Hospital Stay Protection Act

Summary: Hospital Stay Protection Act - Amends the Public Health Service Act (PHSA) and the Employee Retirement Income Security Act of 1974 (ERISA) to require group health plans and individual health insurance coverage to establish hospital lengths of stay based on a determination by an appropriate physician in consultation with the patient. 
Amends the Health Insurance Portability and Accountability Act of 1996 to require related and coordinated regulations under PHSA, ERISA, and the Internal Revenue Code.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Hospital Stay Protection Act''.

SEC. 2. STANDARD RELATING TO HOSPITAL LENGTHS OF STAY.

    (a) Group Health Plans.--
            (1) Public health service act amendments.--
                    (A) In general.--Subpart 2 of part A of title XXVII 
                of the Public Health Service Act, as amended by section 
                703(a) of Public Law 104-204, is amended by adding at 
                the end the following new section:

``SEC. 2706. STANDARD RELATING TO HOSPITAL LENGTHS OF STAY.

    ``(a) Requirement.--A group health plan, and a health insurance 
issuer offering group health insurance coverage in connection with a 
group health plan, shall ensure that inpatient coverage is provided for 
a period of time as is determined by a physician, in consultation with 
the patient, to be medically appropriate.
    ``(b) Prohibitions.--A group health plan, and a health insurance 
issuer offering group health insurance coverage in connection with a 
group health plan, may not--
            ``(1) deny eligibility, or continued eligibility, to enroll 
        or to renew coverage under the terms of the plan, solely for 
        the purpose of avoiding the minimum coverage requirements of 
        subsection (a);
            ``(2) penalize or otherwise reduce or limit the 
        reimbursement of a provider because such provider provided care 
        to a participant or beneficiary in accordance with this 
        section;
            ``(3) provide incentives (monetary or otherwise) to a 
        provider to induce such provider to keep the length of 
        inpatient stays of patients below certain levels; or
            ``(4) require preauthorization for determination of a 
        length of stay.
    ``(c) Appeals Process and Penalty.--The Secretary, in consultation 
with the Secretary of Labor shall establish--
            ``(1) a process for a participant, enrollee, or beneficiary 
        to appeal the decision of a plan or issuer; and
            ``(2) a penalty for plans or issuers that violate the 
        provisions of this section.
    ``(d) Notice.--A group health plan under this part shall comply 
with the notice requirement under section 713(d) of the Employee 
Retirement Income Security Act of 1974 with respect to the requirements 
of this section as if such section applied to such plan.''.
                    (B) Conforming amendment.--Section 2723(c) of such 
                Act (42 U.S.C. 300gg-23(c)) is amended by striking 
                ``section 2704'' and inserting ``sections 2704 and 
                2706''.
            (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 is amended by adding at the end the 
                following new section:

``SEC. 713. STANDARDS FOR HOSPITAL LENGTHS OF STAY.

    ``(a) Requirement.--A group health plan, and a health insurance 
issuer offering group health insurance coverage in connection with a 
group health plan, shall ensure that inpatient coverage is provided for 
a period of time as is determined by a physician, in consultation with 
the patient, to be medically appropriate.
    ``(b) Prohibitions.--A group health plan, and a health insurance 
issuer offering group health insurance coverage in connection with a 
group health plan, may not--
            ``(1) deny eligibility, or continued eligibility, to enroll 
        or to renew coverage under the terms of the plan, solely for 
        the purpose of avoiding the minimum coverage requirements of 
        subsection (a);
            ``(2) penalize or otherwise reduce or limit the 
        reimbursement of a provider because such provider provided care 
to a participant or beneficiary in accordance with this section;
            ``(3) provide incentives (monetary or otherwise) to a 
        provider to induce such provider to keep the length of 
        inpatient stays of patients below certain levels; or
            ``(4) require preauthorization for determination of a 
        length of stay.
    ``(c) Appeals Process and Penalty.--The Secretary, in consultation 
with the Secretary of Health and Human Services shall establish--
            ``(1) a process for a participant, enrollee, or beneficiary 
        to appeal the decision of a plan or issuer; and
            ``(2) a penalty for plans or issuers that violate the 
        provisions of this section.
    ``(d) Notice Under Group Health Plan.--The imposition of the 
requirements of this section shall be treated as a material 
modification in the terms of the plan described in section 102(a)(1), 
for purposes of assuring notice of such requirements under the plan; 
except that the summary description required to be provided under the 
last sentence of section 104(b)(1) with respect to such modification 
shall be provided by not later than 60 days after the first day of the 
first plan year in which such requirements apply.''.
            (B) Conforming and clerical amendments.--(i) Section 731(c) 
        of such Act (29 U.S.C. 1191(c)) is amended by striking 
        ``section 711'' and inserting ``sections 711 and 713''.
            (ii) Section 732(a) of such Act (29 U.S.C. 1191a(a)) is 
        amended by striking ``section 711'' and inserting ``sections 
        711 and 713''.
            (iii) The table of contents in section 1 of such Act is 
        amended by inserting after the item relating to section 712 the 
        following new item:

``Sec. 713. Standard for hospital lengths of stay.''.
    (b) Individual Health Insurance.--
            (1) In general.--Subpart 3 of part B of title XXVII of the 
        Public Health Service Act is amended by adding at the end the 
        following new section:

``SEC. 2752. STANDARDS FOR HOSPITAL LENGTHS OF STAY.

    ``(a) In General.--The provisions of section 2706 (other than 
subsection (d)) 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.
    ``(b) Notice.--A health insurance issuer under this part shall 
comply with the notice requirement under section 713(d) of the Employee 
Retirement Income Security Act of 1974 with respect to the requirements 
referred to in subsection (a) as if such section applied to such issuer 
and such issuer were a group health plan.''.
            (2) Conforming amendment.--Section 2762(b)(2) of such Act 
        (42 U.S.C. 300gg-62(b)(2)) is amended by striking ``section 
        2751'' and inserting ``sections 2751 and 2752''.
    (c) Effective Dates.--
            (1) Group market reforms.--
                    (A) In general.--The amendments made by subsections 
                (a) and (b) shall apply with respect to plan years 
                beginning on or after January 1, 1999.
                    (B) Special rule for collective bargaining 
                agreements.--In the case of a group health plan 
                maintained pursuant to 1 or more collective bargaining 
                agreements between employee representatives and 1 or 
                more employers ratified before such date, the 
                amendments made by such subsections shall not apply to 
                plan years beginning before the later of--
                            (i) the date on which the last collective 
                        bargaining agreements relating to the plan 
                        terminates (determined without regard to any 
                        extension thereof agreed to after the date of 
                        enactment of this Act), or
                            (ii) January 1, 1999.
                For purposes of clause (i), 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 such subsections shall not be 
                treated as a termination of such collective bargaining 
                agreement.
            (2) Individual market amendments.--The amendments made by 
        subsection (b) shall apply with respect to health insurance 
        coverage offered, sold, issued, renewed, in effect, or operated 
        in the individual market on or after January 1, 1999.
    (d) Coordinated Regulations.--Section 104(1) of Health Insurance 
Portability and Accountability Act of 1996 is amended by striking 
``this subtitle (and the amendments made by this subtitle and section 
401)'' and inserting ``the provisions of part 7 of subtitle B of title 
I of the Employee Retirement Income Security Act of 1974, the 
provisions of parts A and C of title XXVII of the Public Health Service 
Act, and chapter 100 of the Internal Revenue Code of 1986''.