriers to such progress;
                            ``(iii) the information reported under 
                        section 1139A of the Social Security Act, 
                        consistent with the reporting requirements of 
                        such section; and
                            ``(iv) in the case of an update required to 
                        be submitted on or after January 1, 2014, the 
                        information reported under section 1139B(b)(4) 
                        of the Social Security Act, consistent with the 
                        reporting requirements of such section.
                    ``(C) Satisfaction of other reporting 
                requirements.--Compliance with the requirements of 
                clauses (iii) and (iv) of subparagraph (B) shall 
                satisfy the reporting requirements under sections 
                1139A(a)(6) and 1139B(b)(4), respectively, of the 
                Social Security Act.
    ``(e) Health Care Quality Internet Website.--Not later than January 
1, 2011, the Secretary shall create an Internet website to make public 
information regarding--
            ``(1) the national priorities for health care quality 
        improvement established under subsection (a)(2);
            ``(2) the agency-specific strategic plans for health care 
        quality described in subsection (b)(2)(B); and
            ``(3) other information, as the Secretary determines to be 
        appropriate.''.

SEC. 3012. INTERAGENCY WORKING GROUP ON HEALTH CARE QUALITY.

    (a) In General.--The President shall convene a working group to be 
known as the Interagency Working Group on Health Care Quality (referred 
to in this section as the ``Working Group'').
    (b) Goals.--The goals of the Working Group shall be to achieve the 
following:
            (1) Collaboration, cooperation, and consultation between 
        Federal departments and agencies with respect to developing and 
        disseminating strategies, goals, models, and timetables that 
        are consistent with the national priorities identified under 
        section 399HH(a)(2) of the Public Health Service Act (as added 
        by section 3011).
            (2) Avoidance of inefficient duplication of quality 
        improvement efforts and resources, where practicable, and a 
        streamlined process for quality reporting and compliance 
        requirements.
            (3) Assess alignment of quality efforts in the public 
        sector with private sector initiatives.
    (c) Composition.--
            (1) In general.--The Working Group shall be composed of 
        senior level representatives of--
                    (A) the Department of Health and Human Services;
                    (B) the Centers for Medicare & Medicaid Services;
                    (C) the National Institutes of Health;
                    (D) the Centers for Disease Control and Prevention;
                    (E) the Food and Drug Administration;
                    (F) the Health Resources and Services 
                Administration;
                    (G) the Agency for Healthcare Research and Quality;
                    (H) the Office of the National Coordinator for 
                Health Information Technology;
                    (I) the Substance Abuse and Mental Health Services 
                Administration;
                    (J) the Administration for Children and Families;
                    (K) the Department of Commerce;
                    (L) the Office of Management and Budget;
                    (M) the United States Coast Guard;
                    (N) the Federal Bureau of Prisons;
                    (O) the National Highway Traffic Safety 
                Administration;
                    (P) the Federal Trade Commission;
                    (Q) the Social Security Administration;
                    (R) the Department of Labor;
                    (S) the United States Office of Personnel 
                Management;
                    (T) the Department of Defense;
                    (U) the Department of Education;
                    (V) the Department of Veterans Affairs;
                    (W) the Veterans Health Administration; and
                    (X) any other Federal agencies and departments with 
                activities relating to improving health care quality 
                and safety, as determined by the President.
            (2) Chair and vice-chair.--
                    (A) Chair.--The Working Group shall be chaired by 
                the Secretary of Health and Human Services.
                    (B) Vice chair.--Members of the Working Group, 
                other than the Secretary of Health and Human Services, 
                shall serve as Vice Chair of the Group on a rotating 
                basis, as determined by the Group.
    (d) Report to Congress.--Not later than December 31, 2010, and 
annually thereafter, the Working Group shall submit to the relevant 
Committees of Congress, and make public on an Internet website, a 
report describing the progress and recommendations of the Working Group 
in meeting the goals described in subsection (b).

SEC. 3013. QUALITY MEASURE DEVELOPMENT.

    (a) Public Health Service Act.--Title IX of the Public Health 
Service Act (42 U.S.C. 299 et seq.) is amended--
            (1) by redesignating part D as part E;
            (2) by redesignating sections 931 through 938 as sections 
        941 through 948, respectively;
            (3) in section 948(1), as so redesignated, by striking 
        ``931'' and inserting ``941''; and
            (4) by inserting after section 926 the following:

               ``PART D--HEALTH CARE QUALITY IMPROVEMENT

                ``Subpart I--Quality Measure Development

``SEC. 931. QUALITY MEASURE DEVELOPMENT.

    ``(a) Quality Measure.--In this subpart, the term `quality measure' 
means a standard for measuring the performance and improvement of 
population health or of health plans, providers of services, and other 
clinicians in the delivery of health care services.
    ``(b) Identification of Quality Measures.--
            ``(1) Identification.--The Secretary, in consultation with 
        the Director of the Agency for Healthcare Research and Quality 
        and the Administrator of the Centers for Medicare & Medicaid 
        Services, shall identify, not less often than triennially, gaps 
        where no quality measures exist and existing quality measures 
        that need improvement, updating, or expansion, consistent with 
        the national strategy under section 399HH, to the extent 
        available, for use in Federal health programs. In identifying 
        such gaps and existing quality measures that need improvement, 
        the Secretary shall take into consideration--
                    ``(A) the gaps identified by the entity with a 
                contract under section 1890(a) of the Social Security 
                Act and other stakeholders;
                    ``(B) quality measures identified by the pediatric 
                quality measures program under section 1139A of the 
                Social Security Act; and
                    ``(C) quality measures identified through the 
                Medicaid Quality Measurement Program under section 
                1139B of the Social Security Act.
            ``(2) Publication.--The Secretary shall make available to 
        the public on an Internet website a report on any gaps 
        identified under paragraph (1) and the process used to make 
        such identification.
    ``(c) Grants or Contracts for Quality Measure Development.--
            ``(1) In general.--The Secretary shall award grants, 
        contracts, or intergovernmental agreements to eligible entities 
        for purposes of developing, improving, updating, or expanding 
        quality measures identified under subsection (b).
            ``(2) Prioritization in the development of quality 
        measures.--In awarding grants, contracts, or agreements under 
        this subsection, the Secretary shall give priority to the 
        development of quality measures that allow the assessment of--
                    ``(A) health outcomes and functional status of 
                patients;
                    ``(B) the management and coordination of health 
                care across episodes of care and care transitions for 
                patients across the continuum of providers, health care 
                settings, and health plans;
                    ``(C) the experience, quality, and use of 
                information provided to and used by patients, 
                caregivers, and authorized representatives to inform 
                decisionmaking about treatment options, including the 
                use of shared decisionmaking tools and preference 
                sensitive care (as defined in section 936);
                    ``(D) the meaningful use of health information 
                technology;
                    ``(E) the safety, effectiveness, patient-
                centeredness, appropriateness, and timeliness of care;
                    ``(F) the efficiency of care;
                    ``(G) the equity of health services and health 
                disparities across health disparity populations (as 
                defined in section 485E) and geographic areas;
                    ``(H) patient experience and satisfaction;
                    ``(I) the use of innovative strategies and 
                methodologies identified under section 933; and
                    ``(J) other areas determined appropriate by the 
                Secretary.
            ``(3) Eligible entities.--To be eligible for a grant or 
        contract under this subsection, an entity shall--
                    ``(A) have demonstrated expertise and capacity in 
                the development and evaluation of quality measures;
                    ``(B) have adopted procedures to include in the 
                quality measure development process--
                            ``(i) the views of those providers or 
                        payers whose performance will be assessed by 
                        the measure; and
                            ``(ii) the views of other parties who also 
                        will use the quality measures (such as 
                        patients, consumers, and health care 
                        purchasers);
                    ``(C) collaborate with the entity with a contract 
                under section 1890(a) of the Social Security Act and 
                other stakeholders, as practicable, and the Secretary 
                so that quality measures developed by the eligible 
                entity will meet the requirements to be considered for 
                endorsement by the entity with a contract under such 
                section 1890(a);
                    ``(D) have transparent policies regarding 
                governance and conflicts of interest; and
                    ``(E) submit an application to the Secretary at 
                such time and in such manner, as the Secretary may 
                require.
            ``(4) Use of funds.--An entity that receives a grant, 
        contract, or agreement under this subsection shall use such 
        award to develop quality measures that meet the following 
        requirements:
                    ``(A) Such measures support measures required to be 
                reported under the Social Security Act, where 
                applicable, and in support of gaps and existing quality 
                measures that need improvement, as described in 
                subsection (b)(1)(A).
                    ``(B) Such measures support measures developed 
                under section 1139A of the Social Security Act and the 
                Medicaid Quality Measurement Program under section 
                1139B of such Act, where applicable.
                    ``(C) To the extent practicable, data on such 
                quality measures is able to be collected using health 
                information technologies.
                    ``(D) Each quality measure is free of charge to 
                users of such measure.
                    ``(E) Each quality measure is publicly available on 
                an Internet website.
    ``(d) Other Activities by the Secretary.--The Secretary may use 
amounts available under this section to update and test, where 
applicable, quality measures endorsed by the entity with a contract 
under section 1890(a) of the Social Security Act or adopted by the 
Secretary.
    ``(e) Coordination of Grants.--The Secretary shall ensure that 
grants or contracts awarded under this section are coordinated with 
grants and contracts awarded under sections 1139A(5) and 1139B(4)(A) of 
the Social Security Act.''.
    (b) Social Security Act.--Section 1890A of the Social Security Act, 
as added by section 3014(b), is amended by adding at the end the 
following new subsection:
    ``(e) Development of Quality Measures.--The Administrator of the 
Center for Medicare & Medicaid Services shall through contracts develop 
quality measures (as determined appropriate by the Administrator) for 
use under this Act. In developing such measures, the Administrator 
shall consult with the Director of the Agency for Healthcare Research 
and Quality.''.
    (c) Funding.--There are authorized to be appropriated to the 
Secretary of Health and Human Services to carry out this section, 
$75,000,000 for each of fiscal years 2010 through 2014. Of the amounts 
appropriated under the preceding sentence in a fiscal year, not less 
than 50 percent of such amounts shall be used pursuant to subsection 
(e) of section 1890A of the Social Security Act, as added by subsection 
(b), with respect to programs under such Act. Amounts appropriated 
under this subsection for a fiscal year shall remain available until 
expended.

SEC. 3014. QUALITY MEASUREMENT.

    (a) New Duties for Consensus-based Entity.--
            (1) Multi-stakeholder group input.--Section 1890(b) of the 
        Social Security Act (42 U.S.C. 1395aaa(b)), as amended by 
        section 3003, is amended by adding at the end the following new 
        paragraphs:
            ``(7) Convening multi-stakeholder groups.--
                    ``(A) In general.--The entity shall convene multi-
                stakeholder groups to provide input on--
                            ``(i) the selection of quality measures 
                        described in subparagraph (B), from among--
                                    ``(I) such measures that have been 
                                endorsed by the entity; and
                                    ``(II) such measures that have not 
                                been considered for endorsement by such 
                                entity but are used or proposed to be 
                                used by the Secretary for the 
                                collection or reporting of quality 
                                measures; and
                            ``(ii) national priorities (as identified 
                        under section 399HH of the Public Health 
                        Service Act) for improvement in population 
                        health and in the delivery of health care 
                        services for consideration under the national 
                        strategy established under section 399HH of the 
                        Public Health Service Act.
                    ``(B) Quality measures.--
                            ``(i) In general.--Subject to clause (ii), 
                        the quality measures described in this 
                        subparagraph are quality measures--
                                    ``(I) for use pursuant to sections 
                                1814(i)(5)(D), 1833(i)(7), 1833(t)(17), 
                                1848(k)(2)(C), 1866(k)(3), 
                                1881(h)(2)(A)(iii), 
                                1886(b)(3)(B)(viii), 1886(j)(7)(D), 
                                1886(m)(5)(D), 1886(o)(2), and 
                                1895(b)(3)(B)(v);
                                    ``(II) for use in reporting 
                                performance information to the public; 
                                and
                                    ``(III) for use in health care 
                                programs other than for use under this 
                                Act.
                            ``(ii) Exclusion.--Data sets (such as the 
                        outcome and assessment information set for home 
                        health services and the minimum data set for 
                        skilled nursing facility services) that are 
                        used for purposes of classification systems 
                        used in establishing payment rates under this 
                        title shall not be quality measures described 
                        in this subparagraph.
                    ``(C) Requirement for transparency in process.--
                            ``(i) In general.--In convening multi-
                        stakeholder groups under subparagraph (A) with 
                        respect to the selection of quality measures, 
                        the entity shall provide for an open and 
                        transparent process for the activities 
                        conducted pursuant to such convening.
                            ``(ii) Selection of organizations 
                        participating in multi-stakeholder groups.--The 
                        process described in clause (i) shall ensure 
                        that the selection of representatives 
                        comprising such groups provides for public 
                        nominations for, and the opportunity for public 
                        comment on, such selection.
                    ``(D) Multi-stakeholder group defined.--In this 
                paragraph, the term `multi-stakeholder group' means, 
                with respect to a quality measure, a voluntary 
                collaborative of organizations representing a broad 
                group of stakeholders interested in or affected by the 
                use of such quality measure.
            ``(8) Transmission of multi-stakeholder input.--Not later 
        than February 1 of each year (beginning with 2012), the entity 
        shall transmit to the Secretary the input of multi-stakeholder 
        groups provided under paragraph (7).''.
            (2) Annual report.--Section 1890(b)(5)(A) of the Social 
        Security Act (42 U.S.C. 1395aaa(b)(5)(A)) is amended--
                    (A) in clause (ii), by striking ``and'' at the end;
                    (B) in clause (iii), by striking the period at the 
                end and inserting a semicolon; and
                    (C) by adding at the end the following new clauses:
                            ``(iv) gaps in endorsed quality measures, 
                        which shall include measures that are within 
                        priority areas identified by the Secretary 
                        under the national strategy established under 
                        section 399HH of the Public Health Service Act, 
                        and where quality measures are unavailable or 
                        inadequate to identify or address such gaps;
                            ``(v) areas in which evidence is 
                        insufficient to support endorsement of quality 
                        measures in priority areas identified by the 
                        Secretary under the national strategy 
                        established under section 399HH of the Public 
                        Health Service Act and where targeted research 
                        may address such gaps; and
                            ``(vi) the matters described in clauses (i) 
                        and (ii) of paragraph (7)(A).''.
    (b) Multi-stakeholder Group Input Into Selection of Quality 
Measures.--Title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.) is amended by inserting after section 1890 the following:

                         ``quality measurement

    ``Sec. 1890A.  (a) Multi-stakeholder Group Input Into Selection of 
Quality Measures.--The Secretary shall establish a pre-rulemaking 
process under which the following steps occur with respect to the 
selection of quality measures described in section 1890(b)(7)(B):
            ``(1) Input.--Pursuant to section 1890(b)(7), the entity 
        with a contract under section 1890 shall convene multi-
        stakeholder groups to provide input to the Secretary on the 
        selection of quality measures described in subparagraph (B) of 
        such paragraph.
            ``(2) Public availability of measures considered for 
        selection.--Not later than December 1 of each year (beginning 
        with 2011), the Secretary shall make available to the public a 
        list of quality measures described in section 1890(b)(7)(B) 
        that the Secretary is considering under this title.
            ``(3) Transmission of multi-stakeholder input.--Pursuant to 
        section 1890(b)(8), not later than February 1 of each year 
        (beginning with 2012), the entity shall transmit to the 
        Secretary the input of multi-stakeholder groups described in 
        paragraph (1).
            ``(4) Consideration of multi-stakeholder input.--The 
        Secretary shall take into consideration the input from multi-
        stakeholder groups described in paragraph (1) in selecting 
        quality measures described in section 1890(b)(7)(B) that have 
        been endorsed by the entity with a contract under section 1890 
        and measures that have not been endorsed by such entity.
            ``(5) Rationale for use of quality measures.--The Secretary 
        shall publish in the Federal Register the rationale for the use 
        of any quality measure described in section 1890(b)(7)(B) that 
        has not been endorsed by the entity with a contract under 
        section 1890.
            ``(6) Assessment of impact.--Not later than March 1, 2012, 
        and at least once every three years thereafter, the Secretary 
        shall--
                    ``(A) conduct an assessment of the quality impact 
                of the use of endorsed measures described in section 
                1890(b)(7)(B); and
                    ``(B) make such assessment available to the public.
    ``(b) Process for Dissemination of Measures Used by the 
Secretary.--
            ``(1) In general.--The Secretary shall establish a process 
        for disseminating quality measures used by the Secretary. Such 
        process shall include the following:
                    ``(A) The incorporation of such measures, where 
                applicable, in workforce programs, training curricula, 
                and any other means of dissemination determined 
                appropriate by the Secretary.
                    ``(B) The dissemination of such quality measures 
                through the national strategy developed under section 
                399HH of the Public Health Service Act.
            ``(2) Existing methods.--To the extent practicable, the 
        Secretary shall utilize and expand existing dissemination 
        methods in disseminating quality measures under the process 
        established under paragraph (1).
    ``(c) Review of Quality Measures Used by the Secretary.--
            ``(1) In general.--The Secretary shall--
                    ``(A) periodically (but in no case less often than 
                once every 3 years) review quality measures described 
                in section 1890(b)(7)(B); and
                    ``(B) with respect to each such measure, determine 
                whether to--
                            ``(i) maintain the use of such measure; or
                            ``(ii) phase out such measure.
            ``(2) Considerations.--In conducting the review under 
        paragraph (1), the Secretary shall take steps to--
                    ``(A) seek to avoid duplication of measures used; 
                and
                    ``(B) take into consideration current innovative 
                methodologies and strategies for quality improvement 
                practices in the delivery of health care services that 
                represent best practices for such quality improvement 
                and measures endorsed by the entity with a contract 
                under section 1890 since the previous review by the 
                Secretary.
    ``(d) Rule of Construction.--Nothing in this section shall preclude 
a State from using the quality measures identified under sections 1139A 
and 1139B.''.
    (c) Funding.--For purposes of carrying out the amendments made by 
this section, the Secretary shall provide for the transfer, from the 
Federal Hospital Insurance Trust Fund under section 1817 of the Social 
Security Act (42 U.S.C. 1395i) and the Federal Supplementary Medical 
Insurance Trust Fund under section 1841 of such Act (42 U.S.C. 1395t), 
in such proportion as the Secretary determines appropriate, of 
$20,000,000, to the Centers for Medicare & Medicaid Services Program 
Management Account for each of fiscal years 2010 through 2014. Amounts 
transferred under the preceding sentence shall remain available until 
expended.

SEC. 3015. DATA COLLECTION; PUBLIC REPORTING.

    Title III of the Public Health Service Act (42 U.S.C. 241 et seq.), 
as amended by section 3011, is further amended by adding at the end the 
following:

``SEC. 399II. COLLECTION AND ANALYSIS OF DATA FOR QUALITY AND RESOURCE 
              USE MEASURES.

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

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

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

      PART III--ENCOURAGING DEVELOPMENT OF NEW PATIENT CARE MODELS

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

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

             ``center for medicare and medicaid innovation

    ``Sec. 1115A.  (a) Center for Medicare and Medicaid Innovation 
Established.--
            ``(1) In general.--There is created within the Centers for 
        Medicare & Medicaid Services a Center for Medicare and Medicaid 
        Innovation (in this section referred to as the `CMI') to carry 
        out the duties described in this section. The purpose of the 
        CMI is to test innovative payment and service delivery models 
        to reduce program expenditures under the applicable titles 
        while preserving or enhancing the quality of care furnished to 
        individuals under such titles. In selecting such models, the 
        Secretary shall give preference to models that also improve the 
        coordination, quality, and efficiency of health care services 
        furnished to applicable individuals defined in paragraph 
        (4)(A).
            ``(2) Deadline.--The Secretary shall ensure that the CMI is 
        carrying out the duties described in this section by not later 
        than January 1, 2011.
            ``(3) Consultation.--In carrying out the duties under this 
        section, the CMI shall consult representatives of relevant 
        Federal agencies, and clinical and analytical experts with 
        expertise in medicine and health care management. The CMI shall 
        use open door forums or other mechanisms to seek input from 
        interested parties.
            ``(4) Definitions.--In this section:
                    ``(A) Applicable individual.--The term `applicable 
                individual' means--
                            ``(i) an individual who is entitled to, or 
                        enrolled for, benefits under part A of title 
                        XVIII or enrolled for benefits under part B of 
                        such title;
                            ``(ii) an individual who is eligible for 
                        medical assistance under title XIX, under a 
                        State plan or waiver; or
                            ``(iii) an individual who meets the 
                        criteria of both clauses (i) and (ii).
                    ``(B) Applicable title.--The term `applicable 
                title' means title XVIII, title XIX, or both.
    ``(b) Testing of Models (Phase I).--
            ``(1) In general.--The CMI shall test payment and service 
        delivery models in accordance with selection criteria under 
        paragraph (2) to determine the effect of applying such models 
        under the applicable title (as defined in subsection (a)(4)(B)) 
        on program expenditures under such titles and the quality of 
        care received by individuals receiving benefits under such 
        title.
            ``(2) Selection of models to be tested.--
                    ``(A) In general.--The Secretary shall select 
                models to be tested from models where the Secretary 
                determines that there is evidence that the model 
                addresses a defined population for which there are 
                deficits in care leading to poor clinical outcomes or 
                potentially avoidable expenditures. The models selected 
                under the preceding sentence may include the models 
                described in subparagraph (B).
                    ``(B) Opportunities.--The models described in this 
                subparagraph are the following models:
                            ``(i) Promoting broad payment and practice 
                        reform in primary care, including patient-
                        centered medical home models for high-need 
                        applicable individuals, medical homes that 
                        address women's unique health care needs, and 
                        models that transition primary care practices 
                        away from fee-for-service based reimbursement 
                        and toward comprehensive payment or salary-
                        based payment.
                            ``(ii) Contracting directly with groups of 
                        providers of services and suppliers to promote 
                        innovative care delivery models, such as 
                        through risk-based comprehensive payment or 
                        salary-based payment.
                            ``(iii) Utilizing geriatric assessments and 
                        comprehensive care plans to coordinate the care 
                        (including through interdisciplinary teams) of 
                        applicable individuals with multiple chronic 
                        conditions and at least one of the following:
                                    ``(I) An inability to perform 2 or 
                                more activities of daily living.
                                    ``(II) Cognitive impairment, 
                                including dementia.
                            ``(iv) Promote care coordination between 
                        providers of services and suppliers that 
                        transition health care providers away from fee-
                        for-service based reimbursement and toward 
                        salary-based payment.
                            ``(v) Supporting care coordination for 
                        chronically-ill applicable individuals at high 
                        risk of hospitalization through a health 
                        information technology-enabled provider network 
                        that includes care coordinators, a chronic 
                        disease registry, and home tele-health 
                        technology.
                            ``(vi) Varying payment to physicians who 
                        order advanced diagnostic imaging services (as 
                        defined in section 1834(e)(1)(B)) according to 
                        the physician's adherence to appropriateness 
                        criteria for the ordering of such services, as 
                        determined in consultation with physician 
                        specialty groups and other relevant 
                        stakeholders.
                            ``(vii) Utilizing medication therapy 
                        management services, such as those described in 
                        section 935 of the Public Health Service Act.
                            ``(viii) Establishing community-based 
                        health teams to support small-practice medical 
                        homes by assisting the primary care 
                        practitioner in chronic care management, 
                        including patient self-management, activities.
                            ``(ix) Assisting applicable individuals in 
                        making informed health care choices by paying 
                        providers of services and suppliers for using 
                        patient decision-support tools, including tools 
                        that meet the standards developed and 
                        identified under section 936(c)(2)(A) of the 
                        Public Health Service Act, that improve 
                        applicable individual and caregiver 
                        understanding of medical treatment options.
                            ``(x) Allowing States to test and evaluate 
                        fully integrating care for dual eligible 
                        individuals in the State, including the 
                        management and oversight of all funds under the 
                        applicable titles with respect to such 
                        individuals.
                            ``(xi) Allowing States to test and evaluate 
                        systems of all-payer payment reform for the 
                        medical care of residents of the State, 
                        including dual eligible individuals.
                            ``(xii) Aligning nationally recognized, 
                        evidence-based guidelines of cancer care with 
                        payment incentives under title XVIII in the 
                        areas of treatment planning and follow-up care 
                        planning for applicable individuals described 
                        in clause (i) or (iii) of subsection (a)(4)(A) 
                        with cancer, including the identification of 
                        gaps in applicable quality measures.
                            ``(xiii) Improving post-acute care through 
                        continuing care hospitals that offer inpatient 
                        rehabilitation, long-term care hospitals, and 
                        home health or skilled nursing care during an 
                        inpatient stay and the 30 days immediately 
                        following discharge.
                            ``(xiv) Funding home health providers who 
                        offer chronic care management services to 
                        applicable individuals in cooperation with 
                        interdisciplinary teams.
                            ``(xv) Promoting improved quality and 
                        reduced cost by developing a collaborative of 
                        high-quality, low-cost health care institutions 
                        that is responsible for--
                                    ``(I) developing, documenting, and 
                                disseminating best practices and proven 
                                care methods;
                                    ``(II) implementing such best 
                                practices and proven care methods 
                                within such institutions to demonstrate 
                                further improvements in quality and 
                                efficiency; and
                                    ``(III) providing assistance to 
                                other health care institutions on how 
                                best to employ such best practices and 
                                proven care methods to improve health 
                                care quality and lower costs.
                            ``(xvi) Facilitate inpatient care, 
                        including intensive care, of hospitalized 
                        applicable individuals at their local hospital 
                        through the use of electronic monitoring by 
                        specialists, including intensivists and 
                        critical care specialists, based at integrated 
                        health systems.
                            ``(xvii) Promoting greater efficiencies and 
                        timely access to outpatient services (such as 
                        outpatient physical therapy services) through 
                        models that do not require a physician or other 
                        health professional to refer the service or be 
                        involved in establishing the plan of care for 
                        the service, when such service is furnished by 
                        a health professional who has the authority to 
                        furnish the service under existing State law.
                            ``(xviii) Establishing comprehensive 
                        payments to Healthcare Innovation Zones, 
                        consisting of groups of providers that include 
                        a teaching hospital, physicians, and other 
                        clinical entities, that, through their 
                        structure, operations, and joint-activity 
                        deliver a full spectrum of integrated and 
                        comprehensive health care services to 
                        applicable individuals while also incorporating 
                        innovative methods for the clinical training of 
                        future health care professionals.
                    ``(C) Additional factors for consideration.--In 
                selecting models for testing under subparagraph (A), 
                the CMI may consider the following additional factors:
                            ``(i) Whether the model includes a regular 
                        process for monitoring and updating patient 
                        care plans in a manner that is consistent with 
                        the needs and preferences of applicable 
                        individuals.
                            ``(ii) Whether the model places the 
                        applicable individual, including family members 
                        and other informal caregivers of the applicable 
                        individual, at the center of the care team of 
                        the applicable individual.
                            ``(iii) Whether the model provides for in-
                        person contact with applicable individuals.
                            ``(iv) Whether the model utilizes 
                        technology, such as electronic health records 
                        and patient-based remote monitoring systems, to 
                        coordinate care over time and across settings.
                            ``(v) Whether the model provides for the 
                        maintenance of a close relationship between 
                        care coordinators, primary care practitioners, 
                        specialist physicians, community-based 
                        organizations, and other providers of services 
                        and suppliers.
                            ``(vi) Whether the model relies on a team-
                        based approach to interventions, such as 
                        comprehensive care assessments, care planning, 
                        and self-management coaching.
                            ``(vii) Whether, under the model, providers 
                        of services and suppliers are able to share 
                        information with patients, caregivers, and 
                        other providers of services and suppliers on a 
                        real time basis.
            ``(3) Budget neutrality.--
                    ``(A) Initial period.--The Secretary shall not 
                require, as a condition for testing a model under 
                paragraph (1), that the design of such model ensure 
                that such model is budget neutral initially with 
                respect to expenditures under the applicable title.
                    ``(B) Termination or modification.--The Secretary 
                shall terminate or modify the design and implementation 
                of a model unless the Secretary determines (and the 
                Chief Actuary of the Centers for Medicare & Medicaid 
                Services, with respect to program spending under the 
                applicable title, certifies), after testing has begun, 
                that the model is expected to--
                            ``(i) improve the quality of care (as 
                        determined by the Administrator of the Centers 
                        for Medicare & Medicaid Services) without 
                        increasing spending under the applicable title;
                            ``(ii) reduce spending under the applicable 
                        title without reducing the quality of care; or
                            ``(iii) improve the quality of care and 
                        reduce spending.
                Such termination may occur at any time after such 
                testing has begun and before completion of the testing.
            ``(4) Evaluation.--
                    ``(A) In general.--The Secretary shall conduct an 
                evaluation of each model tested under this subsection. 
                Such evaluation shall include an analysis of--
                            ``(i) the quality of care furnished under 
                        the model, including the measurement of 
                        patient-level outcomes and patient-centeredness 
                        criteria determined appropriate by the 
                        Secretary; and
                            ``(ii) the changes in spending under the 
                        applicable titles by reason of the model.
                    ``(B) Information.--The Secretary shall make the 
                results of each evaluation under this paragraph 
                available to the public in a timely fashion and may 
                establish requirements for States and other entities 
                participating in the testing of models under this 
                section to collect and report information that the 
                Secretary determines is necessary to monitor and 
                evaluate such models.
    ``(c) Expansion of Models (Phase II).--Taking into account the 
evaluation under subsection (b)(4), the Secretary may, through 
rulemaking, expand (including implementation on a nationwide basis) the 
duration and the scope of a model that is being tested under subsection 
(b) or a demonstration project under section 1866C, to the extent 
determined appropriate by the Secretary, if--
            ``(1) the Secretary determines that such expansion is 
        expected to--
                    ``(A) reduce spending under applicable title 
                without reducing the quality of care; or
                    ``(B) improve the quality of care and reduce 
                spending; and
            ``(2) the Chief Actuary of the Centers for Medicare & 
        Medicaid Services certifies that such expansion would reduce 
        program spending under applicable titles.
    ``(d) Implementation.--
            ``(1) Waiver authority.--The Secretary may waive such 
        requirements of titles XI and XVIII and of sections 1902(a)(1), 
        1902(a)(13), and 1903(m)(2)(A)(iii) as may be necessary solely 
        for purposes of carrying out this section with respect to 
        testing models described in subsection (b).
            ``(2) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of--
                    ``(A) the selection of models for testing or 
                expansion under this section;
                    ``(B) the selection of organizations, sites, or 
                participants to test those models selected;
                    ``(C) the elements, parameters, scope, and duration 
                of such models for testing or dissemination;
                    ``(D) determinations regarding budget neutrality 
                under subsection (b)(3);
                    ``(E) the termination or modification of the design 
                and implementation of a model under subsection 
                (b)(3)(B); and
                    ``(F) determinations about expansion of the 
                duration and scope of a model under subsection (c), 
                including the determination that a model is not 
                expected to meet criteria described in paragraph (1) or 
                (2) of such subsection.
            ``(3) Administration.--Chapter 35 of title 44, United 
        States Code, shall not apply to the testing and evaluation of 
        models or expansion of such models under this section.
    ``(e) Application to CHIP.--The Center may carry out activities 
under this section with respect to title XXI in the same manner as 
provided under this section with respect to the program under the 
applicable titles.
    ``(f) Funding.--
            ``(1) In general.--There are appropriated, from amounts in 
        the Treasury not otherwise appropriated--
                    ``(A) $5,000,000 for the design, implementation, 
                and evaluation of models under subsection (b) for 
                fiscal year 2010;
                    ``(B) $10,000,000,000 for the activities initiated 
                under this section for the period of fiscal years 2011 
                through 2019; and
                    ``(C) the amount described in subparagraph (B) for 
                the activities initiated under this section for each 
                subsequent 10-year fiscal period (beginning with the 
                10-year fiscal period beginning with fiscal year 2020).
        Amounts appropriated under the preceding sentence shall remain 
        available until expended.
            ``(2) Use of certain funds.--Out of amounts appropriated 
        under subparagraphs (B) and (C) of paragraph (1), not less than 
        $25,000,000 shall be made available each such fiscal year to 
        design, implement, and evaluate models under subsection (b).
    ``(g) Report to Congress.--Beginning in 2012, and not less than 
once every other year thereafter, the Secretary shall submit to 
Congress a report on activities under this section. Each such report 
shall describe the models tested under subsection (b), including the 
number of individuals described in subsection (a)(4)(A)(i) and of 
individuals described in subsection (a)(4)(A)(ii) participating in such 
models and payments made under applicable titles for services on behalf 
of such individuals, any models chosen for expansion under subsection 
(c), and the results from evaluations under subsection (b)(4). In 
addition, each such report shall provide such recommendations as the 
Secretary determines are appropriate for legislative action to 
facilitate the development and expansion of successful payment 
models.''.
    (b) Medicaid Conforming Amendment.--Section 1902(a) of the Social 
Security Act (42 U.S.C. 1396a(a)), as amended by section 8002(b), is 
amended--
            (1) in paragraph (81), by striking ``and'' at the end;
            (2) in paragraph (82), by striking the period at the end 
        and inserting ``; and''; and
            (3) by inserting after paragraph (82) the following new 
        paragraph:
            ``(83) provide for implementation of the payment models 
        specified by the Secretary under section 1115A(c) for 
        implementation on a nationwide basis unless the State 
        demonstrates to the satisfaction of the Secretary that 
        implementation would not be administratively feasible or 
        appropriate to the health care delivery system of the State.''.
    (c) Revisions to Health Care Quality Demonstration Program.--
Subsections (b) and (f) of section 1866C of the Social Security Act (42 
U.S.C. 1395cc-3) are amended by striking ``5-year'' each place it 
appears.

SEC. 3022. MEDICARE SHARED SAVINGS PROGRAM.

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

                        ``shared savings program

    ``Sec. 1899.  (a) Establishment.--
            ``(1) In general.--Not later than January 1, 2012, the 
        Secretary shall establish a shared savings program (in this 
        section referred to as the `program') that promotes 
        accountability for a patient population and coordinates items 
        and services under parts A and B, and encourages investment in 
        infrastructure and redesigned care processes for high quality 
        and efficient service delivery. Under such program--
                    ``(A) groups of providers of services and suppliers 
                meeting criteria specified by the Secretary may work 
                together to manage and coordinate care for Medicare 
                fee-for-service beneficiaries through an accountable 
                care organization (referred to in this section as an 
                `ACO'); and
                    ``(B) ACOs that meet quality performance standards 
                established by the Secretary are eligible to receive 
                payments for shared savings under subsection (d)(2).
    ``(b) Eligible ACOs.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, as determined appropriate by the Secretary, 
        the following groups of providers of services and suppliers 
        which have established a mechanism for shared governance are 
        eligible to participate as ACOs under the program under this 
        section:
                    ``(A) ACO professionals in group practice 
                arrangements.
                    ``(B) Networks of individual practices of ACO 
                professionals.
                    ``(C) Partnerships or joint venture arrangements 
                between hospitals and ACO professionals.
                    ``(D) Hospitals employing ACO professionals.
                    ``(E) Such other groups of providers of services 
                and suppliers as the Secretary determines appropriate.
            ``(2) Requirements.--An ACO shall meet the following 
        requirements:
                    ``(A) The ACO shall be willing to become 
                accountable for the quality, cost, and overall care of 
                the Medicare fee-for-service beneficiaries assigned to 
                it.
                    ``(B) The ACO shall enter into an agreement with 
                the Secretary to participate in the program for not 
                less than a 3-year period (referred to in this section 
                as the `agreement period').
                    ``(C) The ACO shall have a formal legal structure 
                that would allow the organization to receive and 
                distribute payments for shared savings under subsection 
                (d)(2) to participating providers of services and 
                suppliers.
                    ``(D) The ACO shall include primary care ACO 
                professionals that are sufficient for the number of 
                Medicare fee-for-service beneficiaries assigned to the 
                ACO under subsection (c). At a minimum, the ACO shall 
                have at least 5,000 such beneficiaries assigned to it 
                under subsection (c) in order to be eligible to 
                participate in the ACO program.
                    ``(E) The ACO shall provide the Secretary with such 
                information regarding ACO professionals participating 
                in the ACO as the Secretary determines necessary to 
                support the assignment of Medicare fee-for-service 
                beneficiaries to an ACO, the implementation of quality 
                and other reporting requirements under paragraph (3), 
                and the determination of payments for shared savings 
                under subsection (d)(2).
                    ``(F) The ACO shall have in place a leadership and 
                management structure that includes clinical and 
                administrative systems.
                    ``(G) The ACO shall define processes to promote 
                evidence-based medicine and patient engagement, report 
                on quality and cost measures, and coordinate care, such 
                as through the use of telehealth, remote patient 
                monitoring, and other such enabling technologies.
                    ``(H) The ACO shall demonstrate to the Secretary 
                that it meets patient-centeredness criteria specified 
                by the Secretary, such as the use of patient and 
                caregiver assessments or the use of individualized care 
                plans.
            ``(3) Quality and other reporting requirements.--
                    ``(A) In general.--The Secretary shall determine 
                appropriate measures to assess the quality of care 
                furnished by the ACO, such as measures of--
                            ``(i) clinical processes and outcomes;
                            ``(ii) patient and, where practicable, 
                        caregiver experience of care; and
                            ``(iii) utilization (such as rates of 
                        hospital admissions for ambulatory care 
                        sensitive conditions).
                    ``(B) Reporting requirements.--An ACO shall submit 
                data in a form and manner specified by the Secretary on 
                measures the Secretary determines necessary for the ACO 
                to report in order to evaluate the quality of care 
                furnished by the ACO. Such data may include care 
                transitions across health care settings, including 
                hospital discharge planning and post-hospital discharge 
                follow-up by ACO professionals, as the Secretary 
                determines appropriate.
                    ``(C) Quality performance standards.--The Secretary 
                shall establish quality performance standards to assess 
                the quality of care furnished by ACOs. The Secretary 
                shall seek to improve the quality of care furnished by 
                ACOs over time by specifying higher standards, new 
                measures, or both for purposes of assessing such 
                quality of care.
                    ``(D) Other reporting requirements.--The Secretary 
                may, as the Secretary determines appropriate, 
                incorporate reporting requirements and incentive 
                payments related to the physician quality reporting 
                initiative (PQRI) under section 1848, including such 
                requirements and such payments related to electronic 
                prescribing, electronic health records, and other 
                similar initiatives under section 1848, and may use 
                alternative criteria than would otherwise apply under 
                such section for determining whether to make such 
                payments. The incentive payments described in the 
                preceding sentence shall not be taken into 
                consideration when calculating any payments otherwise 
                made under subsection (d).
            ``(4) No duplication in participation in shared savings 
        programs.--A provider of services or supplier that participates 
        in any of the following shall not be eligible to participate in 
        an ACO under this section:
                    ``(A) A model tested or expanded under section 
                1115A that involves shared savings under this title, or 
                any other program or demonstration project that 
                involves such shared savings.
                    ``(B) The independence at home medical practice 
                pilot program under section 1866E.
    ``(c) Assignment of Medicare Fee-for-service Beneficiaries to 
ACOs.--The Secretary shall determine an appropriate method to assign 
Medicare fee-for-service beneficiaries to an ACO based on their 
utilization of primary care services provided under this title by an 
ACO professional described in subsection (h)(1)(A).
    ``(d) Payments and Treatment of Savings.--
            ``(1) Payments.--
                    ``(A) In general.--Under the program, subject to 
                paragraph (3), payments shall continue to be made to 
                providers of services and suppliers participating in an 
                ACO under the original Medicare fee-for-service program 
                under parts A and B in the same manner as they would 
                otherwise be made except that a partic