[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 996 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 996

 To improve portability, access, and fair rating for health insurance 
                       coverage for individuals.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 21, 1995

  Mr. Fawell (for himself, Mr. Goodling, Mr. Petri, Mr. Roukema, Mr. 
Ballenger, Mr. Hoekstra, Mr. McKeon, Mrs. Meyers of Kansas, Mr. Talent, 
Mr. Greenwood, Mr. Hutchinson, Mr. Knollenberg, Mr. Graham, Mr. Weldon 
of Florida, and Mr. McIntosh) introduced the following bill; which was 
    referred to the Committee on Commerce and, in addition, to the 
 Committee on Economic and Educational Opportunity, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
 To improve portability, access, and fair rating for health insurance 
                       coverage for individuals.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Targeted Individual Health Insurance 
Reform Act of 1995''.

                 TITLE I--DEFINITIONS AND SPECIAL RULES

                       table of contents of title

Sec. 1001. General definitions.
Sec. 1002. General, catastrophic, and medisave coverage defined.

SEC. 1001. GENERAL DEFINITIONS.

    (a) In General.--For purposes of this Act:
            (1) Dependent.--The term ``dependent'' means, with respect 
        to any individual, any person who is--
                    (A) the spouse or surviving spouse of the 
                individual, or
                    (B) a child (including an adopted child) of such 
                individual and--
                            (i) under 19 years of age, or
                            (ii) under 25 years of age and a full-time 
                        student.
            (2) Employer.--The term ``employer'' shall have the meaning 
        applicable under section 3(5) of the Employee Retirement Income 
        Security Act of 1974, except that such term includes the 
        partnership in relation to any partner.
            (3) Group health plan; plan.--(A) The term ``group health 
        plan'' means a group health plan (as defined in section 3(42) 
        of the Employee Retirement Income Security Act of 1974 (as 
        added by ERISA Targeted Health Insurance Reform Act of 1995)), 
        but does not include any type of coverage excluded from the 
        definition of health insurance coverage under paragraph (6)(B).
            (B) The term ``plan'' means a group health plan (including 
        any such plan which is a multiemployer plan (as defined in 
        section 3(37) of the Employee Retirement Income Security Act of 
        1974)) and an exempted multiple employer health plan (within 
        the meaning of part 7 of the Employee Retirement Income 
        Security Act of 1974 (as added by the ERISA Targeted Health 
        Insurance Reform Act of 1995)).
            (4) Health insurance coverage.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``health insurance coverage'' means any 
                hospital or medical service policy or certificate, 
                hospital or medical service plan contract, or health 
                maintenance organization group contract offered by an 
                insurer.
                    (B) Exception.--Such term does not include any of 
                the following:
                            (i) Coverage only for accident, dental, 
                        vision, disability income, or long-term care 
                        insurance, or any combination thereof.
                            (ii) Medicare supplemental health 
                        insurance.
                            (iii) Coverage issued as a supplement to 
                        liability insurance.
                            (iv) Liability insurance, including general 
                        liability insurance and automobile liability 
                        insurance.
                            (v) Worker's compensation or similar 
                        insurance.
                            (vi) Automobile medical-payment insurance.
                            (vii) Coverage for a specified disease or 
                        illness.
                            (viii) A hospital fixed indemnity policy or 
                        other fixed indemnity policy.
            (5) Individual market.--The term ``individual market'' 
        means the health insurance market under which individuals 
        obtain health insurance coverage on behalf of themselves (and 
        their dependents) and not on the basis of employment.
            (6) Insurer.--(A) The term ``insurer'' means--
                    (i) an insurance company, insurance service, or 
                insurance organization licensed to engage in the 
                business of insurance in a State, or
                    (ii) a health maintenance organization (as defined 
                in subparagraph (B)) licensed to do business in a 
                State.
            (B) Health maintenance organization.--The term `health 
        maintenance organization' means a Federally qualified health 
        maintenance organization (as defined in section 1301(a) of the 
        Public Health Service Act), an organization recognized under 
        State law as a health maintenance organization, or a similar 
        organization regulated under State law for solvency in the same 
        manner and to the same extent as such a health maintenance 
        organization.
            (7) NAIC.--The term ``NAIC'' means the National Association 
        of Insurance Commissioners.
            (8) Network plan.--The term ``network plan'' includes, as 
        defined in standards established under section 2101, an 
        arrangement of an insurer under which health services are 
        offered to be provided primarily through a defined set of 
        providers who have contracts with the insurer.
            (9) State.--The term ``State'' means the 50 States, the 
        District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
        and American Samoa.
            (10) State commissioner of insurance.--The term ``State 
        commissioner of insurance'' includes a State superintendent of 
        insurance.
    (b) Application of ERISA Definitions.--Except as otherwise provided 
in this Act, terms used in this Act shall have the meanings applicable 
to such terms under section 3 of the Employee Retirement Income 
Security Act of 1974.
    (c) Secretary.--For purposes of this Act, except with respect to 
references specifically to the Secretary of Labor, the term 
``Secretary'' means the Secretary of Health and Human Services.

SEC. 1002. GENERAL, CATASTROPHIC, AND MEDISAVE COVERAGE DEFINED.

    (a) General Coverage.--In this Act, the term ``general coverage'' 
means health insurance coverage that meets the applicable standards 
provided for under section 2021 and that is not catastrophic coverage 
or medisave coverage (as defined in this section).
    (b) Catastrophic Coverage.--In this Act, the term ``catastrophic 
coverage'' means health insurance coverage that meets the applicable 
standards provided for under section 2101 and under which benefits are 
available for a year only to the extent that expenses for covered 
services in a year exceed a catastrophic deductible amount.
    (c) Medisave Coverage.--
            (1) In general.--In this Act, the term ``medisave 
        coverage'' means coverage that meets the applicable standards 
        provided for under section 2021 and--
                    (A) consists of--
                            (i) health insurance coverage under which 
                        benefits are available for a year only to the 
                        extent that expenses for covered services in a 
                        year exceed a catastrophic deductible amount; 
                        and
                            (ii) medisave cash benefit coverage 
                        consistent with paragraph (2); and
                    (B) meets such standards as may be prescribed under 
                section 2101.
            (2) Medisave cash benefit coverage.--
                    (A) In general.--Medisave cash benefit coverage is 
                considered to be consistent with this paragraph to the 
                extent that, in addition to and separate from the 
                benefits from the health insurance coverage described 
                in paragraph (1)(A)--
                            (i) under the terms of such coverage there 
                        is a fixed dollar amount of additional benefits 
                        that does not exceed the catastrophic 
                        deductible amount for the catastrophic coverage 
                        described in paragraph (1)(A);
                            (ii) subject to clause (iii), the dollar 
                        amount may be used for deductibles, cost-
                        sharing, and other expenses, for items and 
                        services specified under such catastrophic 
                        coverage and medisave cash benefit coverage;
                            (iii) any such amount of benefits not so 
                        used shall be accumulated, shall remain 
                        available to be applied against future 
                        deductibles, cost-sharing, and other expenses, 
                        and may be withdrawn for any purpose, or used 
                        to pay for coverage described in paragraph 
                        (1)(A)(i), to the extent that the dollar amount 
                        exceeds 150 percent of the catastrophic 
                        deductible amount for the catastrophic coverage 
                        described in paragraph (1)(A), shall be 
                        nonforfeitable, and, upon the death of all 
                        beneficiaries with respect to such benefits, 
                        shall be payable in cash to the estate of the 
                        beneficiary who dies last; and
                            (iv) the coverage meets the portability 
                        rules established under subparagraph (B).
                    (B) Portability rules.--In the case of an 
                individual who has medisave cash benefit coverage with 
                respect to which the requirements of clauses (i), (ii), 
                and (iii) of subparagraph (A) are met in a year, who 
                has accumulated an amount of benefits under such 
                coverage, and who terminates such coverage (or 
                terminates enrollment under health insurance coverage 
                that contains medisave cash benefit coverage), the 
                coverage meets the portability rules of this 
                subparagraph if, under the terms of such coverage, the 
                individual is permitted (as elected by the 
                individual)--
                            (i) to have an amount equal to all or some 
                        of the amount of benefits accumulated under 
                        such coverage paid towards the payment of 
                        premiums under any group health plan or health 
                        insurance coverage providing coverage for the 
                        individual, and
                            (ii) to have an amount equal to all or some 
                        of the remaining balance transferred to a plan 
                        which will provide medisave cash benefit 
                        coverage for that individual in accordance with 
                        the requirements of this paragraph (and such 
                        plan shall credit such amount transferred 
                        towards Medisave cash benefit coverage provided 
                        by such plan).
    (d) Catastrophic Deductible Amount Defined.--
            (1) In general.--For purposes of this section, subject to 
        paragraph (2), the term ``catastrophic deductible amount'' 
        means a deductible amount that is at least $1,800 (or $3,600 if 
        the coverage includes family members).
            (2) Adjustments.--In the case of any calendar year after 
        the first year to which this title II applies, each dollar 
        amount in paragraph (1) shall be increased by the percentage by 
        which (A) the average of the monthly consumer price indexes for 
        all urban consumers for the previous year, exceeds (B) the 
        average of the monthly consumer price indexes for all urban 
        consumers for such first year. If any increase under the 
        preceding sentence does not result in an amount that is a 
        multiple of $50, such increase shall be rounded so that the 
        amount is determined to the nearest multiple of $50.

 TITLE II--ACCESS TO AND FAIR RATING OF HEALTH INSURANCE COVERAGE FOR 
                              INDIVIDUALS

                       table of contents of title

 Subtitle A--Increased Availability and Continuity of Health Insurance 
                        Coverage for Individuals

   Part 1--Nondiscrimination, Portability, and Renewability Standards

Sec. 2001. Nondiscrimination and limitations on preexisting condition 
                            exclusions.
Sec. 2002. Portability.
Sec. 2003. Requirements relating to renewability generally.
 Part 2--Encouragement of Standards-Setting Organizations for Provider 
                    Networks and Utilization Review

Sec. 2011. Encouragement of standards-setting organizations for 
                            provider networks.
Sec. 2012. Encouragement of private standards-setting organizations for 
                            utilization review.
 Part 3--Requirements for Insurers Providing Health Insurance Coverage 
                        in the Individual Market

Sec. 2021. Requirement for insurers to offer general, catastrophic, and 
                            optional medisave coverage in the 
                            individual market.
Sec. 2022. Use of fair rating, uniform marketing materials, and 
                            miscellaneous consumer protections.
  Subtitle B--Establishment of Standards; Enforcement; Effective Dates

Sec. 2101. Establishment of standards.
Sec. 2102. Enforcement.
Sec. 2103. Preemption.
Sec. 2104. Effective date.

 Subtitle A--Increased Availability and Continuity of Health Insurance 
                        Coverage for Individuals

   PART 1--NONDISCRIMINATION, PORTABILITY, AND RENEWABILITY STANDARDS

SEC. 2001. NONDISCRIMINATION AND LIMITATIONS ON PREEXISTING CONDITION 
              EXCLUSIONS.

    (a) In General.--Except as provided in subsection (b), an insurer 
offering health insurance coverage in the individual market may deny, 
or impose a limitation or exclusion of, covered benefits relating to 
treatment of a condition based on health status, based on claims 
experience of an individual, based on receipt of health care by an 
individual, based on the medical history of an individual, or based on 
the fact that the condition preexisted the effective date of coverage 
of the individual, only if--
            (1) the condition relates to a condition that was diagnosed 
        or treated within a period of not to exceed 6 months before the 
        date of such coverage; and
            (2) the limitation or exclusion extends over a period of 
        not to exceed 12 months after the date of such coverage.
In the case of an individual who is eligible for coverage but for a 
waiting period imposed by an insurer, in applying paragraphs (1) and 
(2), the individual shall be treated as having had such coverage as of 
the beginning of the waiting period.
    (b) Special Rule for Health Insurance Coverage Offered in the 
Individual Market.--Notwithstanding subsection (a), an insurer may 
offer an individual health insurance coverage in the individual market 
which imposes a limitation or exclusion based on a preexisting 
condition but only if--
            (1) the condition relates to a condition that was not 
        diagnosed or treated within a period (that exceeds 6 months but 
        does not exceed 12 months) before the date of such coverage; 
        and
            (2) the limitation or exclusion extends over a period that 
        does not exceed 12 months after the date of such coverage.
    (c) No Coverage of Specific Treatment, Procedures, or Classes 
Required.--Nothing in this section may be construed to require the 
coverage of any specific procedure, treatment, or service as part of 
health insurance coverage under this Act or through regulation.
    (d) Application of Rules by Certain Health Maintenance 
Organizations.--A health maintenance organization that offers health 
insurance coverage shall not be considered as failing to meet the 
requirements of section 1301 of the Public Health Service Act 
notwithstanding that it provides for an exclusion of the coverage based 
on a preexisting condition consistent with the provisions of this part 
so long as such exclusion is applied consistent with the provisions of 
this part.
    (e) Applicability to Late Enrollment under Association Coverage.--
In the case of association coverage (as defined in section 
2021(b)(4)(B)), this section applies in the case of any individual with 
respect to whom coverage is elected upon initially becoming eligible 
for coverage or in connection with any subsequent enrollment periods.
    (f) Affiliation Period Alternative to Preexisting Condition 
Limitation.--An insurer offering health insurance coverage in the 
individual market which does not use the preexisting limitations 
allowed under this section and section 2002 may impose an affiliation 
period. For purposes of this subsection, the term ``affiliation 
period'' means a period--
            (1) not to exceed 90 days in the case of an individual 
        first becoming eligible under such coverage, and
            (2) not to exceed 180 days in the case of a later election 
        of coverage,
during which no contributions or premiums are required or collected and 
which must expire before the coverage becomes effective.

SEC. 2002. PORTABILITY.

    (a) In General.--Each insurer offering health insurance coverage in 
the individual market shall provide that if a covered individual is in 
a period of continuous coverage (as defined in subsection (c)) as of a 
date upon which coverage takes effect, any period of exclusion of 
coverage from covered benefits with respect to a preexisting condition 
(as permitted to be excluded under section 2001) shall be reduced by at 
least 1 month for each month in the period of continuous coverage. A 
covered individual may be treated by an insurer as not being in a 
period of continuous coverage if, upon the request of the insurer, the 
covered individual does not present satisfactory documentation of such 
period of continuous coverage. The Secretary may prescribe regulations 
defining standards for satisfactory documentation for purposes of this 
subsection.
    (b) No Preexisting Condition for Newborns and Adopted Children.--
For purposes of this subtitle--
            (1) Newborns.--A child who is covered at the time of birth 
        and remains in a period of continuous coverage after such time 
        shall not be considered to have any preexisting condition 
        beginning at the time of birth.
            (2) Adopted children.--An adopted child who is covered at 
        the time of adoption and remains in a period of continuous 
        coverage shall not be considered, beginning on the date of 
        adoption, to have any preexisting condition.
    (c) Period of Continuous Coverage.--
            (1) In general.--In this part, the term ``period of 
        continuous coverage'' means the period--
                    (A) beginning on the date an individual becomes 
                covered under a group health plan or health insurance 
                coverage (or coverage under a public plan providing 
                medical benefits), and
                    (B) ending on the date the individual does not have 
                such coverage for a continuous period of more than 3 
                months,
        if such period is documented in such form and manner as may be 
        prescribed in regulations of the Secretary.
            (2) Special rule.--For purposes of paragraph (1), if the 
        immediately preceding coverage for an individual was obtained 
        in the individual market--
                    (A) the insurer may require that previous coverage 
                have provided for a period of at least one year for 
                such previous coverage to constitute a period of 
                continuous coverage; and
                    (B) an insurer may provide that the subsequent 
                coverage under this section has a deductible which is 
                not less than the deductible that applied with respect 
                to the immediately preceding coverage.

SEC. 2003. REQUIREMENTS RELATING TO RENEWABILITY GENERALLY.

    (a) In General.--An insurer may not cancel (or deny renewal of) 
health insurance coverage in the individual market other than--
            (1) for nonpayment of premiums,
            (2) for fraud or other intentional misrepresentation by the 
        insured,
            (3) for noncompliance with material plan provisions, or
            (4) subject to subsection (b), because the insurer is 
        ceasing to provide any such coverage (or the same type of 
        coverage in the individual market) in a State, or, in the case 
        of an insurer that is a health maintenance organization or that 
        provides coverage through a network plan in a geographic area.
    (b) Notice Requirement for Market Exit.--Subsection (a)(4) shall 
not apply to an insurer ceasing to provide coverage in the individual 
market unless the insurer provides notice of such termination to 
individuals covered at least 180 days before the date of termination of 
coverage.
    (c) Limitation on Reentry in Individual Market.--If an insurer 
ceases to offer health insurance coverage or a type of coverage in an 
area with respect to the individual market, the insurer may not offer 
such coverage (or type of coverage) in the area in such market until 5 
years after the date of the termination.
    (d) Type of Coverage Defined.--In this section, general coverage, 
catastrophic coverage, and medisave coverage (as defined in section 
1002) shall each be considered to be separate types of health insurance 
coverage.

 PART 2--ENCOURAGEMENT OF STANDARDS-SETTING ORGANIZATIONS FOR PROVIDER 
                    NETWORKS AND UTILIZATION REVIEW

SEC. 2011. ENCOURAGEMENT OF STANDARDS-SETTING ORGANIZATIONS FOR 
              PROVIDER NETWORKS.

    (a) Requirement to Meet Standards.--Each insurer offering health 
insurance coverage in the individual market shall meet such standards 
as may be recognized or established under this section.
    (b) Standards.--
            (1) In general.--If the Secretary of Health and Human 
        Services determines that a private entity has established 
        standards for provider networks providing items and services 
        covered under health insurance coverage offered by insurers in 
        the individual market, in consultation with appropriate parties 
        (including representatives of health care providers, 
        specialists, insurers, plan administrators, and other experts), 
        and provides for a process for the periodic review and update 
        of such standards, such standards shall be the standards 
        applied under this section.
            (2) Contingency.--If the Secretary of Health and Human 
        Services makes a determination contrary to the determination 
        described in paragraph (1), such Secretary shall submit such 
        determination in writing to each House of the Congress.
    (c) Requirements for Standards.--The standards established under 
subsection (a) shall consist only of standards relating to--
            (1) the extent to which individuals covered under the plan 
        are assured to have reasonably prompt access, through the 
        provider network, to all items and services contained in any 
        package of benefits that may be provided under the provider 
        network, in a manner that assures the continuity of the 
        provision of such items and services,
            (2) the extent to which emergency services are provided to 
        covered individuals (including trauma services)--
                    (A) without regard to whether or not the provider 
                furnishing such services has a contractual (or other) 
                arrangement with the entity to provide items or 
                services to covered individuals, and
                    (B) in the case of services furnished for the 
                treatment of an emergency medical condition, without 
                regard to prior authorization, and
            (3) the extent to which--
                    (A) standards (including criteria for quality, 
                efficiency, credentialing, and services) are 
                established by the provider network for entering into 
                contracts (other than a contract providing for 
                employment of an employee) with health care providers 
                with respect to the provider network,
                    (B) such standards are established pursuant to a 
                mechanism which provides for receipt and consideration 
                of recommendations of the providers who are members of 
                the provider network,
                    (C) written notification to the provider is 
                required to terminate or to refuse to renew the 
                agreement and, unless otherwise provided in the 
                agreement and if requested by the provider, written 
                notification to the provider of the reasons for such 
                termination or refusal is also required, and
                    (D) unless otherwise provided in the agreement and 
                if requested by the provider, internal review of any 
                such decision to terminate or to refuse renewal is 
                provided for under the provider network.
    (d) Provider Network.--For purposes of this section, the term 
``provider network'' means, with respect to health insurance coverage 
provided by an insurer in the individual market, providers who have 
entered into an agreement under which such providers are obligated to 
provide covered items and services to covered individuals.

SEC. 2012. ENCOURAGEMENT OF PRIVATE STANDARDS-SETTING ORGANIZATIONS FOR 
              UTILIZATION REVIEW.

    (a) Requiring Review To Meet Standards.--An insurer offering health 
insurance coverage in the individual market may not deny coverage of or 
payment for items and services on the basis of a utilization review 
program unless the program meets such standards as may be recognized or 
established under this section.
    (b) Standards.--
            (1) In general.--If the Secretary of Health and Human 
        Services determines that a private entity has established 
        standards for utilization review programs described in 
        subsection (c), in consultation with appropriate parties 
        (including representatives of health care providers, 
        specialists, insurers, plan administrators, and other experts), 
        and provides for a process for the periodic review and update 
        of such standards, such standards shall be the standards 
        applied under this section.
            (2) Contingency.--If the Secretary of Health and Human 
        Services makes a determination contrary to the determination 
        described in paragraph (1), such Secretary shall submit such 
        determination in writing to each House of the Congress.
    (c) Requirements for Standards.--The standards established under 
subsection (a) shall consist only of standards relating to--
            (1) the extent to which individuals performing utilization 
        review may receive financial compensation based upon the number 
        of denials of coverage;
            (2) the process under which a covered individual or 
        provider may obtain timely review of a denial of coverage, 
        including the extent to which a review must be conducted by a 
        medical director of the insurer or a physician designated by 
        the insurer;
            (3) the extent to which utilization review is to be 
        conducted in accordance with uniformly applied standards that 
        are based on currently available medical evidence; and
            (4) the extent to which providers are to participate in the 
        development of the utilization review program.

 PART 3--REQUIREMENTS FOR INSURERS PROVIDING HEALTH INSURANCE COVERAGE 
                        IN THE INDIVIDUAL MARKET

SEC. 2021. REQUIREMENT FOR INSURERS TO OFFER GENERAL, CATASTROPHIC, AND 
              OPTIONAL MEDISAVE COVERAGE IN THE INDIVIDUAL MARKET.

    (a) Requirement.--
            (1) In general.--Each insurer that makes available any 
        health insurance coverage to individuals in the individual 
        market in a State--
                    (A) shall make available, to each eligible 
                individual in such market in the State, general 
                coverage (as defined in section 1002(a)), with a fee-
                for-service option and, if the insurer makes the option 
                available in the State outside the individual market, a 
                point-of-service option and a managed care option,
                    (B) shall make available, to each eligible 
                individual in the individual market in the State, 
                catastrophic coverage (as defined in section 1002(b)), 
                and
                    (C) may make available, to each eligible individual 
                in the individual market in the State, medisave 
                coverage (as defined in section 1002(c)).
            (2) Special rule for health maintenance organizations.--The 
        requirements of paragraph (1)(A) (with regard to requiring a 
        fee-for-service option) and paragraph (1)(B) shall not apply 
        with respect to health insurance coverage that is offered by--
                    (A) a health maintenance organization, or
                    (B) any other entity if such other entity does not 
                provide for a fee-for-service option.
            (3) Coverage options.--For purposes of this subsection--
                    (A) Fee-for-service option.--General coverage is 
                considered to provide a ``fee-for-service option'' if 
                benefits with respect to the covered items and services 
                in the coverage are made available for such items and 
                services provided through any lawful provider of such 
                covered items and services.
                    (B) Managed care option.--General coverage is 
                considered to provide a ``managed care option'' if 
                benefits with respect to the covered items and services 
                in the coverage are made available exclusively through 
                a managed care arrangement, except in the case of 
                emergency and urgent services and as otherwise required 
                under law.
                    (C) Point-of-service option.--General coverage is 
                considered to provide a ``point-of-service option'' if 
                the benefits with respect to covered items and services 
                in the coverage are made available principally through 
                a managed care arrangement, with the choice of the 
                covered individual to obtain such benefits for items 
                and services provided through any lawful provider of 
                such covered items and services. The coverage may 
                provide for different cost sharing schedules based on 
                whether the items and services are provided through 
                such an arrangement or outside such an arrangement.
            (4) Construction with respect to association coverage.--
        Nothing in paragraph (1) or subsection (b)(1) shall be 
        construed as requiring the general, catastrophic, or medisave 
        coverage made available by an insurer in the individual market 
        in a State as association coverage (as defined in subsection 
        (b)(4)(B)) to be the same as the general, catastrophic, or 
        medisave coverage offered in the State in the individual market 
        not as such association coverage.
    (b) Issuance of Coverage.--
            (1) In general.--Subject to the succeeding paragraphs of 
        this subsection and subsection (a)(4), each insurer that offers 
        general, catastrophic, or medisave coverage to an eligible 
        individual in the individual market in a State must accept 
        every such individual in the State, to the extent so eligible, 
        that applies for such coverage.
            (2) Special rules for health maintenance organizations.--In 
        the case of an insurer that is an health maintenance 
        organization or that provides coverage through a network plan 
        in the individual market, the insurer may--
                    (A) limit the individuals that may apply for such 
                coverage to those with individuals residing in the 
                service area of such organization or plan; and
                    (B) within the service area of such organization or 
                plan, deny such coverage to such individuals if the 
                insurer demonstrates that--
                            (i) it will not have the capacity to 
                        deliver services adequately to additional 
                        individuals because of its obligations to 
                        existing group contract holders and enrollees,
                            (ii) it is applying this subparagraph 
                        uniformly to all individuals without regard to 
                        the health status, claims experience, or 
                        duration of coverage, and
                            (iii) it will not offer coverage to such 
                        individuals within such service area for a 
                        period of at least 180 days after such coverage 
                        is denied.
            (3) Special rule for financial capacity limits.--An insurer 
        may deny health insurance coverage to individuals if the 
        insurer demonstrates that--
                    (A) it does not have the financial reserves 
                necessary to underwrite additional coverage,
                    (B) it is applying this paragraph uniformly to all 
                individuals without regard to the health status, claims 
                experience, or duration of coverage, and
                    (C) it shall not offer coverage to such individuals 
                within such service area for a period of at least 180 
                days after such coverage is denied.
            (4) Special rule for association coverage.--
                    (A) In general.--In the case of association 
                coverage (as defined in subparagraph (B)) in the 
                individual market, an insurer may restrict the coverage 
                to individuals who are bona fide members in the 
                association and who apply for enrollment on a timely 
                basis (consistent with subparagraphs (B) through (F)).
                    (B) Association coverage defined.--In this 
                paragraph, the term ``association coverage'' means 
                coverage provided through an association (such as a 
                trade association, industry association, or 
                professional association) to its members, but only if 
                such association--
                            (i) has been (together with its immediate 
                        predecessor, if any) organized and maintained 
                        for a continuous period of not less than 3 
                        years before the date of the initiation of such 
                        coverage, and
                            (ii) is organized and maintained in good 
                        faith, with a constitution and bylaws 
                        specifically stating its purpose, for 
                        substantial purposes other than providing such 
                        coverage.
                    (C) General initial enrollment requirement.--Except 
                as provided in subparagraphs (D) through (F), 
                enrollment of an individual for general, catastrophic, 
                or medisave coverage may be considered not to be timely 
                if the individual fails to enroll under such coverage 
                during an initial enrollment period, if such period is 
                at least 30 days long.
                    (D) Enrollment due to loss of previous coverage.--
                Enrollment under general, catastrophic, or medisave 
                coverage is considered to be timely in the case of an 
                individual who--
                            (i) was covered under a group health plan 
                        or had other health insurance coverage at the 
                        time of the individual's initial enrollment 
                        period,
                            (ii) stated at the time of the initial 
                        enrollment period that coverage under a group 
                        health plan or other health insurance coverage 
                        was the reason for declining enrollment,
                            (iii) lost coverage under a group health 
                        plan or other health insurance coverage (as a 
                        result of the termination of the coverage, 
                        termination of employment, reduction or hours 
                        of employment, or other reason other than a 
                        reason described in paragraph (1) or (2) of 
                        section 2003(a)), and
                            (iv) requests enrollment within 30 days 
                        after termination of the coverage.
                    (E) Requirement applies during open enrollment 
                periods.--Each insurer providing association coverage 
                in the individual market shall provide for at least one 
                period (of not less than 30 days) each year during 
                which enrollment under such coverage shall be 
                considered to be timely. A late enrollment penalty may 
                apply with respect to any subsequent period (not to 
                extend beyond the effective date of the next such 
                enrollment period).
                    (F) Enrollment of dependents.--
                            (i) In general.--If association coverage 
                        includes coverage of dependents, enrollment of 
                        an individual who is a spouse or child of a 
                        covered individual shall be considered to be 
                        timely if a request for enrollment is made 
                        either--
                                    (I) within 30 days of the date of 
                                the marriage or of the date of the 
                                birth or adoption of such child, if 
                                family coverage is available as of such 
                                date, or
                                    (II) within 30 days of the date 
                                family coverage is first made 
                                available.
                            (ii) Coverage.--If available association 
                        coverage includes family coverage and 
                        enrollment is made under such coverage on a 
                        timely basis under clause (i)(I), the coverage 
                        shall become effective not later than the first 
                        day of the first month beginning after the date 
                        the completed request for enrollment is 
                        received.
            (5) Conditions of coverage applicable to certain 
        individuals.--
                    (A) In general.--An insurer may offer or deny 
                coverage under paragraph (1) with respect to an 
                individual who would be expected to incur 
                disproportionately high health care costs and who is a 
                resident of a State under terms and conditions that may 
                involve risk adjustment mechanisms, high-risk pools, or 
                other mechanisms described in subparagraph (B).
                    (B) Insurance mechanisms.--The Secretary shall 
                request the NAIC to develop (in consultation with the 
                American Academy of Actuaries), within 12 months after 
                the date of the enactment of this Act, a definition of 
                individuals who would be expected to incur 
                disproportionately high health care costs and 
                mechanisms relating to risk adjustment mechanisms, 
                high-risk pools, or other mechanisms to provide 
                additional access to health insurance coverage for such 
                individuals. If the NAIC develops such a definition and 
                mechanisms within such period, the Secretary shall 
                review the definition and mechanisms. Such review shall 
                be completed within 120 days after the date the 
                definition and mechanisms are developed. Unless the 
                Secretary determines within such period that such 
                definition and mechanisms do not meet the requirements 
                of this paragraph, such definition and mechanisms shall 
                serve as the definition and mechanisms applicable under 
                subparagraph (A), with such amendments as the Secretary 
                deems necessary.
    (c) Definitions.--In this section--
            (1) the term ``eligible individual'', at the election of 
        the insurer, may exclude an individual eligible for coverage 
        under a group health plan; and
            (2) the term ``group health plan'' has the meaning given 
        such term under section 3(42) of the Employee Retirement Income 
        Security Act of 1974.

SEC. 2022. USE OF FAIR RATING, UNIFORM MARKETING MATERIALS, AND 
              MISCELLANEOUS CONSUMER PROTECTIONS.

    (a) Use of Fair Rating.--
            (1) In general.--As a standard under section 2101(a), 
        subject to the succeeding paragraphs of this subsection, the 
        premium rates established by an insurer for general, 
        catastrophic, or medisave coverage in the individual market may 
        not vary except by the following:
                    (A) Age.--By age.
                    (B) Geographic area.--By geographic area, based on 
                3-digit zip code or counties, as identified by the 
                Secretary in consultation with the NAIC and the States 
                involved.
                    (C) Family class.--By family class, based on 
                classes of family coverage established by the 
                Secretary, in consultation with the NAIC and the 
                States.
                    (D) Benefit design.--By benefit design of coverage, 
                including by type of coverage, such as general, 
                catastrophic, and medisave coverage and by type of 
                coverage option (described in section 2021(a)(3)) with 
                respect to general coverage.
                    (E) 12-month surcharge for less restrictive pre-
                existing condition exclusion.--By whether coverage is 
                being provided pursuant to section 2001(a) (relating to 
                a less restrictive pre-existing condition exclusion), 
                and which is not described in section 2001(b), but only 
                during the first 12 months in which such coverage is 
                provided.
                    (F) Administrative categories.--By permitted 
                expense category, based on differences in expenses 
                among such categories, consistent with subsection (b).
            (2) Treatment of associations as separate pools.--
                    (A) In general.--At the election of an insurer, the 
                provisions of this section may be applied separately 
                with respect to all individuals who are provided 
                association coverage (as defined in section 
                2021(b)(4)(B)).
                    (B) 5-year rule.--An election under subparagraph 
                (A) may not be made (or revoked) more frequently than 
                once every 5 years.
            (3) Treatment of permanent health insurance policies.--
        Paragraph (1) shall not apply in connection with a permanent 
        policy of health insurance existing on the effective date 
        specified in section 2104, if each individual covered under the 
        policy is given the option to convert the policy to a policy of 
        health insurance that is subject to this subtitle and that 
        meets the requirements of this section.
            (4) Additional variations in renewal premiums permitted for 
        claims experience within class of business.--
                    (A) In general.--Subject to the succeeding 
                provisions of this paragraph and unless an alternative 
                method is provided under standards established under 
                section 2021 with respect to permissible variations for 
                renewal premiums, for a class of business of an insurer 
                in the individual market, with respect to individuals 
                with similar demographic and other similar objective 
                characteristics (not relating to claims experience, 
                health status, occupation, or duration of coverage 
                since issue) for the same or similar coverage, the 
                insurer offering health insurance coverage in the 
                individual market may vary the renewal premiums charged 
                during a rating period based on claims experience so 
                long as the highest rates which could be charged to 
                such individuals under the rating system for that class 
                of business does not exceed the following percentage of 
                the base premium rate for the class of business for the 
                rating period:
                            (i) For a rating (or portion thereof) that 
                        occurs in the first 2 years in which this 
                        section is in effect, 200 percent.
                            (ii) For a rating (or portion thereof) that 
                        occurs in a succeeding year, a percentage 
                        specified in any regulation of the Secretary 
                        that may be prescribed under paragraph (6).
                    (B) Limit on transfer of individuals among classes 
                of business.--In carrying out subparagraph (A), an 
                insurer offering health insurance coverage in the 
                individual market may not involuntarily transfer an 
                individual into or out of a class of business. An 
                insurer providing such coverage may not offer to 
                transfer an individual into or out of a class of 
                business unless such offer is made to transfer all 
                individuals in the class of business without regard to 
                demographic characteristics, claim experience, health 
                status, occupation, or duration since issue.
                    (C) Definitions.--In this paragraph:
                            (i) Base premium rate.--The term ``base 
                        premium rate'' means, for each class of 
                        business for each rating period, the lowest 
                        premium rate charged or which could have been 
                        charged under a rating system for that class of 
                        business by the insurer to individuals in the 
                        individual market with similar demographic 
                        characteristics and other similar objective 
                        characteristics (not relating to claims 
                        experience, health status, occupation, or 
                        duration of coverage since issue) for the same 
                        or similar health insurance coverage.
                            (ii) Class of business.--The term ``class 
                        of business'' means, with respect to an 
                        insurer, all (or a distinct group of) 
                        individuals in the individual market as shown 
                        on the records of the insurer.
                            (iii) Rules for establishing classes of 
                        business.--For purposes of clause (ii)--
                                    (I) an insurer offering health 
                                insurance coverage in the individual 
                                market may establish, subject to 
                                subclause (II), a distinct group of 
                                individuals on the basis that the 
                                applicable health insurance coverage 
                                either is marketed and sold through 
                                individuals and organizations which are 
                                not participating in the marketing or 
                                sale of other distinct groups of 
                                individuals for the insurer or has been 
                                acquired from another insurer as a 
distinct group; and
                                    (II) such an insurer may not 
                                establish more than 2 groupings under 
                                each class of business based on the 
                                insurer's use of managed-care 
                                techniques if the techniques are 
                                expected to produce substantial 
                                variation in health care costs.
                            (iv) Demographic characteristics.--The term 
                        ``demographic characteristics'' means age 
                        (based upon classes established under paragraph 
                        (1)(A)), gender, geographic area (based upon 
                        areas identified under paragraph (1)(B)), and 
                        family composition (based upon family classes 
                        established under paragraph (1)(C)).
            (5) Additional variations in initial premiums permitted for 
        underwriting characteristics.--
                    (A) In general.--For a class of business of an 
                insurer, with respect to individuals in the individual 
                market with similar demographic and other similar 
                objective characteristics (not relating to claims 
                experience, health status, occupation, or duration of 
                coverage since issue), for the same or similar 
                coverage, the insurer offering health insurance 
                coverage in such market may vary the initial premiums 
                charged on the basis of prior claims experience, health 
                status, occupation, and other underwriting 
                characteristics so long as the highest rates which 
                could be charged to such individuals under the rating 
                system for that class of business does not exceed the 
                following percentage of the base premium rate for the 
                class of business for the rating period:
                            (i) For a rating (or portion thereof) that 
                        occurs in the first 2 years in which this 
                        section is in effect, 200 percent.
                            (ii) For a rating (or portion thereof) that 
                        occurs in a succeeding year, a percentage 
                        specified in any regulation of the Secretary 
                        that may be prescribed under paragraph (6).
                    (B) Definitions.--In this paragraph:
                            (i) Base premium rate.--The term ``base 
                        premium rate'' means, for each class of 
                        business, the lowest premium rate charged or 
                        which could have been charged under a rating 
                        system for that class of business by the 
                        insurer to individuals in the individual market 
                        with similar demographic characteristics and 
                        other similar objective characteristics (not 
                        relating to claims experience, health status, 
                        occupation, or duration of coverage since 
                        issue) for the same or similar health insurance 
                        coverage.
                            (ii) Other definitions.--Clause (ii) 
                        (relating to class of business), clause (iii) 
                        (relating to rules for establishing classes of 
                        business), and clause (iv) (relating to 
                        demographic characteristics) of paragraph 
                        (4)(C) shall also apply with respect to this 
                        paragraph.
            (6) Graduated reduction in allowable percentages of base 
        premium rate.--The Secretary shall request the NAIC to 
        determine (in consultation with the American Academy of 
        Actuaries), within 12 months after the date of the enactment of 
        this Act, whether model regulations that provide for a schedule 
        of graduated reductions in the percentages of the base premium 
        rates allowable under each of paragraphs (4)(A)(ii) and 
        (5)(A)(ii) can be developed without adversely affecting 
        coverage rates and affordability of coverage. If the NAIC makes 
        such a determination and develops such model regulations 
        providing for such schedules, the Secretary shall review the 
        schedules provided in such model regulations. Such review shall 
        be completed within 120 days after the date the regulations are 
        developed. Unless the Secretary determines within such period 
        that any schedule provided in such model regulations for 
        paragraph (4)(A)(ii) or (5)(A)(ii) does not meet the 
        requirements of this subsection, such schedule shall serve as 
        the schedule applicable under such paragraph, with such 
        amendments as the Secretary deems necessary. The Secretary 
        shall provide for public comment in connection with the 
        regulations during such 120-day period and in advance of any 
        determination by the Secretary.
    (b) Administrative Variations.--Expense categories shall be 
established under subsection (a)(1)(F) by an insurer in a manner that 
only reflects differences based on marketing, commissions, and similar 
expenses.
    (c) Full Disclosure of Applicable Rating Practices.--At the time an 
insurer offers health insurance coverage in the individual market, the 
insurer shall fully disclose to the individual, at the request of an 
individual, rating practices for health insurance coverage applicable 
to that individual, including rating practices for different benefit 
designs offered to the individual.
    (d) Actuarial Certification.--Each insurer that offers health 
insurance coverage in the individual market in a State shall file 
annually with the State commissioner of insurance, to the extent 
required by such commissioner, a written statement by a member of the 
American Academy of Actuaries (or other individual acceptable to the 
commissioner) that, based upon an examination by the individual which 
includes a review of the appropriate records and of the actuarial 
assumptions of the insurer and methods used by the insurer in 
establishing premium rates for applicable health insurance coverage--
            (1) the insurer is in compliance with the applicable 
        provisions of this section, and
            (2) the rating methods are actuarially sound.
Each such insurer shall retain a copy of such statement for examination 
at its principal place of business.
    (e) Registration and Reporting.--Each insurer that offers any 
health insurance coverage in the individual market in a State shall be 
registered or licensed with the State commissioner of insurance and 
shall comply with any reporting requirements of the commissioner 
relating to such coverage.
    (f) Marketing Material.--Each insurer that offers any health 
insurance coverage in the individual market in a State shall file with 
the State those marketing materials relating to the offer and sale of 
health insurance coverage to be used for distribution before the 
materials are used. Such materials shall be in a uniform format, as may 
be provided under standards established under section 2101.

  Subtitle B--Establishment of Standards; Enforcement; Effective Dates

SEC. 2101. ESTABLISHMENT OF STANDARDS.

    (a) Role of NAIC.--
            (1) In general.--The Secretary of Health and Human Services 
        shall request the NAIC to develop, within 12 months after the 
        date of the enactment of this Act, model regulations that 
        specify standards with respect to the requirements of subtitle 
        A.
            (2) Review by secretary.--If the NAIC develops recommended 
        regulations specifying the standards with respect to the 
        requirements of subtitle A within the 12-month period referred 
        to in paragraph (1), the Secretary shall review the standards. 
        Such review shall be completed within 120 days after the date 
        the regulations are developed.
            (3) Requirements.--Except with respect to the requirements 
        of section 2011 and 2012, unless the Secretary determines 
        within such 120-day period that--
                    (A) the standards do not effectively provide for 
                the application of requirements of sections 2001, 2002, 
                and 2003 to insurers in a manner and to an extent 
                equivalent in substance to the manner and extent to 
                which the requirements apply to group health plans 
                under section 821 of the Employee Retirement Income 
                Security Act of 1974 (as added by the ERISA Targeted 
                Health Insurance Reform Act of 1995), or
                    (B) the standards do not otherwise meet the 
                requirements of subtitle A,
        such standards shall serve as the standards under this section, 
        with such amendments as the Secretary deems necessary.
            (4) Requirements relating to managed care and utilization 
        review.--If the Secretary determines under section 2011(b)(1) 
        that a private entity has established standards for provider 
        networks consistent with section 2011(c), the standards 
        established under this section with respect to the requirements 
        of section 2011 shall consist of the standards recognized or 
        established under section 2011. If the Secretary determines 
        under section 2012(b)(1) that a private entity has established 
        standards for utilization review programs that are consistent 
        with section 2012(c), the standards established under this 
        section with respect to the requirements of section 2012 shall 
        consist of the standards recognized or established under 
        section 2012.
            (5) Public comment.--The Secretary shall provide for public 
        comment in connection with the standards during such 120-day 
        period and in advance of any determination by the Secretary.
    (b) Contingency.--If the NAIC does not develop such model 
regulations within such period or the Secretary makes the determination 
described in subsection (a), the Secretary shall specify, within 24 
months after the date of the enactment of this Act, standards to carry 
out those requirements.
    (c) Definitions.--In this title, the term ``section 2101 
standards'' means the standards established under this section.

SEC. 2102. ENFORCEMENT.

    (a) Voluntary Enforcement by States.--
            (1) In general.--Each State that desires to enforce the 
        section 2101 standards with respect to insurers shall submit to 
        the Secretary of Health and Human Services, by the deadline 
        specified in paragraph (2), a report on the program the State 
        has established by such deadline and consistent with section 
        2104 to implement and enforce such standards.
            (2) Deadline.--
                    (A) 1 year after final model regulations.--Subject 
                to subparagraph (B), the deadline under this paragraph 
                is 1 year after the date model regulations are 
                established under section 2101.
                    (B) Exception for legislation.--In the case of a 
                State which the Secretary of Health and Human Services 
                identifies, in consultation with the NAIC, as--
                            (i) requiring State legislation (other than 
                        legislation appropriating funds) in order for 
                        insurers to meet the section 2101 standards 
                        provided under such model regulations, but
                            (ii) having a legislature which is not 
                        scheduled to meet in 1996 in a legislative 
                        session in which such legislation may be 
                        considered,
                the date specified in this paragraph is the first day 
                of the first calendar quarter beginning after the close 
                of the first legislative session of the State 
                legislature that begins on or after January 1, 1997. 
                For purposes of the previous sentence, in the case of a 
                State that has a 2-year legislative session, each year 
                of such session shall be deemed to be a separate 
                regular session of the State legislature.
            (3) No federal mandate on states.--Nothing in this 
        subsection shall be construed as imposing a requirement on a 
        State. The establishment by a State of an enforcement program 
        under this subsection is voluntary.
    (b) Federal Role.--
            (1) State enforcement exclusive of Federal enforcement.--If 
        the Secretary determines that a State has submitted a report by 
        the deadline specified under subsection (a)(2) and finds that 
        the State has provided for implementation and enforcement of 
        the section 2101 standards, such implementation and enforcement 
        shall be carried out exclusively under State law.
            (2) Review of state enforcement programs.--If the Secretary 
        determines that a State has submitted a report by the deadline 
        specified under subsection (a)(2) but finds that the State 
        program does not provide for implementation and enforcement of 
        the section 2101 standards, the Secretary shall notify the 
        State and provide the State a period of 60 days in which to 
        provide for changes that assure such implementation and 
        enforcement of such standards.
            (3) Contingency.--If the Secretary determines that a State 
        has not submitted a report by the deadline specified under 
        subsection (a)(2) or, in the case of a State described in 
        paragraph (1), the State has not provided for an implementation 
        and enforcement program after the period of 60 days specified 
        in such paragraph, the Secretary shall provide for such 
        mechanism for the implementation and enforcement of the section 
        2101 standards in the State (including the application of civil 
        money penalties under paragraph (3)) as the Secretary 
        determines to be appropriate. Any such implementation and 
        enforcement shall cease to be effective on the date the 
        Secretary finds that a State has established an implementation 
        and enforcement program described in subsection (a)(1).
            (3) Application of civil money penalty under secretarial 
        mechanism.--
                    (A) In general.--If the Secretary is providing for 
                implementation and enforcement of section 2101 
                standards under paragraph (2) and determines that an 
                insurer has failed to comply with such standards 
                applicable to the insurer, the Secretary may impose on 
                the insurer a civil money penalty of not to exceed 
                $25,000 for each such failure. Under regulations of the 
                Secretary, provisions consistent and coextensive with 
                section 1128A of the Social Security Act (other than 
                the first sentence of subsection (a) of such section 
                and other than subsection (b) of such section) shall 
                apply to a civil money penalty under this paragraph in 
                the same manner as such section applies to a penalty or 
                proceeding under section 1128A(a) of such Act.
                    (B) Corrections within 30 days.--The Secretary 
                shall not impose a civil money penalty under this 
                paragraph by reason of any failure if--
                            (i) such failure was due to reasonable 
                        cause and not to willful neglect, and
                            (ii) such failure is corrected within the 
                        30-day period beginning on the earliest date 
                        the insurer knew, or exercising reasonable 
                        diligence would have known, that such failure 
                        existed.
    (c) Good Faith Compliance With Requirement.--An insurer that 
complies in good faith with an applicable requirement of subtitle A 
shall not be subject to a penalty under this section for failure to 
meet such requirement on the basis of its failure to meet section 2101 
standards (or regulations to carry out such standards) for any failure 
that occurs before the date such standards (or regulations) have been 
published and become effective.
    (d) Treatment of Policy Approval by Domicile State.--If a 
particular policy or contract of health insurance coverage offered by 
an insurer is approved in a State that has adopted and is enforcing 
section 2101 standards and that is the domicile State with respect to 
the insurer, the policy or contract shall be deemed to meet such 
standards with respect to any other State but only if a copy of the 
approval by the domicile State is filed by the insurer with the 
applicable regulatory authority of such other State at least 60 days 
before the date the policy or contract is offered, sold, or issued in 
that other State.

SEC. 2103. PREEMPTION.

    (a) In General.--Except as provided in this section, a State may 
not establish or enforce standards for insurers or health insurance 
coverage offered in the individual market with respect to the subject 
matter of this title that are different from the standards established 
under this title.
    (b) Transition for More Restrictive State Standards.--Subsection 
(a) shall not apply to a State establishing and enforcing more 
restrictive standards relating to the matters under this title during 
the 3-year period beginning on January 1, 1998, if such standards have 
been established and are enforced by the State as of February 1, 1995.
    (c) Prohibition of State Benefit Mandates.--
            (1) In general.--No provision of State or local law shall 
        apply that requires--
                    (A) health insurance coverage in the individual 
                market to provide coverage of one or more specific 
                benefits, services, or categories of health care, or 
                services of any class or type of provider of health 
                care; or
                    (B) an insurer (in relation to health insurance 
                coverage offered in the individual market) to provide 
                coverage of one or more specific benefits, services, or 
                categories of health care, or services of any class or 
                type of provider of health care.
            (2) Exception.--
                    (A) State enforcement programs.--Paragraph (1) 
                shall not apply a State enforcement program under 
                section 2102.
                    (B) Certain policies.--Notwithstanding subsection 
                (a), a State may require an insurer (in relation to 
                health insurance coverage offered in the individual 
                market) to provide coverage of one or more specific 
                benefits, services, or categories of health care, or 
                services of any class or type of provider of health 
                care, but only with respect to--
                            (i) not more than 2 policies or contracts 
                        of health insurance coverage, one of which 
                        provides less comprehensive coverage than the 
                        other, and
                            (ii) policies for which the State provides 
                        subsidies to individuals to purchase such 
                        coverage.
    (d) Preemption of State Anti-Managed Care Laws.--
            (1) Preemption of state law provisions.--Subject to 
        paragraph (2)(C), the following provisions of State law are 
        preempted and may not be enforced:
                    (A) Restrictions on reimbursement rates or 
                selective contracting.--Any State law that--
                            (i) restricts the ability of an insurer 
                        offering health insurance coverage in the 
                        individual market to negotiate reimbursement 
                        rates or forms of payments with providers,
                            (ii) restricts the ability of such an 
                        insurer to limit the number of participating 
                        providers, or
                            (iii) requires standards inconsistent with 
                        any standards established under section 
                        2011(b).
                    (B) Restrictions on utilization review methods.--
                Any State law that, in relation to a health insurance 
                coverage offered in the individual market--
                            (i) prohibits utilization review of any or 
                        all treatments and conditions (including 
                        preadmission certification, application of 
                        practice guidelines, continued stay review, 
                        preauthorization of ambulatory procedures, and 
                        retrospective review),
                            (ii) requires that such review be made (I) 
                        by a resident of the State in which the 
                        treatment is to be offered or by an individual 
                        licensed in such State, or (II) by a physician 
                        in any particular specialty or with any board 
                        certified specialty of the same medical 
                        specialty as the provider whose services are 
                        being reviewed,
                            (iii) requires the use of specified 
                        standards of health care practice in such 
                        reviews or requires the disclosure of the 
                        specific criteria used in such reviews,
                            (iv) requires payments to providers for the 
                        expenses of responding to utilization review 
                        requests,
                            (v) imposes liability for delays in 
                        performing such review, or
                            (vi) requires standards in addition to or 
                        inconsistent with standards established under 
                        section 2012(b).

SEC. 2104. EFFECTIVE DATE.

    The requirements of subtitle A and the preemption provisions of 
section 2103, shall apply with respect to insurers on January 1, 1998.
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