Section 1323

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

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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

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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.

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[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

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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".

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[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.

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[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.

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[h] AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated such sums as may be necessary to carry out this section.