[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>