[Congressional Record Volume 151, Number 62 (Thursday, May 12, 2005)]
[Senate]
[Pages S5075-S5099]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KENNEDY (for himself, Mr. Harkin, Ms. Mikulski, Mrs. 
        Murray, Mr. Reed, Mr. Levin, Mr. Lautenberg, Mrs. Boxer, Mr. 
        Dorgan, Mr. Schumer, Ms. Cantwell, Mr. Corzine, Mr. Dayton, and 
        Ms. Stabenow):
  S. 1012. 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 Finance.
  Mr. KENNEDY. Mr. President, it is time for a new effort in Congress 
to enact the Patients' Bill of Rights. The Senate has approved major 
bipartisan legislation to end the abuses of managed care and HMOs 
before, but final enactment of this important measure was blocked by 
the HMOs and the vested interests of the corporate world that deny 
working Americans their basic rights and a needed voice in challenging 
decisions that deny them basic medical care. It was blocked too by an 
administration that professes to support patients' rights, but does all 
it can to block legislation to guarantee those rights.
  Despite our outstanding researchers and professionals, families 
across the country are overwhelmingly and justifiably concerned that 
medical decisions are too often made by insurance industry accountants, 
and not their doctors. HMO profits too often take priority over patient 
needs. It is time for Congress to end the abuses of patients and 
physicians by HMOs and the insurance industry. Too often, managed care 
is mismanaged care. No amount of distortions or smokescreens by 
insurance companies can change the facts.
  The Patients' Bill of Rights can stop these abuses. For millions of 
Americans who rely on health insurance to protect them when serious 
illness strikes, the Patients' Bill of Rights is literally a matter of 
life and death.
  It's important to remember what this debate is really about. It's not 
about lawyers. It's not about insurance companies. It's about 
patients--mothers and daughters, fathers and sons, sisters and 
brothers. It's about families around the country who will someday face 
the challenge of serious illness and deserve the best in health care--
the same care that all members of the Senate want for ourselves and our 
loved ones. But too many families are denied the care they need and 
deserve because of abuses by HMOs and other insurance companies.
  The legislation we are introducing today will end those abuses. 
Several of its provisions are especially important--specialty care, 
clinical trials, and prescription drugs.
  In each of these areas, care is too often delayed or denied by 
insurance companies more interested in profits than patients. Access to 
specialty care for serious and complex illnesses is a critical element 
of good health care. Yet denial of needed specialists is one of the 
most common abuses in the current system.
  Patients with cancer and other serious illnesses need specialty care. 
Often, their best hope for a cure or for precious extra years of life 
is participation in a clinical trial. But too often, both are lacking. 
Patients with cancer or other serious illnesses and their physicians 
must fight HMOs to take advantage of this opportunity.
  Traditionally, insurance companies have paid for the routine costs of 
doctors and hospitals in clinical trials. But HMOs frequently refuse to 
do so, with devastating effects on patients and research alike. Our 
legislation will end this abuse.
  Another abuse that will be ended by our plan is the denial of 
medically necessary drugs not on an HMO plan's list. One group that 
suffers from this denial is the mentally ill. Some of the most dramatic 
advances in medicine in recent years have been the development of 
effective drugs to treat persons with serious mental illness. Too 
often, however, they're told to settle for older, cheaper, less 
effective drugs with harmful side effects, because an HMO refuses to 
pay for the best standard of care.
  Our legislation guarantees that patients can get medically necessary 
drugs, even if they are not on the HMO's list. Equally important, our 
bill guarantees that these drugs will be provided at a cost no greater 
than the normal cost-sharing for other medications. Access to needed 
drugs is a concern for every family, particularly when new cures are 
increasingly based on new drugs today.
  The list of abuses goes on and on. People across the country know 
these abuses are wrong. Managed care practices that cause these 
tragedies cost lives, and ending these abuses is a matter of simple 
justice and common decency.
  The Patients' Bill of Rights will protect families from insurance 
company bureaucracies that rob them of their peace of mind, their 
health, or even their lives. The bill is a guarantee that medical 
decisions will be made by doctors and patients, not managed care 
accountants. It is actively supported by doctors, nurses, patients, 
small businesses, religious organizations, and working families. The 
support is impressive in its breadth, its depth and its diversity.
  It is time to guarantee these basic rights for patients. It is time 
for Congress to pass this bill. Every doctor knows it. Every nurse 
knows it. Every patient knows it. And every Senator knows it too.
  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. 1012

       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 ``Patients' 
     Bill of Rights Act of 2005''.
       (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.
Sec. 105. Health Care Consumer Assistance Fund.

                       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.

[[Page S5076]]

                   Subtitle C--Access to Information

Sec. 121. Patient access to information.

         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. Treatment of excepted benefits.
Sec. 155. Regulations.
Sec. 156. Incorporation into plan or coverage documents.
Sec. 157. Preservation of protections.

 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.
Sec. 203. Cooperation between Federal and State authorities.

   TITLE III--APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL 
                       HEALTH INSURANCE PROGRAMS

Sec. 301. Application of patient protection standards to Federal health 
              insurance programs.

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

Sec. 401. Application of patient protection standards to group health 
              plans and group health insurance coverage under the 
              Employee Retirement Income Security Act of 1974.
Sec. 402. Availability of civil remedies.
Sec. 403. Cooperation between Federal and State authorities.

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

        Subtitle A--Application of Patient Protection Provisions

Sec. 501. Application to group health plans under the Internal Revenue 
              Code of 1986.
Sec. 502. Conforming enforcement for women's health and cancer rights.

         Subtitle B--Health Care Coverage Access Tax Incentives

Sec. 511. Credit for health insurance expenses of small businesses.
Sec. 512. Certain grants by private foundations to qualified health 
              benefit purchasing coalitions.
Sec. 513. State grant program for market innovation.
Sec. 514. Grant program to facilitate health benefits information for 
              small employers.
Sec. 515. State grant program for market innovation.

       TITLE VI--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

Sec. 601. Effective dates.
Sec. 602. Coordination in implementation.
Sec. 603. Severability.

                  TITLE VII--MISCELLANEOUS PROVISIONS

Sec. 701. No impact on Social Security Trust Fund.

                    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, and a health 
     insurance issuer offering health insurance coverage, shall--
       (A) make a determination on an initial claim for benefits 
     by a participant, beneficiary, or enrollee (or authorized 
     representative) regarding payment or coverage for items or 
     services under the terms and conditions of the plan or 
     coverage involved, including any cost-sharing amount that the 
     participant, beneficiary, or enrollee is required to pay with 
     respect to such claim for benefits; and
       (B) notify a participant, beneficiary, or enrollee (or 
     authorized representative) and the treating health care 
     professional involved regarding a determination on an initial 
     claim for benefits made under the terms and conditions of the 
     plan or coverage, including any cost-sharing amounts that the 
     participant, beneficiary, or enrollee may be required to make 
     with respect to such claim for benefits, and of the right of 
     the participant, beneficiary, or enrollee to an internal 
     appeal under section 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.

[[Page S5077]]

       (3) Oral requests.--In the case of a claim for benefits 
     involving an expedited or concurrent determination, a 
     participant, beneficiary, or enrollee (or authorized 
     representative) may make an initial claim for benefits 
     orally, but a group health plan, or health insurance issuer 
     offering health insurance coverage, may require that the 
     participant, beneficiary, or enrollee (or authorized 
     representative) provide written confirmation of such request 
     in a timely manner on a form provided by the plan or issuer. 
     In the case of such an oral request for benefits, the making 
     of the request (and the timing of such request) shall be 
     treated as the making at that time of a claim for such 
     benefits without regard to whether and when a written 
     confirmation of such request is made.
       (b) Timeline for Making Determinations.--
       (1) Prior authorization determination.--
       (A) In general.--A group health plan, and a health 
     insurance issuer offering health insurance coverage, shall 
     make a prior authorization determination on a claim for 
     benefits (whether oral or written) in accordance with the 
     medical exigencies of the case and as soon as possible, but 
     in no case later than 14 days from the date on which the plan 
     or issuer receives information that is reasonably necessary 
     to enable the plan or issuer to make a determination on the 
     request for prior authorization and in no case later than 28 
     days after the date of the claim for benefits is received.
       (B) Expedited determination.--Notwithstanding subparagraph 
     (A), a group health plan, and a health insurance issuer 
     offering health insurance coverage, shall expedite a prior 
     authorization determination on a claim for benefits described 
     in such subparagraph when a request for such an expedited 
     determination is made by a participant, beneficiary, or 
     enrollee (or authorized representative) at any time during 
     the process for making a determination and a health care 
     professional certifies, with the request, that a 
     determination under the procedures described in subparagraph 
     (A) would seriously jeopardize the life or health of the 
     participant, beneficiary, or enrollee or the ability of the 
     participant, beneficiary, or enrollee to maintain or regain 
     maximum function. Such determination shall be made in 
     accordance with the medical exigencies of the case and as 
     soon as possible, but in no case later than 72 hours after 
     the time the request is received by the plan or issuer under 
     this subparagraph.
       (C) Ongoing care.--
       (i) Concurrent review.--

       (I) In general.--Subject to clause (ii), in the case of a 
     concurrent review of ongoing care (including 
     hospitalization), which results in a termination or reduction 
     of such care, the plan or issuer must provide by telephone 
     and in printed form notice of the concurrent review 
     determination to the individual or the individual's designee 
     and the individual's health care provider in accordance with 
     the medical exigencies of the case and as soon as possible, 
     with sufficient time prior to the termination or reduction to 
     allow for an appeal under section 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, and 
     a health insurance issuer offering health insurance coverage, 
     shall make a retrospective determination on a claim for 
     benefits in accordance with the medical exigencies of the 
     case and as soon as possible, but not later than 30 days 
     after the date on which the plan or issuer receives 
     information that is reasonably necessary to enable the plan 
     or issuer to make a determination on the claim, or, if 
     earlier, 60 days after the date of receipt of the claim for 
     benefits.
       (c) Notice of a Denial of a Claim for Benefits.--Written 
     notice of a denial made under an initial claim for benefits 
     shall be issued to the participant, beneficiary, or enrollee 
     (or authorized representative) and the treating health care 
     professional in accordance with the medical exigencies of the 
     case and as soon as possible, but in no case later than 2 
     days after the date of the determination (or, in the case 
     described in subparagraph (B) or (C) of subsection (b)(1), 
     within the 72-hour or applicable period referred to in such 
     subparagraph).
       (d) Requirements of Notice of Determinations.--The written 
     notice of a denial of a claim for benefits determination 
     under subsection (c) shall be provided in printed form and 
     written in a manner calculated to be understood by the 
     participant, beneficiary, or enrollee and shall include--
       (1) the specific reasons for the determination (including a 
     summary of the clinical or scientific evidence used in making 
     the determination);
       (2) the procedures for obtaining additional information 
     concerning the determination; and
       (3) notification of the right to appeal the determination 
     and instructions on how to initiate an appeal in accordance 
     with section 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, and a health 
     insurance issuer offering health insurance coverage, shall 
     ensure that a participant, beneficiary, or enrollee (or 
     authorized representative) has a period of not less than 180 
     days beginning on the date of a denial of a claim for 
     benefits under section 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.

[[Page S5078]]

       (3) Prior authorization determinations.--
       (A) In general.--Except as provided in this paragraph or 
     paragraph (4), a group health plan, and a health insurance 
     issuer offering health insurance coverage, shall make a 
     determination on an appeal of a denial of a claim for 
     benefits under this subsection in accordance with the medical 
     exigencies of the case and as soon as possible, but in no 
     case later than 14 days from the date on which the plan or 
     issuer receives information that is reasonably necessary to 
     enable the plan or issuer to make a determination on the 
     appeal and in no case later than 28 days after the date the 
     request for the appeal is received.
       (B) Expedited determination.--Notwithstanding subparagraph 
     (A), a group health plan, and a health insurance issuer 
     offering health insurance coverage, shall expedite a prior 
     authorization determination on an appeal of a denial of a 
     claim for benefits described in subparagraph (A), when a 
     request for such an expedited determination is made by a 
     participant, beneficiary, or enrollee (or authorized 
     representative) at any time during the process for making a 
     determination and a health care professional certifies, with 
     the request, that a determination under the procedures 
     described in subparagraph (A) would seriously jeopardize the 
     life or health of the participant, beneficiary, or enrollee 
     or the ability of the participant, beneficiary, or enrollee 
     to maintain or regain maximum function. Such determination 
     shall be made in accordance with the medical exigencies of 
     the case and as soon as possible, but in no case later than 
     72 hours after the time the request for such appeal is 
     received by the plan or issuer under this subparagraph.
       (C) Ongoing care determinations.--
       (i) In general.--Subject to clause (ii), in the case of a 
     concurrent review determination described in section 
     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, and 
     a health insurance issuer offering health insurance coverage, 
     shall make a retrospective determination on an appeal of a 
     denial of a claim for benefits in no case later than 30 days 
     after the date on which the plan or issuer receives necessary 
     information that is reasonably necessary to enable the plan 
     or issuer to make a determination on the appeal and in no 
     case later than 60 days after the date the request for the 
     appeal is received.
       (c) Conduct of Review.--
       (1) In general.--A review of a denial of a claim for 
     benefits under this section shall be conducted by an 
     individual with appropriate expertise who was not involved in 
     the initial determination.
       (2) Peer review of medical decisions by health care 
     professionals.--A review of an appeal of a denial of a claim 
     for benefits that is based on a lack of medical necessity and 
     appropriateness, or based on an experimental or 
     investigational treatment, or requires an evaluation of 
     medical facts--
       (A) shall be made by a physician (allopathic or 
     osteopathic); or
       (B) in a claim for benefits provided by a non-physician 
     health professional, shall be made by reviewer (or reviewers) 
     including at least one practicing non-physician health 
     professional of the same or similar specialty;

     with appropriate expertise (including, in the case of a 
     child, appropriate pediatric expertise) and acting within the 
     appropriate scope of practice within the State in which the 
     service is provided or rendered, who was not involved in the 
     initial determination.
       (d) Notice of Determination.--
       (1) In general.--Written notice of a determination made 
     under an internal appeal of a denial of a claim for benefits 
     shall be issued to the participant, beneficiary, or enrollee 
     (or authorized representative) and the treating health care 
     professional in accordance with the medical exigencies of the 
     case and as soon as possible, but in no case later than 2 
     days after the date of completion of the review (or, in the 
     case described in subparagraph (B) or (C) of subsection 
     (b)(3), within the 72-hour or applicable period referred to 
     in such subparagraph).
       (2) Final determination.--The decision by a plan or issuer 
     under this section shall be treated as the final 
     determination of the plan or issuer on a denial of a claim 
     for benefits. The failure of a plan or issuer to issue a 
     determination on an appeal of a denial of a claim for 
     benefits under this section within the applicable timeline 
     established for such a determination shall be treated as a 
     final determination on an appeal of a denial of a claim for 
     benefits for purposes of proceeding to external review under 
     section 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 
     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, or health insurance 
     issuer offering health insurance coverage, may--
       (i) except as provided in subparagraph (B)(i), require that 
     a request for review be in writing;
       (ii) limit the filing of such a request to the participant, 
     beneficiary, or enrollee involved (or an authorized 
     representative);
       (iii) except if waived by the plan or issuer under section 
     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 for 
     such review may be made orally. A group health plan, or 
     health insurance issuer offering health insurance coverage, 
     may require that the participant, beneficiary, or enrollee 
     (or authorized representative) provide written confirmation 
     of such request in a timely manner on a form provided by the 
     plan or issuer. Such written confirmation shall be treated as 
     a consent for purposes of subparagraph (A)(v). In the case of 
     such an oral request for such a review, the making of the 
     request (and the timing of such request) shall be treated as 
     the making at that time of a request for such a review 
     without regard to whether and when a written confirmation of 
     such request is made.
       (ii) Exception to filing fee requirement.--

       (I) Indigency.--Payment of a filing fee shall not be 
     required under subparagraph (A)(iv) where there is a 
     certification (in a form and manner specified in guidelines 
     established by the appropriate Secretary) that the 
     participant, beneficiary, or enrollee is indigent (as defined 
     in such guidelines).
       (II) Fee not required.--Payment of a filing fee shall not 
     be required under subparagraph (A)(iv) if the plan or issuer 
     waives the internal appeals process under section 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

[[Page S5079]]

     under this section, the participant, beneficiary, or enrollee 
     (or authorized representative), the plan or issuer, and the 
     treating health care professional (if any) shall provide the 
     external review entity with information that is necessary to 
     conduct a review under this section, as determined and 
     requested by the entity. Such information shall be provided 
     not later than 5 days after the date on which the request for 
     information is received, or, in a case described in clause 
     (ii) or (iii) of subsection (e)(1)(A), by such earlier time 
     as may be necessary to comply with the applicable timeline 
     under such clause.
       (3) Screening of requests by qualified external review 
     entities.--
       (A) In general.--With respect to a request referred to a 
     qualified external review entity under paragraph (1) relating 
     to a denial of a claim for benefits, the entity shall refer 
     such request for the conduct of an independent medical review 
     unless the entity determines that--
       (i) any of the conditions described in clauses (ii) or 
     (iii) of subsection (b)(2)(A) have not been met;
       (ii) the denial of the claim for benefits does not involve 
     a medically reviewable decision under subsection (d)(2);
       (iii) the denial of the claim for benefits relates to a 
     decision regarding whether an individual is a participant, 
     beneficiary, or enrollee who is enrolled under the terms and 
     conditions of the plan or coverage (including the 
     applicability of any waiting period under the plan or 
     coverage); or
       (iv) the denial of the claim for benefits is a decision as 
     to the application of cost-sharing requirements or the 
     application of a specific exclusion or express limitation on 
     the amount, duration, or scope of coverage of items or 
     services under the terms and conditions of the plan or 
     coverage unless the decision is a denial described in 
     subsection (d)(2).

     Upon making a determination that any of clauses (i) through 
     (iv) applies with respect to the request, the entity shall 
     determine that the denial of a claim for benefits involved is 
     not eligible for independent medical review under subsection 
     (d), and shall provide notice in accordance with subparagraph 
     (C).
       (B) Process for making determinations.--
       (i) No deference to prior determinations.--In making 
     determinations under subparagraph (A), there shall be no 
     deference given to determinations made by the plan or issuer 
     or the recommendation of a treating health care professional 
     (if any).
       (ii) Use of appropriate personnel.--A qualified external 
     review entity shall use appropriately qualified personnel to 
     make determinations under this section.
       (C) Notices and general timelines for determination.--
       (i) Notice in case of denial of referral.--If the entity 
     under this paragraph does not make a referral to an 
     independent medical reviewer, the entity shall provide notice 
     to the plan or issuer, the participant, beneficiary, or 
     enrollee (or authorized representative) filing the request, 
     and the treating health care professional (if any) that the 
     denial is not subject to independent medical review. Such 
     notice--

       (I) shall be written (and, in addition, may be provided 
     orally) in a manner calculated to be understood by a 
     participant or enrollee;
       (II) shall include the reasons for the determination;
       (III) include any relevant terms and conditions of the plan 
     or coverage; and
       (IV) include a description of any further recourse 
     available to the individual.

       (ii) General timeline for determinations.--Upon receipt of 
     information under paragraph (2), the qualified external 
     review entity, and if required the independent medical 
     reviewer, shall make a determination within the overall 
     timeline that is applicable to the case under review as 
     described in subsection (e), except that if the entity 
     determines that a referral to an independent medical reviewer 
     is not required, the entity shall provide notice of such 
     determination to the participant, beneficiary, or enrollee 
     (or authorized representative) within such timeline and 
     within 2 days of the date of such determination.
       (d) Independent Medical Review.--
       (1) In general.--If a qualified external review entity 
     determines under subsection (c) that a denial of a claim for 
     benefits is eligible for independent medical review, the 
     entity shall refer the denial involved to an independent 
     medical reviewer for the conduct of an independent medical 
     review under this subsection.
       (2) Medically reviewable decisions.--A denial of a claim 
     for benefits is eligible for independent medical review if 
     the benefit for the item or service for which the claim is 
     made would be a covered benefit under the terms and 
     conditions of the plan or coverage but for one (or more) of 
     the following determinations:
       (A) Denials based on medical necessity and 
     appropriateness.--A determination that the item or service is 
     not covered because it is not medically necessary and 
     appropriate or based on the application of substantially 
     equivalent terms.
       (B) Denials based on experimental or investigational 
     treatment.--A determination that the item or service is not 
     covered because it is experimental or investigational or 
     based on the application of substantially equivalent terms.
       (C) Denials otherwise based on an evaluation of medical 
     facts.--A determination that the item or service or condition 
     is not covered based on grounds that require an evaluation of 
     the medical facts by a health care professional in the 
     specific case involved to determine the coverage and extent 
     of coverage of the item or service or condition.
       (3) Independent medical review determination.--
       (A) In general.--An independent medical reviewer under this 
     section shall make a new independent determination with 
     respect to whether or not the denial of a claim for a benefit 
     that is the subject of the review should be upheld, reversed, 
     or modified.
       (B) Standard for determination.--The independent medical 
     reviewer's determination relating to the medical necessity 
     and appropriateness, or the experimental or investigational 
     nature, or the evaluation of the medical facts, of the item, 
     service, or condition involved shall be based on the medical 
     condition of the participant, beneficiary, or enrollee 
     (including the medical records of the participant, 
     beneficiary, or enrollee) and valid, relevant scientific 
     evidence and clinical evidence, including peer-reviewed 
     medical literature or findings and including expert opinion.
       (C) No coverage for excluded benefits.--Nothing in this 
     subsection shall be construed to permit an independent 
     medical reviewer to require that a group health plan, or 
     health insurance issuer offering health insurance coverage, 
     provide coverage for items or services for which benefits are 
     specifically excluded or expressly limited under the plan or 
     coverage in the plain language of the plan document (and 
     which are disclosed under section 121(b)(1)(C)). 
     Notwithstanding any other provision of this Act, any 
     exclusion of an exact medical procedure, any exact time limit 
     on the duration or frequency of coverage, and any exact 
     dollar limit on the amount of coverage that is specifically 
     enumerated and defined (in the plain language of the plan or 
     coverage documents) under the plan or coverage offered by a 
     group health plan or health insurance issuer offering health 
     insurance coverage and that is disclosed under section 
     121(b)(1) shall be considered to govern the scope of the 
     benefits that may be required: Provided, That the terms and 
     conditions of the plan or coverage relating to such an 
     exclusion or limit are in compliance with the requirements of 
     law.
       (D) Evidence and information to be used in medical 
     reviews.--In making a determination under this subsection, 
     the independent medical reviewer shall also consider 
     appropriate and available evidence and information, including 
     the following:
       (i) The determination made by the plan or issuer with 
     respect to the claim upon internal review and the evidence, 
     guidelines, or rationale used by the plan or issuer in 
     reaching such determination.
       (ii) The recommendation of the treating health care 
     professional and the evidence, guidelines, and rationale used 
     by the treating health care professional in reaching such 
     recommendation.
       (iii) Additional relevant evidence or information obtained 
     by the reviewer or submitted by the plan, issuer, 
     participant, beneficiary, or enrollee (or an authorized 
     representative), or treating health care professional.
       (iv) The plan or coverage document.
       (E) Independent determination.--In making determinations 
     under this section, a qualified external review entity and an 
     independent medical reviewer shall--
       (i) consider the claim under review without deference to 
     the determinations made by the plan or issuer or the 
     recommendation of the treating health care professional (if 
     any); and
       (ii) consider, but not be bound by, the definition used by 
     the plan or issuer of ``medically necessary and 
     appropriate'', or ``experimental or investigational'', or 
     other substantially equivalent terms that are used by the 
     plan or issuer to describe medical necessity and 
     appropriateness or experimental or investigational nature of 
     the treatment.
       (F) Determination of independent medical reviewer.--An 
     independent medical reviewer shall, in accordance with the 
     deadlines described in subsection (e), prepare a written 
     determination to uphold, reverse, or modify the denial under 
     review. Such written determination shall include--
       (i) the determination of the reviewer;
       (ii) the specific reasons of the reviewer for such 
     determination, including a summary of the clinical or 
     scientific evidence used in making the determination; and
       (iii) with respect to a determination to reverse or modify 
     the denial under review, a timeframe within which the plan or 
     issuer must comply with such determination.
       (G) Nonbinding nature of additional recommendations.--In 
     addition to the determination under subparagraph (F), the 
     reviewer may provide the plan or issuer and the treating 
     health care professional with additional recommendations in 
     connection with such a determination, but any such 
     recommendations shall not affect (or be treated as part of) 
     the determination and shall not be binding on the plan or 
     issuer.
       (e) Timelines and Notifications.--
       (1) Timelines for independent medical review.--
       (A) Prior authorization determination.--
       (i) In general.--The independent medical reviewer (or 
     reviewers) shall make a determination on a denial of a claim 
     for benefits that is referred to the reviewer under 
     subsection (c)(3) in accordance with the medical

[[Page S5080]]

     exigencies of the case and as soon as possible, but in no 
     case later than 14 days after the date of receipt of 
     information under subsection (c)(2) if the review involves a 
     prior authorization of items or services and in no case later 
     than 21 days after the date the request for external review 
     is received.
       (ii) Expedited determination.--Notwithstanding clause (i) 
     and subject to clause (iii), the independent medical reviewer 
     (or reviewers) shall make an expedited determination on a 
     denial of a claim for benefits described in clause (i), when 
     a request for such an expedited determination is made by a 
     participant, beneficiary, or enrollee (or authorized 
     representative) at any time during the process for making a 
     determination, and a health care professional certifies, with 
     the request, that a determination under the timeline 
     described in clause (i) would seriously jeopardize the life 
     or health of the participant, beneficiary, or enrollee or the 
     ability of the participant, beneficiary, or enrollee to 
     maintain or regain maximum function. Such determination shall 
     be made in accordance with the medical exigencies of the case 
     and as soon as possible, but in no case later than 72 hours 
     after the time the request for external review is received by 
     the qualified external review entity.
       (iii) Ongoing care determination.--Notwithstanding clause 
     (i), in the case of a review described in such clause that 
     involves a termination or reduction of care, the notice of 
     the determination shall be completed not later than 24 hours 
     after the time the request for external review is received by 
     the qualified external review entity and before the end of 
     the approved period of care.
       (B) Retrospective determination.--The independent medical 
     reviewer (or reviewers) shall complete a review in the case 
     of a retrospective determination on an appeal of a denial of 
     a claim for benefits that is referred to the reviewer under 
     subsection (c)(3) in no case later than 30 days after the 
     date of receipt of information under subsection (c)(2) and in 
     no case later than 60 days after the date the request for 
     external review is received by the qualified external review 
     entity.
       (2) Notification of determination.--The external review 
     entity shall ensure that the plan or issuer, the participant, 
     beneficiary, or enrollee (or authorized representative) and 
     the treating health care professional (if any) receives a 
     copy of the written determination of the independent medical 
     reviewer prepared under subsection (d)(3)(F). Nothing in this 
     paragraph shall be construed as preventing an entity or 
     reviewer from providing an initial oral notice of the 
     reviewer's determination.
       (3) Form of notices.--Determinations and notices under this 
     subsection shall be written in a manner calculated to be 
     understood by a participant.
       (f) Compliance.--
       (1) Application of determinations.--
       (A) External review determinations binding on plan.--The 
     determinations of an external review entity and an 
     independent medical reviewer under this section shall be 
     binding upon the plan or issuer involved.
       (B) Compliance with determination.--If the determination of 
     an independent medical reviewer is to reverse or modify the 
     denial, the plan or issuer, upon the receipt of such 
     determination, shall authorize coverage to comply with the 
     medical reviewer's determination in accordance with the 
     timeframe established by the medical reviewer.
       (2) Failure to comply.--
       (A) In general.--If a plan or issuer fails to comply with 
     the timeframe established under paragraph (1)(B) with respect 
     to a participant, beneficiary, or enrollee, where such 
     failure to comply is caused by the plan or issuer, the 
     participant, beneficiary, or enrollee may obtain the items or 
     services involved (in a manner consistent with the 
     determination of the independent external reviewer) from any 
     provider regardless of whether such provider is a 
     participating provider under the plan or coverage.
       (B) Reimbursement.--
       (i) In general.--Where a participant, beneficiary, or 
     enrollee obtains items or services in accordance with 
     subparagraph (A), the plan or issuer involved shall provide 
     for reimbursement of the costs of such items or services. 
     Such reimbursement shall be made to the treating health care 
     professional or to the participant, beneficiary, or enrollee 
     (in the case of a participant, beneficiary, or enrollee who 
     pays for the costs of such items or services).
       (ii) Amount.--The plan or issuer shall fully reimburse a 
     professional, participant, beneficiary, or enrollee under 
     clause (i) for the total costs of the items or services 
     provided (regardless of any plan limitations that may apply 
     to the coverage of such items or services) so long as the 
     items or services were provided in a manner consistent with 
     the determination of the independent medical reviewer.
       (C) Failure to reimburse.--Where a plan or issuer fails to 
     provide reimbursement to a professional, participant, 
     beneficiary, or enrollee in accordance with this paragraph, 
     the professional, participant, beneficiary, or enrollee may 
     commence a civil action (or utilize other remedies available 
     under law) to recover only the amount of any such 
     reimbursement that is owed by the plan or issuer and any 
     necessary legal costs or expenses (including attorney's fees) 
     incurred in recovering such reimbursement.
       (D) Available remedies.--The remedies provided under this 
     paragraph are in addition to any other available remedies.
       (3) Penalties against authorized officials for refusing to 
     authorize the determination of an external review entity.--
       (A) Monetary penalties.--
       (i) In general.--In any case in which the determination of 
     an external review entity is not followed by a group health 
     plan, or by a health insurance issuer offering health 
     insurance coverage, any person who, acting in the capacity of 
     authorizing the benefit, causes such refusal may, in the 
     discretion of a court of competent jurisdiction, be liable to 
     an aggrieved participant, beneficiary, or enrollee for a 
     civil penalty in an amount of up to $1,000 a day from the 
     date on which the determination was transmitted to the plan 
     or issuer by the external review entity until the date the 
     refusal to provide the benefit is corrected.
       (ii) Additional penalty for failing to follow timeline.--In 
     any case in which treatment was not commenced by the plan in 
     accordance with the determination of an independent external 
     reviewer, the Secretary shall assess a civil penalty of 
     $10,000 against the plan and the plan shall pay such penalty 
     to the participant, beneficiary, or enrollee involved.
       (B) Cease and desist order and order of attorney's fees.--
     In any action described in subparagraph (A) brought by a 
     participant, beneficiary, or enrollee with respect to a group 
     health plan, or a health insurance issuer offering health 
     insurance coverage, in which a plaintiff alleges that a 
     person referred to in such subparagraph has taken an action 
     resulting in a refusal of a benefit determined by an external 
     appeal entity to be covered, or has failed to take an action 
     for which such person is responsible under the terms and 
     conditions of the plan or coverage and which is necessary 
     under the plan or coverage for authorizing a benefit, the 
     court shall cause to be served on the defendant an order 
     requiring the defendant--
       (i) to cease and desist from the alleged action or failure 
     to act; and
       (ii) to pay to the plaintiff a reasonable attorney's fee 
     and other reasonable costs relating to the prosecution of the 
     action on the charges on which the plaintiff prevails.
       (C) Additional civil penalties.--
       (i) In general.--In addition to any penalty imposed under 
     subparagraph (A) or (B), the appropriate Secretary may assess 
     a civil penalty against a person acting in the capacity of 
     authorizing a benefit determined by an external review entity 
     for one or more group health plans, or health insurance 
     issuers offering health insurance coverage, for--

       (I) any pattern or practice of repeated refusal to 
     authorize a benefit determined by an external appeal entity 
     to be covered; or
       (II) any pattern or practice of repeated violations of the 
     requirements of this section with respect to such plan or 
     coverage.

       (ii) Standard of proof and amount of penalty.--Such penalty 
     shall be payable only upon proof by clear and convincing 
     evidence of such pattern or practice and shall be in an 
     amount not to exceed the lesser of--

       (I) 25 percent of the aggregate value of benefits shown by 
     the appropriate Secretary to have not been provided, or 
     unlawfully delayed, in violation of this section under such 
     pattern or practice; or
       (II) $500,000.

       (D) Removal and disqualification.--Any person acting in the 
     capacity of authorizing benefits who has engaged in any such 
     pattern or practice described in subparagraph (C)(i) with 
     respect to a plan or coverage, upon the petition of the 
     appropriate Secretary, may be removed by the court from such 
     position, and from any other involvement, with respect to 
     such a plan or coverage, and may be precluded from returning 
     to any such position or involvement for a period determined 
     by the court.
       (4) Protection of legal rights.--Nothing in this subsection 
     or 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));

[[Page S5081]]

       (ii) not have a material familial, financial, or 
     professional relationship with such a party; and
       (iii) not otherwise have a conflict of interest with such a 
     party (as determined under regulations).
       (B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       (i) prohibit an individual, solely on the basis of 
     affiliation with the plan or issuer, from serving as an 
     independent medical reviewer if--

       (I) a non-affiliated individual is not reasonably 
     available;
       (II) the affiliated individual is not involved in the 
     provision of items or services in the case under review;
       (III) the fact of such an affiliation is disclosed to the 
     plan or issuer and the participant, beneficiary, or enrollee 
     (or authorized representative) and neither party objects; and
       (IV) the affiliated individual is not an employee of the 
     plan or issuer and does not provide services exclusively or 
     primarily to or on behalf of the plan or issuer;

       (ii) prohibit an individual who has staff privileges at the 
     institution where the treatment involved takes place from 
     serving as an independent medical reviewer merely on the 
     basis of such affiliation if the affiliation is disclosed to 
     the plan or issuer and the participant, beneficiary, or 
     enrollee (or authorized representative), and neither party 
     objects; or
       (iii) prohibit receipt of compensation by an independent 
     medical reviewer from an entity if the compensation is 
     provided consistent with paragraph (6).
       (4) Practicing health care professional in same field.--
       (A) In general.--In a case involving treatment, or the 
     provision of items or services--
       (i) by a physician, a reviewer shall be a practicing 
     physician (allopathic or osteopathic) of the same or similar 
     specialty, as a physician who, acting within the appropriate 
     scope of practice within the State in which the service is 
     provided or rendered, typically treats the condition, makes 
     the diagnosis, or provides the type of treatment under 
     review; or
       (ii) by a non-physician health care professional, a 
     reviewer (or reviewers) shall include at least one practicing 
     non-physician health care professional of the same or similar 
     specialty as the non-physician health care professional who, 
     acting within the appropriate scope of practice within the 
     State in which the service is provided or rendered, typically 
     treats the condition, makes the diagnosis, or provides the 
     type of treatment under review.
       (B) Practicing defined.--For purposes of this paragraph, 
     the term ``practicing'' means, with respect to an individual 
     who is a physician or other health care professional that the 
     individual provides health care services to individual 
     patients on average at least 2 days per week.
       (5) Pediatric expertise.--In the case of an external review 
     relating to a child, a reviewer shall have expertise under 
     paragraph (2) in pediatrics.
       (6) Limitations on reviewer compensation.--Compensation 
     provided by a qualified external review entity to an 
     independent medical reviewer in connection with a review 
     under this section shall--
       (A) not exceed a reasonable level; and
       (B) not be contingent on the decision rendered by the 
     reviewer.
       (7) Related party defined.--For purposes of this section, 
     the term ``related party'' means, with respect to a denial of 
     a claim under a plan or coverage relating to a participant, 
     beneficiary, or enrollee, any of the following:
       (A) The plan, plan sponsor, or issuer involved, or any 
     fiduciary, officer, director, or employee of such plan, plan 
     sponsor, or issuer.
       (B) The participant, beneficiary, or enrollee (or 
     authorized representative).
       (C) The health care professional that provides the items or 
     services involved in the denial.
       (D) The institution at which the items or services (or 
     treatment) involved in the denial are provided.
       (E) The manufacturer of any drug or other item that is 
     included in the items or services involved in the denial.
       (F) Any other party determined under any regulations to 
     have a substantial interest in the denial involved.
       (h) Qualified External Review Entities.--
       (1) Selection of qualified external review entities.--
       (A) Limitation on plan or issuer selection.--The 
     appropriate Secretary shall implement procedures--
       (i) to assure that the selection process among qualified 
     external review entities will not create any incentives for 
     external review entities to make a decision in a biased 
     manner; and
       (ii) for auditing a sample of decisions by such entities to 
     assure that no such decisions are made in a biased manner.

     No such selection process under the procedures implemented by 
     the appropriate Secretary may give either the patient or the 
     plan or issuer any ability to determine or influence the 
     selection of a qualified external review entity to review the 
     case of any participant, beneficiary, or enrollee.
       (B) State authority with respect to qualified external 
     review entities for health insurance issuers.--With respect 
     to health insurance issuers offering health insurance 
     coverage in a State, the State may provide for external 
     review activities to be conducted by a qualified external 
     appeal entity that is designated by the State or that is 
     selected by the State in a manner determined by the State to 
     assure an unbiased determination.
       (2) Contract with qualified external review entity.--Except 
     as provided in paragraph (1)(B), the external review process 
     of a plan or issuer under this section shall be conducted 
     under a contract between the plan or issuer and 1 or more 
     qualified external review entities (as defined in paragraph 
     (4)(A)).
       (3) Terms and conditions of contract.--The terms and 
     conditions of a contract under paragraph (2) shall--
       (A) be consistent with the standards the appropriate 
     Secretary shall establish to assure there is no real or 
     apparent conflict of interest in the conduct of external 
     review activities; and
       (B) provide that the costs of the external review process 
     shall be borne by the plan or issuer.

     Subparagraph (B) shall not be construed as applying to the 
     imposition of a filing fee under subsection (b)(2)(A)(iv) or 
     costs incurred by the participant, beneficiary, or enrollee 
     (or authorized representative) or treating health care 
     professional (if any) in support of the review, including the 
     provision of additional evidence or information.
       (4) Qualifications.--
       (A) In general.--In this section, the term ``qualified 
     external review entity'' means, in relation to a plan or 
     issuer, an entity that is initially certified (and 
     periodically recertified) under subparagraph (C) as meeting 
     the following requirements:
       (i) The entity has (directly or through contracts or other 
     arrangements) sufficient medical, legal, and other expertise 
     and sufficient staffing to carry out duties of a qualified 
     external review entity under this section on a timely basis, 
     including making determinations under subsection (b)(2)(A) 
     and providing for independent medical reviews under 
     subsection (d).
       (ii) The entity is not a plan or issuer or an affiliate or 
     a subsidiary of a plan or issuer, and is not an affiliate or 
     subsidiary of a professional or trade association of plans or 
     issuers or of health care providers.
       (iii) The entity has provided assurances that it will 
     conduct external review activities consistent with the 
     applicable requirements of this section and standards 
     specified in subparagraph (C), including that it will not 
     conduct any external review activities in a case unless the 
     independence requirements of subparagraph (B) are met with 
     respect to the case.
       (iv) The entity has provided assurances that it will 
     provide information in a timely manner under subparagraph 
     (D).
       (v) The entity meets such other requirements as the 
     appropriate Secretary provides by regulation.
       (B) Independence requirements.--
       (i) In general.--Subject to clause (ii), an entity meets 
     the independence requirements of this subparagraph with 
     respect to any case if the entity--

       (I) is not a related party (as defined in subsection 
     (g)(7));
       (II) does not have a material familial, financial, or 
     professional relationship with such a party; and
       (III) does not otherwise have a conflict of interest with 
     such a party (as determined under regulations).

       (ii) Exception for reasonable compensation.--Nothing in 
     clause (i) shall be construed to prohibit receipt by a 
     qualified external review entity of compensation from a plan 
     or issuer for the conduct of external review activities under 
     this section if the compensation is provided consistent with 
     clause (iii).
       (iii) Limitations on entity compensation.--Compensation 
     provided by a plan or issuer to a qualified external review 
     entity in connection with reviews under this section shall--

       (I) not exceed a reasonable level; and
       (II) not be contingent on any decision rendered by the 
     entity or by any independent medical reviewer.

       (C) Certification and recertification process.--
       (i) In general.--The initial certification and 
     recertification of a qualified external review entity shall 
     be made--

       (I) under a process that is recognized or approved by the 
     appropriate Secretary; or
       (II) by a qualified private standard-setting organization 
     that is approved by the appropriate Secretary under clause 
     (iii).

     In taking action under subclause (I), the appropriate 
     Secretary shall give deference to entities that are under 
     contract with the Federal Government or with an applicable 
     State authority to perform functions of the type performed by 
     qualified external review entities.
       (ii) Process.--The appropriate Secretary shall not 
     recognize or approve a process under clause (i)(I) unless the 
     process applies standards (as promulgated in regulations) 
     that ensure that a qualified external review entity--

       (I) will carry out (and has carried out, in the case of 
     recertification) the responsibilities of such an entity in 
     accordance with this section, including meeting applicable 
     deadlines;
       (II) will meet (and has met, in the case of 
     recertification) appropriate indicators of fiscal integrity;

[[Page S5082]]

       (III) will maintain (and has maintained, in the case of 
     recertification) appropriate confidentiality with respect to 
     individually identifiable health information obtained in the 
     course of conducting external review activities; and
       (IV) in the case of recertification, shall review the 
     matters described in clause (iv).

       (iii) Approval of qualified private standard-setting 
     organizations.--For purposes of clause (i)(II), the 
     appropriate Secretary may approve a qualified private 
     standard-setting organization if such Secretary finds that 
     the organization only certifies (or recertifies) external 
     review entities that meet at least the standards required for 
     the certification (or recertification) of external review 
     entities under clause (ii).
       (iv) Considerations in recertifications.--In conducting 
     recertifications of a qualified external review entity under 
     this paragraph, the appropriate Secretary or organization 
     conducting the recertification shall review compliance of the 
     entity with the requirements for conducting external review 
     activities under this section, including the following:

       (I) Provision of information under subparagraph (D).
       (II) Adherence to applicable deadlines (both by the entity 
     and by independent medical reviewers it refers cases to).
       (III) Compliance with limitations on compensation (with 
     respect to both the entity and independent medical reviewers 
     it refers cases to).
       (IV) Compliance with applicable independence requirements.
       (V) Compliance with the requirement of subsection (d)(1) 
     that only medically reviewable decisions shall be the subject 
     of independent medical review and with the requirement of 
     subsection (d)(3) that independent medical reviewers may not 
     require coverage for specifically excluded benefits.

       (v) Period of certification or recertification.--A 
     certification or recertification provided under this 
     paragraph shall extend for a period not to exceed 2 years.
       (vi) Revocation.--A certification or recertification under 
     this paragraph may be revoked by the appropriate Secretary or 
     by the organization providing such certification upon a 
     showing of cause. The Secretary, or organization, shall 
     revoke a certification or deny a recertification with respect 
     to an entity if there is a showing that the entity has a 
     pattern or practice of ordering coverage for benefits that 
     are specifically excluded under the plan or coverage.
       (vii) Petition for denial or withdrawal.--An individual may 
     petition the Secretary, or an organization providing the 
     certification involves, for a denial of recertification or a 
     withdrawal of a certification with respect to an entity under 
     this subparagraph if there is a pattern or practice of such 
     entity failing to meet a requirement of this section.
       (viii) Sufficient number of entities.--The appropriate 
     Secretary shall certify and recertify a number of external 
     review entities which is sufficient to ensure the timely and 
     efficient provision of review services.
       (D) Provision of information.--
       (i) In general.--A qualified external review entity shall 
     provide to the appropriate Secretary, in such manner and at 
     such times as such Secretary may require, such information 
     (relating to the denials which have been referred to the 
     entity for the conduct of external review under this section) 
     as such Secretary determines appropriate to assure compliance 
     with the independence and other requirements of this section 
     to monitor and assess the quality of its external review 
     activities and lack of bias in making determinations. Such 
     information shall include information described in clause 
     (ii) but shall not include individually identifiable medical 
     information.
       (ii) Information to be included.--The information described 
     in this subclause with respect to an entity is as follows:

       (I) The number and types of denials for which a request for 
     review has been received by the entity.
       (II) The disposition by the entity of such denials, 
     including the number referred to a independent medical 
     reviewer and the reasons for such dispositions (including the 
     application of exclusions), on a plan or issuer-specific 
     basis and on a health care specialty-specific basis.
       (III) The length of time in making determinations with 
     respect to such denials.
       (IV) Updated information on the information required to be 
     submitted as a condition of certification with respect to the 
     entity's performance of external review activities.

       (iii) Information to be provided to certifying 
     organization.--

       (I) In general.--In the case of a qualified external review 
     entity which is certified (or recertified) under this 
     subsection by a qualified private standard-setting 
     organization, at the request of the organization, the entity 
     shall provide the organization with the information provided 
     to the appropriate Secretary under clause (i).
       (II) Additional information.--Nothing in this subparagraph 
     shall be construed as preventing such an organization from 
     requiring additional information as a condition of 
     certification or recertification of an entity.

       (iv) Use of information.--Information provided under this 
     subparagraph may be used by the appropriate Secretary and 
     qualified private standard-setting organizations to conduct 
     oversight of qualified external review entities, including 
     recertification of such entities, and shall be made available 
     to the public in an appropriate manner.
       (E) Limitation on liability.--No qualified external review 
     entity having a contract with a plan or issuer, and no person 
     who is employed by any such entity or who furnishes 
     professional services to such entity (including as an 
     independent medical reviewer), shall be held by reason of the 
     performance of any duty, function, or activity required or 
     authorized pursuant to this section, to be civilly liable 
     under any law of the United States or of any State (or 
     political subdivision thereof) if there was no actual malice 
     or gross misconduct in the performance of such duty, 
     function, or activity.
       (5) Report.--Not later than 12 months after the general 
     effective date referred to in section 601, the General 
     Accounting Office shall prepare and submit to the appropriate 
     committees of Congress a report concerning--
       (A) the information that is provided under paragraph 
     (3)(D);
       (B) the number of denials that have been upheld by 
     independent medical reviewers and the number of denials that 
     have been reversed by such reviewers; and
       (C) the extent to which independent medical reviewers are 
     requiring coverage for benefits that are specifically 
     excluded under the plan or coverage.

     SEC. 105. HEALTH CARE CONSUMER ASSISTANCE FUND.

       (a) Grants.--
       (1) In general.--The Secretary of Health and Human Services 
     (referred to in this section as the ``Secretary'') shall 
     establish a fund, to be known as the ``Health Care Consumer 
     Assistance Fund'', to be used to award grants to eligible 
     States to carry out consumer assistance activities (including 
     programs established by States prior to the enactment of this 
     Act) designed to provide information, assistance, and 
     referrals to consumers of health insurance products.
       (2) State eligibility.--To be eligible to receive a grant 
     under this subsection a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including a State plan that describes--
       (A) the manner in which the State will ensure that the 
     health care consumer assistance office (established under 
     paragraph (4)) will educate and assist health care consumers 
     in accessing needed care;
       (B) the manner in which the State will coordinate and 
     distinguish the services provided by the health care consumer 
     assistance office with the services provided by Federal, 
     State and local health-related ombudsman, information, 
     protection and advocacy, insurance, and fraud and abuse 
     programs;
       (C) the manner in which the State will provide information, 
     outreach, and services to underserved, minority populations 
     with limited English proficiency and populations residing in 
     rural areas;
       (D) the manner in which the State will oversee the health 
     care consumer assistance office, its activities, product 
     materials and evaluate program effectiveness;
       (E) the manner in which the State will ensure that funds 
     made available under this section will be used to supplement, 
     and not supplant, any other Federal, State, or local funds 
     expended to provide services for programs described under 
     this section and those described in subparagraphs (C) and 
     (D);
       (F) the manner in which the State will ensure that health 
     care consumer office personnel have the professional 
     background and training to carry out the activities of the 
     office; and
       (G) the manner in which the State will ensure that 
     consumers have direct access to consumer assistance personnel 
     during regular business hours.
       (3) Amount of grant.--
       (A) In general.--From amounts appropriated under subsection 
     (b) for a fiscal year, the Secretary shall award a grant to a 
     State in an amount that bears the same ratio to such amounts 
     as the number of individuals within the State covered under a 
     group health plan or under health insurance coverage offered 
     by a health insurance issuer bears to the total number of 
     individuals so covered in all States (as determined by the 
     Secretary). Any amounts provided to a State under this 
     subsection that are not used by the State shall be remitted 
     to the Secretary and reallocated in accordance with this 
     subparagraph.
       (B) Minimum amount.--In no case shall the amount provided 
     to a State under a grant under this subsection for a fiscal 
     year be less than an amount equal to 0.5 percent of the 
     amount appropriated for such fiscal year to carry out this 
     section.
       (C) Non-federal contributions.--A State will provide for 
     the collection of non-Federal contributions for the operation 
     of the office in an amount that is not less than 25 percent 
     of the amount of Federal funds provided to the State under 
     this section.
       (4) Provision of funds for establishment of office.--
       (A) In general.--From amounts provided under a grant under 
     this subsection, a State shall, directly or through a 
     contract with an independent, nonprofit entity with 
     demonstrated experience in serving the needs of health care 
     consumers, provide for the establishment and operation of a 
     State health care consumer assistance office.
       (B) Eligibility of entity.--To be eligible to enter into a 
     contract under subparagraph (A), an entity shall demonstrate 
     that it has

[[Page S5083]]

     the technical, organizational, and professional capacity to 
     deliver the services described in subsection (b) to all 
     public and private health insurance participants, 
     beneficiaries, enrollees, or prospective enrollees.
       (C) Existing state entity.--Nothing in this section shall 
     prevent the funding of an existing health care consumer 
     assistance program that otherwise meets the requirements of 
     this section.
       (b) Use of Funds.--
       (1) By state.--A State shall use amounts provided under a 
     grant awarded under this section to carry out consumer 
     assistance activities directly or by contract with an 
     independent, non-profit organization. An eligible entity may 
     use some reasonable amount of such grant to ensure the 
     adequate training of personnel carrying out such activities. 
     To receive amounts under this subsection, an eligible entity 
     shall provide consumer assistance services, including--
       (A) the operation of a toll-free telephone hotline to 
     respond to consumer requests;
       (B) the dissemination of appropriate educational materials 
     on available health insurance products and on how best to 
     access health care and the rights and responsibilities of 
     health care consumers;
       (C) the provision of education on effective methods to 
     promptly and efficiently resolve questions, problems, and 
     grievances;
       (D) the coordination of educational and outreach efforts 
     with health plans, health care providers, payers, and 
     governmental agencies;
       (E) referrals to appropriate private and public entities to 
     resolve questions, problems and grievances; and
       (F) the provision of information and assistance, including 
     acting as an authorized representative, regarding internal, 
     external, or administrative grievances or appeals procedures 
     in nonlitigative settings to appeal the denial, termination, 
     or reduction of health care services, or the refusal to pay 
     for such services, under a group health plan or health 
     insurance coverage offered by a health insurance issuer.
       (2) Confidentiality and access to information.--
       (A) State entity.--With respect to a State that directly 
     establishes a health care consumer assistance office, such 
     office shall establish and implement procedures and protocols 
     in accordance with applicable Federal and State laws.
       (B) Contract entity.--With respect to a State that, through 
     contract, establishes a health care consumer assistance 
     office, such office shall establish and implement procedures 
     and protocols, consistent with applicable Federal and State 
     laws, to ensure the confidentiality of all information shared 
     by a participant, beneficiary, enrollee, or their personal 
     representative and their health care providers, group health 
     plans, or health insurance insurers with the office and to 
     ensure that no such information is used by the office, or 
     released or disclosed to State agencies or outside persons or 
     entities without the prior written authorization (in 
     accordance with section 164.508 of title 45, Code of Federal 
     Regulations) of the individual or personal representative. 
     The office may, consistent with applicable Federal and State 
     confidentiality laws, collect, use or disclose aggregate 
     information that is not individually identifiable (as defined 
     in section 164.501 of title 45, Code of Federal Regulations). 
     The office shall provide a written description of the 
     policies and procedures of the office with respect to the 
     manner in which health information may be used or disclosed 
     to carry out consumer assistance activities. The office shall 
     provide health care providers, group health plans, or health 
     insurance issuers with a written authorization (in accordance 
     with section 164.508 of title 45, Code of Federal 
     Regulations) to allow the office to obtain medical 
     information relevant to the matter before the office.
       (3) Availability of services.--The health care consumer 
     assistance office of a State shall not discriminate in the 
     provision of information, referrals, and services regardless 
     of the source of the individual's health insurance coverage 
     or prospective coverage, including individuals covered under 
     a group health plan or health insurance coverage offered by a 
     health insurance issuer, the medicare or medicaid programs 
     under title XVIII or XIX of the Social Security Act (42 
     U.S.C. 1395 and 1396 et seq.), or under any other Federal or 
     State health care program.
       (4) Designation of responsibilities.--
       (A) Within existing state entity.--If the health care 
     consumer assistance office of a State is located within an 
     existing State regulatory agency or office of an elected 
     State official, the State shall ensure that--
       (i) there is a separate delineation of the funding, 
     activities, and responsibilities of the office as compared to 
     the other funding, activities, and responsibilities of the 
     agency; and
       (ii) the office establishes and implements procedures and 
     protocols to ensure the confidentiality of all information 
     shared by a participant, beneficiary, or enrollee or their 
     personal representative and their health care providers, 
     group health plans, or health insurance issuers with the 
     office and to ensure that no information is disclosed to the 
     State agency or office without the written authorization of 
     the individual or their personal representative in accordance 
     with paragraph (2).
       (B) Contract entity.--In the case of an entity that enters 
     into a contract with a State under subsection (a)(3), the 
     entity shall provide assurances that the entity has no 
     conflict of interest in carrying out the activities of the 
     office and that the entity is independent of group health 
     plans, health insurance issuers, providers, payers, and 
     regulators of health care.
       (5) Subcontracts.--The health care consumer assistance 
     office of a State may carry out activities and provide 
     services through contracts entered into with 1 or more 
     nonprofit entities so long as the office can demonstrate that 
     all of the requirements of this section are complied with by 
     the office.
       (6) Term.--A contract entered into under this subsection 
     shall be for a term of 3 years.
       (c) Report.--Not later than 1 year after the Secretary 
     first awards grants under this section, and annually 
     thereafter, the Secretary shall prepare and submit to the 
     appropriate committees of Congress a report concerning the 
     activities funded under this section and the effectiveness of 
     such activities in resolving health care-related problems and 
     grievances.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as may be necessary to carry out 
     this section.

                       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 (including physician pathology services) 
     only if such services are furnished through health care 
     professionals and providers who are members of a network of 
     health care professionals and providers who have entered into 
     a contract with the issuer to provide such services, or
       (2) a group health plan offers to participants or 
     beneficiaries health benefits which provide for coverage of 
     services only if such services are furnished through health 
     care professionals and providers who are members of a network 
     of health care professionals and providers who have entered 
     into a contract with the plan to provide such services,

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

     SEC. 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--

[[Page S5084]]

       (i) by a nonparticipating health care provider with or 
     without prior authorization, or
       (ii) by a participating health care provider without prior 
     authorization,

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

     SEC. 114. TIMELY ACCESS TO SPECIALISTS.

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

     SEC. 115. PATIENT ACCESS TO OBSTETRICAL AND GYNECOLOGICAL 
                   CARE.

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

     SEC. 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

[[Page S5085]]

     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 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 (and health insurance 
     coverage offered in connection with such a plan) that 
     provides any coverage of prescription drugs or medical 
     devices shall not deny coverage of such a drug or device on 
     the basis that the use is investigational, if the use--
       (A) in the case of a prescription drug--

[[Page S5086]]

       (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 and 
     a health insurance issuer shall provide for payment for 
     routine patient costs described in subsection (a)(2) but is 
     not required to pay for costs of items and services that are 
     reasonably expected (as determined by the appropriate 
     Secretary) to be paid for by the sponsors of an approved 
     clinical trial.
       (2) Payment rate.--In the case of covered items and 
     services provided by--
       (A) a participating provider, the payment rate shall be at 
     the agreed upon rate; or
       (B) a nonparticipating provider, the payment rate shall be 
     at the rate the plan or issuer would normally pay for 
     comparable services under subparagraph (A).
       (d) Approved Clinical Trial Defined.--
       (1) In general.--In this section, the term ``approved 
     clinical trial'' means a clinical research study or clinical 
     investigation--
       (A) approved and funded (which may include funding through 
     in-kind contributions) by one or more of the following:
       (i) the National Institutes of Health;
       (ii) a cooperative group or center of the National 
     Institutes of Health, including a qualified nongovernmental 
     research entity to which the National Cancer Institute has 
     awarded a center support grant;
       (iii) either of the following if the conditions described 
     in paragraph (2) are met--

       (I) the Department of Veterans Affairs;
       (II) the Department of Defense; or

       (B) approved by the Food and Drug Administration.
       (2) Conditions for departments.--The conditions described 
     in this paragraph, for a study or investigation conducted by 
     a Department, are that the study or investigation has been 
     reviewed and approved through a system of peer review that 
     the appropriate Secretary determines--
       (A) to be comparable to the system of peer review of 
     studies and investigations used by the National Institutes of 
     Health; and
       (B) assures unbiased review of the highest ethical 
     standards by qualified individuals who have no interest in 
     the outcome of the review.
       (e) Construction.--Nothing in this section shall be 
     construed to limit a plan's or issuer's coverage with respect 
     to clinical trials.

     SEC. 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

[[Page S5087]]

       (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(d)(3)(C);
       (D) any other benefit limitations, including any annual or 
     lifetime benefit limits and any monetary limits or limits on 
     the number of visits, days, or services, and any specific 
     coverage exclusions; and
       (E) any definition of medical necessity used in making 
     coverage determinations by the plan, issuer, or claims 
     administrator.
       (2) Cost sharing.--A description of any cost-sharing 
     requirements, including--
       (A) any premiums, deductibles, coinsurance, copayment 
     amounts, and liability for balance billing, for which the 
     participant, beneficiary, or enrollee will be responsible 
     under each option available under the plan;
       (B) any maximum out-of-pocket expense for which the 
     participant, beneficiary, or enrollee may be liable;
       (C) any cost-sharing requirements for out-of-network 
     benefits or services received from nonparticipating 
     providers; and
       (D) any additional cost-sharing or charges for benefits and 
     services that are furnished without meeting applicable plan 
     or coverage requirements, such as prior authorization or 
     precertification.
       (3) Disenrollment.--Information relating to the 
     disenrollment of a participant, beneficiary, or enrollee.
       (4) Service area.--A description of the plan or issuer's 
     service area, including the provision of any out-of-area 
     coverage.
       (5) Participating providers.--A directory of participating 
     providers (to the extent a plan or issuer provides coverage 
     through a network of providers) that includes, at a minimum, 
     the name, address, and telephone number of each participating 
     provider, and information about how to inquire whether a 
     participating provider is currently accepting new patients.
       (6) Choice of primary care provider.--A description of any 
     requirements and procedures to be used by participants, 
     beneficiaries, and enrollees in selecting, accessing, or 
     changing their primary care provider, including providers 
     both within and outside of the network (if the plan or issuer 
     permits out-of-network services), and the right to select a 
     pediatrician as a primary care provider under section 116 for 
     a participant, beneficiary, or enrollee who is a child if 
     such section applies.
       (7) Preauthorization requirements.--A description of the 
     requirements and procedures to be used to obtain 
     preauthorization for health services, if such 
     preauthorization is required.
       (8) Experimental and investigational treatments.--A 
     description of the process for determining whether a 
     particular item, service, or treatment is considered 
     experimental or investigational, and the circumstances under 
     which such treatments are covered by the plan or issuer.
       (9) Specialty care.--A description of the requirements and 
     procedures to be used by participants, beneficiaries, and 
     enrollees in accessing specialty care and obtaining referrals 
     to participating and nonparticipating specialists, including 
     any limitations on choice of health care professionals 
     referred to in section 112(b)(2) and the right to timely 
     access to specialists care under section 114 if such section 
     applies.
       (10) Clinical trials.--A description of the circumstances 
     and conditions under which participation in clinical trials 
     is covered under the terms and conditions of the plan or 
     coverage, and the right to obtain coverage for approved 
     clinical trials under section 119 if such section applies.
       (11) Prescription drugs.--To the extent the plan or issuer 
     provides coverage for prescription drugs, a statement of 
     whether such coverage is limited to drugs included in a 
     formulary, a description of any provisions and cost-sharing 
     required for obtaining on- and off-formulary medications, and 
     a description of the rights of participants, beneficiaries, 
     and enrollees in obtaining access to access to prescription 
     drugs under section 118 if such section applies.
       (12) Emergency services.--A summary of the rules and 
     procedures for accessing emergency services, including the 
     right of a participant, beneficiary, or enrollee to obtain 
     emergency services under the prudent layperson standard under 
     section 113, if such section applies, and any educational 
     information that the plan or issuer may provide regarding the 
     appropriate use of emergency services.
       (13) Claims and appeals.--A description of the plan or 
     issuer's rules and procedures pertaining to claims and 
     appeals, a description of the rights (including deadlines for 
     exercising rights) of participants, beneficiaries, and 
     enrollees under 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.
       (14) Advance directives and organ donation.--A description 
     of procedures for advance directives and organ donation 
     decisions if the plan or issuer maintains such procedures.
       (15) Information on plans and issuers.--The name, mailing 
     address, and telephone number or numbers of the plan 
     administrator and the issuer to be used by participants, 
     beneficiaries, and enrollees seeking information about plan 
     or coverage benefits and services, payment of a claim, or 
     authorization for services and treatment. Notice of whether 
     the benefits under the plan or coverage are provided under a 
     contract or policy of insurance issued by an issuer, or 
     whether benefits are provided directly by the plan sponsor 
     who bears the insurance risk.
       (16) Translation services.--A summary description of any 
     translation or interpretation services (including the 
     availability of printed information in languages other than 
     English, audio tapes, or information in Braille) that are 
     available for non-English speakers and participants, 
     beneficiaries, and enrollees with communication disabilities 
     and a description of how to access these items or services.
       (17) Accreditation information.--Any information that is 
     made public by accrediting organizations in the process of 
     accreditation if the plan or issuer is accredited, or any 
     additional quality indicators (such as the results of 
     enrollee satisfaction surveys) that the plan or issuer makes 
     public or makes available to participants, beneficiaries, and 
     enrollees.
       (18) Notice of requirements.--A description of any rights 
     of participants, beneficiaries, and enrollees that are 
     established by the Patients' Bill of Rights Act of 2005 
     (excluding those described in paragraphs (1) through (17)) if 
     such sections apply. The description required under this 
     paragraph may be combined with the notices of the type 
     described in sections 711(d), 713(b), or 606(a)(1) of the 
     Employee Retirement Income Security Act of 1974 and with any 
     other notice provision that the appropriate Secretary 
     determines may be combined, so long as such combination does 
     not result in any reduction in the information that would 
     otherwise be provided to the recipient.
       (19) Availability of additional information.--A statement 
     that the information described in subsection (c), and 
     instructions on obtaining such information (including 
     telephone numbers and, if available, Internet websites), 
     shall be made available upon request.
       (20) Designated decisionmakers.--A description of the 
     participants and beneficiaries with respect to whom each 
     designated decisionmaker under the plan has assumed liability 
     under section 502(o) of the Employee Retirement Income 
     Security Act of 1974 and the name and address of each such 
     decisionmaker.
       (c) Additional Information.--The informational materials to 
     be provided upon the request of a participant, beneficiary, 
     or enrollee shall include for each option available under a 
     group health plan or health insurance coverage the following:
       (1) Status of providers.--The State licensure status of the 
     plan or issuer's participating health care professionals and 
     participating health care facilities, and, if available, the 
     education, training, specialty qualifications or 
     certifications of such professionals.
       (2) Compensation methods.--A summary description by 
     category of the applicable methods (such as capitation, fee-
     for-service, salary, bundled payments, per diem, or a 
     combination thereof) used for compensating prospective or 
     treating health care professionals (including primary care 
     providers and specialists) and facilities in connection with 
     the provision of health care under the plan or coverage.
       (3) Prescription drugs.--Information about whether a 
     specific prescription medication is included in the formulary 
     of the plan or issuer, if the plan or issuer uses a defined 
     formulary.
       (4) Utilization review activities.--A description of 
     procedures used and requirements (including circumstances, 
     timeframes, and appeals rights) under any utilization review 
     program under sections 101 and 102, including any drug 
     formulary program under section 118.

[[Page S5088]]

       (5) External appeals information.--Aggregate information on 
     the number and outcomes of external medical reviews, relative 
     to the sample size (such as the number of covered lives) 
     under the plan or under the coverage of the issuer.
       (d) Manner of Disclosure.--The information described in 
     this section shall be disclosed in an accessible medium and 
     format that is calculated to be understood by a participant 
     or enrollee.
       (e) Rules of Construction.--Nothing in this section shall 
     be construed to prohibit a group health plan, or a health 
     insurance issuer in connection with health insurance 
     coverage, from--
       (1) distributing any other additional information 
     determined by the plan or issuer to be important or necessary 
     in assisting participants, beneficiaries, and enrollees in 
     the selection of a health plan or health insurance coverage; 
     and
       (2) complying with the provisions of this section by 
     providing information in brochures, through the Internet or 
     other electronic media, or through other similar means, so 
     long as--
       (A) the disclosure of such information in such form is in 
     accordance with requirements as the appropriate Secretary may 
     impose, and
       (B) in connection with any such disclosure of information 
     through the Internet or other electronic media--
       (i) the recipient has affirmatively consented to the 
     disclosure of such information in such form,
       (ii) the recipient is capable of accessing the information 
     so disclosed on the recipient's individual workstation or at 
     the recipient's home,
       (iii) the recipient retains an ongoing right to receive 
     paper disclosure of such information and receives, in advance 
     of any attempt at disclosure of such information to him or 
     her through the Internet or other electronic media, notice in 
     printed form of such ongoing right and of the proper software 
     required to view information so disclosed, and
       (iv) the plan administrator appropriately ensures that the 
     intended recipient is receiving the information so disclosed 
     and provides the information in printed form if the 
     information is not received.

         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 1852(j)(4) of the Social Security Act) unless the 
     requirements described in clauses (i), (ii)(I), and (iii) of 
     subparagraph (A) of such section are met with respect to such 
     a plan.
       (b) Application.--For purposes of carrying out paragraph 
     (1), any reference in section 1852(j)(4) of the Social 
     Security Act to the Secretary, a MedicareAdvantage 
     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 
     health insurance coverage, shall provide for prompt payment 
     of claims submitted for health care services or supplies 
     furnished to a participant, beneficiary, or enrollee with 
     respect to benefits covered by the plan or issuer, in a 
     manner that is no less protective than the provisions of 
     section 1842(c)(2) of the Social Security Act (42 U.S.C. 
     1395u(c)(2)).

     SEC. 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 and a health insurance 
     issuer may not retaliate or discriminate against a protected 
     health care professional because the professional in good 
     faith--
       (A) discloses information relating to the care, services, 
     or conditions affecting one or more participants, 
     beneficiaries, or enrollees of the plan or issuer to an 
     appropriate public regulatory agency, an appropriate private 
     accreditation body, or appropriate management personnel of 
     the plan or issuer; or
       (B) initiates, cooperates, or otherwise participates in an 
     investigation or proceeding by such an agency with respect to 
     such care, services, or conditions.

     If an institutional health care provider is a participating 
     provider with such a plan or issuer or otherwise receives 
     payments for benefits provided by such a plan or issuer, the 
     provisions of the previous sentence shall apply to the 
     provider in relation to care, services, or conditions 
     affecting one or more patients within an institutional health 
     care provider in the same manner as they apply to the plan or 
     issuer in relation to care, services, or conditions provided 
     to one or more participants, beneficiaries, or enrollees; and 
     for purposes of applying this sentence, any reference to a 
     plan or issuer is deemed a reference to the institutional 
     health care provider.
       (2) Good faith action.--For purposes of paragraph (1), a 
     protected health care professional is considered to be acting 
     in good faith with respect to disclosure of information or 
     participation if, with respect to the information disclosed 
     as part of the action--
       (A) the disclosure is made on the basis of personal 
     knowledge and is consistent with that degree of learning and 
     skill ordinarily possessed by health care professionals with 
     the same licensure or certification and the same experience;
       (B) the professional reasonably believes the information to 
     be true;
       (C) the information evidences either a violation of a law, 
     rule, or regulation, of an applicable accreditation standard, 
     or of a generally recognized professional or clinical 
     standard or that a patient is in imminent hazard of loss of 
     life or serious injury; and
       (D) subject to subparagraphs (B) and (C) of paragraph (3), 
     the professional has followed reasonable internal procedures 
     of the plan, issuer, or institutional health care provider 
     established for the purpose of addressing quality concerns 
     before making the disclosure.
       (3) Exception and special rule.--
       (A) General exception.--Paragraph (1) does not protect 
     disclosures that would violate Federal or State law or 
     diminish or impair the rights of any person to the continued 
     protection of confidentiality of communications provided by 
     such law.
       (B) Notice of internal procedures.--Subparagraph (D) of 
     paragraph (2) shall not apply unless the internal procedures 
     involved are reasonably expected to be known to the health 
     care professional involved. For purposes of this 
     subparagraph, a health care professional is reasonably 
     expected to know of internal procedures if those procedures 
     have been made available to the professional through 
     distribution or posting.
       (C) Internal procedure exception.--Subparagraph (D) of 
     paragraph (2) also shall not apply if--
       (i) the disclosure relates to an imminent hazard of loss of 
     life or serious injury to a patient;
       (ii) the disclosure is made to an appropriate private 
     accreditation body pursuant to disclosure procedures 
     established by the body; or
       (iii) the disclosure is in response to an inquiry made in 
     an investigation or proceeding of an appropriate public 
     regulatory agency and the information disclosed is limited to 
     the scope of the investigation or proceeding.
       (4) Additional considerations.--It shall not be a violation 
     of paragraph (1) to take an adverse action against a 
     protected health care professional if the plan, issuer, or 
     provider taking the adverse action involved demonstrates that 
     it would have taken the same adverse action even in the 
     absence of the activities protected under such paragraph.

[[Page S5089]]

       (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 714 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.
       (2) Enrollee.--The term ``enrollee'' means, with respect to 
     health insurance coverage offered by a health insurance 
     issuer, an individual enrolled with the issuer to receive 
     such coverage.
       (3) Group health plan.--The term ``group health plan'' has 
     the meaning given such term in section 733(a) of the Employee 
     Retirement Income Security Act of 1974, except that such term 
     includes a employee welfare benefit plan treated as a group 
     health plan under section 732(d) of such Act or defined as 
     such a plan under section 607(1) of such Act.
       (4) Health care professional.--The term ``health care 
     professional'' means an individual who is licensed, 
     accredited, or certified under State law to provide specified 
     health care services and who is operating within the scope of 
     such licensure, accreditation, or certification.
       (5) Health care provider.--The term ``health care 
     provider'' includes a physician or other health care 
     professional, as well as an institutional or other facility 
     or agency that provides health care services and that is 
     licensed, accredited, or certified to provide health care 
     items and services under applicable State law.
       (6) Network.--The term ``network'' means, with respect to a 
     group health plan or health insurance issuer offering health 
     insurance coverage, the participating health care 
     professionals and providers through whom the plan or issuer 
     provides health care items and services to participants, 
     beneficiaries, or enrollees.
       (7) Nonparticipating.--The term ``nonparticipating'' means, 
     with respect to a health care provider that provides health 
     care items and services to a participant, beneficiary, or 
     enrollee under group health plan or health insurance 
     coverage, a health care provider that is not a participating 
     health care provider with respect to such items and services.
       (8) Participating.--The term ``participating'' means, with 
     respect to a health care provider that provides health care 
     items and services to a participant, beneficiary, or enrollee 
     under group health plan or health insurance coverage offered 
     by a health insurance issuer, a health care provider that 
     furnishes such items and services under a contract or other 
     arrangement with the plan or issuer.
       (9) Prior authorization.--The term ``prior authorization'' 
     means the process of obtaining prior approval from a health 
     insurance issuer or group health plan for the provision or 
     coverage of medical services.
       (10) Terms and conditions.--The term ``terms and 
     conditions'' includes, with respect to a group health plan or 
     health insurance coverage, requirements imposed under this 
     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 Compliant State Laws.--
       (1) In general.--In the case of a State law that imposes, 
     with respect to health insurance coverage offered by a health 
     insurance issuer and with respect to a group health plan that 
     is a non-Federal governmental plan, a requirement that 
     substantially complies (within the meaning of subsection (c)) 
     with a patient protection requirement (as defined in 
     paragraph (3)) and does not prevent the application of other 
     requirements under this Act (except in the case of other 
     substantially compliant 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) Definitions.--In this section:
       (A) Patient protection requirement.--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.
       (B) Substantially compliant.--The terms ``substantially 
     compliant'', substantially complies'', or ``substantial 
     compliance'' with respect to a State law, mean that the State 
     law has the same or similar features as the patient 
     protection requirements and has a similar effect.
       (c) Determinations of Substantial Compliance.--
       (1) Certification by states.--A State may submit to the 
     Secretary a certification that a State law provides for 
     patient protections that are at least substantially compliant 
     with one or more patient protection requirements. Such 
     certification shall be accompanied by such information as may 
     be required to permit the Secretary to make the determination 
     described in paragraph (2)(A).
       (2) Review.--
       (A) In general.--The Secretary shall promptly review a 
     certification submitted under paragraph (1) with respect to a 
     State law to determine if the State law substantially 
     complies with the patient protection requirement (or 
     requirements) to which the law relates.
       (B) Approval deadlines.--
       (i) Initial review.--Such a certification is considered 
     approved unless the Secretary notifies the State in writing, 
     within 90 days after the date of receipt of the 
     certification, that the certification is disapproved (and the 
     reasons for disapproval) or that specified additional 
     information is needed to make the determination described in 
     subparagraph (A).
       (ii) Additional information.--With respect to a State that 
     has been notified by the Secretary under clause (i) that 
     specified additional information is needed to make the 
     determination described in subparagraph (A), the Secretary 
     shall make the determination within 60 days after the date on 
     which such specified additional information is received by 
     the Secretary.
       (3) Approval.--

[[Page S5090]]

       (A) In general.--The Secretary shall approve a 
     certification under paragraph (1) unless--
       (i) the State fails to provide sufficient information to 
     enable the Secretary to make a determination under paragraph 
     (2)(A); or
       (ii) the Secretary determines that the State law involved 
     does not provide for patient protections that substantially 
     comply with the patient protection requirement (or 
     requirements) to which the law relates.
       (B) State challenge.--A State that has a certification 
     disapproved by the Secretary under subparagraph (A) may 
     challenge such disapproval in the appropriate United States 
     district court.
       (C) Deference to states.--With respect to a certification 
     submitted under paragraph (1), the Secretary shall give 
     deference to the State's interpretation of the State law 
     involved with respect to the patient protection involved.
       (D) Public notification.--The Secretary shall--
       (i) provide a State with a notice of the determination to 
     approve or disapprove a certification under this paragraph;
       (ii) promptly publish in the Federal Register a notice that 
     a State has submitted a certification under paragraph (1);
       (iii) promptly publish in the Federal Register the notice 
     described in clause (i) with respect to the State; and
       (iv) annually publish the status of all States with respect 
     to certifications.
       (4) Construction.--Nothing in this subsection shall be 
     construed as preventing the certification (and approval of 
     certification) of a State law under this subsection solely 
     because it provides for greater protections for patients than 
     those protections otherwise required to establish substantial 
     compliance.
       (5) Petitions.--
       (A) Petition process.--Effective on the date on which the 
     provisions of this Act become effective, as provided for in 
     section 601, a group health plan, health insurance issuer, 
     participant, beneficiary, or enrollee may submit a petition 
     to the Secretary for an advisory opinion as to whether or not 
     a standard or requirement under a State law applicable to the 
     plan, issuer, participant, beneficiary, or enrollee that is 
     not the subject of a certification under this subsection, is 
     superseded under subsection (a)(1) because such standard or 
     requirement prevents the application of a requirement of this 
     title.
       (B) Opinion.--The Secretary shall issue an advisory opinion 
     with respect to a petition submitted under subparagraph (A) 
     within the 60-day period beginning on the date on which such 
     petition is submitted.
       (d) Definitions.--For purposes of this section:
       (1) State law.--The term ``State law'' includes all laws, 
     decisions, rules, regulations, or other State action having 
     the effect of law, of any State. A law of the United States 
     applicable only to the District of Columbia shall be treated 
     as a State law rather than a law of the United States.
       (2) State.--The term ``State'' includes a State, the 
     District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
     American Samoa, the Northern Mariana Islands, any political 
     subdivisions of such, or any agency or instrumentality of 
     such.

     SEC. 153. EXCLUSIONS.

       (a) No Benefit Requirements.--Nothing in this 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. TREATMENT OF EXCEPTED BENEFITS.

       (a) In General.--The requirements of this title and the 
     provisions of sections 502(a)(1)(C), 502(n), and 514(d) of 
     the Employee Retirement Income Security Act of 1974 (added by 
     section 402) shall not apply to excepted benefits (as defined 
     in section 733(c) of such Act), other than benefits described 
     in section 733(c)(2)(A) of such Act, in the same manner as 
     the provisions of part 7 of subtitle B of title I of such Act 
     do not apply to such benefits under subsections (b) and (c) 
     of section 732 of such Act.
       (b) Coverage of Certain Limited Scope Plans.--Only for 
     purposes of applying the requirements of this title under 
     sections 2707 and 2753 of the Public Health Service Act, 
     section 714 of the Employee Retirement Income Security Act of 
     1974, and section 9813 of the Internal Revenue Code of 1986, 
     the following sections shall be deemed not to apply:
       (1) Section 2791(c)(2)(A) of the Public Health Service Act.
       (2) Section 733(c)(2)(A) of the Employee Retirement Income 
     Security Act of 1974.
       (3) Section 9832(c)(2)(A) of the Internal Revenue Code of 
     1986.

     SEC. 155. REGULATIONS.

       The Secretaries of Health and Human Services, Labor, and 
     the Treasury shall issue such regulations as may be necessary 
     or appropriate to carry out this 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, subject to 
     section 154, deemed to be incorporated into, and made a part 
     of, such plan or the policy, certificate, or contract 
     providing such coverage and are enforceable under law as if 
     directly included in the documentation of such plan or such 
     policy, certificate, or contract.

     SEC. 157. PRESERVATION OF PROTECTIONS.

       (a) In General.--The rights under this Act (including the 
     right to maintain a civil action and any other rights under 
     the amendments made by this Act) may not be waived, deferred, 
     or lost pursuant to any agreement not authorized under this 
     Act.
       (b) Exception.--Subsection (a) shall not apply to an 
     agreement providing for arbitration or participation in any 
     other nonjudicial procedure to resolve a dispute if the 
     agreement--
       (1) is entered into knowingly and voluntarily by the 
     parties involved after the dispute has arisen; or
       (2) is pursuant to the terms of a collective bargaining 
     agreement.

     Nothing in this subsection shall be construed to permit the 
     waiver of the requirements of sections 103 and 104 (relating 
     to internal and external review).

 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 Patients' Bill 
     of Rights Act of 2005, 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 Patients' Bill 
     of Rights Act of 2005 with respect to individual health 
     insurance coverage it offers, and such requirements shall be 
     deemed to be incorporated into this subsection.''.

     SEC. 203. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

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

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

       ``(a) Agreement With States.--A State may enter into an 
     agreement with the Secretary for the delegation to the State 
     of some or all of the Secretary's authority under this title 
     to enforce the requirements applicable under title I of the 
     Patients' Bill of Rights Act of 2005 with respect to health 
     insurance coverage offered by a health insurance issuer and 
     with respect to a group health plan that is a non-Federal 
     governmental plan.
       ``(b) Delegations.--Any department, agency, or 
     instrumentality of a State to which authority is delegated 
     pursuant to an agreement entered into under this section may, 
     if authorized under State law and to the extent consistent 
     with such agreement, exercise the powers of the Secretary 
     under this title which relate to such authority.''.

[[Page S5091]]

   TITLE III--APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL 
                       HEALTH INSURANCE PROGRAMS

     SEC. 301. APPLICATION OF PATIENT PROTECTION STANDARDS TO 
                   FEDERAL HEALTH INSURANCE PROGRAMS.

       (a) Sense of Congress.--It is the sense of Congress that 
     enrollees in Federal health insurance programs should have 
     the same rights and privileges as those afforded under title 
     I and under the amendments made by title IV to participants 
     and beneficiaries under group health plans.
       (b) Conforming Federal Health Insurance Programs.--It is 
     the sense of Congress that the President should require, by 
     executive order, the Federal official with authority over 
     each Federal health insurance program, to the extent 
     feasible, to take such steps as are necessary to implement 
     the rights and privileges described in subsection (a) with 
     respect to such program.
       (c) GAO Report on Additional Steps Required.--Not later 
     than 1 year after the date of the enactment of this Act, the 
     Comptroller General of the United States shall submit to 
     Congress a report on statutory changes that are required to 
     implement such rights and privileges in a manner that is 
     consistent with the missions of the Federal health insurance 
     programs and that avoids unnecessary duplication or 
     disruption of such programs.
       (d) Federal Health Insurance Program.--In this section, the 
     term ``Federal health insurance program'' means a Federal 
     program that provides creditable coverage (as defined in 
     section 2701(c)(1) of the Public Health Service Act) and 
     includes a health program of the Department of Veterans 
     Affairs.

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

     SEC. 401. 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 
     Patients' Bill of Rights Act of 2005 (as in effect as of the 
     date of the enactment of such Act), and such requirements 
     shall be deemed to be incorporated into this subsection.
       ``(b) Plan Satisfaction of Certain Requirements.--
       ``(1) Satisfaction of certain requirements through 
     insurance.--For purposes of subsection (a), insofar as a 
     group health plan provides benefits in the form of health 
     insurance coverage through a health insurance issuer, the 
     plan shall be treated as meeting the following requirements 
     of title I of the Patients' Bill of Rights Act of 2005 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 
     Patients' Bill of Rights Act of 2005, 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 Patients' Bill of Rights Act of 2005, 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 compliant state laws.--For 
     purposes of applying this subsection in connection with 
     health insurance coverage, any reference in this subsection 
     to a requirement in a section or other provision in the 
     Patients' Bill of Rights Act of 2005 with respect to a health 
     insurance issuer is deemed to include a reference to a 
     requirement under a State law that substantially complies (as 
     determined under section 152(c) of such Act) with the 
     requirement in such section or other provisions.
       ``(8) Application to certain prohibitions against 
     retaliation.--With respect to compliance with the 
     requirements of section 135(b)(1) of the Patients' Bill of 
     Rights Act of 2005, 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 Patients' Bill of Rights Act of 2005 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 Patients' Bill of Rights Act of 2005 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 Patients' Bill of Rights Act of 2005, 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:

``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) of the 
     Patients' Bill of Rights Act of 2005, as deemed by subsection 
     (a) of section 714 of this Act to be incorporated into such 
     subsection)'' after ``part 7''.

     SEC. 402. 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

[[Page S5092]]

     1974 (29 U.S.C. 1132) is amended by adding at the end the 
     following new subsections:
       ``(n) Cause of Action Relating to Provision of Health 
     Benefits.--
       ``(1) In general.--In any case in which--
       ``(A) a person who is a fiduciary of a group health plan, a 
     health insurance issuer offering health insurance coverage in 
     connection with the plan, or an agent of the plan, issuer, or 
     plan sponsor, upon consideration of a claim for benefits of a 
     participant or beneficiary under section 102 of the Patients' 
     Bill of Rights Act of 2005 (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--
       ``(i) regarding whether an item or service is covered under 
     the terms and conditions of the plan or coverage,
       ``(ii) regarding whether an individual is a participant or 
     beneficiary who is enrolled under the terms and conditions of 
     the plan or coverage (including the applicability of any 
     waiting period under the plan or coverage), or
       ``(iii) as to the application of cost-sharing requirements 
     or the application of a specific exclusion or express 
     limitation on the amount, duration, or scope of coverage of 
     items or services under the terms and conditions of the plan 
     or coverage, and
       ``(B) such failure is a proximate cause of personal injury 
     to, or the death of, the participant or beneficiary,
     such plan, plan sponsor, or issuer shall be liable to the 
     participant or beneficiary (or the estate of such participant 
     or beneficiary) for economic and noneconomic damages (but not 
     exemplary or punitive damages) in connection with such 
     personal injury or death.
       ``(2) Cause of action must not involve medically reviewable 
     decision.--
       ``(A) In general.--A cause of action is established under 
     paragraph (1)(A) only if the decision referred to in 
     paragraph (1)(A) does not include a medically reviewable 
     decision.
       ``(B) Medically reviewable decision.--For purposes of this 
     subsection, the term `medically reviewable decision' means a 
     denial of a claim for benefits under the plan which is 
     described in section 104(d)(2) of the Patients' Bill of 
     Rights Act of 2005 (relating to medically reviewable 
     decisions).
       ``(3) Limitation regarding certain types of actions saved 
     from preemption of state law.--A cause of action is not 
     established under paragraph (1)(A) in connection with a 
     failure described in paragraph (1)(A) to the extent that a 
     cause of action under State law (as defined in section 
     514(c)) for such failure would not be preempted under section 
     514.
       ``(4) Definitions and related rules.--For purposes of this 
     subsection.--
       ``(A) Ordinary care.--The term `ordinary care' means, with 
     respect to a determination on a claim for benefits, that 
     degree of care, skill, and diligence that a reasonable and 
     prudent individual would exercise in making a fair 
     determination on a claim for benefits of like kind to the 
     claims involved.
       ``(B) Personal injury.--The term `personal injury' means a 
     physical injury and includes an injury arising out of the 
     treatment (or failure to treat) a mental illness or disease.
       ``(C) Claim for benefits; denial.--The terms `claim for 
     benefits' and `denial of a claim for benefits' have the 
     meanings provided such terms in section 102(e) of the 
     Patients' Bill of Rights Act of 2005.
       ``(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 Patients' Bill of Rights Act of 2005.
       ``(E) Treatment of excepted benefits.--Under section 154(a) 
     of the Patients' Bill of Rights Act of 2005, the provisions 
     of this subsection and subsection (a)(1)(C) do not apply to 
     certain excepted benefits.
       ``(5) Exclusion of employers and other plan sponsors.--
       ``(A) Causes of action against employers and plan sponsors 
     precluded.--Subject to subparagraph (B), paragraph (1)(A) 
     does not authorize a cause of action against an employer or 
     other plan sponsor maintaining the plan (or against an 
     employee of such an employer or sponsor acting within the 
     scope of employment).
       ``(B) Certain causes of action permitted.--Notwithstanding 
     subparagraph (A), a cause of action may arise against an 
     employer or other plan sponsor (or against an employee of 
     such an employer or sponsor acting within the scope of 
     employment) under paragraph (1)(A), to the extent there was 
     direct participation by the employer or other plan sponsor 
     (or employee) in the decision of the plan under section 102 
     of the Patients' Bill of Rights Act of 2005 upon 
     consideration of a claim for benefits or under section 103 of 
     such Act upon review of a denial of a claim for benefits.
       ``(C) Direct participation.--
       ``(i) In general.--For purposes of subparagraph (B), the 
     term `direct participation' means, in connection with a 
     decision described in paragraph (1)(A), the actual making of 
     such decision or the actual exercise of control in making 
     such decision.
       ``(ii) Rules of construction.--For purposes of clause (i), 
     the employer or plan sponsor (or employee) shall not be 
     construed to be engaged in direct participation because of 
     any form of decisionmaking or other conduct that is merely 
     collateral or precedent to the decision described in 
     paragraph (1)(A) on a particular claim for benefits of a 
     participant or beneficiary, including (but not limited to)--

       ``(I) any participation by the employer or other plan 
     sponsor (or employee) in the selection of the group health 
     plan or health insurance coverage involved or the third party 
     administrator or other agent;
       ``(II) any engagement by the employer or other plan sponsor 
     (or employee) in any cost-benefit analysis undertaken in 
     connection with the selection of, or continued maintenance 
     of, the plan or coverage involved;
       ``(III) any participation by the employer or other plan 
     sponsor (or employee) in the process of creating, continuing, 
     modifying, or terminating the plan or any benefit under the 
     plan, if such process was not substantially focused solely on 
     the particular situation of the participant or beneficiary 
     referred to in paragraph (1)(A); and
       ``(IV) any participation by the employer or other plan 
     sponsor (or employee) in the design of any benefit under the 
     plan, including the amount of copayment and limits connected 
     with such benefit.

       ``(iii) Irrelevance of certain collateral efforts made by 
     employer or plan sponsor.--For purposes of this subparagraph, 
     an employer or plan sponsor shall not be treated as engaged 
     in direct participation in a decision with respect to any 
     claim for benefits or denial thereof in the case of any 
     particular participant or beneficiary solely by reason of--

       ``(I) any efforts that may have been made by the employer 
     or plan sponsor to advocate for authorization of coverage for 
     that or any other participant or beneficiary (or any group of 
     participants or beneficiaries), or
       ``(II) any provision that may have been made by the 
     employer or plan sponsor for benefits which are not covered 
     under the terms and conditions of the plan for that or any 
     other participant or beneficiary (or any group of 
     participants or beneficiaries).

       ``(D) Application to certain plans.--
       ``(i) In general.--Notwithstanding any other provision of 
     this subsection, no group health plan described in clause 
     (ii) (or plan sponsor of such a plan) shall be liable under 
     paragraph (1) for the performance of, or the failure to 
     perform, any non-medically reviewable duty under the plan.
       ``(ii) Definition.--A group health plan described in this 
     clause is--

       ``(I) a group health plan that is self-insured and self 
     administered by an employer (including an employee of such an 
     employer acting within the scope of employment); or
       ``(II) a multiemployer plan as defined in section 3(37)(A) 
     (including an employee of a contributing employer or of the 
     plan, or a fiduciary of the plan, acting within the scope of 
     employment or fiduciary responsibility) that is self-insured 
     and self-administered.

       ``(6) Exclusion of physicians and other health care 
     professionals.--
       ``(A) In general.--No treating physician or other treating 
     health care professional of the participant or beneficiary, 
     and no person acting under the direction of such a physician 
     or health care professional, shall be liable under paragraph 
     (1) for the performance of, or the failure to perform, any 
     non-medically reviewable duty of the plan, the plan sponsor, 
     or any health insurance issuer offering health insurance 
     coverage in connection with the plan.
       ``(B) Definitions.--For purposes of subparagraph (A)--
       ``(i) Health care professional.--The term `health care 
     professional' means an individual who is licensed, 
     accredited, or certified under State law to provide specified 
     health care services and who is operating within the scope of 
     such licensure, accreditation, or certification.
       ``(ii) Non-medically reviewable duty.--The term `non-
     medically reviewable duty' means a duty the discharge of 
     which does not include the making of a medically reviewable 
     decision.
       ``(7) Exclusion of hospitals.--No treating hospital of the 
     participant or beneficiary shall be liable under paragraph 
     (1) for the performance of, or the failure to perform, any 
     non-medically reviewable duty (as defined in paragraph 
     (6)(B)(ii)) of the plan, the plan sponsor, or any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan.
       ``(8) Rule of construction relating to exclusion from 
     liability of physicians, health care professionals, and 
     hospitals.--Nothing in paragraph (6) or (7) shall be 
     construed to limit the liability (whether direct or 
     vicarious) of the plan, the plan sponsor, or any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan.
       ``(9) Requirement of exhaustion.--
       ``(A) In general.--A cause of action may not be brought 
     under paragraph (1) in connection with any denial of a claim 
     for benefits of any individual until all administrative 
     processes under sections 102 and 103 of the Patients' Bill of 
     Rights Act of 2005 (if applicable) have been exhausted.
       ``(B) Exception for needed care.--A participant or 
     beneficiary may seek relief exclusively in Federal court 
     under subsection 502(a)(1)(B) prior to the exhaustion of 
     administrative remedies under sections 102, 103, or 104 of 
     the Patients' Bill of Rights Act of 2005 (as required under 
     subparagraph (A)) if it is demonstrated to the court that the 
     exhaustion of such remedies would cause irreparable harm to 
     the health of the participant or beneficiary. Notwithstanding 
     the awarding of relief under subsection 502(a)(1)(B) pursuant 
     to this subparagraph, no relief

[[Page S5093]]

     shall be available as a result of, or arising under, 
     paragraph (1)(A) or paragraph (10)(B), with respect to a 
     participant or beneficiary, unless the requirements of 
     subparagraph (A) are met.
       ``(C) Receipt of benefits during appeals process.--Receipt 
     by the participant or beneficiary of the benefits involved in 
     the claim for benefits during the pendency of any 
     administrative processes referred to in subparagraph (A) or 
     of any action commenced under this subsection--
       ``(i) shall not preclude continuation of all such 
     administrative processes to their conclusion if so moved by 
     any party, and
       ``(ii) shall not preclude any liability under subsection 
     (a)(1)(C) and this subsection in connection with such claim.
     The court in any action commenced under this subsection shall 
     take into account any receipt of benefits during such 
     administrative processes or such action in determining the 
     amount of the damages awarded.
       ``(D) Admissible.--Any determination made by a reviewer in 
     an administrative proceeding under section 103 of the 
     Patients' Bill of Rights Act of 2005 shall be admissible in 
     any Federal court proceeding and shall be presented to the 
     trier of fact.
       ``(10) Statutory damages.--
       ``(A) In general.--The remedies set forth in this 
     subsection (n) shall be the exclusive remedies for causes of 
     action brought under this subsection.
       ``(B) Assessment of civil penalties.--In addition to the 
     remedies provided for in paragraph (1) (relating to the 
     failure to provide contract benefits in accordance with the 
     plan), a civil assessment, in an amount not to exceed 
     $5,000,000, payable to the claimant may be awarded in any 
     action under such paragraph if the claimant establishes by 
     clear and convincing evidence that the alleged conduct 
     carried out by the defendant demonstrated bad faith and 
     flagrant disregard for the rights of the participant or 
     beneficiary under the plan and was a proximate cause of the 
     personal injury or death that is the subject of the claim.
       ``(11) Limitation on attorneys' fees.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, or any arrangement, agreement, or contract regarding an 
     attorney's fee, the amount of an attorney's contingency fee 
     allowable for a cause of action brought pursuant to this 
     subsection shall not exceed \1/3\ of the total amount of the 
     plaintiff's recovery (not including the reimbursement of 
     actual out-of-pocket expenses of the attorney).
       ``(B) Determination by district court.--The last Federal 
     district court in which the action was pending upon the final 
     disposition, including all appeals, of the action shall have 
     jurisdiction to review the attorney's fee to ensure that the 
     fee is a reasonable one.
       ``(12) Limitation of action.--Paragraph (1) shall not apply 
     in connection with any action commenced after 3 years after 
     the later of--
       ``(A) the date on which the plaintiff first knew, or 
     reasonably should have known, of the personal injury or death 
     resulting from the failure described in paragraph (1), or
       ``(B) the date as of which the requirements of paragraph 
     (9) are first met.
       ``(13) Tolling provision.--The statute of limitations for 
     any cause of action arising under State law relating to a 
     denial of a claim for benefits that is the subject of an 
     action brought in Federal court under this subsection shall 
     be tolled until such time as the Federal court makes a final 
     disposition, including all appeals, of whether such claim 
     should properly be within the jurisdiction of the Federal 
     court. The tolling period shall be determined by the 
     applicable Federal or State law, whichever period is greater.
       ``(14) Purchase of insurance to cover liability.--Nothing 
     in section 410 shall be construed to preclude the purchase by 
     a group health plan of insurance to cover any liability or 
     losses arising under a cause of action under subsection 
     (a)(1)(C) and this subsection.
       ``(15) Exclusion of directed recordkeepers.--
       ``(A) In general.--Subject to subparagraph (C), paragraph 
     (1) shall not apply with respect to a directed recordkeeper 
     in connection with a group health plan.
       ``(B) Directed recordkeeper.--For purposes of this 
     paragraph, the term `directed recordkeeper' means, in 
     connection with a group health plan, a person engaged in 
     directed recordkeeping activities pursuant to the specific 
     instructions of the plan or the employer or other plan 
     sponsor, including the distribution of enrollment information 
     and distribution of disclosure materials under this Act or 
     title I of the Patients' Bill of Rights Act of 2005 and whose 
     duties do not include making decisions on claims for 
     benefits.
       ``(C) Limitation.--Subparagraph (A) does not apply in 
     connection with any directed recordkeeper to the extent that 
     the directed recordkeeper fails to follow the specific 
     instruction of the plan or the employer or other plan 
     sponsor.
       ``(16) Exclusion of health insurance agents.--Paragraph (1) 
     does not apply with respect to a person whose sole 
     involvement with the group health plan is providing advice or 
     administrative services to the employer or other plan sponsor 
     relating to the selection of health insurance coverage 
     offered in connection with the plan.
       ``(17) No effect on state law.--No provision of State law 
     (as defined in section 514(c)(1)) shall be treated as 
     superseded or otherwise altered, amended, modified, 
     invalidated, or impaired by reason of the provisions of 
     subsection (a)(1)(C) and this subsection.
       ``(18) Relief from liability for employer or other plan 
     sponsor by means of designated decisionmaker.--
       ``(A) In general.--Notwithstanding the direct participation 
     (as defined in paragraph (5)(C)(i)) of an employer or plan 
     sponsor, in any case in which there is (or is deemed under 
     subparagraph (B) to be) a designated decisionmaker under 
     subparagraph (B) that meets the requirements of subsection 
     (o)(1) for an employer or other plan sponsor--
       ``(i) all liability of such employer or plan sponsor 
     involved (and any employee of such employer or sponsor acting 
     within the scope of employment) under this subsection in 
     connection with any participant or beneficiary shall be 
     transferred to, and assumed by, the designated decisionmaker, 
     and
       ``(ii) with respect to such liability, the designated 
     decisionmaker shall be substituted for the employer or 
     sponsor (or employee) in the action and may not raise any 
     defense that the employer or sponsor (or employee) could not 
     raise if such a decisionmaker were not so deemed.
       ``(B) Automatic designation.--A health insurance issuer 
     shall be deemed to be a designated decisionmaker for purposes 
     of subparagraph (A) with respect to the participants and 
     beneficiaries of an employer or plan sponsor, whether or not 
     the employer or plan sponsor makes such a designation, and 
     shall be deemed to have assumed unconditionally all liability 
     of the employer or plan sponsor under such designation in 
     accordance with subsection (o), unless the employer or plan 
     sponsor affirmatively enters into a contract to prevent the 
     service of the designated decisionmaker.
       ``(C) Treatment of certain trust funds.--For purposes of 
     this paragraph, the terms `employer' and `plan sponsor', in 
     connection with the assumption by a designated decisionmaker 
     of the liability of employer or other plan sponsor pursuant 
     to this paragraph, shall be construed to include a trust fund 
     maintained pursuant to section 302 of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186) or the Railway Labor Act 
     (45 U.S.C. 151 et seq.).
       ``(19) Previously provided services.--
       ``(A) In general.--Except as provided in this paragraph, a 
     cause of action shall not arise under paragraph (1) where the 
     denial involved relates to an item or service that has 
     already been fully provided to the participant or beneficiary 
     under the plan or coverage and the claim relates solely to 
     the subsequent denial of payment for the provision of such 
     item or service.
       ``(B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       ``(i) prohibit a cause of action under paragraph (1) where 
     the nonpayment involved results in the participant or 
     beneficiary being unable to receive further items or services 
     that are directly related to the item or service involved in 
     the denial referred to in subparagraph (A) or that are part 
     of a continuing treatment or series of procedures; or
       ``(ii) limit liability that otherwise would arise from the 
     provision of the item or services or the performance of a 
     medical procedure.
       ``(20) Exemption from personal liability for individual 
     members of boards of directors, joint boards of trustees, 
     etc.--Any individual who is--
       ``(A) a member of a board of directors of an employer or 
     plan sponsor; or
       ``(B) a member of an association, committee, employee 
     organization, joint board of trustees, or other similar group 
     of representatives of the entities that are the plan sponsor 
     of plan maintained by two or more employers and one or more 
     employee organizations;
     shall not be personally liable under this subsection for 
     conduct that is within the scope of employment or of plan-
     related duties of the individuals unless the individual acts 
     in a fraudulent manner for personal enrichment.
       ``(o) Requirements for Designated Decisionmakers of Group 
     Health Plans.--
       ``(1) In general.--For purposes of subsection (n)(18) and 
     section 514(d)(9), a designated decisionmaker meets the 
     requirements of this paragraph with respect to any 
     participant or beneficiary if--
       ``(A) such designation is in such form as may be prescribed 
     in regulations of the Secretary,
       ``(B) the designated decisionmaker--
       ``(i) meets the requirements of paragraph (2),
       ``(ii) assumes unconditionally all liability of the 
     employer or plan sponsor involved (and any employee of such 
     employer or sponsor acting within the scope of employment) 
     either arising under subsection (n) or arising in a cause of 
     action permitted under section 514(d) in connection with 
     actions (and failures to act) of the employer or plan sponsor 
     (or employee) occurring during the period in which the 
     designation under subsection (n)(18) or section 514(d)(9) is 
     in effect relating to such participant and beneficiary,
       ``(iii) agrees to be substituted for the employer or plan 
     sponsor (or employee) in the action and not to raise any 
     defense with respect to such liability that the employer or 
     plan sponsor (or employee) may not raise, and
       ``(iv) where paragraph (2)(B) applies, assumes 
     unconditionally the exclusive authority under the group 
     health plan to make

[[Page S5094]]

     medically reviewable decisions under the plan with respect to 
     such participant or beneficiary, and
       ``(C) the designated decisionmaker and the participants and 
     beneficiaries for whom the decisionmaker has assumed 
     liability are identified in the written instrument required 
     under section 402(a) and as required under section 121(b)(19) 
     of the Patients' Bill of Rights Act of 2005.
     Any liability assumed by a designated decisionmaker pursuant 
     to this subsection shall be in addition to any liability that 
     it may otherwise have under applicable law.
       ``(2) Qualifications for designated decisionmakers.--
       ``(A) In general.--Subject to subparagraph (B), an entity 
     is qualified under this paragraph to serve as a designated 
     decisionmaker with respect to a group health plan if the 
     entity has the ability to assume the liability described in 
     paragraph (1) with respect to participants and beneficiaries 
     under such plan, including requirements relating to the 
     financial obligation for timely satisfying the assumed 
     liability, and maintains with the plan sponsor and the 
     Secretary certification of such ability. Such certification 
     shall be provided to the plan sponsor or named fiduciary and 
     to the Secretary upon designation under subsection (n)(18)(B) 
     or section 517(d)(9)(B) and not less frequently than annually 
     thereafter, or if such designation constitutes a multiyear 
     arrangement, in conjunction with the renewal of the 
     arrangement.
       ``(B) Special qualification in the case of certain 
     reviewable decisions.--In the case of a group health plan 
     that provides benefits consisting of medical care to a 
     participant or beneficiary only through health insurance 
     coverage offered by a single health insurance issuer, such 
     issuer is the only entity that may be qualified under this 
     paragraph to serve as a designated decisionmaker with respect 
     to such participant or beneficiary, and shall serve as the 
     designated decisionmaker unless the employer or other plan 
     sponsor acts affirmatively to prevent such service.
       ``(3) Requirements relating to financial obligations.--For 
     purposes of paragraph (2)(A), the requirements relating to 
     the financial obligation of an entity for liability shall 
     include--
       ``(A) coverage of such entity under an insurance policy or 
     other arrangement, secured and maintained by such entity, to 
     effectively insure such entity against losses arising from 
     professional liability claims, including those arising from 
     its service as a designated decisionmaker under this part; or
       ``(B) evidence of minimum capital and surplus levels that 
     are maintained by such entity to cover any losses as a result 
     of liability arising from its service as a designated 
     decisionmaker under this part.
     The appropriate amounts of liability insurance and minimum 
     capital and surplus levels for purposes of subparagraphs (A) 
     and (B) shall be determined by an actuary using sound 
     actuarial principles and accounting practices pursuant to 
     established guidelines of the American Academy of Actuaries 
     and in accordance with such regulations as the Secretary may 
     prescribe and shall be maintained throughout the term for 
     which the designation is in effect. The provisions of this 
     paragraph shall not apply in the case of a designated 
     decisionmaker that is a group health plan, plan sponsor, or 
     health insurance issuer and that is regulated under Federal 
     law or a State financial solvency law.
       ``(4) Limitation on appointment of treating physicians.--A 
     treating physician who directly delivered the care, 
     treatment, or provided the patient service that is the 
     subject of a cause of action by a participant or beneficiary 
     under subsection (n) or section 514(d) may not be designated 
     as a designated decisionmaker under this subsection with 
     respect to such participant or beneficiary.''.
       (2) Conforming amendment.--Section 502(a)(1) of such Act 
     (29 U.S.C. 1132(a)(1)) is amended--
       (A) by striking ``or'' at the end of subparagraph (A);
       (B) in subparagraph (B), by striking ``plan;'' and 
     inserting ``plan, or''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) for the relief provided for in subsection (n) of this 
     section.''.
       (b) Rules Relating to ERISA Preemption.--Section 514 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1144) is amended--
       (1) by redesignating subsection (d) as subsection (f); and
       (2) by inserting after subsection (c) the following new 
     subsections:
       ``(d) Preemption Not to Apply to Causes of Action Under 
     State Law Involving Medically Reviewable Decision.--
       ``(1) Non-preemption of certain causes of action.--
       ``(A) In general.--Except as provided in this subsection, 
     nothing in this title (including section 502) shall be 
     construed to supersede or otherwise alter, amend, modify, 
     invalidate, or impair any cause of action under State law of 
     a participant or beneficiary under a group health plan (or 
     the estate of such a participant or beneficiary) against the 
     plan, the plan sponsor, any health insurance issuer offering 
     health insurance coverage in connection with the plan, or any 
     managed care entity in connection with the plan to recover 
     damages resulting from personal injury or for wrongful death 
     if such cause of action arises by reason of a medically 
     reviewable decision.
       ``(B) Medically reviewable decision.--For purposes of 
     subparagraph (A), the term `medically reviewable decision' 
     means a denial of a claim for benefits under the plan which 
     is described in section 104(d)(2) of the Patients' Bill of 
     Rights Act of 2005 (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 Patients' Bill of Rights Act of 
     2005 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.
       ``(2) Definitions and related rules.--For purposes of this 
     subsection and subsection (e)--
       ``(A) Treatment of excepted benefits.--Under section 154(a) 
     of the Patients' Bill of Rights Act of 2005, the provisions 
     of this subsection do not apply to certain excepted benefits.
       ``(B) Personal injury.--The term `personal injury' means a 
     physical injury and includes an injury arising out of the 
     treatment (or failure to treat) a mental illness or disease.
       ``(C) Claim for benefit; denial.--The terms `claim for 
     benefits' and `denial of a claim for benefits' shall have the 
     meaning provided such terms under section 102(e) of the 
     Patients' Bill of Rights Act of 2005.
       ``(D) Managed care entity.--
       ``(i) In general.--The term `managed care entity' means, in 
     connection with a group health plan and subject to clause 
     (ii), any entity that is involved in determining the manner 
     in which or the extent to which items or services (or 
     reimbursement therefor) are to be provided as benefits under 
     the plan.
       ``(ii) Treatment of treating physicians, other treating 
     health care professionals, and treating hospitals.--Such term 
     does not include a treating physician or other treating 
     health care professional (as defined in section 
     502(n)(6)(B)(i)) of the participant or beneficiary and also 
     does not include a treating hospital insofar as it is acting 
     solely in the capacity of providing treatment or care to the 
     participant or beneficiary. Nothing in the preceding sentence 
     shall be construed to preempt vicarious liability of any 
     plan, plan sponsor, health insurance issuer, or managed care 
     entity.
       ``(3) Exclusion of employers and other plan sponsors.--
       ``(A) Causes of action against employers and plan sponsors 
     precluded.--Subject to subparagraph (B), paragraph (1) does 
     not apply with respect to--
       ``(i) any cause of action against an employer or other plan 
     sponsor maintaining the plan (or against an employee of such 
     an employer or sponsor acting within the scope of 
     employment), or
       ``(ii) a right of recovery, indemnity, or contribution by a 
     person against an employer or other plan sponsor (or such an 
     employee) for damages assessed against the person pursuant to 
     a cause of action to which paragraph (1) applies.
       ``(B) Certain causes of action permitted.--Notwithstanding 
     subparagraph (A), paragraph (1) applies with respect to any 
     cause of action that is brought by a participant or 
     beneficiary under a group health plan (or the estate of such 
     a participant or beneficiary) to recover damages resulting 
     from personal injury or for wrongful death against any 
     employer or other plan sponsor maintaining the plan (or 
     against an employee of such an employer or sponsor acting 
     within the scope of employment) if such cause of action 
     arises by reason of a medically reviewable decision, to the 
     extent that there was direct participation by the employer or 
     other plan sponsor (or employee) in the decision.
       ``(C) Direct participation.--
       ``(i) Direct participation in decisions.--For purposes of 
     subparagraph (B), the term `direct participation' means, in 
     connection with a decision described in subparagraph (B), the 
     actual making of such decision or the actual exercise of 
     control in making such decision or in the conduct 
     constituting the failure.
       ``(ii) Rules of construction.--For purposes of clause (i), 
     the employer or plan sponsor (or employee) shall not be 
     construed to be engaged in direct participation because

[[Page S5095]]

     of any form of decisionmaking or other conduct that is merely 
     collateral or precedent to the decision described in 
     subparagraph (B) on a particular claim for benefits of a 
     particular participant or beneficiary, including (but not 
     limited to)--

       ``(I) any participation by the employer or other plan 
     sponsor (or employee) in the selection of the group health 
     plan or health insurance coverage involved or the third party 
     administrator or other agent;
       ``(II) any engagement by the employer or other plan sponsor 
     (or employee) in any cost-benefit analysis undertaken in 
     connection with the selection of, or continued maintenance 
     of, the plan or coverage involved;
       ``(III) any participation by the employer or other plan 
     sponsor (or employee) in the process of creating, continuing, 
     modifying, or terminating the plan or any benefit under the 
     plan, if such process was not substantially focused solely on 
     the particular situation of the participant or beneficiary 
     referred to in paragraph (1)(A); and
       ``(IV) any participation by the employer or other plan 
     sponsor (or employee) in the design of any benefit under the 
     plan, including the amount of copayment and limits connected 
     with such benefit.

       ``(iv) Irrelevance of certain collateral efforts made by 
     employer or plan sponsor.--For purposes of this subparagraph, 
     an employer or plan sponsor shall not be treated as engaged 
     in direct participation in a decision with respect to any 
     claim for benefits or denial thereof in the case of any 
     particular participant or beneficiary solely by reason of--

       ``(I) any efforts that may have been made by the employer 
     or plan sponsor to advocate for authorization of coverage for 
     that or any other participant or beneficiary (or any group of 
     participants or beneficiaries), or
       ``(II) any provision that may have been made by the 
     employer or plan sponsor for benefits which are not covered 
     under the terms and conditions of the plan for that or any 
     other participant or beneficiary (or any group of 
     participants or beneficiaries).

       ``(4) Requirement of exhaustion.--
       ``(A) In general.--Except as provided in subparagraph (D), 
     paragraph (1) shall not apply in connection with any action 
     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 Patients' Bill of Rights Act of 2005 
     (if applicable) have been exhausted.
       ``(B) Late manifestation of injury.--
       ``(i) In general.--A participant or beneficiary shall not 
     be precluded from pursuing a review under section 104 of the 
     Patients' Bill of Rights Act of 2005 regarding an injury that 
     such participant or beneficiary has experienced if the 
     external review entity first determines that the injury of 
     such participant or beneficiary is a late manifestation of an 
     earlier injury.
       ``(ii) Definition.--In this subparagraph, the term `late 
     manifestation of an earlier injury' means an injury sustained 
     by the participant or beneficiary which was not known, and 
     should not have been known, by such participant or 
     beneficiary by the latest date that the requirements of 
     subparagraph (A) should have been met regarding the claim for 
     benefits which was denied.
       ``(C) Exception for needed care.--A participant or 
     beneficiary may seek relief exclusively in Federal court 
     under subsection 502(a)(1)(B) prior to the exhaustion of 
     administrative remedies under sections 102, 103, or 104 of 
     the Patients' Bill of Rights Act of 2005 (as required under 
     subparagraph (A)) if it is demonstrated to the court that the 
     exhaustion of such remedies would cause irreparable harm to 
     the health of the participant or beneficiary. Notwithstanding 
     the awarding of relief under subsection 502(a)(1)(B) pursuant 
     to this subparagraph, no relief shall be available as a 
     result of, or arising under, paragraph (1)(A) unless the 
     requirements of subparagraph (A) are met.
       ``(D) Failure to review.--
       ``(i) In general.--If the external review entity fails to 
     make a determination within the time required under section 
     104(e)(1)(A)(i) of the Patients' Bill of Rights Act of 2005, 
     subparagraph (A) shall not apply with respect to the action 
     after 10 additional days after the date on which such time 
     period has expired and the filing of such action shall not 
     affect the duty of the independent medical reviewer (or 
     reviewers) to make a determination pursuant to such section 
     104(e)(1)(A)(i).
       ``(ii) Expedited determination.--If the external review 
     entity fails to make a determination within the time required 
     under section 104(e)(1)(A)(ii) of the Patients' Bill of 
     Rights Act of 2005, subparagraph (A) shall not apply with 
     respect to the action and the filing of such an action shall 
     not affect the duty of the independent medical reviewer (or 
     reviewers) to make a determination pursuant to such section 
     104(e)(1)(A)(ii).
       ``(E) Receipt of benefits during appeals process.--Receipt 
     by the participant or beneficiary of the benefits involved in 
     the claim for benefits during the pendency of any 
     administrative processes referred to in subparagraph (A) or 
     the pendency of any action with respect to which, under this 
     paragraph, subparagraph (A) does not apply--
       ``(i) shall not preclude continuation of all such 
     administrative processes to their conclusion if so moved by 
     any party, and
       ``(ii) shall not preclude any liability under subsection 
     (a)(1)(C) and this subsection in connection with such claim.
       ``(F) Admissible.--Any determination made by a reviewer in 
     an administrative proceeding under section 104 of the 
     Patients' Bill of Rights Act of 2005 shall be admissible in 
     any Federal or State court proceeding and shall be presented 
     to the trier of fact.
       ``(5) Tolling provision.--The statute of limitations for 
     any cause of action arising under section 502(n) relating to 
     a denial of a claim for benefits that is the subject of an 
     action brought in State court shall be tolled until such time 
     as the State court makes a final disposition, including all 
     appeals, of whether such claim should properly be within the 
     jurisdiction of the State court. The tolling period shall be 
     determined by the applicable Federal or State law, whichever 
     period is greater.
       ``(6) Exclusion of directed recordkeepers.--
       ``(A) In general.--Subject to subparagraph (C), paragraph 
     (1) shall not apply with respect to any action against 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 Patients' Bill of Rights Act of 2005 and whose 
     duties do not include making decisions on claims for 
     benefits.
       ``(C) Limitation.--Subparagraph (A) does not apply in 
     connection with any directed recordkeeper to the extent that 
     the directed recordkeeper fails to follow the specific 
     instruction of the plan or the employer or other plan 
     sponsor.
       ``(7) Construction.--Nothing in this subsection shall be 
     construed as--
       ``(A) saving from preemption a cause of action under State 
     law for the failure to provide a benefit for an item or 
     service which is specifically excluded under the group health 
     plan involved, except to the extent that--
       ``(i) the application or interpretation of the exclusion 
     involves a determination described in section 104(d)(2) of 
     the Patients' Bill of Rights Act of 2005, or
       ``(ii) the provision of the benefit for the item or service 
     is required under Federal law or under applicable State law 
     consistent with subsection (b)(2)(B);
       ``(B) preempting a State law which requires an affidavit or 
     certificate of merit in a civil action;
       ``(C) affecting a cause of action or remedy under State law 
     in connection with the provision or arrangement of excepted 
     benefits (as defined in section 733(c)), other than those 
     described in section 733(c)(2)(A); or
       ``(D) affecting a cause of action under State law other 
     than a cause of action described in paragraph (1)(A).
       ``(8) Purchase of insurance to cover liability.--Nothing in 
     section 410 shall be construed to preclude the purchase by a 
     group health plan of insurance to cover any liability or 
     losses arising under a cause of action described in paragraph 
     (1)(A).
       ``(9) Relief from liability for employer or other plan 
     sponsor by means of designated decisionmaker.--
       ``(A) In general.--Paragraph (1) shall not apply with 
     respect to any cause of action described in paragraph (1)(A) 
     under State law insofar as such cause of action provides for 
     liability with respect to a participant or beneficiary of an 
     employer or plan sponsor (or an employee of such employer or 
     sponsor acting within the scope of employment), if with 
     respect to the employer or plan sponsor there is (or is 
     deemed under subparagraph (B) to be) a designated 
     decisionmaker that meets the requirements of section 
     502(o)(1) with respect to such participant or beneficiary. 
     Such paragraph (1) shall apply with respect to any cause of 
     action described in paragraph (1)(A) under State law against 
     the designated decisionmaker of such employer or other plan 
     sponsor with respect to the participant or beneficiary.
       ``(B) Automatic designation.--A health insurance issuer 
     shall be deemed to be a designated decisionmaker for purposes 
     of subparagraph (A) with respect to the participants and 
     beneficiaries of an employer or plan sponsor, whether or not 
     the employer or plan sponsor makes such a designation, and 
     shall be deemed to have assumed unconditionally all liability 
     of the employer or plan sponsor under such designation in 
     accordance with subsection (o), unless the employer or plan 
     sponsor affirmatively enters into a contract to prevent the 
     service of the designated decisionmaker.
       ``(C) Treatment of certain trust funds.--For purposes of 
     this paragraph, the terms `employer' and `plan sponsor', in 
     connection with the assumption by a designated decisionmaker 
     of the liability of employer or other plan sponsor pursuant 
     to this paragraph, shall be construed to include a trust fund 
     maintained pursuant to section 302 of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186) or the Railway Labor Act 
     (45 U.S.C. 151 et seq.).
       ``(10) Previously provided services.--
       ``(A) In general.--Except as provided in this paragraph, 
     paragraph (1) shall not apply with respect to a cause of 
     action where the denial involved relates to an item or 
     service that has already been fully provided to the 
     participant or beneficiary under the plan or coverage and the 
     claim relates solely to the subsequent denial of payment for 
     the provision of such item or service.

[[Page S5096]]

       ``(B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       ``(i) exclude a cause of action from exemption under 
     paragraph (1) where the nonpayment involved results in the 
     participant or beneficiary being unable to receive further 
     items or services that are directly related to the item or 
     service involved in the denial referred to in subparagraph 
     (A) or that are part of a continuing treatment or series of 
     procedures;
       ``(ii) exclude a cause of action from exemption under 
     paragraph (1) relating to quality of care; or
       ``(iii) limit liability that otherwise would arise from the 
     provision of the item or services or the performance of a 
     medical procedure.
       ``(11) Exemption from personal liability for individual 
     members of boards of directors, joint boards of trustees, 
     etc.--Any individual who is--
       ``(A) a member of a board of directors of an employer or 
     plan sponsor; or
       ``(B) a member of an association, committee, employee 
     organization, joint board of trustees, or other similar group 
     of representatives of the entities that are the plan sponsor 
     of plan maintained by two or more employers and one or more 
     employee organizations;

     shall not be personally liable, by reason of the exemption of 
     a cause of action from preemption under this subsection, for 
     conduct that is within the scope of employment or of plan-
     related duties of the individuals unless the individual acts 
     in a fraudulent manner for personal enrichment.
       ``(12) Choice of law.--A cause of action exempted from 
     preemption under paragraph (1) shall be governed by the law 
     (including choice of law rules) of the State in which the 
     plaintiff resides.
       ``(13) Limitation on attorneys' fees.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, or any arrangement, agreement, or contract regarding an 
     attorney's fee, the amount of an attorney's contingency fee 
     allowable for a cause of action exemption from preemption 
     under paragraph (1) shall not exceed \1/3\ of the total 
     amount of the plaintiff's recovery (not including the 
     reimbursement of actual out-of-pocket expenses of the 
     attorney).
       ``(B) Determination by court.--The last court in which the 
     action was pending upon the final disposition, including all 
     appeals, of the action may review the attorney's fee to 
     ensure that the fee is a reasonable one.
       ``(C) No preemption of state law.--Subparagraph (A) shall 
     not apply with respect to a cause of action that is brought 
     in a State that has a law or framework of laws with respect 
     to the amount of an attorney's contingency fee that may be 
     incurred for the representation of a participant or 
     beneficiary (or the estate of such participant or 
     beneficiary) who brings such a cause of action.
       ``(e) Rules of Construction Relating to Health Care.--
     Nothing in this title shall be construed as--
       ``(1) affecting any State law relating to the practice of 
     medicine or the provision of, or the failure to provide, 
     medical care, or affecting any action (whether the liability 
     is direct or vicarious) based upon such a State law,
       ``(2) superseding any State law permitted under section 
     152(b)(1)(A) of the Patients' Bill of Rights Act of 2005, or
       ``(3) affecting any applicable State law with respect to 
     limitations on monetary damages.
       ``(f) No Right of Action for Recovery, Indemnity, or 
     Contribution by Issuers Against Treating Health Care 
     Professionals and Treating Hospitals.--In the case of any 
     care provided, or any treatment decision made, by the 
     treating health care professional or the treating hospital of 
     a participant or beneficiary under a group health plan which 
     consists of medical care provided under such plan, any cause 
     of action under State law against the treating health care 
     professional or the treating hospital by the plan or a health 
     insurance issuer providing health insurance coverage in 
     connection with the plan for recovery, indemnity, or 
     contribution in connection with such care (or any medically 
     reviewable decision made in connection with such care) or 
     such treatment decision is superseded.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to acts and omissions (from which a cause of 
     action arises) occurring on or after the applicable effective 
     date under section 601.

     SEC. 403. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

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

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

       ``(a) Agreement With States.--A State may enter into an 
     agreement with the Secretary for the delegation to the State 
     of some or all of the Secretary's authority under this title 
     to enforce the requirements applicable under title I of the 
     Patients' Bill of Rights Act of 2005 with respect to health 
     insurance coverage offered by a health insurance issuer and 
     with respect to a group health plan that is a non-Federal 
     governmental plan.
       ``(b) Delegations.--Any department, agency, or 
     instrumentality of a State to which authority is delegated 
     pursuant to an agreement entered into under this section may, 
     if authorized under State law and to the extent consistent 
     with such agreement, exercise the powers of the Secretary 
     under this title which relate to such authority.''.
       (b) Clerical Amendment.--The table of contents of such Act 
     is amended by inserting after the item relating to section 
     734 the following new item:

``Sec. 735. Cooperation between Federal and State authorities''.

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

        Subtitle A--Application of Patient Protection Provisions

     SEC. 501. 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 Patients' Bill of Rights Act of 2005 (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. 502. 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 501, 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.''.

         Subtitle B--Health Care Coverage Access Tax Incentives

     SEC. 511. 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. 45J. 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 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

[[Page S5097]]

     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, 2014.''.
       (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 (18), 
     by striking the period at the end of paragraph (19) and 
     inserting ``, plus'', and by adding at the end the following:
       ``(20) in the case of a small employer (as defined in 
     section 45J(d)(3)), the health insurance credit determined 
     under section 45J(a).''.
       (c) Denial of Double Benefit.--Section 280C of such Code is 
     amended by adding at the end the following new subsection:
       ``(e) 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 
     45J for the taxable year which is equal to the amount of the 
     credit determined for such taxable year under section 45J(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.''.
       (d) 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. 45J. Small business health insurance expenses''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2006, for arrangements 
     established after the date of the enactment of this Act.

     SEC. 512. 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, 2013, and
       ``(B) with respect to start-up costs of a coalition which 
     are paid or incurred after December 31, 2014.''.
       (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--
       ``(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, 
     2006.

     SEC. 513. STATE GRANT PROGRAM FOR MARKET INNOVATION.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred

[[Page S5098]]

     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 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
       (C) 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.

     SEC. 514. GRANT PROGRAM TO FACILITATE HEALTH BENEFITS 
                   INFORMATION FOR SMALL EMPLOYERS.

       (a) In General.--The Small Business Administration shall 
     award grants to 1 or more States, local governments, and non-
     profit organizations for the purposes of--
       (1) demonstrating new and effective ways to provide 
     information about the benefits of health insurance to small 
     employers, including tax benefits, increased productivity of 
     employees, and decreased turnover of employees,
       (2) making employers aware of their current rights in the 
     marketplace under State and Federal health insurance reforms, 
     and
       (3) making employers aware of the tax treatment of 
     insurance premiums.
       (b) Authorization.--There is authorized to be appropriated 
     $10,000,000 for each of the first 5 fiscal years beginning 
     after the date of the enactment of this Act for grants under 
     subsection (a).

     SEC. 515. 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 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
       (C) 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.

       TITLE VI--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

     SEC. 601. EFFECTIVE DATES.

       (a) Group Health Coverage.--
       (1) In general.--Subject to paragraph (2) and subsection 
     (d), the amendments made by sections 201(a), 401, 501, and 
     502 (and title I insofar as it relates to such sections) 
     shall apply with respect to group health plans, and health 
     insurance coverage offered in connection with group health 
     plans, for plan years beginning on or after October 1, 2006 
     (in this section referred to as the ``general effective 
     date'').
       (2) Treatment of collective bargaining agreements.--In the 
     case of a group health plan maintained pursuant to one or 
     more collective bargaining agreements between employee 
     representatives and one or more employers ratified before the 
     date of the enactment of this Act, the amendments made by 
     sections 201(a), 401, 501, and 502 (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 (excluding any 
     extension thereof agreed to after the date of the enactment 
     of this Act); or
       (B) the general effective date;
     but shall apply not later than 1 year after the general 
     effective date. For purposes of subparagraph (A), any plan 
     amendment made pursuant to a collective bargaining agreement 
     relating to the plan which amends the plan solely to conform 
     to any requirement added by this Act shall not be treated as 
     a

[[Page S5099]]

     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 an 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. 602. COORDINATION IN IMPLEMENTATION.

       The Secretary of Labor and the Secretary of Health and 
     Human Services shall ensure, through the execution of an 
     interagency memorandum of understanding among such 
     Secretaries, that--
       (1) regulations, rulings, and interpretations issued by 
     such Secretaries relating to the same matter over which such 
     Secretaries have responsibility under the provisions of this 
     Act (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. 603. 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.

                  TITLE VII--MISCELLANEOUS PROVISIONS

     SEC. 701. NO IMPACT ON SOCIAL SECURITY TRUST FUND.

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