[Congressional Record Volume 147, Number 17 (Wednesday, February 7, 2001)]
[Senate]
[Pages S1122-S1156]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. CLELAND:
S. 269. A bill to ensure that immigrant students and their families
receive the services the students and families need to successfully
participate in elementary schools, secondary schools, and communities
in the United States, and for other purposes; to the Committee on
Health, Education, Labor, and Pensions.
Mr. CLELAND. Mr. President, within the last decade, many States have
experienced a wave of immigration that is rivaling the first and second
waves of German, Irish, Polish and Scandinavian immigrants who arrived
in the U.S. in the late 1800s and early 1900s. In fact, the Census
Bureau is estimating that these recently arrived immigrants and
refugees will account for 75 percent of the U.S. population growth over
the next 50 years. These changing demographics are impacting not just
communities accustomed to large immigrant populations like New York,
Los Angeles and Miami, but also non-traditional immigrant communities
like Gainesville, Georgia and Fremont County, Idaho.
One result of our new wave of immigrants is a significant increase in
the number of children with diverse linguistic and cultural backgrounds
enrolling in our schools. The Waterloo, Iowa school system, for
example, is being challenged to teach 400 Bosnian refugee children, who
came here without knowing our language, culture or customs. Schools in
Wausau, Wisconsin are filled with Asian children who want to achieve
success in the United States. In Dalton, Georgia, over 51 percent of
the student population in the public schools are Hispanic children
eager to participate in their new schools and communities. In Turner,
Maine, the school-aged children of hundreds of recently arrived Latino
immigrant families are pouring into this rural town's schools.
It is clear that U.S. schools from Florida to Washington State are
being increasingly challenged by these changing demographics. We need
to make sure that these children are served appropriately--and that
their families are as well. Studies have shown that where quality
educational programs are joined with community-based services,
immigrants have an increased opportunity to become an integral part of
their community and their children are better prepared to achieve
success in school.
The recent influx of immigrants into U.S. communities calls for
innovative and comprehensive solutions. Today I am reintroducing the
Immigrants to New Americans Act. This legislation would establish a
competitive grant program within the Department of Education to assist
schools and communities which are experiencing an influx of recently
arrived immigrant families. Specifically, this grant program would
provide funding to partnerships of local school districts and
community-based organizations for the purpose of developing model
programs with a two-fold purpose: to assist culturally and
linguistically diverse children achieve success in America's schools
and to provide their families with access to comprehensive community
services, including health care, child care, job training and
transportation.
It does take a village to raise a child, Mr. President.
I have seen firsthand the benefits of one community's program that
brings together teachers, community leaders and businesses in an
innovative partnership to aid their linguistically and culturally
diverse population. It is the Georgia Project, and its mission is to
assist immigrant children from Mexico achieve to higher standards in
Dalton, Georgia's public schools.
In recent years, the carpet and poultry industries in Dalton and
surrounding Whitfield County experienced
[[Page S1123]]
the need for a larger workforce. The city's visionary leaders
encouraged immigrants from Mexico to settle in their community to fill
that need. The challenge has been in Dalton's public school system
where Hispanic enrollment went from being just four percent ten years
ago to over 51 percent today.
To deal with this sizable increase, Dalton and Whitfield County
public school administrators and business leaders formed a public-
private consortium. This consortium, known as The Georgia Project,
initiated a teacher exchange program in 1996 with the University of
Monterrey in Mexico. Today, twenty teachers from Mexico are helping to
bridge the language and culture gap by serving as instructors,
counselors and role models and providing Spanish language training to
English-speaking students. In addition, Dalton public school teachers
spend a month each year in Monterrey, Mexico learning firsthand the
culture, language and customs of the Hispanic students they serve.
There are other programs across the United States that address
similar challenges experienced by the City of Dalton and Whitfield
County. One such example is the Lao Family Project in St. Paul,
Minnesota. This is a community-based refugee assistance organization
that provides a wide range of parent-student services to Hmong and
Vietnamese refugees in St. Paul in an effort to help parents become
economically self-sufficient and their children succeed in school. The
Lao Family Project's staff are bilingual/bicultural para-professionals
who provide services that include adult English-language acquisition
programs and preschool literacy activities for children.
In the rural communities of Healdsburg and Windsor, California, the
Even Start program provides a variety of instructional and support
services to low-income, recently arrived Hispanic immigrant families
and their preschool and elementary school children. The program focuses
on increasing family involvement in their children's education, helping
parents and children with their literacy skills, and offering English
as a second language course. Many of the instructional activities for
the parents' classes are coordinated with the classroom teachers to
ensure consistency with what is being taught to both the parent and
child. One focus of these classes is to communicate what the children
are learning in their regular classes so that parents can help their
children at home.
The Exemplary Multicultural Practices in Rural Education Program, or
EMPIRE, operates in the Yakima region of rural Central Washington
State, an area with a diverse mix of ethnic groups, including
Caucasians, Hispanics, Native Americans, African Americans, and Asian
Americans. The program promotes positive race relations and an
appreciation for ethnic and cultural differences. It encourages schools
to develop learning environments where children of all backgrounds can
be successful in school and in the community. With support from
EMPIRE's board of advisors, each school designs and carries out its own
projects based on local resources and needs. Schools in which EMPIRE is
active plan a wide variety of programs and activities with emphasis on
staff development, student awareness, parent involvement and
improvement of curriculum and instruction.
The Immigrants to New Americans Act is not a one-size-fits-all
approach. It rewards model programs designed by individual communities
to address that community's specific needs and challenges. The
legislation is endorsed by the National Association for Bilingual
Education, the League of United Latin American Citizens, the National
Council of La Raza, the Hispanic Education Coalition, the India Abroad
Center for Political Awareness, the Southeast Asia Resource Action
Center, and the National Korean American Service and Education
Consortium.
Our Nation's communities are being transformed by the diverse culture
of their citizens. Successfully addressing this change will require
leadership, creative thinking and an eagerness to encourage and promote
the promise that these new challenges bring. By doing so, we as a
Nation will better serve all our children--the best guarantee we have
of ensuring America's strength, well into the 21st Century and beyond.
Mr. President, I ask unanimous consent that the text of the bill and
the letters of support be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 269
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Immigrants to New Americans
Act''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) In 1997, there were an estimated 25,800,000 foreign-
born individuals residing in the United States. That number
is the largest number of such foreign-born individuals in
United States history and represents a 6,000,000, or 30
percent, increase over the 1990 census figure of 19,800,000
of such foreign-born individuals. The Bureau of the Census
estimates that the recently arrived immigrant population
(including the refugee population) currently residing in the
Nation will account for 75 percent of the population growth
in the United States over the next 50 years.
(2) For millions of immigrants settling into the Nation's
hamlets, towns, and cities, the dream of ``life, liberty, and
the pursuit of happiness'' has become a reality. The wave of
immigrants, of various nationalities, who have chosen the
United States as their home, has positively influenced the
Nation's image and relationship with other nations. The
diverse cultural heritage of the Nation's immigrants has
helped define the Nation's culture, customs, economy, and
communities. By better understanding the people who have
immigrated to the Nation, individuals in the United States
better understand what it means to be an American.
(3) There is a critical shortage of teachers with the
skills needed to educate immigrant students and their
families in nonconcentrated, nontraditional, immigrant
communities as well as communities with large immigrant
populations. The large influx of immigrant families over the
last decade presents a national dilemma: The number of such
families with school-age children requiring assistance to
successfully participate in elementary schools, secondary
schools, and communities in the United States, is increasing
without a corresponding increase in the number of teachers
with skills to accommodate their needs.
(4) Immigrants arriving in communities across the Nation
generally settle into high-poverty areas, where funding for
programs to provide immigrant students and their families
with the services the students and families need to
successfully participate in elementary schools, secondary
schools, and communities in the United States is inadequate.
(5) The influx of immigrant families settling into many
United States communities is often the result of concerted
efforts by local employers who value immigrant labor. Those
employers realize that helping immigrants to become
productive, prosperous members of a community is beneficial
for the local businesses involved, the immigrants, and the
community. Further, local businesses benefit from the
presence of the immigrant families because the families
present businesses with a committed and effective workforce
and help open up new market opportunities. However, many of
the communities into which the immigrants have settled need
assistance in order to give immigrant students and their
families the services the students and families need to
successfully participate in elementary schools, secondary
schools, and communities in the United States.
SEC. 3. PURPOSE.
The purpose of this Act is to establish a grant program,
within the Department of Education, that provides funding to
partnerships of local educational agencies and community-
based organizations for the development of model programs to
provide immigrant students and their families with the
services the students and families need to successfully
participate in elementary schools, secondary schools, and
communities in the United States.
SEC. 4. DEFINITIONS.
(1) Immigrant.--In this Act, the term ``immigrant'' has the
meaning given the term in section 101 of the Immigration and
Nationality Act (8 U.S.C. 1101).
(2) Other terms.--Other terms used in this Act have the
meanings given the terms in section 14101 of the Elementary
and Secondary Education Act of 1965 (20 U.S.C. 8801).
SEC. 5. PROGRAM AUTHORIZED.
(a) In General.--The Secretary of Education may award not
more than 10 grants in a fiscal year to eligible partnerships
for the design and implementation of model programs to--
(1) assist immigrant students achieve in elementary schools
and secondary schools in the United States by offering such
educational services as English as a second language classes,
literacy programs, programs for introduction to the education
system, and civics education; and
(2) assist parents of immigrant students by offering such
services as parent education and literacy development
services and by coordinating activities with other entities
to
[[Page S1124]]
provide comprehensive community social services such as
health care, job training, child care, and transportation
services.
(b) Eligible Partnerships.--To be eligible to receive a
grant under this Act, a partnership--
(1) shall include--
(A) at least 1 local educational agency; and
(B) at least 1 community-based organization; and
(2) may include another entity such as--
(A) an institution of higher education;
(B) a local or State government agency;
(C) a private sector entity; or
(D) another entity with expertise in working with
immigrants.
(c) Duration.--Each grant awarded under this Act shall be
awarded for a period of not more than 5 years. A partnership
may use funds made available through the grant for not more
than 1 year for planning and program design.
SEC. 6. APPLICATIONS FOR GRANTS.
(a) In General.--Each eligible partnership desiring a grant
under this Act shall submit an application to the Secretary
at such time and in such manner as the Secretary may require.
(b) Required Documentation.--Each application submitted by
a partnership under this section for a proposed program shall
include documentation that--
(1) the partnership has the qualified personnel required to
develop, administer, and implement the proposed program; and
(2) the leadership of each participating school has been
involved in the development and planning of the program in
the school.
(c) Other Application Contents.--Each application submitted
by a partnership under this section for a proposed program
shall include--
(1) a list of the organizations entering into the
partnership;
(2) a description of the need for the proposed program,
including data on the number of immigrant students, and the
number of such students with limited English proficiency in
the schools or school districts to be served through the
program and the characteristics of the students described in
this paragraph, including--
(A) the native languages of the students to be served;
(B) the proficiency of the students in English and the
students' native languages;
(C) achievement data for the students in--
(i) reading or language arts (in English and in the
students' native languages, if applicable); and
(ii) mathematics; and
(D) the previous schooling experiences of the students;
(3) a description of the goals of the program;
(4) a description of how the funds made available through
the grant will be used to supplement the basic services
provided to the immigrant students to be served;
(5) a description of activities that will be pursued by the
partnership through the program, including a description of--
(A) how parents, students, and other members of the
community, including members of private organizations and
nonprofit organizations, will be involved in the design and
implementation of the program;
(B) how the activities will further the academic
achievement of immigrant students served through the program;
(C) methods of teacher training and parent education that
will be used or developed through the program, including the
dissemination of information to immigrant parents, that is
easily understandable in the language of the parents, about
educational programs and the rights of the parents to
participate in educational decisions involving their
children; and
(D) methods of coordinating comprehensive community social
services to assist immigrant families;
(6) a description of how the partnership will evaluate the
progress of the partnership in achieving the goals of the
program;
(7) a description of how the local educational agency will
disseminate information on model programs, materials, and
other information developed under this Act that the local
educational agency determines to be appropriate for use by
other local educational agencies in establishing similar
programs to facilitate the educational achievement of
immigrant students;
(8) an assurance that the partnership will annually provide
to the Secretary such information as may be required to
determine the effectiveness of the program; and
(9) any other information that the Secretary may require.
SEC. 7. SELECTION OF GRANTEES.
(a) Criteria.--The Secretary, through a peer review
process, shall select partnerships to receive grants under
this Act on the basis of the quality of the programs proposed
in the applications submitted under section 6, taking into
consideration such factors as--
(1) the extent to which the program proposed in such an
application effectively addresses differences in language,
culture, and customs;
(2) the quality of the activities proposed by a
partnership;
(3) the extent of parental, student, and community
involvement;
(4) the extent to which the partnership will ensure the
coordination of comprehensive community social services with
the program;
(5) the quality of the plan for measuring and assessing
success; and
(6) the likelihood that the goals of the program will be
achieved.
(b) Geographic Distribution of Programs.--The Secretary
shall approve applications under this Act in a manner that
ensures, to the extent practicable, that programs assisted
under this Act serve different areas of the Nation, including
urban, suburban, and rural areas, with special attention to
areas that are experiencing an influx of immigrant groups
(including refugee groups), and that have limited prior
experience in serving the immigrant community.
SEC. 8. EVALUATION AND PROGRAM DEVELOPMENT.
(a) Requirement.--Each partnership receiving a grant under
this Act shall--
(1) conduct a comprehensive evaluation of the program
assisted under this Act, including an evaluation of the
impact of the program on students, teachers, administrators,
parents, and others; and
(2) prepare and submit to the Secretary a report containing
the results of the evaluation.
(b) Evaluation Report Components.--Each evaluation report
submitted under this section for a program shall include--
(1) data on the partnership's progress in achieving the
goals of the program;
(2) data showing the extent to which all students served by
the program are meeting the State's student performance
standards, including--
(A) data comparing the students served under this Act with
other students, with regard to grade retention and academic
achievement in reading and language arts, in English and in
the native languages of the students if the program develops
native language proficiency, and in mathematics; and
(B) a description of how the activities carried out through
the program are coordinated and integrated with the overall
school program of the school in which the program described
in this Act is carried out, and with other Federal, State, or
local programs serving limited English proficient students;
(3) data showing the extent to which families served by the
program have been afforded access to comprehensive community
social services; and
(4) such other information as the Secretary may require.
SEC. 9. ADMINISTRATIVE FUNDS.
A partnership that receives a grant under this Act may use
not more than 5 percent of the grant funds received under
this Act for administrative purposes.
SEC. 10. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this
Act $10,000,000 for fiscal year 2002 and such sums as may be
necessary for each of the 4 succeeding fiscal years.
____
National Association for
Bilingual Education,
Washington, DC, January 29, 2001.
Hon. Max Cleland,
U.S. Senate, Senate Dirksen Building, Washington, DC.
Dear Senator Cleland: On behalf of the National Association
for Bilingual Education (NABE), I want to thank you for
introducing legislation that will help address one of the
greatest challenges facing the American educational system--
that of addressing the changing needs of emerging immigrant
populations.
The dramatic demographic changes that are taking place in
our nation are forcing school districts and communities to
reevaluate their ability to integrate America's newcomers.
While it was once the case that immigrants settled primarily
in urban areas like New York City or Los Angeles, poultry
processing plants, meat packing firms, and other businesses
are attracting immigrants to states like Georgia, Iowa,
Arkansas, North Carolina and Idaho. Often, these communities
have no experience in helping immigrant children and families
integrate so that they too will attain the American dream and
help make our country stronger.
Your bill clearly recognizes the contributions that
immigrants have made to the United States over its history,
and takes a definitive step forward in the spirit of
empowerment through education and community-based
collaboration. NABE strongly believes that given the
appropriate tools and support immigrant students will rise to
the highest of levels of achievement. Our endorsement of this
forward-thinking legislation is a reaffirmation of this
philosophy, and we hope your colleagues in Congress will
grant it prompt approval. Once again, I commend you on the
introduction of this important piece of legislation.
Sincerely,
Delia Pompa,
Executive Director.
____
League of United
Latin American Citizens,
Washington, DC, January 26, 2001.
Hon. Max Cleland,
U.S. Senate, Dirksen Senate Building, Washington, DC.
Dear Senator Cleland: The League of United Latin American
Citizens (LULAC) wishes to thank you for your efforts at
facilitating and enhancing the ability of immigrant children
and their families to achieve success in America's schools
and communities. We would like to strongly support your
legislation, ``The Immigrants to New Americans Act.''
We believe that this act will greatly enhance the ability
for schools and community-based services to develop model
programs aimed at helping immigrant students
[[Page S1125]]
and their families to receive the tools that they need to be
successful in their new homeland.
We find that this closely supports our mission and beliefs
that immigrants should be supported in any way possible.
LULAC is the oldest and largest Latino civil rights
organization in the United States. LULAC advances the
economic conditions, educational attainment, political
influence, health and civil rights of Hispanic Americans
through community-based programs operating at more than 700
LULAC Councils nationwide.
Once again, thank you for putting forth this effort to help
those who need a little help getting started in this country.
Your legislation will help to carry the United States in a
positive way well into the 21st century.
Sincerely,
Rick Dovalina,
LULAC National President.
____
National Council of La Raza,
Washington, DC, January 30, 2001.
Senator Max Cleland,
Senate Dirksen Office Building,
Washington, DC.
Dear Senator Cleland: The National Council of La Raza
(NCLR) thanks you for your effort to facilitate and enhance
the participation of immigrants in American society. In
particular, we would like to express our support for your
legislation, the ``Immigrants to New Americans Act,'' which
would provide education, adult English as a Second Language
(ESL), job training, and other important services to
immigrants in ``emerging'' communities.
Over the past decade, dramatic shifts have occurred in the
immigrant population in the United States, particularly among
Hispanic immigrants. Many Hispanic immigrants have settled in
areas where their presence had previously been virtually
invisible. For example, the U.S. Census Bureau determined
that the South (Alabama, Arkansas, Georgia, Kentucky,
Mississippi, North Carolina, South Carolina, and Tennessee)
experienced a 93% increase in its Hispanic population from
1990 to 1998, far outpacing growth in ``traditional''
Hispanic states like California, New York, and Texas, where
increases hovered around 32%. While the U.S. Census Bureau
estimated the total Hispanic population in the South in 1998
to be 640,870, unofficial estimates place the Hispanic
population of both Georgia and North Carolina at close to
500,000 in each state. Midwestern states have also
experienced significant increases in their Hispanic
populations during this period, such as Iowa (74%), Minnesota
(61%), and Nebraska (96%). Many of these Hispanics are
immigrants in search of employment.
The emergence of new immigrant populations has created a
significant need for educational and social services. The
search for employment opportunities has historically been the
primary impetus for the migration of immigrants. An ever-
increasing availability of permanent employment has provided
the opportunity for many immigrants to settle with their
spouses and children, often in areas where previously there
had only been seasonal agricultural work available. However,
these opportunities have largely been in unskilled or low-
skilled, low-paying jobs, such as the textile, poultry, and
construction industries in the South; meat- and vegetable-
packing in the Midwest; and light manufacturing and service-
sector work in major cities like New York City, Los Angeles,
and Houston. As these new immigrant populations form
permanent settlements, they often face social isolation and
disconnection from mainstream society.
Emerging immigrant communities face a multitude of issues
in adapting to their new environment. Among the needs
identified in these communities are access to rigorous
standards-based curriculum in the public schools, effective
parental involvement in their children's education, adult
English-language acquisition programs, quality child care,
and employment and training. Your legislation would help
local communities to provide services in each of these
critical areas.
NCLR believes that the ``Immigrants to New Americans Act''
can have a significant, positive impact on the lives of many
immigrant children and families, and on the communities in
which they are settling. That is why we strongly support your
legislation and encourage the entire Congress to do the same.
Sincerely,
Raul Yzaguirre,
President.
____
Hispanic Education Coalition,
January 29, 2001.
Hon. Max Cleland,
U.S. Senate, Senate Dirksen Building, Washington, DC.
Dear Senator Cleland: On behalf of the Hispanic Education
Coalition (HEC)--an ad hoc coalition of national
organizations dedicated to improving educational
opportunities for over 30 million Hispanics living in the
United States--we are writing to commend you for introducing
The Immigrants to New Americans Act. We support this
legislation because it will help improve educational
opportunities for Hispanic Americans by supporting education
and community-based collaboration.
Recent demographic data show that Hispanic children are the
fastest growing segment of the school-aged population. While
the majority of Hispanic children live in large urban areas
in states like California, Texas and Florida, more and more
Hispanic families are migrating to states like Arkansas,
Iowa, North Carolina and Georgia. Emerging immigrant
communities face a multitude of issues in adapting to their
new environment such as academic and language support and
effective parental involvement in their children's public
schools, adult English-language acquisition programs, and
employment and training. Communities like Rogers, Arkansas
are in dire need of assistance to ensure new Hispanic and
immigrant families are integrated in their communities and
schools.
The Immigrants to Americans Act recognizes that while local
communities may need support, they are ultimately in the best
position to address the needs of the newly arrived Hispanic
immigrant families. We are particularly supportive of the
inclusion of community-based organizations as partners in
developing model programs that help immigrant children
succeed in schools and provide families with access to
community services.
HEC believes that The Immigrants to New Americans Act can
have a significant, positive impact on the lives of many
immigrant children and families, their local communities and
our nation. That is why we strongly support your legislation
and encourage the entire Congress to do the same.
Sincerely,
Patricia Loera,
Co-Chair, National Association
For Bilingual Education.
On behalf of: Association for the Advancement of Mexican
Americans (AAMA); HEP-CAMP Association; Hispanic Association
of Colleges and Universities (HACU); League of United Latin
American Citizens (LULAC); Migrant Legal Action Program;
National Association for Migrant Education (NAME); National
Association of Latino Elected and Appointed Officials
(NALEO); National Council of La Raza (NLCR); National Puerto
Rican Coalition (NPRC).
______
By Mr. BINGAMAN (for himself, Mr. Jeffords, Mr. Levin, Mr.
Brownback, and Mr. Helms):
S. 270. A bill to amend title XVIII of the Social Security Act to
provide a transitional adjustment for certain sole community hospitals
in order to limit any decline in payment under the prospective payment
system for hospital outpatient department services; to the Committee on
Finance.
Mr. BINGAMAN. Mr. President, I rise today to introduce, along with my
colleagues Senators Jeffords, Levin, Brownback, and Helms the ``Rural
Hospital and Health Network Preservation Act of 2001.''
As you are aware, rural health care providers have operating margins
that are often much lower and more dependent upon Medicare and Medicaid
reimbursement then suburban or urban providers. The Balanced Budget
Refinement Act of 1999 (BBRA 99) allowed rural hospitals of less than
100 beds to be held harmless in the conversion to the new outpatient
Prospective Payment System by allowing them to choose to stay
essentially under the old fee-for-service program which provided them
with increased revenue. However, that 100-bed limit seems arbitrary and
will actually result in many slightly larger rural hospitals, that have
even higher per patient costs and lower per patient margins, being
squeezed even harder under BBA 97 rules.
With passage of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000, several additional fixes were
put in place for rural providers. While these were steps in the right
direction, rural hospitals with between 100 and 400 beds are still not
being held harmless in the conversion to the new outpatient Prospective
Payment System. This group of hospitals is still suffering under
provisions of the BBA of 1997.
Rural hospitals, and all hospitals for that matter, operate on very
slim margins yet manage to bring cutting-edge medical care to the
communities they serve. But changes in Medicare payments to hospitals
have put many institutions in a bind.
The bill I am introducing today will extend the BBRA of 99 hold-
harmless provisions to rural hospitals of up to 400 beds that are both
Rural Referral Centers and Sole Community Hospitals. This will bring
outpatient reimbursement rates for these critical health care providers
closer in line to the actual health care costs incurred in rural
America by these valued providers.
Rural communities across New Mexico have felt the negative impact of
the BBA of 97. The Carlsbad Regional Medical Center, Eastern New Mexico
Medical Center, San Juan Regional Medical Center, and Lea Regional
Hospital have
[[Page S1126]]
all been suffering because of the BBA of 97. They tell me that they are
bearing substantially higher expenses per patient due to diseconomies
of scale for the technically intensive speciality care that is required
at these types of facilities. In addition, they face difficulties in
recruiting qualified health professionals, as well as qualified coders
and compliance experts that are required under the new outpatient
Prospective Payment System given Medicare's complexity. This is not a
New Mexico only problem. There are at least sixty-one other rural
hospitals that fall in this same category across the United States that
are also suffering.
While the positive restorative effects of BBRA of 99 and the recently
enacted ``Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000'' were very helpful, they are not enough to
protect rural providers. We must prevent rural hospitals from reducing
services or closing completely. When a rural hospital reduces services,
or worse yet closes, local residents lose access to preventive,
routine, and even emergency services. Doctors and other highly trained
professionals move away. Then people must drive a hundred miles or more
in some cases to get the care city dwellers take for granted. Local
economies suffer when jobs are lost. Existing businesses may have to
move, and new businesses won't locate in places where health care is
unavailable. Hospital closure can be a death-knell for struggling
towns. We must move forward to preserve and strengthen the ability of
our Nation's rural hospitals and other Medicare providers to provide
adequate health care to their patients.
I urge my colleagues to support and pass the Rural Hospital and
Health Network Preservation Act of 2001.
I ask consent that the text of the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 270
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Rural Hospital and Health
Network Preservation Act of 2001''.
SEC. 2. TEMPORARY TREATMENT OF CERTAIN SOLE COMMUNITY
HOSPITALS TO LIMIT DECLINE IN PAYMENT UNDER THE
OPD PPS.
(a) Hold Harmless Provision.--Section 1833(t)(7)(D)(i) of
the Social Security Act (42 U.S.C. 1395l(t)(7)(D)(i)) is
amended by inserting ``(or not more than 400 beds if such
hospital is a sole community hospital (as defined in section
1886(d)(5)(D)(iii)) and is classified as a rural referral
center under section 1886(d)(5)(C))'' after ``100 beds''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect as if included in the amendments made by
section 202(a) of the Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999 (113 Stat. 1501A-342), as
enacted into law by section 1000(a)(6) of Public Law 106-113.
______
By Mr. FEINGOLD:
S. 272. A bill to rescind fiscal year 2001 procurement funds for the
V-22 Osprey aircraft program other than as necessary to maintain the
production base and to require certain reports to Congress concerning
that program; to the Committee on Appropriations and the Committee on
the Budget, concurrently, pursuant to the order of January 30, 1975, as
modified by the order of April 11, 1986, with instructions that the
Budget Committee be authorized to report its views to the
Appropriations Committee, and that the latter alone be authorized to
report the bill.
Mr. FEINGOLD. Mr. President, today I am introducing the Osprey
Safety, Performance, and Reliability Evaluation Act of 2001. This
legislation would delay the procurement of the V-22 Osprey tilt-rotor
aircraft for one year, and would require reports from the Secretary of
the Navy and the Department of Defense's Inspector General regarding
the program.
The Osprey is an experimental tilt-rotor aircraft that takes off and
lands like a helicopter, but flies like an airplane by tilting its
wing-mounted rotors forward to serve as propellers. The premise for the
aircraft is to combine the operational flexibility of a helicopter with
the speed, range, and efficiency of a fixed-wing aircraft.
The Marines, Air Force, and Navy all want to purchase versions of
this aircraft. The MV-22 would be used by the Marines for missions such
as troop and cargo transport and amphibious assault; the CV-22 would be
used by the Air Force for special operations; and the HV-22 would be
used by the Navy for search and rescue missions.
I want to be very clear. This bill does not terminate the V-22
program. It does not affect the Marine Corps' ability to continue the
research, development, testing, and evaluation of this aircraft.
This bill delays the start of full-rate procurement of the MV-22
Osprey, the Marines' version of this aircraft, for one year. It also
delays the procurement of four CV-22s, the Air Force's version of this
aircraft, for one year.
There are serious allegations and serious questions surrounding the
V-22 program. Thirty Marines have died in Osprey crashes since 1991.
Many questions regarding the validity of maintenance records and the
safety and viability of this aircraft remain unanswered.
We cannot, in good conscience, move forward with the full-scale
procurement of the MV-22 until these allegations have been investigated
fully and until these questions have been answered.
We should not move forward with the procurement of this aircraft
until further testing has been done to address potentially serious
design flaws that could continue to endanger the lives of our military
personnel.
We owe it to our men and women in uniform to put their safety first.
They are willing to go into harm's way while serving their country.
That service should not include being put into harm's way by a
potentially unsafe aircraft. We should not move forward with the
procurement of an aircraft that crashed as recently as December. We
should not procure this aircraft until the Department of Defense is
absolutely certain that all major design flaws have been corrected.
The legislation that I am introducing today will delay full-rate
production of the MV-22 for one year. This delay is prudent given the
ongoing controversy that has loomed over this program during the last
weeks and months.
I want to reiterate that this legislation does not require the
Department of Defense to terminate the Osprey program. I appreciate the
importance of this program to the Marine Corps. I agree that they need
to replace the aging CH-46 Sea Knight helicopters that they currently
have. However, I am not sure that the Osprey is the safest and most
cost-effective alternative to the Sea Knight.
I know that the leaders of the Marines and the Air Force have the
greatest concern for the safety of their personnel who are and who will
be assigned to the Osprey program. I share that concern. My bill would
require the Marine Corps to wait one year to move to full-rate
production of the MV-22. Because the airframes for the MV-22 and the
CV-22 are 90 percent similar, it follows that the four CV-22s the Air
Force plans to buy this year may be subject to many of the same design
flaws that have been found in the MV-22. For that reason, my bill would
also require the Air Force to wait one year to procure the four CV-22s,
which would be used to train their pilots.
I realize that an effort is being made to address the design flaws
found during testing of this aircraft resulting in some changes in the
new planes that are scheduled to go into production in fiscal year
2001. However, I remain concerned about the many unanswered questions,
and the potentially costly retrofits that these aircraft would require
as more information about the safety and reliability of the Osprey
continues to come to light. In my view, it would be more prudent and
more cost effective to wait to move to full-rate production until these
questions have been answered.
For those reasons, my bill rescinds most of the fiscal year 2001
procurement funds for the MV-22 and the CV-22, but leaves enough
funding in place to maintain the integrity of the production line.
These rescissions would return to the taxpayers more than $1.2 billion
dollars. This kind of investment should not go forward until we are
sure that the Osprey is safe.
The bill does not affect the $148 million in research and development
funding for this program. During the next year, vigorous research and
testing on the problems that remain should continue once the decision
has been made to resume test flights.
[[Page S1127]]
This program has a troubled history. Thirty Marines have been killed
in Osprey crashes since 1991, twenty-three of them in the past eleven
months alone. The Osprey program has been grounded since the December
crash that killed four Marines. Following that crash, former Secretary
of Defense William Cohen appointed a blue ribbon panel to study the
Osprey program. That panel's report is due to be presented to Secretary
of Defense Rumsfeld in March or April of this year. In addition, two
investigations on the December crash are ongoing.
The safety of our men and women in uniform should be the top priority
every time the Department of Defense develops and procures new
technology, whether it be weapons, ships, or aircraft.
During his tenure as Secretary of Defense, Vice President Cheney
tried to cancel the V-22 program in each of his budget requests from
fiscal year 1990 through 1993 because he believed the program was too
costly. Congress disagreed, and the program continued to receive funds.
When asked about the Osprey program last month, the Vice President
said, ``Given the track record and the loss of life so far, it would
appear to me that there are very serious questions that can and should
be--and I hope will be--raised about the Osprey.''
I agree with Vice President Cheney's statement, and I hope that this
legislation will help to get answers to these serious concerns.
One additional concern about this program is its cost. The Marines,
the Air Force, and the Navy each want to buy a version of this
aircraft, for a total of 458 aircraft at a cost of $38.1 billion, or
about $83 million per Osprey. Some defense observers have argued that
the mission of the Osprey could be performed by less costly
helicopters.
Another concern is the safety of the aircraft. One of the newspapers
in my home state of Wisconsin, the Milwaukee Journal Sentinel, has
called the Osprey a ``lemon with wings.'' Is that a fair description?
There is reason to pause and take a good look at the program and find
out. In addition to the four crashes that have occurred since 1991,
there are also a number of unanswered questions regarding the design
and performance of the aircraft.
The MV-22 underwent operational evaluation, OPEVAL, between October
1999 and August 2000. During OPEVAL, in June 2000, a draft DoD
Inspector General's report cited 23 major operational effectiveness and
suitability requirements that would not be met prior to the scheduled
December 2000 Milestone III decision on whether to enter into full-rate
production of the MV-22 in June 2001. The Marine Corps conceded that
these problems exist, and said they had been aware of these
deficiencies prior to the beginning of the OPEVAL.
In October 2000, the Navy announced that the MV-22 had been judged
operationally effective and suitable for land-based operations. In
November 2000, the MV-22 was also judged operationally effective and
suitable for sea-based operations.
Following the completion of OPEVAL, the Department of Defense's
Director of Operational Testing and Evaluation, Philip Coyle, released
his report on the MV-22. This report, which was issued on November 17,
2000, makes a number of recommendations regarding further testing that
should be conducted on this aircraft, including testing on a number of
requirements for the aircraft that were waived during OPEVAL.
Particularly troubling are the MV-22's Mission Capable, MC, and Full
Mission Capable, FMC, rates at the end of OPEVAL. These ratings
demonstrate the availability of the aircraft--the amount of time that
each MV-22 is able to fly versus the amount of time that each MV-22 is
unavailable due to maintenance needs.
The Mission Capable rating represents the percentage of time that the
test aircraft were able to perform at least one of their assigned
missions. The Marine Corps' objective for the MC rate is between 82 and
87 percent. At the end of OPEVAL, the MC rate for the MV-22 was 49
percent. That means, Mr. President, that the MV-22 test fleet was
capable of performing at least one of its missions only 49 percent of
the time during OPEVAL. From 1995-1999, the entire CH-46 fleet Sea
Knight fleet, which the Osprey is supposed to replace, was rated
Mission Capable 79 percent of the time.
The Full Mission Capable rate, FMC, is defined as the percentage of
time that the aircraft could perform all of its assigned missions. The
Marine Corps' objective for FMC is 75 percent. At the end of OPEVAL,
the MV-22 had a FMC rate of only 20 percent. From 1995-1999, the CH-46
fleet had a FMC rate of 74 percent.
I want to say this again--at the end of OPEVAL, the MV-22 test fleet
was capable of performing all of its assigned missions only 20 percent
of the time. The Coyle report says that part of this low rating can be
attributed to problems with the blade fold wing stow, BFWS, system, and
that measures to address this problem will be incorporated into all new
MV-22s.
While both the MC and the FMC both improved over the course of
OPEVAL, both rates are still well below the Marines' own requirements.
By delaying the full rate production of the MV-22 for one year, the
Marines will have the opportunity to further improve these crucial
rates, including testing the modifications to the BFWS system, and
potentially save countless maintenance hours and costs over the life of
this program.
In addition to the problems outlined in the Coyle report, a General
Accounting Office report released last month titled ``Major Management
Challenges and Program Risks: Department of Defense'' also expresses
concern about the Osprey program. The report states that ``the DoD . .
. begins production on many major and nonmajor weapons without first
ensuring that the systems will meet critical performance
requirements.'' The report cites a number of examples, including the
Osprey. GAO reports that ``the Navy was moving toward a full-rate
production decision on the MV-22 Osprey aircraft without having an
appropriate level of confidence that the program would meet design
parameters as well as cost and schedule objectives.''
This finding is just another of the many reasons why the full-rate
procurement of the MV-22 and the procurement of four CV-22s should be
delayed. I share GAO's concern about the frequency with which DoD moves
into full-rate production of systems that may not have been adequately
tested. This rush to production often raises safety concerns and costs
the taxpayers large sums for costly retrofits to address problems that
were often evident--but not fixed--before full-rate production began.
And even if the Osprey is proven to be safe, questions still remain
about its cost.
I am also deeply troubled by the allegations that the Commander of
the Marine Tilt-Rotor Training Squadron 204 may have ordered his team
to falsify maintenance records for the MV-22. An anonymous DoD whistle
blower released a letter and documentation, including an audio tape on
which it is reported that the Commander is heard telling his squadron
to ``lie'' about maintenance reports on the MV-22 until the Milestone
III decision to move into full-rate production of the aircraft had been
made. This decision was scheduled to be made in December 2000, but has
been postponed indefinitely. The Commander has been relieved of his
command pending a full investigation by the DoD Inspector General's
office.
There have been reports that high-ranking Marine Corps officers may
have known about the low MC and FMC rates for the MV-22 in November
2000, and that one of them may have released inaccurate information to
the press regarding the Mission Capable rates of the MV-22.
An electronic mail message from one of these officers to a superior
officer dated November 11, 2000, states that the information regarding
the MV-22 MC and FMC rates for November contained in the message should
be ``close held'' and that the MC and FMC rates for Squadron 204 were
26.7 percent and 7.9 percent, respectively. The message also said that
the sender ``had hoped to be able to use some recent numbers next month
when [his superior] meet[s] with Dr. Buchanan for his Milestone III/FRP
decision in December . . . this isn't going to help.''
Later that month, on November 30, 2000, the officer who reportedly
sent that electronic mail message participated in a DoD press briefing
at which
[[Page S1128]]
the Osprey was discussed in some detail. During this press briefing,
the officer said the following regarding the Mission Capable rates of
the MV-22s being tested by Squadron 204: ``. . . as I was walking down
here [to the briefing], I pulled the first 13 days of November,
mission-capable rate on those airplanes, and the average is 73.2
percent for the first 13 days in November of those nine airplanes. So
when we start talking about the airplane, even since OPEVAL, improving
and getting better, the answer is it is absolutely a resounding yes.''
This information is contrary to the electronic mail message that the
officer in question reportedly sent to a superior officer only nine
days before, which stated that the MC rate for the MV-22s being tested
by Squadron 204 for November 2000 was only 26.7 percent. That is a
difference of 46.5 percent. News reports last week said that the
officer admitted sending the message and attributes the discrepancy in
the MC rate figures to a new software system.
I understand that these very serious allegations are still being
investigated, and I agree that all of those involved deserve a fair and
impartial investigation. We should not rush to judgement about the
alleged conduct of any of these personnel, all of whom who have
dedicated their lives to serving and protecting this country. However,
we must remain cognizant of the fact that the outcome of this
investigation could have an enormous impact on the Osprey program.
This still unfolding situation is another reason why the full rate
procurement of the MV-22 should be delayed. Until these disturbing
allegations have been fully investigated to determine whether records
were falsified in order to make the Osprey appear safe and reliable,
the Department of Defense should not move ahead with this program.
Because of the safety concerns outlined above, Mr. President, my bill
requires the Secretary of the Navy to submit a report to the Congress
on the V-22 program that includes: a description of the planned uses
for the fiscal year 2001 research and development funding for the
Osprey program; a description of the actions taken as a result of the
Coyle report; and a description of the manner in which the Navy and the
Marine Corps have responded to the allegations of the falsification of
maintenance records at Squadron 204. The bill also requires the DoD
Inspector General to report to the Congress on the results of its
investigation into the alleged falsification of maintenance records at
Squadron 204. It would require that these reports be submitted three
months after the enactment of this legislation or on the date of the
Milestone III decision regarding full-rate production of the MV-22
Osprey, whichever is earlier.
The safety of our men and women in uniform should be the principle
that guides this important decision. We should not begin to procure the
MV-22 in mass quantities until we know for certain that this aircraft
is safe, that its maintenance records are accurate, and that the design
flaws described in the Coyle report have been adequately addressed.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 272
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Osprey Safety, Performance,
and Reliability Evaluation Act of 2001''.
SEC. 2. RESCISSIONS.
(a) In General.--Of the funds made available in the
Department of Defense Appropriations Act, 2001 (Public Law
106-259), the following amounts are rescinded from the
following accounts:
(1) ``Aircraft Procurement, Navy'', $856,618,000, of which
$776,760,000 shall be derived from ``V-22 (Medium Lift)'' and
$79,858,000 shall be derived from ``V-22 (Medium Lift) (AP-
CY)''.
(2) ``Aircraft Procurement, Air Force'', $358,440,000, of
which $335,766,000 shall be derived from ``V-22 Osprey'' and
$22,674,000 shall be derived from ``V-22 Osprey (AP-CY)''.
(b) Limitation on Use of Remaining Funds.--Following the
rescission made by subsection (a)(1), the balance of the
funds remaining available for obligation in the account
involved for ``V-22 (Medium Lift)'' may be used only to carry
out activities necessary to maintain the production base for
such aircraft program.
SEC. 3. REPORTS TO CONGRESS.
(a) Secretary of the Navy Report.--The Secretary of the
Navy shall submit to Congress a report on the V-22 Osprey
aircraft program. The report shall include the following:
(1) A description of the activities carried out, and
programmed to be carried out, using funds appropriated for
that program for research, development, test, and evaluation
for fiscal year 2001.
(2) A description of the actions taken by the Secretary as
a result of the report on that program issued by the Director
of Operational Test and Evaluation of the Department of
Defense dated November 17, 2000.
(3) A description of the manner in which the Marine Corps
and the Department of the Navy have responded to the reports
of data falsification concerning the Osprey aircraft by
Marine Corps personnel assigned to Marine Medium Tilt-Rotor
Training Squadron 204.
(b) Inspector General Report.--The Inspector General of the
Department of Defense shall submit to Congress a report on
the results, as of the submission of the report, of the
investigation of the Inspector General into the V-22 Osprey
aircraft program.
(c) Time for Submission of Reports.--The reports under
subsections (a) and (b) shall each be submitted not later
than the earlier of the following:
(1) The date that is three months after the date of the
enactment of this Act.
(2) The date of the Milestone III decision for the V-22
Osprey aircraft program approving the entry of that program
into full-rate production.
______
By Mr. TORRICELLI (for himself and Mr. Corzine):
S. 273 A bill to amend title 28, United States Code, to divide New
Jersey into 2 judicial districts; to the Committee on the Judiciary.
Mr. TORRICELLI. Mr. President, I rise today to introduce, on behalf
of myself and my distinguished colleague, Senator Corzine, a bill that
will help bring more criminals to justice and create a better federal
judicial system in New Jersey. This legislation will divide the federal
District of New Jersey into the Southern and Northern Districts of New
Jersey thus enabling federal courts and federal law enforcement to
better serve the State's approximately eight million residents.
Currently, the District of New Jersey has 17 judges. This bill does
not increase the number of judges, but divides them between the
Southern and Northern Districts giving the South 7 judges and the North
10. The bill will also result in the creation of several new federal
positions for the Southern District including a Clerk of the Court,
U.S. Attorney, U.S. Marshal, and a Federal Public Defender.
The creation of two districts in New Jersey is called for by the
additional crime-fighting resources a split will bring to the State and
by the sheer size of the State. The current District of New Jersey is
the third most populous federal judicial district in the nation. Of the
25 states that have a single federal judicial district, New Jersey has
the largest population. More than a dozen states with smaller
populations have multiple judicial districts. In fact, with more than 2
million residents in the southern counties, the population of the
proposed Southern District of New Jersey would exceed that of almost
half of the current judicial districts. The proposed Northern District
would rank even higher.
And while the bill would not create any new judgeships, it would mean
that, for the first time, the judges of the Southern District would
necessarily come from and be part of the unique community they serve.
This can only lead to enhanced sensitivity to the community's needs.
The bill will also take a significant step towards addressing the
disparity in crime-fighting resources allocated to northern and
southern New Jersey. In 1998, southern New Jersey accounted for 25
percent of the state's urban murders, 32 percent of the state's murder
arrests and 33 percent of the state's arrests for violent crimes.
Despite these statistics, only 10 percent of the FBI agents, 15 percent
of U.S. Marshals and 18 percent of DEA agents in New Jersey are
assigned to the southern counties.
The bill will also ensure that crime-fighting decisions are made
locally instead of by officials who are based elsewhere in the state.
This too would result in a government more sensitive and responsive to
the people it serves.
Given these facts, it is not surprising that the bill has received a
ringing endorsement from many in New Jersey's
[[Page S1129]]
legal and law enforcement community. In the last Congress, the House
version of this bill was cosponsored by the entire southern New Jersey
Congressional delegation. I hope to have their support again. It is
also supported by the New Jersey State Bar Association, all of the
southern county bar associations, the South Jersey Police Chief's
Association, the Chamber of Commerce of Southern New Jersey, and
various former county prosecutors and former federal law enforcement
officials.
While the process of reviewing and deliberating the merits of this
legislation will be lengthy and time consuming, this is a change that
is long overdue. The citizens of New Jersey deserve a better federal
judicial system and their fair share of federal crime-fighting
resources. I look forward to working with my colleagues to secure
passage of this legislation.
I ask unanimous consent that a copy of the legislation be printed in
the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 273
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. FINDINGS.
The Congress finds the following:
(1) In 1978, the Judicial Conference of the United States
established a procedure for creating new Federal judicial
districts, which is still in force. According to the
``Proceedings of the Judicial Conference, September 21-22,
1978'', this procedure requires that 4 principal criteria be
taken into consideration in evaluating the establishment of a
new Federal judicial district: caseload, judicial
administration, geography, and community convenience.
(2) The criterion of ``caseload'' is found to include the
total number of Federal court cases and the number of cases
per Federal judge, for both criminal and civil Federal cases.
(3)(A) The 13 southern counties of New Jersey, consisting
of Atlantic, Burlington, Camden, Cape May, Cumberland,
Gloucester, Hunterdon, Mercer, Monmouth, Ocean, Salem,
Somerset, and Warren Counties, have a substantial criminal
caseload which requires the creation of a separate judicial
district.
(B) 463 Federal criminal cases originated in the 13
southern New Jersey counties in fiscal year 1999 and were
handled principally by the 5 judges of the Camden vicinage
and the 3 judges of the Trenton vicinage.
(C) In fiscal year 1999, the criminal cases originating in
the 13 southern New Jersey counties exceeded that of 57 of
the current 93 Federal judicial districts other than the
District of New Jersey. Only 36 of the other current Federal
judicial districts had more criminal cases than the southern
region of New Jersey.
(D) For example, in the District of Massachusetts (19
judges), 434 criminal cases were filed in fiscal year 1999.
In the District of Connecticut (14 judges), only 250 criminal
cases were filed in fiscal year 1999.
(4)(A) The substantial civil caseload concentrated in the
southern counties of New Jersey requires the creation of a
separate judicial district.
(B) Approximately 2,983 Federal civil cases originated in
the 13 southern New Jersey counties in fiscal year 1999 and
were handled principally by the 5 judges of the Camden
vicinage and the 3 judges of the Trenton vicinage.
(C) In the fiscal year 1999, the civil cases originating in
the 13 southern New Jersey counties exceeded that of 68 of
the current Federal judicial districts other than the
District of New Jersey. Only 25 of the other Federal judicial
districts had more civil cases than the southern region of
New Jersey.
(D) For example, in the Southern District of West Virginia,
a separate judicial district with 8 judges, only 1,203 civil
cases were commenced in fiscal year 1999. The Western
District of Tennessee, with 6 judges, had only 1,512 civil
cases commenced in fiscal year 1999.
(5) The criterion of ``judicial administration'' is found
to include the backlog of pending cases in a Federal judicial
district, which hinders the effective resolution of pending
business before the court.
(6)(A) The size of the backlog of pending cases
concentrated in the 13 southern counties of New Jersey
requires the creation of a separate judicial district.
(B) In fiscal year 1999, the pending criminal cases
attributed to the 13 southern New Jersey counties exceeded
that of 62 of the current 93 Federal judicial districts other
than the District of New Jersey. Only 31 of the other current
Federal judicial districts had more pending criminal cases
than the southern region of New Jersey.
(C) In fiscal year 1999, the pending civil cases attributed
to the 13 southern New Jersey counties exceeded that of 66 of
the current 93 Federal judicial districts other than the
District of New Jersey. Only 27 of the other current Federal
judicial districts had more pending civil cases than the
southern region of New Jersey.
(D) The number of pending cases in the Camden vicinage of
New Jersey exceeds the number of cases pending before entire
judicial districts with similar numbers of judges, clearly
indicating that southern New Jersey merits a separate Federal
judicial district. For example, as of October 1, 1999, there
were 1,431 civil cases pending before the Camden vicinage,
and only 113 of those were commenced in fiscal year 1999. The
Western District of Tennessee, with 6 judges, had only 1,079
civil cases pending in fiscal year 1999. The Western District
of Oklahoma had only 1,356 civil cases pending in fiscal year
1999 before 9 judges. Finally, there are 161 criminal cases
pending before the Camden vicinage, while the entire Southern
District of Indiana, with 7 judges, had only 117 criminal
cases pending in fiscal year 1999.
(7) The criterion of ``geography'' is found to mean the
accessibility of the central administration of the Federal
judicial district to officers of the court, parties with
business before the court, and other citizens living within
the Federal judicial district.
(8)(A) The distance between the northern and southern
regions of New Jersey and the density of New Jersey's
population create a substantial barrier to the efficient
administration of justice.
(B) The distance from Newark, New Jersey to Camden, New
Jersey is more than 85 miles.
(C) When a new Federal court district was created in
Louisiana in 1971, the distance between New Orleans and Baton
Rouge (nearly 80 miles) was cited as a major factor in
creating a new district court, as travel difficulties were
impeding the timely administration of justice.
(9) The criterion of ``community convenience'' is found to
mean the extent to which creating a new Federal judicial
district will allow the court to better serve the population
and diverse communities of the area.
(10)(A) New Jersey's culturally and regionally diverse
population of over 8,000,000 citizens, widely distributed
across a densely populated State, is inconvenienced by having
only 1 judicial district.
(B) The District of New Jersey is the third most populous
Federal judicial district in the United States.
(C) The population of the 13 southern New Jersey counties
exceeds the population of 67 of the current 93 Federal
judicial districts other than the District of New Jersey. The
population of the 8 northern New Jersey counties (consisting
of Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Sussex,
and Union) exceeds the population of 73 of the current 93
Federal judicial districts other than the District of New
Jersey.
(D) Of the 25 States that have only a single Federal
judicial district (including Puerto Rico, the United States
territories, and the District of Columbia), New Jersey has
the highest population.
(E) More than a dozen States have smaller populations than
New Jersey, yet they have multiple Federal judicial
districts, including Washington, Oklahoma, Iowa, Georgia,
West Virginia, and Missouri.
(11) In evaluating the creation of a new Southern District
of New Jersey, the Judicial Conference should seek the views
of the chief judge of the affected district, the judicial
council for the affected circuit court, and the affected
United States Attorney as representative of the views of the
Department of Justice, as required in the procedure
established by the ``Proceedings of the Judicial Conference,
September 21-22, 1978''.
SEC. 2. ESTABLISHMENT OF 2 DISTRICTS IN NEW JERSEY.
(a) Creation.--Section 110 of title 28, United States Code,
is amended to read as follows:
``Sec. 110. New Jersey
``New Jersey is divided into 2 judicial districts to be
known as the Northern and Southern Districts of New Jersey.
``Northern District
``(a) The Northern District comprises the counties of
Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Sussex,
and Union.
``Court for the Northern District shall be held at Newark.
``Southern District
``(b) The Southern District comprises the counties of
Atlantic, Burlington, Camden, Cape May, Cumberland,
Gloucester, Hunterdon, Mercer, Monmouth, Ocean, Salem,
Somerset, and Warren.
``Court for the Southern District shall be held at Camden and
Trenton.''.
(b) Judgeships.--The item relating to New Jersey in the
table set forth in section 133(a) of title 28, United States
Code, is amended to read as follows:
``New Jersey:
``Northern........................................................10
``Southern.......................................................7''.
(c) Bankruptcy Judgeships.--The item relating to New Jersey
in the table set forth in section 152(a)(1) of title 28,
United States Code, is amended to read as follows:
``New Jersey:
``Northern.........................................................4
``Southern.......................................................4''.
SEC. 3. DISTRICT JUDGES, BANKRUPTCY JUDGES, MAGISTRATE
JUDGES, UNITED STATES ATTORNEY, UNITED STATES
MARSHAL, AND FEDERAL PUBLIC DEFENDER.
(a) Transfer of District Judges.--(1) Any district judge of
the District Court of New Jersey who is holding office on the
day before the effective date of this Act and whose official
duty station is in Bergen, Essex, Hudson, Middlesex, Morris,
Passaic, Sussex,
[[Page S1130]]
or Union County shall, on or after such effective date, be a
district judge for the Northern District of New Jersey. Any
district judge of the District Court of New Jersey who is
holding office on the day before the effective date of this
Act and whose official duty station is in Atlantic,
Burlington, Camden, Cape May, Cumberland, Gloucester,
Hunterdon, Mercer, Monmouth, Ocean, Salem, Somerset, or
Warren County shall, on and after such effective date, be a
district judge of the Southern District of New Jersey.
(2) Whenever a vacancy occurs in a judgeship in either
judicial district of New Jersey, the vacancy shall first be
offered to those judges appointed before the enactment of
this Act and in active service in the other judicial district
of New Jersey at the time of the vacancy, and of those judges
wishing to fill the vacancy, the judge most senior in service
shall fill that vacancy. In such a case, the President shall
appoint a judge to fill the vacancy resulting in the district
of New Jersey from which such judge left office.
(b) Transfer of Bankruptcy and Magistrate Judges.--Any
bankruptcy judge or magistrate judge of the District Court of
New Jersey who is holding office on the day before the
effective date of this Act and whose official duty station is
in Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Sussex,
or Union County shall, on or after such effective date, be a
bankruptcy judge or magistrate judge, as the case may be, for
the Northern District of New Jersey. Any bankruptcy judge or
magistrate judge of the District Court of New Jersey who is
holding office on the day before the effective date of this
Act and whose official duty station is in Atlantic,
Burlington, Camden, Cape May, Cumberland, Gloucester,
Hunterdon, Mercer, Monmouth, Ocean, Salem, Somerset, or
Warren County shall, on and after such effective date, be a
bankruptcy judge or magistrate judge, as the case may be, of
the Southern District of New Jersey.
(c) United States Attorney, United States Marshal, and
Federal Public Defender.--
(1) Those in office.--This Act and the amendments made by
this Act shall not affect the tenure of office of the United
States attorney, the United States marshal, and the Federal
Public Defender, for the District of New Jersey who are in
office on the effective date of this Act, except that such
individuals shall be the United States attorney, the United
States marshal, and the Federal Public Defender,
respectively, for the Northern District of New Jersey as of
such effective date.
(2) Appointments.--The President shall appoint, by and with
the advice and consent of the Senate, a United States
attorney and a United States marshal for the Southern
District of New Jersey. The Court of Appeals for the Third
Circuit shall appoint a Federal Public Defender for the
Southern District of New Jersey.
(d) Pending Cases Not Affected.--This Act and the
amendments made by this Act shall not affect any action
commenced before the effective date of this Act and pending
in the United States District Court for the District of New
Jersey on such date.
(e) Juries Not Affected.--This Act and the amendments made
by this Act shall not affect the composition, or preclude the
service, of any grand or petit jury summoned, empaneled, or
actually serving in the Judicial District of New Jersey on
the effective date of this Act.
SEC. 4. EFFECTIVE DATE.
(a) In General.--This Act and the amendments made by this
Act shall take effect 180 days after the date of the
enactment of this Act.
(b) Appointments.--Notwithstanding subsection (a), the
President and the Court of Appeals for the Third Circuit may
make the appointments under section 3(c)(2) at any time after
the date of the enactment of this Act.
______
By Mr. BAUCUS:
S. 274. A bill to establish a Congressional Trade Office; to the
Committee on Finance.
Mr. BAUCUS. Mr. President, I am introducing a bill today to create a
Congressional Trade Office. It is similar to the bill I offered in the
last session of Congress. This legislation is designed to assist the
Congress in fulfilling our Constitutional responsibility for trade
policy by creating an entity that can provide us with the expertise we
need to get independent, non-partisan, and neutral analysis and
information about trade.
Over the past three decades, the role of trade in our economy has
grown enormously. In 1970, trade was equal to only eleven percent of
our Gross Domestic Product. In contrast, today exports and imports are
equivalent to 27 percent of our economy.
I have been in Congress for 26 years. During that time, I have
watched a continuing transfer of authority and responsibility for trade
policy from the Congress to the Executive Branch. The trend has been
subtle, but it has been clear and constant. We need to reverse this
trend.
Article I, Section 8, of the U.S. Constitution says: ``The Congress
shall have power . . . To regulate commerce with foreign nations.'' It
is our responsibility to set the direction for the Executive Branch in
its Formulation of trade policy. It is our responsibility to ensure
that agreements with our trading partners are followed and that there
is full compliance. It is our responsibility to provide more effective
and active oversight of our nation's trade policy. I believe strongly
that we must re-assert Congress' constitutionally defined
responsibility for international commerce.
The Congressional Trade Office I am proposing will provide the entire
Congress, through the Senate Finance Committee and the House Ways and
Means Committee, with the additional trade expertise that will allow us
to meet these responsibilities.
The trade issues that the Congress may face this session are many and
complex: Fast track; incorporating legitimate labor and environmental
issues into trade policy; the U.S./Jordan Free Trade Agreement; the
U.S./Vietnam Bilateral Trade Agreement; Free Trade Area for the
Americas; possible free trade agreements with Singapore, Chile, and
others; Chinese accession to WTO and then compliance with its WTO
commitments; and a new comprehensive multilateral trade round.
Congress needs to be much better prepared to deal with these issues
responsibly and authoritatively. That means we need access to more and
better information, independently arrived at, from people whose
commitment is to the Congress, and only to the Congress.
The Congressional Trade Office would help us meet these
responsibilities through its four core functions.
First, it will monitor compliance with major bilateral, regional, and
multilateral trade agreements. Congress needs the independent ability
to look more closely at agreements with other countries. The
Congressional Trade Office will analyze the performance under key
agreements and evaluate success based on commercial results. It will do
this in close consultation with the affected industries. The
Congressional Trade Office will recommend to the Congress actions
necessary to ensure that commitments made to the United States are
fully implemented. It will also provide annual assessments of the
extent to which agreements comply with labor and environmental goals.
The General Accounting Office has reported on the deficiencies in the
Executive Branch in following trade agreements and monitoring
compliance. Often more energy goes into negotiating new agreements than
into ensuring that existing agreements work. The Administration has
increased the resources it devotes to compliance, and I supported that.
But an independent and neutral assessment in the Congress of compliance
is necessary. It is unrealistic to expect an agency that negotiated an
agreement to provide a totally objective and dispassionate assessment
of that agreement's success or failure. Human nature, and institutional
nature, does not lead to such an outcome.
Second, observing trade negotiations first hand is critical to the
ability of Congress to provide meaningful oversight of trade policy.
Congressional Trade Office staff will participate in selected
negotiations as observers and report back to the Committees.
Third, the Congressional Trade Office will be active in dispute
settlement deliberations. It will evaluate each WTO decision where the
U.S. is a participant. In the case of a U.S. loss, it will explain why
it lost. In the case of a U.S. win, it will measure the commercial
results from that decision. Congressional Trade Office staff should
participate as observers on the U.S. delegation at appropriate dispute
settlement panel meetings at the WTO.
I don't think we even know whether the WTO dispute settlement process
has been successful or not from the perspective of U.S. commercial
interests. A count of wins versus losses tells us nothing. The
Congressional Trade Office will give us the facts we need to evaluate
this process properly.
Fourth, the Congressional Trade Office will have an analytic
function. For example, after the Administration delivers its annual
National Trade Estimates report, the NTE, to Congress, it will analyze
the major outstanding trade barriers based on the cost to the
[[Page S1131]]
U.S. economy. It will also provide an analysis of the Administration's
Trade Policy Agenda.
The Congressional Trade Office will analyze proposed trade
agreements. It will examine the impact of Administration trade policy
actions. And it will analyze the trade accounts every quarter,
including the global current account, the global trade account, and key
bilateral trade accounts.
The Congressional Trade Office is designed to service the Congress.
Its Director will report to the Senate Finance Committee and the House
Ways and Means Committee. It will also advise other committees on both
the impact of trade negotiations and the impact of the Administration's
trade policy on those committees' areas of jurisdiction. Trade rules
increasingly affect domestic regulations. Expertise on the implications
of trade policy on domestic regulatory issues will be vitally
necessary. The Congressional Trade Office can provide that assistance.
The staff of the Congressional Trade Office will consist of
professionals who have a mix of expertise in economics and trade law,
plus in various industries and geographic regions. My expectation is
that staff members will see this as a career position, thus, providing
the Congress with long-term institutional memory.
I encourage my colleagues to support this innovative proposal.
______
By Mr. KYL (for himself, Mr. Breaux, Mr. Gramm, Mrs. Lincoln, and
Mr. Bayh):
S. 275. A bill to amend the Internal Revenue Code of 1986 to repeal
the Federal estate and gift taxes and the tax on generation-skipping
transfers, to preserve a step up in basis of certain property acquired
from a decedent, and for other purposes; to the Committee on Finance.
Mr. KYL. Mr. President, today, Senators Breaux, Gramm, Lincoln, and
Bayh and I are introducing the Estate Tax Elimination Act, a bill to
replace the federal estate tax with a tax on capital gains earned from
inherited assets due when those assets are sold.
This is the approach that won the support of bipartisan majorities in
both houses of Congress last year. Instead of levying an estate tax at
death, Congress agreed that a tax should be imposed when income is
actually realized from inherited property--that is, when it is sold.
The bipartisan consensus that already exists in support of this plan
means that Congress and President Bush--who, unlike his predecessor,
supports repeal of the death tax--can come together and quickly dispose
of the issue this year.
Mr. President, the beauty of this approach is that it removes death
as the trigger for any tax. Whether an asset is sold by the decedent
during his or her lifetime, or by someone who later inherits the
property, the gain is taxed the same. Death neither confers a benefit,
nor results in a punitive, confiscatory tax. Senators on both sides of
the aisle accepted this arrangement last year, and should support it
again this year.
Mr. President, we know that many Americans are troubled by the estate
tax's complexity and high rates, and by the mere fact that it is
triggered by a person's death rather than the realization of income.
For a long time, I have advocated repeal, because I believe death
should not be a taxable event.
Others agree that the tax is problematic, but are concerned that the
unrealized appreciation in certain assets might escape taxation forever
if the death tax were repealed while the step-up in basis allowed by
under current law remained in effect. That is a legitimate concern.
We address this by recommending the elimination of both the death tax
and the step-up in basis, and attributing a carryover basis to
inherited property so that all gains are taxed at the time the property
is sold and income is realized.
The concept of a carryover basis is not new. It exists in current law
with respect to gifts, property transferred in cases of divorce, and in
connection with involuntary conversions of property relating to theft,
destruction, seizure, requisition, or condemnation.
In the latter case, when an owner receives compensation for
involuntarily converted property, a taxable gain normally results to
the extent that the value of the compensation exceeds the basis of the
converted property. However, Section 1033 of the Internal Revenue Code
allows the taxpayer to defer the recognition of the gain until the
property is sold. The concept recommended in this amendment would treat
the transfer of property at death--perhaps the most involuntary
conversion of all--the same way, deferring recognition of any gain
until the inherited property is sold.
Small estates, which currently pay no estate tax by virtue of the
unified credit, and no capital-gains tax by virtue of the step up,
would be unaffected by the basis changes being proposed here. The
estate tax would be eliminated for them, and a limited step-up in basis
would be preserved. Each person could still step up the basis in his or
her assets by up to $2.8 million. Beyond that, a carryover basis would
apply.
I want to stress to colleagues, particularly colleagues on the
Democratic side of the aisle, that this measure would not allow
unrealized appreciation in inherited assets--beyond the limited step-up
amount--to go untaxed, as other death-tax repeal proposals would do. We
are merely saying that if a tax is imposed, it should be imposed when
income is realized.
Mr. President, some people may ask whether the American people want
this kind of tax relief. I will answer that question. Although most
Americans will probably never pay a death tax, most still sense that
there is something terribly wrong with a system that allows Washington
to seize more than half of whatever is left after someone dies--a
system that prevents hard-working Americans from passing the bulk of
their nest eggs to their children or grandchildren.
Fairness, Mr. President. That is what the effort to repeal the death
tax is all about. A June 22-25, 2000 Gallup poll found that 60 percent
of the people support repeal, even though about three-quarters of those
supporters do not think they will ever have to pay a death tax
themselves.
A poll conducted by Zogby International on July 6, 2000, found that,
given a choice between a candidate who believes that a large estate
left to heirs should be taxed at a rate of 50 percent for anything over
$2 million, and a candidate who believes that the estate tax is unfair
to heirs and should be eliminated, 75 percent of the people prefer the
person supporting death-tax repeal.
Other polls similarly put support for repeal at between 70 and 80
percent.
Voters in two states approved referenda last November to repeal their
state death tax: South Dakota by a vote of 79 to 21 percent, and
Montana by a vote of 68 to 32 percent. Many other states have already
done the same.
Mr. President, the significant majorities in the House and Senate
that voted for repeal last year means that we have finally found a
formula for taxing inherited assets in a fair and commonsense way.
Appreciated value will be taxed, but only when income is actually
realized--that is, when the assets are sold. And then, the gains would
be treated by the Tax Code no better, and no worse, than the gains from
the sale of any other kind of asset.
I invite our Senate colleagues to join in support of this bipartisan
initiative again this year.
______
By Mr. SHELBY (for himself, Mr. Bond, Mr. Thomas, Mr. Hagel, Mr.
Sessions, Mr. Helms, Mr. Inhofe, Mr. Burns, Mr. Kyl, Mr.
Cochran, Ms. Snowe, and Mr. Allard):
S. 276. A bill to amend chapter 8 of title 5, United States Code, to
provide for congressional review of any rule promulgated by the
Internal Revenue Service that increases Federal revenue, and for other
purposes; to the Committee on Governmental Affairs.
Mr. SHELBY. Mr. President, I rise today with my colleague Senator
Bond, to introduce the Stealth Tax Prevention Act. Perhaps the most
important power given to Congress by the Constitution of the United
States, is the responsibility of taxation. The Founding Fathers
rationale behind bestowing this power on Congress is that as elected
representatives, Congress remains accountable to the people when they
levy and collect taxes. Members of Congress, unlike Federal agency
bureaucrats, are rightly held responsible to the public for producing
fair and prudent tax legislation.
[[Page S1132]]
In 1996, Mr. President, Congress passed the Congressional Review Act,
which provides that when a major agency rule takes effect, Congress has
60 days to review it. During this time period, Congress has the option
to pass a disapproval resolution. If no such resolution is passed, the
rule then goes into effect.
As you know, Mr. President, the Internal Revenue Service maintains an
enormous amount of power over the lives and the livelihoods of the
American taxpayers through their authority to implement and enforce the
Tax Code. Even though Congress, and only Congress, has the authority to
tax, the Internal Revenue Service has found a ``backdoor'' way to
increase our federal tax burden through their interpretive authority.
The Stealth Tax Prevention Act, that Senator Bond and I are introducing
along with Mr. Thomas, Mr. Hagel, Mr. Kyl, Mr. Burns, Mr. Helms, Mr.
Inhofe, Mr. Sessions, Mr. Cochran, Ms. Snowe, and Mr. Allard, will
return the authority of taxation to the United States Congress by
expanding the definition of a major rule to include any IRS regulation
which increases Federal revenue.
For example, if the Office of Management and Budget finds that the
implementation and enforcement of a rule would result in an increase of
Federal revenues over current practices or revenues anticipated from
the rule on the date of the enactment of the statute, the Stealth Tax
Prevention Act would allow Congress to review the regulations and take
appropriate measures to avoid raising taxes on hard working Americans
and small businesses.
The discretionary authority of the Internal Revenue Service exposes
small businesses, farmers, and individual taxpayers to the sometimes
arbitrary actions of bureaucrats, creating an uncertain and, in many
instances, a hostile environment in which to conduct day-to-day
activities. The Stealth Tax Prevention Act will be particularly helpful
in lowering the tax burden on small business which suffers
disproportionately, Mr. President, from IRS regulations. This tax
burden discourages the startup of new firms and ultimately the creation
of new jobs in the economy, which has really made America great.
Average American families and small businesses are saddled with the
highest tax burden in our country's history. Americans pay federal
income taxes, they pay state income taxes and they pay property taxes.
On the way to work in the morning they pay a gasoline tax when they
fill up their car and a sales tax when they buy a cup of coffee.
Allowing federal bureaucrats to increase taxes even further at their
own discretion through interpretation of the tax code is intolerable.
The Stealth Tax Prevention Act will leave tax policy where it belongs--
to elected members of Congress--not an unelected and unaccountable IRS.
Mr. BURNS. Mr. President, I rise today with my colleague from Alabama
to introduce the Stealth Tax Prevention Act. I sponsored this bill in
the 105th and again in the 106th Congress. I felt strongly enough about
this bill to sponsor it again this year.
One of the most common concerns I hear from my constituents is
regarding the Federal Government's authority to levy and collect taxes.
This is an important role that we in Congress do not take lightly as we
are accountable to the voters who pay those taxes.
Three years ago, Congress passed the Congressional Review Act, which
provides that when a major agency rule takes effect, Congress has 60
days to review it. During this time period, Congress has the option to
pass a disapproval resolution. If no such resolution is passed, the
rule then goes into effect.
The Stealth Tax Prevention Act will expand the definition of a major
rule to include any IRS regulation which increases taxes. It is not the
role of the IRS to make decisions that will result in increased taxes.
For example, if the Office of Management and Budget finds that the
implementation and enforcement of a rule would result in an increase of
Federal revenues over current practices or revenues anticipated from
the rule on the date of the enactment of the statute, the Stealth Tax
Prevention Act would allow Congress to review the regulations and take
appropriate measures to avoid raising taxes on hard working Americans,
in most cases, small businesses.
Bureaucrats are not directly accountable to taxpayers--I am.
Under the bill introduced today, an IRS implemented stealth tax could
not go into effect for at least 60 days following its publication in
the Federal. Register. This window would allow Congress the opportunity
to review the rule and vote on a resolution to disapprove the tax
increase before it is applied to a single taxpayer.
I urge my colleagues to join us in supporting this important
legislation to ensure that the IRS neither usurps the proper role of
Congress--nor skirts its obligations to identify the impact of its
proposed and final rules. When the Department of the Treasury issues a
final IRS rule that increases taxes, Congress should have the ability
to exercise its discretion to enact a resolution of disapproval before
the rule is applicable to a single taxpayer.
The Stealth Tax Prevention Act will leave tax policy where it
belongs, to elected Members of the Congress, not unelected and
unaccountable IRS bureaucrats.
Thank you, Mr. President, I yield the floor.
______
By Mr. KENNEDY (for himself, Mr. Akaka, Mr. Bingaman, Mrs. Boxer,
Mrs. Clinton, Mr. Corzine, Mr. Daschle, Mr. Dodd, Mr. Durbin,
Mr. Feingold, Mrs. Feinstein, Mr. harkin, Mr. Kerry, Ms.
Landrieu, Mr. Lieberman, Mr. Leahy, Mr. Levin, Ms. Mikulski,
Mrs. Murray, Mr. Reed, Mr. Rockefeller, Mr. Sarbanes, Mr.
Schumer, Mr. Wellstone, and Mr. Wyden):
S. 277. A bill to amend the Fair Labor Standards Act of 1938 to
provide for an increase in the Federal minimum wage; to the Committee
on Health, Education, Labor, and Pensions.
Mr. KENNEDY. Mr. President, this afternoon I and others will be
introducing legislation to increase the minimum wage. We will increase
the minimum wage by 60 cents this year, 50 cents next year, and 40
cents the year after.
The reason we are doing this is to recognize that over the last 8
years, we have had the most extraordinary economic expansion, but there
are a number of Americans, about 11 million to 13 million Americans,
who have not benefitted from our economic expansion.
They are the individuals who are on the lowest rung of the economic
ladder. This is an attempt to make an adjustment in their income, and
this increase in the minimum wage will provide an extremely modest
increase in that income.
This issue is a women's issue because the great majority of those who
receive the minimum wage are women.
This is a children's issue because the great majority of the women
who are receiving the minimum wage have children and their lives are
directly affected by the amount of income their mother or their parents
make, and if they are making the minimum wage, often it is not just one
job, but two jobs, and their lives are dramatically affected.
It is a civil rights issue because so many of those who are earning
the minimum wage are men and women of color.
Most of all, it is a fairness issue. Men and women in this country
who work 40 hours a week, 52 weeks a year should not have to live in
poverty.
This is about rewarding work. It is a recognition that people in our
country who are playing by the rules attempting to provide for their
family, if they are making a minimum wage today with a family of three,
they are still falling $3,400 below the poverty line in the United
States of America. This minimum wage will reduce that, but they will
still fall within the definition of poverty.
With this extraordinary expansion we have seen, with the
extraordinary benefits that have gone to so many millions of Americans,
it is time that we ought to give some attention to those who have been
left out and left behind.
Who are these minimum wage workers? First of all, they are men and
women of dignity; men and women who take pride in the work they do; men
and women who are proud to go to work and understand the value of work,
frustrated as others might be, but nonetheless are willing to put their
[[Page S1133]]
shoulder to the wheel because they want to take care of their families
and because they have a sense of pride.
What do they do? By and large, minimum wage workers work in child
care centers. They are helping to look after the children of others who
are working hard in American industry. Many of them are assistants to
teachers in our schools and, again, are working with children all
across this country. Many others are working in nursing homes looking
after those who have retired, those who need nursing home attention.
These are men and women who are doing very important work, in many
instances helping to make sure that the major buildings that house our
industries and corporations are attended to during the nighttime. These
are hard-working people, and they are people who take great pride in
what they do, as they should.
Let's look at what their situation has come to. This chart says:
Working hard, but losing ground. The real value of the minimum wage. If
we look at constant dollars, the purchasing power of the minimum wage
was $7.66 in 1968. Over the years, we have seen how that has fallen,
with just a few interruptions when there was an increase in the minimum
wage in 1988 and another increase in 1994. We can see what has happened
with the purchasing power of the minimum wage. Without an increase in
the minimum wage, in the year 2002, it would be down to $4.75, just
about the lowest that it has been since the mid-1960s. This is in real
purchasing power.
If we raise the minimum wage 60 cents, 50 cents, and 40 cents, and
add that $1.50 on top of the $5.15 an hour now, the purchasing power
would only be $6.14, which is identical to what it would be if we
actually increased the minimum wage in the last 2 years by 50 cents and
50 cents, which was our proposal. Since we lost a year, there has been
further deterioration in the purchasing power of the minimum wage. Even
with the step-up of 60 cents, 50 cents, and 40 cents, its purchasing
power will still only be $6.14.
This is an extremely modest increase. Historically, the percentage
increase in the minimum wage we are asking for is extremely modest.
Most other times, the percentage has been a good deal higher than it is
in this proposal. This is a modest increase, but a very important
increase.
What has been happening to our minimum wage workers? This chart
indicates what has happened to average hourly earnings from 1969 to the
year 2000.
You can see from the chart that the average hourly earnings have been
constantly going up. Going back to 1969, the minimum wage was 53
percent of average hourly earnings. In the year 2000, do you think it
has even held at 53 percent? No. It has dropped to 37 percent of
average hourly earnings--a dramatic reduction, even in comparison to
what has been happening to the average American workers across the
country. They are falling further and further behind.
This chart is very interesting in that it shows what is happening out
there in the workplace among those who have families with children who
are in the bottom 40 percent of U.S. family incomes from 1979 to 1999.
All workers are averaging 416 hours more a year. Do we understand
that? In 1999, they are working more than 400 hours a year more than
they were working in 1979, even when their amount of income
proportionately was a good deal better. Now we find American workers
are working longer and harder than any other workers in any other
industrial country in the world. And this is true about minimum wage
workers, who, in most instances, have not just one job but have two
jobs.
So for all those from whom we are going to hear in this Chamber about
the importance of rewarding people who work, here we have some of the
hardest workers in the world who are making pitiful little and find it
enormously difficult to be able to provide for their families.
Four hundred sixteen hours, what does that translate into? What it
translates into is this: The average minimum wage worker today gets to
spend 25 hours a week less with his or her children than they did 15
years ago. When we are talking about family values--and we will hear a
great deal about family values--one of the most important and basic and
fundamental family values is having an adequate income to provide for
one's children. The minimum wage does not provide it.
We see from this chart that working families are increasingly living
in poverty. The red line indicates what the poverty line represents
here in the United States. What we have seen for many years--in the
1960s, 1970s, right up to about 1980--is that the minimum wage was
effectively the poverty wage. That was the bare minimum to be able to
live with some degree of dignity in terms of providing the housing, the
food, the shelter, the clothing, the essentials for families. What we
have seen is this spread has been growing and increasing. Minimum wage
workers are falling further and further behind.
Now, this is against a very important chart here which reflects the
changes in family incomes from 1979 to 1999. The top fifth of families'
incomes have increased by 42 percent in the last 20 years; middle-
income families by about 11 percent over the last 20 years; the bottom
fifth has actually declined in terms of their quality of life and in
terms of what their income is. It shows they are going down, working
longer, working harder, providing important kinds of services at a time
of extraordinary economic prosperity. They are falling further and
further and further behind. We have an opportunity to do something
about that.
We provided an increase in the earned-income tax credit in the recent
times, which is helpful for those with larger families who have a
number of children; but still, for the single mom, or the mother and
father with a single child, the minimum wage is the way to go when you
are talking about benefitting and increasing the income for families.
We often hear on the Senate floor we cannot do that because if we do
do it, we are going to have an adverse impact in terms of our
employment situation. That is a lot of hogwash.
Let's look at what has happened since the last time we increased the
minimum wage. Since 1996, when we increased the minimum wage in two
steps, we heard: We do not want to do that because it is going to have
an adverse impact on teens. That is wrong. The unemployment rate for
teens has actually gone down with our two-step increase in the minimum
wage.
For those who are lacking high school diplomas--they said: They will
not be able to get employment at the McDonald's in order to gain work
habits--wrong again. We found that the unemployment rate has gone down
even for those lacking a high school diploma.
How about, we often heard: This isn't fair to African Americans.
Wrong again. We found out the unemployment rate has still declined. It
is certainly more than double what it is for the national average, but
the employment level has dropped over what it was previously. The same
is true with regard to Hispanics. And the same is true with regard to
women.
So we believe this is an issue of fairness. We believe it is a matter
of urgency. We have tried, over the period of recent years, to get this
measure up before the Senate. We were denied that opportunity to have
an up-or-down vote. We were told by the Republican leadership at the
end of the last Congress: You can have this if you provide $73 billion
in tax breaks for American companies and corporations. Effectively,
they were saying: We are going to hold this hostage. They were going to
hold this hostage until they got the $73 billion. They did not hold
their own pay increase hostage. They did not hold hostage increasing
Members' pay $3,800 a year in order to benefit businesses and
corporations. But they are holding hostage those who are at the lowest
level, the most vulnerable people, working hard, trying to make ends
meet for their families. They are holding them hostage until they get
additional tax breaks for companies and corporations at an unparalleled
level.
The last time we had the increase we had a modest tax break for small
business. Small business may need help and assistance, I am for that.
But at that time, it was $20 billion. Now that they have that up at $73
billion, and they refuse to let us give consideration to an increase in
the minimum wage, they are saying to all of those women, all of those
children, all of those workers who are minimum wage workers: No,
[[Page S1134]]
you can just wait there. You can stay at $5.15 an hour. You can
continue to work at $5.15 until we get around to developing our package
in order for the $73 billion in tax breaks. And then at that time, when
we are ready to get that $73 billion, the Senate of the United States
better take all $73 billion or we are not going to increase your
minimum wage.
I think that is an outrageous position to take in terms of a
contemptible attitude toward our fellow Americans.
I want to indicate, we welcome the support we have. This issue is not
going to go away. We are going to have to face this issue. We want to
have a fair opportunity. It is not one of those issues that needs a
great deal of study. All of us remember the situation where people tap
us on the shoulder and say: Will you support H.R. 222 or S. 444? and we
are unfamiliar with the details of a particular program. This one is
very simple. Increase in the minimum wage: Three steps, 60, 50, 40
cents. You don't need to have a lot of hearings.
To reiterate, Mr. President, the minimum wage is one of the Nation's
fundamental workplace protections. It is a bedrock right of every
working man and woman. For over 60 years, this country has been
committed to the principle that employees are entitled to a fair
minimum wage that guarantees a fair day's pay for a fair day's work and
protects the dignity of their employment.
In recent years, the country as a whole and most Americans have
benefitted from unprecedented prosperity--the longest period of
economic growth in the Nation's history and the lowest unemployment
rate in three decades. But minimum wage workers have been left out and
left behind. A fair increase in the minimum wage is long overdue.
The real value of the minimum wage is now nearly $3 below what it was
in 1968. To have the purchasing power it had in that year, the minimum
wage would have to be $8.05 an hour today, not $5.15 an hour.
At the same time, poverty has almost doubled among full-time, year-
round workers. Since the late 1970s, it has climbed from about 1.5
million to almost 2.5 million in 1999. An unacceptably low minimum wage
is part of the problem. Minimum wage employees working 40 hours a week,
52 weeks a year, earn only $10,700 a year--$3,400 below the poverty
line for a family of three. Minimum wage workers today fail to earn
enough to afford adequate housing in any area of this country. No one
who works for a living should have to live in poverty.
In too many cases, minimum wage workers are forced to work longer and
longer hours to make ends meet, with less and less time to spend with
their families--still without sharing fairly in the Nation's
prosperity. In fact, the lowest paid American families worked 416 more
hours in 1999 then they did in 1979. Since 1969, the ratio of the
minimum wage to average hourly earnings has dropped from 53 percent to
37 percent.
It is shameful that Congress acted to raise its own pay by $3,800
last year--the third pay increase in 4 years--yet we did not find time
to provide any pay increase at all to the lowest paid workers.
The increase in the legislation we are introducing today--the Fair
Minimum Wage Act of 2001--will directly benefit over 11 million
workers. It will raise the minimum wage by $1.50 in three installments:
60 cents on the 30th day after the bill's enactment; another 50 cents
on January 1, 2002; and 40 more cents on January 1, 2003. The bill will
also apply the federal minimum wage to the Mariana Islands, which now
has an unacceptably low level of $3.05 an hour.
The $1.50 increase is necessary to make up for lost time. In real
value, the $1.50 increase will bring the minimum wage up to the same
level it would have been if our proposed one dollar increase had gone
into effect last year.
Raising the minimum wage is a labor issue, because it guarantees that
American workers will be paid fairly for their contribution to building
a strong Nation and a strong economy. It is a women's issue, since 60
percent of minimum wage earners are women. It is a children's issue,
because 33 percent of minimum wage earners are parents with children--
and 4.3 million children live in poverty, despite being in a family
where a bread-winner works full-time, year-round. And it is a civil
rights issue, because 16 percent of those who will benefit from a
minimum wage increase are African Americans, and 20 percent are
Hispanic.
The record of past increases clearly shows that raising the minimum
wage has not had a negative impact on jobs, employment, or inflation.
After the last increases in the minimum wage in 1996 and 1997, the
economy continued to grow with impressive strength. The unemployment
rate has fallen from 5.2 percent to 4.2 percent. Twelve million new
jobs have been created, at a pace of 230,000 per month, with more than
6 million new service industry jobs, including one and a half million
new retail jobs, and over a half a million new restaurant jobs.
Similarly, the minimum wage increase during the recession in 1991
provided needed support for low-income workers and caused no loss of
jobs.
President Bush supports raising the minimum wage, but suggests that
states should be able to opt out of the increase. But allowing states
to opt out of the minimum wage would violate the basic principle, which
we have stood by for over 60 years, that working men and women are
entitled to a fair minimum wage. Millions of workers across the country
deserve a pay raise, and they deserve it now.
The Federal minimum wage guarantees a floor, but it also allows
States to set wage rates higher than the Federal minimum. Massachusetts
recently raised its minimum wage to $6.75 an hour, one of the highest
levels in the country. Other states, such as California, Connecticut,
Vermont and Rhode Island, have also set their State rates higher than
the Federal minimum.
In other States, however, the State minimum wage is far below the
Federal level. In these States, the Federal level applies to the vast
majority of workers. But for those not covered by the Federal law, the
State level is often extremely low. It is $1.60 in Wyoming, $2.65 in
Kansas, and $3.35 in Texas. Clearly, Congress should not leave the
minimum wage to the tender mercy of the States.
A fair increase in the federal minimum wage is long overdue. I urge
Congress to act as quickly as possible to pass this long overdue
increase.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 277
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fair Minimum Wage Act of
2001''.
SEC. 2. MINIMUM WAGE.
(a) In General.--Section 6(a)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to
read as follows:
``(1) except as otherwise provided in this section, not
less than--
``(A) $5.75 an hour beginning 30 days after the date of
enactment of the Fair Minimum Wage Act of 2001;
``(B) $6.25 an hour during the year beginning January 1,
2002; and
``(C) $6.65 an hour beginning January 1, 2003;''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect 30 days after the date of enactment of this
Act.
SEC. 3. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH OF
THE NORTHERN MARIANA ISLANDS.
(a) In General.--Section 6 of the Fair Labor Standards Act
of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of
the Northern Mariana Islands.
(b) Transition.--Notwithstanding subsection (a), the
minimum wage applicable to the Commonwealth of the Northern
Mariana Islands under section 6(a)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
(1) $3.55 an hour beginning 30 days after the date of
enactment of this Act; and
(2) increased by $0.50 an hour (or such lesser amount as
may be necessary to equal the minimum wage under section
6(a)(1) of such Act), beginning 6 months after the date of
enactment of this Act and every 6 months thereafter until the
minimum wage applicable to the Commonwealth of the Northern
Mariana Islands under this subsection is equal to the minimum
wage set forth in such section.
______
By Mr. JOHNSON (for himself, Mr. Bingaman, and Ms. Snowe):
S. 278. A bill to restore health care coverage to retired members of
the uniformed services; to the Committee on Armed Services.
[[Page S1135]]
Mr. JOHNSON. Mr. President, our country must honor its commitments to
military retirees and veterans, not only because it's the right thing
to do, but also because it's the smart thing to do. We all know the
history: for decades, men and women who joined the military were
promised lifetime health care coverage for themselves and their
families. They were told, in effect, if you disrupt your family, if you
work for low pay, if you endanger your life and limb, we will in turn
guarantee lifetime health benefits.
In my own family, my oldest son is in the Army and has served tours
of duty in Bosnia and Kosovo. I fully appreciate what inadequate health
care and broken promises can do to the morale of military families.
Military retirees and veterans are our nation's most effective
recruiters. Unfortunately, poor health care options make it difficult
for these men and women to encourage the younger generation to make a
career of the military. In fact, in South Dakota, I was talking to
military personnel and talking to retirees who are loyal and patriotic,
who have paid a price second to none for our nation's liberty, and they
told me: ``Tim, I can't in good faith tell my nephews, my children,
young people whom I encounter, that they ought to serve in the U.S.
military, that they ought to make a career of that service because I
see what the Congress has done to its commitment to me, to my family,
to my neighbors.''
I am pleased that last year we made historic improvements in health
care coverage for the approximately 12,600 military retirees living in
South Dakota. In the 106th Congress, I introduced the Keep Our Promise
to America's Military Retirees Act to restore the broken promise of
lifetime health care for military retirees and dependents. My
bipartisan legislation received the endorsement from most military
retiree and veterans organizations and called for military retirees to
have the option of staying in their TRICARE military health care
program or electing to participate in the Federal Employees Health
Benefit Program, FEHBP.
I offered my legislation as an amendment to last year's defense bill
and received 52 votes. Although the amendment failed on a procedural
motion, I was able to convince my colleagues to include one part of my
bill--the expansion of TRICARE to Medicare-eligible military retirees--
in both the Senate defense bill and the final version signed into law.
While I am pleased that last year's defense bill begins to address
problems with military retiree health care, there is more work that
needs to be done. That is why I am once again working with fellow
Democrats and Republicans in the Senate to continue the progress we've
made at living up to our country's commitment to those who serve in the
military.
Today, I am reintroducing the Keep Our Promise to America's Military
Retirees Act to finish the job we started last year. I am pleased to be
joined by Senator Jeff Bingaman and Senator Olympia Snowe. Similar
legislation introduced in the House of Representatives by
Representative Ronnie Shows and Representative Charlie Norwood already
has overwhelming bipartisan support, and I expect a number of Democrats
and Republicans here in the Senate to once again support my bill.
My legislation addresses the pressing health care needs of military
retirees under age 65. Thanks to our efforts last year, retirees over
65 soon will be able to choose their own doctor and be covered by
Medicare and TRICARE as a secondary payer. However, retirees under age
65 must continue coverage under a TRICARE program that offers care at
military treatment facilities on a space available basis. Nationwide,
base closures and downsizing have made access to these military bases
difficult. For many military retirees in South Dakota and other rural
states, it is next to impossible to find a doctor participating in
TRICARE, and these men and women are forced to drive hundreds of miles
just for basic health care.
In addition, retirees who entered the service prior to June 7, 1956,
when space-available care for military retirees was enacted, actually
have seen much of their promised benefits taken away. Under the Keep
Our Promise to America's Military Retirees Act, the United States
government would pay the full cost of FEHBP enrollment to this most
elderly group of retirees.
Congress has the unique opportunity to use a portion of the budget
surplus to improve the quality of life for our military retirees,
veterans, and active duty personnel. I have always believed that our
nation's defense is only as good as the men and women who serve in our
armed forces. Broken promises of health care, retirement benefits,
education incentives, and pay have eroded the morale of the most
valuable assets to our national security. I am hopeful that members of
both parties will join me once again making these issues a priority--
instead of an afterthought--during this session of Congress.
______
By Mr. JOHNSON (for himself, Mr. Graham, Mr. Campbell, Mr. enzi,
Mr. Baucus, Mr. Cleland, Mr. Daschle, and Mr. Hollings):
S. 280. A bill to amend the Agriculture Marketing Act of 1946 to
require retailers of beef, lamb, pork, and perishable agricultural
commodities to inform consumers, at the final point of sale to
consumers, of the country of origin of the commodities; to the
Committee on Agriculture, Nutrition, and Forestry.
Mr. GRAHAM. Mr. President, I rise today with my colleagues Senator
Johnson, Senator Campbell, Senator Craig, and Senator Cleland to
introduce the Consumer Right to Know Act of 2001.
This bill would require country of origin labeling of perishable
agricultural commodities and meat products sold in retail
establishments. I offer this legislation to ensure that Americans know
the origin of every orange, banana, tomato, cucumber, and green pepper
on display in the grocery store.
For two decades, Floridians shopping at their local grocery stores
have been able to make educated choices about the food products they
purchase for their families. In 1979, during my first year as governor,
I proudly signed legislation to make country-of-origin labels mandatory
for produce sold in Florida. This labeling requirement has proven to be
neither complicated nor burdensome for Florida's farmers or retailers.
Country of origin labeling is not new to the American marketplace.
For decades, ``Made In'' labels have been as visible as price tags on
clothes, toys, television sets, watches, and many other products. It
makes little sense that such labels are nowhere to be found in the
produce or meat sections of grocery stores in the vast majority of
states. The current lack of identifying information on produce means
that Americans who wish to heed government health warnings about
foreign products don't have the information they need to protect
themselves. Nor can Americans show justifiable concerns about other
nations' labor, environmental, and agricultural standards by choosing
other perishables.
According to nationwide surveys, between 74 and 83 percent of
consumers favor mandatory country of origin labeling for fresh produce.
This is a low-cost, common sense method of informing consumers, as
retailers will simply be asked to provide this information by means of
a label, stamp, or placard. It is estimated that implementing produce
labeling would take about two hours per grocery store per week. At the
current minimum wage, this equates to about $10.30 per store per week.
This is a remarkable small price to pay to provide American consumers
with the information they need to make informed produce purchases.
In addition, a study by the General Accounting Office found that all
of the 28 countries that account for must of the U.S. produce imports
and exports have requirements for fruit and vegetable labeling. By
adopting this legislation, our law will become more consistent with the
laws of our trading partners.
Consumers have the right to know basic information about the fruits
and vegetables that they bring home to their families. Congress can
take a major step toward achieving this simple goal by adopting this
amendment, thereby restoring American shoppers' ability to make an
informed decision.
Both Senator Johnson and I have worked on this legislation for
several Congresses. I am very pleased to be introducing one legislative
package this year which contains both fruit and vegetable and meat
labeling requirements.
[[Page S1136]]
Both have passed the Senate in the 105th and 106th Congress.
I urge my colleagues who have supported this concept in the past to
co-sponsor our legislation. I urge those of you who are new to this
issue to review this legislation and ask yourselves if American
consumers deserve this basic level of information about their food
supply--the country of origin.
I ask for your support, and I look forward to working with my
colleagues on the Senate Agriculture Committee to move this legislation
expeditiously through the Committee process.
______
By Mr. HARKIN (for himself and Mr. Lugar):
S. 282. A bill to establish in the Antitrust Division of the
Department of Justice a position with responsibility for agriculture
antitrust matters; to the Committee on the Judiciary.
Mr. HARKIN. Mr. President, I am pleased to introduce today, along
with Senator Lugar, legislation that would ensure that there is in the
Antitrust Division of the Department of Justice a position with the
primary responsibility of providing advice and assistance to further
effective enforcement of the antitrust laws in the food and
agricultural sectors of our economy.
As so many of my colleagues understand, we are in a period of very
rapid change in the economic structure of agriculture and of our food
system from the farm on through retail distribution. Those changes
include sweeping consolidation and greatly increased economic
concentration in many segments of our nation's food and agriculture
system that have profoundly affected agricultural producers and rural
communities and raised serious questions about impacts on consumers.
The purpose of this bill is to ensure that our nation's antitrust
laws are fully enforced during this time of rapid change in our food
and agriculture system. This is the same legislation as Senator Lugar
and I introduced late in 1999. Following that introduction, the Clinton
Administration did appoint a person to fill the position required by
this legislation. While that action obviated the necessity of enacting
the legislation at that time, we do not know for certain what the
present or future administrations may do in assigning personnel at the
Department of Justice to antitrust enforcement in agriculture. This
bill is an important safeguard to ensure that we have a person who is
devoted full-time at Justice to the critical task of enforcing our
antitrust laws in the food and agriculture sector.
I urge my colleagues to support this important legislation.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 282
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. ESTABLISHMENT.
(a) In General.--There shall be established within the
Antitrust Division of the Department of Justice a position
the primary responsibility of which shall be to provide
assistance and advice to the Assistant Attorney General of
the Antitrust Division to further the effective enforcement
of the antitrust laws with respect to the food and
agricultural sectors.
(b) Appointment.--Not later than 180 days after the date of
enactment of this Act, the Attorney General shall appoint a
person to the position described in subsection (a).
(c) Functions.--The responsibilities of the position
established under subsection (a) shall include all actions
appropriate to furthering effective enforcement of the
antitrust laws with respect to the food and agricultural
sectors, including--
(1) assisting and advising with respect to the
investigation of possible restraints of trade;
(2) assisting and advising with respect to the
investigation of mergers and acquisitions; and
(3) ensuring that any investigation described in paragraphs
(1) or (2) takes into account the effects of the conduct or
transaction under investigation on consumers, agricultural
producers and rural communities.
SEC. 2. ENFORCEMENT AUTHORITY.
Nothing in this Act shall affect or limit the authority of
the Attorney General or the Assistant Attorney General of the
Antitrust Division to delegate or assign functions relating
to the enforcement of any provision of law.
SEC. 3. EFFECTIVE PERIOD.
This Act shall be effective until the date that is 5 years
after the date of enactment of this Act.
Mr. LUGAR. Mr. President, I rise today to join my esteemed colleague
and Ranking Democratic Member of the Agriculture Committee from Iowa,
Senator Harkin, in once again introducing legislation to help ensure
that antitrust laws impacting agriculture are properly enforced.
Mr. President, the face of rural America is rapidly changing. Ever-
changing technologies, developments in biotechnology and concentration
in production agriculture and agribusiness are developing a new profile
in rural areas. Farmers in my home state of Indiana have many questions
and concerns related to these rapid changes. Many remain to be
convinced that appropriate oversight of merger and acquisition activity
in ag business is a reality.
The intent of this legislation is to establish the Office of Special
Counsel for Agriculture in the Antitrust Division of the Justice
Department. While this office will focus on reviewing ag business
mergers and acquisition activity, it will also serve as an information
resource for American agriculture producers wanting to provide input on
antitrust-related issues.
It is important to note, Mr. President, that shortly after
introduction of this legislation in 1999, Attorney General Reno, on her
own initiative, established the Office of Special Counsel for
Agriculture and appointed Mr. Doug Ross to that position. While the
perspective of Attorney General Ashcroft is not yet known on this
matter, this legislation is a signal, a strong statement, that the
Chairman and the Ranking Democratic Member of the Senate Agriculture
Committee are in favor of greater transparency and consideration to
those issues surrounding ag business mergers in the United States.
______
By Mr. McCAIN (for himself, Mr. Edwards, Mr. Kennedy, Mr. l.
Chafee, Mr. Graham, Mr. Specter, Mrs. Lincoln, Mr. Harkin, Mr.
Baucus, Mr. Torricelli, Mr. Dodd, Mr. Nelson of Florida, and
Mr. Schumer):
S. 283. A bill to amend the Public Health Service Act, the Employee
Retirement Income Security Act of 1974, and the Internal Revenue Code
of 1986 to protect consumers in managed care plans and other health
coverage; to the Committee on Health, Education, Labor, and Pensions.
S. 284. A bill to amend the Internal Revenue Code of 1986 to provide
incentives to expand health care coverage for individuals; to the
Committee on Finance.
Mr. McCAIN. Mr. President, I ask unanimous consent that the text of
S. 283 and S. 284 be printed in the Record.
There being no objection, the bills were ordered to be printed in the
Record, as follows:
S. 283
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Bipartisan
Patient Protection Act of 2001''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--IMPROVING MANAGED CARE
Subtitle A--Utilization Review; Claims; and Internal and External
Appeals
Sec. 101. Utilization review activities.
Sec. 102. Procedures for initial claims for benefits and prior
authorization determinations.
Sec. 103. Internal appeals of claims denials.
Sec. 104. Independent external appeals procedures.
Subtitle B--Access to Care
Sec. 111. Consumer choice option.
Sec. 112. Choice of health care professional.
Sec. 113. Access to emergency care.
Sec. 114. Timely access to specialists.
Sec. 115. Patient access to obstetrical and gynecological care.
Sec. 116. Access to pediatric care.
Sec. 117. Continuity of care.
Sec. 118. Access to needed prescription drugs.
Sec. 119. Coverage for individuals participating in approved clinical
trials.
Sec. 120. Required coverage for minimum hospital stay for mastectomies
and lymph node dissections for the treatment of breast
cancer and coverage for secondary consultations.
Subtitle C--Access to Information
Sec. 121. Patient access to information.
[[Page S1137]]
Subtitle D--Protecting the Doctor-Patient Relationship
Sec. 131. Prohibition of interference with certain medical
communications.
Sec. 132. Prohibition of discrimination against providers based on
licensure.
Sec. 133. Prohibition against improper incentive arrangements.
Sec. 134. Payment of claims.
Sec. 135. Protection for patient advocacy.
Subtitle E--Definitions
Sec. 151. Definitions.
Sec. 152. Preemption; State flexibility; construction.
Sec. 153. Exclusions.
Sec. 154. Coverage of limited scope plans.
Sec. 155. Regulations.
Sec. 156. Incorporation into plan or coverage documents.
TITLE II--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS
AND HEALTH INSURANCE COVERAGE UNDER THE 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. Availability of civil remedies.
Sec. 303. Limitations on actions.
TITLE IV--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986
Sec. 401. Application of requirements to group health plans under the
Internal Revenue Code of 1986.
Sec. 402. Conforming enforcement for women's health and cancer rights.
TITLE V--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION
Sec. 501. Effective dates.
Sec. 502. Coordination in implementation.
Sec. 503. Severability.
TITLE I--IMPROVING MANAGED CARE
Subtitle A--Utilization Review; Claims; and Internal and External
Appeals
SEC. 101. UTILIZATION REVIEW ACTIVITIES.
(a) Compliance With Requirements.--
(1) In general.--A group health plan, and a health
insurance issuer that provides health insurance coverage,
shall conduct utilization review activities in connection
with the provision of benefits under such plan or coverage
only in accordance with a utilization review program that
meets the requirements of this section and section 102.
(2) Use of outside agents.--Nothing in this section shall
be construed as preventing a group health plan or health
insurance issuer from arranging through a contract or
otherwise for persons or entities to conduct utilization
review activities on behalf of the plan or issuer, so long as
such activities are conducted in accordance with a
utilization review program that meets the requirements of
this section.
(3) Utilization review defined.--For purposes of this
section, the terms ``utilization review'' and ``utilization
review activities'' mean procedures used to monitor or
evaluate the use or coverage, clinical necessity,
appropriateness, efficacy, or efficiency of health care
services, procedures or settings, and includes prospective
review, concurrent review, second opinions, case management,
discharge planning, or retrospective review.
(b) Written Policies and Criteria.--
(1) Written policies.--A utilization review program shall
be conducted consistent with written policies and procedures
that govern all aspects of the program.
(2) Use of written criteria.--
(A) In general.--Such a program shall utilize written
clinical review criteria developed with input from a range of
appropriate actively practicing health care professionals, as
determined by the plan, pursuant to the program. Such
criteria shall include written clinical review criteria that
are based on valid clinical evidence where available and that
are directed specifically at meeting the needs of at-risk
populations and covered individuals with chronic conditions
or severe illnesses, including gender-specific criteria and
pediatric-specific criteria where available and appropriate.
(B) Continuing use of standards in retrospective review.--
If a health care service has been specifically pre-authorized
or approved for a participant, beneficiary, or enrollee under
such a program, the program shall not, pursuant to
retrospective review, revise or modify the specific
standards, criteria, or procedures used for the utilization
review for procedures, treatment, and services delivered to
the enrollee during the same course of treatment.
(C) Review of sample of claims denials.--Such a program
shall provide for a periodic evaluation of the clinical
appropriateness of at least a sample of denials of claims for
benefits.
(c) Conduct of Program Activities.--
(1) Administration by health care professionals.--A
utilization review program shall be administered by qualified
health care professionals who shall oversee review decisions.
(2) Use of qualified, independent personnel.--
(A) In general.--A utilization review program shall provide
for the conduct of utilization review activities only through
personnel who are qualified and have received appropriate
training in the conduct of such activities under the program.
(B) Prohibition of contingent compensation arrangements.--
Such a program shall not, with respect to utilization review
activities, permit or provide compensation or anything of
value to its employees, agents, or contractors in a manner
that encourages denials of claims for benefits.
(C) Prohibition of conflicts.--Such a program shall not
permit a health care professional who is providing health
care services to an individual to perform utilization review
activities in connection with the health care services being
provided to the individual.
(3) Accessibility of review.--Such a program shall provide
that appropriate personnel performing utilization review
activities under the program, including the utilization
review administrator, are reasonably accessible by toll-free
telephone during normal business hours to discuss patient
care and allow response to telephone requests, and that
appropriate provision is made to receive and respond promptly
to calls received during other hours.
(4) Limits on frequency.--Such a program shall not provide
for the performance of utilization review activities with
respect to a class of services furnished to an individual
more frequently than is reasonably required to assess whether
the services under review are medically necessary and
appropriate.
SEC. 102. PROCEDURES FOR INITIAL CLAIMS FOR BENEFITS AND
PRIOR AUTHORIZATION DETERMINATIONS.
(a) Procedures of Initial Claims for Benefits.--
(1) In general.--A group health plan, or health insurance
issuer offering health insurance coverage, shall--
(A) make a determination on an initial claim for benefits
by a participant, beneficiary, or enrollee (or authorized
representative) regarding payment or coverage for items or
services under the terms and conditions of the plan or
coverage involved, including any cost-sharing amount that the
participant, beneficiary, or enrollee is required to pay with
respect to such claim for benefits; and
(B) notify a participant, beneficiary, or enrollee (or
authorized representative) and the treating health care
professional involved regarding a determination on an initial
claim for benefits made under the terms and conditions of the
plan or coverage, including any cost-sharing amounts that the
participant, beneficiary, or enrollee may be required to make
with respect to such claim for benefits, and of the right of
the participant, beneficiary, or enrollee to an internal
appeal under section 103.
(2) Access to information.--
(A) Timely provision of necessary information.--With
respect to an initial claim for benefits, the participant,
beneficiary, or enrollee (or authorized representative) and
the treating health care professional (if any) shall provide
the plan or issuer with access to information requested by
the plan or issuer that is necessary to make a determination
relating to the claim. Such access shall be provided not
later than 5 days after the date on which the request for
information is received, or, in a case described in
subparagraph (B) or (C) of subsection (b)(1), by such earlier
time as may be necessary to comply with the applicable
timeline under such subparagraph.
(B) Limited effect of failure on plan or issuer's
obligations.--Failure of the participant, beneficiary, or
enrollee to comply with the requirements of subparagraph (A)
shall not remove the obligation of the plan or issuer to make
a decision in accordance with the medical exigencies of the
case and as soon as possible, based on the available
information, and failure to comply with the time limit
established by this paragraph shall not remove the obligation
of the plan or issuer to comply with the requirements of this
section.
(3) Oral requests.--In the case of a claim for benefits
involving an expedited or concurrent determination, a
participant, beneficiary, or enrollee (or authorized
representative) may make an initial claim for benefits
orally, but a group health plan, or health insurance issuer
offering health insurance coverage, may require that the
participant, beneficiary, or enrollee (or authorized
representative) provide written confirmation of such request
in a timely manner on a form provided by the plan or issuer.
In the case of such an oral request for benefits, the making
of the request (and the timing of such request) shall be
treated as the making at that time of a claims for such
benefits without regard to whether and when a written
confirmation of such request is made.
(b) Timeline for Making Determinations.--
(1) Prior authorization determination.--
(A) In general.--A group health plan, or health insurance
issuer offering health insurance coverage, shall make a prior
authorization determination on a claim for benefits (whether
oral or written) in accordance with the medical exigencies of
the case and as soon as possible, but in no case later than
14
[[Page S1138]]
days from the date on which the plan or issuer receives
information that is reasonably necessary to enable the plan
or issuer to make a determination on the request for prior
authorization and in no case later than 28 days after the
date of the claim for benefits is received.
(B) Expedited determination.--Notwithstanding subparagraph
(A), a group health plan, or health insurance issuer offering
health insurance coverage, shall expedite a prior
authorization determination on a claim for benefits described
in such subparagraph when a request for such an expedited
determination is made by a participant, beneficiary, or
enrollee (or authorized representative) at any time during
the process for making a determination and a health care
professional certifies, with the request, that a
determination under the procedures described in subparagraph
(A) would seriously jeopardize the life or health of the
participant, beneficiary, or enrollee or the ability of the
participant, beneficiary, or enrollee to maintain or regain
maximum function. Such determination shall be made in
accordance with the medical exigencies of the case and as
soon as possible, but in no case later than 72 hours after
the time the request is received by the plan or issuer under
this subparagraph.
(C) Ongoing care.--
(i) Concurrent review.--
(I) In general.--Subject to clause (ii), in the case of a
concurrent review of ongoing care (including
hospitalization), which results in a termination or reduction
of such care, the plan or issuer must provide by telephone
and in printed form notice of the concurrent review
determination to the individual or the individual's designee
and the individual's health care provider in accordance with
the medical exigencies of the case and as soon as possible,
with sufficient time prior to the termination or reduction to
allow for an appeal under section 103(b)(3) to be completed
before the termination or reduction takes effect.
(II) Contents of notice.--Such notice shall include, with
respect to ongoing health care items and services, the number
of ongoing services approved, the new total of approved
services, the date of onset of services, and the next review
date, if any, as well as a statement of the individual's
rights to further appeal.
(ii) Rule of construction.--Clause (i) shall not be
construed as requiring plans or issuers to provide coverage
of care that would exceed the coverage limitations for such
care.
(2) Retrospective determination.--A group health plan, or
health insurance issuer offering health insurance coverage,
shall make a retrospective determination on a claim for
benefits in accordance with the medical exigencies of the
case and as soon as possible, but not later than 30 days
after the date on which the plan or issuer receives
information that is reasonably necessary to enable the plan
or issuer to make a determination on the claim, or, if
earlier, 60 days after the date of receipt of the claim for
benefits.
(c) Notice of a Denial of a Claim for Benefits.--Written
notice of a denial made under an initial claim for benefits
shall be issued to the participant, beneficiary, or enrollee
(or authorized representative) and the treating health care
professional in accordance with the medical exigencies of the
case and as soon as possible, but in no case later than 2
days after the date of the determination (or, in the case
described in subparagraph (B) or (C) of subsection (b)(1),
within the 72-hour or applicable period referred to in such
subparagraph).
(d) Requirements of Notice of Determinations.--The written
notice of a denial of a claim for benefits determination
under subsection (c) shall be provided in printed form and
written in a manner calculated to be understood by the
average participant, beneficiary, or enrollee and shall
include--
(1) the specific reasons for the determination (including a
summary of the clinical or scientific evidence used in making
the determination);
(2) the procedures for obtaining additional information
concerning the determination; and
(3) notification of the right to appeal the determination
and instructions on how to initiate an appeal in accordance
with section 103.
(e) Definitions.--For purposes of this part:
(1) Authorized representative.--The term ``authorized
representative'' means, with respect to an individual who is
a participant, beneficiary, or enrollee, any health care
professional or other person acting on behalf of the
individual with the individual's consent or without such
consent if the individual is medically unable to provide such
consent.
(2) Claim for benefits.--The term ``claim for benefits''
means any request for coverage (including authorization of
coverage), for eligibility, or for payment in whole or in
part, for an item or service under a group health plan or
health insurance coverage.
(3) Denial of claim for benefits.--The term ``denial''
means, with respect to a claim for benefits, a denial (in
whole or in part) of, or a failure to act on a timely basis
upon, the claim for benefits and includes a failure to
provide benefits (including items and services) required to
be provided under this title.
(4) Treating health care professional.--The term ``treating
health care professional'' means, with respect to services to
be provided to a participant, beneficiary, or enrollee, a
health care professional who is primarily responsible for
delivering those services to the participant, beneficiary, or
enrollee.
SEC. 103. INTERNAL APPEALS OF CLAIMS DENIALS.
(a) Right to Internal Appeal.--
(1) In general.--A participant, beneficiary, or enrollee
(or authorized representative) may appeal any denial of a
claim for benefits under section 102 under the procedures
described in this section.
(2) Time for appeal.--
(A) In general.--A group health plan, or health insurance
issuer offering health insurance coverage, shall ensure that
a participant, beneficiary, or enrollee (or authorized
representative) has a period of not less than 180 days
beginning on the date of a denial of a claim for benefits
under section 102 in which to appeal such denial under this
section.
(B) Date of denial.--For purposes of subparagraph (A), the
date of the denial shall be deemed to be the date as of which
the participant, beneficiary, or enrollee knew of the denial
of the claim for benefits.
(3) Failure to act.--The failure of a plan or issuer to
issue a determination on a claim for benefits under section
102 within the applicable timeline established for such a
determination under such section is a denial of a claim for
benefits for purposes this subtitle as of the date of the
applicable deadline.
(4) Plan waiver of internal review.--A group health plan,
or health insurance issuer offering health insurance
coverage, may waive the internal review process under this
section. In such case the plan or issuer shall provide notice
to the participant, beneficiary, or enrollee (or authorized
representative) involved, the participant, beneficiary, or
enrollee (or authorized representative) involved shall be
relieved of any obligation to complete the internal review
involved, and may, at the option of such participant,
beneficiary, enrollee, or representative proceed directly to
seek further appeal through external review under section 104
or otherwise.
(b) Timelines for Making Determinations.--
(1) Oral requests.--In the case of an appeal of a denial of
a claim for benefits under this section that involves an
expedited or concurrent determination, a participant,
beneficiary, or enrollee (or authorized representative) may
request such appeal orally. A group health plan, or health
insurance issuer offering health insurance coverage, may
require that the participant, beneficiary, or enrollee (or
authorized representative) provide written confirmation of
such request in a timely manner on a form provided by the
plan or issuer. In the case of such an oral request for an
appeal of a denial, the making of the request (and the timing
of such request) shall be treated as the making at that time
of a request for an appeal without regard to whether and when
a written confirmation of such request is made.
(2) Access to information.--
(A) Timely provision of necessary information.--With
respect to an appeal of a denial of a claim for benefits, the
participant, beneficiary, or enrollee (or authorized
representative) and the treating health care professional (if
any) shall provide the plan or issuer with access to
information requested by the plan or issuer that is necessary
to make a determination relating to the appeal. Such access
shall be provided not later than 5 days after the date on
which the request for information is received, or, in a case
described in subparagraph (B) or (C) of paragraph (3), by
such earlier time as may be necessary to comply with the
applicable timeline under such subparagraph.
(B) Limited effect of failure on plan or issuer's
obligations.--Failure of the participant, beneficiary, or
enrollee to comply with the requirements of subparagraph (A)
shall not remove the obligation of the plan or issuer to make
a decision in accordance with the medical exigencies of the
case and as soon as possible, based on the available
information, and failure to comply with the time limit
established by this paragraph shall not remove the obligation
of the plan or issuer to comply with the requirements of this
section.
(3) Prior authorization determinations.--
(A) In general.--A group health plan, or health insurance
issuer offering health insurance coverage, shall make a
determination on an appeal of a denial of a claim for
benefits under this subsection in accordance with the medical
exigencies of the case and as soon as possible, but in no
case later than 14 days from the date on which the plan or
issuer receives information that is reasonably necessary to
enable the plan or issuer to make a determination on the
appeal and in no case later than 28 days after the date the
request for the appeal is received.
(B) Expedited determination.--Notwithstanding subparagraph
(A), a group health plan, or health insurance issuer offering
health insurance coverage, shall expedite a prior
authorization determination on an appeal of a denial of a
claim for benefits described in subparagraph (A), when a
request for such an expedited determination is made by a
participant, beneficiary, or enrollee (or authorized
representative) at any time during the process for making a
determination and a health care professional certifies, with
the request, that a determination under the procedures
described in subparagraph (A)
[[Page S1139]]
would seriously jeopardize the life or health of the
participant, beneficiary, or enrollee or the ability of the
participant, beneficiary, or enrollee to maintain or regain
maximum function. Such determination shall be made in
accordance with the medical exigencies of the case and as
soon as possible, but in no case later than 72 hours after
the time the request for such appeal is received by the plan
or issuer under this subparagraph.
(C) Ongoing care determinations.--
(i) In general.--Subject to clause (ii), in the case of a
concurrent review determination described in section
102(b)(1)(C)(i)(I), which results in a termination or
reduction of such care, the plan or issuer must provide
notice of the determination on the appeal under this section
by telephone and in printed form to the individual or the
individual's designee and the individual's health care
provider in accordance with the medical exigencies of the
case and as soon as possible, with sufficient time prior to
the termination or reduction to allow for an external appeal
under section 104 to be completed before the termination or
reduction takes effect.
(ii) Rule of construction.--Clause (i) shall not be
construed as requiring plans or issuers to provide coverage
of care that would exceed the coverage limitations for such
care.
(4) Retrospective determination.--A group health plan, or
health insurance issuer offering health insurance coverage,
shall make a retrospective determination on an appeal of a
claim for benefits in no case later than 30 days after the
date on which the plan or issuer receives necessary
information that is reasonably necessary to enable the plan
or issuer to make a determination on the appeal and in no
case later than 60 days after the date the request for the
appeal is received.
(c) Conduct of Review.--
(1) In general.--A review of a denial of a claim for
benefits under this section shall be conducted by an
individual with appropriate expertise who was not involved in
the initial determination.
(2) Review of medical decisions by physicians.--A review of
an appeal of a denial of a claim for benefits that is based
on a lack of medical necessity and appropriateness, or based
on an experimental or investigational treatment, or requires
an evaluation of medical facts, shall be made by a physician
(allopathic or osteopathic) with appropriate expertise
(including, in the case of a child, appropriate pediatric
expertise) who was not involved in the initial determination.
(d) Notice of Determination.--
(1) In general.--Written notice of a determination made
under an internal appeal of a denial of a claim for benefits
shall be issued to the participant, beneficiary, or enrollee
(or authorized representative) and the treating health care
professional in accordance with the medical exigencies of the
case and as soon as possible, but in no case later than 2
days after the date of completion of the review (or, in the
case described in subparagraph (B) or (C) of subsection
(b)(3), within the 72-hour or applicable period referred to
in such subparagraph).
(2) Final determination.--The decision by a plan or issuer
under this section shall be treated as the final
determination of the plan or issuer on a denial of a claim
for benefits. The failure of a plan or issuer to issue a
determination on an appeal of a denial of a claim for
benefits under this section within the applicable timeline
established for such a determination shall be treated as a
final determination on an appeal of a denial of a claim for
benefits for purposes of proceeding to external review under
section 104.
(3) Requirements of notice.--With respect to a
determination made under this section, the notice described
in paragraph (1) shall be provided in printed form and
written in a manner calculated to be understood by the
average participant, beneficiary, or enrollee and shall
include--
(A) the specific reasons for the determination (including a
summary of the clinical or scientific evidence used in making
the determination);
(B) the procedures for obtaining additional information
concerning the determination; and
(C) notification of the right to an independent external
review under section 104 and instructions on how to initiate
such a review.
SEC. 104. INDEPENDENT EXTERNAL APPEALS PROCEDURES.
(a) Right to External Appeal.--A group health plan, and a
health insurance issuer offering health insurance coverage,
shall provide in accordance with this section participants,
beneficiaries, and enrollees (or authorized representatives)
with access to an independent external review for any denial
of a claim for benefits.
(b) Initiation of the Independent External Review
Process.--
(1) Time to file.--A request for an independent external
review under this section shall be filed with the plan or
issuer not later than 180 days after the date on which the
participant, beneficiary, or enrollee receives notice of the
denial under section 103(d) or notice of waiver of internal
review under section 103(a)(4) or the date on which the plan
or issuer has failed to make a timely decision under section
103(d)(2) and notifies the participant or beneficiary that it
has failed to make a timely decision and that the beneficiary
must file an appeal with an external review entity within 180
days if the participant or beneficiary desires to file such
an appeal.
(2) Filing of request.--
(A) In general.--Subject to the succeeding provisions of
this subsection, a group health plan, and a health insurance
issuer offering health insurance coverage, may--
(i) except as provided in subparagraph (B)(i), require that
a request for review be in writing;
(ii) limit the filing of such a request to the participant,
beneficiary, or enrollee involved (or an authorized
representative);
(iii) except if waived by the plan or issuer under section
103(a)(4), condition access to an independent external review
under this section upon a final determination of a denial of
a claim for benefits under the internal review procedure
under section 103;
(iv) except as provided in subparagraph (B)(ii), require
payment of a filing fee to the plan or issuer of a sum that
does not exceed $25; and
(v) require that a request for review include the consent
of the participant, beneficiary, or enrollee (or authorized
representative) for the release of necessary medical
information or records of the participant, beneficiary, or
enrollee to the qualified external review entity only for
purposes of conducting external review activities.
(B) Requirements and exception relating to general rule.--
(i) Oral requests permitted in expedited or concurrent
cases.--In the case of an expedited or concurrent external
review as provided for under subsection (e), the request may
be made orally. A group health plan, or health insurance
issuer offering health insurance coverage, may require that
the participant, beneficiary, or enrollee (or authorized
representative) provide written confirmation of such request
in a timely manner on a form provided by the plan or issuer.
Such written confirmation shall be treated as a consent for
purposes of subparagraph (A)(v). In the case of such an oral
request for such a review, the making of the request (and the
timing of such request) shall be treated as the making at
that time of a request for such an external review without
regard to whether and when a written confirmation of such
request is made.
(ii) Exception to filing fee requirement.--
(I) Indigency.--Payment of a filing fee shall not be
required under subparagraph (A)(iv) where there is a
certification (in a form and manner specified in guidelines
established by the appropriate Secretary) that the
participant, beneficiary, or enrollee is indigent (as defined
in such guidelines).
(II) Fee not required.--Payment of a filing fee shall not
be required under subparagraph (A)(iv) if the plan or issuer
waives the internal appeals process under section 103(a)(4).
(III) Refunding of fee.--The filing fee paid under
subparagraph (A)(iv) shall be refunded if the determination
under the independent external review is to reverse or modify
the denial which is the subject of the review.
(IV) Collection of filing fee.--The failure to pay such a
filing fee shall not prevent the consideration of a request
for review but, subject to the preceding provisions of this
clause, shall constitute a legal liability to pay.
(c) Referral to Qualified External Review Entity Upon
Request.--
(1) In general.--Upon the filing of a request for
independent external review with the group health plan, or
health insurance issuer offering health insurance coverage,
the plan or issuer shall immediately refer such request, and
forward the plan or issuer's initial decision (including the
information described in section 103(d)(3)(A)), to a
qualified external review entity selected in accordance with
this section.
(2) Access to plan or issuer and health professional
information.--With respect to an independent external review
conducted under this section, the participant, beneficiary,
or enrollee (or authorized representative), the plan or
issuer, and the treating health care professional (if any)
shall provide the external review entity with information
that is necessary to conduct a review under this section, as
determined and requested by the entity. Such information
shall be provided not later than 5 days after the date on
which the request for information is received, or, in a case
described in clause (ii) or (iii) of subsection (e)(1)(A), by
such earlier time as may be necessary to comply with the
applicable timeline under such clause.
(3) Screening of requests by qualified external review
entities.--
(A) In general.--With respect to a request referred to a
qualified external review entity under paragraph (1) relating
to a denial of a claim for benefits, the entity shall refer
such request for the conduct of an independent medical review
unless the entity determines that--
(i) any of the conditions described in clauses (ii) or
(iii) of subsection (b)(2)(A) have not been met;
(ii) the denial of the claim for benefits does not involve
a medically reviewable decision under subsection (d)(2);
(iii) the denial of the claim for benefits relates to a
decision regarding whether an individual is a participant,
beneficiary, or enrollee who is enrolled under the terms and
conditions of the plan or coverage (including the
applicability of any waiting period under the plan or
coverage); or
(iv) the denial of the claim for benefits is a decision as
to the application of cost-sharing requirements or the
application of a specific exclusion or express limitation on
the
[[Page S1140]]
amount, duration, or scope of coverage of items or services
under the terms and conditions of the plan or coverage unless
the decision is a denial described in subsection (d)(2).
Upon making a determination that any of clauses (i) through
(iv) applies with respect to the request, the entity shall
determine that the denial of a claim for benefits involved is
not eligible for independent medical review under subsection
(d), and shall provide notice in accordance with subparagraph
(C).
(B) Process for making determinations.--
(i) No deference to prior determinations.--In making
determinations under subparagraph (A), there shall be no
deference given to determinations made by the plan or issuer
or the recommendation of a treating health care professional
(if any).
(ii) Use of appropriate personnel.--A qualified external
review entity shall use appropriately qualified personnel to
make determinations under this section.
(C) Notices and general timelines for determination.--
(i) Notice in case of denial of referral.--If the entity
under this paragraph does not make a referral to an
independent medical reviewer, the entity shall provide notice
to the plan or issuer, the participant, beneficiary, or
enrollee (or authorized representative) filing the request,
and the treating health care professional (if any) that the
denial is not subject to independent medical review. Such
notice--
(I) shall be written (and, in addition, may be provided
orally) in a manner calculated to be understood by an average
participant or enrollee;
(II) shall include the reasons for the determination;
(III) include any relevant terms and conditions of the plan
or coverage; and
(IV) include a description of any further recourse
available to the individual.
(ii) General timeline for determinations.--Upon receipt of
information under paragraph (2), the qualified external
review entity, and if required the independent medical
reviewer, shall make a determination within the overall
timeline that is applicable to the case under review as
described in subsection (e), except that if the entity
determines that a referral to an independent medical reviewer
is not required, the entity shall provide notice of such
determination to the participant, beneficiary, or enrollee
(or authorized representative) within such timeline and
within 2 days of the date of such determination.
(d) Independent Medical Review.--
(1) In general.--If a qualified external review entity
determines under subsection (c) that a denial of a claim for
benefits is eligible for independent medical review, the
entity shall refer the denial involved to an independent
medical reviewer for the conduct of an independent medical
review under this subsection.
(2) Medically reviewable decisions.--A denial of a claim
for benefits is eligible for independent medical review if
the benefit for the item or service for which the claim is
made would be a covered benefit under the terms and
conditions of the plan or coverage but for one (or more) of
the following determinations:
(A) Denials based on medical necessity and
appropriateness.--A determination that the item or service is
not covered because it is not medically necessary and
appropriate or based on the application of substantially
equivalent terms.
(B) Denials based on experimental or investigational
treatment.--A determination that the item or service is not
covered because it is experimental or investigational or
based on the application of substantially equivalent terms.
(C) Denials otherwise based on an evaluation of medical
facts.--A determination that the item or service or condition
is not covered based on grounds that require an evaluation of
the medical facts by a health care professional in the
specific case involved to determine the coverage and extent
of coverage of the item or service or condition.
(3) Independent medical review determination.--
(A) In general.--An independent medical reviewer under this
section shall make a new independent determination with
respect to whether or not the denial of a claim for a benefit
that is the subject of the review should be upheld, reversed,
or modified.
(B) Standard for determination.--The independent medical
reviewer's determination relating to the medical necessity
and appropriateness, or the experimental or investigation
nature, or the evaluation of the medical facts of the item,
service, or condition shall be based on the medical condition
of the participant, beneficiary, or enrollee (including the
medical records of the participant, beneficiary, or enrollee)
and valid, relevant scientific evidence and clinical
evidence, including peer-reviewed medical literature or
findings and including expert opinion.
(C) No coverage for excluded benefits.--Nothing in this
subsection shall be construed to permit an independent
medical reviewer to require that a group health plan, or
health insurance issuer offering health insurance coverage,
provide coverage for items or services for which benefits are
specifically excluded or expressly limited under the plan or
coverage in the plain language of the plan document (and
which are disclosed under section 121(b)(1)(C)) except to the
extent that the application or interpretation of the
exclusion or limitation involves a determination described in
paragraph (2).
(D) Evidence and information to be used in medical
reviews.--In making a determination under this subsection,
the independent medical reviewer shall also consider
appropriate and available evidence and information, including
the following:
(i) The determination made by the plan or issuer with
respect to the claim upon internal review and the evidence,
guidelines, or rationale used by the plan or issuer in
reaching such determination.
(ii) The recommendation of the treating health care
professional and the evidence, guidelines, and rationale used
by the treating health care professional in reaching such
recommendation.
(iii) Additional relevant evidence or information obtained
by the reviewer or submitted by the plan, issuer,
participant, beneficiary, or enrollee (or an authorized
representative), or treating health care professional.
(iv) The plan or coverage document.
(E) Independent determination.--In making determinations
under this subtitle, a qualified external review entity and
an independent medical reviewer shall--
(i) consider the claim under review without deference to
the determinations made by the plan or issuer or the
recommendation of the treating health care professional (if
any); and
(ii) consider, but not be bound by the definition used by
the plan or issuer of ``medically necessary and
appropriate'', or ``experimental or investigational'', or
other substantially equivalent terms that are used by the
plan or issuer to describe medical necessity and
appropriateness or experimental or investigational nature of
the treatment.
(F) Determination of independent medical reviewer.--An
independent medical reviewer shall, in accordance with the
deadlines described in subsection (e), prepare a written
determination to uphold, reverse, or modify the denial under
review. Such written determination shall include--
(i) the determination of the reviewer;
(ii) the specific reasons of the reviewer for such
determination, including a summary of the clinical or
scientific evidence used in making the determination; and
(iii) with respect to a determination to reverse or modify
the denial under review, a timeframe within which the plan or
issuer must comply with such determination.
(G) Nonbinding nature of additional recommendations.--In
addition to the determination under subparagraph (F), the
reviewer may provide the plan or issuer and the treating
health care professional with additional recommendations in
connection with such a determination, but any such
recommendations shall not affect (or be treated as part of)
the determination and shall not be binding on the plan or
issuer.
(e) Timelines and Notifications.--
(1) Timelines for independent medical review.--
(A) Prior authorization determination.--
(i) In general.--The independent medical reviewer (or
reviewers) shall make a determination on a denial of a claim
for benefits that is referred to the reviewer under
subsection (c)(3) in accordance with the medical exigencies
of the case and as soon as possible, but in no case later
than 14 days after the date of receipt of information under
subsection (c)(2) if the review involves a prior
authorization of items or services and in no case later than
21 days after the date the request for external review is
received.
(ii) Expedited determination.--Notwithstanding clause (i)
and subject to clause (iii), the independent medical reviewer
(or reviewers) shall make an expedited determination on a
denial of a claim for benefits described in clause (i), when
a request for such an expedited determination is made by a
participant, beneficiary, or enrollee (or authorized
representative) at any time during the process for making a
determination, and a health care professional certifies, with
the request, that a determination under the timeline
described in clause (i) would seriously jeopardize the life
or health of the participant, beneficiary, or enrollee or the
ability of the participant, beneficiary, or enrollee to
maintain or regain maximum function. Such determination shall
be made as soon in accordance with the medical exigencies of
the case and as soon as possible, but in no case later than
72 hours after the time the request for external review is
received by the qualified external review entity.
(iii) Ongoing care determination.--Notwithstanding clause
(i), in the case of a review described in such subclause that
involves a termination or reduction of care, the notice of
the determination shall be completed not later than 24 hours
after the time the request for external review is received by
the qualified external review entity and before the end of
the approved period of care.
(B) Retrospective determination.--The independent medical
reviewer (or reviewers) shall complete a review in the case
of a retrospective determination on an appeal of a denial of
a claim for benefits that is referred to the reviewer under
subsection (c)(3) in no case later than 30 days after the
date of receipt of information under subsection (c)(2) and in
no case later than 60 days after the date the request for
external review is received by the qualified external review
entity.
[[Page S1141]]
(2) Notification of determination.--The external review
entity shall ensure that the plan or issuer, the participant,
beneficiary, or enrollee (or authorized representative) and
the treating health care professional (if any) receives a
copy of the written determination of the independent medical
reviewer prepared under subsection (d)(3)(F). Nothing in this
paragraph shall be construed as preventing an entity or
reviewer from providing an initial oral notice of the
reviewer's determination.
(3) Form of notices.--Determinations and notices under this
subsection shall be written in a manner calculated to be
understood by an average participant.
(f) Compliance.--
(1) Application of determinations.--
(A) External review determinations binding on plan.--The
determinations of an external review entity and an
independent medical reviewer under this section shall be
binding upon the plan or issuer involved.
(B) Compliance with determination.--If the determination of
an independent medical reviewer is to reverse or modify the
denial, the plan or issuer, upon the receipt of such
determination, shall authorize coverage to comply with the
medical reviewer's determination in accordance with the
timeframe established by the medical reviewer.
(2) Failure to comply.--
(A) In general.--If a plan or issuer fails to comply with
the timeframe established under paragraph (1)(B) with respect
to a participant, beneficiary, or enrollee, where such
failure to comply is caused by the plan or issuer, the
participant, beneficiary, or enrollee may obtain the items or
services involved (in a manner consistent with the
determination of the independent external reviewer) from any
provider regardless of whether such provider is a
participating provider under the plan or coverage.
(B) Reimbursement.--
(i) In general.--Where a participant, beneficiary, or
enrollee obtains items or services in accordance with
subparagraph (A), the plan or issuer involved shall provide
for reimbursement of the costs of such items or services.
Such reimbursement shall be made to the treating health care
professional or to the participant, beneficiary, or enrollee
(in the case of a participant, beneficiary, or enrollee who
pays for the costs of such items or services).
(ii) Amount.--The plan or issuer shall fully reimburse a
professional, participant, beneficiary, or enrollee under
clause (i) for the total costs of the items or services
provided (regardless of any plan limitations that may apply
to the coverage of such items or services) so long as the
items or services were provided in a manner consistent with
the determination of the independent medical reviewer.
(C) Failure to reimburse.--Where a plan or issuer fails to
provide reimbursement to a professional, participant,
beneficiary, or enrollee in accordance with this paragraph,
the professional, participant, beneficiary, or enrollee may
commence a civil action (or utilize other remedies available
under law) to recover only the amount of any such
reimbursement that is owed by the plan or issuer and any
necessary legal costs or expenses (including attorney's fees)
incurred in recovering such reimbursement.
(D) Available remedies.--The remedies provided under this
paragraph are in addition to any other available remedies.
(3) Penalties against authorized officials for refusing to
authorize the determination of an external review entity.--
(A) Monetary penalties.--
(i) In general.--In any case in which the determination of
an external review entity is not followed by a group health
plan, or by a health insurance issuer offering health
insurance coverage, any person who, acting in the capacity of
authorizing the benefit, causes such refusal may, in the
discretion in a court of competent jurisdiction, be liable to
an aggrieved participant, beneficiary, or enrollee for a
civil penalty in an amount of up to $1,000 a day from the
date on which the determination was transmitted to the plan
or issuer by the external review entity until the date the
refusal to provide the benefit is corrected.
(ii) Additional penalty for failing to follow timeline.--In
any case in which treatment was not commenced by the plan in
accordance with the determination of an independent external
reviewer, the Secretary shall assess a civil penalty of
$10,000 against the plan and the plan shall pay such penalty
to the participant, beneficiary, or enrollee involved.
(B) Cease and desist order and order of attorney's fees.--
In any action described in subparagraph (A) brought by a
participant, beneficiary, or enrollee with respect to a group
health plan, or a health insurance issuer offering health
insurance coverage, in which a plaintiff alleges that a
person referred to in such subparagraph has taken an action
resulting in a refusal of a benefit determined by an external
appeal entity to be covered, or has failed to take an action
for which such person is responsible under the terms and
conditions of the plan or coverage and which is necessary
under the plan or coverage for authorizing a benefit, the
court shall cause to be served on the defendant an order
requiring the defendant--
(i) to cease and desist from the alleged action or failure
to act; and
(ii) to pay to the plaintiff a reasonable attorney's fee
and other reasonable costs relating to the prosecution of the
action on the charges on which the plaintiff prevails.
(C) Additional civil penalties.--
(i) In general.--In addition to any penalty imposed under
subparagraph (A) or (B), the appropriate Secretary may assess
a civil penalty against a person acting in the capacity of
authorizing a benefit determined by an external review entity
for one or more group health plans, or health insurance
issuers offering health insurance coverage, for--
(I) any pattern or practice of repeated refusal to
authorize a benefit determined by an external appeal entity
to be covered; or
(II) any pattern or practice of repeated violations of the
requirements of this section with respect to such plan or
coverage.
(ii) Standard of proof and amount of penalty.--Such penalty
shall be payable only upon proof by clear and convincing
evidence of such pattern or practice and shall be in an
amount not to exceed the lesser of--
(I) 25 percent of the aggregate value of benefits shown by
the appropriate Secretary to have not been provided, or
unlawfully delayed, in violation of this section under such
pattern or practice; or
(II) $500,000.
(D) Removal and disqualification.--Any person acting in the
capacity of authorizing benefits who has engaged in any such
pattern or practice described in subparagraph (C)(i) with
respect to a plan or coverage, upon the petition of the
appropriate Secretary, may be removed by the court from such
position, and from any other involvement, with respect to
such a plan or coverage, and may be precluded from returning
to any such position or involvement for a period determined
by the court.
(4) Protection of legal rights.--Nothing in this subsection
or subtitle shall be construed as altering or eliminating any
cause of action or legal rights or remedies of participants,
beneficiaries, enrollees, and others under State or Federal
law (including sections 502 and 503 of the Employee
Retirement Income Security Act of 1974), including the right
to file judicial actions to enforce rights.
(g) Qualifications of Independent Medical Reviewers.--
(1) In general.--In referring a denial to 1 or more
individuals to conduct independent medical review under
subsection (c), the qualified external review entity shall
ensure that--
(A) each independent medical reviewer meets the
qualifications described in paragraphs (2) and (3);
(B) with respect to each review at least 1 such reviewer
meets the requirements described in paragraphs (4) and (5);
and
(C) compensation provided by the entity to the reviewer is
consistent with paragraph (6).
(2) Licensure and expertise.--Each independent medical
reviewer shall be a physician (allopathic or osteopathic) or
health care professional who--
(A) is appropriately credentialed or licensed in 1 or more
States to deliver health care services; and
(B) typically treats the condition, makes the diagnosis, or
provides the type of treatment under review.
(3) Independence.--
(A) In general.--Subject to subparagraph (B), each
independent medical reviewer in a case shall--
(i) not be a related party (as defined in paragraph (7));
(ii) not have a material familial, financial, or
professional relationship with such a party; and
(iii) not otherwise have a conflict of interest with such a
party (as determined under regulations).
(B) Exception.--Nothing in subparagraph (A) shall be
construed to--
(i) prohibit an individual, solely on the basis of
affiliation with the plan or issuer, from serving as an
independent medical reviewer if--
(I) a non-affiliated individual is not reasonably
available;
(II) the affiliated individual is not involved in the
provision of items or services in the case under review;
(III) the fact of such an affiliation is disclosed to the
plan or issuer and the participant, beneficiary, or enrollee
(or authorized representative) and neither party objects; and
(IV) the affiliated individual is not an employee of the
plan or issuer and does not provide services exclusively or
primarily to or on behalf of the plan or issuer;
(ii) prohibit an individual who has staff privileges at the
institution where the treatment involved takes place from
serving as an independent medical reviewer merely on the
basis of such affiliation if the affiliation is disclosed to
the plan or issuer and the participant, beneficiary, or
enrollee (or authorized representative), and neither party
objects; or
(iii) prohibit receipt of compensation by an independent
medical reviewer from an entity if the compensation is
provided consistent with paragraph (6).
(4) Practicing health care professional in same field.--
(A) In general.--In a case involving treatment, or the
provision of items or services--
(i) by a physician, a reviewer shall be a practicing
physician (allopathic or osteopathic) of the same or similar
specialty, as a physician who typically treats the condition,
makes the diagnosis, or provides the type of treatment under
review; or
(ii) by a health care professional (other than a
physician), a reviewer shall be a practicing physician
(allopathic or osteopathic) or, if determined appropriate by
the qualified external review entity, a practicing
[[Page S1142]]
health care professional (other than such a physician), of
the same or similar specialty as the health care professional
who typically treats the condition, makes the diagnosis, or
provides the type of treatment under review.
(B) Practicing defined.--For purposes of this paragraph,
the term ``practicing'' means, with respect to an individual
who is a physician or other health care professional that the
individual provides health care services to individual
patients on average at least 2 days per week.
(5) Pediatric expertise.--In the case of an external review
relating to a child, a reviewer shall have expertise under
paragraph (2) in pediatrics.
(6) Limitations on reviewer compensation.--Compensation
provided by a qualified external review entity to an
independent medical reviewer in connection with a review
under this section shall--
(A) not exceed a reasonable level; and
(B) not be contingent on the decision rendered by the
reviewer.
(7) Related party defined.--For purposes of this section,
the term ``related party'' means, with respect to a denial of
a claim under a plan or coverage relating to a participant,
beneficiary, or enrollee, any of the following:
(A) The plan, plan sponsor, or issuer involved, or any
fiduciary, officer, director, or employee of such plan, plan
sponsor, or issuer.
(B) The participant, beneficiary, or enrollee (or
authorized representative).
(C) The health care professional that provides the items or
services involved in the denial.
(D) The institution at which the items or services (or
treatment) involved in the denial are provided.
(E) The manufacturer of any drug or other item that is
included in the items or services involved in the denial.
(F) Any other party determined under any regulations to
have a substantial interest in the denial involved.
(h) Qualified External Review Entities.--
(1) Selection of qualified external review entities.--
(A) Limitation on plan or issuer selection.--The
appropriate Secretary shall implement procedures--
(i) to assure that the selection process among qualified
external review entities will not create any incentives for
external review entities to make a decision in a biased
manner; and
(ii) for auditing a sample of decisions by such entities to
assure that no such decisions are made in a biased manner.
No such selection process under the procedures implemented by
the appropriate Secretary may give either the patient or the
plan or issuer any ability to determine or influence the
selection of a qualified external review entity to review the
case of any participant, beneficiary, or enrollee.
(B) State authority with respect to qualified external
review entities for health insurance issuers.--With respect
to health insurance issuers offering health insurance
coverage in a State, the State may provide for external
review activities to be conducted by a qualified external
appeal entity that is designated by the State or that is
selected by the State in a manner determined by the State to
assure an unbiased determination.
(2) Contract with qualified external review entity.--Except
as provided in paragraph (1)(B), the external review process
of a plan or issuer under this section shall be conducted
under a contract between the plan or issuer and 1 or more
qualified external review entities (as defined in paragraph
(4)(A)).
(3) Terms and conditions of contract.--The terms and
conditions of a contract under paragraph (2) shall--
(A) be consistent with the standards the appropriate
Secretary shall establish to assure there is no real or
apparent conflict of interest in the conduct of external
review activities; and
(B) provide that the costs of the external review process
shall be borne by the plan or issuer.
Subparagraph (B) shall not be construed as applying to the
imposition of a filing fee under subsection (b)(2)(A)(iv) or
costs incurred by the participant, beneficiary, or enrollee
(or authorized representative) or treating health care
professional (if any) in support of the review, including the
provision of additional evidence or information.
(4) Qualifications.--
(A) In general.--In this section, the term ``qualified
external review entity'' means, in relation to a plan or
issuer, an entity that is initially certified (and
periodically recertified) under subparagraph (C) as meeting
the following requirements:
(i) The entity has (directly or through contracts or other
arrangements) sufficient medical, legal, and other expertise
and sufficient staffing to carry out duties of a qualified
external review entity under this section on a timely basis,
including making determinations under subsection (b)(2)(A)
and providing for independent medical reviews under
subsection (d).
(ii) The entity is not a plan or issuer or an affiliate or
a subsidiary of a plan or issuer, and is not an affiliate or
subsidiary of a professional or trade association of plans or
issuers or of health care providers.
(iii) The entity has provided assurances that it will
conduct external review activities consistent with the
applicable requirements of this section and standards
specified in subparagraph (C), including that it will not
conduct any external review activities in a case unless the
independence requirements of subparagraph (B) are met with
respect to the case.
(iv) The entity has provided assurances that it will
provide information in a timely manner under subparagraph
(D).
(v) The entity meets such other requirements as the
appropriate Secretary provides by regulation.
(B) Independence requirements.--
(i) In general.--Subject to clause (ii), an entity meets
the independence requirements of this subparagraph with
respect to any case if the entity--
(I) is not a related party (as defined in subsection
(g)(7));
(II) does not have a material familial, financial, or
professional relationship with such a party; and
(III) does not otherwise have a conflict of interest with
such a party (as determined under regulations).
(ii) Exception for reasonable compensation.--Nothing in
clause (i) shall be construed to prohibit receipt by a
qualified external review entity of compensation from a plan
or issuer for the conduct of external review activities under
this section if the compensation is provided consistent with
clause (iii).
(iii) Limitations on entity compensation.--Compensation
provided by a plan or issuer to a qualified external review
entity in connection with reviews under this section shall--
(I) not exceed a reasonable level; and
(II) not be contingent on any decision rendered by the
entity or by any independent medical reviewer.
(C) Certification and recertification process.--
(i) In general.--The initial certification and
recertification of a qualified external review entity shall
be made--
(I) under a process that is recognized or approved by the
appropriate Secretary; or
(II) by a qualified private standard-setting organization
that is approved by the appropriate Secretary under clause
(iii).
In taking action under subclause (I), the appropriate
Secretary shall give deference to entities that are under
contract with the Federal Government or with an applicable
State authority to perform functions of the type performed by
qualified external review entities.
(ii) Process.--The appropriate Secretary shall not
recognize or approve a process under clause (i)(I) unless the
process applies standards (as promulgated in regulations)
that ensure that a qualified external review entity--
(I) will carry out (and has carried out, in the case of
recertification) the responsibilities of such an entity in
accordance with this section, including meeting applicable
deadlines;
(II) will meet (and has met, in the case of
recertification) appropriate indicators of fiscal integrity;
(III) will maintain (and has maintained, in the case of
recertification) appropriate confidentiality with respect to
individually identifiable health information obtained in the
course of conducting external review activities; and
(IV) in the case recertification, shall review the matters
described in clause (iv).
(iii) Approval of qualified private standard-setting
organizations.--For purposes of clause (i)(II), the
appropriate Secretary may approve a qualified private
standard-setting organization if such Secretary finds that
the organization only certifies (or recertifies) external
review entities that meet at least the standards required for
the certification (or recertification) of external review
entities under clause (ii).
(iv) Considerations in recertifications.--In conducting
recertifications of a qualified external review entity under
this paragraph, the appropriate Secretary or organization
conducting the recertification shall review compliance of the
entity with the requirements for conducting external review
activities under this section, including the following:
(I) Provision of information under subparagraph (D).
(II) Adherence to applicable deadlines (both by the entity
and by independent medical reviewers it refers cases to).
(III) Compliance with limitations on compensation (with
respect to both the entity and independent medical reviewers
it refers cases to).
(IV) Compliance with applicable independence requirements.
(v) Period of certification or recertification.--A
certification or recertification provided under this
paragraph shall extend for a period not to exceed 2 years.
(vi) Revocation.--A certification or recertification under
this paragraph may be revoked by the appropriate Secretary or
by the organization providing such certification upon a
showing of cause.
(vii) Sufficient number of entities.--The appropriate
Secretary shall certify and recertify a number of external
review entities which is sufficient to ensure the timely and
efficient provision of review services.
(D) Provision of information.--
(i) In general.--A qualified external review entity shall
provide to the appropriate Secretary, in such manner and at
such times as such Secretary may require, such information
(relating to the denials which have
[[Page S1143]]
been referred to the entity for the conduct of external
review under this section) as such Secretary determines
appropriate to assure compliance with the independence and
other requirements of this section to monitor and assess the
quality of its external review activities and lack of bias in
making determinations. Such information shall include
information described in clause (ii) but shall not include
individually identifiable medical information.
(ii) Information to be included.--The information described
in this subclause with respect to an entity is as follows:
(I) The number and types of denials for which a request for
review has been received by the entity.
(II) The disposition by the entity of such denials,
including the number referred to a independent medical
reviewer and the reasons for such dispositions (including the
application of exclusions), on a plan or issuer-specific
basis and on a health care specialty-specific basis.
(III) The length of time in making determinations with
respect to such denials.
(IV) Updated information on the information required to be
submitted as a condition of certification with respect to the
entity's performance of external review activities.
(iii) Information to be provided to certifying
organization.--
(I) In general.--In the case of a qualified external review
entity which is certified (or recertified) under this
subsection by a qualified private standard-setting
organization, at the request of the organization, the entity
shall provide the organization with the information provided
to the appropriate Secretary under clause (i).
(II) Additional information.--Nothing in this subparagraph
shall be construed as preventing such an organization from
requiring additional information as a condition of
certification or recertification of an entity.
(iv) Use of information.--Information provided under this
subparagraph may be used by the appropriate Secretary and
qualified private standard-setting organizations to conduct
oversight of qualified external review entities, including
recertification of such entities, and shall be made available
to the public in an appropriate manner.
(E) Limitation on liability.--No qualified external review
entity having a contract with a plan or issuer, and no person
who is employed by any such entity or who furnishes
professional services to such entity (including as an
independent medical reviewer), shall be held by reason of the
performance of any duty, function, or activity required or
authorized pursuant to this section, to be civilly liable
under any law of the United States or of any State (or
political subdivision thereof) if there was no actual malice
or gross misconduct in the performance of such duty,
function, or activity.
Subtitle B--Access to Care
SEC. 111. CONSUMER CHOICE OPTION.
(a) In General.--If--
(1) a health insurance issuer providing health insurance
coverage in connection with a group health plan offers to
enrollees health insurance coverage which provides for
coverage of services only if such services are furnished
through health care professionals and providers who are
members of a network of health care professionals and
providers who have entered into a contract with the issuer to
provide such services, or
(2) a group health plan offers to participants or
beneficiaries health benefits which provide for coverage of
services only if such services are furnished through health
care professionals and providers who are members of a network
of health care professionals and providers who have entered
into a contract with the plan to provide such services,
then the issuer or plan shall also offer or arrange to be
offered to such enrollees, participants, or beneficiaries (at
the time of enrollment and during an annual open season as
provided under subsection (c)) the option of health insurance
coverage or health benefits which provide for coverage of
such services which are not furnished through health care
professionals and providers who are members of such a network
unless such enrollees, participants, or beneficiaries are
offered such non-network coverage through another group
health plan or through another health insurance issuer in the
group market.
(b) Additional Costs.--The amount of any additional premium
charged by the health insurance issuer or group health plan
for the additional cost of the creation and maintenance of
the option described in subsection (a) and the amount of any
additional cost sharing imposed under such option shall be
borne by the enrollee, participant, or beneficiary unless it
is paid by the health plan sponsor or group health plan
through agreement with the health insurance issuer.
(c) Open Season.--An enrollee, participant, or beneficiary,
may change to the offering provided under this section only
during a time period determined by the health insurance
issuer or group health plan. Such time period shall occur at
least annually.
SEC. 112. CHOICE OF HEALTH CARE PROFESSIONAL.
(a) Primary Care.--If a group health plan, or a health
insurance issuer that offers health insurance coverage,
requires or provides for designation by a participant,
beneficiary, or enrollee of a participating primary care
provider, then the plan or issuer shall permit each
participant, beneficiary, and enrollee to designate any
participating primary care provider who is available to
accept such individual.
(b) Specialists.--
(1) In general.--Subject to paragraph (2), a group health
plan and a health insurance issuer that offers health
insurance coverage shall permit each participant,
beneficiary, or enrollee to receive medically necessary and
appropriate specialty care, pursuant to appropriate referral
procedures, from any qualified participating health care
professional who is available to accept such individual for
such care.
(2) Limitation.--Paragraph (1) shall not apply to specialty
care if the plan or issuer clearly informs participants,
beneficiaries, and enrollees of the limitations on choice of
participating health care professionals with respect to such
care.
(3) Construction.--Nothing in this subsection shall be
construed as affecting the application of section 114
(relating to access to specialty care).
SEC. 113. ACCESS TO EMERGENCY CARE.
(a) Coverage of Emergency Services.--
(1) In general.--If a group health plan, or health
insurance coverage offered by a health insurance issuer,
provides or covers any benefits with respect to services in
an emergency department of a hospital, the plan or issuer
shall cover emergency services (as defined in paragraph
(2)(B))--
(A) without the need for any prior authorization
determination;
(B) whether the health care provider furnishing such
services is a participating provider with respect to such
services;
(C) in a manner so that, if such services are provided to a
participant, beneficiary, or enrollee--
(i) by a nonparticipating health care provider with or
without prior authorization, or
(ii) by a participating health care provider without prior
authorization,
the participant, beneficiary, or enrollee is not liable for
amounts that exceed the amounts of liability that would be
incurred if the services were provided by a participating
health care provider with prior authorization; and
(D) without regard to any other term or condition of such
coverage (other than exclusion or coordination of benefits,
or an affiliation or waiting period, permitted under section
2701 of the Public Health Service Act, section 701 of the
Employee Retirement Income Security Act of 1974, or section
9801 of the Internal Revenue Code of 1986, and other than
applicable cost-sharing).
(2) Definitions.--In this section:
(A) Emergency medical condition.--The term ``emergency
medical condition'' means a medical condition manifesting
itself by acute symptoms of sufficient severity (including
severe pain) such that a prudent layperson, who possesses an
average knowledge of health and medicine, could reasonably
expect the absence of immediate medical attention to result
in a condition described in clause (i), (ii), or (iii) of
section 1867(e)(1)(A) of the Social Security Act.
(B) Emergency services.--The term ``emergency services''
means, with respect to an emergency medical condition--
(i) a medical screening examination (as required under
section 1867 of the Social Security Act) that is within the
capability of the emergency department of a hospital,
including ancillary services routinely available to the
emergency department to evaluate such emergency medical
condition, and
(ii) within the capabilities of the staff and facilities
available at the hospital, such further medical examination
and treatment as are required under section 1867 of such Act
to stabilize the patient.
(C) Stabilize.--The term ``to stabilize'', with respect to
an emergency medical condition (as defined in subparagraph
(A)), has the meaning given in section 1867(e)(3) of the
Social Security Act (42 U.S.C. 1395dd(e)(3)).
(b) Reimbursement for Maintenance Care and Post-
Stabilization Care.--A group health plan, and health
insurance coverage offered by a health insurance issuer, must
provide reimbursement for maintenance care and post-
stabilization care in accordance with the requirements of
section 1852(d)(2) of the Social Security Act (42 U.S.C.
1395w-22(d)(2)). Such reimbursement shall be provided in a
manner consistent with subsection (a)(1)(C).
(c) Coverage of Emergency Ambulance Services.--
(1) In general.--If a group health plan, or health
insurance coverage provided by a health insurance issuer,
provides any benefits with respect to ambulance services and
emergency services, the plan or issuer shall cover emergency
ambulance services (as defined in paragraph (2)) furnished
under the plan or coverage under the same terms and
conditions under subparagraphs (A) through (D) of subsection
(a)(1) under which coverage is provided for emergency
services.
(2) Emergency ambulance services.--For purposes of this
subsection, the term ``emergency ambulance services'' means
ambulance services (as defined for purposes of section
1861(s)(7) of the Social Security Act) furnished to transport
an individual who has an emergency medical condition (as
defined in subsection (a)(2)(A)) to a hospital for the
receipt of emergency services (as defined in subsection
(a)(2)(B)) in a case in which the emergency services are
covered under the plan or coverage pursuant to subsection
(a)(1) and a prudent layperson, with an average knowledge of
health and medicine, could reasonably expect that the absence
of such transport would result in placing the health of the
individual in serious jeopardy, serious
[[Page S1144]]
impairment of bodily function, or serious dysfunction of any
bodily organ or part.
SEC. 114. TIMELY ACCESS TO SPECIALISTS.
(a) Timely Access.--
(1) In general.--A group health plan or health insurance
issuer offering health insurance coverage shall ensure that
participants, beneficiaries, and enrollees receive timely
access to specialists who are appropriate to the condition
of, and accessible to, the participant, beneficiary, or
enrollee, when such specialty care is a covered benefit under
the plan or coverage.
(2) Rule of construction.--Nothing in paragraph (1) shall
be construed--
(A) to require the coverage under a group health plan or
health insurance coverage of benefits or services;
(B) to prohibit a plan or issuer from including providers
in the network only to the extent necessary to meet the needs
of the plan's or issuer's participants, beneficiaries, or
enrollees; or
(C) to override any State licensure or scope-of-practice
law.
(3) Access to certain providers.--
(A) In general.--With respect to specialty care under this
section, if a participating specialist is not available and
qualified to provide such care to the participant,
beneficiary, or enrollee, the plan or issuer shall provide
for coverage of such care by a nonparticipating specialist.
(B) Treatment of nonparticipating providers.--If a
participant, beneficiary, or enrollee receives care from a
nonparticipating specialist pursuant to subparagraph (A),
such specialty care shall be provided at no additional cost
to the participant, beneficiary, or enrollee beyond what the
participant, beneficiary, or enrollee would otherwise pay for
such specialty care if provided by a participating
specialist.
(b) Referrals.--
(1) Authorization.--A group health plan or health insurance
issuer may require an authorization in order to obtain
coverage for specialty services under this section. Any such
authorization--
(A) shall be for an appropriate duration of time or number
of referrals; and
(B) may not be refused solely because the authorization
involves services of a nonparticipating specialist (described
in subsection (a)(3)).
(2) Referrals for ongoing special conditions.--
(A) In general.--A group health plan or health insurance
issuer shall permit a participant, beneficiary, or enrollee
who has an ongoing special condition (as defined in
subparagraph (B)) to receive a referral to a specialist for
the treatment of such condition and such specialist may
authorize such referrals, procedures, tests, and other
medical services with respect to such condition, or
coordinate the care for such condition, subject to the terms
of a treatment plan (if any) referred to in subsection (c)
with respect to the condition.
(B) Ongoing special condition defined.--In this subsection,
the term ``ongoing special condition'' means a condition or
disease that--
(i) is life-threatening, degenerative, potentially
disabling, or congenital; and
(ii) requires specialized medical care over a prolonged
period of time.
(c) Treatment Plans.--
(1) In general.--A group health plan or health insurance
issuer may require that the specialty care be provided--
(A) pursuant to a treatment plan, but only if the treatment
plan--
(i) is developed by the specialist, in consultation with
the case manager or primary care provider, and the
participant, beneficiary, or enrollee, and
(ii) is approved by the plan or issuer in a timely manner,
if the plan or issuer requires such approval; and
(B) in accordance with applicable quality assurance and
utilization review standards of the plan or issuer.
(2) Notification.--Nothing in paragraph (1) shall be
construed as prohibiting a plan or issuer from requiring the
specialist to provide the plan or issuer with regular updates
on the specialty care provided, as well as all other
reasonably necessary medical information.
(d) Specialist Defined.--For purposes of this section, the
term ``specialist'' means, with respect to the condition of
the participant, beneficiary, or enrollee, a health care
professional, facility, or center that has adequate expertise
through appropriate training and experience (including, in
the case of a child, appropriate pediatric expertise) to
provide high quality care in treating the condition.
SEC. 115. PATIENT ACCESS TO OBSTETRIC AND GYNECOLOGICAL CARE.
(a) General Rights.--
(1) Direct access.--A group health plan, or health
insurance issuer offering health insurance coverage,
described in subsection (b) may not require authorization or
referral by the plan, issuer, or any person (including a
primary care provider described in subsection (b)(2)) in the
case of a female participant, beneficiary, or enrollee who
seeks coverage for obstetrical or gynecological care provided
by a participating health care professional who specializes
in obstetrics or gynecology.
(2) Obstetrical and gynecological care.--A group health
plan or health insurance issuer described in subsection (b)
shall treat the provision of obstetrical and gynecological
care, and the ordering of related obstetrical and
gynecological items and services, pursuant to the direct
access described under paragraph (1), by a participating
health care professional who specializes in obstetrics or
gynecology as the authorization of the primary care provider.
(b) Application of Section.--A group health plan, or health
insurance issuer offering health insurance coverage,
described in this subsection is a group health plan or
coverage that--
(1) provides coverage for obstetric or gynecologic care;
and
(2) requires the designation by a participant, beneficiary,
or enrollee of a participating primary care provider.
(c) Construction.--Nothing in subsection (a) shall be
construed to--
(1) waive any exclusions of coverage under the terms and
conditions of the plan or health insurance coverage with
respect to coverage of obstetrical or gynecological care; or
(2) preclude the group health plan or health insurance
issuer involved from requiring that the obstetrical or
gynecological provider notify the primary care health care
professional or the plan or issuer of treatment decisions.
SEC. 116. ACCESS TO PEDIATRIC CARE.
(a) Pediatric Care.--In the case of a person who has a
child who is a participant, beneficiary, or enrollee under a
group health plan, or health insurance coverage offered by a
health insurance issuer, if the plan or issuer requires or
provides for the designation of a participating primary care
provider for the child, the plan or issuer shall permit such
person to designate a physician (allopathic or osteopathic)
who specializes in pediatrics as the child's primary care
provider if such provider participates in the network of the
plan or issuer.
(b) Construction.--Nothing in subsection (a) shall be
construed to waive any exclusions of coverage under the terms
and conditions of the plan or health insurance coverage with
respect to coverage of pediatric care.
SEC. 117. CONTINUITY OF CARE.
(a) Termination of Provider.--
(1) In general.--If--
(A) a contract between a group health plan, or a health
insurance issuer offering health insurance coverage, and a
treating health care provider is terminated (as defined in
paragraph (e)(4)), or
(B) benefits or coverage provided by a health care provider
are terminated because of a change in the terms of provider
participation in such plan or coverage,
the plan or issuer shall meet the requirements of paragraph
(3) with respect to each continuing care patient.
(2) Treatment of termination of contract with health
insurance issuer.--If a contract for the provision of health
insurance coverage between a group health plan and a health
insurance issuer is terminated and, as a result of such
termination, coverage of services of a health care provider
is terminated with respect to an individual, the provisions
of paragraph (1) (and the succeeding provisions of this
section) shall apply under the plan in the same manner as if
there had been a contract between the plan and the provider
that had been terminated, but only with respect to benefits
that are covered under the plan after the contract
termination.
(3) Requirements.--The requirements of this paragraph are
that the plan or issuer--
(A) notify the continuing care patient involved, or arrange
to have the patient notified pursuant to subsection (d)(2),
on a timely basis of the termination described in paragraph
(1) (or paragraph (2), if applicable) and the right to elect
continued transitional care from the provider under this
section;
(B) provide the patient with an opportunity to notify the
plan or issuer of the patient's need for transitional care;
and
(C) subject to subsection (c), permit the patient to elect
to continue to be covered with respect to the course of
treatment by such provider with the provider's consent during
a transitional period (as provided for under subsection (b)).
(4) Continuing care patient.--For purposes of this section,
the term ``continuing care patient'' means a participant,
beneficiary, or enrollee who--
(A) is undergoing a course of treatment for a serious and
complex condition from the provider at the time the plan or
issuer receives or provides notice of provider, benefit, or
coverage termination described in paragraph (1) (or paragraph
(2), if applicable);
(B) is undergoing a course of institutional or inpatient
care from the provider at the time of such notice;
(C) is scheduled to undergo non-elective surgery from the
provider at the time of such notice;
(D) is pregnant and undergoing a course of treatment for
the pregnancy from the provider at the time of such notice;
or
(E) is or was determined to be terminally ill (as
determined under section 1861(dd)(3)(A) of the Social
Security Act) at the time of such notice, but only with
respect to a provider that was treating the terminal illness
before the date of such notice.
(b) Transitional Periods.--
(1) Serious and complex conditions.--The transitional
period under this subsection with respect to a continuing
care patient described in subsection (a)(4)(A) shall extend
for up to 90 days (as determined by the treating health care
professional) from the date of the notice described in
subsection (a)(3)(A).
(2) Institutional or inpatient care.--The transitional
period under this subsection for
[[Page S1145]]
a continuing care patient described in subsection (a)(4)(B)
shall extend until the earlier of--
(A) the expiration of the 90-day period beginning on the
date on which the notice under subsection (a)(3)(A) is
provided; or
(B) the date of discharge of the patient from such care or
the termination of the period of institutionalization, or, if
later, the date of completion of reasonable follow-up care.
(3) Scheduled non-elective surgery.--The transitional
period under this subsection for a continuing care patient
described in subsection (a)(4)(C) shall extend until the
completion of the surgery involved and post-surgical follow-
up care relating to the surgery and occurring within 90 days
after the date of the surgery.
(4) Pregnancy.--The transitional period under this
subsection for a continuing care patient described in
subsection (a)(4)(D) shall extend through the provision of
post-partum care directly related to the delivery.
(5) Terminal illness.--The transitional period under this
subsection for a continuing care patient described in
subsection (a)(4)(E) shall extend for the remainder of the
patient's life for care that is directly related to the
treatment of the terminal illness or its medical
manifestations.
(c) Permissible Terms and Conditions.--A group health plan
or health insurance issuer may condition coverage of
continued treatment by a provider under this section upon the
provider agreeing to the following terms and conditions:
(1) The treating health care provider agrees to accept
reimbursement from the plan or issuer and continuing care
patient involved (with respect to cost-sharing) at the rates
applicable prior to the start of the transitional period as
payment in full (or, in the case described in subsection
(a)(2), at the rates applicable under the replacement plan or
coverage after the date of the termination of the contract
with the group health plan or health insurance issuer) and
not to impose cost-sharing with respect to the patient in an
amount that would exceed the cost-sharing that could have
been imposed if the contract referred to in subsection (a)(1)
had not been terminated.
(2) The treating health care provider agrees to adhere to
the quality assurance standards of the plan or issuer
responsible for payment under paragraph (1) and to provide to
such plan or issuer necessary medical information related to
the care provided.
(3) The treating health care provider agrees otherwise to
adhere to such plan's or issuer's policies and procedures,
including procedures regarding referrals and obtaining prior
authorization and providing services pursuant to a treatment
plan (if any) approved by the plan or issuer.
(d) Rules of Construction.--Nothing in this section shall
be construed--
(1) to require the coverage of benefits which would not
have been covered if the provider involved remained a
participating provider; or
(2) with respect to the termination of a contract under
subsection (a) to prevent a group health plan or health
insurance issuer from requiring that the health care
provider--
(A) notify participants, beneficiaries, or enrollees of
their rights under this section; or
(B) provide the plan or issuer with the name of each
participant, beneficiary, or enrollee who the provider
believes is a continuing care patient.
(e) Definitions.--In this section:
(1) Contract.--The term ``contract'' includes, with respect
to a plan or issuer and a treating health care provider, a
contract between such plan or issuer and an organized network
of providers that includes the treating health care provider,
and (in the case of such a contract) the contract between the
treating health care provider and the organized network.
(2) Health care provider.--The term ``health care
provider'' or ``provider'' means--
(A) any individual who is engaged in the delivery of health
care services in a State and who is required by State law or
regulation to be licensed or certified by the State to engage
in the delivery of such services in the State; and
(B) any entity that is engaged in the delivery of health
care services in a State and that, if it is required by State
law or regulation to be licensed or certified by the State to
engage in the delivery of such services in the State, is so
licensed.
(3) Serious and complex condition.--The term ``serious and
complex condition'' means, with respect to a participant,
beneficiary, or enrollee under the plan or coverage--
(A) in the case of an acute illness, a condition that is
serious enough to require specialized medical treatment to
avoid the reasonable possibility of death or permanent harm;
or
(B) in the case of a chronic illness or condition, is an
ongoing special condition (as defined in section
114(b)(2)(B)).
(4) Terminated.--The term ``terminated'' includes, with
respect to a contract, the expiration or nonrenewal of the
contract, but does not include a termination of the contract
for failure to meet applicable quality standards or for
fraud.
SEC. 118. ACCESS TO NEEDED PRESCRIPTION DRUGS.
(a) In General.--To the extent that a group health plan, or
health insurance coverage offered by a health insurance
issuer, provides coverage for benefits with respect to
prescription drugs, and limits such coverage to drugs
included in a formulary, the plan or issuer shall--
(1) ensure the participation of physicians and pharmacists
in developing and reviewing such formulary;
(2) provide for disclosure of the formulary to providers;
and
(3) in accordance with the applicable quality assurance and
utilization review standards of the plan or issuer, provide
for exceptions from the formulary limitation when a non-
formulary alternative is medically necessary and appropriate
and, in the case of such an exception, apply the same cost-
sharing requirements that would have applied in the case of a
drug covered under the formulary.
(b) Coverage of Approved Drugs and Medical Devices.--
(1) In general.--A group health plan (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. 119. COVERAGE FOR INDIVIDUALS PARTICIPATING IN APPROVED
CLINICAL TRIALS.
(a) Coverage.--
(1) In general.--If a group health plan, or health
insurance issuer that is providing health insurance coverage,
provides coverage to a qualified individual (as defined in
subsection (b)), the plan or issuer--
(A) may not deny the individual participation in the
clinical trial referred to in subsection (b)(2);
(B) subject to subsection (c), may not deny (or limit or
impose additional conditions on) the coverage of routine
patient costs for items and services furnished in connection
with participation in the trial; and
(C) may not discriminate against the individual on the
basis of the enrollee's participation in such trial.
(2) Exclusion of certain costs.--For purposes of paragraph
(1)(B), routine patient costs do not include the cost of the
tests or measurements conducted primarily for the purpose of
the clinical trial involved.
(3) Use of in-network providers.--If one or more
participating providers is participating in a clinical trial,
nothing in paragraph (1) shall be construed as preventing a
plan or issuer from requiring that a qualified individual
participate in the trial through such a participating
provider if the provider will accept the individual as a
participant in the trial.
(b) Qualified Individual Defined.--For purposes of
subsection (a), the term ``qualified individual'' means an
individual who is a participant or beneficiary in a group
health plan, or who is an enrollee under health insurance
coverage, and who meets the following conditions:
(1)(A) The individual has a life-threatening or serious
illness for which no standard treatment is effective.
(B) The individual is eligible to participate in an
approved clinical trial according to the trial protocol with
respect to treatment of such illness.
(C) The individual's participation in the trial offers
meaningful potential for significant clinical benefit for the
individual.
(2) Either--
(A) the referring physician is a participating health care
professional and has concluded that the individual's
participation in such trial would be appropriate based upon
the individual meeting the conditions described in paragraph
(1); or
(B) the participant, beneficiary, or enrollee provides
medical and scientific information establishing that the
individual's participation in such trial would be appropriate
based upon the individual meeting the conditions described in
paragraph (1).
(c) Payment.--
(1) In general.--Under this section a group health plan 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 appropriate
Secretary) to be paid for by the sponsors of an approved
clinical trial.
[[Page S1146]]
(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) The Food and Drug Administration.
(D) 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 appropriate Secretary determines--
(A) to be comparable to the system of peer review of
studies and investigations used by the National Institutes of
Health; and
(B) assures unbiased review of the highest 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. 120. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR
MASTECTOMIES AND LYMPH NODE DISSECTIONS FOR THE
TREATMENT OF BREAST CANCER AND COVERAGE FOR
SECONDARY CONSULTATIONS.
(a) Inpatient Care.--
(1) In general.--A group health plan, and a health
insurance issuer providing health insurance coverage, that
provides medical and surgical benefits shall ensure that
inpatient coverage with respect to the treatment of breast
cancer is provided for a period of time as is determined by
the attending physician, in consultation with the patient, to
be medically necessary and appropriate following--
(A) a mastectomy;
(B) a lumpectomy; or
(C) a lymph node dissection for the treatment of breast
cancer.
(2) Exception.--Nothing in this section shall be construed
as requiring the provision of inpatient coverage if the
attending physician and patient determine that a shorter
period of hospital stay is medically appropriate.
(b) Prohibition on Certain Modifications.--In implementing
the requirements of this section, a group health plan, and a
health insurance issuer providing health insurance coverage,
may not modify the terms and conditions of coverage based on
the determination by a participant, beneficiary, or enrollee
to request less than the minimum coverage required under
subsection (a).
(c) Secondary Consultations.--
(1) In general.--A group health plan, and a health
insurance issuer providing health insurance coverage, that
provides coverage with respect to medical and surgical
services provided in relation to the diagnosis and treatment
of cancer shall ensure that full coverage is provided for
secondary consultations by specialists in the appropriate
medical fields (including pathology, radiology, and oncology)
to confirm or refute such diagnosis. Such plan or issuer
shall ensure that full coverage is provided for such
secondary consultation whether such consultation is based on
a positive or negative initial diagnosis. In any case in
which the attending physician certifies in writing that
services necessary for such a secondary consultation are not
sufficiently available from specialists operating under the
plan or coverage with respect to whose services coverage is
otherwise provided under such plan or by such issuer, such
plan or issuer shall ensure that coverage is provided with
respect to the services necessary for the secondary
consultation with any other specialist selected by the
attending physician for such purpose at no additional cost to
the individual beyond that which the individual would have
paid if the specialist was participating in the network of
the plan or issuer.
(2) Exception.--Nothing in paragraph (1) shall be construed
as requiring the provision of secondary consultations where
the patient determines not to seek such a consultation.
(d) Prohibition on Penalties or Incentives.--A group health
plan, and a health insurance issuer providing health
insurance coverage, may not--
(1) penalize or otherwise reduce or limit the reimbursement
of a provider or specialist because the provider or
specialist provided care to a participant, beneficiary, or
enrollee in accordance with this section;
(2) provide financial or other incentives to a physician or
specialist to induce the physician or specialist to keep the
length of inpatient stays of patients following a mastectomy,
lumpectomy, or a lymph node dissection for the treatment of
breast cancer below certain limits or to limit referrals for
secondary consultations; or
(3) provide financial or other incentives to a physician or
specialist to induce the physician or specialist to refrain
from referring a participant, beneficiary, or enrollee for a
secondary consultation that would otherwise be covered by the
plan or coverage involved under subsection (c).
Subtitle C--Access to Information
SEC. 121. PATIENT ACCESS TO INFORMATION.
(a) Requirement--
(1) Disclosure.--
(A) In general.--A group health plan, and a health
insurance issuer that provides coverage in connection with
health insurance coverage, shall provide for the disclosure
to participants, beneficiaries, and enrollees--
(i) of the information described in subsection (b) at the
time of the initial enrollment of the participant,
beneficiary, or enrollee under the plan or coverage;
(ii) of such information on an annual basis--
(I) in conjunction with the election period of the plan or
coverage if the plan or coverage has such an election period;
or
(II) in the case of a plan or coverage that does not have
an election period, in conjunction with the beginning of the
plan or coverage year; and
(iii) of information relating to any material reduction to
the benefits or information described in such subsection or
subsection (c), in the form of a notice provided not later
than 30 days before the date on which the reduction takes
effect.
(B) Participants, beneficiaries, and enrollees.--The
disclosure required under subparagraph (A) shall be
provided--
(i) jointly to each participant, beneficiary, and enrollee
who reside at the same address; or
(ii) in the case of a beneficiary or enrollee who does not
reside at the same address as the participant or another
enrollee, separately to the participant or other enrollees
and such beneficiary or enrollee.
(2) Provision of information.--Information shall be
provided to participants, beneficiaries, and enrollees under
this section at the last known address maintained by the plan
or issuer with respect to such participants, beneficiaries,
or enrollees, to the extent that such information is provided
to participants, beneficiaries, or enrollees via the United
States Postal Service or other private delivery service.
(b) Required Information.--The informational materials to
be distributed under this section shall include for each
option available under the group health plan or health
insurance coverage the following:
(1) Benefits.--A description of the covered benefits,
including--
(A) any in- and out-of-network benefits;
(B) specific preventive services covered under the plan or
coverage if such services are covered;
(C) any specific exclusions or express limitations of
benefits described in section 104(b)(3)(C);
(D) any other benefit limitations, including any annual or
lifetime benefit limits and any monetary limits or limits on
the number of visits, days, or services, and any specific
coverage exclusions; and
(E) any definition of medical necessity used in making
coverage determinations by the plan, issuer, or claims
administrator.
(2) Cost sharing.--A description of any cost-sharing
requirements, including--
(A) any premiums, deductibles, coinsurance, copayment
amounts, and liability for balance billing, for which the
participant, beneficiary, or enrollee will be responsible
under each option available under the plan;
(B) any maximum out-of-pocket expense for which the
participant, beneficiary, or enrollee may be liable;
(C) any cost-sharing requirements for out-of-network
benefits or services received from nonparticipating
providers; and
(D) any additional cost-sharing or charges for benefits and
services that are furnished without meeting applicable plan
or coverage requirements, such as prior authorization or
precertification.
(3) Service area.--A description of the plan or issuer's
service area, including the provision of any out-of-area
coverage.
(4) Participating providers.--A directory of participating
providers (to the extent a plan or issuer provides coverage
through a network of providers) that includes, at a minimum,
the name, address, and telephone number of each participating
provider, and information about how to inquire whether a
participating provider is currently accepting new patients.
(5) Choice of primary care provider.--A description of any
requirements and procedures to be used by participants,
beneficiaries, and enrollees in selecting, accessing, or
changing their primary care provider, including providers
both within and outside of the network (if the plan or issuer
permits out-of-network services), and the right to select a
pediatrician as a primary care provider under section 116 for
a participant, beneficiary, or enrollee who is a child if
such section applies.
(6) Preauthorization requirements.--A description of the
requirements and procedures to be used to obtain
preauthorization for health services, if such
preauthorization is required.
(7) Experimental and investigational treatments.--A
description of the process for determining whether a
particular item, service, or treatment is considered
experimental or investigational, and the circumstances under
which such treatments are covered by the plan or issuer.
(8) Specialty care.--A description of the requirements and
procedures to be used by
[[Page S1147]]
participants, beneficiaries, and enrollees in accessing
specialty care and obtaining referrals to participating and
nonparticipating specialists, including any limitations on
choice of health care professionals referred to in section
112(b)(2) and the right to timely access to specialists care
under section 114 if such section applies.
(9) Clinical trials.--A description the circumstances and
conditions under which participation in clinical trials is
covered under the terms and conditions of the plan or
coverage, and the right to obtain coverage for approved
clinical trials under section 119 if such section applies.
(10) Prescription drugs.--To the extent the plan or issuer
provides coverage for prescription drugs, a statement of
whether such coverage is limited to drugs included in a
formulary, a description of any provisions and cost-sharing
required for obtaining on- and off-formulary medications, and
a description of the rights of participants, beneficiaries,
and enrollees in obtaining access to access to prescription
drugs under section 118 if such section applies.
(11) Emergency services.--A summary of the rules and
procedures for accessing emergency services, including the
right of a participant, beneficiary, or enrollee to obtain
emergency services under the prudent layperson standard under
section 113, if such section applies, and any educational
information that the plan or issuer may provide regarding the
appropriate use of emergency services.
(12) Claims and appeals.--A description of the plan or
issuer's rules and procedures pertaining to claims and
appeals, a description of the rights (including deadlines for
exercising rights) of participants, beneficiaries, and
enrollees under subtitle A in obtaining covered benefits,
filing a claim for benefits, and appealing coverage decisions
internally and externally (including telephone numbers and
mailing addresses of the appropriate authority), and a
description of any additional legal rights and remedies
available under section 502 of the Employee Retirement Income
Security Act of 1974 and applicable State law.
(13) Advance directives and organ donation.--A description
of procedures for advance directives and organ donation
decisions if the plan or issuer maintains such procedures.
(14) Information on plans and issuers.--The name, mailing
address, and telephone number or numbers of the plan
administrator and the issuer to be used by participants,
beneficiaries, and enrollees seeking information about plan
or coverage benefits and services, payment of a claim, or
authorization for services and treatment. Notice of whether
the benefits under the plan or coverage are provided under a
contract or policy of insurance issued by an issuer, or
whether benefits are provided directly by the plan sponsor
who bears the insurance risk.
(15) Translation services.--A summary description of any
translation or interpretation services (including the
availability of printed information in languages other than
English, audio tapes, or information in Braille) that are
available for non-English speakers and participants,
beneficiaries, and enrollees with communication disabilities
and a description of how to access these items or services.
(16) Accreditation information.--Any information that is
made public by accrediting organizations in the process of
accreditation if the plan or issuer is accredited, or any
additional quality indicators (such as the results of
enrollee satisfaction surveys) that the plan or issuer makes
public or makes available to participants, beneficiaries, and
enrollees.
(17) Notice of requirements.--A description of any rights
of participants, beneficiaries, and enrollees that are
established by the Bipartisan Patient Protection Act of 2001
(excluding those described in paragraphs (1) through (16)) if
such sections apply. The description required under this
paragraph may be combined with the notices of the type
described in sections 711(d), 713(b), or 606(a)(1) of the
Employee Retirement Income Security Act of 1974 and with any
other notice provision that the appropriate Secretary
determines may be combined, so long as such combination does
not result in any reduction in the information that would
otherwise be provided to the recipient.
(18) Availability of additional information.--A statement
that the information described in subsection (c), and
instructions on obtaining such information (including
telephone numbers and, if available, Internet websites),
shall be made available upon request.
(c) Additional Information.--The informational materials to
be provided upon the request of a participant, beneficiary,
or enrollee shall include for each option available under a
group health plan or health insurance coverage the following:
(1) Status of providers.--The State licensure status of the
plan or issuer's participating health care professionals and
participating health care facilities, and, if available, the
education, training, specialty qualifications or
certifications of such professionals.
(2) Compensation methods.--A summary description by
category of the applicable methods (such as capitation, fee-
for-service, salary, bundled payments, per diem, or a
combination thereof) used for compensating prospective or
treating health care professionals (including primary care
providers and specialists) and facilities in connection with
the provision of health care under the plan or coverage.
(3) Prescription drugs.--Information about whether a
specific prescription medication is included in the formulary
of the plan or issuer, if the plan or issuer uses a defined
formulary.
(4) External appeals information.--Aggregate information on
the number and outcomes of external medical reviews, relative
to the sample size (such as the number of covered lives)
under the plan or under the coverage of the issuer.
(d) Manner of Disclosure.--The information described in
this section shall be disclosed in an accessible medium and
format that is calculated to be understood by an average
participant or enrollee.
(e) Rules of Construction.--Nothing in this section shall
be construed to prohibit a group health plan, or a health
insurance issuer in connection with health insurance
coverage, from--
(1) distributing any other additional information
determined by the plan or issuer to be important or necessary
in assisting participants, beneficiaries, and enrollees in
the selection of a health plan or health insurance coverage;
and
(2) complying with the provisions of this section by
providing information in brochures, through the Internet or
other electronic media, or through other similar means, so
long as--
(A) the disclosure of such information in such form is in
accordance with requirements as the appropriate Secretary may
impose, and
(B) in connection with any such disclosure of information
through the Internet or other electronic media--
(i) the recipient has affirmatively consented to the
disclosure of such information in such form,
(ii) the recipient is capable of accessing the information
so disclosed on the recipient's individual workstation or at
the recipient's home,
(iii) the recipient retains an ongoing right to receive
paper disclosure of such information and receives, in advance
of any attempt at disclosure of such information to him or
her through the Internet or other electronic media, notice in
printed form of such ongoing right and of the proper software
required to view information so disclosed, and
(iv) the plan administrator appropriately ensures that the
intended recipient is receiving the information so disclosed
and provides the information in printed form if the
information is not received..
Subtitle D--Protecting the Doctor-Patient Relationship
SEC. 131. PROHIBITION OF INTERFERENCE WITH CERTAIN MEDICAL
COMMUNICATIONS.
(a) General Rule.--The provisions of any contract or
agreement, or the operation of any contract or agreement,
between a group health plan or health insurance issuer in
relation to health insurance coverage (including any
partnership, association, or other organization that enters
into or administers such a contract or agreement) and a
health care provider (or group of health care providers)
shall not prohibit or otherwise restrict a health care
professional from advising such a participant, beneficiary,
or enrollee who is a patient of the professional about the
health status of the individual or medical care or treatment
for the individual's condition or disease, regardless of
whether benefits for such care or treatment are provided
under the plan or coverage, if the professional is acting
within the lawful scope of practice.
(b) Nullification.--Any contract provision or agreement
that restricts or prohibits medical communications in
violation of subsection (a) shall be null and void.
SEC. 132. PROHIBITION OF DISCRIMINATION AGAINST PROVIDERS
BASED ON LICENSURE.
(a) In General.--A group health plan, and a health
insurance issuer with respect to health insurance coverage,
shall not discriminate with respect to participation or
indemnification as to any provider who is acting within the
scope of the provider's license or certification under
applicable State law, solely on the basis of such license or
certification.
(b) Construction.--Subsection (a) shall not be construed--
(1) as requiring the coverage under a group health plan or
health insurance coverage of a particular benefit or service
or to prohibit a plan or issuer from including providers only
to the extent necessary to meet the needs of the plan's or
issuer's participants, beneficiaries, or enrollees or from
establishing any measure designed to maintain quality and
control costs consistent with the responsibilities of the
plan or issuer;
(2) to override any State licensure or scope-of-practice
law; or
(3) as requiring a plan or issuer that offers network
coverage to include for participation every willing provider
who meets the terms and conditions of the plan or issuer.
SEC. 133. PROHIBITION AGAINST IMPROPER INCENTIVE
ARRANGEMENTS.
(a) In General.--A group health plan and a health insurance
issuer offering health insurance coverage may not operate any
physician incentive plan (as defined in subparagraph (B) of
section 1876(i)(8) of the Social Security Act) unless the
requirements described in clauses (i), (ii)(I), and (iii) of
subparagraph (A) of such section are met with respect to such
a plan.
[[Page S1148]]
(b) 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.
(c) Construction.--Nothing in this section shall be
construed as prohibiting all capitation and similar
arrangements or all provider discount arrangements.
SEC. 134. PAYMENT OF CLAIMS.
A group health plan, and a health insurance issuer offering
group health insurance coverage, shall provide for prompt
payment of claims submitted for health care services or
supplies furnished to a participant, beneficiary, or enrollee
with respect to benefits covered by the plan or issuer, in a
manner consistent with the provisions of section 1842(c)(2)
of the Social Security Act (42 U.S.C. 1395u(c)(2)).
SEC. 135. 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
the same licensure or certification and the same experience;
(B) the professional reasonably believes the information to
be true;
(C) the information evidences either a violation of a law,
rule, or regulation, of an applicable accreditation standard,
or of a generally recognized professional or clinical
standard or that a patient is in imminent hazard of loss of
life or serious injury; and
(D) subject to subparagraphs (B) and (C) of paragraph (3),
the professional has followed reasonable internal procedures
of the plan, issuer, or institutional health care provider
established for the purpose of addressing quality concerns
before making the disclosure.
(3) Exception and special rule.--
(A) General exception.--Paragraph (1) does not protect
disclosures that would violate Federal or State law or
diminish or impair the rights of any person to the continued
protection of confidentiality of communications provided by
such law.
(B) Notice of internal procedures.--Subparagraph (D) of
paragraph (2) shall not apply unless the internal procedures
involved are reasonably expected to be known to the health
care professional involved. For purposes of this
subparagraph, a health care professional is reasonably
expected to know of internal procedures if those procedures
have been made available to the professional through
distribution or posting.
(C) Internal procedure exception.--Subparagraph (D) of
paragraph (2) also shall not apply if--
(i) the disclosure relates to an imminent hazard of loss of
life or serious injury to a patient;
(ii) the disclosure is made to an appropriate private
accreditation body pursuant to disclosure procedures
established by the body; or
(iii) the disclosure is in response to an inquiry made in
an investigation or proceeding of an appropriate public
regulatory agency and the information disclosed is limited to
the scope of the investigation or proceeding.
(4) Additional considerations.--It shall not be a violation
of paragraph (1) to take an adverse action against a
protected health care professional if the plan, issuer, or
provider taking the adverse action involved demonstrates that
it would have taken the same adverse action even in the
absence of the activities protected under such paragraph.
(5) Notice.--A group health plan, health insurance issuer,
and institutional health care provider shall post a notice,
to be provided or approved by the Secretary of Labor, setting
forth excerpts from, or summaries of, the pertinent
provisions of this subsection and information pertaining to
enforcement of such provisions.
(6) Constructions.--
(A) Determinations of coverage.--Nothing in this subsection
shall be construed to prohibit a plan or issuer from making a
determination not to pay for a particular medical treatment
or service or the services of a type of health care
professional.
(B) Enforcement of peer review protocols and internal
procedures.--Nothing in this subsection shall be construed to
prohibit a plan, issuer, or provider from establishing and
enforcing reasonable peer review or utilization review
protocols or determining whether a protected health care
professional has complied with those protocols or from
establishing and enforcing internal procedures for the
purpose of addressing quality concerns.
(C) Relation to other rights.--Nothing in this subsection
shall be construed to abridge rights of participants,
beneficiaries, enrollees, and protected health care
professionals under other applicable Federal or State laws.
(7) Protected health care professional defined.--For
purposes of this subsection, the term ``protected health care
professional'' means an individual who is a licensed or
certified health care professional and who--
(A) with respect to a group health plan or health insurance
issuer, is an employee of the plan or issuer or has a
contract with the plan or issuer for provision of services
for which benefits are available under the plan or issuer; or
(B) with respect to an institutional health care provider,
is an employee of the provider or has a contract or other
arrangement with the provider respecting the provision of
health care services.
Subtitle E--Definitions
SEC. 151. DEFINITIONS.
(a) Incorporation of General Definitions.--Except as
otherwise provided, the provisions of section 2791 of the
Public Health Service Act shall apply for purposes of this
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
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
and the Secretary of Labor in relation to carrying out this
title under section 713 of the Employee Retirement Income
Security Act of 1974.
(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.
(3) Enrollee.--The term ``enrollee'' means, with respect to
health insurance coverage offered by a health insurance
issuer, an individual enrolled with the issuer to receive
such coverage.
(4) Group health plan.--The term ``group health plan'' has
the meaning given such term in section 733(a) of the Employee
Retirement Income Security Act of 1974, except that such term
includes a employee welfare benefit plan treated as a group
health plan under section 732(d) of such Act or defined as
such a plan under section 607(1) of such Act.
(5) Health care professional.--The term ``health care
professional'' means an individual who is licensed,
accredited, or certified under State law to provide specified
health care services and who is operating within the scope of
such licensure, accreditation, or certification.
(6) Health care provider.--The term ``health care
provider'' includes a physician or other health care
professional, as well as an institutional or other facility
or agency that provides health care services and that is
licensed, accredited, or certified to provide health care
items and services under applicable State law.
(7) Network.--The term ``network'' means, with respect to a
group health plan or health insurance issuer offering health
insurance coverage, the participating health care
professionals and providers through whom the plan or issuer
provides health care items and services to participants,
beneficiaries, or enrollees.
(8) Nonparticipating.--The term ``nonparticipating'' means,
with respect to a
[[Page S1149]]
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.
(9) Participating.--The term ``participating'' means, with
respect to a health care provider that provides health care
items and services to a participant, beneficiary, or enrollee
under group health plan or health insurance coverage offered
by a health insurance issuer, a health care provider that
furnishes such items and services under a contract or other
arrangement with the plan or issuer.
(10) Prior authorization.--The term ``prior authorization''
means the process of obtaining prior approval from a health
insurance issuer or group health plan for the provision or
coverage of medical services.
(11) Terms and conditions.--The term ``terms and
conditions'' includes, with respect to a group health plan or
health insurance coverage, requirements imposed under this
title with respect to the plan or coverage.
SEC. 152. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.
(a) Continued Applicability of State Law With Respect to
Health Insurance Issuers.--
(1) In general.--Subject to paragraph (2), this 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
or otherwise) 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.
(3) Construction.--In applying this section, a State law
that provides for equal access to, and availability of, all
categories of licensed health care providers and services
shall not be treated as preventing the application of any
requirement of this title.
(b) Application of Substantially Equivalent State Laws.--
(1) In general.--In the case of a State law that imposes,
with respect to health insurance coverage offered by a health
insurance issuer and with respect to a group health plan that
is a non-Federal governmental plan, a requirement that is
substantially equivalent (within the meaning of subsection
(c)) to a patient protection requirement (as defined in
paragraph (3)) and does not prevent the application of other
requirements under this Act (except in the case of other
substantially equivalent requirements), in applying the
requirements of this title under section 2707 and 2753 (as
applicable) of the Public Health Service Act (as added by
title II), subject to subsection (a)(2)--
(A) the State law shall not be treated as being superseded
under subsection (a); and
(B) the State law shall apply instead of the patient
protection requirement otherwise applicable with respect to
health insurance coverage and non-Federal governmental plans.
(2) Limitation.--In the case of a group health plan covered
under title I of the Employee Retirement Income Security Act
of 1974, paragraph (1) shall be construed to apply only with
respect to the health insurance coverage (if any) offered in
connection with the plan.
(3) Patient protection requirement defined.--For purposes
of this section, the term ``patient protection requirement''
means a requirement under this title, and includes (as a
single requirement) a group or related set of requirements
under a section or similar unit under this title.
(c) Determinations of Substantial Equivalence.--
(1) Certification by states.--A State may submit to the
Secretary a certification that a State law provides for
patient protections that are at least substantially
equivalent to one or more patient protection requirements.
Such certification shall be accompanied by such information
as may be required to permit the Secretary to make the
determination described in paragraph (2)(A).
(2) Review.--
(A) In general.--The Secretary shall promptly review a
certification submitted under paragraph (1) with respect to a
State law to determine if the State law provides for at least
substantially equivalent and effective patient protections to
the patient protection requirement (or requirements) to which
the law relates.
(B) Approval deadlines.--
(i) Initial review.--Such a certification is considered
approved unless the Secretary notifies the State in writing,
within 90 days after the date of receipt of the
certification, that the certification is disapproved (and the
reasons for disapproval) or that specified additional
information is needed to make the determination described in
subparagraph (A).
(ii) Additional information.--With respect to a State that
has been notified by the Secretary under clause (i) that
specified additional information is needed to make the
determination described in subparagraph (A), the Secretary
shall make the determination within 60 days after the date on
which such specified additional information is received by
the Secretary.
(3) Approval.--
(A) In general.--The Secretary shall approve a
certification under paragraph (1) unless--
(i) the State fails to provide sufficient information to
enable the Secretary to make a determination under paragraph
(2)(A); or
(ii) the Secretary determines that the State law involved
does not provide for patient protections that are at least
substantially equivalent to and as effective as the patient
protection requirement (or requirements) to which the law
relates.
(B) State challenge.--A State that has a certification
disapproved by the Secretary under subparagraph (A) may
challenge such disapproval in the appropriate United States
district court.
(4) Construction.--Nothing in this subsection shall be
construed as preventing the certification (and approval of
certification) of a State law under this subsection solely
because it provides for greater protections for patients than
those protections otherwise required to establish substantial
equivalence.
(d) Definitions.--For purposes of this section:
(1) State law.--The term ``State law'' includes all laws,
decisions, rules, regulations, or other State action having
the effect of law, of any State. A law of the United States
applicable only to the District of Columbia shall be treated
as a State law rather than a law of the United States.
(2) State.--The term ``State'' includes a State, the
District of Columbia, Puerto Rico, the Virgin Islands, Guam,
American Samoa, the Northern Mariana Islands, any political
subdivisions of such, or any agency or instrumentality of
such.
SEC. 153. EXCLUSIONS.
(a) No Benefit Requirements.--Nothing in this title shall
be construed to require a group health plan or a health
insurance issuer offering health insurance coverage to
include specific items and services under the terms of such a
plan or coverage, other than those provided under the terms
and conditions of such plan or coverage.
(b) Exclusion from Access to Care Managed Care Provisions
for Fee-for-Service Coverage.--
(1) In general.--The provisions of sections 111 through 117
shall not apply to a group health plan or health insurance
coverage if the only coverage offered under the plan or
coverage is fee-for-service coverage (as defined in paragraph
(2)).
(2) Fee-for-service coverage defined.--For purposes of this
subsection, the term ``fee-for-service coverage'' means
coverage under a group health plan or health insurance
coverage that--
(A) reimburses hospitals, health professionals, and other
providers on a fee-for-service basis without placing the
provider at financial risk;
(B) does not vary reimbursement for such a provider based
on an agreement to contract terms and conditions or the
utilization of health care items or services relating to such
provider;
(C) allows access to any provider that is lawfully
authorized to provide the covered services and that agrees to
accept the terms and conditions of payment established under
the plan or by the issuer; and
(D) for which the plan or issuer does not require prior
authorization before providing for any health care services.
SEC. 154. COVERAGE OF LIMITED SCOPE PLANS.
Only for purposes of applying the requirements of this
title under sections 2707 and 2753 of the Public Health
Service Act and section 714 of the Employee Retirement Income
Security Act of 1974, section 2791(c)(2)(A), and section
733(c)(2)(A) of the Employee Retirement Income Security Act
of 1974 shall be deemed not to apply.
SEC. 155. REGULATIONS.
The Secretaries of Health and Human Services and Labor
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.
SEC. 156. INCORPORATION INTO PLAN OR COVERAGE DOCUMENTS.
The requirements of this title with respect to a group
health plan or health insurance coverage are deemed to be
incorporated into, and made a part of, such plan or the
policy, certificate, or contract providing such coverage and
are enforceable under law as if directly included in the
documentation of such plan or such policy, certificate, or
contract.
TITLE II--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS
AND HEALTH INSURANCE COVERAGE UNDER THE 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. 2707. PATIENT PROTECTION STANDARDS.
``Each group health plan shall comply with patient
protection requirements under title I of the Bipartisan
Patient Protection Act of
[[Page S1150]]
2001, 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) Conforming Amendment.--Section 2721(b)(2)(A) of such
Act (42 U.S.C. 300gg-21(b)(2)(A)) is amended by inserting
``(other than section 2707)'' after ``requirements of such
subparts''.
SEC. 202. APPLICATION TO INDIVIDUAL HEALTH INSURANCE
COVERAGE.
Part B of title XXVII of the Public Health Service Act is
amended by inserting after section 2752 the following new
section:
``SEC. 2753. PATIENT PROTECTION STANDARDS.
``Each health insurance issuer shall comply with patient
protection requirements under title I of the Bipartisan
Patient Protection Act of 2001 with respect to individual
health insurance coverage it offers, and such requirements
shall be deemed to be incorporated into this subsection.''.
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.
Subpart B of part 7 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 is amended by
adding at the end the following new section:
``SEC. 714. PATIENT PROTECTION STANDARDS.
``(a) In General.--Subject to subsection (b), a group
health plan (and a health insurance issuer offering group
health insurance coverage in connection with such a plan)
shall comply with the requirements of title I of the
Bipartisan Patient Protection Act of 2001 (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 Bipartisan Patient Protection Act of 2001
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 111 (relating to consumer choice option).
``(B) Section 112 (relating to choice of health care
professional).
``(C) Section 113 (relating to access to emergency care).
``(D) Section 114 (relating to timely access to
specialists).
``(E) Section 115 (relating to patient access to
obstetrical and gynecological care).
``(F) Section 116 (relating to access to pediatric care).
``(G) Section 117 (relating to continuity of care), but
only insofar as a replacement issuer assumes the obligation
for continuity of care.
``(H) Section 118 (relating to access to needed
prescription drugs).
``(I) Section 119 (relating to coverage for individuals
participating in approved clinical trials).
``(J) Section 120 (relating to required coverage for
minimum hospital stay for mastectomies and lymph node
dissections for the treatment of breast cancer and coverage
for secondary consultations).
``(K) Section 134 (relating to payment of claims).
``(2) Information.--With respect to information required to
be provided or made available under section 121 of the
Bipartisan Patient Protection Act of 2001, in the case of a
group health plan that provides benefits in the form of
health insurance coverage through a health insurance issuer,
the Secretary shall determine the circumstances under which
the plan is not required to provide or make available the
information (and is not liable for the issuer's failure to
provide or make available the information), if the issuer is
obligated to provide and make available (or provides and
makes available) such information.
``(3) Internal appeals.--With respect to the internal
appeals process required to be established under section 103
of such Act, in the case of a group health plan that provides
benefits in the form of health insurance coverage through a
health insurance issuer, the Secretary shall determine the
circumstances under which the plan is not required to provide
for such process and system (and is not liable for the
issuer's failure to provide for such process and system), if
the issuer is obligated to provide for (and provides for)
such process and system.
``(4) External appeals.--Pursuant to rules of the
Secretary, insofar as a group health plan enters into a
contract with a qualified external appeal entity for the
conduct of external appeal activities in accordance with
section 104 of such Act, the plan shall be treated as meeting
the requirement of such section and is not liable for the
entity's failure to meet any requirements under such section.
``(5) Application to prohibitions.--Pursuant to rules of
the Secretary, if a health insurance issuer offers health
insurance coverage in connection with a group health plan and
takes an action in violation of any of the following sections
of the Bipartisan Patient Protection Act of 2001, the group
health plan shall not be liable for such violation unless the
plan caused such violation:
``(A) Section 131 (relating to prohibition of interference
with certain medical communications).
``(B) Section 132 (relating to prohibition of
discrimination against providers based on licensure).
``(C) Section 133 (relating to prohibition against improper
incentive arrangements).
``(D) Section 135 (relating to protection for patient
advocacy).
``(6) Construction.--Nothing in this subsection shall be
construed to affect or modify the responsibilities of the
fiduciaries of a group health plan under part 4 of subtitle
B.
``(7) Treatment of substantially equivalent state laws.--
For purposes of applying this subsection, any reference in
this subsection to a requirement in a section or other
provision in the Bipartisan Patient Protection Act of 2001
with respect to a health insurance issuer is deemed to
include a reference to a requirement under a State law that
is substantially equivalent (as determined under section
152(c) of such Act) to the requirement in such section or
other provisions.
``(8) Application to certain prohibitions against
retaliation.--With respect to compliance with the
requirements of section 135(b)(1) of the Bipartisan Patient
Protection Act of 2001, 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 135(b)(1) of
the Bipartisan Patient Protection Act of 2001 may file with
the Secretary a complaint within 180 days of the date of the
alleged retaliation or discrimination.
``(2) Investigation.--The Secretary shall investigate such
complaints and shall determine if a violation of such section
has occurred and, if so, shall issue an order to ensure that
the protected health care professional does not suffer any
loss of position, pay, or benefits in relation to the plan,
issuer, or provider involved, as a result of the violation
found by the Secretary.
``(d) Conforming Regulations.--The Secretary shall issue
regulations to coordinate the requirements on group health
plans and health insurance issuers under this section with
the requirements imposed under the other provisions of this
title. In order to reduce duplication and clarify the rights
of participants and beneficiaries with respect to information
that is required to be provided, such regulations shall
coordinate the information disclosure requirements under
section 121 of the Bipartisan Patient Protection Act of 2001
with the reporting and disclosure requirements imposed under
part 1, so long as such coordination does not result in any
reduction in the information that would otherwise be provided
to participants and beneficiaries.''.
(b) Satisfaction of ERISA Claims Procedure Requirement.--
Section 503 of such Act (29 U.S.C. 1133) is amended by
inserting ``(a)'' after ``Sec. 503.'' and by adding at the
end the following new subsection:
``(b) In the case of a group health plan (as defined in
section 733) compliance with the requirements of subtitle A
of title I of the Bipartisan Patient Protection Act of 2001,
and compliance with regulations promulgated by the Secretary,
in the case of a claims denial shall be deemed compliance
with subsection (a) with respect to such claims denial.''.
(c) Conforming Amendments.--(1) Section 732(a) of such Act
(29 U.S.C. 1185(a)) is amended by striking ``section 711''
and inserting ``sections 711 and 714''.
(2) The table of contents in section 1 of such Act is
amended by inserting after the item relating to section 713
the following new item:
``Sec. 714. Patient protection standards.''.
(3) Section 502(b)(3) of such Act (29 U.S.C. 1132(b)(3)) is
amended by inserting ``(other than section 135(b))'' after
``part 7''.
SEC. 302. AVAILABILITY OF CIVIL REMEDIES.
(a) Availability of Federal Civil Remedies in Cases Not
Involving Medically Reviewable Decisions.--
(1) In general.--Section 502 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1132) is amended by
adding at the end the following new subsection:
``(n) Cause of Action Relating to Provision of Health
Benefits.--
``(1) In general.--In any case in which--
``(A) a person who is a fiduciary of a group health plan, a
health insurance issuer offering health insurance coverage in
connection with the plan, or an agent of the plan, issuer, or
plan sponsor--
``(i) upon consideration of a claim for benefits of a
participant or beneficiary under section 102 of the
Bipartisan Patient Protection Act of 2001 (relating to
procedures for initial claims for benefits and prior
authorization determinations) or upon review of a denial of
such a claim under section 103 of such Act (relating to
internal appeal of a denial of a claim for benefits), fails
to exercise ordinary care in making a decision--
[[Page S1151]]
``(I) regarding whether an item or service is covered under
the terms and conditions of the plan or coverage,
``(II) regarding whether an individual is a participant or
beneficiary who is enrolled under the terms and conditions of
the plan or coverage (including the applicability of any
waiting period under the plan or coverage), or
``(III) as to the application of cost-sharing requirements
or the application of a specific exclusion or express
limitation on the amount, duration, or scope of coverage of
items or services under the terms and conditions of the plan
or coverage, or
``(ii) otherwise fails to exercise ordinary care in the
performance of a duty under the terms and conditions of the
plan with respect to a participant or beneficiary, and
``(B) such failure is a proximate cause of personal injury
to, or the death of, the participant or beneficiary,
such person shall be liable to the participant or beneficiary
(or the estate of such participant or beneficiary) for
economic and noneconomic damages (but not exemplary or
punitive damages) in connection with such personal injury or
death.
``(2) Cause of action must not involve medically reviewable
decision.--
``(A) In general.--A cause of action is established under
paragraph (1)(A) only if the decision referred to in clause
(i) or the failure described in clause (ii) does not include
a medically reviewable decision.
``(B) Medically reviewable decision.--For purposes of
subparagraph (A), the term `medically reviewable decision'
means a denial of a claim for benefits under the plan which
is described in section 104(d)(2) of the Bipartisan Patient
Protection Act of 2001 (relating to medically reviewable
decisions).
``(3) Definitions.--For purposes of this subsection.--
``(A) Ordinary care.--The term `ordinary care' means--
``(i) with respect to a determination on a claim for
benefits, that degree of care, skill, and diligence that a
reasonable and prudent individual would exercise in making a
fair determination on a claim for benefits of like kind to
the claim involved; and
``(ii) with respect to the performance of a duty, that
degree of care, skill, and diligence that a reasonable and
prudent individual would exercise in performing the duty or a
duty of like character.
``(B) Personal injury.--The term `personal injury' means a
physical injury and includes an injury arising out of the
treatment (or failure to treat) a mental illness or disease.
``(C) Claim for benefits; denial.--The terms `claim for
benefits' and `denial of a claim for benefits' have the
meanings provided such terms in section 102(e) of the
Bipartisan Patient Protection Act of 2001.
``(D) Terms and conditions.--The term `terms and
conditions' includes, with respect to a group health plan or
health insurance coverage, requirements imposed under title I
of the Bipartisan Patient Protection Act of 2001 or under
part 6 or 7.
``(E) Group health plan and other related terms.--The
provisions of sections 732(d) and 733 apply for purposes of
this subsection in the same manner as they apply for purposes
of part 7, except that the term `group health plan' includes
a group health plan (as defined in section 607(1)).
``(4) Exclusion of employers and other plan sponsors.--
``(A) Causes of action against employers and plan sponsors
precluded.--Subject to subparagraph (B), paragraph (1)(A)
does not authorize a cause of action against an employer or
other plan sponsor maintaining the plan (or against an
employee of such an employer or sponsor acting within the
scope of employment).
``(B) Certain causes of action permitted.--Notwithstanding
subparagraph (A), a cause of action may arise against an
employer or other plan sponsor (or against an employee of
such an employer or sponsor acting within the scope of
employment)--
``(i) under clause (i) of paragraph (1)(A), to the extent
there was direct participation by the employer or other plan
sponsor (or employee) in the decision of the plan under
section 102 of the Bipartisan Patient Protection Act of 2001
upon consideration of a claim for benefits or under section
103 of such Act upon review of a denial of a claim for
benefits, or
``(ii) under clause (ii) of paragraph (1)(A), to the extent
there was direct participation by the employer or other plan
sponsor (or employee) in the failure described in such
clause.
``(C) Direct participation.--
``(i) Direct participation in decisions.--For purposes of
subparagraph (B), the term `direct participation' means, in
connection with a decision described in clause (i) of
paragraph (1)(A) or a failure described in clause (ii) of
such paragraph, the actual making of such decision or the
actual exercise of control in making such decision or in the
conduct constituting the failure.
``(ii) Rules of construction.--For purposes of clause (i),
the employer or plan sponsor (or employee) shall not be
construed to be engaged in direct participation because of
any form of decisionmaking or other conduct that is merely
collateral or precedent to the decision described in clause
(i) of paragraph (1)(A) on a particular claim for benefits of
a participant or beneficiary or that is merely collateral or
precedent to the conduct constituting a failure described in
clause (ii) of paragraph (1)(A) with respect to a particular
participant or beneficiary, including (but not limited to)--
``(I) any participation by the employer or other plan
sponsor (or employee) in the selection of the group health
plan or health insurance coverage involved or the third party
administrator or other agent;
``(II) any engagement by the employer or other plan sponsor
(or employee) in any cost-benefit analysis undertaken in
connection with the selection of, or continued maintenance
of, the plan or coverage involved;
``(III) any participation by the employer or other plan
sponsor (or employee) in the process of creating, continuing,
modifying, or terminating the plan or any benefit under the
plan, if such process was not substantially focused solely on
the particular situation of the participant or beneficiary
referred to in paragraph (1)(A); and
``(IV) any participation by the employer or other plan
sponsor (or employee) in the design of any benefit under the
plan, including the amount of copayment and limits connected
with such benefit.
``(iv) Irrelevance of certain collateral efforts made by
employer or plan sponsor.--For purposes of this subparagraph,
an employer or plan sponsor shall not be treated as engaged
in direct participation in a decision with respect to any
claim for benefits or denial thereof in the case of any
particular participant or beneficiary solely by reason of--
``(I) any efforts that may have been made by the employer
or plan sponsor to advocate for authorization of coverage for
that or any other participant or beneficiary (or any group of
participants or beneficiaries), or
``(II) any provision that may have been made by the
employer or plan sponsor for benefits which are not covered
under the terms and conditions of the plan for that or any
other participant or beneficiary (or any group of
participants or beneficiaries).
``(5) Requirement of exhaustion.--
``(A) In general.--Except as provided in this paragraph, a
cause of action may not be brought under paragraph (1) in
connection with any denial of a claim for benefits of any
individual until all administrative processes under sections
102 and 103 of the Bipartisan Patient Protection Act of 2001
(if applicable) have been exhausted.
``(B) Late manifestation of injury.--The requirements under
subparagraph (A) for a cause of action in connection with any
denial of a claim for benefits shall be deemed satisfied,
notwithstanding any failure to timely commence review under
section 103 with respect to the denial, if the personal
injury is first known (or first reasonably should have been
known) to the individual (or the death occurs) after the
latest date by which the applicable requirements of
subparagraph (A) can be met in connection with such denial.
``(C) Occurrence of immediate and irreparable harm or death
prior to completion of process.--
``(i) In general.--The requirements of subparagraph (A)
shall not apply if the action involves an allegation that
immediate and irreparable harm or death was, or would be,
caused by the denial of a claim for benefits prior to the
completion of the administrative processes referred to in
subparagraph (A) with respect to such denial.
``(ii) Construction.--Nothing in clause (i) shall be
construed to preclude--
``(I) continuation of such processes to their conclusion if
so moved by any party, and
``(II) consideration in such action of the final decisions
issued in such processes.
``(iii) Definition.--In clause (i), the term `irreparable
harm', with respect to an individual, means an injury or
condition that, regardless of whether the individual receives
the treatment that is the subject of the denial, cannot be
repaired in a manner that would restore the individual to the
individual's pre-injured condition.
``(D) Receipt of benefits during appeals process.--Receipt
by the participant or beneficiary of the benefits involved in
the claim for benefits during the pendency of any
administrative processes referred to in subparagraph (A) or
of any action commenced under this subsection--
``(i) shall not preclude continuation of all such
administrative processes to their conclusion if so moved by
any party, and
``(ii) shall not preclude any liability under subsection
(a)(1)(C) and this subsection in connection with such claim.
The court in any action commenced under this subsection shall
take into account any receipt of benefits during such
administrative processes or such action in determining the
amount of the damages awarded.
``(6) Statutory damages.--
``(A) In general.--The remedies set forth in this
subsection (n) shall be the exclusive remedies for causes of
action brought under this subsection.
``(B) Assessment of civil penalties.--In addition to the
remedies provided for in paragraph (1) (relating to the
failure to provide contract benefits in accordance with the
plan), a civil assessment, in an amount not to exceed
$5,000,000, payable to the claimant may be awarded in any
action under such paragraph if the claimant establishes by
clear and convincing evidence that the alleged conduct
carried out by the defendant demonstrated bad faith and
flagrant disregard for the rights of the participant or
beneficiary under the plan and was a proximate cause of the
personal injury or death that is the subject of the claim.
[[Page S1152]]
``(7) Limitation of action.--Paragraph (1) shall not apply
in connection with any action commenced after 3 years after
the later of--
``(A) the date on which the plaintiff first knew, or
reasonably should have known, of the personal injury or death
resulting from the failure described in paragraph (1), or
``(B) the date as of which the requirements of paragraph
(5) are first met.
``(8) Tolling provision.--The statute of limitations for
any cause of action arising under State law relating to a
denial of a claim for benefits that is the subject of an
action brought in Federal court under this subsection shall
be tolled until such time as the Federal court makes a final
disposition, including all appeals, of whether such claim
should properly be within the jurisdiction of the Federal
court. The tolling period shall be determined by the
applicable Federal or State law, whichever period is greater.
``(10) Purchase of insurance to cover liability.--Nothing
in section 410 shall be construed to preclude the purchase by
a group health plan of insurance to cover any liability or
losses arising under a cause of action under subsection
(a)(1)(C) and this subsection.
``(11) Exclusion of directed recordkeepers.--
``(A) In general.--Subject to subparagraph (C), paragraph
(1) shall not apply with respect to a directed recordkeeper
in connection with a group health plan.
``(B) Directed recordkeeper.--For purposes of this
paragraph, the term `directed recordkeeper' means, in
connection with a group health plan, a person engaged in
directed recordkeeping activities pursuant to the specific
instructions of the plan or the employer or other plan
sponsor, including the distribution of enrollment information
and distribution of disclosure materials under this Act or
title I of the Bipartisan Patient Protection Act of 2001 and
whose duties do not include making decisions on claims for
benefits.
``(C) Limitation.--Subparagraph (A) does not apply in
connection with any directed recordkeeper to the extent that
the directed recordkeeper fails to follow the specific
instruction of the plan or the employer or other plan
sponsor.
``(12) No effect on state law.--No provision of State law
(as defined in section 514(c)(1)) shall be treated as
superseded or otherwise altered, amended, modified,
invalidated, or impaired by reason of the provisions of
subsection (a)(1)(C) and this subsection.''.
(2) Conforming amendment.--Section 502(a)(1) of such Act
(29 U.S.C. 1132(a)(1)) is amended--
(A) by striking ``or'' at the end of subparagraph (A);
(B) in subparagraph (B), by striking ``plan;'' and
inserting ``plan, or''; and
(C) by adding at the end the following new subparagraph:
``(C) for the relief provided for in subsection (n) of this
section.''.
(b) Rules Relating to ERISA Preemption.--Section 514 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1144) is amended--
(1) by redesignating subsection (d) as subsection (f); and
(2) by inserting after subsection (c) the following new
subsections:
``(d) Preemption Not To Apply to Causes of Action under
State Law Involving Medically Reviewable Decision.--
``(1) Non-preemption of certain causes of action.--
``(A) In general.--Except as provided in this subsection,
nothing in this title (including section 502) shall be
construed to supersede or otherwise alter, amend, modify,
invalidate, or impair any cause of action under State law of
a participant or beneficiary under a group health plan (or
the estate of such a participant or beneficiary) to recover
damages resulting from personal injury or for wrongful death
against any person if such cause of action arises by reason
of a medically reviewable decision.
``(B) Medically reviewable decision.--For purposes of
subparagraph (A), the term `medically reviewable decision'
means a denial of a claim for benefits under the plan which
is described in section 104(d)(2) of the Bipartisan Patient
Protection Act of 2001 (relating to medically reviewable
decisions).
``(C) Limitation on punitive damages.--
``(i) In general.--Except as provided in clauses (ii) and
(iii), with respect to a cause of action described in
subparagraph (A) brought with respect to a participant or
beneficiary, State law is superseded insofar as it provides
any punitive, exemplary, or similar damages if, as of the
time of the personal injury or death, all the requirements of
the following sections of the Bipartisan Patient Protection
Act of 2001 were satisfied with respect to the participant or
beneficiary:
``(I) Section 102 (relating to procedures for initial
claims for benefits and prior authorization determinations).
``(II) Section 103 of such Act (relating to internal
appeals of claims denials).
``(III) Section 104 of such Act (relating to independent
external appeals procedures).
``(ii) Exception for certain actions for wrongful death.--
Clause (i) shall not apply with respect to an action for
wrongful death if the applicable State law provides (or has
been construed to provide) for damages in such an action
which are only punitive or exemplary in nature.
``(iii) Exception for willful or wanton disregard for the
rights or safety of others.--Clause (i) shall not apply with
respect to any cause of action described in subparagraph (A)
if, in such action, the plaintiff establishes by clear and
convincing evidence that conduct carried out by the defendant
with willful or wanton disregard for the rights or safety of
others was a proximate cause of the personal injury or
wrongful death that is the subject of the action.
``(3) Definitions.--For purposes of this subsection and
subsection (e)--
``(A) Group health plan and other related terms.--The
provisions of sections 732(d) and 733 apply for purposes of
this subsection in the same manner as they apply for purposes
of part 7, except that the term `group health plan' includes
a group health plan (as defined in section 607(1)).
``(B) Personal injury.--The term `personal injury' means a
physical injury and includes an injury arising out of the
treatment (or failure to treat) a mental illness or disease.
``(C) Claim for benefit; denial.--The terms `claim for
benefits' and `denial of a claim for benefits' shall have the
meaning provided such terms under section 102(e) of the
Bipartisan Patient Protection Act of 2001.
``(4) Exclusion of employers and other plan sponsors.--
``(A) Causes of action against employers and plan sponsors
precluded.--Subject to subparagraph (B), paragraph (1) does
not apply with respect to--
``(i) any cause of action against an employer or other plan
sponsor maintaining the plan (or against an employee of such
an employer or sponsor acting within the scope of
employment), or
``(ii) a right of recovery, indemnity, or contribution by a
person against an employer or other plan sponsor (or such an
employee) for damages assessed against the person pursuant to
a cause of action to which paragraph (1) applies.
``(B) Certain causes of action permitted.--Notwithstanding
subparagraph (A), paragraph (1) applies with respect to any
cause of action described in paragraph (1) maintained by a
participant or beneficiary against an employer or other plan
sponsor (or against an employee of such an employer or
sponsor acting within the scope of employment)--
``(i) in the case of any cause of action based on a
decision of the plan under section 102 of the Bipartisan
Patient Protection Act of 2001 upon consideration of a claim
for benefits or under section 103 of such Act upon review of
a denial of a claim for benefits, to the extent there was
direct participation by the employer or other plan sponsor
(or employee) in the decision, or
``(ii) in the case of any cause of action based on a
failure to otherwise perform a duty under the terms and
conditions of the plan with respect to a claim for benefits
of a participant or beneficiary, to the extent there was
direct participation by the employer or other plan sponsor
(or employee) in the failure.
``(C) Direct participation.--
``(i) Direct participation in decisions.--For purposes of
subparagraph (B), the term `direct participation' means, in
connection with a decision described in subparagraph (B)(i)
or a failure described in subparagraph (B)(ii), the actual
making of such decision or the actual exercise of control in
making such decision or in the conduct constituting the
failure.
``(ii) Rules of construction.--For purposes of clause (i),
the employer or plan sponsor (or employee) shall not be
construed to be engaged in direct participation because of
any form of decisionmaking or other conduct that is merely
collateral or precedent to the decision described in
subparagraph (B)(i) on a particular claim for benefits of a
particular participant or beneficiary or that is merely
collateral or precedent to the conduct constituting a failure
described in subparagraph (B)(ii) with respect to a
particular participant or beneficiary, including (but not
limited to)--
``(I) any participation by the employer or other plan
sponsor (or employee) in the selection of the group health
plan or health insurance coverage involved or the third party
administrator or other agent;
``(II) any engagement by the employer or other plan sponsor
(or employee) in any cost-benefit analysis undertaken in
connection with the selection of, or continued maintenance
of, the plan or coverage involved;
``(III) any participation by the employer or other plan
sponsor (or employee) in the process of creating, continuing,
modifying, or terminating the plan or any benefit under the
plan, if such process was not substantially focused solely on
the particular situation of the participant or beneficiary
referred to in paragraph (1)(A); and
``(IV) any participation by the employer or other plan
sponsor (or employee) in the design of any benefit under the
plan, including the amount of copayment and limits connected
with such benefit.
``(iv) Irrelevance of certain collateral efforts made by
employer or plan sponsor.--For purposes of this subparagraph,
an employer or plan sponsor shall not be treated as engaged
in direct participation in a decision with respect to any
claim for benefits or denial thereof in the case of any
particular participant or beneficiary solely by reason of--
``(I) any efforts that may have been made by the employer
or plan sponsor to advocate for authorization of coverage for
that or any
[[Page S1153]]
other participant or beneficiary (or any group of
participants or beneficiaries), or
``(II) any provision that may have been made by the
employer or plan sponsor for benefits which are not covered
under the terms and conditions of the plan for that or any
other participant or beneficiary (or any group of
participants or beneficiaries).
``(5) Requirement of exhaustion.--
``(A) In general.--Except as provided in this paragraph,
paragraph (1) shall not apply with respect to a cause of
action described in such paragraph in connection with any
denial of a claim for benefits of any individual until all
administrative processes under sections 102, 103, and 104 of
the Bipartisan Patient Protection Act of 2001 (if applicable)
have been exhausted.
``(B) Late manifestation of injury.--The requirements under
subparagraph (A) for a cause of action in connection with any
denial of a claim for benefits shall be deemed satisfied,
notwithstanding any failure to timely commence review under
section 103 or 104 with respect to the denial, if the
personal injury is first known (or first should have been
known) to the individual (or the death occurs) after the
latest date by which the applicable requirements of
subparagraph (A) can be met in connection with such denial.
``(C) Occurrence of immediate an irreparable harm or death
prior to completion of process.--
``(i) In general.--The requirements of subparagraph (A)
shall not apply if the action involves an allegation that
immediate and irreparable harm or death was, or would be,
caused by the denial of a claim for benefits prior to the
completion of the administrative processes referred to in
subparagraph (A) with respect to such denial.
``(ii) Construction.--Nothing in clause (i) shall be
construed to preclude--
``(I) continuation of such processes to their conclusion if
so moved by any party, and
``(II) consideration in such action of the final decisions
issued in such processes.
``(iii) Definition.--In clause (i), the term `irreparable
harm', with respect to an individual, means an injury or
condition that, regardless of whether the individual receives
the treatment that is the subject of the denial, cannot be
repaired in a manner that would restore the individual to the
individual's pre-injured condition.
``(D) Receipt of benefits during appeals process.--Receipt
by the participant or beneficiary of the benefits involved in
the claim for benefits during the pendency of any
administrative processes referred to in subparagraph (A) or
of any action commenced under this subsection--
``(i) shall not preclude continuation of all such
administrative processes to their conclusion if so moved by
any party, and
``(ii) shall not preclude any liability under subsection
(a)(1)(C) and this subsection in connection with such claim.
``(6) Tolling provision.--The statute of limitations for
any cause of action arising under section 502(n) relating to
a denial of a claim for benefits that is the subject of an
action brought in State court shall be tolled until such time
as the State court makes a final disposition, including all
appeals, of whether such claim should properly be within the
jurisdiction of the State court. The tolling period shall be
determined by the applicable Federal or State law, whichever
period is greater.
``(7) Exclusion of directed recordkeepers.--
``(A) In general.--Subject to subparagraph (C), paragraph
(1) shall not apply with respect to a directed recordkeeper
in connection with a group health plan.
``(B) Directed recordkeeper.--For purposes of this
paragraph, the term `directed recordkeeper' means, in
connection with a group health plan, a person engaged in
directed recordkeeping activities pursuant to the specific
instructions of the plan or the employer or other plan
sponsor, including the distribution of enrollment information
and distribution of disclosure materials under this Act or
title I of the Bipartisan Patient Protection Act of 2001 and
whose duties do not include making decisions on claims for
benefits.
``(C) Limitation.--Subparagraph (A) does not apply in
connection with any directed recordkeeper to the extent that
the directed recordkeeper fails to follow the specific
instruction of the plan or the employer or other plan
sponsor.
``(8) Construction.--Nothing in this subsection shall be
construed as--
``(A) saving from preemption a cause of action under State
law for the failure to provide a benefit for an item or
service which is specifically excluded under the group health
plan involved, except to the extent that--
``(i) the application or interpretation of the exclusion
involves a determination described in section 104(d)(2) of
the Bipartisan Patient Protection Act of 2001, or
``(ii) the provision of the benefit for the item or service
is required under Federal law or under applicable State law
consistent with subsection (b)(2)(B);
``(B) preempting a State law which requires an affidavit or
certificate of merit in a civil action;
``(C) affecting a cause of action or remedy under State law
in connection with the provision or arrangement of excepted
benefits (as defined in section 733(c)), other than those
described in section 733(c)(2)(A); or
``(D) affecting a cause of action under State law other
than a cause of action described in paragraph (1)(A).
``(9) Purchase of insurance to cover liability.--Nothing in
section 410 shall be construed to preclude the purchase by a
group health plan of insurance to cover any liability or
losses arising under a cause of action described in paragraph
(1)(A).
``(e) Rules of Construction Relating to Health Care.--
Nothing in this title shall be construed as--
``(1) affecting any State law relating to the practice of
medicine or the provision of medical care, or affecting any
action based upon such a State law,
``(2) superseding any State law permitted under section
152(b)(1)(A) of the Bipartisan Patient Protection Act of
2001, or
``(3) affecting any applicable State law with respect to
limitations on monetary damages.''.
(c) Effective Date.--The amendments made by this section
shall apply to acts and omissions (from which a cause of
action arises) occurring on or after the date of the
enactment of this Act.
SEC. 303. LIMITATIONS ON ACTIONS.
Section 502 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1132) (as amended by section 302(a)) is
amended further by adding at the end the following new
subsection:
``(o) Limitations on Actions Relating to Group Health
Plans.--
``(1) In general.--Except as provided in paragraph (2), no
action may be brought under subsection (a)(1)(B), (a)(2), or
(a)(3) by a participant or beneficiary seeking relief based
on the application of any provision in section 101, subtitle
B, or subtitle D of title I of the Bipartisan Patient
Protection Act of 2001 (as incorporated under section 714).
``(2) Certain actions allowable.--An action may be brought
under subsection (a)(1)(B), (a)(2), or (a)(3) by a
participant or beneficiary seeking relief based on the
application of section 101, 113, 114, 115, 116, 117,
118(a)(3), 119, or 120 of the Bipartisan Patient Protection
Act of 2001 (as incorporated under section 714) to the
individual circumstances of that participant or beneficiary,
except that--
``(A) such an action may not be brought or maintained as a
class action; and
``(B) in such an action, relief may only provide for the
provision of (or payment of) benefits, items, or services
denied to the individual participant or beneficiary involved
(and for attorney's fees and the costs of the action, at the
discretion of the court) and shall not provide for any other
relief to the participant or beneficiary or for any relief to
any other person.
``(3) Other provisions unaffected.--Nothing in this
subsection shall be construed as affecting subsections
(a)(1)(C) and (n) or section 514(d).
``(4) Enforcement by secretary unaffected.--Nothing in this
subsection shall be construed as affecting any action brought
by the Secretary.''.
TITLE IV--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986
SEC. 401. APPLICATION TO GROUP HEALTH PLANS UNDER THE
INTERNAL REVENUE CODE OF 1986.
Subchapter B of chapter 100 of the Internal Revenue Code of
1986 is amended--
(1) in the table of sections, by inserting after the item
relating to section 9812 the following new item:
``Sec. 9813. Standard relating to patients' bill of rights.'';
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 Bipartisan Patient Protection Act of 2001 (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.''.
SEC. 402. CONFORMING ENFORCEMENT FOR WOMEN'S HEALTH AND
CANCER RIGHTS.
Subchapter B of chapter 100 of the Internal Revenue Code of
1986, as amended by section 401, is further amended--
(1) in the table of sections, by inserting after the item
relating to section 9813 the following new item:
``Sec. 9814. Standard relating to women's health and cancer rights.'';
and
(2) by inserting after section 9813 the following:
``SEC. 9814. STANDARD RELATING TO WOMEN'S HEALTH AND CANCER
RIGHTS.
``The provisions of section 713 of the Employee Retirement
Income Security Act of 1974 (as in effect as of the date of
the enactment of this section) shall apply to group health
plans as if included in this subchapter.''.
TITLE V--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION
SEC. 501. EFFECTIVE DATES.
(a) Group Health Coverage.--
(1) In general.--Subject to paragraph (2) and subsection
(d), the amendments made by sections 201(a), 301, 303, and
401 and 402 (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 January 1,
2002 (in this section referred to as the ``general effective
date'').
(2) Treatment of collective bargaining agreements.--In the
case of a group health
[[Page S1154]]
plan maintained pursuant to one or more collective bargaining
agreements between employee representatives and one or more
employers ratified before the date of the enactment of this
Act, the amendments made by sections 201(a), 301, 303, and
401 and 402 (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 the 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 division shall not be treated as a
termination of such collective bargaining agreement.
(b) Individual Health Insurance Coverage.--Subject to
subsection (d), the amendments made by section 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.
(c) 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, to include as providers religious nonmedical
providers;
(B) require such plans or issuers to--
(i) utilize medically based eligibility standards or
criteria in deciding provider status of religious nonmedical
providers;
(ii) use medical professionals or criteria to decide
patient access to religious nonmedical providers;
(iii) utilize medical professionals or criteria in making
decisions in internal or external appeals regarding coverage
for care by religious nonmedical providers; or
(iv) compel a participant or beneficiary to undergo a
medical examination or test as a condition of receiving
health insurance coverage for treatment by a religious
nonmedical provider; or
(C) require such plans or issuers to exclude religious
nonmedical providers because they do not provide medical or
other required data, if such data is inconsistent with the
religious nonmedical treatment or nursing care provided by
the provider.
(2) Religious nonmedical provider.--For purposes of this
subsection, the term ``religious nonmedical provider'' means
a provider who provides no medical care but who provides only
religious nonmedical treatment or religious nonmedical
nursing care.
(d) Transition for Notice Requirement.--The disclosure of
information required under section 121 of this Act shall
first be provided pursuant to--
(1) subsection (a) with respect to a group health plan that
is maintained as of the general effective date, not later
than 30 days before the beginning of the first plan year to
which title I applies in connection with the plan under such
subsection; or
(2) subsection (b) with respect to a individual health
insurance coverage that is in effect as of the general
effective date, not later than 30 days before the first date
as of which title I applies to the coverage under such
subsection.
SEC. 502. COORDINATION IN IMPLEMENTATION.
The Secretary of Labor, the Secretary of Health and Human
Services, and the Secretary of the Treasury shall ensure,
through the execution of an interagency memorandum of
understanding among such Secretaries, that--
(1) regulations, rulings, and interpretations issued by
such Secretaries relating to the same matter over which such
Secretaries have responsibility under the provisions of this
division (and the amendments made thereby) are administered
so as to have the same effect at all times; and
(2) coordination of policies relating to enforcing the same
requirements through such Secretaries in order to have a
coordinated enforcement strategy that avoids duplication of
enforcement efforts and assigns priorities in enforcement.
SEC. 503. SEVERABILITY.
If any provision of this Act, an amendment made by this
Act, or the application of such provision or amendment to any
person or circumstance is held to be unconstitutional, the
remainder of this Act, the amendments made by this Act, and
the application of the provisions of such to any person or
circumstance shall not be affected thereby.
____
S. 284
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Bipartisan Patient
Protection Act of 2001--Part II''.
SEC. 2. EXPANDED AVAILABILITY OF ARCHER MSAS.
(a) Extension of Program.--Paragraphs (2) and (3)(B) of
section 220(i) of the Internal Revenue Code of 1986 (defining
cut-off year) are each amended by striking ``2002'' each
place it appears and inserting ``2004''.
(b) Increase In Number of Permitted Account Participants.--
(1) In general.--Subsection (j) of section 220 of such Code
is amended by redesignating paragraphs (3), (4), and (5) as
paragraphs (4), (5), and (6) and by inserting after paragraph
(2) the following new paragraph:
``(3) Determination of whether limit exceeded for years
after 2001.--
``(A) In general.--The numerical limitation for any year
after 2001 is exceeded if the sum of--
``(i) the number of Archer MSA returns filed on or before
April 15 of such calendar year for taxable years ending with
or within the preceding calendar year, plus
``(ii) the Secretary's estimate (determined on the basis of
the returns described in clause (i)) of the number of Archer
MSA returns for such taxable years which will be filed after
such date, exceeds 1,000,000. For purposes of the preceding
sentence, the term `Archer MSA return' means any return on
which any exclusion is claimed under section 106(b) or any
deduction is claimed under this section.
``(B) Alternative computation of limitation.--The numerical
limitation for any year after 2001 is also exceeded if the
sum of--
``(i) 90 percent of the sum determined under subparagraph
(A) for such calendar year, plus
``(ii) the product of 2.5 and the number of medical savings
accounts established during the portion of such year
preceding July 1 (based on the reports required under
paragraph (5)) for taxable years beginning in such year,
exceeds 1,000,000.''
(2) Conforming amendments.--
(A) Clause (ii) of section 220(j)(2)(B) of such Code is
amended by striking ``paragraph (4)'' and inserting
``paragraph (5)''.
(B) Subparagraph (A) of section 220(j)(4) of such Code is
amended by striking ``and 2001'' and inserting ``2001, 2002,
and 2003''.
(c) Increase in Size of Eligible Employers.--Subparagraph
(A) of section 220(c)(4) of such Code is amended by striking
``50 or fewer employees'' and inserting ``100 or fewer
employees''.
(d) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
(e) GAO Study.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General of the United
States shall prepare and submit a report to the Committee on
Ways and Means of the House of Representatives and the
Committee on Finance of the Senate on the impact of Archer
MSAs on the cost of conventional insurance (especially in
those areas where there are higher numbers of such accounts)
and on adverse selection and health care costs.
SEC. 3. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS
OF SELF-EMPLOYED INDIVIDUALS.
(a) In General.--Paragraph (1) of section 162(l) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(1) Allowance of deduction.--In the case of an individual
who is an employee within the meaning of section 401(c)(1),
there shall be allowed as a deduction under this section an
amount equal to 100 percent of the amount paid during the
taxable year for insurance which constitutes medical care for
the taxpayer and the taxpayer's spouse and dependents.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 4. CREDIT FOR HEALTH INSURANCE EXPENSES OF SMALL
BUSINESSES.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to
business-related credits) is amended by adding at the end the
following:
``SEC. 45E. SMALL BUSINESS HEALTH INSURANCE EXPENSES.
``(a) General Rule.--For purposes of section 38, in the
case of a small employer, the health insurance credit
determined under this section for the taxable year is an
amount equal to the applicable percentage of the expenses
paid by the taxpayer during the taxable year for health
insurance coverage for such year provided under a new health
plan for employees of such employer.
``(b) Applicable Percentage.--For purposes of subsection
(a), the applicable percentage is--
``(1) in the case of insurance purchased as a member of a
qualified health benefit purchasing coalition (as defined in
section 9841), 30 percent, and
``(2) in the case of insurance not described in paragraph
(1), 20 percent.
``(c) Limitations.--
``(1) Per employee dollar limitation.--The amount of
expenses taken into account under subsection (a) with respect
to any employee for any taxable year shall not exceed--
``(A) $2,000 in the case of self-only coverage, and
``(B) $5,000 in the case of family coverage.
In the case of an employee who is covered by a new health
plan of the employer for only a portion of such taxable year,
the limitation under the preceding sentence shall be an
amount which bears the same ratio to such limitation
(determined without regard to this sentence) as such portion
bears to the entire taxable year.
``(2) Period of coverage.--Expenses may be taken into
account under subsection (a) only with respect to coverage
for the 4-year period beginning on the date the employer
establishes a new health plan.
``(d) Definitions.--For purposes of this section--
``(1) Health insurance coverage.--The term `health
insurance coverage' has the
[[Page S1155]]
meaning given such term by section 9832(b)(1).
``(2) New health plan.--
``(A) In general.--The term `new health plan' means any
arrangement of the employer which provides health insurance
coverage to employees if--
``(i) such employer (and any predecessor employer) did not
establish or maintain such arrangement (or any similar
arrangement) at any time during the 2 taxable years ending
prior to the taxable year in which the credit under this
section is first allowed, and
``(ii) such arrangement provides health insurance coverage
to at least 70 percent of the qualified employees of such
employer.
``(B) Qualified employee.--
``(i) In general.--The term `qualified employee' means any
employee of an employer if the annual rate of such employee's
compensation (as defined in section 414(s)) exceeds $10,000.
``(ii) Treatment of certain employees.--The term `employee'
shall include a leased employee within the meaning of section
414(n).
``(3) Small employer.--The term `small employer' has the
meaning given to such term by section 4980D(d)(2); except
that only qualified employees shall be taken into account.
``(e) Special Rules.--
``(1) Certain rules made applicable.--For purposes of this
section, rules similar to the rules of section 52 shall
apply.
``(2) Amounts paid under salary reduction arrangements.--No
amount paid or incurred pursuant to a salary reduction
arrangement shall be taken into account under subsection (a).
``(f) Termination.--This section shall not apply to
expenses paid or incurred by an employer with respect to any
arrangement established on or after January 1, 2010.''.
(b) Credit To Be Part of General Business Credit.--Section
38(b) of such Code (relating to current year business credit)
is amended by striking ``plus'' at the end of paragraph (12),
by striking the period at the end of paragraph (13) and
inserting ``, plus'', and by adding at the end the following:
``(14) in the case of a small employer (as defined in
section 45E(d)(3)), the health insurance credit determined
under section 45E(a).''
(c) No Carrybacks.--Subsection (d) of section 39 of such
Code (relating to carryback and carryforward of unused
credits) is amended by adding at the end the following:
``(10) No carryback of section 45E credit before effective
date.--No portion of the unused business credit for any
taxable year which is attributable to the employee health
insurance expenses credit determined under section 45E may be
carried back to a taxable year ending before the date of the
enactment of section 45E.''
(d) Denial of Double Benefit.--Section 280C of such Code is
amended by adding at the end the following new subsection:
``(d) Credit for Small Business Health Insurance
Expenses.--
``(1) In general.--No deduction shall be allowed for that
portion of the expenses (otherwise allowable as a deduction)
taken into account in determining the credit under section
45E for the taxable year which is equal to the amount of the
credit determined for such taxable year under section 45E(a).
``(2) Controlled groups.--Persons treated as a single
employer under subsection (a) or (b) of section 52 shall be
treated as 1 person for purposes of this section.''
(e) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following:
``Sec. 45E. Small business health insurance expenses.''
(f) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred in taxable years
beginning after December 31, 2001, for arrangements
established after the date of the enactment of this Act.
SEC. 5. CERTAIN GRANTS BY PRIVATE FOUNDATIONS TO QUALIFIED
HEALTH BENEFIT PURCHASING COALITIONS.
(a) In General.--Section 4942 of the Internal Revenue Code
of 1986 (relating to taxes on failure to distribute income)
is amended by adding at the end the following:
``(k) Certain Qualified Health Benefit Purchasing Coalition
Distributions.--
``(1) In general.--For purposes of subsection (g), sections
170, 501, 507, 509, and 2522, and this chapter, a qualified
health benefit purchasing coalition distribution by a private
foundation shall be considered to be a distribution for a
charitable purpose.
``(2) Qualified health benefit purchasing coalition
distribution.--For purposes of paragraph (1)--
``(A) In general.--The term `qualified health benefit
purchasing coalition distribution' means any amount paid or
incurred by a private foundation to or on behalf of a
qualified health benefit purchasing coalition (as defined in
section 9841) for purposes of payment or reimbursement of
amounts paid or incurred in connection with the establishment
and maintenance of such coalition.
``(B) Exclusions.--Such term shall not include any amount
used by a qualified health benefit purchasing coalition (as
so defined)--
``(i) for the purchase of real property,
``(ii) as payment to, or for the benefit of, members (or
employees or affiliates of such members) of such coalition,
or
``(iii) for any expense paid or incurred more than 48
months after the date of establishment of such coalition.
``(3) Termination.--This subsection shall not apply--
``(A) to qualified health benefit purchasing coalition
distributions paid or incurred after December 31, 2009, and
``(B) with respect to start-up costs of a coalition which
are paid or incurred after December 31, 2010.''.
(b) Qualified Health Benefit Purchasing Coalition.--
(1) In general.--Chapter 100 of such Code (relating to
group health plan requirements) is amended by adding at the
end the following new subchapter:
``Subchapter D--Qualified Health Benefit Purchasing Coalition
``Sec. 9841. Qualified health benefit purchasing coalition.
``SEC. 9841. QUALIFIED HEALTH BENEFIT PURCHASING COALITION.
``(a) In General.--A qualified health benefit purchasing
coalition is a private not-for-profit corporation which--
``(1) sells health insurance through State licensed health
insurance issuers in the State in which the employers to
which such coalition is providing insurance are located, and
``(2) establishes to the Secretary, under State
certification procedures or other procedures as the Secretary
may provide by regulation, that such coalition meets the
requirements of this section.
``(b) Board of Directors.--
``(1) In general.--Each purchasing coalition under this
section shall be governed by a Board of Directors.
``(2) Election.--The Secretary shall establish procedures
governing election of such Board.
``(3) Membership.--The Board of Directors shall--
``(A) be composed of representatives of the members of the
coalition, in equal number, including small employers and
employee representatives of such employers, but
``(B) not include other interested parties, such as service
providers, health insurers, or insurance agents or brokers
which may have a conflict of interest with the purposes of
the coalition.
``(c) Membership of Coalition.--
``(1) In general.--A purchasing coalition shall accept all
small employers residing within the area served by the
coalition as members if such employers request such
membership.
``(2) Other members.--The coalition, at the discretion of
its Board of Directors, may be open to individuals and large
employers.
``(3) Voting.--Members of a purchasing coalition shall have
voting rights consistent with the rules established by the
State.
``(d) Duties of Purchasing Coalitions.--Each purchasing
coalition shall--
``(1) enter into agreements with small employers (and, at
the discretion of its Board, with individuals and other
employers) to provide health insurance benefits to employees
and retirees of such employers,
``(2) where feasible, enter into agreements with 3 or more
unaffiliated, qualified licensed health plans, to offer
benefits to members,
``(3) offer to members at least 1 open enrollment period of
at least 30 days per calendar year,
``(4) serve a significant geographical area and market to
all eligible members in that area, and
``(5) carry out other functions provided for under this
section.
``(e) Limitation on Activities.--A purchasing coalition
shall not--
``(1) perform any activity (including certification or
enforcement) relating to compliance or licensing of health
plans,
``(2) assume insurance or financial risk in relation to any
health plan, or
``(3) perform other activities identified by the State as
being inconsistent with the performance of its duties under
this section.
``(f) Additional Requirements For Purchasing Coalitions.--
As provided by the Secretary in regulations, a purchasing
coalition shall be subject to requirements similar to the
requirements of a group health plan under this chapter.
``(g) Relation to Other Laws.--
``(1) Preemption of state fictitious group laws.--
Requirements (commonly referred to as fictitious group laws)
relating to grouping and similar requirements for health
insurance coverage are preempted to the extent such
requirements impede the establishment and operation of
qualified health benefit purchasing coalitions.
``(2) Allowing savings to be passed through.--Any State law
that prohibits health insurance issuers from reducing
premiums on health insurance coverage sold through a
qualified health benefit purchasing coalition to reflect
administrative savings is preempted. This paragraph shall not
be construed to preempt State laws that impose restrictions
on premiums based on health status, claims history, industry,
age, gender, or other underwriting factors.
``(3) No waiver of hipaa requirements.--Nothing in this
section shall be construed to change the obligation of health
insurance issuers to comply with the requirements of title
XXVII of the Public Health Service Act with respect to health
insurance coverage offered to small employers in the small
group market through a qualified health benefit purchasing
coalition.
``(h) Definition of Small Employer.--For purposes of this
section--
[[Page S1156]]
``(1) In general.--The term `small employer' means, with
respect to any calendar year, any employer if such employer
employed an average of at least 2 and not more than 50
qualified employees on business days during either of the 2
preceding calendar years. For purposes of the preceding
sentence, a preceding calendar year may be taken into account
only if the employer was in existence throughout such year.
``(2) Employers not in existence in preceding year.--In the
case of an employer which was not in existence throughout the
1st preceding calendar year, the determination under
paragraph (1) shall be based on the average number of
qualified employees that it is reasonably expected such
employer will employ on business days in the current calendar
year.''.
(2) Conforming amendment.--The table of subchapters for
chapter 100 of such Code is amended by adding at the end the
following item:
``Subchapter D. Qualified health benefit purchasing coalition.''.
(c) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2001.
SEC. 6. STATE GRANT PROGRAM FOR MARKET INNOVATION.
(a) In General.--The Secretary of Health and Human Services
(in this section referred to as the ``Secretary'') shall
establish a program (in this section referred to as the
``program'') to award demonstration grants under this section
to States to allow States to demonstrate the effectiveness of
innovative ways to increase access to health insurance
through market reforms and other innovative means. Such
innovative means may include (and are not limited to) any of
the following:
(1) Alternative group purchasing or pooling arrangements,
such as a purchasing cooperatives for small businesses,
reinsurance pools, or high risk pools.
(2) Individual or small group market reforms.
(3) Consumer education and outreach.
(4) Subsidies to individuals, employers, or both, in
obtaining health insurance.
(b) Scope; Duration.--The program shall be limited to not
more than 10 States and to a total period of 5 years,
beginning on the date the first demonstration grant is made.
(c) Conditions for Demonstration Grants.--
(1) In general.--The Secretary may not provide for a
demonstration grant to a State under the program unless the
Secretary finds that under the proposed demonstration grant--
(A) the State will provide for demonstrated increase of
access for some portion of the existing uninsured population
through a market innovation (other than merely through a
financial expansion of a program initiated before the date of
the enactment of this Act);
(B) the State will comply with applicable Federal laws;
(C) the State will not discriminate among participants on
the basis of any health status-related factor (as defined in
section 2791(d)(9) of the Public Health Service Act), except
to the extent a State wishes to focus on populations that
otherwise would not obtain health insurance because of such
factors; and
(D) the State will provide for such evaluation, in
coordination with the evaluation required under subsection
(d), as the Secretary may specify.
(2) Application.--The Secretary shall not provide a
demonstration grant under the program to a State unless--
(A) the State submits to the Secretary such an application,
in such a form and manner, as the Secretary specifies;
(B) the application includes information regarding how the
demonstration grant will address issues such as governance,
targeted population, expected cost, and the continuation
after the completion of the demonstration grant period; and
(B) the Secretary determines that the demonstration grant
will be used consistent with this section.
(3) Focus.--A demonstration grant proposal under section
need not cover all uninsured individuals in a State or all
health care benefits with respect to such individuals.
(d) Evaluation.--The Secretary shall enter into a contract
with an appropriate entity outside the Department of Health
and Human Services to conduct an overall evaluation of the
program at the end of the program period. Such evaluation
shall include an analysis of improvements in access, costs,
quality of care, or choice of coverage, under different
demonstration grants.
(e) Option to Provide for Initial Planning Grants.--
Notwithstanding the previous provisions of this section,
under the program the Secretary may provide for a portion of
the amounts appropriated under subsection (f) (not to exceed
$5,000,000) to be made available to any State for initial
planning grants to permit States to develop demonstration
grant proposals under the previous provisions of this
section.
(f) Authorization of Appropriations.--There are authorized
to be appropriated $100,000,000 for each fiscal year to carry
out this section. Amounts appropriated under this subsection
shall remain available until expended.
(g) State Defined.--For purposes of this section, the term
``State'' has the meaning given such term for purposes of
title XIX of the Social Security Act.
Mr. KENNEDY. Mr. President, I'm honored to join my colleagues in
introducing the Bipartisan Patient Protection Act. This bill is a true
bipartisan compromise, and I am confident it will receive the support
of the majority of the Senate.
We believe that our proposal is just what the doctor ordered to end
abuses by HMOs and managed care health plans. Doctors and patients
should be making medical decisions, not insurance company accountants.
It is long past time for Congress to start protecting patients, instead
of HMO profits.
Prompt passage of this legislation is vital for the 161 million
Americans with private health insurance coverage. This is the fifth
year that Congress has considered patient protection--and too many
patients have been subject to unacceptable abuses as the result of our
inaction. Every day that Congress fails to act, more patients suffer.
A survey by the School of Public Health at the University of
California found that every day--each and every day--50,000 patients
experience added pain and suffering because of actions by their health
plan. Thirty-five thousand patients have needed care delayed--or denied
all together. Thirty-five thousand other patients have a referral to a
specialist delayed or denied. Thirty-one thousand patients are forced
to change their doctors. Eighteen thousand patients are forced to
change their medications.
A survey of physicians by the Kaiser Family Foundation and the
Harvard School of Public Health found similar results. Every day, tens
of thousands of patients across the country suffer serious declines in
their health as the result of the action--or inaction--of their health
plan.
Whether the issue is diagnostic tests, specialty care, emergency
care, access to clinical trials, availability of needed drugs,
protection of doctors who give patients their best possible advice, or
women's ability to obtain gynecological services--too often, in all of
these cases. HMOs and managed care plans treat the company's bottom
line as more important than the patient's vital signs. These abuses
have no place in American medicine. Every doctor knows it. Every
patient knows it. And in their hearts, every member of Congress knows
it.
Every American also knows that it is wrong for the current legal
system to give immunity to health insurance companies and HMOs that
kill or injure patients. No other industry in America has immunity from
liability when it acts irresponsibly, and HMOs and health insurance
companies shouldn't have it either.
The legislation we are offering today is bipartisan. Whether the
issue is liability, the appeals process, or state flexibility, we have
made significant modifications to respond to legitimate concerns. but
we have preserved the basic principle that when serious illness
strikes, every American deserves the protection they were promised.
President Bush campaigned on a pledge to pass an effective patients'
bill of rights. We are ready to work with him to bring the American
people the protection they deserve. Ending the current abuses should be
a priority for the new Congress and the new Administration, and I am
hopeful that we can work together to past this legislation as soon as
possible this year.
____________________