I

106TH CONGRESS

1ST SESSION H. R. 719

To amend the Public Health Service Act and the Employee Retirement

Income Security Act of 1974 to protect consumers in managed care

plans and other health coverage.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 11, 1999

Mr. GANSKE (for himself, Mrs. ROUKEMA, Mr. LEACH, Mr. WAMP, Mr.

FORBES, Mr. PETRI, Mr. SHAYS, Mr. HORN, Mr. FRELINGHUYSEN, Mr.

FOLEY, and Mr. COOKSEY) introduced the following bill; which was referred to the Committee on Commerce, and in addition to the Committee

on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

A BILL

To amend the Public Health Service Act and the Employee

Retirement Income Security Act of 1974 to protect consumers in managed care plans and other health coverage.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Managed Care Reform Act of 1999’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:
2

•HR 719 IH

Sec. 1. Short title; table of contents.

TITLE I—MANAGED CARE CONSUMER PROTECTIONS

Subtitle A—Access to Care

Sec. 101. Access to emergency care.

Sec. 102. Offering of choice of coverage options under group health plans.

Sec. 103. Choice of providers.

Sec. 104. Access to specialty care.

Sec. 105. Continuity of care.

Sec. 106. Coverage for individuals participating in approved clinical trials.

Sec. 107. Access to needed prescription drugs.

Sec. 108. Adequacy of provider network.

Subtitle B—Quality Assurance

Sec. 111. Standards for utilization review activities.

Subtitle C—Patient Information

Sec. 121. Patient information.

Sec. 122. Protection of patient confidentiality.

Sec. 123. Health insurance ombudsmen.

Subtitle D—Grievance and Appeals Procedures

Sec. 131. Establishment of grievance process.

Sec. 132. Internal appeals of adverse determinations.

Sec. 133. External appeals of adverse determinations.

Subtitle E—Protecting the Doctor-Patient Relationship

Sec. 141. Prohibition of interference with certain medical communications.

Sec. 142. Prohibition against transfer of indemnification or improper incentive

arrangements.

Sec. 143. Additional rules regarding participation of health care professionals.

Sec. 144. Protection for patient advocacy.

Subtitle F—Promoting Good Medical Practice

Sec. 151. Promoting good medical practice.

Sec. 152. Standards relating to benefits for certain breast cancer treatment.

Subtitle G—Definitions

Sec. 191. Definitions.

Sec. 192. Preemption; State flexibility; construction.

Sec. 193. Regulations.

TITLE II—APPLICATION OF PATIENT PROTECTION STANDARDS

TO GROUP HEALTH PLANS AND HEALTH INSURANCE COVERAGE UNDER PUBLIC HEALTH SERVICE ACT

Sec. 201. Application to group health plans and group health insurance coverage.

Sec. 202. Application to individual health insurance coverage.
3

•HR 719 IH

TITLE III—AMENDMENTS TO THE EMPLOYEE RETIREMENT

INCOME SECURITY ACT OF 1974

Sec. 301. Application of patient protection standards to group health plans and

group health insurance coverage under the Employee Retirement Income Security Act of 1974.

Sec. 302. ERISA preemption not to apply to certain actions involving health insurance policyholders.

TITLE IV—EFFECTIVE DATES; COORDINATION IN

IMPLEMENTATION

Sec. 401. Effective dates.

Sec. 402. Coordination in implementation.

1 TITLE I—MANAGED CARE

2 CONSUMER PROTECTIONS

3 Subtitle A—Access to Care

4 SEC. 101. 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
4

•HR 719 IH

1 the participant, beneficiary, or enrollee is not

2 liable for amounts that exceed the amounts of

3 liability that would be incurred if the services

4 were provided by a participating health care

5 provider; and

6 (D) without regard to any other term or

7 condition of such coverage (other than exclusion

8 or coordination of benefits, or an affiliation or

9 waiting period, permitted under section 2701 of

10 the Public Health Service Act, section 701 of

11 the Employee Retirement Income Security Act

12 of 1974, or section 9801 of the Internal Reve13 nue Code of 1986, and other than applicable

14 cost-sharing).

15 (2) DEFINITIONS.—In this section:

16 (A) EMERGENCY MEDICAL CONDITION

17 BASED ON PRUDENT LAYPERSON STANDARD.—

18 The term ‘‘emergency medical condition’’ means

19 a medical condition manifesting itself by acute

20 symptoms of sufficient severity (including se21 vere pain) such that a prudent layperson, who

22 possesses an average knowledge of health and

23 medicine, could reasonably expect the absence

24 of immediate medical attention to result in a

25 condition described in clause (i), (ii), or (iii) of
5

•HR 719 IH

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

2 Act.

3 (B) EMERGENCY SERVICES.—The term

4 ‘‘emergency services’’ means—

5 (i) a medical screening examination

6 (as required under section 1867 of the So7 cial Security Act) that is within the capa8 bility of the emergency department of a

9 hospital, including ancillary services rou10 tinely available to the emergency depart11 ment to evaluate an emergency medical

12 condition (as defined in subparagraph

13 (A)), and

14 (ii) within the capabilities of the staff

15 and facilities available at the hospital, such

16 further medical examination and treatment

17 as are required under section 1867 of such

18 Act to stabilize the patient.

19 (b) REIMBURSEMENT FOR MAINTENANCE CARE AND

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

21 (other than emergency services) for which benefits are

22 available under a group health plan, or under health insur23 ance coverage offered by a health insurance issuer, the

24 plan or issuer shall provide for reimbursement with re25 spect to such services provided to a participant, bene-
6

•HR 719 IH

1 ficiary, or enrollee other than through a participating

2 health care provider in a manner consistent with sub3 section (a)(1)(C) (and shall otherwise comply with the

4 guidelines established under section 1852(d)(2) of the So5 cial Security Act (relating to promoting efficient and time6 ly coordination of appropriate maintenance and post-sta7 bilization care of an enrollee after an enrollee has been

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

9 under such section, such guidelines as the Secretary shall

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

11 maintenance care or post-stabilization care covered under

12 such guidelines.

13 SEC. 102. OFFERING OF CHOICE OF COVERAGE OPTIONS

14 UNDER GROUP HEALTH PLANS.

15 (a) REQUIREMENT.—

16 (1) OFFERING OF POINT-OF-SERVICE COV17 ERAGE OPTION.—Except as provided in paragraph

18 (2), if a group health plan (or health insurance cov19 erage offered by a health insurance issuer in connec20 tion with a group health plan) provides benefits only

21 through participating health care providers, the plan

22 or issuer shall offer the participant the option to

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

24 subsection (b)) for all such benefits for which cov25 erage is otherwise so limited. Such option shall be
7

•HR 719 IH

1 made available to the participant at the time of en2 rollment under the plan or coverage and at such

3 other times as the plan or issuer offers the partici4 pant a choice of coverage options.

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

6 apply with respect to a participant in a group health

7 plan if the plan offers the participant—

8 (A) a choice of health insurance coverage;

9 and

10 (B) one or more coverage options which do

11 not provide benefits only through participating

12 health care providers and which provide for

13 payment for nonparticipating providers in an

14 amount that is not less than the amount paid

15 to a participating provider for the same serv16 ices.

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

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

19 with respect to benefits covered under a group health plan

20 or health insurance issuer, coverage of such benefits when

21 provided by a nonparticipating health care provider

22 through payment of an amount that is not less than the

23 amount paid to a participating health care provider for

24 the same services. Such coverage need not include cov-
8

•HR 719 IH

1 erage of providers that the plan or issuer excludes because

2 of fraud, quality, or similar reasons.

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

4 construed—

5 (1) as requiring coverage for benefits for a par6 ticular type of health care provider;

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

8 as a result of this section or to make equal contribu9 tions with respect to different health coverage op10 tions; or

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

12 insurance issuer from imposing higher premiums or

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

14 point-of-service coverage option.

15 (d) NO REQUIREMENT FOR GUARANTEED AVAIL16 ABILITY.—If a health insurance issuer offers health insur17 ance coverage that includes point-of-service coverage with

18 respect to an employer solely in order to meet the require19 ment of subsection (a), nothing in section 2711(a)(1)(A)

20 of the Public Health Service Act shall be construed as re21 quiring the offering of such coverage with respect to an22 other employer.

23 SEC. 103. CHOICE OF PROVIDERS.

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

25 health insurance issuer that offers health insurance cov-
9

•HR 719 IH

1 erage, shall permit each participant, beneficiary, and en2 rollee to receive primary care from any participating pri3 mary care provider who is available to accept such individ4 ual.

5 (b) SPECIALISTS.—

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

7 group health plan and a health insurance issuer that

8 offers health insurance coverage shall permit each

9 participant, beneficiary, or enrollee to receive medi10 cally necessary or appropriate specialty care, pursu11 ant to appropriate referral procedures, from any

12 qualified participating health care provider who is

13 available to accept such individual for such care.

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

15 apply to specialty care if the plan or issuer clearly

16 informs participants, beneficiaries, and enrollees of

17 the limitations on choice of participating providers

18 with respect to such care.

19 SEC. 104. ACCESS TO SPECIALTY CARE.

20 (a) OBSTETRICAL AND GYNECOLOGICAL CARE.—

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

22 health insurance issuer in connection with the provi23 sion of health insurance coverage, requires or pro24 vides for a participant, beneficiary, or enrollee to
10

•HR 719 IH

1 designate a participating primary care provider, the

2 plan or issuer—

3 (A) may not require authorization or a re4 ferral by the individual’s primary care provider

5 or otherwise for coverage of routine gyneco6 logical care (such as preventive women’s health

7 examinations) and pregnancy-related services

8 provided by a participating health care profes9 sional who specializes in obstetrics and gyne10 cology to the extent such care is otherwise cov11 ered, and

12 (B) may treat the ordering of other gyne13 cological care by such a participating physician

14 as the authorization of the primary care pro15 vider with respect to such care under the plan

16 or coverage.

17 (2) CONSTRUCTION.—Nothing in paragraph

18 (1)(B) shall waive any requirements of coverage re19 lating to medical necessity or appropriateness with

20 respect to coverage of gynecological care so ordered.

21 (b) PEDIATRIC CARE.—If a group health plan, or a

22 health insurance issuer in connection with the provision

23 of health insurance coverage, requires or providers for an

24 enrollee to designate a participating primary care provider

25 for a child of such enrollee, the plan or issuer shall permit
11

•HR 719 IH

1 the enrollee to designate a physician who specializes in pe2 diatrics as the child’s primary care provider.

3 (c) SPECIALTY CARE.—

4 (1) SPECIALTY CARE FOR COVERED SERV5 ICES.—

6 (A) IN GENERAL.—If—

7 (i) an individual is a participant or

8 beneficiary under a group health plan or

9 an enrollee who is covered under health in10 surance coverage offered by a health insur11 ance issuer,

12 (ii) the individual has a condition or

13 disease of sufficient seriousness and com14 plexity to require treatment by a specialist,

15 and

16 (iii) benefits for such treatment are

17 provided under the plan or coverage,

18 the plan or issuer shall make or provide for a

19 referral to a specialist who is available and ac20 cessible to provide the treatment for such condi21 tion or disease.

22 (B) SPECIALIST DEFINED.—For purposes

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

24 with respect to a condition, a health care practi25 tioner, facility, or center (such as a center of
12

•HR 719 IH

1 excellence) that has adequate expertise through

2 appropriate training and experience (including,

3 in the case of a child, appropriate pediatric ex4 pertise) to provide high quality care in treating

5 the condition.

6 (C) CARE UNDER REFERRAL.—A group

7 health plan or health insurance issuer may re8 quire that the care provided to an individual

9 pursuant to such referral under subparagraph

10 (A) be—

11 (i) pursuant to a treatment plan, only

12 if the treatment plan is developed by the

13 specialist and approved by the plan or

14 issuer, in consultation with the designated

15 primary care provider or specialist and the

16 individual (or the individual’s designee),

17 and

18 (ii) in accordance with applicable

19 quality assurance and utilization review

20 standards of the plan or issuer.

21 Nothing in this subsection shall be construed as

22 preventing such a treatment plan for an individ23 ual from requiring a specialist to provide the

24 primary care provider with regular updates on
13

•HR 719 IH

1 the specialty care provided, as well as all nec2 essary medical information.

3 (D) REFERRALS TO PARTICIPATING PRO4 VIDERS.—A group health plan or health insur5 ance issuer is not required under subparagraph

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

7 is not a participating provider, unless the plan

8 or issuer does not have an appropriate specialist

9 that is available and accessible to treat the indi10 vidual’s condition and that is a participating

11 provider with respect to such treatment.

12 (E) TREATMENT OF NONPARTICIPATING

13 PROVIDERS.—If a plan or issuer refers an indi14 vidual to a nonparticipating specialist pursuant

15 to subparagraph (A), services provided pursu16 ant to the approved treatment plan (if any)

17 shall be provided at no additional cost to the in18 dividual beyond what the individual would oth19 erwise pay for services received by such a spe20 cialist that is a participating provider.

21 (2) SPECIALISTS AS GATEKEEPER FOR TREAT22 MENT OF ONGOING SPECIAL CONDITIONS.—

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

24 a health insurance issuer, in connection with

25 the provision of health insurance coverage, shall
14

•HR 719 IH

1 have a procedure by which an individual who is

2 a participant, beneficiary, or enrollee and who

3 has an ongoing special condition (as defined in

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

5 specialist for such condition who shall be re6 sponsible for and capable of providing and co7 ordinating the individual’s care with respect to

8 the condition. If such an individual’s care would

9 most appropriately be coordinated by such a

10 specialist, such plan or issuer shall refer the in11 dividual to such specialist.

12 (B) TREATMENT AS PRIMARY CARE PRO13 VIDER FOR RELATED REFERRALS.—Such spe14 cialist shall be permitted to treat the individual

15 without a referral from the individual’s primary

16 care provider and may authorize such referrals,

17 procedures, tests, and other medical services as

18 the individual’s primary care provider would

19 otherwise be permitted to provide or authorize,

20 subject to the terms of the treatment plan (re21 ferred to in paragraph (1)(C)(i)) with respect to

22 the ongoing special condition.

23 (C) ONGOING SPECIAL CONDITION DE24 FINED.—In this paragraph, the term ‘‘ongoing
15

•HR 719 IH

1 special condition’’ means a condition or disease

2 that—

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

4 disabling, and

5 (ii) requires specialized medical care

6 over a prolonged period of time.

7 (D) TERMS OF REFERRAL.—The provi8 sions of subparagraphs (C) through (E) of

9 paragraph (1) apply with respect to referrals

10 under subparagraph (A) of this paragraph in

11 the same manner as they apply to referrals

12 under paragraph (1)(A).

13 (3) STANDING REFERRALS.—

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

15 and a health insurance issuer in connection

16 with the provision of health insurance coverage,

17 shall have a procedure by which an individual

18 who is a participant, beneficiary, or enrollee

19 and who has a condition that requires ongoing

20 care from a specialist may receive a standing

21 referral to such specialist for treatment of such

22 condition. If the plan or issuer, or if the pri23 mary care provider in consultation with the

24 medical director of the plan or issuer and the

25 specialist (if any), determines that such a
16

•HR 719 IH

1 standing referral is appropriate, the plan or

2 issuer shall make such a referral to such a spe3 cialist.

4 (B) TERMS OF REFERRAL.—The provi5 sions of subparagraphs (C) through (E) of

6 paragraph (1) apply with respect to referrals

7 under subparagraph (A) of this paragraph in

8 the same manner as they apply to referrals

9 under paragraph (1)(A).

10 SEC. 105. CONTINUITY OF CARE.

11 (a) IN GENERAL.—

12 (1) TERMINATION OF PROVIDER.—If a contract

13 between a group health plan, or a health insurance

14 issuer in connection with the provision of health in15 surance coverage, and a health care provider is ter16 minated (as defined in paragraph (3)), or benefits or

17 coverage provided by a health care provider are ter18 minated because of a change in the terms of pro19 vider participation in a group health plan, and an in20 dividual who is a participant, beneficiary, or enrollee

21 in the plan or coverage is undergoing a course of

22 treatment from the provider at the time of such ter23 mination, the plan or issuer shall—

24 (A) notify the individual on a timely basis

25 of such termination, and
17

•HR 719 IH

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

2 individual to continue or be covered with re3 spect to the course of treatment with the pro4 vider during a transitional period (provided

5 under subsection (b)).

6 (2) TREATMENT OF TERMINATION OF CON7 TRACT WITH HEALTH INSURANCE ISSUER.—If a

8 contract for the provision of health insurance cov9 erage between a group health plan and a health in10 surance issuer is terminated and, as a result of such

11 termination, coverage of services of a health care

12 provider is terminated with respect to an individual,

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

14 provisions of this section) shall apply under the plan

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

16 between the plan and the provider that had been ter17 minated, but only with respect to benefits that are

18 covered under the plan after the contract termi19 nation.

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

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

22 the expiration or nonrenewal of the contract, but

23 does not include a termination of the contract by the

24 plan or issuer for failure to meet applicable quality

25 standards or for fraud.
18

•HR 719 IH

1 (b) TRANSITIONAL PERIOD.—

2 (1) IN GENERAL.—Except as provided in para3 graphs (2) through (4), the transitional period under

4 this subsection shall extend for at least 90 days from

5 the date of the notice described in subsection

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

7 (2) INSTITUTIONAL CARE.—The transitional pe8 riod under this subsection for institutional or inpa9 tient care from a provider shall extend until the dis10 charge or termination of the period of institutional11 ization and also shall include institutional care pro12 vided within a reasonable time of the date of termi13 nation of the provider status if the care was sched14 uled before the date of the announcement of the ter15 mination of the provider status under subsection

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

17 an established waiting list or otherwise scheduled to

18 have such care.

19 (3) PREGNANCY.—If—

20 (A) a participant, beneficiary, or enrollee

21 has entered the second trimester of pregnancy

22 at the time of a provider’s termination of par23 ticipation, and

24 (B) the provider was treating the preg25 nancy before date of the termination,
19

•HR 719 IH

1 the transitional period under this subsection with re2 spect to provider’s treatment of the pregnancy shall

3 extend through the provision of post-partum care di4 rectly related to the delivery.

5 (4) TERMINAL ILLNESS.—If—

6 (A) a participant, beneficiary, or enrollee

7 was determined to be terminally ill (as deter8 mined under section 1861(dd)(3)(A) of the So9 cial Security Act) at the time of a provider’s

10 termination of participation, and

11 (B) the provider was treating the terminal

12 illness before the date of termination,

13 the transitional period under this subsection shall

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

15 care directly related to the treatment of the terminal

16 illness or its medical manifestations.

17 (c) PERMISSIBLE TERMS AND CONDITIONS.—A

18 group health plan or health insurance issuer may condi19 tion coverage of continued treatment by a provider under

20 subsection (a)(1)(B) upon the provider agreeing to the fol21 lowing terms and conditions:

22 (1) The provider agrees to accept reimburse23 ment from the plan or issuer and individual involved

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

25 prior to the start of the transitional period as pay-
20

•HR 719 IH

1 ment in full (or, in the case described in subsection

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

3 plan or issuer after the date of the termination of

4 the contract with the health insurance issuer) and

5 not to impose cost-sharing with respect to the indi6 vidual in an amount that would exceed the cost-shar7 ing that could have been imposed if the contract re8 ferred to in subsection (a)(1) had not been termi9 nated.

10 (2) The provider agrees to adhere to the quality

11 assurance standards of the plan or issuer responsible

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

13 such plan or issuer necessary medical information

14 related to the care provided.

15 (3) The provider agrees otherwise to adhere to

16 such plan’s or issuer’s policies and procedures, in17 cluding procedures regarding referrals and obtaining

18 prior authorization and providing services pursuant

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

20 issuer.

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

22 construed to require the coverage of benefits which would

23 not have been covered if the provider involved remained

24 a participating provider.
21

•HR 719 IH

1 SEC. 106. COVERAGE FOR INDIVIDUALS PARTICIPATING IN

2 APPROVED CLINICAL TRIALS.

3 (a) COVERAGE.—

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

5 health insurance issuer that is providing health in6 surance coverage, provides coverage to a qualified in7 dividual (as defined in subsection (b)), the plan or

8 issuer—

9 (A) may not deny the individual participa10 tion in the clinical trial referred to in subsection

11 (b)(2);

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

13 (or limit or impose additional conditions on) the

14 coverage of routine patient costs for items and

15 services furnished in connection with participa16 tion in the trial; and

17 (C) may not discriminate against the indi18 vidual on the basis of the enrollee’s participa19 tion in such trial.

20 (2) EXCLUSION OF CERTAIN COSTS.—For pur21 poses of paragraph (1)(B), routine patient costs do

22 not include the cost of the tests or measurements

23 conducted primarily for the purpose of the clinical

24 trial involved.

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

26 or more participating providers is participating in a
22

•HR 719 IH

1 clinical trial, nothing in paragraph (1) shall be con2 strued as preventing a plan or issuer from requiring

3 that a qualified individual participate in the trial

4 through such a participating provider if the provider

5 will accept the individual as a participant in the

6 trial.

7 (b) QUALIFIED INDIVIDUAL DEFINED.—For pur8 poses of subsection (a), the term ‘‘qualified individual’’

9 means an individual who is a participant or beneficiary

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

11 insurance coverage, and who meets the following condi12 tions:

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

14 serious illness for which no standard treatment is ef15 fective.

16 (B) The individual is eligible to participate in

17 an approved clinical trial according to the trial pro18 tocol with respect to treatment of such illness.

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

20 offers meaningful potential for significant clinical

21 benefit for the individual.

22 (2) Either—

23 (A) the referring physician is a participat24 ing health care professional and has concluded

25 that the individual’s participation in such trial
23

•HR 719 IH

1 would be appropriate based upon the individual

2 meeting the conditions described in paragraph

3 (1); or

4 (B) the participant, beneficiary, or enrollee

5 provides medical and scientific information es6 tablishing that the individual’s participation in

7 such trial would be appropriate based upon the

8 individual meeting the conditions described in

9 paragraph (1).

10 (c) PAYMENT.—

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

12 health plan or health insurance issuer shall provide

13 for payment for routine patient costs described in

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

15 of items and services that are reasonably expected

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

17 the sponsors of an approved clinical trial.

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

19 items and services provided by—

20 (A) a participating provider, the payment

21 rate shall be at the agreed upon rate, or

22 (B) a nonparticipating provider, the pay23 ment rate shall be at the rate the plan or issuer

24 would normally pay for comparable services

25 under subparagraph (A).
24

•HR 719 IH

1 (d) APPROVED CLINICAL TRIAL DEFINED.—

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

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

4 study or clinical investigation approved and funded

5 (which may include funding through in-kind con6 tributions) by one or more of the following:

7 (A) The National Institutes of Health.

8 (B) A cooperative group or center of the

9 National Institutes of Health.

10 (C) Either of the following if the condi11 tions described in paragraph (2) are met:

12 (i) The Department of Veterans Af13 fairs.

14 (ii) The Department of Defense.

15 (2) CONDITIONS FOR DEPARTMENTS.—The

16 conditions described in this paragraph, for a study

17 or investigation conducted by a Department, are

18 that the study or investigation has been reviewed

19 and approved through a system of peer review that

20 the Secretary determines—

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

22 review of studies and investigations used by the

23 National Institutes of Health, and
25

•HR 719 IH

1 (B) assures unbiased review of the highest

2 scientific standards by qualified individuals who

3 have no interest in the outcome of the review.

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

5 construed to limit a plan’s or issuer’s coverage with re6 spect to clinical trials.

7 SEC. 107. ACCESS TO NEEDED PRESCRIPTION DRUGS.

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

9 insurance issuer that offers health insurance coverage,

10 provides benefits with respect to prescription drugs but

11 the coverage limits such benefits to drugs included in a

12 formulary, the plan or issuer shall—

13 (1) ensure participation of participating physi14 cians and pharmacists in the development of the for15 mulary;

16 (2) disclose to providers and, disclose upon re17 quest under section 121(c)(6) to participants, bene18 ficiaries, and enrollees, the nature of the formulary

19 restrictions; and

20 (3) consistent with the standards for a utiliza21 tion review program under section 111, provide for

22 exceptions from the formulary limitation when a

23 non-formulary alternative is medically indicated.

24 (b) COVERAGE OF APPROVED DRUGS AND MEDICAL

25 DEVICES.—
26

•HR 719 IH

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

2 health insurance coverage offered in connection with

3 such a plan) that provides any coverage of prescrip4 tion drugs or medical devices shall not deny coverage

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

6 is investigational, if the use—

7 (A) in the case of a prescription drug—

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

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

11 section 505 of the Federal Food, Drug,

12 and Cosmetic Act, without regard to any

13 postmarketing requirements that may

14 apply under such Act; or

15 (ii) is included in the labeling author16 ized by the application in effect for the

17 drug under section 351 of the Public

18 Health Service Act, without regard to any

19 postmarketing requirements that may

20 apply pursuant to such section; or

21 (B) in the case of a medical device, is in22 cluded in the labeling authorized by a regula23 tion under subsection (d) or (3) of section 513

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

25 an order under subsection (f) of such section, or
27

•HR 719 IH

1 an application approved under section 515 of

2 such Act, without regard to any postmarketing

3 requirements that may apply under such Act.

4 (2) CONSTRUCTION.—Nothing in this sub5 section shall be construed as requiring a group

6 health plan (or health insurance coverage offered in

7 connection with such a plan) to provide any coverage

8 of prescription drugs or medical devices.

9 SEC. 108. ADEQUACY OF PROVIDER NETWORK.

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

11 health insurance issuer offering health insurance coverage,

12 that provides benefits, in whole or in part, through partici13 pating health care providers shall have (in relation to the

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

15 qualified participating health care providers to ensure that

16 all covered health care services, including specialty serv17 ices, will be available and accessible in a timely manner

18 to all participants, beneficiaries, and enrollees under the

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

20 plan’s or issuer’s application of restrictions on the partici21 pation of health care providers in a network and shall not

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

23 establish new health care providers in an area.

24 (b) TREATMENT OF CERTAIN PROVIDERS.—The

25 qualified health care providers under subsection (a) may
28

•HR 719 IH

1 include Federally qualified health centers, rural health

2 clinics, migrant health centers, and other essential com3 munity providers located in the service area of the plan

4 or issuer and shall include such providers if necessary to

5 meet the standards established to carry out such sub6 section.

7 Subtitle B—Quality Assurance

8 SEC. 111. STANDARDS FOR UTILIZATION REVIEW ACTIVI9 TIES.

10 (a) COMPLIANCE WITH REQUIREMENTS.—

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

12 health insurance issuer that provides health insur13 ance coverage, shall conduct utilization review activi14 ties in connection with the provision of benefits

15 under such plan or coverage only in accordance with

16 a utilization review program that meets the require17 ments of this section.

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

19 section shall be construed as preventing a group

20 health plan or health insurance issuer from arrang21 ing through a contract or otherwise for persons or

22 entities to conduct utilization review activities on be23 half of the plan or issuer, so long as such activities

24 are conducted in accordance with a utilization review

25 program that meets the requirements of this section.
29

•HR 719 IH

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.

20 (B) CONTINUING USE OF STANDARDS IN

21 RETROSPECTIVE REVIEW.—If a health care

22 service has been specifically pre-authorized or

23 approved for an enrollee under such a program,

24 the program shall not, pursuant to retrospective

25 review, revise or modify the specific standards,
30

•HR 719 IH

1 criteria, or procedures used for the utilization

2 review for procedures, treatment, and services

3 delivered to the enrollee during the same course

4 of treatment.

5 (c) CONDUCT OF PROGRAM ACTIVITIES.—

6 (1) ADMINISTRATION BY HEALTH CARE PRO7 FESSIONALS.—A utilization review program shall be

8 administered by qualified health care professionals

9 who shall oversee review decisions. In this sub10 section, the term ‘‘health care professional’’ means a

11 physician or other health care practitioner licensed,

12 accredited, or certified to perform specified health

13 services consistent with State law.

14 (2) USE OF QUALIFIED, INDEPENDENT PER15 SONNEL.—

16 (A) IN GENERAL.—A utilization review

17 program shall provide for the conduct of utiliza18 tion review activities only through personnel

19 who are qualified and, to the extent required,

20 who have received appropriate training in the

21 conduct of such activities under the program.

22 (B) PEER REVIEW OF SAMPLE OF AD23 VERSE CLINICAL DETERMINATIONS.—Such a

24 program shall provide that clinical peers (as de25 fined in section 191(c)(2)) shall evaluate the
31

•HR 719 IH

1 clinical appropriateness of at least a sample of

2 adverse clinical determinations.

3 (C) PROHIBITION OF CONTINGENT COM4 PENSATION ARRANGEMENTS.—Such a program

5 shall not, with respect to utilization review ac6 tivities, permit or provide compensation or any7 thing of value to its employees, agents, or con8 tractors in a manner that—

9 (i) provides incentives, direct or indi10 rect, for such persons to make inappropri11 ate review decisions, or

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

13 the quantity or type of adverse determina14 tions rendered.

15 (D) PROHIBITION OF CONFLICTS.—Such a

16 program shall not permit a health care profes17 sional who provides health care services to an

18 individual to perform utilization review activi19 ties in connection with the health care services

20 being provided to the individual.

21 (3) ACCESSIBILITY OF REVIEW.—Such a pro22 gram shall provide that appropriate personnel per23 forming utilization review activities under the pro24 gram are reasonably accessible by toll-free telephone

25 during normal business hours to discuss patient care
32

•HR 719 IH

1 and allow response to telephone requests, and that

2 appropriate provision is made to receive and respond

3 promptly to calls received during other hours.

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

5 shall not provide for the performance of utilization

6 review activities with respect to a class of services

7 furnished to an individual more frequently than is

8 reasonably required to assess whether the services

9 under review are medically necessary or appropriate.

10 (5) LIMITATION ON INFORMATION REQUESTS.—

11 Under such a program, information shall be required

12 to be provided by health care providers only to the

13 extent it is necessary to perform the utilization re14 view activity involved.

15 (d) DEADLINE FOR DETERMINATIONS.—

16 (1) PRIOR AUTHORIZATION SERVICES.—Except

17 as provided in paragraph (2), in the case of a utili18 zation review activity involving the prior authoriza19 tion of health care items and services for an individ20 ual, the utilization review program shall make a de21 termination concerning such authorization, and pro22 vide notice of the determination to the individual or

23 the individual’s designee and the individual’s health

24 care provider by telephone and in printed form, as

25 soon as possible in accordance with the medical ex-
33

•HR 719 IH

1 igencies of the cases, and in no event later than 3

2 business days after the date of receipt of information

3 that is reasonably necessary to make such deter4 mination.

5 (2) CONTINUED CARE.—In the case of a utiliza6 tion review activity involving authorization for con7 tinued or extended health care services for an indi8 vidual, or additional services for an individual under9 going a course of continued treatment prescribed by

10 a health care provider, the utilization review pro11 gram shall make a determination concerning such

12 authorization, and provide notice of the determina13 tion to the individual or the individual’s designee

14 and the individual’s health care provider by tele15 phone and in printed form, as soon as possible in ac16 cordance with the medical exigencies of the cases,

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

18 date of receipt of information that is reasonably nec19 essary to make such determination. Such notice shall

20 include, with respect to continued or extended health

21 care services, the number of extended services ap22 proved, the new total of approved services, the date

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

24 (3) PREVIOUSLY PROVIDED SERVICES.—In the

25 case of a utilization review activity involving retro-
34

•HR 719 IH

1 spective review of health care services previously pro2 vided for an individual, the utilization review pro3 gram shall make a determination concerning such

4 services, and provide notice of the determination to

5 the individual or the individual’s designee and the

6 individual’s health care provider by telephone and in

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

8 of information that is reasonably necessary to make

9 such determination.

10 (4) REFERENCE TO SPECIAL RULES FOR EMER11 GENCY SERVICES, MAINTENANCE CARE, AND POST12 STABILIZATION CARE.—For waiver of prior author13 ization requirements in certain cases involving emer14 gency services and maintenance care and post-sta15 bilization care, see subsections (a)(1) and (b) of sec16 tion 101, respectively.

17 (e) NOTICE OF ADVERSE DETERMINATIONS.—

18 (1) IN GENERAL.—Notice of an adverse deter19 mination under a utilization review program shall be

20 provided in printed form and shall include—

21 (A) the reasons for the determination (in22 cluding the clinical rationale);

23 (B) instructions on how to initiate an ap24 peal under section 132; and
35

•HR 719 IH

1 (C) notice of the availability, upon request

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

3 of the clinical review criteria relied upon to

4 make such determination.

5 (2) SPECIFICATION OF ANY ADDITIONAL INFOR6 MATION.—Such a notice shall also specify what (if

7 any) additional necessary information must be pro8 vided to, or obtained by, the person making the de9 termination in order to make a decision on such an

10 appeal.

11 Subtitle C—Patient Information

12 SEC. 121. PATIENT INFORMATION.

13 (a) DISCLOSURE REQUIREMENT.—

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

15 plan shall—

16 (A) provide to participants and bene17 ficiaries at the time of initial coverage under

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

19 the case of individuals who are participants or

20 beneficiaries as of such date), and at least an21 nually thereafter, the information described in

22 subsection (b) in printed form;

23 (B) provide to participants and bene24 ficiaries, within a reasonable period (as speci25 fied by the appropriate Secretary) before or
36

•HR 719 IH

1 after the date of significant changes in the in2 formation described in subsection (b), informa3 tion in printed form on such significant

4 changes; and

5 (C) upon request, make available to par6 ticipants and beneficiaries, the applicable au7 thority, and prospective participants and bene8 ficiaries, the information described in sub9 section (b) or (c) in printed form.

10 (2) HEALTH INSURANCE ISSUERS.—A health

11 insurance issuer in connection with the provision of

12 health insurance coverage shall—

13 (A) provide to individuals enrolled under

14 such coverage at the time of enrollment, and at

15 least annually thereafter, the information de16 scribed in subsection (b) in printed form;

17 (B) provide to enrollees, within a reason18 able period (as specified by the appropriate Sec19 retary) before or after the date of significant

20 changes in the information described in sub21 section (b), information in printed form on such

22 significant changes; and

23 (C) upon request, make available to the

24 applicable authority, to individuals who are pro25 spective enrollees, and to the public the infor-
37

•HR 719 IH

1 mation described in subsection (b) or (c) in

2 printed form.

3 (b) INFORMATION PROVIDED.—The information de4 scribed in this subsection with respect to a group health

5 plan or health insurance coverage offered by a health in6 surance issuer includes the following:

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

8 plan or issuer.

9 (2) BENEFITS.—Benefits offered under the

10 plan or coverage, including—

11 (A) covered benefits, including benefit lim12 its and coverage exclusions;

13 (B) cost sharing, such as deductibles, coin14 surance, and copayment amounts, including any

15 liability for balance billing, any maximum limi16 tations on out of pocket expenses, and the max17 imum out of pocket costs for services that are

18 provided by nonparticipating providers or that

19 are furnished without meeting the applicable

20 utilization review requirements;

21 (C) the extent to which benefits may be ob22 tained from nonparticipating providers;

23 (D) the extent to which a participant, ben24 eficiary, or enrollee may select from among par-
38

•HR 719 IH

1 ticipating providers and the types of providers

2 participating in the plan or issuer network;

3 (E) process for determining experimental

4 coverage; and

5 (F) use of a prescription drug formulary.

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

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

8 providers under the plan or coverage.

9 (B) Out-of-network coverage (if any) pro10 vided by the plan or coverage.

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

12 any supplemental premium or cost-sharing for

13 such option).

14 (D) The procedures for participants, bene15 ficiaries, and enrollees to select, access, and

16 change participating primary and specialty pro17 viders.

18 (E) The rights and procedures for obtain19 ing referrals (including standing referrals) to

20 participating and nonparticipating providers.

21 (F) The name, address, and telephone

22 number of participating health care providers

23 and an indication of whether each such provider

24 is available to accept new patients.
39

•HR 719 IH

1 (G) Any limitations imposed on the selec2 tion of qualifying participating health care pro3 viders, including any limitations imposed under

4 section 103(b)(2).

5 (H) How the plan or issuer addresses the

6 needs of participants, beneficiaries, and enroll7 ees and others who do not speak English or

8 who have other special communications needs in

9 accessing providers under the plan or coverage,

10 including the provision of information described

11 in this subsection and subsection (c) to such in12 dividuals and including the provision of infor13 mation in a language other than English if 5

14 percent of the number of participants, bene15 ficiaries, and enrollees communicate in that lan16 guage instead of English.

17 (4) OUT-OF-AREA COVERAGE.—Out-of-area cov18 erage provided by the plan or issuer.

19 (5) EMERGENCY COVERAGE.—Coverage of

20 emergency services, including—

21 (A) the appropriate use of emergency serv22 ices, including use of the 911 telephone system

23 or its local equivalent in emergency situations

24 and an explanation of what constitutes an

25 emergency situation;
40

•HR 719 IH

1 (B) the process and procedures of the plan

2 or issuer for obtaining emergency services; and

3 (C) the locations of (i) emergency depart4 ments, and (ii) other settings, in which plan

5 physicians and hospitals provide emergency

6 services and post-stabilization care.

7 (6) PERCENTAGE OF PREMIUMS USED FOR

8 BENEFITS (LOSS-RATIOS).—In the case of health in9 surance coverage only (and not with respect to group

10 health plans that do not provide coverage through

11 health insurance coverage), a description of the over12 all loss-ratio for the coverage (as defined in accord13 ance with rules established or recognized by the Sec14 retary of Health and Human Services).

15 (7) PRIOR AUTHORIZATION RULES.—Rules re16 garding prior authorization or other review require17 ments that could result in noncoverage or non18 payment.

19 (8) GRIEVANCE AND APPEALS PROCEDURES.—

20 All appeal or grievance rights and procedures under

21 the plan or coverage, including the method for filing

22 grievances and the time frames and circumstances

23 for acting on grievances and appeals, who is the ap24 plicable authority with respect to the plan or issuer,

25 and the availability of assistance through an om-
41

•HR 719 IH

1 budsman to individuals in relation to group health

2 plans and health insurance coverage.

3 (9) SUMMARY OF PROVIDER FINANCIAL INCEN4 TIVES.—A summary description of the information

5 on the types of financial payment incentives (de6 scribed in section 1852(j)(4) of the Social Security

7 Act) provided by the plan or issuer under the cov8 erage.

9 (10) INFORMATION ON ISSUER.—Notice of ap10 propriate mailing addresses and telephone numbers

11 to be used by participants, beneficiaries, and enroll12 ees in seeking information or authorization for treat13 ment.

14 (11) AVAILABILITY OF INFORMATION ON RE15 QUEST.—Notice that the information described in

16 subsection (c) is available upon request.

17 (c) INFORMATION MADE AVAILABLE UPON RE18 QUEST.—The information described in this subsection is

19 the following:

20 (1) UTILIZATION REVIEW ACTIVITIES.—A de21 scription of procedures used and requirements (in22 cluding circumstances, time frames, and appeal

23 rights) under any utilization review program under

24 section 111, including under any drug formulary

25 program under section 107.
42

•HR 719 IH

1 (2) GRIEVANCE AND APPEALS INFORMATION.—

2 Information on the number of grievances and ap3 peals and on the disposition in the aggregate of such

4 matters.

5 (3) METHOD OF PHYSICIAN COMPENSATION.—

6 An overall summary description as to the method of

7 compensation of participating physicians, including

8 information on the types of financial payment incen9 tives (described in section 1852(j)(4) of the Social

10 Security Act) provided by the plan or issuer under

11 the coverage.

12 (4) SPECIFIC INFORMATION ON CREDENTIALS

13 OF PARTICIPATING PROVIDERS.—In the case of each

14 participating provider, a description of the creden15 tials of the provider as they relate to education,

16 training, specialty qualifications, and national ac17 creditation.

18 (5) CONFIDENTIALITY POLICIES AND PROCE19 DURES.—A description of the policies and proce20 dures established to carry out section 122.

21 (6) FORMULARY RESTRICTIONS.—A description

22 of the nature of any drug formula restrictions.

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

24 current participating health care providers.

25 (d) FORM OF DISCLOSURE.—
43

•HR 719 IH

1 (1) UNIFORMITY.—Information required to be

2 disclosed under this section shall be provided in ac3 cordance with uniform, national reporting standards

4 specified by the Secretary, after consultation with

5 applicable State authorities, so that prospective en6 rollees may compare the attributes of different

7 issuers and coverage offered within an area.

8 (2) INFORMATION INTO HANDBOOK.—Nothing

9 in this section shall be construed as preventing a

10 group health plan or health insurance issuer from

11 making the information under subsections (b) and

12 (c) available to participants, beneficiaries, and en13 rollees through an enrollee handbook or similar pub14 lication.

15 (3) UPDATING PARTICIPATING PROVIDER IN16 FORMATION.—The information on participating

17 health care providers described in subsection

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

19 period as determined appropriate by the Secretary.

20 Nothing in this section shall prevent an issuer from

21 changing or updating other information made avail22 able under this section.

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

24 construed as requiring public disclosure of individual con-
44

•HR 719 IH

1 tracts or financial arrangements between a group health

2 plan or health insurance issuer and any provider.

3 SEC. 122. PROTECTION OF PATIENT CONFIDENTIALITY.

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

5 issuer that offers health insurance coverage, maintains

6 medical records or other health information regarding par7 ticipants, beneficiaries, and enrollees, the plan or issuer

8 shall establish procedures—

9 (1) to safeguard the privacy of any individually

10 identifiable enrollee information;

11 (2) to maintain such records and information in

12 a manner that is accurate and timely, and

13 (3) to assure timely access of such individuals

14 to such records and information.

15 SEC. 123. HEALTH INSURANCE OMBUDSMEN.

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

17 under subsection (c) shall provide for creation and oper18 ation of a Health Insurance Ombudsman through a con19 tract with a not-for-profit organization that operates inde20 pendent of group health plans and health insurance

21 issuers. Such Ombudsman shall be responsible for at least

22 the following:

23 (1) To assist consumers in the State in choos24 ing among health insurance coverage or among cov25 erage options offered within group health plans.
45

•HR 719 IH

1 (2) To provide counseling and assistance to en2 rollees dissatisfied with their treatment by health in3 surance issuers and group health plans in regard to

4 such coverage or plans and with respect to griev5 ances and appeals regarding determinations under

6 such coverage or plans.

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

8 does not provide for such an Ombudsman under sub9 section (a), the Secretary shall provide for the creation

10 and operation of a Health Insurance Ombudsman through

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

12 independent of group health plans and health insurance

13 issuers and that is responsible for carrying out with re14 spect to that State the functions otherwise provided under

15 subsection (a) by a Health Insurance Ombudsman.

16 (c) AUTHORIZATION OF APPROPRIATIONS.—There

17 are authorized to be appropriated to the Secretary of

18 Health and Human Services such amounts as may be nec19 essary to provide for grants to States for contracts for

20 Health Insurance Ombudsmen under subsection (a) or

21 contracts for such Ombudsmen under subsection (b).

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

23 construed to prevent the use of other forms of enrollee

24 assistance.
46

•HR 719 IH

1 Subtitle D—Grievance and Appeals

2 Procedures

3 SEC. 131. ESTABLISHMENT OF GRIEVANCE PROCESS.

4 (a) ESTABLISHMENT OF GRIEVANCE SYSTEM.—

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

6 health insurance issuer in connection with the provi7 sion of health insurance coverage, shall establish and

8 maintain a system to provide for the presentation

9 and resolution of oral and written grievances

10 brought by individuals who are participants, bene11 ficiaries, or enrollees, or health care providers or

12 other individuals acting on behalf of an individual

13 and with the individual’s consent, regarding any as14 pect of the plan’s or issuer’s services.

15 (2) SCOPE.—The system shall include griev16 ances regarding access to and availability of services,

17 quality of care, choice and accessibility of providers,

18 network adequacy, and compliance with the require19 ments of this title.

20 (b) GRIEVANCE SYSTEM.—Such system shall include

21 the following components with respect to individuals who

22 are participants, beneficiaries, or enrollees:

23 (1) Written notification to all such individuals

24 and providers of the telephone numbers and business
47

•HR 719 IH

1 addresses of the plan or issuer personnel responsible

2 for resolution of grievances and appeals.

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

4 period of at least 3 previous years, all grievances

5 and appeals made and their status.

6 (3) A process providing for timely processing

7 and resolution of grievances.

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

9 the methods to inform the person making the griev10 ance of the resolution of the grievance.

11 SEC. 132. INTERNAL APPEALS OF ADVERSE DETERMINA12 TIONS.

13 (a) RIGHT OF APPEAL.—

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

15 in a group health plan, and an enrollee in health in16 surance coverage offered by a health insurance

17 issuer, and any provider or other person acting on

18 behalf of such an individual with the individual’s

19 consent, may appeal any appealable decision (as de20 fined in paragraph (2)) under the procedures de21 scribed in this section and (to the extent applicable)

22 section 133. Such individuals and providers shall be

23 provided with a written explanation of the appeal

24 process and the determination upon the conclusion
48

•HR 719 IH

1 of the appeals process and as provided in section

2 121(b)(8).

3 (2) APPEALABLE DECISION DEFINED.—In this

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

5 the following:

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

7 failure to provide or make payment (in whole or

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

9 cover an item or service for which benefits are

10 otherwise provided because it is determined to

11 be experimental or investigational or not medi12 cally necessary or appropriate.

13 (B) Failure to provide coverage of emer14 gency services or reimbursement of mainte15 nance care or post-stabilization care under sec16 tion 101.

17 (C) Failure to provide a choice of provider

18 under section 103.

19 (D) Failure to provide qualified health care

20 providers under section 103.

21 (E) Failure to provide access to specialty

22 and other care under section 104.

23 (F) Failure to provide continuation of care

24 under section 105.
49

•HR 719 IH

1 (G) Failure to provide coverage of routine

2 patient costs in connection with an approval

3 clinical trial under section 106.

4 (H) Failure to provide access to needed

5 drugs under section 107(a)(3) or 107(b).

6 (I) An adverse determination under a utili7 zation review program under section 111.

8 (J) The imposition of a limitation that is

9 prohibited under section 151.

10 (b) INTERNAL APPEAL PROCESS.—

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

12 health insurance issuer shall establish and maintain

13 an internal appeal process under which any partici14 pant, beneficiary, enrollee, or provider acting on be15 half of such an individual with the individual’s con16 sent, who is dissatisfied with any appealable decision

17 has the opportunity to appeal the decision through

18 an internal appeal process. The appeal may be com19 municated orally.

20 (2) CONDUCT OF REVIEW.—

21 (A) IN GENERAL.—The process shall in22 clude a review of the decision by a physician or

23 other health care professional (or professionals)

24 who has been selected by the plan or issuer and
50

•HR 719 IH

1 who has not been involved in the appealable de2 cision at issue in the appeal.

3 (B) AVAILABILITY AND PARTICIPATION OF

4 CLINICAL PEERS.—The individuals conducting

5 such review shall include one or more clinical

6 peers (as defined in section 191(c)(2)) who have

7 not been involved in the appealable decision at

8 issue in the appeal.

9 (3) DEADLINE.—

10 (A) IN GENERAL.—Subject to subsection

11 (c), the plan or issuer shall conclude each ap12 peal as soon as possible after the time of the re13 ceipt of the appeal in accordance with medical

14 exigencies of the case involved, but in no event

15 later than—

16 (i) 72 hours after the time of receipt

17 of an expedited appeal, and

18 (ii) except as provided in subpara19 graph (B), 30 days after such time (or, if

20 the participant, beneficiary, or enrollee

21 supplies additional information that was

22 not available to the plan or issuer at the

23 time of the receipt of the appeal, after the

24 date of supplying such additional informa25 tion) in the case of all other appeals.
51

•HR 719 IH

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

2 that does not relate to a decision regarding an

3 expedited appeal and that does not involve med4 ical exigencies, if a group health plan or health

5 insurance issuer is unable to conclude the ap6 peal within the time period provided under sub7 paragraph (A)(ii) due to circumstances beyond

8 the control of the plan or issuer, the deadline

9 shall be extended for up to an additional 3 busi10 ness days if the plan or issuer provides, on or

11 before 10 days before the deadline otherwise ap12 plicable, written notice to the participant, bene13 ficiary, or enrollee and the provider involved of

14 the extension and the reasons for the extension.

15 (4) NOTICE.—If a plan or issuer denies an ap16 peal, the plan or issuer shall provide the participant,

17 beneficiary, or enrollee and provider involved with

18 notice in printed form of the denial and the reasons

19 therefore, together with a notice in printed form of

20 rights to any further appeal.

21 (c) EXPEDITED REVIEW PROCESS.—

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

23 health insurance issuer, shall establish procedures in

24 writing for the expedited consideration of appeals

25 under subsection (b) in situations in which the appli-
52

•HR 719 IH

1 cation of the normal timeframe for making a deter2 mination could seriously jeopardize the life or health

3 of the participant, beneficiary, or enrollee or such an

4 individual’s ability to regain maximum function.

5 (2) PROCESS.—Under such procedures—

6 (A) the request for expedited appeal may

7 be submitted orally or in writing by an individ8 ual or provider who is otherwise entitled to re9 quest the appeal;

10 (B) all necessary information, including

11 the plan’s or issuer’s decision, shall be trans12 mitted between the plan or issuer and the re13 quester by telephone, facsimile, or other simi14 larly expeditious available method; and

15 (C) the plan or issuer shall expedite the

16 appeal if the request for an expedited appeal is

17 submitted under subparagraph (A) by a physi18 cian and the request indicates that the situation

19 described in paragraph (1) exists.

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

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

22 the deadlines for completion of appeals under this section

23 or in the event that the plan or issuer for any reason ex24 pressly waives its rights to an internal review of an appeal

25 under subsection (b), the participant, beneficiary, or en-
53

•HR 719 IH

1 rollee involved and the provider involved shall be relieved

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

3 at such an individual’s or provider’s option, proceed di4 rectly to seek further appeal through any applicable exter5 nal appeals process.

6 SEC. 133. EXTERNAL APPEALS OF ADVERSE DETERMINA7 TIONS.

8 (a) RIGHT TO EXTERNAL APPEAL.—

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

10 health insurance issuer offering group health insur11 ance coverage, shall provide for an external appeals

12 process that meets the requirements of this section

13 in the case of an externally appealable decision de14 scribed in paragraph (2), for which a timely appeal

15 is made either by the plan or issuer or by the partic16 ipant, beneficiary, or enrollee, or a representative of

17 any of them. The appropriate Secretary shall estab18 lish standards to carry out such requirements.

19 (2) EXTERNALLY APPEALABLE DECISION DE20 FINED.—For purposes of this section, the term ‘‘ex21 ternally appealable decision’’ means an appealable

22 decision (as defined in section 132(a)(2)) if—

23 (A) the amount involved exceeds $100; or

24 (B) the patient’s life or health is jeopard25 ized as a consequence of the decision.
54

•HR 719 IH

1 Such term does not include a denial of coverage for

2 services that are specifically listed in plan or cov3 erage documents as excluded from coverage.

4 (3) EXHAUSTION OF INTERNAL APPEALS PROC5 ESS.—A plan or issuer may condition the use of an

6 external appeal process in the case of an externally

7 appealable decision upon completion of the internal

8 review process provided under section 132, but only

9 if the decision is made in a timely basis consistent

10 with the deadlines provided under this subtitle.

11 (b) GENERAL ELEMENTS OF EXTERNAL APPEALS

12 PROCESS.—

13 (1) CONTRACT WITH QUALIFIED EXTERNAL AP14 PEAL ENTITY.—

15 (A) CONTRACT REQUIREMENT.—Subject to

16 subparagraph (B), the external appeal process

17 under this section of a plan or issuer shall be

18 conducted under a contract between the plan or

19 issuer and one or more qualified external appeal

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

21 (B) RESTRICTIONS ON QUALIFIED EXTER22 NAL APPEAL ENTITY.—

23 (i) BY STATE FOR HEALTH INSUR24 ANCE ISSUERS.—With respect to health in25 surance issuers in a State, the State may
55

•HR 719 IH

1 provide for external review activities to be

2 conducted by a qualified external appeal

3 entity that is designated by the State or

4 that is selected by the State in such a

5 manner as to assure an unbiased deter6 mination.

7 (ii) BY FEDERAL GOVERNMENT FOR

8 GROUP HEALTH PLANS.—With respect to

9 group health plans, the appropriate Sec10 retary may exercise the same authority as

11 a State may exercise with respect to health

12 insurance issuers under clause (i). Such

13 authority may include requiring the use of

14 the qualified external appeal entity des15 ignated or selected under such clause.

16 (iii) LIMITATION ON PLAN OR ISSUER

17 SELECTION.—If an applicable authority

18 permits more than one entity to qualify as

19 a qualified external appeal entity with re20 spect to a group health plan or health in21 surance issuer and the plan or issuer may

22 select among such qualified entities, the

23 applicable authority—

24 (I) shall assure that the selection

25 process will not create any incentives
56

•HR 719 IH

1 for external appeal entities to make a

2 decision in a biased manner, and

3 (II) shall implement procedures

4 for auditing a sample of decisions by

5 such entities to assure that no such

6 decisions are made in a biased man7 ner.

8 (C) OTHER TERMS AND CONDITIONS.—

9 The terms and conditions of a contract under

10 this paragraph shall be consistent with the

11 standards the appropriate Secretary shall estab12 lish to assure there is no real or apparent con13 flict of interest in the conduct of external ap14 peal activities. Such contract shall provide that

15 the direct costs of the process (not including

16 costs of representation of a participant, bene17 ficiary, or enrollee) shall be paid by the plan or

18 issuer, and not by the participant, beneficiary,

19 or enrollee.

20 (2) ELEMENTS OF PROCESS.—An external ap21 peal process shall be conducted consistent with

22 standards established by the appropriate Secretary

23 that include at least the following:

24 (A) FAIR PROCESS; DE NOVO DETERMINA25 TION.—The process shall provide for a fair, de
57

•HR 719 IH

1 novo determination. In carrying out this sub2 paragraph, the determination of medical neces3 sity shall be made under the process without re4 gard to the definition used by the plan or

5 issuer. However, nothing in this sentence shall

6 be construed as providing for coverage of items

7 and services for which benefits are specifically

8 excluded under the plan or coverage.

9 (B) DETERMINATION CONCERNING EXTER10 NALLY APPEALABLE DECISIONS.—A qualified

11 external appeal entity shall determine whether a

12 decision is an externally appealable decision and

13 related decisions, including—

14 (i) whether such a decision involves an

15 expedited appeal;

16 (ii) the appropriate deadlines for in17 ternal review process required due to medi18 cal exigencies in a case; and

19 (iii) whether such a process has been

20 completed.

21 (C) OPPORTUNITY TO SUBMIT EVIDENCE,

22 HAVE REPRESENTATION, AND MAKE ORAL

23 PRESENTATION.—Each party to an externally

24 appealable decision (directly or through an au-
58

•HR 719 IH

1 thorized representative or representatives, any

2 of whom may be an attorney)—

3 (i) may submit and review evidence

4 related to the issues in dispute,

5 (ii) may use the assistance or rep6 resentation of one or more individuals (any

7 of whom may be an attorney), and

8 (iii) may make an oral presentation.

9 (D) PROVISION OF INFORMATION.—The

10 plan or issuer involved shall provide timely ac11 cess to all its records relating to the matter of

12 the externally appealable decision and to all

13 provisions of the plan or health insurance cov14 erage (including any coverage manual) relating

15 to the matter.

16 (E) TIMELY DECISIONS.—A determination

17 by the external appeal entity on the decision

18 shall—

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

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

21 parties in writing as soon as possible;

22 (ii) be binding on the plan or issuer;

23 (iii) be made in accordance with the

24 medical exigencies of the case involved, but

25 in no event later than 60 days (or 72
59

•HR 719 IH

1 hours in the case of an expedited appeal

2 or, in the case of an appeal involving emer3 gency circumstances, as soon as possible in

4 accordance with the medical exigencies of

5 the case, and in no event later than 24

6 hours) from the date of completion of the

7 filing of notice requesting an external ap8 peal of the decision;

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

10 basis for the determination, including, if

11 relevant, any basis in the terms or condi12 tions of the plan or coverage; and

13 (v) inform the participant, beneficiary,

14 or enrollee of the individual’s rights (in15 cluding any limitation on such rights) to

16 seek further review by the courts (or other

17 process) of the external appeal determina18 tion.

19 (c) QUALIFICATIONS OF EXTERNAL APPEAL ENTI20 TIES.—

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

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

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

24 be a governmental entity) that is certified under
60

•HR 719 IH

1 paragraph (2) as meeting the following require2 ments:

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

4 interest that would impede the entity conduct5 ing external appeal activities independent of the

6 plan or issuer.

7 (B) The entity conducts external appeal

8 activities through clinical peers.

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

10 and other expertise and sufficient staffing to

11 conduct external appeal activities for the plan

12 or issuer on a timely basis consistent with sub13 section (b)(3)(E).

14 (D) The entity meets such other require15 ments as the appropriate Secretary may im16 pose.

17 (2) CERTIFICATION OF EXTERNAL APPEAL EN18 TITIES.—

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

20 as a qualified external appeal entity with re21 spect to—

22 (i) a group health plan, the entity

23 must be certified (and, in accordance with

24 subparagraph (B), periodically recertified)

25 as meeting the requirements of paragraph
61

•HR 719 IH

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

2 process recognized or approved by the Sec3 retary of Labor); or

4 (ii) a health insurance issuer operat5 ing in a State, the entity must be certified

6 (and, in accordance with subparagraph

7 (B), periodically recertified) as meeting

8 such requirements by the applicable State

9 authority (or, if the State has not estab10 lished an adequate certification and recer11 tification process, by the Secretary of

12 Health and Human Services, or under a

13 process recognized or approved by such

14 Secretary).

15 (B) RECERTIFICATION PROCESS.—The ap16 propriate Secretary shall develop standards for

17 the recertification of external appeal entities.

18 Such standards shall include a specification

19 of—

20 (i) the information required to be sub21 mitted as a condition of recertification on

22 the entity’s performance of external appeal

23 activities, which information shall include

24 the number of cases reviewed, a summary

25 of the disposition of those cases, the length
62

•HR 719 IH

1 of time in making determinations on those

2 cases, and such information as may be nec3 essary to assure the independence of the

4 entity from the plans or issuers for which

5 external appeal activities are being con6 ducted; and

7 (ii) the periodicity which recertifi8 cation will be required.

9 (3) LIMITATION ON LIABILITY OF REVIEW10 ERS.—No qualified external appeal entity having a

11 contract with a plan or issuer under this part and

12 no person who is employed by, or who has a fidu13 ciary relationship with, any such entity or who fur14 nishes professional services to such entity, shall be

15 held by reason of the performance of any duty, func16 tion, or activity required or authorized pursuant to

17 this section, to have violated any criminal law, or to

18 be civilly liable under any law of the United States

19 or of any State (or political subdivision thereof) if

20 due care was exercised in the performance of such

21 duty, function, or activity and there was no actual

22 malice or gross misconduct in the performance of

23 such duty, function, or activity.

24 (d) EXTERNAL APPEAL DETERMINATION BINDING

25 ON PLAN.—
63

•HR 719 IH

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

2 the determination by an external appeals entity

3 under this section is binding on the plan (and issuer,

4 if any) involved in the determination.

5 (2) VACATION OR MODIFICATION OF DECI6 SION.—The determination by an external appeals

7 entity under this section may be vacated or modified

8 by a court under the same circumstances as the de9 cision of an arbitrator may be vacated or modified

10 under sections 10 and 11 of title 9, United States

11 Code.

12 Subtitle E—Protecting the Doctor13 Patient Relationship

14 SEC. 141. PROHIBITION OF INTERFERENCE WITH CERTAIN

15 MEDICAL COMMUNICATIONS.

16 (a) PROHIBITION.—

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

18 contract or agreement, or the operation of any con19 tract or agreement, between a group health plan or

20 health insurance issuer in relation to health insur21 ance coverage (including any partnership, associa22 tion, or other organization that enters into or ad23 ministers such a contract or agreement) and a

24 health care provider (or group of health care provid25 ers) shall not prohibit or otherwise restrict a covered
64

•HR 719 IH

1 health care professional (as defined in subsection

2 (b)) from advising such a participant, beneficiary, or

3 enrollee who is a patient of the professional about

4 the health status of the individual or medical care or

5 treatment for the individual’s condition or disease,

6 regardless of whether benefits for such care or treat7 ment are provided under the plan or coverage, if the

8 professional is acting within the lawful scope of

9 practice.

10 (2) NULLIFICATION.—Any contract provision or

11 agreement that restricts or prohibits medical com12 munications in violation of paragraph (1) shall be

13 null and void.

14 (b) HEALTH CARE PROFESSIONAL DEFINED.—For

15 purposes of this section, the term ‘‘health care profes16 sional’’ means a physician (as defined in section 1861(r)

17 of the Social Security Act) or other health care profes18 sional if coverage for the professional’s services of the pro19 fessional is provided under the group health plan or health

20 insurance coverage. Such term includes a podiatrist, op21 tometrist, chiropractor, psychologist, dentist, physician as22 sistant, physical or occupational therapist and therapy as23 sistant, speech-language pathologist, audiologist, reg24 istered or licensed practical nurse (including nurse practi25 tioner, clinical nurse specialist, certified registered nurse
65

•HR 719 IH

1 anesthetist, and certified nurse-midwife), licensed clinical

2 social worker, registered respiratory therapist, and cer3 tified respiratory therapy technician.

4 SEC. 142. PROHIBITION AGAINST TRANSFER OF INDEM5 NIFICATION OR IMPROPER INCENTIVE AR6 RANGEMENTS.

7 (a) PROHIBITION OF TRANSFER OF INDEMNIFICA8 TION.—

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

10 between a group health plan or health insurance

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

12 or issuer) and a health care provider shall contain

13 any provision purporting to transfer to the health

14 care provider by indemnification or otherwise any li15 ability relating to activities, actions, or omissions of

16 the plan, issuer, or agent (as opposed to the pro17 vider).

18 (2) NULLIFICATION.—Any contract or agree19 ment provision described in paragraph (1) shall be

20 null and void.

21 (b) PROHIBITION OF IMPROPER PHYSICIAN INCEN22 TIVE PLANS.—

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

24 health insurance issuer offering health insurance

25 coverage may not operate any physician incentive
66

•HR 719 IH

1 plan (as defined in subparagraph (B) of section

2 1876(i)(8) of the Social Security Act) unless the re3 quirements described in subparagraph (A) of such

4 section are met with respect to such a plan.

5 (2) APPLICATION.—For purposes of carrying

6 out paragraph (1), any reference in section

7 1876(i)(8) of the Social Security Act to the Sec8 retary, an eligible organization, or an individual en9 rolled with the organization shall be treated as a ref10 erence to the applicable authority, a group health

11 plan or health insurance issuer, respectively, and a

12 participant, beneficiary, or enrollee with the plan or

13 organization, respectively.

14 SEC. 143. ADDITIONAL RULES REGARDING PARTICIPATION

15 OF HEALTH CARE PROFESSIONALS.

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

17 or health insurance issuer that offers health insurance cov18 erage, provides benefits through participating health care

19 professionals, the plan or issuer shall establish reasonable

20 procedures relating to the participation (under an agree21 ment between a professional and the plan or issuer) of

22 such professionals under the plan or coverage. Such proce23 dures shall include—

24 (1) providing notice of the rules regarding par25 ticipation;
67

•HR 719 IH

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. 144. 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 title.

23 (b) PROTECTION FOR QUALITY ADVOCACY BY

24 HEALTH CARE PROFESSIONALS.—
68

•HR 719 IH

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;

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; or

16 (C) participates in an external appeals

17 process under section 133.

18 If an institutional health care provider is a partici19 pating provider with such a plan or issuer or other20 wise receives payments for benefits provided by such

21 a plan or issuer, the provisions of the previous sen22 tence shall apply to the provider in relation to care,

23 services, or conditions affecting one or more patients

24 within an institutional health care provider in the

25 same manner as they apply to the plan or issuer in
69

•HR 719 IH

1 relation to care, services, or conditions provided to

2 one or more participants, beneficiaries, or enrollees;

3 and for purposes of applying this sentence, any ref4 erence to a plan or issuer is deemed a reference to

5 the institutional health care provider.

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

7 paragraph (1), a protected health care professional

8 is considered to be acting in good faith with respect

9 to disclosure of information or participation if, with

10 respect to the information disclosed as part of the

11 action—

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

13 personal knowledge and is consistent with that

14 degree of learning and skill ordinarily possessed

15 by health care professionals with the same li16 censure or certification and the same experi17 ence;

18 (B) the professional reasonably believes the

19 information to be true;

20 (C) the information evidences either a vio21 lation of a law, rule, or regulation, of an appli22 cable accreditation standard, or of a generally

23 recognized professional or clinical standard or

24 that a patient is in imminent hazard of loss of

25 life or serious injury; and
70

•HR 719 IH

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

2 of paragraph (3), the professional has followed

3 reasonable internal procedures of the plan,

4 issuer, or institutional health care provider es5 tablished or the purpose of addressing quality

6 concerns before making the disclosure.

7 (3) EXCEPTION AND SPECIAL RULE.—

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

9 does not protect disclosures that would violate

10 Federal or State law or diminish or impair the

11 rights of any person to the continued protection

12 of confidentiality of communications provided

13 by such law.

14 (B) NOTICE OF INTERNAL PROCEDURES.—

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

16 apply unless the internal procedures involved

17 are reasonably expected to be known to the

18 health care professional involved. For purposes

19 of this subparagraph, a health care professional

20 is reasonably expected to know of internal pro21 cedures if those procedures have been made

22 available to the professional through distribu23 tion or posting.
71

•HR 719 IH

1 (C) INTERNAL PROCEDURE EXCEPTION.—

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

3 not apply if—

4 (i) the disclosure relates to an immi5 nent hazard of loss of life or serious injury

6 to a patient;

7 (ii) the disclosure is made to an ap8 propriate private accreditation body pursu9 ant to disclosure procedures established by

10 the body; or

11 (iii) the disclosure is in response to an

12 inquiry made in an investigation or pro13 ceeding of an appropriate public regulatory

14 agency and the information disclosed is

15 limited to the scope of the investigation or

16 proceeding.

17 (4) ADDITIONAL CONSIDERATIONS.—It shall

18 not be a violation of paragraph (1) to take an ad19 verse action against a protected health care profes20 sional if the plan, issuer, or provider taking the ad21 verse action involved demonstrates that it would

22 have taken the same adverse action even in the ab23 sence of the activities protected under such para24 graph.
72

•HR 719 IH

1 (5) NOTICE.—A group health plan, health in2 surance issuer, and institutional health care provider

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

4 the Secretary of Labor, setting forth excerpts from,

5 or summaries of, the pertinent provisions of this

6 subsection and information pertaining to enforce7 ment of such provisions.

8 (6) CONSTRUCTIONS.—

9 (A) DETERMINATIONS OF COVERAGE.—

10 Nothing in this subsection shall be construed to

11 prohibit a plan or issuer from making a deter12 mination not to pay for a particular medical

13 treatment or service or the services of a type of

14 health care professional.

15 (B) ENFORCEMENT OF PEER REVIEW PRO16 TOCOLS AND INTERNAL PROCEDURES.—Noth17 ing in this subsection shall be construed to pro18 hibit a plan, issuer, or provider from establish19 ing and enforcing reasonable peer review or uti20 lization review protocols or determining whether

21 a protected health care professional has com22 plied with those protocols or from establishing

23 and enforcing internal procedures for the pur24 pose of addressing quality concerns.
73

•HR 719 IH

1 (C) RELATION TO OTHER RIGHTS.—Noth2 ing in this subsection shall be construed to

3 abridge rights of participants, beneficiaries, en4 rollees, and protected health care professionals

5 under other applicable Federal or State laws.

6 (7) PROTECTED HEALTH CARE PROFESSIONAL

7 DEFINED.—For purposes of this subsection, the

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

9 individual who is a licensed or certified health care

10 professional and who—

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

12 health insurance issuer, is an employee of the

13 plan or issuer or has a contract with the plan

14 or issuer for provision of services for which ben15 efits are available under the plan or issuer; or

16 (B) with respect to an institutional health

17 care provider, is an employee of the provider or

18 has a contract or other arrangement with the

19 provider respecting the provision of health care

20 services.

21 Subtitle F—Promoting Good

22 Medical Practice

23 SEC. 151. PROMOTING GOOD MEDICAL PRACTICE.

24 (a) PROHIBITING ARBITRARY LIMITATIONS OR CON25 DITIONS FOR THE PROVISION OF SERVICES.—
74

•HR 719 IH

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

2 health insurance issuer in connection with the provi3 sion of health insurance coverage, may not arbitrar4 ily interfere with or alter the decision of the treating

5 physician regarding the manner or setting in which

6 particular services are delivered if the services are

7 medically necessary or appropriate for treatment or

8 diagnosis to the extent that such treatment or diag9 nosis is otherwise a covered benefit.

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

11 be construed as prohibiting a plan or issuer from

12 limiting the delivery of services to one or more

13 health care providers within a network of such pro14 viders.

15 (3) MANNER OR SETTING DEFINED.—In para16 graph (1), the term ‘‘manner or setting’’ means the

17 location of treatment, such as whether treatment is

18 provided on an inpatient or outpatient basis, and the

19 duration of treatment, such as the number of days

20 in a hospital. Such term does not include the cov21 erage of a particular service or treatment.

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

23 not be construed as requiring coverage of particular serv24 ices the coverage of which is otherwise not covered under
75

•HR 719 IH

1 the terms of the plan or coverage or from conducting utili2 zation review activities consistent with this subsection.

3 (c) MEDICAL NECESSITY OR APPROPRIATENESS DE4 FINED.—In subsection (a), the term ‘‘medically necessary

5 or appropriate’’ means, with respect to a service or benefit,

6 a service or benefit which is consistent with generally ac7 cepted principles of professional medical practice.

8 SEC. 152. STANDARDS RELATING TO BENEFITS FOR CER9 TAIN BREAST CANCER TREATMENT.

10 (a) INPATIENT CARE.—

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

12 health insurance issuer offering group health insur13 ance coverage, that provides medical and surgical

14 benefits shall ensure that inpatient coverage with re15 spect to the treatment of breast cancer is provided

16 for a period of time as is determined by the attend17 ing physician, in the physician’s professional judg18 ment consistent with generally accepted medical

19 standards, in consultation with the patient, to be

20 medically appropriate following—

21 (A) a mastectomy;

22 (B) a lumpectomy; or

23 (C) a lymph node dissection for the treat24 ment of breast cancer.
76

•HR 719 IH

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

2 be construed as requiring the provision of inpatient

3 coverage if the attending physician and patient de4 termine that a shorter period of hospital stay is

5 medically appropriate.

6 (b) PROHIBITIONS.—A group health plan, and a

7 health insurance issuer offering group health insurance

8 coverage in connection with a group health plan, may

9 not—

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

11 eligibility, to enroll or to renew coverage under the

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

13 the requirements of this section;

14 (2) provide monetary payments or rebates to

15 women to encourage such women to accept less than

16 the minimum protections available under this sec17 tion;

18 (3) penalize or otherwise reduce or limit the re19 imbursement of an attending provider because such

20 provider provided care to an individual participant

21 or beneficiary in accordance with this section;

22 (4) provide incentives (monetary or otherwise)

23 to an attending provider to induce such provider to

24 provide care to an individual participant or bene25 ficiary in a manner inconsistent with this section; or
77

•HR 719 IH

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

2 for any portion of a period within a hospital length

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

4 which is less favorable than the benefits provided for

5 any preceding portion of such stay.

6 (c) RULES OF CONSTRUCTION.—

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

8 require a woman who is a participant or

9 beneficiary—

10 (A) to undergo a mastectomy, lumpectomy,

11 or lymph node dissection in a hospital; or

12 (B) to stay in the hospital for a fixed pe13 riod of time following a mastectomy,

14 lumpectomy, or lymph node dissection.

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

16 any group health plan, or any group health insur17 ance coverage offered by a health insurance issuer,

18 which does not provide benefits for hospital lengths

19 of stay in connection with a mastectomy,

20 lumpectomy, or lymph node dissection for the treat21 ment of breast cancer.

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

23 preventing a group health plan or issuer from impos24 ing deductibles, coinsurance, or other cost-sharing in

25 relation to benefits for hospital lengths of stay in
78

•HR 719 IH

1 connection with a mastectomy or lymph node dissec2 tion for the treatment of breast cancer under the

3 plan (or under health insurance coverage offered in

4 connection with a group health plan), except that

5 such coinsurance or other cost-sharing for any por6 tion of a period within a hospital length of stay re7 quired under subsection (a) may not be greater than

8 such coinsurance or cost-sharing for any preceding

9 portion of such stay.

10 (d) LEVEL AND TYPE OF REIMBURSEMENTS.—Noth11 ing in this section shall be construed to prevent a group

12 health plan or a health insurance issuer offering group

13 health insurance coverage from negotiating the level and

14 type of reimbursement with a provider for care provided

15 in accordance with this section.

16 (e) EXCEPTION FOR HEALTH INSURANCE COVERAGE

17 IN CERTAIN STATES.—

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

19 section shall not apply with respect to health insur20 ance coverage if there is a State law (as defined in

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

22 for a State that regulates such coverage that is de23 scribed in any of the following subparagraphs:

24 (A) Such State law requires such coverage

25 to provide for at least a 48-hour hospital length
79

•HR 719 IH

1 of stay following a mastectomy performed for

2 treatment of breast cancer and at least a 24-

3 hour hospital length of stay following a lymph

4 node dissection for treatment of breast cancer.

5 (B) Such State law requires, in connection

6 with such coverage for surgical treatment of

7 breast cancer, that the hospital length of stay

8 for such care is left to the decision of (or re9 quired to be made by) the attending provider in

10 consultation with the woman involved.

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

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

13 the Employee Retirement Income Security Act of

14 1974 shall not be construed as superseding a State

15 law described in paragraph (1).

16 Subtitle G—Definitions

17 SEC. 191. DEFINITIONS.

18 (a) INCORPORATION OF GENERAL DEFINITIONS.—

19 The provisions of section 2971 of the Public Health Serv20 ice Act shall apply for purposes of this title in the same

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

22 Act.

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

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

25 Human Services, in consultation with the Secretary of
80

•HR 719 IH

1 Labor and the Secretary of the Treasury and the term

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

3 and Human Services in relation to carrying out this title

4 under sections 2706 and 2751 of the Public Health Serv5 ice Act, the Secretary of Labor in relation to carrying out

6 this title under section 714 of the Employee Retirement

7 Income Security Act of 1974, and the Secretary of the

8 Treasury in relation to carrying out this title under chap9 ter 100 and section 4980D of the Internal Revenue Code

10 of 1986.

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

12 title:

13 (1) APPLICABLE AUTHORITY.—The term ‘‘ap14 plicable authority’’ means—

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

16 Secretary of Health and Human Services and

17 the Secretary of Labor; and

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

19 with respect to a specific provision of this title,

20 the applicable State authority (as defined in

21 section 2791(d) of the Public Health Service

22 Act), or the Secretary of Health and Human

23 Services, if such Secretary is enforcing such

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

25 2761(a)(2) of the Public Health Service Act.
81

•HR 719 IH

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

2 means, with respect to a review or appeal, a physi3 cian (allopathic or osteopathic) or other health care

4 professional who holds a license, and who, in the

5 case of a physician, is appropriately certified by a

6 nationally recognized, peer reviewed accrediting body

7 in the same or similar specialty as typically manages

8 the medical condition, procedure, or treatment under

9 review or appeal and includes a pediatric specialist

10 where appropriate; except that only a physician may

11 be a clinical peer with respect to the review or ap12 peal of treatment recommended or rendered by a

13 physician.

14 (3) HEALTH CARE PROVIDER.—The term

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

16 health care professional, as well as an institutional

17 provider of health care services.

18 (4) NONPARTICIPATING.—The term ‘‘non19 participating’’ means, with respect to a health care

20 provider that provides health care items and services

21 to a participant, beneficiary, or enrollee under group

22 health plan or health insurance coverage, a health

23 care provider that is not a participating health care

24 provider with respect to such items and services.
82

•HR 719 IH

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

2 mean, with respect to a health care provider that

3 provides health care items and services to a partici4 pant, beneficiary, or enrollee under group health

5 plan or health insurance coverage offered by a

6 health insurance issuer, a health care provider that

7 furnishes such items and services under a contract

8 or other arrangement with the plan or issuer.

9 SEC. 192. PREEMPTION; STATE FLEXIBILITY; CONSTRUC10 TION.

11 (a) CONTINUED APPLICABILITY OF STATE LAW

12 WITH RESPECT TO HEALTH INSURANCE ISSUERS.—

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

14 this title shall not be construed to supersede any

15 provision of State law which establishes, implements,

16 or continues in effect any standard or requirement

17 solely relating to health insurance issuers in connec18 tion with group health insurance coverage, except to

19 the extent that such standard or requirement pre20 vents the application of a requirement of this title,

21 or which requires (in connection with any litigation

22 against a health insurance issuer) that the dispute

23 be first, or simultaneously, considered through an al24 ternative dispute resolution system.
83

•HR 719 IH

1 (2) CONTINUED PREEMPTION WITH RESPECT

2 TO GROUP HEALTH PLANS.—Nothing in this title

3 shall be construed to affect or modify the provisions

4 of section 514 of the Employee Retirement Income

5 Security Act of 1974 with respect to group health

6 plans.

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

8 in section 152, nothing in this title shall be construed as

9 requiring a group health plan or health insurance coverage

10 to provide specific benefits under the terms of such plan

11 or coverage.

12 (c) DEFINITIONS.—For purposes of this section:

13 (1) STATE LAW.—The term ‘‘State law’’ in14 cludes all laws, decisions, rules, regulations, or other

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

16 A law of the United States applicable only to the

17 District of Columbia shall be treated as a State law

18 rather than a law of the United States.

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

20 State, the Northern Mariana Islands, any political

21 subdivisions of a State or such Islands, or any agen22 cy or instrumentality of either.

23 SEC. 193. REGULATIONS.

24 The Secretaries of Health and Human Services and

25 Labor shall issue such regulations as may be necessary
84

•HR 719 IH

1 or appropriate to carry out this title, other than section

2 151. Such regulations shall be issued consistent with sec3 tion 104 of Health Insurance Portability and Accountabil4 ity Act of 1996. Such Secretaries may promulgate any in5 terim final rules as the Secretaries determine are appro6 priate to carry out this title.

7 TITLE II—APPLICATION OF PA8 TIENT PROTECTION STAND9 ARDS TO GROUP HEALTH

10 PLANS AND HEALTH INSUR11 ANCE COVERAGE UNDER

12 PUBLIC HEALTH SERVICE

13 ACT

14 SEC. 201. APPLICATION TO GROUP HEALTH PLANS AND

15 GROUP HEALTH INSURANCE COVERAGE.

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

17 XXVII of the Public Health Service Act is amended by

18 adding at the end the following new section:

19 ‘‘SEC. 2706. PATIENT PROTECTION STANDARDS.

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

21 comply with patient protection requirements under title I

22 of the Managed Care Reform Act of 1999, and each health

23 insurance issuer shall comply with patient protection re24 quirements under such title with respect to group health
85

•HR 719 IH

1 insurance coverage it offers, and such requirements shall

2 be deemed to be incorporated into this subsection.

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

4 the notice requirement under section 711(d) of the Em5 ployee Retirement Income Security Act of 1974 with re6 spect to the requirements referred to in subsection (a) and

7 a health insurance issuer shall comply with such notice

8 requirement as if such section applied to such issuer and

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

10 (b) CONFORMING AMENDMENT.—Section

11 2721(b)(2)(A) of such Act (42 U.S.C. 300gg–21(b)(2)(A))

12 is amended by inserting ‘‘(other than section 2706)’’ after

13 ‘‘requirements of such subparts’’.

14 SEC. 202. APPLICATION TO INDIVIDUAL HEALTH INSUR15 ANCE COVERAGE.

16 Part B of title XXVII of the Public Health Service

17 Act is amended by inserting after section 2751 the follow18 ing new section:

19 ‘‘SEC. 2752. PATIENT PROTECTION STANDARDS.

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

21 shall comply with patient protection requirements under

22 title I of the Managed Care Reform Act of 1999 with re23 spect to individual health insurance coverage it offers, and

24 such requirements shall be deemed to be incorporated into

25 this subsection.
86

•HR 719 IH

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

2 part shall comply with the notice requirement under sec3 tion 711(d) of the Employee Retirement Income Security

4 Act of 1974 with respect to the requirements of such title

5 as if such section applied to such issuer and such issuer

6 were a group health plan.’’.

7 TITLE III—AMENDMENTS TO

8 THE EMPLOYEE RETIREMENT

9 INCOME SECURITY ACT OF

10 1974

11 SEC. 301. APPLICATION OF PATIENT PROTECTION STAND12 ARDS TO GROUP HEALTH PLANS AND GROUP

13 HEALTH INSURANCE COVERAGE UNDER THE

14 EMPLOYEE RETIREMENT INCOME SECURITY

15 ACT OF 1974.

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

17 B of title I of the Employee Retirement Income Security

18 Act of 1974 is amended by adding at the end the following

19 new section:

20 ‘‘SEC. 714. PATIENT PROTECTION STANDARDS.

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

22 group health plan (and a health insurance issuer offering

23 group health insurance coverage in connection with such

24 a plan) shall comply with the requirements of title I of

25 the Managed Care Reform Act of 1999 (as in effect as
87

•HR 719 IH

1 of the date of the enactment of such Act), and such re2 quirements shall be deemed to be incorporated into this

3 subsection.

4 ‘‘(b) PLAN SATISFACTION OF CERTAIN REQUIRE5 MENTS.—

6 ‘‘(1) SATISFACTION OF CERTAIN REQUIRE7 MENTS THROUGH INSURANCE.—For purposes of

8 subsection (a), insofar as a group health plan pro9 vides benefits in the form of health insurance cov10 erage through a health insurance issuer, the plan

11 shall be treated as meeting the following require12 ments of title I of the Managed Care Reform Act of

13 1999 with respect to such benefits and not be con14 sidered as failing to meet such requirements because

15 of a failure of the issuer to meet such requirements

16 so long as the plan sponsor or its representatives did

17 not cause such failure by the issuer:

18 ‘‘(A) Section 101 (relating to access to

19 emergency care).

20 ‘‘(B) Section 102(a)(1) (relating to offer21 ing option to purchase point-of-service cov22 erage), but only insofar as the plan is meeting

23 such requirement through an agreement with

24 the issuer to offer the option to purchase point25 of-service coverage under such section.
88

•HR 719 IH

1 ‘‘(C) Section 103 (relating to choice of pro2 viders).

3 ‘‘(D) Section 104 (relating to access to

4 specialty care).

5 ‘‘(E) Section 105(a)(1) (relating to con6 tinuity in case of termination of provider con7 tract) and section 105(a)(2) (relating to con8 tinuity in case of termination of issuer con9 tract), but only insofar as a replacement issuer

10 assumes the obligation for continuity of care.

11 ‘‘(F) Section 106 (relating to coverage for

12 individuals participating in approved clinical

13 trials.)

14 ‘‘(G) Section 107 (relating to access to

15 needed prescription drugs).

16 ‘‘(H) Section 108 (relating to adequacy of

17 provider network).

18 ‘‘(I) Subtitle B (relating to quality assur19 ance).

20 ‘‘(J) Section 143 (relating to additional

21 rules regarding participation of health care pro22 fessionals).

23 ‘‘(K) Section 152 (relating to standards re24 lating to benefits for certain breast cancer

25 treatment).
89

•HR 719 IH

1 ‘‘(2) INFORMATION.—With respect to informa2 tion required to be provided or made available under

3 section 121, in the case of a group health plan that

4 provides benefits in the form of health insurance

5 coverage through a health insurance issuer, the Sec6 retary shall determine the circumstances under

7 which the plan is not required to provide or make

8 available the information (and is not liable for the

9 issuer’s failure to provide or make available the in10 formation), if the issuer is obligated to provide and

11 make available (or provides and makes available)

12 such information.

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

14 With respect to the grievance system and internal

15 appeals process required to be established under sec16 tions 131 and 132, in the case of a group health

17 plan that provides benefits in the form of health in18 surance coverage through a health insurance issuer,

19 the Secretary shall determine the circumstances

20 under which the plan is not required to provide for

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

22 issuer’s failure to provide for such system and proc23 ess), if the issuer is obligated to provide for (and

24 provides for) such system and process.
90

•HR 719 IH

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

2 of the Secretary, insofar as a group health plan en3 ters into a contract with a qualified external appeal

4 entity for the conduct of external appeal activities in

5 accordance with section 133, the plan shall be treat6 ed as meeting the requirement of such section and

7 is not liable for the entity’s failure to meet any re8 quirements under such section.

9 ‘‘(5) APPLICATION TO PROHIBITIONS.—Pursu10 ant to rules of the Secretary, if a health insurance

11 issuer offers health insurance coverage in connection

12 with a group health plan and takes an action in vio13 lation of any of the following sections, the group

14 health plan shall not be liable for such violation un15 less the plan caused such violation:

16 ‘‘(A) Section 141 (relating to prohibition of

17 interference with certain medical communica18 tions).

19 ‘‘(B) Section 142 (relating to prohibition

20 against transfer of indemnification or improper

21 incentive arrangements).

22 ‘‘(C) Section 144 (relating to prohibition

23 on retaliation).

24 ‘‘(D) Section 151 (relating to promoting

25 good medical practice).
91

•HR 719 IH

1 ‘‘(6) CONSTRUCTION.—Nothing in this sub2 section shall be construed to affect or modify the re3 sponsibilities of the fiduciaries of a group health

4 plan under part 4 of subtitle B.

5 ‘‘(7) APPLICATION TO CERTAIN PROHIBITIONS

6 AGAINST RETALIATION.—With respect to compliance

7 with the requirements of section 144(b)(1) of the

8 Managed Care Reform Act of 1999, for purposes of

9 this subtitle the term ‘group health plan’ is deemed

10 to include a reference to an institutional health care

11 provider.

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

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

14 professional who believes that the professional has

15 been retaliated or discriminated against in violation

16 of section 144(b)(1) of the Managed Care Reform

17 Act of 1999 may file with the Secretary a complaint

18 within 180 days of the date of the alleged retaliation

19 or discrimination.

20 ‘‘(2) INVESTIGATION.—The Secretary shall in21 vestigate such complaints and shall determine if a

22 violation of such section has occurred and, if so,

23 shall issue an order to ensure that the protected

24 health care professional does not suffer any loss of

25 position, pay, or benefits in relation to the plan,
92

•HR 719 IH

1 issuer, or provider involved, as a result of the viola2 tion found by the Secretary.

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

4 may issue regulations to coordinate the requirements on

5 group health plans under this section with the require6 ments imposed under the other provisions of this title.’’.

7 (b) SATISFACTION OF ERISA CLAIMS PROCEDURE

8 REQUIREMENT.—Section 503 of such Act (29 U.S.C.

9 1133) is amended by inserting ‘‘(a)’’ after ‘‘SEC. 503.’’

10 and by adding at the end the following new subsection:

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

12 in section 733) compliance with the requirements of sub13 title D (and section 111) of title I of the Managed Care

14 Reform Act of 1999 in the case of a claims denial shall

15 be deemed compliance with subsection (a) with respect to

16 such claims denial.’’.

17 (c) CONFORMING AMENDMENTS.—(1) Section 732(a)

18 of such Act (29 U.S.C. 1185(a)) is amended by striking

19 ‘‘section 711’’ and inserting ‘‘sections 711 and 714’’.

20 (2) The table of contents in section 1 of such Act

21 is amended by inserting after the item relating to section

22 712 the following new item:

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

23 (3) Section 502(b)(3) of such Act (29 U.S.C.

24 1132(b)(3)) is amended by inserting ‘‘(other than section

25 144(b))’’ after ‘‘part 7’’.
93

•HR 719 IH

1 SEC. 302. ERISA PREEMPTION NOT TO APPLY TO CERTAIN

2 ACTIONS INVOLVING HEALTH INSURANCE

3 POLICYHOLDERS.

4 (a) IN GENERAL.—Section 514 of the Employee Re5 tirement Income Security Act of 1974 (29 U.S.C. 1144)

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

7 ‘‘(e) PREEMPTION NOT TO APPLY TO CERTAIN AC8 TIONS ARISING OUT OF PROVISION OF HEALTH BENE9 FITS.—

10 ‘‘(1) NON-PREEMPTION OF CERTAIN CAUSES OF

11 ACTION.—

12 ‘‘(A) IN GENERAL.—Except as provided in

13 this subsection, nothing in this title shall be

14 construed to invalidate, impair, or supersede

15 any cause of action brought by a plan partici16 pant or beneficiary (or the estate of a plan par17 ticipant or beneficiary) under State law to re18 cover damages resulting from personal injury or

19 for wrongful death against any person—

20 ‘‘(i) in connection with the provision

21 of insurance, administrative services, or

22 medical services by such person to or for

23 a group health plan (as defined in section

24 733), or

25 ‘‘(ii) that arises out of the arrange26 ment by such person for the provision of
94

•HR 719 IH

1 such insurance, administrative services, or

2 medical services by other persons.

3 ‘‘(B) LIMITATION ON PUNITIVE DAM4 AGES.—The plan or issuer is not liable for any

5 punitive, exemplary, or similar damages in the

6 case of a cause of action brought under sub7 paragraph (A) if—

8 ‘‘(i) it relates to an externally appeal9 able decision (as defined in subsection

10 (a)(2) of section 133 of the Managed Care

11 Reform Act of 1999);

12 ‘‘(ii) an external appeal with respect

13 to such decision was completed under such

14 section 133;

15 ‘‘(iii) in the case such external appeal

16 was initiated by the plan or issuer filing

17 the request for the external appeal, the re18 quest was filed on a timely basis before the

19 date the action was brought or, if later,

20 within 30 days after the date the exter21 nally appealable decision was made;

22 ‘‘(iv) the plan or issuer promptly fol23 lowed the recommendation of the qualified

24 external appeal entity involved; and
95

•HR 719 IH

1 ‘‘(v) such recommendation is not va2 cated under subsection (d)(3) of such sec3 tion based upon an action of the plan or

4 issuer.

5 The provisions of this subparagraph supersede

6 any State law or common law to the contrary.

7 ‘‘(C) PERSONAL INJURY DEFINED.—For

8 purposes of this subsection, the term ‘personal

9 injury’ means a physical injury and includes an

10 injury arising out of the treatment (or failure

11 to treat) a mental illness or disease.

12 ‘‘(2) EXCEPTION FOR EMPLOYERS AND OTHER

13 PLAN SPONSORS.—

14 ‘‘(A) IN GENERAL.—Subject to subpara15 graph (B), paragraph (1) does not authorize—

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

17 employer or other plan sponsor maintain18 ing the group health plan (or against an

19 employee of such an employer or sponsor

20 acting within the scope of employment), or

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

22 by a person against an employer or other

23 plan sponsor (or such an employee) for

24 damages assessed against the person pur-
96

•HR 719 IH

1 suant to a cause of action under paragraph

2 (1).

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

4 shall not preclude any cause of action described

5 in paragraph (1) against an employer or other

6 plan sponsor (or against an employee of such

7 an employer or sponsor acting within the scope

8 of employment) if—

9 ‘‘(i) such action is based on the em10 ployer’s or other plan sponsor’s (or em11 ployee’s) exercise of discretionary authority

12 to make a decision on a claim for benefits

13 covered under the plan or health insurance

14 coverage in the case at issue; and

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

16 other plan sponsor (or employee) of such

17 authority resulted in personal injury or

18 wrongful death.

19 ‘‘(3) CONSTRUCTION.—Nothing in this sub20 section shall be construed as permitting a cause of

21 action under State law for the failure to provide an

22 item or service which is specifically excluded under

23 the group health plan involved.’’.

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

25 subsection (a) shall apply to acts and omissions occurring
97

•HR 719 IH

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

2 which a cause of action arises.

3 TITLE IV—EFFECTIVE DATES;

4 COORDINATION IN IMPLE5 MENTATION

6 SEC. 401. EFFECTIVE DATES.

7 (a) GROUP HEALTH COVERAGE.—

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

9 the amendments made by sections 201(a) and 301

10 (and title I insofar as it relates to such sections)

11 shall apply with respect to group health plans, and

12 health insurance coverage offered in connection with

13 group health plans, for plan years beginning on or

14 after October 1, 2000 (in this section referred to as

15 the ‘‘general effective date’’).

16 (2) TREATMENT OF COLLECTIVE BARGAINING

17 AGREEMENTS.—In the case of a group health plan

18 maintained pursuant to 1 or more collective bargain19 ing agreements between employee representatives

20 and 1 or more employers ratified before the date of

21 enactment of this Act, the amendments made by sec22 tions 201(a) and 301 (and title I insofar as it re23 lates to such sections) shall not apply to plan years

24 beginning before the later of—
98

•HR 719 IH

1 (A) the date on which the last collective

2 bargaining agreements relating to the plan ter3 minates (determined without regard to any ex4 tension thereof agreed to after the date of en5 actment of this Act), or

6 (B) the general effective date.

7 For purposes of subparagraph (A), any plan amend8 ment made pursuant to a collective bargaining

9 agreement relating to the plan which amends the

10 plan solely to conform to any requirement added by

11 this Act shall not be treated as a termination of

12 such collective bargaining agreement.

13 (b) INDIVIDUAL HEALTH INSURANCE COVERAGE.—

14 The amendments made by section 202 shall apply with

15 respect to individual health insurance coverage offered,

16 sold, issued, renewed, in effect, or operated in the individ17 ual market on or after the general effective date.

18 SEC. 402. COORDINATION IN IMPLEMENTATION.

19 The Secretary of Health and Human Services and the

20 Secretary of Labor shall ensure, through the execution of

21 an interagency memorandum of understanding among

22 such Secretaries, that—

23 (1) regulations, rulings, and interpretations

24 issued by such Secretaries relating to the same mat25 ter over which two or more such Secretaries have re-
99

•HR 719 IH

1 sponsibility under title I (and the amendments made

2 by titles II and III) are administered so as to have

3 the same effect at all times; and

4 (2) coordination of policies relating to enforcing

5 the same requirements through such Secretaries in

6 order to have a coordinated enforcement strategy

7 that avoids duplication of enforcement efforts and

8 assigns priorities in enforcement.

Æ