[Congressional Record Volume 144, Number 101 (Friday, July 24, 1998)]
[House]
[Pages H6297-H6395]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     PATIENT PROTECTION ACT OF 1998

  Mr. GOSS. Mr. Speaker, by direction of the Committee on Rules, I call 
up House Resolution 509 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 509

       Resolved, That upon the adoption of this resolution it 
     shall be in order to consider in the House the bill (H.R. 
     4250) to provide new patient protections under group health 
     plans. The bill shall be considered as read for amendment. 
     The amendments printed in the report of the Committee on 
     Rules accompanying this resolution shall be considered as 
     adopted. The previous question shall be considered as ordered 
     on the bill, as amended, and on any further amendment thereto 
     to final passage without intervening motion except: (1) one 
     hour of debate on the bill, as amended, equally divided and 
     controlled by Representative Hastert of Illinois and a Member 
     opposed to the bill; (2) the further amendment printed in the 
     Congressional Record and numbered 2 pursuant to clause 6 of 
     rule XXIII, which shall be in order without intervention of 
     any point of order or demand for division of the question, 
     shall be considered as read, and shall be separately 
     debatable for one hour equally divided and controlled by the 
     proponent and an opponent; and (3) one motion to recommit 
     with or without instructions.

  The SPEAKER pro tempore (Mr. LaHood). The gentleman from Florida (Mr. 
Goss) is recognized for 1 hour.
  Mr. GOSS. Mr. Speaker, I am going to depart from normal custom and 
yield the first minute of this to the distinguished gentleman from New 
York (Mr. Lazio) for a matter of colleague comity.
  (Mr. LAZIO of New York asked and was given permission to speak out of 
order.)


                   Honoring the Honorable Rob Portman

  Mr. LAZIO of New York. I want to thank the gentleman from Florida 
(Mr. Goss) and the gentleman from New York (Mr. Solomon) for their 
courtesy.
  Mr. Speaker, I rise to honor my pal and colleague, the gentleman from 
Ohio, Mr. Rob Portman. He is one of the most accomplished people in 
this Congress. He stood up for America's taxpayers and was the driving 
force behind the landmark IRS reform bill signed into law this week. He 
authored the National Underground Railroad Act signed into law this 
week. By preserving underground railroad sites, America celebrates the 
journey of slaves from bondage to freedom.
  The gentleman from Ohio is the congressional leader in the war 
against drugs. His Drug-Free Communities Act, signed into law, will 
give us peace of mind when our children are away from home. His pro-
business mandates legislation is the law of this House and his pro-
environment tropical rain forest legislation should be signed into law 
next week.
  In an era when bipartisanship is essential for legislative success, 
Rob Portman is the even-headed leader we need. He is balanced and 
principled, substantive, competent, intelligent. He is a man of 
integrity, of modesty and of great character.
  The gentleman form Ohio, Mr. Rob Portman, gets the job done for 
families in Cincinnati, in Ohio, and throughout America.


                Announcement By The Speaker Pro Tempore

  The SPEAKER pro tempore. The Chair would like to announce that the 
rules do not allow Members to wear badges when they are addressing the

[[Page H6298]]

House. The Chair will enforce this rule throughout the debate today.
  Mr. GOSS. Mr. Speaker, for purposes of debate only, I yield the 
customary 30 minutes to the gentleman from Texas (Mr. Frost), pending 
which I yield myself such time as I may consume. During consideration 
of this resolution, all time yielded is for the purpose of debate only.
  Mr. Speaker, this is a structured rule that allows timely 
consideration of this very, very important legislation on health care. 
In yesterday's Rules meeting, which actually went on for quite a while, 
the minority requested that the Dingell substitute be made in order and 
we indeed have obliged them in this rule. It provides for 1 hour of 
debate on the Patient Protection Act to be equally divided between the 
gentleman from Illinois (Mr. Hastert) and an opponent, and 1 hour of 
debate on the Dingell substitute. These are two very different 
approaches to providing better health care for more Americans and I am 
sure that we will have quite a vigorous debate on the merits of each 
today. Finally, the rule provides for one motion to recommit with or 
without instructions. In effect, giving the minority two bites at the 
apple. I certainly feel this is a fair rule.
  Mr. Speaker, today we will move to restore true patient power. The 
Patient Protection Act is the only bill that restores commonsense 
patient protections to Americans while also extending affordable 
coverage to the 41 million Americans who currently lack it and cannot 
get health care coverage. One clear difference between the two 
approaches is the fact that the Kennedy-Dingell Patients' Bill of 
Rights makes no effort to secure affordable health insurance for the 
40-plus million Americans who have none currently. In fact, when asked 
what the Kennedy-Dingell bill does for uninsured Americans, the 
minority leader in the other body reportedly summed it up in two words, 
and I quote, ``Not much.'' Instead of turning our backs on the 
uninsured, our bill attacks their problem head-on. We know that over 75 
percent of uninsured Americans are in a family where the primary 
caregiver works for a small business. This is especially true in 
southwest Florida, which I represent, where mom and pop shops cannot 
afford to provide their employees with health insurance. The Patient 
Protection Act allows small businesses to pool their resources and the 
achieve economies of scale needed to offer quality, affordable health 
insurance to their employees. If it is good enough for the Microsofts 
and the IBMs and the GMs of the world, should it not be good enough for 
the little guys, too? We take care of that.
  As with any major proposal, there comes a certain level of 
misinformation and this effort is no exception. Many of my friends on 
the other side of the aisle have confused a patient's bill of rights 
with a trial lawyer's right to bill. Under our bill, patients would 
still have the right to sue their HMO for malpractice and that includes 
punitive damages. I wonder how many times I am going to be saying that 
in the next few months. Under our bill, patients would still have the 
right to sue their HMO for malpractice, and that includes punitive 
damages. I think we are going to be hearing some debate on that subject 
today. If the HMO runs the wrong tests on you or they happen to cut off 
the wrong foot, you will have recourse through the courts, of course. 
That is essential and that is protected. But as we studied the problem 
and talked to people, the folks who were being denied care in what we 
call coverage disputes, we thought we could do better than settling 
for, or encouraging even more litigation. I do not know many people who 
have gotten much good medical attention in a courtroom. We came to the 
conclusion that we have an innovative solution that assures patients 
get the care they need, up front, when they need it, at a place they 
need it, from a doctor, from a real medical person. Our expedited 
internal and external appeals process means that if your HMO denies 
your experimental treatment, or your treatment, you will be able to 
have a doctor, independent of the HMO, review that decision. Of course 
if you are unsatisfied at the end of that process, you can take the 
offending HMO to court. However, unlike the current law, the judge will 
have the flexibility to serve a fine up to $250,000 against the HMO 
plan. This is not available under current law and it is a healthy and 
reasonable constraint on HMO abuse. I know it has already got their 
attention.
  We have provided commonsense patient protections in this package. 
Women will have direct access to their OB-GYN. Kids will get to see a 
pediatrician without any red tape or having to get permission from a 
government official. And, most importantly, doctors will have no 
restrictions on the recommendations they give their patients. No gag 
rule. These are positive steps to improve the doctor-patient 
relationship, not a retreat into more nonsensical and, I would say, 
very expensive bureaucracy that other approaches take.
  Mr. Speaker, as a member of Chairman Hastert's working group, I can 
assure you that we have worked hard and I think we have come up with a 
pretty good package that provides real protections without returning us 
to the days of double-digit inflation. I encourage my friends on both 
sides of the aisle to ignore the demagogues and focus on the pro-
patient, pro-small business, pro-family provisions in our health care 
bill. I believe they will find it is worth reading.
  Mr. Speaker, I reserve the balance of my time.
  Mr. FROST. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, there is no doubt that the American public wants managed 
care reform. Today we have the opportunity to respond. At long last 
after months and months of denying that a problem exists, the 
Republican majority has agreed to let the House vote on a bill that 
seeks to provide a response to the concerns of millions of Americans. 
While what we have before us today is two bills, one written behind 
closed doors by the Republican leadership and supported by the 
insurance industry, there really is only one bill which meets the 
critical test of addressing the concerns of our constituents. That bill 
is a bipartisan proposal supported by doctors, nurses and consumers.
  Mr. Speaker, there are two bills before us today, but if we listen 
carefully to what our constituents have been saying, there is little 
doubt how we should vote. Only the bipartisan bill sponsored by the 
gentleman from Iowa (Mr. Ganske) and the gentleman from Michigan (Mr. 
Dingell) really offers working families what they have been asking for. 
The bipartisan Ganske-Dingell Patients' Bill of Rights assures working 
families access to necessary medical care and will return health care 
decision-making to patients and their doctors. The bipartisan bill will 
give patients real remedies for real problems. The Ganske-Dingell 
Patients' Bill of Rights will reform a system that is badly in need of 
repair.
  My Republican colleagues will say today that the bipartisan bill is 
nothing more than big government. They will say the bipartisan bill is 
nothing more than a lawyers full employment act. Well, if that is the 
case, Mr. Speaker, why then is the Ganske-Dingell substitute supported 
by the American Medical Association, an organization not normally known 
to support big government or trial lawyers? Why then is it supported by 
the American Nurses Association, an organization representing those 
health care givers closest to the patient? Why then, Mr. Speaker, is it 
supported by consumer groups and opposed by insurance companies? The 
arguments my Republican colleagues will make against the Ganske-Dingell 
bill are just plain bogus and no one should be fooled. Ganske-Dingell 
offers real reform, not just election year posturing.
  That we are even able to consider and debate Ganske-Dingell today is 
testimony to the power of the call of the American people. For far too 
long, my Republican colleagues have denied that there is a problem, but 
the voices of working families who have been demanding that the 
Congress respond to their real concerns has been heard.

                              {time}  0915

  In their efforts to deny the House the opportunity to respond to 
those concerns, the Republican leadership had us guessing until 12:30 
a.m. this morning whether they were even going to give the bipartisan 
substitute a place at the table. I suspect that only after it became 
clear that the rule might not pass without the Ganske-Dingell

[[Page H6299]]

amendment made in order that the Republican leadership relented and 
agreed to make the substitute in order.
  Mr. Speaker, every Member in this House needs to recognize that the 
bipartisan substitute offers American working families something more 
than election year rhetoric. Ganske-Dingell is a good bill and deserves 
the support of every Member of this body. To do less is to do 
disservice to our constituents. I urge Members to do the right thing 
and to support Ganske-Dingell.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GOSS. Mr. Speaker, I yield as much time as he may consume to the 
distinguished gentleman from Glens Falls, New York (Mr. Solomon), 
chairman of the Committee on Rules.
  Mr. SOLOMON. Mr. Speaker, I was not going to speak this morning. We 
spoke enough yesterday and last night into the wee hours. But I just 
want to make sure that all the Members on both sides of the aisle know, 
as the gentleman from Florida (Mr. Goss) has just outlined, that this 
is a negotiated fair rule that was approved by the Democrat minority.
  The Dingell substitute is made in order with ample time for debate so 
that this House has its choice, and that is the way that it should be. 
I just want to point out that we are going to be somewhat repetitive 
here, because what is going to be said now in this next hour on the 
rule could have not been wasted if we had had unanimous consent.
  The gentleman from Michigan (Mr. Dingell) last night agreed to 
unanimous consent to bring this bill on the floor without taking this 
extra hour of time on the rule. That means that Members could have gone 
back home. It is difficult in these last 3 or 4 weeks now before we 
recess for the August break, and taking up the rule today is going to 
add another hour and a half. It is too bad that the Democratic minority 
objected to us offering a unanimous consent to bring this bill on the 
floor, and I just wanted Members to know that.
  But I hope that they will come over and vote for the rule, vote for 
the bill, and we will at least will have made some great progress in 
patients' rights.
  Mr. FROST. Mr. Speaker, I yield myself 30 seconds.
  Mr. Speaker, the gentleman from New York was bemoaning the fact that 
we could not bring this measure up under unanimous consent but, rather, 
that we would have an hour's debate on the rule. This may be the most 
important piece of legislation we will consider this year. Certainly it 
is reasonable to have an hour debate on the rule on this matter.
  The other side was so anxious to bring this up quickly early this 
morning and out of the line of fire without public attention. It is 
clearly appropriate to have an hour's debate on the rule.
  Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. 
Green).
  (Mr. GREEN asked and was given permission to revise and extend his 
remarks.)
  Mr. GREEN. Mr. Speaker, I thank my colleague and friend, the 
gentleman from Texas, and a Member of the Committee on Rules for 
allowing me to speak this morning.
  I rise, not in opposition to the rule, but in opposition to the 
process where we have gotten to today, Mr. Speaker. Managed care reform 
is not about politics; it is about people.
  We have a responsibility to guarantee the American people top quality 
health care. We have a responsibility to protect our children from 
negligent medical decisions made by insurance companies.
  The Republican proposal that we will be debating today is simply 
profit over people. The only people in our country who are guaranteed 
immunity from their decisions are foreign diplomats and HMO officials.
  We cannot really have a Patients' Bill of Rights without access to 
specialists, a timely internal and external appeals process, point of 
service options, choice for our patients, accountability of that 
decision matter, and open communication between the patient and a 
provider; in other words, no gag rule.
  Can we honestly say that the system will protect patients without an 
enforcement mechanism, without an accountability? There is no 
responsibility.
  The Republican bill that will be voted on today never enjoyed a 
public hearing. It was drafted behind closed doors. In fact, I serve on 
the committee that would have been helping draft this bill, and we did 
have hearings over the last few months, but this bill never had a 
public hearing.
  We did not see it until late last night. Do my colleagues know why? 
Because, one, it does not end gag rules. It does not define severe pain 
as a reason a constituent of mine can go to the emergency room. It also 
does not actually provide for the point of service option that we want, 
the choice for that patient. That is easily bypassed by the HMO 
decision makers.
  The Republican bill also will decide what medically necessary is. My 
concern is we are not giving the patient and that physician or that 
provider the decision making that the Democratic bill provides; and 
that is why, later on today, we hopefully will pass the Dingell-Ganske 
bill.
  Mr. Speaker, I include the following for the Record:

            Issues of Concern in the Hastert Task Force Bill

     Does not end gag rules
       While the bill claims to end gag rules, the statutory 
     language creates a loophole that guts the protection. Under 
     the Balanced Budget Act, Medicare and Medicaid plans cannot 
     ``prohibit or otherwise restrict'' medical communications. 
     The GOP bill only refers to prohibitions. So a plan could 
     ``allow'' medical communications, but only after the doctor 
     first complies with certain restrictions (such as calling the 
     plan first and delivering the advice in pig latin). The 
     deletion of the words ``or restrict'' render this protection 
     hollow. This also creates the possibility for lawsuits over 
     whether something is a restriction or a prohibition.
     Does not define/include ``severe pain'' as a reason to get 
         ``emergency medical care
       The access to emergency care language in Medicare and 
     Medicaid contains a specific definition of what a prudent 
     layperson would think required immediate treatment: ``a 
     medical condition manifesting itself by acute symptoms of 
     sufficient severity (including severe pain) such that a 
     prudent layperson, who possesses an average knowledge of 
     health and medicine, could reasonably expect the absence of 
     immediate medical attention to result in--(1) placing the 
     health of the individual (or, with respect to a pregnant 
     woman, the health of the woman or her unborn child) in 
     serious jeopardy, (2) serious impairment to bodily functions, 
     or (3) serious dysfunction of any bodily organ or part.''
       By contrast, the GOP bill does not include ``severe pain'' 
     as a condition that health plans must cover in the emergency 
     room. The deletion is significant. For example, the American 
     Heart Association advises that anyone experiencing crushing 
     chest pain should go to the ER immediately, as that is a 
     warning sign of a possible heart attack.
       Under H.R. 4250, a health plan can refuse to pay the ER 
     bills of a man who went to the emergency room with crushing 
     chest pain but whose EKG came out negative. That might be 
     only a temporary result; he might have a heart attack when 
     the plan gives him a bill for the ER services!
     Allows the plan to decide what is ``medically necessary''
       At its heart, the debate over HMO reform is really about 
     ensuring that health care decisions are made by doctors and 
     patients, not by HMO business executives. H.R. 4250, however, 
     does not fulfill that promise. Under the disclosure section, 
     plans must inform participants of whether care may be 
     excluded because ``of a failure to meet the plan's 
     requirements for medical appropriateness. . . .'' In other 
     words, it is not the doctor and patient who decide what is 
     medically necessary; it is the plan which retains that 
     capability.
       During Commerce Committee testimony two years ago, Dr. 
     Linda Penno, a former HMO medical reviewer, described this as 
     a plan's `smart-bomb' capability. By retaining the power to 
     define what is and what is not medically necessary, the plan 
     is able to take control of health care decisionmaking.
       This is also relevant to the external appeals provisions of 
     the Hastert Task Force Bill. The review is limited to whether 
     the plan followed its own definition of medical necessity or 
     whether or not a treatment is experimental.
     Point of service provision is easily by-passed
       The most powerful argument in the health care debate is the 
     right to choose your own doctor. The GOP bill attempts to 
     respond to this by including a point of service provision for 
     closed panel HMOs (allowing patients to see providers outside 
     the network). H.R. 4250, however, contains loopholes that 
     effectively gut the provision. Employers would not have to 
     offer employees point of service coverage if they could prove 
     that this will cause premiums to rise just 1%--even if all of 
     the added costs would be borne by employees who chose this 
     option! And this ``proof'' could be prospective--meaning a 
     company would not have to offer a single employee a POS 
     option to determine its actual effect on premiums.

[[Page H6300]]

       I am concerned that it will be easy for employers to 
     ``prove'' that premiums will increase 1%. For example, one 
     study by opponents of this legislation suggested that managed 
     care reform legislation would increase premiums between 3 and 
     90%. While CBO's very low estimate of 4% should put those 
     wild allegations to bed, they show how easy it is to 
     prospectively make a doom and gloom forecast with a straight 
     face. Combine that with the fact that insurance premiums are 
     expected to take a big jump this year, and it is not hard to 
     see how health plans will be able to use the 1% threshold to 
     avoid offering their employees a choice of health care 
     providers.

  Mr. GOSS. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Iowa (Mr. Ganske).
  Mr. GANSKE. Mr. Speaker, I want to thank the Committee on Rules for 
bringing a fair rule to the floor. I intend to support it. I encourage 
all my colleagues to support the rule.
  Mr. Speaker, think about how far we have come in the last 6 months. 
Six months ago, we would have never had this debate on the abuses in 
managed care. Today we are going to have that debate.
  Let me briefly outline some of the arguments you will hear today so 
you can evaluate the competing proposals. Here is a sample of key 
protections which are not included in the Hastert task force bill, but 
are included in the substitute plan that I will offer:
  The Ganske-Dingell substitute provides patients with access to 
clinical trials. The Hastert bill does not.
  The Ganske-Dingell substitute allows doctors to override drug 
formularies when medically necessary. The Hastert bill does not.
  The Ganske substitute provides for ongoing access to specialists for 
chronic conditions. The Hastert bill does not.
  The Ganske substitute prevents plans from giving doctors financial 
incentives to deny care. The Hastert bill does not.
  The Ganske substitute has hospital stay protection for mastectomy 
patients. The Hastert bill does not.
  The Ganske substitute provides choice for doctors within the plan. 
The Hastert bill does not.
  The Ganske substitute has a provision for guaranteeing continuity of 
care when providers leave the network. The Hastert bill does not.
  The Ganske substitute requires plans to collect quality data or to 
maintain quality improvement programs. The Hastert plan does not.
  There are other significant provisions in the Hastert bill that are 
of significant concern. The Hastert bill allows a plan to decide what 
is medically necessary. The Hastert bill requires enrollees to spend 
their own money to secure an independent review.
  Finally, I would draw your attention to the HealthMart and MEWA, 
Multiply Employee Working Association, provisions which could make it 
more difficult for States to fund high-risk pools and other programs to 
help keep health insurance affordable. I am glad to support the rule. I 
look forward to the debate today.
  Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from 
Michigan (Mr. Stupak).
  Mr. STUPAK. Mr. Speaker, I thank the gentleman for yielding to me. I 
am going to oppose this bill today and I am going to oppose the rule 
here today, because we are going to have 2 hours, basically, to debate 
this bill.
  I think it shows the insensitivity of this rule, insensitivity to 
basic rights that every American demands, and insensitivity to a basic 
understanding to health care in this Nation.
  We as parents, we all know the world stops when a child falls ill. As 
sons and daughters, we want the best for our parents when they need 
health care. As husbands and wives and brothers and sisters, when a 
family member is stricken, we insist that nothing comes between that 
patient and their health care. We want the best possible treatment. 
Unfortunately, the Hastert bill does not provide it.
  That is what health insurance is supposed to be about. We pay for it, 
we have it, and we want it when we need it. The doctors, the nurses, 
the hospitals, the emergency room, the medicine, we want whatever it 
takes to get our child, our parents back healthy again. That is how it 
used to be.
  But in the last years, millions of Americans have moved into managed 
care plans, and something got in the way. Priorities were shifted from 
patients to profits. Emergency room crises were compromised by 
boardroom considerations. Professionals in white lab coats start taking 
orders, not from doctors, but insurance bureaucrats. The delivery of 
top-notch health care became less important; and the bottom line, 
profit.
  When we take a look at the bill today, we will see that the 
Democratic bill, the Ganske-Dingell bill is the only one that will get 
the job done for us when we pay for health care and we demand quality 
care.
  The Democratic bill is designed to provide medical coverage. Medical 
professions will be back in control of medical decisions. Emergency 
care in an emergency, no questions asked, underneath the Democratic 
plan. Expedited appeals process to approve the care we deserve before 
it is too late. Access to a specialist when you need it.
  I hope we will defeat this rule and put some time into the Democratic 
plan.
  Mr. GOSS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would note to the gentleman who just spoke that we 
have tried very hard to accommodate all the schedules. It is a busy 
time of year. But surely our plan is more sensitive for the debate of 
this important issue than the discharge petition that they have 
provided for.
  Mr. Speaker, I am very pleased to yield such time as he may consume 
to the distinguished gentleman from Illinois (Mr. Hastert), the leader 
of the Speaker's task force on health care.
  Mr. HASTERT. Mr. Speaker, today is an important day for American 
families. Today we will take a step forward to strengthen the Nation's 
health care system. Today we will debate and vote upon the House 
Republican-sponsored Patient Protection Act.
  Our legislation is the only proposal on the table that truly protects 
patients and guarantees choices without the heavy hand of big 
government. Specifically, our bill guarantees patients have increased 
access to affordable health care they need when they need it most by 
holding insurance companies accountable.
  How? Our proposal guarantees the unprecedented expedited review 
process internally and externally. We want patients to receive the care 
they need first rather than be thrown into a long, drawn-out legal 
process controlled by lawyers after harm or death has occurred. 
Patients should be treated in hospital rooms, not courtrooms.
  Besides true accountability, our plan has another major advantage 
over other proposals in this Congress. The Patient Protection Act is 
the only bill which will help cover the 42 million uninsured working 
Americans.
  We create new initiatives to guarantee more access to affordable 
health care choices. Association Health Care Plans, HealthMarts, 
Community Health Organizations, and Expanded Medical Savings Account 
help employees and employers work together to provide the coverage that 
best meet their need.
  As a matter of fact, just this week at a news conference, the Senate 
minority leader Tom Daschle was asked, ``What does the Democrat plan do 
for the uninsured?'' His response, ``Not much.'' At least he was 
truthful.
  I hope my colleagues on the other side of the aisle today are just as 
forthright and resist the temptation to distort the facts about what is 
in the House Republican plan. We truly believe that high quality health 
care depends upon the patient-doctor relationship.
  Personally, I believe that doctors owe their patients the benefit of 
their education, the benefit of their experience, and the benefit of 
their good judgment. Medical decisions should be decided by doctors, 
not by insurance company bureaucrats.
  We prevent health plans from gagging doctors for explaining the full 
range of treatment options available no matter what the cost, no matter 
if the other options are covered by the plan or not. We also ensure 
patients have ready access to emergency room care and prohibit their 
health plan from arbitrarily refusing to pay for it. We guarantee that 
women and children have direct access to their doctors without having 
first going to the insurance company gatekeeper.

[[Page H6301]]

  Our proposal will also empower patients and doctors through 
information. It creates new access to plan coverage information while 
also protecting individual patient records from abuse through new 
confidentiality requirements.

                              {time}  0930

  Access to affordable health care is a fundamental patient protection. 
Without affordability, you cannot have accessibility, nor, for that 
matter, health care coverage at all. As you can see, we are protecting 
patients and guaranteeing choices, without the heavy hand of big 
government.
  Mr. Speaker, we must have a comprehensive approach to meeting 
America's health care needs. Our Patient Protection Act is the only 
proposal before Congress that increases accessibility, affordability 
and accountability in our health care system. I urge my colleagues to 
support this rule so we can deliver the health care reform that 
Americans need.
  Mr. FROST. Mr. Speaker, I yield three minutes to the gentleman from 
New Jersey (Mr. Pallone).
  Mr. PALLONE. Mr. Speaker, I do want to first thank the gentleman from 
Michigan (Mr. Dingell) and the gentleman from Iowa (Mr. Ganske) and the 
members of the Democratic Health Care Task Force and all those who 
worked very hard to make sure that this substitute came up today. The 
discharge petition effort, which I think has over 190 Members, and 
other efforts to appear before the Committee on Rules finally brought 
fruit, I think, and made it possible for us to bring the substitute up 
today, and that hard work, I believe, paid off.
  In my view, there is nothing more important in the managed care 
debate than giving patients the right to hold their HMO accountable 
when they are denied the care they need. Any legislation that fails to 
give patients that renders the protections within it absolutely 
meaningless. The Patient's Bill of Rights includes an enforcement 
mechanism which ensures patients will finally get that right. Our bill 
repeals the ERISA exemption, the 1974 law which shields HMOs from being 
sued if they deny people needed care.
  The other bill we are considering today, the Republican bill, does 
nothing to hold HMOs accountable for their actions. If not only leaves 
ERISA essentially intact, it actually exacerbates the problem. Its 
external appeals process only applies to people whose insurance comes 
under ERISA. Individuals in the private insurance market are left 
without any external recourse when they are denied care. What is even 
worse is that those who are fortunate enough to be covered by ERISA are 
subject to the HMO's definition of ``medical necessity.''
  The Republican bill allows HMOs, and not doctors and patients, to 
define ``medical necessity.'' This provision, of course, flies in the 
face of the whole idea of managed care debate, that medical necessity 
should be the determinant of whether or not a patient needs care and 
not cost considerations. It all but guarantees that insurance company 
bureaucrats will continue to make medical decisions and people will 
continue to be denied care because of it.
  I also want to dispel a myth that my Republican colleagues have been 
working overtime to spread. The Patients' Bill of Rights does not 
create any new Federal legislation. Repealing the ERISA exemption would 
simply allow patients to go back to their states, where individuals 
would normally bring suit. In other words, the Patients' Bill of Rights 
does not create a new Federal remedy. Its approach is essentially 
states' rights by repealing a Federal preemption.
  Another piece of propaganda the Republicans have been actively 
spreading is the charge that the Patients' Bill of Rights provides for 
employers to be sued for medical malpractice. This is patently false. 
In fact, the Patients' Bill of Rights specifically excludes employers 
from liability. Any employer can only be held liable if they intervene 
in a medical decision that leads to injury or death.
  Mr. Speaker, President Clinton recently said that ``a right without a 
remedy is not a right,'' referring to HMOs. If you want good patient 
protections, and, just as importantly, enforcement of those 
protections, vote ``yes'' on the Patients' Bill of Rights and vote 
``no'' on the Republican bill.
  Mr. GOSS. Mr. Speaker, I yield two minutes to the distinguished 
gentleman from Kentucky (Mr. Bunning).
  (Mr. BUNNING asked and was given permission to revise and extend his 
remarks.)
  Mr. BUNNING. Mr. Speaker, I rise in strong support of the rule and 
the Patient Protection Act. This bill is a well-crafted piece of 
legislation which addresses many of the problems facing our Nation's 
rapidly changing health care system.
  What the bill does makes it worth supporting. It strengthens health 
care plan accountability by providing a system of reviews and appeals, 
to make sure that Americans who have health insurance get the care they 
need when they need it; it guarantees patients' choice by ensuring a 
point of service option, so that patients have the freedom to see the 
provider of their choice; it expands the availability and affordability 
of health insurance for millions of Americans through the creation of 
HealthMarts and Association Health Plans, by creating Community Health 
Center networks, and by expanding Medical Savings Accounts; it 
guarantees the right of patients to emergency room service; it 
guarantees the right of women to have direct access to their OB-GYN; it 
guarantees parents the right to direct access to pediatricians for 
their children.
  These are much-needed improvements, and they are the one big reason 
to support the Patient Protection Act, the things it does.
  But there is another reason to support the Patient Protection Act, 
and that is what it does not do. It does not load down the health care 
system with a new layer of bureaucracy; it does not guarantee an 
explosion of unnecessary costs and costly litigation, it puts people 
into care, and not into courtrooms; and it would not increase the cost 
of health care dramatically, like the Patients' Bill of Rights would 
do.
  Mr. Speaker, it is a very good piece of legislation because of what 
it does, and even because of what it does not do.
  I urge my colleagues to support the Patient Protection Act.
  Mr. FROST. Mr. Speaker, I yield two minutes to the gentlewoman from 
the Virgin Islands (Ms. Christian-Green).
  Ms. CHRISTIAN-GREEN. Mr. Speaker, I thank my colleague for yielding 
me time.
  Mr. Speaker, I rise in support of the Ganske-Dingell bill. As a 
physician who has practiced medicine for more than 20 years, I know 
well many of the troubling aspects of the industry, particularly as 
they affect minorities. That is why I rise today to support the Ganske-
Dingell bill and to bring to this body's attention and to the attention 
of the American people an issue which might not be discussed today, the 
discrimination of African-American physicians and patients by managed 
care plans.
  Because minority physicians often serve poorer, sicker and are often 
solo practitioners and not a part of a group that makes a tidy profit 
each year, we do not make attractive candidates for inclusion into 
managed care plans.
  Similarly, because minority patients are often uninsured and receive 
medical assistance from programs such as Medicare and Medicaid, they 
are also not attractive sources of revenue to such plans as well. As we 
seek to reform the managed care industry, we must not forget the 
concerns of minorities in this effort and their struggle to have their 
health care needs addressed.
  My friends in the majority must stop playing politics with the lives 
of the American public and pass the Patients' Bill of Rights. The 
people who put us here and depend on us have asked us for and deserve a 
better health care delivery system. The Ganske-Dingell bill does that. 
I urge its passage. Let us put the ``care'' back in health care.
  Mr. FROST. Mr. Speaker, I yield three minutes to the gentleman from 
Texas (Mr. Doggett).
  Mr. DOGGETT. Mr. Speaker, before coming to this Congress, I worked 
each day in a much different place, in a courtroom, as a judge on the 
highest court in Texas. I was called a justice, as were my colleagues, 
and asked to do justice. And yet, time after time, I found my hands and 
those of my colleagues tied by a Federal law.
  We saw victims of injustice, who had suffered not only some grievous 
loss in

[[Page H6302]]

terms of an illness or an injury, but the same families who suffered 
abuse at the hands of insurance companies, and, because of a law that 
was passed in this National capital, we were powerless to do anything 
about it.
  Recently the State of Texas became the first state to pass a new law 
to try to hold these managed care companies accountable for what they 
were doing. And, wouldn't you know it, the same insurance companies 
that used to come into my court went into another court to try to block 
this new state accountability law.
  Today that same group of health care companies finds willing allies 
over here from the Republican leadership to help them continue to do 
the very same thing. They are folks who would deny help to the infirm. 
What is happening here is much like a firefighter, who sometimes builds 
a small fire in order to stop a much larger fire. There is a fire of 
outrage burning across this country, as one family after another 
suffers abuse and limitation of care at the hands of managed care 
companies.
  So the Republican leadership has come forward today in a very 
contrived fashion. They tried to provide the least amount of reform 
possible and still call it ``patients rights,'' while doing essentially 
nothing to untie the hands of judges all across this country to provide 
a remedy.
  Mr. Speaker, they say that what they are about is providing help to 
patients and not getting lawyers in the process. But, you know, that is 
false under their whole procedure. They keep lawyers involved in the 
process. They keep them involved only for the insurance company, not 
for the victim of the insurance company's abuse. They say that it is 
okay to have the lawyers that write the loopholes, that counsel the 
insurance companies to interfere with some clerk, who never had any 
health care experience, in the best recommendations of a physician or 
other health care provider to help that physician's patient get well. 
But Republicans would deny any enforcement, any accountability, for 
that insurance company.
  They say they are opposed to getting juries involved in this process, 
and that is also false. They simply leave the only jury as not a jury 
of one's peers, but an insurance company, that acts as judge, jury and, 
in too many cases, executioner when it comes to providing health care. 
We would remedy that through the Dingell proposal, not through some 
election year sop.
  Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Connecticut (Ms. DeLauro).
  Ms. DeLAURO. Mr. Speaker, I rise in support of the Ganske-Dingell 
bill and truly relish this debate. I truly wish we had more time for 
it.
  Today we are going to vote on a Republican sham HMO reform bill which 
actually leaves patients with less rights than they have under current 
law.
  Let me give you an example. The GOP bill will repeal state laws that 
keep HMOs from giving out your private medical records. Under this 
Republican proposal, your employer could call for your medical records 
and your HMO could release your personal medical records without your 
permission.
  But the worst thing about this political charade is that the 
Republican bill does not address the one problem that millions of 
Americans have asked us to fix, that doctors and patients should make 
medical decisions, not insurance company bean counters.
  Under the GOP bill, HMOs will continue to define what is medical 
necessity and accountants will continue to decide what medical care 
Americans ought to receive. And if some HMO bureaucrat with no medical 
training makes a mistake that injures or kills you or a member of your 
family, you have no legal recourse. The GOP bill says, too bad, and 
tough luck.
  This is a sham bill, and that is why the American Medical Association 
and dozens of other medical groups oppose it, and why the HMO companies 
support it. It has no protections and no enforcement mechanism. That is 
why the President has said he will veto it.
  Let us pass real reform for the American people in this country. That 
is what they want, that is what they need. Pass the Democratic 
Patients' Bill of Rights. It is the way that we need to address the 
serious issue of getting back the decisionmaking between doctors and 
patients, and out of the hands of the HMOs.
  Mr. GOSS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, regrettably, the last speaker has been victimized by 
misinformation in the paper, in the Washington Post this morning, as 
have other Members. When we get to the debate we will explain that much 
of what was presented was incorrect.
  Mr. Speaker, I yield 3 minutes to the distinguished gentleman from 
Missouri (Mr. Talent), a member of the special task force.

                              {time}  0945

  Mr. TALENT. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  I am very pleased to rise in strong support of the Patient Protection 
Act because it is the only bill on the House floor today that will 
provide health care coverage to millions of people, hard-working 
Americans who currently do not have it. It is the only bill that will 
ensure that Americans who have health care coverage get the coverage 
their physician recommends when they need it, before they get sick, and 
it is the only bill that does what it does without big government and 
big bureaucracy.
  First, access to the uninsured. Mr. Speaker, there are 42 million 
Americans today who do not have health care coverage. Most of them work 
for small employers who, because of the high administrative costs and 
the low buying power with small pools, cannot afford to provide them 
health insurance. If they worked for IBM, they would have access to a 
variety of different options.
  So what our bill does is allows those small employers to pool 
together and get the buying power of a pool. It will cover millions of 
people with good, private sector health insurance and provide many more 
choices to millions of those who currently only have one choice or two.
  What does the Dingell bill do? What does it do for the uninsured? 
Well, according to a cosponsor from the other body, not much. In fact, 
the ``not-much'' plan is worse than not much, because according to the 
CBO, it will drive costs up to the point that 1.6 million people who 
now have health insurance will be thrown off the health insurance 
rolls.
  Our bill also ensures that people will get the care they need when 
they need it, and does it without big government. It provides swift, 
certain, low-cost access for somebody whose physician has recommended 
care whose plan has turned it down to get that decision reversed. First 
internal review has to be before a physician, not a health care 
professional, not a nurse. That is a difference from the Dingell bill.
  Second, automatic appeal has a right to an external review before 
physicians. The Dingell bill does not have that. We get people in the 
treatment rooms, not waste billions of dollars that should be spent on 
health care in the courtrooms.
  Mr. Speaker, all of us who have dealt with this issue have dealt with 
the stories about people who have needed coverage and have had it 
denied by their managed care plans. Those are not just horror stories, 
they are horrible stories. Tales of human misery, of pain, of loss of 
babies, loss of limbs; that should not happen. Under our bill and only 
under our bill those stories would not have happened and will not 
happen in the future.
  That is what this debate today is about, that is what this bill is 
about. It should not be about politics, it should not be about an issue 
for November; it should be about helping the people to get the care 
that they need when their physician recommends it. That is why I rise 
in strong support of the Patient Protection Act.
  Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Texas, (Ms. Eddie Bernice Johnson).
  Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, it is ironic that I 
stand here and know so well that every taxpaying American has paid for 
much of the research that persons now are denied the result of.
  I wish this was not such a partisan area, because we are dealing with 
the most basic need and right of the American people, and that is 
health care. No insurance company has the right to only insure young, 
healthy people.

[[Page H6303]]

  I have heard all kinds of rhetoric about the bureaucracy. The 
bureaucracy rests with the insurance companies who are doing everything 
they can to deny care so that health care premiums can be used as cash 
cows. That is most unfortunate. Can we imagine someone who goes to an 
emergency room, very ill, very confused and frightened, and then be 
told they have to wait to get permission to take care of them. That is 
where we are today.
  I do not understand, frankly, how we can become so committed to an 
industry, the insurance industry, that we forget that we are here to 
protect people.
  Mr. Speaker, I rise against this rule because I do not want it to 
continue to gag physicians who have been educated and trained to take 
care of patients. I do not want to support a system that only makes 
money for the insurance companies. It has been never intended that 
health care services be cash cows for insurance companies.
  This is a terrible rule. I hope we all understand that the people are 
crying out for help. They do not mean help the insurance companies. 
They want help themselves.
  We owe it to the American people to offer them this protection. We 
have failed to do it with this Republican plan, and I rise against this 
rule and ask everyone to vote against it until we can produce a decent 
plan.
  Mr. GOSS. Mr. Speaker, I yield myself such time as I may consume to 
say to the gentlewoman that I hope she will be relieved to find when 
she reads our bill that we have, in fact, removed the gag order.
  Mr. Speaker, I yield 1 minute to the distinguished gentleman from 
Texas (Mr. Paul).
  Mr. PAUL. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  I rise in support of the rule. Under the circumstances, the rule is 
very fair. It offers an opportunity for our side to vote for the 
Patient Protection Act as well as a vote for the opposition. I think 
that is quite fair, so I strongly support the rule.
  I would like to call to the attention of my colleagues one particular 
part of our bill that I think is very important and addresses a problem 
I see as being very serious.
  In 1996, the Kennedy-Kassebaum bill allowed for a national identifier 
and a national data bank to control all our medical records at a 
national level. This is very dangerous. In a bill that is called the 
Patient Protection Act, obviously the best thing we can do is protect 
patient privacy. If we do not, we interfere with the doctor-patient 
relationship, and this is a disaster.
  This whole concept of a national identifier--the administration is 
already working to establish this--is dangerous and we must do whatever 
is possible to stop it.
  I compliment the authors of this bill to prohibit this national 
medical data bank.
  Mr. FROST. Mr. Speaker, I would inquire about the time remaining.
  The SPEAKER pro tempore (Mr. LaHood). The gentleman from Texas has 11 
minutes remaining and the gentleman from Florida has 10 minutes 
remaining.
  Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Ohio 
(Mr. Traficant).
  Mr. TRAFICANT. Mr. Speaker, I support the rule; I also support the 
Democrat substitute, and if it fails, I will support the Republican 
bill. Both bills are better than the current system, and the need for 
reform is greater than Democrat and Republican posturing.
  Doctors should make decisions on our health care, not businessmen. 
Patients should be able to choose the doctor they want. Insurance 
companies and business managers without medical degrees should not be 
delivering our health care system.
  Mr. Speaker, I say to my colleagues, this current system is not 
managed care; this system in America is managed cost. Dollars are all 
they see, not pain, not disease, not people, not children, not cancer, 
not cures; they see dollars.
  The Congress of the United States is appropriately making necessary 
changes today, and these business people have to understand that the 
American people want a doctor, not an accountant, when they have a gall 
bladder problem, I say to my colleagues. And hospitals should not be 
throwing them out because of dollar concerns; it should be predicated 
on sound medical practice.
  It is a shame when Congress has to intervene, but America has gone 
from the Hippocratic oath to hypocrisy in a managed cost health care 
system.
  I will support whatever survives; it is better than the animal that 
still lives.
  Mr. GOSS. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Kentucky (Mrs. Northup).
  Mrs. NORTHUP. Mr. Speaker, I am glad to be a part of this debate. In 
my previous life I was part of the Kentucky General Assembly, and while 
they were altruistic legislators that created the disaster that we had 
in Kentucky, the fact is that that is exactly what they created, a 
terrible disaster.
  We had what would be proposed today by the Democrats in the term of 
health care reform, and what it created were enormously escalating 
prices, prices that escalated so fast that we tried to intervene by 
capping the prices of our insurance premiums. What did that do? It 
chased 45 out of 47 of the insurance companies that were selling 
insurance in Kentucky right out of the State.
  So what did our consumers in Kentucky get left with? They got left 
with higher prices for insurance, they got left with higher copayments, 
and they got left with fewer choices.
  I am so proud to be here today, to be part of an effort to give the 
American people what they really want. What do they want? They want 
essential medical services. They want them to be affordable, both the 
insurance and the copayments, and they want more choices. We are taking 
a giant step in that direction today.
  What we are doing is helping make sure that medical money stays in 
medicine. The American people resent the fact that they pay for their 
insurance, that their employer contributes to their insurance, and they 
make copayments, and a tremendous amount of that money gets diverted to 
lawyers, to court costs, to liability costs and to administrative 
costs.
  We need to make sure that all the money we spend in medicine, 
understanding that there is a finite amount of money that gets spent on 
good health delivery, for patients when they need it.
  We need to make sure that we do not create a bill that has so many 
mandates in it that we begin to say to the American people, you are 
going to pay more and more because we know what you need and want, not 
you. I thank the task force for creating this opportunity.
  Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from 
Maryland (Mr. Cardin).
  Mr. CARDIN. Mr. Speaker, I thank my friend from Texas for yielding me 
this time.
  Mr. Speaker, this is one of the most important issues that we are 
going to deal with in this Congress, how we provide patients protection 
in the health care system of this country. I am outraged, and I hope my 
colleagues are outraged, by the process that we are using in 
considering this legislation.
  There have been no hearings on the Republican bill. It did not go 
through any of the committees of jurisdiction for the purpose of markup 
or to try to get the drafting done correctly, and no wonder that this 
bill is drafted so poorly. My Republican colleagues did not get it 
right. It is not going to do what they are advertising.
  Let me just give one example. H.R. 815, which I introduced many, many 
months ago, deals with access to emergency care. We have 240 cosponsors 
of that legislation that adopts the prudent layperson standard so that 
an HMO has to reimburse a patient who should go to an emergency room. 
We passed it last year for Medicare and Medicaid, and yet the 
Republican bill does not get it right. It does not include pain. So if 
one has severe pain and reasonably should go to an emergency room, 
one's HMO can deny coverage. That is wrong. Even the HMOs acknowledge 
that pain is a reason to go to an emergency room. But my Republican 
colleagues did not put it in their bill and they did not allow a 
correction to be made. That is wrong.
  Let me give another example. My Republican colleagues brag about an 
external appeal process, that they are giving the patients the right to 
take an

[[Page H6304]]

appeal, but what they are not saying is they did not get that right. 
The decision is not binding on the HMO. It is not independent. The HMO 
gets to select the people that serve on the panel. My Republican 
colleagues did not get it right.
  There is legislation that has been filed that deals with external 
appeal, but my Republican colleagues did not bother taking it through 
the committees so that we could have that debate.
  I urge my colleagues to adopt the bipartisan bill, which is our only 
chance today to provide meaningful patient protection.
  Mr. GOSS. Mr. Speaker, I thank the distinguished gentleman from 
Maryland (Mr. Cardin), my friend, who is indeed my close friend. I did 
not get it exactly right in describing our bill as the debate will 
show, but that is why we have the debate.
  Mr. Speaker, I yield 2 minutes to the gentleman from Ohio (Mr. 
Boehner).
  (Mr. BOEHNER asked and was given permission to revise and extend his 
remarks.)

                              {time}  1000

  Mr. BOEHNER. Mr. Speaker, in just 3 years this Congress has delivered 
the first balanced budget in a generation, the first tax cuts from 
Washington in 16 years, and real reforms that are improving the lives 
of many who are on welfare today as they are able to move from welfare 
to work.
  Today we are going to move in a bipartisan fashion to continue to add 
to our record of success and an opportunity to help the American 
people.
  As I travel around my district, I have had many conversations with my 
constituents who are concerned about access to good-quality health 
care. As much as they want access, they are also concerned about making 
sure that it is affordable.
  As I look at the two pieces of legislation that we are going to 
debate today, it is clear to me that the bill brought to us by the task 
force, headed by the gentleman from Illinois (Mr. Dennis Hastert), is a 
bill that does that. It empowers consumers, not lawyers. It makes sure 
that health care continues to be affordable and accessible for all 
Americans.
  I think, in the end, that is what people want. They do not want to go 
to court. They want to be able to go to the doctor. They want to be 
able to get the treatments they need. And I think the empowerment that 
we see in our piece of legislation is exactly that.
  The other bill that we will be debating, the proposal by the 
gentleman from Michigan, in fact creates an awful lot of big 
government, an awful lot of access to lawsuits and to lawyers and to 
courts, driving up the cost of health care. My greatest concern about 
the proposal from the gentleman from Michigan is that, by opening up 
employers to the lawsuit abuse that could occur, many employers in 
America are going to say we are not going to be providing health care 
coverage to our employees anymore.
  I know myself, as a small employer, I would not continue to offer 
health care to my employees if I am subject to being sued by doctors, 
who may be on solid ground, maybe not. I am going to give them a 
voucher and let them go fight for their own.
  I do not think that is what the American people want. They want 
reasonable access, reasonable cost to good-quality care.
  Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
North Carolina (Mrs. Clayton).
  (Mrs. CLAYTON asked and was given permission to revise and extend her 
remarks.)
  Mrs. CLAYTON. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  When a child has a disease that can be cured, should the decision of 
whether to provide needed treatment be made by a doctor and the child's 
parents or by bureaucrats who are counting dollars and cents?
  When a wife or mother has had a mastectomy and the procedure has not 
yet worn off, should she be forced to leave the hospital because of a 
rigid routine for saving dollars rather than saving lives?
  When a husband and a father is unable to get prior approval from the 
insurance who he is paying for an emergency, should he be required to 
pay that medical bill himself?
  When a grandfather is stricken with a life-threatening stroke, should 
the person transporting him be required to pass a hospital that is 
closest to him to go to one that is further away because a narrow-
thinking person is more interested in saving dollars than, again, in 
saving lives?
  H.R. 3605, which is the Patients' Bill of Rights, the Democrat 
substitute, indeed speaks to a number of basic rights that all of these 
patients that I just described should have and not have to suffer. The 
Republican bill, H.R. 4250, does not.
  Many of the patient rights that we are talking about indeed does mean 
that a patient should have a right to sue. A patient should have a 
right to indeed hold us accountable for our liabilities and our rights. 
The patient should have a right to choose their doctor. A patient 
should have a right to choose other professionals that they desire.
  H.R. 3605 does provide open communication. Although those on the 
other side say the gag clause is in there, I cannot find it. So I urge 
my colleagues to support the Patients' Bill of Rights, the Democratic 
substitute.
  Mr. GOSS. Mr. Speaker, I yield 1 minute to the gentleman from Florida 
(Mr. Weldon), my colleague.
  Mr. WELDON of Florida. Mr. Speaker, I thank the gentleman for 
yielding me this time.
  As a physician who still practices medicine, I rise in strong support 
of this rule. I have worked in managed-care settings and I have worked 
in fee-for-service settings. The important issue here is can we, in 
Washington, pass legislation that will help restore the doctor-patient 
relationship and, importantly, help restore quality health care within 
managed-care networks?
  Now, my good friends on the Democrat side of the aisle have their 
bill; we have our bill. We are going to have a very interesting debate 
here this morning. I think the important issue, which speaks of how 
much better our Republican bill is, is the fact our bill is the bill 
that is not going to drive up costs, where the Democrat bill will; and, 
importantly, our bill is going to enable people who are uninsured to 
have access to health care and help them to more easily afford health 
care.
  I would encourage all my colleagues to support this rule. Listen to 
the debate during general debate and the debate on the amendments and, 
in the end, I believe our bill is going to pass. Our bill is the better 
bill for restoring quality, for restoring the doctor-patient 
relationship, for reducing cost and giving the uninsured better access 
to health care.
  Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Texas 
(Mr. Turner).
  (Mr. TURNER asked and was given permission to revise and extend his 
remarks.)
  Mr. TURNER. Mr. Speaker, it has been suggested that the Republican 
bill is better, a better protection for patients. I submit to my 
colleagues that the Republican bill is worse protection for patients 
than exists in current law in most of our States.
  I come from Texas. The Texas legislature passed patient protection 
legislation in 1977, fully intending that all HMOs be covered by the 
protections of State law.
  The Republicans submit a bill today that would control patient 
protections at the Federal level. It would set out a set of rules that 
are far inferior to those in the Democratic alternative.
  On the Republican bill, if the HMO denied coverage, the only remedy 
would be to go, if an individual is in a self-insured plan, to Federal 
Court. And when that individual gets there, they will not have a 
remedy.
  In 1971, Phyllis Cannon was diagnosed with leukemia. She appealed to 
her HMO for a bone marrow transplant. The HMO refused. For over 40 days 
the HMO refused coverage. About a month after that, she died.
  The court ruled that, under ERISA, she had no recovery. Under the 
Republican bill today, she would be entitled, her estate, to $20,000, a 
small price for a life, the denial of treatment. Under the Republican 
bill, the penalty is $500 a day. A much cheaper alternative for an HMO 
than providing the treatment that should have been provided to Phyllis 
Cannon.
  I submit to my colleagues that every Member of this House needs to 
look at

[[Page H6305]]

what their State has done to protect patients, because a vote for the 
Republican bill is rolling back the protections that most of our States 
have already provided for patients under the law. In every place in 
this country, protecting patients enrolled in HMOs has been a 
bipartisan effort. Only in Washington is patient protection partisan.
  Mr. GOSS. Mr. Speaker, may I ask for an accounting of the times 
again?
  The SPEAKER pro tempore (Mr. LaHood). The gentleman from Florida (Mr. 
Goss) has 6 minutes remaining and the gentleman from Texas (Mr. Frost) 
has 3 minutes remaining.
  Mr. GOSS. Mr. Speaker, I yield 3 minutes to the gentlewoman from Ohio 
(Ms. Pryce), who is also a member of the task force as well as a member 
of leadership.
  Ms. PRYCE of Ohio. Mr. Speaker, I thank my friend for yielding me 
this time, and I rise in strong support of this rule. And as a member 
of the working group on health care quality, I first want to thank our 
chairman, the gentleman from Illinois (Mr. Denny Hastert), for his 
patience and expertise and many hours of hard work that got us here 
today.
  Mr. Speaker, the Patient Protection Act is the only managed care 
reform bill that goes beyond patient protection to address the issues 
of access and affordability of health care. Not only does this bill ban 
gag rules, provide emergency room access, and guaranty a choice of 
provider, it increases the number of people with insurance. It does 
that by helping small employers purchase affordable health benefits for 
their employees.
  Now, it is nice to talk about quality. We all want the best health 
care we can get. But A-plus care does not help if we cannot afford to 
buy it. The Democrat proposal would price many, many people out of the 
market. We all know that more requirements, regulations, and government 
is not going to make insurance any cheaper. Rest assured, more 
government largess is just what we will get with the Democrat health 
bill.
  Now, liability has become the rallying cry for the opponents of the 
Patient Protection Act. And the health care working group discussed 
this issue at length and came to some very rational conclusions. As a 
former judge, I think the solution we provide meets every legitimate 
goal of liability reform. The bottom line is that Americans pay a 
pretty sum for their health insurance and they expect it to cover the 
health care that they need when they need it. That is the crux of this 
debate.
  Patients do not want bureaucrats denying their access to care; and 
when a claim is denied, patients want a quick remedy that relies on the 
opinion of a medical professional. But my Democratic colleagues would 
tell these dissatisfied patients that they must hire a lawyer and they 
send them off to court.
  Mr. Speaker, what the Democrats fail to understand is that patients 
do not want a lawyer, a court date and expensive litigation. They want 
a doctor, a diagnosis, and treatment their doctor tells them that they 
need.
  The Republican bill will get them that care by guaranteeing patient 
access to expedited review by independent medical experts. The 
Republican plan keeps patients out of court and in the health care 
system, and it requires the health plans to provide the coverage that 
they are promised.
  The expedited appeals process in the Patient Protection Act gives 
patients the leverage they need to quickly get the care they deserve 
without going to court and waiting through years and years of 
litigation. I urge my colleagues to support patients, not lawyers' 
paychecks, and vote for this rule and the Republican Patient Protection 
Act.
  Mr. FROST. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Texas (Ms. Jackson-Lee).
  (Ms. JACKSON-LEE asked and was given permission to revise and extend 
her remarks.)
  Ms. JACKSON-LEE of Texas. Mr. Speaker, this is the real face of 
health care in America: A young boy who had a difficult birth and 
developed cerebral palsy. And at age 14 months the bureaucrats from the 
HMOs, the ones who are there just to ensure that those who need care do 
not get care, denied this young boy speech therapy and other kinds of 
therapies that he needed to have a better life.
  Americans know the real deal. They understand what it means as they 
travel around this summer on vacation and something tragic happens and 
they go to an emergency room away from their State and that emergency 
room, because the HMO says they cannot come in, sends them away. They 
understand when a little one falls from a tree playing in the back yard 
and has pain; and the emergency room, because of the HMO, says no 
because all they have is pain as evidence of their injury and the HMO 
says pain is not enough.
  I would say to my colleagues, Mr. Speaker, the real Bill of Rights is 
that of the Democrats, and that is what we need to support today. It is 
bipartisan, it is for real, it will the right health care coverage and 
the American people know the real thing.
  Mr. FROST. Mr. Speaker, I yield the balance of my time to the 
gentleman from Maryland (Mr. Hoyer).
  (Mr. HOYER asked and was given permission to revise and extend his 
remarks.)
  Mr. HOYER. Mr. Speaker, the gentlewoman from Ohio (Ms. Pryce) said 
what the Democrats know. Let me tell my colleagues what the Democrats 
know. When people commit wrongs, they do not want to be held 
accountable, and the Republicans are making sure that is true.
  I rise today in opposition to H.R. 4250, the bill that my friends on 
the other side of the aisle claim reforms managed care. The previous 
speaker, the chairman of their conference, said what the Republican 
Congress had brought as it pertains to a balanced budget. We will argue 
that some other time. The fact is, this Congress has not brought hardly 
anything to the American public.

                              {time}  1015

  It is the do-nothing Congress.
  This bill is on the floor today because a discharge petition was 
signed by the gentleman from Iowa (Mr. Ganske) and the gentleman from 
Michigan (Mr. Dingell) and about 190 others of us, and says, we want a 
health care reform bill on this floor. That is the reason it is here 
and the only reason we are here today.
  I rise in strong support of the substitute offered by the gentleman 
from Iowa (Mr. Ganske), a Republican and a doctor, and the gentleman 
from Michigan (Mr. Dingell), the former Chairman of the Committee on 
Commerce, now Ranking Member, and the next Chairman of the Committee on 
Commerce.
  The Republicans have chosen to support H.R. 4250, the so-called 
``Patient Protection Act.'' They bring this bill to the floor today 
with no hearings, no mark-ups, and no CBO estimate. In other words, 
they were so panicked by the discharge petition, that they brought it 
to the floor without the regular process.
  Mr. Speaker, the American public wants access to health care. The 
American public wants decisions made by their doctors and by 
themselves, not by, as all of us have said, insurance companies. They 
are right. But the American public will not be fooled as to which 
alternative gives them protection, as to which bill gives them access, 
and as to which bill allows them to hold accountable those who undercut 
their health care protection.
  My colleagues, I ask you to support the Democratic substitute, the 
Republican substitute, supported by Members on the other side of the 
aisle, the Ganske-Dingell substitute, supported by Members on the other 
side of the aisle, which does in fact do what everybody says they want 
to do.
  Mr. GOSS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, this debate has been on the rule. Very clearly, we have 
not heard much concern about the rule, with some question about 
sensitivity by one speaker. But I do believe we have got a better 
process here than a discharge petition. And I think we will have a 
fair, longer, more extensive, complete, and deliberative debate at a 
result of this rule. And I do urge that everybody support it. I 
honestly do not think it is controversial in any way.
  What we are doing today is responding to the call of all American 
people for improvements in our health care system but particularly for 
those who have no health care insurance. We are

[[Page H6306]]

not responding to the interests of any special groups or any special 
parties. And there are plenty of those who are asking for special 
attention. I think we have responded to America, to the people of 
America, who need health care.
  We are doing this in the same spirit that we resolved the job lock 
and portability problems, the preexisting condition problems. We are 
doing this in same way that made the trust fund whole in Medicare. We 
are addressing the problems in our country in health care and we are 
doing it responsibly.
  There has been a lot said and there will be a lot more said, and 
there clearly is much misinformation. I even read some misinformation 
in the Washington Post this morning, which has obviously misled some of 
the speakers who have addressed this during this rule.
  It is very clear that we have made a good bill, and it is very clear 
that not everybody understands it yet. It is also very clear that the 
Patient Protection Act does not have any big brother in it. There is no 
big brother in our bill. In fact, we put a halt to the big brother ID 
system that has been recently discussed and that so many Americans find 
extremely distasteful and an invasion of their privacy.
  I think that many portions of the legislation that we have, as 
virtually everybody knows that is tuned into this, have already been 
through appropriate committees and they have been I think well put 
together and much debated.
  I think the critical point probably is that what we have done in this 
bill is cut into the 42 million Americans, that big pool of people who 
do not have health care insurance, and given them the opportunity to 
get it.
  The bill on the other side, the Dingell-Kennedy bill, adds, according 
to CBO, to the pool of Americans who will not have health care 
insurance. That is simply unacceptable. Accessibility to health care 
insurance is critical.
  I want to close on a note that many will recognize. My wife and I 
experienced something this year that every parent dreads, a seriously 
sick youngster coming in and asking for health care and the plan that 
that child was under could not perform. I personally got involved with 
why and what went wrong.
  So when I speak to my colleagues to say that I think we have a fix in 
the patient protection care, I speak to them as a parent, not as a 
legislator. I assure my colleagues, I would not be supporting this 
legislation if I did not think my sick youngster would be better off 
under this plan.
  I urge support of this rule.
  Mr. Speaker, I yield back the balance of my time, and I move the 
previous question on the resolution.
  The previous question was ordered.
  The SPEAKER pro tempore (Mr. LaHood). The question is on the 
resolution.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. FROST. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  The vote was taken by electronic device, and there were--yeas 279, 
nays 143, not voting 12, as follows:

                             [Roll No. 335]

                               YEAS--279

     Aderholt
     Archer
     Armey
     Bachus
     Baesler
     Baker
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boswell
     Boyd
     Brady (TX)
     Bryant
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Campbell
     Canady
     Cannon
     Capps
     Chabot
     Chambliss
     Christensen
     Clayton
     Clement
     Coble
     Coburn
     Collins
     Combest
     Cook
     Cooksey
     Cox
     Cramer
     Crane
     Crapo
     Cubin
     Cummings
     Cunningham
     Danner
     Davis (VA)
     Deal
     DeGette
     Delahunt
     DeLay
     Diaz-Balart
     Dickey
     Dingell
     Doyle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Etheridge
     Everett
     Ewing
     Fawell
     Foley
     Fossella
     Fowler
     Fox
     Franks (NJ)
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goodling
     Gordon
     Goss
     Graham
     Granger
     Greenwood
     Gutknecht
     Hall (TX)
     Hamilton
     Hansen
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Hefner
     Hill
     Hilleary
     Hobson
     Hoekstra
     Holden
     Hooley
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inglis
     Jackson-Lee (TX)
     Jenkins
     Johnson (CT)
     Johnson, Sam
     Jones
     Kanjorski
     Kasich
     Kelly
     Kennedy (MA)
     Kennelly
     Kildee
     Kilpatrick
     Kim
     Kind (WI)
     King (NY)
     Kingston
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     Livingston
     LoBiondo
     Lofgren
     Lucas
     Manton
     Manzullo
     Mascara
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McIntyre
     McKeon
     Metcalf
     Mica
     Millender-McDonald
     Miller (FL)
     Mollohan
     Moran (KS)
     Moran (VA)
     Morella
     Murtha
     Myrick
     Nethercutt
     Neumann
     Ney
     Northup
     Norwood
     Nussle
     Obey
     Ortiz
     Oxley
     Packard
     Pallone
     Pappas
     Parker
     Pascrell
     Pastor
     Paul
     Paxon
     Pease
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Quinn
     Radanovich
     Rahall
     Ramstad
     Redmond
     Regula
     Riggs
     Riley
     Rivers
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rothman
     Roukema
     Royce
     Ryun
     Salmon
     Sanford
     Sawyer
     Saxton
     Scarborough
     Schaefer, Dan
     Schaffer, Bob
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Shimkus
     Shuster
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith (TX)
     Smith, Adam
     Smith, Linda
     Snowbarger
     Snyder
     Solomon
     Souder
     Spence
     Stearns
     Stump
     Sununu
     Talent
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Thomas
     Thornberry
     Thune
     Tiahrt
     Traficant
     Upton
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Wexler
     Weygand
     White
     Whitfield
     Wicker
     Wilson
     Wise
     Wolf

                               NAYS--143

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Bentsen
     Berman
     Berry
     Bishop
     Blagojevich
     Bonior
     Borski
     Boucher
     Brady (PA)
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Cardin
     Carson
     Castle
     Clay
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Davis (FL)
     Davis (IL)
     DeFazio
     DeLauro
     Deutsch
     Dicks
     Dixon
     Doggett
     Dooley
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Filner
     Forbes
     Frank (MA)
     Furse
     Gejdenson
     Gephardt
     Green
     Hall (OH)
     Harman
     Hastings (FL)
     Hilliard
     Hinchey
     Hinojosa
     Hoyer
     Istook
     Jackson (IL)
     John
     Johnson (WI)
     Johnson, E.B.
     Kaptur
     Kennedy (RI)
     Kleczka
     Klink
     Kucinich
     LaFalce
     Lampson
     Lantos
     Lee
     Levin
     Lewis (GA)
     Lowey
     Luther
     Maloney (CT)
     Maloney (NY)
     Martinez
     Matsui
     McDermott
     McGovern
     McHale
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Miller (CA)
     Minge
     Mink
     Moakley
     Nadler
     Neal
     Oberstar
     Olver
     Owens
     Payne
     Pelosi
     Peterson (MN)
     Pickett
     Pomeroy
     Poshard
     Price (NC)
     Rangel
     Reyes
     Rodriguez
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Schumer
     Scott
     Serrano
     Sisisky
     Skaggs
     Slaughter
     Spratt
     Stabenow
     Stark
     Stenholm
     Stokes
     Strickland
     Stupak
     Tanner
     Tauscher
     Thompson
     Thurman
     Tierney
     Towns
     Turner
     Velazquez
     Vento
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Woolsey
     Wynn

                             NOT VOTING--12

     Chenoweth
     Doolittle
     Ford
     Gonzalez
     Gutierrez
     Herger
     Jefferson
     Markey
     Torres
     Yates
     Young (AK)
     Young (FL)

                              {time}  1040

  Mr. RANGEL and Mr. MENENDEZ changed their vote from ``yea'' to 
``nay.''
  Ms. LOFGREN, Mrs. McCARTHY of New York, Mr. BILIRAKIS and Mr. CRAMER 
changed their vote from ``nay'' to ``yea.''
  So the resolution was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  Mr. HASTERT. Mr. Speaker, pursuant to House Resolution 509, I call up 
the bill (H.R. 4250) to provide new patient protections under group 
health plans, and ask for its immediate consideration in the House.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore (Mr. Kolbe). The bill is considered read for 
amendment.
  The text of H.R. 4250 is as follows:

[[Page H6307]]

                               H.R. 4250

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--The Act may be cited as the ``Patient 
     Protection Act of 1998''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title and table of contents.

 TITLE I--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

                    Subtitle A--Patient Protections.

Sec. 1001. Patient access to unrestricted medical advice, emergency 
              medical care, obstetric and gynecological care, and 
              pediatric care.
Sec. 1002. Effective date and related rules.

               Subtitle B--Patient Access to Information

Sec. 1101. Patient access to information regarding plan coverage, 
              managed care procedures, health care providers, and 
              quality of medical care.
Sec. 1102. Effective date.

Subtitle C--New Procedures and Access to Courts for Grievances Arising 
                        under Group Health Plans

Sec. 1201. Special rules for group health plans.
Sec. 1202. Effective date.

     Subtitle D--Affordable Health Coverage for Employees of Small 
                               Businesses

Sec. 1301. Short title of subtitle.
Sec. 1302. Rules governing association health plans.

           ``Part 8--Rules Governing Association Health Plans

``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution 
              rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for 
              plans providing health benefits in addition to health 
              insurance coverage.
``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.
``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Trusteeship by the secretary of insolvent association 
              health plans providing health benefits in addition to 
              health insurance coverage.
``Sec. 811. State assessment authority.
``Sec. 812. Special rules for church plans.
``Sec. 813. Definitions and rules of construction.
Sec. 1303. Clarification of treatment of single employer arrangements.
Sec. 1304. Clarification of treatment of certain collectively bargained 
              arrangements.
Sec. 1305. Enforcement provisions relating to association health plans.
Sec. 1306. Cooperation between Federal and State authorities.
Sec. 1307. Effective date and transitional and other rules.

           TITLE II--AMENDMENTS TO PUBLIC HEALTH SERVICE ACT

     Subtitle A--Patient Protections and Point of Service Coverage 
                              Requirements

Sec. 2001. Patient access to unrestricted medical advice, emergency 
              medical care, obstetric and gynecological care, pediatric 
              care.
Sec. 2002. Requiring health maintenance organizations to offer option 
              of point-of-service coverage.

               Subtitle B--Patient Access to Information

Sec. 2101. Patient access to information regarding plan coverage, 
              managed care procedures, health care providers, and 
              quality of medical care.
Sec. 2102. Reporting on fraud and abuse enforcement activities.
Sec. 2103. Effective date.

                        Subtitle C--HealthMarts

Sec. 2201. Short title of subtitle.
Sec. 2202. Expansion of consumer choice through HealthMarts.

                      ``TITLE XXVIII--HEALTHMARTS

``Sec. 2801. Definition of HealthMart.
``Sec. 2802. Application of certain laws and requirements.
``Sec. 2803. Administration.
``Sec. 2804. Definitions.

               Subtitle D--Community Health Organizations

Sec. 2301. Promotion of provision of insurance by community health 
              organizations.

       TITLE III--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

                    Subtitle A--Patient Protections

Sec. 3001. Patient access to unrestricted medical advice, emergency 
              medical care, obstetric and gynecological care, pediatric 
              care.
Sec. 3002. Effective date and related rules.

               Subtitle B--Patient Access to Information

Sec. 3101. Patient access to information regarding plan coverage, 
              managed care procedures, health care providers, and 
              quality of medical care.
Sec. 3102. Reporting on fraud and abuse enforcement activities.
Sec. 3103. Effective date.

                  Subtitle C--Medical Savings Accounts

Sec. 3201. Expansion of availability of medical savings accounts.
Sec. 3202. Exception from insurance limitation in case of medical 
              savings accounts.

                  TITLE IV--HEALTH CARE LAWSUIT REFORM

                     Subtitle A--General Provisions

Sec. 4001. Federal reform of health care liability actions.
Sec. 4002. Definitions.
Sec. 4003. Effective date.

    Subtitle B--Uniform Standards for Health Care Liability Actions

Sec. 4011. Statute of limitations.
Sec. 4012. Calculation and payment of damages.
Sec. 4013. Alternative dispute resolution.

             TITLE V--CONFIDENTIALITY OF HEALTH INFORMATION

Sec. 5001. Confidentiality of protected health information.

       ``Part D--Confidentiality of Protected Health Information

``Sec. 1181. Inspection and copying of protected health information.
``Sec. 1182. Supplementation of protected health information.
``Sec. 1183. Notice of confidentiality practices.
``Sec. 1184. Establishment of safeguards.
``Sec. 1185. Availability of protected health information for purposes 
              of health care operations.
``Sec. 1186. Relationship to other laws.
``Sec. 1187. Civil penalties.
``Sec. 1188. Definitions.
Sec. 5002. Study and report on effect of State law on health-related 
              research.
Sec. 5003. Study and report on State law on protected health 
              information.
Sec. 5004. Protection for certain information developed to reduce 
              mortality or morbidity or for improving patient care and 
              safety.

        TITLE VI--MEDICAL SAVINGS ACCOUNTS FOR FEDERAL EMPLOYEES

Sec. 6001. Medical savings accounts for Federal employees.
Sec. 6002. Effective date.
 TITLE I--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974
                    Subtitle A--Patient Protections

     SEC. 1001. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, AND PEDIATRIC CARE.

       (a) In General.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 is 
     amended further by adding at the end the following new 
     sections:

     ``SEC. 713. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, PEDIATRIC CARE.

       ``(a) Patient Access to Unrestricted Medical Advice.--
       ``(1) In general.--In the case of any health care 
     professional acting within the lawful scope of practice in 
     the course of carrying out a contractual employment 
     arrangement or other direct contractual arrangement between 
     such professional and a group health plan or a health 
     insurance issuer offering health insurance coverage in 
     connection with a group health plan, the plan or issuer with 
     which such contractual employment arrangement or other direct 
     contractual arrangement is maintained by the professional may 
     not impose on such professional under such arrangement any 
     prohibition with respect to advice, provided to a participant 
     or beneficiary under the plan who is a patient, about the 
     health status of the participant or beneficiary or the 
     medical care or treatment for the condition or disease of the 
     participant or beneficiary, regardless of whether benefits 
     for such care or treatment are provided under the plan or 
     health insurance coverage offered in connection with the 
     plan.
       ``(2) Health care professional defined.--For purposes of 
     this subsection, the term `health care professional' means a 
     physician (as defined in section 1861(r) of the Social 
     Security Act) or other health care professional if coverage 
     for the professional's services is provided under the group 
     health plan for the services of the professional. Such term 
     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.

[[Page H6308]]

       ``(b) Patient Access to Emergency Medical Care.--
       ``(1) In general.--To the extent that the group health plan 
     (or health insurance issuer offering health insurance 
     coverage in connection with the plan) provides for any 
     benefits consisting of emergency medical care (as defined in 
     section 503(b)(9)(I)), except for items or services 
     specifically excluded--
       ``(A) the plan or issuer shall provide benefits, without 
     requiring preauthorization, for appropriate emergency medical 
     screening examinations (within the capability of the 
     emergency facility, including ancillary services routinely 
     available to the emergency facility) to the extent that a 
     prudent layperson, who possesses an average knowledge of 
     health and medicine, would determine such examinations to be 
     necessary in order to determine whether emergency medical 
     care (as so defined) is required, and
       ``(B) the plan or issuer shall provide benefits for 
     additional emergency medical services following an emergency 
     medical screening examination (if determined necessary under 
     subparagraph (A)) to the extent that a prudent emergency 
     medical professional would determine such additional 
     emergency services to be necessary to avoid the consequences 
     described in section 503(b)(9)(I).
       ``(2) Uniform cost-sharing required.--Nothing in this 
     subsection shall be construed as preventing a group health 
     plan or issuer from imposing any form of cost-sharing 
     applicable to any participant or beneficiary (including 
     coinsurance, copayments, deductibles, and any other charges) 
     in relation to benefits described in paragraph (1), if such 
     form of cost-sharing is uniformly applied under such plan, 
     with respect to similarly situated participants and 
     beneficiaries, to all benefits consisting of emergency 
     medical care (as defined in section 503(b)(9)(I)) provided to 
     such similarly situated participants and beneficiaries under 
     the plan.
       ``(c) Patient Access to Obstetric and Gynecological Care.
       ``(1) In general.--In any case in which a group health plan 
     (or a health insurance issuer offering health insurance 
     coverage in connection with the plan)--
       ``(A) provides benefits under the terms of the plan 
     consisting of--
       ``(i) routine gynecological care (such as preventive 
     women's health examinations), or
       ``(ii) routine obstetric care (such as routine pregnancy-
     related services),
     provided by a participating physician who specializes in such 
     care (or provides benefits consisting of payment for such 
     care), and
       ``(B) the plan requires or provides for designation by a 
     participant or beneficiary of a participating primary care 
     provider,

     if the primary care provider designated by such a participant 
     or beneficiary is not such a physician, then the plan (or 
     issuer) shall meet the requirements of paragraph (2).
       ``(2) Requirements.--A group health plan (or a health 
     insurance issuer offering health insurance coverage in 
     connection with the plan) meets the requirements of this 
     paragraph, in connection with benefits described in paragraph 
     (1) consisting of care described in clause (i) or (ii) of 
     paragraph (1)(A) (or consisting of payment therefor), if the 
     plan (or issuer)--
       ``(A) does not require authorization or a referral by the 
     primary care provider in order to obtain such benefits, and
       ``(B) treats the ordering of other routine care of the same 
     type, by the participating physician providing the care 
     described in clause (i) or (ii) of paragraph (1)(A), as the 
     authorization of the primary care provider with respect to 
     such care.
       ``(3) Construction.--Nothing in paragraph (2)(B) shall 
     waive any requirements of coverage relating to medical 
     necessity or appropriateness with respect to coverage of 
     gynecological or obstetric care so ordered.
       ``(d) Patient Access to Pediatric Care.--
       ``(1) In general.--In any case in which a group health plan 
     (or a health insurance issuer offering health insurance 
     coverage in connection with the plan) provides benefits 
     consisting of routine pediatric care provided by a 
     participating physician who specializes in pediatrics (or 
     consisting of payment for such care) and the plan requires or 
     provides for designation by a participant or beneficiary of a 
     participating primary care provider, the plan (or issuer) 
     shall provide that such a participating physician may be 
     designated, if available, by a parent or guardian of any 
     beneficiary under the plan is who under 18 years of age, as 
     the primary care provider with respect to any such benefits.
       ``(2) Construction.--Nothing in paragraph (1) shall waive 
     any requirements of coverage relating to medical necessity or 
     appropriateness with respect to coverage of pediatric care.
       ``(e) Treatment of Multiple Coverage Options.--In the case 
     of a plan providing benefits under two or more coverage 
     options, the requirements of subsections (c) and (d) shall 
     apply separately with respect to each coverage option.''.
       (b) Conforming Amendment.--The table of contents in section 
     1 of such Act is amended by adding at the end of the items 
     relating to subpart B of part 7 of subtitle B of title I of 
     such Act the following new item:

``Sec. 713. Patient access to unrestricted medical advice, emergency 
              medical care, obstetric and gynecological care, and 
              pediatric care.''.

     SEC. 1002. EFFECTIVE DATE AND RELATED RULES.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act, except that the Secretary of Labor 
     may issue regulations before such date under such amendments. 
     The Secretary shall first issue regulations necessary to 
     carry out the amendments made by this section before the 
     effective date thereof.
       (b) Limitation on Enforcement Actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this subtitle, against a group health plan or health 
     insurance issuer with respect to a violation of a requirement 
     imposed by such amendments before the date of issuance of 
     regulations issued in connection with such requirement, if 
     the plan or issuer has sought to comply in good faith with 
     such requirement.
       (c) Special Rule for Collective Bargaining Agreements.--In 
     the case of a group health plan maintained pursuant to one or 
     more collective bargaining agreements between employee 
     representatives and one or more employers ratified before the 
     date of the enactment of this Act, the provisions of 
     subsections (b), (c), and (d) of section 713 of the Employee 
     Retirement Income Security Act of 1974 (as added by this 
     subtitle) shall not apply with respect to plan years 
     beginning before the later of--
       (1) the date on which the last of the collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of the enactment of this Act), or
       (2) January 1, 2001.

     For purposes of this subsection, any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by this subtitle shall not be treated as a 
     termination of such collective bargaining agreement.
       (d) Assuring Coordination.--The Secretary of Labor, the 
     Secretary of the Treasury, and the Secretary of Health and 
     Human Services shall ensure, through the execution of an 
     interagency memorandum of understanding among such 
     Secretaries, that--
       (1) regulations, rulings, and interpretations issued by 
     such Secretaries relating to the same matter over which two 
     or more such Secretaries have responsibility under the 
     provisions of this subtitle, section 2101, and subtitle A of 
     title III (and the amendments made thereby) are administered 
     so as to have the same effect at all times, and
       (2) coordination of policies relating to enforcing the same 
     requirements through such Secretaries in order to have a 
     coordinated enforcement strategy that avoids duplication of 
     enforcement efforts and assigns priorities in enforcement.
       (e) Treatment of Religious Nonmedical Providers.--
       (1) In general.--Nothing in this Act (or the amendments 
     made thereby) shall be construed to--
       (A) restrict or limit the right of group health plans, and 
     of health insurance issuers offering health insurance 
     coverage in connection with group health plans, to include as 
     providers religious nonmedical providers,
       (B) require such plans or issuers to--
       (i) utilize medically based eligibility standards or 
     criteria in deciding provider status of religious nonmedical 
     providers,
       (ii) use medical professionals or criteria to decide 
     patient access to religious nonmedical providers,
       (iii) utilize medical professionals or criteria in making 
     decisions in internal or external appeals from decisions 
     denying or limiting coverage for care by religious nonmedical 
     providers, or
       (iv) compel a participant or beneficiary to undergo a 
     medical examination or test as a condition of receiving 
     health insurance coverage for treatment by a religious 
     nonmedical provider, or
       (C) require such plans or issuers to exclude religious 
     nonmedical providers because they do not provide medical or 
     other data otherwise required, if such data is inconsistent 
     with the religious nonmedical treatment or nursing care 
     provided by the provider.
       (2) Religious nonmedical provider.--For purposes of this 
     subsection, the term ``religious nonmedical provider'' means 
     a provider who provides no medical care but who provides only 
     religious nonmedical treatment or religious nonmedical 
     nursing care.
               Subtitle B--Patient Access to Information

     SEC. 1101. PATIENT ACCESS TO INFORMATION REGARDING PLAN 
                   COVERAGE, MANAGED CARE PROCEDURES, HEALTH CARE 
                   PROVIDERS, AND QUALITY OF MEDICAL CARE.

       (a) In General.--Part 1 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 is amended--
       (1) by redesignating section 111 as section 112; and
       (2) by inserting after section 110 the following new 
     section:


                   ``disclosure by group health plans

       ``Sec. 111. (a) Disclosure Requirement.--
       ``(1) Group health plans.--The administrator of each group 
     health plan shall take such actions as are necessary to 
     ensure that the summary plan description of the plan required 
     under section 102 (or each summary plan description in any 
     case in which different summary plan descriptions are 
     appropriate under part 1 for different options of coverage) 
     contains, among any information otherwise required under this 
     part, the information required under subsections (b), (c), 
     (d), and (e)(2)(A).

[[Page H6309]]

       ``(2) Health insurance issuers.--Each health insurance 
     issuer offering health insurance coverage in connection with 
     a group health plan shall provide the administrator on a 
     timely basis with the information necessary to enable the 
     administrator to comply with the requirements of paragraph 
     (1). To the extent that any such issuer provides on a timely 
     basis to plan participants and beneficiaries information 
     otherwise required under this part to be included in the 
     summary plan description, the requirements of sections 
     101(a)(1) and 104(b) shall be deemed satisfied in the case of 
     such plan with respect to such information.
       ``(b) Plan Benefits.--The information required under 
     subsection (a) includes the following:
       ``(1) Covered items and services.--
       ``(A) Categorization of included benefits.--A description 
     of covered benefits, categorized by--
       ``(i) types of items and services (including any special 
     disease management program), and
       ``(ii) types of health care professionals providing such 
     items and services.
       ``(B) Emergency medical care.--A description of the extent 
     to which the plan covers emergency medical care (including 
     the extent to which the plan provides for access to urgent 
     care centers), and any definitions provided under the plan 
     for the relevant plan terminology referring to such care.
       ``(C) Preventative services.--A description of the extent 
     to which the plan provides benefits for preventative 
     services.
       ``(D) Drug formularies.--A description of the extent to 
     which covered benefits are determined by the use or 
     application of a drug formulary and a summary of the process 
     for determining what is included in such formulary.
       ``(E) COBRA continuation coverage.--A description of the 
     benefits available under the plan pursuant to part 6.
       ``(2) Limitations, exclusions, and restrictions on covered 
     benefits.--
       ``(A) Categorization of excluded benefits.--A description 
     of benefits specifically excluded from coverage, categorized 
     by types of items and services.
       ``(B) Utilization review and preauthorization 
     requirements.--Whether coverage for medical care is limited 
     or excluded on the basis of utilization review or 
     preauthorization requirements.
       ``(C) Lifetime, annual, or other period limitations.--A 
     description of the circumstances under which, and the extent 
     to which, coverage is subject to lifetime, annual, or other 
     period limitations, categorized by types of benefits.
       ``(D) Custodial care.--A description of the circumstances 
     under which, and the extent to which, the coverage of 
     benefits for custodial care is limited or excluded, and a 
     statement of the definition used by the plan for custodial 
     care.
       ``(E) Experimental treatments.--Whether coverage for any 
     medical care is limited or excluded because it constitutes 
     experimental treatment or technology, and any definitions 
     provided under the plan for the relevant plan terminology 
     referring to such limited or excluded care.
       ``(F) Medical appropriateness or necessity.--Whether 
     coverage for medical care may be limited or excluded by 
     reason of a failure to meet the plan's requirements for 
     medical appropriateness or necessity, and any definitions 
     provided under the plan for the relevant plan terminology 
     referring to such limited or excluded care.
       ``(G) Second or subsequent opinions.--A description of the 
     circumstances under which, and the extent to which, coverage 
     for second or subsequent opinions is limited or excluded.
       ``(H) Specialty care.--A description of the circumstances 
     under which, and the extent to which, coverage of benefits 
     for specialty care is conditioned on referral from a primary 
     care provider.
       ``(I) Continuity of care.--A description of the 
     circumstances under which, and the extent to which, coverage 
     of items and services provided by any health care 
     professional is limited or excluded by reason of the 
     departure by the professional from any defined set of 
     providers.
       ``(J) Restrictions on coverage of emergency services.--A 
     description of the circumstances under which, and the extent 
     to which, the plan, in covering emergency medical care 
     furnished to a participant or beneficiary of the plan imposes 
     any financial responsibility described in subsection (c) on 
     participants or beneficiaries or limits or conditions 
     benefits for such care subject to any other term or condition 
     of such plan.
       ``(c) Participant's Financial Responsibilities.--The 
     information required under subsection (a) includes an 
     explanation of--
       ``(1) a participant's financial responsibility for payment 
     of premiums, coinsurance, copayments, deductibles, and any 
     other charges, and
       ``(2) the circumstances under which, and the extent to 
     which, the participant's financial responsibility described 
     in paragraph (1) may vary, including any distinctions based 
     on whether a health care provider from whom covered benefits 
     are obtained is included in a defined set of providers.
       ``(d) Dispute Resolution Procedures.--The information 
     required under subsection (a) includes a description of the 
     processes adopted by the plan pursuant to section 503(b), 
     including--
       ``(1) descriptions thereof relating specifically to--
       ``(A) coverage decisions,
       ``(B) internal review of coverage decisions, and
       ``(C) any external review of coverage decisions, and
       ``(2) the procedures and time frames applicable to each 
     step of the processes referred to in subparagraphs (A), (B), 
     and (C) of paragraph (1).
       ``(e) Information Available on Request.--
       ``(1) Access to plan benefit information in electronic 
     form.--
       ``(A) In general.--In addition to the information required 
     to be provided under section 104(b)(4), a group health plan 
     (and a health insurance issuer offering health insurance 
     coverage in connection with a group health plan) shall, upon 
     written request (made not more frequently than annually), 
     make available to participants and beneficiaries, in a 
     generally recognized electronic format, the following 
     information:
       ``(i) the latest summary plan description, including the 
     latest summary of material modifications; and
       ``(ii) the actual plan provisions setting forth the 
     benefits available under the plan

     to the extent such information relates to the coverage 
     options under the plan available to the participant or 
     beneficiary. A reasonable charge may be made to cover the 
     cost of providing such information in such generally 
     recognized electronic format. The Secretary may by regulation 
     prescribe a maximum amount which will constitute a reasonable 
     charge under the preceding sentence.
       ``(B) Alternative access.--The requirements of this 
     paragraph may be met by making such information generally 
     available (rather than upon request) on the Internet or on a 
     proprietary computer network in a format which is readily 
     accessible to participants and beneficiaries.
       ``(2) Additional information to be provided on request.--
       ``(A) Inclusion in summary plan description of summary of 
     additional information.--The information required under 
     subsection (a) includes a summary description of the types of 
     information required by this subsection to be made available 
     to participants and beneficiaries on request.
       ``(B) Information required from plans and issuers on 
     request.--In addition to information required to be included 
     in summary plan descriptions under this subsection, a group 
     health plan (and a health insurance issuer offering health 
     insurance coverage in connection with a group health plan) 
     shall provide the following information to a participant or 
     beneficiary on request:
       ``(i) Network characteristics.--If the plan (or issuer) 
     utilizes a defined set of providers under contract with the 
     plan (or issuer), a detailed list of the names of such 
     providers and their geographic location, set forth separately 
     with respect to primary care providers and with respect to 
     specialists.
       ``(ii) Care management information.--A description of the 
     circumstances under which, and the extent to which, the plan 
     has special disease management programs or programs for 
     persons with disabilities, indicating whether these programs 
     are voluntary or mandatory and whether a significant benefit 
     differential results from participation in such programs.
       ``(iii) Inclusion of drugs and biologicals in 
     formularies.--A statement of whether a specific drug or 
     biological is included in a formulary used to determine 
     benefits under the plan and a description of the procedures 
     for considering requests for any patient-specific waivers.
       ``(iv) Procedures for determining exclusions based on 
     medical necessity or experimental treatments.--Upon receipt 
     by the participant or beneficiary of any notification of an 
     adverse coverage decision based on a determination relating 
     to medical necessity or an experimental treatment or 
     technology, a description of the procedures and medically-
     based criteria used in such decision.
       ``(v) Preauthorization and utilization review procedures.--
     Upon receipt by the participant or beneficiary of any 
     notification of an adverse coverage decision, a description 
     of the basis on which any preauthorization requirement or any 
     utilization review requirement has resulted in such decision.
       ``(vi) Accreditation status of health insurance issuers and 
     service providers.--A description of the accreditation and 
     licencing 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) Measures of enrollee satisfaction.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to enrollee satisfaction.
       ``(viii) Quality performance measures.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to quality of performance 
     of the delivery of medical care with respect to coverage 
     options offered under the plan and of health care 
     professionals and facilities providing medical care under the 
     plan.
       ``(C) Information required from health care professionals 
     on request.--Any

[[Page H6310]]

     health care professional treating a participant or 
     beneficiary under a group health plan shall provide to the 
     participant or beneficiary, on request, a description of his 
     or her professional qualifications (including board 
     certification status, licensing status, and accreditation 
     status, if any), privileges, and experience and a general 
     description by category (including salary, fee-for-service, 
     capitation, and such other categories as may be specified in 
     regulations of the Secretary) of the applicable method by 
     which such professional is compensated in connection with the 
     provision of such medical care.
       ``(D) Information required from health care facilities on 
     request.--Any health care facility from which a participant 
     or beneficiary has sought treatment under a group health plan 
     shall provide to the participant or beneficiary, on request, 
     a description of the facility's corporate form or other 
     organizational form and all forms of licensing and 
     accreditation status (if any) assigned to the facility by 
     standard-setting organizations.
       ``(f) Access to Information Relevant to the Coverage 
     Options under which the Participant or Beneficiary is 
     Eligible to Enroll.--In addition to information otherwise 
     required to be made available under this section, a group 
     health plan (and a health insurance issuer offering health 
     insurance coverage in connection with a group health plan) 
     shall, upon written request (made not more frequently than 
     annually), make available to a participant in connection with 
     a period of enrollment the summary plan description for any 
     coverage option under the plan under which the participant is 
     eligible to enroll and any information described in clauses 
     (i), (ii), (iii), (vi), (vii), and (viii) of subsection 
     (e)(2)(B).
       ``(g) Advance Notice of Changes in Drug Formularies.--Not 
     later than 30 days before the effective of date of any 
     exclusion of a specific drug or biological from any drug 
     formulary under the plan that is used in the treatment of a 
     chronic illness or disease, the plan shall take such actions 
     as are necessary to reasonably ensure that plan participants 
     are informed of such exclusion. The requirements of this 
     subsection may be satisfied--
       ``(1) by inclusion of information in publications broadly 
     distributed by plan sponsors, employers, or employee 
     organizations,
       ``(2) by electronic means of communication (including the 
     Internet or proprietary computer networks in a format which 
     is readily accessible to participants),
       ``(3) by timely informing participants who, under an 
     ongoing program maintained under the plan, have submitted 
     their names for such notification, or
       ``(4) by any other reasonable means of timely informing 
     plan participants.
       ``(h) Definitions.--For purposes of this section--
       ``(1) Group health plan.--The term `group health plan' has 
     the meaning provided such term under section 503(b)(6).
       ``(2) Medical care.--The term `medical care' has the 
     meaning provided such term under section 733(a)(2).
       ``(3) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning provided such term under 
     section 733(b)(1).
       ``(4) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided such term under section 
     733(b)(2).''.
       (b) Conforming Amendments.--
       (1) Section 102(b) of such Act (29 U.S.C. 1022(b)) is 
     amended--
       (A) by striking ``section 733(a)(1)'' each place it appears 
     and inserting ``section 503(b)(6)''; and
       (B) by inserting before the period at the end the 
     following: ``; and, in the case of a group health plan (as 
     defined in section 111(h)(1)), the information required to be 
     included under section 111(a)''.
       (2) The table of contents in section 1 of such Act is 
     amended by striking the item relating to section 111 and 
     inserting the following new items:

``Sec. 111. Disclosure by group health plans.
``Sec. 112. Repeal and effective date.''.

     SEC. 1102. EFFECTIVE DATE AND RELATED RULES.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act. The Secretary shall first issue 
     all regulations necessary to carry out the amendments made by 
     this subtitle before such date.
       (b) Limitation on Enforcement Actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this subtitle, against a group health plan or health 
     insurance issuer with respect to a violation of a requirement 
     imposed by such amendments before the date of issuance of 
     final regulations issued in connection with such requirement, 
     if the plan or issuer has sought to comply in good faith with 
     such requirement.
       (c) Assuring Coordination.--The Secretary of Labor, the 
     Secretary of Health and Human Services, and the Secretary of 
     the Treasury shall ensure, through the execution of an 
     interagency memorandum of understanding among such 
     Secretaries, that--
       (1) regulations, rulings, and interpretations issued by 
     such Secretaries relating to the same matter over which two 
     or more such Secretaries have responsibility under the 
     provisions of this subtitle, subtitle B of title II, and 
     subtitle B of title III (and the amendments made thereby) are 
     administered so as to have the same effect at all times, and
       (2) coordination of policies relating to enforcing the same 
     requirements through such Secretaries in order to have a 
     coordinated enforcement strategy that avoids duplication of 
     enforcement efforts and assigns priorities in enforcement.
Subtitle C--New Procedures and Access to Courts for Grievances Arising 
                        Under Group Health Plans

     SEC. 1201. SPECIAL RULES FOR GROUP HEALTH PLANS.

       (a) In General.--Section 503 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1133) is amended--
       (1) by inserting ``(a) In General.--'' after ``Sec. 503.'';
       (2) by inserting ``(other than a group health plan)'' after 
     ``employee benefit plan''; and
       (3) by adding at the end the following new subsection:
       ``(b) Special Rules for Group Health Plans.--
       ``(1) Coverage determinations.--Every group health plan 
     shall--
       ``(A) provide adequate notice in writing in accordance with 
     this subsection to any participant or beneficiary of any 
     adverse coverage decision with respect to benefits of such 
     participant or beneficiary under the plan, setting forth the 
     specific reasons for such coverage decision and any rights of 
     review provided under the plan, written in a manner 
     calculated to be understood by the participant,
       ``(B) provide such notice in writing also to any treating 
     medical care provider of such participant or beneficiary, if 
     such provider has claimed reimbursement for any item or 
     service involved in such coverage decision, or if a claim 
     submitted by the provider initiated the proceedings leading 
     to such decision,
       ``(C) afford a reasonable opportunity to any participant or 
     beneficiary who is in receipt of the notice of such adverse 
     coverage decision, and who files a written request for review 
     of the initial coverage decision within 180 days after 
     receipt of the notice of the initial decision, for a full and 
     fair de novo review of the decision by an appropriate named 
     fiduciary who did not make the initial decision, and
       ``(D) 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.--
     Except as provided in subparagraph (B)--
       ``(i) Initial 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 such reasonable form as 
     may be required under the plan, the plan shall issue in 
     writing an initial coverage decision on the request before 
     the end of the initial decision period under paragraph (9)(J) 
     following the filing completion date. Failure to issue a 
     coverage decision on such a request before the end of the 
     period required under this clause shall be treated as an 
     adverse coverage decision for purposes of internal review 
     under clause (ii).
       ``(ii) Internal reviews of initial denials.--Upon the 
     written request of a participant or beneficiary for review of 
     an initial adverse coverage decision under clause (i), a 
     review by an appropriate named fiduciary (subject to 
     paragraph (3)) of the initial coverage decision shall be 
     completed, including issuance by the plan of a written 
     decision affirming, reversing, or modifying the initial 
     coverage decision, setting forth the grounds for such 
     decision, before the end of the internal review period 
     following the review filing date. Such decision shall be 
     treated as the final decision of the plan, subject to any 
     applicable reconsideration under paragraph (4). Failure to 
     issue before the end of such period such a written decision 
     requested under this clause shall be treated as a final 
     decision affirming the initial coverage decision, subject to 
     any applicable reconsideration under paragraph (4).
       ``(B) Time limits for making coverage decisions relating to 
     urgent and emergency medical care and for completing internal 
     appeals.--
       ``(i) Initial decisions.--A group health plan shall issue 
     in writing an initial coverage decision on any request for 
     expedited advance determination of coverage or for expedited 
     required determination of medical necessity submitted, in 
     such reasonable form as may be required under the plan--

       ``(I) before the end of the urgent decision period under 
     paragraph (9)(L), in cases involving urgent medical care but 
     not involving emergency medical care, or
       ``(II) before the end of the emergency decision period 
     under paragraph (9)(M), in cases involving emergency medical 
     care,

     following the filing completion date. Failure to approve or 
     deny such a request before the end of the applicable decision 
     period shall be treated as a denial of the request for 
     purposes of internal review under clause (ii).
       ``(ii) Internal reviews of initial denials.--Upon the 
     written request of a participant or beneficiary for review of 
     an initial adverse coverage decision under clause (i), a 
     review by an appropriate named fiduciary (subject to 
     paragraph (3)) of the initial coverage decision shall be 
     completed, including

[[Page H6311]]

     issuance by the plan of a written decision affirming, 
     reversing, or modifying the initial converge decision, 
     setting forth the grounds for the decision--

       ``(I) before the end of the urgent decision period under 
     paragraph (9)(L), in cases involving urgent medical care but 
     not involving emergency medical care, or
       ``(II) before the end of the emergency decision period 
     under paragraph (9)(M), in cases involving emergency medical 
     care,

     following the review filing date. Such decision shall be 
     treated as the final decision of the plan, subject to any 
     applicable reconsideration under paragraph (4). Failure to 
     issue before the end of the applicable decision period such a 
     written decision requested under this clause shall be treated 
     as a final decision affirming the initial coverage decision, 
     subject to any applicable reconsideration under paragraph 
     (4).
       ``(3) Physicians must review initial coverage decisions 
     involving medical appropriateness or necessity or 
     experimental treatment.--If an initial coverage decision 
     under paragraph (2)(A)(i) or (2)(B)(i) is based on a 
     determination that provision of 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 
     review under paragraph (2)(A)(ii) or (2)(B)(ii), to the 
     extent that it relates to medical appropriateness or 
     necessity or to experimental treatment or technology, shall 
     be conducted by a physician who is selected to serve as an 
     appropriate named fiduciary under the plan and who did not 
     make the initial denial.
       ``(4) Elective external review by independent medical 
     expert and reconsideration of initial review decision.--
       ``(A) In general.--The requirements of subparagraphs (B), 
     (C) and (D) shall apply--
       ``(i) in the case of any failure to timely issue a coverage 
     decision upon internal review which is deemed to be an 
     adverse coverage decision under paragraph (2)(A)(ii) or 
     (2)(B)(ii) (thereby failing to constitute a coverage decision 
     for which specific reasons have been set forth as required 
     under paragraph (1)(A)), and
       ``(ii) in the case of any adverse coverage decision which 
     is not reversed upon a review conducted pursuant to paragraph 
     (1)(C) (including any review pursuant to paragraph (2)(A)(ii) 
     or (2)(B)(ii)), if such coverage decision is based on a 
     determination that provision of a particular item or service 
     is excluded from coverage under the terms of the plan because 
     the provision of such item or service--

       ``(I) does not meet the plan's requirements for medical 
     appropriateness or necessity, or
       ``(II) would constitute experimental treatment or 
     technology.

       ``(B) Limits on allowable advance payments.--The review 
     under this paragraph in connection with an adverse coverage 
     decision shall be available subject to any requirement of the 
     plan (unless waived by the plan for financial or other 
     reasons) for payment in advance to the plan by the 
     participant or beneficiary seeking review of an amount not to 
     exceed the greater of--
       ``(i) the lesser of $100 or 10 percent of the cost of the 
     medical care involved in the decision, or
       ``(ii) $25,

     with each such dollar amount subject to compounded annual 
     adjustments in the same manner and to the same extent as 
     apply under section 215(i) of the Social Security Act, except 
     that, for any calendar year, such amount as so adjusted shall 
     be deemed, solely for such calendar year, to be equal to such 
     amount rounded to the nearest $10. No such payment may be 
     required in the case of any participant or beneficiary whose 
     enrollment under the plan is paid for, in whole or in part, 
     under a State plan under title XIX or XXI of the Social 
     Security Act. Any such advance payment shall be subject to 
     reimbursement if the recommendation of the independent 
     medical expert or experts under subparagraph (C)(iii) is to 
     reverse or modify the coverage decision.
       ``(C) Reconsideration of initial review decision.--In any 
     case in which a participant or beneficiary who has received 
     an adverse decision of the plan upon initial review of the 
     coverage decision and who has not commenced review of the 
     initial coverage decision under section 502 makes a request 
     in writing, within 30 days after the date of such review 
     decision, for reconsideration of such review decision, the 
     terms of the plan shall provide for a procedure for such 
     reconsideration under which--
       ``(i) one or more independent medical experts will be 
     selected in accordance with subparagraph (E) to review the 
     coverage decision described in subparagraph (A) to determine 
     whether such decision was in accordance with the terms of the 
     plan and this title,
       ``(ii) 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) will be presented to such 
     expert or experts and maintained in a manner which will 
     ensure confidentiality of such record,
       ``(iii) such expert or experts will report in writing to 
     the plan their recommendation, based on the determination 
     made under clause (i), as to whether such coverage decision 
     should be affirmed, modified, or reversed, setting forth the 
     grounds (including the clinical basis) for the 
     recommendation, and
       ``(iv) a physician who did not make the initial review 
     decision will reconsider the initial review decision to 
     determine whether such decision was in accordance with the 
     terms of the plan and this title and will issue a written 
     decision affirming, modifying, or reversing the initial 
     review decision, taking into account any recommendations 
     reported to the plan pursuant to clause (iii), and setting 
     forth the grounds for the decision.
       ``(D) Time limits for reconsideration.--Any review under 
     this paragraph shall be completed before the end of the 
     reconsideration period (as defined in paragraph (9)(O)) 
     following the review filing date in connection with such 
     review. The decision under this paragraph affirming, 
     reversing, or modifying the initial review decision of the 
     plan shall be the final decision of the plan. Failure to 
     issue a written decision before the end of the 
     reconsideration period in any reconsideration requested under 
     this paragraph shall be treated as a final decision affirming 
     the initial review decision of the plan.
       ``(E) Independent medical experts.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `independent medical expert' means, in connection with any 
     coverage decision by a group health plan, a professional--

       ``(I) who is a physician or, if appropriate, another 
     medical professional,
       ``(II) who has appropriate credentials and has attained 
     recognized expertise in the applicable medical field,
       ``(III) who was not involved in the initial decision or any 
     earlier review thereof, and
       ``(IV) who is selected in accordance with clause (ii) and 
     meets the requirements of clause (iii).

       ``(ii) Selection of medical experts.--An independent 
     medical expert is selected in accordance with this clause 
     if--

       ``(I) the expert is selected by an intermediary which 
     itself meets the requirements of clause (iii), by means of a 
     method which ensures that the identity of the expert is not 
     disclosed to the plan, any health insurance issuer offering 
     health insurance coverage to the aggrieved participant or 
     beneficiary in connection with the plan, and the aggrieved 
     participant or beneficiary under the plan, and the identities 
     of the plan, the issuer, and the aggrieved participant or 
     beneficiary are not disclosed to the expert,
       ``(II) the expert is selected, by an appropriately 
     credentialed panel of physicians meeting the requirements of 
     clause (iii) established by a fully accredited teaching 
     hospital meeting such requirements,
       ``(III) the expert is selected by an organization described 
     in section 1152(1)(A) of the Social Security Act which meets 
     the requirements of clause (iii),
       ``(IV) the expert is selected by an external review 
     organization which meets the requirements of clause (iii) and 
     is accredited by a private standard-setting organization 
     meeting such requirements and recognized as such by the 
     Secretary, or
       ``(V) the expert is selected, by an intermediary or 
     otherwise, in a manner that is, under regulations issued 
     pursuant to negotiated rulemaking, sufficient to ensure the 
     expert's independence,

     and the method of selection is devised to reasonably ensure 
     that the expert selected meets the independence requirements 
     of clause (iii).
       ``(iii) Independence requirements.--An independent medical 
     expert or another entity described in clause (ii) meets the 
     independence requirements of this clause if--

       ``(I) the expert or entity is not affiliated with any 
     related party,
       ``(II) any compensation received by such expert or entity 
     in connection with the external review is reasonable and not 
     contingent on any decision rendered by the expert or entity,
       ``(III) under the terms of the plan and any health 
     insurance coverage offered in connection with the plan, the 
     plan and the issuer (if any) have no recourse against the 
     expert or entity in connection with the external review, and
       ``(IV) the expert or entity does not otherwise have a 
     conflict of interest with a related party as determined under 
     any regulations which the Secretary may prescribe.

       ``(iv) Related party.--For purposes of clause (ii)(I), the 
     term `related party' means--

       ``(I) 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),
       ``(II) the physician or other medical care provider that 
     provided the medical care involved in the coverage decision,
       ``(III) the institution at which the medical care involved 
     in the coverage decision is provided,
       ``(IV) the manufacturer of any drug or other item that was 
     included in the medical care involved in the coverage 
     decision, or
       ``(V) any other party determined under any regulations 
     which the Secretary may prescribe to have a substantial 
     interest in the coverage decision .

       ``(v) Affiliated.--For purposes of clause (iii)(I), 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

[[Page H6312]]

     from coverage.--An adverse coverage decision based on a 
     determination that an item or service is excluded from 
     coverage under the terms of the plan shall not be subject to 
     review under this paragraph, unless such determination is 
     found in such decision to be based solely on the fact that 
     the item or service--
       ``(i) does not meet the plan's requirements for medical 
     appropriateness or necessity, or
       ``(ii) would constitute experimental treatment or 
     technology (as defined under the plan).
       ``(5) Permitted alternatives to required internal review.--
       ``(A) In general.--A group health plan shall not be treated 
     as failing to meet the requirements under paragraphs 
     (2)(A)(ii) and (2)(B)(ii) relating to review of initial 
     coverage decisions for benefits, if--
       ``(i) in lieu of the procedures relating to review under 
     paragraphs (2)(A)(ii) and (2)(B)(ii) and in accordance with 
     such regulations (if any) as may be prescribed by the 
     Secretary--

       ``(I) the aggrieved participant or beneficiary elects in 
     the request for the review an alternative dispute resolution 
     procedure which is available under the plan with respect to 
     similarly situated participants and beneficiaries, or
       ``(II) in the case of any such plan or portion thereof 
     which is established and maintained pursuant to a bona fide 
     collective bargaining agreement, the plan provides for a 
     procedure by which such disputes are resolved by means of any 
     alternative dispute resolution procedure,

       ``(ii) the time limits not exceeding the time limits 
     otherwise applicable under paragraphs (2)(A)(ii) and 
     (2)(B)(ii) are incorporated in such alternative dispute 
     resolution procedure,
       ``(iii) any applicable requirement for review by a 
     physician under paragraph (3), unless waived by the 
     participant or beneficiary (in a manner consistent with such 
     regulations as the Secretary may prescribe to ensure 
     equitable procedures), is incorporated in such alternative 
     dispute resolution procedure, and
       ``(iv) the plan meets the additional requirements of 
     subparagraph (B).

     In any case in which a procedure described in subclause (I) 
     or (II) of clause (i) is utilized and an alternative dispute 
     resolution procedure is voluntarily elected by the aggrieved 
     participant or beneficiary, the plan may require or allow (in 
     a manner consistent with such regulations as the Secretary 
     may prescribe to ensure equitable procedures) the aggrieved 
     participant or beneficiary to waive review of the coverage 
     decision under paragraph (3), to waive further review of the 
     coverage decision under paragraph (4) or section 502, and to 
     elect an alternative means of external review (other than 
     review under paragraph (4)).
       ``(B) Additional requirements.--The requirements of this 
     subparagraph are met if the means of resolution of dispute 
     allow for adequate presentation by the aggrieved participant 
     or beneficiary of scientific and medical evidence supporting 
     the position of such participant or beneficiary.
       ``(6) Permitted alternatives to required external review.--
     A group health plan shall not be treated as failing to meet 
     the requirements of this subsection in connection with review 
     of coverage decisions under paragraph (4) if the aggrieved 
     participant or beneficiary elects to utilize a procedure in 
     connection with such review which is made generally available 
     under the plan (in a manner consistent with such regulations 
     as the Secretary may prescribe to ensure equitable 
     procedures) under which--
       ``(A) the plan agrees in advance of the recommendations of 
     the independent medical expert or experts under paragraph 
     (4)(C)(iii) to render a final decision in accordance with 
     such recommendations, and
       ``(B) the participant or beneficiary waives in advance any 
     right to review of the final decision under section 502.
       ``(7) Special rule for access to specialty care.-- In the 
     case of a request for advance determination of coverage 
     consisting of a request by a physician for a determination of 
     coverage of the services of a specialist with respect to any 
     condition, if coverage of the services of such specialist for 
     such condition is otherwise provided under the plan, the 
     initial coverage decision referred to in subparagraph (A)(i) 
     or (B)(i) of paragraph (2) shall be issued within the 
     specialty decision period. For purposes of this paragraph, 
     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.--For purposes of this 
     section--
       ``(A) In general.--The term `group health plan' shall have 
     the meaning provided in section 733(a).
       ``(B) Treatment of partnerships.--The provisions of 
     paragraphs (1), (2), and (3) of section 732(d) shall apply.
       ``(9) Other definitions.--For purposes of this subsection--
       ``(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 such medical 
     care has been provided.
       ``(B) Required determination of medical necessity.--The 
     term `required determination of medical necessity' means a 
     determination required under a group health plan solely that 
     proposed medical care meets, under the facts and 
     circumstances at the time of the determination, 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 such determination does not constitute 
     an advance determination of coverage (as defined in 
     subparagraph (C)).
       ``(C) Advance determination of coverage.--The term `advance 
     determination of coverage' means a determination under a 
     group health plan that 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 such 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 (or as otherwise provided 
     in regulations of the Secretary) that failure to provide the 
     participant or beneficiary with such medical care within 45 
     days can reasonably be expected to result in either--
       ``(i) the imminent death of the participant or beneficiary, 
     or
       ``(ii) the immediate, serious, and irreversible 
     deterioration of the health of the participant or beneficiary 
     which will significantly increase the likelihood of death of, 
     or irreparable harm to, the participant or beneficiary.
       ``(I) Emergency medical care.--The term `emergency medical 
     care' means medical care in any case in which an appropriate 
     physician has certified in writing (or as otherwise provided 
     in regulations of the Secretary)--
       ``(i) that failure to immediately provide the care to the 
     participant or beneficiary could reasonably be expected to 
     result in--

       ``(I) placing the health of such participant or beneficiary 
     (or, with respect to such a participant or beneficiary who is 
     a pregnant woman, the health of the woman or her unborn 
     child) in serious jeopardy,
       ``(II) serious impairment to bodily functions, or
       ``(III) serious dysfunction of any bodily organ or part,

     or
       ``(ii) 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, or such longer period as 
     may be prescribed in regulations of the Secretary.
       ``(K) Internal review period.--The term `internal review 
     period' means a period of 30 days, or such longer period as 
     may be prescribed in regulations of the Secretary.
       ``(L) Urgent decision period.--The term `urgent decision 
     period' means a period of 10 days, or such longer period as 
     may be prescribed in regulations of the Secretary.
       ``(M) Emergency decision period.--The term `emergency 
     decision period' means a period of 72 hours, or such longer 
     period as may be prescribed in regulations of the Secretary.
       ``(N) Specialty decision period.--The term `specialty 
     decision period' means a period of 72 hours, or such longer 
     period as may be prescribed in regulations of the Secretary.
       ``(O) Reconsideration period.--The term `reconsideration 
     period' means a period of 25 days, or such longer period as 
     may be prescribed in regulations of the Secretary, except 
     that--
       ``(i) in the case of a decision involving urgent medical 
     care, such term means the urgent decision period, and
       ``(ii) in the case of a decision involving emergency 
     medical care, such term means the emergency decision period.
       ``(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

[[Page H6313]]

     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, in connection with a group health plan, the date as of 
     which the appropriate named fiduciary (or the independent 
     medical expert or experts in the case of a review under 
     paragraph (4)) 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 provided such term by 
     section 733(b)(1).
       ``(T) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided such term 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 such request or decision is 
     presented in a generally recognized printable or electronic 
     format. The Secretary may by regulation provide for 
     presentation of information otherwise required to be in 
     written form in such other forms as may be appropriate under 
     the circumstances.
       ``(ii) Medical appropriateness or experimental treatment 
     determinations.--For purposes of this subparagraph, 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 on such request is conveyed to the 
     provider of medical care or to the participant or beneficiary 
     by means of telephonic or other electronic communications, 
     such decision shall be treated as a written decision.''.
       (b) Civil Penalties.--
       (1) In general.--Section 502(c) of such Act (29 U.S.C. 
     1132(c)) is amended by redesignating paragraphs (6) and (7) 
     as paragraphs (7) and (8), respectively, and by inserting 
     after paragraph (5) the following new paragraph:
       ``(6)(A)(i) In any case in which--
       ``(I) a benefit under a group health plan (as defined in 
     section 503(b)(8)) is not timely provided to a participant or 
     beneficiary pursuant to a final decision of the plan which 
     was not in accordance with the terms of the plan or this 
     title, and
       ``(II) such final decision of the plan is contrary to a 
     recommendation described in section 503(b)(4)(C)(iii),

     any person acting in the capacity of a fiduciary of such plan 
     so as to cause such failure may, in the court's discretion, 
     be liable to the aggrieved participant or beneficiary for a 
     civil penalty.
       ``(ii) Such civil penalty shall be in the amount of up to 
     $250 a day 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 $100,000.
       ``(B) In any action commenced under subsection (a) by a 
     participant or beneficiary with respect to a group health 
     plan (as defined in section 503(b)(8)) in which the plaintiff 
     alleges that a person, in the capacity of a fiduciary and in 
     violation of the terms of the plan or this title, has taken 
     an action resulting in an adverse coverage decision in 
     violation of the terms of the plan, or has failed to take an 
     action for which such person is responsible under the plan 
     and which is necessary under the plan for a favorable 
     coverage decision, upon finding in favor of the plaintiff, if 
     such action was commenced after a final decision of the plan 
     upon review which included a review under section 503(b)(4) 
     or such action was commenced under subsection (b)(4) of this 
     section, the court shall cause to be served on the defendant 
     an order requiring the defendant--
       ``(i) to cease and desist from the alleged action or 
     failure to act, and
       ``(ii) to pay to the plaintiff a reasonable attorney's fee 
     and other reasonable costs relating to the prosecution of the 
     action on the charges on which the plaintiff prevails.

     The remedies provided under this subparagraph shall be in 
     addition to remedies otherwise provided under this section.
       ``(C)(i) The Secretary may assess a civil penalty against a 
     person acting in the capacity of a fidicuary of one or more 
     group health plans (as defined in section 503(b)(8)) for--
       ``(I) any pattern or practice of repeated adverse coverage 
     decisions in violation of the terms of the plan or plans or 
     this title, or
       ``(II) any pattern or practice of repeated violations of 
     the requirements of section 503 with respect to such plan or 
     plans.

     Such penalty shall be payable only upon proof by clear and 
     convincing evidence of such pattern or practice.
       ``(ii) Such penalty shall be in an amount not to exceed the 
     lesser of--
       ``(I) 5 percent of the aggregate value of benefits shown by 
     the Secretary to have not been provided, or unlawfully 
     delayed in violation of section 503, under such pattern or 
     practice, or
       ``(II) $100,000.
       ``(iii) Any person acting in the capacity of a fiduciary of 
     a group health plan or plans who has engaged in any such 
     pattern or practice with respect to such plans, upon the 
     petition of the Secretary, may be removed by the court from 
     that position, and from any other involvement, with respect 
     to such plan or plans, and may be precluded from returning to 
     any such position or involvement for a period determined by 
     the court.''.
       (2) Conforming amendment.--Section 502(a)(6) of such Act 
     (29 U.S.C. 1132(a)(6)) is amended by striking ``(6)'' and 
     inserting ``(7)''.
       (c) Expedited Court Review.--Section 502 of such Act (29 
     U.S.C. 1132) is amended--
       (1) in subsection (a)(8), by striking ``or'' at the end;
       (2) in subsection (a)(9), by striking the period and 
     inserting ``; or'';
       (3) by adding at the end of subsection (a) the following 
     new paragraph:
       ``(10) by a participant or beneficiary for appropriate 
     relief under subsection (b)(4).''.
       (4) by adding at the end of subsection (b) the following 
     new paragraph:
       ``(4) In any case in which exhaustion of administrative 
     remedies in accordance with paragraph (2)(A)(ii) or 
     (2)(B)(ii) of section 503(b) otherwise necessary for an 
     action for relief under paragraph (1)(B) or (3) of subsection 
     (a) has not been obtained and it is demonstrated to the court 
     by means of certification by an appropriate physician that 
     such exhaustion is not reasonably attainable under the facts 
     and circumstances without undue risk of irreparable harm to 
     the health of the participant or beneficiary, a civil action 
     may be brought by a participant or beneficiary to obtain 
     appropriate equitable relief. Any determinations made under 
     paragraph (2)(A)(ii) or (2)(B)(ii) of section 503(b) made 
     while an action under this paragraph is pending shall be 
     given due consideration by the court in any such action.''.
       (d) Standard of Review Unaffected.--The standard of review 
     under section 502 of the Employee Retirement Income Security 
     Act of 1974 (as amended by this section) shall continue on 
     and after the date of the enactment of this Act to be the 
     standard of review which was applicable under such section as 
     of immediately before such date.
       (e) Concurrent Jurisdiction.--Section 502(e)(1) of such Act 
     (29 U.S.C. 1132(e)(1)) is amended--
       (1) in the first sentence, by striking ``under subsection 
     (a)(1)(B) of this section'' and inserting ``under subsection 
     (a)(1)(A) for relief under subsection (c)(6), under 
     subsection (a)(1)(B), and under subsection (b)(4)''; and
       (2) in the last sentence, by striking ``of actions under 
     paragraphs (1)(B) and (7) of subsection (a) of this section'' 
     and inserting ``of actions under paragraph (1)(A) of 
     subsection (a) for relief under subsection (c)(6) and of 
     actions under paragraphs (1)(B) and (7) of subsection (a) and 
     paragraph (4) of subsection (b)''.

     SEC. 1202. EFFECTIVE DATE.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect 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. The 
     Secretary shall first issue all regulations necessary to 
     carry out the amendments made by this subtitle before such 
     date.
       (b) Limitation on Enforcement Actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this subtitle, against a group health plan or health 
     insurance issuer with respect to a violation of a requirement 
     imposed by such amendments before the date of issuance of 
     final regulations issued in connection with such requirement, 
     if the plan or issuer has sought to comply in good faith with 
     such requirement.
       (c) Collective Bargaining Agreements.--Any plan amendment 
     made pursuant to a collective bargaining agreement relating 
     to the plan which amends the plan solely to conform to any 
     requirement added by this subtitle shall not be treated as a 
     termination of such collective bargaining agreement.
     Subtitle D--Affordable Health Coverage for Employees of Small 
                               Businesses

     SEC. 1301. SHORT TITLE OF SUBTITLE.

       This subtitle may be cited as the ``Small Business 
     Affordable Health Coverage Act of 1998''.

     SEC. 1302. RULES GOVERNING ASSOCIATION HEALTH PLANS.

       (a) In General.--Subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     after part 7 the following new part:

           ``Part 8--Rules Governing Association Health Plans

     ``SEC. 801. ASSOCIATION HEALTH PLANS.

       ``(a) In General.--For purposes of this part, the term 
     `association health plan' means a group health plan--
       ``(1) whose sponsor is (or is deemed under this part to be) 
     described in subsection (b), and
       ``(2) under which at least one option of health insurance 
     coverage offered by a health insurance issuer (which may 
     include, among other options, managed care options, point of 
     service options, and preferred provider options) is provided 
     to participants and beneficiaries, unless, for any plan year, 
     such coverage remains unavailable to the plan despite good 
     faith efforts exercised by the plan to secure such coverage.
       ``(b) Sponsorship.--The sponsor of a group health plan is 
     described in this subsection if such sponsor--
       ``(1) is organized and maintained in good faith, with a 
     constitution and bylaws specifically stating its purpose and 
     providing for

[[Page H6314]]

     periodic meetings on at least an annual basis, as a trade 
     association, an industry association (including a rural 
     electric cooperative association or a rural telephone 
     cooperative association), a professional association, or a 
     chamber of commerce (or similar business association, 
     including a corporation or similar organization that operates 
     on a cooperative basis (within the meaning of section 1381 of 
     the Internal Revenue Code of 1986)), for substantial purposes 
     other than that of obtaining or providing medical care,
       ``(2) is established as a permanent entity which receives 
     the active support of its members and collects from its 
     members on a periodic basis dues or payments necessary to 
     maintain eligibility for membership in the sponsor, and
       ``(3) does not condition membership, such dues or payments, 
     or coverage under the plan on the basis of health status-
     related factors with respect to the employees of its members 
     (or affiliated members), or the dependents of such employees, 
     and does not condition such dues or payments on the basis of 
     group health plan participation.

     Any sponsor consisting of an association of entities which 
     meet the requirements of paragraphs (1) and (2) shall be 
     deemed to be a sponsor described in this subsection.

     ``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.

       ``(a) In General.--The applicable authority shall prescribe 
     by regulation a procedure under which, subject to subsection 
     (b), the applicable authority shall certify association 
     health plans which apply for certification as meeting the 
     requirements of this part.
       ``(b) Standards.--Under the procedure prescribed pursuant 
     to subsection (a), the applicable authority shall certify an 
     association health plan as meeting the requirements of this 
     part only if the applicable authority is satisfied that--
       ``(1) such certification--
       ``(A) is administratively feasible,
       ``(B) is not adverse to the interests of the individuals 
     covered under the plan, and
       ``(C) is protective of the rights and benefits of the 
     individuals covered under the plan, and
       ``(2) the applicable requirements of this part are met (or, 
     upon the date on which the plan is to commence operations, 
     will be met) with respect to the plan.
       ``(c) Requirements Applicable to Certified Plans.--An 
     association health plan with respect to which certification 
     under this part is in effect shall meet the applicable 
     requirements of this part, effective on the date of 
     certification (or, if later, on the date on which the plan is 
     to commence operations).
       ``(d) Requirements for Continued Certification.--The 
     applicable authority may provide by regulation for continued 
     certification of association health plans under this part, 
     including requirements relating to commencement of new 
     benefit options by plans which do not consist of health 
     insurance coverage.
       ``(e) Class Certification for Fully Insured Plans.--The 
     applicable authority shall establish a class certification 
     procedure for association health plans under which all 
     benefits consist of health insurance coverage. Under such 
     procedure, the applicable authority shall provide for the 
     granting of certification under this part to the plans in 
     each class of such association health plans upon appropriate 
     filing under such procedure in connection with plans in such 
     class and payment of the prescribed fee under section 807(a).

     ``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF 
                   TRUSTEES.

       ``(a) Sponsor.--The requirements of this subsection are met 
     with respect to an association health plan if--
       ``(1) the sponsor (together with its immediate predecessor, 
     if any) has met (or is deemed under this part to have met) 
     for a continuous period of not less than 3 years ending with 
     the date of the application for certification under this 
     part, the requirements of paragraphs (1) and (2) of section 
     801(b), and
       ``(2) the sponsor meets (or is deemed under this part to 
     meet) the requirements of section 801(b)(3).
       ``(b) Board of Trustees.--The requirements of this 
     subsection are met with respect to an association health plan 
     if the following requirements are met:
       ``(1) Fiscal control.--The plan is operated, pursuant to a 
     trust agreement, by a board of trustees which has complete 
     fiscal control over the plan and which is responsible for all 
     operations of the plan.
       ``(2) Rules of operation and financial controls.--The board 
     of trustees has in effect rules of operation and financial 
     controls, based on a 3-year plan of operation, adequate to 
     carry out the terms of the plan and to meet all requirements 
     of this title applicable to the plan.
       ``(3) Rules governing relationship to participating 
     employers and to contractors.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the members of the board of trustees are individuals selected 
     from individuals who are the owners, officers, directors, or 
     employees of the participating employers or who are partners 
     in the participating employers and actively participate in 
     the business.
       ``(B) Limitation.--
       ``(i) General rule.--Except as provided in clauses (ii) and 
     (iii), no such member is an owner, officer, director, or 
     employee of, or partner in, a contract administrator or other 
     service provider to the plan.
       ``(ii) Limited exception for providers of services solely 
     on behalf of the sponsor.--Officers or employees of a sponsor 
     which is a service provider (other than a contract 
     administrator) to the plan may be members of the board if 
     they constitute not more than 25 percent of the membership of 
     the board and they do not provide services to the plan other 
     than on behalf of the sponsor.
       ``(iii) Treatment of providers of medical care.--In the 
     case of a sponsor which is an association whose membership 
     consists primarily of providers of medical care, clause (i) 
     shall not apply in the case of any service provider described 
     in subparagraph (A) who is a provider of medical care under 
     the plan.
       ``(C) Sole authority.--The board has sole authority to 
     approve applications for participation in the plan and to 
     contract with a service provider to administer the day-to-day 
     affairs of the plan.
       ``(c) Treatment of Franchise Networks.--In the case of a 
     group health plan which is established and maintained by a 
     franchiser for a franchise network consisting of its 
     franchisees--
       ``(1) the requirements of subsection (a) and section 
     801(a)(1) shall be deemed met if such requirements would 
     otherwise be met if the franchiser were deemed to be the 
     sponsor referred to in section 801(b), such network were 
     deemed to be an association described in section 801(b), and 
     each franchisee were deemed to be a member (of the 
     association and the sponsor) referred to in section 801(b), 
     and
       ``(2) the requirements of section 804(a)(1) shall be deemed 
     met.
       ``(d) Certain Collectively Bargained Plans.--
       ``(1) In general.--In the case of a group health plan 
     described in paragraph (2)--
       ``(A) the requirements of subsection (a) and section 
     801(a)(1) shall be deemed met,
       ``(B) the joint board of trustees shall be deemed a board 
     of trustees with respect to which the requirements of 
     subsection (b) are met, and
       ``(C) the requirements of section 804 shall be deemed met.
       ``(2) Requirements.--A group health plan is described in 
     this paragraph if--
       ``(A) the plan is a multiemployer plan, or
       ``(B) the plan is in existence on April 1, 1997, and would 
     be described in section 3(40)(A)(i) but solely for the 
     failure to meet the requirements of section 3(40)(C)(ii).

     ``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

       ``(a) Covered Employers and Individuals.--The requirements 
     of this subsection are met with respect to an association 
     health plan if, under the terms of the plan--
       ``(1) all participating employers must be members or 
     affiliated members of the sponsor, except that, in the case 
     of a sponsor which is a professional association or other 
     individual-based association, if at least one of the 
     officers, directors, or employees of an employer, or at least 
     one of the individuals who are partners in an employer and 
     who actively participates in the business, is a member or 
     affiliated member of the sponsor, participating employers may 
     also include such employer, and
       ``(2) all individuals commencing coverage under the plan 
     after certification under this part must be--
       ``(A) active or retired owners (including self-employed 
     individuals), officers, directors, or employees of, or 
     partners in, participating employers, or
       ``(B) the beneficiaries of individuals described in 
     subparagraph (A).
       ``(b) Coverage of Previously Uninsured Employees.--
       ``(1) In general.--Subject to paragraph (2), the 
     requirements of this subsection are met with respect to an 
     association health plan if, under the terms of the plan, no 
     affiliated member of the sponsor may be offered coverage 
     under the plan as a participating employer, unless--
       ``(A) the affiliated member was an affiliated member on the 
     date of certification under this part, or
       ``(B) during the 12-month period preceding the date of the 
     offering of such coverage, the affiliated member has not 
     maintained or contributed to a group health plan with respect 
     to any of its employees who would otherwise be eligible to 
     participate in such association health plan.
       ``(2) Limitation.--The requirements of this subsection 
     shall apply only in the case of plans which were in existence 
     on the date of the enactment of the Small Business Affordable 
     Health Coverage Act of 1998.
       ``(c) Individual Market Unaffected.--The requirements of 
     this subsection are met with respect to an association health 
     plan if, under the terms of the plan, no participating 
     employer may provide health insurance coverage in the 
     individual market for any employee not covered under the plan 
     which is similar to the coverage contemporaneously provided 
     to employees of the employer under the plan, if such 
     exclusion of the employee from coverage under the plan is 
     based on a health status-related factor with respect to the 
     employee and such employee would, but for such exclusion on 
     such basis, be eligible for coverage under the plan.
       ``(d) Prohibition of Discrimination Against Employers and 
     Employees Eligible to Participate.--The requirements of this 
     subsection are met with respect to an association health plan 
     if--
       ``(1) under the terms of the plan, no employer meeting the 
     preceding requirements of this section is excluded as a 
     participating

[[Page H6315]]

     employer, unless participation or contribution requirements 
     of the type referred to in section 2711 of the Public Health 
     Service Act are not met with respect to the excluded 
     employer,
       ``(2) the applicable requirements of sections 701, 702, and 
     703 are met with respect to the plan, and
       ``(3) applicable benefit options under the plan are 
     actively marketed to all eligible participating employers.

     ``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, 
                   CONTRIBUTION RATES, AND BENEFIT OPTIONS.

       ``(a) In General.--The requirements of this section are met 
     with respect to an association health plan if the following 
     requirements are met:
       ``(1) Contents of governing instruments.--The instruments 
     governing the plan include a written instrument, meeting the 
     requirements of an instrument required under section 
     402(a)(1), which--
       ``(A) provides that the board of trustees serves as the 
     named fiduciary required for plans under section 402(a)(1) 
     and serves in the capacity of a plan administrator (referred 
     to in section 3(16)(A)),
       ``(B) provides that the sponsor of the plan is to serve as 
     plan sponsor (referred to in section 3(16)(B)), and
       ``(C) incorporates the requirements of section 806.
       ``(2) Contribution rates must be nondiscriminatory.--
       ``(A) The contribution rates for any participating small 
     employer do not vary on the basis of the claims experience of 
     such employer and do not vary on the basis of the type of 
     business or industry in which such employer is engaged.
       ``(B) Nothing in this title or any other provision of law 
     shall be construed to preclude an association health plan, or 
     a health insurance issuer offering health insurance coverage 
     in connection with an association health plan, from
       ``(i) setting contribution rates based on the claims 
     experience of the plan, or
       ``(ii) varying contribution rates for small employers in a 
     State to the extent that such rates could vary using the same 
     methodology employed in such State for regulating premium 
     rates in the small group market,

     subject to the requirements of section 702(b) relating to 
     contribution rates.
       ``(3) Floor for number of covered individuals with respect 
     to certain plans.--If any benefit option under the plan does 
     not consist of health insurance coverage, the plan has as of 
     the beginning of the plan year not fewer than 1,000 
     participants and beneficiaries.
       ``(4) Marketing requirements.--
       ``(A) In general.--If a benefit option which consists of 
     health insurance coverage is offered under the plan, State-
     licensed insurance agents shall be used to distribute to 
     small employers coverage which does not consist of health 
     insurance coverage in a manner comparable to the manner in 
     which such agents are used to distribute health insurance 
     coverage.
       ``(B) State-licensed insurance agents.--For purposes of 
     subparagraph (A), the term `State-licensed insurance agents' 
     means one or more agents who are licensed in a State and are 
     subject to the laws of such State relating to licensure, 
     qualification, testing, examination, and continuing education 
     of persons authorized to offer, sell, or solicit health 
     insurance coverage in such State.
       ``(5) Regulatory requirements.--Such other requirements as 
     the applicable authority may prescribe by regulation as 
     necessary to carry out the purposes of this part.
       ``(b) Ability of Association Health Plans to Design Benefit 
     Options.--Nothing in this part or any provision of State law 
     (as defined in section 514(c)(1)) shall be construed to 
     preclude an association health plan, or a health insurance 
     issuer offering health insurance coverage in connection with 
     an association health plan, from exercising its sole 
     discretion in selecting the specific items and services 
     consisting of medical care to be included as benefits under 
     such plan or coverage, except (subject to section 514) in the 
     case of any law to the extent that it (1) prohibits an 
     exclusion of a specific disease from such coverage, or (2) is 
     not preempted under section 731(a)(1) with respect to matters 
     governed by section 711 or 712.

     ``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR 
                   SOLVENCY FOR PLANS PROVIDING HEALTH BENEFITS IN 
                   ADDITION TO HEALTH INSURANCE COVERAGE.

       ``(a) In General.--The requirements of this section are met 
     with respect to an association health plan if--
       ``(1) the benefits under the plan consist solely of health 
     insurance coverage, or
       ``(2) if the plan provides any additional benefit options 
     which do not consist of health insurance coverage, the plan--
       ``(A) establishes and maintains reserves with respect to 
     such additional benefit options, in amounts recommended by 
     the qualified actuary, consisting of--
       ``(i) a reserve sufficient for unearned contributions,
       ``(ii) a reserve sufficient for benefit liabilities which 
     have been incurred, which have not been satisfied, and for 
     which risk of loss has not yet been transferred, and for 
     expected administrative costs with respect to such benefit 
     liabilities,
       ``(iii) a reserve sufficient for any other obligations of 
     the plan, and
       ``(iv) a reserve sufficient for a margin of error and other 
     fluctuations, taking into account the specific circumstances 
     of the plan,

     and
       ``(B) establishes and maintains aggregate and specific 
     excess/stop loss insurance and solvency indemnification, with 
     respect to such additional benefit options for which risk of 
     loss has not yet been transferred, as follows:
       ``(i) The plan shall secure aggregate excess/stop loss 
     insurance for the plan with an attachment point which is not 
     greater than 125 percent of expected gross annual claims. The 
     applicable authority may by regulation provide for upward 
     adjustments in the amount of such percentage in specified 
     circumstances in which the plan specifically provides for and 
     maintains reserves in excess of the amounts required under 
     subparagraph (A).
       ``(ii) The plan shall secure specific excess/stop loss 
     insurance for the plan with an attachment point which is at 
     least equal to an amount recommended by the plan's qualified 
     actuary (but not more than $200,000). The applicable 
     authority may by regulation provide for adjustments in the 
     amount of such insurance in specified circumstances in which 
     the plan specifically provides for and maintains reserves in 
     excess of the amounts required under subparagraph (A).
       ``(iii) The plan shall secure indemnification insurance for 
     any claims which the plan is unable to satisfy by reason of a 
     plan termination.

     Any regulations prescribed by the applicable authority 
     pursuant to clause (i) or (ii) of subparagraph (B) may allow 
     for such adjustments in the required levels of excess/stop 
     loss insurance as the qualified actuary may recommend, taking 
     into account the specific circumstances of the plan.
       ``(b) Minimum Surplus in Addition to Claims Reserves.--The 
     requirements of this subsection are met if the plan 
     establishes and maintains surplus in an amount at least equal 
     to $2,000,000, reduced in accordance with a scale, prescribed 
     in regulations of the applicable authority to an amount not 
     less than $500,000, based on the level of aggregate and 
     specific excess/stop loss insurance provided with respect to 
     such plan.
       ``(c) Additional Requirements.--In the case of any 
     association health plan described in subsection (a)(2), the 
     applicable authority may provide such additional requirements 
     relating to reserves and excess/stop loss insurance as the 
     applicable authority considers appropriate. Such requirements 
     may be provided, by regulation or otherwise, with respect to 
     any such plan or any class of such plans.
       ``(d) Adjustments for Excess/Stop Loss Insurance.--The 
     applicable authority may provide for adjustments to the 
     levels of reserves otherwise required under subsections (a) 
     and (b) with respect to any plan or class of plans to take 
     into account excess/stop loss insurance provided with respect 
     to such plan or plans.
       ``(e) Alternative Means of Compliance.--The applicable 
     authority may permit an association health plan described in 
     subsection (a)(2) to substitute, for all or part of the 
     requirements of this section (except subsection 
     (a)(2)(B)(iii)), such security, guarantee, hold-harmless 
     arrangement, or other financial arrangement as the applicable 
     authority determines to be adequate to enable the plan to 
     fully meet all its financial obligations on a timely basis 
     and is otherwise no less protective of the interests of 
     participants and beneficiaries than the requirements for 
     which it is substituted. The applicable authority may take 
     into account, for purposes of this subsection, evidence 
     provided by the plan or sponsor which demonstrates an 
     assumption of liability with respect to the plan. Such 
     evidence may be in the form of a contract of indemnification, 
     lien, bonding, insurance, letter of credit, recourse under 
     applicable terms of the plan in the form of assessments of 
     participating employers, security, or other financial 
     arrangement.
       ``(f) Measures to Ensure Continued Payment of Benefits by 
     Certain Plans in Distress.--
       ``(1) Payments by certain plans to association health plan 
     fund.--
       ``(A) In general.--In the case of an association health 
     plan described in subsection (a)(2), the requirements of this 
     subsection are met if the plan makes payments into the 
     Association Health Plan Fund under this subparagraph when 
     they are due. Such payments shall consist of annual payments 
     in the amount of $5,000, and, in addition to such annual 
     payments, such supplemental payments as the Secretary may 
     determine to be necessary under paragraph (2). Payments under 
     this paragraph are payable to the Fund at the time determined 
     by the Secretary. Initial payments are due in advance of 
     certification under this part. Payments shall continue to 
     accrue until a plan's assets are distributed pursuant to a 
     termination procedure.
       ``(B) Penalties for failure to make payments.--If any 
     payment is not made by a plan when it is due, a late payment 
     charge of not more than 100 percent of the payment which was 
     not timely paid shall be payable by the plan to the Fund.
       ``(C) Continued duty of the secretary.--The Secretary shall 
     not cease to carry out the provisions of paragraph (2) on 
     account of the failure of a plan to pay any payment when due.
       ``(2) Payments by secretary to continue excess stop/loss 
     insurance coverage and indemnification insurance coverage for 
     certain plans.--In any case in which the applicable authority 
     determines that there is,

[[Page H6316]]

     or that there is reason to believe that there will be, (A) a 
     failure to take necessary corrective actions under section 
     809(a) with respect to an association health plan described 
     in subsection (a)(2), or (B) a termination of such a plan 
     under section 809(b) or 810(b)(8) (and, if the applicable 
     authority is not the Secretary, certifies such determination 
     to the Secretary), the Secretary shall determine the amounts 
     necessary to make payments to an insurer (designated by the 
     Secretary) to maintain in force excess/stop loss insurance 
     coverage or indemnification insurance coverage for such plan, 
     if the Secretary determines that there is a reasonable 
     expectation that, without such payments, claims would not be 
     satisfied by reason of termination of such coverage. The 
     Secretary shall, to the extent provided in advance in 
     appropriation Acts, pay such amounts so determined to the 
     insurer designated by the Secretary.
       ``(3) Association health plan fund.--
       ``(A) In general.--There is established on the books of the 
     Treasury a fund to be known as the `Association Health Plan 
     Fund'. The Fund shall be available for making payments 
     pursuant to paragraph (2). The Fund shall be credited with 
     payments received pursuant to paragraph (1)(A), penalties 
     received pursuant to paragraph (1)(B), and earnings on 
     investments of amounts of the Fund under subparagraph (B).
       ``(B) Investment.--Whenever the Secretary determines that 
     the moneys of the fund are in excess of current needs, the 
     Secretary may request the investment of such amounts as the 
     Secretary determines advisable by the Secretary of the 
     Treasury in obligations issued or guaranteed by the United 
     States.
       ``(g) Excess/Stop Loss Insurance.--For purposes of this 
     section--
       ``(1) Aggregate excess/stop loss insurance.--The term 
     `aggregate excess/stop loss insurance' means, in connection 
     with an association health plan, a contract--
       ``(A) under which an insurer (meeting such minimum 
     standards as may be prescribed in regulations of the 
     applicable authority) provides for payment to the plan with 
     respect to aggregate claims under the plan in excess of an 
     amount or amounts specified in such contract,
       ``(B) which is guaranteed renewable, and
       ``(C) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(2) Specific excess/stop loss insurance.--The term 
     `specific excess/stop loss insurance' means , in connection 
     with an association health plan, a contract--
       ``(A) under which an insurer (meeting such minimum 
     standards as may be prescribed in regulations of the 
     applicable authority) provides for payment to the plan with 
     respect to claims under the plan in connection with a covered 
     individual in excess of an amount or amounts specified in 
     such contract in connection with such covered individual,
       ``(B) which is guaranteed renewable, and
       ``(C) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(h) Indemnification Insurance.--For purposes of this 
     section, the term `indemnification insurance' means, in 
     connection with an association health plan, a contract--
       ``(1) under which an insurer (meeting such minimum 
     standards as may be prescribed in regulations of the 
     applicable authority) provides for payment to the plan with 
     respect to claims under the plan which the plan is unable to 
     satisfy by reason of a termination pursuant to section 809(b) 
     (relating to mandatory termination),
       ``(2) which is guaranteed renewable and noncancellable for 
     any reason (except as may be provided in regulations of the 
     applicable authority), and
       ``(3) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(i) Reserves.--For purposes of this section, the term 
     `reserves' means, in connection with an association health 
     plan, plan assets which meet the fiduciary standards under 
     part 4 and such additional requirements regarding liquidity 
     as may be prescribed in regulations of the applicable 
     authority.
       ``(j) Regulations Prescribed under Negotiated Rulemaking.--
     The regulations under this section shall be prescribed under 
     negotiated rulemaking in accordance with subchapter III of 
     chapter 5 of title 5, United States Code, except that, in 
     establishing the negotiated rulemaking committee for purposes 
     of such rulemaking, the applicable authority shall include 
     among persons invited to membership on the committee at least 
     one of each of the following:
       ``(1) a representative of the National Association of 
     Insurance Commissioners,
       ``(2) a representative of the American Academy of 
     Actuaries,
       ``(3) a representative of the State governments, or their 
     interests,
       ``(4) a representative of existing self-insured 
     arrangements, or their interests,
       ``(5) a representative of associations of the type referred 
     to in section 801(b)(1), or their interests, and
       ``(6) a representative of multiemployer plans that are 
     group health plans, or their interests.

     ``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED 
                   REQUIREMENTS.

       ``(a) Filing Fee.--Under the procedure prescribed pursuant 
     to section 802(a), an association health plan shall pay to 
     the applicable authority at the time of filing an application 
     for certification under this part a filing fee in the amount 
     of $5,000, which shall be available in the case of the 
     Secretary, to the extent provided in appropriation Acts, for 
     the sole purpose of administering the certification 
     procedures applicable with respect to association health 
     plans.
       ``(b) Information To Be Included in Application for 
     Certification.--An application for certification under this 
     part meets the requirements of this section only if it 
     includes, in a manner and form prescribed in regulations of 
     the applicable authority, at least the following information:
       ``(1) Identifying information.--The names and addresses 
     of--
       ``(A) the sponsor, and
       ``(B) the members of the board of trustees of the plan.
       ``(2) States in which plan intends to do business.--The 
     States in which participants and beneficiaries under the plan 
     are to be located and the number of them expected to be 
     located in each such State.
       ``(3) Bonding requirements.--Evidence provided by the board 
     of trustees that the bonding requirements of section 412 will 
     be met as of the date of the application or (if later) 
     commencement of operations.
       ``(4) Plan documents.--A copy of the documents governing 
     the plan (including any bylaws and trust agreements), the 
     summary plan description, and other material describing the 
     benefits that will be provided to participants and 
     beneficiaries under the plan.
       ``(5) Agreements with service providers.--A copy of any 
     agreements between the plan and contract administrators and 
     other service providers.
       ``(6) Funding report.--In the case of association health 
     plans providing benefits options in addition to health 
     insurance coverage, a report setting forth information with 
     respect to such additional benefit options determined as of a 
     date within the 120-day period ending with the date of the 
     application, including the following:
       ``(A) Reserves.--A statement, certified by the board of 
     trustees of the plan, and a statement of actuarial opinion, 
     signed by a qualified actuary, that all applicable 
     requirements of section 806 are or will be met in accordance 
     with regulations which the applicable authority shall 
     prescribe.
       ``(B) Adequacy of contribution rates.--A statement of 
     actuarial opinion, signed by a qualified actuary, which sets 
     forth a description of the extent to which contribution rates 
     are adequate to provide for the payment of all obligations 
     and the maintenance of required reserves under the plan for 
     the 12-month period beginning with such date within such 120-
     day period, taking into account the expected coverage and 
     experience of the plan. If the contribution rates are not 
     fully adequate, the statement of actuarial opinion shall 
     indicate the extent to which the rates are inadequate and the 
     changes needed to ensure adequacy.
       ``(C) Current and projected value of assets and 
     liabilities.--A statement of actuarial opinion signed by a 
     qualified actuary, which sets forth the current value of the 
     assets and liabilities accumulated under the plan and a 
     projection of the assets, liabilities, income, and expenses 
     of the plan for the 12-month period referred to in 
     subparagraph (B). The income statement shall identify 
     separately the plan's administrative expenses and claims.
       ``(D) Costs of coverage to be charged and other expenses.--
     A statement of the costs of coverage to be charged, including 
     an itemization of amounts for administration, reserves, and 
     other expenses associated with the operation of the plan.
       ``(E) Other information.--Any other information which may 
     be prescribed in regulations of the applicable authority as 
     necessary to carry out the purposes of this part.
       ``(c) Filing Notice of Certification With States.--A 
     certification granted under this part to an association 
     health plan shall not be effective unless written notice of 
     such certification is filed with the applicable State 
     authority of each State in which at least 25 percent of the 
     participants and beneficiaries under the plan are located. 
     For purposes of this subsection, an individual shall be 
     considered to be located in the State in which a known 
     address of such individual is located or in which such 
     individual is employed.
       ``(d) Notice of Material Changes.--In the case of any 
     association health plan certified under this part, 
     descriptions of material changes in any information which was 
     required to be submitted with the application for the 
     certification under this part shall be filed in such form and 
     manner as shall be prescribed in regulations of the 
     applicable authority. The applicable authority may require by 
     regulation prior notice of material changes with respect to 
     specified matters which might serve as the basis for 
     suspension or revocation of the certification.
       ``(e) Reporting Requirements for Certain Association Health 
     Plans.--An association health plan certified under this part 
     which provides benefit options in addition to health 
     insurance coverage for such plan year shall meet the 
     requirements of section 103 by filing an annual report under 
     such section which shall include information described in 
     subsection (b)(6) with respect to the plan year and, 
     notwithstanding section 104(a)(1)(A), shall be filed with the 
     applicable authority not later than 90 days after the close 
     of the plan year (or on such later date as may be prescribed 
     by the applicable authority).
       ``(f) Engagement of Qualified Actuary.--The board of 
     trustees of each association

[[Page H6317]]

     health plan which provides benefits options in addition to 
     health insurance coverage and which is applying for 
     certification under this part or is certified under this part 
     shall engage, on behalf of all participants and 
     beneficiaries, a qualified actuary who shall be responsible 
     for the preparation of the materials comprising information 
     necessary to be submitted by a qualified actuary under this 
     part. The qualified actuary shall utilize such assumptions 
     and techniques as are necessary to enable such actuary to 
     form an opinion as to whether the contents of the matters 
     reported under this part--
       ``(1) are in the aggregate reasonably related to the 
     experience of the plan and to reasonable expectations, and
       ``(2) represent such actuary's best estimate of anticipated 
     experience under the plan.
     The opinion by the qualified actuary shall be made with 
     respect to, and shall be made a part of, the annual report.

     ``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

       ``Except as provided in section 809(b), an association 
     health plan which is or has been certified under this part 
     may terminate (upon or at any time after cessation of 
     accruals in benefit liabilities) only if the board of 
     trustees--
       ``(1) not less than 60 days before the proposed termination 
     date, provides to the participants and beneficiaries a 
     written notice of intent to terminate stating that such 
     termination is intended and the proposed termination date,
       ``(2) develops a plan for winding up the affairs of the 
     plan in connection with such termination in a manner which 
     will result in timely payment of all benefits for which the 
     plan is obligated, and
       ``(3) submits such plan in writing to the applicable 
     authority.

     Actions required under this section shall be taken in such 
     form and manner as may be prescribed in regulations of the 
     applicable authority.

     ``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.

       ``(a) Actions To Avoid Depletion of Reserves.--An 
     association health plan which is certified under this part 
     and which provides benefits other than health insurance 
     coverage shall continue to meet the requirements of section 
     806, irrespective of whether such certification continues in 
     effect. The board of trustees of such plan shall determine 
     quarterly whether the requirements of section 806 are met. In 
     any case in which the board determines that there is reason 
     to believe that there is or will be a failure to meet such 
     requirements, or the applicable authority makes such a 
     determination and so notifies the board, the board shall 
     immediately notify the qualified actuary engaged by the plan, 
     and such actuary shall, not later than the end of the next 
     following month, make such recommendations to the board for 
     corrective action as the actuary determines necessary to 
     ensure compliance with section 806. Not later than 30 days 
     after receiving from the actuary recommendations for 
     corrective actions, the board shall notify the applicable 
     authority (in such form and manner as the applicable 
     authority may prescribe by regulation) of such 
     recommendations of the actuary for corrective action, 
     together with a description of the actions (if any) that the 
     board has taken or plans to take in response to such 
     recommendations. The board shall thereafter report to the 
     applicable authority, in such form and frequency as the 
     applicable authority may specify to the board, regarding 
     corrective action taken by the board until the requirements 
     of section 806 are met.
       ``(b) Mandatory Termination.--In any case in which--
       ``(1) the applicable authority has been notified under 
     subsection (a) of a failure of an association health plan 
     which is or has been certified under this part and is 
     described in section 806(a)(2) to meet the requirements of 
     section 806 and has not been notified by the board of 
     trustees of the plan that corrective action has restored 
     compliance with such requirements, and
       ``(2) the applicable authority determines that there is a 
     reasonable expectation that the plan will continue to fail to 
     meet the requirements of section 806,

     the board of trustees of the plan shall, at the direction of 
     the applicable authority, terminate the plan and, in the 
     course of the termination, take such actions as the 
     applicable authority may require, including satisfying any 
     claims referred to in section 806(a)(2)(B)(iii) and 
     recovering for the plan any liability under subsection 
     (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
     that the affairs of the plan will be, to the maximum extent 
     possible, wound up in a manner which will result in timely 
     provision of all benefits for which the plan is obligated.

     ``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT 
                   ASSOCIATION HEALTH PLANS PROVIDING HEALTH 
                   BENEFITS IN ADDITION TO HEALTH INSURANCE 
                   COVERAGE.

       ``(a) Appointment of Secretary as Trustee for Insolvent 
     Plans.--Whenever the Secretary determines that an association 
     health plan which is or has been certified under this part 
     and which is described in section 806(a)(2) will be unable to 
     provide benefits when due or is otherwise in a financially 
     hazardous condition as defined in regulations of such 
     Secretary, the Secretary shall, upon notice to the plan, 
     apply to the appropriate United States district court for 
     appointment of the Secretary as trustee to administer the 
     plan for the duration of the insolvency. The plan may appear 
     as a party and other interested persons may intervene in the 
     proceedings at the discretion of the court. The court shall 
     appoint such Secretary trustee if the court determines that 
     the trusteeship is necessary to protect the interests of the 
     participants and beneficiaries or providers of medical care 
     or to avoid any unreasonable deterioration of the financial 
     condition of the plan. The trusteeship of such Secretary 
     shall continue until the conditions described in the first 
     sentence of this subsection are remedied or the plan is 
     terminated.
       ``(b) Powers as Trustee.--The Secretary, upon appointment 
     as trustee under subsection (a), shall have the power--
       ``(1) to do any act authorized by the plan, this title, or 
     other applicable provisions of law to be done by the plan 
     administrator or any trustee of the plan,
       ``(2) to require the transfer of all (or any part) of the 
     assets and records of the plan to the Secretary as trustee,
       ``(3) to invest any assets of the plan which the Secretary 
     holds in accordance with the provisions of the plan, 
     regulations of the Secretary, and applicable provisions of 
     law,
       ``(4) to require the sponsor, the plan administrator, any 
     participating employer, and any employee organization 
     representing plan participants to furnish any information 
     with respect to the plan which the Secretary as trustee may 
     reasonably need in order to administer the plan,
       ``(5) to collect for the plan any amounts due the plan and 
     to recover reasonable expenses of the trusteeship,
       ``(6) to commence, prosecute, or defend on behalf of the 
     plan any suit or proceeding involving the plan,
       ``(7) to issue, publish, or file such notices, statements, 
     and reports as may be required under regulations of the 
     Secretary or by any order of the court,
       ``(8) to terminate the plan (or provide for its termination 
     accordance with section 809(b)) and liquidate the plan 
     assets, to restore the plan to the responsibility of the 
     sponsor, or to continue the trusteeship,
       ``(9) to provide for the enrollment of plan participants 
     and beneficiaries under appropriate coverage options, and
       ``(10) to do such other acts as may be necessary to comply 
     with this title or any order of the court and to protect the 
     interests of plan participants and beneficiaries and 
     providers of medical care.
       ``(c) Notice of Appointment.--As soon as practicable after 
     the Secretary's appointment as trustee, the Secretary shall 
     give notice of such appointment to--
       ``(1) the sponsor and plan administrator,
       ``(2) each participant,
       ``(3) each participating employer, and
       ``(4) if applicable, each employee organization which, for 
     purposes of collective bargaining, represents plan 
     participants.
       ``(d) Additional Duties.--Except to the extent inconsistent 
     with the provisions of this title, or as may be otherwise 
     ordered by the court, the Secretary, upon appointment as 
     trustee under this section, shall be subject to the same 
     duties as those of a trustee under section 704 of title 11, 
     United States Code, and shall have the duties of a fiduciary 
     for purposes of this title.
       ``(e) Other Proceedings.--An application by the Secretary 
     under this subsection may be filed notwithstanding the 
     pendency in the same or any other court of any bankruptcy, 
     mortgage foreclosure, or equity receivership proceeding, or 
     any proceeding to reorganize, conserve, or liquidate such 
     plan or its property, or any proceeding to enforce a lien 
     against property of the plan.
       ``(f) Jurisdiction of Court.--
       ``(1) In general.--Upon the filing of an application for 
     the appointment as trustee or the issuance of a decree under 
     this section, the court to which the application is made 
     shall have exclusive jurisdiction of the plan involved and 
     its property wherever located with the powers, to the extent 
     consistent with the purposes of this section, of a court of 
     the United States having jurisdiction over cases under 
     chapter 11 of title 11, United States Code. Pending an 
     adjudication under this section such court shall stay, and 
     upon appointment by it of the Secretary as trustee, such 
     court shall continue the stay of, any pending mortgage 
     foreclosure, equity receivership, or other proceeding to 
     reorganize, conserve, or liquidate the plan, the sponsor, or 
     property of such plan or sponsor, and any other suit against 
     any receiver, conservator, or trustee of the plan, the 
     sponsor, or property of the plan or sponsor. Pending such 
     adjudication and upon the appointment by it of the Secretary 
     as trustee, the court may stay any proceeding to enforce a 
     lien against property of the plan or the sponsor or any other 
     suit against the plan or the sponsor.
       ``(2) Venue.--An action under this section may be brought 
     in the judicial district where the sponsor or the plan 
     administrator resides or does business or where any asset of 
     the plan is situated. A district court in which such action 
     is brought may issue process with respect to such action in 
     any other judicial district.
       ``(g) Personnel.--In accordance with regulations of the 
     Secretary, the Secretary shall appoint, retain, and 
     compensate accountants, actuaries, and other professional 
     service personnel as may be necessary in connection with the 
     Secretary's service as trustee under this section.

     ``SEC. 811. STATE ASSESSMENT AUTHORITY.

       ``(a) In General.--Notwithstanding section 514, a State may 
     impose by law a contribution tax on an association health 
     plan described in section 806(a)(2), if the plan commenced 
     operations in such State after the

[[Page H6318]]

     date of the enactment of the Small Business Affordable Health 
     Coverage Act of 1998.
       ``(b) Contribution Tax.--For purposes of this section, the 
     term `contribution tax' imposed by a State on an association 
     health plan means any tax imposed by such State if--
       ``(1) such tax is computed by applying a rate to the amount 
     of premiums or contributions, with respect to individuals 
     covered under the plan who are residents of such State, which 
     are received by the plan from participating employers located 
     in such State or from such individuals,
       ``(2) the rate of such tax does not exceed the rate of any 
     tax imposed by such State on premiums or contributions 
     received by insurers or health maintenance organizations for 
     health insurance coverage offered in such State in connection 
     with a group health plan,
       ``(3) such tax is otherwise nondiscriminatory, and
       ``(4) the amount of any such tax assessed on the plan is 
     reduced by the amount of any tax or assessment otherwise 
     imposed by the State on premiums, contributions, or both 
     received by insurers or health maintenance organizations for 
     health insurance coverage, aggregate excess/stop loss 
     insurance (as defined in section 806(g)(1)), specific excess/
     stop loss insurance (as defined in section 806(g)(2)), other 
     insurance related to the provision of medical care under the 
     plan, or any combination thereof provided by such insurers or 
     health maintenance organizations in such State in connection 
     with such plan.

     ``SEC. 812. SPECIAL RULES FOR CHURCH PLANS.

       ``(a) Election for Church Plans.--Notwithstanding section 
     4(b)(2), if a church, a convention or association of 
     churches, or an organization described in section 3(33)(C)(i) 
     maintains a church plan which is a group health plan (as 
     defined in section 733(a)(1)), and such church, convention, 
     association, or organization makes an election with respect 
     to such plan under this subsection (in such form and manner 
     as the Secretary may by regulation prescribe), then the 
     provisions of this section shall apply to such plan, with 
     respect to benefits provided under such plan consisting of 
     medical care, as if section 4(b)(2) did not contain an 
     exclusion for church plans. Nothing in this subsection shall 
     be construed to render any other section of this title 
     applicable to church plans, except to the extent that such 
     other section is incorporated by reference in this section.
       ``(b) Effect of Election.--
       ``(1) Preemption of state insurance laws regulating covered 
     church plans.--Subject to paragraphs (2) and (3), this 
     section shall supersede any and all State laws which regulate 
     insurance insofar as they may now or hereafter regulate 
     church plans to which this section applies or trusts 
     established under such church plans.
       ``(2) General state insurance regulation unaffected.--
       ``(A) In general.--Except as provided in subparagraph (B) 
     and paragraph (3), nothing in this section shall be construed 
     to exempt or relieve any person from any provision of State 
     law which regulates insurance.
       ``(B) Church plans not to be deemed insurance companies or 
     insurers.--Neither a church plan to which this section 
     applies, nor any trust established under such a church plan, 
     shall be deemed to be an insurance company or other insurer 
     or to be engaged in the business of insurance for purposes of 
     any State law purporting to regulate insurance companies or 
     insurance contracts.
       ``(3) Preemption of certain state laws relating to premium 
     rate regulation and benefit mandates.--The provisions of 
     subsections (a)(2)(B) and (b) of section 805 shall apply with 
     respect to a church plan to which this section applies in the 
     same manner and to the same extent as such provisions apply 
     with respect to association health plans.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) State law.--The term `State law' includes all laws, 
     decisions, rules, regulations, or other State action having 
     the effect of law, of any State. A law of the United States 
     applicable only to the District of Columbia shall be treated 
     as a State law rather than a law of the United States.
       ``(B) State.--The term `State' includes a State, any 
     political subdivision thereof, or any agency or 
     instrumentality of either, which purports to regulate, 
     directly or indirectly, the terms and conditions of church 
     plans covered by this section.
       ``(c) Requirements for Covered Church Plans.--
       ``(1) Fiduciary rules and exclusive purpose.--A fiduciary 
     shall discharge his duties with respect to a church plan to 
     which this section applies--
       ``(A) for the exclusive purpose of:
       ``(i) providing benefits to participants and their 
     beneficiaries; and
       ``(ii) defraying reasonable expenses of administering the 
     plan;
       ``(B) with the care, skill, prudence and diligence under 
     the circumstances then prevailing that a prudent man acting 
     in a like capacity and familiar with such matters would use 
     in the conduct of an enterprise of a like character and with 
     like aims; and
       ``(C) in accordance with the documents and instruments 
     governing the plan.

     The requirements of this paragraph shall not be treated as 
     not satisfied solely because the plan assets are commingled 
     with other church assets, to the extent that such plan assets 
     are separately accounted for.
       ``(2) Claims procedure.--In accordance with regulations of 
     the Secretary, every church plan to which this section 
     applies shall--
       ``(A) provide adequate notice in writing to any participant 
     or beneficiary whose claim for benefits under the plan has 
     been denied, setting forth the specific reasons for such 
     denial, written in a manner calculated to be understood by 
     the participant;
       ``(B) afford a reasonable opportunity to any participant 
     whose claim for benefits has been denied for a full and fair 
     review by the appropriate fiduciary of the decision denying 
     the claim; and
       ``(C) provide a written statement to each participant 
     describing the procedures established pursuant to this 
     paragraph.
       ``(3) Annual statements.--In accordance with regulations of 
     the Secretary, every church plan to which this section 
     applies shall file with the Secretary an annual statement--
       ``(A) stating the names and addresses of the plan and of 
     the church, convention, or association maintaining the plan 
     (and its principal place of business);
       ``(B) certifying that it is a church plan to which this 
     section applies and that it complies with the requirements of 
     paragraphs (1) and (2);
       ``(C) identifying the States in which participants and 
     beneficiaries under the plan are or likely will be located 
     during the 1-year period covered by the statement; and
       ``(D) containing a copy of a statement of actuarial opinion 
     signed by a qualified actuary that the plan maintains 
     capital, reserves, insurance, other financial arrangements, 
     or any combination thereof adequate to enable the plan to 
     fully meet all of its financial obligations on a timely 
     basis.
       ``(4) Disclosure.--At the time that the annual statement is 
     filed by a church plan with the Secretary pursuant to 
     paragraph (3), a copy of such statement shall be made 
     available by the Secretary to the State insurance 
     commissioner (or similar official) of any State. The name of 
     each church plan and sponsoring organization filing an annual 
     statement in compliance with paragraph (3) shall be published 
     annually in the Federal Register.
       ``(c) Enforcement.--The Secretary may enforce the 
     provisions of this section in a manner consistent with 
     section 502, to the extent applicable with respect to actions 
     under section 502(a)(5), and with section 3(33)(D), except 
     that, other than for the purpose of seeking a temporary 
     restraining order, a civil action may be brought with respect 
     to the plan's failure to meet any requirement of this section 
     only if the plan fails to correct its failure within the 
     correction period described in section 3(33)(D). The other 
     provisions of part 5 (except sections 501(a), 503, 512, 514, 
     and 515) shall apply with respect to the enforcement and 
     administration of this section.
       ``(d) Definitions and Other Rules.--For purposes of this 
     section--
       ``(1) In general.--Except as otherwise provided in this 
     section, any term used in this section which is defined in 
     any provision of this title shall have the definition 
     provided such term by such provision.
       ``(2) Seminary students.--Seminary students who are 
     enrolled in an institution of higher learning described in 
     section 3(33)(C)(iv) and who are treated as participants 
     under the terms of a church plan to which this section 
     applies shall be deemed to be employees as defined in section 
     3(6) if the number of such students constitutes an 
     insignificant portion of the total number of individuals who 
     are treated as participants under the terms of the plan.

     ``SEC. 813. DEFINITIONS AND RULES OF CONSTRUCTION.

       ``(a) Definitions.--For purposes of this part--
       ``(1) Group health plan.--The term `group health plan' has 
     the meaning provided in section 733(a)(1) (after applying 
     subsection (b) of this section).
       ``(2) Medical care.--The term `medical care' has the 
     meaning provided in section 733(a)(2).
       ``(3) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning provided in section 
     733(b)(1).
       ``(4) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided in section 733(b)(2).
       ``(5) Applicable authority.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `applicable authority' means, in connection with an 
     association health plan--
       ``(i) the State recognized pursuant to subsection (c) of 
     section 506 as the State to which authority has been 
     delegated in connection with such plan, or
       ``(ii) if there if no State referred to in clause (i), the 
     Secretary.
       ``(B) Exceptions.--
       ``(i) Joint authorities.--Where such term appears in 
     section 808(3), section 807(e) (in the first instance), 
     section 809(a) (in the second instance), section 809(a) (in 
     the fourth instance), and section 809(b)(1), such term means, 
     in connection with an association health plan, the Secretary 
     and the State referred to in subparagraph (A)(i) (if any) in 
     connection with such plan.
       ``(ii) Regulatory authorities.--Where such term appears in 
     section 802(a) (in the first instance), section 802(d), 
     section 802(e), section 803(d), section 805(a)(5), section 
     806(a)(2), section 806(b), section 806(c), section 806(d), 
     paragraphs (1)(A) and (2)(A) of section 806(g), section 
     806(h), section 806(i),

[[Page H6319]]

     section 807(a) (in the second instance), section 807(b), 
     section 807(d), section 807(e) (in the second instance), 
     section 808 (in the matter after paragraph (3)), and section 
     809(a) (in the third instance), such term means, in 
     connection with an association health plan, the Secretary.
       ``(6) Health status-related factor.--The term `health 
     status-related factor' has the meaning provided in section 
     733(d)(2).
       ``(7) Individual market.--
       ``(A) In general.--The term `individual market' means the 
     market for health insurance coverage offered to individuals 
     other than in connection with a group health plan.
       ``(B) Treatment of very small groups.--
       ``(i) In general.--Subject to clause (ii), such term 
     includes coverage offered in connection with a group health 
     plan that has fewer than 2 participants as current employees 
     or participants described in section 732(d)(3) on the first 
     day of the plan year.
       ``(ii) State exception.--Clause (i) shall not apply in the 
     case of health insurance coverage offered in a State if such 
     State regulates the coverage described in such clause in the 
     same manner and to the same extent as coverage in the small 
     group market (as defined in section 2791(e)(5) of the Public 
     Health Service Act) is regulated by such State.
       ``(8) Participating employer.--The term `participating 
     employer' means, in connection with an association health 
     plan, any employer, if any individual who is an employee of 
     such employer, a partner in such employer, or a self-employed 
     individual who is such employer (or any dependent, as defined 
     under the terms of the plan, of such individual) is or was 
     covered under such plan in connection with the status of such 
     individual as such an employee, partner, or self-employed 
     individual in relation to the plan.
       ``(9) Applicable state authority.--The term `applicable 
     State authority' means, with respect to a health insurance 
     issuer in a State, the State insurance commissioner or 
     official or officials designated by the State to enforce the 
     requirements of title XXVII of the Public Health Service Act 
     for the State involved with respect to such issuer.
       ``(10) Qualified actuary.--The term `qualified actuary' 
     means an individual who is a member of the American Academy 
     of Actuaries or meets such reasonable standards and 
     qualifications as the Secretary may provide by regulation.
       ``(11) Affiliated member.--The term `affiliated member' 
     means, in connection with a sponsor, a person eligible to be 
     a member of the sponsor or, in the case of a sponsor with 
     member associations, a person who is a member, or is eligible 
     to be a member, of a member association.
       ``(12) Large employer.--The term `large employer' means, in 
     connection with a group health plan with respect to a plan 
     year, an employer who employed an average of at least 51 
     employees on business days during the preceding calendar year 
     and who employs at least 2 employees on the first day of the 
     plan year.
       ``(13) Small employer.--The term `small employer' means, in 
     connection with a group health plan with respect to a plan 
     year, an employer who is not a large employer.
       ``(b) Rules of Construction.--
       ``(1) Employers and employees.--For purposes of determining 
     whether a plan, fund, or program is an employee welfare 
     benefit plan which is an association health plan, and for 
     purposes of applying this title in connection with such plan, 
     fund, or program so determined to be such an employee welfare 
     benefit plan--
       ``(A) in the case of a partnership, the term `employer' (as 
     defined in section (3)(5)) includes the partnership in 
     relation to the partners, and the term `employee' (as defined 
     in section (3)(6)) includes any partner in relation to the 
     partnership, and
       ``(B) in the case of a self-employed individual, the term 
     `employer' (as defined in section 3(5)) and the term 
     `employee' (as defined in section 3(6)) shall include such 
     individual.
       ``(2) Plans, funds, and programs treated as employee 
     welfare benefit plans.--In the case of any plan, fund, or 
     program which was established or is maintained for the 
     purpose of providing medical care (through the purchase of 
     insurance or otherwise) for employees (or their dependents) 
     covered thereunder and which demonstrates to the Secretary 
     that all requirements for certification under this part would 
     be met with respect to such plan, fund, or program if such 
     plan, fund, or program were a group health plan, such plan, 
     fund, or program shall be treated for purposes of this title 
     as an employee welfare benefit plan on and after the date of 
     such demonstration.''.
       (b) Conforming Amendments to Preemption Rules.--
       (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
     amended by adding at the end the following new subparagraph:
       ``(E) The preceding subparagraphs of this paragraph do not 
     apply with respect to any State law in the case of an 
     association health plan which is certified under part 8.''.
       (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
       (A) in subsection (b)(4), by striking ``Subsection (a)'' 
     and inserting ``Subsections (a) and (d)'';
       (B) in subsection (b)(5), by striking ``subsection (a)'' in 
     subparagraph (A) and inserting ``subsection (a) of this 
     section and subsections (a)(2)(B) and (b) of section 805'', 
     and by striking ``subsection (a)'' in subparagraph (B) and 
     inserting ``subsection (a) of this section or subsection 
     (a)(2)(B) or (b) of section 805'';
       (C) by redesignating subsection (d) as subsection (e); and
       (D) by inserting after subsection (c) the following new 
     subsection:
       ``(d)(1) Except as provided in subsection (b)(4), the 
     provisions of this title shall supersede any and all State 
     laws insofar as they may now or hereafter preclude, or have 
     the effect of precluding, a health insurance issuer from 
     offering health insurance coverage in connection with an 
     association health plan which is certified under part 8.
       ``(2) Except as provided in paragraphs (4) and (5) of 
     subsection (b) of this section--
       ``(A) In any case in which health insurance coverage of any 
     policy type is offered under an association health plan 
     certified under part 8 to a participating employer operating 
     in such State, the provisions of this title shall supersede 
     any and all laws of such State insofar as they may preclude a 
     health insurance issuer from offering health insurance 
     coverage of the same policy type to other employers operating 
     in the State which are eligible for coverage under such 
     association health plan, whether or not such other employers 
     are participating employers in such plan.
       ``(B) In any case in which health insurance coverage of any 
     policy type is offered under an association health plan in a 
     State and the filing, with the applicable State authority, of 
     the policy form in connection with such policy type is 
     approved by such State authority, the provisions of this 
     title shall supersede any and all laws of any other State in 
     which health insurance coverage of such type is offered, 
     insofar as they may preclude, upon the filing in the same 
     form and manner of such policy form with the applicable State 
     authority in such other State, the approval of the filing in 
     such other State.
       ``(3) For additional provisions relating to association 
     health plans, see subsections (a)(2)(B) and (b) of section 
     805.
       ``(4) For purposes of this subsection, the term 
     `association health plan' has the meaning provided in section 
     801(a), and the terms `health insurance coverage', 
     `participating employer', and `health insurance issuer' have 
     the meanings provided such terms in section 811, 
     respectively.''.
       (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
     1144(b)(6)(A)) is amended--
       (A) in clause (i)(II), by striking ``and'' at the end;
       (B) in clause (ii), by inserting ``and which does not 
     provide medical care (within the meaning of section 
     733(a)(2)),'' after ``arrangement,'', and by striking 
     ``title.'' and inserting ``title, and''; and
       (C) by adding at the end the following new clause:
       ``(iii) subject to subparagraph (E), in the case of any 
     other employee welfare benefit plan which is a multiple 
     employer welfare arrangement and which provides medical care 
     (within the meaning of section 733(a)(2)), any law of any 
     State which regulates insurance may apply.''.
       (4) Section 514(e) of such Act (as redesignated by 
     paragraph (2)(C)) is amended--
       (A) by striking ``Nothing'' and inserting ``(1) Except as 
     provided in paragraph (2), nothing''; and
       (B) by adding at the end the following new paragraph:
       ``(2) Nothing in any other provision of law enacted on or 
     after the date of the enactment of the Patient Protection Act 
     of 1998 shall be construed to alter, amend, modify, 
     invalidate, impair, or supersede any provision of this title, 
     except by specific cross-reference to the affected 
     section.''.
       (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
     102(16)(B)) is amended by adding at the end the following new 
     sentence: ``Such term also includes a person serving as the 
     sponsor of an association health plan under part 8.''.
       (d) Disclosure of Solvency Protections Related to Self-
     Insured and Fully Insured Options Under Association Health 
     Plans.--Section 102(b) of such Act (29 U.S.C. 102(b)) is 
     amended by adding at the end the following: ``An association 
     health plan shall include in its summary plan description, in 
     connection with each benefit option, a description of the 
     form of solvency or guarantee fund protection secured 
     pursuant to this Act or applicable State law, if any.''.
       (e) Savings Clause.--Section 731(c) of such Act is amended 
     by inserting ``or part 8'' after ``this part''.
       (f) Clerical Amendment.--The table of contents in section 1 
     of the Employee Retirement Income Security Act of 1974 is 
     amended by inserting after the item relating to section 734 
     the following new items:

           ``Part 8--Rules Governing Association Health Plans

``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution 
              rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for 
              plans providing health benefits in addition to health 
              insurance coverage.
``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.

[[Page H6320]]

``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Trusteeship by the Secretary of insolvent association 
              health plans providing health benefits in addition to 
              health insurance coverage.
``Sec. 811. State assessment authority.
``Sec. 812. Special rules for church plans.
``Sec. 813. Definitions and rules of construction.''.

     SEC. 1303. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER 
                   ARRANGEMENTS.

       Section 3(40)(B) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1002(40)(B)) is amended--
       (1) in clause (i), by inserting ``for any plan year of any 
     such plan, or any fiscal year of any such other 
     arrangement;'' after ``single employer'', and by inserting 
     ``during such year or at any time during the preceding 1-year 
     period'' after ``control group'';
       (2) in clause (iii)--
       (A) by striking ``common control shall not be based on an 
     interest of less than 25 percent'' and inserting ``an 
     interest of greater than 25 percent may not be required as 
     the minimum interest necessary for common control''; and
       (B) by striking ``similar to'' and inserting ``consistent 
     and coextensive with'';
       (3) by redesignating clauses (iv) and (v) as clauses (v) 
     and (vi), respectively; and
       (4) by inserting after clause (iii) the following new 
     clause:
       ``(iv) in determining, after the application of clause (i), 
     whether benefits are provided to employees of two or more 
     employers, the arrangement shall be treated as having only 1 
     participating employer if, after the application of clause 
     (i), the number of individuals who are employees and former 
     employees of any one participating employer and who are 
     covered under the arrangement is greater than 75 percent of 
     the aggregate number of all individuals who are employees or 
     former employees of participating employers and who are 
     covered under the arrangement,''.

     SEC. 1304. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY 
                   BARGAINED ARRANGEMENTS.

       (a) In General.--Section 3(40)(A)(i) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1002(40)(A)(i)) is amended to read as follows:
       ``(i)(I) under or pursuant to one or more collective 
     bargaining agreements which are reached pursuant to 
     collective bargaining described in section 8(d) of the 
     National Labor Relations Act (29 U.S.C. 158(d)) or paragraph 
     Fourth of section 2 of the Railway Labor Act (45 U.S.C. 152, 
     paragraph Fourth) or which are reached pursuant to labor-
     management negotiations under similar provisions of State 
     public employee relations laws, and (II) in accordance with 
     subparagraphs (C), (D), and (E),''.
       (b) Limitations.--Section 3(40) of such Act (29 U.S.C. 
     1002(40)) is amended by adding at the end the following new 
     subparagraphs:
       ``(C) For purposes of subparagraph (A)(i)(II), a plan or 
     other arrangement shall be treated as established or 
     maintained in accordance with this subparagraph only if the 
     following requirements are met:
       ``(i) The plan or other arrangement, and the employee 
     organization or any other entity sponsoring the plan or other 
     arrangement, do not--
       ``(I) utilize the services of any licensed insurance agent 
     or broker for soliciting or enrolling employers or 
     individuals as participating employers or covered individuals 
     under the plan or other arrangement; or
       ``(II) pay a commission or any other type of compensation 
     to a person, other than a full time employee of the employee 
     organization (or a member of the organization to the extent 
     provided in regulations of the Secretary), that is related 
     either to the volume or number of employers or individuals 
     solicited or enrolled as participating employers or covered 
     individuals under the plan or other arrangement, or to the 
     dollar amount or size of the contributions made by 
     participating employers or covered individuals to the plan or 
     other arrangement;

     except to the extent that the services used by the plan, 
     arrangement, organization, or other entity consist solely of 
     preparation of documents necessary for compliance with the 
     reporting and disclosure requirements of part 1 or 
     administrative, investment, or consulting services unrelated 
     to solicitation or enrollment of covered individuals.
       ``(ii) As of the end of the preceding plan year, the number 
     of covered individuals under the plan or other arrangement 
     who are identified to the plan or arrangement and who are 
     neither--
       ``(I) employed within a bargaining unit covered by any of 
     the collective bargaining agreements with a participating 
     employer (nor covered on the basis of an individual's 
     employment in such a bargaining unit); nor
       ``(II) present employees (or former employees who were 
     covered while employed) of the sponsoring employee 
     organization, of an employer who is or was a party to any of 
     the collective bargaining agreements, or of the plan or other 
     arrangement or a related plan or arrangement (nor covered on 
     the basis of such present or former employment);

     does not exceed 15 percent of the total number of individuals 
     who are covered under the plan or arrangement and who are 
     present or former employees who are or were covered under the 
     plan or arrangement pursuant to a collective bargaining 
     agreement with a participating employer. The requirements of 
     the preceding provisions of this clause shall be treated as 
     satisfied if, as of the end of the preceding plan year, such 
     covered individuals are comprised solely of individuals who 
     were covered individuals under the plan or other arrangement 
     as of the date of the enactment of the Small Business 
     Affordable Health Coverage Act of 1998 and, as of the end of 
     the preceding plan year, the number of such covered 
     individuals does not exceed 25 percent of the total number of 
     present and former employees enrolled under the plan or other 
     arrangement.
       ``(iii) The employee organization or other entity 
     sponsoring the plan or other arrangement certifies to the 
     Secretary each year, in a form and manner which shall be 
     prescribed in regulations of the Secretary that the plan or 
     other arrangement meets the requirements of clauses (i) and 
     (ii).
       ``(D) For purposes of subparagraph (A)(i)(II), a plan or 
     arrangement shall be treated as established or maintained in 
     accordance with this subparagraph only if--
       ``(i) all of the benefits provided under the plan or 
     arrangement consist of health insurance coverage; or
       ``(ii)(I) the plan or arrangement is a multiemployer plan; 
     and
       ``(II) the requirements of clause (B) of the proviso to 
     clause (5) of section 302(c) of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186(c)) are met with respect 
     to such plan or other arrangement.
       ``(E) For purposes of subparagraph (A)(i)(II), a plan or 
     arrangement shall be treated as established or maintained in 
     accordance with this subparagraph only if--
       ``(i) the plan or arrangement is in effect as of the date 
     of the enactment of the Small Business Affordable Health 
     Coverage Act of 1998, or
       ``(ii) the employee organization or other entity sponsoring 
     the plan or arrangement--
       ``(I) has been in existence for at least 3 years or is 
     affiliated with another employee organization which has been 
     in existence for at least 3 years, or
       ``(II) demonstrates to the satisfaction of the Secretary 
     that the requirements of subparagraphs (C) and (D) are met 
     with respect to the plan or other arrangement.''.
       (c) Conforming Amendments to Definitions of Participant and 
     Beneficiary.--Section 3(7) of such Act (29 U.S.C. 1002(7)) is 
     amended by adding at the end the following new sentence: 
     ``Such term includes an individual who is a covered 
     individual described in paragraph (40)(C)(ii).''.

     SEC. 1305. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION 
                   HEALTH PLANS.

       (a) Criminal Penalties for Certain Willful 
     Misrepresentations.--Section 501 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1131) is amended--
       (1) by inserting ``(a)'' after ``Sec. 501.''; and
       (2) by adding at the end the following new subsection:
       ``(b) Any person who, either willfully or with willful 
     blindness, falsely represents, to any employee, any 
     employee's beneficiary, any employer, the Secretary, or any 
     State, a plan or other arrangement established or maintained 
     for the purpose of offering or providing any benefit 
     described in section 3(1) to employees or their beneficiaries 
     as--
       ``(1) being an association health plan which has been 
     certified under part 8;
       ``(2) having been established or maintained under or 
     pursuant to one or more collective bargaining agreements 
     which are reached pursuant to collective bargaining described 
     in section 8(d) of the National Labor Relations Act (29 
     U.S.C. 158(d)) or paragraph Fourth of section 2 of the 
     Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or which 
     are reached pursuant to labor-management negotiations under 
     similar provisions of State public employee relations laws; 
     or
       ``(3) being a plan or arrangement with respect to which the 
     requirements of subparagraph (C), (D), or (E) of section 
     3(40) are met;

     shall, upon conviction, be imprisoned not more than five 
     years, be fined under title 18, United States Code, or 
     both.''.
       (b) Cease Activities Orders.--Section 502 of such Act (29 
     U.S.C. 1132) is amended by adding at the end the following 
     new subsection:
       ``(n)(1) Subject to paragraph (2), upon application by the 
     Secretary showing the operation, promotion, or marketing of 
     an association health plan (or similar arrangement providing 
     benefits consisting of medical care (as defined in section 
     733(a)(2))) that--
       ``(A) is not certified under part 8, is subject under 
     section 514(b)(6) to the insurance laws of any State in which 
     the plan or arrangement offers or provides benefits, and is 
     not licensed, registered, or otherwise approved under the 
     insurance laws of such State; or
       ``(B) is an association health plan certified under part 8 
     and is not operating in accordance with the requirements 
     under part 8 for such certification,

     a district court of the United States shall enter an order 
     requiring that the plan or arrangement cease activities.
       ``(2) Paragraph (1) shall not apply in the case of an 
     association health plan or other arrangement if the plan or 
     arrangement shows that--
       ``(A) all benefits under it referred to in paragraph (1) 
     consist of health insurance coverage; and
       ``(B) with respect to each State in which the plan or 
     arrangement offers or provides benefits, the plan or 
     arrangement is operating in accordance with applicable State 
     laws that are not superseded under section 514.

[[Page H6321]]

       ``(3) The court may grant such additional equitable relief, 
     including any relief available under this title, as it deems 
     necessary to protect the interests of the public and of 
     persons having claims for benefits against the plan.''.
       (c) Responsibility for Claims Procedure.--Section 503 of 
     such Act (29 U.S.C. 1133) (as amended by title I) is amended 
     by adding at the end the following new subsection:
       ``(c) Association Health Plans.--The terms of each 
     association health plan which is or has been certified under 
     part 8 shall require the board of trustees or the named 
     fiduciary (as applicable) to ensure that the requirements of 
     this section are met in connection with claims filed under 
     the plan.''.

     SEC. 1306. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

       Section 506 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1136) is amended by adding at the end the 
     following new subsection:
       ``(c) Responsibility of States With Respect to Association 
     Health Plans.--
       ``(1) Agreements with states.--A State may enter into an 
     agreement with the Secretary for delegation to the State of 
     some or all of--
       ``(A) the Secretary's authority under sections 502 and 504 
     to enforce the requirements for certification under part 8,
       ``(B) the Secretary's authority to certify association 
     health plans under part 8 in accordance with regulations of 
     the Secretary applicable to certification under part 8, or
       ``(C) any combination of the Secretary's authority 
     authorized to be delegated under subparagraphs (A) and (B).
       ``(2) Delegations.--Any department, agency, or 
     instrumentality of a State to which authority is delegated 
     pursuant to an agreement entered into under this paragraph 
     may, if authorized under State law and to the extent 
     consistent with such agreement, exercise the powers of the 
     Secretary under this title which relate to such authority.
       ``(3) Recognition of primary domicile state.--In entering 
     into any agreement with a State under subparagraph (A), the 
     Secretary shall ensure that, as a result of such agreement 
     and all other agreements entered into under subparagraph (A), 
     only one State will be recognized, with respect to any 
     particular association health plan, as the State to which all 
     authority has been delegated pursuant to such agreements in 
     connection with such plan. In carrying out this paragraph, 
     the Secretary shall take into account the places of residence 
     of the participants and beneficiaries under the plan and the 
     State in which the trust is maintained.''.

     SEC. 1307. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

       (a) Effective Date.--The amendments made by sections 1302, 
     1305, and 1306 shall take effect on January 1, 2000. The 
     amendments made by sections 1303 and 1304 shall take effect 
     on the date of the enactment of this Act. The Secretary of 
     Labor shall first issue all regulations necessary to carry 
     out the amendments made by this Act before January 1, 2000.
       (b) Exception.--Section 801(a)(2) of the Employee 
     Retirement Income Security Act of 1974 (added by section 
     1302) does not apply in connection with an association health 
     plan (certified under part 8 of subtitle B of title I of such 
     Act) existing on April 1, 1997, if no benefits provided 
     thereunder as of the date of the enactment of this Act 
     consist of health insurance coverage (as defined in section 
     733(b)(1) of such Act).
       (c) Treatment of Certain Existing Health Benefits 
     Programs.--
       (1) In general.--In any case in which, as of the date of 
     the enactment of this Act, an arrangement is maintained in a 
     State for the purpose of providing benefits consisting of 
     medical care for the employees and beneficiaries of its 
     participating employers, at least 200 participating employers 
     make contributions to such arrangement, such arrangement has 
     been in existence for at least 10 years, and such arrangement 
     is licensed under the laws of one or more States to provide 
     such benefits to its participating employers, upon the filing 
     with the applicable authority (as defined in section 
     813(a)(5) of the Employee Retirement Income Security Act of 
     1974 (as amended by this Act)) by the arrangement of an 
     application for certification of the arrangement under part 8 
     of subtitle B of title I of such Act--
       (A) such arrangement shall be deemed to be a group health 
     plan for purposes of title I of such Act,
       (B) the requirements of sections 801(a)(1) and 803(a)(1) of 
     the Employee Retirement Income Security Act of 1974 shall be 
     deemed met with respect to such arrangement,
       (C) the requirements of section 803(b) of such Act shall be 
     deemed met, if the arrangement is operated by a board of 
     directors which--
       (i) is elected by the participating employers, with each 
     employer having one vote, and
       (ii) has complete fiscal control over the arrangement and 
     which is responsible for all operations of the arrangement,
       (D) the requirements of section 804(a) of such Act shall be 
     deemed met with respect to such arrangement,
       (E) the arrangement may be certified by any applicable 
     authority with respect to its operations in any State only if 
     it operates in such State on the date of certification.

     The provisions of this subsection shall cease to apply with 
     respect to any such arrangement at such time after the date 
     of the enactment of this Act as the applicable requirements 
     of this subsection are not met with respect to such 
     arrangement.
       (2) Definitions.--For purposes of this subsection, the 
     terms ``group health plan,'' ``medical care,'' and 
     ``participating employer'' shall have the meanings provided 
     in section 813 of the Employee Retirement Income Security Act 
     of 1974, except that the reference in paragraph (7) of such 
     section to an ``association health plan'' shall be deemed a 
     reference to an arrangement referred to in this subsection.
       (d) Pilot Program for Self-Insured Association Health 
     Plans.--
       (1) In general.--During the pilot program period, 
     association health plans which offer benefit options which do 
     not consist of health insurance coverage may be certified 
     under part 8 of subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 only if such plans 
     consist of the following:
       (A) plans which offered such coverage on the date of the 
     enactment of this Act,
       (B) plans under which the sponsor does not restrict 
     membership to one or more trades and businesses or industries 
     and whose eligible participating employers represent a broad 
     cross-section of trades and businesses or industries, or
       (C) plans whose eligible participating employers represent 
     one or more trades or businesses, or one or more industries, 
     which have been indicated as having average or above-average 
     health insurance risk or health claims experience by reason 
     of State rate filings, denials of coverage, proposed premium 
     rate levels, and other means demonstrated by such plans in 
     accordance with regulations which the Secretary shall 
     prescribe, 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.
       (2) Pilot program period.--For purposes of this subsection, 
     the term ``pilot program period'' means the 5-year period 
     beginning on January 1, 1999.
           TITLE II--AMENDMENTS TO PUBLIC HEALTH SERVICE ACT
     Subtitle A--Patient Protections and Point of Service Coverage 
                              Requirements

     SEC. 2001. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, PEDIATRIC CARE.

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

     ``SEC. 2706. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, PEDIATRIC CARE.

       ``(a) Patient Access to Unrestricted Medical Advice.--
       ``(1) In general.--In the case of any health care 
     professional acting within the lawful scope of practice in 
     the course of carrying out a contractual employment 
     arrangement or other direct contractual arrangement between 
     such professional and a group health plan or a health 
     insurance issuer offering health insurance coverage in 
     connection with a group health plan, the plan or issuer with 
     which such contractual employment arrangement or other direct 
     contractual arrangement is maintained by the professional may 
     not impose on such professional under such arrangement any 
     prohibition with respect to advice, provided to a participant 
     or beneficiary under the plan who is a patient, about the 
     health status of the participant or beneficiary or the 
     medical care or treatment for the condition or disease of the 
     participant or beneficiary, regardless of whether benefits 
     for such care or treatment are provided under the plan or 
     health insurance coverage offered in connection with the 
     plan.
       ``(2) Health care professional defined.--For purposes of 
     this subsection, the term `health care professional' means a 
     physician (as defined in section 1861(r) of the Social 
     Security Act) or other health care professional if coverage 
     for the professional's services is provided under the group 
     health plan for the services of the professional. Such term 
     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.
       ``(b) Patient Access to Emergency Medical Care.--
       ``(1) In general.--To the extent that the group health plan 
     (or health insurance issuer offering health insurance 
     coverage in connection with the plan) provides for any 
     benefits consisting of emergency medical care (as defined in 
     section 503(b)(9)(I) of the Employee Retirement Income 
     Security Act of 1974), except for items or services 
     specifically excluded--
       ``(A) the plan or issuer shall provide benefits, without 
     requiring preauthorization, for

[[Page H6322]]

     appropriate emergency medical screening examinations (within 
     the capability of the emergency facility, including ancillary 
     services routinely available to the emergency facility) to 
     the extent that a prudent layperson, who possesses an average 
     knowledge of health and medicine, would determine such 
     examinations to be necessary in order to determine whether 
     emergency medical care (as so defined) is required, and
       ``(B) the plan or issuer shall provide benefits for 
     additional emergency medical services following an emergency 
     medical screening examination (if determined necessary under 
     subparagraph (A)) to the extent that a prudent emergency 
     medical professional would determine such additional 
     emergency services to be necessary to avoid the consequences 
     described in section 503(b)(9)(I) of such Act.
       ``(2) Uniform cost-sharing required.--Nothing in this 
     subsection shall be construed as preventing a group health 
     plan or issuer from imposing any form of cost-sharing 
     applicable to any participant or beneficiary (including 
     coinsurance, copayments, deductibles, and any other charges) 
     in relation to benefits described in paragraph (1), if such 
     form of cost-sharing is uniformly applied under such plan, 
     with respect to similarly situated participants and 
     beneficiaries, to all benefits consisting of emergency 
     medical care (as defined in section 503(b)(9)(I) of the 
     Employee Retirement Income Security Act of 1974) provided to 
     such similarly situated participants and beneficiaries under 
     the plan.
       ``(c) Patient Access to Obstetric and Gynecological Care.
       ``(1) In general.--In any case in which a group health plan 
     (or a health insurance issuer offering health insurance 
     coverage in connection with the plan)--
       ``(A) provides benefits under the terms of the plan 
     consisting of--
       ``(i) routine gynecological care (such as preventive 
     women's health examinations), or
       ``(ii) routine obstetric care (such as routine pregnancy-
     related services),

     provided by a participating physician who specializes in such 
     care (or provides benefits consisting of payment for such 
     care), and
       ``(B) the plan requires or provides for designation by a 
     participant or beneficiary of a participating primary care 
     provider,

     if the primary care provider designated by such a participant 
     or beneficiary is not such a physician, then the plan (or 
     issuer) shall meet the requirements of paragraph (2).
       ``(2) Requirements.--A group health plan (or a health 
     insurance issuer offering health insurance coverage in 
     connection with the plan) meets the requirements of this 
     paragraph, in connection with benefits described in paragraph 
     (1) consisting of care described in clause (i) or (ii) of 
     paragraph (1)(A) (or consisting of payment therefor), if the 
     plan (or issuer)--
       ``(A) does not require authorization or a referral by the 
     primary care provider in order to obtain such benefits, and
       ``(B) treats the ordering of other routine care of the same 
     type, by the participating physician providing the care 
     described in clause (i) or (ii) of paragraph (1)(A), as the 
     authorization of the primary care provider with respect to 
     such care.
       ``(3) Construction.--Nothing in paragraph (2)(B) shall 
     waive any requirements of coverage relating to medical 
     necessity or appropriateness with respect to coverage of 
     gynecological or obstetric care so ordered.
       ``(d) Patient Access to Pediatric Care.--
       ``(1) In general.--In any case in which a group health plan 
     (or a health insurance issuer offering health insurance 
     coverage in connection with the plan) provides benefits 
     consisting of routine pediatric care provided by a 
     participating physician who specializes in pediatrics (or 
     consisting of payment for such care) and the plan requires or 
     provides for designation by a participant or beneficiary of a 
     participating primary care provider, the plan (or issuer) 
     shall provide that such a participating physician may be 
     designated, if available, by a parent or guardian of any 
     beneficiary under the plan is who under 18 years of age, as 
     the primary care provider with respect to any such benefits.
       ``(2) Construction.--Nothing in paragraph (1) shall waive 
     any requirements of coverage relating to medical necessity or 
     appropriateness with respect to coverage of pediatric care.
       ``(e) Treatment of Multiple Coverage Options.--In the case 
     of a plan providing benefits under two or more coverage 
     options, the requirements of subsections (c) and (d) shall 
     apply separately with respect to each coverage option.''.
       (c) Effective date and related rules.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act, except that the Secretary of 
     Health and Human Services may issue regulations before such 
     date under such amendments. The Secretary shall first issue 
     all regulations necessary to carry out the amendments made by 
     this section before the effective date thereof.
       (2) Limitation on enforcement actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this section, against a group health plan or health insurance 
     issuer with respect to a violation of a requirement imposed 
     by such amendments before the date of issuance of regulations 
     issued in connection with such requirement, if the plan or 
     issuer has sought to comply in good faith with such 
     requirement.
       (3) Special rule for collective bargaining agreements.--In 
     the case of a group health plan maintained pursuant to one or 
     more collective bargaining agreements between employee 
     representatives and one or more employers ratified before the 
     date of the enactment of this Act, the amendments made by 
     this section shall not apply with respect to plan years 
     beginning before the later of--
       (1) the date on which the last of the collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of the enactment of this Act), or
       (2) January 1, 2001.

     For purposes of this paragraph, any plan amendments made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by this section shall not be treated as a 
     termination of such collective bargaining agreement.

     SEC. 2002. REQUIRING HEALTH MAINTENANCE ORGANIZATIONS TO 
                   OFFER OPTION OF POINT-OF-SERVICE COVERAGE.

       (a) In General.--Title XXVII of the Public Health Service 
     Act is amended by inserting after section 2713 the following 
     new section:

     ``SEC. 2714. REQUIRING OFFERING OF OPTION OF POINT-OF-SERVICE 
                   COVERAGE.

       ``(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 under health 
     insurance coverage offered in connection with a group health 
     plan only if such services are furnished exclusively through 
     health care professionals within such class or classes who 
     are members of a closed panel of health care professionals,

     the issuer shall make available to the plan sponsor in 
     connection with such a 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.
       ``(b) Requirement to Offer Supplemental Coverage to 
     Participants in Certain Cases.--Except as provided in 
     subsection (c), 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 shall 
     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 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.
       ``(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 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

[[Page H6323]]

     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.
       ``(d) Definitions.--For purposes of this section:
       ``(1) 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.
       ``(2) Health care professional.--The term `health care 
     professional' has the meaning given such term in section 
     2706(a)(2).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to coverage offered on or after January 1 of the 
     second calendar year following the date of the enactment of 
     this Act.
               Subtitle B--Patient Access to Information

     SEC. 2101. PATIENT ACCESS TO INFORMATION REGARDING PLAN 
                   COVERAGE, MANAGED CARE PROCEDURES, HEALTH CARE 
                   PROVIDERS, AND QUALITY OF MEDICAL CARE.

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

     ``SEC. 2707. PATIENT ACCESS TO INFORMATION REGARDING PLAN 
                   COVERAGE, MANAGED CARE PROCEDURES, HEALTH CARE 
                   PROVIDERS, AND QUALITY OF MEDICAL CARE.

       ``(a) Disclosure Requirement.--Each health insurance issuer 
     offering health insurance coverage in connection with a group 
     health plan shall provide the administrator of such plan on a 
     timely basis with the information necessary to enable the 
     administrator to include in the summary plan description of 
     the plan required under section 102 of the Employee 
     Retirement Income Security Act of 1974 (or each summary plan 
     description in any case in which different summary plan 
     descriptions are appropriate under part 1 of subtitle B of 
     title I of such Act for different options of coverage) the 
     information required under subsections (b), (c), (d), and 
     (e)(2)(A). To the extent that any such issuer provides such 
     information on a timely basis to plan participants and 
     beneficiaries, the requirements of this subsection shall be 
     deemed satisfied in the case of such plan with respect to 
     such information.
       ``(b) Plan Benefits.--The information required under 
     subsection (a) includes the following:
       ``(1) Covered items and services.--
       ``(A) Categorization of included benefits.--A description 
     of covered benefits, categorized by--
       ``(i) types of items and services (including any special 
     disease management program), and
       ``(ii) types of health care professionals providing such 
     items and services.
       ``(B) Emergency medical care.--A description of the extent 
     to which the coverage includes emergency medical care 
     (including the extent to which the coverage provides for 
     access to urgent care centers), and any definitions provided 
     under in connection with such coverage for the relevant 
     coverage terminology referring to such care.
       ``(C) Preventative services.--A description of the extent 
     to which the coverage includes benefits for preventative 
     services.
       ``(D) Drug formularies.--A description of the extent to 
     which covered benefits are determined by the use or 
     application of a drug formulary and a summary of the process 
     for determining what is included in such formulary.
       ``(E) COBRA continuation coverage.--A description of the 
     benefits available under the coverage provided pursuant to 
     part 6 of subtitle B of title I of the Employee Retirement 
     Income Security Act of 1974.
       ``(2) Limitations, exclusions, and restrictions on covered 
     benefits.--
       ``(A) Categorization of excluded benefits.--A description 
     of benefits specifically excluded from coverage, categorized 
     by types of items and services.
       ``(B) Utilization review and preauthorization 
     requirements.--Whether coverage for medical care is limited 
     or excluded on the basis of utilization review or 
     preauthorization requirements.
       ``(C) Lifetime, annual, or other period limitations.--A 
     description of the circumstances under which, and the extent 
     to which, coverage is subject to lifetime, annual, or other 
     period limitations, categorized by types of benefits.
       ``(D) Custodial care.--A description of the circumstances 
     under which, and the extent to which, the coverage of 
     benefits for custodial care is limited or excluded, and a 
     statement of the definition used in connection with such 
     coverage for custodial care.
       ``(E) Experimental treatments.--Whether coverage for any 
     medical care is limited or excluded because it constitutes 
     experimental treatment or technology, and any definitions 
     provided in connection with such coverage for the relevant 
     plan terminology referring to such limited or excluded care.
       ``(F) Medical appropriateness or necessity.--Whether 
     coverage for medical care may be limited or excluded by 
     reason of a failure to meet the plan's requirements for 
     medical appropriateness or necessity, and any definitions 
     provided in connection with such coverage for the relevant 
     coverage terminology referring to such limited or excluded 
     care.
       ``(G) Second or subsequent opinions.--A description of the 
     circumstances under which, and the extent to which, coverage 
     for second or subsequent opinions is limited or excluded.
       ``(H) Specialty care.--A description of the circumstances 
     under which, and the extent to which, coverage of benefits 
     for specialty care is conditioned on referral from a primary 
     care provider.
       ``(I) Continuity of care.--A description of the 
     circumstances under which, and the extent to which, coverage 
     of items and services provided by any health care 
     professional is limited or excluded by reason of the 
     departure by the professional from any defined set of 
     providers.
       ``(J) Restrictions on coverage of emergency services.--A 
     description of the circumstances under which, and the extent 
     to which, the coverage, in including emergency medical care 
     furnished to a participant or beneficiary of the plan imposes 
     any financial responsibility described in subsection (c) on 
     participants or beneficiaries or limits or conditions 
     benefits for such care subject to any other term or condition 
     of such coverage.
       ``(c) Participant's Financial Responsibilities.--The 
     information required under subsection (a) includes an 
     explanation of--
       ``(1) a participant's financial responsibility for payment 
     of premiums, coinsurance, copayments, deductibles, and any 
     other charges, and
       ``(2) the circumstances under which, and the extent to 
     which, the participant's financial responsibility described 
     in paragraph (1) may vary, including any distinctions based 
     on whether a health care provider from whom covered benefits 
     are obtained is included in a defined set of providers.
       ``(d) Dispute Resolution Procedures.--The information 
     required under subsection (a) includes a description of the 
     processes adopted in connection with such coverage pursuant 
     to section 503(b) of the Employee Retirement Income Security 
     Act of 1974, including--
       ``(1) descriptions thereof relating specifically to--
       ``(A) coverage decisions,
       ``(B) internal review of coverage decisions, and
       ``(C) any external review of coverage decisions, and
       ``(2) the procedures and time frames applicable to each 
     step of the processes referred to in subparagraphs (A), (B), 
     and (C) of paragraph (1).
       ``(e) Information Available on Request.--
       ``(1) Access to plan benefit information in electronic 
     form.--
       ``(A) In general.--A group health plan (and a health 
     insurance issuer offering health insurance coverage in 
     connection with a group health plan) shall, upon written 
     request (made not more frequently than annually), make 
     available to participants and beneficiaries, in a generally 
     recognized electronic format, the following information:
       ``(i) the latest summary plan description, including the 
     latest summary of material modifications, and
       ``(ii) the actual plan provisions setting forth the 
     benefits available under the plan,

     to the extent such information relates to the coverage 
     options under the plan available to the participant or 
     beneficiary. A reasonable charge may be made to cover the 
     cost of providing such information in such generally 
     recognized electronic format. The Secretary may by regulation 
     prescribe a maximum amount which will constitute a reasonable 
     charge under the preceding sentence.
       ``(B) Alternative access.--The requirements of this 
     paragraph may be met by making such information generally 
     available (rather than upon request) on the Internet or on a 
     proprietary computer network in a format which is readily 
     accessible to participants and beneficiaries.
       ``(2) Additional information to be provided on request.--
       ``(A) Inclusion in summary plan description of summary of 
     additional information.--The information required under 
     subsection (a) includes a summary description of the types of 
     information required by this subsection to be made available 
     to participants and beneficiaries on request.
       ``(B) Information required from plans and issuers on 
     request.--In addition to information required to be included 
     in summary plan descriptions under this subsection, a group 
     health plan (and a health insurance issuer offering health 
     insurance coverage in connection with a group health plan) 
     shall provide the following information to a participant or 
     beneficiary on request:
       ``(i) Network characteristics.--If the plan (or issuer) 
     utilizes a defined set of providers under contract with the 
     plan (or issuer), a detailed list of the names of such 
     providers and their geographic location, set forth separately 
     with respect to primary care providers and with respect to 
     specialists.
       ``(ii) Care management information.--A description of the 
     circumstances under which, and the extent to which, the plan 
     has special disease management programs or

[[Page H6324]]

     programs for persons with disabilities, indicating whether 
     these programs are voluntary or mandatory and whether a 
     significant benefit differential results from participation 
     in such programs.
       ``(iii) Inclusion of drugs and biologicals in 
     formularies.--A statement of whether a specific drug or 
     biological is included in a formulary used to determine 
     benefits under the plan and a description of the procedures 
     for considering requests for any patient-specific waivers.
       ``(iv) Procedures for determining exclusions based on 
     medical necessity or experimental treatments.--Upon receipt 
     by the participant or beneficiary of any notification of an 
     adverse coverage decision based on a determination relating 
     to medical necessity or an experimental treatment or 
     technology, a description of the procedures and medically-
     based criteria used in such decision.
       ``(v) Preauthorization and utilization review procedures.--
     Upon receipt by the participant or beneficiary of any 
     notification of an adverse coverage decision, a description 
     of the basis on which any preauthorization requirement or any 
     utilization review requirement has resulted in such decision.
       ``(vi) Accreditation status of health insurance issuers and 
     service providers.--A description of the accreditation and 
     licencing 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) Measures of enrollee satisfaction.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to enrollee satisfaction.
       ``(viii) Quality performance measures.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to quality of performance 
     of the delivery of medical care with respect to coverage 
     options offered under the plan and of health care 
     professionals and facilities providing medical care under the 
     plan.
       ``(C) Information required from health care professionals 
     on request.--Any health care professional treating a 
     participant or beneficiary under a group health plan shall 
     provide to the participant or beneficiary, on request, a 
     description of his or her professional qualifications 
     (including board certification status, licensing status, and 
     accreditation status, if any), privileges, and experience and 
     a general description by category (including salary, fee-for-
     service, capitation, and such other categories as may be 
     specified in regulations of the Secretary) of the applicable 
     method by which such professional is compensated in 
     connection with the provision of such medical care.
       ``(D) Information required from health care facilities on 
     request.--Any health care facility from which a participant 
     or beneficiary has sought treatment under a group health plan 
     shall provide to the participant or beneficiary, on request, 
     a description of the facility's corporate form or other 
     organizational form and all forms of licensing and 
     accreditation status (if any) assigned to the facility by 
     standard-setting organizations.
       ``(f) Access to Information Relevant to the Coverage 
     Options under which the Participant or Beneficiary is 
     Eligible to Enroll.--In addition to information otherwise 
     required to be made available under this section, a group 
     health plan (and a health insurance issuer offering health 
     insurance coverage in connection with a group health plan) 
     shall, upon written request (made not more frequently than 
     annually), make available to a participant in connection with 
     a period of enrollment the summary plan description for any 
     coverage option under the plan under which the participant is 
     eligible to enroll and any information described in clauses 
     (i), (ii), (iii), (vi), (vii), and (viii) of subsection 
     (e)(2)(B).
       ``(g) Advance Notice of Changes in Drug Formularies.--Not 
     later than 30 days before the effective of date of any 
     exclusion of a specific drug or biological from any drug 
     formulary under the plan that is used in the treatment of a 
     chronic illness or disease, the plan shall take such actions 
     as are necessary to reasonably ensure that plan participants 
     are informed of such exclusion. The requirements of this 
     subsection may be satisfied--
       ``(1) by inclusion of information in publications broadly 
     distributed by plan sponsors, employers, or employee 
     organizations,
       ``(2) by electronic means of communication (including the 
     Internet or proprietary computer networks in a format which 
     is readily accessible to participants),
       ``(3) by timely informing participants who, under an 
     ongoing program maintained under the plan, have submitted 
     their names for such notification, or
       ``(4) by any other reasonable means of timely informing 
     plan participants.''.

     SEC. 2102. REPORTING ON FRAUD AND ABUSE ENFORCEMENT 
                   ACTIVITIES.

       The General Accounting Office shall--
       (1) monitor--
       (A) 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 such guideline, and
       (B) 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
       (2) submit a report on such compliance to the Committee on 
     Commerce of the House of Representatives not later than 
     February 1, 1999, and every year thereafter for a period of 
     four years ending February 1, 2002.

     SEC. 2103. EFFECTIVE DATE.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act. The Secretary shall first issue 
     all regulations necessary to carry out the amendments made by 
     this subtitle before such date.
       (b) Limitation on Enforcement Actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this subtitle, against a group health plan or health 
     insurance issuer with respect to a violation of a requirement 
     imposed by such amendments before the date of issuance of 
     final regulations issued in connection with such requirement, 
     if the plan or issuer has sought to comply in good faith with 
     such requirement.
                        Subtitle C--HealthMarts

     SEC. 2201. SHORT TITLE OF SUBTITLE.

       This subtitle may be cited as the ``Health Care Consumer 
     Empowerment Act of 1998''.

     SEC. 2202. EXPANSION OF CONSUMER CHOICE THROUGH HEALTHMARTS.

       The Public Health Service Act is amended by adding at the 
     end the following new title:

                      ``TITLE XXVIII--HEALTHMARTS

     ``SEC. 2801. DEFINITION OF HEALTHMART.

       ``(a) In General.--For purposes of this title, the term 
     `HealthMart' means a legal entity that meets the following 
     requirements:
       ``(1) Organization.--The HealthMart is a nonprofit 
     organization operated under the direction of a board of 
     directors which is composed of representatives of not fewer 
     than 2 and in equal numbers from each of the following:
       ``(A) Small employers.
       ``(B) Employees of small employers.
       ``(C) Health care providers, which may be physicians, other 
     health care professionals, health care facilities, or any 
     combination thereof.
       ``(D) Entities, such as insurance companies, health 
     maintenance organizations, and licensed provider-sponsored 
     organizations, that underwrite or administer health benefits 
     coverage.
       ``(2) Offering health benefits coverage.--
       ``(A) In general.--The HealthMart, in conjunction with 
     those health insurance issuers that offer health benefits 
     coverage through the HealthMart, makes available health 
     benefits coverage in the manner described in subsection (b) 
     to all small employers and eligible employees in the manner 
     described in subsection (c)(2) 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 (which limit 
     variation among similarly situated individuals of required 
     premiums for health benefits coverage on the basis of health 
     status-related factors).
       ``(B) Nondiscrimination in coverage offered.--
       ``(i) In general.--Subject to clause (ii), the HealthMart 
     may not offer health benefits coverage to an eligible 
     employee in a geographic area (as specified under paragraph 
     (3)(A)) 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.
       ``(ii) Construction.--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.
       ``(C) 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.
       (D) Minimum coverage.--By the end of the first year of its 
     operation and thereafter, the HealthMart maintains not fewer 
     than 10 purchasers and 100 members.
       ``(3) Geographic areas.--
       ``(A) Specification of geographic areas.--The HealthMart 
     shall 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 shall 
     encompass at least one entire county or equivalent area.
       ``(B) Multistate areas.--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.
       ``(C) Multiple healthmarts permitted in single geographic 
     area.--Nothing in this

[[Page H6325]]

     title shall be construed as preventing the establishment and 
     operation of more than one HealthMart in a geographic area or 
     as limiting the number of HealthMarts that may operate in any 
     area.
       ``(4) Provision of administrative services to purchasers.--
       ``(A) In general.--The HealthMart provides administrative 
     services for purchasers. Such services may include 
     accounting, billing, enrollment information, and employee 
     coverage status reports.
       ``(B) Construction.--Nothing in this subsection shall be 
     construed as preventing a HealthMart from serving as an 
     administrative service organization to any entity.
       ``(5) Dissemination of information.--The HealthMart 
     collects and disseminates (or arranges 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. Such information shall be defined by the 
     HealthMart and shall be in a manner appropriate to the type 
     of coverage offered. To the extent practicable, such 
     information shall include information on provider 
     performance, locations and hours of operation of providers, 
     outcomes, and similar matters. Nothing in this section shall 
     be construed as preventing the dissemination of such 
     information or other information by the HealthMart or by 
     health insurance issuers through electronic or other means.
       ``(6) Filing information.--The HealthMart--
       ``(A) files with the applicable Federal authority 
     information that demonstrates the HealthMart's compliance 
     with the applicable requirements of this title; or
       ``(B) in accordance with rules established under section 
     2803(a), files with a State such information as the State may 
     require to demonstrate such compliance.
       ``(b) Health Benefits Coverage Requirements.--
       ``(1) Compliance with consumer protection requirements.--
     Any health benefits coverage offered through a HealthMart 
     shall--
       ``(A) be underwritten by a health insurance issuer that--
       ``(i) is licensed (or otherwise regulated) under State law 
     (or is a community health organization that is offering 
     health insurance coverage pursuant to section 330B(a)),
       ``(ii) meets all applicable State standards relating to 
     consumer protection, subject to section 2802(b), and
       ``(iii) offers the coverage under a contract with the 
     HealthMart;
       ``(B) subject to paragraph (2), be approved or otherwise 
     permitted to be offered under State law; and
       ``(C) 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.--
       ``(A) In general.--The requirement of paragraph (1)(B) 
     shall 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--
       ``(i) either (or both) of the grounds described in 
     subparagraph (B) for approval of the application has been 
     met; and
       ``(ii) the coverage meets the applicable State standards 
     (other than those that have been preempted under section 
     2802).
       ``(B) Grounds.--The grounds described in this subparagraph 
     with respect to a policy or product of health benefits 
     coverage are as follows:
       ``(i) Failure to act on policy, product, or rate 
     application on a timely basis.--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.
       ``(ii) Denial of application based on discriminatory 
     treatment.--The State has denied such an application and--

       ``(I) 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
       ``(II) 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.

       ``(C) Enforcement.--In the case of a waiver granted under 
     subparagraph (A) 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 in subparagraph (A)(ii). Such 
     monitoring and enforcement shall 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. Such an agreement shall specify or establish 
     mechanisms by which compliance activities are undertaken, 
     while not lengthening the time required to review and process 
     applications for waivers under subparagraph (A).
       ``(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:
       ``(A) Coverage through a health maintenance organization.
       ``(B) Coverage in connection with a preferred provider 
     organization.
       ``(C) Coverage in connection with a licensed provider-
     sponsored organization.
       ``(D) Indemnity coverage through an insurance company.
       ``(E) Coverage offered in connection with a contribution 
     into a medical savings account or flexible spending account.
       ``(F) Coverage that includes a point-of-service option.
       ``(G) Coverage offered by a community health organization 
     (as defined in section 330B(e)).
       ``(H) Any combination of such types of coverage.
       ``(4) Wellness bonuses for health promotion.--Nothing in 
     this title shall 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.
       ``(c) Purchasers; Members; Health Insurance Issuers.--
       ``(1) Purchasers.--
       ``(A) In general.--Subject to the provisions of this title, 
     a HealthMart shall 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.
       ``(B) Role of associations, brokers, and licensed health 
     insurance agents.--Nothing in this section shall 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.
       ``(C) Period of contract.--The HealthMart may not require a 
     contract under subparagraph (A) between a HealthMart and a 
     purchaser to be effective for a period of longer than 12 
     months. The previous sentence shall 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.
       ``(D) Exclusive nature of contract.--Such a contract shall 
     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. 
     The previous sentence shall 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.--
       ``(A) In general.--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.
       ``(B) 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).
       ``(C) Annual open enrollment period.--In the case of 
     members enrolled in health benefits coverage offered by a 
     health insurance issuer through a HealthMart, subject to 
     subparagraph (D), the HealthMart shall provide for an annual 
     open enrollment period of 30 days during which such members 
     may change the coverage option in which the members are 
     enrolled.
       ``(D) Rules of eligibility.--Nothing in this paragraph 
     shall preclude a HealthMart from establishing rules of 
     employee eligibility for enrollment and reenrollment of 
     members during the annual open enrollment period under 
     subparagraph (C). Such rules shall 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 issuers.--
       ``(A) Premium collection.--The contract between a 
     HealthMart and a health insurance issuer shall provide, with 
     respect to a

[[Page H6326]]

     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.
       ``(B) Scope of service area.--Nothing in this title shall 
     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.
       ``(C) Availability of coverage options.--A HealthMart shall 
     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 subsection (a)(3)(A).
       ``(d) Prevention of Conflicts of Interest.--
       ``(1) For boards of directors.--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 committees thereof.
       ``(2) 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 contributions, 
     grants, or other funds not connected with a contract for 
     coverage through the HealthMart.
       ``(3) Employment and employee representatives.--
       ``(A) In general.--An individual who is serving on a board 
     of directors of a HealthMart as a representative described in 
     subparagraph (A) or (B) of section 2801(a)(1) shall 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.
       ``(B) Construction.--For purposes of subparagraph (A), the 
     term ``affiliated'' does not include membership in a health 
     benefits plan or the obtaining of health benefits coverage 
     offered by a health insurance issuer.
       ``(e) Construction.--
       ``(1) Network of affiliated healthmarts.--Nothing in this 
     section shall 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):
       ``(A) Coordinating the offering of the same or similar 
     health benefits coverage in different areas served by the 
     different HealthMarts.
       ``(B) Providing for crediting of deductibles and other 
     cost-sharing for individuals who are provided health benefits 
     coverage through the HealthMarts (or affiliated HealthMarts) 
     after--
       ``(i) a change of employers through which the coverage is 
     provided, or
       ``(ii) a change in place of employment to an area not 
     served by the previous HealthMart.
       ``(2) Permitting healthmarts to adjust distributions among 
     issuers to reflect relative risk of enrollees.--Nothing in 
     this section shall be construed as precluding 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.
       ``(3) Application of uniform minimum participation and 
     contribution rules.--Nothing in this section shall be 
     construed as precluding 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.

     ``SEC. 2802. APPLICATION OF CERTAIN LAWS AND REQUIREMENTS.

       ``(a) Authority of States.--Nothing in this section shall 
     be construed as preempting State laws relating to the 
     following:
       ``(1) The regulation of underwriters of health coverage, 
     including licensure and solvency requirements.
       ``(2) The application of premium taxes and required 
     payments for guaranty funds or for contributions to high-risk 
     pools.
       ``(3) The application of fair marketing requirements and 
     other consumer protections (other than those specifically 
     relating to an item described in subsection (b)).
       ``(4) The application of requirements relating to the 
     adjustment of rates for health insurance coverage.
       ``(b) Treatment of Benefit and Grouping Requirements.--
     State laws insofar as they relate to any of the following are 
     superseded and shall not apply to health benefits coverage 
     made available through a HealthMart:
       ``(1) 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 or other Federal law 
     and to the extent the requirement prohibits an exclusion of a 
     specific disease from such coverage.
       ``(2) Requirements (commonly referred to as fictitious 
     group laws) relating to grouping and similar requirements for 
     such coverage to the extent such requirements impede the 
     establishment and operation of HealthMarts pursuant to this 
     title.
       ``(3) 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.
       ``(c) Application of ERISA Fiduciary and Disclosure 
     Requirements.--The board of directors of a HealthMart is 
     deemed to be a plan administrator of an employee welfare 
     benefit plan which is a group health plan for purposes of 
     applying parts 1 and 4 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 and those 
     provisions of part 5 of such subtitle which are applicable to 
     enforcement of such parts 1 and 4, and 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.
       ``(d) Application of ERISA Renewability Protection.--A 
     HealthMart is deemed to be 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.
       ``(e) Application of Rules for Network Plans and Financial 
     Capacity.--The provisions of subsections (c) and (d) of 
     section 2711 apply to health benefits coverage offered by a 
     health insurance issuer through a HealthMart.
       ``(f) Construction Relating to Offering Requirement.--
     Nothing in section 2711(a) of this Act or 703 of the Employee 
     Retirement Income Security Act of 1974 shall be construed as 
     permitting the offering outside the HealthMart of health 
     benefits coverage that is only made available through a 
     HealthMart under this section because of the application of 
     subsection (b).
       ``(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:
       ``(1) 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).
       ``(2) Application of association rules.--The HealthMart 
     shall be considered an association for purposes of applying 
     section 2712(e).
       ``(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 and 7 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 or titles 
     XXII and XXVII of this Act.

     ``SEC. 2803. ADMINISTRATION.

       ``(a) In General.--The applicable Federal authority shall 
     administer this title through the division established under 
     subsection (b) and is authorized to issue such regulations as 
     may be required to carry out this title. Such regulations 
     shall be subject to Congressional review under the provisions 
     of chapter 8 of title 5, United States Code. The applicable 
     Federal authority shall incorporate the process of `deemed 
     file and use' with respect to the information filed under 
     section 2801(a)(6)(A) 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.
       ``(b) Administration Through Health Care Marketplace 
     Division.--
       ``(1) In general.--The applicable Federal authority shall 
     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.
       ``(2) Additional duties.--In addition to other 
     responsibilities provided under this title, such Division is 
     responsible for--
       ``(A) oversight of the operations of HealthMarts under this 
     title; and
       ``(B) the periodic submittal to Congress of reports on the 
     performance of HealthMarts under this title under subsection 
     (c).
       ``(c) Periodic Reports.--The applicable Federal authority 
     shall submit to Congress a report every 30 months, during the 
     10-year period beginning on the effective date of the

[[Page H6327]]

     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.

     ``SEC. 2804. DEFINITIONS.

       ``For purposes of this title:
       ``(1) Applicable Federal authority.--The term `applicable 
     Federal authority' means the Secretary of Health and Human 
     Services.
       ``(2) 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) to enroll or be enrolled in health 
     benefits coverage offered through the HealthMart.
       ``(3) 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.
       ``(4) Health benefits coverage.--The term `health benefits 
     coverage' has the meaning given the term group health 
     insurance coverage in section 2791(b)(4).
       ``(5) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning given such term in section 2791(b)(2) 
     and includes a community health organization that is offering 
     coverage pursuant to section 330B(a).
       ``(6) Health status-related factor.--The term `health 
     status-related factor' has the meaning given such term in 
     section 2791(d)(9).
       ``(7) HealthMart.--The term `HealthMart' is defined in 
     section 2801(a).
       ``(8) 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).
       ``(9) 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.
       ``(10) Small employer.--The term `small employer' has the 
     meaning given such term for purposes of title XXVII.''.
               Subtitle D--Community Health Organizations

     SEC. 2301. PROMOTION OF PROVISION OF INSURANCE BY COMMUNITY 
                   HEALTH ORGANIZATIONS.

       (a) Waiver of State Licensure Requirement for Community 
     Health Organizations in Certain Cases.--Subpart I of part D 
     of title III of the Public Health Service Act is amended by 
     adding at the end the following new section:


     ``waiver of state licensure requirement for community health 
                     organizations in certain cases

       ``Sec. 330B. (a) Waiver Authorized.--
       ``(1) In general.--A community health organization may 
     offer health insurance coverage in a State notwithstanding 
     that it is not licensed in such a State to offer such 
     coverage if--
       ``(A) the organization files an application for waiver of 
     the licensure requirement with the Secretary of Health and 
     Human Services (in this section referred to as the 
     `Secretary') by not later than November 1, 2003, and
       ``(B) the Secretary determines, based on the application 
     and other evidence presented to the Secretary, that any of 
     the grounds for approval of the application described in 
     subparagraph (A), (B), or (C) of paragraph (2) has been met.
       ``(2) Grounds for approval of waiver.--
       ``(A) Failure to act on licensure application on a timely 
     basis.--The ground for approval of such a waiver application 
     described in this subparagraph is that the State has failed 
     to complete action on a licensing application of the 
     organization 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.
       ``(B) Denial of application based on discriminatory 
     treatment.--The ground for approval of such a waiver 
     application described in this subparagraph is that the State 
     has denied such a licensing application and the standards or 
     review process imposed by the State as a condition of 
     approval of the license or as the basis for such denial by 
     the State imposes any material requirements, procedures, or 
     standards (other than solvency requirements) to such 
     organizations that are not generally applicable to other 
     entities engaged in a substantially similar business.
       ``(C) Denial of application based on application of 
     solvency requirements.--With respect to waiver applications 
     filed on or after the date of publication of solvency 
     standards established by the Secretary under subsection (d), 
     the ground for approval of such a waiver application 
     described in this subparagraph is that the State has denied 
     such a licensing application based (in whole or in part) on 
     the organization's failure to meet applicable State solvency 
     requirements and such requirements are not the same as the 
     solvency standards established by the Secretary. For purposes 
     of this subparagraph, the term solvency requirements means 
     requirements relating to solvency and other matters covered 
     under the standards established by the Secretary under 
     subsection (d).
       ``(3) Treatment of waiver.--In the case of a waiver granted 
     under this subsection for a community health organization 
     with respect to a State--
       ``(A) Limitation to state.--The waiver shall be effective 
     only with respect to that State and does not apply to any 
     other State.
       ``(B) Limitation to 36-month period.--The waiver shall be 
     effective only for a 36-month period but may be renewed for 
     up to 36 additional months if the Secretary determines that 
     such an extension is appropriate.
       ``(C) Conditioned on compliance with consumer protection 
     and quality standards.--The continuation of the waiver is 
     conditioned upon the organization's compliance with the 
     requirements described in paragraph (5).
       ``(D) Preemption of state law.--Any provisions of law of 
     that State which relate to the licensing of the organization 
     and which prohibit the organization from providing health 
     insurance coverage shall be superseded.
       ``(4) Prompt action on application.--The Secretary shall 
     grant or deny such a waiver application within 60 days after 
     the date the Secretary determines that a substantially 
     complete waiver application has been filed. Nothing in this 
     section shall be construed as preventing an organization 
     which has had such a waiver application denied from 
     submitting a subsequent waiver application.
       ``(5) Application and enforcement of state consumer 
     protection and quality standards.--A waiver granted under 
     this subsection to an organization with respect to licensing 
     under State law is conditioned upon the organization's 
     compliance with all consumer protection and quality standards 
     insofar as such standards--
       ``(A) would apply in the State to the community health 
     organization if it were licensed as an entity offering health 
     insurance coverage under State law; and
       ``(B) are generally applicable to other risk-bearing 
     managed care organizations and plans in the State.
       ``(6) Report.--By not later than December 31, 2002, the 
     Secretary shall submit to the Committee on Commerce of the 
     House of Representatives and the Committee on Labor and Human 
     Resources of the Senate a report regarding whether the waiver 
     process under this subsection should be continued after 
     December 31, 2003.
       ``(b) Assumption of Full Financial Risk.--To qualify for a 
     waiver under subsection (a), the community health 
     organization shall assume full financial risk on a 
     prospective basis for the provision of covered health care 
     services, except that the organization--
       ``(1) may obtain insurance or make other arrangements for 
     the cost of providing to any enrolled member such services 
     the aggregate value of which exceeds such aggregate level as 
     the Secretary specifies from time to time;
       ``(2) may obtain insurance or make other arrangements for 
     the cost of such services provided to its enrolled members 
     other than through the organization because medical necessity 
     required their provision before they could be secured through 
     the organization;
       ``(3) may obtain insurance or make other arrangements for 
     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; and
       ``(4) may 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 by the physicians or other 
     health professionals or through the institutions.
       ``(c) Certification of Provision against Risk of Insolvency 
     for Unlicensed CHOs.--
       ``(1) In general.--Each community health organization that 
     is not licensed by a State and for which a waiver application 
     has been approved under subsection (a)(1), shall meet 
     standards established by the Secretary under subsection (d) 
     relating to the financial solvency and capital adequacy of 
     the organization.
       ``(2) Certification process for solvency standards for 
     chos.--The Secretary shall establish a process for the 
     receipt and approval of applications of a community health 
     organization described in paragraph (1) for certification 
     (and periodic recertification) of the organization as meeting 
     such solvency standards. Under such process, the Secretary 
     shall act upon such a certification application not later 
     than 60 days after the date the application has been 
     received.
       ``(d) Establishment of Solvency Standards for Community 
     Health Organizations.--
       ``(1) In general.--The Secretary shall establish, on an 
     expedited basis and by rule pursuant to section 553 of title 
     5, United States Code and through the Health Resources and 
     Services Administration, standards described in subsection 
     (c)(1) (relating to financial solvency and capital adequacy) 
     that entities must meet to obtain a waiver under subsection 
     (a)(2)(C). In establishing such standards, the Secretary 
     shall consult with interested organizations, including the 
     National Association of Insurance Commissioners, the Academy 
     of Actuaries, and organizations representing Federally 
     qualified health centers.

[[Page H6328]]

       ``(2) Factors to consider for solvency standards.--In 
     establishing solvency standards for community health 
     organizations under paragraph (1), the Secretary shall take 
     into account--
       ``(A) the delivery system assets of such an organization 
     and ability of such an organization to provide services to 
     enrollees;
       ``(B) alternative means of protecting against insolvency, 
     including reinsurance, unrestricted surplus, letters of 
     credit, guarantees, organizational insurance coverage, 
     partnerships with other licensed entities, and valuation 
     attributable to the ability of such an organization to meet 
     its service obligations through direct delivery of care; and
       ``(C) any standards developed by the National Association 
     of Insurance Commissioners specifically for risk-based health 
     care delivery organizations.
       ``(3) Enrollee protection against insolvency.--Such 
     standards shall 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.
       ``(4) Deadline.--Such standards shall be promulgated in a 
     manner so they are first effective by not later than April 1, 
     1999.
       ``(e) Definitions.--In this section:
       ``(1) Community health organization.--The term `community 
     health organization ' means an organization that is a 
     Federally-qualified health center or is controlled by one or 
     more Federally-qualified health centers.
       ``(2) Federally-qualified health center.--The term 
     `Federally-qualified health center' has the meaning given 
     such term in section 1905(l)(2)(B) of the Social Security 
     Act.
       ``(3) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning given such term in 
     section 2791(b)(1).
       ``(4) Control.--The term `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

     SEC. 3001. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, PEDIATRIC CARE.

       (a) In General.--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:

     ``SEC. 9813. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, PEDIATRIC CARE.

       ``(a) Patient Access to Unrestricted Medical Advice.--
       ``(1) In general.--In the case of any health care 
     professional acting within the lawful scope of practice in 
     the course of carrying out a contractual employment 
     arrangement or other direct contractual arrangement between 
     such professional and a group health plan, the plan with 
     which such contractual employment arrangement or other direct 
     contractual arrangement is maintained by the professional may 
     not impose on such professional under such arrangement any 
     prohibition with respect to advice, provided to a participant 
     or beneficiary under the plan who is a patient, about the 
     health status of the participant or beneficiary or the 
     medical care or treatment for the condition or disease of the 
     participant or beneficiary, regardless of whether benefits 
     for such care or treatment are provided under the plan.
       ``(2) Health care professional defined.--For purposes of 
     this subsection, the term `health care professional' means a 
     physician (as defined in section 1861(r) of the Social 
     Security Act) or other health care professional if coverage 
     for the professional's services is provided under the group 
     health plan for the services of the professional. Such term 
     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.
       ``(b) Patient Access to Emergency Medical Care.--
       ``(1) In general.--To the extent that the group health plan 
     provides for any benefits consisting of emergency medical 
     care (as defined in section 503(b)(9)(I) of the Employee 
     Retirement Income Security Act of 1974), except for items or 
     services specifically excluded--
       ``(A) the plan shall provide benefits, without requiring 
     preauthorization, for appropriate emergency medical screening 
     examinations (within the capability of the emergency 
     facility, including ancillary services routinely available to 
     the emergency facility) to the extent that a prudent 
     layperson, who possesses an average knowledge of health and 
     medicine, would determine such examinations to be necessary 
     in order to determine whether emergency medical care (as so 
     defined) is required, and
       ``(B) the plan shall provide benefits for additional 
     emergency medical services following an emergency medical 
     screening examination (if determined necessary under 
     subparagraph (A)) to the extent that a prudent emergency 
     medical professional would determine such additional 
     emergency services to be necessary to avoid the consequences 
     described in clause (i) of section 503(b)(9)(I) of such Act.
       ``(2) Uniform cost-sharing required.--Nothing in this 
     subsection shall be construed as preventing a group health 
     plan from imposing any form of cost-sharing applicable to any 
     participant or beneficiary (including coinsurance, 
     copayments, deductibles, and any other charges) in relation 
     to benefits described in paragraph (1), if such form of cost-
     sharing is uniformly applied under such plan, with respect to 
     similarly situated participants and beneficiaries, to all 
     benefits consisting of emergency medical care (as defined in 
     section 503(b)(9)(I) of the Employee Retirement Income 
     Security Act of 1974) provided to such similarly situated 
     participants and beneficiaries under the plan.
       ``(c) Patient Access to Obstetric and Gynecological Care.
       ``(1) In general.--In any case in which a group health 
     plan--
       ``(A) provides benefits under the terms of the plan 
     consisting of--
       ``(i) routine gynecological care (such as preventive 
     women's health examinations), or
       ``(ii) routine obstetric care (such as routine pregnancy-
     related services),

     provided by a participating physician who specializes in such 
     care (or provides benefits consisting of payment for such 
     care), and
       ``(B) the plan requires or provides for designation by a 
     participant or beneficiary of a participating primary care 
     provider,

     if the primary care provider designated by such a participant 
     or beneficiary is not such a physician, then the plan shall 
     meet the requirements of paragraph (2).
       ``(2) Requirements.--A group health plan meets the 
     requirements of this paragraph, in connection with benefits 
     described in paragraph (1) consisting of care described in 
     clause (i) or (ii) of paragraph (1)(A) (or consisting of 
     payment therefor), if the plan--
       ``(A) does not require authorization or a referral by the 
     primary care provider in order to obtain such benefits, and
       ``(B) treats the ordering of other routine care of the same 
     type, by the participating physician providing the care 
     described in clause (i) or (ii) of paragraph (1)(A), as the 
     authorization of the primary care provider with respect to 
     such care.
       ``(3) Construction.--Nothing in paragraph (2)(B) shall 
     waive any requirements of coverage relating to medical 
     necessity or appropriateness with respect to coverage of 
     gynecological or obstetric care so ordered.
       ``(d) Patient Access to Pediatric Care.--
       ``(1) In general.--In any case in which a group health plan 
     (or a health insurance issuer offering health insurance 
     coverage in connection with the plan) provides benefits 
     consisting of routine pediatric care provided by a 
     participating physician who specializes in pediatrics (or 
     consisting of payment for such care) and the plan requires or 
     provides for designation by a participant or beneficiary of a 
     participating primary care provider, the plan (or issuer) 
     shall provide that such a participating physician may be 
     designated, if available, by a parent or guardian of any 
     beneficiary under the plan is who under 18 years of age, as 
     the primary care provider with respect to any such benefits.
       ``(2) Construction.--Nothing in paragraph (1) shall waive 
     any requirements of coverage relating to medical necessity or 
     appropriateness with respect to coverage of pediatric care.
       ``(e) Treatment of Multiple Coverage Options.--In the case 
     of a plan providing benefits under two or more coverage 
     options, the requirements of subsections (c) and (d) shall 
     apply separately with respect to each coverage option.''.
       (b) Clerical Amendment.--The table of sections of such 
     subchapter of such chapter is amended by adding at the end 
     the following new item:

``Sec. 9813. Patient access to unrestricted medical advice, emergency 
              medical care, obstetric and gynecological care, pediatric 
              care.''

     SEC. 3002. EFFECTIVE DATE AND RELATED RULES.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act, except that the Secretary of the 
     Treasury may issue regulations before such date under such 
     amendments. The Secretary shall first issue regulations 
     necessary to carry out the amendments made by this section 
     before the effective date thereof.
       (b) Limitation on Penalty for Certain Failures.--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.
       (c) Special Rule for Collective Bargaining Agreements.--In 
     the case of a group health plan maintained pursuant to one or 
     more collective bargaining agreements between employee 
     representatives and one or more employers ratified before the 
     date of the enactment of this Act, the provisions of 
     subsections (b), (c), and (d) of section 9813 of

[[Page H6329]]

     the Internal Revenue Code of 1986 (as added by this subtitle) 
     shall not apply with respect to plan years beginning before 
     the later of--
       (1) the date on which the last of the collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of the enactment of this Act), or
       (2) January 1, 2001.

     For purposes of this subsection, any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by this subtitle shall not be treated as a 
     termination of such collective bargaining agreement.
               Subtitle B--Patient Access to Information

     SEC. 3101. PATIENT ACCESS TO INFORMATION REGARDING PLAN 
                   COVERAGE, MANAGED CARE PROCEDURES, HEALTH CARE 
                   PROVIDERS, AND QUALITY OF MEDICAL CARE.

       (a) In General.--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:

     ``SEC. 9814. DISCLOSURE BY GROUP HEALTH PLANS.

       ``(a) Disclosure Requirement.--The administrator of each 
     group health plan shall take such actions as are necessary to 
     ensure that the summary plan description of the plan required 
     under section 102 of Employee Retirement Income Security Act 
     of 1974 (or each summary plan description in any case in 
     which different summary plan descriptions are appropriate 
     under part 1 of subtitle B of title I of such Act for 
     different options of coverage) contains the information 
     required under subsections (b), (c), (d), and (e)(2)(A). To 
     the extent that any health insurance issuer offering health 
     insurance coverage in connection with such plan provides such 
     information on a timely basis to plan participants and 
     beneficiaries, the requirements of this subsection shall be 
     deemed satisfied in the case of such plan with respect to 
     such information.
       ``(b) Plan Benefits.--The information required under 
     subsection (a) includes the following:
       ``(1) Covered items and services.--
       ``(A) Categorization of included benefits.--A description 
     of covered benefits, categorized by--
       ``(i) types of items and services (including any special 
     disease management program), and
       ``(ii) types of health care professionals providing such 
     items and services.
       ``(B) Emergency medical care.--A description of the extent 
     to which the plan covers emergency medical care (including 
     the extent to which the plan provides for access to urgent 
     care centers), and any definitions provided under the plan 
     for the relevant plan terminology referring to such care.
       ``(C) Preventative services.--A description of the extent 
     to which the plan provides benefits for preventative 
     services.
       ``(D) Drug formularies.--A description of the extent to 
     which covered benefits are determined by the use or 
     application of a drug formulary and a summary of the process 
     for determining what is included in such formulary.
       ``(E) COBRA continuation coverage.--A description of the 
     requirements under section 4980B.
       ``(2) Limitations, exclusions, and restrictions on covered 
     benefits.--
       ``(A) Categorization of excluded benefits.--A description 
     of benefits specifically excluded from coverage, categorized 
     by types of items and services.
       ``(B) Utilization review and preauthorization 
     requirements.--Whether coverage for medical care is limited 
     or excluded on the basis of utilization review or 
     preauthorization requirements.
       ``(C) Lifetime, annual, or other period limitations.--A 
     description of the circumstances under which, and the extent 
     to which, coverage is subject to lifetime, annual, or other 
     period limitations, categorized by types of benefits.
       ``(D) Custodial care.--A description of the circumstances 
     under which, and the extent to which, the coverage of 
     benefits for custodial care is limited or excluded, and a 
     statement of the definition used by the plan for custodial 
     care.
       ``(E) Experimental treatments.--Whether coverage for any 
     medical care is limited or excluded because it constitutes 
     experimental treatment or technology, and any definitions 
     provided under the plan for the relevant plan terminology 
     referring to such limited or excluded care.
       ``(F) Medical appropriateness or necessity.--Whether 
     coverage for medical care may be limited or excluded by 
     reason of a failure to meet the plan's requirements for 
     medical appropriateness or necessity, and any definitions 
     provided under the plan for the relevant plan terminology 
     referring to such limited or excluded care.
       ``(G) Second or subsequent opinions.--A description of the 
     circumstances under which, and the extent to which, coverage 
     for second or subsequent opinions is limited or excluded.
       ``(H) Specialty care.--A description of the circumstances 
     under which, and the extent to which, coverage of benefits 
     for specialty care is conditioned on referral from a primary 
     care provider.
       ``(I) Continuity of care.--A description of the 
     circumstances under which, and the extent to which, coverage 
     of items and services provided by any health care 
     professional is limited or excluded by reason of the 
     departure by the professional from any defined set of 
     providers.
       ``(J) Restrictions on coverage of emergency services.--A 
     description of the circumstances under which, and the extent 
     to which, the plan, in covering emergency medical care 
     furnished to a participant or beneficiary of the plan imposes 
     any financial responsibility described in subsection (c) on 
     participants or beneficiaries or limits or conditions 
     benefits for such care subject to any other term or condition 
     of such plan.
       ``(c) Participant's Financial Responsibilities.--The 
     information required under subsection (a) includes an 
     explanation of--
       ``(1) a participant's financial responsibility for payment 
     of premiums, coinsurance, copayments, deductibles, and any 
     other charges, and
       ``(2) the circumstances under which, and the extent to 
     which, the participant's financial responsibility described 
     in paragraph (1) may vary, including any distinctions based 
     on whether a health care provider from whom covered benefits 
     are obtained is included in a defined set of providers.
       ``(d) Dispute Resolution Procedures.--The information 
     required under subsection (a) includes a description of the 
     processes adopted by the plan pursuant to section 503(b) of 
     Employee Retirement Income Security Act of 1974, including--
       ``(1) descriptions thereof relating specifically to--
       ``(A) coverage decisions,
       ``(B) internal review of coverage decisions, and
       ``(C) any external review of coverage decisions, and
       ``(2) the procedures and time frames applicable to each 
     step of the processes referred to in subparagraphs (A), (B), 
     and (C) of paragraph (1).
       ``(e) Information Available on Request.--
       ``(1) Access to plan benefit information in electronic 
     form.--
       ``(A) In general.--A group health plan shall, upon written 
     request (made not more frequently than annually), make 
     available to participants and beneficiaries, in a generally 
     recognized electronic format, the following information:
       ``(i) the latest summary plan description, including the 
     latest summary of material modifications; and
       ``(ii) the actual plan provisions setting forth the 
     benefits available under the plan

     to the extent such information relates to the coverage 
     options under the plan available to the participant or 
     beneficiary. A reasonable charge may be made to cover the 
     cost of providing such information in such generally 
     recognized electronic format. The Secretary may by regulation 
     prescribe a maximum amount which will constitute a reasonable 
     charge under the preceding sentence.
       ``(B) Alternative access.--The requirements of this 
     paragraph may be met by making such information generally 
     available (rather than upon request) on the Internet or on a 
     proprietary computer network in a format which is readily 
     accessible to participants and beneficiaries.
       ``(2) Additional information to be provided on request.--
       ``(A) Inclusion in summary plan description of summary of 
     additional information.--The information required under 
     subsection (a) includes a summary description of the types of 
     information required by this subsection to be made available 
     to participants and beneficiaries on request.
       ``(B) Information required from plans on request.--In 
     addition to information required to be included in summary 
     plan descriptions under this subsection, a group health plan 
     shall provide the following information to a participant or 
     beneficiary on request:
       ``(i) Network characteristics.--If the plan (or a health 
     insurance issuer offering health insurance coverage in 
     connection with the plan) utilizes a defined set of providers 
     under contract with the plan (or issuer), a detailed list of 
     the names of such providers and their geographic location, 
     set forth separately with respect to primary care providers 
     and with respect to specialists.
       ``(ii) Care management information.--A description of the 
     circumstances under which, and the extent to which, the plan 
     has special disease management programs or programs for 
     persons with disabilities, indicating whether these programs 
     are voluntary or mandatory and whether a significant benefit 
     differential results from participation in such programs.
       ``(iii) Inclusion of drugs and biologicals in 
     formularies.--A statement of whether a specific drug or 
     biological is included in a formulary used to determine 
     benefits under the plan and a description of the procedures 
     for considering requests for any patient-specific waivers.
       ``(iv) Procedures for determining exclusions based on 
     medical necessity or experimental treatments.--Upon receipt 
     by the participant or beneficiary of any notification of an 
     adverse coverage decision based on a determination relating 
     to medical necessity or an experimental treatment or 
     technology, a description of the procedures and medically-
     based criteria used in such decision.
       ``(v) Preauthorization and utilization review procedures.--
     Upon receipt by the participant or beneficiary of any 
     notification of an adverse coverage decision, a description 
     of the basis on which any

[[Page H6330]]

     preauthorization requirement or any utilization review 
     requirement has resulted in such decision.
       ``(vi) Accreditation status of health insurance issuers and 
     service providers.--A description of the accreditation and 
     licencing 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) Measures of enrollee satisfaction.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to enrollee satisfaction.
       ``(viii) Quality performance measures.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to quality of performance 
     of the delivery of medical care with respect to coverage 
     options offered under the plan and of health care 
     professionals and facilities providing medical care under the 
     plan.
       ``(C) Information required from health care professionals 
     on request.--Any health care professional treating a 
     participant or beneficiary under a group health plan shall 
     provide to the participant or beneficiary, on request, a 
     description of his or her professional qualifications 
     (including board certification status, licensing status, and 
     accreditation status, if any), privileges, and experience and 
     a general description by category (including salary, fee-for-
     service, capitation, and such other categories as may be 
     specified in regulations of the Secretary) of the applicable 
     method by which such professional is compensated in 
     connection with the provision of such medical care.
       ``(D) Information required from health care facilities on 
     request.--Any health care facility from which a participant 
     or beneficiary has sought treatment under a group health plan 
     shall provide to the participant or beneficiary, on request, 
     a description of the facility's corporate form or other 
     organizational form and all forms of licensing and 
     accreditation status (if any) assigned to the facility by 
     standard-setting organizations.
       ``(f) Access to Information Relevant to the Coverage 
     Options under which the Participant or Beneficiary is 
     Eligible to Enroll.--In addition to information otherwise 
     required to be made available under this section, a group 
     health plan shall, upon written request (made not more 
     frequently than annually), make available to a participant in 
     connection with a period of enrollment the summary plan 
     description for any coverage option under the plan under 
     which the participant is eligible to enroll and any 
     information described in clauses (i), (ii), (iii), (vi), 
     (vii), and (viii) of subsection (e)(2)(B).
       ``(g) Advance Notice of Changes in Drug Formularies.--Not 
     later than 30 days before the effective of date of any 
     exclusion of a specific drug or biological from any drug 
     formulary under the plan that is used in the treatment of a 
     chronic illness or disease, the plan shall take such actions 
     as are necessary to reasonably ensure that plan participants 
     are informed of such exclusion. The requirements of this 
     subsection may be satisfied--
       ``(1) by inclusion of information in publications broadly 
     distributed by plan sponsors, employers, or employee 
     organizations,
       ``(2) by electronic means of communication (including the 
     Internet or proprietary computer networks in a format which 
     is readily accessible to participants),
       ``(3) by timely informing participants who, under an 
     ongoing program maintained under the plan, have submitted 
     their names for such notification, or
       ``(4) by any other reasonable means of timely informing 
     plan participants.''.
       (b) Clerical Amendment.--The table of sections of such 
     subchapter of such chapter is amended by adding at the end 
     the following new item:

``Sec. 9814. Disclosure by group health plans.''

     SEC. 3102. REPORTING ON FRAUD AND ABUSE ENFORCEMENT 
                   ACTIVITIES.

       The General Accounting Office shall--
       (1) monitor--
       (A) 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
       (B) 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
       (2) submit a report on such compliance to the Committee on 
     the Judiciary 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.

     SEC. 3103. EFFECTIVE DATE.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act. The Secretary of the Treasury or 
     the Secretary's delegate shall first issue all regulations 
     necessary to carry out the amendments made by this subtitle 
     before such date.
       (b) Limitation on Enforcement Actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this subtitle, against a group health plan with respect to a 
     violation of a requirement imposed by such amendments before 
     the date of issuance of final regulations issued in 
     connection with such requirement, if the plan has sought to 
     comply in good faith with such requirement.
                  Subtitle C--Medical Savings Accounts

     SEC. 3201. EXPANSION OF AVAILABILITY OF MEDICAL SAVINGS 
                   ACCOUNTS.

       (a) Repeal of Limitations on Number of Medical Savings 
     Accounts.--
       (1) In general.--Subsections (i) and (j) of section 220 of 
     the Internal Revenue Code of 1986 are hereby repealed.
       (2) Conforming amendment.--Paragraph (1) of section 220(c) 
     of such Code is amended by striking subparagraph (D).
       (b) All Employers May Offer Medical Savings Accounts.--
       (1) In general.--Subclause (I) of section 220(c)(1)(A)(iii) 
     of such Code (defining eligible individual) is amended by 
     striking ``and such employer is a small employer''.
       (2) Conforming amendments.--
       (A) Paragraph (1) of section 220(c) of such Code is amended 
     by striking subparagraph (C).
       (B) Subsection (c) of section 220 of such Code is amended 
     by striking paragraph (4) and by redesignating paragraph (5) 
     as paragraph (4).
       (c) Increase in Amount of Deduction Allowed for 
     Contributions to Medical Savings Accounts.--
       (1) In general.--Paragraph (2) of section 220(b) of such 
     Code is amended to read as follows:
       ``(2) Monthly limitation.--The monthly limitation for any 
     month is the amount equal to \1/12\ of the annual deductible 
     (as of the first day of such month) of the taxpayer's 
     coverage under the high deductible health plan.''
       (2) Conforming amendment.--Clause (ii) of section 
     220(d)(1)(A) of such Code is amended by striking ``75 percent 
     of''.
       (d) Both Employers and Employees May Contribute to Medical 
     Savings Accounts.--Paragraph (5) of section 220(b) of such 
     Code is amended to read as follows:
       ``(5) Coordination with exclusion for employer 
     contributions.--The limitation which would (but for this 
     paragraph) apply under this subsection to the taxpayer for 
     any taxable year shall be reduced (but not below zero) by the 
     amount which would (but for section 106(b)) be includible in 
     the taxpayer's gross income for such taxable year.''
       (e) Reduction of Permitted Deductibles Under High 
     Deductible Health Plans.--
       (1) In general.--Subparagraph (A) of section 220(c)(2) of 
     such Code (defining high deductible health plan) is amended--
       (A) by striking ``$1,500'' and inserting ``$1,000'', and
       (B) by striking ``$3,000'' and inserting ``$2,000''.
       (2) Conforming amendment.--Subsection (g) of section 220 of 
     such Code is amended--
       (A) by striking ``1998'' and inserting ``1999'', and
       (B) by striking ``1997'' and inserting ``1998''.
       (f) Medical Savings Accounts May Be Offered Under Cafeteria 
     Plans.--Subsection (f) of section 125 of such Code is amended 
     by striking ``106(b),''.
       (g) Individuals Receiving Immediate Federal Annuities 
     Eligible for Medical Savings Accounts.--Paragraph (1) of 
     section 220(c) of such Code (defining eligible individual), 
     as amended by subsections (a) and (b), is amended by adding 
     at the end the following new subparagraph:
       ``(C) Special rules for individuals receiving immediate 
     federal annuities.--
       ``(i) In general.--Subparagraph (A)(iii) and subsection 
     (b)(4) shall not apply for any month to an individual--

       ``(I) who, as of the 1st day of such month, is enrolled in 
     a high deductible health plan under chapter 89 of title 5, 
     United States Code, and
       ``(II) who is entitled to receive for such month any amount 
     by reason of being an annuitant (as defined in section 
     8901(3) of such title 5).

       ``(ii) Special rule for spouse of annuitant.--In the case 
     of the spouse of an individual described in clause (i) who is 
     not also described in clause (i), subsection (b)(4) shall not 
     apply to such spouse if such individual and spouse have 
     family coverage under the same plan described in clause 
     (i)(I).''
       (h) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 3202. EXCEPTION FROM INSURANCE LIMITATION IN CASE OF 
                   MEDICAL SAVINGS ACCOUNTS.

       (a) In General.--Section 220(d)(2)(B) of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new clause:
       ``(iii) Insurance offered by community health centers.--

       ``(I) In general.--Subject to clauses (II) and (III), 
     clause (i) shall not apply to any expense for coverage under 
     insurance offered by a health center (as defined in section 
     330(a)(1) of the Public Health Service Act) if the coverage 
     consists solely of coverage for required primary health 
     benefits (as defined

[[Page H6331]]

     in section 330(b)(1)(A) of such Act) provided on a capitated 
     basis.
       ``(II) Income limitation.--Subclause (I) shall only apply 
     to expenses for coverage of an individual who, in the taxable 
     year involved, has income that is less than 200 percent of 
     the income official poverty line (as defined by the Office of 
     Management and Budget, and revised annually in accordance 
     with section 673(2) of the Omnibus Budget Reconciliation Act 
     of 1981) applicable to a family of the size involved.
       ``(III) Limitation on number of contracts.--For a taxable 
     year ending in a calendar year, subclause (I) shall apply 
     only to expenses for coverage for the first 15,000 
     individuals enrolled in insurance described in such subclause 
     in the year.''.

       (b) Reports on Enrollment.--Section 330(j)(3) of the Public 
     Health Service Act (42 U.S.C. 254c(j)(3)) is amended--
       (1) by striking ``and'' at the end of subparagraph (K),
       (2) by striking the period at the end of subparagraph (L) 
     and inserting ``; and'', and
       (3) by inserting after subparagraph (L) the following new 
     subparagraph:
       ``(M) if the center offers insurance coverage to an 
     individual with a medical savings account under subclause (I) 
     of section 220(d)(2)(B)(iii), the center shall provide such 
     reports in such time and manner as may be required by the 
     Secretary and the Secretary of the Treasury in order to carry 
     out subclause (III) of such section.''.
                  TITLE IV--HEALTH CARE LAWSUIT REFORM
                     Subtitle A--General Provisions

     SEC. 4001. FEDERAL REFORM OF HEALTH CARE LIABILITY ACTIONS.

       (a) Applicability.--This title shall apply with respect to 
     any health care liability action brought in any State or 
     Federal court, except that this title shall not apply to--
       (1) an action for damages arising from a vaccine-related 
     injury or death to the extent that title XXI of the Public 
     Health Service Act applies to the action, or
       (2) an action under the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1001 et seq.).
       (b) Preemption.--This title shall preempt any State law to 
     the extent such law is inconsistent with the limitations 
     contained in this title. This title shall not preempt any 
     State law that provides for defenses or places limitations on 
     a person's liability in addition to those contained in this 
     title or otherwise imposes greater restrictions than those 
     provided in this title.
       (c) Effect on Sovereign Immunity and Choice of Law or 
     Venue.--Nothing in subsection (b) shall be construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any provision of law;
       (2) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (3) affect the applicability of any provision of the 
     Foreign Sovereign Immunities Act of 1976;
       (4) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation; or
       (5) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum.
       (d) Amount in Controversy.--In an action to which this 
     title applies and which is brought under section 1332 of 
     title 28, United States Code, the amount of non-economic 
     damages or punitive damages, and attorneys' fees or costs, 
     shall not be included in determining whether the matter in 
     controversy exceeds the sum or value of $50,000.
       (e) Federal Court Jurisdiction Not Established on Federal 
     Question Grounds.--Nothing in this title shall be construed 
     to establish any jurisdiction in the district courts of the 
     United States over health care liability actions on the basis 
     of section 1331 or 1337 of title 28, United States Code.

     SEC. 4002. DEFINITIONS.

       As used in this title:
       (1) Actual damages.--The term ``actual damages'' means 
     damages awarded to pay for economic loss.
       (2) Alternative dispute resolution system; adr.--The term 
     ``alternative dispute resolution system'' or ``ADR'' means a 
     system established under Federal or State law that provides 
     for the resolution of health care liability claims in a 
     manner other than through health care liability actions.
       (3) Claimant.--The term ``claimant'' means any person who 
     brings a health care liability action and any person on whose 
     behalf such an action is brought. If such action is brought 
     through or on behalf of an estate, the term includes the 
     claimant's decedent. If such action is brought through or on 
     behalf of a minor or incompetent, the term includes the 
     claimant's legal guardian.
       (4) Clear and convincing evidence.--The term ``clear and 
     convincing evidence'' is that measure or degree of proof that 
     will produce in the mind of the trier of fact a firm belief 
     or conviction as to the truth of the allegations sought to be 
     established. Such measure or degree of proof is more than 
     that required under preponderance of the evidence but less 
     than that required for proof beyond a reasonable doubt.
       (5) Collateral source payments.--The term ``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 an injury or wrongful death, 
     pursuant to--
       (A) any State or Federal health, sickness, income-
     disability, accident or workers' compensation Act;
       (B) any health, sickness, income-disability, or accident 
     insurance that provides health benefits or income-disability 
     coverage;
       (C) any contract or agreement of any group, organization, 
     partnership, or corporation to provide, pay for, or reimburse 
     the cost of medical, hospital, dental, or income disability 
     benefits; and
       (D) any other publicly or privately funded program.
       (6) Drug.--The term ``drug'' has the meaning given such 
     term in section 201(g)(1) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 321(g)(1)).
       (7) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from injury (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities), to the extent recovery for such loss is 
     allowed under applicable State law.
       (8) Harm.--The term ``harm'' means any legally cognizable 
     wrong or injury for which punitive damages may be imposed.
       (9) Health benefit plan.--The term ``health benefit plan'' 
     means--
       (A) a hospital or medical expense incurred policy or 
     certificate,
       (B) a hospital or medical service plan contract,
       (C) a health maintenance subscriber contract, or
       (D) a Medicare+Choice plan (offered under part C of title 
     XVIII of the Social Security Act),

     that provides benefits with respect to health care services.
       (10) Health care liability action.--The term ``health care 
     liability action'' means a civil action brought in a State or 
     Federal court against--
       (A) a health care provider,
       (B) an entity which is obligated to provide or pay for 
     health benefits under any health benefit plan (including any 
     person or entity acting under a contract or arrangement to 
     provide or administer any health benefit), or
       (C) the manufacturer, distributor, supplier, marketer, 
     promoter, or seller of a medical product,

     in which the claimant alleges a claim (including third party 
     claims, cross claims, counter claims, or contribution claims) 
     based upon the provision of (or the failure to provide or pay 
     for) health care services or the use of a medical product, 
     regardless of the theory of liability on which the claim is 
     based or the number of plaintiffs, defendants, or causes of 
     action.
       (11) Health care liability claim.--The term ``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.
       (12) Health care provider.--The term ``health care 
     provider'' means any person that is engaged in the delivery 
     of health care services in a State and that is required by 
     the laws or regulations of the State to be licensed or 
     certified by the State to engage in the delivery of such 
     services in the State.
       (13) Health care service.--The term ``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.
       (14) Medical device.--The term ``medical device'' has the 
     meaning given such term in section 201(h) of the Federal 
     Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)).
       (15) Non-economic damages.--The term ``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.
       (16) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity, including 
     any governmental entity.
       (17) Product seller.--
       (A) In general.--Subject to subparagraph (B), the term 
     ``product seller'' means a person who, in the course of a 
     business conducted for that purpose--
       (i) sells, distributes, rents, leases, prepares, blends, 
     packages, labels, or is otherwise involved in placing, a 
     product in the stream of commerce, or
       (ii) installs, repairs, or maintains the harm-causing 
     aspect of a product.
       (B) Exclusion.--Such term does not include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services in any case in 
     which the sale or use of a product is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who--

       (I) acts in only a financial capacity with respect to the 
     sale of a product; or
       (II) 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.

       (18) Punitive damages.--The term ``punitive damages'' means 
     damages awarded against any person not to compensate for 
     actual injury suffered, but to punish or deter

[[Page H6332]]

     such person or others from engaging in similar behavior in 
     the future.
       (19) State.--The term ``State'' means each of the several 
     States, the District of Columbia, Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, the Northern Mariana Islands, 
     and any other territory or possession of the United States.

     SEC. 4003. EFFECTIVE DATE.

       This title will apply to--
       (1) any health care liability action brought in a Federal 
     or State court, and
       (2) any health care liability claim subject to an 
     alternative dispute resolution system,

     that is initiated on or after the date of enactment of this 
     title, except that any health care liability claim or action 
     arising from an injury occurring before the date of enactment 
     of this title shall be governed by the applicable statute of 
     limitations provisions in effect at the time the injury 
     occurred.
    Subtitle B--Uniform Standards for Health Care Liability Actions

     SEC. 4011. STATUTE OF LIMITATIONS.

       A health care liability action may not be brought after the 
     expiration of the 2-year period that begins on the date on 
     which the alleged injury that is the subject of the action 
     was discovered or should reasonably have been discovered, but 
     in no case after the expiration of the 5-year period that 
     begins on the date the alleged injury occurred.

     SEC. 4012. CALCULATION AND PAYMENT OF DAMAGES.

       (a) Treatment of Non-Economic Damages.--
       (1) Limitation on non-economic damages.--The total amount 
     of non-economic damages that may be awarded to a claimant for 
     losses resulting from the injury which is the subject of a 
     health care liability action may not exceed $250,000, 
     regardless of the number of parties against whom the action 
     is brought or the number of actions brought with respect to 
     the injury. The limitation under this paragraph shall 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 a patient, or if the patient is 
     incompetent, against the wishes of the patient's guardian, on 
     the basis of the patient's present or predicated age, 
     disability, degree of medical dependency, or quality of life.
       (2) Limit.--If, after the date of the enactment of this 
     Act, a State enacts a law which prescribes the amount of non-
     economic damages which may be awarded in a health care 
     liability action which is different from the amount 
     prescribed by section 4012(a)(1), the State amount shall 
     apply in lieu of the amount prescribed by such section. If, 
     after the date of the enactment of this Act, a State enacts a 
     law which limits the amount of recovery in a health care 
     liability action without delineating between economic and 
     non-economic damages, the State amount shall apply in lieu of 
     the amount prescribed by such section.
       (3) Joint and several liability.--In any health care 
     liability action brought in State or Federal court, a 
     defendant shall be liable only for the amount of non-economic 
     damages attributable to such defendant in direct proportion 
     to such defendant's share of fault or responsibility for the 
     claimant's actual damages, as determined by the trier of 
     fact. In all such cases, the liability of a defendant for 
     non-economic damages shall be several and not joint and a 
     separate judgment shall be rendered against each defendant 
     for the amount allocated to such defendant.
       (b) Treatment of Punitive Damages.--
       (1) General rule.--Punitive damages may, to the extent 
     permitted by applicable State law, be awarded in any health 
     care liability action for harm in any Federal or State court 
     against a defendant if the claimant establishes by clear and 
     convincing evidence that the harm suffered was the result of 
     conduct--
       (A) specifically intended to cause harm, or
       (B) conduct manifesting a conscious, flagrant indifference 
     to the rights or safety of others.
       (2) Applicability.--This subsection shall apply to any 
     health care liability action brought in any Federal or State 
     court on any theory where punitive damages are sought. This 
     subsection does not create a cause of action for punitive 
     damages. This subsection does not preempt or supersede any 
     State or Federal law to the extent that such law would 
     further limit the award of punitive damages.
       (3) Bifurcation.--At the request of any party, the trier of 
     fact shall consider in a separate proceeding whether punitive 
     damages are to be awarded and the amount of such award. If a 
     separate proceeding is requested, evidence relevant only to 
     the claim of punitive damages, as determined by applicable 
     State law, shall be inadmissible in any proceeding to 
     determine whether actual damages are to be awarded.
       (4) Drugs and devices.--
       (A) In general.--
       (i) Punitive damages.--Punitive damages shall not be 
     awarded against a manufacturer or product seller of a drug or 
     medical device which caused the claimant's harm where--

       (I) such drug or device was subject to premarket approval 
     by the Food and Drug Administration with respect to the 
     safety of the formulation or performance of the aspect of 
     such drug or device which caused the claimant's harm, or the 
     adequacy of the packaging or labeling of such drug or device 
     which caused the harm, and such drug, device, packaging, or 
     labeling was approved by the Food and Drug Administration; or
       (II) the drug is generally recognized as safe and effective 
     pursuant to conditions established by the Food and Drug 
     Administration and applicable regulations, including 
     packaging and labeling regulations.

       (ii) Application.--Clause (i) shall not apply in any case 
     in which the defendant, before or after premarket approval of 
     a drug or device--

       (I) intentionally and wrongfully withheld from or 
     misrepresented to the Food and Drug Administration 
     information concerning such drug or device required to be 
     submitted under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.) or section 351 of the Public Health 
     Service Act (42 U.S.C. 262) that is material and relevant to 
     the harm suffered by the claimant, or
       (II) made an illegal payment to an official or employee of 
     the Food and Drug Administration for the purpose of securing 
     or maintaining approval of such drug or device.

       (B) Packaging.--In a health care liability action for harm 
     which is alleged to relate to the adequacy of the packaging 
     or labeling of a drug which is required to have tamper-
     resistant packaging under regulations of the Secretary of 
     Health and Human Services (including labeling regulations 
     related to such packaging), the manufacturer or product 
     seller of the drug shall not be held liable for punitive 
     damages unless such packaging or labeling is found by the 
     court by clear and convincing evidence to be substantially 
     out of compliance with such regulations.
       (c) Periodic Payments for Future Losses.--
       (1) General rule.--In any health care liability action in 
     which the damages awarded for future economic and non-
     economic loss exceeds $50,000, a person shall not be required 
     to pay such damages in a single, lump-sum payment, but shall 
     be permitted to make such payments periodically based on when 
     the damages are likely to occur, as such payments are 
     determined by the court.
       (2) Finality of judgment.--The judgment of the court 
     awarding periodic payments under this subsection may not, in 
     the absence of fraud, be reopened at any time to contest, 
     amend, or modify the schedule or amount of the payments.
       (3) Lump-sum settlements.--This subsection shall not be 
     construed to preclude a settlement providing for a single, 
     lump-sum payment.
       (d) Treatment of Collateral Source Payments.--
       (1) Introduction into evidence.--In any health care 
     liability action, any defendant may introduce evidence of 
     collateral source payments. If any defendant elects to 
     introduce such evidence, the claimant may introduce evidence 
     of any amount paid or contributed or reasonably likely to be 
     paid or contributed in the future by or on behalf of the 
     claimant to secure the right to such collateral source 
     payments.
       (2) No subrogation.--No provider of collateral source 
     payments shall recover any amount against the claimant or 
     receive any lien or credit against the claimant's recovery or 
     be equitably or legally subrogated to the right of the 
     claimant in a health care liability action.
       (3) Application to settlements.--This subsection shall 
     apply to an action that is settled as well as an action that 
     is resolved by a fact finder.

     SEC. 4013. ALTERNATIVE DISPUTE RESOLUTION.

       Any ADR used to resolve a health care liability action or 
     claim shall contain provisions relating to statute of 
     limitations, non-economic damages, joint and several 
     liability, punitive damages, collateral source rule, and 
     periodic payments which are consistent with the provisions 
     relating to such matters in this title.
             TITLE V--CONFIDENTIALITY OF HEALTH INFORMATION

     SEC. 5001. CONFIDENTIALITY OF PROTECTED HEALTH INFORMATION.

       (a) In General.--Title XI of the Social Security Act (42 
     U.S.C. 1301 et seq.) is amended by adding at the end the 
     following:

       ``Part D--Confidentiality of Protected Health Information


        ``inspection and copying of protected health information

       ``Sec. 1181. (a) In General.--Subject to the succeeding 
     provisions of this section, upon the request of an individual 
     who is the subject of protected health information, a person 
     who is a health care provider, health plan, employer, health 
     or life insurer, or educational institution shall make 
     available to the individual (or, in the discretion of the 
     person, to a health care provider designated by the 
     individual), for inspection and copying, protected health 
     information concerning the individual that the person 
     maintains, including records created under section 1182.
       ``(b) Access Through Originating Provider.--Protected 
     health information that is created by an originating 
     provider, and subsequently received by another health care 
     provider or a 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.
       ``(c) Investigational Information.--With respect to 
     protected health information that

[[Page H6333]]

     was created as part of the requesting individual's 
     participation in a clinical trial monitored by an 
     institutional review board established to review health 
     research with respect to potential risks to human subjects 
     pursuant to Federal regulations adopted under section 1802(b) 
     of the Public Health Service Act (42 U.S.C. 300v-1(b)) and 
     the notice (informally referred to as the `Common Rule') 
     promulgated in the Federal Register at 56 Fed. Reg. 28003), a 
     request under subsection (a) shall be granted only to the 
     extent and in a manner consistent with such regulations.
       ``(d) Other Exceptions.--Unless ordered by a court of 
     competent jurisdiction, a person to whom a request under 
     subsection (a) is made is not required to grant the request, 
     if--
       ``(1) the person determines that the disclosure of the 
     information could reasonably be expected to endanger the life 
     or physical safety of, or cause substantial harm to, any 
     individual; or
       ``(2) the information is compiled principally--
       ``(A) in anticipation of a civil, criminal, or 
     administrative action or proceeding; or
       ``(B) for use in such action or proceeding.
       ``(e) Denial of Request for Inspection or Copying.--If a 
     person to whom a request under subsection (a) is made denies 
     a request for inspection or copying pursuant to this section, 
     the person shall inform the individual making the request, in 
     writing, of--
       ``(1) the reasons for the denial of the request;
       ``(2) the availability of procedures for further review of 
     the denial; and
       ``(3) the individual's right to file with the person a 
     concise statement setting forth the request.
       ``(f) Statement Regarding Request.--If an individual has 
     filed with a person a statement under subsection (e)(3) with 
     respect to protected health information, the person, in any 
     subsequent disclosure of the information--
       ``(1) shall include a notation concerning the individual's 
     statement; and
       ``(2) may include a concise statement of the reasons for 
     denying the request for inspection or copying.
       ``(g) Procedures.--A person providing access to protected 
     health information for inspection or copying under this 
     section may set forth appropriate procedures to be followed 
     for such inspection or copying and may require an individual 
     to pay reasonable costs associated with such inspection or 
     copying.
       ``(h) Inspection and Copying of Segregable Portion.--A 
     person to whom a request under subsection (a) is made shall 
     permit the inspection and copying of any reasonably 
     segregable portion of a record after deletion of any portion 
     that the person is not required to disclose under this 
     section.
       ``(i) Deadline.--A person described in subsection (a) shall 
     comply with or deny, in accordance with this section, a 
     request for inspection or copying of protected health 
     information under this section not later than 30 days after 
     the date on which the person receives the request.
       ``(j) Rules Governing Agents.--An agent of a person 
     described in subsection (a) shall not be required to provide 
     for the inspection and copying of protected health 
     information, except where--
       ``(1) the protected health information is retained by the 
     agent; and
       ``(2) the agent has been asked by the person to fulfill the 
     requirements of this section.


           ``supplementation of protected health information

       ``Sec. 1182. (a) In General.--Subject to subsection (b), 
     not later than 45 days after the date on which a person who 
     is a health care provider, health plan, employer, health or 
     life insurer, or educational institution receives, from an 
     individual who is a subject of protected health information 
     that is maintained by the person, a request in writing to 
     amend the information by adding a concise written supplement 
     to it, the person--
       ``(1) shall make the amendment requested;
       ``(2) shall inform the individual of the amendment that has 
     been made; and
       ``(3) shall make reasonable efforts to inform any person 
     who is identified by the individual, who is not an officer, 
     employer, or agent of the person receiving the request, and 
     to whom the unamended portion of the information was 
     disclosed during the preceding year, by sending a notice to 
     the person's last known address that an amendment, consisting 
     of the addition of a supplement, has been made to the 
     protected health information of the individual.
       ``(b) Refusal to Amend.--If a person described in 
     subsection (a) refuses to make an amendment requested by an 
     individual under such subsection, the person shall inform the 
     individual, in writing, of--
       ``(1) the reasons for the refusal to make the amendment;
       ``(2) any procedures for further review of the refusal; and
       ``(3) the individual's right to file with the person a 
     concise statement setting forth the requested amendment and 
     the individual's reasons for disagreeing with the refusal.
       ``(c) Statement of Disagreement.--If an individual has 
     filed a statement of disagreement with a person under 
     subsection (b)(3), the person, in any subsequent disclosure 
     of the disputed portion of the information--
       ``(1) shall include a notation that such individual has 
     filed a statement of disagreement; and
       ``(2) may include a concise statement of the reasons for 
     not making the requested amendment.
       ``(d) Rules Governing Agents.--The agent of a person 
     described in subsection (a) shall not be required to make 
     amendments to individually identifiable health information, 
     except where--
       ``(1) the information is retained by the agent; and
       ``(2) the agent has been asked by such person to fulfill 
     the requirements of this section.
       ``(e) Duplicative Requests for Amendments.--If a person 
     described in subsection (a) receives a duplicative request 
     for an amendment of information as provided for in such 
     subsection and a statement of disagreement with respect to 
     the request has been filed pursuant to subsection (c), the 
     person shall inform the individual of such filing and shall 
     not be required to carry out the procedures under this 
     section.
       ``(f) Rule of Construction.--This section shall not be 
     construed--
       ``(1) 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
       ``(2) 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.


                 ``notice of confidentiality practices

       ``Sec. 1183. (a) Preparation of Written Notice.--A person 
     who is 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 the person's protected health information 
     confidentiality practices. The notice shall include--
       ``(1) a description of an individual's rights with respect 
     to protected health information;
       ``(2) the intended uses and disclosures of protected health 
     information;
       ``(3) the procedures established by the person for the 
     exercise of an individual's rights with respect to protected 
     health information; and
       ``(4) the procedures established by the person for 
     obtaining copies of the notice.
       ``(b) Model Notice.--The Secretary, after notice and 
     opportunity for public comment, and based on the advice of 
     the National Committee on Vital and Health Statistics 
     established under section 306(k) of the Public Health Service 
     Act (42 U.S.C. 242k(k)), shall develop and disseminate, not 
     later than 6 months after the date of the enactment of the 
     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.


                     ``establishment of safeguards

       ``Sec. 1184. (a) In General.--A person who is 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 the person.
       ``(b) Factors To Be Considered.--A person subject to 
     subsection (a) shall consider the following factors in 
     establishing safeguards under such subsection:
       ``(1) The need for protected health information.
       ``(2) The categories of personnel who will have access to 
     protected health information.
       ``(3) The feasibility of limiting access to individual 
     identifiers.
       ``(4) The appropriateness of the policy or procedure to the 
     person, and to the medium in which protected health 
     information is stored and transmitted.
       ``(5) The value of audit trails in computerized records.
       ``(c) Relationship to Part C Requirement.--Any safeguard 
     established under this section shall be consistent with the 
     requirement in section 1173(d)(2).
       ``(d) Conversion to Nonidentifiable Health Information.--A 
     person subject to subsection (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.


 ``availability of protected health information for purposes of health 
                            care operations

       ``Sec. 1185. Disclosure.--Any person who maintains 
     protected health information may disclose the information to 
     a health care provider or a health plan for the purpose of 
     permitting the provider or plan to conduct health care 
     operations.
       ``(b) Use.--A health care provider or a health plan that 
     maintains protected health information may use it for the 
     purposes described in subsection (a).


                      ``relationship to other laws

       ``Sec. 1186. (a) State Law.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the provisions of this part shall preempt a provision of 
     State law to the extent that such provision--
       ``(A) otherwise would be preempted as inconsistent with 
     this part under article VI of the Constitution of the United 
     States;

[[Page H6334]]

       ``(B) relates to authorization for the use or disclosure 
     of--
       ``(i) protected health information for health care 
     operations; or
       ``(ii) nonidentifiable health information; or
       ``(C) relates to any of the following:
       ``(i) Inspection or copying of protected health information 
     by a person who is a subject of the information.
       ``(ii) Amendment of protected health information by a 
     person who is a subject of the information.
       ``(iii) Notice of confidentiality practices with respect to 
     protected health information.
       ``(iv) Establishment of safeguards for protected health 
     information.
       ``(2) Exceptions.--Nothing in this part shall be construed 
     to preempt or modify a provision of State law to the extent 
     that such provision relates to protected health information 
     and--
       ``(A) the confidentiality of the records maintained by a 
     licensed mental health professional;
       ``(B) the provision of health care to a minor, or the 
     disclosure of information about a minor to a parent or 
     guardian of the minor;
       ``(C) condition-specific limitations on disclosure;
       ``(D) the use or disclosure of information for use in 
     legally authorized--
       ``(i) disease or injury reporting;
       ``(ii) public health surveillance, investigation, or 
     intervention;
       ``(iii) vital statistics reporting, such as reporting of 
     birth or death information;
       ``(iv) reporting of abuse or neglect information;
       ``(v) reporting of information concerning a communicable 
     disease status; or
       ``(vi) reporting concerning the safety or effectiveness of 
     a biological product regulated under section 351 of the 
     Public Health Service Act (42 U.S.C. 262) or a drug or device 
     regulated under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.);
       ``(E) the disclosure to a person by a health care provider 
     of information about an individual, in any case in which the 
     provider has determined--
       ``(i) in the provider's reasonable medical judgment, that 
     the individual is unconscious, incompetent, or otherwise 
     incapable of deciding whether to authorize disclosure of the 
     protected health information; and
       ``(ii) in the provider's reasonable judgment, that the 
     person is a spouse, relative, guardian, or close friend of 
     the individual's; or
       ``(F) the use of information by, or the disclosure of 
     information to, a person holding a valid and applicable power 
     of attorney that includes the authority to make health care 
     decisions on behalf of an individual who is a subject of the 
     information.
       ``(3) Privileges.--Nothing in this part shall be construed 
     to preempt or modify a provision of State law to the extent 
     that such provision relates to a privilege of a witness or 
     other person in a court of that State.
       ``(b) Federal Law.--Nothing in this part shall be construed 
     to preempt, modify, or repeal a provision of any other 
     Federal law relating to protected health information or 
     relating to an individual's access to protected health 
     information or health care services. Nothing in this part 
     shall be construed to preempt, modify, or repeal a provision 
     of Federal law to the extent that such provision relates to a 
     privilege of a witness or other person in a court of the 
     United States.


                           ``civil penalties

       ``Sec. 1187. (a) Violation.--A person who the Secretary 
     determines has substantially and materially failed to comply 
     with this part shall be subject, in addition to any other 
     penalties that may be prescribed by law--
       ``(1) in a case in which the violation relates to section 
     1181 or 1182, to a civil penalty of not more than $500 for 
     each such violation but not to exceed $5,000 in the aggregate 
     for all violations of an identical requirement or prohibition 
     during a calendar year;
       ``(2) in the case in which the violation relates to section 
     1183 or 1184, to a civil penalty of not more than $10,000 for 
     each such violation, but not to exceed $50,000 in the 
     aggregate for all violations of an identical requirement or 
     prohibition during a calendar year; or
       ``(3) in a case in which the Secretary finds that such 
     violations have occurred with such frequency as to constitute 
     a general business practice, to a civil penalty of not more 
     than $100,000.
       ``(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.


                             ``definitions

       ``Sec. 1188. As used in this part:
       ``(1) Agent.--The term `agent' means a person, including a 
     contractor, who represents and acts for another under the 
     contract or relation of agency, or whose function is to bring 
     about, modify, affect, accept performance of, or terminate 
     contractual obligations between the principal and a third 
     person.
       ``(2) Condition-specific limitations on disclosure.--The 
     term `condition-specific limitations on disclosure' means 
     State laws that prohibit the disclosure of protected health 
     information relating to a health condition or disease that 
     has been identified by the Secretary as posing a public 
     health threat.
       ``(3) Disclose.--The term `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.
       ``(4) Educational institution.--The term `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.
       ``(5) Employer.--The term `employer' has the meaning given 
     such term under section 3(5) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1002(5)), except that 
     such term shall include only employers of two or more 
     employees.
       ``(6) Health care.--The term `health care' means--
       ``(A) preventive, diagnostic, therapeutic, rehabilitative, 
     maintenance, or palliative care, including appropriate 
     assistance with disease or symptom management and 
     maintenance, counseling, service, or procedure--
       ``(i) with respect to the physical or mental condition of 
     an individual; or
       ``(ii) 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.
       ``(7) Health care operations.--The term `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.
       ``(D) Conducting or arranging for auditing services.
       ``(8) Health care provider.--The term `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, or 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 
     subparagraph (A) or (B).
       ``(9) Health or life insurer.--The term `health or life 
     insurer' means a health insurance issuer, as defined in 
     section 9832(b)(2) of the Internal Revenue Code of 1986, or a 
     life insurance company, as defined in section 816 of such 
     Code.
       ``(10) Health plan.--The term `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)), or 
     other program providing or arranging for the provision of 
     health benefits.
       ``(11) Health researcher.--The term `health researcher' 
     means a person (or an 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.
       ``(12) Nonidentifiable health information.--The term 
     `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 a direct means of identifying the 
     individual (such as name, address, and social security 
     number) have been removed, encrypted, or replaced with a 
     code, such that the identity of the individual is not evident 
     without (in the case of encrypted or coded information) use 
     of a key.
       ``(13) Originating provider.--The term `originating 
     provider', when used with respect to protected health 
     information, means 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.

[[Page H6335]]

       ``(14) Payment activities.--The term `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 of responsibility for coverage under the plan; 
     and
       ``(B) includes the following activities, when performed in 
     a manner consistent with subparagraph (A):
       ``(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.
       ``(iii) Review of health care services with respect to 
     coverage under a health plan or justification of charges.
       ``(15) Person.--The term `person' means--
       ``(A) a natural person;
       ``(B) a government or governmental subdivision, agency, or 
     authority;
       ``(C) a company, corporation, estate, firm, trust, 
     partnership, association, joint venture, society, or joint 
     stock company; or
       ``(D) any other legal entity.
       ``(16) Protected health information.--The term `protected 
     health information', when used with respect to an individual 
     who is a subject of information means any information 
     (including genetic information) that identifies the 
     individual, whether oral or recorded 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--
       ``(i) the provision of health care to an individual; or
       ``(ii) payment for the provision of health care to an 
     individual; and
       ``(D) is not nonidentifiable health information.
       ``(17) State.--The term `State' includes the District of 
     Columbia, Puerto Rico, the Virgin Islands, Guam, American 
     Samoa, and the Northern Mariana Islands.
       ``(18) Treatment.--The term `treatment' means the provision 
     of health care by a health care provider.
       ``(19) Writing.--The term `writing' means writing either in 
     a paper-based, computer-based, or electronic form, including 
     electronic signatures.''.
       (b) Enforcement of Provisions Through Conditions on 
     Participation.--
       (1) Participating physicians and suppliers.--Section 
     1842(h) of the Social Security Act (42 U.S.C. 1395u(h)) is 
     amended by adding at the end the following:
       ``(9) The Secretary may refuse to enter into an agreement 
     with a physician or supplier under this subsection, or may 
     terminate or refuse to renew such agreement, in the event 
     that such physician or supplier has been found to have 
     violated a provision of part D of title XI.''.
       (2) Medicare+choice organizations.--Section 1852(h) of the 
     Social Security Act (42 U.S.C. 1395w-22(h)) is amended--
       (A) in the matter preceding paragraph (1), by striking 
     ``procedures--'' and inserting ``procedures, consistent with 
     sections 1181 through 1185--''; and
       (B) in paragraph (1), by striking ``privacy of any 
     individually identifiable enrollee information;'' and 
     inserting ``confidentiality of protected health information 
     concerning enrollees;''.
       (3) Medicare providers.--Section 1866(a)(1) of the Social 
     Security Act (42 U.S.C. 1395cc(a)(1)) is amended--
       (A) by inserting a semicolon at the end of subparagraph 
     (R);
       (B) by striking the period at the end of subparagraph (S) 
     and inserting ``; and''; and
       (C) by inserting immediately after subparagraph (S) the 
     following new subparagraph:
       ``(T) to comply with sections 1181 through 1184.''.
       (4) Health maintenance organizations with risk-sharing 
     contracts.--Section 1876(k)(4) of the Social Security Act (42 
     U.S.C. 1395mm(k)(4)) of the Social Security Act is amended by 
     adding at the end the following:
       ``(E) The confidentiality and accuracy procedure 
     requirements under section 1852(h).''.
       (c) Conforming Amendments.--
       (1) Title heading.--Title XI of the Social Security Act (42 
     U.S.C. 1301 et seq.) is amended by striking the title heading 
     and inserting the following:

      ``TITLE XI--GENERAL PROVISIONS, PEER REVIEW, ADMINISTRATIVE 
 SIMPLIFICATION, AND CONFIDENTIALITY OF PROTECTED HEALTH INFORMATION''.

       (2) National committee on vital and health statistics.--
     Section 306(k)(5) of the Public Health Service Act (42 U.S.C. 
     242(k)(5)) is amended--
       (A) in subparagraphs (A)(viii) and (D), by striking ``part 
     C'' and inserting ``parts C and D'';
       (B) in subparagraph (C), by striking ``and'' at the end;
       (C) in subparagraph (D), by striking the period at the end 
     and inserting ``; and''; and
       (D) by adding at the end the following:
       ``(E) shall study the issues relating to section 1184 of 
     the Social Security Act (as added by the Patient Protection 
     Act of 1998), and, not later than 1 year after the date of 
     the enactment of the Patient Protection Act of 1998, shall 
     report to the Congress on such section.''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date that is 1 year after the date 
     of the enactment of this Act, except that subsection (c)(2), 
     and section 1183(b) of the Social Security Act (as added by 
     subsection (a)), shall take effect on the date of the 
     enactment of this Act.

     SEC. 5002. STUDY AND REPORT ON EFFECT OF STATE LAW ON HEALTH-
                   RELATED RESEARCH.

       Not later than one year 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 on the effect of State laws on health-
     related research subject to review by an institutional review 
     board or institutional review committee with respect to the 
     protection of human subjects.

     SEC. 5003. STUDY AND REPORT ON STATE LAW ON PROTECTED HEALTH 
                   INFORMATION.

       (a) In General.--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--
       (1) compiling 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.
       (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,'' 
     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,''.

     SEC. 5004. PROTECTION FOR CERTAIN INFORMATION DEVELOPED TO 
                   REDUCE MORTALITY OR MORBIDITY OR FOR IMPROVING 
                   PATIENT CARE AND SAFETY.

       (a) Protection of Certain Information.--Notwithstanding any 
     other provision of Federal or State law, health care response 
     information shall be exempt from any disclosure requirement 
     (regardless of whether the requirement relates to subpoenas, 
     discovery, introduction of evidence, testimony, or any other 
     form of disclosure), in connection with a civil or 
     administrative proceeding under Federal or State law, 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.
       (b) No Waiver of Protection Through Interaction with 
     Accrediting Body.--Notwithstanding any other provision of 
     Federal or State law, the protection of health care response 
     information from disclosure provided under subsection (a) 
     shall not be deemed to be modified or in any way waived by--
       (1) the development of such information in connection with 
     a request or requirement of an accrediting body; or
       (2) the transfer of such information to an accrediting 
     body.
       (c) Definitions.--For purposes of this section:
       (1) The term ``accrediting body'' means a national, not-
     for-profit organization that--
       (A) accredits health care providers; and
       (B) is recognized as an accrediting body by statute or by a 
     Federal or State agency that regulates health care providers.
       (2) The term ``health care provider'' has the meaning given 
     such term in section 1188 of the Social Security Act (as 
     added by section 5001 of this Act).
       (3) The term ``health care response information'' means 
     information (including any data, report, record, memorandum, 
     analysis, statement, or other communication) developed by, or 
     on behalf of, a health care provider in response to a 
     serious, adverse, patient-related event--
       (A) during the course of analyzing or studying the event 
     and its causes; and
       (B) for purposes of--
       (i) reducing mortality or morbidity; or
       (ii) improving patient care or safety (including the 
     provider's notification to an accrediting body and the 
     provider's plans of action in response to such event).
       (5) The term ``State'' has the meaning given such term in 
     section 1188 of the Social Security Act (as added by section 
     5001 of this Act).
        TITLE VI--MEDICAL SAVINGS ACCOUNTS FOR FEDERAL EMPLOYEES

     SEC. 6001. MEDICAL SAVINGS ACCOUNTS FOR FEDERAL EMPLOYEES.

       (a) Medical Savings Accounts.--
       (1) Contributions.--Title 5, United States Code, is amended 
     by redesignating section 8906a as section 8906c and by 
     inserting after section 8906 the following:

[[Page H6336]]

     ``Sec. 8906a. Government contributions to medical savings 
       accounts

       ``(a) An employee or annuitant enrolled in a high 
     deductible health plan is entitled, in addition to the 
     Government contribution under section 8906(b) toward the 
     subscription charge for such plan, to have a Government 
     contribution made, in accordance with succeeding provisions 
     of this section, to a medical savings account of such 
     employee or annuitant.
       ``(b)(1) The biweekly Government contribution under this 
     section shall, in the case of any such employee or annuitant, 
     be equal to the amount by which--
       ``(A) the biweekly equivalent of the maximum Government 
     contribution for the contract year involved (as defined by 
     paragraph (2)), exceeds (if at all)
       ``(B) the amount of the biweekly Government contribution 
     payable on such employee's or annuitant's behalf under 
     section 8906(b) for the period involved.
       ``(2) For purposes of this section, the term `maximum 
     Government contribution' means, with respect to a contract 
     year, the maximum Government contribution that could be made 
     for health benefits for an employee or annuitant for such 
     contract year, as determined under section 8906(b) 
     (disregarding paragraph (2) thereof)).
       ``(3) Notwithstanding any other provision of this section, 
     no contribution under this section shall be payable to any 
     medical savings account of an employee or annuitant for any 
     period--
       ``(A) if, as of the first day of the month before the month 
     in which such period commences, such employee or annuitant 
     (or the spouse of such employee or annuitant, if coverage is 
     for self and family) is entitled to benefits under part A of 
     title XVIII of the Social Security Act;
       ``(B) to the extent that such contribution, when added to 
     previous contributions made under this section for that same 
     year with respect to such employee or annuitant, would cause 
     the total to exceed--
       ``(i) the highest annual limit deductible permitted under 
     clause (i) or (ii) of section 220(c)(2)(A) of the Internal 
     Revenue Code of 1986, as appropriate (determined taking into 
     account any changes in coverage that may occur), for the 
     calendar year in which such period commences; or
       ``(ii) such lower amount (relative to the limitation that 
     would otherwise apply under clause (i)) as the employee or 
     annuitant may specify in accordance with regulations of the 
     Office, including an election not to receive contributions 
     under this section for a year or the remainder of a year; or
       ``(C) for which any information (or documentation) under 
     subsection (d) that is needed in order to make such 
     contribution has not been timely submitted.
       ``(4) Notwithstanding any other provision of this section, 
     no contribution under this section shall be payable to any 
     medical savings account of an employee for any period in a 
     contract year unless that employee was enrolled in a health 
     benefits plan under this chapter as an employee for not less 
     than--
       ``(A) the 1 year of service immediately before the start of 
     such contract year, or
       ``(B) the full period or periods of service between the 
     last day of the first period, as prescribed by regulations of 
     the Office of Personnel Management, in which he is eligible 
     to enroll in the plan and the day before the start of such 
     contract year,
     whichever is shorter.

       ``(5) The Office shall provide for the conversion of 
     biweekly rates of contributions specified by paragraph (1) to 
     rates for employees and annuitants whose pay or annuity is 
     provided on other than a biweekly basis, and for this purpose 
     may provide for the adjustment of the converted rate to the 
     nearest cent.
       ``(c) A Government contribution under this section--
       ``(1) shall be made at the same time that, and the same 
     frequency with which, Government contributions under section 
     8906(b) are made for the benefit of the employee or annuitant 
     involved; and
       ``(2) shall be payable from the same appropriation, fund, 
     account, or other source as would any Government 
     contributions under section 8906(b) with respect to the 
     employee or annuitant involved.
       ``(d) The Office shall by regulation prescribe the time, 
     form, and manner in which an employee or annuitant shall 
     submit any information (and supporting documentation) 
     necessary to identify any medical savings account to which 
     contributions under this section are requested to be made.
       ``(e) Nothing in this section shall be considered to 
     entitle an employee or annuitant to any Government 
     contribution under this section with respect to any period 
     for which such employee or annuitant is ineligible for a 
     Government contribution under section 8906(b).

     ``Sec. 8906b. Individual contributions to medical savings 
       accounts

       ``(a) Upon the written request of an employee or annuitant 
     enrolled in a high deductible health plan, there shall be 
     withheld from the pay or annuity of such employee or 
     annuitant and contributed to the medical savings account 
     identified by such employee or annuitant in accordance with 
     applicable regulations under subsection (c) such amount as 
     the employee or annuitant may specify.
       ``(b) Notwithstanding subsection (a), no withholding under 
     this section may be made from the pay or annuity of an 
     employee or annuitant for any period--
       ``(1) if, or to the extent that, a Government contribution 
     for such period under section 8906a would not be allowable by 
     reason of subparagraph (A) or (B)(i) of subsection (b)(3) 
     thereof;
       ``(2) for which any information (or documentation) that is 
     needed in order to make such contribution has not been timely 
     submitted; or
       ``(3) if the employee or annuitant submits a request for 
     termination of withholdings, beginning on or after the 
     effective date of the request and before the end of the year.
       ``(c) The Office of Personnel Management shall prescribe 
     any regulations necessary to carry out this section, 
     including provisions relating to the time, form, and manner 
     in which any request for withholdings under this section may 
     be made, changed, or terminated.''.
       (2) Rules of construction.--Nothing in this section or in 
     any amendment made by this section shall be considered--
       (A) to permit or require that any contributions to a 
     medical savings account (whether by the Government or through 
     withholdings from pay or annuity) be paid into the Employees 
     Health Benefits Fund; or
       (B) to affect any authority under section 1005(f) of title 
     39, United States Code, to vary, add to, or substitute for 
     any provision of chapter 89 of title 5, United States Code, 
     as amended by this section.
       (3) Conforming amendments.--
       (A) The table of sections at the beginning of chapter 89 of 
     title 5, United States Code, is amended by striking the item 
     relating to section 8906a and inserting the following:

``8906a.   Government contributions to medical savings accounts.
``8906b.   Individual contributions to medical savings accounts.
``8906c.   Temporary employees.''.

       (B) Section 8913(b)(4) of title 5, United States Code, is 
     amended by striking ``8906a(a)'' and inserting ``8906c(a)''.
       (b) Informational Requirements.--Section 8907 of title 5, 
     United States Code, is amended by adding at the end the 
     following:
       ``(c) In addition to any information otherwise required 
     under this section, the Office shall make available to all 
     employees and annuitants eligible to enroll in a high 
     deductible health plan, information relating to--
       ``(1) the conditions under which Government contributions 
     under section 8906a shall be made to a medical savings 
     account;
       ``(2) the amount of any Government contributions under 
     section 8906a to which an employee or annuitant may be 
     entitled (or how such amount may be ascertained);
       ``(3) the conditions under which contributions to a medical 
     savings account may be made under section 8906b through 
     withholdings from pay or annuity; and
       ``(4) any other matter the Office considers appropriate in 
     connection with medical savings accounts.''.
       (c) High Deductible Health Plan and Medical Savings Account 
     Defined.--Section 8901 of title 5, United States Code, is 
     amended--
       (1) in paragraph (10) by striking ``and'' after the 
     semicolon;
       (2) in paragraph (11) by striking the period and inserting 
     a semicolon; and
       (3) by adding at the end the following:
       ``(12) the term `high deductible health plan' means a plan 
     described by section 8903(5) or section 8903a(d); and
       ``(13) the term `medical savings account' has the meaning 
     given such term by section 220(d) of the Internal Revenue 
     Code of 1986.''.
       (d) Authority To Contract for High Deductible Health 
     Plans.--Section 8902 of title 5, United States Code, is 
     amended by adding at the end the following:
       ``(p)(1) The Office shall contract under this chapter for a 
     high deductible health plan with any qualified carrier that 
     offers such a plan and, as of the date of enactment of the 
     Federal Employees Health Care Freedom of Choice Act, offers a 
     health benefits plan under this chapter.
       ``(2) The Office may contract under this chapter for a high 
     deductible health plan with any qualified carrier that offers 
     such a plan, but does not, as of the date of enactment of the 
     Federal Employees Health Care Freedom of Choice Act, offer a 
     health benefits plan under this chapter.''.
       (e) Description of High Deductible Health Plans and 
     Benefits To Be Provided Thereunder.--
       (1) In general.--Section 8903 of title 5, United States 
     Code, is amended by adding at the end the following:
       ``(5) High deductible health plans.--(A) One or more plans 
     described by paragraph (1), (2), (3), or (4), which--
       ``(i) are high deductible health plans (as defined by 
     section 220(c)(2) of the Internal Revenue Code of 1986); and
       ``(ii) provide benefits of the types referred to by section 
     8904(a)(5).
       ``(B) Nothing in this section shall be considered--
       ``(i) to prevent a carrier from simultaneously offering a 
     plan described by subparagraph (A) and a plan described by 
     paragraph (1) or (2); or
       ``(ii) to require that a high deductible health plan offer 
     two levels of benefits.''.
       (2) Types of benefits.--Section 8904(a) of title 5, United 
     States Code, is amended by inserting after paragraph (4) the 
     following:
       ``(5) High deductible health plans.--Benefits of the types 
     named under paragraph (1) or (2) of this subsection or 
     both.''.
       (3) Conforming amendments.--

[[Page H6337]]

       (A) Section 8903a of title 5, United States Code, is 
     amended by redesignating subsection (d) as subsection (e) and 
     by inserting after subsection (c) the following:
       ``(d) The plans under this section may include one or more 
     plans, otherwise allowable under this section, that satisfy 
     the requirements of clauses (i) and (ii) of section 
     8903(5)(A).''.
       (B) Section 8909(d) of title 5, United States Code, is 
     amended by striking ``8903a(d)'' and inserting ``8903a(e)''.
       (4) References.--Section 8903 of title 5, United States 
     Code, is amended by adding after paragraph (5) (as added by 
     paragraph (1) of this subsection) as a flush left sentence, 
     the following:

     ``The Office shall prescribe regulations in accordance with 
     which the requirements of section 8902(c), 8902(n), 8909(e), 
     and any other provision of this chapter that applies with 
     respect to a plan described by paragraph (1), (2), (3), or 
     (4) of this section shall apply with respect to the 
     corresponding plan under paragraph (5) of this section. 
     Similar regulations shall be prescribed with respect to any 
     plan under section 8903a(d).''.

     SEC. 6002. EFFECTIVE DATE.

       The amendments made by this title shall apply with respect 
     to contract years beginning on or after January 1, 2000. The 
     Office of Personnel Management shall take appropriate 
     measures to ensure that coverage under a high deductible 
     health plan under chapter 89 of title 5, United States Code 
     (as amended by this section) shall be available as of the 
     beginning of the first contract year described in the 
     preceding sentence.

  The SPEAKER pro tempore. Pursuant to House Resolution 509, the 
amendments printed in House Report 105-643 are adopted.
  The text of H.R. 4250, as amended pursuant to House Resolution 509, 
is as follows:

                               H.R. 4250

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--The Act may be cited as the ``Patient 
     Protection Act of 1998''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title and table of contents.

 TITLE I--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

                    Subtitle A--Patient Protections.

Sec. 1001. Patient access to unrestricted medical advice, emergency 
              medical care, obstetric and gynecological care, and 
              pediatric care.
Sec. 1002. Effective date and related rules.

               Subtitle B--Patient Access to Information

Sec. 1101. Patient access to information regarding plan coverage, 
              managed care procedures, health care providers, and 
              quality of medical care.
Sec. 1102. Effective date.

Subtitle C--New Procedures and Access to Courts for Grievances Arising 
                        under Group Health Plans

Sec. 1201. Special rules for group health plans.
Sec. 1202. Effective date.

     Subtitle D--Affordable Health Coverage for Employees of Small 
                               Businesses

Sec. 1301. Short title of subtitle.
Sec. 1302. Rules governing association health plans.

           ``Part 8--Rules Governing Association Health Plans

``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution 
              rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for 
              plans providing health benefits in addition to health 
              insurance coverage.
``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.
``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Trusteeship by the secretary of insolvent association 
              health plans providing health benefits in addition to 
              health insurance coverage.
``Sec. 811. State assessment authority.
``Sec. 812. Special rules for church plans.
``Sec. 813. Definitions and rules of construction.
Sec. 1303. Clarification of treatment of single employer arrangements.
Sec. 1304. Clarification of treatment of certain collectively bargained 
              arrangements.
Sec. 1305. Enforcement provisions relating to association health plans.
Sec. 1306. Cooperation between Federal and State authorities.
Sec. 1307. Effective date and transitional and other rules.

           TITLE II--AMENDMENTS TO PUBLIC HEALTH SERVICE ACT

     Subtitle A--Patient Protections and Point of Service Coverage 
                              Requirements

Sec. 2001. Patient access to unrestricted medical advice, emergency 
              medical care, obstetric and gynecological care, pediatric 
              care.
Sec. 2002. Requiring health maintenance organizations to offer option 
              of point-of-service coverage.

               Subtitle B--Patient Access to Information

Sec. 2101. Patient access to information regarding plan coverage, 
              managed care procedures, health care providers, and 
              quality of medical care.
Sec. 2102. Effective date.

                        Subtitle C--HealthMarts

Sec. 2201. Short title of subtitle.
Sec. 2202. Expansion of consumer choice through HealthMarts.

                      ``TITLE XXVIII--HEALTHMARTS

``Sec. 2801. Definition of HealthMart.
``Sec. 2802. Application of certain laws and requirements.
``Sec. 2803. Administration.
``Sec. 2804. Definitions.

               Subtitle D--Community Health Organizations

Sec. 2301. Promotion of provision of insurance by community health 
              organizations.

       TITLE III--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

                    Subtitle A--Patient Protections

Sec. 3001. Patient access to unrestricted medical advice, emergency 
              medical care, obstetric and gynecological care, pediatric 
              care.
Sec. 3002. Effective date and related rules.

               Subtitle B--Patient Access to Information

Sec. 3101. Patient access to information regarding plan coverage, 
              managed care procedures, health care providers, and 
              quality of medical care.
Sec. 3102. Effective date.

                  Subtitle C--Medical Savings Accounts

Sec. 3201. Expansion of availability of medical savings accounts.
Sec. 3202. Exception from insurance limitation in case of medical 
              savings accounts.
Sec. 3203. Sense of the House of Representatives.

                      Subtitle D--Revenue Offsets

Sec. 3301. Clarification of definition of specified liability loss.
Sec. 3302. Property subject to a liability treated in same manner as 
              assumption of liability.
Sec. 3303. Limitation on required accrual of amounts received for 
              performance of certain personal services.
Sec. 3304. Returns relating to cancellations of indebtedness by 
              organizations lending money.
Sec. 3305. Clarifications and expansion of mathematical error 
              assessment procedures.
Sec. 3306. Inclusion of rotavirus gastroenteritis as a taxable vaccine.

                  TITLE IV--HEALTH CARE LAWSUIT REFORM

                     Subtitle A--General Provisions

Sec. 4001. Federal reform of health care liability actions.
Sec. 4002. Definitions.
Sec. 4003. Effective date.

    Subtitle B--Uniform Standards for Health Care Liability Actions

Sec. 4011. Statute of limitations.
Sec. 4012. Calculation and payment of damages.
Sec. 4013. Alternative dispute resolution.
Sec. 4014. Reporting on fraud and abuse enforcement activities.

             TITLE V--CONFIDENTIALITY OF HEALTH INFORMATION

Sec. 5001. Confidentiality of protected health information.

       ``Part D--Confidentiality of Protected Health Information

``Sec. 1181. Inspection and copying of protected health information.
``Sec. 1182. Supplementation of protected health information.
``Sec. 1183. Notice of confidentiality practices.
``Sec. 1184. Establishment of safeguards.
``Sec. 1185. Availability of protected health information for purposes 
              of health care operations.
``Sec. 1186. Relationship to other laws.
``Sec. 1187. Civil penalties.
``Sec. 1188. Definitions.
Sec. 5002. Study and report on effect of State law on health-related 
              research.
Sec. 5003. Study and report on State law on protected health 
              information.
Sec. 5004. Protection for certain information developed to reduce 
              mortality or morbidity or for improving patient care and 
              safety.
Sec. 5005. Effective date for standards governing unique health 
              identifiers for individuals.

[[Page H6338]]

 TITLE I--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974
                    Subtitle A--Patient Protections

     SEC. 1001. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, AND PEDIATRIC CARE.

       (a) In General.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 is 
     amended further by adding at the end the following new 
     section:

     ``SEC. 713. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, PEDIATRIC CARE.

       ``(a) Patient Access to Unrestricted Medical Advice.--
       ``(1) In general.--In the case of any health care 
     professional acting within the lawful scope of practice in 
     the course of carrying out a contractual employment 
     arrangement or other direct contractual arrangement between 
     such professional and a group health plan or a health 
     insurance issuer offering health insurance coverage in 
     connection with a group health plan, the plan or issuer with 
     which such contractual employment arrangement or other direct 
     contractual arrangement is maintained by the professional may 
     not impose on such professional under such arrangement any 
     prohibition or restriction with respect to advice, provided 
     to a participant or beneficiary under the plan who is a 
     patient, about the health status of the participant or 
     beneficiary or the medical care or treatment for the 
     condition or disease of the participant or beneficiary, 
     regardless of whether benefits for such care or treatment are 
     provided under the plan or health insurance coverage offered 
     in connection with the plan.
       ``(2) Health care professional defined.--For purposes of 
     this subsection, the term `health care professional' means a 
     physician (as defined in section 1861(r) of the Social 
     Security Act) or other health care professional if coverage 
     for the professional's services is provided under the group 
     health plan for the services of the professional. Such term 
     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.
       ``(b) Patient Access to Emergency Medical Care.--
       ``(1) In general.--To the extent that the group health plan 
     (or health insurance issuer offering health insurance 
     coverage in connection with the plan) provides for any 
     benefits consisting of emergency medical care (as defined in 
     section 503(b)(9)(I)), except for items or services 
     specifically excluded--
       ``(A) the plan or issuer shall provide benefits, without 
     requiring preauthorization and without regard to otherwise 
     applicable network limitations, for appropriate emergency 
     medical screening examinations (within the capability of the 
     emergency facility, including ancillary services routinely 
     available to the emergency facility) to the extent that a 
     prudent layperson, who possesses an average knowledge of 
     health and medicine, would determine such examinations to be 
     necessary in order to determine whether emergency medical 
     care (as so defined) is required, and
       ``(B) the plan or issuer shall provide benefits for 
     additional emergency medical services following an emergency 
     medical screening examination (if determined necessary under 
     subparagraph (A)) to the extent that a prudent emergency 
     medical professional would determine such additional 
     emergency services to be necessary to avoid the consequences 
     described in section 503(b)(9)(I).
       ``(2) Uniform cost-sharing required.--Nothing in this 
     subsection shall be construed as preventing a group health 
     plan or issuer from imposing any form of cost-sharing 
     applicable to any participant or beneficiary (including 
     coinsurance, copayments, deductibles, and any other charges) 
     in relation to benefits described in paragraph (1), if such 
     form of cost-sharing is uniformly applied under such plan, 
     with respect to similarly situated participants and 
     beneficiaries, to all benefits consisting of emergency 
     medical care (as defined in section 503(b)(9)(I)) provided to 
     such similarly situated participants and beneficiaries under 
     the plan.
       ``(c) Patient Access to Obstetric and Gynecological Care.
       ``(1) In general.--In any case in which a group health plan 
     (or a health insurance issuer offering health insurance 
     coverage in connection with the plan)--
       ``(A) provides benefits under the terms of the plan 
     consisting of--
       ``(i) routine gynecological care (such as preventive 
     women's health examinations), or
       ``(ii) routine obstetric care (such as routine pregnancy-
     related services),
     provided by a participating physician who specializes in such 
     care (or provides benefits consisting of payment for such 
     care), and
       ``(B) the plan requires or provides for designation by a 
     participant or beneficiary of a participating primary care 
     provider,

     if the primary care provider designated by such a participant 
     or beneficiary is not such a physician, then the plan (or 
     issuer) shall meet the requirements of paragraph (2).
       ``(2) Requirements.--A group health plan (or a health 
     insurance issuer offering health insurance coverage in 
     connection with the plan) meets the requirements of this 
     paragraph, in connection with benefits described in paragraph 
     (1) consisting of care described in clause (i) or (ii) of 
     paragraph (1)(A) (or consisting of payment therefor), if the 
     plan (or issuer)--
       ``(A) does not require authorization or a referral by the 
     primary care provider in order to obtain such benefits, and
       ``(B) treats the ordering of other routine care of the same 
     type, by the participating physician providing the care 
     described in clause (i) or (ii) of paragraph (1)(A), as the 
     authorization of the primary care provider with respect to 
     such care.
       ``(3) Construction.--Nothing in paragraph (2)(B) shall 
     waive any requirements of coverage relating to medical 
     necessity or appropriateness with respect to coverage of 
     gynecological or obstetric care so ordered.
       ``(d) Patient Access to Pediatric Care.--
       ``(1) In general.--In any case in which a group health plan 
     (or a health insurance issuer offering health insurance 
     coverage in connection with the plan) provides benefits 
     consisting of routine pediatric care provided by a 
     participating physician who specializes in pediatrics (or 
     consisting of payment for such care) and the plan requires or 
     provides for designation by a participant or beneficiary of a 
     participating primary care provider, the plan (or issuer) 
     shall provide that such a participating physician may be 
     designated, if available, by a parent or guardian of any 
     beneficiary under the plan is who under 18 years of age, as 
     the primary care provider with respect to any such benefits.
       ``(2) Construction.--Nothing in paragraph (1) shall waive 
     any requirements of coverage relating to medical necessity or 
     appropriateness with respect to coverage of pediatric care.
       ``(e) Treatment of Multiple Coverage Options.--In the case 
     of a plan providing benefits under two or more coverage 
     options, the requirements of subsections (c) and (d) shall 
     apply separately with respect to each coverage option.''.
       (b) Conforming Amendment.--The table of contents in section 
     1 of such Act is amended by adding at the end of the items 
     relating to subpart B of part 7 of subtitle B of title I of 
     such Act the following new item:

``Sec. 713. Patient access to unrestricted medical advice, emergency 
              medical care, obstetric and gynecological care, and 
              pediatric care.''.

     SEC. 1002. EFFECTIVE DATE AND RELATED RULES.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act, except that the Secretary of Labor 
     may issue regulations before such date under such amendments. 
     The Secretary shall first issue regulations necessary to 
     carry out the amendments made by this section before the 
     effective date thereof.
       (b) Limitation on Enforcement Actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this subtitle, against a group health plan or health 
     insurance issuer with respect to a violation of a requirement 
     imposed by such amendments before the date of issuance of 
     regulations issued in connection with such requirement, if 
     the plan or issuer has sought to comply in good faith with 
     such requirement.
       (c) Special Rule for Collective Bargaining Agreements.--In 
     the case of a group health plan maintained pursuant to one or 
     more collective bargaining agreements between employee 
     representatives and one or more employers ratified before the 
     date of the enactment of this Act, the provisions of 
     subsections (b), (c), and (d) of section 713 of the Employee 
     Retirement Income Security Act of 1974 (as added by this 
     subtitle) shall not apply with respect to plan years 
     beginning before the later of--
       (1) the date on which the last of the collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of the enactment of this Act), or
       (2) January 1, 2001.

     For purposes of this subsection, any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by this subtitle shall not be treated as a 
     termination of such collective bargaining agreement.
       (d) Assuring Coordination.--The Secretary of Labor, the 
     Secretary of the Treasury, and the Secretary of Health and 
     Human Services shall ensure, through the execution of an 
     interagency memorandum of understanding among such 
     Secretaries, that--
       (1) regulations, rulings, and interpretations issued by 
     such Secretaries relating to the same matter over which two 
     or more such Secretaries have responsibility under the 
     provisions of this subtitle, section 2101, and subtitle A of 
     title III (and the amendments made thereby) are administered 
     so as to have the same effect at all times, and
       (2) coordination of policies relating to enforcing the same 
     requirements through such Secretaries in order to have a 
     coordinated enforcement strategy that avoids duplication of 
     enforcement efforts and assigns priorities in enforcement.
       (e) Treatment of Religious Nonmedical Providers.--

[[Page H6339]]

       (1) In general.--Nothing in this Act (or the amendments 
     made thereby) shall be construed to--
       (A) restrict or limit the right of group health plans, and 
     of health insurance issuers offering health insurance 
     coverage in connection with group health plans, to include as 
     providers religious nonmedical providers,
       (B) require such plans or issuers to--
       (i) utilize medically based eligibility standards or 
     criteria in deciding provider status of religious nonmedical 
     providers,
       (ii) use medical professionals or criteria to decide 
     patient access to religious nonmedical providers,
       (iii) utilize medical professionals or criteria in making 
     decisions in internal or external appeals from decisions 
     denying or limiting coverage for care by religious nonmedical 
     providers, or
       (iv) compel a participant or beneficiary to undergo a 
     medical examination or test as a condition of receiving 
     health insurance coverage for treatment by a religious 
     nonmedical provider, or
       (C) require such plans or issuers to exclude religious 
     nonmedical providers because they do not provide medical or 
     other data otherwise required, if such data is inconsistent 
     with the religious nonmedical treatment or nursing care 
     provided by the provider.
       (2) Religious nonmedical provider.--For purposes of this 
     subsection, the term ``religious nonmedical provider'' means 
     a provider who provides no medical care but who provides only 
     religious nonmedical treatment or religious nonmedical 
     nursing care.
               Subtitle B--Patient Access to Information

     SEC. 1101. PATIENT ACCESS TO INFORMATION REGARDING PLAN 
                   COVERAGE, MANAGED CARE PROCEDURES, HEALTH CARE 
                   PROVIDERS, AND QUALITY OF MEDICAL CARE.

       (a) In General.--Part 1 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 is amended--
       (1) by redesignating section 111 as section 112; and
       (2) by inserting after section 110 the following new 
     section:


                   ``disclosure by group health plans

       ``Sec. 111. (a) Disclosure Requirement.--
       ``(1) Group health plans.--The administrator of each group 
     health plan shall take such actions as are necessary to 
     ensure that the summary plan description of the plan required 
     under section 102 (or each summary plan description in any 
     case in which different summary plan descriptions are 
     appropriate under part 1 for different options of coverage) 
     contains, among any information otherwise required under this 
     part, the information required under subsections (b), (c), 
     (d), and (e)(2)(A).
       ``(2) Health insurance issuers.--Each health insurance 
     issuer offering health insurance coverage in connection with 
     a group health plan shall provide the administrator on a 
     timely basis with the information necessary to enable the 
     administrator to comply with the requirements of paragraph 
     (1). To the extent that any such issuer provides on a timely 
     basis to plan participants and beneficiaries information 
     otherwise required under this part to be included in the 
     summary plan description, the requirements of sections 
     101(a)(1) and 104(b) shall be deemed satisfied in the case of 
     such plan with respect to such information.
       ``(b) Plan Benefits.--The information required under 
     subsection (a) includes the following:
       ``(1) Covered items and services.--
       ``(A) Categorization of included benefits.--A description 
     of covered benefits, categorized by--
       ``(i) types of items and services (including any special 
     disease management program), and
       ``(ii) types of health care professionals providing such 
     items and services.
       ``(B) Emergency medical care.--A description of the extent 
     to which the plan covers emergency medical care (including 
     the extent to which the plan provides for access to urgent 
     care centers), and any definitions provided under the plan 
     for the relevant plan terminology referring to such care.
       ``(C) Preventative services.--A description of the extent 
     to which the plan provides benefits for preventative 
     services.
       ``(D) Drug formularies.--A description of the extent to 
     which covered benefits are determined by the use or 
     application of a drug formulary and a summary of the process 
     for determining what is included in such formulary.
       ``(E) COBRA continuation coverage.--A description of the 
     benefits available under the plan pursuant to part 6.
       ``(2) Limitations, exclusions, and restrictions on covered 
     benefits.--
       ``(A) Categorization of excluded benefits.--A description 
     of benefits specifically excluded from coverage, categorized 
     by types of items and services.
       ``(B) Utilization review and preauthorization 
     requirements.--Whether coverage for medical care is limited 
     or excluded on the basis of utilization review or 
     preauthorization requirements.
       ``(C) Lifetime, annual, or other period limitations.--A 
     description of the circumstances under which, and the extent 
     to which, coverage is subject to lifetime, annual, or other 
     period limitations, categorized by types of benefits.
       ``(D) Custodial care.--A description of the circumstances 
     under which, and the extent to which, the coverage of 
     benefits for custodial care is limited or excluded, and a 
     statement of the definition used by the plan for custodial 
     care.
       ``(E) Experimental treatments.--Whether coverage for any 
     medical care is limited or excluded because it constitutes 
     experimental treatment or technology, and any definitions 
     provided under the plan for the relevant plan terminology 
     referring to such limited or excluded care.
       ``(F) Medical appropriateness or necessity.--Whether 
     coverage for medical care may be limited or excluded by 
     reason of a failure to meet the plan's requirements for 
     medical appropriateness or necessity, and any definitions 
     provided under the plan for the relevant plan terminology 
     referring to such limited or excluded care.
       ``(G) Second or subsequent opinions.--A description of the 
     circumstances under which, and the extent to which, coverage 
     for second or subsequent opinions is limited or excluded.
       ``(H) Specialty care.--A description of the circumstances 
     under which, and the extent to which, coverage of benefits 
     for specialty care is conditioned on referral from a primary 
     care provider.
       ``(I) Continuity of care.--A description of the 
     circumstances under which, and the extent to which, coverage 
     of items and services provided by any health care 
     professional is limited or excluded by reason of the 
     departure by the professional from any defined set of 
     providers.
       ``(J) Restrictions on coverage of emergency services.--A 
     description of the circumstances under which, and the extent 
     to which, the plan, in covering emergency medical care 
     furnished to a participant or beneficiary of the plan imposes 
     any financial responsibility described in subsection (c) on 
     participants or beneficiaries or limits or conditions 
     benefits for such care subject to any other term or condition 
     of such plan.
       ``(c) Participant's Financial Responsibilities.--The 
     information required under subsection (a) includes an 
     explanation of--
       ``(1) a participant's financial responsibility for payment 
     of premiums, coinsurance, copayments, deductibles, and any 
     other charges, and
       ``(2) the circumstances under which, and the extent to 
     which, the participant's financial responsibility described 
     in paragraph (1) may vary, including any distinctions based 
     on whether a health care provider from whom covered benefits 
     are obtained is included in a defined set of providers.
       ``(d) Dispute Resolution Procedures.--The information 
     required under subsection (a) includes a description of the 
     processes adopted by the plan pursuant to section 503(b), 
     including--
       ``(1) descriptions thereof relating specifically to--
       ``(A) coverage decisions,
       ``(B) internal review of coverage decisions, and
       ``(C) any external review of coverage decisions, and
       ``(2) the procedures and time frames applicable to each 
     step of the processes referred to in subparagraphs (A), (B), 
     and (C) of paragraph (1).
       ``(e) Information Available on Request.--
       ``(1) Access to plan benefit information in electronic 
     form.--
       ``(A) In general.--In addition to the information required 
     to be provided under section 104(b)(4), a group health plan 
     (and a health insurance issuer offering health insurance 
     coverage in connection with a group health plan) shall, upon 
     written request (made not more frequently than annually), 
     make available to participants and beneficiaries, in a 
     generally recognized electronic format, the following 
     information:
       ``(i) the latest summary plan description, including the 
     latest summary of material modifications; and
       ``(ii) the actual plan provisions setting forth the 
     benefits available under the plan

     to the extent such information relates to the coverage 
     options under the plan available to the participant or 
     beneficiary. A reasonable charge may be made to cover the 
     cost of providing such information in such generally 
     recognized electronic format. The Secretary may by regulation 
     prescribe a maximum amount which will constitute a reasonable 
     charge under the preceding sentence.
       ``(B) Alternative access.--The requirements of this 
     paragraph may be met by making such information generally 
     available (rather than upon request) on the Internet or on a 
     proprietary computer network in a format which is readily 
     accessible to participants and beneficiaries.
       ``(2) Additional information to be provided on request.--
       ``(A) Inclusion in summary plan description of summary of 
     additional information.--The information required under 
     subsection (a) includes a summary description of the types of 
     information required by this subsection to be made available 
     to participants and beneficiaries on request.
       ``(B) Information required from plans and issuers on 
     request.--In addition to information required to be included 
     in summary plan descriptions under this subsection, a group 
     health plan (and a health insurance issuer offering health 
     insurance coverage in connection with a group health plan) 
     shall provide the following information to a participant or 
     beneficiary on request:
       ``(i) Network characteristics.--If the plan (or issuer) 
     utilizes a defined set of providers under contract with the 
     plan (or

[[Page H6340]]

     issuer), a detailed list of the names of such providers and 
     their geographic location, set forth separately with respect 
     to primary care providers and with respect to specialists.
       ``(ii) Care management information.--A description of the 
     circumstances under which, and the extent to which, the plan 
     has special disease management programs or programs for 
     persons with disabilities, indicating whether these programs 
     are voluntary or mandatory and whether a significant benefit 
     differential results from participation in such programs.
       ``(iii) Inclusion of drugs and biologicals in 
     formularies.--A statement of whether a specific drug or 
     biological is included in a formulary used to determine 
     benefits under the plan and a description of the procedures 
     for considering requests for any patient-specific waivers.
       ``(iv) Procedures for determining exclusions based on 
     medical necessity or experimental treatments.--Upon receipt 
     by the participant or beneficiary of any notification of an 
     adverse coverage decision based on a determination relating 
     to medical necessity or an experimental treatment or 
     technology, a description of the procedures and medically-
     based criteria used in such decision.
       ``(v) Preauthorization and utilization review procedures.--
     Upon receipt by the participant or beneficiary of any 
     notification of an adverse coverage decision, a description 
     of the basis on which any preauthorization requirement or any 
     utilization review requirement has resulted in such decision.
       ``(vi) Accreditation status of health insurance issuers and 
     service providers.--A description of the accreditation and 
     licencing 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) Measures of enrollee satisfaction.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to enrollee satisfaction.
       ``(viii) Quality performance measures.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to quality of performance 
     of the delivery of medical care with respect to coverage 
     options offered under the plan and of health care 
     professionals and facilities providing medical care under the 
     plan.
       ``(ix) Information relating to external reviews.--The 
     number of external reviews under section 503(b)(4) that have 
     been completed during the prior plan year and the number of 
     such reviews in which the recommendation reported under 
     section 503(b)(4)(C)(iii) includes a recommendation for 
     modification or reversal of an internal review decision under 
     the plan.
       ``(C) Information required from health care professionals 
     on request.--Any health care professional treating a 
     participant or beneficiary under a group health plan shall 
     provide to the participant or beneficiary, on request, a 
     description of his or her professional qualifications 
     (including board certification status, licensing status, and 
     accreditation status, if any), privileges, and experience and 
     a general description by category (including salary, fee-for-
     service, capitation, and such other categories as may be 
     specified in regulations of the Secretary) of the applicable 
     method by which such professional is compensated in 
     connection with the provision of such medical care.
       ``(D) Information required from health care facilities on 
     request.--Any health care facility from which a participant 
     or beneficiary has sought treatment under a group health plan 
     shall provide to the participant or beneficiary, on request, 
     a description of the facility's corporate form or other 
     organizational form and all forms of licensing and 
     accreditation status (if any) assigned to the facility by 
     standard-setting organizations.
       ``(f) Access to Information Relevant to the Coverage 
     Options under which the Participant or Beneficiary is 
     Eligible to Enroll.--In addition to information otherwise 
     required to be made available under this section, a group 
     health plan (and a health insurance issuer offering health 
     insurance coverage in connection with a group health plan) 
     shall, upon written request (made not more frequently than 
     annually), make available to a participant (and an employee 
     who, under the terms of the plan, is eligible for coverage, 
     but not enrolled) in connection with a period of enrollment 
     the summary plan description for any coverage option under 
     the plan under which the participant is eligible to enroll 
     and any information described in clauses (i), (ii), (iii), 
     (vi), (vii), and (viii) of subsection (e)(2)(B).
       ``(g) Advance Notice of Changes in Drug Formularies.--Not 
     later than 30 days before the effective of date of any 
     exclusion of a specific drug or biological from any drug 
     formulary under the plan that is used in the treatment of a 
     chronic illness or disease, the plan shall take such actions 
     as are necessary to reasonably ensure that plan participants 
     are informed of such exclusion. The requirements of this 
     subsection may be satisfied--
       ``(1) by inclusion of information in publications broadly 
     distributed by plan sponsors, employers, or employee 
     organizations,
       ``(2) by electronic means of communication (including the 
     Internet or proprietary computer networks in a format which 
     is readily accessible to participants),
       ``(3) by timely informing participants who, under an 
     ongoing program maintained under the plan, have submitted 
     their names for such notification, or
       ``(4) by any other reasonable means of timely informing 
     plan participants.
       ``(h) Definitions.--For purposes of this section--
       ``(1) Group health plan.--The term `group health plan' has 
     the meaning provided such term under section 503(b)(6).
       ``(2) Medical care.--The term `medical care' has the 
     meaning provided such term under section 733(a)(2).
       ``(3) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning provided such term under 
     section 733(b)(1).
       ``(4) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided such term under section 
     733(b)(2).''.
       (b) Conforming Amendments.--
       (1) Section 102(b) of such Act (29 U.S.C. 1022(b)) is 
     amended--
       (A) by striking ``section 733(a)(1)'' each place it appears 
     and inserting ``section 503(b)(6)''; and
       (B) by inserting before the period at the end the 
     following: ``; and, in the case of a group health plan (as 
     defined in section 111(h)(1)), the information required to be 
     included under section 111(a)''.
       (2) The table of contents in section 1 of such Act is 
     amended by striking the item relating to section 111 and 
     inserting the following new items:

``Sec. 111. Disclosure by group health plans.
``Sec. 112. Repeal and effective date.''.

     SEC. 1102. EFFECTIVE DATE AND RELATED RULES.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act. The Secretary shall first issue 
     all regulations necessary to carry out the amendments made by 
     this subtitle before such date.
       (b) Limitation on Enforcement Actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this subtitle, against a group health plan or health 
     insurance issuer with respect to a violation of a requirement 
     imposed by such amendments before the date of issuance of 
     final regulations issued in connection with such requirement, 
     if the plan or issuer has sought to comply in good faith with 
     such requirement.
       (c) Assuring Coordination.--The Secretary of Labor, the 
     Secretary of Health and Human Services, and the Secretary of 
     the Treasury shall ensure, through the execution of an 
     interagency memorandum of understanding among such 
     Secretaries, that--
       (1) regulations, rulings, and interpretations issued by 
     such Secretaries relating to the same matter over which two 
     or more such Secretaries have responsibility under the 
     provisions of this subtitle, subtitle B of title II, and 
     subtitle B of title III (and the amendments made thereby) are 
     administered so as to have the same effect at all times, and
       (2) coordination of policies relating to enforcing the same 
     requirements through such Secretaries in order to have a 
     coordinated enforcement strategy that avoids duplication of 
     enforcement efforts and assigns priorities in enforcement.
Subtitle C--New Procedures and Access to Courts for Grievances Arising 
                        Under Group Health Plans

     SEC. 1201. SPECIAL RULES FOR GROUP HEALTH PLANS.

       (a) In General.--Section 503 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1133) is amended--
       (1) by inserting ``(a) In General.--'' after ``Sec. 503.'';
       (2) by inserting ``(other than a group health plan)'' after 
     ``employee benefit plan''; and
       (3) by adding at the end the following new subsection:
       ``(b) Special Rules for Group Health Plans.--
       ``(1) Coverage determinations.--Every group health plan 
     shall--
       ``(A) provide adequate notice in writing in accordance with 
     this subsection to any participant or beneficiary of any 
     adverse coverage decision with respect to benefits of such 
     participant or beneficiary under the plan, setting forth the 
     specific reasons for such coverage decision and any rights of 
     review provided under the plan, written in a manner 
     calculated to be understood by the participant,
       ``(B) provide such notice in writing also to any treating 
     medical care provider of such participant or beneficiary, if 
     such provider has claimed reimbursement for any item or 
     service involved in such coverage decision, or if a claim 
     submitted by the provider initiated the proceedings leading 
     to such decision,
       ``(C) afford a reasonable opportunity to any participant or 
     beneficiary who is in receipt of the notice of such adverse 
     coverage decision, and who files a written request for review 
     of the initial coverage decision within 180 days after 
     receipt of the notice of the initial decision, for a full and 
     fair de novo review of the decision by an appropriate named

[[Page H6341]]

     fiduciary who did not make the initial decision, and
       ``(D) 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.--
     Except as provided in subparagraph (B)--
       ``(i) Initial 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 such reasonable form as 
     may be required under the plan, the plan shall issue in 
     writing an initial coverage decision on the request before 
     the end of the initial decision period under paragraph (9)(J) 
     following the filing completion date. Failure to issue a 
     coverage decision on such a request before the end of the 
     period required under this clause shall be treated as an 
     adverse coverage decision for purposes of internal review 
     under clause (ii).
       ``(ii) Internal reviews of initial denials.--Upon the 
     written request of a participant or beneficiary for review of 
     an initial adverse coverage decision under clause (i), a 
     review by an appropriate named fiduciary (subject to 
     paragraph (3)) of the initial coverage decision shall be 
     completed, including issuance by the plan of a written 
     decision affirming, reversing, or modifying the initial 
     coverage decision, setting forth the grounds for such 
     decision, before the end of the internal review period 
     following the review filing date. Such decision shall be 
     treated as the final decision of the plan, subject to any 
     applicable reconsideration under paragraph (4). Failure to 
     issue before the end of such period such a written decision 
     requested under this clause shall be treated as a final 
     decision affirming the initial coverage decision, subject to 
     any applicable reconsideration under paragraph (4).
       ``(B) Time limits for making coverage decisions relating to 
     urgent and emergency medical care and for completing internal 
     appeals.--
       ``(i) Initial decisions.--A group health plan shall issue 
     in writing an initial coverage decision on any request for 
     expedited advance determination of coverage or for expedited 
     required determination of medical necessity submitted, in 
     such reasonable form as may be required under the plan--

       ``(I) before the end of the urgent decision period under 
     paragraph (9)(L), in cases involving urgent medical care but 
     not involving emergency medical care, or
       ``(II) before the end of the emergency decision period 
     under paragraph (9)(M), in cases involving emergency medical 
     care,

     following the filing completion date. Failure to approve or 
     deny such a request before the end of the applicable decision 
     period shall be treated as a denial of the request for 
     purposes of internal review under clause (ii).
       ``(ii) Internal reviews of initial denials.--Upon the 
     written request of a participant or beneficiary for review of 
     an initial adverse coverage decision under clause (i), a 
     review by an appropriate named fiduciary (subject to 
     paragraph (3)) of the initial coverage decision shall be 
     completed, including issuance by the plan of a written 
     decision affirming, reversing, or modifying the initial 
     converge decision, setting forth the grounds for the 
     decision--

       ``(I) before the end of the urgent decision period under 
     paragraph (9)(L), in cases involving urgent medical care but 
     not involving emergency medical care, or
       ``(II) before the end of the emergency decision period 
     under paragraph (9)(M), in cases involving emergency medical 
     care,

     following the review filing date. Such decision shall be 
     treated as the final decision of the plan, subject to any 
     applicable reconsideration under paragraph (4). Failure to 
     issue before the end of the applicable decision period such a 
     written decision requested under this clause shall be treated 
     as a final decision affirming the initial coverage decision, 
     subject to any applicable reconsideration under paragraph 
     (4).
       ``(3) Physicians must review initial coverage decisions 
     involving medical appropriateness or necessity or 
     experimental treatment.--If an initial coverage decision 
     under paragraph (2)(A)(i) or (2)(B)(i) is based on a 
     determination that provision of 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 
     review under paragraph (2)(A)(ii) or (2)(B)(ii), to the 
     extent that it relates to medical appropriateness or 
     necessity or to experimental treatment or technology, shall 
     be conducted by a physician who is selected to serve as an 
     appropriate named fiduciary under the plan and who did not 
     make the initial denial.
       ``(4) Elective external review by independent medical 
     expert and reconsideration of initial review decision.--
       ``(A) In general.--The requirements of subparagraphs (B), 
     (C) and (D) shall apply--
       ``(i) in the case of any failure to timely issue a coverage 
     decision upon internal review which is deemed to be an 
     adverse coverage decision under paragraph (2)(A)(ii) or 
     (2)(B)(ii) (thereby failing to constitute a coverage decision 
     for which specific reasons have been set forth as required 
     under paragraph (1)(A)), and
       ``(ii) in the case of any adverse coverage decision which 
     is not reversed upon a review conducted pursuant to paragraph 
     (1)(C) (including any review pursuant to paragraph (2)(A)(ii) 
     or (2)(B)(ii)), if such coverage decision is based on a 
     determination that provision of a particular item or service 
     is excluded from coverage under the terms of the plan because 
     the provision of such item or service--

       ``(I) does not meet the plan's requirements for medical 
     appropriateness or necessity, or
       ``(II) would constitute experimental treatment or 
     technology.

       ``(B) Limits on allowable advance payments.--The review 
     under this paragraph in connection with an adverse coverage 
     decision shall be available subject to any requirement of the 
     plan (unless waived by the plan for financial or other 
     reasons) for payment in advance to the plan by the 
     participant or beneficiary seeking review of an amount not to 
     exceed the greater of--
       ``(i) the lesser of $100 or 10 percent of the cost of the 
     medical care involved in the decision, or
       ``(ii) $25,

     with each such dollar amount subject to compounded annual 
     adjustments in the same manner and to the same extent as 
     apply under section 215(i) of the Social Security Act, except 
     that, for any calendar year, such amount as so adjusted shall 
     be deemed, solely for such calendar year, to be equal to such 
     amount rounded to the nearest $10. No such payment may be 
     required in the case of any participant or beneficiary whose 
     enrollment under the plan is paid for, in whole or in part, 
     under a State plan under title XIX or XXI of the Social 
     Security Act. Any such advance payment shall be subject to 
     reimbursement if the recommendation of the independent 
     medical expert or experts under subparagraph (C)(iii) is to 
     reverse or modify the coverage decision.
       ``(C) Reconsideration of initial review decision.--In any 
     case in which a participant or beneficiary who has received 
     an adverse decision of the plan upon initial review of the 
     coverage decision and who has not commenced review of the 
     initial coverage decision under section 502 makes a request 
     in writing, within 30 days after the date of such review 
     decision, for reconsideration of such review decision, the 
     terms of the plan shall provide for a procedure for such 
     reconsideration under which--
       ``(i) one or more independent medical experts will be 
     selected in accordance with subparagraph (E) to review the 
     coverage decision described in subparagraph (A) to determine 
     whether such decision was in accordance with the terms of the 
     plan and this title,
       ``(ii) 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) will be presented to such 
     expert or experts and maintained in a manner which will 
     ensure confidentiality of such record,
       ``(iii) such expert or experts will report in writing to 
     the plan their recommendation, based on the determination 
     made under clause (i), as to whether such coverage decision 
     should be affirmed, modified, or reversed, setting forth the 
     grounds (including the clinical basis) for the 
     recommendation, and
       ``(iv) a physician who did not make the initial review 
     decision will reconsider the initial review decision to 
     determine whether such decision was in accordance with the 
     terms of the plan and this title and will issue a written 
     decision affirming, modifying, or reversing the initial 
     review decision, taking into account any recommendations 
     reported to the plan pursuant to clause (iii), and setting 
     forth the grounds for the decision.
       ``(D) Time limits for reconsideration.--Any review under 
     this paragraph shall be completed before the end of the 
     reconsideration period (as defined in paragraph (9)(O)) 
     following the review filing date in connection with such 
     review. The decision under this paragraph affirming, 
     reversing, or modifying the initial review decision of the 
     plan shall be the final decision of the plan. Failure to 
     issue a written decision before the end of the 
     reconsideration period in any reconsideration requested under 
     this paragraph shall be treated as a final decision affirming 
     the initial review decision of the plan.
       ``(E) Independent medical experts.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `independent medical expert' means, in connection with any 
     coverage decision by a group health plan, a professional--

       ``(I) who is a physician or, if appropriate, another 
     medical professional,
       ``(II) who has appropriate credentials and has attained 
     recognized expertise in the applicable medical field,
       ``(III) who was not involved in the initial decision or any 
     earlier review thereof, and
       ``(IV) who is selected in accordance with clause (ii) and 
     meets the requirements of clause (iii).

       ``(ii) Selection of medical experts.--An independent 
     medical expert is selected in accordance with this clause 
     if--

       ``(I) the expert is selected by an intermediary which 
     itself meets the requirements of clause (iii), by means of a 
     method which ensures that the identity of the expert is not 
     disclosed to the plan, any health insurance issuer offering 
     health insurance coverage to the aggrieved participant or 
     beneficiary in

[[Page H6342]]

     connection with the plan, and the aggrieved participant or 
     beneficiary under the plan, and the identities of the plan, 
     the issuer, and the aggrieved participant or beneficiary are 
     not disclosed to the expert,
       ``(II) the expert is selected, by an appropriately 
     credentialed panel of physicians meeting the requirements of 
     clause (iii) established by a fully accredited teaching 
     hospital meeting such requirements,
       ``(III) the expert is selected by an organization described 
     in section 1152(1)(A) of the Social Security Act which meets 
     the requirements of clause (iii),
       ``(IV) the expert is selected by an external review 
     organization which meets the requirements of clause (iii) and 
     is accredited by a private standard-setting organization 
     meeting such requirements and recognized as such by the 
     Secretary, or
       ``(V) the expert is selected, by an intermediary or 
     otherwise, in a manner that is, under regulations issued 
     pursuant to negotiated rulemaking, sufficient to ensure the 
     expert's independence,

     and the method of selection is devised to reasonably ensure 
     that the expert selected meets the independence requirements 
     of clause (iii).
       ``(iii) Independence requirements.--An independent medical 
     expert or another entity described in clause (ii) meets the 
     independence requirements of this clause if--

       ``(I) the expert or entity is not affiliated with any 
     related party,
       ``(II) any compensation received by such expert or entity 
     in connection with the external review is reasonable and not 
     contingent on any decision rendered by the expert or entity,
       ``(III) under the terms of the plan and any health 
     insurance coverage offered in connection with the plan, the 
     plan and the issuer (if any) have no recourse against the 
     expert or entity in connection with the external review, and
       ``(IV) the expert or entity does not otherwise have a 
     conflict of interest with a related party as determined under 
     any regulations which the Secretary may prescribe.

       ``(iv) Related party.--For purposes of clause (ii)(I), the 
     term `related party' means--

       ``(I) 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),
       ``(II) the physician or other medical care provider that 
     provided the medical care involved in the coverage decision,
       ``(III) the institution at which the medical care involved 
     in the coverage decision is provided,
       ``(IV) the manufacturer of any drug or other item that was 
     included in the medical care involved in the coverage 
     decision, or
       ``(V) any other party determined under any regulations 
     which the Secretary may prescribe to have a substantial 
     interest in the coverage decision .

       ``(v) Affiliated.--For purposes of clause (iii)(I), 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 based on a determination that an item or service is 
     excluded from coverage under the terms of the plan shall not 
     be subject to review under this paragraph, unless such 
     determination is found in such decision to be based solely on 
     the fact that the item or service--
       ``(i) does not meet the plan's requirements for medical 
     appropriateness or necessity, or
       ``(ii) would constitute experimental treatment or 
     technology (as defined under the plan).
       ``(5) Permitted alternatives to required internal review.--
       ``(A) In general.--A group health plan shall not be treated 
     as failing to meet the requirements under paragraphs 
     (2)(A)(ii) and (2)(B)(ii) relating to review of initial 
     coverage decisions for benefits, if--
       ``(i) in lieu of the procedures relating to review under 
     paragraphs (2)(A)(ii) and (2)(B)(ii) and in accordance with 
     such regulations (if any) as may be prescribed by the 
     Secretary--

       ``(I) the aggrieved participant or beneficiary elects in 
     the request for the review an alternative dispute resolution 
     procedure which is available under the plan with respect to 
     similarly situated participants and beneficiaries, or
       ``(II) in the case of any such plan or portion thereof 
     which is established and maintained pursuant to a bona fide 
     collective bargaining agreement, the plan provides for a 
     procedure by which such disputes are resolved by means of any 
     alternative dispute resolution procedure,

       ``(ii) the time limits not exceeding the time limits 
     otherwise applicable under paragraphs (2)(A)(ii) and 
     (2)(B)(ii) are incorporated in such alternative dispute 
     resolution procedure,
       ``(iii) any applicable requirement for review by a 
     physician under paragraph (3), unless waived by the 
     participant or beneficiary (in a manner consistent with such 
     regulations as the Secretary may prescribe to ensure 
     equitable procedures), is incorporated in such alternative 
     dispute resolution procedure, and
       ``(iv) the plan meets the additional requirements of 
     subparagraph (B).

     In any case in which a procedure described in subclause (I) 
     or (II) of clause (i) is utilized and an alternative dispute 
     resolution procedure is voluntarily elected by the aggrieved 
     participant or beneficiary, the plan may require or allow (in 
     a manner consistent with such regulations as the Secretary 
     may prescribe to ensure equitable procedures) the aggrieved 
     participant or beneficiary to waive review of the coverage 
     decision under paragraph (3), to waive further review of the 
     coverage decision under paragraph (4) or section 502, and to 
     elect an alternative means of external review (other than 
     review under paragraph (4)).
       ``(B) Additional requirements.--The requirements of this 
     subparagraph are met if the means of resolution of dispute 
     allow for adequate presentation by the aggrieved participant 
     or beneficiary of scientific and medical evidence supporting 
     the position of such participant or beneficiary.
       ``(6) Permitted alternatives to required external review.--
     A group health plan shall not be treated as failing to meet 
     the requirements of this subsection in connection with review 
     of coverage decisions under paragraph (4) if the aggrieved 
     participant or beneficiary elects to utilize a procedure in 
     connection with such review which is made generally available 
     under the plan (in a manner consistent with such regulations 
     as the Secretary may prescribe to ensure equitable 
     procedures) under which--
       ``(A) the plan agrees in advance of the recommendations of 
     the independent medical expert or experts under paragraph 
     (4)(C)(iii) to render a final decision in accordance with 
     such recommendations, and
       ``(B) the participant or beneficiary waives in advance any 
     right to review of the final decision under section 502.
       ``(7) Special rule for access to specialty care.-- In the 
     case of a request for advance determination of coverage 
     consisting of a request by a physician for a determination of 
     coverage of the services of a specialist with respect to any 
     condition, if coverage of the services of such specialist for 
     such condition is otherwise provided under the plan, the 
     initial coverage decision referred to in subparagraph (A)(i) 
     or (B)(i) of paragraph (2) shall be issued within the 
     specialty decision period. For purposes of this paragraph, 
     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.--For purposes of this 
     section--
       ``(A) In general.--The term `group health plan' shall have 
     the meaning provided in section 733(a).
       ``(B) Treatment of partnerships.--The provisions of 
     paragraphs (1), (2), and (3) of section 732(d) shall apply.
       ``(9) Other definitions.--For purposes of this subsection--
       ``(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 such medical 
     care has been provided.
       ``(B) Required determination of medical necessity.--The 
     term `required determination of medical necessity' means a 
     determination required under a group health plan solely that 
     proposed medical care meets, under the facts and 
     circumstances at the time of the determination, 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 such determination does not constitute 
     an advance determination of coverage (as defined in 
     subparagraph (C)).
       ``(C) Advance determination of coverage.--The term `advance 
     determination of coverage' means a determination under a 
     group health plan that 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 such 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.

[[Page H6343]]

       ``(H) Urgent medical care.--The term `urgent medical care' 
     means medical care in any case in which an appropriate 
     physician has certified in writing (or as otherwise provided 
     in regulations of the Secretary) that failure to provide the 
     participant or beneficiary with such medical care within 45 
     days can reasonably be expected to result in either--
       ``(i) the imminent death of the participant or beneficiary, 
     or
       ``(ii) the immediate, serious, and irreversible 
     deterioration of the health of the participant or beneficiary 
     which will significantly increase the likelihood of death of, 
     or irreparable harm to, the participant or beneficiary.
       ``(I) Emergency medical care.--The term `emergency medical 
     care' means medical care in any case in which an appropriate 
     physician has certified in writing (or as otherwise provided 
     in regulations of the Secretary)--
       ``(i) that failure to immediately provide the care to the 
     participant or beneficiary could reasonably be expected to 
     result in--

       ``(I) placing the health of such participant or beneficiary 
     (or, with respect to such a participant or beneficiary who is 
     a pregnant woman, the health of the woman or her unborn 
     child) in serious jeopardy,
       ``(II) serious impairment to bodily functions, or
       ``(III) serious dysfunction of any bodily organ or part,

     or
       ``(ii) 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, or such longer period as 
     may be prescribed in regulations of the Secretary.
       ``(K) Internal review period.--The term `internal review 
     period' means a period of 30 days, or such longer period as 
     may be prescribed in regulations of the Secretary.
       ``(L) Urgent decision period.--The term `urgent decision 
     period' means a period of 10 days, or such longer period as 
     may be prescribed in regulations of the Secretary.
       ``(M) Emergency decision period.--The term `emergency 
     decision period' means a period of 72 hours, or such longer 
     period as may be prescribed in regulations of the Secretary.
       ``(N) Specialty decision period.--The term `specialty 
     decision period' means a period of 72 hours, or such longer 
     period as may be prescribed in regulations of the Secretary.
       ``(O) Reconsideration period.--The term `reconsideration 
     period' means a period of 25 days, or such longer period as 
     may be prescribed in regulations of the Secretary, except 
     that--
       ``(i) in the case of a decision involving urgent medical 
     care, such term means the urgent decision period, and
       ``(ii) in the case of a decision involving emergency 
     medical care, such term means the emergency decision period.
       ``(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, in connection with a group health plan, the date as of 
     which the appropriate named fiduciary (or the independent 
     medical expert or experts in the case of a review under 
     paragraph (4)) 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 provided such term by 
     section 733(b)(1).
       ``(T) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided such term 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 such request or decision is 
     presented in a generally recognized printable or electronic 
     format. The Secretary may by regulation provide for 
     presentation of information otherwise required to be in 
     written form in such other forms as may be appropriate under 
     the circumstances.
       ``(ii) Medical appropriateness or experimental treatment 
     determinations.--For purposes of this subparagraph, 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 on such request is conveyed to the 
     provider of medical care or to the participant or beneficiary 
     by means of telephonic or other electronic communications, 
     such decision shall be treated as a written decision.''.
       (b) Civil Penalties.--
       (1) In general.--Section 502(c) of such Act (29 U.S.C. 
     1132(c)) is amended by redesignating paragraphs (6) and (7) 
     as paragraphs (7) and (8), respectively, and by inserting 
     after paragraph (5) the following new paragraph:
       ``(6)(A)(i) In any case in which--
       ``(I) a benefit under a group health plan (as defined in 
     section 503(b)(8)) is not timely provided to a participant or 
     beneficiary pursuant to a final decision of the plan which 
     was not in accordance with the terms of the plan or this 
     title, and
       ``(II) such final decision of the plan is contrary to a 
     recommendation described in section 503(b)(4)(C)(iii),

     any person acting in the capacity of a fiduciary of such plan 
     so as to cause such failure may, in the court's discretion, 
     be liable to the aggrieved participant or beneficiary for a 
     civil penalty.
       ``(ii) Such civil penalty shall be in the amount of up to 
     $500 a day (or up to $1,000 a day in case of a bad faith 
     failure) 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.
       ``(B) In any action commenced under subsection (a) by a 
     participant or beneficiary with respect to a group health 
     plan (as defined in section 503(b)(8)) in which the plaintiff 
     alleges that a person, in the capacity of a fiduciary and in 
     violation of the terms of the plan or this title, has taken 
     an action resulting in an adverse coverage decision in 
     violation of the terms of the plan, or has failed to take an 
     action for which such person is responsible under the plan 
     and which is necessary under the plan for a favorable 
     coverage decision, upon finding in favor of the plaintiff, if 
     such action was commenced after a final decision of the plan 
     upon review which included a review under section 503(b)(4) 
     or such action was commenced under subsection (b)(4) of this 
     section, the court shall cause to be served on the defendant 
     an order requiring the defendant--
       ``(i) to cease and desist from the alleged action or 
     failure to act, and
       ``(ii) to pay to the plaintiff a reasonable attorney's fee 
     and other reasonable costs relating to the prosecution of the 
     action on the charges on which the plaintiff prevails.

     The remedies provided under this subparagraph shall be in 
     addition to remedies otherwise provided under this section.
       ``(C)(i) The Secretary may assess a civil penalty against a 
     person acting in the capacity of a fidicuary of one or more 
     group health plans (as defined in section 503(b)(8)) for--
       ``(I) any pattern or practice of repeated adverse coverage 
     decisions in violation of the terms of the plan or plans or 
     this title, or
       ``(II) any pattern or practice of repeated violations of 
     the requirements of section 503 with respect to such plan or 
     plans.

     Such penalty shall be payable only upon proof by clear and 
     convincing evidence of such pattern or practice.
       ``(ii) Such penalty shall be in an amount not to exceed the 
     lesser of--
       ``(I) 5 percent of the aggregate value of benefits shown by 
     the Secretary to have not been provided, or unlawfully 
     delayed in violation of section 503, under such pattern or 
     practice, or
       ``(II) $100,000.
       ``(iii) Any person acting in the capacity of a fiduciary of 
     a group health plan or plans who has engaged in any such 
     pattern or practice with respect to such plans, upon the 
     petition of the Secretary, may be removed by the court from 
     that position, and from any other involvement, with respect 
     to such plan or plans, and may be precluded from returning to 
     any such position or involvement for a period determined by 
     the court.''.
       (2) Conforming amendment.--Section 502(a)(6) of such Act 
     (29 U.S.C. 1132(a)(6)) is amended by striking ``, or (6)'' 
     and inserting ``, (6), or (7)''.
       (c) Expedited Court Review.--Section 502 of such Act (29 
     U.S.C. 1132) is amended--
       (1) in subsection (a)(8), by striking ``or'' at the end;
       (2) in subsection (a)(9), by striking the period and 
     inserting ``; or'';
       (3) by adding at the end of subsection (a) the following 
     new paragraph:
       ``(10) by a participant or beneficiary for appropriate 
     relief under subsection (b)(4).''.
       (4) by adding at the end of subsection (b) the following 
     new paragraph:
       ``(4) In any case in which exhaustion of administrative 
     remedies in accordance with paragraph (2)(A)(ii) or 
     (2)(B)(ii) of section 503(b) otherwise necessary for an 
     action for relief under paragraph (1)(B) or (3) of subsection 
     (a) has not been obtained and it is demonstrated to the court 
     by means of certification by an appropriate physician that 
     such exhaustion is not reasonably attainable under the facts 
     and circumstances without undue risk of irreparable harm to 
     the health of the participant or beneficiary, a civil action 
     may be brought by a participant or beneficiary to obtain 
     appropriate equitable relief. Any determinations made under 
     paragraph (2)(A)(ii) or (2)(B)(ii) of section 503(b) made 
     while an action under this paragraph is pending shall be 
     given due consideration by the court in any such action.''.
       (d) Standard of Review Unaffected.--The standard of review 
     under section 502 of the Employee Retirement Income Security 
     Act of 1974 (as amended by this section) shall continue on 
     and after the date of the enactment of this Act to be the 
     standard of review which was applicable under such section as 
     of immediately before such date.
       (e) Concurrent Jurisdiction.--Section 502(e)(1) of such Act 
     (29 U.S.C. 1132(e)(1)) is amended--
       (1) in the first sentence, by striking ``under subsection 
     (a)(1)(B) of this section'' and inserting ``under subsection 
     (a)(1)(A) for relief

[[Page H6344]]

     under subsection (c)(6), under subsection (a)(1)(B), and 
     under subsection (b)(4)''; and
       (2) in the last sentence, by striking ``of actions under 
     paragraphs (1)(B) and (7) of subsection (a) of this section'' 
     and inserting ``of actions under paragraph (1)(A) of 
     subsection (a) for relief under subsection (c)(6) and of 
     actions under paragraphs (1)(B) and (7) of subsection (a) and 
     paragraph (4) of subsection (b)''.

     SEC. 1202. EFFECTIVE DATE.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect 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. The 
     Secretary shall first issue all regulations necessary to 
     carry out the amendments made by this subtitle before such 
     date.
       (b) Limitation on Enforcement Actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this subtitle, against a group health plan or health 
     insurance issuer with respect to a violation of a requirement 
     imposed by such amendments before the date of issuance of 
     final regulations issued in connection with such requirement, 
     if the plan or issuer has sought to comply in good faith with 
     such requirement.
       (c) Collective Bargaining Agreements.--Any plan amendment 
     made pursuant to a collective bargaining agreement relating 
     to the plan which amends the plan solely to conform to any 
     requirement added by this subtitle shall not be treated as a 
     termination of such collective bargaining agreement.
     Subtitle D--Affordable Health Coverage for Employees of Small 
                               Businesses

     SEC. 1301. SHORT TITLE OF SUBTITLE.

       This subtitle may be cited as the ``Small Business 
     Affordable Health Coverage Act of 1998''.

     SEC. 1302. RULES GOVERNING ASSOCIATION HEALTH PLANS.

       (a) In General.--Subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     after part 7 the following new part:

           ``Part 8--Rules Governing Association Health Plans

     ``SEC. 801. ASSOCIATION HEALTH PLANS.

       ``(a) In General.--For purposes of this part, the term 
     `association health plan' means a group health plan--
       ``(1) whose sponsor is (or is deemed under this part to be) 
     described in subsection (b), and
       ``(2) under which at least one option of health insurance 
     coverage offered by a health insurance issuer (which may 
     include, among other options, managed care options, point of 
     service options, and preferred provider options) is provided 
     to participants and beneficiaries, unless, for any plan year, 
     such coverage remains unavailable to the plan despite good 
     faith efforts exercised by the plan to secure such coverage.
       ``(b) Sponsorship.--The sponsor of a group health plan is 
     described in this subsection if such sponsor--
       ``(1) is organized and maintained in good faith, with a 
     constitution and bylaws specifically stating its purpose and 
     providing for periodic meetings on at least an annual basis, 
     as a trade association, an industry association (including a 
     rural electric cooperative association or a rural telephone 
     cooperative association), a professional association, or a 
     chamber of commerce (or similar business association, 
     including a corporation or similar organization that operates 
     on a cooperative basis (within the meaning of section 1381 of 
     the Internal Revenue Code of 1986)), for substantial purposes 
     other than that of obtaining or providing medical care,
       ``(2) is established as a permanent entity which receives 
     the active support of its members and collects from its 
     members on a periodic basis dues or payments necessary to 
     maintain eligibility for membership in the sponsor, and
       ``(3) does not condition membership, such dues or payments, 
     or coverage under the plan on the basis of health status-
     related factors with respect to the employees of its members 
     (or affiliated members), or the dependents of such employees, 
     and does not condition such dues or payments on the basis of 
     group health plan participation.
     Any sponsor consisting of an association of entities which 
     meet the requirements of paragraphs (1) and (2) shall be 
     deemed to be a sponsor described in this subsection.

     ``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.

       ``(a) In General.--The applicable authority shall prescribe 
     by regulation a procedure under which, subject to subsection 
     (b), the applicable authority shall certify association 
     health plans which apply for certification as meeting the 
     requirements of this part.
       ``(b) Standards.--Under the procedure prescribed pursuant 
     to subsection (a), the applicable authority shall certify an 
     association health plan as meeting the requirements of this 
     part only if the applicable authority is satisfied that--
       ``(1) such certification--
       ``(A) is administratively feasible,
       ``(B) is not adverse to the interests of the individuals 
     covered under the plan, and
       ``(C) is protective of the rights and benefits of the 
     individuals covered under the plan, and
       ``(2) the applicable requirements of this part are met (or, 
     upon the date on which the plan is to commence operations, 
     will be met) with respect to the plan.
       ``(c) Requirements Applicable to Certified Plans.--An 
     association health plan with respect to which certification 
     under this part is in effect shall meet the applicable 
     requirements of this part, effective on the date of 
     certification (or, if later, on the date on which the plan is 
     to commence operations).
       ``(d) Requirements for Continued Certification.--The 
     applicable authority may provide by regulation for continued 
     certification of association health plans under this part, 
     including requirements relating to commencement of new 
     benefit options by plans which do not consist of health 
     insurance coverage.
       ``(e) Class Certification for Fully Insured Plans.--The 
     applicable authority shall establish a class certification 
     procedure for association health plans under which all 
     benefits consist of health insurance coverage. Under such 
     procedure, the applicable authority shall provide for the 
     granting of certification under this part to the plans in 
     each class of such association health plans upon appropriate 
     filing under such procedure in connection with plans in such 
     class and payment of the prescribed fee under section 807(a).

     ``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF 
                   TRUSTEES.

       ``(a) Sponsor.--The requirements of this subsection are met 
     with respect to an association health plan if--
       ``(1) the sponsor (together with its immediate predecessor, 
     if any) has met (or is deemed under this part to have met) 
     for a continuous period of not less than 3 years ending with 
     the date of the application for certification under this 
     part, the requirements of paragraphs (1) and (2) of section 
     801(b), and
       ``(2) the sponsor meets (or is deemed under this part to 
     meet) the requirements of section 801(b)(3).
       ``(b) Board of Trustees.--The requirements of this 
     subsection are met with respect to an association health plan 
     if the following requirements are met:
       ``(1) Fiscal control.--The plan is operated, pursuant to a 
     trust agreement, by a board of trustees which has complete 
     fiscal control over the plan and which is responsible for all 
     operations of the plan.
       ``(2) Rules of operation and financial controls.--The board 
     of trustees has in effect rules of operation and financial 
     controls, based on a 3-year plan of operation, adequate to 
     carry out the terms of the plan and to meet all requirements 
     of this title applicable to the plan.
       ``(3) Rules governing relationship to participating 
     employers and to contractors.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the members of the board of trustees are individuals selected 
     from individuals who are the owners, officers, directors, or 
     employees of the participating employers or who are partners 
     in the participating employers and actively participate in 
     the business.
       ``(B) Limitation.--
       ``(i) General rule.--Except as provided in clauses (ii) and 
     (iii), no such member is an owner, officer, director, or 
     employee of, or partner in, a contract administrator or other 
     service provider to the plan.
       ``(ii) Limited exception for providers of services solely 
     on behalf of the sponsor.--Officers or employees of a sponsor 
     which is a service provider (other than a contract 
     administrator) to the plan may be members of the board if 
     they constitute not more than 25 percent of the membership of 
     the board and they do not provide services to the plan other 
     than on behalf of the sponsor.
       ``(iii) Treatment of providers of medical care.--In the 
     case of a sponsor which is an association whose membership 
     consists primarily of providers of medical care, clause (i) 
     shall not apply in the case of any service provider described 
     in subparagraph (A) who is a provider of medical care under 
     the plan.
       ``(C) Sole authority.--The board has sole authority to 
     approve applications for participation in the plan and to 
     contract with a service provider to administer the day-to-day 
     affairs of the plan.
       ``(c) Treatment of Franchise Networks.--In the case of a 
     group health plan which is established and maintained by a 
     franchiser for a franchise network consisting of its 
     franchisees--
       ``(1) the requirements of subsection (a) and section 
     801(a)(1) shall be deemed met if such requirements would 
     otherwise be met if the franchiser were deemed to be the 
     sponsor referred to in section 801(b), such network were 
     deemed to be an association described in section 801(b), and 
     each franchisee were deemed to be a member (of the 
     association and the sponsor) referred to in section 801(b), 
     and
       ``(2) the requirements of section 804(a)(1) shall be deemed 
     met.
       ``(d) Certain Collectively Bargained Plans.--
       ``(1) In general.--In the case of a group health plan 
     described in paragraph (2)--
       ``(A) the requirements of subsection (a) and section 
     801(a)(1) shall be deemed met,
       ``(B) the joint board of trustees shall be deemed a board 
     of trustees with respect to which the requirements of 
     subsection (b) are met, and
       ``(C) the requirements of section 804 shall be deemed met.
       ``(2) Requirements.--A group health plan is described in 
     this paragraph if--
       ``(A) the plan is a multiemployer plan, or
       ``(B) the plan is in existence on April 1, 1997, and would 
     be described in section

[[Page H6345]]

     3(40)(A)(i) but solely for the failure to meet the 
     requirements of section 3(40)(C)(ii).

     ``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

       ``(a) Covered Employers and Individuals.--The requirements 
     of this subsection are met with respect to an association 
     health plan if, under the terms of the plan--
       ``(1) all participating employers must be members or 
     affiliated members of the sponsor, except that, in the case 
     of a sponsor which is a professional association or other 
     individual-based association, if at least one of the 
     officers, directors, or employees of an employer, or at least 
     one of the individuals who are partners in an employer and 
     who actively participates in the business, is a member or 
     affiliated member of the sponsor, participating employers may 
     also include such employer, and
       ``(2) all individuals commencing coverage under the plan 
     after certification under this part must be--
       ``(A) active or retired owners (including self-employed 
     individuals), officers, directors, or employees of, or 
     partners in, participating employers, or
       ``(B) the beneficiaries of individuals described in 
     subparagraph (A).
       ``(b) Coverage of Previously Uninsured Employees.--
       ``(1) In general.--Subject to paragraph (2), the 
     requirements of this subsection are met with respect to an 
     association health plan if, under the terms of the plan, no 
     affiliated member of the sponsor may be offered coverage 
     under the plan as a participating employer, unless--
       ``(A) the affiliated member was an affiliated member on the 
     date of certification under this part, or
       ``(B) during the 12-month period preceding the date of the 
     offering of such coverage, the affiliated member has not 
     maintained or contributed to a group health plan with respect 
     to any of its employees who would otherwise be eligible to 
     participate in such association health plan.
       ``(2) Limitation.--The requirements of this subsection 
     shall apply only in the case of plans which were in existence 
     on the date of the enactment of the Small Business Affordable 
     Health Coverage Act of 1998.
       ``(c) Individual Market Unaffected.--The requirements of 
     this subsection are met with respect to an association health 
     plan if, under the terms of the plan, no participating 
     employer may provide health insurance coverage in the 
     individual market for any employee not covered under the plan 
     which is similar to the coverage contemporaneously provided 
     to employees of the employer under the plan, if such 
     exclusion of the employee from coverage under the plan is 
     based on a health status-related factor with respect to the 
     employee and such employee would, but for such exclusion on 
     such basis, be eligible for coverage under the plan.
       ``(d) Prohibition of Discrimination Against Employers and 
     Employees Eligible to Participate.--The requirements of this 
     subsection are met with respect to an association health plan 
     if--
       ``(1) under the terms of the plan, no employer meeting the 
     preceding requirements of this section is excluded as a 
     participating employer, unless participation or contribution 
     requirements of the type referred to in section 2711 of the 
     Public Health Service Act are not met with respect to the 
     excluded employer,
       ``(2) the applicable requirements of sections 701, 702, and 
     703 are met with respect to the plan, and
       ``(3) applicable benefit options under the plan are 
     actively marketed to all eligible participating employers.

     ``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, 
                   CONTRIBUTION RATES, AND BENEFIT OPTIONS.

       ``(a) In General.--The requirements of this section are met 
     with respect to an association health plan if the following 
     requirements are met:
       ``(1) Contents of governing instruments.--The instruments 
     governing the plan include a written instrument, meeting the 
     requirements of an instrument required under section 
     402(a)(1), which--
       ``(A) provides that the board of trustees serves as the 
     named fiduciary required for plans under section 402(a)(1) 
     and serves in the capacity of a plan administrator (referred 
     to in section 3(16)(A)),
       ``(B) provides that the sponsor of the plan is to serve as 
     plan sponsor (referred to in section 3(16)(B)), and
       ``(C) incorporates the requirements of section 806.
       ``(2) Contribution rates must be nondiscriminatory.--
       ``(A) The contribution rates for any participating small 
     employer do not vary on the basis of the claims experience of 
     such employer and do not vary on the basis of the type of 
     business or industry in which such employer is engaged.
       ``(B) Nothing in this title or any other provision of law 
     shall be construed to preclude an association health plan, or 
     a health insurance issuer offering health insurance coverage 
     in connection with an association health plan, from
       ``(i) setting contribution rates based on the claims 
     experience of the plan, or
       ``(ii) varying contribution rates for small employers in a 
     State to the extent that such rates could vary using the same 
     methodology employed in such State for regulating premium 
     rates in the small group market,
     subject to the requirements of section 702(b) relating to 
     contribution rates.
       ``(3) Floor for number of covered individuals with respect 
     to certain plans.--If any benefit option under the plan does 
     not consist of health insurance coverage, the plan has as of 
     the beginning of the plan year not fewer than 1,000 
     participants and beneficiaries.
       ``(4) Marketing requirements.--
       ``(A) In general.--If a benefit option which consists of 
     health insurance coverage is offered under the plan, State-
     licensed insurance agents shall be used to distribute to 
     small employers coverage which does not consist of health 
     insurance coverage in a manner comparable to the manner in 
     which such agents are used to distribute health insurance 
     coverage.
       ``(B) State-licensed insurance agents.--For purposes of 
     subparagraph (A), the term `State-licensed insurance agents' 
     means one or more agents who are licensed in a State and are 
     subject to the laws of such State relating to licensure, 
     qualification, testing, examination, and continuing education 
     of persons authorized to offer, sell, or solicit health 
     insurance coverage in such State.
       ``(5) Regulatory requirements.--Such other requirements as 
     the applicable authority may prescribe by regulation as 
     necessary to carry out the purposes of this part.
       ``(b) Ability of Association Health Plans to Design Benefit 
     Options.--Nothing in this part or any provision of State law 
     (as defined in section 514(c)(1)) shall be construed to 
     preclude an association health plan, or a health insurance 
     issuer offering health insurance coverage in connection with 
     an association health plan, from exercising its sole 
     discretion in selecting the specific items and services 
     consisting of medical care to be included as benefits under 
     such plan or coverage, except (subject to section 514) in the 
     case of any law to the extent that it (1) prohibits an 
     exclusion of a specific disease from such coverage, or (2) is 
     not preempted under section 731(a)(1) with respect to matters 
     governed by section 711 or 712.

     ``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR 
                   SOLVENCY FOR PLANS PROVIDING HEALTH BENEFITS IN 
                   ADDITION TO HEALTH INSURANCE COVERAGE.

       ``(a) In General.--The requirements of this section are met 
     with respect to an association health plan if--
       ``(1) the benefits under the plan consist solely of health 
     insurance coverage, or
       ``(2) if the plan provides any additional benefit options 
     which do not consist of health insurance coverage, the plan--
       ``(A) establishes and maintains reserves with respect to 
     such additional benefit options, in amounts recommended by 
     the qualified actuary, consisting of--
       ``(i) a reserve sufficient for unearned contributions,
       ``(ii) a reserve sufficient for benefit liabilities which 
     have been incurred, which have not been satisfied, and for 
     which risk of loss has not yet been transferred, and for 
     expected administrative costs with respect to such benefit 
     liabilities,
       ``(iii) a reserve sufficient for any other obligations of 
     the plan, and
       ``(iv) a reserve sufficient for a margin of error and other 
     fluctuations, taking into account the specific circumstances 
     of the plan,
     and
       ``(B) establishes and maintains aggregate and specific 
     excess/stop loss insurance and solvency indemnification, with 
     respect to such additional benefit options for which risk of 
     loss has not yet been transferred, as follows:
       ``(i) The plan shall secure aggregate excess/stop loss 
     insurance for the plan with an attachment point which is not 
     greater than 125 percent of expected gross annual claims. The 
     applicable authority may by regulation provide for upward 
     adjustments in the amount of such percentage in specified 
     circumstances in which the plan specifically provides for and 
     maintains reserves in excess of the amounts required under 
     subparagraph (A).
       ``(ii) The plan shall secure specific excess/stop loss 
     insurance for the plan with an attachment point which is at 
     least equal to an amount recommended by the plan's qualified 
     actuary (but not more than $200,000). The applicable 
     authority may by regulation provide for adjustments in the 
     amount of such insurance in specified circumstances in which 
     the plan specifically provides for and maintains reserves in 
     excess of the amounts required under subparagraph (A).
       ``(iii) The plan shall secure indemnification insurance for 
     any claims which the plan is unable to satisfy by reason of a 
     plan termination.
     Any regulations prescribed by the applicable authority 
     pursuant to clause (i) or (ii) of subparagraph (B) may allow 
     for such adjustments in the required levels of excess/stop 
     loss insurance as the qualified actuary may recommend, taking 
     into account the specific circumstances of the plan.
       ``(b) Minimum Surplus in Addition to Claims Reserves.--The 
     requirements of this subsection are met if the plan 
     establishes and maintains surplus in an amount at least equal 
     to $2,000,000, reduced in accordance with a scale, prescribed 
     in regulations of the applicable authority to an amount not 
     less than $500,000, based on the level of aggregate and 
     specific excess/stop loss insurance provided with respect to 
     such plan.
       ``(c) Additional Requirements.--In the case of any 
     association health plan described in subsection (a)(2), the 
     applicable authority may provide such additional requirements

[[Page H6346]]

     relating to reserves and excess/stop loss insurance as the 
     applicable authority considers appropriate. Such requirements 
     may be provided, by regulation or otherwise, with respect to 
     any such plan or any class of such plans.
       ``(d) Adjustments for Excess/Stop Loss Insurance.--The 
     applicable authority may provide for adjustments to the 
     levels of reserves otherwise required under subsections (a) 
     and (b) with respect to any plan or class of plans to take 
     into account excess/stop loss insurance provided with respect 
     to such plan or plans.
       ``(e) Alternative Means of Compliance.--The applicable 
     authority may permit an association health plan described in 
     subsection (a)(2) to substitute, for all or part of the 
     requirements of this section (except subsection 
     (a)(2)(B)(iii)), such security, guarantee, hold-harmless 
     arrangement, or other financial arrangement as the applicable 
     authority determines to be adequate to enable the plan to 
     fully meet all its financial obligations on a timely basis 
     and is otherwise no less protective of the interests of 
     participants and beneficiaries than the requirements for 
     which it is substituted. The applicable authority may take 
     into account, for purposes of this subsection, evidence 
     provided by the plan or sponsor which demonstrates an 
     assumption of liability with respect to the plan. Such 
     evidence may be in the form of a contract of indemnification, 
     lien, bonding, insurance, letter of credit, recourse under 
     applicable terms of the plan in the form of assessments of 
     participating employers, security, or other financial 
     arrangement.
       ``(f) Measures to Ensure Continued Payment of Benefits by 
     Certain Plans in Distress.--
       ``(1) Payments by certain plans to association health plan 
     fund.--
       ``(A) In general.--In the case of an association health 
     plan described in subsection (a)(2), the requirements of this 
     subsection are met if the plan makes payments into the 
     Association Health Plan Fund under this subparagraph when 
     they are due. Such payments shall consist of annual payments 
     in the amount of $5,000, and, in addition to such annual 
     payments, such supplemental payments as the Secretary may 
     determine to be necessary under paragraph (2). Payments under 
     this paragraph are payable to the Fund at the time determined 
     by the Secretary. Initial payments are due in advance of 
     certification under this part. Payments shall continue to 
     accrue until a plan's assets are distributed pursuant to a 
     termination procedure.
       ``(B) Penalties for failure to make payments.--If any 
     payment is not made by a plan when it is due, a late payment 
     charge of not more than 100 percent of the payment which was 
     not timely paid shall be payable by the plan to the Fund.
       ``(C) Continued duty of the secretary.--The Secretary shall 
     not cease to carry out the provisions of paragraph (2) on 
     account of the failure of a plan to pay any payment when due.
       ``(2) Payments by secretary to continue excess stop/loss 
     insurance coverage and indemnification insurance coverage for 
     certain plans.--In any case in which the applicable authority 
     determines that there is, or that there is reason to believe 
     that there will be, (A) a failure to take necessary 
     corrective actions under section 809(a) with respect to an 
     association health plan described in subsection (a)(2), or 
     (B) a termination of such a plan under section 809(b) or 
     810(b)(8) (and, if the applicable authority is not the 
     Secretary, certifies such determination to the Secretary), 
     the Secretary shall determine the amounts necessary to make 
     payments to an insurer (designated by the Secretary) to 
     maintain in force excess/stop loss insurance coverage or 
     indemnification insurance coverage for such plan, if the 
     Secretary determines that there is a reasonable expectation 
     that, without such payments, claims would not be satisfied by 
     reason of termination of such coverage. The Secretary shall, 
     to the extent provided in advance in appropriation Acts, pay 
     such amounts so determined to the insurer designated by the 
     Secretary.
       ``(3) Association health plan fund.--
       ``(A) In general.--There is established on the books of the 
     Treasury a fund to be known as the `Association Health Plan 
     Fund'. The Fund shall be available for making payments 
     pursuant to paragraph (2). The Fund shall be credited with 
     payments received pursuant to paragraph (1)(A), penalties 
     received pursuant to paragraph (1)(B), and earnings on 
     investments of amounts of the Fund under subparagraph (B).
       ``(B) Investment.--Whenever the Secretary determines that 
     the moneys of the fund are in excess of current needs, the 
     Secretary may request the investment of such amounts as the 
     Secretary determines advisable by the Secretary of the 
     Treasury in obligations issued or guaranteed by the United 
     States.
       ``(g) Excess/Stop Loss Insurance.--For purposes of this 
     section--
       ``(1) Aggregate excess/stop loss insurance.--The term 
     `aggregate excess/stop loss insurance' means, in connection 
     with an association health plan, a contract--
       ``(A) under which an insurer (meeting such minimum 
     standards as may be prescribed in regulations of the 
     applicable authority) provides for payment to the plan with 
     respect to aggregate claims under the plan in excess of an 
     amount or amounts specified in such contract,
       ``(B) which is guaranteed renewable, and
       ``(C) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(2) Specific excess/stop loss insurance.--The term 
     `specific excess/stop loss insurance' means , in connection 
     with an association health plan, a contract--
       ``(A) under which an insurer (meeting such minimum 
     standards as may be prescribed in regulations of the 
     applicable authority) provides for payment to the plan with 
     respect to claims under the plan in connection with a covered 
     individual in excess of an amount or amounts specified in 
     such contract in connection with such covered individual,
       ``(B) which is guaranteed renewable, and
       ``(C) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(h) Indemnification Insurance.--For purposes of this 
     section, the term `indemnification insurance' means, in 
     connection with an association health plan, a contract--
       ``(1) under which an insurer (meeting such minimum 
     standards as may be prescribed in regulations of the 
     applicable authority) provides for payment to the plan with 
     respect to claims under the plan which the plan is unable to 
     satisfy by reason of a termination pursuant to section 809(b) 
     (relating to mandatory termination),
       ``(2) which is guaranteed renewable and noncancellable for 
     any reason (except as may be provided in regulations of the 
     applicable authority), and
       ``(3) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(i) Reserves.--For purposes of this section, the term 
     `reserves' means, in connection with an association health 
     plan, plan assets which meet the fiduciary standards under 
     part 4 and such additional requirements regarding liquidity 
     as may be prescribed in regulations of the applicable 
     authority.
       ``(j) Regulations Prescribed under Negotiated Rulemaking.--
     The regulations under this section shall be prescribed under 
     negotiated rulemaking in accordance with subchapter III of 
     chapter 5 of title 5, United States Code, except that, in 
     establishing the negotiated rulemaking committee for purposes 
     of such rulemaking, the applicable authority shall include 
     among persons invited to membership on the committee at least 
     one of each of the following:
       ``(1) a representative of the National Association of 
     Insurance Commissioners,
       ``(2) a representative of the American Academy of 
     Actuaries,
       ``(3) a representative of the State governments, or their 
     interests,
       ``(4) a representative of existing self-insured 
     arrangements, or their interests,
       ``(5) a representative of associations of the type referred 
     to in section 801(b)(1), or their interests, and
       ``(6) a representative of multiemployer plans that are 
     group health plans, or their interests.

     ``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED 
                   REQUIREMENTS.

       ``(a) Filing Fee.--Under the procedure prescribed pursuant 
     to section 802(a), an association health plan shall pay to 
     the applicable authority at the time of filing an application 
     for certification under this part a filing fee in the amount 
     of $5,000, which shall be available in the case of the 
     Secretary, to the extent provided in appropriation Acts, for 
     the sole purpose of administering the certification 
     procedures applicable with respect to association health 
     plans.
       ``(b) Information To Be Included in Application for 
     Certification.--An application for certification under this 
     part meets the requirements of this section only if it 
     includes, in a manner and form prescribed in regulations of 
     the applicable authority, at least the following information:
       ``(1) Identifying information.--The names and addresses 
     of--
       ``(A) the sponsor, and
       ``(B) the members of the board of trustees of the plan.
       ``(2) States in which plan intends to do business.--The 
     States in which participants and beneficiaries under the plan 
     are to be located and the number of them expected to be 
     located in each such State.
       ``(3) Bonding requirements.--Evidence provided by the board 
     of trustees that the bonding requirements of section 412 will 
     be met as of the date of the application or (if later) 
     commencement of operations.
       ``(4) Plan documents.--A copy of the documents governing 
     the plan (including any bylaws and trust agreements), the 
     summary plan description, and other material describing the 
     benefits that will be provided to participants and 
     beneficiaries under the plan.
       ``(5) Agreements with service providers.--A copy of any 
     agreements between the plan and contract administrators and 
     other service providers.
       ``(6) Funding report.--In the case of association health 
     plans providing benefits options in addition to health 
     insurance coverage, a report setting forth information with 
     respect to such additional benefit options determined as of a 
     date within the 120-day period ending with the date of the 
     application, including the following:
       ``(A) Reserves.--A statement, certified by the board of 
     trustees of the plan, and a statement of actuarial opinion, 
     signed by a qualified actuary, that all applicable 
     requirements of section 806 are or will be met in accordance 
     with regulations which the applicable authority shall 
     prescribe.

[[Page H6347]]

       ``(B) Adequacy of contribution rates.--A statement of 
     actuarial opinion, signed by a qualified actuary, which sets 
     forth a description of the extent to which contribution rates 
     are adequate to provide for the payment of all obligations 
     and the maintenance of required reserves under the plan for 
     the 12-month period beginning with such date within such 120-
     day period, taking into account the expected coverage and 
     experience of the plan. If the contribution rates are not 
     fully adequate, the statement of actuarial opinion shall 
     indicate the extent to which the rates are inadequate and the 
     changes needed to ensure adequacy.
       ``(C) Current and projected value of assets and 
     liabilities.--A statement of actuarial opinion signed by a 
     qualified actuary, which sets forth the current value of the 
     assets and liabilities accumulated under the plan and a 
     projection of the assets, liabilities, income, and expenses 
     of the plan for the 12-month period referred to in 
     subparagraph (B). The income statement shall identify 
     separately the plan's administrative expenses and claims.
       ``(D) Costs of coverage to be charged and other expenses.--
     A statement of the costs of coverage to be charged, including 
     an itemization of amounts for administration, reserves, and 
     other expenses associated with the operation of the plan.
       ``(E) Other information.--Any other information which may 
     be prescribed in regulations of the applicable authority as 
     necessary to carry out the purposes of this part.
       ``(c) Filing Notice of Certification With States.--A 
     certification granted under this part to an association 
     health plan shall not be effective unless written notice of 
     such certification is filed with the applicable State 
     authority of each State in which at least 25 percent of the 
     participants and beneficiaries under the plan are located. 
     For purposes of this subsection, an individual shall be 
     considered to be located in the State in which a known 
     address of such individual is located or in which such 
     individual is employed.
       ``(d) Notice of Material Changes.--In the case of any 
     association health plan certified under this part, 
     descriptions of material changes in any information which was 
     required to be submitted with the application for the 
     certification under this part shall be filed in such form and 
     manner as shall be prescribed in regulations of the 
     applicable authority. The applicable authority may require by 
     regulation prior notice of material changes with respect to 
     specified matters which might serve as the basis for 
     suspension or revocation of the certification.
       ``(e) Reporting Requirements for Certain Association Health 
     Plans.--An association health plan certified under this part 
     which provides benefit options in addition to health 
     insurance coverage for such plan year shall meet the 
     requirements of section 103 by filing an annual report under 
     such section which shall include information described in 
     subsection (b)(6) with respect to the plan year and, 
     notwithstanding section 104(a)(1)(A), shall be filed with the 
     applicable authority not later than 90 days after the close 
     of the plan year (or on such later date as may be prescribed 
     by the applicable authority).
       ``(f) Engagement of Qualified Actuary.--The board of 
     trustees of each association health plan which provides 
     benefits options in addition to health insurance coverage and 
     which is applying for certification under this part or is 
     certified under this part shall engage, on behalf of all 
     participants and beneficiaries, a qualified actuary who shall 
     be responsible for the preparation of the materials 
     comprising information necessary to be submitted by a 
     qualified actuary under this part. The qualified actuary 
     shall utilize such assumptions and techniques as are 
     necessary to enable such actuary to form an opinion as to 
     whether the contents of the matters reported under this 
     part--
       ``(1) are in the aggregate reasonably related to the 
     experience of the plan and to reasonable expectations, and
       ``(2) represent such actuary's best estimate of anticipated 
     experience under the plan.
     The opinion by the qualified actuary shall be made with 
     respect to, and shall be made a part of, the annual report.

     ``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

       ``Except as provided in section 809(b), an association 
     health plan which is or has been certified under this part 
     may terminate (upon or at any time after cessation of 
     accruals in benefit liabilities) only if the board of 
     trustees--
       ``(1) not less than 60 days before the proposed termination 
     date, provides to the participants and beneficiaries a 
     written notice of intent to terminate stating that such 
     termination is intended and the proposed termination date,
       ``(2) develops a plan for winding up the affairs of the 
     plan in connection with such termination in a manner which 
     will result in timely payment of all benefits for which the 
     plan is obligated, and
       ``(3) submits such plan in writing to the applicable 
     authority.
     Actions required under this section shall be taken in such 
     form and manner as may be prescribed in regulations of the 
     applicable authority.

     ``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.

       ``(a) Actions To Avoid Depletion of Reserves.--An 
     association health plan which is certified under this part 
     and which provides benefits other than health insurance 
     coverage shall continue to meet the requirements of section 
     806, irrespective of whether such certification continues in 
     effect. The board of trustees of such plan shall determine 
     quarterly whether the requirements of section 806 are met. In 
     any case in which the board determines that there is reason 
     to believe that there is or will be a failure to meet such 
     requirements, or the applicable authority makes such a 
     determination and so notifies the board, the board shall 
     immediately notify the qualified actuary engaged by the plan, 
     and such actuary shall, not later than the end of the next 
     following month, make such recommendations to the board for 
     corrective action as the actuary determines necessary to 
     ensure compliance with section 806. Not later than 30 days 
     after receiving from the actuary recommendations for 
     corrective actions, the board shall notify the applicable 
     authority (in such form and manner as the applicable 
     authority may prescribe by regulation) of such 
     recommendations of the actuary for corrective action, 
     together with a description of the actions (if any) that the 
     board has taken or plans to take in response to such 
     recommendations. The board shall thereafter report to the 
     applicable authority, in such form and frequency as the 
     applicable authority may specify to the board, regarding 
     corrective action taken by the board until the requirements 
     of section 806 are met.
       ``(b) Mandatory Termination.--In any case in which--
       ``(1) the applicable authority has been notified under 
     subsection (a) of a failure of an association health plan 
     which is or has been certified under this part and is 
     described in section 806(a)(2) to meet the requirements of 
     section 806 and has not been notified by the board of 
     trustees of the plan that corrective action has restored 
     compliance with such requirements, and
       ``(2) the applicable authority determines that there is a 
     reasonable expectation that the plan will continue to fail to 
     meet the requirements of section 806,
     the board of trustees of the plan shall, at the direction of 
     the applicable authority, terminate the plan and, in the 
     course of the termination, take such actions as the 
     applicable authority may require, including satisfying any 
     claims referred to in section 806(a)(2)(B)(iii) and 
     recovering for the plan any liability under subsection 
     (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
     that the affairs of the plan will be, to the maximum extent 
     possible, wound up in a manner which will result in timely 
     provision of all benefits for which the plan is obligated.

     ``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT 
                   ASSOCIATION HEALTH PLANS PROVIDING HEALTH 
                   BENEFITS IN ADDITION TO HEALTH INSURANCE 
                   COVERAGE.

       ``(a) Appointment of Secretary as Trustee for Insolvent 
     Plans.--Whenever the Secretary determines that an association 
     health plan which is or has been certified under this part 
     and which is described in section 806(a)(2) will be unable to 
     provide benefits when due or is otherwise in a financially 
     hazardous condition as defined in regulations of such 
     Secretary, the Secretary shall, upon notice to the plan, 
     apply to the appropriate United States district court for 
     appointment of the Secretary as trustee to administer the 
     plan for the duration of the insolvency. The plan may appear 
     as a party and other interested persons may intervene in the 
     proceedings at the discretion of the court. The court shall 
     appoint such Secretary trustee if the court determines that 
     the trusteeship is necessary to protect the interests of the 
     participants and beneficiaries or providers of medical care 
     or to avoid any unreasonable deterioration of the financial 
     condition of the plan. The trusteeship of such Secretary 
     shall continue until the conditions described in the first 
     sentence of this subsection are remedied or the plan is 
     terminated.
       ``(b) Powers as Trustee.--The Secretary, upon appointment 
     as trustee under subsection (a), shall have the power--
       ``(1) to do any act authorized by the plan, this title, or 
     other applicable provisions of law to be done by the plan 
     administrator or any trustee of the plan,
       ``(2) to require the transfer of all (or any part) of the 
     assets and records of the plan to the Secretary as trustee,
       ``(3) to invest any assets of the plan which the Secretary 
     holds in accordance with the provisions of the plan, 
     regulations of the Secretary, and applicable provisions of 
     law,
       ``(4) to require the sponsor, the plan administrator, any 
     participating employer, and any employee organization 
     representing plan participants to furnish any information 
     with respect to the plan which the Secretary as trustee may 
     reasonably need in order to administer the plan,
       ``(5) to collect for the plan any amounts due the plan and 
     to recover reasonable expenses of the trusteeship,
       ``(6) to commence, prosecute, or defend on behalf of the 
     plan any suit or proceeding involving the plan,
       ``(7) to issue, publish, or file such notices, statements, 
     and reports as may be required under regulations of the 
     Secretary or by any order of the court,
       ``(8) to terminate the plan (or provide for its termination 
     accordance with section 809(b)) and liquidate the plan 
     assets, to restore the plan to the responsibility of the 
     sponsor, or to continue the trusteeship,
       ``(9) to provide for the enrollment of plan participants 
     and beneficiaries under appropriate coverage options, and
       ``(10) to do such other acts as may be necessary to comply 
     with this title or any order

[[Page H6348]]

     of the court and to protect the interests of plan 
     participants and beneficiaries and providers of medical care.
       ``(c) Notice of Appointment.--As soon as practicable after 
     the Secretary's appointment as trustee, the Secretary shall 
     give notice of such appointment to--
       ``(1) the sponsor and plan administrator,
       ``(2) each participant,
       ``(3) each participating employer, and
       ``(4) if applicable, each employee organization which, for 
     purposes of collective bargaining, represents plan 
     participants.
       ``(d) Additional Duties.--Except to the extent inconsistent 
     with the provisions of this title, or as may be otherwise 
     ordered by the court, the Secretary, upon appointment as 
     trustee under this section, shall be subject to the same 
     duties as those of a trustee under section 704 of title 11, 
     United States Code, and shall have the duties of a fiduciary 
     for purposes of this title.
       ``(e) Other Proceedings.--An application by the Secretary 
     under this subsection may be filed notwithstanding the 
     pendency in the same or any other court of any bankruptcy, 
     mortgage foreclosure, or equity receivership proceeding, or 
     any proceeding to reorganize, conserve, or liquidate such 
     plan or its property, or any proceeding to enforce a lien 
     against property of the plan.
       ``(f) Jurisdiction of Court.--
       ``(1) In general.--Upon the filing of an application for 
     the appointment as trustee or the issuance of a decree under 
     this section, the court to which the application is made 
     shall have exclusive jurisdiction of the plan involved and 
     its property wherever located with the powers, to the extent 
     consistent with the purposes of this section, of a court of 
     the United States having jurisdiction over cases under 
     chapter 11 of title 11, United States Code. Pending an 
     adjudication under this section such court shall stay, and 
     upon appointment by it of the Secretary as trustee, such 
     court shall continue the stay of, any pending mortgage 
     foreclosure, equity receivership, or other proceeding to 
     reorganize, conserve, or liquidate the plan, the sponsor, or 
     property of such plan or sponsor, and any other suit against 
     any receiver, conservator, or trustee of the plan, the 
     sponsor, or property of the plan or sponsor. Pending such 
     adjudication and upon the appointment by it of the Secretary 
     as trustee, the court may stay any proceeding to enforce a 
     lien against property of the plan or the sponsor or any other 
     suit against the plan or the sponsor.
       ``(2) Venue.--An action under this section may be brought 
     in the judicial district where the sponsor or the plan 
     administrator resides or does business or where any asset of 
     the plan is situated. A district court in which such action 
     is brought may issue process with respect to such action in 
     any other judicial district.
       ``(g) Personnel.--In accordance with regulations of the 
     Secretary, the Secretary shall appoint, retain, and 
     compensate accountants, actuaries, and other professional 
     service personnel as may be necessary in connection with the 
     Secretary's service as trustee under this section.

     ``SEC. 811. STATE ASSESSMENT AUTHORITY.

       ``(a) In General.--Notwithstanding section 514, a State may 
     impose by law a contribution tax on an association health 
     plan described in section 806(a)(2), if the plan commenced 
     operations in such State after the date of the enactment of 
     the Small Business Affordable Health Coverage Act of 1998.
       ``(b) Contribution Tax.--For purposes of this section, the 
     term `contribution tax' imposed by a State on an association 
     health plan means any tax imposed by such State if--
       ``(1) such tax is computed by applying a rate to the amount 
     of premiums or contributions, with respect to individuals 
     covered under the plan who are residents of such State, which 
     are received by the plan from participating employers located 
     in such State or from such individuals,
       ``(2) the rate of such tax does not exceed the rate of any 
     tax imposed by such State on premiums or contributions 
     received by insurers or health maintenance organizations for 
     health insurance coverage offered in such State in connection 
     with a group health plan,
       ``(3) such tax is otherwise nondiscriminatory, and
       ``(4) the amount of any such tax assessed on the plan is 
     reduced by the amount of any tax or assessment otherwise 
     imposed by the State on premiums, contributions, or both 
     received by insurers or health maintenance organizations for 
     health insurance coverage, aggregate excess/stop loss 
     insurance (as defined in section 806(g)(1)), specific excess/
     stop loss insurance (as defined in section 806(g)(2)), other 
     insurance related to the provision of medical care under the 
     plan, or any combination thereof provided by such insurers or 
     health maintenance organizations in such State in connection 
     with such plan.

     ``SEC. 812. SPECIAL RULES FOR CHURCH PLANS.

       ``(a) Election for Church Plans.--Notwithstanding section 
     4(b)(2), if a church, a convention or association of 
     churches, or an organization described in section 3(33)(C)(i) 
     maintains a church plan which is a group health plan (as 
     defined in section 733(a)(1)), and such church, convention, 
     association, or organization makes an election with respect 
     to such plan under this subsection (in such form and manner 
     as the Secretary may by regulation prescribe), then the 
     provisions of this section shall apply to such plan, with 
     respect to benefits provided under such plan consisting of 
     medical care, as if section 4(b)(2) did not contain an 
     exclusion for church plans. Nothing in this subsection shall 
     be construed to render any other section of this title 
     applicable to church plans, except to the extent that such 
     other section is incorporated by reference in this section.
       ``(b) Effect of Election.--
       ``(1) Preemption of state insurance laws regulating covered 
     church plans.--Subject to paragraphs (2) and (3), this 
     section shall supersede any and all State laws which regulate 
     insurance insofar as they may now or hereafter regulate 
     church plans to which this section applies or trusts 
     established under such church plans.
       ``(2) General state insurance regulation unaffected.--
       ``(A) In general.--Except as provided in subparagraph (B) 
     and paragraph (3), nothing in this section shall be construed 
     to exempt or relieve any person from any provision of State 
     law which regulates insurance.
       ``(B) Church plans not to be deemed insurance companies or 
     insurers.--Neither a church plan to which this section 
     applies, nor any trust established under such a church plan, 
     shall be deemed to be an insurance company or other insurer 
     or to be engaged in the business of insurance for purposes of 
     any State law purporting to regulate insurance companies or 
     insurance contracts.
       ``(3) Preemption of certain state laws relating to premium 
     rate regulation and benefit mandates.--The provisions of 
     subsections (a)(2)(B) and (b) of section 805 shall apply with 
     respect to a church plan to which this section applies in the 
     same manner and to the same extent as such provisions apply 
     with respect to association health plans.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) State law.--The term `State law' includes all laws, 
     decisions, rules, regulations, or other State action having 
     the effect of law, of any State. A law of the United States 
     applicable only to the District of Columbia shall be treated 
     as a State law rather than a law of the United States.
       ``(B) State.--The term `State' includes a State, any 
     political subdivision thereof, or any agency or 
     instrumentality of either, which purports to regulate, 
     directly or indirectly, the terms and conditions of church 
     plans covered by this section.
       ``(c) Requirements for Covered Church Plans.--
       ``(1) Fiduciary rules and exclusive purpose.--A fiduciary 
     shall discharge his duties with respect to a church plan to 
     which this section applies--
       ``(A) for the exclusive purpose of:
       ``(i) providing benefits to participants and their 
     beneficiaries; and
       ``(ii) defraying reasonable expenses of administering the 
     plan;
       ``(B) with the care, skill, prudence and diligence under 
     the circumstances then prevailing that a prudent man acting 
     in a like capacity and familiar with such matters would use 
     in the conduct of an enterprise of a like character and with 
     like aims; and
       ``(C) in accordance with the documents and instruments 
     governing the plan.
     The requirements of this paragraph shall not be treated as 
     not satisfied solely because the plan assets are commingled 
     with other church assets, to the extent that such plan assets 
     are separately accounted for.
       ``(2) Claims procedure.--In accordance with regulations of 
     the Secretary, every church plan to which this section 
     applies shall--
       ``(A) provide adequate notice in writing to any participant 
     or beneficiary whose claim for benefits under the plan has 
     been denied, setting forth the specific reasons for such 
     denial, written in a manner calculated to be understood by 
     the participant;
       ``(B) afford a reasonable opportunity to any participant 
     whose claim for benefits has been denied for a full and fair 
     review by the appropriate fiduciary of the decision denying 
     the claim; and
       ``(C) provide a written statement to each participant 
     describing the procedures established pursuant to this 
     paragraph.
       ``(3) Annual statements.--In accordance with regulations of 
     the Secretary, every church plan to which this section 
     applies shall file with the Secretary an annual statement--
       ``(A) stating the names and addresses of the plan and of 
     the church, convention, or association maintaining the plan 
     (and its principal place of business);
       ``(B) certifying that it is a church plan to which this 
     section applies and that it complies with the requirements of 
     paragraphs (1) and (2);
       ``(C) identifying the States in which participants and 
     beneficiaries under the plan are or likely will be located 
     during the 1-year period covered by the statement; and
       ``(D) containing a copy of a statement of actuarial opinion 
     signed by a qualified actuary that the plan maintains 
     capital, reserves, insurance, other financial arrangements, 
     or any combination thereof adequate to enable the plan to 
     fully meet all of its financial obligations on a timely 
     basis.
       ``(4) Disclosure.--At the time that the annual statement is 
     filed by a church plan with the Secretary pursuant to 
     paragraph (3), a copy of such statement shall be made 
     available by the Secretary to the State insurance 
     commissioner (or similar official) of any State. The name of 
     each church plan and sponsoring organization filing an annual 
     statement in compliance with paragraph (3) shall be published 
     annually in the Federal Register.

[[Page H6349]]

       ``(c) Enforcement.--The Secretary may enforce the 
     provisions of this section in a manner consistent with 
     section 502, to the extent applicable with respect to actions 
     under section 502(a)(5), and with section 3(33)(D), except 
     that, other than for the purpose of seeking a temporary 
     restraining order, a civil action may be brought with respect 
     to the plan's failure to meet any requirement of this section 
     only if the plan fails to correct its failure within the 
     correction period described in section 3(33)(D). The other 
     provisions of part 5 (except sections 501(a), 503, 512, 514, 
     and 515) shall apply with respect to the enforcement and 
     administration of this section.
       ``(d) Definitions and Other Rules.--For purposes of this 
     section--
       ``(1) In general.--Except as otherwise provided in this 
     section, any term used in this section which is defined in 
     any provision of this title shall have the definition 
     provided such term by such provision.
       ``(2) Seminary students.--Seminary students who are 
     enrolled in an institution of higher learning described in 
     section 3(33)(C)(iv) and who are treated as participants 
     under the terms of a church plan to which this section 
     applies shall be deemed to be employees as defined in section 
     3(6) if the number of such students constitutes an 
     insignificant portion of the total number of individuals who 
     are treated as participants under the terms of the plan.

     ``SEC. 813. DEFINITIONS AND RULES OF CONSTRUCTION.

       ``(a) Definitions.--For purposes of this part--
       ``(1) Group health plan.--The term `group health plan' has 
     the meaning provided in section 733(a)(1) (after applying 
     subsection (b) of this section).
       ``(2) Medical care.--The term `medical care' has the 
     meaning provided in section 733(a)(2).
       ``(3) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning provided in section 
     733(b)(1).
       ``(4) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided in section 733(b)(2).
       ``(5) Applicable authority.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `applicable authority' means, in connection with an 
     association health plan--
       ``(i) the State recognized pursuant to subsection (c) of 
     section 506 as the State to which authority has been 
     delegated in connection with such plan, or
       ``(ii) if there if no State referred to in clause (i), the 
     Secretary.
       ``(B) Exceptions.--
       ``(i) Joint authorities.--Where such term appears in 
     section 808(3), section 807(e) (in the first instance), 
     section 809(a) (in the second instance), section 809(a) (in 
     the fourth instance), and section 809(b)(1), such term means, 
     in connection with an association health plan, the Secretary 
     and the State referred to in subparagraph (A)(i) (if any) in 
     connection with such plan.
       ``(ii) Regulatory authorities.--Where such term appears in 
     section 802(a) (in the first instance), section 802(d), 
     section 802(e), section 803(d), section 805(a)(5), section 
     806(a)(2), section 806(b), section 806(c), section 806(d), 
     paragraphs (1)(A) and (2)(A) of section 806(g), section 
     806(h), section 806(i), section 807(a) (in the second 
     instance), section 807(b), section 807(d), section 807(e) (in 
     the second instance), section 808 (in the matter after 
     paragraph (3)), and section 809(a) (in the third instance), 
     such term means, in connection with an association health 
     plan, the Secretary.
       ``(6) Health status-related factor.--The term `health 
     status-related factor' has the meaning provided in section 
     733(d)(2).
       ``(7) Individual market.--
       ``(A) In general.--The term `individual market' means the 
     market for health insurance coverage offered to individuals 
     other than in connection with a group health plan.
       ``(B) Treatment of very small groups.--
       ``(i) In general.--Subject to clause (ii), such term 
     includes coverage offered in connection with a group health 
     plan that has fewer than 2 participants as current employees 
     or participants described in section 732(d)(3) on the first 
     day of the plan year.
       ``(ii) State exception.--Clause (i) shall not apply in the 
     case of health insurance coverage offered in a State if such 
     State regulates the coverage described in such clause in the 
     same manner and to the same extent as coverage in the small 
     group market (as defined in section 2791(e)(5) of the Public 
     Health Service Act) is regulated by such State.
       ``(8) Participating employer.--The term `participating 
     employer' means, in connection with an association health 
     plan, any employer, if any individual who is an employee of 
     such employer, a partner in such employer, or a self-employed 
     individual who is such employer (or any dependent, as defined 
     under the terms of the plan, of such individual) is or was 
     covered under such plan in connection with the status of such 
     individual as such an employee, partner, or self-employed 
     individual in relation to the plan.
       ``(9) Applicable state authority.--The term `applicable 
     State authority' means, with respect to a health insurance 
     issuer in a State, the State insurance commissioner or 
     official or officials designated by the State to enforce the 
     requirements of title XXVII of the Public Health Service Act 
     for the State involved with respect to such issuer.
       ``(10) Qualified actuary.--The term `qualified actuary' 
     means an individual who is a member of the American Academy 
     of Actuaries or meets such reasonable standards and 
     qualifications as the Secretary may provide by regulation.
       ``(11) Affiliated member.--The term `affiliated member' 
     means, in connection with a sponsor, a person eligible to be 
     a member of the sponsor or, in the case of a sponsor with 
     member associations, a person who is a member, or is eligible 
     to be a member, of a member association.
       ``(12) Large employer.--The term `large employer' means, in 
     connection with a group health plan with respect to a plan 
     year, an employer who employed an average of at least 51 
     employees on business days during the preceding calendar year 
     and who employs at least 2 employees on the first day of the 
     plan year.
       ``(13) Small employer.--The term `small employer' means, in 
     connection with a group health plan with respect to a plan 
     year, an employer who is not a large employer.
       ``(b) Rules of Construction.--
       ``(1) Employers and employees.--For purposes of determining 
     whether a plan, fund, or program is an employee welfare 
     benefit plan which is an association health plan, and for 
     purposes of applying this title in connection with such plan, 
     fund, or program so determined to be such an employee welfare 
     benefit plan--
       ``(A) in the case of a partnership, the term `employer' (as 
     defined in section (3)(5)) includes the partnership in 
     relation to the partners, and the term `employee' (as defined 
     in section (3)(6)) includes any partner in relation to the 
     partnership, and
       ``(B) in the case of a self-employed individual, the term 
     `employer' (as defined in section 3(5)) and the term 
     `employee' (as defined in section 3(6)) shall include such 
     individual.
       ``(2) Plans, funds, and programs treated as employee 
     welfare benefit plans.--In the case of any plan, fund, or 
     program which was established or is maintained for the 
     purpose of providing medical care (through the purchase of 
     insurance or otherwise) for employees (or their dependents) 
     covered thereunder and which demonstrates to the Secretary 
     that all requirements for certification under this part would 
     be met with respect to such plan, fund, or program if such 
     plan, fund, or program were a group health plan, such plan, 
     fund, or program shall be treated for purposes of this title 
     as an employee welfare benefit plan on and after the date of 
     such demonstration.''.
       (b) Conforming Amendments to Preemption Rules.--
       (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
     amended by adding at the end the following new subparagraph:
       ``(E) The preceding subparagraphs of this paragraph do not 
     apply with respect to any State law in the case of an 
     association health plan which is certified under part 8.''.
       (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
       (A) in subsection (b)(4), by striking ``Subsection (a)'' 
     and inserting ``Subsections (a) and (d)'';
       (B) in subsection (b)(5), by striking ``subsection (a)'' in 
     subparagraph (A) and inserting ``subsection (a) of this 
     section and subsections (a)(2)(B) and (b) of section 805'', 
     and by striking ``subsection (a)'' in subparagraph (B) and 
     inserting ``subsection (a) of this section or subsection 
     (a)(2)(B) or (b) of section 805'';
       (C) by redesignating subsection (d) as subsection (e); and
       (D) by inserting after subsection (c) the following new 
     subsection:
       ``(d)(1) Except as provided in subsection (b)(4), the 
     provisions of this title shall supersede any and all State 
     laws insofar as they may now or hereafter preclude, or have 
     the effect of precluding, a health insurance issuer from 
     offering health insurance coverage in connection with an 
     association health plan which is certified under part 8.
       ``(2) Except as provided in paragraphs (4) and (5) of 
     subsection (b) of this section--
       ``(A) In any case in which health insurance coverage of any 
     policy type is offered under an association health plan 
     certified under part 8 to a participating employer operating 
     in such State, the provisions of this title shall supersede 
     any and all laws of such State insofar as they may preclude a 
     health insurance issuer from offering health insurance 
     coverage of the same policy type to other employers operating 
     in the State which are eligible for coverage under such 
     association health plan, whether or not such other employers 
     are participating employers in such plan.
       ``(B) In any case in which health insurance coverage of any 
     policy type is offered under an association health plan in a 
     State and the filing, with the applicable State authority, of 
     the policy form in connection with such policy type is 
     approved by such State authority, the provisions of this 
     title shall supersede any and all laws of any other State in 
     which health insurance coverage of such type is offered, 
     insofar as they may preclude, upon the filing in the same 
     form and manner of such policy form with the applicable State 
     authority in such other State, the approval of the filing in 
     such other State.
       ``(3) For additional provisions relating to association 
     health plans, see subsections (a)(2)(B) and (b) of section 
     805.
       ``(4) For purposes of this subsection, the term 
     `association health plan' has the meaning provided in section 
     801(a), and the terms

[[Page H6350]]

     `health insurance coverage', `participating employer', and 
     `health insurance issuer' have the meanings provided such 
     terms in section 811, respectively.''.
       (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
     1144(b)(6)(A)) is amended--
       (A) in clause (i)(II), by striking ``and'' at the end;
       (B) in clause (ii), by inserting ``and which does not 
     provide medical care (within the meaning of section 
     733(a)(2)),'' after ``arrangement,'', and by striking 
     ``title.'' and inserting ``title, and''; and
       (C) by adding at the end the following new clause:
       ``(iii) subject to subparagraph (E), in the case of any 
     other employee welfare benefit plan which is a multiple 
     employer welfare arrangement and which provides medical care 
     (within the meaning of section 733(a)(2)), any law of any 
     State which regulates insurance may apply.''.
       (4) Section 514(e) of such Act (as redesignated by 
     paragraph (2)(C)) is amended--
       (A) by striking ``Nothing'' and inserting ``(1) Except as 
     provided in paragraph (2), nothing''; and
       (B) by adding at the end the following new paragraph:
       ``(2) Nothing in any other provision of law enacted on or 
     after the date of the enactment of the Patient Protection Act 
     of 1998 shall be construed to alter, amend, modify, 
     invalidate, impair, or supersede any provision of this title, 
     except by specific cross-reference to the affected 
     section.''.
       (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
     102(16)(B)) is amended by adding at the end the following new 
     sentence: ``Such term also includes a person serving as the 
     sponsor of an association health plan under part 8.''.
       (d) Disclosure of Solvency Protections Related to Self-
     Insured and Fully Insured Options Under Association Health 
     Plans.--Section 102(b) of such Act (29 U.S.C. 102(b)) is 
     amended by adding at the end the following: ``An association 
     health plan shall include in its summary plan description, in 
     connection with each benefit option, a description of the 
     form of solvency or guarantee fund protection secured 
     pursuant to this Act or applicable State law, if any.''.
       (e) Savings Clause.--Section 731(c) of such Act is amended 
     by inserting ``or part 8'' after ``this part''.
       (f) Clerical Amendment.--The table of contents in section 1 
     of the Employee Retirement Income Security Act of 1974 is 
     amended by inserting after the item relating to section 734 
     the following new items:

           ``Part 8--Rules Governing Association Health Plans

``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution 
              rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for 
              plans providing health benefits in addition to health 
              insurance coverage.
``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.
``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Trusteeship by the Secretary of insolvent association 
              health plans providing health benefits in addition to 
              health insurance coverage.
``Sec. 811. State assessment authority.
``Sec. 812. Special rules for church plans.
``Sec. 813. Definitions and rules of construction.''.

     SEC. 1303. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER 
                   ARRANGEMENTS.

       Section 3(40)(B) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1002(40)(B)) is amended--
       (1) in clause (i), by inserting ``for any plan year of any 
     such plan, or any fiscal year of any such other 
     arrangement;'' after ``single employer'', and by inserting 
     ``during such year or at any time during the preceding 1-year 
     period'' after ``control group'';
       (2) in clause (iii)--
       (A) by striking ``common control shall not be based on an 
     interest of less than 25 percent'' and inserting ``an 
     interest of greater than 25 percent may not be required as 
     the minimum interest necessary for common control''; and
       (B) by striking ``similar to'' and inserting ``consistent 
     and coextensive with'';
       (3) by redesignating clauses (iv) and (v) as clauses (v) 
     and (vi), respectively; and
       (4) by inserting after clause (iii) the following new 
     clause:
       ``(iv) in determining, after the application of clause (i), 
     whether benefits are provided to employees of two or more 
     employers, the arrangement shall be treated as having only 1 
     participating employer if, after the application of clause 
     (i), the number of individuals who are employees and former 
     employees of any one participating employer and who are 
     covered under the arrangement is greater than 75 percent of 
     the aggregate number of all individuals who are employees or 
     former employees of participating employers and who are 
     covered under the arrangement,''.

     SEC. 1304. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY 
                   BARGAINED ARRANGEMENTS.

       (a) In General.--Section 3(40)(A)(i) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1002(40)(A)(i)) is amended to read as follows:
       ``(i)(I) under or pursuant to one or more collective 
     bargaining agreements which are reached pursuant to 
     collective bargaining described in section 8(d) of the 
     National Labor Relations Act (29 U.S.C. 158(d)) or paragraph 
     Fourth of section 2 of the Railway Labor Act (45 U.S.C. 152, 
     paragraph Fourth) or which are reached pursuant to labor-
     management negotiations under similar provisions of State 
     public employee relations laws, and (II) in accordance with 
     subparagraphs (C), (D), and (E),''.
       (b) Limitations.--Section 3(40) of such Act (29 U.S.C. 
     1002(40)) is amended by adding at the end the following new 
     subparagraphs:
       ``(C) For purposes of subparagraph (A)(i)(II), a plan or 
     other arrangement shall be treated as established or 
     maintained in accordance with this subparagraph only if the 
     following requirements are met:
       ``(i) The plan or other arrangement, and the employee 
     organization or any other entity sponsoring the plan or other 
     arrangement, do not--
       ``(I) utilize the services of any licensed insurance agent 
     or broker for soliciting or enrolling employers or 
     individuals as participating employers or covered individuals 
     under the plan or other arrangement; or
       ``(II) pay a commission or any other type of compensation 
     to a person, other than a full time employee of the employee 
     organization (or a member of the organization to the extent 
     provided in regulations of the Secretary), that is related 
     either to the volume or number of employers or individuals 
     solicited or enrolled as participating employers or covered 
     individuals under the plan or other arrangement, or to the 
     dollar amount or size of the contributions made by 
     participating employers or covered individuals to the plan or 
     other arrangement;
     except to the extent that the services used by the plan, 
     arrangement, organization, or other entity consist solely of 
     preparation of documents necessary for compliance with the 
     reporting and disclosure requirements of part 1 or 
     administrative, investment, or consulting services unrelated 
     to solicitation or enrollment of covered individuals.
       ``(ii) As of the end of the preceding plan year, the number 
     of covered individuals under the plan or other arrangement 
     who are identified to the plan or arrangement and who are 
     neither--
       ``(I) employed within a bargaining unit covered by any of 
     the collective bargaining agreements with a participating 
     employer (nor covered on the basis of an individual's 
     employment in such a bargaining unit); nor
       ``(II) present employees (or former employees who were 
     covered while employed) of the sponsoring employee 
     organization, of an employer who is or was a party to any of 
     the collective bargaining agreements, or of the plan or other 
     arrangement or a related plan or arrangement (nor covered 
     on the basis of such present or former employment);

     does not exceed 15 percent of the total number of individuals 
     who are covered under the plan or arrangement and who are 
     present or former employees who are or were covered under the 
     plan or arrangement pursuant to a collective bargaining 
     agreement with a participating employer. The requirements of 
     the preceding provisions of this clause shall be treated as 
     satisfied if, as of the end of the preceding plan year, such 
     covered individuals are comprised solely of individuals who 
     were covered individuals under the plan or other arrangement 
     as of the date of the enactment of the Small Business 
     Affordable Health Coverage Act of 1998 and, as of the end of 
     the preceding plan year, the number of such covered 
     individuals does not exceed 25 percent of the total number of 
     present and former employees enrolled under the plan or other 
     arrangement.
       ``(iii) The employee organization or other entity 
     sponsoring the plan or other arrangement certifies to the 
     Secretary each year, in a form and manner which shall be 
     prescribed in regulations of the Secretary that the plan or 
     other arrangement meets the requirements of clauses (i) and 
     (ii).
       ``(D) For purposes of subparagraph (A)(i)(II), a plan or 
     arrangement shall be treated as established or maintained in 
     accordance with this subparagraph only if--
       ``(i) all of the benefits provided under the plan or 
     arrangement consist of health insurance coverage; or
       ``(ii)(I) the plan or arrangement is a multiemployer plan; 
     and
       ``(II) the requirements of clause (B) of the proviso to 
     clause (5) of section 302(c) of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186(c)) are met with respect 
     to such plan or other arrangement.
       ``(E) For purposes of subparagraph (A)(i)(II), a plan or 
     arrangement shall be treated as established or maintained in 
     accordance with this subparagraph only if--
       ``(i) the plan or arrangement is in effect as of the date 
     of the enactment of the Small Business Affordable Health 
     Coverage Act of 1998, or
       ``(ii) the employee organization or other entity sponsoring 
     the plan or arrangement--
       ``(I) has been in existence for at least 3 years or is 
     affiliated with another employee organization which has been 
     in existence for at least 3 years, or
       ``(II) demonstrates to the satisfaction of the Secretary 
     that the requirements of subparagraphs (C) and (D) are met 
     with respect to the plan or other arrangement.''.

[[Page H6351]]

       (c) Conforming Amendments to Definitions of Participant and 
     Beneficiary.--Section 3(7) of such Act (29 U.S.C. 1002(7)) is 
     amended by adding at the end the following new sentence: 
     ``Such term includes an individual who is a covered 
     individual described in paragraph (40)(C)(ii).''.

     SEC. 1305. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION 
                   HEALTH PLANS.

       (a) Criminal Penalties for Certain Willful 
     Misrepresentations.--Section 501 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1131) is amended--
       (1) by inserting ``(a)'' after ``Sec. 501.''; and
       (2) by adding at the end the following new subsection:
       ``(b) Any person who, either willfully or with willful 
     blindness, falsely represents, to any employee, any 
     employee's beneficiary, any employer, the Secretary, or any 
     State, a plan or other arrangement established or maintained 
     for the purpose of offering or providing any benefit 
     described in section 3(1) to employees or their beneficiaries 
     as--
       ``(1) being an association health plan which has been 
     certified under part 8;
       ``(2) having been established or maintained under or 
     pursuant to one or more collective bargaining agreements 
     which are reached pursuant to collective bargaining described 
     in section 8(d) of the National Labor Relations Act (29 
     U.S.C. 158(d)) or paragraph Fourth of section 2 of the 
     Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or which 
     are reached pursuant to labor-management negotiations under 
     similar provisions of State public employee relations laws; 
     or
       ``(3) being a plan or arrangement with respect to which the 
     requirements of subparagraph (C), (D), or (E) of section 
     3(40) are met;

     shall, upon conviction, be imprisoned not more than five 
     years, be fined under title 18, United States Code, or 
     both.''.
       (b) Cease Activities Orders.--Section 502 of such Act (29 
     U.S.C. 1132) is amended by adding at the end the following 
     new subsection:
       ``(n)(1) Subject to paragraph (2), upon application by the 
     Secretary showing the operation, promotion, or marketing of 
     an association health plan (or similar arrangement providing 
     benefits consisting of medical care (as defined in section 
     733(a)(2))) that--
       ``(A) is not certified under part 8, is subject under 
     section 514(b)(6) to the insurance laws of any State in which 
     the plan or arrangement offers or provides benefits, and is 
     not licensed, registered, or otherwise approved under the 
     insurance laws of such State; or
       ``(B) is an association health plan certified under part 8 
     and is not operating in accordance with the requirements 
     under part 8 for such certification,

     a district court of the United States shall enter an order 
     requiring that the plan or arrangement cease activities.
       ``(2) Paragraph (1) shall not apply in the case of an 
     association health plan or other arrangement if the plan or 
     arrangement shows that--
       ``(A) all benefits under it referred to in paragraph (1) 
     consist of health insurance coverage; and
       ``(B) with respect to each State in which the plan or 
     arrangement offers or provides benefits, the plan or 
     arrangement is operating in accordance with applicable State 
     laws that are not superseded under section 514.
       ``(3) The court may grant such additional equitable relief, 
     including any relief available under this title, as it deems 
     necessary to protect the interests of the public and of 
     persons having claims for benefits against the plan.''.
       (c) Responsibility for Claims Procedure.--Section 503 of 
     such Act (29 U.S.C. 1133) (as amended by title I) is amended 
     by adding at the end the following new subsection:
       ``(c) Association Health Plans.--The terms of each 
     association health plan which is or has been certified under 
     part 8 shall require the board of trustees or the named 
     fiduciary (as applicable) to ensure that the requirements of 
     this section are met in connection with claims filed under 
     the plan.''.

     SEC. 1306. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

       Section 506 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1136) is amended by adding at the end the 
     following new subsection:
       ``(c) Responsibility of States With Respect to Association 
     Health Plans.--
       ``(1) Agreements with states.--A State may enter into an 
     agreement with the Secretary for delegation to the State of 
     some or all of--
       ``(A) the Secretary's authority under sections 502 and 504 
     to enforce the requirements for certification under part 8,
       ``(B) the Secretary's authority to certify association 
     health plans under part 8 in accordance with regulations of 
     the Secretary applicable to certification under part 8, or
       ``(C) any combination of the Secretary's authority 
     authorized to be delegated under subparagraphs (A) and (B).
       ``(2) Delegations.--Any department, agency, or 
     instrumentality of a State to which authority is delegated 
     pursuant to an agreement entered into under this paragraph 
     may, if authorized under State law and to the extent 
     consistent with such agreement, exercise the powers of the 
     Secretary under this title which relate to such authority.
       ``(3) Recognition of primary domicile state.--In entering 
     into any agreement with a State under subparagraph (A), the 
     Secretary shall ensure that, as a result of such agreement 
     and all other agreements entered into under subparagraph (A), 
     only one State will be recognized, with respect to any 
     particular association health plan, as the State to which all 
     authority has been delegated pursuant to such agreements in 
     connection with such plan. In carrying out this paragraph, 
     the Secretary shall take into account the places of residence 
     of the participants and beneficiaries under the plan and the 
     State in which the trust is maintained.''.

     SEC. 1307. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

       (a) Effective Date.--The amendments made by sections 1302, 
     1305, and 1306 shall take effect on January 1, 2000. The 
     amendments made by sections 1303 and 1304 shall take effect 
     on the date of the enactment of this Act. The Secretary of 
     Labor shall first issue all regulations necessary to carry 
     out the amendments made by this subtitle before January 1, 
     2000.
       (b) Exception.--Section 801(a)(2) of the Employee 
     Retirement Income Security Act of 1974 (added by section 
     1302) does not apply in connection with an association health 
     plan (certified under part 8 of subtitle B of title I of such 
     Act) existing on April 1, 1997, if no benefits provided 
     thereunder as of the date of the enactment of this Act 
     consist of health insurance coverage (as defined in section 
     733(b)(1) of such Act).
       (c) Treatment of Certain Existing Health Benefits 
     Programs.--
       (1) In general.--In any case in which, as of the date of 
     the enactment of this Act, an arrangement is maintained in a 
     State for the purpose of providing benefits consisting of 
     medical care for the employees and beneficiaries of its 
     participating employers, at least 200 participating employers 
     make contributions to such arrangement, such arrangement has 
     been in existence for at least 10 years, and such arrangement 
     is licensed under the laws of one or more States to provide 
     such benefits to its participating employers, upon the filing 
     with the applicable authority (as defined in section 
     813(a)(5) of the Employee Retirement Income Security Act of 
     1974 (as amended by this Act)) by the arrangement of an 
     application for certification of the arrangement under part 8 
     of subtitle B of title I of such Act--
       (A) such arrangement shall be deemed to be a group health 
     plan for purposes of title I of such Act,
       (B) the requirements of sections 801(a)(1) and 803(a)(1) of 
     the Employee Retirement Income Security Act of 1974 shall be 
     deemed met with respect to such arrangement,
       (C) the requirements of section 803(b) of such Act shall be 
     deemed met, if the arrangement is operated by a board of 
     directors which--
       (i) is elected by the participating employers, with each 
     employer having one vote, and
       (ii) has complete fiscal control over the arrangement and 
     which is responsible for all operations of the arrangement,
       (D) the requirements of section 804(a) of such Act shall be 
     deemed met with respect to such arrangement,
       (E) the arrangement may be certified by any applicable 
     authority with respect to its operations in any State only if 
     it operates in such State on the date of certification.

     The provisions of this subsection shall cease to apply with 
     respect to any such arrangement at such time after the date 
     of the enactment of this Act as the applicable requirements 
     of this subsection are not met with respect to such 
     arrangement.
       (2) Definitions.--For purposes of this subsection, the 
     terms ``group health plan,'' ``medical care,'' and 
     ``participating employer'' shall have the meanings provided 
     in section 813 of the Employee Retirement Income Security Act 
     of 1974, except that the reference in paragraph (7) of such 
     section to an ``association health plan'' shall be deemed a 
     reference to an arrangement referred to in this subsection.
       (d) Pilot Program for Self-Insured Association Health 
     Plans.--
       (1) In general.--During the pilot program period, 
     association health plans which offer benefit options which do 
     not consist of health insurance coverage may be certified 
     under part 8 of subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 only if such plans 
     consist of the following:
       (A) plans which offered such coverage on the date of the 
     enactment of this Act,
       (B) plans under which the sponsor does not restrict 
     membership to one or more trades and businesses or industries 
     and whose eligible participating employers represent a broad 
     cross-section of trades and businesses or industries, or
       (C) plans whose eligible participating employers represent 
     one or more trades or businesses, or one or more industries, 
     which have been indicated as having average or above-average 
     health insurance risk or health claims experience by reason 
     of State rate filings, denials of coverage, proposed premium 
     rate levels, and other means demonstrated by such plans in 
     accordance with regulations which the Secretary shall 
     prescribe, 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.

[[Page H6352]]

       (2) Pilot program period.--For purposes of this subsection, 
     the term ``pilot program period'' means the 5-year period 
     beginning on January 1, 1999.
           TITLE II--AMENDMENTS TO PUBLIC HEALTH SERVICE ACT
     Subtitle A--Patient Protections and Point of Service Coverage 
                              Requirements

     SEC. 2001. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, PEDIATRIC CARE.

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

     ``SEC. 2706. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, PEDIATRIC CARE.

       ``(a) Patient Access to Unrestricted Medical Advice.--
       ``(1) In general.--In the case of any health care 
     professional acting within the lawful scope of practice in 
     the course of carrying out a contractual employment 
     arrangement or other direct contractual arrangement between 
     such professional and a group health plan or a health 
     insurance issuer offering health insurance coverage in 
     connection with a group health plan, the plan or issuer with 
     which such contractual employment arrangement or other direct 
     contractual arrangement is maintained by the professional may 
     not impose on such professional under such arrangement any 
     prohibition or restriction with respect to advice, provided 
     to a participant or beneficiary under the plan who is a 
     patient, about the health status of the participant or 
     beneficiary or the medical care or treatment for the 
     condition or disease of the participant or beneficiary, 
     regardless of whether benefits for such care or treatment are 
     provided under the plan or health insurance coverage offered 
     in connection with the plan.
       ``(2) Health care professional defined.--For purposes of 
     this subsection, the term `health care professional' means a 
     physician (as defined in section 1861(r) of the Social 
     Security Act) or other health care professional if coverage 
     for the professional's services is provided under the group 
     health plan for the services of the professional. Such term 
     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.
       ``(b) Patient Access to Emergency Medical Care.--
       ``(1) In general.--To the extent that the group health plan 
     (or health insurance issuer offering health insurance 
     coverage in connection with the plan) provides for any 
     benefits consisting of emergency medical care (as defined in 
     section 503(b)(9)(I) of the Employee Retirement Income 
     Security Act of 1974), except for items or services 
     specifically excluded--
       ``(A) the plan or issuer shall provide benefits, and 
     without regard to otherwise applicable network limitations, 
     without requiring preauthorization and without regard to 
     otherwise applicable network limitations, for appropriate 
     emergency medical screening examinations (within the 
     capability of the emergency facility, including ancillary 
     services routinely available to the emergency facility) to 
     the extent that a prudent layperson, who possesses an average 
     knowledge of health and medicine, would determine such 
     examinations to be necessary in order to determine whether 
     emergency medical care (as so defined) is required, and
       ``(B) the plan or issuer shall provide benefits for 
     additional emergency medical services following an emergency 
     medical screening examination (if determined necessary under 
     subparagraph (A)) to the extent that a prudent emergency 
     medical professional would determine such additional 
     emergency services to be necessary to avoid the consequences 
     described in section 503(b)(9)(I) of such Act.
       ``(2) Uniform cost-sharing required.--Nothing in this 
     subsection shall be construed as preventing a group health 
     plan or issuer from imposing any form of cost-sharing 
     applicable to any participant or beneficiary (including 
     coinsurance, copayments, deductibles, and any other charges) 
     in relation to benefits described in paragraph (1), if such 
     form of cost-sharing is uniformly applied under such plan, 
     with respect to similarly situated participants and 
     beneficiaries, to all benefits consisting of emergency 
     medical care (as defined in section 503(b)(9)(I) of the 
     Employee Retirement Income Security Act of 1974) provided to 
     such similarly situated participants and beneficiaries under 
     the plan.
       ``(c) Patient Access to Obstetric and Gynecological Care.
       ``(1) In general.--In any case in which a group health plan 
     (or a health insurance issuer offering health insurance 
     coverage in connection with the plan)--
       ``(A) provides benefits under the terms of the plan 
     consisting of--
       ``(i) routine gynecological care (such as preventive 
     women's health examinations), or
       ``(ii) routine obstetric care (such as routine pregnancy-
     related services),
     provided by a participating physician who specializes in such 
     care (or provides benefits consisting of payment for such 
     care), and
       ``(B) the plan requires or provides for designation by a 
     participant or beneficiary of a participating primary care 
     provider,

     if the primary care provider designated by such a participant 
     or beneficiary is not such a physician, then the plan (or 
     issuer) shall meet the requirements of paragraph (2).
       ``(2) Requirements.--A group health plan (or a health 
     insurance issuer offering health insurance coverage in 
     connection with the plan) meets the requirements of this 
     paragraph, in connection with benefits described in paragraph 
     (1) consisting of care described in clause (i) or (ii) of 
     paragraph (1)(A) (or consisting of payment therefor), if the 
     plan (or issuer)--
       ``(A) does not require authorization or a referral by the 
     primary care provider in order to obtain such benefits, and
       ``(B) treats the ordering of other routine care of the same 
     type, by the participating physician providing the care 
     described in clause (i) or (ii) of paragraph (1)(A), as the 
     authorization of the primary care provider with respect to 
     such care.
       ``(3) Construction.--Nothing in paragraph (2)(B) shall 
     waive any requirements of coverage relating to medical 
     necessity or appropriateness with respect to coverage of 
     gynecological or obstetric care so ordered.
       ``(d) Patient Access to Pediatric Care.--
       ``(1) In general.--In any case in which a group health plan 
     (or a health insurance issuer offering health insurance 
     coverage in connection with the plan) provides benefits 
     consisting of routine pediatric care provided by a 
     participating physician who specializes in pediatrics (or 
     consisting of payment for such care) and the plan requires or 
     provides for designation by a participant or beneficiary of a 
     participating primary care provider, the plan (or issuer) 
     shall provide that such a participating physician may be 
     designated, if available, by a parent or guardian of any 
     beneficiary under the plan is who under 18 years of age, as 
     the primary care provider with respect to any such benefits.
       ``(2) Construction.--Nothing in paragraph (1) shall waive 
     any requirements of coverage relating to medical necessity or 
     appropriateness with respect to coverage of pediatric care.
       ``(e) Treatment of Multiple Coverage Options.--In the case 
     of a plan providing benefits under two or more coverage 
     options, the requirements of subsections (c) and (d) shall 
     apply separately with respect to each coverage option.''.
       (c) Effective date and related rules.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act, except that the Secretary of 
     Health and Human Services may issue regulations before such 
     date under such amendments. The Secretary shall first issue 
     all regulations necessary to carry out the amendments made by 
     this section before the effective date thereof.
       (2) Limitation on enforcement actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this section, against a group health plan or health insurance 
     issuer with respect to a violation of a requirement imposed 
     by such amendments before the date of issuance of regulations 
     issued in connection with such requirement, if the plan or 
     issuer has sought to comply in good faith with such 
     requirement.
       (3) Special rule for collective bargaining agreements.--In 
     the case of a group health plan maintained pursuant to one or 
     more collective bargaining agreements between employee 
     representatives and one or more employers ratified before the 
     date of the enactment of this Act, the amendments made by 
     this section shall not apply with respect to plan years 
     beginning before the later of--
       (1) the date on which the last of the collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of the enactment of this Act), or
       (2) January 1, 2001.

     For purposes of this paragraph, any plan amendments made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by this section shall not be treated as a 
     termination of such collective bargaining agreement.

     SEC. 2002. REQUIRING HEALTH MAINTENANCE ORGANIZATIONS TO 
                   OFFER OPTION OF POINT-OF-SERVICE COVERAGE.

       (a) In General.--Title XXVII of the Public Health Service 
     Act is amended by inserting after section 2713 the following 
     new section:

     ``SEC. 2714. REQUIRING OFFERING OF OPTION OF POINT-OF-SERVICE 
                   COVERAGE.

       ``(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 under health 
     insurance coverage offered in connection with a group health 
     plan only if such services are furnished exclusively through 
     health care professionals within such class or classes who 
     are members of a closed panel of health care professionals,
     the issuer shall make available to the plan sponsor in 
     connection with such a plan a

[[Page H6353]]

     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.
       ``(b) Requirement to Offer Supplemental Coverage to 
     Participants in Certain Cases.--Except as provided in 
     subsection (c), 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 shall 
     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 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.
       ``(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 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.
       ``(d) Definitions.--For purposes of this section:
       ``(1) 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.
       ``(2) Health care professional.--The term `health care 
     professional' has the meaning given such term in section 
     2706(a)(2).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to coverage offered on or after January 1 of the 
     second calendar year following the date of the enactment of 
     this Act.
               Subtitle B--Patient Access to Information

     SEC. 2101. PATIENT ACCESS TO INFORMATION REGARDING PLAN 
                   COVERAGE, MANAGED CARE PROCEDURES, HEALTH CARE 
                   PROVIDERS, AND QUALITY OF MEDICAL CARE.

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

     ``SEC. 2707. PATIENT ACCESS TO INFORMATION REGARDING PLAN 
                   COVERAGE, MANAGED CARE PROCEDURES, HEALTH CARE 
                   PROVIDERS, AND QUALITY OF MEDICAL CARE.

       ``(a) Disclosure Requirement.--Each health insurance issuer 
     offering health insurance coverage in connection with a group 
     health plan shall provide the administrator of such plan on a 
     timely basis with the information necessary to enable the 
     administrator to include in the summary plan description of 
     the plan required under section 102 of the Employee 
     Retirement Income Security Act of 1974 (or each summary plan 
     description in any case in which different summary plan 
     descriptions are appropriate under part 1 of subtitle B of 
     title I of such Act for different options of coverage) the 
     information required under subsections (b), (c), (d), and 
     (e)(2)(A). To the extent that any such issuer provides such 
     information on a timely basis to plan participants and 
     beneficiaries, the requirements of this subsection shall be 
     deemed satisfied in the case of such plan with respect to 
     such information.
       ``(b) Plan Benefits.--The information required under 
     subsection (a) includes the following:
       ``(1) Covered items and services.--
       ``(A) Categorization of included benefits.--A description 
     of covered benefits, categorized by--
       ``(i) types of items and services (including any special 
     disease management program), and
       ``(ii) types of health care professionals providing such 
     items and services.
       ``(B) Emergency medical care.--A description of the extent 
     to which the coverage includes emergency medical care 
     (including the extent to which the coverage provides for 
     access to urgent care centers), and any definitions provided 
     under in connection with such coverage for the relevant 
     coverage terminology referring to such care.
       ``(C) Preventative services.--A description of the extent 
     to which the coverage includes benefits for preventative 
     services.
       ``(D) Drug formularies.--A description of the extent to 
     which covered benefits are determined by the use or 
     application of a drug formulary and a summary of the process 
     for determining what is included in such formulary.
       ``(E) COBRA continuation coverage.--A description of the 
     benefits available under the coverage provided pursuant to 
     part 6 of subtitle B of title I of the Employee Retirement 
     Income Security Act of 1974.
       ``(2) Limitations, exclusions, and restrictions on covered 
     benefits.--
       ``(A) Categorization of excluded benefits.--A description 
     of benefits specifically excluded from coverage, categorized 
     by types of items and services.
       ``(B) Utilization review and preauthorization 
     requirements.--Whether coverage for medical care is limited 
     or excluded on the basis of utilization review or 
     preauthorization requirements.
       ``(C) Lifetime, annual, or other period limitations.--A 
     description of the circumstances under which, and the extent 
     to which, coverage is subject to lifetime, annual, or other 
     period limitations, categorized by types of benefits.
       ``(D) Custodial care.--A description of the circumstances 
     under which, and the extent to which, the coverage of 
     benefits for custodial care is limited or excluded, and a 
     statement of the definition used in connection with such 
     coverage for custodial care.
       ``(E) Experimental treatments.--Whether coverage for any 
     medical care is limited or excluded because it constitutes 
     experimental treatment or technology, and any definitions 
     provided in connection with such coverage for the relevant 
     plan terminology referring to such limited or excluded care.
       ``(F) Medical appropriateness or necessity.--Whether 
     coverage for medical care may be limited or excluded by 
     reason of a failure to meet the plan's requirements for 
     medical appropriateness or necessity, and any definitions 
     provided in connection with such coverage for the relevant 
     coverage terminology referring to such limited or excluded 
     care.
       ``(G) Second or subsequent opinions.--A description of the 
     circumstances under which, and the extent to which, coverage 
     for second or subsequent opinions is limited or excluded.
       ``(H) Specialty care.--A description of the circumstances 
     under which, and the extent to which, coverage of benefits 
     for specialty care is conditioned on referral from a primary 
     care provider.
       ``(I) Continuity of care.--A description of the 
     circumstances under which, and the extent to which, coverage 
     of items and services provided by any health care 
     professional is limited or excluded by reason of the 
     departure by the professional from any defined set of 
     providers.
       ``(J) Restrictions on coverage of emergency services.--A 
     description of the circumstances under which, and the extent 
     to which, the coverage, in including emergency medical care 
     furnished to a participant or beneficiary of the plan imposes 
     any financial responsibility described in subsection (c) on 
     participants or beneficiaries or limits or conditions 
     benefits for such care subject to any other term or condition 
     of such coverage.
       ``(c) Participant's Financial Responsibilities.--The 
     information required under subsection (a) includes an 
     explanation of--
       ``(1) a participant's financial responsibility for payment 
     of premiums, coinsurance, copayments, deductibles, and any 
     other charges, and
       ``(2) the circumstances under which, and the extent to 
     which, the participant's financial responsibility described 
     in paragraph (1) may vary, including any distinctions based 
     on whether a health care provider from whom covered benefits 
     are obtained is included in a defined set of providers.

[[Page H6354]]

       ``(d) Dispute Resolution Procedures.--The information 
     required under subsection (a) includes a description of the 
     processes adopted in connection with such coverage pursuant 
     to section 503(b) of the Employee Retirement Income Security 
     Act of 1974, including--
       ``(1) descriptions thereof relating specifically to--
       ``(A) coverage decisions,
       ``(B) internal review of coverage decisions, and
       ``(C) any external review of coverage decisions, and
       ``(2) the procedures and time frames applicable to each 
     step of the processes referred to in subparagraphs (A), (B), 
     and (C) of paragraph (1).
       ``(e) Information Available on Request.--
       ``(1) Access to plan benefit information in electronic 
     form.--
       ``(A) In general.--A group health plan (and a health 
     insurance issuer offering health insurance coverage in 
     connection with a group health plan) shall, upon written 
     request (made not more frequently than annually), make 
     available to participants and beneficiaries, in a generally 
     recognized electronic format, the following information:
       ``(i) the latest summary plan description, including the 
     latest summary of material modifications, and
       ``(ii) the actual plan provisions setting forth the 
     benefits available under the plan,

     to the extent such information relates to the coverage 
     options under the plan available to the participant or 
     beneficiary. A reasonable charge may be made to cover the 
     cost of providing such information in such generally 
     recognized electronic format. The Secretary may by regulation 
     prescribe a maximum amount which will constitute a reasonable 
     charge under the preceding sentence.
       ``(B) Alternative access.--The requirements of this 
     paragraph may be met by making such information generally 
     available (rather than upon request) on the Internet or on a 
     proprietary computer network in a format which is readily 
     accessible to participants and beneficiaries.
       ``(2) Additional information to be provided on request.--
       ``(A) Inclusion in summary plan description of summary of 
     additional information.--The information required under 
     subsection (a) includes a summary description of the types of 
     information required by this subsection to be made available 
     to participants and beneficiaries on request.
       ``(B) Information required from plans and issuers on 
     request.--In addition to information required to be included 
     in summary plan descriptions under this subsection, a group 
     health plan (and a health insurance issuer offering health 
     insurance coverage in connection with a group health plan) 
     shall provide the following information to a participant or 
     beneficiary on request:
       ``(i) Network characteristics.--If the plan (or issuer) 
     utilizes a defined set of providers under contract with the 
     plan (or issuer), a detailed list of the names of such 
     providers and their geographic location, set forth separately 
     with respect to primary care providers and with respect to 
     specialists.
       ``(ii) Care management information.--A description of the 
     circumstances under which, and the extent to which, the plan 
     has special disease management programs or programs for 
     persons with disabilities, indicating whether these programs 
     are voluntary or mandatory and whether a significant benefit 
     differential results from participation in such programs.
       ``(iii) Inclusion of drugs and biologicals in 
     formularies.--A statement of whether a specific drug or 
     biological is included in a formulary used to determine 
     benefits under the plan and a description of the procedures 
     for considering requests for any patient-specific waivers.
       ``(iv) Procedures for determining exclusions based on 
     medical necessity or experimental treatments.--Upon receipt 
     by the participant or beneficiary of any notification of an 
     adverse coverage decision based on a determination relating 
     to medical necessity or an experimental treatment or 
     technology, a description of the procedures and medically-
     based criteria used in such decision.
       ``(v) Preauthorization and utilization review procedures.--
     Upon receipt by the participant or beneficiary of any 
     notification of an adverse coverage decision, a description 
     of the basis on which any preauthorization requirement or any 
     utilization review requirement has resulted in such decision.
       ``(vi) Accreditation status of health insurance issuers and 
     service providers.--A description of the accreditation and 
     licencing 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) Measures of enrollee satisfaction.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to enrollee satisfaction.
       ``(viii) Quality performance measures.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to quality of performance 
     of the delivery of medical care with respect to coverage 
     options offered under the plan and of health care 
     professionals and facilities providing medical care under the 
     plan.
       ``(ix) Information relating to external reviews.--The 
     number of external reviews under section 503(b)(4) of the 
     Employee Retirement Income Security Act of 1974 that have 
     been completed during the prior plan year and the number of 
     such reviews in which the recommendation reported under 
     section 503(b)(4)(C)(iii) of such Act includes a 
     recommendation for modification or reversal of an internal 
     review decision under the plan.
       ``(C) Information required from health care professionals 
     on request.--Any health care professional treating a 
     participant or beneficiary under a group health plan shall 
     provide to the participant or beneficiary, on request, a 
     description of his or her professional qualifications 
     (including board certification status, licensing status, and 
     accreditation status, if any), privileges, and experience and 
     a general description by category (including salary, fee-for-
     service, capitation, and such other categories as may be 
     specified in regulations of the Secretary) of the applicable 
     method by which such professional is compensated in 
     connection with the provision of such medical care.
       ``(D) Information required from health care facilities on 
     request.--Any health care facility from which a participant 
     or beneficiary has sought treatment under a group health plan 
     shall provide to the participant or beneficiary, on request, 
     a description of the facility's corporate form or other 
     organizational form and all forms of licensing and 
     accreditation status (if any) assigned to the facility by 
     standard-setting organizations.
       ``(f) Access to Information Relevant to the Coverage 
     Options under which the Participant or Beneficiary is 
     Eligible to Enroll.--In addition to information otherwise 
     required to be made available under this section, a group 
     health plan (and a health insurance issuer offering health 
     insurance coverage in connection with a group health plan) 
     shall, upon written request (made not more frequently than 
     annually), make available to a participant and an employee 
     who, under the terms of the plan, is eligible for coverage 
     but not enrolled in connection with a period of enrollment 
     the summary plan description for any coverage option under 
     the plan under which the participant is eligible to enroll 
     and any information described in clauses (i), (ii), (iii), 
     (vi), (vii), and (viii) of subsection (e)(2)(B).
       ``(g) Advance Notice of Changes in Drug Formularies.--Not 
     later than 30 days before the effective of date of any 
     exclusion of a specific drug or biological from any drug 
     formulary under the plan that is used in the treatment of a 
     chronic illness or disease, the plan shall take such actions 
     as are necessary to reasonably ensure that plan participants 
     are informed of such exclusion. The requirements of this 
     subsection may be satisfied--
       ``(1) by inclusion of information in publications broadly 
     distributed by plan sponsors, employers, or employee 
     organizations,
       ``(2) by electronic means of communication (including the 
     Internet or proprietary computer networks in a format which 
     is readily accessible to participants),
       ``(3) by timely informing participants who, under an 
     ongoing program maintained under the plan, have submitted 
     their names for such notification, or
       ``(4) by any other reasonable means of timely informing 
     plan participants.''.

     SEC. 2102. EFFECTIVE DATE.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act. The Secretary shall first issue 
     all regulations necessary to carry out the amendments made by 
     this subtitle before such date.
       (b) Limitation on Enforcement Actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this subtitle, against a group health plan or health 
     insurance issuer with respect to a violation of a requirement 
     imposed by such amendments before the date of issuance of 
     final regulations issued in connection with such requirement, 
     if the plan or issuer has sought to comply in good faith with 
     such requirement.
                        Subtitle C--HealthMarts

     SEC. 2201. SHORT TITLE OF SUBTITLE.

       This subtitle may be cited as the ``Health Care Consumer 
     Empowerment Act of 1998''.

     SEC. 2202. EXPANSION OF CONSUMER CHOICE THROUGH HEALTHMARTS.

       (a) In General.--The Public Health Service Act is amended 
     by adding at the end the following new title:

                      ``TITLE XXVIII--HEALTHMARTS

     ``SEC. 2801. DEFINITION OF HEALTHMART.

       ``(a) In General.--For purposes of this title, the term 
     `HealthMart' means a legal entity that meets the following 
     requirements:
       ``(1) Organization.--The HealthMart is a nonprofit 
     organization operated under the direction of a board of 
     directors which is composed of representatives of not fewer 
     than 2 and in equal numbers from each of the following:
       ``(A) Small employers.
       ``(B) Employees of small employers.
       ``(C) Health care providers, which may be physicians, other 
     health care professionals, health care facilities, or any 
     combination thereof.

[[Page H6355]]

       ``(D) Entities, such as insurance companies, health 
     maintenance organizations, and licensed provider-sponsored 
     organizations, that underwrite or administer health benefits 
     coverage.
       ``(2) Offering health benefits coverage.--
       ``(A) In general.--The HealthMart, in conjunction with 
     those health insurance issuers that offer health benefits 
     coverage through the HealthMart, makes available health 
     benefits coverage in the manner described in subsection (b) 
     to all small employers and eligible employees in the manner 
     described in subsection (c)(2) 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 (which limit 
     variation among similarly situated individuals of required 
     premiums for health benefits coverage on the basis of health 
     status-related factors).
       ``(B) Nondiscrimination in coverage offered.--
       ``(i) In general.--Subject to clause (ii), the HealthMart 
     may not offer health benefits coverage to an eligible 
     employee in a geographic area (as specified under paragraph 
     (3)(A)) 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.
       ``(ii) Construction.--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.
       ``(C) 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.
       ``(D) Minimum coverage.--By the end of the first year of 
     its operation and thereafter, the HealthMart maintains not 
     fewer than 10 purchasers and 100 members.
       ``(3) Geographic areas.--
       ``(A) Specification of geographic areas.--The HealthMart 
     shall 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 shall 
     encompass at least one entire county or equivalent area.
       ``(B) Multistate areas.--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.
       ``(C) Multiple healthmarts permitted in single geographic 
     area.--Nothing in this title shall be construed as preventing 
     the establishment and operation of more than one HealthMart 
     in a geographic area or as limiting the number of HealthMarts 
     that may operate in any area.
       ``(4) Provision of administrative services to purchasers.--
       ``(A) In general.--The HealthMart provides administrative 
     services for purchasers. Such services may include 
     accounting, billing, enrollment information, and employee 
     coverage status reports.
       ``(B) Construction.--Nothing in this subsection shall be 
     construed as preventing a HealthMart from serving as an 
     administrative service organization to any entity.
       ``(5) Dissemination of information.--The HealthMart 
     collects and disseminates (or arranges 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. Such information shall be defined by the 
     HealthMart and shall be in a manner appropriate to the type 
     of coverage offered. To the extent practicable, such 
     information shall include information on provider 
     performance, locations and hours of operation of providers, 
     outcomes, and similar matters. Nothing in this section shall 
     be construed as preventing the dissemination of such 
     information or other information by the HealthMart or by 
     health insurance issuers through electronic or other means.
       ``(6) Filing information.--The HealthMart--
       ``(A) files with the applicable Federal authority 
     information that demonstrates the HealthMart's compliance 
     with the applicable requirements of this title; or
       ``(B) in accordance with rules established under section 
     2803(a), files with a State such information as the State may 
     require to demonstrate such compliance.
       ``(b) Health Benefits Coverage Requirements.--
       ``(1) Compliance with consumer protection requirements.--
     Any health benefits coverage offered through a HealthMart 
     shall--
       ``(A) be underwritten by a health insurance issuer that--
       ``(i) is licensed (or otherwise regulated) under State law 
     (or is a community health organization that is offering 
     health insurance coverage pursuant to section 330B(a)),
       ``(ii) meets all applicable State standards relating to 
     consumer protection, subject to section 2802(b), and
       ``(iii) offers the coverage under a contract with the 
     HealthMart;
       ``(B) subject to paragraph (2), be approved or otherwise 
     permitted to be offered under State law; and
       ``(C) 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.--
       ``(A) In general.--The requirement of paragraph (1)(B) 
     shall 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--
       ``(i) either (or both) of the grounds described in 
     subparagraph (B) for approval of the application has been 
     met; and
       ``(ii) the coverage meets the applicable State standards 
     (other than those that have been preempted under section 
     2802).
       ``(B) Grounds.--The grounds described in this subparagraph 
     with respect to a policy or product of health benefits 
     coverage are as follows:
       ``(i) Failure to act on policy, product, or rate 
     application on a timely basis.--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.
       ``(ii) Denial of application based on discriminatory 
     treatment.--The State has denied such an application and--

       ``(I) 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
       ``(II) 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.

       ``(C) Enforcement.--In the case of a waiver granted under 
     subparagraph (A) 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 in subparagraph (A)(ii). Such 
     monitoring and enforcement shall 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. Such an agreement shall specify or establish 
     mechanisms by which compliance activities are undertaken, 
     while not lengthening the time required to review and process 
     applications for waivers under subparagraph (A).
       ``(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:
       ``(A) Coverage through a health maintenance organization.
       ``(B) Coverage in connection with a preferred provider 
     organization.
       ``(C) Coverage in connection with a licensed provider-
     sponsored organization.
       ``(D) Indemnity coverage through an insurance company.
       ``(E) Coverage offered in connection with a contribution 
     into a medical savings account or flexible spending account.
       ``(F) Coverage that includes a point-of-service option.
       ``(G) Coverage offered by a community health organization 
     (as defined in section 330B(e)).
       ``(H) Any combination of such types of coverage.
       ``(4) Wellness bonuses for health promotion.--Nothing in 
     this title shall 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.
       ``(c) Purchasers; Members; Health Insurance Issuers.--
       ``(1) Purchasers.--
       ``(A) In general.--Subject to the provisions of this title, 
     a HealthMart shall 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.

[[Page H6356]]

       ``(B) Role of associations, brokers, and licensed health 
     insurance agents.--Nothing in this section shall 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.
       ``(C) Period of contract.--The HealthMart may not require a 
     contract under subparagraph (A) between a HealthMart and a 
     purchaser to be effective for a period of longer than 12 
     months. The previous sentence shall 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.
       ``(D) Exclusive nature of contract.--Such a contract shall 
     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. 
     The previous sentence shall 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.--
       ``(A) In general.--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.
       ``(B) 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).
       ``(C) Annual open enrollment period.--In the case of 
     members enrolled in health benefits coverage offered by a 
     health insurance issuer through a HealthMart, subject to 
     subparagraph (D), the HealthMart shall provide for an annual 
     open enrollment period of 30 days during which such members 
     may change the coverage option in which the members are 
     enrolled.
       ``(D) Rules of eligibility.--Nothing in this paragraph 
     shall preclude a HealthMart from establishing rules of 
     employee eligibility for enrollment and reenrollment of 
     members during the annual open enrollment period under 
     subparagraph (C). Such rules shall 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 issuers.--
       ``(A) Premium collection.--The contract between a 
     HealthMart and a health insurance issuer shall 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.
       ``(B) Scope of service area.--Nothing in this title shall 
     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.
       ``(C) Availability of coverage options.--A HealthMart shall 
     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 subsection (a)(3)(A).
       ``(d) Prevention of Conflicts of Interest.--
       ``(1) For boards of directors.--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 committees thereof.
       ``(2) 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 contributions, 
     grants, or other funds not connected with a contract for 
     coverage through the HealthMart.
       ``(3) Employment and employee representatives.--
       ``(A) In general.--An individual who is serving on a board 
     of directors of a HealthMart as a representative described in 
     subparagraph (A) or (B) of section 2801(a)(1) shall 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.
       ``(B) Construction.--For purposes of subparagraph (A), the 
     term ``affiliated'' does not include membership in a health 
     benefits plan or the obtaining of health benefits coverage 
     offered by a health insurance issuer.
       ``(e) Construction.--
       ``(1) Network of affiliated healthmarts.--Nothing in this 
     section shall 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):
       ``(A) Coordinating the offering of the same or similar 
     health benefits coverage in different areas served by the 
     different HealthMarts.
       ``(B) Providing for crediting of deductibles and other 
     cost-sharing for individuals who are provided health benefits 
     coverage through the HealthMarts (or affiliated HealthMarts) 
     after--
       ``(i) a change of employers through which the coverage is 
     provided, or
       ``(ii) a change in place of employment to an area not 
     served by the previous HealthMart.
       ``(2) Permitting healthmarts to adjust distributions among 
     issuers to reflect relative risk of enrollees.--Nothing in 
     this section shall be construed as precluding 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.
       ``(3) Application of uniform minimum participation and 
     contribution rules.--Nothing in this section shall be 
     construed as precluding 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.

     ``SEC. 2802. APPLICATION OF CERTAIN LAWS AND REQUIREMENTS.

       ``(a) Authority of States.--Nothing in this section shall 
     be construed as preempting State laws relating to the 
     following:
       ``(1) The regulation of underwriters of health coverage, 
     including licensure and solvency requirements.
       ``(2) The application of premium taxes and required 
     payments for guaranty funds or for contributions to high-risk 
     pools.
       ``(3) The application of fair marketing requirements and 
     other consumer protections (other than those specifically 
     relating to an item described in subsection (b)).
       ``(4) The application of requirements relating to the 
     adjustment of rates for health insurance coverage.
       ``(b) Treatment of Benefit and Grouping Requirements.--
     State laws insofar as they relate to any of the following are 
     superseded and shall not apply to health benefits coverage 
     made available through a HealthMart:
       ``(1) 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 or other Federal law 
     and to the extent the requirement prohibits an exclusion of a 
     specific disease from such coverage.
       ``(2) Requirements (commonly referred to as fictitious 
     group laws) relating to grouping and similar requirements for 
     such coverage to the extent such requirements impede the 
     establishment and operation of HealthMarts pursuant to this 
     title.
       ``(3) 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.
       ``(c) Application of ERISA Fiduciary and Disclosure 
     Requirements.--The board of directors of a HealthMart is 
     deemed to be a plan administrator of an employee welfare 
     benefit plan which is a group health plan for purposes of 
     applying parts 1 and 4 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 and those 
     provisions of part 5 of such subtitle which are applicable to 
     enforcement of such parts 1 and 4, and 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.
       ``(d) Application of ERISA Renewability Protection.--A 
     HealthMart is deemed to be 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.
       ``(e) Application of Rules for Network Plans and Financial 
     Capacity.--The provisions of subsections (c) and (d) of 
     section 2711 apply to health benefits coverage offered by a 
     health insurance issuer through a HealthMart.
       ``(f) Construction Relating to Offering Requirement.--
     Nothing in section 2711(a) of this Act or 703 of the Employee 
     Retirement Income Security Act of 1974 shall be construed as 
     permitting the offering outside the HealthMart of health 
     benefits coverage that is only made available through a 
     HealthMart under this section because of the application of 
     subsection (b).
       ``(g) Application to Guaranteed Renewability Requirements 
     in Case of Discontinuation of an Issuer.--For purposes of

[[Page H6357]]

     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:
       ``(1) 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).
       ``(2) Application of association rules.--The HealthMart 
     shall be considered an association for purposes of applying 
     section 2712(e).
       ``(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 and 7 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 or titles 
     XXII and XXVII of this Act.

     ``SEC. 2803. ADMINISTRATION.

       ``(a) In General.--The applicable Federal authority shall 
     administer this title through the division established under 
     subsection (b) and is authorized to issue such regulations as 
     may be required to carry out this title. Such regulations 
     shall be subject to Congressional review under the provisions 
     of chapter 8 of title 5, United States Code. The applicable 
     Federal authority shall incorporate the process of `deemed 
     file and use' with respect to the information filed under 
     section 2801(a)(6)(A) 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.
       ``(b) Administration Through Health Care Marketplace 
     Division.--
       ``(1) In general.--The applicable Federal authority shall 
     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.
       ``(2) Additional duties.--In addition to other 
     responsibilities provided under this title, such Division is 
     responsible for--
       ``(A) oversight of the operations of HealthMarts under this 
     title; and
       ``(B) the periodic submittal to Congress of reports on the 
     performance of HealthMarts under this title under subsection 
     (c).
       ``(c) Periodic Reports.--The applicable Federal authority 
     shall 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.

     ``SEC. 2804. DEFINITIONS.

       ``For purposes of this title:
       ``(1) Applicable Federal authority.--The term `applicable 
     Federal authority' means the Secretary of Health and Human 
     Services.
       ``(2) 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) to enroll or be enrolled in health 
     benefits coverage offered through the HealthMart.
       ``(3) 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.
       ``(4) Health benefits coverage.--The term `health benefits 
     coverage' has the meaning given the term group health 
     insurance coverage in section 2791(b)(4).
       ``(5) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning given such term in section 2791(b)(2) 
     and includes a community health organization that is offering 
     coverage pursuant to section 330B(a).
       ``(6) Health status-related factor.--The term `health 
     status-related factor' has the meaning given such term in 
     section 2791(d)(9).
       ``(7) HealthMart.--The term `HealthMart' is defined in 
     section 2801(a).
       ``(8) 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).
       ``(9) 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.
       ``(10) Small employer.--The term `small employer' has the 
     meaning given such term for purposes of title XXVII.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2000. The Secretary of Health 
     and Human Services shall first issue all regulations 
     necessary to carry out such amendment before such date.
               Subtitle D--Community Health Organizations

     SEC. 2301. PROMOTION OF PROVISION OF INSURANCE BY COMMUNITY 
                   HEALTH ORGANIZATIONS.

       (a) Waiver of State Licensure Requirement for Community 
     Health Organizations in Certain Cases.--Subpart I of part D 
     of title III of the Public Health Service Act is amended by 
     adding at the end the following new section:


     ``waiver of state licensure requirement for community health 
                     organizations in certain cases

       ``Sec. 330B. (a) Waiver Authorized.--
       ``(1) In general.--A community health organization may 
     offer health insurance coverage in a State notwithstanding 
     that it is not licensed in such a State to offer such 
     coverage if--
       ``(A) the organization files an application for waiver of 
     the licensure requirement with the Secretary of Health and 
     Human Services (in this section referred to as the 
     `Secretary') by not later than November 1, 2003, and
       ``(B) the Secretary determines, based on the application 
     and other evidence presented to the Secretary, that any of 
     the grounds for approval of the application described in 
     subparagraph (A), (B), or (C) of paragraph (2) has been met.
       ``(2) Grounds for approval of waiver.--
       ``(A) Failure to act on licensure application on a timely 
     basis.--The ground for approval of such a waiver application 
     described in this subparagraph is that the State has failed 
     to complete action on a licensing application of the 
     organization 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.
       ``(B) Denial of application based on discriminatory 
     treatment.--The ground for approval of such a waiver 
     application described in this subparagraph is that the State 
     has denied such a licensing application and the standards or 
     review process imposed by the State as a condition of 
     approval of the license or as the basis for such denial by 
     the State imposes any material requirements, procedures, or 
     standards (other than solvency requirements) to such 
     organizations that are not generally applicable to other 
     entities engaged in a substantially similar business.
       ``(C) Denial of application based on application of 
     solvency requirements.--With respect to waiver applications 
     filed on or after the date of publication of solvency 
     standards established by the Secretary under subsection (d), 
     the ground for approval of such a waiver application 
     described in this subparagraph is that the State has denied 
     such a licensing application based (in whole or in part) on 
     the organization's failure to meet applicable State solvency 
     requirements and such requirements are not the same as the 
     solvency standards established by the Secretary. For purposes 
     of this subparagraph, the term solvency requirements means 
     requirements relating to solvency and other matters covered 
     under the standards established by the Secretary under 
     subsection (d).
       ``(3) Treatment of waiver.--In the case of a waiver granted 
     under this subsection for a community health organization 
     with respect to a State--
       ``(A) Limitation to state.--The waiver shall be effective 
     only with respect to that State and does not apply to any 
     other State.
       ``(B) Limitation to 36-month period.--The waiver shall be 
     effective only for a 36-month period but may be renewed for 
     up to 36 additional months if the Secretary determines that 
     such an extension is appropriate.
       ``(C) Conditioned on compliance with consumer protection 
     and quality standards.--The continuation of the waiver is 
     conditioned upon the organization's compliance with the 
     requirements described in paragraph (5).
       ``(D) Preemption of state law.--Any provisions of law of 
     that State which relate to the licensing of the organization 
     and which prohibit the organization from providing health 
     insurance coverage shall be superseded.
       ``(4) Prompt action on application.--The Secretary shall 
     grant or deny such a waiver application within 60 days after 
     the date the Secretary determines that a substantially 
     complete waiver application has been filed. Nothing in this 
     section shall be construed as preventing an organization 
     which has had such a waiver application denied from 
     submitting a subsequent waiver application.
       ``(5) Application and enforcement of state consumer 
     protection and quality standards.--A waiver granted under 
     this subsection to an organization with respect to licensing 
     under State law is conditioned upon the organization's 
     compliance with all consumer protection and quality standards 
     insofar as such standards--
       ``(A) would apply in the State to the community health 
     organization if it were licensed as an entity offering health 
     insurance coverage under State law; and
       ``(B) are generally applicable to other risk-bearing 
     managed care organizations and plans in the State.
       ``(6) Report.--By not later than December 31, 2002, the 
     Secretary shall submit to the

[[Page H6358]]

     Committee on Commerce of the House of Representatives and the 
     Committee on Labor and Human Resources of the Senate a report 
     regarding whether the waiver process under this subsection 
     should be continued after December 31, 2003.
       ``(b) Assumption of Full Financial Risk.--To qualify for a 
     waiver under subsection (a), the community health 
     organization shall assume full financial risk on a 
     prospective basis for the provision of covered health care 
     services, except that the organization--
       ``(1) may obtain insurance or make other arrangements for 
     the cost of providing to any enrolled member such services 
     the aggregate value of which exceeds such aggregate level as 
     the Secretary specifies from time to time;
       ``(2) may obtain insurance or make other arrangements for 
     the cost of such services provided to its enrolled members 
     other than through the organization because medical necessity 
     required their provision before they could be secured through 
     the organization;
       ``(3) may obtain insurance or make other arrangements for 
     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; and
       ``(4) may 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 by the physicians or other 
     health professionals or through the institutions.
       ``(c) Certification of Provision against Risk of Insolvency 
     for Unlicensed CHOs.--
       ``(1) In general.--Each community health organization that 
     is not licensed by a State and for which a waiver application 
     has been approved under subsection (a)(1), shall meet 
     standards established by the Secretary under subsection (d) 
     relating to the financial solvency and capital adequacy of 
     the organization.
       ``(2) Certification process for solvency standards for 
     chos.--The Secretary shall establish a process for the 
     receipt and approval of applications of a community health 
     organization described in paragraph (1) for certification 
     (and periodic recertification) of the organization as meeting 
     such solvency standards. Under such process, the Secretary 
     shall act upon such a certification application not later 
     than 60 days after the date the application has been 
     received.
       ``(d) Establishment of Solvency Standards for Community 
     Health Organizations.--
       ``(1) In general.--The Secretary shall establish, on an 
     expedited basis and by rule pursuant to section 553 of title 
     5, United States Code and through the Health Resources and 
     Services Administration, standards described in subsection 
     (c)(1) (relating to financial solvency and capital adequacy) 
     that entities must meet to obtain a waiver under subsection 
     (a)(2)(C). In establishing such standards, the Secretary 
     shall consult with interested organizations, including the 
     National Association of Insurance Commissioners, the Academy 
     of Actuaries, and organizations representing Federally 
     qualified health centers.
       ``(2) Factors to consider for solvency standards.--In 
     establishing solvency standards for community health 
     organizations under paragraph (1), the Secretary shall take 
     into account--
       ``(A) the delivery system assets of such an organization 
     and ability of such an organization to provide services to 
     enrollees;
       ``(B) alternative means of protecting against insolvency, 
     including reinsurance, unrestricted surplus, letters of 
     credit, guarantees, organizational insurance coverage, 
     partnerships with other licensed entities, and valuation 
     attributable to the ability of such an organization to meet 
     its service obligations through direct delivery of care; and
       ``(C) any standards developed by the National Association 
     of Insurance Commissioners specifically for risk-based health 
     care delivery organizations.
       ``(3) Enrollee protection against insolvency.--Such 
     standards shall 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.
       ``(4) Deadline.--Such standards shall be promulgated in a 
     manner so they are first effective by not later than April 1, 
     1999.
       ``(e) Definitions.--In this section:
       ``(1) Community health organization.--The term `community 
     health organization ' means an organization that is a 
     Federally-qualified health center or is controlled by one or 
     more Federally-qualified health centers.
       ``(2) Federally-qualified health center.--The term 
     `Federally-qualified health center' has the meaning given 
     such term in section 1905(l)(2)(B) of the Social Security 
     Act.
       ``(3) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning given such term in 
     section 2791(b)(1).
       ``(4) Control.--The term `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

     SEC. 3001. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, PEDIATRIC CARE.

       (a) In General.--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:

     ``SEC. 9813. PATIENT ACCESS TO UNRESTRICTED MEDICAL ADVICE, 
                   EMERGENCY MEDICAL CARE, OBSTETRIC AND 
                   GYNECOLOGICAL CARE, PEDIATRIC CARE.

       ``(a) Patient Access to Unrestricted Medical Advice.--
       ``(1) In general.--In the case of any health care 
     professional acting within the lawful scope of practice in 
     the course of carrying out a contractual employment 
     arrangement or other direct contractual arrangement between 
     such professional and a group health plan, the plan with 
     which such contractual employment arrangement or other direct 
     contractual arrangement is maintained by the professional may 
     not impose on such professional under such arrangement any 
     prohibition or restriction with respect to advice, provided 
     to a participant or beneficiary under the plan who is a 
     patient, about the health status of the participant or 
     beneficiary or the medical care or treatment for the 
     condition or disease of the participant or beneficiary, 
     regardless of whether benefits for such care or treatment are 
     provided under the plan.
       ``(2) Health care professional defined.--For purposes of 
     this subsection, the term `health care professional' means a 
     physician (as defined in section 1861(r) of the Social 
     Security Act) or other health care professional if coverage 
     for the professional's services is provided under the group 
     health plan for the services of the professional. Such term 
     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.
       ``(b) Patient Access to Emergency Medical Care.--
       ``(1) In general.--To the extent that the group health plan 
     provides for any benefits consisting of emergency medical 
     care (as defined in section 503(b)(9)(I) of the Employee 
     Retirement Income Security Act of 1974), except for items or 
     services specifically excluded--
       ``(A) the plan shall provide benefits, without requiring 
     preauthorization and without regard to otherwise applicable 
     network limitations, for appropriate emergency medical 
     screening examinations (within the capability of the 
     emergency facility, including ancillary services routinely 
     available to the emergency facility) to the extent that a 
     prudent layperson, who possesses an average knowledge of 
     health and medicine, would determine such examinations to be 
     necessary in order to determine whether emergency medical 
     care (as so defined) is required, and
       ``(B) the plan shall provide benefits for additional 
     emergency medical services following an emergency medical 
     screening examination (if determined necessary under 
     subparagraph (A)) to the extent that a prudent emergency 
     medical professional would determine such additional 
     emergency services to be necessary to avoid the consequences 
     described in clause (i) of section 503(b)(9)(I) of such Act.
       ``(2) Uniform cost-sharing required.--Nothing in this 
     subsection shall be construed as preventing a group health 
     plan from imposing any form of cost-sharing applicable to any 
     participant or beneficiary (including coinsurance, 
     copayments, deductibles, and any other charges) in relation 
     to benefits described in paragraph (1), if such form of cost-
     sharing is uniformly applied under such plan, with respect to 
     similarly situated participants and beneficiaries, to all 
     benefits consisting of emergency medical care (as defined in 
     section 503(b)(9)(I) of the Employee Retirement Income 
     Security Act of 1974) provided to such similarly situated 
     participants and beneficiaries under the plan.
       ``(c) Patient Access to Obstetric and Gynecological Care.
       ``(1) In general.--In any case in which a group health 
     plan--
       ``(A) provides benefits under the terms of the plan 
     consisting of--
       ``(i) routine gynecological care (such as preventive 
     women's health examinations), or
       ``(ii) routine obstetric care (such as routine pregnancy-
     related services),
     provided by a participating physician who specializes in such 
     care (or provides benefits consisting of payment for such 
     care), and
       ``(B) the plan requires or provides for designation by a 
     participant or beneficiary of a participating primary care 
     provider,

     if the primary care provider designated by such a participant 
     or beneficiary is not such a physician, then the plan shall 
     meet the requirements of paragraph (2).
       ``(2) Requirements.--A group health plan meets the 
     requirements of this paragraph, in connection with benefits 
     described in paragraph (1) consisting of care described in 
     clause (i) or (ii) of paragraph (1)(A) (or consisting of 
     payment therefor), if the plan--

[[Page H6359]]

       ``(A) does not require authorization or a referral by the 
     primary care provider in order to obtain such benefits, and
       ``(B) treats the ordering of other routine care of the same 
     type, by the participating physician providing the care 
     described in clause (i) or (ii) of paragraph (1)(A), as the 
     authorization of the primary care provider with respect to 
     such care.
       ``(3) Construction.--Nothing in paragraph (2)(B) shall 
     waive any requirements of coverage relating to medical 
     necessity or appropriateness with respect to coverage of 
     gynecological or obstetric care so ordered.
       ``(d) Patient Access to Pediatric Care.--
       ``(1) In general.--In any case in which a group health plan 
     (or a health insurance issuer offering health insurance 
     coverage in connection with the plan) provides benefits 
     consisting of routine pediatric care provided by a 
     participating physician who specializes in pediatrics (or 
     consisting of payment for such care) and the plan requires or 
     provides for designation by a participant or beneficiary of a 
     participating primary care provider, the plan (or issuer) 
     shall provide that such a participating physician may be 
     designated, if available, by a parent or guardian of any 
     beneficiary under the plan is who under 18 years of age, as 
     the primary care provider with respect to any such benefits.
       ``(2) Construction.--Nothing in paragraph (1) shall waive 
     any requirements of coverage relating to medical necessity or 
     appropriateness with respect to coverage of pediatric care.
       ``(e) Treatment of Multiple Coverage Options.--In the case 
     of a plan providing benefits under two or more coverage 
     options, the requirements of subsections (c) and (d) shall 
     apply separately with respect to each coverage option.''.
       (b) Clerical Amendment.--The table of sections of such 
     subchapter of such chapter is amended by adding at the end 
     the following new item:

``Sec. 9813. Patient access to unrestricted medical advice, emergency 
              medical care, obstetric and gynecological care, pediatric 
              care.''

     SEC. 3002. EFFECTIVE DATE AND RELATED RULES.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act, except that the Secretary of the 
     Treasury may issue regulations before such date under such 
     amendments. The Secretary shall first issue regulations 
     necessary to carry out the amendments made by this section 
     before the effective date thereof.
       (b) Limitation on Penalty for Certain Failures.--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.
       (c) Special Rule for Collective Bargaining Agreements.--In 
     the case of a group health plan maintained pursuant to one or 
     more collective bargaining agreements between employee 
     representatives and one or more employers ratified before the 
     date of the enactment of this Act, the provisions of 
     subsections (b), (c), and (d) of section 9813 of the Internal 
     Revenue Code of 1986 (as added by this subtitle) shall not 
     apply with respect to plan years beginning before the later 
     of--
       (1) the date on which the last of the collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of the enactment of this Act), or

       (2) January 1, 2001.
     For purposes of this subsection, any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by this subtitle shall not be treated as a 
     termination of such collective bargaining agreement.
               Subtitle B--Patient Access to Information

     SEC. 3101. PATIENT ACCESS TO INFORMATION REGARDING PLAN 
                   COVERAGE, MANAGED CARE PROCEDURES, HEALTH CARE 
                   PROVIDERS, AND QUALITY OF MEDICAL CARE.

       (a) In General.--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:

     ``SEC. 9814. DISCLOSURE BY GROUP HEALTH PLANS.

       ``(a) Disclosure Requirement.--The administrator of each 
     group health plan shall take such actions as are necessary to 
     ensure that the summary plan description of the plan required 
     under section 102 of Employee Retirement Income Security Act 
     of 1974 (or each summary plan description in any case in 
     which different summary plan descriptions are appropriate 
     under part 1 of subtitle B of title I of such Act for 
     different options of coverage) contains the information 
     required under subsections (b), (c), (d), and (e)(2)(A). To 
     the extent that any health insurance issuer offering health 
     insurance coverage in connection with such plan provides such 
     information on a timely basis to plan participants and 
     beneficiaries, the requirements of this subsection shall be 
     deemed satisfied in the case of such plan with respect to 
     such information.
       ``(b) Plan Benefits.--The information required under 
     subsection (a) includes the following:
       ``(1) Covered items and services.--
       ``(A) Categorization of included benefits.--A description 
     of covered benefits, categorized by--
       ``(i) types of items and services (including any special 
     disease management program), and
       ``(ii) types of health care professionals providing such 
     items and services.
       ``(B) Emergency medical care.--A description of the extent 
     to which the plan covers emergency medical care (including 
     the extent to which the plan provides for access to urgent 
     care centers), and any definitions provided under the plan 
     for the relevant plan terminology referring to such care.
       ``(C) Preventative services.--A description of the extent 
     to which the plan provides benefits for preventative 
     services.
       ``(D) Drug formularies.--A description of the extent to 
     which covered benefits are determined by the use or 
     application of a drug formulary and a summary of the process 
     for determining what is included in such formulary.
       ``(E) COBRA continuation coverage.--A description of the 
     requirements under section 4980B.
       ``(2) Limitations, exclusions, and restrictions on covered 
     benefits.--
       ``(A) Categorization of excluded benefits.--A description 
     of benefits specifically excluded from coverage, categorized 
     by types of items and services.
       ``(B) Utilization review and preauthorization 
     requirements.--Whether coverage for medical care is limited 
     or excluded on the basis of utilization review or 
     preauthorization requirements.
       ``(C) Lifetime, annual, or other period limitations.--A 
     description of the circumstances under which, and the extent 
     to which, coverage is subject to lifetime, annual, or other 
     period limitations, categorized by types of benefits.
       ``(D) Custodial care.--A description of the circumstances 
     under which, and the extent to which, the coverage of 
     benefits for custodial care is limited or excluded, and a 
     statement of the definition used by the plan for custodial 
     care.
       ``(E) Experimental treatments.--Whether coverage for any 
     medical care is limited or excluded because it constitutes 
     experimental treatment or technology, and any definitions 
     provided under the plan for the relevant plan terminology 
     referring to such limited or excluded care.
       ``(F) Medical appropriateness or necessity.--Whether 
     coverage for medical care may be limited or excluded by 
     reason of a failure to meet the plan's requirements for 
     medical appropriateness or necessity, and any definitions 
     provided under the plan for the relevant plan terminology 
     referring to such limited or excluded care.
       ``(G) Second or subsequent opinions.--A description of the 
     circumstances under which, and the extent to which, coverage 
     for second or subsequent opinions is limited or excluded.
       ``(H) Specialty care.--A description of the circumstances 
     under which, and the extent to which, coverage of benefits 
     for specialty care is conditioned on referral from a primary 
     care provider.
       ``(I) Continuity of care.--A description of the 
     circumstances under which, and the extent to which, coverage 
     of items and services provided by any health care 
     professional is limited or excluded by reason of the 
     departure by the professional from any defined set of 
     providers.
       ``(J) Restrictions on coverage of emergency services.--A 
     description of the circumstances under which, and the extent 
     to which, the plan, in covering emergency medical care 
     furnished to a participant or beneficiary of the plan imposes 
     any financial responsibility described in subsection (c) on 
     participants or beneficiaries or limits or conditions 
     benefits for such care subject to any other term or condition 
     of such plan
       ``(c) Participant's Financial Responsibilities.--The 
     information required under subsection (a) includes an 
     explanation of--
       ``(1) a participant's financial responsibility for payment 
     of premiums, coinsurance, copayments, deductibles, and any 
     other charges, and
       ``(2) the circumstances under which, and the extent to 
     which, the participant's financial responsibility described 
     in paragraph (1) may vary, including any distinctions based 
     on whether a health care provider from whom covered benefits 
     are obtained is included in a defined set of providers.
       ``(d) Dispute Resolution Procedures.--The information 
     required under subsection (a) includes a description of the 
     processes adopted by the plan pursuant to section 503(b) of 
     Employee Retirement Income Security Act of 1974, including--
       ``(1) descriptions thereof relating specifically to--
       ``(A) coverage decisions,
       ``(B) internal review of coverage decisions, and
       ``(C) any external review of coverage decisions, and
       ``(2) the procedures and time frames applicable to each 
     step of the processes referred to in subparagraphs (A), (B), 
     and (C) of paragraph (1).
       ``(e) Information Available on Request.--
       ``(1) Access to plan benefit information in electronic 
     form.--
       ``(A) In general.--A group health plan shall, upon written 
     request (made not more frequently than annually), make 
     available to

[[Page H6360]]

     participants and beneficiaries, in a generally recognized 
     electronic format, the following information:
       ``(i) the latest summary plan description, including the 
     latest summary of material modifications; and
       ``(ii) the actual plan provisions setting forth the 
     benefits available under the plan

     to the extent such information relates to the coverage 
     options under the plan available to the participant or 
     beneficiary. A reasonable charge may be made to cover the 
     cost of providing such information in such generally 
     recognized electronic format. The Secretary may by regulation 
     prescribe a maximum amount which will constitute a reasonable 
     charge under the preceding sentence.
       ``(B) Alternative access.--The requirements of this 
     paragraph may be met by making such information generally 
     available (rather than upon request) on the Internet or on a 
     proprietary computer network in a format which is readily 
     accessible to participants and beneficiaries.
       ``(2) Additional information to be provided on request.--
       ``(A) Inclusion in summary plan description of summary of 
     additional information.--The information required under 
     subsection (a) includes a summary description of the types of 
     information required by this subsection to be made available 
     to participants and beneficiaries on request.
       ``(B) Information required from plans on request.--In 
     addition to information required to be included in summary 
     plan descriptions under this subsection, a group health plan 
     shall provide the following information to a participant or 
     beneficiary on request:
       ``(i) Network characteristics.--If the plan (or a health 
     insurance issuer offering health insurance coverage in 
     connection with the plan) utilizes a defined set of providers 
     under contract with the plan (or issuer), a detailed list of 
     the names of such providers and their geographic location, 
     set forth separately with respect to primary care providers 
     and with respect to specialists.
       ``(ii) Care management information.--A description of the 
     circumstances under which, and the extent to which, the plan 
     has special disease management programs or programs for 
     persons with disabilities, indicating whether these programs 
     are voluntary or mandatory and whether a significant benefit 
     differential results from participation in such programs.
       ``(iii) Inclusion of drugs and biologicals in 
     formularies.--A statement of whether a specific drug or 
     biological is included in a formulary used to determine 
     benefits under the plan and a description of the procedures 
     for considering requests for any patient-specific waivers.
       ``(iv) Procedures for determining exclusions based on 
     medical necessity or experimental treatments.--Upon receipt 
     by the participant or beneficiary of any notification of an 
     adverse coverage decision based on a determination relating 
     to medical necessity or an experimental treatment or 
     technology, a description of the procedures and medically-
     based criteria used in such decision.
       ``(v) Preauthorization and utilization review procedures.--
     Upon receipt by the participant or beneficiary of any 
     notification of an adverse coverage decision, a description 
     of the basis on which any preauthorization requirement or any 
     utilization review requirement has resulted in such decision.
       ``(vi) Accreditation status of health insurance issuers and 
     service providers.--A description of the accreditation and 
     licencing 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) Measures of enrollee satisfaction.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to enrollee satisfaction.
       ``(viii) Quality performance measures.--The latest 
     information (if any) maintained by the plan, or by any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan, relating to quality of performance 
     of the delivery of medical care with respect to coverage 
     options offered under the plan and of health care 
     professionals and facilities providing medical care under the 
     plan.
       ``(ix) Information relating to external reviews.--The 
     number of external reviews under section 503(b)(4) of the 
     Employee Retirement Income Security Act of 1974 that have 
     been completed during the prior plan year and the number of 
     such reviews in which the recommendation reported under 
     section 503(b)(4)(C)(iii) of such Act includes a 
     recommendation for modification or reversal of an internal 
     review decision under the plan.
       ``(C) Information required from health care professionals 
     on request.--Any health care professional treating a 
     participant or beneficiary under a group health plan shall 
     provide to the participant or beneficiary, on request, a 
     description of his or her professional qualifications 
     (including board certification status, licensing status, and 
     accreditation status, if any), privileges, and experience and 
     a general description by category (including salary, fee-for-
     service, capitation, and such other categories as may be 
     specified in regulations of the Secretary) of the applicable 
     method by which such professional is compensated in 
     connection with the provision of such medical care.
       ``(D) Information required from health care facilities on 
     request.--Any health care facility from which a participant 
     or beneficiary has sought treatment under a group health plan 
     shall provide to the participant or beneficiary, on request, 
     a description of the facility's corporate form or other 
     organizational form and all forms of licensing and 
     accreditation status (if any) assigned to the facility by 
     standard-setting organizations.
       ``(f) Access to Information Relevant to the Coverage 
     Options under which the Participant or Beneficiary is 
     Eligible to Enroll.--In addition to information otherwise 
     required to be made available under this section, a group 
     health plan shall, upon written request (made not more 
     frequently than annually), make available to a participant 
     (and an employee who, under the terms of the plan, is 
     eligible for coverage but not enrolled) in connection with a 
     period of enrollment the summary plan description for any 
     coverage option under the plan under which the participant is 
     eligible to enroll and any information described in clauses 
     (i), (ii), (iii), (vi), (vii), and (viii) of subsection 
     (e)(2)(B).
       ``(g) Advance Notice of Changes in Drug Formularies.--Not 
     later than 30 days before the effective of date of any 
     exclusion of a specific drug or biological from any drug 
     formulary under the plan that is used in the treatment of a 
     chronic illness or disease, the plan shall take such actions 
     as are necessary to reasonably ensure that plan participants 
     are informed of such exclusion. The requirements of this 
     subsection may be satisfied--
       ``(1) by inclusion of information in publications broadly 
     distributed by plan sponsors, employers, or employee 
     organizations,
       ``(2) by electronic means of communication (including the 
     Internet or proprietary computer networks in a format which 
     is readily accessible to participants),
       ``(3) by timely informing participants who, under an 
     ongoing program maintained under the plan, have submitted 
     their names for such notification, or
       ``(4) by any other reasonable means of timely informing 
     plan participants.''.
       (b) Clerical Amendment.--The table of sections of such 
     subchapter of such chapter is amended by adding at the end 
     the following new item:

``Sec. 9814. Disclosure by group health plans.''

     SEC. 3102. EFFECTIVE DATE.

       (a) In General.--The amendments made by this subtitle shall 
     apply with respect to plan years beginning on or after 
     January 1 of the second calendar year following the date of 
     the enactment of this Act. The Secretary of the Treasury or 
     the Secretary's delegate shall first issue all regulations 
     necessary to carry out the amendments made by this subtitle 
     before such date.
       (b) Limitation on Enforcement Actions.--No enforcement 
     action shall be taken, pursuant to the amendments made by 
     this subtitle, against a group health plan with respect to a 
     violation of a requirement imposed by such amendments before 
     the date of issuance of final regulations issued in 
     connection with such requirement, if the plan has sought to 
     comply in good faith with such requirement.
                  Subtitle C--Medical Savings Accounts

     SEC. 3201. EXPANSION OF AVAILABILITY OF MEDICAL SAVINGS 
                   ACCOUNTS.

       (a) Repeal of Limitations on Number of Medical Savings 
     Accounts.--
       (1) In general.--Subsections (i) and (j) of section 220 of 
     the Internal Revenue Code of 1986 are hereby repealed.
       (2) Conforming amendment.--Paragraph (1) of section 220(c) 
     of such Code is amended by striking subparagraph (D).
       (b) All Employers May Offer Medical Savings Accounts.--
       (1) In general.--Subclause (I) of section 220(c)(1)(A)(iii) 
     of such Code (defining eligible individual) is amended by 
     striking ``and such employer is a small employer''.
       (2) Conforming amendments.--
       (A) Paragraph (1) of section 220(c) of such Code is amended 
     by striking subparagraph (C).
       (B) Subsection (c) of section 220 of such Code is amended 
     by striking paragraph (4) and by redesignating paragraph (5) 
     as paragraph (4).
       (c) Increase in Amount of Deduction Allowed for 
     Contributions to Medical Savings Accounts.--
       (1) In general.--Paragraph (2) of section 220(b) of such 
     Code is amended to read as follows:
       ``(2) Monthly limitation.--The monthly limitation for any 
     month is the amount equal to \1/12\ of the annual deductible 
     (as of the first day of such month) of the taxpayer's 
     coverage under the high deductible health plan.''
       (2) Conforming amendment.--Clause (ii) of section 
     220(d)(1)(A) of such Code is amended by striking ``75 percent 
     of''.
       (d) Both Employers and Employees May Contribute to Medical 
     Savings Accounts.--Paragraph (5) of section 220(b) of such 
     Code is amended to read as follows:
       ``(5) Coordination with exclusion for employer 
     contributions.--The limitation which would (but for this 
     paragraph) apply

[[Page H6361]]

     under this subsection to the taxpayer for any taxable year 
     shall be reduced (but not below zero) by the amount which 
     would (but for section 106(b)) be includible in the 
     taxpayer's gross income for such taxable year.''
       (e) Reduction of Permitted Deductibles Under High 
     Deductible Health Plans.--
       (1) In general.--Subparagraph (A) of section 220(c)(2) of 
     such Code (defining high deductible health plan) is amended--
       (A) by striking ``$1,500'' and inserting ``$1,000'', and
       (B) by striking ``$3,000'' and inserting ``$2,000''.
       (2) Conforming amendment.--Subsection (g) of section 220 of 
     such Code is amended--
       (A) by striking ``1998'' and inserting ``1999'', and
       (B) by striking ``1997'' and inserting ``1998''.
       (f) Medical Savings Accounts May Be Offered Under Cafeteria 
     Plans.--Subsection (f) of section 125 of such Code is amended 
     by striking ``106(b),''.
       (g) Individuals Receiving Immediate Federal Annuities 
     Eligible for Medical Savings Accounts.--Paragraph (1) of 
     section 220(c) of such Code (defining eligible individual), 
     as amended by subsections (a) and (b), is amended by adding 
     at the end the following new subparagraph:
       ``(C) Special rules for individuals receiving immediate 
     federal annuities.--
       ``(i) In general.--Subparagraph (A)(iii) and subsection 
     (b)(4) shall not apply for any month to an individual--

       ``(I) who, as of the 1st day of such month, is enrolled in 
     a high deductible health plan under chapter 89 of title 5, 
     United States Code, and
       ``(II) who is entitled to receive for such month any amount 
     by reason of being an annuitant (as defined in section 
     8901(3) of such title 5).

       ``(ii) Special rule for spouse of annuitant.--In the case 
     of the spouse of an individual described in clause (i) who is 
     not also described in clause (i), subsection (b)(4) shall not 
     apply to such spouse if such individual and spouse have 
     family coverage under the same plan described in clause 
     (i)(I).''
       (h) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 3202. EXCEPTION FROM INSURANCE LIMITATION IN CASE OF 
                   MEDICAL SAVINGS ACCOUNTS.

       (a) In General.--Section 220(d)(2)(B) of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new clause:
       ``(iii) Insurance offered by community health centers.--

       ``(I) In general.--Subject to clauses (II) and (III), 
     clause (i) shall not apply to any expense for coverage under 
     insurance offered by a health center (as defined in section 
     330(a)(1) of the Public Health Service Act) if the coverage 
     consists solely of coverage for required primary health 
     benefits (as defined in section 330(b)(1)(A) of such Act) 
     provided on a capitated basis.
       ``(II) Income limitation.--Subclause (I) shall only apply 
     to expenses for coverage of an individual who, in the taxable 
     year involved, has income that is less than 200 percent of 
     the income official poverty line (as defined by the Office of 
     Management and Budget, and revised annually in accordance 
     with section 673(2) of the Omnibus Budget Reconciliation Act 
     of 1981) applicable to a family of the size involved.
       ``(III) Limitation on number of contracts.--For a taxable 
     year ending in a calendar year, subclause (I) shall apply 
     only to expenses for coverage for the first 15,000 
     individuals enrolled in insurance described in such subclause 
     in the year.''.

       (b) Reports on Enrollment.--Section 330(j)(3) of the Public 
     Health Service Act (42 U.S.C. 254c(j)(3)) is amended--
       (1) by striking ``and'' at the end of subparagraph (K),
       (2) by striking the period at the end of subparagraph (L) 
     and inserting ``; and'', and
       (3) by inserting after subparagraph (L) the following new 
     subparagraph:
       ``(M) if the center offers insurance coverage to an 
     individual with a medical savings account under subclause (I) 
     of section 220(d)(2)(B)(iii), the center shall provide such 
     reports in such time and manner as may be required by the 
     Secretary and the Secretary of the Treasury in order to 
     carry out subclause (III) of such section.''.

     SEC. 3203. SENSE OF THE HOUSE OF REPRESENTATIVES.

       It is 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

     SEC. 3301. CLARIFICATION OF DEFINITION OF SPECIFIED LIABILITY 
                   LOSS.

       (a) In General.--Subparagraph (B) of section 172(f)(1) of 
     the Internal Revenue Code of 1986 (defining specified 
     liability loss) is amended to read as follows:
       ``(B)(i) Any amount allowable as a deduction under this 
     chapter (other than section 468(a)(1) or 468A(a)) which is in 
     satisfaction of a liability under a Federal or State law 
     requiring--
       ``(I) the reclamation of land,
       ``(II) the decommissioning of a nuclear power plant (or any 
     unit thereof),
       ``(III) the dismantlement of a drilling platform,
       ``(IV) the remediation of environmental contamination, or
       ``(V) a payment under any workers compensation act (within 
     the meaning of section 461(h)(2)(C)(i)).
       ``(ii) A liability shall be taken into account under this 
     subparagraph only if--
       ``(I) the act (or failure to act) giving rise to such 
     liability occurs at least 3 years before the beginning of the 
     taxable year, and
       ``(II) the taxpayer used an accrual method of accounting 
     throughout the period or periods during which such act (or 
     failure to act) occurred.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to net operating losses arising in taxable years 
     ending after the date of the enactment of this Act.

     SEC. 3302. PROPERTY SUBJECT TO A LIABILITY TREATED IN SAME 
                   MANNER AS ASSUMPTION OF LIABILITY.

       (a) Repeal of Property Subject to a Liability Test.--
       (1) Section 357.--Section 357(a) of the Internal Revenue 
     Code of 1986 (relating to assumption of liability) is amended 
     by striking ``, or acquires from the taxpayer property 
     subject to a liability'' in paragraph (2).
       (2) Section 358.--Section 358(d)(1) of such Code (relating 
     to assumption of liability) is amended by striking ``or 
     acquired from the taxpayer property subject to a liability''.
       (3) Section 368.--
       (A) Section 368(a)(1)(C) of such Code is amended by 
     striking ``, or the fact that property acquired is subject to 
     a liability,''.
       (B) The last sentence of section 368(a)(2)(B) of such Code 
     is amended by striking ``, and the amount of any liability to 
     which any property acquired from the acquiring corporation is 
     subject,''.
       (b) Clarification of Assumption of Liability.--
       (1) In general.--Section 357 of such Code is amended by 
     adding at the end the following new subsections:
       ``(d) Determination of Amount of Liability Assumed.--
       ``(1) In general.--For purposes of this section, section 
     358(d), section 362(d), section 368(a)(1)(C), and section 
     368(a)(2)(B), except as provided in regulations--
       ``(A) a recourse liability (or portion thereof) shall be 
     treated as having been assumed if, as determined on the basis 
     of all facts and circumstances, the transferee has agreed to, 
     and is expected to, satisfy such liability (or portion), 
     whether or not the transferor has been relieved of such 
     liability, and
       ``(B) a nonrecourse liability shall be treated as having 
     been assumed by the transferee of any asset subject to such 
     liability.
       ``(2) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection and section 362(d). The Secretary may also 
     prescribe regulations which provide that the manner in which 
     a liability is treated as assumed under this subsection is 
     applied, where appropriate, elsewhere in this title.''
       (2) Limitation on basis increase attributable to assumption 
     of liability.--Section 362 of such Code is amended by adding 
     at the end the following new subsection:
       ``(d) Limitation on Basis Increase Attributable to 
     Assumption of Liability.--
       ``(1) In general.--In no event shall the basis of any 
     property be increased under subsection (a) or (b) above fair 
     market value (determined without regard to section 7701(g)) 
     by reason of any gain recognized to the transferor as a 
     result of the assumption of a liability.
       ``(2) Treatment of gain not subject to tax.--Except as 
     provided in regulations, if--
       ``(A) gain is recognized to the transferor as a result of 
     an assumption of a nonrecourse liability by a transferee 
     which is also secured by assets not transferred to such 
     transferee, and
       ``(B) no person is subject to tax under this title on such 
     gain,

     then, for purposes of determining basis under subsections (a) 
     and (b), the amount of gain recognized by the transferor as a 
     result of the assumption of the liability shall be determined 
     as if the liability assumed by the transferee equaled such 
     transferee's ratable portion of such liability determined on 
     the basis of the relative fair market values (determined 
     without regard to section 7701(g)) of all of the assets 
     subject to such liability.''
       (c) Application to Provisions Other Than Subchapter C.--
       (1) Section 584.--Section 584(h)(3) of such Code is 
     amended--
       (A) by striking ``, and the fact that any property 
     transferred by the common trust fund is subject to a 
     liability,'' in subparagraph (A),
       (B) by striking clause (ii) of subparagraph (B) and 
     inserting:
       ``(ii) Assumed liabilities.--For purposes of clause (i), 
     the term `assumed liabilities' means any liability of the 
     common trust fund assumed by any regulated investment company 
     in connection with the transfer referred to in paragraph 
     (1)(A).
       ``(C) Assumption.--For purposes of this paragraph, in 
     determining the amount of any liability assumed, the rules of 
     section 357(d) shall apply.''.
       (2) Section 1031.--The last sentence of section 1031(d) of 
     such Code is amended--

[[Page H6362]]

       (A) by striking ``assumed a liability of the taxpayer or 
     acquired from the taxpayer property subject to a liability'' 
     and inserting ``assumed (as determined under section 357(d)) 
     a liability of the taxpayer'', and
       (B) by striking ``or acquisition (in the amount of the 
     liability)''.
       (d) Conforming Amendments.--
       (1) Section 351(h)(1) of such Code is amended by striking 
     ``, or acquires property subject to a liability,''.
       (2) Section 357 of such Code is amended by striking ``or 
     acquisition'' each place it appears in subsection (a) or (b).
       (3) Section 357(b)(1) of such Code is amended by striking 
     ``or acquired''.
       (4) Section 357(c)(1) of such Code is amended by striking 
     ``, plus the amount of the liabilities to which the property 
     is subject,''.
       (5) Section 357(c)(3) of such Code is amended by striking 
     ``or to which the property transferred is subject''.
       (6) Section 358(d)(1) of such Code is amended by striking 
     ``or acquisition (in the amount of the liability)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to transfers after the date of the enactment of 
     this Act.

     SEC. 3303. LIMITATION ON REQUIRED ACCRUAL OF AMOUNTS RECEIVED 
                   FOR PERFORMANCE OF CERTAIN PERSONAL SERVICES.

       (a) In General.--Paragraph (5) of section 448(d) of the 
     Internal Revenue Code of 1986 (relating to special rule for 
     services) is amended by inserting ``in fields referred to in 
     paragraph (2)(A)'' after ``services by such person''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1998.
       (c) Coordination With Section 481.--In the case of any 
     taxpayer required by this section to change its method of 
     accounting for any taxable year--
       (1) such change shall be treated as initiated by the 
     taxpayer,
       (2) such change shall be treated as made with the consent 
     of the Secretary of the Treasury, and
       (3) the period for taking into account the adjustments 
     under section 481 by reason of such change shall be 3 years.

     SEC. 3304. RETURNS RELATING TO CANCELLATIONS OF INDEBTEDNESS 
                   BY ORGANIZATIONS LENDING MONEY.

       (a) In General.--Paragraph (2) of section 6050P(c) of the 
     Internal Revenue Code of 1986 (relating to definitions and 
     special rules) is amended by striking ``and'' at the end of 
     subparagraph (B), by striking the period at the end of 
     subparagraph (C) and inserting ``, and'', and by inserting 
     after subparagraph (C) the following new subparagraph:
       ``(D) any organization a significant trade or business of 
     which is the lending of money.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to discharges of indebtedness after December 31, 
     1998.

     SEC. 3305. CLARIFICATION AND EXPANSION OF MATHEMATICAL ERROR 
                   ASSESSMENT PROCEDURES.

       (a) TIN Deemed Incorrect if Information on Return Differs 
     With Agency Records.--Section 6213(g)(2) of the Internal 
     Revenue Code of 1986 (defining mathematical or clerical 
     error) is amended by adding at the end the following flush 
     sentence:

     ``A taxpayer shall be treated as having omitted a correct TIN 
     for purposes of the preceding sentence if information 
     provided by the taxpayer on the return with respect to the 
     individual whose TIN was provided differs from the 
     information the Secretary obtains from the person issuing the 
     TIN.''.
       (b) Expansion of Mathematical Error Procedures to Cases 
     Where TIN Establishes Individual Not Eligible for Tax 
     Credit.--Section 6213(g)(2) of such Code is amended by 
     striking ``and'' at the end of subparagraph (J), by striking 
     the period at the end of the subparagraph (K) and inserting 
     ``, and'', and by adding at the end the following new 
     subparagraph:
       ``(L) the inclusion on a return of a TIN required to be 
     included on the return under section 21, 24, or 32 if--
       ``(i) such TIN is of an individual whose age affects the 
     amount of the credit under such section, and
       ``(ii) the computation of the credit on the return reflects 
     the treatment of such individual as being of an age different 
     from the individual's age based on such TIN.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 3306. INCLUSION OF ROTAVIRUS GASTROENTERITIS AS A 
                   TAXABLE VACCINE.

       (a) In General.--Section 4132(1) of the Internal Revenue 
     Code of 1986 (defining taxable vaccine) is amended by adding 
     at the end the following new subparagraph:
       ``(K) Any vaccine against rotavirus gastroenteritis.''.
       (b) Effective Date.--
       (1) Sales.--The amendment made by this section shall apply 
     to sales after the date of the enactment of this Act.
       (2) Deliveries.--For purposes of paragraph (1), in the case 
     of sales on or before the date of the enactment of this Act 
     for which delivery is made after such date, the delivery date 
     shall be considered the sale date.
                  TITLE IV--HEALTH CARE LAWSUIT REFORM
                     Subtitle A--General Provisions

     SEC. 4001. FEDERAL REFORM OF HEALTH CARE LIABILITY ACTIONS.

       (a) Applicability.--This title shall apply with respect to 
     any health care liability action brought in any State or 
     Federal court, except that this title shall not apply to--
       (1) an action for damages arising from a vaccine-related 
     injury or death to the extent that title XXI of the Public 
     Health Service Act applies to the action, or
       (2) an action under the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1001 et seq.).
       (b) Preemption.--This title shall preempt any State law to 
     the extent such law is inconsistent with the limitations 
     contained in this title. This title shall not preempt any 
     State law that provides for defenses or places limitations on 
     a person's liability in addition to those contained in this 
     title or otherwise imposes greater restrictions than those 
     provided in this title.
       (c) Effect on Sovereign Immunity and Choice of Law or 
     Venue.--Nothing in subsection (b) shall be construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any provision of law;
       (2) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (3) affect the applicability of any provision of the 
     Foreign Sovereign Immunities Act of 1976;
       (4) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation; or
       (5) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum.
       (d) Amount in Controversy.--In an action to which this 
     title applies and which is brought under section 1332 of 
     title 28, United States Code, the amount of non-economic 
     damages or punitive damages, and attorneys' fees or costs, 
     shall not be included in determining whether the matter in 
     controversy exceeds the sum or value of $50,000.
       (e) Federal Court Jurisdiction Not Established on Federal 
     Question Grounds.--Nothing in this title shall be construed 
     to establish any jurisdiction in the district courts of the 
     United States over health care liability actions on the basis 
     of section 1331 or 1337 of title 28, United States Code.

     SEC. 4002. DEFINITIONS.

       As used in this title:
       (1) Actual damages.--The term ``actual damages'' means 
     damages awarded to pay for economic loss.
       (2) Alternative dispute resolution system; adr.--The term 
     ``alternative dispute resolution system'' or ``ADR'' means a 
     system established under Federal or State law that provides 
     for the resolution of health care liability claims in a 
     manner other than through health care liability actions.
       (3) Claimant.--The term ``claimant'' means any person who 
     brings a health care liability action and any person on whose 
     behalf such an action is brought. If such action is brought 
     through or on behalf of an estate, the term includes the 
     claimant's decedent. If such action is brought through or on 
     behalf of a minor or incompetent, the term includes the 
     claimant's legal guardian.
       (4) Clear and convincing evidence.--The term ``clear and 
     convincing evidence'' is that measure or degree of proof that 
     will produce in the mind of the trier of fact a firm belief 
     or conviction as to the truth of the allegations sought to be 
     established. Such measure or degree of proof is more than 
     that required under preponderance of the evidence but less 
     than that required for proof beyond a reasonable doubt.
       (5) Collateral source payments.--The term ``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 an injury or wrongful death, 
     pursuant to--
       (A) any State or Federal health, sickness, income-
     disability, accident or workers' compensation Act;
       (B) any health, sickness, income-disability, or accident 
     insurance that provides health benefits or income-disability 
     coverage;
       (C) any contract or agreement of any group, organization, 
     partnership, or corporation to provide, pay for, or reimburse 
     the cost of medical, hospital, dental, or income disability 
     benefits; and
       (D) any other publicly or privately funded program.
       (6) Drug.--The term ``drug'' has the meaning given such 
     term in section 201(g)(1) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 321(g)(1)).
       (7) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from injury (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities), to the extent recovery for such loss is 
     allowed under applicable State law.
       (8) Harm.--The term ``harm'' means any legally cognizable 
     wrong or injury for which punitive damages may be imposed.
       (9) Health benefit plan.--The term ``health benefit plan'' 
     means--
       (A) a hospital or medical expense incurred policy or 
     certificate,
       (B) a hospital or medical service plan contract,
       (C) a health maintenance subscriber contract, or

[[Page H6363]]

       (D) a Medicare+Choice plan (offered under part C of title 
     XVIII of the Social Security Act),

     that provides benefits with respect to health care services.
       (10) Health care liability action.--The term ``health care 
     liability action'' means a civil action brought in a State or 
     Federal court against--
       (A) a health care provider,
       (B) an entity which is obligated to provide or pay for 
     health benefits under any health benefit plan (including any 
     person or entity acting under a contract or arrangement to 
     provide or administer any health benefit), or
       (C) the manufacturer, distributor, supplier, marketer, 
     promoter, or seller of a medical product,
     in which the claimant alleges a claim (including third party 
     claims, cross claims, counter claims, or contribution claims) 
     based upon the provision of (or the failure to provide or pay 
     for) health care services or the use of a medical product, 
     regardless of the theory of liability on which the claim is 
     based or the number of plaintiffs, defendants, or causes of 
     action.
       (11) Health care liability claim.--The term ``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.
       (12) Health care provider.--The term ``health care 
     provider'' means any person that is engaged in the delivery 
     of health care services in a State and that is required by 
     the laws or regulations of the State to be licensed or 
     certified by the State to engage in the delivery of such 
     services in the State.
       (13) Health care service.--The term ``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.
       (14) Medical device.--The term ``medical device'' has the 
     meaning given such term in section 201(h) of the Federal 
     Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)).
       (15) Non-economic damages.--The term ``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.
       (16) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity, including 
     any governmental entity.
       (17) Product seller.--
       (A) In general.--Subject to subparagraph (B), the term 
     ``product seller'' means a person who, in the course of a 
     business conducted for that purpose--
       (i) sells, distributes, rents, leases, prepares, blends, 
     packages, labels, or is otherwise involved in placing, a 
     product in the stream of commerce, or
       (ii) installs, repairs, or maintains the harm-causing 
     aspect of a product.
       (B) Exclusion.--Such term does not include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services in any case in 
     which the sale or use of a product is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who--

       (I) acts in only a financial capacity with respect to the 
     sale of a product; or
       (II) 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.

       (18) Punitive damages.--The term ``punitive damages'' means 
     damages awarded against any person not to compensate for 
     actual injury suffered, but to punish or deter such person or 
     others from engaging in similar behavior in the future.
       (19) State.--The term ``State'' means each of the several 
     States, the District of Columbia, Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, the Northern Mariana Islands, 
     and any other territory or possession of the United States.

     SEC. 4003. EFFECTIVE DATE.

       This title will apply to--
       (1) any health care liability action brought in a Federal 
     or State court, and
       (2) any health care liability claim subject to an 
     alternative dispute resolution system,

     that is initiated on or after the date of enactment of this 
     title, except that any health care liability claim or action 
     arising from an injury occurring before the date of enactment 
     of this title shall be governed by the applicable statute of 
     limitations provisions in effect at the time the injury 
     occurred.
    Subtitle B--Uniform Standards for Health Care Liability Actions

     SEC. 4011. STATUTE OF LIMITATIONS.

       A health care liability action may not be brought after the 
     expiration of the 2-year period that begins on the date on 
     which the alleged injury that is the subject of the action 
     was discovered or should reasonably have been discovered, but 
     in no case after the expiration of the 5-year period that 
     begins on the date the alleged injury occurred.

     SEC. 4012. CALCULATION AND PAYMENT OF DAMAGES.

       (a) Treatment of Non-Economic Damages.--
       (1) Limitation on non-economic damages.--The total amount 
     of non-economic damages that may be awarded to a claimant for 
     losses resulting from the injury which is the subject of a 
     health care liability action may not exceed $250,000, 
     regardless of the number of parties against whom the action 
     is brought or the number of actions brought with respect to 
     the injury. The limitation under this paragraph shall 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 a patient, or if the patient is 
     incompetent, against the wishes of the patient's guardian, on 
     the basis of the patient's present or predicated age, 
     disability, degree of medical dependency, or quality of life.
       (2) Limit.--If, after the date of the enactment of this 
     Act, a State enacts a law which prescribes the amount of non-
     economic damages which may be awarded in a health care 
     liability action which is different from the amount 
     prescribed by section 4012(a)(1), the State amount shall 
     apply in lieu of the amount prescribed by such section. If, 
     after the date of the enactment of this Act, a State enacts a 
     law which limits the amount of recovery in a health care 
     liability action without delineating between economic and 
     non-economic damages, the State amount shall apply in lieu of 
     the amount prescribed by such section.
       (3) Joint and several liability.--In any health care 
     liability action brought in State or Federal court, a 
     defendant shall be liable only for the amount of non-economic 
     damages attributable to such defendant in direct proportion 
     to such defendant's share of fault or responsibility for the 
     claimant's actual damages, as determined by the trier of 
     fact. In all such cases, the liability of a defendant for 
     non-economic damages shall be several and not joint and a 
     separate judgment shall be rendered against each defendant 
     for the amount allocated to such defendant.
       (b) Treatment of Punitive Damages.--
       (1) General rule.--Punitive damages may, to the extent 
     permitted by applicable State law, be awarded in any health 
     care liability action for harm in any Federal or State court 
     against a defendant if the claimant establishes by clear and 
     convincing evidence that the harm suffered was the result of 
     conduct--
       (A) specifically intended to cause harm, or
       (B) conduct manifesting a conscious, flagrant indifference 
     to the rights or safety of others.
       (2) Applicability.--This subsection shall apply to any 
     health care liability action brought in any Federal or State 
     court on any theory where punitive damages are sought. This 
     subsection does not create a cause of action for punitive 
     damages. This subsection does not preempt or supersede any 
     State or Federal law to the extent that such law would 
     further limit the award of punitive damages.
       (3) Bifurcation.--At the request of any party, the trier of 
     fact shall consider in a separate proceeding whether punitive 
     damages are to be awarded and the amount of such award. If a 
     separate proceeding is requested, evidence relevant only to 
     the claim of punitive damages, as determined by applicable 
     State law, shall be inadmissible in any proceeding to 
     determine whether actual damages are to be awarded.
       (4) Drugs and devices.--
       (A) In general.--
       (i) Punitive damages.--Punitive damages shall not be 
     awarded against a manufacturer or product seller of a drug or 
     medical device which caused the claimant's harm where--

       (I) such drug or device was subject to premarket approval 
     by the Food and Drug Administration with respect to the 
     safety of the formulation or performance of the aspect of 
     such drug or device which caused the claimant's harm, or the 
     adequacy of the packaging or labeling of such drug or device 
     which caused the harm, and such drug, device, packaging, or 
     labeling was approved by the Food and Drug Administration; or
       (II) the drug is generally recognized as safe and effective 
     pursuant to conditions established by the Food and Drug 
     Administration and applicable regulations, including 
     packaging and labeling regulations.

       (ii) Application.--Clause (i) shall not apply in any case 
     in which the defendant, before or after premarket approval of 
     a drug or device--

       (I) intentionally and wrongfully withheld from or 
     misrepresented to the Food and Drug Administration 
     information concerning such drug or device required to be 
     submitted under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.) or section 351 of the Public Health 
     Service Act (42 U.S.C. 262) that is material and relevant to 
     the harm suffered by the claimant, or
       (II) made an illegal payment to an official or employee of 
     the Food and Drug Administration for the purpose of securing 
     or maintaining approval of such drug or device.

       (B) Packaging.--In a health care liability action for harm 
     which is alleged to relate to the adequacy of the packaging 
     or labeling of a drug which is required to have tamper-
     resistant packaging under regulations of the Secretary of 
     Health and Human Services (including labeling regulations 
     related to such packaging), the manufacturer or product 
     seller of the drug shall not be held liable for punitive 
     damages unless such packaging or labeling is found by the 
     court by clear and convincing evidence to be substantially 
     out of compliance with such regulations.
       (c) Periodic Payments for Future Losses.--
       (1) General rule.--In any health care liability action in 
     which the damages awarded

[[Page H6364]]

     for future economic and non-economic loss exceeds $50,000, a 
     person shall not be required to pay such damages in a single, 
     lump-sum payment, but shall be permitted to make such 
     payments periodically based on when the damages are likely to 
     occur, as such payments are determined by the court.
       (2) Finality of judgment.--The judgment of the court 
     awarding periodic payments under this subsection may not, in 
     the absence of fraud, be reopened at any time to contest, 
     amend, or modify the schedule or amount of the payments.
       (3) Lump-sum settlements.--This subsection shall not be 
     construed to preclude a settlement providing for a single, 
     lump-sum payment.
       (d) Treatment of Collateral Source Payments.--
       (1) Introduction into evidence.--In any health care 
     liability action, any defendant may introduce evidence of 
     collateral source payments. If any defendant elects to 
     introduce such evidence, the claimant may introduce evidence 
     of any amount paid or contributed or reasonably likely to be 
     paid or contributed in the future by or on behalf of the 
     claimant to secure the right to such collateral source 
     payments.
       (2) No subrogation.--No provider of collateral source 
     payments shall recover any amount against the claimant or 
     receive any lien or credit against the claimant's recovery or 
     be equitably or legally subrogated to the right of the 
     claimant in a health care liability action.
       (3) Application to settlements.--This subsection shall 
     apply to an action that is settled as well as an action that 
     is resolved by a fact finder.

     SEC. 4013. ALTERNATIVE DISPUTE RESOLUTION.

       Any ADR used to resolve a health care liability action or 
     claim shall contain provisions relating to statute of 
     limitations, non-economic damages, joint and several 
     liability, punitive damages, collateral source rule, and 
     periodic payments which are consistent with the provisions 
     relating to such matters in this title.

     SEC. 4014. REPORTING ON FRAUD AND ABUSE ENFORCEMENT 
                   ACTIVITIES.

       The General Accounting Office shall--
       (1) monitor--
       (A) 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
       (B) 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
       (2) submit a report on such compliance to the Committee on 
     Commerce, the Committee on the Judiciary, 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

     SEC. 5001. CONFIDENTIALITY OF PROTECTED HEALTH INFORMATION.

       (a) In General.--Title XI of the Social Security Act (42 
     U.S.C. 1301 et seq.) is amended by adding at the end the 
     following:

       ``Part D--Confidentiality of Protected Health Information


        ``inspection and copying of protected health information

       ``Sec. 1181. (a) In General.--Subject to the succeeding 
     provisions of this section, upon the request of an individual 
     who is the subject of protected health information, a person 
     who is a health care provider, health plan, employer, health 
     or life insurer, or educational institution shall make 
     available to the individual (or, in the discretion of the 
     person, to a health care provider designated by the 
     individual), for inspection and copying, protected health 
     information concerning the individual that the person 
     maintains, including records created under section 1182.
       ``(b) Access Through Originating Provider.--Protected 
     health information that is created by an originating 
     provider, and subsequently received by another health care 
     provider or a 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.
       ``(c) Investigational Information.--With respect to 
     protected health information that was created as part of the 
     requesting individual's participation in a clinical trial 
     monitored by an institutional review board established to 
     review health research with respect to potential risks to 
     human subjects pursuant to Federal regulations adopted under 
     section 1802(b) of the Public Health Service Act (42 U.S.C. 
     300v-1(b)) and the notice (informally referred to as the 
     `Common Rule') promulgated in the Federal Register at 56 Fed. 
     Reg. 28003), a request under subsection (a) shall be granted 
     only to the extent and in a manner consistent with such 
     regulations.
       ``(d) Other Exceptions.--Unless ordered by a court of 
     competent jurisdiction, a person to whom a request under 
     subsection (a) is made is not required to grant the request, 
     if--
       ``(1) the person determines that the disclosure of the 
     information could reasonably be expected to endanger the life 
     or physical safety of, or cause substantial harm to, any 
     individual; or
       ``(2) the information is compiled principally--
       ``(A) in anticipation of a civil, criminal, or 
     administrative action or proceeding; or
       ``(B) for use in such action or proceeding.
       ``(e) Denial of Request for Inspection or Copying.--If a 
     person to whom a request under subsection (a) is made denies 
     a request for inspection or copying pursuant to this section, 
     the person shall inform the individual making the request, in 
     writing, of--
       ``(1) the reasons for the denial of the request;
       ``(2) the availability of procedures for further review of 
     the denial; and
       ``(3) the individual's right to file with the person a 
     concise statement setting forth the request.
       ``(f) Statement Regarding Request.--If an individual has 
     filed with a person a statement under subsection (e)(3) with 
     respect to protected health information, the person, in any 
     subsequent disclosure of the information--
       ``(1) shall include a notation concerning the individual's 
     statement; and
       ``(2) may include a concise statement of the reasons for 
     denying the request for inspection or copying.
       ``(g) Procedures.--A person providing access to protected 
     health information for inspection or copying under this 
     section may set forth appropriate procedures to be followed 
     for such inspection or copying and may require an individual 
     to pay reasonable costs associated with such inspection or 
     copying.
       ``(h) Inspection and Copying of Segregable Portion.--A 
     person to whom a request under subsection (a) is made shall 
     permit the inspection and copying of any reasonably 
     segregable portion of a record after deletion of any portion 
     that the person is not required to disclose under this 
     section.
       ``(i) Deadline.--A person described in subsection (a) shall 
     comply with or deny, in accordance with this section, a 
     request for inspection or copying of protected health 
     information under this section not later than 30 days after 
     the date on which the person receives the request.
       ``(j) Rules Governing Agents.--An agent of a person 
     described in subsection (a) shall not be required to provide 
     for the inspection and copying of protected health 
     information, except where--
       ``(1) the protected health information is retained by the 
     agent; and
       ``(2) the agent has been asked by the person to fulfill the 
     requirements of this section.


           ``supplementation of protected health information

       ``Sec. 1182. (a) In General.--Subject to subsection (b), 
     not later than 45 days after the date on which a person who 
     is a health care provider, health plan, employer, health or 
     life insurer, or educational institution receives, from an 
     individual who is a subject of protected health information 
     that is maintained by the person, a request in writing to 
     amend the information by adding a concise written supplement 
     to it, the person--
       ``(1) shall make the amendment requested;
       ``(2) shall inform the individual of the amendment that has 
     been made; and
       ``(3) shall make reasonable efforts to inform any person 
     who is identified by the individual, who is not an officer, 
     employer, or agent of the person receiving the request, and 
     to whom the unamended portion of the information was 
     disclosed during the preceding year, by sending a notice to 
     the person's last known address that an amendment, consisting 
     of the addition of a supplement, has been made to the 
     protected health information of the individual.
       ``(b) Refusal to Amend.--If a person described in 
     subsection (a) refuses to make an amendment requested by an 
     individual under such subsection, the person shall inform the 
     individual, in writing, of--
       ``(1) the reasons for the refusal to make the amendment;
       ``(2) any procedures for further review of the refusal; and
       ``(3) the individual's right to file with the person a 
     concise statement setting forth the requested amendment and 
     the individual's reasons for disagreeing with the refusal.
       ``(c) Statement of Disagreement.--If an individual has 
     filed a statement of disagreement with a person under 
     subsection (b)(3), the person, in any subsequent disclosure 
     of the disputed portion of the information--
       ``(1) shall include a notation that such individual has 
     filed a statement of disagreement; and
       ``(2) may include a concise statement of the reasons for 
     not making the requested amendment.
       ``(d) Rules Governing Agents.--The agent of a person 
     described in subsection (a) shall not be required to make 
     amendments to individually identifiable health information, 
     except where--
       ``(1) the information is retained by the agent; and
       ``(2) the agent has been asked by such person to fulfill 
     the requirements of this section.

[[Page H6365]]

       ``(e) Duplicative Requests for Amendments.--If a person 
     described in subsection (a) receives a duplicative request 
     for an amendment of information as provided for in such 
     subsection and a statement of disagreement with respect to 
     the request has been filed pursuant to subsection (c), the 
     person shall inform the individual of such filing and shall 
     not be required to carry out the procedures under this 
     section.
       ``(f) Rule of Construction.--This section shall not be 
     construed--
       ``(1) 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
       ``(2) 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.


                 ``notice of confidentiality practices

       ``Sec. 1183. (a) Preparation of Written Notice.--A person 
     who is 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 the person's protected health information 
     confidentiality practices. The notice shall include--
       ``(1) a description of an individual's rights with respect 
     to protected health information;
       ``(2) the intended uses and disclosures of protected health 
     information;
       ``(3) the procedures established by the person for the 
     exercise of an individual's rights with respect to protected 
     health information; and
       ``(4) the procedures established by the person for 
     obtaining copies of the notice.
       ``(b) Model Notice.--The Secretary, after notice and 
     opportunity for public comment, and based on the advice of 
     the National Committee on Vital and Health Statistics 
     established under section 306(k) of the Public Health Service 
     Act (42 U.S.C. 242k(k)), shall develop and disseminate, not 
     later than 6 months after the date of the enactment of the 
     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.


                     ``establishment of safeguards

       ``Sec. 1184. (a) In General.--A person who is 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 the person.
       ``(b) Factors To Be Considered.--A person subject to 
     subsection (a) shall consider the following factors in 
     establishing safeguards under such subsection:
       ``(1) The need for protected health information.
       ``(2) The categories of personnel who will have access to 
     protected health information.
       ``(3) The feasibility of limiting access to individual 
     identifiers.
       ``(4) The appropriateness of the policy or procedure to the 
     person, and to the medium in which protected health 
     information is stored and transmitted.
       ``(5) The value of audit trails in computerized records.
       ``(c) Relationship to Part C Requirement.--Any safeguard 
     established under this section shall be consistent with the 
     requirement in section 1173(d)(2).
       ``(d) Conversion to Nonidentifiable Health Information.--A 
     person subject to subsection (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.


 ``availability of protected health information for purposes of health 
                            care operations

       ``Sec. 1185. (a) Disclosure.--Any person who maintains 
     protected health information may disclose the information to 
     a health care provider or a health plan for the purpose of 
     permitting the provider or plan to conduct health care 
     operations.
       ``(b) Use.--A health care provider or a health plan that 
     maintains protected health information may use it for the 
     purposes described in subsection (a).
       ``(c) Limitation on Sale or Barter.--Notwithstanding 
     subsection (b), no health care provider or health plan may, 
     as part of conducting health care operations, sell or barter 
     protected health information.


                      ``relationship to other laws

       ``Sec. 1186. (a) State Law.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the provisions of this part shall preempt a provision of 
     State law to the extent that such provision--
       ``(A) otherwise would be preempted as inconsistent with 
     this part under article VI of the Constitution of the United 
     States;
       ``(B) relates to authorization for the use or disclosure 
     of--
       ``(i) protected health information for health care 
     operations; or
       ``(ii) nonidentifiable health information; or
       ``(C) relates to any of the following:
       ``(i) Inspection or copying of protected health information 
     by a person who is a subject of the information.
       ``(ii) Amendment of protected health information by a 
     person who is a subject of the information.
       ``(iii) Notice of confidentiality practices with respect to 
     protected health information.
       ``(iv) Establishment of safeguards for protected health 
     information.
       ``(2) Exceptions.--Nothing in this part shall be construed 
     to preempt or modify a provision of State law to the extent 
     that such provision relates to protected health information 
     and--
       ``(A) the confidentiality of the records maintained by a 
     licensed mental health professional;
       ``(B) the provision of health care to a minor, or the 
     disclosure of information about a minor to a parent or 
     guardian of the minor;
       ``(C) condition-specific limitations on disclosure;
       ``(D) the use or disclosure of information for use in 
     legally authorized--
       ``(i) disease or injury reporting;
       ``(ii) public health surveillance, investigation, or 
     intervention;
       ``(iii) vital statistics reporting, such as reporting of 
     birth or death information;
       ``(iv) reporting of abuse or neglect information;
       ``(v) reporting of information concerning a communicable 
     disease status; or
       ``(vi) reporting concerning the safety or effectiveness of 
     a biological product regulated under section 351 of the 
     Public Health Service Act (42 U.S.C. 262) or a drug or device 
     regulated under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.);
       ``(E) the disclosure to a person by a health care provider 
     of information about an individual, in any case in which the 
     provider has determined--
       ``(i) in the provider's reasonable medical judgment, that 
     the individual is unconscious, incompetent, or otherwise 
     incapable of deciding whether to authorize disclosure of the 
     protected health information; and
       ``(ii) in the provider's reasonable judgment, that the 
     person is a spouse, relative, guardian, or close friend of 
     the individual's; or
       ``(F) the use of information by, or the disclosure of 
     information to, a person holding a valid and applicable power 
     of attorney that includes the authority to make health care 
     decisions on behalf of an individual who is a subject of the 
     information.
       ``(3) Privileges.--Nothing in this part shall be construed 
     to preempt or modify a provision of State law to the extent 
     that such provision relates to a privilege of a witness or 
     other person in a court of that State.
       ``(b) Federal Law.--Nothing in this part shall be construed 
     to preempt, modify, or repeal a provision of any other 
     Federal law relating to protected health information or 
     relating to an individual's access to protected health 
     information or health care services. Nothing in this part 
     shall be construed to preempt, modify, or repeal a provision 
     of Federal law to the extent that such provision relates to a 
     privilege of a witness or other person in a court of the 
     United States.


                           ``civil penalties

       ``Sec. 1187. (a) Violation.--A person who the Secretary 
     determines has substantially and materially failed to comply 
     with this part shall be subject, in addition to any other 
     penalties that may be prescribed by law--
       ``(1) in a case in which the violation relates to section 
     1181 or 1182, to a civil penalty of not more than $500 for 
     each such violation but not to exceed $5,000 in the aggregate 
     for all violations of an identical requirement or prohibition 
     during a calendar year;
       ``(2) in the case in which the violation relates to section 
     1183 or 1184, to a civil penalty of not more than $10,000 for 
     each such violation, but not to exceed $50,000 in the 
     aggregate for all violations of an identical requirement or 
     prohibition during a calendar year; or
       ``(3) in a case in which the Secretary finds that such 
     violations have occurred with such frequency as to constitute 
     a general business practice, to a civil penalty of not more 
     than $100,000.
       ``(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.


                             ``definitions

       ``Sec. 1188. As used in this part:
       ``(1) Agent.--The term `agent' means a person, including a 
     contractor, who represents and acts for another under the 
     contract or relation of agency, or whose function is to bring 
     about, modify, affect, accept performance of, or terminate 
     contractual obligations between the principal and a third 
     person.
       ``(2) Condition-specific limitations on disclosure.--The 
     term `condition-specific limitations on disclosure' means 
     State laws that prohibit the disclosure of protected health 
     information relating to a health condition or disease that 
     has been identified by the Secretary as posing a public 
     health threat.
       ``(3) Disclose.--The term `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.

[[Page H6366]]

       ``(4) Educational institution.--The term `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.
       ``(5) Employer.--The term `employer' has the meaning given 
     such term under section 3(5) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1002(5)), except that 
     such term shall include only employers of two or more 
     employees.
       ``(6) Health care.--The term `health care' means--
       ``(A) preventive, diagnostic, therapeutic, rehabilitative, 
     maintenance, or palliative care, including appropriate 
     assistance with disease or symptom management and 
     maintenance, counseling, service, or procedure--
       ``(i) with respect to the physical or mental condition of 
     an individual; or
       ``(ii) 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.
       ``(7) Health care operations.--The term `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.
       ``(D) Conducting or arranging for auditing services.
       ``(8) Health care provider.--The term `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, or 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 
     subparagraph (A) or (B).
       ``(9) Health or life insurer.--The term `health or life 
     insurer' means a health insurance issuer, as defined in 
     section 9832(b)(2) of the Internal Revenue Code of 1986, or a 
     life insurance company, as defined in section 816 of such 
     Code.
       ``(10) Health plan.--The term `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)), or 
     other program providing or arranging for the provision of 
     health benefits.
       ``(11) Health researcher.--The term `health researcher' 
     means a person (or an 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.
       ``(12) Nonidentifiable health information.--The term 
     `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 a direct means of identifying the 
     individual (such as name, address, and social security 
     number) have been removed, encrypted, or replaced with a 
     code, such that the identity of the individual is not evident 
     without (in the case of encrypted or coded information) use 
     of a key.
       ``(13) Originating provider.--The term `originating 
     provider', when used with respect to protected health 
     information, means 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.
       ``(14) Payment activities.--The term `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 of responsibility for coverage under the plan; 
     and
       ``(B) includes the following activities, when performed in 
     a manner consistent with subparagraph (A):
       ``(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.
       ``(iii) Review of health care services with respect to 
     coverage under a health plan or justification of charges.
       ``(15) Person.--The term `person' means--
       ``(A) a natural person;
       ``(B) a government or governmental subdivision, agency, or 
     authority;
       ``(C) a company, corporation, estate, firm, trust, 
     partnership, association, joint venture, society, or joint 
     stock company; or
       ``(D) any other legal entity.
       ``(16) Protected health information.--The term `protected 
     health information', when used with respect to an individual 
     who is a subject of information means any information 
     (including genetic information) that identifies the 
     individual, whether oral or recorded 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--
       ``(i) the provision of health care to an individual; or
       ``(ii) payment for the provision of health care to an 
     individual; and
       ``(D) is not nonidentifiable health information.
       ``(17) State.--The term `State' includes the District of 
     Columbia, Puerto Rico, the Virgin Islands, Guam, American 
     Samoa, and the Northern Mariana Islands.
       ``(18) Treatment.--The term `treatment' means the provision 
     of health care by a health care provider.
       ``(19) Writing.--The term `writing' means writing either in 
     a paper-based, computer-based, or electronic form, including 
     electronic signatures.''.
       (b) Enforcement of Provisions Through Conditions on 
     Participation.--
       (1) Participating physicians and suppliers.--Section 
     1842(h) of the Social Security Act (42 U.S.C. 1395u(h)) is 
     amended by adding at the end the following:
       ``(9) The Secretary may refuse to enter into an agreement 
     with a physician or supplier under this subsection, or may 
     terminate or refuse to renew such agreement, in the event 
     that such physician or supplier has been found to have 
     violated a provision of part D of title XI.''.
       (2) Medicare+choice organizations.--Section 1852(h) of the 
     Social Security Act (42 U.S.C. 1395w-22(h)) is amended--
       (A) in the matter preceding paragraph (1), by striking 
     ``procedures--'' and inserting ``procedures, consistent with 
     sections 1181 through 1185--''; and
       (B) in paragraph (1), by striking ``privacy of any 
     individually identifiable enrollee information;'' and 
     inserting ``confidentiality of protected health information 
     concerning enrollees;''.
       (3) Medicare providers.--Section 1866(a)(1) of the Social 
     Security Act (42 U.S.C. 1395cc(a)(1)) is amended--
       (A) by inserting a semicolon at the end of subparagraph 
     (R);
       (B) by striking the period at the end of subparagraph (S) 
     and inserting ``; and''; and
       (C) by inserting immediately after subparagraph (S) the 
     following new subparagraph:
       ``(T) to comply with sections 1181 through 1184.''.
       (4) Health maintenance organizations with risk-sharing 
     contracts.--Section 1876(k)(4) of the Social Security Act (42 
     U.S.C. 1395mm(k)(4)) of the Social Security Act is amended by 
     adding at the end the following:
       ``(E) The confidentiality and accuracy procedure 
     requirements under section 1852(h).''.
       (c) Conforming Amendments.--
       (1) Title heading.--Title XI of the Social Security Act (42 
     U.S.C. 1301 et seq.) is amended by striking the title heading 
     and inserting the following:
      ``TITLE XI--GENERAL PROVISIONS, PEER REVIEW, ADMINISTRATIVE 
 SIMPLIFICATION, AND CONFIDENTIALITY OF PROTECTED HEALTH INFORMATION''.
       (2) National committee on vital and health statistics.--
     Section 306(k)(5) of the Public Health Service Act (42 U.S.C. 
     242(k)(5)) is amended--
       (A) in subparagraphs (A)(viii) and (D), by striking ``part 
     C'' and inserting ``parts C and D'';
       (B) in subparagraph (C), by striking ``and'' at the end;
       (C) in subparagraph (D), by striking the period at the end 
     and inserting ``; and''; and
       (D) by adding at the end the following:
       ``(E) shall study the issues relating to section 1184 of 
     the Social Security Act (as added by the Patient Protection 
     Act of 1998), and, not later than 1 year after the date of 
     the enactment of the Patient Protection Act of

[[Page H6367]]

     1998, shall report to the Congress on such section.''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date that is 1 year after the date 
     of the enactment of this Act, except that subsection (c)(2), 
     and section 1183(b) of the Social Security Act (as added by 
     subsection (a)), shall take effect on the date of the 
     enactment of this Act.

     SEC. 5002. STUDY AND REPORT ON EFFECT OF STATE LAW ON HEALTH-
                   RELATED RESEARCH.

       Not later than one year 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 on the effect of State laws on health-
     related research subject to review by an institutional review 
     board or institutional review committee with respect to the 
     protection of human subjects.

     SEC. 5003. STUDY AND REPORT ON STATE LAW ON PROTECTED HEALTH 
                   INFORMATION.

       (a) In General.--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--
       (1) compiling 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.
       (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,'' 
     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,''.

     SEC. 5004. PROTECTION FOR CERTAIN INFORMATION DEVELOPED TO 
                   REDUCE MORTALITY OR MORBIDITY OR FOR IMPROVING 
                   PATIENT CARE AND SAFETY.

       (a) Protection of Certain Information.--Notwithstanding any 
     other provision of Federal or State law, health care response 
     information shall be exempt from any disclosure requirement 
     (regardless of whether the requirement relates to subpoenas, 
     discovery, introduction of evidence, testimony, or any other 
     form of disclosure), in connection with a civil or 
     administrative proceeding under Federal or State law, 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.
       (b) No Waiver of Protection Through Interaction with 
     Accrediting Body.--Notwithstanding any other provision of 
     Federal or State law, the protection of health care response 
     information from disclosure provided under subsection (a) 
     shall not be deemed to be modified or in any way waived by--
       (1) the development of such information in connection with 
     a request or requirement of an accrediting body; or
       (2) the transfer of such information to an accrediting 
     body.
       (c) Definitions.--For purposes of this section:
       (1) The term ``accrediting body'' means a national, not-
     for-profit organization that--
       (A) accredits health care providers; and
       (B) is recognized as an accrediting body by statute or by a 
     Federal or State agency that regulates health care providers.
       (2) The term ``health care provider'' has the meaning given 
     such term in section 1188 of the Social Security Act (as 
     added by section 5001 of this Act).
       (3) The term ``health care response information'' means 
     information (including any data, report, record, memorandum, 
     analysis, statement, or other communication) developed by, or 
     on behalf of, a health care provider in response to a 
     serious, adverse, patient-related event--
       (A) during the course of analyzing or studying the event 
     and its causes; and
       (B) for purposes of--
       (i) reducing mortality or morbidity; or
       (ii) improving patient care or safety (including the 
     provider's notification to an accrediting body and the 
     provider's plans of action in response to such event).
       (5) The term ``State'' has the meaning given such term in 
     section 1188 of the Social Security Act (as added by section 
     5001 of this Act).

     SEC. 5005. EFFECTIVE DATE FOR STANDARDS GOVERNING UNIQUE 
                   HEALTH IDENTIFIERS FOR INDIVIDUALS.

       Section 1174 of the Social Security Act (42 U.S.C. 1320d-3) 
     is amended by adding at the end the following:
       ``(c) Unique Health Identifiers.--Notwithstanding 
     subsections (a) and (b), the Secretary may not promulgate or 
     adopt a final standard under section 1173(b) 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.''.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, as 
amended, it shall be in order to consider the further amendment printed 
in the Congressional Record numbered 2, which shall be considered read 
and debatable for 1 hour, equally divided and controlled by the 
proponent and an opponent.
  The gentleman from Illinois (Mr. Hastert) and the gentleman from 
Michigan (Mr. Dingell) each will control 30 minutes of debate on the 
bill.
  The Chair recognizes the gentleman from Illinois (Mr. Hastert).

                              {time}  1045

  Mr. HASTERT. Mr. Speaker, I yield 3 minutes to the gentleman from 
Pennsylvania (Mr. Goodling), the distinguished chairman of the 
Committee on Education and the Workforce.
  (Mr. GOODLING asked and was given permission to revise and extend his 
remarks.)
  Mr. GOODLING. Mr. Speaker, I rise today in support of H.R. 4250, the 
Patient Protection Act. This is truly a historic occasion which rivals 
the passage of ERISA in 1974. Thanks to ERISA, 150 million Americans 
are covered by employer-sponsored health care plans. Thanks to the 
gentleman from Illinois (Mr. Fawell), most of the 4 million uninsured 
will have quality affordable health coverage available to them when we 
pass this legislation.
  Increasingly, the American people tell us that they need common sense 
elements in health insurance reform, and that is what is in the Patient 
Protection Act, including basic protections such as guaranteed access 
to emergency medical care, doctors being able to speak freely with 
patients about their health care options without being gagged and 
ensuring that a patient can quickly obtain the benefits promised by 
their health care.
  The Patient Protection Act will also provide health care 
accessibility to patients by requiring that patients have full access 
to plan information such as what benefits are covered, the 
participant's financial responsibility, and a complete description of 
the claims procedure and appeals process. Women and families with small 
children will be ensured direct access to key specialists such as OB/
GYNs and pediatricians.
  As I see it, however, our plan differs from other proposals in two 
key ways. First, we make sure that patients get the care they deserve 
in a timely manner before harm can occur. We get them into hospital 
rooms, not into courtrooms.
  We take serious, comprehensive steps to expand availability and 
affordability of health insurance to American working families who have 
no health insurance. No other plan does this.
  I have held a lot of town meetings in my district over the years, and 
not once has a constituent said to me, ``I would really like to be able 
to sue my health plan.'' What they have said to me over and over again 
is ``When are you going to do something about the high costs of health 
insurance?'' Today, I am happy to say we are doing something about it.
  Simply put, the Patient Protection Act will increase access to 
affordable health insurance for millions of Americans. It is amazing to 
me that all the other proposals ignore the 42 million uninsured 
Americans.
  The gentleman from Illinois (Mr. Fawell) has pushed this through our 
committee on two occasions to make sure that we do something about the 
uninsured. The problem of the uninsured, both children and adults, is 
the problem of small business lacking access to affordable health 
coverage.
  Over 80 percent of the 82 million uninsured Americans live in 
families where someone is working, someone is employed usually by a 
small employer, or they are self-employed.
  To address the affordability problem of the uninsured, the 
Association Health Plan proposals in the Patient Protection Act would 
give franchise networks, bona fide trades, business and professional 
associations, and organizations such as the Chamber of Commerce, and 
the National Federation of Independent Business the ability to form 
large group health plans within and across State lines.
  Again, the best patient protection is access to affordable health 
care.
  I would like to take a minute to go into a little more detail about 
some of the claims procedure provisions in the Patient Protection Act 
as they pertain to ERISA.

[[Page H6368]]

  The provisions relating to internal review and external review claims 
procedures and remedies are contained in Subtitle C of Title I and will 
hold plans accountable and insure patients get the care they deserve in 
a timely manner.
  The current claims procedures that apply to employee benefit plans 
under federal law are contained in ERISA Title I section 503. The 
exclusive remedies that apply to such plans are contained in Part 5 of 
that Act. With minor exception as provided in regulations, the 
procedures under 503 do not distinguish between group health plans 
(i.e. employee benefit plans providing medical care) and other plans, 
including pension plans and other employee welfare benefit plans. In 
general, plans may take up to 90 days to inform claimants of initial 
decisions and up to 60 days to inform them of decisions upon internal 
appeal. Generally, upon satisfaction of administrative remedies, 
claimants may proceed, pursuant to Part 5, to enforce their rights 
under the plan and the ERISA law in court. In general, remedies 
relating to adverse coverage decisions are limited to the payment of 
benefits as found to be provided under the terms of the plan and to 
such reasonable attorney's fees as may be provided in the discretion of 
the court. Certain other civil remedies may also apply.
  Under Subtitle C of Title I the ERISA claims procedures are 
modernized to take into account the rules as they apply to the many 
diverse kinds of group health plans in today's evolving health care 
delivery system. Section 503 of ERISA is amended to require group 
health plans to provide written--and understandable--notice to a 
participant of any negative coverage decision on requested benefits 
under the plan within 30 days of the request. If the request is for 
urgent medical care, the plan must provide the notice within 10 days; 
for emergencies, the requirement is 72 hours. If the request is for a 
referral to a physician specialist, the coverage decision must be 
within 72 hours. This notice also must be sent to the participant's 
medical provider if the provider initiated the claim or seeks 
reimbursement from the plan. The participant must be informed in the 
notice that he or she may file a written request for review (i.e. 
internal appeal to an appropriate named fiduciary under the plan) of 
the coverage decision within 180 days after the notice is received. 
Internal reviews of coverage request denials involving medical 
necessity and experimental treatment or technology must be conducted by 
a physician who did not make the initial decision. The same time frames 
apply to internal review as to the initial coverage decision.
  If the internal appeal results in a coverage denial, the participant 
may make a request within 30 days for an external review, which must be 
conducted by one or more independent medical experts (in general, a 
physician with expertise in the matters involved) selected in 
accordance with procedures that must be specified under the plan. The 
procedures of selection required under the plan allow for independent 
intermediaries to select the reviewing medical experts so as to ensure 
they meet the strict independence rules preventing conflict of 
interest. The external review must be completed within 25 days of the 
request. If the final decision under the plan by a physician, who did 
not make the earlier decision, is an adverse coverage decision, then 
the participant has recourse to the courts. Alternative dispute 
resolution procedures would be permitted, however they would have to 
conform to the requirements for physician review of medical necessity 
and with the external review procedures.
  The remedies under section 502 of ERISA are improved to include civil 
penalties for fiduciaries who do not provide benefits in accordance 
with the recommendation of the external review medical expert. If after 
external review, a participant is denied coverage, a civil court may 
impose a penalty of up to $500 a day ($1,000 in the case of bad faith 
violations) starting on the date on which the recommendation was made. 
The total penalty may be up to $250,000. Also, fiduciaries in an 
expedited court action or who took or failed to take action that 
resulted in a denial of coverage after an external review would be 
liable in such court actions to pay attorney fees and other reasonable 
costs to the plaintiff--i.e., the patient. In the case of a pattern or 
practice of violation, the Secretary of Labor may, in a court 
proceeding, impose a penalty of up to $100,000. In cases in which a 
physician certifies to a court that the time needed to carry out 
administrative remedies and procedures for review of coverage denials 
would run the risk of causing irreparable harm to the health of the 
participant, the provisions under section 502 allows such participants 
to take civil action to obtain an injunction or other equitable relief.
  This claims process will ensure patients get the care they deserve in 
a timely manner. It is one of many reasons the Patient Protection Act 
should be passed by Congress and signed into law.
  Mr. DINGELL. Mr. Speaker, I yield myself 2 minutes.
  Mr. Speaker, we face a clear choice today between two different 
approaches. The first, the Patients' Bill of Rights was written last 
year and revised in March. The other piece of legislation, the 
Republican leadership bill, was still being written after midnight last 
night.
  The Patients' Bill of Rights has been scored by the CBO at a cost of 
$2 per month per patient, and we provided revenue offsets to ensure 
fiscal responsibility.
  The leadership's bill was never even seen by the CBO and has not been 
read by the Members. Only minutes ago did we get a final score from 
CBO. Since it does nothing, it costs nothing. I think my colleagues 
should note, a bill that does nothing costs nothing.
  The Patients' Bill of Rights guarantees real patient rights. It puts 
health back into the Health Maintenance Organization. The Republican 
leadership bill has the word HMO. In that bill, HMO stands for hide my 
opposition.
  If our primary concern is health care for the American people, the 
choice is clear. The Patients' Bill of Rights puts medical decisions, 
especially the question of medical necessity into the hands of doctors 
and takes them away from insurance company bureaucrats who now are 
hurting the American public.
  The Patients' Bill of Rights guarantees that we can see a medical 
specialist when we need one. The Patients' Bill of Rights says that, if 
you are a pregnant woman or cancer patient, you will continue to be 
able to see your doctor when you need continuity of care.
  The Patients' Bill of Rights guarantees that we will be able to get 
the prescriptions that we need. The Patients' Bill of Rights holds 
health plans accountable when they have denied health care and when 
their decision kills or injures somebody.
  The Patients' Bill of Rights protects the confidentiality of our 
medical records, and the Republican bill does not. The Republican bill 
even has one interesting thing. It goes so far as to repeal existing 
consumer protection laws that help patients. I want my colleagues to 
hear that.
  Last of all, I want my colleagues to look at the roster of supporters 
of the Patients' Bill of Rights: AMA, all the health care specialists, 
the nurses, and all of the consumers and aging organizations. The 
American people want the Patients' Bill of Rights. If we want to serve 
them, we will vote for the Patients' Bill of Rights today.
  I want to particularly single out my good friend and colleague, Dr. 
Ganske for his leadership and courage on this issue. He is a man of 
integrity and stands up for what he believes in. He deserves great 
credit.
  I also want to commend the work of the staff in the development of 
the Patients Bill of Rights.
  Among our staff Bridgett Taylor, Amy Droskoski, and Bernadette 
Fernandez have worked tirelessly on the bill for many months.
  Mr. HASTERT. Mr. Speaker, I yield 3 minutes to the distinguished 
gentleman from Virginia (Mr. Bliley), chairman of the Committee on 
Commerce.
  (Mr. BLILEY asked and was given permission to revise and extend his 
remarks.)
  Mr. BLILEY. Mr. Speaker, when it comes to health care, patients and 
their doctors should be in the driver's seat. Right now, they are mere 
passengers. Fortunately, the Patient Protection Act of 1998 puts 
patients back at the wheel where they belong.
  Our bill gives Americans the care they need when they need it. It 
protects patients without expanding big government, and it promises 
patients greater choice and the ability to stick with a favorite 
doctor.
  The Patient Protection Act addresses a major flaw in our health care 
system, the lack of a real marketplace where patients can shop for the 
lowest cost and highest quality care.
  Even Ron Pollack of Families U.S.A., a staunch supporter of President 
Clinton's efforts to nationalize health care agrees this is needed. He 
recently said, and I quote, ``There is no true marketplace today to 
drive health care quality.'' He is right. Think about it.
  When we buy a new car, we do not go to a bank, credit union, or GMAC 
first. We choose the car we want; then we arrange the financing. In 
other words,

[[Page H6369]]

we, not the lender, choose what car to buy. We, not our employer, 
choose the financing.
  Why can health care not work the same way? Why do health care choices 
have to be dictated by the terms of health insurance than by consumers' 
needs and preferences. Why must employers choose the health coverage 
that finances so many Americans' care?
  HealthMarts answer these important questions in a way that puts 
patients first. HealthMarts are private, voluntary, and competitive 
health insurance supermarkets. They transfer choice within the 
employer-based health insurance market from small employers to 
employees.
  HealthMarts give consumers the freedom to choose health coverage from 
a broad menu of options. Here is how they work: A small business joins 
a HealthMart because it offers lower cost coverage, makes more options 
available to employees, and does the administrative work.
  Employees choose from among the HealthMart's coverage options. Each 
can choose a different plan and still benefit from group rates. Sound 
familiar? It should. It is the type of choice today that is available 
only to Members of Congress, our staffs, and other Federal employees.
  This type of consumer choice is essential to the quality of health 
care coverage and services. After all, if all Americans had the freedom 
to choose their coverage, they would be able to get the highest quality 
care that best meets their needs. HealthMarts will achieve that 
critical objective.
  The bottom line is this: By making quality as important in the 
selection of health coverage as cost, HealthMarts will move the Nation 
toward a true health care marketplace.
  This new idea gives patients more choice and better quality health 
care. It puts them back in the driver's seat. It is yet another reason 
why the Patient Protection Act deserves our strong support.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Iowa (Mr. Ganske) and note that he has been instrumental 
in bringing us to where we are today. I salute him for it and thank him 
on behalf of my colleagues.
  Mr. GANSKE. Mr. Speaker, I rise in opposition to H.R. 4250 and in 
support of the Ganske-Dingell substitute. There is going to be a lot of 
debate today about the legal situation. I have been for legal reform. I 
have stood in this well arguing for medical malpractice reform. I voted 
for securities litigation reform, product liability reform.
  I, as a physician, would never want Congress to pass a law that says 
physicians should be immune from their malpractice. Yet, that is a 
situation that we have with ERISA.
  The problem with H.R. 4250 is it does not remove ERISA preemption for 
State causes of action. The Ganske-Dingell bill says that Federal law 
may not preempt State law, but we have a provision in there that 
protects the employer.
  If the employer is not making the decision, if the HMO is making the 
decision, the employer is not subject to liability. That is a very 
important distinction. It is fair.
  But let me just ask my colleagues something, it is very clear that 
HMOs have committed malpractice that has resulted in loss of life and 
limb. ERISA, through the interpretation of the courts, has extended 
that legal exemption to health plans. However, we have never had our 
personal fingerprints on that legal immunity and the problems with it.
  If we vote for the GOP bill, we are going to be codifying, giving 
HMOs legal immunity. Would we do that for tobacco companies? I think 
not. Would we do that for companies that are making life and death 
decisions? I hope not.
  Mr. HASTERT. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. Cunningham).
  Mr. CUNNINGHAM. Mr. Speaker, I have no doubt that Members on both 
sides of the aisle want to focus on health care, but I personally feel 
that, in an election year, political pandering on both sides is not a 
benefit for the American public.
  I look at the Democratic ``Bill of Fights'' that is going to drive up 
health care cost by letting trial lawyers take over. California is a 
leader in HMOs, but I also see good, bad, and ugly in the HMOs in 
California. We are losing good doctors in California because of HMOs 
and managed health care.

                              {time}  1100

  But yet there are still some good ones, and we need to attend to 
that.
  Whether the lawyers drive up costs or CEO's from HMOs rip off the 
system and drive up health care, both are bad, and that is why I say 
that neither one of these bills are good for the American consumer, and 
we need to help.
  The gentleman from California (Mr. Fazio) brought over a list of 
things that are preempted in state law. I do not want that. But, at the 
same time, I looked into it, and the unions right now are under ERISA. 
Your supporters are exempt under state law, the unions and large 
companies. We wanted the small businesses to be able to band together 
and have the same benefits for low health care costs.
  Mr. DINGELL. Mr. Speaker, I yield such time as he may consume to the 
distinguished gentleman from California (Mr. Stark).
  (Mr. STARK asked and was given permission to revise and extend his 
remarks.)
  Mr. STARK. Mr. Speaker, I ask unanimous consent that my infirmity not 
be taken as support for the Republican bill, which is a cynical sham 
and should be defeated. I wish to announce my support for the Dingell 
bill.
  Mr. Speaker, today's vote on managed care reform is a complete sham.
  It wasn't long ago when the Republican leadership called on their 
friends in the health insurance industry ``get off your butts and get 
off your wallets'' to defeat real reform.
  Today, they are here to put another nail in the coffin of real 
reform.
  Their answer to managed care reform is the same as their answer to 
campaign finance reform and tobacco legislation: Make it look like they 
are doing something, but then work to kill it with the addition of 
divisive provisions.
  H.R. 4250 flunks the fundamental test of real reform--it doesn't hold 
health plans accountable for their medical decision making. This bill 
precludes an injured patient or their family from suing a managed care 
plan that maims or kills them.
  Under the Republican bill, health plans could continue to get away 
with cases like that of Mrs. Florence Corcoran, who lost her baby 
because of her health plan's refusal to follow her doctors' advice.
  Today, if a doctor commits malpractice on a patient, the patient has 
the right to sue that doctor. If a hospital maims a patient, they are 
liable for their action. If a defective car causes a person's death, 
the care manufacturer is liable.
  Why should we let managed care plans off the hook? What makes them 
worthy of legal immunity that we don't grant doctors and hospitals--or 
any other profession or industry?
  In addition, the Gingrich managed care bill before us today includes 
a number of ``poison pills'' that Congress has rejected numerous times 
in the past.
  Among the poison pills are:
  Expansions of medical savings accounts to help the healthy and 
wealthy at a cost of billions to American taxpayers;
  MEWA and HealthMart provisions that would destroy small group market 
reforms in the states, increase adverse selection and weaken state 
enforcement authority.
  But the cherry on top of this sundae for the managed care industry is 
the permission this bill gives health plans to withhold even more 
access to care than they can under current law. This bill gives HMOs 
the right to define--each plan for itself--what the medically necessary 
care is that it will provide to its enrollees. Today, medically 
necessary care is defined by doctors and other medical experts as the 
best that science and human ability can deliver. But this bill says 
plans can decide what their version of medically necessary care is, and 
how much of it they will give you. It lets bureaucrats, not doctors, 
determine your health care.
  Even those managed care reforms where there has been widespread 
agreement--such as access to emergency care--are botched in the 
Gingrich bill.
  This bill does not provide the protections to the private sector that 
are enjoyed by Medicare and Medicaid beneficiaries today.
  An emergency physician who testified earlier this week, Dr. Charlotte 
Yeh, got it right when she said that she thought the Republicans had 
performed some ``unnecessary surgery on the prudent lay person standard 
to the point where it is hardly recognizable as the consumer protection 
we envisioned.''
  The Gingrich bill destroys medical record confidentiality. It would 
trample on Fourth Amendment rights by giving health plans and

[[Page H6370]]

health providers the right to disclose your medical record to any 
entity--without your permission. Your medical record, with your name 
and full history, could wind up in the hands of a drug company's 
marketing department . . . a credit card company . . . a consultant 
working on a political campaign . . . a divorce lawyer . . . a 
newspaper.
  The public deserves better from Congress than this shoddy piece of 
work.
  This bill also allows plans to charge people up to $100 to get 
external appeals--and doesn't allow patients or doctors to present any 
evidence at that external appeal review. Talk about a sham!
  This Republican bill is worse than doing nothing. If Members of 
Congress took the Hippocratic oath to do no harm, they would not be 
able to vote for this bill. Vote to defeat H.R. 4250.
  I support the Ganske-Dingell substitute. It is a real bill, with real 
protections.
  The Republican bill is a sham. It provides none of the major consumer 
protections that patients need.
  The Republican bill actually does harm. It overrides hundreds and 
hundreds of State consumer protection laws, leaving people with less 
protection than they now have. It will drive up the cost of health 
insurance for most people. It makes your most private medical records 
available to every Tom, Dick, and Harry salesman. It spends billions on 
a new tax break for the wealthiest and healthiest in our society. It 
takes away your right for compensation for pain and suffering because 
of medical malpractice.
  These harmful features are poison pills, designed to cause 
controversy and confusion in the Senate and to prevent a bill from 
passing. The Republican bill is another testament to the need for 
campaign finance reform: it is a bill designed to make their PAC 
contributors happy.
  The Democratic substitute bill, on the other hand, is a real patient 
protection bill endorsed by the doctors, by the nurses, and all the 
consumer groups.
  It will require that health plans provide you care that is based on 
the consensus of the latest, best quality of care. The Republican bill, 
on the other hand, lets each profit-making HMO define what they believe 
is adequate medical care: they will provide care based on what their 
accountants tell them--not their doctors.
  The choice could not be clearer. We can pass the Republican sham bill 
today--or we can pass a real bill--the Democratic substitute.
  Mr. DINGELL. Mr. Speaker, I yield two minutes to the gentleman from 
Missouri (Mr. Clay) the ranking member on the Committee on Education 
and the Workforce.
  Mr. CLAY. Mr. Speaker, I rise to oppose H.R. 4250. This bill is 
nothing more than a cynical propaganda effort promoted by the 
Republican leadership to convince the public that they are doing 
something about the abuse of HMOs. This bill is loaded with special 
interest provisions that do far more harm than good to consumers of 
health care.
  The Republican bill includes a provision to establish Association 
Health Plans that would enable small businesses and self-employed 
individuals to band together and purchase health insurance coverage. 
The chairman of our Committee on Education and the Workforce has stated 
that the committee has approved this provision and so no one should be 
concerned about it. The fact is, the bill was reported over Democrat's 
vehement objections, because it is clear that the arrangements will do 
more harm than good.
  The National Governors Association and the National Conference of 
State Legislators join with the National Association of Insurance 
Commissioners in stating that Association Health Plans would undermine 
positive state regulatory reforms already in place, would destroy 
important consumer protections, and would contribute to the collapse of 
small group health insurance in many states.
  According to CBO, Association Health Plans would increase the risk of 
health plan failure and would disrupt the insurance market, because 
Federal regulatory standards would probably be less strict than the 
state standards that apply under current law. Association Health Plans 
would present state regulations covering such vital matters as 
sovereignty, mandated care and the policing of fraud and abuse.
  Mr. Speaker, I urge my colleagues to reject H.R. 4250 and instead 
support H.R. 3605, the bipartisan Patients' Bill of Rights act.
  Mr. HASTERT. Mr. Speaker, I yield three minutes to the distinguished 
gentleman from Texas (Mr. Archer), the Chairman of the Committee on 
Ways and Means.
  Mr. ARCHER. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, two principles have forever guided our Nation, 
individual freedom and liberty. As a democratic Nation whose strength 
derives from its people, we have achieved high degrees of each, 
unsurpassed by any nation in all history. It is no wonder that people 
around the globe want to come here and be called Americans. We are the 
envy of the world. Now, as we consider a plan to protect and strengthen 
a free people who worry about the health care needs of themselves and 
their families, we must do so with our guiding principles in mind.
  Our Nation's health care system is the best in the world. Americans 
do not travel abroad to get health care, but visitors come here from 
all over the world, to the Mayo Clinic, to Mount Sinai, and, yes, to my 
own City of Houston to the Texas Medical Center Memorial, because we 
are the best.
  The reason our health care system is the best is because it is based 
on capitalism, on choice and on individualism. That is why the one 
aspect of the bill before us today that gives me great pride is the 
expansion and the unfettered opportunity for Americans to choose 
medical savings accounts, free and unencumbered.
  The source of America's frustrations with HMOs is the lack of control 
which both patients and doctors feel. There is always a third party 
making a decision. Patients want to be able to pick up the phone and 
get a quick appointment to see their doctor. Patients want to see the 
doctor of their choice for all their health needs.
  Doctors want to take more time to be with their patients. Doctors 
want to treat their patients as they see fit, without interference from 
a third-party payer or an insurance company, and that is why we need 
medical savings accounts. With MSAs, patients, not insurance companies, 
control their choices. There are no gatekeepers, there are no 
middlemen, and there are no third-party payers, except in the case of a 
catastrophic event.
  MSAs let patients and employers deposit money tax-free into accounts 
that patients control. Like an IRA for retirement needs, MSAs are IRAs 
for health care needs. When people control their own money, the general 
use of capitalism will come into play. It has in all things American; 
it will in health care too.
  Our Nation's greatness is based on freedom and liberty. So, too, is 
our future. While I originally introduced this bill with a Democrat 
Congressman, Andy Jacobs, six years ago, I realize even more today that 
MSAs are and should be the future of health care.
  I urge support of the bill.
  Mr. DINGELL. Mr. Speaker, I yield two minutes to the distinguished 
gentleman from Texas (Mr. Hall).
  Mr. HALL of Texas. Mr. Speaker, I would start by saying that my 
speech will probably fall on some closed minds, because many already 
have your minds made up. Many of you have decided or pledged to take a 
particular vote, or taken an oath to do it, or been whipped by either 
the Democrat or Republican Whip.
  I speak though to those who do not have their feet set in concrete 
today, I think those that really and truly want the facts about this 
situation.
  I did not speak on the rule. As a matter of fact, I voted for the 
rule. I think it is about as fair a rule as a majority will give a 
minority, so I had no problem with the rule. The rule was not good, but 
I think the worst is yet to come, and let me talk about a little of it.
  It does not please me, by the way, to oppose the likes of the U.S. 
Chamber and the NFIB. I have had 100 percent with them for years and 
years, but I differ with them on this because I think they are wrong.
  I think that ERISA is what this is all about. ERISA is what all these 
meetings have been about. ERISA is what the insurance companies can 
hide behind to escape liability, and it is not right, it is not fair, 
it is not just, and it should have been changed.
  All the conferences that have been had over on this side, all the 
committee meetings, way into the night, last night, late, late, late, 
war gaming amendments, it is how can we compromise ERISA? That is what 
the

[[Page H6371]]

whole thrust has been, how can we keep ERISA on the table for insurance 
companies to hide behind when they err, when they guess wrong?
  I tell you, H.R. 4250 preempts states patient protections too. I 
think we need to know that. This bill will remove stronger patient 
protection bills in over 40 states. I think the facts are out on the 
sheet that show how your various states are affected.
  Tonight we are going to finish this. We are going to go home, we are 
going to issue press releases carefully worded, but the hard cold fact 
is you are offending people when you leave ERISA in place as a hiding 
place for those that ought to be liable.
  Mr. Speaker, as I close, I urge Members to vote against 4250.
  Mr. DINGELL. Mr. Speaker, I yield two minutes to the distinguished 
gentlewoman from New Jersey (Mrs. Roukema).
  (Mrs. ROUKEMA asked and was given permission to revise and extend her 
remarks.)
  Mrs. ROUKEMA. Mr. Speaker, I must tell my colleagues that I rise in 
reluctant opposition to this bill, and I am constrained to ask, not 
facetiously, is this as good as it gets? I am sorry, that is a 
facetious reference to the movie that we all say identified the 
backlash out there, and that backlash has promoted our party, both 
parties, to seek a solution. But I do not believe that this bill is as 
good as it should get.
  I wanted to say that I recognize that there are a lot of benefits to 
the Republican task force bill, but we have to go beyond that.
  Let me point out the issues that are of continuing concern to me. I 
do not believe we have the patients' access to clinical trials that 
they need. I do not believe there is expanded access to specialists in 
a meaningful way, and that is very important to me. I think that the 
external appeals process, as I read it, and, of course, we only got it 
really this morning, but as I read it, the appeals process is not even 
binding. This concerns me, because a right without enforcement is no 
right at all, as far as I can tell.
  I do also want to get to the point of the ERISA question, the health 
plans. I want to particularly reference the fact that I believe that 
the gentleman from Iowa (Mr. Ganske) in his analysis was absolutely 
correct, and I agree with him. I am concerned that this ERISA 
preemption as it is supplied to the Association Health Plans and the 
HealthMarts would be an expanded loophole to legitimate care, 
particularly for the small business community employees, and I am 
deeply concerned about that.
  These potential loopholes would greatly diminish the quality of care 
and the medical protections in states such as New Jersey. This is a 
prime problem. We can have these association pools, we can do these 
small business pools, without expanding the ERISA preemption.
  So I must reluctantly again say, bottom line, the question is whether 
or not patients will have better access to health care, and health care 
through the doctors and the professional health care providers, not 
bureaucrats.


                              introduction

  I rise in reluctant opposition to the bill placed before the House 
today. And I am constrained to ask: Is this ``As good as it get?'' This 
is my own reference and its not facetious to the motion picture that 
made graphically clear to policymakers the backlash I long ago 
predicted against HMOs. This building backlash was the reason I 
introduced my own bill H.R. 1222, ``The Quality Health Care and 
Consumer Protection Act'' in 1996 to focus the debate.
  Today I say that this bill is clear movement in the right direction. 
But it is not ``as good as it should get.''
  We need to put health care decisions back in the hands of doctors and 
other health care professionals, and take them away from the managed 
care companies who are practicing ``bottom line'' medicine and 
``rationing'' healthcare.
  It is for this reason that I introduced legislation to ensure that 
managed-care networks provide high-quality, efficient care, not just 
low-case care that boosts profits. But at the same time my bill guards 
against unjustified health care costs.


                 concerns with today's hurried process

  But today I must decide between one of two proposals. Before I 
discuss the proposals I do want to raise a concern wit the process.
  The state of our nation's health care is an issue that should be 
debated through Committee discussions, through hearings, and through 
floor debate, instead of a limited up or down vote.


               benefits of the republican task force bill

  The bill we have before us today is not altogether bad. There 
certainly are areas that could use significant improvement; however, 
the base bill does include information disclosure, internal and 
external appeals and grievances, a ban on gag clauses, and access to 
OB/GYNs and pediatricians. These are all moving in the right direction.
  However, we are not yet there! Again, this is not ``As Good As It 
Should Get!''


              problems with the republican task force bill

  This bill does not include a provision to provide patients access to 
clinical trials, expanded access to specialists, and physician 
involvement in the development of drug formularies.
  This bill also has an external appeals process that is not even 
binding. This concerns me, because it is a right without enforcement. 
And a right with no enforcement is no right at all!
  In addition I am concerned this legislation does not have a provision 
relating to provider incentive language to ensure that physicians and 
pharmacists are consulted in the development of drug formularies when 
medically necessary.


                association health plans and healthmarts

  I am also deeply concerned about expanding the ERISA pre-emption to 
even more businesses than those already able to escape State laws.
  We must carefully weigh the benefits of allowing associations the 
protections of being covered by national laws with the benefits of 
allowing state laws to determine consumer protection. Association 
Health Plans and Healthmarts would both allow more people to escape the 
coverage of state laws. These are potential loopholes that would 
diminish necessary medical protections in states such as New Jersey.
  Businesses have long argued that ERISA is necessary for companies 
that operate in more than one state because it avoids the onerous 
burden of complying with 50 different sets of regulations and offering 
50 different sets of rules and coverage for their employees. This is a 
valid argument.
  However, in today's market, this has led to loopholes where employers 
are able to avoid the protections fought for, and placed at the state 
level. I agree with Dr. Ganske's analysis of how inadequate this 
provision is.


                              right to sue

  I must also address the right to sue. While I understand the merits 
to this important right, I am also very concerned that this right would 
add tremendous costs and affect the quality of health care--doctors and 
HMOs and hospitals would be practicing defensive medicine--namely 
executing procedures and conducting tests merely to protect themselves 
against lawsuits. This concerns me, because this could lead to a 
reduction in the number of people able to afford health care.


                               conclusion

  The bottom line is whether patients will have better access to health 
care and whether doctors and health care professionals will be put back 
in charge instead of insurance company bureaucrats. We need to return 
the power over medical decisions to those with the medical training and 
expertise--the doctors and the nurses. This will restore the quality of 
care that has been our American tradition and leave the field of 
``bottom line medicine'' practiced by bureaucrats and so-called 
``gatekeepers.''
  Mr. HASTERT. Mr. Speaker, I yield myself 15 seconds.
  Mr. Speaker, I would like to just remind the gentlewoman from New 
Jersey that the people that we are bringing under the umbrella of new 
health care do not have health care today, part of the 40 million 
people who work for a living, who are out there that do not have health 
care. We are trying to expand and bring those people under the umbrella 
of health care.
  Mr. Speaker, I yield two minutes to my colleague, the gentleman from 
Illinois (Mr. Fawell), the distinguished chairman of the Subcommittee 
on Employer-Employee Relations, and certainly someone who has worked on 
this issue of bringing people under the umbrella of health care for a 
long time.
  (Mr. FAWELL asked and was given permission to revise and extend his 
remarks.)
  Mr. FAWELL. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, right now there can be no patient's bill of rights for 
43 million people, because they have no access to affordable health 
care, and we can change that in this legislation with Association 
Health Plans.
  What do Association Health Plans do? By allowing small businesses to

[[Page H6372]]

band together under multiple employer health plans, Association Health 
Plans simply allow the little guys, the small businesses, the self-
employed, to have precisely what large employers have had for many 
years. Thus, small businesses can gain the economies of size, so they 
can do what, self-insure, and thereby they have the clout to bargain 
and to discount the price of health care in dealing with health care 
providers and in dealing with insurance companies.

                              {time}  1115

  Who are these association health plans? They are long-standing and 
respected, not-for-profit, professional business and trade and church 
associations which, like the large employers, they are not in the 
business of insurance, but that they will, like large employers, assume 
the responsibility of sponsoring self-insured and fully-insured plans 
for the members of their associations.
  Examples of these associations, yes, include the National Chamber of 
Commerce and the NFIB, the National Restaurant Association, but also 
include the Agricultural Field Workers Association, who cannot get 
health insurance in the market. National Church Associations, National 
Farm Bureau, the Boys and Girls Clubs of America with 700 units, and 
they cannot get regular indemnity policies.
  Why are the association health plans important? Because most of the 
43 million people who do not have health insurance in America, 
including most of the uninsured children, are people who live in 
families with the breadwinners employed by small business or are self-
employed. They have to simply go into the individual and small business 
market, and my colleagues know what happens when one goes into that 
individual and small business market. The insurance companies and the 
HMOs do not want to give up and have new competition.
  Mr. DINGELL. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Minnesota (Mr. Oberstar).
  (Mr. OBERSTAR asked and was given permission to revise and extend his 
remarks.)
  Mr. OBERSTAR. Mr. Speaker, I rise in opposition to the bill before us 
and in support of the Dingell substitute.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the gentleman from New 
York (Mr. Forbes), my distinguished friend.
  (Mr. FORBES asked and was given permission to revise and extend his 
remarks.)
  Mr. FORBES. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  For an increasing number of years now Americans across this country 
have made it clear that they are dissatisfied with the manner in which 
some health maintenance organizations oversee the delivery of their 
health care services. In fact, just a few years ago the ``hue and cry'' 
got so loud that on this floor, this very floor, a bipartisan majority 
of Democrats and Republicans saw fit to pass legislation that corrected 
the practice of some insurance providers that forced women out of the 
hospital barely 24 hours after they gave birth.
  Yes, the House and Senate together, along with the President, decided 
that it was wrong and we must mandate, yes, mandate a minimum hospital 
stay for women who give birth.
  Well, unfortunately, that is not the sole example of some of the 
problems with the HMOs and that is why we are here today. 
Unfortunately, the Republican initiative, which I would have loved to 
have supported, does not adequately meet the needs that most Americans 
are calling for.
  The Patients' Bill of Rights, in fact, is the best alternative to 
restoring common sense in the HMO equation. Only the Patients' Bill of 
Rights allows patients access to key clinical trials, those 
experimental, innovative and emergency processes that are the last 
resort for the severely ill. The Patients' Bill of Rights gives access 
to important drug therapies that a doctor may believe are important to 
restoring one's health and cost thousands of dollars and would 
otherwise mean literally life or death for the patient.
  A gross omission in the Republican bill, I am afraid, is something 
even worse than the early release after giving birth, and that is the 
so-called omission of preventing drive-by mastectomies, the practice 
that too many HMOs use to force a woman who has undergone a mastectomy 
out of the hospital before she is physically able to resume normal 
activities.
  Absent, too, and I believe it should be her right, that every woman 
who has undergone a mastectomy have the right to access to 
reconstructive surgery and not have it deemed cosmetic by an uncaring 
HMO.
  Finally, the Patients' Bill of Rights is the only one that ends the 
special protections for HMOs under ERISA. HMOs should not be exempt 
from lawsuits if bad decisions lead to injury or death.
  Mr. Speaker, I urge adoption of the Patients' Bill of Rights by the 
gentleman from Michigan (Mr. Dingell) and the gentleman from Iowa (Mr. 
Ganske).
  Mr. HASTERT. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished 
gentleman from Louisiana (Mr. McCrery).
  (Mr. McCRERY asked and was given permission to revise and extend his 
remarks.)
  Mr. McCRERY. Mr. Speaker, if one believes in the free market, if one 
believes in the power of individual choice, if one believes our private 
health care system is, in most respects, the best in the world and is 
worth preserving, then listen up.
  I am going to tell my colleagues about the best part of the Patient 
Protection Act. It is the part of this bill that really empowers 
patients. It gives them the ability to choose their own doctors and 
hospitals. It gives them the economic power to deal effectively with 
the costs of their health care. It gives individuals the power to take 
advantage of preventive health care, if they choose. It even offers 
people the prospect of a sizable nest egg in their later years which 
they could use for long-term care expenses or retirement.
  Mr. Speaker, this Patient Protection Act will finally make medical 
savings accounts available to everyone, and it removes the burdensome 
regulations that have prevented many individuals and small businesses 
from obtaining MSAs. This bill allows both small and large employers to 
make deductible contributions to an employee's MSA. It allows both 
employers and employees to make tax-favored contributions to a medical 
savings account.
  Mr. Speaker, if we really want people to be able to take control of 
their health care choices, if we really want to make the doctor-patient 
relationship what it used to be and what it should be, if we really 
want to create a market with forces that can control health care costs, 
then we must be for the expansion of this valuable, free market tool: 
medical savings accounts. That alone should make my colleagues vote for 
this bill.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Arkansas (Mr. Berry).
  Mr. BERRY. Mr. Speaker, I rise in opposition to H.R. 4250 and in 
support of the Dingell-Ganske bill. The Republican bill is bad for 
small business, bad for America, and it is shameful. It is a fiscally-
irresponsible sham that does nothing to address the real concerns of 
employers, employees and real people.
  This legislation creates a new Federal Commission of Insurance at the 
Department of Labor, a Department that my Republican colleagues tried 
to do away with just 2 years ago. It authorizes the hiring of hundreds, 
perhaps thousands, of new employees at a new Federal Commission of 
Insurance.
  What will this new Federal Commission do? Absolutely nothing. Because 
its powers are so limited by the Republican bill that its ability to 
remedy health plan wrongdoing is almost nil.
  How much will this new Republican Federal Insurance Commission cost? 
No one knows, because we still have not seen a CBO score.
  Let us see. A multimillion dollar new Federal bureaucracy, thousands 
of new employees with nothing to enforce, all at the American 
taxpayers' expense, release of medical records. Your competitors in 
business, your opponents in politics will have access to your medical 
records. Protection of insurance company profits, abuse of patients, no 
access to emergency care or specialists. My Republican colleagues 
should be ashamed.
  Have my colleagues read this bill? My colleagues will be shocked. I 
urge

[[Page H6373]]

my colleagues to vote down this irresponsible proposal. Vote for the 
Dingell-Ganske substitute. This Republican proposal is a useless drain 
on our Treasury and a threat to our balanced budget.
  Mr. HASTERT. Mr. Speaker, I yield 1 minute to the gentleman from Ohio 
(Mr. Chabot).
  Mr. CHABOT. Mr. Speaker, I rise in support of the Patient Protection 
Act. There have been numerous managed care reform proposals offered in 
Congress this year, and many share similar consumer protections.
  The Patient Protection Act guarantees that patients can choose their 
own doctor, gain access to emergency care, communicate openly with 
health care providers, and independently appeal decisions made by 
managed care companies.
  This bill also contains a number of pro-consumer provisions that the 
other proposals do not. This legislation increases patient access to 
affordable care by expanding health care coverage options for workers 
and their families, many who have no health care coverage at all now.
  American families know that the most important patient protection is 
access to affordable care. Families should not be forced to choose 
between expensive health care coverage and putting food on the kitchen 
table.
  This legislation will protect consumers from abuses in the managed 
care industry, while increasing access and affordability. That is why I 
support the Patient Protection Act.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the gentleman from 
Washington (Mr. McDermott).
  (Mr. McDERMOTT asked and was given permission to revise and extend 
his remarks.)
  Mr. McDERMOTT. Mr. Speaker, as the public listens to this debate, I 
am sure they will wind up confused, so I want to give 10 reasons why my 
colleagues should vote against the Hastert proposal and for the Ganske-
Dingell bill. I borrowed these from the gentleman from Iowa (Mr. 
Ganske) who is a Republican and a doctor. I am a Democrat and a doctor, 
and we agree.
  He says, the substitute provides, that means the Democratic 
substitute, patients with access to clinical trials. The Hastert bill 
does not.
  The substitute allows doctors to override drug formularies when 
medically necessary. The Hastert does not.
  The substitute provides for ongoing access to specialists for chronic 
conditions. The Hastert bill does not.
  The Ganske-Dingell substitute prevents plans from giving doctors 
financial incentives to deny care. The Hastert bill does not.
  The substitute has hospital-stay protection for mastectomy patients. 
The Hastert bill does not.
  The substitute provides choice of doctors within the plan. The 
Hastert bill does not.
  The substitute has a provision guaranteeing continuity of care when 
providers leave the network. The Hastert bill does not.
  The Ganske-Dingell plan requires plans to collect quality data and 
maintain a quality improvement program. The Hastert bill does not.
  In addition, the Hastert bill allows the plan to decide what is 
medically necessary. If one has chest pain and one feels like one 
should go to an emergency room, one cannot decide whether that is 
medically necessary, one's plan will tell you if it was medically 
necessary. Maybe after you get to the hospital, they will say, well, it 
is just indigestion, so it is not medically necessary to go to an 
emergency room.
  There are more reasons than I can get in in 10 minutes. This cynical 
process requires a ``no'' vote on Hastert and a ``yes'' vote on Ganske-
Dingell.
  Mr. HASTERT. Mr. Speaker, I yield myself 30 seconds.
  I appreciate the gentleman from Washington, who is a doctor and 
certainly sees things from a different perspective, but I have to tell 
my colleagues he named 10 mandates that our bill does not have, 10 
mandates. And he also talked about the Federal Government, the HCFA 
agency starting to lay out what one's health plan should do and what it 
should not do.
  The gentleman from Washington has certainly been an advocate of big 
health care, government takeover of health care, and that is exactly 
what this plan is not, and I want the people in this country to know 
that. We think the decision on what one owes health care should be 
between the patient and the doctor, and that is exactly what this bill 
does.
  Mr. Speaker, I yield 3 minutes and 15 seconds to the gentlewoman from 
Texas (Ms. Granger) for the purpose of a colloquy.
  Ms. GRANGER. Mr. Speaker, I rise today in support of H.R. 4250, and I 
thank the gentleman from Illinois (Mr. Hastert) and all of the members 
of the working group for their ability to listen and their desire to 
lead.
  It has often been said that there is a time in the life of every 
problem when it is large enough to see and yet small enough to solve. 
The issue of health care reform is one we can see and solve, and our 
bill does that.
  The Republican goal is to provide quality health care and peace of 
mind for every American. The Republican plan gives peace of mind when 
the nearest emergency room can mean the fastest care in the case of a 
heart attack. Our plan gives peace of mind for mothers because there is 
no barrier for care by a pediatrician. Our plan gives peace of mind for 
women because they can go directly to an OB-GYN for their health care. 
And our plan gives peace of mind for small businesses because they will 
have choices for their health plans through health marts and 
association health plans.

                              {time}  1130

  Overall, our bill gives HMOs accountability to their patients, not 
their profits. Our bill says that doctors, not bureaucrats, will be 
authorized to make medical decisions.
  Our bill is the only bill that would provide affordable health care 
to millions of uninsured Americans. Even Senator Daschle agrees with us 
on that.
  In short, our bill, the Patient Protection Act, will ensure that all 
Americans have access they deserve to the health care they need at a 
price they can afford.
  Mr. Speaker, at this time I would like to engage the gentleman from 
Illinois (Chairman Fawell) in a colloquy. Among the most important 
protections that this legislation affords to patients is the right to 
internal and external review of decisions made by HMOs. Those reviews 
will be made by qualified independent doctors.
  My home State of Texas has a law that allows HMOs to be liable in 
court. There is some uncertainty as to whether or not and the extent to 
which this Texas law is preempted by the ERISA law. In fact, this is a 
question that is before the courts.
  Mr. Speaker, I would like to engage in a colloquy with the gentleman 
from Illinois regarding the possible effects of this new legislation's 
internal and external review procedures on whether the ERISA law 
preempts the State statute.
  As one of the authors of this legislation, the principal author of 
the internal and external review procedures, and one of the leading 
experts on ERISA, are these new procedures intended in any way to 
indicate congressional intent about whether the Texas State law is 
preempted by ERISA?
  Mr. FAWELL. Mr. Speaker, if the gentlewoman from Texas (Ms. Granger) 
would yield, no, they are not. The more explicit internal and external 
review provisions under this new legislation do not and are not 
intended to expand or contract existing ERISA law.
  Therefore, these new procedures do not and are not intended to affect 
whether or the extent to which ERISA does or does not preempt any 
particular State statute. These new procedures do not indicate 
congressional intent either way about whether Texas law is preempted by 
ERISA.
  Ms. GRANGER. Mr. Chairman, reclaiming my time, are the legislation's 
more explicit internal and external review procedures intended to in 
any way affect the outcome of any matters pending in court examining 
the extent or scope of ERISA preemption of State laws?
  Mr. FAWELL. Again, no, they are not. The legislation's more explicit 
internal and external review procedures under ERISA are not intended to 
expand or contract existing provisions of law. Therefore, it is not 
intended to have any impact on pending litigation examining the 
possible scope of ERISA preemption. Accordingly, this new legislation 
is not intended to and should not affect the outcome of the Texas 
legislation either way.

[[Page H6374]]

  Ms. GRANGER. Mr. Speaker, I thank the gentleman from Illinois for 
this clarification.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished 
gentlewoman from the Virgin Islands (Ms. Christian-Green), a physician 
of family medicine who has good advice for my colleagues.
  (Ms. CHRISTIAN-GREEN asked and was given permission to revise and 
extend her remarks.)
  Ms. CHRISTIAN-GREEN. Mr. Speaker, I rise to speak against H.R. 4250 
and for the Patients' Bill of Rights. As has been pointed out over and 
over again by physicians and patients alike, what H.R. 4250, if passed, 
does is codify or write into law the very practices which time and time 
again have denied needed and appropriate medical care to us and our 
families.
  On the issue of access to emergency care, the Ganske-Dingell bill 
assures that if patients reasonably think that they have an emergency 
illness, they can go to an emergency room and receive care that their 
plan will pay for. In the Republican bill, severe pain could not be 
used as a reason to access emergency care. That means if someone thinks 
they are having a heart attack, where often the only symptom is pain, 
they have to go to a phone and answer a laundry list of questions from 
some paper pusher maybe millions of miles away, before they can go to 
the hospital. And if it is not a typical pain, as often happens, that 
care would be denied.
  If we pass H.R. 4250, severe pain, the most common symptom of a 
severe or serious medical condition, would not be a standard that a 
reasonable person could apply in going to an emergency room. Emergency 
care is just one more instance of where H.R. 4250 does not measure up 
to the demands of the American people.
  The Ganske-Dingell bill is true managed care reform. It puts 
decisions back in the hands of the patient and their doctors and allows 
access to needed medical care. I urge its passage. Vote against H.R. 
4250.
  Mr. HASTERT. Mr. Speaker, what is the remaining time for both?
  The SPEAKER pro tempore (Mr. Kolbe). The gentleman from Illinois (Mr. 
Hastert) has 11\1/2\ minutes remaining, and the gentleman from Michigan 
(Mr. Dingell) has 12\1/2\ minutes remaining.
  Mr. HASTERT. Mr. Speaker, I reserve the balance of my time.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Ohio (Mr. Brown).
  Mr. BROWN of Ohio. Mr. Speaker, I thank the gentleman from Michigan 
(Mr. Dingell) for yielding me this time and for his outstanding 
leadership on this issue.
  Mr. Speaker, a mother of a 6-month-old child who was having trouble 
breathing called her HMO at 3:30 a.m. An HMO bureaucrat told the mother 
to go to the plan's network hospital 42 miles from her home. On the way 
to the hospital, the baby suffered cardiac arrest and later had both 
arms and legs amputated.
  For the past 2 years, Democrats in Congress have been fighting to 
pass the Patients' Bill of Rights that could have protected this mother 
and child.
  Last week, I met with a number of area residents in a restaurant in 
North Ridgeville who told story after story about coverage denied for 
emergency care and bureaucratic refusals of doctor-ordered tests to 
detect breast cancer.
  But rather than protecting patients, the Republican leadership in 
Washington has introduced a proposal that protects millionaire 
insurance company executives.
  A friend has diabetes or breast cancer. The Patients' Bill of Rights 
would guarantee access to a specialist. The insurance company 
Republican bill does not.
  A grandfather experiences chest pains that may be a warning sign of a 
heart attack. The Patients' Bill of Rights would ensure he gets 
immediate attention at the nearest emergency room by requiring his HMO 
to cover this care. The insurance company Republican bill does not.
  A child has been denied access to a pediatric specialist for asthma. 
The Patients' Bill of Rights would allow a parent to have access to an 
independent patient's appeal process. The insurance company Republican 
bill does not.
  Under present law, the only people in America who enjoy complete 
immunity from lawsuits are HMOs and foreign diplomats. The Patients' 
Bill of Rights holds HMOs accountable in State court if they make a 
medical decision that harms the patient. The insurance company 
Republican bill does not.
  Our bill provides real patient protections at a mere $2 per patient 
per month, according to the Republican-appointed Congressional Budget 
Office. Our bill is supported by the Cancer Society and the National 
Breast Cancer Coalition.
  Mr. Chairman, I urge my colleagues to defeat the Republican insurance 
company bill. Pass the Patients' Bill of Rights.
  Mr. HASTERT. Mr. Speaker, I yield 45 seconds to the gentleman from 
California (Mr. McKeon)
  Mr. McKEON. Mr. Speaker, I rise in support of this historic 
legislation that addresses the problem of the rising number of 
Americans who cannot afford health insurance. For the first time, we 
will be able to extend health care options to the 42 million people in 
our country who remain uninsured, while the Democratic substitute 
ignores the problem.
  We know that most people without health insurance have one thing in 
common: They cannot afford health care. They are either self-employed 
or they work in small businesses that cannot afford to pay for health 
benefits. This bill solves this problem.
  The Patient Protection Act creates association health plans to combat 
high costs of health care in our country. This new and unique solution 
allows small businesses and those that are self-employed to join 
together under the umbrella of trade and professional organizations to 
buy health insurance for themselves and their employees. Consequently, 
small businesses will have access to the same kind of health care 
options that big corporations currently enjoy.
  Mr. Speaker, I urge my colleagues to support this bill.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from New Jersey (Mr. Pallone), the chairman of our task force 
on this matter.
  Mr. PALLONE. Mr. Speaker, I just wanted to mention, the Republicans 
keep talking about the number of uninsured in this country. I would 
point out that 4 years ago, when President Clinton tried to put forward 
a health care plan that would insure all Americans, they fought it 
vigorously. The fact that we have more Americans now without health 
insurance is their fault, because they would not allow the Clinton plan 
to come forward. So now the numbers of uninsured continue to grow.
  Mr. Speaker, I just want to explain why the Democrats' bill is a 
vastly superior bill in terms of ensuring and expanding patients' 
access to physicians.
  For example, the Patients' Bill of Rights ensures access to 
specialists. The Republican bill does not. Under the Democratic bill, 
if a patient has cancer, they could go directly to an oncologist. If 
their child has a specific problem, they could bring their child to 
whatever type of specialist their child might need. But under the 
Republican plan that child would still have to go to their primary 
physician for a referral, and there is no guarantee that they would get 
to see a specialist if they need one.
  The differences between the two bills are more pronounced when it 
comes to seeing specialists outside of one's HMO. The Patients' Bill of 
Rights ensures that patients will be able to go outside their network, 
at no cost to them, if they need to see a specialist that their HMO 
does not have. Under the Republican bill, they are out of luck.
  Another difference between the access each bill would provide is 
standing referrals. If a patient is fortunate enough to have an HMO 
that has the type of specialist they need when they get sick, under the 
Republican plan they still have to jump through hoops. The Republican 
plan does not allow patients who need care over a long period of time 
by a specialist to have standing referrals.
  The Patients' Bill of Rights does not require patients to go back 
time and again to renew referrals. If a patient needs to see a 
specialist over a long period of time, they are guaranteed the right to 
see that doctor.

[[Page H6375]]

  The Patients' Bill of Rights would also allow patients to designate 
that specialist as their primary care physician. Women could choose 
their OB/GYN as their primary physician. The Republican bill does not 
allow patients to designate their specialist as their primary care 
physician, nor their OB/GYN.
  Another major difference is with the continuity of care issue. The 
Republican bill does not allow patients to continue to have the same 
doctor.
  Mr. HASTERT. Mr. Speaker, I yield 2 minutes to the gentleman from 
Florida (Mr. Bilirakis), the chairman of the Subcommittee on Health and 
Environment of the Committee on Commerce.
  Mr. BILIRAKIS. Mr. Speaker, I rise in favor of H.R. 4250. I am proud 
of this bill. Whereas the Democratic bill focuses on patient 
protections, our bill focuses on basically the same patient protections 
and additionally places great emphasis on expanding health coverage and 
access for the insured and the uninsured, but both are accomplished 
without imposing burdensome government mandates.
  Guaranteeing access to quality health care must always be a top 
priority. What good, in fact, are patient protections if access is not 
there? We do this through the creation of Health Marts and by 
broadening the role of the community health centers, so that for those 
who live in medically underserved areas it will be simpler to receive 
critical services.
  The proposal creates community health organizations, which are 
basically managed care plans controlled by community health centers. It 
encourages more competition to lower prices for health consumers. 
Community health centers will have more money because they will have 
more private-paying patients using their facilities. As a result, these 
health centers will be able to provide care to even more uninsured 
people.
  Of course, the bill before us includes important new patient 
protections. For months, people across the country have told Congress 
that they want to choose their own doctors. We listened to our 
constituents, and I am proud to say that through our bill, patients 
will now be guaranteed their choice of medical providers, contrary to 
what some others on the other side have said, and be better able to 
understand their health care policies.
  Mr. Speaker, is it a surprise in fact to anyone that the other party 
is attacking a Republican bill? I think not. But we have been able, I 
think, to accomplish and to do what they did not even attempt during 
their many years of control of the United States House of 
Representatives.
  Mr. Speaker, I say to my colleagues: Help us pass a bill which will 
help people now.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Texas (Mr. Turner).
  Mr. TURNER. Mr. Speaker, Democrats initiated the effort in this 
Congress to protect patients and their doctors from interference by 
insurance company bureaucrats. The Dingell-Ganske bill provides these 
protections and eliminates the complete exemption from accountability 
that many HMOs enjoy today under the Federal ERISA law.
  The Republican bill, on the other hand, in an effort to preserve the 
insurance companies' shield of protection from accountability for their 
mistakes, creates a Federal bureaucracy in the Department of Labor and 
a complex appeals process diagramed here on this chart to my right. 
Look at this. An endless maze of bureaucratic nightmare created by the 
Republican bill.
  In September of 1991, Phyllis Cannon was diagnosed with leukemia. On 
August 10 of 1992, her doctor sought approval from her HMO for a bone 
marrow treatment. Forty-three days later, her doctor pleaded for 
authorization and it was repeatedly denied.

                              {time}  1145

  By the time the HMO finally agreed, it was too late for the treatment 
and Phyllis Cannon died.
  Could she have gone through this maze under the Republican bill and 
done any better? I think not. And if she had made it through the maze 
under the Republican bill, after her death she would have been entitled 
to only $500 a day; under the Republican bill, a total recovery for her 
family of only $20,000.
  Is this what we call protecting patients? I think not. Vote against 
the Republican bill, vote for the Ganske-Dingell bill and prevent this 
kind of endless bureaucratic interference with medical decisions from 
happening to the patients of this country.
  Mr. HASTERT. Mr. Speaker, I yield 45 seconds to the gentleman from 
Oregon (Mr. Smith).
  Mr. SMITH of Oregon. Mr. Speaker, H.R. 4250 moves us in the right 
direction. One of the ways it does this is by allowing community health 
centers to establish community health organizations. These would be 
health plans sponsored by health centers and the doctors themselves to 
give people the extra choice in their health care.
  I used to serve on one of these boards and I recently visited these 
facilities in Michigan. Patients get first-class treatment and these 
centers do a great job, and this bill will increase the chance that 
these small hospitals can survive by allowing them to have the 
community health organizations. These provisions are going to help 
create the competition needed to make more regulation from Washington, 
D.C. unnecessary.
  Support this bill.
  Mr. HASTERT. Mr. Speaker, what is the remaining time?
  The SPEAKER pro tempore (Mr. Kolbe). The gentleman from Illinois (Mr. 
Hastert) has 8 minutes remaining and the gentleman from Michigan (Mr. 
Dingell) has 6\1/2\ minutes remaining.
  Mr. HASTERT. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
New York (Mrs. Kelly).
  Mrs. KELLY. Mr. Speaker, we have included some special provisions in 
the Patient Protection Act that recognize the distinctive health care 
needs of patients, especially women and children. Medically, women are 
not just small men. Their bodies are different and their needs are 
different. And children are not little adults. They need specific and 
sometimes immediate care.
  This bill provides women with direct access to their OB-GYN without 
preauthorization or referral by a primary care physician. It also lets 
parents get to a pediatrician directly.
  As a former florist, I also know how costly it is to provide coverage 
to employees, and I know how frightening it is to an employee not to be 
sure that their health care will be there when they need it. And 
although the cost continues to skyrocket, my colleagues on the other 
side of the aisle continue to turn their backs on small businesses and 
the burden that these employers face.
  The Patient Protection Act is the only proposal that addresses the 
growing health insurance crisis among the small business community, and 
the fact is the fastest growing segment of small business owners are 
businesswomen. These women-owned businesses are the businesses that we 
use every day: The woman who does our taxes, who cuts our hair, who 
runs the local day care center.
  We have 8 million women-owned businesses that employ 18.5 million 
people, one out of every four U.S. workers, yet only 48 percent of the 
women-owned businesses with less than 25 employees can afford to offer 
health care insurance. We confront that problem by providing affordable 
health insurance to small businesses so they can provide peace of mind 
and security for their workers and their families.
  I encourage each and every one of my colleagues to vote for this 
bill.
  Mr. DINGELL. Mr. Speaker, I yield such time as he may consume to the 
distinguished gentleman from Florida (Mr. Deutsch).
  (Mr. DEUTSCH asked and was given permission to revise and extend his 
remarks.)
  Mr. DEUTSCH. Mr. Speaker, I rise against the proposed bill by the 
majority, which does not address any of the major needs the people of 
America are asking for in this proposal.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Pennsylvania (Mr. Klink).
  Mr. KLINK. Mr. Speaker, I thank the gentleman for yielding me this 
time and for his leadership on this issue.
  Mr. Speaker, I am a pro-life Democrat, and that means, quite often, 
that the Democrats get mad at me because I am pro life, and the pro-
life people get mad at me because I am a Democrat. But I can handle 
that.
  I say that because whether someone gets to remain in a hospital when 
they need to, whether they get the drugs that their doctor wants, 
whether they

[[Page H6376]]

can see that specialist that can save their life, to me, is a life or 
death matter.
  I have a lot of problems today standing on the floor of the House and 
sitting on the floor of the House listening to this debate after we 
went through this partial-birth abortion debate yesterday. Because to 
me, this is life and death. And if National Right to Life does not 
score this vote today, something is wrong. If the Catholic Church does 
not score this, something is wrong.
  We cannot be pro life at conception and then abandon people once they 
are born, when their life is on the line, when they are fighting to get 
medical care that they need to live, and that is exactly what this 
debate is all about.
  Let us compare the two bills. The Democratic Patients' Bill of Rights 
leaves medical decisions in the hands of doctors and parents. The 
Republican bill leaves the decision still in the hands of insurance 
companies.
  The Dingell-Ganske bill of rights gives everyone the right to see a 
specialist. The Republican bill does not.
  The Patients' Bill of Rights gives everyone the right to a real 
external appeals process. The Republican insurance company bill allows 
the insurance companies to make individuals pay for their appeal. So 
first an individual pays their premium, then they are denied coverage, 
then they pay the insurance company for an appeal.
  The Patients' Bill of Rights that I am supporting gives everyone the 
right to hold their insurers accountable. If they are denied something 
and someone dies, if they lose a limb, then the decision-maker must be 
responsible for that decision. The Republican bill, the Insurance 
Company Protection Act, does not hold the decision-makers in the 
insurance companies accountable.
  That is the difference between these bills. It is ridiculous. The 
American public wants us to change it. The Republicans are here today 
refusing to do that. I say we must vote today to protect life. We must 
vote for the Ganske-Dingell bill. We must vote also pro choice. Give 
patients and their doctors the choice, not the insurance companies.
  Support Ganske-Dingell.
  Mr. HASTERT. Mr. Speaker, I yield 2 minutes to the gentleman from 
South Carolina (Mr. Graham).
  Mr. GRAHAM. Mr. Speaker, I thank the gentleman for yielding me this 
time, and very quickly let me tell my colleagues my experience and what 
I bring to the debate, I believe.
  Unlike most Republicans, I was a trial lawyer. I made my living 
trying to enforce the rights of people, and at one time I had the 
largest medical malpractice verdict in the State of South Carolina. And 
I can tell my colleagues, my client would rather have had good health 
care than the money.
  I know what I am talking about. I have sued doctors who are medically 
negligent, and it takes years and it is no fun. The goal that I have 
today is to get people the treatment they need.
  Let us talk about the lady who died of cancer. My mother died of 
cancer. Under this bill that I am supporting here, this is what would 
happen. An individual does not have to wait 43 days and get told no. 
The first thing that is a difference today is when a doctor calls up 
and says the patient needs cancer treatment, they are talking to a 
doctor, not a nurse. In their bill it can be a nurse. It does not have 
to be a doctor. So it is doctor-to-doctor. We require that now. No more 
clerks. The clerks are taken out of the mix and we replace it with a 
medical doctor.
  I have lived in the real world, and sometimes doctors have an 
allegiance to the company and not to what is good for medicine. Under 
our bill, if it is an emergency situation, we take that case and send 
it to a panel of independent doctors who have no idea who the company 
is that is involved, has no idea the doctor who is treating the 
patient. They are just looking at the facts. Under our bill they have 
to give a decision in 6 days of whether or not the treatment is 
medically necessary. That lady will get the treatment.
  If the patient is awarded at the independent review process, if there 
is a finding for the patient, our bill has a $500 per-day penalty that 
kicks in. An individual can go to court right after that, get attorney 
fees, get the full benefit plus $500 a day. And if the judge finds out 
the decision was made in bad faith to provide care, it is $1,000 a day, 
up to $250,000. This happens up front. And give me that any time, 
rather than a 4-year lawsuit.
  If the HMO doctor says no, an individual can go get a lawyer, like 
myself, and go to court within 24 hours and get a temporary restraining 
order ordering the treatment be paid, by a judge in State or Federal 
court, and I can get my attorney fees. The lady does not die.
  The penalties in this bill are to force people to make the right 
decision, not awards 4 years later. I will tell my colleagues about the 
$500 claim in the next part of this debate and how our bill is better.
  Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
California (Ms. Eshoo).
  Ms. ESHOO. Mr. Speaker, I rise in strong opposition to 4250, and let 
me tell the American people why. Privacy, privacy, privacy. Under the 
Republican bill our medical records are not safe. Any hospital, HMO or 
pharmacy that keeps our medical records can disclose them without our 
consent.
  Imagine suffering from depression, paying for prescriptions out of 
our own pocket to keep our condition private. Under the Republican 
plan, a pharmacy could disclose the use of these prescriptions to an 
employer. Imagine a health care bureaucrat reviewing someone's family's 
medical history without their knowledge. Even more frightening is the 
very real threat that our medical history could then be used against us 
to deny us employment or when we apply for a mortgage.
  Anyone obtaining our medical records could distribute them to a 
divorce lawyer, to a newspaper or a political campaign. A business 
could investigate its employees to find out who has potential health 
problems. They could review our family's medical records to find out if 
any of our children were sick and how seriously they were, and the 
insurance company could then raise our premiums.
  Wake up, America. Under the Republican plan the patient does not have 
to give their consent or be informed about the transfer of their 
medical records. This is an outrage of the highest order. This plan 
does not protect patients, it destroys the privacy that exists between 
doctors and patients. It should be called the Puncture of Privacy Act, 
and the American people should reject it and the Members of the House 
of Representatives should, too.
  Vote for the Dingell-Ganske bill and reject H.R. 4250 on the grounds 
of privacy; if nothing else, on the grounds of privacy.
  Mr. DINGELL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished 
gentleman from California (Mr. Fazio).
  Mr. FAZIO of California. Mr. Speaker, I rise in opposition to the 
last-minute Republican sham before us today. This is not the first time 
Republicans have buckled to pressure from their insurance industry 
contributors. It is not the first time under Speaker Gingrich 
Republicans have tried to pull one over on the American people by 
crafting something that sounds good in a 30-second campaign ad but does 
nothing fundamental to fix the problem. This is perhaps, however, the 
most cruel farce the Republicans have brought to this body since they 
took control.
  For those on the other side of the aisle, who have already written 
the press releases and started patting themselves on the back and 
scheduled the air time for those 30-second spots, I ask them to look 
inside their souls and admit that what they have brought forth today 
will not end families' tragedies and needless human suffering.
  If we pass this bill today, those managed care plans that do not 
operate as honorably as others will still go on putting profits over 
patients. Only now the blood will be on our hands. Under this bill, a 
health plan could still unhook a critically ill patient from the 
intensive care monitors and transfer the patient to an in-plan 
hospital. A health insurance bureaucrat could still withhold life-
saving cancer treatment until it is too late and face no responsibility 
for that human life.

                              {time}  1200

  In my home State of California, State laws protecting patients who 
need prenatal care, well-child care, mammography screening, cervical 
cancer screening, diabetic supplies, and

[[Page H6377]]

nine other benefits would be overridden by this law, preempted.
  This bill is a sham. Support the Dingell-Ganske bill, which doctors 
and patients support.
  The SPEAKER pro tempore (Mr. Kolbe). The gentleman from Michigan (Mr. 
Dingell) has 1 minute remaining.
  Mr. DINGELL. Mr. Speaker, I yield 1 minute to the distinguished 
gentleman from Massachusetts (Mr. Olver).
  Mr. OLVER. Mr. Speaker, I thank the gentleman for yielding.
  What this people's House is doing today is the most cynical action I 
have seen them take in 7 years in Congress.
  H.R. 4250, the so-called Patient Protection Act, is based on 
deception and a big lie. The only thing protected is the insurance 
industry. The best protection we could provide Americans would be to 
return decisions about their care to them and their doctors.
  Instead, this bill drives the wedge between them and their doctor. 
The people of Massachusetts will be hurt by H.R. 4250 because it 
overrides patient protections already provided by State law. The 
mammography and cervical cancer screening for women, blood lead 
screening for children, bone marrow transplants for victims of 
leukemia, home health care for the aged, and a good many more are 
endangered under the Republican bill.
  My constituents and the people of Massachusetts would be better off 
with no bill rather that 4250, the insurance industry protection act. 
But Massachusetts has a large insurance industry, and they will be 
happy with this Republican bill.
  Support the Ganske-Dingell bill.
  The SPEAKER pro tempore. The gentleman from Illinois (Mr. Hastert) 
has 4 minutes remaining.
  Mr. HASTERT. Mr. Speaker, I yield 4 minutes to the gentleman from 
California (Mr. Thomas), the distinguished chairman of the Subcommittee 
on Health of the Committee on Ways and Means.
  (Mr. THOMAS asked and was given permission to revise and extend his 
remarks.)
  Mr. THOMAS. Mr. Speaker, some of this debate has literally taken my 
breath away. If anyone listening to this debate wonders how in the 
world Republicans could get away with treating Americans the way we do, 
listening to the Democrats, I ask them to just look at the calendar. 
This is the pre-election warm-up.
  Remember Medicare? Pre-election, Republicans were going to destroy 
Medicare. Well, the American people did not listen to them. We were 
returned as the majority. And as chairman of the Subcommittee on 
Health, we prepared a Medicare reform package that was passed in my 
subcommittee 11-0, no Democrats dissenting. Prior to the election, it 
would destroy Medicare. After the election, post-politics, everything 
is okay.
  Today we are debating patient protections. Here we go again. It is 
pre-election time. Have things changed out there in America? Of course 
they have. In 1988, health care inflation was 18\1/2\ percent. Today it 
is less than 5 percent. Why? To a very good extent, just 5 years ago, 
in 1993, about a majority of Americans, about half, got their health 
care from managed care. Today, if they get it from their employer, it 
is about 85 percent.
  So health care markets have changed. Have there been distortions? 
Yes, there have been distortions. Do there need to be corrections? Of 
course there need to be corrections. But when we unite egos and 
politics, we get some pretty ugly offspring.
  There have been Members who have taken the well and virtually every 
word they spoke about the Republican plan is absolutely, totally false. 
This headline that says ``the bill would allow sale of patient data'' 
in today's Washington Post is totally, absolutely false.
  If my colleagues will turn to the bill, on page 260, the language is 
clear. If we read on, it says, ``Limitation on Sale or Barter. 
Notwithstanding subsection (c) which is a limit which guarantees that 
State law is not overridden,'' it says, ``no health care provider or 
health plan may as part of conducting health care operations sell or 
barter protected health information,'' period.
  What was said to be contained in the Republican bill is absolutely, 
totally false. What we heard from my colleagues was that they want 
``medical necessity'' defined in law. Who defines ``medical necessity'' 
in law? Bureaucrats, Health Care Financing Administration. We get 
specific items, medical necessity. That is cookbook medicine.
  Who do we have define ``medical necessity,'' for example, in an 
emergency room? Quote, page 144: ``A prudent emergency medical 
professional.'' It is the medical professional there looking at the 
patient and their problem that determines what needs to be done, not 
some book drawn up by bureaucrats that lists what is and what is not 
medically necessary.
  It has been said that it does not say ``pain.'' What this bill says 
is that ``a prudent lay person who possesses an average knowledge of 
health and medicine would determine such examinations to be 
necessary.'' Not itemized; across the board.
  I heard my colleague the gentlewoman from North Carolina (Mrs. 
Clayton) say she cannot find the gag rule. I will tell her page 141, 
section 2706, says, ``patient access to unrestricted medical advice.''
  So please understand, it is a pre-election season. But let me tell my 
colleagues something else. The Congressional Budget Office has laid out 
the numbers on the plan. Their plan increases premiums. Our plan 
reduces premiums.
  Under the Republican plan, CBO, ``lower medical malpractice costs 
would reduce Federal direct spending for Medicare and Medicaid by $1.5 
billion over 10 years.''
  We have heard them say ours is a sham and it drives prices up. It is 
simply not true. CBO says their plan will drive premiums up. CBO says 
our plan will drop premiums. Correct the marketplace and Federal costs. 
Vote ``yes'' on 4250.
  Mr. DREIER. Mr. Speaker, I rise in support of H.R. 4520, the Patient 
Protection Act, because it upholds a patient's most fundamental right--
the right to choose his/her own health care. As much as I believe that 
health insurance bureaucrats should not be able to decide what is best 
for patients, the federal government also should not be issuing onerous 
mandates and regulations that micromanage the care that patients 
receive. Instead, we should provide consumers with additional choices 
that may not be available from their employer-provided health care 
plan.
  Many employees are frustrated because they are forced by their 
employer to join a health plan that does not offer the level of 
benefits or protections that they want. This occurs because the federal 
tax code prevents employees from making important decisions about their 
health care. Under a quirk in the federal tax code, employers receive a 
tax subsidy for providing health care to their employees, and since 
employers pay for the health care, there is an incentive to purchase a 
plan based on costs, not on level of benefits. To give employees the 
option to choose coverage with a higher level of benefits, the solution 
then is not to add another layer of mandates, but to alter the system 
so that employees can choose the health plan that is best for them.
  To accomplish this goal, H.R. 4520 creates a system similar to the 
Federal Employees Health Benefits program known as HealthMarts which 
are private non-profit organizations that offer a variety of health 
benefits to small businesses and the self-insured. Employers pay a set 
fee to the HealthMart, and it provides a variety of health insurance 
options, including health maintenance organizations, paid provider 
organizations, and fee-for-service plans, to employees. With a 
HealthMart, the employee, not the employer, has the flexibility to 
choose the type of plan based on the level of benefits, protections and 
costs. HealthMarts eliminate the possibility that employees feel 
dissatisfied with the health coverage and empowers them to choose the 
best provider that meets their needs.
  Unlike the Democrat substitute, H.R. 4520 actually addresses the 41 
million Americans lacking access to affordable health insurance. 
Regrettably, many of these Americans are in families in which one 
member works in a job that does not provide health care coverage. 
Because they lack the purchasing power of large businesses, many small 
businesses often find the cost of providing coverage too prohibitive. 
H.R. 4520 gives small businesses and the self-insured the ability to 
bank together to obtain more affordable health care coverage. These 
Association Health Plans allow employers to join together through a 
trade association or their local Chamber of Commerce to broaden their 
risk pool and give them the same purchasing power as large 
corporations.
  Mr. Speaker, H.R. 4520 provides an effective means to protect 
patients by offering them more choices. The Patient Protection Act 
restores accountability to health plans without raising premiums on the 
most vulnerable. It

[[Page H6378]]

will also reduce the number of uninsured through innovative reforms and 
the creation of health care ``supermarkets'' so that the average 
American can have more available choices. I would like to commend my 
colleagues who served on the Working Group on Health Care Quality for 
their tremendous efforts in bringing forth this responsible 
legislation, and I urge support of this measure.
  Mr. KOLBE. Mr. Speaker, I rise today in support of H.R. 4250, the 
Patient Protection Act. This bill lays an excellent foundation and 
contains many important pro-patient provisions. This bill adapts for 
the changing health care market without the unintended consequences of 
increased costs, increased bureaucracies and an explosion of lawsuits. 
This bill expands access to health care for millions of Americans, 
makes health care more affordable for working families and small 
businesses, and holds health insurance companies accountable for their 
decisions about your care.
  First, the Patient Protection Act allows individual's access to the 
best type of health care based on their and their families' needs. 
Women would have direct access, without having to go through a 
gatekeeper, to an ob/gyn as their primary care physician. It would also 
allow families to utilize a pediatrician for the health care of their 
children without the interference of an insurance gatekeeper.
  The Patient Protection Act also makes it easier for individuals to 
learn more about what their health care plan covers and discuss options 
with our doctors to determine the best form of treatment. This bill 
requires health plans to cover emergency room care for conditions which 
a prudent layperson would view as requiring emergency treatment.
  Second, the Patient Protection Act will make health more affordable 
for individuals. Most people without health insurance can not afford to 
pay for health benefits. They usually work in small businesses or are 
self-employed, but cannot afford to purchase health care insurance. 
This bill will make it affordable for small business owners to provide 
their employees with health insurance coverage.
  Through the creation HealthMarts, and Community Health Centers 
Organizations, Association Health Plans, and Medical Savings Accounts, 
small business will have the same access to health insurance as large 
business, therefore creating a more affordable health insurance market 
for workers. Workers that currently are caught between being too poor 
for Medicaid, but not cannot afford health insurance.
  And third, the Patient Protection Act makes health plans accountable 
for the health care services that are provided. Through the creation of 
an expedited review process--both internally and externally--
individuals will be able to receive the care they need first, rather 
than being thrown into a long, drawn-out legal process controlled by 
trial lawyers, with no resolution until long after they've been harmed 
or killed. This is the only bill that truly relies on getting patients 
treated first in hospital rooms, rather than in the courtroom.
  Mr. Speaker, I am pleased to vote in support H.R. 4250, the Patient 
Protection Act, and urge my colleagues to join us in protecting 
patients and guaranteeing choices without the heavy-hand of big 
government and provide patients, especially the 42 million un-insured, 
with access to affordable health care, when they need it, where they 
need it, and with whom they need it.
  Mr. MICA. Mr. Speaker, the question before us is whether we want to 
pay more and get less or correct some of the problems we have 
experienced with managed care.
  It is true that the law and regulations have not kept up with changes 
in health care delivery.
  It is also true that increasing costs are depriving millions of 
Americans affordable health care.
  Unfortunately the Democrat plan will do three things we know will 
drive up costs. Their solution is more regulation, more bureaucracy, 
and more litigation.
  In hearings I conducted on the President's fancy titled ``Patients' 
Bill of Rights'' for Federal employees, every administration official 
testified that his similar Executive Order would impose more paperwork 
at high cost without any benefit in coverage.
  The Democrat plan proposes over 300 new mandates, thousands of new 
federal bureaucrats, and 59 new federal regulations.
  The CBO estimates the Democrat plan will increase costs 4 percent. 
Add to that cost of living and they escalate health care premiums 7 
percent per year.
  The Democrat plan increases lawsuits which also increase health care 
costs. So what do you get? More costly regulation. More costly 
bureaucracy. More costly litigation.
  I submit that's not what the patient, consumer or doctor ordered.
  Mr. HILL. Mr. Speaker, recent polls show a growing desire on the part 
of Americans to address some concerns facing our health care system, 
including the number of uninsured working adults and dependents, the 
increased costs being passed to employees, and the lack of choice in 
health plans.
  While Americans enjoy the best quality health care in the world, our 
system for delivering care often frustrates patients, providers and 
employers. Moreover, people are concerned that their health plan may 
not deliver the care they need when they are sick.
  Today, we are addressing what the people want and deserve--a patients 
bill of rights. They do not want a trial lawyers right to work. H.R. 
4250, the Patient Protection Act, which I am a cosponsor, will move 
ahead what I call the three A's--Accessibility, Affordability and 
Accountability.
  The Patient Protection Act promotes accessibility by requiring basic 
protections to ensure high-quality health care coverage, promotes 
affordability by creating more choices and access to affordable health 
care coverage for all Americans, particularly the over 100,000 
Montanans that are uninsured, and ensures accountability by holding 
insurance companies accountable so patients are guaranteed to receive 
high-quality care.
  We achieve this by expanding the eligibility for medical savings 
accounts, allowing for the creation of new `health marts' and 
permitting small employers to pool their risks with others, which will 
make health care become more affordable as well as more available.
  The vast majority of the uninsured have one thing in common, they are 
either self-employed, work, or have a family member who works in a 
small business that cannot afford to pay for health benefits.
  Furthermore, for those small businesses that are able to offer their 
employees coverage, often they can only afford to offer one coverage 
option. In Montana, I constantly hear concerns with the affordability 
of health care. The Congressional Budget Office estimates that premiums 
would increase and the number of uninsured Americans will actually 
increase by 1.4 million if H.R. 3605 became law.
  The question is who are we trying to help--patients, employees. We 
should look at who is opposed to H.R. 3605:
  NFIB, Small Business Survival Committee, US Chamber, National 
Association of Wholesalers-Distributors, National Restaurant 
Association, the Coalition for Patient Choice, Citizens for a Sound 
Economy, NAM, National Retail Association among others.
  Who supports the H.R. 3605--Trial Lawyers.
  We address the very real concern patients in managed care plans have 
that their health plan won't provide the benefits they are entitled to 
if they get sick. We should do this by empowering patients, not trial 
lawyers. I want patients to get the care they are entitled to when they 
need it, not allow their heirs to sue for some large settlement after 
they die. The other proposal that I touched on earlier seen to 
concentrate on courtrooms over hospital rooms and would only increase 
health care costs by taking money away from care and putting it into 
the pockets of attorneys.
  The Patient Protection Act will build upon what's good about our 
private health care system--without big government or more bureaucracy. 
It will make health insurance more accessible, affordable and 
accountable, while giving patients more choices.
  Mr. HOBSON. Mr. Speaker, I rise today in strong support of the House 
Republican Health Care Proposal, the Patient Protection Act. I believe 
this bill strikes a good balance between protecting patient rights 
without the heavy hand of big government. I am excited about many of 
the large protections in this bill, like giving patients a better and 
quicker appeal process when the HMO denies their claim, lifting any gag 
orders on physicians to ensure that patients are better informed, and 
providing greater access to specialists for women and children. I 
believe this bill addresses the frustrating problems that upset so many 
people about their HMOs.
  As many of you know, Representative Tom Sawyer and I wrote the 
Administrative Simplification language in the Health Insurance 
Portability and Accountability Act--Kassebaum-Kennedy. Administrative 
Simplification will reduce paper work, speed the processing and payment 
of medical transactions, and let physicians spend less time on paper 
work so they can do what they do best: treat patients. In putting 
together this legislation some estimated that Medicare could save $60-
90 billion per year if individual patients' financial records were kept 
from getting confused. Because of the confusion over individual 
Medicare financial records, the U.S. Department of Health and Human 
Services (HHS) which runs the Medicare program, often pays claims for 
beneficiaries that have outside supplemental insurance. After paying 
the claim, Medicare's only recourse to get its money back is to sue the 
insurance company, which it seldom does. The most obvious solution to 
this problem is a unique identifier for health care beneficiaries.
  In these days of increased government scrutiny and tight federal 
budgets there are tremendous pressures on HHS to recover

[[Page H6379]]

these funds. Quite frankly, with these pressures on HHS I was afraid 
that they would rush to get in place a one-size fits all solution that 
might compromise patient privacy. To ensure that the system was not run 
by the bureaucrats at HHS and to guarantee public input, Congress 
instructed the National Committee on Vital and Health Statistics, an 
independent research organization, to hold hearings to gather 
information from private and public sector organizations to develop 
recommendations on establishing a way to keep individual patients' 
financial records from getting confused with one another.
  After the hearings, the Committee will write a report that will be 
published in the Federal Register. Moreover, an amendment I introduced 
to the Patient Protection Act will guarantee that Congress reviews and 
approves any suggestions made by the Secretary of HHS on individual 
health care identifiers before they are implemented. This provides a 
built-in guarantee that Congress and the public will have a chance to 
comment on, participate in the development of, and ultimately approve 
any unique health care identifier before it goes into effect. Once 
again, this process insures public input and oversight to prevent 
another ``Big-Brother'' bureaucratic solution.
  However, Administrative Simplification is not complete without the 
Confidentiality Standards proposed in the Patient Protection Act. 
Section 264 of Kassebaum-Kennedy states that if Congress does not pass 
legislation concerning the confidentiality of patient records within 3 
years after the act goes into effect, then the Secretary of HHS will 
adopt her own final regulations. As a result, Congress is on a very 
tight time frame to propose and pass confidentiality legislation.
  The Medical Record Confidentiality provisions in the Patient 
Protection Act provide the necessary safeguards required in Kassebaum-
Kennedy. It allows patients access to their medical records in order to 
view, copy, and amend by addition; requires providers, plans and 
employers to develop safeguards to protect confidentiality of medical 
information; requires providers, plans and employers to disclose their 
confidentiality policies to patients, enrollees and employers; 
encourages health researchers to use non-identifiable information by 
preempting state laws in this defined area; allows providers and plans 
to use information within their network for certain defined purposes, 
including outcomes evaluation, health promotion, and utilization 
review.
  The Medical Record Confidentiality provisions in the Patient 
Protection Act guarantee accurate records and prevent unlawful use of 
one's medical records.
  Mr. FAZIO of California. Mr. Speaker, I rise in opposition to this 
last minute Republican sham before us today. Mr. Speaker, this is not 
the first time the Republicans have buckled to pressure from their 
insurance industry contributors.
  It is not the first time under Speaker Gingrich, Republicans have 
tried to pull one over on the American people by crafting something 
that sounds good in a 30-second campaign ad, but does nothing--
fundamental--to fix the problem.
  But this is perhaps the most cruel farce the Republicans have brought 
to this body since they took control.
  For those on the other side of the aisle who have already written the 
press releases patting yourselves on the back--and scheduled the air 
time for those 30-second spots--I say look inside your souls and admit 
that what you have brought forth today will not end families' tragedies 
and needless human suffering.
  My colleagues, if you pass this bill today, those managed care plans 
that do not operate as honorably as others will still go on putting 
profits over patients. Only now, the blood will be on your hands.
  Under this bill, a health plan could still unhook a critically ill 
patient from the intensive care monitors and transfer the patient to an 
``in-plan'' hospital.
  A health insurance bureaucrat could still withhold life-saving cancer 
treatment until it is too late--and face no responsibility for that 
human life.
  In my home state of California, state laws protecting patients who 
need prenatal care, well child care, mammography screening, cervical 
cancer screening, and diabetic supplies and 9 other benefits--
overriden--prempted by Fed law would be moot.
  Put this bill to the test before you vote: Does it provide adequate 
access to medical specialists? No; Emergency services for severe chest 
pain? No; Proper care for women who have mastectomies? No; Patient 
recourse when needed care is denied? No.
  Right down the line, the Republican bill is a failure and a cruel 
hoax.
  If you pass this bill today, you will go on hearing the stories from 
your constituents who were denied care they paid for in their health 
plans.
  If you fail to join Dr. Ganske and Congressman Dingell--you will 
guarantee that life or death decisions are made by health insurance 
bureaucrats, not doctors. Instead, you will be complicit in people's 
pain.
  You are playing with people's lives here today. Don't choose a 
placebo over a real cure.
  Vote NO on this last minute farce we have before us today. Support 
Dingell-Ganske which is supported by doctors and patients.
  Mr. OXLEY. Mr. Speaker, I rise today in strong support of the Patient 
Protection Act. Since Republicans took control of Congress in 1995 we 
have worked diligently to pass health care reform legislation that 
gives Americans greater choices, makes health care more affordable, and 
improves the quality of the health care they receive. I believe this 
legislation adds to the long list of legislative accomplishments that 
Republicans have achieved in this arena.
  Allow me to expand on some of these accomplishments. First, through 
passage of comprehensive Food and Drug Administration reform, the 
Republican Congress helped expedite the development and delivery of new 
healthcare technology. As a result of these reforms, which streamlined 
the FDA bureaucracy and cut government red tape, we will help save the 
lives of millions of Americans over the coming years.
  Second, while many initially criticized our efforts at passing much 
needed Medicare reform, we succeeded in passing a bipartisan reform 
package designed to save this critical program until 2007 while 
establishing a bipartisan panel to consider options that will ensure 
Medicare's long-term financial health. This responsible package of 
reforms also included provisions to give Medicare beneficiaries greater 
choice, crack down on fraud and abuse, and grant beneficiaries new 
preventative health benefits. For the 34 million seniors that rely on 
Medicare for their health care needs I was pleased to support this 
valuable legislation.
  Finally, any discussion of major health care accomplishments would 
not be complete without highlighting the 1996 Health Care Portability 
and Accountability Act. This legislation was a common-sense, market 
based solution to one of America's most difficult health care 
problems--namely the portability of health insurance. By guaranteeing 
that people can go from one employer to another without facing pre-
existing condition restrictions or being denied coverage by a new 
employer's insurance plan this legislation ended the problem of job-
lock by allowing workers to switch jobs without the fear of losing 
their insurance coverage.
  Today, in our continuing efforts to strengthen the health care 
American's receive, we will consider legislation that address many of 
the concerns patients all over our country have with the health care 
marketplace. This legislation focuses on making health care more 
affordable for working families and small businesses, while holding 
insurance companies accountable for their decisions, and expanding 
access to health care for millions of Americans. I commend Congressman 
Hastert for his fine work with the House Republican Working Group on 
Health Care Quality in bringing this legislation to the House floor. I 
am pleased with the outcome of the working group that I feel builds on 
and strengthens our previous accomplishments.
  While many have advocated reforms that would significantly increase 
both costs and expand government bureaucracies, I support the 
Republican Task Force legislation because it protects patients and 
expands access to health care without damaging the free market health 
care system we enjoy today. Mr. Speaker I urge my fellow colleagues to 
support this much needed legislation that ensures that the health 
insurance Americans receive is accessible, affordable, and accountable 
without crippling the free market's ability to hold down health care 
prices.
  Mr. GILMAN. Mr. Speaker, I rise today in support of H.R. 4250, the 
Patient Protection Act. As managed care has continued to grow as the 
major system of health care delivery in this country, we are 
increasingly aware of incidents where patients have suffered serious 
injury or even death because an HMO or other managed care plans denied 
a treatment that was necessary to protect the patient. An emphasis on 
cost control over the quality of care has prevented health care 
professionals from acting in the best interest of the patient. While 
looking for ways to control the cost of health care, we must also 
ensure that people have access to quality health care services when the 
need it.
  The legislation before us today attempts to make significant changes 
in the managed care industry. H.R. 4250 guarantees access to emergency 
room care by applying a ``prudent layperson'' standard of what 
constitutes an emergency, additionally, this bill will allow women 
direct access to their ob/gyn and children to their pediatrician. This 
access will prevent patients from having to be referred to these type 
of specialists by their primary provider.
  This bill would also provide for an independent appeal process. If a 
patient is unhappy

[[Page H6380]]

with the initial decision, he or she can ask for an independent 
internal review within 30 days of the decision. If that decision is 
unsatisfactory, they can appeal for an independent external review by 
an independent contracted physician. If after these two appeals, they 
are still unhappy, the patient can take the HMO to court and sue for 
damages up to $250,000.

  The Patient Protection Act would require all insurance providers to 
provide detailed information to their customers including patients' 
responsibilities, the number of appeals made and granted as well as 
other plan information. This provision is intended to arm the consumer 
with all of the necessary information up front so that future appeals 
and litigation become unnecessary.
  Although this bill provides a great number of HMO reform provisions, 
there are still a few items which need to be addressed and amended 
during the House-Senate conference. I urge the conferees to consider 
changes to this legislation which will provide greater patient 
protection and strengthen HMO liability.
  Accordingly, I am pleased to support H.R. 4250, the Patient 
Protection Act.
  Mr. UPTON. Mr. Speaker, I rise to express my strong support for the 
Patient Protection Act. Before I review the reasons that I support this 
legislation and will work hard for its enactment, I want to take this 
opportunity to single out two of my colleagues without whom this bill 
which will do so much to ensure quality of care would not be before us 
today. First, I want to thank Charlie Norwood, who saw early-on the 
need for strong patient protections. He introduced the Patient Access 
to Responsible Care Act and used this legislation as a vehicle to 
educate all of us to the need for reforms. Second, I want to express my 
deep regard for the leadership, patience, and effort that Denny Hastert 
has shown in the development of the Patient Protection Act, the 
legislation we are considering today. He had a Herculean task, and he 
did it with skill and grace.
  I am proud to be counted as a cosponsor of the Patient Protection 
Act. This legislation will ensure that our nation's health care system 
is patient-centered, no profit-centered and that no one, no insurance 
clerk or green eyeshade worrying about a fat profit, stands between the 
patient and the physician when potentially life and death health care 
decisions are being made.
  There are some who continue to argue that patient protection 
legislation is not needed--that the market will work over time to 
ensure patients have access to care when they need it and receive high 
quality care. That has not been my experience at all. Rarely a day goes 
by that I don't hear or read in my constituent mail of serious problems 
that individuals or their families are having with their managed care 
plans. Just yesterday, for example, I received a report of a Michigan 
woman who was experiencing severe pain from an ovarian cyst. She went 
to the nearest hospital, but her managed care plan would not cover her 
care at that facility. Instead, a plan clerk directed her to another, 
more distant facility. Unfortunately, that facility was affected by a 
massive power outage in the Detroit area and could not see her 
promptly. She requested permission to return to the first hospital, but 
was denied. By the time she was finally treated, she had a massive 
internal infection from the ruptured cyst. Her doctor said she was 
lucky to be alive.
  We need to stop this rising drum-beat of stories of patients being 
denied appropriate care by their health plans, and the Patient 
Protection Act will do this. Had the Patient Protection Act been in 
place, for example, this woman could have sought and received care at 
the nearest emergency room rather than having to seek prior 
authorization and go to another, more distant facility.
  Perhaps the single most important patient protection in this 
legislation is the right it will give patients to a timely review of 
plan determinations with which they disagree. Patients may seek an 
internal and then an independent external review, both of which must be 
conducted by physicians who are trained in the provision of the 
treatment under review. The patient may then go to court to enforce the 
ruling of the external review organization that a service should be 
provided or covered. If the court upholds the finding of the 
independent expert external reviewer, which is highly likely, the plan 
is subject to fines of $500 per day up to a total of $250,000.
  I think the internal/external review appeal process in this 
legislation is actually more likely to hold plans' feet to the fire for 
their decisions and ensure appropriate access to care than would be the 
case if patients could simply go to court and sue their plans or 
employers. While the penalties leveled in state torts might be greater 
in some cases, such cases can drag on for years and the outcome is 
never certain for individuals. And the uncertain, uncapped liability 
exposure to which employers could be subject under the state court suit 
option could lead to employers terminating plans and add significantly 
to the number of individuals and families with no health care coverage.
  In closing, I strongly urge my colleagues to join me in voting today 
for the Patient Protection Act. It ensures that our Nation's health 
care system is patient-centered, not profit-centered. It ensures that 
medical decisions are made by patients and their physicians with the 
well-being of the patient being the first consideration.
  Mr. GEJDENSON. Mr. Speaker, for the past few months, my democratic 
colleagues and I have demanded that Republicans bring HMO reform to the 
floor. And now, what do we get. Barely 2 hours to debate a bill that 
was introduced just last week and has had no hearings, no mark-up, no 
public discussion of any kind.
  The Republican bill will do little to fix the problems with the HMO 
system. The Republican bill does not allow direct access to specialty 
care. If you have heart disease, you must still go through a primary 
care doctor before seeing a cardiologist. If you have cancer, you must 
go through your primary care physician before you can see an 
oncologist. The Patient's Bill of Rights, which I support, guarantees 
patients access to specialists without going through a gatekeeper.
  The Republican bill will not require HMOs to pay for emergency room 
visits if a patient has severe pain, but does not have a serious 
medical problem. Parents who take a child to the emergency room when 
they complain about pains will not know if their insurance company will 
cover the visit. This bill expects parents to be doctors and penalizes 
them for taking prudent steps. The Republican bill will not prohibit 
gag orders on doctors in group practice. It will not prevent plans from 
arbitrarily limiting medically-necessary services. It will not allow 
patients to sue HMOs for decisions that adversely affect them.
  The Patient's Bill of Rights will fully address all of these 
problems. Access to medically needed care, including access to 
emergency rooms and specialists, is a fundamental element of the 
Patient's Bill of Rights. This bill will ban all gag rules on 
physicians. This bill will end the current practice of HMO's offering 
financial incentives to withhold necessary care. This bill will 
guarantee timely internal appeals, as well as an independent external 
appeals when plans deny care. Finally, the Patient's Bill of Rights 
holds plans legally accountable for decisions that lead to serious 
injury or death. People need real ways to hold HMOs responsible. In too 
many instances, courts are the only advocate that patients have in 
their battles with multi-billion dollar companies.
  It is time for true HMO reform. We all know people who have been 
injured by HMOs. Just this week, a woman from my district got in touch 
with me and relayed what is probably an all too common occurance:
  This Monday, she had a hysterectomy. On Tuesday, 24 hours later, her 
HMO wanted her out of the hospital even though she was feverish and had 
medical staples holding her abdomen together. Her doctor demanded that 
her HMO allow her to stay in the hospital at least one more day. Her 
HMO relented because of her fever but after the fever broke on 
Wednesday, she was forced out. She was sent home, still weak and groggy 
and not even close to recovery. How is she supposed to get well? This 
is not what she paid for when she paid her premium.
  Republicans claim that their bill will stop this type of abuse, but 
it won't. Their bill has no guarantee that doctors, not HMOs will 
determine what amount of time is needed to recover from major surgery. 
The Patient's Bill of Rights will make sure that doctors and patients, 
not HMO plan administrators, decide when it's time to go home.
  Under the Republican bill, what can patients and their families do 
when they are denied care? Other than jump through some hoops--not 
much! First, patients will have to prove during the internal appeal 
that their care is medically necessary. In the Republican bill, the 
definition of medically necessary is determined by the health plan--not 
by decades of medical experience, not by doctors there in the 
examination room with the patient. Then, if the internal appeals 
process doesn't work, the Republican bill will force patients to pay to 
have an independent review of their claim.
  This is outrageous for two reasons. First, charging a fee is designed 
to discourage people from using this recourse. Second, HMOs will only 
be held accountable for failing to follow the provisions of their plan. 
As a result, as long as the HMO follows its own rules, patients 
receiving nothing from the external appeals provision even if their 
health is compromised.
  In the Patient's Bill of Rights, the definition of medically 
necessary is uniform for all--a definition drafted by doctors, not 
HMOs. The Patient's Bill of Rights not only has internal and external 
appeals--both free of charge--but also sets up an Ombudsman program to 
assist consumers in understanding their health insurance options and 
filing appeals and grievances with their HMOs.

[[Page H6381]]

  The Republicans also seem to think that it's a good thing that their 
bill will deny patients access to the court system when their care is 
denied. Somehow, Republicans believe that the health insurance 
industry, which makes $952 billion a year, needs protection from 
lawsuits. When one of your family members dies because an HMO denies 
access to care, the Republican bill gives you nowhere to turn. No other 
industry enjoys such a powerful, congressionally-mandated shield from 
liability for their actions. It's time to remove that protection for 
health plans and focus on granting more protections for patients.
  If the bill in and of itself isn't bad enough, the proponents of this 
sham have added totally unrelated provisions which further threaten the 
quality of health care for all Americans. Once again, Republicans are 
threatening Medicare by expanding so-called Medical Savings Accounts. 
Remember these? They will allow healthy senior citizens to pull out of 
Medicare leaving it with only the poorest, sickest older Americans. 
This is bad medical policy and even worse fiscal policy. Other 
provisions preempt state laws and jeopardize patient privacy.
  We must create a better system for everyone who gives or receives 
health care in this country. The Republican plan will do nothing to 
help our Nation's patients. For real reform, we must pass the Patient's 
Bill of Rights.
  Mr. NUSSLE. Mr. Speaker, I rise today in support of the Patient 
Protection Act. I support this bill because it establishes Association 
Health Plans and Health Marts as new ways to provide health insurance 
to workers, many of whom work for small businesses which cannot 
currently afford to provide health insurance to their employees. 
Individuals who work for small businesses are the people most likely to 
be without health insurance. I also applaud the increased care options 
this bill provides for individuals dissatisfied with the choice of 
doctors provided by their health plan.
  The national debate on health care has been focused almost 
exclusively on the care provided by HMOs. Providing appeals processes 
and other recourses for patients in HMOs are important and appropriate 
steps for Congress to take in order to ensure quality care. However, in 
all the talk over giving recourse and options to individuals with HMO 
coverage, both bills have overlooked the fact that the Patient 
Protection Act and the Kennedy-Dingell bill primarily address the fears 
and complaints of Americans who are fortunate enough to have real 
access to health care and a menu of health care options.
  For many Iowans, access to health care doesn't mean the ability to 
see a specialist on demand. There are few specialists in Grundy Center, 
Iowa. People in Iowa's Second District have to load a family member 
into the car and drive miles and miles to the nearest doctor, clinic or 
emergency room. A patient bill of rights means little or nothing to 
people whose only choice of a hospital or clinic is 40 or 50 miles 
away. And miles mean minutes, which are crucial in the event of an 
emergency. Improving access to health care in Iowa means recruiting 
more doctors so that people will have shorter drives, and maybe a 
choice of where to go.
  I am disappointed that neither proposal the House is considering 
today contains any initiatives to address the shortage of doctors in 
rural America. Twenty-five percent of the American population lives in 
rural areas. By the federal government's own count, almost 2,500 
counties in our nation lack adequate medical care. Last year, Congress 
acted to make this shortage worse by creating a program to pay 
hospitals to train fewer doctors. What we need in Iowa are more 
doctors. The resources being spent to reduce the number of physicians 
would be better spent providing incentives to encourage doctors to 
locate in areas with inadequate access to health care.
  The Patient Protection Act provides valuable protections and new 
health care options to many individuals, and I support those goals. 
However, I hope that today's vote on the Patient Protection Act is the 
beginning of the debate on improving access to health care and not the 
end. This debate is essential for people in Iowa's Second District and 
one in which I intend to participate vigorously.
  Thank you, Mr. Speaker.
  Mr. CRANE. Mr. Speaker, today, this House has an opportunity to 
improve the health care system for millions of Americans. Like 
everyone, I want a health care system that is more accessible, more 
affordable and more accountable. With that goal in mind, I will cast my 
vote for H.R. 4250, the Patient Protection Act.
  It is not a perfect piece of legislation and while there are 
provisions I think could be improved, there are also other provisions I 
have long supported. I am particularly pleased with the expansion of 
medical savings accounts, the creation of association health plans, 
medical malpractice reform and improving the patient appeals process 
without increasing the involvement of trial lawyers. In response to the 
concerns we have heard from our constituents, the bill prohibits gag 
rules, allows women direct access to gynecological and obstetrical care 
and allow parents to choose a pediatrician as their child's primary 
care provider without having to get a referral from a health plan.
  This legislation will not only improve health care for the currently 
insured, we expect it to also make insurance more affordable to the 41 
million uninsured Americans, including the 1.3 million uninsured in my 
state of Illinois.
  As a member of the Ways and Means Health Subcommittee, I have taken 
an active interest in the many innovative ideas in health care. The 
Patient Protection Act represents the only choice for those of us who 
do not want a heavy-handed, big-government takover of our health care 
system. The American people overwhelmingly rejected that proposal and 
made it clear they want quick access to the best medical care in the 
world at an affordable price. The Patient Protection Act moves us in 
that direction and I would urge my colleagues to vote in support of it.
  Ms. BROWN of Florida. Mr. Speaker, I represent the 3rd District of 
Florida. And, senior citizens in my district which ranges from 
Jacksonville to Orlando have suffered at the hands of HMO providers 
day-after-day. They are urged to sign up for health coverage plans, and 
these HMOs only give them cheap gifts and inadequate health coverage.
  Because I have hosted numerous town hall meetings on health care for 
senior citizens, I have been able to hear their stories and provide 
assistance when their insurance providers have failed to deliver. An 
81-year-old man, who after his HMO was sold had to replace his regular 
hypertension drug with a lower-cost one. Within days his blood pressure 
skyrocketed. He switched to an HMO that covered his drug, but then the 
new plan changed its coverage too. Unable to pay for the drug, he went 
on TV as a cry for help and a local physician with compassion gave him 
the medication for free. Health care is such a crucial part of our 
lives, I believe every effort should be made to protect senior citizens 
and the working poor. It is our responsibility to protect and pass 
legislation that will protect the rights of our constituents. More 
importantly, we are charged with ensuring that our nation has access to 
quality health care at an affordable cost. There is nothing more heart 
wrenching, than talking with someone who desperately needs medical care 
and their insurance company will not cover the life-saving medical 
treatment or reimburse patients for much needed medicine. In another 
case, a baby girl was diagnosed with a hole in her heart. Chances were 
good that she would need surgery to fix the defect if it did not close 
on its own. Her mother switched HMOs for better coverage; however, the 
new insurance company would not cover the procedure because her 
daughter's heart defect was a pre-existing condition. The HMO had a 2 
year limit on pre-existing conditions and would not pay for the little 
girl's operation. Thanks to a special state program in Florida the 
little girl was able to receive care. We need to hold HMOs accountable 
for their actions and how they treat people. That is why, I urge my 
colleagues to oppose the Patient Protection Act (H.R. 4250) and support 
the Patient Bill of Rights (H.R. 3605). H.R. 3605 is the right choice, 
it puts patients before profits and medical decisions are given back to 
doctors and nurses. This bill also holds HMOs responsible for decisions 
when they withhold or limit care to patients.
  The challenges of quality health care will require our nation to 
overcome the barriers of ever-increasing medical cost and recognize the 
needs of our nation. In a society where technology is progressing at 
the speed of light, why is it so difficult for us to make the right 
decision for the American people?
  We need to treat quality health care as a right versus a luxury for a 
privileged few.
  Mrs. MINK of Hawaii. Mr. Speaker, I rise in opposition to H.R. 4250, 
the Patient Protection Act of 1998, because it falls short of 
addressing America's true health care issues. The essence of the health 
care debate is threefold: access to health care; patient protections; 
and patient rights. The Democratic substitute, the Patients' Bill of 
Rights, would address all three of these issues. This bill, the so 
called Patient Protection Act, does not.
  First, Americans, despite being insured, are tired of having to fight 
every step of the way for care they are entitled to. Americans want 
access to care. The Patient Protection Act would not alleviate many of 
the existing barriers to care identified as priorities. For example:
  The Patient Protection Act would not provide direct access to 
specialists. It does not guarantee women direct access to their OBGYN 
nor would it provide parents direct access to pediatricians for their 
children.
  The Patient Protection Act would not insure a patient can continue to 
see the same doctor through a course of a treatment or a pregnancy if 
that doctor leaves the network.
  The Patient Protection Act would not insure that a patient can get 
the prescription drug chosen by the physician, not the HMO.

[[Page H6382]]

  The Patient Protection Act would not allow patients with ongoing 
conditions to have standing referrals to specialists.
  The Patient Protection Act would not ensure that patients are allowed 
to see an outside specialist at no additional cost when specialists in 
their plan are unable to meet their needs.
  The Patients Bill of Rights will provide all of these.
  Second, patients should have the right to hold managed care 
administrators accountable for their decisions when it influences the 
care that is provided.
  The Patient Protection Act does not hold managed care plans 
accountable when decisions to deny or delay care results in injury or 
death. It does not provide patients the right to sue HMOs when they are 
denied needed health care nor does it provide a true external 
independent appeals process. In fact, the Patient Protection Act 
reduces accountability by placing an arbitrary cap on medical 
malpractice awards.
  In addition, the Patient Protection Act does not ensure that doctors 
and nurses can report quality problems without retaliation from HMO's, 
Insurance companies and hospitals. The Patient Protection Act would not 
prevent health care professionals from being financially rewarded for 
limiting a patient's care. Patients deserve care from health care 
professionals who are not rewarded for providing less care.
  The Patients' Bill of Rights would provide these protections and true 
accountability.
  Finally, patients deserve basic health care protections. After 
preaching a mantra of returning power to the states since taking 
control of Congress four years ago, Republicans take a hypocritical u-
turn and pre-empt carefully constructed state health care protections. 
The Patients' Protection Act will allow ``Healthmarts'' to pick and 
choose the services covered under the plan, ignoring state mandated 
minimum benefit requirements. It would also eliminate state regulations 
enacted to insure solvency and protect against fraud and abuse.
  The Patients' Bill of Rights would not pre-empt state mandated care 
nor would it eliminate solvency and fraud and abuse protections.
  In closing, Americans deserve health care from qualified physicians 
who are not influenced by health care plan administrators. Americans 
deserve the right to take their health plans to court if they are 
denied care. America wants real managed care reform. The Patient 
Protection Act is not real managed care reform. This is a facade and a 
sham designed to provide political cover for Republican leadership who 
have argued that managed care reform is not necessary.
  Do not judge a bill by its title. The Republican Patient Protection 
Act is a facade. It's meager ``protections'' do not address the real 
issues we are faced with. The Patients' Bill of Rights on the other 
hand is a comprehensive and revolutionary bill providing substantive 
reform.
  America understands the difficulties involved with obtaining health 
care. The Patients' Bill of Rights provides solutions. The Patient 
Protection Act creates more problems.
  Mr. TURNER. Mr. Speaker, it has been suggested that the Republican 
bill provides better protection for patients. I submit to my colleagues 
that the Republican bill provides fewer protections for patients than 
exist in current law in most of our States.
  I come from Texas. The Texas Legislature passed patient protection 
legislation in 1997, fully intending that all HMOs be covered by the 
protections of State law.
  The Republicans submit a bill today that would control patient 
protections at the Federal level. It would set forth a series of rules 
that are far inferior to those in the Democratic alternative.
  Under the Republic proposal, if the HMO denied coverage, the only 
remedy, if an individual was enrolled in a self-insured plan, would be 
to go to Federal Court. And once the individual gets there, he or she 
would have no genuine recourse.
  In 1991, Phyllis Cannon was diagnosed with leukemia. She appealed to 
her HMO for a bone narrow transplant. The HMO refused. For over 40 days 
the HMO refused coverage. Due to a denial of medical treatment, about a 
month after that Ms. Cannon died.
  The court ruled that under ERISA, she had no recovery. Under the 
Republican bill today, her estate would be entitled to $20,000--a small 
price for a life. Under the Republican bill, the penalty would be $500 
per day. This represents a much cheaper alternative for an HMO than 
providing the treatment that should have been provided to Phyllis 
Cannon.
  I submit to my colleagues that all Members of this House needs to 
look at what their State has done to protect patients because a vote 
for the Republican bill amounts to rolling back the protections that 
most of our State have already provided for patients under the law. In 
every place in this country, protecting patients enrolled in HMOs has 
been a bipartisan effort. Only in Washington is patient protection 
partisan.


     Amendment in the Nature of a Substitute Offered by Mr. Dingell

  Mr. DINGELL. Mr. Speaker, I offer an amendment in the nature of a 
substitute.
  The SPEAKER pro tempore. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 2 in the Nature of a Substitute Offered by 
     Mr. Dingell:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Patients' 
     Bill of Rights Act of 1998''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                TITLE I--HEALTH INSURANCE BILL OF RIGHTS

                       Subtitle A--Access to Care

Sec. 101. Access to emergency care.
Sec. 102. Offering of choice of coverage options under group health 
              plans.
Sec. 103. Choice of providers.
Sec. 104. Access to specialty care.
Sec. 105. Continuity of care.
Sec. 106. Coverage for individuals participating in approved clinical 
              trials.
Sec. 107. Access to needed prescription drugs.
Sec. 108. Adequacy of provider network.
Sec. 109. Nondiscrimination in delivery of services.

                     Subtitle B--Quality Assurance

Sec. 111. Internal quality assurance program.
Sec. 112. Collection of standardized data.
Sec. 113. Process for selection of providers.
Sec. 114. Drug utilization program.
Sec. 115. Standards for utilization review activities.
Sec. 116. Health Care Quality Advisory Board.

                    Subtitle C--Patient Information

Sec. 121. Patient information.
Sec. 122. Protection of patient confidentiality.
Sec. 123. Health insurance ombudsmen.

              Subtitle D--Grievance and Appeals Procedures

Sec. 131. Establishment of grievance process.
Sec. 132. Internal appeals of adverse determinations.
Sec. 133. External appeals of adverse determinations.

         Subtitle E--Protecting the Doctor-Patient Relationship

Sec. 141. Prohibition of interference with certain medical 
              communications.
Sec. 142. Prohibition against transfer of indemnification or improper 
              incentive arrangements.
Sec. 143. Additional rules regarding participation of health care 
              professionals.
Sec. 144. Protection for patient advocacy.

              Subtitle F--Promoting Good Medical Practice

Sec. 151. Promoting good medical practice.
Sec. 152. Standards relating to benefits for certain breast cancer 
              treatment.
Sec. 153. Standards relating to benefits for reconstructive breast 
              surgery.

                        Subtitle G--Definitions

Sec. 191. Definitions.
Sec. 192. Preemption; State flexibility; construction.
Sec. 193. Regulations.

 TITLE II--APPLICATION OF PATIENT PROTECTION STANDARDS TO GROUP HEALTH 
  PLANS AND HEALTH INSURANCE COVERAGE UNDER PUBLIC HEALTH SERVICE ACT

Sec. 201. Application to group health plans and group health insurance 
              coverage.
Sec. 202. Application to individual health insurance coverage.

TITLE III--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

Sec. 301. Application of patient protection standards to group health 
              plans and group health insurance coverage under the 
              Employee Retirement Income Security Act of 1974.
Sec. 302. ERISA preemption not to apply to certain actions involving 
              health insurance policyholders.

TITLE IV--APPLICATION TO GROUP HEALTH PLANS UNDER THE INTERNAL REVENUE 
                              CODE OF 1986

Sec. 401. Amendments to the Internal Revenue Code of 1986.

        TITLE V--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

Sec. 501. Effective dates.
Sec. 502. Coordination in implementation.

                      TITLE VI--REVENUE PROVISIONS

Sec. 601. Estate tax technical correction.
Sec. 602. Treatment of certain deductible liquidating distributions of 
              regulated investment companies and real estate investment 
              trusts.

[[Page H6383]]

                TITLE I--HEALTH INSURANCE BILL OF RIGHTS

                       Subtitle A--Access to Care

     SEC. 101. ACCESS TO EMERGENCY CARE.

       (a) Coverage of Emergency Services.--
       (1) In general.--If a group health plan, or health 
     insurance coverage offered by a health insurance issuer, 
     provides any benefits with respect to emergency services (as 
     defined in paragraph (2)(B)), the plan or issuer shall cover 
     emergency services furnished under the plan or coverage--
       (A) without the need for any prior authorization 
     determination;
       (B) whether or not the health care provider furnishing such 
     services is a participating provider with respect to such 
     services;
       (C) in a manner so that, if such services are provided to a 
     participant, beneficiary, or enrollee by a nonparticipating 
     health care provider--
       (i) the participant, beneficiary, or enrollee is not liable 
     for amounts that exceed the amounts of liability that would 
     be incurred if the services were provided by a participating 
     health care provider, and
       (ii) the plan or issuer pays an amount that is not less 
     than the amount paid to a participating health care provider 
     for the same services; and
       (D) without regard to any other term or condition of such 
     coverage (other than exclusion or coordination of benefits, 
     or an affiliation or waiting period, permitted under section 
     2701 of the Public Health Service Act, section 701 of the 
     Employee Retirement Income Security Act of 1974, or section 
     9801 of the Internal Revenue Code of 1986, and other than 
     applicable cost-sharing).
       (2) Definitions.--In this section:
       (A) Emergency medical condition based on prudent layperson 
     standard.--The term ``emergency medical condition'' means a 
     medical condition manifesting itself by acute symptoms of 
     sufficient severity (including severe pain) such that a 
     prudent layperson, who possesses an average knowledge of 
     health and medicine, could reasonably expect the absence of 
     immediate medical attention to result in a condition 
     described in clause (i), (ii), or (iii) of section 
     1867(e)(1)(A) of the Social Security Act.
       (B) Emergency services.--The term ``emergency services'' 
     means--
       (i) a medical screening examination (as required under 
     section 1867 of the Social Security Act) that is within the 
     capability of the emergency department of a hospital, 
     including ancillary services routinely available to the 
     emergency department to evaluate an emergency medical 
     condition (as defined in subparagraph (A)), and
       (ii) within the capabilities of the staff and facilities 
     available at the hospital, such further medical examination 
     and treatment as are required under section 1867 of such Act 
     to stabilize the patient.
       (b) Reimbursement for Maintenance Care and Post-
     Stabilization Care.--In the case of services (other than 
     emergency services) for which benefits are available under a 
     group health plan, or under health insurance coverage offered 
     by a health insurance issuer, the plan or issuer shall 
     provide for reimbursement with respect to such services 
     provided to a participant, beneficiary, or enrollee other 
     than through a participating health care provider in a manner 
     consistent with subsection (a)(1)(C) if the services are 
     maintenance care or post-stabilization care covered under the 
     guidelines established under section 1852(d)(2) of the Social 
     Security Act (relating to promoting efficient and timely 
     coordination of appropriate maintenance and post-
     stabilization care of an enrollee after an enrollee has been 
     determined to be stable), or, in the absence of guidelines 
     under such section, such guidelines as the Secretary shall 
     establish to carry out this subsection.

     SEC. 102. OFFERING OF CHOICE OF COVERAGE OPTIONS UNDER GROUP 
                   HEALTH PLANS.

       (a) Requirement.--
       (1) Offering of point-of-service coverage option.--Except 
     as provided in paragraph (2), if a group health plan (or 
     health insurance coverage offered by a health insurance 
     issuer in connection with a group health plan) provides 
     benefits only through participating health care providers, 
     the plan or issuer shall offer the participant the option to 
     purchase point-of-service coverage (as defined in subsection 
     (b)) for all such benefits for which coverage is otherwise so 
     limited. Such option shall be made available to the 
     participant at the time of enrollment under the plan or 
     coverage and at such other times as the plan or issuer offers 
     the participant a choice of coverage options.
       (2) Exception.--Paragraph (1) shall not apply with respect 
     to a participant in a group health plan if the plan offers 
     the participant--
       (A) a choice of health insurance coverage through more than 
     one health insurance issuer; or
       (B) two or more coverage options that differ significantly 
     with respect to the use of participating health care 
     providers or the networks of such providers that are used.
       (b) Point-of-Service Coverage Defined.--In this section, 
     the term ``point-of-service coverage'' means, with respect to 
     benefits covered under a group health plan or health 
     insurance issuer, coverage of such benefits when provided by 
     a nonparticipating health care provider. Such coverage need 
     not include coverage of providers that the plan or issuer 
     excludes because of fraud, quality, or similar reasons.
       (c) Construction.--Nothing in this section shall be 
     construed--
       (1) as requiring coverage for benefits for a particular 
     type of health care provider;
       (2) as requiring an employer to pay any costs as a result 
     of this section or to make equal contributions with respect 
     to different health coverage options; or
       (3) as preventing a group health plan or health insurance 
     issuer from imposing higher premiums or cost-sharing on a 
     participant for the exercise of a point-of-service coverage 
     option.
       (d) No Requirement for Guaranteed Availability.--If a 
     health insurance issuer offers health insurance coverage that 
     includes point-of-service coverage with respect to an 
     employer solely in order to meet the requirement of 
     subsection (a), nothing in section 2711(a)(1)(A) of the 
     Public Health Service Act shall be construed as requiring the 
     offering of such coverage with respect to another employer.

     SEC. 103. CHOICE OF PROVIDERS.

       (a) Primary Care.--A group health plan, and a health 
     insurance issuer that offers health insurance coverage, shall 
     permit each participant, beneficiary, and enrollee to receive 
     primary care from any participating primary care provider who 
     is available to accept such individual.
       (b) Specialists.--
       (1) In general.--Subject to paragraph (2), a group health 
     plan and a health insurance issuer that offers health 
     insurance coverage shall permit each participant, 
     beneficiary, or enrollee to receive medically necessary or 
     appropriate specialty care, pursuant to appropriate referral 
     procedures, from any qualified participating health care 
     provider who is available to accept such individual for such 
     care.
       (2) Limitation.--Paragraph (1) shall not apply to specialty 
     care if the plan or issuer clearly informs participants, 
     beneficiaries, and enrollees of the limitations on choice of 
     participating providers with respect to such care.

     SEC. 104. ACCESS TO SPECIALTY CARE.

       (a) Obstetrical and Gynecological Care.--
       (1) In general.--If a group health plan, or a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, requires or provides for a participant, 
     beneficiary, or enrollee to designate a participating primary 
     care provider--
       (A) the plan or issuer shall permit such an individual who 
     is a female to designate a participating physician who 
     specializes in obstetrics and gynecology as the individual's 
     primary care provider; and
       (B) if such an individual has not designated such a 
     provider as a primary care provider, the plan or issuer--
       (i) may not require authorization or a referral by the 
     individual's primary care provider or otherwise for coverage 
     of routine gynecological care (such as preventive women's 
     health examinations) and pregnancy-related services provided 
     by a participating health care professional who specializes 
     in obstetrics and gynecology to the extent such care is 
     otherwise covered, and
       (ii) may treat the ordering of other gynecological care by 
     such a participating physician as the authorization of the 
     primary care provider with respect to such care under the 
     plan or coverage.
       (2) Construction.--Nothing in paragraph (1)(B)(ii) shall 
     waive any requirements of coverage relating to medical 
     necessity or appropriateness with respect to coverage of 
     gynecological care so ordered.
       (b) Specialty Care.--
       (1) Specialty care for covered services.--
       (A) In general.--If--
       (i) an individual is a participant or beneficiary under a 
     group health plan or an enrollee who is covered under health 
     insurance coverage offered by a health insurance issuer,
       (ii) the individual has a condition or disease of 
     sufficient seriousness and complexity to require treatment by 
     a specialist, and
       (iii) benefits for such treatment are provided under the 
     plan or coverage,
     the plan or issuer shall make or provide for a referral to a 
     specialist who is available and accessible to provide the 
     treatment for such condition or disease.
       (B) Specialist defined.--For purposes of this subsection, 
     the term ``specialist'' means, with respect to a condition, a 
     health care practitioner, facility, or center (such as a 
     center of excellence) that has adequate expertise through 
     appropriate training and experience (including, in the case 
     of a child, appropriate pediatric expertise) to provide high 
     quality care in treating the condition.
       (C) Care under referral.--A group health plan or health 
     insurance issuer may require that the care provided to an 
     individual pursuant to such referral under subparagraph (A) 
     be--
       (i) pursuant to a treatment plan, only if the treatment 
     plan is developed by the specialist and approved by the plan 
     or issuer, in consultation with the designated primary care 
     provider or specialist and the individual (or the 
     individual's designee), and
       (ii) in accordance with applicable quality assurance and 
     utilization review standards of the plan or issuer.

     Nothing in this subsection shall be construed as preventing 
     such a treatment plan for an individual from requiring a 
     specialist to provide the primary care provider with regular 
     updates on the specialty care provided, as well as all 
     necessary medical information.

[[Page H6384]]

       (D) Referrals to participating providers.--A group health 
     plan or health insurance issuer is not required under 
     subparagraph (A) to provide for a referral to a specialist 
     that is not a participating provider, unless the plan or 
     issuer does not have an appropriate specialist that is 
     available and accessible to treat the individual's condition 
     and that is a participating provider with respect to such 
     treatment.
       (E) Treatment of nonparticipating providers.--If a plan or 
     issuer refers an individual to a nonparticipating specialist 
     pursuant to subparagraph (A), services provided pursuant to 
     the approved treatment plan (if any) shall be provided at no 
     additional cost to the individual beyond what the individual 
     would otherwise pay for services received by such a 
     specialist that is a participating provider.
       (2) Specialists as primary care providers.--
       (A) In general.--A group health plan, or a health insurance 
     issuer, in connection with the provision of health insurance 
     coverage, shall have a procedure by which an individual who 
     is a participant, beneficiary, or enrollee and who has an 
     ongoing special condition (as defined in subparagraph (C)) 
     may receive a referral to a specialist for such condition who 
     shall be responsible for and capable of providing and 
     coordinating the individual's primary and specialty care. If 
     such an individual's care would most appropriately be 
     coordinated by such a specialist, such plan or issuer shall 
     refer the individual to such specialist.
       (B) Treatment as primary care provider.--Such specialist 
     shall be permitted to treat the individual without a referral 
     from the individual's primary care provider and may authorize 
     such referrals, procedures, tests, and other medical services 
     as the individual's primary care provider would otherwise be 
     permitted to provide or authorize, subject to the terms of 
     the treatment plan (referred to in paragraph (1)(C)(i)).
       (C) Ongoing special condition defined.--In this paragraph, 
     the term ``special condition'' means a condition or disease 
     that--
       (i) is life-threatening, degenerative, or disabling, and
       (ii) requires specialized medical care over a prolonged 
     period of time.
       (D) Terms of referral.--The provisions of subparagraphs (C) 
     through (E) of paragraph (1) apply with respect to referrals 
     under subparagraph (A) of this paragraph in the same manner 
     as they apply to referrals under paragraph (1)(A).
       (3) Standing referrals.--
       (A) In general.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, shall have a procedure by which an 
     individual who is a participant, beneficiary, or enrollee and 
     who has a condition that requires ongoing care from a 
     specialist may receive a standing referral to such specialist 
     for treatment of such condition. If the plan or issuer, or if 
     the primary care provider in consultation with the medical 
     director of the plan or issuer and the specialist (if any), 
     determines that such a standing referral is appropriate, the 
     plan or issuer shall make such a referral to such a 
     specialist.
       (B) Terms of referral.--The provisions of subparagraphs (C) 
     through (E) of paragraph (1) apply with respect to referrals 
     under subparagraph (A) of this paragraph in the same manner 
     as they apply to referrals under paragraph (1)(A).

     SEC. 105. CONTINUITY OF CARE.

       (a) In General.--
       (1) Termination of provider.--If a contract between a group 
     health plan, or a health insurance issuer in connection with 
     the provision of health insurance coverage, and a health care 
     provider is terminated (as defined in paragraph (3)), or 
     benefits or coverage provided by a health care provider are 
     terminated because of a change in the terms of provider 
     participation in a group health plan, and an individual who 
     is a participant, beneficiary, or enrollee in the plan or 
     coverage is undergoing a course of treatment from the 
     provider at the time of such termination, the plan or issuer 
     shall--
       (A) notify the individual on a timely basis of such 
     termination, and
       (B) subject to subsection (c), permit the individual to 
     continue or be covered with respect to the course of 
     treatment with the provider during a transitional period 
     (provided under subsection (b)).
       (2) Treatment of termination of contract with health 
     insurance issuer.--If a contract for the provision of health 
     insurance coverage between a group health plan and a health 
     insurance issuer is terminated and, as a result of such 
     termination, coverage of services of a health care provider 
     is terminated with respect to an individual, the provisions 
     of paragraph (1) (and the succeeding provisions of this 
     section) shall apply under the plan in the same manner as if 
     there had been a contract between the plan and the provider 
     that had been terminated, but only with respect to benefits 
     that are covered under the plan after the contract 
     termination.
       (3) Termination.--In this section, the term ``terminated'' 
     includes, with respect to a contract, the expiration or 
     nonrenewal of the contract, but does not include a 
     termination of the contract by the plan or issuer for failure 
     to meet applicable quality standards or for fraud.
       (b) Transitional Period.--
       (1) In general.--Except as provided in paragraphs (2) 
     through (4), the transitional period under this subsection 
     shall extend for at least 90 days from the date of the notice 
     described in subsection (a)(1)(A) of the provider's 
     termination.
       (2) Institutional care.--The transitional period under this 
     subsection for institutional or inpatient care from a 
     provider shall extend until the discharge or termination of 
     the period of institutionalization and also shall include 
     institutional care provided within a reasonable time of the 
     date of termination of the provider status if the care was 
     scheduled before the date of the announcement of the 
     termination of the provider status under subsection (a)(1)(A) 
     or if the individual on such date was on an established 
     waiting list or otherwise scheduled to have such care.
       (3) Pregnancy.--If--
       (A) a participant, beneficiary, or enrollee has entered the 
     second trimester of pregnancy at the time of a provider's 
     termination of participation, and
       (B) the provider was treating the pregnancy before date of 
     the termination,

     the transitional period under this subsection with respect to 
     provider's treatment of the pregnancy shall extend through 
     the provision of post-partum care directly related to the 
     delivery.
       (4) Terminal illness.--If--
       (A) a participant, beneficiary, or enrollee was determined 
     to be terminally ill (as determined under section 
     1861(dd)(3)(A) of the Social Security Act) at the time of a 
     provider's termination of participation, and
       (B) the provider was treating the terminal illness before 
     the date of termination,

     the transitional period under this subsection shall extend 
     for the remainder of the individual's life for care directly 
     related to the treatment of the terminal illness.
       (c) Permissible Terms and Conditions.--A group health plan 
     or health insurance issuer may condition coverage of 
     continued treatment by a provider under subsection (a)(1)(B) 
     upon the provider agreeing to the following terms and 
     conditions:
       (1) The provider agrees to accept reimbursement from the 
     plan or issuer and individual involved (with respect to cost-
     sharing) at the rates applicable prior to the start of the 
     transitional period as payment in full (or, in the case 
     described in subsection (a)(2), at the rates applicable under 
     the replacement plan or issuer after the date of the 
     termination of the contract with the health insurance issuer) 
     and not to impose cost-sharing with respect to the individual 
     in an amount that would exceed the cost-sharing that could 
     have been imposed if the contract referred to in subsection 
     (a)(1) had not been terminated.
       (2) The provider agrees to adhere to the quality assurance 
     standards of the plan or issuer responsible for payment under 
     paragraph (1) and to provide to such plan or issuer necessary 
     medical information related to the care provided.
       (3) The provider agrees otherwise to adhere to such plan's 
     or issuer's policies and procedures, including procedures 
     regarding referrals and obtaining prior authorization and 
     providing services pursuant to a treatment plan (if any) 
     approved by the plan or issuer.
       (d) Construction.--Nothing in this section shall be 
     construed to require the coverage of benefits which would not 
     have been covered if the provider involved remained a 
     participating provider.

     SEC. 106. COVERAGE FOR INDIVIDUALS PARTICIPATING IN APPROVED 
                   CLINICAL TRIALS.

       (a) Coverage.--
       (1) In general.--If a group health plan, or health 
     insurance issuer that is providing health insurance coverage, 
     provides coverage to a qualified individual (as defined in 
     subsection (b)), the plan or issuer--
       (A) may not deny the individual participation in the 
     clinical trial referred to in subsection (b)(2);
       (B) subject to subsection (c), may not deny (or limit or 
     impose additional conditions on) the coverage of routine 
     patient costs for items and services furnished in connection 
     with participation in the trial; and
       (C) may not discriminate against the individual on the 
     basis of the enrollee's participation in such trial.
       (2) Exclusion of certain costs.--For purposes of paragraph 
     (1)(B), routine patient costs do not include the cost of the 
     tests or measurements conducted primarily for the purpose of 
     the clinical trial involved.
       (3) Use of in-network providers.--If one or more 
     participating providers is participating in a clinical trial, 
     nothing in paragraph (1) shall be construed as preventing a 
     plan or issuer from requiring that a qualified individual 
     participate in the trial through such a participating 
     provider if the provider will accept the individual as a 
     participant in the trial.
       (b) Qualified Individual Defined.--For purposes of 
     subsection (a), the term ``qualified individual'' means an 
     individual who is a participant or beneficiary in a group 
     health plan, or who is an enrollee under health insurance 
     coverage, and who meets the following conditions:
       (1)(A) The individual has a life-threatening or serious 
     illness for which no standard treatment is effective.
       (B) The individual is eligible to participate in an 
     approved clinical trial according to the trial protocol with 
     respect to treatment of such illness.
       (C) The individual's participation in the trial offers 
     meaningful potential for significant clinical benefit for the 
     individual.
       (2) Either--

[[Page H6385]]

       (A) the referring physician is a participating health care 
     professional and has concluded that the individual's 
     participation in such trial would be appropriate based upon 
     the individual meeting the conditions described in paragraph 
     (1); or
       (B) the participant, beneficiary, or enrollee provides 
     medical and scientific information establishing that the 
     individual's participation in such trial would be appropriate 
     based upon the individual meeting the conditions described in 
     paragraph (1).
       (c) Payment.--
       (1) In general.--Under this section a group health plan or 
     health insurance issuer shall provide for payment for routine 
     patient costs described in subsection (a)(2) but is not 
     required to pay for costs of items and services that are 
     reasonably expected (as determined by the Secretary) to be 
     paid for by the sponsors of an approved clinical trial.
       (2) Payment rate.--In the case of covered items and 
     services provided by--
       (A) a participating provider, the payment rate shall be at 
     the agreed upon rate, or
       (B) a nonparticipating provider, the payment rate shall be 
     at the rate the plan or issuer would normally pay for 
     comparable services under subparagraph (A).
       (d) Approved Clinical Trial Defined.--
       (1) In general.--In this section, the term ``approved 
     clinical trial'' means a clinical research study or clinical 
     investigation approved and funded (which may include funding 
     through in-kind contributions) by one or more of the 
     following:
       (A) The National Institutes of Health.
       (B) A cooperative group or center of the National 
     Institutes of Health.
       (C) Either of the following if the conditions described in 
     paragraph (2) are met:
       (i) The Department of Veterans Affairs.
       (ii) The Department of Defense.
       (2) Conditions for departments.--The conditions described 
     in this paragraph, for a study or investigation conducted by 
     a Department, are that the study or investigation has been 
     reviewed and approved through a system of peer review that 
     the Secretary determines--
       (A) to be comparable to the system of peer review of 
     studies and investigations used by the National Institutes of 
     Health, and
       (B) assures unbiased review of the highest scientific 
     standards by qualified individuals who have no interest in 
     the outcome of the review.
       (e) Construction.--Nothing in this section shall be 
     construed to limit a plan's or issuer's coverage with respect 
     to clinical trials.

     SEC. 107. ACCESS TO NEEDED PRESCRIPTION DRUGS.

       (a) In General.--If a group health plan, or health 
     insurance issuer that offers health insurance coverage, 
     provides benefits with respect to prescription drugs but the 
     coverage limits such benefits to drugs included in a 
     formulary, the plan or issuer shall--
       (1) ensure participation of participating physicians and 
     pharmacists in the development of the formulary;
       (2) disclose to providers and, disclose upon request under 
     section 121(c)(6) to participants, beneficiaries, and 
     enrollees, the nature of the formulary restrictions; and
       (3) consistent with the standards for a utilization review 
     program under section 115, provide for exceptions from the 
     formulary limitation when a non-formulary alternative is 
     medically indicated.
       (b) Coverage of Approved Drugs and Medical Devices.--
       (1) In general.--A group health plan (or health insurance 
     coverage offered in connection with such a plan) that 
     provides any coverage of prescription drugs or medical 
     devices shall not deny coverage of such a drug or device on 
     the basis that the use is investigational, if the use--
       (A) in the case of a prescription drug--
       (i) is included in the labeling authorized by the 
     application in effect for the drug pursuant to subsection (b) 
     or (j) of section 505 of the Federal Food, Drug, and Cosmetic 
     Act, without regard to any postmarketing requirements that 
     may apply under such Act; or
       (ii) is included in the labeling authorized by the 
     application in effect for the drug under section 351 of the 
     Public Health Service Act, without regard to any 
     postmarketing requirements that may apply pursuant to such 
     section; or
       (B) in the case of a medical device, is included in the 
     labeling authorized by a regulation under subsection (d) or 
     (3) of section 513 of the Federal Food, Drug, and Cosmetic 
     Act, an order under subsection (f) of such section, or an 
     application approved under section 515 of such Act, without 
     regard to any postmarketing requirements that may apply under 
     such Act.
       (2) Construction.--Nothing in this subsection shall be 
     construed as requiring a group health plan (or health 
     insurance coverage offered in connection with such a plan) to 
     provide any coverage of prescription drugs or medical 
     devices.

     SEC. 108. ADEQUACY OF PROVIDER NETWORK.

       (a) In General.--Each group health plan, and each health 
     insurance issuer offering health insurance coverage, that 
     provides benefits, in whole or in part, through participating 
     health care providers shall have (in relation to the 
     coverage) a sufficient number, distribution, and variety of 
     qualified participating health care providers to ensure that 
     all covered health care services, including specialty 
     services, will be available and accessible in a timely manner 
     to all participants, beneficiaries, and enrollees under the 
     plan or coverage.
       (b) Treatment of Certain Providers.--The qualified health 
     care providers under subsection (a) may include Federally 
     qualified health centers, rural health clinics, migrant 
     health centers, and other essential community providers 
     located in the service area of the plan or issuer and shall 
     include such providers if necessary to meet the standards 
     established to carry out such subsection.

     SEC. 109. NONDISCRIMINATION IN DELIVERY OF SERVICES.

       (a) Application to Delivery of Services.--Subject to 
     subsection (b), a group health plan, and health insurance 
     issuer in relation to health insurance coverage, may not 
     discriminate against a participant, beneficiary, or enrollee 
     in the delivery of health care services consistent with the 
     benefits covered under the plan or coverage or as required by 
     law based on race, color, ethnicity, national origin, 
     religion, sex, age, mental or physical disability, sexual 
     orientation, genetic information, or source of payment.
       (b) Construction.--Nothing in subsection (a) shall be 
     construed as relating to the eligibility to be covered, or 
     the offering (or guaranteeing the offer) of coverage, under a 
     plan or health insurance coverage, the application of any 
     pre-existing condition exclusion consistent with applicable 
     law, or premiums charged under such plan or coverage.

                     Subtitle B--Quality Assurance

     SEC. 111. INTERNAL QUALITY ASSURANCE PROGRAM.

       (a) Requirement.--A group health plan, and a health 
     insurance issuer that offers health insurance coverage, shall 
     establish and maintain an ongoing, internal quality assurance 
     and continuous quality improvement program that meets the 
     requirements of subsection (b).
       (b) Program Requirements.--The requirements of this 
     subsection for a quality improvement program of a plan or 
     issuer are as follows:
       (1) Administration.--The plan or issuer has a separate 
     identifiable unit with responsibility for administration of 
     the program.
       (2) Written plan.--The plan or issuer has a written plan 
     for the program that is updated annually and that specifies 
     at least the following:
       (A) The activities to be conducted.
       (B) The organizational structure.
       (C) The duties of the medical director.
       (D) Criteria and procedures for the assessment of quality.
       (3) Systematic review.--The program provides for systematic 
     review of the type of health services provided, consistency 
     of services provided with good medical practice, and patient 
     outcomes.
       (4) Quality criteria.--The program--
       (A) uses criteria that are based on performance and patient 
     outcomes where feasible and appropriate;
       (B) includes criteria that are directed specifically at 
     meeting the needs of at-risk populations and covered 
     individuals with chronic conditions or severe illnesses, 
     including gender-specific criteria and pediatric-specific 
     criteria where available and appropriate;
       (C) includes methods for informing covered individuals of 
     the benefit of preventive care and what specific benefits 
     with respect to preventive care are covered under the plan or 
     coverage; and
       (D) makes available to the public a description of the 
     criteria used under subparagraph (A).
       (5) System for reporting.--The program has procedures for 
     reporting of possible quality concerns by providers and 
     enrollees and for remedial actions to correct quality 
     problems, including written procedures for responding to 
     concerns and taking appropriate corrective action.
       (6) Data analysis.--The program provides, using data that 
     include the data collected under section 112, for an analysis 
     of the plan's or issuer's performance on quality measures.
       (7) Drug utilization review.--The program provides for a 
     drug utilization review program in accordance with section 
     114.
       (c) Deeming.--For purposes of subsection (a), the 
     requirements of--
       (1) subsection (b) (other than paragraph (5)) are deemed to 
     be met with respect to a health insurance issuer that is a 
     qualified health maintenance organization (as defined in 
     section 1310(c) of the Public Health Service Act); or
       (2) subsection (b) are deemed to be met with respect to a 
     health insurance issuer that is accredited by a national 
     accreditation organization that the Secretary certifies as 
     applying, as a condition of certification, standards at least 
     as stringent as those required for a quality improvement 
     program under subsection (b).
       (d) Variation Permitted.--The Secretary may provide for 
     variations in the application of the requirements of this 
     section to group health plans and health insurance issuers 
     based upon differences in the delivery system among such 
     plans and issuers as the Secretary deems appropriate.

     SEC. 112. COLLECTION OF STANDARDIZED DATA.

       (a) In General.--A group health plan and a health insurance 
     issuer that offers health insurance coverage shall collect 
     uniform quality data that include a minimum uniform data set 
     described in subsection (b).
       (b) Minimum Uniform Data Set.--The Secretary shall specify 
     (and may from time to time update) the data required to be 
     included

[[Page H6386]]

     in the minimum uniform data set under subsection (a) and the 
     standard format for such data. Such data shall include at 
     least--
       (1) aggregate utilization data;
       (2) data on the demographic characteristics of 
     participants, beneficiaries, and enrollees;
       (3) data on disease-specific and age-specific mortality 
     rates and (to the extent feasible) morbidity rates of such 
     individuals;
       (4) data on satisfaction of such individuals, including 
     data on voluntary disenrollment and grievances; and
       (5) data on quality indicators and health outcomes, 
     including, to the extent feasible and appropriate, data on 
     pediatric cases and on a gender-specific basis.
       (c) Availability.--A summary of the data collected under 
     subsection (a) shall be disclosed under section 121(b)(9). 
     The Secretary shall be provided access to all the data so 
     collected.
       (d) Variation Permitted.--The Secretary may provide for 
     variations in the application of the requirements of this 
     section to group health plans and health insurance issuers 
     based upon differences in the delivery system among such 
     plans and issuers as the Secretary deems appropriate.

     SEC. 113. PROCESS FOR SELECTION OF PROVIDERS.

       (a) In General.--A group health plan and a health insurance 
     issuer that offers health insurance coverage shall, if it 
     provides benefits through participating health care 
     professionals, have a written process for the selection of 
     participating health care professionals, including minimum 
     professional requirements.
       (b) Verification of Background.--Such process shall include 
     verification of a health care provider's license and a 
     history of suspension or revocation.
       (c) Restriction.--Such process shall not use a high-risk 
     patient base or location of a provider in an area with 
     residents with poorer health status as a basis for excluding 
     providers from participation.
       (d) Nondiscrimination Based on Licensure.--
       (1) In general.--Such process shall not discriminate with 
     respect to participation or indemnification as to any 
     provider who is acting within the scope of the provider's 
     license or certification under applicable State law, solely 
     on the basis of such license or certification.
       (2) Construction.--Paragraph (1) shall not be construed--
       (A) as requiring the coverage under a plan or coverage of 
     particular benefits or services or to prohibit a plan or 
     issuer from including providers only to the extent necessary 
     to meet the needs of the plan's or issuer's participants, 
     beneficiaries, or enrollees or from establishing any measure 
     designed to maintain quality and control costs consistent 
     with the responsibilities of the plan or issuer; or
       (B) to override any State licensure or scope-of-practice 
     law.
       (e) General Nondiscrimination.--
       (1) In general.--Subject to paragraph (2), such process 
     shall not discriminate with respect to selection of a health 
     care professional to be a participating health care provider, 
     or with respect to the terms and conditions of such 
     participation, based on the professional's race, color, 
     religion, sex, national origin, age, sexual orientation, or 
     disability (consistent with the Americans with Disabilities 
     Act of 1990).
       (2) Rules.--The appropriate Secretary may establish such 
     definitions, rules, and exceptions as may be appropriate to 
     carry out paragraph (1), taking into account comparable 
     definitions, rules, and exceptions in effect under 
     employment-based nondiscrimination laws and regulations that 
     relate to each of the particular bases for discrimination 
     described in such paragraph.

     SEC. 114. DRUG UTILIZATION PROGRAM.

       A group health plan, and a health insurance issuer that 
     provides health insurance coverage, that includes benefits 
     for prescription drugs shall establish and maintain, as part 
     of its internal quality assurance and continuous quality 
     improvement program under section 111, a drug utilization 
     program which--
       (1) encourages appropriate use of prescription drugs by 
     participants, beneficiaries, and enrollees and providers, and
       (2) takes appropriate action to reduce the incidence of 
     improper drug use and adverse drug reactions and 
     interactions.

     SEC. 115. STANDARDS FOR UTILIZATION REVIEW ACTIVITIES.

       (a) Compliance With Requirements.--
       (1) In general.--A group health plan, and a health 
     insurance issuer that provides health insurance coverage, 
     shall conduct utilization review activities in connection 
     with the provision of benefits under such plan or coverage 
     only in accordance with a utilization review program that 
     meets the requirements of this section.
       (2) Use of outside agents.--Nothing in this section shall 
     be construed as preventing a group health plan or health 
     insurance issuer from arranging through a contract or 
     otherwise for persons or entities to conduct utilization 
     review activities on behalf of the plan or issuer, so long as 
     such activities are conducted in accordance with a 
     utilization review program that meets the requirements of 
     this section.
       (3) Utilization review defined.--For purposes of this 
     section, the terms ``utilization review'' and ``utilization 
     review activities'' mean procedures used to monitor or 
     evaluate the clinical necessity, appropriateness, efficacy, 
     or efficiency of health care services, procedures or 
     settings, and includes prospective review, concurrent review, 
     second opinions, case management, discharge planning, or 
     retrospective review.
       (b) Written Policies and Criteria.--
       (1) Written policies.--A utilization review program shall 
     be conducted consistent with written policies and procedures 
     that govern all aspects of the program.
       (2) Use of written criteria.--
       (A) In general.--Such a program shall utilize written 
     clinical review criteria developed pursuant to the program 
     with the input of appropriate physicians. Such criteria shall 
     include written clinical review criteria described in section 
     111(b)(4)(B).
       (B) Continuing use of standards in retrospective review.--
     If a health care service has been specifically pre-authorized 
     or approved for an enrollee under such a program, the program 
     shall not, pursuant to retrospective review, revise or modify 
     the specific standards, criteria, or procedures used for the 
     utilization review for procedures, treatment, and services 
     delivered to the enrollee during the same course of 
     treatment.
       (c) Conduct of Program Activities.--
       (1) Administration by health care professionals.--A 
     utilization review program shall be administered by qualified 
     health care professionals who shall oversee review decisions. 
     In this subsection, the term ``health care professional'' 
     means a physician or other health care practitioner licensed, 
     accredited, or certified to perform specified health services 
     consistent with State law.
       (2) Use of qualified, independent personnel.--
       (A) In general.--A utilization review program shall provide 
     for the conduct of utilization review activities only through 
     personnel who are qualified and, to the extent required, who 
     have received appropriate training in the conduct of such 
     activities under the program.
       (B) Peer review of sample of adverse clinical 
     determinations.--Such a program shall provide that clinical 
     peers (as defined in section 191(c)(2)) shall evaluate the 
     clinical appropriateness of at least a sample of adverse 
     clinical determinations.
       (C) Prohibition of contingent compensation arrangements.--
     Such a program shall not, with respect to utilization review 
     activities, permit or provide compensation or anything of 
     value to its employees, agents, or contractors in a manner 
     that--
       (i) provides incentives, direct or indirect, for such 
     persons to make inappropriate review decisions, or
       (ii) is based, directly or indirectly, on the quantity or 
     type of adverse determinations rendered.
       (D) Prohibition of conflicts.--Such a program shall not 
     permit a health care professional who provides health care 
     services to an individual to perform utilization review 
     activities in connection with the health care services being 
     provided to the individual.
       (3) Accessibility of review.--Such a program shall provide 
     that appropriate personnel performing utilization review 
     activities under the program are reasonably accessible by 
     toll-free telephone during normal business hours to discuss 
     patient care and allow response to telephone requests, and 
     that appropriate provision is made to receive and respond 
     promptly to calls received during other hours.
       (4) Limits on frequency.--Such a program shall not provide 
     for the performance of utilization review activities with 
     respect to a class of services furnished to an individual 
     more frequently than is reasonably required to assess whether 
     the services under review are medically necessary or 
     appropriate.
       (5) Limitation on information requests.--Under such a 
     program, information shall be required to be provided by 
     health care providers only to the extent it is necessary to 
     perform the utilization review activity involved.
       (6) Review of preliminary utilization review decision.--
     Under such program a participant, beneficiary, or enrollee or 
     any provider acting on behalf of such an individual with the 
     individual's consent, who is dissatisfied with a preliminary 
     utilization review decision has the opportunity to discuss 
     the decision with, and have such decision reviewed by, the 
     medical director of the plan or issuer involved (or the 
     director's designee) who has the authority to reverse the 
     decision.
       (d) Deadline for Determinations.--
       (1) Prior authorization services.--Except as provided in 
     paragraph (2), in the case of a utilization review activity 
     involving the prior authorization of health care items and 
     services for an individual, the utilization review program 
     shall make a determination concerning such authorization, and 
     provide notice of the determination to the individual or the 
     individual's designee and the individual's health care 
     provider by telephone and in printed form, as soon as 
     possible in accordance with the medical exigencies of the 
     cases, and in no event later than 3 business days after the 
     date of receipt of information that is reasonably necessary 
     to make such determination.
       (2) Continued care.--In the case of a utilization review 
     activity involving authorization for continued or extended 
     health care services for an individual, or additional 
     services for an individual undergoing a course of continued 
     treatment prescribed by a health care provider, the 
     utilization review program shall make a determination 
     concerning such

[[Page H6387]]

     authorization, and provide notice of the determination to the 
     individual or the individual's designee and the individual's 
     health care provider by telephone and in printed form, as 
     soon as possible in accordance with the medical exigencies of 
     the cases, and in no event later than 1 business day after 
     the date of receipt of information that is reasonably 
     necessary to make such determination. Such notice shall 
     include, with respect to continued or extended health care 
     services, the number of extended services approved, the new 
     total of approved services, the date of onset of services, 
     and the next review date, if any.
       (3) Previously provided services.--In the case of a 
     utilization review activity involving retrospective review of 
     health care services previously provided for an individual, 
     the utilization review program shall make a determination 
     concerning such services, and provide notice of the 
     determination to the individual or the individual's designee 
     and the individual's health care provider by telephone and in 
     printed form, within 30 days of the date of receipt of 
     information that is reasonably necessary to make such 
     determination.
       (4) Reference to special rules for emergency services, 
     maintenance care, and post-stabilization care.--For waiver of 
     prior authorization requirements in certain cases involving 
     emergency services and maintenance care and post-
     stabilization care, see subsections (a)(1) and (b) of section 
     101, respectively.
       (e) Notice of Adverse Determinations.--
       (1) In general.--Notice of an adverse determination under a 
     utilization review program shall be provided in printed form 
     and shall include--
       (A) the reasons for the determination (including the 
     clinical rationale);
       (B) instructions on how to initiate an appeal under section 
     132; and
       (C) notice of the availability, upon request of the 
     individual (or the individual's designee) of the clinical 
     review criteria relied upon to make such determination.
       (2) Specification of any additional information.--Such a 
     notice shall also specify what (if any) additional necessary 
     information must be provided to, or obtained by, the person 
     making the determination in order to make a decision on such 
     an appeal.

     SEC. 116. HEALTH CARE QUALITY ADVISORY BOARD.

       (a) Establishment.--The President shall establish an 
     advisory board to provide information to Congress and the 
     administration on issues relating to quality monitoring and 
     improvement in the health care provided under group health 
     plans and health insurance coverage.
       (b) Number and Appointment.--The advisory board shall be 
     composed of the Secretary of Health and Human Services (or 
     the Secretary's designee), the Secretary of Labor (or the 
     Secretary's designee), and 20 additional members appointed by 
     the President, in consultation with the Majority and Minority 
     Leaders of the Senate and House of Representatives. The 
     members so appointed shall include individuals with expertise 
     in--
       (1) consumer needs;
       (2) education and training of health professionals;
       (3) health care services;
       (4) health plan management;
       (5) health care accreditation, quality assurance, 
     improvement, measurement, and oversight;
       (6) medical practice, including practicing physicians;
       (7) prevention and public health; and
       (8) public and private group purchasing for small and large 
     employers or groups.
       (c) Duties.--The advisory board shall--
       (1) identify, update, and disseminate measures of health 
     care quality for group health plans and health insurance 
     issuers, including network and non-network plans;
       (2) advise the Secretary on the development and maintenance 
     of the minimum data set in section 112(b); and
       (3) advise the Secretary on standardized formats for 
     information on group health plans and health insurance 
     coverage.
     The measures identified under paragraph (1) may be used on a 
     voluntary basis by such plans and issuers. In carrying out 
     paragraph (1), the advisory board shall consult and cooperate 
     with national health care standard setting bodies which 
     define quality indicators, the Agency for Health Care Policy 
     and Research, the Institute of Medicine, and other public and 
     private entities that have expertise in health care quality.
       (d) Report.--The advisory board shall provide an annual 
     report to Congress and the President on the quality of the 
     health care in the United States and national and regional 
     trends in health care quality. Such report shall include a 
     description of determinants of health care quality and 
     measurements of practice and quality variability within the 
     United States.
       (e) Secretarial Consultation.--In serving on the advisory 
     board, the Secretaries of Health and Human Services and Labor 
     (or their designees) shall consult with the Secretaries 
     responsible for other Federal health insurance and health 
     care programs.
       (f) Vacancies.--Any vacancy on the board shall be filled in 
     such manner as the original appointment. Members of the board 
     shall serve without compensation but shall be reimbursed for 
     travel, subsistence, and other necessary expenses incurred by 
     them in the performance of their duties. Administrative 
     support, scientific support, and technical assistance for the 
     advisory board shall be provided by the Secretary of Health 
     and Human Services.
       (g) Continuation.--Section 14(a)(2)(B) of the Federal 
     Advisory Committee Act (5 U.S.C. App.; relating to the 
     termination of advisory committees) shall not apply to the 
     advisory board.

                    Subtitle C--Patient Information

     SEC. 121. PATIENT INFORMATION.

       (a) Disclosure Requirement.--
       (1) Group health plans.--A group health plan shall--
       (A) provide to participants and beneficiaries at the time 
     of initial coverage under the plan (or the effective date of 
     this section, in the case of individuals who are participants 
     or beneficiaries as of such date), and at least annually 
     thereafter, the information described in subsection (b) in 
     printed form;
       (B) provide to participants and beneficiaries, within a 
     reasonable period (as specified by the appropriate Secretary) 
     before or after the date of significant changes in the 
     information described in subsection (b), information in 
     printed form on such significant changes; and
       (C) upon request, make available to participants and 
     beneficiaries, the applicable authority, and prospective 
     participants and beneficiaries, the information described in 
     subsection (b) or (c) in printed form.
       (2) Health insurance issuers.--A health insurance issuer in 
     connection with the provision of health insurance coverage 
     shall--
       (A) provide to individuals enrolled under such coverage at 
     the time of enrollment, and at least annually thereafter, the 
     information described in subsection (b) in printed form;
       (B) provide to enrollees, within a reasonable period (as 
     specified by the appropriate Secretary) before or after the 
     date of significant changes in the information described in 
     subsection (b), information in printed form on such 
     significant changes; and
       (C) upon request, make available to the applicable 
     authority, to individuals who are prospective enrollees, and 
     to the public the information described in subsection (b) or 
     (c) in printed form.
       (b) Information Provided.--The information described in 
     this subsection with respect to a group health plan or health 
     insurance coverage offered by a health insurance issuer 
     includes the following:
       (1) Service area.--The service area of the plan or issuer.
       (2) Benefits.--Benefits offered under the plan or coverage, 
     including--
       (A) covered benefits, including benefit limits and coverage 
     exclusions;
       (B) cost sharing, such as deductibles, coinsurance, and 
     copayment amounts, including any liability for balance 
     billing, any maximum limitations on out of pocket expenses, 
     and the maximum out of pocket costs for services that are 
     provided by non participating providers or that are furnished 
     without meeting the applicable utilization review 
     requirements;
       (C) the extent to which benefits may be obtained from 
     nonparticipating providers;
       (D) the extent to which a participant, beneficiary, or 
     enrollee may select from among participating providers and 
     the types of providers participating in the plan or issuer 
     network;
       (E) process for determining experimental coverage; and
       (F) use of a prescription drug formulary.
       (3) Access.--A description of the following:
       (A) The number, mix, and distribution of providers under 
     the plan or coverage.
       (B) Out-of-network coverage (if any) provided by the plan 
     or coverage.
       (C) Any point-of-service option (including any supplemental 
     premium or cost-sharing for such option).
       (D) The procedures for participants, beneficiaries, and 
     enrollees to select, access, and change participating primary 
     and specialty providers.
       (E) The rights and procedures for obtaining referrals 
     (including standing referrals) to participating and 
     nonparticipating providers.
       (F) The name, address, and telephone number of 
     participating health care providers and an indication of 
     whether each such provider is available to accept new 
     patients.
       (G) Any limitations imposed on the selection of qualifying 
     participating health care providers, including any 
     limitations imposed under section 103(b)(2).
       (H) How the plan or issuer addresses the needs of 
     participants, beneficiaries, and enrollees and others who do 
     not speak English or who have other special communications 
     needs in accessing providers under the plan or coverage, 
     including the provision of information described in this 
     subsection and subsection (c) to such individuals and 
     including the provision of information in a language other 
     than English if 5 percent of the number of participants, 
     beneficiaries, and enrollees communicate in that language 
     instead of English.
       (4) Out-of-area coverage.--Out-of-area coverage provided by 
     the plan or issuer.
       (5) Emergency coverage.--Coverage of emergency services, 
     including--
       (A) the appropriate use of emergency services, including 
     use of the 911 telephone system or its local equivalent in 
     emergency situations and an explanation of what constitutes 
     an emergency situation;
       (B) the process and procedures of the plan or issuer for 
     obtaining emergency services; and
       (C) the locations of (i) emergency departments, and (ii) 
     other settings, in which plan physicians and hospitals 
     provide emergency services and post-stabilization care.

[[Page H6388]]

       (6) Percentage of premiums used for benefits (loss-
     ratios).--In the case of health insurance coverage only (and 
     not with respect to group health plans that do not provide 
     coverage through health insurance coverage), a description of 
     the overall loss-ratio for the coverage (as defined in 
     accordance with rules established or recognized by the 
     Secretary of Health and Human Services).
       (7) Prior authorization rules.--Rules regarding prior 
     authorization or other review requirements that could result 
     in noncoverage or nonpayment.
       (8) Grievance and appeals procedures.--All appeal or 
     grievance rights and procedures under the plan or coverage, 
     including the method for filing grievances and the time 
     frames and circumstances for acting on grievances and 
     appeals, who is the applicable authority with respect to the 
     plan or issuer, and the availability of assistance through an 
     ombudsman to individuals in relation to group health plans 
     and health insurance coverage.
       (9) Quality assurance.--A summary description of the data 
     on quality collected under section 112(a), including a 
     summary description of the data on satisfaction of 
     participants, beneficiaries, and enrollees (including data on 
     individual voluntary disenrollment and grievances and 
     appeals) described in section 112(b)(4).
       (10) Summary of provider financial incentives.--A summary 
     description of the information on the types of financial 
     payment incentives (described in section 1852(j)(4) of the 
     Social Security Act) provided by the plan or issuer under the 
     coverage.
       (11) Information on issuer.--Notice of appropriate mailing 
     addresses and telephone numbers to be used by participants, 
     beneficiaries, and enrollees in seeking information or 
     authorization for treatment.
       (12) Availability of information on request.--Notice that 
     the information described in subsection (c) is available upon 
     request.
       (c) Information Made Available Upon Request.--The 
     information described in this subsection is the following:
       (1) Utilization review activities.--A description of 
     procedures used and requirements (including circumstances, 
     time frames, and appeal rights) under any utilization review 
     program under section 115, including under any drug formulary 
     program under section 107.
       (2) Grievance and appeals information.--Information on the 
     number of grievances and appeals and on the disposition in 
     the aggregate of such matters.
       (3) Method of physician compensation.--An overall summary 
     description as to the method of compensation of participating 
     physicians, including information on the types of financial 
     payment incentives (described in section 1852(j)(4) of the 
     Social Security Act) provided by the plan or issuer under the 
     coverage.
       (4) Specific information on credentials of participating 
     providers.--In the case of each participating provider, a 
     description of the credentials of the provider.
       (5) Confidentiality policies and procedures.--A description 
     of the policies and procedures established to carry out 
     section 122.
       (6) Formulary restrictions.--A description of the nature of 
     any drug formula restrictions.
       (7) Participating provider list.--A list of current 
     participating health care providers.
       (d) Form of Disclosure.--
       (1) Uniformity.--Information required to be disclosed under 
     this section shall be provided in accordance with uniform, 
     national reporting standards specified by the Secretary, 
     after consultation with applicable State authorities, so that 
     prospective enrollees may compare the attributes of different 
     issuers and coverage offered within an area.
       (2) Information into handbook.--Nothing in this section 
     shall be construed as preventing a group health plan or 
     health insurance issuer from making the information under 
     subsections (b) and (c) available to participants, 
     beneficiaries, and enrollees through an enrollee handbook or 
     similar publication.
       (3) Updating participating provider information.--The 
     information on participating health care providers described 
     in subsection (b)(3)(C) shall be updated within such 
     reasonable period as determined appropriate by the Secretary. 
     Nothing in this section shall prevent an issuer from changing 
     or updating other information made available under this 
     section.
       (e) Construction.--Nothing in this section shall be 
     construed as requiring public disclosure of individual 
     contracts or financial arrangements between a group health 
     plan or health insurance issuer and any provider.

     SEC. 122. PROTECTION OF PATIENT CONFIDENTIALITY.

       Insofar as a group health plan, or a health insurance 
     issuer that offers health insurance coverage, maintains 
     medical records or other health information regarding 
     participants, beneficiaries, and enrollees, the plan or 
     issuer shall establish procedures--
       (1) to safeguard the privacy of any individually 
     identifiable enrollee information;
       (2) to maintain such records and information in a manner 
     that is accurate and timely, and
       (3) to assure timely access of such individuals to such 
     records and information.

     SEC. 123. HEALTH INSURANCE OMBUDSMEN.

       (a) In General.--Each State that obtains a grant under 
     subsection (c) shall provide for creation and operation of a 
     Health Insurance Ombudsman through a contract with a not-for-
     profit organization that operates independent of group health 
     plans and health insurance issuers. Such Ombudsman shall be 
     responsible for at least the following:
       (1) To assist consumers in the State in choosing among 
     health insurance coverage or among coverage options offered 
     within group health plans.
       (2) To provide counseling and assistance to enrollees 
     dissatisfied with their treatment by health insurance issuers 
     and group health plans in regard to such coverage or plans 
     and with respect to grievances and appeals regarding 
     determinations under such coverage or plans.
       (b) Federal Role.--In the case of any State that does not 
     provide for such an Ombudsman under subsection (a), the 
     Secretary shall provide for the creation and operation of a 
     Health Insurance Ombudsman through a contract with a not-for-
     profit organization that operates independent of group health 
     plans and health insurance issuers and that is responsible 
     for carrying out with respect to that State the functions 
     otherwise provided under subsection (a) by a Health Insurance 
     Ombudsman.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Health and Human 
     Services such amounts as may be necessary to provide for 
     grants to States for contracts for Health Insurance Ombudsmen 
     under subsection (a) or contracts for such Ombudsmen under 
     subsection (b).
       (d) Construction.--Nothing in this section shall be 
     construed to prevent the use of other forms of enrollee 
     assistance.

              Subtitle D--Grievance and Appeals Procedures

     SEC. 131. ESTABLISHMENT OF GRIEVANCE PROCESS.

       (a) Establishment of Grievance System.--
       (1) In general.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, shall establish and maintain a system to 
     provide for the presentation and resolution of oral and 
     written grievances brought by individuals who are 
     participants, beneficiaries, or enrollees, or health care 
     providers or other individuals acting on behalf of an 
     individual and with the individual's consent, regarding any 
     aspect of the plan's or issuer's services.
       (2) Scope.--The system shall include grievances regarding 
     access to and availability of services, quality of care, 
     choice and accessibility of providers, network adequacy, and 
     compliance with the requirements of this title.
       (b) Grievance System.--Such system shall include the 
     following components with respect to individuals who are 
     participants, beneficiaries, or enrollees:
       (1) Written notification to all such individuals and 
     providers of the telephone numbers and business addresses of 
     the plan or issuer personnel responsible for resolution of 
     grievances and appeals.
       (2) A system to record and document, over a period of at 
     least 3 previous years, all grievances and appeals made and 
     their status.
       (3) A process providing for timely processing and 
     resolution of grievances.
       (4) Procedures for follow-up action, including the methods 
     to inform the person making the grievance of the resolution 
     of the grievance.
       (5) Notification to the continuous quality improvement 
     program under section 111(a) of all grievances and appeals 
     relating to quality of care.

     SEC. 132. INTERNAL APPEALS OF ADVERSE DETERMINATIONS.

       (a) Right of Appeal.--
       (1) In general.--A participant or beneficiary in a group 
     health plan, and an enrollee in health insurance coverage 
     offered by a health insurance issuer, and any provider or 
     other person acting on behalf of such an individual with the 
     individual's consent, may appeal any appealable decision (as 
     defined in paragraph (2)) under the procedures described in 
     this section and (to the extent applicable) section 133. Such 
     individuals and providers shall be provided with a written 
     explanation of the appeal process and the determination upon 
     the conclusion of the appeals process and as provided in 
     section 121(b)(8).
       (2) Appealable decision defined.--In this section, the term 
     ``appealable decision'' means any of the following:
       (A) Denial, reduction, or termination of, or failure to 
     provide or make payment (in whole or in part) for, a benefit, 
     including a failure to cover an item or service for which 
     benefits are otherwise provided because it is determined to 
     be experimental or investigational or not medically necessary 
     or appropriate.
       (B) Failure to provide coverage of emergency services or 
     reimbursement of maintenance care or post-stabilization care 
     under section 101.
       (C) Failure to provide a choice of provider under section 
     103.
       (D) Failure to provide qualified health care providers 
     under section 103.
       (E) Failure to provide access to specialty and other care 
     under section 104.
       (F) Failure to provide continuation of care under section 
     105.
       (G) Failure to provide coverage of routine patient costs in 
     connection with an approval clinical trial under section 106.
       (H) Failure to provide access to needed drugs under section 
     107(a)(3) or 107(b).

[[Page H6389]]

       (I) Discrimination in delivery of services in violation of 
     section 109.
       (J) An adverse determination under a utilization review 
     program under section 115.
       (K) The imposition of a limitation that is prohibited under 
     section 151.
       (b) Internal Appeal Process.--
       (1) In general.--Each group health plan and health 
     insurance issuer shall establish and maintain an internal 
     appeal process under which any participant, beneficiary, 
     enrollee, or provider acting on behalf of such an individual 
     with the individual's consent, who is dissatisfied with any 
     appealable decision has the opportunity to appeal the 
     decision through an internal appeal process. The appeal may 
     be communicated orally.
       (2) Conduct of review.--
       (A) In general.--The process shall include a review of the 
     decision by a physician or other health care professional (or 
     professionals) who has been selected by the plan or issuer 
     and who has not been involved in the appealable decision at 
     issue in the appeal.
       (B) Availability and participation of clinical peers.--The 
     individuals conducting such review shall include one or more 
     clinical peers (as defined in section 191(c)(2)) who have not 
     been involved in the appealable decision at issue in the 
     appeal.
       (3) Deadline.--
       (A) In general.--Subject to subsection (c), the plan or 
     issuer shall conclude each appeal as soon as possible after 
     the time of the receipt of the appeal in accordance with 
     medical exigencies of the case involved, but in no event 
     later than--
       (i) 72 hours after the time of receipt of an expedited 
     appeal, and
       (ii) except as provided in subparagraph (B), 30 business 
     days after such time (or, if the participant, beneficiary, or 
     enrollee supplies additional information that was not 
     available to the plan or issuer at the time of the receipt of 
     the appeal, after the date of supplying such additional 
     information) in the case of all other appeals.
       (B) Extension.--In the case of an appeal that does not 
     relate to a decision regarding an expedited appeal and that 
     does not involve medical exigencies, if a group health plan 
     or health insurance issuer is unable to conclude the appeal 
     within the time period provided under subparagraph (A)(ii) 
     due to circumstances beyond the control of the plan or 
     issuer, the deadline shall be extended for up to an 
     additional 10 business days if the plan or issuer provides, 
     on or before 10 days before the deadline otherwise 
     applicable, written notice to the participant, beneficiary, 
     or enrollee and the provider involved of the extension and 
     the reasons for the extension.
       (4) Notice.--If a plan or issuer denies an appeal, the plan 
     or issuer shall provide the participant, beneficiary, or 
     enrollee and provider involved with notice in printed form of 
     the denial and the reasons therefore, together with a notice 
     in printed form of rights to any further appeal.
       (c) Expedited Review Process.--
       (1) In general.--A group health plan, and a health 
     insurance issuer, shall establish procedures in writing for 
     the expedited consideration of appeals under subsection (b) 
     in situations in which the application of the normal 
     timeframe for making a determination could seriously 
     jeopardize the life or health of the participant, 
     beneficiary, or enrollee or such an individual's ability to 
     regain maximum function.
       (2) Process.--Under such procedures--
       (A) the request for expedited appeal may be submitted 
     orally or in writing by an individual or provider who is 
     otherwise entitled to request the appeal;
       (B) all necessary information, including the plan's or 
     issuer's decision, shall be transmitted between the plan or 
     issuer and the requester by telephone, facsimile, or other 
     similarly expeditious available method; and
       (C) the plan or issuer shall expedite the appeal if the 
     request for an expedited appeal is submitted under 
     subparagraph (A) by a physician and the request indicates 
     that the situation described in paragraph (1) exists.
       (d) Direct Use of Further Appeals.--In the event that the 
     plan or issuer fails to comply with any of the deadlines for 
     completion of appeals under this section or in the event that 
     the plan or issuer for any reason expressly waives its rights 
     to an internal review of an appeal under subsection (b), the 
     participant, beneficiary, or enrollee involved and the 
     provider involved shall be relieved of any obligation to 
     complete the appeal involved and may, at such an individual's 
     or provider's option, proceed directly to seek further appeal 
     through any applicable external appeals process.

     SEC. 133. EXTERNAL APPEALS OF ADVERSE DETERMINATIONS.

       (a) Right to External Appeal.--
       (1) In general.--A group health plan, and a health 
     insurance issuer offering group health insurance coverage, 
     shall provide for an external appeals process that meets the 
     requirements of this section in the case of an externally 
     appealable decision described in paragraph (2). The 
     appropriate Secretary shall establish standards to carry out 
     such requirements.
       (2) Externally appealable decision defined.--For purposes 
     of this section, the term ``externally appealable decision'' 
     means an appealable decision (as defined in section 
     132(a)(2)) if--
       (A) the amount involved exceeds a significant threshold; or
       (B) the patient's life or health is jeopardized as a 
     consequence of the decision.
     Such term does not include a denial of coverage for services 
     that are specifically listed in plan or coverage documents as 
     excluded from coverage.
       (3) Exhaustion of internal appeals process.--A plan or 
     issuer may condition the use of an external appeal process in 
     the case of an externally appealable decision upon completion 
     of the internal review process provided under section 132, 
     but only if the decision is made in a timely basis consistent 
     with the deadlines provided under this subtitle.
       (b) General Elements of External Appeals Process.--
       (1) Contract with qualified external appeal entity.--
       (A) Contract requirement.--Subject to subparagraph (B), the 
     external appeal process under this section of a plan or 
     issuer shall be conducted under a contract between the plan 
     or issuer and one or more qualified external appeal entities 
     (as defined in subsection (c)).
       (B) Restrictions on qualified external appeal entity.--
       (i) By state for health insurance issuers.--With respect to 
     health insurance issuers in a State, the State may provide 
     for external review activities to be conducted by a qualified 
     external appeal entity that is designated by the State or 
     that is selected by the State in such a manner as to assure 
     an unbiased determination.
       (ii) By federal government for group health plans.--With 
     respect to group health plans, the appropriate Secretary may 
     exercise the same authority as a State may exercise with 
     respect to health insurance issuers under clause (i). Such 
     authority may include requiring the use of the qualified 
     external appeal entity designated or selected under such 
     clause.
       (iii) Limitation on plan or issuer selection.--If an 
     applicable authority permits more than one entity to qualify 
     as a qualified external appeal entity with respect to a group 
     health plan or health insurance issuer and the plan or issuer 
     may select among such qualified entities, the applicable 
     authority--

       (I) shall assure that the selection process will not create 
     any incentives for external appeal entities to make a 
     decision in a biased manner, and
       (II) shall implement procedures for auditing a sample of 
     decisions by such entities to assure that no such decisions 
     are made in a biased manner.

       (C) Other terms and conditions.--The terms and conditions 
     of a contract under this paragraph shall be consistent with 
     the standards the appropriate Secretary shall establish to 
     assure there is no real or apparent conflict of interest in 
     the conduct of external appeal activities. Such contract 
     shall provide that the direct costs of the process (not 
     including costs of representation of a participant, 
     beneficiary, or enrollee) shall be paid by the plan or 
     issuer, and not by the participant, beneficiary, or enrollee.
       (2) Elements of process.--An external appeal process shall 
     be conducted consistent with standards established by the 
     appropriate Secretary that include at least the following:
       (A) Fair process; de novo determination.--The process shall 
     provide for a fair, de novo determination.
       (B) Determination concerning externally appealable 
     decisions.--A qualified external appeal entity shall 
     determine whether a decision is an externally appealable 
     decision and related decisions, including--
       (i) whether such a decision involves an expedited appeal;
       (ii) the appropriate deadlines for internal review process 
     required due to medical exigencies in a case; and
       (iii) whether such a process has been completed.
       (C) Opportunity to submit evidence, have representation, 
     and make oral presentation.--Each party to an externally 
     appealable decision--
       (i) may submit and review evidence related to the issues in 
     dispute,
       (ii) may use the assistance or representation of one or 
     more individuals (any of whom may be an attorney), and
       (iii) may make an oral presentation.
       (D) Provision of information.--The plan or issuer involved 
     shall provide timely access to all its records relating to 
     the matter of the externally appealable decision and to all 
     provisions of the plan or health insurance coverage 
     (including any coverage manual) relating to the matter.
       (E) Timely decisions.--A determination by the external 
     appeal entity on the decision shall--
       (i) be made orally or in writing and, if it is made orally, 
     shall be supplied to the parties in writing as soon as 
     possible;
       (ii) be binding on the plan or issuer;
       (iii) be made in accordance with the medical exigencies of 
     the case involved, but in no event later than 60 days (or 72 
     hours in the case of an expedited appeal) from the date of 
     completion of the filing of notice of external appeal of the 
     decision;
       (iv) state, in layperson's language, the basis for the 
     determination, including, if relevant, any basis in the terms 
     or conditions of the plan or coverage; and
       (v) inform the participant, beneficiary, or enrollee of the 
     individual's rights to seek further review by the courts (or 
     other process) of the external appeal determination.
       (c) Qualifications of External Appeal Entities.--

[[Page H6390]]

       (1) In general.--For purposes of this section, the term 
     ``qualified external appeal entity'' means, in relation to a 
     plan or issuer, an entity (which may be a governmental 
     entity) that is certified under paragraph (2) as meeting the 
     following requirements:
       (A) There is no real or apparent conflict of interest that 
     would impede the entity conducting external appeal activities 
     independent of the plan or issuer.
       (B) The entity conducts external appeal activities through 
     clinical peers.
       (C) The entity has sufficient medical, legal, and other 
     expertise and sufficient staffing to conduct external appeal 
     activities for the plan or issuer on a timely basis 
     consistent with subsection (b)(3)(E).
       (D) The entity meets such other requirements as the 
     appropriate Secretary may impose.
       (2) Certification of external appeal entities.--
       (A) In general.--In order to be treated as a qualified 
     external appeal entity with respect to--
       (i) a group health plan, the entity must be certified (and, 
     in accordance with subparagraph (B), periodically 
     recertified) as meeting the requirements of paragraph (1) by 
     the Secretary of Labor (or under a process recognized or 
     approved by the Secretary of Labor); or
       (ii) a health insurance issuer operating in a State, the 
     entity must be certified (and, in accordance with 
     subparagraph (B), periodically recertified) as meeting such 
     requirements by the applicable State authority (or, if the 
     States has not established an adequate certification and 
     recertification process, by the Secretary of Health and Human 
     Services, or under a process recognized or approved by such 
     Secretary).
       (B) Recertification process.--The appropriate Secretary 
     shall develop standards for the recertification of external 
     appeal entities. Such standards shall include a specification 
     of--
       (i) the information required to be submitted as a condition 
     of recertification on the entity's performance of external 
     appeal activities, which information shall include the number 
     of cases reviewed, a summary of the disposition of those 
     cases, the length of time in making determinations on those 
     cases, and such information as may be necessary to assure the 
     independence of the entity from the plans or issuers for 
     which external appeal activities are being conducted; and
       (ii) the periodicity which recertification will be 
     required.
       (d) Continuing Legal Rights of Enrollees.--Nothing in this 
     title shall be construed as removing any legal rights of 
     participants, beneficiaries, enrollees, and others under 
     State or Federal law, including the right to file judicial 
     actions to enforce rights.

         Subtitle E--Protecting the Doctor-Patient Relationship

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

       (a) Prohibition.--
       (1) General rule.--The provisions of any contract or 
     agreement, or the operation of any contract or agreement, 
     between a group health plan or health insurance issuer in 
     relation to health insurance coverage (including any 
     partnership, association, or other organization that enters 
     into or administers such a contract or agreement) and a 
     health care provider (or group of health care providers) 
     shall not prohibit or restrict the provider from engaging in 
     medical communications with the provider's patient.
       (2) Nullification.--Any contract provision or agreement 
     described in paragraph (1) shall be null and void.
       (b) Rules of Construction.--Nothing in this section shall 
     be construed--
       (1) to prohibit the enforcement, as part of a contract or 
     agreement to which a health care provider is a party, of any 
     mutually agreed upon terms and conditions, including terms 
     and conditions requiring a health care provider to 
     participate in, and cooperate with, all programs, policies, 
     and procedures developed or operated by a group health plan 
     or health insurance issuer to assure, review, or improve the 
     quality and effective utilization of health care services (if 
     such utilization is according to guidelines or protocols that 
     are based on clinical or scientific evidence and the 
     professional judgment of the provider) but only if the 
     guidelines or protocols under such utilization do not 
     prohibit or restrict medical communications between providers 
     and their patients; or
       (2) to permit a health care provider to misrepresent the 
     scope of benefits covered under the group health plan or 
     health insurance coverage or to otherwise require a group 
     health plan health insurance issuer to reimburse providers 
     for benefits not covered under the plan or coverage.
       (c) Medical Communication Defined.--In this section:
       (1) In general.--The term ``medical communication'' means 
     any communication made by a health care provider with a 
     patient of the health care provider (or the guardian or legal 
     representative of such patient) with respect to--
       (A) the patient's health status, medical care, or treatment 
     options;
       (B) any utilization review requirements that may affect 
     treatment options for the patient; or
       (C) any financial incentives that may affect the treatment 
     of the patient.
       (2) Misrepresentation.--The term ``medical communication'' 
     does not include a communication by a health care provider 
     with a patient of the health care provider (or the guardian 
     or legal representative of such patient) if the communication 
     involves a knowing or willful misrepresentation by such 
     provider.

     SEC. 142. PROHIBITION AGAINST TRANSFER OF INDEMNIFICATION OR 
                   IMPROPER INCENTIVE ARRANGEMENTS.

       (a) Prohibition of Transfer of Indemnification.--
       (1) In general.--No contract or agreement between a group 
     health plan or health insurance issuer (or any agent acting 
     on behalf of such a plan or issuer) and a health care 
     provider shall contain any provision purporting to transfer 
     to the health care provider by indemnification or otherwise 
     any liability relating to activities, actions, or omissions 
     of the plan, issuer, or agent (as opposed to the provider).
       (2) Nullification.--Any contract or agreement provision 
     described in paragraph (1) shall be null and void.
       (b) Prohibition of Improper Physician Incentive Plans.--
       (1) In general.--A group health plan and a health insurance 
     issuer offering health insurance coverage may not operate any 
     physician incentive plan (as defined in subparagraph (B) of 
     section 1876(i)(8) of the Social Security Act) unless the 
     requirements described in subparagraph (A) of such section 
     are met with respect to such a plan.
       (2) Application.--For purposes of carrying out paragraph 
     (1), any reference in section 1876(i)(8) of the Social 
     Security Act to the Secretary, an eligible organization, or 
     an individual enrolled with the organization shall be treated 
     as a reference to the applicable authority, a group health 
     plan or health insurance issuer, respectively, and a 
     participant, beneficiary, or enrollee with the plan or 
     organization, respectively.

     SEC. 143. ADDITIONAL RULES REGARDING PARTICIPATION OF HEALTH 
                   CARE PROFESSIONALS.

       (a) Procedures.--Insofar as a group health plan, or health 
     insurance issuer that offers health insurance coverage, 
     provides benefits through participating health care 
     professionals, the plan or issuer shall establish reasonable 
     procedures relating to the participation (under an agreement 
     between a professional and the plan or issuer) of such 
     professionals under the plan or coverage. Such procedures 
     shall include--
       (1) providing notice of the rules regarding participation;
       (2) providing written notice of participation decisions 
     that are adverse to professionals; and
       (3) providing a process within the plan or issuer for 
     appealing such adverse decisions, including the presentation 
     of information and views of the professional regarding such 
     decision.
       (b) Consultation in Medical Policies.--A group health plan, 
     and health insurance issuer that offers health insurance 
     coverage, shall consult with participating physicians (if 
     any) regarding the plan's or issuer's medical policy, 
     quality, and medical management procedures.

     SEC. 144. PROTECTION FOR PATIENT ADVOCACY.

       (a) Protection for Use of Utilization Review and Grievance 
     Process.--A group health plan, and a health insurance issuer 
     with respect to the provision of health insurance coverage, 
     may not retaliate against a participant, beneficiary, 
     enrollee, or health care provider based on the participant's, 
     beneficiary's, enrollee's or provider's use of, or 
     participation in, a utilization review process or a grievance 
     process of the plan or issuer (including an internal or 
     external review or appeal process) under this title.
       (b) Protection for Quality Advocacy by Health Care 
     Professionals.--
       (1) In general.--A group health plan or health insurance 
     issuer may not retaliate or discriminate against a protected 
     health care professional because the professional in good 
     faith--
       (A) discloses information relating to the care, services, 
     or conditions affecting one or more participants, 
     beneficiaries, or enrollees of the plan or issuer to an 
     appropriate public regulatory agency, an appropriate private 
     accreditation body, or appropriate management personnel of 
     the plan or issuer; or
       (B) initiates, cooperates, or otherwise participates in an 
     investigation or proceeding by such an agency with respect to 
     such care, services, or conditions.

     If an institutional health care provider is a participating 
     provider with such a plan or issuer or otherwise receives 
     payments for benefits provided by such a plan or issuer, the 
     provisions of the previous sentence shall apply to the 
     provider in relation to care, services, or conditions 
     affecting one or more patients within an institutional health 
     care provider in the same manner as they apply to the plan or 
     issuer in relation to care, services, or conditions provided 
     to one or more participants, beneficiaries, or enrollees; and 
     for purposes of applying this sentence, any reference to a 
     plan or issuer is deemed a reference to the institutional 
     health care provider.
       (2) Good faith action.--For purposes of paragraph (1), a 
     protected health care professional is considered to be acting 
     in good faith with respect to disclosure of information or 
     participation if, with respect to the information disclosed 
     as part of the action--
       (A) the disclosure is made on the basis of personal 
     knowledge and is consistent with that degree of learning and 
     skill ordinarily possessed by health care professionals with

[[Page H6391]]

     the same licensure or certification and the same experience;
       (B) the professional reasonably believes the information to 
     be true;
       (C) the information evidences either a violation of a law, 
     rule, or regulation, of an applicable accreditation standard, 
     or of a generally recognized professional or clinical 
     standard or that a patient is in imminent hazard of loss of 
     life or serious injury; and
       (D) subject to subparagraphs (B) and (C) of paragraph (3), 
     the professional has followed reasonable internal procedures 
     of the plan, issuer, or institutional health care provider 
     established or the purpose of addressing quality concerns 
     before making the disclosure.
       (3) Exception and special rule.--
       (A) General exception.--Paragraph (1) does not protect 
     disclosures that would violate Federal or State law or 
     diminish or impair the rights of any person to the continued 
     protection of confidentiality of communications provided by 
     such law.
       (B) Notice of internal procedures.--Subparagraph (D) of 
     paragraph (2) shall not apply unless the internal procedures 
     involved are reasonably expected to be known to the health 
     care professional involved. For purposes of this 
     subparagraph, a health care professional is reasonably 
     expected to know of internal procedures if those procedures 
     have been made available to the professional through 
     distribution or posting.
       (C) Internal procedure exception.--Subparagraph (D) of 
     paragraph (2) also shall not apply if--
       (i) the disclosure relates to an imminent hazard of loss of 
     life or serious injury to a patient;
       (ii) the disclosure is made to an appropriate private 
     accreditation body pursuant to disclosure procedures 
     established by the body; or
       (iii) the disclosure is in response to an inquiry made in 
     an investigation or proceeding of an appropriate public 
     regulatory agency and the information disclosed is limited to 
     the scope of the investigation or proceeding.
       (4) Additional considerations.--It shall not be a violation 
     of paragraph (1) to take an adverse action against a 
     protected health care professional if the plan, issuer, or 
     provider taking the adverse action involved demonstrates that 
     it would have taken the same adverse action even in the 
     absence of the activities protected under such paragraph.
       (5) Notice.--A group health plan, health insurance issuer, 
     and institutional health care provider shall post a notice, 
     to be provided or approved by the Secretary of Labor, setting 
     forth excerpts from, or summaries of, the pertinent 
     provisions of this subsection and information pertaining to 
     enforcement of such provisions.
       (6) Constructions.--
       (A) Determinations of coverage.--Nothing in this subsection 
     shall be construed to prohibit a plan or issuer from making a 
     determination not to pay for a particular medical treatment 
     or service or the services of a type of health care 
     professional.
       (B) Enforcement of peer review protocols and internal 
     procedures.--Nothing in this subsection shall be construed to 
     prohibit a plan, issuer, or provider from establishing and 
     enforcing reasonable peer review or utilization review 
     protocols or determining whether a protected health care 
     professional has complied with those protocols or from 
     establishing and enforcing internal procedures for the 
     purpose of addressing quality concerns.
       (C) Relation to other rights.--Nothing in this subsection 
     shall be construed to abridge rights of participants, 
     beneficiaries, enrollees, and protected health care 
     professionals under other applicable Federal or State laws.
       (7) Protected health care professional defined.--For 
     purposes of this subsection, the term ``protected health care 
     professional'' means an individual who is a licensed or 
     certified health care professional and who--
       (A) with respect to a group health plan or health insurance 
     issuer, is an employee of the plan or issuer or has a 
     contract with the plan or issuer for provision of services 
     for which benefits are available under the plan or issuer; or
       (B) with respect to an institutional health care provider, 
     is an employee of the provider or has a contract or other 
     arrangement with the provider respecting the provision of 
     health care services.

              Subtitle F--Promoting Good Medical Practice

     SEC. 151. PROMOTING GOOD MEDICAL PRACTICE.

       (a) Prohibiting Arbitrary Limitations or Conditions for the 
     Provision of Services.--
       (1) In general.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, may not arbitrarily interfere with or 
     alter the decision of the treating physician regarding the 
     manner or setting in which particular services are delivered 
     if the services are medically necessary or appropriate for 
     treatment or diagnosis to the extent that such treatment or 
     diagnosis is otherwise a covered benefit.
       (2) Construction.--Paragraph (1) shall not be construed as 
     prohibiting a plan or issuer from limiting the delivery of 
     services to one or more health care providers within a 
     network of such providers.
       (3) Manner or setting defined.--In paragraph (1), the term 
     ``manner or setting'' means the location of treatment, such 
     as whether treatment is provided on an inpatient or 
     outpatient basis, and the duration of treatment, such as the 
     number of days in a hospital, Such term does not include the 
     coverage of a particular service or treatment.
       (b) No Change in Coverage.--Subsection (a) shall not be 
     construed as requiring coverage of particular services the 
     coverage of which is otherwise not covered under the terms of 
     the plan or coverage or from conducting utilization review 
     activities consistent with this subsection.
       (c) Medical Necessity or Appropriateness Defined.--In 
     subsection (a), the term ``medically necessary or 
     appropriate'' means, with respect to a service or benefit, a 
     service or benefit which is consistent with generally 
     accepted principles of professional medical practice.

     SEC. 152. STANDARDS RELATING TO BENEFITS FOR CERTAIN BREAST 
                   CANCER TREATMENT.

       (a) Requirements for Minimum Hospital Stay Following 
     Mastectomy or Lymph Node Dissection.--
       (1) In general.--A group health plan, and a health 
     insurance issuer offering group health insurance coverage, 
     may not--
       (A) except as provided in paragraph (2)--
       (i) restrict benefits for any hospital length of stay in 
     connection with a mastectomy for the treatment of breast 
     cancer to less than 48 hours, or
       (ii) restrict benefits for any hospital length of stay in 
     connection with a lymph node dissection for the treatment of 
     breast cancer to less than 24 hours, or
       (B) require that a provider obtain authorization from the 
     plan or the issuer for prescribing any length of stay 
     required under subparagraph (A) (without regard to paragraph 
     (2)).
       (2) Exception.--Paragraph (1)(A) shall not apply in 
     connection with any group health plan or health insurance 
     issuer in any case in which the decision to discharge the 
     woman involved prior to the expiration of the minimum length 
     of stay otherwise required under paragraph (1)(A) is made by 
     the attending provider in consultation with the woman or in a 
     case involving a partial mastectomy without lymph node 
     dissection.
       (b) Prohibitions.--A group health plan, and a health 
     insurance issuer offering group health insurance coverage in 
     connection with a group health plan, may not--
       (1) deny to a woman eligibility, or continued eligibility, 
     to enroll or to renew coverage under the terms of the plan, 
     solely for the purpose of avoiding the requirements of this 
     section;
       (2) provide monetary payments or rebates to women to 
     encourage such women to accept less than the minimum 
     protections available under this section;
       (3) penalize or otherwise reduce or limit the reimbursement 
     of an attending provider because such provider provided care 
     to an individual participant or beneficiary in accordance 
     with this section;
       (4) provide incentives (monetary or otherwise) to an 
     attending provider to induce such provider to provide care to 
     an individual participant or beneficiary in a manner 
     inconsistent with this section; or
       (5) subject to subsection (c)(3), restrict benefits for any 
     portion of a period within a hospital length of stay required 
     under subsection (a) in a manner which is less favorable than 
     the benefits provided for any preceding portion of such stay.
       (c) Rules of Construction.--
       (1) Nothing in this section shall be construed to require a 
     woman who is a participant or beneficiary--
       (A) to undergo a mastectomy or lymph node dissection in a 
     hospital; or
       (B) to stay in the hospital for a fixed period of time 
     following a mastectomy or lymph node dissection.
       (2) This section shall not apply with respect to any group 
     health plan, or any group health insurance coverage offered 
     by a health insurance issuer, which does not provide benefits 
     for hospital lengths of stay in connection with a mastectomy 
     or lymph node dissection for the treatment of breast cancer.
       (3) Nothing in this section shall be construed as 
     preventing a group health plan or issuer from imposing 
     deductibles, coinsurance, or other cost-sharing in relation 
     to benefits for hospital lengths of stay in connection with a 
     mastectomy or lymph node dissection for the treatment of 
     breast cancer under the plan (or under health insurance 
     coverage offered in connection with a group health plan), 
     except that such coinsurance or other cost-sharing for any 
     portion of a period within a hospital length of stay required 
     under subsection (a) may not be greater than such coinsurance 
     or cost-sharing for any preceding portion of such stay.
       (d) Level and Type of Reimbursements.--Nothing in this 
     section shall be construed to prevent a group health plan or 
     a health insurance issuer offering group health insurance 
     coverage from negotiating the level and type of reimbursement 
     with a provider for care provided in accordance with this 
     section.
       (e) Exception for Health Insurance Coverage in Certain 
     States.--
       (1) In general.--The requirements of this section shall not 
     apply with respect to health insurance coverage if there is a 
     State law (as defined in section 2723(d)(1) of the Public 
     Health Service Act) for a State that regulates such coverage 
     that is described in any of the following subparagraphs:
       (A) Such State law requires such coverage to provide for at 
     least a 48-hour hospital

[[Page H6392]]

     length of stay following a mastectomy performed for treatment 
     of breast cancer and at least a 24-hour hospital length of 
     stay following a lymph node dissection for treatment of 
     breast cancer.
       (B) Such State law requires, in connection with such 
     coverage for surgical treatment of breast cancer, that the 
     hospital length of stay for such care is left to the decision 
     of (or required to be made by) the attending provider in 
     consultation with the woman involved.
       (2) Construction.--Section 2723(a)(1) of the Public Health 
     Service Act and section 731(a)(1) of the Employee Retirement 
     Income Security Act of 1974 shall not be construed as 
     superseding a State law described in paragraph (1).

     SEC. 153. STANDARDS RELATING TO BENEFITS FOR RECONSTRUCTIVE 
                   BREAST SURGERY.

       (a) Requirements for Reconstructive Breast Surgery.--
       (1) In general.--A group health plan, and a health 
     insurance issuer offering group health insurance coverage, 
     that provides coverage for breast surgery in connection with 
     a mastectomy shall provide coverage for reconstructive breast 
     surgery resulting from the mastectomy. Such coverage shall 
     include coverage for all stages of reconstructive breast 
     surgery performed on a nondiseased breast to establish 
     symmetry with the diseased when reconstruction on the 
     diseased breast is performed and coverage of prostheses and 
     complications of mastectomy including lymphedema.
       (2) Reconstructive breast surgery defined.--In this 
     section, the term ``reconstructive breast surgery'' means 
     surgery performed as a result of a mastectomy to reestablish 
     symmetry between two breasts, and includes augmentation 
     mammoplasty, reduction mammoplasty, and mastopexy.
       (3) Mastectomy defined.--In this section, the term 
     ``mastectomy'' means the surgical removal of all or part of a 
     breast.
       (b) Prohibitions.--
       (1) Denial of coverage based on cosmetic surgery.--A group 
     health plan, and a health insurance issuer offering group 
     health insurance coverage in connection with a group health 
     plan, may not deny coverage described in subsection (a)(1) on 
     the basis that the coverage is for cosmetic surgery.
       (2) Application of similar prohibitions.--Paragraphs (2) 
     through (5) of section 152 shall apply under this section in 
     the same manner as they apply with respect to section 152.
       (c) Rules of Construction.--
       (1) Nothing in this section shall be construed to require a 
     woman who is a participant or beneficiary to undergo 
     reconstructive breast surgery.
       (2) This section shall not apply with respect to any group 
     health plan, or any group health insurance coverage offered 
     by a health insurance issuer, which does not provide benefits 
     for mastectomies.
       (3) Nothing in this section shall be construed as 
     preventing a group health plan or issuer from imposing 
     deductibles, coinsurance, or other cost-sharing in relation 
     to benefits for reconstructive breast surgery under the plan 
     (or under health insurance coverage offered in connection 
     with a group health plan), except that such coinsurance or 
     other cost-sharing for any portion may not be greater than 
     such coinsurance or cost-sharing that is otherwise applicable 
     with respect to benefits for mastectomies.
       (e) Level and Type of Reimbursements.--Nothing in this 
     section shall be construed to prevent a group health plan or 
     a health insurance issuer offering group health insurance 
     coverage from negotiating the level and type of reimbursement 
     with a provider for care provided in accordance with this 
     section.
       (f) Exception for Health Insurance Coverage in Certain 
     States.--
       (1) In general.--The requirements of this section shall not 
     apply with respect to health insurance coverage if there is a 
     State law (as defined in section 2723(d)(1) of the Public 
     Health Service Act) for a State that regulates such coverage 
     and that requires coverage of at least the coverage of 
     reconstructive breast surgery otherwise required under this 
     section.
       (2) Construction.--Section 2723(a)(1) of the Public Health 
     Service Act and section 731(a)(1) of the Employee Retirement 
     Income Security Act of 1974 shall not be construed as 
     superseding a State law described in paragraph (1).

                        Subtitle G--Definitions

     SEC. 191. DEFINITIONS.

       (a) Incorporation of General Definitions.--The provisions 
     of section 2971 of the Public Health Service Act shall apply 
     for purposes of this title in the same manner as they apply 
     for purposes of title XXVII of such Act.
       (b) Secretary.--Except as otherwise provided, the term 
     ``Secretary'' means the Secretary of Health and Human 
     Services, in consultation with the Secretary of Labor and the 
     Secretary of the Treasury and the term ``appropriate 
     Secretary'' means the Secretary of Health and Human Services 
     in relation to carrying out this title under sections 2706 
     and 2751 of the Public Health Service Act, the Secretary of 
     Labor in relation to carrying out this title under section 
     713 of the Employee Retirement Income Security Act of 1974, 
     and the Secretary of the Treasury in relation to carrying out 
     this title under chapter 100 and section 4980D of the 
     Internal Revenue Code of 1986.
       (c) Additional Definitions.--For purposes of this title:
       (1) Applicable authority.--The term ``applicable 
     authority'' means--
       (A) in the case of a group health plan, the Secretary of 
     Health and Human Services and the Secretary of Labor; and
       (B) in the case of a health insurance issuer with respect 
     to a specific provision of this title, the applicable State 
     authority (as defined in section 2791(d) of the Public Health 
     Service Act), or the Secretary of Health and Human Services, 
     if such Secretary is enforcing such provision under section 
     2722(a)(2) or 2761(a)(2) of the Public Health Service Act.
       (2) Clinical peer.--The term ``clinical peer'' means, with 
     respect to a review or appeal, a physician (allopathic or 
     osteopathic) or other health care professional who holds a 
     non-restricted license in a State and who is appropriately 
     credentialed in the same or similar specialty as typically 
     manages the medical condition, procedure, or treatment under 
     review or appeal and includes a pediatric specialist where 
     appropriate; except that only a physician may be a clinical 
     peer with respect to the review or appeal of treatment 
     rendered by a physician.
       (3) Health care provider.--The term ``health care 
     provider'' includes a physician or other health care 
     professional, as well as an institutional provider of health 
     care services.
       (4) Nonparticipating.--The term ``nonparticipating'' means, 
     with respect to a health care provider that provides health 
     care items and services to a participant, beneficiary, or 
     enrollee under group health plan or health insurance 
     coverage, a health care provider that is not a participating 
     health care provider with respect to such items and services.
       (5) Participating.--The term ``participating'' mean, with 
     respect to a health care provider that provides health care 
     items and services to a participant, beneficiary, or enrollee 
     under group health plan or health insurance coverage offered 
     by a health insurance issuer, a health care provider that 
     furnishes such items and services under a contract or other 
     arrangement with the plan or issuer.

     SEC. 192. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.

       (a) Continued Applicability of State Law With Respect to 
     Health Insurance Issuers.--
       (1) In general.--Subject to paragraph (2), this title shall 
     not be construed to supersede any provision of State law 
     which establishes, implements, or continues in effect any 
     standard or requirement solely relating to health insurance 
     issuers in connection with group health insurance coverage 
     except to the extent that such standard or requirement 
     prevents the application of a requirement of this title.
       (2) Continued preemption with respect to group health 
     plans.--Nothing in this title shall be construed to affect or 
     modify the provisions of section 514 of the Employee 
     Retirement Income Security Act of 1974 with respect to group 
     health plans.
       (b) Rules of Construction.--Except as provided in sections 
     152 and 153, nothing in this title shall be construed as 
     requiring a group health plan or health insurance coverage to 
     provide specific benefits under the terms of such plan or 
     coverage.
       (c) Definitions.--For purposes of this section:
       (1) State law.--The term ``State law'' includes all laws, 
     decisions, rules, regulations, or other State action having 
     the effect of law, of any State. A law of the United States 
     applicable only to the District of Columbia shall be treated 
     as a State law rather than a law of the United States.
       (2) State.--The term ``State'' includes a State, the 
     Northern Mariana Islands, any political subdivisions of a 
     State or such Islands, or any agency or instrumentality of 
     either.

     SEC. 193. REGULATIONS.

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

 TITLE II--APPLICATION OF PATIENT PROTECTION STANDARDS TO GROUP HEALTH 
  PLANS AND HEALTH INSURANCE COVERAGE UNDER PUBLIC HEALTH SERVICE ACT

     SEC. 201. APPLICATION TO GROUP HEALTH PLANS AND GROUP HEALTH 
                   INSURANCE COVERAGE.

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

     ``SEC. 2706. PATIENT PROTECTION STANDARDS.

       ``(a) In General.--Each group health plan shall comply with 
     patient protection requirements under title I of the 
     Patients' Bill of Rights Act of 1998, and each health 
     insurance issuer shall comply with patient protection 
     requirements under such title with respect to group health 
     insurance coverage it offers, and such requirements shall be 
     deemed to be incorporated into this subsection.
       ``(b) Notice.--A group health plan shall comply with the 
     notice requirement under section 711(d) of the Employee 
     Retirement Income Security Act of 1974 with respect to

[[Page H6393]]

     the requirements referred to in subsection (a) and a health 
     insurance issuer shall comply with such notice requirement as 
     if such section applied to such issuer and such issuer were a 
     group health plan.''.
       (b) Conforming Amendment.--Section 2721(b)(2)(A) of such 
     Act (42 U.S.C. 300gg-21(b)(2)(A)) is amended by inserting 
     ``(other than section 2706)'' after ``requirements of such 
     subparts''.

     SEC. 202. APPLICATION TO INDIVIDUAL HEALTH INSURANCE 
                   COVERAGE.

       Part B of title XXVII of the Public Health Service Act is 
     amended by inserting after section 2751 the following new 
     section:

     ``SEC. 2752. PATIENT PROTECTION STANDARDS.

       ``(a) In General.--Each health insurance issuer shall 
     comply with patient protection requirements under title I of 
     the Patients' Bill of Rights Act of 1998 with respect to 
     individual health insurance coverage it offers, and such 
     requirements shall be deemed to be incorporated into this 
     subsection.
       ``(b) Notice.--A health insurance issuer under this part 
     shall comply with the notice requirement under section 711(d) 
     of the Employee Retirement Income Security Act of 1974 with 
     respect to the requirements of such title as if such section 
     applied to such issuer and such issuer were a group health 
     plan.''.

TITLE III--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

     SEC. 301. APPLICATION OF PATIENT PROTECTION STANDARDS TO 
                   GROUP HEALTH PLANS AND GROUP HEALTH INSURANCE 
                   COVERAGE UNDER THE EMPLOYEE RETIREMENT INCOME 
                   SECURITY ACT OF 1974.

       (a) In General.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 is 
     amended by adding at the end the following new section:

     ``SEC. 713. PATIENT PROTECTION STANDARDS.

       ``(a) In General.--Subject to subsection (b), a group 
     health plan (and a health insurance issuer offering group 
     health insurance coverage in connection with such a plan) 
     shall comply with the requirements of title I of the 
     Patients' Bill of Rights Act of 1998 (as in effect as of the 
     date of the enactment of such Act), and such requirements 
     shall be deemed to be incorporated into this subsection.
       ``(b) Plan Satisfaction of Certain Requirements.--
       ``(1) Satisfaction of certain requirements through 
     insurance.--For purposes of subsection (a), insofar as a 
     group health plan provides benefits in the form of health 
     insurance coverage through a health insurance issuer, the 
     plan shall be treated as meeting the following requirements 
     of title I of the Patients' Bill of Rights Act of 1998 with 
     respect to such benefits and not be considered as failing to 
     meet such requirements because of a failure of the issuer to 
     meet such requirements so long as the plan sponsor or its 
     representatives did not cause such failure by the issuer:
       ``(A) Section 101 (relating to access to emergency care).
       ``(B) Section 102(a)(1) (relating to offering option to 
     purchase point-of-service coverage), but only insofar as the 
     plan is meeting such requirement through an agreement with 
     the issuer to offer the option to purchase point-of-service 
     coverage under such section.
       ``(C) Section 103 (relating to choice of providers).
       ``(D) Section 104 (relating to access to specialty care).
       ``(E) Section 105(a)(1) (relating to continuity in case of 
     termination of provider contract) and section 105(a)(2) 
     (relating to continuity in case of termination of issuer 
     contract), but only insofar as a replacement issuer assumes 
     the obligation for continuity of care.
       ``(F) Section 106 (relating to coverage for individuals 
     participating in approved clinical trials.)
       ``(G) Section 107 (relating to access to needed 
     prescription drugs).
       ``(H) Section 108 (relating to adequacy of provider 
     network).
       ``(I) Subtitle B (relating to quality assurance).
       ``(J) Section 143 (relating to additional rules regarding 
     participation of health care professionals).
       ``(K) Section 152 (relating to standards relating to 
     benefits for certain breast cancer treatment).
       ``(L) Section 153 (relating to standards relating to 
     benefits for reconstructive breast surgery).
       ``(2) Information.--With respect to information required to 
     be provided or made available under section 121, in the case 
     of a group health plan that provides benefits in the form of 
     health insurance coverage through a health insurance issuer, 
     the Secretary shall determine the circumstances under which 
     the plan is not required to provide or make available the 
     information (and is not liable for the issuer's failure to 
     provide or make available the information), if the issuer is 
     obligated to provide and make available (or provides and 
     makes available) such information.
       ``(3) Grievance and internal appeals.--With respect to the 
     grievance system and internal appeals process required to be 
     established under sections 131 and 132, in the case of a 
     group health plan that provides benefits in the form of 
     health insurance coverage through a health insurance issuer, 
     the Secretary shall determine the circumstances under which 
     the plan is not required to provide for such system and 
     process (and is not liable for the issuer's failure to 
     provide for such system and process), if the issuer is 
     obligated to provide for (and provides for) such system and 
     process.
       ``(4) External appeals.--Pursuant to rules of the 
     Secretary, insofar as a group health plan enters into a 
     contract with a qualified external appeal entity for the 
     conduct of external appeal activities in accordance with 
     section 133, the plan shall be treated as meeting the 
     requirement of such section and is not liable for the 
     entity's failure to meet any requirements under such section.
       ``(5) Application to prohibitions.--Pursuant to rules of 
     the Secretary, if a health insurance issuer offers health 
     insurance coverage in connection with a group health plan and 
     takes an action in violation of any of the following 
     sections, the group health plan shall not be liable for such 
     violation unless the plan caused such violation:
       ``(A) Section 109 (relating to nondiscrimination in 
     delivery of services).
       ``(B) Section 141 (relating to prohibition of interference 
     with certain medical communications).
       ``(C) Section 142 (relating to prohibition against transfer 
     of indemnification or improper incentive arrangements).
       ``(D) Section 144 (relating to prohibition on retaliation).
       ``(E) Section 151 (relating to promoting good medical 
     practice).
       ``(6) Construction.--Nothing in this subsection shall be 
     construed to affect or modify the responsibilities of the 
     fiduciaries of a group health plan under part 4 of subtitle 
     B.
       ``(7) Application to certain prohibitions against 
     retaliation.--With respect to compliance with the 
     requirements of section 144(b)(1) of the Patients' Bill of 
     Rights Act of 1998, for purposes of this subtitle the term 
     `group health plan' is deemed to include a reference to an 
     institutional health care provider.
       ``(c) Enforcement of Certain Requirements.--
       ``(1) Complaints.--Any protected health care professional 
     who believes that the professional has been retaliated or 
     discriminated against in violation of section 144(b)(1) of 
     the Patients' Bill of Rights Act of 1998 may file with the 
     Secretary a complaint within 180 days of the date of the 
     alleged retaliation or discrimination.
       ``(2) Investigation.--The Secretary shall investigate such 
     complaints and shall determine if a violation of such section 
     has occurred and, if so, shall issue an order to ensure that 
     the protected health care professional does not suffer any 
     loss of position, pay, or benefits in relation to the plan, 
     issuer, or provider involved, as a result of the violation 
     found by the Secretary.
       ``(d) Conforming Regulations.--The Secretary may issue 
     regulations to coordinate the requirements on group health 
     plans under this section with the requirements imposed under 
     the other provisions of this title.''.
       (b) Satisfaction of ERISA Claims Procedure Requirement.--
     Section 503 of such Act (29 U.S.C. 1133) is amended by 
     inserting ``(a)'' after ``Sec. 503.'' and by adding at the 
     end the following new subsection:
       ``(b) In the case of a group health plan (as defined in 
     section 733) compliance with the requirements of subtitle D 
     (and section 115) of title I of the Patients' Bill of Rights 
     Act of 1998 in the case of a claims denial shall be deemed 
     compliance with subsection (a) with respect to such claims 
     denial.''.
       (c) Conforming Amendments.--(1) Section 732(a) of such Act 
     (29 U.S.C. 1185(a)) is amended by striking ``section 711'' 
     and inserting ``sections 711 and 713''.
       (2) The table of contents in section 1 of such Act is 
     amended by inserting after the item relating to section 712 
     the following new item:

``Sec. 713. Patient protection standards.''.
       (3) Section 502(b)(3) of such Act (29 U.S.C. 1132(b)(3)) is 
     amended by inserting ``(other than section 144(b))'' after 
     ``part 7''.

     SEC. 302. ERISA PREEMPTION NOT TO APPLY TO CERTAIN ACTIONS 
                   INVOLVING HEALTH INSURANCE POLICYHOLDERS.

       (a) In General.--Section 514 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1144) is amended by 
     adding at the end the following subsection:
       ``(e) Preemption Not To Apply to Certain Actions Arising 
     Out of Provision of Health Benefits.--
       ``(1) In general.--Except as provided in this subsection, 
     nothing in this title shall be construed to invalidate, 
     impair, or supersede any cause of action brought by a plan 
     participant or beneficiary (or the estate of a plan 
     participant or beneficiary) under State law to recover 
     damages resulting from personal injury or for wrongful death 
     against any person--
       ``(A) in connection with the provision of insurance, 
     administrative services, or medical services by such person 
     to or for a group health plan (as defined in section 733), or
       ``(B) that arises out of the arrangement by such person for 
     the provision of such insurance, administrative services, or 
     medical services by other persons.

     For purposes of this subsection, the term `personal injury' 
     means a physical injury and includes an injury arising out of 
     the treatment (or failure to treat) a mental illness or 
     disease.
       ``(2) Exception for employers and other plan sponsors.--

[[Page H6394]]

       ``(A) In general.--Subject to subparagraph (B), paragraph 
     (1) does not authorize--
       ``(i) any cause of action against an employer or other plan 
     sponsor maintaining the group health plan (or against an 
     employee of such an employer or sponsor acting within the 
     scope of employment), or
       ``(ii) a right of recovery or indemnity by a person against 
     an employer or other plan sponsor (or such an employee) for 
     damages assessed against the person pursuant to a cause of 
     action under paragraph (1).
       ``(B) Special rule.--Subparagraph (A) shall not preclude 
     any cause of action described in paragraph (1) against an 
     employer or other plan sponsor (or against an employee of 
     such an employer or sponsor acting within the scope of 
     employment) if--
       ``(i) such action is based on the employer's or other plan 
     sponsor's (or employee's) exercise of discretionary authority 
     to make a decision on a claim for benefits covered under the 
     plan or health insurance coverage in the case at issue; and
       ``(ii) the exercise by such employer or other plan sponsor 
     (or employee) of such authority resulted in personal injury 
     or wrongful death.
       ``(3) Construction.--Nothing in this subsection shall be 
     construed as permitting a cause of action under State law for 
     the failure to provide an item or service which is not 
     covered under the group health plan involved.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to acts and omissions occurring on or after the 
     date of the enactment of this Act from which a cause of 
     action arises.

TITLE IV--APPLICATION TO GROUP HEALTH PLANS UNDER THE INTERNAL REVENUE 
                             CODE OF 1986.

     SEC. 401. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

       Subchapter B of chapter 100 of the Internal Revenue Code of 
     1986 (as amended by section 1531(a) of the Taxpayer Relief 
     Act of 1997) is amended--
       (1) in the table of sections, by inserting after the item 
     relating to section 9812 the following new item:

``Sec. 9813. Standard relating to patient freedom of choice.''; and

       (2) by inserting after section 9812 the following:

     ``SEC. 9813. STANDARD RELATING TO PATIENTS' BILL OF RIGHTS.

       ``A group health plan shall comply with the requirements of 
     title I of the Patients' Bill of Rights Act of 1998 (as in 
     effect as of the date of the enactment of such Act), and such 
     requirements shall be deemed to be incorporated into this 
     section.''.

        TITLE V--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

     SEC. 501. EFFECTIVE DATES.

       (a) Group Health Coverage.--
       (1) In general.--Subject to paragraph (2), the amendments 
     made by sections 201(a), 301, and 401 (and title I insofar as 
     it relates to such sections) shall apply with respect to 
     group health plans, and health insurance coverage offered in 
     connection with group health plans, for plan years beginning 
     on or after October 1, 1999 (in this section referred to as 
     the ``general effective date'').
       (2) Treatment of collective bargaining agreements.--In the 
     case of a group health plan maintained pursuant to 1 or more 
     collective bargaining agreements between employee 
     representatives and 1 or more employers ratified before the 
     date of enactment of this Act, the amendments made by 
     sections 201(a), 301, and 401 (and title I insofar as it 
     relates to such sections) shall not apply to plan years 
     beginning before the later of--
       (A) the date on which the last collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of enactment of this Act), or
       (B) the general effective date.

     For purposes of subparagraph (A), any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by this Act shall not be treated as a 
     termination of such collective bargaining agreement.
       (b) Individual Health Insurance Coverage.--The amendments 
     made by section 202 shall apply with respect to individual 
     health insurance coverage offered, sold, issued, renewed, in 
     effect, or operated in the individual market on or after the 
     general effective date.

     SEC. 502. COORDINATION IN IMPLEMENTATION.

       Section 104(1) of Health Insurance Portability and 
     Accountability Act of 1996 is amended by striking ``this 
     subtitle (and the amendments made by this subtitle and 
     section 401)'' and inserting ``the provisions of part 7 of 
     subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974, the provisions of parts A and C of 
     title XXVII of the Public Health Service Act, chapter 100 of 
     the Internal Revenue Code of 1986, and title I of the 
     Patients' Bill of Rights Act of 1998''.

                      TITLE VI--REVENUE PROVISIONS

     SEC. 601. ESTATE TAX TECHNICAL CORRECTION.

       (a) In General.--Paragraph (2) of section 2001(c) of the 
     Internal Revenue Code of 1986 is amended by striking 
     ``$10,000,000'' and all that follows and inserting 
     ``$10,000,000. The amount of the increase under the preceding 
     sentence shall not exceed the sum of the applicable credit 
     amount under section 2010(c) (determined without regard to 
     section 2057(a)(3)) and $359,200.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the amendments made by 
     section 501 of the Taxpayer Relief Act of 1997.

     SEC. 602. TREATMENT OF CERTAIN DEDUCTIBLE LIQUIDATING 
                   DISTRIBUTIONS OF REGULATED INVESTMENT COMPANIES 
                   AND REAL ESTATE INVESTMENT TRUSTS.

       (a) In General.--Section 332 of the Internal Revenue Code 
     of 1986 (relating to complete liquidations of subsidiaries) 
     is amended by adding at the end the following new subsection:
       ``(c) Deductible Liquidating Distributions of Regulated 
     Investment Companies and Real Estate Investment Trusts.--If a 
     corporation receives a distribution from a regulated 
     investment company or a real estate investment trust which is 
     considered under subsection (b) as being in complete 
     liquidation of such company or trust, then, notwithstanding 
     any other provision of this chapter, such corporation shall 
     recognize and treat as a dividend from such company or trust 
     an amount equal to the deduction for dividends paid allowable 
     to such company or trust by reason of such distribution.''.
       (b) Conforming Amendments.--
       (1) The material preceding paragraph (1) of section 332(b) 
     of such Code is amended by striking ``subsection (a)'' and 
     inserting ``this section''.
       (2) Paragraph (1) of section 334(b) of such Code is amended 
     by striking ``section 332(a)'' and inserting ``section 332''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after May 21, 1998.

  The SPEAKER pro tempore. Pursuant to House Resolution 509, the 
gentleman from Michigan (Mr. Dingell) and the gentleman from Illinois 
(Mr. Hastert) each will control 30 minutes.
  The Chair recognizes the gentleman from Michigan (Mr. Dingell).
  Mr. DINGELL. Mr. Speaker, I yield 3 minutes to the gentleman from 
Iowa (Mr. Ganske), my distinguished friend, for purposes of offering 
the amendment.
  Mr. GANSKE. Mr. Speaker, I rise in support of the Ganske-Dingell 
substitute. This substitute is supported by Consumers Union, other 
consumer groups, about 170 health groups, both consumer groups and 
provider groups. It is supported by the AARP, it is supported by the 
AMA, the Nurses Association, and by the AFL-CIO. It has broad, 
widespread support, for a good reason.
  Let me specifically address my friend Lindsey Graham's comments about 
the underlying Republican bill and how it relates to the substitute on 
liability. My friend Lindsey Graham is trying to improve the GOP bill.
  Consider the family of Joyce Chiang. Her complaints of severe 
abdominal pain and requests for a referral to a specialist went 
unheeded. The delay prevented the timely discovery of a colon cancer 
that might have been cured. Instead, by the time she got the additional 
tests she requested, the cancer had perforated her bowel and no amount 
of surgery could save her.
  Under the Hastert bill, Joyce Chiang's family could only collect $500 
for every day the care was denied. But I would say that is hardly an 
effective remedy or deterrent, when it can cost health plans more to 
provide the needed care than it would potentially cost them in a 
subsequent legal action.
  Mr. Speaker, I am not interested in granting tobacco companies legal 
protections for their conduct; and I cannot see how it serves our 
constituents to allow health plans who are making life-and-death 
decisions to hide from their consequences.
  Republicans believe in personal responsibility, and this immunity 
that is preserved in the Hastert bill flies in the face of that. Health 
plans should be treated like any other industry and held accountable 
for their negligent actions.
  Furthermore, the GOP bill does not get at a fundamental underlying 
problem, and that is that the HMOs can define what is medically 
necessary. Before our Committee on Commerce we had a medical reviewer 
describe how she had made decisions that resulted in the loss of life 
because she could manipulate the way the HMO defined ``medically 
necessary.'' Under the Ganske-Dingell bill, we address that problem. 
Their bill does not.
  I strongly urge my Republican colleagues to vote for the best bill, 
the one that addresses the smart bomb of HMOs, the issue of what is 
defined as ``medically necessary.''
  Mr. HASTERT. Mr. Speaker, I yield 3 minutes to the gentleman from 
Florida (Mr. Weldon).

[[Page H6395]]

  Mr. WELDON of Florida. Mr. Speaker, I thank the gentleman for 
yielding.
  I am a practicing physician. And I do not plan on staying in this 
body. I plan on returning in a few short years to my practice. And I 
think it is a wonderful thing that we are having this debate today. We 
both want to do what we can to restore the doctor-patient relationship. 
We both want to do what we can to return quality as number one in 
health care in the United States. They have their plan. We have ours.
  Now, I believe that there is an important feature in our bill that 
makes our bill the better bill over their bill. But I want to address a 
few points made by my colleague the gentleman from Iowa (Mr. Ganske).
  I served on the task force that produced this bill, and one of the 
most important things that I was going after was timely access to 
specialists. And contrary to the claims that were made by him and the 
claims by others, we have important language in our bill that will 
require people in managed care entities to have timely access to 
specialists.
  Here is the difference between their bill and our bill, and I will 
tell my colleagues about it. I was on a radio talk show last week where 
a lady called in and she was saying some bad things about her HMO and 
she said, ``The other HMO I was in was just as bad. I had switched.'' I 
said, ``What do you mean, you switched from one HMO to another HMO? Are 
you in the FEHBP plan?'' And she said, ``Yes.'' And I said, ``Well, you 
know, I am in that, too; and there are some better plans that you could 
select. Why didn't you select one of those better coverage plans?'' And 
do you know what she said to me? ``Well, we cannot afford it. That is 
why I am in an HMO.''
  Now, we are to be led to believe by our colleagues on the other side 
of the aisle that their bill which is going to place all these 
government mandates is not going to drive up costs for that lady?
  Let me tell my colleagues something. Every month in my practice a 
clerk from my billing office brought a stack of charts of working 
people who were not able to pay their bills and I did what thousands of 
other physicians all across America do; I wrote off those bills, 
thousands of dollars every year. Why? Because those people had no 
health insurance.
  Now we are led to believe by these folks that they here in Washington 
are going to make all these HMOs do all these wonderful things that are 
mandated in their bill and it is not going to drive up costs, it is not 
going to increase the number of uninsured?
  Let me tell my colleagues something. We have a good bill here that is 
going to work very hard to restore quality and it is not going to drive 
up costs. Indeed, we believe the provisions in this bill, which allow 
small employers to pool, which has malpractice reform, is actually 
going to drive down costs. It is going to allow more people to get 
insurance.
  We have, in my opinion, the better bill. And I can say that as 
somebody who is going to go back in a few short years to be working in 
the system.

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