I

106TH CONGRESS

1ST SESSION H. R. 2095

To amend title I of the Employee Retirement Income Security Act of 1974

to make needed reforms relating to group health plans.

IN THE HOUSE OF REPRESENTATIVES

JUNE 9, 1999

Mr. BOEHNER introduced the following bill; which was referred to the

Committee on Education and the Workforce

A BILL

To amend title I of the Employee Retirement Income Security Act of 1974 to make needed reforms relating to

group health plans.

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 AND TABLE OF CONTENTS.

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

5 ‘‘Health Care Quality and Access Act of 1999’’.

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

7 as follows:

Sec. 1. Short title and table of contents.

TITLE I—PATIENT RIGHT TO UNRESTRICTED MEDICAL ADVICE

Sec. 101. Patient access to unrestricted professional health care advice.

Sec. 102. Effective date and related rules.
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TITLE II—PATIENT RIGHT TO EMERGENCY MEDICAL CARE

Sec. 201. Patient access to emergency medical care.

Sec. 202. Effective date and related rules.

TITLE III—PATIENT RIGHT TO OBSTETRIC AND GYNECOLOGICAL

CARE

Sec. 301. Patient access to obstetric and gynecological care.

Sec. 302. Effective date and related rules.

TITLE IV—PATIENT RIGHT TO PEDIATRIC CARE

Sec. 401. Patient access to pediatric care.

Sec. 402. Effective date and related rules.

TITLE V—PATIENT ACCESS TO INFORMATION

Sec. 501. Patient access to information regarding plan coverage, managed care

procedures, health care providers, and quality of medical care.

Sec. 502. Effective date and related rules.

TITLE VI—GROUP HEALTH PLAN REVIEW STANDARDS

Sec. 601. Special rules for group health plans.

Sec. 602. Clarification of ERISA preemption rules.

Sec. 603. Effective date.

TITLE VII—SMALL BUSINESS ACCESS AND CHOICE FOR

ENTREPRENEURS

Sec. 701. Rules governing association health plans.

‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS

‘‘Sec. 801. Association health plans.

‘‘Sec. 802. Certification of association health plans.

‘‘Sec. 803. Requirements relating to sponsors and boards of trustees.

‘‘Sec. 804. Participation and coverage requirements.

‘‘Sec. 805. Other requirements relating to plan documents, contribution

rates, and benefit options.

‘‘Sec. 806. Maintenance of reserves and provisions for solvency for plans

providing health benefits in addition to health insurance

coverage.

‘‘Sec. 807. Requirements for application and related requirements.

‘‘Sec. 808. Notice requirements for voluntary termination.

‘‘Sec. 809. Corrective actions and mandatory termination.

‘‘Sec. 810. Trusteeship by the Secretary of insolvent association health

plans providing health benefits in addition to health insurance coverage.

‘‘Sec. 811. State assessment authority.

‘‘Sec. 812. Definitions and rules of construction.

Sec. 702. Clarification of treatment of single employer arrangements.

Sec. 703. Clarification of treatment of certain collectively bargained arrangements.

Sec. 704. Enforcement provisions relating to association health plans.

Sec. 705. Cooperation between Federal and State authorities.

Sec. 706. Effective date and transitional and other rules.
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TITLE VIII—HEALTH CARE ACCESS, AFFORDABILITY, AND

QUALITY COMMISSION

Sec. 801. Establishment of commission.

Sec. 802. Effective date.

1 TITLE I—PATIENT RIGHT TO UN2 RESTRICTED MEDICAL AD3 VICE

4 SEC. 101. PATIENT ACCESS TO UNRESTRICTED PROFES5 SIONAL HEALTH CARE ADVICE.

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

7 B of title I of the Employee Retirement Income Security

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

9 new section:

10 ‘‘SEC. 714. PATIENT ACCESS TO UNRESTRICTED PROFES11 SIONAL HEALTH CARE ADVICE.

12 ‘‘(a) IN GENERAL.—A group health plan, or a health

13 insurance issuer offering health insurance coverage in con14 nection with a group health plan, shall not prohibit or oth15 erwise restrict a health care professional from advising a

16 participant or beneficiary under the plan who is a patient

17 of the professional about the health status of the partici18 pant or beneficiary or the medical care or treatment for

19 the condition or disease of the participant or beneficiary,

20 regardless of whether benefits for such care or treatment

21 are provided under the plan or coverage, if the professional

22 is acting within the lawful scope of practice of the profes23 sional.
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1 ‘‘(b) RULES OF CONSTRUCTION.—Nothing in this

2 section shall be construed—

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

4 contract or agreement to which a health care profes5 sional is a party, of any mutually agreed upon terms

6 and conditions, including terms and conditions re7 quiring a health care professional to participate in,

8 and cooperate with, all programs, policies, and pro9 cedures developed or operated by a group health

10 plan or health insurance issuer to assure, review, or

11 improve the quality and effective utilization of health

12 care services (if such utilization is according to

13 guidelines or protocols that are based on clinical or

14 scientific evidence and the professional judgment of

15 the professional) but only if the guidelines or proto16 cols under such utilization do not prohibit or restrict

17 advice described in subsection (a) between health

18 care professionals and their patients; or

19 ‘‘(2) to permit a health care professional to

20 misrepresent the scope of benefits covered under the

21 group health plan or health insurance coverage or to

22 otherwise require a group health plan or health in23 surance issuer to reimburse health care professionals

24 for benefits (including services and advice) not cov25 ered under the plan or coverage.
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1 ‘‘(c) HEALTH CARE PROFESSIONAL DEFINED.—For

2 purposes of this section, the term ‘health care professional’

3 means a physician (as defined in section 1861(r) of the

4 Social Security Act) or other health care professional if

5 coverage for the professional’s services is provided under

6 the group health plan for the services of the professional.

7 Such term includes a podiatrist, optometrist, chiropractor,

8 psychologist, dentist, physician assistant, physical or occu9 pational therapist and therapy assistant, speech-language

10 pathologist, audiologist, registered or licensed practical

11 nurse (including nurse practitioner, clinical nurse spe12 cialist, certified registered nurse anesthetist, and certified

13 nurse-midwife), licensed certified social worker, registered

14 respiratory therapist, and certified respiratory therapy

15 technician.’’.

16 (b) CONFORMING AMENDMENT.—Section 732(a) of

17 such Act (29 U.S.C. 1191a(a)) is amended by striking

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

19 (c) CLERICAL AMENDMENT.—The table of contents

20 in section 1 of such Act is amended by adding at the end

21 of the items relating to subpart B of part 7 of subtitle

22 B of title I of such Act the following new item:

‘‘Sec. 714. Patient access to unrestricted professional health care advice.’’.

23 SEC. 102. EFFECTIVE DATE AND RELATED RULES.

24 (a) EFFECTIVE DATE.—
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1 (1) IN GENERAL.—Subject to paragraph (2),

2 the amendments made by this title apply with re3 spect to group health plans for plan years beginning

4 on or after the first day of the first month that be5 gins more than 1 year after the date of the enact6 ment of this Act.

7 (2) COLLECTIVE BARGAINING EXCEPTION.—In

8 the case of a group health plan maintained pursuant

9 to 1 or more collective bargaining agreements be10 tween employee representatives and 1 or more em11 ployers ratified before the date of enactment of this

12 Act, the amendments made by this title shall not

13 apply to plan years beginning before the later of—

14 (A) the date on which the last collective

15 bargaining agreements relating to the plan ter16 minates (determined without regard to any ex17 tension thereof agreed to after the date of en18 actment of this Act), or

19 (B) the first day described in paragraph

20 (1).

21 For purposes of subparagraph (A), any plan amend22 ment made pursuant to a collective bargaining

23 agreement relating to the plan which amends the

24 plan solely to conform to any requirement added by
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1 this title shall not be treated as a termination of

2 such collective bargaining agreement.

3 (c) LIMITATION ON ENFORCEMENT ACTIONS.—No

4 enforcement action shall be taken, pursuant to the amend5 ments made by this title, against a group health plan or

6 health insurance issuer with respect to a violation of a re7 quirement imposed by such amendments, and no penalty

8 shall be imposed on any failure by such plan to comply

9 with any requirement imposed by such amendments, to the

10 extent that violation or failure occurs before the date of

11 issuance of final regulations issued in connection with

12 such requirement, if the plan or issuer has sought to com13 ply in good faith with such requirement.

14 TITLE II—PATIENT RIGHT TO

15 EMERGENCY MEDICAL CARE

16 SEC. 201. PATIENT ACCESS TO EMERGENCY MEDICAL

17 CARE.

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

19 B of title I of the Employee Retirement Income Security

20 Act of 1974 (as amended by the preceding provisions of

21 this Act) is amended further by adding at the end the fol22 lowing new section:
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1 ‘‘SEC. 715. PATIENT ACCESS TO EMERGENCY MEDICAL

2 CARE.

3 ‘‘(a) IN GENERAL.—To the extent that a group

4 health plan (or a health insurance issuer offering health

5 insurance coverage in connection with the plan) provides

6 for any benefits consisting of emergency medical care, ex7 cept for items or services specifically excluded—

8 ‘‘(1) the plan or issuer shall provide benefits,

9 without requiring preauthorization and without re10 gard to otherwise applicable network limitations, for

11 appropriate emergency medical screening examina12 tions (within the capability of the emergency facility,

13 including ancillary services routinely available to the

14 emergency facility) to the extent that a prudent

15 layperson, who possesses an average knowledge of

16 health and medicine, would determine such examina17 tions to be necessary in order to determine whether

18 emergency medical care is required; and

19 ‘‘(2) the plan or issuer shall provide benefits for

20 additional emergency medical services following an

21 emergency medical screening examination (if deter22 mined necessary under paragraph (1)) to the extent

23 that a prudent emergency medical professional

24 would determine such additional emergency services

25 to be necessary to avoid the consequences described

26 in subsection (c).
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1 ‘‘(b) UNIFORM COST-SHARING REQUIRED.—Nothing

2 in this section shall be construed as preventing a group

3 health plan or issuer from imposing any form of cost-shar4 ing applicable to any participant or beneficiary (including

5 coinsurance, copayments, deductibles, and any other

6 charges) in relation to benefits described in subsection (a),

7 if such form of cost-sharing is uniformly applied under

8 such plan, with respect to similarly situated participants

9 and beneficiaries, to all benefits consisting of emergency

10 medical care provided to such similarly situated partici11 pants and beneficiaries under the plan.

12 ‘‘(c) EMERGENCY MEDICAL CARE.—For purposes of

13 this section, the term ‘emergency medical care’ means

14 medical care in any case in which an appropriate physician

15 has certified in writing (or as otherwise provided in regula16 tions of the Secretary)—

17 ‘‘(1) that failure to immediately provide the

18 care to the participant or beneficiary could reason19 ably be expected to result in—

20 ‘‘(A) placing the health of such participant

21 or beneficiary (or, with respect to such a partic22 ipant or beneficiary who is a pregnant woman,

23 the health of the woman or her unborn child)

24 in serious jeopardy;
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1 ‘‘(B) serious impairment to bodily func2 tions; or

3 ‘‘(C) serious dysfunction of any bodily

4 organ or part; or

5 ‘‘(2) that immediate provision of the care is

6 necessary because the participant or beneficiary has

7 made or is at serious risk of making an attempt to

8 harm himself or herself or another individual.’’.

9 (b) CONFORMING AMENDMENT.—The table of con10 tents in section 1 of such Act (as amended by the pre11 ceding provisions of this Act) is amended further by add12 ing at the end of the items relating to subpart B of part

13 7 of subtitle B of title I of such Act the following new

14 item:

‘‘Sec. 715. Patient access to emergency medical care.’’.

15 SEC. 202. EFFECTIVE DATE AND RELATED RULES.

16 (a) IN GENERAL.—The amendments made by this

17 title shall apply with respect to plan years beginning on

18 or after January 1 of the second calendar year following

19 the date of the enactment of this Act, except that the Sec20 retary of Labor may issue regulations before such date

21 under such amendments. The Secretary shall first issue

22 regulations necessary to carry out the amendments made

23 by this title before the effective date thereof.

24 (b) LIMITATION ON ENFORCEMENT ACTIONS.—No

25 enforcement action shall be taken, pursuant to the amend-
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1 ments made by this title, against a group health plan or

2 health insurance issuer with respect to a violation of a re3 quirement imposed by such amendments before the date

4 of issuance of regulations issued in connection with such

5 requirement, if the plan or issuer has sought to comply

6 in good faith with such requirement.

7 (c) SPECIAL RULE FOR COLLECTIVE BARGAINING

8 AGREEMENTS.—In the case of a group health plan main9 tained pursuant to one or more collective bargaining

10 agreements between employee representatives and one or

11 more employers ratified before the date of the enactment

12 of this Act, the amendments made by this title shall not

13 apply with respect to plan years beginning before the later

14 of—

15 (1) the date on which the last of the collective

16 bargaining agreements relating to the plan termi17 nates (determined without regard to any extension

18 thereof agreed to after the date of the enactment of

19 this Act); or

20 (2) January 1, 2002.

21 For purposes of this subsection, any plan amendment

22 made pursuant to a collective bargaining agreement relat23 ing to the plan which amends the plan solely to conform

24 to any requirement added by this title shall not be treated

25 as a termination of such collective bargaining agreement.
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1 TITLE III—PATIENT RIGHT TO

2 OBSTETRIC AND GYNECO3 LOGICAL CARE

4 SEC. 301. PATIENT ACCESS TO OBSTETRIC AND GYNECO5 LOGICAL CARE.

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

7 B of title I of the Employee Retirement Income Security

8 Act of 1974 (as amended by the preceding provisions of

9 this Act) is amended further by adding at the end the fol10 lowing new section:

11 ‘‘SEC. 716. PATIENT ACCESS TO OBSTETRIC AND GYNECO12 LOGICAL CARE

13 ‘‘(a) IN GENERAL.—In any case in which a group

14 health plan (or a health insurance issuer offering health

15 insurance coverage in connection with the plan)—

16 ‘‘(1) provides benefits under the terms of the

17 plan consisting of—

18 ‘‘(A) routine gynecological care (such as

19 preventive women’s health examinations); or

20 ‘‘(B) routine obstetric care (such as rou21 tine pregnancy-related services),

22 provided by a participating physician who specializes

23 in such care (or provides benefits consisting of pay24 ment for such care); and
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1 ‘‘(2) requires or provides for designation by a

2 participant or beneficiary of a participating primary

3 care provider,

4 if the primary care provider designated by such a partici5 pant or beneficiary is not such a physician, then the plan

6 (or issuer) shall meet the requirements of subsection (b).

7 ‘‘(b) REQUIREMENTS.—A group health plan (or a

8 health insurance issuer offering health insurance coverage

9 in connection with the plan) meets the requirements of

10 this subsection, in connection with benefits described in

11 subsection (a) consisting of care described in subpara12 graph (A) or (B) of subsection (a)(1) (or consisting of

13 payment therefor), if the plan (or issuer)—

14 ‘‘(1) does not require authorization or a referral

15 by the primary care provider in order to obtain such

16 benefits; and

17 ‘‘(2) treats the ordering of other routine care of

18 the same type, by the participating physician pro19 viding the care described in subparagraph (A) or (B)

20 of subsection (a)(1), as the authorization of the pri21 mary care provider with respect to such care.

22 ‘‘(c) CONSTRUCTION.—Nothing in subsection (b)(2)

23 shall waive any requirements of coverage relating to med24 ical necessity or appropriateness with respect to coverage

25 of gynecological or obstetric care so ordered.
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1 ‘‘(d) TREATMENT OF MULTIPLE COVERAGE OP2 TIONS.—In the case of a plan providing benefits under two

3 or more coverage options, the requirements of this section

4 shall apply separately with respect to each coverage op5 tion.’’.

6 (b) CONFORMING AMENDMENT.—The table of con7 tents in section 1 of such Act (as amended by the pre8 ceding provisions of this Act) is amended further by add9 ing at the end of the items relating to subpart B of part

10 7 of subtitle B of title I of such Act the following new

11 item:

‘‘Sec. 716. Patient access to obstetric and gynecological care.’’.

12 SEC. 302. EFFECTIVE DATE AND RELATED RULES.

13 (a) IN GENERAL.—The amendments made by this

14 title shall apply with respect to plan years beginning on

15 or after January 1 of the second calendar year following

16 the date of the enactment of this Act, except that the Sec17 retary of Labor may issue regulations before such date

18 under such amendments. The Secretary shall first issue

19 regulations necessary to carry out the amendments made

20 by this title before the effective date thereof.

21 (b) LIMITATION ON ENFORCEMENT ACTIONS.—No

22 enforcement action shall be taken, pursuant to the amend23 ments made by this title, against a group health plan or

24 health insurance issuer with respect to a violation of a re25 quirement imposed by such amendments before the date
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1 of issuance of regulations issued in connection with such

2 requirement, if the plan or issuer has sought to comply

3 in good faith with such requirement.

4 (c) SPECIAL RULE FOR COLLECTIVE BARGAINING

5 AGREEMENTS.—In the case of a group health plan main6 tained pursuant to one or more collective bargaining

7 agreements between employee representatives and one or

8 more employers ratified before the date of the enactment

9 of this Act, the amendments made by this title shall not

10 apply with respect to plan years beginning before the later

11 of—

12 (1) the date on which the last of the collective

13 bargaining agreements relating to the plan termi14 nates (determined without regard to any extension

15 thereof agreed to after the date of the enactment of

16 this Act); or

17 (2) January 1, 2002.

18 For purposes of this subsection, any plan amendment

19 made pursuant to a collective bargaining agreement relat20 ing to the plan which amends the plan solely to conform

21 to any requirement added by this title shall not be treated

22 as a termination of such collective bargaining agreement.
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1 TITLE IV—PATIENT RIGHT TO

2 PEDIATRIC CARE

3 SEC. 401. PATIENT ACCESS TO PEDIATRIC CARE.

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

5 B of title I of the Employee Retirement Income Security

6 Act of 1974 (as amended by the preceding provisions of

7 this Act) is amended further by adding at the end the fol8 lowing new section:

9 ‘‘SEC. 717. PATIENT ACCESS TO PEDIATRIC CARE.

10 ‘‘(a) IN GENERAL.—In any case in which a group

11 health plan (or a health insurance issuer offering health

12 insurance coverage in connection with the plan) provides

13 benefits consisting of routine pediatric care provided by

14 a participating physician who specializes in pediatrics (or

15 consisting of payment for such care) and the plan requires

16 or provides for designation by a participant or beneficiary

17 of a participating primary care provider, the plan (or

18 issuer) shall provide that such a participating physician

19 may be designated, if available, by a parent or guardian

20 of any beneficiary under the plan is who under 18 years

21 of age, as the primary care provider with respect to any

22 such benefits.

23 ‘‘(b) CONSTRUCTION.—Nothing in subsection (a)

24 shall waive any requirements of coverage relating to med-
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1 ical necessity or appropriateness with respect to coverage

2 of pediatric care.

3 ‘‘(c) TREATMENT OF MULTIPLE COVERAGE OP4 TIONS.—In the case of a plan providing benefits under two

5 or more coverage options, the requirements of this section

6 shall apply separately with respect to each coverage op7 tion.’’.

8 (b) CONFORMING AMENDMENT.—The table of con9 tents in section 1 of such Act (as amended by the pre10 ceding provisions of this Act) is amended further by add11 ing at the end of the items relating to subpart B of part

12 7 of subtitle B of title I of such Act the following new

13 item:

‘‘Sec. 717. Patient access to pediatric care.’’.

14 SEC. 402. EFFECTIVE DATE AND RELATED RULES.

15 (a) IN GENERAL.—The amendments made by this

16 title shall apply with respect to plan years beginning on

17 or after January 1 of the second calendar year following

18 the date of the enactment of this Act, except that the Sec19 retary of Labor may issue regulations before such date

20 under such amendments. The Secretary shall first issue

21 regulations necessary to carry out the amendments made

22 by this title before the effective date thereof.

23 (b) LIMITATION ON ENFORCEMENT ACTIONS.—No

24 enforcement action shall be taken, pursuant to the amend25 ments made by this title, against a group health plan or
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1 health insurance issuer with respect to a violation of a re2 quirement imposed by such amendments before the date

3 of issuance of regulations issued in connection with such

4 requirement, if the plan or issuer has sought to comply

5 in good faith with such requirement.

6 (c) SPECIAL RULE FOR COLLECTIVE BARGAINING

7 AGREEMENTS.—In the case of a group health plan main8 tained pursuant to one or more collective bargaining

9 agreements between employee representatives and one or

10 more employers ratified before the date of the enactment

11 of this Act, the amendments made by this title shall not

12 apply with respect to plan years beginning before the later

13 of—

14 (1) the date on which the last of the collective

15 bargaining agreements relating to the plan termi16 nates (determined without regard to any extension

17 thereof agreed to after the date of the enactment of

18 this Act); or

19 (2) January 1, 2002.

20 For purposes of this subsection, any plan amendment

21 made pursuant to a collective bargaining agreement relat22 ing to the plan which amends the plan solely to conform

23 to any requirement added by this title shall not be treated

24 as a termination of such collective bargaining agreement.
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1 TITLE V—PATIENT ACCESS TO

2 INFORMATION

3 SEC. 501. PATIENT ACCESS TO INFORMATION REGARDING

4 PLAN COVERAGE, MANAGED CARE PROCE5 DURES, HEALTH CARE PROVIDERS, AND

6 QUALITY OF MEDICAL CARE.

7 (a) IN GENERAL.—Part 1 of subtitle B of title I of

8 the Employee Retirement Income Security Act of 1974 is

9 amended—

10 (1) by redesignating section 111 as section 112;

11 and

12 (2) by inserting after section 110 the following

13 new section:

14 ‘‘DISCLOSURE BY GROUP HEALTH PLANS

15 ‘‘SEC. 111. (a) DISCLOSURE REQUIREMENT.—

16 ‘‘(1) GROUP HEALTH PLANS.—The adminis17 trator of each group health plan shall take such ac18 tions as are necessary to ensure that the summary

19 plan description of the plan required under section

20 102 (or each summary plan description in any case

21 in which different summary plan descriptions are ap22 propriate under part 1 for different options of cov23 erage) contains, among any information otherwise

24 required under this part, the information required

25 under subsections (b), (c), (d), and (e)(2)(A).
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1 ‘‘(2) HEALTH INSURANCE ISSUERS.—Each

2 health insurance issuer offering health insurance

3 coverage in connection with a group health plan

4 shall provide the administrator on a timely basis

5 with the information necessary to enable the admin6 istrator to comply with the requirements of para7 graph (1). To the extent that any such issuer pro8 vides on a timely basis to plan participants and

9 beneficiaries information otherwise required under

10 this part to be included in the summary plan de11 scription, the requirements of sections 101(a)(1) and

12 104(b) shall be deemed satisfied in the case of such

13 plan with respect to such information.

14 ‘‘(b) PLAN BENEFITS.—The information required

15 under subsection (a) includes the following:

16 ‘‘(1) COVERED ITEMS AND SERVICES.—

17 ‘‘(A) CATEGORIZATION OF INCLUDED BEN18 EFITS.—A description of covered benefits, cat19 egorized by—

20 ‘‘(i) types of items and services (in21 cluding any special disease management

22 program); and

23 ‘‘(ii) types of health care professionals

24 providing such items and services.
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1 ‘‘(B) EMERGENCY MEDICAL CARE.—A de2 scription of the extent to which the plan covers

3 emergency medical care (including the extent to

4 which the plan provides for access to urgent

5 care centers), and any definitions provided

6 under the plan for the relevant plan termi7 nology referring to such care.

8 ‘‘(C) PREVENTATIVE SERVICES.—A de9 scription of the extent to which the plan pro10 vides benefits for preventative services.

11 ‘‘(D) DRUG FORMULARIES.—A description

12 of the extent to which covered benefits are de13 termined by the use or application of a drug

14 formulary and a summary of the process for de15 termining what is included in such formulary.

16 ‘‘(E) COBRA CONTINUATION COV17 ERAGE.—A description of the benefits available

18 under the plan pursuant to part 6.

19 ‘‘(2) LIMITATIONS, EXCLUSIONS, AND RESTRIC20 TIONS ON COVERED BENEFITS.—

21 ‘‘(A) CATEGORIZATION OF EXCLUDED

22 BENEFITS.—A description of benefits specifi23 cally excluded from coverage, categorized by

24 types of items and services.
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1 ‘‘(B) UTILIZATION REVIEW AND

2 PREAUTHORIZATION REQUIREMENTS.—Whether

3 coverage for medical care is limited or excluded

4 on the basis of utilization review or

5 preauthorization requirements.

6 ‘‘(C) LIFETIME, ANNUAL, OR OTHER PE7 RIOD LIMITATIONS.—A description of the cir8 cumstances under which, and the extent to

9 which, coverage is subject to lifetime, annual, or

10 other period limitations, categorized by types of

11 benefits.

12 ‘‘(D) CUSTODIAL CARE.—A description of

13 the circumstances under which, and the extent

14 to which, the coverage of benefits for custodial

15 care is limited or excluded, and a statement of

16 the definition used by the plan for custodial

17 care.

18 ‘‘(E) EXPERIMENTAL TREATMENTS.—

19 Whether coverage for any medical care is lim20 ited or excluded because it constitutes experi21 mental treatment or technology, and any defini22 tions provided under the plan for the relevant

23 plan terminology referring to such limited or

24 excluded care.
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1 ‘‘(F) MEDICAL APPROPRIATENESS OR NE2 CESSITY.—Whether coverage for medical care

3 may be limited or excluded by reason of a fail4 ure to meet the plan’s requirements for medical

5 appropriateness or necessity, and any defini6 tions provided under the plan for the relevant

7 plan terminology referring to such limited or

8 excluded care.

9 ‘‘(G) SECOND OR SUBSEQUENT OPIN10 IONS.—A description of the circumstances

11 under which, and the extent to which, coverage

12 for second or subsequent opinions is limited or

13 excluded.

14 ‘‘(H) SPECIALTY CARE.—A description of

15 the circumstances under which, and the extent

16 to which, coverage of benefits for specialty care

17 is conditioned on referral from a primary care

18 provider.

19 ‘‘(I) CONTINUITY OF CARE.—A description

20 of the circumstances under which, and the ex21 tent to which, coverage of items and services

22 provided by any health care professional is lim23 ited or excluded by reason of the departure by

24 the professional from any defined set of pro25 viders.
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1 ‘‘(J) RESTRICTIONS ON COVERAGE OF

2 EMERGENCY SERVICES.—A description of the

3 circumstances under which, and the extent to

4 which, the plan, in covering emergency medical

5 care furnished to a participant or beneficiary of

6 the plan imposes any financial responsibility de7 scribed in subsection (c) on participants or

8 beneficiaries or limits or conditions benefits for

9 such care subject to any other term or condition

10 of such plan.

11 ‘‘(c) PARTICIPANT’S FINANCIAL RESPONSIBIL12 ITIES.—The information required under subsection (a) in13 cludes an explanation of—

14 ‘‘(1) a participant’s financial responsibility for

15 payment of premiums, coinsurance, copayments,

16 deductibles, and any other charges; and

17 ‘‘(2) the circumstances under which, and the

18 extent to which, the participant’s financial responsi19 bility described in paragraph (1) may vary, including

20 any distinctions based on whether a health care pro21 vider from whom covered benefits are obtained is in22 cluded in a defined set of providers.

23 ‘‘(d) DISPUTE RESOLUTION PROCEDURES.—The in24 formation required under subsection (a) includes a de-
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1 scription of the processes adopted by the plan pursuant

2 to section 503, including—

3 ‘‘(1) descriptions thereof relating specifically

4 to—

5 ‘‘(A) coverage decisions;

6 ‘‘(B) internal review of coverage decisions;

7 and

8 ‘‘(C) any external review of coverage deci9 sions; and

10 ‘‘(2) the procedures and time frames applicable

11 to each step of the processes referred to in subpara12 graphs (A), (B), and (C) of paragraph (1).

13 ‘‘(e) INFORMATION AVAILABLE ON REQUEST.—

14 ‘‘(1) ACCESS TO PLAN BENEFIT INFORMATION

15 IN ELECTRONIC FORM.—

16 ‘‘(A) IN GENERAL.—In addition to the in17 formation required to be provided under section

18 104(b)(4), a group health plan (and a health

19 insurance issuer offering health insurance cov20 erage in connection with a group health plan)

21 shall, upon written request (made not more fre22 quently than annually), make available to par23 ticipants and beneficiaries, in a generally recog24 nized electronic format, the following informa25 tion:
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1 ‘‘(i) the latest summary plan descrip2 tion, including the latest summary of ma3 terial modifications; and

4 ‘‘(ii) the actual plan provisions setting

5 forth the benefits available under the plan

6 to the extent such information relates to the

7 coverage options under the plan available to the

8 participant or beneficiary. A reasonable charge

9 may be made to cover the cost of providing

10 such information in such generally recognized

11 electronic format. The Secretary may by regula12 tion prescribe a maximum amount which will

13 constitute a reasonable charge under the pre14 ceding sentence.

15 ‘‘(B) ALTERNATIVE ACCESS.—The require16 ments of this paragraph may be met by making

17 such information generally available (rather

18 than upon request) on the Internet or on a pro19 prietary computer network in a format which is

20 readily accessible to participants and bene21 ficiaries.

22 ‘‘(2) ADDITIONAL INFORMATION TO BE PRO23 VIDED ON REQUEST.—

24 ‘‘(A) INCLUSION IN SUMMARY PLAN DE25 SCRIPTION OF SUMMARY OF ADDITIONAL IN-
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1 FORMATION.—The information required under

2 subsection (a) includes a summary description

3 of the types of information required by this

4 subsection to be made available to participants

5 and beneficiaries on request.

6 ‘‘(B) INFORMATION REQUIRED FROM

7 PLANS AND ISSUERS ON REQUEST.—In addition

8 to information required to be included in sum9 mary plan descriptions under this subsection, a

10 group health plan (and a health insurance

11 issuer offering health insurance coverage in

12 connection with a group health plan) shall pro13 vide the following information to a participant

14 or beneficiary on request:

15 ‘‘(i) NETWORK CHARACTERISTICS.—If

16 the plan (or issuer) utilizes a defined set of

17 providers under contract with the plan (or

18 issuer), a detailed list of the names of such

19 providers and their geographic location, set

20 forth separately with respect to primary

21 care providers and with respect to special22 ists.

23 ‘‘(ii) CARE MANAGEMENT INFORMA24 TION.—A description of the circumstances

25 under which, and the extent to which, the
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1 plan has special disease management pro2 grams or programs for persons with dis3 abilities, indicating whether these pro4 grams are voluntary or mandatory and

5 whether a significant benefit differential

6 results from participation in such pro7 grams.

8 ‘‘(iii) INCLUSION OF DRUGS AND

9 BIOLOGICALS IN FORMULARIES.—A state10 ment of whether a specific drug or biologi11 cal is included in a formulary used to de12 termine benefits under the plan and a de13 scription of the procedures for considering

14 requests for any patient-specific waivers.

15 ‘‘(iv) PROCEDURES FOR DETERMINING

16 EXCLUSIONS BASED ON MEDICAL NECES17 SITY OR EXPERIMENTAL TREATMENTS.—

18 Upon receipt by the participant or bene19 ficiary of any notification of an adverse

20 coverage decision based on a determination

21 relating to medical necessity or an experi22 mental treatment or technology, a descrip23 tion of the procedures and medically-based

24 criteria used in such decision.
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1 ‘‘(v) PREAUTHORIZATION AND UTILI2 ZATION REVIEW PROCEDURES.—Upon re3 ceipt by the participant or beneficiary of

4 any notification of an adverse coverage de5 cision, a description of the basis on which

6 any preauthorization requirement or any

7 utilization review requirement has resulted

8 in such decision.

9 ‘‘(vi) ACCREDITATION STATUS OF

10 HEALTH INSURANCE ISSUERS AND SERV11 ICE PROVIDERS.—A description of the ac12 creditation and licencing status (if any) of

13 each health insurance issuer offering

14 health insurance coverage in connection

15 with the plan and of any utilization review

16 organization utilized by the issuer or the

17 plan, together with the name and address

18 of the accrediting or licencing authority.

19 ‘‘(vii) MEASURES OF ENROLLEE SAT20 ISFACTION.—The latest information (if

21 any) maintained by the plan, or by any

22 health insurance issuer offering health in23 surance coverage in connection with the

24 plan, relating to enrollee satisfaction.
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1 ‘‘(viii) QUALITY PERFORMANCE MEAS2 URES.—The latest information (if any)

3 maintained by the plan, or by any health

4 insurance issuer offering health insurance

5 coverage in connection with the plan, relat6 ing to quality of performance of the deliv7 ery of medical care with respect to cov8 erage options offered under the plan and

9 of health care professionals and facilities

10 providing medical care under the plan.

11 ‘‘(ix) INFORMATION RELATING TO EX12 TERNAL REVIEWS.—The number of any

13 external reviews under section 503 that

14 have been completed during the prior plan

15 year and the number of such reviews in

16 which a recommendation is made for modi17 fication or reversal of an internal review

18 decision under the plan.

19 ‘‘(C) INFORMATION REQUIRED FROM

20 HEALTH CARE PROFESSIONALS ON REQUEST.—

21 Any health care professional treating a partici22 pant or beneficiary under a group health plan

23 shall provide to the participant or beneficiary,

24 on request, a description of his or her profes25 sional qualifications (including board certifi-
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1 cation status, licensing status, and accreditation

2 status, if any), privileges, and experience and a

3 general description by category (including sal4 ary, fee-for-service, capitation, and such other

5 categories as may be specified in regulations of

6 the Secretary) of the applicable method by

7 which such professional is compensated in con8 nection with the provision of such medical care.

9 ‘‘(D) INFORMATION REQUIRED FROM

10 HEALTH CARE FACILITIES ON REQUEST.—Any

11 health care facility from which a participant or

12 beneficiary has sought treatment under a group

13 health plan shall provide to the participant or

14 beneficiary, on request, a description of the fa15 cility’s corporate form or other organizational

16 form and all forms of licensing and accredita17 tion status (if any) assigned to the facility by

18 standard-setting organizations.

19 ‘‘(f) ACCESS TO INFORMATION RELEVANT TO THE

20 COVERAGE OPTIONS UNDER WHICH THE PARTICIPANT

21 OR BENEFICIARY IS ELIGIBLE TO ENROLL.—In addition

22 to information otherwise required to be made available

23 under this section, a group health plan (and a health in24 surance issuer offering health insurance coverage in con25 nection with a group health plan) shall, upon written re-
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•HR 2095 IH

1 quest (made not more frequently than annually), make

2 available to a participant (and an employee who, under

3 the terms of the plan, is eligible for coverage but not en4 rolled) in connection with a period of enrollment the sum5 mary plan description for any coverage option under the

6 plan under which the participant is eligible to enroll and

7 any information described in clauses (i), (ii), (iii), (vi),

8 (vii), and (viii) of subsection (e)(2)(B).

9 ‘‘(g) ADVANCE NOTICE OF CHANGES IN DRUG

10 FORMULARIES.—Not later than 30 days before the effec11 tive of date of any exclusion of a specific drug or biological

12 from any drug formulary under the plan that is used in

13 the treatment of a chronic illness or disease, the plan shall

14 take such actions as are necessary to reasonably ensure

15 that plan participants are informed of such exclusion. The

16 requirements of this subsection may be satisfied—

17 ‘‘(1) by inclusion of information in publications

18 broadly distributed by plan sponsors, employers, or

19 employee organizations;

20 ‘‘(2) by electronic means of communication (in21 cluding the Internet or proprietary computer net22 works in a format which is readily accessible to par23 ticipants);

24 ‘‘(3) by timely informing participants who,

25 under an ongoing program maintained under the
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1 plan, have submitted their names for such notifica2 tion; or

3 ‘‘(4) by any other reasonable means of timely

4 informing plan participants.

5 ‘‘(h) DEFINITIONS.—For purposes of this section—

6 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group

7 health plan’ has the meaning provided such term

8 under section 733(a)(1).

9 ‘‘(2) MEDICAL CARE.—The term ‘medical care’

10 has the meaning provided such term under section

11 733(a)(2).

12 ‘‘(3) HEALTH INSURANCE COVERAGE.—The

13 term ‘health insurance coverage’ has the meaning

14 provided such term under section 733(b)(1).

15 ‘‘(4) HEALTH INSURANCE ISSUER.—The term

16 ‘health insurance issuer’ has the meaning provided

17 such term under section 733(b)(2).’’.

18 (b) CONFORMING AMENDMENTS.—

19 (1) Section 102(b) of such Act (29 U.S.C.

20 1022(b)) is amended by inserting before the period

21 at the end the following: ‘‘; and, in the case of a

22 group health plan (as defined in section 111(h)(1)),

23 the information required to be included under sec24 tion 111(a)’’.
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1 (2) The table of contents in section 1 of such

2 Act is amended by striking the item relating to sec3 tion 111 and inserting the following new items:

‘‘Sec. 111. Disclosure by group health plans.

‘‘Sec. 112. Repeal and effective date.’’.

4 SEC. 502. EFFECTIVE DATE AND RELATED RULES.

5 (a) IN GENERAL.—The amendments made by this

6 title shall apply with respect to plan years beginning on

7 or after January 1 of the second calendar year following

8 the date of the enactment of this Act. The Secretary shall

9 first issue all regulations necessary to carry out the

10 amendments made by this title before such date.

11 (b) LIMITATION ON ENFORCEMENT ACTIONS.—No

12 enforcement action shall be taken, pursuant to the amend13 ments made by this title, against a group health plan or

14 health insurance issuer with respect to a violation of a re15 quirement imposed by such amendments before the date

16 of issuance of final regulations issued in connection with

17 such requirement, if the plan or issuer has sought to com18 ply in good faith with such requirement.

19 TITLE VI—GROUP HEALTH PLAN

20 REVIEW STANDARDS

21 SEC. 601. SPECIAL RULES FOR GROUP HEALTH PLANS.

22 (a) IN GENERAL.—Section 503 of the Employee Re23 tirement Income Security Act of 1974 (29 U.S.C. 1133)

24 is amended—
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1 (1) by inserting ‘‘(a) IN GENERAL.—’’ after

2 ‘‘SEC. 503.’’;

3 (2) by inserting ‘‘(other than a group health

4 plan)’’ after ‘‘employee benefit plan’’; and

5 (3) by adding at the end the following new sub6 section:

7 ‘‘(b) SPECIAL RULES FOR GROUP HEALTH PLANS.—

8 ‘‘(1) COVERAGE DETERMINATIONS.—Every

9 group health plan shall—

10 ‘‘(A) provide adequate notice in writing in

11 accordance with this subsection to any partici12 pant or beneficiary of any adverse coverage de13 cision with respect to benefits of such partici14 pant or beneficiary under the plan, setting forth

15 the specific reasons for such coverage decision

16 and any rights of review provided under the

17 plan, written in a manner calculated to be un18 derstood by the average participant;

19 ‘‘(B) provide such notice in writing also to

20 any treating medical care provider of such par21 ticipant or beneficiary, if such provider has

22 claimed reimbursement for any item or service

23 involved in such coverage decision, or if a claim

24 submitted by the provider initiated the pro25 ceedings leading to such decision;
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1 ‘‘(C) afford a reasonable opportunity to

2 any participant or beneficiary who is in receipt

3 of the notice of such adverse coverage decision,

4 and who files a written request for review of the

5 initial coverage decision within 90 days after re6 ceipt of the notice of the initial decision, for a

7 full and fair review of the decision by an appro8 priate named fiduciary who did not make the

9 initial decision; and

10 ‘‘(D) meet the additional requirements of

11 this subsection.

12 ‘‘(2) TIME LIMITS FOR MAKING INITIAL COV13 ERAGE DECISIONS FOR BENEFITS AND COMPLETING

14 INTERNAL APPEALS.—

15 ‘‘(A) TIME LIMITS FOR DECIDING RE16 QUESTS FOR BENEFIT PAYMENTS, REQUESTS

17 FOR ADVANCE DETERMINATION OF COVERAGE,

18 AND REQUESTS FOR REQUIRED DETERMINA19 TION OF MEDICAL NECESSITY.—Except as pro20 vided in subparagraph (B)—

21 ‘‘(i) INITIAL DECISIONS.—If a request

22 for benefit payments, a request for advance

23 determination of coverage, or a request for

24 required determination of medical necessity

25 is submitted to a group health plan in such
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1 reasonable form as may be required under

2 the plan, the plan shall issue in writing an

3 initial coverage decision on the request be4 fore the end of the initial decision period

5 under paragraph (10)(I) following the fil6 ing completion date. Failure to issue a cov7 erage decision on such a request before the

8 end of the period required under this

9 clause shall be treated as an adverse cov10 erage decision for purposes of internal re11 view under clause (ii).

12 ‘‘(ii) INTERNAL REVIEWS OF INITIAL

13 DENIALS.—Upon the written request of a

14 participant or beneficiary for review of an

15 initial adverse coverage decision under

16 clause (i), a review by an appropriate

17 named fiduciary (subject to paragraph (3))

18 of the initial coverage decision shall be

19 completed, including issuance by the plan

20 of a written decision affirming, reversing,

21 or modifying the initial coverage decision,

22 setting forth the grounds for such decision,

23 before the end of the internal review period

24 following the review filing date. Such deci25 sion shall be treated as the final decision
38

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1 of the plan, subject to any applicable re2 consideration under paragraph (4). Failure

3 to issue before the end of such period such

4 a written decision requested under this

5 clause shall be treated as a final decision

6 affirming the initial coverage decision.

7 ‘‘(B) TIME LIMITS FOR MAKING COVERAGE

8 DECISIONS RELATING TO ACCELERATED NEED

9 MEDICAL CARE AND FOR COMPLETING INTER10 NAL APPEALS.—

11 ‘‘(i) INITIAL DECISIONS.—A group

12 health plan shall issue in writing an initial

13 coverage decision on any request for expe14 dited advance determination of coverage or

15 for expedited required determination of

16 medical necessity submitted, in such rea17 sonable form as may be required under the

18 plan before the end of the accelerated need

19 decision period under paragraph (10)(K),

20 in cases involving accelerated need medical

21 care, following the filing completion date.

22 Failure to approve or deny such a request

23 before the end of the applicable decision

24 period shall be treated as a denial of the
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1 request for purposes of internal review

2 under clause (ii).

3 ‘‘(ii) INTERNAL REVIEWS OF INITIAL

4 DENIALS.—Upon the written request of a

5 participant or beneficiary for review of an

6 initial adverse coverage decision under

7 clause (i), a review by an appropriate

8 named fiduciary (subject to paragraph (3))

9 of the initial coverage decision shall be

10 completed, including issuance by the plan

11 of a written decision affirming, reversing,

12 or modifying the initial converge decision,

13 setting forth the grounds for the decision

14 before the end of the accelerated need deci15 sion period under paragraph (10)(K) fol16 lowing the review filing date. Such decision

17 shall be treated as the final decision of the

18 plan, subject to any applicable reconsider19 ation under paragraph (4). Failure to issue

20 before the end of the applicable decision

21 period such a written decision requested

22 under this clause shall be treated as a final

23 decision affirming the initial coverage deci24 sion.
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1 ‘‘(3) MEDICAL PROFESSIONALS MUST REVIEW

2 INITIAL COVERAGE DECISIONS INVOLVING MEDICAL

3 APPROPRIATENESS OR NECESSITY OR INVESTIGA4 TIONAL ITEMS OR EXPERIMENTAL TREATMENT OR

5 TECHNOLOGY.—If an initial coverage decision under

6 paragraph (2)(A)(i) or (2)(B)(i) is based on a deter7 mination that provision of a particular item or serv8 ice is excluded from coverage under the terms of the

9 plan because the provision of such item or service

10 does not meet the plan’s requirements for medical

11 appropriateness or necessity or would constitute in12 vestigational items or experimental treatment or

13 technology, the review under paragraph (2)(A)(ii) or

14 (2)(B)(ii), to the extent that it relates to medical ap15 propriateness or necessity or to investigational items

16 or experimental treatment or technology, shall be

17 conducted by a physician or, if appropriate, another

18 medical professional, who is selected by the plan and

19 who did not make the initial denial.

20 ‘‘(4) ELECTIVE EXTERNAL REVIEW BY INDE21 PENDENT MEDICAL EXPERT AND RECONSIDERATION

22 OF INITIAL REVIEW DECISION.—

23 ‘‘(A) IN GENERAL.—In any case in which

24 a participant or beneficiary, who has received

25 an adverse coverage decision which is not re-
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1 versed upon review conducted pursuant to para2 graph (1)(C) (including review under paragraph

3 (2)(A)(ii) or (2)(B)(ii)) and who has not com4 menced review of the coverage decision under

5 section 502, makes a request in writing, within

6 30 days after the date of such review decision,

7 for reconsideration of such review decision, the

8 requirements of subparagraphs (B), (C), (D)

9 and (E) shall apply in the case of such adverse

10 coverage decision, if the requirements of clause

11 (i), (ii), or (iii) are met.

12 ‘‘(i) MEDICAL APPROPRIATENESS OR

13 INVESTIGATIONAL ITEM OR EXPERI14 MENTAL TREATMENT OR TECHNOLOGY.—

15 The requirements of this clause are met if

16 such coverage decision is based on a deter17 mination that provision of a particular

18 item or service that would otherwise be

19 covered under the terms of the plan is ex20 cluded from coverage under the terms of

21 the plan because the provision of such item

22 or service—

23 ‘‘(I) does not meet the plan’s re24 quirements for medical appropriate25 ness or necessity; or
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1 ‘‘(II) would constitute an inves2 tigational item or experimental treat3 ment or technology.

4 ‘‘(ii) CATEGORICAL EXCLUSION OF

5 ITEM OR SERVICE REQUIRING EVALUATION

6 OF MEDICAL FACTS OR EVIDENCE.—The

7 requirements of this clause are met if—

8 ‘‘(I) such coverage decision is

9 based on a determination that a par10 ticular item or service is not covered

11 under the terms of the plan because

12 provision of such item or service is

13 categorically excluded from coverage

14 under the terms of the plan, and

15 ‘‘(II) an independent contract ex16 pert finds under subparagraph (C), in

17 advance of any review of the decision

18 under subparagraph (D), that such

19 determination primarily requires the

20 evaluation of medical facts or medical

21 evidence by a health professional.

22 ‘‘(iii) SPECIFIC EXCLUSION OF ITEM

23 OR SERVICE REQUIRING EVALUATION OF

24 MEDICAL FACTS OR EVIDENCE.—The re25 quirements of this clause are met if—
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1 ‘‘(I) such coverage decision is

2 based on a determination that a par3 ticular item or service is not covered

4 under the terms of the plan because

5 provision of such item or service is

6 specifically excluded from coverage

7 under the terms of the plan, and

8 ‘‘(II) an independent contract ex9 pert finds under subparagraph (C), in

10 advance of any review of the decision

11 under subparagraph (D), that such

12 determination primarily requires the

13 evaluation of medical facts or medical

14 evidence by a health professional.

15 ‘‘(iv) MATTERS SPECIFICALLY NOT

16 SUBJECT TO REVIEW.—The requirements

17 of subparagraphs (B), (C), (D), and (E)

18 shall not apply in the case of any adverse

19 coverage decision if such decision is based

20 on—

21 ‘‘(I) a determination of eligibility

22 for benefits,

23 ‘‘(II) the application of explicit

24 plan limits on the number, cost, or

25 duration of any benefit, or
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1 ‘‘(III) a limitation on the amount

2 of any benefit payment or a require3 ment to make copayments under the

4 terms of the plan.

5 Review under this paragraph shall not be avail6 able for any coverage decision that has pre7 viously undergone review under this paragraph.

8 ‘‘(B) LIMITS ON ALLOWABLE ADVANCE

9 PAYMENTS.—The review under this paragraph

10 in connection with an adverse coverage decision

11 shall be available subject to any requirement of

12 the plan (unless waived by the plan for financial

13 or other reasons) for payment in advance to the

14 plan by the participant or beneficiary seeking

15 review of an amount not to exceed the greater

16 of (i) the lesser of $100 or 10 percent of the

17 cost of the medical care involved in the decision,

18 or (ii) $25, with such dollar amount subject to

19 compounded annual adjustments in the same

20 manner and to the same extent as apply under

21 section 215(i) of the Social Security Act, except

22 that, for any calendar year, such amount as so

23 adjusted shall be deemed, solely for such cal24 endar year, to be equal to such amount rounded

25 to the nearest $10. No such payment may be
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1 required in the case of any participant or bene2 ficiary whose enrollment under the plan is paid

3 for, in whole or in part, under a State plan

4 under title XIX or XXI of the Social Security

5 Act. Any such advance payment shall be subject

6 to reimbursement if the recommendation of the

7 independent medical expert or experts under

8 subparagraph (D)(iii) is to reverse or modify

9 the coverage decision.

10 ‘‘(C) REQUEST TO INDEPENDENT CON11 TRACT EXPERTS FOR DETERMINATION OF

12 WHETHER COVERAGE DECISION REQUIRED

13 EVALUATION OF MEDICAL FACTS OR EVI14 DENCE.—

15 ‘‘(i) IN GENERAL.—In the case of a

16 request for review made by a participant or

17 beneficiary as described in subparagraph

18 (A), if the requirements of clause (ii) or

19 (iii) of subparagraph (A) are met (and re20 view is not otherwise precluded under sub21 paragraph (A)(iv)), the terms of the plan

22 shall provide for a procedure for initial re23 view by an independent contract expert se24 lected by the plan under which the expert

25 will determine whether the coverage deci-
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1 sion requires the evaluation of medical

2 facts or evidence by a health professional.

3 If the expert determines that the coverage

4 decision requires such evaluation, reconsid5 eration of such adverse decision shall pro6 ceed under this paragraph. If the expert

7 determines that the coverage decision does

8 not require such evaluation, the adverse

9 decision shall remain the final decision of

10 the plan.

11 ‘‘(ii) INDEPENDENT CONTRACT EX12 PERTS.—For purposes of this subpara13 graph, the term ‘independent contract ex14 pert’ means a professional—

15 ‘‘(I) who has appropriate creden16 tials and has attained recognized ex17 pertise in the applicable area of con18 tract interpretation;

19 ‘‘(II) who was not involved in the

20 initial decision or any earlier review

21 thereof; and

22 ‘‘(III) who is selected in accord23 ance with subparagraph (G)(i) and

24 meets the requirements of subpara25 graph (G)(ii).
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1 ‘‘(D) RECONSIDERATION OF INITIAL RE2 VIEW DECISION.—

3 ‘‘(i) IN GENERAL.—In the case of a

4 request for review made by a participant or

5 beneficiary as described in subparagraph

6 (A), if the requirements of subparagraph

7 (A)(i) are met or reconsideration proceeds

8 under this paragraph pursuant to subpara9 graph (C), the terms of the plan shall pro10 vide for a procedure for such reconsider11 ation in accordance with clause (ii).

12 ‘‘(ii) PROCEDURE FOR RECONSIDER13 ATION.—The procedure required under

14 clause (i) shall include the following—

15 ‘‘(I) One or more independent

16 medical experts will be selected in ac17 cordance with subparagraph (F) to re18 consider any coverage decision de19 scribed in subparagraph (A) to deter20 mine whether such decision was in ac21 cordance with the terms of the plan

22 and this title.

23 ‘‘(II) The record for review (in24 cluding a specification of the terms of

25 the plan and other criteria serving as
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1 the basis for the initial review deci2 sion) will be presented to such expert

3 or experts and maintained in a man4 ner which will ensure confidentiality

5 of such record.

6 ‘‘(III) Such expert or experts will

7 reconsider the initial review decision

8 to determine whether such decision

9 was in accordance with the terms of

10 the plan and this title. Such reconsid11 eration shall include the initial deci12 sion of the plan, the medical condition

13 of the patient, and the recommenda14 tions of the treating physician. The

15 experts shall take into account in the

16 course of such reconsideration any

17 guidelines adopted by the plan

18 through a process involving medical

19 practitioners and peer-reviewed med20 ical literature identified as such under

21 criteria established by the Food and

22 Drug Administration.

23 ‘‘(IV) Such expert or experts will

24 issue a written decision affirming,

25 modifying, or reversing the initial re-
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1 view decision, setting forth the

2 grounds for the decision.

3 ‘‘(E) TIME LIMITS FOR RECONSIDER4 ATION.—Any review under this paragraph (in5 cluding any review under subparagraph (C))

6 shall be completed before the end of the recon7 sideration period (as defined in paragraph

8 (10)(L)) following the review filing date in con9 nection with such review. The decision under

10 this paragraph affirming, reversing, or modi11 fying the initial review decision of the plan shall

12 be the final decision of the plan. Failure to

13 issue a written decision before the end of the

14 reconsideration period in any reconsideration

15 requested under this paragraph shall be treated

16 as a final decision affirming the initial review

17 decision of the plan.

18 ‘‘(F) INDEPENDENT MEDICAL EXPERTS.—

19 ‘‘(i) IN GENERAL.—For purposes of

20 this paragraph, the term ‘independent

21 medical expert’ means, in connection with

22 any coverage decision by a group health

23 plan, a professional—
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1 ‘‘(I) who is a physician or, if ap2 propriate, another medical profes3 sional;

4 ‘‘(II) who has appropriate cre5 dentials and has attained recognized

6 expertise in the applicable medical

7 field;

8 ‘‘(III) who was not involved in

9 the initial decision or any earlier re10 view thereof;

11 ‘‘(IV) who has not history of dis12 ciplinary action or sanctions (includ13 ing, but not limited to, loss of staff

14 privileges or participation restriction)

15 taken or pending by any hospital,

16 health carrier, government, or regu17 latory body; and

18 ‘‘(V) who is selected in accord19 ance with subparagraph (G)(i) and

20 meets the requirements of subpara21 graph (G)(ii).

22 ‘‘(G) SELECTION OF EXPERTS.—

23 ‘‘(i) IN GENERAL.—An independent

24 contract expert or independent medical ex-
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1 pert is selected in accordance with this

2 clause if—

3 ‘‘(I) the expert is selected by an

4 intermediary which itself meets the re5 quirements of clause (ii), by means of

6 a method which ensures that the iden7 tity of the expert is not disclosed to

8 the plan, any health insurance issuer

9 offering health insurance coverage to

10 the aggrieved participant or bene11 ficiary in connection with the plan,

12 and the aggrieved participant or bene13 ficiary under the plan, and the identi14 ties of the plan, the issuer, and the

15 aggrieved participant or beneficiary

16 are not disclosed to the expert; or

17 ‘‘(II) the expert is selected, by an

18 intermediary or otherwise, in a man19 ner that is, under regulations issued

20 pursuant to negotiated rulemaking,

21 sufficient to ensure the expert’s inde22 pendence, including selection by the

23 plan in cases where it is determined

24 that a suitable intermediary is not

25 reasonably available,
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1 and the method of selection is devised to

2 reasonably ensure that the expert selected

3 meets the independence requirements of

4 clause (ii).

5 ‘‘(ii) INDEPENDENCE REQUIRE6 MENTS.—An independent contract expert

7 or independent medical expert or another

8 entity described in clause (i) meets the

9 independence requirements of this clause

10 if—

11 ‘‘(I) the expert or entity is not

12 affiliated with any related party;

13 ‘‘(II) any compensation received

14 by such expert or entity in connection

15 with the external review is reasonable

16 and not contingent on any decision

17 rendered by the expert or entity;

18 ‘‘(III) under the terms of the

19 plan and any health insurance cov20 erage offered in connection with the

21 plan, the plan and the issuer (if any)

22 have no recourse against the expert or

23 entity in connection with the external

24 review; and
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1 ‘‘(IV) the expert or entity does

2 not otherwise have a conflict of inter3 est with a related party as determined

4 under any regulations which the Sec5 retary may prescribe.

6 ‘‘(iii) RELATED PARTY.—For pur7 poses of clause (i)(I), the term ‘related

8 party’ means—

9 ‘‘(I) the plan or any health insur10 ance issuer offering health insurance

11 coverage in connection with the plan

12 (or any officer, director, or manage13 ment employee of such plan or issuer);

14 ‘‘(II) the physician or other med15 ical care provider that provided the

16 medical care involved in the coverage

17 decision;

18 ‘‘(III) the institution at which

19 the medical care involved in the cov20 erage decision is provided;

21 ‘‘(IV) the manufacturer of any

22 drug or other item that was included

23 in the medical care involved in the

24 coverage decision; or
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1 ‘‘(V) any other party determined

2 under any regulations which the Sec3 retary may prescribe to have a sub4 stantial interest in the coverage deci5 sion.

6 ‘‘(iv) AFFILIATED.—For purposes of

7 clause (ii)(I), the term ‘affiliated’ means,

8 in connection with any entity, having a fa9 milial, financial, or professional relation10 ship with, or interest in, such entity.

11 ‘‘(H) MISBEHAVIOR BY EXPERTS.—Any

12 action by the expert or experts in applying for

13 their selection under this paragraph or in the

14 course of carrying out their duties under this

15 paragraph which constitutes—

16 ‘‘(i) fraud or intentional misrepresen17 tation by such expert or experts, or

18 ‘‘(ii) demonstrates failure to adhere to

19 the standards for selection set forth in sub20 paragraph (G)(ii),

21 shall be treated as a failure to meet the require22 ments of this paragraph and therefore as a

23 cause of action which may be brought by a fidu24 ciary under section 502(a)(3).
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1 ‘‘(5) PERMITTED ALTERNATIVES TO REQUIRED

2 INTERNAL REVIEW.—

3 ‘‘(A) IN GENERAL.—In accordance with

4 such regulations (if any) as may be prescribed

5 by the Secretary for purposes of this paragraph,

6 in the case of any initial coverage decision for

7 benefits under paragraph (2)(A)(ii) or

8 (2)(B)(ii), a group health plan may provide an

9 alternative dispute resolution procedure meeting

10 the requirements of subparagraph (B) for use

11 in lieu of the procedures set forth under the

12 preceding provisions of this subsection relating

13 review of such decision. Such procedure may be

14 provided in one form for all participants and

15 beneficiaries or in a different form each group

16 of similarly situated participants and bene17 ficiaries.

18 ‘‘(B) REQUIREMENTS.—An alternative dis19 pute resolution procedure meets the require20 ments of this subparagraph, in connection with

21 any initial coverage decision, if—

22 ‘‘(i) such procedure is utilized solely—

23 ‘‘(I) accordance with the applica24 ble terms of a bona fide collective bar25 gaining agreement pursuant to which
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1 the plan (or the applicable portion

2 thereof governed by the agreement) is

3 established or maintained, or

4 ‘‘(II) upon election by all parties

5 to such decision,

6 ‘‘(ii) the procedure incorporates time

7 limits not exceeding the time limits other8 wise applicable under paragraphs (2)(A)(ii)

9 and (2)(B)(ii);

10 ‘‘(iii) the procedure incorporates any

11 otherwise applicable requirement for review

12 by a physician under paragraph (3), unless

13 waived by the participant or beneficiary (in

14 a manner consistent with such regulations

15 as the Secretary may prescribe to ensure

16 equitable procedures); and

17 ‘‘(iv) the means of resolution of dis18 pute allow for adequate presentation by

19 each party of scientific and medical evi20 dence supporting the position of such

21 party.

22 ‘‘(C) WAIVERS.—In any case in which uti23 lization of the alternative dispute resolution

24 procedure is voluntarily elected by all parties in

25 connection with a coverage decision, the plan
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1 may require or allow under such procedure (in

2 a manner consistent with such regulations as

3 the Secretary may prescribe to ensure equitable

4 procedures) any party to waive review of the

5 coverage decision under paragraph (3), to waive

6 further review of the coverage decision under

7 paragraph (4) or section 502, and to elect an

8 alternative means of external review (other than

9 review under paragraph (4)).

10 ‘‘(6) PERMITTED ALTERNATIVES TO REQUIRED

11 EXTERNAL REVIEW.—A group health plan shall not

12 be treated as failing to meet the requirements of this

13 subsection in connection with review of coverage de14 cisions under paragraph (4) if the aggrieved partici15 pant or beneficiary elects to utilize a procedure in

16 connection with such review which is made generally

17 available under the plan (in a manner consistent

18 with such regulations as the Secretary may prescribe

19 to ensure equitable procedures) under which—

20 ‘‘(A) the plan agrees in advance of the rec21 ommendations of the independent medical ex22 pert or experts under paragraph (4)(C)(iii) to

23 render a final decision in accordance with such

24 recommendations; and
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1 ‘‘(B) the participant or beneficiary waives

2 in advance any right to review of the final deci3 sion under section 502.

4 ‘‘(7) REVIEW REQUIREMENTS.—In any review

5 of a decision issued under this subsection—

6 ‘‘(A) the record below shall be maintained

7 for purposes of review in accordance with

8 standards which shall be prescribed in regula9 tions of the Secretary designed to facilitate

10 such review, and

11 ‘‘(B) any decision upon review which modi12 fies or reverses a decision below shall specifi13 cally set forth a determination that the record

14 upon review is sufficient to rebut a presumption

15 in favor of the decision below.

16 ‘‘(8) COMPLIANCE WITH FIDUCIARY STAND17 ARDS.—The issuance of a decision under a plan

18 upon review in good faith compliance with the re19 quirements of this subsection shall not be treated as

20 a violation of part 4.

21 ‘‘(9) GROUP HEALTH PLAN DEFINED.—For

22 purposes of this section—

23 ‘‘(A) IN GENERAL.—The term ‘group

24 health plan’ shall have the meaning provided in

25 section 733(a).
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1 ‘‘(B) TREATMENT OF PARTNERSHIPS.—

2 The provisions of paragraphs (1), (2), and (3)

3 of section 732(d) shall apply.

4 ‘‘(10) OTHER DEFINITIONS.—For purposes of

5 this subsection—

6 ‘‘(A) REQUEST FOR BENEFIT PAY7 MENTS.—The term ‘request for benefit pay8 ments’ means a request, for payment of benefits

9 by a group health plan for medical care, which

10 is made by, or (if expressly authorized) on be11 half of, a participant or beneficiary after such

12 medical care has been provided.

13 ‘‘(B) REQUIRED DETERMINATION OF MED14 ICAL NECESSITY.—The term ‘required deter15 mination of medical necessity’ means a deter16 mination required under a group health plan

17 solely that proposed medical care meets, under

18 the facts and circumstances at the time of the

19 determination, the plan’s requirements for med20 ical appropriateness or necessity (which may be

21 subject to exceptions under the plan for fraud

22 or misrepresentation), irrespective of whether

23 the proposed medical care otherwise meets

24 other terms and conditions of coverage, but

25 only if such determination does not constitute
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1 an advance determination of coverage (as de2 fined in subparagraph (C)).

3 ‘‘(C) ADVANCE DETERMINATION OF COV4 ERAGE.—The term ‘advance determination of

5 coverage’ means a determination under a group

6 health plan that proposed medical care meets,

7 under the facts and circumstances at the time

8 of the determination, the plan’s terms and con9 ditions of coverage (which may be subject to ex10 ceptions under the plan for fraud or misrepre11 sentation).

12 ‘‘(D) REQUEST FOR ADVANCE DETERMINA13 TION OF COVERAGE.—The term ‘request for ad14 vance determination of coverage’ means a re15 quest for an advance determination of coverage

16 of medical care which is made by, or (if ex17 pressly authorized) on behalf of, a participant

18 or beneficiary before such medical care is pro19 vided.

20 ‘‘(E) REQUEST FOR EXPEDITED ADVANCE

21 DETERMINATION OF COVERAGE.—The term ‘re22 quest for expedited advance determination of

23 coverage’ means a request for advance deter24 mination of coverage, in any case in which the
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1 proposed medical care constitutes accelerated

2 need medical care.

3 ‘‘(F) REQUEST FOR REQUIRED DETER4 MINATION OF MEDICAL NECESSITY.—The term

5 ‘request for required determination of medical

6 necessity’ means a request for a required deter7 mination of medical necessity for medical care

8 which is made by or on behalf of a participant

9 or beneficiary before the medical care is pro10 vided.

11 ‘‘(G) REQUEST FOR EXPEDITED REQUIRED

12 DETERMINATION OF MEDICAL NECESSITY.—

13 The term ‘request for expedited required deter14 mination of medical necessity’ means a request

15 for required determination of medical necessity

16 in any case in which the proposed medical care

17 constitutes accelerated need medical care.

18 ‘‘(H) ACCELERATED NEED MEDICAL

19 CARE.—The term ‘accelerated need medical

20 care’ means medical care in any case in which

21 an appropriate physician has certified in writing

22 (or as otherwise provided in regulations of the

23 Secretary) that the participant or beneficiary is

24 stabilized and—
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1 ‘‘(i) that failure to immediately pro2 vide the care to the participant or bene3 ficiary could reasonably be expected to re4 sult in—

5 ‘‘(I) placing the health of such

6 participant or beneficiary (or, with re7 spect to such a participant or bene8 ficiary who is a pregnant woman, the

9 health of the woman or her unborn

10 child) in serious jeopardy;

11 ‘‘(II) serious impairment to bod12 ily functions; or

13 ‘‘(III) serious dysfunction of any

14 bodily organ or part; or

15 ‘‘(ii) that immediate provision of the

16 care is necessary because the participant

17 or beneficiary has made or is at serious

18 risk of making an attempt to harm himself

19 or herself or another individual.

20 ‘‘(I) INITIAL DECISION PERIOD.—The term

21 ‘initial decision period’ means a period of 30

22 days, or such longer period as may be pre23 scribed in regulations of the Secretary.

24 ‘‘(J) INTERNAL REVIEW PERIOD.—The

25 term ‘internal review period’ means a period of
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1 30 days, or such longer period as may be pre2 scribed in regulations of the Secretary.

3 ‘‘(K) ACCELERATED NEED DECISION PE4 RIOD.—The term ‘accelerated need decision pe5 riod’ means a period of 5 days, or such longer

6 period as may be prescribed in regulations of

7 the Secretary.

8 ‘‘(L) RECONSIDERATION PERIOD.—The

9 term ‘reconsideration period’ means a period of

10 25 days, or such longer period as may be pre11 scribed in regulations of the Secretary, except

12 that—

13 ‘‘(i) in the case of a decision involving

14 urgent medical care, such term means the

15 urgent decision period; and

16 ‘‘(ii) in the case of a decision involving

17 accelerated need medical care, such term

18 means the accelerated need decision period.

19 ‘‘(M) FILING COMPLETION DATE.—The

20 term ‘filing completion date’ means, in connec21 tion with a group health plan, the date as of

22 which the plan is in receipt of all information

23 reasonably required (in writing or in such other

24 reasonable form as may be specified by the

25 plan) to make an initial coverage decision.
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1 ‘‘(N) REVIEW FILING DATE.—The term

2 ‘review filing date’ means, in connection with a

3 group health plan, the date as of which the ap4 propriate named fiduciary (or the independent

5 medical expert or experts in the case of a review

6 under paragraph (4)) is in receipt of all infor7 mation reasonably required (in writing or in

8 such other reasonable form as may be specified

9 by the plan) to make a decision to affirm, mod10 ify, or reverse a coverage decision.

11 ‘‘(O) MEDICAL CARE.—The term ‘medical

12 care’ has the meaning provided such term by

13 section 733(a)(2).

14 ‘‘(P) HEALTH INSURANCE COVERAGE.—

15 The term ‘health insurance coverage’ has the

16 meaning provided such term by section

17 733(b)(1).

18 ‘‘(Q) HEALTH INSURANCE ISSUER.—The

19 term ‘health insurance issuer’ has the meaning

20 provided such term by section 733(b)(2).

21 ‘‘(R) WRITTEN OR IN WRITING.—

22 ‘‘(i) IN GENERAL.—A request or deci23 sion shall be deemed to be ‘written’ or ‘in

24 writing’ if such request or decision is pre25 sented in a generally recognized printable
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1 or electronic format. The Secretary may by

2 regulation provide for presentation of in3 formation otherwise required to be in writ4 ten form in such other forms as may be

5 appropriate under the circumstances.

6 ‘‘(ii) MEDICAL APPROPRIATENESS OR

7 INVESTIGATIONAL ITEMS OR EXPERI8 MENTAL TREATMENT DETERMINATIONS.—

9 For purposes of this subparagraph, in the

10 case of a request for advance determina11 tion of coverage, a request for expedited

12 advance determination of coverage, a re13 quest for required determination of medical

14 necessity, or a request for expedited re15 quired determination of medical necessity,

16 if the decision on such request is conveyed

17 to the provider of medical care or to the

18 participant or beneficiary by means of tele19 phonic or other electronic communications,

20 such decision shall be treated as a written

21 decision.’’.

22 SEC. 602. CLARIFICATION OF ERISA PREEMPTION RULES.

23 (a) IN GENERAL.—Section 514 of the Employee Re24 tirement Income Security Act of 1974 (29 U.S.C. 1144)

25 is amended—
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1 (1) by redesignating subsection (d) as sub2 section (e); and

3 (2) by inserting after subsection (c) the fol4 lowing new subsection:

5 ‘‘(d) The procedures and remedies required or pro6 vided under sections 502 and 503 in connection with—

7 ‘‘(1) review of claims for benefits under em8 ployee benefit plans and for review of decisions deny9 ing such claims (including review of coverage deci10 sions referred to in section 503(b) and decisions

11 upon review of such coverage decisions), and

12 ‘‘(2) causes of action brought to recover plan

13 benefits, to enforce rights under the terms of the

14 plan or this title, or to clarify rights to future bene15 fits under the terms of the plan or this title,

16 are the exclusive procedures and remedies with respect to

17 any such review or cause of action and supersede any pro18 vision of State law providing for any such review or cause

19 of action.’’.

20 (b) CONFORMING AMENDMENT.—Section

21 514(b)(2)(A) of such Act (42 U.S.C. 1144(b)(2)(A)) is

22 amended by inserting ‘‘or subsection (d)’’ after ‘‘subpara23 graph (B)’’.
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1 SEC. 603. EFFECTIVE DATE.

2 (a) IN GENERAL.—The amendments made by this

3 title shall apply with respect to grievances arising in plan

4 years beginning on or after January 1 of the second cal5 endar year following 12 months after the date the Sec6 retary of Labor issues all regulations necessary to carry

7 out amendments made by this title.

8 (b) LIMITATION ON ENFORCEMENT ACTIONS.—No

9 enforcement action shall be taken, pursuant to the amend10 ments made by this title, against a group health plan or

11 health insurance issuer with respect to a violation of a re12 quirement imposed by such amendments before the date

13 of issuance of final regulations issued in connection with

14 such requirement, if the plan or issuer has sought to com15 ply in good faith with such requirement.

16 (c) COLLECTIVE BARGAINING AGREEMENTS.—Any

17 plan amendment made pursuant to a collective bargaining

18 agreement relating to the plan which amends the plan

19 solely to conform to any requirement added by this title

20 shall not be treated as a termination of such collective bar21 gaining agreement.
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1 TITLE VII—SMALL BUSINESS AC2 CESS AND CHOICE FOR EN3 TREPRENEURS

4 SEC. 701. RULES GOVERNING ASSOCIATION HEALTH

5 PLANS.

6 (a) IN GENERAL.—Subtitle B of title I of the Em7 ployee Retirement Income Security Act of 1974 is amend8 ed by adding after part 7 the following new part:

9 ‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH

10 PLANS

11 ‘‘SEC. 801. ASSOCIATION HEALTH PLANS.

12 ‘‘(a) IN GENERAL.—For purposes of this part, the

13 term ‘association health plan’ means a group health

14 plan—

15 ‘‘(1) whose sponsor is (or is deemed under this

16 part to be) described in subsection (b); and

17 ‘‘(2) under which at least one option of health

18 insurance coverage offered by a health insurance

19 issuer (which may include, among other options,

20 managed care options, point of service options, and

21 preferred provider options) is provided to partici22 pants and beneficiaries, unless, for any plan year,

23 such coverage remains unavailable to the plan de24 spite good faith efforts exercised by the plan to se25 cure such coverage.
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1 ‘‘(b) SPONSORSHIP.—The sponsor of a group health

2 plan is described in this subsection if such sponsor—

3 ‘‘(1) is organized and maintained in good faith,

4 with a constitution and bylaws specifically stating its

5 purpose and providing for periodic meetings on at

6 least an annual basis, as a bona fide trade associa7 tion, a bona fide industry association (including a

8 rural electric cooperative association or a rural tele9 phone cooperative association), a bona fide profes10 sional association, or a bona fide chamber of com11 merce (or similar bona fide business association, in12 cluding a corporation or similar organization that

13 operates on a cooperative basis (within the meaning

14 of section 1381 of the Internal Revenue Code of

15 1986)), for substantial purposes other than that of

16 obtaining or providing medical care;

17 ‘‘(2) is established as a permanent entity which

18 receives the active support of its members and col19 lects from its members on a periodic basis dues or

20 payments necessary to maintain eligibility for mem21 bership in the sponsor; and

22 ‘‘(3) does not condition membership, such dues

23 or payments, or coverage under the plan on the

24 basis of health status-related factors with respect to

25 the employees of its members (or affiliated mem-
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1 bers), or the dependents of such employees, and does

2 not condition such dues or payments on the basis of

3 group health plan participation.

4 Any sponsor consisting of an association of entities which

5 meet the requirements of paragraphs (1), (2), and (3)

6 shall be deemed to be a sponsor described in this sub7 section.

8 ‘‘SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH

9 PLANS.

10 ‘‘(a) IN GENERAL.—The applicable authority shall

11 prescribe by regulation, through negotiated rulemaking, a

12 procedure under which, subject to subsection (b), the ap13 plicable authority shall certify association health plans

14 which apply for certification as meeting the requirements

15 of this part.

16 ‘‘(b) STANDARDS.—Under the procedure prescribed

17 pursuant to subsection (a), in the case of an association

18 health plan that provides at least one benefit option which

19 does not consist of health insurance coverage, the applica20 ble authority shall certify such plan as meeting the re21 quirements of this part only if the applicable authority is

22 satisfied that—

23 ‘‘(1) such certification—

24 ‘‘(A) is administratively feasible;
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1 ‘‘(B) is not adverse to the interests of the

2 individuals covered under the plan; and

3 ‘‘(C) is protective of the rights and benefits

4 of the individuals covered under the plan; and

5 ‘‘(2) the applicable requirements of this part

6 are met (or, upon the date on which the plan is to

7 commence operations, will be met) with respect to

8 the plan.

9 ‘‘(c) REQUIREMENTS APPLICABLE TO CERTIFIED

10 PLANS.—An association health plan with respect to which

11 certification under this part is in effect shall meet the ap12 plicable requirements of this part, effective on the date

13 of certification (or, if later, on the date on which the plan

14 is to commence operations).

15 ‘‘(d) REQUIREMENTS FOR CONTINUED CERTIFI16 CATION.—The applicable authority may provide by regula17 tion, through negotiated rulemaking, for continued certifi18 cation of association health plans under this part.

19 ‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED

20 PLANS.—The applicable authority shall establish a class

21 certification procedure for association health plans under

22 which all benefits consist of health insurance coverage.

23 Under such procedure, the applicable authority shall pro24 vide for the granting of certification under this part to

25 the plans in each class of such association health plans
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1 upon appropriate filing under such procedure in connec2 tion with plans in such class and payment of the pre3 scribed fee under section 807(a).

4 ‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION

5 HEALTH PLANS.—An association health plan which offers

6 one or more benefit options which do not consist of health

7 insurance coverage may be certified under this part only

8 if such plan consists of any of the following:

9 ‘‘(1) a plan which offered such coverage on the

10 date of the enactment of the Small Business Access

11 and Choice for Entrepreneurs Act of 1999,

12 ‘‘(2) a plan under which the sponsor does not

13 restrict membership to one or more trades and busi14 nesses or industries and whose eligible participating

15 employers represent a broad cross-section of trades

16 and businesses or industries, or

17 ‘‘(3) a plan whose eligible participating employ18 ers represent one or more trades or businesses, or

19 one or more industries, which have been indicated as

20 having average or above-average health insurance

21 risk or health claims experience by reason of State

22 rate filings, denials of coverage, proposed premium

23 rate levels, and other means demonstrated by such

24 plan in accordance with regulations which the Sec25 retary shall prescribe through negotiated rule-
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1 making, including (but not limited to) the following:

2 agriculture; automobile dealerships; barbering and

3 cosmetology; child care; construction; dance, theat4 rical, and orchestra productions; disinfecting and

5 pest control; eating and drinking establishments;

6 fishing; hospitals; labor organizations; logging; man7 ufacturing (metals); mining; medical and dental

8 practices; medical laboratories; sanitary services;

9 transportation (local and freight); and warehousing.

10 ‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND

11 BOARDS OF TRUSTEES.

12 ‘‘(a) SPONSOR.—The requirements of this subsection

13 are met with respect to an association health plan if the

14 sponsor has met (or is deemed under this part to have

15 met) the requirements of section 801(b) for a continuous

16 period of not less than 3 years ending with the date of

17 the application for certification under this part.

18 ‘‘(b) BOARD OF TRUSTEES.—The requirements of

19 this subsection are met with respect to an association

20 health plan if the following requirements are met:

21 ‘‘(1) FISCAL CONTROL.—The plan is operated,

22 pursuant to a trust agreement, by a board of trust23 ees which has complete fiscal control over the plan

24 and which is responsible for all operations of the

25 plan.
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1 ‘‘(2) RULES OF OPERATION AND FINANCIAL

2 CONTROLS.—The board of trustees has in effect

3 rules of operation and financial controls, based on a

4 3-year plan of operation, adequate to carry out the

5 terms of the plan and to meet all requirements of

6 this title applicable to the plan.

7 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

8 PARTICIPATING EMPLOYERS AND TO CONTRAC9 TORS.—

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

11 subparagraphs (B) and (C), the members of the

12 board of trustees are individuals selected from

13 individuals who are the owners, officers, direc14 tors, or employees of the participating employ15 ers or who are partners in the participating em16 ployers and actively participate in the business.

17 ‘‘(B) LIMITATION.—

18 ‘‘(i) GENERAL RULE.—Except as pro19 vided in clauses (ii) and (iii), no such

20 member is an owner, officer, director, or

21 employee of, or partner in, a contract ad22 ministrator or other service provider to the

23 plan.

24 ‘‘(ii) LIMITED EXCEPTION FOR PRO25 VIDERS OF SERVICES SOLELY ON BEHALF
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1 OF THE SPONSOR.—Officers or employees

2 of a sponsor which is a service provider

3 (other than a contract administrator) to

4 the plan may be members of the board if

5 they constitute not more than 25 percent

6 of the membership of the board and they

7 do not provide services to the plan other

8 than on behalf of the sponsor.

9 ‘‘(iii) TREATMENT OF PROVIDERS OF

10 MEDICAL CARE.—In the case of a sponsor

11 which is an association whose membership

12 consists primarily of providers of medical

13 care, clause (i) shall not apply in the case

14 of any service provider described in sub15 paragraph (A) who is a provider of medical

16 care under the plan.

17 ‘‘(C) CERTAIN PLANS EXCLUDED.—Sub18 paragraph (A) shall not apply to an association

19 health plan which is in existence on the date of

20 the enactment of the Small Business Access

21 and Choice for Entrepreneurs Act of 1999.

22 ‘‘(D) SOLE AUTHORITY.—The board has

23 sole authority under the plan to approve appli24 cations for participation in the plan and to con-
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1 tract with a service provider to administer the

2 day-to-day affairs of the plan.

3 ‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In

4 the case of a group health plan which is established and

5 maintained by a franchiser for a franchise network con6 sisting of its franchisees—

7 ‘‘(1) the requirements of subsection (a) and sec8 tion 801(a)(1) shall be deemed met if such require9 ments would otherwise be met if the franchiser were

10 deemed to be the sponsor referred to in section

11 801(b), such network were deemed to be an associa12 tion described in section 801(b), and each franchisee

13 were deemed to be a member (of the association and

14 the sponsor) referred to in section 801(b); and

15 ‘‘(2) the requirements of section 804(a)(1) shall

16 be deemed met.

17 The Secretary may by regulation, through negotiated rule18 making, define for purposes of this subsection the terms

19 ‘franchiser’, ‘franchise network’, and ’franchisee’.

20 ‘‘(d) CERTAIN COLLECTIVELY BARGAINED PLANS.—

21 ‘‘(1) IN GENERAL.—In the case of a group

22 health plan described in paragraph (2)—

23 ‘‘(A) the requirements of subsection (a)

24 and section 801(a)(1) shall be deemed met;
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1 ‘‘(B) the joint board of trustees shall be

2 deemed a board of trustees with respect to

3 which the requirements of subsection (b) are

4 met; and

5 ‘‘(C) the requirements of section 804 shall

6 be deemed met.

7 ‘‘(2) REQUIREMENTS.—A group health plan is

8 described in this paragraph if—

9 ‘‘(A) the plan is a multiemployer plan; or

10 ‘‘(B) the plan is in existence on April 1,

11 1997, and would be described in section

12 3(40)(A)(i) but solely for the failure to meet

13 the requirements of section 3(40)(C)(ii).

14 ‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE15 MENTS.

16 ‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The

17 requirements of this subsection are met with respect to

18 an association health plan if, under the terms of the

19 plan—

20 ‘‘(1) each participating employer must be—

21 ‘‘(A) a member of the sponsor,

22 ‘‘(B) the sponsor, or

23 ‘‘(C) an affiliated member of the sponsor

24 with respect to which the requirements of sub25 section (b) are met,
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1 except that, in the case of a sponsor which is a pro2 fessional association or other individual-based asso3 ciation, if at least one of the officers, directors, or

4 employees of an employer, or at least one of the in5 dividuals who are partners in an employer and who

6 actively participates in the business, is a member or

7 such an affiliated member of the sponsor, partici8 pating employers may also include such employer;

9 and

10 ‘‘(2) all individuals commencing coverage under

11 the plan after certification under this part must

12 be—

13 ‘‘(A) active or retired owners (including

14 self-employed individuals), officers, directors, or

15 employees of, or partners in, participating em16 ployers; or

17 ‘‘(B) the beneficiaries of individuals de18 scribed in subparagraph (A).

19 ‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM20 PLOYEES.—In the case of an association health plan in

21 existence on the date of the enactment of the Small Busi22 ness Access and Choice for Entrepreneurs Act of 1999,

23 an affiliated member of the sponsor of the plan may be

24 offered coverage under the plan as a participating em25 ployer only if—
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1 ‘‘(1) the affiliated member was an affiliated

2 member on the date of certification under this part;

3 or

4 ‘‘(2) during the 12-month period preceding the

5 date of the offering of such coverage, the affiliated

6 member has not maintained or contributed to a

7 group health plan with respect to any of its employ8 ees who would otherwise be eligible to participate in

9 such association health plan.

10 ‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re11 quirements of this subsection are met with respect to an

12 association health plan if, under the terms of the plan,

13 no participating employer may provide health insurance

14 coverage in the individual market for any employee not

15 covered under the plan which is similar to the coverage

16 contemporaneously provided to employees of the employer

17 under the plan, if such exclusion of the employee from cov18 erage under the plan is based on a health status-related

19 factor with respect to the employee and such employee

20 would, but for such exclusion on such basis, be eligible

21 for coverage under the plan.

22 ‘‘(d) PROHIBITION OF DISCRIMINATION AGAINST

23 EMPLOYERS AND EMPLOYEES ELIGIBLE TO PARTICI24 PATE.—The requirements of this subsection are met with

25 respect to an association health plan if—
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1 ‘‘(1) under the terms of the plan, all employers

2 meeting the preceding requirements of this section

3 are eligible to qualify as participating employers for

4 all geographically available coverage options, unless,

5 in the case of any such employer, participation or

6 contribution requirements of the type referred to in

7 section 2711 of the Public Health Service Act are

8 not met;

9 ‘‘(2) upon request, any employer eligible to par10 ticipate is furnished information regarding all cov11 erage options available under the plan; and

12 ‘‘(3) the applicable requirements of sections

13 701, 702, and 703 are met with respect to the plan.

14 ‘‘SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN

15 DOCUMENTS, CONTRIBUTION RATES, AND

16 BENEFIT OPTIONS.

17 ‘‘(a) IN GENERAL.—The requirements of this section

18 are met with respect to an association health plan if the

19 following requirements are met:

20 ‘‘(1) CONTENTS OF GOVERNING INSTRU21 MENTS.—The instruments governing the plan in22 clude a written instrument, meeting the require23 ments of an instrument required under section

24 402(a)(1), which—
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1 ‘‘(A) provides that the board of trustees

2 serves as the named fiduciary required for plans

3 under section 402(a)(1) and serves in the ca4 pacity of a plan administrator (referred to in

5 section 3(16)(A));

6 ‘‘(B) provides that the sponsor of the plan

7 is to serve as plan sponsor (referred to in sec8 tion 3(16)(B)); and

9 ‘‘(C) incorporates the requirements of sec10 tion 806.

11 ‘‘(2) CONTRIBUTION RATES MUST BE NON12 DISCRIMINATORY.—

13 ‘‘(A) The contribution rates for any par14 ticipating small employer do not vary on the

15 basis of the claims experience of such employer

16 and do not vary on the basis of the type of

17 business or industry in which such employer is

18 engaged.

19 ‘‘(B) Nothing in this title or any other pro20 vision of law shall be construed to preclude an

21 association health plan, or a health insurance

22 issuer offering health insurance coverage in

23 connection with an association health plan,

24 from—
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1 ‘‘(i) setting contribution rates based

2 on the claims experience of the plan; or

3 ‘‘(ii) varying contribution rates for

4 small employers in a State to the extent

5 that such rates could vary using the same

6 methodology employed in such State for

7 regulating premium rates in the small

8 group market with respect to health insur9 ance coverage offered in connection with

10 bona fide associations (within the meaning

11 of section 2791(d)(3) of the Public Health

12 Service Act),

13 subject to the requirements of section 702(b)

14 relating to contribution rates.

15 ‘‘(3) FLOOR FOR NUMBER OF COVERED INDI16 VIDUALS WITH RESPECT TO CERTAIN PLANS.—If

17 any benefit option under the plan does not consist

18 of health insurance coverage, the plan has as of the

19 beginning of the plan year not fewer than 1,000 par20 ticipants and beneficiaries.

21 ‘‘(4) MARKETING REQUIREMENTS.—

22 ‘‘(A) IN GENERAL.—If a benefit option

23 which consists of health insurance coverage is

24 offered under the plan, State-licensed insurance

25 agents shall be used to distribute to small em-
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1 ployers coverage which does not consist of

2 health insurance coverage in a manner com3 parable to the manner in which such agents are

4 used to distribute health insurance coverage.

5 ‘‘(B) STATE-LICENSED INSURANCE

6 AGENTS.—For purposes of subparagraph (A),

7 the term ‘State-licensed insurance agents’

8 means one or more agents who are licensed in

9 a State and are subject to the laws of such

10 State relating to licensure, qualification, test11 ing, examination, and continuing education of

12 persons authorized to offer, sell, or solicit

13 health insurance coverage in such State.

14 ‘‘(5) REGULATORY REQUIREMENTS.—Such

15 other requirements as the applicable authority deter16 mines are necessary to carry out the purposes of this

17 part, which shall be prescribed by the applicable au18 thority by regulation through negotiated rulemaking.

19 ‘‘(b) ABILITY OF ASSOCIATION HEALTH PLANS TO

20 DESIGN BENEFIT OPTIONS.—Subject to section 514(d),

21 nothing in this part or any provision of State law (as de22 fined in section 514(c)(1)) shall be construed to preclude

23 an association health plan, or a health insurance issuer

24 offering health insurance coverage in connection with an

25 association health plan, from exercising its sole discretion
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1 in selecting the specific items and services consisting of

2 medical care to be included as benefits under such plan

3 or coverage, except (subject to section 514) in the case

4 of any law to the extent that it (1) prohibits an exclusion

5 of a specific disease from such coverage, or (2) is not pre6 empted under section 731(a)(1) with respect to matters

7 governed by section 711 or 712.

8 ‘‘SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS

9 FOR SOLVENCY FOR PLANS PROVIDING

10 HEALTH BENEFITS IN ADDITION TO HEALTH

11 INSURANCE COVERAGE.

12 ‘‘(a) IN GENERAL.—The requirements of this section

13 are met with respect to an association health plan if—

14 ‘‘(1) the benefits under the plan consist solely

15 of health insurance coverage; or

16 ‘‘(2) if the plan provides any additional benefit

17 options which do not consist of health insurance cov18 erage, the plan—

19 ‘‘(A) establishes and maintains reserves

20 with respect to such additional benefit options,

21 in amounts recommended by the qualified actu22 ary, consisting of—

23 ‘‘(i) a reserve sufficient for unearned

24 contributions;
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1 ‘‘(ii) a reserve sufficient for benefit li2 abilities which have been incurred, which

3 have not been satisfied, and for which risk

4 of loss has not yet been transferred, and

5 for expected administrative costs with re6 spect to such benefit liabilities;

7 ‘‘(iii) a reserve sufficient for any other

8 obligations of the plan; and

9 ‘‘(iv) a reserve sufficient for a margin

10 of error and other fluctuations, taking into

11 account the specific circumstances of the

12 plan; and

13 ‘‘(B) establishes and maintains aggregate

14 and specific excess /stop loss insurance and sol15 vency indemnification, with respect to such ad16 ditional benefit options for which risk of loss

17 has not yet been transferred, as follows:

18 ‘‘(i) The plan shall secure aggregate

19 excess /stop loss insurance for the plan

20 with an attachment point which is not

21 greater than 125 percent of expected gross

22 annual claims. The applicable authority

23 may by regulation, through negotiated

24 rulemaking, provide for upward adjust25 ments in the amount of such percentage in
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1 specified circumstances in which the plan

2 specifically provides for and maintains re3 serves in excess of the amounts required

4 under subparagraph (A).

5 ‘‘(ii) The plan shall secure specific ex6 cess /stop loss insurance for the plan with

7 an attachment point which is at least equal

8 to an amount recommended by the plan’s

9 qualified actuary (but not more than

10 $175,000). The applicable authority may

11 by regulation, through negotiated rule12 making, provide for adjustments in the

13 amount of such insurance in specified cir14 cumstances in which the plan specifically

15 provides for and maintains reserves in ex16 cess of the amounts required under sub17 paragraph (A).

18 ‘‘(iii) The plan shall secure indem19 nification insurance for any claims which

20 the plan is unable to satisfy by reason of

21 a plan termination.

22 Any regulations prescribed by the applicable authority

23 pursuant to clause (i) or (ii) of subparagraph (B) may

24 allow for such adjustments in the required levels of excess /

25 stop loss insurance as the qualified actuary may rec-
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1 ommend, taking into account the specific circumstances

2 of the plan.

3 ‘‘(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS

4 RESERVES.—In the case of any association health plan de5 scribed in subsection (a)(2), the requirements of this sub6 section are met if the plan establishes and maintains sur7 plus in an amount at least equal to—

8 ‘‘(1) $500,000, or

9 ‘‘(2) such greater amount (but not greater than

10 $2,000,000) as may be set forth in regulations pre11 scribed by the applicable authority through nego12 tiated rulemaking, based on the level of aggregate

13 and specific excess /stop loss insurance provided with

14 respect to such plan.

15 ‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of

16 any association health plan described in subsection (a)(2),

17 the applicable authority may provide such additional re18 quirements relating to reserves and excess /stop loss insur19 ance as the applicable authority considers appropriate.

20 Such requirements may be provided by regulation, through

21 negotiated rulemaking, with respect to any such plan or

22 any class of such plans.

23 ‘‘(d) ADJUSTMENTS FOR EXCESS /STOP LOSS INSUR24 ANCE.—The applicable authority may provide for adjust25 ments to the levels of reserves otherwise required under
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1 subsections (a) and (b) with respect to any plan or class

2 of plans to take into account excess /stop loss insurance

3 provided with respect to such plan or plans.

4 ‘‘(e) ALTERNATIVE MEANS OF COMPLIANCE.—The

5 applicable authority may permit an association health plan

6 described in subsection (a)(2) to substitute, for all or part

7 of the requirements of this section (except subsection

8 (a)(2)(B)(iii)), such security, guarantee, hold-harmless ar9 rangement, or other financial arrangement as the applica10 ble authority determines to be adequate to enable the plan

11 to fully meet all its financial obligations on a timely basis

12 and is otherwise no less protective of the interests of par13 ticipants and beneficiaries than the requirements for

14 which it is substituted. The applicable authority may take

15 into account, for purposes of this subsection, evidence pro16 vided by the plan or sponsor which demonstrates an as17 sumption of liability with respect to the plan. Such evi18 dence may be in the form of a contract of indemnification,

19 lien, bonding, insurance, letter of credit, recourse under

20 applicable terms of the plan in the form of assessments

21 of participating employers, security, or other financial ar22 rangement.

23 ‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT

24 OF BENEFITS BY CERTAIN PLANS IN DISTRESS.—
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1 ‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO2 CIATION HEALTH PLAN FUND.—

3 ‘‘(A) IN GENERAL.—In the case of an as4 sociation health plan described in subsection

5 (a)(2), the requirements of this subsection are

6 met if the plan makes payments into the Asso7 ciation Health Plan Fund under this subpara8 graph when they are due. Such payments shall

9 consist of annual payments in the amount of

10 $5,000, and, in addition to such annual pay11 ments, such supplemental payments as the Sec12 retary may determine to be necessary under

13 paragraph (2). Payments under this paragraph

14 are payable to the Fund at the time determined

15 by the Secretary. Initial payments are due in

16 advance of certification under this part. Pay17 ments shall continue to accrue until a plan’s as18 sets are distributed pursuant to a termination

19 procedure.

20 ‘‘(B) PENALTIES FOR FAILURE TO MAKE

21 PAYMENTS.—If any payment is not made by a

22 plan when it is due, a late payment charge of

23 not more than 100 percent of the payment

24 which was not timely paid shall be payable by

25 the plan to the Fund.
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1 ‘‘(C) CONTINUED DUTY OF THE SEC2 RETARY.—The Secretary shall not cease to

3 carry out the provisions of paragraph (2) on ac4 count of the failure of a plan to pay any pay5 ment when due.

6 ‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE

7 EXCESS /STOP LOSS INSURANCE COVERAGE AND IN8 DEMNIFICATION INSURANCE COVERAGE FOR CER9 TAIN PLANS.—In any case in which the applicable

10 authority determines that there is, or that there is

11 reason to believe that there will be: (A) a failure to

12 take necessary corrective actions under section

13 809(a) with respect to an association health plan de14 scribed in subsection (a)(2); or (B) a termination of

15 such a plan under section 809(b) or 810(b)(8) (and,

16 if the applicable authority is not the Secretary, cer17 tifies such determination to the Secretary), the Sec18 retary shall determine the amounts necessary to

19 make payments to an insurer (designated by the

20 Secretary) to maintain in force excess /stop loss in21 surance coverage or indemnification insurance cov22 erage for such plan, if the Secretary determines that

23 there is a reasonable expectation that, without such

24 payments, claims would not be satisfied by reason of

25 termination of such coverage. The Secretary shall, to
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1 the extent provided in advance in appropriation

2 Acts, pay such amounts so determined to the insurer

3 designated by the Secretary.

4 ‘‘(3) ASSOCIATION HEALTH PLAN FUND.—

5 ‘‘(A) IN GENERAL.—There is established

6 on the books of the Treasury a fund to be

7 known as the ‘Association Health Plan Fund’.

8 The Fund shall be available for making pay9 ments pursuant to paragraph (2). The Fund

10 shall be credited with payments received pursu11 ant to paragraph (1)(A), penalties received pur12 suant to paragraph (1)(B); and earnings on in13 vestments of amounts of the Fund under sub14 paragraph (B).

15 ‘‘(B) INVESTMENT.—Whenever the Sec16 retary determines that the moneys of the fund

17 are in excess of current needs, the Secretary

18 may request the investment of such amounts as

19 the Secretary determines advisable by the Sec20 retary of the Treasury in obligations issued or

21 guaranteed by the United States.

22 ‘‘(g) EXCESS /STOP LOSS INSURANCE.—For pur23 poses of this section—

24 ‘‘(1) AGGREGATE EXCESS /STOP LOSS INSUR25 ANCE.—The term ‘aggregate excess /stop loss insur-
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1 ance’ means, in connection with an association

2 health plan, a contract—

3 ‘‘(A) under which an insurer (meeting such

4 minimum standards as the applicable authority may

5 prescribe by regulation through negotiated rule6 making) provides for payment to the plan with re7 spect to aggregate claims under the plan in excess

8 of an amount or amounts specified in such contract;

9 ‘‘(B) which is guaranteed renewable; and

10 ‘‘(C) which allows for payment of premiums by

11 any third party on behalf of the insured plan.

12 ‘‘(2) SPECIFIC EXCESS /STOP LOSS INSUR13 ANCE.—The term ‘specific excess /stop loss insur14 ance’ means, in connection with an association

15 health plan, a contract—

16 ‘‘(A) under which an insurer (meeting such

17 minimum standards as the applicable authority

18 may prescribe by regulation through negotiated

19 rulemaking) provides for payment to the plan

20 with respect to claims under the plan in connec21 tion with a covered individual in excess of an

22 amount or amounts specified in such contract

23 in connection with such covered individual;

24 ‘‘(B) which is guaranteed renewable; and
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1 ‘‘(C) which allows for payment of pre2 miums by any third party on behalf of the in3 sured plan.

4 ‘‘(h) INDEMNIFICATION INSURANCE.—For purposes

5 of this section, the term ‘indemnification insurance’

6 means, in connection with an association health plan, a

7 contract—

8 ‘‘(1) under which an insurer (meeting such min9 imum standards as the applicable authority may pre10 scribe through negotiated rulemaking) provides for

11 payment to the plan with respect to claims under the

12 plan which the plan is unable to satisfy by reason

13 of a termination pursuant to section 809(b) (relating

14 to mandatory termination);

15 ‘‘(2) which is guaranteed renewable and

16 noncancellable for any reason (except as the applica17 ble authority may prescribe by regulation through

18 negotiated rulemaking); and

19 ‘‘(3) which allows for payment of premiums by

20 any third party on behalf of the insured plan.

21 ‘‘(i) RESERVES.—For purposes of this section, the

22 term ‘reserves’ means, in connection with an association

23 health plan, plan assets which meet the fiduciary stand24 ards under part 4 and such additional requirements re-
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1 garding liquidity as the applicable authority may prescribe

2 through negotiated rulemaking.

3 ‘‘(j) SOLVENCY STANDARDS WORKING GROUP.—

4 ‘‘(1) IN GENERAL.—Within 90 days after the

5 date of the enactment of the Small Business Access

6 and Choice for Entrepreneurs Act of 1999, the ap7 plicable authority shall establish a Solvency Stand8 ards Working Group. In prescribing the initial regu9 lations under this section, the applicable authority

10 shall take into account the recommendations of such

11 Working Group.

12 ‘‘(2) MEMBERSHIP.—The Working Group shall

13 consist of not more than 15 members appointed by

14 the applicable authority. The applicable authority

15 shall include among persons invited to membership

16 on the Working Group at least one of each of the

17 following:

18 ‘‘(A) a representative of the National Asso19 ciation of Insurance Commissioners;

20 ‘‘(B) a representative of the American

21 Academy of Actuaries;

22 ‘‘(C) a representative of the State govern23 ments, or their interests;

24 ‘‘(D) a representative of existing self-in25 sured arrangements, or their interests;
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1 ‘‘(E) a representative of associations of the

2 type referred to in section 801(b)(1), or their

3 interests; and

4 ‘‘(F) a representative of multiemployer

5 plans that are group health plans, or their in6 terests.

7 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE8 LATED REQUIREMENTS.

9 ‘‘(a) FILING FEE.—Under the procedure prescribed

10 pursuant to section 802(a), an association health plan

11 shall pay to the applicable authority at the time of filing

12 an application for certification under this part a filing fee

13 in the amount of $5,000, which shall be available in the

14 case of the Secretary, to the extent provided in appropria15 tion Acts, for the sole purpose of administering the certifi16 cation procedures applicable with respect to association

17 health plans.

18 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA19 TION FOR CERTIFICATION.—An application for certifi20 cation under this part meets the requirements of this sec21 tion only if it includes, in a manner and form which shall

22 be prescribed by the applicable authority through nego23 tiated rulemaking, at least the following information:

24 ‘‘(1) IDENTIFYING INFORMATION.—The names

25 and addresses of—
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1 ‘‘(A) the sponsor; and

2 ‘‘(B) the members of the board of trustees

3 of the plan.

4 ‘‘(2) STATES IN WHICH PLAN INTENDS TO DO

5 BUSINESS.—The States in which participants and

6 beneficiaries under the plan are to be located and

7 the number of them expected to be located in each

8 such State.

9 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro10 vided by the board of trustees that the bonding re11 quirements of section 412 will be met as of the date

12 of the application or (if later) commencement of op13 erations.

14 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu15 ments governing the plan (including any bylaws and

16 trust agreements), the summary plan description,

17 and other material describing the benefits that will

18 be provided to participants and beneficiaries under

19 the plan.

20 ‘‘(5) AGREEMENTS WITH SERVICE PRO21 VIDERS.—A copy of any agreements between the

22 plan and contract administrators and other service

23 providers.

24 ‘‘(6) FUNDING REPORT.—In the case of asso25 ciation health plans providing benefits options in ad-
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1 dition to health insurance coverage, a report setting

2 forth information with respect to such additional

3 benefit options determined as of a date within the

4 120-day period ending with the date of the applica5 tion, including the following:

6 ‘‘(A) RESERVES.—A statement, certified

7 by the board of trustees of the plan, and a

8 statement of actuarial opinion, signed by a

9 qualified actuary, that all applicable require10 ments of section 806 are or will be met in ac11 cordance with regulations which the applicable

12 authority shall prescribe through negotiated

13 rulemaking.

14 ‘‘(B) ADEQUACY OF CONTRIBUTION

15 RATES.—A statement of actuarial opinion,

16 signed by a qualified actuary, which sets forth

17 a description of the extent to which contribution

18 rates are adequate to provide for the payment

19 of all obligations and the maintenance of re20 quired reserves under the plan for the 12-

21 month period beginning with such date within

22 such 120-day period, taking into account the

23 expected coverage and experience of the plan. If

24 the contribution rates are not fully adequate,

25 the statement of actuarial opinion shall indicate
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1 the extent to which the rates are inadequate

2 and the changes needed to ensure adequacy.

3 ‘‘(C) CURRENT AND PROJECTED VALUE OF

4 ASSETS AND LIABILITIES.—A statement of ac5 tuarial opinion signed by a qualified actuary,

6 which sets forth the current value of the assets

7 and liabilities accumulated under the plan and

8 a projection of the assets, liabilities, income,

9 and expenses of the plan for the 12-month pe10 riod referred to in subparagraph (B). The in11 come statement shall identify separately the

12 plan’s administrative expenses and claims.

13 ‘‘(D) COSTS OF COVERAGE TO BE

14 CHARGED AND OTHER EXPENSES.—A state15 ment of the costs of coverage to be charged, in16 cluding an itemization of amounts for adminis17 tration, reserves, and other expenses associated

18 with the operation of the plan.

19 ‘‘(E) OTHER INFORMATION.—Any other

20 information as may be determined by the appli21 cable authority, by regulation through nego22 tiated rulemaking, as necessary to carry out the

23 purposes of this part.

24 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

25 STATES.—A certification granted under this part to an
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1 association health plan shall not be effective unless written

2 notice of such certification is filed with the applicable

3 State authority of each State in which at least 25 percent

4 of the participants and beneficiaries under the plan are

5 located. For purposes of this subsection, an individual

6 shall be considered to be located in the State in which a

7 known address of such individual is located or in which

8 such individual is employed.

9 ‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case

10 of any association health plan certified under this part,

11 descriptions of material changes in any information which

12 was required to be submitted with the application for the

13 certification under this part shall be filed in such form

14 and manner as shall be prescribed by the applicable au15 thority by regulation through negotiated rulemaking. The

16 applicable authority may require by regulation, through

17 negotiated rulemaking, prior notice of material changes

18 with respect to specified matters which might serve as the

19 basis for suspension or revocation of the certification.

20 ‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS21 SOCIATION HEALTH PLANS.—An association health plan

22 certified under this part which provides benefit options in

23 addition to health insurance coverage for such plan year

24 shall meet the requirements of section 103 by filing an

25 annual report under such section which shall include infor-
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1 mation described in subsection (b)(6) with respect to the

2 plan year and, notwithstanding section 104(a)(1)(A), shall

3 be filed with the applicable authority not later than 90

4 days after the close of the plan year (or on such later date

5 as may be prescribed by the applicable authority). The ap6 plicable authority may require by regulation through nego7 tiated rulemaking such interim reports as it considers ap8 propriate.

9 ‘‘(f) ENGAGEMENT OF QUALIFIED ACTUARY.—The

10 board of trustees of each association health plan which

11 provides benefits options in addition to health insurance

12 coverage and which is applying for certification under this

13 part or is certified under this part shall engage, on behalf

14 of all participants and beneficiaries, a qualified actuary

15 who shall be responsible for the preparation of the mate16 rials comprising information necessary to be submitted by

17 a qualified actuary under this part. The qualified actuary

18 shall utilize such assumptions and techniques as are nec19 essary to enable such actuary to form an opinion as to

20 whether the contents of the matters reported under this

21 part—

22 ‘‘(1) are in the aggregate reasonably related to

23 the experience of the plan and to reasonable expecta24 tions; and
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1 ‘‘(2) represent such actuary’s best estimate of

2 anticipated experience under the plan.

3 The opinion by the qualified actuary shall be made with

4 respect to, and shall be made a part of, the annual report.

5 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER6 MINATION.

7 ‘‘Except as provided in section 809(b), an association

8 health plan which is or has been certified under this part

9 may terminate (upon or at any time after cessation of ac10 cruals in benefit liabilities) only if the board of trustees—

11 ‘‘(1) not less than 60 days before the proposed

12 termination date, provides to the participants and

13 beneficiaries a written notice of intent to terminate

14 stating that such termination is intended and the

15 proposed termination date;

16 ‘‘(2) develops a plan for winding up the affairs

17 of the plan in connection with such termination in

18 a manner which will result in timely payment of all

19 benefits for which the plan is obligated; and

20 ‘‘(3) submits such plan in writing to the appli21 cable authority.

22 Actions required under this section shall be taken in such

23 form and manner as may be prescribed by the applicable

24 authority by regulation through negotiated rulemaking.
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1 ‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI2 NATION.

3 ‘‘(a) ACTIONS TO AVOID DEPLETION OF RE4 SERVES.—An association health plan which is certified

5 under this part and which provides benefits other than

6 health insurance coverage shall continue to meet the re7 quirements of section 806, irrespective of whether such

8 certification continues in effect. The board of trustees of

9 such plan shall determine quarterly whether the require10 ments of section 806 are met. In any case in which the

11 board determines that there is reason to believe that there

12 is or will be a failure to meet such requirements, or the

13 applicable authority makes such a determination and so

14 notifies the board, the board shall immediately notify the

15 qualified actuary engaged by the plan, and such actuary

16 shall, not later than the end of the next following month,

17 make such recommendations to the board for corrective

18 action as the actuary determines necessary to ensure com19 pliance with section 806. Not later than 30 days after re20 ceiving from the actuary recommendations for corrective

21 actions, the board shall notify the applicable authority (in

22 such form and manner as the applicable authority may

23 prescribe by regulation through negotiated rulemaking) of

24 such recommendations of the actuary for corrective action,

25 together with a description of the actions (if any) that the

26 board has taken or plans to take in response to such rec-
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1 ommendations. The board shall thereafter report to the

2 applicable authority, in such form and frequency as the

3 applicable authority may specify to the board, regarding

4 corrective action taken by the board until the requirements

5 of section 806 are met.

6 ‘‘(b) MANDATORY TERMINATION.—In any case in

7 which—

8 ‘‘(1) the applicable authority has been notified

9 under subsection (a) of a failure of an association

10 health plan which is or has been certified under this

11 part and is described in section 806(a)(2) to meet

12 the requirements of section 806 and has not been

13 notified by the board of trustees of the plan that

14 corrective action has restored compliance with such

15 requirements; and

16 ‘‘(2) the applicable authority determines that

17 there is a reasonable expectation that the plan will

18 continue to fail to meet the requirements of section

19 806,

20 the board of trustees of the plan shall, at the direction

21 of the applicable authority, terminate the plan and, in the

22 course of the termination, take such actions as the appli23 cable authority may require, including satisfying any

24 claims referred to in section 806(a)(2)(B)(iii) and recov25 ering for the plan any liability under subsection
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1 (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure

2 that the affairs of the plan will be, to the maximum extent

3 possible, wound up in a manner which will result in timely

4 provision of all benefits for which the plan is obligated.

5 ‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL6 VENT ASSOCIATION HEALTH PLANS PRO7 VIDING HEALTH BENEFITS IN ADDITION TO

8 HEALTH INSURANCE COVERAGE.

9 ‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR

10 INSOLVENT PLANS.—Whenever the Secretary determines

11 that an association health plan which is or has been cer12 tified under this part and which is described in section

13 806(a)(2) will be unable to provide benefits when due or

14 is otherwise in a financially hazardous condition, as shall

15 be defined by the Secretary by regulation through nego16 tiated rulemaking, the Secretary shall, upon notice to the

17 plan, apply to the appropriate United States district court

18 for appointment of the Secretary as trustee to administer

19 the plan for the duration of the insolvency. The plan may

20 appear as a party and other interested persons may inter21 vene in the proceedings at the discretion of the court. The

22 court shall appoint such Secretary trustee if the court de23 termines that the trusteeship is necessary to protect the

24 interests of the participants and beneficiaries or providers

25 of medical care or to avoid any unreasonable deterioration
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1 of the financial condition of the plan. The trusteeship of

2 such Secretary shall continue until the conditions de3 scribed in the first sentence of this subsection are rem4 edied or the plan is terminated.

5 ‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon

6 appointment as trustee under subsection (a), shall have

7 the power—

8 ‘‘(1) to do any act authorized by the plan, this

9 title, or other applicable provisions of law to be done

10 by the plan administrator or any trustee of the plan;

11 ‘‘(2) to require the transfer of all (or any part)

12 of the assets and records of the plan to the Sec13 retary as trustee;

14 ‘‘(3) to invest any assets of the plan which the

15 Secretary holds in accordance with the provisions of

16 the plan, regulations prescribed by the Secretary

17 through negotiated rulemaking, and applicable provi18 sions of law;

19 ‘‘(4) to require the sponsor, the plan adminis20 trator, any participating employer, and any employee

21 organization representing plan participants to fur22 nish any information with respect to the plan which

23 the Secretary as trustee may reasonably need in

24 order to administer the plan;
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1 ‘‘(5) to collect for the plan any amounts due the

2 plan and to recover reasonable expenses of the trust3 eeship;

4 ‘‘(6) to commence, prosecute, or defend on be5 half of the plan any suit or proceeding involving the

6 plan;

7 ‘‘(7) to issue, publish, or file such notices, state8 ments, and reports as may be required by the Sec9 retary by regulation through negotiated rulemaking

10 or required by any order of the court;

11 ‘‘(8) to terminate the plan (or provide for its

12 termination accordance with section 809(b)) and liq13 uidate the plan assets, to restore the plan to the re14 sponsibility of the sponsor, or to continue the trust15 eeship;

16 ‘‘(9) to provide for the enrollment of plan par17 ticipants and beneficiaries under appropriate cov18 erage options; and

19 ‘‘(10) to do such other acts as may be nec20 essary to comply with this title or any order of the

21 court and to protect the interests of plan partici22 pants and beneficiaries and providers of medical

23 care.
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1 ‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac2 ticable after the Secretary’s appointment as trustee, the

3 Secretary shall give notice of such appointment to—

4 ‘‘(1) the sponsor and plan administrator;

5 ‘‘(2) each participant;

6 ‘‘(3) each participating employer; and

7 ‘‘(4) if applicable, each employee organization

8 which, for purposes of collective bargaining, rep9 resents plan participants.

10 ‘‘(d) ADDITIONAL DUTIES.—Except to the extent in11 consistent with the provisions of this title, or as may be

12 otherwise ordered by the court, the Secretary, upon ap13 pointment as trustee under this section, shall be subject

14 to the same duties as those of a trustee under section 704

15 of title 11, United States Code, and shall have the duties

16 of a fiduciary for purposes of this title.

17 ‘‘(e) OTHER PROCEEDINGS.—An application by the

18 Secretary under this subsection may be filed notwith19 standing the pendency in the same or any other court of

20 any bankruptcy, mortgage foreclosure, or equity receiver21 ship proceeding, or any proceeding to reorganize, conserve,

22 or liquidate such plan or its property, or any proceeding

23 to enforce a lien against property of the plan.

24 ‘‘(f) JURISDICTION OF COURT.—
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1 ‘‘(1) IN GENERAL.—Upon the filing of an appli2 cation for the appointment as trustee or the issuance

3 of a decree under this section, the court to which the

4 application is made shall have exclusive jurisdiction

5 of the plan involved and its property wherever lo6 cated with the powers, to the extent consistent with

7 the purposes of this section, of a court of the United

8 States having jurisdiction over cases under chapter

9 11 of title 11, United States Code. Pending an adju10 dication under this section such court shall stay, and

11 upon appointment by it of the Secretary as trustee,

12 such court shall continue the stay of, any pending

13 mortgage foreclosure, equity receivership, or other

14 proceeding to reorganize, conserve, or liquidate the

15 plan, the sponsor, or property of such plan or spon16 sor, and any other suit against any receiver, conser17 vator, or trustee of the plan, the sponsor, or prop18 erty of the plan or sponsor. Pending such adjudica19 tion and upon the appointment by it of the Sec20 retary as trustee, the court may stay any proceeding

21 to enforce a lien against property of the plan or the

22 sponsor or any other suit against the plan or the

23 sponsor.

24 ‘‘(2) VENUE.—An action under this section

25 may be brought in the judicial district where the
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1 sponsor or the plan administrator resides or does

2 business or where any asset of the plan is situated.

3 A district court in which such action is brought may

4 issue process with respect to such action in any

5 other judicial district.

6 ‘‘(g) PERSONNEL.—In accordance with regulations

7 which shall be prescribed by the Secretary through nego8 tiated rulemaking, the Secretary shall appoint, retain, and

9 compensate accountants, actuaries, and other professional

10 service personnel as may be necessary in connection with

11 the Secretary’s service as trustee under this section.

12 ‘‘SEC. 811. STATE ASSESSMENT AUTHORITY.

13 ‘‘(a) IN GENERAL.—Notwithstanding section 514, a

14 State may impose by law a contribution tax on an associa15 tion health plan described in section 806(a)(2), if the plan

16 commenced operations in such State after the date of the

17 enactment of the Small Business Access and Choice for

18 Entrepreneurs Act of 1999.

19 ‘‘(b) CONTRIBUTION TAX.—For purposes of this sec20 tion, the term ‘contribution tax’ imposed by a State on

21 an association health plan means any tax imposed by such

22 State if—

23 ‘‘(1) such tax is computed by applying a rate to

24 the amount of premiums or contributions, with re25 spect to individuals covered under the plan who are
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1 residents of such State, which are received by the

2 plan from participating employers located in such

3 State or from such individuals;

4 ‘‘(2) the rate of such tax does not exceed the

5 rate of any tax imposed by such State on premiums

6 or contributions received by insurers or health main7 tenance organizations for health insurance coverage

8 offered in such State in connection with a group

9 health plan;

10 ‘‘(3) such tax is otherwise nondiscriminatory;

11 and

12 ‘‘(4) the amount of any such tax assessed on

13 the plan is reduced by the amount of any tax or as14 sessment otherwise imposed by the State on pre15 miums, contributions, or both received by insurers or

16 health maintenance organizations for health insur17 ance coverage, aggregate excess /stop loss insurance

18 (as defined in section 806(g)(1)), specific excess /

19 stop loss insurance (as defined in section 806(g)(2)),

20 other insurance related to the provision of medical

21 care under the plan, or any combination thereof pro22 vided by such insurers or health maintenance organi23 zations in such State in connection with such plan.

24 ‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.

25 ‘‘(a) DEFINITIONS.—For purposes of this part—
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1 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group

2 health plan’ has the meaning provided in section

3 733(a)(1) (after applying subsection (b) of this sec4 tion).

5 ‘‘(2) MEDICAL CARE.—The term ‘medical care’

6 has the meaning provided in section 733(a)(2).

7 ‘‘(3) HEALTH INSURANCE COVERAGE.—The

8 term ‘health insurance coverage’ has the meaning

9 provided in section 733(b)(1).

10 ‘‘(4) HEALTH INSURANCE ISSUER.—The term

11 ‘health insurance issuer’ has the meaning provided

12 in section 733(b)(2).

13 ‘‘(5) APPLICABLE AUTHORITY.—

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

15 subparagraph (B), the term ‘applicable author16 ity’ means, in connection with an association

17 health plan—

18 ‘‘(i) the State recognized pursuant to

19 subsection (c) of section 506 as the State

20 to which authority has been delegated in

21 connection with such plan; or

22 ‘‘(ii) if there if no State referred to in

23 clause (i), the Secretary.

24 ‘‘(B) EXCEPTIONS.—
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1 ‘‘(i) JOINT AUTHORITIES.—Where

2 such term appears in section 808(3), sec3 tion 807(e) (in the first instance), section

4 809(a) (in the second instance), section

5 809(a) (in the fourth instance), and sec6 tion 809(b)(1), such term means, in con7 nection with an association health plan, the

8 Secretary and the State referred to in sub9 paragraph (A)(i) (if any) in connection

10 with such plan.

11 ‘‘(ii) REGULATORY AUTHORITIES.—

12 Where such term appears in section 802(a)

13 (in the first instance), section 802(d), sec14 tion 802(e), section 803(d), section

15 805(a)(5), section 806(a)(2), section

16 806(b), section 806(c), section 806(d),

17 paragraphs (1)(A) and (2)(A) of section

18 806(g), section 806(h), section 806(i), sec19 tion 806(j), section 807(a) (in the second

20 instance), section 807(b), section 807(d),

21 section 807(e) (in the second instance),

22 section 808 (in the matter after paragraph

23 (3)), and section 809(a) (in the third in24 stance), such term means, in connection
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1 with an association health plan, the Sec2 retary.

3 ‘‘(6) HEALTH STATUS-RELATED FACTOR.—The

4 term ‘health status-related factor’ has the meaning

5 provided in section 733(d)(2).

6 ‘‘(7) INDIVIDUAL MARKET.—

7 ‘‘(A) IN GENERAL.—The term ‘individual

8 market’ means the market for health insurance

9 coverage offered to individuals other than in

10 connection with a group health plan.

11 ‘‘(B) TREATMENT OF VERY SMALL

12 GROUPS.—

13 ‘‘(i) IN GENERAL.—Subject to clause

14 (ii), such term includes coverage offered in

15 connection with a group health plan that

16 has fewer than 2 participants as current

17 employees or participants described in sec18 tion 732(d)(3) on the first day of the plan

19 year.

20 ‘‘(ii) STATE EXCEPTION.—Clause (i)

21 shall not apply in the case of health insur22 ance coverage offered in a State if such

23 State regulates the coverage described in

24 such clause in the same manner and to the

25 same extent as coverage in the small group
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1 market (as defined in section 2791(e)(5) of

2 the Public Health Service Act) is regulated

3 by such State.

4 ‘‘(8) PARTICIPATING EMPLOYER.—The term

5 ‘participating employer’ means, in connection with

6 an association health plan, any employer, if any indi7 vidual who is an employee of such employer, a part8 ner in such employer, or a self-employed individual

9 who is such employer (or any dependent, as defined

10 under the terms of the plan, of such individual) is

11 or was covered under such plan in connection with

12 the status of such individual as such an employee,

13 partner, or self-employed individual in relation to the

14 plan.

15 ‘‘(9) APPLICABLE STATE AUTHORITY.—The

16 term ‘applicable State authority’ means, with respect

17 to a health insurance issuer in a State, the State in18 surance commissioner or official or officials des19 ignated by the State to enforce the requirements of

20 title XXVII of the Public Health Service Act for the

21 State involved with respect to such issuer.

22 ‘‘(10) QUALIFIED ACTUARY.—The term ‘quali23 fied actuary’ means an individual who is a member

24 of the American Academy of Actuaries or meets

25 such reasonable standards and qualifications as the
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1 Secretary may provide by regulation through nego2 tiated rulemaking.

3 ‘‘(11) AFFILIATED MEMBER±±.—The term ‘af4 filiated member’ means, in connection with a

5 sponsor—

6 ‘‘(A) a person who is otherwise eligible to

7 be a member of the sponsor but who elects an

8 affiliated status with the sponsor,

9 ‘‘(B) in the case of a sponsor with mem10 bers which consist of associations, a person who

11 is a member of any such association and elects

12 an affiliated status with the sponsor, or

13 ‘‘(C) in the case of an association health

14 plan in existence on the date of the enactment

15 of the Small Business Access and Choice for

16 Entrepreneurs Act of 1999, a person eligible to

17 be a member of the sponsor or one of its mem18 ber associations.

19 ‘‘(12) LARGE EMPLOYER.—The term ‘large em20 ployer’ means, in connection with a group health

21 plan with respect to a plan year, an employer who

22 employed an average of at least 51 employees on

23 business days during the preceding calendar year

24 and who employs at least 2 employees on the first

25 day of the plan year.
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1 ‘‘(13) SMALL EMPLOYER.—The term ‘small em2 ployer’ means, in connection with a group health

3 plan with respect to a plan year, an employer who

4 is not a large employer.

5 ‘‘(b) RULES OF CONSTRUCTION.—

6 ‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur7 poses of determining whether a plan, fund, or pro8 gram is an employee welfare benefit plan which is an

9 association health plan, and for purposes of applying

10 this title in connection with such plan, fund, or pro11 gram so determined to be such an employee welfare

12 benefit plan—

13 ‘‘(A) in the case of a partnership, the term

14 ‘employer’ (as defined in section (3)(5)) in15 cludes the partnership in relation to the part16 ners, and the term ‘employee’ (as defined in

17 section (3)(6)) includes any partner in relation

18 to the partnership; and

19 ‘‘(B) in the case of a self-employed indi20 vidual, the term ‘employer’ (as defined in sec21 tion 3(5)) and the term ‘employee’ (as defined

22 in section 3(6)) shall include such individual.

23 ‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED

24 AS EMPLOYEE WELFARE BENEFIT PLANS.—In the

25 case of any plan, fund, or program which was estab-
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1 lished or is maintained for the purpose of providing

2 medical care (through the purchase of insurance or

3 otherwise) for employees (or their dependents) cov4 ered thereunder and which demonstrates to the Sec5 retary that all requirements for certification under

6 this part would be met with respect to such plan,

7 fund, or program if such plan, fund, or program

8 were a group health plan, such plan, fund, or pro9 gram shall be treated for purposes of this title as an

10 employee welfare benefit plan on and after the date

11 of such demonstration.’’.

12 (b) CONFORMING AMENDMENTS TO PREEMPTION

13 RULES.—

14 (1) Section 514(b)(6) of such Act (29 U.S.C.

15 1144(b)(6)) is amended by adding at the end the

16 following new subparagraph:

17 ‘‘(E) The preceding subparagraphs of this paragraph

18 do not apply with respect to any State law in the case

19 of an association health plan which is certified under part

20 8.’’.

21 (2) Section 514 of such Act (29 U.S.C. 1144)

22 is amended—

23 (A) in subsection (b)(4), by striking ‘‘Sub24 section (a)’’ and inserting ‘‘Subsections (a) and

25 (d)’’;
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1 (B) in subsection (b)(5), by striking ‘‘sub2 section (a)’’ in subparagraph (A) and inserting

3 ‘‘subsection (a) of this section and subsections

4 (a)(2)(B) and (b) of section 805’’, and by strik5 ing ‘‘subsection (a)’’ in subparagraph (B) and

6 inserting ‘‘subsection (a) of this section or sub7 section (a)(2)(B) or (b) of section 805’’;

8 (C) by redesignating subsection (d) as sub9 section (e); and

10 (D) by inserting after subsection (c) the

11 following new subsection:

12 ‘‘(d)(1) Except as provided in subsection (b)(4), the

13 provisions of this title shall supersede any and all State

14 laws insofar as they may now or hereafter preclude, or

15 have the effect of precluding, a health insurance issuer

16 from offering health insurance coverage in connection with

17 an association health plan which is certified under part

18 8.

19 ‘‘(2) Except as provided in paragraphs (4) and (5)

20 of subsection (b) of this section—

21 ‘‘(A) In any case in which health insurance cov22 erage of any policy type is offered under an associa23 tion health plan certified under part 8 to a partici24 pating employer operating in such State, the provi25 sions of this title shall supersede any and all laws
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1 of such State insofar as they may preclude a health

2 insurance issuer from offering health insurance cov3 erage of the same policy type to other employers op4 erating in the State which are eligible for coverage

5 under such association health plan, whether or not

6 such other employers are participating employers in

7 such plan.

8 ‘‘(B) In any case in which health insurance cov9 erage of any policy type is offered under an associa10 tion health plan in a State and the filing, with the

11 applicable State authority, of the policy form in con12 nection with such policy type is approved by such

13 State authority, the provisions of this title shall su14 persede any and all laws of any other State in which

15 health insurance coverage of such type is offered, in16 sofar as they may preclude, upon the filing in the

17 same form and manner of such policy form with the

18 applicable State authority in such other State, the

19 approval of the filing in such other State.

20 ‘‘(3) For additional provisions relating to association

21 health plans, see subsections (a)(2)(B) and (b) of section

22 805.

23 ‘‘(4) For purposes of this subsection, the term ‘asso24 ciation health plan’ has the meaning provided in section

25 801(a), and the terms ‘health insurance coverage’, ‘par-
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1 ticipating employer’, and ‘health insurance issuer’ have

2 the meanings provided such terms in section 811, respec3 tively.’’.

4 (3) Section 514(b)(6)(A) of such Act (29

5 U.S.C. 1144(b)(6)(A)) is amended—

6 (A) in clause (i)(II), by striking ‘‘and’’ at

7 the end;

8 (B) in clause (ii), by inserting ‘‘and which

9 does not provide medical care (within the mean10 ing of section 733(a)(2)),’’ after ‘‘arrange11 ment,’’, and by striking ‘‘title.’’ and inserting

12 ‘‘title, and’’; and

13 (C) by adding at the end the following new

14 clause:

15 ‘‘(iii) subject to subparagraph (E), in the case

16 of any other employee welfare benefit plan which is

17 a multiple employer welfare arrangement and which

18 provides medical care (within the meaning of section

19 733(a)(2)), any law of any State which regulates in20 surance may apply.’’.

21 (4) Section 514(e) of such Act (as redesignated

22 by paragraph (2)(C)) is amended—

23 (A) by striking ‘‘Nothing’’ and inserting

24 ‘‘(1) Except as provided in paragraph (2), noth25 ing’’; and
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1 (B) by adding at the end the following new

2 paragraph:

3 ‘‘(2) Nothing in any other provision of law enacted

4 on or after the date of the enactment of the Small Busi5 ness Access and Choice for Entrepreneurs Act of 1999

6 shall be construed to alter, amend, modify, invalidate, im7 pair, or supersede any provision of this title, except by

8 specific cross-reference to the affected section.’’.

9 (c) PLAN SPONSOR.—Section 3(16)(B) of such Act

10 (29 U.S.C. 102(16)(B)) is amended by adding at the end

11 the following new sentence: ‘‘Such term also includes a

12 person serving as the sponsor of an association health plan

13 under part 8.’’.

14 (d) DISCLOSURE OF SOLVENCY PROTECTIONS RE15 LATED TO SELF-INSURED AND FULLY INSURED OPTIONS

16 UNDER ASSOCIATION HEALTH PLANS.—Section 102(b)

17 of such Act (29 U.S.C. 102(b)) is amended by adding at

18 the end the following: ‘‘An association health plan shall

19 include in its summary plan description, in connection

20 with each benefit option, a description of the form of sol21 vency or guarantee fund protection secured pursuant to

22 this Act or applicable State law, if any.’’.

23 (e) SAVINGS CLAUSE.—Section 731(c) of such Act is

24 amended by inserting ‘‘or part 8’’ after ‘‘this part’’.
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1 (f) REPORT TO THE CONGRESS REGARDING CERTIFI2 CATION OF SELF-INSURED ASSOCIATION HEALTH

3 PLANS.—Not later than January 1, 2004, the Secretary

4 of Labor shall report to the Committee on Education and

5 the Workforce of the House of Representatives and the

6 Committee on Health, Education, Labor, and Pensions of

7 the Senate the effect association health plans have had,

8 if any, on reducing the number of uninsured individuals.

9 (g) CLERICAL AMENDMENT.—The table of contents

10 in section 1 of the Employee Retirement Income Security

11 Act of 1974 is amended by inserting after the item relat12 ing to section 734 the following new items:

‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS

‘‘Sec. 801. Association health plans.

‘‘Sec. 802. Certification of association health plans.

‘‘Sec. 803. Requirements relating to sponsors and boards of trustees.

‘‘Sec. 804. Participation and coverage requirements.

‘‘Sec. 805. Other requirements relating to plan documents, contribution rates,

and benefit options.

‘‘Sec. 806. Maintenance of reserves and provisions for solvency for plans providing health benefits in addition to health insurance coverage.

‘‘Sec. 807. Requirements for application and related requirements.

‘‘Sec. 808. Notice requirements for voluntary termination.

‘‘Sec. 809. Corrective actions and mandatory termination.

‘‘Sec. 810. Trusteeship by the Secretary of insolvent association health plans

providing health benefits in addition to health insurance coverage.

‘‘Sec. 811. State assessment authority.

‘‘Sec. 812. Definitions and rules of construction.’’.

13 SEC. 702. CLARIFICATION OF TREATMENT OF SINGLE EM14 PLOYER ARRANGEMENTS.

15 Section 3(40)(B) of the Employee Retirement Income

16 Security Act of 1974 (29 U.S.C. 1002(40)(B)) is

17 amended—
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1 (1) in clause (i), by inserting ‘‘for any plan year

2 of any such plan, or any fiscal year of any such

3 other arrangement;’’ after ‘‘single employer’’, and by

4 inserting ‘‘during such year or at any time during

5 the preceding 1-year period’’ after ‘‘control group’’;

6 (2) in clause (iii)—

7 (A) by striking ‘‘common control shall not

8 be based on an interest of less than 25 percent’’

9 and inserting ‘‘an interest of greater than 25

10 percent may not be required as the minimum

11 interest necessary for common control’’; and

12 (B) by striking ‘‘similar to’’ and inserting

13 ‘‘consistent and coextensive with’’;

14 (3) by redesignating clauses (iv) and (v) as

15 clauses (v) and (vi), respectively; and

16 (4) by inserting after clause (iii) the following

17 new clause:

18 ‘‘(iv) in determining, after the application of

19 clause (i), whether benefits are provided to employ20 ees of two or more employers, the arrangement shall

21 be treated as having only one participating employer

22 if, after the application of clause (i), the number of

23 individuals who are employees and former employees

24 of any one participating employer and who are cov25 ered under the arrangement is greater than 75 per-
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1 cent of the aggregate number of all individuals who

2 are employees or former employees of participating

3 employers and who are covered under the arrange4 ment;’’.

5 SEC. 703. CLARIFICATION OF TREATMENT OF CERTAIN

6 COLLECTIVELY BARGAINED ARRANGE7 MENTS.

8 (a) IN GENERAL.—Section 3(40)(A)(i) of the Em9 ployee Retirement Income Security Act of 1974 (29

10 U.S.C. 1002(40)(A)(i)) is amended to read as follows:

11 ‘‘(i)(I) under or pursuant to one or more collec12 tive bargaining agreements which are reached pursu13 ant to collective bargaining described in section 8(d)

14 of the National Labor Relations Act (29 U.S.C.

15 158(d)) or paragraph Fourth of section 2 of the

16 Railway Labor Act (45 U.S.C. 152, paragraph

17 Fourth) or which are reached pursuant to labor18 management negotiations under similar provisions of

19 State public employee relations laws, and (II) in ac20 cordance with subparagraphs (C), (D), and (E);’’.

21 (b) LIMITATIONS.—Section 3(40) of such Act (29

22 U.S.C. 1002(40)) is amended by adding at the end the

23 following new subparagraphs:

24 ‘‘(C) For purposes of subparagraph (A)(i)(II), a plan

25 or other arrangement shall be treated as established or
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1 maintained in accordance with this subparagraph only if

2 the following requirements are met:

3 ‘‘(i) The plan or other arrangement, and the

4 employee organization or any other entity sponsoring

5 the plan or other arrangement, do not—

6 ‘‘(I) utilize the services of any licensed in7 surance agent or broker for soliciting or enroll8 ing employers or individuals as participating

9 employers or covered individuals under the plan

10 or other arrangement; or

11 ‘‘(II) pay any type of compensation to a

12 person, other than a full time employee of the

13 employee organization (or a member of the or14 ganization to the extent provided in regulations

15 prescribed by the Secretary through negotiated

16 rulemaking), that is related either to the volume

17 or number of employers or individuals solicited

18 or enrolled as participating employers or cov19 ered individuals under the plan or other ar20 rangement, or to the dollar amount or size of

21 the contributions made by participating employ22 ers or covered individuals to the plan or other

23 arrangement;

24 except to the extent that the services used by the

25 plan, arrangement, organization, or other entity con-
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1 sist solely of preparation of documents necessary for

2 compliance with the reporting and disclosure re3 quirements of part 1 or administrative, investment,

4 or consulting services unrelated to solicitation or en5 rollment of covered individuals.

6 ‘‘(ii) As of the end of the preceding plan year,

7 the number of covered individuals under the plan or

8 other arrangement who are neither—

9 ‘‘(I) employed within a bargaining unit

10 covered by any of the collective bargaining

11 agreements with a participating employer (nor

12 covered on the basis of an individual’s employ13 ment in such a bargaining unit); nor

14 ‘‘(II) present employees (or former employ15 ees who were covered while employed) of the

16 sponsoring employee organization, of an em17 ployer who is or was a party to any of the col18 lective bargaining agreements, or of the plan or

19 other arrangement or a related plan or arrange20 ment (nor covered on the basis of such present

21 or former employment);

22 does not exceed 15 percent of the total number of

23 individuals who are covered under the plan or ar24 rangement and who are present or former employees

25 who are or were covered under the plan or arrange-
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1 ment pursuant to a collective bargaining agreement

2 with a participating employer. The requirements of

3 the preceding provisions of this clause shall be treat4 ed as satisfied if, as of the end of the preceding plan

5 year, such covered individuals are comprised solely

6 of individuals who were covered individuals under

7 the plan or other arrangement as of the date of the

8 enactment of the Small Business Access and Choice

9 for Entrepreneurs Act of 1999 and, as of the end of

10 the preceding plan year, the number of such covered

11 individuals does not exceed 25 percent of the total

12 number of present and former employees enrolled

13 under the plan or other arrangement.

14 ‘‘(iii) The employee organization or other entity

15 sponsoring the plan or other arrangement certifies

16 to the Secretary each year, in a form and manner

17 which shall be prescribed by the Secretary through

18 negotiated rulemaking that the plan or other ar19 rangement meets the requirements of clauses (i) and

20 (ii).

21 ‘‘(D) For purposes of subparagraph (A)(i)(II), a plan

22 or arrangement shall be treated as established or main23 tained in accordance with this subparagraph only if—
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1 ‘‘(i) all of the benefits provided under the plan

2 or arrangement consist of health insurance coverage;

3 or

4 ‘‘(ii)(I) the plan or arrangement is a multiem5 ployer plan; and

6 ‘‘(II) the requirements of clause (B) of the pro7 viso to clause (5) of section 302(c) of the Labor

8 Management Relations Act, 1947 (29 U.S.C.

9 186(c)) are met with respect to such plan or other

10 arrangement.

11 ‘‘(E) For purposes of subparagraph (A)(i)(II), a plan

12 or arrangement shall be treated as established or main13 tained in accordance with this subparagraph only if—

14 ‘‘(i) the plan or arrangement is in effect as of

15 the date of the enactment of the Small Business Ac16 cess and Choice for Entrepreneurs Act of 1999; or

17 ‘‘(ii) the employee organization or other entity

18 sponsoring the plan or arrangement—

19 ‘‘(I) has been in existence for at least 3

20 years; or

21 ‘‘(II) demonstrates to the satisfaction of

22 the Secretary that the requirements of subpara23 graphs (C) and (D) are met with respect to the

24 plan or other arrangement.’’.
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1 (c) CONFORMING AMENDMENTS TO DEFINITIONS OF

2 PARTICIPANT AND BENEFICIARY.—Section 3(7) of such

3 Act (29 U.S.C. 1002(7)) is amended by adding at the end

4 the following new sentence: ‘‘Such term includes an indi5 vidual who is a covered individual described in paragraph

6 (40)(C)(ii).’’.

7 SEC. 704. ENFORCEMENT PROVISIONS RELATING TO ASSO8 CIATION HEALTH PLANS.

9 (a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL

10 MISREPRESENTATIONS.—Section 501 of the Employee

11 Retirement Income Security Act of 1974 (29 U.S.C. 1131)

12 is amended—

13 (1) by inserting ‘‘(a)’’ after ‘‘SEC. 501.’’; and

14 (2) by adding at the end the following new sub15 section:

16 ‘‘(b) Any person who willfully falsely represents, to

17 any employee, any employee’s beneficiary, any employer,

18 the Secretary, or any State, a plan or other arrangement

19 established or maintained for the purpose of offering or

20 providing any benefit described in section 3(1) to employ21 ees or their beneficiaries as—

22 ‘‘(1) being an association health plan which has

23 been certified under part 8;

24 ‘‘(2) having been established or maintained

25 under or pursuant to one or more collective bar-
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1 gaining agreements which are reached pursuant to

2 collective bargaining described in section 8(d) of the

3 National Labor Relations Act (29 U.S.C. 158(d)) or

4 paragraph Fourth of section 2 of the Railway Labor

5 Act (45 U.S.C. 152, paragraph Fourth) or which are

6 reached pursuant to labor-management negotiations

7 under similar provisions of State public employee re8 lations laws; or

9 ‘‘(3) being a plan or arrangement with respect

10 to which the requirements of subparagraph (C), (D),

11 or (E) of section 3(40) are met;

12 shall, upon conviction, be imprisoned not more than 5

13 years, be fined under title 18, United States Code, or

14 both.’’.

15 (b) CEASE ACTIVITIES ORDERS.—Section 502 of

16 such Act (29 U.S.C. 1132) is amended by adding at the

17 end the following new subsection:

18 ‘‘(n)(1) Subject to paragraph (2), upon application

19 by the Secretary showing the operation, promotion, or

20 marketing of an association health plan (or similar ar21 rangement providing benefits consisting of medical care

22 (as defined in section 733(a)(2))) that—

23 ‘‘(A) is not certified under part 8, is subject

24 under section 514(b)(6) to the insurance laws of any

25 State in which the plan or arrangement offers or
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1 provides benefits, and is not licensed, registered, or

2 otherwise approved under the insurance laws of such

3 State; or

4 ‘‘(B) is an association health plan certified

5 under part 8 and is not operating in accordance with

6 the requirements under part 8 for such certification,

7 a district court of the United States shall enter an order

8 requiring that the plan or arrangement cease activities.

9 ‘‘(2) Paragraph (1) shall not apply in the case of an

10 association health plan or other arrangement if the plan

11 or arrangement shows that—

12 ‘‘(A) all benefits under it referred to in para13 graph (1) consist of health insurance coverage; and

14 ‘‘(B) with respect to each State in which the

15 plan or arrangement offers or provides benefits, the

16 plan or arrangement is operating in accordance with

17 applicable State laws that are not superseded under

18 section 514.

19 ‘‘(3) The court may grant such additional equitable

20 relief, including any relief available under this title, as it

21 deems necessary to protect the interests of the public and

22 of persons having claims for benefits against the plan.’’.

23 (c) RESPONSIBILITY FOR CLAIMS PROCEDURE.—

24 Section 503 of such Act (29 U.S.C. 1133) (as amended
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1 by title I) is amended by adding at the end the following

2 new subsection:

3 ‘‘(c) ASSOCIATION HEALTH PLANS.—The terms of

4 each association health plan which is or has been certified

5 under part 8 shall require the board of trustees or the

6 named fiduciary (as applicable) to ensure that the require7 ments of this section are met in connection with claims

8 filed under the plan.’’.

9 SEC. 705. COOPERATION BETWEEN FEDERAL AND STATE

10 AUTHORITIES.

11 Section 506 of the Employee Retirement Income Se12 curity Act of 1974 (29 U.S.C. 1136) is amended by adding

13 at the end the following new subsection:

14 ‘‘(c) RESPONSIBILITY OF STATES WITH RESPECT TO

15 ASSOCIATION HEALTH PLANS.—

16 ‘‘(1) AGREEMENTS WITH STATES.—A State

17 may enter into an agreement with the Secretary for

18 delegation to the State of some or all of—

19 ‘‘(A) the Secretary’s authority under sec20 tions 502 and 504 to enforce the requirements

21 for certification under part 8;

22 ‘‘(B) the Secretary’s authority to certify

23 association health plans under part 8 in accord24 ance with regulations of the Secretary applica25 ble to certification under part 8; or
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1 ‘‘(C) any combination of the Secretary’s

2 authority authorized to be delegated under sub3 paragraphs (A) and (B).

4 ‘‘(2) DELEGATIONS.—Any department, agency,

5 or instrumentality of a State to which authority is

6 delegated pursuant to an agreement entered into

7 under this paragraph may, if authorized under State

8 law and to the extent consistent with such agree9 ment, exercise the powers of the Secretary under

10 this title which relate to such authority.

11 ‘‘(3) RECOGNITION OF PRIMARY DOMICILE

12 STATE.—In entering into any agreement with a

13 State under subparagraph (A), the Secretary shall

14 ensure that, as a result of such agreement and all

15 other agreements entered into under subparagraph

16 (A), only one State will be recognized, with respect

17 to any particular association health plan, as the

18 State to which all authority has been delegated pur19 suant to such agreements in connection with such

20 plan. In carrying out this paragraph, the Secretary

21 shall take into account the places of residence of the

22 participants and beneficiaries under the plan and the

23 State in which the trust is maintained.’’.
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1 SEC. 706. EFFECTIVE DATE AND TRANSITIONAL AND

2 OTHER RULES.

3 (a) EFFECTIVE DATE.—The amendments made by

4 sections 701, 704, and 705 shall take effect on January

5 1, 2001. The amendments made by sections 702 and 703

6 shall take effect on the date of the enactment of this Act.

7 The Secretary of Labor shall first issue all regulations

8 necessary to carry out the amendments made by this title

9 before January 1, 2001. Such regulations shall be issued

10 through negotiated rulemaking.

11 (b) EXCEPTION.—Section 801(a)(2) of the Employee

12 Retirement Income Security Act of 1974 (added by section

13 701) does not apply in connection with an association

14 health plan (certified under part 8 of subtitle B of title

15 I of such Act) existing on the date of the enactment of

16 this Act, if no benefits provided thereunder as of the date

17 of the enactment of this Act consist of health insurance

18 coverage (as defined in section 733(b)(1) of such Act).

19 (c) TREATMENT OF CERTAIN EXISTING HEALTH

20 BENEFITS PROGRAMS.—

21 (1) IN GENERAL.—In any case in which, as of

22 the date of the enactment of this Act, an arrange23 ment is maintained in a State for the purpose of

24 providing benefits consisting of medical care for the

25 employees and beneficiaries of its participating em26 ployers, at least 200 participating employers make
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1 contributions to such arrangement, such arrange2 ment has been in existence for at least 10 years, and

3 such arrangement is licensed under the laws of one

4 or more States to provide such benefits to its par5 ticipating employers, upon the filing with the appli6 cable authority (as defined in section 812(a)(5) of

7 the Employee Retirement Income Security Act of

8 1974 (as amended by this Act)) by the arrangement

9 of an application for certification of the arrangement

10 under part 8 of subtitle B of title I of such Act—

11 (A) such arrangement shall be deemed to

12 be a group health plan for purposes of title I

13 of such Act;

14 (B) the requirements of sections 801(a)(1)

15 and 803(a)(1) of the Employee Retirement In16 come Security Act of 1974 shall be deemed met

17 with respect to such arrangement;

18 (C) the requirements of section 803(b) of

19 such Act shall be deemed met, if the arrange20 ment is operated by a board of directors

21 which—

22 (i) is elected by the participating em23 ployers, with each employer having one

24 vote; and
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1 (ii) has complete fiscal control over

2 the arrangement and which is responsible

3 for all operations of the arrangement;

4 (D) the requirements of section 804(a) of

5 such Act shall be deemed met with respect to

6 such arrangement; and

7 (E) the arrangement may be certified by

8 any applicable authority with respect to its op9 erations in any State only if it operates in such

10 State on the date of certification.

11 The provisions of this subsection shall cease to apply

12 with respect to any such arrangement at such time

13 after the date of the enactment of this Act as the

14 applicable requirements of this subsection are not

15 met with respect to such arrangement.

16 (2) DEFINITIONS.—For purposes of this sub17 section, the terms ‘‘group health plan’’, ‘‘medical

18 care’’, and ‘‘participating employer’’ shall have the

19 meanings provided in section 812 of the Employee

20 Retirement Income Security Act of 1974, except

21 that the reference in paragraph (7) of such section

22 to an ‘‘association health plan’’ shall be deemed a

23 reference to an arrangement referred to in this sub24 section.
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1 TITLE VIII—HEALTH CARE AC2 CESS, AFFORDABILITY, AND

3 QUALITY COMMISSION

4 SEC. 801. ESTABLISHMENT OF COMMISSION.

5 Part 5 of the Employee Retirement Income Security

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

7 new section:

8 ‘‘SEC. 518. HEALTH CARE ACCESS, AFFORDABILITY AND

9 QUALITY COMMISSION.

10 ‘‘(a) ESTABLISHMENT.—There is hereby established

11 a commission to be known as the Health Care Access, Af12 fordability, and Quality Commission (hereinafter in this

13 Act referred to as the ‘Commission’).

14 ‘‘(b) DUTIES OF COMMISSION.—The duties of the

15 Commission shall be as follows:

16 ‘‘(1) ESTABLISHMENT OF MODEL GUIDE17 LINES.—Based on information gathered by appro18 priate Federal agencies, advisory groups, and other

19 appropriate sources for health care information,

20 studies, and data, the Commission shall establish

21 model guidelines in each of the following areas:

22 ‘‘(A) Independent expert external review

23 programs.

24 ‘‘(B) Consumer friendly information pro25 grams.
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1 ‘‘(C) Systems for measuring patient satis2 faction and patient outcomes.

3 ‘‘(D) Systems to ensure the timely proc4 essing of claims.

5 ‘‘(2) EVALUATION OF HEALTH BENEFITS MAN6 DATES.—At the request of the chairmen or ranking

7 minority members of the appropriate committees of

8 Congress, the Commission shall evaluate, taking into

9 consideration the overall cost effect, availability of

10 treatment, and the effect on the health of the gen11 eral population, existing and proposed benefit re12 quirements for group health plans.

13 ‘‘(3) COMMENTS ON CERTAIN SECRETARIAL RE14 PORTS.—If the Secretary submits to Congress (or a

15 committee of Congress) a report that is required by

16 law and that relates to policies under this section,

17 the Secretary shall transmit a copy of the report to

18 the Commission. The Commission shall review the

19 report and, not later than 6 months after the date

20 of submittal of the Secretary’s report to Congress,

21 shall submit to the appropriate committees of Con22 gress written comments on such report. Such com23 ments may include such recommendations as the

24 Commission deems appropriate.
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1 ‘‘(4) AGENDA AND ADDITIONAL REVIEW.—The

2 Commission shall consult periodically with the chair3 men and ranking minority members of the appro4 priate committees of Congress regarding the Com5 mission’s agenda and progress toward achieving the

6 agenda. The Commission may conduct additional re7 views, and submit additional reports to the appro8 priate committees of Congress, from time to time on

9 such topics as may be requested by such chairmen

10 and members and as the Commission deems appro11 priate.

12 ‘‘(5) AVAILABILITY OF REPORTS.—The Com13 mission shall transmit to the Secretary a copy of

14 each report submitted under this subsection and

15 shall make such reports available to the public.

16 ‘‘(c) MEMBERSHIP.—

17 ‘‘(1) NUMBER AND APPOINTMENT.—The Com18 mission shall be composed of 11 members appointed

19 by the Comptroller General.

20 ‘‘(2) QUALIFICATIONS.—

21 ‘‘(A) IN GENERAL.—The membership of

22 the Commission shall include—

23 ‘‘(i) physicians and other health pro24 fessionals;
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1 ‘‘(ii) representatives of employers, in2 cluding multiemployer plans;

3 ‘‘(ii) representatives of insured em4 ployees;

5 ‘‘(iv) third-party payers; and

6 ‘‘(v) health services and health eco7 nomics researchers with expertise in out8 comes and effectiveness research and tech9 nology assessment.

10 ‘‘(B) ETHICAL DISCLOSURE.—The Comp11 troller General shall establish a system for pub12 lic disclosure by members of the Commission of

13 financial and other potential conflicts of interest

14 relating to such members.

15 ‘‘(3) TERMS.—

16 ‘‘(A) IN GENERAL.—Each member shall be

17 appointed for a term of 3 years, except that the

18 Comptroller shall designate staggered terms for

19 the members first appointed.

20 ‘‘(B) VACANCIES.—Any member appointed

21 to fill a vacancy occurring before the expiration

22 of the term for which the member’s predecessor

23 was appointed shall be appointed only for the

24 remainder of that term. A member may serve

25 after the expiration of that member’s term until
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1 a successor has taken office. A vacancy in the

2 Commission shall be filled in the manner in

3 which the original appointment was made.

4 ‘‘(4) BASIC PAY.—

5 ‘‘(A) RATES OF PAY.—Except as provided

6 in subparagraph (B), members shall each be

7 paid at a rate equal to the rate of basic pay

8 payable for level IV of the Executive Schedule

9 for each day (including travel time) during

10 which they are engaged in the actual perform11 ance of duties vested in the Commission.

12 ‘‘(B) PROHIBITION OF COMPENSATION OF

13 FEDERAL EMPLOYEES.—Members of the Com14 mission who are full-time officers or employees

15 of the United States (or Members of Congress)

16 may not receive additional pay, allowances, or

17 benefits by reason of their service on the Com18 mission.

19 ‘‘(5) TRAVEL EXPENSES.—Each member shall

20 receive travel expenses, including per diem in lieu of

21 subsistence, in accordance with sections 5702 and

22 5703 of title 5, United States Code.

23 ‘‘(6) CHAIRPERSON.—The Chairperson of the

24 Commission shall be designated by the Comptroller
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1 at the time of the appointment. The term of office

2 of the Chairperson shall be 3 years.

3 ‘‘(7) MEETINGS.—The Commission shall meet 4

4 times each year.

5 ‘‘(d) DIRECTOR AND STAFF OF COMMISSION.—

6 ‘‘(1) DIRECTOR.—The Commission shall have a

7 Director who shall be appointed by the Chairperson.

8 The Director shall be paid at a rate not to exceed

9 the maximum rate of basic pay payable for GS–13

10 of the General Schedule.

11 ‘‘(2) STAFF.—The Director may appoint 2 ad12 ditional staff members.

13 ‘‘(3) APPLICABILITY OF CERTAIN CIVIL SERV14 ICE LAWS.—The Director and staff of the Commis15 sion shall be appointed subject to the provisions of

16 title 5, United States Code, governing appointments

17 in the competitive service, and shall be paid in ac18 cordance with the provisions of chapter 51 and sub19 chapter III of chapter 53 of that title relating to

20 classification and General Schedule pay rates.

21 ‘‘(e) POWERS OF COMMISSION.—

22 ‘‘(1) HEARINGS AND SESSIONS.—The Commis23 sion may, for the purpose of carrying out this Act,

24 hold hearings, sit and act at times and places, take

25 testimony, and receive evidence as the Commission
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1 considers appropriate. The Commission may admin2 ister oaths or affirmations to witnesses appearing

3 before it.

4 ‘‘(2) POWERS OF MEMBERS AND AGENTS.—Any

5 member or agent of the Commission may, if author6 ized by the Commission, take any action which the

7 Commission is authorized to take by this section.

8 ‘‘(3) OBTAINING OFFICIAL DATA.—The Com9 mission may secure directly from any department or

10 agency of the United States information necessary

11 to enable it to carry out this Act. Upon request of

12 the Chairperson of the Commission, the head of that

13 department or agency shall furnish that information

14 to the Commission.

15 ‘‘(4) MAILS.—The Commission may use the

16 United States mails in the same manner and under

17 the same conditions as other departments and agen18 cies of the United States.

19 ‘‘(5) ADMINISTRATIVE SUPPORT SERVICES.—

20 Upon the request of the Commission, the Adminis21 trator of General Services shall provide to the Com22 mission, on a reimbursable basis, the administrative

23 support services necessary for the Commission to

24 carry out its responsibilities under this Act.
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1 ‘‘(6) CONTRACT AUTHORITY.—The Commission

2 may contract with and compensate government and

3 private agencies or persons for services, without re4 gard to section 3709 of the Revised Statutes (41

5 U.S.C. 5).

6 ‘‘(f) REPORTS.—Beginning December 31, 2000, and

7 each year thereafter, the Commission shall submit to the

8 Congress an annual report detailing the following informa9 tion:

10 ‘‘(1) Access to care, affordability to employers

11 and employees, and quality of care under employer12 sponsored health plans and recommendations for im13 proving such access, affordability, and quality.

14 ‘‘(2) Any issues the Commission deems appro15 priate or any issues (such as the appropriateness

16 and availability of particular medical treatment) that

17 the chairmen or ranking members of the appropriate

18 committees of Congress requested the Commission

19 to evaluate.

20 ‘‘(g) DEFINITION OF APPROPRIATE COMMITTEES OF

21 CONGRESS.—For purposes of this section the term ‘appro22 priate committees of Congress’ means any committee in

23 the Senate or House of Representatives having jurisdiction

24 over the Employee Retirement Income Security Act of

25 1974.
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1 ‘‘(h) TERMINATION.—Section 14(a)(2)(B) of the

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

3 to the termination of advisory committees) shall not apply

4 to the Commission.

5 ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—There is

6 authorized to be appropriated for fiscal years 2000

7 through 2004 such sums as may be necessary to carry

8 out this Act.’’.

9 SEC. 802. EFFECTIVE DATE.

10 This title shall be effective 6 months after the date

11 of the enactment of this Act.

Æ