[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 10 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                 S. 10

 To protect consumers in managed care plans and other health coverage, 
to provide for parity with respect to mental health coverage, to reduce 
 medical errors, and to increase the access of individuals to quality 
                              health care.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 7, 2003

Mr. Daschle (for himself, Mr. Kennedy, Ms. Stabenow, Mrs. Clinton, Mr. 
   Schumer, Mrs. Murray, Mr. Corzine, Mr. Durbin, Mr. Lieberman, Ms. 
   Mikulski, Mr. Levin, Mr. Rockefeller, Mr. Akaka, Mr. Johnson, Mr. 
  Sarbanes, Mr. Dayton, Mr. Lautenberg, Mr. Leahy, Mr. Reid, and Mr. 
Pryor) introduced the following bill; which was read twice and referred 
                      to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To protect consumers in managed care plans and other health coverage, 
to provide for parity with respect to mental health coverage, to reduce 
 medical errors, and to increase the access of individuals to quality 
                              health care.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Care 
Coverage Expansion and Quality Improvement Act of 2003''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                      TITLE I--PATIENT PROTECTIONS

Sec. 101. Short title.
                   Subtitle A--Improving Managed Care

   Chapter 1--Utilization Review; Claims; and Internal and External 
                                Appeals

Sec. 111. Utilization review activities.
Sec. 112. Procedures for initial claims for benefits and prior 
                            authorization determinations.
Sec. 113. Internal appeals of claims denials.
Sec. 114. Independent external appeals procedures.
Sec. 115. Health care consumer assistance fund.
                       Chapter 2--Access To Care

Sec. 121. Consumer choice option.
Sec. 122. Choice of health care professional.
Sec. 123. Access to emergency care.
Sec. 124. Timely access to specialists.
Sec. 125. Patient access to obstetrical and gynecological care.
Sec. 126. Access to pediatric care.
Sec. 127. Continuity of care.
Sec. 128. Access to needed prescription drugs.
Sec. 129. Coverage for individuals participating in approved clinical 
                            trials.
Sec. 130. Required coverage for minimum hospital stay for mastectomies 
                            and lymph node dissections for the 
                            treatment of breast cancer and coverage for 
                            secondary consultations.
                    Chapter 3--Access To Information

Sec. 131. Patient access to information.
         Chapter 4--Protecting The Doctor-patient Relationship

Sec. 141. Prohibition of interference with certain medical 
                            communications.
Sec. 142. Prohibition of discrimination against providers based on 
                            licensure.
Sec. 143. Prohibition against improper incentive arrangements.
Sec. 144. Payment of claims.
Sec. 145. Protection for patient advocacy.
                         Chapter 5--Definitions

Sec. 151. Definitions.
Sec. 152. Preemption; State flexibility; construction.
Sec. 153. Exclusions.
Sec. 154. Treatment of excepted benefits.
Sec. 155. Regulations.
Sec. 156. Incorporation into plan or coverage documents.
Sec. 157. Preservation of protections.
Subtitle B--Application of Quality Care Standards to Group Health Plans 
   and Health Insurance Coverage Under the Public Health Service Act

Sec. 161. Application to group health plans and group health insurance 
                            coverage.
Sec. 162. Application to individual health insurance coverage.
Sec. 163. Cooperation between Federal and State authorities.
 Subtitle C--Amendments to the Employee Retirement Income Security Act 
                                of 1974

Sec. 171. Application of patient protection standards to group health 
                            plans and group health insurance coverage 
                            under the Employee Retirement Income 
                            Security Act of 1974.
Sec. 172. Availability of civil remedies.
Sec. 173. Limitation on certain class action litigation.
Sec. 174. Limitations on actions.
Sec. 175. Cooperation between Federal and State authorities.
Sec. 176. Sense of the Senate concerning the importance of certain 
                            unpaid services.
      Subtitle D--Effective Dates; Coordination in Implementation

Sec. 181. Effective dates.
Sec. 182. Coordination in implementation.
Sec. 183. Severability.
                  Subtitle E--Miscellaneous Provisions

Sec. 191. No impact on Social Security Trust Fund.
Sec. 192. Customs user fees.
Sec. 193. Fiscal year 2003 medicare payments.
Sec. 194. Sense of Senate with respect to participation in clinical 
                            trials and access to specialty care.
Sec. 195. Sense of the Senate regarding fair review process.
Sec. 196. Annual review.
                     TITLE II--MENTAL HEALTH PARITY

Sec. 201. Short title.
Sec. 202. Amendment to the Employee Retirement Income Security Act of 
                            1974.
Sec. 203. Amendment to the Public Health Service Act relating to the 
                            group market.
Sec. 204. Preemption.
Sec. 205. General accounting office study.
                       TITLE III--PATIENT SAFETY

Sec. 301. Short title.
Sec. 302. Purpose.
Sec. 303. Patient safety improvements.
Sec. 304. Required use of product identification technology.
   TITLE IV--TAX CREDIT FOR OFFERING EMPLOYER-BASED HEALTH INSURANCE 
                                COVERAGE

Sec. 401. Credit for employee health insurance expenses.
                          TITLE V--FAMILYCARE

Sec. 501. Renaming of title XXI program.
Sec. 502. Familycare coverage of parents and pregnant women under the 
                            medicaid program and title XXI.
Sec. 503. Automatic enrollment of children born to title XXI parents.
Sec. 504. Optional coverage of legal immigrants under the medicaid 
                            program and title XXI.
Sec. 505. Optional coverage of children through age 20 under the 
                            medicaid program and title XXI.
Sec. 506. Application of simplified title XXI procedures under the 
                            medicaid program.
Sec. 507. Improving welfare-to-work transition under the medicaid 
                            program.
Sec. 508. Elimination of 100 hour rule and other AFDC-related 
                            eligibility restrictions.
Sec. 509. Increased Federal reimbursement for language services under 
                            the medicaid program and title XXI.
Sec. 510. Limitations on conflicts of interest.
Sec. 511. Title XXI funding.
Sec. 512. Changes to rules for redistribution and extended availability 
                            of title XXI fiscal year 2000 and 
                            subsequent fiscal year allotments.
Sec. 513. Demonstration programs to improve medicaid and title XXI 
                            outreach to homeless individuals and 
                            families.
Sec. 514. Technical and conforming amendments to authority to pay 
                            medicaid expansion costs from title XXI 
                            appropriation.
Sec. 515. Additional title XXI revisions.
                      TITLE VI--FAMILY OPPORTUNITY

Sec. 601. Opportunity for families of disabled children to purchase 
                            medicaid coverage for such children.
Sec. 602. Treatment of inpatient psychiatric hospital services for 
                            individuals under age 21 in home or 
                            community-based services waivers.
Sec. 603. Development and support of family-to-family health 
                            information centers.
Sec. 604. Restoration of medicaid eligibility for certain SSI 
                            beneficiaries.
                TITLE VII--TEMPORARY STATE FISCAL RELIEF

Sec. 701. Temporary State fiscal relief.
    TITLE VIII--IMPROVEMENT OF THE PROCESS FOR THE DEVELOPMENT AND 
              IMPLEMENTATION OF MEDICAID AND SCHIP WAIVERS

Sec. 801. Improvement of the process for the development and 
                            implementation of medicaid and SCHIP 
                            waivers.
                  TITLE IX--INDIAN HEALTH CARE FUNDING

Sec. 901. Guaranteed adequate funding for Indian health care.

                      TITLE I--PATIENT PROTECTIONS

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Bipartisan Patient Protection 
Act''.

                   Subtitle A--Improving Managed Care

   CHAPTER 1--UTILIZATION REVIEW; CLAIMS; AND INTERNAL AND EXTERNAL 
                                APPEALS

SEC. 111. 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 112.
            (2) Use of outside agents.--Nothing in this section shall 
        be construed as preventing a group health plan or health 
        insurance issuer from arranging through a contract or otherwise 
        for persons or entities to conduct utilization review 
        activities on behalf of the plan or issuer, so long as such 
        activities are conducted in accordance with a utilization 
review program that meets the requirements of this section.
            (3) Utilization review defined.--For purposes of this 
        section, the terms ``utilization review'' and ``utilization 
        review activities'' mean procedures used to monitor or evaluate 
        the use or coverage, clinical necessity, appropriateness, 
        efficacy, or efficiency of health care services, procedures or 
        settings, and includes prospective review, concurrent review, 
        second opinions, case management, discharge planning, or 
        retrospective review.
    (b) Written Policies and Criteria.--
            (1) Written policies.--A utilization review program shall 
        be conducted consistent with written policies and procedures 
        that govern all aspects of the program.
            (2) Use of written criteria.--
                    (A) In general.--Such a program shall utilize 
                written clinical review criteria developed with input 
                from a range of appropriate actively practicing health 
                care professionals, as determined by the plan, pursuant 
                to the program. Such criteria shall include written 
                clinical review criteria that are based on valid 
                clinical evidence where available and that are directed 
                specifically at meeting the needs of at-risk 
                populations and covered individuals with chronic 
                conditions or severe illnesses, including gender-
                specific criteria and pediatric-specific criteria where 
                available and appropriate.
                    (B) Continuing use of standards in retrospective 
                review.--If a health care service has been specifically 
                pre-authorized or approved for a participant, 
                beneficiary, or enrollee under such a program, the 
                program shall not, pursuant to retrospective review, 
                revise or modify the specific standards, criteria, or 
                procedures used for the utilization review for 
                procedures, treatment, and services delivered to the 
                enrollee during the same course of treatment.
                    (C) Review of sample of claims denials.--Such a 
                program shall provide for a periodic evaluation of the 
                clinical appropriateness of at least a sample of 
                denials of claims for benefits.
    (c) Conduct of Program Activities.--
            (1) Administration by health care professionals.--A 
        utilization review program shall be administered by qualified 
        health care professionals who shall oversee review decisions.
            (2) Use of qualified, independent personnel.--
                    (A) In general.--A utilization review program shall 
                provide for the conduct of utilization review 
                activities only through personnel who are qualified and 
                have received appropriate training in the conduct of 
                such activities under the program.
                    (B) Prohibition of contingent compensation 
                arrangements.--Such a program shall not, with respect 
                to utilization review activities, permit or provide 
                compensation or anything of value to its employees, 
                agents, or contractors in a manner that encourages 
                denials of claims for benefits.
                    (C) Prohibition of conflicts.--Such a program shall 
                not permit a health care professional who is providing 
                health care services to an individual to perform 
                utilization review activities in connection with the 
                health care services being provided to the individual.
            (3) Accessibility of review.--Such a program shall provide 
        that appropriate personnel performing utilization review 
        activities under the program, including the utilization review 
        administrator, are reasonably accessible by toll-free telephone 
        during normal business hours to discuss patient care and allow 
        response to telephone requests, and that appropriate provision 
        is made to receive and respond promptly to calls received 
        during other hours.
            (4) Limits on frequency.--Such a program shall not provide 
        for the performance of utilization review activities with 
        respect to a class of services furnished to an individual more 
        frequently than is reasonably required to assess whether the 
        services under review are medically necessary and appropriate.

SEC. 112. PROCEDURES FOR INITIAL CLAIMS FOR BENEFITS AND PRIOR 
              AUTHORIZATION DETERMINATIONS.

    (a) Procedures of Initial Claims for Benefits.--
            (1) In general.--A group health plan, and a health 
        insurance issuer offering health insurance coverage, shall--
                    (A) make a determination on an initial claim for 
                benefits by a participant, beneficiary, or enrollee (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, 
                beneficiary, or enrollee is required to pay with 
                respect to such claim for benefits; and
                    (B) notify a participant, beneficiary, or enrollee 
                (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, beneficiary, or 
                enrollee may be required to make with respect to such 
                claim for benefits, and of the right of the 
                participant, beneficiary, or enrollee to an internal 
                appeal under section 113.
            (2) Access to information.--
                    (A) Timely provision of necessary information.--
                With respect to an initial claim for benefits, the 
                participant, beneficiary, or enrollee (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.
                    (B) Limited effect of failure on plan or issuer's 
                obligations.--Failure of the participant, beneficiary, 
                or enrollee to comply with the requirements of 
                subparagraph (A) shall not remove the obligation of the 
                plan or issuer to make a decision in accordance with 
                the medical exigencies of the case and as soon as 
                possible, based on the available information, and 
                failure to comply with the time limit established by 
                this paragraph shall not remove the obligation of the 
                plan or issuer to comply with the requirements of this 
                section.
            (3) Oral requests.--In the case of a claim for benefits 
        involving an expedited or concurrent determination, a 
        participant, beneficiary, or enrollee (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, 
        beneficiary, or enrollee (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, and a health 
                insurance issuer offering health insurance coverage, 
                shall make a prior authorization determination on a 
                claim for benefits (whether oral or written) in 
                accordance with the medical exigencies of the case and 
                as soon as possible, 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, and a health 
                insurance issuer offering health insurance coverage, 
                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, beneficiary, or enrollee (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, beneficiary, or enrollee or 
                the ability of the participant, beneficiary, or 
enrollee to maintain or regain maximum function. Such determination 
shall be made in accordance with the medical exigencies of the case and 
as soon as possible, but 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 in accordance with the 
                                medical exigencies of the case and as 
                                soon as possible, with sufficient time 
                                prior to the termination or reduction 
                                to allow for an appeal under section 
                                113(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, and 
        a health insurance issuer offering health insurance coverage, 
        shall make a retrospective determination on a claim for 
        benefits in accordance with the medical exigencies of the case 
        and as soon as possible, 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, beneficiary, or enrollee (or authorized 
representative) and the treating health care professional in accordance 
with the medical exigencies of the case and as soon as possible, but 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 participant, beneficiary, or enrollee 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 113.
    (e) Definitions.--For purposes of this part:
            (1) Authorized representative.--The term ``authorized 
        representative'' means, with respect to an individual who is a 
        participant, beneficiary, or enrollee, 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.
            (2) 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.
            (3) 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 subtitle.
            (4) Treating health care professional.--The term ``treating 
        health care professional'' means, with respect to services to 
        be provided to a participant, beneficiary, or enrollee, a 
        health care professional who is primarily responsible for 
        delivering those services to the participant, beneficiary, or 
        enrollee.

SEC. 113. INTERNAL APPEALS OF CLAIMS DENIALS.

    (a) Right to Internal Appeal.--
            (1) In general.--A participant, beneficiary, or enrollee 
        (or authorized representative) may appeal any denial of a claim 
        for benefits under section 112 under the procedures described 
        in this section.
            (2) Time for appeal.--
                    (A) In general.--A group health plan, and a health 
                insurance issuer offering health insurance coverage, 
                shall ensure that a participant, beneficiary, or 
                enrollee (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 112 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, beneficiary, or 
                enrollee 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 112 
        within the applicable timeline established for such a 
        determination under such section is a denial of a claim for 
        benefits for purposes this chapter 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, 
        may waive the internal review process under this section. In 
        such case the plan or issuer shall provide notice to the 
        participant, beneficiary, or enrollee (or authorized 
        representative) involved, the participant, beneficiary, or 
        enrollee (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, enrollee, or representative proceed directly to 
        seek further appeal through external review under section 114 
        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, 
        beneficiary, or enrollee (or authorized representative) may 
        request such appeal orally. A group health plan, or health 
        insurance issuer offering health insurance coverage, may 
        require that the participant, beneficiary, or enrollee (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.--
                    (A) Timely provision of necessary information.--
                With respect to an appeal of a denial of a claim for 
                benefits, the participant, beneficiary, or enrollee (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.
                    (B) Limited effect of failure on plan or issuer's 
                obligations.--Failure of the participant, beneficiary, 
                or enrollee to comply with the requirements of 
                subparagraph (A) shall not remove the obligation of the 
                plan or issuer to make a decision in accordance with 
                the medical exigencies of the case and as soon as 
                possible, based on the available information, and 
                failure to comply with the time limit established by 
                this paragraph shall not remove the obligation of the 
                plan or issuer to comply with the requirements of this 
                section.
            (3) Prior authorization determinations.--
                    (A) In general.--Except as provided in this 
                paragraph or paragraph (4), a group health plan, and a 
                health insurance issuer offering health insurance 
                coverage, shall make a determination on an appeal of a 
                denial of a claim for benefits under this subsection in 
                accordance with the medical exigencies of the case and 
                as soon as possible, 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, and a health 
                insurance issuer offering health insurance coverage, 
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, 
beneficiary, or enrollee (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, beneficiary, or enrollee or the 
ability of the participant, beneficiary, or enrollee to maintain or 
regain maximum function. Such determination shall be made in accordance 
with the medical exigencies of the case and as soon as possible, but 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 112(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 in accordance 
                        with the medical exigencies of the case and as 
                        soon as possible, with sufficient time prior to 
                        the termination or reduction to allow for an 
                        external appeal under section 114 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, and 
        a health insurance issuer offering health insurance coverage, 
        shall make a retrospective determination on an appeal of a 
        denial 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) Peer review of medical decisions by health care 
        professionals.--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--
                    (A) shall be made by a physician (allopathic or 
                osteopathic); or
                    (B) in a claim for benefits provided by a non-
                physician health professional, shall be made by 
                reviewer (or reviewers) including at least one 
                practicing non-physician health professional of the 
                same or similar specialty;
        with appropriate expertise (including, in the case of a child, 
        appropriate pediatric expertise) and acting within the 
        appropriate scope of practice within the State in which the 
        service is provided or rendered, 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, beneficiary, or enrollee 
        (or authorized representative) and the treating health care 
        professional in accordance with the medical exigencies of the 
        case and as soon as possible, but 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 114.
            (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 participant, 
        beneficiary, or enrollee 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 114 and instructions on 
                how to initiate such a review.

SEC. 114. INDEPENDENT EXTERNAL APPEALS PROCEDURES.

    (a) Right to External Appeal.--A group health plan, and a health 
insurance issuer offering health insurance coverage, shall provide in 
accordance with this section participants, beneficiaries, and enrollees 
(or authorized representatives) with access to an independent external 
review for any denial of a claim for benefits.
    (b) Initiation of the Independent External Review Process.--
            (1) Time to file.--A request for an independent external 
        review under this section shall be filed with the plan or 
issuer not later than 180 days after the date on which the participant, 
beneficiary, or enrollee receives notice of the denial under section 
113(d) or notice of waiver of internal review under section 113(a)(4) 
or the date on which the plan or issuer has failed to make a timely 
decision under section 113(d)(2) and notifies the participant or 
beneficiary that it has failed to make a timely decision and that the 
beneficiary must file an appeal with an external review entity within 
180 days if the participant or beneficiary desires to file such an 
appeal.
            (2) Filing of request.--
                    (A) In general.--Subject to the succeeding 
                provisions of this subsection, a group health plan, or 
                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, beneficiary, or enrollee 
                        involved (or an authorized representative);
                            (iii) except if waived by the plan or 
                        issuer under section 113(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 113;
                            (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, 
                        beneficiary, or enrollee (or authorized 
                        representative) for the release of necessary 
                        medical information or records of the 
                        participant, beneficiary, or enrollee to the 
                        qualified external review entity only for 
                        purposes of conducting external review 
                        activities.
                    (B) Requirements and exception relating to general 
                rule.--
                            (i) Oral requests permitted in expedited or 
                        concurrent cases.--In the case of an expedited 
                        or concurrent external review as provided for 
                        under subsection (e), the request for such 
                        review may be made orally. A group health plan, 
                        or health insurance issuer offering health 
                        insurance coverage, may require that the 
                        participant, beneficiary, or enrollee (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 a 
                        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 appropriate Secretary) that the 
                                participant, beneficiary, or enrollee 
                                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 113(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 or modify 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 113(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, beneficiary, or 
        enrollee (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, beneficiary, or 
                        enrollee 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 to an independent medical 
                        reviewer, the entity shall provide notice to 
                        the plan or issuer, the participant, 
                        beneficiary, or enrollee (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 a 
                                participant or enrollee;
                                    (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 reviewer, 
                        shall make a determination within the overall 
                        timeline that is applicable to the case under 
                        review as described in subsection (e), except 
                        that if the entity determines that a referral 
                        to an independent medical reviewer is not 
                        required, the entity shall provide notice of 
                        such determination to the participant, 
                        beneficiary, or enrollee (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 
        reviewer 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 reviewer 
                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 reviewer's determination relating to the 
                medical necessity and appropriateness, or the 
                experimental or investigational nature, or the 
                evaluation of the medical facts, of the item, service, 
                or condition involved shall be based on the medical 
                condition of the participant, beneficiary, or enrollee 
                (including the medical records of the participant, 
                beneficiary, or enrollee) 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 reviewer 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 document (and which are 
                disclosed under section 131(b)(1)(C)). Notwithstanding 
                any other provision of this title, any exclusion of an 
                exact medical procedure, any exact time limit on the 
                duration or frequency of coverage, and any exact dollar 
                limit on the amount of coverage that is specifically 
                enumerated and defined (in the plain language of the 
                plan or coverage documents) under the plan or coverage 
                offered by a group health plan or health insurance 
                issuer offering health insurance coverage and that is 
                disclosed under section 131(b)(1) shall be considered 
                to govern the scope of the benefits that may be 
                required: Provided, That the terms and conditions of 
                the plan or coverage relating to such an exclusion or 
                limit are in compliance with the requirements of law.
                    (D) Evidence and information to be used in medical 
                reviews.--In making a determination under this 
                subsection, the independent medical reviewer shall also 
                consider appropriate and available evidence and 
                information, including the following:
                            (i) The determination made by the plan or 
                        issuer with respect to the claim upon internal 
                        review and the evidence, 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 reviewer or 
                        submitted by the plan, issuer, participant, 
                        beneficiary, or enrollee (or an authorized 
                        representative), or treating health care 
                        professional.
                            (iv) The plan or coverage document.
                    (E) Independent determination.--In making 
                determinations under this section, a qualified external 
                review entity and an independent medical reviewer 
                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 
                reviewer.--An independent medical reviewer shall, in 
                accordance with the deadlines described in subsection 
                (e), prepare a written determination to uphold, 
                reverse, or modify the denial under review. Such 
written determination shall include--
                            (i) the determination of the reviewer;
                            (ii) the specific reasons of the reviewer 
                        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 or modify the denial under review, a 
                        timeframe within which the plan or issuer must 
                        comply with such determination.
                    (G) Nonbinding nature of additional 
                recommendations.--In addition to the determination 
                under subparagraph (F), the reviewer may provide the 
                plan or issuer and the treating health care 
                professional with additional recommendations in 
                connection with such a determination, but any such 
                recommendations shall not affect (or be treated as part 
                of) the determination and shall not be binding on the 
                plan or issuer.
    (e) Timelines and Notifications.--
            (1) Timelines for independent medical review.--
                    (A) Prior authorization determination.--
                            (i) In general.--The independent medical 
                        reviewer (or reviewers) shall make a 
                        determination on a denial of a claim for 
                        benefits that is referred to the reviewer under 
                        subsection (c)(3) in accordance with the 
                        medical exigencies of the case and as soon as 
                        possible, but in no case 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 reviewer 
                        (or reviewers) shall make an expedited 
                        determination on a denial of a claim for 
                        benefits described in clause (i), when a 
                        request for such an expedited determination is 
                        made by a participant, beneficiary, or enrollee 
                        (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, beneficiary, or enrollee or the 
                        ability of the participant, beneficiary, or 
                        enrollee to maintain or regain maximum 
                        function. Such determination shall be made in 
                        accordance with the medical exigencies of the 
                        case and as soon as possible, but 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 clause 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 reviewer (or reviewers) shall complete a review 
                in the case of a retrospective determination on an 
                appeal of a denial of a claim for benefits that is 
                referred to the reviewer under subsection (c)(3) in no 
                case 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, 
        beneficiary, or enrollee (or authorized representative) and the 
        treating health care professional (if any) receives a copy of 
        the written determination of the independent medical reviewer 
        prepared under subsection (d)(3)(F). Nothing in this paragraph 
        shall be construed as preventing an entity or reviewer from 
        providing an initial oral notice of the reviewer's 
        determination.
            (3) Form of notices.--Determinations and notices under this 
        subsection shall be written in a manner calculated to be 
        understood by a participant.
    (f) Compliance.--
            (1) Application of determinations.--
                    (A) External review determinations binding on 
                plan.--The determinations of an external review entity 
                and an independent medical reviewer under this section 
                shall be binding upon the plan or issuer involved.
                    (B) Compliance with determination.--If the 
                determination of an independent medical reviewer is to 
                reverse or modify the denial, the plan or issuer, upon 
                the receipt of such determination, shall authorize 
                coverage to comply with the medical reviewer's 
                determination in accordance with the timeframe 
                established by the medical reviewer.
            (2) Failure to comply.--
                    (A) In general.--If a plan or issuer fails to 
                comply with the timeframe established under paragraph 
                (1)(B) with respect to a participant, beneficiary, or 
                enrollee, where such failure to comply is caused by the 
                plan or issuer, the participant, beneficiary, or 
                enrollee may obtain the items or services involved (in 
                a manner consistent with the determination of the 
                independent external reviewer) from any provider 
                regardless of whether such provider is a participating 
                provider under the plan or coverage.
                    (B) Reimbursement.--
                            (i) In general.--Where a participant, 
                        beneficiary, or enrollee obtains items or 
                        services in accordance with subparagraph (A), 
                        the plan or issuer involved shall provide for 
                        reimbursement of the costs of such items or 
                        services. Such reimbursement shall be made to 
                        the treating health care professional or to the 
                        participant, beneficiary, or enrollee (in the 
                        case of a participant, beneficiary, or enrollee 
                        who pays for the costs of such items or 
                        services).
                            (ii) Amount.--The plan or issuer shall 
                        fully reimburse a professional, participant, 
                        beneficiary, or enrollee under clause (i) for 
                        the total costs of the items or services 
                        provided (regardless of any plan limitations 
                        that may apply to the coverage of such items or 
                        services) so long as the items or services were 
                        provided in a manner consistent with the 
                        determination of the independent medical 
                        reviewer.
                    (C) Failure to reimburse.--Where a plan or issuer 
                fails to provide reimbursement to a professional, 
                participant, beneficiary, or enrollee in accordance 
                with this paragraph, the professional, participant, 
                beneficiary, or enrollee may commence a civil action 
                (or utilize other remedies available under law) to 
                recover only the amount of any such reimbursement that 
                is owed by the plan or issuer and any necessary legal 
                costs or expenses (including attorney's fees) incurred 
                in recovering such reimbursement.
                    (D) Available remedies.--The remedies provided 
                under this paragraph are in addition to any other 
                available remedies.
            (3) Penalties against authorized officials for refusing to 
        authorize the determination of an external review entity.--
                    (A) Monetary penalties.--
                            (i) In general.--In any case in which the 
                        determination of an external review entity is 
                        not followed by a group health plan, or by a 
                        health insurance issuer offering health 
                        insurance coverage, any person who, acting in 
the capacity of authorizing the benefit, causes such refusal may, in 
the discretion of a court of competent jurisdiction, be liable to an 
aggrieved participant, beneficiary, or enrollee for a civil penalty in 
an amount of up to $1,000 a day from the date on which the 
determination was transmitted to the plan or issuer by the external 
review entity until the date the refusal to provide the benefit is 
corrected.
                            (ii) Additional penalty for failing to 
                        follow timeline.--In any case in which 
                        treatment was not commenced by the plan in 
                        accordance with the determination of an 
                        independent external reviewer, the Secretary 
                        shall assess a civil penalty of $10,000 against 
                        the plan and the plan shall pay such penalty to 
                        the participant, beneficiary, or enrollee 
                        involved.
                    (B) Cease and desist order and order of attorney's 
                fees.--In any action described in subparagraph (A) 
                brought by a participant, beneficiary, or enrollee with 
                respect to a group health plan, or a health insurance 
                issuer offering health insurance coverage, in which a 
                plaintiff alleges that a person referred to in such 
                subparagraph has taken an action resulting in a refusal 
                of a benefit determined by an external appeal entity to 
                be covered, or has failed to take an action for which 
                such person is responsible under the terms and 
                conditions of the plan or coverage and which is 
                necessary under the plan or coverage for authorizing a 
                benefit, the court shall cause to be served on the 
                defendant an order requiring the defendant--
                            (i) to cease and desist from the alleged 
                        action or failure to act; and
                            (ii) to pay to the plaintiff a reasonable 
                        attorney's fee and other reasonable costs 
                        relating to the prosecution of the action on 
                        the charges on which the plaintiff prevails.
                    (C) Additional civil penalties.--
                            (i) In general.--In addition to any penalty 
                        imposed under subparagraph (A) or (B), the 
                        appropriate Secretary may assess a civil 
                        penalty against a person acting in the capacity 
                        of authorizing a benefit determined by an 
                        external review entity for one or more group 
                        health plans, or health insurance issuers 
offering health insurance coverage, for--
                                    (I) any pattern or practice of 
                                repeated refusal to authorize a benefit 
                                determined by an external appeal entity 
                                to be covered; or
                                    (II) any pattern or practice of 
                                repeated violations of the requirements 
                                of this section with respect to such 
                                plan or coverage.
                            (ii) Standard of proof and amount of 
                        penalty.--Such penalty shall be payable only 
                        upon proof by clear and convincing evidence of 
                        such pattern or practice and shall be in an 
                        amount not to exceed the lesser of--
                                    (I) 25 percent of the aggregate 
                                value of benefits shown by the 
                                appropriate Secretary to have not been 
                                provided, or unlawfully delayed, in 
                                violation of this section under such 
                                pattern or practice; or
                                    (II) $500,000.
                    (D) Removal and disqualification.--Any person 
                acting in the capacity of authorizing benefits who has 
                engaged in any such pattern or practice described in 
                subparagraph (C)(i) with respect to a plan or coverage, 
                upon the petition of the appropriate Secretary, may be 
                removed by the court from such position, and from any 
                other involvement, with respect to such a plan or 
                coverage, and may be precluded from returning to any 
                such position or involvement for a period determined by 
                the court.
            (4) Protection of legal rights.--Nothing in this subsection 
        or chapter shall be construed as altering or eliminating any 
        cause of action or legal rights or remedies of participants, 
        beneficiaries, enrollees, and others under State or Federal law 
        (including sections 502 and 503 of the Employee Retirement 
        Income Security Act of 1974), including the right to file 
        judicial actions to enforce rights.
    (g) Qualifications of Independent Medical Reviewers.--
            (1) In general.--In referring a denial to 1 or more 
        individuals to conduct independent medical review under 
        subsection (c), the qualified external review entity shall 
        ensure that--
                    (A) each independent medical reviewer meets the 
                qualifications described in paragraphs (2) and (3);
                    (B) with respect to each review at least 1 such 
                reviewer meets the requirements described in paragraphs 
                (4) and (5); and
                    (C) compensation provided by the entity to the 
                reviewer is consistent with paragraph (6).
            (2) Licensure and expertise.--Each independent medical 
        reviewer 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 
                independent medical reviewer in a case shall--
                            (i) not be a related party (as defined in 
                        paragraph (7));
                            (ii) not have a material familial, 
                        financial, or professional relationship with 
                        such a party; and
                            (iii) not otherwise have a conflict of 
                        interest with such a party (as determined under 
                        regulations).
                    (B) Exception.--Nothing in subparagraph (A) shall 
                be construed to--
                            (i) prohibit an individual, solely on the 
                        basis of affiliation with the plan or issuer, 
                        from serving as an independent medical reviewer 
                        if--
                                    (I) a non-affiliated individual is 
                                not reasonably available;
                                    (II) the affiliated individual is 
                                not involved in the provision of items 
                                or services in the case under review;
                                    (III) the fact of such an 
                                affiliation is disclosed to the plan or 
                                issuer and the participant, 
                                beneficiary, or enrollee (or authorized 
                                representative) and neither party 
                                objects; and
                                    (IV) the affiliated individual is 
                                not an employee of the plan or issuer 
                                and does not provide services 
                                exclusively or primarily to or on 
                                behalf of the plan or issuer;
                            (ii) prohibit an individual who has staff 
                        privileges at the institution where the 
                        treatment involved takes place from serving as 
                        an independent medical reviewer merely on the 
                        basis of such affiliation if the affiliation is 
                        disclosed to the plan or issuer and the 
                        participant, beneficiary, or enrollee (or 
                        authorized representative), and neither party 
                        objects; or
                            (iii) prohibit receipt of compensation by 
                        an independent medical reviewer from an entity 
                        if the compensation is provided consistent with 
                        paragraph (6).
            (4) Practicing health care professional in same field.--
                    (A) In general.--In a case involving treatment, or 
                the provision of items or services--
                            (i) by a physician, a reviewer shall be a 
                        practicing physician (allopathic or 
                        osteopathic) of the same or similar specialty, 
                        as a physician who, acting within the 
appropriate scope of practice within the State in which the service is 
provided or rendered, typically treats the condition, makes the 
diagnosis, or provides the type of treatment under review; or
                            (ii) by a non-physician health care 
                        professional, a reviewer (or reviewers) shall 
                        include at least one practicing non-physician 
                        health care professional of the same or similar 
                        specialty as the non-physician health care 
                        professional who, acting within the appropriate 
                        scope of practice within the State in which the 
                        service is provided or rendered, typically 
                        treats the condition, makes the diagnosis, or 
                        provides the type of treatment under review.
                    (B) Practicing defined.--For purposes of this 
                paragraph, the term ``practicing'' means, with respect 
                to an individual who is a physician or other health 
                care professional that the individual provides health 
                care services to individual patients on average at 
                least 2 days per week.
            (5) Pediatric expertise.--In the case of an external review 
        relating to a child, a reviewer shall have expertise under 
        paragraph (2) in pediatrics.
            (6) Limitations on reviewer compensation.--Compensation 
        provided by a qualified external review entity to an 
        independent medical reviewer in connection with a review under 
        this section shall--
                    (A) not exceed a reasonable level; and
                    (B) not be contingent on the 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, 
        beneficiary, or enrollee, 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, beneficiary, or enrollee (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 
                appropriate 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.
                No such selection process under the procedures 
                implemented by the appropriate Secretary may give 
                either the patient or the plan or issuer any ability to 
                determine or influence the selection of a qualified 
                external review entity to review the case of any 
                participant, beneficiary, or enrollee.
                    (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 
                appropriate 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, beneficiary, or enrollee (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 appropriate 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 reviewer.
                    (C) Certification and recertification process.--
                            (i) In general.--The initial certification 
                        and recertification of a qualified external 
                        review entity shall be made--
                                    (I) under a process that is 
                                recognized or approved by the 
                                appropriate Secretary; or
                                    (II) by a qualified private 
                                standard-setting organization that is 
                                approved by the appropriate Secretary 
                                under clause (iii).
                        In taking action under subclause (I), the 
                        appropriate 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 appropriate Secretary 
                        shall not recognize or approve a process under 
                        clause (i)(I) unless the process applies 
                        standards (as promulgated in regulations) that 
                        ensure that a qualified external review 
                        entity--
                                    (I) will carry out (and has carried 
                                out, in the case of recertification) 
                                the responsibilities of such an entity 
                                in accordance with this section, 
                                including meeting applicable deadlines;
                                    (II) will meet (and has met, in the 
                                case of recertification) appropriate 
                                indicators of fiscal integrity;
                                    (III) will maintain (and has 
                                maintained, in the case of 
                                recertification) appropriate 
                                confidentiality with respect to 
                                individually identifiable health 
                                information obtained in the course of 
                                conducting external review activities; 
                                and
                                    (IV) in the case of 
                                recertification, shall review the 
                                matters described in clause (iv).
                            (iii) Approval of qualified private 
                        standard-setting organizations.--For purposes 
                        of clause (i)(II), the appropriate 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 appropriate Secretary or organization 
                        conducting the recertification shall review 
                        compliance of the entity with the requirements 
                        for conducting external review activities under 
                        this section, including the following:
                                    (I) Provision of information under 
                                subparagraph (D).
                                    (II) Adherence to applicable 
                                deadlines (both by the entity and by 
                                independent medical reviewers it refers 
                                cases to).
                                    (III) Compliance with limitations 
                                on compensation (with respect to both 
                                the entity and independent medical 
                                reviewers it refers cases to).
                                    (IV) Compliance with applicable 
                                independence requirements.
                                    (V) Compliance with the requirement 
                                of subsection (d)(1) that only 
                                medically reviewable decisions shall be 
                                the subject of independent medical 
                                review and with the requirement of 
                                subsection (d)(3) that independent 
                                medical reviewers may not require 
                                coverage for specifically excluded 
                                benefits.
                            (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 appropriate Secretary or by the 
                        organization providing such certification upon 
                        a showing of cause. The Secretary, or 
                        organization, shall revoke a certification or 
                        deny a recertification with respect to an 
                        entity if there is a showing that the entity 
                        has a pattern or practice of ordering coverage 
                        for benefits that are specifically excluded 
                        under the plan or coverage.
                            (vii) Petition for denial or withdrawal.--
                        An individual may petition the Secretary, or an 
                        organization providing the certification 
                        involves, for a denial of recertification or a 
                        withdrawal of a certification with respect to 
                        an entity under this subparagraph if there is a 
                        pattern or practice of such entity failing to 
                        meet a requirement of this section.
                            (viii) Sufficient number of entities.--The 
                        appropriate Secretary shall certify and 
                        recertify a number of external review entities 
                        which is sufficient to ensure the timely and 
                        efficient provision of review services.
                    (D) Provision of information.--
                            (i) In general.--A qualified external 
                        review entity shall provide to the appropriate 
                        Secretary, in such manner and at such times as 
                        such Secretary may require, such information 
                        (relating to the denials which have been 
                        referred to the entity for the conduct of 
                        external review under this section) as such 
                        Secretary determines appropriate to assure 
                        compliance with the independence and other 
                        requirements of this section to monitor and 
                        assess the quality of its external review 
                        activities and lack of bias in making 
                        determinations. Such information shall include 
                        information described in clause (ii) but shall 
                        not include individually identifiable medical 
                        information.
                            (ii) Information to be included.--The 
                        information described in this subclause with 
                        respect to an entity is as follows:
                                    (I) The number and types of denials 
                                for which a request for review has been 
                                received by the entity.
                                    (II) The disposition by the entity 
                                of such denials, including the number 
                                referred to a independent medical 
                                reviewer and the reasons for such 
                                dispositions (including the application 
                                of exclusions), on a plan or issuer-
                                specific basis and on a health care 
                                specialty-specific basis.
                                    (III) The length of time in making 
                                determinations with respect to such 
                                denials.
                                    (IV) Updated information on the 
                                information required to be submitted as 
                                a condition of certification with 
                                respect to the entity's performance of 
                                external review activities.
                            (iii) Information to be provided to 
                        certifying organization.--
                                    (I) In general.--In the case of a 
                                qualified external review entity which 
                                is certified (or recertified) under 
                                this subsection by a qualified private 
standard-setting organization, at the request of the organization, the 
entity shall provide the organization with the information provided to 
the appropriate 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 appropriate 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 an independent medical reviewer), shall 
                be held by reason of the performance of any duty, 
                function, or activity required or authorized pursuant 
                to this section, to be civilly liable under any law of 
                the United States or of any State (or political 
                subdivision thereof) if there was no actual malice or 
                gross misconduct in the performance of such duty, 
                function, or activity.
            (5) Report.--Not later than 12 months after the general 
        effective date referred to in section 181, the General 
        Accounting Office shall prepare and submit to the appropriate 
        committees of Congress a report concerning--
                    (A) the information that is provided under 
                paragraph (3)(D);
                    (B) the number of denials that have been upheld by 
                independent medical reviewers and the number of denials 
                that have been reversed by such reviewers; and
                    (C) the extent to which independent medical 
                reviewers are requiring coverage for benefits that are 
                specifically excluded under the plan or coverage.

SEC. 115. HEALTH CARE CONSUMER ASSISTANCE FUND.

    (a) Grants.--
            (1) In general.--The Secretary of Health and Human Services 
        (referred to in this section as the ``Secretary'') shall 
        establish a fund, to be known as the ``Health Care Consumer 
        Assistance Fund'', to be used to award grants to eligible 
        States to carry out consumer assistance activities (including 
        programs established by States prior to the enactment of this 
        Act) designed to provide information, assistance, and referrals 
        to consumers of health insurance products.
            (2) State eligibility.--To be eligible to receive a grant 
        under this subsection a State shall prepare and submit to the 
        Secretary an application at such time, in such manner, and 
        containing such information as the Secretary may require, 
        including a State plan that describes--
                    (A) the manner in which the State will ensure that 
                the health care consumer assistance office (established 
                under paragraph (4)) will educate and assist health 
                care consumers in accessing needed care;
                    (B) the manner in which the State will coordinate 
                and distinguish the services provided by the health 
                care consumer assistance office with the services 
                provided by Federal, State and local health-related 
                ombudsman, information, protection and advocacy, 
insurance, and fraud and abuse programs;
                    (C) the manner in which the State will provide 
                information, outreach, and services to underserved, 
                minority populations with limited English proficiency 
                and populations residing in rural areas;
                    (D) the manner in which the State will oversee the 
                health care consumer assistance office, its activities, 
                product materials and evaluate program effectiveness;
                    (E) the manner in which the State will ensure that 
                funds made available under this section will be used to 
                supplement, and not supplant, any other Federal, State, 
                or local funds expended to provide services for 
                programs described under this section and those 
                described in subparagraphs (C) and (D);
                    (F) the manner in which the State will ensure that 
                health care consumer office personnel have the 
                professional background and training to carry out the 
                activities of the office; and
                    (G) the manner in which the State will ensure that 
                consumers have direct access to consumer assistance 
                personnel during regular business hours.
            (3) Amount of grant.--
                    (A) In general.--From amounts appropriated under 
                subsection (b) for a fiscal year, the Secretary shall 
                award a grant to a State in an amount that bears the 
                same ratio to such amounts as the number of individuals 
                within the State covered under a group health plan or 
                under health insurance coverage offered by a health 
                insurance issuer bears to the total number of 
                individuals so covered in all States (as determined by 
                the Secretary). Any amounts provided to a State under 
                this subsection that are not used by the State shall be 
                remitted to the Secretary and reallocated in accordance 
                with this subparagraph.
                    (B) Minimum amount.--In no case shall the amount 
                provided to a State under a grant under this subsection 
                for a fiscal year be less than an amount equal to 0.5 
                percent of the amount appropriated for such fiscal year 
                to carry out this section.
                    (C) Non-federal contributions.--A State will 
                provide for the collection of non-Federal contributions 
                for the operation of the office in an amount that is 
                not less than 25 percent of the amount of Federal funds 
                provided to the State under this section.
            (4) Provision of funds for establishment of office.--
                    (A) In general.--From amounts provided under a 
                grant under this subsection, a State shall, directly or 
                through a contract with an independent, nonprofit 
                entity with demonstrated experience in serving the 
                needs of health care consumers, provide for the 
                establishment and operation of a State health care 
                consumer assistance office.
                    (B) Eligibility of entity.--To be eligible to enter 
                into a contract under subparagraph (A), an entity shall 
                demonstrate that it has the technical, organizational, 
                and professional capacity to deliver the services 
                described in subsection (b) to all public and private 
                health insurance participants, beneficiaries, 
                enrollees, or prospective enrollees.
                    (C) Existing state entity.--Nothing in this section 
                shall prevent the funding of an existing health care 
                consumer assistance program that otherwise meets the 
                requirements of this section.
    (b) Use of Funds.--
            (1) By state.--A State shall use amounts provided under a 
        grant awarded under this section to carry out consumer 
        assistance activities directly or by contract with an 
        independent, non-profit organization. An eligible entity may 
        use some reasonable amount of such grant to ensure the adequate 
        training of personnel carrying out such activities. To receive 
        amounts under this subsection, an eligible entity shall provide 
        consumer assistance services, including--
                    (A) the operation of a toll-free telephone hotline 
                to respond to consumer requests;
                    (B) the dissemination of appropriate educational 
                materials on available health insurance products and on 
                how best to access health care and the rights and 
                responsibilities of health care consumers;
                    (C) the provision of education on effective methods 
                to promptly and efficiently resolve questions, 
                problems, and grievances;
                    (D) the coordination of educational and outreach 
                efforts with health plans, health care providers, 
                payers, and governmental agencies;
                    (E) referrals to appropriate private and public 
                entities to resolve questions, problems and grievances; 
                and
                    (F) the provision of information and assistance, 
                including acting as an authorized representative, 
                regarding internal, external, or administrative 
                grievances or appeals procedures in nonlitigative 
                settings to appeal the denial, termination, or 
                reduction of health care services, or the refusal to 
                pay for such services, under a group health plan or 
                health insurance coverage offered by a health insurance 
                issuer.
            (2) Confidentiality and access to information.--
                    (A) State entity.--With respect to a State that 
                directly establishes a health care consumer assistance 
                office, such office shall establish and implement 
                procedures and protocols in accordance with applicable 
                Federal and State laws.
                    (B) Contract entity.--With respect to a State that, 
                through contract, establishes a health care consumer 
                assistance office, such office shall establish and 
                implement procedures and protocols, consistent with 
                applicable Federal and State laws, to ensure the 
                confidentiality of all information shared by a 
                participant, beneficiary, enrollee, or their personal 
                representative and their health care providers, group 
                health plans, or health insurance insurers with the 
                office and to ensure that no such information is used 
                by the office, or released or disclosed to State 
                agencies or outside persons or entities without the 
                prior written authorization (in accordance with section 
                164.508 of title 45, Code of Federal Regulations) of 
                the individual or personal representative. The office 
                may, consistent with applicable Federal and State 
                confidentiality laws, collect, use or disclose 
                aggregate information that is not individually 
                identifiable (as defined in section 164.501 of title 
                45, Code of Federal Regulations). The office shall 
                provide a written description of the policies and 
                procedures of the office with respect to the manner in 
                which health information may be used or disclosed to 
                carry out consumer assistance activities. The office 
                shall provide health care providers, group health 
plans, or health insurance issuers with a written authorization (in 
accordance with section 164.508 of title 45, Code of Federal 
Regulations) to allow the office to obtain medical information relevant 
to the matter before the office.
            (3) Availability of services.--The health care consumer 
        assistance office of a State shall not discriminate in the 
        provision of information, referrals, and services regardless of 
        the source of the individual's health insurance coverage or 
        prospective coverage, including individuals covered under a 
        group health plan or health insurance coverage offered by a 
        health insurance issuer, the medicare or medicaid programs 
        under title XVIII or XIX of the Social Security Act (42 U.S.C. 
        1395 and 1396 et seq.), or under any other Federal or State 
        health care program.
            (4) Designation of responsibilities.--
                    (A) Within existing state entity.--If the health 
                care consumer assistance office of a State is located 
                within an existing State regulatory agency or office of 
                an elected State official, the State shall ensure 
                that--
                            (i) there is a separate delineation of the 
                        funding, activities, and responsibilities of 
                        the office as compared to the other funding, 
                        activities, and responsibilities of the agency; 
                        and
                            (ii) the office establishes and implements 
                        procedures and protocols to ensure the 
                        confidentiality of all information shared by a 
                        participant, beneficiary, or enrollee or their 
                        personal representative and their health care 
                        providers, group health plans, or health 
                        insurance issuers with the office and to ensure 
                        that no information is disclosed to the State 
                        agency or office without the written 
                        authorization of the individual or their 
                        personal representative in accordance with 
                        paragraph (2).
                    (B) Contract entity.--In the case of an entity that 
                enters into a contract with a State under subsection 
                (a)(3), the entity shall provide assurances that the 
                entity has no conflict of interest in carrying out the 
                activities of the office and that the entity is 
                independent of group health plans, health insurance 
                issuers, providers, payers, and regulators of health 
                care.
            (5) Subcontracts.--The health care consumer assistance 
        office of a State may carry out activities and provide services 
        through contracts entered into with 1 or more nonprofit 
        entities so long as the office can demonstrate that all of the 
        requirements of this section are complied with by the office.
            (6) Term.--A contract entered into under this subsection 
        shall be for a term of 3 years.
    (c) Report.--Not later than 1 year after the Secretary first awards 
grants under this section, and annually thereafter, the Secretary shall 
prepare and submit to the appropriate committees of Congress a report 
concerning the activities funded under this section and the 
effectiveness of such activities in resolving health care-related 
problems and grievances.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section.

                       CHAPTER 2--ACCESS TO CARE

SEC. 121. CONSUMER CHOICE OPTION.

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

SEC. 122. CHOICE OF HEALTH CARE PROFESSIONAL.

    (a) Primary Care.--If a group health plan, or a health insurance 
issuer that offers health insurance coverage, requires or provides for 
designation by a participant, beneficiary, or enrollee of a 
participating primary care provider, then the plan or issuer shall 
permit each participant, beneficiary, and enrollee to designate any 
participating primary care provider who is available to accept such 
individual.
    (b) Specialists.--
            (1) In general.--Subject to paragraph (2), a group health 
        plan and a health insurance issuer that offers health insurance 
        coverage shall permit each participant, beneficiary, or 
        enrollee to receive medically necessary and appropriate 
        specialty care, pursuant to appropriate referral procedures, 
        from any qualified participating health care professional who 
        is available to accept such individual for such care.
            (2) Limitation.--Paragraph (1) shall not apply to specialty 
        care if the plan or issuer clearly informs participants, 
        beneficiaries, and enrollees of the limitations on choice of 
        participating health care professionals with respect to such 
        care.
            (3) Construction.--Nothing in this subsection shall be 
        construed as affecting the application of section 124 (relating 
        to access to specialty care).

SEC. 123. ACCESS TO EMERGENCY CARE.

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

SEC. 124. TIMELY ACCESS TO SPECIALISTS.

    (a) Timely Access.--
            (1) In general.--A group health plan and a health insurance 
        issuer offering health insurance coverage shall ensure that 
        participants, beneficiaries, and enrollees receive timely 
        access to specialists who are appropriate to the condition of, 
        and accessible to, the participant, beneficiary, or enrollee, 
        when such specialty care is a covered benefit under the plan or 
        coverage.
            (2) Rule of construction.--Nothing in paragraph (1) shall 
        be construed--
                    (A) to require the coverage under a group health 
                plan or health insurance coverage of benefits or 
                services;
                    (B) to prohibit a plan or issuer from including 
                providers in the network only to the extent necessary 
                to meet the needs of the plan's or issuer's 
                participants, beneficiaries, or enrollees; or
                    (C) to override any State licensure or scope-of-
                practice law.
            (3) Access to certain providers.--
                    (A) In general.--With respect to specialty care 
                under this section, if a participating specialist is 
                not available and qualified to provide such care to the 
                participant, beneficiary, or enrollee, the plan or 
                issuer shall provide for coverage of such care by a 
nonparticipating specialist.
                    (B) Treatment of nonparticipating providers.--If a 
                participant, beneficiary, or enrollee receives care 
                from a nonparticipating specialist pursuant to 
                subparagraph (A), such specialty care shall be provided 
                at no additional cost to the participant, beneficiary, 
                or enrollee beyond what the participant, beneficiary, 
                or enrollee would otherwise pay for such specialty care 
                if provided by a participating specialist.
    (b) Referrals.--
            (1) Authorization.--Subject to subsection (a)(1), a group 
        health plan or health insurance issuer may require an 
        authorization in order to obtain coverage for specialty 
        services under this section. Any such authorization--
                    (A) shall be for an appropriate duration of time or 
                number of referrals, including an authorization for a 
                standing referral where appropriate; and
                    (B) may not be refused solely because the 
                authorization involves services of a nonparticipating 
                specialist (described in subsection (a)(3)).
            (2) Referrals for ongoing special conditions.--
                    (A) In general.--Subject to subsection (a)(1), a 
                group health plan and a health insurance issuer shall 
                permit a participant, beneficiary, or enrollee who has 
                an ongoing special condition (as defined in 
                subparagraph (B)) to receive a referral to a specialist 
                for the treatment of such condition and such specialist 
                may authorize such referrals, procedures, tests, and 
                other medical services with respect to such condition, 
                or coordinate the care for such condition, subject to 
                the terms of a treatment plan (if any) referred to in 
                subsection (c) with respect to the condition.
                    (B) Ongoing special condition defined.--In this 
                subsection, the term ``ongoing special condition'' 
                means a condition or disease that--
                            (i) is life-threatening, degenerative, 
                        potentially disabling, or congenital; and
                            (ii) requires specialized medical care over 
                        a prolonged period of time.
    (c) Treatment Plans.--
            (1) In general.--A group health plan or health insurance 
        issuer may require that the specialty care be provided--
                    (A) pursuant to a treatment plan, but only if the 
                treatment plan--
                            (i) is developed by the specialist, in 
                        consultation with the case manager or primary 
                        care provider, and the participant, 
                        beneficiary, or enrollee, and
                            (ii) is approved by the plan or issuer in a 
                        timely manner, if the plan or issuer requires 
                        such approval; and
                    (B) in accordance with applicable quality assurance 
                and utilization review standards of the plan or issuer.
            (2) Notification.--Nothing in paragraph (1) shall be 
        construed as prohibiting a plan or issuer from requiring the 
        specialist to provide the plan or issuer with regular updates 
        on the specialty care provided, as well as all other reasonably 
        necessary medical information.
    (d) Specialist Defined.--For purposes of this section, the term 
``specialist'' means, with respect to the condition of the participant, 
beneficiary, or enrollee, a health care professional, facility, or 
center that has adequate expertise through appropriate training and 
experience (including, in the case of a child, appropriate pediatric 
expertise) to provide high quality care in treating the condition.

SEC. 125. PATIENT ACCESS TO OBSTETRICAL AND GYNECOLOGICAL CARE.

    (a) General Rights.--
            (1) Direct access.--A group health plan, and a health 
        insurance issuer offering health insurance coverage, described 
        in subsection (b) may not require authorization or referral by 
        the plan, issuer, or any person (including a primary care 
        provider described in subsection (b)(2)) in the case of a 
        female participant, beneficiary, or enrollee who seeks coverage 
        for obstetrical or gynecological care provided by a 
        participating health care professional who specializes in 
        obstetrics or gynecology.
            (2) Obstetrical and gynecological care.--A group health 
        plan and a health insurance issuer described in subsection (b) 
        shall treat the provision of obstetrical and gynecological 
        care, and the ordering of related obstetrical and gynecological 
        items and services, pursuant to the direct access described 
        under paragraph (1), by a participating health care 
        professional who specializes in obstetrics or gynecology as the 
authorization of the primary care provider.
    (b) Application of Section.--A group health plan, or health 
insurance issuer offering health insurance coverage, described in this 
subsection is a group health plan or coverage that--
            (1) provides coverage for obstetric or gynecologic care; 
        and
            (2) requires the designation by a participant, beneficiary, 
        or enrollee of a participating primary care provider.
    (c) Construction.--Nothing in subsection (a) shall be construed 
to--
            (1) waive any exclusions of coverage under the terms and 
        conditions of the plan or health insurance coverage with 
        respect to coverage of obstetrical or gynecological care; or
            (2) preclude the group health plan or health insurance 
        issuer involved from requiring that the obstetrical or 
        gynecological provider notify the primary care health care 
        professional or the plan or issuer of treatment decisions.

SEC. 126. ACCESS TO PEDIATRIC CARE.

    (a) Pediatric Care.--In the case of a person who has a child who is 
a participant, beneficiary, or enrollee under a group health plan, or 
health insurance coverage offered by a health insurance issuer, if the 
plan or issuer requires or provides for the designation of a 
participating primary care provider for the child, the plan or issuer 
shall permit such person to designate a physician (allopathic or 
osteopathic) who specializes in pediatrics as the child's primary care 
provider if such provider participates in the network of the plan or 
issuer.
    (b) Construction.--Nothing in subsection (a) shall be construed to 
waive any exclusions of coverage under the terms and conditions of the 
plan or health insurance coverage with respect to coverage of pediatric 
care.

SEC. 127. CONTINUITY OF CARE.

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

SEC. 128. ACCESS TO NEEDED PRESCRIPTION DRUGS.

    (a) In General.--To the extent that a group health plan, or health 
insurance coverage offered by a health insurance issuer, provides 
coverage for benefits with respect to prescription drugs, and limits 
such coverage to drugs included in a formulary, the plan or issuer 
shall--
            (1) ensure the participation of physicians and pharmacists 
        in developing and reviewing such formulary;
            (2) provide for disclosure of the formulary to providers; 
        and
            (3) in accordance with the applicable quality assurance and 
        utilization review standards of the plan or issuer, provide for 
        exceptions from the formulary limitation when a non-formulary 
        alternative is medically necessary and appropriate and, in the 
        case of such an exception, apply the same cost-sharing 
        requirements that would have applied in the case of a drug 
        covered under the formulary.
    (b) Coverage of Approved Drugs and Medical Devices.--
            (1) In general.--A group health plan (and health insurance 
        coverage offered in connection with such a plan) that provides 
        any coverage of prescription drugs or medical devices shall not 
        deny coverage of such a drug or device on the basis that the 
        use is investigational, if the use--
                    (A) in the case of a prescription drug--
                            (i) is included in the labeling authorized 
                        by the application in effect for the drug 
                        pursuant to subsection (b) or (j) of section 
                        505 of the Federal Food, Drug, and Cosmetic 
                        Act, without regard to any postmarketing 
                        requirements that may apply under such Act; or
                            (ii) is included in the labeling authorized 
                        by the application in effect for the drug under 
                        section 351 of the Public Health Service Act, 
                        without regard to any postmarketing 
requirements that may apply pursuant to such section; or
                    (B) in the case of a medical device, is included in 
                the labeling authorized by a regulation under 
                subsection (d) or (3) of section 513 of the Federal 
                Food, Drug, and Cosmetic Act, an order under subsection 
                (f) of such section, or an application approved under 
                section 515 of such Act, without regard to any 
                postmarketing requirements that may apply under such 
                Act.
            (2) Construction.--Nothing in this subsection shall be 
        construed as requiring a group health plan (or health insurance 
        coverage offered in connection with such a plan) to provide any 
        coverage of prescription drugs or medical devices.

SEC. 129. COVERAGE FOR INDIVIDUALS PARTICIPATING IN APPROVED CLINICAL 
              TRIALS.

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

SEC. 130. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR MASTECTOMIES 
              AND LYMPH NODE DISSECTIONS FOR THE TREATMENT OF BREAST 
              CANCER AND COVERAGE FOR SECONDARY CONSULTATIONS.

    (a) Inpatient Care.--
            (1) In general.--A group health plan, and a health 
        insurance issuer providing health insurance coverage, that 
        provides medical and surgical benefits shall ensure that 
        inpatient coverage with respect to the treatment of breast 
        cancer is provided for a period of time as is determined by the 
        attending physician, in consultation with the patient, to be 
        medically necessary and appropriate following--
                    (A) a mastectomy;
                    (B) a lumpectomy; or
                    (C) a lymph node dissection for the treatment of 
                breast cancer.
            (2) Exception.--Nothing in this section shall be construed 
        as requiring the provision of inpatient coverage if the 
        attending physician and patient determine that a shorter period 
        of hospital stay is medically appropriate.
    (b) Prohibition on Certain Modifications.--In implementing the 
requirements of this section, a group health plan, and a health 
insurance issuer providing health insurance coverage, may not modify 
the terms and conditions of coverage based on the determination by a 
participant, beneficiary, or enrollee to request less than the minimum 
coverage required under subsection (a).
    (c) Secondary Consultations.--
            (1) In general.--A group health plan, and a health 
        insurance issuer providing health insurance coverage, that 
        provides coverage with respect to medical and surgical services 
        provided in relation to the diagnosis and treatment of cancer 
        shall ensure that full coverage is provided for secondary 
        consultations by specialists in the appropriate medical fields 
        (including pathology, radiology, and oncology) to confirm or 
        refute such diagnosis. Such plan or issuer shall ensure that 
        full coverage is provided for such secondary consultation 
        whether such consultation is based on a positive or negative 
        initial diagnosis. In any case in which the attending physician 
        certifies in writing that services necessary for such a 
        secondary consultation are not sufficiently available from 
        specialists operating under the plan or coverage with respect 
        to whose services coverage is otherwise provided under such 
        plan or by such issuer, such plan or issuer shall ensure that 
        coverage is provided with respect to the services necessary for 
        the secondary consultation with any other specialist selected 
        by the attending physician for such purpose at no additional 
        cost to the individual beyond that which the individual would 
        have paid if the specialist was participating in the network of 
        the plan or issuer.
            (2) Exception.--Nothing in paragraph (1) shall be construed 
        as requiring the provision of secondary consultations where the 
        patient determines not to seek such a consultation.
    (d) Prohibition on Penalties or Incentives.--A group health plan, 
and a health insurance issuer providing health insurance coverage, may 
not--
            (1) penalize or otherwise reduce or limit the reimbursement 
        of a provider or specialist because the provider or specialist 
        provided care to a participant, beneficiary, or enrollee in 
        accordance with this section;
            (2) provide financial or other incentives to a physician or 
        specialist to induce the physician or specialist to keep the 
        length of inpatient stays of patients following a mastectomy, 
        lumpectomy, or a lymph node dissection for the treatment of 
        breast cancer below certain limits or to limit referrals for 
        secondary consultations; or
            (3) provide financial or other incentives to a physician or 
        specialist to induce the physician or specialist to refrain 
        from referring a participant, beneficiary, or enrollee for a 
        secondary consultation that would otherwise be covered by the 
        plan or coverage involved under subsection (c).

                    CHAPTER 3--ACCESS TO INFORMATION

SEC. 131. PATIENT ACCESS TO INFORMATION.

    (a) Requirement.--
            (1) Disclosure.--
                    (A) In general.--A group health plan, and a health 
                insurance issuer that provides coverage in connection 
                with health insurance coverage, shall provide for the 
                disclosure to participants, beneficiaries, and 
                enrollees--
                            (i) of the information described in 
                        subsection (b) at the time of the initial 
                        enrollment of the participant, beneficiary, or 
                        enrollee under the plan or coverage;
                            (ii) of such information on an annual 
                        basis--
                                    (I) in conjunction with the 
                                election period of the plan or coverage 
                                if the plan or coverage has such an 
                                election period; or
                                    (II) in the case of a plan or 
                                coverage that does not have an election 
                                period, in conjunction with the 
                                beginning of the plan or coverage year; 
                                and
                            (iii) of information relating to any 
                        material reduction to the benefits or 
                        information described in such subsection or 
                        subsection (c), in the form of a notice 
                        provided not later than 30 days before the date 
                        on which the reduction takes effect.
                    (B) Participants, beneficiaries, and enrollees.--
                The disclosure required under subparagraph (A) shall be 
                provided--
                            (i) jointly to each participant, 
                        beneficiary, and enrollee who reside at the 
                        same address; or
                            (ii) in the case of a beneficiary or 
                        enrollee who does not reside at the same 
                        address as the participant or another enrollee, 
                        separately to the participant or other 
                        enrollees and such beneficiary or enrollee.
            (2) Provision of information.--Information shall be 
        provided to participants, beneficiaries, and enrollees under 
        this section at the last known address maintained by the plan 
        or issuer with respect to such participants, beneficiaries, or 
        enrollees, to the extent that such information is provided to 
        participants, beneficiaries, or enrollees via the United States 
        Postal Service or other private delivery service.
    (b) Required Information.--The informational materials to be 
distributed under this section shall include for each option available 
under the group health plan or health insurance coverage the following:
            (1) Benefits.--A description of the covered benefits, 
        including--
                    (A) any in- and out-of-network benefits;
                    (B) specific preventive services covered under the 
                plan or coverage if such services are covered;
                    (C) any specific exclusions or express limitations 
                of benefits described in section 114(d)(3)(C);
                    (D) any other benefit limitations, including any 
                annual or lifetime benefit limits and any monetary 
                limits or limits on the number of visits, days, or 
                services, and any specific coverage exclusions; and
                    (E) any definition of medical necessity used in 
                making coverage determinations by the plan, issuer, or 
                claims administrator.
            (2) Cost sharing.--A description of any cost-sharing 
        requirements, including--
                    (A) any premiums, deductibles, coinsurance, 
                copayment amounts, and liability for balance billing, 
                for which the participant, beneficiary, or enrollee 
                will be responsible under each option available under 
                the plan;
                    (B) any maximum out-of-pocket expense for which the 
                participant, beneficiary, or enrollee may be liable;
                    (C) any cost-sharing requirements for out-of-
                network benefits or services received from 
                nonparticipating providers; and
                    (D) any additional cost-sharing or charges for 
                benefits and services that are furnished without 
                meeting applicable plan or coverage requirements, such 
                as prior authorization or precertification.
            (3) Disenrollment.--Information relating to the 
        disenrollment of a participant, beneficiary, or enrollee.
            (4) Service area.--A description of the plan or issuer's 
        service area, including the provision of any out-of-area 
        coverage.
            (5) Participating providers.--A directory of participating 
        providers (to the extent a plan or issuer provides coverage 
        through a network of providers) that includes, at a minimum, 
        the name, address, and telephone number of each participating 
        provider, and information about how to inquire whether a 
        participating provider is currently accepting new patients.
            (6) Choice of primary care provider.--A description of any 
        requirements and procedures to be used by participants, 
        beneficiaries, and enrollees in selecting, accessing, or 
        changing their primary care provider, including providers both 
        within and outside of the network (if the plan or issuer 
        permits out-of-network services), and the right to select a 
        pediatrician as a primary care provider under section 126 for a 
        participant, beneficiary, or enrollee who is a child if such 
        section applies.
            (7) Preauthorization requirements.--A description of the 
        requirements and procedures to be used to obtain 
        preauthorization for health services, if such preauthorization 
        is required.
            (8) Experimental and investigational treatments.--A 
        description of the process for determining whether a particular 
        item, service, or treatment is considered experimental or 
        investigational, and the circumstances under which such 
        treatments are covered by the plan or issuer.
            (9) Specialty care.--A description of the requirements and 
        procedures to be used by participants, beneficiaries, and 
        enrollees in accessing specialty care and obtaining referrals 
        to participating and nonparticipating specialists, including 
        any limitations on choice of health care professionals referred 
        to in section 122(b)(2) and the right to timely access to 
specialists care under section 124 if such section applies.
            (10) Clinical trials.--A description of the circumstances 
        and conditions under which participation in clinical trials is 
        covered under the terms and conditions of the plan or coverage, 
        and the right to obtain coverage for approved clinical trials 
        under section 129 if such section applies.
            (11) Prescription drugs.--To the extent the plan or issuer 
        provides coverage for prescription drugs, a statement of 
        whether such coverage is limited to drugs included in a 
        formulary, a description of any provisions and cost-sharing 
        required for obtaining on- and off-formulary medications, and a 
        description of the rights of participants, beneficiaries, and 
        enrollees in obtaining access to access to prescription drugs 
        under section 128 if such section applies.
            (12) Emergency services.--A summary of the rules and 
        procedures for accessing emergency services, including the 
        right of a participant, beneficiary, or enrollee to obtain 
        emergency services under the prudent layperson standard under 
        section 123, if such section applies, and any educational 
        information that the plan or issuer may provide regarding the 
        appropriate use of emergency services.
            (13) Claims and appeals.--A description of the plan or 
        issuer's rules and procedures pertaining to claims and appeals, 
        a description of the rights (including deadlines for exercising 
        rights) of participants, beneficiaries, and enrollees under 
        chapter 1 in obtaining covered benefits, filing a claim for 
        benefits, and appealing coverage decisions internally and 
        externally (including telephone numbers and mailing addresses 
        of the appropriate authority), and a description of any 
        additional legal rights and remedies available under section 
        502 of the Employee Retirement Income Security Act of 1974 and 
        applicable State law.
            (14) Advance directives and organ donation.--A description 
        of procedures for advance directives and organ donation 
        decisions if the plan or issuer maintains such procedures.
            (15) Information on plans and issuers.--The name, mailing 
        address, and telephone number or numbers of the plan 
        administrator and the issuer to be used by participants, 
        beneficiaries, and enrollees seeking information about plan or 
        coverage benefits and services, payment of a claim, or 
        authorization for services and treatment. Notice of whether the 
        benefits under the plan or coverage are provided under a 
        contract or policy of insurance issued by an issuer, or whether 
        benefits are provided directly by the plan sponsor who bears 
        the insurance risk.
            (16) Translation services.--A summary description of any 
        translation or interpretation services (including the 
        availability of printed information in languages other than 
        English, audio tapes, or information in Braille) that are 
        available for non-English speakers and participants, 
        beneficiaries, and enrollees with communication disabilities 
        and a description of how to access these items or services.
            (17) Accreditation information.--Any information that is 
        made public by accrediting organizations in the process of 
        accreditation if the plan or issuer is accredited, or any 
        additional quality indicators (such as the results of enrollee 
        satisfaction surveys) that the plan or issuer makes public or 
        makes available to participants, beneficiaries, and enrollees.
            (18) Notice of requirements.--A description of any rights 
        of participants, beneficiaries, and enrollees that are 
        established by the Bipartisan Patient Protection Act (excluding 
        those described in paragraphs (1) through (17)) if such 
        sections apply. The description required under this paragraph 
        may be combined with the notices of the type described in 
        sections 711(d), 713(b), or 606(a)(1) of the Employee 
        Retirement Income Security Act of 1974 and with any other 
        notice provision that the appropriate Secretary determines may 
        be combined, so long as such combination does not result in any 
        reduction in the information that would otherwise be provided 
        to the recipient.
            (19) Availability of additional information.--A statement 
        that the information described in subsection (c), and 
        instructions on obtaining such information (including telephone 
        numbers and, if available, Internet websites), shall be made 
        available upon request.
            (20) Designated decisionmakers.--A description of the 
        participants and beneficiaries with respect to whom each 
        designated decisionmaker under the plan has assumed liability 
        under section 502(o) of the Employee Retirement Income Security 
        Act of 1974 and the name and address of each such 
        decisionmaker.
    (c) Additional Information.--The informational materials to be 
provided upon the request of a participant, beneficiary, or enrollee 
shall include for each option available under a group health plan or 
health insurance coverage the following:
            (1) Status of providers.--The State licensure status of the 
        plan or issuer's participating health care professionals and 
        participating health care facilities, and, if available, the 
        education, training, specialty qualifications or certifications 
        of such professionals.
            (2) Compensation methods.--A summary description by 
        category of the applicable methods (such as capitation, fee-
        for-service, salary, bundled payments, per diem, or a 
        combination thereof) used for compensating prospective or 
        treating health care professionals (including primary care 
        providers and specialists) and facilities in connection with 
        the provision of health care under the plan or coverage.
            (3) Prescription drugs.--Information about whether a 
        specific prescription medication is included in the formulary 
        of the plan or issuer, if the plan or issuer uses a defined 
        formulary.
            (4) Utilization review activities.--A description of 
        procedures used and requirements (including circumstances, 
        timeframes, and appeals rights) under any utilization review 
        program under sections 111 and 112, including any drug 
formulary program under section 128.
            (5) External appeals information.--Aggregate information on 
        the number and outcomes of external medical reviews, relative 
        to the sample size (such as the number of covered lives) under 
        the plan or under the coverage of the issuer.
    (d) Manner of Disclosure.--The information described in this 
section shall be disclosed in an accessible medium and format that is 
calculated to be understood by a participant or enrollee.
    (e) Rules of Construction.--Nothing in this section shall be 
construed to prohibit a group health plan, or a health insurance issuer 
in connection with health insurance coverage, from--
            (1) distributing any other additional information 
        determined by the plan or issuer to be important or necessary 
        in assisting participants, beneficiaries, and enrollees in the 
        selection of a health plan or health insurance coverage; and
            (2) complying with the provisions of this section by 
        providing information in brochures, through the Internet or 
        other electronic media, or through other similar means, so long 
        as--
                    (A) the disclosure of such information in such form 
                is in accordance with requirements as the appropriate 
                Secretary may impose, and
                    (B) in connection with any such disclosure of 
                information through the Internet or other electronic 
                media--
                            (i) the recipient has affirmatively 
                        consented to the disclosure of such information 
                        in such form,
                            (ii) the recipient is capable of accessing 
                        the information so disclosed on the recipient's 
                        individual workstation or at the recipient's 
                        home,
                            (iii) the recipient retains an ongoing 
                        right to receive paper disclosure of such 
                        information and receives, in advance of any 
                        attempt at disclosure of such information to 
                        him or her through the Internet or other 
                        electronic media, notice in printed form of 
                        such ongoing right and of the proper software 
                        required to view information so disclosed, and
                            (iv) the plan administrator appropriately 
                        ensures that the intended recipient is 
                        receiving the information so disclosed and 
                        provides the information in printed form if the 
                        information is not received.

         CHAPTER 4--PROTECTING THE DOCTOR-PATIENT RELATIONSHIP

SEC. 141. PROHIBITION OF INTERFERENCE WITH CERTAIN MEDICAL 
              COMMUNICATIONS.

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

SEC. 142. PROHIBITION OF DISCRIMINATION AGAINST PROVIDERS BASED ON 
              LICENSURE.

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

SEC. 143. PROHIBITION AGAINST IMPROPER INCENTIVE ARRANGEMENTS.

    (a) In General.--A group health plan and a health insurance issuer 
offering health insurance coverage may not operate any physician 
incentive plan (as defined in subparagraph (B) of section 1852(j)(4) of 
the Social Security Act) unless the requirements described in clauses 
(i), (ii)(I), and (iii) of subparagraph (A) of such section are met 
with respect to such a plan.
    (b) Application.--For purposes of carrying out paragraph (1), any 
reference in section 1852(j)(4) of the Social Security Act to the 
Secretary, a Medicare+Choice organization, or an individual enrolled 
with the organization shall be treated as a reference to the applicable 
authority, a group health plan or health insurance issuer, 
respectively, and a participant, beneficiary, or enrollee with the plan 
or organization, respectively.
    (c) Construction.--Nothing in this section shall be construed as 
prohibiting all capitation and similar arrangements or all provider 
discount arrangements.

SEC. 144. PAYMENT OF CLAIMS.

    A group health plan, and a health insurance issuer offering health 
insurance coverage, shall provide for prompt payment of claims 
submitted for health care services or supplies furnished to a 
participant, beneficiary, or enrollee with respect to benefits covered 
by the plan or issuer, in a manner that is no less protective than the 
provisions of section 1842(c)(2) of the Social Security Act (42 U.S.C. 
1395u(c)(2)).

SEC. 145. PROTECTION FOR PATIENT ADVOCACY.

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

                         CHAPTER 5--DEFINITIONS

SEC. 151. DEFINITIONS.

    (a) Incorporation of General Definitions.--Except as otherwise 
provided, the provisions of section 2791 of the Public Health Service 
Act shall apply for purposes of this subtitle in the same manner as 
they apply for purposes of title XXVII of such Act.
    (b) Secretary.--Except as otherwise provided, the term 
``Secretary'' means the Secretary of Health and Human Services, in 
consultation with the Secretary of Labor and the term ``appropriate 
Secretary'' means the Secretary of Health and Human Services in 
relation to carrying out this subtitle under sections 2706 and 2751 of 
the Public Health Service Act and the Secretary of Labor in relation to 
carrying out this subtitle under section 714 of the Employee Retirement 
Income Security Act of 1974.
    (c) Additional Definitions.--For purposes of this subtitle:
            (1) Applicable authority.--The term ``applicable 
        authority'' means--
                    (A) in the case of a group health plan, the 
                Secretary of Health and Human Services and the 
                Secretary of Labor; and
                    (B) in the case of a health insurance issuer with 
                respect to a specific provision of this subtitle, the 
                applicable State authority (as defined in section 
                2791(d) of the Public Health Service Act), or the 
                Secretary of Health and Human Services, if such 
                Secretary is enforcing such provision under section 
                2722(a)(2) or 2761(a)(2) of the Public Health Service 
                Act.
            (2) Enrollee.--The term ``enrollee'' means, with respect to 
        health insurance coverage offered by a health insurance issuer, 
        an individual enrolled with the issuer to receive such 
        coverage.
            (3) Group health plan.--The term ``group health plan'' has 
        the meaning given such term in section 733(a) of the Employee 
        Retirement Income Security Act of 1974, except that such term 
includes a employee welfare benefit plan treated as a group health plan 
under section 732(d) of such Act or defined as such a plan under 
section 607(1) of such Act.
            (4) 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.
            (5) Health care provider.--The term ``health care 
        provider'' includes a physician or other health care 
        professional, as well as an institutional or other facility or 
        agency that provides health care services and that is licensed, 
        accredited, or certified to provide health care items and 
        services under applicable State law.
            (6) Network.--The term ``network'' means, with respect to a 
        group health plan or health insurance issuer offering health 
        insurance coverage, the participating health care professionals 
        and providers through whom the plan or issuer provides health 
        care items and services to participants, beneficiaries, or 
        enrollees.
            (7) Nonparticipating.--The term ``nonparticipating'' means, 
        with respect to a health care provider that provides health 
        care items and services to a participant, beneficiary, or 
        enrollee under group health plan or health insurance coverage, 
        a health care provider that is not a participating health care 
        provider with respect to such items and services.
            (8) Participating.--The term ``participating'' means, with 
        respect to a health care provider that provides health care 
        items and services to a participant, beneficiary, or enrollee 
        under group health plan or health insurance coverage offered by 
        a health insurance issuer, a health care provider that 
        furnishes such items and services under a contract or other 
        arrangement with the plan or issuer.
            (9) 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.
            (10) Terms and conditions.--The term ``terms and 
        conditions'' includes, with respect to a group health plan or 
        health insurance coverage, requirements imposed under this 
        subtitle with respect to the plan or coverage.

SEC. 152. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.

    (a) Continued Applicability of State Law With Respect to Health 
Insurance Issuers.--
            (1) In general.--Subject to paragraph (2), this subtitle 
        shall not be construed to supersede any provision of State law 
        which establishes, implements, or continues in effect any 
        standard or requirement solely relating to health insurance 
        issuers (in connection with group health insurance coverage or 
        otherwise) except to the extent that such standard or 
        requirement prevents the application of a requirement of this 
        subtitle.
            (2) Continued preemption with respect to group health 
        plans.--Nothing in this subtitle 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.
            (3) Construction.--In applying this section, a State law 
        that provides for equal access to, and availability of, all 
        categories of licensed health care providers and services shall 
        not be treated as preventing the application of any requirement 
        of this subtitle.
    (b) Application of Substantially Compliant State Laws.--
            (1) In general.--In the case of a State law that imposes, 
        with respect to health insurance coverage offered by a health 
        insurance issuer and with respect to a group health plan that 
        is a non-Federal governmental plan, a requirement that 
        substantially complies (within the meaning of subsection (c)) 
        with a patient protection requirement (as defined in paragraph 
        (3)) and does not prevent the application of other requirements 
        under this title (except in the case of other substantially 
        compliant requirements), in applying the requirements of this 
        subtitle under section 2707 and 2753 (as applicable) of the 
        Public Health Service Act (as added by subtitle B), subject to 
        subsection (a)(2)--
                    (A) the State law shall not be treated as being 
                superseded under subsection (a); and
                    (B) the State law shall apply instead of the 
                patient protection requirement otherwise applicable 
                with respect to health insurance coverage and non-
                Federal governmental plans.
            (2) Limitation.--In the case of a group health plan covered 
        under title I of the Employee Retirement Income Security Act of 
        1974, paragraph (1) shall be construed to apply only with 
        respect to the health insurance coverage (if any) offered in 
        connection with the plan.
            (3) Definitions.--In this section:
                    (A) Patient protection requirement.--The term 
                ``patient protection requirement'' means a requirement 
                under this subtitle, and includes (as a single 
                requirement) a group or related set of requirements 
                under a section or similar unit under this subtitle.
                    (B) Substantially compliant.--The terms 
                ``substantially compliant'', substantially complies'', 
                or ``substantial compliance'' with respect to a State 
                law, mean that the State law has the same or similar 
                features as the patient protection requirements and has 
                a similar effect.
    (c) Determinations of Substantial Compliance.--
            (1) Certification by states.--A State may submit to the 
        Secretary a certification that a State law provides for patient 
        protections that are at least substantially compliant with one 
        or more patient protection requirements. Such certification 
        shall be accompanied by such information as may be required to 
        permit the Secretary to make the determination described in 
        paragraph (2)(A).
            (2) Review.--
                    (A) In general.--The Secretary shall promptly 
                review a certification submitted under paragraph (1) 
                with respect to a State law to determine if the State 
                law substantially complies with the patient protection 
                requirement (or requirements) to which the law relates.
                    (B) Approval deadlines.--
                            (i) Initial review.--Such a certification 
                        is considered approved unless the Secretary 
                        notifies the State in writing, within 90 days 
                        after the date of receipt of the certification, 
                        that the certification is disapproved (and the 
                        reasons for disapproval) or that specified 
                        additional information is needed to make the 
                        determination described in subparagraph (A).
                            (ii) Additional information.--With respect 
                        to a State that has been notified by the 
                        Secretary under clause (i) that specified 
                        additional information is needed to make the 
                        determination described in subparagraph (A), 
                        the Secretary shall make the determination 
                        within 60 days after the date on which such 
                        specified additional information is received by 
                        the Secretary.
            (3) Approval.--
                    (A) In general.--The Secretary shall approve a 
                certification under paragraph (1) unless--
                            (i) the State fails to provide sufficient 
                        information to enable the Secretary to make a 
                        determination under paragraph (2)(A); or
                            (ii) the Secretary determines that the 
                        State law involved does not provide for patient 
                        protections that substantially comply with the 
                        patient protection requirement (or 
                        requirements) to which the law relates.
                    (B) State challenge.--A State that has a 
                certification disapproved by the Secretary under 
                subparagraph (A) may challenge such disapproval in the 
                appropriate United States district court.
                    (C) Deference to states.--With respect to a 
                certification submitted under paragraph (1), the 
                Secretary shall give deference to the State's 
                interpretation of the State law involved with respect 
                to the patient protection involved.
                    (D) Public notification.--The Secretary shall--
                            (i) provide a State with a notice of the 
                        determination to approve or disapprove a 
                        certification under this paragraph;
                            (ii) promptly publish in the Federal 
                        Register a notice that a State has submitted a 
                        certification under paragraph (1);
                            (iii) promptly publish in the Federal 
                        Register the notice described in clause (i) 
                        with respect to the State; and
                            (iv) annually publish the status of all 
                        States with respect to certifications.
            (4) Construction.--Nothing in this subsection shall be 
        construed as preventing the certification (and approval of 
        certification) of a State law under this subsection solely 
        because it provides for greater protections for patients than 
        those protections otherwise required to establish substantial 
        compliance.
            (5) Petitions.--
                    (A) Petition process.--Effective on the date on 
                which the provisions of this title become effective, as 
provided for in section 181, a group health plan, health insurance 
issuer, participant, beneficiary, or enrollee may submit a petition to 
the Secretary for an advisory opinion as to whether or not a standard 
or requirement under a State law applicable to the plan, issuer, 
participant, beneficiary, or enrollee that is not the subject of a 
certification under this subsection, is superseded under subsection 
(a)(1) because such standard or requirement prevents the application of 
a requirement of this subtitle.
                    (B) Opinion.--The Secretary shall issue an advisory 
                opinion with respect to a petition submitted under 
                subparagraph (A) within the 60-day period beginning on 
                the date on which such petition is submitted.
    (d) Definitions.--For purposes of this section:
            (1) State law.--The term ``State law'' includes all laws, 
        decisions, rules, regulations, or other State action having the 
        effect of law, of any State. A law of the United States 
        applicable only to the District of Columbia shall be treated as 
        a State law rather than a law of the United States.
            (2) State.--The term ``State'' includes a State, the 
        District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
        American Samoa, the Northern Mariana Islands, any political 
        subdivisions of such, or any agency or instrumentality of such.

SEC. 153. EXCLUSIONS.

    (a) No Benefit Requirements.--Nothing in this subtitle 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.
    (b) Exclusion From Access to Care Managed Care Provisions for Fee-
for-Service Coverage.--
            (1) In general.--The provisions of sections 121 through 127 
        shall not apply to a group health plan or health insurance 
        coverage if the only coverage offered under the plan or 
        coverage is fee-for-service coverage (as defined in paragraph 
        (2)).
            (2) Fee-for-service coverage defined.--For purposes of this 
        subsection, the term ``fee-for-service coverage'' means 
        coverage under a group health plan or health insurance coverage 
        that--
                    (A) reimburses hospitals, health professionals, and 
                other providers on a fee-for-service basis without 
                placing the provider at financial risk;
                    (B) does not vary reimbursement for such a provider 
                based on an agreement to contract terms and conditions 
                or the utilization of health care items or services 
                relating to such provider;
                    (C) allows access to any provider that is lawfully 
                authorized to provide the covered services and that 
                agrees to accept the terms and conditions of payment 
                established under the plan or by the issuer; and
                    (D) for which the plan or issuer does not require 
                prior authorization before providing for any health 
                care services.

SEC. 154. TREATMENT OF EXCEPTED BENEFITS.

    (a) In General.--The requirements of this subtitle and the 
provisions of sections 502(a)(1)(C), 502(n), and 514(d) of the Employee 
Retirement Income Security Act of 1974 (added by section 172) shall not 
apply to excepted benefits (as defined in section 733(c) of such Act), 
other than benefits described in section 733(c)(2)(A) of such Act, in 
the same manner as the provisions of part 7 of subtitle B of title I of 
such Act do not apply to such benefits under subsections (b) and (c) of 
section 732 of such Act.
    (b) Coverage of Certain Limited Scope Plans.--Only for purposes of 
applying the requirements of this subtitle under sections 2707 and 2753 
of the Public Health Service Act, section 714 of the Employee 
Retirement Income Security Act of 1974, and section 9813 of the 
Internal Revenue Code of 1986, the following sections shall be deemed 
not to apply:
            (1) Section 2791(c)(2)(A) of the Public Health Service Act.
            (2) Section 733(c)(2)(A) of the Employee Retirement Income 
        Security Act of 1974.
            (3) Section 9832(c)(2)(A) of the Internal Revenue Code of 
        1986.

SEC. 155. REGULATIONS.

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

SEC. 156. INCORPORATION INTO PLAN OR COVERAGE DOCUMENTS.

    The requirements of this subtitle with respect to a group health 
plan or health insurance coverage are, subject to section 154, deemed 
to be incorporated into, and made a part of, such plan or the policy, 
certificate, or contract providing such coverage and are enforceable 
under law as if directly included in the documentation of such plan or 
such policy, certificate, or contract.

SEC. 157. PRESERVATION OF PROTECTIONS.

    (a) In General.--The rights under this title (including the right 
to maintain a civil action and any other rights under the amendments 
made by this title) may not be waived, deferred, or lost pursuant to 
any agreement not authorized under this title.
    (b) Exception.--Subsection (a) shall not apply to an agreement 
providing for arbitration or participation in any other nonjudicial 
procedure to resolve a dispute if the agreement is entered into 
knowingly and voluntarily by the parties involved after the dispute has 
arisen or is pursuant to the terms of a collective bargaining 
agreement. Nothing in this subsection shall be construed to permit the 
waiver of the requirements of sections 113 and 114 (relating to 
internal and external review).

Subtitle B--Application of Quality Care Standards to Group Health Plans 
   and Health Insurance Coverage Under the Public Health Service Act

SEC. 161. APPLICATION TO GROUP HEALTH PLANS AND GROUP HEALTH INSURANCE 
              COVERAGE.

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

``SEC. 2707. PATIENT PROTECTION STANDARDS.

    ``Each group health plan shall comply with patient protection 
requirements under subtitle A of the Bipartisan Patient Protection Act, 
and each health insurance issuer shall comply with patient protection 
requirements under such subtitle with respect to group health insurance 
coverage it offers, and such requirements shall be deemed to be 
incorporated into this subsection.''.
    (b) Conforming Amendment.--Section 2721(b)(2)(A) of such Act (42 
U.S.C. 300gg-21(b)(2)(A)) is amended by inserting ``(other than section 
2707)'' after ``requirements of such subparts''.

SEC. 162. APPLICATION TO INDIVIDUAL HEALTH INSURANCE COVERAGE.

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

``SEC. 2753. PATIENT PROTECTION STANDARDS.

    ``Each health insurance issuer shall comply with patient protection 
requirements under subtitle A of the Bipartisan Patient Protection Act 
with respect to individual health insurance coverage it offers, and 
such requirements shall be deemed to be incorporated into this 
subsection.''.

SEC. 163. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Part C of title XXVII of the Public Health Service Act (42 U.S.C. 
300gg-91 et seq.) is amended by adding at the end the following:

``SEC. 2793. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    ``(a) Agreement with States.--A State may enter into an agreement 
with the Secretary for the delegation to the State of some or all of 
the Secretary's authority under this title to enforce the requirements 
applicable under subtitle A of the Bipartisan Patient Protection Act 
with respect to health insurance coverage offered by a health insurance 
issuer and with respect to a group health plan that is a non-Federal 
governmental plan.
    ``(b) Delegations.--Any department, agency, or instrumentality of a 
State to which authority is delegated pursuant to an agreement entered 
into under this section may, if authorized under State law and to the 
extent consistent with such agreement, exercise the powers of the 
Secretary under this title which relate to such authority.''.

 Subtitle C--Amendments to the Employee Retirement Income Security Act 
                                of 1974

SEC. 171. APPLICATION OF PATIENT PROTECTION STANDARDS TO GROUP HEALTH 
              PLANS AND GROUP HEALTH INSURANCE COVERAGE UNDER THE 
              EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.

    Subpart B of part 7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 is amended by adding at the end 
the following new section:

``SEC. 714. PATIENT PROTECTION STANDARDS.

    ``(a) In General.--Subject to subsection (b), a group health plan 
(and a health insurance issuer offering group health insurance coverage 
in connection with such a plan) shall comply with the requirements of 
subtitle A of the Bipartisan Patient Protection Act (as in effect as of 
the date of the enactment of such Act), and such requirements shall be 
deemed to be incorporated into this subsection.
    ``(b) Plan Satisfaction of Certain Requirements.--
            ``(1) Satisfaction of certain requirements through 
        insurance.--For purposes of subsection (a), insofar as a group 
        health plan provides benefits in the form of health insurance 
        coverage through a health insurance issuer, the plan shall be 
        treated as meeting the following requirements of subtitle A of 
        the Bipartisan Patient Protection Act with respect to such 
        benefits and not be considered as failing to meet such 
        requirements because of a failure of the issuer to meet such 
        requirements so long as the plan sponsor or its representatives 
        did not cause such failure by the issuer:
                    ``(A) Section 121 (relating to consumer choice 
                option).
                    ``(B) Section 122 (relating to choice of health 
                care professional).
                    ``(C) Section 123 (relating to access to emergency 
                care).
                    ``(D) Section 124 (relating to timely access to 
                specialists).
                    ``(E) Section 125 (relating to patient access to 
                obstetrical and gynecological care).
                    ``(F) Section 126 (relating to access to pediatric 
                care).
                    ``(G) Section 127 (relating to continuity of care), 
                but only insofar as a replacement issuer assumes the 
                obligation for continuity of care.
                    ``(H) Section 128 (relating to access to needed 
                prescription drugs).
                    ``(I) Section 129 (relating to coverage for 
                individuals participating in approved clinical trials).
                    ``(J) Section 130 (relating to required coverage 
                for minimum hospital stay for mastectomies and lymph 
                node dissections for the treatment of breast cancer and 
                coverage for secondary consultations).
                    ``(K) Section 144 (relating to payment of claims).
            ``(2) Information.--With respect to information required to 
        be provided or made available under section 131 of the 
Bipartisan Patient Protection Act, in the case of a group health plan 
that provides benefits in the form of health insurance coverage through 
a health insurance issuer, the Secretary shall determine the 
circumstances under which the plan is not required to provide or make 
available the information (and is not liable for the issuer's failure 
to provide or make available the information), if the issuer is 
obligated to provide and make available (or provides and makes 
available) such information.
            ``(3) Internal appeals.--With respect to the internal 
        appeals process required to be established under section 113 of 
        such Act, in the case of a group health plan that provides 
        benefits in the form of health insurance coverage through a 
        health insurance issuer, the Secretary shall determine the 
        circumstances under which the plan is not required to provide 
        for such process and system (and is not liable for the issuer's 
        failure to provide for such process and system), if the issuer 
        is obligated to provide for (and provides for) such process and 
        system.
            ``(4) External appeals.--Pursuant to rules of the 
        Secretary, insofar as a group health plan enters into a 
        contract with a qualified external appeal entity for the 
        conduct of external appeal activities in accordance with 
        section 114 of such Act, the plan shall be treated as meeting 
        the requirement of such section and is not liable for the 
        entity's failure to meet any requirements under such section.
            ``(5) Application to prohibitions.--Pursuant to rules of 
        the Secretary, if a health insurance issuer offers health 
        insurance coverage in connection with a group health plan and 
        takes an action in violation of any of the following sections 
        of the Bipartisan Patient Protection Act, the group health plan 
        shall not be liable for such violation unless the plan caused 
        such violation:
                    ``(A) Section 141 (relating to prohibition of 
                interference with certain medical communications).
                    ``(B) Section 142 (relating to prohibition of 
                discrimination against providers based on licensure).
                    ``(C) Section 143 (relating to prohibition against 
                improper incentive arrangements).
                    ``(D) Section 145 (relating to protection for 
                patient advocacy).
            ``(6) Construction.--Nothing in this subsection shall be 
        construed to affect or modify the responsibilities of the 
        fiduciaries of a group health plan under part 4 of subtitle B.
            ``(7) Treatment of substantially compliant state laws.--For 
        purposes of applying this subsection in connection with health 
        insurance coverage, any reference in this subsection to a 
        requirement in a section or other provision in the Bipartisan 
        Patient Protection Act with respect to a health insurance 
        issuer is deemed to include a reference to a requirement under 
        a State law that substantially complies (as determined under 
        section 152(c) of such Act) with the requirement in such 
        section or other provisions.
            ``(8) Application to certain prohibitions against 
        retaliation.--With respect to compliance with the requirements 
        of section 145(b)(1) of the Bipartisan Patient Protection Act, 
        for purposes of this subtitle the term `group health plan' is 
        deemed to include a reference to an institutional health care 
        provider.
    ``(c) Enforcement of Certain Requirements.--
            ``(1) Complaints.--Any protected health care professional 
        who believes that the professional has been retaliated or 
        discriminated against in violation of section 145(b)(1) of the 
        Bipartisan Patient Protection Act may file with the Secretary a 
        complaint within 180 days of the date of the alleged 
        retaliation or discrimination.
            ``(2) Investigation.--The Secretary shall investigate such 
        complaints and shall determine if a violation of such section 
        has occurred and, if so, shall issue an order to ensure that 
        the protected health care professional does not suffer any loss 
        of position, pay, or benefits in relation to the plan, issuer, 
        or provider involved, as a result of the violation found by the 
        Secretary.
    ``(d) Conforming Regulations.--The Secretary shall issue 
regulations to coordinate the requirements on group health plans and 
health insurance issuers under this section with the requirements 
imposed under the other provisions of this title. In order to reduce 
duplication and clarify the rights of participants and beneficiaries 
with respect to information that is required to be provided, such 
regulations shall coordinate the information disclosure requirements 
under section 131 of the Bipartisan Patient Protection Act with the 
reporting and disclosure requirements imposed under part 1, so long as 
such coordination does not result in any reduction in the information 
that would otherwise be provided to participants and beneficiaries.''.
    (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 chapter 1 of subtitle A of 
the Bipartisan Patient Protection Act, and compliance with regulations 
promulgated by the Secretary, in the case of a claims denial, shall be 
deemed compliance with subsection (a) with respect to such claims 
denial.''.
    (c) Conforming Amendments.--(1) Section 732(a) of such Act (29 
U.S.C. 1185(a)) is amended by striking ``section 711'' and inserting 
``sections 711 and 714''.
    (2) The table of contents in section 1 of such Act is amended by 
inserting after the item relating to section 713 the following new 
item:

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

SEC. 172. AVAILABILITY OF CIVIL REMEDIES.

    (a) Availability of Federal Civil Remedies in Cases Not Involving 
Medically Reviewable Decisions.--
            (1) In general.--Section 502 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1132) is amended by 
        adding at the end the following new subsections:
    ``(n) Cause of Action Relating to Provision of Health Benefits.--
            ``(1) In general.--In any case in which--
                    ``(A) a person who is a fiduciary of a group health 
                plan, a health insurance issuer offering health 
                insurance coverage in connection with the plan, or an 
                agent of the plan, issuer, or plan sponsor, upon 
                consideration of a claim for benefits of a participant 
                or beneficiary under section 112 of the Bipartisan 
                Patient Protection Act (relating to procedures for 
                initial claims for benefits and prior authorization 
                determinations) or upon review of a denial of such a 
                claim under section 113 of such Act (relating to 
                internal appeal of a denial of a claim for benefits), 
                fails to exercise ordinary care in making a decision--
                            ``(i) regarding whether an item or service 
                        is covered under the terms and conditions of 
                        the plan or coverage,
                            ``(ii) 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
                            ``(iii) 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, and
                    ``(B) such failure is a proximate cause of personal 
                injury to, or the death of, the participant or 
                beneficiary,
        such plan, plan sponsor, or issuer shall be liable to the 
        participant or beneficiary (or the estate of such participant 
        or beneficiary) for economic and noneconomic damages (but not 
        exemplary or punitive damages) in connection with such personal 
        injury or death.
            ``(2) Cause of action must not involve medically reviewable 
        decision.--
                    ``(A) In general.--A cause of action is established 
                under paragraph (1)(A) only if the decision referred to 
                in paragraph (1)(A) does not include a medically 
                reviewable decision.
                    ``(B) Medically reviewable decision.--For purposes 
                of this subsection, the term `medically reviewable 
                decision' means a denial of a claim for benefits under 
                the plan which is described in section 114(d)(2) of the 
                Bipartisan Patient Protection Act (relating to 
                medically reviewable decisions).
            ``(3) Limitation regarding certain types of actions saved 
        from preemption of state law.--A cause of action is not 
        established under paragraph (1)(A) in connection with a failure 
        described in paragraph (1)(A) to the extent that a cause of 
        action under State law (as defined in section 514(c)) for such 
        failure would not be preempted under section 514.
            ``(4) Definitions and related rules.--For purposes of this 
        subsection and subsection (o)--
                    ``(A) Ordinary care.--The term `ordinary care' 
                means, with respect to a determination on a claim for 
                benefits, that degree of care, skill, and diligence 
                that a reasonable and prudent individual would exercise 
                in making a fair determination on a claim for benefits 
                of like kind to the claims involved.
                    ``(B) Personal injury.--The term `personal injury' 
                means a physical injury and includes an injury arising 
                out of the treatment (or failure to treat) a mental 
                illness or disease.
                    ``(C) Claim for benefits; denial.--The terms `claim 
                for benefits' and `denial of a claim for benefits' have 
                the meanings provided such terms in section 112(e) of 
                the Bipartisan Patient Protection Act.
                    ``(D) Terms and conditions.--The term `terms and 
                conditions' includes, with respect to a group health 
                plan or health insurance coverage, requirements imposed 
                under subtitle A of the Bipartisan Patient Protection 
                Act.
                    ``(E) Treatment of excepted benefits.--Under 
                section 154(a) of the Bipartisan Patient Protection 
                Act, the provisions of this subsection and subsection 
                (a)(1)(C) do not apply to certain excepted benefits.
                    ``(F) Group health plan and other related terms.--
                The provisions of sections 732(d) and 733 apply for 
                purposes of this subsection in the same manner as they 
                apply for purposes of part 7, except that the term 
                `group health plan' includes a group health plan (as 
                defined in section 607(1)).
            ``(5) Exclusion of employers and other plan sponsors.--
                    ``(A) Causes of action against employers and plan 
                sponsors precluded.--Subject to subparagraph (B), 
                paragraph (1)(A) does not authorize a cause of action 
                against an employer or other plan sponsor maintaining 
                the plan (or against an employee of such an employer or 
                sponsor acting within the scope of employment).
                    ``(B) Certain causes of action permitted.--
                Notwithstanding subparagraph (A), a cause of action may 
                arise against an employer or other plan sponsor (or 
                against an employee of such an employer or sponsor 
                acting within the scope of employment) under paragraph 
                (1)(A), to the extent there was direct participation by 
                the employer or other plan sponsor (or employee) in the 
                decision of the plan under section 112 of the 
                Bipartisan Patient Protection Act upon consideration of 
                a claim for benefits or under section 113 of such Act 
                upon review of a denial of a claim for benefits.
                    ``(C) Direct participation.--
                            ``(i) In general.--For purposes of 
                        subparagraph (B), the term `direct 
                        participation' means, in connection with a 
                        decision described in paragraph (1)(A), the 
                        actual making of such decision or the actual 
                        exercise of control in making such decision.
                            ``(ii) Rules of construction.--For purposes 
                        of clause (i), the employer or plan sponsor (or 
                        employee) shall not be construed to be engaged 
                        in direct participation because of any form of 
                        decisionmaking or other conduct that is merely 
                        collateral or precedent to the decision 
                        described in paragraph (1)(A) on a particular 
                        claim for benefits of a participant or 
                        beneficiary, including (but not limited to)--
                                    ``(I) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the selection of the group 
                                health plan or health insurance 
                                coverage involved or the third party 
                                administrator or other agent;
                                    ``(II) any engagement by the 
                                employer or other plan sponsor (or 
                                employee) in any cost-benefit 
analysis undertaken in connection with the selection of, or continued 
maintenance of, the plan or coverage involved;
                                    ``(III) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the process of creating, 
                                continuing, modifying, or terminating 
                                the plan or any benefit under the plan, 
                                if such process was not substantially 
                                focused solely on the particular 
                                situation of the participant or 
                                beneficiary referred to in paragraph 
                                (1)(A); and
                                    ``(IV) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the design of any benefit 
                                under the plan, including the amount of 
                                copayment and limits connected with 
                                such benefit.
                            ``(iii) Irrelevance of certain collateral 
                        efforts made by employer or plan sponsor.--For 
                        purposes of this subparagraph, an employer or 
                        plan sponsor shall not be treated as engaged in 
                        direct participation in a decision with respect 
                        to any claim for benefits or denial thereof in 
                        the case of any particular participant or 
                        beneficiary solely by reason of--
                                    ``(I) any efforts that may have 
                                been made by the employer or plan 
                                sponsor to advocate for authorization 
                                of coverage for that or any other 
                                participant or beneficiary (or any 
                                group of participants or 
                                beneficiaries), or
                                    ``(II) any provision that may have 
                                been made by the employer or plan 
                                sponsor for benefits which are not 
                                covered under the terms and conditions 
                                of the plan for that or any other 
                                participant or beneficiary (or any 
                                group of participants or 
                                beneficiaries).
                    ``(D) Application to certain plans.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of this subsection, no group 
                        health plan described in clause (ii) (or plan 
                        sponsor of such a plan) shall be liable under 
                        paragraph (1) for the performance of, or the 
                        failure to perform, any non-medically 
                        reviewable duty under the plan.
                            ``(ii) Definition.--A group health plan 
                        described in this clause is--
                                    ``(I) a group health plan that is 
                                self-insured and self administered by 
                                an employer (including an employee of 
                                such an employer acting within the 
                                scope of employment); or
                                    ``(II) a multiemployer plan as 
                                defined in section 3(37)(A) (including 
                                an employee of a contributing employer 
                                or of the plan, or a fiduciary of the 
plan, acting within the scope of employment or fiduciary 
responsibility) that is self-insured and self-administered.
            ``(6) Exclusion of physicians and other health care 
        professionals.--
                    ``(A) In general.--No treating physician or other 
                treating health care professional of the participant or 
                beneficiary, and no person acting under the direction 
                of such a physician or health care professional, shall 
                be liable under paragraph (1) for the performance of, 
                or the failure to perform, any non-medically reviewable 
                duty of the plan, the plan sponsor, or any health 
                insurance issuer offering health insurance coverage in 
                connection with the plan.
                    ``(B) Definitions.--For purposes of subparagraph 
                (A)--
                            ``(i) 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.
                            ``(ii) Non-medically reviewable duty.--The 
                        term `non-medically reviewable duty' means a 
                        duty the discharge of which does not include 
                        the making of a medically reviewable decision.
            ``(7) Exclusion of hospitals.--No treating hospital of the 
        participant or beneficiary shall be liable under paragraph (1) 
        for the performance of, or the failure to perform, any non-
        medically reviewable duty (as defined in paragraph (6)(B)(ii)) 
        of the plan, the plan sponsor, or any health insurance issuer 
        offering health insurance coverage in connection with the plan.
            ``(8) Rule of construction relating to exclusion from 
        liability of physicians, health care professionals, and 
        hospitals.--Nothing in paragraph (6) or (7) shall be construed 
        to limit the liability (whether direct or vicarious) of the 
        plan, the plan sponsor, or any health insurance issuer offering 
        health insurance coverage in connection with the plan.
            ``(9) Requirement of exhaustion.--
                    ``(A) In general.--A cause of action may not be 
                brought under paragraph (1) in connection with any 
                denial of a claim for benefits of any individual until 
                all administrative processes under sections 112 and 113 
                of the Bipartisan Patient Protection Act (if 
                applicable) have been exhausted.
                    ``(B) Exception for needed care.--A participant or 
                beneficiary may seek relief exclusively in Federal 
                court under subsection 502(a)(1)(B) prior to the 
                exhaustion of administrative remedies under sections 
                112, 113, or 114 of the Bipartisan Patient Protection 
                Act (as required under subparagraph (A)) if it is 
                demonstrated to the court that the exhaustion of such 
                remedies would cause irreparable harm to the health of 
the participant or beneficiary. Notwithstanding the awarding of relief 
under subsection 502(a)(1)(B) pursuant to this subparagraph, no relief 
shall be available as a result of, or arising under, paragraph (1)(A) 
or paragraph (10)(B), with respect to a participant or beneficiary, 
unless the requirements of subparagraph (A) are met.
                    ``(C) Receipt of benefits during appeals process.--
                Receipt by the participant or beneficiary of the 
                benefits involved in the claim for benefits during the 
                pendency of any administrative processes referred to in 
                subparagraph (A) or of any action commenced under this 
                subsection--
                            ``(i) shall not preclude continuation of 
                        all such administrative processes to their 
                        conclusion if so moved by any party, and
                            ``(ii) shall not preclude any liability 
                        under subsection (a)(1)(C) and this subsection 
                        in connection with such claim.
                The court in any action commenced under this subsection 
                shall take into account any receipt of benefits during 
                such administrative processes or such action in 
                determining the amount of the damages awarded.
                    ``(D) Admissible.--Any determination made by a 
                reviewer in an administrative proceeding under section 
                113 of the Bipartisan Patient Protection Act shall be 
                admissible in any Federal court proceeding and shall be 
                presented to the trier of fact.
            ``(10) Statutory damages.--
                    ``(A) In general.--The remedies set forth in this 
                subsection (n) shall be the exclusive remedies for 
                causes of action brought under this subsection.
                    ``(B) Assessment of civil penalties.--In addition 
                to the remedies provided for in paragraph (1) (relating 
                to the failure to provide contract benefits in 
                accordance with the plan), a civil assessment, in an 
                amount not to exceed $5,000,000, payable to the 
                claimant may be awarded in any action under such 
                paragraph if the claimant establishes by clear and 
                convincing evidence that the alleged conduct carried 
                out by the defendant demonstrated bad faith and 
                flagrant disregard for the rights of the participant or 
                beneficiary under the plan and was a proximate cause of 
                the personal injury or death that is the subject of the 
                claim.
            ``(11) Limitation on attorneys' fees.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, or any arrangement, agreement, or 
                contract regarding an attorney's fee, the amount of an 
                attorney's contingency fee allowable for a cause of 
                action brought pursuant to this subsection shall not 
                exceed \1/3\ of the total amount of the plaintiff's 
                recovery (not including the reimbursement of actual 
                out-of-pocket expenses of the attorney).
                    ``(B) Determination by district court.--The last 
                Federal district court in which the action was pending 
                upon the final disposition, including all appeals, of 
                the action shall have jurisdiction to review the 
                attorney's fee to ensure that the fee is a reasonable 
                one.
            ``(12) Limitation of action.--Paragraph (1) shall not apply 
        in connection with any action commenced after 3 years after the 
        later of--
                    ``(A) the date on which the plaintiff first knew, 
                or reasonably should have known, of the personal injury 
                or death resulting from the failure described in 
                paragraph (1), or
                    ``(B) the date as of which the requirements of 
                paragraph (9) are first met.
            ``(13) Tolling provision.--The statute of limitations for 
        any cause of action arising under State law relating to a 
        denial of a claim for benefits that is the subject of an action 
        brought in Federal court under this subsection shall be tolled 
        until such time as the Federal court makes a final disposition, 
        including all appeals, of whether such claim should properly be 
        within the jurisdiction of the Federal court. The tolling 
        period shall be determined by the applicable Federal or State 
        law, whichever period is greater.
            ``(14) Purchase of insurance to cover liability.--Nothing 
        in section 410 shall be construed to preclude the purchase by a 
        group health plan of insurance to cover any liability or losses 
        arising under a cause of action under subsection (a)(1)(C) and 
        this subsection.
            ``(15) Exclusion of directed recordkeepers.--
                    ``(A) In general.--Subject to subparagraph (C), 
                paragraph (1) shall not apply with respect to a 
                directed recordkeeper in connection with a group health 
                plan.
                    ``(B) Directed recordkeeper.--For purposes of this 
                paragraph, the term `directed recordkeeper' means, in 
                connection with a group health plan, a person engaged 
                in directed recordkeeping activities pursuant to the 
                specific instructions of the plan or the employer or 
                other plan sponsor, including the distribution of 
enrollment information and distribution of disclosure materials under 
this Act or subtitle A of the Bipartisan Patient Protection Act and 
whose duties do not include making decisions on claims for benefits.
                    ``(C) Limitation.--Subparagraph (A) does not apply 
                in connection with any directed recordkeeper to the 
                extent that the directed recordkeeper fails to follow 
                the specific instruction of the plan or the employer or 
                other plan sponsor.
            ``(16) Exclusion of health insurance agents.--Paragraph (1) 
        does not apply with respect to a person whose sole involvement 
        with the group health plan is providing advice or 
        administrative services to the employer or other plan sponsor 
        relating to the selection of health insurance coverage offered 
        in connection with the plan.
            ``(17) No effect on state law.--No provision of State law 
        (as defined in section 514(c)(1)) shall be treated as 
        superseded or otherwise altered, amended, modified, 
        invalidated, or impaired by reason of the provisions of 
        subsection (a)(1)(C) and this subsection.
            ``(18) Relief from liability for employer or other plan 
        sponsor by means of designated decisionmaker.--
                    ``(A) In general.--Notwithstanding the direct 
                participation (as defined in paragraph (5)(C)(i)) of an 
                employer or plan sponsor, in any case in which there is 
                (or is deemed under subparagraph (B) to be) a 
                designated decisionmaker under subparagraph (B) that 
                meets the requirements of subsection (o)(1) for an 
                employer or other plan sponsor--
                            ``(i) all liability of such employer or 
                        plan sponsor involved (and any employee of such 
                        employer or sponsor acting within the scope of 
                        employment) under this subsection in connection 
                        with any participant or beneficiary shall be 
                        transferred to, and assumed by, the designated 
                        decisionmaker, and
                            ``(ii) with respect to such liability, the 
                        designated decisionmaker shall be substituted 
                        for the employer or sponsor (or employee) in 
                        the action and may not raise any defense that 
                        the employer or sponsor (or employee) could not 
                        raise if such a decisionmaker were not so 
                        deemed.
                    ``(B) Automatic designation.--A health insurance 
                issuer shall be deemed to be a designated decisionmaker 
                for purposes of subparagraph (A) with respect to the 
                participants and beneficiaries of an employer or plan 
                sponsor, whether or not the employer or plan sponsor 
                makes such a designation, and shall be deemed to have 
                assumed unconditionally all liability of the employer 
                or plan sponsor under such designation in accordance 
                with subsection (o), unless the employer or plan 
                sponsor affirmatively enters into a contract to prevent 
                the service of the designated decisionmaker.
                    ``(C) Treatment of certain trust funds.--For 
                purposes of this paragraph, the terms `employer' and 
                `plan sponsor', in connection with the assumption by a 
                designated decisionmaker of the liability of employer 
                or other plan sponsor pursuant to this paragraph, shall 
                be construed to include a trust fund maintained 
                pursuant to section 302 of the Labor Management 
                Relations Act, 1947 (29 U.S.C. 186) or the Railway 
                Labor Act (45 U.S.C. 151 et seq.).
            ``(19) Previously provided services.--
                    ``(A) in general.--Except as provided in this 
                paragraph, a cause of action shall not arise under 
                paragraph (1) where the denial involved relates to an 
                item or service that has already been fully provided to 
                the participant or beneficiary under the plan or 
                coverage and the claim relates solely to the subsequent 
                denial of payment for the provision of such item or 
                service.
                    ``(B) Exception.--Nothing in subparagraph (A) shall 
                be construed to--
                            ``(i) prohibit a cause of action under 
                        paragraph (1) where the nonpayment involved 
                        results in the participant or beneficiary being 
                        unable to receive further items or services 
                        that are directly related to the item or 
                        service involved in the denial referred to in 
                        subparagraph (A) or that are part of a 
                        continuing treatment or series of procedures; 
                        or
                            ``(ii) limit liability that otherwise would 
                        arise from the provision of the item or 
                        services or the performance of a medical 
                        procedure.
            ``(20) Exemption from personal liability for individual 
        members of boards of directors, joint boards of trustees, 
        etc.--Any individual who is--
                    ``(A) a member of a board of directors of an 
                employer or plan sponsor; or
                    ``(B) a member of an association, committee, 
                employee organization, joint board of trustees, or 
                other similar group of representatives of the entities 
                that are the plan sponsor of plan maintained by two or 
                more employers and one or more employee organizations;
        shall not be personally liable under this subsection for 
        conduct that is within the scope of employment or of plan-
        related duties of the individuals unless the individual acts in 
        a fraudulent manner for personal enrichment.
    ``(o) Requirements for Designated Decisionmakers of Group Health 
Plans.--
            ``(1) In general.--For purposes of subsection (n)(18) and 
        section 514(d)(9), a designated decisionmaker meets the 
        requirements of this paragraph with respect to any participant 
        or beneficiary if--
                    ``(A) such designation is in such form as may be 
                prescribed in regulations of the Secretary,
                    ``(B) the designated decisionmaker--
                            ``(i) meets the requirements of paragraph 
                        (2),
                            ``(ii) assumes unconditionally all 
                        liability of the employer or plan sponsor 
                        involved (and any employee of such employer or 
                        sponsor acting within the scope of employment) 
                        either arising under subsection (n) or arising 
                        in a cause of action permitted under section 
                        514(d) in connection with actions (and failures 
                        to act) of the employer or plan sponsor (or 
                        employee) occurring during the period in which 
                        the designation under subsection (n)(18) or 
                        section 514(d)(9) is in effect relating to such 
                        participant and beneficiary,
                            ``(iii) agrees to be substituted for the 
                        employer or plan sponsor (or employee) in the 
                        action and not to raise any defense with 
                        respect to such liability that the employer or 
                        plan sponsor (or employee) may not raise, and
                            ``(iv) where paragraph (2)(B) applies, 
                        assumes unconditionally the exclusive authority 
                        under the group health plan to make medically 
                        reviewable decisions under the plan with 
                        respect to such participant or beneficiary, and
                    ``(C) the designated decisionmaker and the 
                participants and beneficiaries for whom the 
                decisionmaker has assumed liability are identified in 
                the written instrument required under section 402(a) 
                and as required under section 131(b)(19) of the 
                Bipartisan Patient Protection Act.
        Any liability assumed by a designated decisionmaker pursuant to 
        this subsection shall be in addition to any liability that it 
        may otherwise have under applicable law.
            ``(2) Qualifications for designated decisionmakers.--
                    ``(A) In general.--Subject to subparagraph (B), an 
                entity is qualified under this paragraph to serve as a 
                designated decisionmaker with respect to a group health 
                plan if the entity has the ability to assume the 
liability described in paragraph (1) with respect to participants and 
beneficiaries under such plan, including requirements relating to the 
financial obligation for timely satisfying the assumed liability, and 
maintains with the plan sponsor and the Secretary certification of such 
ability. Such certification shall be provided to the plan sponsor or 
named fiduciary and to the Secretary upon designation under subsection 
(n)(18)(B) or section 517(d)(9)(B) and not less frequently than 
annually thereafter, or if such designation constitutes a multiyear 
arrangement, in conjunction with the renewal of the arrangement.
                    ``(B) Special qualification in the case of certain 
                reviewable decisions.--In the case of a group health 
                plan that provides benefits consisting of medical care 
                to a participant or beneficiary only through health 
                insurance coverage offered by a single health insurance 
                issue, such issuer is the only entity that may be 
                qualified under this paragraph to serve as a designated 
                decisionmaker with respect to such participant or 
                beneficiary, and shall serve as the designated 
                decisionmaker unless the employer or other plan sponsor 
                acts affirmatively to prevent such service.
            ``(3) Requirements relating to financial obligations.--For 
        purposes of paragraph (2)(A), the requirements relating to the 
        financial obligation of an entity for liability shall include--
                    ``(A) coverage of such entity under an insurance 
                policy or other arrangement, secured and maintained by 
                such entity, to effectively insure such entity against 
                losses arising from professional liability claims, 
                including those arising from its service as a 
                designated decisionmaker under this part; or
                    ``(B) evidence of minimum capital and surplus 
                levels that are maintained by such entity to cover any 
                losses as a result of liability arising from its 
                service as a designated decisionmaker under this part.
        The appropriate amounts of liability insurance and minimum 
        capital and surplus levels for purposes of subparagraphs (A) 
        and (B) shall be determined by an actuary using sound actuarial 
        principles and accounting practices pursuant to established 
        guidelines of the American Academy of Actuaries and in 
        accordance with such regulations as the Secretary may prescribe 
        and shall be maintained throughout the term for which the 
        designation is in effect. The provisions of this paragraph 
        shall not apply in the case of a designated decisionmaker that 
        is a group health plan, plan sponsor, or health insurance 
        issuer and that is regulated under Federal law or a State 
        financial solvency law.
            ``(4) Limitation on appointment of treating physicians.--A 
        treating physician who directly delivered the care, treatment, 
        or provided the patient service that is the subject of a cause 
        of action by a participant or beneficiary under subsection (n) 
        or section 514(d) may not be designated as a designated 
        decisionmaker under this subsection with respect to such 
        participant or beneficiary.''.
            (2) Conforming amendment.--Section 502(a)(1) of such Act 
        (29 U.S.C. 1132(a)(1)) is amended--
                    (A) by striking ``or'' at the end of subparagraph 
                (A);
                    (B) in subparagraph (B), by striking ``plan;'' and 
                inserting ``plan, or''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(C) for the relief provided for in subsection (n) 
                of this section.''.
    (b) Rules Relating to ERISA Preemption.--Section 514 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144) is 
amended--
            (1) by redesignating subsection (d) as subsection (f); and
            (2) by inserting after subsection (c) the following new 
        subsections:
    ``(d) Preemption Not To Apply to Causes of Action under State Law 
Involving Medically Reviewable Decision.--
            ``(1) Non-preemption of certain causes of action.--
                    ``(A) In general.--Except as provided in this 
                subsection, nothing in this title (including section 
                502) shall be construed to supersede or otherwise 
                alter, amend, modify, invalidate, or impair any cause 
                of action under State law of a participant or 
                beneficiary under a group health plan (or the estate of 
                such a participant or beneficiary) against the plan, 
                the plan sponsor, any health insurance issuer offering 
                health insurance coverage in connection with the plan, 
                or any managed care entity in connection with the plan 
                to recover damages resulting from personal injury or 
                for wrongful death if such cause of action arises by 
                reason of a medically reviewable decision.
                    ``(B) Medically reviewable decision.--For purposes 
                of subparagraph (A), the term `medically reviewable 
                decision' means a denial of a claim for benefits under 
                the plan which is described in section 114(d)(2) of the 
                Bipartisan Patient Protection Act (relating to 
                medically reviewable decisions).
                    ``(C) Limitation on punitive damages.--
                            ``(i) In general.--Except as provided in 
                        clauses (ii) and (iii), with respect to a cause 
                        of action described in subparagraph (A) brought 
                        with respect to a participant or beneficiary, 
                        State law is superseded insofar as it provides 
                        any punitive, exemplary, or similar damages if, 
                        as of the time of the personal injury or death, 
                        all the requirements of the following sections 
                        of the Bipartisan Patient Protection Act were 
                        satisfied with respect to the participant or 
                        beneficiary:
                                    ``(I) Section 112 (relating to 
                                procedures for initial claims for 
                                benefits and prior authorization 
                                determinations).
                                    ``(II) Section 113 of such Act 
                                (relating to internal appeals of claims 
                                denials).
                                    ``(III) Section 114 of such Act 
                                (relating to independent external 
                                appeals procedures).
                            ``(ii) Exception for certain actions for 
                        wrongful death.--Clause (i) shall not apply 
                        with respect to an action for wrongful death if 
                        the applicable State law provides (or has been 
                        construed to provide) for damages in such an 
                        action which are only punitive or exemplary in 
                        nature.
                            ``(iii) Exception for willful or wanton 
                        disregard for the rights or safety of others.--
                        Clause (i) shall not apply with respect to any 
                        cause of action described in subparagraph (A) 
                        if, in such action, the plaintiff establishes 
                        by clear and convincing evidence that conduct 
                        carried out by the defendant with willful 
or wanton disregard for the rights or safety of others was a proximate 
cause of the personal injury or wrongful death that is the subject of 
the action.
            ``(2) Definitions and related rules.--For purposes of this 
        subsection and subsection (e)--
                    ``(A) Treatment of excepted benefits.--Under 
                section 154(a) of the Bipartisan Patient Protection 
                Act, the provisions of this subsection do not apply to 
                certain excepted benefits.
                    ``(B) Personal injury.--The term `personal injury' 
                means a physical injury and includes an injury arising 
                out of the treatment (or failure to treat) a mental 
                illness or disease.
                    ``(C) Claim for benefit; denial.--The terms `claim 
                for benefits' and `denial of a claim for benefits' 
                shall have the meaning provided such terms under 
                section 112(e) of the Bipartisan Patient Protection 
                Act.
                    ``(D) Managed care entity.--
                            ``(i) In general.--The term `managed care 
                        entity' means, in connection with a group 
                        health plan and subject to clause (ii), any 
                        entity that is involved in determining the 
                        manner in which or the extent to which items or 
                        services (or reimbursement therefor) are to be 
provided as benefits under the plan.
                            ``(ii) Treatment of treating physicians, 
                        other treating health care professionals, and 
                        treating hospitals.--Such term does not include 
                        a treating physician or other treating health 
                        care professional (as defined in section 
                        502(n)(6)(B)(i)) of the participant or 
                        beneficiary and also does not include a 
                        treating hospital insofar as it is acting 
                        solely in the capacity of providing treatment 
                        or care to the participant or beneficiary. 
                        Nothing in the preceding sentence shall be 
                        construed to preempt vicarious liability of any 
                        plan, plan sponsor, health insurance issuer, or 
                        managed care entity.
                    ``(E) Group health plan and other related terms.--
                The provisions of sections 732(d) and 733 apply for 
                purposes of this subsection in the same manner as they 
                apply for purposes of part 7, except that the term 
                `group health plan' includes a group health plan (as 
                defined in section 607(1)).
            ``(3) Exclusion of employers and other plan sponsors.--
                    ``(A) Causes of action against employers and plan 
                sponsors precluded.--Subject to subparagraph (B), 
                paragraph (1) does not apply with respect to--
                            ``(i) any cause of action against an 
                        employer or other plan sponsor maintaining the 
                        plan (or against an employee of such an 
                        employer or sponsor acting within the scope of 
                        employment), or
                            ``(ii) a right of recovery, indemnity, or 
                        contribution by a person against an employer or 
                        other plan sponsor (or such an employee) for 
                        damages assessed against the person pursuant to 
                        a cause of action to which paragraph (1) 
                        applies.
                    ``(B) Certain causes of action permitted.--
                Notwithstanding subparagraph (A), paragraph (1) applies 
                with respect to any cause of action that is brought by 
                a participant or beneficiary under a group health plan 
                (or the estate of such a participant or beneficiary) to 
                recover damages resulting from personal injury or for 
                wrongful death against any employer or other plan 
                sponsor maintaining the plan (or against an employee of 
                such an employer or sponsor acting within the scope of 
                employment) if such cause of action arises by reason of 
                a medically reviewable decision, to the extent that 
                there was direct participation by the employer or other 
                plan sponsor (or employee) in the decision.
                    ``(C) Direct participation.--
                            ``(i) Direct participation in decisions.--
                        For purposes of subparagraph (B), the term 
                        `direct participation' means, in connection 
                        with a decision described in subparagraph (B), 
                        the actual making of such decision or the 
                        actual exercise of control in making such 
                        decision or in the conduct constituting the 
                        failure.
                            ``(ii) Rules of construction.--For purposes 
                        of clause (i), the employer or plan sponsor (or 
                        employee) shall not be construed to be engaged 
                        in direct participation because of any form of 
                        decisionmaking or other conduct that is merely 
                        collateral or precedent to the decision 
                        described in subparagraph (B) on a particular 
                        claim for benefits of a particular participant 
                        or beneficiary, including (but not limited 
                        to)--
                                    ``(I) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the selection of the group 
                                health plan or health insurance 
                                coverage involved or the third party 
                                administrator or other agent;
                                    ``(II) any engagement by the 
                                employer or other plan sponsor (or 
                                employee) in any cost-benefit analysis 
                                undertaken in connection with the 
                                selection of, or continued maintenance 
                                of, the plan or coverage involved;
                                    ``(III) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the process of creating, 
                                continuing, modifying, or terminating 
                                the plan or any benefit under the plan, 
                                if such process was not substantially 
                                focused solely on the particular 
                                situation of the participant or 
                                beneficiary referred to in paragraph 
                                (1)(A); and
                                    ``(IV) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the design of any benefit 
                                under the plan, including the amount of 
                                copayment and limits connected with 
                                such benefit.
                            ``(iv) Irrelevance of certain collateral 
                        efforts made by employer or plan sponsor.--For 
                        purposes of this subparagraph, an employer or 
                        plan sponsor shall not be treated as engaged in 
                        direct participation in a decision with respect 
                        to any claim for benefits or denial thereof in 
                        the case of any particular participant or 
                        beneficiary solely by reason of--
                                    ``(I) any efforts that may have 
                                been made by the employer or plan 
                                sponsor to advocate for authorization 
                                of coverage for that or any other 
                                participant or beneficiary (or any 
                                group of participants or 
                                beneficiaries), or
                                    ``(II) any provision that may have 
                                been made by the employer or plan 
sponsor for benefits which are not covered under the terms and 
conditions of the plan for that or any other participant or beneficiary 
(or any group of participants or beneficiaries).
            ``(4) Requirement of exhaustion.--
                    ``(A) In general.--Except as provided in 
                subparagraph (D), a cause of action may not be brought 
                under paragraph (1) in connection with any denial of a 
                claim for benefits of any individual until all 
                administrative processes under sections 112, 113, and 
                114 of the Bipartisan Patient Protection Act (if 
                applicable) have been exhausted.
                    ``(B) Late manifestation of injury.--
                            ``(i) In general.--A participant or 
                        beneficiary shall not be precluded from 
                        pursuing a review under section 114 of the 
                        Bipartisan Patient Protection Act regarding an 
                        injury that such participant or beneficiary has 
                        experienced if the external review entity first 
                        determines that the injury of such participant 
                        or beneficiary is a late manifestation of an 
                        earlier injury.
                            ``(ii) Definition.--In this subparagraph, 
                        the term `late manifestation of an earlier 
                        injury' means an injury sustained by the 
                        participant or beneficiary which was not known, 
                        and should not have been known, by such 
                        participant or beneficiary by the latest date 
                        that the requirements of subparagraph (A) 
                        should have been met regarding the claim for 
                        benefits which was denied.
                    ``(C) Exception for needed care.--A participant or 
                beneficiary may seek relief exclusively in Federal 
                court under subsection 502(a)(1)(B) prior to the 
                exhaustion of administrative remedies under sections 
                112, 113, or 114 of the Bipartisan Patient Protection 
                Act (as required under subparagraph (A)) if it is 
                demonstrated to the court that the exhaustion of such 
                remedies would cause irreparable harm to the health of 
                the participant or beneficiary. Notwithstanding the 
                awarding of relief under subsection 502(a)(1)(B) 
                pursuant to this subparagraph, no relief shall be 
                available as a result of, or arising under, paragraph 
                (1)(A) unless the requirements of subparagraph (A) are 
                met.
                    ``(D) Failure to review.--
                            ``(i) In general.--If the external review 
                        entity fails to make a determination within the 
                        time required under section 114(e)(1)(A)(i), a 
                        participant or beneficiary may bring an action 
                        under section 514(d) after 10 additional days 
                        after the date on which such time period has 
                        expired and the filing of such action shall not 
                        affect the duty of the independent medical 
reviewer (or reviewers) to make a determination pursuant to section 
114(e)(1)(A)(i).
                            ``(ii) Expedited determination.--If the 
                        external review entity fails to make a 
                        determination within the time required under 
                        section 114(e)(1)(A)(ii), a participant or 
                        beneficiary may bring an action under this 
                        subsection and the filing of such an action 
                        shall not affect the duty of the independent 
                        medical reviewer (or reviewers) to make a 
                        determination pursuant to section 
                        114(e)(1)(A)(ii).
                    ``(E) Receipt of benefits during appeals process.--
                Receipt by the participant or beneficiary of the 
                benefits involved in the claim for benefits during the 
                pendency of any administrative processes referred to in 
                subparagraph (A) or of any action commenced under this 
                subsection--
                            ``(i) shall not preclude continuation of 
                        all such administrative processes to their 
                        conclusion if so moved by any party, and
                            ``(ii) shall not preclude any liability 
                        under subsection (a)(1)(C) and this subsection 
                        in connection with such claim.
                    ``(F) Admissible.--Any determination made by a 
                reviewer in an administrative proceeding under section 
                114 of the Bipartisan Patient Protection Act shall be 
                admissible in any Federal or State court proceeding and 
                shall be presented to the trier of fact.
            ``(5) Tolling provision.--The statute of limitations for 
        any cause of action arising under section 502(n) relating to a 
        denial of a claim for benefits that is the subject of an action 
        brought in State court shall be tolled until such time as the 
        State court makes a final disposition, including all appeals, 
        of whether such claim should properly be within the 
        jurisdiction of the State court. The tolling period shall be 
        determined by the applicable Federal or State law, whichever 
        period is greater.
            ``(6) Exclusion of directed recordkeepers.--
                    ``(A) In general.--Subject to subparagraph (C), 
                paragraph (1) shall not apply with respect to a 
                directed recordkeeper in connection with a group health 
                plan.
                    ``(B) Directed recordkeeper.--For purposes of this 
                paragraph, the term `directed recordkeeper' means, in 
                connection with a group health plan, a person engaged 
                in directed recordkeeping activities pursuant to the 
                specific instructions of the plan or the employer or 
                other plan sponsor, including the distribution of 
                enrollment information and distribution of disclosure 
                materials under this Act or subtitle A of the 
                Bipartisan Patient Protection Act and whose duties do 
                not include making decisions on claims for benefits.
                    ``(C) Limitation.--Subparagraph (A) does not apply 
                in connection with any directed recordkeeper to the 
                extent that the directed recordkeeper fails to follow 
the specific instruction of the plan or the employer or other plan 
sponsor.
            ``(7) Construction.--Nothing in this subsection shall be 
        construed as--
                    ``(A) saving from preemption a cause of action 
                under State law for the failure to provide a benefit 
                for an item or service which is specifically excluded 
                under the group health plan involved, except to the 
                extent that--
                            ``(i) the application or interpretation of 
                        the exclusion involves a determination 
                        described in section 114(d)(2) of the 
                        Bipartisan Patient Protection Act, or
                            ``(ii) the provision of the benefit for the 
                        item or service is required under Federal law 
                        or under applicable State law consistent with 
                        subsection (b)(2)(B);
                    ``(B) preempting a State law which requires an 
                affidavit or certificate of merit in a civil action;
                    ``(C) affecting a cause of action or remedy under 
                State law in connection with the provision or 
                arrangement of excepted benefits (as defined in section 
                733(c)), other than those described in section 
                733(c)(2)(A); or
                    ``(D) affecting a cause of action under State law 
                other than a cause of action described in paragraph 
                (1)(A).
            ``(8) Purchase of insurance to cover liability.--Nothing in 
        section 410 shall be construed to preclude the purchase by a 
        group health plan of insurance to cover any liability or losses 
        arising under a cause of action described in paragraph (1)(A).
            ``(9) Relief from liability for employer or other plan 
        sponsor by means of designated decisionmaker.--
                    ``(A) In general.--Paragraph (1) shall not apply 
                with respect to any cause of action described in 
                paragraph (1)(A) under State law insofar as such cause 
                of action provides for liability with respect to a 
                participant or beneficiary of an employer or plan 
                sponsor (or an employee of such employer or sponsor 
                acting within the scope of employment), if with respect 
                to the employer or plan sponsor there is (or is deemed 
                under subparagraph (B) to be) a designated 
                decisionmaker that meets the requirements of section 
                502(o)(1) with respect to such participant or 
                beneficiary. Such paragraph (1) shall apply with 
                respect to any cause of action described in paragraph 
                (1)(A) under State law against the designated 
                decisionmaker of such employer or other plan sponsor 
                with respect to the participant or beneficiary.
                    ``(B) Automatic designation.--A health insurance 
                issuer shall be deemed to be a designated decisionmaker 
                for purposes of subparagraph (A) with respect to the 
                participants and beneficiaries of an employer or plan 
                sponsor, whether or not the employer or plan sponsor 
                makes such a designation, and shall be deemed to have 
                assumed unconditionally all liability of the employer 
                or plan sponsor under such designation in accordance 
                with subsection (o), unless the employer or plan 
                sponsor affirmatively enters into a contract to prevent 
                the service of the designated decisionmaker.
                    ``(C) Treatment of certain trust funds.--For 
                purposes of this paragraph, the terms `employer' and 
                `plan sponsor', in connection with the assumption by a 
                designated decisionmaker of the liability of employer 
                or other plan sponsor pursuant to this paragraph, shall 
                be construed to include a trust fund maintained 
                pursuant to section 302 of the Labor Management 
                Relations Act, 1947 (29 U.S.C. 186) or the Railway 
                Labor Act (45 U.S.C. 151 et seq.).
            ``(10) Previously provided services.--
                    ``(A) In general.--Except as provided in this 
                paragraph, a cause of action shall not arise under 
                paragraph (1) where the denial involved relates to an 
                item or service that has already been fully provided to 
                the participant or beneficiary under the plan or 
                coverage and the claim relates solely to the subsequent 
                denial of payment for the provision of such item or 
                service.
                    ``(B) Exception.--Nothing in subparagraph (A) shall 
                be construed to--
                            ``(i) prohibit a cause of action under 
                        paragraph (1) where the nonpayment involved 
                        results in the participant or beneficiary being 
                        unable to receive further items or services 
                        that are directly related to the item or 
                        service involved in the denial referred to in 
                        subparagraph (A) or that are part of a 
                        continuing treatment or series of procedures;
                            ``(ii) prohibit a cause of action under 
                        paragraph (1) relating to quality of care; or
                            ``(iii) limit liability that otherwise 
                        would arise from the provision of the item or 
                        services or the performance of a medical 
                        procedure.
            ``(11) Exemption from personal liability for individual 
        members of boards of directors, joint boards of trustees, 
        etc.--Any individual who is--
                    ``(A) a member of a board of directors of an 
                employer or plan sponsor; or
                    ``(B) a member of an association, committee, 
                employee organization, joint board of trustees, or 
                other similar group of representatives of the entities 
                that are the plan sponsor of plan maintained by two or 
                more employers and one or more employee organizations;
        shall not be personally liable under this subsection for 
        conduct that is within the scope of employment or of plan-
        related duties of the individuals unless the individual acts in 
        a fraudulent manner for personal enrichment.
            ``(12) Choice of law.--A cause of action brought under 
        paragraph (1) shall be governed by the law (including choice of 
        law rules) of the State in which the plaintiff resides.
            ``(13) Limitation on attorneys' fees.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, or any arrangement, agreement, or 
                contract regarding an attorney's fee, the amount of an 
                attorney's contingency fee allowable for a cause of 
                action brought under paragraph (1) shall not exceed \1/
                3\ of the total amount of the plaintiff's recovery (not 
                including the reimbursement of actual out-of-pocket 
                expenses of the attorney).
                    ``(B) Determination by court.--The last court in 
                which the action was pending upon the final 
                disposition, including all appeals, of the action may 
                review the attorney's fee to ensure that the fee is a 
                reasonable one.
                    ``(C) No preemption of state law.--Subparagraph (A) 
                shall not apply with respect to a cause of action under 
                paragraph (1) that is brought in a State that has a law 
                or framework of laws with respect to the amount of an 
                attorney's contingency fee that may be incurred for the 
                representation of a participant or beneficiary (or the 
                estate of such participant or beneficiary) who brings 
                such a cause of action.
    ``(e) Rules of Construction Relating to Health Care.--Nothing in 
this title shall be construed as--
            ``(1) affecting any State law relating to the practice of 
        medicine or the provision of, or the failure to provide, 
        medical care, or affecting any action (whether the liability is 
        direct or vicarious) based upon such a State law,
            ``(2) superseding any State law permitted under section 
        152(b)(1)(A) of the Bipartisan Patient Protection Act, or
            ``(3) affecting any applicable State law with respect to 
        limitations on monetary damages.
    ``(f) No Right of Action for Recovery, Indemnity, or Contribution 
by Issuers Against Treating Health Care Professionals and Treating 
Hospitals.--In the case of any care provided, or any treatment decision 
made, by the treating health care professional or the treating hospital 
of a participant or beneficiary under a group health plan which 
consists of medical care provided under such plan, any cause of action 
under State law against the treating health care professional or the 
treating hospital by the plan or a health insurance issuer providing 
health insurance coverage in connection with the plan for recovery, 
indemnity, or contribution in connection with such care (or any 
medically reviewable decision made in connection with such care) or 
such treatment decision is superseded.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to acts and omissions (from which a cause of action arises) 
occurring on or after the applicable effective under section 181.

SEC. 173. LIMITATION ON CERTAIN CLASS ACTION LITIGATION.

    Section 502 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1132), as amended by section 172, is further amended by 
adding at the end the following:
    ``(p) Limitation on Class Action Litigation.--
            ``(1) In general.--Any claim or cause of action that is 
        maintained under subsection (n) or (o) in connection with a 
        group health plan, or health insurance coverage issued in 
        connection with a group health plan, as a class action, 
        derivative action, or as an action on behalf of any group of 2 
        or more claimants, may be maintained only if the class, the 
        derivative claimant, or the group of claimants is limited to 
        the participants or beneficiaries of a group health plan 
        established by only 1 plan sponsor. No action maintained by 
        such class, such derivative claimant, or such group of 
        claimants may be joined in the same proceeding with any action 
        maintained by another class, derivative claimant, or group of 
        claimants or consolidated for any purpose with any other 
        proceeding. In this paragraph, the terms `group health plan' 
        and `health insurance coverage' have the meanings given such 
        terms in section 733.
            ``(2) Effective date.--This subsection shall apply to all 
        civil actions that are filed on or after January 1, 2004.''.

SEC. 174. LIMITATIONS ON ACTIONS.

    Section 502 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1132) (as amended by section 172(a)) is amended further by 
adding at the end the following new subsection:
    ``(q) Limitations on Actions Relating to Group Health Plans.--
            ``(1) In general.--Except as provided in paragraph (2), no 
        action may be brought under subsection (a)(1)(B), (a)(2), or 
        (a)(3) by a participant or beneficiary seeking relief based on 
        the application of any provision in section 111, chapter 2, or 
        chapter 4 of subtitle A of the Bipartisan Patient Protection 
        Act (as incorporated under section 714).
            ``(2) Certain actions allowable.--An action may be brought 
        under subsection (a)(1)(B), (a)(2), or (a)(3) by a participant 
        or beneficiary seeking relief based on the application of 
        section 111, 123, 124, 125, 126, 127, 128(a)(3), 129, or 130 of 
        the Bipartisan Patient Protection Act (as incorporated under 
        section 714) to the individual circumstances of that 
        participant or beneficiary, except that--
                    ``(A) such an action may not be brought or 
                maintained as a class action; and
                    ``(B) in such an action, relief may only provide 
                for the provision of (or payment of) benefits, items, 
                or services denied to the individual participant or 
                beneficiary involved (and for attorney's fees and the 
                costs of the action, at the discretion of the court) 
                and shall not provide for any other relief to the 
                participant or beneficiary or for any relief to any 
                other person.
            ``(3) Other provisions unaffected.--Nothing in this 
        subsection shall be construed as affecting subsections 
        (a)(1)(C) and (n) or section 514(d).
            ``(4) Enforcement by secretary unaffected.--Nothing in this 
        subsection shall be construed as affecting any action brought 
        by the Secretary.''.

SEC. 175. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Subpart C of part 7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1191 et seq.) is 
amended by adding at the end the following new section:

``SEC. 735. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    ``(a) Agreement with States.--A State may enter into an agreement 
with the Secretary for the delegation to the State of some or all of 
the Secretary's authority under this title to enforce the requirements 
applicable under subtitle A of the Bipartisan Patient Protection Act 
with respect to health insurance coverage offered by a health insurance 
issuer and with respect to a group health plan that is a non-Federal 
governmental plan.
    ``(b) Delegations.--Any department, agency, or instrumentality of a 
State to which authority is delegated pursuant to an agreement entered 
into under this section may, if authorized under State law and to the 
extent consistent with such agreement, exercise the powers of the 
Secretary under this title which relate to such authority.''.

SEC. 176. SENSE OF THE SENATE CONCERNING THE IMPORTANCE OF CERTAIN 
              UNPAID SERVICES.

    It is the sense of the Senate that the court should consider the 
loss of a nonwage earning spouse or parent as an economic loss for the 
purposes of this section. Furthermore, the court should define the 
compensation for the loss not as minimum services, but, rather, in 
terms that fully compensate for the true and whole replacement cost to 
the family.

      Subtitle D--Effective Dates; Coordination in Implementation

SEC. 181. EFFECTIVE DATES.

    (a) Group Health Coverage.--
            (1) In general.--Subject to paragraph (2) and subsection 
        (d), the amendments made by sections 161(a), 171, and 173 (and 
        subtitle A insofar as it relates to such sections) shall apply 
        with respect to group health plans, and health insurance 
        coverage offered in connection with group health plans, for 
        plan years beginning on or after October 1, 2003 (in this 
        section referred to as the ``general effective date'').
            (2) Treatment of collective bargaining agreements.--In the 
        case of a group health plan maintained pursuant to one or more 
        collective bargaining agreements between employee 
        representatives and one or more employers ratified before the 
        date of the enactment of this Act, the amendments made by 
        sections 161(a), 171, and 173 (and subtitle A insofar as it 
        relates to such sections) shall not apply to plan years 
        beginning before the later of--
                    (A) the date on which the last collective 
                bargaining agreements relating to the plan terminates 
                (excluding any extension thereof agreed to after the 
                date of the enactment of this Act); or
                    (B) the general effective date;
        but shall apply not later than 1 year after the general 
        effective date. For purposes of subparagraph (A), any plan 
        amendment made pursuant to a collective bargaining agreement 
        relating to the plan which amends the plan solely to conform to 
        any requirement added by this title shall not be treated as a 
        termination of such collective bargaining agreement.
    (b) Individual Health Insurance Coverage.--Subject to subsection 
(d), the amendments made by section 162 shall apply with respect to 
individual health insurance coverage offered, sold, issued, renewed, in 
effect, or operated in the individual market on or after the general 
effective date.
    (c) Treatment of Religious Nonmedical Providers.--
            (1) In general.--Nothing in this title (or the amendments 
        made thereby) shall be construed to--
                    (A) restrict or limit the right of group health 
                plans, and of health insurance issuers offering health 
                insurance coverage, to include as providers religious 
                nonmedical providers;
                    (B) require such plans or issuers to--
                            (i) utilize medically based eligibility 
                        standards or criteria in deciding provider 
                        status of religious nonmedical providers;
                            (ii) use medical professionals or criteria 
                        to decide patient access to religious 
                        nonmedical providers;
                            (iii) utilize medical professionals or 
                        criteria in making decisions in internal or 
                        external appeals regarding coverage for care by 
                        religious nonmedical providers; or
                            (iv) compel a participant or beneficiary to 
                        undergo a medical examination or test as a 
                        condition of receiving health insurance 
                        coverage for treatment by a religious 
                        nonmedical provider; or
                    (C) require such plans or issuers to exclude 
                religious nonmedical providers because they do not 
                provide medical or other required data, if such data is 
                inconsistent with the religious nonmedical treatment or 
                nursing care provided by the provider.
            (2) Religious nonmedical provider.--For purposes of this 
        subsection, the term ``religious nonmedical provider'' means a 
        provider who provides no medical care but who provides only 
        religious nonmedical treatment or religious nonmedical nursing 
        care.
    (d) Transition for Notice Requirement.--The disclosure of 
information required under section 131 of this title shall first be 
provided pursuant to--
            (1) subsection (a) with respect to a group health plan that 
        is maintained as of the general effective date, not later than 
        30 days before the beginning of the first plan year to which 
        subtitle A applies in connection with the plan under such 
        subsection; or
            (2) subsection (b) with respect to a individual health 
        insurance coverage that is in effect as of the general 
effective date, not later than 30 days before the first date as of 
which subtitle A applies to the coverage under such subsection.

SEC. 182. COORDINATION IN IMPLEMENTATION.

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

SEC. 183. SEVERABILITY.

    If any provision of this title, an amendment made by this title, or 
the application of such provision or amendment to any person or 
circumstance is held to be unconstitutional, the remainder of this 
title, the amendments made by this title, and the application of the 
provisions of such to any person or circumstance shall not be affected 
thereby.

                  Subtitle E--Miscellaneous Provisions

SEC. 191. NO IMPACT ON SOCIAL SECURITY TRUST FUND.

    (a) In General.--Nothing in this title (or an amendment made by 
this title) shall be construed to alter or amend the Social Security 
Act (or any regulation promulgated under that Act).
    (b) Transfers.--
            (1) Estimate of secretary.--The Secretary of the Treasury 
        shall annually estimate the impact that the enactment of this 
        title has on the income and balances of the trust funds 
        established under section 201 of the Social Security Act (42 
        U.S.C. 401).
            (2) Transfer of funds.--If, under paragraph (1), the 
        Secretary of the Treasury estimates that the enactment of this 
        title has a negative impact on the income and balances of the 
        trust funds established under section 201 of the Social 
        Security Act (42 U.S.C. 401), the Secretary shall transfer, not 
        less frequently than quarterly, from the general revenues of 
        the Federal Government an amount sufficient so as to ensure 
        that the income and balances of such trust funds are not 
        reduced as a result of the enactment of such Act.

SEC. 192. CUSTOMS USER FEES.

    Section 13031(j)(3) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended by striking 
``2003'' and inserting ``2011, except that fees may not be charged 
under paragraphs (9) and (10) of such subsection after March 31, 
2006''.

SEC. 193. FISCAL YEAR 2003 MEDICARE PAYMENTS.

    Notwithstanding any other provision of law, any letter of credit 
under part B of title XVIII of the Social Security Act (42 U.S.C. 1395j 
et seq.) that would otherwise be sent to the Treasury or the Federal 
Reserve Board on September 30, 2003, by a carrier with a contract under 
section 1842 of that Act (42 U.S.C. 1395u) shall be sent on October 1, 
2003.

SEC. 194. SENSE OF SENATE WITH RESPECT TO PARTICIPATION IN CLINICAL 
              TRIALS AND ACCESS TO SPECIALTY CARE.

    (a) Findings.--The Senate finds the following:
            (1) Breast cancer is the most common form of cancer among 
        women, excluding skin cancers.
            (2) During 2001, 182,800 new cases of female invasive 
        breast cancer will be diagnosed, and 40,800 women will die from 
        the disease.
            (3) In addition, 1,400 male breast cancer cases are 
        projected to be diagnosed, and 400 men will die from the 
        disease.
            (4) Breast cancer is the second leading cause of cancer 
        death among all women and the leading cause of cancer death 
        among women between ages 40 and 55.
            (5) This year 8,600 children are expected to be diagnosed 
        with cancer.
            (6) 1,500 children are expected to die from cancer this 
        year.
            (7) There are approximately 333,000 people diagnosed with 
        multiple sclerosis in the United States and 200 more cases are 
        diagnosed each week.
            (8) Parkinson's disease is a progressive disorder of the 
        central nervous system affecting 1,000,000 in the United 
        States.
            (9) An estimated 198,100 men will be diagnosed with 
        prostate cancer this year.
            (10) 31,500 men will die from prostate cancer this year. It 
        is the second leading cause of cancer in men.
            (11) While information obtained from clinical trials is 
        essential to finding cures for diseases, it is still research 
        which carries the risk of fatal results. Future efforts should 
        be taken to protect the health and safety of adults and 
        children who enroll in clinical trials.
            (12) While employers and health plans should be responsible 
        for covering the routine costs associated with federally 
        approved or funded clinical trials, such employers and health 
        plans should not be held legally responsible for the design, 
        implementation, or outcome of such clinical trials, consistent 
        with any applicable State or Federal liability statutes.
    (b) Sense of the Senate.--It is the sense of the Senate that--
            (1) men and women battling life-threatening, deadly 
        diseases, including advanced breast or ovarian cancer, should 
        have the opportunity to participate in a federally approved or 
        funded clinical trial recommended by their physician;
            (2) an individual should have the opportunity to 
        participate in a federally approved or funded clinical trial 
        recommended by their physician if--
                    (A) that individual--
                            (i) has a life-threatening or serious 
                        illness for which no standard treatment is 
                        effective;
                            (ii) is eligible to participate in a 
                        federally approved or funded clinical trial 
                        according to the trial protocol with respect to 
                        treatment of the illness;
                    (B) that individual's participation in the trial 
                offers meaningful potential for significant clinical 
                benefit for the individual; and
                    (C) either--
                            (i) the referring physician is a 
                        participating health care professional and has 
                        concluded that the individual's participation 
                        in the trial would be appropriate, based upon 
                        the individual meeting the conditions described 
                        in subparagraph (A); or
                            (ii) the participant, beneficiary, or 
                        enrollee provides medical and scientific 
                        information establishing that the individual's 
                        participation in the trial would be 
                        appropriate, based upon the individual meeting 
                        the conditions described in subparagraph (A);
            (3) a child with a life-threatening illness, including 
        cancer, should be allowed to participate in a federally 
        approved or funded clinical trial if that participation meets 
        the requirements of paragraph (2);
            (4) a child with a rare cancer should be allowed to go to a 
        cancer center capable of providing high quality care for that 
        disease; and
            (5) a health maintenance organization's decision that an 
        in-network physician without the necessary expertise can 
        provide care for a seriously ill patient, including a woman 
        battling cancer, should be appealable to an independent, 
        impartial body, and that this same right should be available to 
        all Americans in need of access to high quality specialty care.

SEC. 195. SENSE OF THE SENATE REGARDING FAIR REVIEW PROCESS.

    (a) Findings.--The Senate finds the following:
            (1) A fair, timely, impartial independent external appeals 
        process is essential to any meaningful program of patient 
        protection.
            (2) The independence and objectivity of the review 
        organization and review process must be ensured.
            (3) It is incompatible with a fair and independent appeals 
        process to allow a health maintenance organization to select 
        the review organization that is entrusted with providing a 
        neutral and unbiased medical review.
            (4) The American Arbitration Association and arbitration 
        standards adopted under chapter 44 of title 28, United States 
        Code (28 U.S.C. 651 et seq.) both prohibit, as inherently 
unfair, the right of one party to a dispute to choose the judge in that 
dispute.
    (b) Sense of the Senate.--It is the sense of the Senate that--
            (1) every patient who is denied care by a health 
        maintenance organization or other health insurance company 
        should be entitled to a fair, speedy, impartial appeal to a 
        review organization that has not been selected by the health 
        plan;
            (2) the States should be empowered to maintain and develop 
        the appropriate process for selection of the independent 
        external review entity;
            (3) a child battling a rare cancer whose health maintenance 
        organization has denied a covered treatment recommended by its 
        physician should be entitled to a fair and impartial external 
        appeal to a review organization that has not been chosen by the 
        organization or plan that has denied the care; and
            (4) patient protection legislation should not pre-empt 
        existing State laws in States where there already are strong 
        laws in place regarding the selection of independent review 
        organizations.

SEC. 196. ANNUAL REVIEW.

    (a) In General.--Not later than 24 months after the general 
effective date referred to in section 181(a)(1), and annually 
thereafter for each of the succeeding 4 calendar years (or until a 
repeal is effective under subsection (b)), the Secretary of Health and 
Human Services shall request that the Institute of Medicine of the 
National Academy of Sciences prepare and submit to the appropriate 
committees of Congress a report concerning the impact of this title, 
and the amendments made by this title, on the number of individuals in 
the United States with health insurance coverage.
    (b) Funding.--From funds appropriated to the Department of Health 
and Human Services for fiscal years 2004 and 2005, the Secretary of 
Health and Human Services shall provide for such funding as the 
Secretary determines necessary for the conduct of the study of the 
National Academy of Sciences under this section.

                     TITLE II--MENTAL HEALTH PARITY

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Mental Health Equitable Treatment 
Act of 2003''.

SEC. 202. AMENDMENT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (a) In General.--Section 712 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1185a) is amended to read as follows:

``SEC. 712. MENTAL HEALTH PARITY.

    ``(a) In General.--In the case of a group health plan (or health 
insurance coverage offered in connection with such a plan) that 
provides both medical and surgical benefits and mental health benefits, 
such plan or coverage shall not impose any treatment limitations or 
financial requirements with respect to the coverage of benefits for 
mental illnesses unless comparable treatment limitations or financial 
requirements are imposed on medical and surgical benefits.
    ``(b) Construction.--
            ``(1) In general.--Nothing in this section shall be 
        construed as requiring a group health plan (or health insurance 
        coverage offered in connection with such a plan) to provide any 
mental health benefits.
            ``(2) Medical management of mental health benefits.--
        Consistent with subsection (a), nothing in this section shall 
        be construed to prevent the medical management of mental health 
        benefits, including through concurrent and retrospective 
        utilization review and utilization management practices, 
        preauthorization, and the application of medical necessity and 
        appropriateness criteria applicable to behavioral health and 
        the contracting and use of a network of participating 
        providers.
            ``(3) No requirement of specific services.--Nothing in this 
        section shall be construed as requiring a group health plan (or 
        health insurance coverage offered in connection with such a 
        plan) to provide coverage for specific mental health services, 
        except to the extent that the failure to cover such services 
        would result in a disparity between the coverage of mental 
        health and medical and surgical benefits.
    ``(c) Small Employer Exemption.--
            ``(1) In general.--This section shall not apply to any 
        group health plan (and group health insurance coverage offered 
        in connection with a group health plan) for any plan year of 
        any employer who employed an average of at least 2 but not more 
        than 50 employees on business days during the preceding 
        calendar year.
            ``(2) Application of certain rules in determination of 
        employer size.--For purposes of this subsection--
                    ``(A) Application of aggregation rule for 
                employers.--Rules similar to the rules under 
                subsections (b), (c), (m), and (o) of section 414 of 
                the Internal Revenue Code of 1986 shall apply for 
                purposes of treating persons as a single employer.
                    ``(B) Employers not in existence in preceding 
                year.--In the case of an employer which was not in 
                existence throughout the preceding calendar year, the 
                determination of whether such employer is a small 
                employer shall be based on the average number of 
                employees that it is reasonably expected such employer 
                will employ on business days in the current calendar 
                year.
                    ``(C) Predecessors.--Any reference in this 
                paragraph to an employer shall include a reference to 
                any predecessor of such employer.
    ``(d) Separate Application to Each Option Offered.--In the case of 
a group health plan that offers a participant or beneficiary two or 
more benefit package options under the plan, the requirements of this 
section shall be applied separately with respect to each such option.
    ``(e) In-Network and Out-of-Network Rules.--In the case of a plan 
or coverage option that provides in-network mental health benefits, 
out-of-network mental health benefits may be provided using treatment 
limitations or financial requirements that are not comparable to the 
limitations and requirements applied to medical and surgical benefits 
if the plan or coverage provides such in-network mental health benefits 
in accordance with subsection (a) and provides reasonable access to in-
network providers and facilities.
    ``(f) Definitions.--For purposes of this section--
            ``(1) Financial requirements.--The term `financial 
        requirements' includes deductibles, coinsurance, co-payments, 
        other cost sharing, and limitations on the total amount that 
        may be paid by a participant or beneficiary with respect to 
        benefits under the plan or health insurance coverage and shall 
        include the application of annual and lifetime limits.
            ``(2) Medical or surgical benefits.--The term `medical or 
        surgical benefits' means benefits with respect to medical or 
        surgical services, as defined under the terms of the plan or 
        coverage (as the case may be), but does not include mental 
        health benefits.
            ``(3) Mental health benefits.--The term `mental health 
        benefits' means benefits with respect to services, as defined 
        under the terms and conditions of the plan or coverage (as the 
        case may be), for all categories of mental health conditions 
        listed in the Diagnostic and Statistical Manual of Mental 
        Disorders, Fourth Edition (DSM IV-TR), or the most recent 
        edition if different than the Fourth Edition, if such services 
        are included as part of an authorized treatment plan that is in 
        accordance with standard protocols and such services meet the 
        plan or issuer's medical necessity criteria. Such term does not 
        include benefits with respect to the treatment of substance 
        abuse or chemical dependency.
            ``(4) Treatment limitations.--The term `treatment 
        limitations' means limitations on the frequency of treatment, 
        number of visits or days of coverage, or other similar limits 
        on the duration or scope of treatment under the plan or 
        coverage.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to plan years beginning on or after January 1, 2004.

SEC. 203. AMENDMENT TO THE PUBLIC HEALTH SERVICE ACT RELATING TO THE 
              GROUP MARKET.

    (a) In General.--Section 2705 of the Public Health Service Act (42 
U.S.C. 300gg-5) is amended to read as follows:

``SEC. 2705. MENTAL HEALTH PARITY.

    ``(a) In General.--In the case of a group health plan (or health 
insurance coverage offered in connection with such a plan) that 
provides both medical and surgical benefits and mental health benefits, 
such plan or coverage shall not impose any treatment limitations or 
financial requirements with respect to the coverage of benefits for 
mental illnesses unless comparable treatment limitations or financial 
requirements are imposed on medical and surgical benefits.
    ``(b) Construction.--
            ``(1) In general.--Nothing in this section shall be 
        construed as requiring a group health plan (or health insurance 
        coverage offered in connection with such a plan) to provide any 
        mental health benefits.
            ``(2) Medical management of mental health benefits.--
        Consistent with subsection (a), nothing in this section shall 
        be construed to prevent the medical management of mental health 
        benefits, including through concurrent and retrospective 
        utilization review and utilization management practices, 
        preauthorization, and the application of medical necessity and 
        appropriateness criteria applicable to behavioral health and 
        the contracting and use of a network of participating 
        providers.
            ``(3) No requirement of specific services.--Nothing in this 
        section shall be construed as requiring a group health plan (or 
        health insurance coverage offered in connection with such a 
        plan) to provide coverage for specific mental health services, 
        except to the extent that the failure to cover such services 
        would result in a disparity between the coverage of mental 
        health and medical and surgical benefits.
    ``(c) Small Employer Exemption.--
            ``(1) In general.--This section shall not apply to any 
        group health plan (and group health insurance coverage offered 
        in connection with a group health plan) for any plan year of 
        any employer who employed an average of at least 2 but not more 
        than 50 employees on business days during the preceding 
        calendar year.
            ``(2) Application of certain rules in determination of 
        employer size.--For purposes of this subsection--
                    ``(A) Application of aggregation rule for 
                employers.--Rules similar to the rules under 
                subsections (b), (c), (m), and (o) of section 414 of 
                the Internal Revenue Code of 1986 shall apply for 
                purposes of treating persons as a single employer.
                    ``(B) Employers not in existence in preceding 
                year.--In the case of an employer which was not in 
                existence throughout the preceding calendar year, the 
                determination of whether such employer is a small 
                employer shall be based on the average number of 
                employees that it is reasonably expected such employer 
                will employ on business days in the current calendar 
                year.
                    ``(C) Predecessors.--Any reference in this 
                paragraph to an employer shall include a reference to 
                any predecessor of such employer.
    ``(d) Separate Application to Each Option Offered.--In the case of 
a group health plan that offers a participant or beneficiary two or 
more benefit package options under the plan, the requirements of this 
section shall be applied separately with respect to each such option.
    ``(e) In-Network and Out-of-Network Rules.--In the case of a plan 
or coverage option that provides in-network mental health benefits, 
out-of-network mental health benefits may be provided using treatment 
limitations or financial requirements that are not comparable to the 
limitations and requirements applied to medical and surgical benefits 
if the plan or coverage provides such in-network mental health benefits 
in accordance with subsection (a) and provides reasonable access to in-
network providers and facilities.
    ``(f) Definitions.--For purposes of this section--
            ``(1) Financial requirements.--The term `financial 
        requirements' includes deductibles, coinsurance, co-payments, 
        other cost sharing, and limitations on the total amount that 
        may be paid by a participant, beneficiary or enrollee with 
        respect to benefits under the plan or health insurance coverage 
        and shall include the application of annual and lifetime 
        limits.
            ``(2) Medical or surgical benefits.--The term `medical or 
        surgical benefits' means benefits with respect to medical or 
        surgical services, as defined under the terms of the plan or 
        coverage (as the case may be), but does not include mental 
        health benefits.
            ``(3) Mental health benefits.--The term `mental health 
        benefits' means benefits with respect to services, as defined 
        under the terms and conditions of the plan or coverage (as the 
        case may be), for all categories of mental health conditions 
        listed in the Diagnostic and Statistical Manual of Mental 
        Disorders, Fourth Edition (DSM IV-TR), or the most recent 
        edition if different than the Fourth Edition, if such services 
        are included as part of an authorized treatment plan that is in 
        accordance with standard protocols and such services meet the 
        plan or issuer's medical necessity criteria. Such term does not 
        include benefits with respect to the treatment of substance 
        abuse or chemical dependency.
            ``(4) Treatment limitations.--The term `treatment 
        limitations' means limitations on the frequency of treatment, 
        number of visits or days of coverage, or other similar limits 
        on the duration or scope of treatment under the plan or 
        coverage.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to plan years beginning on or after January 1, 2004.

SEC. 204. PREEMPTION.

    Nothing in the amendments made by this title shall be construed to 
preempt any provision of State law, with respect to health insurance 
coverage offered by a health insurance issuer in connection with a 
group health plan, that provides protections to enrollees that are 
greater than the protections provided under such amendments. Nothing in 
the amendments made by this title shall be construed to affect or 
modify section 514 of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1144).

SEC. 205. GENERAL ACCOUNTING OFFICE STUDY.

    (a) Study.--The Comptroller General shall conduct a study that 
evaluates the effect of the implementation of the amendments made by 
this title on the cost of health insurance coverage, access to health 
insurance coverage (including the availability of in-network 
providers), the quality of health care, and other issues as determined 
appropriate by the Comptroller General.
    (b) Report.--Not later than 2 years after the date of enactment of 
this Act, the Comptroller General shall prepare and submit to the 
appropriate committees of Congress a report containing the results of 
the study conducted under subsection (a).

                       TITLE III--PATIENT SAFETY

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Patient Safety Improvement and 
Medical Injury Reduction Act''.

SEC. 302. PURPOSE.

    It is the purpose of this title to improve patient safety by 
promoting the voluntary reporting of patient safety events and medical 
errors and other measures.

SEC. 303. PATIENT SAFETY IMPROVEMENTS.

    Title IX of the Public Health Service Act (42 U.S.C. 299 et seq.) 
is amended--
            (1) in section 912(c), by inserting ``, in accordance with 
        part C,'' after ``The Director shall'';
            (2) by redesignating part C as part E;
            (3) by redesignating sections 921 through 928, as sections 
        941 through 948, respectively;
            (4) in section 948(1) (as so redesignated), by striking 
        ``921'' and inserting ``941''; and
            (5) by inserting after part B the following:

                  ``PART C--PATIENT SAFETY IMPROVEMENT

``SEC. 921. DEFINITIONS.

    ``In this part:
            ``(1) Center.--The term `Center' means the Center for 
        Quality Improvement and Patient Safety established under 
        section 922(a).
            ``(2) Health care provider.--The term `health care 
        provider' means an individual or entity licensed or otherwise 
        authorized under State law to provide health care services, 
        including--
                    ``(A) a hospital, nursing facility, comprehensive 
                outpatient rehabilitation facility, home health agency, 
                and hospice program;
                    ``(B) a physician, physician assistant, nurse 
                practitioner, clinical nurse specialist, nurse 
                anesthetist, certified nurse midwife, psychologist, 
                certified social worker, registered dietitian or 
                nutrition professional, physical or occupational 
                therapist, or other individual health care 
                practitioner;
                    ``(C) a pharmacist; and
                    ``(D) a renal dialysis facility, ambulatory 
                surgical center, pharmacy, physician or health care 
                practitioner's office, long-term care facility, 
                behavioral health residential treatment facility, 
                clinical laboratory, or community health center.
            ``(3) Identifiable information.--The term `identifiable 
        information' means information that is presented in a form and 
        manner that allows the identification of any health care 
        provider, patient, or reporter of patient safety information. 
        With respect to patients, such information includes any 
        individually identifiable health information as that term is 
        defined in the regulations promulgated pursuant to section 
        264(c) of the Health Insurance Portability and Accountability 
        Act of 1996 (Public Law 104-191; 110 Stat. 2033).
            ``(4) National patient safety database.--The term `National 
        Patient Safety Database' means the database of nonidentifiable 
        information concerning patient safety that is coordinated by, 
        and developed in collaboration with, the Director under section 
        922(c)(3)(B).
            ``(5) National patient safety research demonstration 
        system.--The term `National Patient Safety Research 
        Demonstration System' means a system under which the Director 
        will enter into voluntary agreements with a geographically and 
        institutionally diverse group of eligible entities to collect 
        data for the purpose of conducting research on patient safety 
        under section 922(c)(3)(C).
            ``(6) Nonidentifiable information.--The term 
        `nonidentifiable information' means information that is 
        presented in a form and manner that prevents the identification 
        of any health care provider, patient, or reporter of patient 
        safety information. With respect to patients, such information 
        must be de-identified consistent with the regulations 
        promulgated pursuant to section 264(c) of the Health Insurance 
        Portability and Accountability Act of 1996 (Public Law 104-191; 
        110 Stat. 2033).
            ``(7) Patient safety information.--The term `patient safety 
        information' means any reports, records, memoranda, analyses, 
        deliberative work, statements, or root cause analyses that are 
        collected or developed to improve patient safety or health care 
        quality and that--
                    ``(A) are developed by a health care provider for 
                the purpose of reporting to a patient safety 
                organization and that are reported on a timely basis to 
                such an organization; or
                    ``(B) are collected or developed by a patient 
                safety organization or by the National Patient Safety 
                Database or National Patient Safety Research 
                Demonstration System, regardless of whether the 
                information is transmitted to the health care provider 
                that reported the original information.
            ``(8) Patient safety organization.--The term `patient 
        safety organization' means a private or public organization, or 
        component thereof, that is certified, through a process to be 
        determined by the Director under section 925, to perform each 
        of the following activities:
                    ``(A) The conduct, as the organization or 
                component's primary activity, of activities to improve 
                patient safety and the quality of health care delivery.
                    ``(B) The collection and analysis of patient safety 
                information that is submitted by health care providers.
                    ``(C) The development and dissemination of 
                evidence-based information to health care providers 
                with respect to improving patient safety (such as 
                recommendations, protocols, or information regarding 
                best practices).
                    ``(D) The utilization of patient safety information 
                to carry out activities limited to those described 
                under this paragraph and for the purposes of 
                encouraging a culture of safety and of providing direct 
                feedback and assistance to health care providers to 
                effectively minimize patient risk.
                    ``(E) The maintenance of appropriate 
                confidentiality with respect to identifiable 
                information.
                    ``(F) The provision of appropriate security 
                measures with respect to patient safety information.
                    ``(G) The submission of nonidentifiable information 
                to the Agency consistent with standards established by 
                the Director under section 924 for the National Patient 
                Safety Database.

``SEC. 922. PRIVILEGE.

    ``(a) In General.--Notwithstanding any other provision of law, 
patient safety information shall be privileged and confidential in 
accordance with this section.
    ``(b) Scope of Privilege.--Subject to the succeeding provisions of 
this section, such information shall not be--
            ``(1) subject to a civil or administrative subpoena;
            ``(2) subject to discovery in connection with a civil or 
        administrative proceeding;
            ``(3) disclosed pursuant to section 552 of title 5, United 
        States Code (commonly known as the Freedom of Information Act) 
        or any other similar Federal or State law; or
            ``(4) admitted as evidence or otherwise disclosed in any 
        Federal or State civil or administrative proceeding.
    ``(c) Exceptions to Privilege.--The privilege provided for under 
this section shall not apply to--
            ``(1) records of a patient's medical diagnosis and 
        treatment, patient or hospital records, other primary health 
        care information or other documents, records, or data that 
        exist separately from the process of collecting or developing 
        information for the purposes of this part;
            ``(2) information merely by reason of its inclusion, 
        report, or the fact of its submission, to a patient safety 
        organization, the National Patient Safety Database, or the 
        National Patient Safety Research Demonstration System; and
            ``(3) information available from sources other than a 
        report or submission made under this part, which may be 
        discovered or admitted in a Federal or State civil or 
        administrative proceeding, if discoverable or admissible under 
        applicable Federal or State law.
    ``(d) Disclosures.--Nothing in this section shall be construed to 
prohibit any of the following disclosures:
            ``(1) The disclosure of nonidentifiable information by a 
        health care provider, patient safety organization, or the 
        Director.
            ``(2) The disclosure of identifiable information by a 
        health care provider or patient safety organization, if such 
        disclosure--
                    ``(A) is authorized by the provider for the 
                purposes of improving quality and safety;
                    ``(B) is to an entity or person subject to the 
                requirements of section 264(c) of the Health Insurance 
                Portability and Accountability Act of 1996 (Public Law 
                104-191; 110 Stat. 2033), or any regulation promulgated 
                under such section; and
                    ``(C) is not in conflict with such section or any 
                regulation promulgated under such section.
            ``(3) The disclosure of patient safety information by a 
        provider or patient safety organization to the Food and Drug 
        Administration.
    ``(e) Rules of Construction.--
            ``(1) In general.--Nothing in this section shall be 
        construed to limit or extend other privileges that are 
        available under Federal or State laws, including peer review 
        and confidentiality protections.
            ``(2) Construction regarding use of patient safety 
        information.--
                    ``(A) Internal use permitted to improve patient 
                safety, quality, and efficiency.--Nothing in this part 
                shall be construed to limit a health care provider from 
                using patient safety information within the provider to 
                improve patient safety, health care quality, or 
                administrative efficiency of the provider.
                    ``(B) Treatment.--Information that is collected as 
                patient safety information is not disqualified from 
                being treated as patient safety information because of 
                its use for the purposes described in subparagraph (A) 
                and such use shall not constitute a waiver of any 
                privilege or protection established under this section 
                or under State law.
            ``(3) State mandatory reporting requirements.--Nothing in 
        this part shall be construed as preempting or otherwise 
        affecting any mandatory reporting requirement for health care 
        providers under State law.
    ``(f) Application of Privacy Regulations.--For purposes of applying 
the regulations promulgated pursuant to section 264(c) of the Health 
Insurance Portability and Accountability Act of 1996 (Public Law 104-
191; 110 Stat. 2033)--
            ``(1) patient safety organizations that collect or receive 
        identifiable information shall be treated as covered entities; 
        and
            ``(2) activities of such organizations described in section 
        923(b)(2)(A) in relation to a health care provider are deemed 
        to be health care operations of the provider.
Nothing in this section shall be construed to alter or affect the 
implementation of such regulation or such section 264(c).
    ``(g) Waivers.--
            ``(1) In general.--Nothing in this part shall be construed 
        as precluding a health care provider from waiving the privilege 
        established under this section.
            ``(2) Limitation.--The disclosure of patient safety 
        information pursuant to this part shall not constitute a waiver 
        of any other Federal or State privilege.
    ``(h) Continuation of Privilege.--Patient safety information of an 
organization that is certified as a patient safety organization shall 
continue to be privileged and confidential, in accordance with this 
section, if the organization's certification is terminated or revoked 
or if the organization otherwise ceases to qualify as a patient safety 
organization until the information is otherwise disposed of in 
accordance with section 925(g).
    ``(i) Penalty.--
            ``(1) Prohibition.--Except as provided in this part, and 
        subject to paragraph (2), it shall be unlawful for any person 
        to disclose patient safety information in violation of this 
        section.
            ``(2) Relation to hipaa.--The penalty under this subsection 
        for a disclosure described in paragraph (1) shall not apply if 
        the person making such disclosure is subject to a penalty under 
        section 264(c) of the Health Insurance Portability and 
        Accountability Act of 1996 (Public Law 104-191; 110 Stat. 
        2033), or any regulation promulgated under such section, for 
        such disclosure.
            ``(3) Amount.--Any person who violates paragraph (1) shall 
        be subject to a civil monetary penalty of not more than $25,000 
        for each such violation involved. Such penalty shall be imposed 
        and collected in the same manner as civil money penalties are 
        imposed and collected under subsection (a) of section 1128A of 
        the Social Security Act.
    ``(j) Survey and Report.--
            ``(1) Survey.--The Comptroller General of the United States 
        shall conduct a survey of State laws that relate to patient 
        safety information peer review systems, including laws that 
        establish an evidentiary privilege applicable to information 
        developed in such systems, and shall review the manner in which 
        such laws have been interpreted by the courts and the 
        effectiveness of such laws in promoting patient safety.
            ``(2) Report.--Not later than 9 months after the date of 
        enactment of this part, the Comptroller General shall prepare 
        and submit to Congress a report concerning the results of the 
        survey conducted under paragraph (1).

``SEC. 923. REPORTER PROTECTION.

    ``(a) In General.--A health care provider may not take an adverse 
employment action, as described in subsection (b), against an 
individual based upon the fact that the individual in good faith 
reported--
            ``(1) to the provider with the intention of having it 
        reported to a patient safety organization, or
            ``(2) directly to a patient safety organization,
information that would constitute patient safety information if the 
provider were to have submitted it on a timely basis to a patient 
safety organization in accordance with this part.
    ``(b) Adverse Employment Action.--For purposes of this section, an 
`adverse employment action' includes--
            ``(1) the failure to promote an individual or provide any 
        other employment-related benefit for which the individual would 
        otherwise be eligible;
            ``(2) an evaluation or decision made in relation to 
        accreditation, certification, credentialing or licensing of the 
        individual; and
            ``(3) a personnel action that is adverse to the individual 
        concerned.
    ``(c) Remedies.--The provisions of the first sentence of section 
1128A(a) of the Social Security Act shall apply with respect to a 
health care provider's violation of subsection (a) in the same manner 
as they apply to an act referred to in section 1128A(a)(7) of such Act.
    ``(d) Penalty.--Any person who violated the provisions of this 
section shall be subject to a fine of not more than $25,000, 
imprisonment for not more than 6 months, or both, per disclosure and 
payment of the costs of prosecution.

``SEC. 924. CENTER FOR QUALITY IMPROVEMENT AND PATIENT SAFETY.

    ``(a) In General.--The Director shall establish a center to be 
known as the Center for Quality Improvement and Patient Safety to carry 
out the duties described in subsection (b).
    ``(b) Duties.--
            ``(1) In general.--The Center shall carry out the following 
        duties:
                    ``(A) Conduct and support research, demonstrations, 
                and evaluations of the quality of health care and the 
                promotion of patient safety, and the measurement of 
                health care quality.
                    ``(B) Develop, evaluate, and disseminate methods 
                for identifying and promoting effective patient safety 
                programs.
                    ``(C) Provide for the certification and 
                recertification of patient safety organizations in 
                accordance with section 925.
                    ``(D) Establish a National Patient Safety Database 
                to collect, support, and coordinate the analysis of 
                nonidentifiable information submitted to the Database 
                in accordance with subsection (d).
                    ``(E) Establish a National Patient Safety Research 
                Demonstration System under which the Director will 
                enter into voluntary agreements with a geographically 
                and institutionally diverse group of eligible entities 
                to collect data for the purpose of conducting research 
                on patient safety.
                    ``(F) Facilitate the development of consensus, 
                including through annual meetings, among health care 
                providers, patients, and other interested parties 
                concerning patient safety and recommendations to 
                improve patient safety.
                    ``(G) Provide technical assistance and support to 
                States that have (or are developing) medical errors 
                reporting systems, assist States in developing 
                standardized methods for data collection, and collect 
                data from State reporting systems for inclusion in the 
                National Patient Safety Database.
            ``(2) Consultation.--In carrying out the duties under 
        paragraph (1) (including the establishment of the Database), 
        the Director shall consult with and develop partnerships, as 
        appropriate, with health care organizations, health care 
        providers, public and private sector entities, patient safety 
        organizations, health care consumers, and other relevant 
        experts to improve patient safety.
    ``(c) Implementation and Consultation.--In carrying out this 
section, the Director shall--
            ``(1) facilitate the development of patient safety goals 
        and track the progress made in meeting those goals; and
            ``(2) ensure that information submitted by a patient safety 
        organization to the National Patient Safety Database, as 
        provided for under subsection (d), is comparable and useful for 
        research and analysis and that the research findings and 
        patient safety alerts that result from such analyses are 
        presented in clear and consistent formats that enhance the 
        usefulness of such alerts.
    ``(d) National Patient Safety Database.--
            ``(1) In general.--The Director shall--
                    ``(A) establish a National Patient Safety Database 
                to collect nonidentifiable information concerning 
                patient safety that is reported on a voluntary basis 
                which shall be used to analyze national, regional, and 
                State trends and patterns in patient safety and medical 
                errors; and
                    ``(B) establish common formats for the voluntary 
                reporting of information under subparagraph (A), 
                including the establishment of necessary data elements, 
                common and consistent definitions, and a standardized 
                computer interface for the processing of such data.
        To the extent practicable, formats established under 
        subparagraph (A) shall be consistent with the administrative 
        simplification provisions of part C of title XI of the Social 
        Security Act
            ``(2) Database.--In carrying out this subsection, the 
        Director--
                    ``(A) shall establish and modify as necessary 
                criteria to determine the organizations that may 
                voluntarily contribute to, and the data that comprises, 
                the National Patient Safety Database;
                    ``(B) shall ensure that the National Patient Safety 
                Database is only used by qualified entities or 
                individuals for purposes of research, education, and 
                enhancing patient safety as determined appropriate by 
                the Director in accordance with criteria applied by the 
                Director;
                    ``(C) may enter into contracts for the 
                administration of the Database with private and public 
                entities with experience in the administration of 
                similar databases;
                    ``(D) shall ensure that the methodologies for the 
                collection of nonidentifiable patient safety 
                information for the National Patient Safety Database 
                include the methodologies developed or recommended by 
                the Patient Safety Task Force of the Department of 
                Health and Human Services; and
                    ``(E) may, to the extent practicable, facilitate 
                the direct link of information between health care 
                providers and patient safety organizations and between 
                patient safety organizations and the National Patient 
                Safety Database.
            ``(3) National patient safety research demonstration 
        system.--
                    ``(A) Establishment.--
                            ``(i) In general.--Not later than 1 year 
                        after the date of enactment of this part, the 
                        Director shall establish a National Patient 
                        Safety Research Demonstration System under 
                        which the Director will enter into voluntary 
                        agreements with a geographically and 
                        institutionally diverse group of eligible 
                        entities to collect information for the purpose 
                        of conducting research on patient safety. The 
                        Director may contract with other organizations 
                        to carry out this paragraph.
                            ``(ii) Purpose.--The purpose of the 
                        demonstration system established under clause 
                        (i) is to conduct targeted research on patient 
                        safety and to test promising systems and 
                        methods of improving patient safety.
                            ``(iii) Number and types of 
                        organizations.--In carrying out clause (i), the 
                        Director shall determine the number and types 
                        of health care organizations with which to 
                        enter into agreements, as well as the types of 
                        patient safety events the particular health 
                        care organizations with which the Director 
                        enters into an agreement should identify and 
                        the types of analyses that such organizations 
                        should perform.
                    ``(B) Eligibility.--To be eligible to enter into an 
                agreement under subparagraph (A) an entity shall--
                            ``(i) be a health care organization; and
                            ``(ii) prepare and submit to the Director 
                        an application at such time, in such manner, 
                        and containing such information as the Director 
                        may require.
                    ``(C) Submission of reports.--
                            ``(i) In general.--A health care 
                        organization that enters into a voluntary 
                        agreement under subparagraph (A) shall, with 
                        respect to such organization, submit reports of 
                        patient safety events, or reports of specific 
                        types of patient safety events if so prescribed 
                        by the agreement, and shall submit, if 
prescribed by the agreement, root cause analyses concerning such events 
(using standards developed by the Director), and corrective action 
plans to the Director.
                            ``(ii) Processing of information.--The 
                        Director shall process the reports submitted 
                        under clause (i) in the same manner as reports 
                        are processed through the National Patient 
                        Safety Database.
                            ``(iii) Provision of recommendations.--The 
                        Director shall provide feedback concerning 
                        patient safety event reports directly to the 
                        health care organizations that are 
                        participating in the demonstration system under 
                        this paragraph.
                    ``(D) Technical assistance.--The Director shall 
                provide health care organizations participating in the 
                demonstration system under this paragraph with 
                technical support and may provide technology support, 
                including computer software and hardware, through the 
                patient safety improvement grants under section 932 and 
                section 934.
                    ``(E) Evaluation.--Upon the expiration of the 5-
                year period beginning on the date on which the 
                demonstration system is established under this 
                paragraph, the Director shall prepare and submit to the 
                Committee on Health, Education, Labor, and Pensions of 
                the Senate and the Committee on Energy and Commerce of 
                the House of Representatives a report that includes--
                            ``(i) information on the types of data 
                        collected through the demonstration system;
                            ``(ii) research conducted with data 
                        collected through the demonstration system; and
                            ``(iii) the identification of promising 
                        systems and methods of reducing patient safety 
                        events.
                    ``(F) Rule of construction.--Nothing in this 
                paragraph shall be construed to preempt Federal or 
                State mandatory reporting or sentinel surveillance 
                systems in effect on the date of enactment of this 
                part, or Federal or State mandatory reporting or 
                sentinel surveillance systems developed after such date 
                of enactment.
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary for each fiscal year to 
carry out this section.

``SEC. 925. PATIENT SAFETY ORGANIZATIONS.

    ``(a) Certification and Recertification.--
            ``(1) In general.--The initial certification and 
        recertification of a patient safety organization under section 
        924 shall be made under a process that is approved by the 
        Director and is consistent with criteria published by the 
        Director.
            ``(2) Revocation.--Such a certification or recertification 
        of a patient safety organization may be revoked by the Director 
        upon a showing of cause (including the disclosure of 
        information in violation of section 922).
            ``(3) Termination.--Such a certification provided for a 
        patient safety organization shall terminate (subject to 
        recertification) on the earlier of--
                    ``(A) the date that is 3 years after the date on 
                which such certification was provided; or
                    ``(B) the date on which the Director revokes the 
                certification.
    ``(b) Organization Requirements.--A patient safety organization 
shall meet the following criteria as conditions for certification:
            ``(1) The mission of the organization shall be to conduct 
        activities to improve patient safety and the quality of health 
        care delivery.
            ``(2) The organization shall collect and analyze patient 
        safety information that is voluntarily reported by more than 
        one health care provider on a local, regional, State, or 
        national basis.
            ``(3) The organization shall have appropriately qualified 
        staff, including licensed or certified medical professionals.
            ``(4) The organization is managed, controlled, and operated 
        independently from health care providers that report patient 
        safety information to it under this part, and the 
        organization--
                    ``(A) does not have a material familial or 
                financial relationship (except for fees charged to 
                health care providers) with any health care provider 
                from whom it receives patient safety information;
                    ``(B) does not otherwise have a conflict of 
                interest with such a health care provider (as 
                determined under regulations); and
                    ``(C) is not a health insurer or other entity that 
                offers a group health plan or health insurance 
                coverage, or a component of such an entity.
            ``(5) The organization seeks to collect data from health 
        care providers in a standardized manner that permits valid 
        comparisons of similar cases among similar health care 
        providers.
            ``(6) The organization meets such other requirements as the 
        Director may by regulation require.
    ``(c) Limitation on Use of Patient Safety Information by Patient 
Safety Organizations.--A patient safety organization may not use 
patient safety information reported by a health care provider in 
accordance with this part to take regulatory or enforcement actions it 
otherwise performs (or is responsible for performing) in relation to 
such provider.
    ``(d) Technical Assistance.--The Director may provide technical 
assistance to patient safety organizations in providing recommendations 
and advice to health care providers reporting patient safety 
information under this part. Such assistance shall include advice with 
respect to methodology, communication, dissemination of information, 
data collection, security, and confidentiality concerns.
    ``(e) Component Organizations.--If a patient safety organization is 
a component of a larger organization, the patient safety organization 
shall--
            ``(1) maintain patient safety information within the 
        component, separately from the rest of the larger organization, 
        and establish appropriate security measures to maintain the 
        confidentiality of the patient safety information;
            ``(2) not disclose patient safety information to the larger 
        organization; and
            ``(3) not create a conflict of interest with the larger 
        organization.
    ``(f) Construction.--Nothing in this part shall be construed to 
limit or discourage the reporting of information relating to patient 
safety within a health care provider.
    ``(g) Treatment of Information.--If an organization no longer 
qualifies as a patient safety organization under this section, with 
respect to any patient safety information that such organization 
received from a health care provider, the organization shall comply 
with one of the following:
            ``(1) With the approval of the provider and another patient 
        safety organization, the organization shall transfer such 
        information to such other organization.
            ``(2) If practicable, the organization shall return the 
        information to the provider.
            ``(3) The organization shall destroy the patient safety 
        information.

              ``PART D--PATIENT SAFETY IMPROVEMENT GRANTS

``SEC. 931. GRANTS FOR COMMUNITY PARTNERSHIPS FOR HEALTH CARE 
              IMPROVEMENT.

    ``(a) In General.--The Secretary shall award grants to eligible 
entities to enable such entities to establish, enhance or improve 
community partnerships for health care improvement among providers 
within a community for the purpose of improving the quality of medical 
care, including the prescribing, dispensing, and use of prescription 
drugs, within such community.
    ``(b) Eligible Entities.--To be eligible to receive a grant under 
subsection (a) an entity shall--
            ``(1) be a--
                    ``(A) hospital;
                    ``(B) health care clinic;
                    ``(C) skilled nursing facility;
                    ``(D) non-profit entity, or component thereof, 
                established for the purpose of establishing, enhancing 
                or improving a community partnership for health care 
                improvement; or
                    ``(E) consortium of any of the entities described 
                in subparagraphs (A) through (D); and
            ``(2) prepare and submit to the Secretary an application at 
        such time, in such manner, and containing such information as 
        the Secretary may reasonably require, including assurances 
        satisfactory to the Secretary that the community partnership 
        for health care improvement in connection with which the entity 
        is submitting the application does, at the time of application, 
        or will, within a reasonable amount of time from the date of 
        application, include the substantive participation of a broad 
        range of entities (that may include providers, payers, 
        patients, and governmental entities) involved in the delivery 
        of health care within the community.
    ``(c) Limitations.--In carrying out subsection (a), the Secretary 
shall not--
            ``(1) award any single entity more than $2,000,000 in any 
        single fiscal year; or
            ``(2) award grants under this section to any single entity 
        for more than 3 fiscal years.
    ``(d) Definition.--In this section, the term `community partnership 
for health care improvement' means a formal cooperative arrangement 
including health care facilities and nonprofit organizations within a 
community that--
            ``(1) is entered into for the purpose of significantly 
        reducing the incidence of patient safety events or 
        significantly improving the quality of health care, including 
        the appropriate use of prescription drugs, at health care 
        facilities participating in such partnership using one or more 
        quantifiable indicators of such improvement;
            ``(2) collects quantifiable data on the incidence of 
        patient safety events or on the quality of health care in 
        connection with one or more specific medical procedures 
        conducted at the health care facilities participating in such 
        partnerships;
            ``(3) makes available to the health care facilities 
        participating in such partnership the data described in 
        paragraph (2); and
            ``(4) promotes cooperation and communication among 
        providers employed by the health care facilities participating 
        in such partnership for the purposes described in paragraph 
        (1).
    ``(e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, $50,000,000 for fiscal year 
2004, and such sums as may be necessary for each subsequent fiscal 
year.

``SEC. 932. TECHNICAL STANDARDS FOR HEALTH CARE INFORMATION TECHNOLOGY 
              SYSTEMS.

    ``(a) In General.--By not later than 2 years after the date of the 
enactment of this part, the Secretary shall develop or adopt (and shall 
periodically review and update) voluntary, national standards--
            ``(1) that promote the interoperability of health care 
        information technology systems across all health care settings; 
        and
            ``(2) for computerized physician order entry systems, 
        including standards relating to--
                    ``(A) data formats or other methods of encoding 
                medical information that facilitate transfer of data 
                among such systems;
                    ``(B) the protection of the confidentiality of 
                individually identifiable health information contained 
                within such systems from unauthorized access or 
                disclosure;
                    ``(C) procedures for issuing warnings when 
                prescribing errors may be imminent;
                    ``(D) procedures for ensuring that recommendations 
                or warnings issued by such systems reflect good medical 
                practice; and
                    ``(E) other matters determined appropriate by the 
                Secretary.
    ``(b) Cost and Increased Efficiency.--In promulgating regulations 
to carry out this section, the Secretary shall take into account the 
cost that meeting the standards under subsection (a) would have on 
providing health care in the United States and the increased 
efficiencies in providing such care achieved under the standards.
    ``(c) Consultation and Coordination.--The Secretary shall develop 
and update the standards under subsection (a) in consultation with (and 
with coordination between)--
            ``(1) the National Committee for Vital and Health 
        Statistics;
            ``(2) the Medical Information Technology Advisory Board 
        (established under section 933); and
            ``(3) the Secretary of Veterans Affairs and the Secretary 
        of Defense.
    ``(d) Dissemination.--The Secretary shall provide for the 
dissemination of the standards developed and updated under this 
section.
    ``(e) Limitation.--Effective beginning on the date that is 4 years 
after the date of enactment of this part, the Secretary may not 
purchase any health care information technology system unless such 
system conforms to the standards developed or adopted under subsection 
(a), to the extent that such standards have been developed or adopted.
    ``(f) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary for each fiscal year to 
carry out this section.

``SEC. 933. MEDICAL INFORMATION TECHNOLOGY ADVISORY BOARD.

    ``(a) Establishment.--
            ``(1) In general.--Not later than 3 months after the date 
        of the enactment of this part, the Secretary shall appoint an 
        advisory board to be known as the `Medical Information 
        Technology Advisory Board' (in this section referred to as the 
        `MITAB').
            ``(2) Chairperson.--The Secretary shall designate one 
        member of the MITAB to serve as the chairperson. The 
        chairperson shall be an individual affiliated with an 
        organization having expertise creating American National 
        Standards Institute (ANSI) accepted standards in health care 
        information technology and a member of the National Committee 
        for Vital and Health Statistics.
    ``(b) Composition.--
            ``(1) In general.--The MITAB shall consist of not more than 
        17 members that include--
                    ``(A) experts from the fields of medical 
                information, information technology, medical continuous 
                quality improvement, medical records security and 
                privacy, individual and institutional health care 
                clinical providers, health researchers, and health care 
                purchasers;
                    ``(B) one or more staff experts from each of the 
                following: the Centers for Medicare & Medicaid 
                Services, the Agency for Healthcare Research and 
                Quality, and the Institute of Medicine of the National 
                Academy of Sciences;
                    ``(C) representatives of private organizations with 
                expertise in medical informatics;
                    ``(D) a representative of a teaching hospital;
                    ``(E) one or more representatives of the health 
                care information technology industry; and
                    ``(F) a representative of an organization 
                representing health care consumers.
            ``(2) Terms of appointment.--The term of any appointment 
        under paragraph (1) to the MITAB shall be for 2 years. Such an 
        appointment may be renewed for one additional term.
            ``(3) Meetings.--The MITAB shall meet at the call of its 
        chairperson or a majority of its members.
            ``(4) Vacancies.--A vacancy on the MITAB shall be filled in 
        the same manner in which the original appointment was made not 
        later than 30 days after the MITAB is given notice of the 
        vacancy and shall not affect the power of the remaining members 
        to execute the duties of the MITAB.
            ``(5) Compensation.--Members of the MITAB shall receive no 
        additional pay, allowances, or benefits by reason of their 
        service on the MITAB.
            ``(6) Expenses.--Each member of the MITAB shall receive 
        travel expenses and per diem in lieu of subsistence in 
        accordance with sections 5702 and 5703 of title 5, United 
        States Code.
    ``(c) Duties.--
            ``(1) In general.--The MITAB shall on an ongoing basis 
        advise, and make recommendations to, the Secretary regarding 
        medical information technology, including the following:
                    ``(A) The best current practices in medical 
                information technology.
                    ``(B) Methods for the adoption (not later than 2 
                years after the date of the enactment of this part) of 
                a uniform health care information system interface 
                between and among old and new computer systems.
                    ``(C) Recommendations for health care vocabulary, 
                messaging, and other technology standards (including a 
                common lexicon for computer technology) necessary to 
                achieve the interoperability of health care information 
                systems for the purposes described in subparagraph (E).
                    ``(D) Methods of implementing--
                            ``(i) health care information technology 
                        interoperability standardization; and
                            ``(ii) records security.
                    ``(E) Methods to promote information exchange among 
                health care providers so that long-term compatibility 
                among information systems is maximized, in order to do 
                one or more of the following:
                            ``(i) To maximize positive outcomes in 
                        clinical care--
                                    ``(I) by providing decision support 
                                for diagnosis and care; and
                                    ``(II) by assisting in the 
                                emergency treatment of a patient 
                                presenting at a facility where there is 
                                no medical record for the patient.
                            ``(ii) To contribute to (and be consistent 
                        with) the development of the patient assessment 
                        instrument provided for under section 545 of 
                        the Medicare, Medicaid, and SCHIP Benefits 
                        Improvement and Protection Act of 2000, and to 
                        assist in minimizing the need for new and 
                        different records as patients move from 
                        provider to provider.
                            ``(iii) To reduce or eliminate the need for 
                        redundant records, paperwork, and the 
                        repetitive taking of patient histories and 
                        administering of tests.
                            ``(iv) To minimize medical errors, such as 
                        administration of contraindicated drugs.
                            ``(v) To provide a compatible information 
                        technology architecture that facilitates future 
                        quality and cost-saving needs and that avoids 
                        the financing and development of information 
                        technology systems that are not readily 
                        compatible.
            ``(2) Reports.--
                    ``(A) Initial report.--Not later than 18 months 
                after the date of the enactment of this part, the MITAB 
                shall submit to Congress and the Secretary an initial 
                report concerning the matters described in paragraph 
                (1). The report shall include--
                            ``(i) the practices described in paragraph 
                        (1)(A), including the status of health care 
                        information technology standards being 
                        developed by private sector and public-private 
                        groups;
                            ``(ii) recommendations for accelerating the 
                        development of common health care terminology 
                        standards;
                            ``(iii) recommendations for completing 
                        development of health care information system 
                        messaging standards; and
                            ``(iv) progress toward meeting the deadline 
                        described in paragraph (1)(B) for adoption of 
                        methods described in such paragraph.
                    ``(B) Subsequent reports.--During each of the 2 
                years after the year in which the report is submitted 
                under subparagraph (A), the MITAB shall submit to 
                Congress and the Secretary an annual report relating to 
                additional recommendations, best practices, results of 
                information technology improvements, analyses of 
                private sector efforts to implement the 
                interoperability standards established in section 1184 
                of the Social Security Act, and such other matters as 
                may help ensure the most rapid dissemination of best 
                practices in health care information technology.
    ``(d) Staff and Support Services.--
            ``(1) Executive director.--
                    ``(A) Appointment.--The Chairperson shall appoint 
                an executive director of the MITAB.
                    ``(B) Compensation.--The executive director shall 
                be paid the rate of basic pay for level V of the 
                Executive Schedule.
            ``(2) Staff.--With the approval of the MITAB, the executive 
        director may appoint such personnel as the executive director 
        considers appropriate.
            ``(3) Applicability of civil service laws.--The staff of 
        the MITAB shall be appointed without regard to the provisions 
        of title 5, United States Code, governing appointments in the 
        competitive service, and shall be paid without regard to the 
        provisions of chapter 51 and subchapter III of chapter 53 of 
        such title (relating to classification and General Schedule pay 
        rates).
            ``(4) Experts and consultants.--With the approval of the 
        MITAB, the executive director may procure temporary and 
        intermittent services under section 3109(b) of title 5, United 
        States Code.
    ``(e) Powers.--
            ``(1) Hearings and other activities.--For the purpose of 
        carrying out its duties, the MITAB may hold such hearings and 
        undertake such other activities as the MITAB determines to be 
        necessary to carry out its duties.
            ``(2) Detail of federal employees.--Upon the request of the 
        MITAB, the head of any Federal agency is authorized to detail, 
        without reimbursement, any of the personnel of such agency to 
        the MITAB to assist the MITAB in carrying out its duties. Any 
        such detail shall not interrupt or otherwise affect the civil 
        service status or privileges of the Federal employee.
            ``(3) Technical assistance.--Upon the request of the MITAB, 
        the head of a Federal agency shall provide such technical 
        assistance to the MITAB as the MITAB determines to be necessary 
        to carry out its duties.
            ``(4) Obtaining information.--The MITAB may secure directly 
        from any Federal agency information necessary to enable it to 
        carry out its duties, if the information may be disclosed under 
        section 552 of title 5, United States Code. Upon request of the 
        Chairman of the MITAB, the head of such agency shall furnish 
        such information to the MITAB.
    ``(f) Termination.--The MITAB shall terminate 30 days after the 
date of submission of its final report under subsection (c)(2)(B).
    ``(g) Testing.--The Secretary, in consultation with the MITAB, 
shall test the efficacy, usability, and scalability, of standards 
within a variety of clinical settings that may include a rural hospital 
or community health center, a community hospital, a children's 
hospital, and an urban academic center.
    ``(h) Applicability of FACA.--The provisions of the Federal 
Advisory Committee Act (5 U.S.C. App.) shall apply to the MITAB.
    ``(i) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Health and Human Services such sums as 
are necessary to carry out this section.

``SEC. 934. GRANTS FOR COMPUTERIZED PHYSICIAN ORDER ENTRY SYSTEMS.

    ``(a) In General.--The Secretary may award grants to eligible 
entities to enable such entities to develop, install, or train 
personnel in the use of, computerized physician order entry systems.
    ``(b) Eligibility.--To be eligible to receive a grant under 
subsection (a), an entity shall--
            ``(1) be a nonprofit hospital, health care clinic, 
        community health center, skilled nursing facility, or other 
        nonprofit entity determined to be eligible by the Secretary;
            ``(2) prepare and submit to the Secretary an application at 
        such time, in such manner, and containing such information as 
        the Secretary may require, including a description of the 
        computerized medication prescribing system that the entity 
        intends to implement using amounts received under the grant; 
        and
            ``(3) provide assurances that are satisfactory to the 
        Secretary that any computerized physician order entry systems, 
        for which amounts are to be expended under an award made under 
        subsection (a), conform to the technical standards established 
        by the Secretary for such systems under section 932(a)(2).
    ``(c) Matching Requirement.--
            ``(1) In general.--The Secretary may not make a grant to an 
        entity under subsection (a) unless that entity agrees that, 
        with respect to the costs to be incurred by the entity in 
        carrying out the activities for which the grant is being 
        awarded, the entity will make available (directly or through 
        donations from public or private entities) non-Federal 
        contributions toward such costs in an amount equal to $1 for 
        each $2 of Federal funds provided under the grant.
            ``(2) Determination of amount contributed.--Non-Federal 
        contributions required in paragraph (1) may be in cash or in 
        kind, fairly evaluated, including equipment or services. 
        Amounts provided by the Federal Government, or services 
        assisted or subsidized to any significant extent by the Federal 
        Government, may not be included in determining the amount of 
        such non-Federal contributions.
    ``(d) Study.--
            ``(1) In general.--The Secretary, acting through The 
        Director of the Agency for Healthcare Research and Quality, 
        shall support a study to assess existing scientific evidence 
        regarding the effectiveness and cost-effectiveness of the use 
        of electronic prescription programs intended to improve the 
        efficiency of prescription ordering and the safe and effective 
        use of prescription drugs. The study shall address the 
        following:
                    ``(A) The ability of such programs to reduce 
                medical errors and improve the quality and safety of 
                patient care.
                    ``(B) The impact of the use of such programs on 
                physicians, pharmacists, and patients, including such 
                factors as direct and indirect costs, changes in 
                productivity, and satisfaction.
                    ``(C) The effectiveness of strategies for 
                overcoming barriers to the use of electronic 
                prescription programs.
            ``(2) Report.--The Secretary shall ensure that, not later 
        than 18 months after the date of enactment of this part, a 
        report containing the findings of the study under paragraph (1) 
        is submitted to the appropriate committees of the Congress.
            ``(3) Dissemination of findings.--The Secretary shall 
        disseminate the findings of the study under paragraph (1) to 
        appropriate public and private entities.
    ``(e) Definitions.--In this section and section 932:
            ``(1) Computerized physician order entry system.--The term 
        `computerized physician order entry system' means an 
        information technology system that--
                    ``(A) shall--
                            ``(i) permit a qualified practitioner who 
                        wishes to enter a medication order for a 
                        patient to enter such order via a computer that 
                        is linked to a database capable of accessing 
                        the medical record of the patient who is 
                        intended to receive such medication;
                            ``(ii) incorporate prescribing error 
                        prevention software so that a warning 
                        (including documentation regarding the cause of 
                        such warning) is generated by such system if a 
                        medication order is entered that is likely to 
                        lead to an adverse drug event; and
                            ``(iii) require documented acknowledgment 
                        that a qualified practitioner entering a 
                        medication order that has generated the warning 
                        described in clause (ii) has read the 
                        appropriate documentation regarding the cause 
                        of such warning prior to overriding such 
                        warning; and
                    ``(B) may allow for the electronic submission of 
                prescriptions to pharmacies or pharmacy benefit 
                managers and the processing of such submissions by 
                pharmacies.
            ``(2) Qualified practitioner.--The term `qualified 
        practitioner' means a practitioner licensed to administer 
        prescription drugs.
    ``(f) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, $100,000,000 for fiscal year 
2004, and such sums as may be necessary for each of fiscal years 2005 
through 2008.

``SEC. 935. GRANTS FOR INFORMATICS SYSTEMS.

    ``(a) In General.--The Secretary may establish a program to make 
grants to eligible entities for the purpose of assisting such entities 
in offsetting the costs related to  purchasing, leasing, licensing, 
developing, and implementing standardized clinical health care 
informatics systems, other than computerized prescriber order entry 
systems, that are designed to improve patient safety and reduce adverse 
events and health care complications resulting from medication errors.
    ``(b) Costs Defined.--In this section, the term `costs' includes 
total expenditures incurred for--
            ``(1) purchasing, leasing, licensing, and installing 
        computer software and hardware;
            ``(2) making improvements to existing computer software and 
        hardware;
            ``(3) purchasing or leasing communications capabilities 
        necessary for clinical data access, storage, and exchange; and
            ``(4) providing education and training to eligible entity 
        staff on computer patient safety information systems.
    ``(c) Eligibility.--To be eligible to receive a grant under this 
section, an entity shall--
            ``(1) be a hospital, health care clinic, community health 
        center, skilled nursing facility, patient safety organization, 
        or other entity determined to be eligible by the Secretary; and
            ``(2) prepare and submit to the Secretary an application at 
        such time, in such manner, and containing such information as 
        the Secretary may require, including a description of the type 
        of informatics system that the entity intends to implement 
        using amounts received under the grant.
    ``(d) Types of Imformatics Systems.--
            ``(1) In general.--Not later than 6 months after the date 
        of enactment of this part, the Secretary shall identify the 
        informatics systems, other than computerized physician order 
        entry systems, and other information technology or 
        telecommunications systems demonstrated to improve patient 
        safety and reduce adverse events and health care complications 
        resulting from medication errors, that may be adopted and 
        applied by eligible entities through funds under this section.
            ``(2) Systems.--The systems described in paragraph (1) may 
        include bar coding, software to collect and analyze medication 
        errors, clinical decision-support systems, software to detect 
        inappropriately prescribed drugs or doses, drug utilization 
        review programs, and disease management systems.
    ``(e) Matching Requirement.--
            ``(1) In general.--The Secretary may not make a grant to an 
        entity under subsection (a) unless that entity agrees that, 
        with respect to the costs to be incurred by the entity in 
        carrying out the activities for which the grant is being 
        awarded, the entity will make available (directly or through 
        donations from public or private entities) non-Federal 
        contributions toward such costs in an amount equal to $1 for 
        each $1 of Federal funds provided under the grant.
            ``(2) Determination of amount contributed.--Non-Federal 
        contributions required in paragraph (1) may be in cash or in 
        kind, fairly evaluated, including equipment or services. 
        Amounts provided by the Federal Government, or services 
        assisted or subsidized to any significant extent by the Federal 
        Government, may not be included in determining the amount of 
        such non-Federal contributions.
    ``(f) Additional Information.--An eligible entity receiving a grant 
under this section shall furnish the Secretary with such information as 
the Secretary may require to--
            ``(1) evaluate the project for which the grant is made, 
        including how the project has improved patient safety and has 
        reduced patient safety events and health care complications 
        resulting from medication errors; and
            ``(2) ensure that funding provided under the grant is 
        expended for the purposes for which it is made.
    ``(g) Reports.--
            ``(1) Interim reports.--
                    ``(A) In general.--The Secretary shall submit, at 
                least annually, a report to the Committee on Health, 
                Education, Labor, and Pensions of the Senate and the 
                Committee on Energy and Commerce of the House of 
                Representatives on the grant program established under 
                this section.
                    ``(B) Contents.--A report submitted pursuant to 
                subparagraph (A) shall include information on--
                            ``(i) the number of grants made;
                            ``(ii) the nature of the projects for which 
                        funding is provided under the grant program;
                            ``(iii) the geographic distribution of 
                        grant recipients; and
                            ``(iv) such other matters as the Secretary 
                        determines appropriate.
            ``(2) Final report.--Not later than 5 years after the date 
        of enactment of this part, the Secretary shall submit a final 
        report to the committees referred to in paragraph (1)(A) on the 
        grant program.
    ``(h) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, $50,000,000 for fiscal year 
2004, and such sums as may be necessary for each subsequent fiscal 
year.

``SEC. 936. GRANTS FOR PATIENT SAFETY RESEARCH.

    ``(a) In General.--The Secretary may conduct research and award 
grants to promote research on patient safety.
    ``(b) Process.--The Secretary shall establish a formal process to 
gather information on priorities, methodologies and approaches for 
medical errors, including medication errors, and patient safety 
research. In gathering such information, the Secretary shall ensure 
that input is obtained from a wide range of individuals and 
organizations who will use and can benefit from the availability of 
such information.
    ``(c) Coordination.--The Secretary shall ensure that activities are 
carried out under subsection (a) in cooperation and coordination with 
existing research initiatives, programs, and activities.
    ``(d) Other Industries.--In carrying out this section, the 
Secretary shall consider the experiences of other industries in 
reducing errors within such industries and the processes that such 
industries employ to reduce errors.
    ``(e) Issues.--The issues to be addressed with respect to the 
research to be conducted and supported under this subsection may 
include--
            ``(1) the types and causes of errors in the provision of 
        health care, both in the United States and internationally, 
        such as those identified by the reporting system developed by 
        the Linnaeus Collaboration and the United States Pharmacopeia;
            ``(2) the identification and comparison of trends in errors 
        in geographically and demographically diverse health care 
        facilities;
            ``(3) training requirements for health care professionals 
        to ensure that such professionals provide quality health care 
        generally, in specific settings, and for specific practices;
            ``(4) the development of effective communication methods 
        and tools between disciplines to improve patient safety;
            ``(5) the use of interdisciplinary teams to improve patient 
        safety;
            ``(6) the barriers to medical error reduction strategies;
            ``(7) the use of standardized processes in providing 
        medication, including the application of these processes in 
        demographically diverse health care facilities;
            ``(8) the application of a national standardized taxonomy 
        for medication errors;
            ``(9) the effect of educational programs on the consistent 
        application of standardized definitions, terminology, and 
        formats; and
            ``(10) other areas determined appropriate by the Secretary.
    ``(f) Eligibility.--To be eligible to receive a grant under 
subsection (a), an entity shall--
            ``(1) be a patient safety organization, health care 
        provider, health care provider association, research 
        organization, university, or other entity determined to be 
        eligible by the Secretary; and
            ``(2) prepare and submit to the Secretary an application at 
        such time, in such manner, and containing such information as 
        the Secretary may require.
    ``(g) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, $50,000,000 for fiscal year 
2004, and such sums as may be necessary for each subsequent fiscal 
year.''.

SEC. 304. REQUIRED USE OF PRODUCT IDENTIFICATION TECHNOLOGY.

    The Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) is 
amended--
            (1) in section 502, by adding at the end the following:
    ``(u) If it is a drug or biological product, unless it includes a 
unique product identifier for the drug or biological product as 
required by regulations under section 510(o).''; and
            (2) in section 510, by adding at the end the following:
    ``(o)(1) The Secretary shall issue, and may periodically revise, 
regulations requiring the manufacturer of any drug or biological 
product, or the packager or labeler of a drug or biological product, to 
include a unique product identifier on the packaging of the drug or 
biological product.
    ``(2) For purposes of this subsection, the term `unique product 
identifier' means an identification that--
            ``(A) is affixed by the manufacturer, labeler, or packager 
        to each drug or biological product described in paragraph (1);
            ``(B) uniquely identifies the item and meets the standards 
        required by this section; and
            ``(C) can be read by a scanning device or other technology 
        acceptable to the Secretary.
    ``(3) A unique product identifier required by regulations issued or 
revised under paragraph (1) shall be based on--
            ``(A) the National Drug Code maintained by the Food and 
        Drug Administration;
            ``(B) commercially accepted standards established by 
        organizations that are accredited by the American National 
        Standards Institute, such as the Health Industry Business 
        Communication Council or the Uniform Code Council; or
            ``(C) other identification formats that the Secretary deems 
        appropriate.
    ``(4) The Secretary may, at the Secretary's discretion, waive the 
requirements of this subsection, or add additional provisions that are 
necessary to safeguard the public health.''.

   TITLE IV--TAX CREDIT FOR OFFERING EMPLOYER-BASED HEALTH INSURANCE 
                                COVERAGE

SEC. 401. CREDIT FOR EMPLOYEE HEALTH INSURANCE EXPENSES.

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

``SEC. 45G. EMPLOYEE HEALTH INSURANCE EXPENSES.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible small employer, the employee health insurance expenses credit 
determined under this section is an amount equal to the applicable 
percentage of the amount paid by the taxpayer during the taxable year 
for qualified employee health insurance expenses.
    ``(b) Applicable Percentage.--For purposes of subsection (a)--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), the applicable percentage is equal to 50 percent reduced 
        (but not below zero) by 1.25 percentage points for each 
        qualified employee of the employer in excess of 10 qualified 
        employees (as determined under the rules under subsection 
        (c)(1)).
            ``(2) Limitation based on annual wages.--
                    ``(A) In general.--The percentage which would (but 
                for this paragraph) be taken into account as the 
                applicable percentage for purposes of subsection (a) 
                for the taxable year shall be reduced (but not below 
                zero) by the applicable percentage points for each 
                $1,000 (or fraction thereof) by which the average 
                amount of wages paid or incurred by an eligible small 
                employer to qualified employees at an annual rate 
                during the taxable year exceeds $10,000.
                    ``(B) Applicable percentage points.--For purposes 
                of subparagraph (A), the applicable percentage points 
                are equal to--
                            ``(i) in the case of an employer with not 
                        more than 10 qualified employees (as so 
                        determined), 2.22 percentage points, and
                            ``(ii) in the case of an employer with more 
                        than 10 qualified employees (as so determined), 
                        the ratio of the number of qualified employees 
                        of such employer to 450, expressed as 
                        percentage points.
                    ``(C) Wages.--For purposes of this paragraph, the 
                term `wages' has the meaning given such term by section 
                3121(a) (determined without regard to any dollar 
                limitation contained in such section).
            ``(3) High contribution bonus.--With respect to any taxable 
        year during which an eligible small employer pays 100 percent 
        of qualified employee health insurance expenses for the 
        qualified employees of the small employer, the applicable 
        percentage otherwise determined for such taxable year under the 
        preceding paragraphs of this subsection shall be increased by 5 
        percentage points.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible small employer.--
                    ``(A) In general.--The term `eligible small 
                employer' means, with respect to any taxable year, any 
                employer if such employer employed an average of 50 or 
                fewer employees on business days during either of the 2 
                preceding taxable years. For purposes of the preceding 
                sentence, a preceding taxable year may be taken into 
                account only if the employer was in existence 
                throughout such year.
                    ``(B) Employers not in existence in preceding 
                year.--In the case of an employer which was not in 
                existence throughout the 1st preceding taxable year, 
                the determination under subparagraph (A) shall be based 
                on the average number of employees that it is 
                reasonably expected such employer will employ on 
                business days in the current taxable year.
            ``(2) Qualified employee health insurance expenses.--
                    ``(A) In general.--The term `qualified employee 
                health insurance expenses' means any amount paid by an 
                employer for health insurance coverage to the extent 
                such amount is attributable to coverage provided to any 
                employee while such employee is a qualified employee.
                    ``(B) Exception for amounts paid under salary 
                reduction arrangements.--No amount paid or incurred for 
                health insurance coverage pursuant to a salary 
                reduction arrangement shall be taken into account under 
                subparagraph (A).
                    ``(C) Health insurance coverage.--The term `health 
                insurance coverage' has the meaning given such term by 
                section 9832(b)(1).
            ``(3) Qualified employee.--
                    ``(A) In general.--The term `qualified employee' 
                means, with respect to any period, an employee of an 
                employer who is not provided health insurance coverage 
                under--
                            ``(i) a health plan of the employee's 
                        spouse,
                            ``(ii) title XVIII, XIX, or XXI of the 
                        Social Security Act,
                            ``(iii) chapter 17 of title 38, United 
                        States Code,
                            ``(iv) chapter 55 of title 10, United 
                        States Code,
                            ``(v) chapter 89 of title 5, United States 
                        Code,
                            ``(vi) the Indian Health Care Improvement 
                        Act, or
                            ``(vii) any other provision of law.
                    ``(B) Treatment of certain employees.--For purposes 
                of subparagraph (A), the term `employee'--
                            ``(i) shall not include an employee within 
                        the meaning of section 401(c)(1), and
                            ``(ii) shall include a leased employee 
                        within the meaning of section 414(n).
    ``(d) Certain rules made applicable.--For purposes of this section, 
rules similar to the rules of section 52 shall apply.
    ``(e) Denial of Double Benefit.--No deduction or credit under any 
other provision of this chapter shall be allowed with respect to 
qualified employee health insurance expenses taken into account under 
subsection (a).''.
    (b) Credit To Be Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``plus'' at the end of paragraph (14), 
by striking the period at the end of paragraph (15) and inserting ``, 
plus'', and by adding at the end the following:
            ``(16) the employee health insurance expenses credit 
        determined under section 45G.''.
    (c) No Carrybacks.--Subsection (d) of section 39 of the Internal 
Revenue Code of 1986 (relating to carryback and carryforward of unused 
credits) is amended by adding at the end the following:
            ``(11) No carryback of section 45G credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the employee health insurance 
        expenses credit determined under section 45G may be carried 
        back to a taxable year ending before the date of the enactment 
        of section 45G.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following:

                              ``Sec. 45G. Employee health insurance 
                                        expenses.''.
    (e) Employer Outreach.--The Internal Revenue Service shall, in 
conjunction with the Small Business Administration, develop materials 
and implement an educational program to ensure that business personnel 
are aware of--
            (1) the eligibility criteria for the tax credit provided 
        under section 45G of the Internal Revenue Code of 1986 (as 
        added by this section),
            (2) the methods to be used in calculating such credit, and
            (3) the documentation needed in order to claim such credit,
so that the maximum number of eligible businesses may claim the tax 
credit.
    (f) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after the 
date of the enactment of this Act.

                          TITLE V--FAMILYCARE

SEC. 501. RENAMING OF TITLE XXI PROGRAM.

    (a) In General.--The heading of title XXI of the Social Security 
Act (42 U.S.C. 1397aa et seq.) is amended to read as follows:

                   ``TITLE XXI--FAMILYCARE PROGRAM''.

    (b) Program References.--Any reference in any provision of Federal 
law or regulation to ``SCHIP'' or ``State children's health insurance 
program'' under title XXI of the Social Security Act shall be deemed a 
reference to the FamilyCare program under such title.

SEC. 502. FAMILYCARE COVERAGE OF PARENTS AND PREGNANT WOMEN UNDER THE 
              MEDICAID PROGRAM AND TITLE XXI.

    (a) Incentives To Implement FamilyCare Coverage.--
            (1) Under medicaid.--
                    (A) Establishment of new optional eligibility 
                category.--Section 1902(a)(10)(A)(ii) of the Social 
                Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is 
                amended--
                            (i) by striking ``or'' at the end of 
                        subclause (XVII);
                            (ii) by adding ``or'' at the end of 
                        subclause (XVIII); and
                            (iii) by adding at the end the following:
                                    ``(XIX) who are individuals 
                                described in subsection (k)(1) 
                                (relating to parents of categorically 
                                eligible children);''.
                    (B) Parents described.--Section 1902 of the Social 
                Security Act is further amended by inserting after 
                subsection (j) the following:
    ``(k)(1)(A) Individuals described in this paragraph are 
individuals--
            ``(i) who are the parents of an individual who is under 19 
        years of age (or such higher age as the State may have elected 
        under section 1902(l)(1)(D) (as amended by section 505 of the 
        Health Care Coverage Expansion and Quality Improvement Act of 
        2003) and who is eligible for medical assistance under 
        subsection (a)(10)(A);
            ``(ii) who are not otherwise eligible for medical 
        assistance under such subsection or under a waiver approved 
        under section 1115 or otherwise (except under section 1931 or 
        under subsection (a)(10)(A)(ii)(XIX)); and
            ``(iii) whose family income exceeds the effective income 
        level or resource level applicable under the State plan under 
        part A of title IV as in effect as of July 16, 1996, but does 
        not exceed the highest effective income level applicable to a 
        child in the family under this title.
    ``(B) In establishing an income eligibility level for individuals 
described in this paragraph, a State may vary such level consistent 
with the various income levels established under subsection (l)(2) 
based on the ages of children described in subsection (l)(1) in order 
to ensure, to the maximum extent possible, that such individuals shall 
be enrolled in the same program as their children.
    ``(C) An individual may not be treated as being described in this 
paragraph unless, at the time of the individual's enrollment under this 
title, the child referred to in subparagraph (A)(i) of the individual 
is also enrolled under this title.
    ``(D) In this subsection, the term `parent' has the meaning given 
the term `caretaker relative' for purposes of carrying out section 
1931.
    ``(2) In the case of a parent described in paragraph (1) who is 
also the parent of a child who is eligible for child health assistance 
under title XXI, the State may elect (on a uniform basis) to cover all 
such parents under section 2111 or under this title.''.
                    (C) Enhanced matching funds available if certain 
                conditions met.--Section 1905 of the Social Security 
                Act (42 U.S.C. 1396d) is amended--
                            (i) in the fourth sentence of subsection 
                        (b), by striking ``or subsection (u)(3)'' and 
                        inserting ``, (u)(3), or (u)(4)''; and
                            (ii) in subsection (u)--
                                    (I) by redesignating paragraph (4) 
                                as paragraph (6), and
                                    (II) by inserting after paragraph 
                                (3) the following:
    ``(4) For purposes of subsection (b) and section 2105(a)(1):
            ``(A) FamilyCare parents.--The expenditures described in 
        this subparagraph are the expenditures described in the 
        following clauses (i) and (ii):
                    ``(i) Parents.--If the conditions described in 
                clause (iii) are met, expenditures for medical 
                assistance for parents described in section 1902(k)(1) 
                and for parents who would be described in such section 
                but for the fact that they are eligible for medical 
                assistance under section 1931 or under a waiver 
                approved under section 1115.
                    ``(ii) Certain pregnant women.--If the conditions 
                described in clause (iv) are met, expenditures for 
                medical assistance for pregnant women described in 
                subsection (n) or under section 1902(l)(1)(A) in a 
                family the income of which exceeds the effective income 
                level applicable under subsection (a)(10)(A)(i)(III) or 
                (l)(2)(A) of section 1902 to a family of the size 
                involved as of January 1, 2003.
                    ``(iii) Conditions for expenditures for parents.--
                The conditions described in this clause are the 
                following:
                            ``(I) The State has a State child health 
                        plan under title XXI which (whether implemented 
                        under such title or under this title) has an 
                        effective income level for children that is at 
                        least 200 percent of the poverty line.
                            ``(II) Such State child health plan does 
                        not limit the acceptance of applications, does 
                        not use a waiting list for children who meet 
                        eligibility standards to qualify for 
                        assistance, and provides benefits to all 
                        children in the State who apply for and meet 
                        eligibility standards.
                            ``(III) The State plans under this title 
                        and title XXI do not provide coverage for 
                        parents with higher family income without 
                        covering parents with a lower family income.
                            ``(IV) The State does not apply an income 
                        level for parents that is lower than the 
                        effective income level (expressed as a percent 
                        of the poverty line) that has been specified 
under the State plan under title XIX (including under a waiver 
authorized by the Secretary or under section 1902(r)(2)), as of January 
1, 2003, to be eligible for medical assistance as a parent under this 
title.
                    ``(iv) Conditions for expenditures for certain 
                pregnant women.--The conditions described in this 
                clause are the following:
                            ``(I) The State has established an 
                        effective income eligibility level for pregnant 
                        women under subsection (a)(10)(A)(i)(III) or 
                        (l)(2)(A) of section 1902 that is at least 185 
                        percent of the poverty line.
                            ``(II) The State plans under this title and 
                        title XXI do not provide coverage for pregnant 
                        women described in subparagraph (A)(ii) with 
                        higher family income without covering such 
                        pregnant women with a lower family income.
                            ``(III) The State does not apply an income 
                        level for pregnant women that is lower than the 
                        effective income level (expressed as a percent 
                        of the poverty line and considering applicable 
                        income disregards) that has been specified 
                        under the State plan under subsection 
                        (a)(10)(A)(i)(III) or (l)(2)(A) of section 
                        1902, as of January 1, 2003, to be eligible for 
                        medical assistance as a pregnant woman.
                            ``(IV) The State satisfies the conditions 
                        described in subclauses (I) and (II) of clause 
                        (iii).
                    ``(v) Definitions.--For purposes of this 
                subsection:
                            ``(I) The term `parent' has the meaning 
                        given such term for purposes of section 
                        1902(k)(1).
                            ``(II) The term `poverty line' has the 
                        meaning given such term in section 
                        2110(c)(5).''.
                    (D) Appropriation from title xxi allotment for 
                medicaid expansion costs for parents; elimination of 
                counting medicaid child presumptive eligibility costs 
                against title xxi allotment.--Subparagraph (B) of 
                section 2105(a)(1) of the Social Security Act, as 
                amended by section 515(a), is amended to read as 
                follows:
                    ``(B) FamilyCare parents.--Expenditures for medical 
                assistance that are attributable to expenditures 
                described in section 1905(u)(4)(A).''.
                    (E) Only counting enhanced portion for coverage of 
                additional pregnant women.--Section 1905 of the Social 
                Security Act (42 U.S.C. 1396d) is amended--
                            (i) in the fourth sentence of subsection 
                        (b), by inserting ``(except in the case of 
                        expenditures described in subsection (u)(5))'' 
                        after ``do not exceed'';
                            (ii) in subsection (u), by inserting after 
                        paragraph (4) (as inserted by subparagraph 
                        (C)), the following:
    ``(5) For purposes of the fourth sentence of subsection (b) and 
section 2105(a), the following payments under this title do not count 
against a State's allotment under section 2104:
            ``(A) Regular fmap for expenditures for pregnant women with 
        income above january 1, 2003 income level and below 185 percent 
        of poverty.--The portion of the payments made for expenditures 
        described in paragraph (4)(A)(ii) that represents the amount 
        that would have been paid if the enhanced FMAP had not been 
        substituted for the Federal medical assistance percentage.''.
            (2) Under title xxi.--
                    (A) FamilyCare coverage.--Title XXI of the Social 
                Security Act (42 U.S.C. 1397aa et seq.) is amended by 
                adding at the end the following:

``SEC. 2111. OPTIONAL FAMILYCARE COVERAGE OF PARENTS OF TARGETED LOW-
              INCOME CHILDREN OR TARGETED LOW-INCOME PREGNANT WOMEN.

    ``(a) Optional Coverage.--Notwithstanding any other provision of 
this title, a State may provide for coverage, through an amendment to 
its State child health plan under section 2102, of parent health 
assistance for targeted low-income parents, pregnancy-related 
assistance for targeted low-income pregnant women, or both, in 
accordance with this section, but only if--
            ``(1) with respect to the provision of parent health 
        assistance, the State meets the conditions described in clause 
        (iii) of section 1905(u)(4)(A);
            ``(2) with respect to the provision of pregnancy-related 
        assistance, the State meets the conditions described in clause 
        (iv) of section 1905(u)(4)(A); and
            ``(3) in the case of parent health assistance for targeted 
        low-income parents, the State elects to provide medical 
        assistance under section 1902(a)(10)(A)(ii)(XIX), under section 
        1931, or under a waiver under section 1115 to individuals 
        described in section 1902(k)(1)(A)(i) and elects an effective 
        income level that, consistent with paragraphs (1)(B) and (2) of 
        section 1902(k), ensures to the maximum extent possible, that 
        such individuals shall be enrolled in the same program as their 
        children if their children are eligible for coverage under 
        title XIX (including under a waiver authorized by the Secretary 
        or under section 1902(r)(2)).''.
    ``(b) Definitions.--For purposes of this title:
            ``(1) Parent health assistance.--The term `parent health 
        assistance' has the meaning given the term child health 
        assistance in section 2110(a) as if any reference to targeted 
        low-income children were a reference to targeted low-income 
        parents.
            ``(2) Parent.--The term `parent' has the meaning given the 
        term `caretaker relative' for purposes of carrying out section 
        1931.
            ``(3) Pregnancy-related assistance.--The term `pregnancy-
        related assistance' has the meaning given the term child health 
        assistance in section 2110(a) as if any reference to targeted 
low-income children were a reference to targeted low-income pregnant 
women, except that the assistance shall be limited to services related 
to pregnancy (which include prenatal, delivery, and postpartum 
services) and to other conditions that may complicate pregnancy.
            ``(4) Targeted low-income parent.--The term `targeted low-
        income parent' has the meaning given the term targeted low-
        income child in section 2110(b) as if the reference to a child 
        were deemed a reference to a parent (as defined in paragraph 
        (3)) of the child; except that in applying such section--
                    ``(A) there shall be substituted for the income 
                level described in paragraph (1)(B)(ii)(I) the 
                applicable income level in effect for a targeted low-
                income child;
                    ``(B) in paragraph (3), January 1, 2003, shall be 
                substituted for July 1, 1997; and
                    ``(C) in paragraph (4), January 1, 2003, shall be 
                substituted for March 31, 1997.
            ``(5) Targeted low-income pregnant woman.--The term 
        `targeted low-income pregnant woman' has the meaning given the 
        term targeted low-income child in section 2110(b) as if any 
        reference to a child were a reference to a woman during 
        pregnancy and through the end of the month in which the 60-day 
        period beginning on the last day of her pregnancy ends; except 
        that in applying such section--
                    ``(A) there shall be substituted for the income 
                level described in paragraph (1)(B)(ii)(I) the 
                applicable income level in effect for a targeted low-
                income child;
                    ``(B) in paragraph (3), January 1, 2003, shall be 
                substituted for July 1, 1997; and
                    ``(C) in paragraph (4), January 1, 2003, shall be 
                substituted for March 31, 1997.
    ``(c) References to Terms and Special Rules.--In the case of, and 
with respect to, a State providing for coverage of parent health 
assistance to targeted low-income parents or pregnancy-related 
assistance to targeted low-income pregnant women under subsection (a), 
the following special rules apply:
            ``(1) Any reference in this title (other than in subsection 
        (b)) to a targeted low-income child is deemed to include a 
        reference to a targeted low-income parent or a targeted low-
        income pregnant woman (as applicable).
            ``(2) Any such reference to child health assistance--
                    ``(A) with respect to such parents is deemed a 
                reference to parent health assistance; and
                    ``(B) with respect to such pregnant women, is 
                deemed a reference to pregnancy-related assistance.
            ``(3) In applying section 2103(e)(3)(B) in the case of a 
        family or pregnant woman provided coverage under this section, 
        the limitation on total annual aggregate cost-sharing shall be 
        applied to the entire family or such pregnant woman.
            ``(4) In applying section 2110(b)(4), any reference to 
        `section 1902(l)(2) or 1905(n)(2) (as selected by a State)' is 
        deemed a reference to the effective income level applicable to 
        parents under section 1931 or under a waiver approved under 
        section 1115, or, in the case of a pregnant woman, the income 
        level established under section 1902(l)(2)(A).
            ``(5) In applying section 2102(b)(3)(B), any reference to 
        children found through screening to be eligible for medical 
        assistance under the State medicaid plan under title XIX is 
        deemed a reference to parents and pregnant women.''.
                    (B) Additional allotment for states providing 
                coverage of parents or pregnant women.--
                            (i) In general.--Section 2104 of the Social 
                        Security Act (42 U.S.C. 1397dd) is amended by 
                        inserting after subsection (c) the following:
    ``(d) Additional Allotments for State Coverage of Parents or 
Pregnant Women.--
            ``(1) Appropriation; total allotment.--For the purpose of 
        providing additional allotments to States under this title, 
        there is appropriated, out of any money in the Treasury not 
        otherwise appropriated--
                    ``(A) for fiscal year 2004, $2,000,000,000;
                    ``(B) for fiscal year 2005, $4,000,000,000;
                    ``(C) for fiscal year 2006, $4,000,000,000;
                    ``(D) for fiscal year 2007, $5,000,000,000;
                    ``(E) for fiscal year 2008, $5,000,000,000;
                    ``(F) for fiscal year 2009, $6,000,000,000;
                    ``(G) for fiscal year 2010, $7,000,000,000;
                    ``(H) for fiscal year 2011, $8,000,000,000;
                    ``(I) for fiscal year 2012, $9,000,000,000;
                    ``(J) for fiscal year 2013 and each fiscal year 
                thereafter, the amount of the allotment provided under 
                this paragraph for the preceding fiscal year increased 
                by the percentage increase (if any) in the medical care 
                expenditure category of the Consumer Price Index for 
                All Urban Consumers (United States city average).
            ``(2) State and territorial allotments.--
                    ``(A) In general.--In addition to the allotments 
                provided under subsections (b) and (c), subject to 
                paragraphs (3) and (4), of the amount available for the 
                additional allotments under paragraph (1) for a fiscal 
                year, the Secretary shall allot to each State with a 
                State child health plan approved under this title--
                            ``(i) in the case of such a State other 
                        than a commonwealth or territory described in 
                        subparagraph (B), the same proportion as the 
                        proportion of the State's allotment under 
                        subsection (b) (determined without regard to 
                        subsection (f)) to the total amount of the 
                        allotments under subsection (b) for such States 
                        eligible for an allotment under this paragraph 
                        for such fiscal year; and
                            ``(ii) in the case of a commonwealth or 
                        territory described in subsection (c)(3), the 
                        same proportion as the proportion of the 
                        commonwealth's or territory's allotment under 
                        subsection (c) (determined without regard to 
                        subsection (f)) to the total amount of the 
                        allotments under subsection (c) for 
                        commonwealths and territories eligible for an 
                        allotment under this paragraph for such fiscal 
                        year.
                    ``(B) Availability and redistribution of unused 
                allotments.--In applying subsections (e) and (f) with 
                respect to additional allotments made available under 
                this subsection, the procedures established under such 
                subsections shall ensure such additional allotments are 
                only made available to States which have elected to 
                provide coverage under section 2111.
            ``(3) Use of additional allotment.--Additional allotments 
        provided under this subsection are not available for amounts 
        expended before October 1, 2003. Such amounts are available for 
        amounts expended on or after such date for child health 
        assistance for targeted low-income children, as well as for 
        parent health assistance for targeted low-income parents, and 
        pregnancy-related assistance for targeted low-income pregnant 
        women.
            ``(4) Requiring election to provide coverage.--No payments 
        may be made to a State under this title from an allotment 
        provided under this subsection unless the State has made an 
        election to provide parent health assistance for targeted low-
        income parents, or pregnancy-related assistance for targeted 
        low-income pregnant women.''.
                            (ii) Conforming amendments.--Section 2104 
                        of the Social Security Act (42 U.S.C. 1397dd) 
                        is amended--
                                    (I) in subsection (a), by inserting 
                                ``subject to subsection (d),'' after 
                                ``under this section,'';
                                    (II) in subsection (b)(1), by 
                                inserting ``and subsection (d)'' after 
                                ``Subject to paragraph (4)''; and
                                    (III) in subsection (c)(1), by 
                                inserting ``subject to subsection 
                                (d),'' after ``for a fiscal year,''.
                    (C) No cost-sharing for pregnancy-related 
                benefits.--Section 2103(e)(2) of the Social Security 
                Act (42 U.S.C. 1397cc(e)(2)) is amended--
                            (i) in the heading, by inserting ``and 
                        pregnancy-related services'' after ``preventive 
                        services''; and
                            (ii) by inserting before the period at the 
                        end the following: ``and for pregnancy-related 
                        services''.
            (3) Effective date.--The amendments made by this subsection 
        apply to items and services furnished on or after October 1, 
        2003, without regard to whether regulations implementing such 
        amendments have been issued.
    (b) Optional Application of Presumptive Eligibility Provisions to 
Parents.--Section 1920A of the Social Security Act (42 U.S.C. 1396r-1a) 
is amended by adding at the end the following:
    ``(e) A State may elect to apply the previous provisions of this 
section to provide for a period of presumptive eligibility for medical 
assistance for a parent (as defined for purposes of section 1902(k)(1)) 
of a child with respect to whom such a period is provided under this 
section.''.
    (c) Conforming Amendments.--
            (1) Eligibility categories.--Section 1905(a) of the Social 
        Security Act (42 U.S.C. 1396d(a)) is amended, in the matter 
        before paragraph (1)--
                    (A) by striking ``or'' at the end of clause (xii);
                    (B) by inserting ``or'' at the end of clause 
                (xiii); and
                    (C) by inserting after clause (xiii) the following:
            ``(xiv) who are parents described (or treated as if 
        described) in section 1902(k)(1),''.
            (2) Income limitations.--Section 1903(f)(4) of the Social 
        Security Act (42 U.S.C. 1396b(f)(4)) is amended by inserting 
        ``1902(a)(10)(A)(ii)(XIX),'' after 
        ``1902(a)(10)(A)(ii)(XVIII),''.
            (3) Conforming amendment relating to no waiting period for 
        pregnant women.--Section 2102(b)(1)(B) of the Social Security 
        Act (42 U.S.C. 1397bb(b)(1)(B)) is amended--
                    (A) by striking ``, and'' at the end of clause (i) 
                and inserting a semicolon;
                    (B) by striking the period at the end of clause 
                (ii) and inserting ``; and''; and
                    (C) by adding at the end the following:
                            ``(iii) may not apply a waiting period 
                        (including a waiting period to carry out 
                        paragraph (3)(C)) in the case of a targeted 
                        low-income parent who is pregnant.''.

SEC. 503. AUTOMATIC ENROLLMENT OF CHILDREN BORN TO TITLE XXI PARENTS.

    (a) Title XXI.--Section 2102(b)(1) (42 U.S.C. 1397bb(b)(1)) is 
amended by adding at the end the following:
                    ``(C) Automatic eligibility of children born to 
                parents or pregnant women.--Such eligibility standards 
                shall provide for automatic coverage of a child born to 
                an individual who is provided assistance under this 
                title in the same manner as medical assistance would be 
                provided under section 1902(e)(4) to a child described 
                in such section.''.
    (b) Conforming Amendment to Medicaid.--Section 1902(e)(4) (42 
U.S.C. 1396a(e)(4)) is amended in the first sentence by striking ``so 
long as the child is a member of the woman's household and the woman 
remains (or would remain if pregnant) eligible for such assistance''.

SEC. 504. OPTIONAL COVERAGE OF LEGAL IMMIGRANTS UNDER THE MEDICAID 
              PROGRAM AND TITLE XXI.

    (a) Medicaid Program.--Section 1903(v) of the Social Security Act 
(42 U.S.C. 1396b(v)) is amended--
            (1) in paragraph (1), by striking ``paragraph (2)'' and 
        inserting ``paragraphs (2) and (4)''; and
            (2) by adding at the end the following:
    ``(4)(A) A State may elect (in a plan amendment under this title) 
to provide medical assistance under this title for aliens who are 
lawfully residing in the United States (including battered aliens 
described in section 431(c) of the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996) and who are otherwise eligible 
for such assistance, within any of the following eligibility 
categories:
            ``(i) Pregnant women.--Women during pregnancy (and during 
        the 60-day period beginning on the last day of the pregnancy).
            ``(ii) Children.--Children (as defined under such plan), 
        including optional targeted low-income children described in 
        section 1905(u)(2)(B).
            ``(iii) Parents.--If the State has elected the eligibility 
        category described in clause (ii), caretaker relatives who are 
        parents (including individuals treated as a caregiver for 
        purposes of carrying out section 1931) of children (described 
        in such clause or otherwise) who are eligible for medical 
        assistance under the plan.
    ``(B)(i) In the case of a State that has elected to provide medical 
assistance to a category of aliens under subparagraph (A), no debt 
shall accrue under an affidavit of support against any sponsor of such 
an alien on the basis of provision of assistance to such category and 
the cost of such assistance shall not be considered as an unreimbursed 
cost.
    ``(ii) The provisions of sections 401(a), 402(b), 403, and 421 of 
the Personal Responsibility and Work Opportunity Reconciliation Act of 
1996 shall not apply to a State that makes an election under 
subparagraph (A).''.
    (b) Title XXI.--Section 2107(e)(1) of the Social Security Act (42 
U.S.C. 1397gg(e)(1)) is amended by adding at the end the following:
                    ``(E) Section 1903(v)(4) (relating to optional 
                coverage of categories of lawful resident alien 
                pregnant women, children, and parents), but only with 
                respect to an eligibility category under this title, if 
                the same eligibility category has been elected under 
                such section for purposes of title XIX.''.
    (c) Effective Date.--The amendments made by this section take 
effect on October 1, 2003, and apply to medical assistance and child 
health assistance furnished on or after such date, whether or not 
regulations implementing such amendments have been issued.

SEC. 505. OPTIONAL COVERAGE OF CHILDREN THROUGH AGE 20 UNDER THE 
              MEDICAID PROGRAM AND TITLE XXI.

    (a) Medicaid.--
            (1) In general.--Section 1902(l)(1)(D) of the Social 
        Security Act (42 U.S.C. 1396a(l)(1)(D)) is amended by inserting 
        ``(or, at the election of a State, 20 or 21 years of age)'' 
        after ``19 years of age''.
            (2) Conforming amendments.--
                    (A) Section 1902(e)(3)(A) of the Social Security 
                Act (42 U.S.C. 1396a(e)(3)(A)) is amended by inserting 
                ``(or 1 year less than the age the State has elected 
                under subsection (l)(1)(D))'' after ``18 years of 
                age''.
                    (B) Section 1902(e)(12) of the Social Security Act 
                (42 U.S.C. 1396a(e)(12)) is amended by inserting ``or 
                such higher age as the State has elected under 
                subsection (l)(1)(D)'' after ``19 years of age''.
                    (C) Section 1920A(b)(1) of the Social Security Act 
                (42 U.S.C. 1396r-1a(b)(1)) is amended by inserting ``or 
                such higher age as the State has elected under section 
                1902(l)(1)(D)'' after ``19 years of age''.
                    (D) Section 1928(h)(1) of the Social Security Act 
                (42 U.S.C. 1396s(h)(1)) is amended by inserting ``or 1 
                year less than the age the State has elected under 
                section 1902(l)(1)(D)'' before the period at the end.
                    (E) Section 1932(a)(2)(A) of the Social Security 
                Act (42 U.S.C. 1396u-2(a)(2)(A)) is amended by 
                inserting ``(or such higher age as the State has 
                elected under section 1902(l)(1)(D))'' after ``19 years 
                of age''.
    (b) Title XXI.--Section 2110(c)(1) of the Social Security Act (42 
U.S.C. 1397jj(c)(1)) is amended by inserting ``(or such higher age as 
the State has elected under section 1902(l)(1)(D))''.
    (c) Effective Date.--The amendments made by this section take 
effect on October 1, 2003, and apply to medical assistance and child 
health assistance provided on or after such date, whether or not 
regulations implementing such amendments have been issued.

SEC. 506. APPLICATION OF SIMPLIFIED TITLE XXI PROCEDURES UNDER THE 
              MEDICAID PROGRAM.

    (a) Application Under Medicaid.--
            (1) In general.--Section 1902(l) of the Social Security Act 
        (42 U.S.C. 1396a(l)) is amended--
                    (A) in paragraph (3), by inserting ``subject to 
                paragraph (5)'', after ``Notwithstanding subsection 
                (a)(17),''; and
                    (B) by adding at the end the following:
    ``(5) With respect to determining the eligibility of individuals 
under 19 years of age (or such higher age as the State has elected 
under paragraph (1)(D)) for medical assistance under subsection 
(a)(10)(A) and, separately, with respect to determining the eligibility 
of individuals for medical assistance under subsection 
(a)(10)(A)(i)(VIII) or (a)(10)(A)(ii)(XIX), notwithstanding any other 
provision of this title, if the State has established a State child 
health plan under title XXI--
            ``(A) the State may not apply a resource standard;
            ``(B) the State shall use the same simplified eligibility 
        form (including, if applicable, permitting application other 
        than in person) as the State uses under such State child health 
        plan with respect to such individuals;
            ``(C) the State shall provide for initial eligibility 
        determinations and redeterminations of eligibility using 
        verification policies, forms, and frequency that are no less 
        restrictive than the policies, forms, and frequency the State 
        uses for such purposes under such State child health plan with 
        respect to such individuals; and
            ``(D) the State shall not require a face-to-face interview 
        for purposes of initial eligibility determinations and 
        redeterminations unless the State requires such an interview 
        for such purposes under such child health plan with respect to 
        such individuals.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        apply to determinations of eligibility made on or after the 
        date that is 1 year after the date of the enactment of this 
        Act, whether or not regulations implementing such amendments 
        have been issued.
    (b) Presumptive Eligibility.--
            (1) In general.--Section 1920A(b)(3)(A)(i) of the Social 
        Security Act (42 U.S.C. 1396r-1a(b)(3)(A)(i)) is amended by 
        inserting ``a child care resource and referral agency,'' after 
        ``a State or tribal child support enforcement agency,''.
            (2) Application to presumptive eligibility for pregnant 
        women under medicaid.--Section 1920(b) of the Social Security 
        Act (42 U.S.C. 1396r-1(b)) is amended by adding at the end 
        after and below paragraph (2) the following flush sentence:
``The term `qualified provider' includes a qualified entity as defined 
in section 1920A(b)(3).''.
            (3) Application under title xxi.--
                    (A) In general.--Section 2107(e)(1)(D) of the 
                Social Security Act (42 U.S.C. 1397gg(e)(1)) is amended 
                to read as follows:
                    ``(D) Sections 1920 and 1920A (relating to 
                presumptive eligibility).''.
                    (B) Conforming elimination of resource test.--
                Section 2102(b)(1)(A) of such Act (42 U.S.C. 
                1397bb(b)(1)(A)) is amended--
                            (i) by striking `` and resources (including 
                        any standards relating to spenddowns and 
                        disposition of resources)''; and
                            (ii) by adding at the end the following: 
                        ``Effective 1 year after the date of the 
                        enactment of the Health Care Coverage Expansion 
                        and Quality Improvement Act of 2003, such 
                        standards may not include the application of a 
                        resource standard or test.''.
    (c) Automatic Reassessment of Eligibility for Title XXI and 
Medicaid Benefits for Children Losing Medicaid or Title XXI 
Eligibility.--
            (1) Loss of medicaid eligibility.--Section 1902(a) of the 
        Social Security Act (42 U.S.C. 1396a(a)) is amended--
                    (A) by striking the period at the end of paragraph 
                (65) and inserting ``; and'', and
                    (B) by inserting after paragraph (65) the 
                following:
            ``(66) provide, in the case of a State with a State child 
        health plan under title XXI, that before medical assistance to 
        a child (or a parent of a child) is discontinued under this 
        title, a determination of whether the child (or parent) is 
        eligible for benefits under title XXI shall be made and, if 
        determined to be so eligible, the child (or parent) shall be 
        automatically enrolled in the program under such title without 
        the need for a new application.''.
            (2) Loss of title xxi eligibility and coordination with 
        medicaid.--Section 2102(b) of the Social Security Act (42 
        U.S.C. 1397bb(b)) is amended--
                    (A) in paragraph (3), by redesignating 
                subparagraphs (D) and (E) as subparagraphs (E) and (F), 
                respectively, and by inserting after subparagraph (C) 
                the following:
                    ``(D) that before health assistance to a child (or 
                a parent of a child) is discontinued under this title, 
                a determination of whether the child (or parent) is 
                eligible for benefits under title XIX is made and, if 
                determined to be so eligible, the child (or parent) is 
                automatically enrolled in the program under such title 
                without the need for a new application;'';
                    (B) by redesignating paragraph (4) as paragraph 
                (5); and
                    (C) by inserting after paragraph (3) the following 
                new paragraph:
            ``(4) Coordination with medicaid.--The State shall 
        coordinate the screening and enrollment of individuals under 
        this title and under title XIX consistent with the following:
                    ``(A) Information that is collected under this 
                title or under title XIX which is needed to make an 
                eligibility determination under the other title shall 
                be transmitted to the appropriate administering entity 
                under such other title in a timely manner so that 
                coverage is not delayed and families do not have to 
                submit the same information twice. Families shall be 
                provided the information they need to complete the 
                application process for coverage under both titles and 
                be given appropriate notice of any determinations made 
                on their applications for such coverage.
                    ``(B) If a State does not use a joint application 
                under this title and such title, the State shall--
                            ``(i) promptly inform a child's parent or 
                        caretaker in writing and, if appropriate, 
                        orally, that a child has been found likely to 
                        be eligible under title XIX;
                            ``(ii) provide the family with an 
                        application for medical assistance under such 
                        title and offer information about what (if any) 
                        further information, documentation, or other 
                        steps are needed to complete such application 
                        process;
                            ``(iii) offer assistance in completing such 
                        application process; and
                            ``(iv) promptly transmit the separate 
                        application under this title or the information 
                        obtained through such application, and all 
                        other relevant information and documentation, 
                        including the results of the screening process, 
                        to the State agency under title XIX for a final 
                        determination on eligibility under such title.
                    ``(C) Applicants are notified in writing of--
                            ``(i) benefits (including restrictions on 
                        cost-sharing) under title XIX; and
                            ``(ii) eligibility rules that prohibit 
                        children who have been screened eligible for 
                        medical assistance under such title from being 
                        enrolled under this title, other than 
                        provisional temporary enrollment while a final 
                        eligibility determination is being made under 
                        such title.
                    ``(D) If the agency administering this title is 
                different from the agency administering a State plan 
                under title XIX, such agencies shall coordinate the 
                screening and enrollment of applicants for such 
                coverage under both titles.
                    ``(E) The coordination procedures established 
                between the program under this title and under title 
                XIX shall apply not only to the initial eligibility 
                determination of a family but also to any renewals or 
redeterminations of such eligibility.''.
            (3) Effective date.--The amendments made by paragraphs (1) 
        and (2) apply to individuals who lose eligibility under the 
        medicaid program under title XIX, or under a State child health 
        insurance plan under title XXI, respectively, of the Social 
        Security Act on or after October 1, 2003 (or, if later, 60 days 
        after the date of the enactment of this Act), whether or not 
        regulations implementing such amendments have been issued.
    (d) Provision of Medicaid and CHIP Applications and Information 
Under the School Lunch Program.--Section 9(b)(2)(B) of the Richard B. 
Russell National School Lunch Act (42 U.S.C. 1758(b)(2)(B)) is 
amended--
            (1) by striking ``(B) Applications'' and inserting ``(B)(i) 
        Applications''; and
            (2) by adding at the end the following:
    ``(ii)(I) Applications for free and reduced price lunches that are 
distributed pursuant to clause (i) to parents or guardians of children 
in attendance at schools participating in the school lunch program 
under this Act shall also contain information on the availability of 
medical assistance under title XIX of the Social Security Act (42 
U.S.C. 1396 et seq.) and of child health and FamilyCare assistance 
under title XXI of such Act, including information on how to obtain an 
application for assistance under such programs.
    ``(II) Information on the programs referred to in subclause (I) 
shall be provided on a form separate from the application form for free 
and reduced price lunches under clause (i).''.
    (e) 12-Months Continuous Eligibility.--
            (1) Medicaid.--Section 1902(e)(12) of the Social Security 
        Act (42 U.S.C. 1396a(e)(12)) is amended--
                    (A) by striking ``At the option of the State, the 
                plan may'' and inserting ``The plan shall'';
                    (B) by striking ``an age specified by the State 
                (not to exceed 19 years of age)'' and inserting ``19 
                years of age (or such higher age as the State has 
                elected under subsection (l)(1)(D)) or, at the option 
                of the State, who is eligible for medical assistance as 
                the parent of such a child''; and
                    (C) in subparagraph (A), by striking ``a period 
                (not to exceed 12 months) '' and inserting ``the 12-
                month period beginning on the date''.
            (2) Title xxi.--Section 2102(b)(2) of such Act (42 U.S.C. 
        1397bb(b)(2)) is amended by adding at the end the following: 
        ``Such methods shall provide 12-months continuous eligibility 
        for children under this title in the same manner that section 
        1902(e)(12) provides 12-months continuous eligibility for 
        children described in such section under title XIX. If a State 
        has elected to apply section 1902(e)(12) to parents, such 
        methods may provide 12-months continuous eligibility for 
        parents under this title in the same manner that such section 
        provides 12-months continuous eligibility for parents described 
        in such section under title XIX.''.
            (3) Effective date.--
                    (A) In general.--The amendments made by this 
                subsection shall take effect on October 1, 2003 (or, if 
                later, 60 days after the date of the enactment of this 
                Act), whether or not regulations implementing such 
                amendments have been issued.

SEC. 507. IMPROVING WELFARE-TO-WORK TRANSITION UNDER THE MEDICAID 
              PROGRAM.

    (a) Option of Continuous Eligibility for 12 Months; Option of 
Continuing Coverage for Up To an Additional Year.--
            (1) Option of continuous eligibility for 12 months by 
        making reporting requirements optional.--Section 1925(b) (42 
        U.S.C. 1396r-6(b)) is amended--
                    (A) in paragraph (1), by inserting ``, at the 
                option of a State,'' after ``and which'';
                    (B) in paragraph (2)(A), by inserting ``Subject to 
                subparagraph (C):'' after ``(A) Notices.--'';
                    (C) in paragraph (2)(B), by inserting ``Subject to 
                subparagraph (C):'' after ``(B) Reporting 
                requirements.--'';
                    (D) by adding at the end the following new 
                subparagraph:
                    ``(C) State option to waive notice and reporting 
                requirements.--A State may waive some or all of the 
                reporting requirements under clauses (i) and (ii) of 
                subparagraph (B). Insofar as it waives such a reporting 
                requirement, the State need not provide for a notice 
                under subparagraph (A) relating to such requirement.''; 
                and
                    (E) in paragraph (3)(A)(iii), by inserting ``the 
                State has not waived under paragraph (2)(C) the 
                reporting requirement with respect to such month under 
paragraph (2)(B) and if'' after ``6-month period if''.
            (2) State option to extend eligibility for low-income 
        individuals for up to 12 additional months.--Section 1925 (42 
        U.S.C. 1396r-6) is further amended--
                    (A) by redesignating subsections (c) through (f) as 
                subsections (d) through (g), respectively; and
                    (B) by inserting after subsection (b) the following 
                new subsection:
    ``(c) State Option of Up To 12 Months of Additional Eligibility.--
            ``(1) In general.--Notwithstanding any other provision of 
        this title, each State plan approved under this title may 
        provide, at the option of the State, that the State shall offer 
        to each family which received assistance during the entire 6-
        month period under subsection (b) and which meets the 
        applicable requirement of paragraph (2), in the last month of 
        the period the option of extending coverage under this 
        subsection for the succeeding period not to exceed 12 months.
            ``(2) Income restriction.--The option under paragraph (1) 
        shall not be made available to a family for a succeeding period 
        unless the State determines that the family's average gross 
        monthly earnings (less such costs for such child care as is 
        necessary for the employment of the caretaker relative) as of 
        the end of the 6-month period under subsection (b) does not 
        exceed 185 percent of the official poverty line (as defined by 
        the Office of Management and Budget, and revised annually in 
        accordance with section 673(2) of the Omnibus Budget 
        Reconciliation Act of 1981) applicable to a family of the size 
        involved.
            ``(3) Application of extension rules.--The provisions of 
        paragraphs (2), (3), (4), and (5) of subsection (b) shall apply 
        to the extension provided under this subsection in the same 
        manner as they apply to the extension provided under subsection 
        (b)(1), except that for purposes of this subsection--
                    ``(A) any reference to a 6-month period under 
                subsection (b)(1) is deemed a reference to the 
                extension period provided under paragraph (1) and any 
                deadlines for any notices or reporting and the premium 
                payment periods shall be modified to correspond to the 
                appropriate calendar quarters of coverage provided 
                under this subsection; and
                    ``(B) any reference to a provision of subsection 
                (a) or (b) is deemed a reference to the corresponding 
                provision of subsection (b) or of this subsection, 
                respectively.''.
    (b) State Option To Waive Receipt of Medicaid for 3 of Previous 6 
Months To Qualify for TMA.--Section 1925(a)(1) (42 U.S.C. 1396r-
6(a)(1)) is amended by adding at the end the following: ``A State may, 
at its option, also apply the previous sentence in the case of a family 
that was receiving such aid for fewer than 3 months, or that had 
applied for and was eligible for such aid for fewer than 3 months, 
during the 6 immediately preceding months described in such 
sentence.''.
    (c) Elimination of Sunset for TMA.--
            (1) Subsection (g) of section 1925 of such Act (42 U.S.C. 
        1396r-6), as redesignated under subsection (a)(2)(A), is 
        repealed.
            (2) Section 1902(e)(1) of such Act (42 U.S.C. 1396a(e)(1)) 
        is amended by striking ``(A) Notwithstanding'' and all that 
        follows through ``During such period, for'' in subparagraph (B) 
        and inserting ``For''.
    (d) CMS Report on Enrollment and Participation Rates Under TMA.--
Section 1925 (42 U.S.C. 1396r-6), as amended by subsections (a)(2)(A) 
and (c), is amended by inserting after subsection (f) the following:
    ``(g) Additional Provisions.--
            ``(1) Collection and reporting of participation 
        information.--Each State shall--
                    ``(A) collect and submit to the Secretary, in a 
                format specified by the Secretary, information on 
                average monthly enrollment and average monthly 
                participation rates for adults and children under this 
                section; and
                    ``(B) make such information publicly available.
        Such information shall be submitted under subparagraph (A) at 
        the same time and frequency in which other enrollment 
        information under this title is submitted to the Secretary. 
        Using such information, the Secretary shall submit to Congress 
        annual reports concerning such rates.''.
    (e) Coordination of Work.--Section 1925(g) (42 U.S.C. 1396r-6(g)), 
as added by subsection (d), is amended by adding at the end the 
following new paragraph:
            ``(2) Coordination with administration for children and 
        families.--The Administrator of the Centers for Medicare & 
Medicaid Services, in carrying out this section, shall work with the 
Assistant Secretary for the Administration for Children and Families to 
develop guidance or other technical assistance for States regarding 
best practices in guaranteeing access to transitional medical 
assistance under this section.''.
    (f) Elimination of TMA Requirement for States That Extend Coverage 
to Children and Parents Through 185 Percent of Poverty.--
            (1) In general.--Section 1925 of the Social Security Act 
        (42 U.S.C. 1396r-6) is further amended by inserting after 
        subsection (g), as added by subsection (d), the following:
    ``(h) Provisions Optional for States That Extend Coverage to 
Children and Parents Through 185 Percent of Poverty.--A State may meet 
(but is not required to meet) the requirements of subsections (a) and 
(b) if it provides for medical assistance under section 1931 to 
families (including both children and caretaker relatives) the average 
gross monthly earning of which (less such costs for such child care as 
is necessary for the employment of a caretaker relative) is at or below 
a level that is at least 185 percent of the official poverty line (as 
defined by the Office of Management and Budget, and revised annually in 
accordance with section 673(2) of the Omnibus Budget Reconciliation Act 
of 1981) applicable to a family of the size involved.''.
            (2) Conforming amendments.--Section 1925 of the Social 
        Security Act (42 U.S.C. 1396r-6) is further amended, in 
        subsections (a)(1) and (b)(1), by inserting ``, but subject to 
        subsection (h),'' after ``Notwithstanding any other provision 
        of this title,'' each place it appears.
    (g) Requirement of Notice for All Families Losing TANF.--Subsection 
(a)(2) of section 1925 of such Act (42 U.S.C. 1396r-6) is amended by 
adding at the end the following flush sentences:
        ``Each State shall provide, to families whose aid under part A 
        or E of title IV has terminated but whose eligibility for 
        medical assistance under this title continues, written notice 
        of their ongoing eligibility for such medical assistance. If a 
        State makes a determination that any member of a family whose 
        aid under part A or E of title IV is being terminated is also 
        no longer eligible for medical assistance under this title, the 
        notice of such determination shall be supplemented by a 1-page 
        notification form describing the different ways in which 
        individuals and families may qualify for such medical 
        assistance and explaining that individuals and families do not 
        have to be receiving aid under part A or E of title IV in order 
        to qualify for such medical assistance. Such notice shall 
        further be supplemented by information on how to apply for 
        child health assistance under the State children's health 
        insurance program under title XXI and how to apply for medical 
        assistance under this title.''.
    (h) Extending Use of Outstationed Workers To Accept Applications 
for Transitional Medical Assistance.--Section 1902(a)(55) of the Social 
Security Act (42 U.S.C. 1396a(a)(55)) is amended by inserting ``and 
under section 1931'' after ``(a)(10)(A)(ii)(IX)''.
    (i) Effective Dates.--
            (1) In general.--Except as provided in this subsection, the 
        amendments made by this section shall apply to calendar 
        quarters beginning on or after October 1, 2003, without regard 
        to whether or not final regulations to carry out such 
        amendments have been promulgated by such date.
            (2) Notice.--The amendment made by subsection (g) shall 
        take effect 6 months after the date of enactment of this Act.
            (3) Delay permitted for state plan amendment.--In the case 
        of a State plan for medical assistance under title XIX of the 
        Social Security Act which the Secretary of Health and Human 
        Services determines requires State legislation (other than 
        legislation appropriating funds) in order for the plan to meet 
        the additional requirements imposed by the amendments made by 
        this section, the State plan shall not be regarded as failing 
        to comply with the requirements of such title solely on the 
        basis of its failure to meet these additional requirements 
        before the first day of the first calendar quarter beginning 
        after the close of the first regular session of the State 
        legislature that begins after the date of enactment of this 
        Act. For purposes of the previous sentence, in the case of a 
        State that has a 2-year legislative session, each year of such 
        session shall be deemed to be a separate regular session of the 
        State legislature.

SEC. 508. ELIMINATION OF 100 HOUR RULE AND OTHER AFDC-RELATED 
              ELIGIBILITY RESTRICTIONS.

    (a) In General.--Section 1931(b)(1)(A)(ii) of the Social Security 
Act (42 U.S.C. 1396u-1(b)(1)(A)(ii)) is amended by inserting ``other 
than the requirement that the child be deprived of parental support or 
care by reason of the death, continued absence from the home, 
incapacity, or unemployment of a parent,'' after ``section 407(a),''.
    (b) Conforming Amendment.--Section 1905(a) of the Social Security 
Act (42 U.S.C. 1396d(a)) is amended, in the matter before paragraph 
(1), in clause (ii), by striking ``if such child is (or would, if 
needy, be) a dependent child under part A of title IV''.
    (c) Effective Date.--The amendments made by this section apply to 
eligibility determinations made on or after October 1, 2003, whether or 
not regulations implementing such amendments have been issued.

SEC. 509. INCREASED FEDERAL REIMBURSEMENT FOR LANGUAGE SERVICES UNDER 
              THE MEDICAID PROGRAM AND TITLE XXI.

    (a) Medicaid.--Section 1903(a)(3) of the Social Security Act (42 
U.S.C. 1396b(a)(3)) is amended--
            (1) in subparagraph (D), by striking ``plus'' at the end 
        and inserting ``and''; and
            (2) by adding at the end the following:
                    ``(E) 90 percent of the sums expended with respect 
                to costs incurred during such quarter as are 
                attributable to the provision of language services, 
                including oral interpretation, translations of written 
                materials, and other language services, for individuals 
                with limited English proficiency who apply for, or 
                receive, medical assistance under the State plan; 
                plus''.
    (b) SCHIP.--Section 2105(a)(1) of the Social Security Act (42 
U.S.C.1397ee(a)), as amended by section 515, is amended--
            (1) in the matter preceding subparagraph (A), by inserting 
        ``or, in the case of expenditures described in subparagraph 
        (D)(iv), 90 percent'' after ``enhanced FMAP''; and
            (2) in subparagraph (D)--
                    (A) in clause (iii), by striking ``and'' at the 
                end;
                    (B) be redesignating clause (iv) as clause (v); and
                    (C) by inserting after clause (iii) the following:
                            ``(iv) for expenditures attributable to the 
                        provision of language services, including oral 
                        interpretation, translations of written 
                        materials, and other language services, for 
                        individuals with limited English proficiency 
                        who apply for, or receive, child health 
                        assistance under the plan; and''.
    (c) Effective Date.--The amendments made by this section take 
effect on October 1, 2003.

SEC. 510. LIMITATIONS ON CONFLICTS OF INTEREST.

    (a) Limitation on Conflicts of Interest in Marketing Activities.--
            (1) Title xxi.--Section 2105(c) of the Social Security Act 
        (42 U.S.C. 300aa-5(c)) is amended by adding at the end the 
        following:
            ``(8) Limitation on expenditures for marketing 
        activities.--Amounts expended by a State for the use of an 
        administrative vendor in marketing health benefits coverage to 
        low-income children under this title shall not be considered, 
        for purposes of subsection (a)(2)(D), to be reasonable costs to 
        administer the plan unless the following conditions are met 
        with respect to the vendor:
                    ``(A) The vendor is independent of any entity 
                offering the coverage in the same area of the State in 
                which the vendor is conducting marketing activities.
                    ``(B) No person who is an owner, employee, 
                consultant, or has a contract with the vendor either 
                has any direct or indirect financial interest with such 
                an entity or has been excluded from participation in 
                the program under this title or title XVIII or XIX or 
                debarred by any Federal agency, or subject to a civil 
                money penalty under this Act.''.
    (b) Prohibition of Affiliation With Debarred Individuals.--
            (1) Medicaid.--Section 1903(i) of the Social Security Act 
        (42 U.S.C. 1396b(i))is amended--
                    (A) by striking the period at the end of paragraph 
                (20) and inserting ``; or''; and
                    (B) by inserting after paragraph (20) the 
                following:
            ``(21) with respect to any amounts expended for an entity 
        that receives payments under the plan unless--
                    ``(A) no person with an ownership or control 
                interest (as defined in section 1124(a)(3)) in the 
                entity is a person that is debarred, suspended, or 
                otherwise excluded from participating in procurement or 
                non-procurement activities under the Federal 
                Acquisition Regulation; and
                    ``(B) such entity has not entered into an 
                employment, consulting, or other agreement for the 
                provision of items or services that are material to 
                such entity's obligations under the plan with a person 
                described in subparagraph (A).''.
            (2) Title xxi.--Section 2107(e)(1) of the Social Security 
        Act (42 U.S.C. 1397gg(e)(1)), as amended by sections 505(b) and 
        507(b)(3), is further amended--
                    (A) in subparagraph (B), by striking ``and (17)'' 
                and inserting ``(17), and (21)''; and
                    (B) by adding at the end the following:
                    ``(F) Section 1902(a)(67) (relating to prohibition 
                of affiliation with debarred individuals).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures made on or after October 1, 2003, whether or not 
regulations implementing such amendments have been issued.

SEC. 511. TITLE XXI FUNDING.

    (a) In General.--Section 2104(a) of the Social Security Act (42 
U.S.C. 1397dd(a)) is amended--
            (1) in paragraphs (6) and (7), by striking 
        ``$3,150,000,000'' each place it appears and inserting 
        ``$4,275,000,000'';
            (2) in paragraphs (8) and (9), by striking 
        ``$4,050,000,000'' each place it appears and inserting 
        ``$5,050,000,000'';
            (3) in paragraph (9), by striking ``and'';
            (4) in paragraph (10)--
                    (A) by striking ``$5,000,000,000'' and inserting 
                ``$6,000,000,000''; and
                    (B) by striking the period and inserting a semi-
                colon; and
            (5) by adding at the end the following new paragraph:
            ``(11) for fiscal year 2008 and each fiscal year 
        thereafter, the amount of the allotment provided under this 
        subsection for the preceding fiscal year increased by the 
        percentage increase (if any) in the medical care expenditure 
        category of the Consumer Price Index for All Urban Consumers 
        (United States city average).''.
    (b) Additional Allotment To Territories.--Section 2104(c)(4)(B) of 
the Social Security Act (42 U.S.C. 1397dd(c)(4)(B)) is amended to read 
as follows:
                    ``(B) Appropriations.--For purposes of providing 
                allotments pursuant to subparagraph (A), there is 
                appropriated, out of any money in the Treasury not 
                otherwise appropriated, $32,000,000 for fiscal year 
                1999, $40,000,000 for each of fiscal years 2000 through 
                2004, $50,000,000 for each of fiscal years 2005, 2006 
                and 2007, and for fiscal year 2008 and each fiscal year 
                thereafter, the amount under this paragraph for the 
                preceding fiscal year increased by the percentage 
                increase (if any) in the medical care expenditure 
category of the Consumer Price Index for All Urban Consumers (United 
States city average).''.
    (c) Effective Date.--This section, and the amendments made by this 
section, shall be effective as if this section had been enacted on 
September 30, 2002, and amounts under title XXI of the Social Security 
Act (42 U.S.C. 1397aa et seq.) from allotments for fiscal years 
beginning with fiscal year 2000 are available for expenditure on and 
after October 1, 2002, under the amendments made by this section as if 
this section had been enacted on September 30, 2002.

SEC. 512. CHANGES TO RULES FOR REDISTRIBUTION AND EXTENDED AVAILABILITY 
              OF TITLE XXI FISCAL YEAR 2000 AND SUBSEQUENT FISCAL YEAR 
              ALLOTMENTS.

    (a) In General.--Section 2104(g) of the Social Security Act (42 
U.S.C. 1397dd(g)) is amended--
            (1) in the subsection heading--
                    (A) by striking ``and'' after ``1998'' and 
                inserting a comma; and
                    (B) by inserting ``, and 2000 and subsequent fiscal 
                year'' after ``1999'';
            (2) in paragraph (1)--
                    (A) in subparagraph (A)--
                            (i) in the matter preceding clause (i)--
                                    (I) by inserting ``or for fiscal 
                                year 2000 by the end of fiscal year 
                                2002, or allotments for fiscal year 
                                2001 and subsequent fiscal years by the 
                                end of the last fiscal year for which 
                                such allotments are available under 
                                subsection (e), subject to paragraph 
                                (2)(C)'' after ``2001,''; and
                                    (II) by striking ``1998 or 1999'' 
                                and inserting ``1998, 1999, 2000, or 
                                subsequent fiscal year'';
                            (ii) in clause (i)--
                                    (I) in subclause (I), by striking 
                                ``or'' at the end;
                                    (II) in subclause (II), by striking 
                                the period and inserting a semicolon; 
                                and
                                    (III) by adding at the end the 
                                following:
                                    ``(III) the fiscal year 2000 
                                allotment, the amount by which the 
                                State's expenditures under this title 
                                in fiscal years 2000, 2001, and 2002 
                                exceed the State's allotment for fiscal 
                                year 2000 under subsection (b);
                                    ``(IV) the fiscal year 2001 
                                allotment, the amount by which the 
                                State's expenditures under this title 
                                in fiscal years 2001, 2002, and 2003 
                                exceed the State's allotment for fiscal 
                                year 2001 under subsection (b); or
                                    ``(V) the allotment for any 
                                subsequent fiscal year, the amount by 
                                which the State's expenditures under 
                                this title in the period such allotment 
                                is available under subsection (e) 
                                exceeds the State's allotment for that 
                                fiscal year under subsection (b).''; 
                                and
                            (iii) in clause (ii), by striking ``1998 or 
                        1999 allotment'' and inserting ``1998, 1999, 
                        2000, or subsequent fiscal year allotment'';
                    (B) in subparagraph (B)--
                            (i) in the matter preceding clause (i), by 
                        striking ``with respect to fiscal year 1998 or 
                        1999'';
                            (ii) in clause (ii)--
                                    (I) by inserting ``with respect to 
                                fiscal year 1998 or 1999,'' after 
                                ``subsection (e)''; and
                                    (II) by striking ``and'' at the 
                                end;
                            (iii) by redesignating clause (iii) as 
                        clause (iv); and
                            (iv) by inserting after clause (ii), the 
                        following:
                            ``(iii) notwithstanding subsection (e), 
                        with respect to fiscal year 2000 or any 
                        subsequent fiscal year, shall remain available 
                        for expenditure by the State through the end of 
                        the fiscal year in which the State is allotted 
                        a redistribution under this paragraph; and'';
            (3) in paragraph (2)--
                    (A) in the paragraph heading, by striking ``1998 
                and 1999'' and inserting ``1998, 1999, 2000, and 
                subsequent fiscal year'';
                    (B) in subparagraph (A), by adding at the end the 
                following:
                            ``(iii) Fiscal year 2000 allotment.--Of the 
                        amounts allotted to a State pursuant to this 
                        section for fiscal year 2000 that were not 
                        expended by the State by the end of fiscal year 
                        2002, the amount specified in subparagraph (B) 
                        for fiscal year 2000 for such State shall 
                        remain available for expenditure by the State 
                        through the end of fiscal year 2003.
                            ``(iv) Fiscal year 2001 allotment.--Of the 
                        amounts allotted to a State pursuant to this 
                        section for fiscal year 2001 that were not 
                        expended by the State by the end of fiscal year 
                        2003, the amount specified in subparagraph (B) 
                        for fiscal year 2001 for such State shall 
                        remain available for expenditure by the State 
through the end of 2004.
                            ``(v) Subsequent fiscal year allotments.--
                        Of the amounts allotted to a State pursuant to 
                        this section for any fiscal year after 2001, 
                        that were not expended by the State by the end 
                        of the last fiscal year such amounts are 
                        available under subsection (e), the amount 
                        specified in subparagraph (B) for that fiscal 
                        year for such State shall remain available for 
                        expenditure by the State through the end of the 
                        fiscal year following the last fiscal year such 
                        amounts are available under subsection (e).'';
                    (C) in subparagraph (B), by striking ``The'' and 
                inserting ``Subject to subparagraph (C), the'';
                    (D) by redesignating subparagraph (C) as 
                subparagraph (D); and
                    (E) by inserting after subparagraph (B), the 
                following:
                    ``(C) Floor for fiscal years 2000 and 2001.--For 
                fiscal years 2000 and 2001, if the total amounts that 
                would otherwise be redistributed under paragraph (1) 
                exceed 60 percent of the total amount available for 
                redistribution under subsection (f) for the fiscal 
                year, the amount remaining available for expenditure by 
                the State under subparagraph (A) for such fiscal years 
                shall be--
                            ``(i) the amount equal to--
                                    ``(I) 40 percent of the total 
                                amount available for redistribution 
                                under subsection (f) from the 
                                allotments for the applicable fiscal 
                                year; multiplied by
                                    ``(II) the ratio of the amount of 
                                such State's unexpended allotment for 
                                that fiscal year to the total amount 
                                available for redistribution under 
                                subsection (f) from the allotments for 
                                the fiscal year.''; and
            (4) in paragraph (3), by adding at the end the following: 
        ``For purposes of calculating the amounts described in 
        paragraphs (1) and (2) relating to the allotment for any fiscal 
        year after 1999, the Secretary shall use the amount reported by 
        the States not later than November 30 of the applicable 
        calendar year on HCFA Form 64 or HCFA Form 21, as approved by 
        the Secretary.''.
    (b) Establishment of Caseload Stabilization Pool and Additional 
Redistribution of Allotments.--Section 2104 of the Social Security Act 
(42 U.S.C. 1397dd) is amended by adding at the end the following:
    ``(h) Redistribution of Caseload Stabilization Pool Amounts.--
            ``(1) Additional redistribution to stabilize caseloads.--
                    ``(A) In general.--With respect to fiscal year 2003 
                and any subsequent fiscal year, the Secretary shall 
                redistribute to an eligible State (as defined in 
                subparagraph (B)) the amount available for 
                redistribution to the State (as determined under 
                subparagraph (C)) from the caseload stabilization pool 
                established under paragraph (3).
                    ``(B) Definition of eligible state.--For purposes 
                of subparagraph (A), an eligible State is a State whose 
                total expenditures under this title through the end of 
                the previous fiscal year exceed the total allotments 
                made available to the State under subsection (b) or 
                subsection (c) (not including amounts made available 
                under subsection (f)) through the previous fiscal year.
                    ``(C) Amount of additional redistribution.--For 
                purposes of subparagraph (A), the amount available for 
                redistribution to a State under subparagraph (A) is 
                equal to--
                            ``(i) the ratio of the State's allotment 
                        for the previous fiscal year under subsection 
                        (b) or subsection (c) to the total allotments 
                        made available under such subsections to 
                        eligible States as defined under subparagraph 
                        (A) for the previous fiscal year; multiplied by
                            ``(ii) the total amounts available in the 
                        caseload stabilization pool established under 
                        paragraph (3).
            ``(2) Period of availability.--Amounts redistributed under 
        this subsection shall remain available for expenditure by the 
        State through the end of the fiscal year in which the State 
        receives any such amounts.
            ``(3) Caseload stabilization pool.--For purposes of making 
        a redistribution under paragraph (1), the Secretary shall 
        establish a caseload stabilization pool that includes the 
        following amounts:
                    ``(A) Any amount made available to a State under 
                subsection (g) but not expended within the periods 
                required under subparagraphs (g)(1)(B)(ii), 
                (g)(1)(B)(iii), or (g)(2)(A).
                    ``(B) Any amount made available to a State under 
                this subsection but not expended within the period 
                required under paragraph (2).''.
    (c) Authority for Qualifying States To Use Portion of SCHIP Funds 
for Medicaid Expenditures.--Section 2105 of the Social Security Act (42 
U.S.C. 1397ee) is amended by adding at the end the following:
    ``(g) Authority for Qualifying States To Use Certain Funds for 
Medicaid Expenditures.--
            ``(1) State option.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, with respect to fiscal year 2003 and 
                each fiscal year thereafter, a qualifying State (as 
                defined in paragraph (2)) may elect to use not more 
                than 20 percent of the amount allotted to the State 
                under subsection (b) or (c) of section 2104 for the 
                fiscal year (instead of for expenditures under this 
                title) for payments for such fiscal year under title 
                XIX in accordance with subparagraph (B).
                    ``(B) Payments to states.--
                            ``(i) In general.--In the case of a 
                        qualifying State that has elected the option 
                        described in subparagraph (A), subject to the 
                        total amount of funds described with respect to 
                        the State in subparagraph (A), the Secretary 
                        shall pay the State an amount each quarter 
                        equal to the additional amount that would have 
                        been paid to the State under title XIX for 
                        expenditures of the State for the fiscal year 
                        described in clause (ii) if the enhanced FMAP 
                        (as determined under subsection (b)) had been 
                        substituted for the Federal medical assistance 
                        percentage (as defined in section 1905(b)) of 
                        such expenditures.
                            ``(ii) Expenditures described.--For 
                        purposes of clause (i), the expenditures 
                        described in this clause are expenditures for 
                        such fiscal years for providing medical 
                        assistance under title XIX to individuals who 
                        have not attained age 19 and whose family 
                        income exceeds 150 percent of the poverty line.
            ``(2) Qualifying state.--In this subsection, the term 
        `qualifying State' means a State that--
                    ``(A) as of March 31, 1997, has an income 
                eligibility standard with respect to any 1 or more 
                categories of children (other than infants) who are 
                eligible for medical assistance under section 
                1902(a)(10)(A) that is at least 185 percent of the 
                poverty line; and
                    ``(B) satisfies the requirements described in 
                paragraph (3).
            ``(3) Requirements.--The requirements described in this 
        paragraph are the following:
                    ``(A) SCHIP income eligibility.--The State has a 
                State child health plan that (whether implemented under 
                title XIX or this title)--
                            ``(i) as of January 1, 2003, has an income 
                        eligibility standard that is at least 200 
                        percent of the poverty line;
                            ``(ii) subject to subparagraph (B), does 
                        not limit the acceptance of applications for 
                        children; and
                            ``(iii) provides benefits to all children 
                        in the State who apply for and meet eligibility 
                        standards on a statewide basis.
                    ``(B) No waiting list imposed.--With respect to 
                children whose family income is at or below 200 percent 
                of the poverty line, the State does not impose any 
                numerical limitation, waiting list, or similar 
                limitation on the eligibility of such children for 
                child health assistance under such State plan.
                    ``(C) Additional requirements.--The State has 
                implemented at least 4 of the following policies and 
                procedures (relating to coverage of children under 
                title XIX and this title):
                            ``(i) Uniform, simplified application 
                        form.--With respect to children who are 
                        eligible for medical assistance under section 
                        1902(a)(10)(A), the State uses the same 
                        uniform, simplified application form 
                        (including, if applicable, permitting 
                        application other than in person) for purposes 
                        of establishing eligibility for benefits under 
                        title XIX and this title.
                            ``(ii) Elimination of asset test.--The 
                        State does not apply any asset test for 
                        eligibility under section 1902(l) or this title 
                        with respect to children.
                            ``(iii) Adoption of 12-month continuous 
                        enrollment.--The State provides that 
                        eligibility shall not be regularly redetermined 
                        more often than once every year under this 
                        title or for children described in section 
                        1902(a)(10)(A).
                            ``(iv) Same verification and 
                        redetermination policies; automatic 
                        reassessment of eligibility.--With respect to 
                        children who are eligible for medical 
                        assistance under section 1902(a)(10)(A), the 
                        State provides for initial eligibility 
                        determinations and redeterminations of 
                        eligibility using the same verification 
                        policies (including with respect to face-to-
                        face interviews), forms, and frequency as the 
                        State uses for such purposes under this title, 
                        and, as part of such redeterminations, provides 
                        for the automatic reassessment of the 
                        eligibility of such children for assistance 
                        under title XIX and this title.
                            ``(v) Outstationing enrollment staff.--The 
                        State provides for the receipt and initial 
                        processing of applications for benefits under 
                        this title and for children under title XIX at 
                        facilities defined as disproportionate share 
                        hospitals under section 1923(a)(1)(A) and 
                        Federally-qualified health centers described in 
                        section 1905(l)(2)(B) consistent with section 
                        1902(a)(55).''.
    (d) Effective Date.--This section, and the amendments made by this 
section, shall be effective as if this section had been enacted on 
September 30, 2002, and amounts under title XXI of the Social Security 
Act (42 U.S.C. 1397aa et seq.) from allotments for fiscal years 1998 
through 2000 are available for expenditure on and after October 1, 
2002, under the amendments made by this section as if this section had 
been enacted on September 30, 2002.

SEC. 513. DEMONSTRATION PROGRAMS TO IMPROVE MEDICAID AND TITLE XXI 
              OUTREACH TO HOMELESS INDIVIDUALS AND FAMILIES.

    (a) Authority.--The Secretary of Health and Human Services may 
award demonstration grants to not more than 7 States (or other 
qualified entities) to conduct innovative programs that are designed to 
improve outreach to homeless individuals and families under the 
programs described in subsection (b) with respect to enrollment of such 
individuals and families under such programs and the provision of 
services (and coordinating the provision of such services) under such 
programs.
    (b) Programs for Homeless Described.--The programs described in 
this subsection are as follows:
            (1) Medicaid.--The program under title XIX of the Social 
        Security Act (42 U.S.C. 1396 et seq.).
            (2) CHIP.--The program under title XXI of the Social 
        Security Act (42 U.S.C. 1397aa et seq.).
            (3) TANF.--The program under part of A of title IV of the 
        Social Security Act (42 U.S.C. 601 et seq.).
            (4) SAMHSA block grants.--The program of grants under part 
        B of title XIX of the Public Health Service Act (42 U.S.C. 
        300x-1 et seq.).
            (5) Food stamp program.--The program under the Food Stamp 
        Act of 1977 (7 U.S.C. 2011 et seq.).
            (6) Workforce investment act.--The program under the 
        Workforce Investment Act of 1999 (29 U.S.C. 2801 et seq.).
            (7) Welfare-to-work.--The welfare-to-work program under 
        section 403(a)(5) of the Social Security Act (42 U.S.C. 
        603(a)(5)).
            (8) Other programs.--Other public and private benefit 
        programs that serve low-income individuals.
    (c) Appropriations.--For the purposes of carrying out this section, 
there is appropriated for fiscal year 2004, out of any funds in the 
Treasury not otherwise appropriated, $10,000,000, to remain available 
until expended.

SEC. 514. TECHNICAL AND CONFORMING AMENDMENTS TO AUTHORITY TO PAY 
              MEDICAID EXPANSION COSTS FROM TITLE XXI APPROPRIATION.

    (a) Authority To Pay Medicaid Expansion Costs From Title XXI 
Appropriation.--Section 2105(a) of the Social Security Act (42 U.S.C. 
1397ee(a)) is amended to read as follows:
    ``(a) Allowable Expenditures.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this section, the Secretary shall pay to each State with a plan 
        approved under this title, from its allotment under section 
        2104, an amount for each quarter equal to the enhanced FMAP of 
        the following expenditures in the quarter:
                    ``(A) Child health assistance under medicaid.--
                Expenditures for child health assistance under the plan 
                for targeted low-income children in the form of 
                providing medical assistance for expenditures described 
                in the fourth sentence of section 1905(b).
                    ``(B) Reserved.--[reserved].
                    ``(C) Child health assistance under this title.--
                Expenditures for child health assistance under the plan 
                for targeted low-income children in the form of 
                providing health benefits coverage that meets the 
                requirements of section 2103.
                    ``(D) Assistance and administrative expenditures 
                subject to limit.--Expenditures only to the extent 
                permitted consistent with subsection (c)--
                            ``(i) for other child health assistance for 
                        targeted low-income children;
                            ``(ii) for expenditures for health services 
                        initiatives under the plan for improving the 
                        health of children (including targeted low-
                        income children and other low-income children);
                            ``(iii) for expenditures for outreach 
                        activities as provided in section 2102(c)(1) 
                        under the plan; and
                            ``(iv) for other reasonable costs incurred 
                        by the State to administer the plan.
            ``(2) Order of payments.--Payments under a subparagraph of 
        paragraph (1) from a State's allotment for expenditures 
        described in each such subparagraph shall be made on a 
        quarterly basis in the order of such subparagraph in such 
        paragraph.
            ``(3) No duplicative payment.--In the case of expenditures 
        for which payment is made under paragraph (1), no payment shall 
        be made under title XIX.''.
    (b) Conforming Amendments.--
            (1) Section 1905(u).--Section 1905(u)(1)(B) of the Social 
        Security Act (42 U.S.C. 1396d(u)(1)(B)) is amended by inserting 
        ``and section 2105(a)(1)'' after ``subsection (b)''.
            (2) Section 2105(c).--Section 2105(c)(2)(A) of the Social 
        Security Act (42 U.S.C. 1397ee(c)(2)(A)) is amended by striking 
        ``subparagraphs (A), (C), and (D) of''.
    (c) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of the Balanced Budget Act of 
1997 (Public Law 105-33; 111 Stat. 251), whether or not regulations 
implementing such amendments have been issued.

SEC. 515. ADDITIONAL TITLE XXI REVISIONS.

    (a) Limiting Cost-Sharing to 2.5 Percent for Families With Income 
Below 150 Percent of Poverty.--Section 2103(e)(3)(A) of the Social 
Security Act (42 U.S.C. 1397cc(e)(3)(A)) is amended--
            (1) by striking ``and'' at the end of clause (i);
            (2) by striking the period at the end of clause (ii) and 
        inserting ``; and''; and
            (3) by adding at the end the following new clause:
                            ``(iii) total annual aggregate cost-sharing 
                        described in clauses (i) and (ii) with respect 
                        to all such targeted low-income children in a 
                        family under this title that exceeds 2.5 
                        percent of such family's income for the year 
                        involved.''.
    (b) Reporting of Enrollment Data.--
            (1) Quarterly reports.--Section 2107(b)(1) of such Act (42 
        U.S.C. 1397gg(b)(1)) is amended by adding at the end the 
        following: ``In quarterly reports on enrollment required under 
        this paragraph, a State shall include information on the age, 
        gender, race, ethnicity, service delivery system, and family 
        income of individuals enrolled.''.
            (2) Annual reports.--Section 2108(b)(1)(B)(i) of such Act 
        (42 U.S.C. 1397hh(b)(1)(B)(i)) is amended by inserting 
        ``primary language of enrollees,'' after ``family income,''.
    (c) Employer Coverage Waiver Changes.--Section 2105(c)(3) of such 
Act (42 U.S.C. 1397ee(c)(3)) is amended--
            (1) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii) and indenting appropriately;
            (2) by designating the matter beginning with ``Payment may 
        be made'' as a subparagraph (A) with the heading ``In general'' 
        and indenting appropriately; and
            (3) by adding at the end the following new subparagraphs:
                    ``(B) Application of requirements.--In carrying out 
                subparagraph (A)--
                            ``(i) the Secretary shall not require a 
                        minimum employer contribution level that is 
                        separate from the requirement of cost-
                        effectiveness under subparagraph (A)(i), but a 
                        State shall identify a reasonable minimum 
                        employer contribution level that is based on 
                        data demonstrating that such a level is 
                        representative to the employer-sponsored 
                        insurance market in the State and shall monitor 
                        employer contribution levels over time to 
                        determine whether substitution is occurring and 
                        report the findings in annual reports under 
                        section 2108(a);
                            ``(ii) the State shall establish a waiting 
                        period of at least 6 months without group 
                        health coverage, but may establish reasonable 
                        exceptions to such period and shall not apply 
                        such a waiting period to a child who is 
                        provided coverage under a group health plan 
                        under section 1906;
                            ``(iii) subject to clause (iv), the State 
                        shall provide satisfactory assurances that the 
                        minimum benefits and cost-sharing protections 
                        established under this title are provided, 
                        either through the coverage under subparagraph 
                        (A) or as a supplement to such coverage; and
                            ``(iv) coverage under such subparagraph 
                        shall not be considered to violate clause (iii) 
                        because it does not comply with requirements 
                        relating to reviews of health service decisions 
                        if the enrollee involved is provided the option 
                        of being provided benefits directly under this 
                        title.
                    ``(C) Access to external review process.--In 
                carrying out subparagraph (A), if a State provides 
                coverage under a group health plan that does not meet 
                the following external review requirements, the State 
                must give applicants and enrollees (at initial 
                enrollment and at each redetermination of eligibility) 
                the option to obtain health benefits coverage other 
                than through that group health plan:
                            ``(i) The enrollee has an opportunity for 
                        external review of a--
                                    ``(I) delay, denial, reduction, 
                                suspension, or termination of health 
                                services, in whole or in part, 
                                including a determination about the 
                                type or level of services; and
                                    ``(II) failure to approve, furnish, 
                                or provide payment for health services 
                                in a timely manner.
                            ``(ii) The external review is conducted by 
                        the State or a impartial contractor other than 
                        the contractor responsible for the matter 
                        subject to external review.
                            ``(iii) The external review decision is 
                        made on a timely basis in accordance with the 
                        medical needs of the patient. If the medical 
                        needs of the patient do not dictate a shorter 
                        time frame, the review must be completed--
                                    ``(I) within 90 calendar days of 
                                the date of the request for internal or 
                                external review; or
                                    ``(II) within 72 hours if the 
                                enrollee's physician or plan determines 
                                that the deadline under subclause (I) 
                                could seriously jeopardize the 
                                enrollee's life or health or ability to 
                                attain, maintain, or regain maximum 
                                function (except that a State may 
                                extend the 72-hour deadline by up to 14 
                                days if the enrollee requests an 
                                extension).
                            ``(iv) The external review decision shall 
                        be in writing.
                            ``(v) Applicants and enrollees have an 
                        opportunity--
                                    ``(I) to represent themselves or 
                                have representatives of their choosing 
                                in the review process;
                                    ``(II) timely review their files 
                                and other applicable information 
                                relevant to the review of the decision; 
                                and
                                    ``(III) fully participate in the 
                                review process, whether the review is 
                                conducted in person or in writing, 
                                including by presenting supplemental 
                                information during the review 
                                process.''.
    (d) Effective Date.--The amendments made by this section apply as 
of October 1, 2003, whether or not regulations implementing such 
amendments have been issued.

                      TITLE VI--FAMILY OPPORTUNITY

SEC. 601. OPPORTUNITY FOR FAMILIES OF DISABLED CHILDREN TO PURCHASE 
              MEDICAID COVERAGE FOR SUCH CHILDREN

    (a) State Option To Allow Families of Disabled Children To Purchase 
Medicaid Coverage for Such Children.--
            (1) In general.--Section 1902 of the Social Security Act 
        (42 U.S.C. 1396a), as amended by section 502(a)(1)(A), is 
        amended--
                    (A) in subsection (a)(10)(A)(ii)--
                            (i) by striking ``or'' at the end of 
                        subclause (XVIII);
                            (ii) by adding ``or'' at the end of 
                        subclause (XIX); and
                            (iii) by adding at the end the following 
                        new subclause:
                                    ``(XX) who are disabled children 
                                described in subsection (cc)(1);''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(cc)(1) Individuals described in this paragraph are individuals--
            ``(A) who have not attained 18 years of age;
            ``(B) who would be considered disabled under section 
        1614(a)(3)(C) but for having earnings or deemed income or 
        resources (as determined under title XVI for children) that 
        exceed the requirements for receipt of supplemental security 
        income benefits; and
            ``(C) whose family income does not exceed such income level 
        as the State establishes and does not exceed--
                    ``(i) 250 percent of the income official poverty 
                line (as defined by the Office of Management and 
                Budget, and revised annually in accordance with section 
                673(2) of the Omnibus Budget Reconciliation Act of 
                1981) applicable to a family of the size involved; or
                    ``(ii) such higher percent of such poverty line as 
                a State may establish, except that--
                            ``(I) any medical assistance provided to an 
                        individual whose family income exceeds 250 
                        percent of such poverty line may only be 
                        provided with State funds; and
                            ``(II) no Federal financial participation 
                        shall be provided under section 1903(a) for any 
                        medical assistance provided to such an 
                        individual.''.
            (2) Interaction with employer-sponsored family coverage.--
        Section 1902(cc) of Social Security Act (42 U.S.C. 1396a(cc)), 
        as added by paragraph (1)(B), is amended by adding at the end 
        the following new paragraph:
    ``(2)(A) If an employer of a parent of an individual described in 
paragraph (1) offers family coverage under a group health plan (as 
defined in section 2791(a) of the Public Health Service Act), the State 
shall--
            ``(i) require such parent to apply for, enroll in, and pay 
        premiums for, such coverage as a condition of such parent's 
        child being or remaining eligible for medical assistance under 
        subsection (a)(10)(A)(ii)(XIX) if the parent is determined 
        eligible for such coverage and the employer contributes at 
        least 50 percent of the total cost of annual premiums for such 
        coverage; and
            ``(ii) if such coverage is obtained--
                    ``(I) subject to paragraph (2) of section 1916(h), 
                reduce the premium imposed by the State under that 
                section in an amount that reasonably reflects the 
                premium contribution made by the parent for private 
                coverage on behalf of a child with a disability; and
                    ``(II) treat such coverage as a third party 
                liability under subsection (a)(25).
    ``(B) In the case of a parent to which subparagraph (A) applies, a 
State, subject to paragraph (1)(C)(ii), may provide for payment of any 
portion of the annual premium for such family coverage that the parent 
is required to pay. Any payments made by the State under this 
subparagraph shall be considered, for purposes of section 1903(a), to 
be payments for medical assistance.''.
    (b) State Option To Impose Income-Related Premiums.--Section 1916 
of the Social Security Act (42 U.S.C. 1396o) is amended--
            (1) in subsection (a), by striking ``subsection (g)'' and 
        inserting ``subsections (g) and (h)''; and
            (2) by adding at the end the following new subsection:
    ``(h)(1) With respect to disabled children provided medical 
assistance under section 1902(a)(10)(A)(ii)(XX), subject to paragraph 
(2), a State may (in a uniform manner for such children) require the 
families of such children to pay monthly premiums set on a sliding 
scale based on family income.
    ``(2) A premium requirement imposed under paragraph (1) may only 
apply to the extent that--
            ``(A) the aggregate amount of such premium and any premium 
        that the parent is required to pay for family coverage under 
        section 1902(cc)(2)(A)(i) does not exceed 5 percent of the 
        family's income; and
            ``(B) the requirement is imposed consistent with section 
        1902(cc)(2)(A)(ii)(I).
    ``(3) A State shall not require prepayment of a premium imposed 
pursuant to paragraph (1) and shall not terminate eligibility of a 
child under section 1902(a)(10)(A)(ii)(XX) for medical assistance under 
this title on the basis of failure to pay any such premium until such 
failure continues for a period of not less than 60 days from the date 
on which the premium became past due. The State may waive payment of 
any such premium in any case where the State determines that requiring 
such payment would create an undue hardship.''.
    (c) Conforming Amendments.--Section 1903(f)(4) of the Social 
Security Act (42 U.S.C. 1396b(f)(4)), as amended by section 502(c)(2) 
is amended in the matter preceding subparagraph (A), by inserting 
``1902(a)(10)(A)(ii)(XX),'' after ``1902(a)(10)(A)(ii)(XIX),''.
    (d) Effective Date.--The amendments made by this section shall 
apply to medical assistance for items and services furnished on or 
after October 1, 2004.

SEC. 602. TREATMENT OF INPATIENT PSYCHIATRIC HOSPITAL SERVICES FOR 
              INDIVIDUALS UNDER AGE 21 IN HOME OR COMMUNITY-BASED 
              SERVICES WAIVERS.

    (a) In General.--Section 1915(c) of the Social Security Act (42 
U.S.C. 1396n(c)) is amended--
            (1) in paragraph (1)--
                    (A) in the first sentence, by inserting ``, or 
                would require inpatient psychiatric hospital services 
                for individuals under age 21,'' after ``intermediate 
                care facility for the mentally retarded''; and
                    (B) in the second sentence, by inserting ``, or 
                would require inpatient psychiatric hospital services 
                for individuals under age 21'' before the period;
            (2) in paragraph (2)(B), by striking ``or services in an 
        intermediate care facility for the mentally retarded'' each 
        place it appears and inserting ``services in an intermediate 
        care facility for the mentally retarded, or inpatient 
        psychiatric hospital services for individuals under age 21'';
            (3) in paragraph (2)(C)--
                    (A) by inserting ``, or who are determined to be 
                likely to require inpatient psychiatric hospital 
                services for individuals under age 21,'' after ``, or 
                intermediate care facility for the mentally retarded''; 
                and
                    (B) by striking ``or services in an intermediate 
                care facility for the mentally retarded'' and inserting 
                ``services in an intermediate care facility for the 
                mentally retarded, or inpatient psychiatric hospital 
                services for individuals under age 21''; and
            (4) in paragraph (7)(A)--
                    (A) by inserting ``or would require inpatient 
                psychiatric hospital services for individuals under age 
                21,'' after ``intermediate care facility for the 
                mentally retarded,''; and
                    (B) by inserting ``or who would require inpatient 
                psychiatric hospital services for individuals under age 
                21'' before the period.
    (b) Effective Date.--The amendments made by subsection (a) apply 
with respect to medical assistance provided on or after January 1, 
2004.

SEC. 603. DEVELOPMENT AND SUPPORT OF FAMILY-TO-FAMILY HEALTH 
              INFORMATION CENTERS.

    Section 501 of the Social Security Act (42 U.S.C. 701) is amended 
by adding at the end the following new subsection:
    ``(c)(1)(A) For the purpose of enabling the Secretary (through 
grants, contracts, or otherwise) to provide for special projects of 
regional and national significance for the development and support of 
family-to-family health information centers described in paragraph 
(2)--
            ``(i) there is appropriated to the Secretary, out of any 
        money in the Treasury not otherwise appropriated--
                    ``(I) $3,000,000 for fiscal year 2003;
                    ``(II) $4,000,000 for fiscal year 2004; and
                    ``(III) $5,000,000 for fiscal year 2005; and
            ``(ii) there is authorized to be appropriated to the 
        Secretary, $5,000,000 for each of fiscal years 2006 and 2007.
    ``(B) Funds appropriated or authorized to be appropriated under 
subparagraph (A) shall--
            ``(i) be in addition to amounts appropriated under 
        subsection (a) and retained under section 502(a)(1) for the 
        purpose of carrying out activities described in subsection 
        (a)(2); and
            ``(ii) remain available until expended.
    ``(2) The family-to-family health information centers described in 
this paragraph are centers that--
            ``(A) assist families of children with disabilities or 
        special health care needs to make informed choices about health 
        care in order to promote good treatment decisions, cost-
        effectiveness, and improved health outcomes for such children;
            ``(B) provide information regarding the health care needs 
        of, and resources available for, children with disabilities or 
        special health care needs;
            ``(C) identify successful health delivery models for such 
        children;
            ``(D) develop with representatives of health care 
        providers, managed care organizations, health care purchasers, 
        and appropriate State agencies a model for collaboration 
        between families of such children and health professionals;
            ``(E) provide training and guidance regarding caring for 
        such children;
            ``(F) conduct outreach activities to the families of such 
        children, health professionals, schools, and other appropriate 
        entities and individuals; and
            ``(G) are staffed by families of children with disabilities 
        or special health care needs who have expertise in Federal and 
        State public and private health care systems and health 
        professionals.
    ``(3) The Secretary shall develop family-to-family health 
information centers described in paragraph (2) under this subsection in 
accordance with the following:
            ``(A) With respect to fiscal year 2003, such centers shall 
        be developed in not less than 25 States.
            ``(B) With respect to fiscal year 2004, such centers shall 
        be developed in not less than 40 States.
            ``(C) With respect to fiscal year 2005, such centers shall 
        be developed in not less than 50 States and the District of 
        Columbia.
    ``(4) The provisions of this title that are applicable to the funds 
made available to the Secretary under section 502(a)(1) apply in the 
same manner to funds made available to the Secretary under paragraph 
(1)(A).
    ``(5) For purposes of this subsection, the term `State' means each 
of the 50 States and the District of Columbia.''.

SEC. 604. RESTORATION OF MEDICAID ELIGIBILITY FOR CERTAIN SSI 
              BENEFICIARIES.

    (a) In General.--Section 1902(a)(10)(A)(i)(II) of the Social 
Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(II)) is amended--
            (1) by inserting ``(aa)'' after ``(II)'';
            (2) by striking ``) and'' and inserting ``and'';
            (3) by striking ``section or who are'' and inserting 
        ``section), (bb) who are''; and
            (4) by inserting before the comma at the end the following: 
        ``, or (cc) who are under 21 years of age and with respect to 
        whom supplemental security income benefits would be paid under 
        title XVI if subparagraphs (A) and (B) of section 1611(c)(7) 
        were applied without regard to the phrase `the first day of the 
        month following'''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to medical assistance for items and services furnished on or 
after the first day of the first calendar quarter that begins after the 
date of enactment of this Act.

                TITLE VII--TEMPORARY STATE FISCAL RELIEF

SEC. 701. TEMPORARY STATE FISCAL RELIEF.

    (a) Permitting Maintenance of Fiscal Year 2002 FMAP for Last 2 
Calendar Quarters of Fiscal Year 2003.--Notwithstanding any other 
provision of law, but subject to subsection (e), if the FMAP determined 
without regard to this section for a State for fiscal year 2003 is less 
than the FMAP as so determined for fiscal year 2002, the FMAP for the 
State for fiscal year 2002 shall be substituted for the State's FMAP 
for the third and fourth calendar quarters of fiscal year 2003, before 
the application of this section.
    (b) Permitting Maintenance of Fiscal Year 2003 FMAP for Fiscal Year 
2004.--Notwithstanding any other provision of law, but subject to 
subsection (e), if the FMAP determined without regard to this section 
for a State for fiscal year 2004 is less than the FMAP as so determined 
for fiscal year 2003, the FMAP for the State for fiscal year 2003 shall 
be substituted for the State's FMAP for each calendar quarter of fiscal 
year 2004, before the application of this section.
    (c) General 2.38 Percentage Points Increase for Last 2 Calendar 
Quarters of Fiscal Year 2003 and Fiscal Year 2004.--Notwithstanding any 
other provision of law, but subject to subsections (e) and (f), for 
each State for the third and fourth calendar quarters of fiscal year 
2003 and each calendar quarter of fiscal year 2004, the FMAP (taking 
into account the application of subsections (a) and (b)) shall be 
increased by 2.38 percentage points.
    (d) Increase in Cap on Medicaid Payments To Territories.--
Notwithstanding any other provision of law, but subject to subsection 
(f), with respect to the third and fourth calendar quarters of fiscal 
year 2003 and each calendar quarter of fiscal year 2004, the amounts 
otherwise determined for Puerto Rico, the Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa under subsections (f) and 
(g) of section 1108 of the Social Security Act (42 U.S.C. 1308) shall 
each be increased by an amount equal to 4.76 percent of such amounts.
    (e) Scope of Application.--The increases in the FMAP for a State 
under this section shall apply only for purposes of title XIX of the 
Social Security Act and shall not apply with respect to--
            (1) disproportionate share hospital payments described in 
        section 1923 of such Act (42 U.S.C. 1396r-4); or
            (2) payments under title IV or XXI of such Act (42 U.S.C. 
        601 et seq. and 1397aa et seq.).
    (f) State Eligibility.--
            (1) In general.--Subject to paragraph (2), a State is 
        eligible for an increase in its FMAP under subsection (c) or an 
increase in a cap amount under subsection (d) only if the eligibility 
under its State plan under title XIX of the Social Security Act 
(including any waiver under such title or under section 1115 of such 
Act (42 U.S.C. 1315)) is no more restrictive than the eligibility under 
such plan (or waiver) as in effect on January 1, 2003.
            (2) State reinstatement of eligibility permitted.--A State 
        that has restricted eligibility under its State plan under 
        title XIX of the Social Security Act (including any waiver 
        under such title or under section 1115 of such Act (42 U.S.C. 
        1315)) after January 1, 2003, but prior to the date of 
        enactment of this Act is eligible for an increase in its FMAP 
        under subsection (c) or an increase in a cap amount under 
        subsection (d) in the first calendar quarter (and subsequent 
        calendar quarters) in which the State has reinstated 
        eligibility that is no more restrictive than the eligibility 
        under such plan (or waiver) as in effect on January 1, 2003.
            (3) Rule of construction.--Nothing in paragraph (1) or (2) 
        shall be construed as affecting a State's flexibility with 
        respect to benefits offered under the State medicaid program 
        under title XIX of the Social Security Act (42 U.S.C. 1396 et 
        seq.) (including any waiver under such title or under section 
        1115 of such Act (42 U.S.C. 1315)).
    (g) Definitions.--In this section:
            (1) FMAP.--The term ``FMAP'' means the Federal medical 
        assistance percentage, as defined in section 1905(b) of the 
        Social Security Act (42 U.S.C. 1396d(b)).
            (2) State.--The term ``State'' has the meaning given such 
        term for purposes of title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.).
    (h) Repeal.--Effective as of October 1, 2004, this subsection is 
repealed.

    TITLE VIII--IMPROVEMENT OF THE PROCESS FOR THE DEVELOPMENT AND 
              IMPLEMENTATION OF MEDICAID AND SCHIP WAIVERS

SEC. 801. IMPROVEMENT OF THE PROCESS FOR THE DEVELOPMENT AND 
              IMPLEMENTATION OF MEDICAID AND SCHIP WAIVERS.

    (a) In General.--Section 1115 of the Social Security Act (42 U.S.C. 
1315) is amended by inserting after subsection (c) the following:
    ``(d) In the case of any experimental, pilot, or demonstration 
project undertaken under subsection (a) to assist in promoting the 
objectives of title XIX or XXI in a State that would result in a 
nontrivial impact on eligibility, enrollment, benefits, cost-sharing, 
or financing with respect to a State program under title XIX or XXI (in 
this subsection referred to as a `medicaid waiver' and a `SCHIP 
waiver', respectively,) the following shall apply:
            ``(1) The Secretary may not approve a proposal for a 
        medicaid waiver, SCHIP waiver, or an amendment to a previously 
        approved medicaid waiver or SCHIP waiver unless the State 
        requesting approval certifies that the following process was 
        used to develop the proposal:
                    ``(A) Prior to publication of the notice required 
                under subparagraph (B), the State--
                            ``(i) provided notice (which may have been 
                        accomplished by electronic mail) of the State's 
                        intent to develop the proposal to the medical 
                        care advisory committee established for the 
                        State for purposes of complying with section 
                        1902(a)(4) and any individual or organization 
                        that requests such notice; and
                            ``(ii) convened at least 1 meeting of such 
                        medical care advisory committee at which the 
                        proposal and any modifications of the proposal 
                        were considered and discussed.
                    ``(B) At least 60 days prior to the date that the 
                State submits the proposal to the Secretary, the State 
                published for written comment (in accordance with the 
                State's procedure for issuing regulations) a notice of 
                the proposal that contains at least the following:
                            ``(i) Information regarding how the public 
                        may submit comments to the State on the 
                        proposal.
                            ``(ii) A statement of the State's 
                        projections regarding the likely effect and 
                        impact of the proposal on any individuals who 
                        are eligible for, or receiving, medical 
                        assistance, child health assistance, or other 
                        health benefits coverage under a State program 
                        under title XIX or XXI and the State's 
                        assumptions on which such projections are 
                        based.
                            ``(iii) A statement of the State's 
                        projections regarding the likely effect and 
                        impact of the proposal on any providers or 
                        suppliers of items or services for which 
                        payment may be made under title XIX or XXI and 
                        the State's assumptions on which such 
                        projections are based.
                    ``(C) Concurrent with the publication of the notice 
                required under subparagraph (B), the State--
                            ``(i) posted the proposal (and any 
                        modifications of the proposal) on the State's 
                        Internet website; and
                            ``(ii) provided the notice (which may have 
                        been accomplished by electronic mail) to the 
                        medical care advisory committee referred to in 
                        subparagraph (A)(i) and to any individual or 
                        organization that requested such notice.
                    ``(D) Not later than 30 days after publication of 
                the notice required under subparagraph (B), the State 
                convened at least 1 open meeting of the medical care 
                advisory committee referred to in subparagraph (A)(i), 
                at which the proposal and any modifications of the 
                proposal were the primary items considered and 
                discussed.
                    ``(E) After publication of the notice required 
                under subparagraph (B), the State--
                            ``(i) held at least 2 public hearings on 
                        the proposal and any modifications of the 
                        proposal; and
                            ``(ii) held the last such public hearing at 
                        least 15 days before the State submitted the 
                        proposal to the Secretary.
                    ``(F) The State has a record of all public comments 
                submitted in response to the notice required under 
                subparagraph (B) or at any hearings or meetings 
                required under this paragraph regarding the proposal.
            ``(2) A State shall include with any proposal submitted to 
        the Secretary for a medicaid waiver, SCHIP waiver, or an 
        amendment to a previously approved medicaid waiver or SCHIP 
        waiver the following:
                    ``(A) A detailed description of the public notice 
                and input process used to develop the proposal in 
                accordance with the requirements of paragraph (1).
                    ``(B) Copies of all notices required under 
                paragraph (1).
                    ``(C) The dates of all meetings and hearings 
                required under paragraph (1).
                    ``(D) A summary of the public comments received in 
                response to the notices required under paragraph (1) or 
                at any hearings or meetings required under that 
                paragraph regarding the proposal and the State's 
                response to the comments.
                    ``(E) A certification that the State complied with 
                any applicable notification requirements with respect 
                to Indian tribes during the development of the proposal 
                in accordance with paragraph (1).
            ``(3) The Secretary shall return to a State without action 
        any proposal for a medicaid waiver, SCHIP waiver, or an 
        amendment to a previously approved medicaid waiver or SCHIP 
        waiver that fails to satisfy the requirements of paragraphs (1) 
        and (2).
            ``(4) With respect to all proposals for medicaid waivers, 
        SCHIP waivers, or amendments to a previously approved medicaid 
        waiver or SCHIP waiver received by the Secretary the following 
        shall apply:
                    ``(A) Each month the Secretary shall publish a 
                notice in the Federal Register identifying all of the 
                proposals for such waivers or amendments that were 
                received by the Secretary during the preceding month.
                    ``(B) The notice required under subparagraph (A) 
                shall provide information regarding the method by which 
                comments on the proposals will be received from the 
                public.
                    ``(C) Not later than 7 days after receipt of a 
                proposal for a medicaid waiver, SCHIP waiver, or an 
                amendment to a previously approved medicaid waiver or 
                SCHIP waiver, the Secretary shall--
                            ``(i) provide notice (which may be 
                        accomplished by electronic mail) to any 
                        individual or organization that has requested 
                        such notification;
                            ``(ii) publish on the Internet website of 
                        the Centers for Medicare & Medicaid Services a 
                        copy of the proposal, including any appendices 
                        or modifications of the proposal; and
                            ``(iii) ensure that the information posted 
                        on the website is updated to accurately reflect 
                        the proposal.
                    ``(D) The Secretary shall provide for a period of 
                not less than 30 days from the later of the date of 
                publication of the notice required under subparagraph 
                (A) that first identifies receipt of the proposal or 
                the date on which an Internet website containing the 
                information required under subparagraph (C)(ii) with 
                respect to the proposal is first published, in which 
                written comments on the proposal may be submitted from 
                all interested parties.
                    ``(E) After the completion of the public comment 
                period required under subparagraph (D), if the 
                Secretary intends to approve the proposal, as 
                originally submitted or revised, the Secretary shall--
                            ``(i) publish and post on the Internet 
                        website for the Centers for Medicare & Medicaid 
                        Services the proposed terms and conditions for 
                        such approval and updated versions of the 
                        statements required to be published by the 
                        State under clauses (ii) and (iii) of paragraph 
                        (1)(B);
                            ``(ii) provide at least a 15-day period for 
                        the submission of written comments on such 
                        proposed terms and conditions and such 
                        statements; and
                            ``(iii) retain, and make available upon 
                        request, all comments received concerning the 
                        proposal, the terms and conditions for approval 
                        of the proposal, or such statements.
                    ``(F) In no event may the Secretary approve or deny 
                a proposal for a medicaid waiver, SCHIP waiver, or an 
                amendment to a previously approved medicaid waiver or 
                SCHIP waiver until the Secretary--
                            ``(i) reviews and considers all comments 
                        submitted in response to the notices required 
                        under this paragraph; and
                            ``(ii) considers the nature and impact of 
                        the proposal; and
                            ``(iii) determines that the proposal--
                                    ``(I) is based on a reasonable 
                                hypothesis which the proposal is 
                                designed to test in a methodologically 
                                sound manner; and
                                    ``(II) will be evaluated on a 
                                yearly basis utilizing a sound 
                                methodology to determine whether the 
                                proposal has resulted in a change in 
                                access to health care or in health 
                                outcomes for any beneficiaries of 
                                medical assistance, child health 
                                assistance, or other health benefits 
                                coverage whose assistance or coverage 
                                would be altered as a result of the 
                                proposal.
                    ``(G) Not later than 3 days after the approval of 
                any proposal for a medicaid waiver, SCHIP waiver, or 
                amendment to a previously approved medicaid waiver or 
                SCHIP waiver, the Secretary shall post on the Internet 
                website for the Centers for Medicare & Medicaid 
                Services the following:
                            ``(i) The text of the approved medicaid 
                        waiver, SCHIP waiver, or amendment to a 
                        previously approved medicaid waiver or SCHIP 
                        waiver.
                            ``(ii) A list identifying each provision of 
                        title XIX or XXI, and each regulation relating 
                        to either such title, for which compliance is 
                        waived under the approved waiver or amendment 
                        or for which costs that would otherwise not be 
                        permitted under the provision will be allowed.
                            ``(iii) The terms and conditions for 
                        approval of the waiver or amendment.
                            ``(v) The approval letter.
                            ``(vi) The protocol for the waiver or 
                        amendment.
                            ``(vii) The evaluation design for the 
                        waiver or amendment.
                            ``(viii) The results of the evaluation of 
                        the waiver or amendment.
                Any item required to be posted under this subparagraph 
                that is not available within 3 days of the approval of 
                the waiver or amendment shall be posted as soon as the 
                item becomes available.
                    ``(H) Each month the Secretary shall publish a 
                notice in the Federal Register that identifies any 
                proposals for medicaid waivers, SCHIP waivers, or 
                amendments to a previously approved medicaid waiver or 
                SCHIP waiver that were approved, denied, or returned to 
                the State without action during the preceding month.
            ``(5) Any provision under title XIX or XXI, or under any 
        regulation in effect that relates to either such title, that is 
        not explicitly waived by the Secretary when the medicaid 
        waiver, SCHIP waiver, or amendment is approved and identified 
        in the list required under paragraph (4)(G)(ii), is not waived 
        and a State shall continue to comply with any such 
        requirement.''.
    (b) Clarification of Limitations of Waiver Authority.--
            (1) Section 1115 waivers.--Paragraphs (1) and (2) of 
        section 1115(a) of such Act (42 U.S.C. 1315(a)) are each 
        amended by inserting ``and only to the extent that waiving such 
        requirements is likely to assist in promoting the objectives of 
        the title in which such section is located,'' after ``as the 
        case may be,''.
            (2) EPSDT.--Section 1902(e) of the Social Security Act (42 
        U.S.C. 1396a(e)) is amended by adding at the end the following:
    ``(13) Notwithstanding section 1115(a), with respect to any waiver, 
experimental, pilot, or demonstration project that involves the use of 
funds made available under this title, or an amendment to such a 
project that has been approved as of the date of enactment of this 
paragraph, the Secretary may not waive compliance with the requirements 
of subsection (a)(43) (relating to early and periodic screening, 
diagnostic, and treatment services as described in section 1905(r)).''.
            (3) Use of schip funds.--
                    (A) In general.--Section 2107 of the Social 
                Security Act (42 U.S.C. 1397gg) is amended by adding at 
                the end the following:
    ``(f) Limitation of Waiver Authority.--Notwithstanding subsection 
(e)(2)(A) and section 1115(a), the Secretary may not approve a waiver, 
experimental, pilot, or demonstration project, or an amendment to such 
a project that has been approved as of the date of enactment of this 
subsection, that would allow funds made available under this title to 
be used to provide child health assistance or other health benefits 
coverage to childless adults. For purposes of the preceding sentence, a 
caretaker relative (as such term is defined for purposes of carrying 
out section 1931) shall not be considered a childless adult.''.
                    (B) Conforming Amendment.--Section 2105(c)(1) of 
                the Social Security Act (42 U.S.C. 1397ee(c)(1)) is 
                amended by inserting before the period the following: 
                ``and may not include coverage of childless adults. For 
                purposes of the preceding sentence, a caretaker 
                relative (as such term is defined for purposes of 
                carrying out section 1931) shall not be considered a 
                childless adult.''.
    (c) Rule of Construction.--Nothing in this section or the 
amendments made by this section shall be construed to--
            (1) authorize the waiver of any provision of title XIX or 
        XXI of the Social Security Act (42 U.S.C. 1396 et seq., 1397aa 
        et seq.) that is not otherwise authorized to be waived under 
        such titles or under title XI of such Act (42 U.S.C. 1301 et 
        seq.) as of the date of enactment of this Act; or
            (2) imply congressional approval of any waiver, 
        experimental, pilot, or demonstration project affecting the 
        medicaid program under title XIX of the Social Security Act or 
        the State children's health insurance program under title XXI 
        of such Act that has been approved as of such date of 
        enactment.
    (d) Effective Date.--This section and the amendments made by this 
section take effect on the date of enactment of this Act and apply to 
proposals to conduct a waiver, experimental, pilot, or demonstration 
project affecting the medicaid program under title XIX of the Social 
Security Act or the State children's health insurance program under 
title XXI of such Act, and to any proposals to amend such projects, 
that are approved or extended on or after such date of enactment.

                  TITLE IX--INDIAN HEALTH CARE FUNDING

SEC. 901. GUARANTEED ADEQUATE FUNDING FOR INDIAN HEALTH CARE.

    Section 825 of the Indian Health Care Improvement Act (25 U.S.C. 
1680o) is amended to read as follows:

``SEC. 825. FUNDING.

    ``(a) In General.--Notwithstanding any other provision of law, not 
later than 30 days after the date of enactment of this section, on 
October 1, 2003, and on each October 1 thereafter, out of any funds in 
the Treasury not otherwise appropriated, the Secretary of the Treasury 
shall transfer to the Secretary to carry out this title the amount 
determined under subsection (d).
    ``(b) Use and Availability.--
            ``(1) In general.--An amount transferred under subsection 
        (a)--
                    ``(A) shall remain available until expended; and
                    ``(B) shall be used to carry out any programs, 
                functions, and activities relating to clinical services 
                (as defined in paragraph (2)) of the Service and 
                Service units.
            ``(2) Clinical services defined.--For purposes of paragraph 
        (1)(B), the term `clinical services' includes all programs of 
        the Indian Health Service which are funded directly or under 
        the authority of the Indian Self-Determination and Education 
        Assistance Act, for the purposes of--
                    ``(A) clinical care, including inpatient care, 
                outpatient care (including audiology, clinical eye and 
                vision care), primary care, secondary and tertiary 
                care, and long term care;
                    ``(B) preventive health, including mammography and 
                other cancer screening;
                    ``(C) dental care;
                    ``(D) mental health, including community mental 
                health services, inpatient mental health services, 
                dormitory mental health services, therapeutic and 
                residential treatment centers;
                    ``(E) emergency medical services;
                    ``(F) treatment and control of, and rehabilitative 
                care related to, alcoholism and drug abuse (including 
                fetal alcohol syndrome) among Indians;
                    ``(G) accident prevention programs;
                    ``(H) home health care;
                    ``(I) community health representatives;
                    ``(J) maintenance and repair; and
                    ``(K) traditional health care practices and 
                training of traditional health care practitioners.
    ``(c) Receipt and Acceptance.--The Secretary shall be entitled to 
receive, shall accept, and shall use to carry out this title the funds 
transferred under subsection (a), without further appropriation.
    ``(d) Amount.--The amount referred to in subsection (a) is--
            ``(1) for fiscal year 2004, the amount equal to 390 percent 
        of the amount obligated by the Service during fiscal year 2002 
        for the purposes described in subsection (b)(2); and
            ``(2) for fiscal year 2005 and each fiscal year thereafter, 
        the amount equal to the product obtained by multiplying--
                    ``(A) the number of Indians served by the Service 
                as of September 30 of the preceding the fiscal year; 
                and
                    ``(B) the per capita baseline amount, as determined 
                under subsection (e).
    ``(e) Per Capita Baseline Amount.--
            ``(1) In general.--For the purpose of subsection (d)(2)(B), 
        the per capita baseline amount shall be equal to the sum of--
                    ``(A) the quotient obtained by dividing--
                            ``(i) the amount specified in subsection 
                        (d)(1); by
                            ``(ii) the number of Indians served by the 
                        Service as of September 30, 2002; and
                    ``(B) any applicable increase under paragraph (2).
            ``(2) Increase.--For each fiscal year, the Secretary shall 
        provide a percentage increase (rounded to the nearest dollar) 
        in the per capita baseline amount equal to the percentage by 
        which--
                    ``(A) the Consumer Price Index for all Urban 
                Consumers published by the Department of Labor 
                (relating to the United States city average for medical 
                care and not seasonally adjusted) for the 1-year period 
                ending on the June 30 of the fiscal year preceding the 
                fiscal year for which the increase is made; exceeds
                    ``(B) that Consumer Price Index for the 1-year 
                period preceding the 1-year period described in 
                subparagraph (A).''.
                                 <all>