Managed Care Plan Accountability Act of 1997

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Managed Care Plan Accountability Act 
of 1997''.

SEC. 2. IMPROVEMENTS IN ERISA ENFORCEMENT WITH RESPECT TO MANAGED CARE 
              GROUP HEALTH PLANS.

    (a) Additional Remedies for Cost-Driven Violations of Plan Terms.--
            (1) In general.--Section 502(c) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1132(c)) is amended--
                    (A) by redesignating paragraph (6) as paragraph 
                (7); and
                    (B) by inserting after paragraph (5) the following 
                new paragraph:
    ``(6)(A) In any case in which a group health plan, or a health 
insurance issuer offering health insurance coverage in connection with 
such plan, provides benefits under such plan under managed care, and 
such plan or issuer fails to provide any such benefit in accordance 
with the terms of the plan or such coverage, insofar as such failure 
occurs pursuant to a clinically or medically inappropriate decision or 
determination resulting from--
            ``(i) the application of any cost containment technique,
            ``(ii) any utilization review directed at cost containment, 
        or
            ``(iii) any other medical care delivery policy decision 
        which restricts the ability of providers of medical care from 
        utilizing their full discretion for treatment of patients,
each specified defendant shall be jointly and severally liable to any 
participant or beneficiary aggrieved by such failure for actual damages 
(including compensatory and consequential damages) proximately caused 
by such failure, and may, in the court's discretion, be liable to such 
participant or beneficiary for punitive damages.
    ``(B) For purposes of this paragraph--
            ``(i) a group health plan, or a health insurance issuer 
        offering health insurance coverage in connection with the plan, 
        provides benefits under `managed care' if the plan or the 
        issuer--
                    ``(I) provides or arranges for the provision of the 
                benefits to participants and beneficiaries primarily 
                through participating providers of medical care, or
                    ``(II) provides financial incentives (such as 
                variable copayments and deductibles) to induce 
                participants and beneficiaries to obtain the benefits 
                primarily through participating providers of medical 
                care,
        or both.
            ``(ii) The term `specified defendant' means, in connection 
        with any failure to provide any benefit, a person who is--
                    ``(I) the plan sponsor, or
                    ``(II) a health insurance issuer offering health 
                insurance coverage in connection with the plan,
        insofar as an act or failure to act of such person constitutes 
        or contributes to the failure to so provide such benefit.
            ``(iii) The term `participating' means, with respect to a 
        provider of medical care in relation to a group health plan or 
        health insurance coverage offered in connection with a group 
        health plan, a provider that furnishes the items and services 
        comprising medical care to participants and beneficiaries under 
        the plan under an agreement with the plan or with a health 
        insurance issuer offering the coverage.
            ``(iv) The provisions of section 733 apply in the same 
        manner and to the same extent as they apply for purposes of 
        part 7.
    ``(C) Remedies under this paragraph are in addition to remedies 
otherwise provided under this section.''.
            (2) Concurrent jurisdiction.--Section 502(e)(1) of such Act 
        (29 U.S.C. 1132(e)(1)) is amended--
                    (A) in the first sentence, by inserting ``and 
                except for actions under subsection (a)(1)(A) of this 
                section for the relief provided in subsection (c)(6) of 
                this section,'' after ``this section,''; and
                    (B) in the last sentence, by inserting ``and under 
                subsection (a)(1)(A) of this section for the relief 
                provided in subsection (c)(6) of this section'' after 
                ``this section''.
    (b) Indemnification for Liability of Providers Bound by Plan 
Restrictions on Medical Communications.--Section 502 of such Act (29 
U.S.C. 1132) is amended further by adding at the end the following new 
subsection:
    ``(n)(1) In any case in which a group health plan, or a health 
insurance issuer offering health insurance coverage in connection with 
such plan, provides benefits under such plan under managed care, the 
plan shall provide for full indemnification of any participating 
provider of medical care for any liability incurred by such provider 
for any failure to provide any such benefit in accordance with the 
terms of the plan or such coverage, if such failure is the direct 
result of a plan restriction on medical communications under the plan.
    ``(2) For purposes of this subsection--
            ``(A) the term `plan restriction on medical communications' 
        under a group health plan means a provision of the plan, or of 
        any health insurance coverage offered in connection with the 
        plan, which prohibits, restricts, or interferes with any 
        medical communication as part of--
                    ``(i) a written contract or agreement with a 
                participating provider of medical care,
                    ``(ii) a written statement to a participating 
                provider of medical care, or
                    ``(iii) an oral communication to a participating 
                provider of medical care.
            ``(B) The term `medical communication'--
                    ``(i) means any communication made by the provider 
                of medical care--
                            ``(I) regarding the mental or physical 
                        health care needs or treatment of a patient and 
                        the provisions, terms, or requirements of the 
                        group health plan or health insurance coverage 
                        or another plan or coverage relating to such 
                        needs or treatment, and
                            ``(II) between the provider and a current, 
                        former, or prospective patient (or the guardian 
                        or legal representative of a patient), between 
                        the provider and any employee or representative 
                        of the plan or issuer, or between the provider 
                        and any employee or representative of any State 
                        or Federal authority with responsibility for 
                        the licensing or oversight with respect to the 
                        plan or issuer; and
                    ``(ii) includes communications concerning--
                            ``(I) any tests, consultations, and 
                        treatment options,
                            ``(II) any risks or benefits associated 
                        with such tests, consultations, and options,
                            ``(III) variation among any providers of 
                        medical care and any institutions providing 
                        such services in experience, quality, or 
                        outcomes,
                            ``(IV) the basis or standard for the 
                        decision of a managed care group health plan, 
                        or a health insurance issuer offering health 
                        insurance coverage in connection with such a 
                        plan, to authorize or deny particular benefits 
                        consisting of medical care,
                            ``(V) the process used by the plan or 
                        issuer to determine whether to authorize or 
                        deny particular benefits consisting of medical 
                        care, and
                            ``(VI) any financial incentives or 
                        disincentives provided by the plan or issuer to 
                        a provider of medical care that are based on 
                        service utilization.
            ``(C) For purposes of this paragraph, the provisions of 
        subsection (c)(6)(B) apply in the same manner and to the same 
        extent as they apply for purposes of subsection (c)(6), and the 
        provisions of section 733 apply in the same manner and to the 
        same extent as they apply for purposes of part 7.''.

SEC. 3. EXCISE TAX FOR COST-DRIVEN VIOLATIONS OF PLAN TERMS.

    (a) In General.--Chapter 100 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subchapter:

  ``Subchapter B--Failure To Provide Health Benefits Due to Improper 
                 Cost-Driven Delivery Policy Decisions

                              ``Sec. 9811. Failure to provide health 
                                        benefits due to improper cost-
                                        driven delivery policy 
                                        decisions.

``SEC. 9811. FAILURE TO PROVIDE HEALTH BENEFITS DUE TO IMPROPER COST-
              DRIVEN DELIVERY POLICY DECISIONS.

    ``(a) General Rule.--In the case of a group health coverage to 
which this section applies, there is a failure to meet the requirements 
of this chapter if--
            ``(1) the provider of such coverage fails to provide any 
        benefit in accordance with the terms of the coverage, and
            ``(2) such failure occurs pursuant to a clinically or 
        medically inappropriate decision or determination resulting 
        from the application of--
                    ``(A) any cost containment technique,
                    ``(B) any utilization review directed at cost 
                containment, or
                    ``(C) any other medical care delivery policy 
                decision which restricts the ability of providers of 
                medical care from utilizing their full discretion for 
                treatment of patients.
    ``(b) Health Coverage Providers to Which Section Applies.--This 
section shall apply to any group health coverage which is provided 
under managed care.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Group health coverage.--The term `group health 
        coverage' means--
                    ``(A) coverage under any group health plan, and
                    ``(B) health insurance coverage provided by a 
                health insurance issuer.
            ``(2) Managed care.--Group health coverage is provided 
        under managed care if--
                    ``(A) such coverage is provided primarily through 
                participating providers of medical care, or
                    ``(B) the provider of such coverage provides 
                financial incentives (such as variable copayments and 
                deductibles) to induce participants and beneficiaries 
                to obtain the benefits primarily through participating 
                providers of medical care,
        or both.
            ``(3) Provider.--The term `provider' means--
                    ``(A) the group health plan in the case of coverage 
                described in paragraph (2)(A), and
                    ``(B) the health insurance issuer in the case of 
                coverage described in paragraph (2)(B).
            ``(4) Other definitions.--The terms `group health plan', 
        `health insurance coverage', and `health insurance issuer' have 
        the respective meanings given such terms by section 9805.''.
    (b) Conforming Amendments.--
            (1) Subtitle K of such Code is amended by striking all that 
        precedes section 9801 and inserting the following:

              ``Subtitle K--Group Health Plan Requirements

                              ``Chapter 100. Group health plan 
                                        requirements.

             ``CHAPTER 100--GROUP HEALTH PLAN REQUIREMENTS

                              ``Subchapter A. Requirements relating to 
                                        portability, access, and 
                                        renewability.
                              ``Subchapter B. Failure to provide health 
                                        benefits due to improper cost-
                                        driven delivery policy 
                                        decisions.''
            (2) The table of subtitles for such Code is amended by 
        striking the item relating to subtitle K and inserting the 
        following new item:

                              ``Subtitle K. Group health plan 
                                        requirements.''

SEC. 4. EFFECTIVE DATE.

    The amendments made by this Act shall apply with respect to plan 
years beginning after on or after January 1, 1998.

Summary: Managed Care Plan Accountability Act of 1997 - Amends the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code (IRC) with respect to accountability for violations of requirements for managed care group health plans, especially failure to provide health benefits due to improper cost-driven delivery policy decisions. Imposes joint and several liability for actual damages, and, in the court's discretion, for punitive damages, on a group health plan, or a plan health insurance issuer, for failure to provide a benefit in accordance with plan terms, insofar as such failure occurs pursuant to a clinically or medically inappropriate decision or determination resulting from application of any cost containment technique, related utilization review, or any other medical care delivery policy decision which restricts the ability of medical care providers to use their full discretion for treatment of patients. Provides for an action for damages in either a State or Federal court. Requires managed care group health plans to provide for full indemnification of medical care providers bound by plan restrictions for any liability incurred for such a failure if it is the direct result of a plan restriction on medical communications. Amends the IRC to establish an excise tax for such cost-driven violations of plan terms.