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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 2196 Introduced in Senate (IS)]

103d CONGRESS
  2d Session
                                S. 2196

 To assure fairness and choice to patients and providers under managed 
           care health benefit plans, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                June 15 (legislative day, June 7), 1994

  Mr. Wellstone (for himself and Mr. Burns) introduced the following 
 bill; which was read twice and referred to the Committee on Labor and 
                            Human Resources

_______________________________________________________________________

                                 A BILL

 
 To assure fairness and choice to patients and providers under managed 
           care health benefit plans, and for other purposes.

    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

SEC. 2. PROTECTION OF CONSUMER CHOICE.

    Nothing in this Act shall be construed as prohibiting--
            (1) an individual from purchasing any health care services 
        with the individual's own funds, whether such services are 
        covered within any benefits package otherwise available to the 
        individual; and
            (2) employers from providing coverage for benefits in 
        addition to any benefits package otherwise available to an 
        individual.

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

SEC. 3. DEFINITIONS.

    For purposes of this title:
            (1) Qualified managed care plan.--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 section 4(b).
            (2) Qualified utilization review program.--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 section 4(c).
            (3) Utilization review program.--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 medical procedures, and retrospective 
        review.
            (4) Managed care plan.--
                    (A) In general.--The term ``managed care plan'' 
                means a plan operated by a managed care entity (as 
                defined 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.--The term ``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 defined in subparagraph 
                (C)), that operates a managed care plan.
                    (C) Managed care contractor.--The term ``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.
            (5) Participating provider.--The term ``participating 
        provider'' means a physician, hospital, pharmacy, laboratory, 
        or other appropriately authorized 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.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

SEC. 4. CERTIFICATION OF MANAGED CARE PLANS AND UTILIZATION REVIEW 
              PROGRAMS.

    (a) In General.--
            (1) Certification.--The Secretary shall establish a process 
        for certification of managed care plans meeting the 
        requirements of subsection (b) and utilization review programs 
        meeting the requirements of subsection (c).
            (2) Review and recertification.--The Secretary shall 
        establish procedures for the periodic review and 
        recertification of qualified managed care plans and qualified 
        utilization review programs. Such procedures shall include 
        steps by which a health plan may remedy any deficiencies cited.
            (3) Termination of certification.--If the Secretary 
        determines that a qualified managed care plan or qualified 
        utilization review program no longer substantially meets the 
        applicable requirements for certification, the Secretary shall 
        establish procedures for terminating the certification of the 
        plan or program for reasons including the failure of remedies 
        for deficiencies referred to in paragraph (2). Prior to the 
        date a termination becomes effective, the Secretary shall 
        provide the plan notice and opportunity for a hearing on the 
        proposed termination.
            (4) Certification through alternative requirements.--
                    (A) Certain organizations recognized.--An eligible 
                organization (as defined in section 1876(b) of the 
                Social Security Act), 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 requirements for 
                accreditation of a managed care plan or utilization 
                review program that are at least equivalent to 
                requirements established under this section, the 
                Secretary may, to the extent appropriate, treat a 
                managed care plan or a utilization review program 
                accredited by such program or body as meeting the 
                applicable requirements of this section.
    (b) Requirements for Certification of Managed Care Plans.--
            (1) In general.--The Secretary shall establish Federal 
        standards for the certification of managed care plans, 
        including standards which require managed care plans to meet 
        the requirements described in paragraphs (2) through (6).
            (2) Information on terms of plan.--Managed care plans shall 
        provide prospective enrollees information on the terms and 
        conditions of the plan so that the enrollees can make informed 
        decisions about accepting a certain system of health care 
        delivery. Easily understood, truthful, linguistically 
        appropriate and objective terms must be used in all oral and 
        written descriptions of a plan. Such descriptions shall be 
        consistent with standards developed for supplemental insurance 
        coverage under title XVIII of the Social Security Act. 
        Descriptions of plans under this paragraph must be standardized 
        so that customers can compare the attributes of the plans. 
        Specific items that must be included in a description of a plan 
        are--
                    (A) coverage provisions, benefits, and any 
                exclusions by category of service, provider, or 
                physician, and if applicable, any exclusions by 
                specific service;
                    (B) 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;
                    (C) financial arrangements or contractual 
                provisions with hospitals, utilization review 
                organizations, physicians, or any other provider of 
                health care services that would limit the services 
                offered, restrict referral or treatment options, or 
                negatively affect a physician's fiduciary 
                responsibility to patients, including financial 
                incentives not to provide medical or other services;
                    (D) an explanation of how plan limitations impact 
                enrollees, including information on enrollee financial 
                responsibility for payment for coinsurance or other 
                noncovered or out-of-plan services; 
                    (E) the plan's loss ratios and an explanation that 
                they reflect the percentage of premiums expended for 
                health services; and
                    (F) enrollee satisfaction statistics, including 
                reenrollment statistics and a description of enrollees' 
                reasons for leaving the plan.
            (3) Adequate access to physicians.--Managed care plans 
        shall be required to demonstrate that they have adequate access 
        to physicians and other providers so that all covered health 
        care services will be provided in a timely manner. This 
        requirement may not be waived and must be met in all areas 
        where the plan has enrollees, including rural areas.
            (4) Financial reserves.--Managed care plans shall be 
        required to meet financial reserve requirements that are 
        established to assure proper payment for health care services 
        provided under the plan. The Secretary shall establish a 
        mechanism to provide adequately for indemnification of plan 
        failures even when a plan has met the reserve requirements.
            (5) Provider input.--Managed care plans shall be required 
        to establish a mechanism under which physicians and other 
        providers participating in a plan have defined rights to 
        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.
            (6) Credentials for physicians.--
                    (A) In general.--Managed care plans shall be 
                required to credential physicians furnishing health 
                care services under the plan. Any physicians within a 
                plan's geographic service area may apply for 
                credentials under the plan and at least once each year, 
                the plan shall notify such physicians of the 
                opportunity to apply for credentials.
                    (B) Credentialing process.--
                            (i) In general.--Each managed care plan 
                        shall establish a credentialing process. Such 
                        process shall begin upon application by a 
                        physician to be included under the plan. Each 
                        application by a physician shall be reviewed by 
                        a credentialing committee with appropriate 
                        representation of the applicant's medical 
                        specialty.
                            (ii) Standards.--Credentialing under a plan 
                        shall be based on objective standards of 
                        quality with input from physicians credentialed 
                        by the plan. Credentialing standards shall be 
                        available to applicants and enrollees.
                            (iii) Economic considerations.--If economic 
                        considerations, including practitioners' 
                        patterns of expenditure per patient, are part 
                        of a credentialing decision, objective criteria 
                        must used in examining such considerations and 
                        such criteria 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 or lower than expected costs. Economic 
                        profiles must be made available to the 
                        physicians profiled.
                            (iv) Graduate medical education.--If 
                        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.
                            (v) Recording decisions.--A record shall be 
                        maintained of all decisions made under the 
                        credentialing process and each applicant shall 
                        be provided with reasons for an application 
                        being denied or a contract not being renewed.
                            (vi) Due process.--Prior to initiation of a 
                        proceeding leading to termination of a 
                        contract, 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.
                            (vii) Reducing or withdrawing 
                        credentials.--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.
                            (viii) Appeals.--There shall be allowed a 
                        due process appeal from all adverse decisions 
                        affecting practitioners with whom a plan has 
                        contracted. The due process appeal mechanisms 
                        shall be as set forth in the Health Care 
                        Quality Improvement Act of 1986 (42 U.S.C. 
                        11101-11152).
                    (C) Discrimination against enrollees.--Managed care 
                plans shall be prohibited from discriminating against 
                enrollees based on health status or anticipated need 
                for medical services likely to lead to high expenses by 
                excluding practitioners with practices containing a 
                substantial number of such patients.
            (7) Confidentiality of records.--Managed care plans shall 
        be required to establish procedures to ensure that all 
        applicable Federal and State laws designed to protect the 
        confidentiality of provider and individual medical records are 
        followed.
    (c) Requirements for Certification of Utilization Review 
Programs.--
            (1) In general.--The Secretary shall establish Federal 
        standards for the certification of utilization review programs, 
        including standards which require such programs to meet the 
        requirements described in paragraph (2).
            (2) Requirements.--Plans must have a medical director 
        responsible for all clinical decisions by the plan and provide 
        assurances that the medical review or utilization practices 
        used by the plans, and the medical review or utilization 
        practices of payers or reviewers with whom the plans contract, 
        comply with the following requirements:
                    (A) Screening criteria used in the review process, 
                the methods by which they are applied, and their method 
                of development, must be released to physicians and the 
                public upon request.
                    (B) Such criteria and methods must be based on 
                sound scientific principles and developed in 
                cooperation with practicing physicians and other 
                affected health care providers.
                    (C) 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.
                    (D) Each claimant or provider (upon assignment of a 
                claim) 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 that is independent of the entity that performed 
                the initial review.
                    (E) Any individual making a final, negative 
                judgment or recommendation about the necessity or 
                appropriateness of services or the site of service must 
                be a comparably qualified health care professional 
                licensed to practice in the jurisdiction from which the 
                claim arose.
                    (F) Upon request, physicians and other 
                professionals will be provided the names and 
                credentials of all individuals conducting medical 
                necessity or appropriateness review, subject to 
                reasonable safeguards and standards.
                    (G) Prior authorization shall not be required for 
                emergency care, and patient or physician requests for 
                prior authorization of a nonemergency service must be 
                answered within 24 hours and qualified personnel must 
                be available for same-day telephone responses to 
                inquiries about medical necessity, including 
                certification of continued length of stay. If review 
                personnel are not available, medical services provided 
                shall be considered approved.
                    (H) Plans must ensure that enrollees, in plans 
                where prior authorization is a condition for coverage 
                of a service, are offered the opportunity to sign 
                medical information release consent forms upon 
                enrollment for use where services requiring prior 
                authorization are recommended or proposed by their 
                physician.
                    (I) When prior approval for a service or other 
                covered item is obtained, the service shall be 
                considered to be covered unless there was fraud or 
                incorrect information provided at the time such prior 
                approval was obtained.
                    (J) Plans must establish procedures for ensuring 
                that all applicable Federal and State laws designed to 
                protect the confidentiality of provider and individual 
                medical records are followed.
    (d) Considerations in Developing Standards.--In developing 
standards under subsections (b) and (c), the Secretary shall--
            (1) review standards in use by national private 
        accreditation organizations and State licensure programs;
            (2) recognize, to the extent appropriate, differences in 
        the organizational structure and operation of managed care 
        plans; and
            (3) establish procedures for the timely consideration of 
        applications for certification by managed care plans and 
        utilization review programs.
    (e) Timetable for Establishment of Standards.--
            (1) In general.--Not later than 12 months after the date of 
        the enactment of this Act standards shall first be established 
        under this section.
            (2) Revision of standards.--The Secretary shall 
        periodically review the standards established under this 
        section, 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 OF HEALTH PLANS FOR ENROLLMENT

SEC. 5. CHOICE OF HEALTH PLANS FOR ENROLLMENT.

    (a) In General.--Each sponsor, including a self-insured sponsor, of 
a health benefit plan, who offers, provides, or makes available such 
plan must provide to each eligible enrollee a choice of health plans 
among available plans.
    (b) Offering of Plans.--Each sponsor referred to in subsection (a) 
shall include among its health plan offerings at least one of each of 
the following types of health benefit plans, where available:
            (1) A managed care plan, including a health maintenance 
        organization or preferred provider organization.
            (2) A traditional insurance plan (as defined in subsection 
        (c)(1)).
            (3) A benefit payment schedule plan (as defined in 
        subsection (c)(2)), pursuant to the following activities of the 
        Secretary:
                    (A) Not later than 12 months after the date of the 
                enactment of this Act, the Secretary shall--
                            (i) conduct a study on the projected impact 
                        of benefit payment schedule plans on enrollees 
                        and on the Nation's health care costs; and
                            (ii) submit a report to Congress on the 
                        results of such study.
                    (B) The Secretary shall promulgate regulations to--
                            (i) assure that benefit payment schedule 
                        plans, if approved, are affordable for all 
                        enrollees and contribute to health care cost 
                        containment; and
                            (ii) remedy any other significant 
                        deficiencies identified by the study described 
                        in subparagraph (A).
    (c) Definitions.--For purposes of this section:
            (1) Traditional insurance plan.--The term ``traditional 
        insurance plan'' includes plans that offer a health benefits 
        package and 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.
            (2) Benefit payment schedule plan.--The term ``benefit 
        payment schedule plan'' means a health plan that--
                    (A) provides coverage for all items and services 
                included in a health benefits package that are 
                furnished by any health care provider licensed under 
                State law of the enrollee's choice;
                    (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;
                    (C) provides a benefit payment schedule that 
                identifies covered services and the payment for each 
                service covered by the plan; and
                    (D) applies no copayments or coinsurance.

SEC. 6. CHOICE REQUIREMENTS FOR POINT-OF-SERVICE PLANS.

    (a) In General.--Each sponsor, including a self-insured sponsor, of 
a health benefit plan that restricts access to providers, shall offer 
to all eligible enrollees the opportunity to obtain coverage for out-
of-network items or services through a point-of-service plan (as 
defined under subsection (e)(1)), at the time of enrollment and at 
least for a continuous one-month period annually thereafter.
    (b) Coinsurance.--A point-of-service plan may require payment of 
coinsurance for an out-of-network item or service, as follows:
            (1) The applicable coinsurance percentage shall not be 
        greater than 20 percent of payment for items and services.
            (2) The applicable coinsurance percentage may be applied 
        differentially with respect to out-of-network items and 
        services, subject to the requirements of paragraph (1).
    (c) Payment Disclosure Requirement.--All sponsors of point-of-
service plans and physicians and other professionals 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.
    (d) 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 the amount allowed under applicable plan limits. Such amount 
shall be considered payment in full.
    (e) Definitions.--For purposes of this section:
            (1) Point-of-service plan.--The term ``point-of-service 
        plan'' means a plan that offers services to enrollees through a 
        provider network (as defined in paragraph (2)) and also offers 
        additional services and/or access to care by network or non-
        network providers.
            (2) Provider network.--The term ``provider network'' means, 
        with respect to a health plan that restricts access, those 
        providers who have entered into a contract or agreement with 
        the plan under which such providers are obligated to provide 
        items and services under the plan to eligible individuals 
        enrolled in the plan, or have an agreement to provide services 
        on a fee-for-service basis.

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