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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4527 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 4527

 To assure fairness and choice to patients and providers under managed 
                       care health benefit plans.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 26, 1994

   Mr. Peterson of Minnesota (for himself, Mr. Laughlin, Mr. Hall of 
Texas, Mr. Rowland, Mr. Barcia of Michigan, and Mr. Allard) introduced 
  the following bill; which was referred jointly to the Committees on 
              Energy and Commerce and Education and Labor

_______________________________________________________________________

                                 A BILL

 
 To assure fairness and choice to patients and providers under managed 
                       care health benefit plans.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Patient Protection Act of 1994''.

                 TITLE I--PROTECTION OF CONSUMER CHOICE

    (a) Nothing in this Act shall be construed as prohibiting the 
following:
            (1) An individual from purchasing any health care services 
        with that individual's own funds, whether such services are 
        covered within the individual's standard benefit package or 
        from another health care provider or plan.
            (2) Employers from providing coverage for benefits in 
        addition to the comprehensive benefit package.

 TITLE II--CERTIFICATION OF MANAGED CARE PLANS AND UTILIZATION REVIEW 
                                PROGRAMS

    (a) Certification Process.--
            (1) Certification.--The Secretary shall establish a process 
        for certification of managed care plans meeting the 
        requirements of subsection (b)(1) and of utilization review 
        programs meeting the requirements of subsection (b)(2).
            (2) Qualified managed care plan.--For purposes of this 
        title, the term ``qualified managed care plan'' means a managed 
        care plan that the Secretary certifies, upon application by the 
        program, as meeting the requirements of this section.
            (3) Qualified utilization review program.--For purposes of 
        this title, the term ``qualified utilization review program'' 
        means a utilization review program that the Secretary 
        certifies, upon application by the program, as meeting the 
        requirements of this section.
            (4) Utilization review program.--For purposes of this title 
        the term ``utilization review program'' means a system of 
        reviewing the medical necessity, appropriateness, or quality of 
        health care services and supplies provided under a health 
        insurance plan or a managed care plan using specified 
        guidelines. Such a system may include preadmission 
        certification, the application of practice guidelines, 
        continued stay review, discharge planning, preauthorization of 
        ambulatory procedures, and retrospective review.
            (5) Managed care plan.--
                    (A) In general.--For purposes of this title the 
                term ``managed care plan'' means a plan operated by a 
                managed care entity as described in subparagraph (B), 
                that provides for the financing and delivery of health 
                care services to persons enrolled in such plan 
                through--
                            (i) arrangements with selected providers to 
                        furnish health care services;
                            (ii) explicit standards for the selection 
                        of participating providers;
                            (iii) organizational arrangements for 
                        ongoing quality assurance, utilization review 
                        programs, and dispute resolution; and
                            (iv) financial incentives for persons 
                        enrolled in the plan to use the participating 
                        providers and procedures provided for by the 
                        plan.
                    (B) Managed care entity defined.--For purposes of 
                this title, a managed care entity includes a licensed 
                insurance company, hospital or medical service plan, 
                health maintenance organization, an employer or 
                employee organization, or a managed care contractor as 
                described in subparagraph (C), that operates a managed 
                care plan.
                    (C) Managed care contractor defined.--For purposes 
                of this title, a managed care contractor means a person 
                that--
                            (i) establishes, operates or maintains a 
                        network of participating providers;
                            (ii) conducts or arranges for utilization 
                        review activities; and
                            (iii) contracts with an insurance company, 
                        a hospital or medical service plan, an 
                        employer, an employee organization, or any 
                        other entity providing coverage for health care 
                        services to operate a managed care plan.
            (6) Participating provider.--The term ``participating 
        provider'' means a physician, hospital, pharmacy, laboratory, 
        or other appropriately state licensed provider of health care 
        services or supplies, that has entered into an agreement with a 
        managed care entity to provide such services or supplies to a 
        patient enrolled in a managed care plan.
            (7) Review and recertification.--The Secretary shall 
        establish procedures for the periodic review and 
        recertification of qualified managed care plans and qualified 
        utilization review programs.
            (8) Termination of certification.--The Secretary shall 
        terminate the certification of a previously qualified managed 
        care plan or a qualified utilization review program if the 
        Secretary determines that such plan or program no longer meets 
        the applicable requirements for certification. Before effecting 
        a termination, the Secretary shall provide the plan notice and 
        opportunity for a hearing on the proposed termination.
            (9) Certification through alternative requirements.--
                    (A) Certain organizations recognized.--An eligible 
                organization as defined in section 1876(b), shall be 
                deemed to meet the requirements of subsection (b) for 
                certification as a qualified managed care plan.
                    (B) Recognition of accreditation.--If the Secretary 
                finds that a State licensure program or a national 
                accreditation body establishes a requirement or 
                requirements for accreditation of a managed care plan 
                or utilization review program that are at least 
                equivalent to a requirement(s) established under 
                subsection (b), the Secretary may, to the extent 
                appropriate, treat a managed care plan or a utilization 
                review program thus accredited as meeting the 
                requirement(s) of subsection (b).
    (b) Requirements for Certification.--
            (1) Managed care plans.--The Secretary shall establish 
        Federal standards for the certification of qualified managed 
        care plans, including standards whereby:
                    (A) Prospective enrollees in health insurance plans 
                must be provided information as to the terms and 
                conditions of the plan so that they can make informed 
                decisions about accepting a certain system of health 
                care delivery. Where the plan is described orally to 
                enrollees, easily understood, truthful, and objective 
                terms must be used. All written plan descriptions must 
                be in a readable and understandable format, consistent 
                with standards developed for supplemental insurance 
                coverage under Title XVIII of the Social Security Act. 
                This format must be standardized so that customers can 
                compare the attributes of the plans. Specific items 
                that must be included are--
                            (i) coverage provisions, benefits, and any 
                        exclusions by category of service, provider or 
                        physician, and if applicable, by specific 
                        service;
                            (ii) any and all prior authorization or 
                        other review requirements including 
                        preauthorization review, concurrent review, 
                        post-service review, post payment review and 
                        any procedures that may lead the patient to be 
                        denied coverage for or not be provided a 
                        particular service;
                            (iii) financial arrangements or contractual 
                        provisions with hospitals, review companies, 
                        physicians or any other provider of health care 
                        services that would limit the services offered, 
                        restrict referral or treatment options, or 
                        negatively affect the physician's fiduciary 
                        responsibility to his or her patients, 
                        including but not limited to financial 
                        incentives not to provide medical or other 
                        services;
                            (iv) explanation of how plan limitations 
                        impact enrollees, including information on 
                        enrollee financial responsibility for payment 
                        for coinsurance or other non-covered or out-of-
                        plan services;
                            (v) loss ratios; and
                            (vi) enrollee satisfaction statistics 
                        (including percent reenrollment, reasons for 
                        leaving plan, etc.).
                    (B) Plans must demonstrate that they have adequate 
                access to physicians and other providers, so that all 
                covered health care services will be provided in a 
                timely fashion. This requirement can not be waived and 
                must be met in all areas where the plan has enrollees, 
                including rural areas.
                    (C) Plans must meet financial reserve requirements 
                that are established to assure proper payment for 
                covered services provided. An indemnity fund should be 
                established to provide for plan failures even when a 
                plan has met the reserve requirements.
                    (D) All plans shall be required to establish a 
                mechanism, with defined rights, under which physicians 
                participating in the plan provide input into the plan's 
                medical policy (including coverage of new technology 
                and procedures), utilization review criteria and 
                procedures, quality and credentialing criteria, and 
                medical management procedures.
                    (E) All plans shall be required to credential 
                physicians within the plan, and will allow all 
                physicians within the plan's geographic service area to 
                apply for such credentials. At least once per year, 
                plans shall notify physicians of the opportunity to 
                apply for credentials.
                            (i) Such a credentialing process shall 
                        begin upon application of a physician to the 
                        plan for inclusion.
                            (ii) Each application shall be reviewed by 
                        a credentialing committee with appropriate 
                        representation of the applicant's medical 
                        specialty.
                            (iii) Credentialing shall be based on 
                        objective standards of quality with input from 
                        physicians credentialed in the plan and such 
                        standards shall be available to applicants and 
                        enrollees. When economic considerations are 
                        part of the decision, objective criteria must 
                        be used and must be available to applicants, 
                        participating physicians and enrollees. Any 
                        economic profiling of physicians must be 
                        adjusted to recognize case mix, severity of 
                        illness, age of patients and other features of 
                        a physician's practice that may account for 
                        higher than or lower than expected costs. 
                        Profiles must be made available to those so 
                        profiled. When graduate medical education is a 
                        consideration in credentialing, equal 
                        recognition will be given to training programs 
                        accredited by the Accrediting Council on 
                        Graduate Medical Education and by the American 
                        Osteopathic Association.
                            (iv) Plans shall be prohibited from 
                        discriminating against enrollees with expensive 
                        medical conditions by excluding practitioners 
                        with practices containing a substantial number 
                        of such patients.
                            (v) All decisions shall be made on the 
                        record and the applicant shall be provided with 
                        all reasons used if the application is denied 
                        or the contract not renewed.
                            (vi) Plans shall not be allowed to include 
                        clauses in physician or other provider 
                        contracts that allow for the plan to terminate 
                        the contract ``without cause''.
                            (vii) There shall be a due process appeal 
                        from all adverse decisions. The due process 
                        appeal mechanisms shall be as set forth in the 
                        Health Care Quality Improvement Act of 1986, 42 
                        U.S.C. Sec. 11101-11152.
                            (viii) The same standards and procedures 
                        used for an application for credentials shall 
                        also be used in those cases where the plan 
                        seeks to reduce or withdraw such credentials. 
                        Prior to initiation of a proceeding leading to 
                        termination of a contract ``for cause'', the 
                        physician shall be provided notice, an 
                        opportunity for discussion, and an opportunity 
                        to enter into and complete a corrective action 
                        plan, except in cases where there is imminent 
                        harm to patient health or an action by a state 
                        medical board or other government agency that 
                        effectively impairs the physician's ability to 
                        practice medicine within the jurisdiction.
                    (F) Procedures shall be established to ensure that 
                all applicable Federal and State laws designed to 
                protect the confidentiality of provider and individual 
                medical records are followed.
            (2) Qualified utilization review programs.--The Secretary, 
        shall establish Federal standards for the certification of 
        qualified utilization review programs, including:
                    (A) Plans must have a medical director responsible 
                for all clinical decisions by the plan and provide 
                assurances that the medical review or utilization 
                practices they use, and the medical review or 
                utilization practices of payers or reviewers with whom 
                they contract, comply with the following requirements.
                    (B) Screening criteria, weighting elements, and 
                computer algorithms utilized in the review process and 
                their method of development, must be released to 
                physicians and the public.
                    (C) Such criteria must be based on sound scientific 
                principles and developed in cooperation with practicing 
                physicians and other affected health care providers.
                    (D) Any person who recommends denial of coverage or 
                payment, or determines that a service should not be 
                provided, based on medical necessity standards, must be 
                of the same medical branch (allopathic or osteopathic 
                medicine) and specialty (specialties as recognized by 
                the American Board of Medical Specialties or the 
                American Osteopathic Association) as the practitioner 
                who provided the service.
                    (E) Each claimant or provider (upon assignment of a 
                claimant) who has had a claim denied as not medically 
                necessary must be provided an opportunity for a due 
                process appeal to a medical consultant or peer review 
                group not involved in the organization that performed 
                the initial review.
                    (F) Any individual making a negative judgment or 
                recommendation about the necessity or appropriateness 
                of services or the site of service must be a physician 
                licensed to practice medicine in the jurisdiction from 
                which the claim arose.
                    (G) Upon request, physicians will be provided the 
                names and credentials of all individuals conducting 
                medical necessity or appropriateness review, subject to 
                reasonable safeguards and standards.
                    (H) Patient or physician requests for prior 
                authorization of a non-emergency service must be 
                answered within two business days, and qualified 
                personnel must be available for same-day telephone 
                responses to inquiries about medical necessity, 
                including certification of continued length of stay.
                    (I) Plans must ensure that enrollees, in plans 
                where prior authorization is a condition to coverage of 
                a service, are required to sign medical information 
                release consent forms upon enrollment for use where 
                services requiring prior authorization are recommended 
                or proposed by their physician.
                    (J) When prior approval for a service or other 
                covered item is obtained, it shall be considered 
                approval for all purposes and the service shall be 
                considered to be covered unless there was fraud or 
                incorrect information provided at the time such prior 
                approval was obtained.
                    (K) Procedures for ensuring that all applicable 
                Federal and State laws designed to protect the 
                confidentiality of provider and individual medical 
                records are followed.
            (3) Application of standards.--
                    (A) In general.--Standards shall first be 
                established under this subsection by not later than 12 
                months after the date of the enactment of this section. 
                In developing standards under this subsection, the 
                Secretary shall--
                            (i) review standards in use by national 
                        private accreditation organizations and State 
                        licensure programs;
                            (ii) recognize, to the extent appropriate, 
                        differences in the organizational structure and 
                        operation of managed care plans; and
                            (iii) establish procedures for the timely 
                        consideration of applications for certification 
                        by managed care plans and utilization review 
                        programs.
                    (B) Revision of standards.--The Secretary shall 
                periodically review the standards established under 
                this subsection, and may revise the standards from time 
                to time to assure that such standards continue to 
                reflect appropriate policies and practices for the 
                cost-effective and medically appropriate use of 
                services within managed care plans and utilization 
                review programs.

       TITLE III--CHOICE REQUIREMENTS FOR POINT OF SERVICE PLANS

    Sec. 3. (a) Choice Requirements for Point of Service Plans.--
            (1) Each sponsor of a health benefit plan that restricts 
        access to providers (including such plans provided, offered, or 
        made available by voluntary health purchasing co-operatives, 
        employers, and self-insurers), shall offer to all eligible 
        enrollees the opportunity to obtain coverage for out-of-network 
        services through a ``point of service'' plan, as defined by 
        subparagraph (2), at the time of enrollment and at least for a 
        continuous one-month period annually thereafter.
            (2) For purposes of this Act, an ``out-of-network'' or 
        ``point of service'' plan provides additional coverage and/or 
        access to care to nonnetwork providers to an eligible enrollee 
        of a health plan that restricts access to items and services 
        provided by a health care provider who is not a member of the 
        plan's provider network (as defined in subparagraph (2)), or, 
        that may cover any other services the enrollee seeks, whether 
        such services are provided in or outside of the enrollee's 
        plan.
            (3) A ``provider network'' means, with respect to a health 
        plan that restricts access, those providers who have entered 
        into a contract of agreement with the plan under which such 
        providers are obligated to provide items and services in the 
        standard benefits package to eligible individuals enrolled in 
        the plan, or have an agreement to provide services on a fee-
        for-service basis.
            (4) Premiums.--A plan may charge an enrollee who opts to 
        obtain point of service coverage an alternative premium that 
        takes into account the actuarial value of such coverage.
            (5) Copayments.--A point of service plan shall require 
        payment of coinsurance for an out-of-network item or service, 
        as follows:
                    (A) The applicable coinsurance percentage shall not 
                be greater than 20 percent of payment for items and 
                services.
                    (B) The applicable coinsurance percentage may be 
                applied differentially with respect to out-of-network 
                items and services, subject to the requirements of 
                subparagraph (i).
            (6) Payment disclosure requirement.--All sponsors of point 
        of service plans and physicians participating in such plans 
        shall be required to disclose their fees, applicable payment 
        schedules, coinsurance requirements or any other financial 
        requirements that affect patient payment levels.
            (7) Poverty exclusion.--Any enrollee, including enrolled 
        dependents, whose income does not exceed 200 percent of the 
        established federal poverty guideline for the applicable year, 
        shall be charged no more than amount allowed under applicable 
        plan limits. Such amount, except for reasonable coinsurance, 
        shall be considered payment in full.

            TITLE IV--CHOICE OF HEALTH PLANS FOR ENROLLMENT

    Sec. 4. (a) In General.--Each sponsor of a health benefit plan, who 
offers, provides or makes available such benefit plan (including 
voluntary health insurance purchasing co-operatives, employers, and 
selfinsurers), must provide to each eligible enrollee a choice of 
health plans among available plans.
    (b) Offering of Plans by Voluntary Health Insurance Purchasing 
Cooperatives, Employers, and Other Sponsors.--
            (1) In general.--Each voluntary health insurance purchasing 
        cooperative, employer, or other sponsor shall include among its 
        health plan offerings at least one of each of the following 
        types of health benefit plans:
                    (A) A health maintenance organization or preferred 
                provider organization, where available.
                    (B) A traditional insurance plan (as defined in 
                paragraph (2)).
                    (C) A benefit payment schedule plan (as defined in 
                paragraph (3)).
            (2) Traditional insurance plan defined.--For purposes of 
        this act, the term ``traditional insurance plan'' is defined to 
        include those plans that offer the standard benefits package 
        that pay for medical services on a fee-for-service basis using 
        a usual, customary or reasonable payment methodology or a 
        resource-based relative value schedule, usually linked to an 
        annual deductible and/or coinsurance payment on each allowed 
        amount.
            (3) Benefit payment schedule plan defined.--For purposes of 
        this Act, the term ``benefit payment schedule plan'' means a 
        health plan that--
                    (A) provides coverage for all items and services 
                included in the standard benefit package that are 
                furnished by any lawful health care provider of the 
                enrollee's choice (within the scope of state 
                licensure);
                    (B) makes payment for the services of a provider on 
                a fee-for-service basis without regard to whether or 
                not there is a contractual arrangement between the plan 
                and the provider; and
                    (C) provides a benefit payment schedule that 
                identifies covered services and the payment for each 
                service covered by the plan. No co-payments or 
                coinsurance shall be applied.

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