[Congressional Record Volume 144, Number 100 (Thursday, July 23, 1998)]
[Extensions of Remarks]
[Pages E1402-E1418]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   THE PATENT PROTECTION ACT OF 1998

                                 ______
                                 

                         HON. J. DENNIS HASTERT

                              of illinois

                    in the house of representatives

                        Thursday, July 23, 1998

  Mr. Mr. Speaker, I submit for the Record, a section-by-section 
analysis of H.R. 4250 the Patient Protection Act for my colleagues to 
review.

                   THE PATENT PROTECTION ACT OF 1998

       Section 1. Short Title And Table of Contents. This section 
     provides for the short title, ``Patient Protection Act of 
     1998'' and a table of contents.
 TITLE I--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974
                    Subtitle A--Patient Protections
       Section 1001. Patient Access to Unrestricted Medical 
     Advice, Emergency Medical Care, Obstetric and Gynecological 
     Care, and Pediatric Care.
       Subsection (a). In General. This subsection amends subpart 
     B of part 7 of subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 by adding a new 
     Section 713, which follows.
       Section 713. Patient Access to Unrestricted Medical Advice, 
     Emergency Medical Care, Obstetric And Gynecological Care, 
     Pediatric Care.
       Subsection (a). Patient Access to Unrestricted Medical 
     Advice. This subsection states that a group health plan or 
     health insurance issuer may not prohibit or restrict health 
     care professionals under contract from advising participants 
     or beneficiaries about their health status or treatment, even 
     if benefits for such care or treatment are not covered by the 
     plan or health insurance. Health care professional is defined 
     as a physician (section 1861(r) of the Social Security Act) 
     or other health care professional whose services are provided 
     under the group health plan. This includes a podiatrist, 
     optometrist, chiropractor, psychologist, dentist, physician 
     assistant, physical or occupational therapist and therapy 
     assistant, speech language pathologist, audiologist, 
     registered or licensed practical nurse (including nurse 
     practitioner, clinical nurse specialist, certified registered 
     nurse anesthetist, and certified nurse midwife), licensed 
     certified social worker, registered respiratory therapist, 
     and certified respiratory therapy technician.
       Subsection (b). Patient Access to Emergency Medical Care. 
     This subsection prohibits group health plans or health 
     insurance issuers from requiring beneficiaries to get 
     preauthorization before seeking emergency medical services 
     and requires them to cover emergency medical screening 
     examinations obtained at any emergency medical care facility, 
     whether in or outside a plan's network of affiliated 
     providers, if a prudent layperson with an average knowledge 
     of health and medicine would judge the examination necessary 
     in order to determine whether emergency medical care is 
     needed. The plan or issuer must provide additional emergency 
     medical services to the extent a prudent emergency medical 
     professional determines necessary to avoid the consequences 
     described in section 503(b)(8)(I) of ERISA as amended by this 
     Act. These requirements apply to the extent the group health 
     plan or health insurance issuer covers emergency medical care 
     benefits (as defined in section 503(b)(8)(I) of ERISA as 
     amended by this Act), except for items or services 
     specifically excluded; and to items or services within the 
     capability of the emergency facility, including routinely 
     available ancillary services. This subsection does not 
     prevent a group health plan or issuer from imposing any form 
     of cost-sharing for emergency medical services so long as the 
     cost-sharing is uniformly applied.
       Subsection (c). Patient Access to Obstetric and 
     Gynecological Care. If the group health plan or health 
     insurance issuer covers routine gynecological or obstetric 
     care by a participating physician specializing in such care, 
     and the participant's designated primary care provider is not 
     such a specialist, authorization or referral by a primary 
     care provider must not be required for routine gynecological 
     or obstetric care. Ordering of other similar routine 
     gynecological or obstetric care by such a participating 
     specialist is treated as authorized by the primary care 
     provider. Plan requirements relating to medical necessity or 
     appropriateness for obstetric and gynecological care will be 
     allowed.
       Subsection (d). Patient Access to Pediatric Care. This 
     subsection states that if the group health plan or health 
     insurance issuer covers routine pediatric care, and requires 
     the designation of a primary care provider, the parent or 
     guardian of any plan beneficiary under 18 years of age may 
     designate a participating physician who specializes in 
     pediatrics, if available, as the primary care provider. Plan 
     requirements relating to medical necessity or appropriateness 
     for pediatric care will be allowed.
       Subsection (e). Treatment of Multiple Coverage Options. 
     This subsection requires plans that have two or more coverage 
     options to provide patient access to obstetric and 
     gynecological care and pediatric care as defined in 
     subsections (c) and (d) under each option.
       Subsection (b). Conforming Amendment. This subsection 
     simply amends the table of contents of the Employee 
     Retirement Income Security Act of 1974.
       Section 1002. Effective Date and Related Rules.
       Subsection (a). In General. This subsection states that the 
     amendments made by Subtitle A will apply with respect to plan 
     years beginning on or after January 1 of the second calendar 
     year following the date of the enactment of the Act. The 
     Secretary is also required to issue all necessary regulations 
     before the effective date.
       Subsection (b). Limitation on Enforcement Actions. If the 
     group health plan or health insurance issuer has sought to 
     comply in good faith with the amendments of Subtitle A, no 
     enforcement action shall be taken against a plan or issuer 
     for violating a requirement imposed by the amendments before 
     implementing regulations are issued.
       Subsection (c). Special Rule for Collective Bargaining 
     Agreements. If a group health

[[Page E1403]]

     plan is maintained pursuant to one or more collective 
     bargaining agreements ratified before the date of enactment 
     of this Act, the provisions relating to patient access 
     (subsections (b), (c), and (d) of section 713 of ERISA as 
     added by this subtitle) will not apply before the date of 
     termination of the last collective bargaining agreement 
     relating to the plan, or January 1, 2001, which ever is 
     later. Any amendment in the plan made solely to conform to 
     requirements of this subtitle must not be treated as a 
     termination of the collective bargaining agreement.
       Subsection (d). Assuring Coordination. This subsection 
     requires the Secretary of Labor, the Secretary of the 
     Treasury, and the Secretary of Health and Human Services to 
     execute an interagency memorandum of understanding to ensure 
     that regulations, rulings, and interpretations on the same 
     matter over which two or more such Secretaries have 
     responsibility are administered so as to have the same effect 
     at all times, and that enforcement policies are coordinated 
     to assign priorities and avoid duplication.
       Subsection (e). Treatment of Religious Nonmedical 
     Providers. Among other things, this section clarifies that 
     nothing in this Act shall be construed to prevent a group 
     health plan or health insurance issuer offering coverage in 
     connection with a group health plan from include as covered 
     providers religious nonmedical providers.
               Subtitle B--Patient Access to Information.
       Section 1101. Patient Access to Information Regarding Plan 
     Coverage, Managed Care Procedures, Health Care Providers, And 
     Quality of Medical Care.
       Subsection (a). In General. This subsection amends Part 1 
     of subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974 by (1) redesignating section 111 as 
     section 112; and (2) inserting after section 110 the 
     following new Section 111.
       Section 111. Disclosure by Group Health Plans.
       Subsection (a). Disclosure Requirement. This subsection 
     requires the administrator of each group health plan to 
     ensure that the summary plan descriptions required under 
     ERISA section 102 contain the information described in 
     subsections (b),(c),(d), and (e)(2)(A). Each health insurance 
     issuer connected with a group health plan is also required to 
     provide the necessary information to the administrator or to 
     plan participants and beneficiaries on a timely basis.
       Subsection (b). Plan Benefits. The information required 
     under subsection (a) includes a description of : (A) covered 
     benefits categorized by the types of items and services and 
     the types of health care professionals providing the items 
     and services; (B) plan coverage for emergency medical care, 
     the extent of access to urgent care centers, and definitions 
     of terminology referring to emergency medical care; (C) plan 
     benefits for preventive services; (D) any use or application 
     of a drug formulary, including a summary of the process for 
     determining the formulary; (E) and COBRA benefits available 
     under the plan.
       Information must also be provided on any limitations, 
     exclusions, or restrictions on covered benefits, including: 
     (A) benefits specifically excluded from coverage, categorized 
     by types of items and services; (B) whether coverage for 
     medical care can be limited or excluded based on utilization 
     review or preauthorization requirements; (C) any lifetime, 
     annual, or other period limitations on coverage, categorized 
     by types of benefits; (D) any limitations or exclusions for 
     custodial care; (E) experimental treatment or technology; or 
     (F) failure to meet the plan's requirements for medical 
     appropriateness or necessity; (G) coverage of second or 
     subsequent opinions; (H) whether referral from a primary care 
     provider is required for specialty care; (I) if continuity of 
     care may be affected by the departure by the health care 
     professional from a defined set of providers; restrictions on 
     coverage of emergency services; and (J) any financial 
     responsibility of participants or beneficiaries for emergency 
     services.
       Subsection (c). Participant's Financial Responsibilities. 
     The summary plan description must also explain the 
     participant's financial responsibility for payment of 
     premiums, coinsurance, copayments, deductibles, and whether 
     this may vary if the health care provider is not one of a 
     defined set of providers.
       Subsection (d). Dispute Resolution Procedures. The summary 
     plan description must describe the process for dispute 
     resolution adopted by the plan pursuant to section 503(b) of 
     ERISA as amended by this Act. This must explain the 
     procedures and time frames for coverage decisions and 
     internal and external review.
       Subsection (e). Information Available on Request. Upon 
     written request, a group health plan or health insurance 
     issuer offering coverage in connection with a group health 
     plan must provide access to plan benefit information in 
     electronic form. This information, in electronic format, must 
     include, in addition to information required by section 
     104(b)(4) of ERISA, the latest summary plan description, 
     summary of material modifications, and the actual plan 
     provisions with available benefits. This is required no more 
     than once a year, and a reasonable charge is permitted which 
     may be subject to a maximum amount set by the Secretary. 
     Requirements may also be met by making the information 
     generally available on the Internet or on a proprietary 
     computer network in a format which is readily accessible to 
     participants and beneficiaries.
       A summary description of the types of information available 
     on request must be included in the summary plan description 
     made available to participants and beneficiaries.
       In addition to information described above, a group or 
     health plan issuer must provide to participants or 
     beneficiaries upon request information on: (i) any network 
     characteristics with detailed lists of primary care providers 
     and specialists and their geographic locations; (ii) any 
     special disease management programs or programs for persons 
     with disabilities, whether these programs are voluntary and 
     if benefits would differ significantly for participants in 
     care management; (iii) whether a specific drug or biological 
     is included in the plan's formulary and procedures for waiver 
     requests; (iv) the procedures and medically-based criteria 
     used in an adverse coverage decision if the determination 
     relates to medical necessity, an experimental treatment or 
     technology; (v) the basis on which any preauthorization and 
     utilization review requirement has resulted in an adverse 
     coverage decision; (vi) the accreditation and licensing 
     status of each health insurance issuer offering health 
     insurance coverage in connection with the plan and of any 
     utilization review organization utilized by the issuer or the 
     plan, together with the name and address of the accrediting 
     or licensing authority; (vii) the latest information on 
     enrollee satisfaction maintained by the plan or health 
     insurance issuer; (viii) the latest information, if any, on 
     quality performance maintained by the plan or health 
     insurance issuer; and (ix) information about the frequency 
     and outcome of external review decisions requested by 
     enrollees of the plan or health insurance issuer.
       Upon request, any health care professional treating a 
     participant or beneficiary under a group health plan must 
     provide to the participant or beneficiary a description of 
     his or her professional qualifications, privileges, 
     experience and general description of the method of 
     compensation for medical care according to categories that 
     may be specified by the Secretary.
       In addition, upon request, any health care facility from 
     which a participant or beneficiary has sought treatment under 
     a group health plan must provide to the participant or 
     beneficiary a description of the facility's corporate form or 
     other organizational form and all forms of licensing and 
     accreditation status, if any, with standard-setting 
     organizations.
       Subsection (f). Access to Information Relevant to the 
     Coverage Options under which the Participant or Beneficiary 
     is Eligible to Enroll. Upon written request, and in 
     connection with a period of enrollment, the group health plan 
     and health insurance issuer must make the summary plan 
     description available for any coverage option in which the 
     participant or prospective participant is eligible to enroll 
     and any information described in clauses 
     (i),(ii),(iii),(vi),(vii), and (viii) of subsection 
     (e)(2)(B).
       Subsection (g). Advance Notice of Changes in Drug 
     Formularies. The plan must inform participants not later than 
     30 days before the effective of date of any exclusion of a 
     specific drug or biological from any drug formulary used by 
     the plan in the treatment of a chronic illness or disease.
       Subsection (h). Definitions.--For purposes of this section: 
     the term ``group health plan'' has the meaning under section 
     503(b)(6); the term ``medical care'' has the meaning under 
     section 733(a)(2); the term ``health insurance coverage'' has 
     the meaning under section 733(b)(1) and the term ``health 
     insurance issuer'' has the meaning under section 733(b)(2).
       Subsection (b). Conforming Amendments. This section makes 
     miscellaneous conforming amendments to ERISA.
       Section 1102. Effective Date and Related Rules.
       Subsection (a). In General. Amendments made by Subtitle B--
     Patient Access to Information will apply to plan years 
     beginning on or after January 1 of the second calendar year 
     following the date of the enactment of this Act. The 
     subsection also requires the Secretary to issue all necessary 
     regulations before that date.
       Subsection (b). Limitation on Enforcement Actions. If the 
     group health plan or health insurance issuer has sought to 
     comply in good faith with the amendments of Subtitle B, no 
     enforcement actions shall be taken against a plan or issuer 
     for violating a requirement imposed by the amendments before 
     final regulations are issued.
       Subsection (c). Assuring Coordination. This subsection 
     requires the Secretary of Labor, the Secretary of the 
     Treasury, and the Secretary of Health and Human Services to 
     execute an interagency memorandum of understanding to ensure 
     that regulations, rulings, and interpretations on the same 
     matter over which two or more such Secretaries have 
     responsibility are administered so as to have the same effect 
     at all times, and that enforcement policies are coordinated 
     to assign priorities and avoid duplication
Subtitle C--New Procedures and Access to Courts for Grievances Arising 
                        Under Group Health Plans
       Section 1201. Special Rules for Group Health Plans.
       Subsection (a). Section 503 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1133) is amended by 
     adding at the end the following new subsections:

[[Page E1404]]

       Subsection (b). Special Rules for Group Health Plans.
       (1) Coverage Determinations. Every group health plan must 
     provide notice in writing to a participant of any adverse 
     coverage decision with respect to requested benefits under 
     the plan. The notice sets forth the specific reasons for the 
     coverage decision and must be written in a manner that can be 
     understood by the participant. The notice must inform the 
     participant or beneficiary of their ability to file a written 
     request for review of the initial coverage decision (i.e. 
     internal appeal) within 180 days after receipt of the notice. 
     A notice must also be sent to the participant or 
     beneficiary's medical care provider if the provider initiated 
     the claim or seeks reimbursement from the plan. A full and 
     fair de novo review of the decision must be made by an 
     appropriate named fiduciary who did not make the initial 
     decision. Group health plans must also meet the additional 
     requirements of this subsection.
       (2) Time Limits for Making Initial Coverage Decisions for 
     Benefits and Completing Internal Appeals.
       (A) Time Limits for Deciding Requests for Benefit Payments, 
     Requests for Advance Determination of Coverage, and Requests 
     for Required Determination of Medical Necessity.
       (i) Initial Coverage Decisions. If a request for benefit 
     payments, a request for advance determination of coverage, or 
     a request for required determination of medical necessity is 
     submitted to a group health plan in a reasonable form under 
     the plan, the plan must issue in writing an initial coverage 
     decision within 30 days of the filing completion date. 
     Failure of the plan to issue a coverage decision will be 
     treated as an adverse coverage decision, thus allowing for an 
     internal appeal.
       (ii) Internal Review of Initial Denials. Upon written 
     request, a review by an appropriate named fiduciary (who 
     pursuant to paragraph (3) must be a physician) must be issued 
     within 30 days of the review filing date and must include a 
     written decision affirming, reversing, or modifying the 
     initial coverage decision setting forth the grounds for the 
     decision. The decision is treated as the final decision of 
     the plan except in the case of an adverse coverage decision 
     with respect to which the participant elects an external 
     review as described below. Failure of the plan to issue a 
     coverage decision will be treated as an adverse coverage 
     decision, thus allowing for an external review.
       (B) Time Limits for Making Coverage Decisions Relating to 
     Urgent and Emergency Medical Care and for Completing Internal 
     Appeals.
       (i) Initial Coverage Decisions. In general, for any request 
     for expedited advance determination of coverage, a group 
     health plan must issue in writing an initial coverage 
     decision within 10 days in cases involving urgent medical 
     care or within 72 hours in cases involving emergency medical 
     care. Failure of the plan to issue a coverage decision will 
     be treated as an adverse coverage decision, thus allowing for 
     an internal appeal.
       (ii) Internal Review of Initial Denials. Upon written 
     request, a review by an appropriate named fiduciary (who 
     pursuant to paragraph (3) must be a physician) must be issued 
     within 10 days for urgent medical care and 72 hours for 
     emergency medical care and must include a written decision 
     affirming, reversing, or modifying the initial coverage 
     decision and setting forth the grounds for the decision. The 
     decision is treated as the final decision of the plan except 
     in the case of an adverse coverage decision with respect to 
     which the participant elects an external review as described 
     below. Failure of the plan to issue a coverage decision will 
     be treated as an adverse coverage decision, thus allowing for 
     an external review.
       (3) Physicians Must Review Initial Coverage Decisions 
     Involving Medical Appropriateness or Necessity or 
     Experimental Treatment. If an initial coverage decision is 
     based on a determination that a particular item or service is 
     excluded from coverage under the terms of the plan because 
     the provision of such item or service does not meet the 
     plan's requirements for medical appropriateness or necessity 
     or would constitute experimental treatment or technology, the 
     internal review shall be conducted by a physician who did not 
     make the initial denial.
       (4) Participant Election of External Review by Independent 
     Medical Expert and Reconsideration of Initial Review 
     Decision.
       (A) General Requirements for External Review. The external 
     review requirements described in (B), (C), and (D) apply in 
     the case of (1) any failure to timely issue a coverage 
     decision under an internal review, or (2) the internal review 
     decision is based on a determination that a particular item 
     or service is excluded from coverage under the terms of the 
     plan because it does not meet the plan's requirements for 
     medical appropriateness or necessity or would constitute 
     experimental treatment or technology.
       (B) Limits on Allowable Advance Payments. The external 
     review in connection with an adverse coverage decision is 
     available subject to any requirement of the plan (unless 
     waived by the plan for financial or other reasons) for 
     payment in advance by the participant or beneficiary seeking 
     review of an amount equal to $25, or if greater 10 percent of 
     the cost of the medical care involved up to a maximum of 
     $100. No payment may be required of a participant enrolled in 
     a plan pursuant to a program under Medicaid (Title XIX of the 
     Social Security Act) or under a State Childrens' Health 
     Insurance Program (Title XXVI of such Act). The payment is to 
     be refunded if the recommendation under external review is to 
     modify or reverse the internal review decision.
       (C) Reconsideration of Initial Review Decision. If an 
     internal appeal results in an adverse coverage decision, a 
     participant or beneficiary can make a request in writing 
     within 30 days for an external review and reconsideration of 
     the initial review decision denying coverage. The plan must 
     provide for a procedure under which one or more independent 
     medical experts selected under the plan will review the 
     coverage decision to determine whether the decision was in 
     accordance with the terms of the plan and Title I. The record 
     for review (including a specification of the terms of the 
     plan and other criteria serving as the basis for the initial 
     review decision denying coverage) will be presented to such 
     expert(s) who must maintain such record in a manner to ensure 
     confidentiality. The expert(s) will then report in writing to 
     the plan their recommendation as to whether the coverage 
     decision should be affirmed, modified, or reversed. An 
     explanation of the grounds (including the clinical basis) for 
     the recommendation must be included. A physician selected 
     under the plan, who did not make the initial internal review 
     decision, must then reconsider the decision denying coverage 
     to determine whether the decision was in accordance with the 
     terms of the plan and Title I and must issue a written 
     decision affirming, modifying, or reversing the decision, 
     taking into account the recommendation of the external review 
     medical expert(s). The decision must set forth the grounds 
     for the decision.
       (D) Time Limits for Reconsideration. The review must be 
     completed within 72 hours for emergency medical care, within 
     10 days for urgent medical care or within 25 days in other 
     cases. The decision affirming, reversing, or modifying the 
     initial review decision of the plan denying coverage is the 
     final decision of the plan. Failure to issue a written 
     decision will be treated as a final decision affirming the 
     initial review decision of the plan, thus allowing for court 
     review.
       (E) Independent Medical Expert.
       (i) In General. The term `independent medical expert' means 
     a medical professional who is a physician (or if appropriate 
     another medical professional) who has appropriate credentials 
     (including licensing in the applicable medical field) and has 
     attained recognized expertise in the applicable medical 
     field. Under the selection procedures in clause (ii), the 
     expert must also meet strict rules of independence as 
     described below.
       (ii) Selection of Medical Experts. To ensure independence 
     of the recommendation with respect to a particular external 
     review, a plan must have procedures that follow one of the 
     following means of selecting independent medical expert(s). 
     Under the first option, the independent expert must be 
     selected by an independent intermediary by means of a method 
     that ensures that the identity of the expert is not disclosed 
     and the identity of the plan, issuer and patient is not 
     disclosed to the expert. Under the second option, the 
     independent expert must be selected by an independent and 
     appropriately credentialed panel of physicians established by 
     a fully accredited teaching hospital. Under the third option, 
     the independent expert must be selected by an independent 
     peer review organization as described in section 1152(1)(A) 
     of the Social Security Act. Under the fourth option, the 
     independent expert must be selected by an independent 
     external review organization accredited by a private 
     standard-setting organization recognized by the Secretary. 
     The independent expert may also be selected, under a plan, by 
     an intermediary or otherwise that sufficiently ensures the 
     expert's independence as prescribed under regulations issued 
     pursuant to negotiated rulemaking. Nothing in this section 
     shall be construed to require that the external review be 
     conducted by a governmental entity.
       (iii) Independence Requirements. A professional or entity 
     meets the independence requirements if they are not 
     affiliated with any related party, if they are not receiving 
     any compensation in connection with the external review that 
     is contingent on any decision rendered by the professional, 
     if the plan and the issuer have no recourse against the 
     professional in connection with the recommendation under 
     external review, and if the professional or entity does not 
     otherwise have a conflict of interest with a related party.
       (iv) Related Party. The term `related party' means the plan 
     or any health insurance issuer offering health insurance 
     coverage in connection with the plan (or any officer, 
     director, or management employee of such plan or issuer), the 
     physician or other medical care provider that provided the 
     medical care involved in the coverage decision, the 
     institution at which the medical care involved in the 
     coverage decision is provided, the manufacturer of any drug 
     or other item that was included in the medical care involved 
     in the coverage decision, or any other party determined to 
     have a substantial interest in the coverage decision .
       (v) Affiliated. The term `affiliated' means, in connection 
     with any entity, having a familial, financial, or 
     professional relationship with, or interest in, such entity.
       (F) Inapplicability with Respect to Items and Services 
     Specifically Excluded from Coverage. An adverse coverage 
     decision that is based on a determination that an item or 
     service is excluded from coverage under the terms of the plan 
     shall not be subject to external review, unless the 
     determination is

[[Page E1405]]

     found in the decision to be based solely on the fact that the 
     item or service does not meet the plan's requirements for 
     medical appropriateness or necessity, or would constitute 
     experimental treatment or technology.
       (5) Permitted Alternatives to Required Internal Review.
       (A) In General. A group health plan will not fail to meet 
     the requirements relating to the review of initial coverage 
     decisions for benefits, if in lieu of the procedures relating 
     to review, the aggrieved participant or beneficiary elects an 
     alternative dispute resolution procedure or the plan provides 
     for an alternative dispute resolution procedure pursuant to a 
     collective bargaining agreement. The time limits of the 
     alternative dispute resolution procedure are not to exceed 
     the time limits otherwise applicable. In any case in which 
     such an alternative dispute resolution procedure is 
     voluntarily elected by the aggrieved participant or 
     beneficiary, the plan may require or allow the participant or 
     beneficiary to waive review of the coverage decision, to 
     waive further review of the coverage decision, and to elect 
     an alternative means of external review.
       (B) Additional Requirements. The dispute resolution must 
     allow for adequate presentation by the aggrieved participant 
     or beneficiary of scientific and medical evidence supporting 
     the participant's or beneficiary's position.
       (6) Permitted Alternatives to Required External Review. A 
     group health plan does not fail to meet the external review 
     requirements if the participant or beneficiary elects to 
     utilize a procedure which is generally available under the 
     plan, the plan agrees in advance to abide by the 
     recommendation of the independent medical expert(s), and the 
     participant or beneficiary waives in advance any right to 
     further review of the final decision.
       (7) Special Rule for Access to Specialty Care. In the case 
     of a request by a physician for advance determination of 
     coverage of a specialist's services, if those services are 
     otherwise provided under the plan, then the initial coverage 
     decision shall be issued within the specialty decision period 
     (72 hours). The term `specialist' means with respect to a 
     condition, a physician who has a high level of expertise 
     through appropriate training and experience (including, in 
     the case of a child, appropriate pediatric expertise) to 
     treat the condition.
       (8) Group Health Plan Defined. The term `group health plan' 
     has the meaning provided in section 733(a).
       (9) Other Definitions.
       (A) Request for Benefit Payments. The term `request for 
     benefit payments' means a request, for payment of benefits by 
     a group health plan for medical care, which is made by or on 
     behalf of a participant or beneficiary after the medical care 
     has been provided.
       (B) Required Determination Of Medical Necessity. The term 
     `required determination of medical necessity' means a 
     determination that the proposed medical care meets the plan's 
     requirements for medical appropriateness or necessity (which 
     may be subject to exceptions under the plan for fraud or 
     misrepresentation), irrespective of whether the proposed 
     medical care otherwise meets other terms and conditions of 
     coverage, but only if the determination does not constitute 
     an advance determination of coverage.
       (C) Advance Determination of Coverage. The term `advance 
     determination of coverage' means a determination that the 
     proposed medical care meets, under the facts and 
     circumstances at the time of the determination, the plan's 
     terms and conditions of coverage (which may be subject to 
     exceptions under the plan for fraud or misrepresentation).
       (D) Request for Advance Determination of Coverage. The term 
     `request for advance determination of coverage' means a 
     request for an advance determination of coverage of medical 
     care which is made by or on behalf of a participant or 
     beneficiary before the medical care is provided.
       (E) Request for Expedited Advance Determination of 
     Coverage. The term `request for expedited advance 
     determination of coverage' means a request for advance 
     determination of coverage, in any case in which the proposed 
     medical care constitutes urgent medical care or emergency 
     medical care.
       (F) Request for Required Determination of Medical 
     Necessity. The term `request for required determination of 
     medical necessity' means a request for a required 
     determination of medical necessity for medical care which is 
     made by or on behalf of a participant or beneficiary before 
     the medical care is provided.
       (G) Request for Expedited Required Determination of Medical 
     Necessity. The term `request for expedited required 
     determination of medical necessity' means a request for 
     required determination of medical necessity in any case in 
     which the proposed medical care constitutes urgent medical 
     care or emergency medical care.
       (H) Urgent Medical Care. The term `urgent medical care' 
     means medical care in any case in which an appropriate 
     physician has certified in writing that failure to provide 
     the participant or beneficiary with such medical care within 
     45 days can reasonably be expected to result in either the 
     imminent death of the participant or beneficiary, or the 
     immediate, serious, and irreversible deterioration of the 
     health of the participant or beneficiary which will 
     significantly increase the likelihood of death, or 
     irreparable harm.
       (I) Emergency Medical Care. The term `emergency medical 
     care' means medical care in any case in which an appropriate 
     physician has certified in writing that failure to 
     immediately provide the care to the participant or 
     beneficiary could reasonably be expected to result in placing 
     the health of such participant or beneficiary (or, with 
     respect to a participant or beneficiary who is a pregnant 
     woman, the health of the woman or her unborn child) in 
     serious jeopardy, serious impairment to bodily functions, or 
     serious dysfunction of any bodily organ or part, or that 
     immediate provision of the care is necessary because the 
     participant or beneficiary has made or is at serious risk of 
     making an attempt to harm himself or herself or another 
     individual.
       (J) Initial Decision Period. The term `initial decision 
     period' means a period of 30 days. In general, the calendar 
     days specified in the various decision and review periods may 
     be extended pursuant to regulations prescribed by the 
     Secretary.
       (K) Internal Review Period. The term `internal review 
     period' means a period of 30 days.
       (L) Urgent Decision Period. The term `urgent review period' 
     means a period of 10 days.
       (M) Emergency Decision Period. The term `emergency review 
     period' means a period of 72 hours.
       (N) Specialty Decision Period. The term `specialty decision 
     period' means a period of 72 hours.
       (O) Reconsideration Period. The term `reconsideration 
     period' means a period of 25 days. In cases involving urgent 
     medical care, this term means the urgent decision period 
     (generally, 10 days). In cases involving emergency medical 
     care, this term means the emergency decision period 
     (generally, 72 hours).
       (P) Filing Completion Date. The term `filing completion 
     date' means, in connection with a group health plan, the date 
     as of which the plan is in receipt of all information 
     reasonably required (in writing or in such other reasonable 
     form as may be specified by the plan) to make an initial 
     coverage decision.
       (Q) Review Filing Date. The term `review filing date' means 
     the date as of which the appropriate named fiduciary (or the 
     independent medical expert(s)) is in receipt of all 
     information reasonably required (in writing or in such other 
     reasonable form as may be specified by the plan) to make a 
     decision to affirm, modify, or reverse a coverage decision.
       (R) Medical Care. The term `medical care' has the meaning 
     provided such term by section 733(a)(2).
       (S) Health Insurance Coverage. The term `health insurance 
     coverage' has the meaning by section 733(b)(1).
       (T) Health Insurance Issuer. The term `health insurance 
     issuer' has the meaning provided by section 733(b)(2).
       (U) Written or in Writing.
       (i) In General. A request or decision shall be deemed to be 
     `written' or `in writing' if the request or decision is 
     presented in a generally recognized printable or electronic 
     format.
       (ii) Medical Appropriateness or Experimental Treatment 
     Determinations. In the case of a request for advance 
     determination of coverage, a request for expedited advance 
     determination of coverage, a request for required 
     determination of medical necessity, or a request for 
     expedited required determination of medical necessity, if the 
     decision is conveyed to the provider of medical care or to 
     the participant or beneficiary by means of telephonic or 
     other electronic communications, that decision will be 
     treated as a written decision.
       Subsection (b). Civil Penalties. Section 502(c) of ERISA 
     (29 U.S.C. 1132(c)) is amended to insert a new paragraph (6):
       (6)(A). If a benefit under a group health plan is not 
     timely provided to a participant or beneficiary pursuant to a 
     plan's final decision, which did not follow the terms of the 
     plan or Title I and the final decision under the plan is 
     contrary to the recommendation made under the external 
     review, then any person acting in the capacity of a fiduciary 
     who takes an action (or fails to take an action) in violation 
     of the plan or title I may, in the court's discretion, be 
     liable to the aggrieved participant or beneficiary for a 
     civil penalty in the amount of up to $500 a day (or up to 
     $1,000 in the case of a bad faith violation) from the date on 
     which the recommendation was made to the plan until the date 
     the failure to provide benefits is corrected, up to a total 
     amount not to exceed $250,000.
       (6)(B). If a person acting in the capacity of a fiduciary 
     took or failed to take action that resulted in an adverse 
     coverage decision violating the terms of the plan or Title I, 
     upon a court finding in favor of the plaintiff, if this 
     occurred in connection with the action described in (A) or 
     under section (b)(4), then the court is to issue an order 
     requiring the defendant to cease and desist from the alleged 
     action or failure to act, and 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.
       (6)(C). (i) The Secretary may assess a civil penalty 
     against a person acting in the capacity of a fiduciary of one 
     or more group health plans for any pattern or practice of 
     repeated adverse coverage decisions that violates the terms 
     of the plan(s) or Title I. A penalty must be paid upon proof 
     by clear and

[[Page E1406]]

     convincing evidence of such pattern or practice.
       (ii) A penalty shall be in an amount not to exceed the 
     lesser of 5 percent of the aggregate value of benefits shown 
     by the Secretary to have not been provided or unlawfully 
     delayed, or $100,000.
       (iii) Any person acting in the capacity of a fiduciary of a 
     group health plan(s) who has engaged in any such pattern or 
     practice, upon the petition of the Secretary, may be removed 
     by the court from that position and from any other 
     involvement, and may be precluded from returning to any such 
     position or involvement for a period determined by the court.
       Subsection (c). Expedited Court Review. Section 502 of 
     ERISA (29 U.S.C. 1132) is amended by adding the following new 
     paragraph (b)(4):
       (4) In a case in which it is demonstrated to the court by 
     means of a certification by an appropriate physician that 
     exhaustion of administrative remedies is not reasonably 
     attainable under the facts and circumstances without undue 
     risk of irreparable harm to the health of a participant or 
     beneficiary, a civil action may be brought by the participant 
     or beneficiary to obtain appropriate equitable relief.
       Subsection (d). Standard of Review Unaffected. The standard 
     of review under section 502 ERISA shall continue on and after 
     the date of the enactment to be the standard of review 
     applicable immediately prior to enactment.
       Subsection (e). Concurrent Jurisdiction. State courts have 
     concurrent jurisdiction in actions arising under new sections 
     502(b)(4) and (a)(1)(A) for relief under subsection (c)(6).
       Section 1202. Effective Date.
       Subsection (a). In General. The amendments made by this 
     subtitle shall apply to grievances arising in plan years 
     beginning on or after January 1 of the second calendar year 
     following the date of the enactment of this Act.
       Subsection (b). Limitation on Enforcement Actions. No 
     enforcement action shall be taken against a group health plan 
     or health insurance issuer before the date that final 
     regulations are issued, if the plan or issuer has sought to 
     comply in good faith with such requirement.
       Subsection (c). Collective Bargaining Agreements. Any 
     amendments made to a plan solely to conform to requirements 
     added by this subtitle shall not be treated as a termination 
     of a collective bargaining agreement.
       Nothing in the amendments made by this Subtitle C shall be 
     construed to affect whether or the extent to which the 
     provisions of Title I of the Employee Retirement Income 
     Security Act of 1974 supersede State laws. It is intended 
     that the addition of more explicit internal review and 
     external review provisions under section 503 of ERISA and the 
     additional remedies under 502 of ERISA not expand or contract 
     existing law as to whether or the extent to which ERISA 
     supersedes state law. The ERISA section 514 clause has not 
     been changed in this connection and, therefore, whether ERISA 
     does or does not preempt any particular state statute is left 
     unchanged. Accordingly, this section is not intended to 
     affect the outcome of any matters pending in court as to the 
     extent or scope of such ERISA preemption of state laws.
     Subtitle D--Affordable Health Coverage for Employees of Small 
                               Businesses
       Section 1301. This Subtitle may be cited as the ``Small 
     Business Affordable Health Coverage Act of 1998''.
       Section 1302. Rules Governing Association Health Plans
       Subsection (a). Rules governing regulation of association 
     health plans This subsection adds a new Part 8 (Rules 
     Governing Regulation of Association Health Plans) to Title I 
     of ERISA, as follows:
       Section 801. Association Health Plans. The term 
     ``association health plan'' means a ``group health plan'' 
     (which is defined in ERISA as added by the Health Insurance 
     Portability and Accountability Act or HIPAA; under HIPAA such 
     group health plans are subject to all of the portability, 
     preexisting condition, nondiscrimination, special enrollment, 
     renewability and other provisions of ERISA Part 7)--
       (1) under which at least one option of fully-insured 
     ``health insurance coverage'' offered by a health insurance 
     issuer is made available to plan participants and 
     beneficiaries, and
       (2) whose sponsor of the plan meets the following 
     conditions:
       The sponsor of an Association Health Plan (AHP) must be 
     organized and maintained in good faith, with a constitution 
     and bylaws specifically stating its purpose and providing for 
     at least annual meetings, as a trade association, an industry 
     association (including a rural electric or rural telephone 
     cooperative), a professional association, or a chamber of 
     commerce (or similar business association, including a 
     similar organization that operates on a cooperative basis 
     within the meaning of section 1381 of the IRC), for 
     substantial purposes other than that of obtaining or 
     providing medical care. Also, the applicant must demonstrate 
     that the sponsor is established as a permanent entity, has 
     the active support of its members, and collects dues from its 
     members without conditioning such on the basis of the health 
     status or claims experience of plan participants or 
     beneficiaries or on the basis of the member's participation 
     in a group health plan.
       In addition to the associations described above, certain 
     other entities are eligible to seek certification as AHPs. 
     These include franchise networks and multiemployer plans. 
     Section 812 also makes eligible certain church plans 
     voluntarily electing to come under the fiduciary, reporting, 
     and actuarial standards contained in the subsection.
       Section 802. Certification of Association Health Plans. 
     This section establishes a procedure for the certification of 
     Association Health Plans by the applicable authority (a state 
     authority or, if a state does not elect to become the 
     applicable authority, the Secretary). The applicable 
     authority shall grant certification only if such 
     certification is administratively feasible, not adverse to 
     the interests of the individuals covered under it, and 
     protective of the rights and benefits of the individuals 
     covered under the plan. In essence, this procedure has the 
     same effect as requiring the provision in ERISA section 
     514(b)(6)(B) under current law to be implemented so as to 
     enable association health plans to operate. A ``class 
     certification'' procedure is established to speed the 
     approval of plans which offer only fully-insured health 
     insurance coverage. An AHP that is certified must also meet 
     the applicable requirements of Part 8 as described below.
       Section 803. Requirements Relating to Sponsors and Boards 
     of Trustees. This section establishes additional eligibility 
     requirements for AHPs. Applicants must demonstrate that the 
     arrangement's sponsor has been in existence for a continuous 
     period of at least 3 years for substantial purposes other 
     than providing coverage under a group health plan.
       Subsection (b) also requires that the plan be operated, 
     pursuant to a trust agreement, by a ``board of trustees'' 
     which has complete fiscal control and which is responsible 
     for all operations of the plan. The board of trustees must 
     develop rules of operation and financial control based on a 
     three-year plan of operation which is adequate to carry out 
     the terms of the plan and to meet all applicable requirements 
     of the certification and Title I of ERISA. The board of 
     trustees must consist of individuals who are owners, 
     officers, directors or employees of the employers who 
     participate in the plan.
       Section 804. Participation and Coverage Requirements. This 
     section prohibits discrimination against eligible employers 
     and employees by requiring that all employers who are 
     association members be eligible for participation under the 
     terms of the plan, that benefit options be actively marketed 
     to all eligible members, and that eligible individuals of 
     such participating employers not be excluded from enrolling 
     in the plan because of health status. The legislation will 
     not affect the individual health insurance market adversely 
     inasmuch as the bill requires that no participating employer 
     may exclude an employee from enrollment under an AHP by 
     purchasing an individual policy of health insurance coverage 
     for such person based on their health status.
       Section 805. Other Requirements Relating to Plan Documents, 
     Contribution Rates, and Benefit Options. This section 
     requires an association health plan to meet the following 
     requirements: (1) its governing instruments must provide that 
     the board of trustees serves as the named fiduciary and plan 
     administrator, that the sponsor serves as plan sponsor, and 
     that the reserve requirements of section 806 are met; (2) the 
     contribution rates for any particular small employer must be 
     nondiscriminatory-- they cannot be based on the claims 
     experience of the particular employer or on the type of 
     business or industry in which the employer is engaged (any 
     variation in a state must be limited to that permitted under 
     state small group rating laws), (3) the plan has at least 
     1,000 participants and beneficiaries if the plan does not 
     consist solely of fully-insured health insurance coverage, 
     and (4) the plan meets such other requirements as may be set 
     forth in regulations.
       The rules also stipulate that association health plans must 
     be allowed to design benefit options. Specifically, no 
     provision of state law shall preclude an AHP or health 
     insurance issuer from exercising its discretion in designing 
     the items and services of medical care to be included as 
     health insurance coverage under the plan, except to the 
     extent that such law (1) prohibits the exclusion of a 
     specific disease from such coverage, or (2) is not preempted 
     under section 731(a)(1) with respect to the matters governed 
     by section 711 (relating to maternal and newborn 
     hospitalization) and section 712 (relating to mental health 
     coverage).
       In addition, no provision of law shall be construed to 
     preclude an AHP or health insurance issuer from setting 
     contribution rates based on the experience under the plan to 
     the extent such rates are nondiscriminatory as described 
     above.
       Section 806. Maintenance of Reserves and Provisions for 
     Solvency for Plans Providing Health Benefits in Addition to 
     Health Insurance Coverage. This section requires AHPs 
     offering benefit options that do not consist solely of fully-
     insured health insurance coverage to establish and maintain 
     reserves sufficient for unearned contributions, benefit 
     liabilities incurred but not yet satisfied and for which risk 
     of loss has not been transferred, expected administrative 
     costs, any other obligations and a margin for error 
     recommended by the plan's qualified actuary. In addition, 
     each plan must secure coverage from a state licensed insurer 
     consisting of (1)

[[Page E1407]]

     aggregate stop-loss insurance with an attachment point not 
     greater than 125% of expected gross claims, (2) specific 
     stop-loss insurance with an attachment point, as recommended 
     by the plan's qualified actuary, up to $200,000, and (3) to 
     prevent insolvency, indemnification insurance for any claims 
     which a plan is unable to satisfy by reason of a mandatory 
     termination described under section 809(b). The plan must 
     maintain minimum surplus in the amount of $2,000,000 reduced 
     to not less than $500,000 based on the level of the stop-loss 
     coverage maintained by the plan. The applicable authority may 
     provide additional requirements relating to reserves and 
     excess/stop loss insurance. To ensure that indemnification 
     insurance will be available to pay all claims in the event of 
     the termination of a plan, AHPs must make annual payments to 
     an AHP fund which would guarantee that indemnification 
     insurance is always available to pay such claims.
       Section 807. Requirements for Application and Related 
     Requirements. This section sets forth additional criteria 
     which association health plans must meet to qualify for 
     certification. The applicable authority shall grant 
     certification to a plan only if: (1) a complete application 
     has been filed, accompanied by the filing fee of $5,000; and 
     (2) all other terms of the certification are met (including 
     financial, actuarial, reporting, participation, and such 
     other requirements as may be specified as a condition of the 
     certification).
       The application must include the following: (1) identifying 
     information about the arrangement and the states in which it 
     will operate; (2) evidence that the bonding requirements will 
     be met; (3) copies of all plan documents and agreements with 
     service providers; (4) a funding report indicating that the 
     reserve requirements of 806 will be met, that contribution 
     rates will be adequate to cover obligations, and that a 
     qualified actuary (a member in good standing of the American 
     Academy of Actuaries or an actuary meeting such other 
     standards the applicable authority considers adequate) has 
     issued an opinion with respect to the arrangement's assets, 
     liabilities, and projected costs; and (5) any other 
     information prescribed by the applicable authority. Certified 
     association health plans must notify the applicable authority 
     of any material changes in this information at any time, must 
     file annual reports with the applicable authority, and must 
     engage a qualified actuary.
       Section 808. Notice Requirements for Voluntary Termination. 
     This section requires that, except as provided in section 
     809, an AHP may terminate only if the board of trustees 
     provides 60 days advance written notice to participants and 
     beneficiaries and submits to the applicable authority a plan 
     providing for timely payment of all benefit obligations.
       Section 809. Corrective Actions and Mandatory Termination. 
     This section requires an AHP which offers benefit options 
     which are not fully-insured to continue to meet the reserve 
     requirements under section 806 even if its exemption is no 
     longer in effect. The board of trustees of such an AHP must 
     quarterly determine whether the reserve requirements of 
     section 806 are being met and, if they are not, must, in 
     consultation with the qualified actuary, develop a plan to 
     ensure compliance and report such information to the 
     applicable authority. In any case where an AHP notifies the 
     applicable authority that it has failed to meet the reserve 
     requirements and corrective action has not restored 
     compliance, and the applicable authority determines that 
     there is a reasonable expectation that the plan will continue 
     to fail to meet the requirements applicable to such AHPs, the 
     applicable authority may direct the board to terminate the 
     arrangement.
       Section 810. Trusteeship of Insolvent Association Health 
     Plans Providing Health Benefits in Addition to Health 
     Insurance Coverage. Whenever an association health plan is 
     unable to provide benefits when due or is otherwise in a 
     financially hazardous condition, the Secretary is to give 
     notice to the plan and participants and apply to the 
     appropriate court to act as a trustee to administer the plan 
     for the duration of the insolvency.
       Section 811. State Assessment Authority. A state may impose 
     a nondiscriminatory tax on an association health plan 
     described in section 806(a)(2), with respect to operations in 
     the state commenced after the date of the enactment, if the 
     rate does not exceed the rate of similar premium or 
     contribution taxes on health maintenance organizations and 
     other insurers.
       Section 812. Special Rules for Church Plans. This section 
     permits church plans providing medical care to voluntarily 
     elect to apply to the Department of Labor for certification. 
     In order to receive an exemption from state insurance law, an 
     electing church plan would be subject to the requirements of 
     section 810 providing for compliance with fiduciary standards 
     (exclusive purpose and prudence rules); claims procedures; 
     annual certification by a qualified actuary that the plan 
     maintains reserves, capital, insurance or other financial 
     arrangements adequate to enable the plan to meet all of its 
     financial obligations on a timely basis; and annual 
     statements certifying plan compliance with the above.
       Section 813. Definitions and Rule of Construction. This 
     section defines the following terms: group health plan, 
     medical care, health insurance coverage, health insurance 
     issuer, health status-related factor, individual market, 
     participating employer, qualified actuary and applicable 
     state authority. The terms are consistent with those added to 
     ERISA by the Health Insurance Portability and Accountability 
     Act. In addition, the terms ``employer'' and ``employee'' 
     include self-employed individuals and partners for purposes 
     of the application of Part 8 and the provisions of Title I as 
     applicable to association health plans.
       Subsection (b). Conforming Amendments. This subsection 
     contains (1) conforming changes to the definition of ``plan 
     sponsor'' to include the sponsor of an AHP; (2) conforming 
     changes to the Title I exception for church plans electing 
     association health plan status; and (3) as described below, 
     conforming changes to the section 514 preemption rules to 
     reflect the policy changes under Part 8 with respect to 
     association health plans. First, paragraph (6) of section 
     514(b) is made inapplicable with respect to any state law in 
     the case of a certified AHP. Secondly, a new subsection 
     514(d) (current subsection (d) is redesignated as (e)) 
     clarifies the ability of health insurance issuers to offer 
     health insurance coverage under AHPs and clarifies the 
     ability of any health insurance issuer to offer health 
     insurance coverage of the same policy type as offered in 
     connection with a particular AHP to eligible employers, 
     regardless of whether such employers choose or do not choose 
     to become members of the particular association. Health 
     insurance coverage policy forms filed and approved in a 
     particular state in connection with an insurer's offering 
     under an association health plan are deemed to be approved in 
     any other state in which such coverage is offered when the 
     insurer provides a complete filing in the same form and 
     manner to the authority in the other state. Also, this 
     section removes the current restriction on state regulation 
     of self-insured multiple employer welfare arrangements 
     providing medical care (which do not elect to meet the 
     certification requirements for AHPs) under section 
     514(b)(6)(A)(ii) by eliminating the requirement that such 
     state laws otherwise ``be consistent with the provisions of 
     ERISA Title I.'' Other than as described above, the 
     preemptive provisions of section 514 continue to apply as 
     under current law, including their application with respect 
     to self-insured plans and direct contracting with providers 
     under such plans.
       Section 1303. Clarification of Treatment of Single Employer 
     Arrangements. This section clarifies the treatment of certain 
     single employer arrangements under the section of ERISA that 
     defines a multiple employer welfare arrangement (section 
     3(40)). The treatment of a single employer plan as being 
     excluded from the definition of such an arrangement is 
     clarified by defining the minimum interest required for two 
     or more entities to be in ``common control'' as a percentage 
     which cannot be required to be greater than 25%. Also a plan 
     would be considered a single employer plan if less than 25% 
     of the covered employees are employed by other participating 
     employers.
       Section 1304. Clarification of Treatment of Certain 
     Collectively Bargained Arrangements. This section clarifies 
     the conditions under which multiemployer and other 
     collectively-bargained arrangements are exempted from the 
     definition of a multiple employer welfare arrangement, and 
     thus exempt from state law. This is intended to address the 
     problem of ``bogus unions'' and other illegitimate health 
     insurance operators. The provision amends the definition of 
     such an arrangement to exclude a plan or arrangement which is 
     established or maintained under or pursuant to a collective 
     bargaining arrangement (as described in the National Labor 
     Relations Act, the Railway Labor Act, and similar state 
     public employee relations laws). (Current law requires the 
     Secretary to ``find'' that a collective bargaining agreement 
     exists, but no such finding has ever been issued). It then 
     specifies additional conditions which must be met for such a 
     plan to be a statutorily excluded collectively bargained 
     arrangement and thus not a multiple employer welfare 
     arrangement. These include:
       (1) The plan cannot utilize the services of any licensed 
     insurance agent or broker to solicit or enroll employers or 
     pay a commission or other form of compensation to certain 
     persons that is related to the volume or number of employers 
     or individuals solicited or enrolled in the plan.
       (2) A maximum 15 percent rule applies to the number of 
     covered individuals in the plan who are not employees (or 
     their beneficiaries) within a bargaining unit covered by any 
     of the collective bargaining agreements with a participating 
     employer or who are not present or former employees (or their 
     beneficiaries) of sponsoring employee organizations or 
     employers who are or were a party to any of the collective 
     bargaining agreements.
       (3) The employee organization or other entity sponsoring 
     the plan or arrangement must certify annually to the 
     Secretary the plan has met the previous requirements.
       (4) If the plan or arrangement is not fully insured, it 
     must be a multiemployer plan meeting specific requirements of 
     the Labor Management Relations Act (i.e., the requirement for 
     joint labor-management trusteeship under section 
     302(c)(5)(B)).
       (5) If the plan or arrangement is not in effect as of the 
     date of enactment, the employee organization or other entity 
     sponsoring the plan or arrangement must have existed for at 
     least 3 years or have been affiliated with another employee 
     organization in existence for at least 3 years, or 
     demonstrate to the Secretary that certain of the above 
     requirements have been met.

[[Page E1408]]

       Section 1305. Enforcement Provisions Relating to 
     Association Health Plans. This section amends ERISA to 
     establish enforcement provisions relating to association 
     health plans and multiple employer welfare arrangements: (1) 
     willful misrepresentation that an entity is an exempted AHP 
     or collectively-bargained arrangement may result in criminal 
     penalties; (2) the section provides for cease activity orders 
     for arrangements found to be neither licensed, registered, or 
     otherwise approved under State insurance law, or operating in 
     accordance with the terms of a certification granted by the 
     applicable authority under part 8; and (3) the section 
     provides for the responsibility of the named fiduciary or 
     board of trustees of an AHP to comply with the required 
     claims procedure under ERISA.
       Section 1306. Cooperation between Federal and State 
     Authorities. This section amends section 506 of ERISA 
     (relating to coordination and responsibility of agencies 
     enforcing ERISA and related laws) to specify State 
     responsibility with respect to Association Health Plans. In 
     general, a state would be the applicable authority under Part 
     8 to the extent the state enters into an agreement with the 
     Secretary for delegation to the state of some or all of the 
     authority under Title I to certify AHPs and to enforce the 
     provisions applicable to certified AHPs. The Secretary would 
     be the applicable authority if a state did not assume such 
     authority.
       Section 1307. Effective Date; Transitional Rules. In 
     general, the amendments made by the Act are effective January 
     1, 2000. Sections 3 and 4 are effective upon date of 
     enactment. The provisions of section 801(a)(2) relating to 
     health insurance coverage do not apply to group health plans 
     existing on April 1, 1997 if they do not provide fully-
     insured health insurance coverage, but later qualify for 
     certification. In certain cases existing state licensed plans 
     would be eligible to become certified.
       Pilot Program for Self-Insured Association Health Plans. 
     During a 5-year pilot program period, association health 
     plans may offer self-insured benefit options only if they 
     consist of the following: (A) plans which offer such coverage 
     on the date of enactment, (B) the sponsor of the plan does 
     not restrict membership to one or more trades and businesses 
     or industries and whose eligible participating employers 
     represent a broad cross-section of trades and businesses or 
     industries, or (C) plans whose eligible participating 
     employers represent one or more trades, businesses, 
     industries, which have been indicated as having average or 
     above-average health insurance risk or health claims 
     experience by reason of State rate filings, denials of 
     coverage, proposed premium rate levels, and other 
     demonstrated means, including (but not limited to) the 
     following: agriculture; automobile dealerships; barbering and 
     cosmetology; child care; construction; dance, theatrical, and 
     orchestra productions; disinfecting and pest control; eating 
     and drinking establishments; fishing; hospitals; labor 
     organizations; logging; manufacturing (metals); mining; 
     medical and dental practices; medical laboratories; sanitary 
     services; transportation (local and freight); and 
     warehousing.
         TITLE II--AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT
     Subtitle A--Patient Protections and Point of Service Coverage 
                             Requirements.
       Section 2001. Patient access to unrestricted medical 
     advice, emergency medical care, obstetric and gynecological 
     care, and pediatric care.
       Subsection (a). In General. This section amends subpart 2 
     of part A of title XXVII of the Public Health Service Act by 
     adding a new Section 2706, which follows.
       Section 2706. Patient Access to Unrestricted Medical 
     Advice, Emergency Medical Care, Obstetric And Gynecological 
     Care, Pediatric Care.
       Subsection (a). Patient Access to Unrestricted Medical 
     Advice. This subsection states that a group health plan or 
     health insurance issuer may not prohibit or restrict health 
     care professionals under contract from advising participants 
     or beneficiaries about their health status or treatment, even 
     if benefits for such care or treatment are not covered by the 
     plan or health insurance. Health care professional is defined 
     as a physician (section 1861(r) of the Social Security Act) 
     or other health care professional whose services are provided 
     under the group health plan. This includes a podiatrist, 
     optometrist, chiropractor, psychologist, dentist, physician 
     assistant, physical or occupational therapist and therapy 
     assistant, speech language pathologist, audiologist, 
     registered or licensed practical nurse (including nurse 
     practitioner, clinical nurse specialist, certified registered 
     nurse anesthetist, and certified nurse midwife), licensed 
     certified social worker, registered respiratory therapist, 
     and certified respiratory therapy technician.
       Subsection (b). Patient Access to Emergency Medical Care. 
     This subsection prohibits group health plans or health 
     insurance issuers from requiring beneficiaries to get 
     preauthorization before seeking emergency medical services 
     and requires them to cover emergency medical screening 
     examinations obtained at any emergency medical care facility, 
     whether in or outside a plan`s network of affiliated 
     providers, if a prudent layperson with an average knowledge 
     of health and medicine would judge the examination necessary 
     in order to determine whether emergency medical care is 
     needed. The plan or issuer must provide additional emergency 
     medical services to the extent a prudent emergency medical 
     professional determines necessary to avoid the consequences 
     described in section 503(b)(8)(I) of ERISA as amended by this 
     Act. These requirements apply to the extent the group health 
     plan or health insurance issuer covers emergency medical care 
     benefits (as defined in section 503(b)(8)(I) of ERISA as 
     amended by this Act), except for items or services 
     specifically excluded; and to items or services within the 
     capability of the emergency facility, including routinely 
     available ancillary services. This subsection does not 
     prevent a group health plan or issuer from imposing any form 
     of cost-sharing for emergency medical services so long as the 
     cost-sharing is uniformly applied.
       Subsection (c). Patient Access to Obstetric and 
     Gynecological Care. If the group health plan or health 
     insurance issuer covers routine gynecological or obstetric 
     care by a participating physician specializing in such care, 
     and the participant's designated primary care provider is not 
     such a specialist, authorization or referral by a primary 
     care provider must not be required for routine gynecological 
     or obstetric care. Ordering of other similar routine 
     gynecological or obstetric care by such a participating 
     specialist is treated as authorized by the primary care 
     provider. Plan requirements relating to medical necessity or 
     appropriateness for obstetric and gynecological care will be 
     allowed.
       Subsection (d). Patient Access to Pediatric Care. This 
     subsection states that if the group health plan or health 
     insurance issuer covers routine pediatric care, and requires 
     the designation of a primary care provider, the parent or 
     guardian of any plan beneficiary under 18 years of age may 
     designate a participating physician who specializes in 
     pediatrics, if available, as the primary care provider. Plan 
     requirements relating to medical necessity or appropriateness 
     for pediatric care will be allowed.
       Subsection (e). Treatment of Multiple Coverage Options. 
     This subsection requires plans that have two or more coverage 
     options to provide patient access to obstetric and 
     gynecological care and pediatric care as defined in 
     subsections (c) and (d) under each option.
       Subsection (b). Effective Date and Related Rules.
       In General. This subsection states that the amendments made 
     by Subtitle A will apply with respect to plan years beginning 
     on or after January 1 of the second calendar year following 
     the date of the enactment of the Act. The Secretary is also 
     required to issue all necessary regulations before the 
     effective date.
       Limitation on Enforcement Actions. If the group health plan 
     or health insurance issuer has sought to comply in good faith 
     with the amendments of Subtitle A, no enforcement action 
     shall be taken against a plan or issuer for violating a 
     requirement imposed by the amendments before implementing 
     regulations are issued.
       Special Rule for Collective Bargaining Agreements. If a 
     group health plan is maintained pursuant to one or more 
     collective bargaining agreements ratified before the date of 
     enactment of this Act, the provisions relating to patient 
     access (subsections (b), (c), and (d)of section 713 of ERISA 
     as added by this subtitle) will not apply before the date of 
     termination of the last collective bargaining agreement 
     relating to the plan, or January 1, 2001, which ever is 
     later. Any amendment in the plan made solely to conform to 
     requirements of this subtitle must not be treated as a 
     termination of the collective bargaining agreement.
       Application to group health plans and health insurance 
     issuers. As under current law, the application of Subpart 2, 
     as amended by this section, applies with respect to group 
     health plans that are nonfederal governmental plans and with 
     respect to health insurance coverage offered by health 
     insurance issuers in connection with all group health plans 
     (private and governmental).
       Section 2002. Requiring Health Maintenance Organizations to 
     Offer Option of Point-of-Service Coverage.
       Subsection (a). In General. This section amends Title XXVII 
     of the Public Health Service Act by inserting after section 
     2713 the following new section:
       Section 2714. Requiring Offering of Option of Point-of-
     Service Coverage.
       Subsection (a). Requirement to Offer Coverage Option to 
     Certain Employers. Except as provided in subsection (c), any 
     health insurance issuer which (1) is a health maintenance 
     organization ( as defined in section 2791(b)(3)), and (2) 
     which provides for coverage of services of one or more 
     classes of health care professionals which are furnished 
     exclusively through closed panels of health care 
     professionals, shall make available to the plan sponsor in 
     connection with such plan, a coverage option which provides 
     for coverage of such services which are furnished through 
     such class (or classes) of health care professionals 
     regardless of whether or not the professionals are members of 
     such panel.
       Subsection (b). Requirement to Offer Supplemental Coverage 
     to Participants in Certain Cases. If a health insurance 
     issuer makes available a coverage option under and described 
     in subsection (a) to a plan sponsor of a group health plan 
     and the sponsor declines to contract for such coverage 
     option, then the issuer must make available in the individual 
     insurance market to each participant in the group health plan 
     optional separate supplemental health insurance coverage in 
     the individual health insurance market which consists of 
     services identical to those

[[Page E1409]]

     provided under such coverage provided through the closed 
     panel under the group health plan but are furnished 
     exclusively by health care professionals who are not members 
     of such a closed panel. Exceptions are provided in subsection 
     (c).
       Subsection (c). Exceptions.
       (1) Offering of non-panel option. Subsections (a) and (b) 
     shall not apply with respect to a group health plan if the 
     plan offers a coverage option that provides coverage for 
     services that may be furnished by a class or classes of 
     health care professionals who are not in a closed panel. This 
     paragraph shall be applied separately to distinguishable 
     groups of employees under the plan.
       (2) Availability of coverage through a HealthMart. 
     Subsections (a) and (b) shall not apply to a group health 
     plan if the health insurance coverage under the plan is made 
     available through a HealthMart (as defined in section 2801) 
     and if any health insurance coverage made available through 
     the HealthMart provides for coverage of the services of any 
     class of health care professionals other than through a 
     closed panel of professionals.
       (3)Relicensure exemption.--Subsections (a) and (b) shall 
     not apply to a health maintenance organization in a State in 
     any case in which--
       (A) the organization demonstrates to the applicable 
     authority that the organization has made a good faith effort 
     to obtain (but has failed to obtain) a contract between the 
     organization and any other health insurance issuer providing 
     for the coverage option or supplemental coverage described in 
     subsection (a) or (b), as the case may be, within the 
     applicable service area of the organization, and
       (B) the State requires the organization to receive or 
     qualify for a separate license, as an indemnity insurer or 
     otherwise, in order to offer such coverage option or 
     supplemental coverage, respectively.
       The applicable authority may require that the organization 
     demonstrate that it meets the requirements of the previous 
     sentence no more frequently that once every two years.
       (4) Increased costs.--Subsections (a) and (b) shall not 
     apply to a health maintenance organization if the 
     organization demonstrates to the applicable authority, in 
     accordance with generally accepted actuarial practice, that, 
     on either a prospective or retroactive basis, the premium for 
     the coverage option or supplemental coverage required to be 
     made available under such respective subsection exceeds by 
     more than 1 percent the premium for the coverage consisting 
     of services which are furnished through a closed panel of 
     health care professionals in the class or classes involved. 
     The applicable authority may require that the organization 
     demonstrate such an increase no more frequently that once 
     every two years. This paragraph shall be applied on an 
     average per enrollee or similar basis.
       (5)Collective bargaining agreements.--Subsections (a) and 
     (b) shall not apply in connection with a group health plan if 
     the plan is established or maintained pursuant to one or more 
     collective bargaining agreements.
       Subsection (d). Definitions. For purposes of this section, 
     the following definitions apply:
        Coverage through closed panel. Health insurance coverage 
     for a class of health care professionals shall be treated as 
     provided through a closed panel of such professionals only if 
     such coverage consists of coverage of items or services 
     consisting of professionals services which are reimbursed for 
     or provided only within a limited network of such 
     professionals.
        Health care professional. The term `health care 
     professional' has the meaning given such term in section 
     2706(a)(2).
       Subsection (b). Effective Date. This subsection states that 
     the amendment made by subsection (a) applies to coverage 
     offered on or after January 1 of the second calendar year 
     following the date of enactment of this Act.
               Subtitle B--Patient Access to Information.
       Section 2101. Patient Access to Information Regarding Plan 
     Coverage, Managed Care Procedures, Health Care Providers, And 
     Quality of Medical Care.
       Subsection (a). In General. This subsection amends subpart 
     2 of part A of title XXVII of the Public Health Service Act 
     (as amended by subtitle A of this title) by adding the 
     following new Section 2707.
       Section 2707. Patient Access to Information Regarding Plan 
     Coverage, Managed Care Procedures, Health Care Providers, and 
     Quality of Medical Care.
       Subsection (a). Disclosure Requirement. This subsection 
     requires the administrator of each group health plan to 
     ensure that the summary plan descriptions required under 
     ERISA section 102 contain the information described in 
     subsections (b),(c),(d), and (e)(2)(A). Each health insurance 
     issuer connected with a group health plan is also required to 
     provide the necessary information to the administrator or to 
     plan participants and beneficiaries on a timely basis.
       Subsection (b). Plan Benefits. The information required 
     under subsection (a) includes a description of : (A) covered 
     benefits categorized by the types of items and services and 
     the types of health care professionals providing the items 
     and services; (B) plan coverage for emergency medical care, 
     the extent of access to urgent care centers, and definitions 
     of terminology referring to emergency medical care; (C) plan 
     benefits for preventive services; (D) any use or application 
     of a drug formulary, including a summary of the process for 
     determining the formulary; (E) and COBRA benefits available 
     under the plan.Information must also be provided on any 
     limitations, exclusions, or restrictions on covered benefits, 
     including: (A) benefits specifically excluded from coverage, 
     categorized by types of items and services; (B) whether 
     coverage for medical care can be limited or excluded based on 
     utilization review or preauthorization requirements; (C) any 
     lifetime, annual, or other period limitations on coverage, 
     categorized by types of benefits; (D) any limitations or 
     exclusions for custodial care; (E) experimental treatment or 
     technology; or (F) failure to meet the plan's requirements 
     for medical appropriateness or necessity; (G) coverage of 
     second or subsequent opinions; (H) whether referral from a 
     primary care provider is required for specialty care; (I) if 
     continuity of care may be affected by the departure by the 
     health care professional from a defined set of providers; 
     restrictions on coverage of emergency services; and (J) any 
     financial responsibility of participants or beneficiaries for 
     emergency services.
       Subsection (c). Participant's Financial Responsibilities. 
     The summary plan description must also explain the 
     participant's financial responsibility for payment of 
     premiums, coinsurance, copayments, deductibles, and whether 
     this may vary if the health care provider is not one of a 
     defined set of providers.
       Subsection (d). Dispute Resolution Procedures. The summary 
     plan description must describe the process for dispute 
     resolution adopted by the plan pursuant to section 503(b) of 
     ERISA as amended by this Act. This must explain the 
     procedures and time frames for coverage decisions and 
     internal and external review.
       Subsection (e). Information Available on Request. Upon 
     written request, a group health plan or health insurance 
     issuer offering coverage in connection with a group health 
     plan must provide access to plan benefit information in 
     electronic form. This information, in electronic format, must 
     include, in addition to information required by section 
     104(b)(4) of ERISA, the latest summary plan description, 
     summary of material modifications, and the actual plan 
     provisions with available benefits. This is required no more 
     than once a year, and a reasonable charge is permitted which 
     may be subject to a maximum amount set by the Secretary. 
     Requirements may also be met by making the information 
     generally available on the Internet or on a proprietary 
     computer network in a format which is readily accessible to 
     participants and beneficiaries. A summary description of the 
     types of information available on request must be included in 
     the summary plan description made available to participants 
     and beneficiaries.
       In addition to information described above, a group or 
     health plan issuer must provide to participants or 
     beneficiaries upon request information on: (i) any network 
     characteristics with detailed lists of primary care providers 
     and specialists and their geographic locations; (ii) any 
     special disease management programs or programs for persons 
     with disabilities, whether these programs are voluntary and 
     if benefits would differ significantly for participants in 
     care management; (iii) whether a specific drug or biological 
     is included in the plan's formulary and procedures for waiver 
     requests; (iv) the procedures and medically-based criteria 
     used in an adverse coverage decision if the determination 
     relates to medical necessity, an experimental treatment or 
     technology; (v) the basis on which any preauthorization and 
     utilization review requirement has resulted in an adverse 
     coverage decision; (vi) the accreditation and licensing 
     status (if any) of each health insurance issuer offering 
     health insurance coverage in connection with the plan and of 
     any utilization review organization utilized by the issuer or 
     the plan, together with the name and address of the 
     accrediting or licensing authority; (vii) the latest 
     information on enrollee satisfaction maintained by the plan 
     or health insurance issuer; (viii) the latest information on 
     quality performance maintained by the plan or health 
     insurance issuer; and (ix) information about the frequency 
     and outcome of external review decisions requested by 
     enrollees of the plan or health insurance issuer.
       Upon request, any health care professional treating a 
     participant or beneficiary under a group health plan must 
     provide to the participant or beneficiary a description of 
     his or her professional qualifications, privileges, 
     experience and general description of the method of 
     compensation for medical care according to categories that 
     may be specified by the Secretary.
       In addition, upon request, any health care facility from 
     which a participant or beneficiary has sought treatment under 
     a group health plan must provide to the participant or 
     beneficiary a description of the facility's corporate form or 
     other organizational form and all forms of licensing and 
     accreditation status, if any, with standard-setting 
     organizations.
       Subsection (f). Access to Information Relevant to the 
     Coverage Options under which the Participant or Beneficiary 
     is Eligible to Enroll. Upon written request, and in 
     connection with a period of enrollment, the group health plan 
     and health insurance issuer must make the summary plan 
     description available for any coverage option in which the 
     participant or prospective participant is eligible to enroll 
     and any information described in clauses 
     (i),(ii),(iii),(vi),(vii), and (viii) of subsection 
     (e)(2)(B).

[[Page E1410]]

       Subsection (g). Advance Notice of Changes in Drug 
     Formularies. This subsection requires the plan to inform 
     participants not later than 30 days before the effective of 
     date of any exclusion of a specific drug or biological from 
     any drug formulary used by the plan in the treatment of a 
     chronic illness or disease.
       Section 2102. Effective Date.
       Subsection (a). In General. Amendments made by Subtitle B--
     Patient Access to Information will apply to plan years 
     beginning on or after January 1 of the second calendar year 
     following the date of the enactment of this Act. The 
     subsection also requires the Secretary to issue all necessary 
     regulations before that date. As under current law, the 
     application of Subpart 2, as amended by this section, applies 
     with respect to group health plans that are nonfederal 
     governmental plans and with respect to health insurance 
     coverage offered in connection with all group health plans 
     (private and governmental).
       Subsection (b). Limitation on Enforcement Actions. If the 
     group health plan or health insurance issuer has sought to 
     comply in good faith with the amendments of Subtitle B, no 
     enforcement actions shall be taken against a plan or issuer 
     for violating a requirement imposed by the amendments before 
     final regulations are issued.
                        Subtitle C--HealthMarts
       Section 2201. Short Title of Subtitle. The short title of 
     this subtitle is the ``Health Care Consumer Empowerment Act 
     of 1998.''
       Section 2202. Expansion of Consumer Choice through 
     HealthMarts.
       Subsection (a). In General. This section amends the Public 
     Health Service Act by adding the following new title:
                       TITLE XXVIII-- HEALTHMARTS
       Section 2801. Definition of HealthMart.
       Subsection (a). In General. This subsection defines the 
     ``HealthMart'' as a legal entity that meets several 
     requirements specified in the Act. In short, the HealthMart 
     is an organization that offers health benefits within a 
     defined geographic area (or areas), provides administrative 
     services to purchasers, and disseminates and files 
     information. Requirements are described below.
       (1) Organization. The HealthMart is a private, nonprofit 
     organization operated under the direction of a board of 
     directors. The board is composed of representatives from: 
     small employers, employees of small employers, health care 
     providers (which may be physicians, other health care 
     professionals, health care facilities, or any combination 
     thereof), and entities that underwrite or administer health 
     benefits coverage (such as insurance companies, health 
     maintenance organizations, and licensed provider-sponsored 
     organizations). There must be at least 2 board members from 
     each group and there must be the same number from each group.
       (2) Offering health benefits coverage. The HealthMart, in 
     conjunction with health insurance issuers that offer health 
     benefits coverage through the HealthMart, must make available 
     health benefits coverage at rates (including employer's and 
     employee's share) that are established by the health 
     insurance issuer on a policy or product specific basis and 
     that may vary only as permissible under State law. A 
     HealthMart is deemed to be a group health plan for purposes 
     of applying section 702 of the Employee Retirement Income 
     Security Act of 1974, section 2702 of this Act, and section 
     9802(b) of the Internal Revenue Code of 1986. (These 
     provisions limit variation of required premiums for health 
     benefits coverage, for similarly situated individuals, on the 
     basis of health status-related factors.)
        Nondiscrimination in coverage offered. The HealthMart may 
     not offer health benefits coverage to an eligible employee in 
     a geographic area (as specified in (3) below) unless the same 
     coverage is offered to all such employees in the same 
     geographic area. Section 2711(a)(1)(B) of this Act limits 
     denial of enrollment of certain eligible individuals under 
     health benefits coverage in the small group market. Nothing 
     in this title shall be construed as requiring or permitting a 
     health insurance issuer to provide coverage outside the 
     service area of the issuer, as approved under State law.
        No financial underwriting. The HealthMart provides health 
     benefits coverage only through contracts with health 
     insurance issuers and does not assume insurance risk with 
     respect to such coverage.
        Minimum coverage. Requires the HealthMart to maintain at 
     least 10 purchasers and 100 members by the end of the first 
     year of its operation and thereafter.
       (3) Geographic areas. Requires the HealthMart to specify 
     the geographic area (or areas) in which it makes available 
     health benefits coverage offered by health insurance issuers 
     to small employers. Such an area must encompass at least one 
     entire county or equivalent area. In the case of a HealthMart 
     that serves more than one State, such geographic areas may be 
     areas that include portions of two or more contiguous States. 
     Allows the establishment and operation of more than one 
     HealthMart in a geographic area. Does not limit the number of 
     HealthMarts that may operate in any area.
       (4) Provision of administrative services to purchasers. The 
     HealthMart provides administrative services for purchasers. 
     Such services may include accounting, billing, enrollment 
     information, and employee coverage status reports. Nothing in 
     this subsection should be construed as preventing a 
     HealthMart from serving as an administrative service 
     organization to any entity.
       (5) Dissemination of information. Requires the HealthMart 
     to collect and disseminate (or arrange for the collection and 
     dissemination of) consumer-oriented information on the scope, 
     cost, and enrollee satisfaction of all coverage options 
     offered through the HealthMart to its members and eligible 
     individuals, in a manner defined by the Health Mart as 
     appropriate to the type of coverage offered. To the extent 
     practicable, this must include consumer-oriented information 
     on provider performance, locations and hours of operation of 
     providers, outcomes, and similar matters. Allows the 
     dissemination of this information or other information by the 
     HealthMart or by health insurance issuers through electronic 
     or other means.
       (6) Filing information. Requires the HealthMart to file 
     information that demonstrates the HealthMart's compliance 
     with the applicable requirements of this title with the 
     applicable Federal authority; or in accordance with rules 
     established under section 2803(a), to file with a State such 
     information as the State may require to demonstrate such 
     compliance.
       Subsection (b). Health Benefits Coverage Requirements. This 
     subsection specifies consumer protection requirements, an 
     alternative process for approval of health benefits coverage 
     in case of discrimination or delay, examples of types of 
     coverage, and wellness bonuses for health promotion.
       (1) Compliance with consumer protection requirements. 
     Requires that any health benefits coverage offered through a 
     HealthMart must be underwritten by a health insurance issuer 
     that is licensed (or otherwise regulated) under State law, 
     meets all applicable State standards relating to consumer 
     protection (subject to section 2802(a)), and offers the 
     coverage under a contract with the HealthMart. Subject to the 
     provisions of (2) below, health benefit coverage offered 
     through HealthMarts must be approved or otherwise permitted 
     to be offered under State law. Finally, HealthMarts must 
     provide full portability of creditable coverage for 
     individuals who remain members of the same HealthMart 
     notwithstanding that they change the employer through which 
     they are members (in accordance with the provisions of the 
     parts 6 and 7 of subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 and titles XXII and 
     XXVII of this Act), so long as both employers are purchasers 
     in the HealthMart.
       (2) Alternative process for approval of health benefits 
     coverage in case of discrimination or delay. The requirement 
     that health benefit coverage offered through HealthMarts be 
     approved or otherwise permitted to be offered under State law 
     does not apply to a policy or product of health benefits 
     coverage offered in a State if the health insurance issuer 
     seeking to offer such policy or product files an application 
     to waive such requirement with the applicable Federal 
     authority, and the authority determines, based on the 
     application and other evidence presented to the authority, 
     that:
       --either (or both) of the grounds (described next) for 
     approval of the application has been met; and
       --the coverage meets the applicable State standards (other 
     than those that have been preempted under section 2802).
        Grounds. The grounds described above are:
       --the State has failed to complete action on the policy or 
     product (or rates for the policy or product) within 90 days 
     of the date of the State's receipt of a substantially 
     complete application. (No period before the date of the 
     enactment of this section shall be included in determining 
     such 90-day period.)
       --the State has discriminatorily denied an application if:
       (1) the standards or review process imposed by the State as 
     a condition of approval of the policy or product imposes 
     either any material requirements, procedures, or standards to 
     such policy or product that are not generally applicable to 
     other policies and products offered or any requirements that 
     are preempted under section 2802; or
       (2) the State requires the issuer, as a condition of 
     approval of the policy or product, to offer any policy or 
     product other than such policy or product.
        Enforcement. In the case of a waiver granted to an issuer 
     with respect to a State, the Secretary may enter into an 
     agreement with the State under which the State agrees to 
     provide for monitoring and enforcement activities with 
     respect to compliance of such an issuer and its health 
     insurance coverage with the applicable State standards 
     described above (and in (A)(ii) of subsection (b)). Requires 
     that such monitoring and enforcement be conducted by the 
     State in the same manner as the State enforces such standards 
     with respect to other health insurance issuers and plans, 
     without discrimination based on the type of issuer to which 
     the standards apply. Requires that such an agreement must 
     specify or establish mechanisms by which compliance 
     activities are undertaken, while not lengthening the time 
     required to review and process applications for waivers.
       (3) Examples of types of coverage. The health benefits 
     coverage made available through a HealthMart may include, but 
     is not limited to, any of the following (if it meets the 
     other applicable requirements of this title): coverage 
     through a health maintenance organization, coverage in 
     connection with a preferred provider organization, coverage 
     in connection with a licensed provider-sponsored 
     organization, indemnity coverage through an insurance 
     company, coverage offered in connection with a contribution 
     into a medical savings account or flexible spending account, 
     coverage that includes

[[Page E1411]]

     a point-of-service option, coverage offered in conjunction 
     with community health centers (as defined in section 330B(e) 
     of the PHS Act, as amended by this bill) or any combination 
     of such types of coverage.
       (4) Wellness bonuses for health promotion. Requires that 
     nothing in this title be construed as precluding a health 
     insurance issuer offering health benefits coverage through a 
     HealthMart from establishing premium discounts or rebates for 
     members or from modifying otherwise applicable copayments or 
     deductibles in return for adherence to programs of health 
     promotion and disease prevention so long as such programs are 
     agreed to in advance by the HealthMart and comply with all 
     other provisions of this title and do not discriminate among 
     similarly situated members.
       Subsection (c). Purchasers, Membership, Health Insurance 
     Issuers.
       (1) Purchasers. Subject to the provisions of this title, a 
     HealthMart must permit any small employer to contract with 
     the HealthMart for the purchase of health benefits coverage 
     for its employees and dependents of those employees and may 
     not vary conditions of eligibility (including premium rates 
     and membership fees) of a small employer to be a purchaser.
        Role of Associations, brokers, and licensed health 
     insurance agents. Nothing in this section should be construed 
     as preventing an association, broker, licensed health 
     insurance agent, or other entity from assisting or 
     representing a HealthMart or small employers from entering 
     into appropriate arrangements to carry out this title.
        Period of Contract. The HealthMart may not require a 
     contract between a HealthMart and a purchaser to be effective 
     for a period of longer than 12 months. (However, this should 
     not be construed as preventing such a contract from being 
     extended for additional 12-month periods or preventing the 
     purchaser from voluntarily electing a contract period of 
     longer than 12 months.)
        Exclusive nature of contract. Such a contract must provide 
     that the purchaser agrees not to obtain or sponsor health 
     benefits coverage, on behalf of any eligible employees (and 
     their dependents), other than through the HealthMart. 
     (However, this does not apply to an eligible individual who 
     resides in an area for which no coverage is offered by any 
     health insurance issuer through the HealthMart.)
       (2) Members. Under rules established to carry out this 
     title, with respect to a small employer that has a purchaser 
     contract with a HealthMart, individuals who are employees of 
     the employer may enroll for health benefits coverage 
     (including coverage for dependents of such enrolling 
     employees) offered by a health insurance issuer through the 
     HealthMart.
        Nondiscrimination in enrollment. A HealthMart may not deny 
     enrollment as a member to an individual who is an employee 
     (or dependent of such an employee) eligible to be so enrolled 
     based on health status-related factors, except as may be 
     permitted consistent with section 2742(b).
        Annual open enrollment period . Requires the HealthMart to 
     provide for an annual open enrollment period of 30 days 
     during which members may change the coverage option in which 
     they are enrolled.
        Rules of eligibility . The HealthMart may establish rules 
     of employee eligibility for enrollment and reenrollment of 
     members during the annual open enrollment period (see above). 
     Such rules must be applied consistently to all purchasers and 
     members within the HealthMart and shall not be based in any 
     manner on health status-related factors and may not conflict 
     with sections 2701 and 2702 of this Act.
       (3) Health insurance issuer.
        Premium collection. Requires that the contract between a 
     HealthMart and a health insurance issuer provide, with 
     respect to a member enrolled with health benefits coverage 
     offered by the issuer through the HealthMart, for the payment 
     of the premiums collected by the HealthMart (or the issuer) 
     for such coverage (less a pre-determined administrative 
     charge negotiated by the HealthMart and the issuer) to the 
     issuer.
        Scope of service area. Nothing in this title should be 
     construed as requiring the service area of a health insurance 
     issuer with respect to health insurance coverage to cover the 
     entire geographic area served by a HealthMart.
        Availability of coverage options. A HealthMart must enter 
     into contracts with one or more health insurance issuers in a 
     manner that assures that at least 2 health insurance coverage 
     options are made available in the geographic area specified 
     under section (a)(3)(A) of this bill.
       Subsection (d). Prevention of Conflicts of Interest.
        For boards of directors. Provides that a member of a board 
     of directors of a HealthMart may not serve as an employee or 
     paid consultant to the HealthMart, but may receive reasonable 
     reimbursement for travel expenses for purposes of attending 
     meetings of the board or its committees.
        For boards of directors or employees. An individual is not 
     eligible to serve in a paid or unpaid capacity on the board 
     of directors of a HealthMart, or as an employee of the 
     HealthMart, if the individual is employed by, represents in 
     any capacity, owns, or controls any ownership interest in a 
     organization from whom the HealthMart receives contribution, 
     grants, or other funds not connected with a contract for 
     coverage through the HealthMart.
        Employment and employee representatives. Requires that an 
     individual who is serving on a board of directors of a 
     HealthMart must not be employed by or affiliated with a 
     health insurance issuer or be licensed as or employed by or 
     affiliated with a health care provider. In the previous 
     sentence, the term ``affiliated'' does not include membership 
     in a health benefits plan or obtaining health benefits 
     coverage offered by a health insurance issuer.
       Subsection (e). Construction.
        Network of Affiliated HealthMarts. Provides that nothing 
     in this section should be construed as preventing one or more 
     HealthMarts serving different areas (whether or not 
     contiguous) from providing for some or all of the following 
     (through a single administrative organization or otherwise):
       (1) Coordinating the offering of the same or similar health 
     benefits coverage in different areas served by the different 
     HealthMarts;
       (2) Providing for crediting of deductibles and other cost-
     sharing for individuals who are provided health benefits 
     coverage through the HealthMarts (or affiliated HealthMarts) 
     and who continue to receive such coverage through the same 
     health insurance issuer after (a) a change of employers 
     through which the coverage is provided, or (b) a change in 
     place of employment to an area not served by the previous 
     HealthMart.
        Permitting HealthMarts to adjust distributions among 
     issuers to reflect relative risk of enrollees. Does not 
     preclude a HealthMart from providing for adjustments in 
     amounts distributed among the health insurance issuers 
     offering health benefits coverage through the HealthMart 
     based on factors such as the relative health care risk of 
     members enrolled under the coverage offered by the different 
     issuers.
        Uniform minimum participation and contribution rules. Does 
     not preclude a HealthMart from establishing minimum 
     participation and contribution rules (described in section 
     2711(e)(1)) for small employers that apply to become 
     purchasers in the HealthMart, so long as such rules are 
     applied uniformly for all health insurance issuers.
       Section 2802. Application of Certain Laws and Requirements.
       Subsection (a). Authority of States. Provides that nothing 
     in this section should be construed as preempting State laws 
     relating to the following:
       --The regulation of underwriters of health coverage, 
     including licensure and solvency requirements;
       --The application of premium taxes and required payments 
     for guaranty funds or for contributions to high-risk pools;
       --The application of fair marketing requirements and other 
     consumer protections (other than those specifically relating 
     to an item described in subsection (a));
       --The application of requirements relating to the 
     adjustment of rates for health insurance coverage.
       Subsection (b). Treatment of Benefit and Grouping 
     Requirements. Provides that State laws are superseded and 
     shall not apply to health benefits coverage made available 
     through a HealthMart, insofar as they relate to any of the 
     following:
       --benefit requirements for health benefits coverage offered 
     through a HealthMart, including (but not limited to) 
     requirements relating to coverage of specific providers, 
     specific services or conditions, or the amount, duration, or 
     scope of benefits, but not including requirements to the 
     extent required to implement title XXVII of the PHS Act or 
     other Federal law and to the extent the requirement prohibits 
     an exclusion of a specific disease from such coverage;
       --requirements (commonly referred to as fictitious group 
     laws) relating to grouping and similar requirements for such 
     coverage;--any other requirements (including limitations on 
     compensation arrangements) that, directly or indirectly, 
     preclude (or have the effect of precluding) the offering of 
     such coverage through a HealthMart, if the HealthMart meets 
     the requirements of this title.
       Any State law or regulation relating to the composition or 
     organization of a HealthMart is preempted to the extent the 
     law or regulation is inconsistent with the provisions of this 
     title.
       Subsection (c). Application of ERISA Fiduciary and 
     Disclosure Requirements. The board of directors of a 
     HealthMart is deemed to be a plan administrator for purposes 
     of applying parts 1 and 4 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974. The 
     HealthMart shall be treated as such a plan and the enrollees 
     shall be treated as participants and beneficiaries for 
     purposes of applying such provisions pursuant to this 
     subsection.
       Subsection (d). Application of ERISA Renewability 
     Protection.--A HealthMart is deemed to be a group health plan 
     that is a multiple employer welfare arrangement for purposes 
     of applying section 703 of the Employee Retirement Income 
     Security Act of 1974.
       Subsection (e). Application of Rules for Network Plans and 
     Financial Capacity. The provisions of subsections (c) and (d) 
     of section 2711 of ERISA apply to health benefits coverage 
     offered by a health insurance issuer through a HealthMart.
       Subsection (f). Construction Relating to Offering 
     Requirement. Nothing in section 2711(a) of this Act (relating 
     to guaranteed issuance) or section 703 of the Employee 
     Retirement Income Security Act of 1974 (relating to 
     guaranteed renewal) shall be construed as permitting the 
     offering outside the

[[Page E1412]]

     HealthMart of health benefits coverage that is only made 
     available through a HealthMart under this section because of 
     the application of subsection (b).
       Subsection (g). Application to Guaranteed Renewability 
     Requirements in Case of Discontinuation of an Issuer. For 
     purposes of applying section 2712 in the case of health 
     insurance coverage offered by a health insurance issuer 
     through a HealthMart, if the contract between the HealthMart 
     and the issuer is terminated and the HealthMart continues to 
     make available any health insurance coverage after the date 
     of such termination, the following rules apply:
        Renewability. The HealthMart shall fulfill the obligation 
     under such section of the issuer renewing and continuing in 
     force coverage by offering purchasers (and members and their 
     dependents) all available health benefits coverage that would 
     otherwise be available to similarly-situated purchasers and 
     members from the remaining participating health insurance 
     issuers in the same manner as would be required of issuers 
     under section 2712(c).
        Application of association rules. The HealthMart shall be 
     considered an association for purposes of applying section 
     2712(e).
       Subsection (h). Construction in Relation to Certain Other 
     Laws. Nothing in this title shall be construed as modifying 
     or affecting the applicability to HealthMarts or health 
     benefits coverage offered by a health insurance issuer 
     through a HealthMart of parts 6 (relating to continuation of 
     coverage under group health plans) and 7 (relating to group 
     health plan portability, access, and renewability) of 
     subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974 or titles XXII (relating to requirements 
     for certain group health plans for certain state and local 
     employees) and XXVII (regarding requirements relating to 
     health insurance coverage) of this Act.
       Section 2803. Administration.
       Subsection (a).
       In General. Provides that the applicable federal authority 
     must administer this title through the division established 
     under subsection (b) of this section, and is authorized to 
     issue such regulations as may be required to carry out this 
     title. These regulations shall be subject to Congressional 
     review under the provisions of chapter 8 of title 5, United 
     States Code. Provides that the applicable Federal authority 
     must incorporate the process of >deemed file and use' with 
     respect to the information filed under section 2801(a)(6)(A) 
     of this title and shall determine whether information filed 
     by a HealthMart demonstrates compliance with the applicable 
     requirements of this title. Such authority shall exercise its 
     authority under this title in a manner that fosters and 
     promotes the development of HealthMarts in order to improve 
     access to health care coverage and services.
       Subsection (b). Administration Through Health Care 
     Marketplace Division. Provides that the applicable federal 
     authority carry out its duties under this title through a 
     separate Health Care Marketplace Division, the sole duty of 
     which (including the staff of which) shall be to administer 
     this title. In addition to other responsibilities provided 
     under this title, such Division is responsible for: oversight 
     of the operations of HealthMarts under this title, and the 
     periodic submission of reports to Congress on the performance 
     of HealthMarts under this title under subsection (c), below.
       Subsection (c). Periodic Reports. Requires that the 
     applicable Federal authority submit to Congress a report 
     every 30 months, during the 10-year period beginning on the 
     effective date of the rules promulgated by the applicable 
     Federal authority to carry out this title, on the 
     effectiveness of this title in promoting coverage of 
     uninsured individuals. Such authority may provide for the 
     production of such reports through one or more contracts with 
     appropriate private entities.
       Section 2804. Definitions. Provides the following 
     definitions for purposes of this title:
        Applicable Federal authority. The term `applicable Federal 
     authority' means the Secretary of Health and Human Services.
        Eligible employee or individual. The term `eligible' 
     means, with respect to an employee or other individual and a 
     HealthMart, an employee or individual who is eligible under 
     section 2801(c)(2), as provided in this Act, to enroll or be 
     enrolled in health benefits coverage offered through the 
     HealthMart.
        Employer, employee, dependent. Except as the applicable 
     Federal authority may otherwise provide, the terms 
     ``employer'', ``employee'', and ``dependent'', as applied to 
     health insurance coverage offered by a health insurance 
     issuer licensed (or otherwise regulated) in a State, shall 
     have the meanings applied to such terms with respect to such 
     coverage under the laws of the State relating to such 
     coverage and such an issuer.
        Health benefits coverage. The term `health benefits 
     coverage' has the meaning given the term group health 
     insurance coverage in section 2791(b)(4) of the PHS Act.
        Health insurance issuer. The term `health insurance 
     issuer' has the meaning given the term in section 2791(b)(2).
        Health status-related factor. The term `health status-
     related factor' has the meaning given the term in section 
     2791(d)(9) of the PHS Act.
        HealthMart. The term `HealthMart' is defined above in 
     section 2801(a)
        Member. The term `member'' means, with respect to a 
     HealthMart, an individual enrolled for health benefits 
     coverage through the HealthMart under section 2801(c)(2).
        Purchaser. The term `purchaser' means, with respect to a 
     HealthMart, a small employer that has contracted under 
     section 2801(c)(1)(A) with the HealthMart for the purchase of 
     health benefits coverage.
        Small employer. The term `small employer' has the meaning 
     given such term in section 2791(e)(4).
       Subsection (b). Effective Date. In general, the amendment 
     made by subsection (a) shall take effect on January 1, 2000. 
     The Secretary of Health and Human Services shall issue all 
     regulations necessary to carry out the amendment made by 
     subsection (a) before January 1, 2000.
               Subtitle D--Community Health Organizations
       Section 2301. Promotion of Provision of Insurance by 
     Community Health Organizations. This section amends subpart I 
     of part D of title III of the Public Health Service Act by 
     authorizing the waiver of state licensure requirements by 
     community health organizations. It adds the following new 
     section 330B.
       Section 330B. Waiver of state licensure requirement for 
     community health organizations in certain cases.
       Subsection (a). In General. A community health organization 
     may offer health insurance coverage in a state in which it is 
     not licensed if the organization files an application for 
     waiver of the licensure requirement with the Secretary of 
     Health and Human Services by November 1, 2003, and the 
     Secretary determines that the grounds for approval of the 
     application have been met. The grounds for approval of a 
     waiver include: (1) the state failed to complete action on a 
     licensing application within 90 days of the state's receipt 
     of the application; (2) the waiver application denied by the 
     state is discriminatory in that the standards or review 
     process used by the state imposed requirements, procedures, 
     or standards (other than solvency requirements) that are not 
     generally applicable to other entities engaged in 
     substantially similar business; or (3) the waiver application 
     denied by the state is based on the organizations' failure to 
     meet applicable state solvency requirements and such 
     requirements are not the same as those established by the 
     Secretary. A waiver granted under this subsection: is 
     effective only in the state for which it is granted; is 
     effective for a 36-month period and may be renewed for up to 
     36 additional months; may be continued on condition that the 
     organization complies with state consumer protection and 
     quality standards; and preempts state law. The Secretary is 
     required to grant or deny a waiver application within 60 days 
     after a substantially complete application is filed. The 
     Secretary is required to report to the House Committee on 
     Commerce and the Senate Committee on Labor and Human 
     Resources, by December 31, 2002, on whether the waiver 
     process should be continued after December 31, 2003.
       Subsection (b). Assumption of full financial risk. The 
     community health organization, in order to qualify for a 
     waiver, must assume full financial risk on a prospective 
     basis for the provision of covered health care services. The 
     organization may obtain insurance or make other arrangements 
     for: (1) the costs of providing services, the aggregate value 
     of which exceeds such aggregate level as the Secretary 
     specifies from time to time; (2) providing services other 
     than through the organization because medical necessity 
     required their provision before they could be secured through 
     the organization; and (3) not more than 90 percent of the 
     amount by which its costs for any of its fiscal years exceed 
     105 percent of its income for such fiscal year. The 
     organization may also make arrangements with physicians or 
     other health care professionals, health care institutions, or 
     any combination of such individuals or institutions, to 
     assume all or part of the financial risk on a prospective 
     basis for the provision of health services.
       Subsection (c). Certification of provision against risk of 
     insolvency for unlicensed CHOs. Each community health 
     organization that is not licensed by a state and which has an 
     approved waiver application must meet the standards 
     established by the Secretary relating to financial solvency 
     and capital adequacy. The Secretary is required to establish 
     a certification process for organizations to meet the 
     solvency standards.
       Subsection (d). Establishment of solvency standards for 
     community health organizations. The Secretary is required to 
     establish on an expedited basis, using a negotiated 
     rulemaking process and through the Health Resources and 
     Services Administration, standards relating to financial 
     solvency and capital adequacy for entities to meet in order 
     to obtain an approved waiver. The Secretary, in establishing 
     such standards, must consult with interested organizations, 
     including the National Association of Insurance 
     Commissioners, the Academy of Actuaries, and organizations 
     representing federally qualified health centers. The 
     Secretary must take into account the following factors for 
     such standards: (1) the delivery system assets of an 
     organization; (2) alternative means of protecting against 
     insolvency; and (3) any standards developed by the National 
     Association of Insurance Commissioners specifically for risk-
     based health care delivery organizations. The standards must 
     include provisions to prevent enrollees from being held 
     liable to any person or entity for the organization's debts 
     in the event of the organization's insolvency.

[[Page E1413]]

       The Secretary, after consultation with the National 
     Association of Insurance Commissioners, the American Academy 
     of Actuaries, organizations representative of Medicare 
     beneficiaries, and other interested parties, must: (1) 
     publish a notice in the Federal Register of the rulemaking 
     process within 45 days of enactment of this Act; (2) 
     establish a target date for publication of the rule of April 
     1, 1999; (3) allow 15 days, instead of 30 days, for a comment 
     period; and (4) appoint a negotiated rulemaking committee not 
     later than 30 days after the comment period and nominate a 
     facilitator not later than ten days after appointment of the 
     committee. The Secretary must provide for publication of a 
     rule and terminate the process if, by January 1, 1999, the 
     committee reports that it is unlikely that it will reach 
     consensus within one month of the target date. If the 
     committee is not terminated, then it must report a proposed 
     rule not later than one month before the target date of 
     publication. The Secretary must publish a rule not later than 
     the target date of publication that will be effective on an 
     interim basis and include at least a 60-day public comment 
     period. The Secretary must provide for consideration of 
     comments and republish such rule not later than one year 
     after the target date.
       Subsection (e). Definitions. A community health 
     organization is an organization that is a federally-qualified 
     health center or is controlled by one or more federally-
     qualified health centers. A federally-qualified health center 
     is as defined under Medicaid law and generally is a health 
     center that meet statutory requirements but does not receive 
     grant funding. ``Health insurance coverage'' has the meaning 
     given in section 2701 (b) (1) of the Public Health Service 
     Act. ``Control'' means the possession, whether direct or 
     indirect, of the power to direct or cause the direction of 
     the management and policies of the organization through 
     membership, board representation, or an ownership interest 
     equal to or greater than 50.1 percent.
       TITLE III--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986
                    Subtitle A--Patient Protections
       Section 3001. Patient Access to Unrestricted Medical 
     Advice, Emergency Medical Care, Obstetric and Gynecological 
     Care, Pediatric Care. Subchapter B of chapter 100 of the 
     Internal Revenue Code of 1986 (relating to other 
     requirements) is amended by adding at the end the following 
     new section:
        Section 9813. Patient Access to Unrestricted Medical 
     Advice, Emergency Medical Care, Obstetric And Gynecological 
     Care, Pediatric Care.
       Subsection (a). Patient Access to Unrestricted Medical 
     Advice. This subsection states that a group health plan may 
     not prohibit or restrict health care professionals under 
     contract from advising participants or beneficiaries about 
     their health status or treatment, even if benefits for such 
     care or treatment are not covered by the plan. Health care 
     professional is defined as a physician (section 1861(r) of 
     the Social Security Act) or other health care professional 
     whose services are provided under the group health plan. This 
     includes a podiatrist, optometrist, chiropractor, 
     psychologist, dentist, physician assistant, physical or 
     occupational therapist and therapy assistant, speech language 
     pathologist, audiologist, registered or licensed practical 
     nurse (including nurse practitioner, clinical nurse 
     specialist, certified registered nurse anesthetist, and 
     certified nurse midwife), licensed certified social worker, 
     registered respiratory therapist, and certified respiratory 
     therapy technician.
       Subsection (b). Patient Access to Emergency Medical Care. 
     This subsection prohibits group health plans or health 
     insurance issuers from requiring beneficiaries to get 
     preauthorization before seeking emergency medical services 
     and requires them to cover emergency medical screening 
     examinations obtained at any emergency medical care facility, 
     whether in or outside a plan's network of affiliated 
     providers, if a prudent layperson with an average knowledge 
     of health and medicine would judge the examination necessary 
     in order to determine whether emergency medical care is 
     needed. The plan or issuer must provide additional emergency 
     medical services to the extent a prudent emergency medical 
     professional determines necessary to avoid the consequences 
     described in section 503(b)(8)(I) of ERISA as amended by this 
     Act. These requirements apply to the extent the group health 
     plan or health insurance issuer covers emergency medical care 
     benefits (as defined in section 503(b)(8)(I) of ERISA as 
     amended by this Act), except for items or services 
     specifically excluded; and to items or services within the 
     capability of the emergency facility, including routinely 
     available ancillary services. This subsection does not 
     prevent a group health plan or issuer from imposing any form 
     of cost-sharing for emergency medical services so long as the 
     cost-sharing is uniformly applied.
       Subsection (c). Patient Access to Obstetric and 
     Gynecological Care. If the group health plan or health 
     insurance issuer covers routine gynecological or obstetric 
     care by a participating physician specializing in such care, 
     and the participant's designated primary care provider is not 
     such a specialist, authorization or referral by a primary 
     care provider must not be required for routine gynecological 
     or obstetric care. Ordering of other similar routine 
     gynecological or obstetric care by such a participating 
     specialist is treated as authorized by the primary care 
     provider. Plan requirements relating to medical necessity or 
     appropriateness for obstetric and gynecological care will be 
     allowed.
       Subsection (d). Patient Access to Pediatric Care. This 
     subsection states that if the group health plan or health 
     insurance issuer covers routine pediatric care, and requires 
     the designation of a primary care provider, the parent or 
     guardian of any plan beneficiary under 18 years of age may 
     designate a participating physician who specializes in 
     pediatrics, if available, as the primary care provider. Plan 
     requirements relating to medical necessity or appropriateness 
     for pediatric care will be allowed.
       Subsection (e). Treatment of Multiple Coverage Options. 
     This subsection requires plans that have two or more coverage 
     options to provide patient access to obstetric and 
     gynecological care and pediatric care as defined in 
     subsections (c) and (d) under each option.
       Subsection (b). Clerical Amendment. This subsection adds a 
     clerical amendment to the table of sections.
       Section 3002. Effective Date and Related Rules.
       Subsection (a). In General. This subsection states that the 
     amendments made by Subtitle A will apply with respect to plan 
     years beginning on or after January 1 of the second calendar 
     year following the date of the enactment of the Act. The 
     Secretary is also required to issue all necessary regulations 
     before the effective date.
       Subsection (b). Limitation on Enforcement Actions. No 
     penalty shall be imposed on any failure to comply with any 
     requirement imposed by the amendments made by section 3101 to 
     the extent such failure occurs before the date of issuance of 
     regulations issued in connection with such requirement if the 
     plan has sought to comply in good faith with such 
     requirement.
       Subsection (c). Special Rule for Collective Bargaining 
     Agreements. If a group health plan is maintained pursuant to 
     one or more collective bargaining agreements ratified before 
     the date of enactment of this Act, the provisions relating to 
     patient access (subsections (b), (c), and (d)of section 9813 
     of the Internal Revenue Code of 1986 (as added by this 
     subtitle) will not apply before the date of termination of 
     the last collective bargaining agreement relating to the 
     plan, or January 1, 2001, which ever is later. Any amendment 
     in the plan made solely to conform to requirements of this 
     subtitle must not be treated as a termination of the 
     collective bargaining agreement.
               Subtitle B--Patient Access to Information.
       Section 3101. Patient Access to Information Regarding Plan 
     Coverage, Managed Care Procedures, Health Care Providers, And 
     Quality of Medical Care.Subsection (a). In General. This 
     subsection amends subchapter B of chapter 100 of the Internal 
     Revenue Code of 1986 (relating to other requirements) by 
     adding the following new Section 9814.
       Section 9814. Disclosure by Group Health Plans.
       Subsection (a). Disclosure Requirement. This subsection 
     requires the administrator of each group health plan to 
     ensure that the summary plan descriptions required under 
     ERISA section 102 contain the information described in 
     subsections (b), (c), (d), and (e)(2)(A).
        Each health insurance issuer connected with a group health 
     plan is also required to provide the necessary information to 
     the administrator or to plan participants and beneficiaries 
     on a timely basis.
       Subsection (b). Plan Benefits. The information required 
     under subsection (a) includes a description of: (A) covered 
     benefits categorized by the types of items and services and 
     the types of health care professionals providing the items 
     and services; (B) plan coverage for emergency medical care, 
     the extent of access to urgent care centers, and definitions 
     of terminology referring to emergency medical care; (C) plan 
     benefits for preventive services; (D) any use or application 
     of a drug formulary, including a summary of the process for 
     determining the formulary; (E) and COBRA benefits available 
     under the plan.
       Information must also be provided on any limitations, 
     exclusions, or restrictions on covered benefits, including: 
     (A) benefits specifically excluded from coverage, categorized 
     by types of items and services; (B) whether coverage for 
     medical care can be limited or excluded based on utilization 
     review or preauthorization requirements; (C) any lifetime, 
     annual, or other period limitations on coverage, categorized 
     by types of benefits; (D) any limitations or exclusions for 
     custodial care; (E) experimental treatment or technology; or 
     (F) failure to meet the plan's requirements for medical 
     appropriateness or necessity; (G) coverage of second or 
     subsequent opinions; (H) whether referral from a primary care 
     provider is required for specialty care; (I) if continuity of 
     care may be affected by the departure by the health care 
     professional from a defined set of providers; restrictions on 
     coverage of emergency services; and (J) any financial 
     responsibility of participants or beneficiaries for emergency 
     services.
       Subsection (c). Participant's Financial Responsibilities. 
     The summary plan description must also explain the 
     participant's financial responsibility for payment of 
     premiums, coinsurance, copayments, deductibles, and whether 
     this may vary if the health care provider is not one of a 
     defined set of providers.
       Subsection (d). Dispute Resolution Procedures. The summary 
     plan description must describe the process for dispute 
     resolution adopted by the plan pursuant to section 503(b) of 
     ERISA as amended by this Act. This

[[Page E1414]]

     must explain the procedures and time frames for coverage 
     decisions and internal and external review.
       Subsection (e). Information Available on Request. Upon 
     written request, a group health plan offering coverage in 
     connection with a group health plan must provide access to 
     plan benefit information in electronic form. This 
     information, in electronic format, must include, in addition 
     to information required by section 104(b)(4) of ERISA, the 
     latest summary plan description, summary of material 
     modifications, and the actual plan provisions with available 
     benefits. This is required no more than once a year, and a 
     reasonable charge is permitted which may be subject to a 
     maximum amount set by the Secretary. Requirements may also be 
     met by making the information generally available on the 
     Internet or on a proprietary computer network in a format 
     which is readily accessible to participants and 
     beneficiaries.A summary description of the types of 
     information available on request must be included in the 
     summary plan description made available to participants and 
     beneficiaries.
       In addition to information described above, a group or 
     health plan issuer must provide to participants or 
     beneficiaries upon request information on: (i) any network 
     characteristics with detailed lists of primary care providers 
     and specialists and their geographic locations; (ii) any 
     special disease management programs or programs for persons 
     with disabilities, whether these programs are voluntary and 
     if benefits would differ significantly for participants in 
     care management; (iii) whether a specific drug or biological 
     is included in the plan's formulary and procedures for waiver 
     requests; (iv) the procedures and medically-based criteria 
     used in an adverse coverage decision if the determination 
     relates to medical necessity, an experimental treatment or 
     technology; (v) the basis on which any preauthorization and 
     utilization review requirement has resulted in an adverse 
     coverage decision; (vi) the accreditation and licensing 
     status (if any) of each health insurance issuer offering 
     health insurance coverage in connection with the plan and of 
     any utilization review organization utilized by the issuer or 
     the plan, together with the name and address of the 
     accrediting or licencing authority; (vii) the latest 
     information, if any, on enrollee satisfaction maintained by 
     the plan; (viii) the latest information on quality 
     performance maintained by the plan; and (ix) information 
     about the frequency and outcome of external review decisions 
     requested by enrollees of the plan or health insurance 
     issuer.
       Upon request, any health care professional treating a 
     participant or beneficiary under a group health plan must 
     provide to the participant or beneficiary a description of 
     his or her professional qualifications, privileges, 
     experience and general description of the method of 
     compensation for medical care according to categories that 
     may be specified by the Secretary.
       In addition, upon request, any health care facility from 
     which a participant or beneficiary has sought treatment under 
     a group health plan must provide to the participant or 
     beneficiary a description of the facility's corporate form or 
     other organizational form and all forms of licensing and 
     accreditation status, if any, with standard-setting 
     organizations.
       Subsection (f). Access to Information Relevant to the 
     Coverage Options under which the Participant or Beneficiary 
     is Eligible to Enroll. Upon written request, and in 
     connection with a period of enrollment, the group health plan 
     must make the summary plan description available for any 
     coverage option in which the participant or prospective 
     participant is eligible to enroll and any information 
     described in clauses (i),(ii),(iii),(vi),(vii), and (viii) of 
     subsection (e)(2)(B).
       Subsection (g). Advance Notice of Changes in Drug 
     Formularies. Plans must inform participants not later than 30 
     days before the effective of date of any exclusion of a 
     specific drug or biological from any drug formulary used by 
     the plan in the treatment of a chronic illness or disease.
       Subsection (b). Clerical Amendment. This subsection amends 
     the table of sections.
       Section 3102. Effective Date.
       Subsection (a). In General. Amendments made by Subtitle B--
     Patient Access to Information will apply to plan years 
     beginning on or after January 1 of the second calendar year 
     following the date of the enactment of this Act. The 
     subsection also requires the Secretary to issue all necessary 
     regulations before that date.
       Subsection (b). Limitation on Enforcement Actions. If the 
     group health plan has sought to comply in good faith with the 
     amendments of Subtitle B, no enforcement actions shall be 
     taken against a plan or issuer for violating a requirement 
     imposed by the amendments before final regulations are 
     issued.
                  Subtitle C--Medical Savings Accounts
       Section 3201. Expansion of Availability of Medical Savings 
     Accounts (MSAs)
       Subsection (a). Repeal of Limitations on Number of Medical 
     Savings Accounts. The current limitation on the number of 
     taxpayers that may have MSAs and the rules for applying this 
     limitation are repealed.
       Subsection (b). All Employers May Offer MSAs. The 
     legislation removes the current restriction that only small 
     employers may offer MSAs.
       Subsection (c). Increase in Amount of Deduction Allowed for 
     Contributions to MSAs. The legislation allows monthly 
     contributions of up to 1/12th the annual deductible for the 
     taxpayer's coverage under the high deductible plan. The 
     current percentage limitations are repealed.
       Subsection (d). Both Employers and Employees May Contribute 
     to MSAs. The legislation allows both employers and employees 
     to contribute to an MSA. Currently, if an employer makes a 
     contribution the employee may not contribute.
       Subsection (e). Reduction in Permitted Deductibles under 
     High Deductible Health Plans. The legislation lowers the 
     allowable deductible for high deductible plans from $1,500 to 
     $1,000 in the case of single coverage and $3,000 to $2,000 in 
     the case of family coverage. It also postpones from 1998 to 
     1999 the first year for which cost-of-living adjustments are 
     applied to the minimum allowable deductible, the maximum 
     allowable deductible, and the maximum out-of-pocket 
     requirements.
       Subsection (f). MSAs May Be Offered under Cafeteria Plans. 
     The current restriction against funding MSAs through 
     cafeteria plans is repealed.
       Subsection (g). Special Rules for Certain Federal 
     Annuitants. Individuals receiving immediate Federal annuities 
     may also have MSAs.
       Subsection (h). Effective Date. The amendments made by this 
     section apply to taxable years ending after the date of 
     enactment of this legislation.
       Section 3202. Exception from Insurance Limitation in Case 
     of Medical Savings Accounts (MSAs).
       Subsection (a). Insurance Offered by Community Health 
     Centers. Qualified medical expenses (with respect to an 
     account holder) includes coverage under insurance offered by 
     a community health center if the coverage consists solely of 
     required primary health benefits provided on a capitated 
     basis. This exception applies only to individuals who in the 
     taxable year involved have income that is less than 200% of 
     the official poverty line. The exception applies only to the 
     first 15,000 individuals enrolled in this insurance in a 
     taxable year.
       Subsection (b). Reports on Enrollment. Centers offering 
     insurance coverage to individuals with MSAs shall provide 
     reports as may be required by the Secretary of Health and 
     Human Services and the Secretary of the Treasury to carry out 
     the restriction on the number of individuals to whom the 
     exception applies.
       Section 3203. Sense of the House of Representatives. This 
     section expresses the Sense of the House of Representatives 
     that patients are best served when they are empowered to make 
     informed choices about their own health care. The same is 
     true regarding an individual's choice of health insurance. A 
     system that gives people the power to choose the coverage 
     that best meets their needs, combined with insurance market 
     reforms, offers great promise of increased choices and 
     greater access to health insurance for Americans.
                      Subtitle D--Revenue Offsets
       See attached Joint Committee on Taxation Report No. JCX-56-
     98.
                  TITLE IV--HEALTH CARE LAWSUIT REFORM
                     Subtitle A--General Provisions
       Section 4001. Federal Reform of Health Care Liability 
     Actions. Title IV provides for Federal reform of health care 
     liability actions.
       Subsection (a). Applicability. This subsection specifies 
     that reform provisions apply to any health care liability 
     action brought in any State or Federal court. The provisions 
     do not apply to any action for damages arising from a 
     vaccine-related injury or death to the extent that the 
     provisions of the National Vaccine Injury Compensation 
     Program apply. The provisions also do not apply to actions 
     under the Employment Retirement Income Security Act.
       Subsection (b). Preemption. This subsection specifies that 
     the provisions preempt State law to the extent State law 
     provisions are inconsistent with the new requirements. 
     However, they do not preempt State law to the extent State 
     law provisions are more stringent.
       Subsection (c). Effect on Sovereign Immunity and Choice of 
     Law or Venue. This subsection provides that the new 
     provisions do not waive or affect the defense of sovereign 
     immunity asserted by any State or the U.S., affect the 
     applicability of the Foreign Sovereign Immunities Act of 
     1976, preempt State choice-of -law rules with respect to 
     claims brought by a foreign nation or citizen, or affect the 
     right of any court to transfer venue.
       Subsection (d). Amount in Controversy. This subsection 
     specifies that in the case of any action under which the new 
     provisions apply, and which is brought in federal court, the 
     amount of economic damages, punitive damages, and attorneys 
     fees or costs, are not included in the determination of 
     whether the amount in controversy exceeds the minimum limit.
       Subsection (e). Federal Court Jurisdiction Not Established 
     on Federal Question Grounds. This subsection specifies that 
     nothing in the new provisions is to be construed as 
     establishing any new jurisdiction in the federal courts over 
     health care liability actions.
       Section 4002. Definitions. This section defines a number of 
     terms.
       Actual damages means damages awarded to pay for economic 
     loss.
       Alternative dispute resolution system or ADR means a system 
     established under federal or state law that provides for 
     resolution

[[Page E1415]]

     of health care liability claims other than through liability 
     actions.
       Claimant means any person who brings a health care 
     liability action and any person on whose behalf the action is 
     brought.
       Clear and convincing evidence is that measure or degree of 
     proof that produces in the mind of the trier of fact a firm 
     belief or conviction as to the truth of the allegations. It 
     is more than that required under preponderance of the 
     evidence but less than that required for proof beyond a 
     reasonable doubt.
       Collateral source payments means any amount paid or 
     reasonably likely to be paid in the future to or on behalf of 
     a claimant, or any service, product, or other benefit 
     provided or reasonably likely to be provided in the future to 
     or on behalf of a claimant as a result of injury or wrongful 
     death pursuant to various laws, insurance policies, 
     contracts, or other programs.
       Drug has the meaning given the term under the Federal Food, 
     Drug and Cosmetic Act.
       Economic loss means any pecuniary loss resulting from 
     injury to the extent recovery for such loss is allowed under 
     state law. The term includes loss of earnings or other 
     employment benefits, medical expense loss, replacement 
     service loss, loss due to death, burial costs, and loss of 
     business or employment opportunities.
       Harm means any legally cognizable wrong or injury for which 
     punitive damages may be imposed.
       Health benefit plan means any of the following that 
     provides benefits with respect to health care services: a 
     hospital or medical expense incurred policy or certificate; a 
     hospital or medical service plan contract; a health 
     maintenance subscriber contract; or a Medicare+Choice plan 
     offered under Medicare.
       Health care liability action means a civil action brought 
     in a state or federal court in which the claimant alleges a 
     claim based on the provision of (or the failure to provide or 
     pay for) health care services or the use of a medical 
     product. The action may be brought against: a health care 
     provider; an entity which is obligated to pay for health 
     benefits under any health benefit plan (including persons or 
     entities acting under a contract or arrangements); or the 
     manufacturer, distributor, supplier, marketer, promoter, or 
     seller of a medical product. The term applies regardless of 
     the theory of liability on which the claim is based or the 
     number of plaintiffs, defendants, or causes of action.
       Health care liability claim means a claim in which the 
     claimant alleges that injury was caused by the provision of 
     (or the failure to provide) health care services.
       Health care provider means any person that is engaged in 
     the delivery of health care services in a state and is 
     required by the state to be licensed or certified in order to 
     engage in the delivery of services in the state.
       Health care service means any service eligible for payment 
     under a health benefit plan, including services related to 
     the delivery or administration of such service.
       Medical device has the meaning given the term under the 
     Federal Food, Drug and Cosmetic Act.
       Non-economic damages means damages paid to an individual 
     for pain and suffering, inconvenience, emotional distress, 
     mental anguish, loss of consortium, injury to reputation, 
     humiliation, and other nonpecuniary losses.
       Person means any individual, corporation, company, 
     association, firm, partnership, society, joint stock company, 
     or any other entity, including governmental entity.
       Product seller means a person who (in the course of a 
     business conducted for that purpose) sells, distributes, 
     rents, leases, prepares, blends, packages, labels, or is 
     otherwise involved in placing a product in the stream of 
     commerce. The term also includes a person who installs, 
     repairs, or maintains the harm-causing aspect of a product. 
     The term does not include: (i) a seller or lessor of real 
     property; (ii) a provider of professional services in any 
     case where the sale or use of a product is incidental to the 
     furnishing of judgment, skill, or services; or (iii) any 
     person who acts only in a financial capacity with respect to 
     sale of the product or who leases a product under a lease 
     arrangement in which the selection, possession, maintenance, 
     and operation of the product are controlled by a person other 
     than the lessor.
       Punitive damages means damages awarded against any person 
     to punish or deter such person or others from engaging in 
     similar behavior in the future. The term does not include 
     damages awarded to compensate for actual injury suffered.
       State includes the 50 states, the District of Columbia, and 
     all territories and possessions of the U.S.
       Section 4003. Effective Date. The section specifies that 
     the provisions of title IV of the bill apply to any health 
     care liability action brought in any State or Federal court, 
     and any health care liability claim subject to an ADR system, 
     that is initiated on or after the date of enactment. Any 
     health care liability claim or action arising from an injury 
     occurring prior to enactment would be governed by the statute 
     of limitations in effect at the time the injury occurred.
    Subtitle B--Uniform Standards for Health Care Liability Actions
       Section 4011. Statute of Limitations. This section 
     establishes a uniform statute of limitations. Actions may not 
     be brought more than two years after the injury is discovered 
     or reasonably should be discovered. In no event may the 
     action be brought more than five years after the date of the 
     alleged injury.
       Section 4012. Calculation and Payment of Damages
       Subsection (a) Treatment of Non-Economic Damages. This 
     subsection limits non-economic damages for losses resulting 
     from an injury to $250,000. The limit applies regardless of 
     the number of persons against whom the health care liability 
     action is brought or the number of actions brought. The 
     limitation does not apply to an action for damages based 
     solely on intentional denial of medical treatment (necessary 
     to preserve a patient's life that the patient is otherwise 
     qualified to receive), against the wishes of the patient (or 
     if the patient is incompetent, against the wishes of the 
     patient's guardian), on the basis of the patient's present or 
     predicted age, disability, degree of medical dependency or 
     quality of life.
       The subsection specifies that, if after enactment, a state 
     enacts a law which prescribes the amount of non-economic 
     damages that may be awarded, the state limit will apply. 
     Similarly, if after enactment, a state limits the amount of 
     recovery in a health care liability action, but doesn't 
     delineate between economic and non-economic damages, the 
     state limit will apply.
       The subsection specifies that a defendant is only liable 
     for the amount of non-economic damages attributable to that 
     defendant's proportionate share of the fault or 
     responsibility for the claimant's actual damages, as 
     determined by the trier of fact. In all cases, the liability 
     of a defendant for non-economic damages is several and not 
     joint. A separate judgment is to be rendered against each 
     defendant for the amount allocated to such defendant.
       Subsection (b) Treatment of Punitive Damages. The 
     subsection permits the award of punitive damages (to the 
     extent allowed under State law) only if the claimant 
     establishes by clear and convincing evidence that the harm 
     suffered was the result of conduct that was either 
     specifically intended to cause harm or that manifested a 
     conscious flagrant indifference to the rights or safety of 
     others.
       The subsection applies to any health care liability action 
     brought in any federal or state court on any theory where 
     punitive damages are sought. It does not create a cause of 
     action for punitive damages. Further, it does not preempt or 
     supersede any State or Federal law to the extent that such 
     law would further limit punitive damage awards.
       The subsection permits either party to request a separate 
     proceeding (bifurcation) on the issue of whether punitive 
     damages should be awarded and in what amount. If a separate 
     proceeding is requested, evidence related only to the claim 
     of punitive damages (as determined under state law) is 
     inadmissible in any proceeding to determine whether actual 
     damages should be awarded.
       The subsection generally prohibits the award of punitive 
     damages against a manufacturer or product seller of a drug or 
     medical device. The prohibition applies in a case where the 
     drug or device, or the adequacy of its packaging or labeling, 
     was subject to pre-market approval by the Food and Drug 
     Administration (FDA) and had received such pre-market 
     approval. The prohibition also applies where the drug is 
     generally recognized as safe and effective according to 
     conditions established by the FDA. The prohibition against 
     punitive damage awards does not apply in any case where the 
     defendant, before or after pre-market approval of the drug or 
     device, intentionally and wrongfully withheld information or 
     made misrepresentations to the FDA or to the Secretary (with 
     respect to biological products) that is material and relevant 
     to the harm suffered by the claimant. The prohibition against 
     damage awards also does not apply if the defendant made an 
     illegal payment to an FDA official or employee for the 
     purpose of securing or maintaining approval of the drug or 
     device.
       The subsection provides that a manufacturer or product 
     seller shall not be held liable for punitive damages related 
     to adequacy of required tamper resistant packaging unless the 
     packaging or labeling was found by clear and convincing 
     evidence to be substantially out of compliance with the 
     regulations.
       Subsection (c) Periodic Payments for Future Losses. The 
     subsection permits periodic (rather than lump sum) payment in 
     any case in which damages awarded for future economic and 
     non-economic loss exceeds $50,000. The judgment of a court 
     awarding periodic payments may not, in the absence of fraud, 
     be reopened at any time to contest, amend, or modify the 
     schedule or amount of payments. The provision does not 
     preclude a single lump sum settlement
       Subsection (d) Treatment of Collateral Source Payments. The 
     subsection permits a defendant to introduce evidence of 
     collateral source payments. If such evidence is introduced, 
     the claimant may introduce evidence of any amount paid or 
     reasonably likely to be paid to secure the right to such 
     collateral source payments. No provider of collateral source 
     payments is permitted to recover any amount against the 
     claimant or against the claimant's recovery or be equitably 
     or legally subrogated to the right of the claimant in a 
     health care liability action. This subsection applies to 
     actions that are settled as well as actions that are resolved 
     by a fact finder.

[[Page E1416]]

       Section 4013. Alternative Dispute Resolution. The 
     subsection requires that any system used to resolve health 
     care liability actions or claims must include provisions 
     consistent with those specified in the bill relating to 
     statute of limitations, non-economic damages, joint and 
     several liability, punitive damages, collateral source rule, 
     and periodic payments.
       Section 4014. Reporting on Fraud and Abuse Enforcement 
     Activities. This subsection requires the General Accounting 
     Office to:
       (1) monitor the compliance of the Department of Justice and 
     all United States Attorneys-with the guideline entitled 
     ``Guidance on the Use of the False Claims Act in Civil Health 
     Care Matters'' issued by the Department on June 3, 1998, 
     including any revisions to that guideline; and
       (2) monitor the compliance of the Office of the Inspector 
     General of the Department of Health and Human Services with 
     the protocols and guidelines entitled ``National Project 
     Protocols--Best Practice Guidelines'' issued by the Inspector 
     General on June 3, 1998, including any revisions to such 
     protocols and guidelines; and
       (3) submit a report on such compliance to the Committee on 
     the Judiciary, the Committee on Commerce, and the Committee 
     on Ways and Means of the House of Representatives and the 
     Committee on the Judiciary and the Committee on Finance of 
     the Senate not later than February 1, 1999, and every year 
     thereafter for a period of four years ending February 1, 
     2002.
             TITLE V--CONFIDENTIALITY OF HEALTH INFORMATION
       Section 5001. Confidentiality of Protected Health 
     Information.
       Subsection (a). In General. The section amends Title XI of 
     the Social Security Act (42 U.S.C. 1301 et seq.) by adding 
     the following text:
       Part D--Confidentiality of Protected Health 
     InformationInspection and Copying of Protected Health 
     Information
       Section 1181. Inspection And Copying of Protected Health 
     Information.
       Subsection (a). In General. The section generally 
     authorizes, subject to the succeeding provisions of the 
     section, a health care provider, health plan employer, health 
     or life insurer, or educational institution to make available 
     to a requesting individual (or a health care provider 
     designated by the individual) his or her protected health 
     information for inspection and copying.
       Subsection(b). Access Through Originating Provider. 
     Protected health information created by an originating 
     provider and subsequently received by another health care 
     provider or health plan as part of treatment or payment 
     activities shall be made available for inspection and copying 
     as provided in this section through the originating provider, 
     rather than the receiving health care provider or health 
     plan, unless the originating provider does not maintain the 
     information.
       Subsection (c). Investigational Information. Health 
     information created as part of the requesting individual's 
     participation in a clinical trial monitored by an 
     institutional review board established pursuant to federal 
     regulations adopted under the Public Health Service Act (42 
     U.S.C. 300v-1(b)) and Common Rule notice (56 Fed. Reg. 28003) 
     shall be provided in response to a subsection (a) request 
     only to the extent and in a manner consistent with such 
     regulations.
       Subsection (d). Other Exceptions. Unless ordered by a court 
     of competent jurisdiction, the recipient of a subsection 
     1181(a) request is not required to grant the request if 
     disclosure could reasonably be expected to endanger the life 
     or physical safety, or cause substantial harm to any 
     individual, or if the information has been compiled 
     principally in anticipation of or for use in a civil, 
     criminal, or administrative action or proceeding.
       Subsection (e). Denial of Request For Inspection or 
     Copying. If the recipient of a subsection 1181(a) request 
     denies the request, the requesting individual shall be 
     informed in writing of the reasons for the denial, the 
     availability of procedures for further review of the denial, 
     and the individual's right to file a concise statement 
     setting forth the request.
       Subsection (f). Statement Regarding Request. If a 
     requesting individual has filed a concise statement pursuant 
     to subsection 1181(e), any subsequent disclosure of that 
     individual's protected health information shall include a 
     notation concerning the statement and may include a concise 
     statement of the reasons for the denial of the request for 
     inspection and copying.
       Subsection (g). Procedures. A health care provider, health 
     plan employer, health or life insurer, or educational 
     institution providing access to protected health information 
     for inspection or copying under this section, may prescribe 
     appropriate procedures and may require a requesting 
     individual to pay reasonable costs associated with such 
     inspection and copying.
       Subsection (h). Inspection and Copying of Segregable 
     Portion. A health care provider, health plan employer, health 
     or life insurer, or educational institution receiving a 
     subsection 1181(a) request shall permit the inspection and 
     copying of any segregable portion of a record after the 
     deletion of any portion that is not required to be disclosed 
     under this section.
       Subsection (i). Deadline. A health care provider, health 
     plan employer, health or life insurer, or educational 
     institution shall comply with or deny a subsection 1181(a) 
     request not later than 30 days after the date of receiving 
     such request.
       Subsection (j). Rules Governing Agents. An agent of a 
     health care provider, health plan employer, health or life 
     insurer, or educational institution shall not be required to 
     provide for the inspection and copying of protected health 
     information, except where the information is retained by the 
     agent and the agent has been asked by the health care 
     provider, health plan employer, health or life insurer, or 
     educational institution to fulfill the requirements of this 
     section.
       Section 1182. Supplementation of Protected Health 
     Information.
       Subsection (a). In General. Subject to subsection 1182(b), 
     not later than 45 days after receiving a written request from 
     an individual to amend his or her protected health 
     information by adding a concise written statement, a health 
     care provider, health plan employer, health or life insurer, 
     or educational institution shall make the requested 
     amendment, inform the individual of the amendment action, and 
     make reasonable efforts to inform recipients of the unamended 
     health information during the previous year of the addition 
     of a supplement.
       Subsection (b). Refusal to Amend. If a health care 
     provider, health plan employer, health or life insurer, or 
     educational institution refuses to make a requested 
     subsection 1182(a) amendment, the requesting individual shall 
     be informed of the reasons for the refusal, any procedures 
     for further review of the refusal, and the individual's right 
     to file a concise statement setting forth the requested 
     amendment, and the individual's reasons for disagreeing with 
     the refusal.
       Subsection (c). Statement of Disagreement. If a requesting 
     individual has filed a concise statement pursuant to 
     subsection 1182(b), any subsequent disclosure of the disputed 
     portion of the information shall include a notation 
     concerning the statement and may include a concise statement 
     of the reasons for the denial of the amendment request.
       Subsection (d). Rules Governing Agents. An agent of a 
     health care provider, health plan employer, health or life 
     insurer, or educational institution shall not be required to 
     make amendments to individually identifiable health 
     information, except where the information is retained by the 
     agent and the agent has been asked by the health care 
     provider, health plan employer, health or life insurer, or 
     educational institution to fulfill the requirements of this 
     section.
       Subsection (e). Duplicative Requests For Amendments. If a 
     health care provider, health plan employer, health or life 
     insurer, or educational institution receives a duplicative 
     request for an amendment of health information and a 
     statement of disagreement with respect to the request that 
     has been filed, the requesting individual shall be informed 
     of such filing and there shall be no further requirement to 
     carry out the procedures under this section.
       Subsection (f). Rule of Construction. This section shall 
     not be construed to permit an individual to modify statements 
     in his or her record that document the factual observations 
     of another individual or state the results of diagnostic 
     tests, or to permit an individual to amend his or her record 
     as to the type, duration, or quality of treatment the 
     individual believes he or she should have been provided.
       Section 1183. Notice of Confidentiality Practices.
       Subsection (a). Preparation of Written Notice. A health 
     care provider, health plan, health oversight agency, public 
     health authority, employer, health or life insurer, health 
     researcher, or educational institution shall post or provide, 
     in writing and in a clear and conspicuous manner, notice of 
     their protected health information confidentiality practices. 
     Such notice shall include a description of an individual's 
     rights with respect to protected health information, the 
     intended uses and disclosures of such information, the 
     procedures established for the exercise of an individual's 
     rights with respect to such information, and the procedures 
     established for obtaining copies of the notice.
       Subsection (b). Model Notice. The Secretary of Health and 
     Human Services, after notice and opportunity for public 
     comment, and based on the advice of the National Committee on 
     Vital and Health Statistics, shall develop and disseminate, 
     not later than 6 months after the date of the enactment of 
     the Accessibility, Affordability, and Accountability Patient 
     Protection Act of 1998, model notices of confidentiality 
     practices for use under this section. Use of a model notice 
     developed by the Secretary shall serve as a complete defense 
     in any civil action to an allegation that a violation of this 
     section has occurred.
       Section 1184. Establishment of Safeguards.
       Subsection (a). In General. A health care provider, health 
     plan, health oversight agency, public health authority, 
     employer, health or life insurer, health researcher, or 
     educational institution shall establish, maintain, and 
     enforce reasonable and appropriate administrative, technical, 
     and physical safeguards to protect the confidentiality, 
     security, accuracy, and integrity of protected health 
     information created, received, obtained, maintained, used, 
     transmitted, or disposed of by them.
       Subsection (b). Factors to Be Considered. A health care 
     provider, health plan, health oversight agency, public health 
     authority,

[[Page E1417]]

     employer, health or life insurer, health researcher, or 
     educational institution subject to subsection 1184(a) shall 
     consider the following factors in establishing safeguards 
     under such subsection: the need for protected health 
     information; the categories of personnel who will have access 
     to such information; the feasibility of limiting access to 
     individual identifiers; the appropriateness of the policy or 
     procedure to the person and the medium in which protected 
     health information is stored and transmitted; and the value 
     of audit trails in computerized records.
       Subsection (c). Relationship to Part C Requirement. Any 
     safeguard established under this section shall be consistent 
     with the requirement in section 1173(d)(2).
       Subsection (d). Conversion to Nonidentifiable Health 
     Information. A health care provider, health plan, health 
     oversight agency, public health authority, employer, health 
     or life insurer, health researcher, or educational 
     institution subject to subsection 1184(a) shall, to the 
     extent practicable and consistent with the purpose for which 
     protected health information is maintained, convert such 
     information into nonidentifiable health information.
       Section 1185. Availability of Protected Health Information 
     For Purposes of Health Care Operations
       Subsection (a). Disclosure. The bill allows any person who 
     maintains protected health information to disclose the 
     information to a health care provider or a health plan in 
     order to permit the provider or plan to conduct health care 
     operations.
       Subsection (b). Use. A health care provider or a health 
     plan that maintains protected health information may use it 
     to conduct health care operations.
       Subsection (c). Limitation on Sale or Barter. 
     Notwithstanding subsection (b), this subsection prohibits 
     health care providers or health plans from selling or 
     bartering protected health information as part of conducting 
     health care operations.
       Section 1186. Relationship to Other Laws.
       Subsection (a). State Law. Part D, as established by the 
     bill, preempts State law provisions that; (A) would be 
     preempted as inconsistent with this title under the Supremacy 
     Clause of the U.S. Constitution; (B) relate to authorization 
     for the use or disclosure of protected health information for 
     health care operations, or nonidentifiable health 
     information; or (C) relate to the inspection, copying, or 
     amendment of protected health information by the information-
     subject, to the notice of confidentiality practices, or to 
     the establishment of safeguards for protected health 
     information. Nothing in this part shall be construed to 
     preempt or modify State privileges. There are exceptions to 
     federal preemption for the following purposes of protected 
     health information: (A) confidentiality of medical records 
     maintained by a licensed mental health professional; (B) 
     provision of health care or disclosure of information about a 
     minor; (C) condition-specific limitations on disclosure as 
     identified by the Secretary as posing a public health threat; 
     (D) use or disclosure of information for use in public health 
     reporting; (E) situations where the individual is 
     unconscious, incompetent, or otherwise incapable of deciding 
     whether to authorize disclosure of protected health 
     information; or, (F) situations where the individual has a 
     valid and applicable power of attorney.
       Subsection (b). Federal Law. Part D shall not be construed 
     to preempt, modify, or repeal any provision of Federal law 
     relating to protected health information, or relating to an 
     individual's access to protected health information or health 
     care services. This part shall not be construed to preempt or 
     modify Federal privileges.
       Section 1187. Civil Penalties.
       Subsection (a). Violation. A person determined by the 
     Secretary to have substantially and materially failed to 
     comply with this part shall be subject to, in addition to any 
     other penalties that may be imposed: (1) in the case of a 
     violation related to section 1181 or 1182, a civil penalty up 
     to $500 for each violation but not more than $5,000 for all 
     violations of an identical requirement or prohibition during 
     a calendar year; (2) for violations of sections 1183, 1184, 
     or 1185, to a civil penalty not more than $10,000 for each 
     violation, but not to exceed $50,000 for all violations of an 
     identical requirement or prohibition during the calendar 
     year; or (3) in a case where the Secretary finds that 
     violations occur with such frequency as to constitute a 
     general business practice, to a civil penalty of not more 
     than $100,000.
       Subsection (b). Procedures For Imposition of Penalties. 
     Section 1128A, other than subsections (a) and (b) and the 
     second sentence of subsection (f) of that section, shall 
     apply to the imposition of a civil or monetary penalty under 
     this section in the same manner as such provisions apply with 
     respect to the imposition of a penalty under section 1128A.
       Section 1188. Definitions. The bill defines the following 
     terms:
       Agent means a person, including a contractor, who 
     represents and acts for another under the contract or 
     relation of an agency, or whose function is to bring about, 
     modify, affect, accept performance of, or terminate 
     contractual obligations between the principle and a third 
     person.
       Disclose means to release, transfer, provide access to, or 
     otherwise divulge protected health information to any person 
     other than an individual who is the subject of such 
     information.
       Educational institution means an institution or place 
     accredited or licensed for purposes of providing for 
     instruction or education, including an elementary school, 
     secondary school, or institution of higher learning, a 
     college, or an assemblage of colleges united under one 
     corporate organization or government.
       Employer means the definition used under ERISA, except that 
     such term is required to include only employers of two or 
     more employees.
       Health care means: (a) preventive, diagnostic, therapeutic, 
     rehabilitative, maintenance, or palliative care, including 
     appropriate assistance with disease or symptom management and 
     maintenance, counseling, services or procedures with respect 
     to the physical or mental condition of an individual or 
     affecting the structure or function of the human body or any 
     part of the human body, including the banking of blood, 
     sperm, organs, or any other tissue; or (b) any sale or 
     dispensing, pursuant to a prescription or medical order, of a 
     drug, device, equipment, or other health care related item to 
     an individual, or for the use of an individual.
       Health care operations means services, provided directly by 
     or on behalf of a health plan or health care provider or by 
     its agent, for any of the following purposes: (a) 
     coordinating health care, including health care management of 
     the individual through risk assessment, case management, and 
     disease management; (b) conducting quality assessment and 
     improvement activities, including outcomes evaluation, 
     clinical guideline development and improvement, and health 
     promotion; (c) carrying out utilization review activities, 
     including precertification and preauthorization of services, 
     and health plan rating activities, including underwriting and 
     experience rating; or (d) conducting or arranging for 
     auditing services.
       Health care provider means a person, who with respect to a 
     specific item of protected health information, receives, 
     creates, uses, maintains, or discloses the information while 
     acting in whole or in part in the capacity of (a) a person 
     who is licensed, certified, registered, or otherwise 
     authorized by federal or state law to provide an item or 
     service that constitutes health care in the ordinary course 
     of business, or practice of a profession; (b) a federal, 
     state, employer-sponsored or any other privately-sponsored 
     program that directly provides items or services that 
     constitute health care to beneficiaries; or (c) an officer or 
     employee of a person described in subparagraphs (a) or (b).
       Health or life insurer means a health insurance issuer, as 
     defined in section 9805(b)(2) of the Internal Revenue Code of 
     1986, or a life insurance company, as defined in section 816 
     of such Code.
       Health plan means any health insurance plan, including any 
     hospital or medical service plan, dental or other health 
     service plan, health maintenance organization plan, plan 
     offered by a provider-sponsored organization (as defined in 
     section 1855(d) of the Social Security Act, the 
     Medicare+Choice program), or other program providing or 
     arranging for the provision of health benefits.
       Health researcher means a person (or officer, employee, or 
     agent of a person) who is engaged in systematic 
     investigation, including research development, testing, data 
     analysis, and evaluation, designed to develop or contribute 
     to generalizable knowledge relating to basic biomedical 
     processes, health, health care, health care delivery, or 
     health care cost.
       Nonidentifiable health information means protected health 
     information from which personal identifiers that reveal the 
     identity of the individual who is the subject of such 
     information or provide direct means of identifying the 
     individual (such as name, address, and social security 
     number) have been removed, encrypted, or replaced with a 
     code, so that the identity of the individual is not evident 
     without (in the case of encrypted or coded information) the 
     use of a key.
       Originating provider means, when used with respect to 
     protected health information, the health care provider who 
     takes an action that initiates the treatment episode to which 
     that information relates, such as prescribing a drug, 
     ordering a diagnostic test, or admitting an individual to a 
     health care facility. A hospital or nursing facility is the 
     originating provider with respect to protected health 
     information created or received as part of inpatient or 
     outpatient treatment provided in the hospital or facility.
       Payment activities means (a) activities undertaken (i) by, 
     or on behalf of, a health plan to determine its 
     responsibility for coverage under the plan; or (ii) by a 
     health care provider to obtain payment for items or services 
     provided to an individual, provided under a health plan, or 
     provided based on a determination by the health plan or 
     responsibility for coverage under the plan; and (b) includes 
     the following activities: (i) billing, claims management, 
     medical data processing, other administrative services, and 
     actual payment; (ii) determinations of coverage or 
     adjudication of health benefit or subrogation claims; or 
     (iii) review of health care services with respect to coverage 
     under a health plan or justification of charges.
       Person means a natural person; a government or governmental 
     subdivision, agency, or authority; a company, corporation, 
     estate, firm, trust, partnership, association, joint venture, 
     society, or joint stock company; or any other legal entity.
       Protected health information when used with respect to an 
     individual who is the subject of information, means any 
     information (including genetic information) that identifies 
     the individual, whether oral or recorded

[[Page E1418]]

     in any form or medium, and that (a) is created or received by 
     a health care provider, health plan, health oversight agency, 
     public health authority, employer, health or life insurer, or 
     educational institution; (b) relates to the past, present, or 
     future physical or mental health or condition of an 
     individual (including individual cells and their components); 
     (c) is derived from the provision of health care to an 
     individual or payment for the provision of health care to an 
     individual; and (d) is not nonidentifiable health 
     information.
       State includes the District of Columbia, Puerto Rico, the 
     Virgin Islands, Guam, American Samoa, and the Northern 
     Mariana Islands.
       Treatment means the provision of health care by a health 
     care provider.
       Writing means writing either in a paper-based, computer-
     based, or electronic form, including electronic signatures.
       Subsection (b). Enforcement of Provisions Through 
     Conditions of Participation. This subsection amends section 
     1842(h) of the Social Security Act to permit the Secretary to 
     refuse to enter into an agreement with a physician or 
     supplier, or to terminate or refuse to renew an agreement, if 
     the physician or supplier is found to have violated the 
     confidentiality of protected health information as 
     established by the bill. This subsection also amends sections 
     1852(h), 1866(a)(1), and 1876(k)(4) of the Social Security 
     Act to require that Medicare+Choice organizations, Medicare 
     providers, and Health Maintenance Organizations with risk-
     sharing contracts under Medicare comply with the 
     confidentiality of protected health information provisions 
     established by the bill.
       Subsection (c). Conforming Amendments. This subsection 
     provides conforming amendments modifying the title heading of 
     Title XI of the Social Security Act to read as follows: 
     ``Title XI -- General Provisions, Peer Review, Administrative 
     Simplification, and Confidentiality of Protected Health 
     Information``. This subsection also amends section 306(k)(5) 
     of the Public Health Service Act to require the National 
     Committee on Vital and Health Statistics to study the issues 
     relating to section 1184 of the bill regarding the 
     establishment of safeguards to protect health information. 
     The National Committee is required to report the results of 
     the study to the Congress by not later than one year after 
     enactment of the bill.
       Subsection (d). Effective Date. This subsection provides an 
     effective date for the provisions of this section that is one 
     year after enactment of the bill, with some exceptions; (1) 
     the provisions in subsection (c)(2), the study on safeguards 
     required of the National Committee on Vital and Health 
     Statistics, and (2) section 1183(b) related to the 
     development of a model notice of confidentiality practices.
       Section 5002. Study and Report on Effect of State Law on 
     Health-Related Research. The bill requires that one year 
     after enactment of the bill, the Comptroller General of the 
     U.S. prepare and submit to the Congress a report containing 
     the results of a study on the effect of state laws on health-
     related research that is subject to review by an 
     institutional review board or institutional review committee 
     with respect to the protection of human subjects.
       Section 5003. Study and Report on State Law on Protected 
     Health Information.
       Subsection (a). In General. The bill requires that not 
     later than 9 months after the date of the enactment of this 
     Act, the Comptroller General of the United States shall 
     prepare and submit to the Congress a report containing the 
     results of a study that (1) compiles State laws on the 
     confidentiality of protected health information (as defined 
     in section 1188 of the Social Security Act, as added by 
     section 5001 of this Act); and (2) analyzing the effect of 
     such laws on the provision of health care and securing 
     payment for such care.
       Subsection (b). Modification of Deadline. Section 264(c)(1) 
     of the Health Insurance Portability and Accountability Act of 
     1996 (Public Law 104-191; 110 Stat. 2033) is amended by 
     striking ``36 months after the date of the enactment of this 
     Act,'' (August 1999), and inserting ``6 months after the date 
     on which the Comptroller General of the United States submits 
     to the Congress a report under section 5003(a) of the Patient 
     Protection Act of 1998.''
       Section 5004. Protection for Certain Information Developed 
     to Reduce Mortality or Morbidity or for Improving Patient 
     Care and Safety
       Subsection (a). Protection of Certain Information. Health 
     care response information shall be exempt from any disclosure 
     requirement in connection with a civil or administrative 
     proceeding to the same extent as information developed by a 
     health care provider with respect to any of the following: 
     (1) peer review; (2) utilization review; (3) quality 
     management or improvement; (4) quality control; (5) risk 
     management; (6) internal review for purposes of reducing 
     mortality, morbidity, or for improving patient care or 
     safety.
       Subsection (b). No Waiver of Protection Through Interaction 
     with Accrediting Body. The protection of health care response 
     information from disclosure shall not be deemed to be 
     modified or in any way waived by the development or transfer 
     of such information to an accrediting body.
       Section 5005. Effective Date for Standards Governing Unique 
     Health Identifiers for Individuals. Amends Section 1174 of 
     the Social Security Act (42 U.S.C. 1320d-3) to preclude the 
     Secretary of Health and Human Services from promulgating or 
     adopting a final standard to be effective under section 
     1173(b) of the Social Security Act providing for a unique 
     health identifier for an individual (except in an 
     individual's capacity as an employer or a health care 
     provider), until legislation is enacted specifically 
     approving the standard or containing provisions consistent 
     with the standard.