[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3469 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3469

To amend the Public Health Service Act, the Employee Retirement Income 
Security Act of 1974, and the Internal Revenue Code of 1986 to require 
 that group and individual health insurance coverage and group health 
       plans provide for external appeals in the case of adverse 
determinations involving experimental treatment, significant costs, or 
                      a serious medical condition.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 17, 1998

  Mr. Cardin introduced the following bill; which was referred to the 
 Committee on Commerce, and in addition to the Committees on Education 
and the Workforce, and Ways and Means, 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 amend the Public Health Service Act, the Employee Retirement Income 
Security Act of 1974, and the Internal Revenue Code of 1986 to require 
 that group and individual health insurance coverage and group health 
       plans provide for external appeals in the case of adverse 
determinations involving experimental treatment, significant costs, or 
                      a serious medical condition.

    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 ``Patient Right to Independent Appeal 
Act of 1998''.

SEC. 2. EXTERNAL APPEALS PROCESS FOR HEALTH PLANS.

    (a) Group Health Plans.--
            (1) Public health service act amendments.--(A) Subpart 2 of 
        part A of title XXVII of the Public Health Service Act is 
        amended by adding at the end the following new section:

``SEC. 2706. EXTERNAL APPEALS OF ADVERSE DETERMINATIONS.

    ``(a) Right to External Appeal.--
            ``(1) In general.--A group health plan, and a health 
        insurance issuer offering group health insurance coverage, 
        shall provide for an external appeals process that meets the 
        requirements of this section in the case of an externally 
        appealable decision described in paragraph (2). The Secretary 
        shall establish standards to carry out such requirements.
            ``(2) Externally appealable decision defined.--For purposes 
        of this section, the term `externally appealable decision' 
        means a benefit denial, reduction, or termination of, or 
        failure to provide or make, payment (in whole or in part) for, 
        a benefit (including a denial of choice of provider to the 
        extent such a choice is permitted under a plan), if--
                    ``(A) the denial or failure involves a 
                determination that a treatment is experimental or 
                investigational in nature;
                    ``(B) the denial or failure is based on a 
                determination that services are not medically necessary 
                or appropriate and the amount involved exceeds a 
                significant threshold; or
                    ``(C) the patient's life or health is jeopardized 
                as a consequence of the denial or failure.
        Such term does not include a denial of (or failure to provide) 
        coverage for services that are specifically stated in plan or 
        coverage documents as an exclusion from coverage.
            ``(3) Conditioning appeal on internal appeals process.--A 
        plan or issuer may condition the use of an external appeal 
        process in the case of an externally appealable decision upon 
        completion of an internal review process but only if the 
        internal review process provides for a determination on the 
        decision in accordance with the medical exigencies of the case 
        involved, but in no event later than 15 business days (or 72 
        hours in the case of a decision involving emergency or urgent 
        care) of the time of the filing of the request for the internal 
        review.
    ``(b) General Elements of Process.--
            ``(1) Contract with qualified external appeal entity.--
                    ``(A) Contract requirement.--Subject to 
                subparagraph (B), the external appeal process under 
                this section of a plan or issuer shall be conducted 
                under a contract between the plan or issuer and one or 
                more qualified external appeal entities (as defined in 
                subsection (c)).
                    ``(B) Restrictions on qualified external appeal 
                entity.--
                            ``(i) By state for health insurance 
                        issuers.--With respect to health insurance 
                        issuers in a State, the State may provide for 
                        external review activities to be conducted by a 
                        qualified external appeal entity that is 
                        designated by the State or that is selected by 
                        the State in such a manner as to assure an 
                        unbiased determination.
                            ``(ii) By federal government for group 
                        health plans.--With respect to group health 
                        plans, the Secretary may exercise the same 
                        authority as a State may exercise with respect 
                        to health insurance issuers under clause (i). 
                        Such authority may include requiring the use of 
                        the qualified external appeal entity designated 
                        or selected under such clause.
                            ``(iii) Limitation on plan or issuer 
                        selection.--If a State or the Secretary under 
                        this subparagraph permits more than one entity 
                        to qualify as a qualified external appeal 
                        entity with respect to a group health plan or 
                        health insurance issuer and the plan or issuer 
                        may select among such qualified entities, the 
                        State or Secretary shall assure that the 
                        selection process will not create any 
                        incentives for external appeal entities to make 
                        a decision in a biased manner.
                    ``(C) Other terms and conditions.--The terms and 
                conditions of a contract under this paragraph shall be 
                consistent with the standards the Secretary shall 
                establish to assure there is no real or apparent 
                conflict of interest in the conduct of external appeal 
                activities. Such contract shall provide that the direct 
                costs of the process (not including costs of 
                representation of a participant, beneficiary, or 
                enrollee) shall be paid by the plan or issuer, and not 
                by the participant, beneficiary, or enrollee.
            ``(2) Elements of process.--An external appeal process 
        shall be conducted consistent with standards established by the 
        Secretary that include at least the following:
                    ``(A) Fair process; de novo determination.--The 
                process shall provide for a fair, de novo 
                determination.
                    ``(B) Determination concerning externally 
                appealable decisions.--A qualified external appeal 
                entity shall determine whether a decision is an 
                externally appealable decision and related decisions, 
                including--
                            ``(i) whether such a decision involves 
                        emergency or urgent care,
                            ``(ii) the appropriate deadlines for 
                        internal review process required due to medical 
                        exigencies in a case, and
                            ``(iii) whether such a process has been 
                        completed.
                    ``(C) Opportunity to submit evidence, have 
                representation, and make oral presentation.--Each party 
                to an externally appealable decision--
                            ``(i) may submit and review evidence 
                        related to the issues in dispute,
                            ``(ii) may use the assistance or 
                        representation of one or more individuals (any 
                        of whom may be an attorney), and
                            ``(iii) may make an oral presentation.
                    ``(D) Provision of information.--The plan or issuer 
                involved shall provide timely access to all its records 
                relating to the matter of the externally appealable 
                decision and to all provisions of the plan or health 
                insurance coverage (including any coverage manual) 
                relating to the matter.
                    ``(E) Timely decisions.--A determination by the 
                external appeal entity on the decision shall--
                            ``(i) be made orally or in writing and, if 
                        it is made orally, shall be supplied to the 
                        parties in writing as soon as possible;
                            ``(ii) be binding on the plan or issuer;
                            ``(iii) be made in accordance with the 
                        medical exigencies of the case involved, but in 
                        no event later than 60 days (or 72 hours in the 
                        case of an externally appealable decision 
                        involving emergency or urgent care) from the 
                        date of completion of the filing of notice of 
                        external appeal of the decision;
                            ``(iv) state, in layperson's language, the 
                        basis for the determination, including, if 
                        relevant, any basis in the terms or conditions 
                        of the plan or coverage; and
                            ``(v) inform the enrollee of the enrollee's 
                        rights to seek further review by the courts (or 
                        other process) of the external appeal 
                        determination.
    ``(c) Qualifications of External Appeal Entities.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified external appeal entity' means, in relation to a plan 
        or issuer, an entity (which may be a governmental entity) that 
        is certified under paragraph (2) as meeting the following 
        requirements:
                    ``(A) There is no real or apparent conflict of 
                interest that would impede the entity conducting 
                external appeal activities independent of the plan or 
                issuer.
                    ``(B) The entity conducts external appeal 
                activities through clinical peers.
                    ``(C) The entity has sufficient medical, legal, and 
                other expertise and sufficient staffing to conduct 
                external appeal activities for the plan or issuer on a 
                timely basis consistent with subsection (b)(3)(E)(ii).
                    ``(D) The entity meets such other requirements as 
                the Secretary may impose.
            ``(2) Certification of external appeal entities.--
                    ``(A) In general.--In order to be treated as a 
                qualified external appeal entity with respect to--
                            ``(i) a group health plan, the entity must 
                        be certified (and, in accordance with 
                        subparagraph (B), periodically recertified) as 
                        meeting the requirements of paragraph (1) by 
                        the Secretary of Labor (or under a process 
                        recognized or approved by the Secretary of 
                        Labor); or
                            ``(ii) a health insurance issuer operating 
                        in a State, the entity must be certified (and, 
                        in accordance with subparagraph (B), 
                        periodically recertified) as meeting such 
                        requirements by the applicable State authority 
                        (or, if the States has not established an 
                        adequate certification and recertification 
                        process, by the Secretary of Health and Human 
                        Services, or under a process recognized or 
                        approved by such Secretary).
                    ``(B) Recertification process.--The Secretary shall 
                develop standards for the recertification of external 
                appeal entities. Such standards shall include a 
                specification of--
                            ``(i) the information required to be 
                        submitted as a condition of recertification on 
                        the entity's performance of external appeal 
                        activities, which information shall include the 
                        number of cases reviewed, a summary of the 
                        disposition of those cases, the length of time 
                        in making determinations on those cases, and 
                        such information as may be necessary to assure 
                        the independence of the entity from the plans 
                        or issuers for which external appeal activities 
                        are being conducted; and
                            ``(ii) the periodicity which 
                        recertification will be required.
            ``(3) Clinical peer defined.--For purposes of this 
        subsection, the term `clinical peer' means, with respect to an 
        appeal, a physician (allopathic or osteopathic) or other health 
        care professional who holds a non-restricted license in a State 
        and who is appropriately credentialed in the same or similar 
        specialty as typically manages the medical condition, 
        procedure, or treatment under appeal and includes a pediatric 
        specialist where appropriate.
    ``(d) Continuing Legal Rights of Enrollees.--Nothing in this 
section shall be construed as removing any legal rights of 
participants, beneficiaries, enrollees, and others under State or 
Federal law, including the right to file judicial actions to enforce 
rights.
    ``(e) Notice.--A group health plan under this part shall comply 
with the notice requirement under section 713(e) of the Employee 
Retirement Income Security Act of 1974 with respect to the requirements 
of this section as if such section applied to such plan.''.
            (B) Section 2723(c) of such Act (42 U.S.C. 300gg-23(c)), as 
        amended by section 604(b)(2) of Public Law 104-204, is amended 
        by striking ``section 2704'' and inserting ``sections 2704 and 
        2706''.
            (2) ERISA amendments.--(A) Subpart B of part 7 of subtitle 
        B of title I of the Employee Retirement Income Security Act of 
        1974 is amended by adding at the end the following new section:

``SEC. 713. EXTERNAL APPEALS OF ADVERSE DETERMINATIONS.

    ``(a) Right to External Appeal.--
            ``(1) In general.--A group health plan, and a health 
        insurance issuer offering group health insurance coverage, 
        shall provide for an external appeals process that meets the 
        requirements of this section in the case of an externally 
        appealable decision described in paragraph (2). The Secretary 
        shall establish standards to carry out such requirements.
            ``(2) Externally appealable decision defined.--For purposes 
        of this section, the term `externally appealable decision' 
        means a benefit denial, reduction, or termination of, or 
        failure to provide or make, payment (in whole or in part) for, 
        a benefit (including a denial of choice of provider to the 
        extent such a choice is permitted under a plan), if--
                    ``(A) the denial or failure involves a 
                determination that a treatment is experimental or 
                investigational in nature;
                    ``(B) the denial or failure is based on a 
                determination that services are not medically necessary 
                or appropriate and the amount involved exceeds a 
                significant threshold; or
                    ``(C) the patient's life or health is jeopardized 
                as a consequence of the denial or failure.
        Such term does not include a denial of (or failure to provide) 
        coverage for services that are specifically stated in plan or 
        coverage documents as an exclusion from coverage.
            ``(3) Conditioning appeal on internal appeals process.--A 
        plan or issuer may condition the use of an external appeal 
        process in the case of an externally appealable decision upon 
        completion of an internal review process but only if the 
        internal review process provides for a determination on the 
        decision in accordance with the medical exigencies of the case 
        involved, but in no event later than 15 business days (or 72 
        hours in the case of a decision involving emergency or urgent 
        care)of the time of the filing of the request for the internal 
        review.
    ``(b) General Elements of Process.--
            ``(1) Contract with qualified external appeal entity.--
                    ``(A) Contract requirement.--Subject to 
                subparagraph (B), the external appeal process under 
                this section of a plan or issuer shall be conducted 
                under a contract between the plan or issuer and one or 
                more qualified external appeal entities (as defined in 
                subsection (c)).
                    ``(B) Restrictions on qualified external appeal 
                entity.--
                            ``(i) By state for health insurance 
                        issuers.--With respect to health insurance 
                        issuers in a State, the State may provide for 
                        external review activities to be conducted by a 
                        qualified external appeal entity that is 
                        designated by the State or that is selected by 
                        the State in such a manner as to assure an 
                        unbiased determination.
                            ``(ii) By federal government for group 
                        health plans.--With respect to group health 
                        plans, the Secretary may exercise the same 
                        authority as a State may exercise with respect 
                        to health insurance issuers under clause (i). 
                        Such authority may include requiring the use of 
                        the qualified external appeal entity designated 
                        or selected under such clause.
                            ``(iii) Limitation on plan or issuer 
                        selection.--If a State or the Secretary under 
                        this subparagraph permits more than one entity 
                        to qualify as a qualified external appeal 
                        entity with respect to a group health plan or 
                        health insurance issuer and the plan or issuer 
                        may select among such qualified entities, the 
                        State or Secretary shall assure that the 
                        selection process will not create any 
                        incentives for external appeal entities to make 
                        a decision in a biased manner.
                    ``(C) Other terms and conditions.--The terms and 
                conditions of a contract under this paragraph shall be 
                consistent with the standards the Secretary shall 
                establish to assure there is no real or apparent 
                conflict of interest in the conduct of external appeal 
                activities. Such contract shall provide that the direct 
                costs of the process (not including costs of 
                representation of a participant, beneficiary, or 
                enrollee) shall be paid by the plan or issuer, and not 
                by the participant, beneficiary, or enrollee.
            ``(2) Elements of process.--An external appeal process 
        shall be conducted consistent with standards established by the 
        Secretary that include at least the following:
                    ``(A) Fair process; de novo determination.--The 
                process shall provide for a fair, de novo 
                determination.
                    ``(B) Determination concerning externally 
                appealable decisions.--A qualified external appeal 
                entity shall determine whether a decision is an 
                externally appealable decision and related decisions, 
                including--
                            ``(i) whether such a decision involves 
                        emergency or urgent care,
                            ``(ii) the appropriate deadlines for 
                        internal review process required due to medical 
                        exigencies in a case, and
                            ``(iii) whether such a process has been 
                        completed.
                    ``(C) Opportunity to submit evidence, have 
                representation, and make oral presentation.--Each party 
                to an externally appealable decision--
                            ``(i) may submit and review evidence 
                        related to the issues in dispute,
                            ``(ii) may use the assistance or 
                        representation of one or more individuals (any 
                        of whom may be an attorney), and
                            ``(iii) may make an oral presentation.
                    ``(D) Provision of information.--The plan or issuer 
                involved shall provide timely access to all its records 
                relating to the matter of the externally appealable 
                decision and to all provisions of the plan or health 
                insurance coverage (including any coverage manual) 
                relating to the matter.
                    ``(E) Timely decisions.--A determination by the 
                external appeal entity on the decision shall--
                            ``(i) be made orally or in writing and, if 
                        it is made orally, shall be supplied to the 
                        parties in writing as soon as possible;
                            ``(ii) be binding on the plan or issuer;
                            ``(iii) be made in accordance with the 
                        medical exigencies of the case involved, but in 
                        no event later than 60 days (or 72 hours in the 
                        case of an externally appealable decision 
                        involving emergency or urgent care) from the 
                        date of completion of the filing of notice of 
                        external appeal of the decision;
                            ``(iv) state, in layperson's language, the 
                        basis for the determination, including, if 
                        relevant, any basis in the terms or conditions 
                        of the plan or coverage; and
                            ``(v) inform the enrollee of the enrollee's 
                        rights to seek further review by the courts (or 
other process) of the external appeal determination.
    ``(c) Qualifications of External Appeal Entities.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified external appeal entity' means, in relation to a plan 
        or issuer, an entity (which may be a governmental entity) that 
        is certified under paragraph (2) as meeting the following 
        requirements:
                    ``(A) There is no real or apparent conflict of 
                interest that would impede the entity conducting 
                external appeal activities independent of the plan or 
                issuer.
                    ``(B) The entity conducts external appeal 
                activities through clinical peers.
                    ``(C) The entity has sufficient medical, legal, and 
                other expertise and sufficient staffing to conduct 
                external appeal activities for the plan or issuer on a 
                timely basis consistent with subsection (b)(3)(E)(ii).
                    ``(D) The entity meets such other requirements as 
                the Secretary may impose.
            ``(2) Certification of external appeal entities.--
                    ``(A) In general.--In order to be treated as a 
                qualified external appeal entity with respect to--
                            ``(i) a group health plan, the entity must 
                        be certified (and, in accordance with 
                        subparagraph (B), periodically recertified) as 
                        meeting the requirements of paragraph (1) by 
                        the Secretary of Labor (or under a process 
                        recognized or approved by the Secretary of 
                        Labor); or
                            ``(ii) a health insurance issuer operating 
                        in a State, the entity must be certified (and, 
                        in accordance with subparagraph (B), 
                        periodically recertified) as meeting such 
                        requirements by the applicable State authority 
                        (or, if the States has not established an 
                        adequate certification and recertification 
                        process, by the Secretary of Health and Human 
                        Services, or under a process recognized or 
                        approved by such Secretary).
                    ``(B) Recertification process.--The Secretary shall 
                develop standards for the recertification of external 
                appeal entities. Such standards shall include a 
                specification of--
                            ``(i) the information required to be 
                        submitted as a condition of recertification on 
                        the entity's performance of external appeal 
                        activities, which information shall include the 
                        number of cases reviewed, a summary of the 
                        disposition of those cases, the length of time 
                        in making determinations on those cases, and 
                        such information as may be necessary to assure 
                        the independence of the entity from the plans 
                        or issuers for which external appeal activities 
                        are being conducted; and
                            ``(ii) the periodicity which 
                        recertification will be required.
            ``(3) Clinical peer defined.--For purposes of this 
        subsection, the term `clinical peer' means, with respect to an 
        appeal, a physician (allopathic or osteopathic) or other health 
        care professional who holds a non-restricted license in a State 
        and who is appropriately credentialed in the same or similar 
        specialty as typically manages the medical condition, 
        procedure, or treatment under appeal and includes a pediatric 
        specialist where appropriate.
    ``(d) Continuing Legal Rights of Enrollees.--Nothing in this 
section shall be construed as removing any legal rights of 
participants, beneficiaries, enrollees, and others under State or 
Federal law, including the right to file judicial actions to enforce 
rights.
    ``(e) Notice under Group Health Plan.--The imposition of the 
requirement of this section shall be treated as a material modification 
in the terms of the plan described in section 102(a)(1), for purposes 
of assuring notice of such requirements under the plan; except that the 
summary description required to be provided under the last sentence of 
section 104(b)(1) with respect to such modification shall be provided 
by not later than 60 days after the first day of the first plan year in 
which such requirement apply.''.
            (B) Section 731(c) of such Act (29 U.S.C. 1191(c)) is 
        amended by striking ``section 711'' and inserting ``sections 
        711 and 713''.
            (C) Section 732(a) of such Act (29 U.S.C. 1191a(a)) is 
        amended by striking ``section 711'' and inserting ``sections 
        711 and 713''.
            (D) The table of contents in section 1 of such Act is 
        amended by inserting after the item relating to section 712 the 
        following new item:

``Sec. 713. External appeals of adverse determinations.''.
            (3) Internal revenue code amendments.--Subchapter B of 
        chapter 100 of the Internal Revenue Code of 1986 (as amended by 
        section 1531(a) of the Taxpayer Relief Act of 1997) is 
        amended--
                    (A) in the table of sections, by inserting after 
                the item relating to section 9812 the following new 
                item:

                              ``Sec. 9813. External appeals of adverse 
                                        determinations.'';
                and
                    (B) by inserting after section 9812 the following:

``SEC. 9813. EXTERNAL APPEALS OF ADVERSE DETERMINATIONS.

    ``(a) Right to External Appeal.--
            ``(1) In general.--A group health plan shall provide for an 
        external appeals process that meets the requirements of this 
        section in the case of an externally appealable decision 
        described in paragraph (2). The Secretary shall establish 
        standards to carry out such requirements.
            ``(2) Externally appealable decision defined.--For purposes 
        of this section, the term `externally appealable decision' 
        means a benefit denial, reduction, or termination of, or 
        failure to provide or make, payment (in whole or in part) for, 
        a benefit (including a denial of choice of provider to the 
        extent such a choice is permitted under a plan), if--
                    ``(A) the denial or failure involves a 
                determination that a treatment is experimental or 
                investigational in nature;
                    ``(B) the denial or failure is based on a 
                determination that services are not medically necessary 
                or appropriate and the amount involved exceeds a 
                significant threshold; or
                    ``(C) the patient's life or health is jeopardized 
                as a consequence of the denial or failure.
        Such term does not include a denial of (or failure to provide) 
        coverage for services that are specifically stated in plan 
        documents as an exclusion from coverage.
            ``(3) Conditioning appeal on internal appeals process.--A 
        plan may condition the use of an external appeal process in the 
        case of an externally appealable decision upon completion of an 
        internal review process but only if the internal review process 
        provides for a determination on the decision in accordance with 
        the medical exigencies of the case involved, but in no event 
        later than 15 business days (or 72 hours in the case of a 
        decision involving emergency or urgent care) of the time of the 
        filing of the request for the internal review.
    ``(b) General Elements of Process.--
            ``(1) Contract with qualified external appeal entity.--
                    ``(A) Contract requirement.--Subject to 
                subparagraph (B), the external appeal process under 
                this section of a plan shall be conducted under a 
                contract between the plan and one or more qualified 
                external appeal entities (as defined in subsection 
                (c)).
                    ``(B) Restrictions on qualified external appeal 
                entity.--
                            ``(i) In general.--The Secretary may 
                        provide for external review activities to be 
                        conducted by a qualified external appeal entity 
                        that is designated by the Secretary or that is 
                        selected by the Secretary in such a manner as 
                        to assure an unbiased determination.
                            ``(ii) Limitation on plan selection.--If 
                        the Secretary under this subparagraph permits 
                        more than one entity to qualify as a qualified 
                        external appeal entity with respect to a group 
                        health plan and the plan may select among such 
                        qualified entities, the Secretary shall assure 
                        that the selection process will not create any 
                        incentives for external appeal entities to make 
                        a decision in a biased manner.
                    ``(C) Other terms and conditions.--The terms and 
                conditions of a contract under this paragraph shall be 
                consistent with the standards the Secretary shall 
                establish to assure there is no real or apparent 
                conflict of interest in the conduct of external appeal 
                activities. Such contract shall provide that the direct 
                costs of the process (not including costs of 
                representation of a participant or beneficiary) shall 
                be paid by the plan, and not by the participant or 
                beneficiary.
            ``(2) Elements of process.--An external appeal process 
        shall be conducted consistent with standards established by the 
        Secretary that include at least the following:
                    ``(A) Fair process; de novo determination.--The 
                process shall provide for a fair, de novo 
                determination.
                    ``(B) Determination concerning externally 
                appealable decisions.--A qualified external appeal 
                entity shall determine whether a decision is an 
                externally appealable decision and related decisions, 
                including--
                            ``(i) whether such a decision involves 
                        emergency or urgent care,
                            ``(ii) the appropriate deadlines for 
                        internal review process required due to medical 
                        exigencies in a case, and
                            ``(iii) whether such a process has been 
                        completed.
                    ``(C) Opportunity to submit evidence, have 
                representation, and make oral presentation.--Each party 
                to an externally appealable decision--
                            ``(i) may submit and review evidence 
                        related to the issues in dispute,
                            ``(ii) may use the assistance or 
                        representation of one or more individuals (any 
                        of whom may be an attorney), and
                            ``(iii) may make an oral presentation.
                    ``(D) Provision of information.--The plan involved 
                shall provide timely access to all its records relating 
                to the matter of the externally appealable decision and 
                to all provisions of the plan (including any coverage 
                manual) relating to the matter.
                    ``(E) Timely decisions.--A determination by the 
                external appeal entity on the decision shall--
                            ``(i) be made orally or in writing and, if 
                        it is made orally, shall be supplied to the 
                        parties in writing as soon as possible;
                            ``(ii) be binding on the plan;
                            ``(iii) be made in accordance with the 
                        medical exigencies of the case involved, but in 
                        no event later than 60 days (or 72 hours in the 
                        case of an externally appealable decision 
                        involving emergency or urgent care) from the 
                        date of completion of the filing of notice of 
                        external appeal of the decision;
                            ``(iv) state, in layperson's language, the 
                        basis for the determination, including, if 
                        relevant, any basis in the terms or conditions 
                        of the plan; and
                            ``(v) inform the participant, beneficiary, 
                        or enrollee of the individual's rights to seek 
                        further review by the courts (or other process) 
                        of the external appeal determination.
    ``(c) Qualifications of External Appeal Entities.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified external appeal entity' means, in relation to a 
        group health plan, an entity (which may be a governmental 
        entity) that is certified under paragraph (2) as meeting the 
        following requirements:
                    ``(A) There is no real or apparent conflict of 
                interest that would impede the entity conducting 
                external appeal activities independent of the plan.
                    ``(B) The entity conducts external appeal 
                activities through clinical peers.
                    ``(C) The entity has sufficient medical, legal, and 
                other expertise and sufficient staffing to conduct 
                external appeal activities for the plan on a timely 
                basis consistent with subsection (b)(3)(E)(ii).
                    ``(D) The entity meets such other requirements as 
                the Secretary may impose.
            ``(2) Certification of external appeal entities.--
                    ``(A) In general.--In order to be treated as a 
                qualified external appeal entity with respect to a 
                group health plan, the entity must be certified (and, 
                in accordance with subparagraph (B), periodically 
                recertified) as meeting the requirements of paragraph 
                (1) by the Secretary of Labor (or under a process 
                recognized or approved by the Secretary of Labor.
                    ``(B) Recertification process.--The Secretary shall 
                develop standards for the recertification of external 
                appeal entities. Such standards shall include a 
                specification of--
                            ``(i) the information required to be 
                        submitted as a condition of recertification on 
                        the entity's performance of external appeal 
                        activities, which information shall include the 
                        number of cases reviewed, a summary of the 
                        disposition of those cases, the length of time 
                        in making determinations on those cases, and 
                        such information as may be necessary to assure 
                        the independence of the entity from the plans 
                        for which external appeal activities are being 
                        conducted; and
                            ``(ii) the periodicity which 
                        recertification will be required.
            ``(3) Clinical peer defined.--For purposes of this 
        subsection, the term `clinical peer' means, with respect to an 
        appeal, a physician (allopathic or osteopathic) or other health 
        care professional who holds a non-restricted license in a State 
        and who is appropriately credentialed in the same or similar 
        specialty as typically manages the medical condition, 
        procedure, or treatment under appeal and includes a pediatric 
        specialist where appropriate.''
    (b) Individual Health Insurance.--(1) Part B of title XXVII of the 
Public Health Service Act is amended by inserting after section 2751 
the following new section:

``SEC. 2752. EXTERNAL REVIEW PROCESS.

    ``(a) In General.--The provisions of section 2706 (other than 
subsection (e)) shall apply to health insurance coverage offered by a 
health insurance issuer in the individual market in the same manner as 
they apply to health insurance coverage offered by a health insurance 
issuer in connection with a group health plan in the small or large 
group market.
    ``(b) Notice.--A health insurance issuer under this part shall 
comply with the notice requirement under section 713(3) of the Employee 
Retirement Income Security Act of 1974 with respect to the requirements 
referred to in subsection (a) as if such section applied to such issuer 
and such issuer were a group health plan.''.
    (2) Section 2762(b)(2) of such Act (42 U.S.C. 300gg-62(b)(2)) is 
amended by striking ``section 2751'' and inserting ``sections 2751 and 
2752''.
    (c) Authority To Apply Standards to Medicare and Medicaid 
Programs.--The Secretary of Health and Human Services may apply the 
requirements of section 2706 of the Public Health Service Act to 
Medicare+Choice organizations offering plans under part C under title 
XVIII of the Social Security Act, eligible organizations offering 
coverage under section 1876 of such Act, medicaid managed care 
organizations or managed care entity offering coverage under section 
1932 of such Act, and similar organizations and entities offering 
coverage under title XVIII or XIX of such Act, to the extent that the 
Secretary finds that such requirements provide greater protections for 
enrollees under such titles and do not conflict directly with 
requirements otherwise imposed by law relating to external review and 
appeals.
    (d) Effective Dates.--
            (1) Group health plans.--
                    (A) In general.--Subject to subparagraph (B), the 
                amendments made by subsection (a) shall apply with 
                respect to group health plans for plan years beginning 
                on or after January 1, 1999.
                    (B) Rule for certain collective bargaining 
                agreements.--In the case of a group health plan 
                maintained pursuant to 1 or more collective bargaining 
                agreements between employee representatives and 1 or 
                more employers ratified before the date of enactment of 
                this Act, the amendments made by subsection (a) shall 
                not apply to plan years beginning before the later of--
                            (i) the date on which the last collective 
                        bargaining agreements relating to the plan 
                        terminates (determined without regard to any 
                        extension thereof agreed to after the date of 
                        enactment of this Act), or
                            (ii) January 1, 1999.
                For purposes of clause (i), any plan amendment made 
                pursuant to a collective bargaining agreement relating 
                to the plan which amends the plan solely to conform to 
                any requirement added by subsection (a) shall not be 
                treated as a termination of such collective bargaining 
                agreement.
            (2) Individual health insurance coverage.--The amendment 
        made by subsection (b) shall apply with respect to health 
        insurance coverage offered, sold, issued, renewed, in effect, 
        or operated in the individual market on or after such date.
    (e) Coordinated Regulations.--Section 104(1) of Health Insurance 
Portability and Accountability Act of 1996 is amended by striking 
``this subtitle (and the amendments made by this subtitle and section 
401)'' and inserting ``the provisions of part 7 of subtitle B of title 
I of the Employee Retirement Income Security Act of 1974, the 
provisions of parts A and C of title XXVII of the Public Health Service 
Act, and chapter 100 of the Internal Revenue Code of 1986''.
                                 <all>