[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2551 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 2551

 To provide for prompt payment and interest on late payments of health 
                              care claims.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 5, 2006

Mr. Menendez (for himself and Mr. Lautenberg) introduced the following 
  bill; which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
 To provide for prompt payment and interest on late payments of health 
                              care claims.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Prompt Payment of Health Benefits 
Claims Act of 2006''.

SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

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

``SEC. 714. PROMPT PAYMENT OF HEALTH BENEFITS CLAIMS.

    ``(a) Timeframe for Payment of Clean Claim.--A group health plan, 
and a health insurance issuer offering group health insurance coverage 
in connection with a group health plan, shall pay all clean claims and 
uncontested claims--
            ``(1) in the case of a claim that is submitted 
        electronically, within 14 days of the date on which the claim 
        is submitted; or
            ``(2) in the case of a claim that is not submitted 
        electronically, within 30 days of the date on which the claim 
        is submitted.
    ``(b) Procedures Involving Submitted Claims.--
            ``(1) In general.--Not later than 10 days after the date on 
        which a clean claim is submitted, a group health plan, and a 
        health insurance issuer offering group health insurance 
        coverage in connection with a group health plan, shall provide 
        the claimant with a notice that acknowledges receipt of the 
        claim by the plan or issuer. Such notice shall be considered to 
        have been provided on the date on which the notice is mailed or 
        electronically transferred.
            ``(2) Claim deemed to be clean.--A claim is deemed to be a 
        clean claim under this section if the group health plan or 
        health insurance issuer involved does not provide notice to the 
        claimant of any deficiency in the claim within 10 days of the 
        date on which the claim is submitted.
            ``(3) Claim determined to not be a clean claim.--
                    ``(A) In general.--If a group health plan or health 
                insurance issuer determines that a claim for health 
                care expenses is not a clean claim, the plan or issuer 
                shall, not later than the end of the period described 
                in paragraph (2), notify the claimant of such 
                determination. Such notification shall specify all 
                deficiencies in the claim and shall list with 
                specificity all additional information or documents 
                necessary for the proper processing and payment of the 
                claim.
                    ``(B) Determination after submission of additional 
                information.--A claim is deemed to be a clean claim 
                under this paragraph if the group health plan or health 
                insurance issuer involved does not provide notice to 
                the claimant of any deficiency in the claim within 10 
                days of the date on which additional information is 
                received pursuant to subparagraph (A).
                    ``(C) Payment of uncontested portion of a claim.--A 
                group health plan or health insurance issuer shall pay 
                any uncontested portion of a claim in accordance with 
                subsection (a).
            ``(4) Obligation to pay.--A claim for health care expenses 
        that is not paid or contested by a group health plan or health 
        insurance issuer within the timeframes set forth in this 
        subsection shall be deemed to be a clean claim and paid by the 
        plan or issuer in accordance with subsection (a).
    ``(c) Date of Payment of Claim.--Payment of a clean claim under 
this section is considered to have been made on the date on which full 
payment is received by the health care provider.
    ``(d) Interest Schedule.--
            ``(1) In general.--With respect to a clean claim, a group 
        health plan or health insurance issuer that fails to comply 
        with subsection (a) shall pay the claimant interest on the 
        amount of such claim, from the date on which such payment was 
        due as provided in this section, at the following rates:
                    ``(A) 1\1/2\ percent per month from the 1st day of 
                nonpayment after payment is due through the 15th day of 
                such nonpayment.
                    ``(B) 2 percent per month from the 16th day of such 
                nonpayment through the 45th day of such nonpayment.
                    ``(C) 2\1/2\ percent per month after the 46th day 
                of such nonpayment.
            ``(2) Contested claims.--With respect to claims for health 
        care expenses that are contested by the plan or issuer, once 
        such claim is deemed clean under subsection (b), the interest 
        rate applicable for noncompliance under this subsection shall 
        apply consistent with paragraph (1).
    ``(e) Private Right of Action.--Nothing in this section shall be 
construed to prohibit or limit a claim or action not covered by the 
subject matter of this section that any claimant has against a group 
health plan, or a health insurance issuer.
    ``(f) Anti-Retaliation.--Consistent with applicable Federal or 
State law, a group health plan or health insurance issuer shall not 
retaliate against a claimant for exercising a right of action under 
this section.
    ``(g) Fines and Penalties.--
            ``(1) Fines.--
                    ``(A) In general.--If a group health plan, or 
                health insurance issuer offering group health insurance 
                coverage, willfully and knowingly violates this section 
                or has a pattern of repeated violations of this 
                section, the Secretary shall impose a fine not to 
                exceed $1,000 per claim for each day a response is 
                delinquent beyond the date on which such response is 
                required under this section.
                    ``(B) Repeated violations.--If 3 separate fines 
                under subparagraph (A) are levied within a 5-year 
                period, the Secretary is authorized to impose a penalty 
                in an amount not to exceed $10,000 per claim.
            ``(2) Remedial action plan.--Where it is established that 
        the group health plan or health insurance issuer willfully and 
        knowingly violated this section or has a pattern of repeated 
        violations, the Secretary shall require the group health plan 
        or health insurance issuer to--
                    ``(A) submit a remedial action plan to the 
                Secretary; and
                    ``(B) contact claimants regarding the delays in the 
                processing of claims and inform claimants of steps 
                being taken to improve such delays.
    ``(h) Definitions.--In this section:
            ``(1) Claimant.--The term `claimant' means a participant, 
        beneficiary, pharmacy, or health care provider submitting a 
        claim for payment of health care expenses.
            ``(2) Clean claim.--The term `clean claim' means a claim--
                    ``(A) with respect to health care expenses for an 
                individual who is covered under a group health plan on 
                the date such expenses are incurred;
                    ``(B) for such expenses that are covered under such 
                plan at such time; and
                    ``(C) that is submitted with all of the information 
                requested by a group health plan or health insurance 
                issuer offering group health insurance coverage in 
                connection with a group health plan on the claim form 
                or other instructions provided to the health care 
                provider prior to submission of the claim.
            ``(3) Contested claim.--The term `contested claim' means a 
        claim for health care expenses that is denied by a group health 
        plan or health insurance issuer during or after the benefit 
        determination process.
            ``(4) Health care provider.--The term `health care 
        provider' includes a physician or other 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, as 
        well as an institution or other facility or agency that 
        provides health care services and is licensed, accredited, or 
        certified to provide health care items and services under 
        applicable State law.''.

SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT.

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

``SEC. 2707. PROMPT PAYMENT OF HEALTH BENEFITS CLAIMS.

    ``(a) Timeframe for Payment of Clean Claim.--A group health plan, 
and a health insurance issuer offering group health insurance coverage 
in connection with a group health plan, shall pay all clean claims and 
uncontested claims--
            ``(1) in the case of a claim that is submitted 
        electronically, within 14 days of the date on which the claim 
        is submitted; or
            ``(2) in the case of a claim that is not submitted 
        electronically, within 30 days of the date on which the claim 
        is submitted.
    ``(b) Procedures Involving Submitted Claims.--
            ``(1) In general.--Not later than 10 days after the date on 
        which a clean claim is submitted, a group health plan, and a 
        health insurance issuer offering group health insurance 
        coverage in connection with a group health plan, shall provide 
        the claimant with a notice that acknowledges receipt of the 
        claim by the plan or issuer. Such notice shall be considered to 
        have been provided on the date on which the notice is mailed or 
        electronically transferred.
            ``(2) Claim deemed to be a clean claim.--A claim is deemed 
        to be a clean claim under this section if the group health plan 
        or health insurance issuer involved does not provide notice to 
        the claimant of any deficiency in the claim within 10 days of 
        the date on which the claim is submitted.
            ``(3) Claim determined to not be a clean claim.--
                    ``(A) In general.--If a group health plan or health 
                insurance issuer determines that a claim for health 
                care expenses is not clean, the plan or issuer shall, 
                not later than the end of the period described in 
                paragraph (2), notify the claimant of such 
                determination. Such notification shall specify all 
                deficiencies in the claim and shall list with 
                specificity all additional information or documents 
                necessary for the proper processing and payment of the 
                claim.
                    ``(B) Determination after submission of additional 
                information.--A claim is deemed to be a clean claim 
                under this paragraph if the group health plan or health 
                insurance issuer involved does not provide notice to 
                the claimant of any deficiency in the claim within 10 
                days of the date on which the additional information is 
                received pursuant to subparagraph (A).
                    ``(C) Payment of uncontested portion of a claim.--A 
                group health plan or health insurance issuer shall pay 
                any uncontested portion of a claim in accordance with 
                subsection (a).
            ``(4) Obligation to pay.--A claim for health care expenses 
        that is not paid or contested by a group health plan or health 
        insurance issuer within the timeframes set forth in this 
        subsection shall be deemed to be a clean claim and paid by the 
        plan or issuer in accordance with subsection (a).
    ``(c) Date of Payment of Claim.--Payment of a clean claim under 
this section is considered to have been made on the date on which full 
payment is received by the health care provider.
    ``(d) Interest Schedule.--
            ``(1) In general.--With respect to a clean claim, a group 
        health plan or health insurance issuer that fails to comply 
        with subsection (a) shall pay the claimant interest on the 
        amount of such claim, from the date on which such payment was 
        due as provided in this section, at the following rates:
                    ``(A) 1\1/2\ percent per month from the 1st day of 
                nonpayment after payment is due through the 15th day of 
                such nonpayment.
                    ``(B) 2 percent per month from the 16th day of such 
                nonpayment through the 45th day of such nonpayment.
                    ``(C) 2\1/2\ percent per month after the 46th day 
                of such nonpayment.
            ``(2) Contested claims.--With respect to claims for health 
        care expenses that are contested by the plan or issuer, once 
        such claim is deemed clean under subsection (b), the interest 
        rate applicable for noncompliance under this subsection shall 
        apply consistent with paragraph (1).
    ``(e) Private Right of Action.--Nothing in this section shall be 
construed to prohibit or limit a claim or action not covered by the 
subject matter of this section that any claimant has against a group 
health plan, or a health insurance issuer.
    ``(f) Anti-Retaliation.--Consistent with applicable Federal or 
State law, a group health plan or health insurance issuer shall not 
retaliate against a claimant for exercising a right of action under 
this section.
    ``(g) Fines and Penalties.--
            ``(1) Fines.--
                    ``(A) In general.--If a group health plan, or 
                health insurance issuer offering group health insurance 
                coverage, willfully and knowingly violates this section 
                or has a pattern of repeated violations of this 
                section, the Secretary shall impose a fine not to 
                exceed $1,000 per claim for each day a response is 
                delinquent beyond the date on which such response is 
                required under this section.
                    ``(B) Repeated violations.--If 3 separate fines 
                under subparagraph (A) are levied within a 5-year 
                period, the Secretary is authorized to impose a penalty 
                in an amount not to exceed $10,000 per claim.
            ``(2) Remedial action plan.--Where it is established that 
        the group health plan or health insurance issuer willfully and 
        knowingly violated this section or has a pattern of repeated 
        violations, the Secretary shall require the health plan or 
        health insurance issuer to--
                    ``(A) submit a remedial action plan to the 
                Secretary; and
                    ``(B) contact claimants regarding the delays in the 
                processing of claims and inform claimants of steps 
                being taken to improve such delays.
    ``(h) Definitions.--In this section:
            ``(1) Claimant.--The term `claimant' means a participant, 
        beneficiary, pharmacy, or health care provider submitting a 
        claim for payment of health care expenses.
            ``(2) Clean claim.--The term `clean claim' means a claim--
                    ``(A) with respect to health care expenses for an 
                individual who is covered under a group health plan on 
                the date such expenses are incurred;
                    ``(B) for such expenses that are covered under such 
                plan at such time; and
                    ``(C) that is submitted with all of the information 
                requested by a group health plan or health insurance 
                issuer offering group health insurance coverage in 
                connection with a group health plan on the claim form 
                or other instructions provided to the health care 
                provider prior to submission of the claim.
            ``(3) Contested claim.--The term `contested claim' means a 
        claim for health care expenses that is denied by a group health 
        plan or health insurance issuer during or after the benefit 
        determination process.
            ``(4) Health care provider.--The term `health care 
        provider' includes a physician or other 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, as 
        well as an institution or other facility or agency that 
        provides health care services and is licensed, accredited, or 
        certified to provide health care items and services under 
        applicable State law.''.
    (b) Individual Market.--Part B of title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg-41 et seq.) is amended--
            (1) by redesignating the first subpart 3 (relating to other 
        requirements) as subpart 2; and
            (2) by adding at the end of subpart 2 the following:

``SEC. 2753. STANDARDS RELATING TO PROMPT PAYMENT OF HEALTH BENEFITS 
              CLAIMS.

    ``The provisions of section 2707 shall apply to health insurance 
coverage offered by a health insurance issuer in the individual market 
in the same manner as they apply to health insurance coverage offered 
by a health insurance issuer in connection with a group health plan in 
the small or large group market.''.

SEC. 4. AMENDMENTS TO THE SOCIAL SECURITY ACT.

    (a) Prompt Payment by Prescription Drug Plans.--Section 1860D-12(b) 
of the Social Security Act (42 U.S.C. 1395w-112(b)) is amended by 
adding at the end the following new paragraph:
            ``(4) Prompt payment of clean claims.--
                    ``(A) Prompt payment.--
                            ``(i) In general.--Each contract entered 
                        into with a PDP sponsor under this section with 
                        respect to a prescription drug plan offered by 
                        such sponsor shall provide that payment shall 
                        be issued, mailed, or otherwise transmitted 
                        with respect to all clean claims submitted 
                        under this part within the applicable number of 
                        calendar days after the date on which the claim 
                        is received.
                            ``(ii) Clean claim defined.--In this 
                        paragraph, the term `clean claim' means a 
                        claim--
                                    ``(I) with respect to health care 
                                expenses for an individual who is 
                                covered under a group health plan on 
                                the date such expenses are incurred;
                                    ``(II) for such expenses that are 
                                covered under such plan at such time; 
                                and
                                    ``(III) that is submitted with all 
                                of the information requested by a group 
                                health plan or health insurance issuer 
                                offering group health insurance 
                                coverage in connection with a group 
                                health plan on the claim form or other 
                                instructions provided to the health 
                                care provider prior to submission of 
                                the claim.
                    ``(B) Applicable number of calendar days defined.--
                In this paragraph, the term `applicable number of 
                calendar days' means--
                            ``(i) with respect to claims submitted 
                        electronically, 14 days; and
                            ``(ii) with respect to claims submitted 
                        otherwise, 30 days.
                    ``(C) Interest schedule.--
                            ``(i) In general.--With respect to a clean 
                        claim, a PDP sponsor that fails to comply with 
                        subparagraph (A) shall pay the claimant 
                        interest on the amount of such claim, from the 
                        date on which such payment was due as provided 
                        in this paragraph, at the following rates:
                                    ``(I) 1\1/2\ percent per month from 
                                the 1st day of nonpayment after payment 
                                is due through the 15th day of such 
                                nonpayment.
                                    ``(II) 2 percent per month from the 
                                16th day of such nonpayment through the 
                                45th day of such nonpayment.
                                    ``(III) 2\1/2\ percent per month 
                                after the 46th day of such nonpayment.
                    ``(D) Procedures involving claims.--
                            ``(i) In general.--A contract entered into 
                        with a PDP sponsor under this section with 
                        respect to a prescription drug plan offered by 
                        such sponsor shall provide that, not later than 
                        10 days after the date on which a clean claim 
                        is submitted, the PDP sponsor shall provide the 
                        claimant with a notice that acknowledges 
                        receipt of the claim by such sponsor. Such 
                        notice shall be considered to have been 
                        provided on the date on which the notice is 
                        mailed or electronically transferred.
                            ``(ii) Claim deemed to be a clean claim.--A 
                        claim is deemed to be a clean claim if the PDP 
                        sponsor involved does not provide notice to the 
                        claimant of any deficiency in the claim within 
                        10 days of the date on which the claim is 
                        submitted.
                            ``(iii) Claim determined to not be a clean 
                        claim.--
                                    ``(I) In general.--If a PDP sponsor 
                                determines that a submitted claim is 
                                not a clean claim, the PDP sponsor 
                                shall, not later than the end of the 
                                period described in clause (ii), notify 
                                the claimant of such determination. 
                                Such notification shall specify all 
                                defects or improprieties in the claim 
                                and shall list with specificity all 
                                additional information or documents 
                                necessary for the proper processing and 
                                payment of the claim.
                                    ``(II) Determination after 
                                submission of additional information.--
                                A claim is deemed to be a clean claim 
                                under this paragraph if the PDP sponsor 
                                involved does not provide notice to the 
                                claimant of any defect or impropriety 
                                in the claim within 10 days of the date 
                                on which additional information is 
                                received under subclause (I).
                                    ``(III) Payment of clean portion of 
                                a claim.--A PDP sponsor shall, as 
                                appropriate, pay any portion of a claim 
                                that would be a clean claim but for a 
                                defect or impropriety in a separate 
                                portion of the claim in accordance with 
                                subparagraph (A).
                            ``(iv) Obligation to pay.--A claim 
                        submitted to a PDP sponsor that is not paid or 
                        contested by the provider within the applicable 
                        number of days (as defined in subparagraph (B)) 
                        shall be deemed to be a clean claim and shall 
                        be paid by the PDP sponsor in accordance with 
                        subparagraph (A).
                            ``(v) Date of payment of claim.--Payment of 
                        a clean claim under such subparagraph is 
                        considered to have been made on the date on 
                        which full payment is received by the provider.
                    ``(E) Private right of action.--
                            ``(i) In general.--Nothing in this 
                        paragraph shall be construed to prohibit or 
                        limit a claim or action not covered by the 
                        subject matter of this section that any 
                        individual or organization has against a 
                        provider or a PDP sponsor.
                            ``(ii) Anti-retaliation.--Consistent with 
                        applicable Federal or State law, a PDP sponsor 
                        shall not retaliate against an individual or 
                        provider for exercising a right of action under 
                        this subparagraph.
                    ``(F) Fines and penalties.--
                            ``(i) Fines.--
                                    ``(I) In general.--If a PDP sponsor 
                                willfully and knowingly violates this 
                                section or has a pattern of repeated 
                                violations of this section, the 
                                Secretary shall impose a fine not to 
                                exceed $1,000 per claim for each day a 
                                response is delinquent beyond the date 
                                on which such response is required 
                                under this paragraph.
                                    ``(II) Repeated violations.--If 3 
                                separate fines under subclause (I) are 
                                levied within a 5-year period, the 
                                Secretary is authorized to impose a 
                                penalty in an amount not to exceed 
                                $10,000 per claim.
                            ``(ii) Remedial action plan.--Where it is 
                        established that the PDP sponsor willfully and 
                        knowingly violated this section or has a 
                        pattern of repeated violations, the Secretary 
                        shall require the PDP sponsor to--
                                    ``(I) submit a remedial action plan 
                                to the Secretary; and
                                    ``(II) contact claimants regarding 
                                the delays in the processing of claims 
                                and inform claimants of steps being 
                                taken to improve such delays.''.
    (b) Prompt Payment by MA-PD Plans.--Section 1857(f) of the Social 
Security Act (42 U.S.C. 1395w-27) is amended by adding at the end the 
following new paragraph:
            ``(3) Incorporation of certain prescription drug plan 
        contract requirements.--The provisions of section 1860D-
        12(b)(4) shall apply to contracts with a Medicare Advantage 
        organization in the same manner as they apply to contracts with 
        a PDP sponsor offering a prescription drug plan under part 
        D.''.
    (c) Medicaid.--Section 1932(f) of the Social Security Act (42 
U.S.C. 1396u-2(f)) is amended by striking ``the claims payment 
procedures described in section 1902(a)(37)(A), unless the health care 
provider and the organization agree to an alternate payment schedule'' 
and inserting ``section 1860D-12(b)(4), in the same manner as the 
provisions of such section apply to a PDP sponsor offering a 
prescription drug plan under part D''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contracts entered into or renewed on or after December 31, 
2006.

SEC. 5. PREEMPTION.

    The provisions of this Act shall not supersede any contrary 
provision of State law if the provision of State law imposes 
requirements, standards, or implementation specifications that are 
equal to or more stringent than the requirements, standards, or 
implementation specifications imposed under this Act, and any such 
requirements, standards, or implementation specifications under State 
law that are equal to or more stringent than the requirements, 
standards, or implementation specifications under this Act shall apply 
to group health plans and health insurance issuers as provided for 
under State law.

SEC. 6. EFFECTIVE DATE.

    (a) In General.--Except as provided in section 4 and subsection 
(b), the amendments made by this Act shall apply with respect to group 
health plans and health insurance issuers for plan years beginning 
after December 31, 2006.
    (b) Special Rule for Collective Bargaining Agreements.--In the case 
of a group health plan maintained pursuant to one or more collective 
bargaining agreements between employee representatives and one or more 
employers ratified before the date of the enactment of this Act, the 
amendments made by this Act shall not apply to plan years beginning 
before the later of--
            (1) the date on which the last of the collective bargaining 
        agreements relating to the plan terminates (determined without 
        regard to any extension thereof agreed to after the date of the 
        enactment of this Act), or
            (2) January 1, 2007.
For purposes of paragraph (1), any plan amendment made pursuant to a 
collective bargaining agreement relating to the plan which amends the 
plan solely to conform to any requirement of the amendments made by 
this section shall not be treated as a termination of such collective 
bargaining agreement.

SEC. 7. SEVERABILITY.

    If any provision of this Act, or an amendment made by this Act, is 
held by a court to be invalid, such invalidity shall not affect the 
remaining provisions of this Act, or amendments made by this Act.
                                 <all>