SEC. 162. ENDING HEALTH INSURANCE RESCISSION ABUSE.

[a] Clarification Regarding Application of Guaranteed Renewability of Individual Health Insurance Coverage- Section- 2742 of the Public Health Service Act [42 U.S.C. 300gg-42] is amended--

[1] in its heading, by inserting 'and continuation in force, including prohibition of rescission,' after 'guaranteed renewability'; and

[2] in subsection [a], by inserting ', including without rescission,' after 'continue in force'.

[b] Secretarial Guidance Regarding Rescissions- Section- 2742 of such Act [42 U.S.C. 300gg-42] is amended by adding at the end the following:

'[f] Rescission- A health insurance issuer may rescind health insurance coverage only upon clear and convincing evidence of fraud described in subsection [b][2]. The Secretary, no later than July 1, 2010, shall issue guidance implementing this requirement, including procedures for independent, external third party review.'.

[c] Opportunity for Independent, External Third Party Review in Certain Cases- Subpart 1 of part B of title XXVII of such Act [42 U.S.C. 300gg-41 et seq.] is amended by adding at the end the following:

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

'[a] Notice and Review Right- If a health insurance issuer determines to rescind health insurance coverage for an individual in the individual market, before such rescission may take effect the issuer shall provide the individual with notice of such proposed rescission and an opportunity for a review of such determination by an independent, external third party under procedures specified by the Secretary under section 2742[f].

'[b] Independent Determination- If the individual requests such review by an independent, external third party of a rescission of health insurance coverage, the coverage shall remain in effect until such third party determines that the coverage may be rescinded under the guidance issued by the Secretary under section 2742[f].'.

[d] Effective Date- The amendments made by this section shall apply on and after October 1, 2010, with respect to health insurance coverage issued before, on, or after such date.