[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2367 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2367

   To amend the Employee Retirement Income Security Act of 1974, the 
  Public Health Service Act, and the Internal Revenue Code of 1986 to 
              provide for accountability of health plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 28, 2001

  Mr. Sessions (for himself and Mr. Weldon of Florida) introduced the 
 following bill; which was referred to the Committee on Education and 
    the Workforce, and in addition to the Committees on Energy and 
     Commerce, and Ways and Means, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To amend the Employee Retirement Income Security Act of 1974, the 
  Public Health Service Act, and the Internal Revenue Code of 1986 to 
              provide for accountability of health plans.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patient Care 
Dispute Resolution Act of 2001''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. Consideration by plans of claims for benefits and reviews by 
                            plans of denials of such claims.
        ``Sec. 503A. Utilization review activities.
        ``Sec. 503B. Procedures for initial claims for benefits and 
                            prior authorization determinations.
        ``Sec. 503C. Internal appeals of claims denials.
        ``Sec. 503D. Independent external appeals procedures.
        ``Sec. 503E. Effect of Federal review standards for group 
                            health plans on availability of legal 
                            remedies under State law.
        ``Sec. 503F. Definitions relating to group health plans.
Sec. 3. State flexibility in applying accountability rules to health 
                            insurance issuers.
Sec. 4. Effective dates and related rules.
Sec. 5. Regulations; coordination.
Sec. 6. No benefit requirements.
Sec. 7. Severability.

SEC. 2. CONSIDERATION BY PLANS OF CLAIMS FOR BENEFITS AND REVIEWS BY 
              PLANS OF DENIALS OF SUCH CLAIMS.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) 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 new 
        sections:

``SEC. 503A. UTILIZATION REVIEW ACTIVITIES.

    ``(a) Compliance With Requirements.--
            ``(1) In general.--A group health plan, and a health 
        insurance issuer that provides health insurance coverage, shall 
        conduct utilization review activities in connection with the 
        provision of benefits under such plan or coverage only in 
        accordance with a utilization review program that meets the 
        requirements of this section and section 503B.
            ``(2) Use of outside agents.--Nothing in this section shall 
        be construed as preventing a group health plan or health 
        insurance issuer from arranging through a contract or otherwise 
        for persons or entities to conduct utilization review 
        activities on behalf of the plan or issuer, so long as such 
        activities are conducted in accordance with a utilization 
        review program that meets the requirements of this section.
            ``(3) Utilization review defined.--For purposes of this 
        section, the terms `utilization review' and `utilization review 
        activities' mean procedures used to monitor or evaluate the use 
        or coverage, clinical necessity, appropriateness, efficacy, or 
        efficiency of health care services, procedures or settings, and 
        includes prospective review, concurrent review, second 
        opinions, case management, discharge planning, or retrospective 
        review.
    ``(b) Written Policies and Criteria.--
            ``(1) Written policies.--A utilization review program shall 
        be conducted consistent with written policies and procedures 
        that govern all aspects of the program.
            ``(2) Use of written criteria.--
                    ``(A) In general.--Such a program shall utilize 
                written clinical review criteria developed with input 
                from a range of appropriate actively practicing 
                physicians or dentists, as determined by the plan, 
                pursuant to the program. Such criteria shall include 
                written clinical review criteria that are based on 
                valid clinical evidence where available and that are 
                directed specifically at meeting the needs of at-risk 
                populations and covered individuals with chronic 
                conditions or severe illnesses, including gender-
                specific criteria and pediatric-specific criteria where 
                available and appropriate.
                    ``(B) Continuing use of standards in retrospective 
                review.--If a health care service has been specifically 
                pre-authorized or approved for a participant or 
                beneficiary under such a program, the program shall 
                not, pursuant to retrospective review, revise or modify 
                the specific standards, criteria, or procedures used 
                for the utilization review for procedures, treatment, 
                and services delivered to the participant or 
                beneficiary during the same course of treatment.
                    ``(C) Review of sample of claims denials.--Such a 
                program shall provide for an evaluation of the clinical 
                appropriateness of at least a sample of denials of 
                claims for benefits.
    ``(c) Conduct of Program Activities.--
            ``(1) Administration by physicians or dentists.--A 
        utilization review program shall be administered by qualified 
        physicians or dentists who shall oversee review decisions.
            ``(2) Use of qualified, independent personnel.--
                    ``(A) In general.--A utilization review program 
                shall provide for the conduct of utilization review 
                activities only through personnel who are qualified and 
                have received appropriate training in the conduct of 
                such activities under the program.
                    ``(B) Prohibition of contingent compensation 
                arrangements.--Such a program shall not, with respect 
                to utilization review activities, permit or provide 
                compensation or anything of value to its employees, 
                agents, or contractors in a manner that encourages 
                denials of claims for benefits.
                    ``(C) Prohibition of conflicts.--Such a program 
                shall not permit a health care professional who is 
                providing health care services to an individual to 
                perform utilization review activities in connection 
                with the health care services being provided to the 
                individual.
            ``(3) Accessibility of review.--Such a program shall 
        provide that appropriate personnel performing utilization 
        review activities under the program, including the utilization 
        review administrator, are reasonably accessible by toll-free 
        telephone during normal business hours to discuss patient care 
        and allow response to telephone requests, and that appropriate 
        provision is made to receive and respond promptly to calls 
        received during other hours.
            ``(4) Limits on frequency.--Such a program shall not 
        provide for the performance of utilization review activities 
        with respect to a class of services furnished to an individual 
        more frequently than is reasonably required to assess whether 
        the services under review are medically necessary or 
        appropriate.

``SEC. 503B. PROCEDURES FOR INITIAL CLAIMS FOR BENEFITS AND PRIOR 
              AUTHORIZATION DETERMINATIONS.

    ``(a) Procedures of Initial Claims for Benefits.--
            ``(1) In general.--A group health plan, or health insurance 
        issuer offering health insurance coverage in connection with a 
        group health plan, shall--
                    ``(A) make 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
                    ``(B) notify 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 section 503C.
            ``(2) 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. Such 
        access shall be provided not later than 5 days after the date 
        on which the request for information is received, or, in a case 
        described in subparagraph (B) or (C) of subsection (b)(1), by 
        such earlier time as may be necessary to comply with the 
        applicable timeline under such subparagraph.
            ``(3) 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 offering health insurance 
        coverage, may require that the participant or beneficiary (or 
        authorized representative) provide written confirmation of such 
        request in a timely manner on a form provided by the plan or 
        issuer. In the case of such an oral request for benefits, the 
        making of the request (and the timing of such request) shall be 
        treated as the making at that time of a claim for such benefits 
        without regard to whether and when a written confirmation of 
        such request is made.
    ``(b) Timeline for Making Determinations.--
            ``(1) Prior authorization determination.--
                    ``(A) In general.--A group health plan, or health 
                insurance issuer offering health insurance coverage in 
                connection with a group health plan, shall make a prior 
                authorization determination on a claim for benefits 
                (whether oral or written) as soon as possible in 
                accordance with the medical exigencies of the case but 
                in no case later than 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 and in no case later than 28 days after 
                the date of the claim for benefits is received.
                    ``(B) Expedited determination.--Notwithstanding 
                subparagraph (A), a group health plan, or health 
insurance issuer offering health insurance coverage in connection with 
a group health plan, shall expedite a prior authorization determination 
on a claim for benefits described in such subparagraph 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 a health care professional 
certifies, with the request, that a determination under the procedures 
described in subparagraph (A) would seriously jeopardize the life or 
health of the participant or beneficiary or the ability of the 
participant or beneficiary to maintain or regain maximum function. Such 
determination shall be made as soon as possible based on the medical 
exigencies of the case involved and in no case later than 72 hours 
after the time the request is received by the plan or issuer under this 
subparagraph.
                    ``(C) Ongoing care.--
                            ``(i) Concurrent review.--
                                    ``(I) In general.--Subject to 
                                clause (ii), in the case of a 
                                concurrent review of ongoing care 
                                (including hospitalization), which 
                                results in a termination or reduction 
                                of such care, the plan or issuer must 
                                provide by telephone and in printed 
                                form notice of the concurrent review 
                                determination to the individual or the 
                                individual's designee and the 
                                individual's health care provider as 
                                soon as possible in accordance with the 
                                medical exigencies of the case, with 
                                sufficient time prior to the 
                                termination or reduction to allow for 
                                an appeal under section 503C(b)(3) to 
                                be completed before the termination or 
                                reduction takes effect.
                                    ``(II) Contents of notice.--Such 
                                notice shall include, with respect to 
                                ongoing health care items and services, 
                                the number of ongoing services 
                                approved, the new total of approved 
                                services, the date of onset of 
                                services, and the next review date, if 
                                any, as well as a statement of the 
                                individual's rights to further appeal.
                            ``(ii) Rule of construction.--Clause (i) 
                        shall not be construed as requiring plans or 
                        issuers to provide coverage of care that would 
                        exceed the coverage limitations for such care.
            ``(2) Retrospective determination.--A group health plan, or 
        health insurance issuer offering health insurance coverage in 
        connection with a group health plan, shall make a retrospective 
        determination on a claim for benefits as soon as possible in 
        accordance with the medical exigencies of the case but not 
        later than 30 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 claim, or, if 
        earlier, 60 days after the date of receipt of the claim for 
        benefits.
    ``(c) 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 as soon as possible in accordance 
with the medical exigencies of the case and in no case later than 2 
days after the date of the determination (or, in the case described in 
subparagraph (B) or (C) of subsection (b)(1), within the 72-hour or 
applicable period referred to in such subparagraph).
    ``(d) Requirements of Notice of Determinations.--The written notice 
of a denial of a claim for benefits determination under subsection (c) 
shall be provided in printed form and written in a manner calculated to 
be understood by the average participant or beneficiary and shall 
include--
            ``(1) the specific reasons for the determination (including 
        a summary of the clinical or scientific evidence used in making 
        the determination);
            ``(2) the procedures for obtaining additional information 
        concerning the determination; and
            ``(3) notification of the right to appeal the determination 
        and instructions on how to initiate an appeal in accordance 
        with section 503C.

``SEC. 503C. INTERNAL APPEALS OF CLAIMS DENIALS.

    ``(a) Right to Internal Appeal.--
            ``(1) In general.--A participant or beneficiary of a group 
        health plan (or authorized representative) may appeal any 
        denial of a claim for benefits under section 503B under the 
        procedures described in this section.
            ``(2) Time for appeal.--
                    ``(A) In general.--A group health plan, or health 
                insurance issuer offering 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 180 days 
                beginning on the date of a denial of a claim for 
                benefits under section 503B in which to appeal such 
                denial under this section.
                    ``(B) Date of denial.--For purposes of subparagraph 
                (A), the date of the denial shall be deemed to be the 
                date as of which the participant or beneficiary knew of 
                the denial of the claim for benefits.
            ``(3) Failure to act.--The failure of a plan or issuer to 
        issue a determination on a claim for benefits under section 
        503B within the applicable timeline established for such a 
        determination under such section is a denial of a claim for 
        benefits for purposes this section and section 503D as of the 
        date of the applicable deadline.
            ``(4) Plan waiver of internal review.--A group health plan, 
        or health insurance issuer offering health insurance coverage 
        in connection with a group health plan, may waive the internal 
        review process under this section. In such case the plan or 
        issuer shall provide notice to the participant or beneficiary 
        (or authorized representative) involved, the participant or 
beneficiary (or authorized representative) involved shall be relieved 
of any obligation to complete the internal review involved, and may, at 
the option of such participant, beneficiary, or representative proceed 
directly to seek further appeal through external review under section 
503D or otherwise.
    ``(b) Timelines for Making Determinations.--
            ``(1) Oral requests.--In the case of an appeal of a denial 
        of a claim for benefits under this section that involves an 
        expedited or concurrent determination, a participant or 
        beneficiary (or authorized representative) may request such 
        appeal orally. A group health plan, or health insurance issuer 
        offering 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 on a form provided by the plan 
        or issuer. In the case of such an oral request for an appeal of 
        a denial, the making of the request (and the timing of such 
        request) shall be treated as the making at that time of a 
        request for an appeal without regard to whether and when a 
        written confirmation of such request is made.
            ``(2) 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. Such access shall be provided not later than 5 days 
        after the date on which the request for information is 
        received, or, in a case described in subparagraph (B) or (C) of 
        paragraph (3), by such earlier time as may be necessary to 
        comply with the applicable timeline under such subparagraph.
            ``(3) Prior authorization determinations.--
                    ``(A) In general.--A group health plan, or health 
                insurance issuer offering health insurance coverage in 
                connection with a group health plan, shall make a 
                determination on an appeal of a denial of a claim for 
                benefits under this subsection as soon as possible in 
                accordance with the medical exigencies of the case but 
                in no case later than 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 appeal and in no case later 
                than 28 days after the date the request for the appeal 
                is received.
                    ``(B) Expedited determination.--Notwithstanding 
                subparagraph (A), a group health plan, or health 
                insurance issuer offering health insurance coverage in 
                connection with a group health plan, shall expedite a 
                prior authorization determination on an appeal of a 
                denial of a claim for benefits described in 
                subparagraph (A), 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 a health care 
                professional certifies, with the request, that a 
                determination under the procedures described in 
                subparagraph (A) would seriously jeopardize the life or 
                health of the participant or beneficiary or the ability 
                of the participant or beneficiary to maintain or regain 
                maximum function. Such determination shall be made as 
                soon as possible based on the medical exigencies of the 
                case involved and in no case later than 72 hours after 
                the time the request for such appeal is received by the 
                plan or issuer under this subparagraph.
                    ``(C) Ongoing care determinations.--
                            ``(i) In general.--Subject to clause (ii), 
                        in the case of a concurrent review 
                        determination described in section 
                        503B(b)(1)(C)(i)(I), which results in a 
                        termination or reduction of such care, the plan 
                        or issuer must provide notice of the 
                        determination on the appeal under this section 
                        by telephone and in printed form to the 
                        individual or the individual's designee and the 
                        individual's health care provider as soon as 
                        possible in accordance with the medical 
                        exigencies of the case, with sufficient time 
                        prior to the termination or reduction to allow 
                        for an external appeal under section 503D to be 
                        completed before the termination or reduction 
                        takes effect.
                            ``(ii) Rule of construction.--Clause (i) 
                        shall not be construed as requiring plans or 
                        issuers to provide coverage of care that would 
                        exceed the coverage limitations for such care.
            ``(4) Retrospective determination.--A group health plan, or 
        health insurance issuer offering health insurance coverage in 
        connection with a group health plan, shall make a retrospective 
        determination on an appeal of a claim for benefits in no case 
        later than 30 days after the date on which the plan or issuer 
        receives necessary information that is reasonably necessary to 
        enable the plan or issuer to make a determination on the appeal 
        and in no case later than 60 days after the date the request 
        for the appeal is received.
    ``(c) Conduct of Review.--
            ``(1) In general.--A review of a denial of a claim for 
        benefits under this section shall be conducted by an individual 
        with appropriate expertise who was not involved in the initial 
        determination.
            ``(2) Appropriate review of medical decisions.--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 
        (allopathic or osteopathic) or dentist with appropriate 
        expertise (including, in the case of a child, appropriate 
pediatric expertise) who was not involved in the initial determination.
    ``(d) Notice of Determination.--
            ``(1) 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 as soon as possible in accordance with the medical 
        exigencies of the case and in no case later than 2 days after 
        the date of completion of the review (or, in the case described 
        in subparagraph (B) or (C) of subsection (b)(3), within the 72-
        hour or applicable period referred to in such subparagraph).
            ``(2) Final determination.--The decision by a plan or 
        issuer under this section shall be treated as the final 
        determination of the plan or issuer on a denial of a claim for 
        benefits. The failure of a plan or issuer to issue a 
        determination on an appeal of a denial of a claim for benefits 
        under this section 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 
        503D.
            ``(3) Requirements of notice.--With respect to a 
        determination made under this section, the notice described in 
        paragraph (1) shall be provided in printed form and written in 
        a manner calculated to be understood by the average participant 
        or beneficiary and shall include--
                    ``(A) the specific reasons for the determination 
                (including a summary of the clinical or scientific 
                evidence used in making the determination);
                    ``(B) the procedures for obtaining additional 
                information concerning the determination; and
                    ``(C) notification of the right to an independent 
                external review under section 503D and instructions on 
                how to initiate such a review.

``SEC. 503D. INDEPENDENT EXTERNAL APPEALS PROCEDURES.

    ``(a) Right to External Appeal.--A group health plan, and a health 
insurance issuer offering 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 in any case in which the amount involved exceeds $100.
    ``(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 180 days after the date on which the 
        participant or beneficiary receives notice of the denial under 
        section 503C(d) or notice of waiver of internal review under 
        section 503C(a)(4) or the date on which the plan or issuer has 
        failed to make a timely decision under section 503C(d)(2).
            ``(2) Filing of request.--
                    ``(A) In general.--Subject to the succeeding 
                provisions of this subsection, a group health plan, and 
                a health insurance issuer offering health insurance 
                coverage, 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 503C(a)(4), 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 503C;
                            ``(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 
                        $25; 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 the sole 
                        purpose 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. A group health plan, or 
                        health insurance issuer offering health 
                        insurance coverage, may require that the 
                        participant or beneficiary (or authorized 
                        representative) provide written confirmation of 
                        such request in a timely manner on a form 
                        provided by the plan or issuer. Such written 
                        confirmation shall be treated as a consent for 
                        purposes of subparagraph (A)(v). In the case of 
                        such an oral request for such a review, the 
                        making of the request (and the timing of such 
                        request) shall be treated as the making at that 
                        time of a request for such an external review 
                        without regard to whether and when a written 
                        confirmation of such request is made.
                            ``(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).
                                    ``(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 503C(a)(4).
                                    ``(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) Collection of filing fee.--
                                The failure to pay such a filing fee 
                                shall not prevent the consideration of 
                                a request for review but, subject to 
                                the preceding provisions of this 
                                clause, shall constitute a legal 
                                liability to pay.
    ``(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 offering health insurance coverage, the 
plan or issuer shall immediately refer such request, and forward the 
plan or issuer's initial decision (including the information described 
in section 503C(d)(3)(A)), 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 information that is necessary to 
        conduct a review under this section, as determined and 
        requested by the entity. Such information shall be provided not 
        later than 5 days after the date on which the request for 
        information is received, or, in a case described in clause (ii) 
        or (iii) of subsection (e)(1)(A), by such earlier time as may 
        be necessary to comply with the applicable timeline under such 
        clause.
            ``(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 
                        clauses (ii) or (iii) of subsection (b)(2)(A) 
                        have not been met;
                            ``(ii) the denial of the claim for benefits 
                        does not involve a medically reviewable 
                        decision under subsection (d)(2);
                            ``(iii) the denial of the claim for 
                        benefits relates to a decision regarding 
                        whether an individual is a participant or 
                        beneficiary who is enrolled under the terms and 
                        conditions of the plan or coverage (including 
                        the applicability of any waiting period under 
                        the plan or coverage); or
                            ``(iv) the denial of the claim for benefits 
                        is a decision 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 decision is a 
                        denial described in subsection (d)(2).
                Upon making a determination that any of clauses (i) 
                through (iv) 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 (C).
                    ``(B) 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 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.
                    ``(C) 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 for the conduct of an 
                        independent medical review, 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 or beneficiary;
                                    ``(II) shall include the reasons 
                                for the determination;
                                    ``(III) include any relevant terms 
                                and conditions of the plan or coverage; 
                                and
                                    ``(IV) include a description of any 
                                further recourse available to the 
                                individual.
                            ``(ii) General timeline for 
                        determinations.--Upon receipt of information 
                        under paragraph (2), the qualified external 
                        review entity, and if required the independent 
                        medical review panel conducting independent 
                        medical review under subsection (d), 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 review panel is not 
                        required, the entity shall provide notice of 
                        such determination to the participant or 
                        beneficiary (or authorized representative) 
                        within such timeline and within 2 days of the 
                        date 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 
        review panel comprised of 3 members meeting the requirements of 
subsection (g) for the conduct of an independent medical review under 
this subsection.
            ``(2) Medically reviewable decisions.--A denial of a claim 
        for benefits is eligible for independent medical review if the 
        benefit for the item or service for which the claim 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.--A determination that the item or 
                service is not covered because it is not medically 
                necessary and appropriate or based on the application 
                of substantially equivalent terms.
                    ``(B) Denials based on experimental or 
                investigational treatment.--A determination that the 
                item or service is not covered because it is 
                experimental or investigational or based on the 
                application of substantially equivalent terms.
                    ``(C) Denials otherwise based on an evaluation of 
                medical facts.--A determination that the item or 
                service or condition is not covered based on grounds 
                that require an evaluation of the medical facts by a 
                health care professional in the specific case involved 
                to determine the coverage and extent of coverage of the 
                item or service or condition.
            ``(3) Independent medical review determination.--
                    ``(A) In general.--An independent medical review 
                panel under this section shall make a new independent 
                determination with respect to whether or not the denial 
                of a claim for a benefit that is the subject of the 
                review should be upheld, reversed, or modified.
                    ``(B) Standard for determination.--The independent 
                medical review panel'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 valid, 
                relevant scientific evidence and clinical evidence, 
                including peer-reviewed medical literature or findings 
                and including expert opinion.
                    ``(C) No coverage for excluded benefits.--Nothing 
                in this subsection shall be construed to permit an 
                independent medical review panel to require that a 
                group health plan, or health insurance issuer offering 
                health insurance coverage, provide coverage for items 
                or services for which benefits are specifically 
                excluded or expressly limited under the plan or 
                coverage in the plain language of the plan or coverage 
                document, except to the extent that the application or 
                interpretation of the exclusion or limitation involves 
                a determination described in paragraph (2).
                    ``(D) Evidence and information to be used in 
                medical reviews.--In making a determination under this 
                subsection, the independent medical review panel 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, guidelines, or 
                        rationale 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 relevant evidence or 
                        information obtained by the independent medical 
                        review panel 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 
                determinations under this subtitle, a qualified 
                external review entity and an independent medical 
                review panel shall--
                            ``(i) consider the claim under review 
                        without deference to the determinations made by 
                        the plan or issuer 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 
                        substantially 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 review 
                panel.--An independent medical review panel shall, in 
                accordance with the deadlines described in subsection 
                (e), prepare a written determination to uphold or 
                reverse the denial under review. Such written 
                determination shall include--
                            ``(i) the determination of the panel;
                            ``(ii) the specific reasons of the panel 
                        for such determination, including a summary of 
                        the clinical or scientific evidence used in 
                        making the determination; and
                            ``(iii) with respect to a determination to 
                        reverse the denial under review, a timeframe 
                        within which the plan or issuer must comply 
                        with such determination.
    ``(e) Timelines and Notifications.--
            ``(1) Timelines for independent medical review.--
                    ``(A) Prior authorization determination.--
                            ``(i) In general.--The independent medical 
                        review panel shall make a determination under 
                        subsection (d) on a denial of a claim for 
                        benefits in accordance with the medical 
                        exigencies of the case but not later than 14 
                        days after the date of receipt of information 
                        under subsection (c)(2) if the review involves 
                        a prior authorization of items or services and 
                        in no case later than 21 days after the date 
                        the request for external review is received.
                            ``(ii) Expedited determination.--
                        Notwithstanding clause (i) and subject to 
                        clause (iii), the independent medical review 
                        panel shall make an expedited determination 
                        under subsection (d) 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 a 
                        health care professional certifies, 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 or the ability of 
                        the participant or beneficiary to maintain or 
                        regain maximum function. Such determination 
                        shall be made as soon as possible based on the 
                        medical exigencies of the case involved and in 
                        no case later than 72 hours after the time the 
                        request for external review is received by the 
                        qualified external review entity.
                            ``(iii) Ongoing care determination.--
                        Notwithstanding clause (i), in the case of a 
                        review described in such subclause that 
                        involves a termination or reduction of care, 
                        the notice of the determination shall be 
                        completed not later than 24 hours after the 
                        time the request for external review is 
                        received by the qualified external review 
                        entity and before the end of the approved 
                        period of care.
                    ``(B) Retrospective determination.--The independent 
                medical review panel shall complete a review under 
                subsection (d) in the case of a retrospective 
                determination concerting a denial of a claim for 
                benefits not later than 30 days after the date of 
                receipt of information under subsection (c)(2) and in 
                no case later than 60 days after the date the request 
                for external review is received by the qualified 
                external review entity.
            ``(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 review panel 
        prepared under subsection (d)(3)(F). Nothing in this paragraph 
        shall be construed as preventing an entity or panel from 
        providing an initial oral notice of the 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.
    ``(f) Compliance.--
            ``(1) Failure to comply with timelines for review.--In any 
        case in which a decision by a medical review panel is not made 
        within the applicable timeline under subsection (e)(1), the 
        Secretary may assess a civil penalty against the plan or issuer 
        of up to $1,000 a day from the date on which such action is 
        required under such timeline and ending on the date on which 
        such action is taken, except that, in any case in which such 
        action is not taken within 7 business days following the date 
        on which such action is required, the Secretary may assess, in 
        lieu of such civil penalty, a civil penalty not to exceed 
        $500,000.
            ``(2) Application of determinations.--
                    ``(A) External review determinations binding on 
                plan.--The determinations of an external review entity 
                and an independent medical review panel under this 
                section shall be binding upon the plan or issuer 
                involved.
                    ``(B) Compliance with determination.--If the 
                determination of an independent medical review panel is 
                to reverse the denial, the plan or issuer, upon the 
                receipt of such determination, shall authorize coverage 
                to comply with the panel's determination in accordance 
                with the timeframe established by the panel.
                    ``(C) Failure to comply.--If a plan or issuer fails 
                to comply with the timeframe established under 
                subparagraph (B) with respect to a participant or 
                beneficiary, the Secretary may assess a civil penalty 
                against the plan or issuer of up to $3,000,000.
            ``(3) Protection of legal rights.--Nothing in this 
        subsection or subtitle shall be construed as altering or 
        eliminating any cause of action or legal rights or remedies of 
        participants, beneficiaries, and others under State or Federal 
        law (including sections 502 and 503), including the right to 
        file judicial actions to enforce rights.
            ``(4) Treatment of amounts collected as assessments.--
        Amounts collected pursuant to any assessment under this 
        subsection shall be credited to a special fund established in 
        the Treasury of the United States for assessments under this 
        subsection. The amounts so credited, to the extent and in the 
        amounts provided in advance in appropriations Acts, shall be 
        available to defray expenses incurred in carrying out this 
        section. The amounts so credited shall not be scored as 
        receipts under section 252 of the Balanced Budget and Emergency 
        Deficit Control Act of 1985, and the amounts so credited shall 
        be credited as a discretionary offset to discretionary spending 
        to the extent that the amounts so credited are made available 
for expenditure in appropriations Acts.
            ``(5) Exemption from liability for compliance with 
        decisions of independent medical review panel.--A health care 
        provider shall not be liable under any provision of law for any 
        act or failure to act by such provider which is in compliance 
        with any requirement imposed by the decision of an independent 
        medical review panel under this section.
    ``(g) Qualifications of Members of Independent Medical Review 
Panels.--
            ``(1) In general.--In referring a denial to an independent 
        medical review panel to conduct independent medical review 
        under subsection (c), the qualified external review entity 
        shall ensure that--
                    ``(A) each member of the panel meets the 
                qualifications described in paragraphs (2) and (3);
                    ``(B) with respect to each review the requirements 
                described in paragraphs (4) and (5) for the panel are 
                met; and
                    ``(C) compensation provided by the entity to each 
                member of the panel is consistent with paragraph (6).
            ``(2) Licensure and expertise.--Each member of the 
        independent medical review panel shall be a physician 
        (allopathic or osteopathic) or health care professional who--
                    ``(A) is appropriately credentialed or licensed in 
                1 or more States to deliver health care services; and
                    ``(B) typically treats the condition, makes the 
                diagnosis, or provides the type of treatment under 
                review.
            ``(3) Independence.--
                    ``(A) In general.--Subject to subparagraph (B), 
                each member of the independent medical review panel 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 subparagraph (A) shall 
                be construed to--
                            ``(i) prohibit an individual, solely on the 
                        basis of affiliation with the plan or issuer, 
                        from serving as a member of an independent 
                        medical review panel 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 
                        a member of an independent medical review panel 
                        merely on the basis of such affiliation 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 
                        a member of an independent medical review panel 
                        from an entity if the compensation is provided 
                        consistent with paragraph (6).
            ``(4) Practicing health care professional in same field.--
                    ``(A) In general.--In a case involving treatment, 
                or the provision of items or services--
                            ``(i) by a physician, the members of an 
                        independent medical review panel shall be 
                        practicing physicians (allopathic or 
                        osteopathic) of the same or similar specialty 
                        as a physician who typically treats the 
                        condition, makes the diagnosis, or provides the 
                        type of treatment under review; or
                            ``(ii) by a health care professional (other 
                        than a physician), at least two of the members 
                        of an independent medical review panel shall be 
                        practicing physicians (allopathic or 
                        osteopathic) of the same or similar specialty 
                        as the health care professional who typically 
                        treats the condition, makes the diagnosis, or 
                        provides the type of treatment under review, 
                        and, if determined appropriate by the qualified 
                        external review entity, the third member of 
                        such panel shall be a practicing health care 
                        professional (other than such a physician) of 
                        such a same or similar specialty.
                    ``(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.--In the case of an external 
        review relating to a child, a member of an independent medical 
        review panel shall have expertise under paragraph (2) in 
        pediatrics.
            ``(6) Limitations on reviewer compensation.--Compensation 
        provided by a qualified external review entity to a member of 
        an independent medical review panel in connection with a review 
        under this section shall--
                    ``(A) not exceed a reasonable level; and
                    ``(B) not be contingent on the decision 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 or 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--
                            ``(i) to assure that the selection process 
                        among qualified external review entities will 
                        not create any incentives for external review 
                        entities to make a decision in a biased manner; 
                        and
                            ``(ii) for auditing a sample of decisions 
                        by such entities to assure that no such 
                        decisions are made in a biased manner.
                    ``(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 external review activities to be 
                conducted by a qualified external appeal entity that is 
                designated by the State or that is selected by the 
                State in a manner determined by the State to assure an 
                unbiased determination.
            ``(2) 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 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 any 
                                decision rendered by the entity or by 
                                any independent medical review panel.
                    ``(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).
                        In taking action under subclause (I), the 
                        Secretary shall give deference to entities that 
                        are under contract with the Federal Government 
                        or with an applicable State authority to 
                        perform functions of the type performed by 
                        qualified external review entities.
                            ``(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 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 such 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 review panels it 
                                refers cases to).
                                    ``(III) Compliance with limitations 
                                on compensation (with respect to both 
                                the entity and independent medical 
                                review panels it refers cases to).
                                    ``(IV) Compliance with applicable 
                                independence requirements.
                            ``(v) Period of certification or 
                        recertification.--A certification or 
                        recertification provided under this paragraph 
                        shall extend for a period not to exceed 2 
                        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.
                    ``(D) Provision of information.--
                            ``(i) In general.--A qualified external 
                        review entity shall provide to the Secretary 
                        (or the State in the case of external review 
                        activities provided for by a State pursuant to 
                        paragraph (1)(B)), in such manner and at such 
                        times as such Secretary (or State) 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 such Secretary (or State) 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 an independent 
                                medical review panel 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.--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.
                    ``(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 a member of an independent medical 
                review panel), 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.

``SEC. 503E. EFFECT OF FEDERAL REVIEW STANDARDS FOR GROUP HEALTH PLANS 
              ON AVAILABILITY OF LEGAL REMEDIES UNDER STATE LAW.

    ``(a) In General.--Subject to subsection (b), in the case of any 
denial of a claim for benefits under a group health plan with respect 
to which external review has been completed under section 503D, nothing 
in section 503A, 503B, 503C, or 503D shall be construed to alter, 
amend, modify, invalidate, impair, or supersede any provision of State 
law (as defined in section 514(c)(1)) to the extent that such provision 
provides a legal remedy for injury or wrongful death resulting from 
such denial.
    ``(b) Treatment of Delays by External Review Entities and 
Independent Medical Reviewers.--Notwithstanding subsection (a), this 
title supersedes any provision of State law to the extent it provides 
for liability for any violation of a timeline under section 503D 
applicable to external review entities or independent medical review 
panels (except with respect to any liability of any such entity or any 
member of any such panel permitted under section 503D(h)(4)(E)).

``SEC. 503F. DEFINITIONS RELATING TO GROUP HEALTH PLANS.

    ``For purposes of this part--
            ``(1) Group health plan.--The term `group health plan' has 
        the meaning given such term in section 733(a), except that such 
        term includes a employee welfare benefit plan treated as a 
        group health plan under section 732(d) or defined as such a 
        plan under section 607(1).
            ``(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) Participating.--The term `participating' means, with 
        respect to a health care provider that provides health care 
        items and services to a participant or beneficiary 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.
            ``(5) 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.
            ``(6) Authorized representative.--The term `authorized 
        representative' means, with respect to an individual who is a 
        participant or beneficiary, any health care professional or 
        other person acting on behalf of the individual with the 
        individual's consent or without such consent if the individual 
        is medically unable to provide such consent.
            ``(7) Claim for benefits.--The term `claim for benefits' 
        means any request for coverage (including authorization of 
        coverage), for eligibility, or for payment in whole or in part, 
        for an item or service under a group health plan or health 
        insurance coverage.
            ``(8) Denial of claim for benefits.--The term `denial' 
        means, with respect to a claim for benefits, a denial (in whole 
        or in part) of, or a failure to act on a timely basis upon, the 
        claim for benefits and includes a failure to provide benefits 
        (including items and services) required to be provided under 
        this title.
            ``(9) Treating health care professional.--The term 
        `treating health care professional' means, with respect to 
        services to be provided to a participant or beneficiary, a 
        health care professional who is primarily responsible for 
        delivering those services to the participant or beneficiary.''.
            (2) Conforming amendments.--
                    (A) Cause of action to collect assessments.--
                Section 502(a)(6) of such Act (29 U.S.C. 1132(a)(6)) is 
                amended--
                            (i) by striking ``or under'' and inserting 
                        ``, under''; and
                            (ii) by striking the period and inserting 
                        the following: ``, or under section 503D(f).''.
                    (B) Satisfaction of erisa claims procedure 
                requirement.--Section 503 of such Act (29 U.S.C. 1133) 
                is amended by inserting ``(a)'' after ``Sec. 503.'' and 
                by adding at the end the following new subsection:
    ``(b) In the case of a group health plan (as defined in section 
733) compliance with the requirements of sections 503A through 503D in 
the case of a claims denial shall be deemed compliance with subsection 
(a) with respect to such claims denial.''.
            (3) 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 503 the 
        following:

``Sec. 503A. Utilization review activities.
``Sec. 503B. Procedures for initial claims for benefits and prior 
                            authorization determinations.
``Sec. 503C. Internal appeals of claims denials.
``Sec. 503D. Independent external appeals procedures.
``Sec. 503E. Effect of Federal review standards for group health plans 
                            on availability of legal remedies under 
                            State law.
``Sec. 503F. Definitions relating to group health plans.''.
    (b) Conforming Amendments to Public Health Service Act.--
            (1) Group health plans.--Title XXVII of the Public Health 
        Service Act is amended by inserting after section 2706 the 
        following new section:

``SEC. 2707. STANDARD RELATING TO ACCOUNTABILITY.

    ``Subject to section 2724(c), a group health plan, and health 
insurance coverage offered in connection with a group health plan, 
shall comply with the requirements of sections 503A through 503D of the 
Employee Retirement Income Security Act of 1974 (as in effect as of the 
day after the date of the enactment of such Act) and such requirements 
shall be deemed to be incorporated into this section. For purposes of 
this section, references in such sections 503A through 503D to the 
Secretary shall be deemed references to the Secretary of Health and 
Human Services.''.
            (2) Individual health plans.--Title XXVII of the Public 
        Health Service Act is amended by inserting after section 2752 
        the following new section:

``SEC. 2753. STANDARD RELATING TO ACCOUNTABILITY.

    ``Subject to section 2762A(c), the provisions of sections 503A 
through 503D of the Employee Retirement Income Security Act of 1974 (as 
in effect as of the day after the date of the enactment of such Act) 
shall apply to health insurance coverage offered by a health insurance 
issuer in the individual market for 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 in the small or large group market and the requirements 
referred to in such section shall be deemed to be incorporated into 
this section. For purposes of this section, references in such sections 
503A through 503D to the Secretary shall be deemed references to the 
Secretary of Health and Human Services.''.
    (c) Conforming Amendments to the Internal Revenue Code of 1986.--
Subchapter B of chapter 100 of the Internal Revenue Code of 1986 is 
amended--
            (1) in the table of sections, by inserting after the item 
        relating to section 9812 the following new item:

                              ``Sec. 9813. Standard relating to plan 
                                        accountability.'';
        and
            (2) by inserting after section 9814 the following:

``SEC. 9813. STANDARD RELATING TO PLAN ACCOUNTABILITY.

    ``A group health plan shall comply with the requirements of 
sections 503A through 503D of the Employee Retirement Income Security 
Act of 1974 (as in effect as of the day after the date of the enactment 
of such Act) and such requirements shall be deemed to be incorporated 
into this section. For purposes of this section, references in such 
sections 503A through 503D to the Secretary shall be deemed references 
to the Secretary of the Treasury.''.

SEC. 3. STATE FLEXIBILITY IN APPLYING ACCOUNTABILITY RULES TO HEALTH 
              INSURANCE ISSUERS.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--Part 5 of subtitle B of title I of the Employee Retirement 
Income Security Act of 1974 (as amended by section 2) is amended 
further--
            (1) by redesignating section 503F as section 503G; and
            (2) by inserting after section 503E the following new 
        section:

``SEC. 503F. STATE FLEXIBILITY IN APPLYING ACCOUNTABILITY RULES TO 
              HEALTH INSURANCE ISSUERS.

    ``(a) State Flexibility.--The requirements of section 503A, 503B, 
503C, or 503D 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) in a State--
            ``(1) before January 1, 2004; and
            ``(2) on or after such date, during any period for which 
        the State certifies to the Patients' Protection Certification 
        Board (established under subsection (b)) that the State has in 
        effect a State law (as defined in section 2723(d)(1) of the 
        Public Health Service Act)--
                    ``(A) that provides rules relating to consideration 
                of claims for benefits or review of denials of such 
                claims under such section 503A, 503B, 503C, or 503D; 
                and
                    ``(B) that--
                            ``(i) adopts the Federal rules under such 
                        section with respect to the consideration or 
                        review; or
                            ``(ii) is consistent with the purposes of 
                        such section,
        and the Board has not found such certification invalid under 
        subsection (b)(2)(A).
    ``(b) Patients' Protection Certification Board; Certification 
Review Process.--
            ``(1) Establishment of board.--
                    ``(A) In general.--There is hereby established in 
                the Health Resources and Services Administration of the 
                Department of Health and Human Services a Patients' 
                Protection Certification Board (in this section 
                referred to as the `Board').
                    ``(B) Composition.--The Board shall be composed of 
                13 members appointed by the President, by and with the 
                advice and consent of the Senate, from among 
                individuals who represent consumers and employers or 
                have expertise in law, medicine, insurance, employee 
                benefits, and related fields. Members shall first be 
                appointed to the Board not earlier than February 1, 
                2002, and no later than May 1, 2002.
                    ``(C) Terms.--The terms of members of the Board 
                shall be for 3 years except that for the members first 
                appointed the President shall designate staggered terms 
                of 3 years for 2 members, 2 years for 2 members, and 1 
                year for one member. A vacancy in the Board shall be 
                filled in the same manner in which the original 
                appointment was made and a member appointed to fill a 
                vacancy occurring before the expiration of the term for 
                which the member's predecessor was appointed shall be 
                appointed only for the remainder of that term.
                    ``(D) Compensation.--To the extent provided in 
                advance in appropriations Acts, while serving on the 
business of the Board (including travel time), each member of the 
Board--
                            ``(i) shall be entitled to receive 
                        compensation at the daily equivalent of the 
                        annual rate of basic pay provided for level IV 
                        of the Executive Schedule under section 5315 of 
                        title 5, United States Code for each day 
                        (including travel time) during which the member 
                        is engaged in the actual performance of duties 
                        as such a member; and
                            ``(ii) while so serving away from home and 
                        the member's regular place of business, may be 
                        allowed travel expenses, as authorized by the 
                        Board.
            ``(2) Duties.--
                    ``(A) Review of certifications submitted.--
                            ``(i) In general.--The Board shall review 
                        certifications submitted under subsection 
                        (a)(2).
                            ``(ii) Deference to states.--Such a 
                        certification submitted for a State law with 
                        respect to the requirements of a section is 
                        deemed valid unless, within 90 days after the 
                        date of its submittal to the Board, the Board 
                        finds that there is clear and convincing 
                        evidence of substantial non-compliance of the 
                        State law with the requirements of subsection 
                        (a)(2)(B).
                    ``(B) Annual congressional reports.--The Board 
                shall submit to Congress an annual report on its 
                activities. The first annual report shall focus 
                specifically on the development by the Board of 
                criteria for the evaluation of State laws and any other 
                activities of the Board during its first year of 
                operation.
            ``(3) Organization.--
                    ``(A) Chair.--The Board shall elect a member of the 
                Board to serve as chair.
                    ``(B) Meetings.--The Board shall meet at least 
                quarterly and otherwise at the call of the chair or 
                upon the written request of a majority of its members.
                    ``(C) Quorum.--Seven members of the Board shall 
                constitute a quorum thereof, but a lesser number may 
                hold hearings and take testimony.
            ``(4) Director and staff; experts and consultants.--To the 
        extent provided in advance in appropriations Acts, the Board 
        may--
                    ``(A) employ and fix the compensation of an 
                Executive Director and such other personnel as may be 
                necessary to carry out the Board's duties, without 
                regard to the provisions of title 5, United States 
                Code, governing appointments in the competitive 
                service;
                    ``(B) procure temporary and intermittent services 
                under section 3109(b) of title 5, United States Code; 
                and
                    ``(C) provide transportation and subsistence for 
                persons serving the Board without compensation.
            ``(5) Powers.--
                    ``(A) Obtaining official data.--
                            ``(i) In general.--The Board may secure 
                        directly from any department or agency of the 
                        United States information necessary to enable 
                        it to carry out its duties.
                            ``(ii) Request of chair.--Upon request of 
                        the chair, the head of that department or 
                        agency shall furnish that information to the 
                        Board on an agreed upon schedule.
                    ``(B) Agency assistance.--The Board may seek such 
                assistance and support as may be required in the 
                performance of its duties from the Secretary of Health 
                and Human Services, acting through the Health Resources 
                and Services Administration. Any employee of such 
                Administration may be detailed to the Board to assist 
                the Board in carrying out its duties.
                    ``(C) Contract authority.--To the extent provided 
                in advance in appropriations Acts, the Board may enter 
                into contracts or make other arrangements for 
                facilities and services as may be necessary for the 
                conduct of the work of the Board (without regard to 
                section 3709 of the Revised Statutes (41 U.S.C. 5)).
                    ``(D) Hearings.--The Board may, for the purpose of 
                carrying out its duties, hold hearings, sit and act at 
                times and places, take testimony, and receive evidence 
                as the Board considers appropriate. The Board may 
                administer oaths or affirmations to witnesses appearing 
                before it. To the extent provided in advance in 
                appropriation Acts, the Board may pay reasonable travel 
                expenses to witnesses for travel incident to hearings 
                held by the Board. Nothing in this subsection shall be 
                construed as authorizing the issuance of subpoenas in 
                support of its duties.
                    ``(E) Rules.--The Board may prescribe such rules 
                and regulations as it deems necessary to carry out this 
                subsection.
            ``(6) Authorization of appropriations.--There are 
        authorized to be appropriated to carry out this subsection--
                    ``(A) for fiscal year 2002, $500,000,
                    ``(B) for fiscal year 2003, $1,000,000, and
                    ``(C) for subsequent fiscal years, such sums as may 
                be necessary.
    ``(c) Relationship to Group Health Plan Requirements.--Nothing in 
this section shall be construed to affect or modify the provisions of 
section 514 with respect to group health plans (insofar as they provide 
benefits other than in the form of health insurance coverage).
    ``(d) Conforming Regulations.--The Secretary may issue regulations 
to coordinate the requirements on group health plans under sections 
503A through 503D with the requirements imposed under the other 
provisions of this title.''.
            (2) Clerical amendment.--The table of contents in section 1 
        of such Act (as amended by section 2) is amended further--
                    (A) in the item relating to section 503F, by 
                striking ``Sec. 503F.'' and inserting ``Sec. 503G.''; 
                and
                    (B) by inserting after the item relating to section 
                503E, the following:

``Sec. 503F. State flexibility in applying accountability rules to 
                            health insurance issuers.''.
    (b) State Flexibility in Applying Accountability Rules Under the 
Public Health Service Act.--
            (1) Group health plans and group health insurance 
        coverage.--Title XXVII of the Public Health Service Act is 
        amended--
                    (A) in section 2723(a)(1) (42 U.S.C. 300gg-
                23(a)(1)), by inserting ``and section 2724'' after 
                ``Subject to paragraph (2)''; and
                    (B) by inserting after section 2723 the following 
                new section:

``SEC. 2724. STATE FLEXIBILITY IN APPLYING ACCOUNTABILITY RULES.

    ``(a) In General.--The provisions of section 503F of the Employee 
Retirement Income Security Act of 1974 apply with respect to the rules 
under section 2707 (only as applied with respect to group health plans 
under section 2721(b)) in the same manner as such provisions apply to 
comparable rules with respect to health insurance coverage provided in 
connection with a group health plan.
    ``(b) Relationship to Group Health Plan Requirements.--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 with 
respect to group health plans (insofar as it provides benefits other 
than in the form of health insurance coverage).''.
            (2) Individual health insurance coverage.--Title XXVII of 
        the Public Health Service Act is amended--
                    (A) in section 2762(a) (42 U.S.C. 300gg-62(a)(1)), 
                by inserting ``and section 2762A'' after ``Subject to 
                subsection (b)''; and
                    (B) by inserting after section 2762 the following 
                new section:

``SEC. 2762A. STATE FLEXIBILITY IN APPLYING ACCOUNTABILITY RULES.

    ``The provisions of section 2724 apply in relation to the rules 
under section 2755 (relating to accountability) with respect to 
individual health insurance coverage in the same manner as those 
provisions apply in relation to the rules under section 2709, as 
applied to group health plans under section 2721(b).''.

SEC. 4. EFFECTIVE DATES AND RELATED RULES.

    (a) In General.--The provisions of this Act, including the 
amendments made by this Act, 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) Coverage of Limited Scope Plans.--Section 2791(c)(2)(A) of the 
Public Health Service Act (42 U.S.C. 300gg-91(c)(2)(A)) and section 
733(c)(2)(A) of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1186(c)(2)(A)) shall be deemed not to apply for purposes of 
applying the provisions of the amendments made by this Act.

SEC. 5. REGULATIONS; COORDINATION.

    (a) Authority.--The Secretaries of Health and Human Services, 
Labor, and the Treasury shall issue such regulations as may be 
necessary or appropriate to carry out the amendments made by this Act 
before the effective date thereof.
    (b) Coordination in Implementation.--The Secretary of Labor, the 
Secretary of Health and Human Services, and the Secretary of the 
Treasury shall ensure, through the execution of an interagency 
memorandum of understanding among such Secretaries, that--
            (1) regulations, rulings, and interpretations issued by 
        such Secretaries relating to the same matter over which such 
        Secretaries have responsibility under the amendments made by 
        this Act are administered so as to have the same effect at all 
        times; and
            (2) coordination of policies relating to enforcing the same 
        requirements through such Secretaries in order to have a 
        coordinated enforcement strategy that avoids duplication of 
        enforcement efforts and assigns priorities in enforcement.
    (c) Use of Interim Final Rules.--Such Secretaries may promulgate 
any interim final rules as the Secretaries determine are appropriate to 
carry out this Act.
    (d) Limitation on Enforcement Actions.--No enforcement action shall 
be taken, pursuant to the amendments made by this Act, against a group 
health plan or health insurance issuer with respect to a violation of a 
requirement imposed by such amendments before the date of issuance of 
regulations issued in connection with such requirement, if the plan or 
issuer has sought to comply in good faith with such requirement.

SEC. 6. NO BENEFIT REQUIREMENTS.

    Nothing in the amendments made by this Act shall be construed to 
require a group health plan or a health insurance issuer offering 
health insurance coverage to include specific items and services under 
the terms of such a plan or coverage, other than those provided under 
the terms and conditions of such plan or coverage.

SEC. 7. SEVERABILITY.

    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.
                                 <all>