"(B) require paper versions of standardized transactions to comply with the same standards as to data content such that a fully compliant, equivalent electronic transaction can be populated from the data from a paper version;

"(C) enable electronic funds transfers, in order to allow automated reconciliation with the related health care payment and remittance advice; "(D) require timely and transparent claim and denial management processes, including tracking, adjudication, and appeal processing;

"(E) require the use of a standard electronic transaction with which health care providers may quickly and efficiently enroll with a health plan to conduct the other electronic transactions provided for in this part; and "(F) provide for other requirements relating to administrative simplification as identified by the Secretary, in consultation with stakeholders. “(5) BUILDING ON EXISTING STANDARDS.-In developing the standards under this section, the Secretary shall build upon existing and planned standards.

"(6) IMPLEMENTATION AND ENFORCEMENT.-Not later than 6 months after the date of the enactment of this section, the Secretary shall submit to the appropriate committees of Congress a plan for the implementation and enforcement, by not later than 5 years after such date of enactment, of the standards under this section. Such plan shall include

"(A) a process and timeframe with milestones for developing the complete set of standards;

"(B) an expedited upgrade program for continually developing and approving additions and modifications to the standards as often as annually to improve their quality and extend their functionality to meet evolving requirements in health care;

"(C) programs to provide incentives for, and ease the burden of, implementation for certain health care providers, with special consideration given to such providers serving rural or underserved areas and ensure coordination with standards, implementation specifications, and certification criteria being adopted under the HITECH Act;

"(D) programs to provide incentives for, and ease the burden of, health care providers who volunteer to participate in the process of setting standards for electronic transactions;

"(E) an estimate of total funds needed to ensure timely completion of the implementation plan; and

(F) an enforcement process that includes timely investigation of complaints, random audits to ensure compliance, civil monetary and programmatic penalties for non-compliance consistent with existing laws and regulations, and a fair and reasonable appeals process building off of enforcement provisions under this part.

"(b) LIMITATIONS ON USE OF DATA.-Nothing in this section shall be construed to permit the use of information collected under this section in a manner that would adversely affect any individual.

"(c) PROTECTION OF DATA. The Secretary shall ensure (through the promulgation of regulations or otherwise) that all data collected pursuant to subsection (a) are"(1) used and disclosed in a manner that meets the HIPAA privacy and security law (as defined in section 3009(a)(2) of the Public Health Service Act), including any privacy or security standard adopted under section 3004 of such Act; and

"(2) protected from all inappropriate internal use by any entity that collects, stores, or receives the data, including use of such data in determinations of eligibility (or continued eligibility) in health plans, and from other inappropriate uses, as defined by the Secretary.

"SEC. 1173B. OPERATING RULES.

"(a) IN GENERAL.-The Secretary shall adopt operating rules for each transaction described in section 1173(a)(2) of the Social Security Act (42 U.S.C. 1320d-2(a))

“(b) OPERATING RULES DEVELOPMENT. In adopting such rules, the Secretary shall take into account the development of operating rules that have been developed by a nonprofit entity that meets the following criteria:

“(1) The entity focuses its mission on administrative simplification.

"(2) The entity demonstrates a established multi-stakeholder process that creates consensus based operating rules using a voting policy with balanced representation by the critical stakeholders (including health plans and health care providers) so that no one group dominates the entity and shall include others such as standards development organizations, and relevant Federal agencies. "(3) The entity has in place a public set of guiding principles that ensure the operating rules and process are open and transparent.

"(4) The entity shall coordinate its activities with the HIT Policy Committee and the HIT Standards Committee (established under title XXX of the Public Health Service Act) and complements the efforts of the Office of the National Healthcare Coordinator and its related health information exchange goals.

"(5) The entity incorporates national standards, including the transaction standards issued under Health Insurance Portability and Accountability Act of 1996.

"(6) The entity uses existing market research and proven best practices. "(7) The entity has a set of measures that allow for the evaluation of their market impact and public reporting of aggregate stakeholder impact.

"(8) The entity supports nondiscrimination and conflict of interest policies that demonstrate a commitment to open, fair, and nondiscriminatory practices. “(9) The entity allows for public reviews and updates of the operating rules. "(c) IMPLEMENTATION.-The Secretary shall adopt operating rules under this section, by regulation or otherwise, only after taking into account the rules developed by the entity under subsection (b) and having ensured consultation with providers. The first set of operating rules for the transactions for eligibility for health plan and health claims status under this section shall be adopted not later than October 1, 2011, in a manner such that such set of rules is effective beginning not later than January 1, 2013. The second set of operating rules for the remainder of the transactions described in section 1173(a)(2) of the Social Security Act (42 U.S.C. 1320d2(a)) shall be adopted not later than October 1, 2012, in a manner such that such set of rules is effective beginning not later than January 1, 2014.".

(2) DEFINITIONS.-Section 1171 of such Act (42 U.S.C. 1320d) is amended(A) in paragraph (7), by striking "with reference to" and all that follows and inserting "with reference to a transaction or data element of health information in section 1173 means implementation specifications, certification criteria, operating rules, messaging formats, codes, and code sets adopted or established by the Secretary for the electronic exchange and use of information."; and

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

“(9) OPERATING RULES.-The term 'operating rules' means business rules for using and processing transactions. Operating rules should address the following:

"(A) Requirements for data content using available and established national standards.

"(B) Infrastructure requirements that establish best practices for streamlining data flow to yield timely execution of transactions.

"(C) Policies defining the transaction related rights and responsibilities for entities that are transmitting or receiving data.".

(3) CONFORMING AMENDMENT.-Section 1179 of such Act (42 U.S.C. 1320d-8) is amended, in the matter before paragraph (1)

(A) by inserting "on behalf of an individual" after "1978)"; and

(B) by inserting "on behalf of an individual" after "for a financial institution".

(b) STANDARDS FOR CLAIMS ATTACHMENTS AND COORDINATION OF BENEFITS.(1) STANDARD FOR HEALTH CLAIMS ATTACHMENTS.-Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall promulgate a final rule to establish a standard for health claims attachment transaction described in section 1173(a)(2)(B) of the Social Security Act (42 U.S.C. 1320d-2(a)(2)(B)) and coordination of benefits.

(2) REVISION IN PROCESSING PAYMENT TRANSACTIONS BY FINANCIAL INSTITUTIONS.

(A) IN GENERAL.-Section 1179 of the Social Security Act (42 U.S.C. 1320d-8) is amended, in the matter before paragraph (1)—

(i) by striking "or is engaged" and inserting "and is engaged"; and (ii) by inserting "(other than as a business associate for a covered entity)" after "for a financial institution".

(B) EFFECTIVE DATE.-The amendments made by paragraph (1) shall apply to transactions occurring on or after such date (not later than 6 months after the date of the enactment of this Act) as the Secretary of Health and Human Services shall specify.

(c) UNIQUE HEALTH PLAN IDENTIFIER.-Not later than 2 years after the date of the enactment of this Act, the Secretary of Health and Human Services shall promulgate a final rule to establish a unique health plan identifier described in section 1173(b) of the Social Security Act (42 U.S.C. 1320d-2(b)) based on the input of the National Committee of Vital and Health Statistics and consultation with health plans. The Secretary may do so on an interim final basis and effective not later than October 1, 2012.

SEC. 165. EXPANSION OF ELECTRONIC TRANSACTIONS IN MEDICARE.

(a) IN GENERAL.-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) subject to subsection (h), not later than January 1, 2015, 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.".

(b) EFFECTIVE DATE.-The amendments made by subsection (a) shall take effect upon the date of the enactment of this Act.

SEC. 166. REINSURANCE PROGRAM FOR RETIREES.

(a) ESTABLISHMENT.

(1) IN GENERAL.-Not later than 90 days after the date of the enactment of this Act, the Secretary of Health and Human Services shall establish a temporary reinsurance program (in this section referred to as the "reinsurance program") to provide reimbursement to assist participating employment-based plans with the cost of providing health benefits to retirees and to eligible spouses, surviving spouses and dependents of such retirees. (2) DEFINITIONS.-For purposes of this section:

(A) The term "eligible employment-based plan" means a group health benefits plan that

(i) is maintained by one or more employers, former employers or employee associations, or a voluntary employees' beneficiary association, or a committee or board of individuals appointed to administer such plan, and

(ii) provides health benefits to retirees.

(B) The term "health benefits" means medical, surgical, hospital, prescription drug, and such other benefits as shall be determined by the Secretary, whether self-funded or delivered through the purchase of insurance or otherwise.

(C) The term "participating employment-based plan" means an eligible employment-based plan that is participating in the reinsurance program. (D) The term "retiree" means, with respect to a participating employment-benefit plan, an individual who—

(i) is 55 years of age or older;

(ii) is not eligible for coverage under title XVIII of the Social Security Act; and

(iii) is not an active employee of an employer maintaining the plan or of any employer that makes or has made substantial contributions to fund such plan.

(E) The term "Secretary" means Secretary of Health and Human Services.

(b) PARTICIPATION.-To be eligible to participate in the reinsurance program, an eligible employment-based plan shall submit to the Secretary an application for participation in the program, at such time, in such manner, and containing such information as the Secretary shall require.

(c) PAYMENT.—

(1) SUBMISSION OF CLAIMS.

(A) IN GENERAL.-Under the reinsurance program, a participating employment-based plan shall submit claims for reimbursement to the Secretary which shall contain documentation of the actual costs of the items and services for which each claim is being submitted.

(B) BASIS FOR CLAIMS.-Each claim submitted under subparagraph (A) shall be based on the actual amount expended by the participating employment-based plan involved within the plan year for the appropriate employment based health benefits provided to a retiree or to the spouse, surviving spouse, or dependent of a retiree. In determining the amount of any claim for purposes of this subsection, the participating employment-based plan shall take into account any negotiated price concessions (such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations) obtained by such plan with respect to such health benefits. For purposes of calculating the amount of any claim, the costs paid by the retiree or by the spouse, surviving spouse, or dependent of the retiree in the form of deductibles, co-payments, and co-insurance shall be included along with the amounts paid by the participating employment-based plan.

(2) PROGRAM PAYMENTS AND LIMIT.-If the Secretary determines that a participating employment-based plan has submitted a valid claim under paragraph (1), the Secretary shall reimburse such plan for 80 percent of that portion of the costs attributable to such claim that exceeds $15,000, but is less than $90,000. Such amounts shall be adjusted each year based on the percentage increase in the medical care component of the Consumer Price Index (rounded to the nearest multiple of $1,000) for the year involved.

(3) USE OF PAYMENTS.-Amounts paid to a participating employment-based plan under this subsection shall be used to lower the costs borne directly by the participants and beneficiaries for health benefits provided under such plan in the form of premiums, co-payments, deductibles, co-insurance, or other out-ofpocket costs. Such payments shall not be used to reduce the costs of an employer maintaining the participating employment-based plan. The Secretary shall develop a mechanism to monitor the appropriate use of such payments by such plans.

(4) APPEALS AND PROGRAM PROTECTIONS.-The Secretary shall establish

(A) an appeals process to permit participating employment-based plans to appeal a determination of the Secretary with respect to claims submitted under this section; and

(B) procedures to protect against fraud, waste, and abuse under the program.

(5) AUDITS.-The Secretary shall conduct annual audits of claims data submitted by participating employment-based plans under this section to ensure that they are in compliance with the requirements of this section. (d) RETIREE RESERVE TRUST FUND.

(1) ESTABLISHMENT.

(A) IN GENERAL.-There is established in the Treasury of the United States a trust fund to be known as the "Retiree Reserve Trust Fund" (referred to in this section as the "Trust Fund"), that shall consist of such amounts as may be appropriated or credited to the Trust Fund as provided for in this subsection to enable the Secretary to carry out the reinsurance program. Such amounts shall remain available until expended.

(B) FUNDING.-There are hereby appropriated to the Trust Fund, out of any moneys in the Treasury not otherwise appropriated, an amount requested by the Secretary as necessary to carry out this section, except that the total of all such amounts requested shall not exceed $10,000,000,000. (C) APPROPRIATIONS FROM THE TRUST FUND.—

(i) IN GENERAL.-Amounts in the Trust Fund are appropriated to provide funding to carry out the reinsurance program and shall be used to carry out such program.

(ii) BUDGETARY IMPLICATIONS.-Amounts appropriated under clause (i), and outlays flowing from such appropriations, shall not be taken into account for purposes of any budget enforcement procedures including allocations under section 302(a) and (b) of the Balanced Budget and Emergency Deficit Control Act and budget resolutions for fiscal years during which appropriations are made from the Trust Fund.

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

SEC. 167. LIMITATIONS ON PREEXISTING CONDITION EXCLUSIONS IN GROUP HEALTH PLANS AND HEALTH INSURANCE COVERAGE IN THE GROUP AND INDIVIDUAL MARKETS IN ADVANCE OF APPLICABILITY OF NEW PROHIBITION OF PREEXISTING CONDITION EXCLUSIONS.

(a) AMENDMENTS RELATING TO PREEXISTING CONDITION EXCLUSIONS UNDER GROUP HEALTH PLANS.

(1) REDUCTION IN LOOK-BACK PERIOD.-Section 2701(a)(1) of the Public Health Service Act (42 U.S.C. 300gg(a)(1)) is amended by striking "6-month period" and inserting "30-day period".

(2) REDUCTION IN PERMITTED PREEXISTING CONDITION LIMITATION PERIOD.— Section 2701(a)(2) of such Act (42 U.S.C. 300gg(a)(2)) is amended by striking "12 months” and inserting “3 months", and by striking “18 months” and inserting "9 months".

(3) EFFECTIVE DATE.

(A) IN GENERAL.-Except as provided in subparagraph (B), the amendments made by this subsection shall apply with respect to group health plans for plan years beginning after the end of the 6th calendar month following the date of the enactment of this Act.

(B) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS.-In the case of a group health plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified before the date of the enactment of this Act, the amendments made by this subsection shall not apply to plan years beginning before the earlier of

(i) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act),

or

(ii) 3 years after the date of the enactment of this Act.

For purposes of clause (i), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by the amendments made by this section shall not be treated as a termination of such collective bargaining agreement.

(b) AMENDMENTS RELATING TO PREEXISTING CONDITION EXCLUSIONS IN HEALTH INSURANCE COVERAGE IN THE INDIVIDUAL MARKET UNDER GRANDFATHERED HEALTH INSURANCE COVERAGE.

(1) APPLICABILITY OF GROUP HEALTH INSURANCE LIMITATIONS ON IMPOSITION

OF PREEXISTING CONDITION EXCLUSIONS.

(A) IN GENERAL.-Section 2741 of the Public Health Service Act (42 U.S.C. 300gg-41) is amended

(i) by redesignating the second subsection (e) (relating to market requirements) and subsection (f) as subsections (f) and (g), respectively; and

(ii) by adding at the end the following new subsection:

"(h) APPLICATION OF GROUP HEALTH INSURANCE LIMITATIONS ON IMPOSITION OF PREEXISTING CONDITION EXCLUSIONS.

“(1) IN GENERAL. Subject to paragraph (2), a health insurance issuer that provides individual health insurance coverage may not impose a preexisting condition exclusion (as defined in subsection (b)(1)(A) of section 2701) with respect to such coverage except to the extent that such exclusion could be imposed consistent with such section if such coverage were group health insurance coverage.

"(2) LIMITATION.-In the case of an individual who

"(A) is enrolled in individual health insurance coverage;

"(B) during the period of such enrollment has a condition for which no medical advice, diagnosis, care, or treatment had been recommended or received as of the enrollment date; and

"(C) seeks to enroll under other individual health insurance coverage which provides benefits different from those provided under the coverage referred to in subparagraph (A) with respect to such condition,

the issuer of the individual health insurance coverage described in subparagraph (C) may impose a preexisting condition exclusion with respect to such condition and any benefits in addition to those provided under the coverage referred to in subparagraph (A), but such exclusion may not extend for a period of more than 3 months.".

(B) ELIMINATION OF COBRA REQUIREMENT.-Subsection (b) of such section is amended

(i) by adding “and” at the end of paragraph (2);

(ii) by striking the semicolon at the end of paragraph (3) and inserting a period; and

(iii) by striking paragraphs (4) and (5).

(C) CONFORMING AMENDMENT.-Section 2744(a)(1) of such Act (42 U.S.C. 300gg-44(a)(1)) is amended by inserting "(other than subsection (h))" after "section 2741".

(2) EFFECTIVE DATE.-The amendments made by this subsection shall apply with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market beginning after the end of the 6th calendar month following the date of the enactment of this Act.

(c) INAPPLICABILITY OF INTERIM LIMITATIONS UPON APPLICABILITY OF TOTAL PROHIBITION OF EXCLUSION.-Section 2701 of such Act and the amendments made by subsection (b) of this section to sections 2741 and 2744 of such Act shall cease to be effective in the case of any health benefits plan as of the date on which such plan becomes subject to the requirements of section 111 of this Act (relating to prohibiting preexisting condition exclusions).