[Congressional Record Volume 152, Number 42 (Wednesday, April 5, 2006)]
[Senate]
[Pages S2910-S2914]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. AKAKA (for himself and Mr. Bingaman):
  S. 2550. A bill to provide for direct access to electronic tax return 
filing, and for other purposes; to the Committee on Finance.

  Mr. AKAKA. Mr. President. As the tax filing deadline approaches, I am 
delighted to introduce the Free Internet Filing Act. The bill requires 
the Internal Revenue Service (IRS) to provide universal access to 
individual taxpayers filing their tax returns directly through the IRS 
Web site. I thank Senator Bingaman for cosponsoring this bill and 
working with me on so many issues that are important to taxpayers.
  It is frustrating that individual taxpayers completing their own 
returns are not able to file directly with the IRS. Taxpayers are 
dependent on commercial preparers to electronically file their taxes. 
If a taxpayer takes the time necessary to prepare their returns by 
themselves, they must be provided with the option of electronically 
filing directly with the IRS. My legislation would make this direct 
filing possible.
  The current system that provides a select group of taxpayers with the 
ability to file electronically for free using third party 
intermediaries, called the Free File Alliance, is a failure. In 
testimony before the Finance Committee yesterday, The National Taxpayer 
Advocate, Ms. Nina Olson, testified that ``As currently structured, 
Free File amounts to a Wild, Wild West of differing eligibility 
requirements, differing capabilities, differing availability of and 
fees for add-on products, and many sites that are difficult to use.'' 
Ms. Olson also stated that the ``IRS should place a basic, fill-in 
template on its website to allow any taxpayer who wants to self-prepare 
his or her return to do so and file directly with the IRS for free.'' I 
completely agree.
  The current Free File Alliance agreement leaves out too many 
taxpayers. Taxpayers that make more than $50,000 are not eligible. In 
addition, tax preparation companies try to sell additional products and 
services, such as refund anticipation loans, to consumers that utilize 
their free file services that are accessed via the IRS Web site. 
Taxpayers should not be forced to access online filing through 
companies that peddle services and products to them. Taxpayers are 
directed to these companies via the IRS Web site. This should not 
happen. While paying their taxes

[[Page S2911]]

and fulfilling their obligations, taxpayers should be allowed to file 
directly without being subjected to sales pitches or ads. Taxpayers 
should not have the additional worry associated with sharing their 
private financial information with a tax preparation company. In the 
current environment where there have been so many electronic breeches 
of financial information, taxpayers should not be forced to hand over 
their private information if they want to electronically file their 
return with the IRS. Taxpayers should not lose out on the benefits of 
electronic filing simply because they are worried about sending their 
data to third parties.
  My legislation will help increase the number of electronically filed 
returns. As Ms. Olson pointed out, nearly 45 million returns prepared 
using software are mailed in rather than electronically filed. With 
universal access to free e-file, this number could be substantially 
reduced. Electronic returns help taxpayers receive their refunds faster 
than mailing them in. This would also save the IRS resources and reduce 
possible errors that can occur when the mailed in returns are 
transcribed.
  I want to take a moment to express my appreciation for all of the 
tremendous work that Ms. Olson has done in an attempt to improve the 
lives of taxpayers. It is a pleasure to work with Ms. Olson and her 
staff both in Washington and Hawaii. I look forward to continuing to 
work with the National Taxpayer Advocate, other Treasury officials, and 
my colleagues to expand access to Internet filing.
  I ask unanimous consent that the full text of the bill be printed in 
the Record. I also ask unanimous consent that a letter of support from 
the Hawaii Alliance for Community-Based Economic Development be printed 
in the Record.
  There being no objection, the materials were ordered to be printed in 
the Record as follows:

                                S. 2550

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Free Internet Filing Act''.

     SEC. 2. DIRECT ACCESS TO E-FILE FEDERAL INCOME TAX RETURNS.

       (a) In General.--The Secretary of the Treasury shall 
     provide individual taxpayers with the ability to 
     electronically file their Federal income tax returns through 
     the Internal Revenue Service website without the use of an 
     intermediary or with the use of an intermediary which is 
     contracted by the Internal Revenue Service to provide free 
     universal access for such filing (hereafter in this section 
     referred to as the ``direct e-file program'') for taxable 
     years beginning after the date which is not later than 3 
     years after the date of the enactment of this Act.
       (b) Development and Operation of Program.--In providing for 
     the development and operation of the direct e-file program, 
     the Secretary of the Treasury shall--
       (1) consult with nonprofit organizations representing the 
     interests of taxpayers as well as other private and nonprofit 
     organizations and Federal, State, and local agencies as 
     determined appropriate by the Secretary,
       (2) promulgate such regulations as necessary to administer 
     such program, and
       (3) conduct a public information and consumer education 
     campaign to encourage taxpayers to use the direct e-file 
     program.
       (c) Authorization of Appropriations.--There is authorized 
     to be appropriated such sums as are necessary to carry out 
     the direct e-file program. Any sums so appropriated shall 
     remain available until expended.
       (d) Reports to Congress.--
       (1) Report on implementation.--The Secretary of the 
     Treasury shall report to the Committee on Finance of the 
     Senate and the Committee on Ways and Means of the House of 
     Representatives every 6 months regarding the status of the 
     implementation of the direct e-file program.
       (2) Report on usage.--The Secretary of the Treasury, in 
     consultation with the National Taxpayer Advocate, shall 
     report to the Committee on Finance of the Senate and the 
     Committee on Ways and Means of the House of Representatives 
     annually on taxpayer usage of the direct e-file program.
                                  ____

         Hawai`i Alliance for Community-Based Economic 
           Development,
                                      Honolulu, HI, April 4, 2006.
     Hon. Daniel K. Akaka,
     U.S. Senate, 141 Hart Senate Office Building, Washington, DC.
       Dear Senator Akaka: The Hawai`i Alliance for Community 
     Based Economic Development (HACBED) is writing in support of 
     the ``Free Internet Filing Act.''
       HACBED is a statewide 501(c)3 organization established in 
     1992 to help maximize the impact of community-based economic 
     development organizations (CBEDOs). We pursue our mission by 
     helping CBEDOs to increase community control of their assets 
     and means of production. We accomplish this in many ways--by 
     providing technical support to help CBEDOs deal with 
     organizational issues; by networking on a local and national 
     basis for funding and financing for community-based efforts; 
     and, by advocating for communities to play a more active role 
     in the political process in order to effect systemic change. 
     To this end, HACBED has been facilitating statewide 
     conversations to develop a comprehensive asset policy agenda. 
     Core to this agenda is the recognition of the importance of 
     creating policies that assist individuals, families and the 
     broader community to build wealth.
       Tax season is an essential time for low income families to 
     take advantage of their tax related benefits, including the 
     earned income tax credit. Electronic filing of taxes is a 
     quicker, more efficient way to process a tax return. In many 
     cases, working families must pay a professional tax preparer 
     to prepare their return and file electronically. By providing 
     free universal access to electronic filing these low income 
     working families would be able to keep more of their hard 
     earned dollars in their pocket.
       HACBED fully supports this bill and we look forward to 
     working with you in the future to insure free and low cost 
     tax related services for low income families.
           Sincerely,
                                                 Brent Dillabaugh,
     Public Policy Director.
                                  ____

      By Mr. MENENDEZ (for himself and Mr. Lautenberg):
  S. 2551. A bill to provide for prompt payment and interest on late 
payments of health care claims; to the Committee on Health, Education, 
Labor, and Pensions.
  Mr. MENENDEZ. Mr. President, I rise today to introduce legislation, 
along with my colleague, Senator Lautenberg, to preserve seniors' and 
all patients' access to local pharmacies, doctors and hospitals. Since 
these providers are on the front lines of our communities' health care 
systems and often find themselves squeezed by insurance copies on the 
one hand and their obligation to take care of patients on the other, 
this bill aims to relieve their burden by requiring prescription drug 
managers, managed care plans and other private health insurers to pay 
health care claims in a timely fashion.
  The Prompt Payment of Health Benefits Claims Act bill seeks to 
address the financial strains being faced by hospitals and physicians 
in my State of New Jersey and across the country. In addition, this 
legislation would address the new financial crisis pharmacies are 
facing in light of the new Medicare Prescription Drug benefit. 
Specifically, the legislation requires prescription drug managers, 
private health plans and other private health insurers to pay manually 
filed claims within 30 days and electronically filed claims within 14 
days. Insurers that fail to meet these timeframes would be required to 
pay interest for every day the claims goes unpaid. Insurers that 
knowingly violate these prompt payment requirements would be subject to 
monetary penalties.
  A Federal prompt pay law is critical to ensuring that our pharmacies 
and health care providers maintain adequate cash flows and are able to 
continue functioning. Seniors and all patients depend on their local 
pharmacists and preferred physicians. They are the providers that know 
their patients best and ensure that they receive the important care 
they need and deserve. The threat of local pharmacies, physicians and 
hospitals going out of business has serious consequences with regards 
to the kind of care the community will receive.
  The need for this legislation cannot be understated. In my State of 
New Jersey, local pharmacies have never had a more challenging 
financial situation. They are encountering lower reimbursement rates 
from the prescription drug managers and a 60-90 day lag time in 
reimbursements, which are putting many on the brink of going out of 
business. Almost half of all hospitals are operating in the red, and 
that number is growing. Physicians and hospitals are experiencing 
rising health care operating costs and tight Federal and State budgets. 
Untimely payment of claims has only compounded these problems.
  The problem of late payments has reached such a crisis that the 
majority of States, including New Jersey, have enacted ``prompt pay'' 
laws to require insurers to pay their bills within a specific 
timeframe. Unfortunately, New Jersey's law, like most similar State 
laws, is largely ineffective because it

[[Page S2912]]

lacks strong enforcement provisions and offers no incentives for 
private insurers to comply. Furthermore, State prompt-pay laws apply 
only to State-regulated plans, which only cover approximately half of 
New Jerseyans that are insured.
  The bottom line is that pharmacies, physicians, hospitals and other 
health care providers should not have to shoulder the burden of unpaid 
claims. These local providers have fulfilled their commitment to care 
for patients, and my legislation will ensure that private insurers 
assume the financial responsibilities for the health coverage they are 
being paid to provide.
  I ask unanimous consent that the text of the legislation be printed 
in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record as follows:

                                S. 2551

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

     SECTION 1. SHORT TITLE.

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

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

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

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

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

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

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

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

       ``(a) Timeframe for Payment of Clean Claim.--A group health 
     plan, and a health insurance issuer offering group health 
     insurance coverage in connection with a group health plan, 
     shall pay all clean claims and uncontested claims--
       ``(1) in the case of a claim that is submitted 
     electronically, within 14 days of the date on which the claim 
     is submitted; or
       ``(2) in the case of a claim that is not submitted 
     electronically, within 30 days of the date on which the claim 
     is submitted.
       ``(b) Procedures Involving Submitted Claims.--
       ``(1) In general.--Not later than 10 days after the date on 
     which a clean claim is submitted, a group health plan, and a 
     health insurance issuer offering group health insurance 
     coverage in connection with a group health plan, shall 
     provide the claimant with a notice that acknowledges receipt 
     of the claim by the plan or issuer. Such notice shall be 
     considered to have been provided on the date on which the 
     notice is mailed or electronically transferred.
       ``(2) Claim deemed to be a clean claim.--A claim is deemed 
     to be a clean claim under this section if the group health 
     plan or health insurance issuer involved does not provide 
     notice to the claimant of any deficiency in the claim within 
     10 days of the date on which the claim is submitted.
       ``(3) Claim determined to not be a clean claim.--
       ``(A) In general.--If a group health plan or health 
     insurance issuer determines that a claim for health care 
     expenses is not clean, the plan or issuer shall, not later 
     than the end of the period described in paragraph (2), notify 
     the claimant of such determination.

[[Page S2913]]

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

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

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

     SEC. 4. AMENDMENTS TO THE SOCIAL SECURITY ACT.

       (a) Prompt Payment by Prescription Drug Plans.--Section 
     1860D-12(b) of the Social Security Act (42 U.S.C. 1395w-
     112(b)) is amended by adding at the end the following new 
     paragraph:
       ``(4) Prompt payment of clean claims.--
       ``(A) Prompt payment.--
       ``(i) In general.--Each contract entered into with a PDP 
     sponsor under this section with respect to a prescription 
     drug plan offered by such sponsor shall provide that payment 
     shall be issued, mailed, or otherwise transmitted with 
     respect to all clean claims submitted under this part within 
     the applicable number of calendar days after the date on 
     which the claim is received.
       ``(ii) Clean claim defined.--In this paragraph, the term 
     `clean claim' means a claim--

       ``(I) with respect to health care expenses for an 
     individual who is covered under a group health plan on the 
     date such expenses are incurred;
       ``(II) for such expenses that are covered under such plan 
     at such time; and
       ``(III) that is submitted with all of the information 
     requested by a group health plan or health insurance issuer 
     offering group health insurance coverage in connection with a 
     group health plan on the claim form or other instructions 
     provided to the health care provider prior to submission of 
     the claim.

       ``(B) Applicable number of calendar days defined.--In this 
     paragraph, the term `applicable number of calendar days' 
     means--
       ``(i) with respect to claims submitted electronically, 14 
     days; and
       ``(ii) with respect to claims submitted otherwise, 30 days.
       ``(C) Interest schedule.--
       ``(i) In general.--With respect to a clean claim, a PDP 
     sponsor that fails to comply with subparagraph (A) shall pay 
     the claimant interest on the amount of such claim, from the 
     date on which such payment was due as provided in this 
     paragraph, at the following rates:

       ``(I) 1\1/2\ percent per month from the 1st day of 
     nonpayment after payment is due through the 15th day of such 
     nonpayment.
       ``(II) 2 percent per month from the 16th day of such 
     nonpayment through the 45th day of such nonpayment.
       ``(III) 2\1/2\ percent per month after the 46th day of such 
     nonpayment.

       ``(D) Procedures involving claims.--
       ``(i) In general.--A contract entered into with a PDP 
     sponsor under this section with respect to a prescription 
     drug plan offered by such sponsor shall provide that, not 
     later than 10 days after the date on which a clean claim is 
     submitted, the PDP sponsor shall provide the claimant with a 
     notice that acknowledges receipt of the claim by such 
     sponsor. Such notice shall be considered to have been 
     provided on the date on which the notice is mailed or 
     electronically transferred.
       ``(ii) Claim deemed to be a clean claim.--A claim is deemed 
     to be a clean claim if the PDP sponsor involved does not 
     provide notice to the claimant of any deficiency in the claim 
     within 10 days of the date on which the claim is submitted.
       ``(iii) Claim determined to not be a clean claim.--

       ``(I) In general.--If a PDP sponsor determines that a 
     submitted claim is not a clean claim, the PDP sponsor shall, 
     not later than the end of the period described in clause 
     (ii), notify the claimant of such determination. Such 
     notification shall specify all defects or improprieties in 
     the claim and shall list with specificity all additional 
     information or documents necessary for the proper processing 
     and payment of the claim.
       ``(II) Determination after submission of additional 
     information.--A claim is deemed to be a clean claim under 
     this paragraph if the PDP sponsor involved does not provide 
     notice to the claimant of any defect or impropriety in the 
     claim within 10 days of the date on which additional 
     information is received under subclause (I).
       ``(III) Payment of clean portion of a claim.--A PDP sponsor 
     shall, as appropriate, pay any portion of a claim that would 
     be a clean claim but for a defect or impropriety in a 
     separate portion of the claim in accordance with subparagraph 
     (A).

       ``(iv) Obligation to pay.--A claim submitted to a PDP 
     sponsor that is not paid or contested by the provider within 
     the applicable number of days (as defined in subparagraph 
     (B)) shall be deemed to be a clean claim and shall be paid by 
     the PDP sponsor in accordance with subparagraph (A).
       ``(v) Date of payment of claim.--Payment of a clean claim 
     under such subparagraph is

[[Page S2914]]

     considered to have been made on the date on which full 
     payment is received by the provider.
       ``(E) Private right of action.--
       ``(i) In general.--Nothing in this paragraph shall be 
     construed to prohibit or limit a claim or action not covered 
     by the subject matter of this section that any individual or 
     organization has against a provider or a PDP sponsor.
       ``(ii) Anti-retaliation.--Consistent with applicable 
     Federal or State law, a PDP sponsor shall not retaliate 
     against an individual or provider for exercising a right of 
     action under this subparagraph.
       ``(F) Fines and penalties.--
       ``(i) Fines.--

       ``(I) In general.--If a PDP sponsor willfully and knowingly 
     violates this section or has a pattern of repeated violations 
     of this section, the Secretary shall impose a fine not to 
     exceed $1,000 per claim for each day a response is delinquent 
     beyond the date on which such response is required under this 
     paragraph.
       ``(II) Repeated violations.--If 3 separate fines under 
     subclause (I) are levied within a 5-year period, the 
     Secretary is authorized to impose a penalty in an amount not 
     to exceed $10,000 per claim.

       ``(ii) Remedial action plan.--Where it is established that 
     the PDP sponsor willfully and knowingly violated this section 
     or has a pattern of repeated violations, the Secretary shall 
     require the PDP sponsor to--

       ``(I) submit a remedial action plan to the Secretary; and
       ``(II) contact claimants regarding the delays in the 
     processing of claims and inform claimants of steps being 
     taken to improve such delays.''.

       (b) Prompt Payment by MA-PD Plans.--Section 1857(f) of the 
     Social Security Act (42 U.S.C. 1395w-27) is amended by adding 
     at the end the following new paragraph:
       ``(3) Incorporation of certain prescription drug plan 
     contract requirements.--The provisions of section 1860D-
     12(b)(4) shall apply to contracts with a Medicare Advantage 
     organization in the same manner as they apply to contracts 
     with a PDP sponsor offering a prescription drug plan under 
     part D.''.
       (c) Medicaid.--Section 1932(f) of the Social Security Act 
     (42 U.S.C. 1396u-2(f)) is amended by striking ``the claims 
     payment procedures described in section 1902(a)(37)(A), 
     unless the health care provider and the organization agree to 
     an alternate payment schedule'' and inserting ``section 
     1860D-12(b)(4), in the same manner as the provisions of such 
     section apply to a PDP sponsor offering a prescription drug 
     plan under part D''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to contracts entered into or renewed on or after 
     December 31, 2006.

     SEC. 5. PREEMPTION.

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

     SEC. 6. EFFECTIVE DATE.

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

     SEC. 7. SEVERABILITY.

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