[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 448 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 448

      To provide new patient protections under group health plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 2, 1999

  Mr. Bilirakis (for himself, Mr. Hastert, Mr. Upton, Mr. Talent, Mr. 
Goodling, Mr. Gillmor, Mr. Cunningham, Mr. English, Mr. Goss, Ms. Pryce 
of Ohio, Mr. Hill of Montana, Mr. Armey, and Mr. Oxley) introduced the 
following bill; which was referred to the Committee on Commerce, and in 
  addition to the Committees on Education and the Workforce, Ways and 
Means, and the Judiciary, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
      To provide new patient protections under group health plans.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patient Protection 
Act of 1999''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
 TITLE I--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

                    Subtitle A--Patient Protections

Sec. 1001. Patient access to unrestricted medical advice, emergency 
                            medical care, obstetric and gynecological 
                            care, and pediatric care.
Sec. 1002. Effective date and related rules.
               Subtitle B--Patient Access to Information

Sec. 1101. Patient access to information regarding plan coverage, 
                            managed care procedures, health care 
                            providers, and quality of medical care.
Sec. 1102. Effective date.
Subtitle C--New Procedures and Access to Courts for Grievances Arising 
                        under Group Health Plans

Sec. 1201. Special rules for group health plans.
Sec. 1202. Effective date.
     Subtitle D--Affordable Health Coverage for Employees of Small 
                               Businesses

Sec. 1301. Short title of subtitle.
Sec. 1302. Rules governing association health plans.
Sec. 1303. Clarification of treatment of single employer arrangements.
Sec. 1304. Clarification of treatment of certain collectively bargained 
                            arrangements.
Sec. 1305. Enforcement provisions relating to association health plans.
Sec. 1306. Cooperation between Federal and State authorities.
Sec. 1307. Effective date and transitional and other rules.
           TITLE II--AMENDMENTS TO PUBLIC HEALTH SERVICE ACT

     Subtitle A--Patient Protections and Point of Service Coverage 
                              Requirements

Sec. 2001. Patient access to unrestricted medical advice, emergency 
                            medical care, obstetric and gynecological 
                            care, pediatric care.
Sec. 2002. Requiring health maintenance organizations to offer option 
                            of point-of-service coverage.
               Subtitle B--Patient Access to Information

Sec. 2101. Patient access to information regarding plan coverage, 
                            managed care procedures, health care 
                            providers, and quality of medical care.
Sec. 2102. Effective date.
                        Subtitle C--HealthMarts

Sec. 2201. Short title of subtitle.
Sec. 2202. Expansion of consumer choice through HealthMarts.
               Subtitle D--Community Health Organizations

Sec. 2301. Promotion of provision of insurance by community health 
                            organizations.
       TITLE III--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

                    Subtitle A--Patient Protections

Sec. 3001. Patient access to unrestricted medical advice, emergency 
                            medical care, obstetric and gynecological 
                            care, and pediatric care.
Sec. 3002. Effective date and related rules.
               Subtitle B--Patient Access to Information

Sec. 3101. Patient access to information regarding plan coverage, 
                            managed care procedures, health care 
                            providers, and quality of medical care.
Sec. 3102. Effective date.
                  Subtitle C--Medical Savings Accounts

Sec. 3201. Expansion of availability of medical savings accounts.
Sec. 3202. Exception from insurance limitation in case of medical 
                            savings accounts.
Sec. 3203. Sense of the House of Representatives.
                  TITLE IV--HEALTH CARE LAWSUIT REFORM

                     Subtitle A--General Provisions

Sec. 4001. Federal reform of health care liability actions.
Sec. 4002. Definitions.
Sec. 4003. Effective date.
    Subtitle B--Uniform Standards for Health Care Liability Actions

Sec. 4011. Statute of limitations.
Sec. 4012. Calculation and payment of damages.
Sec. 4013. Alternative dispute resolution.
Sec. 4014. Reporting on fraud and abuse enforcement activities.
             TITLE V--CONFIDENTIALITY OF HEALTH INFORMATION

Sec. 5001. Confidentiality of protected health information.
Sec. 5002. Study and report on effect of State law on health-related 
                            research.
Sec. 5003. Study and report on State law on protected health 
                            information.
Sec. 5004. Protection for certain information developed to reduce 
                            mortality or morbidity or for improving 
                            patient care and safety.

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

                    Subtitle A--Patient Protections

SEC. 1001. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, EMERGENCY 
              MEDICAL CARE, OBSTETRIC AND GYNECOLOGICAL CARE, AND 
              PEDIATRIC CARE.

    (a) In General.--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 ACCESS TO UNRESTRICTED MEDICAL ADVICE, EMERGENCY 
              MEDICAL CARE, OBSTETRIC AND GYNECOLOGICAL CARE, PEDIATRIC 
              CARE.

    ``(a) Patient Access to Unrestricted Medical Advice.--
            ``(1) In general.--In the case of any health care 
        professional acting within the lawful scope of practice in the 
        course of carrying out a contractual employment arrangement or 
        other direct contractual arrangement between such professional 
        and a group health plan or a health insurance issuer offering 
        health insurance coverage in connection with a group health 
        plan, the plan or issuer with which such contractual employment 
        arrangement or other direct contractual arrangement is 
        maintained by the professional may not impose on such 
        professional under such arrangement any prohibition or 
        restriction with respect to advice, provided to a participant 
        or beneficiary under the plan who is a patient, about the 
        health status of the participant or beneficiary or the medical 
        care or treatment for the condition or disease of the 
        participant or beneficiary, regardless of whether benefits for 
        such care or treatment are provided under the plan or health 
        insurance coverage offered in connection with the plan.
            ``(2) Health care professional defined.--For purposes of 
        this subsection, the term `health care professional' means a 
        physician (as defined in section 1861(r) of the Social Security 
        Act) or other health care professional if coverage for the 
        professional's services is provided under the group health plan 
        for the services of the professional. Such term includes a 
        podiatrist, optometrist, chiropractor, psychologist, dentist, 
        physician assistant, physical or occupational therapist and 
        therapy assistant, speech-language pathologist, audiologist, 
        registered or licensed practical nurse (including nurse 
        practitioner, clinical nurse specialist, certified registered 
        nurse anesthetist, and certified nurse-midwife), licensed 
        certified social worker, registered respiratory therapist, and 
        certified respiratory therapy technician.
    ``(b) Patient Access to Emergency Medical Care.--
            ``(1) In general.--To the extent that the group health plan 
        (or health insurance issuer offering health insurance coverage 
        in connection with the plan) provides for any benefits 
        consisting of emergency medical care (as defined in section 
        503(b)(9)(I)), except for items or services specifically 
        excluded--
                    ``(A) the plan or issuer shall provide benefits, 
                without requiring preauthorization and without regard 
                to otherwise applicable network limitations, for 
                appropriate emergency medical screening examinations 
                (within the capability of the emergency facility, 
                including ancillary services routinely available to the 
                emergency facility) to the extent that a prudent 
                layperson, who possesses an average knowledge of health 
                and medicine, would determine such examinations to be 
                necessary in order to determine whether emergency 
                medical care (as so defined) is required; and
                    ``(B) the plan or issuer shall provide benefits for 
                additional emergency medical services following an 
                emergency medical screening examination (if determined 
                necessary under subparagraph (A)) to the extent that a 
                prudent emergency medical professional would determine 
                such additional emergency services to be necessary to 
                avoid the consequences described in section 
                503(b)(9)(I).
            ``(2) Uniform cost-sharing required.--Nothing in this 
        subsection shall be construed as preventing a group health plan 
        or issuer from imposing any form of cost-sharing applicable to 
        any participant or beneficiary (including coinsurance, 
        copayments, deductibles, and any other charges) in relation to 
        benefits described in paragraph (1), if such form of cost-
        sharing is uniformly applied under such plan, with respect to 
        similarly situated participants and beneficiaries, to all 
        benefits consisting of emergency medical care (as defined in 
        section 503(b)(9)(I)) provided to such similarly situated 
        participants and beneficiaries under the plan.
    ``(c) Patient Access to Obstetric and Gynecological Care.--
            ``(1) In general.--In any case in which a group health plan 
        (or a health insurance issuer offering health insurance 
        coverage in connection with the plan)--
                    ``(A) provides benefits under the terms of the plan 
                consisting of--
                            ``(i) routine gynecological care (such as 
                        preventive women's health examinations); or
                            ``(ii) routine obstetric care (such as 
                        routine pregnancy-related services),
                provided by a participating physician who specializes 
                in such care (or provides benefits consisting of 
                payment for such care); and
                    ``(B) the plan requires or provides for designation 
                by a participant or beneficiary of a participating 
                primary care provider,
        if the primary care provider designated by such a participant 
        or beneficiary is not such a physician, then the plan (or 
        issuer) shall meet the requirements of paragraph (2).
            ``(2) Requirements.--A group health plan (or a health 
        insurance issuer offering health insurance coverage in 
        connection with the plan) meets the requirements of this 
        paragraph, in connection with benefits described in paragraph 
        (1) consisting of care described in clause (i) or (ii) of 
        paragraph (1)(A) (or consisting of payment therefor), if the 
        plan (or issuer)--
                    ``(A) does not require authorization or a referral 
                by the primary care provider in order to obtain such 
                benefits; and
                    ``(B) treats the ordering of other routine care of 
                the same type, by the participating physician providing 
                the care described in clause (i) or (ii) of paragraph 
                (1)(A), as the authorization of the primary care 
                provider with respect to such care.
            ``(3) Construction.--Nothing in paragraph (2)(B) shall 
        waive any requirements of coverage relating to medical 
        necessity or appropriateness with respect to coverage of 
        gynecological or obstetric care so ordered.
    ``(d) Patient Access to Pediatric Care.--
            ``(1) In general.--In any case in which a group health plan 
        (or a health insurance issuer offering health insurance 
        coverage in connection with the plan) provides benefits 
        consisting of routine pediatric care provided by a 
        participating physician who specializes in pediatrics (or 
        consisting of payment for such care) and the plan requires or 
        provides for designation by a participant or beneficiary of a 
        participating primary care provider, the plan (or issuer) shall 
        provide that such a participating physician may be designated, 
        if available, by a parent or guardian of any beneficiary under 
        the plan who is under 18 years of age, as the primary care 
        provider with respect to any such benefits.
            ``(2) Construction.--Nothing in paragraph (1) shall waive 
        any requirements of coverage relating to medical necessity or 
        appropriateness with respect to coverage of pediatric care.
    ``(e) Treatment of Multiple Coverage Options.--In the case of a 
plan providing benefits under two or more coverage options, the 
requirements of subsections (c) and (d) shall apply separately with 
respect to each coverage option.''.
    (b) Conforming Amendment.--The table of contents in section 1 of 
such Act is amended by adding at the end of the items relating to 
subpart B of part 7 of subtitle B of title I of such Act the following 
new item:

``Sec. 714. Patient access to unrestricted medical advice, emergency 
                            medical care, obstetric and gynecological 
                            care, and pediatric care.''.

SEC. 1002. EFFECTIVE DATE AND RELATED RULES.

    (a) In General.--The amendments made by this subtitle shall apply 
with respect to plan years beginning on or after January 1 of the 
second calendar year following the date of the enactment of this Act, 
except that the Secretary of Labor may issue regulations before such 
date under such amendments. The Secretary shall first issue regulations 
necessary to carry out the amendments made by this section before the 
effective date thereof.
    (b) Limitation on Enforcement Actions.--No enforcement action shall 
be taken, pursuant to the amendments made by this subtitle, against a 
group health plan or health insurance issuer with respect to a 
violation of a requirement imposed by such amendments before the date 
of issuance of regulations issued in connection with such requirement, 
if the plan or issuer has sought to comply in good faith with such 
requirement.
    (c) Special Rule for 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 
provisions of subsections (b), (c), and (d) of section 714 of the 
Employee Retirement Income Security Act of 1974 (as added by this 
subtitle) shall not apply with respect to plan years beginning before 
the later of--
            (1) the date on which the last of the 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
            (2) January 1, 2002.
For purposes of this subsection, 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 subtitle shall 
not be treated as a termination of such collective bargaining 
agreement.
    (d) Assuring Coordination.--The Secretary of Labor, the Secretary 
of the Treasury, and the Secretary of Health and Human Services 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 two or 
        more such Secretaries have responsibility under the provisions 
        of this subtitle, section 2101, and subtitle A of title III 
        (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.
    (e) Treatment of Religious Nonmedical Providers.--
            (1) In general.--Nothing in this Act (or the amendments 
        made thereby) shall be construed to--
                    (A) restrict or limit the right of group health 
                plans, and of health insurance issuers offering health 
                insurance coverage in connection with group health 
                plans, to include as providers religious nonmedical 
                providers;
                    (B) require such plans or issuers to--
                            (i) utilize medically based eligibility 
                        standards or criteria in deciding provider 
                        status of religious nonmedical providers;
                            (ii) use medical professionals or criteria 
                        to decide patient access to religious 
                        nonmedical providers;
                            (iii) utilize medical professionals or 
                        criteria in making decisions in internal or 
                        external appeals from decisions denying or 
                        limiting coverage for care by religious 
                        nonmedical providers; or
                            (iv) compel a participant or beneficiary to 
                        undergo a medical examination or test as a 
                        condition of receiving health insurance 
                        coverage for treatment by a religious 
                        nonmedical provider; or
                    (C) require such plans or issuers to exclude 
                religious nonmedical providers because they do not 
                provide medical or other data otherwise required, if 
                such data is inconsistent with the religious nonmedical 
                treatment or nursing care provided by the provider.
            (2) Religious nonmedical provider.--For purposes of this 
        subsection, the term ``religious nonmedical provider'' means a 
        provider who provides no medical care but who provides only 
        religious nonmedical treatment or religious nonmedical nursing 
        care.

               Subtitle B--Patient Access to Information

SEC. 1101. PATIENT ACCESS TO INFORMATION REGARDING PLAN COVERAGE, 
              MANAGED CARE PROCEDURES, HEALTH CARE PROVIDERS, AND 
              QUALITY OF MEDICAL CARE.

    (a) In General.--Part 1 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 is amended--
            (1) by redesignating section 111 as section 112; and
            (2) by inserting after section 110 the following new 
        section:

                   ``disclosure by group health plans

    ``Sec. 111. (a) Disclosure Requirement.--
            ``(1) Group health plans.--The administrator of each group 
        health plan shall take such actions as are necessary to ensure 
        that the summary plan description of the plan required under 
        section 102 (or each summary plan description in any case in 
        which different summary plan descriptions are appropriate under 
        part 1 for different options of coverage) contains, among any 
        information otherwise required under this part, the information 
        required under subsections (b), (c), (d), and (e)(2)(A).
            ``(2) Health insurance issuers.--Each health insurance 
        issuer offering health insurance coverage in connection with a 
        group health plan shall provide the administrator on a timely 
        basis with the information necessary to enable the 
        administrator to comply with the requirements of paragraph (1). 
        To the extent that any such issuer provides on a timely basis 
        to plan participants and beneficiaries information otherwise 
        required under this part to be included in the summary plan 
        description, the requirements of sections 101(a)(1) and 104(b) 
        shall be deemed satisfied in the case of such plan with respect 
        to such information.
    ``(b) Plan Benefits.--The information required under subsection (a) 
includes the following:
            ``(1) Covered items and services.--
                    ``(A) Categorization of included benefits.--A 
                description of covered benefits, categorized by--
                            ``(i) types of items and services 
                        (including any special disease management 
                        program); and
                            ``(ii) types of health care professionals 
                        providing such items and services.
                    ``(B) Emergency medical care.--A description of the 
                extent to which the plan covers emergency medical care 
                (including the extent to which the plan provides for 
                access to urgent care centers), and any definitions 
                provided under the plan for the relevant plan 
                terminology referring to such care.
                    ``(C) Preventative services.--A description of the 
                extent to which the plan provides benefits for 
                preventative services.
                    ``(D) Drug formularies.--A description of the 
                extent to which covered benefits are determined by the 
                use or application of a drug formulary and a summary of 
                the process for determining what is included in such 
                formulary.
                    ``(E) COBRA continuation coverage.--A description 
                of the benefits available under the plan pursuant to 
                part 6.
            ``(2) Limitations, exclusions, and restrictions on covered 
        benefits.--
                    ``(A) Categorization of excluded benefits.--A 
                description of benefits specifically excluded from 
                coverage, categorized by types of items and services.
                    ``(B) Utilization review and preauthorization 
                requirements.--Whether coverage for medical care is 
                limited or excluded on the basis of utilization review 
                or preauthorization requirements.
                    ``(C) Lifetime, annual, or other period 
                limitations.--A description of the circumstances under 
                which, and the extent to which, coverage is subject to 
                lifetime, annual, or other period limitations, 
                categorized by types of benefits.
                    ``(D) Custodial care.--A description of the 
                circumstances under which, and the extent to which, the 
                coverage of benefits for custodial care is limited or 
                excluded, and a statement of the definition used by the 
                plan for custodial care.
                    ``(E) Experimental treatments.--Whether coverage 
                for any medical care is limited or excluded because it 
                constitutes experimental treatment or technology, and 
                any definitions provided under the plan for the 
                relevant plan terminology referring to such limited or 
                excluded care.
                    ``(F) Medical appropriateness or necessity.--
                Whether coverage for medical care may be limited or 
                excluded by reason of a failure to meet the plan's 
                requirements for medical appropriateness or necessity, 
                and any definitions provided under the plan for the 
                relevant plan terminology referring to such limited or 
                excluded care.
                    ``(G) Second or subsequent opinions.--A description 
                of the circumstances under which, and the extent to 
                which, coverage for second or subsequent opinions is 
                limited or excluded.
                    ``(H) Specialty care.--A description of the 
                circumstances under which, and the extent to which, 
                coverage of benefits for specialty care is conditioned 
                on referral from a primary care provider.
                    ``(I) Continuity of care.--A description of the 
                circumstances under which, and the extent to which, 
                coverage of items and services provided by any health 
                care professional is limited or excluded by reason of 
                the departure by the professional from any defined set 
                of providers.
                    ``(J) Restrictions on coverage of emergency 
                services.--A description of the circumstances under 
                which, and the extent to which, the plan, in covering 
                emergency medical care furnished to a participant or 
                beneficiary of the plan imposes any financial 
                responsibility described in subsection (c) on 
                participants or beneficiaries or limits or conditions 
                benefits for such care subject to any other term or 
                condition of such plan.
    ``(c) Participant's Financial Responsibilities.--The information 
required under subsection (a) includes an explanation of--
            ``(1) a participant's financial responsibility for payment 
        of premiums, coinsurance, copayments, deductibles, and any 
        other charges; and
            ``(2) the circumstances under which, and the extent to 
        which, the participant's financial responsibility described in 
        paragraph (1) may vary, including any distinctions based on 
        whether a health care provider from whom covered benefits are 
        obtained is included in a defined set of providers.
    ``(d) Dispute Resolution Procedures.--The information required 
under subsection (a) includes a description of the processes adopted by 
the plan pursuant to section 503(b), including--
            ``(1) descriptions thereof relating specifically to--
                    ``(A) coverage decisions;
                    ``(B) internal review of coverage decisions; and
                    ``(C) any external review of coverage decisions; 
                and
            ``(2) the procedures and time frames applicable to each 
        step of the processes referred to in subparagraphs (A), (B), 
        and (C) of paragraph (1).
    ``(e) Information Available on Request.--
            ``(1) Access to plan benefit information in electronic 
        form.--
                    ``(A) In general.--In addition to the information 
                required to be provided under section 104(b)(4), a 
                group health plan (and a health insurance issuer 
                offering health insurance coverage in connection with a 
                group health plan) shall, upon written request (made 
                not more frequently than annually), make available to 
                participants and beneficiaries, in a generally 
                recognized electronic format, the following 
                information:
                            ``(i) the latest summary plan description, 
                        including the latest summary of material 
                        modifications; and
                            ``(ii) the actual plan provisions setting 
                        forth the benefits available under the plan
                to the extent such information relates to the coverage 
                options under the plan available to the participant or 
                beneficiary. A reasonable charge may be made to cover 
                the cost of providing such information in such 
                generally recognized electronic format. The Secretary 
                may by regulation prescribe a maximum amount which will 
                constitute a reasonable charge under the preceding 
                sentence.
                    ``(B) Alternative access.--The requirements of this 
                paragraph may be met by making such information 
                generally available (rather than upon request) on the 
                Internet or on a proprietary computer network in a 
                format which is readily accessible to participants and 
                beneficiaries.
            ``(2) Additional information to be provided on request.--
                    ``(A) Inclusion in summary plan description of 
                summary of additional information.--The information 
                required under subsection (a) includes a summary 
                description of the types of information required by 
                this subsection to be made available to participants 
                and beneficiaries on request.
                    ``(B) Information required from plans and issuers 
                on request.--In addition to information required to be 
                included in summary plan descriptions under this 
                subsection, a group health plan (and a health insurance 
                issuer offering health insurance coverage in connection 
                with a group health plan) shall provide the following 
                information to a participant or beneficiary on request:
                            ``(i) Network characteristics.--If the plan 
                        (or issuer) utilizes a defined set of providers 
                        under contract with the plan (or issuer), a 
                        detailed list of the names of such providers 
                        and their geographic location, set forth 
                        separately with respect to primary care 
                        providers and with respect to specialists.
                            ``(ii) Care management information.--A 
                        description of the circumstances under which, 
                        and the extent to which, the plan has special 
                        disease management programs or programs for 
                        persons with disabilities, indicating whether 
                        these programs are voluntary or mandatory and 
                        whether a significant benefit differential 
                        results from participation in such programs.
                            ``(iii) Inclusion of drugs and biologicals 
                        in formularies.--A statement of whether a 
                        specific drug or biological is included in a 
                        formulary used to determine benefits under the 
                        plan and a description of the procedures for 
                        considering requests for any patient-specific 
                        waivers.
                            ``(iv) Procedures for determining 
                        exclusions based on medical necessity or 
                        experimental treatments.--Upon receipt by the 
                        participant or beneficiary of any notification 
                        of an adverse coverage decision based on a 
                        determination relating to medical necessity or 
                        an experimental treatment or technology, a 
                        description of the procedures and medically-
                        based criteria used in such decision.
                            ``(v) Preauthorization and utilization 
                        review procedures.--Upon receipt by the 
                        participant or beneficiary of any notification 
                        of an adverse coverage decision, a description 
                        of the basis on which any preauthorization 
                        requirement or any utilization review 
                        requirement has resulted in such decision.
                            ``(vi) Accreditation status of health 
                        insurance issuers and service providers.--A 
                        description of the accreditation and licensing 
                        status (if any) of each health insurance issuer 
                        offering health insurance coverage in 
                        connection with the plan and of any utilization 
                        review organization utilized by the issuer or 
                        the plan, together with the name and address of 
                        the accrediting or licensing authority.
                            ``(vii) Measures of enrollee 
                        satisfaction.--The latest information (if any) 
                        maintained by the plan, or by any health 
                        insurance issuer offering health insurance 
                        coverage in connection with the plan, relating 
                        to enrollee satisfaction.
                            ``(viii) Quality performance measures.--The 
                        latest information (if any) maintained by the 
                        plan, or by any health insurance issuer 
                        offering health insurance coverage in 
                        connection with the plan, relating to quality 
                        of performance of the delivery of medical care 
                        with respect to coverage options offered under 
                        the plan and of health care professionals and 
                        facilities providing medical care under the 
                        plan.
                            ``(ix) Information relating to external 
                        reviews.--The number of external reviews under 
                        section 503(b)(4) that have been completed 
                        during the prior plan year and the number of 
                        such reviews in which the recommendation 
                        reported under section 503(b)(4)(C)(iii) 
                        includes a recommendation for modification or 
                        reversal of an internal review decision under 
                        the plan.
                    ``(C) Information required from health care 
                professionals on request.--Any health care professional 
                treating a participant or beneficiary under a group 
                health plan shall provide to the participant or 
                beneficiary, on request, a description of his or her 
                professional qualifications (including board 
                certification status, licensing status, and 
                accreditation status, if any), privileges, and 
                experience and 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 such professional is compensated in connection 
                with the provision of such medical care.
                    ``(D) Information required from health care 
                facilities on request.--Any health care facility from 
                which a participant or beneficiary has sought treatment 
                under a group health plan shall provide to the 
                participant or beneficiary, on request, a description 
                of the facility's corporate form or other 
                organizational form and all forms of licensing and 
                accreditation status (if any) assigned to the facility 
                by standard-setting organizations.
    ``(f) Access to Information Relevant to the Coverage Options Under 
Which the Participant or Beneficiary Is Eligible To Enroll.--In 
addition to information otherwise required to be made available under 
this section, a group health plan (and a health insurance issuer 
offering health insurance coverage in connection with a group health 
plan) shall, upon written request (made not more frequently than 
annually), make available to a participant (and an employee who, under 
the terms of the plan, is eligible for coverage but not enrolled) in 
connection with a period of enrollment the summary plan description for 
any coverage option under the plan under which the participant is 
eligible to enroll and any information described in clauses (i), (ii), 
(iii), (vi), (vii), and (viii) of subsection (e)(2)(B).
    ``(g) Advance Notice of Changes in Drug Formularies.--Not later 
than 30 days before the effective date of any exclusion of a specific 
drug or biological from any drug formulary under the plan that is used 
in the treatment of a chronic illness or disease, the plan shall take 
such actions as are necessary to reasonably ensure that plan 
participants are informed of such exclusion. The requirements of this 
subsection may be satisfied--
            ``(1) by inclusion of information in publications broadly 
        distributed by plan sponsors, employers, or employee 
        organizations;
            ``(2) by electronic means of communication (including the 
        Internet or proprietary computer networks in a format which is 
        readily accessible to participants);
            ``(3) by timely informing participants who, under an 
        ongoing program maintained under the plan, have submitted their 
        names for such notification; or
            ``(4) by any other reasonable means of timely informing 
        plan participants.
    ``(h) Definitions.--For purposes of this section--
            ``(1) Group health plan.--The term `group health plan' has 
        the meaning provided such term under section 503(b)(8).
            ``(2) Medical care.--The term `medical care' has the 
        meaning provided such term under section 733(a)(2).
            ``(3) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning provided such term under 
        section 733(b)(1).
            ``(4) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning provided such term under section 
        733(b)(2).''.
    (b) Conforming Amendments.--
            (1) Section 102(b) of such Act (29 U.S.C. 1022(b)) is 
        amended--
                    (A) by striking ``section 733(a)(1)'' each place it 
                appears and inserting ``section 503(b)(6)''; and
                    (B) by inserting before the period at the end the 
                following: ``; and, in the case of a group health plan 
                (as defined in section 111(h)(1)), the information 
                required to be included under section 111(a)''.
            (2) The table of contents in section 1 of such Act is 
        amended by striking the item relating to section 111 and 
        inserting the following new items:

``Sec. 111. Disclosure by group health plans.
``Sec. 112. Repeal and effective date.''.

SEC. 1102. EFFECTIVE DATE AND RELATED RULES.

    (a) In General.--The amendments made by this subtitle shall apply 
with respect to plan years beginning on or after January 1 of the 
second calendar year following the date of the enactment of this Act. 
The Secretary shall first issue all regulations necessary to carry out 
the amendments made by this subtitle before such date.
    (b) Limitation on Enforcement Actions.--No enforcement action shall 
be taken, pursuant to the amendments made by this subtitle, against a 
group health plan or health insurance issuer with respect to a 
violation of a requirement imposed by such amendments before the date 
of issuance of final regulations issued in connection with such 
requirement, if the plan or issuer has sought to comply in good faith 
with such requirement.
    (c) Assuring Coordination.--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 two or 
        more such Secretaries have responsibility under the provisions 
        of this subtitle, subtitle B of title II, and subtitle B of 
        title III (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.

Subtitle C--New Procedures and Access to Courts for Grievances Arising 
                        Under Group Health Plans

SEC. 1201. SPECIAL RULES FOR GROUP HEALTH PLANS.

    (a) In General.--Section 503 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1133) is amended--
            (1) by inserting ``(a) In General.--'' after ``Sec. 503.'';
            (2) by inserting ``(other than a group health plan)'' after 
        ``employee benefit plan''; and
            (3) by adding at the end the following new subsection:
    ``(b) Special Rules for Group Health Plans.--
            ``(1) Coverage determinations.--Every group health plan 
        shall--
                    ``(A) provide adequate notice in writing in 
                accordance with this subsection to any participant or 
                beneficiary of any adverse coverage decision with 
                respect to benefits of such participant or beneficiary 
                under the plan, setting forth the specific reasons for 
                such coverage decision and any rights of review 
                provided under the plan, written in a manner calculated 
                to be understood by the participant;
                    ``(B) provide such notice in writing also to any 
                treating medical care provider of such participant or 
                beneficiary, if such provider has claimed reimbursement 
                for any item or service involved in such coverage 
                decision, or if a claim submitted by the provider 
                initiated the proceedings leading to such decision;
                    ``(C) afford a reasonable opportunity to any 
                participant or beneficiary who is in receipt of the 
                notice of such adverse coverage decision, and who files 
                a written request for review of the initial coverage 
                decision within 180 days after receipt of the notice of 
                the initial decision, for a full and fair de novo 
                review of the decision by an appropriate named 
                fiduciary who did not make the initial decision; and
                    ``(D) meet the additional requirements of this 
                subsection.
            ``(2) Time limits for making initial coverage decisions for 
        benefits and completing internal appeals.--
                    ``(A) Time limits for deciding requests for benefit 
                payments, requests for advance determination of 
                coverage, and requests for required determination of 
                medical necessity.--Except as provided in subparagraph 
                (B)--
                            ``(i) Initial decisions.--If a request for 
                        benefit payments, a request for advance 
                        determination of coverage, or a request for 
                        required determination of medical necessity is 
                        submitted to a group health plan in such 
                        reasonable form as may be required under the 
                        plan, the plan shall issue in writing an 
                        initial coverage decision on the request before 
                        the end of the initial decision period under 
                        paragraph (9)(J) following the filing 
                        completion date. Failure to issue a coverage 
                        decision on such a request before the end of 
                        the period required under this clause shall be 
                        treated as an adverse coverage decision for 
                        purposes of internal review under clause (ii).
                            ``(ii) Internal reviews of initial 
                        denials.--Upon the written request of a 
                        participant or beneficiary for review of an 
                        initial adverse coverage decision under clause 
                        (i), a review by an appropriate named fiduciary 
                        (subject to paragraph (3)) of the initial 
                        coverage decision shall be completed, including 
                        issuance by the plan of a written decision 
                        affirming, reversing, or modifying the initial 
                        coverage decision, setting forth the grounds 
                        for such decision, before the end of the 
                        internal review period following the review 
                        filing date. Such decision shall be treated as 
                        the final decision of the plan, subject to any 
                        applicable reconsideration under paragraph (4). 
                        Failure to issue before the end of such period 
                        such a written decision requested under this 
                        clause shall be treated as a final decision 
                        affirming the initial coverage decision, 
                        subject to any applicable reconsideration under 
                        paragraph (4).
                    ``(B) Time limits for making coverage decisions 
                relating to urgent and emergency medical care and for 
                completing internal appeals.--
                            ``(i) Initial decisions.--A group health 
                        plan shall issue in writing an initial coverage 
                        decision on any request for expedited advance 
                        determination of coverage or for expedited 
                        required determination of medical necessity 
                        submitted, in such reasonable form as may be 
                        required under the plan--
                                    ``(I) before the end of the urgent 
                                decision period under paragraph (9)(L), 
                                in cases involving urgent medical care 
                                but not involving emergency medical 
                                care; or
                                    ``(II) before the end of the 
                                emergency decision period under 
                                paragraph (9)(M), in cases involving 
                                emergency medical care,
                        following the filing completion date. Failure 
                        to approve or deny such a request before the 
                        end of the applicable decision period shall be 
                        treated as a denial of the request for purposes 
                        of internal review under clause (ii).
                            ``(ii) Internal reviews of initial 
                        denials.--Upon the written request of a 
                        participant or beneficiary for review of an 
                        initial adverse coverage decision under clause 
                        (i), a review by an appropriate named fiduciary 
                        (subject to paragraph (3)) of the initial 
                        coverage decision shall be completed, including 
                        issuance by the plan of a written decision 
                        affirming, reversing, or modifying the initial 
                        converge decision, setting forth the grounds 
                        for the decision--
                                    ``(I) before the end of the urgent 
                                decision period under paragraph (9)(L), 
                                in cases involving urgent medical care 
                                but not involving emergency medical 
                                care; or
                                    ``(II) before the end of the 
                                emergency decision period under 
                                paragraph (9)(M), in cases involving 
                                emergency medical care,
                        following the review filing date. Such decision 
                        shall be treated as the final decision of the 
                        plan, subject to any applicable reconsideration 
                        under paragraph (4). Failure to issue before 
                        the end of the applicable decision period such 
                        a written decision requested under this clause 
                        shall be treated as a final decision affirming 
                        the initial coverage decision, subject to any 
                        applicable reconsideration under paragraph (4).
            ``(3) Physicians must review initial coverage decisions 
        involving medical appropriateness or necessity or experimental 
        treatment.--If an initial coverage decision under paragraph 
        (2)(A)(i) or (2)(B)(i) is based on a determination that 
        provision of a particular item or service is excluded from 
        coverage under the terms of the plan because the provision of 
        such item or service does not meet the plan's requirements for 
        medical appropriateness or necessity or would constitute 
experimental treatment or technology, the review under paragraph 
(2)(A)(ii) or (2)(B)(ii), to the extent that it relates to medical 
appropriateness or necessity or to experimental treatment or 
technology, shall be conducted by a physician who is selected to serve 
as an appropriate named fiduciary under the plan and who did not make 
the initial denial.
            ``(4) Elective external review by independent medical 
        expert and reconsideration of initial review decision.--
                    ``(A) In general.--The requirements of 
                subparagraphs (B), (C) and (D) shall apply--
                            ``(i) in the case of any failure to timely 
                        issue a coverage decision upon internal review 
                        which is deemed to be an adverse coverage 
                        decision under paragraph (2)(A)(ii) or 
                        (2)(B)(ii) (thereby failing to constitute a 
                        coverage decision for which specific reasons 
                        have been set forth as required under paragraph 
                        (1)(A)); and
                            ``(ii) in the case of any adverse coverage 
                        decision which is not reversed upon a review 
                        conducted pursuant to paragraph (1)(C) 
                        (including any review pursuant to paragraph 
                        (2)(A)(ii) or (2)(B)(ii)), if such coverage 
                        decision is based on a determination that 
                        provision of a particular item or service is 
                        excluded from coverage under the terms of the 
                        plan because the provision of such item or 
                        service--
                                    ``(I) does not meet the plan's 
                                requirements for medical 
                                appropriateness or necessity; or
                                    ``(II) would constitute 
                                experimental treatment or technology.
                    ``(B) Limits on allowable advance payments.--The 
                review under this paragraph in connection with an 
                adverse coverage decision shall be available subject to 
                any requirement of the plan (unless waived by the plan 
                for financial or other reasons) for payment in advance 
                to the plan by the participant or beneficiary seeking 
                review of an amount not to exceed the greater of--
                            ``(i) the lesser of $100 or 10 percent of 
                        the cost of the medical care involved in the 
                        decision; or
                            ``(ii) $25,
                with each such dollar amount subject to compounded 
                annual adjustments in the same manner and to the same 
                extent as apply under section 215(i) of the Social 
                Security Act, except that, for any calendar year, such 
                amount as so adjusted shall be deemed, solely for such 
                calendar year, to be equal to such amount rounded to 
                the nearest $10. No such payment may be required in the 
                case of any participant or beneficiary whose enrollment 
                under the plan is paid for, in whole or in part, under 
                a State plan under title XIX or XXI of the Social 
                Security Act. Any such advance payment shall be subject 
                to reimbursement if the recommendation of the 
                independent medical expert or experts under 
                subparagraph (C)(iii) is to reverse or modify the 
                coverage decision.
                    ``(C) Reconsideration of initial review decision.--
                In any case in which a participant or beneficiary who 
                has received an adverse decision of the plan upon 
                initial review of the coverage decision and who has not 
                commenced review of the initial coverage decision under 
                section 502 makes a request in writing, within 30 days 
                after the date of such review decision, for 
                reconsideration of such review decision, the terms of 
                the plan shall provide for a procedure for such 
                reconsideration under which--
                            ``(i) one or more independent medical 
                        experts will be selected in accordance with 
                        subparagraph (E) to review the coverage 
                        decision described in subparagraph (A) to 
                        determine whether such decision was in 
                        accordance with the terms of the plan and this 
                        title;
                            ``(ii) the record for review (including a 
                        specification of the terms of the plan and 
                        other criteria serving as the basis for the 
                        initial review decision) will be presented to 
                        such expert or experts and maintained in a 
                        manner which will ensure confidentiality of 
                        such record;
                            ``(iii) such expert or experts will report 
                        in writing to the plan their recommendation, 
                        based on the determination made under clause 
                        (i), as to whether such coverage decision 
                        should be affirmed, modified, or reversed, 
                        setting forth the grounds (including the 
clinical basis) for the recommendation; and
                            ``(iv) a physician who did not make the 
                        initial review decision will reconsider the 
                        initial review decision to determine whether 
                        such decision was in accordance with the terms 
                        of the plan and this title and will issue a 
                        written decision affirming, modifying, or 
                        reversing the initial review decision, taking 
                        into account any recommendations reported to 
                        the plan pursuant to clause (iii), and setting 
                        forth the grounds for the decision.
                    ``(D) Time limits for reconsideration.--Any review 
                under this paragraph shall be completed before the end 
                of the reconsideration period (as defined in paragraph 
                (9)(O)) following the review filing date in connection 
                with such review. The decision under this paragraph 
                affirming, reversing, or modifying the initial review 
                decision of the plan shall be the final decision of the 
                plan. Failure to issue a written decision before the 
                end of the reconsideration period in any 
                reconsideration requested under this paragraph shall be 
                treated as a final decision affirming the initial 
                review decision of the plan.
                    ``(E) Independent medical experts.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `independent medical 
                        expert' means, in connection with any coverage 
                        decision by a group health plan, a 
                        professional--
                                    ``(I) who is a physician or, if 
                                appropriate, another medical 
                                professional;
                                    ``(II) who has appropriate 
                                credentials and has attained recognized 
                                expertise in the applicable medical 
                                field;
                                    ``(III) who was not involved in the 
                                initial decision or any earlier review 
                                thereof; and
                                    ``(IV) who is selected in 
                                accordance with clause (ii) and meets 
                                the requirements of clause (iii).
                            ``(ii) Selection of medical experts.--An 
                        independent medical expert is selected in 
                        accordance with this clause if--
                                    ``(I) the expert is selected by an 
                                intermediary which itself meets the 
                                requirements of clause (iii), by means 
                                of a method which ensures that the 
                                identity of the expert is not disclosed 
                                to the plan, any health insurance 
                                issuer offering health insurance 
                                coverage to the aggrieved participant 
                                or beneficiary in connection with the 
                                plan, and the aggrieved participant or 
                                beneficiary under the plan, and the 
                                identities of the plan, the issuer, and 
                                the aggrieved participant or 
                                beneficiary are not disclosed to the 
                                expert;
                                    ``(II) the expert is selected, by 
                                an appropriately credentialed panel of 
                                physicians meeting the requirements of 
                                clause (iii) established by a fully 
                                accredited teaching hospital meeting 
                                such requirements;
                                    ``(III) the expert is selected by 
                                an organization described in section 
                                1152(1)(A) of the Social Security Act 
                                which meets the requirements of clause 
                                (iii);
                                    ``(IV) the expert is selected by an 
                                external review organization which 
                                meets the requirements of clause (iii) 
                                and is accredited by a private 
                                standard-setting organization meeting 
                                such requirements and recognized as 
                                such by the Secretary; or
                                    ``(V) the expert is selected, by an 
                                intermediary or otherwise, in a manner 
                                that is, under regulations issued 
                                pursuant to negotiated rulemaking, 
                                sufficient to ensure the expert's 
                                independence,
                        and the method of selection is devised to 
                        reasonably ensure that the expert selected 
                        meets the independence requirements of clause 
                        (iii).
                            ``(iii) Independence requirements.--An 
                        independent medical expert or another entity 
                        described in clause (ii) meets the independence 
                        requirements of this clause if--
                                    ``(I) the expert or entity is not 
                                affiliated with any related party;
                                    ``(II) any compensation received by 
                                such expert or entity in connection 
                                with the external review is reasonable 
                                and not contingent on any decision 
                                rendered by the expert or entity;
                                    ``(III) under the terms of the plan 
                                and any health insurance coverage 
                                offered in connection with the plan, 
                                the plan and the issuer (if any) have 
                                no recourse against the expert or 
                                entity in connection with the external 
                                review; and
                                    ``(IV) the expert or entity does 
                                not otherwise have a conflict of 
                                interest with a related party as 
                                determined under any regulations which 
                                the Secretary may prescribe.
                            ``(iv) Related party.--For purposes of 
                        clause (ii)(I), the term `related party' 
                        means--
                                    ``(I) the plan or any health 
                                insurance issuer offering health 
                                insurance coverage in connection with 
                                the plan (or any officer, director, or 
                                management employee of such plan or 
                                issuer);
                                    ``(II) the physician or other 
                                medical care provider that provided the 
                                medical care involved in the coverage 
                                decision;
                                    ``(III) the institution at which 
                                the medical care involved in the 
                                coverage decision is provided;
                                    ``(IV) the manufacturer of any drug 
                                or other item that was included in the 
                                medical 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.
                            ``(v) Affiliated.--For purposes of clause 
                        (iii)(I), the term `affiliated' means, in 
                        connection with any entity, having a familial, 
                        financial, or professional relationship with, 
                        or interest in, such entity.
                    ``(F) Inapplicability with respect to items and 
                services specifically excluded from coverage.--An 
                adverse coverage decision based on a determination that 
                an item or service is excluded from coverage under the 
                terms of the plan shall not be subject to review under 
                this paragraph, unless such determination is found in 
                such decision to be based solely on the fact that the 
                item or service--
                            ``(i) does not meet the plan's requirements 
                        for medical appropriateness or necessity; or
                            ``(ii) would constitute experimental 
                        treatment or technology (as defined under the 
                        plan).
            ``(5) Permitted alternatives to required internal review.--
                    ``(A) In general.--A group health plan shall not be 
                treated as failing to meet the requirements under 
                paragraphs (2)(A)(ii) and (2)(B)(ii) relating to review 
                of initial coverage decisions for benefits, if--
                            ``(i) in lieu of the procedures relating to 
                        review under paragraphs (2)(A)(ii) and 
                        (2)(B)(ii) and in accordance with such 
                        regulations (if any) as may be prescribed by 
                        the Secretary--
                                    ``(I) the aggrieved participant or 
                                beneficiary elects in the request for 
                                the review an alternative dispute 
                                resolution procedure which is available 
                                under the plan with respect to 
                                similarly situated participants and 
                                beneficiaries; or
                                    ``(II) in the case of any such plan 
                                or portion thereof which is established 
                                and maintained pursuant to a bona fide 
                                collective bargaining agreement, the 
                                plan provides for a procedure by which 
                                such disputes are resolved by means of 
                                any alternative dispute resolution 
                                procedure;
                            ``(ii) the time limits not exceeding the 
                        time limits otherwise applicable under 
                        paragraphs (2)(A)(ii) and (2)(B)(ii) are 
                        incorporated in such alternative dispute 
                        resolution procedure;
                            ``(iii) any applicable requirement for 
                        review by a physician under paragraph (3), 
                        unless waived by the participant or beneficiary 
                        (in a manner consistent with such regulations 
                        as the Secretary may prescribe to ensure 
                        equitable procedures), is incorporated in such 
                        alternative dispute resolution procedure; and
                            ``(iv) the plan meets the additional 
                        requirements of subparagraph (B).
                In any case in which a procedure described in subclause 
                (I) or (II) of clause (i) is utilized and an 
                alternative dispute resolution procedure is voluntarily 
                elected by the aggrieved participant or beneficiary, 
                the plan may require or allow (in a manner consistent 
                with such regulations as the Secretary may prescribe to 
                ensure equitable procedures) the aggrieved participant 
                or beneficiary to waive review of the coverage decision 
                under paragraph (3), to waive further review of the 
                coverage decision under paragraph (4) or section 502, 
                and to elect an alternative means of external review 
                (other than review under paragraph (4)).
                    ``(B) Additional requirements.--The requirements of 
                this subparagraph are met if the means of resolution of 
                dispute allow for adequate presentation by the 
                aggrieved participant or beneficiary of scientific and 
                medical evidence supporting the position of such 
                participant or beneficiary.
            ``(6) Permitted alternatives to required external review.--
        A group health plan shall not be treated as failing to meet the 
        requirements of this subsection in connection with review of 
        coverage decisions under paragraph (4) if the aggrieved 
        participant or beneficiary elects to utilize a procedure in 
        connection with such review which is made generally available 
        under the plan (in a manner consistent with such regulations as 
        the Secretary may prescribe to ensure equitable procedures) 
        under which--
                    ``(A) the plan agrees in advance of the 
                recommendations of the independent medical expert or 
                experts under paragraph (4)(C)(iii) to render a final 
                decision in accordance with such recommendations; and
                    ``(B) the participant or beneficiary waives in 
                advance any right to review of the final decision under 
                section 502.
            ``(7) Special rule for access to specialty care.--In the 
        case of a request for advance determination of coverage 
        consisting of a request by a physician for a determination of 
        coverage of the services of a specialist with respect to any 
        condition, if coverage of the services of such specialist for 
        such condition is otherwise provided under the plan, the 
        initial coverage decision referred to in subparagraph (A)(i) or 
        (B)(i) of paragraph (2) shall be issued within the specialty 
        decision period. For purposes of this paragraph, the term 
        `specialist' means, with respect to a condition, a physician 
        who has a high level of expertise through appropriate training 
        and experience (including, in the case of a child, appropriate 
        pediatric expertise) to treat the condition.
            ``(8) Group health plan defined.--For purposes of this 
        section--
                    ``(A) In general.--The term `group health plan' 
                shall have the meaning provided in section 733(a).
                    ``(B) Treatment of partnerships.--The provisions of 
                paragraphs (1), (2), and (3) of section 732(d) shall 
                apply.
            ``(9) Other definitions.--For purposes of this subsection--
                    ``(A) Request for benefit payments.--The term 
                `request for benefit payments' means a request, for 
                payment of benefits by a group health plan for medical 
                care, which is made by or on behalf of a participant or 
                beneficiary after such medical care has been provided.
                    ``(B) Required determination of medical 
                necessity.--The term `required determination of medical 
                necessity' means a determination required under a group 
                health plan solely that proposed medical care meets, 
                under the facts and circumstances at the time of the 
                determination, the plan's requirements for medical 
                appropriateness or necessity (which may be subject to 
                exceptions under the plan for fraud or 
                misrepresentation), irrespective of whether the 
                proposed medical care otherwise meets other terms and 
                conditions of coverage, but only if such determination 
                does not constitute an advance determination of 
                coverage (as defined in subparagraph (C)).
                    ``(C) Advance determination of coverage.--The term 
                `advance determination of coverage' means a 
                determination under a group health plan that proposed 
                medical care meets, under the facts and circumstances 
                at the time of the determination, the plan's terms and 
                conditions of coverage (which may be subject to 
                exceptions under the plan for fraud or 
                misrepresentation).
                    ``(D) Request for advance determination of 
                coverage.--The term `request for advance determination 
                of coverage' means a request for an advance 
                determination of coverage of medical care which is made 
                by or on behalf of a participant or beneficiary before 
                such medical care is provided.
                    ``(E) Request for expedited advance determination 
                of coverage.--The term `request for expedited advance 
                determination of coverage' means a request for advance 
                determination of coverage, in any case in which the 
                proposed medical care constitutes urgent medical care 
                or emergency medical care.
                    ``(F) Request for required determination of medical 
                necessity.--The term `request for required 
                determination of medical necessity' means a request for 
                a required determination of medical necessity for 
                medical care which is made by or on behalf of a 
                participant or beneficiary before the medical care is 
                provided.
                    ``(G) Request for expedited required determination 
                of medical necessity.--The term `request for expedited 
                required determination of medical necessity' means a 
                request for required determination of medical necessity 
                in any case in which the proposed medical care 
                constitutes urgent medical care or emergency medical 
                care.
                    ``(H) Urgent medical care.--The term `urgent 
                medical care' means medical care in any case in which 
                an appropriate physician has certified in writing (or 
                as otherwise provided in regulations of the Secretary) 
                that failure to provide the participant or beneficiary 
                with such medical care within 45 days can reasonably be 
                expected to result in either--
                            ``(i) the imminent death of the participant 
                        or beneficiary; or
                            ``(ii) the immediate, serious, and 
                        irreversible deterioration of the health of the 
                        participant or beneficiary which will 
                        significantly increase the likelihood of death 
                        of, or irreparable harm to, the participant or 
                        beneficiary.
                    ``(I) Emergency medical care.--The term `emergency 
                medical care' means medical care in any case in which 
                an appropriate physician has certified in writing (or 
                as otherwise provided in regulations of the 
                Secretary)--
                            ``(i) that failure to immediately provide 
                        the care to the participant or beneficiary 
                        could reasonably be expected to result in--
                                    ``(I) placing the health of such 
                                participant or beneficiary (or, with 
                                respect to such a participant or 
                                beneficiary who is a pregnant woman, 
                                the health of the woman or her unborn 
                                child) in serious jeopardy;
                                    ``(II) serious impairment to bodily 
                                functions; or
                                    ``(III) serious dysfunction of any 
                                bodily organ or part; or
                            ``(ii) that immediate provision of the care 
                        is necessary because the participant or 
                        beneficiary has made or is at serious risk of 
                        making an attempt to harm himself or herself or 
                        another individual.
                    ``(J) Initial decision period.--The term `initial 
                decision period' means a period of 30 days, or such 
                longer period as may be prescribed in regulations of 
                the Secretary.
                    ``(K) Internal review period.--The term `internal 
                review period' means a period of 30 days, or such 
                longer period as may be prescribed in regulations of 
                the Secretary.
                    ``(L) Urgent decision period.--The term `urgent 
                decision period' means a period of 10 days, or such 
                longer period as may be prescribed in regulations of 
                the Secretary.
                    ``(M) Emergency decision period.--The term 
                `emergency decision period' means a period of 72 hours, 
                or such longer period as may be prescribed in 
                regulations of the Secretary.
                    ``(N) Specialty decision period.--The term 
                `specialty decision period' means a period of 72 hours, 
                or such longer period as may be prescribed in 
                regulations of the Secretary.
                    ``(O) Reconsideration period.--The term 
                `reconsideration period' means a period of 25 days, or 
                such longer period as may be prescribed in regulations 
                of the Secretary, except that--
                            ``(i) in the case of a decision involving 
                        urgent medical care, such term means the urgent 
                        decision period; and
                            ``(ii) in the case of a decision involving 
                        emergency medical care, such term means the 
                        emergency decision period.
                    ``(P) Filing completion date.--The term `filing 
                completion date' means, in connection with a group 
                health plan, the date as of which the plan is in 
                receipt of all information reasonably required (in 
                writing or in such other reasonable form as may be 
                specified by the plan) to make an initial coverage 
                decision.
                    ``(Q) Review filing date.--The term `review filing 
                date' means, in connection with a group health plan, 
                the date as of which the appropriate named fiduciary 
                (or the independent medical expert or experts in the 
                case of a review under paragraph (4)) is in receipt of 
                all information reasonably required (in writing or in 
                such other reasonable form as may be specified by the 
                plan) to make a decision to affirm, modify, or reverse 
                a coverage decision.
                    ``(R) Medical care.--The term `medical care' has 
                the meaning provided such term by section 733(a)(2).
                    ``(S) Health insurance coverage.--The term `health 
                insurance coverage' has the meaning provided such term 
                by section 733(b)(1).
                    ``(T) Health insurance issuer.--The term `health 
                insurance issuer' has the meaning provided such term by 
                section 733(b)(2).
                    ``(U) Written or in writing.--
                            ``(i) In general.--A request or decision 
                        shall be deemed to be `written' or `in writing' 
                        if such request or decision is presented in a 
                        generally recognized printable or electronic 
                        format. The Secretary may by regulation provide 
                        for presentation of information otherwise 
                        required to be in written form in such other 
                        forms as may be appropriate under the 
                        circumstances.
                            ``(ii) Medical appropriateness or 
                        experimental treatment determinations.--For 
                        purposes of this subparagraph, in the case of a 
                        request for advance determination of coverage, 
                        a request for expedited advance determination 
                        of coverage, a request for required 
                        determination of medical necessity, or a 
                        request for expedited required determination of 
                        medical necessity, if the decision on such 
                        request is conveyed to the provider of medical 
                        care or to the participant or beneficiary by 
                        means of telephonic or other electronic 
                        communications, such decision shall be treated 
                        as a written decision.''.
    (b) Civil Penalties.--
            (1) In general.--Section 502(c) of such Act (29 U.S.C. 
        1132(c)) is amended by redesignating paragraphs (6) and (7) as 
        paragraphs (7) and (8), respectively, and by inserting after 
        paragraph (5) the following new paragraph:
    ``(6)(A)(i) In any case in which--
            ``(I) a benefit under a group health plan (as defined in 
        section 503(b)(8)) is not timely provided to a participant or 
        beneficiary pursuant to a final decision of the plan which was 
        not in accordance with the terms of the plan or this title; and
            ``(II) such final decision of the plan is contrary to a 
        recommendation described in section 503(b)(4)(C)(iii),
any person acting in the capacity of a fiduciary of such plan so as to 
cause such failure may, in the court's discretion, be liable to the 
aggrieved participant or beneficiary for a civil penalty.
    ``(ii) Such civil penalty shall be in the amount of up to $500 a 
day (or up to $1,000 a day in the case of a bad faith failure) from the 
date on which the recommendation was made to the plan until the date 
the failure to provide benefits is corrected, up to a total amount not 
to exceed $250,000.
    ``(B) In any action commenced under subsection (a) by a participant 
or beneficiary with respect to a group health plan (as defined in 
section 503(b)(8)) in which the plaintiff alleges that a person, in the 
capacity of a fiduciary and in violation of the terms of the plan or 
this title, has taken an action resulting in an adverse coverage 
decision in violation of the terms of the plan, or has failed to take 
an action for which such person is responsible under the plan and which 
is necessary under the plan for a favorable coverage decision, upon 
finding in favor of the plaintiff, if such action was commenced after a 
final decision of the plan upon review which included a review under 
section 503(b)(4) or such action was commenced under subsection (b)(4) 
of this section, the court shall cause to be served on the defendant an 
order requiring the defendant--
            ``(i) to cease and desist from the alleged action or 
        failure to act; and
            ``(ii) 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.
The remedies provided under this subparagraph shall be in addition to 
remedies otherwise provided under this section.
    ``(C)(i) The Secretary may assess a civil penalty against a person 
acting in the capacity of a fiduciary of one or more group health plans 
(as defined in section 503(b)(8)) for--
            ``(I) any pattern or practice of repeated adverse coverage 
        decisions in violation of the terms of the plan or plans or 
        this title; or
            ``(II) any pattern or practice of repeated violations of 
        the requirements of section 503 with respect to such plan or 
        plans.
Such penalty shall be payable only upon proof by clear and convincing 
evidence of such pattern or practice.
    ``(ii) Such penalty shall be in an amount not to exceed the lesser 
of--
            ``(I) 5 percent of the aggregate value of benefits shown by 
        the Secretary to have not been provided, or unlawfully delayed 
        in violation of section 503, under such pattern or practice; or
            ``(II) $100,000.
    ``(iii) Any person acting in the capacity of a fiduciary of a group 
health plan or plans who has engaged in any such pattern or practice 
with respect to such plans, upon the petition of the Secretary, may be 
removed by the court from that position, and from any other 
involvement, with respect to such plan or plans, and may be precluded 
from returning to any such position or involvement for a period 
determined by the court.''.
            (2) Conforming amendment.--Section 502(a)(6) of such Act 
        (29 U.S.C. 1132(a)(6)) is amended by striking ``, or (6)'' and 
        inserting ``, (6), or (7)''.
    (c) Expedited Court Review.--Section 502 of such Act (29 U.S.C. 
1132) is amended--
            (1) in subsection (a)(8), by striking ``or'' at the end;
            (2) in subsection (a)(9), by striking the period and 
        inserting ``; or'';
            (3) by adding at the end of subsection (a) the following 
        new paragraph:
    ``(10) by a participant or beneficiary for appropriate relief under 
subsection (b)(4).''.
            (4) by adding at the end of subsection (b) the following 
        new paragraph:
    ``(4) In any case in which exhaustion of administrative remedies in 
accordance with paragraph (2)(A)(ii) or (2)(B)(ii) of section 503(b) 
otherwise necessary for an action for relief under paragraph (1)(B) or 
(3) of subsection (a) has not been obtained and it is demonstrated to 
the court by means of certification by an appropriate physician that 
such exhaustion is not reasonably attainable under the facts and 
circumstances without undue risk of irreparable harm to the health of 
the participant or beneficiary, a civil action may be brought by a 
participant or beneficiary to obtain appropriate equitable relief. Any 
determinations made under paragraph (2)(A)(ii) or (2)(B)(ii) of section 
503(b) made while an action under this paragraph is pending shall be 
given due consideration by the court in any such action.''.
    (d) Standard of Review Unaffected.--The standard of review under 
section 502 of the Employee Retirement Income Security Act of 1974 (as 
amended by this section) shall continue on and after the date of the 
enactment of this Act to be the standard of review which was applicable 
under such section as of immediately before such date.
    (e) Concurrent Jurisdiction.--Section 502(e)(1) of such Act (29 
U.S.C. 1132(e)(1)) is amended--
            (1) in the first sentence, by striking ``under subsection 
        (a)(1)(B) of this section'' and inserting ``under subsection 
        (a)(1)(A) for relief under subsection (c)(6), under subsection 
        (a)(1)(B), and under subsection (b)(4)''; and
            (2) in the last sentence, by striking ``of actions under 
        paragraphs (1)(B) and (7) of subsection (a) of this section'' 
        and inserting ``of actions under paragraph (1)(A) of subsection 
        (a) for relief under subsection (c)(6) and of actions under 
        paragraphs (1)(B) and (7) of subsection (a) and paragraph (4) 
        of subsection (b)''.

SEC. 1202. EFFECTIVE DATE.

    (a) In General.--The amendments made by this subtitle shall apply 
with respect to grievances arising in plan years beginning on or after 
January 1 of the second calendar year following the date of the 
enactment of this Act. The Secretary shall first issue all regulations 
necessary to carry out the amendments made by this subtitle before such 
date.
    (b) Limitation on Enforcement Actions.--No enforcement action shall 
be taken, pursuant to the amendments made by this subtitle, against a 
group health plan or health insurance issuer with respect to a 
violation of a requirement imposed by such amendments before the date 
of issuance of final regulations issued in connection with such 
requirement, if the plan or issuer has sought to comply in good faith 
with such requirement.
    (c) Collective Bargaining Agreements.--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 subtitle shall not be treated as a termination of such collective 
bargaining agreement.

     Subtitle D--Affordable Health Coverage for Employees of Small 
                               Businesses

SEC. 1301. SHORT TITLE OF SUBTITLE.

    This subtitle may be cited as the ``Small Business Affordable 
Health Coverage Act of 1999''.

SEC. 1302. RULES GOVERNING ASSOCIATION HEALTH PLANS.

    (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 trade association, an industry association (including a rural 
        electric cooperative association or a rural telephone 
        cooperative association), a professional association, or a 
        chamber of commerce (or similar 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 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), the applicable authority shall certify an association 
health 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 for continued certification of 
association health plans under this part, including requirements 
relating to commencement of new benefit options by plans which do not 
consist of health insurance coverage.
    ``(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).

``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--
            ``(1) the sponsor (together with its immediate predecessor, 
        if any) has met (or is deemed under this part to have met) for 
        a continuous period of not less than 3 years ending with the 
        date of the application for certification under this part, the 
        requirements of paragraphs (1) and (2) of section 801(b); and
            ``(2) the sponsor meets (or is deemed under this part to 
        meet) the requirements of section 801(b)(3).
    ``(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 
                subparagraph (B), 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) Sole authority.--The board has sole authority 
                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.
    ``(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) all participating employers must be members or 
        affiliated members of the sponsor, 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 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.--
            ``(1) In general.--Subject to paragraph (2), the 
        requirements of this subsection are met with respect to an 
        association health plan if, under the terms of the plan, no 
        affiliated member of the sponsor may be offered coverage under 
        the plan as a participating employer, unless--
                    ``(A) the affiliated member was an affiliated 
                member on the date of certification under this part; or
                    ``(B) 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.
            ``(2) Limitation.--The requirements of this subsection 
        shall apply only in the case of plans which were in existence 
        on the date of the enactment of the Small Business Affordable 
        Health Coverage Act of 1999.
    ``(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, no employer meeting the 
        preceding requirements of this section is excluded as a 
        participating employer, unless participation or contribution 
        requirements of the type referred to in section 2711 of the 
        Public Health Service Act are not met with respect to the 
        excluded employer;
            ``(2) the applicable requirements of sections 701, 702, and 
        703 are met with respect to the plan; and
            ``(3) applicable benefit options under the plan are 
        actively marketed to all eligible participating employers.

``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,
                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 may prescribe by regulation as 
        necessary to carry out the purposes of this part.
    ``(b) Ability of Association Health Plans To Design Benefit 
Options.--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 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 $200,000). The 
                        applicable authority may by regulation 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.--The 
requirements of this subsection are met if the plan establishes and 
maintains surplus in an amount at least equal to $2,000,000, reduced in 
accordance with a scale, prescribed in regulations of the applicable 
authority to an amount not less than $500,000, 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 or 
otherwise, 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, and, in addition to such annual payments, 
                such supplemental payments as the Secretary may 
                determine to be necessary under 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 may be prescribed in regulations of the applicable 
        authority) 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 may be prescribed in regulations of the 
                applicable authority) 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 may be prescribed in regulations of the applicable 
        authority) 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 may be provided in regulations of the 
        applicable authority); 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 may be prescribed in regulations of 
the applicable authority.
    ``(j) Regulations Prescribed Under Negotiated Rulemaking.--The 
regulations under this section shall be prescribed under negotiated 
rulemaking in accordance with subchapter III of chapter 5 of title 5, 
United States Code, except that, in establishing the negotiated 
rulemaking committee for purposes of such rulemaking, the applicable 
authority shall include among persons invited to membership on the 
committee at least one of each of the following:
            ``(1) a representative of the National Association of 
        Insurance Commissioners;
            ``(2) a representative of the American Academy of 
        Actuaries;
            ``(3) a representative of the State governments, or their 
        interests;
            ``(4) a representative of existing self-insured 
        arrangements, or their interests;
            ``(5) a representative of associations of the type referred 
        to in section 801(b)(1), or their interests; and
            ``(6) a representative 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 prescribed in regulations of the applicable authority, 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.
                    ``(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 
                which may be prescribed in regulations of the 
                applicable authority 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 in regulations of the 
applicable authority. The applicable authority may require by 
regulation 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).
    ``(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 in regulations of the applicable authority.

``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) 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 defined in 
regulations of such Secretary, 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 of the Secretary, 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 under regulations of the 
        Secretary or 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 of the Secretary, 
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 Small Business Affordable Health 
Coverage 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 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 2 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.
            ``(11) Affiliated member.--The term `affiliated member' 
        means, in connection with a sponsor, a person eligible to be a 
        member of the sponsor or, in the case of a sponsor with member 
        associations, a person who is a member, or is eligible to be a 
        member, of a member association.
            ``(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 2 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 Patient Protection 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) 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. 1303. 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. 1304. 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 a commission or any other 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 
                of the Secretary), 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 identified to the plan or arrangement and 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 Small Business Affordable 
        Health Coverage 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 in regulations of the Secretary 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 Small Business Affordable Health 
        Coverage 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 
                is affiliated with another employee organization which 
                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. 1305. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH PLANS.

    (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, either willfully or with willful blindness, 
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 I) 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. 1306. 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. 1307. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

    (a) Effective Date.--The amendments made by sections 1302, 1305, 
and 1306 shall take effect on January 1, 2001. The amendments made by 
sections 1303 and 1304 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 subtitle before 
January 1, 2001.
    (b) Exception.--Section 801(a)(2) of the Employee Retirement Income 
Security Act of 1974 (added by section 1302) 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 April 1, 1997, 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) Pilot Program for Self-Insured Association Health Plans.--
            (1) In general.--During the pilot program period, 
        association health plans which offer benefit options which do 
        not consist of health insurance coverage may be certified under 
        part 8 of subtitle B of title I of the Employee Retirement 
        Income Security Act of 1974 only if such plans consist of the 
        following:
                    (A) plans which offered such coverage on the date 
                of the enactment of this Act;
                    (B) plans 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
                    (C) plans 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 plans in 
                accordance with regulations which the Secretary shall 
                prescribe, 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.
            (2) Pilot program period.--For purposes of this subsection, 
        the term ``pilot program period'' means the 5-year period 
        beginning on January 1, 2000.

           TITLE II--AMENDMENTS TO PUBLIC HEALTH SERVICE ACT

     Subtitle A--Patient Protections and Point of Service Coverage 
                              Requirements

SEC. 2001. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, EMERGENCY 
              MEDICAL CARE, OBSTETRIC AND GYNECOLOGICAL CARE, PEDIATRIC 
              CARE.

    (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 ACCESS TO UNRESTRICTED MEDICAL ADVICE, EMERGENCY 
              MEDICAL CARE, OBSTETRIC AND GYNECOLOGICAL CARE, PEDIATRIC 
              CARE.

    ``(a) Patient Access to Unrestricted Medical Advice.--
            ``(1) In general.--In the case of any health care 
        professional acting within the lawful scope of practice in the 
        course of carrying out a contractual employment arrangement or 
        other direct contractual arrangement between such professional 
        and a group health plan or a health insurance issuer offering 
        health insurance coverage in connection with a group health 
        plan, the plan or issuer with which such contractual employment 
        arrangement or other direct contractual arrangement is 
        maintained by the professional may not impose on such 
        professional under such arrangement any prohibition or 
        restriction with respect to advice, provided to a participant 
        or beneficiary under the plan who is a patient, about the 
        health status of the participant or beneficiary or the medical 
        care or treatment for the condition or disease of the 
        participant or beneficiary, regardless of whether benefits for 
        such care or treatment are provided under the plan or health 
        insurance coverage offered in connection with the plan.
            ``(2) Health care professional defined.--For purposes of 
        this subsection, the term `health care professional' means a 
        physician (as defined in section 1861(r) of the Social Security 
        Act) or other health care professional if coverage for the 
        professional's services is provided under the group health plan 
        for the services of the professional. Such term includes a 
        podiatrist, optometrist, chiropractor, psychologist, dentist, 
        physician assistant, physical or occupational therapist and 
        therapy assistant, speech-language pathologist, audiologist, 
        registered or licensed practical nurse (including nurse 
        practitioner, clinical nurse specialist, certified registered 
        nurse anesthetist, and certified nurse-midwife), licensed 
        certified social worker, registered respiratory therapist, and 
        certified respiratory therapy technician.
    ``(b) Patient Access to Emergency Medical Care.--
            ``(1) In general.--To the extent that the group health plan 
        (or health insurance issuer offering health insurance coverage 
        in connection with the plan) provides for any benefits 
        consisting of emergency medical care (as defined in section 
        503(b)(9)(I) of the Employee Retirement Income Security Act of 
        1974), except for items or services specifically excluded--
                    ``(A) the plan or issuer shall provide benefits, 
                without requiring preauthorization and without regard 
                to otherwise applicable network limitations, for 
                appropriate emergency medical screening examinations 
(within the capability of the emergency facility, including ancillary 
services routinely available to the emergency facility) to the extent 
that a prudent layperson, who possesses an average knowledge of health 
and medicine, would determine such examinations to be necessary in 
order to determine whether emergency medical care (as so defined) is 
required; and
                    ``(B) the plan or issuer shall provide benefits for 
                additional emergency medical services following an 
                emergency medical screening examination (if determined 
                necessary under subparagraph (A)) to the extent that a 
                prudent emergency medical professional would determine 
                such additional emergency services to be necessary to 
                avoid the consequences described in section 
                503(b)(9)(I) of such Act.
            ``(2) Uniform cost-sharing required.--Nothing in this 
        subsection shall be construed as preventing a group health plan 
        or issuer from imposing any form of cost-sharing applicable to 
        any participant or beneficiary (including coinsurance, 
        copayments, deductibles, and any other charges) in relation to 
        benefits described in paragraph (1), if such form of cost-
        sharing is uniformly applied under such plan, with respect to 
        similarly situated participants and beneficiaries, to all 
        benefits consisting of emergency medical care (as defined in 
        section 503(b)(9)(I) of the Employee Retirement Income Security 
        Act of 1974) provided to such similarly situated participants 
        and beneficiaries under the plan.
    ``(c) Patient Access to Obstetric and Gynecological Care.--
            ``(1) In general.--In any case in which a group health plan 
        (or a health insurance issuer offering health insurance 
        coverage in connection with the plan)--
                    ``(A) provides benefits under the terms of the plan 
                consisting of--
                            ``(i) routine gynecological care (such as 
                        preventive women's health examinations); or
                            ``(ii) routine obstetric care (such as 
                        routine pregnancy-related services),
                provided by a participating physician who specializes 
                in such care (or provides benefits consisting of 
                payment for such care); and
                    ``(B) the plan requires or provides for designation 
                by a participant or beneficiary of a participating 
                primary care provider,
        if the primary care provider designated by such a participant 
        or beneficiary is not such a physician, then the plan (or 
        issuer) shall meet the requirements of paragraph (2).
            ``(2) Requirements.--A group health plan (or a health 
        insurance issuer offering health insurance coverage in 
        connection with the plan) meets the requirements of this 
        paragraph, in connection with benefits described in paragraph 
        (1) consisting of care described in clause (i) or (ii) of 
        paragraph (1)(A) (or consisting of payment therefor), if the 
        plan (or issuer)--
                    ``(A) does not require authorization or a referral 
                by the primary care provider in order to obtain such 
                benefits; and
                    ``(B) treats the ordering of other routine care of 
                the same type, by the participating physician providing 
                the care described in clause (i) or (ii) of paragraph 
                (1)(A), as the authorization of the primary care 
                provider with respect to such care.
            ``(3) Construction.--Nothing in paragraph (2)(B) shall 
        waive any requirements of coverage relating to medical 
        necessity or appropriateness with respect to coverage of 
        gynecological or obstetric care so ordered.
    ``(d) Patient Access to Pediatric Care.--
            ``(1) In general.--In any case in which a group health plan 
        (or a health insurance issuer offering health insurance 
        coverage in connection with the plan) provides benefits 
        consisting of routine pediatric care provided by a 
        participating physician who specializes in pediatrics (or 
        consisting of payment for such care) and the plan requires or 
        provides for designation by a participant or beneficiary of a 
        participating primary care provider, the plan (or issuer) shall 
        provide that such a participating physician may be designated, 
        if available, by a parent or guardian of any beneficiary under 
        the plan is who under 18 years of age, as the primary care 
        provider with respect to any such benefits.
            ``(2) Construction.--Nothing in paragraph (1) shall waive 
        any requirements of coverage relating to medical necessity or 
        appropriateness with respect to coverage of pediatric care.
    ``(e) Treatment of Multiple Coverage Options.--In the case of a 
plan providing benefits under two or more coverage options, the 
requirements of subsections (c) and (d) shall apply separately with 
respect to each coverage option.''.
    (c) Effective Date and Related Rules.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to plan years beginning on or after January 
        1 of the second calendar year following the date of the 
        enactment of this Act, except that the Secretary of Health and 
        Human Services may issue regulations before such date under 
        such amendments. The Secretary shall first issue all 
        regulations necessary to carry out the amendments made by this 
        section before the effective date thereof.
            (2) Limitation on enforcement actions.--No enforcement 
        action shall be taken, pursuant to the amendments made by this 
        section, against a group health plan or health insurance issuer 
        with respect to a violation of a requirement imposed by such 
        amendments before the date of issuance of regulations issued in 
        connection with such requirement, if the plan or issuer has 
        sought to comply in good faith with such requirement.
            (3) Special rule for 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 this 
        section shall not apply with respect to plan years beginning 
        before the later of--
                    (A) the date on which the last of the 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) January 1, 2002.
        For purposes of this paragraph, any plan amendments made 
        pursuant to a collective bargaining agreement relating to the 
        plan which amends the plan solely to conform to any requirement 
        added by this section shall not be treated as a termination of 
        such collective bargaining agreement.

SEC. 2002. REQUIRING HEALTH MAINTENANCE ORGANIZATIONS TO OFFER OPTION 
              OF POINT-OF-SERVICE COVERAGE.

    (a) In General.--Title XXVII of the Public Health Service Act is 
amended by inserting after section 2713 the following new section:

``SEC. 2714. REQUIRING OFFERING OF OPTION OF POINT-OF-SERVICE COVERAGE.

    ``(a) Requirement To Offer Coverage Option to Certain Employers.--
Except as provided in subsection (c), any health insurance issuer 
which--
            ``(1) is a health maintenance organization (as defined in 
        section 2791(b)(3)); and
            ``(2) which provides for coverage of services of one or 
        more classes of health care professionals under health 
        insurance coverage offered in connection with a group health 
        plan only if such services are furnished exclusively through 
        health care professionals within such class or classes who are 
        members of a closed panel of health care professionals,
the issuer shall make available to the plan sponsor in connection with 
such a plan a coverage option which provides for coverage of such 
services which are furnished through such class (or classes) of health 
care professionals regardless of whether or not the professionals are 
members of such panel.
    ``(b) Requirement To Offer Supplemental Coverage to Participants in 
Certain Cases.--Except as provided in subsection (c), if a health 
insurance issuer makes available a coverage option under and described 
in subsection (a) to a plan sponsor of a group health plan and the 
sponsor declines to contract for such coverage option, then the issuer 
shall make available in the individual insurance market to each 
participant in the group health plan optional separate supplemental 
health insurance coverage in the individual health insurance market 
which consists of services identical to those provided under such 
coverage provided through the closed panel under the group health plan 
but are furnished exclusively by health care professionals who are not 
members of such a closed panel.
    ``(c) Exceptions.--
            ``(1) Offering of nonpanel option.--Subsections (a) and (b) 
        shall not apply with respect to a group health plan if the plan 
        offers a coverage option that provides coverage for services 
        that may be furnished by a class or classes of health care 
        professionals who are not in a closed panel. This paragraph 
        shall be applied separately to distinguishable groups of 
        employees under the plan.
            ``(2) Availability of coverage through healthmart.--
        Subsections (a) and (b) shall not apply to a group health plan 
        if the health insurance coverage under the plan is made 
        available through a HealthMart (as defined in section 2801) and 
        if any health insurance coverage made available through the 
        HealthMart provides for coverage of the services of any class 
        of health care professionals other than through a closed panel 
        of professionals.
            ``(3) Relicensure exemption.--Subsections (a) and (b) shall 
        not apply to a health maintenance organization in a State in 
        any case in which--
                    ``(A) the organization demonstrates to the 
                applicable authority that the organization has made a 
                good faith effort to obtain (but has failed to obtain) 
                a contract between the organization and any other 
                health insurance issuer providing for the coverage 
                option or supplemental coverage described in subsection 
                (a) or (b), as the case may be, within the applicable 
                service area of the organization; and
                    ``(B) the State requires the organization to 
                receive or qualify for a separate license, as an 
                indemnity insurer or otherwise, in order to offer such 
                coverage option or supplemental coverage, respectively.
        The applicable authority may require that the organization 
        demonstrate that it meets the requirements of the previous 
        sentence no more frequently that once every 2 years.
            ``(4) Increased costs.--Subsections (a) and (b) shall not 
        apply to a health maintenance organization if the organization 
        demonstrates to the applicable authority, in accordance with 
        generally accepted actuarial practice, that, on either a 
        prospective or retroactive basis, the premium for the coverage 
        option or supplemental coverage required to be made available 
        under such respective subsection exceeds by more than 1 percent 
        the premium for the coverage consisting of services which are 
        furnished through a closed panel of health care professionals 
        in the class or classes involved. The applicable authority may 
        require that the organization demonstrate such an increase no 
        more frequently that once every 2 years. This paragraph shall 
        be applied on an average per enrollee or similar basis.
            ``(5) Collective bargaining agreements.--Subsections (a) 
        and (b) shall not apply in connection with a group health plan 
        if the plan is established or maintained pursuant to one or 
        more collective bargaining agreements.
    ``(d) Definitions.--For purposes of this section:
            ``(1) Coverage through closed panel.--Health insurance 
        coverage for a class of health care professionals shall be 
        treated as provided through a closed panel of such 
        professionals only if such coverage consists of coverage of 
        items or services consisting of professionals services which 
        are reimbursed for or provided only within a limited network of 
        such professionals.
            ``(2) Health care professional.--The term `health care 
        professional' has the meaning given such term in section 
        2707(a)(2).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to coverage offered on or after January 1 of the second calendar 
year following the date of the enactment of this Act.

               Subtitle B--Patient Access to Information

SEC. 2101. PATIENT ACCESS TO INFORMATION REGARDING PLAN COVERAGE, 
              MANAGED CARE PROCEDURES, HEALTH CARE PROVIDERS, AND 
              QUALITY OF MEDICAL CARE.

    (a) In General.--Subpart 2 of part A of title XXVII of the Public 
Health Service Act (as amended by subtitle A of this title) is amended 
further by adding at the end the following new section:

``SEC. 2707. PATIENT ACCESS TO INFORMATION REGARDING PLAN COVERAGE, 
              MANAGED CARE PROCEDURES, HEALTH CARE PROVIDERS, AND 
              QUALITY OF MEDICAL CARE.

    ``(a) Disclosure Requirement.--Each health insurance issuer 
offering health insurance coverage in connection with a group health 
plan shall provide the administrator of such plan on a timely basis 
with the information necessary to enable the administrator to include 
in the summary plan description of the plan required under section 102 
of the Employee Retirement Income Security Act of 1974 (or each summary 
plan description in any case in which different summary plan 
descriptions are appropriate under part 1 of subtitle B of title I of 
such Act for different options of coverage) the information required 
under subsections (b), (c), (d), and (e)(2)(A). To the extent that any 
such issuer provides such information on a timely basis to plan 
participants and beneficiaries, the requirements of this subsection 
shall be deemed satisfied in the case of such plan with respect to such 
information.
    ``(b) Plan Benefits.--The information required under subsection (a) 
includes the following:
            ``(1) Covered items and services.--
                    ``(A) Categorization of included benefits.--A 
                description of covered benefits, categorized by--
                            ``(i) types of items and services 
                        (including any special disease management 
                        program); and
                            ``(ii) types of health care professionals 
                        providing such items and services.
                    ``(B) Emergency medical care.--A description of the 
                extent to which the coverage includes emergency medical 
                care (including the extent to which the coverage 
                provides for access to urgent care centers), and any 
                definitions provided under in connection with such 
                coverage for the relevant coverage terminology 
                referring to such care.
                    ``(C) Preventative services.--A description of the 
                extent to which the coverage includes benefits for 
                preventative services.
                    ``(D) Drug formularies.--A description of the 
                extent to which covered benefits are determined by the 
                use or application of a drug formulary and a summary of 
                the process for determining what is included in such 
                formulary.
                    ``(E) COBRA continuation coverage.--A description 
                of the benefits available under the coverage provided 
                pursuant to part 6 of subtitle B of title I of the 
                Employee Retirement Income Security Act of 1974.
            ``(2) Limitations, exclusions, and restrictions on covered 
        benefits.--
                    ``(A) Categorization of excluded benefits.--A 
                description of benefits specifically excluded from 
                coverage, categorized by types of items and services.
                    ``(B) Utilization review and preauthorization 
                requirements.--Whether coverage for medical care is 
                limited or excluded on the basis of utilization review 
                or preauthorization requirements.
                    ``(C) Lifetime, annual, or other period 
                limitations.--A description of the circumstances under 
                which, and the extent to which, coverage is subject to 
                lifetime, annual, or other period limitations, 
                categorized by types of benefits.
                    ``(D) Custodial care.--A description of the 
                circumstances under which, and the extent to which, the 
                coverage of benefits for custodial care is limited or 
                excluded, and a statement of the definition used in 
                connection with such coverage for custodial care.
                    ``(E) Experimental treatments.--Whether coverage 
                for any medical care is limited or excluded because it 
                constitutes experimental treatment or technology, and 
                any definitions provided in connection with such 
                coverage for the relevant plan terminology referring to 
                such limited or excluded care.
                    ``(F) Medical appropriateness or necessity.--
                Whether coverage for medical care may be limited or 
                excluded by reason of a failure to meet the plan's 
                requirements for medical appropriateness or necessity, 
                and any definitions provided in connection with such 
                coverage for the relevant coverage terminology 
                referring to such limited or excluded care.
                    ``(G) Second or subsequent opinions.--A description 
                of the circumstances under which, and the extent to 
                which, coverage for second or subsequent opinions is 
                limited or excluded.
                    ``(H) Specialty care.--A description of the 
                circumstances under which, and the extent to which, 
                coverage of benefits for specialty care is conditioned 
                on referral from a primary care provider.
                    ``(I) Continuity of care.--A description of the 
                circumstances under which, and the extent to which, 
                coverage of items and services provided by any health 
                care professional is limited or excluded by reason of 
                the departure by the professional from any defined set 
                of providers.
                    ``(J) Restrictions on coverage of emergency 
                services.--A description of the circumstances under 
                which, and the extent to which, the coverage, in 
                including emergency medical care furnished to a 
                participant or beneficiary of the plan imposes any 
                financial responsibility described in subsection (c) on 
                participants or beneficiaries or limits or conditions 
                benefits for such care subject to any other term or 
                condition of such coverage.
    ``(c) Participant's Financial Responsibilities.--The information 
required under subsection (a) includes an explanation of--
            ``(1) a participant's financial responsibility for payment 
        of premiums, coinsurance, copayments, deductibles, and any 
        other charges; and
            ``(2) the circumstances under which, and the extent to 
        which, the participant's financial responsibility described in 
        paragraph (1) may vary, including any distinctions based on 
        whether a health care provider from whom covered benefits are 
        obtained is included in a defined set of providers.
    ``(d) Dispute Resolution Procedures.--The information required 
under subsection (a) includes a description of the processes adopted in 
connection with such coverage pursuant to section 503(b) of the 
Employee Retirement Income Security Act of 1974, including--
            ``(1) descriptions thereof relating specifically to--
                    ``(A) coverage decisions;
                    ``(B) internal review of coverage decisions; and
                    ``(C) any external review of coverage decisions; 
                and
            ``(2) the procedures and time frames applicable to each 
        step of the processes referred to in subparagraphs (A), (B), 
        and (C) of paragraph (1).
    ``(e) Information Available on Request.--
            ``(1) Access to plan benefit information in electronic 
        form.--
                    ``(A) In general.--A group health plan (and a 
                health insurance issuer offering health insurance 
                coverage in connection with a group health plan) shall, 
                upon written request (made not more frequently than 
                annually), make available to participants and 
                beneficiaries, in a generally recognized electronic 
                format, the following information:
                            ``(i) the latest summary plan description, 
                        including the latest summary of material 
                        modifications; and
                            ``(ii) the actual plan provisions setting 
                        forth the benefits available under the plan,
                to the extent such information relates to the coverage 
                options under the plan available to the participant or 
                beneficiary. A reasonable charge may be made to cover 
                the cost of providing such information in such 
                generally recognized electronic format. The Secretary 
                may by regulation prescribe a maximum amount which will 
                constitute a reasonable charge under the preceding 
                sentence.
                    ``(B) Alternative access.--The requirements of this 
                paragraph may be met by making such information 
                generally available (rather than upon request) on the 
                Internet or on a proprietary computer network in a 
                format which is readily accessible to participants and 
                beneficiaries.
            ``(2) Additional information to be provided on request.--
                    ``(A) Inclusion in summary plan description of 
                summary of additional information.--The information 
                required under subsection (a) includes a summary 
                description of the types of information required by 
                this subsection to be made available to participants 
                and beneficiaries on request.
                    ``(B) Information required from plans and issuers 
                on request.--In addition to information required to be 
                included in summary plan descriptions under this 
                subsection, a group health plan (and a health insurance 
                issuer offering health insurance coverage in connection 
                with a group health plan) shall provide the following 
                information to a participant or beneficiary on request:
                            ``(i) Network characteristics.--If the plan 
                        (or issuer) utilizes a defined set of providers 
                        under contract with the plan (or issuer), a 
                        detailed list of the names of such providers 
                        and their geographic location, set forth 
                        separately with respect to primary care 
                        providers and with respect to specialists.
                            ``(ii) Care management information.--A 
                        description of the circumstances under which, 
                        and the extent to which, the plan has special 
                        disease management programs or programs for 
                        persons with disabilities, indicating whether 
                        these programs are voluntary or mandatory and 
                        whether a significant benefit differential 
                        results from participation in such programs.
                            ``(iii) Inclusion of drugs and biologicals 
                        in formularies.--A statement of whether a 
                        specific drug or biological is included in a 
                        formulary used to determine benefits under the 
                        plan and a description of the procedures for 
                        considering requests for any patient-specific 
                        waivers.
                            ``(iv) Procedures for determining 
                        exclusions based on medical necessity or 
                        experimental treatments.--Upon receipt by the 
                        participant or beneficiary of any notification 
                        of an adverse coverage decision based on a 
                        determination relating to medical necessity or 
                        an experimental treatment or technology, a 
                        description of the procedures and medically-
                        based criteria used in such decision.
                            ``(v) Preauthorization and utilization 
                        review procedures.--Upon receipt by the 
                        participant or beneficiary of any notification 
                        of an adverse coverage decision, a description 
                        of the basis on which any preauthorization 
                        requirement or any utilization review 
                        requirement has resulted in such decision.
                            ``(vi) Accreditation status of health 
                        insurance issuers and service providers.--A 
                        description of the accreditation and licensing 
                        status (if any) of each health insurance issuer 
                        offering health insurance coverage in 
                        connection with the plan and of any utilization 
                        review organization utilized by the issuer or 
                        the plan, together with the name and address of 
                        the accrediting or licensing authority.
                            ``(vii) Measures of enrollee 
                        satisfaction.--The latest information (if any) 
                        maintained by the plan, or by any health 
                        insurance issuer offering health insurance 
                        coverage in connection with the plan, relating 
                        to enrollee satisfaction.
                            ``(viii) Quality performance measures.--The 
                        latest information (if any) maintained by the 
                        plan, or by any health insurance issuer 
                        offering health insurance coverage in 
                        connection with the plan, relating to quality 
                        of performance of the delivery of medical care 
                        with respect to coverage options offered under 
                        the plan and of health care professionals and 
                        facilities providing medical care under the 
                        plan.
                            ``(ix) Information relating to external 
                        reviews.--The number of external reviews under 
                        section 503(b)(4) of the Employee Retirement 
                        Income Security Act of 1974 that have been 
                        completed during the prior plan year and the 
                        number of such reviews in which the 
                        recommendation reported under section 
                        503(b)(4)(C)(iii) of such Act includes a 
                        recommendation for modification or reversal of 
                        an internal review decision under the plan.
                    ``(C) Information required from health care 
                professionals on request.--Any health care professional 
                treating a participant or beneficiary under a group 
                health plan shall provide to the participant or 
                beneficiary, on request, a description of his or her 
                professional qualifications (including board 
                certification status, licensing status, and 
                accreditation status, if any), privileges, and 
                experience and 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 such professional is compensated in connection 
                with the provision of such medical care.
                    ``(D) Information required from health care 
                facilities on request.--Any health care facility from 
                which a participant or beneficiary has sought treatment 
                under a group health plan shall provide to the 
                participant or beneficiary, on request, a description 
                of the facility's corporate form or other 
                organizational form and all forms of licensing and 
                accreditation status (if any) assigned to the facility 
                by standard-setting organizations.
    ``(f) Access to Information Relevant to the Coverage Options Under 
Which the Participant or Beneficiary Is Eligible To Enroll.--In 
addition to information otherwise required to be made available under 
this section, a group health plan (and a health insurance issuer 
offering health insurance coverage in connection with a group health 
plan) shall, upon written request (made not more frequently than 
annually), make available to a participant (and an employee who, under 
the terms of the plan, is eligible for coverage but not enrolled) in 
connection with a period of enrollment the summary plan description for 
any coverage option under the plan under which the participant is 
eligible to enroll and any information described in clauses (i), (ii), 
(iii), (vi), (vii), and (viii) of subsection (e)(2)(B).
    ``(g) Advance Notice of Changes in Drug Formularies.--Not later 
than 30 days before the effective of date of any exclusion of a 
specific drug or biological from any drug formulary under the plan that 
is used in the treatment of a chronic illness or disease, the plan 
shall take such actions as are necessary to reasonably ensure that plan 
participants are informed of such exclusion. The requirements of this 
subsection may be satisfied--
            ``(1) by inclusion of information in publications broadly 
        distributed by plan sponsors, employers, or employee 
        organizations;
            ``(2) by electronic means of communication (including the 
        Internet or proprietary computer networks in a format which is 
        readily accessible to participants);
            ``(3) by timely informing participants who, under an 
        ongoing program maintained under the plan, have submitted their 
        names for such notification; or
            ``(4) by any other reasonable means of timely informing 
        plan participants.''.

SEC. 2102. EFFECTIVE DATE.

    (a) In General.--The amendments made by this subtitle shall apply 
with respect to plan years beginning on or after January 1 of the 
second calendar year following the date of the enactment of this Act. 
The Secretary shall first issue all regulations necessary to carry out 
the amendments made by this subtitle before such date.
    (b) Limitation on Enforcement Actions.--No enforcement action shall 
be taken, pursuant to the amendments made by this subtitle, against a 
group health plan or health insurance issuer with respect to a 
violation of a requirement imposed by such amendments before the date 
of issuance of final regulations issued in connection with such 
requirement, if the plan or issuer has sought to comply in good faith 
with such requirement.

                        Subtitle C--HealthMarts

SEC. 2201. SHORT TITLE OF SUBTITLE.

    This subtitle may be cited as the ``Health Care Consumer 
Empowerment Act of 1999''.

SEC. 2202. 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 2 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 330D(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 330D(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 2 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 health- marts.--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 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 330D(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, 2001. The Secretary of Health and Human 
Services shall first issue all regulations necessary to carry out such 
amendment before such date.

               Subtitle D--Community Health Organizations

SEC. 2301. 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, 
                2004; 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, 2003, 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, 2004.
    ``(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.''.

       TITLE III--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

                    Subtitle A--Patient Protections

SEC. 3001. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, EMERGENCY 
              MEDICAL CARE, OBSTETRIC AND GYNECOLOGICAL CARE, AND 
              PEDIATRIC CARE.

    (a) In General.--Subchapter B of chapter 100 of the Internal 
Revenue Code of 1986 (relating to other requirements) is amended by 
adding at the end the following new section:

``SEC. 9813. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, EMERGENCY 
              MEDICAL CARE, OBSTETRIC AND GYNECOLOGICAL CARE, AND 
              PEDIATRIC CARE.

    ``(a) Patient Access to Unrestricted Medical Advice.--
            ``(1) In general.--In the case of any health care 
        professional acting within the lawful scope of practice in the 
        course of carrying out a contractual employment arrangement or 
        other direct contractual arrangement between such professional 
        and a group health plan, the plan with which such contractual 
        employment arrangement or other direct contractual arrangement 
        is maintained by the professional may not impose on such 
        professional under such arrangement any prohibition or 
        restriction with respect to advice, provided to a participant 
        or beneficiary under the plan who is a patient, about the 
        health status of the participant or beneficiary or the medical 
        care or treatment for the condition or disease of the 
        participant or beneficiary, regardless of whether benefits for 
        such care or treatment are provided under the plan.
            ``(2) Health care professional defined.--For purposes of 
        this subsection, the term `health care professional' means a 
        physician (as defined in section 1861(r) of the Social Security 
        Act) or other health care professional if coverage for the 
        professional's services is provided under the group health plan 
        for the services of the professional. Such term includes a 
        podiatrist, optometrist, chiropractor, psychologist, dentist, 
        physician assistant, physical or occupational therapist and 
        therapy assistant, speech-language pathologist, audiologist, 
        registered or licensed practical nurse (including nurse 
        practitioner, clinical nurse specialist, certified registered 
        nurse anesthetist, and certified nurse-midwife), licensed 
        certified social worker, registered respiratory therapist, and 
        certified respiratory therapy technician.
    ``(b) Patient Access to Emergency Medical Care.--
            ``(1) In general.--To the extent that the group health plan 
        provides for any benefits consisting of emergency medical care 
        (as defined in section 503(b)(9)(I) of the Employee Retirement 
        Income Security Act of 1974), except for items or services 
        specifically excluded--
                    ``(A) the plan shall provide benefits, without 
                requiring preauthorization and without regard to 
                otherwise applicable network limitations, for 
                appropriate emergency medical screening examinations 
                (within the capability of the emergency facility, 
                including ancillary services routinely available to the 
                emergency facility) to the extent that a prudent 
                layperson, who possesses an average knowledge of health 
                and medicine, would determine such examinations to be 
                necessary in order to determine whether emergency 
                medical care (as so defined) is required; and
                    ``(B) the plan shall provide benefits for 
                additional emergency medical services following an 
                emergency medical screening examination (if determined 
                necessary under subparagraph (A)) to the extent that a 
                prudent emergency medical professional would determine 
                such additional emergency services to be necessary to 
                avoid the consequences described in clause (i) of 
                section 503(b)(9)(I) of such Act.
            ``(2) Uniform cost-sharing required.--Nothing in this 
        subsection shall be construed as preventing a group health plan 
        from imposing any form of cost-sharing applicable to any 
        participant or beneficiary (including coinsurance, copayments, 
        deductibles, and any other charges) in relation to benefits 
        described in paragraph (1), if such form of cost-sharing is 
        uniformly applied under such plan, with respect to similarly 
        situated participants and beneficiaries, to all benefits 
        consisting of emergency medical care (as defined in section 
        503(b)(9)(I) of the Employee Retirement Income Security Act of 
        1974) provided to such similarly situated participants and 
        beneficiaries under the plan.
    ``(c) Patient Access to Obstetric and Gynecological Care.--
            ``(1) In general.--In any case in which a group health 
        plan--
                    ``(A) provides benefits under the terms of the plan 
                consisting of--
                            ``(i) routine gynecological care (such as 
                        preventive women's health examinations); or
                            ``(ii) routine obstetric care (such as 
                        routine pregnancy-related services),
                provided by a participating physician who specializes 
                in such care (or provides benefits consisting of 
                payment for such care); and
                    ``(B) the plan requires or provides for designation 
                by a participant or beneficiary of a participating 
                primary care provider,
        if the primary care provider designated by such a participant 
        or beneficiary is not such a physician, then the plan shall 
        meet the requirements of paragraph (2).
            ``(2) Requirements.--A group health plan meets the 
        requirements of this paragraph, in connection with benefits 
        described in paragraph (1) consisting of care described in 
        clause (i) or (ii) of paragraph (1)(A) (or consisting of 
        payment therefor), if the plan--
                    ``(A) does not require authorization or a referral 
                by the primary care provider in order to obtain such 
                benefits; and
                    ``(B) treats the ordering of other routine care of 
                the same type, by the participating physician providing 
                the care described in clause (i) or (ii) of paragraph 
                (1)(A), as the authorization of the primary care 
                provider with respect to such care.
            ``(3) Construction.--Nothing in paragraph (2)(B) shall 
        waive any requirements of coverage relating to medical 
        necessity or appropriateness with respect to coverage of 
        gynecological or obstetric care so ordered.
    ``(d) Patient Access to Pediatric Care.--
            ``(1) In general.--In any case in which a group health plan 
        (or a health insurance issuer offering health insurance 
        coverage in connection with the plan) provides benefits 
        consisting of routine pediatric care provided by a 
        participating physician who specializes in pediatrics (or 
        consisting of payment for such care) and the plan requires or 
        provides for designation by a participant or beneficiary of a 
        participating primary care provider, the plan (or issuer) shall 
        provide that such a participating physician may be designated, 
        if available, by a parent or guardian of any beneficiary under 
        the plan who is under 18 years of age, as the primary care 
        provider with respect to any such benefits.
            ``(2) Construction.--Nothing in paragraph (1) shall waive 
        any requirements of coverage relating to medical necessity or 
        appropriateness with respect to coverage of pediatric care.
    ``(e) Treatment of Multiple Coverage Options.--In the case of a 
plan providing benefits under two or more coverage options, the 
requirements of subsections (c) and (d) shall apply separately with 
respect to each coverage option.''.
    (b) Clerical Amendment.--The table of sections of such subchapter 
of such chapter is amended by adding at the end the following new item:

                              ``Sec. 9813. Patient access to 
                                        unrestricted medical advice, 
                                        emergency medical care, 
                                        obstetric and gynecological 
                                        care, and pediatric care.''.

SEC. 3002. EFFECTIVE DATE AND RELATED RULES.

    (a) In General.--The amendments made by this subtitle shall apply 
with respect to plan years beginning on or after January 1 of the 
second calendar year following the date of the enactment of this Act, 
except that the Secretary of the Treasury may issue regulations before 
such date under such amendments. The Secretary shall first issue 
regulations necessary to carry out the amendments made by this subtitle 
before the effective date thereof.
    (b) Limitation on Penalty for Certain Failures.--No penalty shall 
be imposed on any failure to comply with any requirement imposed by the 
amendments made by section 3001 to the extent such failure occurs 
before the date of issuance of regulations issued in connection with 
such requirement if the plan has sought to comply in good faith with 
such requirement.
    (c) Special Rule for 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 
provisions of subsections (b), (c), and (d) of section 9813 of the 
Internal Revenue Code of 1986 (as added by this subtitle) shall not 
apply with respect to plan years beginning before the later of--
            (1) the date on which the last of the 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
            (2) January 1, 2002.
For purposes of this subsection, 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 subtitle shall 
not be treated as a termination of such collective bargaining 
agreement.

               Subtitle B--Patient Access to Information

SEC. 3101. PATIENT ACCESS TO INFORMATION REGARDING PLAN COVERAGE, 
              MANAGED CARE PROCEDURES, HEALTH CARE PROVIDERS, AND 
              QUALITY OF MEDICAL CARE.

    (a) In General.--Subchapter B of chapter 100 of the Internal 
Revenue Code of 1986 (relating to other requirements) is amended by 
adding at the end the following new section:

``SEC. 9814. DISCLOSURE BY GROUP HEALTH PLANS.

    ``(a) Disclosure Requirement.--The administrator of each group 
health plan shall take such actions as are necessary to ensure that the 
summary plan description of the plan required under section 102 of 
Employee Retirement Income Security Act of 1974 (or each summary plan 
description in any case in which different summary plan descriptions 
are appropriate under part 1 of subtitle B of title I of such Act for 
different options of coverage) contains the information required under 
subsections (b), (c), (d), and (e)(2)(A). To the extent that any health 
insurance issuer offering health insurance coverage in connection with 
such plan provides such information on a timely basis to plan 
participants and beneficiaries, the requirements of this subsection 
shall be deemed satisfied in the case of such plan with respect to such 
information.
    ``(b) Plan Benefits.--The information required under subsection (a) 
includes the following:
            ``(1) Covered items and services.--
                    ``(A) Categorization of included benefits.--A 
                description of covered benefits, categorized by--
                            ``(i) types of items and services 
                        (including any special disease management 
                        program); and
                            ``(ii) types of health care professionals 
                        providing such items and services.
                    ``(B) Emergency medical care.--A description of the 
                extent to which the plan covers emergency medical care 
                (including the extent to which the plan provides for 
                access to urgent care centers), and any definitions 
                provided under the plan for the relevant plan 
                terminology referring to such care.
                    ``(C) Preventative services.--A description of the 
                extent to which the plan provides benefits for 
                preventative services.
                    ``(D) Drug formularies.--A description of the 
                extent to which covered benefits are determined by the 
                use or application of a drug formulary and a summary of 
                the process for determining what is included in such 
                formulary.
                    ``(E) COBRA continuation coverage.--A description 
                of the requirements under section 4980B.
            ``(2) Limitations, exclusions, and restrictions on covered 
        benefits.--
                    ``(A) Categorization of excluded benefits.--A 
                description of benefits specifically excluded from 
                coverage, categorized by types of items and services.
                    ``(B) Utilization review and preauthorization 
                requirements.--Whether coverage for medical care is 
                limited or excluded on the basis of utilization review 
                or preauthorization requirements.
                    ``(C) Lifetime, annual, or other period 
                limitations.--A description of the circumstances under 
                which, and the extent to which, coverage is subject to 
                lifetime, annual, or other period limitations, 
                categorized by types of benefits.
                    ``(D) Custodial care.--A description of the 
                circumstances under which, and the extent to which, the 
                coverage of benefits for custodial care is limited or 
                excluded, and a statement of the definition used by the 
                plan for custodial care.
                    ``(E) Experimental treatments.--Whether coverage 
                for any medical care is limited or excluded because it 
                constitutes experimental treatment or technology, and 
                any definitions provided under the plan for the 
                relevant plan terminology referring to such limited or 
                excluded care.
                    ``(F) Medical appropriateness or necessity.--
                Whether coverage for medical care may be limited or 
                excluded by reason of a failure to meet the plan's 
                requirements for medical appropriateness or necessity, 
                and any definitions provided under the plan for the 
                relevant plan terminology referring to such limited or 
                excluded care.
                    ``(G) Second or subsequent opinions.--A description 
                of the circumstances under which, and the extent to 
                which, coverage for second or subsequent opinions is 
                limited or excluded.
                    ``(H) Specialty care.--A description of the 
                circumstances under which, and the extent to which, 
                coverage of benefits for specialty care is conditioned 
                on referral from a primary care provider.
                    ``(I) Continuity of care.--A description of the 
                circumstances under which, and the extent to which, 
                coverage of items and services provided by any health 
                care professional is limited or excluded by reason of 
                the departure by the professional from any defined set 
                of providers.
                    ``(J) Restrictions on coverage of emergency 
                services.--A description of the circumstances under 
                which, and the extent to which, the plan, in covering 
                emergency medical care furnished to a participant or 
                beneficiary of the plan imposes any financial 
                responsibility described in subsection (c) on 
                participants or beneficiaries or limits or conditions 
                benefits for such care subject to any other term or 
                condition of such plan.
    ``(c) Participant's Financial Responsibilities.--The information 
required under subsection (a) includes an explanation of--
            ``(1) a participant's financial responsibility for payment 
        of premiums, coinsurance, copayments, deductibles, and any 
        other charges; and
            ``(2) the circumstances under which, and the extent to 
        which, the participant's financial responsibility described in 
        paragraph (1) may vary, including any distinctions based on 
        whether a health care provider from whom covered benefits are 
        obtained is included in a defined set of providers.
    ``(d) Dispute Resolution Procedures.--The information required 
under subsection (a) includes a description of the processes adopted by 
the plan pursuant to section 503(b) of Employee Retirement Income 
Security Act of 1974, including--
            ``(1) descriptions thereof relating specifically to--
                    ``(A) coverage decisions;
                    ``(B) internal review of coverage decisions; and
                    ``(C) any external review of coverage decisions; 
                and
            ``(2) the procedures and time frames applicable to each 
        step of the processes referred to in subparagraphs (A), (B), 
        and (C) of paragraph (1).
    ``(e) Information Available on Request.--
            ``(1) Access to plan benefit information in electronic 
        form.--
                    ``(A) In general.--A group health plan shall, upon 
                written request (made not more frequently than 
                annually), make available to participants and 
                beneficiaries, in a generally recognized electronic 
                format, the following information:
                            ``(i) the latest summary plan description, 
                        including the latest summary of material 
                        modifications; and
                            ``(ii) the actual plan provisions setting 
                        forth the benefits available under the plan,
                to the extent such information relates to the coverage 
                options under the plan available to the participant or 
                beneficiary. A reasonable charge may be made to cover 
                the cost of providing such information in such 
                generally recognized electronic format. The Secretary 
                may by regulation prescribe a maximum amount which will 
                constitute a reasonable charge under the preceding 
                sentence.
                    ``(B) Alternative access.--The requirements of this 
                paragraph may be met by making such information 
                generally available (rather than upon request) on the 
                Internet or on a proprietary computer network in a 
                format which is readily accessible to participants and 
                beneficiaries.
            ``(2) Additional information to be provided on request.--
                    ``(A) Inclusion in summary plan description of 
                summary of additional information.--The information 
                required under subsection (a) includes a summary 
                description of the types of information required by 
                this subsection to be made available to participants 
                and beneficiaries on request.
                    ``(B) Information required from plans on request.--
                In addition to information required to be included in 
                summary plan descriptions under this subsection, a 
                group health plan shall provide the following 
                information to a participant or beneficiary on request:
                            ``(i) Network characteristics.--If the plan 
                        (or a health insurance issuer offering health 
                        insurance coverage in connection with the plan) 
                        utilizes a defined set of providers under 
                        contract with the plan (or issuer), a detailed 
                        list of the names of such providers and their 
                        geographic location, set forth separately with 
                        respect to primary care providers and with 
                        respect to specialists.
                            ``(ii) Care management information.--A 
                        description of the circumstances under which, 
                        and the extent to which, the plan has special 
                        disease management programs or programs for 
                        persons with disabilities, indicating whether 
                        these programs are voluntary or mandatory and 
                        whether a significant benefit differential 
                        results from participation in such programs.
                            ``(iii) Inclusion of drugs and biologicals 
                        in formularies.--A statement of whether a 
                        specific drug or biological is included in a 
                        formulary used to determine benefits under the 
                        plan and a description of the procedures for 
                        considering requests for any patient-specific 
                        waivers.
                            ``(iv) Procedures for determining 
                        exclusions based on medical necessity or 
                        experimental treatments.--Upon receipt by the 
                        participant or beneficiary of any notification 
                        of an adverse coverage decision based on a 
                        determination relating to medical necessity or 
                        an experimental treatment or technology, a 
                        description of the procedures and medically-
                        based criteria used in such decision.
                            ``(v) Preauthorization and utilization 
                        review procedures.--Upon receipt by the 
                        participant or beneficiary of any notification 
                        of an adverse coverage decision, a description 
                        of the basis on which any preauthorization 
                        requirement or any utilization review 
                        requirement has resulted in such decision.
                            ``(vi) Accreditation status of health 
                        insurance issuers and service providers.--A 
                        description of the accreditation and licensing 
                        status (if any) of each health insurance issuer 
                        offering health insurance coverage in 
                        connection with the plan and of any utilization 
                        review organization utilized by the issuer or 
                        the plan, together with the name and address of 
                        the accrediting or licensing authority.
                            ``(vii) Measures of enrollee 
                        satisfaction.--The latest information (if any) 
                        maintained by the plan, or by any health 
                        insurance issuer offering health insurance 
                        coverage in connection with the plan, relating 
                        to enrollee satisfaction.
                            ``(viii) Quality performance measures.--The 
                        latest information (if any) maintained by the 
                        plan, or by any health insurance issuer 
offering health insurance coverage in connection with the plan, 
relating to quality of performance of the delivery of medical care with 
respect to coverage options offered under the plan and of health care 
professionals and facilities providing medical care under the plan.
                            ``(ix) Information relating to external 
                        reviews.--The number of external reviews under 
                        section 503(b)(4) of the Employee Retirement 
                        Income Security Act of 1974 that have been 
                        completed during the prior plan year and the 
                        number of such reviews in which the 
                        recommendation reported under section 
                        503(b)(4)(C)(iii) of such Act includes a 
                        recommendation for modification or reversal of 
                        an internal review decision under the plan.
                    ``(C) Information required from health care 
                professionals on request.--Any health care professional 
                treating a participant or beneficiary under a group 
                health plan shall provide to the participant or 
                beneficiary, on request, a description of his or her 
                professional qualifications (including board 
                certification status, licensing status, and 
                accreditation status, if any), privileges, and 
                experience and 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 such professional is compensated in connection 
                with the provision of such medical care.
                    ``(D) Information required from health care 
                facilities on request.--Any health care facility from 
                which a participant or beneficiary has sought treatment 
                under a group health plan shall provide to the 
                participant or beneficiary, on request, a description 
                of the facility's corporate form or other 
                organizational form and all forms of licensing and 
                accreditation status (if any) assigned to the facility 
                by standard-setting organizations.
    ``(f) Access to Information Relevant to the Coverage Options Under 
Which the Participant or Beneficiary Is Eligible To Enroll.--In 
addition to information otherwise required to be made available under 
this section, a group health plan shall, upon written request (made not 
more frequently than annually), make available to a participant (and an 
employee who, under the terms of the plan, is eligible for coverage but 
not enrolled) in connection with a period of enrollment the summary 
plan description for any coverage option under the plan under which the 
participant is eligible to enroll and any information described in 
clauses (i), (ii), (iii), (vi), (vii), and (viii) of subsection 
(e)(2)(B).
    ``(g) Advance Notice of Changes in Drug Formularies.--Not later 
than 30 days before the effective of date of any exclusion of a 
specific drug or biological from any drug formulary under the plan that 
is used in the treatment of a chronic illness or disease, the plan 
shall take such actions as are necessary to reasonably ensure that plan 
participants are informed of such exclusion. The requirements of this 
subsection may be satisfied--
            ``(1) by inclusion of information in publications broadly 
        distributed by plan sponsors, employers, or employee 
        organizations;
            ``(2) by electronic means of communication (including the 
        Internet or proprietary computer networks in a format which is 
        readily accessible to participants);
            ``(3) by timely informing participants who, under an 
        ongoing program maintained under the plan, have submitted their 
        names for such notification; or
            ``(4) by any other reasonable means of timely informing 
        plan participants.''.
    (b) Clerical Amendment.--The table of sections of such subchapter 
of such chapter is amended by adding at the end the following new item:

                              ``Sec. 9814. Disclosure by group health 
                                        plans.''.

SEC. 3102. EFFECTIVE DATE.

    (a) In General.--The amendments made by this subtitle shall apply 
with respect to plan years beginning on or after January 1 of the 
second calendar year following the date of the enactment of this Act. 
The Secretary of the Treasury or the Secretary's delegate shall first 
issue all regulations necessary to carry out the amendments made by 
this subtitle before such date.
    (b) Limitation on Enforcement Actions.--No enforcement action shall 
be taken, pursuant to the amendments made by this subtitle, against a 
group health plan with respect to a violation of a requirement imposed 
by such amendments before the date of issuance of final regulations 
issued in connection with such requirement, if the plan has sought to 
comply in good faith with such requirement.

                  Subtitle C--Medical Savings Accounts

SEC. 3201. 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 amendment.--Paragraph (1) of section 220(c) 
        of such Code is amended by striking subparagraph (D).
    (b) All Employers May Offer Medical Savings Accounts.--
            (1) In general.--Subclause (I) of section 220(c)(1)(A)(iii) 
        of such Code (defining eligible individual) is amended by 
        striking ``and such employer is a small employer''.
            (2) Conforming amendments.--
                    (A) Paragraph (1) of section 220(c) of such Code is 
                amended by striking subparagraph (C).
                    (B) Subsection (c) of section 220 of such Code is 
                amended by striking paragraph (4) and by redesignating 
                paragraph (5) as paragraph (4).
    (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 (5) of section 220(b) of such Code is amended to 
read as follows:
            ``(5) Coordination with exclusion for employer 
        contributions.--The limitation which would (but for this 
        paragraph) apply under this subsection to the individual 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 individual'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'' and inserting 
                ``$1,000''; and
                    (B) in clause (ii) by striking ``$3,000'' and 
                inserting ``$2,000''.
            (2) Conforming amendment.--Subsection (g) of section 220 of 
        such Code is amended--
                    (A) by striking ``1998'' and inserting ``2000''; 
                and
                    (B) by striking ``1997'' and inserting ``1999''.
    (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) Individuals Receiving Immediate Federal Annuities Eligible for 
Medical Savings Accounts.--Paragraph (1) of section 220(c) of such Code 
(defining eligible individual), as amended by subsections (a) and (b), 
is amended by adding at the end the following new subparagraph:
                    ``(C) Special rules for individuals receiving 
                immediate federal annuities.--
                            ``(i) In general.--Subparagraph (A)(iii) 
                        and subsection (b)(4) shall not apply for any 
                        month to an individual--
                                    ``(I) who, as of the first day of 
                                such month, is enrolled in a high 
                                deductible health plan under chapter 89 
                                of title 5, United States Code; and
                                    ``(II) who is entitled to receive 
                                for such month any amount by reason of 
                                being an annuitant (as defined in 
                                section 8901(3) of such title 5).
                            ``(ii) Special rule for spouse of 
                        annuitant.--In the case of the spouse of an 
                        individual described in clause (i) who is not 
                        also described in clause (i), subsection (b)(4) 
                        shall not apply to such spouse if such 
                        individual and spouse have family coverage 
                        under the same plan described in clause 
                        (i)(I).''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 3202. EXCEPTION FROM INSURANCE LIMITATION IN CASE OF MEDICAL 
              SAVINGS ACCOUNTS.

    (a) In General.--Section 220(d)(2)(B) of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new clause:
                            ``(iii) Insurance offered by community 
                        health centers.--
                                    ``(I) In general.--Subject to 
                                subclauses (II) and (III), clause (i) 
                                shall not apply to any expense for 
                                coverage under insurance offered by a 
                                health center (as defined in section 
                                330(a)(1) of the Public Health Service 
                                Act) if the coverage consists solely of 
                                coverage for required primary health 
                                benefits (as defined in section 
                                330(b)(1)(A) of such Act) provided on a 
                                capitated basis.
                                    ``(II) Income limitation.--
                                Subclause (I) shall only apply to 
                                expenses for coverage of an individual 
                                who, in the taxable year involved, has 
                                income that is less than 200 percent of 
                                the income official poverty line (as 
                                defined by the Office of Management and 
                                Budget, and revised annually in 
                                accordance with section 673(2) of the 
                                Omnibus Budget Reconciliation Act of 
                                1981) applicable to a family of the 
                                size involved.
                                    ``(III) Limitation on number of 
                                contracts.--For a taxable year ending 
                                in a calendar year, subclause (I) shall 
                                apply only to expenses for coverage for 
                                the first 15,000 individuals enrolled 
                                in insurance described in such 
                                subclause in the year.''.
    (b) Reports on Enrollment.--Section 330(j)(3) of the Public Health 
Service Act (42 U.S.C. 254c(j)(3)) is amended--
            (1) by striking ``and'' at the end of subparagraph (K);
            (2) by striking the period at the end of subparagraph (L) 
        and inserting ``; and''; and
            (3) by inserting after subparagraph (L) the following new 
        subparagraph:
                    ``(M) if the center offers insurance coverage to an 
                individual with a medical savings account under 
                subclause (I) of section 220(d)(2)(B)(iii), the center 
                shall provide such reports in such time and manner as 
                may be required by the Secretary and the Secretary of 
                the Treasury in order to carry out subclause (III) of 
                such section.''.

SEC. 3203. SENSE OF THE HOUSE OF REPRESENTATIVES.

    It is the sense of the House of Representatives that patients are 
best served when they are empowered to make informed choices about 
their own health care. The same is true regarding an individual's 
choice of health insurance. A system that gives people the power to 
choose the coverage that best meets their needs, combined with 
insurance market reforms, offers great promise of increased choices and 
greater access to health insurance for Americans.

                  TITLE IV--HEALTH CARE LAWSUIT REFORM

                     Subtitle A--General Provisions

SEC. 4001. FEDERAL REFORM OF HEALTH CARE LIABILITY ACTIONS.

    (a) Applicability.--This title shall apply with respect to any 
health care liability action brought in any State or Federal court, 
except that this title shall not apply to--
            (1) an action for damages arising from a vaccine-related 
        injury or death to the extent that title XXI of the Public 
        Health Service Act applies to the action; or
            (2) an action under the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1001 et seq.).
    (b) Preemption.--This title shall preempt any State law to the 
extent such law is inconsistent with the limitations contained in this 
title. This title shall not preempt any State law that provides for 
defenses or places limitations on a person's liability in addition to 
those contained in this title or otherwise imposes greater restrictions 
than those provided in this title.
    (c) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (b) shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum.
    (d) Amount in Controversy.--In an action to which this title 
applies and which is brought under section 1332 of title 28, United 
States Code, the amount of noneconomic damages or punitive damages, and 
attorneys' fees or costs, shall not be included in determining whether 
the matter in controversy exceeds the sum or value of $50,000.
    (e) Federal Court Jurisdiction Not Established on Federal Question 
Grounds.--Nothing in this title shall be construed to establish any 
jurisdiction in the district courts of the United States over health 
care liability actions on the basis of section 1331 or 1337 of title 
28, United States Code.

SEC. 4002. DEFINITIONS.

    As used in this title:
            (1) Actual damages.--The term ``actual damages'' means 
        damages awarded to pay for economic loss.
            (2) Alternative dispute resolution system; adr.--The term 
        ``alternative dispute resolution system'' or ``ADR'' means a 
        system established under Federal or State law that provides for 
        the resolution of health care liability claims in a manner 
        other than through health care liability actions.
            (3) Claimant.--The term ``claimant'' means any person who 
        brings a health care liability action and any person on whose 
        behalf such an action is brought. If such action is brought 
        through or on behalf of an estate, the term includes the 
        claimant's decedent. If such action is brought through or on 
        behalf of a minor or incompetent, the term includes the 
        claimant's legal guardian.
            (4) Clear and convincing evidence.--The term ``clear and 
        convincing evidence'' is that measure or degree of proof that 
        will produce in the mind of the trier of fact a firm belief or 
        conviction as to the truth of the allegations sought to be 
        established. Such measure or degree of proof is more than that 
        required under preponderance of the evidence but less than that 
        required for proof beyond a reasonable doubt.
            (5) Collateral source payments.--The term ``collateral 
        source payments'' means any amount paid or reasonably likely to 
        be paid in the future to or on behalf of a claimant, or any 
        service, product, or other benefit provided or reasonably 
        likely to be provided in the future to or on behalf of a 
        claimant, as a result of an injury or wrongful death, pursuant 
        to--
                    (A) any State or Federal health, sickness, income-
                disability, accident or workers' compensation Act;
                    (B) any health, sickness, income-disability, or 
                accident insurance that provides health benefits or 
                income-disability coverage;
                    (C) any contract or agreement of any group, 
                organization, partnership, or corporation to provide, 
                pay for, or reimburse the cost of medical, hospital, 
                dental, or income disability benefits; and
                    (D) any other publicly or privately funded program.
            (6) Drug.--The term ``drug'' has the meaning given such 
        term in section 201(g)(1) of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 321(g)(1)).
            (7) Economic loss.--The term ``economic loss'' means any 
        pecuniary loss resulting from injury (including the loss of 
        earnings or other benefits related to employment, medical 
        expense loss, replacement services loss, loss due to death, 
        burial costs, and loss of business or employment 
        opportunities), to the extent recovery for such loss is allowed 
        under applicable State law.
            (8) Harm.--The term ``harm'' means any legally cognizable 
        wrong or injury for which punitive damages may be imposed.
            (9) Health benefit plan.--The term ``health benefit plan'' 
        means--
                    (A) a hospital or medical expense incurred policy 
                or certificate;
                    (B) a hospital or medical service plan contract;
                    (C) a health maintenance subscriber contract; or
                    (D) a Medicare+Choice plan (offered under part C of 
                title XVIII of the Social Security Act),
        that provides benefits with respect to health care services.
            (10) Health care liability action.--The term ``health care 
        liability action'' means a civil action brought in a State or 
        Federal court against--
                    (A) a health care provider;
                    (B) an entity which is obligated to provide or pay 
                for health benefits under any health benefit plan 
                (including any person or entity acting under a contract 
                or arrangement to provide or administer any health 
                benefit); or
                    (C) the manufacturer, distributor, supplier, 
                marketer, promoter, or seller of a medical product,
in which the claimant alleges a claim (including third party claims, 
cross claims, counter claims, or contribution claims) based upon the 
provision of (or the failure to provide or pay for) health care 
services or the use of a medical product, regardless of the theory of 
liability on which the claim is based or the number of plaintiffs, 
defendants, or causes of action.
            (11) Health care liability claim.--The term ``health care 
        liability claim'' means a claim in which the claimant alleges 
        that injury was caused by the provision of (or the failure to 
        provide) health care services.
            (12) Health care provider.--The term ``health care 
        provider'' means any person that is engaged in the delivery of 
        health care services in a State and that is required by the 
        laws or regulations of the State to be licensed or certified by 
        the State to engage in the delivery of such services in the 
        State.
            (13) Health care service.--The term ``health care service'' 
        means any service eligible for payment under a health benefit 
        plan, including services related to the delivery or 
        administration of such service.
            (14) Medical device.--The term ``medical device'' has the 
        meaning given such term in section 201(h) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 321(h)).
            (15) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages paid to an individual for pain and suffering, 
        inconvenience, emotional distress, mental anguish, loss of 
        consortium, injury to reputation, humiliation, and other 
        nonpecuniary losses.
            (16) Person.--The term ``person'' means any individual, 
        corporation, company, association, firm, partnership, society, 
        joint stock company, or any other entity, including any 
        governmental entity.
            (17) Product seller.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``product seller'' means a person who, in the 
                course of a business conducted for that purpose--
                            (i) sells, distributes, rents, leases, 
                        prepares, blends, packages, labels, or is 
                        otherwise involved in placing, a product in the 
                        stream of commerce; or
                            (ii) installs, repairs, or maintains the 
                        harm-causing aspect of a product.
                    (B) Exclusion.--Such term does not include--
                            (i) a seller or lessor of real property;
                            (ii) a provider of professional services in 
                        any case in which the sale or use of a product 
                        is incidental to the transaction and the 
                        essence of the transaction is the furnishing of 
                        judgment, skill, or services; or
                            (iii) any person who--
                                    (I) acts in only a financial 
                                capacity with respect to the sale of a 
                                product; or
                                    (II) leases a product under a lease 
                                arrangement in which the selection, 
                                possession, maintenance, and operation 
                                of the product are controlled by a 
                                person other than the lessor.
            (18) Punitive damages.--The term ``punitive damages'' means 
        damages awarded against any person not to compensate for actual 
        injury suffered, but to punish or deter such person or others 
        from engaging in similar behavior in the future.
            (19) State.--The term ``State'' means each of the several 
        States, the District of Columbia, Puerto Rico, the Virgin 
        Islands, Guam, American Samoa, the Northern Mariana Islands, 
        and any other territory or possession of the United States.

SEC. 4003. EFFECTIVE DATE.

    This title will apply to--
            (1) any health care liability action brought in a Federal 
        or State court; and
            (2) any health care liability claim subject to an 
        alternative dispute resolution system,
that is initiated on or after the date of enactment of this title, 
except that any health care liability claim or action arising from an 
injury occurring before the date of enactment of this title shall be 
governed by the applicable statute of limitations provisions in effect 
at the time the injury occurred.

    Subtitle B--Uniform Standards for Health Care Liability Actions

SEC. 4011. STATUTE OF LIMITATIONS.

    A health care liability action may not be brought after the 
expiration of the 2-year period that begins on the date on which the 
alleged injury that is the subject of the action was discovered or 
should reasonably have been discovered, but in no case after the 
expiration of the 5-year period that begins on the date the alleged 
injury occurred.

SEC. 4012. CALCULATION AND PAYMENT OF DAMAGES.

    (a) Treatment of Noneconomic Damages.--
            (1) Limitation on noneconomic damages.--The total amount of 
        noneconomic damages that may be awarded to a claimant for 
        losses resulting from the injury which is the subject of a 
        health care liability action may not exceed $250,000, 
        regardless of the number of parties against whom the action is 
        brought or the number of actions brought with respect to the 
        injury. The limitation under this paragraph shall not apply to 
        an action for damages based solely on intentional denial of 
        medical treatment necessary to preserve a patient's life that 
        the patient is otherwise qualified to receive, against the 
        wishes of a patient, or if the patient is incompetent, against 
        the wishes of the patient's guardian, on the basis of the 
        patient's present or predicated age, disability, degree of 
        medical dependency, or quality of life.
            (2) Limit.--If, after the date of the enactment of this 
        Act, a State enacts a law which prescribes the amount of 
        noneconomic damages which may be awarded in a health care 
        liability action which is different from the amount prescribed 
        by section 4012(a)(1), the State amount shall apply in lieu of 
        the amount prescribed by such section. If, after the date of 
        the enactment of this Act, a State enacts a law which limits 
        the amount of recovery in a health care liability action 
        without delineating between economic and noneconomic damages, 
        the State amount shall apply in lieu of the amount prescribed 
        by such section.
            (3) Joint and several liability.--In any health care 
        liability action brought in State or Federal court, a defendant 
        shall be liable only for the amount of noneconomic damages 
        attributable to such defendant in direct proportion to such 
        defendant's share of fault or responsibility for the claimant's 
        actual damages, as determined by the trier of fact. In all such 
        cases, the liability of a defendant for noneconomic damages 
        shall be several and not joint and a separate judgment shall be 
        rendered against each defendant for the amount allocated to 
        such defendant.
    (b) Treatment of Punitive Damages.--
            (1) General rule.--Punitive damages may, to the extent 
        permitted by applicable State law, be awarded in any health 
        care liability action for harm in any Federal or State court 
        against a defendant if the claimant establishes by clear and 
        convincing evidence that the harm suffered was the result of 
        conduct--
                    (A) specifically intended to cause harm; or
                    (B) conduct manifesting a conscious, flagrant 
                indifference to the rights or safety of others.
            (2) Applicability.--This subsection shall apply to any 
        health care liability action brought in any Federal or State 
        court on any theory where punitive damages are sought. This 
        subsection does not create a cause of action for punitive 
        damages. This subsection does not preempt or supersede any 
        State or Federal law to the extent that such law would further 
        limit the award of punitive damages.
            (3) Bifurcation.--At the request of any party, the trier of 
        fact shall consider in a separate proceeding whether punitive 
        damages are to be awarded and the amount of such award. If a 
        separate proceeding is requested, evidence relevant only to the 
        claim of punitive damages, as determined by applicable State 
        law, shall be inadmissible in any proceeding to determine 
        whether actual damages are to be awarded.
            (4) Drugs and devices.--
                    (A) In general.--
                            (i) Punitive damages.--Punitive damages 
                        shall not be awarded against a manufacturer or 
                        product seller of a drug or medical device 
                        which caused the claimant's harm where--
                                    (I) such drug or device was subject 
                                to premarket approval by the Food and 
                                Drug Administration with respect to the 
                                safety of the formulation or 
                                performance of the aspect of such drug 
                                or device which caused the claimant's 
                                harm, or the adequacy of the packaging 
                                or labeling of such drug or device 
                                which caused the harm, and such drug, 
                                device, packaging, or labeling was 
                                approved by the Food and Drug 
                                Administration; or
                                    (II) the drug is generally 
                                recognized as safe and effective 
                                pursuant to conditions established by 
                                the Food and Drug Administration and 
                                applicable regulations, including 
                                packaging and labeling regulations.
                            (ii) Application.--Clause (i) shall not 
                        apply in any case in which the defendant, 
                        before or after premarket approval of a drug or 
                        device--
                                    (I) intentionally and wrongfully 
                                withheld from or misrepresented to the 
                                Food and Drug Administration 
                                information concerning such drug or 
                                device required to be submitted under 
                                the Federal Food, Drug, and Cosmetic 
                                Act (21 U.S.C. 301 et seq.) or section 
                                351 of the Public Health Service Act 
                                (42 U.S.C. 262) that is material and 
                                relevant to the harm suffered by the 
                                claimant; or
                                    (II) made an illegal payment to an 
                                official or employee of the Food and 
                                Drug Administration for the purpose of 
                                securing or maintaining approval of 
                                such drug or device.
                    (B) Packaging.--In a health care liability action 
                for harm which is alleged to relate to the adequacy of 
                the packaging or labeling of a drug which is required 
                to have tamper-resistant packaging under regulations of 
                the Secretary of Health and Human Services (including 
                labeling regulations related to such packaging), the 
                manufacturer or product seller of the drug shall not be 
                held liable for punitive damages unless such packaging 
                or labeling is found by the court by clear and 
                convincing evidence to be substantially out of 
                compliance with such regulations.
    (c) Periodic Payments for Future Losses.--
            (1) General rule.--In any health care liability action in 
        which the damages awarded for future economic and noneconomic 
        loss exceeds $50,000, a person shall not be required to pay 
        such damages in a single, lump-sum payment, but shall be 
        permitted to make such payments periodically based on when the 
        damages are likely to occur, as such payments are determined by 
        the court.
            (2) Finality of judgment.--The judgment of the court 
        awarding periodic payments under this subsection may not, in 
        the absence of fraud, be reopened at any time to contest, 
        amend, or modify the schedule or amount of the payments.
            (3) Lump-sum settlements.--This subsection shall not be 
        construed to preclude a settlement providing for a single, 
        lump-sum payment.
    (d) Treatment of Collateral Source Payments.--
            (1) Introduction into evidence.--In any health care 
        liability action, any defendant may introduce evidence of 
        collateral source payments. If any defendant elects to 
        introduce such evidence, the claimant may introduce evidence of 
        any amount paid or contributed or reasonably likely to be paid 
        or contributed in the future by or on behalf of the claimant to 
        secure the right to such collateral source payments.
            (2) No subrogation.--No provider of collateral source 
        payments shall recover any amount against the claimant or 
        receive any lien or credit against the claimant's recovery or 
        be equitably or legally subrogated to the right of the claimant 
        in a health care liability action.
            (3) Application to settlements.--This subsection shall 
        apply to an action that is settled as well as an action that is 
        resolved by a fact finder.

SEC. 4013. ALTERNATIVE DISPUTE RESOLUTION.

    Any ADR used to resolve a health care liability action or claim 
shall contain provisions relating to statute of limitations, 
noneconomic damages, joint and several liability, punitive damages, 
collateral source rule, and periodic payments which are consistent with 
the provisions relating to such matters in this title.

SEC. 4014. REPORTING ON FRAUD AND ABUSE ENFORCEMENT ACTIVITIES.

    The General Accounting Office shall--
            (1) monitor--
                    (A) the compliance of the Department of Justice and 
                all United States Attorneys-with the guideline entitled 
                ``Guidance on the Use of the False Claims Act in Civil 
                Health Care Matters'' issued by the Department on June 
                3, 1998, including any revisions to that guideline; and
                    (B) the compliance of the Office of the Inspector 
                General of the Department of Health and Human Services 
                with the protocols and guidelines entitled ``National 
                Project Protocols--Best Practice Guidelines'' issued by 
                the Inspector General on June 3, 1998, including any 
                revisions to such protocols and guidelines; and
            (2) submit a report on such compliance to the Committee on 
        Commerce, the Committee on the Judiciary, and the Committee on 
        Ways and Means of the House of Representatives and the 
        Committee on the Judiciary and the Committee on Finance of the 
        Senate not later than February 1, 2000, and every year 
        thereafter for a period of 4 years ending February 1, 2003.

             TITLE V--CONFIDENTIALITY OF HEALTH INFORMATION

SEC. 5001. CONFIDENTIALITY OF PROTECTED HEALTH INFORMATION.

    (a) In General.--Title XI of the Social Security Act (42 U.S.C. 
1301 et seq.) is amended by adding at the end the following:

       ``Part D--Confidentiality of Protected Health Information

        ``inspection and copying of protected health information

    ``Sec. 1181. (a) In General.--Subject to the succeeding provisions 
of this section, upon the request of an individual who is the subject 
of protected health information, a person who is a health care 
provider, health plan, employer, health or life insurer, or educational 
institution shall make available to the individual (or, in the 
discretion of the person, to a health care provider designated by the 
individual), for inspection and copying, protected health information 
concerning the individual that the person maintains, including records 
created under section 1182.
    ``(b) Access Through Originating Provider.--Protected health 
information that is created by an originating provider, and 
subsequently received by another health care provider or a health plan 
as part of treatment or payment activities, shall be made available for 
inspection and copying as provided in this section through the 
originating provider, rather than the receiving health care provider or 
health plan, unless the originating provider does not maintain the 
information.
    ``(c) Investigational Information.--With respect to protected 
health information that was created as part of the requesting 
individual's participation in a clinical trial monitored by an 
institutional review board established to review health research with 
respect to potential risks to human subjects pursuant to Federal 
regulations adopted under section 1802(b) of the Public Health Service 
Act (42 U.S.C. 300v-1(b)) and the notice (informally referred to as the 
`Common Rule') promulgated in the Federal Register at 56 Fed. Reg. 
28003), a request under subsection (a) shall be granted only to the 
extent and in a manner consistent with such regulations.
    ``(d) Other Exceptions.--Unless ordered by a court of competent 
jurisdiction, a person to whom a request under subsection (a) is made 
is not required to grant the request, if--
            ``(1) the person determines that the disclosure of the 
        information could reasonably be expected to endanger the life 
        or physical safety of, or cause substantial harm to, any 
        individual; or
            ``(2) the information is compiled principally--
                    ``(A) in anticipation of a civil, criminal, or 
                administrative action or proceeding; or
                    ``(B) for use in such action or proceeding.
    ``(e) Denial of Request for Inspection or Copying.--If a person to 
whom a request under subsection (a) is made denies a request for 
inspection or copying pursuant to this section, the person shall inform 
the individual making the request, in writing, of--
            ``(1) the reasons for the denial of the request;
            ``(2) the availability of procedures for further review of 
        the denial; and
            ``(3) the individual's right to file with the person a 
        concise statement setting forth the request.
    ``(f) Statement Regarding Request.--If an individual has filed with 
a person a statement under subsection (e)(3) with respect to protected 
health information, the person, in any subsequent disclosure of the 
information--
            ``(1) shall include a notation concerning the individual's 
        statement; and
            ``(2) may include a concise statement of the reasons for 
        denying the request for inspection or copying.
    ``(g) Procedures.--A person providing access to protected health 
information for inspection or copying under this section may set forth 
appropriate procedures to be followed for such inspection or copying 
and may require an individual to pay reasonable costs associated with 
such inspection or copying.
    ``(h) Inspection and Copying of Segregable Portion.--A person to 
whom a request under subsection (a) is made shall permit the inspection 
and copying of any reasonably segregable portion of a record after 
deletion of any portion that the person is not required to disclose 
under this section.
    ``(i) Deadline.--A person described in subsection (a) shall comply 
with or deny, in accordance with this section, a request for inspection 
or copying of protected health information under this section not later 
than 30 days after the date on which the person receives the request.
    ``(j) Rules Governing Agents.--An agent of a person described in 
subsection (a) shall not be required to provide for the inspection and 
copying of protected health information, except where--
            ``(1) the protected health information is retained by the 
        agent; and
            ``(2) the agent has been asked by the person to fulfill the 
        requirements of this section.

           ``supplementation of protected health information

    ``Sec. 1182. (a) In General.--Subject to subsection (b), not later 
than 45 days after the date on which a person who is a health care 
provider, health plan, employer, health or life insurer, or educational 
institution receives, from an individual who is a subject of protected 
health information that is maintained by the person, a request in 
writing to amend the information by adding a concise written supplement 
to it, the person--
            ``(1) shall make the amendment requested;
            ``(2) shall inform the individual of the amendment that has 
        been made; and
            ``(3) shall make reasonable efforts to inform any person 
        who is identified by the individual, who is not an officer, 
        employer, or agent of the person receiving the request, and to 
        whom the unamended portion of the information was disclosed 
        during the preceding year, by sending a notice to the person's 
        last known address that an amendment, consisting of the 
        addition of a supplement, has been made to the protected health 
        information of the individual.
    ``(b) Refusal To Amend.--If a person described in subsection (a) 
refuses to make an amendment requested by an individual under such 
subsection, the person shall inform the individual, in writing, of--
            ``(1) the reasons for the refusal to make the amendment;
            ``(2) any procedures for further review of the refusal; and
            ``(3) the individual's right to file with the person a 
        concise statement setting forth the requested amendment and the 
        individual's reasons for disagreeing with the refusal.
    ``(c) Statement of Disagreement.--If an individual has filed a 
statement of disagreement with a person under subsection (b)(3), the 
person, in any subsequent disclosure of the disputed portion of the 
information--
            ``(1) shall include a notation that such individual has 
        filed a statement of disagreement; and
            ``(2) may include a concise statement of the reasons for 
        not making the requested amendment.
    ``(d) Rules Governing Agents.--The agent of a person described in 
subsection (a) shall not be required to make amendments to individually 
identifiable health information, except where--
            ``(1) the information is retained by the agent; and
            ``(2) the agent has been asked by such person to fulfill 
        the requirements of this section.
    ``(e) Duplicative Requests for Amendments.--If a person described 
in subsection (a) receives a duplicative request for an amendment of 
information as provided for in such subsection and a statement of 
disagreement with respect to the request has been filed pursuant to 
subsection (c), the person shall inform the individual of such filing 
and shall not be required to carry out the procedures under this 
section.
    ``(f) Rule of Construction.--This section shall not be construed--
            ``(1) to permit an individual to modify statements in his 
        or her record that document the factual observations of another 
        individual or state the results of diagnostic tests; or
            ``(2) to permit an individual to amend his or her record as 
        to the type, duration, or quality of treatment the individual 
        believes he or she should have been provided.

                 ``notice of confidentiality practices

    ``Sec. 1183. (a) Preparation of Written Notice.--A person who is a 
health care provider, health plan, health oversight agency, public 
health authority, employer, health or life insurer, health researcher, 
or educational institution shall post or provide, in writing and in a 
clear and conspicuous manner, notice of the person's protected health 
information confidentiality practices. The notice shall include--
            ``(1) a description of an individual's rights with respect 
        to protected health information;
            ``(2) the intended uses and disclosures of protected health 
        information;
            ``(3) the procedures established by the person for the 
        exercise of an individual's rights with respect to protected 
        health information; and
            ``(4) the procedures established by the person for 
        obtaining copies of the notice.
    ``(b) Model Notice.--The Secretary, after notice and opportunity 
for public comment, and based on the advice of the National Committee 
on Vital and Health Statistics established under section 306(k) of the 
Public Health Service Act (42 U.S.C. 242k(k)), shall develop and 
disseminate, not later than 6 months after the date of the enactment of 
the Patient Protection Act of 1999, model notices of confidentiality 
practices, for use under this section. Use of a model notice developed 
by the Secretary shall serve as a complete defense in any civil action 
to an allegation that a violation of this section has occurred.

                     ``establishment of safeguards

    ``Sec. 1184. (a) In General.--A person who is a health care 
provider, health plan, health oversight agency, public health 
authority, employer, health or life insurer, health researcher, or 
educational institution shall establish, maintain, and enforce 
reasonable and appropriate administrative, technical, and physical 
safeguards to protect the confidentiality, security, accuracy, and 
integrity of protected health information created, received, obtained, 
maintained, used, transmitted, or disposed of by the person.
    ``(b) Factors To Be Considered.--A person subject to subsection (a) 
shall consider the following factors in establishing safeguards under 
such subsection:
            ``(1) The need for protected health information.
            ``(2) The categories of personnel who will have access to 
        protected health information.
            ``(3) The feasibility of limiting access to individual 
        identifiers.
            ``(4) The appropriateness of the policy or procedure to the 
        person, and to the medium in which protected health information 
        is stored and transmitted.
            ``(5) The value of audit trails in computerized records.
    ``(c) Relationship to Part C Requirement.--Any safeguard 
established under this section shall be consistent with the requirement 
in section 1173(d)(2).
    ``(d) Conversion to Nonidentifiable Health Information.--A person 
subject to subsection (a) shall, to the extent practicable and 
consistent with the purpose for which protected health information is 
maintained, convert such information into nonidentifiable health 
information.

 ``availability of protected health information for purposes of health 
                            care operations

    ``Sec. 1185. (a) Disclosure.--Any person who maintains protected 
health information may disclose the information to a health care 
provider or a health plan for the purpose of permitting the provider or 
plan to conduct health care operations.
    ``(b) Use.--A health care provider or a health plan that maintains 
protected health information may use it for the purpose described in 
subsection (a).
    ``(c) Limitation on Sale or Barter.--Notwithstanding subsection 
(b), no health care provider or health plan may, as part of conducting 
health care operations, sell or barter protected health information.

                      ``relationship to other laws

    ``Sec. 1186. (a) State Law.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), the provisions of this part shall preempt a provision of 
        State law to the extent that such provision--
                    ``(A) otherwise would be preempted as inconsistent 
                with this part under article VI of the Constitution of 
                the United States;
                    ``(B) relates to authorization for the use or 
                disclosure of--
                            ``(i) protected health information for 
                        health care operations; or
                            ``(ii) nonidentifiable health information; 
                        or
                    ``(C) relates to any of the following:
                            ``(i) Inspection or copying of protected 
                        health information by a person who is a subject 
                        of the information.
                            ``(ii) Amendment of protected health 
                        information by a person who is a subject of the 
                        information.
                            ``(iii) Notice of confidentiality practices 
                        with respect to protected health information.
                            ``(iv) Establishment of safeguards for 
                        protected health information.
            ``(2) Exceptions.--Nothing in this part shall be construed 
        to preempt or modify a provision of State law to the extent 
        that such provision relates to protected health information 
        and--
                    ``(A) the confidentiality of the records maintained 
                by a licensed mental health professional;
                    ``(B) the provision of health care to a minor, or 
                the disclosure of information about a minor to a parent 
                or guardian of the minor;
                    ``(C) condition-specific limitations on disclosure;
                    ``(D) the use or disclosure of information for use 
                in legally authorized--
                            ``(i) disease or injury reporting;
                            ``(ii) public health surveillance, 
                        investigation, or intervention;
                            ``(iii) vital statistics reporting, such as 
                        reporting of birth or death information;
                            ``(iv) reporting of abuse or neglect 
                        information;
                            ``(v) reporting of information concerning a 
                        communicable disease status; or
                            ``(vi) reporting concerning the safety or 
                        effectiveness of a biological product regulated 
                        under section 351 of the Public Health Service 
                        Act (42 U.S.C. 262) or a drug or device 
                        regulated under the Federal Food, Drug, and 
                        Cosmetic Act (21 U.S.C. 301 et seq.);
                    ``(E) the disclosure to a person by a health care 
                provider of information about an individual, in any 
                case in which the provider has determined--
                            ``(i) in the provider's reasonable medical 
                        judgment, that the individual is unconscious, 
                        incompetent, or otherwise incapable of deciding 
                        whether to authorize disclosure of the 
                        protected health information; and
                            ``(ii) in the provider's reasonable 
                        judgment, that the person is a spouse, 
                        relative, guardian, or close friend of the 
                        individual's; or
                    ``(F) the use of information by, or the disclosure 
                of information to, a person holding a valid and 
                applicable power of attorney that includes the 
                authority to make health care decisions on behalf of an 
                individual who is a subject of the information.
            ``(3) Privileges.--Nothing in this part shall be construed 
        to preempt or modify a provision of State law to the extent 
        that such provision relates to a privilege of a witness or 
        other person in a court of that State.
    ``(b) Federal Law.--Nothing in this part shall be construed to 
preempt, modify, or repeal a provision of any other Federal law 
relating to protected health information or relating to an individual's 
access to protected health information or health care services. Nothing 
in this part shall be construed to preempt, modify, or repeal a 
provision of Federal law to the extent that such provision relates to a 
privilege of a witness or other person in a court of the United States.

                           ``civil penalties

    ``Sec. 1187. (a) Violation.--A person who the Secretary determines 
has substantially and materially failed to comply with this part shall 
be subject, in addition to any other penalties that may be prescribed 
by law--
            ``(1) in a case in which the violation relates to section 
        1181 or 1182, to a civil penalty of not more than $500 for each 
        such violation but not to exceed $5,000 in the aggregate for 
        all violations of an identical requirement or prohibition 
        during a calendar year;
            ``(2) in the case in which the violation relates to section 
        1183, 1184, or 1185(c), to a civil penalty of not more than 
        $10,000 for each such violation, but not to exceed $50,000 in 
        the aggregate for all violations of an identical requirement or 
        prohibition during a calendar year; or
            ``(3) in a case in which the Secretary finds that such 
        violations have occurred with such frequency as to constitute a 
        general business practice, to a civil penalty of not more than 
        $100,000.
    ``(b) Procedures for Imposition of Penalties.--Section 1128A, other 
than subsections (a) and (b) and the second sentence of subsection (f) 
of that section, shall apply to the imposition of a civil or monetary 
penalty under this section in the same manner as such provisions apply 
with respect to the imposition of a penalty under section 1128A.

                             ``definitions

    ``Sec. 1188. As used in this part:
            ``(1) Agent.--The term `agent' means a person, including a 
        contractor, who represents and acts for another under the 
        contract or relation of agency, or whose function is to bring 
        about, modify, affect, accept performance of, or terminate 
        contractual obligations between the principal and a third 
        person.
            ``(2) Condition-specific limitations on disclosure.--The 
        term `condition-specific limitations on disclosure' means State 
        laws that prohibit the disclosure of protected health 
        information relating to a health condition or disease that has 
        been identified by the Secretary as posing a public health 
        threat.
            ``(3) Disclose.--The term `disclose' means to release, 
        transfer, provide access to, or otherwise divulge protected 
        health information to any person other than an individual who 
        is the subject of such information.
            ``(4) Educational institution.--The term `educational 
        institution' means an institution or place accredited or 
        licensed for purposes of providing for instruction or 
        education, including an elementary school, secondary school, or 
        institution of higher learning, a college, or an assemblage of 
        colleges united under one corporate organization or government.
            ``(5) Employer.--The term `employer' has the meaning given 
        such term under section 3(5) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1002(5)), except that such term 
        shall include only employers of two or more employees.
            ``(6) Health care.--The term `health care' means--
                    ``(A) preventive, diagnostic, therapeutic, 
                rehabilitative, maintenance, or palliative care, 
                including appropriate assistance with disease or 
                symptom management and maintenance, counseling, 
                service, or procedure--
                            ``(i) with respect to the physical or 
                        mental condition of an individual; or
                            ``(ii) affecting the structure or function 
                        of the human body or any part of the human 
                        body, including the banking of blood, sperm, 
                        organs, or any other tissue; or
                    ``(B) any sale or dispensing, pursuant to a 
                prescription or medical order, of a drug, device, 
                equipment, or other health care-related item to an 
                individual, or for the use of an individual.
            ``(7) Health care operations.--The term `health care 
        operations' means services, provided directly by or on behalf 
        of a health plan or health care provider or by its agent, for 
        any of the following purposes:
                    ``(A) Coordinating health care, including health 
                care management of the individual through risk 
                assessment, case management, and disease management.
                    ``(B) Conducting quality assessment and improvement 
                activities, including outcomes evaluation, clinical 
                guideline development and improvement, and health 
                promotion.
                    ``(C) Carrying out utilization review activities, 
                including precertification and preauthorization of 
                services, and health plan rating activities, including 
underwriting and experience rating.
                    ``(D) Conducting or arranging for auditing 
                services.
            ``(8) Health care provider.--The term `health care 
        provider' means a person, who with respect to a specific item 
        of protected health information, receives, creates, uses, 
        maintains, or discloses the information while acting in whole 
        or in part in the capacity of--
                    ``(A) a person who is licensed, certified, 
                registered, or otherwise authorized by Federal or State 
                law to provide an item or service that constitutes 
                health care in the ordinary course of business, or 
                practice of a profession;
                    ``(B) a Federal, State, or employer-sponsored or 
                any other privately-sponsored program that directly 
                provides items or services that constitute health care 
                to beneficiaries; or
                    ``(C) an officer or employee of a person described 
                in subparagraph (A) or (B).
            ``(9) Health or life insurer.--The term `health or life 
        insurer' means a health insurance issuer, as defined in section 
        9832(b)(2) of the Internal Revenue Code of 1986, or a life 
        insurance company, as defined in section 816 of such Code.
            ``(10) Health plan.--The term `health plan' means any 
        health insurance plan, including any hospital or medical 
        service plan, dental or other health service plan, health 
        maintenance organization plan, plan offered by a provider-
        sponsored organization (as defined in section 1855(d)), or 
        other program providing or arranging for the provision of 
        health benefits.
            ``(11) Health researcher.--The term `health researcher' 
        means a person (or an officer, employee, or agent of a person) 
        who is engaged in systematic investigation, including research 
        development, testing, data analysis, and evaluation, designed 
        to develop or contribute to generalizable knowledge relating to 
        basic biomedical processes, health, health care, health care 
        delivery, or health care cost.
            ``(12) Nonidentifiable health information.--The term 
        `nonidentifiable health information' means protected health 
        information from which personal identifiers that reveal the 
        identity of the individual who is the subject of such 
        information or provide a direct means of identifying the 
        individual (such as name, address, and social security number) 
        have been removed, encrypted, or replaced with a code, such 
        that the identity of the individual is not evident without (in 
        the case of encrypted or coded information) use of a key.
            ``(13) Originating provider.--The term `originating 
        provider', when used with respect to protected health 
        information, means the health care provider who takes an action 
        that initiates the treatment episode to which that information 
        relates, such as prescribing a drug, ordering a diagnostic 
        test, or admitting an individual to a health care facility. A 
        hospital or nursing facility is the originating provider with 
        respect to protected health information created or received as 
        part of inpatient or outpatient treatment provided in the 
        hospital or facility.
            ``(14) Payment activities.--The term `payment activities' 
        means--
                    ``(A) activities undertaken--
                            ``(i) by, or on behalf of, a health plan to 
                        determine its responsibility for coverage under 
                        the plan; or
                            ``(ii) by a health care provider to obtain 
                        payment for items or services provided to an 
                        individual, provided under a health plan, or 
                        provided based on a determination by the health 
                        plan of responsibility for coverage under the 
                        plan; and
                    ``(B) includes the following activities, when 
                performed in a manner consistent with subparagraph (A):
                            ``(i) Billing, claims management, medical 
                        data processing, other administrative services, 
                        and actual payment.
                            ``(ii) Determinations of coverage or 
                        adjudication of health benefit or subrogation 
                        claims.
                            ``(iii) Review of health care services with 
                        respect to coverage under a health plan or 
                        justification of charges.
            ``(15) Person.--The term `person' means--
                    ``(A) a natural person;
                    ``(B) a government or governmental subdivision, 
                agency, or authority;
                    ``(C) a company, corporation, estate, firm, trust, 
                partnership, association, joint venture, society, or 
                joint stock company; or
                    ``(D) any other legal entity.
            ``(16) Protected health information.--The term `protected 
        health information', when used with respect to an individual 
        who is a subject of information means any information 
        (including genetic information) that identifies the individual, 
        whether oral or recorded in any form or medium, and that--
                    ``(A) is created or received by a health care 
                provider, health plan, health oversight agency, public 
                health authority, employer, health or life insurer, or 
                educational institution;
                    ``(B) relates to the past, present, or future 
                physical or mental health or condition of an individual 
                (including individual cells and their components);
                    ``(C) is derived from--
                            ``(i) the provision of health care to an 
                        individual; or
                            ``(ii) payment for the provision of health 
                        care to an individual; and
                    ``(D) is not nonidentifiable health information.
            ``(17) State.--The term `State' includes the District of 
        Columbia, Puerto Rico, the Virgin Islands, Guam, American 
        Samoa, and the Northern Mariana Islands.
            ``(18) Treatment.--The term `treatment' means the provision 
        of health care by a health care provider.
            ``(19) Writing.--The term `writing' means writing either in 
        a paper-based, computer-based, or electronic form, including 
        electronic signatures.''.
    (b) Enforcement of Provisions Through Conditions on 
Participation.--
            (1) Participating physicians and suppliers.--Section 
        1842(h) of the Social Security Act (42 U.S.C. 1395u(h)) is 
        amended by adding at the end the following:
    ``(9) The Secretary may refuse to enter into an agreement with a 
physician or supplier under this subsection, or may terminate or refuse 
to renew such agreement, in the event that such physician or supplier 
has been found to have violated a provision of part D of title XI.''.
            (2) Medicare+choice organizations.--Section 1852(h) of the 
        Social Security Act (42 U.S.C. 1395w-22(h)) is amended--
                    (A) in the matter preceding paragraph (1), by 
                striking ``procedures--'' and inserting ``procedures, 
                consistent with sections 1181 through 1185--''; and
                    (B) in paragraph (1), by striking ``privacy of any 
                individually identifiable enrollee information;'' and 
                inserting ``confidentiality of protected health 
                information concerning enrollees;''.
            (3) Medicare providers.--Section 1866(a)(1) of the Social 
        Security Act (42 U.S.C. 1395cc(a)(1)) is amended--
                    (A) by inserting a semicolon at the end of 
                subparagraph (R);
                    (B) by striking the period at the end of 
                subparagraph (S) and inserting ``; and''; and
                    (C) by inserting immediately after subparagraph (S) 
                the following new subparagraph:
            ``(T) to comply with sections 1181 through 1184.''.
            (4) Health maintenance organizations with risk-sharing 
        contracts.--Section 1876(k)(4) of the Social Security Act (42 
        U.S.C. 1395mm(k)(4)) is amended by adding at the end the 
        following:
            ``(E) The confidentiality and accuracy procedure 
        requirements under section 1852(h).''.
    (c) Conforming Amendments.--
            (1) Title heading.--Title XI of the Social Security Act (42 
        U.S.C. 1301 et seq.) is amended by striking the title heading 
        and inserting the following:

      ``TITLE XI--GENERAL PROVISIONS, PEER REVIEW, ADMINISTRATIVE 
 SIMPLIFICATION, AND CONFIDENTIALITY OF PROTECTED HEALTH INFORMATION''.

            (2) National committee on vital and health statistics.--
        Section 306(k)(5) of the Public Health Service Act (42 U.S.C. 
        242(k)(5)) is amended--
                    (A) in subparagraphs (A)(viii) and (D), by striking 
                ``part C'' and inserting ``parts C and D'';
                    (B) in subparagraph (C), by striking ``and'' at the 
                end;
                    (C) in subparagraph (D), by striking the period at 
                the end and inserting ``; and''; and
                    (D) by adding at the end the following:
            ``(E) shall study the issues relating to section 1184 of 
        the Social Security Act (as added by the Patient Protection Act 
        of 1998), and, not later than 1 year after the date of the 
        enactment of the Patient Protection Act of 1999, shall report 
        to the Congress on such section.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date that is 1 year after the date of the enactment of 
this Act, except that subsection (c)(2), and section 1183(b) of the 
Social Security Act (as added by subsection (a)), shall take effect on 
the date of the enactment of this Act.

SEC. 5002. STUDY AND REPORT ON EFFECT OF STATE LAW ON HEALTH-RELATED 
              RESEARCH.

    Not later than 1 year after the date of the enactment of this Act, 
the Comptroller General of the United States shall prepare and submit 
to the Congress a report containing the results of a study on the 
effect of State laws on health-related research subject to review by an 
institutional review board or institutional review committee with 
respect to the protection of human subjects.

SEC. 5003. STUDY AND REPORT ON STATE LAW ON PROTECTED HEALTH 
              INFORMATION.

    (a) In General.--Not later than 9 months after the date of the 
enactment of this Act, the Comptroller General of the United States 
shall prepare and submit to the Congress a report containing the 
results of a study--
            (1) compiling State laws on the confidentiality of 
        protected health information (as defined in section 1188 of the 
        Social Security Act, as added by section 5001 of this Act); and
            (2) analyzing the effect of such laws on the provision of 
        health care and securing payment for such care.
    (b) Modification of Deadline.--Section 264(c)(1) of the Health 
Insurance Portability and Accountability Act of 1996 (Public Law 104-
191; 110 Stat. 2033) is amended by striking ``36 months after the date 
of the enactment of this Act,'' and inserting ``6 months after the date 
on which the Comptroller General of the United States submits to the 
Congress a report under section 5003(a) of the Patient Protection Act 
of 1999,''.

SEC. 5004. PROTECTION FOR CERTAIN INFORMATION DEVELOPED TO REDUCE 
              MORTALITY OR MORBIDITY OR FOR IMPROVING PATIENT CARE AND 
              SAFETY.

    (a) Protection of Certain Information.--Notwithstanding any other 
provision of Federal or State law, health care response information 
shall be exempt from any disclosure requirement (regardless of whether 
the requirement relates to subpoenas, discovery, introduction of 
evidence, testimony, or any other form of disclosure), in connection 
with a civil or administrative proceeding under Federal or State law, 
to the same extent as information developed by a health care provider 
with respect to any of the following:
            (1) Peer review.
            (2) Utilization review.
            (3) Quality management or improvement.
            (4) Quality control.
            (5) Risk management.
            (6) Internal review for purposes of reducing mortality, 
        morbidity, or for improving patient care or safety.
    (b) No Waiver of Protection Through Interaction With Accrediting 
Body.--Notwithstanding any other provision of Federal or State law, the 
protection of health care response information from disclosure provided 
under subsection (a) shall not be deemed to be modified or in any way 
waived by--
            (1) the development of such information in connection with 
        a request or requirement of an accrediting body; or
            (2) the transfer of such information to an accrediting 
        body.
    (c) Definitions.--For purposes of this section:
            (1) The term ``accrediting body'' means a national, not-
        for-profit organization that--
                    (A) accredits health care providers; and
                    (B) is recognized as an accrediting body by statute 
                or by a Federal or State agency that regulates health 
                care providers.
            (2) The term ``health care provider'' has the meaning given 
        such term in section 1188 of the Social Security Act (as added 
        by section 5001 of this Act).
            (3) The term ``health care response information'' means 
        information (including any data, report, record, memorandum, 
        analysis, statement, or other communication) developed by, or 
        on behalf of, a health care provider in response to a serious, 
        adverse, patient-related event--
                    (A) during the course of analyzing or studying the 
                event and its causes; and
                    (B) for purposes of--
                            (i) reducing mortality or morbidity; or
                            (ii) improving patient care or safety 
                        (including the provider's notification to an 
                        accrediting body and the provider's plans of 
                        action in response to such event).
            (5) The term ``State'' has the meaning given such term in 
        section 1188 of the Social Security Act (as added by section 
        5001 of this Act).
                                 <all>