[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2905 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 2905

   To provide for comprehensive reform for managed health care plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            November 7, 1997

  Mr. Nadler introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committees on 
     Commerce, and Education and the Workforce, 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 provide for comprehensive reform for managed health care plans.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Comprehensive 
Managed Health Care Reform Act of 1997''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Enforcement of requirements.
Sec. 4. Assuring adequate access to covered services and providers.
Sec. 5. Assuring adequate scope of coverage.
Sec. 6. Assuring unbiased medical determinations by health care 
                            professionals and providers.
Sec. 7. Nondiscrimination against enrollees and in the selection of 
                            participating providers; equitable access 
                            to networks.
Sec. 8. Disclosure of information.
Sec. 9. Grievance procedures and deadline for responding to requests 
                            for coverage of services.
Sec. 10. Due process for health care professionals and providers.
Sec. 11. Requirements for quality improvement program and utilization 
                            review programs.
Sec. 12. Minimum loss ratios; general consumer protections.

SEC. 2. DEFINITIONS.

    (a) In General.--For purposes of this Act:
            (1) Enrollee.--The term ``enrollee'' means, with respect to 
        a managed care plan offered by a managed care organization, an 
        individual enrolled with the organization for coverage under 
        such a plan.
            (2) Health care professional.--The term ``health care 
        professional'' means a physician or other health care 
        practitioner who is licensed under State law with respect to 
        the health care services the practitioner furnishes.
            (3) Health plan.--The term ``health plan'' means a group 
        health plan or health insurance coverage offered by a health 
        insurance issuer.
            (4) Managed care organization.--The term ``managed care 
        organization'' means any entity, including a group health plan, 
        health maintenance organization, or provider-sponsored 
        organization, in relation to its offering of a managed care 
        plan, and includes any other entity that provides or manages 
        the coverage under such a plan under a contract or arrangement 
        with the entity.
            (5) Managed care plan.--The term ``managed care plan'' 
        means a health plan offered by an entity if the entity--
                    (A) provides or arranges for the provision of 
                health care items and services to enrollees in the plan 
                through participating health care professionals and 
                providers, or
                    (B) provides financial incentives (such as variable 
                copayments and deductibles) to induce enrollees to 
                obtain benefits through participating health care 
                professionals and providers,
        or both.
            (6) Participating.--The term ``participating'' means, with 
        respect to a health care professional or provider in relation 
        to a health plan offered by an entity, a physician or provider 
        that furnishes health care items and services to enrollees of 
        the entity under an agreement with the entity.
            (7) Primary care provider.--The term ``primary care 
        provider'' means a health care professional who acts as a 
        gatekeeper for the overall care of an enrollee.
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (9) State.--The term ``State'' includes the District of 
        Columbia, Puerto Rico, the Virgin Islands, Guam, American 
        Samoa, and the Northern Mariana Islands.
    (b) Incorporation of General Definitions From Health Insurance 
Portability and Accountability Act.--For purposes of this Act, the 
definitions contained in section 2791 of the Public Health Service Act 
(42 U.S.C. 300gg-91) shall apply under this Act.

SEC. 3. ENFORCEMENT OF REQUIREMENTS.

    (a) Application to Group Health Plans.--
            (1) Public health service act.--For purposes of applying 
        title XXVII of the Public Health Service Act, the requirements 
        of the succeeding sections of this Act shall be treated as 
        though they were included in the subpart 2 of part A of such 
        title (42 U.S.C. 300gg-4 et seq.).
            (2) Employee retirement income security act of 1974.--For 
        purposes of applying part 7 of subtitle B of title I of the 
        Employee Retirement Income Security Act of 1974, the 
        requirements of the succeeding sections of this Act shall be 
        treated as though they were included in subpart B of such part 
        (29 U.S.C. 1185 et seq.).
            (3) Internal revenue code of 1986.--For purposes of 
        applying chapter 100 of the Internal Revenue Code of 1986, the 
        requirements of the succeeding sections of this Act shall be 
        treated as though they were included in subchapter B of such 
        chapter.
    (b) Application to Individual Health Insurance Coverage.--For 
purposes of applying title XXVII of the Public Health Service Act, the 
requirements of the succeeding sections of this Act also shall be 
treated as though they were part of subpart 2 of part B of such title 
(42 U.S.C. 300gg-51 et seq.).
    (c) Medicare.--The Secretary may not enter into a contract under 
section 1857 of the Social Security Act (42 U.S.C. 1395w-27) with a 
Medicare+Choice organization that is a managed care organization unless 
the contract contains assurances satisfactory to the Secretary that the 
organization will comply with the applicable requirements of the 
succeeding sections of this Act.
    (d) Medicaid.--Notwithstanding any other provision of law, no funds 
shall be paid to a State under section 1903(a)(1) of the Social 
Security Act (42 U.S.C. 1396b(a)(1)) with respect to medical assistance 
provided through payment to a medicaid managed care organization (as 
defined in section 1903(m)(1)(A) of such Act, 42 U.S.C. 1396b(m)(1)(A)) 
unless the contract with such organization contains assurances 
satisfactory to the Secretary that the organization will comply with 
the applicable requirements of the succeeding sections of this Act.
    (e) Secretarial Enforcement Authority.--
            (1) In general.--In addition to any other authority 
        provided under law, the Secretary shall establish sanctions, 
        consistent with this subsection, for the enforcement of the 
        requirements of the succeeding sections of this Act.
            (2) Progressive civil monetary penalties.--Such sanctions 
        shall include the imposition of civil monetary penalties for 
        violations of such requirements. The amount of such penalties 
        shall increase as the frequency or severity of the violations 
        by a managed care organization increases.
            (3) Opportunity for corrective action plan.--The Secretary 
        shall provide an opportunity for a managed care organization to 
        implement a corrective action plan before imposing sanctions 
        for violations of such requirements.
            (4) Disqualification from medicare and medicaid.--In cases 
        of repeated or egregious violations of such requirements by 
        such an organization that has entered into a contract under 
        title XVIII or XIX of the Social Security Act--
                    (A) the Secretary initially shall prohibit the 
                organization from enrolling any additional individuals 
                under either such title, and
                    (B) if the Secretary finds that the violations 
                continue, the Secretary shall terminate the contracts 
                with the organization under such titles and require the 
                termination of enrollment of individuals enrolled with 
                the organization under either such title.
            (5) Printing list of violators.--The Secretary shall 
        periodically publish a list of the organizations which have 
        been sanctioned under this subsection, the nature of such 
        sanctions, and the violations for which such sanctions were 
        imposed. The Secretary may exclude from such list an 
        organization that, in lieu of imposition of a sanction, is 
        implementing (or has completed implementation of) a corrective 
        plan.
    (f) Additional Liability for Withholding of Medically Necessary 
Care.--If a managed care organization in connection with a managed care 
plan fails (through the curtailment of a hospital stay, a limitation on 
covered tests, a limitation on treatment, or otherwise) to provide any 
such benefit in accordance with the terms of the plan, insofar as such 
failure occurs pursuant to a clinically or medically inappropriate 
decision or determination resulting from--
            (1) the application of any cost containment technique,
            (2) any utilization review directed at cost containment, or
            (3) any other medical care delivery policy decision which 
        restricts the ability of providers of medical care from 
        utilizing their full discretion for treatment of enrollees,
the organization, and any agent of the organization having authority to 
make such decision or determination on behalf of the organization, 
shall be jointly and severally liable to any enrollee aggrieved by such 
failure for actual damages (including compensatory and consequential 
damages) proximately caused by such failure, and may, in the court's 
discretion, be liable to such enrollee for punitive damages. The 
remedies under this subsection are in addition to remedies otherwise 
provided under this section.
    (g) No Preemption of Stricter State Law.--
            (1) In general.--Subject to paragraph (2), this Act shall 
        not be construed to supersede any provision of State law that 
        provides protections in relation to health insurance coverage 
        that are greater than the protections provided under this Act.
            (2) Continued preemption with respect to group health 
        plans.--Nothing in this Act shall be construed to affect or 
        modify the provisions of section 514 of the Employee Retirement 
        Income Security Act of 1974 with respect to group health plans.
    (h) Nullification of Contrary Contractual Provisions.--Any contract 
provision or agreement that is in violation of any provision of this 
Act (or amendment made by this Act) shall be null and void.

SEC. 4. ASSURING ADEQUATE ACCESS TO COVERED SERVICES AND PROVIDERS.

    (a) General Access.--
            (1) In general.--Subject to paragraph (2), a managed care 
        organization offering a managed care plan shall establish and 
maintain adequate arrangements, as defined under regulations of the 
Secretary, with a sufficient number, mix, and distribution of health 
care professionals and providers to assure that covered items and 
services are available and accessible to each enrollee under the plan--
                    (A) in the service area of the organization;
                    (B) in a variety of sites of service;
                    (C) with reasonable promptness (including 
                reasonable hours of operation and after-hours 
                services);
                    (D) with reasonable proximity to the residences and 
                workplaces of enrollees; and
                    (E) in a manner that--
                            (i) takes into account the diverse needs of 
                        enrollees, and
                            (ii) reasonably assures continuity of care.
            (2) Treatment of organizations serving certain areas.--For 
        a managed care organization that serves a rural or medically 
        underserved area, the organization shall be treated as meeting 
        the requirement of paragraph (1) if the organization has 
        arrangements with a sufficient number, mix, and distribution of 
        health care professionals and providers having a history of 
        serving such areas. The use of telemedicine and other 
        innovative means to provide covered items and services by a 
        managed care organization that serves a rural or medically 
        underserved area shall also be considered in determining 
        whether the requirement of such paragraph is met.
            (3) Definitions.--For purposes of paragraph (1):
                    (A) Medically underserved area.--The term 
                ``medically underserved area'' means an area that is 
                designated as a health professional shortage area under 
                section 332 of the Public Health Service Act (42 U.S.C. 
                254e) or as a medically underserved area for purposes 
                of section 330 or 1302(7) of such Act (42 U.S.C. 254c, 
                300e-1(7)).
                    (B) Rural area.--The term ``rural area'' means an 
                area that is not within a Standard Metropolitan 
                Statistical Area or a New England County Metropolitan 
                Area (as defined by the Office of Management and 
                Budget).
    (b) Access to Specialized Services.--
            (1) In general.--A managed care organization shall 
        demonstrate that enrollees have access to specialized treatment 
        expertise when such treatment is medically or clinically 
        indicated in the professional judgment of the treating health 
        care professional, in consultation with the enrollee.
            (2) Medical specialists.--A managed care organization shall 
        develop a system to permit enrollees to use a medical 
        specialist primary care provider as a primary care provider 
        when the enrollee's medical conditions (including suffering 
        from a chronic disease or medical condition) warrant it.
            (3) Standing referrals to specialists.--A managed care 
        organization shall provide for a standing referral to a medical 
        specialist if the treating primary care provider, in 
        consultation with such specialists, determines such a referral 
        is necessary to provide adequate and continuous care for the 
        patient.
            (4) Specialized treatment expertise defined.--For purposes 
        of this subsection, the term ``specialized treatment 
        expertise'' means expertise in diagnosing or treating--
                    (A) unusual diseases or conditions, or
                    (B) diseases and conditions that are unusually 
                difficult to diagnose or treat.
            (5) Medical specialist defined.--For purposes of paragraph 
        (2), the term ``medical specialist'' means, with respect to a 
        managed care organization, a health care professional who is 
        certified by a national accreditation board (or pursuant to 
        State licensing authority) as possessing specialized treatment 
        expertise.
    (c) Use of Gynecologists As Primary Care Providers.--A managed care 
organization may not require an enrollee to obtain a referral from a 
physician in order to obtain covered items and services from a 
physician who specializes in obstetrics and gynecology.
    (d) Emergency and Urgent Care.--
            (1) In general.--A managed care organization shall--
                    (A) assure the availability and accessibility of 
                medically or clinically necessary emergency services 
                and urgent care services within the service area of the 
                organization 24 hours a day, 7 days a week;
                    (B) require no prior authorization for items and 
                services furnished in a hospital emergency department 
                to an enrollee (without regard to whether the health 
                care professional or hospital has a contractual or 
                other arrangement with the organization) with symptoms 
                that would reasonably suggest to a prudent layperson 
that there is an emergency medical condition (including items and 
services described in subparagraph (C)(iii));
                    (C) cover (and make reasonable payments for)--
                            (i) emergency services,
                            (ii) services that are not emergency 
                        services but are described in subparagraph (B),
                            (iii) medical screening examinations and 
                        other ancillary services necessary to diagnose, 
                        treat, and stabilize an emergency medical 
                        condition, and
                            (iv) urgent care services,
                without regard to whether the health care professional 
                or provider furnishing such services has a contractual 
                (or other) arrangement with the organization; and
                    (D) make prior authorization determinations for--
                            (i) services that are furnished in a 
                        hospital emergency department (other than 
                        services described in clauses (i) and (iii) of 
                        subparagraph (C)), and
                            (ii) urgent care services,
                within the time periods specified in (or pursuant to) 
                sections 9(c)(3) and 10(f).
            (2) Definitions.--For purposes of this subsection:
                    (A) Emergency medical condition.--The term 
                ``emergency medical condition'' means a medical 
                condition (including emergency labor and delivery) 
                manifesting itself by acute symptoms of sufficient 
                severity (including severe pain) such that a prudent 
                layperson, who possesses an average knowledge of health 
                and medicine, could reasonably expect that the absence 
                of immediate medical attention might result in--
                            (i) placing the patient's health in serious 
                        jeopardy,
                            (ii) serious impairment to bodily 
                        functions, or
                            (iii) serious dysfunction of any bodily 
                        organ or part.
                    (B) Emergency services.--The term ``emergency 
                services'' means health care items and services that 
                are necessary for the diagnosis, treatment, and 
                stabilization of an emergency medical condition.
                    (C) Urgent care services.--The term ``urgent care 
                services'' means health care items and services that 
                are necessary for the treatment of a condition that--
                    (i) is not an emergency medical condition,
                    (ii) requires prompt medical or clinical treatment, 
                and
                    (iii) poses a danger to the patient if not treated 
                in a timely manner, as defined by the Secretary in 
                consultation with relevant treating health care 
                professionals or providers.
    (e) Right to Referral to Nonparticipating Providers.--A managed 
care organization shall permit an enrollee to obtain a referral to a 
nonparticipating provider if the organization does not have a 
participating provider with appropriate training and experience to meet 
the enrollee's needs and shall pay for care provided pursuant to such a 
referral.
    (f) Access to Centers of Excellence for Individuals Requiring 
Specialized Care.--
            (1) In general.--Each managed care organization shall 
        demonstrate that enrollees who have chronic diseases or 
        otherwise require specialized services, as determined by the 
        primary care provider or treating specialist, have access 
        through the organization to specialized treatment expertise at 
        designated centers of excellence in order to provide adequate 
        and continuous care for such enrollees. Such an organization 
        shall demonstrate such access according to standards developed 
        by the Secretary, including requirements relating to 
        arrangements with such centers and referral of enrollees to 
        such centers.
            (2) Designation process.--The Secretary shall establish a 
        process for the designation of facilities as centers of 
        excellence for purposes of this subsection. A facility may not 
        be designated unless the facility is determined--
                    (A) to provide specialty care,
                    (B) to deliver care for complex cases requiring 
                specialized treatment or for individuals with chronic 
                diseases, and
                    (C) to meet other requirements that may be 
                established by the Secretary relating to specialized 
                education and training of health care professionals, 
                participation in peer-reviewed research, or treatment 
                of patients from outside the geographic area of the 
                facility.
    (g) Patient Access to Clinical Studies.--
            (1) Permitting participation in approved clinical 
        studies.--A managed care organization may not deny (or limit or 
        impose additional conditions on) coverage of items and services 
        furnished to an enrollee if--
                    (A) the enrollee is participating in an approved 
                clinical study,
                    (B) the items and services are furnished according 
                to the design of the study or to treat conditions 
                resulting from participation in the study, and
                    (C) the items and services would otherwise be 
                covered by the organization except for the fact that 
                they are provided in connection with participation in 
                such a study.
        Such an organization may not discriminate against an enrollee 
        on the basis of the enrollee's participation in such a study.
            (2) Construction.--Nothing in paragraph (1) shall be 
        construed as requiring an organization to provide for payment 
        for items and services routinely paid for as part of an 
        approved clinical study.
            (3) Approved clinical study defined.--For purposes of this 
        subsection, the term ``approved clinical study'' means--
                    (A) a research study approved by the Secretary, the 
                Director of the National Institutes of Health, the 
                Commissioner of the Food and Drug Administration, the 
                Secretary of Veterans Affairs, the Secretary of 
                Defense, or a qualified nongovernmental research entity 
                (as defined in guidelines of the National Institute of 
                Health), or
                    (B) a peer-reviewed and approved research program, 
                as defined by the Secretary, conducted for the primary 
                purpose of determining whether or not a treatment is 
                safe, efficacious, or having any other characteristic 
                of a treatment which must be demonstrated in order for 
                the treatment to be medically necessary or appropriate.
    (h) Access to Experimental Treatments.--A managed care organization 
shall provide access to experimental treatments in the case of 
enrollees who have a life-threatening disease or condition, when 
determined to be medically necessary and appropriate by the treating 
health care provider in consultation with the enrollee.
    (i) Requirements Regarding Use of Prescription Drug Formularies.--
            (1) In general.--A managed care organization shall provide 
        coverage for a prescribed drug, approved for dispensing by the 
        Food and Drug Administration, whether or not such drug is on a 
        prescription drug formulary used by the organization if the use 
        of such drug is judged to be medically necessary and 
        appropriate by the prescribing health care professional.
            (2) Not permitting changes in prescriptions.--No pharmacist 
        or health care facility shall change the prescription 
        prescribed by a health care provider, or change the drug 
        dispensed to carry out a prescription for an enrollee of a 
        managed care plan unless--
                    (A) the prescribing health care provider has 
                approved the change, and
                    (B) the enrollee has been informed and given 
                consent to the change.
            (3) Use of generics permitted.--Nothing in this subsection 
        shall be construed as preventing a managed care organization 
        from using medically approved generic drugs.

SEC. 5. ASSURING ADEQUATE SCOPE OF COVERAGE.

    (a) Coverage of Prescription Drugs, Preventive Services, and 
Inpatient and Outpatient Services.--A managed care organization, in 
offering coverage under a managed care plan, shall include coverage of 
prescription drugs, preventive services, and inpatient and outpatient 
services, and shall--
            (1) include coverage of annual screening mammography for 
        any female enrollee who is 40 years of age or older and for any 
        female enrollee who is less than 40 years of age and who has a 
        medical condition that makes such coverage medically necessary 
        and appropriate;
            (2) not restrict benefits for any hospital length of stay 
        in connection with--
                    (A) a mastectomy for the treatment of breast cancer 
                to less than 48 hours, or
                    (B) a lymph node dissection for the treatment of 
                breast cancer to less than 24 hours; and
            (3) not exclude or restrict benefits--
                    (A) for prescription contraceptive drugs or devices 
                approved by the Food and Drug Administration, or 
                generic equivalents approved as substitutable by the 
                Food and Drug Administration, or
                    (B) for outpatient contraceptive services 
                (including consultations, examinations, procedures, and 
                medical services, provided on an outpatient basis and 
                related to the use of contraceptive methods (including 
                natural family planning) to prevent an unintended 
                pregnancy).
    (b) Mental Health Parity.--A managed care organization, in offering 
a managed care plan, may not distinguish in the amount, duration, or 
scope of coverage under the plan among items and services based on 
whether the items and services relate to mental health (or treatment of 
mental illness or disease) or to physical health (or treatment of 
physical illness or disease).
    (c) Coverage of Services of Essential Community Providers.--
            (1) In general.--The Secretary may require a managed care 
        organization to enter into agreements with essential community 
        providers serving the organization's service area (in relation 
        to the coverage) to join the organization's provider network if 
        such Secretary finds that such agreements are necessary for the 
        organization to make contracted for services (A) available and 
        accessible to each enrollee, within the area served by the 
        organization (in relation to such coverage), with reasonable 
        promptness and in a manner which assures continuity, and (B) 
        when medically necessary, available and accessible 24 hours a 
day and 7 days a week.
            (2) Essential community provider defined.--For purposes of 
        paragraph (1), the term ``essential community provider'' means 
        a rural health clinic (described in paragraph (2) of section 
        1861(aa) of the Social Security Act, 42 U.S.C. 1395x(aa)), a 
        Federally qualified health center (described in paragraph (4) 
        of such section), and any other provider meeting such standards 
        as the Secretary may require.
    (d) Coverage of Emergency Services.--A managed care organization 
shall provide for coverage of emergency services (as defined in section 
4(d)(2)(B)), 24-hours a day, 7-days-a-week, without the need for any 
prior approval for coverage of such services.
    (e) Requirement for Point of Service Option.--A managed care 
organization that offers a managed care plan shall offer each enrollee 
an enrollment option under which the enrollee may receive benefits for 
services provided by nonparticipating health care professionals and 
providers. The organization may require that the enrollee pay a 
reasonable premium to reflect the cost of such option.
    (f) Requirement for Continuity of Care.--A managed care 
organization shall provide for continuity of care following enrollment, 
including appropriate continuity of care following termination of 
participation of a provider that is providing a course of treatment to 
an enrollee at the time of the termination.
    (g) Coverage of Consultation for Second Opinions.--A managed care 
organization shall provide enrollees with access to a consultation for 
a second opinion regarding treatment options.

SEC. 6. ASSURING UNBIASED MEDICAL DETERMINATIONS BY HEALTH CARE 
              PROFESSIONALS AND PROVIDERS.

    (a) Requiring Medical Determinations by Treating Professional.--A 
managed care organization may not deny payment for services covered 
under a managed care plan based upon the fact that the services are not 
medically necessary or appropriate with respect to an enrollee unless 
the determination is made solely by the health care professional 
treating the enrollee.
    (b) Prohibition of Certain Incentive Arrangements.--
            (1) In general.--No managed care organization shall offer 
        monetary rewards, penalties, or inducements (including varying 
        the amount of compensation) to a health care professional or 
        provider, or condition the initial or continued participation 
        of such a professional or provider in a managed care plan 
        offered by the organization, on the basis of the professional's 
        or provider's decision (or decisions) to reduce or limit the 
        availability of appropriate medical tests, services, or 
        treatment, on the basis of any utilization review decisions 
        relating to the professional or provider, or the number of 
        referrals, tests, or other procedures ordered or performed by 
        the professional or provider.
            (2) Penalty.--Any managed care organization, or executive 
        of such an organization, that knowingly offers a reward, 
        penalty, or inducement in violation of paragraph (1) shall be 
        fined in accordance with title 18, United States Code, 
        imprisoned for not more than 2 years, or both.
    (c) Prohibition of Interference With Certain Medical 
Communications.--
            (1) In general.--The provisions of any contract or 
        agreement, or the operation of any contract or agreement, 
        between a managed care organization and a health care 
        professional shall not prohibit or restrict the health care 
        professional from engaging in medical communications with a 
        patient of the professional.
            (2) Medical communication defined.--For purposes of this 
        subsection, the term ``medical communication'' means a 
        communication made by a health care professional with a patient 
        of the health care professional (or the guardian or legal 
        representative of the patient) with respect to--
                    (A) the patient's health status, medical care, or 
                treatment options;
                    (B) any utilization review requirements that may 
                affect treatment options for the patient; or
                    (C) any financial incentives that may affect the 
                treatment of the patient.
    (d) Whistleblower Protection.--
            (1) In general.--No managed care organization may discharge 
        or otherwise discriminate against any employee with respect to 
        compensation, terms, conditions, or privileges of employment 
        because the employee (or any person acting pursuant to the 
        request of the employee) provided information to a Federal or 
        State official with any enforcement responsibility or authority 
        concerning the provisions of this Act regarding a possible 
        violation of any provision of this Act, or any regulation under 
        any such provision, by the organization or any director, 
        officer, or employee of the organization.
            (2) Enforcement.--Any employee or former employee who 
        believes that such employee has been discharged or 
        discriminated against in violation of paragraph (1) may file a 
        civil action in the appropriate United States District Court 
        before the end of the 2-year period beginning on the date of 
        such discharge or discrimination.
            (3) Remedies.--If the District Court determines that a 
        violation has occurred, the court may order the organization 
        which committed the violation--
                    (A) to reinstate the employee to the employee's 
                former position;
                    (B) to pay compensatory damages; or
                    (C) to take other appropriate actions to remedy any 
                past discrimination.
            (4) Limitation.--The protections of this subsection shall 
        not apply to any employee who--
                    (A) deliberately causes or participates in the 
                alleged violation of law or regulation; or
                    (B) knowingly or recklessly provides substantially 
                false information to the Federal or State official 
                involved.
    (e) Protection of Advocacy Functions.--No managed care organization 
shall terminate, vary the compensation or working conditions, or refuse 
to renew a contract for participation with a health care professional 
because the professional has--
            (1) advocated on behalf of an enrollee,
            (2) filed a complaint against the organization,
            (3) appealed a decision of the organization,
            (4) provided information or filed a report with an 
        appropriate Federal or State official, or
            (5) requested a hearing or review pursuant to this Act.

SEC. 7. NONDISCRIMINATION AGAINST ENROLLEES AND IN THE SELECTION OF 
              PARTICIPATING PROVIDERS; EQUITABLE ACCESS TO NETWORKS.

    (a) Nondiscrimination Against Enrollees.--No managed care 
organization may discriminate (directly or through contractual 
arrangements) against any enrollee on the basis of age, gender, 
disability, health status, genetic information, or anticipated need for 
health services.
    (b) Nondiscrimination in Selection of Participating Health Care 
Professionals.--A managed care organization shall not discriminate in 
selecting participating health care professionals (or in establishing 
the terms and conditions for such participation) on the basis of--
            (1) the race, national origin, gender, age, or disability 
        (other than a disability that impairs the ability of an 
        individual to provide health care services or that may threaten 
        the health of enrollees) of the professional; or
            (2) the professional's lack of affiliation with, or 
        admitting privileges at, a hospital (unless such lack of 
        affiliation is a result of infractions of quality standards and 
        is not due to a professional's type of license).
    (c) Nondiscrimination in Access to Health Plans.--
            (1) In general.--Subject to paragraph (2), a managed care 
        organization shall not discriminate in participation, 
        reimbursement, or indemnification against a health care 
        professional, who is acting within the scope of the 
        professional's license or certification under applicable State 
        law, solely on the basis of such license or certification.
            (2) Construction.--Nothing in this subsection shall be 
        construed as a requirement to include for participation every 
        willing health care professional who meets the terms and 
        conditions of a managed care organization.

SEC. 8. DISCLOSURE OF INFORMATION.

    (a) Provision of Information and Orientation.--
            (1) General requirement.--A managed care organization 
        offering a managed care plan shall provide enrollees and, upon 
        request, prospective enrollees with written information 
        concerning the terms and conditions of the plan, including the 
        information described in subsection (c).
            (2) Information upon request.--In addition to the 
        information provided under subsection (c), a managed care 
        organization offering a managed care plan shall provide, upon 
        request of an enrollee or prospective enrollee, the information 
        described in subsection (d).
            (3) Requirement for initial information session.--
                    (A) In general.--Within 30 days of enrolling an 
                individual under a managed care plan, the managed care 
                organization shall provide for an in-person information 
                session with the enrollee for the purpose of outlining 
                the information described in this section.
                    (B) Payment.--Such a session shall be held with an 
                enrollee before the enrollee is required to pay for 
                services. This subparagraph shall not affect the 
                coverage of items and services under the plan 
                immediately upon the effective date of enrollment.
            (4) Comparative form.--The information provided under this 
        section shall be in a form, specified by the Secretary, so that 
        prospective enrollees may compare the attributes of all such 
        plans offered within a coverage area.
    (b) Understandability.--Information provided under this section, 
whether written or oral shall be easily understandable, truthful, 
linguistically appropriate and objective with respect to the terms 
used.
    (c) Required Information.--Information required under subsection 
(a)(1) shall include information concerning each of the following:
            (1) Coverage and benefits.--Coverage provisions, benefits, 
        and any exclusions by category of service or product, including 
        24-hour coverage of emergency services without a requirement 
        for prior approval.
            (2) Prior authorization requirements.--Prior authorization 
        requirements for coverage of benefits.
            (3) Utilization review policies.--Utilization review 
        procedures and policies (including preauthorization review, 
        concurrent review, post-service review, post-payment review 
        procedures that may lead an enrollee to be denied coverage for 
        or not be provided a particular service or product), including 
        time frames for review decisions and enrollee rights relating 
        to notice, reconsideration, and appeal of utilization review 
        decisions, and including information on the percentage of 
        utilization review determinations that disagree with the 
        judgment of the initial treating health care professional and 
        the percentage of such determinations which are reversed 
        (whether internally or externally) on appeal.
            (4) Payment methods.--Types of methodologies used by the 
        organization to reimburse types of providers or for types of 
        services.
            (5) Enrollee financial responsibilities.--Enrollees' 
        financial responsibility for services, including any variation 
        in the responsibility based on whether the provider is a 
        participating provider.
            (6) Grievance procedures.--Grievance procedures.
            (7) Provider selection procedures.--Procedures used by 
        enrollees to select and change primary and specialty providers 
        and to be referred to nonparticipating providers and 
        appropriate specialists, consistent with the requirements of 
        this Act.
            (8) Enrollee participation in policy development.--
        Procedures which enrollees may use to participate in 
        development of policy of the organization.
            (9) Procedures for non-english proficient enrollees.--
        Procedures which the organization has established to meet the 
        needs of enrollees who are not proficient in English.
            (10) Information.--An address and phone number at which 
        enrollees and prospective enrollees can obtain information 
        about the organization and managed care plans offered by the 
        organization.
            (11) List of contract facilities.--A list, annually 
        updated, of the facilities and providers, by specialty, through 
        which the organization provides its benefits. For each such 
        facility or provider the list shall include the name, address, 
        phone number, and (in the case of a physician) board 
        certification.
            (12) Non-health care expenditures.--A statement of the 
        percentage of health-care related revenues of the organization 
        used for administration, the percentage of such revenues used 
        for marketing, and the percentage of such revenues attributable 
        to profit.
            (13) Enrollee satisfaction.--Statistics on enrollee 
        satisfaction, stated separately for those who continue 
        enrollment and those who discontinue enrollment, and on the 
        proportion of enrollees who disenroll.
            (14) Availability of providers; provider incentives.--The 
        characteristics and availability of participating health care 
        providers and professionals, including a description of any 
        financial or contractual arrangements with hospitals, 
        utilization review organizations, physicians, or other health 
        care providers or professionals that would affect the services 
        offered, referral or treatment options, or providers' fiduciary 
        responsibility to patients, including any financial or other 
        incentives regarding the provision, denial, or limitation of 
        needed services.
            (15) Quality indicators.--Indicators that measure the 
        quality of services provided by the organization and by 
        participating health providers with the organization, including 
        population-based statistics such as immunization rates and 
        performance measures such as survival after surgery, adjusted 
        for case mix.
            (16) Physician credentialing standards.--Standards used by 
        the organization in the credentialing of participating 
        physicians.
            (17) Formularies.--Information on prescription drug 
        formularies used by the organization, consistent with section 
        4(i).
            (18) Loss-ratio.--Its loss-ratio.
    (d) Information Supplied Upon Request.--For purposes of subsection 
(a)(2), the information described in this subsection concerning a 
managed care organization offering a managed care plan is as follows:
            (1) Annual financial statement.--The most recent annual 
        financial statement of the organization.
            (2) Subscriber contract.--A copy of the most recent 
        individual, direct pay subscriber contract, or, in the case of 
        a group health plan, any contract between the plan and a health 
        insurance issuer providing coverage under the plan.
            (3) Consumer complaints.--Information relating to consumer 
        complaints compiled pursuant to insurance or other law.
            (4) Charges and benefits for services.--Information on the 
        enrollee charges for all covered items and services, including, 
        for the point of service option described in section 5(e), the 
        amounts that are payable with respect to items and services 
        furnished by nonparticipating health care professionals and 
        providers.
            (5) Confidentiality of medical records.--Information on the 
        procedures used by the organization to protect the 
        confidentiality of medical records maintained in relation to 
        enrollees.
            (6) Quality assurance programs.--A description of quality 
        assurance programs maintained by the organization in relation 
        to the plan.
            (7) Coverage of experimental or investigational drugs.--A 
        description of procedures used by the organization to determine 
        whether drugs, devices, or treatments in clinical trials are 
        experimental or investigational.
            (8) Provider affiliations.--Information on affiliations of 
        participating health care professionals with participating 
        hospitals.
            (9) Clinical review criteria.--Upon written request, a 
        description of the specific clinical written review criteria 
        relating to a particular condition or disease and how such 
        criteria are used.
            (10) Participation procedures and qualifications.--A 
        description of the written application procedures and 
        qualification requirements for providers to be considered for 
        participation under the plan.
            (11) Officials.--A list of the names, business addresses, 
        and official positions of the membership of the board of 
        directors, officers, or persons with an ownership or control 
        interest in the organization.
    (e) Notice of Termination of Providers.--A managed care 
organization shall provide written notice to each enrollee within 15 
business days of the date that the organization is aware that the 
participation of a health care provider, that is currently in a course 
of treating the enrollee, is being withdrawn or terminated. The 
organization shall include in such notice the procedures under section 
5(f) for the enrollee to continue to receive care from the provider.

SEC. 9. GRIEVANCE PROCEDURES AND DEADLINE FOR RESPONDING TO REQUESTS 
              FOR COVERAGE OF SERVICES.

    (a) Grievance Procedures.--A managed care organization shall 
provide meaningful procedures for hearing and resolving grievances 
between the organization (or any entity or individual through which the 
organization provides health care services) and its enrollees.
    (b) Details.--The procedures provided under subsection (a) shall 
include--
            (1) recorded (written or otherwise) procedures for 
        registering and responding to complaints and grievances in a 
        timely manner;
            (2) documentation concerning the substance of complaints, 
        grievances, and actions taken concerning such complaints and 
        grievances, which shall be in writing;
            (3) procedures to ensure a resolution of a complaint or 
        grievance;
            (4) the compilation and analysis of complaint and grievance 
        data;
            (5) procedures to expedite the complaint process if the 
        complaint involves a dispute about the coverage of an 
        immediately and urgently needed service; and
            (6) procedures to ensure that if an enrollee orally 
        notifies the organization about a complaint, the organization 
        (if requested) must send the enrollee a complaint form that 
        includes the telephone numbers and addresses of member 
        services, and a description of the organization's grievance 
        procedure.
The Secretary may establish deadlines for the complaint procedures 
under paragraph (5) in order to ensure timely resolution of disputes 
involving immediately and urgently needed services.
    (c) Appeals Process.--Each managed care organization shall adopt an 
appeals process to enable enrollees to appeal decisions that are 
adverse to them. Such a process shall include--
            (1) the right to a review by a grievance panel composed of 
        clinical peer professionals who are in the same or similar 
        specialty or field that would provide the item or service 
        involved in the grievance;
            (2) the right to a second review with a different panel 
        that is independent of the organization and that is composed of 
        clinical peer professionals who are in the same or similar 
        specialty or field that would provide the item or service 
        involved in the grievance, or to a review through an impartial 
        arbitration process which shall be described in writing by the 
        organization;
            (3) a process for completion of review in the case of 
        urgent or emergency care services within 24 hours; and
            (4) covering the costs of all appeals and not imposing any 
        such costs on an enrollee.
The Secretary shall develop guidelines for the structure and 
requirements applicable to the independent review panel and impartial 
arbitration process described in paragraph (2).
    (d) Written Decision.--With respect to the complaint, grievance, 
and appeals processes required under this section, the organization 
shall, upon the request of an enrollee, provide the enrollee a written 
decision concerning a complaint, grievance, or appeal in a timely 
manner consistent with subsections (c)(3) and (f).
    (e) Construction.--The complaint, grievance, and appeals processes 
established in accordance with this section may not be used in any 
fashion to discourage or prevent an enrollee from receiving medically 
necessary care in a timely manner.
    (f) Prompt Response to Requests for Services.--In addition to the 
procedures available pursuant to the previous provisions of this 
section, in the case of the request of an enrollee with a managed care 
organization--
            (1) the organization shall respond to the request not later 
        than 24 hours after the request is made; and
            (2) the organization shall hear and resolve the enrollee's 
        appeal of a denial of coverage of such services in accordance 
        with a process meeting standards established by the Secretary.

SEC. 10. DUE PROCESS FOR HEALTH CARE PROFESSIONALS AND PROVIDERS.

    (a) In General.--A managed care organization shall--
            (1) allow all health care professionals and providers in 
        its service area to apply to become a participating health care 
        professional or provider during at least one period in each 
        calendar year;
            (2) provide reasonable notice to such health care 
        professionals and providers of the opportunity to apply and of 
        the period during which applications are accepted;
            (3) provide for review of each application by a 
        credentialing committee with appropriate representation of the 
        category or type of health care professional or provider;
            (4) select participating health care professionals and 
        providers based on objective standards of quality developed 
        with the suggestions and advice of professional associations, 
        health care professionals, and providers;
            (5) make such selection standards available to--
                    (A) those applying to become a participating 
                provider or health care professional,
                    (B) health plan purchasers, and
                    (C) enrollees;
            (6) when economic considerations are taken into account in 
        selecting participating health care professionals and 
        providers, use objective criteria that are available to those 
        applying to become a participating provider or health care 
        professional and enrollees;
            (7) adjust any economic profiling to take into account 
        patient characteristics (such as severity of illness) that may 
        result in atypical utilization of services;
            (8) make the results of such profiling available to 
        insurance purchasers, enrollees, and the health care 
        professional or provider involved;
            (9) notify any health care professional or provider being 
        reviewed under the process referred to in paragraph (3) of any 
        information indicating that the health care professional or 
        provider fails to meet the standards of the organization;
            (10) offer a health care professional or provider receiving 
        notice pursuant to the requirement of paragraph (9) with an 
        opportunity to--
                    (A) review the information referred to in such 
                paragraph, and
                    (B) submit supplemental or corrected information;
            (11) not include in its contracts with participating health 
        care professionals and providers a provision permitting the 
        organization to terminate the contract ``without cause'';
            (12) provide a due process appeal that conforms to the 
        process specified in section 412 of the Health Care Quality 
        Improvement Act of 1986 (42 U.S.C. 11112) for all 
        determinations that are adverse to a health care professional 
        or provider; and
            (13) unless a health care professional or provider poses an 
        imminent harm to enrollees or an adverse action by a 
        governmental agency effectively impairs the ability to provide 
        health care items and services, provide--
                    (A) reasonable notice of any decision to terminate 
                a health care professional or provider ``for cause'' 
                (including an explanation of the reasons for the 
                determination),
                    (B) an opportunity to review and discuss all of the 
                information on which the determination is based, and
                    (C) an opportunity to enter into a corrective 
                action plan, before the determination becomes subject 
                to appeal under the process referred to in paragraph 
                (12).
    (b) Limitation on Use of Non-compete Clauses.--A managed care 
organization may not (directly or indirectly) seek to enforce any 
contractual provision which prevents a health care professional or 
provider whose contractual obligations to the organization for the 
provision of services through the organization have ended from joining 
or forming any competing managed care organization, whether or not the 
organization serves the same geographic area.
    (c) Equal Compensation Arrangements.--
            (1) In general.--Subject to paragraph (2), a managed care 
        organization shall provide for comparable payment for all 
health care professionals and providers in the same field or specialty 
located in the same geographic area.
            (2) Adjustments authorized.--A managed care organization 
        may adjust the amount of compensation among professionals and 
        providers for experience and other relevant factors, including 
        bonus payments that reflect quality factors, such as enrollee 
        satisfaction and medical chart reviews, unless such payments 
        are based solely on cost-effectiveness of services provided.
    (d) Rule of Construction.--The requirements of subsection (a) shall 
not be construed as preempting or superseding any other reviews and 
appeals a managed care organization is required by law to make 
available.

SEC. 11. REQUIREMENTS FOR QUALITY IMPROVEMENT PROGRAM AND UTILIZATION 
              REVIEW PROGRAMS.

    (a) Quality Improvement Program.--
            (1) In general.--A managed care organization shall 
        establish a quality improvement program (consistent with 
        paragraph (2)) that systematically and continuously assesses 
        and improves--
                    (A) enrollee health status, patient outcomes, 
                processes of care, and enrollee satisfaction associated 
                with health care provided by the organization; and
                    (B) the administrative and funding capacity of the 
                organization to support and emphasize preventive care, 
                utilization, access and availability, cost 
                effectiveness, acceptable treatment modalities, 
                specialists referrals, the peer review process, and the 
                efficiency of the administrative process.
            (2) Functions.--A quality improvement program established 
        pursuant to paragraph (1) shall--
                    (A) assess the performance of the organization and 
                its participating health care professionals and 
                providers and report the results of such assessment to 
                purchasers, participating health care professionals and 
                providers, and administrative personnel;
                    (B) demonstrate measurable improvements in clinical 
                outcomes and plan performance measured by identified 
                criteria, including those specified in paragraph 
                (1)(A); and
                    (C) analyze quality assessment data to determine 
                specific interactions in the delivery system (both the 
                design and funding of the health care coverage and the 
                clinical provision of care) that have an adverse impact 
                on the quality of care.
    (b) Utilization Review.--The utilization review program of a 
managed care organization shall--
            (1) be developed (including any screening criteria used by 
        such program) with the involvement of participating health 
        professionals and providers;
            (2) to the extent consistent with the protection of 
        proprietary business information (as defined for purposes of 
        section 552 of title 5, United States Code) release, upon 
        request, to affected health professionals, providers, and 
        enrollees the screening criteria, weighting elements, and 
        computer algorithms used in reviews and a description of the 
        method by which they were developed;
            (3) uniformly apply review criteria that are based on sound 
        scientific principles and the most recent medical evidence;
            (4) use licensed, accredited, or certified health 
        professionals to make review determinations (and for services 
        requiring specialized training for their delivery, use a health 
        professional who is qualified through equivalent specialized 
        training and experience);
            (5) subject to reasonable safeguards, disclose to health 
        professionals and providers, upon request, the names and 
        credentials of individuals conducting utilization review;
            (6) not compensate individuals conducting utilization 
        review for denials of payment or coverage of benefits;
            (7) comply with the requirement of section 4(d)(1) that 
        prior authorization not be required for emergency and related 
        services furnished in a hospital emergency department;
            (8) make prior authorization determinations--
                    (A) in the case of services that are urgent care 
                services described in section 4(d)(2)(C), within 30 
                minutes of a request for such determination, and
                    (B) in the case of other services, within 24 hours 
                after the time of a request for determination;
            (9) include in any notice of such determination an 
        explanation of the basis of the determination and the right to 
        an immediate appeal;
            (10) treat a favorable prior authorization review 
        determination as a final determination for purposes of making 
        payment for a claim submitted for the item or service involved 
unless such determination was based on false information knowingly 
supplied by the person requesting the determination;
            (11) provide timely access, as defined by the applicable 
        State authority, to utilization review personnel and, if such 
        personnel are not available, waives any prior authorization 
        that would otherwise be required; and
            (12) provide notice of an initial determination on payment 
        of a claim within 30 days after the date the claim is submitted 
        for such item or service, and include in such notice an 
        explanation of the reasons for such determination and of the 
        right to an immediate appeal.

SEC. 12. MINIMUM LOSS RATIOS; GENERAL CONSUMER PROTECTIONS.

    (a) Minimum Loss Ratio.--The loss-ratio (as defined by the 
Secretary) for a managed care organization shall not be less than 85 
percent with respect to managed care plans it offers.
    (b) Participation in Policy Development.--A managed care 
organization shall have a procedure whereby enrollees may participate 
in the development of policies of the organization.
    (c) Needs of Non-English Proficient Enrollees.--A managed care 
organization shall have procedures for addressing the needs of 
enrollees who are not proficient in English.
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