42 U.S.C. § 18042 — Federal program to assist establishment

Page 9114 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 18042 title, transferred sections 300gg–4 to 300gg–7 and 300gg–13 of this title to sections 300gg–25 to 300gg–28 and 300gg–9 of this title, respectively, amended sections 300gg–11, 300gg–12, and 300gg–21 to 300gg–23 of this title, and enacted provisions set out as a note under section 300gg–11 of this title. Subtitle C enacted subchapter II of this chapter and sections 300gg to 300gg–2 and 300gg–4 to 300gg–7 of this title, transferred section 300gg of this title to section 300gg–3 of this title, amended sections 300gg–1 and 300gg–4 of this title, and enacted provisions set out as a note under section 300gg of this title. For complete classification of subtitles A and C to the Code, see Tables. The Public Health Service Act, referred to in subsec. (a)(1), is act July 1, 1944, ch. 373, 58 Stat. 682, which is classified generally to chapter 6A (§ 201 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 201 of this title and Tables. Section 2736 of the Public Health Service Act, re- ferred to in subsec. (c)(2), was renumbered section 2723 of that Act by Pub. L. 111–148, § 1563(c)(13)(C) (formerly § 1562(c)(13)(C)), Mar. 23, 2010, 124 Stat. 269, and is classi- fied to section 300gg–22 of this title. This Act, referred to in subsec. (e)(1), is Pub. L. 111–148, Mar. 23, 2010, 124 Stat. 119, known as the Pa- tient Protection and Affordable Care Act. For complete classification of this Act to the Code, see Short Title note set out under section 18001 of this title and Tables. § 18042. Federal program to assist establishment and operation of nonprofit, member-run health insurance issuers (a) Establishment of program (1) In general The Secretary shall establish a program to carry out the purposes of this section to be known as the Consumer Operated and Oriented Plan (CO–OP) program. (2) Purpose It is the purpose of the CO–OP program to foster the creation of qualified nonprofit health insurance issuers to offer qualified health plans in the individual and small group markets in the States in which the issuers are licensed to offer such plans. (b) Loans and grants under the CO–OP program (1) In general The Secretary shall provide through the CO–OP program for the awarding to persons applying to become qualified nonprofit health insurance issuers of— (A) loans to provide assistance to such per- son in meeting its start-up costs; and (B) grants to provide assistance to such person in meeting any solvency require- ments of States in which the person seeks to be licensed to issue qualified health plans. (2) Requirements for awarding loans and grants (A) In general In awarding loans and grants under the CO–OP program, the Secretary shall— (i) take into account the recommenda- tions of the advisory board established under paragraph (3); (ii) give priority to applicants that will offer qualified health plans on a Statewide basis, will utilize integrated care models, and have significant private support; and (iii) ensure that there is sufficient fund- ing to establish at least 1 qualified non- profit health insurance issuer in each State, except that nothing in this clause shall prohibit the Secretary from funding the establishment of multiple qualified nonprofit health insurance issuers in any State if the funding is sufficient to do so. (B) States without issuers in program If no health insurance issuer applies to be a qualified nonprofit health insurance issuer within a State, the Secretary may use amounts appropriated under this section for the awarding of grants to encourage the es- tablishment of a qualified nonprofit health insurance issuer within the State or the ex- pansion of a qualified nonprofit health insur- ance issuer from another State to the State. (C) Agreement (i) In general The Secretary shall require any person receiving a loan or grant under the CO–OP program to enter into an agreement with the Secretary which requires such person to meet (and to continue to meet)— (I) any requirement under this section for such person to be treated as a quali- fied nonprofit health insurance issuer; and (II) any requirements contained in the agreement for such person to receive such loan or grant. (ii) Restrictions on use of Federal funds The agreement shall include a require- ment that no portion of the funds made available by any loan or grant under this section may be used— (I) for carrying on propaganda, or oth- erwise attempting, to influence legisla- tion; or (II) for marketing. Nothing in this clause shall be construed to allow a person to take any action pro- hibited by section 501(c)(29) of title 26. (iii) Failure to meet requirements If the Secretary determines that a per- son has failed to meet any requirement de- scribed in clause (i) or (ii) and has failed to correct such failure within a reasonable period of time of when the person first knows (or reasonably should have known) of such failure, such person shall repay to the Secretary an amount equal to the sum of— (I) 110 percent of the aggregate amount of loans and grants received under this section; plus (II) interest on the aggregate amount of loans and grants received under this section for the period the loans or grants were outstanding. The Secretary shall notify the Secretary of the Treasury of any determination under this section of a failure that results in the termination of an issuer’s tax-ex- empt status under section 501(c)(29) of such title. (D) Time for awarding loans and grants The Secretary shall not later than July 1, 2013, award the loans and grants under the Page 9115 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 18042 CO–OP program and begin the distribution of amounts awarded under such loans and grants. (3) Repayment of loans and grants Not later than July 1, 2013, and prior to awarding loans and grants under the CO–OP program, the Secretary shall promulgate regu- lations with respect to the repayment of such loans and grants in a manner that is con- sistent with State solvency regulations and other similar State laws that may apply. In promulgating such regulations, the Secretary shall provide that such loans shall be repaid within 5 years and such grants shall be repaid within 15 years, taking into consideration any appropriate State reserve requirements, sol- vency regulations, and requisite surplus note arrangements that must be constructed in a State to provide for such repayment prior to awarding such loans and grants. (4) Advisory board (A) In general The advisory board under this paragraph shall consist of 15 members appointed by the Comptroller General of the United States from among individuals with qualifications described in section 1395b–6(c)(2) of this title. (B) Rules relating to appointments (i) Standards Any individual appointed under subpara- graph (A) shall meet ethics and conflict of interest standards protecting against in- surance industry involvement and inter- ference. (ii) Original appointments The original appointment of board mem- bers under subparagraph (A)(ii) shall be made no later than 3 months after March 23, 2010. (C) Vacancy Any vacancy on the advisory board shall be filled in the same manner as the original appointment. (D) Pay and reimbursement (i) No compensation for members of advi- sory board Except as provided in clause (ii), a mem- ber of the advisory board may not receive pay, allowances, or benefits by reason of their service on the board. (ii) Travel expenses Each member shall receive travel ex- penses, including per diem in lieu of sub- sistence under subchapter I of chapter 57 of title 5. (E) Application of chapter 10 of title 5 Chapter 10 of title 5 shall apply to the ad- visory board, except that section 1013 of title 5 shall not apply. (F) Termination The advisory board shall terminate on the earlier of the date that it completes its du- ties under this section or December 31, 2015. (c) Qualified nonprofit health insurance issuer For purposes of this section— (1) In general The term ‘‘qualified nonprofit health insur- ance issuer’’ means a health insurance issuer that is an organization— (A) that is organized under State law as a nonprofit, member corporation; (B) substantially all of the activities of which consist of the issuance of qualified health plans in the individual and small group markets in each State in which it is licensed to issue such plans; and (C) that meets the other requirements of this subsection. (2) Certain organizations prohibited An organization shall not be treated as a qualified nonprofit health insurance issuer if— (A) the organization or a related entity (or any predecessor of either) was a health in- surance issuer on July 16, 2009; or (B) the organization is sponsored by a State or local government, any political sub- division thereof, or any instrumentality of such government or political subdivision. (3) Governance requirements An organization shall not be treated as a qualified nonprofit health insurance issuer un- less— (A) the governance of the organization is subject to a majority vote of its members; (B) its governing documents incorporate ethics and conflict of interest standards pro- tecting against insurance industry involve- ment and interference; and (C) as provided in regulations promulgated by the Secretary, the organization is re- quired to operate with a strong consumer focus, including timeliness, responsiveness, and accountability to members. (4) Profits inure to benefit of members An organization shall not be treated as a qualified nonprofit health insurance issuer un- less any profits made by the organization are required to be used to lower premiums, to im- prove benefits, or for other programs intended to improve the quality of health care delivered to its members. (5) Compliance with State insurance laws An organization shall not be treated as a qualified nonprofit health insurance issuer un- less the organization meets all the require- ments that other issuers of qualified health plans are required to meet in any State where the issuer offers a qualified health plan, in- cluding solvency and licensure requirements, rules on payments to providers, and compli- ance with network adequacy rules, rate and form filing rules, any applicable State pre- mium assessments and any other State law de- scribed in section 18044(b) of this title. (6) Coordination with State insurance reforms An organization shall not be treated as a qualified nonprofit health insurance issuer un- less the organization does not offer a health plan in a State until that State has in effect (or the Secretary has implemented for the State) the market reforms required by part A of title XXVII of the Public Health Service Page 9116 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 18042 Act [42 U.S.C. 300gg et seq.] (as amended by subtitles A and C of this Act). (d) Establishment of private purchasing council (1) In general Qualified nonprofit health insurance issuers participating in the CO–OP program under this section may establish a private pur- chasing council to enter into collective pur- chasing arrangements for items and services that increase administrative and other cost ef- ficiencies, including claims administration, administrative services, health information technology, and actuarial services. (2) Council may not set payment rates The private purchasing council established under paragraph (1) shall not set payment rates for health care facilities or providers participating in health insurance coverage provided by qualified nonprofit health insur- ance issuers. (3) Continued application of antitrust laws (A) In general Nothing in this section shall be construed to limit the application of the antitrust laws to any private purchasing council (whether or not established under this subsection) or to any qualified nonprofit health insurance issuer participating in such a council. (B) Antitrust laws For purposes of this subparagraph, the term ‘‘antitrust laws’’ has the meaning given the term in subsection (a) of section 12 of title 15. Such term also includes section 45 of title 15 to the extent that such section 45 applies to unfair methods of competition. (e) Limitation on participation No representative of any Federal, State, or local government (or of any political subdivision or instrumentality thereof), and no representa- tive of a person described in subsection (c)(2)(A), may serve on the board of directors of a quali- fied nonprofit health insurance issuer or with a private purchasing council established under subsection (d). (f) Limitations on Secretary (1) In general The Secretary shall not— (A) participate in any negotiations be- tween 1 or more qualified nonprofit health insurance issuers (or a private purchasing council established under subsection (d)) and any health care facilities or providers, in- cluding any drug manufacturer, pharmacy, or hospital; and (B) establish or maintain a price structure for reimbursement of any health benefits covered by such issuers. (2) Competition Nothing in this section shall be construed as authorizing the Secretary to interfere with the competitive nature of providing health benefits through qualified nonprofit health in- surance issuers. (g) Appropriations There are hereby appropriated, out of any funds in the Treasury not otherwise appro- priated, $6,000,000,000 to carry out this section. (h) Omitted (i) GAO study and report (1) Study The Comptroller General of the General Ac- countability Office shall conduct an ongoing study on competition and market concentra- tion in the health insurance market in the United States after the implementation of the reforms in such market under the provisions of, and the amendments made by, this Act. Such study shall include an analysis of new issuers of health insurance in such market. (2) Report The Comptroller General shall, not later than December 31 of each even-numbered year (beginning with 2014), report to the appro- priate committees of the Congress the results of the study conducted under paragraph (1), in- cluding any recommendations for administra- tive or legislative changes the Comptroller General determines necessary or appropriate to increase competition in the health insur- ance market. (Pub. L. 111–148, title I, § 1322, title X, § 10104(l), Mar. 23, 2010, 124 Stat. 187, 902; Pub. L. 117–286, § 4(a)(282), Dec. 27, 2022, 136 Stat. 4337.) Editorial Notes REFERENCES IN TEXT The Public Health Service Act, referred to in subsec. (c)(6), is act July 1, 1944, ch. 373, 58 Stat. 682. Part A of title XXVII of the Act is classified generally to part A (§ 300gg et seq.) of subchapter XXV of chapter 6A of this title. For complete classification of this Act to the Code, see Short Title note set out under section 201 of this title and Tables. Subtitles A and C of this Act, referred to in subsec. (c)(6), are subtitles A (§§ 1001–1004) and C (§§ 1201–1255), respectively, of title I of Pub. L. 111–148, Mar. 23, 2010, 124 Stat. 130, 154. Subtitle A enacted sections 300gg–11 to 300gg–19, 300gg–93, and 300gg–94 of this title, trans- ferred sections 300gg–4 to 300gg–7 and 300gg–13 of this title to sections 300gg–25 to 300gg–28 and 300gg–9 of this title, respectively, amended sections 300gg–11, 300gg–12, and 300gg–21 to 300gg–23 of this title, and enacted provi- sions set out as a note under section 300gg–11 of this title. Subtitle C enacted subchapter II of this chapter and sections 300gg to 300gg–2 and 300gg–4 to 300gg–7 of this title, transferred section 300gg of this title to sec- tion 300gg–3 of this title, amended sections 300gg–1 and 300gg–4 of this title, and enacted provisions set out as a note under section 300gg of this title. For complete classification of subtitles A and C to the Code, see Ta- bles. This Act, referred to in subsec. (i)(1), is Pub. L. 111–148, Mar. 23, 2010, 124 Stat. 119, known as the Pa- tient Protection and Affordable Care Act. For complete classification of this Act to the Code, see Short Title note set out under section 18001 of this title and Tables. CODIFICATION Section is comprised of section 1322 of Pub. L. 111–148. Subsec. (h) of section 1322 of Pub. L. 111–148 amended sections 501, 4958, and 6033 of Title 26, Internal Revenue Code. AMENDMENTS 2022—Subsec. (b)(4)(E). Pub. L. 117–286 substituted ‘‘chapter 10 of title 5’’ for ‘‘FACA’’ in heading and ‘‘Chapter 10 of title 5 shall apply to the advisory board, except that section 1013 of title 5’’ for ‘‘The Federal Ad- visory Committee Act (5 U.S.C. App.) shall apply to the Page 9117 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 18044 advisory board, except that section 14 of such Act’’ in text. 2010—Subsec. (b)(3), (4). Pub. L. 111–148, § 10104(l), added par. (3) and redesignated former par. (3) as (4). Statutory Notes and Related Subsidiaries CONSUMER OPERATED AND ORIENTED PLAN PROGRAM CONTINGENCY FUND Pub. L. 112–240, title VI, § 644, Jan. 2, 2013, 126 Stat. 2362, provided that: ‘‘(a) ESTABLISHMENT.—The Secretary of Health and Human Services shall establish a fund to be used to provide assistance and oversight to qualified nonprofit health insurance issuers that have been awarded loans or grants under section 1322 of the Patient Protection and Affordable Care Act (42 U.S.C. 18042) prior to the date of enactment of this Act [Jan. 2, 2013]. ‘‘(b) TRANSFER AND RESCISSION.— ‘‘(1) TRANSFER.—From the unobligated balance of funds appropriated under section 1322(g) of the Pa- tient Protection and Affordable Care Act (42 U.S.C. 18042(g)), 10 percent of such sums are hereby trans- ferred to the fund established under subsection (a) to remain available until expended. ‘‘(2) RESCISSION.—Except as provided for in para- graph (1), amounts appropriated under section 1322(g) of the Patient Protection and Affordable Care Act (42 U.S.C. 18042(g)) that are unobligated as of the date of enactment of this Act [Jan. 2, 2013] are rescinded.’’ § 18043. Funding for the territories (a) In general A territory that— (1) elects consistent with subsection (b) to establish an Exchange in accordance with part B of this subchapter and establishes such an Exchange in accordance with such part shall be treated as a State for purposes of such part and shall be entitled to payment from the amount allocated to the territory under sub- section (c); or (2) does not make such election shall be enti- tled to an increase in the dollar limitation ap- plicable to the territory under subsections (f) and (g) of section 1108 of the Social Security Act (42 U.S.C. 1308) for such period in such amount for such territory and such increase shall not be taken into account in computing any other amount under such subsections. (b) Terms and conditions An election under subsection (a)(1) shall— (1) not be effective unless the election is con- sistent with section 18041 of this title and is received not later than October 1, 2013; and (2) be contingent upon entering into an agreement between the territory and the Sec- retary that requires that— (A) funds provided under the agreement shall be used only to provide premium and cost-sharing assistance to residents of the territory obtaining health insurance cov- erage through the Exchange; and (B) the premium and cost-sharing assist- ance provided under such agreement shall be structured in such a manner so as to prevent any gap in assistance for individuals be- tween the income level at which medical as- sistance is available through the territory’s Medicaid plan under title XIX of the Social Security Act [42 U.S.C. 1396 et seq.] and the income level at which premium and cost- sharing assistance is available under the agreement. (c) Appropriation and allocation (1) Appropriation Out of any funds in the Treasury not other- wise appropriated, there is appropriated for purposes of payment pursuant to subsection (a) $1,000,000,000, to be available during the pe- riod beginning with 2014 and ending with 2019. (2) Allocation The Secretary shall allocate the amount ap- propriated under paragraph (1) among the ter- ritories for purposes of carrying out this sec- tion as follows: (A) For Puerto Rico, $925,000,000. (B) For another territory, the portion of $75,000,000 specified by the Secretary. (Pub. L. 111–148, title I, § 1323, as added Pub. L. 111–152, title I, § 1204(a), Mar. 30, 2010, 124 Stat. 1055.) Editorial Notes REFERENCES IN TEXT The Social Security Act, referred to in subsec. (b)(2)(B), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Title XIX of the Act is classified generally to subchapter XIX (§ 1396 et seq.) of chapter 7 of this title. For complete classification of this Act to the Code, see section 1305 of this title and Tables. PRIOR PROVISIONS A prior section 18043, Pub. L. 111–148, title I, § 1323, Mar. 23, 2010, 124 Stat. 192, which related to establish- ment of community health insurance option, was re- pealed by Pub. L. 111–148, title X, § 10104(m), Mar. 23, 2010, 124 Stat. 902. § 18044. Level playing field (a) In general Notwithstanding any other provision of law, any health insurance coverage offered by a pri- vate health insurance issuer shall not be subject to any Federal or State law described in sub- section (b) if a qualified health plan offered under the Consumer Operated and Oriented Plan program under section 18042 of this title, or a multi-State qualified health plan under section 18054 of this title, is not subject to such law. (b) Laws described The Federal and State laws described in this subsection are those Federal and State laws re- lating to— (1) guaranteed renewal; (2) rating; (3) preexisting conditions; (4) non-discrimination; (5) quality improvement and reporting; (6) fraud and abuse; (7) solvency and financial requirements; (8) market conduct; (9) prompt payment; (10) appeals and grievances; (11) privacy and confidentiality; (12) licensure; and (13) benefit plan material or information. (Pub. L. 111–148, title I, § 1324, title X, § 10104(n), Mar. 23, 2010, 124 Stat. 199, 902.) Editorial Notes AMENDMENTS 2010—Subsec. (a). Pub. L. 111–148, § 10104(n), sub- stituted ‘‘, or a multi-State qualified health plan under