[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2990 Engrossed in House (EH)]


  1st Session

                               H. R. 2990

_______________________________________________________________________

                                 AN ACT

To amend the Internal Revenue Code of 1986 to allow individuals greater 
access to health insurance through a health care tax deduction, a long-
term care deduction, and other health-related tax incentives, to amend 
 the Employee Retirement Income Security Act of 1974 to provide access 
to and choice in health care through association health plans, to amend 
 the Public Health Service Act to create new pooling opportunities for 
  small employers to obtain greater access to health coverage through 
    HealthMarts; to amend title I of the Employee Retirement Income 
Security Act of 1974, title XXVII of the Public Health Service Act, and 
the Internal Revenue Code of 1986 to protect consumers in managed care 
        plans and other health coverage; and for other purposes.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
106th CONGRESS
  1st Session
                                H. R. 2990

_______________________________________________________________________

                                 AN ACT


 
To amend the Internal Revenue Code of 1986 to allow individuals greater 
access to health insurance through a health care tax deduction, a long-
term care deduction, and other health-related tax incentives, to amend 
 the Employee Retirement Income Security Act of 1974 to provide access 
to and choice in health care through association health plans, to amend 
 the Public Health Service Act to create new pooling opportunities for 
  small employers to obtain greater access to health coverage through 
    HealthMarts; to amend title I of the Employee Retirement Income 
Security Act of 1974, title XXVII of the Public Health Service Act, and 
the Internal Revenue Code of 1986 to protect consumers in managed care 
        plans and other health coverage; and for other purposes.

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

SECTION 1. ORGANIZATION OF ACT INTO DIVISIONS; TABLE OF CONTENTS.

    (a) Divisions.--This Act is organized into 2 divisions as follows:
            (1) Division A--Quality Care for the Uninsured Act of 1999.
            (2) Division B--Bipartisan Consensus Managed Care 
        Improvement Act of 1999.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Organization of Act into divisions; table of contents.
         DIVISION A--QUALITY CARE FOR THE UNINSURED ACT OF 1999

                      TITLE I--GENERAL PROVISIONS

Sec. 101. Short title of division; table of contents of division.
Sec. 102. Constitutional authority to enact this division.
Sec. 103. Purposes of division.
Sec. 104. Findings relating to health care choice.
              TITLE II--TAX-RELATED HEALTH CARE PROVISIONS

Sec. 201. Deduction for health and long-term care insurance costs of 
                            individuals not participating in employer-
                            subsidized health plans.
Sec. 202. Deduction for 100 percent of health insurance costs of self-
                            employed individuals.
Sec. 203. Expansion of availability of medical savings accounts.
Sec. 204. Long-term care insurance permitted to be offered under 
                            cafeteria plans and flexible spending 
                            arrangements.
Sec. 205. Additional personal exemption for taxpayer caring for elderly 
                            family member in taxpayer's home.
Sec. 206. Expanded human clinical trials qualifying for orphan drug 
                            credit.
Sec. 207. Inclusion of certain vaccines against streptococcus 
                            pneumoniae to list of taxable vaccines; 
                            reduction in per dose tax rate.
Sec. 208. Credit for clinical testing research expenses attributable to 
                            certain qualified academic institutions 
                            including teaching hospitals.
 TITLE III--GREATER ACCESS AND CHOICE THROUGH ASSOCIATION HEALTH PLANS

Sec. 301. Rules.
Sec. 302. Clarification of treatment of single employer arrangements.
Sec. 303. Clarification of treatment of certain collectively bargained 
                            arrangements.
Sec. 304. Enforcement provisions.
Sec. 305. Cooperation between Federal and State authorities.
Sec. 306. Effective date and transitional and other rules.
        TITLE IV--GREATER ACCESS AND CHOICE THROUGH HEALTHMARTS

Sec. 401. Expansion of consumer choice through HealthMarts.
                TITLE V--COMMUNITY HEALTH ORGANIZATIONS

Sec. 501. Promotion of provision of insurance by community health 
                            organizations.
 DIVISION B--BIPARTISAN CONSENSUS MANAGED CARE IMPROVEMENT ACT OF 1999

Sec. 1001. Short title of division; table of contents of division.
                    TITLE XI--IMPROVING MANAGED CARE

                   Subtitle A--Grievances and Appeals

Sec. 1101. Utilization review activities.
Sec. 1102. Internal appeals procedures.
Sec. 1103. External appeals procedures.
Sec. 1104. Establishment of a grievance process.
                       Subtitle B--Access to Care

Sec. 1111. Consumer choice option.
Sec. 1112. Choice of health care professional.
Sec. 1113. Access to emergency care.
Sec. 1114. Access to specialty care.
Sec. 1115. Access to obstetrical and gynecological care.
Sec. 1116. Access to pediatric care.
Sec. 1117. Continuity of care.
Sec. 1118. Access to needed prescription drugs.
Sec. 1119. Coverage for individuals participating in approved clinical 
                            trials.
                   Subtitle C--Access to Information

Sec. 1121. Patient access to information.
         Subtitle D--Protecting the Doctor-Patient Relationship

Sec. 1131. Prohibition of interference with certain medical 
                            communications.
Sec. 1132. Prohibition of discrimination against providers based on 
                            licensure.
Sec. 1133. Prohibition against improper incentive arrangements.
Sec. 1134. Payment of claims.
Sec. 1135. Protection for patient advocacy.
                        Subtitle E--Definitions

Sec. 1151. Definitions.
Sec. 1152. Preemption; State flexibility; construction.
Sec. 1153. Exclusions.
Sec. 1154. Coverage of limited scope plans.
Sec. 1155. Regulations.
TITLE XII--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS 
   AND HEALTH INSURANCE COVERAGE UNDER THE PUBLIC HEALTH SERVICE ACT

Sec. 1201. Application to group health plans and group health insurance 
                            coverage.
Sec. 1202. Application to individual health insurance coverage.
 TITLE XIII--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT 
                                OF 1974

Sec. 1301. Application of patient protection standards to group health 
                            plans and group health insurance coverage 
                            under the Employee Retirement Income 
                            Security Act of 1974.
Sec. 1302. ERISA preemption not to apply to certain actions involving 
                            health insurance policyholders.
Sec. 1303. Limitations on actions.
TITLE XIV--APPLICATION TO GROUP HEALTH PLANS UNDER THE INTERNAL REVENUE 
                              CODE OF 1986

Sec. 1401. Amendments to the Internal Revenue Code of 1986.
       TITLE XV--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

Sec. 1501. Effective dates.
Sec. 1502. Coordination in implementation.
            TITLE XVI--HEALTH CARE PAPERWORK SIMPLIFICATION

Sec. 1601. Health care paperwork simplification.

         DIVISION A--QUALITY CARE FOR THE UNINSURED ACT OF 1999

                      TITLE I--GENERAL PROVISIONS

SEC. 101. SHORT TITLE OF DIVISION; TABLE OF CONTENTS OF DIVISION.

    (a) Short Title of Division.--This division may be cited as the 
``Quality Care for the Uninsured Act of 1999''.
    (b) Table of Contents of Division.--The table of contents of this 
division is as follows:

                      TITLE I--GENERAL PROVISIONS

Sec. 101. Short title of division; table of contents of division.
Sec. 102. Constitutional authority to enact this division.
Sec. 103. Purposes of division.
Sec. 104. Findings relating to health care choice.
              TITLE II--TAX-RELATED HEALTH CARE PROVISIONS

Sec. 201. Deduction for health and long-term care insurance costs of 
                            individuals not participating in employer-
                            subsidized health plans.
Sec. 202. Deduction for 100 percent of health insurance costs of self-
                            employed individuals.
Sec. 203. Expansion of availability of medical savings accounts.
Sec. 204. Long-term care insurance permitted to be offered under 
                            cafeteria plans and flexible spending 
                            arrangements.
Sec. 205. Additional personal exemption for taxpayer caring for elderly 
                            family member in taxpayer's home.
Sec. 206. Expanded human clinical trials qualifying for orphan drug 
                            credit.
Sec. 207. Inclusion of certain vaccines against streptococcus 
                            pneumoniae to list of taxable vaccines; 
                            reduction in per dose tax rate.
Sec. 208. Credit for clinical testing research expenses attributable to 
                            certain qualified academic institutions 
                            including teaching hospitals.
 TITLE III--GREATER ACCESS AND CHOICE THROUGH ASSOCIATION HEALTH PLANS

Sec. 301. Rules.
           ``Part 8--Rules Governing Association Health Plans

        ``Sec. 801. Association health plans.
        ``Sec. 802. Certification of association health plans.
        ``Sec. 803. Requirements relating to sponsors and boards of 
                            trustees.
        ``Sec. 804. Participation and coverage requirements.
        ``Sec. 805. Other requirements relating to plan documents, 
                            contribution rates, and benefit options.
        ``Sec. 806. Maintenance of reserves and provisions for solvency 
                            for plans providing health benefits in 
                            addition to health insurance coverage.
        ``Sec. 807. Requirements for application and related 
                            requirements.
        ``Sec. 808. Notice requirements for voluntary termination.
        ``Sec. 809. Corrective actions and mandatory termination.
        ``Sec. 810. Trusteeship by the Secretary of insolvent 
                            association health plans providing health 
                            benefits in addition to health insurance 
                            coverage.
        ``Sec. 811. State assessment authority.
        ``Sec. 812. Special rules for church plans.
        ``Sec. 813. Definitions and rules of construction.
Sec. 302. Clarification of treatment of single employer arrangements.
Sec. 303. Clarification of treatment of certain collectively bargained 
                            arrangements.
Sec. 304. Enforcement provisions.
Sec. 305. Cooperation between Federal and State authorities.
Sec. 306. Effective date and transitional and other rules.
        TITLE IV--GREATER ACCESS AND CHOICE THROUGH HEALTHMARTS

Sec. 401. Expansion of consumer choice through HealthMarts.
                      ``TITLE XXVIII--HEALTHMARTS

        ``Sec. 2801. Definition of HealthMart.
        ``Sec. 2802. Application of certain laws and requirements.
        ``Sec. 2803. Administration.
        ``Sec. 2804. Definitions.
                TITLE V--COMMUNITY HEALTH ORGANIZATIONS

Sec. 501. Promotion of provision of insurance by community health 
                            organizations.

SEC. 102. CONSTITUTIONAL AUTHORITY TO ENACT THIS DIVISION.

    The constitutional authority upon which this division rests is the 
power of the Congress to regulate commerce with foreign nations and 
among the several States, set forth in article I, section 8 of the 
United States Constitution.

SEC. 103. PURPOSES OF DIVISION.

    The purposes of this division are--
            (1) to make it possible for individuals, employees, and the 
        self-employed to purchase and own their own health insurance 
        without suffering any negative tax consequences;
            (2) to assist individuals in obtaining and in paying for 
        basic health care services;
            (3) to render patients and deliverers sensitive to the cost 
        of health care, giving them both the incentive and the ability 
        to restrain undesired increases in health care costs;
            (4) to foster the development of numerous, varied, and 
        innovative systems of providing health care which will compete 
        against each other in terms of price, service, and quality, and 
        thus allow the American people to benefit from competitive 
        forces which will reward efficient and effective deliverers and 
        eliminate those which provide unsatisfactory quality of care or 
        are inefficient; and
            (5) to encourage the development of systems of delivering 
        health care which are capable of supplying a broad range of 
        health care services in a comprehensive and systematic manner.

SEC. 104. FINDINGS RELATING TO HEALTH CARE CHOICE.

    (a) Congress finds that the majority of Americans are receiving 
health care of a quality unmatched elsewhere in the world but that 43 
million Americans remain without private health insurance. Congress 
further finds that small business faces significant challenges in the 
purchase of health insurance, including higher costs and lack of choice 
of coverage. Congress further finds that such challenges lead to fewer 
Americans who are able to take advantage of private health insurance, 
leading to higher cost and lower quality care.
    (b) Congress finds that reduction of the number of uninsured 
Americans is an important public policy goal. Congress further finds 
that the use of alternative pooling mechanisms such as Association 
Health Plans, HealthMarts and other innovative means could provide 
significant opportunities for small business and individuals to 
purchase health insurance. Congress further finds that the use of such 
mechanisms could provide significant opportunities to expand private 
health coverage for individuals who are employees of small business, 
self-employed, or do not work for employers who provide health 
insurance.
    (c) Congress finds that the current Tax Code provides significant 
incentives for employers to provide health insurance coverage for their 
employees by providing a deduction for the employer for the cost of 
health insurance coverage and an exclusion from income for the employee 
for employer-provided health care. Congress further finds that some 
individuals may prefer to decline coverage under their employer's group 
health plan and obtain individual health insurance coverage, and some 
employers may wish to give employees the opportunity to do so. Congress 
further finds that the Internal Revenue Service has ruled that this tax 
treatment for the employer and employee for employer-provided health 
care applies even if the employer pays for individual health insurance 
polices for its employees. Therefore, the Tax Code makes it possible 
for employers to provide employees choice among health insurance 
coverage while retaining favorable tax treatment. Congress further 
finds that the present-law exclusion for employer-provided health care, 
together with the tax provisions in the bill, will provide more 
equitable tax treatment for health insurance expenses, encourage 
uninsured individuals to purchase insurance, expand health care 
options, and encourage individuals to better manage their health care 
needs and expenses.
    (d) Congress finds that continually increasing and complex 
Government regulation of the health care delivery system has proven 
ineffective in restraining costs and is itself expensive and 
counterproductive in fulfilling its purposes and detrimental to the 
care of patients.

              TITLE II--TAX-RELATED HEALTH CARE PROVISIONS

SEC. 201. DEDUCTION FOR HEALTH AND LONG-TERM CARE INSURANCE COSTS OF 
              INDIVIDUALS NOT PARTICIPATING IN EMPLOYER-SUBSIDIZED 
              HEALTH PLANS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by redesignating section 222 
as section 223 and by inserting after section 221 the following new 
section:

``SEC. 222. HEALTH AND LONG-TERM CARE INSURANCE COSTS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction an amount equal to the applicable percentage of 
the amount paid during the taxable year for insurance which constitutes 
medical care for the taxpayer and the taxpayer's spouse and dependents.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage shall be determined in accordance with the 
following table:

``For taxable years beginning
                                                         The applicable
  in calendar year--
                                                        percentage is--
    2002, 2003, and 2004...................................        25  
    2005...................................................        35  
    2006...................................................        65  
    2007 and thereafter....................................      100.  
    ``(c) Limitation Based on Other Coverage.--
            ``(1) Coverage under certain subsidized employer plans.--
                    ``(A) In general.--Subsection (a) shall not apply 
                to any taxpayer for any calendar month for which the 
                taxpayer participates in any health plan maintained by 
                any employer of the taxpayer or of the spouse of the 
                taxpayer if 50 percent or more of the cost of coverage 
                under such plan (determined under section 4980B and 
                without regard to payments made with respect to any 
                coverage described in subsection (e)) is paid or 
                incurred by the employer.
                    ``(B) Employer contributions to cafeteria plans, 
                flexible spending arrangements, and medical savings 
                accounts.--Employer contributions to a cafeteria plan, 
                a flexible spending or similar arrangement, or a 
                medical savings account which are excluded from gross 
                income under section 106 shall be treated for purposes 
                of subparagraph (A) as paid by the employer.
                    ``(C) Aggregation of plans of employer.--A health 
                plan which is not otherwise described in subparagraph 
                (A) shall be treated as described in such subparagraph 
                if such plan would be so described if all health plans 
                of persons treated as a single employer under 
                subsection (b), (c), (m), or (o) of section 414 were 
                treated as one health plan.
                    ``(D) Separate application to health insurance and 
                long-term care insurance.--Subparagraphs (A) and (C) 
                shall be applied separately with respect to--
                            ``(i) plans which include primarily 
                        coverage for qualified long-term care services 
                        or are qualified long-term care insurance 
                        contracts, and
                            ``(ii) plans which do not include such 
                        coverage and are not such contracts.
            ``(2) Coverage under certain federal programs.--
                    ``(A) In general.--Subsection (a) shall not apply 
                to any amount paid for any coverage for an individual 
                for any calendar month if, as of the first day of such 
                month, the individual is covered under any medical care 
                program described in--
                            ``(i) title XVIII, XIX, or XXI of the 
                        Social Security Act,
                            ``(ii) chapter 55 of title 10, United 
                        States Code,
                            ``(iii) chapter 17 of title 38, United 
                        States Code,
                            ``(iv) chapter 89 of title 5, United States 
                        Code, or
                            ``(v) the Indian Health Care Improvement 
                        Act.
                    ``(B) Exceptions.--
                            ``(i) Qualified long-term care.--
                        Subparagraph (A) shall not apply to amounts 
                        paid for coverage under a qualified long-term 
                        care insurance contract.
                            ``(ii) Continuation coverage of fehbp.--
                        Subparagraph (A)(iv) shall not apply to 
                        coverage which is comparable to continuation 
                        coverage under section 4980B.
    ``(d) Long-Term Care Deduction Limited to Qualified Long-Term Care 
Insurance Contracts.--In the case of a qualified long-term care 
insurance contract, only eligible long-term care premiums (as defined 
in section 213(d)(10)) may be taken into account under subsection (a).
    ``(e) Deduction Not Available for Payment of Ancillary Coverage 
Premiums.--Any amount paid as a premium for insurance which provides 
for--
            ``(1) coverage for accidents, disability, dental care, 
        vision care, or a specified illness, or
            ``(2) making payments of a fixed amount per day (or other 
        period) by reason of being hospitalized,
shall not be taken into account under subsection (a).
    ``(f) Special Rules.--
            ``(1) Coordination with deduction for health insurance 
        costs of self-employed individuals.--The amount taken into 
        account by the taxpayer in computing the deduction under 
        section 162(l) shall not be taken into account under this 
        section.
            ``(2) Coordination with medical expense deduction.--The 
        amount taken into account by the taxpayer in computing the 
        deduction under this section shall not be taken into account 
        under section 213.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out this section, including regulations 
requiring employers to report to their employees and the Secretary such 
information as the Secretary determines to be appropriate.''.
    (b) Deduction Allowed Whether or Not Taxpayer Itemizes Other 
Deductions.--Subsection (a) of section 62 of such Code is amended by 
inserting after paragraph (17) the following new item:
            ``(18) Health and long-term care insurance costs.--The 
        deduction allowed by section 222.''.
    (c) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by striking the last 
item and inserting the following new items:

                              ``Sec. 222. Health and long-term care 
                                        insurance costs.
                              ``Sec. 223. Cross reference.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 202. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS OF SELF-
              EMPLOYED INDIVIDUALS.

    (a) In General.--Paragraph (1) of section 162(l) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(1) Allowance of deduction.--In the case of an individual 
        who is an employee within the meaning of section 401(c)(1), 
        there shall be allowed as a deduction under this section an 
        amount equal to 100 percent of the amount paid during the 
        taxable year for insurance which constitutes medical care for 
        the taxpayer and the taxpayer's spouse and dependents.''.
    (b) Clarification of Limitations on Other Coverage.--The first 
sentence of section 162(l)(2)(B) of such Code is amended to read as 
follows: ``Paragraph (1) shall not apply to any taxpayer for any 
calendar month for which the taxpayer participates in any subsidized 
health plan maintained by any employer (other than an employer 
described in section 401(c)(4)) of the taxpayer or the spouse of the 
taxpayer.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 203. EXPANSION OF AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

    (a) Repeal of Limitations on Number of Medical Savings Accounts.--
            (1) In general.--Subsections (i) and (j) of section 220 of 
        the Internal Revenue Code of 1986 are hereby repealed.
            (2) Conforming amendments.--
                    (A) Paragraph (1) of section 220(c) of such Code is 
                amended by striking subparagraph (D).
                    (B) Section 138 of such Code is amended by striking 
                subsection (f).
    (b) Availability Not Limited to Accounts For Employees of Small 
Employers and Self-employed Individuals.--
            (1) In general.--Section 220(c)(1)(A) of such Code 
        (relating to eligible individual) is amended to read as 
        follows:
                    ``(A) In general.--The term `eligible individual' 
                means, with respect to any month, any individual if--
                            ``(i) such individual is covered under a 
                        high deductible health plan as of the 1st day 
                        of such month, and
                            ``(ii) such individual is not, while 
                        covered under a high deductible health plan, 
                        covered under any health plan--
                                    ``(I) which is not a high 
                                deductible health plan, and
                                    ``(II) which provides coverage for 
                                any benefit which is covered under the 
                                high deductible health plan.''.
            (2) Conforming amendments.--
                    (A) Section 220(c)(1) of such Code is amended by 
                striking subparagraph (C).
                    (B) Section 220(c) of such Code is amended by 
                striking paragraph (4) (defining small employer) and by 
                redesignating paragraph (5) as paragraph (4).
                    (C) Section 220(b) of such Code is amended by 
                striking paragraph (4) (relating to deduction limited 
                by compensation) and by redesignating paragraphs (5), 
                (6), and (7) as paragraphs (4), (5), and (6), 
                respectively.
    (c) Increase in Amount of Deduction Allowed for Contributions to 
Medical Savings Accounts.--
            (1) In general.--Paragraph (2) of section 220(b) of such 
        Code is amended to read as follows:
            ``(2) Monthly limitation.--The monthly limitation for any 
        month is the amount equal to \1/12\ of the annual deductible 
        (as of the first day of such month) of the individual's 
        coverage under the high deductible health plan.''.
            (2) Conforming amendment.--Clause (ii) of section 
        220(d)(1)(A) of such Code is amended by striking ``75 percent 
        of''.
    (d) Both Employers and Employees May Contribute to Medical Savings 
Accounts.--Paragraph (4) of section 220(b) of such Code (as 
redesignated by subsection (b)(2)(C)) is amended to read as follows:
            ``(4) Coordination with exclusion for employer 
        contributions.--The limitation which would (but for this 
        paragraph) apply under this subsection to the taxpayer for any 
        taxable year shall be reduced (but not below zero) by the 
        amount which would (but for section 106(b)) be includible in 
        the taxpayer's gross income for such taxable year.''.
    (e) Reduction of Permitted Deductibles Under High Deductible Health 
Plans.--
            (1) In general.--Subparagraph (A) of section 220(c)(2) of 
        such Code (defining high deductible health plan) is amended--
                    (A) by striking ``$1,500'' in clause (i) and 
                inserting ``$1,000''; and
                    (B) by striking ``$3,000'' in clause (ii) and 
                inserting ``$2,000''.
            (2) Conforming amendment.--Subsection (g) of section 220 of 
        such Code is amended to read as follows:
    ``(g) Cost-of-Living Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 1998, each dollar amount in 
        subsection (c)(2) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                such taxable year begins by substituting `calendar year 
                1997' for `calendar year 1992' in subparagraph (B) 
                thereof.
            ``(2) Special rules.--In the case of the $1,000 amount in 
        subsection (c)(2)(A)(i) and the $2,000 amount in subsection 
        (c)(2)(A)(ii), paragraph (1)(B) shall be applied by 
        substituting `calendar year 1999' for `calendar year 1997'.
            ``(3) Rounding.--If any increase under paragraph (1) or (2) 
        is not a multiple of $50, such increase shall be rounded to the 
        nearest multiple of $50.''.
    (f) Medical Savings Accounts May Be Offered Under Cafeteria 
Plans.--Subsection (f) of section 125 of such Code is amended by 
striking ``106(b),''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 204. LONG-TERM CARE INSURANCE PERMITTED TO BE OFFERED UNDER 
              CAFETERIA PLANS AND FLEXIBLE SPENDING ARRANGEMENTS.

    (a) Cafeteria Plans.--
            (1) In general.--Subsection (f) of section 125 of the 
        Internal Revenue Code of 1986 (defining qualified benefits) is 
        amended by inserting before the period at the end ``; except 
        that such term shall include the payment of premiums for any 
        qualified long-term care insurance contract (as defined in 
        section 7702B) to the extent the amount of such payment does 
        not exceed the eligible long-term care premiums (as defined in 
        section 213(d)(10)) for such contract''.
    (b) Flexible Spending Arrangements.--Section 106 of such Code 
(relating to contributions by employer to accident and health plans) is 
amended by striking subsection (c).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 205. ADDITIONAL PERSONAL EXEMPTION FOR TAXPAYER CARING FOR ELDERLY 
              FAMILY MEMBER IN TAXPAYER'S HOME.

    (a) In General.--Section 151 of the Internal Revenue Code of 1986 
(relating to allowance of deductions for personal exemptions) is 
amended by redesignating subsection (e) as subsection (f) and by 
inserting after subsection (d) the following new subsection:
    ``(e) Additional Exemption for Certain Elderly Family Members 
Residing With Taxpayer.--
            ``(1) In general.--An exemption of the exemption amount for 
        each qualified family member of the taxpayer.
            ``(2) Qualified family member.--For purposes of this 
        subsection, the term `qualified family member' means, with 
        respect to any taxable year, any individual--
                    ``(A) who is an ancestor of the taxpayer or of the 
                taxpayer's spouse or who is the spouse of any such 
                ancestor,
                    ``(B) who is a member for the entire taxable year 
                of a household maintained by the taxpayer, and
                    ``(C) who has been certified, before the due date 
                for filing the return of tax for the taxable year 
                (without extensions), by a physician (as defined in 
                section 1861(r)(1) of the Social Security Act) as being 
                an individual with long-term care needs described in 
                paragraph (3) for a period--
                            ``(i) which is at least 180 consecutive 
                        days, and
                            ``(ii) a portion of which occurs within the 
                        taxable year.
        Such term shall not include any individual otherwise meeting 
        the requirements of the preceding sentence unless within the 
        39\1/2\ month period ending on such due date (or such other 
        period as the Secretary prescribes) a physician (as so defined) 
        has certified that such individual meets such requirements.
            ``(3) Individuals with long-term care needs.--An individual 
        is described in this paragraph if the individual--
                    ``(A) is unable to perform (without substantial 
                assistance from another individual) at least two 
                activities of daily living (as defined in section 
                7702B(c)(2)(B)) due to a loss of functional capacity, 
                or
                    ``(B) requires substantial supervision to protect 
                such individual from threats to health and safety due 
                to severe cognitive impairment and is unable to 
                perform, without reminding or cuing assistance, at 
                least one activity of daily living (as so defined) or 
                to the extent provided in regulations prescribed by the 
                Secretary (in consultation with the Secretary of Health 
                and Human Services), is unable to engage in age 
                appropriate activities.
            ``(4) Special rules.--Rules similar to the rules of 
        paragraphs (1), (2), (3), (4), and (5) of section 21(e) shall 
        apply for purposes of this subsection.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 206. EXPANDED HUMAN CLINICAL TRIALS QUALIFYING FOR ORPHAN DRUG 
              CREDIT.

    (a) In General.--Subclause (I) of section 45C(b)(2)(A)(ii) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                                    ``(I) after the date that the 
                                application is filed for designation 
                                under such section 526, and''.
    (b) Conforming Amendment.--Clause (i) of section 45C(b)(2)(A) of 
such Code is amended by inserting ``which is'' before ``being'' and by 
inserting before the comma at the end ``and which is designated under 
section 526 of such Act''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after December 31, 2000.

SEC. 207. INCLUSION OF CERTAIN VACCINES AGAINST STREPTOCOCCUS 
              PNEUMONIAE TO LIST OF TAXABLE VACCINES; REDUCTION IN PER 
              DOSE TAX RATE.

    (a) Inclusion of Vaccines.--
            (1) In general.--Section 4132(a)(1) of the Internal Revenue 
        Code of 1986 (defining taxable vaccine) is amended by adding at 
        the end the following new subparagraph:
                    ``(L) Any conjugate vaccine against streptococcus 
                pneumoniae.''.
            (2) Effective date.--
                    (A) Sales.--The amendment made by this subsection 
                shall apply to vaccine sales beginning on the day after 
                the date on which the Centers for Disease Control makes 
                a final recommendation for routine administration to 
                children of any conjugate vaccine against streptococcus 
                pneumoniae, but shall not take effect if subsection (c) 
                does not take effect.
                    (B) Deliveries.--For purposes of subparagraph (A), 
                in the case of sales on or before the date described in 
                such subparagraph for which delivery is made after such 
                date, the delivery date shall be considered the sale 
                date.
    (b) Reduction in Per Dose Tax Rate.--
            (1) In general.--Section 4131(b)(1) of such Code (relating 
        to amount of tax) is amended by striking ``75 cents'' and 
        inserting ``50 cents''.
            (2) Effective date.--
                    (A) Sales.--The amendment made by this subsection 
                shall apply to vaccine sales after December 31, 2004, 
                but shall not take effect if subsection (c) does not 
                take effect.
                    (B) Deliveries.--For purposes of subparagraph (A), 
                in the case of sales on or before the date described in 
                such subparagraph for which delivery is made after such 
                date, the delivery date shall be considered the sale 
                date.
            (3) Limitation on certain credits or refunds.--For purposes 
        of applying section 4132(b) of the Internal Revenue Code of 
        1986 with respect to any claim for credit or refund filed after 
        August 31, 2004, the amount of tax taken into account shall not 
        exceed the tax computed under the rate in effect on January 1, 
        2005.
    (c) Vaccine Tax and Trust Fund Amendments.--
            (1) Sections 1503 and 1504 of the Vaccine Injury 
        Compensation Program Modification Act (and the amendments made 
        by such sections) are hereby repealed.
            (2) Subparagraph (A) of section 9510(c)(1) of such Code is 
        amended by striking ``August 5, 1997'' and inserting ``October 
        21, 1998''.
            (3) The amendments made by this subsection shall take 
        effect as if included in the provisions of the Tax and Trade 
        Relief Extension Act of 1998 to which they relate.
    (d) Report.--Not later than December 31, 1999, the Comptroller 
General of the United States shall prepare and submit a report to the 
Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate on the operation of the Vaccine 
Injury Compensation Trust Fund and on the adequacy of such Fund to meet 
future claims made under the Vaccine Injury Compensation Program.

SEC. 208. CREDIT FOR CLINICAL TESTING RESEARCH EXPENSES ATTRIBUTABLE TO 
              CERTAIN QUALIFIED ACADEMIC INSTITUTIONS INCLUDING 
              TEACHING HOSPITALS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by inserting after section 41 the following:

``SEC. 41A. CREDIT FOR MEDICAL INNOVATION EXPENSES.

    ``(a) General Rule.--For purposes of section 38, the medical 
innovation credit determined under this section for the taxable year 
shall be an amount equal to 40 percent of the excess (if any) of--
            ``(1) the qualified medical innovation expenses for the 
        taxable year, over
            ``(2) the medical innovation base period amount.
    ``(b) Qualified Medical Innovation Expenses.--For purposes of this 
section--
            ``(1) In general.--The term `qualified medical innovation 
        expenses' means the amounts which are paid or incurred by the 
        taxpayer during the taxable year directly or indirectly to any 
        qualified academic institution for clinical testing research 
        activities.
            ``(2) Clinical testing research activities.--
                    ``(A) In general.--The term `clinical testing 
                research activities' means human clinical testing 
                conducted at any qualified academic institution in the 
                development of any product, which occurs before--
                            ``(i) the date on which an application with 
                        respect to such product is approved under 
                        section 505(b), 506, or 507 of the Federal 
                        Food, Drug, and Cosmetic Act (as in effect on 
                        the date of the enactment of this section),
                            ``(ii) the date on which a license for such 
                        product is issued under section 351 of the 
                        Public Health Service Act (as so in effect), or
                            ``(iii) the date classification or approval 
                        of such product which is a device intended for 
                        human use is given under section 513, 514, or 
                        515 of the Federal Food, Drug, and Cosmetic Act 
                        (as so in effect).
                    ``(B) Product.--The term `product' means any drug, 
                biologic, or medical device.
            ``(3) Qualified academic institution.--The term `qualified 
        academic institution' means any of the following institutions:
                    ``(A) Educational institution.--A qualified 
                organization described in section 170(b)(1)(A)(iii) 
                which is owned by, or affiliated with, an institution 
                of higher education (as defined in section 3304(f)).
                    ``(B) Teaching hospital.--A teaching hospital 
                which--
                            ``(i) is publicly supported or owned by an 
                        organization described in section 501(c)(3), 
                        and
                            ``(ii) is affiliated with an organization 
                        meeting the requirements of subparagraph (A).
                    ``(C) Foundation.--A medical research organization 
                described in section 501(c)(3) (other than a private 
                foundation) which is affiliated with, or owned by--
                            ``(i) an organization meeting the 
                        requirements of subparagraph (A), or
                            ``(ii) a teaching hospital meeting the 
                        requirements of subparagraph (B).
                    ``(D) Charitable research hospital.--A hospital 
                that is designated as a cancer center by the National 
                Cancer Institute.
            ``(4) Exclusion for amounts funded by grants, etc.--The 
        term `qualified medical innovation expenses' shall not include 
        any amount to the extent such amount is funded by any grant, 
        contract, or otherwise by another person (or any governmental 
        entity).
    ``(c) Medical Innovation Base Period Amount.--For purposes of this 
section, the term `medical innovation base period amount' means the 
average annual qualified medical innovation expenses paid by the 
taxpayer during the 3-taxable year period ending with the taxable year 
immediately preceding the first taxable year of the taxpayer beginning 
after December 31, 2000.
    ``(d) Special Rules.--
            ``(1) Limitation on foreign testing.--No credit shall be 
        allowed under this section with respect to any clinical testing 
        research activities conducted outside the United States.
            ``(2) Certain rules made applicable.--Rules similar to the 
        rules of subsections (f) and (g) of section 41 shall apply for 
        purposes of this section.
            ``(3) Election.--This section shall apply to any taxpayer 
        for any taxable year only if such taxpayer elects to have this 
        section apply for such taxable year.
            ``(4) Coordination with credit for increasing research 
        expenditures and with credit for clinical testing expenses for 
        certain drugs for rare diseases.--Any qualified medical 
        innovation expense for a taxable year to which an election 
        under this section applies shall not be taken into account for 
        purposes of determining the credit allowable under section 41 
        or 45C for such taxable year.''.
    (b) Credit To Be Part of General Business Credit.--
            (1) In general.--Section 38(b) of such Code (relating to 
        current year business credits) is amended by striking ``plus'' 
        at the end of paragraph (11), by striking the period at the end 
        of paragraph (12) and inserting ``, plus'', and by adding at 
        the end the following:
            ``(13) the medical innovation expenses credit determined 
        under section 41A(a).''.
            (2) Transition rule.--Section 39(d) of such Code is amended 
        by adding at the end the following new paragraph:
            ``(9) No carryback of section 41a credit before 
        enactment.--No portion of the unused business credit for any 
        taxable year which is attributable to the medical innovation 
        credit determined under section 41A may be carried back to a 
        taxable year beginning before January 1, 2001.''.
    (c) Denial of Double Benefit.--Section 280C of such Code is amended 
by adding at the end the following new subsection:
    ``(d) Credit for Increasing Medical Innovation Expenses.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the qualified medical innovation expenses (as 
        defined in section 41A(b)) otherwise allowable as a deduction 
        for the taxable year which is equal to the amount of the credit 
        determined for such taxable year under section 41A(a).
            ``(2) Certain rules to apply.--Rules similar to the rules 
        of paragraphs (2), (3), and (4) of subsection (c) shall apply 
        for purposes of this subsection.''.
    (d) Deduction for Unused Portion of Credit.--Section 196(c) of such 
Code (defining qualified business credits) is amended by redesignating 
paragraphs (5) through (8) as paragraphs (6) through (9), respectively, 
and by inserting after paragraph (4) the following new paragraph:
            ``(5) the medical innovation expenses credit determined 
        under section 41A(a) (other than such credit determined under 
        the rules of section 280C(d)(2)),''.
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
after the item relating to section 41 the following:

                              ``Sec. 41A. Credit for medical innovation 
                                        expenses.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

 TITLE III--GREATER ACCESS AND CHOICE THROUGH ASSOCIATION HEALTH PLANS

SEC. 301. RULES.

    (a) In General.--Subtitle B of title I of the Employee Retirement 
Income Security Act of 1974 is amended by adding after part 7 the 
following new part:

           ``Part 8--Rules Governing Association Health Plans

``SEC. 801. ASSOCIATION HEALTH PLANS.

    ``(a) In General.--For purposes of this part, the term `association 
health plan' means a group health plan--
            ``(1) whose sponsor is (or is deemed under this part to be) 
        described in subsection (b); and
            ``(2) under which at least one option of health insurance 
        coverage offered by a health insurance issuer (which may 
        include, among other options, managed care options, point of 
        service options, and preferred provider options) is provided to 
        participants and beneficiaries, unless, for any plan year, such 
        coverage remains unavailable to the plan despite good faith 
        efforts exercised by the plan to secure such coverage.
    ``(b) Sponsorship.--The sponsor of a group health plan is described 
in this subsection if such sponsor--
            ``(1) is organized and maintained in good faith, with a 
        constitution and bylaws specifically stating its purpose and 
        providing for periodic meetings on at least an annual basis, as 
        a bona fide trade association, a bona fide industry association 
        (including a rural electric cooperative association or a rural 
        telephone cooperative association), a bona fide professional 
        association, or a bona fide chamber of commerce (or similar 
        bona fide business association, including a corporation or 
        similar organization that operates on a cooperative basis 
        (within the meaning of section 1381 of the Internal Revenue 
        Code of 1986)), for substantial purposes other than that of 
        obtaining or providing medical care;
            ``(2) is established as a permanent entity which receives 
        the active support of its members and collects from its members 
        on a periodic basis dues or payments necessary to maintain 
        eligibility for membership in the sponsor; and
            ``(3) does not condition membership, such dues or payments, 
        or coverage under the plan on the basis of health status-
        related factors with respect to the employees of its members 
        (or affiliated members), or the dependents of such employees, 
        and does not condition such dues or payments on the basis of 
        group health plan participation.
Any sponsor consisting of an association of entities which meet the 
requirements of paragraphs (1), (2), and (3) shall be deemed to be a 
sponsor described in this subsection.

``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.

    ``(a) In General.--The applicable authority shall prescribe by 
regulation, through negotiated rulemaking, a procedure under which, 
subject to subsection (b), the applicable authority shall certify 
association health plans which apply for certification as meeting the 
requirements of this part.
    ``(b) Standards.--Under the procedure prescribed pursuant to 
subsection (a), in the case of an association health plan that provides 
at least one benefit option which does not consist of health insurance 
coverage, the applicable authority shall certify such plan as meeting 
the requirements of this part only if the applicable authority is 
satisfied that--
            ``(1) such certification--
                    ``(A) is administratively feasible;
                    ``(B) is not adverse to the interests of the 
                individuals covered under the plan; and
                    ``(C) is protective of the rights and benefits of 
                the individuals covered under the plan; and
            ``(2) the applicable requirements of this part are met (or, 
        upon the date on which the plan is to commence operations, will 
        be met) with respect to the plan.
    ``(c) Requirements Applicable to Certified Plans.--An association 
health plan with respect to which certification under this part is in 
effect shall meet the applicable requirements of this part, effective 
on the date of certification (or, if later, on the date on which the 
plan is to commence operations).
    ``(d) Requirements for Continued Certification.--The applicable 
authority may provide by regulation, through negotiated rulemaking, for 
continued certification of association health plans under this part.
    ``(e) Class Certification for Fully Insured Plans.--The applicable 
authority shall establish a class certification procedure for 
association health plans under which all benefits consist of health 
insurance coverage. Under such procedure, the applicable authority 
shall provide for the granting of certification under this part to the 
plans in each class of such association health plans upon appropriate 
filing under such procedure in connection with plans in such class and 
payment of the prescribed fee under section 807(a).
    ``(f) Certification of Self-Insured Association Health Plans.--An 
association health plan which offers one or more benefit options which 
do not consist of health insurance coverage may be certified under this 
part only if such plan consists of any of the following:
            ``(1) a plan which offered such coverage on the date of the 
        enactment of the Quality Care for the Uninsured Act of 1999,
            ``(2) a plan under which the sponsor does not restrict 
        membership to one or more trades and businesses or industries 
        and whose eligible participating employers represent a broad 
        cross-section of trades and businesses or industries, or
            ``(3) a plan whose eligible participating employers 
        represent one or more trades or businesses, or one or more 
        industries, which have been indicated as having average or 
        above-average health insurance risk or health claims experience 
        by reason of State rate filings, denials of coverage, proposed 
        premium rate levels, and other means demonstrated by such plan 
        in accordance with regulations which the Secretary shall 
        prescribe through negotiated rulemaking, including (but not 
        limited to) the following: agriculture; automobile dealerships; 
        barbering and cosmetology; child care; construction; dance, 
        theatrical, and orchestra productions; disinfecting and pest 
        control; eating and drinking establishments; fishing; 
        hospitals; labor organizations; logging; manufacturing 
        (metals); mining; medical and dental practices; medical 
        laboratories; sanitary services; transportation (local and 
        freight); and warehousing.

``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.

    ``(a) Sponsor.--The requirements of this subsection are met with 
respect to an association health plan if the sponsor has met (or is 
deemed under this part to have met) the requirements of section 801(b) 
for a continuous period of not less than 3 years ending with the date 
of the application for certification under this part.
    ``(b) Board of Trustees.--The requirements of this subsection are 
met with respect to an association health plan if the following 
requirements are met:
            ``(1) Fiscal control.--The plan is operated, pursuant to a 
        trust agreement, by a board of trustees which has complete 
        fiscal control over the plan and which is responsible for all 
        operations of the plan.
            ``(2) Rules of operation and financial controls.--The board 
        of trustees has in effect rules of operation and financial 
        controls, based on a 3-year plan of operation, adequate to 
        carry out the terms of the plan and to meet all requirements of 
        this title applicable to the plan.
            ``(3) Rules governing relationship to participating 
        employers and to contractors.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), the members of the board of 
                trustees are individuals selected from individuals who 
                are the owners, officers, directors, or employees of 
                the participating employers or who are partners in the 
                participating employers and actively participate in the 
                business.
                    ``(B) Limitation.--
                            ``(i) General rule.--Except as provided in 
                        clauses (ii) and (iii), no such member is an 
                        owner, officer, director, or employee of, or 
                        partner in, a contract administrator or other 
                        service provider to the plan.
                            ``(ii) Limited exception for providers of 
                        services solely on behalf of the sponsor.--
                        Officers or employees of a sponsor which is a 
                        service provider (other than a contract 
                        administrator) to the plan may be members of 
                        the board if they constitute not more than 25 
                        percent of the membership of the board and they 
                        do not provide services to the plan other than 
                        on behalf of the sponsor.
                            ``(iii) Treatment of providers of medical 
                        care.--In the case of a sponsor which is an 
                        association whose membership consists primarily 
                        of providers of medical care, clause (i) shall 
                        not apply in the case of any service provider 
                        described in subparagraph (A) who is a provider 
                        of medical care under the plan.
                    ``(C) Certain plans excluded.--Subparagraph (A) 
                shall not apply to an association health plan which is 
                in existence on the date of the enactment of the 
                Quality Care for the Uninsured Act of 1999.
                    ``(D) Sole authority.--The board has sole authority 
                under the plan to approve applications for 
                participation in the plan and to contract with a 
                service provider to administer the day-to-day affairs 
                of the plan.
    ``(c) Treatment of Franchise Networks.--In the case of a group 
health plan which is established and maintained by a franchiser for a 
franchise network consisting of its franchisees--
            ``(1) the requirements of subsection (a) and section 
        801(a)(1) shall be deemed met if such requirements would 
        otherwise be met if the franchiser were deemed to be the 
        sponsor referred to in section 801(b), such network were deemed 
        to be an association described in section 801(b), and each 
        franchisee were deemed to be a member (of the association and 
        the sponsor) referred to in section 801(b); and
            ``(2) the requirements of section 804(a)(1) shall be deemed 
        met.
The Secretary may by regulation, through negotiated rulemaking, define 
for purposes of this subsection the terms `franchiser', `franchise 
network', and `franchisee'.
    ``(d) Certain Collectively Bargained Plans.--
            ``(1) In general.--In the case of a group health plan 
        described in paragraph (2)--
                    ``(A) the requirements of subsection (a) and 
                section 801(a)(1) shall be deemed met;
                    ``(B) the joint board of trustees shall be deemed a 
                board of trustees with respect to which the 
                requirements of subsection (b) are met; and
                    ``(C) the requirements of section 804 shall be 
                deemed met.
            ``(2) Requirements.--A group health plan is described in 
        this paragraph if--
                    ``(A) the plan is a multiemployer plan; or
                    ``(B) the plan is in existence on April 1, 1997, 
                and would be described in section 3(40)(A)(i) but 
                solely for the failure to meet the requirements of 
                section 3(40)(C)(ii).

``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

    ``(a) Covered Employers and Individuals.--The requirements of this 
subsection are met with respect to an association health plan if, under 
the terms of the plan--
            ``(1) each participating employer must be--
                    ``(A) a member of the sponsor,
                    ``(B) the sponsor, or
                    ``(C) an affiliated member of the sponsor with 
                respect to which the requirements of subsection (b) are 
                met,
        except that, in the case of a sponsor which is a professional 
        association or other individual-based association, if at least 
        one of the officers, directors, or employees of an employer, or 
        at least one of the individuals who are partners in an employer 
        and who actively participates in the business, is a member or 
        such an affiliated member of the sponsor, participating 
        employers may also include such employer; and
            ``(2) all individuals commencing coverage under the plan 
        after certification under this part must be--
                    ``(A) active or retired owners (including self-
                employed individuals), officers, directors, or 
                employees of, or partners in, participating employers; 
                or
                    ``(B) the beneficiaries of individuals described in 
                subparagraph (A).
    ``(b) Coverage of Previously Uninsured Employees.--In the case of 
an association health plan in existence on the date of the enactment of 
the Quality Care for the Uninsured Act of 1999, an affiliated member of 
the sponsor of the plan may be offered coverage under the plan as a 
participating employer only if--
            ``(1) the affiliated member was an affiliated member on the 
        date of certification under this part; or
            ``(2) during the 12-month period preceding the date of the 
        offering of such coverage, the affiliated member has not 
        maintained or contributed to a group health plan with respect 
        to any of its employees who would otherwise be eligible to 
        participate in such association health plan.
    ``(c) Individual Market Unaffected.--The requirements of this 
subsection are met with respect to an association health plan if, under 
the terms of the plan, no participating employer may provide health 
insurance coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
contemporaneously provided to employees of the employer under the plan, 
if such exclusion of the employee from coverage under the plan is based 
on a health status-related factor with respect to the employee and such 
employee would, but for such exclusion on such basis, be eligible for 
coverage under the plan.
    ``(d) Prohibition of Discrimination Against Employers and Employees 
Eligible To Participate.--The requirements of this subsection are met 
with respect to an association health plan if--
            ``(1) under the terms of the plan, all employers meeting 
        the preceding requirements of this section are eligible to 
        qualify as participating employers for all geographically 
        available coverage options, unless, in the case of any such 
        employer, participation or contribution requirements of the 
        type referred to in section 2711 of the Public Health Service 
        Act are not met;
            ``(2) upon request, any employer eligible to participate is 
        furnished information regarding all coverage options available 
        under the plan; and
            ``(3) the applicable requirements of sections 701, 702, and 
        703 are met with respect to the plan.

``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION 
              RATES, AND BENEFIT OPTIONS.

    ``(a) In General.--The requirements of this section are met with 
respect to an association health plan if the following requirements are 
met:
            ``(1) Contents of governing instruments.--The instruments 
        governing the plan include a written instrument, meeting the 
        requirements of an instrument required under section 402(a)(1), 
        which--
                    ``(A) provides that the board of trustees serves as 
                the named fiduciary required for plans under section 
                402(a)(1) and serves in the capacity of a plan 
                administrator (referred to in section 3(16)(A));
                    ``(B) provides that the sponsor of the plan is to 
                serve as plan sponsor (referred to in section 
                3(16)(B)); and
                    ``(C) incorporates the requirements of section 806.
            ``(2) Contribution rates must be nondiscriminatory.--
                    ``(A) The contribution rates for any participating 
                small employer do not vary on the basis of the claims 
                experience of such employer and do not vary on the 
                basis of the type of business or industry in which such 
                employer is engaged.
                    ``(B) Nothing in this title or any other provision 
                of law shall be construed to preclude an association 
                health plan, or a health insurance issuer offering 
                health insurance coverage in connection with an 
                association health plan, from--
                            ``(i) setting contribution rates based on 
                        the claims experience of the plan; or
                            ``(ii) varying contribution rates for small 
                        employers in a State to the extent that such 
                        rates could vary using the same methodology 
                        employed in such State for regulating premium 
                        rates in the small group market with respect to 
                        health insurance coverage offered in connection 
                        with bona fide associations (within the meaning 
                        of section 2791(d)(3) of the Public Health 
                        Service Act),
                subject to the requirements of section 702(b) relating 
                to contribution rates.
            ``(3) Floor for number of covered individuals with respect 
        to certain plans.--If any benefit option under the plan does 
        not consist of health insurance coverage, the plan has as of 
        the beginning of the plan year not fewer than 1,000 
        participants and beneficiaries.
            ``(4) Marketing requirements.--
                    ``(A) In general.--If a benefit option which 
                consists of health insurance coverage is offered under 
                the plan, State-licensed insurance agents shall be used 
                to distribute to small employers coverage which does 
                not consist of health insurance coverage in a manner 
                comparable to the manner in which such agents are used 
                to distribute health insurance coverage.
                    ``(B) State-licensed insurance agents.--For 
                purposes of subparagraph (A), the term `State-licensed 
                insurance agents' means one or more agents who are 
                licensed in a State and are subject to the laws of such 
                State relating to licensure, qualification, testing, 
                examination, and continuing education of persons 
                authorized to offer, sell, or solicit health insurance 
                coverage in such State.
            ``(5) Regulatory requirements.--Such other requirements as 
        the applicable authority determines are necessary to carry out 
        the purposes of this part, which shall be prescribed by the 
        applicable authority by regulation through negotiated 
        rulemaking.
    ``(b) Ability of Association Health Plans To Design Benefit 
Options.--Subject to section 514(d), nothing in this part or any 
provision of State law (as defined in section 514(c)(1)) shall be 
construed to preclude an association health plan, or a health insurance 
issuer offering health insurance coverage in connection with an 
association health plan, from exercising its sole discretion in 
selecting the specific items and services consisting of medical care to 
be included as benefits under such plan or coverage, except (subject to 
section 514) in the case of any law to the extent that it (1) prohibits 
an exclusion of a specific disease from such coverage, or (2) is not 
preempted under section 731(a)(1) with respect to matters governed by 
section 711 or 712.

``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR 
              PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH 
              INSURANCE COVERAGE.

    ``(a) In General.--The requirements of this section are met with 
respect to an association health plan if--
            ``(1) the benefits under the plan consist solely of health 
        insurance coverage; or
            ``(2) if the plan provides any additional benefit options 
        which do not consist of health insurance coverage, the plan--
                    ``(A) establishes and maintains reserves with 
                respect to such additional benefit options, in amounts 
                recommended by the qualified actuary, consisting of--
                            ``(i) a reserve sufficient for unearned 
                        contributions;
                            ``(ii) a reserve sufficient for benefit 
                        liabilities which have been incurred, which 
                        have not been satisfied, and for which risk of 
                        loss has not yet been transferred, and for 
                        expected administrative costs with respect to 
                        such benefit liabilities;
                            ``(iii) a reserve sufficient for any other 
                        obligations of the plan; and
                            ``(iv) a reserve sufficient for a margin of 
                        error and other fluctuations, taking into 
                        account the specific circumstances of the plan; 
                        and
                    ``(B) establishes and maintains aggregate and 
                specific excess/stop loss insurance and solvency 
                indemnification, with respect to such additional 
                benefit options for which risk of loss has not yet been 
                transferred, as follows:
                            ``(i) The plan shall secure aggregate 
                        excess/stop loss insurance for the plan with an 
                        attachment point which is not greater than 125 
                        percent of expected gross annual claims. The 
                        applicable authority may by regulation, through 
                        negotiated rulemaking, provide for upward 
                        adjustments in the amount of such percentage in 
                        specified circumstances in which the plan 
                        specifically provides for and maintains 
                        reserves in excess of the amounts required 
                        under subparagraph (A).
                            ``(ii) The plan shall secure specific 
                        excess/stop loss insurance for the plan with an 
                        attachment point which is at least equal to an 
                        amount recommended by the plan's qualified 
                        actuary (but not more than $175,000). The 
                        applicable authority may by regulation, through 
                        negotiated rulemaking, provide for adjustments 
                        in the amount of such insurance in specified 
                        circumstances in which the plan specifically 
                        provides for and maintains reserves in excess 
                        of the amounts required under subparagraph (A).
                            ``(iii) The plan shall secure 
                        indemnification insurance for any claims which 
                        the plan is unable to satisfy by reason of a 
                        plan termination.
Any regulations prescribed by the applicable authority pursuant to 
clause (i) or (ii) of subparagraph (B) may allow for such adjustments 
in the required levels of excess/stop loss insurance as the qualified 
actuary may recommend, taking into account the specific circumstances 
of the plan.
    ``(b) Minimum Surplus in Addition to Claims Reserves.--In the case 
of any association health plan described in subsection (a)(2), the 
requirements of this subsection are met if the plan establishes and 
maintains surplus in an amount at least equal to--
            ``(1) $500,000, or
            ``(2) such greater amount (but not greater than $2,000,000) 
        as may be set forth in regulations prescribed by the applicable 
        authority through negotiated rulemaking, based on the level of 
        aggregate and specific excess/stop loss insurance provided with 
        respect to such plan.
    ``(c) Additional Requirements.--In the case of any association 
health plan described in subsection (a)(2), the applicable authority 
may provide such additional requirements relating to reserves and 
excess/stop loss insurance as the applicable authority considers 
appropriate. Such requirements may be provided by regulation, through 
negotiated rulemaking, with respect to any such plan or any class of 
such plans.
    ``(d) Adjustments for Excess/Stop Loss Insurance.--The applicable 
authority may provide for adjustments to the levels of reserves 
otherwise required under subsections (a) and (b) with respect to any 
plan or class of plans to take into account excess/stop loss insurance 
provided with respect to such plan or plans.
    ``(e) Alternative Means of Compliance.--The applicable authority 
may permit an association health plan described in subsection (a)(2) to 
substitute, for all or part of the requirements of this section (except 
subsection (a)(2)(B)(iii)), such security, guarantee, hold-harmless 
arrangement, or other financial arrangement as the applicable authority 
determines to be adequate to enable the plan to fully meet all its 
financial obligations on a timely basis and is otherwise no less 
protective of the interests of participants and beneficiaries than the 
requirements for which it is substituted. The applicable authority may 
take into account, for purposes of this subsection, evidence provided 
by the plan or sponsor which demonstrates an assumption of liability 
with respect to the plan. Such evidence may be in the form of a 
contract of indemnification, lien, bonding, insurance, letter of 
credit, recourse under applicable terms of the plan in the form of 
assessments of participating employers, security, or other financial 
arrangement.
    ``(f) Measures To Ensure Continued Payment of Benefits by Certain 
Plans in Distress.--
            ``(1) Payments by certain plans to association health plan 
        fund.--
                    ``(A) In general.--In the case of an association 
                health plan described in subsection (a)(2), the 
                requirements of this subsection are met if the plan 
                makes payments into the Association Health Plan Fund 
                under this subparagraph when they are due. Such 
                payments shall consist of annual payments in the amount 
                of $5,000, except that the Secretary shall reduce part 
                or all of such annual payments, or shall provide a 
                rebate of part or all of such a payment, to the extent 
                that the Secretary determines that the balance in such 
                Fund is sufficient (taking into account such a 
                reduction or rebate) to meet all reasonable actuarial 
                requirements. Such determination shall occur not less 
                than once annually. In addition to any such annual 
                payments, such payments may include such supplemental 
                payments as the Secretary may determine to be necessary 
                to meet reasonable actuarial requirements to carry out 
                paragraph (2). Payments under this paragraph are 
                payable to the Fund at the time determined by the 
                Secretary. Initial payments are due in advance of 
                certification under this part. Payments shall continue 
                to accrue until a plan's assets are distributed 
                pursuant to a termination procedure.
                    ``(B) Penalties for failure to make payments.--If 
                any payment is not made by a plan when it is due, a 
                late payment charge of not more than 100 percent of the 
                payment which was not timely paid shall be payable by 
                the plan to the Fund.
                    ``(C) Continued duty of the secretary.--The 
                Secretary shall not cease to carry out the provisions 
                of paragraph (2) on account of the failure of a plan to 
                pay any payment when due.
            ``(2) Payments by secretary to continue excess/stop loss 
        insurance coverage and indemnification insurance coverage for 
        certain plans.--In any case in which the applicable authority 
        determines that there is, or that there is reason to believe 
        that there will be: (A) a failure to take necessary corrective 
        actions under section 809(a) with respect to an association 
        health plan described in subsection (a)(2); or (B) a 
        termination of such a plan under section 809(b) or 810(b)(8) 
        (and, if the applicable authority is not the Secretary, 
        certifies such determination to the Secretary), the Secretary 
        shall determine the amounts necessary to make payments to an 
        insurer (designated by the Secretary) to maintain in force 
        excess/stop loss insurance coverage or indemnification 
        insurance coverage for such plan, if the Secretary determines 
        that there is a reasonable expectation that, without such 
        payments, claims would not be satisfied by reason of 
        termination of such coverage. The Secretary shall, to the 
        extent provided in advance in appropriation Acts, pay such 
        amounts so determined to the insurer designated by the 
        Secretary.
            ``(3) Association health plan fund.--
                    ``(A) In general.--There is established on the 
                books of the Treasury a fund to be known as the 
                `Association Health Plan Fund'. The Fund shall be 
                available for making payments pursuant to paragraph 
                (2). The Fund shall be credited with payments received 
                pursuant to paragraph (1)(A), penalties received 
                pursuant to paragraph (1)(B); and earnings on 
                investments of amounts of the Fund under subparagraph 
                (B).
                    ``(B) Investment.--Whenever the Secretary 
                determines that the moneys of the fund are in excess of 
                current needs, the Secretary may request the investment 
                of such amounts as the Secretary determines advisable 
                by the Secretary of the Treasury in obligations issued 
                or guaranteed by the United States.
    ``(g) Excess/Stop Loss Insurance.--For purposes of this section--
            ``(1) Aggregate excess/stop loss insurance.--The term 
        `aggregate excess/stop loss insurance' means, in connection 
        with an association health plan, a contract--
            ``(A) under which an insurer (meeting such minimum 
        standards as the applicable authority may prescribe by 
        regulation through negotiated rulemaking) provides for payment 
        to the plan with respect to aggregate claims under the plan in 
        excess of an amount or amounts specified in such contract;
            ``(B) which is guaranteed renewable; and
            ``(C) which allows for payment of premiums by any third 
        party on behalf of the insured plan.
            ``(2) Specific excess/stop loss insurance.--The term 
        `specific excess/stop loss insurance' means, in connection with 
        an association health plan, a contract--
                    ``(A) under which an insurer (meeting such minimum 
                standards as the applicable authority may prescribe by 
                regulation through negotiated rulemaking) provides for 
                payment to the plan with respect to claims under the 
                plan in connection with a covered individual in excess 
                of an amount or amounts specified in such contract in 
                connection with such covered individual;
                    ``(B) which is guaranteed renewable; and
                    ``(C) which allows for payment of premiums by any 
                third party on behalf of the insured plan.
    ``(h) Indemnification Insurance.--For purposes of this section, the 
term `indemnification insurance' means, in connection with an 
association health plan, a contract--
            ``(1) under which an insurer (meeting such minimum 
        standards as the applicable authority may prescribe through 
        negotiated rulemaking) provides for payment to the plan with 
        respect to claims under the plan which the plan is unable to 
        satisfy by reason of a termination pursuant to section 809(b) 
        (relating to mandatory termination);
            ``(2) which is guaranteed renewable and noncancellable for 
        any reason (except as the applicable authority may prescribe by 
        regulation through negotiated rulemaking); and
            ``(3) which allows for payment of premiums by any third 
        party on behalf of the insured plan.
    ``(i) Reserves.--For purposes of this section, the term `reserves' 
means, in connection with an association health plan, plan assets which 
meet the fiduciary standards under part 4 and such additional 
requirements regarding liquidity as the applicable authority may 
prescribe through negotiated rulemaking.
    ``(j) Solvency Standards Working Group.--
            ``(1) In general.--Within 90 days after the date of the 
        enactment of the Quality Care for the Uninsured Act of 1999, 
        the applicable authority shall establish a Solvency Standards 
        Working Group. In prescribing the initial regulations under 
        this section, the applicable authority shall take into account 
        the recommendations of such Working Group.
            ``(2) Membership.--The Working Group shall consist of 18 
        members appointed by the applicable authority as follows:
                    ``(A) three representatives of the National 
                Association of Insurance Commissioners;
                    ``(B) three representatives of the American Academy 
                of Actuaries;
                    ``(C) three representatives of the State 
                governments, or their interests;
                    ``(D) three representatives of existing self-
                insured arrangements, or their interests;
                    ``(E) three representatives of associations of the 
                type referred to in section 801(b)(1), or their 
                interests; and
                    ``(F) three representatives of multiemployer plans 
                that are group health plans, or their interests.

``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.

    ``(a) Filing Fee.--Under the procedure prescribed pursuant to 
section 802(a), an association health plan shall pay to the applicable 
authority at the time of filing an application for certification under 
this part a filing fee in the amount of $5,000, which shall be 
available in the case of the Secretary, to the extent provided in 
appropriation Acts, for the sole purpose of administering the 
certification procedures applicable with respect to association health 
plans.
    ``(b) Information To Be Included in Application for 
Certification.--An application for certification under this part meets 
the requirements of this section only if it includes, in a manner and 
form which shall be prescribed by the applicable authority through 
negotiated rulemaking, at least the following information:
            ``(1) Identifying information.--The names and addresses 
        of--
                    ``(A) the sponsor; and
                    ``(B) the members of the board of trustees of the 
                plan.
            ``(2) States in which plan intends to do business.--The 
        States in which participants and beneficiaries under the plan 
        are to be located and the number of them expected to be located 
        in each such State.
            ``(3) Bonding requirements.--Evidence provided by the board 
        of trustees that the bonding requirements of section 412 will 
        be met as of the date of the application or (if later) 
        commencement of operations.
            ``(4) Plan documents.--A copy of the documents governing 
        the plan (including any bylaws and trust agreements), the 
        summary plan description, and other material describing the 
        benefits that will be provided to participants and 
        beneficiaries under the plan.
            ``(5) Agreements with service providers.--A copy of any 
        agreements between the plan and contract administrators and 
        other service providers.
            ``(6) Funding report.--In the case of association health 
        plans providing benefits options in addition to health 
        insurance coverage, a report setting forth information with 
        respect to such additional benefit options determined as of a 
        date within the 120-day period ending with the date of the 
        application, including the following:
                    ``(A) Reserves.--A statement, certified by the 
                board of trustees of the plan, and a statement of 
                actuarial opinion, signed by a qualified actuary, that 
                all applicable requirements of section 806 are or will 
                be met in accordance with regulations which the 
                applicable authority shall prescribe through negotiated 
                rulemaking.
                    ``(B) Adequacy of contribution rates.--A statement 
                of actuarial opinion, signed by a qualified actuary, 
                which sets forth a description of the extent to which 
                contribution rates are adequate to provide for the 
                payment of all obligations and the maintenance of 
                required reserves under the plan for the 12-month 
                period beginning with such date within such 120-day 
                period, taking into account the expected coverage and 
                experience of the plan. If the contribution rates are 
                not fully adequate, the statement of actuarial opinion 
                shall indicate the extent to which the rates are 
                inadequate and the changes needed to ensure adequacy.
                    ``(C) Current and projected value of assets and 
                liabilities.--A statement of actuarial opinion signed 
                by a qualified actuary, which sets forth the current 
                value of the assets and liabilities accumulated under 
                the plan and a projection of the assets, liabilities, 
                income, and expenses of the plan for the 12-month 
                period referred to in subparagraph (B). The income 
                statement shall identify separately the plan's 
                administrative expenses and claims.
                    ``(D) Costs of coverage to be charged and other 
                expenses.--A statement of the costs of coverage to be 
                charged, including an itemization of amounts for 
                administration, reserves, and other expenses associated 
                with the operation of the plan.
                    ``(E) Other information.--Any other information as 
                may be determined by the applicable authority, by 
                regulation through negotiated rulemaking, as necessary 
                to carry out the purposes of this part.
    ``(c) Filing Notice of Certification With States.--A certification 
granted under this part to an association health plan shall not be 
effective unless written notice of such certification is filed with the 
applicable State authority of each State in which at least 25 percent 
of the participants and beneficiaries under the plan are located. For 
purposes of this subsection, an individual shall be considered to be 
located in the State in which a known address of such individual is 
located or in which such individual is employed.
    ``(d) Notice of Material Changes.--In the case of any association 
health plan certified under this part, descriptions of material changes 
in any information which was required to be submitted with the 
application for the certification under this part shall be filed in 
such form and manner as shall be prescribed by the applicable authority 
by regulation through negotiated rulemaking. The applicable authority 
may require by regulation, through negotiated rulemaking, prior notice 
of material changes with respect to specified matters which might serve 
as the basis for suspension or revocation of the certification.
    ``(e) Reporting Requirements for Certain Association Health 
Plans.--An association health plan certified under this part which 
provides benefit options in addition to health insurance coverage for 
such plan year shall meet the requirements of section 103 by filing an 
annual report under such section which shall include information 
described in subsection (b)(6) with respect to the plan year and, 
notwithstanding section 104(a)(1)(A), shall be filed with the 
applicable authority not later than 90 days after the close of the plan 
year (or on such later date as may be prescribed by the applicable 
authority). The applicable authority may require by regulation through 
negotiated rulemaking such interim reports as it considers appropriate.
    ``(f) Engagement of Qualified Actuary.--The board of trustees of 
each association health plan which provides benefits options in 
addition to health insurance coverage and which is applying for 
certification under this part or is certified under this part shall 
engage, on behalf of all participants and beneficiaries, a qualified 
actuary who shall be responsible for the preparation of the materials 
comprising information necessary to be submitted by a qualified actuary 
under this part. The qualified actuary shall utilize such assumptions 
and techniques as are necessary to enable such actuary to form an 
opinion as to whether the contents of the matters reported under this 
part--
            ``(1) are in the aggregate reasonably related to the 
        experience of the plan and to reasonable expectations; and
            ``(2) represent such actuary's best estimate of anticipated 
        experience under the plan.
The opinion by the qualified actuary shall be made with respect to, and 
shall be made a part of, the annual report.

``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

    ``Except as provided in section 809(b), an association health plan 
which is or has been certified under this part may terminate (upon or 
at any time after cessation of accruals in benefit liabilities) only if 
the board of trustees--
            ``(1) not less than 60 days before the proposed termination 
        date, provides to the participants and beneficiaries a written 
        notice of intent to terminate stating that such termination is 
        intended and the proposed termination date;
            ``(2) develops a plan for winding up the affairs of the 
        plan in connection with such termination in a manner which will 
        result in timely payment of all benefits for which the plan is 
        obligated; and
            ``(3) submits such plan in writing to the applicable 
        authority.
Actions required under this section shall be taken in such form and 
manner as may be prescribed by the applicable authority by regulation 
through negotiated rulemaking.

``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.

    ``(a) Actions To Avoid Depletion of Reserves.--An association 
health plan which is certified under this part and which provides 
benefits other than health insurance coverage shall continue to meet 
the requirements of section 806, irrespective of whether such 
certification continues in effect. The board of trustees of such plan 
shall determine quarterly whether the requirements of section 806 are 
met. In any case in which the board determines that there is reason to 
believe that there is or will be a failure to meet such requirements, 
or the applicable authority makes such a determination and so notifies 
the board, the board shall immediately notify the qualified actuary 
engaged by the plan, and such actuary shall, not later than the end of 
the next following month, make such recommendations to the board for 
corrective action as the actuary determines necessary to ensure 
compliance with section 806. Not later than 30 days after receiving 
from the actuary recommendations for corrective actions, the board 
shall notify the applicable authority (in such form and manner as the 
applicable authority may prescribe by regulation through negotiated 
rulemaking) of such recommendations of the actuary for corrective 
action, together with a description of the actions (if any) that the 
board has taken or plans to take in response to such recommendations. 
The board shall thereafter report to the applicable authority, in such 
form and frequency as the applicable authority may specify to the 
board, regarding corrective action taken by the board until the 
requirements of section 806 are met.
    ``(b) Mandatory Termination.--In any case in which--
            ``(1) the applicable authority has been notified under 
        subsection (a) of a failure of an association health plan which 
        is or has been certified under this part and is described in 
        section 806(a)(2) to meet the requirements of section 806 and 
        has not been notified by the board of trustees of the plan that 
        corrective action has restored compliance with such 
        requirements; and
            ``(2) the applicable authority determines that there is a 
        reasonable expectation that the plan will continue to fail to 
        meet the requirements of section 806,
the board of trustees of the plan shall, at the direction of the 
applicable authority, terminate the plan and, in the course of the 
termination, take such actions as the applicable authority may require, 
including satisfying any claims referred to in section 
806(a)(2)(B)(iii) and recovering for the plan any liability under 
subsection (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
that the affairs of the plan will be, to the maximum extent possible, 
wound up in a manner which will result in timely provision of all 
benefits for which the plan is obligated.

``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT ASSOCIATION 
              HEALTH PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO 
              HEALTH INSURANCE COVERAGE.

    ``(a) Appointment of Secretary as Trustee for Insolvent Plans.--
Whenever the Secretary determines that an association health plan which 
is or has been certified under this part and which is described in 
section 806(a)(2) will be unable to provide benefits when due or is 
otherwise in a financially hazardous condition, as shall be defined by 
the Secretary by regulation through negotiated rulemaking, the 
Secretary shall, upon notice to the plan, apply to the appropriate 
United States district court for appointment of the Secretary as 
trustee to administer the plan for the duration of the insolvency. The 
plan may appear as a party and other interested persons may intervene 
in the proceedings at the discretion of the court. The court shall 
appoint such Secretary trustee if the court determines that the 
trusteeship is necessary to protect the interests of the participants 
and beneficiaries or providers of medical care or to avoid any 
unreasonable deterioration of the financial condition of the plan. The 
trusteeship of such Secretary shall continue until the conditions 
described in the first sentence of this subsection are remedied or the 
plan is terminated.
    ``(b) Powers as Trustee.--The Secretary, upon appointment as 
trustee under subsection (a), shall have the power--
            ``(1) to do any act authorized by the plan, this title, or 
        other applicable provisions of law to be done by the plan 
        administrator or any trustee of the plan;
            ``(2) to require the transfer of all (or any part) of the 
        assets and records of the plan to the Secretary as trustee;
            ``(3) to invest any assets of the plan which the Secretary 
        holds in accordance with the provisions of the plan, 
        regulations prescribed by the Secretary through negotiated 
        rulemaking, and applicable provisions of law;
            ``(4) to require the sponsor, the plan administrator, any 
        participating employer, and any employee organization 
        representing plan participants to furnish any information with 
        respect to the plan which the Secretary as trustee may 
        reasonably need in order to administer the plan;
            ``(5) to collect for the plan any amounts due the plan and 
        to recover reasonable expenses of the trusteeship;
            ``(6) to commence, prosecute, or defend on behalf of the 
        plan any suit or proceeding involving the plan;
            ``(7) to issue, publish, or file such notices, statements, 
        and reports as may be required by the Secretary by regulation 
        through negotiated rulemaking or required by any order of the 
        court;
            ``(8) to terminate the plan (or provide for its termination 
        accordance with section 809(b)) and liquidate the plan assets, 
        to restore the plan to the responsibility of the sponsor, or to 
        continue the trusteeship;
            ``(9) to provide for the enrollment of plan participants 
        and beneficiaries under appropriate coverage options; and
            ``(10) to do such other acts as may be necessary to comply 
        with this title or any order of the court and to protect the 
        interests of plan participants and beneficiaries and providers 
        of medical care.
    ``(c) Notice of Appointment.--As soon as practicable after the 
Secretary's appointment as trustee, the Secretary shall give notice of 
such appointment to--
            ``(1) the sponsor and plan administrator;
            ``(2) each participant;
            ``(3) each participating employer; and
            ``(4) if applicable, each employee organization which, for 
        purposes of collective bargaining, represents plan 
        participants.
    ``(d) Additional Duties.--Except to the extent inconsistent with 
the provisions of this title, or as may be otherwise ordered by the 
court, the Secretary, upon appointment as trustee under this section, 
shall be subject to the same duties as those of a trustee under section 
704 of title 11, United States Code, and shall have the duties of a 
fiduciary for purposes of this title.
    ``(e) Other Proceedings.--An application by the Secretary under 
this subsection may be filed notwithstanding the pendency in the same 
or any other court of any bankruptcy, mortgage foreclosure, or equity 
receivership proceeding, or any proceeding to reorganize, conserve, or 
liquidate such plan or its property, or any proceeding to enforce a 
lien against property of the plan.
    ``(f) Jurisdiction of Court.--
            ``(1) In general.--Upon the filing of an application for 
        the appointment as trustee or the issuance of a decree under 
        this section, the court to which the application is made shall 
        have exclusive jurisdiction of the plan involved and its 
        property wherever located with the powers, to the extent 
        consistent with the purposes of this section, of a court of the 
        United States having jurisdiction over cases under chapter 11 
        of title 11, United States Code. Pending an adjudication under 
        this section such court shall stay, and upon appointment by it 
        of the Secretary as trustee, such court shall continue the stay 
        of, any pending mortgage foreclosure, equity receivership, or 
        other proceeding to reorganize, conserve, or liquidate the 
        plan, the sponsor, or property of such plan or sponsor, and any 
        other suit against any receiver, conservator, or trustee of the 
        plan, the sponsor, or property of the plan or sponsor. Pending 
        such adjudication and upon the appointment by it of the 
        Secretary as trustee, the court may stay any proceeding to 
        enforce a lien against property of the plan or the sponsor or 
        any other suit against the plan or the sponsor.
            ``(2) Venue.--An action under this section may be brought 
        in the judicial district where the sponsor or the plan 
        administrator resides or does business or where any asset of 
        the plan is situated. A district court in which such action is 
        brought may issue process with respect to such action in any 
        other judicial district.
    ``(g) Personnel.--In accordance with regulations which shall be 
prescribed by the Secretary through negotiated rulemaking, the 
Secretary shall appoint, retain, and compensate accountants, actuaries, 
and other professional service personnel as may be necessary in 
connection with the Secretary's service as trustee under this section.

``SEC. 811. STATE ASSESSMENT AUTHORITY.

    ``(a) In General.--Notwithstanding section 514, a State may impose 
by law a contribution tax on an association health plan described in 
section 806(a)(2), if the plan commenced operations in such State after 
the date of the enactment of the Quality Care for the Uninsured Act of 
1999.
    ``(b) Contribution Tax.--For purposes of this section, the term 
`contribution tax' imposed by a State on an association health plan 
means any tax imposed by such State if--
            ``(1) such tax is computed by applying a rate to the amount 
        of premiums or contributions, with respect to individuals 
        covered under the plan who are residents of such State, which 
        are received by the plan from participating employers located 
        in such State or from such individuals;
            ``(2) the rate of such tax does not exceed the rate of any 
        tax imposed by such State on premiums or contributions received 
        by insurers or health maintenance organizations for health 
        insurance coverage offered in such State in connection with a 
        group health plan;
            ``(3) such tax is otherwise nondiscriminatory; and
            ``(4) the amount of any such tax assessed on the plan is 
        reduced by the amount of any tax or assessment otherwise 
        imposed by the State on premiums, contributions, or both 
        received by insurers or health maintenance organizations for 
        health insurance coverage, aggregate excess/stop loss insurance 
        (as defined in section 806(g)(1)), specific excess/stop loss 
        insurance (as defined in section 806(g)(2)), other insurance 
        related to the provision of medical care under the plan, or any 
        combination thereof provided by such insurers or health 
        maintenance organizations in such State in connection with such 
        plan.

``SEC. 812. SPECIAL RULES FOR CHURCH PLANS.

    ``(a) Election for Church Plans.--Notwithstanding section 4(b)(2), 
if a church, a convention or association of churches, or an 
organization described in section 3(33)(C)(i) maintains a church plan 
which is a group health plan (as defined in section 733(a)(1)), and 
such church, convention, association, or organization makes an election 
with respect to such plan under this subsection (in such form and 
manner as the Secretary may by regulation prescribe), then the 
provisions of this section shall apply to such plan, with respect to 
benefits provided under such plan consisting of medical care, as if 
section 4(b)(2) did not contain an exclusion for church plans. Nothing 
in this subsection shall be construed to render any other section of 
this title applicable to church plans, except to the extent that such 
other section is incorporated by reference in this section.
    ``(b) Effect of Election.--
            ``(1) Preemption of state insurance laws regulating covered 
        church plans.--Subject to paragraphs (2) and (3), this section 
        shall supersede any and all State laws which regulate insurance 
        insofar as they may now or hereafter regulate church plans to 
        which this section applies or trusts established under such 
        church plans.
            ``(2) General state insurance regulation unaffected.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B) and paragraph (3), nothing in this 
                section shall be construed to exempt or relieve any 
                person from any provision of State law which regulates 
                insurance.
                    ``(B) Church plans not to be deemed insurance 
                companies or insurers.--Neither a church plan to which 
                this section applies, nor any trust established under 
                such a church plan, shall be deemed to be an insurance 
                company or other insurer or to be engaged in the 
                business of insurance for purposes of any State law 
                purporting to regulate insurance companies or insurance 
                contracts.
            ``(3) Preemption of certain state laws relating to premium 
        rate regulation and benefit mandates.--The provisions of 
        subsections (a)(2)(B) and (b) of section 805 shall apply with 
        respect to a church plan to which this section applies in the 
        same manner and to the same extent as such provisions apply 
        with respect to association health plans.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) State law.--The term `State law' includes all 
                laws, decisions, rules, regulations, or other State 
                action having the effect of law, of any State. A law of 
                the United States applicable only to the District of 
                Columbia shall be treated as a State law rather than a 
                law of the United States.
                    ``(B) State.--The term `State' includes a State, 
                any political subdivision thereof, or any agency or 
                instrumentality of either, which purports to regulate, 
                directly or indirectly, the terms and conditions of 
                church plans covered by this section.
    ``(c) Requirements for Covered Church Plans.--
            ``(1) Fiduciary rules and exclusive purpose.--A fiduciary 
        shall discharge his duties with respect to a church plan to 
        which this section applies--
                    ``(A) for the exclusive purpose of:
                            ``(i) providing benefits to participants 
                        and their beneficiaries; and
                            ``(ii) defraying reasonable expenses of 
                        administering the plan;
                    ``(B) with the care, skill, prudence and diligence 
                under the circumstances then prevailing that a prudent 
                man acting in a like capacity and familiar with such 
                matters would use in the conduct of an enterprise of a 
                like character and with like aims; and
                    ``(C) in accordance with the documents and 
                instruments governing the plan.
        The requirements of this paragraph shall not be treated as not 
        satisfied solely because the plan assets are commingled with 
        other church assets, to the extent that such plan assets are 
        separately accounted for.
            ``(2) Claims procedure.--In accordance with regulations of 
        the Secretary, every church plan to which this section applies 
        shall--
                    ``(A) provide adequate notice in writing to any 
                participant or beneficiary whose claim for benefits 
                under the plan has been denied, setting forth the 
                specific reasons for such denial, written in a manner 
                calculated to be understood by the participant;
                    ``(B) afford a reasonable opportunity to any 
                participant whose claim for benefits has been denied 
                for a full and fair review by the appropriate fiduciary 
                of the decision denying the claim; and
                    ``(C) provide a written statement to each 
                participant describing the procedures established 
                pursuant to this paragraph.
            ``(3) Annual statements.--In accordance with regulations of 
        the Secretary, every church plan to which this section applies 
        shall file with the Secretary an annual statement--
                    ``(A) stating the names and addresses of the plan 
                and of the church, convention, or association 
                maintaining the plan (and its principal place of 
                business);
                    ``(B) certifying that it is a church plan to which 
                this section applies and that it complies with the 
                requirements of paragraphs (1) and (2);
                    ``(C) identifying the States in which participants 
                and beneficiaries under the plan are or likely will be 
                located during the 1-year period covered by the 
                statement; and
                    ``(D) containing a copy of a statement of actuarial 
                opinion signed by a qualified actuary that the plan 
                maintains capital, reserves, insurance, other financial 
                arrangements, or any combination thereof adequate to 
                enable the plan to fully meet all of its financial 
                obligations on a timely basis.
            ``(4) Disclosure.--At the time that the annual statement is 
        filed by a church plan with the Secretary pursuant to paragraph 
        (3), a copy of such statement shall be made available by the 
        Secretary to the State insurance commissioner (or similar 
        official) of any State. The name of each church plan and 
        sponsoring organization filing an annual statement in 
        compliance with paragraph (3) shall be published annually in 
        the Federal Register.
    ``(c) Enforcement.--The Secretary may enforce the provisions of 
this section in a manner consistent with section 502, to the extent 
applicable with respect to actions under section 502(a)(5), and with 
section 3(33)(D), except that, other than for the purpose of seeking a 
temporary restraining order, a civil action may be brought with respect 
to the plan's failure to meet any requirement of this section only if 
the plan fails to correct its failure within the correction period 
described in section 3(33)(D). The other provisions of part 5 (except 
sections 501(a), 503, 512, 514, and 515) shall apply with respect to 
the enforcement and administration of this section.
    ``(d) Definitions and Other Rules.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        section, any term used in this section which is defined in any 
        provision of this title shall have the definition provided such 
        term by such provision.
            ``(2) Seminary students.--Seminary students who are 
        enrolled in an institution of higher learning described in 
        section 3(33)(C)(iv) and who are treated as participants under 
        the terms of a church plan to which this section applies shall 
        be deemed to be employees as defined in section 3(6) if the 
        number of such students constitutes an insignificant portion of 
        the total number of individuals who are treated as participants 
        under the terms of the plan.

``SEC. 813. DEFINITIONS AND RULES OF CONSTRUCTION.

    ``(a) Definitions.--For purposes of this part--
            ``(1) Group health plan.--The term `group health plan' has 
        the meaning provided in section 733(a)(1) (after applying 
        subsection (b) of this section).
            ``(2) Medical care.--The term `medical care' has the 
        meaning provided in section 733(a)(2).
            ``(3) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning provided in section 
        733(b)(1).
            ``(4) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning provided in section 733(b)(2).
            ``(5) Applicable authority.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `applicable authority' 
                means, in connection with an association health plan--
                            ``(i) the State recognized pursuant to 
                        subsection (c) of section 506 as the State to 
                        which authority has been delegated in 
                        connection with such plan; or
                            ``(ii) if there is no State referred to in 
                        clause (i), the Secretary.
                    ``(B) Exceptions.--
                            ``(i) Joint authorities.--Where such term 
                        appears in section 808(3), section 807(e) (in 
                        the first instance), section 809(a) (in the 
                        second instance), section 809(a) (in the fourth 
                        instance), and section 809(b)(1), such term 
                        means, in connection with an association health 
                        plan, the Secretary and the State referred to 
                        in subparagraph (A)(i) (if any) in connection 
                        with such plan.
                            ``(ii) Regulatory authorities.--Where such 
                        term appears in section 802(a) (in the first 
                        instance), section 802(d), section 802(e), 
                        section 803(d), section 805(a)(5), section 
                        806(a)(2), section 806(b), section 806(c), 
                        section 806(d), paragraphs (1)(A) and (2)(A) of 
                        section 806(g), section 806(h), section 806(i), 
                        section 806(j), section 807(a) (in the second 
                        instance), section 807(b), section 807(d), 
                        section 807(e) (in the second instance), 
                        section 808 (in the matter after paragraph 
                        (3)), and section 809(a) (in the third 
                        instance), such term means, in connection with 
                        an association health plan, the Secretary.
            ``(6) Health status-related factor.--The term `health 
        status-related factor' has the meaning provided in section 
        733(d)(2).
            ``(7) Individual market.--
                    ``(A) In general.--The term `individual market' 
                means the market for health insurance coverage offered 
                to individuals other than in connection with a group 
                health plan.
                    ``(B) Treatment of very small groups.--
                            ``(i) In general.--Subject to clause (ii), 
                        such term includes coverage offered in 
                        connection with a group health plan that has 
                        fewer than two participants as current 
                        employees or participants described in section 
                        732(d)(3) on the first day of the plan year.
                            ``(ii) State exception.--Clause (i) shall 
                        not apply in the case of health insurance 
                        coverage offered in a State if such State 
                        regulates the coverage described in such clause 
                        in the same manner and to the same extent as 
                        coverage in the small group market (as defined 
                        in section 2791(e)(5) of the Public Health 
                        Service Act) is regulated by such State.
            ``(8) Participating employer.--The term `participating 
        employer' means, in connection with an association health plan, 
        any employer, if any individual who is an employee of such 
        employer, a partner in such employer, or a self-employed 
        individual who is such employer (or any dependent, as defined 
        under the terms of the plan, of such individual) is or was 
        covered under such plan in connection with the status of such 
        individual as such an employee, partner, or self-employed 
        individual in relation to the plan.
            ``(9) Applicable state authority.--The term `applicable 
        State authority' means, with respect to a health insurance 
        issuer in a State, the State insurance commissioner or official 
        or officials designated by the State to enforce the 
        requirements of title XXVII of the Public Health Service Act 
        for the State involved with respect to such issuer.
            ``(10) Qualified actuary.--The term `qualified actuary' 
        means an individual who is a member of the American Academy of 
        Actuaries or meets such reasonable standards and qualifications 
        as the Secretary may provide by regulation through negotiated 
        rulemaking.
            ``(11) Affiliated member.--The term `affiliated member' 
        means, in connection with a sponsor--
                    ``(A) a person who is otherwise eligible to be a 
                member of the sponsor but who elects an affiliated 
                status with the sponsor,
                    ``(B) in the case of a sponsor with members which 
                consist of associations, a person who is a member of 
                any such association and elects an affiliated status 
                with the sponsor, or
                    ``(C) in the case of an association health plan in 
                existence on the date of the enactment of the Quality 
                Care for the Uninsured Act of 1999, a person eligible 
                to be a member of the sponsor or one of its member 
                associations.
            ``(12) Large employer.--The term `large employer' means, in 
        connection with a group health plan with respect to a plan 
        year, an employer who employed an average of at least 51 
        employees on business days during the preceding calendar year 
        and who employs at least two employees on the first day of the 
        plan year.
            ``(13) Small employer.--The term `small employer' means, in 
        connection with a group health plan with respect to a plan 
        year, an employer who is not a large employer.
    ``(b) Rules of Construction.--
            ``(1) Employers and employees.--For purposes of determining 
        whether a plan, fund, or program is an employee welfare benefit 
        plan which is an association health plan, and for purposes of 
        applying this title in connection with such plan, fund, or 
        program so determined to be such an employee welfare benefit 
        plan--
                    ``(A) in the case of a partnership, the term 
                `employer' (as defined in section (3)(5)) includes the 
                partnership in relation to the partners, and the term 
                `employee' (as defined in section (3)(6)) includes any 
                partner in relation to the partnership; and
                    ``(B) in the case of a self-employed individual, 
                the term `employer' (as defined in section 3(5)) and 
                the term `employee' (as defined in section 3(6)) shall 
                include such individual.
            ``(2) Plans, funds, and programs treated as employee 
        welfare benefit plans.--In the case of any plan, fund, or 
        program which was established or is maintained for the purpose 
        of providing medical care (through the purchase of insurance or 
        otherwise) for employees (or their dependents) covered 
        thereunder and which demonstrates to the Secretary that all 
        requirements for certification under this part would be met 
        with respect to such plan, fund, or program if such plan, fund, 
        or program were a group health plan, such plan, fund, or 
        program shall be treated for purposes of this title as an 
        employee welfare benefit plan on and after the date of such 
        demonstration.''.
    (b) Conforming Amendments to Preemption Rules.--
            (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
        amended by adding at the end the following new subparagraph:
    ``(E) The preceding subparagraphs of this paragraph do not apply 
with respect to any State law in the case of an association health plan 
which is certified under part 8.''.
            (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
                    (A) in subsection (b)(4), by striking ``Subsection 
                (a)'' and inserting ``Subsections (a) and (d)'';
                    (B) in subsection (b)(5), by striking ``subsection 
                (a)'' in subparagraph (A) and inserting ``subsection 
                (a) of this section and subsections (a)(2)(B) and (b) 
                of section 805'', and by striking ``subsection (a)'' in 
                subparagraph (B) and inserting ``subsection (a) of this 
                section or subsection (a)(2)(B) or (b) of section 
                805'';
                    (C) by redesignating subsection (d) as subsection 
                (e); and
                    (D) by inserting after subsection (c) the following 
                new subsection:
    ``(d)(1) Except as provided in subsection (b)(4), the provisions of 
this title shall supersede any and all State laws insofar as they may 
now or hereafter preclude, or have the effect of precluding, a health 
insurance issuer from offering health insurance coverage in connection 
with an association health plan which is certified under part 8.
    ``(2) Except as provided in paragraphs (4) and (5) of subsection 
(b) of this section--
            ``(A) In any case in which health insurance coverage of any 
        policy type is offered under an association health plan 
        certified under part 8 to a participating employer operating in 
        such State, the provisions of this title shall supersede any 
        and all laws of such State insofar as they may preclude a 
        health insurance issuer from offering health insurance coverage 
        of the same policy type to other employers operating in the 
        State which are eligible for coverage under such association 
        health plan, whether or not such other employers are 
        participating employers in such plan.
            ``(B) In any case in which health insurance coverage of any 
        policy type is offered under an association health plan in a 
        State and the filing, with the applicable State authority, of 
        the policy form in connection with such policy type is approved 
        by such State authority, the provisions of this title shall 
        supersede any and all laws of any other State in which health 
        insurance coverage of such type is offered, insofar as they may 
        preclude, upon the filing in the same form and manner of such 
        policy form with the applicable State authority in such other 
        State, the approval of the filing in such other State.
    ``(3) For additional provisions relating to association health 
plans, see subsections (a)(2)(B) and (b) of section 805.
    ``(4) For purposes of this subsection, the term `association health 
plan' has the meaning provided in section 801(a), and the terms `health 
insurance coverage', `participating employer', and `health insurance 
issuer' have the meanings provided such terms in section 811, 
respectively.''.
            (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
        1144(b)(6)(A)) is amended--
                    (A) in clause (i)(II), by striking ``and'' at the 
                end;
                    (B) in clause (ii), by inserting ``and which does 
                not provide medical care (within the meaning of section 
                733(a)(2)),'' after ``arrangement,'', and by striking 
                ``title.'' and inserting ``title, and''; and
                    (C) by adding at the end the following new clause:
            ``(iii) subject to subparagraph (E), in the case of any 
        other employee welfare benefit plan which is a multiple 
        employer welfare arrangement and which provides medical care 
        (within the meaning of section 733(a)(2)), any law of any State 
        which regulates insurance may apply.''.
            (4) Section 514(e) of such Act (as redesignated by 
        paragraph (2)(C)) is amended--
                    (A) by striking ``Nothing'' and inserting ``(1) 
                Except as provided in paragraph (2), nothing''; and
                    (B) by adding at the end the following new 
                paragraph:
    ``(2) Nothing in any other provision of law enacted on or after the 
date of the enactment of the Quality Care for the Uninsured Act of 1999 
shall be construed to alter, amend, modify, invalidate, impair, or 
supersede any provision of this title, except by specific cross-
reference to the affected section.''.
    (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
102(16)(B)) is amended by adding at the end the following new sentence: 
``Such term also includes a person serving as the sponsor of an 
association health plan under part 8.''.
    (d) Disclosure of Solvency Protections Related to Self-Insured and 
Fully Insured Options Under Association Health Plans.--Section 102(b) 
of such Act (29 U.S.C. 102(b)) is amended by adding at the end the 
following: ``An association health plan shall include in its summary 
plan description, in connection with each benefit option, a description 
of the form of solvency or guarantee fund protection secured pursuant 
to this Act or applicable State law, if any.''.
    (e) Savings Clause.--Section 731(c) of such Act is amended by 
inserting ``or part 8'' after ``this part''.
    (f) Report to the Congress Regarding Certification of Self-Insured 
Association Health Plans.--Not later than January 1, 2004, the 
Secretary of Labor shall report to the Committee on Education and the 
Workforce of the House of Representatives and the Committee on Health, 
Education, Labor, and Pensions of the Senate the effect association 
health plans have had, if any, on reducing the number of uninsured 
individuals.
    (g) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 is amended by inserting 
after the item relating to section 734 the following new items:

           ``Part 8--Rules Governing Association Health Plans

``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution 
                            rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for 
                            plans providing health benefits in addition 
                            to health insurance coverage.
``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.
``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Trusteeship by the Secretary of insolvent association 
                            health plans providing health benefits in 
                            addition to health insurance coverage.
``Sec. 811. State assessment authority.
``Sec. 812. Special rules for church plans.
``Sec. 813. Definitions and rules of construction.''.

SEC. 302. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.

    Section 3(40)(B) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1002(40)(B)) is amended--
            (1) in clause (i), by inserting ``for any plan year of any 
        such plan, or any fiscal year of any such other arrangement;'' 
        after ``single employer'', and by inserting ``during such year 
        or at any time during the preceding 1-year period'' after 
        ``control group'';
            (2) in clause (iii)--
                    (A) by striking ``common control shall not be based 
                on an interest of less than 25 percent'' and inserting 
                ``an interest of greater than 25 percent may not be 
                required as the minimum interest necessary for common 
                control''; and
                    (B) by striking ``similar to'' and inserting 
                ``consistent and coextensive with'';
            (3) by redesignating clauses (iv) and (v) as clauses (v) 
        and (vi), respectively; and
            (4) by inserting after clause (iii) the following new 
        clause:
            ``(iv) in determining, after the application of clause (i), 
        whether benefits are provided to employees of two or more 
        employers, the arrangement shall be treated as having only one 
        participating employer if, after the application of clause (i), 
        the number of individuals who are employees and former 
        employees of any one participating employer and who are covered 
        under the arrangement is greater than 75 percent of the 
        aggregate number of all individuals who are employees or former 
        employees of participating employers and who are covered under 
        the arrangement;''.

SEC. 303. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED 
              ARRANGEMENTS.

    (a) In General.--Section 3(40)(A)(i) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to 
read as follows:
            ``(i)(I) under or pursuant to one or more collective 
        bargaining agreements which are reached pursuant to collective 
        bargaining described in section 8(d) of the National Labor 
        Relations Act (29 U.S.C. 158(d)) or paragraph Fourth of section 
        2 of the Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or 
        which are reached pursuant to labor-management negotiations 
        under similar provisions of State public employee relations 
        laws, and (II) in accordance with subparagraphs (C), (D), and 
        (E);''.
    (b) Limitations.--Section 3(40) of such Act (29 U.S.C. 1002(40)) is 
amended by adding at the end the following new subparagraphs:
    ``(C) For purposes of subparagraph (A)(i)(II), a plan or other 
arrangement shall be treated as established or maintained in accordance 
with this subparagraph only if the following requirements are met:
            ``(i) The plan or other arrangement, and the employee 
        organization or any other entity sponsoring the plan or other 
        arrangement, do not--
                    ``(I) utilize the services of any licensed 
                insurance agent or broker for soliciting or enrolling 
                employers or individuals as participating employers or 
                covered individuals under the plan or other 
                arrangement; or
                    ``(II) pay any type of compensation to a person, 
                other than a full time employee of the employee 
                organization (or a member of the organization to the 
                extent provided in regulations prescribed by the 
                Secretary through negotiated rulemaking), that is 
                related either to the volume or number of employers or 
                individuals solicited or enrolled as participating 
                employers or covered individuals under the plan or 
                other arrangement, or to the dollar amount or size of 
                the contributions made by participating employers or 
                covered individuals to the plan or other arrangement;
        except to the extent that the services used by the plan, 
        arrangement, organization, or other entity consist solely of 
        preparation of documents necessary for compliance with the 
        reporting and disclosure requirements of part 1 or 
        administrative, investment, or consulting services unrelated to 
        solicitation or enrollment of covered individuals.
            ``(ii) As of the end of the preceding plan year, the number 
        of covered individuals under the plan or other arrangement who 
        are neither--
                    ``(I) employed within a bargaining unit covered by 
                any of the collective bargaining agreements with a 
                participating employer (nor covered on the basis of an 
                individual's employment in such a bargaining unit); nor
                    ``(II) present employees (or former employees who 
                were covered while employed) of the sponsoring employee 
                organization, of an employer who is or was a party to 
                any of the collective bargaining agreements, or of the 
                plan or other arrangement or a related plan or 
                arrangement (nor covered on the basis of such present 
                or former employment);
        does not exceed 15 percent of the total number of individuals 
        who are covered under the plan or arrangement and who are 
        present or former employees who are or were covered under the 
        plan or arrangement pursuant to a collective bargaining 
        agreement with a participating employer. The requirements of 
        the preceding provisions of this clause shall be treated as 
        satisfied if, as of the end of the preceding plan year, such 
        covered individuals are comprised solely of individuals who 
        were covered individuals under the plan or other arrangement as 
        of the date of the enactment of the Quality Care for the 
        Uninsured Act of 1999 and, as of the end of the preceding plan 
        year, the number of such covered individuals does not exceed 25 
        percent of the total number of present and former employees 
        enrolled under the plan or other arrangement.
            ``(iii) The employee organization or other entity 
        sponsoring the plan or other arrangement certifies to the 
        Secretary each year, in a form and manner which shall be 
        prescribed by the Secretary through negotiated rulemaking that 
        the plan or other arrangement meets the requirements of clauses 
        (i) and (ii).
    ``(D) For purposes of subparagraph (A)(i)(II), a plan or 
arrangement shall be treated as established or maintained in accordance 
with this subparagraph only if--
            ``(i) all of the benefits provided under the plan or 
        arrangement consist of health insurance coverage; or
            ``(ii)(I) the plan or arrangement is a multiemployer plan; 
        and
            ``(II) the requirements of clause (B) of the proviso to 
        clause (5) of section 302(c) of the Labor Management Relations 
        Act, 1947 (29 U.S.C. 186(c)) are met with respect to such plan 
        or other arrangement.
    ``(E) For purposes of subparagraph (A)(i)(II), a plan or 
arrangement shall be treated as established or maintained in accordance 
with this subparagraph only if--
            ``(i) the plan or arrangement is in effect as of the date 
        of the enactment of the Quality Care for the Uninsured Act of 
        1999; or
            ``(ii) the employee organization or other entity sponsoring 
        the plan or arrangement--
                    ``(I) has been in existence for at least 3 years; 
                or
                    ``(II) demonstrates to the satisfaction of the 
                Secretary that the requirements of subparagraphs (C) 
                and (D) are met with respect to the plan or other 
                arrangement.''.
    (c) Conforming Amendments to Definitions of Participant and 
Beneficiary.--Section 3(7) of such Act (29 U.S.C. 1002(7)) is amended 
by adding at the end the following new sentence: ``Such term includes 
an individual who is a covered individual described in paragraph 
(40)(C)(ii).''.

SEC. 304. ENFORCEMENT PROVISIONS.

    (a) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1131) is amended--
            (1) by inserting ``(a)'' after ``Sec. 501.''; and
            (2) by adding at the end the following new subsection:
    ``(b) Any person who willfully falsely represents, to any employee, 
any employee's beneficiary, any employer, the Secretary, or any State, 
a plan or other arrangement established or maintained for the purpose 
of offering or providing any benefit described in section 3(1) to 
employees or their beneficiaries as--
            ``(1) being an association health plan which has been 
        certified under part 8;
            ``(2) having been established or maintained under or 
        pursuant to one or more collective bargaining agreements which 
        are reached pursuant to collective bargaining described in 
        section 8(d) of the National Labor Relations Act (29 U.S.C. 
        158(d)) or paragraph Fourth of section 2 of the Railway Labor 
        Act (45 U.S.C. 152, paragraph Fourth) or which are reached 
        pursuant to labor-management negotiations under similar 
        provisions of State public employee relations laws; or
            ``(3) being a plan or arrangement with respect to which the 
        requirements of subparagraph (C), (D), or (E) of section 3(40) 
        are met;
shall, upon conviction, be imprisoned not more than 5 years, be fined 
under title 18, United States Code, or both.''.
    (b) Cease Activities Orders.--Section 502 of such Act (29 U.S.C. 
1132) is amended by adding at the end the following new subsection:
    ``(n)(1) Subject to paragraph (2), upon application by the 
Secretary showing the operation, promotion, or marketing of an 
association health plan (or similar arrangement providing benefits 
consisting of medical care (as defined in section 733(a)(2))) that--
            ``(A) is not certified under part 8, is subject under 
        section 514(b)(6) to the insurance laws of any State in which 
        the plan or arrangement offers or provides benefits, and is not 
        licensed, registered, or otherwise approved under the insurance 
        laws of such State; or
            ``(B) is an association health plan certified under part 8 
        and is not operating in accordance with the requirements under 
        part 8 for such certification,
a district court of the United States shall enter an order requiring 
that the plan or arrangement cease activities.
    ``(2) Paragraph (1) shall not apply in the case of an association 
health plan or other arrangement if the plan or arrangement shows 
that--
            ``(A) all benefits under it referred to in paragraph (1) 
        consist of health insurance coverage; and
            ``(B) with respect to each State in which the plan or 
        arrangement offers or provides benefits, the plan or 
        arrangement is operating in accordance with applicable State 
        laws that are not superseded under section 514.
    ``(3) The court may grant such additional equitable relief, 
including any relief available under this title, as it deems necessary 
to protect the interests of the public and of persons having claims for 
benefits against the plan.''.
    (c) Responsibility for Claims Procedure.--Section 503 of such Act 
(29 U.S.C. 1133) (as amended by title XIII) is amended by adding at the 
end the following new subsection:
    ``(c) Association Health Plans.--The terms of each association 
health plan which is or has been certified under part 8 shall require 
the board of trustees or the named fiduciary (as applicable) to ensure 
that the requirements of this section are met in connection with claims 
filed under the plan.''.

SEC. 305. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Section 506 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1136) is amended by adding at the end the following new 
subsection:
    ``(c) Responsibility of States With Respect to Association Health 
Plans.--
            ``(1) Agreements with states.--A State may enter into an 
        agreement with the Secretary for delegation to the State of 
        some or all of--
                    ``(A) the Secretary's authority under sections 502 
                and 504 to enforce the requirements for certification 
                under part 8;
                    ``(B) the Secretary's authority to certify 
                association health plans under part 8 in accordance 
                with regulations of the Secretary applicable to 
                certification under part 8; or
                    ``(C) any combination of the Secretary's authority 
                authorized to be delegated under subparagraphs (A) and 
                (B).
            ``(2) Delegations.--Any department, agency, or 
        instrumentality of a State to which authority is delegated 
        pursuant to an agreement entered into under this paragraph may, 
        if authorized under State law and to the extent consistent with 
        such agreement, exercise the powers of the Secretary under this 
        title which relate to such authority.
            ``(3) Recognition of primary domicile state.--In entering 
        into any agreement with a State under subparagraph (A), the 
        Secretary shall ensure that, as a result of such agreement and 
        all other agreements entered into under subparagraph (A), only 
        one State will be recognized, with respect to any particular 
        association health plan, as the State to which all authority 
        has been delegated pursuant to such agreements in connection 
        with such plan. In carrying out this paragraph, the Secretary 
        shall take into account the places of residence of the 
        participants and beneficiaries under the plan and the State in 
        which the trust is maintained.''.

SEC. 306. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

    (a) Effective Date.--The amendments made by sections 301, 304, and 
305 shall take effect on January 1, 2001. The amendments made by 
sections 302 and 303 shall take effect on the date of the enactment of 
this Act. The Secretary of Labor shall first issue all regulations 
necessary to carry out the amendments made by this title before January 
1, 2001. Such regulations shall be issued through negotiated 
rulemaking.
    (b) Exception.--Section 801(a)(2) of the Employee Retirement Income 
Security Act of 1974 (added by section 301) does not apply in 
connection with an association health plan (certified under part 8 of 
subtitle B of title I of such Act) existing on the date of the 
enactment of this Act, if no benefits provided thereunder as of the 
date of the enactment of this Act consist of health insurance coverage 
(as defined in section 733(b)(1) of such Act).
    (c) Treatment of Certain Existing Health Benefits Programs.--
            (1) In general.--In any case in which, as of the date of 
        the enactment of this Act, an arrangement is maintained in a 
        State for the purpose of providing benefits consisting of 
        medical care for the employees and beneficiaries of its 
        participating employers, at least 200 participating employers 
        make contributions to such arrangement, such arrangement has 
        been in existence for at least 10 years, and such arrangement 
        is licensed under the laws of one or more States to provide 
        such benefits to its participating employers, upon the filing 
        with the applicable authority (as defined in section 813(a)(5) 
        of the Employee Retirement Income Security Act of 1974 (as 
        amended by this Act)) by the arrangement of an application for 
        certification of the arrangement under part 8 of subtitle B of 
        title I of such Act--
                    (A) such arrangement shall be deemed to be a group 
                health plan for purposes of title I of such Act;
                    (B) the requirements of sections 801(a)(1) and 
                803(a)(1) of the Employee Retirement Income Security 
                Act of 1974 shall be deemed met with respect to such 
                arrangement;
                    (C) the requirements of section 803(b) of such Act 
                shall be deemed met, if the arrangement is operated by 
                a board of directors which--
                            (i) is elected by the participating 
                        employers, with each employer having one vote; 
                        and
                            (ii) has complete fiscal control over the 
                        arrangement and which is responsible for all 
                        operations of the arrangement;
                    (D) the requirements of section 804(a) of such Act 
                shall be deemed met with respect to such arrangement; 
                and
                    (E) the arrangement may be certified by any 
                applicable authority with respect to its operations in 
                any State only if it operates in such State on the date 
                of certification.
        The provisions of this subsection shall cease to apply with 
        respect to any such arrangement at such time after the date of 
        the enactment of this Act as the applicable requirements of 
        this subsection are not met with respect to such arrangement.
            (2) Definitions.--For purposes of this subsection, the 
        terms ``group health plan'', ``medical care'', and 
        ``participating employer'' shall have the meanings provided in 
        section 813 of the Employee Retirement Income Security Act of 
        1974, except that the reference in paragraph (7) of such 
        section to an ``association health plan'' shall be deemed a 
        reference to an arrangement referred to in this subsection.
    (d) Promoting Use of Certain Additional Associations in Providing 
Individual Health Insurance Coverage.--Section 2742(b)(5) of the Public 
Health Service Act (42 U.S.C. 300gg-42(b)(5)) is amended--
            (1) by striking ``paragraph'' and inserting 
        ``subparagraph'';
            (2) by inserting ``(A)'' after ``.--''; and
            (3) by adding at the end the following new subparagraph:
            ``(B)(i) In the case of health insurance coverage that is 
        made available in the individual market only through one or 
        more associations described in clause (ii), the membership of 
        the individual in the association (on the basis of which the 
        coverage is provided) ceases but only if such coverage is 
        terminated under this subparagraph uniformly without regard to 
        any health status-related factor of covered individuals and 
        only if the individual is entitled, upon application and 
        without furnishing evidence of insurability, to health 
        insurance conversion coverage that meets and is subject to all 
        the rules and regulations of the State in which application is 
        made.
            ``(ii) An association described in this clause is an 
        organization that meets the requirements for a bona fide 
        organization described in subparagraphs (A), (B), (C), (E) and 
        (F) of section 2791(d)(3) and, except in the case of an 
        association that enrolls individual members who each pay their 
        own individual membership dues, which provides that all members 
        and dependents of members are eligible for coverage offered 
        through the association regardless of any health status-related 
        factor.''.

        TITLE IV--GREATER ACCESS AND CHOICE THROUGH HEALTHMARTS

SEC. 401. EXPANSION OF CONSUMER CHOICE THROUGH HEALTHMARTS.

    (a) In General.--The Public Health Service Act is amended by adding 
at the end the following new title:

                      ``TITLE XXVIII--HEALTHMARTS

``SEC. 2801. DEFINITION OF HEALTHMART.

    ``(a) In General.--For purposes of this title, the term 
`HealthMart' means a legal entity that meets the following 
requirements:
            ``(1) Organization.--The HealthMart is a nonprofit 
        organization operated under the direction of a board of 
        directors which is composed of representatives of not fewer 
        than two and in equal numbers from each of the following:
                    ``(A) Small employers.
                    ``(B) Employees of small employers.
                    ``(C) Health care providers, which may be 
                physicians, other health care professionals, health 
                care facilities, or any combination thereof.
                    ``(D) Entities, such as insurance companies, health 
                maintenance organizations, and licensed provider-
                sponsored organizations, that underwrite or administer 
                health benefits coverage.
            ``(2) Offering health benefits coverage.--
                    ``(A) In general.--The HealthMart, in conjunction 
                with those health insurance issuers that offer health 
                benefits coverage through the HealthMart, makes 
                available health benefits coverage in the manner 
                described in subsection (b) to all small employers and 
                eligible employees in the manner described in 
                subsection (c)(2) at rates (including employer's and 
                employee's share) that are established by the health 
                insurance issuer on a policy or product specific basis 
                and that may vary only as permissible under State law. 
                A HealthMart is deemed to be a group health plan for 
                purposes of applying section 702 of the Employee 
                Retirement Income Security Act of 1974, section 2702 of 
                this Act, and section 9802(b) of the Internal Revenue 
                Code of 1986 (which limit variation among similarly 
                situated individuals of required premiums for health 
                benefits coverage on the basis of health status-related 
                factors).
                    ``(B) Nondiscrimination in coverage offered.--
                            ``(i) In general.--Subject to clause (ii), 
                        the HealthMart may not offer health benefits 
                        coverage to an eligible employee in a 
                        geographic area (as specified under paragraph 
                        (3)(A)) unless the same coverage is offered to 
                        all such employees in the same geographic area. 
                        Section 2711(a)(1)(B) of this Act limits denial 
                        of enrollment of certain eligible individuals 
                        under health benefits coverage in the small 
                        group market.
                            ``(ii) Construction.--Nothing in this title 
                        shall be construed as requiring or permitting a 
                        health insurance issuer to provide coverage 
                        outside the service area of the issuer, as 
                        approved under State law.
                    ``(C) No financial underwriting.--The HealthMart 
                provides health benefits coverage only through 
                contracts with health insurance issuers and does not 
                assume insurance risk with respect to such coverage.
                    (D) Minimum coverage.--By the end of the first year 
                of its operation and thereafter, the HealthMart 
                maintains not fewer than 10 purchasers and 100 members.
            ``(3) Geographic areas.--
                    ``(A) Specification of geographic areas.--The 
                HealthMart shall specify the geographic area (or areas) 
                in which it makes available health benefits coverage 
                offered by health insurance issuers to small employers. 
                Such an area shall encompass at least one entire county 
                or equivalent area.
                    ``(B) Multistate areas.--In the case of a 
                HealthMart that serves more than one State, such 
                geographic areas may be areas that include portions of 
                two or more contiguous States.
                    ``(C) Multiple healthmarts permitted in single 
                geographic area.--Nothing in this title shall be 
                construed as preventing the establishment and operation 
                of more than one HealthMart in a geographic area or as 
                limiting the number of HealthMarts that may operate in 
                any area.
            ``(4) Provision of administrative services to purchasers.--
                    ``(A) In general.--The HealthMart provides 
                administrative services for purchasers. Such services 
                may include accounting, billing, enrollment 
                information, and employee coverage status reports.
                    ``(B) Construction.--Nothing in this subsection 
                shall be construed as preventing a HealthMart from 
                serving as an administrative service organization to 
                any entity.
            ``(5) Dissemination of information.--The HealthMart 
        collects and disseminates (or arranges for the collection and 
        dissemination of) consumer-oriented information on the scope, 
        cost, and enrollee satisfaction of all coverage options offered 
        through the HealthMart to its members and eligible individuals. 
        Such information shall be defined by the HealthMart and shall 
        be in a manner appropriate to the type of coverage offered. To 
        the extent practicable, such information shall include 
        information on provider performance, locations and hours of 
        operation of providers, outcomes, and similar matters. Nothing 
        in this section shall be construed as preventing the 
        dissemination of such information or other information by the 
        HealthMart or by health insurance issuers through electronic or 
        other means.
            ``(6) Filing information.--The Health-
        Mart--
                    ``(A) files with the applicable Federal authority 
                information that demonstrates the HealthMart's 
                compliance with the applicable requirements of this 
                title; or
                    ``(B) in accordance with rules established under 
                section 2803(a), files with a State such information as 
                the State may require to demonstrate such compliance.
    ``(b) Health Benefits Coverage Requirements.--
            ``(1) Compliance with consumer protection requirements.--
        Any health benefits coverage offered through a HealthMart 
        shall--
                    ``(A) be underwritten by a health insurance issuer 
                that--
                            ``(i) is licensed (or otherwise regulated) 
                        under State law (or is a community health 
                        organization that is offering health insurance 
                        coverage pursuant to section 330B(a));
                            ``(ii) meets all applicable State standards 
                        relating to consumer protection, subject to 
                        section 2802(b); and
                            ``(iii) offers the coverage under a 
                        contract with the HealthMart;
                    ``(B) subject to paragraph (2), be approved or 
                otherwise permitted to be offered under State law; and
                    ``(C) provide full portability of creditable 
                coverage for individuals who remain members of the same 
                HealthMart notwithstanding that they change the 
                employer through which they are members in accordance 
                with the provisions of the parts 6 and 7 of subtitle B 
                of title I of the Employee Retirement Income Security 
                Act of 1974 and titles XXII and XXVII of this Act, so 
                long as both employers are purchasers in the 
                HealthMart.
            ``(2) Alternative process for approval of health benefits 
        coverage in case of discrimination or delay.--
                    ``(A) In general.--The requirement of paragraph 
                (1)(B) shall not apply to a policy or product of health 
                benefits coverage offered in a State if the health 
                insurance issuer seeking to offer such policy or 
                product files an application to waive such requirement 
                with the applicable Federal authority, and the 
                authority determines, based on the application and 
                other evidence presented to the authority, that--
                            ``(i) either (or both) of the grounds 
                        described in subparagraph (B) for approval of 
                        the application has been met; and
                            ``(ii) the coverage meets the applicable 
                        State standards (other than those that have 
                        been preempted under section 2802).
                    ``(B) Grounds.--The grounds described in this 
                subparagraph with respect to a policy or product of 
                health benefits coverage are as follows:
                            ``(i) Failure to act on policy, product, or 
                        rate application on a timely basis.--The State 
                        has failed to complete action on the policy or 
                        product (or rates for the policy or product) 
                        within 90 days of the date of the State's 
                        receipt of a substantially complete 
                        application. No period before the date of the 
                        enactment of this section shall be included in 
                        determining such 90-day period.
                            ``(ii) Denial of application based on 
                        discriminatory treatment.--The State has denied 
                        such an application and--
                                    ``(I) the standards or review 
                                process imposed by the State as a 
                                condition of approval of the policy or 
                                product imposes either any material 
                                requirements, procedures, or standards 
                                to such policy or product that are not 
                                generally applicable to other policies 
                                and products offered or any 
                                requirements that are preempted under 
                                section 2802; or
                                    ``(II) the State requires the 
                                issuer, as a condition of approval of 
                                the policy or product, to offer any 
                                policy or product other than such 
                                policy or product.
                    ``(C) Enforcement.--In the case of a waiver granted 
                under subparagraph (A) to an issuer with respect to a 
                State, the Secretary may enter into an agreement with 
                the State under which the State agrees to provide for 
                monitoring and enforcement activities with respect to 
                compliance of such an issuer and its health insurance 
                coverage with the applicable State standards described 
                in subparagraph (A)(ii). Such monitoring and 
                enforcement shall be conducted by the State in the same 
                manner as the State enforces such standards with 
                respect to other health insurance issuers and plans, 
                without discrimination based on the type of issuer to 
                which the standards apply. Such an agreement shall 
                specify or establish mechanisms by which compliance 
                activities are undertaken, while not lengthening the 
                time required to review and process applications for 
                waivers under subparagraph (A).
            ``(3) Examples of types of coverage.--The health benefits 
        coverage made available through a HealthMart may include, but 
        is not limited to, any of the following if it meets the other 
        applicable requirements of this title:
                    ``(A) Coverage through a health maintenance 
                organization.
                    ``(B) Coverage in connection with a preferred 
                provider organization.
                    ``(C) Coverage in connection with a licensed 
                provider-sponsored organization.
                    ``(D) Indemnity coverage through an insurance 
                company.
                    ``(E) Coverage offered in connection with a 
                contribution into a medical savings account or flexible 
                spending account.
                    ``(F) Coverage that includes a point-of-service 
                option.
                    ``(G) Coverage offered by a community health 
                organization (as defined in section 330B(e)).
                    ``(H) Any combination of such types of coverage.
            ``(4) Wellness bonuses for health promotion.--Nothing in 
        this title shall be construed as precluding a health insurance 
        issuer offering health benefits coverage through a HealthMart 
        from establishing premium discounts or rebates for members or 
        from modifying otherwise applicable copayments or deductibles 
        in return for adherence to programs of health promotion and 
        disease prevention so long as such programs are agreed to in 
        advance by the HealthMart and comply with all other provisions 
        of this title and do not discriminate among similarly situated 
        members.
    ``(c) Purchasers; Members; Health Insurance Issuers.--
            ``(1) Purchasers.--
                    ``(A) In general.--Subject to the provisions of 
                this title, a HealthMart shall permit any small 
                employer to contract with the HealthMart for the 
                purchase of health benefits coverage for its employees 
                and dependents of those employees and may not vary 
                conditions of eligibility (including premium rates and 
                membership fees) of a small employer to be a purchaser.
                    ``(B) Role of associations, brokers, and licensed 
                health insurance agents.--Nothing in this section shall 
                be construed as preventing an association, broker, 
                licensed health insurance agent, or other entity from 
                assisting or representing a HealthMart or small 
                employers from entering into appropriate arrangements 
                to carry out this title.
                    ``(C) Period of contract.--The HealthMart may not 
                require a contract under subparagraph (A) between a 
                HealthMart and a purchaser to be effective for a period 
                of longer than 12 months. The previous sentence shall 
                not be construed as preventing such a contract from 
                being extended for additional 12-month periods or 
                preventing the purchaser from voluntarily electing a 
                contract period of longer than 12 months.
                    ``(D) Exclusive nature of contract.--Such a 
                contract shall provide that the purchaser agrees not to 
                obtain or sponsor health benefits coverage, on behalf 
                of any eligible employees (and their dependents), other 
                than through the HealthMart. The previous sentence 
                shall not apply to an eligible individual who resides 
                in an area for which no coverage is offered by any 
                health insurance issuer through the HealthMart.
            ``(2) Members.--
                    ``(A) In general.--Under rules established to carry 
                out this title, with respect to a small employer that 
                has a purchaser contract with a HealthMart, individuals 
                who are employees of the employer may enroll for health 
                benefits coverage (including coverage for dependents of 
                such enrolling employees) offered by a health insurance 
                issuer through the HealthMart.
                    ``(B) Nondiscrimination in enrollment.--A 
                HealthMart may not deny enrollment as a member to an 
                individual who is an employee (or dependent of such an 
                employee) eligible to be so enrolled based on health 
                status-related factors, except as may be permitted 
                consistent with section 2742(b).
                    ``(C) Annual open enrollment period.--In the case 
                of members enrolled in health benefits coverage offered 
                by a health insurance issuer through a HealthMart, 
                subject to subparagraph (D), the HealthMart shall 
                provide for an annual open enrollment period of 30 days 
                during which such members may change the coverage 
                option in which the members are enrolled.
                    ``(D) Rules of eligibility.--Nothing in this 
                paragraph shall preclude a HealthMart from establishing 
                rules of employee eligibility for enrollment and 
                reenrollment of members during the annual open 
                enrollment period under subparagraph (C). Such rules 
                shall be applied consistently to all purchasers and 
                members within the HealthMart and shall not be based in 
                any manner on health status-related factors and may not 
                conflict with sections 2701 and 2702 of this Act.
            ``(3) Health insurance issuers.--
                    ``(A) Premium collection.--The contract between a 
                HealthMart and a health insurance issuer shall provide, 
                with respect to a member enrolled with health benefits 
                coverage offered by the issuer through the HealthMart, 
                for the payment of the premiums collected by the 
                HealthMart (or the issuer) for such coverage (less a 
                pre-determined administrative charge negotiated by the 
                HealthMart and the issuer) to the issuer.
                    ``(B) Scope of service area.--Nothing in this title 
                shall be construed as requiring the service area of a 
                health insurance issuer with respect to health 
                insurance coverage to cover the entire geographic area 
                served by a HealthMart.
                    ``(C) Availability of coverage options.--A 
                HealthMart shall enter into contracts with one or more 
                health insurance issuers in a manner that assures that 
                at least two health insurance coverage options are made 
                available in the geographic area specified under 
                subsection (a)(3)(A).
    ``(d) Prevention of Conflicts of Interest.--
            ``(1) For boards of directors.--A member of a board of 
        directors of a HealthMart may not serve as an employee or paid 
        consultant to the HealthMart, but may receive reasonable 
        reimbursement for travel expenses for purposes of attending 
        meetings of the board or committees thereof.
            ``(2) For boards of directors or employees.--An individual 
        is not eligible to serve in a paid or unpaid capacity on the 
        board of directors of a HealthMart or as an employee of the 
        HealthMart, if the individual is employed by, represents in any 
        capacity, owns, or controls any ownership interest in a 
        organization from whom the HealthMart receives contributions, 
        grants, or other funds not connected with a contract for 
        coverage through the HealthMart.
            ``(3) Employment and employee representatives.--
                    ``(A) In general.--An individual who is serving on 
                a board of directors of a HealthMart as a 
                representative described in subparagraph (A) or (B) of 
                section 2801(a)(1) shall not be employed by or 
                affiliated with a health insurance issuer or be 
                licensed as or employed by or affiliated with a health 
                care provider.
                    ``(B) Construction.--For purposes of subparagraph 
                (A), the term ``affiliated'' does not include 
                membership in a health benefits plan or the obtaining 
                of health benefits coverage offered by a health 
                insurance issuer.
    ``(e) Construction.--
            ``(1) Network of affiliated healthmarts.--Nothing in this 
        section shall be construed as preventing one or more 
        HealthMarts serving different areas (whether or not contiguous) 
        from providing for some or all of the following (through a 
        single administrative organization or otherwise):
                    ``(A) Coordinating the offering of the same or 
                similar health benefits coverage in different areas 
                served by the different HealthMarts.
                    ``(B) Providing for crediting of deductibles and 
                other cost-sharing for individuals who are provided 
                health benefits coverage through the HealthMarts (or 
                affiliated HealthMarts) after--
                            ``(i) a change of employers through which 
                        the coverage is provided; or
                            ``(ii) a change in place of employment to 
                        an area not served by the previous HealthMart.
            ``(2) Permitting healthmarts to adjust distributions among 
        issuers to reflect relative risk of enrollees.--Nothing in this 
        section shall be construed as precluding a HealthMart from 
        providing for adjustments in amounts distributed among the 
        health insurance issuers offering health benefits coverage 
        through the HealthMart based on factors such as the relative 
        health care risk of members enrolled under the coverage offered 
        by the different issuers.
            ``(3) Application of uniform minimum participation and 
        contribution rules.--Nothing in this section shall be construed 
        as precluding a HealthMart from establishing minimum 
        participation and contribution rules (described in section 
        2711(e)(1)) for small employers that apply to become purchasers 
        in the HealthMart, so long as such rules are applied uniformly 
        for all health insurance issuers.

``SEC. 2802. APPLICATION OF CERTAIN LAWS AND REQUIREMENTS.

    ``(a) Authority of States.--Nothing in this section shall be 
construed as preempting State laws relating to the following:
            ``(1) The regulation of underwriters of health coverage, 
        including licensure and solvency requirements.
            ``(2) The application of premium taxes and required 
        payments for guaranty funds or for contributions to high-risk 
        pools.
            ``(3) The application of fair marketing requirements and 
        other consumer protections (other than those specifically 
        relating to an item described in subsection (b)).
            ``(4) The application of requirements relating to the 
        adjustment of rates for health insurance coverage.
    ``(b) Treatment of Benefit and Grouping Requirements.--State laws 
insofar as they relate to any of the following are superseded and shall 
not apply to health benefits coverage made available through a 
HealthMart:
            ``(1) Benefit requirements for health benefits coverage 
        offered through a HealthMart, including (but not limited to) 
        requirements relating to coverage of specific providers, 
        specific services or conditions, or the amount, duration, or 
        scope of benefits, but not including requirements to the extent 
        required to implement title XXVII or other Federal law and to 
        the extent the requirement prohibits an exclusion of a specific 
        disease from such coverage.
            ``(2) Requirements (commonly referred to as fictitious 
        group laws) relating to grouping and similar requirements for 
        such coverage to the extent such requirements impede the 
        establishment and operation of HealthMarts pursuant to this 
        title.
            ``(3) Any other requirements (including limitations on 
        compensation arrangements) that, directly or indirectly, 
        preclude (or have the effect of precluding) the offering of 
        such coverage through a HealthMart, if the HealthMart meets the 
        requirements of this title.
Any State law or regulation relating to the composition or organization 
of a HealthMart is preempted to the extent the law or regulation is 
inconsistent with the provisions of this title.
    ``(c) Application of ERISA Fiduciary and Disclosure Requirements.--
The board of directors of a HealthMart is deemed to be a plan 
administrator of an employee welfare benefit plan which is a group 
health plan for purposes of applying parts 1 and 4 of subtitle B of 
title I of the Employee Retirement Income Security Act of 1974 and 
those provisions of part 5 of such subtitle which are applicable to 
enforcement of such parts 1 and 4, and the HealthMart shall be treated 
as such a plan and the enrollees shall be treated as participants and 
beneficiaries for purposes of applying such provisions pursuant to this 
subsection.
    ``(d) Application of ERISA Renewability Protection.--A HealthMart 
is deemed to be a group health plan that is a multiple employer welfare 
arrangement for purposes of applying section 703 of the Employee 
Retirement Income Security Act of 1974.
    ``(e) Application of Rules for Network Plans and Financial 
Capacity.--The provisions of subsections (c) and (d) of section 2711 
apply to health benefits coverage offered by a health insurance issuer 
through a HealthMart.
    ``(f) Construction Relating to Offering Requirement.--Nothing in 
section 2711(a) of this Act or 703 of the Employee Retirement Income 
Security Act of 1974 shall be construed as permitting the offering 
outside the HealthMart of health benefits coverage that is only made 
available through a HealthMart under this section because of the 
application of subsection (b).
    ``(g) Application to Guaranteed Renewability Requirements in Case 
of Discontinuation of an Issuer.--For purposes of applying section 2712 
in the case of health insurance coverage offered by a health insurance 
issuer through a HealthMart, if the contract between the HealthMart and 
the issuer is terminated and the HealthMart continues to make available 
any health insurance coverage after the date of such termination, the 
following rules apply:
            ``(1) Renewability.--The HealthMart shall fulfill the 
        obligation under such section of the issuer renewing and 
        continuing in force coverage by offering purchasers (and 
        members and their dependents) all available health benefits 
        coverage that would otherwise be available to similarly-
        situated purchasers and members from the remaining 
        participating health insurance issuers in the same manner as 
        would be required of issuers under section 2712(c).
            ``(2) Application of association rules.--The HealthMart 
        shall be considered an association for purposes of applying 
        section 2712(e).
    ``(h) Construction in Relation to Certain Other Laws.--Nothing in 
this title shall be construed as modifying or affecting the 
applicability to HealthMarts or health benefits coverage offered by a 
health insurance issuer through a HealthMart of parts 6 and 7 of 
subtitle B of title I of the Employee Retirement Income Security Act of 
1974 or titles XXII and XXVII of this Act.

``SEC. 2803. ADMINISTRATION.

    ``(a) In General.--The applicable Federal authority shall 
administer this title through the division established under subsection 
(b) and is authorized to issue such regulations as may be required to 
carry out this title. Such regulations shall be subject to 
Congressional review under the provisions of chapter 8 of title 5, 
United States Code. The applicable Federal authority shall incorporate 
the process of `deemed file and use' with respect to the information 
filed under section 2801(a)(6)(A) and shall determine whether 
information filed by a HealthMart demonstrates compliance with the 
applicable requirements of this title. Such authority shall exercise 
its authority under this title in a manner that fosters and promotes 
the development of HealthMarts in order to improve access to health 
care coverage and services.
    ``(b) Administration Through Health Care Marketplace Division.--
            ``(1) In general.--The applicable Federal authority shall 
        carry out its duties under this title through a separate Health 
        Care Marketplace Division, the sole duty of which (including 
        the staff of which) shall be to administer this title.
            ``(2) Additional duties.--In addition to other 
        responsibilities provided under this title, such Division is 
        responsible for--
                    ``(A) oversight of the operations of HealthMarts 
                under this title; and
                    ``(B) the periodic submittal to Congress of reports 
                on the performance of HealthMarts under this title 
                under subsection (c).
    ``(c) Periodic Reports.--The applicable Federal authority shall 
submit to Congress a report every 30 months, during the 10-year period 
beginning on the effective date of the rules promulgated by the 
applicable Federal authority to carry out this title, on the 
effectiveness of this title in promoting coverage of uninsured 
individuals. Such authority may provide for the production of such 
reports through one or more contracts with appropriate private 
entities.

``SEC. 2804. DEFINITIONS.

    ``For purposes of this title:
            ``(1) Applicable Federal authority.--The term `applicable 
        Federal authority' means the Secretary of Health and Human 
        Services.
            ``(2) Eligible employee or individual.--The term `eligible' 
        means, with respect to an employee or other individual and a 
        HealthMart, an employee or individual who is eligible under 
        section 2801(c)(2) to enroll or be enrolled in health benefits 
        coverage offered through the HealthMart.
            ``(3) Employer; employee; dependent.--Except as the 
        applicable Federal authority may otherwise provide, the terms 
        `employer', `employee', and `dependent', as applied to health 
        insurance coverage offered by a health insurance issuer 
        licensed (or otherwise regulated) in a State, shall have the 
        meanings applied to such terms with respect to such coverage 
        under the laws of the State relating to such coverage and such 
        an issuer.
            ``(4) Health benefits coverage.--The term `health benefits 
        coverage' has the meaning given the term group health insurance 
        coverage in section 2791(b)(4).
            ``(5) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning given such term in section 2791(b)(2) 
        and includes a community health organization that is offering 
        coverage pursuant to section 330B(a).
            ``(6) Health status-related factor.--The term `health 
        status-related factor' has the meaning given such term in 
        section 2791(d)(9).
            ``(7) HealthMart.--The term `HealthMart' is defined in 
        section 2801(a).
            ``(8) Member.--The term `member' means, with respect to a 
        HealthMart, an individual enrolled for health benefits coverage 
        through the HealthMart under section 2801(c)(2).
            ``(9) Purchaser.--The term `purchaser' means, with respect 
        to a HealthMart, a small employer that has contracted under 
        section 2801(c)(1)(A) with the HealthMart for the purchase of 
        health benefits coverage.
            ``(10) Small employer.--The term `small employer' has the 
        meaning given such term for purposes of title XXVII.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on January 1, 2000. The Secretary of Health and Human 
Services shall first issue all regulations necessary to carry out such 
amendment before such date.

                TITLE V--COMMUNITY HEALTH ORGANIZATIONS

SEC. 501. PROMOTION OF PROVISION OF INSURANCE BY COMMUNITY HEALTH 
              ORGANIZATIONS.

    (a) Waiver of State Licensure Requirement for Community Health 
Organizations in Certain Cases.--Subpart I of part D of title III of 
the Public Health Service Act is amended by adding at the end the 
following new section:

     ``waiver of state licensure requirement for community health 
                     organizations in certain cases

    ``Sec. 330D. (a) Waiver Authorized.--
            ``(1) In general.--A community health organization may 
        offer health insurance coverage in a State notwithstanding that 
        it is not licensed in such a State to offer such coverage if--
                    ``(A) the organization files an application for 
                waiver of the licensure requirement with the Secretary 
                of Health and Human Services (in this section referred 
                to as the `Secretary') by not later than November 1, 
                2005; and
                    ``(B) the Secretary determines, based on the 
                application and other evidence presented to the 
                Secretary, that any of the grounds for approval of the 
                application described in subparagraph (A), (B), or (C) 
                of paragraph (2) has been met.
            ``(2) Grounds for approval of waiver.--
                    ``(A) Failure to act on licensure application on a 
                timely basis.--The ground for approval of such a waiver 
                application described in this subparagraph is that the 
                State has failed to complete action on a licensing 
                application of the organization within 90 days of the 
                date of the State's receipt of a substantially complete 
                application. No period before the date of the enactment 
                of this section shall be included in determining such 
                90-day period.
                    ``(B) Denial of application based on discriminatory 
                treatment.--The ground for approval of such a waiver 
                application described in this subparagraph is that the 
                State has denied such a licensing application and the 
                standards or review process imposed by the State as a 
                condition of approval of the license or as the basis 
                for such denial by the State imposes any material 
                requirements, procedures, or standards (other than 
                solvency requirements) to such organizations that are 
                not generally applicable to other entities engaged in a 
                substantially similar business.
                    ``(C) Denial of application based on application of 
                solvency requirements.--With respect to waiver 
                applications filed on or after the date of publication 
                of solvency standards established by the Secretary 
                under subsection (d), the ground for approval of such a 
                waiver application described in this subparagraph is 
                that the State has denied such a licensing application 
                based (in whole or in part) on the organization's 
                failure to meet applicable State solvency requirements 
                and such requirements are not the same as the solvency 
                standards established by the Secretary. For purposes of 
                this subparagraph, the term solvency requirements means 
                requirements relating to solvency and other matters 
                covered under the standards established by the 
                Secretary under subsection (d).
            ``(3) Treatment of waiver.--In the case of a waiver granted 
        under this subsection for a community health organization with 
        respect to a State--
                    ``(A) Limitation to state.--The waiver shall be 
                effective only with respect to that State and does not 
                apply to any other State.
                    ``(B) Limitation to 36-month period.--The waiver 
                shall be effective only for a 36-month period but may 
                be renewed for up to 36 additional months if the 
                Secretary determines that such an extension is 
                appropriate.
                    ``(C) Conditioned on compliance with consumer 
                protection and quality standards.--The continuation of 
                the waiver is conditioned upon the organization's 
                compliance with the requirements described in paragraph 
                (5).
                    ``(D) Preemption of state law.--Any provisions of 
                law of that State which relate to the licensing of the 
                organization and which prohibit the organization from 
                providing health insurance coverage shall be 
                superseded.
            ``(4) Prompt action on application.--The Secretary shall 
        grant or deny such a waiver application within 60 days after 
        the date the Secretary determines that a substantially complete 
        waiver application has been filed. Nothing in this section 
        shall be construed as preventing an organization which has had 
        such a waiver application denied from submitting a subsequent 
        waiver application.
            ``(5) Application and enforcement of state consumer 
        protection and quality standards.--A waiver granted under this 
        subsection to an organization with respect to licensing under 
        State law is conditioned upon the organization's compliance 
        with all consumer protection and quality standards insofar as 
        such standards--
                    ``(A) would apply in the State to the community 
                health organization if it were licensed as an entity 
                offering health insurance coverage under State law; and
                    ``(B) are generally applicable to other risk-
                bearing managed care organizations and plans in the 
                State.
            ``(6) Report.--By not later than December 31, 2004, the 
        Secretary shall submit to the Committee on Commerce of the 
        House of Representatives and the Committee on Labor and Human 
        Resources of the Senate a report regarding whether the waiver 
        process under this subsection should be continued after 
        December 31, 2005.
    ``(b) Assumption of Full Financial Risk.--To qualify for a waiver 
under subsection (a), the community health organization shall assume 
full financial risk on a prospective basis for the provision of covered 
health care services, except that the organization--
            ``(1) may obtain insurance or make other arrangements for 
        the cost of providing to any enrolled member such services the 
        aggregate value of which exceeds such aggregate level as the 
        Secretary specifies from time to time;
            ``(2) may obtain insurance or make other arrangements for 
        the cost of such services provided to its enrolled members 
        other than through the organization because medical necessity 
        required their provision before they could be secured through 
        the organization;
            ``(3) may obtain insurance or make other arrangements for 
        not more than 90 percent of the amount by which its costs for 
        any of its fiscal years exceed 105 percent of its income for 
        such fiscal year; and
            ``(4) may make arrangements with physicians or other health 
        care professionals, health care institutions, or any 
        combination of such individuals or institutions to assume all 
        or part of the financial risk on a prospective basis for the 
        provision of health services by the physicians or other health 
        professionals or through the institutions.
    ``(c) Certification of Provision Against Risk of Insolvency for 
Unlicensed CHOs.--
            ``(1) In general.--Each community health organization that 
        is not licensed by a State and for which a waiver application 
        has been approved under subsection (a)(1), shall meet standards 
        established by the Secretary under subsection (d) relating to 
        the financial solvency and capital adequacy of the 
        organization.
            ``(2) Certification process for solvency standards for 
        chos.--The Secretary shall establish a process for the receipt 
        and approval of applications of a community health organization 
        described in paragraph (1) for certification (and periodic 
        recertification) of the organization as meeting such solvency 
        standards. Under such process, the Secretary shall act upon 
        such a certification application not later than 60 days after 
        the date the application has been received.
    ``(d) Establishment of Solvency Standards for Community Health 
Organizations.--
            ``(1) In general.--The Secretary shall establish, on an 
        expedited basis and by rule pursuant to section 553 of title 5, 
        United States Code and through the Health Resources and 
        Services Administration, standards described in subsection 
        (c)(1) (relating to financial solvency and capital adequacy) 
        that entities must meet to obtain a waiver under subsection 
        (a)(2)(C). In establishing such standards, the Secretary shall 
        consult with interested organizations, including the National 
        Association of Insurance Commissioners, the Academy of 
        Actuaries, and organizations representing Federally qualified 
        health centers.
            ``(2) Factors to consider for solvency standards.--In 
        establishing solvency standards for community health 
        organizations under paragraph (1), the Secretary shall take 
        into account--
                    ``(A) the delivery system assets of such an 
                organization and ability of such an organization to 
                provide services to enrollees;
                    ``(B) alternative means of protecting against 
                insolvency, including reinsurance, unrestricted 
                surplus, letters of credit, guarantees, organizational 
                insurance coverage, partnerships with other licensed 
                entities, and valuation attributable to the ability of 
                such an organization to meet its service obligations 
                through direct delivery of care; and
                    ``(C) any standards developed by the National 
                Association of Insurance Commissioners specifically for 
                risk-based health care delivery organizations.
            ``(3) Enrollee protection against insolvency.--Such 
        standards shall include provisions to prevent enrollees from 
        being held liable to any person or entity for the 
        organization's debts in the event of the organization's 
        insolvency.
            ``(4) Deadline.--Such standards shall be promulgated in a 
        manner so they are first effective by not later than April 1, 
        2000.
    ``(e) Definitions.--In this section:
            ``(1) Community health organization.--The term `community 
        health organization' means an organization that is a Federally-
        qualified health center or is controlled by one or more 
        Federally-qualified health centers.
            ``(2) Federally-qualified health center.--The term 
        `Federally-qualified health center' has the meaning given such 
        term in section 1905(l)(2)(B) of the Social Security Act.
            ``(3) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning given such term in section 
        2791(b)(1).
            ``(4) Control.--The term `control' means the possession, 
        whether direct or indirect, of the power to direct or cause the 
        direction of the management and policies of the organization 
        through membership, board representation, or an ownership 
        interest equal to or greater than 50.1 percent.''.

 DIVISION B--BIPARTISAN CONSENSUS MANAGED CARE IMPROVEMENT ACT OF 1999

SEC. 1001. SHORT TITLE OF DIVISION; TABLE OF CONTENTS OF DIVISION.

    (a) Short Title of Division.--This division may be cited as the 
``Bipartisan Consensus Managed Care Improvement Act of 1999''.
    (b) Table of Contents of Division.--The table of contents of this 
division is as follows:

Sec. 1001. Short title; table of contents.
                    TITLE XI--IMPROVING MANAGED CARE

                   Subtitle A--Grievances and Appeals

Sec. 1101. Utilization review activities.
Sec. 1102. Internal appeals procedures.
Sec. 1103. External appeals procedures.
Sec. 1104. Establishment of a grievance process.
                       Subtitle B--Access to Care

Sec. 1111. Consumer choice option.
Sec. 1112. Choice of health care professional.
Sec. 1113. Access to emergency care.
Sec. 1114. Access to specialty care.
Sec. 1115. Access to obstetrical and gynecological care.
Sec. 1116. Access to pediatric care.
Sec. 1117. Continuity of care.
Sec. 1118. Access to needed prescription drugs.
Sec. 1119. Coverage for individuals participating in approved clinical 
                            trials.
                   Subtitle C--Access to Information

Sec. 1121. Patient access to information.
         Subtitle D--Protecting the Doctor-Patient Relationship

Sec. 1131. Prohibition of interference with certain medical 
                            communications.
Sec. 1132. Prohibition of discrimination against providers based on 
                            licensure.
Sec. 1133. Prohibition against improper incentive arrangements.
Sec. 1134. Payment of claims.
Sec. 1135. Protection for patient advocacy.
                        Subtitle E--Definitions

Sec. 1151. Definitions.
Sec. 1152. Preemption; State flexibility; construction.
Sec. 1153. Exclusions.
Sec. 1154. Coverage of limited scope plans.
Sec. 1155. Regulations.
TITLE XII--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS 
   AND HEALTH INSURANCE COVERAGE UNDER THE PUBLIC HEALTH SERVICE ACT

Sec. 1201. Application to group health plans and group health insurance 
                            coverage.
Sec. 1202. Application to individual health insurance coverage.
 TITLE XIII--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT 
                                OF 1974

Sec. 1301. Application of patient protection standards to group health 
                            plans and group health insurance coverage 
                            under the Employee Retirement Income 
                            Security Act of 1974.
Sec. 1302. ERISA preemption not to apply to certain actions involving 
                            health insurance policyholders.
Sec. 1303. Limitations on actions.
TITLE XIV--APPLICATION TO GROUP HEALTH PLANS UNDER THE INTERNAL REVENUE 
                              CODE OF 1986

Sec. 1401. Amendments to the Internal Revenue Code of 1986.
       TITLE XV--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

Sec. 1501. Effective dates.
Sec. 1502. Coordination in implementation.
            TITLE XVI--HEALTH CARE PAPERWORK SIMPLIFICATION

Sec. 1601. Health care paperwork simplification.

                    TITLE XI--IMPROVING MANAGED CARE

                   Subtitle A--Grievance and Appeals

SEC. 1101. UTILIZATION REVIEW ACTIVITIES.

    (a) Compliance With Requirements.--
            (1) In general.--A group health plan, and a health 
        insurance issuer that provides health insurance coverage, shall 
        conduct utilization review activities in connection with the 
        provision of benefits under such plan or coverage only in 
        accordance with a utilization review program that meets the 
        requirements of this section.
            (2) Use of outside agents.--Nothing in this section shall 
        be construed as preventing a group health plan or health 
        insurance issuer from arranging through a contract or otherwise 
        for persons or entities to conduct utilization review 
        activities on behalf of the plan or issuer, so long as such 
        activities are conducted in accordance with a utilization 
        review program that meets the requirements of this section.
            (3) Utilization review defined.--For purposes of this 
        section, the terms ``utilization review'' and ``utilization 
        review activities'' mean procedures used to monitor or evaluate 
        the use or coverage, clinical necessity, appropriateness, 
        efficacy, or efficiency of health care services, procedures or 
        settings, and includes prospective review, concurrent review, 
        second opinions, case management, discharge planning, or 
        retrospective review.
    (b) Written Policies and Criteria.--
            (1) Written policies.--A utilization review program shall 
        be conducted consistent with written policies and procedures 
        that govern all aspects of the program.
            (2) Use of written criteria.--
                    (A) In general.--Such a program shall utilize 
                written clinical review criteria developed with input 
                from a range of appropriate actively practicing health 
                care professionals, as determined by the plan, pursuant 
                to the program. Such criteria shall include written 
                clinical review criteria that are based on valid 
                clinical evidence where available and that are directed 
                specifically at meeting the needs of at-risk 
                populations and covered individuals with chronic 
                conditions or severe illnesses, including gender-
                specific criteria and pediatric-specific criteria where 
                available and appropriate.
                    (B) Continuing use of standards in retrospective 
                review.--If a health care service has been specifically 
                pre-authorized or approved for an enrollee under such a 
                program, the program shall not, pursuant to 
                retrospective review, revise or modify the specific 
                standards, criteria, or procedures used for the 
                utilization review for procedures, treatment, and 
                services delivered to the enrollee during the same 
                course of treatment.
                    (C) Review of sample of claims denials.--Such a 
                program shall provide for an evaluation of the clinical 
                appropriateness of at least a sample of denials of 
                claims for benefits.
    (c) Conduct of Program Activities.--
            (1) Administration by health care professionals.--A 
        utilization review program shall be administered by qualified 
        health care professionals who shall oversee review decisions.
            (2) Use of qualified, independent personnel.--
                    (A) In general.--A utilization review program shall 
                provide for the conduct of utilization review 
                activities only through personnel who are qualified and 
                have received appropriate training in the conduct of 
                such activities under the program.
                    (B) Prohibition of contingent compensation 
                arrangements.--Such a program shall not, with respect 
                to utilization review activities, permit or provide 
                compensation or anything of value to its employees, 
                agents, or contractors in a manner that encourages 
                denials of claims for benefits.
                    (C) Prohibition of conflicts.--Such a program shall 
                not permit a health care professional who is providing 
                health care services to an individual to perform 
                utilization review activities in connection with the 
                health care services being provided to the individual.
            (3) Accessibility of review.--Such a program shall provide 
        that appropriate personnel performing utilization review 
        activities under the program, including the utilization review 
        administrator, are reasonably accessible by toll-free telephone 
        during normal business hours to discuss patient care and allow 
        response to telephone requests, and that appropriate provision 
        is made to receive and respond promptly to calls received 
        during other hours.
            (4) Limits on frequency.--Such a program shall not provide 
        for the performance of utilization review activities with 
        respect to a class of services furnished to an individual more 
        frequently than is reasonably required to assess whether the 
        services under review are medically necessary or appropriate.
    (d) Deadline for Determinations.--
            (1) Prior authorization services.--
                    (A) In general.--Except as provided in paragraph 
                (2), in the case of a utilization review activity 
                involving the prior authorization of health care items 
                and services for an individual, the utilization review 
                program shall make a determination concerning such 
                authorization, and provide notice of the determination 
                to the individual or the individual's designee and the 
                individual's health care provider by telephone and in 
                printed form, as soon as possible in accordance with 
                the medical exigencies of the case, and in no event 
                later than the deadline specified in subparagraph (B).
                    (B) Deadline.--
                            (i) In general.--Subject to clauses (ii) 
                        and (iii), the deadline specified in this 
                        subparagraph is 14 days after the date of 
                        receipt of the request for prior authorization.
                            (ii) Extension permitted where notice of 
                        additional information required.--If a 
                        utilization review program--
                                    (I) receives a request for a prior 
                                authorization;
                                    (II) determines that additional 
                                information is necessary to complete 
                                the review and make the determination 
                                on the request; and
                                    (III) notifies the requester, not 
                                later than five business days after the 
                                date of receiving the request, of the 
                                need for such specified additional 
                                information,
                        the deadline specified in this subparagraph is 
                        14 days after the date the program receives the 
                        specified additional information, but in no 
                        case later than 28 days after the date of 
                        receipt of the request for the prior 
                        authorization. This clause shall not apply if 
                        the deadline is specified in clause (iii).
                            (iii) Expedited cases.--In the case of a 
                        situation described in section 102(c)(1)(A), 
                        the deadline specified in this subparagraph is 
                        72 hours after the time of the request for 
                        prior authorization.
            (2) Ongoing care.--
                    (A) Concurrent review.--
                            (i) In general.--Subject to subparagraph 
                        (B), in the case of a concurrent review of 
                        ongoing care (including hospitalization), which 
                        results in a termination or reduction of such 
                        care, the plan must provide by telephone and in 
                        printed form notice of the concurrent review 
                        determination to the individual or the 
                        individual's designee and the individual's 
                        health care provider as soon as possible in 
                        accordance with the medical exigencies of the 
                        case, with sufficient time prior to the 
                        termination or reduction to allow for an appeal 
                        under section 102(c)(1)(A) to be completed 
                        before the termination or reduction takes 
                        effect.
                            (ii) Contents of notice.--Such notice shall 
                        include, with respect to ongoing health care 
                        items and services, the number of ongoing 
                        services approved, the new total of approved 
                        services, the date of onset of services, and 
                        the next review date, if any, as well as a 
                        statement of the individual's rights to further 
                        appeal.
                    (B) Exception.--Subparagraph (A) shall not be 
                interpreted as requiring plans or issuers to provide 
                coverage of care that would exceed the coverage 
                limitations for such care.
            (3) Previously provided services.--In the case of a 
        utilization review activity involving retrospective review of 
        health care services previously provided for an individual, the 
        utilization review program shall make a determination 
        concerning such services, and provide notice of the 
        determination to the individual or the individual's designee 
        and the individual's health care provider by telephone and in 
        printed form, within 30 days of the date of receipt of 
        information that is reasonably necessary to make such 
        determination, but in no case later than 60 days after the date 
        of receipt of the claim for benefits.
            (4) Failure to meet deadline.--In a case in which a group 
        health plan or health insurance issuer fails to make a 
        determination on a claim for benefit under paragraph (1), 
        (2)(A), or (3) by the applicable deadline established under the 
        respective paragraph, the failure shall be treated under this 
        subtitle as a denial of the claim as of the date of the 
        deadline.
            (5) Reference to special rules for emergency services, 
        maintenance care, and post-stabilization care.--For waiver of 
        prior authorization requirements in certain cases involving 
        emergency services and maintenance care and post-stabilization 
        care, see subsections (a)(1) and (b) of section 1113, 
        respectively.
    (e) Notice of Denials of Claims for Benefits.--
            (1) In general.--Notice of a denial of claims for benefits 
        under a utilization review program shall be provided in printed 
        form and written in a manner calculated to be understood by the 
        participant, beneficiary, or enrollee and shall include--
                    (A) the reasons for the denial (including the 
                clinical rationale);
                    (B) instructions on how to initiate an appeal under 
                section 1102; and
                    (C) notice of the availability, upon request of the 
                individual (or the individual's designee) of the 
                clinical review criteria relied upon to make such 
                denial.
            (2) Specification of any additional information.--Such a 
        notice shall also specify what (if any) additional necessary 
        information must be provided to, or obtained by, the person 
        making the denial in order to make a decision on such an 
        appeal.
    (f) Claim for Benefits and Denial of Claim for Benefits Defined.--
For purposes of this subtitle:
            (1) Claim for benefits.--The term ``claim for benefits'' 
        means any request for coverage (including authorization of 
        coverage), for eligibility, or for payment in whole or in part, 
        for an item or service under a group health plan or health 
        insurance coverage.
            (2) Denial of claim for benefits.--The term ``denial'' 
        means, with respect to a claim for benefits, means a denial, or 
        a failure to act on a timely basis upon, in whole or in part, 
        the claim for benefits and includes a failure to provide 
        benefits (including items and services) required to be provided 
        under this title.

SEC. 1102. INTERNAL APPEALS PROCEDURES.

    (a) Right of Review.--
            (1) In general.--Each group health plan, and each health 
        insurance issuer offering health insurance coverage--
                    (A) shall provide adequate notice in writing to any 
                participant or beneficiary under such plan, or enrollee 
                under such coverage, whose claim for benefits under the 
                plan or coverage has been denied (within the meaning of 
                section 1101(f)(2)), setting forth the specific reasons 
                for such denial of claim for benefits and rights to any 
                further review or appeal, written in a manner 
                calculated to be understood by the participant, 
                beneficiary, or enrollee; and
                    (B) shall afford such a participant, beneficiary, 
                or enrollee (and any provider or other person acting on 
                behalf of such an individual with the individual's 
                consent or without such consent if the individual is 
                medically unable to provide such consent) who is 
                dissatisfied with such a denial of claim for benefits a 
                reasonable opportunity (of not less than 180 days) to 
                request and obtain a full and fair review by a named 
                fiduciary (with respect to such plan) or named 
                appropriate individual (with respect to such coverage) 
                of the decision denying the claim.
            (2) Treatment of oral requests.--The request for review 
        under paragraph (1)(B) may be made orally, but, in the case of 
        an oral request, shall be followed by a request in writing.
    (b) Internal Review Process.--
            (1) Conduct of review.--
                    (A) In general.--A review of a denial of claim 
                under this section shall be made by an individual who--
                            (i) in a case involving medical judgment, 
                        shall be a physician or, in the case of limited 
                        scope coverage (as defined in subparagraph (B), 
                        shall be an appropriate specialist;
                            (ii) has been selected by the plan or 
                        issuer; and
                            (iii) did not make the initial denial in 
                        the internally appealable decision.
                    (B) Limited scope coverage defined.--For purposes 
                of subparagraph (A), the term ``limited scope 
                coverage'' means a group health plan or health 
                insurance coverage the only benefits under which are 
                for benefits described in section 2791(c)(2)(A) of the 
                Public Health Service Act (42 U.S.C. 300gg-91(c)(2)).
            (2) Time limits for internal reviews.--
                    (A) In general.--Having received such a request for 
                review of a denial of claim, the plan or issuer shall, 
                in accordance with the medical exigencies of the case 
                but not later than the deadline specified in 
                subparagraph (B), complete the review on the denial and 
                transmit to the participant, beneficiary, enrollee, or 
                other person involved a decision that affirms, 
                reverses, or modifies the denial. If the decision does 
                not reverse the denial, the plan or issuer shall 
                transmit, in printed form, a notice that sets forth the 
                grounds for such decision and that includes a 
                description of rights to any further appeal. Such 
                decision shall be treated as the final decision of the 
                plan. Failure to issue such a decision by such deadline 
                shall be treated as a final decision affirming the 
                denial of claim.
                    (B) Deadline.--
                            (i) In general.--Subject to clauses (ii) 
                        and (iii), the deadline specified in this 
                        subparagraph is 14 days after the date of 
                        receipt of the request for internal review.
                            (ii) Extension permitted where notice of 
                        additional information required.--If a group 
                        health plan or health insurance issuer--
                                    (I) receives a request for internal 
                                review;
                                    (II) determines that additional 
                                information is necessary to complete 
                                the review and make the determination 
                                on the request; and
                                    (III) notifies the requester, not 
                                later than five business days after the 
                                date of receiving the request, of the 
                                need for such specified additional 
                                information,
                        the deadline specified in this subparagraph is 
                        14 days after the date the plan or issuer 
                        receives the specified additional information, 
                        but in no case later than 28 days after the 
                        date of receipt of the request for the internal 
                        review. This clause shall not apply if the 
                        deadline is specified in clause (iii).
                            (iii) Expedited cases.--In the case of a 
                        situation described in subsection (c)(1)(A), 
                        the deadline specified in this subparagraph is 
                        72 hours after the time of the request for 
                        review.
    (c) Expedited Review Process.--
            (1) In general.--A group health plan, and a health 
        insurance issuer, shall establish procedures in writing for the 
        expedited consideration of requests for review under subsection 
        (b) in situations--
                    (A) in which the application of the normal 
                timeframe for making a determination could seriously 
                jeopardize the life or health of the participant, 
                beneficiary, or enrollee or such an individual's 
                ability to regain maximum function; or
                    (B) described in section 1101(d)(2) (relating to 
                requests for continuation of ongoing care which would 
                otherwise be reduced or terminated).
            (2) Process.--Under such procedures--
                    (A) the request for expedited review may be 
                submitted orally or in writing by an individual or 
                provider who is otherwise entitled to request the 
                review;
                    (B) all necessary information, including the plan's 
                or issuer's decision, shall be transmitted between the 
                plan or issuer and the requester by telephone, 
                facsimile, or other similarly expeditious available 
                method; and
                    (C) the plan or issuer shall expedite the review in 
                the case of any of the situations described in 
                subparagraph (A) or (B) of paragraph (1).
            (3) Deadline for decision.--The decision on the expedited 
        review must be made and communicated to the parties as soon as 
        possible in accordance with the medical exigencies of the case, 
        and in no event later than 72 hours after the time of receipt 
        of the request for expedited review, except that in a case 
        described in paragraph (1)(B), the decision must be made before 
        the end of the approved period of care.
    (d) Waiver of Process.--A plan or issuer may waive its rights for 
an internal review under subsection (b). In such case the participant, 
beneficiary, or enrollee involved (and any designee or provider 
involved) shall be relieved of any obligation to complete the review 
involved and may, at the option of such participant, beneficiary, 
enrollee, designee, or provider, proceed directly to seek further 
appeal through any applicable external appeals process.

SEC. 1103. EXTERNAL APPEALS PROCEDURES.

    (a) Right to External Appeal.--
            (1) In general.--A group health plan, and a health 
        insurance issuer offering 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), for which a 
        timely appeal is made either by the plan or issuer or by the 
        participant, beneficiary, or enrollee (and any provider or 
        other person acting on behalf of such an individual with the 
        individual's consent or without such consent if such an 
        individual is medically unable to provide such consent). The 
        appropriate Secretary shall establish standards to carry out 
        such requirements.
            (2) Externally appealable decision defined.--
                    (A) In general.--For purposes of this section, the 
                term ``externally appealable decision'' means a denial 
                of claim for benefits (as defined in section 
                1101(f)(2))--
                            (i) that is based in whole or in part on a 
                        decision that the item or service is not 
                        medically necessary or appropriate or is 
                        investigational or experimental; or
                            (ii) in which the decision as to whether a 
                        benefit is covered involves a medical judgment.
                    (B) Inclusion.--Such term also includes a failure 
                to meet an applicable deadline for internal review 
                under section 1102.
                    (C) Exclusions.--Such term does not include--
                            (i) specific exclusions or express 
                        limitations on the amount, duration, or scope 
                        of coverage that do not involve medical 
                        judgment; or
                            (ii) a decision regarding whether an 
                        individual is a participant, beneficiary, or 
                        enrollee under the plan or coverage.
            (3) Exhaustion of internal review process.--Except as 
        provided under section 1102(d), a plan or issuer may condition 
        the use of an external appeal process in the case of an 
        externally appealable decision upon a final decision in an 
        internal review under section 1102, but only if the decision is 
        made in a timely basis consistent with the deadlines provided 
        under this subtitle.
            (4) Filing fee requirement.--
                    (A) In general.--Subject to subparagraph (B), a 
                plan or issuer may condition the use of an external 
                appeal process upon payment to the plan or issuer of a 
                filing fee that does not exceed $25.
                    (B) Exception for indigency.--The plan or issuer 
                may not require payment of the filing fee in the case 
                of an individual participant, beneficiary, or enrollee 
                who certifies (in a form and manner specified in 
                guidelines established by the Secretary of Health and 
                Human Services) that the individual is indigent (as 
                defined in such guidelines).
                    (C) Refunding fee in case of successful appeals.--
                The plan or issuer shall refund payment of the filing 
                fee under this paragraph if the recommendation of the 
                external appeal entity is to reverse or modify the 
                denial of a claim for benefits which is the subject of 
                the appeal.
    (b) General Elements of External Appeals Process.--
            (1) Contract with qualified external appeal entity.--
                    (A) Contract requirement.--Except as provided in 
                subparagraph (D), 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) Limitation on plan or issuer selection.--The 
                applicable authority shall implement procedures--
                            (i) to assure that the selection process 
                        among qualified external appeal entities will 
                        not create any incentives for external appeal 
                        entities to make a decision in a biased manner; 
                        and
                            (ii) for auditing a sample of decisions by 
                        such entities to assure that no such decisions 
                        are made 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 appropriate 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 all costs 
                of the process (except those incurred by the 
                participant, beneficiary, enrollee, or treating 
                professional in support of the appeal) shall be paid by 
                the plan or issuer, and not by the participant, 
                beneficiary, or enrollee. The previous sentence shall 
                not be construed as applying to the imposition of a 
                filing fee under subsection (a)(4).
                    (D) State authority with respect qualified external 
                appeal entity for health insurance issuers.--With 
                respect to health insurance issuers offering health 
                insurance coverage 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 a manner 
                determined by the State to assure an unbiased 
                determination.
            (2) Elements of process.--An external appeal process shall 
        be conducted consistent with standards established by the 
        appropriate Secretary that include at least the following:
                    (A) Fair and de novo determination.--The process 
                shall provide for a fair, de novo determination. 
                However, nothing in this paragraph shall be construed 
                as providing for coverage of items and services for 
                which benefits are specifically excluded under the plan 
                or coverage.
                    (B) Standard of review.--An external appeal entity 
                shall determine whether the plan's or issuer's decision 
                is in accordance with the medical needs of the patient 
                involved (as determined by the entity) taking into 
                account, as of the time of the entity's determination, 
                the patient's medical condition and any relevant and 
                reliable evidence the entity obtains under subparagraph 
                (D). If the entity determines the decision is in 
                accordance with such needs, the entity shall affirm the 
                decision and to the extent that the entity determines 
                the decision is not in accordance with such needs, the 
                entity shall reverse or modify the decision.
                    (C) Consideration of plan or coverage 
                definitions.--In making such determination, the 
                external appeal entity shall consider (but not be bound 
                by) any language in the plan or coverage document 
                relating to the definitions of the terms medical 
                necessity, medically necessary or appropriate, or 
                experimental, investigational, or related terms.
                    (D) Evidence.--
                            (i) In general.--An external appeal entity 
                        shall include, among the evidence taken into 
                        consideration--
                                    (I) the decision made by the plan 
                                or issuer upon internal review under 
                                section 1102 and any guidelines or 
                                standards used by the plan or issuer in 
                                reaching such decision;
                                    (II) any personal health and 
                                medical information supplied with 
                                respect to the individual whose denial 
                                of claim for benefits has been 
                                appealed; and
                                    (III) the opinion of the 
                                individual's treating physician or 
                                health care professional.
                            (ii) Additional evidence.--Such entity may 
                        also take into consideration but not be limited 
                        to the following evidence (to the extent 
                        available):
                                    (I) The results of studies that 
                                meet professionally recognized 
                                standards of validity and replicability 
                                or that have been published in peer-
                                reviewed journals.
                                    (II) The results of professional 
                                consensus conferences conducted or 
                                financed in whole or in part by one or 
                                more Government agencies.
                                    (III) Practice and treatment 
                                guidelines prepared or financed in 
                                whole or in part by Government 
                                agencies.
                                    (IV) Government-issued coverage and 
                                treatment policies.
                                    (V) Community standard of care and 
                                generally accepted principles of 
                                professional medical practice.
                                    (VI) To the extent that the entity 
                                determines it to be free of any 
                                conflict of interest, the opinions of 
                                individuals who are qualified as 
                                experts in one or more fields of health 
                                care which are directly related to the 
                                matters under appeal.
                                    (VII) To the extent that the entity 
                                determines it to be free of any 
                                conflict of interest, the results of 
                                peer reviews conducted by the plan or 
                                issuer involved.
                    (E) Determination concerning externally appealable 
                decisions.--A qualified external appeal entity shall 
                determine--
                            (i) whether a denial of claim for benefits 
                        is an externally appealable decision (within 
                        the meaning of subsection (a)(2));
                            (ii) whether an externally appealable 
                        decision involves an expedited appeal; and
                            (iii) for purposes of initiating an 
                        external review, whether the internal review 
                        process has been completed.
                    (F) Opportunity to submit evidence.--Each party to 
                an externally appealable decision may submit evidence 
                related to the issues in dispute.
                    (G) Provision of information.--The plan or issuer 
                involved shall provide timely access to the external 
                appeal entity to information and to provisions of the 
                plan or health insurance coverage relating to the 
                matter of the externally appealable decision, as 
                determined by the entity.
                    (H) 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 made in accordance with the medical 
                        exigencies of the case involved, but in no 
                        event later than 21 days after the date (or, in 
                        the case of an expedited appeal, 72 hours after 
                        the time) of requesting an external appeal of 
                        the decision;
                            (iii) 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
                            (iv) inform the participant, beneficiary, 
                        or enrollee of the individual's rights 
                        (including any limitation on such rights) to 
                        seek further review by the courts (or other 
                        process) of the external appeal determination.
                    (I) Compliance with determination.--If the external 
                appeal entity reverses or modifies the denial of a 
                claim for benefits, the plan or issuer shall--
                            (i) upon the receipt of the determination, 
                        authorize benefits in accordance with such 
                        determination;
                            (ii) take such actions as may be necessary 
                        to provide benefits (including items or 
                        services) in a timely manner consistent with 
                        such determination; and
                            (iii) submit information to the entity 
                        documenting compliance with the entity's 
                        determination and this subparagraph.
    (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 that is certified under paragraph (2) 
        as meeting the following requirements:
                    (A) The entity meets the independence requirements 
                of paragraph (3).
                    (B) The entity conducts external appeal activities 
                through a panel of not fewer than three 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)(2)(G).
                    (D) The entity meets such other requirements as the 
                appropriate Secretary may impose.
            (2) Initial 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)--
                                    (I) by the Secretary of Labor;
                                    (II) under a process recognized or 
                                approved by the Secretary of Labor; or
                                    (III) to the extent provided in 
                                subparagraph (C)(i), by a qualified 
                                private standard-setting organization 
                                (certified under such subparagraph); 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--
                                    (I) by the applicable State 
                                authority (or under a process 
                                recognized or approved by such 
                                authority); or
                                    (II) if the State has not 
                                established a certification and 
                                recertification process for such 
                                entities, by the Secretary of Health 
                                and Human Services, under a process 
                                recognized or approved by such 
                                Secretary, or to the extent provided in 
                                subparagraph (C)(ii), by a qualified 
                                private standard-setting organization 
                                (certified under such subparagraph).
                    (B) Recertification process.--The appropriate 
                Secretary shall develop standards for the 
                recertification of external appeal entities. Such 
                standards shall include a review of--
                            (i) the number of cases reviewed;
                            (ii) a summary of the disposition of those 
                        cases;
                            (iii) the length of time in making 
                        determinations on those cases;
                            (iv) updated information of what was 
                        required to be submitted as a condition of 
                        certification for the entity's performance of 
                        external appeal activities; and
                            (v) 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.
                    (C) Certification of qualified private standard-
                setting organizations.--
                            (i) For external reviews under group health 
                        plans.--For purposes of subparagraph 
                        (A)(i)(III), the Secretary of Labor may provide 
                        for a process for certification (and periodic 
                        recertification) of qualified private standard-
                        setting organizations which provide for 
                        certification of external review entities. Such 
                        an organization shall only be certified if the 
                        organization does not certify an external 
                        review entity unless it meets standards 
                        required for certification of such an entity by 
                        such Secretary under subparagraph (A)(i)(I).
                            (ii) For external reviews of health 
                        insurance issuers.--For purposes of 
                        subparagraph (A)(ii)(II), the Secretary of 
                        Health and Human Services may provide for a 
                        process for certification (and periodic 
                        recertification) of qualified private standard-
                        setting organizations which provide for 
                        certification of external review entities. Such 
                        an organization shall only be certified if the 
                        organization does not certify an external 
                        review entity unless it meets standards 
                        required for certification of such an entity by 
                        such Secretary under subparagraph (A)(ii)(II).
            (3) Independence requirements.--
                    (A) In general.--A clinical peer or other entity 
                meets the independence requirements of this paragraph 
                if--
                            (i) the peer or entity does not have a 
                        familial, financial, or professional 
                        relationship with any related party;
                            (ii) any compensation received by such peer 
                        or entity in connection with the external 
                        review is reasonable and not contingent on any 
                        decision rendered by the peer or entity;
                            (iii) except as provided in paragraph (4), 
                        the plan and the issuer have no recourse 
                        against the peer or entity in connection with 
                        the external review; and
                            (iv) the peer or entity does not otherwise 
                        have a conflict of interest with a related 
                        party as determined under any regulations which 
                        the Secretary may prescribe.
                    (B) Related party.--For purposes of this paragraph, 
                the term ``related party'' means--
                            (i) with respect to--
                                    (I) a group health plan or health 
                                insurance coverage offered in 
                                connection with such a plan, the plan 
                                or the health insurance issuer offering 
                                such coverage; or
                                    (II) individual health insurance 
                                coverage, the health insurance issuer 
                                offering such coverage,
                        or any plan sponsor, fiduciary, officer, 
                        director, or management employee of such plan 
                        or issuer;
                            (ii) the health care professional that 
                        provided the health care involved in the 
                        coverage decision;
                            (iii) the institution at which the health 
                        care involved in the coverage decision is 
                        provided;
                            (iv) the manufacturer of any drug or other 
                        item that was included in the health care 
                        involved in the coverage decision; or
                            (v) any other party determined under any 
                        regulations which the Secretary may prescribe 
                        to have a substantial interest in the coverage 
                        decision.
            (4) Limitation on liability of reviewers.--No qualified 
        external appeal entity having a contract with a plan or issuer 
        under this part and no person who is employed by any such 
        entity or who furnishes professional services to such entity, 
        shall be held by reason of the performance of any duty, 
        function, or activity required or authorized pursuant to this 
        section, to have violated any criminal law, or to be civilly 
        liable under any law of the United States or of any State (or 
        political subdivision thereof) if due care was exercised in the 
        performance of such duty, function, or activity and there was 
        no actual malice or gross misconduct in the performance of such 
        duty, function, or activity.
    (d) External Appeal Determination Binding on Plan.--The 
determination by an external appeal entity under this section is 
binding on the plan and issuer involved in the determination.
    (e) Penalties Against Authorized Officials for Refusing to 
Authorize the Determination of an External Review Entity.--
            (1) Monetary penalties.--In any case in which the 
        determination of an external review entity is not followed by a 
        group health plan, or by a health insurance issuer offering 
        health insurance coverage, any person who, acting in the 
        capacity of authorizing the benefit, causes such refusal may, 
        in the discretion in a court of competent jurisdiction, be 
        liable to an aggrieved participant, beneficiary, or enrollee 
        for a civil penalty in an amount of up to $1,000 a day from the 
        date on which the determination was transmitted to the plan or 
        issuer by the external review entity until the date the refusal 
        to provide the benefit is corrected.
            (2) Cease and desist order and order of attorney's fees.--
        In any action described in paragraph (1) brought by a 
        participant, beneficiary, or enrollee with respect to a group 
        health plan, or a health insurance issuer offering health 
        insurance coverage, in which a plaintiff alleges that a person 
        referred to in such paragraph has taken an action resulting in 
        a refusal of a benefit determined by an external appeal entity 
        in violation of such terms of the plan, coverage, or this 
        subtitle, or has failed to take an action for which such person 
        is responsible under the plan, coverage, or this title and 
        which is necessary under the plan or coverage for authorizing a 
        benefit, the court shall cause to be served on the defendant an 
        order requiring the defendant--
                    (A) to cease and desist from the alleged action or 
                failure to act; and
                    (B) to pay to the plaintiff a reasonable attorney's 
                fee and other reasonable costs relating to the 
                prosecution of the action on the charges on which the 
                plaintiff prevails.
            (3) Additional civil penalties.--
                    (A) In general.--In addition to any penalty imposed 
                under paragraph (1) or (2), the appropriate Secretary 
                may assess a civil penalty against a person acting in 
                the capacity of authorizing a benefit determined by an 
                external review entity for one or more group health 
                plans, or health insurance issuers offering health 
                insurance coverage, for--
                            (i) any pattern or practice of repeated 
                        refusal to authorize a benefit determined by an 
                        external appeal entity in violation of the 
                        terms of such a plan, coverage, or this title; 
                        or
                            (ii) any pattern or practice of repeated 
                        violations of the requirements of this section 
                        with respect to such plan or plans or coverage.
                    (B) Standard of proof and amount of penalty.--Such 
                penalty shall be payable only upon proof by clear and 
                convincing evidence of such pattern or practice and 
                shall be in an amount not to exceed the lesser of--
                            (i) 25 percent of the aggregate value of 
                        benefits shown by the appropriate Secretary to 
                        have not been provided, or unlawfully delayed, 
                        in violation of this section under such pattern 
                        or practice; or
                            (ii) $500,000.
            (4) Removal and disqualification.--Any person acting in the 
        capacity of authorizing benefits who has engaged in any such 
        pattern or practice described in paragraph (3)(A) with respect 
        to a plan or coverage, upon the petition of the appropriate 
        Secretary, may be removed by the court from such position, and 
        from any other involvement, with respect to such a plan or 
        coverage, and may be precluded from returning to any such 
        position or involvement for a period determined by the court.
    (f) Protection of Legal Rights.--Nothing in this subtitle shall be 
construed as altering or eliminating any cause of action or legal 
rights or remedies of participants, beneficiaries, enrollees, and 
others under State or Federal law (including sections 502 and 503 of 
the Employee Retirement Income Security Act of 1974), including the 
right to file judicial actions to enforce rights.

SEC. 1104. ESTABLISHMENT OF A GRIEVANCE PROCESS.

    (a) Establishment of Grievance System.--
            (1) In general.--A group health plan, and a health 
        insurance issuer in connection with the provision of health 
        insurance coverage, shall establish and maintain a system to 
        provide for the presentation and resolution of oral and written 
        grievances brought by individuals who are participants, 
        beneficiaries, or enrollees, or health care providers or other 
        individuals acting on behalf of an individual and with the 
        individual's consent or without such consent if the individual 
        is medically unable to provide such consent, regarding any 
        aspect of the plan's or issuer's services.
            (2) Grievance defined.--In this section, the term 
        ``grievance'' means any question, complaint, or concern brought 
        by a participant, beneficiary or enrollee that is not a claim 
        for benefits (as defined in section 1101(f)(1)).
    (b) Grievance System.--Such system shall include the following 
components with respect to individuals who are participants, 
beneficiaries, or enrollees:
            (1) Written notification to all such individuals and 
        providers of the telephone numbers and business addresses of 
        the plan or issuer personnel responsible for resolution of 
        grievances and appeals.
            (2) A system to record and document, over a period of at 
        least three previous years, all grievances and appeals made and 
        their status.
            (3) A process providing for timely processing and 
        resolution of grievances.
            (4) Procedures for follow-up action, including the methods 
        to inform the person making the grievance of the resolution of 
        the grievance.
Grievances are not subject to appeal under the previous provisions of 
this subtitle.

                       Subtitle B--Access to Care

SEC. 1111. CONSUMER CHOICE OPTION.

    (a) In General.--If a health insurance issuer offers to enrollees 
health insurance coverage in connection with a group health plan which 
provides for coverage of services only if such services are furnished 
through health care professionals and providers who are members of a 
network of health care professionals and providers who have entered 
into a contract with the issuer to provide such services, the issuer 
shall also offer or arrange to be offered to such enrollees (at the 
time of enrollment and during an annual open season as provided under 
subsection (c)) the option of health insurance coverage which provides 
for coverage of such services which are not furnished through health 
care professionals and providers who are members of such a network 
unless enrollees are offered such non-network coverage through another 
group health plan or through another health insurance issuer in the 
group market.
    (b) Additional Costs.--The amount of any additional premium charged 
by the health insurance issuer for the additional cost of the creation 
and maintenance of the option described in subsection (a) and the 
amount of any additional cost sharing imposed under such option shall 
be borne by the enrollee unless it is paid by the health plan sponsor 
through agreement with the health insurance issuer.
    (c) Open Season.--An enrollee may change to the offering provided 
under this section only during a time period determined by the health 
insurance issuer. Such time period shall occur at least annually.

SEC. 1112. CHOICE OF HEALTH CARE PROFESSIONAL.

    (a) Primary Care.--If a group health plan, or a health insurance 
issuer that offers health insurance coverage, requires or provides for 
designation by a participant, beneficiary, or enrollee of a 
participating primary care provider, then the plan or issuer shall 
permit each participant, beneficiary, and enrollee to designate any 
participating primary care provider who is available to accept such 
individual.
    (b) Specialists.--
            (1) In general.--Subject to paragraph (2), a group health 
        plan and a health insurance issuer that offers health insurance 
        coverage shall permit each participant, beneficiary, or 
        enrollee to receive medically necessary or appropriate 
        specialty care, pursuant to appropriate referral procedures, 
        from any qualified participating health care professional who 
        is available to accept such individual for such care.
            (2) Limitation.--Paragraph (1) shall not apply to specialty 
        care if the plan or issuer clearly informs participants, 
        beneficiaries, and enrollees of the limitations on choice of 
        participating health care professionals with respect to such 
        care.
            (3) Construction.--Nothing in this subsection shall be 
        construed as affecting the application of section 1114 
        (relating to access to specialty care).

SEC. 1113. ACCESS TO EMERGENCY CARE.

    (a) Coverage of Emergency Services.--
            (1) In general.--If a group health plan, or health 
        insurance coverage offered by a health insurance issuer, 
        provides any benefits with respect to services in an emergency 
        department of a hospital, the plan or issuer shall cover 
        emergency services (as defined in paragraph (2)(B))--
                    (A) without the need for any prior authorization 
                determination;
                    (B) whether or not the health care provider 
                furnishing such services is a participating provider 
                with respect to such services;
                    (C) in a manner so that, if such services are 
                provided to a participant, beneficiary, or enrollee--
                            (i) by a nonparticipating health care 
                        provider with or without prior authorization; 
                        or
                            (ii) by a participating health care 
                        provider without prior authorization,
                the participant, beneficiary, or enrollee is not liable 
                for amounts that exceed the amounts of liability that 
                would be incurred if the services were provided by a 
                participating health care provider with prior 
                authorization; and
                    (D) without regard to any other term or condition 
                of such coverage (other than exclusion or coordination 
                of benefits, or an affiliation or waiting period, 
                permitted under section 2701 of the Public Health 
                Service Act, section 701 of the Employee Retirement 
                Income Security Act of 1974, or section 9801 of the 
                Internal Revenue Code of 1986, and other than 
                applicable cost-sharing).
            (2) Definitions.--In this section:
                    (A) Emergency medical condition based on prudent 
                layperson standard.--The term ``emergency medical 
                condition'' means a medical condition 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 the absence of 
                immediate medical attention to result in a condition 
                described in clause (i), (ii), or (iii) of section 
                1867(e)(1)(A) of the Social Security Act.
                    (B) Emergency services.--The term ``emergency 
                services'' means--
                            (i) a medical screening examination (as 
                        required under section 1867 of the Social 
                        Security Act) that is within the capability of 
                        the emergency department of a hospital, 
                        including ancillary services routinely 
                        available to the emergency department to 
                        evaluate an emergency medical condition (as 
                        defined in subparagraph (A)); and
                            (ii) within the capabilities of the staff 
                        and facilities available at the hospital, such 
                        further medical examination and treatment as 
                        are required under section 1867 of such Act to 
                        stabilize the patient.
                    (C) Stabilize.--The term ``to stabilize'' means, 
                with respect to an emergency medical condition, to 
                provide such medical treatment of the condition as may 
                be necessary to assure, within reasonable medical 
                probability, that no material deterioration of the 
                condition is likely to result from or occur during the 
                transfer of the individual from a facility.
    (b) Reimbursement for Maintenance Care and Post-Stabilization 
Care.--In the case of services (other than emergency services) for 
which benefits are available under a group health plan, or under health 
insurance coverage offered by a health insurance issuer, the plan or 
issuer shall provide for reimbursement with respect to such services 
provided to a participant, beneficiary, or enrollee other than through 
a participating health care provider in a manner consistent with 
subsection (a)(1)(C) (and shall otherwise comply with the guidelines 
established under section 1852(d)(2) of the Social Security Act), if 
the services are maintenance care or post-stabilization care covered 
under such guidelines.

SEC. 1114. ACCESS TO SPECIALTY CARE.

    (a) Specialty Care for Covered Services.--
            (1) In general.--If--
                    (A) an individual is a participant or beneficiary 
                under a group health plan or an enrollee who is covered 
                under health insurance coverage offered by a health 
                insurance issuer;
                    (B) the individual has a condition or disease of 
                sufficient seriousness and complexity to require 
                treatment by a specialist; and
                    (C) benefits for such treatment are provided under 
                the plan or coverage,
        the plan or issuer shall make or provide for a referral to a 
        specialist who is available and accessible to provide the 
        treatment for such condition or disease.
            (2) Specialist defined.--For purposes of this subsection, 
        the term ``specialist'' means, with respect to a condition, a 
        health care practitioner, facility, or center that has adequate 
        expertise through appropriate training and experience 
        (including, in the case of a child, appropriate pediatric 
        expertise) to provide high quality care in treating the 
        condition.
            (3) Care under referral.--A group health plan or health 
        insurance issuer may require that the care provided to an 
        individual pursuant to such referral under paragraph (1) be--
                    (A) pursuant to a treatment plan, only if the 
                treatment plan is developed by the specialist and 
                approved by the plan or issuer, in consultation with 
                the designated primary care provider or specialist and 
                the individual (or the individual's designee); and
                    (B) in accordance with applicable quality assurance 
                and utilization review standards of the plan or issuer.
        Nothing in this subsection shall be construed as preventing 
        such a treatment plan for an individual from requiring a 
        specialist to provide the primary care provider with regular 
        updates on the specialty care provided, as well as all 
        necessary medical information.
            (4) Referrals to participating providers.--A group health 
        plan or health insurance issuer is not required under paragraph 
        (1) to provide for a referral to a specialist that is not a 
        participating provider, unless the plan or issuer does not have 
        an appropriate specialist that is available and accessible to 
        treat the individual's condition and that is a participating 
        provider with respect to such treatment.
            (5) Treatment of nonparticipating providers.--If a plan or 
        issuer refers an individual to a nonparticipating specialist 
        pursuant to paragraph (1), services provided pursuant to the 
        approved treatment plan (if any) shall be provided at no 
        additional cost to the individual beyond what the individual 
        would otherwise pay for services received by such a specialist 
        that is a participating provider.
    (b) Specialists as Gatekeeper for Treatment of Ongoing Special 
Conditions.--
            (1) In general.--A group health plan, or a health insurance 
        issuer, in connection with the provision of health insurance 
        coverage, shall have a procedure by which an individual who is 
        a participant, beneficiary, or enrollee and who has an ongoing 
        special condition (as defined in paragraph (3)) may request and 
        receive a referral to a specialist for such condition who shall 
        be responsible for and capable of providing and coordinating 
        the individual's care with respect to the condition. Under such 
        procedures if such an individual's care would most 
        appropriately be coordinated by such a specialist, such plan or 
        issuer shall refer the individual to such specialist.
            (2) Treatment for related referrals.--Such specialists 
        shall be permitted to treat the individual without a referral 
        from the individual's primary care provider and may authorize 
        such referrals, procedures, tests, and other medical services 
        as the individual's primary care provider would otherwise be 
        permitted to provide or authorize, subject to the terms of the 
        treatment (referred to in subsection (a)(3)(A)) with respect to 
        the ongoing special condition.
            (3) Ongoing special condition defined.--In this subsection, 
        the term ``ongoing special condition'' means a condition or 
        disease that--
                    (A) is life-threatening, degenerative, or 
                disabling; and
                    (B) requires specialized medical care over a 
                prolonged period of time.
            (4) Terms of referral.--The provisions of paragraphs (3) 
        through (5) of subsection (a) apply with respect to referrals 
        under paragraph (1) of this subsection in the same manner as 
        they apply to referrals under subsection (a)(1).
    (c) Standing Referrals.--
            (1) In general.--A group health plan, and a health 
        insurance issuer in connection with the provision of health 
        insurance coverage, shall have a procedure by which an 
        individual who is a participant, beneficiary, or enrollee and 
        who has a condition that requires ongoing care from a 
        specialist may receive a standing referral to such specialist 
        for treatment of such condition. If the plan or issuer, or if 
        the primary care provider in consultation with the medical 
        director of the plan or issuer and the specialist (if any), 
        determines that such a standing referral is appropriate, the 
        plan or issuer shall make such a referral to such a specialist 
        if the individual so desires.
            (2) Terms of referral.--The provisions of paragraphs (3) 
        through (5) of subsection (a) apply with respect to referrals 
        under paragraph (1) of this subsection in the same manner as 
        they apply to referrals under subsection (a)(1).

SEC. 1115. ACCESS TO OBSTETRICAL AND GYNECOLOGICAL CARE.

    (a) In General.--If a group health plan, or a health insurance 
issuer in connection with the provision of health insurance coverage, 
requires or provides for a participant, beneficiary, or enrollee to 
designate a participating primary care health care professional, the 
plan or issuer--
            (1) may not require authorization or a referral by the 
        individual's primary care health care professional or otherwise 
        for coverage of gynecological care (including preventive 
        women's health examinations) and pregnancy-related services 
        provided by a participating health care professional, including 
        a physician, who specializes in obstetrics and gynecology to 
        the extent such care is otherwise covered; and
            (2) shall treat the ordering of other obstetrical or 
        gynecological care by such a participating professional as the 
        authorization of the primary care health care professional with 
        respect to such care under the plan or coverage.
    (b) Construction.--Nothing in subsection (a) shall be construed 
to--
            (1) waive any exclusions of coverage under the terms of the 
        plan or health insurance coverage with respect to coverage of 
        obstetrical or gynecological care; or
            (2) preclude the group health plan or health insurance 
        issuer involved from requiring that the obstetrical or 
        gynecological provider notify the primary care health care 
        professional or the plan or issuer of treatment decisions.

SEC. 1116. ACCESS TO PEDIATRIC CARE.

    (a) Pediatric Care.--If a group health plan, or a health insurance 
issuer in connection with the provision of health insurance coverage, 
requires or provides for an enrollee to designate a participating 
primary care provider for a child of such enrollee, the plan or issuer 
shall permit the enrollee to designate a physician who specializes in 
pediatrics as the child's primary care provider.
    (b) Construction.--Nothing in subsection (a) shall be construed to 
waive any exclusions of coverage under the terms of the plan or health 
insurance coverage with respect to coverage of pediatric care.

SEC. 1117. CONTINUITY OF CARE.

    (a) In General.--
            (1) Termination of provider.--If a contract between a group 
        health plan, or a health insurance issuer in connection with 
        the provision of health insurance coverage, and a health care 
        provider is terminated (as defined in paragraph (3)(B)), or 
        benefits or coverage provided by a health care provider are 
        terminated because of a change in the terms of provider 
        participation in a group health plan, and an individual who is 
        a participant, beneficiary, or enrollee in the plan or coverage 
        is undergoing treatment from the provider for an ongoing 
        special condition (as defined in paragraph (3)(A)) at the time 
        of such termination, the plan or issuer shall--
                    (A) notify the individual on a timely basis of such 
                termination and of the right to elect continuation of 
                coverage of treatment by the provider under this 
                section; and
                    (B) subject to subsection (c), permit the 
                individual to elect to continue to be covered with 
                respect to treatment by the provider of such condition 
                during a transitional period (provided under subsection 
                (b)).
            (2) Treatment of termination of contract with health 
        insurance issuer.--If a contract for the provision of health 
        insurance coverage between a group health plan and a health 
        insurance issuer is terminated and, as a result of such 
        termination, coverage of services of a health care provider is 
        terminated with respect to an individual, the provisions of 
        paragraph (1) (and the succeeding provisions of this section) 
        shall apply under the plan in the same manner as if there had 
        been a contract between the plan and the provider that had been 
        terminated, but only with respect to benefits that are covered 
        under the plan after the contract termination.
            (3) Definitions.--For purposes of this section:
                    (A) Ongoing special condition.--The term ``ongoing 
                special condition'' has the meaning given such term in 
                section 1114(b)(3), and also includes pregnancy.
                    (B) Termination.--The term ``terminated'' includes, 
                with respect to a contract, the expiration or 
                nonrenewal of the contract, but does not include a 
                termination of the contract by the plan or issuer for 
                failure to meet applicable quality standards or for 
                fraud.
    (b) Transitional Period.--
            (1) In general.--Except as provided in paragraphs (2) 
        through (4), the transitional period under this subsection 
        shall extend up to 90 days (as determined by the treating 
        health care professional) after the date of the notice 
        described in subsection (a)(1)(A) of the provider's 
        termination.
            (2) Scheduled surgery and organ transplantation.--If 
        surgery or organ transplantation was scheduled for an 
        individual before the date of the announcement of the 
        termination of the provider status under subsection (a)(1)(A) 
        or if the individual on such date was on an established waiting 
        list or otherwise scheduled to have such surgery or 
        transplantation, the transitional period under this subsection 
        with respect to the surgery or transplantation shall extend 
        beyond the period under paragraph (1) and until the date of 
        discharge of the individual after completion of the surgery or 
        transplantation.
            (3) Pregnancy.--If--
                    (A) a participant, beneficiary, or enrollee was 
                determined to be pregnant at the time of a provider's 
                termination of participation; and
                    (B) the provider was treating the pregnancy before 
                date of the termination,
        the transitional period under this subsection with respect to 
        provider's treatment of the pregnancy shall extend through the 
        provision of post-partum care directly related to the delivery.
            (4) Terminal illness.--If--
                    (A) a participant, beneficiary, or enrollee was 
                determined to be terminally ill (as determined under 
                section 1861(dd)(3)(A) of the Social Security Act) at 
                the time of a provider's termination of participation; 
                and
                    (B) the provider was treating the terminal illness 
                before the date of termination,
        the transitional period under this subsection shall extend for 
        the remainder of the individual's life for care directly 
        related to the treatment of the terminal illness or its medical 
        manifestations.
    (c) Permissible Terms and Conditions.--A group health plan or 
health insurance issuer may condition coverage of continued treatment 
by a provider under subsection (a)(1)(B) upon the individual notifying 
the plan of the election of continued coverage and upon the provider 
agreeing to the following terms and conditions:
            (1) The provider agrees to accept reimbursement from the 
        plan or issuer and individual involved (with respect to cost-
        sharing) at the rates applicable prior to the start of the 
        transitional period as payment in full (or, in the case 
        described in subsection (a)(2), at the rates applicable under 
        the replacement plan or issuer after the date of the 
        termination of the contract with the health insurance issuer) 
        and not to impose cost-sharing with respect to the individual 
        in an amount that would exceed the cost-sharing that could have 
        been imposed if the contract referred to in subsection (a)(1) 
        had not been terminated.
            (2) The provider agrees to adhere to the quality assurance 
        standards of the plan or issuer responsible for payment under 
        paragraph (1) and to provide to such plan or issuer necessary 
        medical information related to the care provided.
            (3) The provider agrees otherwise to adhere to such plan's 
        or issuer's policies and procedures, including procedures 
        regarding referrals and obtaining prior authorization and 
        providing services pursuant to a treatment plan (if any) 
        approved by the plan or issuer.
    (d) Construction.--Nothing in this section shall be construed to 
require the coverage of benefits which would not have been covered if 
the provider involved remained a participating provider.

SEC. 1118. ACCESS TO NEEDED PRESCRIPTION DRUGS.

    If a group health plan, or health insurance issuer that offers 
health insurance coverage, provides benefits with respect to 
prescription drugs but the coverage limits such benefits to drugs 
included in a formulary, the plan or issuer shall--
            (1) ensure participation of participating physicians and 
        pharmacists in the development of the formulary;
            (2) disclose to providers and, disclose upon request under 
        section 1121(c)(5) to participants, beneficiaries, and 
        enrollees, the nature of the formulary restrictions; and
            (3) consistent with the standards for a utilization review 
        program under section 1101, provide for exceptions from the 
        formulary limitation when a non-formulary alternative is 
        medically indicated.

SEC. 1119. COVERAGE FOR INDIVIDUALS PARTICIPATING IN APPROVED CLINICAL 
              TRIALS.

    (a) Coverage.--
            (1) In general.--If a group health plan, or health 
        insurance issuer that is providing health insurance coverage, 
        provides coverage to a qualified individual (as defined in 
        subsection (b)), the plan or issuer--
                    (A) may not deny the individual participation in 
                the clinical trial referred to in subsection (b)(2);
                    (B) subject to subsection (c), may not deny (or 
                limit or impose additional conditions on) the coverage 
                of routine patient costs for items and services 
                furnished in connection with participation in the 
                trial; and
                    (C) may not discriminate against the individual on 
                the basis of the enrollee's participation in such 
                trial.
            (2) Exclusion of certain costs.--For purposes of paragraph 
        (1)(B), routine patient costs do not include the cost of the 
        tests or measurements conducted primarily for the purpose of 
        the clinical trial involved.
            (3) Use of in-network providers.--If one or more 
        participating providers is participating in a clinical trial, 
        nothing in paragraph (1) shall be construed as preventing a 
        plan or issuer from requiring that a qualified individual 
        participate in the trial through such a participating provider 
        if the provider will accept the individual as a participant in 
        the trial.
    (b) Qualified Individual Defined.--For purposes of subsection (a), 
the term ``qualified individual'' means an individual who is a 
participant or beneficiary in a group health plan, or who is an 
enrollee under health insurance coverage, and who meets the following 
conditions:
            (1)(A) The individual has a life-threatening or serious 
        illness for which no standard treatment is effective.
            (B) The individual is eligible to participate in an 
        approved clinical trial according to the trial protocol with 
        respect to treatment of such illness.
            (C) The individual's participation in the trial offers 
        meaningful potential for significant clinical benefit for the 
        individual.
            (2) Either--
                    (A) the referring physician is a participating 
                health care professional and has concluded that the 
                individual's participation in such trial would be 
                appropriate based upon the individual meeting the 
                conditions described in paragraph (1); or
                    (B) the participant, beneficiary, or enrollee 
                provides medical and scientific information 
                establishing that the individual's participation in 
                such trial would be appropriate based upon the 
                individual meeting the conditions described in 
                paragraph (1).
    (c) Payment.--
            (1) In general.--Under this section a group health plan or 
        health insurance issuer shall provide for payment for routine 
        patient costs described in subsection (a)(2) but is not 
        required to pay for costs of items and services that are 
        reasonably expected (as determined by the Secretary) to be paid 
        for by the sponsors of an approved clinical trial.
            (2) Payment rate.--In the case of covered items and 
        services provided by--
                    (A) a participating provider, the payment rate 
                shall be at the agreed upon rate; or
                    (B) a nonparticipating provider, the payment rate 
                shall be at the rate the plan or issuer would normally 
                pay for comparable services under subparagraph (A).
    (d) Approved Clinical Trial Defined.--
            (1) In general.--In this section, the term ``approved 
        clinical trial'' means a clinical research study or clinical 
        investigation approved and funded (which may include funding 
        through in-kind contributions) by one or more of the following:
                    (A) The National Institutes of Health.
                    (B) A cooperative group or center of the National 
                Institutes of Health.
                    (C) Either of the following if the conditions 
                described in paragraph (2) are met:
                            (i) The Department of Veterans Affairs.
                            (ii) The Department of Defense.
            (2) Conditions for departments.--The conditions described 
        in this paragraph, for a study or investigation conducted by a 
        Department, are that the study or investigation has been 
        reviewed and approved through a system of peer review that the 
        Secretary determines--
                    (A) to be comparable to the system of peer review 
                of studies and investigations used by the National 
                Institutes of Health; and
                    (B) assures unbiased review of the highest 
                scientific standards by qualified individuals who have 
                no interest in the outcome of the review.
    (e) Construction.--Nothing in this section shall be construed to 
limit a plan's or issuer's coverage with respect to clinical trials.

                   Subtitle C--Access to Information

SEC. 1121. PATIENT ACCESS TO INFORMATION.

    (a) Disclosure Requirement.--
            (1) Group health plans.--A group health plan shall--
                    (A) provide to participants and beneficiaries at 
                the time of initial coverage under the plan (or the 
                effective date of this section, in the case of 
                individuals who are participants or beneficiaries as of 
                such date), and at least annually thereafter, the 
                information described in subsection (b) in printed 
                form;
                    (B) provide to participants and beneficiaries, 
                within a reasonable period (as specified by the 
                appropriate Secretary) before or after the date of 
                significant changes in the information described in 
                subsection (b), information in printed form on such 
                significant changes; and
                    (C) upon request, make available to participants 
                and beneficiaries, the applicable authority, and 
                prospective participants and beneficiaries, the 
                information described in subsection (b) or (c) in 
                printed form.
            (2) Health insurance issuers.--A health insurance issuer in 
        connection with the provision of health insurance coverage 
        shall--
                    (A) provide to individuals enrolled under such 
                coverage at the time of enrollment, and at least 
                annually thereafter, the information described in 
                subsection (b) in printed form;
                    (B) provide to enrollees, within a reasonable 
                period (as specified by the appropriate Secretary) 
                before or after the date of significant changes in the 
                information described in subsection (b), information in 
                printed form on such significant changes; and
                    (C) upon request, make available to the applicable 
                authority, to individuals who are prospective 
                enrollees, and to the public the information described 
                in subsection (b) or (c) in printed form.
    (b) Information Provided.--The information described in this 
subsection with respect to a group health plan or health insurance 
coverage offered by a health insurance issuer includes the following:
            (1) Service area.--The service area of the plan or issuer.
            (2) Benefits.--Benefits offered under the plan or coverage, 
        including--
                    (A) covered benefits, including benefit limits and 
                coverage exclusions;
                    (B) cost sharing, such as deductibles, coinsurance, 
                and copayment amounts, including any liability for 
                balance billing, any maximum limitations on out of 
                pocket expenses, and the maximum out of pocket costs 
                for services that are provided by nonparticipating 
                providers or that are furnished without meeting the 
                applicable utilization review requirements;
                    (C) the extent to which benefits may be obtained 
                from nonparticipating providers;
                    (D) the extent to which a participant, beneficiary, 
                or enrollee may select from among participating 
                providers and the types of providers participating in 
                the plan or issuer network;
                    (E) process for determining experimental coverage; 
                and
                    (F) use of a prescription drug formulary.
            (3) Access.--A description of the following:
                    (A) The number, mix, and distribution of providers 
                under the plan or coverage.
                    (B) Out-of-network coverage (if any) provided by 
                the plan or coverage.
                    (C) Any point-of-service option (including any 
                supplemental premium or cost-sharing for such option).
                    (D) The procedures for participants, beneficiaries, 
                and enrollees to select, access, and change 
                participating primary and specialty providers.
                    (E) The rights and procedures for obtaining 
                referrals (including standing referrals) to 
                participating and nonparticipating providers.
                    (F) The name, address, and telephone number of 
                participating health care providers and an indication 
                of whether each such provider is available to accept 
                new patients.
                    (G) Any limitations imposed on the selection of 
                qualifying participating health care providers, 
                including any limitations imposed under section 
                1112(b)(2).
                    (H) How the plan or issuer addresses the needs of 
                participants, beneficiaries, and enrollees and others 
                who do not speak English or who have other special 
                communications needs in accessing providers under the 
                plan or coverage, including the provision of 
                information described in this subsection and subsection 
                (c) to such individuals.
            (4) Out-of-area coverage.--Out-of-area coverage provided by 
        the plan or issuer.
            (5) Emergency coverage.--Coverage of emergency services, 
        including--
                    (A) the appropriate use of emergency services, 
                including use of the 911 telephone system or its local 
                equivalent in emergency situations and an explanation 
                of what constitutes an emergency situation;
                    (B) the process and procedures of the plan or 
                issuer for obtaining emergency services; and
                    (C) the locations of (i) emergency departments, and 
                (ii) other settings, in which plan physicians and 
                hospitals provide emergency services and post-
                stabilization care.
            (6) Percentage of premiums used for benefits (loss-
        ratios).--In the case of health insurance coverage only (and 
        not with respect to group health plans that do not provide 
        coverage through health insurance coverage), a description of 
        the overall loss-ratio for the coverage (as defined in 
        accordance with rules established or recognized by the 
        Secretary of Health and Human Services).
            (7) Prior authorization rules.--Rules regarding prior 
        authorization or other review requirements that could result in 
        noncoverage or nonpayment.
            (8) Grievance and appeals procedures.--All appeal or 
        grievance rights and procedures under the plan or coverage, 
        including the method for filing grievances and the time frames 
        and circumstances for acting on grievances and appeals, who is 
        the applicable authority with respect to the plan or issuer.
            (9) Quality assurance.--Any information made public by an 
        accrediting organization in the process of accreditation of the 
        plan or issuer or any additional quality indicators the plan or 
        issuer makes available.
            (10) Information on issuer.--Notice of appropriate mailing 
        addresses and telephone numbers to be used by participants, 
        beneficiaries, and enrollees in seeking information or 
        authorization for treatment.
            (11) Notice of requirements.--Notice of the requirements of 
        this title.
            (12) Availability of information on request.--Notice that 
        the information described in subsection (c) is available upon 
        request.
    (c) Information Made Available Upon Request.--The information 
described in this subsection is the following:
            (1) Utilization review activities.--A description of 
        procedures used and requirements (including circumstances, time 
        frames, and appeal rights) under any utilization review program 
        under section 1101, including under any drug formulary program 
        under section 1118.
            (2) Grievance and appeals information.--Information on the 
        number of grievances and appeals and on the disposition in the 
        aggregate of such matters.
            (3) Method of physician compensation.--A general 
        description by category (including salary, fee-for-service, 
        capitation, and such other categories as may be specified in 
        regulations of the Secretary) of the applicable method by which 
        a specified prospective or treating health care professional is 
        (or would be) compensated in connection with the provision of 
        health care under the plan or coverage.
            (4) Specific information on credentials of participating 
        providers.--In the case of each participating provider, a 
        description of the credentials of the provider.
            (5) Formulary restrictions.--A description of the nature of 
        any drug formula restrictions.
            (6) Participating provider list.--A list of current 
        participating health care providers.
    (d) Construction.--Nothing in this section shall be construed as 
requiring public disclosure of individual contracts or financial 
arrangements between a group health plan or health insurance issuer and 
any provider.

         Subtitle D--Protecting the Doctor-Patient Relationship

SEC. 1131. PROHIBITION OF INTERFERENCE WITH CERTAIN MEDICAL 
              COMMUNICATIONS.

    (a) General Rule.--The provisions of any contract or agreement, or 
the operation of any contract or agreement, between a group health plan 
or health insurance issuer in relation to health insurance coverage 
(including any partnership, association, or other organization that 
enters into or administers such a contract or agreement) and a health 
care provider (or group of health care providers) shall not prohibit or 
otherwise restrict a health care professional from advising such a 
participant, beneficiary, or enrollee who is a patient of the 
professional about the health status of the individual or medical care 
or treatment for the individual's condition or disease, regardless of 
whether benefits for such care or treatment are provided under the plan 
or coverage, if the professional is acting within the lawful scope of 
practice.
    (b) Nullification.--Any contract provision or agreement that 
restricts or prohibits medical communications in violation of 
subsection (a) shall be null and void.

SEC. 1132. PROHIBITION OF DISCRIMINATION AGAINST PROVIDERS BASED ON 
              LICENSURE.

    (a) In General.--A group health plan and a health insurance issuer 
offering health insurance coverage shall not discriminate with respect 
to participation or indemnification as to any provider who is acting 
within the scope of the provider's license or certification under 
applicable State law, solely on the basis of such license or 
certification.
    (b) Construction.--Subsection (a) shall not be construed--
            (1) as requiring the coverage under a group health plan or 
        health insurance coverage of particular benefits or services or 
        to prohibit a plan or issuer from including providers only to 
        the extent necessary to meet the needs of the plan's or 
        issuer's participants, beneficiaries, or enrollees or from 
        establishing any measure designed to maintain quality and 
        control costs consistent with the responsibilities of the plan 
        or issuer;
            (2) to override any State licensure or scope-of-practice 
        law; or
            (3) as requiring a plan or issuer that offers network 
        coverage to include for participation every willing provider 
        who meets the terms and conditions of the plan or issuer.

SEC. 1133. PROHIBITION AGAINST IMPROPER INCENTIVE ARRANGEMENTS.

    (a) In General.--A group health plan and a health insurance issuer 
offering health insurance coverage may not operate any physician 
incentive plan (as defined in subparagraph (B) of section 1876(i)(8) of 
the Social Security Act) unless the requirements described in clauses 
(i), (ii)(I), and (iii) of subparagraph (A) of such section are met 
with respect to such a plan.
    (b) Application.--For purposes of carrying out paragraph (1), any 
reference in section 1876(i)(8) of the Social Security Act to the 
Secretary, an eligible organization, or an individual enrolled with the 
organization shall be treated as a reference to the applicable 
authority, a group health plan or health insurance issuer, 
respectively, and a participant, beneficiary, or enrollee with the plan 
or organization, respectively.
    (c) Construction.--Nothing in this section shall be construed as 
prohibiting all capitation and similar arrangements or all provider 
discount arrangements.

SEC. 1134. PAYMENT OF CLAIMS.

    A group health plan, and a health insurance issuer offering group 
health insurance coverage, shall provide for prompt payment of claims 
submitted for health care services or supplies furnished to a 
participant, beneficiary, or enrollee with respect to benefits covered 
by the plan or issuer, in a manner consistent with the provisions of 
sections 1816(c)(2) and 1842(c)(2) of the Social Security Act (42 
U.S.C. 1395h(c)(2) and 42 U.S.C. 1395u(c)(2)), except that for purposes 
of this section, subparagraph (C) of section 1816(c)(2) of the Social 
Security Act shall be treated as applying to claims received from a 
participant, beneficiary, or enrollee as well as claims referred to in 
such subparagraph.

SEC. 1135. PROTECTION FOR PATIENT ADVOCACY.

    (a) Protection for Use of Utilization Review and Grievance 
Process.--A group health plan, and a health insurance issuer with 
respect to the provision of health insurance coverage, may not 
retaliate against a participant, beneficiary, enrollee, or health care 
provider based on the participant's, beneficiary's, enrollee's or 
provider's use of, or participation in, a utilization review process or 
a grievance process of the plan or issuer (including an internal or 
external review or appeal process) under this title.
    (b) Protection for Quality Advocacy by Health Care Professionals.--
            (1) In general.--A group health plan or health insurance 
        issuer may not retaliate or discriminate against a protected 
        health care professional because the professional in good 
        faith--
                    (A) discloses information relating to the care, 
                services, or conditions affecting one or more 
                participants, beneficiaries, or enrollees of the plan 
                or issuer to an appropriate public regulatory agency, 
                an appropriate private accreditation body, or 
                appropriate management personnel of the plan or issuer; 
                or
                    (B) initiates, cooperates, or otherwise 
                participates in an investigation or proceeding by such 
                an agency with respect to such care, services, or 
                conditions.
        If an institutional health care provider is a participating 
        provider with such a plan or issuer or otherwise receives 
        payments for benefits provided by such a plan or issuer, the 
        provisions of the previous sentence shall apply to the provider 
        in relation to care, services, or conditions affecting one or 
        more patients within an institutional health care provider in 
        the same manner as they apply to the plan or issuer in relation 
        to care, services, or conditions provided to one or more 
        participants, beneficiaries, or enrollees; and for purposes of 
        applying this sentence, any reference to a plan or issuer is 
        deemed a reference to the institutional health care provider.
            (2) Good faith action.--For purposes of paragraph (1), a 
        protected health care professional is considered to be acting 
        in good faith with respect to disclosure of information or 
        participation if, with respect to the information disclosed as 
        part of the action--
                    (A) the disclosure is made on the basis of personal 
                knowledge and is consistent with that degree of 
                learning and skill ordinarily possessed by health care 
                professionals with the same licensure or certification 
                and the same experience;
                    (B) the professional reasonably believes the 
                information to be true;
                    (C) the information evidences either a violation of 
                a law, rule, or regulation, of an applicable 
                accreditation standard, or of a generally recognized 
                professional or clinical standard or that a patient is 
                in imminent hazard of loss of life or serious injury; 
                and
                    (D) subject to subparagraphs (B) and (C) of 
                paragraph (3), the professional has followed reasonable 
                internal procedures of the plan, issuer, or 
                institutional health care provider established for the 
                purpose of addressing quality concerns before making 
                the disclosure.
            (3) Exception and special rule.--
                    (A) General exception.--Paragraph (1) does not 
                protect disclosures that would violate Federal or State 
                law or diminish or impair the rights of any person to 
                the continued protection of confidentiality of 
                communications provided by such law.
                    (B) Notice of internal procedures.--Subparagraph 
                (D) of paragraph (2) shall not apply unless the 
                internal procedures involved are reasonably expected to 
                be known to the health care professional involved. For 
                purposes of this subparagraph, a health care 
                professional is reasonably expected to know of internal 
                procedures if those procedures have been made available 
                to the professional through distribution or posting.
                    (C) Internal procedure exception.--Subparagraph (D) 
                of paragraph (2) also shall not apply if--
                            (i) the disclosure relates to an imminent 
                        hazard of loss of life or serious injury to a 
                        patient;
                            (ii) the disclosure is made to an 
                        appropriate private accreditation body pursuant 
                        to disclosure procedures established by the 
                        body; or
                            (iii) the disclosure is in response to an 
                        inquiry made in an investigation or proceeding 
                        of an appropriate public regulatory agency and 
                        the information disclosed is limited to the 
                        scope of the investigation or proceeding.
            (4) Additional considerations.--It shall not be a violation 
        of paragraph (1) to take an adverse action against a protected 
        health care professional if the plan, issuer, or provider 
        taking the adverse action involved demonstrates that it would 
        have taken the same adverse action even in the absence of the 
        activities protected under such paragraph.
            (5) Notice.--A group health plan, health insurance issuer, 
        and institutional health care provider shall post a notice, to 
        be provided or approved by the Secretary of Labor, setting 
        forth excerpts from, or summaries of, the pertinent provisions 
        of this subsection and information pertaining to enforcement of 
        such provisions.
            (6) Constructions.--
                    (A) Determinations of coverage.--Nothing in this 
                subsection shall be construed to prohibit a plan or 
                issuer from making a determination not to pay for a 
                particular medical treatment or service or the services 
                of a type of health care professional.
                    (B) Enforcement of peer review protocols and 
                internal procedures.--Nothing in this subsection shall 
                be construed to prohibit a plan, issuer, or provider 
                from establishing and enforcing reasonable peer review 
                or utilization review protocols or determining whether 
                a protected health care professional has complied with 
                those protocols or from establishing and enforcing 
                internal procedures for the purpose of addressing 
                quality concerns.
                    (C) Relation to other rights.--Nothing in this 
                subsection shall be construed to abridge rights of 
                participants, beneficiaries, enrollees, and protected 
                health care professionals under other applicable 
                Federal or State laws.
            (7) Protected health care professional defined.--For 
        purposes of this subsection, the term ``protected health care 
        professional'' means an individual who is a licensed or 
        certified health care professional and who--
                    (A) with respect to a group health plan or health 
                insurance issuer, is an employee of the plan or issuer 
                or has a contract with the plan or issuer for provision 
                of services for which benefits are available under the 
                plan or issuer; or
                    (B) with respect to an institutional health care 
                provider, is an employee of the provider or has a 
                contract or other arrangement with the provider 
                respecting the provision of health care services.

                        Subtitle E--Definitions

SEC. 1151. DEFINITIONS.

    (a) Incorporation of General Definitions.--Except as otherwise 
provided, the provisions of section 2791 of the Public Health Service 
Act shall apply for purposes of this title in the same manner as they 
apply for purposes of title XXVII of such Act.
    (b) Secretary.--Except as otherwise provided, the term 
``Secretary'' means the Secretary of Health and Human Services, in 
consultation with the Secretary of Labor and the term ``appropriate 
Secretary'' means the Secretary of Health and Human Services in 
relation to carrying out this title under sections 2706 and 2751 of the 
Public Health Service Act and the Secretary of Labor in relation to 
carrying out this title under section 713 of the Employee Retirement 
Income Security Act of 1974.
    (c) Additional Definitions.--For purposes of this title:
            (1) Actively practicing.--The term ``actively practicing'' 
        means, with respect to a physician or other health care 
        professional, such a physician or professional who provides 
        professional services to individual patients on average at 
        least two full days per week.
            (2) Applicable authority.--The term ``applicable 
        authority'' means--
                    (A) in the case of a group health plan, the 
                Secretary of Health and Human Services and the 
                Secretary of Labor; and
                    (B) in the case of a health insurance issuer with 
                respect to a specific provision of this title, the 
                applicable State authority (as defined in section 
                2791(d) of the Public Health Service Act), or the 
                Secretary of Health and Human Services, if such 
                Secretary is enforcing such provision under section 
                2722(a)(2) or 2761(a)(2) of the Public Health Service 
                Act.
            (3) Clinical peer.--The term ``clinical peer'' means, with 
        respect to a review or appeal, an actively practicing physician 
        (allopathic or osteopathic) or other actively practicing health 
        care professional who holds a nonrestricted license, and who is 
        appropriately credentialed in the same or similar specialty or 
        subspecialty (as appropriate) as typically handles the medical 
        condition, procedure, or treatment under review or appeal and 
        includes a pediatric specialist where appropriate; except that 
        only a physician (allopathic or osteopathic) may be a clinical 
        peer with respect to the review or appeal of treatment 
        recommended or rendered by a physician.
            (4) Enrollee.--The term ``enrollee'' means, with respect to 
        health insurance coverage offered by a health insurance issuer, 
        an individual enrolled with the issuer to receive such 
        coverage.
            (5) Group health plan.--The term ``group health plan'' has 
        the meaning given such term in section 733(a) of the Employee 
        Retirement Income Security Act of 1974 and in section 
        2791(a)(1) of the Public Health Service Act.
            (6) Health care professional.--The term ``health care 
        professional'' means an individual who is licensed, accredited, 
        or certified under State law to provide specified health care 
        services and who is operating within the scope of such 
        licensure, accreditation, or certification.
            (7) Health care provider.--The term ``health care 
        provider'' includes a physician or other health care 
        professional, as well as an institutional or other facility or 
        agency that provides health care services and that is licensed, 
        accredited, or certified to provide health care items and 
        services under applicable State law.
            (8) Network.--The term ``network'' means, with respect to a 
        group health plan or health insurance issuer offering health 
        insurance coverage, the participating health care professionals 
        and providers through whom the plan or issuer provides health 
        care items and services to participants, beneficiaries, or 
        enrollees.
            (9) Nonparticipating.--The term ``nonparticipating'' means, 
        with respect to a health care provider that provides health 
        care items and services to a participant, beneficiary, or 
        enrollee under group health plan or health insurance coverage, 
        a health care provider that is not a participating health care 
        provider with respect to such items and services.
            (10) Participating.--The term ``participating'' means, with 
        respect to a health care provider that provides health care 
        items and services to a participant, beneficiary, or enrollee 
        under group health plan or health insurance coverage offered by 
        a health insurance issuer, a health care provider that 
        furnishes such items and services under a contract or other 
        arrangement with the plan or issuer.
            (11) Prior authorization.--The term ``prior authorization'' 
        means the process of obtaining prior approval from a health 
        insurance issuer or group health plan for the provision or 
        coverage of medical services.

SEC. 1152. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.

    (a) Continued Applicability of State Law With Respect to Health 
Insurance Issuers.--
            (1) In general.--Subject to paragraph (2), this title shall 
        not be construed to supersede any provision of State law which 
        establishes, implements, or continues in effect any standard or 
        requirement solely relating to health insurance issuers (in 
        connection with group health insurance coverage or otherwise) 
        except to the extent that such standard or requirement prevents 
        the application of a requirement of this title.
            (2) Continued preemption with respect to group health 
        plans.--Nothing in this title 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.
    (b) Definitions.--For purposes of this section:
            (1) State law.--The term ``State law'' includes all laws, 
        decisions, rules, regulations, or other State action having the 
        effect of law, of any State. A law of the United States 
        applicable only to the District of Columbia shall be treated as 
        a State law rather than a law of the United States.
            (2) State.--The term ``State'' includes a State, the 
        District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
        American Samoa, the Northern Mariana Islands, any political 
        subdivisions of such, or any agency or instrumentality of such.

SEC. 1153. EXCLUSIONS.

    (a) No Benefit Requirements.--Nothing in this title shall be 
construed to require a group health plan or a health insurance issuer 
offering health insurance coverage to provide items and services 
(including abortions) that are specifically excluded under the plan or 
coverage.
    (b) Exclusion from Access to Care Managed Care Provisions for Fee-
for-Service Coverage.--
            (1) In general.--The provisions of sections 1111 through 
        1117 shall not apply to a group health plan or health insurance 
        coverage if the only coverage offered under the plan or 
        coverage is fee-for-service coverage (as defined in paragraph 
        (2)).
            (2) Fee-for-service coverage defined.--For purposes of this 
        subsection, the term ``fee-for-service coverage'' means 
        coverage under a group health plan or health insurance coverage 
        that--
                    (A) reimburses hospitals, health professionals, and 
                other providers on the basis of a rate determined by 
                the plan or issuer on a fee-for-service basis without 
                placing the provider at financial risk;
                    (B) does not vary reimbursement for such a provider 
                based on an agreement to contract terms and conditions 
                or the utilization of health care items or services 
                relating to such provider;
                    (C) does not restrict the selection of providers 
                among those who are lawfully authorized to provide the 
                covered services and agree to accept the terms and 
                conditions of payment established under the plan or by 
                the issuer; and
                    (D) for which the plan or issuer does not require 
                prior authorization before providing coverage for any 
                services.

SEC. 1154. COVERAGE OF LIMITED SCOPE PLANS.

    Only for purposes of applying the requirements of this title under 
sections 2707 and 2753 of the Public Health Service Act and section 714 
of the Employee Retirement Income Security Act of 1974, section 
2791(c)(2)(A), and section 733(c)(2)(A) of the Employee Retirement 
Income Security Act of 1974 shall be deemed not to apply.

SEC. 1155. REGULATIONS.

    The Secretaries of Health and Human Services and Labor shall issue 
such regulations as may be necessary or appropriate to carry out this 
title. Such regulations shall be issued consistent with section 104 of 
Health Insurance Portability and Accountability Act of 1996. Such 
Secretaries may promulgate any interim final rules as the Secretaries 
determine are appropriate to carry out this title.

TITLE XII--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS 
   AND HEALTH INSURANCE COVERAGE UNDER THE PUBLIC HEALTH SERVICE ACT

SEC. 1201. APPLICATION TO GROUP HEALTH PLANS AND GROUP HEALTH INSURANCE 
              COVERAGE.

    (a) In General.--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. 2707. PATIENT PROTECTION STANDARDS.

    ``(a) In General.--Each group health plan shall comply with patient 
protection requirements under title XI of the Bipartisan Consensus 
Managed Care Improvement Act of 1999, and each health insurance issuer 
shall comply with patient protection requirements under such title with 
respect to group health insurance coverage it offers, and such 
requirements shall be deemed to be incorporated into this subsection.
    ``(b) Notice.--A group health plan shall comply with the notice 
requirement under section 711(d) of the Employee Retirement Income 
Security Act of 1974 with respect to the requirements referred to in 
subsection (a) and a health insurance issuer shall comply with such 
notice requirement as if such section applied to such issuer and such 
issuer were a group health plan.''.
    (b) Conforming Amendment.--Section 2721(b)(2)(A) of such Act (42 
U.S.C. 300gg-21(b)(2)(A)) is amended by inserting ``(other than section 
2707)'' after ``requirements of such subparts''.

SEC. 1202. APPLICATION TO INDIVIDUAL HEALTH INSURANCE COVERAGE.

    Part B of title XXVII of the Public Health Service Act is amended 
by inserting after section 2752 the following new section:

``SEC. 2753. PATIENT PROTECTION STANDARDS.

    ``(a) In General.--Each health insurance issuer shall comply with 
patient protection requirements under title XI of the Bipartisan 
Consensus Managed Care Improvement Act of 1999 with respect to 
individual health insurance coverage it offers, and such requirements 
shall be deemed to be incorporated into this subsection.
    ``(b) Notice.--A health insurance issuer under this part shall 
comply with the notice requirement under section 711(d) of the Employee 
Retirement Income Security Act of 1974 with respect to the requirements 
of such title as if such section applied to such issuer and such issuer 
were a group health plan.''.

 TITLE XIII--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT 
                                OF 1974

SEC. 1301. APPLICATION OF PATIENT PROTECTION STANDARDS TO GROUP HEALTH 
              PLANS AND GROUP HEALTH INSURANCE COVERAGE UNDER THE 
              EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.

    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. 714. PATIENT PROTECTION STANDARDS.

    ``(a) In General.--Subject to subsection (b), a group health plan 
(and a health insurance issuer offering group health insurance coverage 
in connection with such a plan) shall comply with the requirements of 
title XI of the Bipartisan Consensus Managed Care Improvement Act of 
1999 (as in effect as of the date of the enactment of such Act), and 
such requirements shall be deemed to be incorporated into this 
subsection.
    ``(b) Plan Satisfaction of Certain Requirements.--
            ``(1) Satisfaction of certain requirements through 
        insurance.--For purposes of subsection (a), insofar as a group 
        health plan provides benefits in the form of health insurance 
        coverage through a health insurance issuer, the plan shall be 
        treated as meeting the following requirements of title XI of 
        the Bipartisan Consensus Managed Care Improvement Act of 1999 
        with respect to such benefits and not be considered as failing 
        to meet such requirements because of a failure of the issuer to 
        meet such requirements so long as the plan sponsor or its 
        representatives did not cause such failure by the issuer:
                    ``(A) Section 1112 (relating to choice of 
                providers).
                    ``(B) Section 1113 (relating to access to emergency 
                care).
                    ``(C) Section 1114 (relating to access to specialty 
                care).
                    ``(D) Section 1115 (relating to access to 
                obstetrical and gynecological care).
                    ``(E) Section 1116 (relating to access to pediatric 
                care).
                    ``(F) Section 1117(a)(1) (relating to continuity in 
                case of termination of provider contract) and section 
                117(a)(2) (relating to continuity in case of 
                termination of issuer contract), but only insofar as a 
                replacement issuer assumes the obligation for 
                continuity of care.
                    ``(G) Section 1118 (relating to access to needed 
                prescription drugs).
                    ``(H) Section 1119 (relating to coverage for 
                individuals participating in approved clinical trials.)
                    ``(I) Section 1134 (relating to payment of claims).
            ``(2) Information.--With respect to information required to 
        be provided or made available under section 1121, in the case 
        of a group health plan that provides benefits in the form of 
        health insurance coverage through a health insurance issuer, 
        the Secretary shall determine the circumstances under which the 
        plan is not required to provide or make available the 
        information (and is not liable for the issuer's failure to 
        provide or make available the information), if the issuer is 
        obligated to provide and make available (or provides and makes 
        available) such information.
            ``(3) Grievance and internal appeals.--With respect to the 
        internal appeals process and the grievance system required to 
        be established under sections 1102 and 1104, in the case of a 
        group health plan that provides benefits in the form of health 
        insurance coverage through a health insurance issuer, the 
        Secretary shall determine the circumstances under which the 
        plan is not required to provide for such process and system 
        (and is not liable for the issuer's failure to provide for such 
        process and system), if the issuer is obligated to provide for 
        (and provides for) such process and system.
            ``(4) External appeals.--Pursuant to rules of the 
        Secretary, insofar as a group health plan enters into a 
        contract with a qualified external appeal entity for the 
        conduct of external appeal activities in accordance with 
        section 1103, the plan shall be treated as meeting the 
        requirement of such section and is not liable for the entity's 
        failure to meet any requirements under such section.
            ``(5) Application to prohibitions.--Pursuant to rules of 
        the Secretary, if a health insurance issuer offers health 
        insurance coverage in connection with a group health plan and 
        takes an action in violation of any of the following sections, 
        the group health plan shall not be liable for such violation 
        unless the plan caused such violation:
                    ``(A) Section 1131 (relating to prohibition of 
                interference with certain medical communications).
                    ``(B) Section 1132 (relating to prohibition of 
                discrimination against providers based on licensure).
                    ``(C) Section 1133 (relating to prohibition against 
                improper incentive arrangements).
                    ``(D) Section 1135 (relating to protection for 
                patient advocacy).
            ``(6) Construction.--Nothing in this subsection shall be 
        construed to affect or modify the responsibilities of the 
        fiduciaries of a group health plan under part 4 of subtitle B.
            ``(7) Application to certain prohibitions against 
        retaliation.--With respect to compliance with the requirements 
        of section 1135(b)(1) of the Bipartisan Consensus Managed Care 
        Improvement Act of 1999, for purposes of this subtitle the term 
        `group health plan' is deemed to include a reference to an 
        institutional health care provider.
    ``(c) Enforcement of Certain Requirements.--
            ``(1) Complaints.--Any protected health care professional 
        who believes that the professional has been retaliated or 
        discriminated against in violation of section 1135(b)(1) of the 
        Bipartisan Consensus Managed Care Improvement Act of 1999 may 
        file with the Secretary a complaint within 180 days of the date 
        of the alleged retaliation or discrimination.
            ``(2) Investigation.--The Secretary shall investigate such 
        complaints and shall determine if a violation of such section 
        has occurred and, if so, shall issue an order to ensure that 
        the protected health care professional does not suffer any loss 
        of position, pay, or benefits in relation to the plan, issuer, 
        or provider involved, as a result of the violation found by the 
        Secretary.
    ``(d) Conforming Regulations.--The Secretary may issue regulations 
to coordinate the requirements on group health plans under this section 
with the requirements imposed under the other provisions of this 
title.''.
    (b) Satisfaction of ERISA Claims Procedure Requirement.--Section 
503 of such Act (29 U.S.C. 1133) is amended by inserting ``(a)'' after 
``Sec. 503.'' and by adding at the end the following new subsection:
    ``(b) In the case of a group health plan (as defined in section 
733) compliance with the requirements of subtitle A of title XI of the 
Bipartisan Consensus Managed Care Improvement Act of 1999 in the case 
of a claims denial shall be deemed compliance with subsection (a) with 
respect to such claims denial.''.
    (c) Conforming Amendments.--(1) Section 732(a) of such Act (29 
U.S.C. 1185(a)) is amended by striking ``section 711'' and inserting 
``sections 711 and 714''.
    (2) The table of contents in section 1 of such Act is amended by 
inserting after the item relating to section 713 the following new 
item:

``Sec. 714. Patient protection standards.''.
    (3) Section 502(b)(3) of such Act (29 U.S.C. 1132(b)(3)) is amended 
by inserting ``(other than section 135(b))'' after ``part 7''.

SEC. 1302. ERISA PREEMPTION NOT TO APPLY TO CERTAIN ACTIONS INVOLVING 
              HEALTH INSURANCE POLICYHOLDERS.

    (a) In General.--Section 514 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1144) (as amended by section 301(b)) is 
amended further by adding at the end the following subsections:
    ``(f) Preemption Not To Apply to Certain Actions Arising Out of 
Provision of Health Benefits.--
            ``(1) Non-preemption of certain causes of action.--
                    ``(A) In general.--Except as provided in this 
                subsection, nothing in this title shall be construed to 
                invalidate, impair, or supersede any cause of action by 
                a participant or beneficiary (or the estate of a 
                participant or beneficiary) under State law to recover 
                damages resulting from personal injury or for wrongful 
                death against any person--
                            ``(i) in connection with the provision of 
                        insurance, administrative services, or medical 
                        services by such person to or for a group 
                        health plan as defined in section 733), or
                            ``(ii) that arises out of the arrangement 
                        by such person for the provision of such 
                        insurance, administrative services, or medical 
                        services by other persons.
                    ``(B) Limitation on punitive damages.--
                            ``(i) In general.--No person shall be 
                        liable for any punitive, exemplary, or similar 
                        damages in the case of a cause of action 
                        brought under subparagraph (A) if--
                                    ``(I) it relates to an externally 
                                appealable decision (as defined in 
                                subsection (a)(2) of section 1103 of 
                                the Bipartisan Consensus Managed Care 
                                Improvement Act of 1999);
                                    ``(II) an external appeal with 
                                respect to such decision was completed 
                                under such section 1103;
                                    ``(III) in the case such external 
                                appeal was initiated by the plan or 
                                issuer filing the request for the 
                                external appeal, the request was filed 
                                on a timely basis before the date the 
                                action was brought or, if later, within 
                                30 days after the date the externally 
                                appealable decision was made; and
                                    ``(IV) the plan or issuer complied 
                                with the determination of the external 
                                appeal entity upon receipt of the 
                                determination of the external appeal 
                                entity.
                        The provisions of this clause supersede any 
                        State law or common law to the contrary.
                            ``(ii) Exception.--Clause (i) shall not 
                        apply with respect to damages in the case of a 
                        cause of action for wrongful death if the 
                        applicable State law provides (or has been 
                        construed to provide) for damages in such a 
                        cause of action which are only punitive or 
                        exemplary in nature.
                    ``(C) Personal injury defined.--For purposes of 
                this subsection, the term `personal injury' means a 
                physical injury and includes an injury arising out of 
                the treatment (or failure to treat) a mental illness or 
                disease.
            ``(2) Exception for group health plans, employers, and 
        other plan sponsors.--
                    ``(A) In general.--Subject to subparagraph (B), 
                paragraph (1) does not authorize--
                            ``(i) any cause of action against a group 
                        health plan or an employer or other plan 
                        sponsor maintaining the plan (or against an 
                        employee of such a plan, employer, or sponsor 
                        acting within the scope of employment), or
                            ``(ii) a right of recovery, indemnity, or 
                        contribution by a person against a group health 
                        plan or an employer or other plan sponsor (or 
                        such an employee) for damages assessed against 
                        the person pursuant to a cause of action under 
                        paragraph (1).
                    ``(B) Special rule.--Subparagraph (A) shall not 
                preclude any cause of action described in paragraph (1) 
                against group health plan or an employer or other plan 
                sponsor (or against an employee of such a plan, 
                employer, or sponsor acting within the scope of 
                employment) if--
                            ``(i) such action is based on the exercise 
                        by the plan, employer, or sponsor (or employee) 
                        of discretionary authority to make a decision 
                        on a claim for benefits covered under the plan 
                        or health insurance coverage in the case at 
                        issue; and
                            ``(ii) the exercise by the plan, employer, 
                        or sponsor (or employee) of such authority 
                        resulted in personal injury or wrongful death.
                    ``(C) Exception.--The exercise of discretionary 
                authority described in subparagraph (B)(i) shall not be 
                construed to include--
                            ``(i) the decision to include or exclude 
                        from the plan any specific benefit;
                            ``(ii) any decision to provide extra-
                        contractual benefits; or
                            ``(iii) any decision not to consider the 
                        provision of a benefit while internal or 
                        external review is being conducted.
            ``(3) Futility of exhaustion.--An individual bringing an 
        action under this subsection is required to exhaust 
        administrative processes under sections 1102 and 1103 of the 
        Bipartisan Consensus Managed Care Improvement Act of 1999, 
        unless the injury to or death of such individual has occurred 
        before the completion of such processes.
            ``(4) Construction.--Nothing in this subsection shall be 
        construed as--
                    ``(A) permitting a cause of action under State law 
                for the failure to provide an item or service which is 
                specifically excluded under the group health plan 
                involved;
                    ``(B) as preempting a State law which requires an 
                affidavit or certificate of merit in a civil action; or
                    ``(C) permitting a cause of action or remedy under 
                State law in connection with the provision or 
                arrangement of excepted benefits (as defined in section 
                733(c)), other than those described in section 
                733(c)(2)(A).
    ``(g) Rules of Construction Relating to Health Care.--Nothing in 
this title shall be construed as--
            ``(1) permitting the application of State laws that are 
        otherwise superseded by this title and that mandate the 
        provision of specific benefits by a group health plan (as 
        defined in section 733(a)) or a multiple employer welfare 
        arrangement (as defined in section 3(40)), or
            ``(2) affecting any State law which regulates the practice 
        of medicine or provision of medical care, or affecting any 
        action based upon such a State law.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to acts and omissions occurring on or after the date of the 
enactment of this Act from which a cause of action arises.

SEC. 1303. LIMITATIONS ON ACTIONS.

    Section 502 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1132) (as amended by section 304(b)) is amended further by 
adding at the end the following new subsection:
    ``(o)(1) Except as provided in this subsection, no action may be 
brought under subsection (a)(1)(B), (a)(2), or (a)(3) by a participant 
or beneficiary seeking relief based on the application of any provision 
in section 1101, subtitle B, or subtitle D of title XI of the 
Bipartisan Consensus Managed Care Improvement Act of 1999 (as 
incorporated under section 714).
    ``(2) An action may be brought under subsection (a)(1)(B), (a)(2), 
or (a)(3) by a participant or beneficiary seeking relief based on the 
application of section 1101, 1113, 1114, 1115, 1116, 1117, 1119, or 
1118(3) of the Bipartisan Consensus Managed Care Improvement Act of 
1999 (as incorporated under section 714) to the individual 
circumstances of that participant or beneficiary, except that--
            ``(A) such an action may not be brought or maintained as a 
        class action; and
            ``(B) in such an action, relief may only provide for the 
        provision of (or payment of) benefits, items, or services 
        denied to the individual participant or beneficiary involved 
        (and for attorney's fees and the costs of the action, at the 
        discretion of the court) and shall not provide for any other 
        relief to the participant or beneficiary or for any relief to 
        any other person.
    ``(3) Nothing in this subsection shall be construed as affecting 
any action brought by the Secretary.''.

TITLE XIV--APPLICATION TO GROUP HEALTH PLANS UNDER THE INTERNAL REVENUE 
                              CODE OF 1986

SEC. 1401. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

    Subchapter B of chapter 100 of the Internal Revenue Code of 1986 is 
amended--
            (1) in the table of sections, by inserting after the item 
        relating to section 9812 the following new item:

                              ``Sec. 9813. Standard relating to patient 
                                        freedom of choice.'';
        and
            (2) by inserting after section 9812 the following:

``SEC. 9813. STANDARD RELATING TO PATIENTS' BILL OF RIGHTS.

    ``A group health plan shall comply with the requirements of title 
XI of the Bipartisan Consensus Managed Care Improvement Act of 1999 (as 
in effect as of the date of the enactment of such Act), and such 
requirements shall be deemed to be incorporated into this section.''.

       TITLE XV--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

SEC. 1501. EFFECTIVE DATES.

    (a) Group Health Coverage.--
            (1) In general.--Subject to paragraph (2), the amendments 
        made by sections 1201(a), 1301, 1303, and 1401 (and title XI 
        insofar as it relates to such sections) shall apply with 
        respect to group health plans, and health insurance coverage 
        offered in connection with group health plans, for plan years 
        beginning on or after January 1, 2001 (in this section referred 
        to as the ``general effective date'') and also shall apply to 
        portions of plan years occurring on and after such date.
            (2) Treatment of collective bargaining agreements.--In the 
        case of a group health plan maintained pursuant to one or more 
        collective bargaining agreements between employee 
        representatives and one or more employers ratified before the 
        date of the enactment of this Act, the amendments made by 
        sections 1201(a), 1301, 1303, and 1401 (and title XI insofar as 
        it relates to such sections) shall not apply to plan years 
        beginning before the later of--
                    (A) 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 the enactment of this Act); 
                or
                    (B) the general effective date.
        For purposes of subparagraph (A), 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 this division shall not be treated as a termination of 
        such collective bargaining agreement.
    (b) Individual Health Insurance Coverage.--The amendments made by 
section 1202 shall apply with respect to individual health insurance 
coverage offered, sold, issued, renewed, in effect, or operated in the 
individual market on or after the general effective date.

SEC. 1502. COORDINATION IN IMPLEMENTATION.

    The Secretary of Labor, the Secretary of Health and Human Services, 
and the Secretary of the Treasury shall ensure, through the execution 
of an interagency memorandum of understanding among such Secretaries, 
that--
            (1) regulations, rulings, and interpretations issued by 
        such Secretaries relating to the same matter over which such 
        Secretaries have responsibility under the provisions of this 
        division (and the amendments made thereby) are administered so 
        as to have the same effect at all times; and
            (2) coordination of policies relating to enforcing the same 
        requirements through such Secretaries in order to have a 
        coordinated enforcement strategy that avoids duplication of 
        enforcement efforts and assigns priorities in enforcement.

            TITLE XVI--HEALTH CARE PAPERWORK SIMPLIFICATION

SEC. 1601. HEALTH CARE PAPERWORK SIMPLIFICATION.

    (a) Establishment of Panel.--
            (1) Establishment.--There is established a panel to be 
        known as the Health Care Panel to Devise a Uniform Explanation 
        of Benefits (in this section referred to as the ``Panel'').
            (2) Duties of panel.--
                    (A) In general.--The Panel shall devise a single 
                form for use by third-party health care payers for the 
                remittance of claims to providers.
                    (B) Definition.--For purposes of this section, the 
                term ``third-party health care payer'' means any entity 
                that contractually pays health care bills for an 
                individual.
            (3) Membership.--
                    (A) Size and composition.--The Secretary of Health 
                and Human Services shall determine the number of 
                members and the composition of the Panel. Such Panel 
                shall include equal numbers of representatives of 
                private insurance organizations, consumer groups, State 
                insurance commissioners, State medical societies, State 
                hospital associations, and State medical specialty 
                societies.
                    (B) Terms of appointment.--The members of the Panel 
                shall serve for the life of the Panel.
                    (C) Vacancies.--A vacancy in the Panel shall not 
                affect the power of the remaining members to execute 
                the duties of the Panel, but any such vacancy shall be 
                filled in the same manner in which the original 
                appointment was made.
            (4) Procedures.--
                    (A) Meetings.--The Panel shall meet at the call of 
                a majority of its members.
                    (B) First meeting.--The Panel shall convene not 
                later than 60 days after the date of the enactment of 
                the Bipartisan Consensus Managed Care Improvement Act 
                of 1999.
                    (C) Quorum.--A quorum shall consist of a majority 
                of the members of the Panel.
                    (D) Hearings.--For the purpose of carrying out its 
                duties, the Panel may hold such hearings and undertake 
                such other activities as the Panel determines to be 
                necessary to carry out its duties.
            (5) Administration.--
                    (A) Compensation.--Except as provided in 
                subparagraph (B), members of the Panel shall receive no 
                additional pay, allowances, or benefits by reason of 
                their service on the Panel.
                    (B) Travel expenses and per diem.--Each member of 
                the Panel who is not an officer or employee of the 
                Federal Government shall receive travel expenses and 
                per diem in lieu of subsistence in accordance with 
                sections 5702 and 5703 of title 5, United States Code.
                    (C) Contract authority.--The Panel may contract 
                with and compensate Government and private agencies or 
                persons for items and services, without regard to 
                section 3709 of the Revised Statutes (41 U.S.C. 5).
                    (D) Use of mails.--The Panel may use the United 
                States mails in the same manner and under the same 
                conditions as Federal agencies and shall, for purposes 
                of the frank, be considered a commission of Congress as 
                described in section 3215 of title 39, United States 
                Code.
                    (E) Administrative support services.--Upon the 
                request of the Panel, the Secretary of Health and Human 
                Services shall provide to the Panel on a reimbursable 
                basis such administrative support services as the Panel 
                may request.
            (6) Submission of form.--Not later than 2 years after the 
        first meeting, the Panel shall submit a form to the Secretary 
        of Health and Human Services for use by third-party health care 
        payers.
            (7) Termination.--The Panel shall terminate on the day 
        after submitting the form under paragraph (6).
    (b) Requirement for Use of Form by Third-Party Care Payers.--A 
third-party health care payer shall be required to use the form devised 
under subsection (a) for plan years beginning on or after 5 years 
following the date of the enactment of this Act.

            Passed the House of Representatives October 7, 1999.

            Attest:

                                                                 Clerk.