Title II — Medicare

“1 Medicare Advantage program”

“2 Medicare Total Health program

“1860C–1. Eligibility, enrollment, and information

“(a) Eligibility

“(1) In general—Notwithstanding section 1851(a)(1) and subject to the succeeding provisions of this subpart, each Total Health eligible individual (as defined in paragraph (3)) may elect to receive benefits under this title—

“(A) through the original medicare fee-for-service program under parts A and B, including the option to elect qualified prescription drug coverage in accordance with section 1860D–1; or

“(B) through enrollment in a Total Health plan under this subpart.

“(2) Coverage first effective January 1, 2017—Coverage under the Medicare Total Health program shall first be effective on January 1, 2017.

“(3) Total health eligible individual—For purposes of this subpart, the term Total Health eligible individual means an individual who is entitled to benefits under part A and enrolled under part B who resides in a Total Health region.

“(4) Types of total health plans that may be available—A Total Health plan may be any of the types of plans of health insurance described in section 1851(a)(2)(A), including a plan for special needs individuals described in clause (ii) of such section.

“(b) Enrollment process for Total Health plans

“(1) Establishment of process

“(A) In general—The Secretary shall establish a process for the enrollment, disenrollment, termination, and change of enrollment of Total Health eligible individuals in Total Health plans in a manner similar to (and coordinated with) the process established under section 1860D–1(b)(1).

“(B) Requirements—Except as otherwise provided in this subsection, the process established under subparagraph (A) shall include a residency requirement similar to the residency requirement described in section 1851(b)(1) and shall take into account the process for exercising choice described in section 1851(c).

“(2) Initial enrollment period

“(A) Program initiation—In the case of an individual who is a Total Health eligible individual as of November 15, 2016, there shall be an initial enrollment period beginning on October 15, 2016, and ending on December 7, 2016.

“(B) Continuing periods—In the case of an individual who first becomes a Total Health eligible individual after November 15, 2016, there shall be an initial enrollment period which is the same as the period under section 1851(e)(1).

“(3) Annual, coordinated election period

“(A) In general—As part of the process established under paragraph (1), each individual who is eligible to make an election under this section may change such election during an annual, coordinated election period.

“(B) Annual, coordinated election period—For purposes of this section, the term annual, coordinated election period means, with respect to 2017 and succeeding years, the period beginning on October 15 and ending on December 7 of the year before such year.

“(4) Special enrollment periods—The Secretary shall establish special enrollment periods that are similar to the special enrollment periods established under section 1851(e)(4).

“(5) Special rule

“(A) In general—Notwithstanding any other provision of law, the process established under paragraph (1) shall include, in the case of a Total Health eligible individual who has failed to enroll in either the original medicare fee-for-service program option or a Total Health plan prior to the beginning of a plan year (including a full-benefit dual eligible individual (as defined in section 1935(c)(6))), for the enrollment in a Total Health plan with a monthly beneficiary premium under section 1860C–7(a) (taking into account any adjustment under subparagraph (B) or (C) of section 1860C–7(a)(2) and without regard to any adjustment under subparagraph (D) or (E) of such section) that does not exceed the base beneficiary premium computed under section 1860C–7(a)(1).

“(B) Selection of plan by the secretary—In selecting a plan for the enrollment of a Total Health eligible individual under subparagraph (A), the Secretary shall first attempt to identify the Total Health plan in which the cost-sharing and health benefits are most similar to the coverage the individual had in the preceding plan year. If there is more than one such plan available, the Secretary shall enroll such an individual on a random basis among all such plans in the Total Health region. Nothing in the previous sentence shall prevent such an individual from declining or changing such enrollment.

“(C) Individuals who are not total health eligible individuals—The Secretary shall establish procedures under which individuals who are entitled to, or enrolled for, coverage under part A or enrolled for coverage under part B (but not both), may continue to receive benefits with deductible and coinsurance amounts comparable to the benefits, deductible, and coinsurance amounts they would have received if this subpart had not been enacted.

“(c) Providing information to beneficiaries

“(1) In general—The Secretary shall conduct activities that are designed to broadly disseminate information to Total Health eligible individuals (and prospective Total Health eligible individuals) regarding the coverage provided under this subpart. Such activities shall ensure that such information is first made available at least 30 days prior to the initial enrollment period described in subsection (b)(2)(A).

“(2) Activities—The activities conducted under paragraph (1) shall be similar to the activities described in paragraph (2) of section 1860D–1(c) and contain comparative information similar to the information described in paragraph (3) of such section.

“1860C–2. Total Health plan benefits

“(a) Requirements

“(1) Qualified total health benefits—Each Total Health plan shall provide to individuals enrolled under this subpart, through providers and other persons that meet the applicable requirements of this title and part A of title XI, a qualified Total Health benefits package and qualified prescription drug coverage (described in section 1860D–2(a)).

“(2) Definition of qualified total health benefits package—For purposes of this subpart, the term qualified Total Health benefits package means either of the following:

“(A) Standard health benefits coverage with access to negotiated prices—Standard health benefits coverage (as defined in subsection (b)) and access to negotiated prices under subsection (d).

“(B) Alternative total health benefits coverage with at least actuarially equivalent benefits and access to negotiated prices—Coverage of health benefits which meets the alternative health benefits coverage requirements under subsection (c) and access to negotiated prices under subsection (d), but only if the benefit design of such coverage is approved by the Secretary, as provided under subsection (c).

“(3) Permitting supplemental health benefits coverage

“(A) In general—Subject to subparagraph (B), a qualified Total Health benefits package may include supplemental health benefits coverage consisting of either or both of the following:

“(i) Certain reductions in cost-sharing

“(I) In general—A reduction in the annual deductible or a reduction in the coinsurance percentage, or any combination thereof, insofar as such a reduction or increase increases the actuarial value of benefits above the actuarial value of a basic Total Health benefits package.

“(II) Construction—Nothing in this clause shall be construed as affecting the application of subsection (c)(3).

“(ii) Additional benefits—Coverage of any health care item or service that is not covered under the original medicare fee-for-service program option or that is eligible for coverage under part D, subject to the approval of the Secretary.

“(B) Requirement for at least one basic benefits plan—A Total Health sponsor may not offer a Total Health plan that provides supplemental health benefits coverage pursuant to subparagraph (A) in an area unless the sponsor also offers a Total Health plan in the area that only provides a basic Total Health benefits package.

“(4) Basic total health benefits package—For purposes of this subpart, the term basic Total Health benefits package means either of the following:

“(A) Coverage that meets the requirements of paragraph (2)(A).

“(B) Coverage that meets the requirements of paragraph (2)(B) but does not have any supplemental health benefits coverage described in paragraph (3)(A).

“(5) Application of secondary payer provisions—The provisions of section 1852(a)(4) shall apply under this subpart in the same manner as such provisions applied to a Medicare Advantage plan.

“(6) Construction—Nothing in this subsection shall be construed as changing the computation of incurred costs under subsection (b)(3).

“(b) Standard health benefits coverage—For purposes of this subpart, the term standard health benefits coverage means coverage of benefits under the original medicare fee-for-service program option (as defined in section 1852(a)(1)(B)), including the following requirements:

“(1) Deductible—The coverage has an annual deductible that is equal to the amount of the unified deductible for the year under section 1899C.

“(2) 20 percent coinsurance—The coverage has coinsurance (for costs above the annual deductible specified in paragraph (1) and up to the first threshold annual out-of-pocket limit specified in paragraph (3)(B)(i)) that is—

“(A) equal to 20 percent; or

“(B) actuarially equivalent (using processes and methods established by the Secretary) to an average expected payment of 20 percent of such costs.

“(3) Protection against high out-of-pocket expenditures

“(A) In general—The coverage provides benefits, after the Total Health eligible individual has incurred costs (as described in subparagraph (C)) for health benefits in a year equal to—

“(i) the first threshold annual out-of-pocket limit specified in subparagraph (B)(i) for that year but less than the second threshold annual out-of-pocket limit specified in subparagraph (B)(ii) for that year, with coinsurance that is equal to 5 percent; and

“(ii) the second threshold annual out-of-pocket limit specified in subparagraph (B)(ii) for that year, without coinsurance.

“(B) Annual out-of-pocket limits specified—For purposes of this subpart:

“(i) First threshold annual out-of-pocket limit specified—The “first threshold annual out-of-pocket limit” specified in this clause is equal to the first threshold annual out-of-pocket limit for the year specified in section 1899B(b)(1).

“(ii) Second threshold annual out-of-pocket limit specified—The “second threshold annual out-of-pocket limit” specified in this clause is equal to the second threshold annual out-of-pocket limit for the year specified in section 1899B(b)(2).

“(C) Application—In applying subparagraph (A), incurred costs shall only include costs incurred with respect to health benefits for the annual deductible described in paragraph (1) and for cost-sharing described in paragraph (2) or paragraph (3)(A)(i), or for benefits that would have otherwise been covered under the plan but for the exhaustion of those benefits. Incurred costs do not include any costs incurred for health benefits which are not included (or treated as being included) under the plan.

“(c) Alternative total health benefits coverage requirements—A Total Health plan may provide a different benefit design from standard health benefits coverage so long as the Secretary determines that the following requirements are met and the plan applies for, and receives, the approval of the Secretary for such benefit design:

“(1) Assuring at least actuarially equivalent coverage

“(A) Assuring equivalent value of total coverage—The actuarial value of the total coverage is at least equal to the actuarial value of standard health benefits coverage.

“(B) Assuring equivalent unsubsidized value of coverage—The unsubsidized value of the coverage is at least equal to the unsubsidized value of standard health benefits coverage. For purposes of this subparagraph, the unsubsidized value of coverage is the amount by which the actuarial value of the coverage exceeds the subsidy payments with respect to such coverage.

“(C) Assuring standard payment for costs below first threshold annual out-of-pocket limit—The coverage is designed, based upon an actuarially representative pattern of utilization, to provide for the payment, with respect to costs incurred up to the first threshold annual out-of-pocket limit specified in subsection (b)(3)(B)(i), of an amount equal to at least the product of—

“(i) the amount by which the costs incurred exceed the deductible described in subsection (b)(1) for the year; and

“(ii) 100 percent minus the coinsurance percentage specified in subsection (b)(2).

“(2) Approval of benefit package—The benefit package is approved by the Secretary as containing a comparable range of benefits to standard health benefits coverage and meets such other requirements of this subpart as the Secretary may specify.

“(3) Maximum required deductible—The deductible under the coverage shall not exceed the deductible amount specified under subsection (b)(1) for the year.

“(4) Same protection against high out-of-pocket expenditures—The coverage provides the coverage required under subsection (b)(3).

“(d) Access to negotiated prices

“(1) Access

“(A) In general—Under a qualified Total Health benefits package offered by a Total Health sponsor offering a Total Health plan, the sponsor shall provide enrollees with access to negotiated prices used for payment for covered health benefits, regardless of the fact that no benefits may be payable under the coverage with respect to such benefits because of the application of a deductible or other cost-sharing.

“(B) Negotiated prices—For purposes of this subpart, negotiated prices shall take into account negotiated price concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for covered health benefits.

“(2) Audits—To protect against fraud and abuse and to ensure proper disclosures and accounting under this part and in accordance with section 1857(d)(2)(B), the Secretary may conduct periodic audits, directly or through contracts, of the financial statements and records of Total Health sponsors with respect to Total Health Plans.

“(3) Application of general exclusion provisions

“(A) In general—A Total Health plan may exclude from a qualified Total Health benefits package any health care item or service—

“(i) for which payment would not be made if section 1862(a) applied to this subpart; or

“(ii) which is not prescribed in accordance with the Total Health plan or this subpart.

“(B) Reconsideration and appeal—Any exclusion under subparagraph (A) is a determination subject to reconsideration and appeal under this subpart.

“(e) Satisfaction of requirements—A Total Health plan satisfies the requirements of subsection (a) in the same way a Medicare Advantage plan satisfied the requirements of section 1852(a)(2).

“1860C–3. Access to a choice of qualified Total Health benefits plans

“(a) Assuring access to a choice of plans

“(1) Choice of at least two plans in each area—The Secretary shall ensure that each Total Health eligible individual has available, consistent with paragraph (2), a choice of enrollment in at least 2 Total Health plans in the area in which the individual resides.

“(2) Requirement for different plan sponsors—The requirement in paragraph (1) is not satisfied with respect to an area if only one entity offers all of the qualifying plans in the area.

“(b) Flexibility in risk assumed—In order to ensure access pursuant to subsection (a) in an area the Secretary may approve limited risk plans under section 1860C–5(g) for the area.

“1860C–4. Beneficiary protections for Total Health plan enrollees

“(a) Dissemination of information

“(1) General information—A Total Health sponsor shall disclose, in a clear, accurate, and standardized form to each enrollee with a Total Health plan offered by the sponsor under this subpart at the time of enrollment and at least annually thereafter, the information described in section 1852(c)(1) relating to such plan, insofar as the Secretary determines appropriate with respect to benefits provided under this subpart, and including the information described in section 1860D–4 relating to qualified prescription drug coverage under the plan.

“(2) Disclosure upon request of general coverage, utilization, and grievance information—Upon request of a Total Health eligible individual who is eligible to enroll in a Total Health plan, the Total Health sponsor offering such plan shall provide information similar (as determined by the Secretary) to the information described in section 1852(c)(2) to such individual.

“(3) Provision of specific information—Each Total Health sponsor offering a Total Health plan shall have a mechanism for providing specific information on a timely basis to enrollees upon request. Such mechanism shall include access to information through the use of a toll-free telephone number and, upon request, the provision of such information in writing.

“(4) Claims information

“(A) In general—A Total Health sponsor offering a Total Health plan must furnish to each enrollee in a form easily understandable to such enrollees—

“(i) an explanation of benefits (in accordance with section 1806(a) or in a comparable manner); and

“(ii) when Total Health benefits are provided under this subpart, a notice of the benefits in relation to—

“(I) the deductible described in paragraph (1) of section 1860C–2(b) for the current year; and

“(II) the annual out-of-pocket limits under paragraph (3) of such section for the current year.

“(B) Timing of notices—Notices under subparagraph (A)(ii) need not be provided more often than as specified by the Secretary.

“(b) Access to health care providers

“(1) Assuring provider access

“(A) Discounts allowed for network providers—For health benefits furnished through in-network providers, a Total Health plan may reduce coinsurance or copayments for Total Health eligible individuals enrolled in the plan below the level otherwise required. In no case shall such a reduction result in an increase in payments made by the Secretary under section 1860C–8 to the Total Health sponsor of the plan.

“(B) Convenient access for network providers

“(i) In general—The Total Health sponsor of the Total Health plan shall secure the participation in its network of a sufficient number of health care providers that furnish health care items and services under the plan directly to patients to ensure convenient access (consistent with rules established by the Secretary).

“(ii) Adequate emergency access—Such rules shall include adequate emergency access for enrollees.

“(C) Level playing field—Such a sponsor shall permit enrollees to receive benefits through any health care provider participating in the program under this title with any differential in charge paid by such enrollees.

“(2) Use of standardized technology

“(A) In general—The Total Health sponsor of a Total Health plan shall issue (and reissue, as appropriate) such a card (or other technology) that may be used by an enrollee to assure access to health benefits under this subpart.

“(B) Standards

“(i) In general—The Secretary shall provide for the development, adoption, or recognition of standards relating to a standardized format for the card or other technology required under subparagraph (A). Such standards shall be compatible with part C of title XI and may be based on standards developed by an appropriate standard setting organization.

“(ii) Consultation—In developing the standards under clause (i), the Secretary shall consult with standard setting organizations determined appropriate by the Secretary.

“(iii) Implementation—The Secretary shall develop, adopt, or recognize the standards under clause (i) by such date as the Secretary determines shall be sufficient to ensure that Total Health sponsors utilize such standards beginning January 1, 2017.

“(c) Cost and utilization management; quality assurance; wellness program

“(1) In general—The Total Health sponsor shall have in place, directly or through appropriate arrangements, the following:

“(A) A cost-effective health benefits management program, including incentives to reduce costs when medically appropriate.

“(B) Quality assurance measures and systems to reduce errors and improve the use of health benefits.

“(C) A wellness program described in paragraph (2).

“(D) A program to control fraud, abuse, and waste.

“(2) Wellness program

“(A) Description—A wellness program described in this paragraph is a program focused on health improvement, disease prevention, and management of chronic conditions for Total Health eligible individuals enrolled in a plan under this part to optimize health outcomes through improved use of health care items and services and to reduce the risk of adverse events.

“(B) Elements—Such program may include elements that promote—

“(i) enhanced enrollee understanding to promote the appropriate use of health care items and services by enrollees and to reduce the risk of potential adverse events and to improve health outcomes through beneficiary education, counseling, and other appropriate means;

“(ii) increased enrollee adherence with recommended regimens through compliance programs and other appropriate means; and

“(iii) detection of adverse events and patterns of overuse and underuse of health care items and services.

“(C) Assessment—The Total Health sponsor shall have in place a process to assess, at least on a quarterly basis, the health benefits use of individuals who are not enrolled in the wellness program.

“(D) Wellness program enrollment—The Total Health sponsor shall have in place a process to—

“(i) subject to clause (ii), automatically enroll plan enrollees in the wellness program required under this subsection; and

“(ii) permit plan enrolles to opt-out of enrollment in the wellness program.

“(E) Development of program in cooperation with physicians—Such program shall be developed in cooperation with physicians.

“(F) Coordination with care management plans—The Secretary shall establish guidelines for the coordination of any wellness program under this paragraph with respect to a targeted beneficiary described in section 1860D–4(c)(2)(A)(i) (applied by substituting “Total Health eligible individual” for “part D eligible individual”) with any care management plan established with respect to such beneficiary under a chronic care improvement program under section 1807.

“(G) Considerations in provider fees—The Total Health sponsor of a Total Health plan shall take into account, in establishing fees for entities providing services under such plan, the resources used, and time required to, implement the wellness program under this paragraph. Each such sponsor shall disclose to the Secretary upon request the amount of any such fees.

“(d) Consumer satisfaction surveys—In order to provide for comparative information under section 1860C–1(c), the Secretary shall conduct consumer satisfaction surveys with respect to Total Health sponsors and Total Health plans in a manner similar to the manner such surveys were conducted for MA organizations and MA plans under subpart 1.

“(e) Grievance mechanism—Each Total Health sponsor shall provide meaningful procedures for hearing and resolving grievances between the sponsor (including any entity or individual through which the sponsor provides covered benefits) and enrollees with Total Health plans of the sponsor under this part in accordance with section 1852(f).

“(f) Coverage determinations and reconsiderations—A Total Health sponsor shall meet the requirements of paragraphs (1) through (3) of section 1852(g) with respect to covered benefits under the Total Health plan offered by the sponsor under this subpart in the same manner as such requirements applied to an MA organization with respect to covered benefits under an MA plan offered by the organization under subpart 1.

“(g) Appeals—A Total Health sponsor shall meet the requirements of paragraphs (4) and (5) of section 1852(g) with respect to benefits in a manner similar (as determined by the Secretary) to the manner such requirements applied to an MA organization with respect to benefits under the original medicare fee-for-service program option under an MA plan. In applying this subsection, only the Total Health eligible individual shall be entitled to bring such an appeal.

“(h) Privacy, confidentiality, and accuracy of enrollee records—The provisions of section 1852(h) shall apply to a Total Health sponsor and Total Health plan in the same manner as such provisions applied to an MA organization and an MA plan.

“(i) Treatment of accreditation—Subparagraph (A) of section 1852(e)(4) (relating to treatment of accreditation) shall apply to a Total Health sponsor under this part in the same manner as such subparagraph applied to an MA organization.

“(j) Requirements with respect to sales and marketing activities—The following provisions shall apply to a Total Health sponsor (and the agents, brokers, and other third parties representing such sponsor) in the same manner as such provisions applied to a Medicare Advantage organization (and the agents, brokers, and other third parties representing such organization):

“(1) The prohibition under section 1851(h)(4)(C) on conducting activities described in section 1851(j)(1).

“(2) The requirement under section 1851(h)(4)(D) to conduct activities described in paragraph (2) of section 1851(j) in accordance with the limitations established under such section.

“(3) The inclusion of the plan type in the plan name under section 1851(h)(6).

“(4) The requirements regarding the appointment of agents and brokers and compliance with State information requests under subparagraphs (A) and (B), respectively, of section 1851(h)(7).

“1860C–5. Total Health regions; submission of bids; Total Health plan approval

“(a) Establishment of total health regions; service areas

“(1) Coverage of entire total health region

“(A) In general—The service area for a Total Health plan shall consist of an entire Total Health region established under paragraph (2).

“(B) No use of segments of service areas—In no case may a Total Health plan serve only segments of the service area.

“(2) Establishment of total health regions

“(A) In general—The Secretary shall establish, and may revise, Total Health regions in accordance with the requirements of this paragraph.

“(B) Regions to be larger than a single county—Total Health regions shall include more than one county.

“(C) Regions within msas—Among counties in a metropolitan statistical area, a Total Health region shall include all of the counties located in the same State in that metropolitan statistical area.

“(D) Regions outside msas—Among counties outside a metropolitan statistical area, a Total Health region shall include all of the counties in the same State that the Secretary determines are accurate reflections of health care market areas, such as health service areas.

“(E) Authority for territories—The Secretary shall establish, and may revise, Total Health regions for areas in States that are not within the 50 States or the District of Columbia.

“(3) National plan—Nothing in this subsection shall be construed as preventing a Total Health plan from being offered in more than one Total Health region (including all Total Health regions).

“(b) Submission of bids, premiums, and related information

“(1) In general—A Total Health sponsor shall submit to the Secretary information described in paragraph (2) with respect to each Total Health plan it offers. Such information shall be submitted at the same time and in a similar manner to the manner in which information described in paragraph (6) of section 1854(a) was submitted by an MA organization under paragraph (1) of such section.

“(2) Information described—The information described in this paragraph is information on the following:

“(A) Benefits package provided—The qualified Total Health benefits package provided under the plan, including the deductible and other cost-sharing.

“(B) Actuarial value—The actuarial value of the qualified Total Health benefits package in the Total Health region for a Total Health eligible individual with a national average risk profile for the factors described in section 1860C–8(b)(1)(A) (as specified by the Secretary).

“(C) Bid—Information on the bid, including an actuarial certification of—

“(i) the basis for the actuarial value described in subparagraph (B) assumed in such bid;

“(ii) the portion of such bid attributable to a basic Total Health benefits package and, if applicable, the portion of such bid attributable to supplemental benefits; and

“(iii) administrative expenses assumed in the bid.

“(D) Service area—The service area for the plan (as described in subsection (a)(1)).

“(E) Level of risk assumed—Whether the Total Health sponsor requires a modification of risk level and, if so, the extent of such modification. Any such modification shall apply with respect to all Total Health plans offered by a Total Health sponsor in a Total Health region.

“(F) Additional information—Such other information as the Secretary may require to carry out this subpart.

“(3) Paperwork reduction for offering of total health plans nationally or in multi-region areas—The Secretary shall establish requirements for the submission of information under this subsection in a manner that promotes the offering of such plans in more than one Total Health region (including all regions) through the filing of consolidated information.

“(c) Medicare fee-for-Service bid—For purposes of this subpart, the bid for benefits under the original medicare fee-for-service program option (as defined in section 1852(a)(1)(B)) is the dollar amount of the actuarial valuation of the benefits under that option for each Total Health region (as determined and submitted by the Chief Actuary of the Centers for Medicare & Medicaid Services using the same processes used to value Total Health plans under subsection (d)).

“(d) Actuarial valuation

“(1) Processes—For purposes of this subpart, the Secretary shall establish processes and methods for determining the actuarial valuation of a Total Health benefits package, including—

“(A) an actuarial valuation of the benefits under the original medicare fee-for-service program option (as defined in section 1852(a)(1)(B)) in each service area;

“(B) actuarial valuations relating to the qualified Total Health benefits package under section 1860C–2(a)(1);

“(C) the use of generally accepted actuarial principles and methodologies; and

“(D) applying the same methodology for determinations of actuarial valuations under subparagraphs (A) and (B).

“(2) Accounting for utilization—Such processes and methods for determining actuarial valuation shall take into account the effect that providing a qualified Total Health benefits package (rather than benefits under the original medicare fee-for-service program option) has on the utilization of health care items and services.

“(3) Responsibilities

“(A) Plan responsibilities—Total Health sponsors are responsible for the preparation and submission of actuarial valuations required under this subpart for the Total Health plans offered by the sponsor.

“(B) Use of outside actuaries—Under the processes and methods established under paragraph (1), Total Health sponsors offering a Total Health benefits package may use actuarial opinions certified by independent, qualified actuaries to establish actuarial values.

“(e) Review of information and negotiation

“(1) Review of information—The Secretary shall review the information submitted under subsection (b) for the purpose of conducting negotiations under paragraph (2).

“(2) Negotiation regarding terms and conditions—Subject to subsection (i), in exercising the authority under paragraph (1), the Secretary—

“(A) has the authority to negotiate the terms and conditions of the proposed bid submitted and other terms and conditions of a proposed plan; and

“(B) has authority similar to the authority of the Director of the Office of Personnel Management with respect to health benefits plans under chapter 89 of title 5, United States Code.

“(3) Rejection of bids—Paragraph (5)(C) of section 1854(a) shall apply with respect to bids submitted by a Total Health sponsor under subsection (b) in the same manner as such paragraph applied to bids submitted by an MA organization under such section 1854(a).

“(f) Approval of proposed plans

“(1) In general—After review and negotiation under subsection (e), the Secretary shall approve or disapprove the Total Health plan.

“(2) Requirements for approval—The Secretary may approve a Total Health plan only if the Secretary determines the following requirements are met:

“(A) Compliance with requirements—The plan and the Total Health sponsor offering the plan comply with the requirements under this subpart, including the provision of a qualified Total Health benefits package.

“(B) Actuarial determinations—The plan and Total Health sponsor offering the plan meet the requirements under this subpart relating to actuarial determinations, including such requirements under section 1860C–2(c).

“(C) Application of FEHBP standard

“(i) In general—The portion of the bid submitted under subsection (b) that is attributable to basic health benefits coverage is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of section 1302(8)(C) of the Public Health Service Act) for benefits provided under that plan.

“(ii) Supplemental coverage—The portion of the bid submitted under subsection (b) that is attributable to supplemental health benefits coverage pursuant to section 1860C–2(a)(3) is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of section 1302(8)(C) of the Public Health Service Act) for such coverage under the plan.

“(D) Plan design—The design of the plan and covered benefits under the plan are not likely to substantially discourage enrollment by certain Total Health eligible individuals in the plan.

“(g) Application of limited risk plans

“(1) Conditions for approval of limited risk plans—The Secretary may only approve a limited risk plan (as defined in paragraph (4)(A)) for a Total Health region if the access requirements under section 1860C–3(a) would not be met for the region but for the approval of such a plan.

“(2) Rules—The following rules shall apply with respect to the approval of a limited risk plan in a Total Health region:

“(A) Limited exercise of authority—Only the minimum number of such plans may be approved in order to meet the access requirements under section 1860C–3(a).

“(B) Maximizing assumption of risk—The Secretary shall provide priority in approval for those plans bearing the highest level of risk (as computed by the Secretary), but the Secretary may take into account the level of the bids submitted by such plans.

“(C) No full underwriting for limited risk plans—In no case may the Secretary approve a limited risk plan under which the modification of risk level provides for no (or a de minimis) level of financial risk.

“(3) Acceptance of all full risk contracts—There shall be no limit on the number of full risk plans that are approved under subsection (e).

“(4) Risk-plans defined—For purposes of this subsection:

“(A) Limited risk plan—The term limited risk plan means a Total Health plan that provides a basic Total Health benefits package and for which the Total Health sponsor includes a modification of risk level described in subparagraph (E) of subsection (b)(2) in the bid submitted for the plan under such subsection.

“(B) Full risk plan—The term full risk plan means a Total Health plan that is not a limited risk plan.

“(h) Annual report on use of limited risk plans—The Secretary shall submit to Congress an annual report that describes instances in which limited risk plans were approved under this section. The Secretary shall include in such report such recommendations as may be appropriate to limit the need for the provision of such plans and to maximize the assumption of financial risk under such subsection.

“(i) Noninterference—In order to promote competition under this part and in carrying out this part, the Secretary—

“(1) may not interfere with the negotiations between physicians or other health professionals, providers, suppliers, drug manufacturers, pharmacies, and Total Health sponsors; and

“(2) may not require a particular benefit design or formulary, or institute a price structure for the reimbursement of covered items and services.

“1860C–6. Requirements for and contracts with Total Health sponsors

“(a) General requirements—Each sponsor of a Total Health plan shall meet the following requirements:

“(1) Licensure—Subject to subsection (c), the sponsor is organized and licensed under State law as a risk-bearing entity eligible to offer health insurance or health benefits coverage in each State in which it offers a Total Health plan.

“(2) Assumption of financial risk for unsubsidized coverage

“(A) In general—Subject to subparagraph (B), to the extent that the entity is at risk the entity assumes financial risk on a prospective basis for benefits that it offers under a Total Health plan.

“(B) Reinsurance permitted—The plan sponsor may obtain insurance or make other arrangements for the cost of coverage provided to any enrollee to the extent that the sponsor is at risk for providing such coverage.

“(3) Solvency for unlicensed sponsors—In the case of a Total Health sponsor that is not described in paragraph (1) and for which a waiver has been approved under subsection (c), such sponsor shall meet solvency standards established by the Secretary under subsection (d).

“(b) Contract requirements

“(1) In general—The Secretary shall not permit the enrollment under section 1860C–1 in a Total Health plan offered by a Total Health sponsor under this subpart, and the sponsor shall not be eligible for payments under section 1860C–8, unless the Secretary has entered into a contract under this subsection with the sponsor with respect to the offering of such plan. Such a contract with a sponsor may cover more than one Total Health plan. Such contract shall provide that the sponsor agrees to comply with the applicable requirements and standards of this subpart and the terms and conditions of payment as provided for in this subpart.

“(2) Incorporation of certain medicare advantage contract requirements—Except as otherwise provided, the following provisions of section 1857 shall apply to contracts under this section in the same manner as such provisions applied to contracts under section 1857(a):

“(A) Minimum enrollment—Paragraphs (1) and (3) of section 1857(b), except that—

“(i) the Secretary may increase the minimum number of enrollees required under such paragraph (1) as the Secretary determines appropriate; and

“(ii) the requirement of such paragraph (1) shall be waived during the first contract year with respect to an organization in a region.

“(B) Contract period and effectiveness—Section 1857(c), except that in applying paragraph (4)(B) of such section any reference to payment amounts under section 1853 is deemed a reference to payment amounts under section 1860C–8.

“(C) Protections against fraud and beneficiary protections—Section 1857(d).

“(D) Additional contract terms—Section 1857(e); except that section 1857(e)(2) shall apply as specified to Total Health sponsors and payments to a Total Health plan under this subpart shall be treated as expenditures made under this subpart. Notwithstanding any other provision of law, information provided to the Secretary under the application of section 1857(e)(1) to contracts under this section under the preceding sentence—

“(i) may be used for the purposes of carrying out this subpart, improving public health through research on the utilization, safety, effectiveness, quality, and efficiency of health care services (as the Secretary determines appropriate); and

“(ii) shall be made available to Congressional support agencies (in accordance with their obligations to support Congress as set out in their authorizing statutes) for the purposes of conducting Congressional oversight, monitoring, making recommendations, and analysis of the program under this title.

“(E) Intermediate sanctions—Section 1857(g) (other than paragraph (1)(F) of such section), except that in applying such section the reference in section 1857(g)(1)(B) to section 1854 is deemed a reference to this subpart.

“(F) Procedures for termination—Section 1857(h).

“(c) Waiver of certain requirements To expand choice

“(1) Authorizing waiver

“(A) In general—In the case of an entity that seeks to offer a Total Health plan in a State, the Secretary shall waive the requirement of subsection (a)(1) that the entity be licensed in that State if the Secretary determines, based on the application and other evidence presented to the Secretary, that any of the grounds for approval of the application described in paragraph (2) have been met.

“(B) Application of regional plan waiver rule—In addition to the waiver available under subparagraph (A), the provisions of section 1858(d) shall apply to Total Health sponsors under this part in a manner similar to the manner in which such provisions applied to MA organizations.

“(2) Grounds for approval

“(A) In general—The grounds for approval under this paragraph are—

“(i) subject to subparagraph (B), the grounds for approval described in subparagraphs (B), (C), and (D) of section 1855(a)(2); and

“(ii) the application by a State of any grounds other than those required under Federal law.

“(B) Special rules—In applying subparagraph (A)(i)—

“(i) the ground of approval described in section 1855(a)(2)(B) is deemed to have been met if the State does not have a licensing process in effect with respect to the Total Health sponsor; and

“(ii) for plan years beginning before January 1, 2019, if the State does have such a licensing process in effect, such ground for approval described in such section is deemed to have been met upon submission of an application described in such section.

“(3) Application of waiver procedures—With respect to an application for a waiver (or a waiver granted) under paragraph (1)(A) of this subsection, the provisions of subparagraphs (E), (F), and (G) of section 1855(a)(2) shall apply, except that clauses (i) and (ii) of such subparagraph (E) shall not apply in the case of a State that does not have a licensing process described in paragraph (2)(B)(i) in effect.

“(4) References to certain provisions—In applying provisions of section 1855(a)(2) under paragraphs (2) and (3) of this subsection to Total Health plans and Total Health sponsors—

“(A) any reference to a waiver application under section 1855 shall be treated as a reference to a waiver application under paragraph (1)(A) of this subsection; and

“(B) any reference to solvency standards shall be treated as a reference to solvency standards established under subsection (d) of this section.

“(d) Solvency standards for non-Licensed entities

“(1) Establishment and publication—The Secretary, in consultation with the National Association of Insurance Commissioners, shall establish and publish, by not later than January 1, 2016, financial solvency and capital adequacy standards for entities described in paragraph (2).

“(2) Compliance with standards—A Total Health sponsor that is not licensed by a State under subsection (a)(1) and for which a waiver application has been approved under subsection (c) shall meet solvency and capital adequacy standards established under paragraph (1). The Secretary shall establish certification procedures for such sponsors with respect to such solvency standards in the manner described in section 1855(c)(2).

“(e) Licensure does not substitute for or constitute certification—The fact that a Total Health sponsor is licensed in accordance with subsection (a)(1) or has a waiver application approved under subsection (c) does not deem the sponsor to meet other requirements imposed under this subpart for a sponsor.

“(f) Periodic review and revision of standards

“(1) In general—Subject to paragraph (2), the Secretary may periodically review the standards established under this section and, based on such review, may revise such standards if the Secretary determines such revision to be appropriate.

“(2) Prohibition of midyear implementation of significant new regulatory requirements—The Secretary may not implement, other than at the beginning of a calendar year, regulations under this section that impose new, significant regulatory requirements on a Total Health sponsor or a Total Health plan.

“(g) Prohibition of state imposition of premium taxes; relation to state laws—The provisions of sections 1854(g) and 1856(b)(3) shall apply with respect to Total Health sponsors and Total Health plans under this part in the same manner as such provisions applied to MA organizations and MA plans.

“1860C–7. Total Health premiums

“(a) Monthly beneficiary premium

“(1) Base beneficiary premium—The base beneficiary premium under this paragraph for a Total Health plan for a month is equal to the product of—

“(A) 15 percent; and

“(B) an amount determined by the Secretary to be equal to the 40th percentile of the monthly standardized bid amounts (as defined in subsection (c), weighted under subsection (b), and adjusted under section 1860C–8(b)(2)) for the service area in which the plan is offered.

“(2) Computation of monthly beneficiary premium

“(A) In general—The monthly beneficiary premium for a Total Health plan is the base beneficiary premium computed under paragraph (1) as adjusted under this paragraph.

“(B) Adjustment to reflect difference between bid and 40th percentile of the monthly standardized bid amount

“(i) Above 40th percentile—If the beneficiary enrolls in a plan with a monthly standardized bid amount that exceeds the 40th percentile (as determined under paragraph (1)(B)), the base beneficiary premium for the month shall be increased by the amount of such excess.

“(ii) Below 40th percentile—If the beneficiary enrolls in a plan with a monthly standardized bid amount that is less than the 40th percentile (as determined under paragraph (1)(B)), the base beneficiary premium for the month shall be decreased by the amount of such difference. Any reduction under the preceding sentence shall not result in a monthly beneficiary premium that is less than $0.

“(C) Increase for supplemental benefits—The base beneficiary premium shall be increased by the portion of the Total Health approved bid that is attributable to supplemental benefits.

“(D) Increase for late enrollment penalty—The base beneficiary premium shall be increased by the amount of any late enrollment penalty under subsection (e).

“(E) Increase based on income—The monthly beneficiary premium shall be increased pursuant to subsection (f).

“(F) Uniform premium—Except as provided in subparagraphs (D) and (E), the monthly beneficiary premium for a Total Health plan in a Total Health region is the same for all Total Health eligible individuals enrolled in the plan.

“(b) Weighting of bid amounts based on enrollment

“(1) In general—For purposes of subsection (a)(1)(B), the weight for each plan in the service area shall be equal to the average number of Total Health eligible individuals enrolled in such plan in the reference month (as defined in section 1858(f)(4)).

“(2) Special rule for 2017—For purposes of applying this paragraph for 2017, the Secretary shall establish procedures for determining the weighted average under paragraph (1) for 2016.

“(c) Standardized bid amount defined—For purposes of this subsection, the term standardized bid amount means the following:

“(1) Basic coverage only—In the case of a Total Health plan that provides basic health benefits coverage, the Total Health approved bid (as defined in subsection (d)).

“(2) Plans offering supplemental coverage—In the case of a Total Health plan that provides supplemental health benefits coverage, only the portion of the Total Health approved bid that is attributable to basic health benefits coverage.

“(d) Total health approved bid defined—For purposes of this subpart, the term Total Health approved bid means—

“(1) with respect to a Total Health plan, the bid amount approved for the plan under section 1860C–5;

“(2) with respect to the original medicare fee-for-service program option, the bid described in section 1860C–5(c).

“(e) Late enrollment penalty—The monthly beneficiary premium established under subsection (a) shall be subject to adjustment in the same manner as the part B monthly beneficiary premium computed under section 1839 is subject to adjustment under subsection (b) of such section, except that, in applying the late enrollment penalty under such subsection, the initial enrollment period of the individual shall be the enrollment period under 1860C–1(b)(2) instead of the initial enrollment period described in such section 1839(b).

“(f) Increase in base beneficiary premium based on income

“(1) In general—In the case of an individual whose modified adjusted gross income (as defined in paragraph (2)) exceeds the threshold amount applicable under paragraph (2) of section 1839(i) (including application of paragraph (5) of such section), the Secretary shall substitute the applicable percentage determined under paragraph (3)(C) of section 1839(i) for the individual for the calendar year for the percentage described in subsection (a)(1)(A).

“(2) Modified adjusted gross income—For purposes of this subsection, the term modified adjusted gross income has the meaning given such term in subparagraph (A) of section 1839(i)(4), determined for the taxable year applicable under subparagraphs (B) and (C) of such section.

“(3) Determination by commissioner of social security—The Commissioner of Social Security shall make any determination necessary to carry out the income-related increase in the base beneficiary premium under this subsection.

“(4) Procedures to assure correct income-related increase in base beneficiary premium

“(A) Disclosure of base beneficiary premium—Not later than September 15 of each year beginning with 2016, the Secretary shall disclose to the Commissioner of Social Security the amount of the base beneficiary premium (as computed under subsection (a)(1)) for the purpose of carrying out the income-related increase in the base beneficiary premium under this subsection with respect to the following year.

“(B) Additional disclosure—Not later than October 15 of each year beginning with 2016, the Secretary shall disclose to the Commissioner of Social Security the following information for the purpose of carrying out the income-related increase in the base beneficiary premium under this subsection with respect to the following year:

“(i) The modified adjusted gross income threshold applicable under paragraph (2) of section 1839(i) (including application of paragraph (5) of such section).

“(ii) The applicable percentage determined under paragraph (3)(C) of section 1839(i) (including application of paragraph (5) of such section).

“(iii) Any other information the Commissioner of Social Security determines necessary to carry out the income-related increase in the base beneficiary premium under this subsection.

“1860C–8. Premium and cost-sharing support for Total Health eligible individuals

“(a) Direct subsidy payment—The Secretary shall provide for payment to a Total Health sponsor that offers a Total Health plan a direct subsidy for each Total Health eligible individual enrolled in a Total Health plan for a month equal to—

“(1) the amount of the plan’s standardized bid amount (as defined in section 1860C–7(c)), adjusted under subsection (b)(1), reduced by

“(2) the base beneficiary premium (as computed under paragraph (1) of section 1860C–7(a) and as adjusted under paragraph (2)(B) of such section).

“(b) Adjustments relating to bids

“(1) Health status risk adjustment

“(A) Establishment of risk adjustors—The Secretary shall establish an appropriate methodology for adjusting the standardized bid amount under subsection (a)(1) to take into account variation in costs for health benefits coverage among Total Health plans based on the differences in actuarial risk of different enrollees being served. Any such risk adjustment shall be designed in a manner so as not to result in a change in the aggregate amounts payable to such plans under subsection (a) and through that portion of the monthly beneficiary Total Health premiums described in subsection (a)(2).

“(B) Considerations—In establishing the methodology under subparagraph (A), the Secretary may take into account the similar methodologies used under section 1853(a)(3) to adjust payments to MA organizations for benefits under the original medicare fee-for-service program option.

“(C) Data collection—In order to carry out this paragraph, the Secretary shall require Total Health sponsors to submit data regarding claims that can be linked at the individual level to data under this title and such other information as the Secretary determines necessary.

“(D) Publication—At the time of publication of risk adjustment factors under section 1860D–15(c)(1)(D), the Secretary shall publish the risk adjusters established under this paragraph for the succeeding year.

“(2) Geographic adjustment

“(A) In general—Subject to subparagraph (B), for purposes of section 1860C–7(a)(1)(B), the Secretary shall establish an appropriate methodology for adjusting the amount determined under such section to take into account differences in prices for covered health benefits among Total Health regions.

“(B) De minimis rule—If the Secretary determines that the price variations described in subparagraph (A) among Total Health regions are de minimis, the Secretary shall not provide for adjustment under this paragraph.

“(C) Budget neutral adjustment—Any adjustment under this paragraph shall be applied in a manner so as to not result in a change in the aggregate payments made under this subpart that would have been made if the Secretary had not applied such adjustment.

“(c) Payment methods

“(1) In general—Payments under this section shall be based on such a method as the Secretary determines. The Secretary may establish a payment method by which interim payments of amounts under this section are made during a year based on the Secretary’s best estimate of amounts that will be payable after obtaining all of the information.

“(2) Requirement for provision of information

“(A) Requirement—Payments under this section to a Total Health sponsor are conditioned upon the furnishing to the Secretary, in a form and manner specified by the Secretary, of such information as may be required to carry out this section.

“(B) Restriction on use of information—Information disclosed or obtained pursuant to subparagraph (A) may be used by officers, employees, and contractors of the Department of Health and Human Services only for the purposes of, and to the extent necessary in, carrying out this section.

“(3) Source of payments—Payments under this section shall be made from the Federal Hospital Insurance Trust Fund under section 1817 and the Federal Supplementary Medical Insurance Trust Fund under section 1841, in such proportion as the Secretary determines appropriate.

“(4) Application of enrollee adjustment—The provisions of section 1853(a)(2) shall apply to payments to Total Health sponsors under this section in the same manner as they applied to payments to MA organizations under section 1853(a).

“(d) Plans at risk for entire amount of benefits—A Total Health sponsor that offers a plan under this subpart shall be at full financial risk for the provision of benefits under such plan.

“(e) Disclosure of information

“(1) In general—Each contract under this subpart shall provide that—

“(A) the Total Health sponsor offering a Total Health plan shall provide the Secretary with such information as the Secretary determines is necessary to carry out this section; and

“(B) the Secretary shall have the right in accordance with section 1857(d)(2)(B) (as applied under section 1860C–6(b)(2)(C)) to inspect and audit any books and records of a Total Health sponsor that pertain to the information regarding costs provided to the Secretary under subparagraph (A).

“(2) Restriction on use of information—Information disclosed or obtained pursuant to the provisions of this section may be used—

“(A) by officers, employees, and contractors of the Department of Health and Human Services for the purposes of, and to the extent necessary in—

“(i) carrying out this section; and

“(ii) conducting oversight, evaluation, and enforcement under this title; and

“(B) by the Attorney General and the Comptroller General of the United States for the purposes of, and to the extent necessary in, carrying out health oversight activities.

“1860C–9. Exemption for MSA plans

“(a) In general—None of the provisions in this subpart shall apply to an MSA plan (as defined in section 1859(b)(3)) and an MSA plan may not be a Total Health plan.

“(b) Continuing availability—Notwithstanding any other provision of law, the Secretary shall establish procedures under which—

“(1) MSA plans may continue to operate on and after January 1, 2017; and

“(2) individuals who would have been eligible to enroll in those plans prior to such date continue to be eligible to enroll in such a plan.

“1860C–10. Special rules for employer-sponsored programs

“(a) Subsidy payment

“(1) In general—The Secretary shall provide in accordance with this subsection for payment to the sponsor of a qualified retiree health benefits plan (as defined in paragraph (2)) of a special subsidy payment equal to the amount specified in paragraph (3) for each qualified covered retiree under the plan (as defined in paragraph (4)). This subsection constitutes budget authority in advance of appropriations Acts and represents the obligation of the Secretary to provide for the payment of amounts provided under this section.

“(2) Qualified retiree health benefits plan defined—For purposes of this subsection, the term qualified retiree health benefits plan means employment-based retiree health coverage (as defined in subsection (c)(1)) if, with respect to a Total Health eligible individual who is a participant or beneficiary under such coverage, the following requirements are met:

“(A) Attestation of actuarial equivalence to standard coverage—The sponsor of the plan provides the Secretary, annually or at such other time as the Secretary may require, with an attestation that the actuarial value of health benefits coverage under the plan (as determined using the processes and methods described in section 1860C–5(d)) is at least equal to the actuarial value of standard health benefits coverage.

“(B) Audits—The sponsor of the plan, or an administrator of the plan designated by the sponsor, shall maintain (and afford the Secretary access to) such records as the Secretary may require for purposes of audits and other oversight activities necessary to ensure the adequacy of health benefits coverage and the accuracy of payments made under this section. The provisions of section 1860C–2(d)(2) shall apply to such information under this section (including such actuarial value and attestation) in a manner similar to the manner in which they apply to financial records of Total Health sponsors.

“(C) Provision of disclosure regarding health benefits coverage

“(i) In general—Each entity that offers employment-based retiree health coverage shall provide for disclosure, in a form, manner, and time consistent with standards established by the Secretary, to the Secretary and Total Health eligible individuals of whether the coverage meets the requirement of subparagraph (A) or whether such coverage is changed so it no longer meets such requirement.

“(ii) Disclosure of non-qualified coverage—In the case of such coverage that does not meet such requirement, the disclosure to Total Health eligible individuals under this subparagraph shall include information regarding the fact that because such coverage does not meet such requirement there are limitations on the periods in a year in which the individuals may enroll under a Total Health plan.

“(iii) Waiver of requirement—In the case of a Total Health eligible individual who was enrolled in employment-based retiree health coverage which does not meet the requirement of subparagraph (A), the individual may apply to the Secretary to have such coverage treated as a qualified retiree health benefits plan if the individual establishes that the individual was not adequately informed that such coverage did not meet such requirement.

“(3) Employer and union special subsidy amounts

“(A) In general—For purposes of this subsection, the special subsidy payment amount under this paragraph for a qualifying covered retiree for a coverage year enrolled with the sponsor of a qualified retiree health benefits plan is, for the portion of the retiree’s gross covered retiree plan-related health benefits costs (as defined in subparagraph (C)(ii)) for such year that exceeds the cost threshold amount specified in subparagraph (B) and does not exceed the cost limit under such subparagraph, an amount equal to 28 percent of the allowable retiree costs (as defined in subparagraph (C)(i)) attributable to such gross covered retiree plan-related health benefits costs.

“(B) Cost threshold and cost limit applicable

“(i) In general—Subject to clause (ii)—

“(I) the cost threshold under this subparagraph is equal to $250 for plan years that end in 2017; and

“(II) the cost limit under this subparagraph is equal to $5,000 for plan years that end in 2017.

“(ii) Indexing—The cost threshold and cost limit amounts specified in subclauses (I) and (II) of clause (i) for a plan year that ends after 2017 shall be adjusted in the same manner as the unified deductible and the annual out-of-pocket limits, respectively, are annually adjusted under sections 1899B and 1899C.

“(C) Definitions—For purposes of this paragraph:

“(i) Allowable retiree costs—The term allowable retiree costs means, with respect to gross covered health benefits costs under a qualified retiree health benefits plan by a plan sponsor, the part of such costs that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or by or on behalf of a qualifying covered retiree under the plan.

“(ii) Gross covered retiree plan-related health benefits costs—The term gross covered retiree plan-related health benefits costs means, with respect to a qualifying covered retiree enrolled in a qualified retiree health benefits plan during a coverage year, the costs incurred under the plan, not including administrative costs, but including costs directly related to the furnishing of health benefits items and services during the year. Such costs shall be determined whether they are paid by the retiree or under the plan.

“(iii) Coverage year—The term coverage year has the meaning given such term in section 1860D–15(b)(4) (as applied by substituting “covered health benefits” for “covered part D drugs”).

“(4) Qualifying covered retiree defined—For purposes of this subsection, the term qualifying covered retiree means a Total Health eligible individual who is not enrolled in a Total Health plan but is covered under a qualified retiree health benefits plan.

“(5) Payment methods, including provision of necessary information—The provisions of section 1860C–8(c) (including paragraph (2) of such section, relating to requirement for provision of information) shall apply to payments under this subsection in a manner similar to the manner in which they apply to payments under section 1860C–8.

“(6) Construction—Nothing in this subsection shall be construed as—

“(A) precluding a Total Health eligible individual who is covered under employment-based retiree health coverage from enrolling in a Total Health plan;

“(B) precluding such employment-based retiree health coverage or an employer or other person from paying all or any portion of any premium required for coverage under a Total Health plan on behalf of such an individual;

“(C) preventing such employment-based retiree health coverage from providing coverage—

“(i) that is better than standard health benefits coverage to retirees who are covered under a qualified retiree health benefits plan; or

“(ii) that is supplemental to the benefits provided under a Total Health plan, including benefits to retirees who are not covered under a qualified retiree health benefits plan but who are enrolled in such a Total Health plan; or

“(D) preventing employers from providing for flexibility in benefit design and provider access provisions, without regard to the requirements for basic health benefits coverage, so long as the actuarial equivalence requirement of paragraph (2)(A) is met.

“(b) Application of Medicare Advantage waiver authority—The provisions of section 1857(i) shall apply with respect to Total Health plans in relation to employment-based retiree health coverage in a manner similar to the manner in which they applied to an MA plan in relation to employers, including authorizing the establishment of separate premium amounts for enrollees in a Total Health plan by reason of such coverage and limitations on enrollment to Total Health eligible individuals enrolled under such coverage.

“(c) Definitions—For purposes of this section:

“(1) Employment-based retiree health coverage—The term employment-based retiree health coverage means health insurance or other coverage of health care costs (whether provided by voluntary insurance coverage or pursuant to statutory or contractual obligation) for Total Health eligible individuals (or for such individuals and their spouses and dependents) under a group health plan based on their status as retired participants in such plan.

“(2) Sponsor—The term sponsor means a plan sponsor, as defined in section (16)(B) of the Employee Retirement Income Security Act of 1974, in relation to a group health plan, except that, in the case of a plan maintained jointly by one employer and an employee organization and with respect to which the employer is the primary source of financing, such term means such employer.

“(3) Group health plan—The term group health plan includes such a plan as defined in section 607(1) of the Employee Retirement Income Security Act of 1974 and also includes the following:

“(A) Federal and state governmental plans—Such a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing, including a health benefits plan offered under chapter 89 of title 5, United States Code.

“(B) Collectively bargained plans—Such a plan established or maintained under or pursuant to one or more collective bargaining agreements.

“(C) Church plans—Such a plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches which is exempt from tax under section 501 of the Internal Revenue Code of 1986.

“1860C–11. Coordination with State Medicaid programs

“(a) Application

“(1) In general—Subject to subsection (c)(2), a State may apply to the Secretary for the waiver of any or all requirements described in this subpart for plan years beginning on or after January 1, 2017, with respect to a Total Health plan offered within the State for the purpose of coordinating that plan with its State plan under title XIX to ensure—

“(A) dually eligible individuals have full access to the services to which they are entitled;

“(B) the development of innovative care coordination and integration models; and

“(C) the elimination of financial misalignments that lead to poor quality and cost-shifting.

“(2) Requirements—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 proposal and program to implement a plan meeting the requirements for a waiver under this section; and

“(ii) an analysis of the proposal demonstrating that the plan will not increase Federal Government expenditures; and

“(C) provide an assurance that, if approved, the Total Health sponsor will offer the plan that is the subject of the proposal.

“(3) 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 subpart, the Secretary shall promulgate regulations relating to waivers under this section that provide—

“(i) a process for public notice and comment sufficient to ensure a meaningful level of public input;

“(ii) a process for the submission of an application for the waiver;

“(iii) a process for the submission to the Secretary of periodic reports by the State concerning the implementation of the program under the waiver; and

“(iv) 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.

“(4) State option to be a total health sponsor—For purposes of this section, a State may elect to be the sponsor of a Total Health plan for residents of the State who are eligible for benefits under this title and title XIX or to apply on behalf of a Total Health sponsor offering a Total Health plan in the State.

“(5) Coordinated waiver process—The Secretary shall develop a process for coordinating and consolidating the waiver processes applicable under the provisions of this section to ensure that individuals eligible to enroll in a plan offered under the waiver are initially able to do so during an annual, coordinated election period.

“(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 proposed Total Health plan—

“(A) will provide coverage that is at least as comprehensive as the coverage described in section 1860C–2(a)(1) as certified by Office of the Actuary of the Centers for Medicare & Medicaid Services;

“(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 subtitle would provide; and

“(C) will not increase the Federal deficit.

“(c) Scope of waiver

“(1) In general—Subject to paragraph (2), the Secretary shall determine the scope of a waiver granted with respect to a Total Health plan under subsection (a)(1).

“(2) Limitation—The Secretary may only waive provisions under this title and titles II, XI, XIX, and XXI under a waiver under this section.

“(d) Determinations by the 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 Total Health sponsor 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 Total Health sponsor involved, including the reasons therefor.

“(e) Term of waiver—No waiver under this section may extend over a period of longer than 5 years unless the Total Health sponsor requests continuation of such waiver, and such request shall be deemed granted unless the Secretary, within 90 days after the date of the submission of the request to the Secretary, either denies such request in writing or informs the State in writing with respect to any additional information that is needed in order to make a final determination with respect to the request.

“1860C–12. Definitions and miscellaneous provisions

“(a) Definitions—For purposes of this subpart:

“(1) Basic health benefits coverage—The term basic health benefits coverage means coverage of the health care items and services for which payment may be made under the original medicare fee-for-service program option.

“(2) Insurance risk—The term insurance risk means, with respect to a participating health care provider, risk of the type commonly assumed only by insurers licensed by a State and does not include payment variations designed to reflect performance-based measures of activities within the control of the health care provider.

“(3) MA plan; Medicare Advantage plan—The terms MA plan and Medicare Advantage plan have the meaning given such terms in section 1859(b)(1).

“(4) Original medicare fee-for-service program option—The term original medicare fee-for-service program option means the original medicare fee-for-service program under parts A and B, as modified by this subpart.

“(5) Standard health benefits coverage—The term standard health benefits coverage has the meaning given such term in section 1860C–2(b).

“(6) Total health eligible individual—The term Total Health eligible individual has the meaning given such term in section 1860C–1(a)(3).

“(7) Total health plan—The term Total Health plan means health benefits coverage that is offered—

“(A) under a policy, contract, or plan that has been approved under section 1860C–5(f); and

“(B) by a Total Health sponsor pursuant to, and in accordance with, a contract between the Secretary and the sponsor under section 1860C–6(b).

“(8) Total health sponsor—The term Total Health sponsor means a nongovernmental entity that is certified under this subpart as meeting the requirements and standards of this subpart for such a sponsor.

“(b) Application of subpart 1 provisions and regulations under this subpart—For purposes of applying provisions of subpart 1 under this subpart (and regulations implementing such provisions) with respect to a Total Health plan and a Total Health sponsor, unless otherwise provided in this subpart, and to the extent consistent with this subpart, such provisions (and regulations implementing such provisions) shall be applied as the provisions (and regulations) applied for plan years beginning prior to January 1, 2017, and as if—

“(1) any reference to a Medicare Advantage plan or an MA plan included a reference to a Total Health plan;

“(2) any reference to an MA organization or a provider-sponsored organization included a reference to a Total Health sponsor;

“(3) any reference to a contract under section 1857 included a reference to a contract under section 1860C–6(b);

“(4) any reference to subpart 1 included a reference to this subpart; and

“(5) any reference to an election period under section 1851 were a reference to an enrollment period under section 1860C–1.”

“(j) Replacement of part b premium with Medicare Total Health program plan premium

“(1) In general—Notwithstanding the preceding provisions of this section, except as provided in paragraph (2), on and after January 1, 2017, in lieu of the premium otherwise applicable under this section, the monthly premium of each Total Health eligible individual (as defined in section 1860C–1(a)(3)) shall be the monthly beneficiary premium determined under section 1860C–7 for the Total Health plan or the original medicare fee-for-service program option and the plan year involved.

“(2) Individuals enrolled for coverage under part b only—Individuals enrolled under this part only (and not entitled to, or enrolled for, benefits under part A) shall pay the premium that would have been calculated under this section but for the enactment of this subsection.

“(3) Crediting of premiums—Premiums paid by each Total Health eligible individual enrolled in the original medicare fee-for-service program option (as defined in section 1860E–13(a)(4)), shall be deposited in the Treasury to the credit of the Federal Supplementary Medical Insurance Trust Fund under section 1841.”