Calendar No. 164

106TH CONGRESS

1ST SESSION S. 1256

A BILL

Entitled the ‘‘Patients’ Bill of Rights’’.

JUNE 22, 1999

Read the second time and placed on the calendar
II

Calendar No. 164

106TH CONGRESS

1ST SESSION S. 1256

Entitled the ‘‘Patients’ Bill of Rights’’.

IN THE SENATE OF THE UNITED STATES

JUNE 21, 1999

Mr. DASCHLE introduced the following bill; which was read the first time

JUNE 22, 1999

Read the second time and placed on the calendar

A BILL

Entitled the ‘‘Patients’ Bill of Rights’’.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SEC. ll01. SHORT TITLE.

4 This title may be cited as the ‘‘Patients’ Bill of

5 Rights Act of 1999’’.
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1 Subtitle A—Health Insurance Bill

2 of Rights

3 CHAPTER 1—ACCESS TO CARE

4 SEC. ll101. ACCESS TO EMERGENCY CARE.

5 (a) COVERAGE OF EMERGENCY SERVICES.—

6 (1) IN GENERAL.—If a group health plan, or

7 health insurance coverage offered by a health insur8 ance issuer, provides any benefits with respect to

9 emergency services (as defined in paragraph (2)(B)),

10 the plan or issuer shall cover emergency services fur11 nished under the plan or coverage—

12 (A) without the need for any prior author13 ization determination;

14 (B) whether or not the health care pro15 vider furnishing such services is a participating

16 provider with respect to such services;

17 (C) in a manner so that, if such services

18 are provided to a participant, beneficiary, or en19 rollee by a nonparticipating health care provider

20 without prior authorization by the plan or

21 issuer, the participant, beneficiary, or enrollee

22 is not liable for amounts that exceed the

23 amounts of liability that would be incurred if

24 the services were provided by a participating
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1 health care provider with prior authorization by

2 the plan or issuer; and

3 (D) without regard to any other term or

4 condition of such coverage (other than exclusion

5 or coordination of benefits, or an affiliation or

6 waiting period, permitted under section 2701 of

7 the Public Health Service Act, section 701 of

8 the Employee Retirement Income Security Act

9 of 1974, or section 9801 of the Internal Rev10 enue Code of 1986, and other than applicable

11 cost-sharing).

12 (2) DEFINITIONS.—In this section:

13 (A) EMERGENCY MEDICAL CONDITION

14 BASED ON PRUDENT LAYPERSON STANDARD.—

15 The term ‘‘emergency medical condition’’ means

16 a medical condition manifesting itself by acute

17 symptoms of sufficient severity (including se18 vere pain) such that a prudent layperson, who

19 possesses an average knowledge of health and

20 medicine, could reasonably expect the absence

21 of immediate medical attention to result in a

22 condition described in clause (i), (ii), or (iii) of

23 section 1867(e)(1)(A) of the Social Security

24 Act.
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1 (B) EMERGENCY SERVICES.—The term

2 ‘‘emergency services’’ means—

3 (i) a medical screening examination

4 (as required under section 1867 of the So5 cial Security Act) that is within the capa6 bility of the emergency department of a

7 hospital, including ancillary services rou8 tinely available to the emergency depart9 ment to evaluate an emergency medical

10 condition (as defined in subparagraph

11 (A)), and

12 (ii) within the capabilities of the staff

13 and facilities available at the hospital, such

14 further medical examination and treatment

15 as are required under section 1867 of such

16 Act to stabilize the patient.

17 (b) REIMBURSEMENT FOR MAINTENANCE CARE AND

18 POST-STABILIZATION CARE.—In the case of services

19 (other than emergency services) for which benefits are

20 available under a group health plan, or under health insur21 ance coverage offered by a health insurance issuer, the

22 plan or issuer shall provide for reimbursement with re23 spect to such services provided to a participant, bene24 ficiary, or enrollee other than through a participating

25 health care provider in a manner consistent with sub-
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1 section (a)(1)(C) (and shall otherwise comply with the

2 guidelines established under section 1852(d)(2) of the So3 cial Security Act (relating to promoting efficient and time4 ly coordination of appropriate maintenance and post-sta5 bilization care of an enrollee after an enrollee has been

6 determined to be stable), or, in the absence of guidelines

7 under such section, such guidelines as the Secretary shall

8 establish to carry out this subsection), if the services are

9 maintenance care or post-stabilization care covered under

10 such guidelines.

11 SEC. ll102. OFFERING OF CHOICE OF COVERAGE OP12 TIONS UNDER GROUP HEALTH PLANS.

13 (a) REQUIREMENT.—

14 (1) OFFERING OF POINT-OF-SERVICE COV15 ERAGE OPTION.—Except as provided in paragraph

16 (2), if a group health plan (or health insurance cov17 erage offered by a health insurance issuer in connec18 tion with a group health plan) provides benefits only

19 through participating health care providers, the plan

20 or issuer shall offer the participant the option to

21 purchase point-of-service coverage (as defined in

22 subsection (b)) for all such benefits for which cov23 erage is otherwise so limited. Such option shall be

24 made available to the participant at the time of en25 rollment under the plan or coverage and at such
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1 other times as the plan or issuer offers the partici2 pant a choice of coverage options.

3 (2) EXCEPTION.—Paragraph (1) shall not

4 apply with respect to a participant in a group health

5 plan if the plan offers the participant—

6 (A) a choice of health insurance coverage;

7 and

8 (B) one or more coverage options that do

9 not provide benefits only through participating

10 health care providers.

11 (b) POINT-OF-SERVICE COVERAGE DEFINED.—In

12 this section, the term ‘‘point-of-service coverage’’ means,

13 with respect to benefits covered under a group health plan

14 or health insurance issuer, coverage of such benefits when

15 provided by a nonparticipating health care provider. Such

16 coverage need not include coverage of providers that the

17 plan or issuer excludes because of fraud, quality, or similar

18 reasons.

19 (c) CONSTRUCTION.—Nothing in this section shall be

20 construed—

21 (1) as requiring coverage for benefits for a par22 ticular type of health care provider;

23 (2) as requiring an employer to pay any costs

24 as a result of this section or to make equal contribu-
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1 tions with respect to different health coverage op2 tions; or

3 (3) as preventing a group health plan or health

4 insurance issuer from imposing higher premiums or

5 cost-sharing on a participant for the exercise of a

6 point-of-service coverage option.

7 (d) NO REQUIREMENT FOR GUARANTEED AVAIL8 ABILITY.—If a health insurance issuer offers health insur9 ance coverage that includes point-of-service coverage with

10 respect to an employer solely in order to meet the require11 ment of subsection (a), nothing in section 2711(a)(1)(A)

12 of the Public Health Service Act shall be construed as re13 quiring the offering of such coverage with respect to an14 other employer.

15 SEC. ll103. CHOICE OF PROVIDERS.

16 (a) PRIMARY CARE.—A group health plan, and a

17 health insurance issuer that offers health insurance cov18 erage, shall permit each participant, beneficiary, and en19 rollee to receive primary care from any participating pri20 mary care provider who is available to accept such indi21 vidual.

22 (b) SPECIALISTS.—

23 (1) IN GENERAL.—Subject to paragraph (2), a

24 group health plan and a health insurance issuer that

25 offers health insurance coverage shall permit each
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1 participant, beneficiary, or enrollee to receive medi2 cally necessary or appropriate specialty care, pursu3 ant to appropriate referral procedures, from any

4 qualified participating health care provider who is

5 available to accept such individual for such care.

6 (2) LIMITATION.—Paragraph (1) shall not

7 apply to specialty care if the plan or issuer clearly

8 informs participants, beneficiaries, and enrollees of

9 the limitations on choice of participating providers

10 with respect to such care.

11 SEC. ll104. ACCESS TO SPECIALTY CARE.

12 (a) OBSTETRICAL AND GYNECOLOGICAL CARE.—

13 (1) IN GENERAL.—If a group health plan, or a

14 health insurance issuer in connection with the provi15 sion of health insurance coverage, requires or pro16 vides for a participant, beneficiary, or enrollee to

17 designate a participating primary care provider—

18 (A) the plan or issuer shall permit such an

19 individual who is a female to designate a par20 ticipating physician who specializes in obstetrics

21 and gynecology as the individual’s primary care

22 provider; and

23 (B) if such an individual has not des24 ignated such a provider as a primary care pro25 vider, the plan or issuer—
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1 (i) may not require authorization or a

2 referral by the individual’s primary care

3 provider or otherwise for coverage of rou4 tine gynecological care (such as preventive

5 women’s health examinations) and preg6 nancy-related services provided by a par7 ticipating health care professional who spe8 cializes in obstetrics and gynecology to the

9 extent such care is otherwise covered, and

10 (ii) may treat the ordering of other

11 gynecological care by such a participating

12 health professional as the authorization of

13 the primary care provider with respect to

14 such care under the plan or coverage.

15 (2) CONSTRUCTION.—Nothing in paragraph

16 (1)(B)(ii) shall waive any requirements of coverage

17 relating to medical necessity or appropriateness with

18 respect to coverage of gynecological care so ordered.

19 (b) SPECIALTY CARE.—

20 (1) SPECIALTY CARE FOR COVERED SERV21 ICES.—

22 (A) IN GENERAL.—If—

23 (i) an individual is a participant or

24 beneficiary under a group health plan or

25 an enrollee who is covered under health in-
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1 surance coverage offered by a health insur2 ance issuer,

3 (ii) the individual has a condition or

4 disease of sufficient seriousness and com5 plexity to require treatment by a specialist,

6 and

7 (iii) benefits for such treatment are

8 provided under the plan or coverage,

9 the plan or issuer shall make or provide for a

10 referral to a specialist who is available and ac11 cessible to provide the treatment for such condi12 tion or disease.

13 (B) SPECIALIST DEFINED.—For purposes

14 of this subsection, the term ‘‘specialist’’ means,

15 with respect to a condition, a health care practi16 tioner, facility, or center (such as a center of

17 excellence) that has adequate expertise through

18 appropriate training and experience (including,

19 in the case of a child, appropriate pediatric ex20 pertise) to provide high quality care in treating

21 the condition.

22 (C) CARE UNDER REFERRAL.—A group

23 health plan or health insurance issuer may re24 quire that the care provided to an individual
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1 pursuant to such referral under subparagraph

2 (A) be—

3 (i) pursuant to a treatment plan, only

4 if the treatment plan is developed by the

5 specialist and approved by the plan or

6 issuer, in consultation with the designated

7 primary care provider or specialist and the

8 individual (or the individual’s designee),

9 and

10 (ii) in accordance with applicable

11 quality assurance and utilization review

12 standards of the plan or issuer.

13 Nothing in this subsection shall be construed as

14 preventing such a treatment plan for an indi15 vidual from requiring a specialist to provide the

16 primary care provider with regular updates on

17 the specialty care provided, as well as all nec18 essary medical information.

19 (D) REFERRALS TO PARTICIPATING PRO20 VIDERS.—A group health plan or health insur21 ance issuer is not required under subparagraph

22 (A) to provide for a referral to a specialist that

23 is not a participating provider, unless the plan

24 or issuer does not have an appropriate specialist

25 that is available and accessible to treat the indi-
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1 vidual’s condition and that is a participating

2 provider with respect to such treatment.

3 (E) TREATMENT OF NONPARTICIPATING

4 PROVIDERS.—If a plan or issuer refers an indi5 vidual to a nonparticipating specialist pursuant

6 to subparagraph (A), services provided pursu7 ant to the approved treatment plan (if any)

8 shall be provided at no additional cost to the in9 dividual beyond what the individual would oth10 erwise pay for services received by such a spe11 cialist that is a participating provider.

12 (2) SPECIALISTS AS PRIMARY CARE PRO13 VIDERS.—

14 (A) IN GENERAL.—A group health plan, or

15 a health insurance issuer, in connection with

16 the provision of health insurance coverage, shall

17 have a procedure by which an individual who is

18 a participant, beneficiary, or enrollee and who

19 has an ongoing special condition (as defined in

20 subparagraph (C)) may receive a referral to a

21 specialist for such condition who shall be re22 sponsible for and capable of providing and co23 ordinating the individual’s primary and spe24 cialty care. If such an individual’s care would

25 most appropriately be coordinated by such a
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1 specialist, such plan or issuer shall refer the in2 dividual to such specialist.

3 (B) TREATMENT AS PRIMARY CARE PRO4 VIDER.—Such specialist shall be permitted to

5 treat the individual without a referral from the

6 individual’s primary care provider and may au7 thorize such referrals, procedures, tests, and

8 other medical services as the individual’s pri9 mary care provider would otherwise be per10 mitted to provide or authorize, subject to the

11 terms of the treatment plan (referred to in

12 paragraph (1)(C)(i)).

13 (C) ONGOING SPECIAL CONDITION DE14 FINED.—In this paragraph, the term ‘‘special

15 condition’’ means a condition or disease that—

16 (i) is life-threatening, degenerative, or

17 disabling, and

18 (ii) requires specialized medical care

19 over a prolonged period of time.

20 (D) TERMS OF REFERRAL.—The provi21 sions of subparagraphs (C) through (E) of

22 paragraph (1) apply with respect to referrals

23 under subparagraph (A) of this paragraph in

24 the same manner as they apply to referrals

25 under paragraph (1)(A).
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1 (3) STANDING REFERRALS.—

2 (A) IN GENERAL.—A group health plan,

3 and a health insurance issuer in connection

4 with the provision of health insurance coverage,

5 shall have a procedure by which an individual

6 who is a participant, beneficiary, or enrollee

7 and who has a condition that requires ongoing

8 care from a specialist may receive a standing

9 referral to such specialist for treatment of such

10 condition. If the plan or issuer, or if the pri11 mary care provider in consultation with the

12 medical director of the plan or issuer and the

13 specialist (if any), determines that such a

14 standing referral is appropriate, the plan or

15 issuer shall make such a referral to such a spe16 cialist.

17 (B) TERMS OF REFERRAL.—The provi18 sions of subparagraphs (C) through (E) of

19 paragraph (1) apply with respect to referrals

20 under subparagraph (A) of this paragraph in

21 the same manner as they apply to referrals

22 under paragraph (1)(A).

23 SEC. ll105. CONTINUITY OF CARE.

24 (a) IN GENERAL.—
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1 (1) TERMINATION OF PROVIDER.—If a contract

2 between a group health plan, or a health insurance

3 issuer in connection with the provision of health in4 surance coverage, and a health care provider is ter5 minated (as defined in paragraph (3)), or benefits or

6 coverage provided by a health care provider are ter7 minated because of a change in the terms of pro8 vider participation in a group health plan, and an in9 dividual who is a participant, beneficiary, or enrollee

10 in the plan or coverage is undergoing a course of

11 treatment from the provider at the time of such ter12 mination, the plan or issuer shall—

13 (A) notify the individual on a timely basis

14 of such termination, and

15 (B) subject to subsection (c), permit the

16 individual to continue or be covered with re17 spect to the course of treatment with the pro18 vider during a transitional period (provided

19 under subsection (b)).

20 (2) TREATMENT OF TERMINATION OF CON21 TRACT WITH HEALTH INSURANCE ISSUER.—If a

22 contract for the provision of health insurance cov23 erage between a group health plan and a health in24 surance issuer is terminated and, as a result of such

25 termination, coverage of services of a health care
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1 provider is terminated with respect to an individual,

2 the provisions of paragraph (1) (and the succeeding

3 provisions of this section) shall apply under the plan

4 in the same manner as if there had been a contract

5 between the plan and the provider that had been ter6 minated, but only with respect to benefits that are

7 covered under the plan after the contract termi8 nation.

9 (3) TERMINATION.—In this section, the term

10 ‘‘terminated’’ includes, with respect to a contract,

11 the expiration or nonrenewal of the contract, but

12 does not include a termination of the contract by the

13 plan or issuer for failure to meet applicable quality

14 standards or for fraud.

15 (b) TRANSITIONAL PERIOD.—

16 (1) IN GENERAL.—Except as provided in para17 graphs (2) through (4), the transitional period under

18 this subsection shall extend for at least 90 days from

19 the date of the notice described in subsection

20 (a)(1)(A) of the provider’s termination.

21 (2) INSTITUTIONAL CARE.—The transitional pe22 riod under this subsection for institutional or inpa23 tient care from a provider shall extend until the dis24 charge or termination of the period of institutional25 ization and also shall include institutional care pro-
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1 vided within a reasonable time of the date of termi2 nation of the provider status if the care was sched3 uled before the date of the announcement of the ter4 mination of the provider status under subsection

5 (a)(1)(A) or if the individual on such date was on

6 an established waiting list or otherwise scheduled to

7 have such care.

8 (3) PREGNANCY.—If—

9 (A) a participant, beneficiary, or enrollee

10 has entered the second trimester of pregnancy

11 at the time of a provider’s termination of par12 ticipation, and

13 (B) the provider was treating the preg14 nancy before date of the termination,

15 the transitional period under this subsection with re16 spect to provider’s treatment of the pregnancy shall

17 extend through the provision of post-partum care di18 rectly related to the delivery.

19 (4) TERMINAL ILLNESS.—If—

20 (A) a participant, beneficiary, or enrollee

21 was determined to be terminally ill (as deter22 mined under section 1861(dd)(3)(A) of the So23 cial Security Act) at the time of a provider’s

24 termination of participation, and
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1 (B) the provider was treating the terminal

2 illness before the date of termination,

3 the transitional period under this subsection shall

4 extend for the remainder of the individual’s life for

5 care directly related to the treatment of the terminal

6 illness.

7 (c) PERMISSIBLE TERMS AND CONDITIONS.—A

8 group health plan or health insurance issuer may condi9 tion coverage of continued treatment by a provider under

10 subsection (a)(1)(B) upon the provider agreeing to the fol11 lowing terms and conditions:

12 (1) The provider agrees to accept reimburse13 ment from the plan or issuer and individual involved

14 (with respect to cost-sharing) at the rates applicable

15 prior to the start of the transitional period as pay16 ment in full (or, in the case described in subsection

17 (a)(2), at the rates applicable under the replacement

18 plan or issuer after the date of the termination of

19 the contract with the health insurance issuer) and

20 not to impose cost-sharing with respect to the indi21 vidual in an amount that would exceed the cost-shar22 ing that could have been imposed if the contract re23 ferred to in subsection (a)(1) had not been termi24 nated.
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1 (2) The provider agrees to adhere to the quality

2 assurance standards of the plan or issuer responsible

3 for payment under paragraph (1) and to provide to

4 such plan or issuer necessary medical information

5 related to the care provided.

6 (3) The provider agrees otherwise to adhere to

7 such plan’s or issuer’s policies and procedures, in8 cluding procedures regarding referrals and obtaining

9 prior authorization and providing services pursuant

10 to a treatment plan (if any) approved by the plan or

11 issuer.

12 (d) CONSTRUCTION.—Nothing in this section shall be

13 construed to require the coverage of benefits which would

14 not have been covered if the provider involved remained

15 a participating provider.

16 SEC. ll106. COVERAGE FOR INDIVIDUALS PARTICIPATING

17 IN APPROVED CLINICAL TRIALS.

18 (a) COVERAGE.—

19 (1) IN GENERAL.—If a group health plan, or

20 health insurance issuer that is providing health in21 surance coverage, provides coverage to a qualified in22 dividual (as defined in subsection (b)), the plan or

23 issuer—
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1 (A) may not deny the individual participa2 tion in the clinical trial referred to in subsection

3 (b)(2);

4 (B) subject to subsection (c), may not deny

5 (or limit or impose additional conditions on) the

6 coverage of routine patient costs for items and

7 services furnished in connection with participa8 tion in the trial; and

9 (C) may not discriminate against the indi10 vidual on the basis of the enrollee’s participa11 tion in such trial.

12 (2) EXCLUSION OF CERTAIN COSTS.—For pur13 poses of paragraph (1)(B), routine patient costs do

14 not include the cost of the tests or measurements

15 conducted primarily for the purpose of the clinical

16 trial involved.

17 (3) USE OF IN-NETWORK PROVIDERS.—If one

18 or more participating providers is participating in a

19 clinical trial, nothing in paragraph (1) shall be con20 strued as preventing a plan or issuer from requiring

21 that a qualified individual participate in the trial

22 through such a participating provider if the provider

23 will accept the individual as a participant in the

24 trial.
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1 (b) QUALIFIED INDIVIDUAL DEFINED.—For pur2 poses of subsection (a), the term ‘‘qualified individual’’

3 means an individual who is a participant or beneficiary

4 in a group health plan, or who is an enrollee under health

5 insurance coverage, and who meets the following condi6 tions:

7 (1)(A) The individual has a life-threatening or

8 serious illness for which no standard treatment is ef9 fective.

10 (B) The individual is eligible to participate in

11 an approved clinical trial according to the trial pro12 tocol with respect to treatment of such illness.

13 (C) The individual’s participation in the trial

14 offers meaningful potential for significant clinical

15 benefit for the individual.

16 (2) Either—

17 (A) the referring physician is a partici18 pating health care professional and has con19 cluded that the individual’s participation in

20 such trial would be appropriate based upon the

21 individual meeting the conditions described in

22 paragraph (1); or

23 (B) the participant, beneficiary, or enrollee

24 provides medical and scientific information es25 tablishing that the individual’s participation in
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1 such trial would be appropriate based upon the

2 individual meeting the conditions described in

3 paragraph (1).

4 (c) PAYMENT.—

5 (1) IN GENERAL.—Under this section a group

6 health plan or health insurance issuer shall provide

7 for payment for routine patient costs described in

8 subsection (a)(2) but is not required to pay for costs

9 of items and services that are reasonably expected

10 (as determined by the Secretary) to be paid for by

11 the sponsors of an approved clinical trial.

12 (2) PAYMENT RATE.—In the case of covered

13 items and services provided by—

14 (A) a participating provider, the payment

15 rate shall be at the agreed upon rate, or

16 (B) a nonparticipating provider, the pay17 ment rate shall be at the rate the plan or issuer

18 would normally pay for comparable services

19 under subparagraph (A).

20 (d) APPROVED CLINICAL TRIAL DEFINED.—

21 (1) IN GENERAL.—In this section, the term

22 ‘‘approved clinical trial’’ means a clinical research

23 study or clinical investigation approved and funded

24 (which may include funding through in-kind con25 tributions) by one or more of the following:
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1 (A) The National Institutes of Health.

2 (B) A cooperative group or center of the

3 National Institutes of Health.

4 (C) Either of the following if the condi5 tions described in paragraph (2) are met:

6 (i) The Department of Veterans Af7 fairs.

8 (ii) The Department of Defense.

9 (2) CONDITIONS FOR DEPARTMENTS.—The

10 conditions described in this paragraph, for a study

11 or investigation conducted by a Department, are

12 that the study or investigation has been reviewed

13 and approved through a system of peer review that

14 the Secretary determines—

15 (A) to be comparable to the system of peer

16 review of studies and investigations used by the

17 National Institutes of Health, and

18 (B) assures unbiased review of the highest

19 scientific standards by qualified individuals who

20 have no interest in the outcome of the review.

21 (e) CONSTRUCTION.—Nothing in this section shall be

22 construed to limit a plan’s or issuer’s coverage with re23 spect to clinical trials.
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1 SEC. ll107. ACCESS TO NEEDED PRESCRIPTION DRUGS.

2 (a) IN GENERAL.—If a group health plan, or health

3 insurance issuer that offers health insurance coverage,

4 provides benefits with respect to prescription drugs but

5 the coverage limits such benefits to drugs included in a

6 formulary, the plan or issuer shall—

7 (1) ensure participation of participating physi8 cians and pharmacists in the development of the for9 mulary;

10 (2) disclose to providers and, disclose upon re11 quest under section ll121(c)(6) to participants,

12 beneficiaries, and enrollees, the nature of the for13 mulary restrictions; and

14 (3) consistent with the standards for a utiliza15 tion review program under section ll115, provide

16 for exceptions from the formulary limitation when a

17 non-formulary alternative is medically indicated.

18 (b) COVERAGE OF APPROVED DRUGS AND MEDICAL

19 DEVICES.—

20 (1) IN GENERAL.—A group health plan (or

21 health insurance coverage offered in connection with

22 such a plan) that provides any coverage of prescrip23 tion drugs or medical devices shall not deny coverage

24 of such a drug or device on the basis that the use

25 is investigational, if the use—

26 (A) in the case of a prescription drug—
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1 (i) is included in the labeling author2 ized by the application in effect for the

3 drug pursuant to subsection (b) or (j) of

4 section 505 of the Federal Food, Drug,

5 and Cosmetic Act, without regard to any

6 postmarketing requirements that may

7 apply under such Act; or

8 (ii) is included in the labeling author9 ized by the application in effect for the

10 drug under section 351 of the Public

11 Health Service Act, without regard to any

12 postmarketing requirements that may

13 apply pursuant to such section; or

14 (B) in the case of a medical device, is in15 cluded in the labeling authorized by a regula16 tion under subsection (d) or (3) of section 513

17 of the Federal Food, Drug, and Cosmetic Act,

18 an order under subsection (f) of such section, or

19 an application approved under section 515 of

20 such Act, without regard to any postmarketing

21 requirements that may apply under such Act.

22 (2) CONSTRUCTION.—Nothing in this sub23 section shall be construed as requiring a group

24 health plan (or health insurance coverage offered in
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1 connection with such a plan) to provide any coverage

2 of prescription drugs or medical devices.

3 SEC. ll108. ADEQUACY OF PROVIDER NETWORK.

4 (a) IN GENERAL.—Each group health plan, and each

5 health insurance issuer offering health insurance coverage,

6 that provides benefits, in whole or in part, through partici7 pating health care providers shall have (in relation to the

8 coverage) a sufficient number, distribution, and variety of

9 qualified participating health care providers to ensure that

10 all covered health care services, including specialty serv11 ices, will be available and accessible in a timely manner

12 to all participants, beneficiaries, and enrollees under the

13 plan or coverage. This subsection shall only apply to a

14 plan’s or issuer’s application of restrictions on the partici15 pation of health care providers in a network and shall not

16 be construed as requiring a plan or issuer to create or

17 establish new health care providers in an area.

18 (b) TREATMENT OF CERTAIN PROVIDERS.—The

19 qualified health care providers under subsection (a) may

20 include Federally qualified health centers, rural health

21 clinics, migrant health centers, and other essential com22 munity providers located in the service area of the plan

23 or issuer and shall include such providers if necessary to

24 meet the standards established to carry out such sub25 section.
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1 SEC. ll109. NONDISCRIMINATION IN DELIVERY OF SERV2 ICES.

3 (a) APPLICATION TO DELIVERY OF SERVICES.—Sub4 ject to subsection (b), a group health plan, and health in5 surance issuer in relation to health insurance coverage,

6 may not discriminate against a participant, beneficiary, or

7 enrollee in the delivery of health care services consistent

8 with the benefits covered under the plan or coverage or

9 as required by law based on race, color, ethnicity, national

10 origin, religion, sex, age, mental or physical disability, sex11 ual orientation, genetic information, or source of payment.

12 (b) CONSTRUCTION.—Nothing in subsection (a) shall

13 be construed as relating to the eligibility to be covered,

14 or the offering (or guaranteeing the offer) of coverage,

15 under a plan or health insurance coverage, the application

16 of any pre-existing condition exclusion consistent with ap17 plicable law, or premiums charged under such plan or cov18 erage. Pursuant to section ll192(b), except as provided

19 in section ll152, nothing in this subtitle shall be con20 strued as requiring a group health plan or health insur21 ance issuer to provide specific benefits under the terms

22 of such plan or coverage.

23 CHAPTER 2—QUALITY ASSURANCE

24 SEC. ll111. INTERNAL QUALITY ASSURANCE PROGRAM.

25 (a) REQUIREMENT.—A group health plan, and a

26 health insurance issuer that offers health insurance cov-
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1 erage, shall establish and maintain an ongoing, internal

2 quality assurance and continuous quality improvement

3 program that meets the requirements of subsection (b).

4 (b) PROGRAM REQUIREMENTS.—The requirements of

5 this subsection for a quality improvement program of a

6 plan or issuer are as follows:

7 (1) ADMINISTRATION.—The plan or issuer has

8 a separate identifiable unit with responsibility for

9 administration of the program.

10 (2) WRITTEN PLAN.—The plan or issuer has a

11 written plan for the program that is updated annu12 ally and that specifies at least the following:

13 (A) The activities to be conducted.

14 (B) The organizational structure.

15 (C) The duties of the medical director.

16 (D) Criteria and procedures for the assess17 ment of quality.

18 (3) SYSTEMATIC REVIEW.—The program pro19 vides for systematic review of the type of health

20 services provided, consistency of services provided

21 with good medical practice, and patient outcomes.

22 (4) QUALITY CRITERIA.—The program—

23 (A) uses criteria that are based on per24 formance and patient outcomes where feasible

25 and appropriate;
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1 (B) includes criteria that are directed spe2 cifically at meeting the needs of at-risk popu3 lations and covered individuals with chronic

4 conditions or severe illnesses, including gender5 specific criteria and pediatric-specific criteria

6 where available and appropriate;

7 (C) includes methods for informing covered

8 individuals of the benefit of preventive care and

9 what specific benefits with respect to preventive

10 care are covered under the plan or coverage;

11 and

12 (D) makes available to the public a de13 scription of the criteria used under subpara14 graph (A).

15 (5) SYSTEM FOR REPORTING.—The program

16 has procedures for reporting of possible quality con17 cerns by providers and enrollees and for remedial ac18 tions to correct quality problems, including written

19 procedures for responding to concerns and taking

20 appropriate corrective action.

21 (6) DATA ANALYSIS.—The program provides,

22 using data that include the data collected under sec23 tion ll112, for an analysis of the plan’s or

24 issuer’s performance on quality measures.
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1 (7) DRUG UTILIZATION REVIEW.—The program

2 provides for a drug utilization review program in ac3 cordance with section ll114.

4 (c) DEEMING.—For purposes of subsection (a), the

5 requirements of—

6 (1) subsection (b) (other than paragraph (5))

7 are deemed to be met with respect to a health insur8 ance issuer that is a qualified health maintenance

9 organization (as defined in section 1310(c) of the

10 Public Health Service Act); or

11 (2) subsection (b) are deemed to be met with

12 respect to a health insurance issuer that is accred13 ited by a national accreditation organization that the

14 Secretary certifies as applying, as a condition of cer15 tification, standards at least as stringent as those

16 required for a quality improvement program under

17 subsection (b).

18 (d) VARIATION PERMITTED.—The Secretary may

19 provide for variations in the application of the require20 ments of this section to group health plans and health in21 surance issuers based upon differences in the delivery sys22 tem among such plans and issuers as the Secretary deems

23 appropriate.
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1 SEC. ll112. COLLECTION OF STANDARDIZED DATA.

2 (a) IN GENERAL.—A group health plan and a health

3 insurance issuer that offers health insurance coverage

4 shall collect uniform quality data that include a minimum

5 uniform data set described in subsection (b).

6 (b) MINIMUM UNIFORM DATA SET.—The Secretary

7 shall specify (and may from time to time update) the data

8 required to be included in the minimum uniform data set

9 under subsection (a) and the standard format for such

10 data. Such data shall include at least—

11 (1) aggregate utilization data;

12 (2) data on the demographic characteristics of

13 participants, beneficiaries, and enrollees;

14 (3) data on disease-specific and age-specific

15 mortality rates and (to the extent feasible) morbidity

16 rates of such individuals;

17 (4) data on satisfaction (including satisfaction

18 with respect to services to children) of such individ19 uals, including data on voluntary disenrollment and

20 grievances; and

21 (5) data on quality indicators and health out22 comes, including, to the extent feasible and appro23 priate, data on pediatric cases and on a gender-spe24 cific basis.

25 (c) AVAILABILITY.—A summary of the data collected

26 under subsection (a) shall be disclosed under section
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1 ll121(b)(9). The Secretary shall be provided access to

2 all the data so collected.

3 (d) VARIATION PERMITTED.—The Secretary may

4 provide for variations in the application of the require5 ments of this section to group health plans and health in6 surance issuers based upon differences in the delivery sys7 tem among such plans and issuers as the Secretary deems

8 appropriate.

9 (e) EXCEPTION FOR NON-MEDICAL, RELIGIOUS

10 CARE PROVIDERS.—The requirements of subsection (a),

11 insofar as they may apply to a provider of health care,

12 do not apply to a provider that provides no medical care

13 and that provides only a religious method of healing or

14 religious nonmedical nursing care.

15 SEC. ll113. PROCESS FOR SELECTION OF PROVIDERS.

16 (a) IN GENERAL.—A group health plan and a health

17 insurance issuer that offers health insurance coverage

18 shall, if it provides benefits through participating health

19 care professionals, have a written process for the selection

20 of participating health care professionals, including min21 imum professional requirements.

22 (b) VERIFICATION OF BACKGROUND.—Such process

23 shall include verification of a health care provider’s license

24 and a history of suspension or revocation.
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1 (c) RESTRICTION.—Such process shall not use a

2 high-risk patient base or location of a provider in an area

3 with residents with poorer health status as a basis for ex4 cluding providers from participation.

5 (d) NONDISCRIMINATION BASED ON LICENSURE.—

6 (1) IN GENERAL.—Such process shall not dis7 criminate with respect to participation or indem8 nification as to any provider who is acting within the

9 scope of the provider’s license or certification under

10 applicable State law, solely on the basis of such li11 cense or certification.

12 (2) CONSTRUCTION.—Paragraph (1) shall not

13 be construed—

14 (A) as requiring the coverage under a plan

15 or coverage of particular benefits or services or

16 to prohibit a plan or issuer from including pro17 viders only to the extent necessary to meet the

18 needs of the plan’s or issuer’s participants,

19 beneficiaries, or enrollees or from establishing

20 any measure designed to maintain quality and

21 control costs consistent with the responsibilities

22 of the plan or issuer; or

23 (B) to override any State licensure or

24 scope-of-practice law.

25 (e) GENERAL NONDISCRIMINATION.—
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1 (1) IN GENERAL.—Subject to paragraph (2),

2 such process shall not discriminate with respect to

3 selection of a health care professional to be a partici4 pating health care provider, or with respect to the

5 terms and conditions of such participation, based on

6 the professional’s race, color, religion, sex, national

7 origin, age, sexual orientation, or disability (con8 sistent with the Americans with Disabilities Act of

9 1990).

10 (2) RULES.—The appropriate Secretary may

11 establish such definitions, rules, and exceptions as

12 may be appropriate to carry out paragraph (1), tak13 ing into account comparable definitions, rules, and

14 exceptions in effect under employment-based non15 discrimination laws and regulations that relate to

16 each of the particular bases for discrimination de17 scribed in such paragraph.

18 SEC. ll114. DRUG UTILIZATION PROGRAM.

19 A group health plan, and a health insurance issuer

20 that provides health insurance coverage, that includes ben21 efits for prescription drugs shall establish and maintain,

22 as part of its internal quality assurance and continuous

23 quality improvement program under section ll111, a

24 drug utilization program which—
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•S 1256 PCS

1 (1) encourages appropriate use of prescription

2 drugs by participants, beneficiaries, and enrollees

3 and providers, and

4 (2) takes appropriate action to reduce the inci5 dence of improper drug use and adverse drug reac6 tions and interactions.

7 SEC. ll115. STANDARDS FOR UTILIZATION REVIEW AC8 TIVITIES.

9 (a) COMPLIANCE WITH REQUIREMENTS.—

10 (1) IN GENERAL.—A group health plan, and a

11 health insurance issuer that provides health insur12 ance coverage, shall conduct utilization review activi13 ties in connection with the provision of benefits

14 under such plan or coverage only in accordance with

15 a utilization review program that meets the require16 ments of this section.

17 (2) USE OF OUTSIDE AGENTS.—Nothing in this

18 section shall be construed as preventing a group

19 health plan or health insurance issuer from arrang20 ing through a contract or otherwise for persons or

21 entities to conduct utilization review activities on be22 half of the plan or issuer, so long as such activities

23 are conducted in accordance with a utilization review

24 program that meets the requirements of this section.
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1 (3) UTILIZATION REVIEW DEFINED.—For pur2 poses of this section, the terms ‘‘utilization review’’

3 and ‘‘utilization review activities’’ mean procedures

4 used to monitor or evaluate the clinical necessity,

5 appropriateness, efficacy, or efficiency of health care

6 services, procedures or settings, and includes pro7 spective review, concurrent review, second opinions,

8 case management, discharge planning, or retrospec9 tive review.

10 (b) WRITTEN POLICIES AND CRITERIA.—

11 (1) WRITTEN POLICIES.—A utilization review

12 program shall be conducted consistent with written

13 policies and procedures that govern all aspects of the

14 program.

15 (2) USE OF WRITTEN CRITERIA.—

16 (A) IN GENERAL.—Such a program shall

17 utilize written clinical review criteria developed

18 pursuant to the program with the input of ap19 propriate physicians. Such criteria shall include

20 written clinical review criteria described in sec21 tion ll111(b)(4)(B).

22 (B) CONTINUING USE OF STANDARDS IN

23 RETROSPECTIVE REVIEW.—If a health care

24 service has been specifically pre-authorized or

25 approved for an enrollee under such a program,
37

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1 the program shall not, pursuant to retrospective

2 review, revise or modify the specific standards,

3 criteria, or procedures used for the utilization

4 review for procedures, treatment, and services

5 delivered to the enrollee during the same course

6 of treatment.

7 (c) CONDUCT OF PROGRAM ACTIVITIES.—

8 (1) ADMINISTRATION BY HEALTH CARE PRO9 FESSIONALS.—A utilization review program shall be

10 administered by qualified health care professionals

11 who shall oversee review decisions. In this sub12 section, the term ‘‘health care professional’’ means a

13 physician or other health care practitioner licensed,

14 accredited, or certified to perform specified health

15 services consistent with State law.

16 (2) USE OF QUALIFIED, INDEPENDENT PER17 SONNEL.—

18 (A) IN GENERAL.—A utilization review

19 program shall provide for the conduct of utiliza20 tion review activities only through personnel

21 who are qualified and, to the extent required,

22 who have received appropriate training in the

23 conduct of such activities under the program.

24 (B) PEER REVIEW OF SAMPLE OF AD25 VERSE CLINICAL DETERMINATIONS.—Such a
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1 program shall provide that clinical peers (as de2 fined in section ll191(c)(2)) shall evaluate

3 the clinical appropriateness of at least a sample

4 of adverse clinical determinations.

5 (C) PROHIBITION OF CONTINGENT COM6 PENSATION ARRANGEMENTS.—Such a program

7 shall not, with respect to utilization review ac8 tivities, permit or provide compensation or any9 thing of value to its employees, agents, or con10 tractors in a manner that—

11 (i) provides incentives, direct or indi12 rect, for such persons to make inappro13 priate review decisions, or

14 (ii) is based, directly or indirectly, on

15 the quantity or type of adverse determina16 tions rendered.

17 (D) PROHIBITION OF CONFLICTS.—Such a

18 program shall not permit a health care profes19 sional who provides health care services to an

20 individual to perform utilization review activi21 ties in connection with the health care services

22 being provided to the individual.

23 (3) ACCESSIBILITY OF REVIEW.—Such a pro24 gram shall provide that appropriate personnel per25 forming utilization review activities under the pro-
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1 gram are reasonably accessible by toll-free telephone

2 during normal business hours to discuss patient care

3 and allow response to telephone requests, and that

4 appropriate provision is made to receive and respond

5 promptly to calls received during other hours.

6 (4) LIMITS ON FREQUENCY.—Such a program

7 shall not provide for the performance of utilization

8 review activities with respect to a class of services

9 furnished to an individual more frequently than is

10 reasonably required to assess whether the services

11 under review are medically necessary or appropriate.

12 (5) LIMITATION ON INFORMATION REQUESTS.—

13 Under such a program, information shall be required

14 to be provided by health care providers only to the

15 extent it is necessary to perform the utilization re16 view activity involved.

17 (d) DEADLINE FOR DETERMINATIONS.—

18 (1) PRIOR AUTHORIZATION SERVICES.—Except

19 as provided in paragraph (2), in the case of a utili20 zation review activity involving the prior authoriza21 tion of health care items and services for an indi22 vidual, the utilization review program shall make a

23 determination concerning such authorization, and

24 provide notice of the determination to the individual

25 or the individual’s designee and the individual’s
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1 health care provider by telephone and in printed

2 form, as soon as possible in accordance with the

3 medical exigencies of the cases, and in no event later

4 than 3 business days after the date of receipt of in5 formation that is reasonably necessary to make such

6 determination.

7 (2) CONTINUED CARE.—In the case of a utiliza8 tion review activity involving authorization for con9 tinued or extended health care services for an indi10 vidual, or additional services for an individual under11 going a course of continued treatment prescribed by

12 a health care provider, the utilization review pro13 gram shall make a determination concerning such

14 authorization, and provide notice of the determina15 tion to the individual or the individual’s designee

16 and the individual’s health care provider by tele17 phone and in printed form, as soon as possible in ac18 cordance with the medical exigencies of the cases,

19 and in no event later than 1 business day after the

20 date of receipt of information that is reasonably nec21 essary to make such determination. Such notice shall

22 include, with respect to continued or extended health

23 care services, the number of extended services ap24 proved, the new total of approved services, the date

25 of onset of services, and the next review date, if any.
41

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1 (3) PREVIOUSLY PROVIDED SERVICES.—In the

2 case of a utilization review activity involving retro3 spective review of health care services previously pro4 vided for an individual, the utilization review pro5 gram shall make a determination concerning such

6 services, and provide notice of the determination to

7 the individual or the individual’s designee and the

8 individual’s health care provider by telephone and in

9 printed form, within 30 days of the date of receipt

10 of information that is reasonably necessary to make

11 such determination.

12 (4) REFERENCE TO SPECIAL RULES FOR EMER13 GENCY SERVICES, MAINTENANCE CARE, AND POST14 STABILIZATION CARE.—For waiver of prior author15 ization requirements in certain cases involving emer16 gency services and maintenance care and post-sta17 bilization care, see subsections (a)(1) and (b) of sec18 tion ll101, respectively.

19 (e) NOTICE OF ADVERSE DETERMINATIONS.—

20 (1) IN GENERAL.—Notice of an adverse deter21 mination under a utilization review program shall be

22 provided in printed form and shall include—

23 (A) the reasons for the determination (in24 cluding the clinical rationale);
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1 (B) instructions on how to initiate an ap2 peal under section ll132; and

3 (C) notice of the availability, upon request

4 of the individual (or the individual’s designee)

5 of the clinical review criteria relied upon to

6 make such determination.

7 (2) SPECIFICATION OF ANY ADDITIONAL INFOR8 MATION.—Such a notice shall also specify what (if

9 any) additional necessary information must be pro10 vided to, or obtained by, the person making the de11 termination in order to make a decision on such an

12 appeal.

13 SEC. ll116. HEALTH CARE QUALITY ADVISORY BOARD.

14 (a) ESTABLISHMENT.—The President shall establish

15 an advisory board to provide information to Congress and

16 the administration on issues relating to quality monitoring

17 and improvement in the health care provided under group

18 health plans and health insurance coverage.

19 (b) NUMBER AND APPOINTMENT.—The advisory

20 board shall be composed of the Secretary of Health and

21 Human Services (or the Secretary’s designee), the Sec22 retary of Labor (or the Secretary’s designee), and 20 addi23 tional members appointed by the President, in consulta24 tion with the Majority and Minority Leaders of the Senate
43

•S 1256 PCS

1 and House of Representatives. The members so appointed

2 shall include individuals with expertise in—

3 (1) consumer needs;

4 (2) education and training of health profes5 sionals;

6 (3) health care services;

7 (4) health plan management;

8 (5) health care accreditation, quality assurance,

9 improvement, measurement, and oversight;

10 (6) medical practice, including practicing physi11 cians;

12 (7) prevention and public health; and

13 (8) public and private group purchasing for

14 small and large employers or groups.

15 (c) DUTIES.—The advisory board shall—

16 (1) identify, update, and disseminate measures

17 of health care quality for group health plans and

18 health insurance issuers, including network and non19 network plans;

20 (2) advise the Secretary on the development

21 and maintenance of the minimum data set in section

22 ll112(b); and

23 (3) advise the Secretary on standardized for24 mats for information on group health plans and

25 health insurance coverage.
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1 The measures identified under paragraph (1) may be used

2 on a voluntary basis by such plans and issuers. In carrying

3 out paragraph (1), the advisory board shall consult and

4 cooperate with national health care standard setting bod5 ies which define quality indicators, the Agency for Health

6 Care Policy and Research, the Institute of Medicine, and

7 other public and private entities that have expertise in

8 health care quality.

9 (d) REPORT.—The advisory board shall provide an

10 annual report to Congress and the President on the qual11 ity of the health care in the United States and national

12 and regional trends in health care quality. Such report

13 shall include a description of determinants of health care

14 quality and measurements of practice and quality varia15 bility within the United States.

16 (e) SECRETARIAL CONSULTATION.—In serving on

17 the advisory board, the Secretaries of Health and Human

18 Services and Labor (or their designees) shall consult with

19 the Secretaries responsible for other Federal health insur20 ance and health care programs.

21 (f) VACANCIES.—Any vacancy on the board shall be

22 filled in such manner as the original appointment. Mem23 bers of the board shall serve without compensation but

24 shall be reimbursed for travel, subsistence, and other nec25 essary expenses incurred by them in the performance of
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1 their duties. Administrative support, scientific support,

2 and technical assistance for the advisory board shall be

3 provided by the Secretary of Health and Human Services.

4 (g) CONTINUATION.—Section 14(a)(2)(B) of the

5 Federal Advisory Committee Act (5 U.S.C. App.; relating

6 to the termination of advisory committees) shall not apply

7 to the advisory board.

8 CHAPTER 3—PATIENT INFORMATION

9 SEC. ll121. PATIENT INFORMATION.

10 (a) DISCLOSURE REQUIREMENT.—

11 (1) GROUP HEALTH PLANS.—A group health

12 plan shall—

13 (A) provide to participants and bene14 ficiaries at the time of initial coverage under

15 the plan (or the effective date of this section, in

16 the case of individuals who are participants or

17 beneficiaries as of such date), and at least an18 nually thereafter, the information described in

19 subsection (b) in printed form;

20 (B) provide to participants and bene21 ficiaries, within a reasonable period (as speci22 fied by the appropriate Secretary) before or

23 after the date of significant changes in the in24 formation described in subsection (b), informa-
46

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1 tion in printed form on such significant

2 changes; and

3 (C) upon request, make available to par4 ticipants and beneficiaries, the applicable au5 thority, and prospective participants and bene6 ficiaries, the information described in sub7 section (b) or (c) in printed form.

8 (2) HEALTH INSURANCE ISSUERS.—A health

9 insurance issuer in connection with the provision of

10 health insurance coverage shall—

11 (A) provide to individuals enrolled under

12 such coverage at the time of enrollment, and at

13 least annually thereafter, the information de14 scribed in subsection (b) in printed form;

15 (B) provide to enrollees, within a reason16 able period (as specified by the appropriate Sec17 retary) before or after the date of significant

18 changes in the information described in sub19 section (b), information in printed form on such

20 significant changes; and

21 (C) upon request, make available to the

22 applicable authority, to individuals who are pro23 spective enrollees, and to the public the infor24 mation described in subsection (b) or (c) in

25 printed form.
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1 (b) INFORMATION PROVIDED.—The information de2 scribed in this subsection with respect to a group health

3 plan or health insurance coverage offered by a health in4 surance issuer includes the following:

5 (1) SERVICE AREA.—The service area of the

6 plan or issuer.

7 (2) BENEFITS.—Benefits offered under the

8 plan or coverage, including—

9 (A) covered benefits, including benefit lim10 its and coverage exclusions;

11 (B) cost sharing, such as deductibles, coin12 surance, and copayment amounts, including any

13 liability for balance billing, any maximum limi14 tations on out of pocket expenses, and the max15 imum out of pocket costs for services that are

16 provided by nonparticipating providers or that

17 are furnished without meeting the applicable

18 utilization review requirements;

19 (C) the extent to which benefits may be ob20 tained from nonparticipating providers;

21 (D) the extent to which a participant, ben22 eficiary, or enrollee may select from among par23 ticipating providers and the types of providers

24 participating in the plan or issuer network;
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1 (E) process for determining experimental

2 coverage; and

3 (F) use of a prescription drug formulary.

4 (3) ACCESS.—A description of the following:

5 (A) The number, mix, and distribution of

6 providers under the plan or coverage.

7 (B) Out-of-network coverage (if any) pro8 vided by the plan or coverage.

9 (C) Any point-of-service option (including

10 any supplemental premium or cost-sharing for

11 such option).

12 (D) The procedures for participants, bene13 ficiaries, and enrollees to select, access, and

14 change participating primary and specialty pro15 viders.

16 (E) The rights and procedures for obtain17 ing referrals (including standing referrals) to

18 participating and nonparticipating providers.

19 (F) The name, address, and telephone

20 number of participating health care providers

21 and an indication of whether each such provider

22 is available to accept new patients.

23 (G) Any limitations imposed on the selec24 tion of qualifying participating health care pro-
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1 viders, including any limitations imposed under

2 section ll103(b)(2).

3 (H) How the plan or issuer addresses the

4 needs of participants, beneficiaries, and enroll5 ees and others who do not speak English or

6 who have other special communications needs in

7 accessing providers under the plan or coverage,

8 including the provision of information described

9 in this subsection and subsection (c) to such in10 dividuals and including the provision of infor11 mation in a language other than English if 5

12 percent of the number of participants, bene13 ficiaries, and enrollees communicate in that lan14 guage instead of English.

15 (4) OUT-OF-AREA COVERAGE.—Out-of-area cov16 erage provided by the plan or issuer.

17 (5) EMERGENCY COVERAGE.—Coverage of

18 emergency services, including—

19 (A) the appropriate use of emergency serv20 ices, including use of the 911 telephone system

21 or its local equivalent in emergency situations

22 and an explanation of what constitutes an

23 emergency situation;

24 (B) the process and procedures of the plan

25 or issuer for obtaining emergency services; and
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•S 1256 PCS

1 (C) the locations of (i) emergency depart2 ments, and (ii) other settings, in which plan

3 physicians and hospitals provide emergency

4 services and post-stabilization care.

5 (6) PERCENTAGE OF PREMIUMS USED FOR

6 BENEFITS (LOSS-RATIOS).—In the case of health in7 surance coverage only (and not with respect to group

8 health plans that do not provide coverage through

9 health insurance coverage), a description of the over10 all loss-ratio for the coverage (as defined in accord11 ance with rules established or recognized by the Sec12 retary of Health and Human Services).

13 (7) PRIOR AUTHORIZATION RULES.—Rules re14 garding prior authorization or other review require15 ments that could result in noncoverage or non16 payment.

17 (8) GRIEVANCE AND APPEALS PROCEDURES.—

18 All appeal or grievance rights and procedures under

19 the plan or coverage, including the method for filing

20 grievances and the time frames and circumstances

21 for acting on grievances and appeals, who is the ap22 plicable authority with respect to the plan or issuer,

23 and the availability of assistance through an om24 budsman to individuals in relation to group health

25 plans and health insurance coverage.
51

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1 (9) QUALITY ASSURANCE.—A summary descrip2 tion of the data on quality collected under section

3 ll112(a), including a summary description of the

4 data on satisfaction of participants, beneficiaries,

5 and enrollees (including data on individual voluntary

6 disenrollment and grievances and appeals) described

7 in section ll112(b)(4).

8 (10) SUMMARY OF PROVIDER FINANCIAL IN9 CENTIVES.—A summary description of the informa10 tion on the types of financial payment incentives

11 (described in section 1852(j)(4) of the Social Secu12 rity Act) provided by the plan or issuer under the

13 coverage.

14 (11) INFORMATION ON ISSUER.—Notice of ap15 propriate mailing addresses and telephone numbers

16 to be used by participants, beneficiaries, and enroll17 ees in seeking information or authorization for treat18 ment.

19 (12) AVAILABILITY OF INFORMATION ON RE20 QUEST.—Notice that the information described in

21 subsection (c) is available upon request.

22 (c) INFORMATION MADE AVAILABLE UPON RE23 QUEST.—The information described in this subsection is

24 the following:
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1 (1) UTILIZATION REVIEW ACTIVITIES.—A de2 scription of procedures used and requirements (in3 cluding circumstances, time frames, and appeal

4 rights) under any utilization review program under

5 section ll115, including under any drug for6 mulary program under section ll107.

7 (2) GRIEVANCE AND APPEALS INFORMATION.—

8 Information on the number of grievances and ap9 peals and on the disposition in the aggregate of such

10 matters.

11 (3) METHOD OF PHYSICIAN COMPENSATION.—

12 An overall summary description as to the method of

13 compensation of participating physicians, including

14 information on the types of financial payment incen15 tives (described in section 1852(j)(4) of the Social

16 Security Act) provided by the plan or issuer under

17 the coverage.

18 (4) SPECIFIC INFORMATION ON CREDENTIALS

19 OF PARTICIPATING PROVIDERS.—In the case of each

20 participating provider, a description of the creden21 tials of the provider.

22 (5) CONFIDENTIALITY POLICIES AND PROCE23 DURES.—A description of the policies and proce24 dures established to carry out section ll122.
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•S 1256 PCS

1 (6) FORMULARY RESTRICTIONS.—A description

2 of the nature of any drug formula restrictions.

3 (7) PARTICIPATING PROVIDER LIST.—A list of

4 current participating health care providers.

5 (d) FORM OF DISCLOSURE.—

6 (1) UNIFORMITY.—Information required to be

7 disclosed under this section shall be provided in ac8 cordance with uniform, national reporting standards

9 specified by the Secretary, after consultation with

10 applicable State authorities, so that prospective en11 rollees may compare the attributes of different

12 issuers and coverage offered within an area.

13 (2) INFORMATION INTO HANDBOOK.—Nothing

14 in this section shall be construed as preventing a

15 group health plan or health insurance issuer from

16 making the information under subsections (b) and

17 (c) available to participants, beneficiaries, and en18 rollees through an enrollee handbook or similar pub19 lication.

20 (3) UPDATING PARTICIPATING PROVIDER IN21 FORMATION.—The information on participating

22 health care providers described in subsection

23 (b)(3)(C) shall be updated within such reasonable

24 period as determined appropriate by the Secretary.

25 Nothing in this section shall prevent an issuer from
54

•S 1256 PCS

1 changing or updating other information made avail2 able under this section.

3 (e) CONSTRUCTION.—Nothing in this section shall be

4 construed as requiring public disclosure of individual con5 tracts or financial arrangements between a group health

6 plan or health insurance issuer and any provider.

7 SEC. ll122. PROTECTION OF PATIENT CONFIDENTIALITY.

8 Insofar as a group health plan, or a health insurance

9 issuer that offers health insurance coverage, maintains

10 medical records or other health information regarding par11 ticipants, beneficiaries, and enrollees, the plan or issuer

12 shall establish procedures—

13 (1) to safeguard the privacy of any individually

14 identifiable enrollee information;

15 (2) to maintain such records and information in

16 a manner that is accurate and timely, and

17 (3) to assure timely access of such individuals

18 to such records and information.

19 SEC. ll123. HEALTH INSURANCE OMBUDSMEN.

20 (a) IN GENERAL.—Each State that obtains a grant

21 under subsection (c) shall provide for creation and oper22 ation of a Health Insurance Ombudsman through a con23 tract with a not-for-profit organization that operates inde24 pendent of group health plans and health insurance
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1 issuers. Such Ombudsman shall be responsible for at least

2 the following:

3 (1) To assist consumers in the State in choos4 ing among health insurance coverage or among cov5 erage options offered within group health plans.

6 (2) To provide counseling and assistance to en7 rollees dissatisfied with their treatment by health in8 surance issuers and group health plans in regard to

9 such coverage or plans and with respect to griev10 ances and appeals regarding determinations under

11 such coverage or plans.

12 (b) FEDERAL ROLE.—In the case of any State that

13 does not provide for such an Ombudsman under sub14 section (a), the Secretary shall provide for the creation

15 and operation of a Health Insurance Ombudsman through

16 a contract with a not-for-profit organization that operates

17 independent of group health plans and health insurance

18 issuers and that is responsible for carrying out with re19 spect to that State the functions otherwise provided under

20 subsection (a) by a Health Insurance Ombudsman.

21 (c) AUTHORIZATION OF APPROPRIATIONS.—There

22 are authorized to be appropriated to the Secretary of

23 Health and Human Services such amounts as may be nec24 essary to provide for grants to States for contracts for
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1 Health Insurance Ombudsmen under subsection (a) or

2 contracts for such Ombudsmen under subsection (b).

3 (d) CONSTRUCTION.—Nothing in this section shall be

4 construed to prevent the use of other forms of enrollee

5 assistance.

6 CHAPTER 4—GRIEVANCE AND APPEALS

7 PROCEDURES

8 SEC. ll131. ESTABLISHMENT OF GRIEVANCE PROCESS.

9 (a) ESTABLISHMENT OF GRIEVANCE SYSTEM.—

10 (1) IN GENERAL.—A group health plan, and a

11 health insurance issuer in connection with the provi12 sion of health insurance coverage, shall establish and

13 maintain a system to provide for the presentation

14 and resolution of oral and written grievances

15 brought by individuals who are participants, bene16 ficiaries, or enrollees, or health care providers or

17 other individuals acting on behalf of an individual

18 and with the individual’s consent, regarding any as19 pect of the plan’s or issuer’s services.

20 (2) SCOPE.—The system shall include griev21 ances regarding access to and availability of services,

22 quality of care, choice and accessibility of providers,

23 network adequacy, and compliance with the require24 ments of this subtitle.
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1 (b) GRIEVANCE SYSTEM.—Such system shall include

2 the following components with respect to individuals who

3 are participants, beneficiaries, or enrollees:

4 (1) Written notification to all such individuals

5 and providers of the telephone numbers and business

6 addresses of the plan or issuer personnel responsible

7 for resolution of grievances and appeals.

8 (2) A system to record and document, over a

9 period of at least 3 previous years, all grievances

10 and appeals made and their status.

11 (3) A process providing for timely processing

12 and resolution of grievances.

13 (4) Procedures for follow-up action, including

14 the methods to inform the person making the griev15 ance of the resolution of the grievance.

16 (5) Notification to the continuous quality im17 provement program under section ll111(a) of all

18 grievances and appeals relating to quality of care.

19 SEC. ll132. INTERNAL APPEALS OF ADVERSE DETER20 MINATIONS.

21 (a) RIGHT OF APPEAL.—

22 (1) IN GENERAL.—A participant or beneficiary

23 in a group health plan, and an enrollee in health in24 surance coverage offered by a health insurance

25 issuer, and any provider or other person acting on
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1 behalf of such an individual with the individual’s

2 consent, may appeal any appealable decision (as de3 fined in paragraph (2)) under the procedures de4 scribed in this section and (to the extent applicable)

5 section ll133. Such individuals and providers

6 shall be provided with a written explanation of the

7 appeal process and the determination upon the con8 clusion of the appeals process and as provided in

9 section ll121(b)(8).

10 (2) APPEALABLE DECISION DEFINED.—In this

11 section, the term ‘‘appealable decision’’ means any of

12 the following:

13 (A) Denial, reduction, or termination of, or

14 failure to provide or make payment (in whole or

15 in part) for a benefit, including a failure to

16 cover an item or service for which benefits are

17 otherwise provided because it is determined to

18 be experimental or investigational or not medi19 cally necessary or appropriate.

20 (B) Failure to provide coverage of emer21 gency services or reimbursement of mainte22 nance care or post-stabilization care under sec23 tion ll101.

24 (C) Failure to provide a choice of provider

25 under section ll103.
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1 (D) Failure to provide qualified health care

2 providers under section ll103.

3 (E) Failure to provide access to specialty

4 and other care under section ll104.

5 (F) Failure to provide continuation of care

6 under section ll105.

7 (G) Failure to provide coverage of routine

8 patient costs in connection with an approval

9 clinical trial under section ll106.

10 (H) Failure to provide access to needed

11 drugs under section ll107(a)(3) or 107(b).

12 (I) Discrimination in delivery of services in

13 violation of section ll109.

14 (J) An adverse determination under a utili15 zation review program under section ll115.

16 (K) The imposition of a limitation that is

17 prohibited under section ll151.

18 (b) INTERNAL APPEAL PROCESS.—

19 (1) IN GENERAL.—Each group health plan and

20 health insurance issuer shall establish and maintain

21 an internal appeal process under which any partici22 pant, beneficiary, or enrollee, or any provider or

23 other person acting on behalf of such an individual

24 with the individual’s consent, who is dissatisfied with

25 any appealable decision has the opportunity to ap-
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1 peal the decision through an internal appeal process.

2 The appeal may be communicated orally.

3 (2) CONDUCT OF REVIEW.—

4 (A) IN GENERAL.—The process shall in5 clude a review of the decision by a physician or

6 other health care professional (or professionals)

7 who has been selected by the plan or issuer and

8 who has not been involved in the appealable de9 cision at issue in the appeal.

10 (B) AVAILABILITY AND PARTICIPATION OF

11 CLINICAL PEERS.—The individuals conducting

12 such review shall include one or more clinical

13 peers (as defined in section ll191(c)(2)) who

14 have not been involved in the appealable deci15 sion at issue in the appeal.

16 (3) DEADLINE.—

17 (A) IN GENERAL.—Subject to subsection

18 (c), the plan or issuer shall conclude each ap19 peal as soon as possible after the time of the re20 ceipt of the appeal in accordance with medical

21 exigencies of the case involved, but in no event

22 later than—

23 (i) 72 hours after the time of receipt

24 of an expedited appeal, and
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1 (ii) except as provided in subpara2 graph (B), 30 business days after such

3 time (or, if the participant, beneficiary, or

4 enrollee supplies additional information

5 that was not available to the plan or issuer

6 at the time of the receipt of the appeal,

7 after the date of supplying such additional

8 information) in the case of all other ap9 peals.

10 (B) EXTENSION.—In the case of an appeal

11 that does not relate to a decision regarding an

12 expedited appeal and that does not involve med13 ical exigencies, if a group health plan or health

14 insurance issuer is unable to conclude the ap15 peal within the time period provided under sub16 paragraph (A)(ii) due to circumstances beyond

17 the control of the plan or issuer, the deadline

18 shall be extended for up to an additional 10

19 business days if the plan or issuer provides, on

20 or before 10 days before the deadline otherwise

21 applicable, written notice to the participant,

22 beneficiary, or enrollee and the provider in23 volved of the extension and the reasons for the

24 extension.
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1 (4) NOTICE.—If a plan or issuer denies an ap2 peal, the plan or issuer shall provide the participant,

3 beneficiary, or enrollee and provider involved with

4 notice in printed form of the denial and the reasons

5 therefore, together with a notice in printed form of

6 rights to any further appeal.

7 (c) EXPEDITED REVIEW PROCESS.—

8 (1) IN GENERAL.—A group health plan, and a

9 health insurance issuer, shall establish procedures in

10 writing for the expedited consideration of appeals

11 under subsection (b) in situations in which the appli12 cation of the normal timeframe for making a deter13 mination could seriously jeopardize the life or health

14 of the participant, beneficiary, or enrollee (including

15 in the case of a child, development) or such an indi16 vidual’s ability to regain maximum function.

17 (2) PROCESS.—Under such procedures—

18 (A) the request for expedited appeal may

19 be submitted orally or in writing by an indi20 vidual or provider who is otherwise entitled to

21 request the appeal; and

22 (B) all necessary information, including

23 the plan’s or issuer’s decision, shall be trans24 mitted between the plan or issuer and the re-
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1 quester by telephone, facsimile, or other simi2 larly expeditious available method.

3 (d) DIRECT USE OF FURTHER APPEALS.—In the

4 event that the plan or issuer fails to comply with any of

5 the deadlines for completion of appeals under this section

6 or in the event that the plan or issuer for any reason ex7 pressly waives its rights to an internal review of an appeal

8 under subsection (b), the participant, beneficiary, or en9 rollee involved and the provider involved shall be relieved

10 of any obligation to complete the appeal involved and may,

11 at such an individual’s or provider’s option, proceed di12 rectly to seek further appeal through any applicable exter13 nal appeals process.

14 SEC. ll133. EXTERNAL APPEALS OF ADVERSE DETER15 MINATIONS.

16 (a) RIGHT TO EXTERNAL APPEAL.—

17 (1) IN GENERAL.—A group health plan, and a

18 health insurance issuer offering group health insur19 ance coverage, shall provide for an external appeals

20 process that meets the requirements of this section

21 in the case of an externally appealable decision de22 scribed in paragraph (2). The appropriate Secretary

23 shall establish standards to carry out such require24 ments.
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1 (2) EXTERNALLY APPEALABLE DECISION DE2 FINED.—For purposes of this section, the term ‘‘ex3 ternally appealable decision’’ means an appealable

4 decision (as defined in section ll132(a)(2)) if—

5 (A) the amount involved exceeds a signifi6 cant threshold; or

7 (B) the patient’s life or health is jeopard8 ized (including, in the case of a child, develop9 ment) as a consequence of the decision.

10 Such term does not include a denial of coverage for

11 services that are specifically listed in plan or cov12 erage documents as excluded from coverage.

13 (3) EXHAUSTION OF INTERNAL APPEALS PROC14 ESS.—A plan or issuer may condition the use of an

15 external appeal process in the case of an externally

16 appealable decision upon completion of the internal

17 review process provided under section ll132, but

18 only if the decision is made in a timely basis con19 sistent with the deadlines provided under this chap20 ter.

21 (b) GENERAL ELEMENTS OF EXTERNAL APPEALS

22 PROCESS.—

23 (1) CONTRACT WITH QUALIFIED EXTERNAL AP24 PEAL ENTITY.—
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1 (A) CONTRACT REQUIREMENT.—Subject to

2 subparagraph (B), the external appeal process

3 under this section of a plan or issuer shall be

4 conducted under a contract between the plan or

5 issuer and one or more qualified external appeal

6 entities (as defined in subsection (c)).

7 (B) RESTRICTIONS ON QUALIFIED EXTER8 NAL APPEAL ENTITY.—

9 (i) BY STATE FOR HEALTH INSUR10 ANCE ISSUERS.—With respect to health in11 surance issuers in a State, the State may

12 provide for external review activities to be

13 conducted by a qualified external appeal

14 entity that is designated by the State or

15 that is selected by the State in such a

16 manner as to assure an unbiased deter17 mination.

18 (ii) BY FEDERAL GOVERNMENT FOR

19 GROUP HEALTH PLANS.—With respect to

20 group health plans, the appropriate Sec21 retary may exercise the same authority as

22 a State may exercise with respect to health

23 insurance issuers under clause (i). Such

24 authority may include requiring the use of
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1 the qualified external appeal entity des2 ignated or selected under such clause.

3 (iii) LIMITATION ON PLAN OR ISSUER

4 SELECTION.—If an applicable authority

5 permits more than one entity to qualify as

6 a qualified external appeal entity with re7 spect to a group health plan or health in8 surance issuer and the plan or issuer may

9 select among such qualified entities, the

10 applicable authority—

11 (I) shall assure that the selection

12 process will not create any incentives

13 for external appeal entities to make a

14 decision in a biased manner, and

15 (II) shall implement procedures

16 for auditing a sample of decisions by

17 such entities to assure that no such

18 decisions are made in a biased man19 ner.

20 (C) OTHER TERMS AND CONDITIONS.—

21 The terms and conditions of a contract under

22 this paragraph shall be consistent with the

23 standards the appropriate Secretary shall estab24 lish to assure there is no real or apparent con25 flict of interest in the conduct of external ap-
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1 peal activities. Such contract shall provide that

2 the direct costs of the process (not including

3 costs of representation of a participant, bene4 ficiary, or enrollee) shall be paid by the plan

5 or issuer, and not by the participant, bene6 ficiary, or enrollee.

7 (2) ELEMENTS OF PROCESS.—An external ap8 peal process shall be conducted consistent with

9 standards established by the appropriate Secretary

10 that include at least the following:

11 (A) FAIR PROCESS; DE NOVO DETERMINA12 TION.—The process shall provide for a fair, de

13 novo determination.

14 (B) DETERMINATION CONCERNING EXTER15 NALLY APPEALABLE DECISIONS.—A qualified

16 external appeal entity shall determine whether a

17 decision is an externally appealable decision and

18 related decisions, including—

19 (i) whether such a decision involves an

20 expedited appeal;

21 (ii) the appropriate deadlines for in22 ternal review process required due to med23 ical exigencies in a case; and

24 (iii) whether such a process has been

25 completed.
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1 (C) OPPORTUNITY TO SUBMIT EVIDENCE,

2 HAVE REPRESENTATION, AND MAKE ORAL

3 PRESENTATION.—Each party to an externally

4 appealable decision—

5 (i) may submit and review evidence

6 related to the issues in dispute,

7 (ii) may use the assistance or rep8 resentation of one or more individuals (any

9 of whom may be an attorney), and

10 (iii) may make an oral presentation.

11 (D) PROVISION OF INFORMATION.—The

12 plan or issuer involved shall provide timely ac13 cess to all its records relating to the matter of

14 the externally appealable decision and to all

15 provisions of the plan or health insurance cov16 erage (including any coverage manual) relating

17 to the matter.

18 (E) TIMELY DECISIONS.—A determination

19 by the external appeal entity on the decision

20 shall—

21 (i) be made orally or in writing and,

22 if it is made orally, shall be supplied to the

23 parties in writing as soon as possible;

24 (ii) be binding on the plan or issuer;
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1 (iii) be made in accordance with the

2 medical exigencies of the case involved, but

3 in no event later than 60 days (or 72

4 hours in the case of an expedited appeal)

5 from the date of completion of the filing of

6 notice of external appeal of the decision;

7 (iv) state, in layperson’s language, the

8 basis for the determination, including, if

9 relevant, any basis in the terms or condi10 tions of the plan or coverage; and

11 (v) inform the participant, beneficiary,

12 or enrollee of the individual’s rights to seek

13 further review by the courts (or other proc14 ess) of the external appeal determination.

15 (c) QUALIFICATIONS OF EXTERNAL APPEAL ENTI16 TIES.—

17 (1) IN GENERAL.—For purposes of this section,

18 the term ‘‘qualified external appeal entity’’ means,

19 in relation to a plan or issuer, an entity (which may

20 be a governmental entity) that is certified under

21 paragraph (2) as meeting the following require22 ments:

23 (A) There is no real or apparent conflict of

24 interest that would impede the entity con-
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1 ducting external appeal activities independent

2 of the plan or issuer.

3 (B) The entity conducts external appeal

4 activities through clinical peers.

5 (C) The entity has sufficient medical, legal,

6 and other expertise and sufficient staffing to

7 conduct external appeal activities for the plan

8 or issuer on a timely basis consistent with sub9 section (b)(3)(E).

10 (D) The entity meets such other require11 ments as the appropriate Secretary may im12 pose.

13 (2) CERTIFICATION OF EXTERNAL APPEAL EN14 TITIES.—

15 (A) IN GENERAL.—In order to be treated

16 as a qualified external appeal entity with re17 spect to—

18 (i) a group health plan, the entity

19 must be certified (and, in accordance with

20 subparagraph (B), periodically recertified)

21 as meeting the requirements of paragraph

22 (1) by the Secretary of Labor (or under a

23 process recognized or approved by the Sec24 retary of Labor); or
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1 (ii) a health insurance issuer oper2 ating in a State, the entity must be cer3 tified (and, in accordance with subpara4 graph (B), periodically recertified) as

5 meeting such requirements by the applica6 ble State authority (or, if the State has not

7 established an adequate certification and

8 recertification process, by the Secretary of

9 Health and Human Services, or under a

10 process recognized or approved by such

11 Secretary).

12 (B) RECERTIFICATION PROCESS.—The ap13 propriate Secretary shall develop standards for

14 the recertification of external appeal entities.

15 Such standards shall include a specification

16 of—

17 (i) the information required to be sub18 mitted as a condition of recertification on

19 the entity’s performance of external appeal

20 activities, which information shall include

21 the number of cases reviewed, a summary

22 of the disposition of those cases, the length

23 of time in making determinations on those

24 cases, and such information as may be nec25 essary to assure the independence of the
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1 entity from the plans or issuers for which

2 external appeal activities are being con3 ducted; and

4 (ii) the periodicity which recertifi5 cation will be required.

6 (d) CONTINUING LEGAL RIGHTS OF ENROLLEES.—

7 Nothing in this subtitle shall be construed as removing

8 any legal rights of participants, beneficiaries, enrollees,

9 and others under State or Federal law, including the right

10 to file judicial actions to enforce rights.

11 CHAPTER 5—PROTECTING THE DOCTOR12 PATIENT RELATIONSHIP

13 SEC. ll141. PROHIBITION OF INTERFERENCE WITH CER14 TAIN MEDICAL COMMUNICATIONS.

15 (a) PROHIBITION.—

16 (1) GENERAL RULE.—The provisions of any

17 contract or agreement, or the operation of any con18 tract or agreement, between a group health plan or

19 health insurance issuer in relation to health insur20 ance coverage (including any partnership, associa21 tion, or other organization that enters into or ad22 ministers such a contract or agreement) and a

23 health care provider (or group of health care pro24 viders) shall not prohibit or restrict the provider
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1 from engaging in medical communications with the

2 provider’s patient.

3 (2) NULLIFICATION.—Any contract provision or

4 agreement that restricts or prohibits medical com5 munications in violation of paragraph (1) shall be

6 null and void.

7 (b) RULES OF CONSTRUCTION.—Nothing in this sec8 tion shall be construed—

9 (1) to prohibit the enforcement, as part of a

10 contract or agreement to which a health care pro11 vider is a party, of any mutually agreed upon terms

12 and conditions, including terms and conditions re13 quiring a health care provider to participate in, and

14 cooperate with, all programs, policies, and proce15 dures developed or operated by a group health plan

16 or health insurance issuer to assure, review, or im17 prove the quality and effective utilization of health

18 care services (if such utilization is according to

19 guidelines or protocols that are based on clinical or

20 scientific evidence and the professional judgment of

21 the provider) but only if the guidelines or protocols

22 under such utilization do not prohibit or restrict

23 medical communications between providers and their

24 patients; or
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1 (2) to permit a health care provider to mis2 represent the scope of benefits covered under the

3 group health plan or health insurance coverage or to

4 otherwise require a group health plan health insur5 ance issuer to reimburse providers for benefits not

6 covered under the plan or coverage.

7 (c) MEDICAL COMMUNICATION DEFINED.—In this

8 section:

9 (1) IN GENERAL.—The term ‘‘medical commu10 nication’’ means any communication made by a

11 health care provider with a patient of the health care

12 provider (or the guardian or legal representative of

13 such patient) with respect to—

14 (A) the patient’s health status, medical

15 care, or treatment options;

16 (B) any utilization review requirements

17 that may affect treatment options for the pa18 tient; or

19 (C) any financial incentives that may af20 fect the treatment of the patient.

21 (2) MISREPRESENTATION.—The term ‘‘medical

22 communication’’ does not include a communication

23 by a health care provider with a patient of the

24 health care provider (or the guardian or legal rep25 resentative of such patient) if the communication in-
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1 volves a knowing or willful misrepresentation by

2 such provider.

3 SEC. ll142. PROHIBITION AGAINST TRANSFER OF INDEM4 NIFICATION OR IMPROPER INCENTIVE AR5 RANGEMENTS.

6 (a) PROHIBITION OF TRANSFER OF INDEMNIFICA7 TION.—

8 (1) IN GENERAL.—No contract or agreement

9 between a group health plan or health insurance

10 issuer (or any agent acting on behalf of such a plan

11 or issuer) and a health care provider shall contain

12 any provision purporting to transfer to the health

13 care provider by indemnification or otherwise any li14 ability relating to activities, actions, or omissions of

15 the plan, issuer, or agent (as opposed to the pro16 vider).

17 (2) NULLIFICATION.—Any contract or agree18 ment provision described in paragraph (1) shall be

19 null and void.

20 (b) PROHIBITION OF IMPROPER PHYSICIAN INCEN21 TIVE PLANS.—

22 (1) IN GENERAL.—A group health plan and a

23 health insurance issuer offering health insurance

24 coverage may not operate any physician incentive

25 plan (as defined in subparagraph (B) of section
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1 1876(i)(8) of the Social Security Act) unless the re2 quirements described in subparagraph (A) of such

3 section are met with respect to such a plan.

4 (2) APPLICATION.—For purposes of carrying

5 out paragraph (1), any reference in section

6 1876(i)(8) of the Social Security Act to the Sec7 retary, an eligible organization, or an individual en8 rolled with the organization shall be treated as a ref9 erence to the applicable authority, a group health

10 plan or health insurance issuer, respectively, and a

11 participant, beneficiary, or enrollee with the plan or

12 organization, respectively.

13 SEC. ll143. ADDITIONAL RULES REGARDING PARTICIPA14 TION OF HEALTH CARE PROFESSIONALS.

15 (a) PROCEDURES.—Insofar as a group health plan,

16 or health insurance issuer that offers health insurance cov17 erage, provides benefits through participating health care

18 professionals, the plan or issuer shall establish reasonable

19 procedures relating to the participation (under an agree20 ment between a professional and the plan or issuer) of

21 such professionals under the plan or coverage. Such proce22 dures shall include—

23 (1) providing notice of the rules regarding par24 ticipation;
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1 (2) providing written notice of participation de2 cisions that are adverse to professionals; and

3 (3) providing a process within the plan or issuer

4 for appealing such adverse decisions, including the

5 presentation of information and views of the profes6 sional regarding such decision.

7 (b) CONSULTATION IN MEDICAL POLICIES.—A group

8 health plan, and health insurance issuer that offers health

9 insurance coverage, shall consult with participating physi10 cians (if any) regarding the plan’s or issuer’s medical pol11 icy, quality, and medical management procedures.

12 SEC. ll144. PROTECTION FOR PATIENT ADVOCACY.

13 (a) PROTECTION FOR USE OF UTILIZATION REVIEW

14 AND GRIEVANCE PROCESS.—A group health plan, and a

15 health insurance issuer with respect to the provision of

16 health insurance coverage, may not retaliate against a par17 ticipant, beneficiary, enrollee, or health care provider

18 based on the participant’s, beneficiary’s, enrollee’s or pro19 vider’s use of, or participation in, a utilization review proc20 ess or a grievance process of the plan or issuer (including

21 an internal or external review or appeal process) under

22 this subtitle.

23 (b) PROTECTION FOR QUALITY ADVOCACY BY

24 HEALTH CARE PROFESSIONALS.—
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1 (1) IN GENERAL.—A group health plan or

2 health insurance issuer may not retaliate or dis3 criminate against a protected health care profes4 sional because the professional in good faith—

5 (A) discloses information relating to the

6 care, services, or conditions affecting one or

7 more participants, beneficiaries, or enrollees of

8 the plan or issuer to an appropriate public reg9 ulatory agency, an appropriate private accredi10 tation body, or appropriate management per11 sonnel of the plan or issuer; or

12 (B) initiates, cooperates, or otherwise par13 ticipates in an investigation or proceeding by

14 such an agency with respect to such care, serv15 ices, or conditions.

16 If an institutional health care provider is a partici17 pating provider with such a plan or issuer or other18 wise receives payments for benefits provided by such

19 a plan or issuer, the provisions of the previous sen20 tence shall apply to the provider in relation to care,

21 services, or conditions affecting one or more patients

22 within an institutional health care provider in the

23 same manner as they apply to the plan or issuer in

24 relation to care, services, or conditions provided to

25 one or more participants, beneficiaries, or enrollees;
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1 and for purposes of applying this sentence, any ref2 erence to a plan or issuer is deemed a reference to

3 the institutional health care provider.

4 (2) GOOD FAITH ACTION.—For purposes of

5 paragraph (1), a protected health care professional

6 is considered to be acting in good faith with respect

7 to disclosure of information or participation if, with

8 respect to the information disclosed as part of the

9 action—

10 (A) the disclosure is made on the basis of

11 personal knowledge and is consistent with that

12 degree of learning and skill ordinarily possessed

13 by health care professionals with the same li14 censure or certification and the same experi15 ence;

16 (B) the professional reasonably believes the

17 information to be true;

18 (C) the information evidences either a vio19 lation of a law, rule, or regulation, of an appli20 cable accreditation standard, or of a generally

21 recognized professional or clinical standard or

22 that a patient is in imminent hazard of loss of

23 life or serious injury; and

24 (D) subject to subparagraphs (B) and (C)

25 of paragraph (3), the professional has followed
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1 reasonable internal procedures of the plan,

2 issuer, or institutional health care provider es3 tablished for the purpose of addressing quality

4 concerns before making the disclosure.

5 (3) EXCEPTION AND SPECIAL RULE.—

6 (A) GENERAL EXCEPTION.—Paragraph (1)

7 does not protect disclosures that would violate

8 Federal or State law or diminish or impair the

9 rights of any person to the continued protection

10 of confidentiality of communications provided

11 by such law.

12 (B) NOTICE OF INTERNAL PROCEDURES.—

13 Subparagraph (D) of paragraph (2) shall not

14 apply unless the internal procedures involved

15 are reasonably expected to be known to the

16 health care professional involved. For purposes

17 of this subparagraph, a health care professional

18 is reasonably expected to know of internal pro19 cedures if those procedures have been made

20 available to the professional through distribu21 tion or posting.

22 (C) INTERNAL PROCEDURE EXCEPTION.—

23 Subparagraph (D) of paragraph (2) also shall

24 not apply if—
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1 (i) the disclosure relates to an immi2 nent hazard of loss of life or serious injury

3 to a patient;

4 (ii) the disclosure is made to an ap5 propriate private accreditation body pursu6 ant to disclosure procedures established by

7 the body; or

8 (iii) the disclosure is in response to an

9 inquiry made in an investigation or pro10 ceeding of an appropriate public regulatory

11 agency and the information disclosed is

12 limited to the scope of the investigation or

13 proceeding.

14 (4) ADDITIONAL CONSIDERATIONS.—It shall

15 not be a violation of paragraph (1) to take an ad16 verse action against a protected health care profes17 sional if the plan, issuer, or provider taking the ad18 verse action involved demonstrates that it would

19 have taken the same adverse action even in the ab20 sence of the activities protected under such para21 graph.

22 (5) NOTICE.—A group health plan, health in23 surance issuer, and institutional health care provider

24 shall post a notice, to be provided or approved by

25 the Secretary of Labor, setting forth excerpts from,
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1 or summaries of, the pertinent provisions of this

2 subsection and information pertaining to enforce3 ment of such provisions.

4 (6) CONSTRUCTIONS.—

5 (A) DETERMINATIONS OF COVERAGE.—

6 Nothing in this subsection shall be construed to

7 prohibit a plan or issuer from making a deter8 mination not to pay for a particular medical

9 treatment or service or the services of a type of

10 health care professional.

11 (B) ENFORCEMENT OF PEER REVIEW PRO12 TOCOLS AND INTERNAL PROCEDURES.—Noth13 ing in this subsection shall be construed to pro14 hibit a plan, issuer, or provider from estab15 lishing and enforcing reasonable peer review or

16 utilization review protocols or determining

17 whether a protected health care professional has

18 complied with those protocols or from estab19 lishing and enforcing internal procedures for

20 the purpose of addressing quality concerns.

21 (C) RELATION TO OTHER RIGHTS.—Noth22 ing in this subsection shall be construed to

23 abridge rights of participants, beneficiaries, en24 rollees, and protected health care professionals

25 under other applicable Federal or State laws.
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1 (7) PROTECTED HEALTH CARE PROFESSIONAL

2 DEFINED.—For purposes of this subsection, the

3 term ‘‘protected health care professional’’ means an

4 individual who is a licensed or certified health care

5 professional and who—

6 (A) with respect to a group health plan or

7 health insurance issuer, is an employee of the

8 plan or issuer or has a contract with the plan

9 or issuer for provision of services for which ben10 efits are available under the plan or issuer; or

11 (B) with respect to an institutional health

12 care provider, is an employee of the provider or

13 has a contract or other arrangement with the

14 provider respecting the provision of health care

15 services.

16 CHAPTER 6—PROMOTING GOOD MEDICAL

17 PRACTICE

18 SEC. ll151. PROMOTING GOOD MEDICAL PRACTICE.

19 (a) PROHIBITING ARBITRARY LIMITATIONS OR CON20 DITIONS FOR THE PROVISION OF SERVICES.—

21 (1) IN GENERAL.—A group health plan, and a

22 health insurance issuer in connection with the provi23 sion of health insurance coverage, may not arbi24 trarily interfere with or alter the decision of the

25 treating physician regarding the manner or setting
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1 in which particular services are delivered if the serv2 ices are medically necessary or appropriate for treat3 ment or diagnosis to the extent that such treatment

4 or diagnosis is otherwise a covered benefit.

5 (2) CONSTRUCTION.—Paragraph (1) shall not

6 be construed as prohibiting a plan or issuer from

7 limiting the delivery of services to one or more

8 health care providers within a network of such pro9 viders.

10 (3) MANNER OR SETTING DEFINED.—In para11 graph (1), the term ‘‘manner or setting’’ means the

12 location of treatment, such as whether treatment is

13 provided on an inpatient or outpatient basis, and the

14 duration of treatment, such as the number of days

15 in a hospital. Such term does not include the cov16 erage of a particular service or treatment.

17 (b) NO CHANGE IN COVERAGE.—Subsection (a) shall

18 not be construed as requiring coverage of particular serv19 ices the coverage of which is otherwise not covered under

20 the terms of the plan or coverage or from conducting utili21 zation review activities consistent with this subsection.

22 (c) MEDICAL NECESSITY OR APPROPRIATENESS DE23 FINED.—In subsection (a), the term ‘‘medically necessary

24 or appropriate’’ means, with respect to a service or benefit,
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1 a service or benefit which is consistent with generally ac2 cepted principles of professional medical practice.

3 SEC. ll152. STANDARDS RELATING TO BENEFITS FOR

4 CERTAIN BREAST CANCER TREATMENT.

5 (a) INPATIENT CARE.—

6 (1) IN GENERAL.—A group health plan, and a

7 health insurance issuer offering group health insur8 ance coverage, that provides medical and surgical

9 benefits shall ensure that inpatient coverage with re10 spect to the treatment of breast cancer is provided

11 for a period of time as is determined by the attend12 ing physician, in his or her professional judgment

13 consistent with generally accepted medical stand14 ards, in consultation with the patient, to be medi15 cally appropriate following—

16 (A) a mastectomy;

17 (B) a lumpectomy; or

18 (C) a lymph node dissection for the treat19 ment of breast cancer.

20 (2) EXCEPTION.—Nothing in this section shall

21 be construed as requiring the provision of inpatient

22 coverage if the attending physician and patient de23 termine that a shorter period of hospital stay is

24 medically appropriate.
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1 (b) PROHIBITIONS.—A group health plan, and a

2 health insurance issuer offering group health insurance

3 coverage in connection with a group health plan, may

4 not—

5 (1) deny to a woman eligibility, or continued

6 eligibility, to enroll or to renew coverage under the

7 terms of the plan, solely for the purpose of avoiding

8 the requirements of this section;

9 (2) provide monetary payments or rebates to

10 women to encourage such women to accept less than

11 the minimum protections available under this sec12 tion;

13 (3) penalize or otherwise reduce or limit the re14 imbursement of an attending provider because such

15 provider provided care to an individual participant

16 or beneficiary in accordance with this section;

17 (4) provide incentives (monetary or otherwise)

18 to an attending provider to induce such provider to

19 provide care to an individual participant or bene20 ficiary in a manner inconsistent with this section; or

21 (5) subject to subsection (c)(3), restrict benefits

22 for any portion of a period within a hospital length

23 of stay required under subsection (a) in a manner

24 which is less favorable than the benefits provided for

25 any preceding portion of such stay.
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1 (c) RULES OF CONSTRUCTION.—

2 (1) Nothing in this section shall be construed to

3 require a woman who is a participant or

4 beneficiary—

5 (A) to undergo a mastectomy or lymph

6 node dissection in a hospital; or

7 (B) to stay in the hospital for a fixed pe8 riod of time following a mastectomy or lymph

9 node dissection.

10 (2) This section shall not apply with respect to

11 any group health plan, or any group health insur12 ance coverage offered by a health insurance issuer,

13 which does not provide benefits for hospital lengths

14 of stay in connection with a mastectomy or lymph

15 node dissection for the treatment of breast cancer.

16 (3) Nothing in this section shall be construed as

17 preventing a group health plan or issuer from impos18 ing deductibles, coinsurance, or other cost-sharing in

19 relation to benefits for hospital lengths of stay in

20 connection with a mastectomy or lymph node dissec21 tion for the treatment of breast cancer under the

22 plan (or under health insurance coverage offered in

23 connection with a group health plan), except that

24 such coinsurance or other cost-sharing for any por25 tion of a period within a hospital length of stay re-
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1 quired under subsection (a) may not be greater than

2 such coinsurance or cost-sharing for any preceding

3 portion of such stay.

4 (d) LEVEL AND TYPE OF REIMBURSEMENTS.—Noth5 ing in this section shall be construed to prevent a group

6 health plan or a health insurance issuer offering group

7 health insurance coverage from negotiating the level and

8 type of reimbursement with a provider for care provided

9 in accordance with this section.

10 (e) EXCEPTION FOR HEALTH INSURANCE COVERAGE

11 IN CERTAIN STATES.—

12 (1) IN GENERAL.—The requirements of this

13 section shall not apply with respect to health insur14 ance coverage if there is a State law (as defined in

15 section 2723(d)(1) of the Public Health Service Act)

16 for a State that regulates such coverage that is de17 scribed in any of the following subparagraphs:

18 (A) Such State law requires such coverage

19 to provide for at least a 48-hour hospital length

20 of stay following a mastectomy performed for

21 treatment of breast cancer and at least a 24-

22 hour hospital length of stay following a lymph

23 node dissection for treatment of breast cancer.

24 (B) Such State law requires, in connection

25 with such coverage for surgical treatment of
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1 breast cancer, that the hospital length of stay

2 for such care is left to the decision of (or re3 quired to be made by) the attending provider in

4 consultation with the woman involved.

5 (2) CONSTRUCTION.—Section 2723(a)(1) of the

6 Public Health Service Act and section 731(a)(1) of

7 the Employee Retirement Income Security Act of

8 1974 shall not be construed as superseding a State

9 law described in paragraph (1).

10 CHAPTER 7—DEFINITIONS

11 SEC. ll191. DEFINITIONS.

12 (a) INCORPORATION OF GENERAL DEFINITIONS.—

13 The provisions of section 2971 of the Public Health Serv14 ice Act shall apply for purposes of this subtitle in the same

15 manner as they apply for purposes of title XXVII of such

16 Act.

17 (b) SECRETARY.—Except as otherwise provided, the

18 term ‘‘Secretary’’ means the Secretary of Health and

19 Human Services, in consultation with the Secretary of

20 Labor and the Secretary of the Treasury and the term

21 ‘‘appropriate Secretary’’ means the Secretary of Health

22 and Human Services in relation to carrying out this sub23 title under sections 2707 and 2753 of the Public Health

24 Service Act, the Secretary of Labor in relation to carrying

25 out this subtitle under section 714 of the Employee Retire-
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1 ment Income Security Act of 1974, and the Secretary of

2 the Treasury in relation to carrying out this subtitle under

3 chapter 100 and section 4980D of the Internal Revenue

4 Code of 1986.

5 (c) ADDITIONAL DEFINITIONS.—For purposes of this

6 subtitle:

7 (1) APPLICABLE AUTHORITY.—The term ‘‘ap8 plicable authority’’ means—

9 (A) in the case of a group health plan, the

10 Secretary of Health and Human Services and

11 the Secretary of Labor; and

12 (B) in the case of a health insurance issuer

13 with respect to a specific provision of this sub14 title, the applicable State authority (as defined

15 in section 2791(d) of the Public Health Service

16 Act), or the Secretary of Health and Human

17 Services, if such Secretary is enforcing such

18 provision under section 2722(a)(2) or

19 2761(a)(2) of the Public Health Service Act.

20 (2) CLINICAL PEER.—The term ‘‘clinical peer’’

21 means, with respect to a review or appeal, a physi22 cian (allopathic or osteopathic) or other health care

23 professional who holds a non-restricted license in a

24 State and who is appropriately credentialed in the

25 same or similar specialty as typically manages the
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1 medical condition, procedure, or treatment under re2 view or appeal and includes a pediatric specialist

3 where appropriate; except that only a physician may

4 be a clinical peer with respect to the review or ap5 peal of treatment rendered by a physician.

6 (3) HEALTH CARE PROVIDER.—The term

7 ‘‘health care provider’’ includes a physician or other

8 health care professional, as well as an institutional

9 provider of health care services.

10 (4) NONPARTICIPATING.—The term ‘‘non11 participating’’ means, with respect to a health care

12 provider that provides health care items and services

13 to a participant, beneficiary, or enrollee under group

14 health plan or health insurance coverage, a health

15 care provider that is not a participating health care

16 provider with respect to such items and services.

17 (5) PARTICIPATING.—The term ‘‘participating’’

18 means, with respect to a health care provider that

19 provides health care items and services to a partici20 pant, beneficiary, or enrollee under group health

21 plan or health insurance coverage offered by a

22 health insurance issuer, a health care provider that

23 furnishes such items and services under a contract

24 or other arrangement with the plan or issuer.
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1 SEC. ll192. PREEMPTION; STATE FLEXIBILITY; CON2 STRUCTION.

3 (a) CONTINUED APPLICABILITY OF STATE LAW

4 WITH RESPECT TO HEALTH INSURANCE ISSUERS.—

5 (1) IN GENERAL.—Subject to paragraph (2),

6 this subtitle shall not be construed to supersede any

7 provision of State law which establishes, implements,

8 or continues in effect any standard or requirement

9 solely relating to health insurance issuers in connec10 tion with group health insurance coverage except to

11 the extent that such standard or requirement pre12 vents the application of a requirement of this sub13 title.

14 (2) CONTINUED PREEMPTION WITH RESPECT

15 TO GROUP HEALTH PLANS.—Nothing in this subtitle

16 shall be construed to affect or modify the provisions

17 of section 514 of the Employee Retirement Income

18 Security Act of 1974 with respect to group health

19 plans.

20 (b) RULES OF CONSTRUCTION.—Except as provided

21 in section ll152, nothing in this subtitle shall be con22 strued as requiring a group health plan or health insur23 ance coverage to provide specific benefits under the terms

24 of such plan or coverage.

25 (c) DEFINITIONS.—For purposes of this section:
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1 (1) STATE LAW.—The term ‘‘State law’’ in2 cludes all laws, decisions, rules, regulations, or other

3 State action having the effect of law, of any State.

4 A law of the United States applicable only to the

5 District of Columbia shall be treated as a State law

6 rather than a law of the United States.

7 (2) STATE.—The term ‘‘State’’ includes a

8 State, the Northern Mariana Islands, any political

9 subdivisions of a State or such Islands, or any agen10 cy or instrumentality of either.

11 SEC. ll193. REGULATIONS.

12 The Secretaries of Health and Human Services,

13 Labor, and the Treasury shall issue such regulations as

14 may be necessary or appropriate to carry out this subtitle.

15 Such regulations shall be issued consistent with section

16 104 of the Health Insurance Portability and Account17 ability Act of 1996. Such Secretaries may promulgate any

18 interim final rules as the Secretaries determine are appro19 priate to carry out this subtitle.
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1 Subtitle B—Application of Patient

2 Protection Standards to Group

3 Health Plans and Health Insur4 ance Coverage Under Public

5 Health Service Act

6 SEC. ll201. APPLICATION TO GROUP HEALTH PLANS AND

7 GROUP HEALTH INSURANCE COVERAGE.

8 (a) IN GENERAL.—Subpart 2 of part A of title

9 XXVII of the Public Health Service Act, as amended by

10 the Omnibus Consolidated and Emergency Supplemental

11 Appropriations Act, 1999 (Public Law 105–277), is

12 amended by adding at the end the following new section:

13 ‘‘SEC. 2707. PATIENT PROTECTION STANDARDS.

14 ‘‘(a) IN GENERAL.—Each group health plan shall

15 comply with patient protection requirements under sub16 title A of the Patients’ Bill of Rights Act of 1999, and

17 each health insurance issuer shall comply with patient pro18 tection requirements under such subtitle with respect to

19 group health insurance coverage it offers, and such re20 quirements shall be deemed to be incorporated into this

21 subsection.

22 ‘‘(b) NOTICE.—A group health plan shall comply with

23 the notice requirement under section 711(d) of the Em24 ployee Retirement Income Security Act of 1974 with re25 spect to the requirements referred to in subsection (a) and
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1 a health insurance issuer shall comply with such notice

2 requirement as if such section applied to such issuer and

3 such issuer were a group health plan.’’.

4 (b) CONFORMING AMENDMENT.—Section

5 2721(b)(2)(A) of the Public Health Service Act (42

6 U.S.C. 300gg–21(b)(2)(A)) is amended by inserting

7 ‘‘(other than section 2707)’’ after ‘‘requirements of such

8 subparts’’.

9 SEC. ll202. APPLICATION TO INDIVIDUAL HEALTH INSUR10 ANCE COVERAGE.

11 Subpart 3 of part B of title XXVII of the Public

12 Health Service Act, as amended by the Omnibus Consoli13 dated and Emergency Supplemental Appropriations Act,

14 1999 (Public Law 105–277), is amended by adding at the

15 end the following new section:

16 ‘‘SEC. 2753. PATIENT PROTECTION STANDARDS.

17 ‘‘(a) IN GENERAL.—Each health insurance issuer

18 shall comply with patient protection requirements under

19 subtitle A of the Patients’ Bill of Rights Act of 1999 with

20 respect to individual health insurance coverage it offers,

21 and such requirements shall be deemed to be incorporated

22 into this subsection.

23 ‘‘(b) NOTICE.—A health insurance issuer under this

24 part shall comply with the notice requirement under sec25 tion 711(d) of the Employee Retirement Income Security
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1 Act of 1974 with respect to the requirements of such sub2 title as if such section applied to such issuer and such

3 issuer were a group health plan.’’.

4 Subtitle C—Amendments to the

5 Employee Retirement Income

6 Security Act of 1974

7 SEC. ll301. APPLICATION OF PATIENT PROTECTION

8 STANDARDS TO GROUP HEALTH PLANS AND

9 GROUP HEALTH INSURANCE COVERAGE

10 UNDER THE EMPLOYEE RETIREMENT IN11 COME SECURITY ACT OF 1974.

12 (a) IN GENERAL.—Subpart B of part 7 of subtitle

13 B of title I of the Employee Retirement Income Security

14 Act of 1974, as amended by the Omnibus Consolidated

15 and Emergency Supplemental Appropriations Act, 1999

16 (Public Law 105–277), is amended by adding at the end

17 the following:

18 ‘‘SEC. 714. PATIENT PROTECTION STANDARDS.

19 ‘‘(a) IN GENERAL.—Subject to subsection (b), a

20 group health plan (and a health insurance issuer offering

21 group health insurance coverage in connection with such

22 a plan) shall comply with the requirements of subtitle A

23 of the Patients’ Bill of Rights Act of 1999 (as in effect

24 as of the date of the enactment of such Act), and such
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1 requirements shall be deemed to be incorporated into this

2 subsection.

3 ‘‘(b) PLAN SATISFACTION OF CERTAIN REQUIRE4 MENTS.—

5 ‘‘(1) SATISFACTION OF CERTAIN REQUIRE6 MENTS THROUGH INSURANCE.—For purposes of

7 subsection (a), insofar as a group health plan pro8 vides benefits in the form of health insurance cov9 erage through a health insurance issuer, the plan

10 shall be treated as meeting the following require11 ments of subtitle A of the Patients’ Bill of Rights

12 Act of 1999 with respect to such benefits and not

13 be considered as failing to meet such requirements

14 because of a failure of the issuer to meet such re15 quirements so long as the plan sponsor or its rep16 resentatives did not cause such failure by the issuer:

17 ‘‘(A) Section ll101 (relating to access

18 to emergency care).

19 ‘‘(B) Section ll102(a)(1) (relating to of20 fering option to purchase point-of-service cov21 erage), but only insofar as the plan is meeting

22 such requirement through an agreement with

23 the issuer to offer the option to purchase point24 of-service coverage under such section.
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1 ‘‘(C) Section ll103 (relating to choice of

2 providers).

3 ‘‘(D) Section ll104 (relating to access

4 to specialty care).

5 ‘‘(E) Section ll105(a)(1) (relating to

6 continuity in case of termination of provider

7 contract) and section ll105(a)(2) (relating

8 to continuity in case of termination of issuer

9 contract), but only insofar as a replacement

10 issuer assumes the obligation for continuity of

11 care.

12 ‘‘(F) Section ll106 (relating to coverage

13 for individuals participating in approved clinical

14 trials.)

15 ‘‘(G) Section ll107 (relating to access

16 to needed prescription drugs).

17 ‘‘(H) Section ll108 (relating to ade18 quacy of provider network).

19 ‘‘(I) Chapter 2 of subtitle A (relating to

20 quality assurance).

21 ‘‘(J) Section ll143 (relating to addi22 tional rules regarding participation of health

23 care professionals).
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1 ‘‘(K) Section ll152 (relating to stand2 ards relating to benefits for certain breast can3 cer treatment).

4 ‘‘(2) INFORMATION.—With respect to informa5 tion required to be provided or made available under

6 section ll121, in the case of a group health plan

7 that provides benefits in the form of health insur8 ance coverage through a health insurance issuer, the

9 Secretary shall determine the circumstances under

10 which the plan is not required to provide or make

11 available the information (and is not liable for the

12 issuer’s failure to provide or make available the in13 formation), if the issuer is obligated to provide and

14 make available (or provides and makes available)

15 such information.

16 ‘‘(3) GRIEVANCE AND INTERNAL APPEALS.—

17 With respect to the grievance system and internal

18 appeals process required to be established under sec19 tions 131 and 132, in the case of a group health

20 plan that provides benefits in the form of health in21 surance coverage through a health insurance issuer,

22 the Secretary shall determine the circumstances

23 under which the plan is not required to provide for

24 such system and process (and is not liable for the

25 issuer’s failure to provide for such system and proc-
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1 ess), if the issuer is obligated to provide for (and

2 provides for) such system and process.

3 ‘‘(4) EXTERNAL APPEALS.—Pursuant to rules

4 of the Secretary, insofar as a group health plan en5 ters into a contract with a qualified external appeal

6 entity for the conduct of external appeal activities in

7 accordance with section ll133, the plan shall be

8 treated as meeting the requirement of such section

9 and is not liable for the entity’s failure to meet any

10 requirements under such section.

11 ‘‘(5) APPLICATION TO PROHIBITIONS.—Pursu12 ant to rules of the Secretary, if a health insurance

13 issuer offers health insurance coverage in connection

14 with a group health plan and takes an action in vio15 lation of any of the following sections, the group

16 health plan shall not be liable for such violation un17 less the plan caused such violation:

18 ‘‘(A) Section ll109 (relating to non19 discrimination in delivery of services).

20 ‘‘(B) Section ll141 (relating to prohibi21 tion of interference with certain medical com22 munications).

23 ‘‘(C) Section ll142 (relating to prohibi24 tion against transfer of indemnification or im25 proper incentive arrangements).
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1 ‘‘(D) Section ll144 (relating to prohibi2 tion on retaliation).

3 ‘‘(E) Section ll151 (relating to pro4 moting good medical practice).

5 ‘‘(6) CONSTRUCTION.—Nothing in this sub6 section shall be construed to affect or modify the re7 sponsibilities of the fiduciaries of a group health

8 plan under part 4 of subtitle B.

9 ‘‘(7) APPLICATION TO CERTAIN PROHIBITIONS

10 AGAINST RETALIATION.—With respect to compliance

11 with the requirements of section ll144(b)(1) of

12 the Patients’ Bill of Rights Act of 1999, for pur13 poses of this subtitle the term ‘group health plan’ is

14 deemed to include a reference to an institutional

15 health care provider.

16 ‘‘(c) ENFORCEMENT OF CERTAIN REQUIREMENTS.—

17 ‘‘(1) COMPLAINTS.—Any protected health care

18 professional who believes that the professional has

19 been retaliated or discriminated against in violation

20 of section ll144(b)(1) of the Patients’ Bill of

21 Rights Act of 1999 may file with the Secretary a

22 complaint within 180 days of the date of the alleged

23 retaliation or discrimination.

24 ‘‘(2) INVESTIGATION.—The Secretary shall in25 vestigate such complaints and shall determine if a
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1 violation of such section has occurred and, if so,

2 shall issue an order to ensure that the protected

3 health care professional does not suffer any loss of

4 position, pay, or benefits in relation to the plan,

5 issuer, or provider involved, as a result of the viola6 tion found by the Secretary.

7 ‘‘(d) CONFORMING REGULATIONS.—The Secretary

8 may issue regulations to coordinate the requirements on

9 group health plans under this section with the require10 ments imposed under the other provisions of this title.’’.

11 (b) SATISFACTION OF ERISA CLAIMS PROCEDURE

12 REQUIREMENT.—Section 503 of the Employee Retirement

13 Income Security Act of 1974 (29 U.S.C. 1133) is amended

14 by inserting ‘‘(a)’’ after ‘‘SEC. 503.’’ and by adding at

15 the end the following new subsection:

16 ‘‘(b) In the case of a group health plan (as defined

17 in section 733) compliance with the requirements of chap18 ter 4 (and section ll115) of subtitle A of the Patients’

19 Bill of Rights Act of 1999 in the case of a claims denial

20 shall be deemed compliance with subsection (a) with re21 spect to such claims denial.’’.

22 (c) CONFORMING AMENDMENTS.—

23 (1) Section 732(a) of the Employee Retirement

24 Income Security Act of 1974 (29 U.S.C. 1185(a)) is
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1 amended by striking ‘‘section 711’’ and inserting

2 ‘‘sections 711 and 714’’.

3 (2) The table of contents in section 1 of the

4 Employee Retirement Income Security Act of 1974,

5 as amended by the Omnibus Consolidated and

6 Emergency Supplemental Appropriations Act, 1999

7 (Public Law 105–277), is amended by inserting

8 after the item relating to section 713 the following

9 new item:

‘‘Sec. 714. Patient protection standards.’’.

10 (3) Section 502(b)(3) of the Employee Retire11 ment Income Security Act of 1974 (29 U.S.C.

12 1132(b)(3)) is amended by inserting ‘‘(other than

13 section 144(b))’’ after ‘‘part 7’’.

14 SEC. ll302. ERISA PREEMPTION NOT TO APPLY TO CER15 TAIN ACTIONS INVOLVING HEALTH INSUR16 ANCE POLICYHOLDERS.

17 (a) IN GENERAL.—Section 514 of the Employee Re18 tirement Income Security Act of 1974 (29 U.S.C. 1144)

19 is amended by adding at the end the following subsection:

20 ‘‘(e) PREEMPTION NOT TO APPLY TO CERTAIN AC21 TIONS ARISING OUT OF PROVISION OF HEALTH BENE22 FITS.—

23 ‘‘(1) IN GENERAL.—Except as provided in this

24 subsection, nothing in this title shall be construed to

25 invalidate, impair, or supersede any cause of action
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1 brought by a plan participant or beneficiary (or the

2 estate of a plan participant or beneficiary) under

3 State law to recover damages resulting from per4 sonal injury or for wrongful death against any

5 person—

6 ‘‘(A) in connection with the provision of in7 surance, administrative services, or medical

8 services by such person to or for a group health

9 plan (as defined in section 733), or

10 ‘‘(B) that arises out of the arrangement by

11 such person for the provision of such insurance,

12 administrative services, or medical services by

13 other persons.

14 ‘‘(2) EXCEPTION FOR EMPLOYERS AND OTHER

15 PLAN SPONSORS.—

16 ‘‘(A) IN GENERAL.—Subject to subpara17 graph (B), paragraph (1) does not authorize—

18 ‘‘(i) any cause of action against an

19 employer or other plan sponsor maintain20 ing the group health plan or against an

21 employee of such an employer or sponsor

22 acting within the scope of employment, or

23 ‘‘(ii) a right of recovery or indemnity

24 by a person against an employer or other

25 plan sponsor (or such an employee) for
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1 damages assessed against the person pur2 suant to a cause of action under paragraph

3 (1).

4 ‘‘(B) SPECIAL RULE.—Subparagraph (A)

5 shall not preclude any cause of action described

6 in paragraph (1) against an employer or other

7 plan sponsor (or against an employee of such

8 an employer or sponsor acting within the scope

9 of employment) if—

10 ‘‘(i) such action is based on the em11 ployer’s or other plan sponsor’s (or em12 ployee’s) exercise of discretionary authority

13 to make a decision on a claim for benefits

14 covered under the plan or health insurance

15 coverage in the case at issue; and

16 ‘‘(ii) the exercise by such employer or

17 other plan sponsor (or employee of such

18 authority) resulted in personal injury or

19 wrongful death.

20 ‘‘(3) CONSTRUCTION.—Nothing in this sub21 section shall be construed as permitting a cause of

22 action under State law for the failure to provide an

23 item or service which is not covered under the group

24 health plan involved.
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1 ‘‘(4) PERSONAL INJURY DEFINED.—For pur2 poses of this subsection, the term ‘personal injury’

3 means a physical injury and includes an injury aris4 ing out of the treatment (or failure to treat) a men5 tal illness or disease.’’.

6 (b) EFFECTIVE DATE.—The amendment made by

7 subsection (a) shall apply to acts and omissions occurring

8 on or after the date of the enactment of this Act from

9 which a cause of action arises.

10 SEC. ll303. LIMITATION IN ACTIONS.

11 Section 502 of Employee Retirement Income Security

12 Act of 1974 (29 U.S.C. 1132) is amended by adding at

13 the end the following:

14 ‘‘(n)(1) Except as provided in this section, no action

15 may be brought under subsection (a)(1)(B), (a)(2), or

16 (a)(3) by a participant or beneficiary seeking relief based

17 on the application of any provision in chapter 1 (other

18 than section ll109) of subtitle A, chapter 5 of subtitle

19 A, or section ll115 or ll151 of the Patient’s Bill

20 of Rights Act of 1999 (as incorporated under section 714).

21 ‘‘(2) An action may be brought under subsection

22 (a)(1)(B), (a)(2), or (a)(3) by a participant or beneficiary

23 seeking relief based on the application of section ll101,

24 ll104, ll105, ll106, ll107(a)(3), ll107(b),

25 ll115, or ll151 of the Patient’s Bill of Rights Act
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1 of 1999 (as incorporated under section 714) to the indi2 vidual circumstances of that participant or beneficiary; ex3 cept that—

4 ‘‘(A) such an action may not be brought or

5 maintained as a class action; and

6 ‘‘(B) in such an action relief may only provide

7 for the provision of (or payment for) benefits, items,

8 or services denied to the individual participant or

9 beneficiary involved (and for attorney’s fees and the

10 costs of the action, at the discretion of the court)

11 and shall not provide for any other relief to the par12 ticipant or beneficiary and for any relief to any other

13 person.

14 ‘‘(3) Nothing in this subsection shall be construed as

15 affecting any action brought by the Secretary.’’.

16 Subtitle D—Application to Group

17 Health Plans under the Internal

18 Revenue Code of 1986

19 SEC. ll401. AMENDMENTS TO THE INTERNAL REVENUE

20 CODE OF 1986.

21 Subchapter B of chapter 100 of the Internal Revenue

22 Code of 1986 (as amended by section 1531(a) of the Tax23 payer Relief Act of 1997) is amended—
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1 (1) in the table of sections, by inserting after

2 the item relating to section 9812 the following new

3 item:

‘‘Sec. 9813. Standard relating to patient freedom of choice.’’;

and

4 (2) by inserting after section 9812 the fol5 lowing:

6 ‘‘SEC. 9813. STANDARD RELATING TO PATIENTS’ BILL OF

7 RIGHTS.

8 ‘‘A group health plan shall comply with the require9 ments of subtitle A of the Patients’ Bill of Rights Act of

10 1999 (as in effect as of the date of the enactment of such

11 Act), and such requirements shall be deemed to be incor12 porated into this section.’’.

13 Subtitle E—Effective Dates;

14 Coordination in Implementation

15 SEC. ll501. EFFECTIVE DATES AND RELATED RULES.

16 (a) GROUP HEALTH COVERAGE.—

17 (1) IN GENERAL.—Subject to paragraph (2),

18 the amendments made by sections 201(a), 301, and

19 401 (and subtitle A insofar as it relates to such sec20 tions) shall apply with respect to group health plans,

21 and health insurance coverage offered in connection

22 with group health plans, for plan years beginning on

23 or after October 1, 2000 (in this section referred to

24 as the ‘‘general effective date’’).
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1 (2) TREATMENT OF COLLECTIVE BARGAINING

2 AGREEMENTS.—In the case of a group health plan

3 maintained pursuant to 1 or more collective bar4 gaining agreements between employee representa5 tives and 1 or more employers ratified before the

6 date of enactment of this title, the amendments

7 made by sections ll201(a), ll301, and

8 ll401 (and subtitle A insofar as it relates to such

9 sections) shall not apply to plan years beginning be10 fore the later of—

11 (A) the date on which the last collective

12 bargaining agreements relating to the plan ter13 minates (determined without regard to any ex14 tension thereof agreed to after the date of en15 actment of this Act), or

16 (B) the general effective date.

17 For purposes of subparagraph (A), any plan amend18 ment made pursuant to a collective bargaining

19 agreement relating to the plan which amends the

20 plan solely to conform to any requirement added by

21 this title shall not be treated as a termination of

22 such collective bargaining agreement.

23 (b) INDIVIDUAL HEALTH INSURANCE COVERAGE.—

24 The amendments made by section ll202 shall apply

25 with respect to individual health insurance coverage of-
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1 fered, sold, issued, renewed, in effect, or operated in the

2 individual market on or after the general effective date.

3 (c) TREATMENT OF RELIGIOUS NONMEDICAL PRO4 VIDERS.—

5 (1) IN GENERAL.—Nothing in this title (or the

6 amendments made thereby) shall be construed to—

7 (A) restrict or limit the right of group

8 health plans, and of health insurance issuers of9 fering health insurance coverage, to include as

10 providers religious nonmedical providers;

11 (B) require such plans or issuers to—

12 (i) utilize medically based eligibility

13 standards or criteria in deciding provider

14 status of religious nonmedical providers;

15 (ii) use medical professionals or cri16 teria to decide patient access to religious

17 nonmedical providers;

18 (iii) utilize medical professionals or

19 criteria in making decisions in internal or

20 external appeals regarding coverage for

21 care by religious nonmedical providers; or

22 (iv) compel a participant or bene23 ficiary to undergo a medical examination

24 or test as a condition of receiving health
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1 insurance coverage for treatment by a reli2 gious nonmedical provider; or

3 (C) require such plans or issuers to ex4 clude religious nonmedical providers because

5 they do not provide medical or other required

6 data, if such data is inconsistent with the reli7 gious nonmedical treatment or nursing care

8 provided by the provider.

9 (2) RELIGIOUS NONMEDICAL PROVIDER.—For

10 purposes of this subsection, the term ‘‘religious non11 medical provider’’ means a provider who provides no

12 medical care but who provides only religious non13 medical treatment or religious nonmedical nursing

14 care.

15 SEC. ll502. COORDINATION IN IMPLEMENTATION.

16 Section 104(1) of Health Insurance Portability and

17 Accountability Act of 1996 is amended by striking ‘‘this

18 subtitle (and the amendments made by this subtitle and

19 section 401)’’ and inserting ‘‘the provisions of part 7 of

20 subtitle B of title I of the Employee Retirement Income

21 Security Act of 1974, the provisions of parts A and C of

22 title XXVII of the Public Health Service Act, chapter 100

23 of the Internal Revenue Code of 1986, and subtitle A of

24 the Patients’ Bill of Rights Act of 1999’’.
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1 SEC. ll503. NO IMPACT ON SOCIAL SECURITY TRUST

2 FUND.

3 (a) IN GENERAL.—Nothing in this title shall be con4 strued to alter or amend the Social Security Act (or any

5 regulation promulgated under that Act).

6 (b) TRANSFERS.—

7 (1) ESTIMATE OF SECRETARY.—The Secretary

8 of the Treasury shall annually estimate the impact

9 that the enactment of this title has on the income

10 and balances of the trust funds established under

11 section 201 of the Social Security Act (42 U.S.C.

12 401).

13 (2) TRANSFER OF FUNDS.—If, under para14 graph (1), the Secretary of the Treasury estimates

15 that the enactment of this title has a negative im16 pact on the income and balances of the trust funds

17 established under section 201 of the Social Security

18 Act (42 U.S.C. 401), the Secretary shall transfer,

19 not less frequently than quarterly, from the general

20 revenues of the Federal Government an amount suf21 ficient so as to ensure that the income and balances

22 of such trust funds are not reduced as a result of

23 the enactment of such title.
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1 Subtitle F—Revenue-Related

2 Provisions

3 SEC. ll601. INFORMATION REQUIREMENTS.

4 (a) INFORMATION FROM GROUP HEALTH PLANS.—

5 Section 1862(b) of the Social Security Act (42 U.S.C.

6 1395y(b)) is amended by adding at the end the following:

7 ‘‘(7) INFORMATION FROM GROUP HEALTH

8 PLANS.—

9 ‘‘(A) PROVISION OF INFORMATION BY

10 GROUP HEALTH PLANS.—The administrator of

11 a group health plan subject to the requirements

12 of paragraph (1) shall provide to the Secretary

13 such of the information elements described in

14 subparagraph (C) as the Secretary specifies,

15 and in such manner and at such times as the

16 Secretary may specify (but not more frequently

17 than 4 times per year), with respect to each in18 dividual covered under the plan who is entitled

19 to any benefits under this title.

20 ‘‘(B) PROVISION OF INFORMATION BY EM21 PLOYERS AND EMPLOYEE ORGANIZATIONS.—An

22 employer (or employee organization) that main23 tains or participates in a group health plan sub24 ject to the requirements of paragraph (1) shall

25 provide to the administrator of the plan such of
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1 the information elements required to be pro2 vided under subparagraph (A), and in such

3 manner and at such times as the Secretary may

4 specify, at a frequency consistent with that re5 quired under subparagraph (A) with respect to

6 each individual described in subparagraph (A)

7 who is covered under the plan by reason of em8 ployment with that employer or membership in

9 the organization.

10 ‘‘(C) INFORMATION ELEMENTS.—The in11 formation elements described in this subpara12 graph are the following:

13 ‘‘(i) ELEMENTS CONCERNING THE IN14 DIVIDUAL.—

15 ‘‘(I) The individual’s name.

16 ‘‘(II) The individual’s date of

17 birth.

18 ‘‘(III) The individual’s sex.

19 ‘‘(IV) The individual’s social se20 curity insurance number.

21 ‘‘(V) The number assigned by the

22 Secretary to the individual for claims

23 under this title.

24 ‘‘(VI) The family relationship of

25 the individual to the person who has
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1 or had current or employment status

2 with the employer.

3 ‘‘(ii) ELEMENTS CONCERNING THE

4 FAMILY MEMBER WITH CURRENT OR

5 FORMER EMPLOYMENT STATUS.—

6 ‘‘(I) The name of the person in

7 the individual’s family who has cur8 rent or former employment status

9 with the employer.

10 ‘‘(II) That person’s social secu11 rity insurance number.

12 ‘‘(III) The number or other iden13 tifier assigned by the plan to that per14 son.

15 ‘‘(IV) The periods of coverage for

16 that person under the plan.

17 ‘‘(V) The employment status of

18 that person (current or former) dur19 ing those periods of coverage.

20 ‘‘(VI) The classes (of that per21 son’s family members) covered under

22 the plan.

23 ‘‘(iii) PLAN ELEMENTS.—

24 ‘‘(I) The items and services cov25 ered under the plan.
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1 ‘‘(II) The name and address to

2 which claims under the plan are to be

3 sent.

4 ‘‘(iv) ELEMENTS CONCERNING THE

5 EMPLOYER.—

6 ‘‘(I) The employer’s name.

7 ‘‘(II) The employer’s address.

8 ‘‘(III) The employer identifica9 tion number of the employer.

10 ‘‘(D) USE OF IDENTIFIERS.—The adminis11 trator of a group health plan shall utilize a

12 unique identifier for the plan in providing infor13 mation under subparagraph (A) and in other

14 transactions, as may be specified by the Sec15 retary, related to the provisions of this sub16 section. The Secretary may provide to the ad17 ministrator the unique identifier described in

18 the preceding sentence.

19 ‘‘(E) PENALTY FOR NONCOMPLIANCE.—

20 Any entity that knowingly and willfully fails to

21 comply with a requirement imposed by the pre22 vious subparagraphs shall be subject to a civil

23 money penalty not to exceed $1,000 for each in24 cident of such failure. The provisions of section

25 1128A (other than subsections (a) and (b))
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1 shall apply to a civil money penalty under the

2 previous sentence in the same manner as those

3 provisions apply to a penalty or proceeding

4 under section 1128A(a).’’

5 (b) EFFECTIVE DATE.—The amendment made by

6 subsection (a) shall take effect 180 days after the date

7 of the enactment of this Act.

8 SEC. ll602. EXTENSION OF HAZARDOUS SUBSTANCE

9 SUPERFUND TAXES.

10 (a) EXTENSION OF TAXES.—

11 (1) ENVIRONMENTAL TAX.—Section 59A(e) of

12 the Internal Revenue Code of 1986 is amended to

13 read as follows:

14 ‘‘(e) APPLICATION OF TAX.—The tax imposed by this

15 section shall apply to taxable years beginning after De16 cember 31, 1986, and before January 1, 1996, and to tax17 able years beginning after December 31, 1998, and before

18 January 1, 2010.’’

19 (2) EXCISE TAXES.—Section 4611(e) of such

20 Code is amended to read as follows:

21 ‘‘(e) APPLICATION OF HAZARDOUS SUBSTANCE

22 SUPERFUND FINANCING RATE.—The Hazardous Sub23 stance Superfund financing rate under this section shall

24 apply after December 31, 1986, and before January 1,
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1 1996, and after September 15, 1999, and before October

2 1, 2009.’’

3 (b) EFFECTIVE DATES.—

4 (1) INCOME TAX.—The amendment made by

5 subsection (a)(1) shall apply to taxable years begin6 ning after December 31, 1998.

7 (2) EXCISE TAX.—The amendment made by

8 subsection (a)(2) shall take effect on September 15,

9 1999.

10 SEC. ll603. MODIFICATION TO FOREIGN TAX CREDIT

11 CARRYBACK AND CARRYOVER PERIODS.

12 (a) IN GENERAL.—Section 904(c) of the Internal

13 Revenue Code of 1986 (relating to limitation on credit)

14 is amended—

15 (1) by striking ‘‘in the second preceding taxable

16 year,’’, and

17 (2) by striking ‘‘or fifth’’ and inserting ‘‘fifth,

18 sixth, or seventh’’.

19 (b) EFFECTIVE DATE.—The amendment made by

20 subsection (a) shall apply to credits arising in taxable

21 years beginning after December 31, 2001.

22 SEC. ll604. LIMITATIONS ON WELFARE BENEFIT FUNDS

23 OF 10 OR MORE EMPLOYER PLANS.

24 (a) BENEFITS TO WHICH EXCEPTION APPLIES.—

25 Section 419A(f)(6)(A) of the Internal Revenue Code of
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1 1986 (relating to exception for 10 or more employer plans)

2 is amended to read as follows:

3 ‘‘(A) IN GENERAL.—This subpart shall not

4 apply to a welfare benefit fund which is part of

5 a 10 or more employer plan if the only benefits

6 provided through the fund are 1 or more of the

7 following:

8 ‘‘(i) Medical benefits.

9 ‘‘(ii) Disability benefits.

10 ‘‘(iii) Group term life insurance bene11 fits which do not provide for any cash sur12 render value or other money that can be

13 paid, assigned, borrowed, or pledged for

14 collateral for a loan.

15 The preceding sentence shall not apply to any

16 plan which maintains experience-rating arrange17 ments with respect to individual employers.’’

18 (b) LIMITATION ON USE OF AMOUNTS FOR OTHER

19 PURPOSES.—Section 4976(b) of the Internal Revenue

20 Code of 1986 (defining disqualified benefit) is amended

21 by adding at the end the following new paragraph:

22 ‘‘(5) SPECIAL RULE FOR 10 OR MORE EM23 PLOYER PLANS EXEMPTED FROM PREFUNDING LIM24 ITS.—For purposes of paragraph (1)(C), if—
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1 ‘‘(A) subpart D of part I of subchapter D

2 of chapter 1 does not apply by reason of section

3 419A(f)(6) to contributions to provide 1 or

4 more welfare benefits through a welfare benefit

5 fund under a 10 or more employer plan, and

6 ‘‘(B) any portion of the welfare benefit

7 fund attributable to such contributions is used

8 for a purpose other than that for which the con9 tributions were made,

10 then such portion shall be treated as reverting to the

11 benefit of the employers maintaining the fund.’’

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to contributions paid or accrued

14 after the date of the enactment of this Act, in taxable

15 years ending after such date.

16 SEC. ll605. MODIFICATION OF INSTALLMENT METHOD

17 AND REPEAL OF INSTALLMENT METHOD FOR

18 ACCRUAL METHOD TAXPAYERS.

19 (a) REPEAL OF INSTALLMENT METHOD FOR AC20 CRUAL BASIS TAXPAYERS.—

21 (1) IN GENERAL.—Subsection (a) of section

22 453 of the Internal Revenue Code of 1986 (relating

23 to installment method) is amended to read as fol24 lows:

25 ‘‘(a) USE OF INSTALLMENT METHOD.—
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1 ‘‘(1) IN GENERAL.—Except as otherwise pro2 vided in this section, income from an installment

3 sale shall be taken into account for purposes of this

4 title under the installment method.

5 ‘‘(2) ACCRUAL METHOD TAXPAYER.—The in6 stallment method shall not apply to income from an

7 installment sale if such income would be reported

8 under an accrual method of accounting without re9 gard to this section. The preceding sentence shall

10 not apply to a disposition described in subparagraph

11 (A) or (B) of subsection (l)(2).’’

12 (2) CONFORMING AMENDMENTS.—Sections

13 453(d)(1), 453(i)(1), and 453(k) of the Internal

14 Revenue Code of 1986 are each amended by striking

15 ‘‘(a)’’ each place it appears and inserting ‘‘(a)(1)’’.

16 (b) MODIFICATION OF PLEDGE RULES.—Paragraph

17 (4) of section 453A(d) (relating to pledges, etc., of install18 ment obligations) is amended by adding at the end the

19 following: ‘‘A payment shall be treated as directly secured

20 by an interest in an installment obligation to the extent

21 an arrangement allows the taxpayer to satisfy all or a por22 tion of the indebtedness with the installment obligation.’’

23 (c) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to sales or other dispositions occur25 ring on or after the date of the enactment of this Act.