II

105TH CONGRESS

2D SESSION S. 2074

To guarantee for all Americans quality, affordable, and comprehensive health

care coverage.

IN THE SENATE OF THE UNITED STATES

MAY 13, 1998

Mr. WELLSTONE introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To guarantee for all Americans quality, affordable, and

comprehensive health care 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 ‘‘Healthy Americans Act’’.

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

7 the Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—STATE UNIVERSAL HEALTH INSURANCE COVERAGE

PROGRAMS—PHASE I

Subtitle A—Expansion of SCHIP To Provide Health Insurance Coverage to

Additional Individuals
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Sec. 101. Phase I State universal health insurance coverage plans.

Subtitle B—State Health Coverage Outreach Programs

Sec. 111. Grants for State health coverage outreach programs.

TITLE II—UNIVERSAL, AFFORDABLE, COMPREHENSIVE HEALTH

CARE—PHASE II

Sec. 201. Phase II State plans.

Sec. 202. State law requiring a minimum benefits package that includes parity.

Sec. 203. State law requiring limitations on premiums and cost-sharing.

Sec. 204. Administration of, and definitions for, phase II State plans.

Sec. 205. Secretarial submission of legislative proposal to expand medicare benefits.

TITLE III—PATIENT PROTECTIONS

Sec. 301. Definitions.

Subtitle A—Utilization Management

Sec. 311. Definitions.

Sec. 312. Requirement for utilization review program.

Sec. 313. Standards for utilization review.

Subtitle C—Health Plan Standards

Sec. 321. Health plan standards.

Sec. 322. Minimum solvency requirements.

Sec. 323. Information on terms of plan.

Sec. 324. Access.

Sec. 325. Credentialing for health providers.

Sec. 326. Grievance procedures.

Sec. 327. Confidentiality standards.

Sec. 328. Discrimination.

Sec. 329. Prohibition on selective marketing.

Subtitle D—Miscellaneous Provisions

Sec. 331. Enforcement.

Sec. 332. Preemption.

Sec. 333. Effective dates; regulations.

TITLE IV—MISCELLANEOUS

Sec. 401. Nonapplication of ERISA.

Sec. 402. Sense of Congress regarding offsets.
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1 TITLE I—STATE UNIVERSAL

2 HEALTH INSURANCE COV3 ERAGE PROGRAMS—PHASE I

4 Subtitle A—Expansion of SCHIP To

5 Provide Health Insurance Cov6 erage to Additional Individuals

7 SEC. 101. PHASE I STATE UNIVERSAL HEALTH INSURANCE

8 COVERAGE PLANS.

9 Title XXI of the Social Security Act (42 U.S.C.

10 1397aa et seq.) is amended—

11 (1) by striking the title heading and inserting

12 the following:

13 ‘‘TITLE XXI—STATE HEALTH

14 INSURANCE PROGRAMS

15 ‘‘PART A—STATE CHILDREN’S HEALTH INSURANCE

16 PROGRAM’’;

17 and

18 (2) by adding at the end the following:

19 ‘‘PART B—STATE UNIVERSAL HEALTH INSURANCE

20 COVERAGE PROGRAM—PHASE I

21 ‘‘SEC. 2121. PURPOSE; STATE PLANS.

22 ‘‘(a) PURPOSE.—The purpose of this part is to pro23 vide funds to participating States to enable those States

24 to initiate and expand State-administered systems of
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1 health insurance coverage for individuals and families with

2 incomes at or below 300 percent of the poverty line.

3 ‘‘(b) PHASE I STATE UNIVERSAL COVERAGE PLAN

4 REQUIRED.—A State is not eligible for a payment under

5 section 2125(a) unless the State has submitted to the Sec6 retary a plan that—

7 ‘‘(1) sets forth how the State intends to use the

8 funds provided under this part to expand the State

9 children’s health insurance program under part A to

10 provide universal health insurance coverage to eligi11 ble individuals and families within the State consist12 ent with the provisions of this part; and

13 ‘‘(2) has been approved under section 2122(d).

14 ‘‘SEC. 2122. PLAN REQUIREMENTS.

15 ‘‘(a) IN GENERAL.—A phase I State universal health

16 insurance coverage plan shall include a description, con17 sistent with the requirements of this part, of the following:

18 ‘‘(1) INFORMATION ON THE CURRENT LEVEL

19 OF HEALTH INSURANCE COVERAGE.—

20 ‘‘(A) The current level of health insurance

21 coverage within the State as determined under

22 subsection (b) and the base coverage gap for

23 the year involved as determined under sub24 section (b)(4).
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1 ‘‘(B) Current State efforts to provide or

2 obtain health care coverage for uncovered indi3 viduals, including the steps the State is taking

4 to identify and enroll all uncovered individuals

5 who are eligible to participate in public health

6 insurance programs and health insurance pro7 grams that involve public-private partnerships.

8 ‘‘(2) DETAILS OF, AND TIMELINES FOR, THE

9 PHASE I STATE UNIVERSAL COVERAGE PLAN.—

10 ‘‘(A) The activities that the State intends

11 to carry out using funds received under this

12 part, including how the State will coordinate ef13 forts under the program under this part with

14 existing State efforts to increase the health care

15 coverage of individuals.

16 ‘‘(B) Consistent with subsection (c), the

17 manner in which the State will reduce the base

18 coverage gap for the year involved, including a

19 timetable with specified targets for reducing the

20 base coverage gap by 50 percent in 2 years and

21 100 percent in 4 years.

22 ‘‘(3) DETAILS REGARDING MAINTENANCE OF

23 PRIVATE LEVELS OF FINANCIAL SUPPORT.—The

24 manner in which the State will ensure that employ25 ers within the State will continue to provide existing
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1 levels of financial support toward the health insur2 ance premiums required for coverage of their em3 ployees.

4 ‘‘(4) DETAILS OF, AND TIMELINES FOR, STATE

5 OUTREACH PROGRAMS.—The manner in which, in6 cluding a timetable, the State will institute outreach

7 programs funded under section 121 of the Healthy

8 Americans Act.

9 ‘‘(5) DESCRIPTION OF THE PHASE II PLAN.—A

10 description of the process that will be used to de11 velop the phase II State universal health insurance

12 coverage plan required under part C, including the

13 timelines for developing the plan.

14 ‘‘(6) OTHER MATTERS.—Any other matter de15 termined appropriate by the Secretary.

16 ‘‘(b) CURRENT LEVEL OF COVERAGE.—

17 ‘‘(1) IN GENERAL.—The Secretary, using the

18 most recent Medical Expenditure Panel Survey con19 ducted by the Agency for Health Care Policy and

20 Research, another survey selected by the Secretary,

21 or an alternative system approved under paragraph

22 (3), shall determine the percentage of the population

23 of the State that is currently covered by a health in24 surance plan or program.
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1 ‘‘(2) BIANNUAL SURVEY.—The Secretary, act2 ing through the Agency for Health Care Policy and

3 Research, shall provide for the conduct of the Medi4 cal Expenditure Panel Survey (or another survey se5 lected by the Secretary) not less than biannually to

6 make coverage determinations for purposes of para7 graph (1).

8 ‘‘(3) USE OF ALTERNATIVE SYSTEM.—The Sec9 retary shall permit a State to utilize an alternative

10 population-based monitoring system to make deter11 minations with respect to coverage in the State for

12 purposes of paragraph (1) if the Secretary, acting

13 through the Health Care Financing Administration,

14 determines that such system meets or exceeds the

15 methodological standards utilized in the Medical Ex16 penditure Panel Survey.

17 ‘‘(4) BASE COVERAGE GAP.—For purposes of

18 subsection (a)(1)(A), the base coverage gap for a

19 State shall be equal to 100 percent of the eligible in20 dividuals and families in the State for the year in21 volved that have income equal to or less than 300

22 percent of the poverty line, less the current level of

23 coverage for those individuals and families for such

24 year as determined under paragraph (1).
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1 ‘‘(c) REDUCING THE LEVEL OF UNINSURED INDIVID2 UALS.—

3 ‘‘(1) IN GENERAL.—To be eligible to receive

4 funds under this part, a State shall agree to admin5 ister a phase I State universal health insurance cov6 erage plan with a goal of providing health care cov7 erage for 100 percent of the eligible individuals and

8 families who reside in the State and who have in9 come that is equal to or less than 300 percent of the

10 poverty line by not later than September 30, 2003.

11 ‘‘(2) PERMISSIBLE ACTIVITIES.—A State may

12 use amounts provided under this part for any activi13 ties consistent with this part that are appropriate to

14 enroll individuals in health plans and health pro15 grams to meet the targets contained in the State

16 plan under subsection (a)(2)(B), including through

17 the use of direct payments to health plans or provid18 ers of services.

19 ‘‘(d) PROCESS FOR SUBMISSION, APPROVAL, AND

20 AMENDMENT OF PHASE I STATE PLAN.—The provisions

21 of section 2106 apply to a phase I State plan under this

22 part in the same manner as they apply to a State plan

23 under part A, except that no phase I State plan may be

24 effective earlier than October 1, 1998, and all phase I
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1 State plans must be submitted for approval by not later

2 than September 30, 1999.

3 ‘‘SEC. 2123. COVERAGE REQUIREMENTS FOR PHASE I

4 STATE PLANS.

5 ‘‘(a) REQUIRED SCOPE OF HEALTH INSURANCE COV6 ERAGE.—Health insurance coverage provided under this

7 part shall consist of any of the following:

8 ‘‘(1) BENCHMARK COVERAGE.—Health benefits

9 coverage that is equivalent to the benefits coverage

10 in a benchmark benefit package described in section

11 2103(b).

12 ‘‘(2) BENCHMARK-EQUIVALENT COVERAGE.—

13 Health benefits coverage that satisfies the require14 ments of section 2103(a)(2).

15 ‘‘(3) SECRETARY-APPROVED COVERAGE.—Any

16 other health benefits coverage that the Secretary de17 termines, upon application by a State, provides ap18 propriate coverage for the individuals and families

19 residing in the State who have income at or below

20 300 percent of the poverty line.

21 ‘‘(b) COST-SHARING.—

22 ‘‘(1) DESCRIPTION; GENERAL CONDITIONS.—

23 ‘‘(A) DESCRIPTION.—A phase I State uni24 versal health insurance coverage plan shall in25 clude a description, consistent with this sub-
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1 section, of the amount (if any) of premiums,

2 deductibles, coinsurance, and other cost-sharing

3 imposed. Any such charges shall be imposed

4 pursuant to a public schedule.

5 ‘‘(B) PROTECTION FOR LOWER INCOME IN6 DIVIDUALS AND FAMILIES.—The phase I State

7 plan may only vary premiums, deductibles, coin8 surance, and other cost-sharing based on the in9 come of the individuals and families eligible

10 under the plan in a manner that does not favor

11 individuals and families with higher income over

12 individuals and families with lower income.

13 ‘‘(2) LIMITATIONS ON PREMIUMS AND COST14 SHARING.—

15 ‘‘(A) INDIVIDUALS AND FAMILIES WITH IN16 COME BELOW 150 PERCENT OF POVERTY

17 LINE.—In the case of an individual or family

18 whose income is at or below 150 percent of the

19 poverty line, the State plan may not impose—

20 ‘‘(i) an enrollment fee, premium, or

21 similar charge that exceeds the maximum

22 monthly charge permitted consistent with

23 standards established to carry out section

24 1916(b)(1) (with respect to individuals de25 scribed in such section); and
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1 ‘‘(ii) a deductible, cost-sharing, or

2 similar charge that exceeds an amount

3 that is nominal (as determined consistent

4 with regulations referred to in section

5 1916(a)(3), with such appropriate adjust6 ment for inflation or other reasons as the

7 Secretary determines to be reasonable).

8 ‘‘(B) OTHER INDIVIDUALS AND FAMI9 LIES.—For individuals and families not de10 scribed in subparagraph (A), subject to para11 graph (1)(B), any premiums, deductibles, cost12 sharing or similar charges imposed under the

13 phase I State plan may be imposed on a sliding

14 scale related to income, except that the total

15 annual aggregate cost-sharing imposed under

16 this part with respect to all individuals in a

17 family may not exceed 5 percent of the family’s

18 income for the year involved.

19 ‘‘(c) APPLICATION OF CERTAIN REQUIREMENTS.—

20 ‘‘(1) RESTRICTION ON APPLICATION OF PRE21 EXISTING CONDITION EXCLUSIONS.—The phase I

22 State universal health insurance coverage plan shall

23 not permit the imposition of any preexisting condi24 tion exclusion for covered benefits under the plan.
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1 ‘‘(2) COMPLIANCE WITH OTHER REQUIRE2 MENTS.—Coverage offered under this section shall

3 comply with the requirements of subpart 2 of part

4 A of title XXVII of the Public Health Service Act

5 insofar as such requirements apply with respect to

6 a health insurance issuer that offers group health in7 surance coverage.

8 ‘‘SEC. 2124. ALLOTMENTS.

9 ‘‘(a) APPROPRIATION.—For the purpose of providing

10 allotments to States under this part, there is appropriated,

11 out of any money in the Treasury not otherwise appro12 priated—

13 ‘‘(1) $39,000,000,000 for fiscal year 1999;

14 ‘‘(2) $45,000,000,000 for fiscal year 2000;

15 ‘‘(3) $59,000,000,000 for fiscal year 2001; and

16 ‘‘(4) $59,900,000,000 for fiscal year 2002 and

17 each succeeding fiscal year thereafter.

18 ‘‘(b) BASE STATE ALLOCATION.—

19 ‘‘(1) IN GENERAL.—From the amount appro20 priated under subsection (a) for a fiscal year for

21 purposes of carrying out the program under this

22 part, after application of subsection (e), the Sec23 retary shall allot to each State with a phase I State

24 universal health insurance coverage plan approved
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1 under this part an amount equal to the sum of the

2 amounts determined under paragraphs (2) and (3).

3 ‘‘(2) DETERMINATION OF COST OF INDIVIDUAL

4 COVERAGE.—The amount determined under this

5 paragraph is the amount equal to—

6 ‘‘(A) the product of—

7 ‘‘(i) the designated Federal participa8 tion rate for the State as determined under

9 subsection (c) and adjusted under sub10 section (d);

11 ‘‘(ii) the estimated cost for the mini12 mum benefits package required to comply

13 under section 2123, not to exceed the sum

14 of—

15 ‘‘(I) the total annual Government

16 and employee contributions required

17 for individual health benefits coverage

18 under the Blue Cross/Blue Shield

19 standard service benefit plan offered

20 under chapter 89 of title 5, United

21 States Code (adjusted for age, as the

22 Secretary determines appropriate);

23 and

24 ‘‘(II) the estimated average cost25 sharing expense for an individual; and
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1 ‘‘(iii) the estimated number of eligible

2 individuals to be enrolled in the phase I

3 State plan; less

4 ‘‘(B) the sum of—

5 ‘‘(i) the individual health insurance

6 contribution and cost-sharing payments to

7 be made in accordance with section

8 2123(b); and

9 ‘‘(ii) any applicable employer contribu10 tion to such payments.

11 ‘‘(3) DETERMINATION OF COST OF FAMILY COV12 ERAGE.—The amount determined under this para13 graph is the amount equal to—

14 ‘‘(A) the product of—

15 ‘‘(i) the designated Federal participa16 tion rate for the State as determined under

17 subsection (c) and adjusted under sub18 section (d);

19 ‘‘(ii) the estimated cost for the mini20 mum benefits package required to comply

21 under section 2123, not to exceed the sum

22 of—

23 ‘‘(I) the total annual Government

24 and employee contributions required

25 for family health benefits coverage
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1 under the Blue Cross/Blue Shield

2 standard service benefit plan offered

3 under chapter 89 of title 5, United

4 States Code (adjusted for age, as the

5 Secretary determines appropriate);

6 and

7 ‘‘(II) the estimated average cost8 sharing expense for a family; and

9 ‘‘(iii) the aggregate of the estimated

10 number of eligible families to be enrolled in

11 the phase I State plan; less

12 ‘‘(B) the sum of—

13 ‘‘(i) the family health insurance con14 tribution and cost-sharing payments to be

15 made in accordance with section 2123(b);

16 and

17 ‘‘(ii) any applicable employer contribu18 tion to such payments.

19 ‘‘(c) FEDERAL PARTICIPATION RATE.—For purposes

20 of subsection (b)(1), the Federal participation rate for a

21 State for a fiscal year shall be equal to the enhanced

22 FMAP determined for the State under section 2105(b).

23 ‘‘(d) ENHANCED STATE ALLOCATION.—

24 ‘‘(1) BASED ON CLOSURE OF BASE COVERAGE

25 GAP.—
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1 ‘‘(A) IN GENERAL.—The Secretary shall

2 adjust the amount of the Federal participation

3 rate under subsection (c) based on the decrease

4 in the base coverage gap in the State. An ad5 justment under the preceding sentence shall

6 apply for the 2 succeeding fiscal years.

7 ‘‘(B) AMOUNT OF ADJUSTMENT.—The

8 amount of the Federal participation rate under

9 subsection (c) with respect to a State for a fis10 cal year shall be increased by—

11 ‘‘(i) 1 percentage point if the base

12 coverage gap of the State has decreased by

13 at least 50 percent by the date that is 2

14 years after the date the Secretary approves

15 the phase I State plan; and

16 ‘‘(ii) 3 percentage points if the base

17 coverage gap of the State has decreased by

18 100 percent by the date that is 4 years

19 after the date the Secretary approves the

20 phase I State plan.

21 ‘‘(C) FULL COVERAGE.—For purposes of

22 subparagraph (B)(ii), a State shall be deemed

23 to have decreased its base coverage gap by 100

24 percent if the Secretary determines that—
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1 ‘‘(i) 98 percent of all residents of the

2 State who have individual or family income

3 that is equal to or less than 300 percent

4 of the poverty line are provided health in5 surance coverage under the phase I State

6 plan; and

7 ‘‘(ii) the remaining 2 percent of such

8 residents is served by alternative health

9 care delivery systems as demonstrated by

10 the State.

11 ‘‘(2) BASED ON EXPENDITURES FOR COV12 ERAGE.—

13 ‘‘(A) IN GENERAL.—The Secretary shall

14 adjust annually the amount of the Federal par15 ticipation rate under subsection (c) if the State

16 can demonstrate that qualified plans have spent

17 a sufficient percentage of total premium income

18 to provide covered health benefits in the prior

19 year.

20 ‘‘(B) AMOUNT.—The amount of the Fed21 eral participation rate under subsection (b) with

22 respect to a State for a fiscal year shall be in23 creased by—

24 ‘‘(i) 0.25 percentage points if all

25 qualified plans in the State expend at least
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1 85 percent of total income received from

2 premiums (excluding all costs for market3 ing, advertising, promotion, health plan ad4 ministration, profits, or capital accumula5 tion) on the provision of covered health

6 benefits; and

7 ‘‘(ii) 0.5 percentage points if all quali8 fied plans in the State expend at least 90

9 percent of total income received from pre10 miums (excluding all costs for marketing,

11 advertising, promotion, health plan admin12 istration, profits, or capital accumulation)

13 on the provision of covered health benefits.

14 ‘‘(e) GRANTS TO INDIAN TRIBES AND NATIVE HA15 WAIIAN ORGANIZATIONS.—

16 ‘‘(1) IN GENERAL.—From the amounts appro17 priated under subsection (a) for a fiscal year, the

18 Secretary shall reserve not more than 3 percent to

19 make grants to Indian tribes and Native Hawaiian

20 organizations for development and implementation of

21 universal health insurance coverage plans for mem22 bers of such tribes and organizations.

23 ‘‘(2) PLAN.—To be eligible to receive a grant

24 under paragraph (1), an Indian tribe or Native Ha25 waiian organization shall submit a universal health
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1 insurance coverage plan to the Secretary at such

2 time, in such manner, and containing such informa3 tion, as the Secretary may require.

4 ‘‘(3) REGULATIONS.—The Secretary shall issue

5 regulations specifying the requirements of this part

6 that apply to Indian tribes and Native Hawaiian or7 ganizations receiving grants under paragraph (1).

8 ‘‘SEC. 2125. ADMINISTRATION.

9 ‘‘(a) PAYMENTS.—

10 ‘‘(1) QUARTERLY.—The Secretary shall make

11 quarterly payments to each State with a phase I

12 State plan approved under this part, from its allot13 ment under section 2124.

14 ‘‘(2) ADVANCE PAYMENT; RETROSPECTIVE AD15 JUSTMENT.—The Secretary may make payments

16 under this part for each quarter on the basis of ad17 vance estimates by the State and such other inves18 tigation as the Secretary may find necessary, and

19 may reduce or increase the payments as necessary to

20 adjust for any overpayment or underpayment for

21 prior quarters.

22 ‘‘(3) FLEXIBILITY IN SUBMITTAL OF CLAIMS.—

23 Nothing in this subsection shall be construed as pre24 venting a State from claiming as expenditures in the
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1 quarter expenditures that were incurred in a pre2 vious quarter.

3 ‘‘(b) COORDINATION.—The Secretary shall coordi4 nate activities carried out under this part with activities

5 carried out under titles XVIII, XIX, and part A, and

6 under other Federal health programs.

7 ‘‘(c) REPORT.—Not later than January 1, 2000, and

8 each January 1 thereafter, the Secretary, in consultation

9 with the General Accounting Office and the Congressional

10 Budget Office, shall prepare and submit to the appro11 priate committees of Congress a report on the number of

12 States receiving payments under this part for the year for

13 which the report is being prepared as well as the level of

14 insurance coverage attained by each such State.

15 ‘‘SEC. 2126. DEFINITIONS.

16 ‘‘In this part:

17 ‘‘(1) POVERTY LINE.—The term ‘poverty line’

18 means the poverty line as defined in section 673(2)

19 of the Community Services Block Grant Act (42

20 U.S.C. 9902(2)) applicable to an individual or a

21 family of the size involved.

22 ‘‘(2) ELIGIBLE INDIVIDUALS AND FAMILIES.—

23 The term ‘eligible individuals and families’ means an

24 individual or family who—
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1 ‘‘(A) is (or consists of) a resident of the

2 State involved;

3 ‘‘(B) has a family income that does not ex4 ceed 300 percent of the poverty line;

5 ‘‘(C) is (or consists of) a citizen of the

6 United States, a legal resident alien, or an indi7 vidual otherwise residing in the United States

8 under the authority of Federal law; and

9 ‘‘(D) in the case of an individual, is not el10 igible for benefits under the medicare program

11 under title XVIII or for medical assistance

12 under the medicaid program under title XIX

13 (other than under the application of section

14 1905(u)(4)).

15 ‘‘(3) PHASE I STATE PLAN.—The term ‘phase I

16 State plan’ means the State universal health insur17 ance coverage plan submitted under section 2121(b).

18 ‘‘(4) QUALIFIED PLAN.—The term ‘qualified

19 plan’ means a health insurance plan that satisfies

20 the coverage requirements described under section

21 2123 and participates in a phase I State plan.’’.
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1 Subtitle B—State Health Coverage

2 Outreach Programs

3 SEC. 111. GRANTS FOR STATE HEALTH COVERAGE OUT4 REACH PROGRAMS.

5 (a) AUTHORITY TO AWARD GRANTS.—The Secretary

6 of Health and Human Services shall award grants to

7 States to establish State-administered outreach programs

8 to maximize the enrollment of—

9 (1) eligible individuals in the State medicaid

10 program under title XIX of the Social Security Act

11 (42 U.S.C. 1396 et seq.);

12 (2) eligible children in the State children’s

13 health insurance program under part A of title XXI

14 of such Act (42 U.S.C. 1397aa et seq.); and

15 (3) eligible individuals and families in the phase

16 I State universal health insurance coverage program

17 under part B of title XXI of such Act (as added by

18 section 101).

19 (b) STATE OUTREACH PLAN REQUIRED.—

20 (1) IN GENERAL.—A State is not eligible for a

21 grant under this section unless—

22 (A) the State has submitted to the Sec23 retary a plan that sets forth how the State in24 tends to use the funds provided under this sec25 tion to promote outreach efforts to maximize
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1 the enrollment of eligible individuals for the

2 State programs described in subsection (a)

3 within the State; and

4 (B) the State notifies the Secretary that,

5 not later than September 30, 1999, the State

6 shall submit a phase I State universal health in7 surance coverage plan for approval by the Sec8 retary in accordance with the requirements of

9 part B of title XXI of the Social Security Act

10 (as added by section 101).

11 (2) USE OF FUNDS.—Funds provided under

12 this section may be used for any purpose that is in13 tended to promote the outreach described in para14 graph (1)(A) and is approved by the Secretary, in15 cluding—

16 (A) implementing the use of a single appli17 cation form to determine the eligibility of an in18 dividual or family for assistance or benefits

19 under public health insurance programs and

20 health insurance programs that involve public21 private partnerships;

22 (B) providing for the stationing of eligi23 bility workers at sites such as hospitals, health

24 clinics, and schools, at which individuals receive

25 health care or related services; and
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1 (C) reimbursing localities and nonprofit

2 entities for training and administrative costs as3 sociated with outreach activities.

4 (c) APPROPRIATION.—For the purpose of providing

5 grants to States under this section, there is appropriated,

6 out of any money in the Treasury not otherwise appro7 priated $3,400,000,000 for each of fiscal years 1999

8 through 2002.

9 TITLE II—UNIVERSAL, AFFORD10 ABLE, COMPREHENSIVE

11 HEALTH CARE—PHASE II

12 SEC. 201. PHASE II STATE PLANS.

13 Title XXI of the Social Security Act (42 U.S.C.

14 1397aa et seq.), as amended by section 101, is amended

15 by adding at the end the following:

16 ‘‘PART C—STATE UNIVERSAL HEALTH INSURANCE

17 COVERAGE PROGRAM—PHASE II

18 ‘‘Subpart 1—Phase II State Universal Health

19 Insurance Coverage Plans

20 ‘‘SEC. 2131. PURPOSE; STATE PLANS.

21 ‘‘(a) PURPOSE.—The purpose of this part is to pro22 vide funds to participating States to enable those States

23 to establish State-administered systems to ensure univer24 sal health insurance coverage.
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1 ‘‘(b) PHASE II STATE UNIVERSAL HEALTH INSUR2 ANCE COVERAGE PLAN REQUIRED.—A State is not eligi3 ble for a payment under section 2135(a) unless the State

4 has submitted to the Secretary a plan that—

5 ‘‘(1) sets forth how the State intends to use the

6 funds provided under this part to ensure universal,

7 affordable, and comprehensive health insurance cov8 erage to eligible residents of the State consistent

9 with the provisions of this part; and

10 ‘‘(2) has been approved under section 2132(d).

11 ‘‘SEC. 2132. PLAN REQUIREMENTS.

12 ‘‘(a) IN GENERAL.—A phase II State universal

13 health insurance coverage plan shall include a description,

14 consistent with the requirements of this part, of the follow15 ing:

16 ‘‘(1) INFORMATION ON THE CURRENT LEVEL

17 OF HEALTH INSURANCE COVERAGE.—

18 ‘‘(A) The current level of health insurance

19 coverage within the State as determined under

20 section 2122(b)(1).

21 ‘‘(B) The base coverage gap for the year

22 involved for the State, as determined under

23 subsection (b).

24 ‘‘(C) Current State efforts to provide or

25 obtain health care coverage for uncovered indi-
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1 viduals, including the steps the State is taking

2 to identify and enroll all uncovered individuals

3 who are eligible to participate in public health

4 insurance programs and health insurance pro5 grams that involve public-private partnerships.

6 ‘‘(2) DETAILS OF, AND TIMELINES FOR, THE

7 PHASE II STATE UNIVERSAL COVERAGE PLAN.—

8 ‘‘(A) The activities that the State intends

9 to carry out using funds received under this

10 part, including how the State will coordinate ef11 forts under the program under this part with

12 existing State efforts to increase the health care

13 coverage of individuals.

14 ‘‘(B) Consistent with subsection (c), the

15 manner in which the State will reduce the base

16 coverage gap for the year involved, including a

17 timetable with specified targets for reducing the

18 base coverage gap by 100 percent on or before

19 September 30, 2004.

20 ‘‘(3) DETAILS REGARDING MAINTENANCE OF

21 PRIVATE LEVELS OF FINANCIAL SUPPORT AND EN22 SURING THAT BENEFITS ARE OBTAINED.—

23 ‘‘(A) The manner in which the State will

24 ensure that employers within the State will con25 tinue to provide existing levels of financial sup-
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1 port toward the health insurance premiums re2 quired for coverage of their employees, which

3 may include any of the following:

4 ‘‘(i) programs and activities to encour5 age the voluntary provision of employment6 based health insurance coverage with vol7 untary employer contributions;

8 ‘‘(ii) State laws requiring employers to

9 provide employment-based health insurance

10 coverage for employees with required mini11 mum premium contributions by such em12 ployers;

13 ‘‘(iii) State laws requiring employers

14 to make payments to a health insurance

15 purchasing fund or program for health in16 surance; and

17 ‘‘(iv) other methods devised by the

18 State.

19 ‘‘(B) The manner in which the State will

20 ensure that individuals with family income that

21 exceeds the income level for eligibility for health

22 insurance coverage provided under a phase I

23 State universal health insurance coverage plan

24 under part B will obtain health benefits cov25 erage.
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•S 2074 IS

1 ‘‘(4) DETAILS OF, AND TIMELINES FOR, GUAR2 ANTEEING A MINIMUM BENEFITS PACKAGE THAT IN3 CLUDES PARITY, INCOME PROTECTIONS, AND PA4 TIENT PROTECTIONS FOR ALL STATE RESIDENTS.—

5 ‘‘(A) The manner in which, including a

6 timetable, the State will institute a statewide

7 minimum benefits requirement that includes

8 mental health and substance abuse treatment

9 parity, as described in subpart 2.

10 ‘‘(B) The manner in which, including a

11 timetable, the State will institute a statewide

12 maximum out-of-pocket expenses requirement

13 that is based on individual and family income

14 level, as described in subpart 3.

15 ‘‘(5) OTHER MATTERS.—Any other matter de16 termined appropriate by the Secretary.

17 ‘‘(b) BASE COVERAGE GAP.—For purposes of sub18 section (a)(1)(B), the base coverage gap for a State for

19 a year shall be equal to 100 percent of the eligible resi20 dents of the State for the year involved, less the current

21 level of coverage for those residents for such year as deter22 mined under section 2122(b)(1).

23 ‘‘(c) REDUCING THE LEVEL OF UNINSURED INDIVID24 UALS.—
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•S 2074 IS

1 ‘‘(1) IN GENERAL.—To be eligible to receive

2 funds under this part, a State shall agree to admin3 ister a phase II State universal health insurance cov4 erage program with a goal of ensuring, not later

5 than September 30, 2004, health care coverage for

6 100 percent of the eligible residents of the State

7 under a qualified plan or qualified program.

8 ‘‘(2) PERMISSIBLE ACTIVITIES.—A State may

9 use amounts provided under this part for any activi10 ties consistent with this part that are appropriate to

11 enroll individuals in health plans and health pro12 grams to meet the targets contained in the State

13 plan under subsection (a)(2)(B), including through

14 the use of direct payments to health plans or provid15 ers of services.

16 ‘‘(d) PROCESS FOR SUBMISSION, APPROVAL, AND

17 AMENDMENT OF PHASE II STATE PLAN.—The provisions

18 of section 2106 apply to a phase II State plan under this

19 part in the same manner as they apply to a State plan

20 under part A, except that no phase II State plan may be

21 effective earlier than October 1, 2001, and all phase II

22 State plans must be submitted for approval by not later

23 than September 30, 2002.
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1 ‘‘SEC. 2133. QUALIFIED PLANS AND QUALIFIED PROGRAMS.

2 ‘‘(a) IN GENERAL.—To be eligible to receive funds

3 under this part, a State shall establish and implement pro4 cedures to certify—

5 ‘‘(1) private and public health care plans as

6 qualified plans; and

7 ‘‘(2) public health care programs as qualified

8 programs.

9 ‘‘(b) REQUIREMENTS.—The procedures implemented

10 under subsection (a) shall ensure that a plan or program

11 is not certified under this section unless such plan or pro12 gram—

13 ‘‘(1) provides benefits that satisfy the require14 ments of subpart 2; and

15 ‘‘(2) complies with the income protections that

16 limit out-of-pocket expenditures under subpart 3.

17 ‘‘(c) DECERTIFICATION.—The Secretary shall pro18 mulgate regulations for the decertification of qualified

19 plans or qualified programs for violations of the require20 ments of this part.

21 ‘‘SEC. 2134. ALLOTMENTS.

22 ‘‘(a) APPROPRIATION.—For the purpose of providing

23 allotments to States under this part, there is appropriated,

24 out of any money in the Treasury not otherwise appro25 priated—

26 ‘‘(1) $25,100,000,000 for fiscal year 2002; and
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•S 2074 IS

1 ‘‘(2) $37,700,000,000 for fiscal year 2003 and

2 each succeeding fiscal year thereafter.

3 ‘‘(b) BASE STATE ALLOCATION.—

4 ‘‘(1) IN GENERAL.—From the amount appro5 priated under subsection (a) for a fiscal year for

6 purposes of carrying out the program under this

7 part, after application of subsection (e), the Sec8 retary shall allot to each State with a phase II State

9 universal health insurance coverage plan approved

10 under this part an amount equal to the sum of the

11 amounts determined under paragraphs (2) and (3).

12 ‘‘(2) DETERMINATION OF COST OF INDIVIDUAL

13 COVERAGE.—The amount determined under this

14 paragraph is the amount equal to—

15 ‘‘(A) the product of—

16 ‘‘(i) the designated Federal participa17 tion rate for the State as determined under

18 subsection (c) and adjusted under sub19 section (d);

20 ‘‘(ii) the estimated cost for the mini21 mum benefits package required to comply

22 under section 2133, not to exceed the sum

23 of—

24 ‘‘(I) the total annual Government

25 and employee contributions required
32

•S 2074 IS

1 for individual health benefits coverage

2 under the Blue Cross/Blue Shield

3 standard service benefit plan offered

4 under chapter 89 of title 5, United

5 States Code (adjusted for age, as the

6 Secretary determines appropriate);

7 and

8 ‘‘(II) the estimated average cost9 sharing expense for an individual; and

10 ‘‘(iii) the estimated number of eligible

11 individuals to be enrolled in the phase I

12 State plan; less

13 ‘‘(B) the sum of—

14 ‘‘(i) the individual health insurance

15 contribution and cost-sharing payments to

16 be made in accordance with section 2152;

17 and

18 ‘‘(ii) any applicable employer contribu19 tion to such payments.

20 ‘‘(3) DETERMINATION OF COST OF FAMILY COV21 ERAGE.—The amount determined under this para22 graph is the amount equal to—

23 ‘‘(A) the product of—

24 ‘‘(i) the designated Federal participa25 tion rate for the State as determined under
33

•S 2074 IS

1 subsection (c) and adjusted under sub2 section (d);

3 ‘‘(ii) the estimated cost for the mini4 mum benefits package required to comply

5 under section 2133, not to exceed the sum

6 of—

7 ‘‘(I) the total annual Government

8 and employee contributions required

9 for family health benefits coverage

10 under the Blue Cross/Blue Shield

11 standard service benefit plan offered

12 under chapter 89 of title 5, United

13 States Code (adjusted for age, as the

14 Secretary determines appropriate);

15 and

16 ‘‘(II) the estimated average cost17 sharing expense for a family; and

18 ‘‘(iii) the aggregate of the estimated

19 number of eligible families to be enrolled in

20 the phase I State plan; less

21 ‘‘(B) the sum of—

22 ‘‘(i) the family health insurance con23 tribution and cost-sharing payments to be

24 made in accordance with section 2152; and
34

•S 2074 IS

1 ‘‘(ii) any applicable employer contribu2 tion to such payments.

3 ‘‘(c) FEDERAL PARTICIPATION RATE.—For purposes

4 of subsection (b)(1), the Federal participation rate for a

5 State for a fiscal year shall be equal to the enhanced

6 FMAP determined for the State under section 2105(b).

7 ‘‘(d) ENHANCED STATE ALLOCATION.—

8 ‘‘(1) BASED ON EXPENDITURES FOR COV9 ERAGE.—The Secretary shall adjust annually the

10 amount of the Federal participation rate under sub11 section (c) if the State can demonstrate that quali12 fied plans or qualified programs have spent a suffi13 cient percentage of total premium income to provide

14 covered health benefits in the prior year.

15 ‘‘(2) AMOUNT.—The amount of the Federal

16 participation rate under subsection (b) with respect

17 to a State for a fiscal year shall be increased by—

18 ‘‘(A) 0.25 percentage points if all qualified

19 plans or qualified programs in the State expend

20 at least 85 percent of total income received

21 from premiums (excluding all costs for market22 ing, advertising, promotion, health plan admin23 istration, profits, or capital accumulation) on

24 the provision of covered health benefits; and
35

•S 2074 IS

1 ‘‘(B) 0.5 percentage points if all qualified

2 plans or qualified programs in the State expend

3 at least 90 percent of total income received

4 from premiums (excluding all costs for market5 ing, advertising, promotion, health plan admin6 istration, profits, or capital accumulation) on

7 the provision of covered health benefits.

8 ‘‘(e) GRANTS TO INDIAN TRIBES AND NATIVE HA9 WAIIAN ORGANIZATIONS.—

10 ‘‘(1) IN GENERAL.—From the amounts appro11 priated under subsection (a) for a fiscal year, the

12 Secretary shall reserve not more than 3 percent to

13 make grants to Indian tribes and Native Hawaiian

14 organizations for development and implementation of

15 universal health insurance coverage plans for mem16 bers of such tribes and organizations.

17 ‘‘(2) PLAN.—To be eligible to receive a grant

18 under paragraph (1), an Indian tribe or Native Ha19 waiian organization shall submit a universal health

20 insurance coverage plan to the Secretary at such

21 time, in such manner, and containing such informa22 tion, as the Secretary may require.

23 ‘‘(3) REGULATIONS.—The Secretary shall issue

24 regulations specifying the requirements of this part
36

•S 2074 IS

1 that apply to Indian tribes and Native Hawaiian or2 ganizations receiving grants under paragraph (1).’’.

3 SEC. 202. STATE LAW REQUIRING A MINIMUM BENEFITS

4 PACKAGE THAT INCLUDES PARITY.

5 Part C of title XXI of the Social Security Act, as

6 added by section 201, is amended by adding at the end

7 the following:

8 ‘‘Subpart 2—Minimum Benefits Package That

9 Includes Parity

10 ‘‘SEC. 2141. MINIMUM BENEFITS PACKAGE THAT INCLUDES

11 PARITY.

12 ‘‘Each State that submits a phase II State universal

13 health insurance coverage plan under subpart 1 shall, as

14 of the date that the State submits the State plan, have

15 in effect a State law that requires any health plan that

16 is offered in the State to—

17 ‘‘(1) offer benefits to enrollees under the plan

18 that are at least actuarially equivalent (determined

19 without regard to benefits offered to comply with the

20 requirements of section 2142) to benefits offered

21 under chapter 89 of title 5, United States Code; and

22 ‘‘(2) satisfy the requirements of section 2142.
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•S 2074 IS

1 ‘‘SEC. 2142. PARITY IN MENTAL HEALTH AND SUBSTANCE

2 ABUSE BENEFITS.

3 ‘‘(a) IN GENERAL.—A health plan (or health insur4 ance coverage offered in connection with such a plan) shall

5 include mental health and substance abuse treatment ben6 efits that are at least equal to the medical and surgical

7 benefits provided by or in connection with the plan. The

8 requirement for such parity of benefits shall apply to the

9 imposition of aggregate lifetime limits, annual limits,

10 deductibles, copayments, and other cost-sharing, limita11 tions on the number of visits or hospital days allowed

12 under or in connection with the plan, and any other bene13 fit-related requirements as the Secretary may designate.

14 ‘‘(b) SEPARATE APPLICATION TO EACH OPTION OF15 FERED.—In the case of a health plan that offers a partici16 pant or beneficiary 2 or more benefit package options

17 under the plan, the requirements of this section shall be

18 applied separately with respect to each such option.

19 ‘‘(c) DEFINITIONS.—In this section:

20 ‘‘(1) AGGREGATE LIFETIME LIMIT.—The term

21 ‘aggregate lifetime limit’ means, with respect to ben22 efits under a health plan or health insurance cov23 erage, a dollar limitation on the total amount that

24 may be paid with respect to such benefits under the

25 plan or health insurance coverage with respect to an

26 individual or other coverage unit.
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•S 2074 IS

1 ‘‘(2) ANNUAL LIMIT.—The term ‘annual limit’

2 means, with respect to benefits under a health plan

3 or health insurance coverage, a dollar limitation on

4 the total amount of benefits that may be paid with

5 respect to such benefits in a 12-month period under

6 the plan or health insurance coverage with respect to

7 an individual or other coverage unit.

8 ‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The

9 term ‘medical or surgical benefits’ means benefits

10 with respect to medical or surgical services, as de11 fined under the terms of the plan or coverage (as the

12 case may be), but does not include mental health or

13 substance abuse benefits.

14 ‘‘(4) MENTAL HEALTH BENEFITS.—The term

15 ‘mental health benefits’ means benefits with respect

16 to mental health services, as defined under the terms

17 of the plan or coverage (as the case may be), but

18 does not include benefits with respect to treatment

19 of substance abuse or chemical dependency.

20 ‘‘(5) SUBSTANCE ABUSE BENEFITS.—The term

21 ‘substance abuse benefits’ means benefits with re22 spect to treatment of substance abuse or chemical

23 dependency.’’.
39

•S 2074 IS

1 SEC. 203. STATE LAW REQUIRING LIMITATIONS ON PRE2 MIUMS AND COST-SHARING.

3 Part C of title XXI of the Social Security Act, as

4 amended by section 202, is amended by adding at the end

5 the following:

6 ‘‘Subpart 3—Limitations on Premiums and Cost7 Sharing

8 ‘‘SEC. 2151. LIMITATIONS ON PREMIUMS AND COST-SHAR9 ING.

10 ‘‘Each State that submits a phase II State universal

11 health insurance coverage plan under subpart 1 shall, as

12 of the date that the State submits the State plan, have

13 in effect a State law that satisfies the requirements of sec14 tion 2152.

15 ‘‘SEC. 2152. LIMITATION ON PREMIUMS AND COST-SHARING.

16 ‘‘(a) LIMITATION.—A State that receives payments

17 under this part shall ensure that no individual or family

18 who enrolls in a qualified plan or under a qualified pro19 gram shall be required to pay in excess of the maximum

20 health insurance contribution determined under subsection

21 (b) with respect to any premiums, deductibles, copay22 ments, or cost-sharing imposed on the individual or family.

23 ‘‘(b) MAXIMUM HEALTH INSURANCE CONTRIBU24 TION.—For purposes of subsection (a), the maximum

25 health insurance contribution of an individual or family

26 shall be an amount equal to—
40

•S 2074 IS

1 ‘‘(1) if the family income of the individual or

2 family involved is less than 100 percent of the pov3 erty line, 0.5 percent of the gross annual income of

4 such individual or family;

5 ‘‘(2) if the family income of the individual or

6 family involved is at least 100 percent, but less than

7 200 percent, of the poverty line, 3 percent of the

8 gross annual income of such individual or family;

9 ‘‘(3) if the family income of the individual or

10 family involved is at least 200 percent, but less than

11 400 percent, of the poverty line, 5 percent of the

12 gross annual income of such individual or family;

13 and

14 ‘‘(4) if the family income of the individual or

15 family involved is at least 400 percent of the poverty

16 line, 7 percent of the gross annual income of such

17 individual or family.’’.

18 SEC. 204. ADMINISTRATION OF, AND DEFINITIONS FOR,

19 PHASE II STATE PLANS.

20 Part C of title XXI of the Social Security Act, as

21 amended by section 203, is amended by adding at the end

22 the following:

23 ‘‘Subpart 4—Administration; Definitions

24 ‘‘SEC. 2155. ADMINISTRATION.

25 ‘‘(a) PAYMENTS.—
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•S 2074 IS

1 ‘‘(1) QUARTERLY.—The Secretary shall make

2 quarterly payments to each State with a phase II

3 State plan approved under this part, from its allot4 ment under section 2134.

5 ‘‘(2) ADVANCE PAYMENT; RETROSPECTIVE AD6 JUSTMENT.—The Secretary may make payments

7 under this part for each quarter on the basis of ad8 vance estimates by the State and such other inves9 tigation as the Secretary may find necessary, and

10 may reduce or increase the payments as necessary to

11 adjust for any overpayment or underpayment for

12 prior quarters.

13 ‘‘(3) FLEXIBILITY IN SUBMITTAL OF CLAIMS.—

14 Nothing in this subsection shall be construed as pre15 venting a State from claiming as expenditures in the

16 quarter expenditures that were incurred in a pre17 vious quarter.

18 ‘‘(b) COORDINATION.—The Secretary shall coordi19 nate activities carried out under this part with activities

20 carried out under titles XVIII, XIX, and parts A and B,

21 and under other Federal health programs.

22 ‘‘(c) REPORT.—Not later than January 1, 2003, and

23 each January 1 thereafter, the Secretary, in consultation

24 with the General Accounting Office and the Congressional

25 Budget Office, shall prepare and submit to the appro-
42

•S 2074 IS

1 priate committees of Congress a report on the number of

2 States receiving payments under this part for the year for

3 which the report is being prepared as well as the level of

4 insurance coverage attained by each such State.

5 ‘‘SEC. 2156. DEFINITIONS.

6 ‘‘In this part:

7 ‘‘(1) HEALTH PLAN.—The term ‘health plan’

8 includes any organization that seeks to arrange for,

9 or provide for the financing and coordinated delivery

10 of, health care services directly or through a con11 tracted health provider panel, and shall include

12 health maintenance organizations, preferred provider

13 organizations, single service health maintenance or14 ganizations, single service preferred provider organi15 zations, other entities such as provider-hospital or

16 hospital-provider organizations, employee welfare

17 benefit plans (as defined in section 3(1) of the Em18 ployee Retirement Income Security Act of 1974 (29

19 U.S.C. 1002(1)), and multiple employer welfare

20 plans or other association plans, as well as carriers.

21 ‘‘(2) POVERTY LINE.—The term ‘poverty line’

22 has the meaning given that term in section 2126(1).

23 ‘‘(3) ELIGIBLE RESIDENTS OF THE STATE.—

24 The term ‘eligible residents of the State’ means an

25 individual who—
43

•S 2074 IS

1 ‘‘(A) is a resident of the State involved;

2 ‘‘(B) is a citizen of the United States, a

3 legal resident alien, or an individual otherwise

4 residing in the United States under the author5 ity of Federal law; and

6 ‘‘(C) is not eligible for benefits under the

7 medicare program under title XVIII, for medi8 cal assistance under the medicaid program

9 under title XIX, or for health insurance cov10 erage under a phase I State plan under part B.

11 ‘‘(4) QUALIFIED PLAN.—The term ‘qualified

12 plan’ means a health insurance plan certified under

13 section 2133 to provide coverage to eligible residents

14 of the State under this part and participates in a

15 phase II State plan.

16 ‘‘(5) QUALIFIED PROGRAM.—The term ‘quali17 fied program’ means a health care program certified

18 under section 2133 to provide coverage to eligible

19 residents of the State under this part and partici20 pates in a phase II State plan.

21 ‘‘(6) PHASE II STATE PLAN.—The term ‘phase

22 II State plan’ means the phase II State universal

23 health insurance coverage plan submitted under sec24 tion 2131(b).’’.
44

•S 2074 IS

1 SEC. 205. SECRETARIAL SUBMISSION OF LEGISLATIVE PRO2 POSAL TO EXPAND MEDICARE BENEFITS.

3 Not later than 1 year after the date of the enactment

4 of this Act, the Secretary of Health and Human Services

5 shall submit to the appropriate committees of Congress

6 a legislative proposal containing such technical and con7 forming amendments as are necessary to, with respect to

8 a State, as of the date that the State’s phase II universal

9 health insurance coverage plan under part C of title XXI

10 of the Social Security Act is first effective in the State—

11 (1) apply the limitation on premiums and cost12 sharing established under section 2152 of the Social

13 Security Act to individuals who are residents of the

14 State and who are entitled to, or eligible for, items

15 and services under the medicare program under title

16 XVIII of the Social Security Act (42 U.S.C. 1395 et

17 seq.);

18 (2) provide coverage for outpatient prescription

19 drugs for such individuals under the medicare pro20 gram; and

21 (3) provide full mental health and substance

22 abuse treatment parity to such individuals under the

23 medicare program, consistent with section 2142 of

24 the Social Security Act.
45

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1 TITLE III—PATIENT

2 PROTECTIONS

3 SEC. 301. DEFINITIONS.

4 Unless specifically provided otherwise, as used in this

5 title:

6 (1) CARRIER.—The term ‘‘carrier’’ means a li7 censed insurance company, a hospital or medical

8 service corporation (including an existing Blue Cross

9 or Blue Shield organization, within the meaning of

10 section 833(c)(2) of Internal Revenue Code of 1986

11 as in effect before the date of the enactment of this

12 Act), a health maintenance organization, or other

13 entity licensed or certified by the State to provide

14 health insurance or health benefits.

15 (2) COVERED INDIVIDUAL.—The term ‘‘covered

16 individual’’ means a member, enrollee, subscriber,

17 covered life, patient or other individual eligible to re18 ceive benefits under a health plan.

19 (3) EMERGENCY SERVICES.—The term ‘‘emer20 gency services’’ means those health care services

21 that are provided to a patient after the sudden onset

22 of a health condition that manifests itself by symp23 toms of sufficient severity, including severe pain,

24 and the absence of such immediate health care at25 tention could reasonably be expected, to result in—
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•S 2074 IS

1 (A) placing the patient’s health in serious

2 jeopardy;

3 (B) serious impairment to bodily function;

4 or

5 (C) serious dysfunction of any bodily organ

6 or part.

7 (4) HEALTH PLAN.—The term ‘‘health plan’’

8 includes any organization that seeks to arrange for,

9 or provide for the financing and coordinated delivery

10 of, health care services directly or through a con11 tracted health provider panel, and shall include

12 health maintenance organizations, preferred provider

13 organizations, single service health maintenance or14 ganizations, single service preferred provider organi15 zations, other entities such as provider-hospital or

16 hospital-provider organizations, employee welfare

17 benefit plans (as defined in section 3(1) of the Em18 ployee Retirement Income Security Act of 1974 (29

19 U.S.C. 1002(1)), and multiple employer welfare

20 plans or other association plans, as well as carriers.

21 (5) HEALTH PROVIDER.—The term ‘‘health

22 provider’’ means an individual who is licensed or cer23 tified under State law to provide health care services

24 and who is operating within the scope of such licen25 sure or certification.
47

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1 (6) MANAGED CARE PLAN.—

2 (A) IN GENERAL.—The term ‘‘managed

3 care plan’’ means a plan operated by a man4 aged care entity (as defined in subparagraph

5 (B)), that provides for the financing and deliv6 ery of health care services to persons enrolled in

7 such plan through—

8 (i) arrangements with selected provid9 ers to furnish health care services;

10 (ii) explicit standards for the selection

11 of participating providers;

12 (iii) organizational arrangements for

13 ongoing quality assurance, utilization re14 view programs, and dispute resolution; and

15 (iv) financial incentives for persons

16 enrolled in the plan to use the participat17 ing providers and procedures provided for

18 by the plan.

19 (B) MANAGED CARE ENTITY.—The term

20 ‘‘managed care entity’’ includes a licensed in21 surance company, hospital or medical service

22 plan (including provider and provider-hospital

23 networks), health maintenance organization, an

24 employer or employee organization, or a man-
48

•S 2074 IS

1 aged care contractor (as defined in subpara2 graph (C)), that operates a managed care plan.

3 (C) MANAGED CARE CONTRACTOR.—The

4 term ‘‘managed care contractor’’ means a per5 son that—

6 (i) establishes, operates, or maintains

7 a network of participating providers;

8 (ii) conducts or arranges for utiliza9 tion review activities; and

10 (iii) contracts with an insurance com11 pany, a hospital or health service plan, an

12 employer, an employee organization, or any

13 other entity providing coverage for health

14 care services to operate a managed care

15 plan.

16 (7) PROVIDER NETWORK.—The term ‘‘provider

17 network’’ means, with respect to a health plan that

18 restricts access, those providers who have entered

19 into a contract or agreement with the plan under

20 which such providers are obligated to provide items

21 and services under the plan to eligible individuals

22 enrolled in the plan, or have an agreement to pro23 vide services on a fee-for-service basis.
49

•S 2074 IS

1 (8) SECRETARY.—The term ‘‘Secretary’’ means

2 the Secretary of Health and Human Services unless

3 specifically provided otherwise.

4 (9) SPECIALIZED TREATMENT EXPERTISE.—

5 The term ‘‘specialized treatment expertise’’ means

6 expertise in diagnosing and treating unusual dis7 eases and conditions, diagnosing and treating dis8 eases and conditions that are usually difficult to di9 agnose or treat, and providing other specialized

10 health care.

11 (10) SPONSOR.—The term ‘‘sponsor’’ means a

12 carrier or employer that provides a health plan.

13 (11) UTILIZATION REVIEW.—The term ‘‘utiliza14 tion review’’ means a set of formal techniques de15 signed to monitor and evaluate the clinical necessity,

16 appropriateness and efficiency of health care serv17 ices, procedures, providers and facilities. Techniques

18 may include ambulatory review, prospective review,

19 second opinion, certification, concurrent review, case

20 .

21 Subtitle A—Utilization

22 Management

23 SEC. 311. DEFINITIONS.

24 As used in this subtitle:
50

•S 2074 IS

1 (1) ADVERSE DETERMINATION.—The term ‘‘ad2 verse determination’’ means a determination that an

3 admission to or continued stay at a hospital or that

4 another health care service that is required has been

5 reviewed and, based upon the information provided,

6 does not meet the requirements for clinical necessity,

7 appropriateness, level of care, or effectiveness.

8 (2) AMBULATORY REVIEW.—The term ‘‘ambu9 latory review’’ means utilization review of health

10 care services performed or provided in an outpatient

11 setting.

12 (3) APPEALS PROCEDURE.—The term ‘‘appeals

13 procedure’’ means a formal process under which a

14 covered individual (or an individual acting on behalf

15 of a covered individual), attending provider or facil16 ity may appeal an adverse utilization review decision

17 rendered by the health plan or its designee utiliza18 tion review organization.

19 (4) CARE COORDINATOR.—The term ‘‘care co20 ordinator’’ means a health provider who performs

21 case management functions in consultation with the

22 interdisciplinary health care team, the patient, fam23 ily, and community.

24 (5) CASE MANAGEMENT.—The term ‘‘case man25 agement’’ means a coordinated set of activities con-
51

•S 2074 IS

1 ducted for the individual patient management of se2 rious, complicated, protracted or chronic health con3 ditions that provides cost-effective and benefit-maxi4 mizing treatments for extremely resource-intensive

5 conditions.

6 (6) CLINICAL REVIEW CRITERIA.—The term

7 ‘‘clinical review criteria’’ means the recorded (writ8 ten or otherwise) screening procedures, decision ab9 stracts, clinical protocols and practice guidelines

10 used by the health plan to determine necessity and

11 appropriateness of health care services.

12 (7) COMPARABLE.—The term ‘‘comparable’’

13 means a health provider who is licensed or certified

14 in a manner that permits the provider to authorize

15 the equipment, services, or procedures that are the

16 subject of a review.

17 (8) CONCURRENT REVIEW.—The term ‘‘concur18 rent review’’ means utilization review conducted dur19 ing a patient’s hospital stay or course of treatment.

20 (9) DISCHARGE PLANNING.—The term ‘‘dis21 charge planning’’ means the formal process for de22 termining, coordinating and managing the care a pa23 tient receives following the discharge of the patient

24 from a facility.
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•S 2074 IS

1 (10) FACILITY.—The term ‘‘facility’’ means an

2 institution or health care setting providing the pre3 scribed health care services under review. Such term

4 includes hospitals and other licensed inpatient facili5 ties, ambulatory surgical or treatment centers,

6 skilled nursing facilities, residential treatment cen7 ters, diagnostic, laboratory and imaging centers and

8 rehabilitation and other therapeutic health care set9 tings.

10 (11) PROSPECTIVE REVIEW.—The term ‘‘pro11 spective review’’ means utilization review conducted

12 prior to an admission or a course of treatment.

13 (12) RETROSPECTIVE REVIEW.—The term ‘‘ret14 rospective review’’ means utilization review con15 ducted after health care services have been provided

16 to a patient. Such term does not include the retro17 spective review of a claim that is limited to an eval18 uation of reimbursement levels, veracity of docu19 mentation, accuracy of coding and adjudication for

20 payment.

21 (13) SECOND OPINION.—The term ‘‘second

22 opinion’’ means an opportunity or requirement to

23 obtain a clinical evaluation by a provider other than

24 the provider originally making a recommendation for

25 a proposed health service to assess the clinical neces-
53

•S 2074 IS

1 sity and appropriateness of the initial proposed

2 health service.

3 (14) UTILIZATION REVIEW ORGANIZATION.—

4 The term ‘‘utilization review organization’’ means an

5 entity that conducts utilization review.

6 SEC. 312. REQUIREMENT FOR UTILIZATION REVIEW PRO7 GRAM.

8 A health plan shall have in place a utilization review

9 program that meets the requirements of this subtitle and

10 that is certified by the State.

11 SEC. 313. STANDARDS FOR UTILIZATION REVIEW.

12 (a) ESTABLISHMENT.—The Secretary of Health and

13 Human Services, in consultation with the Secretary of

14 Labor (referred to in this subtitle as the ‘‘Secretaries’’),

15 shall establish standards for the establishment, operation,

16 and certification and periodic recertification of health plan

17 utilization review programs.

18 (b) ALTERNATIVE STANDARDS.—

19 (1) IN GENERAL.—A State may certify a health

20 plan as meeting the standards established under

21 subsection (a) if the State determines that the

22 health plan has met the utilization standards re23 quired for accreditation as applied by a nationally

24 recognized, independent, nonprofit accreditation en25 tity.
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•S 2074 IS

1 (2) REVIEW BY STATE.—A State that makes a

2 determination under paragraph (1) shall periodically

3 review the standards used by the private accredita4 tion entity to ensure that such standards meet or ex5 ceed the standards established by the Secretaries

6 under this subtitle.

7 (c) UTILIZATION REVIEW PROGRAM REQUIRE8 MENTS.—The standards developed by the Secretaries

9 under subsection (a) shall require that utilization review

10 programs comply with the following:

11 (1) DOCUMENTATION.—A health plan shall pro12 vide a written description of the utilization review

13 program of the plan, including a description of—

14 (A) any activities assigned from the health

15 plan to other entities;

16 (B) the policies and procedures used under

17 the program to evaluate clinical necessity; and

18 (C) the clinical review criteria, information

19 sources, and the process used to review and ap20 prove the provision of health care services under

21 the program.

22 (2) PROHIBITION.—With respect to the admin23 istration of the utilization review program, a health

24 plan may not employ utilization reviewers or con25 tract with a utilization management organization if
55

•S 2074 IS

1 the conditions of employment or the contract terms

2 include financial incentives to reduce or limit the

3 provision of clinically necessary or appropriate serv4 ices to covered individuals.

5 (3) REVIEW AND MODIFICATION.—A health

6 plan shall develop procedures for periodically review7 ing and modifying the utilization review of the plan.

8 Such procedures shall provide for the participation

9 of providers and consumers in the health plan in the

10 development and review of utilization review policies

11 and procedures.

12 (4) DECISION PROTOCOLS.—

13 (A) IN GENERAL.—A utilization review

14 program shall develop and apply recorded (writ15 ten or otherwise) utilization review decision pro16 tocols. Such protocols shall be based on sound

17 health care evidence.

18 (B) PROTOCOL CRITERIA.—The clinical re19 view criteria used under the utilization review

20 decision protocols to assess the appropriateness

21 of health care services shall be clearly docu22 mented and available to participating health

23 providers upon request. Such protocols shall in24 clude a mechanism for assessing the consistency

25 of the application of the criteria used under the
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•S 2074 IS

1 protocols across reviewers, and a mechanism for

2 periodically updating such criteria.

3 (5) REVIEW AND DECISIONS.—

4 (A) REVIEW.—The procedures applied

5 under a utilization review program with respect

6 to the preauthorization and concurrent review

7 of the necessity and appropriateness of health

8 care devices, services or procedures, shall re9 quire that qualified, comparable health care

10 providers supervise review decisions. With re11 spect to a decision to deny the provision of

12 health care devices, services or procedures, a

13 comparable provider shall conduct a subsequent

14 review to determine the clinical appropriateness

15 of such a denial. Comparable health providers

16 from the appropriate specialty area shall be uti17 lized in the review process.

18 (B) DECISIONS.—All utilization review de19 cisions shall be made in a timely manner, as de20 termined appropriate when considering the ur21 gency of the situation.

22 (C) ADVERSE DETERMINATIONS.—With re23 spect to utilization review, an adverse deter24 mination or noncertification of an admission,

25 continued stay, or service shall be clearly docu-
57

•S 2074 IS

1 mented, including the specific clinical or other

2 reason for the adverse determination or noncer3 tification, and be available to the covered indi4 vidual and the affected provider or facility. A

5 health plan may not deny or limit coverage with

6 respect to a service that the enrollee has al7 ready received solely on the basis of lack of

8 prior authorization or second opinion, to the ex9 tent that the service would have otherwise been

10 covered by the plan had such prior authoriza11 tion or a second opinion been obtained.

12 (D) NOTIFICATION OF DENIAL.—A health

13 plan shall provide a covered individual with

14 timely notice of an adverse determination or

15 noncertification of an admission, continued

16 stay, or service. Such a notification shall in17 clude information concerning the utilization re18 view program appeals procedure as well as the

19 telephone number for the Office.

20 (6) REQUESTS FOR AUTHORIZATION.—A health

21 plan utilization review program shall ensure that re22 quests by covered individuals or providers for prior

23 authorization of a nonemergency service shall be an24 swered in a timely manner after such request is re25 ceived. If utilization review personnel are not avail-
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•S 2074 IS

1 able in a timely fashion, any health care services

2 provided shall be considered approved.

3 (7) NEW TECHNOLOGIES.—A utilization review

4 program shall implement policies and procedures to

5 evaluate the appropriate use of new health care tech6 nologies or new applications of established tech7 nologies, including health care procedures, drugs,

8 and devices. The program shall ensure that appro9 priate providers participate in the development of

10 technology evaluation criteria.

11 (8) SPECIAL RULE.—Where prior authorization

12 for a service or other covered item is obtained under

13 a program under this section, the service shall be

14 considered to be covered unless there was intentional

15 fraud or intentionally incorrect information provided

16 at the time such prior authorization was obtained. If

17 a provider intentionally supplied the incorrect infor18 mation that led to the authorization of clinically un19 necessary care, the provider shall be prohibited from

20 collecting payment directly from the enrollee, and

21 shall reimburse the plan and subscriber for any pay22 ments or copayments the provider may have re23 ceived.

24 (d) HEALTH PLAN REQUIREMENTS.—

25 (1) DISCLOSURE OF INFORMATION.—
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•S 2074 IS

1 (A) PROSPECTIVE COVERED INDIVID2 UALS.—A health plan shall, with respect to any

3 materials distributed to prospective covered in4 dividuals, include a summary of the utilization

5 review procedures of the plan.

6 (B) COVERED INDIVIDUALS.—A health

7 plan shall, with respect to any materials distrib8 uted to newly covered individuals, include a

9 clear and comprehensive description of utiliza10 tion review procedures of the plan and a state11 ment of patient rights and responsibilities with

12 respect to such procedures.

13 (C) STATE OFFICIALS.—

14 (i) IN GENERAL.—A health plan shall

15 disclose to the State insurance commis16 sioner, or other designated State official,

17 the health plan utilization review program

18 policies, procedures, and reports required

19 by the State for certification.

20 (ii) STREAMLINING OF PROCE21 DURES.—To the extent practicable, a State

22 shall implement procedures to streamline

23 the process by which a health plan docu24 ments compliance with the requirements of

25 this title, including procedures to condense
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•S 2074 IS

1 the number of documents filed with the

2 State concerning such compliance.

3 (2) TOLL-FREE NUMBER.—A health plan shall

4 have a membership card which shall have printed on

5 the card the toll-free telephone number that a cov6 ered individual should call to receive precertification

7 utilization review decisions.

8 (3) EVALUATION.—A health plan shall establish

9 mechanisms to evaluate the effects of the utilization

10 review program of the plan through the use of mem11 ber satisfaction data or through other appropriate

12 means.

13 (e) EMERGENCY CARE.—

14 (1) EMERGENCY MEDICAL CONDITION.—For

15 purposes of this section the term ‘emergency medical

16 condition’ means a medical condition manifesting

17 itself by acute symptoms of sufficient severity (in18 cluding severe pain) such that a prudent layperson

19 (including the parent of a minor child or the guard20 ian of a disabled individual), who possesses an aver21 age knowledge of health and medicine, could reason22 ably expect the absence of immediate medical atten23 tion to result in—

24 (A) placing the health of the individual (or,

25 with respect to a pregnant woman, the health
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•S 2074 IS

1 of the woman or her unborn child) in serious

2 jeopardy,

3 (B) serious impairment to bodily functions,

4 or

5 (C) serious dysfunction of any bodily organ

6 or part.

7 (2) PREAUTHORIZATION.—With respect to

8 emergency services furnished in a hospital emer9 gency department, a health plan shall not require

10 prior authorization for the provision of such services

11 if the enrollee arrived at the emergency department

12 with symptoms that reasonably suggested an emer13 gency medical condition based on the judgment of a

14 prudent layperson, regardless of whether the hos15 pital was affiliated with the health plan. All proce16 dures performed during the evaluation and treat17 ment of an emergency medical condition shall be

18 covered under the health plan.

19 Subtitle C—Health Plan Standards

20 SEC. 321. HEALTH PLAN STANDARDS.

21 (a) ESTABLISHMENT.—The Secretary of Health and

22 Human Services, in conjunction with the Secretary of

23 Labor (referred to in this subtitle as the ‘‘Secretaries’’),

24 shall establish standards for the certification and periodic
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•S 2074 IS

1 recertification of health plans, including standards which

2 require plans to meet the requirements of this subtitle.

3 (b) STATE CERTIFICATION.—

4 (1) IN GENERAL.—A State shall provide for the

5 certification of health plans if the certifying author6 ity designated by the State determines that the plan

7 meets the applicable requirements of this title.

8 (2) REQUIREMENT.—Effective on January 1,

9 1999, a health plan sponsor may only offer a health

10 plan in a State if such plan is certified by the State

11 under paragraph (1).

12 (c) CONSTRUCTION.—Whenever in this subtitle a re13 quirement or standard is imposed on a health plan, the

14 requirement or standard is deemed to have been imposed

15 on the sponsor of the plan in relation to that plan.

16 SEC. 322. MINIMUM SOLVENCY REQUIREMENTS.

17 (a) IN GENERAL.—Except as provided in subsection

18 (b), each State shall apply minimum solvency require19 ments to all health plans offered or operating within the

20 State to ensure the fiscal integrity of such plans. A health

21 plan shall meet the financial reserve requirements that are

22 established by the State to assure proper payment for

23 health care services provided under the plan. Such require24 ments may include plan participation in a mechanism to
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•S 2074 IS

1 provide for indemnification of plan failures even if a plan

2 has met the reserve requirements.

3 (b) FEDERAL STANDARDS.—The Secretaries shall es4 tablish minimum solvency standards that shall apply to

5 all self-insured health plans. Such standards shall at least

6 meet the solvency requirements established by the Na7 tional Association of Insurance Commissioners.

8 SEC. 323. INFORMATION ON TERMS OF PLAN.

9 (a) IN GENERAL.—A health plan shall provide pro10 spective covered individuals with written information con11 cerning the terms and conditions of the health plan to en12 able such individuals to make informed decisions with re13 spect to a certain system of health care delivery. Such in14 formation shall be standardized so that prospective cov15 ered individuals may compare the attributes of all such

16 plans offered within the coverage area.

17 (b) UNDERSTANDABILITY.—Information provided

18 under this section, whether written or oral shall be easily

19 understandable, truthful, linguistically appropriate and

20 objective with respect to the terms used. Descriptions pro21 vided in such information shall be consistent with stand22 ards developed for supplemental insurance coverage under

23 title XVIII of the Social Security Act (42 U.S.C. 1395

24 et seq.).
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•S 2074 IS

1 (c) REQUIRED INFORMATION.—Information required

2 under this section shall include information concerning—

3 (1) coverage provisions, benefits, and any exclu4 sions by category of service or product;

5 (2) plan loss ratios with an explanation that

6 such ratios reflect the percentage of the premiums

7 expended for health services;

8 (3) prior authorization or other review require9 ments including preauthorization review, concurrent

10 review, post-service review, post-payment review and

11 procedures that may lead the patient to be denied

12 coverage for, or not be provided, a particular service

13 or product;

14 (4) an explanation of how plan design impacts

15 enrollees, including information on the financial re16 sponsibility of covered individuals for payment for

17 coinsurance or other out-of-plan services;

18 (5) covered individual satisfaction statistics, in19 cluding disenrollment statistics and satisfaction sta20 tistics from those who disenroll;

21 (6) advance directives and organ donation;

22 (7) the characteristics and availability of health

23 care providers and institutions participating in the

24 plan, including descriptions of the financial arrange25 ments or contractual provisions with hospitals, utili-
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•S 2074 IS

1 zation review organizations, physicians, or any other

2 provider of health care services that would affect the

3 services offered, referral or treatment options, or

4 provider’s fiduciary responsibility to patients, includ5 ing financial incentives regarding the provision of

6 services; and

7 (8) quality indicators for the plan and for par8 ticipating health providers under the plan, including

9 population-based statistics such as immunization

10 rates and performance measures such as survival

11 after surgery, adjusted for case mix.

12 SEC. 324. ACCESS.

13 (a) IN GENERAL.—A health plan shall demonstrate

14 that the plan has a sufficient number, distribution, and

15 variety of qualified health care providers to ensure that

16 all covered health care services will be available and acces17 sible in a timely manner to adults, infants, children, and

18 individuals with disabilities enrolled in the plan. Plans

19 shall make reasonable efforts to address issues of cultural

20 competence and appropriateness with respect to providers.

21 (b) AVAILABILITY OF SERVICES.—A health plan shall

22 ensure that services covered under the plan are available

23 in a timely manner that ensures a continuity of care, are

24 accessible within a reasonable proximity to the residences

25 of the enrollees, are available within reasonable hours of
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•S 2074 IS

1 operation, and include emergency and urgent care services

2 when clinically necessary and available which shall be ac3 cessible within the service area 24-hours a day, seven days

4 a week.

5 (c) SPECIALIZED TREATMENT.—A health plan shall

6 demonstrate that plan enrollees have meaningful access,

7 when clinically indicated in the judgment of the treating

8 health provider, to specialized treatment expertise.

9 (d) CHRONIC CONDITIONS.—

10 (1) IN GENERAL.—Any process established by a

11 health plan to coordinate care and control costs may

12 not impose an undue burden on enrollees with

13 chronic health conditions. The plan shall ensure a

14 continuity of care and shall, when clinically indicated

15 in the judgment of the treating health provider, en16 sure ongoing direct access to relevant specialists for

17 continued care.

18 (2) CARE COORDINATOR.—In the case of an en19 rollee who has a severe, complex, or chronic condi20 tion, the health plan shall determine, based on the

21 judgment of the treating health provider, whether it

22 is clinically necessary or appropriate to use a care

23 coordinator from an interdisciplinary team.

24 (e) REQUIREMENT.—
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•S 2074 IS

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

2 section may not be waived and shall be met in all

3 areas where the health plan has enrollees, including

4 rural areas. With respect to children, such services

5 shall include pediatric and pediatric specialty serv6 ices.

7 (2) OUT-OF-NETWORK SERVICES.—If a health

8 plan fails to meet the requirements of this section,

9 the plan shall arrange for the provision of out-of10 network services to enrollees in a manner that pro11 vides enrollees with access to services in accordance

12 with the principles and parameters set forth in this

13 section.

14 SEC. 325. CREDENTIALING FOR HEALTH PROVIDERS.

15 (a) IN GENERAL.—A health plan shall credential

16 health providers furnishing health care services under the

17 plan.

18 (b) CREDENTIALING PROCESS.—

19 (1) IN GENERAL.—A health plan shall establish

20 a credentialing process. Such process shall ensure

21 that a health provider is credentialed prior to that

22 provider being listed as a health provider in the

23 health plan’s marketing materials, in accordance

24 with recorded (written or otherwise) policies and

25 procedures.
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•S 2074 IS

1 (2) RESPONSIBILITY CHIEF HEALTH CARE OF2 FICER.—The chief health care officer of the health

3 plan, or another designated health provider, shall

4 have responsibility for the credentialing of health

5 providers under the plan.

6 (3) UNIFORM APPLICATIONS.—A State shall de7 velop a basic uniform application that shall be used

8 by all health plans in the State for credentialing

9 purposes.

10 (4) STANDARDS.—

11 (A) IN GENERAL.—Credentialing decisions

12 under a health plan shall be based on objective

13 standards with input from health providers

14 credentialed under the plan. Information con15 cerning all application and credentialing policies

16 and procedures shall be made available for re17 view by the health providers involved upon writ18 ten request.

19 (B) RIGHT TO REVIEW INFORMATION.—A

20 health provider who undergoes the credentialing

21 process shall have the right to review the basis

22 information, including the sources of that infor23 mation, that was used to meet the designated

24 credentialing criteria.
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•S 2074 IS

1 SEC. 326. GRIEVANCE PROCEDURES.

2 (a) IN GENERAL.—A health plan shall adopt a timely

3 and organized system for resolving complaints and formal

4 grievances filed by covered individuals. Such system shall

5 include—

6 (1) recorded (written or otherwise) procedures

7 for registering and responding to complaints and

8 grievances in a timely manner;

9 (2) documentation concerning the substance of

10 complaints, grievances, and actions taken concerning

11 such complaints and grievances, which shall be in

12 writing, and be available upon request to the Office

13 for Consumer Information, Counseling and Assist14 ance with Health Care;

15 (3) procedures to ensure a resolution of a com16 plaint or grievance;

17 (4) the compilation and analysis of complaint

18 and grievance data;

19 (5) procedures to expedite the complaint proc20 ess if the complaint involves a dispute about the cov21 erage of an immediately and urgently needed service;

22 and

23 (6) procedures to ensure that if an enrollee

24 orally notifies a health plan about a complaint, the

25 plan (if requested) must send the enrollee a com26 plaint form that includes the telephone numbers and
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•S 2074 IS

1 addresses of member services, a description of the

2 plan’s grievance procedure, and the telephone num3 ber of the Officer for Consumer Information, Coun4 seling and Assistance with Health Care where enroll5 ees may register complaints.

6 (b) APPEAL PROCESS.—A health plan shall adopt an

7 appeals process to enable covered individuals and provid8 ers to appeal decisions that are adverse to the covered in9 dividuals. Such a process shall include—

10 (1) the right to a review by a grievance panel;

11 (2) the right to a second review with a different

12 panel, independent from the health plan; and

13 (3) an expedited process for review in emer14 gency cases.

15 The Secretaries shall develop guidelines for the structure

16 and requirements applicable to the independent review

17 panel.

18 (c) NOTIFICATION.—With respect to the complaint,

19 grievance, and appeals processes required under this sec20 tion, a health plan shall, upon the request of a covered

21 individual, provide the individual a written decision con22 cerning a complaint, grievance, or appeal in a timely fash23 ion.

24 (d) NON-IMPEDIMENT TO BENEFITS.—The com25 plaint, grievance, and appeals processes established in ac-
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•S 2074 IS

1 cordance with this section may not be used in any fashion

2 to discourage, prevent, or deny a covered individual from

3 receiving clinically necessary care in a timely manner.

4 (e) DUE PROCESS WITH RESPECT TO

5 CREDENTIALING.—

6 (1) RECEIPT OF INFORMATION.—A health pro7 vider who is subject to credentialing under section

8 325 shall, upon written request, receive from the

9 health plan any information obtained by the plan

10 during the credentialing process that, as determined

11 by the credentialing committee, does not meet the

12 credentialing standards of the plan, or that varies

13 substantially from the information provided to the

14 health plan by the health provider.

15 (2) SUBMISSION OF CORRECTIONS.—A health

16 plan shall have a formal, recorded (written or other17 wise) process by which a health provider may submit

18 supplemental information to the credentialing com19 mittee if the health provider determines that erro20 neous or misleading information has been previously

21 submitted. The health provider may request that

22 such information be reconsidered in the evaluation

23 for credentialing purposes.

24 (3) NO ENTITLEMENT.—
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•S 2074 IS

1 (A) IN GENERAL.—A health provider is

2 not entitled to be selected or retained by a

3 health plan as a participating or contracting

4 provider whether or not such provider meets the

5 credentialing standards established under sec6 tion 325.

7 (B) ECONOMIC CONSIDERATIONS.—If eco8 nomic considerations, including the health care

9 provider’s patterns of expenditure per patient,

10 are part of a selection decision, objective cri11 teria shall be used in examining such consider12 ations and a written description of such criteria

13 shall be provided to applicants, participating

14 health providers, and enrollees. Any economic

15 profiling of health providers must be adjusted

16 to recognize case mix, severity of illness, and

17 the age and gender of patients of a health pro18 vider’s practice that may account for higher or

19 lower than expected costs, to the extent appro20 priate data in this regard is available to the

21 health plan.

22 (4) TERMINATION, REDUCTION, OR WITH23 DRAWAL.—

24 (A) PROCEDURES.—A health plan shall de25 velop and implement procedures for the report-
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•S 2074 IS

1 ing, to appropriate authorities, of serious qual2 ity deficiencies that result in the suspension or

3 termination of a contract with a health pro4 vider.

5 (B) REVIEW.—A health plan shall develop

6 and implement policies and procedures under

7 which the plan reviews the contract privileges of

8 health providers who—

9 (i) have seriously violated policies and

10 procedures of the health plan;

11 (ii) have lost their privilege to practice

12 with a contracting institutional provider; or

13 (iii) otherwise pose a threat to the

14 quality of service and care provided to the

15 enrollees of the health plan.

16 At a minimum, the policies and procedures im17 plemented under this subparagraph shall meet

18 the requirements of the Health Care Quality

19 Improvement Act of 1986.

20 (C) COMMUNICATION.—Health plans shall

21 not restrict nor inhibit communication between

22 providers and patients or penalize a provider

23 making public the failure of the health plan to

24 comply with the provisions of this title.
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•S 2074 IS

1 (D) LIABILITY.—A health plan shall not

2 require a provider to sign any type of hold3 harmless agreement as a requirement for par4 ticipation in the health plan.

5 (E) DUE PROCESS.—The policies and pro6 cedures implemented under subparagraph (B)

7 shall include requirements for the timely notifi8 cation of the affected health provider of the rea9 sons for the reduction, withdrawal, or termi10 nation of privileges, and shall provide the health

11 provider with the right to appeal initially to the

12 health plan and subsequently, upon failure to

13 resolve a dispute, to an independent entity, the

14 determination of reduction, withdrawal, or ter15 mination. No reduction, withdrawal, or termi16 nation of privileges shall be made without

17 cause.

18 (F) AVAILABILITY.—A written copy of the

19 policies and procedures implemented under this

20 paragraph shall be made available to a health

21 provider on request prior to the time at which

22 the health provider contracts to provide services

23 under the plan.
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•S 2074 IS

1 SEC. 327. CONFIDENTIALITY STANDARDS.

2 (a) IN GENERAL.—A health plan shall ensure that

3 the confidentiality of specified enrollee patient information

4 and records is protected.

5 (b) POLICIES AND PROCEDURES.—A health plan

6 shall have written confidentiality policies and procedures.

7 Such policies and procedures shall, at a minimum—

8 (1) protect the confidentiality of enrollee pa9 tient information within the administrative structure

10 of the health plan with special attention to sensitive

11 health conditions and history;

12 (2) protect health care record information;

13 (3) protect claim information;

14 (4) establish requirements for the release of in15 formation; and

16 (5) inform health plan employees of the con17 fidentiality policies and procedures and enforce com18 pliance with such policies and procedures.

19 (c) PATIENT CARE PROVIDERS AND FACILITIES.—

20 A health plan shall ensure that providers, offices, and fa21 cilities responsible for providing covered items or services

22 to plan enrollees have implemented policies and procedures

23 to prevent the unauthorized or inadvertent disclosure of

24 confidential patient information to individuals who should

25 not have access to such information.
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•S 2074 IS

1 (d) RELEASE OF INFORMATION.—An enrollee in a

2 health plan shall have the opportunity to approve or dis3 approve the release of identifiable personal patient infor4 mation by the health plan, except where such release is

5 required under applicable law.

6 SEC. 328. DISCRIMINATION.

7 (a) ENROLLEES.—A health plan (network or non-net8 work) may not discriminate or engage (directly or through

9 contractual arrangements) in any activity, including the

10 selection of service area, that has the effect of discriminat11 ing against an individual on the basis of race, culture, na12 tional origin, gender, language, socio-economic status, age,

13 disability, health status including genetic information, or

14 anticipated utilization of health services.

15 (b) PROVIDERS.—A health plan may not discriminate

16 in the selection of members of the health provider or pro17 vider network (and in establishing the terms and condi18 tions for membership in the network) of the plan based

19 on—

20 (1) the race, national origin, culture, age, or

21 disability of the health provider; or

22 (2) the socio-economic status, disability, health

23 status, or anticipated utilization of health services of

24 the patients of the health provider.
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•S 2074 IS

1 SEC. 329. PROHIBITION ON SELECTIVE MARKETING.

2 A health plan may not engage in marketing or other

3 practices intended to discourage or limit the issuance of

4 health plans to individuals on the basis of health condition,

5 geographic area, industry, or other risk factors.

6 Subtitle D—Miscellaneous

7 Provisions

8 SEC. 331. ENFORCEMENT.

9 (a) IN GENERAL.—A State shall prohibit the offering

10 or issuance of any health plan in such State if such plan

11 does not—

12 (1) have in place a utilization review program

13 that is certified by the State as meeting the require14 ments of subtitle A;

15 (2) comply with the standards developed under

16 subtitle B;

17 (3) have in place a credentialing program that

18 meets the requirements of section 325;

19 (4) comply with the requirements of subtitle C;

20 and

21 (5) meet any other requirements determined ap22 propriate by the Secretary.

23 (b) SELF-INSURED PLANS.—The Secretary of Labor

24 may take corrective action to terminate or disqualify a

25 self-insured plan that does not meet the standards devel26 oped under this title.
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•S 2074 IS

1 SEC. 332. PREEMPTION.

2 Nothing in this title shall be construed to preempt

3 any State law, or the implementation of such a State law,

4 that provides protections for individuals that are equiva5 lent to or stricter than the provisions of this title.

6 SEC. 333. EFFECTIVE DATES; REGULATIONS.

7 (a) IN GENERAL.—Except as otherwise provided in

8 this section, this title shall take effect on the date of enact9 ment of this Act.

10 (b) STANDARDS.—The standards and programs re11 quired under this title shall apply to health plans begin12 ning on January 1, 1999.

13 (c) OTHER REQUIREMENTS.—The requirements of

14 this subtitle shall apply to health plans beginning on Janu15 ary 1, 1999.

16 (d) REGULATIONS.—The Secretaries described in

17 section 313(a) may promulgate regulations to carry out

18 this Act.

19 TITLE IV—MISCELLANEOUS

20 SEC. 401. NONAPPLICATION OF ERISA.

21 The provisions of section 514 of the Employee Retire22 ment Income Security Act of 1974 (29 U.S.C. 1144) shall

23 not apply with respect to health benefits provided under

24 a group health plan (as defined in section 733(a) of that

25 Act (29 U.S.C. 1191b(a)) qualified to offer such benefits

26 under a phase I State universal health insurance coverage
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•S 2074 IS

1 plan under part B of title XXI of the Social Security Act

2 or under a phase II State universal health insurance cov3 erage plan under part C of title XXI of that Act.

4 SEC. 402. SENSE OF CONGRESS REGARDING OFFSETS.

5 It is the sense of Congress that any sums necessary

6 for the implementation of this Act, and the amendments

7 made by this Act, should be offset by—

8 (1) reductions in unnecessary tax benefits avail9 able only to individuals and large corporations that

10 are in the maximum tax brackets;

11 (2) increases in taxes from the sale of tobacco

12 products;

13 (3) elimination of duplicative and wasteful mili14 tary spending; and

15 (4) direct savings in health care expenditures

16 resulting from the implementation of this Act.

Æ