[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2315 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2315

    To protect consumers in managed care plans and in other health 
                               coverage.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 26, 2001

 Mr. Fletcher (for himself, Mr. Peterson of Minnesota, Mrs. Johnson of 
 Connecticut, Mr. Burr of North Carolina, Mr. Thomas, Mr. Tauzin, Mr. 
  Boehner, Mr. Bilirakis, Mr. Sam Johnson of Texas, Mr. Cooksey, Mr. 
Weldon of Florida, Mr. Hayes, Mr. Pence, Mr. Platts, Ms. Pryce of Ohio, 
  Mr. Goss, Mr. Houghton, Mr. Greenwood, Mr. Portman, Mr. Hobson, Mr. 
Hilleary, Mr. Radanovich, Mr. Simmons, Mr. Crenshaw, Mr. Ballenger, Mr. 
Gibbons, Mr. Buyer, Mr. Collins, Mr. Pitts, Mr. Rogers of Kentucky, Mr. 
 Simpson, Mr. Linder, Mr. Shaw, Mr. Watts of Oklahoma, Mr. Skeen, Mr. 
 Stearns, Mr. Bachus, Mr. Kirk, Mr. Bartlett of Maryland, Mr. English, 
Mr. Weller, Mr. Ramstad, Mr. Otter, Mr. Sununu, Mr. Lewis of Kentucky, 
  Mrs. Cubin, Mr. Isakson, Mr. Shays, Mr. Wicker, Mr. Pickering, Mr. 
  McInnis, Mr. McCrery, and Mr. Camp) introduced the following bill; 
  which was referred to the Committee on Energy and Commerce, and in 
addition to the Committees on Education and the Workforce, and Ways and 
 Means, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
    To protect consumers in managed care plans and in other health 
                               coverage.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patients' Bill of 
Rights Act of 2001''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                   TITLE I--PATIENTS' BILL OF RIGHTS

                  Subtitle A--Right to Advice and Care

Sec. 101. Access to emergency medical care.
Sec. 102. Offering of choice of coverage options.
Sec. 103. Patient access to obstetric and gynecological care.
Sec. 104. Access to pediatric care.
Sec. 105. Timely access to specialists.
Sec. 106. Continuity of care.
Sec. 107. Protection of patient-provider communications.
Sec. 108. Patient access to prescription drugs.
Sec. 109. Coverage for individuals participating in approved clinical 
                            trials.
Sec. 110. Prohibition of discrimination against providers based on 
                            licensure.
Sec. 111. Generally applicable provision.
       Subtitle B--Right to Information About Plans and Providers

Sec. 121. Health plan information.
Sec. 122. Study on the effect of physician compensation methods.
           Subtitle C--Right to Hold Health Plans Accountable

Sec. 131. Amendments to Employee Retirement Income Security Act of 
                            1974.
Sec. 132. Enforcement.
        ``Sec. 503A. Claims and internal appeals procedures for group 
                            health plans.
        ``Sec. 503B. Independent external appeals procedures for group 
                            health plans.
                          Subtitle D--Remedies

Sec. 141. Availability of court remedies.
Sec. 142. Treatment of State causes of action with respect to certain 
                            claims denials by group health plans.
Sec. 143. Limitation on certain class action litigation.
                     Subtitle E--State Flexibility

Sec. 151. State flexibility in applying requirements to health 
                            insurance issuers and non-Federal 
                            Governmental group health plans.
                  Subtitle F--Miscellaneous Provisions

Sec. 161. Definitions.
Sec. 162. Exclusions.
         TITLE II--AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT

Sec. 201. Application to certain health insurance coverage.
Sec. 202. Application to individual health insurance coverage.
TITLE III--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

Sec. 301. Application of patient protection standards to group health 
                            plans and group health insurance coverage 
                            under the Employee Retirement Income 
                            Security Act of 1974.
       TITLE IV--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

Sec. 401. Application to group health plans under the Internal Revenue 
                            Code of 1986.
                 TITLE V--EFFECTIVE DATE; SEVERABILITY

Sec. 501. Effective date and related rules.
Sec. 502. Severability.
       TITLE VI--INCREASING ACCESS TO AFFORDABLE HEALTH INSURANCE

                       Subtitle A--Tax Incentives

Sec. 601. Expansion of availability of Archer medical savings accounts.
                  Subtitle B--Association Health Plans

Sec. 621. Rules governing association health plans.
           ``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. Definitions and rules of construction.
Sec. 622. Clarification of treatment of single employer arrangements.
Sec. 623. Clarification of treatment of certain collectively bargained 
                            arrangements.
Sec. 624. Enforcement provisions relating to association health plans.
Sec. 625. Cooperation between Federal and State authorities.
Sec. 626. Effective date and transitional and other rules.

                   TITLE I--PATIENTS' BILL OF RIGHTS

                  Subtitle A--Right to Advice and Care

SEC. 101. ACCESS TO EMERGENCY MEDICAL CARE.

    (a) Coverage of Emergency Services.--
            (1) In general.--If a group health plan, or health 
        insurance coverage offered by a health insurance issuer, 
        provides or covers any benefits with respect to services in an 
        emergency department of a hospital, the plan or issuer shall 
        cover emergency services (as defined in paragraph (2)(B))--
                    (A) without the need for any prior authorization 
                determination;
                    (B) whether the health care provider furnishing 
                such services is a participating provider with respect 
                to such services;
                    (C) in a manner so that, if such services are 
                provided to a participant or beneficiary by a 
                nonparticipating health care provider, the participant 
                or beneficiary is not liable for amounts that exceed 
                the amounts of liability that would be incurred if the 
                services were provided by a participating health care 
                provider; and
                    (D) without regard to any other term or condition 
                of such coverage (other than exclusion or coordination 
                of benefits, or an affiliation or waiting period, 
                permitted under section 2701 of the Public Health 
                Service Act, section 701 of the Employee Retirement 
                Income Security Act of 1974, or section 9801 of the 
                Internal Revenue Code of 1986, and other than 
                applicable cost-sharing).
            (2) Definitions.--In this section:
                    (A) Emergency medical condition.--The term 
                ``emergency medical condition'' means--
                            (i) a medical condition manifesting itself 
                        by acute symptoms of sufficient severity 
                        (including severe pain) such that a prudent 
                        layperson, who possesses an average knowledge 
                        of health and medicine, could reasonably expect 
                        the absence of immediate medical attention to 
                        result in a condition described in clause (i), 
                        (ii), or (iii) of section 1867(e)(1)(A) of the 
                        Social Security Act; and
                            (ii) a medical condition manifesting itself 
                        in a neonate by acute symptoms of sufficient 
                        severity (including severe pain) such that a 
                        prudent health care professional could 
                        reasonably expect the absence of immediate 
                        medical attention to result in a condition 
                        described in clause (i), (ii), or (iii) of 
                        section 1867(e)(1)(A) of the Social Security 
                        Act.
                    (B) Emergency services.--The term ``emergency 
                services'' means--
                            (i) with respect to an emergency medical 
                        condition described in subparagraph (A)(i)--
                                    (I) a medical screening examination 
                                (as required under section 1867 of the 
                                Social Security Act) that is within the 
                                capability of the emergency department 
                                of a hospital, including ancillary 
                                services routinely available to the 
                                emergency department to evaluate such 
                                emergency medical condition, and
                                    (II) within the capabilities of the 
                                staff and facilities available at the 
                                hospital, such further medical 
                                examination and treatment as are 
                                required under section 1867 of such Act 
                                to stabilize the patient; or
                            (ii) with respect to an emergency medical 
                        condition described in subparagraph (A)(ii), 
                        medical treatment for such condition rendered 
                        by a health care provider in a hospital to a 
                        neonate, including available hospital ancillary 
                        services in response to an urgent request of a 
                        health care professional and to the extent 
                        necessary to stabilize the neonate.
                    (C) Stabilize.--The term ``to stabilize'', with 
                respect to an emergency medical condition, has the 
                meaning given in section 1867(e)(3) of the Social 
                Security Act (42 U.S.C. 1395dd(e)(3)).
    (b) Reimbursement for Maintenance Care and Post-Stabilization 
Care.--If benefits are available under a group health plan, or under 
health insurance coverage offered by a health insurance issuer, with 
respect to services that are provided as maintenance care or post-
stabilization care covered under the guidelines established under 
section 1852(d)(2) of the Social Security Act, the plan or issuer shall 
provide for reimbursement with respect to such services provided to a 
participant or beneficiary other than through a participating health 
care provider in a manner consistent with subsection (a)(1)(C) (and 
shall otherwise comply with such guidelines).
    (c) Coverage of Emergency Ambulance Services.--
            (1) In general.--If a group health plan, or health 
        insurance coverage provided by a health insurance issuer, 
        provides any benefits with respect to ambulance services and 
        emergency services, the plan or issuer shall cover emergency 
        ambulance services (as defined in paragraph (2))) furnished 
        under the plan or coverage under the same conditions under 
        subparagraphs (A) through (D) of subsection (a)(1) under which 
        coverage is provided for emergency services.
            (2) Emergency ambulance services.--For purposes of this 
        subsection, the term ``emergency ambulance services'' means 
        ambulance services (as defined for purposes of section 
        1861(s)(7) of the Social Security Act) furnished to transport 
        an individual who has an emergency medical condition (as 
        defined in subsection (a)(2)(A)) to a hospital for the receipt 
        of emergency services (as defined in subsection (a)(2)(B)) in a 
        case in which the emergency services are covered under the plan 
        or coverage pursuant to subsection (a)(1) and a prudent 
        layperson, with an average knowledge of health and medicine, 
        could reasonably expect that the absence of such transport 
        would result in placing the health of the individual in serious 
        jeopardy, serious impairment of bodily function, or serious 
        dysfunction of any bodily organ or part.

SEC. 102. OFFERING OF CHOICE OF COVERAGE OPTIONS.

    (a) Requirement.--If a group health plan provides coverage for 
benefits only through a defined set of participating health care 
professionals, the plan shall offer the participant the option to 
purchase point-of-service coverage (as defined in subsection (b)) for 
all such benefits (including physician pathology services) for which 
coverage is otherwise so limited. Such option shall be made available 
to the participant at the time of enrollment under the plan and at such 
other times as the plan offers the participant a choice of coverage 
options.
    (b) Point-of-Service Coverage Defined.--In this section, the term 
``point-of-service coverage'' means, with respect to benefits 
(including physician pathology services) covered under a group health 
plan, coverage of such benefits when provided by a nonparticipating 
health care professional.
    (c) Small Employer Exemption.--
            (1) In general.--This section shall not apply to any group 
        health plan with respect to a small employer.
            (2) Small employer.--For purposes of paragraph (1), the 
        term ``small employer'' means, in connection with a group 
        health plan with respect to a calendar year and a plan year, an 
        employer who employed an average of at least 2 but not more 
        than 25 employees on business days during the preceding 
        calendar year and who employs at least 2 employees on the first 
        day of the plan year. For purposes of this paragraph, the 
        provisions of subparagraph (C) of section 712(c)(1) shall apply 
        in determining employer size.
    (d) Rule of Construction.--Nothing in this section shall be 
construed--
            (1) as requiring coverage for benefits for a particular 
        type of health care professional;
            (2) as preventing a group health plan from imposing higher 
        premiums or cost-sharing on a participant for the exercise of a 
        point-of-service coverage option; or
            (3) to require that a group health plan include coverage of 
        health care professionals that the plan excludes because of 
        fraud, quality of care, or other similar reasons with respect 
        to such professionals.

SEC. 103. PATIENT ACCESS TO OBSTETRIC AND GYNECOLOGICAL CARE.

    (a) General Rights.--
            (1) Direct access.--A group health plan, and health 
        insurance coverage offered by a health insurance issuer, 
        described in subsection (b) may not require authorization or 
        referral by the primary care provider described in subsection 
        (b)(2) in the case of a female participant or beneficiary who 
        seeks coverage for obstetric or gynecological care provided by 
        a participating physician or by a participating health care 
        professional who specializes in obstetrics or gynecology and is 
        operating within State licensure and scope of practice laws.
            (2) Obstetric and gynecological care.--Such a plan or 
        issuer shall treat the provision of obstetric and gynecological 
        care, and the ordering of related obstetric and gynecological 
        items and services, pursuant to the direct access described 
        under paragraph (1), by a participating physician or other 
        health care professional who specializes in obstetrics or 
        gynecology as the authorization of the primary care provider.
    (b) Application of Section.--A group health plan, or health 
insurance coverage offered by a health insurance issuer, described in 
this subsection is a plan or coverage that--
            (1) provides coverage for obstetric or gynecological care; 
        and
            (2) requires the designation by a participant or 
        beneficiary of a participating primary care provider other than 
        a physician who specializes in obstetrics or gynecology.
    (c) Rules of Construction.--Nothing in this section shall be 
construed--
            (1) to require that a group health plan or health insurance 
        issuer approve or provide coverage for--
                    (A) any items or services that are not covered 
                under the terms and conditions of the group health plan 
                or the health insurance coverage;
                    (B) any items or services that are not medically 
                necessary and appropriate; or
                    (C) any items or services that are provided, 
                ordered, or otherwise authorized under subsection 
                (a)(2) by a physician or other health care professional 
                unless such items or services are related to obstetric 
                or gynecological care;
            (2) to preclude a group health plan or health insurance 
        issuer from requiring that the physician or health care 
        professional described in subsection (a) notify the designated 
        primary care professional or case manager of treatment 
        decisions in accordance with a process implemented by the plan, 
        except that the group health plan or issuer shall not impose 
        such a notification requirement on the participant or 
        beneficiary involved in the treatment decision; or
            (3) to preclude a group health plan or health insurance 
        issuer from requiring authorization, including prior 
        authorization, for items and services (other than routine items 
        and services) from the physician or health care professional 
        described in subsection (a) who specializes in obstetrics and 
        gynecology if the designated primary care provider of the 
        participant or beneficiary would otherwise be required to 
        obtain authorization for such items or services.
For purposes of paragraph (3), routine items and services includes 
annual, prenatal, and perinatal examinations.

SEC. 104. ACCESS TO PEDIATRIC CARE.

    (a) Pediatric Care.--If a group health plan, and a health insurance 
issuer that offers health insurance coverage, requires or provides for 
a participant, beneficiary, or enrollee to designate a participating 
primary care provider for a child of such participant, beneficiary, or 
enrollee, the plan or issuer shall permit the participant, beneficiary, 
or enrollee to designate a physician who specializes in pediatrics as 
the child's primary care provider if such provider participates in the 
network of the plan or issuer.
    (b) Rules of Construction.--With respect to the child of a 
participant, beneficiary, or enrollee, nothing in subsection (a) shall 
be construed to--
            (1) require that the participant, beneficiary, or enrollee 
        obtain prior authorization or a referral from a primary care 
        provider in order to obtain pediatric care from a health care 
        professional other than a physician if the provision of 
        pediatric care by such professional is permitted by the plan or 
        issuer and consistent with State licensure, credentialing, and 
        scope of practice laws and regulations; or
            (2) preclude the participant, beneficiary, or enrollee from 
        designating a health care professional other than a physician 
        as a primary care provider for the child if such designation is 
        permitted by the plan or issuer and the treatment by such 
        professional is consistent with State licensure, credentialing, 
        and scope of practice laws.

SEC. 105. TIMELY ACCESS TO SPECIALISTS.

    (a) Timely Access.--
            (1) In general.--A group health plan, or a health insurance 
        issuer offering health insurance coverage, shall ensure that 
        participants and beneficiaries receive timely coverage for 
        access to specialists with respect to the medical condition of 
        the participant or beneficiary, when such specialty care is a 
        covered benefit under the plan or coverage.
            (2) Rule of construction.--Nothing in paragraph (1) shall 
        be construed--
                    (A) to require the coverage under a group health 
                plan or health insurance coverage of benefits or 
                services;
                    (B) to prohibit a plan or issuer from including 
                providers in the network only to the extent necessary 
                to meet the needs of the plan's participants and 
                beneficiaries;
                    (C) to prohibit a plan or issuer from establishing 
                measures designed to maintain quality and control costs 
                consistent with the responsibilities of the plan or 
                issuer; or
                    (D) to override any State licensure or scope-of-
                practice law.
            (3) Access to certain providers.--
                    (A) Participating providers.--Nothing in this 
                section shall be construed to prohibit a group health 
                plan or health insurance issuer from requiring that a 
                participant or beneficiary obtain specialty care from a 
                participating specialist.
                    (B) Nonparticipating providers.--
                            (i) In general.--With respect to specialty 
                        care under this section, if a group health plan 
                        or health insurance issuer determines that a 
                        participating specialist is not available to 
                        provide such care to the participant or 
                        beneficiary, the plan or issuer shall provide 
                        for coverage of such care by a nonparticipating 
                        specialist.
                            (ii) Treatment of nonparticipating 
                        providers.--If a group health plan or health 
                        insurance issuer refers a participant or 
                        beneficiary to a nonparticipating specialist 
                        pursuant to clause (i), such specialty care 
                        shall be provided at no additional cost to the 
                        participant or beneficiary beyond what the 
                        participant or beneficiary would otherwise pay 
                        for such specialty care if provided by a 
                        participating specialist.
    (b) Referrals.--
            (1) Authorization.--Nothing in this section shall be 
        construed to prohibit a group health plan or health insurance 
        issuer from requiring an authorization in order to obtain 
        coverage for specialty services so long as such authorization 
        is for an appropriate duration or number of referrals.
            (2) Referrals for ongoing special conditions.--
                    (A) In general.--A group health plan, or a health 
                insurance issuer offering health insurance coverage, 
                shall permit a participant or beneficiary who has an 
                ongoing special condition (as defined in subparagraph 
                (B)) to receive a referral to a specialist for the 
                treatment of such condition and such specialist may 
                authorize such referrals, procedures, tests, and other 
                medical services with respect to such condition, or 
                coordinate the care for such condition, subject to the 
                terms of a treatment plan referred to in subsection (c) 
                with respect to the condition.
                    (B) Ongoing special condition defined.--In this 
                subsection, the term ``ongoing special condition'' 
                means a condition or disease that--
                            (i) is life-threatening, degenerative, or 
                        disabling; and
                            (ii) requires specialized medical care over 
                        a prolonged period of time.
    (c) Treatment Plans.--
            (1) In general.--Nothing in this section shall be construed 
        to prohibit a group health plan or health insurance issuer from 
        requiring that specialty care be provided pursuant to a 
        treatment plan so long as the treatment plan is--
                    (A) developed by the specialist, in consultation 
                with the case manager or primary care provider, and the 
                participant or beneficiary;
                    (B) approved by the plan or issuer in a timely 
                manner if the plan or issuer requires such approval; 
                and
                    (C) in accordance with the applicable quality 
                assurance and utilization review standards of the plan 
                or issuer.
            (2) Notification.--Nothing in paragraph (1) shall be 
        construed as prohibiting a group health plan or health 
        insurance issuer from requiring the specialist to provide the 
        plan or issuer with regular updates on the specialty care 
        provided, as well as all other necessary medical information.
    (d) Specialist Defined.--For purposes of this section, the term 
``specialist'' means, with respect to the medical condition of the 
participant or beneficiary, a physician (including an allopathic or 
osteopathic physician) or health care professional who is appropriately 
credentialed or licensed in 1 or more States, who has adequate 
expertise, appropriate training and experience, and routinely treats 
the diagnosis or condition of the participant or beneficiary.

SEC. 106. CONTINUITY OF CARE.

    (a) Termination of Provider.--If a contract between a group health 
plan, and a health insurance issuer that offers health insurance 
coverage, as appropriate, and a treating health care provider is 
terminated (as defined in paragraph (e)(4)), or benefits or coverage 
provided by a health care provider are terminated because of a change 
in the terms of provider participation in such plan or coverage, and an 
individual who is a participant, beneficiary or enrollee under such 
plan or coverage is undergoing an active course of treatment for a 
serious and complex condition, institutional care, pregnancy, or 
terminal illness from the provider at the time the plan or issuer 
receives or provides notice of such termination, the plan or issuer 
shall--
            (1) notify the individual, or arrange to have the 
        individual notified pursuant to subsection (d)(2), on a timely 
        basis of such termination;
            (2) provide the individual with an opportunity to notify 
        the plan or issuer of the individual's need for transitional 
        care; and
            (3) subject to subsection (c), permit the individual to 
        elect to continue to be covered with respect to the active 
        course of treatment with the provider's consent during a 
        transitional period (as provided for under subsection (b)).
Nothing in this section shall be construed as preventing a plan or 
issuer from providing the notice under paragraph (1) before the 
effective date of the provider's termination.
    (b) Transitional Period.--
            (1) Serious and complex conditions.--The transitional 
        period under this section with respect to a serious and complex 
        condition shall extend for up to 90 days from the date of the 
        notice described in subsection (a)(1) of the provider's 
        termination.
            (2) Institutional or inpatient care.--
                    (A) In general.--The transitional period under this 
                section for institutional or non-elective inpatient 
                care from a provider shall extend until the earlier 
                of--
                            (i) the expiration of the 90-day period 
                        beginning on the date on which the notice 
                        described in subsection (a)(1) of the 
                        provider's termination is provided; or
                            (ii) the date of discharge of the 
                        individual from such care or the termination of 
                        the period of institutionalization.
                    (B) Scheduled care.--The 90 day limitation 
                described in subparagraph (A)(i) shall include post-
                surgical follow-up care relating to non-elective 
                surgery that has been scheduled before the date of the 
                notice of the termination of the provider under 
                subsection (a)(1).
            (3) Pregnancy.--If--
                    (A) a participant, beneficiary, or enrollee was 
                pregnant at the time of a provider's termination of 
                participation; and
                    (B) the provider was treating the pregnancy before 
                the date of the termination;
        the transitional period under this subsection with respect to 
        provider's treatment of the pregnancy shall extend through the 
        provision of post-partum care directly related to the delivery.
            (4) Terminal illness.--If--
                    (A) a participant, beneficiary, or enrollee was 
                determined to be terminally ill (as determined under 
                section 1861(dd)(3)(A) of the Social Security Act) at 
                the time of a provider's termination of participation; 
                and
                    (B) the provider was treating the terminal illness 
                before the date of termination;
        the transitional period under this subsection shall extend for 
        the remainder of the individual's life for care that is 
        directly related to the treatment of the terminal illness.
    (c) Permissible Terms and Conditions.--A group health plan, and a 
health insurance issuer that offers health insurance coverage, may 
condition coverage of continued treatment by a provider under this 
section upon the provider agreeing, in advance in writing, to the 
following:
            (1) The treating health care provider agrees to accept 
        reimbursement from the plan or issuer and individual involved 
        (with respect to cost-sharing) at the rates applicable prior to 
        the start of the transitional period as payment in full (or at 
        the rates applicable under the replacement plan after the date 
        of the termination of the contract with the plan or issuer) and 
        not to impose cost-sharing with respect to the individual in an 
        amount that would exceed the cost-sharing that could have been 
        imposed if the contract referred to in this section had not 
        been terminated (or, if applicable, at the cost-sharing 
        applicable under the replacement plan).
            (2) The treating health care provider agrees to adhere to 
        the quality assurance standards of the plan or issuer 
        responsible for payment under paragraph (1) and to provide to 
        such plan or issuer necessary medical information related to 
        the care provided.
            (3) The treating health care provider agrees otherwise to 
        adhere to such plan's or issuer's policies and procedures, 
        including procedures regarding referrals and obtaining prior 
        authorization and providing services pursuant to a treatment 
        plan (if any) approved by the plan or issuer.
    (d) Rules of Construction.--Nothing in this section shall be 
construed--
            (1) to require the coverage of benefits which would not 
        have been covered if the provider involved remained a 
        participating provider; or
            (2) with respect to the termination of a contract under 
        subsection (a) to prevent a group health plan or health 
        insurance issuer from requiring that the health care provider--
                    (A) notify participants, beneficiaries, or 
                enrollees of their rights under this section; or
                    (B) provide the plan or issuer with the name of 
                each participant, beneficiary, or enrollee who the 
                provider believes is eligible for transitional care 
                under this section.
    (e) Definitions.--In this section:
            (1) Contract.--The term ``contract between a group health 
        plan, and a health insurance issuer that offers health 
        insurance coverage, and a treating health care provider'' shall 
        include a contract between such a plan or issuer and an 
        organized network of providers.
            (2) Health care provider.--The term ``health care 
        provider'' or ``provider'' means--
                    (A) any individual who is engaged in the delivery 
                of health care services in a State and who is required 
                by State law or regulation to be licensed or certified 
                by the State to engage in the delivery of such services 
                in the State; and
                    (B) any entity that is engaged in the delivery of 
                health care services in a State and that, if it is 
                required by State law or regulation to be licensed or 
                certified by the State to engage in the delivery of 
                such services in the State, is so licensed.
            (3) Serious and complex condition.--The term ``serious and 
        complex condition'' means, with respect to a participant, 
        beneficiary, or enrollee under the plan or coverage, a 
        condition that is medically determinable and--
                    (A) in the case of an acute illness, is a condition 
                serious enough to require specialized medical treatment 
                to avoid the reasonable possibility of death or 
                permanent harm; or
                    (B) in the case of a chronic illness or condition, 
                is an illness or condition that--
                            (i) is complex and difficult to manage;
                            (ii) is disabling or life- threatening; and
                            (iii) requires--
                                    (I) frequent monitoring over a 
                                prolonged period of time and requires 
                                substantial on-going specialized 
                                medical care; or
                                    (II) frequent ongoing specialized 
                                medical care across a variety of 
                                domains of care.
            (4) Terminated.--The term ``terminated'' includes, with 
        respect to a contract (as defined in paragraph (1)), the 
        expiration or nonrenewal of the contract with the provider by 
        the group health plan or health insurance issuer, but does not 
        include a termination of the contract by the plan or issuer for 
        failure to meet applicable quality standards or for fraud.

SEC. 107. PROTECTION OF PATIENT-PROVIDER COMMUNICATIONS.

    (a) In General.--Subject to subsection (b), a group health plan, 
and a health insurance issuer that offers health insurance coverage, 
(in relation to a participant, beneficiary, or enrollee) shall not 
prohibit or otherwise restrict a health care professional from advising 
such a participant, beneficiary, or enrollee who is a patient of the 
professional about the health status of the participant, beneficiary, 
or enrollee or medical care or treatment for the condition or disease 
of the participant, beneficiary, or enrollee, regardless of whether 
coverage for such care or treatment are provided under the contract, if 
the professional is acting within the lawful scope of practice.
    (b) Rule of Construction.--Nothing in this section shall be 
construed as requiring a group health plan, or a health insurance 
issuer that offers health insurance coverage, to provide specific 
benefits under the terms of such plan or coverage.
    (c) Nullification.--Any contract provision that restricts or 
prohibits medical communications in violation of subsection (a) shall 
be null and void.

SEC. 108. PATIENT ACCESS TO PRESCRIPTION DRUGS.

    (a) In General.--To the extent that a group health plan, and a 
health insurance issuer that offers health insurance coverage, provides 
coverage for benefits with respect to prescription drugs, and limits 
such coverage to drugs included in a formulary, the plan or issuer 
shall--
            (1) ensure the establishment of a pharmaceutical and 
        therapeutic committee that develops the formulary, the majority 
        of the members of which must be individuals who are physicians 
        or pharmacists; and
            (2) in accordance with the applicable quality assurance and 
        utilization review standards of the plan or issuer, provide for 
        exceptions from the formulary limitation when--
                    (A) the prescribing physician (or the prescribing 
                health care professional) requests such an exception;
                    (B) the drugs on the formulary within a therapeutic 
                class--
                            (i) are (or are likely to be) not as 
                        effective for the specific patient as the non-
                        formulary drug, or
                            (ii) in comparison with the non-formulary 
                        drug, have (or are likely to have) greater 
                        significant adverse side-effects for the 
                        specific patient; and
                    (C) the non-formulary drug is medically necessary 
                and appropriate for the specific patient.
    (b) Rule of Construction.--Nothing in this section shall be 
construed to prohibit a group health plan, or a health insurance issuer 
that offers health insurance coverage, from excluding coverage for a 
specific drug or class of drugs if such drugs or class of drugs is 
expressly excluded under the terms and conditions of the plan or 
coverage.
    (c) Information Disclosure Required.--Disclosure to patients and 
physicians of information on formulary restrictions is required under 
subsections (a), (b)(10), and (c)(2) of section 121(a).

SEC. 109. COVERAGE FOR INDIVIDUALS PARTICIPATING IN APPROVED CLINICAL 
              TRIALS.

    (a) Coverage.--
            (1) In general.--If a group health plan, and a health 
        insurance issuer that offers health insurance coverage, 
        provides coverage to a qualified individual (as defined in 
        subsection (b)), the plan or issuer--
                    (A) may not deny the individual participation in 
                the clinical trial referred to in subsection (b)(2);
                    (B) subject to subsections (b), (c), and (d) may 
                not deny (or limit or impose additional conditions on) 
                the coverage of routine patient costs for items and 
                services furnished in connection with participation in 
                the trial; and
                    (C) may not discriminate against the individual on 
                the basis of the participant's, beneficiaries, or 
                enrollee's participation in such trial.
            (2) Exclusion of certain costs.--For purposes of this 
        section, routine patient costs do not include costs of items 
        and services (including transportation, tests, measurements, 
        and procedures) that are provided primarily for the purpose of 
        the clinical trial involved or that otherwise are reasonably 
        expected (as determined by the Secretary) to be paid for by the 
        sponsors of an approved clinical trial.
            (3) Use of in-network providers.--If one or more 
        participating providers is participating in a clinical trial, 
        nothing in paragraph (1) shall be construed as preventing a 
        plan or issuer from requiring that a qualified individual 
        participate in the trial through such a participating provider 
        if the provider will accept the individual as a participant in 
        the trial.
    (b) Qualified Individual Defined.--For purposes of subsection (a), 
the term ``qualified individual'' means an individual who is a 
participant or beneficiary in a group health plan or an enrollee in 
health insurance coverage and who meets all the following conditions:
            (1)(A) The individual has a life-threatening or serious 
        illness for which no standard treatment is effective.
            (B) The individual is eligible to participate in an 
        approved clinical trial according to the trial protocol with 
        respect to treatment of such illness.
            (C) The individual's participation in the trial offers 
        meaningful potential for significant clinical benefit for the 
        individual.
            (2) Either--
                    (A) the referring physician is a participating 
                health care professional and has concluded that the 
                individual's participation in such trial would be 
                appropriate based upon the individual meeting the 
                conditions described in paragraph (1); or
                    (B) the participant, beneficiary, or enrollee 
                provides medical and scientific information 
                establishing that the individual's participation in 
                such trial would be appropriate based upon the 
                individual meeting the conditions described in 
                paragraph (1).
    (c) Payment.--
            (1) In general.--Under this section a group health plan, 
        and a health insurance issuer offering health insurance 
        coverage, shall provide for payment for routine patient costs 
        consistent with subsection (a)(2).
            (2) Payment rate.--In the case of covered items and 
        services provided by--
                    (A) a participating provider, the payment rate 
                shall be at the agreed upon rate, or
                    (B) a nonparticipating provider, the payment rate 
                shall be at the rate the plan would normally pay for 
                comparable services under subparagraph (A).
    (d) Approved Clinical Trial Defined.--
            (1) In general.--In this section, the term ``approved 
        clinical trial'' means a clinical research study or clinical 
        investigation approved or funded (which may include funding 
        through in-kind contributions) by one or more of the following:
                    (A) The National Institutes of Health.
                    (B) A cooperative group or center of the National 
                Institutes of Health.
                    (C) The Food and Drug Administration, but only with 
                respect to cancer clinical research studies or cancer 
                clinical investigations.
                    (D) Either of the following if the conditions 
                described in paragraph (2) are met:
                            (i) The Department of Veterans Affairs.
                            (ii) The Department of Defense.
            (2) Conditions for departments.--The conditions described 
        in this paragraph, for a study or investigation conducted by a 
        Department, are that the study or investigation has been 
        reviewed and approved through a system of peer review that the 
        Secretary determines--
                    (A) to be comparable to the system of peer review 
                of studies and investigations used by the National 
                Institutes of Health, and
                    (B) assures unbiased review of the highest 
                scientific standards by qualified individuals who have 
                no interest in the outcome of the review.
    (e) Construction.--Nothing in this section shall be construed to 
preclude a plan or issuer from offering coverage that is broader than 
the coverage required under this section with respect to clinical 
trials.
    (f) Plan Satisfaction of Certain Requirements; Responsibilities of 
Fiduciaries.--
            (1) In general.--For purposes of this section, insofar as a 
        group health plan provides benefits in the form of health 
        insurance coverage through a health insurance issuer, the plan 
        shall be treated as meeting the requirements of this section 
        with respect to such benefits and not be considered as failing 
        to meet such requirements because of a failure of the issuer to 
        meet such requirements so long as the plan sponsor or its 
        representatives did not cause such failure by the issuer.
            (2) Construction.--Nothing in this section shall be 
        construed to affect or modify the responsibilities of the 
        fiduciaries of a group health plan under part 4 of subtitle B 
        of title I of the Employee Retirement Income Security Act of 
        1974.
    (g) Study and Report.--
            (1) Study.--The Secretary shall study the impact on group 
        health plans and health insurance issuers for covering routine 
        patient care costs for individuals who are entitled to benefits 
        under this section and who are enrolled in an approved clinical 
        trial program.
            (2) Report to congress.--Not later than January 1, 2006, 
        the Secretary shall submit a report to Congress that contains 
        an assessment of--
                    (A) any incremental cost to group health plans and 
                health insurance issuers resulting from the provisions 
                of this section;
                    (B) a projection of expenditures to such plans and 
                issuers resulting from this section; and
                    (C) any impact on premiums resulting from this 
                section.

SEC. 110. PROHIBITION OF DISCRIMINATION AGAINST PROVIDERS BASED ON 
              LICENSURE.

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

SEC. 111. GENERALLY APPLICABLE PROVISION.

    Notwithstanding section 102, in the case of a group health plan, 
and a health insurance issuer that offers health insurance coverage, 
that provides benefits under 2 or more coverage options, the 
requirements of this subtitle shall apply separately with respect to 
each coverage option.

       Subtitle B--Right to Information About Plans and Providers

SEC. 121. HEALTH PLAN INFORMATION.

    (a) Requirement.--
            (1) Disclosure.--
                    (A) In general.--A group health plan, and a health 
                insurance issuer that offers health insurance coverage, 
                shall provide for the disclosure of the information 
                described in subsection (b) to participants, 
                beneficiaries, and enrollees--
                            (i) at the time of the initial enrollment 
                        of the participant, beneficiary, or enrollee 
                        under the plan or coverage;
                            (ii) on an annual basis after enrollment--
                                    (I) in conjunction with the 
                                election period of the plan or coverage 
                                if the plan or coverage has such an 
                                election period; or
                                    (II) in the case of a plan or 
                                coverage that does not have an election 
                                period, in conjunction with the 
                                beginning of the plan or coverage year; 
                                and
                            (iii) in the case of any material reduction 
                        to the benefits or information described in 
                        paragraphs (1), (2) and (3) of subsection (b), 
                        in the form of a summary notice provided not 
                        later than the date on which the reduction 
                        takes effect.
                    (B) Participants, beneficiaries, or enrollees.--The 
                disclosure required under subparagraph (A) shall be 
                provided--
                            (i)(I) jointly to each participant and 
                        beneficiary who reside at the same address; or
                            (II) in the case of a beneficiary who does 
                        not reside at the same address as the 
                        participant, separately to the participant and 
                        such beneficiary; and
                            (ii) to each enrollee.
            (2) Disclosure of prescription drug information to 
        participating physicians.--A group health plan, and a health 
        insurance issuer that offers health insurance coverage, shall 
        provide for the disclosure of the information described in 
        subsection (b)(10) and in subsection (c)(2) to participating 
        physicians upon request.
            (3) Provision of information.--Information shall be 
        provided to participants, beneficiaries, and enrollees under 
        this section at the last known address maintained by the plan 
        or issuer with respect to such participants, beneficiaries, or 
        enrollees, to the extent that such information is provided to 
        participants, beneficiaries, or enrollees via the United States 
        Postal Service or other private delivery service.
            (4) Rule of construction.--Nothing in this section shall be 
        construed to prevent a group health plan sponsor and health 
        insurance issuer from entering into an agreement under which 
        either the plan sponsor or the issuer agrees to assume 
        responsibility for compliance with the requirements of this 
        section, in whole or in part, and the party delegating such 
        responsibility is released from liability for compliance with 
        the requirements that are assumed by the other party, to the 
extent the party delegating such responsibility did not cause such 
noncompliance.
    (b) Required Information.--The informational materials to be 
distributed under this section shall include for each option available 
under the group health plan and health insurance coverage the 
following:
            (1) Benefits.--A description of the covered benefits, 
        including--
                    (A) any in- and out-of-network benefits;
                    (B) specific preventative services covered under 
                the plan or coverage if such services are covered;
                    (C) any benefit limitations, including any annual 
                or lifetime benefit limits and any monetary limits or 
                limits on the number of visits, days, or services, and 
                any specific coverage exclusions; and
                    (D) any definition of medical necessity used in 
                making coverage determinations by the plan, issuer, or 
                claims administrator.
            (2) Cost sharing.--A description of any cost-sharing 
        requirements, including--
                    (A) any premiums, deductibles, coinsurance, 
                copayment amounts, and liability for balance billing 
                above any reasonable and customary charges, for which 
                the participant, beneficiary, or enrollee will be 
                responsible under each option available under the plan;
                    (B) any maximum out-of-pocket expense for which the 
                participant, beneficiary, or enrollee may be liable;
                    (C) any cost-sharing requirements for out-of-
                network benefits or services received from 
                nonparticipating providers; and
                    (D) any additional cost-sharing or charges for 
                benefits and services that are furnished without 
                meeting applicable plan or coverage requirements, such 
                as prior authorization or precertification.
            (3) Service area.--A description of the plan or issuer's 
        service area, including the provision of any out-of-area 
        coverage.
            (4) Participating providers.--A directory of participating 
        providers (to the extent a plan or issuer provides coverage 
        through a network of providers) that includes, at a minimum, 
        the name, address, and telephone number of each participating 
        provider, and information about how to inquire whether a 
        participating provider is currently accepting new patients.
            (5) Choice of primary care provider.--A description of any 
        requirements and procedures to be used by participants, 
        beneficiaries, and enrollees in selecting, accessing, or 
        changing their primary care provider, including providers both 
        within and outside of the network (if the plan or issuer 
        permits out-of-network services), and the right to select a 
        pediatrician as a primary care provider under section 104 for a 
        participant, beneficiary, or enrollee who is a child if such 
        section applies.
            (6) Preauthorization requirements.--A description of the 
        requirements and procedures to be used to obtain 
        preauthorization for health services, if such preauthorization 
        is required.
            (7) Experimental and investigational treatments.--A 
        description of the process for determining whether a particular 
        item, service, or treatment is considered experimental or 
        investigational, and the circumstances under which such 
        treatments are covered by the plan or issuer.
            (8) Specialty care.--A description of the requirements and 
        procedures to be used by participants, beneficiaries, and 
        enrollees in accessing specialty care and obtaining referrals 
        to participating and nonparticipating specialists, including 
        the right to timely coverage for access to specialists care 
        under section 105 if such section applies.
            (9) Clinical trials.--A description the circumstances and 
        conditions under which participation in clinical trials is 
        covered under the terms and conditions of the plan or coverage, 
        and the right to obtain coverage for approved cancer clinical 
        trials under section 109 if such section applies.
            (10) Prescription drugs.--To the extent the plan or issuer 
        provides coverage for prescription drugs, a statement of 
        whether such coverage is limited to drugs included in a 
        formulary, a description of any provisions and cost-sharing 
        required for obtaining on- and off-formulary medications, and a 
        description of the rights of participants, beneficiaries, and 
        enrollees in obtaining access to access to prescription drugs 
        under section 107 if such section applies.
            (11) Emergency services.--A summary of the rules and 
        procedures for accessing emergency services, including the 
        right of a participant, beneficiary, or enrollee to obtain 
        emergency services under the prudent layperson standard under 
        section 101, if such section applies, and any educational 
        information that the plan or issuer may provide regarding the 
        appropriate use of emergency services.
            (12) Claims and appeals.--A description of the plan or 
        issuer's rules and procedures pertaining to claims and appeals, 
        a description of the rights of participants, beneficiaries, or 
        enrollees under sections 503, 503A and 503B of the Employee 
        Retirement Income Security Act of 1974 (or sections 2707(b) and 
        2753(b) of the Public Health Service with respect to non-
        Federal governmental plans and individual health insurance 
        coverage) in obtaining covered benefits, filing a claim for 
        benefits, and appealing coverage determinations internally and 
        externally (including telephone numbers and mailing addresses 
        of the appropriate authority), and a description of any 
        additional legal rights and remedies available under section 
        502 of the Employee Retirement Income Security Act of 1974.
            (13) Advance directives and organ donation.--A description 
        of procedures for advance directives and organ donation 
        decisions if the plan or issuer maintains such procedures.
            (14) Information on plans and issuers.--The name, mailing 
        address, and telephone number or numbers of the plan 
        administrator and the issuer to be used by participants, 
        beneficiaries, and enrollees seeking information about plan or 
        coverage benefits and services, payment of a claim, or 
        authorization for services and treatment. The name of the 
        designated decisionmaker (or decisionmakers) appointed under 
        section 502(n)(2) of the Employee Retirement Income Security 
        Act of 1974 for purposes of making final determinations under 
        section 503A of such Act and approving coverage pursuant to the 
        written determination of an independent medical reviewer under 
        section 503B of such Act. Notice of whether the benefits under 
        the plan are provided under a contract or policy of insurance 
        issued by an issuer, or whether benefits are provided directly 
        by the plan sponsor who bears the insurance risk.
            (15) Translation services.--A summary description of any 
        translation or interpretation services (including the 
        availability of printed information in languages other than 
        English, audio tapes, or information in Braille) that are 
        available for non-English speakers and participants, 
        beneficiaries, and enrollees with communication disabilities 
        and a description of how to access these items or services.
            (16) Accreditation information.--Any information that is 
        made public by accrediting organizations in the process of 
        accreditation if the plan or issuer is accredited, or any 
        additional quality indicators (such as the results of enrollee 
        satisfaction surveys) that the plan or issuer makes public or 
        makes available to participants, beneficiaries, and enrollees.
            (17) Notice of requirements.--A description of any rights 
        of participants, beneficiaries, and enrollees that are 
        established by this Act (excluding those described in 
        paragraphs (1) through (16)) if such rights apply. The 
        description required under this paragraph may be combined with 
        the notices required under sections 711(d), 713(b), or 
        606(a)(1) of the Employee Retirement Income Security Act of 
1974, and with any other notice provision that the Secretary determines 
may be combined.
            (18) Compensation methods.--A summary description of the 
        methods (including capitation, fee-for-service, salary, 
        withholds, bonuses, bundled payments, per diem, or a 
        combination thereof) used for compensating participating health 
        care professionals (including primary care providers and 
        specialists) and facilities in connection with the provision of 
        health care under the plan or coverage. The requirement of this 
        paragraph shall not be construed as requiring plans or issuers 
        to provide information concerning proprietary payment 
        methodology.
            (19) Availability of additional information.--A statement 
        that the information described in subsection (c), and 
        instructions on obtaining such information (including telephone 
        numbers and, if available, Internet websites), shall be made 
        available upon request.
    (c) Additional Information.--The informational materials to be 
provided upon the request of a participant, beneficiary, or enrollees 
shall include for each option available under a group health plan and 
health insurance coverage the following:
            (1) Status of providers.--The State licensure status of the 
        plan or issuer's participating health care professionals and 
        participating health care facilities, and, if available, the 
        education, training, specialty qualifications or certifications 
        of such professionals.
            (2) Prescription drugs.--Information about whether a 
        specific prescription medication is included in the formulary 
        of the plan or issuer, if the plan or issuer uses a defined 
        formulary.
            (3) External appeals information.--Aggregate information on 
        the number and outcomes of external medical reviews, relative 
        to the sample size (such as the number of covered lives) 
        determined for the plan or issuer's book of business.
    (d) Manner of Disclosure.--The information described in this 
section shall be disclosed in an accessible medium and format that is 
calculated to be understood by the average participant.
    (e) Rules of Construction.--Nothing in this section shall be 
construed to prohibit a group health plan, or a health insurance issuer 
that offers health insurance coverage, from--
            (1) distributing any other additional information 
        determined by the plan or issuer to be important or necessary 
        in assisting participants, beneficiaries, and enrollees in the 
        selection of a health plan; and
            (2) complying with the provisions of this section by 
        providing information in brochures, through the Internet or 
        other electronic media, or through other similar means, so long 
        as participants, beneficiaries, and enrollees are provided with 
        an opportunity to request that informational materials be 
        provided in printed form.
    (f) Conforming Regulations.--The Secretary shall issue regulations 
to coordinate the requirements on group health plans and health 
insurance issuers under this section with the requirements imposed 
under part 1, to reduce duplication with respect to any information 
that is required to be provided under any such requirements.
    (g) Secretarial Enforcement Authority.--
            (1) In general.--The Secretary of Health and Human Services 
        or the Secretary of Labor (as appropriate) may assess a civil 
        monetary penalty against the administrator of a plan or issuer 
        in connection with the failure of the plan or issuer to comply 
        with the requirements of this section.
            (2) Amount of penalty.--The amount of the penalty to be 
        imposed under paragraph (1) shall not exceed $100 for each day 
        for each participant, beneficiary, or enrollee with respect to 
        which the failure to comply with the requirements of this 
        section occurs.
            (3) Failure defined.--For purposes of this subsection, a 
        plan or issuer shall have failed to comply with the 
        requirements of this section with respect to a participant, 
        beneficiary, or enrollee if the plan or issuer failed or 
        refused to comply with the requirements of this section within 
        30 days--
                    (A) of the date described in subsection 
                (a)(1)(A)(i);
                    (B) of the date described in subsection 
                (a)(1)(A)(ii); or
                    (C) of the date on which additional information was 
                requested under subsection (c).
    (h) Conforming Amendments.--
            (1) Section 732(a) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1191a(a)) is amended by 
        striking ``section 711'' and inserting ``section 711 and 
        section 121 of the Patients' Bill of Rights Act of 2001''.
            (2) Section 502(b)(3) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1132(b)(3)) is amended by 
        striking ``733(a)(1))'' and inserting ``733(a)(1)), except with 
        respect to the requirements of section 121 of the Patients' 
        Bill of Rights Act of 2001''.

SEC. 122. STUDY ON THE EFFECT OF PHYSICIAN COMPENSATION METHODS.

    (a) Study and Report.--
            (1) In general.--The Secretary shall enter into a contract 
        with the Institute of Medicine for the conduct of a study in 
        accordance with this section, to be submitted to the Secretary 
        and the Secretary of Labor as provided for in paragraph (4).
            (2) Matters to be studied.--The study under paragraph (1) 
        shall include--
                    (A) a study, including a survey if necessary, of 
                physician compensation arrangements that are utilized 
                in employer-sponsored group health plans (including 
                group health plans sponsored by government and non-
                government employers) and commercial health insurance 
                products, including--
                            (i) all types of compensation arrangements, 
                        including financial incentive and risk sharing 
                        arrangements and arrangements that do not 
                        contain such incentives and risk sharing, that 
                        reflect the complexity of organizational 
                        relationships between health plans and 
                        physicians;
                            (ii) arrangements that are based on factors 
                        such as utilization management, cost control, 
                        quality improvement, and patient or enrollee 
                        satisfaction; and
                            (iii) arrangements between the plan or 
                        issuer and provider, as well as down-stream 
                        arrangements between providers and sub-
                        contracted providers;
                    (B) an analysis of the effect of such differing 
                arrangements on physician behavior with respect to the 
                provision of medical care to patients, including 
                whether and how such arrangements affect the quality of 
                patient care and the ability of physicians to provide 
                care that is medically necessary and appropriate.
            (3) Study design.--The Secretary shall consult with the 
        Director of the Agency for Healthcare Research and Quality in 
        preparing the scope of work and study design with respect to 
        the contract under paragraph (1).
            (4) Report.--Not later than 24 months after the date of 
        enactment of this Act, the Secretary shall forward to the 
        appropriate committees of Congress a copy of the report and 
        study conducted under subsection (a).
    (b) Research.--
            (1) In general.--The Secretary, acting through the Director 
        of the Agency for Healthcare Research and Quality, shall 
        conduct and support research to develop scientific evidence 
        regarding the effects of differing physician compensation 
        methods on physician behavior with respect to the provision of 
        medical care to patients, particularly issues relating to the 
        quality of patient care and whether patients receive medically 
        necessary and appropriate care.
            (2) Authorization of appropriations.--For purposes of 
        carrying out this section, there are authorized to be 
        appropriated such sums as may be necessary.

           Subtitle C--Right to Hold Health Plans Accountable

SEC. 131. AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (a) In General.--Part 5 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 is amended by inserting after 
section 503 (29 U.S.C. 1133) the following:

``SEC. 503A. CLAIMS AND INTERNAL APPEALS PROCEDURES FOR GROUP HEALTH 
              PLANS.

    ``(a) Initial Claim for Benefits Under Group Health Plans.--
            ``(1) Procedures.--
                    ``(A) In general.--A group health plan, and a 
                health insurance issuer that offers health insurance 
                coverage in connection with a group health plan, shall 
                ensure that procedures are in place for--
                            ``(i) making a determination on an initial 
                        claim for benefits by a participant or 
                        beneficiary (or authorized representative) 
                        regarding payment or coverage for items or 
                        services under the terms and conditions of the 
                        plan or coverage involved, including any cost-
                        sharing amount that the participant or 
                        beneficiary is required to pay with respect to 
                        such claim for benefits; and
                            ``(ii) notifying a participant or 
                        beneficiary (or authorized representative) and 
                        the treating health care professional involved 
                        regarding a determination on an initial claim 
                        for benefits made under the terms and 
                        conditions of the plan or coverage, including 
                        any cost-sharing amounts that the participant 
                        or beneficiary may be required to make with 
                        respect to such claim for benefits, and of the 
                        right of the participant or beneficiary to an 
                        internal appeal under subsection (b).
                    ``(B) Access to information.--With respect to an 
                initial claim for benefits, the participant or 
                beneficiary (or authorized representative) and the 
                treating health care professional (if any) shall 
                provide the plan or issuer with access to information 
                requested by the plan or issuer that is necessary to 
                make a determination relating to the claim, not later 
                than 5 days after the date on which the claim is filed 
                or to meet the applicable timelines under clauses (ii) 
                and (iii) of paragraph (2)(A).
                    ``(C) Oral requests.--In the case of a claim for 
                benefits involving an expedited or concurrent 
                determination, a participant or beneficiary (or 
                authorized representative) may make an initial claim 
                for benefits orally, but a group health plan, or health 
                insurance issuer that offers health insurance coverage 
                in connection with a group health plan, may require 
                that the participant or beneficiary (or authorized 
                representative) provide written confirmation of such 
                request in a timely manner.
            ``(2) Timeline for making determinations.--
                    ``(A) Prior authorization determination.--
                            ``(i) In general.--A group health plan, and 
                        a health insurance issuer that offers health 
                        insurance coverage in connection with a group 
                        health plan, shall maintain procedures to 
                        ensure that a prior authorization determination 
                        on a claim for benefits is made within 14 days 
                        from the date on which the plan or issuer 
                        receives information that is reasonably 
                        necessary to enable the plan or issuer to make 
                        a determination on the request for prior 
                        authorization, but in no case shall such 
                        determination be made later than 21 days after 
                        the receipt of the claim for benefits.
                            ``(ii) Expedited determination.--
                        Notwithstanding clause (i), a group health 
                        plan, and a health insurance issuer that offers 
                        health insurance coverage in connection with a 
                        group health plan, shall maintain procedures 
                        for expediting a prior authorization 
                        determination on a claim for benefits described 
                        in such clause when a request for such an 
                        expedited determination is made by a 
                        participant or beneficiary (or authorized 
                        representative) at any time during the process 
                        for making a determination and the treating 
                        health care professional substantiates, with 
                        the request, that a determination under the 
                        procedures described in clause (i) would 
                        seriously jeopardize the life or health of the 
                        participant or beneficiary. Such determination 
                        shall be made within 72 hours after a request 
                        is received by the plan or issuer under this 
                        clause.
                            ``(iii) Concurrent determinations.--A group 
                        health plan, and a health insurance issuer that 
                        offers health insurance coverage in connection 
                        with a group health plan, shall maintain 
                        procedures to ensure that a concurrent 
                        determination on a claim for benefits that 
                        results in a discontinuation of inpatient care 
                        is made within 24 hours after the receipt of 
                        the claim for benefits.
                    ``(B) Retrospective determination.--A group health 
                plan, and a health insurance issuer that offers health 
                insurance coverage in connection with a group health 
                plan, shall maintain procedures to ensure that a 
                retrospective determination on a claim for benefits is 
                made within 30 days of the date on which the plan or 
                issuer receives information that is reasonably 
                necessary to enable the plan or issuer to make a 
                determination on the claim, but in no case shall such 
                determination be made later than 60 days after the 
                receipt of the claim for benefits.
            ``(3) Notice of a denial of a claim for benefits.--Written 
        notice of a denial made under an initial claim for benefits 
        shall be issued to the participant or beneficiary (or 
        authorized representative) and the treating health care 
professional not later than 2 days after the determination (or within 
the 72-hour or 24-hour period referred to in clauses (ii) and (iii) of 
paragraph (2)(A) if applicable).
            ``(4) Requirements of notice of determinations.--The 
        written notice of a denial of a claim for benefits 
        determination under paragraph (3) shall include--
                    ``(A) the reasons for the determination (including 
                a summary of the clinical or scientific-evidence based 
                rationale used in making the determination and 
                instruction on obtaining a more complete description 
                written in a manner calculated to be understood by the 
                average participant);
                    ``(B) the procedures for obtaining additional 
                information concerning the determination; and
                    ``(C) notification of the right to appeal the 
                determination and instructions on how to initiate an 
                appeal in accordance with subsection (b).
    ``(b) Internal Appeal of a Denial of a Claim for Benefits.--
            ``(1) Right to internal appeal.--
                    ``(A) In general.--A participant or beneficiary (or 
                authorized representative) may appeal any denial of a 
                claim for benefits under subsection (a) under the 
                procedures described in this subsection.
                    ``(B) Time for appeal.--A group health plan, and a 
                health insurance issuer that offers health insurance 
                coverage in connection with a group health plan, shall 
                ensure that a participant or beneficiary (or authorized 
                representative) has a period of not less than 90 days 
                beginning on the date of a denial of a claim for 
                benefits under subsection (a) in which to appeal such 
                denial under this subsection.
                    ``(C) Failure to act.--The failure of a plan or 
                issuer to issue a determination on a claim for benefits 
                under subsection (a) within the applicable timeline 
                established for such a determination under such 
                subsection shall be treated as a denial of a claim for 
                benefits for purposes of proceeding to internal review 
                under this subsection.
                    ``(D) Plan waiver of internal review.--A group 
                health plan, and a health insurance issuer that offers 
                health insurance coverage in connection with a group 
                health plan, may waive the internal review process 
                under this subsection and permit a participant or 
                beneficiary (or authorized representative) to proceed 
                directly to external review under section 503B.
            ``(2) Timelines for making determinations.--
                    ``(A) Oral requests.--In the case of an appeal of a 
                denial of a claim for benefits under this subsection 
                that involves an expedited or concurrent determination, 
                a participant or beneficiary (or authorized 
                representative) may request such appeal orally, but a 
                group health plan, and a health insurance issuer that 
                offers health insurance coverage in connection with a 
                group health plan, may require that the participant or 
                beneficiary (or authorized representative) provide 
                written confirmation of such request in a timely 
                manner.
                    ``(B) Access to information.--With respect to an 
                appeal of a denial of a claim for benefits, the 
                participant or beneficiary (or authorized 
                representative) and the treating health care 
                professional (if any) shall provide the plan or issuer 
                with access to information requested by the plan or 
                issuer that is necessary to make a determination 
                relating to the appeal, not later than 5 days after the 
                date on which the request for the appeal is filed or to 
                meet the applicable timelines under clauses (ii) and 
                (iii) of subparagraph (C).
                    ``(C) Prior authorization determinations.--
                            ``(i) In general.--A group health plan, and 
                        a health insurance issuer that offers health 
                        insurance coverage in connection with a group 
                        health plan, shall maintain procedures to 
                        ensure that a determination on an appeal of a 
                        denial of a claim for benefits under this 
                        subsection is made within 14 days after the 
                        date on which the plan or issuer receives 
                        information that is reasonably necessary to 
                        enable the plan or issuer to make a 
                        determination on the appeal, but in no case 
                        shall such determination be made later than 21 
                        days after the receipt of the request for the 
                        appeal.
                            ``(ii) Expedited determination.--
                        Notwithstanding clause (i), a group health 
                        plan, and a health insurance issuer that offers 
                        health insurance coverage in connection with a 
                        group health plan, shall maintain procedures 
                        for expediting a prior authorization 
                        determination on an appeal of a denial of a 
                        claim for benefits described in clause (i), 
                        when a request for such an expedited 
                        determination is made by a participant or 
                        beneficiary (or authorized representative) at 
                        any time during the process for making a 
                        determination and the treating health care 
                        professional substantiates, with the request, 
                        that a determination under the procedures 
                        described in clause (i) would seriously 
                        jeopardize the life or health of the 
                        participant or beneficiary. Such determination 
                        shall be made not later than 72 hours after the 
                        request for such appeal is received by the plan 
                        or issuer under this clause.
                            ``(iii) Concurrent determinations.--A group 
                        health plan, and a health insurance issuer that 
                        offers health insurance coverage in connection 
                        with a group health plan, shall maintain 
                        procedures to ensure that a concurrent 
                        determination on an appeal of a denial of a 
                        claim for benefits that results in a 
                        discontinuation of inpatient care is made 
                        within 24 hours after the receipt of the 
                        request for appeal.
                    ``(B) Retrospective determination.--A group health 
                plan, and a health insurance issuer that offers health 
                insurance coverage in connection with a group health 
                plan, shall maintain procedures to ensure that a 
                retrospective determination on an appeal of a claim for 
                benefits is made within 30 days of the date on which 
                the plan or issuer receives necessary information that 
                is reasonably required by the plan or issuer to make a 
                determination on the appeal, but in no case shall such 
                determination be made later than 60 days after the 
                receipt of the request for the appeal.
            ``(3) Conduct of review.--
                    ``(A) In general.--A review of a denial of a claim 
                for benefits under this subsection shall be conducted 
                by an individual with appropriate expertise who was not 
                directly involved in the initial determination.
                    ``(B) Review of medical determinations by 
                physicians.--A review of an appeal of a denial of a 
                claim for benefits that is based on a lack of medical 
                necessity and appropriateness, or based on an 
                experimental or investigational treatment, or requires 
                an evaluation of medical facts, shall be made by a 
                physician with appropriate expertise, including 
                pediatric expertise where necessary, to evaluate the 
                relevant conditions, who was not involved in the 
                initial determination.
            ``(4) Notice of determination.--
                    ``(A) In general.--Written notice of a 
                determination made under an internal appeal of a denial 
                of a claim for benefits shall be issued to the 
                participant or beneficiary (or authorized 
                representative) and the treating health care 
                professional not later than 2 days after the completion 
                of the review (or within the 72-hour or 24-hour period 
                referred to in paragraph (2) if applicable).
                    ``(B) Final determination.--The determination by a 
                plan or issuer under this subsection shall be treated 
                as the final determination of the plan or issuer on a 
                denial of a claim for benefits.
                    ``(C) Failure to act.--The failure of a plan or 
                issuer to issue a determination on an appeal of a 
                denial of a claim for benefits under this subsection 
within the applicable timeline established for such a determination 
shall be treated as a final determination on an appeal of a denial of a 
claim for benefits for purposes of proceeding to external review under 
section 503B.
                    ``(D) Requirements of notice.--With respect to a 
                determination made under this subsection, the notice 
                described in subparagraph (A) shall include--
                            ``(i) the reasons for the determination 
                        (including a summary of the clinical or 
                        scientific-evidence based rationale used in 
                        making the determination and instruction on 
                        obtaining a more complete description written 
                        in a manner calculated to be understood by the 
                        average participant);
                            ``(ii) the procedures for obtaining 
                        additional information concerning the 
                        determination; and
                            ``(iii) notification of the right to an 
                        independent external review under section 503B 
                        and instructions on how to initiate such a 
                        review.
    ``(c) Definitions.--The definitions contained in section 503B(i) 
shall apply for purposes of this section.

``SEC. 503B. INDEPENDENT EXTERNAL APPEALS PROCEDURES FOR GROUP HEALTH 
              PLANS.

    ``(a) Right to External Appeal.--A group health plan, and a health 
insurance issuer that offers health insurance coverage in connection 
with a group health plan, shall provide in accordance with this section 
participants and beneficiaries (or authorized representatives) with 
access to an independent external review for any denial of a claim for 
benefits.
    ``(b) Initiation of the Independent External Review Process.--
            ``(1) Time to file.--A request for an independent external 
        review under this section shall be filed with the plan or 
        issuer not later than 90 days after the date on which the 
        participant or beneficiary receives notice of the denial under 
        section 503A(b)(4) or the date on which the internal review is 
        waived by the plan or issuer under section 503A(b)(1)(D).
            ``(2) Filing of request.--
                    ``(A) In general.--Subject to the succeeding 
                provisions of this subsection, a group health plan, and 
                a health insurance issuer that offers health insurance 
                coverage in connection with a group health plan, may--
                            ``(i) except as provided in subparagraph 
                        (B)(i), require that a request for review be in 
                        writing;
                            ``(ii) limit the filing of such a request 
                        to the participant or beneficiary involved (or 
                        an authorized representative);
                            ``(iii) except if waived by the plan or 
                        issuer under section 503A(b)(1)(D), condition 
                        access to an independent external review under 
                        this section upon a final determination of a 
                        denial of a claim for benefits under the 
                        internal review procedure under section 503A;
                            ``(iv) except as provided in subparagraph 
                        (B)(ii), require payment of a filing fee to the 
                        plan or issuer of a sum that does not exceed 
                        $50; and
                            ``(v) require that a request for review 
                        include the consent of the participant or 
                        beneficiary (or authorized representative) for 
                        the release of medical information or records 
                        of the participant or beneficiary to the 
                        qualified external review entity for purposes 
                        of conducting external review activities.
                    ``(B) Requirements and exception relating to 
                general rule.--
                            ``(i) Oral requests permitted in expedited 
                        or concurrent cases.--In the case of an 
                        expedited or concurrent external review as 
                        provided for under subsection (e), the request 
                        may be made orally. In such case a written 
                        confirmation of such request shall be made in a 
                        timely manner. Such written confirmation shall 
                        be treated as a consent for purposes of 
                        subparagraph (A)(v).
                            ``(ii) Exception to filing fee 
                        requirement.--
                                    ``(I) Indigency.--Payment of a 
                                filing fee shall not be required under 
                                subparagraph (A)(iv) where there is a 
                                certification (in a form and manner 
                                specified in guidelines established by 
                                the Secretary) that the participant or 
                                beneficiary is indigent (as defined in 
                                such guidelines). In establishing 
                                guidelines under this subclause, the 
                                Secretary shall ensure that the 
                                guidelines relating to indigency are 
                                consistent with the poverty guidelines 
                                used by the Secretary of Health and 
                                Human Services under title XIX of the 
                                Social Security Act.
                                    ``(II) Fee not required.--Payment 
                                of a filing fee shall not be required 
                                under subparagraph (A)(iv) if the plan 
                                or issuer waives the internal appeals 
                                process under section 503A(b)(1)(D).
                                    ``(III) Refunding of fee.--The 
                                filing fee paid under subparagraph 
                                (A)(iv) shall be refunded if the 
                                determination under the independent 
                                external review is to reverse the 
                                denial which is the subject of the 
                                review.
                                    ``(IV) Increase in amount.--The 
                                amount referred to in subparagraph 
                                (A)(iv) shall be increased or 
                                decreased, for each calendar year that 
                                ends after December 31, 2002, by the 
                                same percentage as the percentage by 
                                which the Consumer Price Index for All 
                                Urban Consumers (United States city 
                                average), published by the Bureau of 
                                Labor Statistics, for September of the 
                                preceding calendar year has increased 
                                or decreased from the such Index for 
                                September of 2002.
    ``(c) Referral to Qualified External Review Entity Upon Request.--
            ``(1) In general.--Upon the filing of a request for 
        independent external review with the group health plan, or 
        health insurance issuer that offers health insurance coverage 
        in connection with a group health plan, the plan or issuer 
        shall refer such request to a qualified external review entity 
        selected in accordance with this section.
            ``(2) Access to plan or issuer and health professional 
        information.--With respect to an independent external review 
        conducted under this section, the participant or beneficiary 
        (or authorized representative), the plan or issuer, and the 
        treating health care professional (if any) shall provide the 
        external review entity with access to information requested by 
        the external review entity that is necessary to conduct a 
        review under this section, as determined by the entity, not 
        later than 5 days after the date on which a request is referred 
        to the qualified external review entity under paragraph (1), or 
        earlier as determined appropriate by the entity to meet the 
        applicable timelines under clauses (ii) and (iii) of subsection 
        (e)(1)(A).
            ``(3) Screening of requests by qualified external review 
        entities.--
                    ``(A) In general.--With respect to a request 
                referred to a qualified external review entity under 
                paragraph (1) relating to a denial of a claim for 
                benefits, the entity shall refer such request for the 
                conduct of an independent medical review unless the 
                entity determines that--
                            ``(i) any of the conditions described in 
                        subsection (b)(2)(A) have not been met;
                            ``(ii) the thresholds described in 
                        subparagraph (B) have not been met;
                            ``(iii) the denial of the claim for 
                        benefits does not involve a medically 
                        reviewable determination under subsection 
                        (d)(2);
                            ``(iv) the denial of the claim for benefits 
                        relates to a determination regarding whether an 
                        individual is a participant or beneficiary who 
                        is enrolled under the terms of the plan or 
                        coverage (including the applicability of any 
                        waiting period under the plan or coverage); or
                            ``(v) the denial of the claim for benefits 
                        is a determination as to the application of 
                        cost-sharing requirements or the application of 
                        a specific exclusion or express limitation on 
                        the amount, duration, or scope of coverage of 
                        items or services under the terms and 
                        conditions of the plan or coverage unless the 
                        determination is a denial described in 
                        subsection (d)(2);
                Upon making a determination that any of clauses (i) 
                through (v) applies with respect to the request, the 
                entity shall determine that the denial of a claim for 
                benefits involved is not eligible for independent 
                medical review under subsection (d), and shall provide 
                notice in accordance with subparagraph (D).
                    ``(B) Thresholds.--
                            ``(i) In general.--The thresholds described 
                        in this subparagraph are that--
                                    ``(I) the total amount payable 
                                under the plan or coverage for the item 
                                or service that was the subject of such 
                                denial exceeds $100; or
                                    ``(II) a physician has asserted in 
                                writing that there is a significant 
                                risk of placing the life, health, or 
                                development of the participant or 
                                beneficiary in jeopardy if the denial 
                                of the claim for benefits is sustained.
                            ``(ii) Thresholds not applied.--The 
                        thresholds described in this subparagraph shall 
                        not apply if the plan or issuer involved waives 
                        the internal appeals process with respect to 
                        the denial of a claim for benefits involved 
                        under section 503A(b)(1)(D).
                    ``(C) Process for making determinations.--
                            ``(i) No deference to prior 
                        determinations.--In making determinations under 
                        subparagraph (A), there shall be no deference 
                        given to determinations made by the plan or 
                        issuer under section 503A or the recommendation 
                        of a treating health care professional (if 
                        any).
                            ``(ii) Use of appropriate personnel.--A 
                        qualified external review entity shall use 
                        appropriately qualified personnel to make 
                        determinations under this section.
                    ``(D) Notices and general timelines for 
                determination.--
                            ``(i) Notice in case of denial of 
                        referral.--If the entity under this paragraph 
                        does not make a referral to an independent 
                        medical reviewer, the entity shall provide 
                        notice to the plan or issuer, the participant 
                        or beneficiary (or authorized representative) 
                        filing the request, and the treating health 
                        care professional (if any) that the denial is 
                        not subject to independent medical review. Such 
                        notice--
                                    ``(I) shall be written (and, in 
                                addition, may be provided orally) in a 
                                manner calculated to be understood by 
                                an average participant;
                                    ``(II) shall include the reasons 
                                for the determination; and
                                    ``(III) include any relevant terms 
                                and conditions of the plan or coverage.
                            ``(ii) General timeline for 
                        determinations.--Upon receipt of information 
                        under paragraph (2), the qualified external 
                        review entity, and if required the independent 
                        medical reviewer, shall make a determination 
                        within the overall timeline that is applicable 
                        to the case under review as described in 
                        subsection (e), except that if the entity 
                        determines that a referral to an independent 
                        medical reviewer is not required, the entity 
                        shall provide notice of such determination to 
                        the participant or beneficiary (or authorized 
                        representative) within 2 days of such 
                        determination.
    ``(d) Independent Medical Review.--
            ``(1) In general.--If a qualified external review entity 
        determines under subsection (c) that a denial of a claim for 
        benefits is eligible for independent medical review, the entity 
        shall refer the denial involved to an independent medical 
        reviewer for the conduct of an independent medical review under 
        this subsection.
            ``(2) Medically reviewable determinations.--For purposes of 
        this section, a denial of a claim for benefits is a medically 
        reviewable determination if the benefit the item or service 
        with respect to which the determination is made would be a 
        covered benefit under the terms and conditions of the plan or 
        coverage but for one (or more) of the following determinations:
                    ``(A) Denials based on medical necessity and 
                appropriateness.--The basis of the determination is 
                that the item or service is not medically necessary and 
                appropriate.
                    ``(B) Denials based on experimental or 
                investigational treatment.--The basis of the 
                determination is that the item or service is 
                experimental or investigational.
                    ``(C) Denials otherwise based on an evaluation of 
                medical facts.--A determination that the item or 
                service or condition is not covered but an evaluation 
                of the medical facts by a health care professional in 
                the specific case involved is necessary to determine 
                whether the item or service or condition is required to 
                be provided under the terms and conditions of the plan 
                or coverage.
            ``(3) Independent medical review determination.--
                    ``(A) In general.--An independent medical reviewer 
                under this section shall make a new independent 
                determination with respect to--
                            ``(i) whether the item or service or 
                        condition that is the subject of the denial is 
                        covered under the terms and conditions of the 
                        plan or coverage; and
                            ``(ii) based upon an affirmative 
                        determination under clause (i), whether or not 
                        the denial of a claim for a benefit that is the 
                        subject of the review should be upheld or 
                        reversed.
                    ``(B) Standard for determination.--The independent 
                medical reviewer's determination relating to the 
                medical necessity and appropriateness, or the 
                experimental or investigation nature, or the evaluation 
                of the medical facts of the item, service, or condition 
                shall be based on the medical condition of the 
                participant or beneficiary (including the medical 
                records of the participant or beneficiary) and the 
                valid, relevant scientific evidence and clinical 
                evidence. The independent medical reviewer may consider 
                peer-reviewed medical literature or findings and peer-
                reviewed expert opinions and expert consensus. In 
                determining the medical necessity and appropriateness 
                of any item or service for which a claim for benefits 
                is denied, the independent medical reviewer shall 
                consider the effectiveness of the alternative items and 
                services, if any, for which benefits were authorized by 
                the plan or issuer involved for the participant or 
                beneficiary.
                    ``(C) No coverage for excluded benefits.--Nothing 
                in this subsection shall be construed to permit an 
                independent medical reviewer to require that a group 
                health plan, or health insurance issuer that offers 
                health insurance coverage in connection with a group 
                health plan, provide coverage for items or services 
                that are specifically excluded or expressly limited 
                under the plan or coverage and that are not covered 
                regardless of any determination relating to medical 
                necessity and appropriateness, experimental or 
                investigational nature of the treatment, or an 
                evaluation of the medical facts in the case involved.
                    ``(D) Evidence and information to be used in 
                medical reviews.--In making a determination under this 
                subsection, the independent medical reviewer shall also 
                consider appropriate and available evidence and 
                information, including the following:
                            ``(i) The determination made by the plan or 
                        issuer with respect to the claim upon internal 
                        review and the evidence or guidelines used by 
                        the plan or issuer in reaching such 
                        determination.
                            ``(ii) The recommendation of the treating 
                        health care professional and the evidence, 
                        guidelines, and rationale used by the treating 
                        health care professional in reaching such 
                        recommendation.
                            ``(iii) Additional evidence or information 
                        obtained by the reviewer or submitted by the 
                        plan, issuer, participant or beneficiary (or an 
                        authorized representative), or treating health 
                        care professional.
                            ``(iv) The plan or coverage document.
                    ``(E) Independent determination.--In making the 
                determination, the independent medical reviewer shall--
                            ``(i) consider the claim under review 
                        without deference to the determinations made by 
                        the plan or issuer under section 503A or the 
                        recommendation of the treating health care 
                        professional (if any); and
                            ``(ii) consider, but not be bound by the 
                        definition used by the plan or issuer of 
                        `medically necessary and appropriate', or 
                        `experimental or investigational', or other 
                        equivalent terms that are used by the plan or 
                        issuer to describe medical necessity and 
                        appropriateness or experimental or 
                        investigational nature of the treatment.
                    ``(F) Determination of independent medical 
                reviewer.--An independent medical reviewer shall, in 
                accordance with the deadlines described in subsection 
                (e), prepare a written determination to uphold or 
                reverse the denial under review and, in the case of a 
                reversal, the timeframe within which the plan or issuer 
                shall authorize coverage to comply with the 
                determination. Such written determination shall include 
                the specific reasons of the reviewer for such 
                determination, including a summary of the clinical or 
                scientific-evidence based rationale used in making the 
                determination. The reviewer may provide the plan or 
                issuer and the treating health care professional with 
                additional recommendations in connection with such a 
                determination, but any such recommendations shall not 
                be treated as part of the determination and shall not 
                be admissible in any action under section 502.
    ``(e) Timelines and Notifications.--
            ``(1) Timelines for independent medical review.--
                    ``(A) Prior authorization determination.--
                            ``(i) In general.--The independent medical 
                        reviewer (or reviewers) shall make a 
                        determination on a denial of a claim for 
                        benefits that is referred to the reviewer under 
                        subsection (c)(3) not later than 14 days after 
                        the receipt of information under subsection 
                        (c)(2) if the review involves a prior 
                        authorization of items or services.
                            ``(ii) Expedited determination.--
                        Notwithstanding clause (i), the independent 
                        medical reviewer (or reviewers) shall make an 
                        expedited determination on a denial of a claim 
                        for benefits described in clause (i), when a 
                        request for such an expedited determination is 
                        made by a participant or beneficiary (or 
                        authorized representative) at any time during 
                        the process for making a determination, and the 
                        treating health care professional 
                        substantiates, with the request, that a 
                        determination under the timeline described in 
                        clause (i) would seriously jeopardize the life 
                        or health of the participant or beneficiary. 
                        Such determination shall be made not later than 
                        72 hours after the receipt of information under 
                        subsection (c)(2).
                            ``(iii) Concurrent determination.--
                        Notwithstanding clause (i), a review described 
                        in such subclause shall be completed not later 
                        than 24 hours after the receipt of information 
                        under subsection (c)(2) if the review involves 
                        a discontinuation of inpatient care.
                    ``(B) Retrospective determination.--The independent 
                medical reviewer (or reviewers) shall complete a review 
                in the case of a retrospective determination on an 
                appeal of a denial of a claim for benefits that is 
                referred to the reviewer under subsection (c)(3) not 
                later than 30 days after the receipt of information 
                under subsection (c)(2).
            ``(2) Notification of determination.--The external review 
        entity shall ensure that the plan or issuer, the participant or 
        beneficiary (or authorized representative) and the treating 
        health care professional (if any) receives a copy of the 
        written determination of the independent medical reviewer 
        prepared under subsection (d)(3)(F). Nothing in this paragraph 
        shall be construed as preventing an entity or reviewer from 
        providing an initial oral notice of the reviewer's 
        determination.
            ``(3) Form of notices.--Determinations and notices under 
        this subsection shall be written in a manner calculated to be 
        understood by an average participant.
            ``(4) Termination of external review process if approval of 
        a claim for benefits during process.--
                    ``(A) In general.--If a plan or issuer--
                            ``(i) reverses a determination on a denial 
                        of a claim for benefits that is the subject of 
                        an external review under this section and 
                        authorizes coverage for the claim or provides 
                        payment of the claim; and
                            ``(ii) provides notice of such reversal to 
                        the participant or beneficiary (or authorized 
                        representative) and the treating health care 
                        professional (if any), and the external review 
                        entity responsible for such review,
                the external review process shall be terminated with 
                respect to such denial and any filing fee paid under 
                subsection (b)(2)(A)(iv) shall be refunded.
                    ``(B) Treatment of termination.--An authorization 
                of coverage under subparagraph (A) by the plan or 
                issuer shall be treated as a written determination to 
                reverse a denial under section (d)(3)(F) for purposes 
                of liability under section 502(n)(1)(B).
    ``(f) Compliance.--
            ``(1) Application of determinations.--
                    ``(A) External review determinations binding on 
                plan.--The determinations of an external review entity 
                and an independent medical reviewer under this section 
                shall be binding upon the plan or issuer involved.
                    ``(B) Compliance with determination.--If the 
                determination of an independent medical reviewer is to 
                reverse the denial, the plan or issuer, upon the 
                receipt of such determination, shall authorize coverage 
                to comply with the medical reviewer's determination in 
                accordance with the timeframe established by the 
                medical reviewer under subsection (d)(3)(F).
            ``(2) Failure to comply.--
                    ``(A) With timeframe for providing items and 
                services.--If a plan or issuer fails to comply with the 
                timeframe established under paragraph (1)(B) with 
                respect to a participant or beneficiary, where such 
                failure to comply is caused by the plan or issuer, the 
                participant or beneficiary may obtain the items or 
                services involved (in a manner consistent with the 
                determination of the independent external reviewer) 
                from any provider regardless of whether such provider 
                is a participating provider under the plan or coverage.
                    ``(B) Reimbursement.--
                            ``(i) In general.--Where a participant or 
                        beneficiary obtains items or services in 
                        accordance with subparagraph (A), the plan or 
                        issuer involved shall provide for reimbursement 
                        of the costs of such items or services. Such 
                        reimbursement shall be made to the treating 
                        health care professional or to the participant 
                        or beneficiary (in the case of a participant or 
                        beneficiary who pays for the costs of such 
                        items or services).
                            ``(ii) Amount.--The plan or issuer shall 
                        fully reimburse a professional, participant or 
                        beneficiary under clause (i) for the total 
                        costs of the items or services provided 
                        (regardless of any plan limitations that may 
                        apply to the coverage of such items or 
                        services) so long as--
                                    ``(I) the items or services would 
                                have been covered under the terms of 
                                the plan or coverage if provided by the 
                                plan or issuer; and
                                    ``(II) the items or services were 
                                provided in a manner consistent with 
                                the determination of the independent 
                                medical reviewer.
                    ``(C) Failure to reimburse.--Where a plan or issuer 
                fails to provide reimbursement to a professional, 
                participant or beneficiary in accordance with this 
                paragraph, the professional, participant or beneficiary 
                may commence a civil action (or utilize other remedies 
                available under law) to recover only the amount of any 
                such reimbursement that is unpaid and any necessary 
                legal costs or expenses (including attorneys' fees) 
                incurred in recovering such reimbursement.
    ``(g) Qualifications of Independent Medical Reviewers.--
            ``(1) In general.--In referring a denial to 1 or more 
        individuals to conduct independent medical review under 
        subsection (c), the qualified external review entity shall 
        ensure that--
                    ``(A) each independent medical reviewer meets the 
                qualifications described in paragraphs (2) and (3);
                    ``(B) with respect to each review at least 1 such 
                reviewer meets the requirements described in paragraphs 
                (4) and (5); and
                    ``(C) compensation provided by the entity to the 
                reviewer is consistent with paragraph (6).
            ``(2) Licensure and expertise.--
                    ``(A) In general.--Subject to subparagraph (B), 
                each independent medical reviewer shall be a physician 
                (who is an allopathic or osteopathic physician) or 
                health care professional who--
                            ``(i) is appropriately credentialed or 
                        licensed in 1 or more States to deliver health 
                        care services; and
                            ``(ii) typically treats the diagnosis or 
                        condition or provides the type of treatment 
                        under review.
                    ``(B) Physician review.--In referring a denial for 
                independent medical review under subsection (c), the 
                qualified external review entity shall ensure that, in 
                the case of the review of treatment that is recommended 
                or provided by a physician, such referral may be made 
                only to a physician for such independent medical 
                review.
            ``(3) Independence.--
                    ``(A) In general.--Subject to subparagraph (B), 
                each independent medical reviewer in a case shall--
                            ``(i) not be a related party (as defined in 
                        paragraph (7));
                            ``(ii) not have a material familial, 
                        financial, or professional relationship with 
                        such a party; and
                            ``(iii) not otherwise have a conflict of 
                        interest with such a party (as determined under 
                        regulations).
                    ``(B) Exception.--Nothing in this subparagraph (A) 
                shall be construed to--
                            ``(i) prohibit an individual, solely on the 
                        basis of affiliation with the plan or issuer, 
                        from serving as an independent medical reviewer 
                        if--
                                    ``(I) a non-affiliated individual 
                                is not reasonably available;
                                    ``(II) the affiliated individual is 
                                not involved in the provision of items 
                                or services in the case under review;
                                    ``(III) the fact of such an 
                                affiliation is disclosed to the plan or 
                                issuer and the participant or 
                                beneficiary (or authorized 
                                representative) and neither party 
                                objects; and
                                    ``(IV) the affiliated individual is 
                                not an employee of the plan or issuer 
                                and does not provide services 
                                exclusively or primarily to or on 
                                behalf of the plan or issuer;
                            ``(ii) prohibit an individual who has staff 
                        privileges at the institution where the 
                        treatment involved takes place from serving as 
                        an independent medical reviewer if the 
                        affiliation is disclosed to the plan or issuer 
                        and the participant or beneficiary (or 
                        authorized representative), and neither party 
                        objects; or
                            ``(iii) prohibit receipt of compensation by 
                        an independent medical reviewer from an entity 
                        if the compensation is provided consistent with 
                        paragraph (6).
            ``(4) Practicing health care professional in same field.--
                    ``(A) In general.--The requirement of this 
                paragraph with respect to a reviewer in a case 
                involving treatment, or the provision of items or 
                services, by--
                            ``(i) a physician, is that the reviewer be 
                        a practicing physician of the same or similar 
                        specialty as a physician who typically treats 
                        the diagnosis or condition or provides such 
                        treatment in the case under review; or
                            ``(ii) a health care professional (other 
                        than a physician), is that the reviewer be a 
                        practicing physician or, if determined 
                        appropriate by the qualified external review 
                        entity, a health care professional (other than 
                        a physician), of the same or similar specialty 
                        as the health care professional who typically 
                        treats the diagnosis or condition or provides 
                        the treatment in the case under review.
                    ``(B) Practicing defined.--For purposes of this 
                paragraph, the term `practicing' means, with respect to 
                an individual who is a physician or other health care 
                professional that the individual provides health care 
                services to individual patients on average at least 2 
                days per week.
            ``(5) Pediatric expertise.--The independent medical 
        reviewer shall have pediatric expertise under paragraph (2) 
        where necessary to evaluate the relevant conditions for the 
        participant or beneficiary involved.
            ``(6) Limitations on reviewer compensation.--Compensation 
        provided by a qualified external review entity to an 
        independent medical reviewer in connection with a review under 
        this section shall--
                    ``(A) not exceed a reasonable level; and
                    ``(B) not be contingent on the determination 
                rendered by the reviewer.
            ``(7) Related party defined.--For purposes of this section, 
        the term `related party' means, with respect to a denial of a 
        claim under a plan or coverage relating to a participant or 
        beneficiary, any of the following:
                    ``(A) The plan, plan sponsor, or issuer involved, 
                or any fiduciary, officer, director, or employee of 
                such plan, plan sponsor, or issuer.
                    ``(B) The participant or beneficiary (or authorized 
                representative).
                    ``(C) The health care professional that provides 
                the items of services involved in the denial.
                    ``(D) The institution at which the items or 
                services (or treatment) involved in the denial are 
                provided.
                    ``(E) The manufacturer of any drug or other item 
                that is included in the items or services involved in 
                the denial.
                    ``(F) Any other party determined under any 
                regulations to have a substantial interest in the 
                denial involved.
    ``(h) Qualified External Review Entities.--
            ``(1) Selection of qualified external review entities.--
                    ``(A) Limitation on plan or issuer selection.--The 
                Secretary shall implement procedures with respect to 
                the selection of qualified external review entities by 
                a plan or issuer to assure that the selection process 
                among qualified external review entities will not 
                create any incentives for external review entities to 
                make a determination in a biased manner. No such 
                selection process under the procedures implemented by 
                the Secretary may give either the patient or the plan 
                or issuer any ability to determine or influence the 
                selection of a qualified external review entity to 
                review the case of any participant or beneficiary.
                    ``(B) State authority with respect to qualified 
                external review entities for health insurance 
                issuers.--With respect to health insurance issuers 
                offering health insurance coverage in a State, the 
                State may provide for the designation or selection of 
                qualified external review entities in a manner 
                determined by the State to assure an unbiased 
                determination in conducting external review activities. 
                In conducting reviews under this section, an entity 
                designated or selected under this subparagraph shall 
                comply with provisions of this section.
            ``(2) Contract with qualified external review entity.--
        Except as provided in paragraph (1)(B), the external review 
        process of a plan or issuer under this section shall be 
        conducted under a contract between the plan or issuer and 1 or 
        more qualified external review entities (as defined in 
        paragraph (4)(A)).
            ``(3) Terms and conditions of contract.--The terms and 
        conditions of a contract under paragraph (2) shall--
                    ``(A) be consistent with the standards the 
                Secretary shall establish to assure there is no real or 
                apparent conflict of interest in the conduct of 
                external review activities; and
                    ``(B) provide that the costs of the external review 
                process shall be borne by the plan or issuer.
        Subparagraph (B) shall not be construed as applying to the 
        imposition of a filing fee under subsection (b)(2)(A)(iv) or 
        costs incurred by the participant or beneficiary (or authorized 
        representative) or treating health care professional (if any) 
        in support of the review, including the provision of additional 
        evidence or information.
            ``(4) Qualifications.--
                    ``(A) In general.--In this section, the term 
                `qualified external review entity' means, in relation 
                to a plan or issuer, an entity that is initially 
                certified (and periodically recertified) under 
                subparagraph (C) as meeting the following requirements:
                            ``(i) The entity has (directly or through 
                        contracts or other arrangements) sufficient 
                        medical, legal, and other expertise and 
                        sufficient staffing to carry out duties of a 
                        qualified external review entity under this 
                        section on a timely basis, including making 
                        determinations under subsection (b)(2)(A) and 
                        providing for independent medical reviews under 
                        subsection (d).
                            ``(ii) The entity is not a plan or issuer 
                        or an affiliate or a subsidiary of a plan or 
                        issuer, and is not an affiliate or subsidiary 
of a professional or trade association of plans or issuers or of health 
care providers.
                            ``(iii) The entity has provided assurances 
                        that it will conduct external review activities 
                        consistent with the applicable requirements of 
                        this section and standards specified in 
                        subparagraph (C), including that it will not 
                        conduct any external review activities in a 
                        case unless the independence requirements of 
                        subparagraph (B) are met with respect to the 
                        case.
                            ``(iv) The entity has provided assurances 
                        that it will provide information in a timely 
                        manner under subparagraph (D).
                            ``(v) The entity meets such other 
                        requirements as the Secretary provides by 
                        regulation.
                    ``(B) Independence requirements.--
                            ``(i) In general.--Subject to clause (ii), 
                        an entity meets the independence requirements 
                        of this subparagraph with respect to any case 
                        if the entity--
                                    ``(I) is not a related party (as 
                                defined in subsection (g)(7));
                                    ``(II) does not have a material 
                                familial, financial, or professional 
                                relationship with such a party; and
                                    ``(III) does not otherwise have a 
                                conflict of interest with such a party 
                                (as determined under regulations).
                            ``(ii) Exception for reasonable 
                        compensation.--Nothing in clause (i) shall be 
                        construed to prohibit receipt by a qualified 
                        external review entity of compensation from a 
                        plan or issuer for the conduct of external 
                        review activities under this section if the 
                        compensation is provided consistent with clause 
                        (iii).
                            ``(iii) Limitations on entity 
                        compensation.--Compensation provided by a plan 
                        or issuer to, or charged by, a qualified 
                        external review entity in connection with 
                        reviews under this section shall--
                                    ``(I) not exceed a reasonable 
                                level; and
                                    ``(II) not be contingent on the 
                                determination rendered by the entity or 
                                by any independent medical reviewer.
                    ``(C) Certification and recertification process.--
                            ``(i) In general.--The initial 
                        certification and recertification of a 
                        qualified external review entity shall be 
                        made--
                                    ``(I) under a process that is 
                                recognized or approved by the 
                                Secretary; or
                                    ``(II) by a qualified private 
                                standard-setting organization that is 
                                approved by the Secretary under clause 
                                (iii).
                        The Secretary shall promulgate regulations 
                        setting forth the process described in 
                        subclause (I).
                            ``(ii) Process.--The Secretary shall not 
                        recognize or approve a process under clause 
                        (i)(I) unless the process applies standards (as 
                        promulgated in regulations) that ensure that a 
                        qualified external review entity--
                                    ``(I) will carry out (and has 
                                carried out, in the case of 
                                recertification) the responsibilities 
                                of such an entity in accordance with 
                                this section, including meeting 
                                applicable deadlines;
                                    ``(II) will meet (and has met, in 
                                the case of recertification) 
                                appropriate indicators of fiscal 
                                integrity;
                                    ``(III) will maintain (and has 
                                maintained, in the case of 
                                recertification) appropriate 
                                confidentiality with respect to 
                                individually identifiable health 
                                information obtained in the course of 
                                conducting external review activities; 
                                and
                                    ``(IV) in the case of 
                                recertification, shall review the 
                                matters described in clause (iv).
                            ``(iii) Approval of qualified private 
                        standard-setting organizations.--For purposes 
                        of clause (i)(II), the Secretary may approve a 
                        qualified private standard-setting organization 
                        if the Secretary finds that the organization 
                        only certifies (or recertifies) external review 
                        entities that meet at least the standards 
                        required for the certification (or 
                        recertification) of external review entities 
                        under clause (ii).
                            ``(iv) Considerations in 
                        recertifications.--In conducting 
                        recertifications of a qualified external review 
                        entity under this paragraph, the Secretary or 
                        organization conducting the recertification 
                        shall review compliance of the entity with the 
                        requirements for conducting external review 
                        activities under this section, including the 
                        following:
                                    ``(I) Provision of information 
                                under subparagraph (D).
                                    ``(II) Adherence to applicable 
                                deadlines (both by the entity and by 
                                independent medical reviewers it refers 
                                cases to).
                                    ``(III) Compliance with limitations 
                                on compensation (with respect to both 
                                the entity and independent medical 
                                reviewers it refers cases to).
                                    ``(IV) Compliance with applicable 
                                independence requirements.
                                    ``(V) Quality and consistency of 
                                medical review determinations with 
                                valid, relevant scientific and clinical 
                                evidence, as provided under clause 
                                (vii).
                            ``(v) Period of certification or 
                        recertification.--A certification or 
                        recertification provided under this paragraph 
                        shall extend for a period not to exceed 3 
                        years.
                            ``(vi) Revocation.--A certification or 
                        recertification under this paragraph may be 
                        revoked by the Secretary or by the organization 
                        providing such certification upon a showing of 
                        cause.
                            ``(vii) Assurance of quality and 
                        consistency with valid, relevant scientific and 
                        clinical evidence of external review 
                        determinations.--The standards applied under 
                        this subparagraph shall include procedures, 
                        promulgated by the Secretary in consultation 
                        with the Secretary of Health and Human 
                        Services, to assure that each qualified 
                        external review entity is accountable for the 
                        quality and consistency of the external review 
                        determinations made by its independent medical 
                        reviewers with valid, relevant scientific and 
                        clinical evidence.
                    ``(D) Provision of information.--
                            ``(i) In general.--A qualified external 
                        review entity shall provide to the Secretary, 
                        in such manner and at such times as the 
                        Secretary may require, such information 
                        (relating to the denials which have been 
                        referred to the entity for the conduct of 
                        external review under this section) as the 
                        Secretary determines appropriate to assure 
                        compliance with the independence and other 
                        requirements of this section to monitor and 
                        assess the quality of its external review 
                        activities and lack of bias in making 
                        determinations. Such information shall include 
                        information described in clause (ii) but shall 
                        not include individually identifiable medical 
                        information.
                            ``(ii) Information to be included.--The 
                        information described in this subclause with 
                        respect to an entity is as follows:
                                    ``(I) The number and types of 
                                denials for which a request for review 
                                has been received by the entity.
                                    ``(II) The disposition by the 
                                entity of such denials, including the 
                                number referred to a independent 
                                medical reviewer and the reasons for 
                                such dispositions (including the 
                                application of exclusions), on a plan 
                                or issuer-specific basis and on a 
                                health care specialty-specific basis.
                                    ``(III) The length of time in 
                                making determinations with respect to 
                                such denials.
                                    ``(IV) Updated information on the 
                                information required to be submitted as 
                                a condition of certification with 
                                respect to the entity's performance of 
                                external review activities.
                            ``(iii) Information to be provided to 
                        certifying organization.--
                                    ``(I) In general.--In the case of a 
                                qualified external review entity which 
                                is certified (or recertified) under 
                                this subsection by a qualified private 
                                standard-setting organization, at the 
                                request of the organization, the entity 
                                shall provide the organization with the 
                                information provided to the Secretary 
                                under clause (i).
                                    ``(II) Additional information.--
                                Nothing in this subparagraph shall be 
                                construed as preventing such an 
                                organization from requiring additional 
                                information as a condition of 
                                certification or recertification of an 
                                entity.
                            ``(iv) Use of information.--
                                    ``(I) In general.--Information 
                                provided under this subparagraph may be 
                                used by the Secretary and qualified 
                                private standard-setting organizations 
                                to conduct oversight of qualified 
                                external review entities, including 
                                recertification of such entities, and 
                                shall be made available to the public 
                                in an appropriate manner.
                                    ``(II) Report to congress.--Not 
                                later than 2 years after the date on 
                                which the Patients' Bill of Rights Act 
                                of 2001 takes effect under section 501 
                                of such Act, and every 2 years 
                                thereafter, the Secretary, in 
                                consultation with the Secretary of 
                                Health and Human Services, shall 
                                prepare and submit to the appropriate 
                                committees of Congress, a report that 
                                contains--
                                            ``(aa) a summary of the 
                                        information provided to the 
                                        Secretary under clause (ii);
                                            ``(bb) a description of the 
                                        effect that the appeals process 
                                        established under this section 
                                        and section 503A had on the 
                                        access of individuals to health 
                                        insurance and health care;
                                            ``(cc) a description of the 
                                        effect on health care costs 
                                        associated with the 
                                        implementation of the appeals 
                                        process described in item (bb); 
                                        and
                                            ``(dd) a description of the 
                                        quality and consistency of 
                                        determinations by qualified 
                                        external review entities.
                                    ``(III) Recommendations.--The 
                                Secretary may from time to time submit 
                                recommendations to Congress with 
                                respect to proposed modifications to 
                                the appeals process based on the 
                                reports submitted under subclause (II).
                    ``(E) Limitation on liability.--No qualified 
                external review entity having a contract with a plan or 
                issuer, and no person who is employed by any such 
                entity or who furnishes professional services to such 
                entity (including as an independent medical reviewer), 
                shall be held by reason of the performance of any duty, 
                function, or activity required or authorized pursuant 
                to this section, to be civilly liable under any law of 
                the United States or of any State (or political 
                subdivision thereof) if there was no actual malice or 
                gross misconduct in the performance of such duty, 
                function, or activity.
    ``(i) Definitions and Related Rules.--For purposes of this 
section--
            ``(1) Authorized representative.--The term `authorized 
        representative' means, with respect to a participant or 
        beneficiary--
                    ``(A) a person to whom a participant or beneficiary 
                has given express written consent to represent the 
                participant or beneficiary in any proceeding under this 
                section;
                    ``(B) a person authorized by law to provide 
                substituted consent for the participant or beneficiary; 
                or
                    ``(C) a family member of the participant or 
                beneficiary (or the estate of the participant or 
                beneficiary) or the participant's or beneficiary's 
                treating health care professional when the participant 
                or beneficiary is unable to provide consent.
            ``(2) Claim for benefits.--The term `claim for benefits' 
        means any request by a participant or beneficiary (or 
        authorized representative) for benefits, for eligibility, or 
        for payment in whole or in part, for an item or service under a 
        group health plan or health insurance coverage offered by a 
        health insurance issuer in connection with a group health plan.
            ``(3) Group health plan.--The term `group health plan' 
        shall have the meaning given such term in section 733(a).
            ``(4) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning given such term in section 
        733(b)(1).
            ``(5) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning given such term in section 733(b)(2).
            ``(6) Prior authorization determination.--The term `prior 
        authorization determination' means a determination by the group 
        health plan or health insurance issuer offering health 
        insurance coverage in connection with a group health plan prior 
        to the provision of the items and services as a condition of 
        coverage of the items and services under the terms and 
        conditions of the plan or coverage.
            ``(7) Treating health care professional.--The term 
        `treating health care professional' with respect to a group 
        health plan, health insurance issuer or provider sponsored 
        organization means a physician (medical doctor or doctor of 
        osteopathy) or other health care practitioner who is acting 
        within the scope of his or her State licensure or certification 
        for the delivery of health care services and who is primarily 
        responsible for delivering those services to the participant or 
        beneficiary.
            ``(8) Utilization review.--The term `utilization review' 
        with respect to a group health plan or health insurance 
        coverage means procedures used in the determination of coverage 
        for a participant or beneficiary, such as procedures to 
        evaluate the medical necessity, appropriateness, efficacy, 
        quality, or efficiency of health care services, procedures or 
        settings, and includes prospective review, concurrent review, 
        second opinions, case management, discharge planning, or 
        retrospective review.
            ``(9) Treatment of excepted benefits.--The requirements of 
        this section and section 503A shall not apply to excepted 
        benefits (as defined in section 733(c)), other than benefits 
        described in section 733(c)(2)(A), in the same manner as the 
        provisions of part 7 do not apply to such benefits under 
        subsections (b) and (c) of section 732.''.
    (b) Conforming 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 503 the following:

``Sec. 503A. Claims and internal appeals procedures for group health 
                            plans.
``Sec. 503B. Independent external appeals procedures for group health 
                            plans.''.

SEC. 132. ENFORCEMENT.

    (a) Civil Penalty Authority.--Section 502(c) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1132(c)) is amended--
            (1) by redesignating paragraph (7) as paragraph (8); and
            (2) by inserting after paragraph (6) the following new 
        paragraph: in subsection (a)(1)(A), by inserting ``or (n)'' 
        after ``subsection (c)''; and
    ``(7)(A) In the case of--
            ``(i) a failure described in section 503B(f)(2)(A) 
        (relating to failure to comply with timeframe for providing 
        items and services), or
            ``(ii) a failure of a group health plan or health insurance 
        issuer to take such actions as are necessary to refer a denial 
        of a claim for benefit to independent medical review in 
        accordance with section 503B(c)(1) or to provide information 
        required in connection with such a referral under section 
        503B(c)(2),
the Secretary may assess a civil penalty in an amount determined under 
subparagraph (B) against any person who, acting in the capacity of 
authorizing the benefit involved, causes such failure.
    ``(B)(i) Subject to clause (iii), such civil penalty shall not 
exceed the amount specified in clause (ii) for each day from the date 
of commencement of such failure until the date the failure is 
corrected.
    ``(ii) The amount specified in this clause for any day described in 
clause (i) shall be--
            ``(I) $2,000 a day for the 1st through the 7th days,
            ``(II) $5,000 a day for the 8th through the 14th days, and
            ``(III) $10,000 a day for each day after the 14th day.
    ``(iii) The total amount of the penalty under clause (i) may not 
exceed $500,000.
    ``(C) Civil monetary penalties under the preceding provisions of 
this paragraph may be imposed against authorized officials for failure 
to provide referral to a qualified external review entity or access to 
health information, as required under section 503B(c)(1) and (2).
    ``(D)(i) In addition to any penalty imposed under subparagraph (A), 
the Secretary may assess a civil penalty against a person acting in the 
capacity of authorizing a benefit determined by an external review 
entity for one or more group health plans, or health insurance issuers 
offering health insurance coverage, for any pattern or practice of 
repeated violations of the requirements of this section with respect to 
such plan or coverage (including any failure described in subparagraph 
(A)(i) or the refusal to authorize a benefit determined by an external 
appeal entity to be covered).
    ``(ii) Such penalty shall be payable only upon proof by clear and 
convincing evidence of such pattern or practice and shall be in an 
amount not to exceed for such pattern or practice the lesser of--
            ``(I) 25 percent of the aggregate value of benefits shown 
        by the Secretary to have not been provided, or unlawfully 
        delayed, in violation of this section under such pattern or 
        practice; or
            ``(II) $500,000.
    ``(iii) Any person acting in the capacity of authorizing benefits 
who has engaged in any such pattern or practice described in clause (i) 
with respect to a plan or coverage, upon the petition of the Secretary, 
may be removed by the court from such position, and from any other 
involvement, with respect to such a plan or coverage, and may be 
precluded from returning to any such position or involvement for a 
period determined by the court.
    ``(E) In any action under this paragraph to collect a civil penalty 
under subparagraph (A) or (D), the court shall cause to be served on 
the defendant an order requiring the defendant--
            ``(i) to cease and desist from the alleged failure to act; 
        and
            ``(ii) to pay to the Secretary a reasonable attorney's fee 
        and other reasonable costs relating to the prosecution of the 
        action on the charges on which the Secretary prevails.
    ``(F) The preceding provisions of this paragraph shall not apply 
with respect to employee benefit plans that are not group health plans. 
Such provisions also shall not apply to excepted benefits (as defined 
in section 733(c)), other than benefits described in section 
733(c)(2)(A), in the same manner as the provisions of part 7 do not 
apply to such benefits under subsections (b) and (c) of section 732.
    ``(G) The remedies provided under this paragraph are in addition to 
any other available remedies.''.
    (b) 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)''.

                          Subtitle D--Remedies

SEC. 141. AVAILABILITY OF COURT REMEDIES.

    (a) In General.--Section 502 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132) is amended by adding at the end 
the following:
    ``(n) Cause of Action Relating to Denial of a Claim for Health 
Benefits.--
            ``(1) In general.--
                    ``(A) Failure to comply with external medical 
                review.--With respect to an action commenced by a 
                participant or beneficiary (or the estate of the 
                participant or beneficiary) in connection with a claim 
                for benefits under a group health plan, if--
                            ``(i) a designated decisionmaker described 
                        in paragraph (2) fails to exercise ordinary 
                        care in failing to authorize coverage in 
                        compliance with the written determination of an 
                        independent medical reviewer under section 
                        503B(d)(3)(F) that reverses a denial of the 
                        claim for benefits; and
                            ``(ii) the failure described in clause (i) 
                        is the proximate cause of substantial harm (as 
defined in paragraph (14)(G)) to the participant or beneficiary;
                such designated decisionmaker shall be liable to the 
                participant or beneficiary (or the estate) for economic 
                and noneconomic damages in connection with such failure 
                and such injury or death (subject to paragraph (4)).
                    ``(B) Wrongful determination resulting in delay in 
                providing or failure to receive benefits.--With respect 
                to an action commenced by a participant or beneficiary 
                (or the estate of the participant or beneficiary) in 
                connection with a claim for benefits under a group 
                health plan, if--
                            ``(i) a designated decisionmaker described 
                        in paragraph (2)--
                                    ``(I) fails to exercise ordinary 
                                care in making a determination denying 
                                the claim for benefits under section 
                                503A(a) (relating to an initial claim 
                                for benefits); or
                                    ``(II) fails to exercise ordinary 
                                care in making a determination denying 
                                the claim for benefits under section 
                                503A(b) (relating to an internal 
                                appeal);
                            ``(ii) the denial described in clause (i)--
                                    ``(I) is reversed by an independent 
                                medical reviewer under section 503B(d) 
                                or 503B(e)(4)(B), or
                                    ``(II) was determined by a 
                                qualified external review entity under 
                                section 503B(c)(3) not to be eligible 
                                for referral for independent medical 
                                review under such section; and
                            ``(iii) the delay in receiving, or failure 
                        to receive, benefits attributable to the 
                        failure described in clause (i) is the 
                        proximate cause of substantial harm to, or the 
                        wrongful death of, the participant or 
                        beneficiary;
                such designated decisionmaker shall be liable to the 
                participant or beneficiary (or the estate) for economic 
                and noneconomic damages in connection with such failure 
                and such injury or death (subject to paragraph (4)).
                    ``(C) Limitation on liability based on appointment 
                of designated decisionmaker.--If a plan sponsor or 
                named fiduciary appoints a designated decisionmaker in 
                accordance with paragraph (2), the plan sponsor or 
                named fiduciary, or any other person or group health 
                plan (or their employees) associated with the plan 
                sponsor or named fiduciary, shall not be liable under 
                this paragraph. The appointment of a designated 
decisionmaker in accordance with paragraph (2) shall not affect the 
liability of the appointing plan sponsor or named fiduciary for the 
failure of the plan sponsor or named fiduciary to comply with any other 
requirement of this title.
            ``(2) Designated decisionmaker.--
                    ``(A) Appointment.--
                            ``(i) In general.--The plan sponsor or 
                        named fiduciary of a group health plan shall, 
                        in accordance with this paragraph, designate 
                        one or more persons to serve as a designated 
                        decisionmaker with respect to causes of action 
                        described in subparagraphs (A) and (B) of 
                        paragraph (1), except that--
                                    ``(I) with respect to health 
                                insurance coverage offered in 
                                connection with a group health plan, 
                                the health insurance issuer shall be 
                                the designated decisionmaker unless the 
                                plan sponsor and the issuer 
                                specifically agree in writing (on a 
                                form to be prescribed by the Secretary) 
                                to substitute another person as the 
                                designated decisionmaker; or
                                    ``(II) with respect to the 
                                designation of a person other than a 
                                plan sponsor or health insurance 
                                issuer, such person shall satisfy the 
                                requirements of subparagraph (D).
                            ``(ii) Plan documents.--The designated 
                        decisionmaker shall be specifically designated 
                        as such in the written instruments of the plan 
                        (under section 402(a)) and be identified as 
                        required under section 121(b)(14) of the 
                        Patients' Bill of Rights Act of 2001.
                    ``(B) Authority.--A designated decisionmaker 
                appointed under subparagraph (A) shall have the 
                exclusive authority under the group health plan--
                            ``(i) to make determinations with respect 
                        to a claim for benefits under section 503A(a) 
                        (relating to an initial claim for benefits);
                            ``(ii) to make final determinations under 
                        section 503A(b) (relating to an internal 
                        appeal); or
                            ``(iii) to approve coverage pursuant to the 
                        written determination of independent medical 
                        reviewers under section 503B.
                    ``(C) Allocation of responsibility.--Responsibility 
                may be allocated among different designated 
                decisionmakers with respect to--
                            ``(i) for purposes of paragraph (1)(A), the 
                        approval of coverage under section 503B;
                            ``(ii) for purposes of paragraph (1)(B), 
                        making determinations on a claim for benefits 
                        under section 503A(a) (relating to an initial 
                        claim for benefits); and
                            ``(iii) for purposes of paragraph (1)(B), 
                        making final determinations on claims for 
                        benefits under section 503A(b) (relating to 
                        internal appeals).
                Where such an allocation is made, liability under a 
                cause of action under paragraph (1) shall be assessed 
                against the appropriate designated decisionmaker.
                    ``(D) Qualifications.--
                            ``(i) Certification of ability.--To be 
                        appointed as a designated decisionmaker under 
                        this paragraph, a person shall provide to the 
                        plan sponsor or named fiduciary a certification 
                        of such person's ability to meet the 
                        requirement of clause (ii) and the requirements 
                        of clause (iii) (relating to financial 
                        obligation for liability under this 
                        subsection). Such certification shall be 
                        provided upon appointment and not less 
                        frequently than annually thereafter, or if the 
                        designation is pursuant to a multi-year 
                        contract, in conjunction with the renewal of 
                        the contract, but in no case less than once 
                        every 3 years.
                            ``(ii) Treating physician not eligible.--
                        The treating physician of a participant or 
                        beneficiary is not qualified to be appointed as 
                        a designated decisionmaker under this paragraph 
                        with respect to claims for benefits of such 
                        participant or beneficiary relating to the 
                        services of that physician.
                            ``(iii) Other requirements relating to 
                        financial obligations.--For purposes of clause 
                        (i), requirements relating to financial 
                        obligation for liability shall include evidence 
                        of--
                                    ``(I) coverage of the person under 
                                insurance policies or other 
                                arrangements, secured and maintained by 
                                the person, to insure the person 
                                against losses arising from 
                                professional liability claims, 
                                including those arising from being 
                                designated as a designated 
                                decisionmaker under this paragraph; or
                                    ``(II) minimum capital and surplus 
                                levels that are maintained by the 
                                person to cover any losses as a result 
                                of liability arising from being 
                                designated as a designated 
                                decisionmaker under this paragraph.
                        The appropriate amounts of liability insurance 
                        and minimum capital and surplus levels for 
                        purposes of subclauses (I) and (II) shall be 
                        determined by an actuary using sound actuarial 
                        principles and accounting practices pursuant to 
                        established guidelines of the American Academy 
                        of Actuaries and shall be maintained throughout 
                        the course of the contract in which such person 
                        is designated as a designated decisionmaker.
                    ``(E) Flexibility in administration.--A group 
                health plan, and a health insurance issuer offering 
                health insurance coverage in connection with a group 
                health plan, may provide--
                            ``(i) that any person or group of persons 
                        may serve in more than one capacity with 
                        respect to the plan or coverage (including 
                        service as a designated decisionmaker, 
                        administrator, and named fiduciary); or
                            ``(ii) that a designated decisionmaker may 
                        employ one or more persons to provide advice 
                        with respect to any responsibility of such 
                        decisionmaker under the plan or coverage.
                    ``(F) Failure to appoint.--With respect to any 
                cause of action under paragraph (1) relating to a 
                denial of a claim for benefits where a designated 
                decisionmaker has not been appointed in accordance with 
                this paragraph, the plan sponsor or named fiduciary 
                responsible for determinations under section 503 shall 
                be deemed to be the designated decisionmaker.
            ``(3) Requirement of exhaustion of independent medical 
        review.--
                    ``(A) In general.--Paragraph (1) shall apply only 
                if--
                            ``(i) a final determination denying a claim 
                        for benefits under section 503A(b) has been 
                        referred for independent medical review under 
                        section 503B(d) and a written determination by 
                        an independent medical reviewer to reverse such 
                        final determination has been issued with 
                        respect to such review, or
                            ``(ii) the qualified external review entity 
                        has determined under section 503B(c)(3) that a 
                        referral to an independent medical reviewer is 
                        not required.
                    ``(B) Injunctive relief for irreparable harm.--A 
                participant or beneficiary may seek relief under 
                subsection 502(a)(1)(B) prior to the exhaustion of 
                administrative remedies under section 503A(b) or 503B 
                (as required under subparagraph (A)) if it is 
                demonstrated to the court, by a preponderance of the 
                evidence, that the exhaustion of such remedies would 
                cause irreparable harm to the health of the participant 
                or beneficiary. Any determinations that already have 
                been made under section 503A or 503B in such case, or 
                that are made in such case while an action under this 
                subparagraph is pending, shall be given due 
                consideration by the court in any action under this 
                subsection in such case. Notwithstanding the awarding 
                of relief under subsection 502(a)(1)(B) pursuant to 
                this subparagraph, no relief shall be available under--
                            ``(i) paragraph (1), with respect to a 
                        participant or beneficiary, unless the 
                        requirements of subparagraph (A) are met; or
                            ``(ii) subsection (q) unless the 
                        requirements of such subsection are met.
            ``(4) Limitations on recovery of damages.--
                    ``(A) Maximum award of noneconomic damages.--The 
                aggregate amount of liability for noneconomic loss in 
                an action under paragraph (1) may not exceed $500,000.
                    ``(B) Several liability.--In the case of any action 
                commenced pursuant to paragraph (1), the designated 
                decisionmaker shall be liable only for the amount of 
                damages attributable to such designated decisionmaker 
                in direct proportion to such decisionmaker's share of 
                fault or responsibility for the injury suffered by the 
                participant or beneficiary. In all such cases, the 
                liability of a designated decisionmaker for damages 
                shall be several and not joint.
                    ``(C) Prohibition of award of punitive damages.--
                Notwithstanding any other provision of law, in the case 
                of any action commenced pursuant to paragraph (1), the 
                court may not award any punitive, exemplary, or similar 
                damages against a defendant.
            ``(5) Affirmative defenses.--In the case of any cause of 
        action under paragraph (1), it shall be an affirmative defense 
        that--
                    ``(A) the designated decisionmaker of a group 
                health plan, or health insurance issuer that offers 
                health insurance coverage in connection with a group 
                health plan, involved did not receive from the 
                participant or beneficiary (or authorized 
                representative) or the treating health care 
                professional (if any), the information requested by the 
                plan or issuer regarding the medical condition of the 
                participant or beneficiary that was necessary to make a 
                determination on a claim for benefits under section 
                503A(a) or a final determination on a claim for 
                benefits under section 503A(b);
                    ``(B) the participant or beneficiary (or authorized 
                representative) or treating health care professional--
                            ``(i) was in possession of facts that were 
                        sufficient to enable the participant or 
                        beneficiary (or authorized representative) to 
                        know that an expedited review under section 
                        503A or 503B would have prevented the harm that 
                        is the subject of the action; and
                            ``(ii) failed to notify the plan or issuer 
                        of the need for such an expedited review; or
                    ``(C) the qualified external review entity or an 
                independent medical reviewer failed to meet the 
                timelines applicable under section 503B, or a period of 
                time elapsing after coverage has been authorized.
        Nothing in this paragraph shall be construed to limit the 
        application of any other affirmative defense that may be 
        applicable to the cause of action involved.
            ``(6) Waiver of internal review.--In the case of any cause 
        of action under paragraph (1), the waiver or nonwaiver of 
        internal review under section 503A(b)(1)(D) by the group health 
        plan, or health insurance issuer that offers health insurance 
        coverage in connection with a group health plan, shall not be 
        used in determining liability.
            ``(7) Limitations on actions.--Paragraph (1) shall not 
        apply in connection with any action that is commenced more than 
        5 years after the date on which the failure described in such 
        paragraph occurred or, if earlier, not later than 2 years after 
        the first date the participant or beneficiary became aware of 
        the substantial harm referred to in such paragraph.
            ``(8) Exclusion of directed recordkeepers.--
                    ``(A) In general.--Paragraph (1) shall not apply 
                with respect to a directed record keeper in connection 
                with a group health plan.
                    ``(B) Directed recordkeeper.--For purposes of this 
                paragraph, the term `directed record keeper' means, in 
                connection with a group health plan, a person engaged 
                in directed record keeping activities pursuant to the 
                instructions of the plan, the employer, or another plan 
                sponsor, including the distribution of enrollment 
                information and distribution of disclosure materials 
                under this Act or the Public Health Service Act and 
                whose duties do not include making determinations on 
                claims for benefits.
            ``(9) Protection of the regulation of quality of medical 
        care under state law.--Nothing in this subsection shall be 
        construed to preclude any action under State law against a 
        person or entity for liability or vicarious liability with 
        respect to the delivery of medical care. A claim that is based 
on or otherwise relates to a group health plan's administration or 
determination of a claim for benefits (as such term is defined in 
section 503B(i)(2) and notwithstanding the definition contained in 
paragraph (14)(B)) shall not be deemed to be the delivery of medical 
care under any State law for purposes of this section. Any such claim 
shall be maintained exclusively under section 502. Nothing in this 
paragraph shall be construed as affecting any action under State law 
that is permitted under section 514(c).
            ``(10) Coordination with fiduciary requirements.--A 
        fiduciary shall not be treated as failing to meet any 
        requirement of part 4 solely by reason of any action taken by a 
        fiduciary which consists of full compliance with the reversal 
        under section 503B (relating to independent external appeals 
        procedures for group health plans) of a denial of claim for 
        benefits (within the meaning of section 503B(i)(2)).
            ``(11) Construction.--Nothing in this subsection shall be 
        construed as authorizing a cause of action under paragraph (1) 
        for the failure of a group health plan or health insurance 
        issuer to provide an item or service that is specifically 
        excluded under the plan or coverage.
            ``(12) Limitation on class action litigation.--A claim or 
        cause of action under this subsection may not be maintained as 
        a class action, as a derivative action, or as an action on 
        behalf of any group of 2 or more claimants.
            ``(13) Prevention of duplication of action with action 
        under state law.--No action may be brought under this 
        subsection based upon facts and circumstances if a cause of 
        action under State law (that is permitted under section 514 
        only because of the application of subsection (c) of such 
        section) is brought based upon the same facts and 
        circumstances.
            ``(14) Definitions and related rules.--For purposes of this 
        subsection:
                    ``(A) Authorized representative.--The term 
                `authorized representative' has the meaning given such 
                term in section 503B(i).
                    ``(B) Claim for benefits.--Except as provided for 
                in paragraph (8), the term `claim for benefits' shall 
                have the meaning given such term in section 503B(i), 
                except that such term shall only include claims for 
                prior authorization determinations (as such term is 
                defined in section 503B(i)).
                    ``(C) Group health plan.--The term `group health 
                plan' shall have the meaning given such term in section 
                733(a).
                    ``(D) Health insurance coverage.--The term `health 
                insurance coverage' has the meaning given such term in 
                section 733(b)(1).
                    ``(E) Health insurance issuer.--The term `health 
                insurance issuer' has the meaning given such term in 
                section 733(b)(2).
                    ``(F) Ordinary care.--The term `ordinary care' 
                means the care, skill, prudence, and diligence under 
                the circumstances then prevailing that a prudent 
                individual acting in a like capacity and familiar with 
                such matters would use in making a determination on a 
                claim for benefits of a similar character.
                    ``(G) Substantial harm.--The term `substantial 
                harm' means the loss of life, loss or significant 
                impairment of limb or bodily function, significant 
                mental illness or disease, significant disfigurement, 
                or severe and chronic physical pain.
                    ``(H) Treatment of excepted benefits.--The 
                provisions of this subsection shall not apply to 
                excepted benefits (as defined in section 733(c)), other 
                than benefits described in section 733(c)(2)(A), in the 
                same manner as the provisions of part 7 do not apply to 
                such benefits under subsections (b) and (c) of section 
                732.''.
    (b) Conforming Amendment.--Section 502(a)(1)(A) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1132(a)(1)(A)) is 
amended by inserting ``or (n)'' after ``subsection (c)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to acts and omissions occurring on or after the effective date 
contained in section 501 of this Act.

SEC. 142. TREATMENT OF STATE CAUSES OF ACTION WITH RESPECT TO CERTAIN 
              CLAIMS DENIALS BY GROUP HEALTH PLANS.

    Section 514 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1144) is amended--
            (1) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
            (2) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Treatment of State Causes of Action With Respect to Certain 
Claims Denials by Group Health Plans.--
            ``(1) In general.--Notwithstanding the preceding provisions 
        of this section, a cause of action by a participant or 
        beneficiary under a group health plan against the applicable 
        designated decisionmaker (within the meaning of section 502(o)) 
        under State law is not superseded by the provisions of this 
        title if--
                    ``(A) the action is one for damages from personal 
                injury or for wrongful death proximately caused by a 
                denial of a claim for benefits, and
                    ``(B) the conditions described in paragraph (2) are 
                met with respect to such denial.
            ``(2) Failure to authorize coverage ordered by independent 
        medical reviewer.--The conditions in this paragraph with 
        respect to a denial of a claim for benefits are met if--
                    ``(A) the denial is reversed by a written 
                determination by an independent medical reviewer under 
                section 503B(d)(3)(F); and
                    ``(B) there has been a failure to authorize 
                coverage in compliance with such written determination.
            ``(3) Prevention of duplication of action with action under 
        federal law.--Paragraph (1) shall not apply, in relation to a 
        cause of action under State law based upon facts and 
        circumstances, if a cause of action is brought under section 
        502(n) based upon the same facts and circumstances.
            ``(4) Definitions and related rules.--For purposes of this 
        subsection--
                    ``(A) Claim for benefits.--The term `claim for 
                benefits' has the meaning provided such term under 
                section 503B(i)(2).
                    ``(B) Group health plan.--The term `group health 
                plan' has the meaning provided such term under section 
                733(a)(1), except that such term includes a plan, fund, 
                or program treated as a group health plan under section 
                732(d).
                    ``(C) Treatment of excepted benefits.--The 
                provisions of this subsection shall not apply to 
                excepted benefits (as defined in section 733(c)), other 
                than benefits described in section 733(c)(2)(A), in the 
                same manner as the provisions of part 7 do not apply to 
                such benefits under subsections (b) and (c) of section 
                732.''.

SEC. 143. LIMITATION ON CERTAIN CLASS ACTION LITIGATION.

    (a) ERISA.--
            (1) In general.--Section 502 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1132), as amended by 
        section 141, is further amended by adding at the end the 
        following:
    ``(o) Limitation on Class Action Litigation.--Any claim or cause of 
action that is maintained under this section (other than under 
subsection (n)) or under section 1962 or 1964(c) of title 18, United 
States Code, in connection with a group health plan, or health 
insurance coverage issued in connection with a group health plan, as a 
class action, derivative action, or as an action on behalf of any group 
of 2 or more claimants, may be maintained only if the class, the 
derivative claimant, or the group of claimants is limited to the 
participants or beneficiaries of a group health plan established by 
only 1 plan sponsor. No action maintained by such class, such 
derivative claimant, or such group of claimants may be joined in the 
same proceeding with any action maintained by another class, derivative 
claimant, or group of claimants or consolidated for any purpose with 
any other proceeding. In this paragraph, the terms `group health plan' 
and `health insurance coverage' have the meanings given such terms in 
section 733.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to actions commenced on or after June 
        26, 2001. Notwithstanding the preceding sentence, with respect 
        to class actions, the amendment made by paragraph (1) shall 
        apply with respect to civil actions which are pending on such 
        date in which a class action has not been certified as of such 
        date.
    (b) RICO.--
            (1) In general.--Section 1964(c) of title 18, United States 
        Code, is amended--
                    (A) by inserting ``(1)'' after the subsection 
                designation; and
                    (B) by adding at the end the following:
    ``(2) No action may be brought under this subsection, or alleging 
any violation of section 1962, where the action seeks relief concerning 
the manner in which any person has marketed, provided information 
concerning, established, administered, or otherwise operated a group 
health plan, or health insurance coverage in connection with a group 
health plan. Any such action shall only be brought under the Employee 
Retirement Income Security Act of 1974. In this paragraph, the terms 
`group health plan' and `health insurance issuer' shall have the 
meanings given such terms in section 733 of the Employee Retirement 
Income Security Act of 1974.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply with respect to actions commenced on or after June 
        26, 2001.

                     Subtitle E--State Flexibility

SEC. 151. STATE FLEXIBILITY IN APPLYING REQUIREMENTS TO HEALTH 
              INSURANCE ISSUERS AND NON-FEDERAL GOVERNMENTAL GROUP 
              HEALTH PLANS.

    (a) Nonapplication of Certain Federal Requirements in Case of 
Qualified State Regulation.--
            (1) In general.--
                    (A) Qualified state patient protections.--A patient 
                protection requirement shall not apply with respect to 
                health insurance coverage (and to a group health plan 
                insofar as it provides benefits in the form of health 
                insurance coverage) if there is a State law (as defined 
                in subsection (c)) that regulates such coverage and 
                that is substantially equivalent (as provided under 
                paragraph (2) or (4)) to such requirement.
                    (B) Internal and external appeals.--The 
                requirements of section 503A or 503B of the Employee 
                Retirement Income Security Act of 1974 shall not apply 
                with respect to individual health insurance coverage or 
                to a non-Federal governmental group health plan if 
                there is a State law that regulates such coverage or 
                plan and that is substantially equivalent (as provided 
                under paragraph (2) or (4)) to the section.
                    (C) Patient protection requirement defined.--For 
                purposes of this section, the term ``patient protection 
                requirement'' means any one or more requirements under 
                the following:
                            (i) Section 101 (relating to access to 
                        emergency care).
                            (ii) Section 102 (relating to consumer 
                        choice option) with respect to non-Federal 
                        governmental plans only.
                            (iii) Section 103 (relating to patient 
                        access to obstetric and gynecological care).
                            (iv) Section 104 (relating to access to 
                        pediatric care).
                            (v) Section 105 (relating to timely access 
                        to specialists).
                            (vi) Section 106 (relating to continuity of 
                        care), but only insofar as a replacement issuer 
                        assumes the obligation for continuity of care.
                            (vii) Section 108 (relating to access to 
                        needed prescription drugs).
                            (viii) Section 109 (relating to coverage 
                        for individuals participating in approved 
                        clinical trials).
                            (ix) A prohibition under--
                                    (I) section 107 (relating to 
                                prohibition of interference with 
                                certain medical communications); and
                                    (II) section 110 (relating to 
                                prohibition of discrimination against 
                                providers based on licensure).
                            (x) An informational requirement under 
                        section 121.
            (2) State certification of substantial equivalence.--
                    (A) In general.--For purposes of paragraph (1), a 
                State law that imposes requirements that relate to a 
                section in Federal law referred to in such paragraph is 
                deemed to be substantially equivalent to that section 
                if the chief executive officer of the State, not later 
                than the deadline specified in subparagraph (D), 
                submits to the Secretary of Health and Human Services a 
                certification described in subparagraph (B). Such 
                certification shall be effective under paragraph (1) 
                until otherwise provided under paragraph (3)(C) or 
                (3)(D).
                    (B) Description of certification.--A certification 
                described in this subparagraph is, with respect to a 
                State law in relation to a section of Federal law 
                referred to in paragraph (1), a certification that 
                there is a reasonable basis to find that the State law 
                imposes requirements that, taken as a whole and 
                considering the need for flexibility in the application 
                of such section in relation to applicable State law, 
                provide protections that are substantially equivalent 
                to or greater than the protections to participants and 
                beneficiaries provided under such section.
                    (C) Procedures.--The Secretary of Health and Human 
                Services shall by regulation establish procedures to 
                carry out this subsection.
                    (D) Deadline.--The deadline specified in this 
                subparagraph is 90 days after the date regulations 
                described in subparagraph (C) are first promulgated.
            (3) Opportunity for secretarial review and determination.--
                    (A) Notice of receipt of certification.--The 
                Secretary of Health and Human Services shall provide 
                for public notice upon receipt of a certification 
                submitted under paragraph (2). Such Secretary may 
                review such a certification to determine preliminarily 
                whether there is a reasonable basis for the 
                certification,
                    (B) Notice of preliminary disapproval.--A 
                certification under paragraph (2) shall be effective 
                unless such Secretary determines, within 90 days of the 
                date of its submittal, that there is not a reasonable 
                basis for the certification. Such Secretary shall 
                provide notice to the State and the public of such 
                determination. Such notice shall include an explanation 
                of the basis for the determination and shall identify 
                specific deficiencies in the State law. The provision 
                of such notice shall not suspend the effectiveness of 
                the State certification.
                    (C) Final determination.--If such Secretary has 
                made a determination described in subparagraph (B), 
                such Secretary shall make a final determination 
                regarding whether there is a reasonable basis for the 
certification. Such Secretary shall provide notice of such final 
determination in the same manner as for determinations under 
subparagraph (B). If such Secretary decides that there is not a 
reasonable basis for the certification, such Secretary shall specify a 
time period (of not less than one year) by the end of which the 
certification will no longer be effective. Such determination shall 
take effect (and the effectiveness of the certification suspended) at 
the end of the period for filing judicial review of such determination 
under subparagraph (D) unless the State files for judicial review. If 
the State files for judicial review the certification shall remain in 
effect during the period of judicial review and until such time as 
ordered by the court under subparagraph (D).
                    (D) Judicial review.--A final determination of the 
                Secretary under subparagraph (C) is subject to judicial 
                review under chapter 5 of title 5, United States Code, 
                in the Circuit Court of Appeals for the State 
                certification of which is challenged. To find for such 
                Secretary, the court must find that there is not a 
                reasonable basis for the certification. If the court 
                upholds the final determination of such Secretary, the 
                certification shall remain in effect until such date as 
                the court may specify in order to provide for an 
                orderly transition.
            (4) State certifications after federal provisions have 
        taken effect.--After a section of Federal law referred to in 
        paragraph (1) has taken effect, a State may nonetheless submit 
        a certification described in paragraph (2)(B). Such a 
        certification shall only become effective if--
                    (A) there is no challenge of the certification by 
                the Secretary of Health and Human Services within 90 
                days after the date of its submittal;
                    (B) such Secretary concurs in the certification; or
                    (C) such Secretary challenges the certification but 
                such challenge is not upheld in court;
        and not until 1 year after the expiration of such 90-day 
        period, the date of the Secretary's concurrence, or the date a 
        court does not uphold the Secretary's challenge, as the case 
        may be.
    (b) Relationship of Qualified State Patient Protections to Plans 
Under ERISA.--
            (1) In general.--Nothing in this section shall be construed 
        to affect or modify the provisions of section 514 of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1144) with respect to group health plans. In any case in which 
        health insurance coverage is provided by a health insurance 
        issuer in connection with a group health plan to which title I 
        of such Act applies and there is a State law described in 
        subsection (a)(1)(A) that regulates such coverage and that is 
        substantially equivalent (as provided under paragraph (2) or 
        (4) of subsection (a)) to requirements of a section of Federal 
        law referred to in subsection (a)(1)(A), to the extent that 
        such State law, as applicable to such plan, is superseded by 
        such title, the provisions of such State law shall be deemed 
        (including for purposes of applying administration and 
        enforcement of part 5 of subtitle B of title I of such Act) to 
        be substituted for (and incorporated as) the corresponding 
        section of Federal law referred to in subsection (a)(1)(A) 
        insofar as the plan provides benefits by means of such 
        coverage.
            (2) Preventing application of state law in cases where 
        federal law is applied.--In any case in which, after applying 
        the provisions of this subsection with respect to a section of 
        Federal law described referred to in subsection (a)(1)(A), the 
        requirements of such section remain applicable with respect to 
        health insurance coverage (and to a group health plan insofar 
        as it provides benefits in the form of health insurance 
        coverage) in a State, any State law that imposes requirements 
        within the scope of the subject matter and protections provided 
        by such section, taken as a whole, is preempted and does not 
        apply.
    (c) Definitions.--For purposes of this section, the terms ``State'' 
and ``State law'' shall have the meanings given such terms in section 
2723(d) of the Public Health Service Act (42 U.S.C. 300gg-23(d)).

                  Subtitle F--Miscellaneous Provisions

SEC. 161. DEFINITIONS.

    (a) Incorporation of General Definitions.--Except as otherwise 
provided, the provisions of section 2791 of the Public Health Service 
Act shall apply for purposes of this title in the same manner as they 
apply for purposes of title XXVII of such Act.
    (b) Secretary.--Except as otherwise provided, the term 
``Secretary'' means the Secretary of Health and Human Services, in 
consultation with the Secretary of Labor.
    (c) Additional Definitions.--For purposes of this title:
            (1) Enrollee.--The term ``enrollee'' means, with respect to 
        health insurance coverage offered by a health insurance issuer, 
        an individual enrolled with the issuer to receive such 
        coverage.
            (2) Health care professional.--The term ``health care 
        professional'' means an individual who is licensed, accredited, 
        or certified under State law to provide specified health care 
        services and who is operating within the scope of such 
        licensure, accreditation, or certification.
            (3) Health care provider.--The term ``health care 
        provider'' includes an allopathic or osteopathic physician or 
        other health care professional, as well as an institutional or 
        other facility or agency that provides health care services and 
        that is licensed, accredited, or certified to provide health 
        care items and services under applicable State law.
            (4) Network.--The term ``network'' means, with respect to a 
        group health plan or health insurance issuer offering health 
        insurance coverage, the participating health care professionals 
        and providers through whom the plan or issuer provides health 
        care items and services to participants, beneficiaries, or 
        enrollees.
            (5) Nonparticipating.--The term ``nonparticipating'' means, 
        with respect to a health care provider that provides health 
        care items and services to a participant, beneficiary, or 
        enrollee under group health plan or health insurance coverage, 
        a health care provider that is not a participating health care 
        provider with respect to such items and services.
            (6) Participating.--The term ``participating'' means, with 
        respect to a health care provider that provides health care 
        items and services to a participant, beneficiary, or enrollee 
        under group health plan or health insurance coverage offered by 
        a health insurance issuer, a health care provider that 
        furnishes such items and services under a contract or other 
        arrangement with the plan or issuer.
            (7) Prior authorization.--The term ``prior authorization'' 
        means the process of obtaining prior approval from a health 
        insurance issuer or group health plan for the provision or 
        coverage of medical services.
            (8) Terms and conditions.--The term ``terms and 
        conditions'' includes, with respect to a group health plan or 
        health insurance coverage, requirements imposed under this 
        title (and sections 503A and 503B of the Employee Retirement 
        Income Security Act of 1974) with respect to the plan or 
        coverage.

SEC. 162. EXCLUSIONS.

    (a) No Benefit Requirements.--Nothing in this title (or the 
amendments made by this title) shall be construed to require a group 
health plan or a health insurance issuer offering health insurance 
coverage to provide specific benefits under the terms of such plan or 
coverage, other than those provided under the terms of such plan or 
coverage.
    (b) Exclusion for Fee-for-Service Coverage.--
            (1) In general.--The provisions of subtitle A shall not 
        apply to a group health plan or health insurance coverage if 
        the only coverage offered under such plan or coverage is fee-
        for-service coverage (as defined in paragraph (2)).
            (2) Fee-for-service coverage defined.--For purposes of this 
        subsection, the term ``fee-for-service coverage'' means 
        coverage under a group health plan or health insurance coverage 
        that--
                    (A) reimburses hospitals, health professionals, and 
                other providers on a fee-for-service basis without 
                placing the provider at financial risk;
                    (B) does not vary reimbursement for such a provider 
                based on an agreement to contract terms or the 
                utilization of health care items or services relating 
                to such provider;
                    (C) allows access to any provider that is lawfully 
                authorized to provide the covered services and agree to 
                accept the terms of payment established under the plan 
                or by the issuer; and
                    (D) for which the plan or issuer does not require 
                prior authorization before providing for any health 
                care services.
        Notwithstanding subparagraph (D), coverage that would satisfy 
        the coverage requirements established for an indemnity benefit 
        plan or a service benefit plan under the Federal employees 
        health benefits program under chapter 89 of title 5, United 
        States Code, and any related regulations and rules promulgated 
        by the Office of Personnel Management, shall be considered to 
        meet the definition of fee-for-service coverage under this 
        paragraph.
    (c) Treatment of Excepted Benefits.--The requirements of this title 
shall not apply to excepted benefits (as defined in section 733(c) of 
the Employee Retirement Income Security Act of 1974, 29 U.S.C. 
1191b(c)), other than benefits described in section 733(c)(2)(A) of 
such Act, in the same manner as the provisions of part 7 of subtitle B 
of title I of such Act do not apply to such benefits under subsections 
(b) and (c) of section 732 of such Act (29 U.S.C. 1191a).
    (d) Rule With Respect to Certain Plans.--
            (1) In general.--Notwithstanding any other provision of 
        law, health insurance issuers may offer, and eligible 
        individuals may purchase, high deductible health plans 
        described in section 220(c)(2)(A) of the Internal Revenue Code 
        of 1986. Effective for the 5-year period beginning on the date 
        of the enactment of this Act, such health plans shall not be 
        required to provide payment for any health care items or 
        services that are exempt from the plan's deductible.
            (2) Existing state laws.--A State law relating to payment 
        for health preempted under paragraph (1), shall not apply to 
        high deductible health plans after the expiration of the 5-year 
        period described in such paragraph unless the State reenacts 
        such law after such period.

         TITLE II--AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT

SEC. 201. APPLICATION TO CERTAIN HEALTH INSURANCE COVERAGE.

    (a) In General.--Subpart 2 of part A of title XXVII of the Public 
Health Service Act (42 U.S.C. 300gg-4 et seq.) is amended by adding at 
the end the following:

``SEC. 2707. PATIENT PROTECTION STANDARDS AND ACCOUNTABILITY.

    ``(a) In General.--Each health insurance issuer shall comply with 
the patient protection requirements under title I of the Patients' Bill 
of Rights Act of 2001 with respect to non-Federal governmental group 
health insurance coverage offered by such issuers, and such 
requirements shall be deemed to be incorporated into this section.
    ``(b) Accountability.--The provisions of sections 503 through 503B 
of the Employee Retirement Income Security Act of 1974 (as in effect as 
of the day after the date of enactment of the Patients' Bill of Rights 
Act of 2001) shall apply to non-Federal governmental group health 
insurance coverage offered by health insurance issuers with respect to 
an enrollee in the same manner as they apply to health insurance 
coverage offered by a health insurance issuer for a participant or 
beneficiary in connection with a group health plan and the requirements 
referred to in such sections shall be deemed to be incorporated into 
this section. For purposes of this subsection, references in such 
sections 503 through 503B to the Secretary shall be deemed to be 
references to the Secretary of Health and Human Services.
    ``(c) Construction.--Nothing in this section shall be construed to 
affect section 2721(b)(2).''.
    (b) Conforming Amendment.--Section 2721(b)(2)(A) of such Act (42 
U.S.C. 300gg-21(b)(2)(A)) is amended by inserting ``(other than section 
2707)'' after ``requirements of such subparts''.

SEC. 202. APPLICATION TO INDIVIDUAL HEALTH INSURANCE COVERAGE.

    Part B of title XXVII of the Public Health Service Act (42 U.S.C. 
300gg-41 et seq.) is amended--
            (1) by redesignating the first subpart 3 (relating to other 
        requirements) as subpart 2; and
            (2) by inserting after section 2752 the following:

``SEC. 2753. PATIENT PROTECTION STANDARDS AND ACCOUNTABILITY.

    ``(a) In General.--Each health insurance issuer shall comply with 
the patient protection requirements under subtitles A and B of title I 
of the Patients' Bill of Rights Act of 2001 with respect to individual 
health insurance coverage it offers, and such requirements shall be 
deemed to be incorporated into this section.
    ``(b) Accountability.--The provisions of sections 503 through 503B 
of the Employee Retirement Income Security Act of 1974 (as in effect as 
of the day after the date of enactment of the Patients' Bill of Rights 
Act of 2001) shall apply to health insurance coverage offered by a 
health insurance issuer in the individual market with respect to an 
enrollee in the same manner as they apply to health insurance coverage 
offered by a health insurance issuer for a participant or beneficiary 
in connection with a group health plan and the requirements referred to 
in such sections shall be deemed to be incorporated into this section. 
For purposes of this subsection, references in such sections 503 
through 503B to the Secretary shall be deemed to be references to the 
Secretary of Health and Human Services.''.

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

SEC. 301. APPLICATION OF PATIENT PROTECTION STANDARDS TO GROUP HEALTH 
              PLANS AND GROUP HEALTH INSURANCE COVERAGE UNDER THE 
              EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.

    (a) In General.--Subpart B of part 7 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1185 et 
seq.) is further amended by adding at the end the following new 
section:

``SEC. 714. PATIENT PROTECTION STANDARDS.

    ``(a) In General.--Subject to subsection (b), a group health plan 
(and a health insurance issuer offering health insurance coverage in 
connection with a group health plan) shall comply with the requirements 
of title I of the Patients' Bill of Rights Act of 2001 (as in effect as 
of the date of the enactment of such Act), and such requirements shall 
be deemed to be incorporated into this subsection.
    ``(b) Plan Satisfaction of Certain Requirements.--
            ``(1) Satisfaction of certain requirements through 
        insurance.--For purposes of subsection (a), insofar as a group 
        health plan provides benefits in the form of health insurance 
        coverage through a health insurance issuer, the plan shall be 
        treated as meeting the following requirements of title I of the 
        Patients' Bill of Rights Act of 2001 with respect to such 
        benefits and not be considered as failing to meet such 
        requirements because of a failure of the issuer to meet such 
        requirements so long as the plan sponsor or its representatives 
        did not cause such failure by the issuer:
                    ``(A) Section 101 (relating to access to emergency 
                care).
                    ``(B) Section 102 (relating to consumer choice 
                option).
                    ``(C) Section 103 (relating to patient access to 
                obstetric and gynecological care).
                    ``(D) Section 104 (relating to access to pediatric 
                care).
                    ``(E) Section 105 (relating to timely access to 
                specialists).
                    ``(F) Section 106 (relating to continuity of care), 
                but only insofar as a replacement issuer assumes the 
                obligation for continuity of care.
                    ``(G) Section 108 (relating to access to needed 
                prescription drugs).
                    ``(H) Section 109 (relating to coverage for 
                individuals participating in approved clinical trials).
                    ``(I) Section 121 (relating to the provision of 
                information).
            ``(2) Application to prohibitions.--Pursuant to rules of 
        the Secretary, if a health insurance issuer offering health 
        insurance coverage in connection with a group health plan takes 
        an action in violation of any of the following sections of the 
        Patients' Bill of Rights Act of 2001, the group health plan 
        shall not be liable for such violation unless the plan caused 
        such violation:
                    ``(A) Section 107 (relating to prohibition of 
                interference with certain medical communications).
                    ``(B) Section 110 (relating to prohibition of 
                discrimination against providers based on licensure).
            ``(3) Construction.--Nothing in this subsection shall be 
        construed to affect or modify the responsibilities of the 
        fiduciaries of a group health plan under part 4 of subtitle B.
            ``(4) Treatment of consistent state laws.--For purposes of 
        applying this subsection, a health insurance issuer offering 
        coverage in connection with a group health plan (and such group 
        health plan) shall be deemed to be in compliance with one or 
        more of the patient protection requirements of the Patients' 
        Bill of Rights Act of 2001 (as defined in section 151(a)(1)(C) 
        of such Act) that are otherwise applicable to such issuer (or 
        plan) under this section where the issuer (or plan) is in 
        compliance with a State law, with respect to the patient 
        protection requirements involved, that has been certified in 
        accordance with section 151 of such Act.
    ``(c) Conforming Regulations.--The Secretary shall issue 
regulations to coordinate the requirements on group health plans and 
health insurance issuers under this section with the requirements 
imposed under the other provisions of this title.''.
    (b) Satisfaction of ERISA Claims Procedure Requirement.--Section 
503 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1133) is amended--
            (1) by inserting ``(a)'' after ``Sec. 503.''; and
            (2) by adding at the end the following:
    ``(b) In the case of a group health plan (as defined in section 
733) compliance with the requirements of subtitle A of title I of the 
Patients' Bill of Rights Act of 2001, and compliance with regulations 
promulgated by the Secretary, in the case of a claims denial shall be 
deemed compliance with subsection (a) with respect to such claims 
denial.''.
    (c) Enforcement.--Section 502(b)(3) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1132(b)(3)) is amended--
            (1) by striking ``The Secretary'' and inserting ``(A) The 
        Secretary''; and
            (2) by adding at the end the following:
    ``(B) A participant, beneficiary, plan fiduciary, or the Secretary 
may not bring an action to enforce the requirements of section 714 
against a health insurance issuer offering coverage in connection with 
a group health plan (or such group health plan) where the patient 
protection requirements of the Patients' Bill of Rights Act of 2001 (as 
defined in section 151(a)(1)(C) of such Act) otherwise applicable to 
such issuer (or plan) under section 714 do not apply because the issuer 
(or plan) is in compliance with a State law, with respect to the 
patient protection requirements involved, that has been certified or a 
determination made in accordance with section 151 of such Act.''.
    (d) Conforming Amendments.--
            (1) Section 732(a) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1185(a)) is amended by striking 
        ``section 711'' and inserting ``sections 711 and 714''.
            (2) The table of contents in section 1 of the Employee 
        Retirement Income Security Act of 1974 is amended by inserting 
        after the item relating to section 713 the following new item:

``Sec. 714. Patient protection standards.''.
            (3) Section 502(b)(3) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1132(b)(3)) is amended by 
        inserting ``(other than section 135(b))'' after ``part 7''.
            (4) Section 731(a)(1) of such Act (29 U.S.C. 1191(a)(1)) is 
        amended by inserting ``and section 151 of the Patients' Bill of 
        Rights Act of 2001'' after ``Subject to paragraph (2)''.

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

SEC. 401. APPLICATION TO GROUP HEALTH PLANS UNDER THE INTERNAL REVENUE 
              CODE OF 1986.

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

                              ``Sec. 9813. Standard relating to 
                                        patients' bill of rights.'';
        and
            (2) by inserting after section 9812 the following:

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

    ``A group health plan shall comply with the requirements of 
subtitles A and B title I of the Patients' Bill of Rights Act of 2001 
(and subtitle F of such title insofar as it applies to such subtitles A 
and B) and of sections 503A and 503B of the Employee Retirement Income 
Security Act of 1974, as such requirements are in effect as of the date 
of the enactment of such Act, and such requirements shall be deemed to 
be incorporated into this section.''.

                 TITLE V--EFFECTIVE DATE; SEVERABILITY

SEC. 501. EFFECTIVE DATE AND RELATED RULES.

    (a) In General.--Except as otherwise provided in this Act, the 
provisions of this Act, including the amendments made by title I, shall 
apply--
            (1) to group health plans, and health insurance coverage 
        offered in connection with such plans, on the later of--
                    (A) plan years beginning on or after January 1 of 
                the first calendar year that begins more than 1 year 
                after the date of the enactment of this Act; or
                    (B) plan years beginning on or after 18 months 
                after the date on which the Secretary of Health and 
                Human Services and the Secretary of Labor issue final 
                regulations, subject to the notice and comment period 
                required under subchapter 2 of chapter 5 of title 5, 
                United States Code, necessary to carry out such 
                provisions and the amendments made by this Act; and
            (2) to individual health insurance coverage beginning on or 
        after the effective date described in paragraph (1)(A).
     (b) Limitation on Enforcement Actions.--No enforcement action 
shall be taken, pursuant to the amendments made by this Act, against a 
group health plan 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 has sought to comply in 
good faith with such requirement.
    (c) 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, 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 determinations in internal 
                        or external appeals regarding 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 required data, 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.

SEC. 502. SEVERABILITY.

    (a) In General.--Except as provided in subsections (b) and (c), if 
any provision of this Act, an amendment made by this Act, or the 
application of such provision or amendment to any person or 
circumstance is held to be unconstitutional, the remainder of this Act, 
the amendments made by this Act, and the application of the provisions 
of such to any person or circumstance shall not be affected thereby.
    (b) Dependence of Remedies on Appeals.--If any provision of section 
131, or the amendments made by such section, or the application of such 
section or amendments to any person or circumstance is held to be 
unconstitutional, sections 141 and 142 and the amendments made by such 
sections, shall be deemed to be null and void and shall be given no 
force or effect.
    (c) Remedies.--If any provision of section 141 or 142, or the 
amendments made by such section, or the application of such section or 
amendments to any person or circumstance is held to be 
unconstitutional, the remainder of such section, and the amendments 
made by such section shall be deemed to be null and void and shall be 
given no force or effect.

       TITLE VI--INCREASING ACCESS TO AFFORDABLE HEALTH INSURANCE

                       Subtitle A--Tax Incentives

SEC. 601. EXPANSION OF AVAILABILITY OF ARCHER MEDICAL SAVINGS ACCOUNTS.

    (a) Repeal of Limitations on Number of Medical Savings Accounts.--
            (1) In general.--Subsections (i) and (j) of section 220 of 
        the Internal Revenue Code of 1986 are hereby repealed.
            (2) Conforming amendments.--
                    (A) Paragraph (1) of section 220(c) of such Code is 
                amended by striking subparagraph (D).
                    (B) Section 138 of such Code is amended by striking 
                subsection (f).
    (b) Availability Not Limited to Accounts for Employees of Small 
Employers and Self-employed Individuals.--
            (1) In general.--Subparagraph (A) of section 220(c)(1) of 
        such Code (relating to eligible individual) is amended to read 
        as follows:
                    ``(A) In general.--The term `eligible individual' 
                means, with respect to any month, any individual if--
                            ``(i) such individual is covered under a 
                        high deductible health plan as of the 1st day 
                        of such month, and
                            ``(ii) such individual is not, while 
                        covered under a high deductible health plan, 
                        covered under any health plan--
                                    ``(I) which is not a high 
                                deductible health plan, and
                                    ``(II) which provides coverage for 
                                any benefit which is covered under the 
                                high deductible health plan.''.
            (2) Conforming amendments.--
                    (A) Section 220(c)(1) of such Code is amended by 
                striking subparagraph (C).
                    (B) Section 220(c) of such Code is amended by 
                striking paragraph (4) (defining small employer) and by 
                redesignating paragraph (5) as paragraph (4).
                    (C) Section 220(b) of such Code is amended by 
                striking paragraph (4) (relating to deduction limited 
                by compensation) and by redesignating paragraphs (5), 
                (6), and (7) as paragraphs (4), (5), and (6), 
                respectively.
    (c) Increase in Amount of Deduction Allowed for Contributions to 
Medical Savings Accounts.--
            (1) In general.--Paragraph (2) of section 220(b) of such 
        Code is amended to read as follows:
            ``(2) Monthly limitation.--The monthly limitation for any 
        month is the amount equal to \1/12\ of the annual deductible 
        (as of the first day of such month) of the individual's 
        coverage under the high deductible health plan.''.
            (2) Conforming amendment.--Clause (ii) of section 
        220(d)(1)(A) of such Code is amended by striking ``75 percent 
        of''.
    (d) Both Employers and Employees May Contribute to Medical Savings 
Accounts.--Paragraph (4) of section 220(b) of such Code (as 
redesignated by subsection (b)(2)(C)) is amended to read as follows:
            ``(4) Coordination with exclusion for employer 
        contributions.--The limitation which would (but for this 
        paragraph) apply under this subsection to the taxpayer for any 
        taxable year shall be reduced (but not below zero) by the 
        amount which would (but for section 106(b)) be includible in 
        the taxpayer's gross income for such taxable year.''.
    (e) Reduction of Permitted Deductibles Under High Deductible Health 
Plans.--
            (1) In general.--Subparagraph (A) of section 220(c)(2) of 
        such Code (defining high deductible health plan) is amended--
                    (A) by striking ``$1,500'' in clause (i) and 
                inserting ``$1,000''; and
                    (B) by striking ``$3,000'' in clause (ii) and 
                inserting ``$2,000''.
            (2) Conforming amendment.--Subsection (g) of section 220 of 
        such Code is amended to read as follows:
    ``(g) Cost-of-Living Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 1998, each dollar amount in 
        subsection (c)(2) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                such taxable year begins by substituting `calendar year 
                1997' for `calendar year 1992' in subparagraph (B) 
                thereof.
            ``(2) Special rules.--In the case of the $1,000 amount in 
        subsection (c)(2)(A)(i) and the $2,000 amount in subsection 
        (c)(2)(A)(ii), paragraph (1)(B) shall be applied by 
        substituting `calendar year 2000' for `calendar year 1997'.
            ``(3) Rounding.--If any increase under paragraph (1) or (2) 
        is not a multiple of $50, such increase shall be rounded to the 
        nearest multiple of $50.''.
    (f) Providing Incentives for Preferred Provider Organizations To 
Offer Medical Savings Accounts.--Clause (ii) of section 220(c)(2)(B) of 
such Code is amended by striking ``preventive care if'' and all that 
follows and inserting ``preventive care.''
    (g) Medical Savings Accounts May Be Offered Under Cafeteria 
Plans.--Subsection (f) of section 125 of such Code is amended by 
striking ``106(b),''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

                  Subtitle B--Association Health Plans

SEC. 621. 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 whose sponsor is (or is deemed 
under this part to be) described in subsection (b).
    ``(b) Sponsorship.--The sponsor of a group health plan is described 
in this subsection if such sponsor--
            ``(1) is organized and maintained in good faith, with a 
        constitution and bylaws specifically stating its purpose and 
        providing for periodic meetings on at least an annual basis, as 
        a bona fide trade association, a bona fide industry association 
        (including a rural electric cooperative association or a rural 
        telephone cooperative association), a bona fide professional 
        association, or a bona fide chamber of commerce (or similar 
        bona fide business association, including a corporation or 
        similar organization that operates on a cooperative basis 
        (within the meaning of section 1381 of the Internal Revenue 
        Code of 1986)), for substantial purposes other than that of 
        obtaining or providing medical care;
            ``(2) is established as a permanent entity which receives 
        the active support of its members and collects from its members 
        on a periodic basis dues or payments necessary to maintain 
        eligibility for membership in the sponsor; and
            ``(3) does not condition membership, such dues or payments, 
        or coverage under the plan on the basis of health status-
        related factors with respect to the employees of its members 
        (or affiliated members), or the dependents of such employees, 
        and does not condition such dues or payments on the basis of 
        group health plan participation.
Any sponsor consisting of an association of entities which meet the 
requirements of paragraphs (1), (2), and (3) shall be deemed to be a 
sponsor described in this subsection.

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

    ``(a) In General.--The applicable authority shall prescribe by 
regulation, through negotiated rulemaking, a procedure under which, 
subject to subsection (b), the applicable authority shall certify 
association health plans which apply for certification as meeting the 
requirements of this part.
    ``(b) Standards.--Under the procedure prescribed pursuant to 
subsection (a), in the case of an association health plan that provides 
at least one benefit option which does not consist of health insurance 
coverage, the applicable authority shall certify such plan as meeting 
the requirements of this part only if the applicable authority is 
satisfied that the applicable requirements of this part are met (or, 
upon the date on which the plan is to commence operations, will be met) 
with respect to the plan.
    ``(c) Requirements Applicable to Certified Plans.--An association 
health plan with respect to which certification under this part is in 
effect shall meet the applicable requirements of this part, effective 
on the date of certification (or, if later, on the date on which the 
plan is to commence operations).
    ``(d) Requirements for Continued Certification.--The applicable 
authority may provide by regulation, through negotiated rulemaking, for 
continued certification of association health plans under this part.
    ``(e) Class Certification for Fully Insured Plans.--The applicable 
authority shall establish a class certification procedure for 
association health plans under which all benefits consist of health 
insurance coverage. Under such procedure, the applicable authority 
shall provide for the granting of certification under this part to the 
plans in each class of such association health plans upon appropriate 
filing under such procedure in connection with plans in such class and 
payment of the prescribed fee under section 807(a).
    ``(f) Certification of Self-Insured Association Health Plans.--An 
association health plan which offers one or more benefit options which 
do not consist of health insurance coverage may be certified under this 
part only if such plan consists of any of the following:
            ``(1) a plan which offered such coverage on the date of the 
        enactment of the Patients' Bill of Rights Act of 2001,
            ``(2) a plan under which the sponsor does not restrict 
        membership to one or more trades and businesses or industries 
        and whose eligible participating employers represent a broad 
        cross-section of trades and businesses or industries, or
            ``(3) a plan whose eligible participating employers 
        represent one or more trades or businesses, or one or more 
        industries, which have been indicated as having average or 
        above-average health insurance risk or health claims experience 
        by reason of State rate filings, denials of coverage, proposed 
        premium rate levels, and other means demonstrated by such plan 
        in accordance with regulations which the Secretary shall 
        prescribe through negotiated rulemaking, including (but not 
        limited to) the following: agriculture; equipment and 
        automobile dealerships; barbering and cosmetology; beverage 
        wholesaling/distributing; certified public accounting 
        practices; child care; construction; dance, theatrical, and 
        orchestra productions; disinfecting and pest control; eating 
        and drinking establishments; fishing; hospitals; labor 
        organizations; logging; manufacturing (metals); mining; medical 
        and dental practices; medical laboratories; sanitary services; 
        transportation (local and freight); and warehousing.

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

    ``(a) Sponsor.--The requirements of this subsection are met with 
respect to an association health plan if the sponsor has met (or is 
deemed under this part to have met) the requirements of section 801(b) 
for a continuous period of not less than 3 years ending with the date 
of the application for certification under this part.
    ``(b) Board of Trustees.--The requirements of this subsection are 
met with respect to an association health plan if the following 
requirements are met:
            ``(1) Fiscal control.--The plan is operated, pursuant to a 
        trust agreement, by a board of trustees which has complete 
        fiscal control over the plan and which is responsible for all 
        operations of the plan.
            ``(2) Rules of operation and financial controls.--The board 
        of trustees has in effect rules of operation and financial 
        controls, based on a 3-year plan of operation, adequate to 
        carry out the terms of the plan and to meet all requirements of 
        this title applicable to the plan.
            ``(3) Rules governing relationship to participating 
        employers and to contractors.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), the members of the board of 
                trustees are individuals selected from individuals who 
                are the owners, officers, directors, or employees of 
                the participating employers or who are partners in the 
                participating employers and actively participate in the 
                business.
                    ``(B) Limitation.--
                            ``(i) General rule.--Except as provided in 
                        clauses (ii) and (iii), no such member is an 
                        owner, officer, director, or employee of, or 
                        partner in, a contract administrator or other 
                        service provider to the plan.
                            ``(ii) Limited exception for providers of 
                        services solely on behalf of the sponsor.--
                        Officers or employees of a sponsor which is a 
                        service provider (other than a contract 
                        administrator) to the plan may be members of 
                        the board if they constitute not more than 25 
                        percent of the membership of the board and they 
                        do not provide services to the plan other than 
                        on behalf of the sponsor.
                            ``(iii) Treatment of providers of medical 
                        care.--In the case of a sponsor which is an 
                        association whose membership consists primarily 
                        of providers of medical care, clause (i) shall 
                        not apply in the case of any service provider 
                        described in subparagraph (A) who is a provider 
                        of medical care under the plan.
                    ``(C) Certain plans excluded.--Subparagraph (A) 
                shall not apply to an association health plan which is 
                in existence on the date of the enactment of the 
                Patients' Bill of Rights Act of 2001.
                    ``(D) Sole authority.--The board has sole authority 
                under the plan to approve applications for 
                participation in the plan and to contract with a 
                service provider to administer the day-to-day affairs 
                of the plan.
    ``(c) Treatment of Franchise Networks.--In the case of a group 
health plan which is established and maintained by a franchiser for a 
franchise network consisting of its franchisees--
            ``(1) the requirements of subsection (a) and section 
        801(a)(1) shall be deemed met if such requirements would 
        otherwise be met if the franchiser were deemed to be the 
        sponsor referred to in section 801(b), such network were deemed 
        to be an association described in section 801(b), and each 
        franchisee were deemed to be a member (of the association and 
        the sponsor) referred to in section 801(b); and
            ``(2) the requirements of section 804(a)(1) shall be deemed 
        met.
The Secretary may by regulation, through negotiated rulemaking, define 
for purposes of this subsection the terms `franchiser', `franchise 
network', and `franchisee'.
    ``(d) Certain Collectively Bargained Plans.--
            ``(1) In general.--In the case of a group health plan 
        described in paragraph (2)--
                    ``(A) the requirements of subsection (a) and 
                section 801(a)(1) shall be deemed met;
                    ``(B) the joint board of trustees shall be deemed a 
                board of trustees with respect to which the 
                requirements of subsection (b) are met; and
                    ``(C) the requirements of section 804 shall be 
                deemed met.
            ``(2) Requirements.--A group health plan is described in 
        this paragraph if--
                    ``(A) the plan is a multiemployer plan; or
                    ``(B) the plan is in existence on April 1, 2001, 
                and would be described in section 3(40)(A)(i) but 
                solely for the failure to meet the requirements of 
                section 3(40)(C)(ii).

``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

    ``(a) Covered Employers and Individuals.--The requirements of this 
subsection are met with respect to an association health plan if, under 
the terms of the plan--
            ``(1) each participating employer must be--
                    ``(A) a member of the sponsor,
                    ``(B) the sponsor, or
                    ``(C) an affiliated member of the sponsor with 
                respect to which the requirements of subsection (b) are 
                met,
        except that, in the case of a sponsor which is a professional 
        association or other individual-based association, if at least 
        one of the officers, directors, or employees of an employer, or 
        at least one of the individuals who are partners in an employer 
        and who actively participates in the business, is a member or 
        such an affiliated member of the sponsor, participating 
        employers may also include such employer; and
            ``(2) all individuals commencing coverage under the plan 
        after certification under this part must be--
                    ``(A) active or retired owners (including self-
                employed individuals), officers, directors, or 
                employees of, or partners in, participating employers; 
                or
                    ``(B) the beneficiaries of individuals described in 
                subparagraph (A).
    ``(b) Coverage of Previously Uninsured Employees.--In the case of 
an association health plan in existence on the date of the enactment of 
the Patients' Bill of Rights Act of 2001, an affiliated member of the 
sponsor of the plan may be offered coverage under the plan as a 
participating employer only if--
            ``(1) the affiliated member was an affiliated member on the 
        date of certification under this part; or
            ``(2) during the 12-month period preceding the date of the 
        offering of such coverage, the affiliated member has not 
        maintained or contributed to a group health plan with respect 
        to any of its employees who would otherwise be eligible to 
        participate in such association health plan.
    ``(c) Individual Market Unaffected.--The requirements of this 
subsection are met with respect to an association health plan if, under 
the terms of the plan, no participating employer may provide health 
insurance coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
contemporaneously provided to employees of the employer under the plan, 
if such exclusion of the employee from coverage under the plan is based 
on a health status-related factor with respect to the employee and such 
employee would, but for such exclusion on such basis, be eligible for 
coverage under the plan.
    ``(d) Prohibition of Discrimination Against Employers and Employees 
Eligible To Participate.--The requirements of this subsection are met 
with respect to an association health plan if--
            ``(1) under the terms of the plan, all employers meeting 
        the preceding requirements of this section are eligible to 
        qualify as participating employers for all geographically 
        available coverage options, unless, in the case of any such 
        employer, participation or contribution requirements of the 
        type referred to in section 2711 of the Public Health Service 
        Act are not met;
            ``(2) upon request, any employer eligible to participate is 
        furnished information regarding all coverage options available 
        under the plan; and
            ``(3) the applicable requirements of sections 701, 702, and 
        703 are met with respect to the plan.

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

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

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

    ``(a) In General.--The requirements of this section are met with 
respect to an association health plan if--
            ``(1) the benefits under the plan consist solely of health 
        insurance coverage; or
            ``(2) if the plan provides any additional benefit options 
        which do not consist of health insurance coverage, the plan--
                    ``(A) establishes and maintains reserves with 
                respect to such additional benefit options, in amounts 
                recommended by the qualified actuary, consisting of--
                            ``(i) a reserve sufficient for unearned 
                        contributions;
                            ``(ii) a reserve sufficient for benefit 
                        liabilities which have been incurred, which 
                        have not been satisfied, and for which risk of 
                        loss has not yet been transferred, and for 
                        expected administrative costs with respect to 
                        such benefit liabilities;
                            ``(iii) a reserve sufficient for any other 
                        obligations of the plan; and
                            ``(iv) a reserve sufficient for a margin of 
                        error and other fluctuations, taking into 
                        account the specific circumstances of the plan; 
                        and
                    ``(B) establishes and maintains aggregate and 
                specific excess/stop loss insurance and solvency 
                indemnification, with respect to such additional 
                benefit options for which risk of loss has not yet been 
                transferred, as follows:
                            ``(i) The plan shall secure aggregate 
                        excess/stop loss insurance for the plan with an 
                        attachment point which is not greater than 125 
                        percent of expected gross annual claims. The 
                        applicable authority may by regulation, through 
                        negotiated rulemaking, provide for upward 
                        adjustments in the amount of such percentage in 
                        specified circumstances in which the plan 
                        specifically provides for and maintains 
                        reserves in excess of the amounts required 
                        under subparagraph (A).
                            ``(ii) The plan shall secure specific 
                        excess/stop loss insurance for the plan with an 
                        attachment point which is at least equal to an 
                        amount recommended by the plan's qualified 
                        actuary. The applicable authority may by 
                        regulation, through negotiated rulemaking, 
                        provide for adjustments in the amount of such 
                        insurance in specified circumstances in which 
                        the plan specifically provides for and 
                        maintains reserves in excess of the amounts 
                        required under subparagraph (A).
                            ``(iii) The plan shall secure 
                        indemnification insurance for any claims which 
                        the plan is unable to satisfy by reason of a 
                        plan termination.
Any regulations prescribed by the applicable authority pursuant to 
clause (i) or (ii) of subparagraph (B) may allow for such adjustments 
in the required levels of excess/stop loss insurance as the qualified 
actuary may recommend, taking into account the specific circumstances 
of the plan.
    ``(b) Minimum Surplus in Addition to Claims Reserves.--In the case 
of any association health plan described in subsection (a)(2), the 
requirements of this subsection are met if the plan establishes and 
maintains surplus in an amount at least equal to--
            ``(1) $500,000, or
            ``(2) such greater amount (but not greater than $2,000,000) 
        as may be set forth in regulations prescribed by the applicable 
        authority through negotiated rulemaking, based on the level of 
        aggregate and specific excess/stop loss insurance provided with 
        respect to such plan.
    ``(c) Additional Requirements.--In the case of any association 
health plan described in subsection (a)(2), the applicable authority 
may provide such additional requirements relating to reserves and 
excess/stop loss insurance as the applicable authority considers 
appropriate. Such requirements may be provided by regulation, through 
negotiated rulemaking, with respect to any such plan or any class of 
such plans.
    ``(d) Adjustments for Excess/Stop Loss Insurance.--The applicable 
authority may provide for adjustments to the levels of reserves 
otherwise required under subsections (a) and (b) with respect to any 
plan or class of plans to take into account excess/stop loss insurance 
provided with respect to such plan or plans.
    ``(e) Alternative Means of Compliance.--The applicable authority 
may permit an association health plan described in subsection (a)(2) to 
substitute, for all or part of the requirements of this section (except 
subsection (a)(2)(B)(iii)), such security, guarantee, hold-harmless 
arrangement, or other financial arrangement as the applicable authority 
determines to be adequate to enable the plan to fully meet all its 
financial obligations on a timely basis and is otherwise no less 
protective of the interests of participants and beneficiaries than the 
requirements for which it is substituted. The applicable authority may 
take into account, for purposes of this subsection, evidence provided 
by the plan or sponsor which demonstrates an assumption of liability 
with respect to the plan. Such evidence may be in the form of a 
contract of indemnification, lien, bonding, insurance, letter of 
credit, recourse under applicable terms of the plan in the form of 
assessments of participating employers, security, or other financial 
arrangement.
    ``(f) Measures To Ensure Continued Payment of Benefits by Certain 
Plans in Distress.--
            ``(1) Payments by certain plans to association health plan 
        fund.--
                    ``(A) In general.--In the case of an association 
                health plan described in subsection (a)(2), the 
                requirements of this subsection are met if the plan 
                makes payments into the Association Health Plan Fund 
                under this subparagraph when they are due. Such 
                payments shall consist of annual payments in the amount 
                of $5,000, 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 the applicable authority may prescribe by 
                regulation through negotiated rulemaking) provides for 
                payment to the plan with respect to aggregate claims 
                under the plan in excess of an amount or amounts 
                specified in such contract;
                    ``(B) which is guaranteed renewable; and
                    ``(C) which allows for payment of premiums by any 
                third party on behalf of the insured plan.
            ``(2) Specific excess/stop loss insurance.--The term 
        `specific excess/stop loss insurance' means, in connection with 
        an association health plan, a contract--
                    ``(A) under which an insurer (meeting such minimum 
                standards as the applicable authority may prescribe by 
                regulation through negotiated rulemaking) provides for 
                payment to the plan with respect to claims under the 
                plan in connection with a covered individual in excess 
                of an amount or amounts specified in such contract in 
                connection with such covered individual;
                    ``(B) which is guaranteed renewable; and
                    ``(C) which allows for payment of premiums by any 
                third party on behalf of the insured plan.
    ``(h) Indemnification Insurance.--For purposes of this section, the 
term `indemnification insurance' means, in connection with an 
association health plan, a contract--
            ``(1) under which an insurer (meeting such minimum 
        standards as the applicable authority may prescribe through 
        negotiated rulemaking) provides for payment to the plan with 
        respect to claims under the plan which the plan is unable to 
        satisfy by reason of a termination pursuant to section 809(b) 
        (relating to mandatory termination);
            ``(2) which is guaranteed renewable and noncancellable for 
        any reason (except as the applicable authority may prescribe by 
        regulation through negotiated rulemaking); and
            ``(3) which allows for payment of premiums by any third 
        party on behalf of the insured plan.
    ``(i) Reserves.--For purposes of this section, the term `reserves' 
means, in connection with an association health plan, plan assets which 
meet the fiduciary standards under part 4 and such additional 
requirements regarding liquidity as the applicable authority may 
prescribe through negotiated rulemaking.
    ``(j) Solvency Standards Working Group.--
            ``(1) In general.--Within 90 days after the date of the 
        enactment of the Patients' Bill of Rights Act of 2001, the 
        applicable authority shall establish a Solvency Standards 
        Working Group. In prescribing the initial regulations under 
        this section, the applicable authority shall take into account 
        the recommendations of such Working Group.
            ``(2) Membership.--The Working Group shall consist of not 
        more than 15 members appointed by the applicable authority. The 
        applicable authority shall include among persons invited to 
        membership on the Working Group at least one of each of the 
        following:
                    ``(A) a representative of the National Association 
                of Insurance Commissioners;
                    ``(B) a representative of the American Academy of 
                Actuaries;
                    ``(C) a representative of the State governments, or 
                their interests;
                    ``(D) a representative of existing self-insured 
                arrangements, or their interests;
                    ``(E) a representative of associations of the type 
                referred to in section 801(b)(1), or their interests; 
                and
                    ``(F) 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 which shall be prescribed by the applicable authority through 
negotiated rulemaking, at least the following information:
            ``(1) Identifying information.--The names and addresses 
        of--
                    ``(A) the sponsor; and
                    ``(B) the members of the board of trustees of the 
                plan.
            ``(2) States in which plan intends to do business.--The 
        States in which participants and beneficiaries under the plan 
        are to be located and the number of them expected to be located 
        in each such State.
            ``(3) Bonding requirements.--Evidence provided by the board 
        of trustees that the bonding requirements of section 412 will 
        be met as of the date of the application or (if later) 
        commencement of operations.
            ``(4) Plan documents.--A copy of the documents governing 
        the plan (including any bylaws and trust agreements), the 
        summary plan description, and other material describing the 
        benefits that will be provided to participants and 
        beneficiaries under the plan.
            ``(5) Agreements with service providers.--A copy of any 
        agreements between the plan and contract administrators and 
        other service providers.
            ``(6) Funding report.--In the case of association health 
        plans providing benefits options in addition to health 
        insurance coverage, a report setting forth information with 
        respect to such additional benefit options determined as of a 
        date within the 120-day period ending with the date of the 
        application, including the following:
                    ``(A) Reserves.--A statement, certified by the 
                board of trustees of the plan, and a statement of 
                actuarial opinion, signed by a qualified actuary, that 
                all applicable requirements of section 806 are or will 
                be met in accordance with regulations which the 
                applicable authority shall prescribe through negotiated 
                rulemaking.
                    ``(B) Adequacy of contribution rates.--A statement 
                of actuarial opinion, signed by a qualified actuary, 
                which sets forth a description of the extent to which 
                contribution rates are adequate to provide for the 
                payment of all obligations and the maintenance of 
                required reserves under the plan for the 12-month 
                period beginning with such date within such 120-day 
                period, taking into account the expected coverage and 
                experience of the plan. If the contribution rates are 
                not fully adequate, the statement of actuarial opinion 
                shall indicate the extent to which the rates are 
                inadequate and the changes needed to ensure adequacy.
                    ``(C) Current and projected value of assets and 
                liabilities.--A statement of actuarial opinion signed 
                by a qualified actuary, which sets forth the current 
                value of the assets and liabilities accumulated under 
                the plan and a projection of the assets, liabilities, 
                income, and expenses of the plan for the 12-month 
                period referred to in subparagraph (B). The income 
                statement shall identify separately the plan's 
                administrative expenses and claims.
                    ``(D) Costs of coverage to be charged and other 
                expenses.--A statement of the costs of coverage to be 
                charged, including an itemization of amounts for 
                administration, reserves, and other expenses associated 
                with the operation of the plan.
                    ``(E) Other information.--Any other information as 
                may be determined by the applicable authority, by 
                regulation through negotiated rulemaking, as necessary 
                to carry out the purposes of this part.
    ``(c) Filing Notice of Certification With States.--A certification 
granted under this part to an association health plan shall not be 
effective unless written notice of such certification is filed with the 
applicable State authority of each State in which at least 25 percent 
of the participants and beneficiaries under the plan are located. For 
purposes of this subsection, an individual shall be considered to be 
located in the State in which a known address of such individual is 
located or in which such individual is employed.
    ``(d) Notice of Material Changes.--In the case of any association 
health plan certified under this part, descriptions of material changes 
in any information which was required to be submitted with the 
application for the certification under this part shall be filed in 
such form and manner as shall be prescribed by the applicable authority 
by regulation through negotiated rulemaking. The applicable authority 
may require by regulation, through negotiated rulemaking, prior notice 
of material changes with respect to specified matters which might serve 
as the basis for suspension or revocation of the certification.
    ``(e) Reporting Requirements for Certain Association Health 
Plans.--An association health plan certified under this part which 
provides benefit options in addition to health insurance coverage for 
such plan year shall meet the requirements of section 103 by filing an 
annual report under such section which shall include information 
described in subsection (b)(6) with respect to the plan year and, 
notwithstanding section 104(a)(1)(A), shall be filed with the 
applicable authority not later than 90 days after the close of the plan 
year (or on such later date as may be prescribed by the applicable 
authority). The applicable authority may require by regulation through 
negotiated rulemaking such interim reports as it considers appropriate.
    ``(f) Engagement of Qualified Actuary.--The board of trustees of 
each association health plan which provides benefits options in 
addition to health insurance coverage and which is applying for 
certification under this part or is certified under this part shall 
engage, on behalf of all participants and beneficiaries, a qualified 
actuary who shall be responsible for the preparation of the materials 
comprising information necessary to be submitted by a qualified actuary 
under this part. The qualified actuary shall utilize such assumptions 
and techniques as are necessary to enable such actuary to form an 
opinion as to whether the contents of the matters reported under this 
part--
            ``(1) are in the aggregate reasonably related to the 
        experience of the plan and to reasonable expectations; and
            ``(2) represent such actuary's best estimate of anticipated 
        experience under the plan.
The opinion by the qualified actuary shall be made with respect to, and 
shall be made a part of, the annual report.

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

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

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

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

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

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

``SEC. 811. STATE ASSESSMENT AUTHORITY.

    ``(a) In General.--Notwithstanding section 514, a State may impose 
by law a contribution tax on an association health plan described in 
section 806(a)(2), if the plan commenced operations in such State after 
the date of the enactment of the Patients' Bill of Rights Act of 2001.
    ``(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. 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 if no State referred to in 
                        clause (i), the Secretary.
                    ``(B) Exceptions.--
                            ``(i) Joint authorities.--Where such term 
                        appears in section 808(3), section 807(e) (in 
                        the first instance), section 809(a) (in the 
                        second instance), section 809(a) (in the fourth 
                        instance), and section 809(b)(1), such term 
                        means, in connection with an association health 
                        plan, the Secretary and the State referred to 
                        in subparagraph (A)(i) (if any) in connection 
                        with such plan.
                            ``(ii) Regulatory authorities.--Where such 
                        term appears in section 802(a) (in the first 
                        instance), section 802(d), section 802(e), 
                        section 803(d), section 805(a)(5), section 
                        806(a)(2), section 806(b), section 806(c), 
                        section 806(d), paragraphs (1)(A) and (2)(A) of 
                        section 806(g), section 806(h), section 806(i), 
                        section 806(j), section 807(a) (in the second 
                        instance), section 807(b), section 807(d), 
                        section 807(e) (in the second instance), 
                        section 808 (in the matter after paragraph 
                        (3)), and section 809(a) (in the third 
                        instance), such term means, in connection with 
                        an association health plan, the Secretary.
            ``(6) Health status-related factor.--The term `health 
        status-related factor' has the meaning provided in section 
        733(d)(2).
            ``(7) Individual market.--
                    ``(A) In general.--The term `individual market' 
                means the market for health insurance coverage offered 
                to individuals other than in connection with a group 
                health plan.
                    ``(B) Treatment of very small groups.--
                            ``(i) In general.--Subject to clause (ii), 
                        such term includes coverage offered in 
                        connection with a group health plan that has 
                        fewer than 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 through negotiated 
        rulemaking.
            ``(11) Affiliated member.--The term `affiliated member' 
        means, in connection with a sponsor--
                    ``(A) a person who is otherwise eligible to be a 
                member of the sponsor but who elects an affiliated 
                status with the sponsor,
                    ``(B) in the case of a sponsor with members which 
                consist of associations, a person who is a member of 
                any such association and elects an affiliated status 
                with the sponsor, or
                    ``(C) in the case of an association health plan in 
                existence on the date of the enactment of the Patients' 
                Bill of Rights Act of 2001, a person eligible to be a 
                member of the sponsor or one of its member 
                associations.
            ``(12) Large employer.--The term `large employer' means, in 
        connection with a group health plan with respect to a plan 
        year, an employer who employed an average of at least 51 
        employees on business days during the preceding calendar year 
        and who employs at least 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), as amended by 
        section 142, is amended--
                    (A) in subsection (b)(4), by striking ``Subsection 
                (a)'' and inserting ``Subsections (a) and (e)'';
                    (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 (e) as subsection 
                (f); and
                    (D) by inserting after subsection (d) the following 
                new subsection:
    ``(e)(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 Patients' Bill of Rights Act of 2001 shall 
be construed to alter, amend, modify, invalidate, impair, or supersede 
any provision of this title, except by specific cross-reference to the 
affected section.''.
    (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
102(16)(B)) is amended by adding at the end the following new sentence: 
``Such term also includes a person serving as the sponsor of an 
association health plan under part 8.''.
    (d) Disclosure of Solvency Protections Related to Self-Insured and 
Fully Insured Options Under Association Health Plans.--Section 102(b) 
of such Act (29 U.S.C. 102(b)) is amended by adding at the end the 
following: ``An association health plan shall include in its summary 
plan description, in connection with each benefit option, a description 
of the form of solvency or guarantee fund protection secured pursuant 
to this Act or applicable State law, if any.''.
    (e) Savings Clause.--Section 731(c) of such Act is amended by 
inserting ``or part 8'' after ``this part''.
    (f) Report to the Congress Regarding Certification of Self-Insured 
Association Health Plans.--Not later than January 1, 2006, the 
Secretary of Labor shall report to the Committee on Education and the 
Workforce of the House of Representatives and the Committee on Health, 
Education, Labor, and Pensions of the Senate the effect association 
health plans have had, if any, on reducing the number of uninsured 
individuals.
    (g) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 is amended by inserting 
after the item relating to section 734 the following new items:

           ``Part 8--Rules Governing Association Health Plans

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

SEC. 622. 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. 623. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED 
              ARRANGEMENTS.

    (a) In General.--Section 3(40)(A)(i) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to 
read as follows:
            ``(i)(I) under or pursuant to one or more collective 
        bargaining agreements which are reached pursuant to collective 
        bargaining described in section 8(d) of the National Labor 
        Relations Act (29 U.S.C. 158(d)) or paragraph Fourth of section 
        2 of the Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or 
        which are reached pursuant to labor-management negotiations 
        under similar provisions of State public employee relations 
        laws, and (II) in accordance with subparagraphs (C), (D), and 
        (E);''.
    (b) Limitations.--Section 3(40) of such Act (29 U.S.C. 1002(40)) is 
amended by adding at the end the following new subparagraphs:
    ``(C) For purposes of subparagraph (A)(i)(II), a plan or other 
arrangement shall be treated as established or maintained in accordance 
with this subparagraph only if the following requirements are met:
            ``(i) The plan or other arrangement, and the employee 
        organization or any other entity sponsoring the plan or other 
        arrangement, do not--
                    ``(I) utilize the services of any licensed 
                insurance agent or broker for soliciting or enrolling 
                employers or individuals as participating employers or 
                covered individuals under the plan or other 
                arrangement; or
                    ``(II) pay any type of compensation to a person, 
                other than a full time employee of the employee 
                organization (or a member of the organization to the 
                extent provided in regulations prescribed by the 
                Secretary through negotiated rulemaking), that is 
                related either to the volume or number of employers or 
                individuals solicited or enrolled as participating 
                employers or covered individuals under the plan or 
                other arrangement, or to the dollar amount or size of 
                the contributions made by participating employers or 
                covered individuals to the plan or other arrangement;
        except to the extent that the services used by the plan, 
        arrangement, organization, or other entity consist solely of 
        preparation of documents necessary for compliance with the 
        reporting and disclosure requirements of part 1 or 
        administrative, investment, or consulting services unrelated to 
        solicitation or enrollment of covered individuals.
            ``(ii) As of the end of the preceding plan year, the number 
        of covered individuals under the plan or other arrangement who 
        are neither--
                    ``(I) employed within a bargaining unit covered by 
                any of the collective bargaining agreements with a 
                participating employer (nor covered on the basis of an 
                individual's employment in such a bargaining unit); nor
                    ``(II) present employees (or former employees who 
                were covered while employed) of the sponsoring employee 
                organization, of an employer who is or was a party to 
                any of the collective bargaining agreements, or of the 
                plan or other arrangement or a related plan or 
                arrangement (nor covered on the basis of such present 
                or former employment);
        does not exceed 15 percent of the total number of individuals 
        who are covered under the plan or arrangement and who are 
        present or former employees who are or were covered under the 
        plan or arrangement pursuant to a collective bargaining 
        agreement with a participating employer. The requirements of 
        the preceding provisions of this clause shall be treated as 
        satisfied if, as of the end of the preceding plan year, such 
        covered individuals are comprised solely of individuals who 
        were covered individuals under the plan or other arrangement as 
        of the date of the enactment of the Patients' Bill of Rights 
        Act of 2001 and, as of the end of the preceding plan year, the 
        number of such covered individuals does not exceed 25 percent 
        of the total number of present and former employees enrolled 
        under the plan or other arrangement.
            ``(iii) The employee organization or other entity 
        sponsoring the plan or other arrangement certifies to the 
        Secretary each year, in a form and manner which shall be 
        prescribed by the Secretary through negotiated rulemaking that 
        the plan or other arrangement meets the requirements of clauses 
        (i) and (ii).
    ``(D) For purposes of subparagraph (A)(i)(II), a plan or 
arrangement shall be treated as established or maintained in accordance 
with this subparagraph only if--
            ``(i) all of the benefits provided under the plan or 
        arrangement consist of health insurance coverage; or
            ``(ii)(I) the plan or arrangement is a multiemployer plan; 
        and
            ``(II) the requirements of clause (B) of the proviso to 
        clause (5) of section 302(c) of the Labor Management Relations 
        Act, 1947 (29 U.S.C. 186(c)) are met with respect to such plan 
        or other arrangement.
    ``(E) For purposes of subparagraph (A)(i)(II), a plan or 
arrangement shall be treated as established or maintained in accordance 
with this subparagraph only if--
            ``(i) the plan or arrangement is in effect as of the date 
        of the enactment of the Patients' Bill of Rights Act of 2001; 
        or
            ``(ii) the employee organization or other entity sponsoring 
        the plan or arrangement--
                    ``(I) has been in existence for at least 3 years; 
                or
                    ``(II) demonstrates to the satisfaction of the 
                Secretary that the requirements of subparagraphs (C) 
                and (D) are met with respect to the plan or other 
                arrangement.''.
    (c) Conforming Amendments to Definitions of Participant and 
Beneficiary.--Section 3(7) of such Act (29 U.S.C. 1002(7)) is amended 
by adding at the end the following new sentence: ``Such term includes 
an individual who is a covered individual described in paragraph 
(40)(C)(ii).''.

SEC. 624. 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 willfully falsely represents, to any employee, 
any employee's beneficiary, any employer, the Secretary, or any State, 
a plan or other arrangement established or maintained for the purpose 
of offering or providing any benefit described in section 3(1) to 
employees or their beneficiaries as--
            ``(1) being an association health plan which has been 
        certified under part 8;
            ``(2) having been established or maintained under or 
        pursuant to one or more collective bargaining agreements which 
        are reached pursuant to collective bargaining described in 
        section 8(d) of the National Labor Relations Act (29 U.S.C. 
        158(d)) or paragraph Fourth of section 2 of the Railway Labor 
        Act (45 U.S.C. 152, paragraph Fourth) or which are reached 
        pursuant to labor-management negotiations under similar 
        provisions of State public employee relations laws; or
            ``(3) being a plan or arrangement with respect to which the 
        requirements of subparagraph (C), (D), or (E) of section 3(40) 
        are met;
shall, upon conviction, be imprisoned not more than 5 years, be fined 
under title 18, United States Code, or both.''.
    (b) Cease Activities Orders.--Section 502 of such Act (29 U.S.C. 
1132), as amended by sections 141 and 143, is further amended by adding 
at the end the following new subsection:
    ``(p) Association Health Plan Cease and Desist Orders.--
            ``(1) In general.--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) Exception.--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) Additional equitable relief.--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 section 301(b), 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. 625. 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) Consultation With States With Respect to Association Health 
Plans.--
            ``(1) Agreements with states.--The Secretary shall consult 
        with the State recognized under paragraph (2) with respect to 
        an association health plan regarding the exercise of--
                    ``(A) the Secretary's authority under sections 502 
                and 504 to enforce the requirements for certification 
                under part 8; and
                    ``(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.
            ``(2) Recognition of primary domicile state.--In carrying 
        out paragraph (1), the Secretary shall ensure that only one 
        State will be recognized, with respect to any particular 
        association health plan, as the State to with which 
        consultation is required. 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. 626. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

    (a) Effective Date.--The amendments made by sections 621, 624, and 
625 shall take effect one year from the date of enactment. The 
amendments made by sections 622 and 623 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 within one year from the date of enactment. Such regulations 
shall be issued through negotiated rulemaking.
    (b) Exception.--Section 801(a)(2) of the Employee Retirement Income 
Security Act of 1974 (added by section 621) does not apply in 
connection with an association health plan (certified under part 8 of 
subtitle B of title I of such Act) existing on the date of the 
enactment of this Act, if no benefits provided thereunder as of the 
date of the enactment of this Act consist of health insurance coverage 
(as defined in section 733(b)(1) of such Act).
    (c) Treatment of Certain Existing Health Benefits Programs.--
            (1) In general.--In any case in which, as of the date of 
        the enactment of this Act, an arrangement is maintained in a 
        State for the purpose of providing benefits consisting of 
        medical care for the employees and beneficiaries of its 
        participating employers, at least 200 participating employers 
        make contributions to such arrangement, such arrangement has 
        been in existence for at least 10 years, and such arrangement 
        is licensed under the laws of one or more States to provide 
        such benefits to its participating employers, upon the filing 
        with the applicable authority (as defined in section 812(a)(5) 
        of the Employee Retirement Income Security Act of 1974 (as 
        amended by this subtitle)) 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 812 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.
                                 <all>