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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4628 Introduced in House (IH)]

108th CONGRESS
  2d Session
                                H. R. 4628

To amend the Public Health Service Act, the Employee Retirement Income 
Security Act of 1974, and the Internal Revenue Code of 1986 to protect 
       consumers in managed care plans and other health coverage.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 21, 2004

  Mr. Dingell (for himself, Mr. Andrews, Mr. Berry, Mr. Stenholm, Mr. 
  George Miller of California, Mr. Waxman, Mr. Stark, Mr. Rangel, Mr. 
  Brown of Ohio, Ms. Pelosi, Mr. Hoyer, Mr. Menendez, Mr. Frost, Mr. 
 Sandlin, Mr. Edwards, Mr. Davis of Florida, Mr. Meehan, Mr. Lampson, 
  Mr. Holden, Mr. Green of Texas, Mr. Bell, Mr. Moore, Mr. Turner of 
Texas, Mr. Pallone, Mrs. Capps, Mr. Meeks of New York, Ms. Schakowsky, 
 Mrs. Maloney, Ms. DeLauro, Ms. Waters, Mr. Larson of Connecticut, Mr. 
 Jackson of Illinois, Mr. Kennedy of Rhode Island, Ms. Slaughter, Mr. 
Serrano, Mr. Lipinski, Mr. Etheridge, Mr. Boswell, Mr. Strickland, Mr. 
 Holt, Ms. Kaptur, Mr. Ackerman, Mr. Hinchey, Mr. McNulty, Mr. Gordon, 
Ms. DeGette, Ms. Kilpatrick, Mr. Spratt, Mr. Skelton, Mr. Conyers, Mr. 
  Doyle, Mr. Oberstar, Mr. Stupak, Mr. Sherman, Mrs. McCarthy of New 
York, Ms. Linda T. Sanchez of California, and Mrs. Tauscher) introduced 
 the following bill; which was referred to the Committee on Energy and 
   Commerce, and in addition to the Committees on Education and the 
     Workforce and Ways and Means, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
To amend the Public Health Service Act, the Employee Retirement Income 
Security Act of 1974, and the Internal Revenue Code of 1986 to protect 
       consumers in managed care plans and other health coverage.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Patients' Bill of 
Rights Act of 2004''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                    TITLE I--IMPROVING MANAGED CARE

   Subtitle A--Utilization review; claims; and internal and external 
                                appeals

Sec. 101. Utilization review activities.
Sec. 102. Procedures for initial claims for benefits and prior 
                            authorization determinations.
Sec. 103. Internal appeals of claims denials.
Sec. 104. Independent external appeals procedures.
Sec. 105. Health Care Consumer Assistance Fund.
                       Subtitle B--Access to care

Sec. 111. Consumer choice option.
Sec. 112. Choice of health care professional.
Sec. 113. Access to emergency care.
Sec. 114. Timely access to specialists.
Sec. 115. Patient access to obstetrical and gynecological care.
Sec. 116. Access to pediatric care.
Sec. 117. Continuity of care.
Sec. 118. Access to needed prescription drugs.
Sec. 119. Coverage for individuals participating in approved clinical 
                            trials.
Sec. 120. Required coverage for minimum hospital stay for mastectomies 
                            and lymph node dissections for the 
                            treatment of breast cancer and coverage for 
                            secondary consultations.
                   Subtitle C--Access to information

Sec. 121. Patient access to information.
         Subtitle D--Protecting the doctor-patient relationship

Sec. 131. Prohibition of interference with certain medical 
                            communications.
Sec. 132. Prohibition of discrimination against providers based on 
                            licensure.
Sec. 133. Prohibition against improper incentive arrangements.
Sec. 134. Payment of claims.
Sec. 135. Protection for patient advocacy.
                        Subtitle E--Definitions

Sec. 151. Definitions.
Sec. 152. Preemption; State flexibility; construction.
Sec. 153. Exclusions.
Sec. 154. Treatment of excepted benefits.
Sec. 155. Regulations.
Sec. 156. Incorporation into plan or coverage documents.
Sec. 157. Preservation of protections.
 TITLE II--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS 
   AND HEALTH INSURANCE COVERAGE UNDER THE PUBLIC HEALTH SERVICE ACT

Sec. 201. Application to group health plans and group health insurance 
                            coverage.
Sec. 202. Application to individual health insurance coverage.
Sec. 203. Cooperation between Federal and State authorities.
   TITLE III--APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL 
                       HEALTH INSURANCE PROGRAMS

Sec. 301. Application of patient protection standards to Federal health 
                            insurance programs.
TITLE IV--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

Sec. 401. Application of patient protection standards to group health 
                            plans and group health insurance coverage 
                            under the Employee Retirement Income 
                            Security Act of 1974.
Sec. 402. Availability of civil remedies.
Sec. 403. Cooperation between Federal and State authorities.
        TITLE V--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

        Subtitle A--Application of patient protection provisions

Sec. 501. Application to group health plans under the Internal Revenue 
                            Code of 1986.
Sec. 502. Conforming enforcement for women's health and cancer rights.
         Subtitle B--Health care coverage access tax incentives

Sec. 511. Credit for health insurance expenses of small businesses.
Sec. 512. Certain grants by private foundations to qualified health 
                            benefit purchasing coalitions.
Sec. 513. State grant program for market innovation.
Sec. 514. Grant program to facilitate health benefits information for 
                            small employers.
Sec. 515. State grant program for market innovation.
       TITLE VI--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

Sec. 601. Effective dates.
Sec. 602. Coordination in implementation.
Sec. 603. Severability.
                  TITLE VII--MISCELLANEOUS PROVISIONS

Sec. 701. No impact on Social Security Trust Fund.

                    TITLE I--IMPROVING MANAGED CARE

   Subtitle A--Utilization Review; Claims; and Internal and External 
                                Appeals

SEC. 101. UTILIZATION REVIEW ACTIVITIES.

    (a) Compliance With Requirements.--
            (1) In general.--A group health plan, and a health 
        insurance issuer that provides health insurance coverage, shall 
        conduct utilization review activities in connection with the 
        provision of benefits under such plan or coverage only in 
        accordance with a utilization review program that meets the 
        requirements of this section and section 102.
            (2) Use of outside agents.--Nothing in this section shall 
        be construed as preventing a group health plan or health 
        insurance issuer from arranging through a contract or otherwise 
        for persons or entities to conduct utilization review 
        activities on behalf of the plan or issuer, so long as such 
        activities are conducted in accordance with a utilization 
        review program that meets the requirements of this section.
            (3) Utilization review defined.--For purposes of this 
        section, the terms ``utilization review'' and ``utilization 
        review activities'' mean procedures used to monitor or evaluate 
        the use or coverage, clinical necessity, appropriateness, 
        efficacy, or efficiency of health care services, procedures or 
        settings, and includes prospective review, concurrent review, 
        second opinions, case management, discharge planning, or 
        retrospective review.
    (b) Written Policies and Criteria.--
            (1) Written policies.--A utilization review program shall 
        be conducted consistent with written policies and procedures 
        that govern all aspects of the program.
            (2) Use of written criteria.--
                    (A) In general.--Such a program shall utilize 
                written clinical review criteria developed with input 
                from a range of appropriate actively practicing health 
                care professionals, as determined by the plan, pursuant 
                to the program. Such criteria shall include written 
                clinical review criteria that are based on valid 
                clinical evidence where available and that are directed 
                specifically at meeting the needs of at-risk 
                populations and covered individuals with chronic 
                conditions or severe illnesses, including gender-
                specific criteria and pediatric-specific criteria where 
                available and appropriate.
                    (B) Continuing use of standards in retrospective 
                review.--If a health care service has been specifically 
                pre-authorized or approved for a participant, 
                beneficiary, or enrollee under such a program, the 
                program shall not, pursuant to retrospective review, 
                revise or modify the specific standards, criteria, or 
                procedures used for the utilization review for 
                procedures, treatment, and services delivered to the 
                enrollee during the same course of treatment.
                    (C) Review of sample of claims denials.--Such a 
                program shall provide for a periodic evaluation of the 
                clinical appropriateness of at least a sample of 
                denials of claims for benefits.
    (c) Conduct of Program Activities.--
            (1) Administration by health care professionals.--A 
        utilization review program shall be administered by qualified 
        health care professionals who shall oversee review decisions.
            (2) Use of qualified, independent personnel.--
                    (A) In general.--A utilization review program shall 
                provide for the conduct of utilization review 
                activities only through personnel who are qualified and 
                have received appropriate training in the conduct of 
                such activities under the program.
                    (B) Prohibition of contingent compensation 
                arrangements.--Such a program shall not, with respect 
                to utilization review activities, permit or provide 
                compensation or anything of value to its employees, 
                agents, or contractors in a manner that encourages 
                denials of claims for benefits.
                    (C) Prohibition of conflicts.--Such a program shall 
                not permit a health care professional who is providing 
                health care services to an individual to perform 
                utilization review activities in connection with the 
                health care services being provided to the individual.
            (3) Accessibility of review.--Such a program shall provide 
        that appropriate personnel performing utilization review 
        activities under the program, including the utilization review 
        administrator, are reasonably accessible by toll-free telephone 
        during normal business hours to discuss patient care and allow 
        response to telephone requests, and that appropriate provision 
        is made to receive and respond promptly to calls received 
        during other hours.
            (4) Limits on frequency.--Such a program shall not provide 
        for the performance of utilization review activities with 
        respect to a class of services furnished to an individual more 
        frequently than is reasonably required to assess whether the 
        services under review are medically necessary and appropriate.

SEC. 102. PROCEDURES FOR INITIAL CLAIMS FOR BENEFITS AND PRIOR 
              AUTHORIZATION DETERMINATIONS.

    (a) Procedures of Initial Claims for Benefits.--
            (1) In general.--A group health plan, and a health 
        insurance issuer offering health insurance coverage, shall--
                    (A) make a determination on an initial claim for 
                benefits by a participant, beneficiary, or enrollee (or 
                authorized representative) regarding payment or 
                coverage for items or services under the terms and 
                conditions of the plan or coverage involved, including 
                any cost-sharing amount that the participant, 
                beneficiary, or enrollee is required to pay with 
                respect to such claim for benefits; and
                    (B) notify a participant, beneficiary, or enrollee 
                (or authorized representative) and the treating health 
                care professional involved regarding a determination on 
                an initial claim for benefits made under the terms and 
                conditions of the plan or coverage, including any cost-
                sharing amounts that the participant, beneficiary, or 
                enrollee may be required to make with respect to such 
                claim for benefits, and of the right of the 
                participant, beneficiary, or enrollee to an internal 
                appeal under section 103.
            (2) Access to information.--
                    (A) Timely provision of necessary information.--
                With respect to an initial claim for benefits, the 
                participant, beneficiary, or enrollee (or authorized 
                representative) and the treating health care 
                professional (if any) shall provide the plan or issuer 
                with access to information requested by the plan or 
                issuer that is necessary to make a determination 
                relating to the claim. Such access shall be provided 
                not later than 5 days after the date on which the 
                request for information is received, or, in a case 
                described in subparagraph (B) or (C) of subsection 
                (b)(1), by such earlier time as may be necessary to 
                comply with the applicable timeline under such 
                subparagraph.
                    (B) Limited effect of failure on plan or issuer's 
                obligations.--Failure of the participant, beneficiary, 
                or enrollee to comply with the requirements of 
                subparagraph (A) shall not remove the obligation of the 
                plan or issuer to make a decision in accordance with 
                the medical exigencies of the case and as soon as 
                possible, based on the available information, and 
                failure to comply with the time limit established by 
                this paragraph shall not remove the obligation of the 
                plan or issuer to comply with the requirements of this 
                section.
            (3) Oral requests.--In the case of a claim for benefits 
        involving an expedited or concurrent determination, a 
        participant, beneficiary, or enrollee (or authorized 
        representative) may make an initial claim for benefits orally, 
        but a group health plan, or health insurance issuer offering 
        health insurance coverage, may require that the participant, 
        beneficiary, or enrollee (or authorized representative) provide 
        written confirmation of such request in a timely manner on a 
        form provided by the plan or issuer. In the case of such an 
        oral request for benefits, the making of the request (and the 
        timing of such request) shall be treated as the making at that 
        time of a claim for such benefits without regard to whether and 
        when a written confirmation of such request is made.
    (b) Timeline for Making Determinations.--
            (1) Prior authorization determination.--
                    (A) In general.--A group health plan, and a health 
                insurance issuer offering health insurance coverage, 
                shall make a prior authorization determination on a 
                claim for benefits (whether oral or written) in 
                accordance with the medical exigencies of the case and 
                as soon as possible, but in no case later than 14 days 
                from the date on which the plan or issuer receives 
                information that is reasonably necessary to enable the 
                plan or issuer to make a determination on the request 
                for prior authorization and in no case later than 28 
                days after the date of the claim for benefits is 
                received.
                    (B) Expedited determination.--Notwithstanding 
                subparagraph (A), a group health plan, and a health 
                insurance issuer offering health insurance coverage, 
                shall expedite a prior authorization determination on a 
                claim for benefits described in such subparagraph when 
                a request for such an expedited determination is made 
                by a participant, beneficiary, or enrollee (or 
                authorized representative) at any time during the 
                process for making a determination and a health care 
                professional certifies, with the request, that a 
                determination under the procedures described in 
                subparagraph (A) would seriously jeopardize the life or 
                health of the participant, beneficiary, or enrollee or 
                the ability of the participant, beneficiary, or 
                enrollee to maintain or regain maximum function. Such 
                determination shall be made in accordance with the 
                medical exigencies of the case and as soon as possible, 
                but in no case later than 72 hours after the time the 
                request is received by the plan or issuer under this 
                subparagraph.
                    (C) Ongoing care.--
                            (i) Concurrent review.--
                                    (I) In general.--Subject to clause 
                                (ii), in the case of a concurrent 
                                review of ongoing care (including 
                                hospitalization), which results in a 
                                termination or reduction of such care, 
                                the plan or issuer must provide by 
                                telephone and in printed form notice of 
                                the concurrent review determination to 
                                the individual or the individual's 
                                designee and the individual's health 
                                care provider in accordance with the 
                                medical exigencies of the case and as 
                                soon as possible, with sufficient time 
                                prior to the termination or reduction 
                                to allow for an appeal under section 
                                103(b)(3) to be completed before the 
                                termination or reduction takes effect.
                                    (II) Contents of notice.--Such 
                                notice shall include, with respect to 
                                ongoing health care items and services, 
                                the number of ongoing services 
                                approved, the new total of approved 
                                services, the date of onset of 
                                services, and the next review date, if 
                                any, as well as a statement of the 
                                individual's rights to further appeal.
                            (ii) Rule of construction.--Clause (i) 
                        shall not be construed as requiring plans or 
                        issuers to provide coverage of care that would 
                        exceed the coverage limitations for such care.
            (2) Retrospective determination.--A group health plan, and 
        a health insurance issuer offering health insurance coverage, 
        shall make a retrospective determination on a claim for 
        benefits in accordance with the medical exigencies of the case 
        and as soon as possible, but not later than 30 days after the 
        date on which the plan or issuer receives information that is 
        reasonably necessary to enable the plan or issuer to make a 
        determination on the claim, or, if earlier, 60 days after the 
        date of receipt of the claim for benefits.
    (c) Notice of a Denial of a Claim for Benefits.--Written notice of 
a denial made under an initial claim for benefits shall be issued to 
the participant, beneficiary, or enrollee (or authorized 
representative) and the treating health care professional in accordance 
with the medical exigencies of the case and as soon as possible, but in 
no case later than 2 days after the date of the determination (or, in 
the case described in subparagraph (B) or (C) of subsection (b)(1), 
within the 72-hour or applicable period referred to in such 
subparagraph).
    (d) Requirements of Notice of Determinations.--The written notice 
of a denial of a claim for benefits determination under subsection (c) 
shall be provided in printed form and written in a manner calculated to 
be understood by the participant, beneficiary, or enrollee and shall 
include--
            (1) the specific reasons for the determination (including a 
        summary of the clinical or scientific evidence used in making 
        the determination);
            (2) the procedures for obtaining additional information 
        concerning the determination; and
            (3) notification of the right to appeal the determination 
        and instructions on how to initiate an appeal in accordance 
        with section 103.
    (e) Definitions.--For purposes of this part:
            (1) Authorized representative.--The term ``authorized 
        representative'' means, with respect to an individual who is a 
        participant, beneficiary, or enrollee, any health care 
        professional or other person acting on behalf of the individual 
        with the individual's consent or without such consent if the 
        individual is medically unable to provide such consent.
            (2) Claim for benefits.--The term ``claim for benefits'' 
        means any request for coverage (including authorization of 
        coverage), for eligibility, or for payment in whole or in part, 
        for an item or service under a group health plan or health 
        insurance coverage.
            (3) Denial of claim for benefits.--The term ``denial'' 
        means, with respect to a claim for benefits, a denial (in whole 
        or in part) of, or a failure to act on a timely basis upon, the 
        claim for benefits and includes a failure to provide benefits 
        (including items and services) required to be provided under 
        this title.
            (4) Treating health care professional.--The term ``treating 
        health care professional'' means, with respect to services to 
        be provided to a participant, beneficiary, or enrollee, a 
        health care professional who is primarily responsible for 
        delivering those services to the participant, beneficiary, or 
        enrollee.

SEC. 103. INTERNAL APPEALS OF CLAIMS DENIALS.

    (a) Right to Internal Appeal.--
            (1) In general.--A participant, beneficiary, or enrollee 
        (or authorized representative) may appeal any denial of a claim 
        for benefits under section 102 under the procedures described 
        in this section.
            (2) Time for appeal.--
                    (A) In general.--A group health plan, and a health 
                insurance issuer offering health insurance coverage, 
                shall ensure that a participant, beneficiary, or 
                enrollee (or authorized representative) has a period of 
                not less than 180 days beginning on the date of a 
                denial of a claim for benefits under section 102 in 
                which to appeal such denial under this section.
                    (B) Date of denial.--For purposes of subparagraph 
                (A), the date of the denial shall be deemed to be the 
                date as of which the participant, beneficiary, or 
                enrollee knew of the denial of the claim for benefits.
            (3) Failure to act.--The failure of a plan or issuer to 
        issue a determination on a claim for benefits under section 102 
        within the applicable timeline established for such a 
        determination under such section is a denial of a claim for 
        benefits for purposes this subtitle as of the date of the 
        applicable deadline.
            (4) Plan waiver of internal review.--A group health plan, 
        or health insurance issuer offering health insurance coverage, 
        may waive the internal review process under this section. In 
        such case the plan or issuer shall provide notice to the 
        participant, beneficiary, or enrollee (or authorized 
        representative) involved, the participant, beneficiary, or 
        enrollee (or authorized representative) involved shall be 
        relieved of any obligation to complete the internal review 
        involved, and may, at the option of such participant, 
        beneficiary, enrollee, or representative proceed directly to 
        seek further appeal through external review under section 104 
        or otherwise.
    (b) Timelines for Making Determinations.--
            (1) Oral requests.--In the case of an appeal of a denial of 
        a claim for benefits under this section that involves an 
        expedited or concurrent determination, a participant, 
        beneficiary, or enrollee (or authorized representative) may 
        request such appeal orally. A group health plan, or health 
        insurance issuer offering health insurance coverage, may 
        require that the participant, beneficiary, or enrollee (or 
        authorized representative) provide written confirmation of such 
        request in a timely manner on a form provided by the plan or 
        issuer. In the case of such an oral request for an appeal of a 
        denial, the making of the request (and the timing of such 
        request) shall be treated as the making at that time of a 
        request for an appeal without regard to whether and when a 
        written confirmation of such request is made.
            (2) Access to information.--
                    (A) Timely provision of necessary information.--
                With respect to an appeal of a denial of a claim for 
                benefits, the participant, beneficiary, or enrollee (or 
                authorized representative) and the treating health care 
                professional (if any) shall provide the plan or issuer 
                with access to information requested by the plan or 
                issuer that is necessary to make a determination 
                relating to the appeal. Such access shall be provided 
                not later than 5 days after the date on which the 
                request for information is received, or, in a case 
                described in subparagraph (B) or (C) of paragraph (3), 
                by such earlier time as may be necessary to comply with 
                the applicable timeline under such subparagraph.
                    (B) Limited effect of failure on plan or issuer's 
                obligations.--Failure of the participant, beneficiary, 
                or enrollee to comply with the requirements of 
                subparagraph (A) shall not remove the obligation of the 
                plan or issuer to make a decision in accordance with 
                the medical exigencies of the case and as soon as 
                possible, based on the available information, and 
                failure to comply with the time limit established by 
                this paragraph shall not remove the obligation of the 
                plan or issuer to comply with the requirements of this 
                section.
            (3) Prior authorization determinations.--
                    (A) In general.--Except as provided in this 
                paragraph or paragraph (4), a group health plan, and a 
                health insurance issuer offering health insurance 
                coverage, shall make a determination on an appeal of a 
                denial of a claim for benefits under this subsection in 
                accordance with the medical exigencies of the case and 
                as soon as possible, but in no case later than 14 days 
                from the date on which the plan or issuer receives 
                information that is reasonably necessary to enable the 
                plan or issuer to make a determination on the appeal 
                and in no case later than 28 days after the date the 
                request for the appeal is received.
                    (B) Expedited determination.--Notwithstanding 
                subparagraph (A), a group health plan, and a health 
                insurance issuer offering health insurance coverage, 
                shall expedite a prior authorization determination on 
                an appeal of a denial of a claim for benefits described 
                in subparagraph (A), when a request for such an 
                expedited determination is made by a participant, 
                beneficiary, or enrollee (or authorized representative) 
                at any time during the process for making a 
                determination and a health care professional certifies, 
                with the request, that a determination under the 
                procedures described in subparagraph (A) would 
                seriously jeopardize the life or health of the 
                participant, beneficiary, or enrollee or the ability of 
                the participant, beneficiary, or enrollee to maintain 
                or regain maximum function. Such determination shall be 
                made in accordance with the medical exigencies of the 
                case and as soon as possible, but in no case later than 
                72 hours after the time the request for such appeal is 
                received by the plan or issuer under this subparagraph.
                    (C) Ongoing care determinations.--
                            (i) In general.--Subject to clause (ii), in 
                        the case of a concurrent review determination 
                        described in section 102(b)(1)(C)(i)(I), which 
                        results in a termination or reduction of such 
                        care, the plan or issuer must provide notice of 
                        the determination on the appeal under this 
                        section by telephone and in printed form to the 
                        individual or the individual's designee and the 
                        individual's health care provider in accordance 
                        with the medical exigencies of the case and as 
                        soon as possible, with sufficient time prior to 
                        the termination or reduction to allow for an 
                        external appeal under section 104 to be 
                        completed before the termination or reduction 
                        takes effect.
                            (ii) Rule of construction.--Clause (i) 
                        shall not be construed as requiring plans or 
                        issuers to provide coverage of care that would 
                        exceed the coverage limitations for such care.
            (4) Retrospective determination.--A group health plan, and 
        a health insurance issuer offering health insurance coverage, 
        shall make a retrospective determination on an appeal of a 
        denial of a claim for benefits in no case later than 30 days 
        after the date on which the plan or issuer receives necessary 
        information that is reasonably necessary to enable the plan or 
        issuer to make a determination on the appeal and in no case 
        later than 60 days after the date the request for the appeal is 
        received.
    (c) Conduct of Review.--
            (1) In general.--A review of a denial of a claim for 
        benefits under this section shall be conducted by an individual 
        with appropriate expertise who was not involved in the initial 
        determination.
            (2) Peer review of medical decisions by health care 
        professionals.--A review of an appeal of a denial of a claim 
        for benefits that is based on a lack of medical necessity and 
        appropriateness, or based on an experimental or investigational 
        treatment, or requires an evaluation of medical facts--
                    (A) shall be made by a physician (allopathic or 
                osteopathic); or
                    (B) in a claim for benefits provided by a non-
                physician health professional, shall be made by 
                reviewer (or reviewers) including at least one 
                practicing non-physician health professional of the 
                same or similar specialty;
        with appropriate expertise (including, in the case of a child, 
        appropriate pediatric expertise) and acting within the 
        appropriate scope of practice within the State in which the 
        service is provided or rendered, who was not involved in the 
        initial determination.
    (d) Notice of Determination.--
            (1) In general.--Written notice of a determination made 
        under an internal appeal of a denial of a claim for benefits 
        shall be issued to the participant, beneficiary, or enrollee 
        (or authorized representative) and the treating health care 
        professional in accordance with the medical exigencies of the 
        case and as soon as possible, but in no case later than 2 days 
        after the date of completion of the review (or, in the case 
        described in subparagraph (B) or (C) of subsection (b)(3), 
        within the 72-hour or applicable period referred to in such 
        subparagraph).
            (2) Final determination.--The decision by a plan or issuer 
        under this section shall be treated as the final determination 
        of the plan or issuer on a denial of a claim for benefits. The 
        failure of a plan or issuer to issue a determination on an 
        appeal of a denial of a claim for benefits under this section 
        within the applicable timeline established for such a 
        determination shall be treated as a final determination on an 
        appeal of a denial of a claim for benefits for purposes of 
        proceeding to external review under section 104.
            (3) Requirements of notice.--With respect to a 
        determination made under this section, the notice described in 
        paragraph (1) shall be provided in printed form and written in 
        a manner calculated to be understood by the participant, 
        beneficiary, or enrollee and shall include--
                    (A) the specific reasons for the determination 
                (including a summary of the clinical or scientific 
                evidence used in making the determination);
                    (B) the procedures for obtaining additional 
                information concerning the determination; and
                    (C) notification of the right to an independent 
                external review under section 104 and instructions on 
                how to initiate such a review.

SEC. 104. INDEPENDENT EXTERNAL APPEALS PROCEDURES.

    (a) Right to External Appeal.--A group health plan, and a health 
insurance issuer offering health insurance coverage, shall provide in 
accordance with this section participants, beneficiaries, and enrollees 
(or authorized representatives) with access to an independent external 
review for any denial of a claim for benefits.
    (b) Initiation of the Independent External Review Process.--
            (1) Time to file.--A request for an independent external 
        review under this section shall be filed with the plan or 
        issuer not later than 180 days after the date on which the 
        participant, beneficiary, or enrollee receives notice of the 
        denial under section 103(d) or notice of waiver of internal 
        review under section 103(a)(4) or the date on which the plan or 
        issuer has failed to make a timely decision under section 
        103(d)(2) and notifies the participant or beneficiary that it 
        has failed to make a timely decision and that the beneficiary 
        must file an appeal with an external review entity within 180 
        days if the participant or beneficiary desires to file such an 
        appeal.
            (2) Filing of request.--
                    (A) In general.--Subject to the succeeding 
                provisions of this subsection, a group health plan, or 
                health insurance issuer offering health insurance 
                coverage, may--
                            (i) except as provided in subparagraph 
                        (B)(i), require that a request for review be in 
                        writing;
                            (ii) limit the filing of such a request to 
                        the participant, beneficiary, or enrollee 
                        involved (or an authorized representative);
                            (iii) except if waived by the plan or 
                        issuer under section 103(a)(4), condition 
                        access to an independent external review under 
                        this section upon a final determination of a 
                        denial of a claim for benefits under the 
                        internal review procedure under section 103;
                            (iv) except as provided in subparagraph 
                        (B)(ii), require payment of a filing fee to the 
                        plan or issuer of a sum that does not exceed 
                        $25; and
                            (v) require that a request for review 
                        include the consent of the participant, 
                        beneficiary, or enrollee (or authorized 
                        representative) for the release of necessary 
                        medical information or records of the 
                        participant, beneficiary, or enrollee to the 
                        qualified external review entity only for 
                        purposes of conducting external review 
                        activities.
                    (B) Requirements and exception relating to general 
                rule.--
                            (i) Oral requests permitted in expedited or 
                        concurrent cases.--In the case of an expedited 
                        or concurrent external review as provided for 
                        under subsection (e), the request for such 
                        review may be made orally. A group health plan, 
                        or health insurance issuer offering health 
                        insurance coverage, may require that the 
                        participant, beneficiary, or enrollee (or 
                        authorized representative) provide written 
                        confirmation of such request in a timely manner 
                        on a form provided by the plan or issuer. Such 
                        written confirmation shall be treated as a 
                        consent for purposes of subparagraph (A)(v). In 
                        the case of such an oral request for such a 
                        review, the making of the request (and the 
                        timing of such request) shall be treated as the 
                        making at that time of a request for such a 
                        review without regard to whether and when a 
                        written confirmation of such request is made.
                            (ii) Exception to filing fee requirement.--
                                    (I) Indigency.--Payment of a filing 
                                fee shall not be required under 
                                subparagraph (A)(iv) where there is a 
                                certification (in a form and manner 
                                specified in guidelines established by 
                                the appropriate Secretary) that the 
                                participant, beneficiary, or enrollee 
                                is indigent (as defined in such 
                                guidelines).
                                    (II) Fee not required.--Payment of 
                                a filing fee shall not be required 
                                under subparagraph (A)(iv) if the plan 
                                or issuer waives the internal appeals 
                                process under section 103(a)(4).
                                    (III) Refunding of fee.--The filing 
                                fee paid under subparagraph (A)(iv) 
                                shall be refunded if the determination 
                                under the independent external review 
                                is to reverse or modify the denial 
                                which is the subject of the review.
                                    (IV) Collection of filing fee.--The 
                                failure to pay such a filing fee shall 
                                not prevent the consideration of a 
                                request for review but, subject to the 
                                preceding provisions of this clause, 
                                shall constitute a legal liability to 
                                pay.
    (c) Referral to Qualified External Review Entity Upon Request.--
            (1) In general.--Upon the filing of a request for 
        independent external review with the group health plan, or 
        health insurance issuer offering health insurance coverage, the 
        plan or issuer shall immediately refer such request, and 
        forward the plan or issuer's initial decision (including the 
        information described in section 103(d)(3)(A)), to a qualified 
        external review entity selected in accordance with this 
        section.
            (2) Access to plan or issuer and health professional 
        information.--With respect to an independent external review 
        conducted under this section, the participant, beneficiary, or 
        enrollee (or authorized representative), the plan or issuer, 
        and the treating health care professional (if any) shall 
        provide the external review entity with information that is 
        necessary to conduct a review under this section, as determined 
        and requested by the entity. Such information shall be provided 
        not later than 5 days after the date on which the request for 
        information is received, or, in a case described in clause (ii) 
        or (iii) of subsection (e)(1)(A), by such earlier time as may 
        be necessary to comply with the applicable timeline under such 
        clause.
            (3) Screening of requests by qualified external review 
        entities.--
                    (A) In general.--With respect to a request referred 
                to a qualified external review entity under paragraph 
                (1) relating to a denial of a claim for benefits, the 
                entity shall refer such request for the conduct of an 
                independent medical review unless the entity determines 
                that--
                            (i) any of the conditions described in 
                        clauses (ii) or (iii) of subsection (b)(2)(A) 
                        have not been met;
                            (ii) the denial of the claim for benefits 
                        does not involve a medically reviewable 
                        decision under subsection (d)(2);
                            (iii) the denial of the claim for benefits 
                        relates to a decision regarding whether an 
                        individual is a participant, beneficiary, or 
                        enrollee who is enrolled under the terms and 
                        conditions of the plan or coverage (including 
                        the applicability of any waiting period under 
                        the plan or coverage); or
                            (iv) the denial of the claim for benefits 
                        is a decision as to the application of cost-
                        sharing requirements or the application of a 
                        specific exclusion or express limitation on the 
                        amount, duration, or scope of coverage of items 
                        or services under the terms and conditions of 
                        the plan or coverage unless the decision is a 
                        denial described in subsection (d)(2).
                Upon making a determination that any of clauses (i) 
                through (iv) applies with respect to the request, the 
                entity shall determine that the denial of a claim for 
                benefits involved is not eligible for independent 
                medical review under subsection (d), and shall provide 
                notice in accordance with subparagraph (C).
                    (B) Process for making determinations.--
                            (i) No deference to prior determinations.--
                        In making determinations under subparagraph 
                        (A), there shall be no deference given to 
                        determinations made by the plan or issuer or 
                        the recommendation of a treating health care 
                        professional (if any).
                            (ii) Use of appropriate personnel.--A 
                        qualified external review entity shall use 
                        appropriately qualified personnel to make 
                        determinations under this section.
                    (C) Notices and general timelines for 
                determination.--
                            (i) Notice in case of denial of referral.--
                        If the entity under this paragraph does not 
                        make a referral to an independent medical 
                        reviewer, the entity shall provide notice to 
                        the plan or issuer, the participant, 
                        beneficiary, or enrollee (or authorized 
                        representative) filing the request, and the 
                        treating health care professional (if any) that 
                        the denial is not subject to independent 
                        medical review. Such notice--
                                    (I) shall be written (and, in 
                                addition, may be provided orally) in a 
                                manner calculated to be understood by a 
                                participant or enrollee;
                                    (II) shall include the reasons for 
                                the determination;
                                    (III) include any relevant terms 
                                and conditions of the plan or coverage; 
                                and
                                    (IV) include a description of any 
                                further recourse available to the 
                                individual.
                            (ii) General timeline for determinations.--
                        Upon receipt of information under paragraph 
                        (2), the qualified external review entity, and 
                        if required the independent medical reviewer, 
                        shall make a determination within the overall 
                        timeline that is applicable to the case under 
                        review as described in subsection (e), except 
                        that if the entity determines that a referral 
                        to an independent medical reviewer is not 
                        required, the entity shall provide notice of 
                        such determination to the participant, 
                        beneficiary, or enrollee (or authorized 
                        representative) within such timeline and within 
                        2 days of the date of such determination.
    (d) Independent Medical Review.--
            (1) In general.--If a qualified external review entity 
        determines under subsection (c) that a denial of a claim for 
        benefits is eligible for independent medical review, the entity 
        shall refer the denial involved to an independent medical 
        reviewer for the conduct of an independent medical review under 
        this subsection.
            (2) Medically reviewable decisions.--A denial of a claim 
        for benefits is eligible for independent medical review if the 
        benefit for the item or service for which the claim is made 
        would be a covered benefit under the terms and conditions of 
        the plan or coverage but for one (or more) of the following 
        determinations:
                    (A) Denials based on medical necessity and 
                appropriateness.--A determination that the item or 
                service is not covered because it is not medically 
                necessary and appropriate or based on the application 
                of substantially equivalent terms.
                    (B) Denials based on experimental or 
                investigational treatment.--A determination that the 
                item or service is not covered because it is 
                experimental or investigational or based on the 
                application of substantially equivalent terms.
                    (C) Denials otherwise based on an evaluation of 
                medical facts.--A determination that the item or 
                service or condition is not covered based on grounds 
                that require an evaluation of the medical facts by a 
                health care professional in the specific case involved 
                to determine the coverage and extent of coverage of the 
                item or service or condition.
            (3) Independent medical review determination.--
                    (A) In general.--An independent medical reviewer 
                under this section shall make a new independent 
                determination with respect to whether or not the denial 
                of a claim for a benefit that is the subject of the 
                review should be upheld, reversed, or modified.
                    (B) Standard for determination.--The independent 
                medical reviewer's determination relating to the 
                medical necessity and appropriateness, or the 
                experimental or investigational nature, or the 
                evaluation of the medical facts, of the item, service, 
                or condition involved shall be based on the medical 
                condition of the participant, beneficiary, or enrollee 
                (including the medical records of the participant, 
                beneficiary, or enrollee) and valid, relevant 
                scientific evidence and clinical evidence, including 
                peer-reviewed medical literature or findings and 
                including expert opinion.
                    (C) No coverage for excluded benefits.--Nothing in 
                this subsection shall be construed to permit an 
                independent medical reviewer to require that a group 
                health plan, or health insurance issuer offering health 
                insurance coverage, provide coverage for items or 
                services for which benefits are specifically excluded 
                or expressly limited under the plan or coverage in the 
                plain language of the plan document (and which are 
                disclosed under section 121(b)(1)(C)). Notwithstanding 
                any other provision of this Act, any exclusion of an 
                exact medical procedure, any exact time limit on the 
                duration or frequency of coverage, and any exact dollar 
                limit on the amount of coverage that is specifically 
                enumerated and defined (in the plain language of the 
                plan or coverage documents) under the plan or coverage 
                offered by a group health plan or health insurance 
                issuer offering health insurance coverage and that is 
                disclosed under section 121(b)(1) shall be considered 
                to govern the scope of the benefits that may be 
                required: Provided, That the terms and conditions of 
                the plan or coverage relating to such an exclusion or 
                limit are in compliance with the requirements of law.
                    (D) Evidence and information to be used in medical 
                reviews.--In making a determination under this 
                subsection, the independent medical reviewer shall also 
                consider appropriate and available evidence and 
                information, including the following:
                            (i) The determination made by the plan or 
                        issuer with respect to the claim upon internal 
                        review and the evidence, guidelines, or 
                        rationale used by the plan or issuer in 
                        reaching such determination.
                            (ii) The recommendation of the treating 
                        health care professional and the evidence, 
                        guidelines, and rationale used by the treating 
                        health care professional in reaching such 
                        recommendation.
                            (iii) Additional relevant evidence or 
                        information obtained by the reviewer or 
                        submitted by the plan, issuer, participant, 
                        beneficiary, or enrollee (or an authorized 
                        representative), or treating health care 
                        professional.
                            (iv) The plan or coverage document.
                    (E) Independent determination.--In making 
                determinations under this section, a qualified external 
                review entity and an independent medical reviewer 
                shall--
                            (i) consider the claim under review without 
                        deference to the determinations made by the 
                        plan or issuer or the recommendation of the 
                        treating health care professional (if any); and
                            (ii) consider, but not be bound by, the 
                        definition used by the plan or issuer of 
                        ``medically necessary and appropriate'', or 
                        ``experimental or investigational'', or other 
                        substantially equivalent terms that are used by 
                        the plan or issuer to describe medical 
                        necessity and appropriateness or experimental 
                        or investigational nature of the treatment.
                    (F) Determination of independent medical 
                reviewer.--An independent medical reviewer shall, in 
                accordance with the deadlines described in subsection 
                (e), prepare a written determination to uphold, 
                reverse, or modify the denial under review. Such 
                written determination shall include--
                            (i) the determination of the reviewer;
                            (ii) the specific reasons of the reviewer 
                        for such determination, including a summary of 
                        the clinical or scientific evidence used in 
                        making the determination; and
                            (iii) with respect to a determination to 
                        reverse or modify the denial under review, a 
                        timeframe within which the plan or issuer must 
                        comply with such determination.
                    (G) Nonbinding nature of additional 
                recommendations.--In addition to the determination 
                under subparagraph (F), the reviewer may provide the 
                plan or issuer and the treating health care 
                professional with additional recommendations in 
                connection with such a determination, but any such 
                recommendations shall not affect (or be treated as part 
                of) the determination and shall not be binding on the 
                plan or issuer.
    (e) Timelines and Notifications.--
            (1) Timelines for independent medical review.--
                    (A) Prior authorization determination.--
                            (i) In general.--The independent medical 
                        reviewer (or reviewers) shall make a 
                        determination on a denial of a claim for 
                        benefits that is referred to the reviewer under 
                        subsection (c)(3) in accordance with the 
                        medical exigencies of the case and as soon as 
                        possible, but in no case later than 14 days 
                        after the date of receipt of information under 
                        subsection (c)(2) if the review involves a 
                        prior authorization of items or services and in 
                        no case later than 21 days after the date the 
                        request for external review is received.
                            (ii) Expedited determination.--
                        Notwithstanding clause (i) and subject to 
                        clause (iii), the independent medical reviewer 
                        (or reviewers) shall make an expedited 
                        determination on a denial of a claim for 
                        benefits described in clause (i), when a 
                        request for such an expedited determination is 
                        made by a participant, beneficiary, or enrollee 
                        (or authorized representative) at any time 
                        during the process for making a determination, 
                        and a health care professional certifies, with 
                        the request, that a determination under the 
                        timeline described in clause (i) would 
                        seriously jeopardize the life or health of the 
                        participant, beneficiary, or enrollee or the 
                        ability of the participant, beneficiary, or 
                        enrollee to maintain or regain maximum 
                        function. Such determination shall be made in 
                        accordance with the medical exigencies of the 
                        case and as soon as possible, but in no case 
                        later than 72 hours after the time the request 
                        for external review is received by the 
                        qualified external review entity.
                            (iii) Ongoing care determination.--
                        Notwithstanding clause (i), in the case of a 
                        review described in such clause that involves a 
                        termination or reduction of care, the notice of 
                        the determination shall be completed not later 
                        than 24 hours after the time the request for 
                        external review is received by the qualified 
                        external review entity and before the end of 
                        the approved period of care.
                    (B) Retrospective determination.--The independent 
                medical reviewer (or reviewers) shall complete a review 
                in the case of a retrospective determination on an 
                appeal of a denial of a claim for benefits that is 
                referred to the reviewer under subsection (c)(3) in no 
                case later than 30 days after the date of receipt of 
                information under subsection (c)(2) and in no case 
                later than 60 days after the date the request for 
                external review is received by the qualified external 
                review entity.
            (2) Notification of determination.--The external review 
        entity shall ensure that the plan or issuer, the participant, 
        beneficiary, or enrollee (or authorized representative) and the 
        treating health care professional (if any) receives a copy of 
        the written determination of the independent medical reviewer 
        prepared under subsection (d)(3)(F). Nothing in this paragraph 
        shall be construed as preventing an entity or reviewer from 
        providing an initial oral notice of the reviewer's 
        determination.
            (3) Form of notices.--Determinations and notices under this 
        subsection shall be written in a manner calculated to be 
        understood by a participant.
    (f) Compliance.--
            (1) Application of determinations.--
                    (A) External review determinations binding on 
                plan.--The determinations of an external review entity 
                and an independent medical reviewer under this section 
                shall be binding upon the plan or issuer involved.
                    (B) Compliance with determination.--If the 
                determination of an independent medical reviewer is to 
                reverse or modify the denial, the plan or issuer, upon 
                the receipt of such determination, shall authorize 
                coverage to comply with the medical reviewer's 
                determination in accordance with the timeframe 
                established by the medical reviewer.
            (2) Failure to comply.--
                    (A) In general.--If a plan or issuer fails to 
                comply with the timeframe established under paragraph 
                (1)(B) with respect to a participant, beneficiary, or 
                enrollee, where such failure to comply is caused by the 
                plan or issuer, the participant, beneficiary, or 
                enrollee may obtain the items or services involved (in 
                a manner consistent with the determination of the 
                independent external reviewer) from any provider 
                regardless of whether such provider is a participating 
                provider under the plan or coverage.
                    (B) Reimbursement.--
                            (i) In general.--Where a participant, 
                        beneficiary, or enrollee obtains items or 
                        services in accordance with subparagraph (A), 
                        the plan or issuer involved shall provide for 
                        reimbursement of the costs of such items or 
                        services. Such reimbursement shall be made to 
                        the treating health care professional or to the 
                        participant, beneficiary, or enrollee (in the 
                        case of a participant, beneficiary, or enrollee 
                        who pays for the costs of such items or 
                        services).
                            (ii) Amount.--The plan or issuer shall 
                        fully reimburse a professional, participant, 
                        beneficiary, or enrollee under clause (i) for 
                        the total costs of the items or services 
                        provided (regardless of any plan limitations 
                        that may apply to the coverage of such items or 
                        services) so long as the items or services were 
                        provided in a manner consistent with the 
                        determination of the independent medical 
                        reviewer.
                    (C) Failure to reimburse.--Where a plan or issuer 
                fails to provide reimbursement to a professional, 
                participant, beneficiary, or enrollee in accordance 
                with this paragraph, the professional, participant, 
                beneficiary, or enrollee may commence a civil action 
                (or utilize other remedies available under law) to 
                recover only the amount of any such reimbursement that 
                is owed by the plan or issuer and any necessary legal 
                costs or expenses (including attorney's fees) incurred 
                in recovering such reimbursement.
                    (D) Available remedies.--The remedies provided 
                under this paragraph are in addition to any other 
                available remedies.
            (3) Penalties against authorized officials for refusing to 
        authorize the determination of an external review entity.--
                    (A) Monetary penalties.--
                            (i) In general.--In any case in which the 
                        determination of an external review entity is 
                        not followed by a group health plan, or by a 
                        health insurance issuer offering health 
                        insurance coverage, any person who, acting in 
                        the capacity of authorizing the benefit, causes 
                        such refusal may, in the discretion of a court 
                        of competent jurisdiction, be liable to an 
                        aggrieved participant, beneficiary, or enrollee 
                        for a civil penalty in an amount of up to 
                        $1,000 a day from the date on which the 
                        determination was transmitted to the plan or 
                        issuer by the external review entity until the 
                        date the refusal to provide the benefit is 
                        corrected.
                            (ii) Additional penalty for failing to 
                        follow timeline.--In any case in which 
                        treatment was not commenced by the plan in 
                        accordance with the determination of an 
                        independent external reviewer, the Secretary 
                        shall assess a civil penalty of $10,000 against 
                        the plan and the plan shall pay such penalty to 
                        the participant, beneficiary, or enrollee 
                        involved.
                    (B) Cease and desist order and order of attorney's 
                fees.--In any action described in subparagraph (A) 
                brought by a participant, beneficiary, or enrollee with 
                respect to a group health plan, or a health insurance 
                issuer offering health insurance coverage, in which a 
                plaintiff alleges that a person referred to in such 
                subparagraph has taken an action resulting in a refusal 
                of a benefit determined by an external appeal entity to 
                be covered, or has failed to take an action for which 
                such person is responsible under the terms and 
                conditions of the plan or coverage and which is 
                necessary under the plan or coverage for authorizing a 
                benefit, the court shall cause to be served on the 
                defendant an order requiring the defendant--
                            (i) to cease and desist from the alleged 
                        action or failure to act; and
                            (ii) to pay to the plaintiff a reasonable 
                        attorney's fee and other reasonable costs 
                        relating to the prosecution of the action on 
                        the charges on which the plaintiff prevails.
                    (C) Additional civil penalties.--
                            (i) In general.--In addition to any penalty 
                        imposed under subparagraph (A) or (B), the 
                        appropriate Secretary may assess a civil 
                        penalty against a person acting in the capacity 
                        of authorizing a benefit determined by an 
                        external review entity for one or more group 
                        health plans, or health insurance issuers 
                        offering health insurance coverage, for--
                                    (I) any pattern or practice of 
                                repeated refusal to authorize a benefit 
                                determined by an external appeal entity 
                                to be covered; or
                                    (II) any pattern or practice of 
                                repeated violations of the requirements 
                                of this section with respect to such 
                                plan or coverage.
                            (ii) Standard of proof and amount of 
                        penalty.--Such penalty shall be payable only 
                        upon proof by clear and convincing evidence of 
                        such pattern or practice and shall be in an 
                        amount not to exceed the lesser of--
                                    (I) 25 percent of the aggregate 
                                value of benefits shown by the 
                                appropriate Secretary to have not been 
                                provided, or unlawfully delayed, in 
                                violation of this section under such 
                                pattern or practice; or
                                    (II) $500,000.
                    (D) Removal and disqualification.--Any person 
                acting in the capacity of authorizing benefits who has 
                engaged in any such pattern or practice described in 
                subparagraph (C)(i) with respect to a plan or coverage, 
                upon the petition of the appropriate Secretary, may be 
                removed by the court from such position, and from any 
                other involvement, with respect to such a plan or 
                coverage, and may be precluded from returning to any 
                such position or involvement for a period determined by 
                the court.
            (4) Protection of legal rights.--Nothing in this subsection 
        or subtitle shall be construed as altering or eliminating any 
        cause of action or legal rights or remedies of participants, 
        beneficiaries, enrollees, and others under State or Federal law 
        (including sections 502 and 503 of the Employee Retirement 
        Income Security Act of 1974), including the right to file 
        judicial actions to enforce rights.
    (g) Qualifications of Independent Medical Reviewers.--
            (1) In general.--In referring a denial to 1 or more 
        individuals to conduct independent medical review under 
        subsection (c), the qualified external review entity shall 
        ensure that--
                    (A) each independent medical reviewer meets the 
                qualifications described in paragraphs (2) and (3);
                    (B) with respect to each review at least 1 such 
                reviewer meets the requirements described in paragraphs 
                (4) and (5); and
                    (C) compensation provided by the entity to the 
                reviewer is consistent with paragraph (6).
            (2) Licensure and expertise.--Each independent medical 
        reviewer shall be a physician (allopathic or osteopathic) or 
        health care professional who--
                    (A) is appropriately credentialed or licensed in 1 
                or more States to deliver health care services; and
                    (B) typically treats the condition, makes the 
                diagnosis, or provides the type of treatment under 
                review.
            (3) Independence.--
                    (A) In general.--Subject to subparagraph (B), each 
                independent medical reviewer in a case shall--
                            (i) not be a related party (as defined in 
                        paragraph (7));
                            (ii) not have a material familial, 
                        financial, or professional relationship with 
                        such a party; and
                            (iii) not otherwise have a conflict of 
                        interest with such a party (as determined under 
                        regulations).
                    (B) Exception.--Nothing in subparagraph (A) shall 
                be construed to--
                            (i) prohibit an individual, solely on the 
                        basis of affiliation with the plan or issuer, 
                        from serving as an independent medical reviewer 
                        if--
                                    (I) a non-affiliated individual is 
                                not reasonably available;
                                    (II) the affiliated individual is 
                                not involved in the provision of items 
                                or services in the case under review;
                                    (III) the fact of such an 
                                affiliation is disclosed to the plan or 
                                issuer and the participant, 
                                beneficiary, or enrollee (or authorized 
                                representative) and neither party 
                                objects; and
                                    (IV) the affiliated individual is 
                                not an employee of the plan or issuer 
                                and does not provide services 
                                exclusively or primarily to or on 
                                behalf of the plan or issuer;
                            (ii) prohibit an individual who has staff 
                        privileges at the institution where the 
                        treatment involved takes place from serving as 
                        an independent medical reviewer merely on the 
                        basis of such affiliation if the affiliation is 
                        disclosed to the plan or issuer and the 
                        participant, beneficiary, or enrollee (or 
                        authorized representative), and neither party 
                        objects; or
                            (iii) prohibit receipt of compensation by 
                        an independent medical reviewer from an entity 
                        if the compensation is provided consistent with 
                        paragraph (6).
            (4) Practicing health care professional in same field.--
                    (A) In general.--In a case involving treatment, or 
                the provision of items or services--
                            (i) by a physician, a reviewer shall be a 
                        practicing physician (allopathic or 
                        osteopathic) of the same or similar specialty, 
                        as a physician who, acting within the 
                        appropriate scope of practice within the State 
                        in which the service is provided or rendered, 
                        typically treats the condition, makes the 
                        diagnosis, or provides the type of treatment 
                        under review; or
                            (ii) by a non-physician health care 
                        professional, a reviewer (or reviewers) shall 
                        include at least one practicing non-physician 
                        health care professional of the same or similar 
                        specialty as the non-physician health care 
                        professional who, acting within the appropriate 
                        scope of practice within the State in which the 
                        service is provided or rendered, typically 
                        treats the condition, makes the diagnosis, or 
                        provides the type of treatment under review.
                    (B) Practicing defined.--For purposes of this 
                paragraph, the term ``practicing'' means, with respect 
                to an individual who is a physician or other health 
                care professional that the individual provides health 
                care services to individual patients on average at 
                least 2 days per week.
            (5) Pediatric expertise.--In the case of an external review 
        relating to a child, a reviewer shall have expertise under 
        paragraph (2) in pediatrics.
            (6) Limitations on reviewer compensation.--Compensation 
        provided by a qualified external review entity to an 
        independent medical reviewer in connection with a review under 
        this section shall--
                    (A) not exceed a reasonable level; and
                    (B) not be contingent on the decision rendered by 
                the reviewer.
            (7) Related party defined.--For purposes of this section, 
        the term ``related party'' means, with respect to a denial of a 
        claim under a plan or coverage relating to a participant, 
        beneficiary, or enrollee, any of the following:
                    (A) The plan, plan sponsor, or issuer involved, or 
                any fiduciary, officer, director, or employee of such 
                plan, plan sponsor, or issuer.
                    (B) The participant, beneficiary, or enrollee (or 
                authorized representative).
                    (C) The health care professional that provides the 
                items or services involved in the denial.
                    (D) The institution at which the items or services 
                (or treatment) involved in the denial are provided.
                    (E) The manufacturer of any drug or other item that 
                is included in the items or services involved in the 
                denial.
                    (F) Any other party determined under any 
                regulations to have a substantial interest in the 
                denial involved.
    (h) Qualified External Review Entities.--
            (1) Selection of qualified external review entities.--
                    (A) Limitation on plan or issuer selection.--The 
                appropriate Secretary shall implement procedures--
                            (i) to assure that the selection process 
                        among qualified external review entities will 
                        not create any incentives for external review 
                        entities to make a decision in a biased manner; 
                        and
                            (ii) for auditing a sample of decisions by 
                        such entities to assure that no such decisions 
                        are made in a biased manner.
                No such selection process under the procedures 
                implemented by the appropriate Secretary may give 
                either the patient or the plan or issuer any ability to 
                determine or influence the selection of a qualified 
                external review entity to review the case of any 
                participant, beneficiary, or enrollee.
                    (B) State authority with respect to qualified 
                external review entities for health insurance 
                issuers.--With respect to health insurance issuers 
                offering health insurance coverage in a State, the 
                State may provide for external review activities to be 
                conducted by a qualified external appeal entity that is 
                designated by the State or that is selected by the 
                State in a manner determined by the State to assure an 
                unbiased determination.
            (2) Contract with qualified external review entity.--Except 
        as provided in paragraph (1)(B), the external review process of 
        a plan or issuer under this section shall be conducted under a 
        contract between the plan or issuer and 1 or more qualified 
        external review entities (as defined in paragraph (4)(A)).
            (3) Terms and conditions of contract.--The terms and 
        conditions of a contract under paragraph (2) shall--
                    (A) be consistent with the standards the 
                appropriate Secretary shall establish to assure there 
                is no real or apparent conflict of interest in the 
                conduct of external review activities; and
                    (B) provide that the costs of the external review 
                process shall be borne by the plan or issuer.
        Subparagraph (B) shall not be construed as applying to the 
        imposition of a filing fee under subsection (b)(2)(A)(iv) or 
        costs incurred by the participant, beneficiary, or enrollee (or 
        authorized representative) or treating health care professional 
        (if any) in support of the review, including the provision of 
        additional evidence or information.
            (4) Qualifications.--
                    (A) In general.--In this section, the term 
                ``qualified external review entity'' means, in relation 
                to a plan or issuer, an entity that is initially 
                certified (and periodically recertified) under 
                subparagraph (C) as meeting the following requirements:
                            (i) The entity has (directly or through 
                        contracts or other arrangements) sufficient 
                        medical, legal, and other expertise and 
                        sufficient staffing to carry out duties of a 
                        qualified external review entity under this 
                        section on a timely basis, including making 
                        determinations under subsection (b)(2)(A) and 
                        providing for independent medical reviews under 
                        subsection (d).
                            (ii) The entity is not a plan or issuer or 
                        an affiliate or a subsidiary of a plan or 
                        issuer, and is not an affiliate or subsidiary 
                        of a professional or trade association of plans 
                        or issuers or of health care providers.
                            (iii) The entity has provided assurances 
                        that it will conduct external review activities 
                        consistent with the applicable requirements of 
                        this section and standards specified in 
                        subparagraph (C), including that it will not 
                        conduct any external review activities in a 
                        case unless the independence requirements of 
                        subparagraph (B) are met with respect to the 
                        case.
                            (iv) The entity has provided assurances 
                        that it will provide information in a timely 
                        manner under subparagraph (D).
                            (v) The entity meets such other 
                        requirements as the appropriate Secretary 
                        provides by regulation.
                    (B) Independence requirements.--
                            (i) In general.--Subject to clause (ii), an 
                        entity meets the independence requirements of 
                        this subparagraph with respect to any case if 
                        the entity--
                                    (I) is not a related party (as 
                                defined in subsection (g)(7));
                                    (II) does not have a material 
                                familial, financial, or professional 
                                relationship with such a party; and
                                    (III) does not otherwise have a 
                                conflict of interest with such a party 
                                (as determined under regulations).
                            (ii) Exception for reasonable 
                        compensation.--Nothing in clause (i) shall be 
                        construed to prohibit receipt by a qualified 
                        external review entity of compensation from a 
                        plan or issuer for the conduct of external 
                        review activities under this section if the 
                        compensation is provided consistent with clause 
                        (iii).
                            (iii) Limitations on entity compensation.--
                        Compensation provided by a plan or issuer to a 
                        qualified external review entity in connection 
                        with reviews under this section shall--
                                    (I) not exceed a reasonable level; 
                                and
                                    (II) not be contingent on any 
                                decision rendered by the entity or by 
                                any independent medical reviewer.
                    (C) Certification and recertification process.--
                            (i) In general.--The initial certification 
                        and recertification of a qualified external 
                        review entity shall be made--
                                    (I) under a process that is 
                                recognized or approved by the 
                                appropriate Secretary; or
                                    (II) by a qualified private 
                                standard-setting organization that is 
                                approved by the appropriate Secretary 
                                under clause (iii).
                        In taking action under subclause (I), the 
                        appropriate Secretary shall give deference to 
                        entities that are under contract with the 
                        Federal Government or with an applicable State 
                        authority to perform functions of the type 
                        performed by qualified external review 
                        entities.
                            (ii) Process.--The appropriate Secretary 
                        shall not recognize or approve a process under 
                        clause (i)(I) unless the process applies 
                        standards (as promulgated in regulations) that 
                        ensure that a qualified external review 
                        entity--
                                    (I) will carry out (and has carried 
                                out, in the case of recertification) 
                                the responsibilities of such an entity 
                                in accordance with this section, 
                                including meeting applicable deadlines;
                                    (II) will meet (and has met, in the 
                                case of recertification) appropriate 
                                indicators of fiscal integrity;
                                    (III) will maintain (and has 
                                maintained, in the case of 
                                recertification) appropriate 
                                confidentiality with respect to 
                                individually identifiable health 
                                information obtained in the course of 
                                conducting external review activities; 
                                and
                                    (IV) in the case of 
                                recertification, shall review the 
                                matters described in clause (iv).
                            (iii) Approval of qualified private 
                        standard-setting organizations.--For purposes 
                        of clause (i)(II), the appropriate Secretary 
                        may approve a qualified private standard-
                        setting organization if such Secretary finds 
                        that the organization only certifies (or 
                        recertifies) external review entities that meet 
                        at least the standards required for the 
                        certification (or recertification) of external 
                        review entities under clause (ii).
                            (iv) Considerations in recertifications.--
                        In conducting recertifications of a qualified 
                        external review entity under this paragraph, 
                        the appropriate Secretary or organization 
                        conducting the recertification shall review 
                        compliance of the entity with the requirements 
                        for conducting external review activities under 
                        this section, including the following:
                                    (I) Provision of information under 
                                subparagraph (D).
                                    (II) Adherence to applicable 
                                deadlines (both by the entity and by 
                                independent medical reviewers it refers 
                                cases to).
                                    (III) Compliance with limitations 
                                on compensation (with respect to both 
                                the entity and independent medical 
                                reviewers it refers cases to).
                                    (IV) Compliance with applicable 
                                independence requirements.
                                    (V) Compliance with the requirement 
                                of subsection (d)(1) that only 
                                medically reviewable decisions shall be 
                                the subject of independent medical 
                                review and with the requirement of 
                                subsection (d)(3) that independent 
                                medical reviewers may not require 
                                coverage for specifically excluded 
                                benefits.
                            (v) Period of certification or 
                        recertification.--A certification or 
                        recertification provided under this paragraph 
                        shall extend for a period not to exceed 2 
                        years.
                            (vi) Revocation.--A certification or 
                        recertification under this paragraph may be 
                        revoked by the appropriate Secretary or by the 
                        organization providing such certification upon 
                        a showing of cause. The Secretary, or 
                        organization, shall revoke a certification or 
                        deny a recertification with respect to an 
                        entity if there is a showing that the entity 
                        has a pattern or practice of ordering coverage 
                        for benefits that are specifically excluded 
                        under the plan or coverage.
                            (vii) Petition for denial or withdrawal.--
                        An individual may petition the Secretary, or an 
                        organization providing the certification 
                        involves, for a denial of recertification or a 
                        withdrawal of a certification with respect to 
                        an entity under this subparagraph if there is a 
                        pattern or practice of such entity failing to 
                        meet a requirement of this section.
                            (viii) Sufficient number of entities.--The 
                        appropriate Secretary shall certify and 
                        recertify a number of external review entities 
                        which is sufficient to ensure the timely and 
                        efficient provision of review services.
                    (D) Provision of information.--
                            (i) In general.--A qualified external 
                        review entity shall provide to the appropriate 
                        Secretary, in such manner and at such times as 
                        such Secretary may require, such information 
                        (relating to the denials which have been 
                        referred to the entity for the conduct of 
                        external review under this section) as such 
                        Secretary determines appropriate to assure 
                        compliance with the independence and other 
                        requirements of this section to monitor and 
                        assess the quality of its external review 
                        activities and lack of bias in making 
                        determinations. Such information shall include 
                        information described in clause (ii) but shall 
                        not include individually identifiable medical 
                        information.
                            (ii) Information to be included.--The 
                        information described in this subclause with 
                        respect to an entity is as follows:
                                    (I) The number and types of denials 
                                for which a request for review has been 
                                received by the entity.
                                    (II) The disposition by the entity 
                                of such denials, including the number 
                                referred to a independent medical 
                                reviewer and the reasons for such 
                                dispositions (including the application 
                                of exclusions), on a plan or issuer-
                                specific basis and on a health care 
                                specialty-specific basis.
                                    (III) The length of time in making 
                                determinations with respect to such 
                                denials.
                                    (IV) Updated information on the 
                                information required to be submitted as 
                                a condition of certification with 
                                respect to the entity's performance of 
                                external review activities.
                            (iii) Information to be provided to 
                        certifying organization.--
                                    (I) In general.--In the case of a 
                                qualified external review entity which 
                                is certified (or recertified) under 
                                this subsection by a qualified private 
                                standard-setting organization, at the 
                                request of the organization, the entity 
                                shall provide the organization with the 
                                information provided to the appropriate 
                                Secretary under clause (i).
                                    (II) Additional information.--
                                Nothing in this subparagraph shall be 
                                construed as preventing such an 
                                organization from requiring additional 
                                information as a condition of 
                                certification or recertification of an 
                                entity.
                            (iv) Use of information.--Information 
                        provided under this subparagraph may be used by 
                        the appropriate Secretary and qualified private 
                        standard-setting organizations to conduct 
                        oversight of qualified external review 
                        entities, including recertification of such 
                        entities, and shall be made available to the 
                        public in an appropriate manner.
                    (E) Limitation on liability.--No qualified external 
                review entity having a contract with a plan or issuer, 
                and no person who is employed by any such entity or who 
                furnishes professional services to such entity 
                (including as an independent medical reviewer), shall 
                be held by reason of the performance of any duty, 
                function, or activity required or authorized pursuant 
                to this section, to be civilly liable under any law of 
                the United States or of any State (or political 
                subdivision thereof) if there was no actual malice or 
                gross misconduct in the performance of such duty, 
                function, or activity.
            (5) Report.--Not later than 12 months after the general 
        effective date referred to in section 601, the General 
        Accounting Office shall prepare and submit to the appropriate 
        committees of Congress a report concerning--
                    (A) the information that is provided under 
                paragraph (3)(D);
                    (B) the number of denials that have been upheld by 
                independent medical reviewers and the number of denials 
                that have been reversed by such reviewers; and
                    (C) the extent to which independent medical 
                reviewers are requiring coverage for benefits that are 
                specifically excluded under the plan or coverage.

SEC. 105. HEALTH CARE CONSUMER ASSISTANCE FUND.

    (a) Grants.--
            (1) In general.--The Secretary of Health and Human Services 
        (referred to in this section as the ``Secretary'') shall 
        establish a fund, to be known as the ``Health Care Consumer 
        Assistance Fund'', to be used to award grants to eligible 
        States to carry out consumer assistance activities (including 
        programs established by States prior to the enactment of this 
        Act) designed to provide information, assistance, and referrals 
        to consumers of health insurance products.
            (2) State eligibility.--To be eligible to receive a grant 
        under this subsection a State shall prepare and submit to the 
        Secretary an application at such time, in such manner, and 
        containing such information as the Secretary may require, 
        including a State plan that describes--
                    (A) the manner in which the State will ensure that 
                the health care consumer assistance office (established 
                under paragraph (4)) will educate and assist health 
                care consumers in accessing needed care;
                    (B) the manner in which the State will coordinate 
                and distinguish the services provided by the health 
                care consumer assistance office with the services 
                provided by Federal, State and local health-related 
                ombudsman, information, protection and advocacy, 
                insurance, and fraud and abuse programs;
                    (C) the manner in which the State will provide 
                information, outreach, and services to underserved, 
                minority populations with limited English proficiency 
                and populations residing in rural areas;
                    (D) the manner in which the State will oversee the 
                health care consumer assistance office, its activities, 
                product materials and evaluate program effectiveness;
                    (E) the manner in which the State will ensure that 
                funds made available under this section will be used to 
                supplement, and not supplant, any other Federal, State, 
                or local funds expended to provide services for 
                programs described under this section and those 
                described in subparagraphs (C) and (D);
                    (F) the manner in which the State will ensure that 
                health care consumer office personnel have the 
                professional background and training to carry out the 
                activities of the office; and
                    (G) the manner in which the State will ensure that 
                consumers have direct access to consumer assistance 
                personnel during regular business hours.
            (3) Amount of grant.--
                    (A) In general.--From amounts appropriated under 
                subsection (b) for a fiscal year, the Secretary shall 
                award a grant to a State in an amount that bears the 
                same ratio to such amounts as the number of individuals 
                within the State covered under a group health plan or 
                under health insurance coverage offered by a health 
                insurance issuer bears to the total number of 
                individuals so covered in all States (as determined by 
                the Secretary). Any amounts provided to a State under 
                this subsection that are not used by the State shall be 
                remitted to the Secretary and reallocated in accordance 
                with this subparagraph.
                    (B) Minimum amount.--In no case shall the amount 
                provided to a State under a grant under this subsection 
                for a fiscal year be less than an amount equal to 0.5 
                percent of the amount appropriated for such fiscal year 
                to carry out this section.
                    (C) Non-federal contributions.--A State will 
                provide for the collection of non-Federal contributions 
                for the operation of the office in an amount that is 
                not less than 25 percent of the amount of Federal funds 
                provided to the State under this section.
            (4) Provision of funds for establishment of office.--
                    (A) In general.--From amounts provided under a 
                grant under this subsection, a State shall, directly or 
                through a contract with an independent, nonprofit 
                entity with demonstrated experience in serving the 
                needs of health care consumers, provide for the 
                establishment and operation of a State health care 
                consumer assistance office.
                    (B) Eligibility of entity.--To be eligible to enter 
                into a contract under subparagraph (A), an entity shall 
                demonstrate that it has the technical, organizational, 
                and professional capacity to deliver the services 
                described in subsection (b) to all public and private 
                health insurance participants, beneficiaries, 
                enrollees, or prospective enrollees.
                    (C) Existing state entity.--Nothing in this section 
                shall prevent the funding of an existing health care 
                consumer assistance program that otherwise meets the 
                requirements of this section.
    (b) Use of Funds.--
            (1) By state.--A State shall use amounts provided under a 
        grant awarded under this section to carry out consumer 
        assistance activities directly or by contract with an 
        independent, non-profit organization. An eligible entity may 
        use some reasonable amount of such grant to ensure the adequate 
        training of personnel carrying out such activities. To receive 
        amounts under this subsection, an eligible entity shall provide 
        consumer assistance services, including--
                    (A) the operation of a toll-free telephone hotline 
                to respond to consumer requests;
                    (B) the dissemination of appropriate educational 
                materials on available health insurance products and on 
                how best to access health care and the rights and 
                responsibilities of health care consumers;
                    (C) the provision of education on effective methods 
                to promptly and efficiently resolve questions, 
                problems, and grievances;
                    (D) the coordination of educational and outreach 
                efforts with health plans, health care providers, 
                payers, and governmental agencies;
                    (E) referrals to appropriate private and public 
                entities to resolve questions, problems and grievances; 
                and
                    (F) the provision of information and assistance, 
                including acting as an authorized representative, 
                regarding internal, external, or administrative 
                grievances or appeals procedures in nonlitigative 
                settings to appeal the denial, termination, or 
                reduction of health care services, or the refusal to 
                pay for such services, under a group health plan or 
                health insurance coverage offered by a health insurance 
                issuer.
            (2) Confidentiality and access to information.--
                    (A) State entity.--With respect to a State that 
                directly establishes a health care consumer assistance 
                office, such office shall establish and implement 
                procedures and protocols in accordance with applicable 
                Federal and State laws.
                    (B) Contract entity.--With respect to a State that, 
                through contract, establishes a health care consumer 
                assistance office, such office shall establish and 
                implement procedures and protocols, consistent with 
                applicable Federal and State laws, to ensure the 
                confidentiality of all information shared by a 
                participant, beneficiary, enrollee, or their personal 
                representative and their health care providers, group 
                health plans, or health insurance insurers with the 
                office and to ensure that no such information is used 
                by the office, or released or disclosed to State 
                agencies or outside persons or entities without the 
                prior written authorization (in accordance with section 
                164.508 of title 45, Code of Federal Regulations) of 
                the individual or personal representative. The office 
                may, consistent with applicable Federal and State 
                confidentiality laws, collect, use or disclose 
                aggregate information that is not individually 
                identifiable (as defined in section 164.501 of title 
                45, Code of Federal Regulations). The office shall 
                provide a written description of the policies and 
                procedures of the office with respect to the manner in 
                which health information may be used or disclosed to 
                carry out consumer assistance activities. The office 
                shall provide health care providers, group health 
                plans, or health insurance issuers with a written 
                authorization (in accordance with section 164.508 of 
                title 45, Code of Federal Regulations) to allow the 
                office to obtain medical information relevant to the 
                matter before the office.
            (3) Availability of services.--The health care consumer 
        assistance office of a State shall not discriminate in the 
        provision of information, referrals, and services regardless of 
        the source of the individual's health insurance coverage or 
        prospective coverage, including individuals covered under a 
        group health plan or health insurance coverage offered by a 
        health insurance issuer, the medicare or medicaid programs 
        under title XVIII or XIX of the Social Security Act (42 U.S.C. 
        1395 and 1396 et seq.), or under any other Federal or State 
        health care program.
            (4) Designation of responsibilities.--
                    (A) Within existing state entity.--If the health 
                care consumer assistance office of a State is located 
                within an existing State regulatory agency or office of 
                an elected State official, the State shall ensure 
                that--
                            (i) there is a separate delineation of the 
                        funding, activities, and responsibilities of 
                        the office as compared to the other funding, 
                        activities, and responsibilities of the agency; 
                        and
                            (ii) the office establishes and implements 
                        procedures and protocols to ensure the 
                        confidentiality of all information shared by a 
                        participant, beneficiary, or enrollee or their 
                        personal representative and their health care 
                        providers, group health plans, or health 
                        insurance issuers with the office and to ensure 
                        that no information is disclosed to the State 
                        agency or office without the written 
                        authorization of the individual or their 
                        personal representative in accordance with 
                        paragraph (2).
                    (B) Contract entity.--In the case of an entity that 
                enters into a contract with a State under subsection 
                (a)(3), the entity shall provide assurances that the 
                entity has no conflict of interest in carrying out the 
                activities of the office and that the entity is 
                independent of group health plans, health insurance 
                issuers, providers, payers, and regulators of health 
                care.
            (5) Subcontracts.--The health care consumer assistance 
        office of a State may carry out activities and provide services 
        through contracts entered into with 1 or more nonprofit 
        entities so long as the office can demonstrate that all of the 
        requirements of this section are complied with by the office.
            (6) Term.--A contract entered into under this subsection 
        shall be for a term of 3 years.
    (c) Report.--Not later than 1 year after the Secretary first awards 
grants under this section, and annually thereafter, the Secretary shall 
prepare and submit to the appropriate committees of Congress a report 
concerning the activities funded under this section and the 
effectiveness of such activities in resolving health care-related 
problems and grievances.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section.

                       Subtitle B--Access to Care

SEC. 111. CONSUMER CHOICE OPTION.

    (a) In General.--If--
            (1) a health insurance issuer providing health insurance 
        coverage in connection with a group health plan offers to 
        enrollees health insurance coverage which provides for coverage 
        of services (including physician pathology services) only if 
        such services are furnished through health care professionals 
        and providers who are members of a network of health care 
        professionals and providers who have entered into a contract 
        with the issuer to provide such services, or
            (2) a group health plan offers to participants or 
        beneficiaries health benefits which provide for coverage of 
        services only if such services are furnished through health 
        care professionals and providers who are members of a network 
        of health care professionals and providers who have entered 
        into a contract with the plan to provide such services,
then the issuer or plan shall also offer or arrange to be offered to 
such enrollees, participants, or beneficiaries (at the time of 
enrollment and during an annual open season as provided under 
subsection (c)) the option of health insurance coverage or health 
benefits which provide for coverage of such services which are not 
furnished through health care professionals and providers who are 
members of such a network unless such enrollees, participants, or 
beneficiaries are offered such non-network coverage through another 
group health plan or through another health insurance issuer in the 
group market.
    (b) Additional Costs.--The amount of any additional premium charged 
by the health insurance issuer or group health plan for the additional 
cost of the creation and maintenance of the option described in 
subsection (a) and the amount of any additional cost sharing imposed 
under such option shall be borne by the enrollee, participant, or 
beneficiary unless it is paid by the health plan sponsor or group 
health plan through agreement with the health insurance issuer.
    (c) Open Season.--An enrollee, participant, or beneficiary, may 
change to the offering provided under this section only during a time 
period determined by the health insurance issuer or group health plan. 
Such time period shall occur at least annually.

SEC. 112. CHOICE OF HEALTH CARE PROFESSIONAL.

    (a) Primary Care.--If a group health plan, or a health insurance 
issuer that offers health insurance coverage, requires or provides for 
designation by a participant, beneficiary, or enrollee of a 
participating primary care provider, then the plan or issuer shall 
permit each participant, beneficiary, and enrollee to designate any 
participating primary care provider who is available to accept such 
individual.
    (b) Specialists.--
            (1) In general.--Subject to paragraph (2), a group health 
        plan and a health insurance issuer that offers health insurance 
        coverage shall permit each participant, beneficiary, or 
        enrollee to receive medically necessary and appropriate 
        specialty care, pursuant to appropriate referral procedures, 
        from any qualified participating health care professional who 
        is available to accept such individual for such care.
            (2) Limitation.--Paragraph (1) shall not apply to specialty 
        care if the plan or issuer clearly informs participants, 
        beneficiaries, and enrollees of the limitations on choice of 
        participating health care professionals with respect to such 
        care.
            (3) Construction.--Nothing in this subsection shall be 
        construed as affecting the application of section 114 (relating 
        to access to specialty care).

SEC. 113. ACCESS TO EMERGENCY CARE.

    (a) Coverage of Emergency Services.--
            (1) In general.--If a group health plan, or health 
        insurance coverage offered by a health insurance issuer, 
        provides or covers any benefits with respect to services in an 
        emergency department of a hospital, the plan or issuer shall 
        cover emergency services (as defined in paragraph (2)(B))--
                    (A) without the need for any prior authorization 
                determination;
                    (B) whether the health care provider furnishing 
                such services is a participating provider with respect 
                to such services;
                    (C) in a manner so that, if such services are 
                provided to a participant, beneficiary, or enrollee--
                            (i) by a nonparticipating health care 
                        provider with or without prior authorization, 
                        or
                            (ii) by a participating health care 
                        provider without prior authorization,
                the participant, beneficiary, or enrollee is not liable 
                for amounts that exceed the amounts of liability that 
                would be incurred if the services were provided by a 
                participating health care provider with prior 
                authorization; and
                    (D) without regard to any other term or condition 
                of such coverage (other than exclusion or coordination 
                of benefits, or an affiliation or waiting period, 
                permitted under section 2701 of the Public Health 
                Service Act, section 701 of the Employee Retirement 
                Income Security Act of 1974, or section 9801 of the 
                Internal Revenue Code of 1986, and other than 
                applicable cost-sharing).
            (2) Definitions.--In this section:
                    (A) Emergency medical condition.--The term 
                ``emergency medical condition'' means a medical 
                condition manifesting itself by acute symptoms of 
                sufficient severity (including severe pain) such that a 
                prudent layperson, who possesses an average knowledge 
                of health and medicine, could reasonably expect the 
                absence of immediate medical attention to result in a 
                condition described in clause (i), (ii), or (iii) of 
                section 1867(e)(1)(A) of the Social Security Act.
                    (B) Emergency services.--The term ``emergency 
                services'' means, with respect to an emergency medical 
                condition--
                            (i) a medical screening examination (as 
                        required under section 1867 of the Social 
                        Security Act) that is within the capability of 
                        the emergency department of a hospital, 
                        including ancillary services routinely 
                        available to the emergency department to 
                        evaluate such emergency medical condition, and
                            (ii) within the capabilities of the staff 
                        and facilities available at the hospital, such 
                        further medical examination and treatment as 
                        are required under section 1867 of such Act to 
                        stabilize the patient.
                    (C) Stabilize.--The term ``to stabilize'', with 
                respect to an emergency medical condition (as defined 
                in subparagraph (A)), has the meaning given in section 
                1867(e)(3) of the Social Security Act (42 U.S.C. 
                1395dd(e)(3)).
    (b) Reimbursement for Maintenance Care and Post-Stabilization 
Care.--A group health plan, and health insurance coverage offered by a 
health insurance issuer, must provide reimbursement for maintenance 
care and post-stabilization care in accordance with the requirements of 
section 1852(d)(2) of the Social Security Act (42 U.S.C. 1395w-
22(d)(2)). Such reimbursement shall be provided in a manner consistent 
with subsection (a)(1)(C).
    (c) Coverage of Emergency Ambulance Services.--
            (1) In general.--If a group health plan, or health 
        insurance coverage provided by a health insurance issuer, 
        provides any benefits with respect to ambulance services and 
        emergency services, the plan or issuer shall cover emergency 
        ambulance services (as defined in paragraph (2)) furnished 
        under the plan or coverage under the same terms and conditions 
        under subparagraphs (A) through (D) of subsection (a)(1) under 
        which coverage is provided for emergency services.
            (2) Emergency ambulance services.--For purposes of this 
        subsection, the term ``emergency ambulance services'' means 
        ambulance services (as defined for purposes of section 
        1861(s)(7) of the Social Security Act) furnished to transport 
        an individual who has an emergency medical condition (as 
        defined in subsection (a)(2)(A)) to a hospital for the receipt 
        of emergency services (as defined in subsection (a)(2)(B)) in a 
        case in which the emergency services are covered under the plan 
        or coverage pursuant to subsection (a)(1) and a prudent 
        layperson, with an average knowledge of health and medicine, 
        could reasonably expect that the absence of such transport 
        would result in placing the health of the individual in serious 
        jeopardy, serious impairment of bodily function, or serious 
        dysfunction of any bodily organ or part.

SEC. 114. TIMELY ACCESS TO SPECIALISTS.

    (a) Timely Access.--
            (1) In general.--A group health plan and a health insurance 
        issuer offering health insurance coverage shall ensure that 
        participants, beneficiaries, and enrollees receive timely 
        access to specialists who are appropriate to the condition of, 
        and accessible to, the participant, beneficiary, or enrollee, 
        when such specialty care is a covered benefit under the plan or 
        coverage.
            (2) Rule of construction.--Nothing in paragraph (1) shall 
        be construed--
                    (A) to require the coverage under a group health 
                plan or health insurance coverage of benefits or 
                services;
                    (B) to prohibit a plan or issuer from including 
                providers in the network only to the extent necessary 
                to meet the needs of the plan's or issuer's 
                participants, beneficiaries, or enrollees; or
                    (C) to override any State licensure or scope-of-
                practice law.
            (3) Access to certain providers.--
                    (A) In general.--With respect to specialty care 
                under this section, if a participating specialist is 
                not available and qualified to provide such care to the 
                participant, beneficiary, or enrollee, the plan or 
                issuer shall provide for coverage of such care by a 
                nonparticipating specialist.
                    (B) Treatment of nonparticipating providers.--If a 
                participant, beneficiary, or enrollee receives care 
                from a nonparticipating specialist pursuant to 
                subparagraph (A), such specialty care shall be provided 
                at no additional cost to the participant, beneficiary, 
                or enrollee beyond what the participant, beneficiary, 
                or enrollee would otherwise pay for such specialty care 
                if provided by a participating specialist.
    (b) Referrals.--
            (1) Authorization.--Subject to subsection (a)(1), a group 
        health plan or health insurance issuer may require an 
        authorization in order to obtain coverage for specialty 
        services under this section. Any such authorization--
                    (A) shall be for an appropriate duration of time or 
                number of referrals, including an authorization for a 
                standing referral where appropriate; and
                    (B) may not be refused solely because the 
                authorization involves services of a nonparticipating 
                specialist (described in subsection (a)(3)).
            (2) Referrals for ongoing special conditions.--
                    (A) In general.--Subject to subsection (a)(1), a 
                group health plan and a health insurance issuer shall 
                permit a participant, beneficiary, or enrollee who has 
                an ongoing special condition (as defined in 
                subparagraph (B)) to receive a referral to a specialist 
                for the treatment of such condition and such specialist 
                may authorize such referrals, procedures, tests, and 
                other medical services with respect to such condition, 
                or coordinate the care for such condition, subject to 
                the terms of a treatment plan (if any) referred to in 
                subsection (c) with respect to the condition.
                    (B) Ongoing special condition defined.--In this 
                subsection, the term ``ongoing special condition'' 
                means a condition or disease that--
                            (i) is life-threatening, degenerative, 
                        potentially disabling, or congenital; and
                            (ii) requires specialized medical care over 
                        a prolonged period of time.
    (c) Treatment Plans.--
            (1) In general.--A group health plan or health insurance 
        issuer may require that the specialty care be provided--
                    (A) pursuant to a treatment plan, but only if the 
                treatment plan--
                            (i) is developed by the specialist, in 
                        consultation with the case manager or primary 
                        care provider, and the participant, 
                        beneficiary, or enrollee, and
                            (ii) is approved by the plan or issuer in a 
                        timely manner, if the plan or issuer requires 
                        such approval; and
                    (B) in accordance with applicable quality assurance 
                and utilization review standards of the plan or issuer.
            (2) Notification.--Nothing in paragraph (1) shall be 
        construed as prohibiting a plan or issuer from requiring the 
        specialist to provide the plan or issuer with regular updates 
        on the specialty care provided, as well as all other reasonably 
        necessary medical information.
    (d) Specialist Defined.--For purposes of this section, the term 
``specialist'' means, with respect to the condition of the participant, 
beneficiary, or enrollee, a health care professional, facility, or 
center that has adequate expertise through appropriate training and 
experience (including, in the case of a child, appropriate pediatric 
expertise) to provide high quality care in treating the condition.

SEC. 115. PATIENT ACCESS TO OBSTETRICAL AND GYNECOLOGICAL CARE.

    (a) General Rights.--
            (1) Direct access.--A group health plan, and a health 
        insurance issuer offering health insurance coverage, described 
        in subsection (b) may not require authorization or referral by 
        the plan, issuer, or any person (including a primary care 
        provider described in subsection (b)(2)) in the case of a 
        female participant, beneficiary, or enrollee who seeks coverage 
        for obstetrical or gynecological care provided by a 
        participating health care professional who specializes in 
        obstetrics or gynecology.
            (2) Obstetrical and gynecological care.--A group health 
        plan and a health insurance issuer described in subsection (b) 
        shall treat the provision of obstetrical and gynecological 
        care, and the ordering of related obstetrical and gynecological 
        items and services, pursuant to the direct access described 
        under paragraph (1), by a participating health care 
        professional who specializes in obstetrics or gynecology as the 
        authorization of the primary care provider.
    (b) Application of Section.--A group health plan, or health 
insurance issuer offering health insurance coverage, described in this 
subsection is a group health plan or coverage that--
            (1) provides coverage for obstetric or gynecologic care; 
        and
            (2) requires the designation by a participant, beneficiary, 
        or enrollee of a participating primary care provider.
    (c) Construction.--Nothing in subsection (a) shall be construed 
to--
            (1) waive any exclusions of coverage under the terms and 
        conditions of the plan or health insurance coverage with 
        respect to coverage of obstetrical or gynecological care; or
            (2) preclude the group health plan or health insurance 
        issuer involved from requiring that the obstetrical or 
        gynecological provider notify the primary care health care 
        professional or the plan or issuer of treatment decisions.

SEC. 116. ACCESS TO PEDIATRIC CARE.

    (a) Pediatric Care.--In the case of a person who has a child who is 
a participant, beneficiary, or enrollee under a group health plan, or 
health insurance coverage offered by a health insurance issuer, if the 
plan or issuer requires or provides for the designation of a 
participating primary care provider for the child, the plan or issuer 
shall permit such person to designate a physician (allopathic or 
osteopathic) who specializes in pediatrics as the child's primary care 
provider if such provider participates in the network of the plan or 
issuer.
    (b) Construction.--Nothing in subsection (a) shall be construed to 
waive any exclusions of coverage under the terms and conditions of the 
plan or health insurance coverage with respect to coverage of pediatric 
care.

SEC. 117. CONTINUITY OF CARE.

    (a) Termination of Provider.--
            (1) In general.--If--
                    (A) a contract between a group health plan, or a 
                health insurance issuer offering health insurance 
                coverage, and a treating health care provider is 
                terminated (as defined in paragraph (e)(4)), or
                    (B) benefits or coverage provided by a health care 
                provider are terminated because of a change in the 
                terms of provider participation in such plan or 
                coverage,
        the plan or issuer shall meet the requirements of paragraph (3) 
        with respect to each continuing care patient.
            (2) Treatment of termination of contract with health 
        insurance issuer.--If a contract for the provision of health 
        insurance coverage between a group health plan and a health 
        insurance issuer is terminated and, as a result of such 
        termination, coverage of services of a health care provider is 
        terminated with respect to an individual, the provisions of 
        paragraph (1) (and the succeeding provisions of this section) 
        shall apply under the plan in the same manner as if there had 
        been a contract between the plan and the provider that had been 
        terminated, but only with respect to benefits that are covered 
        under the plan after the contract termination.
            (3) Requirements.--The requirements of this paragraph are 
        that the plan or issuer--
                    (A) notify the continuing care patient involved, or 
                arrange to have the patient notified pursuant to 
                subsection (d)(2), on a timely basis of the termination 
                described in paragraph (1) (or paragraph (2), if 
                applicable) and the right to elect continued 
                transitional care from the provider under this section;
                    (B) provide the patient with an opportunity to 
                notify the plan or issuer of the patient's need for 
                transitional care; and
                    (C) subject to subsection (c), permit the patient 
                to elect to continue to be covered with respect to the 
                course of treatment by such provider with the 
                provider's consent during a transitional period (as 
                provided for under subsection (b)).
            (4) Continuing care patient.--For purposes of this section, 
        the term ``continuing care patient'' means a participant, 
        beneficiary, or enrollee who--
                    (A) is undergoing a course of treatment for a 
                serious and complex condition from the provider at the 
                time the plan or issuer receives or provides notice of 
                provider, benefit, or coverage termination described in 
                paragraph (1) (or paragraph (2), if applicable);
                    (B) is undergoing a course of institutional or 
                inpatient care from the provider at the time of such 
                notice;
                    (C) is scheduled to undergo non-elective surgery 
                from the provider at the time of such notice;
                    (D) is pregnant and undergoing a course of 
                treatment for the pregnancy from the provider at the 
                time of such notice; or
                    (E) is or was determined to be terminally ill (as 
                determined under section 1861(dd)(3)(A) of the Social 
                Security Act) at the time of such notice, but only with 
                respect to a provider that was treating the terminal 
                illness before the date of such notice.
    (b) Transitional Periods.--
            (1) Serious and complex conditions.--The transitional 
        period under this subsection with respect to a continuing care 
        patient described in subsection (a)(4)(A) shall extend for up 
        to 90 days (as determined by the treating health care 
        professional) from the date of the notice described in 
        subsection (a)(3)(A).
            (2) Institutional or inpatient care.--The transitional 
        period under this subsection for a continuing care patient 
        described in subsection (a)(4)(B) shall extend until the 
        earlier of--
                    (A) the expiration of the 90-day period beginning 
                on the date on which the notice under subsection 
                (a)(3)(A) is provided; or
                    (B) the date of discharge of the patient from such 
                care or the termination of the period of 
                institutionalization, or, if later, the date of 
                completion of reasonable follow-up care.
            (3) Scheduled non-elective surgery.--The transitional 
        period under this subsection for a continuing care patient 
        described in subsection (a)(4)(C) shall extend until the 
        completion of the surgery involved and post-surgical follow-up 
        care relating to the surgery and occurring within 90 days after 
        the date of the surgery.
            (4) Pregnancy.--The transitional period under this 
        subsection for a continuing care patient described in 
        subsection (a)(4)(D) shall extend through the provision of 
        post-partum care directly related to the delivery.
            (5) Terminal illness.--The transitional period under this 
        subsection for a continuing care patient described in 
        subsection (a)(4)(E) shall extend for the remainder of the 
        patient's life for care that is directly related to the 
        treatment of the terminal illness or its medical 
        manifestations.
    (c) Permissible Terms and Conditions.--A group health plan or 
health insurance issuer may condition coverage of continued treatment 
by a provider under this section upon the provider agreeing to the 
following terms and conditions:
            (1) The treating health care provider agrees to accept 
        reimbursement from the plan or issuer and continuing care 
        patient involved (with respect to cost-sharing) at the rates 
        applicable prior to the start of the transitional period as 
        payment in full (or, in the case described in subsection 
        (a)(2), at the rates applicable under the replacement plan or 
        coverage after the date of the termination of the contract with 
        the group health plan or health insurance issuer) and not to 
        impose cost-sharing with respect to the patient in an amount 
        that would exceed the cost-sharing that could have been imposed 
        if the contract referred to in subsection (a)(1) had not been 
        terminated.
            (2) The treating health care provider agrees to adhere to 
        the quality assurance standards of the plan or issuer 
        responsible for payment under paragraph (1) and to provide to 
        such plan or issuer necessary medical information related to 
        the care provided.
            (3) The treating health care provider agrees otherwise to 
        adhere to such plan's or issuer's policies and procedures, 
        including procedures regarding referrals and obtaining prior 
        authorization and providing services pursuant to a treatment 
        plan (if any) approved by the plan or issuer.
    (d) Rules of Construction.--Nothing in this section shall be 
construed--
            (1) to require the coverage of benefits which would not 
        have been covered if the provider involved remained a 
        participating provider; or
            (2) with respect to the termination of a contract under 
        subsection (a) to prevent a group health plan or health 
        insurance issuer from requiring that the health care provider--
                    (A) notify participants, beneficiaries, or 
                enrollees of their rights under this section; or
                    (B) provide the plan or issuer with the name of 
                each participant, beneficiary, or enrollee who the 
                provider believes is a continuing care patient.
    (e) Definitions.--In this section:
            (1) Contract.--The term ``contract'' includes, with respect 
        to a plan or issuer and a treating health care provider, a 
        contract between such plan or issuer and an organized network 
        of providers that includes the treating health care provider, 
        and (in the case of such a contract) the contract between the 
        treating health care provider and the organized network.
            (2) Health care provider.--The term ``health care 
        provider'' or ``provider'' means--
                    (A) any individual who is engaged in the delivery 
                of health care services in a State and who is required 
                by State law or regulation to be licensed or certified 
                by the State to engage in the delivery of such services 
                in the State; and
                    (B) any entity that is engaged in the delivery of 
                health care services in a State and that, if it is 
                required by State law or regulation to be licensed or 
                certified by the State to engage in the delivery of 
                such services in the State, is so licensed.
            (3) Serious and complex condition.--The term ``serious and 
        complex condition'' means, with respect to a participant, 
        beneficiary, or enrollee under the plan or coverage--
                    (A) in the case of an acute illness, a condition 
                that is serious enough to require specialized medical 
                treatment to avoid the reasonable possibility of death 
                or permanent harm; or
                    (B) in the case of a chronic illness or condition, 
                is an ongoing special condition (as defined in section 
                114(b)(2)(B)).
            (4) Terminated.--The term ``terminated'' includes, with 
        respect to a contract, the expiration or nonrenewal of the 
        contract, but does not include a termination of the contract 
        for failure to meet applicable quality standards or for fraud.

SEC. 118. ACCESS TO NEEDED PRESCRIPTION DRUGS.

    (a) In General.--To the extent that a group health plan, or health 
insurance coverage offered by a health insurance issuer, provides 
coverage for benefits with respect to prescription drugs, and limits 
such coverage to drugs included in a formulary, the plan or issuer 
shall--
            (1) ensure the participation of physicians and pharmacists 
        in developing and reviewing such formulary;
            (2) provide for disclosure of the formulary to providers; 
        and
            (3) in accordance with the applicable quality assurance and 
        utilization review standards of the plan or issuer, provide for 
        exceptions from the formulary limitation when a non-formulary 
        alternative is medically necessary and appropriate and, in the 
        case of such an exception, apply the same cost-sharing 
        requirements that would have applied in the case of a drug 
        covered under the formulary.
    (b) Coverage of Approved Drugs and Medical Devices.--
            (1) In general.--A group health plan (and health insurance 
        coverage offered in connection with such a plan) that provides 
        any coverage of prescription drugs or medical devices shall not 
        deny coverage of such a drug or device on the basis that the 
        use is investigational, if the use--
                    (A) in the case of a prescription drug--
                            (i) is included in the labeling authorized 
                        by the application in effect for the drug 
                        pursuant to subsection (b) or (j) of section 
                        505 of the Federal Food, Drug, and Cosmetic 
                        Act, without regard to any postmarketing 
                        requirements that may apply under such Act; or
                            (ii) is included in the labeling authorized 
                        by the application in effect for the drug under 
                        section 351 of the Public Health Service Act, 
                        without regard to any postmarketing 
                        requirements that may apply pursuant to such 
                        section; or
                    (B) in the case of a medical device, is included in 
                the labeling authorized by a regulation under 
                subsection (d) or (3) of section 513 of the Federal 
                Food, Drug, and Cosmetic Act, an order under subsection 
                (f) of such section, or an application approved under 
                section 515 of such Act, without regard to any 
                postmarketing requirements that may apply under such 
                Act.
            (2) Construction.--Nothing in this subsection shall be 
        construed as requiring a group health plan (or health insurance 
        coverage offered in connection with such a plan) to provide any 
        coverage of prescription drugs or medical devices.

SEC. 119. COVERAGE FOR INDIVIDUALS PARTICIPATING IN APPROVED CLINICAL 
              TRIALS.

    (a) Coverage.--
            (1) In general.--If a group health plan, or health 
        insurance issuer that is providing health insurance coverage, 
        provides coverage to a qualified individual (as defined in 
        subsection (b)), the plan or issuer--
                    (A) may not deny the individual participation in 
                the clinical trial referred to in subsection (b)(2);
                    (B) subject to subsection (c), may not deny (or 
                limit or impose additional conditions on) the coverage 
                of routine patient costs for items and services 
                furnished in connection with participation in the 
                trial; and
                    (C) may not discriminate against the individual on 
                the basis of the enrollee's participation in such 
                trial.
            (2) Exclusion of certain costs.--For purposes of paragraph 
        (1)(B), routine patient costs do not include the cost of the 
        tests or measurements conducted primarily for the purpose of 
        the clinical trial involved.
            (3) Use of in-network providers.--If one or more 
        participating providers is participating in a clinical trial, 
        nothing in paragraph (1) shall be construed as preventing a 
        plan or issuer from requiring that a qualified individual 
        participate in the trial through such a participating provider 
        if the provider will accept the individual as a participant in 
        the trial.
    (b) Qualified Individual Defined.--For purposes of subsection (a), 
the term ``qualified individual'' means an individual who is a 
participant or beneficiary in a group health plan, or who is an 
enrollee under health insurance coverage, and who meets the following 
conditions:
            (1)(A) The individual has a life-threatening or serious 
        illness for which no standard treatment is effective.
            (B) The individual is eligible to participate in an 
        approved clinical trial according to the trial protocol with 
        respect to treatment of such illness.
            (C) The individual's participation in the trial offers 
        meaningful potential for significant clinical benefit for the 
        individual.
            (2) Either--
                    (A) the referring physician is a participating 
                health care professional and has concluded that the 
                individual's participation in such trial would be 
                appropriate based upon the individual meeting the 
                conditions described in paragraph (1); or
                    (B) the participant, beneficiary, or enrollee 
                provides medical and scientific information 
                establishing that the individual's participation in 
                such trial would be appropriate based upon the 
                individual meeting the conditions described in 
                paragraph (1).
    (c) Payment.--
            (1) In general.--Under this section a group health plan and 
        a health insurance issuer shall provide for payment for routine 
        patient costs described in subsection (a)(2) but is not 
        required to pay for costs of items and services that are 
        reasonably expected (as determined by the appropriate 
        Secretary) to be paid for by the sponsors of an approved 
        clinical trial.
            (2) Payment rate.--In the case of covered items and 
        services provided by--
                    (A) a participating provider, the payment rate 
                shall be at the agreed upon rate; or
                    (B) a nonparticipating provider, the payment rate 
                shall be at the rate the plan or issuer would normally 
                pay for comparable services under subparagraph (A).
    (d) Approved Clinical Trial Defined.--
            (1) In general.--In this section, the term ``approved 
        clinical trial'' means a clinical research study or clinical 
        investigation--
                    (A) approved and funded (which may include funding 
                through in-kind contributions) by one or more of the 
                following:
                            (i) the National Institutes of Health;
                            (ii) a cooperative group or center of the 
                        National Institutes of Health, including a 
                        qualified nongovernmental research entity to 
                        which the National Cancer Institute has awarded 
                        a center support grant;
                            (iii) either of the following if the 
                        conditions described in paragraph (2) are met--
                                    (I) the Department of Veterans 
                                Affairs;
                                    (II) the Department of Defense; or
                    (B) approved by the Food and Drug Administration.
            (2) Conditions for departments.--The conditions described 
        in this paragraph, for a study or investigation conducted by a 
        Department, are that the study or investigation has been 
        reviewed and approved through a system of peer review that the 
        appropriate Secretary determines--
                    (A) to be comparable to the system of peer review 
                of studies and investigations used by the National 
                Institutes of Health; and
                    (B) assures unbiased review of the highest ethical 
                standards by qualified individuals who have no interest 
                in the outcome of the review.
    (e) Construction.--Nothing in this section shall be construed to 
limit a plan's or issuer's coverage with respect to clinical trials.

SEC. 120. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR MASTECTOMIES 
              AND LYMPH NODE DISSECTIONS FOR THE TREATMENT OF BREAST 
              CANCER AND COVERAGE FOR SECONDARY CONSULTATIONS.

    (a) Inpatient Care.--
            (1) In general.--A group health plan, and a health 
        insurance issuer providing health insurance coverage, that 
        provides medical and surgical benefits shall ensure that 
        inpatient coverage with respect to the treatment of breast 
        cancer is provided for a period of time as is determined by the 
        attending physician, in consultation with the patient, to be 
        medically necessary and appropriate following--
                    (A) a mastectomy;
                    (B) a lumpectomy; or
                    (C) a lymph node dissection for the treatment of 
                breast cancer.
            (2) Exception.--Nothing in this section shall be construed 
        as requiring the provision of inpatient coverage if the 
        attending physician and patient determine that a shorter period 
        of hospital stay is medically appropriate.
    (b) Prohibition on Certain Modifications.--In implementing the 
requirements of this section, a group health plan, and a health 
insurance issuer providing health insurance coverage, may not modify 
the terms and conditions of coverage based on the determination by a 
participant, beneficiary, or enrollee to request less than the minimum 
coverage required under subsection (a).
    (c) Secondary Consultations.--
            (1) In general.--A group health plan, and a health 
        insurance issuer providing health insurance coverage, that 
        provides coverage with respect to medical and surgical services 
        provided in relation to the diagnosis and treatment of cancer 
        shall ensure that full coverage is provided for secondary 
        consultations by specialists in the appropriate medical fields 
        (including pathology, radiology, and oncology) to confirm or 
        refute such diagnosis. Such plan or issuer shall ensure that 
        full coverage is provided for such secondary consultation 
        whether such consultation is based on a positive or negative 
        initial diagnosis. In any case in which the attending physician 
        certifies in writing that services necessary for such a 
        secondary consultation are not sufficiently available from 
        specialists operating under the plan or coverage with respect 
        to whose services coverage is otherwise provided under such 
        plan or by such issuer, such plan or issuer shall ensure that 
        coverage is provided with respect to the services necessary for 
        the secondary consultation with any other specialist selected 
        by the attending physician for such purpose at no additional 
        cost to the individual beyond that which the individual would 
        have paid if the specialist was participating in the network of 
        the plan or issuer.
            (2) Exception.--Nothing in paragraph (1) shall be construed 
        as requiring the provision of secondary consultations where the 
        patient determines not to seek such a consultation.
    (d) Prohibition on Penalties or Incentives.--A group health plan, 
and a health insurance issuer providing health insurance coverage, may 
not--
            (1) penalize or otherwise reduce or limit the reimbursement 
        of a provider or specialist because the provider or specialist 
        provided care to a participant, beneficiary, or enrollee in 
        accordance with this section;
            (2) provide financial or other incentives to a physician or 
        specialist to induce the physician or specialist to keep the 
        length of inpatient stays of patients following a mastectomy, 
        lumpectomy, or a lymph node dissection for the treatment of 
        breast cancer below certain limits or to limit referrals for 
        secondary consultations; or
            (3) provide financial or other incentives to a physician or 
        specialist to induce the physician or specialist to refrain 
        from referring a participant, beneficiary, or enrollee for a 
        secondary consultation that would otherwise be covered by the 
        plan or coverage involved under subsection (c).

                   Subtitle C--Access to Information

SEC. 121. PATIENT ACCESS TO INFORMATION.

    (a) Requirement.--
            (1) Disclosure.--
                    (A) In general.--A group health plan, and a health 
                insurance issuer that provides coverage in connection 
                with health insurance coverage, shall provide for the 
                disclosure to participants, beneficiaries, and 
                enrollees--
                            (i) of the information described in 
                        subsection (b) at the time of the initial 
                        enrollment of the participant, beneficiary, or 
                        enrollee under the plan or coverage;
                            (ii) of such information on an annual 
                        basis--
                                    (I) in conjunction with the 
                                election period of the plan or coverage 
                                if the plan or coverage has such an 
                                election period; or
                                    (II) in the case of a plan or 
                                coverage that does not have an election 
                                period, in conjunction with the 
                                beginning of the plan or coverage year; 
                                and
                            (iii) of information relating to any 
                        material reduction to the benefits or 
                        information described in such subsection or 
                        subsection (c), in the form of a notice 
                        provided not later than 30 days before the date 
                        on which the reduction takes effect.
                    (B) Participants, beneficiaries, and enrollees.--
                The disclosure required under subparagraph (A) shall be 
                provided--
                            (i) jointly to each participant, 
                        beneficiary, and enrollee who reside at the 
                        same address; or
                            (ii) in the case of a beneficiary or 
                        enrollee who does not reside at the same 
                        address as the participant or another enrollee, 
                        separately to the participant or other 
                        enrollees and such beneficiary or enrollee.
            (2) Provision of information.--Information shall be 
        provided to participants, beneficiaries, and enrollees under 
        this section at the last known address maintained by the plan 
        or issuer with respect to such participants, beneficiaries, or 
        enrollees, to the extent that such information is provided to 
        participants, beneficiaries, or enrollees via the United States 
        Postal Service or other private delivery service.
    (b) Required Information.--The informational materials to be 
distributed under this section shall include for each option available 
under the group health plan or health insurance coverage the following:
            (1) Benefits.--A description of the covered benefits, 
        including--
                    (A) any in- and out-of-network benefits;
                    (B) specific preventive services covered under the 
                plan or coverage if such services are covered;
                    (C) any specific exclusions or express limitations 
                of benefits described in section 104(d)(3)(C);
                    (D) any other benefit limitations, including any 
                annual or lifetime benefit limits and any monetary 
                limits or limits on the number of visits, days, or 
                services, and any specific coverage exclusions; and
                    (E) any definition of medical necessity used in 
                making coverage determinations by the plan, issuer, or 
                claims administrator.
            (2) Cost sharing.--A description of any cost-sharing 
        requirements, including--
                    (A) any premiums, deductibles, coinsurance, 
                copayment amounts, and liability for balance billing, 
                for which the participant, beneficiary, or enrollee 
                will be responsible under each option available under 
                the plan;
                    (B) any maximum out-of-pocket expense for which the 
                participant, beneficiary, or enrollee may be liable;
                    (C) any cost-sharing requirements for out-of-
                network benefits or services received from 
                nonparticipating providers; and
                    (D) any additional cost-sharing or charges for 
                benefits and services that are furnished without 
                meeting applicable plan or coverage requirements, such 
                as prior authorization or precertification.
            (3) Disenrollment.--Information relating to the 
        disenrollment of a participant, beneficiary, or enrollee.
            (4) Service area.--A description of the plan or issuer's 
        service area, including the provision of any out-of-area 
        coverage.
            (5) Participating providers.--A directory of participating 
        providers (to the extent a plan or issuer provides coverage 
        through a network of providers) that includes, at a minimum, 
        the name, address, and telephone number of each participating 
        provider, and information about how to inquire whether a 
        participating provider is currently accepting new patients.
            (6) Choice of primary care provider.--A description of any 
        requirements and procedures to be used by participants, 
        beneficiaries, and enrollees in selecting, accessing, or 
        changing their primary care provider, including providers both 
        within and outside of the network (if the plan or issuer 
        permits out-of-network services), and the right to select a 
        pediatrician as a primary care provider under section 116 for a 
        participant, beneficiary, or enrollee who is a child if such 
        section applies.
            (7) Preauthorization requirements.--A description of the 
        requirements and procedures to be used to obtain 
        preauthorization for health services, if such preauthorization 
        is required.
            (8) Experimental and investigational treatments.--A 
        description of the process for determining whether a particular 
        item, service, or treatment is considered experimental or 
        investigational, and the circumstances under which such 
        treatments are covered by the plan or issuer.
            (9) Specialty care.--A description of the requirements and 
        procedures to be used by participants, beneficiaries, and 
        enrollees in accessing specialty care and obtaining referrals 
        to participating and nonparticipating specialists, including 
        any limitations on choice of health care professionals referred 
        to in section 112(b)(2) and the right to timely access to 
        specialists care under section 114 if such section applies.
            (10) Clinical trials.--A description of the circumstances 
        and conditions under which participation in clinical trials is 
        covered under the terms and conditions of the plan or coverage, 
        and the right to obtain coverage for approved clinical trials 
        under section 119 if such section applies.
            (11) Prescription drugs.--To the extent the plan or issuer 
        provides coverage for prescription drugs, a statement of 
        whether such coverage is limited to drugs included in a 
        formulary, a description of any provisions and cost-sharing 
        required for obtaining on- and off-formulary medications, and a 
        description of the rights of participants, beneficiaries, and 
        enrollees in obtaining access to access to prescription drugs 
        under section 118 if such section applies.
            (12) Emergency services.--A summary of the rules and 
        procedures for accessing emergency services, including the 
        right of a participant, beneficiary, or enrollee to obtain 
        emergency services under the prudent layperson standard under 
        section 113, if such section applies, and any educational 
        information that the plan or issuer may provide regarding the 
        appropriate use of emergency services.
            (13) Claims and appeals.--A description of the plan or 
        issuer's rules and procedures pertaining to claims and appeals, 
        a description of the rights (including deadlines for exercising 
        rights) of participants, beneficiaries, and enrollees under 
        subtitle A in obtaining covered benefits, filing a claim for 
        benefits, and appealing coverage decisions internally and 
        externally (including telephone numbers and mailing addresses 
        of the appropriate authority), and a description of any 
        additional legal rights and remedies available under section 
        502 of the Employee Retirement Income Security Act of 1974 and 
        applicable State law.
            (14) Advance directives and organ donation.--A description 
        of procedures for advance directives and organ donation 
        decisions if the plan or issuer maintains such procedures.
            (15) Information on plans and issuers.--The name, mailing 
        address, and telephone number or numbers of the plan 
        administrator and the issuer to be used by participants, 
        beneficiaries, and enrollees seeking information about plan or 
        coverage benefits and services, payment of a claim, or 
        authorization for services and treatment. Notice of whether the 
        benefits under the plan or coverage are provided under a 
        contract or policy of insurance issued by an issuer, or whether 
        benefits are provided directly by the plan sponsor who bears 
        the insurance risk.
            (16) Translation services.--A summary description of any 
        translation or interpretation services (including the 
        availability of printed information in languages other than 
        English, audio tapes, or information in Braille) that are 
        available for non-English speakers and participants, 
        beneficiaries, and enrollees with communication disabilities 
        and a description of how to access these items or services.
            (17) Accreditation information.--Any information that is 
        made public by accrediting organizations in the process of 
        accreditation if the plan or issuer is accredited, or any 
        additional quality indicators (such as the results of enrollee 
        satisfaction surveys) that the plan or issuer makes public or 
        makes available to participants, beneficiaries, and enrollees.
            (18) Notice of requirements.--A description of any rights 
        of participants, beneficiaries, and enrollees that are 
        established by the Patients' Bill of Rights Act of 2004 
        (excluding those described in paragraphs (1) through (17)) if 
        such sections apply. The description required under this 
        paragraph may be combined with the notices of the type 
        described in sections 711(d), 713(b), or 606(a)(1) of the 
        Employee Retirement Income Security Act of 1974 and with any 
        other notice provision that the appropriate Secretary 
        determines may be combined, so long as such combination does 
        not result in any reduction in the information that would 
        otherwise be provided to the recipient.
            (19) Availability of additional information.--A statement 
        that the information described in subsection (c), and 
        instructions on obtaining such information (including telephone 
        numbers and, if available, Internet websites), shall be made 
        available upon request.
            (20) Designated decisionmakers.--A description of the 
        participants and beneficiaries with respect to whom each 
        designated decisionmaker under the plan has assumed liability 
        under section 502(o) of the Employee Retirement Income Security 
        Act of 1974 and the name and address of each such 
        decisionmaker.
    (c) Additional Information.--The informational materials to be 
provided upon the request of a participant, beneficiary, or enrollee 
shall include for each option available under a group health plan or 
health insurance coverage the following:
            (1) Status of providers.--The State licensure status of the 
        plan or issuer's participating health care professionals and 
        participating health care facilities, and, if available, the 
        education, training, specialty qualifications or certifications 
        of such professionals.
            (2) Compensation methods.--A summary description by 
        category of the applicable methods (such as capitation, fee-
        for-service, salary, bundled payments, per diem, or a 
        combination thereof) used for compensating prospective or 
        treating health care professionals (including primary care 
        providers and specialists) and facilities in connection with 
        the provision of health care under the plan or coverage.
            (3) Prescription drugs.--Information about whether a 
        specific prescription medication is included in the formulary 
        of the plan or issuer, if the plan or issuer uses a defined 
        formulary.
            (4) Utilization review activities.--A description of 
        procedures used and requirements (including circumstances, 
        timeframes, and appeals rights) under any utilization review 
        program under sections 101 and 102, including any drug 
        formulary program under section 118.
            (5) External appeals information.--Aggregate information on 
        the number and outcomes of external medical reviews, relative 
        to the sample size (such as the number of covered lives) under 
        the plan or under the coverage of the issuer.
    (d) Manner of Disclosure.--The information described in this 
section shall be disclosed in an accessible medium and format that is 
calculated to be understood by a participant or enrollee.
    (e) Rules of Construction.--Nothing in this section shall be 
construed to prohibit a group health plan, or a health insurance issuer 
in connection with health insurance coverage, from--
            (1) distributing any other additional information 
        determined by the plan or issuer to be important or necessary 
        in assisting participants, beneficiaries, and enrollees in the 
        selection of a health plan or health insurance coverage; and
            (2) complying with the provisions of this section by 
        providing information in brochures, through the Internet or 
        other electronic media, or through other similar means, so long 
        as--
                    (A) the disclosure of such information in such form 
                is in accordance with requirements as the appropriate 
                Secretary may impose, and
                    (B) in connection with any such disclosure of 
                information through the Internet or other electronic 
                media--
                            (i) the recipient has affirmatively 
                        consented to the disclosure of such information 
                        in such form,
                            (ii) the recipient is capable of accessing 
                        the information so disclosed on the recipient's 
                        individual workstation or at the recipient's 
                        home,
                            (iii) the recipient retains an ongoing 
                        right to receive paper disclosure of such 
                        information and receives, in advance of any 
                        attempt at disclosure of such information to 
                        him or her through the Internet or other 
                        electronic media, notice in printed form of 
                        such ongoing right and of the proper software 
                        required to view information so disclosed, and
                            (iv) the plan administrator appropriately 
                        ensures that the intended recipient is 
                        receiving the information so disclosed and 
                        provides the information in printed form if the 
                        information is not received.

         Subtitle D--Protecting the Doctor-patient Relationship

SEC. 131. PROHIBITION OF INTERFERENCE WITH CERTAIN MEDICAL 
              COMMUNICATIONS.

    (a) General Rule.--The provisions of any contract or agreement, or 
the operation of any contract or agreement, between a group health plan 
or health insurance issuer in relation to health insurance coverage 
(including any partnership, association, or other organization that 
enters into or administers such a contract or agreement) and a health 
care provider (or group of health care providers) shall not prohibit or 
otherwise restrict a health care professional from advising such a 
participant, beneficiary, or enrollee who is a patient of the 
professional about the health status of the individual or medical care 
or treatment for the individual's condition or disease, regardless of 
whether benefits for such care or treatment are provided under the plan 
or coverage, if the professional is acting within the lawful scope of 
practice.
    (b) Nullification.--Any contract provision or agreement that 
restricts or prohibits medical communications in violation of 
subsection (a) shall be null and void.

SEC. 132. PROHIBITION OF DISCRIMINATION AGAINST PROVIDERS BASED ON 
              LICENSURE.

    (a) In General.--A group health plan, and a health insurance issuer 
with respect to health insurance coverage, shall not discriminate with 
respect to participation or indemnification as to any provider who is 
acting within the scope of the provider's license or certification 
under applicable State law, solely on the basis of such license or 
certification.
    (b) Construction.--Subsection (a) shall not be construed--
            (1) as requiring the coverage under a group health plan or 
        health insurance coverage of a particular benefit or service or 
        to prohibit a plan or issuer from including providers only to 
        the extent necessary to meet the needs of the plan's or 
        issuer's participants, beneficiaries, or enrollees or from 
        establishing any measure designed to maintain quality and 
        control costs consistent with the responsibilities of the plan 
        or issuer;
            (2) to override any State licensure or scope-of-practice 
        law; or
            (3) as requiring a plan or issuer that offers network 
        coverage to include for participation every willing provider 
        who meets the terms and conditions of the plan or issuer.

SEC. 133. PROHIBITION AGAINST IMPROPER INCENTIVE ARRANGEMENTS.

    (a) In General.--A group health plan and a health insurance issuer 
offering health insurance coverage may not operate any physician 
incentive plan (as defined in subparagraph (B) of section 1852(j)(4) of 
the Social Security Act) unless the requirements described in clauses 
(i), (ii)(I), and (iii) of subparagraph (A) of such section are met 
with respect to such a plan.
    (b) Application.--For purposes of carrying out paragraph (1), any 
reference in section 1852(j)(4) of the Social Security Act to the 
Secretary, a Medicare+Choice organization, or an individual enrolled 
with the organization shall be treated as a reference to the applicable 
authority, a group health plan or health insurance issuer, 
respectively, and a participant, beneficiary, or enrollee with the plan 
or organization, respectively.
    (c) Construction.--Nothing in this section shall be construed as 
prohibiting all capitation and similar arrangements or all provider 
discount arrangements.

SEC. 134. PAYMENT OF CLAIMS.

    A group health plan, and a health insurance issuer offering health 
insurance coverage, shall provide for prompt payment of claims 
submitted for health care services or supplies furnished to a 
participant, beneficiary, or enrollee with respect to benefits covered 
by the plan or issuer, in a manner that is no less protective than the 
provisions of section 1842(c)(2) of the Social Security Act (42 U.S.C. 
1395u(c)(2)).

SEC. 135. PROTECTION FOR PATIENT ADVOCACY.

    (a) Protection for Use of Utilization Review and Grievance 
Process.--A group health plan, and a health insurance issuer with 
respect to the provision of health insurance coverage, may not 
retaliate against a participant, beneficiary, enrollee, or health care 
provider based on the participant's, beneficiary's, enrollee's or 
provider's use of, or participation in, a utilization review process or 
a grievance process of the plan or issuer (including an internal or 
external review or appeal process) under this title.
    (b) Protection for Quality Advocacy by Health Care Professionals.--
            (1) In general.--A group health plan and a health insurance 
        issuer may not retaliate or discriminate against a protected 
        health care professional because the professional in good 
        faith--
                    (A) discloses information relating to the care, 
                services, or conditions affecting one or more 
                participants, beneficiaries, or enrollees of the plan 
                or issuer to an appropriate public regulatory agency, 
                an appropriate private accreditation body, or 
                appropriate management personnel of the plan or issuer; 
                or
                    (B) initiates, cooperates, or otherwise 
                participates in an investigation or proceeding by such 
                an agency with respect to such care, services, or 
                conditions.
        If an institutional health care provider is a participating 
        provider with such a plan or issuer or otherwise receives 
        payments for benefits provided by such a plan or issuer, the 
        provisions of the previous sentence shall apply to the provider 
        in relation to care, services, or conditions affecting one or 
        more patients within an institutional health care provider in 
        the same manner as they apply to the plan or issuer in relation 
        to care, services, or conditions provided to one or more 
        participants, beneficiaries, or enrollees; and for purposes of 
        applying this sentence, any reference to a plan or issuer is 
        deemed a reference to the institutional health care provider.
            (2) Good faith action.--For purposes of paragraph (1), a 
        protected health care professional is considered to be acting 
        in good faith with respect to disclosure of information or 
        participation if, with respect to the information disclosed as 
        part of the action--
                    (A) the disclosure is made on the basis of personal 
                knowledge and is consistent with that degree of 
                learning and skill ordinarily possessed by health care 
                professionals with the same licensure or certification 
                and the same experience;
                    (B) the professional reasonably believes the 
                information to be true;
                    (C) the information evidences either a violation of 
                a law, rule, or regulation, of an applicable 
                accreditation standard, or of a generally recognized 
                professional or clinical standard or that a patient is 
                in imminent hazard of loss of life or serious injury; 
                and
                    (D) subject to subparagraphs (B) and (C) of 
                paragraph (3), the professional has followed reasonable 
                internal procedures of the plan, issuer, or 
                institutional health care provider established for the 
                purpose of addressing quality concerns before making 
                the disclosure.
            (3) Exception and special rule.--
                    (A) General exception.--Paragraph (1) does not 
                protect disclosures that would violate Federal or State 
                law or diminish or impair the rights of any person to 
                the continued protection of confidentiality of 
                communications provided by such law.
                    (B) Notice of internal procedures.--Subparagraph 
                (D) of paragraph (2) shall not apply unless the 
                internal procedures involved are reasonably expected to 
                be known to the health care professional involved. For 
                purposes of this subparagraph, a health care 
                professional is reasonably expected to know of internal 
                procedures if those procedures have been made available 
                to the professional through distribution or posting.
                    (C) Internal procedure exception.--Subparagraph (D) 
                of paragraph (2) also shall not apply if--
                            (i) the disclosure relates to an imminent 
                        hazard of loss of life or serious injury to a 
                        patient;
                            (ii) the disclosure is made to an 
                        appropriate private accreditation body pursuant 
                        to disclosure procedures established by the 
                        body; or
                            (iii) the disclosure is in response to an 
                        inquiry made in an investigation or proceeding 
                        of an appropriate public regulatory agency and 
                        the information disclosed is limited to the 
                        scope of the investigation or proceeding.
            (4) Additional considerations.--It shall not be a violation 
        of paragraph (1) to take an adverse action against a protected 
        health care professional if the plan, issuer, or provider 
        taking the adverse action involved demonstrates that it would 
        have taken the same adverse action even in the absence of the 
        activities protected under such paragraph.
            (5) Notice.--A group health plan, health insurance issuer, 
        and institutional health care provider shall post a notice, to 
        be provided or approved by the Secretary of Labor, setting 
        forth excerpts from, or summaries of, the pertinent provisions 
        of this subsection and information pertaining to enforcement of 
        such provisions.
            (6) Constructions.--
                    (A) Determinations of coverage.--Nothing in this 
                subsection shall be construed to prohibit a plan or 
                issuer from making a determination not to pay for a 
                particular medical treatment or service or the services 
                of a type of health care professional.
                    (B) Enforcement of peer review protocols and 
                internal procedures.--Nothing in this subsection shall 
                be construed to prohibit a plan, issuer, or provider 
                from establishing and enforcing reasonable peer review 
                or utilization review protocols or determining whether 
                a protected health care professional has complied with 
                those protocols or from establishing and enforcing 
                internal procedures for the purpose of addressing 
                quality concerns.
                    (C) Relation to other rights.--Nothing in this 
                subsection shall be construed to abridge rights of 
                participants, beneficiaries, enrollees, and protected 
                health care professionals under other applicable 
                Federal or State laws.
            (7) Protected health care professional defined.--For 
        purposes of this subsection, the term ``protected health care 
        professional'' means an individual who is a licensed or 
        certified health care professional and who--
                    (A) with respect to a group health plan or health 
                insurance issuer, is an employee of the plan or issuer 
                or has a contract with the plan or issuer for provision 
                of services for which benefits are available under the 
                plan or issuer; or
                    (B) with respect to an institutional health care 
                provider, is an employee of the provider or has a 
                contract or other arrangement with the provider 
                respecting the provision of health care services.

                        Subtitle E--Definitions

SEC. 151. DEFINITIONS.

    (a) Incorporation of General Definitions.--Except as otherwise 
provided, the provisions of section 2791 of the Public Health Service 
Act shall apply for purposes of this title in the same manner as they 
apply for purposes of title XXVII of such Act.
    (b) Secretary.--Except as otherwise provided, the term 
``Secretary'' means the Secretary of Health and Human Services, in 
consultation with the Secretary of Labor and the term ``appropriate 
Secretary'' means the Secretary of Health and Human Services in 
relation to carrying out this title under sections 2706 and 2751 of the 
Public Health Service Act and the Secretary of Labor in relation to 
carrying out this title under section 714 of the Employee Retirement 
Income Security Act of 1974.
    (c) Additional Definitions.--For purposes of this title:
            (1) Applicable authority.--The term ``applicable 
        authority'' means--
                    (A) in the case of a group health plan, the 
                Secretary of Health and Human Services and the 
                Secretary of Labor; and
                    (B) in the case of a health insurance issuer with 
                respect to a specific provision of this title, the 
                applicable State authority (as defined in section 
                2791(d) of the Public Health Service Act), or the 
                Secretary of Health and Human Services, if such 
                Secretary is enforcing such provision under section 
                2722(a)(2) or 2761(a)(2) of the Public Health Service 
                Act.
            (2) Enrollee.--The term ``enrollee'' means, with respect to 
        health insurance coverage offered by a health insurance issuer, 
        an individual enrolled with the issuer to receive such 
        coverage.
            (3) Group health plan.--The term ``group health plan'' has 
        the meaning given such term in section 733(a) of the Employee 
        Retirement Income Security Act of 1974, except that such term 
        includes a employee welfare benefit plan treated as a group 
        health plan under section 732(d) of such Act or defined as such 
        a plan under section 607(1) of such Act.
            (4) Health care professional.--The term ``health care 
        professional'' means an individual who is licensed, accredited, 
        or certified under State law to provide specified health care 
        services and who is operating within the scope of such 
        licensure, accreditation, or certification.
            (5) Health care provider.--The term ``health care 
        provider'' includes a physician or other health care 
        professional, as well as an institutional or other facility or 
        agency that provides health care services and that is licensed, 
        accredited, or certified to provide health care items and 
        services under applicable State law.
            (6) Network.--The term ``network'' means, with respect to a 
        group health plan or health insurance issuer offering health 
        insurance coverage, the participating health care professionals 
        and providers through whom the plan or issuer provides health 
        care items and services to participants, beneficiaries, or 
        enrollees.
            (7) Nonparticipating.--The term ``nonparticipating'' means, 
        with respect to a health care provider that provides health 
        care items and services to a participant, beneficiary, or 
        enrollee under group health plan or health insurance coverage, 
        a health care provider that is not a participating health care 
        provider with respect to such items and services.
            (8) Participating.--The term ``participating'' means, with 
        respect to a health care provider that provides health care 
        items and services to a participant, beneficiary, or enrollee 
        under group health plan or health insurance coverage offered by 
        a health insurance issuer, a health care provider that 
        furnishes such items and services under a contract or other 
        arrangement with the plan or issuer.
            (9) Prior authorization.--The term ``prior authorization'' 
        means the process of obtaining prior approval from a health 
        insurance issuer or group health plan for the provision or 
        coverage of medical services.
            (10) Terms and conditions.--The term ``terms and 
        conditions'' includes, with respect to a group health plan or 
        health insurance coverage, requirements imposed under this 
        title with respect to the plan or coverage.

SEC. 152. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.

    (a) Continued Applicability of State Law With Respect to Health 
Insurance Issuers.--
            (1) In general.--Subject to paragraph (2), this title shall 
        not be construed to supersede any provision of State law which 
        establishes, implements, or continues in effect any standard or 
        requirement solely relating to health insurance issuers (in 
        connection with group health insurance coverage or otherwise) 
        except to the extent that such standard or requirement prevents 
        the application of a requirement of this title.
            (2) Continued preemption with respect to group health 
        plans.--Nothing in this title shall be construed to affect or 
        modify the provisions of section 514 of the Employee Retirement 
        Income Security Act of 1974 with respect to group health plans.
            (3) Construction.--In applying this section, a State law 
        that provides for equal access to, and availability of, all 
        categories of licensed health care providers and services shall 
        not be treated as preventing the application of any requirement 
        of this title.
    (b) Application of Substantially Compliant State Laws.--
            (1) In general.--In the case of a State law that imposes, 
        with respect to health insurance coverage offered by a health 
        insurance issuer and with respect to a group health plan that 
        is a non-Federal governmental plan, a requirement that 
        substantially complies (within the meaning of subsection (c)) 
        with a patient protection requirement (as defined in paragraph 
        (3)) and does not prevent the application of other requirements 
        under this Act (except in the case of other substantially 
        compliant requirements), in applying the requirements of this 
        title under section 2707 and 2753 (as applicable) of the Public 
        Health Service Act (as added by title II), subject to 
        subsection (a)(2)--
                    (A) the State law shall not be treated as being 
                superseded under subsection (a); and
                    (B) the State law shall apply instead of the 
                patient protection requirement otherwise applicable 
                with respect to health insurance coverage and non-
                Federal governmental plans.
            (2) Limitation.--In the case of a group health plan covered 
        under title I of the Employee Retirement Income Security Act of 
        1974, paragraph (1) shall be construed to apply only with 
        respect to the health insurance coverage (if any) offered in 
        connection with the plan.
            (3) Definitions.--In this section:
                    (A) Patient protection requirement.--The term 
                ``patient protection requirement'' means a requirement 
                under this title, and includes (as a single 
                requirement) a group or related set of requirements 
                under a section or similar unit under this title.
                    (B) Substantially compliant.--The terms 
                ``substantially compliant'', substantially complies'', 
                or ``substantial compliance'' with respect to a State 
                law, mean that the State law has the same or similar 
                features as the patient protection requirements and has 
                a similar effect.
    (c) Determinations of Substantial Compliance.--
            (1) Certification by states.--A State may submit to the 
        Secretary a certification that a State law provides for patient 
        protections that are at least substantially compliant with one 
        or more patient protection requirements. Such certification 
        shall be accompanied by such information as may be required to 
        permit the Secretary to make the determination described in 
        paragraph (2)(A).
            (2) Review.--
                    (A) In general.--The Secretary shall promptly 
                review a certification submitted under paragraph (1) 
                with respect to a State law to determine if the State 
                law substantially complies with the patient protection 
                requirement (or requirements) to which the law relates.
                    (B) Approval deadlines.--
                            (i) Initial review.--Such a certification 
                        is considered approved unless the Secretary 
                        notifies the State in writing, within 90 days 
                        after the date of receipt of the certification, 
                        that the certification is disapproved (and the 
                        reasons for disapproval) or that specified 
                        additional information is needed to make the 
                        determination described in subparagraph (A).
                            (ii) Additional information.--With respect 
                        to a State that has been notified by the 
                        Secretary under clause (i) that specified 
                        additional information is needed to make the 
                        determination described in subparagraph (A), 
                        the Secretary shall make the determination 
                        within 60 days after the date on which such 
                        specified additional information is received by 
                        the Secretary.
            (3) Approval.--
                    (A) In general.--The Secretary shall approve a 
                certification under paragraph (1) unless--
                            (i) the State fails to provide sufficient 
                        information to enable the Secretary to make a 
                        determination under paragraph (2)(A); or
                            (ii) the Secretary determines that the 
                        State law involved does not provide for patient 
                        protections that substantially comply with the 
                        patient protection requirement (or 
                        requirements) to which the law relates.
                    (B) State challenge.--A State that has a 
                certification disapproved by the Secretary under 
                subparagraph (A) may challenge such disapproval in the 
                appropriate United States district court.
                    (C) Deference to states.--With respect to a 
                certification submitted under paragraph (1), the 
                Secretary shall give deference to the State's 
                interpretation of the State law involved with respect 
                to the patient protection involved.
                    (D) Public notification.--The Secretary shall--
                            (i) provide a State with a notice of the 
                        determination to approve or disapprove a 
                        certification under this paragraph;
                            (ii) promptly publish in the Federal 
                        Register a notice that a State has submitted a 
                        certification under paragraph (1);
                            (iii) promptly publish in the Federal 
                        Register the notice described in clause (i) 
                        with respect to the State; and
                            (iv) annually publish the status of all 
                        States with respect to certifications.
            (4) Construction.--Nothing in this subsection shall be 
        construed as preventing the certification (and approval of 
        certification) of a State law under this subsection solely 
        because it provides for greater protections for patients than 
        those protections otherwise required to establish substantial 
        compliance.
            (5) Petitions.--
                    (A) Petition process.--Effective on the date on 
                which the provisions of this Act become effective, as 
                provided for in section 601, a group health plan, 
                health insurance issuer, participant, beneficiary, or 
                enrollee may submit a petition to the Secretary for an 
                advisory opinion as to whether or not a standard or 
                requirement under a State law applicable to the plan, 
                issuer, participant, beneficiary, or enrollee that is 
                not the subject of a certification under this 
                subsection, is superseded under subsection (a)(1) 
                because such standard or requirement prevents the 
                application of a requirement of this title.
                    (B) Opinion.--The Secretary shall issue an advisory 
                opinion with respect to a petition submitted under 
                subparagraph (A) within the 60-day period beginning on 
                the date on which such petition is submitted.
    (d) Definitions.--For purposes of this section:
            (1) State law.--The term ``State law'' includes all laws, 
        decisions, rules, regulations, or other State action having the 
        effect of law, of any State. A law of the United States 
        applicable only to the District of Columbia shall be treated as 
        a State law rather than a law of the United States.
            (2) State.--The term ``State'' includes a State, the 
        District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
        American Samoa, the Northern Mariana Islands, any political 
        subdivisions of such, or any agency or instrumentality of such.

SEC. 153. EXCLUSIONS.

    (a) No Benefit Requirements.--Nothing in this title shall be 
construed to require a group health plan or a health insurance issuer 
offering health insurance coverage to include specific items and 
services under the terms of such a plan or coverage, other than those 
provided under the terms and conditions of such plan or coverage.
    (b) Exclusion From Access to Care Managed Care Provisions for Fee-
For-Service Coverage.--
            (1) In general.--The provisions of sections 111 through 117 
        shall not apply to a group health plan or health insurance 
        coverage if the only coverage offered under the plan or 
        coverage is fee-for-service coverage (as defined in paragraph 
        (2)).
            (2) Fee-for-service coverage defined.--For purposes of this 
        subsection, the term ``fee-for-service coverage'' means 
        coverage under a group health plan or health insurance coverage 
        that--
                    (A) reimburses hospitals, health professionals, and 
                other providers on a fee-for-service basis without 
                placing the provider at financial risk;
                    (B) does not vary reimbursement for such a provider 
                based on an agreement to contract terms and conditions 
                or the utilization of health care items or services 
                relating to such provider;
                    (C) allows access to any provider that is lawfully 
                authorized to provide the covered services and that 
                agrees to accept the terms and conditions of payment 
                established under the plan or by the issuer; and
                    (D) for which the plan or issuer does not require 
                prior authorization before providing for any health 
                care services.

SEC. 154. TREATMENT OF EXCEPTED BENEFITS.

    (a) In General.--The requirements of this title and the provisions 
of sections 502(a)(1)(C), 502(n), and 514(d) of the Employee Retirement 
Income Security Act of 1974 (added by section 402) shall not apply to 
excepted benefits (as defined in section 733(c) of such Act), other 
than benefits described in section 733(c)(2)(A) of such Act, in the 
same manner as the provisions of part 7 of subtitle B of title I of 
such Act do not apply to such benefits under subsections (b) and (c) of 
section 732 of such Act.
    (b) Coverage of Certain Limited Scope Plans.--Only for purposes of 
applying the requirements of this title under sections 2707 and 2753 of 
the Public Health Service Act, section 714 of the Employee Retirement 
Income Security Act of 1974, and section 9813 of the Internal Revenue 
Code of 1986, the following sections shall be deemed not to apply:
            (1) Section 2791(c)(2)(A) of the Public Health Service Act.
            (2) Section 733(c)(2)(A) of the Employee Retirement Income 
        Security Act of 1974.
            (3) Section 9832(c)(2)(A) of the Internal Revenue Code of 
        1986.

SEC. 155. REGULATIONS.

    The Secretaries of Health and Human Services, Labor, and the 
Treasury shall issue such regulations as may be necessary or 
appropriate to carry out this title. Such regulations shall be issued 
consistent with section 104 of Health Insurance Portability and 
Accountability Act of 1996. Such Secretaries may promulgate any interim 
final rules as the Secretaries determine are appropriate to carry out 
this title.

SEC. 156. INCORPORATION INTO PLAN OR COVERAGE DOCUMENTS.

    The requirements of this title with respect to a group health plan 
or health insurance coverage are, subject to section 154, deemed to be 
incorporated into, and made a part of, such plan or the policy, 
certificate, or contract providing such coverage and are enforceable 
under law as if directly included in the documentation of such plan or 
such policy, certificate, or contract.

SEC. 157. PRESERVATION OF PROTECTIONS.

    (a) In General.--The rights under this Act (including the right to 
maintain a civil action and any other rights under the amendments made 
by this Act) may not be waived, deferred, or lost pursuant to any 
agreement not authorized under this Act.
    (b) Exception.--Subsection (a) shall not apply to an agreement 
providing for arbitration or participation in any other nonjudicial 
procedure to resolve a dispute if the agreement--
            (1) is entered into knowingly and voluntarily by the 
        parties involved after the dispute has arisen; or
            (2) is pursuant to the terms of a collective bargaining 
        agreement.
Nothing in this subsection shall be construed to permit the waiver of 
the requirements of sections 103 and 104 (relating to internal and 
external review).

 TITLE II--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS 
   AND HEALTH INSURANCE COVERAGE UNDER THE PUBLIC HEALTH SERVICE ACT

SEC. 201. APPLICATION TO GROUP HEALTH PLANS AND GROUP HEALTH INSURANCE 
              COVERAGE.

    (a) In General.--Subpart 2 of part A of title XXVII of the Public 
Health Service Act is amended by adding at the end the following new 
section:

``SEC. 2707. PATIENT PROTECTION STANDARDS.

    ``Each group health plan shall comply with patient protection 
requirements under title I of the Patients' Bill of Rights Act of 2004, 
and each health insurance issuer shall comply with patient protection 
requirements under such title with respect to group health insurance 
coverage it offers, and such requirements shall be deemed to be 
incorporated into this subsection.''.
    (b) Conforming Amendment.--Section 2721(b)(2)(A) of such Act (42 
U.S.C. 300gg-21(b)(2)(A)) is amended by inserting ``(other than section 
2707)'' after ``requirements of such subparts''.

SEC. 202. APPLICATION TO INDIVIDUAL HEALTH INSURANCE COVERAGE.

    Part B of title XXVII of the Public Health Service Act is amended 
by inserting after section 2752 the following new section:

``SEC. 2753. PATIENT PROTECTION STANDARDS.

    ``Each health insurance issuer shall comply with patient protection 
requirements under title I of the Patients' Bill of Rights Act of 2004 
with respect to individual health insurance coverage it offers, and 
such requirements shall be deemed to be incorporated into this 
subsection.''.

SEC. 203. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Part C of title XXVII of the Public Health Service Act (42 U.S.C. 
300gg-91 et seq.) is amended by adding at the end the following:

``SEC. 2793. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    ``(a) Agreement With States.--A State may enter into an agreement 
with the Secretary for the delegation to the State of some or all of 
the Secretary's authority under this title to enforce the requirements 
applicable under title I of the Patients' Bill of Rights Act of 2004 
with respect to health insurance coverage offered by a health insurance 
issuer and with respect to a group health plan that is a non-Federal 
governmental plan.
    ``(b) Delegations.--Any department, agency, or instrumentality of a 
State to which authority is delegated pursuant to an agreement entered 
into under this section may, if authorized under State law and to the 
extent consistent with such agreement, exercise the powers of the 
Secretary under this title which relate to such authority.''.

   TITLE III--APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL 
                       HEALTH INSURANCE PROGRAMS

SEC. 301. APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL HEALTH 
              INSURANCE PROGRAMS.

    (a) Sense of Congress.--It is the sense of Congress that enrollees 
in Federal health insurance programs should have the same rights and 
privileges as those afforded under title I and under the amendments 
made by title IV to participants and beneficiaries under group health 
plans.
    (b) Conforming Federal Health Insurance Programs.--It is the sense 
of Congress that the President should require, by executive order, the 
Federal official with authority over each Federal health insurance 
program, to the extent feasible, to take such steps as are necessary to 
implement the rights and privileges described in subsection (a) with 
respect to such program.
    (c) GAO Report on Additional Steps Required.--Not later than 1 year 
after the date of the enactment of this Act, the Comptroller General of 
the United States shall submit to Congress a report on statutory 
changes that are required to implement such rights and privileges in a 
manner that is consistent with the missions of the Federal health 
insurance programs and that avoids unnecessary duplication or 
disruption of such programs.
    (d) Federal Health Insurance Program.--In this section, the term 
``Federal health insurance program'' means a Federal program that 
provides creditable coverage (as defined in section 2701(c)(1) of the 
Public Health Service Act) and includes a health program of the 
Department of Veterans Affairs.

TITLE IV--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

SEC. 401. APPLICATION OF PATIENT PROTECTION STANDARDS TO GROUP HEALTH 
              PLANS AND GROUP HEALTH INSURANCE COVERAGE UNDER THE 
              EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.

    Subpart B of part 7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 is amended by adding at the end 
the following new section:

``SEC. 714. PATIENT PROTECTION STANDARDS.

    ``(a) In General.--Subject to subsection (b), a group health plan 
(and a health insurance issuer offering group health insurance coverage 
in connection with such a plan) shall comply with the requirements of 
title I of the Patients' Bill of Rights Act of 2004 (as in effect as of 
the date of the enactment of such Act), and such requirements shall be 
deemed to be incorporated into this subsection.
    ``(b) Plan Satisfaction of Certain Requirements.--
            ``(1) Satisfaction of certain requirements through 
        insurance.--For purposes of subsection (a), insofar as a group 
        health plan provides benefits in the form of health insurance 
        coverage through a health insurance issuer, the plan shall be 
        treated as meeting the following requirements of title I of the 
        Patients' Bill of Rights Act of 2004 with respect to such 
        benefits and not be considered as failing to meet such 
        requirements because of a failure of the issuer to meet such 
        requirements so long as the plan sponsor or its representatives 
        did not cause such failure by the issuer:
                    ``(A) Section 111 (relating to consumer choice 
                option).
                    ``(B) Section 112 (relating to choice of health 
                care professional).
                    ``(C) Section 113 (relating to access to emergency 
                care).
                    ``(D) Section 114 (relating to timely access to 
                specialists).
                    ``(E) Section 115 (relating to patient access to 
                obstetrical and gynecological care).
                    ``(F) Section 116 (relating to access to pediatric 
                care).
                    ``(G) Section 117 (relating to continuity of care), 
                but only insofar as a replacement issuer assumes the 
                obligation for continuity of care.
                    ``(H) Section 118 (relating to access to needed 
                prescription drugs).
                    ``(I) Section 119 (relating to coverage for 
                individuals participating in approved clinical trials).
                    ``(J) Section 120 (relating to required coverage 
                for minimum hospital stay for mastectomies and lymph 
                node dissections for the treatment of breast cancer and 
                coverage for secondary consultations).
                    ``(K) Section 134 (relating to payment of claims).
            ``(2) Information.--With respect to information required to 
        be provided or made available under section 121 of the 
        Patients' Bill of Rights Act of 2004, in the case of a group 
        health plan that provides benefits in the form of health 
        insurance coverage through a health insurance issuer, the 
        Secretary shall determine the circumstances under which the 
        plan is not required to provide or make available the 
        information (and is not liable for the issuer's failure to 
        provide or make available the information), if the issuer is 
        obligated to provide and make available (or provides and makes 
        available) such information.
            ``(3) Internal appeals.--With respect to the internal 
        appeals process required to be established under section 103 of 
        such Act, in the case of a group health plan that provides 
        benefits in the form of health insurance coverage through a 
        health insurance issuer, the Secretary shall determine the 
        circumstances under which the plan is not required to provide 
        for such process and system (and is not liable for the issuer's 
        failure to provide for such process and system), if the issuer 
        is obligated to provide for (and provides for) such process and 
        system.
            ``(4) External appeals.--Pursuant to rules of the 
        Secretary, insofar as a group health plan enters into a 
        contract with a qualified external appeal entity for the 
        conduct of external appeal activities in accordance with 
        section 104 of such Act, the plan shall be treated as meeting 
        the requirement of such section and is not liable for the 
        entity's failure to meet any requirements under such section.
            ``(5) Application to prohibitions.--Pursuant to rules of 
        the Secretary, if a health insurance issuer offers health 
        insurance coverage in connection with a group health plan and 
        takes an action in violation of any of the following sections 
        of the Patients' Bill of Rights Act of 2004, the group health 
        plan shall not be liable for such violation unless the plan 
        caused such violation:
                    ``(A) Section 131 (relating to prohibition of 
                interference with certain medical communications).
                    ``(B) Section 132 (relating to prohibition of 
                discrimination against providers based on licensure).
                    ``(C) Section 133 (relating to prohibition against 
                improper incentive arrangements).
                    ``(D) Section 135 (relating to protection for 
                patient advocacy).
            ``(6) Construction.--Nothing in this subsection shall be 
        construed to affect or modify the responsibilities of the 
        fiduciaries of a group health plan under part 4 of subtitle B.
            ``(7) Treatment of substantially compliant state laws.--For 
        purposes of applying this subsection in connection with health 
        insurance coverage, any reference in this subsection to a 
        requirement in a section or other provision in the Patients' 
        Bill of Rights Act of 2004 with respect to a health insurance 
        issuer is deemed to include a reference to a requirement under 
        a State law that substantially complies (as determined under 
        section 152(c) of such Act) with the requirement in such 
        section or other provisions.
            ``(8) Application to certain prohibitions against 
        retaliation.--With respect to compliance with the requirements 
        of section 135(b)(1) of the Patients' Bill of Rights Act of 
        2004, for purposes of this subtitle the term `group health 
        plan' is deemed to include a reference to an institutional 
        health care provider.
    ``(c) Enforcement of Certain Requirements.--
            ``(1) Complaints.--Any protected health care professional 
        who believes that the professional has been retaliated or 
        discriminated against in violation of section 135(b)(1) of the 
        Patients' Bill of Rights Act of 2004 may file with the 
        Secretary a complaint within 180 days of the date of the 
        alleged retaliation or discrimination.
            ``(2) Investigation.--The Secretary shall investigate such 
        complaints and shall determine if a violation of such section 
        has occurred and, if so, shall issue an order to ensure that 
        the protected health care professional does not suffer any loss 
        of position, pay, or benefits in relation to the plan, issuer, 
        or provider involved, as a result of the violation found by the 
        Secretary.
    ``(d) Conforming Regulations.--The Secretary shall issue 
regulations to coordinate the requirements on group health plans and 
health insurance issuers under this section with the requirements 
imposed under the other provisions of this title. In order to reduce 
duplication and clarify the rights of participants and beneficiaries 
with respect to information that is required to be provided, such 
regulations shall coordinate the information disclosure requirements 
under section 121 of the Patients' Bill of Rights Act of 2004 with the 
reporting and disclosure requirements imposed under part 1, so long as 
such coordination does not result in any reduction in the information 
that would otherwise be provided to participants and beneficiaries.''.
    (b) Satisfaction of ERISA Claims Procedure Requirement.--Section 
503 of such Act (29 U.S.C. 1133) is amended by inserting ``(a)'' after 
``Sec. 503.'' and by adding at the end the following new subsection:
    ``(b) In the case of a group health plan (as defined in section 
733), compliance with the requirements of subtitle A of title I of the 
Patients' Bill of Rights Act of 2004, and compliance with regulations 
promulgated by the Secretary, in the case of a claims denial, shall be 
deemed compliance with subsection (a) with respect to such claims 
denial.''.
    (c) Conforming Amendments.--(1) Section 732(a) of such Act (29 
U.S.C. 1185(a)) is amended by striking ``section 711'' and inserting 
``sections 711 and 714''.
    (2) The table of contents in section 1 of such Act is amended by 
inserting after the item relating to section 713 the following new 
item:

``714. Patient protection standards.''.
    (3) Section 502(b)(3) of such Act (29 U.S.C. 1132(b)(3)) is amended 
by inserting ``(other than section 135(b))'' after ``part 7''.

SEC. 402. AVAILABILITY OF CIVIL REMEDIES.

    (a) Availability of Federal Civil Remedies in Cases not Involving 
Medically Reviewable Decisions.--
            (1) In general.--Section 502 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1132) is amended by 
        adding at the end the following new subsections:
    ``(n) Cause of Action Relating to Provision of Health Benefits.--
            ``(1) In general.--In any case in which--
                    ``(A) a person who is a fiduciary of a group health 
                plan, a health insurance issuer offering health 
                insurance coverage in connection with the plan, or an 
                agent of the plan, issuer, or plan sponsor, upon 
                consideration of a claim for benefits of a participant 
                or beneficiary under section 102 of the Patients' Bill 
                of Rights Act of 2004 (relating to procedures for 
                initial claims for benefits and prior authorization 
                determinations) or upon review of a denial of such a 
                claim under section 103 of such Act (relating to 
                internal appeal of a denial of a claim for benefits), 
                fails to exercise ordinary care in making a decision--
                            ``(i) regarding whether an item or service 
                        is covered under the terms and conditions of 
                        the plan or coverage,
                            ``(ii) regarding whether an individual is a 
                        participant or beneficiary who is enrolled 
                        under the terms and conditions of the plan or 
                        coverage (including the applicability of any 
                        waiting period under the plan or coverage), or
                            ``(iii) as to the application of cost-
                        sharing requirements or the application of a 
                        specific exclusion or express limitation on the 
                        amount, duration, or scope of coverage of items 
                        or services under the terms and conditions of 
                        the plan or coverage, and
                    ``(B) such failure is a proximate cause of personal 
                injury to, or the death of, the participant or 
                beneficiary,
        such plan, plan sponsor, or issuer shall be liable to the 
        participant or beneficiary (or the estate of such participant 
        or beneficiary) for economic and noneconomic damages (but not 
        exemplary or punitive damages) in connection with such personal 
        injury or death.
            ``(2) Cause of action must not involve medically reviewable 
        decision.--
                    ``(A) In general.--A cause of action is established 
                under paragraph (1)(A) only if the decision referred to 
                in paragraph (1)(A) does not include a medically 
                reviewable decision.
                    ``(B) Medically reviewable decision.--For purposes 
                of this subsection, the term `medically reviewable 
                decision' means a denial of a claim for benefits under 
                the plan which is described in section 104(d)(2) of the 
                Patients' Bill of Rights Act of 2004 (relating to 
                medically reviewable decisions).
            ``(3) Limitation regarding certain types of actions saved 
        from preemption of state law.--A cause of action is not 
        established under paragraph (1)(A) in connection with a failure 
        described in paragraph (1)(A) to the extent that a cause of 
        action under State law (as defined in section 514(c)) for such 
        failure would not be preempted under section 514.
            ``(4) Definitions and related rules.--For purposes of this 
        subsection.--
                    ``(A) Ordinary care.--The term `ordinary care' 
                means, with respect to a determination on a claim for 
                benefits, that degree of care, skill, and diligence 
                that a reasonable and prudent individual would exercise 
                in making a fair determination on a claim for benefits 
                of like kind to the claims involved.
                    ``(B) Personal injury.--The term `personal injury' 
                means a physical injury and includes an injury arising 
                out of the treatment (or failure to treat) a mental 
                illness or disease.
                    ``(C) Claim for benefits; denial.--The terms `claim 
                for benefits' and `denial of a claim for benefits' have 
                the meanings provided such terms in section 102(e) of 
                the Patients' Bill of Rights Act of 2004.
                    ``(D) Terms and conditions.--The term `terms and 
                conditions' includes, with respect to a group health 
                plan or health insurance coverage, requirements imposed 
                under title I of the Patients' Bill of Rights Act of 
                2004.
                    ``(E) Treatment of excepted benefits.--Under 
                section 154(a) of the Patients' Bill of Rights Act of 
                2004, the provisions of this subsection and subsection 
                (a)(1)(C) do not apply to certain excepted benefits.
            ``(5) Exclusion of employers and other plan sponsors.--
                    ``(A) Causes of action against employers and plan 
                sponsors precluded.--Subject to subparagraph (B), 
                paragraph (1)(A) does not authorize a cause of action 
                against an employer or other plan sponsor maintaining 
                the plan (or against an employee of such an employer or 
                sponsor acting within the scope of employment).
                    ``(B) Certain causes of action permitted.--
                Notwithstanding subparagraph (A), a cause of action may 
                arise against an employer or other plan sponsor (or 
                against an employee of such an employer or sponsor 
                acting within the scope of employment) under paragraph 
                (1)(A), to the extent there was direct participation by 
                the employer or other plan sponsor (or employee) in the 
                decision of the plan under section 102 of the Patients' 
                Bill of Rights Act of 2004 upon consideration of a 
                claim for benefits or under section 103 of such Act 
                upon review of a denial of a claim for benefits.
                    ``(C) Direct participation.--
                            ``(i) In general.--For purposes of 
                        subparagraph (B), the term `direct 
                        participation' means, in connection with a 
                        decision described in paragraph (1)(A), the 
                        actual making of such decision or the actual 
                        exercise of control in making such decision.
                            ``(ii) Rules of construction.--For purposes 
                        of clause (i), the employer or plan sponsor (or 
                        employee) shall not be construed to be engaged 
                        in direct participation because of any form of 
                        decisionmaking or other conduct that is merely 
                        collateral or precedent to the decision 
                        described in paragraph (1)(A) on a particular 
                        claim for benefits of a participant or 
                        beneficiary, including (but not limited to)--
                                    ``(I) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the selection of the group 
                                health plan or health insurance 
                                coverage involved or the third party 
                                administrator or other agent;
                                    ``(II) any engagement by the 
                                employer or other plan sponsor (or 
                                employee) in any cost-benefit analysis 
                                undertaken in connection with the 
                                selection of, or continued maintenance 
                                of, the plan or coverage involved;
                                    ``(III) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the process of creating, 
                                continuing, modifying, or terminating 
                                the plan or any benefit under the plan, 
                                if such process was not substantially 
                                focused solely on the particular 
                                situation of the participant or 
                                beneficiary referred to in paragraph 
                                (1)(A); and
                                    ``(IV) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the design of any benefit 
                                under the plan, including the amount of 
                                copayment and limits connected with 
                                such benefit.
                            ``(iii) Irrelevance of certain collateral 
                        efforts made by employer or plan sponsor.--For 
                        purposes of this subparagraph, an employer or 
                        plan sponsor shall not be treated as engaged in 
                        direct participation in a decision with respect 
                        to any claim for benefits or denial thereof in 
                        the case of any particular participant or 
                        beneficiary solely by reason of--
                                    ``(I) any efforts that may have 
                                been made by the employer or plan 
                                sponsor to advocate for authorization 
                                of coverage for that or any other 
                                participant or beneficiary (or any 
                                group of participants or 
                                beneficiaries), or
                                    ``(II) any provision that may have 
                                been made by the employer or plan 
                                sponsor for benefits which are not 
                                covered under the terms and conditions 
                                of the plan for that or any other 
                                participant or beneficiary (or any 
                                group of participants or 
                                beneficiaries).
                    ``(D) Application to certain plans.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of this subsection, no group 
                        health plan described in clause (ii) (or plan 
                        sponsor of such a plan) shall be liable under 
                        paragraph (1) for the performance of, or the 
                        failure to perform, any non-medically 
                        reviewable duty under the plan.
                            ``(ii) Definition.--A group health plan 
                        described in this clause is--
                                    ``(I) a group health plan that is 
                                self-insured and self administered by 
                                an employer (including an employee of 
                                such an employer acting within the 
                                scope of employment); or
                                    ``(II) a multiemployer plan as 
                                defined in section 3(37)(A) (including 
                                an employee of a contributing employer 
                                or of the plan, or a fiduciary of the 
                                plan, acting within the scope of 
                                employment or fiduciary responsibility) 
                                that is self-insured and self-
                                administered.
            ``(6) Exclusion of physicians and other health care 
        professionals.--
                    ``(A) In general.--No treating physician or other 
                treating health care professional of the participant or 
                beneficiary, and no person acting under the direction 
                of such a physician or health care professional, shall 
                be liable under paragraph (1) for the performance of, 
                or the failure to perform, any non-medically reviewable 
                duty of the plan, the plan sponsor, or any health 
                insurance issuer offering health insurance coverage in 
                connection with the plan.
                    ``(B) Definitions.--For purposes of subparagraph 
                (A)--
                            ``(i) Health care professional.--The term 
                        `health care professional' means an individual 
                        who is licensed, accredited, or certified under 
                        State law to provide specified health care 
                        services and who is operating within the scope 
                        of such licensure, accreditation, or 
                        certification.
                            ``(ii) Non-medically reviewable duty.--The 
                        term `non-medically reviewable duty' means a 
                        duty the discharge of which does not include 
                        the making of a medically reviewable decision.
            ``(7) Exclusion of hospitals.--No treating hospital of the 
        participant or beneficiary shall be liable under paragraph (1) 
        for the performance of, or the failure to perform, any non-
        medically reviewable duty (as defined in paragraph (6)(B)(ii)) 
        of the plan, the plan sponsor, or any health insurance issuer 
        offering health insurance coverage in connection with the plan.
            ``(8) Rule of construction relating to exclusion from 
        liability of physicians, health care professionals, and 
        hospitals.--Nothing in paragraph (6) or (7) shall be construed 
        to limit the liability (whether direct or vicarious) of the 
        plan, the plan sponsor, or any health insurance issuer offering 
        health insurance coverage in connection with the plan.
            ``(9) Requirement of exhaustion.--
                    ``(A) In general.--A cause of action may not be 
                brought under paragraph (1) in connection with any 
                denial of a claim for benefits of any individual until 
                all administrative processes under sections 102 and 103 
                of the Patients' Bill of Rights Act of 2004 (if 
                applicable) have been exhausted.
                    ``(B) Exception for needed care.--A participant or 
                beneficiary may seek relief exclusively in Federal 
                court under subsection 502(a)(1)(B) prior to the 
                exhaustion of administrative remedies under sections 
                102, 103, or 104 of the Patients' Bill of Rights Act of 
                2004 (as required under subparagraph (A)) if it is 
                demonstrated to the court that the exhaustion of such 
                remedies would cause irreparable harm to the health of 
                the participant or beneficiary. Notwithstanding the 
                awarding of relief under subsection 502(a)(1)(B) 
                pursuant to this subparagraph, no relief shall be 
                available as a result of, or arising under, paragraph 
                (1)(A) or paragraph (10)(B), with respect to a 
                participant or beneficiary, unless the requirements of 
                subparagraph (A) are met.
                    ``(C) Receipt of benefits during appeals process.--
                Receipt by the participant or beneficiary of the 
                benefits involved in the claim for benefits during the 
                pendency of any administrative processes referred to in 
                subparagraph (A) or of any action commenced under this 
                subsection--
                            ``(i) shall not preclude continuation of 
                        all such administrative processes to their 
                        conclusion if so moved by any party, and
                            ``(ii) shall not preclude any liability 
                        under subsection (a)(1)(C) and this subsection 
                        in connection with such claim.
                The court in any action commenced under this subsection 
                shall take into account any receipt of benefits during 
                such administrative processes or such action in 
                determining the amount of the damages awarded.
                    ``(D) Admissible.--Any determination made by a 
                reviewer in an administrative proceeding under section 
                103 of the Patients' Bill of Rights Act of 2004 shall 
                be admissible in any Federal court proceeding and shall 
                be presented to the trier of fact.
            ``(10) Statutory damages.--
                    ``(A) In general.--The remedies set forth in this 
                subsection (n) shall be the exclusive remedies for 
                causes of action brought under this subsection.
                    ``(B) Assessment of civil penalties.--In addition 
                to the remedies provided for in paragraph (1) (relating 
                to the failure to provide contract benefits in 
                accordance with the plan), a civil assessment, in an 
                amount not to exceed $5,000,000, payable to the 
                claimant may be awarded in any action under such 
                paragraph if the claimant establishes by clear and 
                convincing evidence that the alleged conduct carried 
                out by the defendant demonstrated bad faith and 
                flagrant disregard for the rights of the participant or 
                beneficiary under the plan and was a proximate cause of 
                the personal injury or death that is the subject of the 
                claim.
            ``(11) Limitation on attorneys' fees.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, or any arrangement, agreement, or 
                contract regarding an attorney's fee, the amount of an 
                attorney's contingency fee allowable for a cause of 
                action brought pursuant to this subsection shall not 
                exceed \1/3\ of the total amount of the plaintiff's 
                recovery (not including the reimbursement of actual 
                out-of-pocket expenses of the attorney).
                    ``(B) Determination by district court.--The last 
                Federal district court in which the action was pending 
                upon the final disposition, including all appeals, of 
                the action shall have jurisdiction to review the 
                attorney's fee to ensure that the fee is a reasonable 
                one.
            ``(12) Limitation of action.--Paragraph (1) shall not apply 
        in connection with any action commenced after 3 years after the 
        later of--
                    ``(A) the date on which the plaintiff first knew, 
                or reasonably should have known, of the personal injury 
                or death resulting from the failure described in 
                paragraph (1), or
                    ``(B) the date as of which the requirements of 
                paragraph (9) are first met.
            ``(13) Tolling provision.--The statute of limitations for 
        any cause of action arising under State law relating to a 
        denial of a claim for benefits that is the subject of an action 
        brought in Federal court under this subsection shall be tolled 
        until such time as the Federal court makes a final disposition, 
        including all appeals, of whether such claim should properly be 
        within the jurisdiction of the Federal court. The tolling 
        period shall be determined by the applicable Federal or State 
        law, whichever period is greater.
            ``(14) Purchase of insurance to cover liability.--Nothing 
        in section 410 shall be construed to preclude the purchase by a 
        group health plan of insurance to cover any liability or losses 
        arising under a cause of action under subsection (a)(1)(C) and 
        this subsection.
            ``(15) Exclusion of directed recordkeepers.--
                    ``(A) In general.--Subject to subparagraph (C), 
                paragraph (1) shall not apply with respect to a 
                directed recordkeeper in connection with a group health 
                plan.
                    ``(B) Directed recordkeeper.--For purposes of this 
                paragraph, the term `directed recordkeeper' means, in 
                connection with a group health plan, a person engaged 
                in directed recordkeeping activities pursuant to the 
                specific instructions of the plan or the employer or 
                other plan sponsor, including the distribution of 
                enrollment information and distribution of disclosure 
                materials under this Act or title I of the Patients' 
                Bill of Rights Act of 2004 and whose duties do not 
                include making decisions on claims for benefits.
                    ``(C) Limitation.--Subparagraph (A) does not apply 
                in connection with any directed recordkeeper to the 
                extent that the directed recordkeeper fails to follow 
                the specific instruction of the plan or the employer or 
                other plan sponsor.
            ``(16) Exclusion of health insurance agents.--Paragraph (1) 
        does not apply with respect to a person whose sole involvement 
        with the group health plan is providing advice or 
        administrative services to the employer or other plan sponsor 
        relating to the selection of health insurance coverage offered 
        in connection with the plan.
            ``(17) No effect on state law.--No provision of State law 
        (as defined in section 514(c)(1)) shall be treated as 
        superseded or otherwise altered, amended, modified, 
        invalidated, or impaired by reason of the provisions of 
        subsection (a)(1)(C) and this subsection.
            ``(18) Relief from liability for employer or other plan 
        sponsor by means of designated decisionmaker.--
                    ``(A) In general.--Notwithstanding the direct 
                participation (as defined in paragraph (5)(C)(i)) of an 
                employer or plan sponsor, in any case in which there is 
                (or is deemed under subparagraph (B) to be) a 
                designated decisionmaker under subparagraph (B) that 
                meets the requirements of subsection (o)(1) for an 
                employer or other plan sponsor--
                            ``(i) all liability of such employer or 
                        plan sponsor involved (and any employee of such 
                        employer or sponsor acting within the scope of 
                        employment) under this subsection in connection 
                        with any participant or beneficiary shall be 
                        transferred to, and assumed by, the designated 
                        decisionmaker, and
                            ``(ii) with respect to such liability, the 
                        designated decisionmaker shall be substituted 
                        for the employer or sponsor (or employee) in 
                        the action and may not raise any defense that 
                        the employer or sponsor (or employee) could not 
                        raise if such a decisionmaker were not so 
                        deemed.
                    ``(B) Automatic designation.--A health insurance 
                issuer shall be deemed to be a designated decisionmaker 
                for purposes of subparagraph (A) with respect to the 
                participants and beneficiaries of an employer or plan 
                sponsor, whether or not the employer or plan sponsor 
                makes such a designation, and shall be deemed to have 
                assumed unconditionally all liability of the employer 
                or plan sponsor under such designation in accordance 
                with subsection (o), unless the employer or plan 
                sponsor affirmatively enters into a contract to prevent 
                the service of the designated decisionmaker.
                    ``(C) Treatment of certain trust funds.--For 
                purposes of this paragraph, the terms `employer' and 
                `plan sponsor', in connection with the assumption by a 
                designated decisionmaker of the liability of employer 
                or other plan sponsor pursuant to this paragraph, shall 
                be construed to include a trust fund maintained 
                pursuant to section 302 of the Labor Management 
                Relations Act, 1947 (29 U.S.C. 186) or the Railway 
                Labor Act (45 U.S.C. 151 et seq.).
            ``(19) Previously provided services.--
                    ``(A) In general.--Except as provided in this 
                paragraph, a cause of action shall not arise under 
                paragraph (1) where the denial involved relates to an 
                item or service that has already been fully provided to 
                the participant or beneficiary under the plan or 
                coverage and the claim relates solely to the subsequent 
                denial of payment for the provision of such item or 
                service.
                    ``(B) Exception.--Nothing in subparagraph (A) shall 
                be construed to--
                            ``(i) prohibit a cause of action under 
                        paragraph (1) where the nonpayment involved 
                        results in the participant or beneficiary being 
                        unable to receive further items or services 
                        that are directly related to the item or 
                        service involved in the denial referred to in 
                        subparagraph (A) or that are part of a 
                        continuing treatment or series of procedures; 
                        or
                            ``(ii) limit liability that otherwise would 
                        arise from the provision of the item or 
                        services or the performance of a medical 
                        procedure.
            ``(20) Exemption from personal liability for individual 
        members of boards of directors, joint boards of trustees, 
        etc.--Any individual who is--
                    ``(A) a member of a board of directors of an 
                employer or plan sponsor; or
                    ``(B) a member of an association, committee, 
                employee organization, joint board of trustees, or 
                other similar group of representatives of the entities 
                that are the plan sponsor of plan maintained by two or 
                more employers and one or more employee organizations;
        shall not be personally liable under this subsection for 
        conduct that is within the scope of employment or of plan-
        related duties of the individuals unless the individual acts in 
        a fraudulent manner for personal enrichment.
    ``(o) Requirements for Designated Decisionmakers of Group Health 
Plans.--
            ``(1) In general.--For purposes of subsection (n)(18) and 
        section 514(d)(9), a designated decisionmaker meets the 
        requirements of this paragraph with respect to any participant 
        or beneficiary if--
                    ``(A) such designation is in such form as may be 
                prescribed in regulations of the Secretary,
                    ``(B) the designated decisionmaker--
                            ``(i) meets the requirements of paragraph 
                        (2),
                            ``(ii) assumes unconditionally all 
                        liability of the employer or plan sponsor 
                        involved (and any employee of such employer or 
                        sponsor acting within the scope of employment) 
                        either arising under subsection (n) or arising 
                        in a cause of action permitted under section 
                        514(d) in connection with actions (and failures 
                        to act) of the employer or plan sponsor (or 
                        employee) occurring during the period in which 
                        the designation under subsection (n)(18) or 
                        section 514(d)(9) is in effect relating to such 
                        participant and beneficiary,
                            ``(iii) agrees to be substituted for the 
                        employer or plan sponsor (or employee) in the 
                        action and not to raise any defense with 
                        respect to such liability that the employer or 
                        plan sponsor (or employee) may not raise, and
                            ``(iv) where paragraph (2)(B) applies, 
                        assumes unconditionally the exclusive authority 
                        under the group health plan to make medically 
                        reviewable decisions under the plan with 
                        respect to such participant or beneficiary, and
                    ``(C) the designated decisionmaker and the 
                participants and beneficiaries for whom the 
                decisionmaker has assumed liability are identified in 
                the written instrument required under section 402(a) 
                and as required under section 121(b)(19) of the 
                Patients' Bill of Rights Act of 2004.
        Any liability assumed by a designated decisionmaker pursuant to 
        this subsection shall be in addition to any liability that it 
        may otherwise have under applicable law.
            ``(2) Qualifications for designated decisionmakers.--
                    ``(A) In general.--Subject to subparagraph (B), an 
                entity is qualified under this paragraph to serve as a 
                designated decisionmaker with respect to a group health 
                plan if the entity has the ability to assume the 
                liability described in paragraph (1) with respect to 
                participants and beneficiaries under such plan, 
                including requirements relating to the financial 
                obligation for timely satisfying the assumed liability, 
                and maintains with the plan sponsor and the Secretary 
                certification of such ability. Such certification shall 
                be provided to the plan sponsor or named fiduciary and 
                to the Secretary upon designation under subsection 
                (n)(18)(B) or section 517(d)(9)(B) and not less 
                frequently than annually thereafter, or if such 
                designation constitutes a multiyear arrangement, in 
                conjunction with the renewal of the arrangement.
                    ``(B) Special qualification in the case of certain 
                reviewable decisions.--In the case of a group health 
                plan that provides benefits consisting of medical care 
                to a participant or beneficiary only through health 
                insurance coverage offered by a single health insurance 
                issue, such issuer is the only entity that may be 
                qualified under this paragraph to serve as a designated 
                decisionmaker with respect to such participant or 
                beneficiary, and shall serve as the designated 
                decisionmaker unless the employer or other plan sponsor 
                acts affirmatively to prevent such service.
            ``(3) Requirements relating to financial obligations.--For 
        purposes of paragraph (2)(A), the requirements relating to the 
        financial obligation of an entity for liability shall include--
                    ``(A) coverage of such entity under an insurance 
                policy or other arrangement, secured and maintained by 
                such entity, to effectively insure such entity against 
                losses arising from professional liability claims, 
                including those arising from its service as a 
                designated decisionmaker under this part; or
                    ``(B) evidence of minimum capital and surplus 
                levels that are maintained by such entity to cover any 
                losses as a result of liability arising from its 
                service as a designated decisionmaker under this part.
        The appropriate amounts of liability insurance and minimum 
        capital and surplus levels for purposes of subparagraphs (A) 
        and (B) shall be determined by an actuary using sound actuarial 
        principles and accounting practices pursuant to established 
        guidelines of the American Academy of Actuaries and in 
        accordance with such regulations as the Secretary may prescribe 
        and shall be maintained throughout the term for which the 
        designation is in effect. The provisions of this paragraph 
        shall not apply in the case of a designated decisionmaker that 
        is a group health plan, plan sponsor, or health insurance 
        issuer and that is regulated under Federal law or a State 
        financial solvency law.
            ``(4) Limitation on appointment of treating physicians.--A 
        treating physician who directly delivered the care, treatment, 
        or provided the patient service that is the subject of a cause 
        of action by a participant or beneficiary under subsection (n) 
        or section 514(d) may not be designated as a designated 
        decisionmaker under this subsection with respect to such 
        participant or beneficiary.''.
            (2) Conforming amendment.--Section 502(a)(1) of such Act 
        (29 U.S.C. 1132(a)(1)) is amended--
                    (A) by striking ``or'' at the end of subparagraph 
                (A);
                    (B) in subparagraph (B), by striking ``plan;'' and 
                inserting ``plan, or''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(C) for the relief provided for in subsection (n) 
                of this section.''.
    (b) Rules Relating to ERISA Preemption.--Section 514 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144) is 
amended--
            (1) by redesignating subsection (d) as subsection (f); and
            (2) by inserting after subsection (c) the following new 
        subsections:
    ``(d) Preemption not to Apply to Causes of Action Under State Law 
Involving Medically Reviewable Decision.--
            ``(1) Non-preemption of certain causes of action.--
                    ``(A) In general.--Except as provided in this 
                subsection, nothing in this title (including section 
                502) shall be construed to supersede or otherwise 
                alter, amend, modify, invalidate, or impair any cause 
                of action under State law of a participant or 
                beneficiary under a group health plan (or the estate of 
                such a participant or beneficiary) against the plan, 
                the plan sponsor, any health insurance issuer offering 
                health insurance coverage in connection with the plan, 
                or any managed care entity in connection with the plan 
                to recover damages resulting from personal injury or 
                for wrongful death if such cause of action arises by 
                reason of a medically reviewable decision.
                    ``(B) Medically reviewable decision.--For purposes 
                of subparagraph (A), the term `medically reviewable 
                decision' means a denial of a claim for benefits under 
                the plan which is described in section 104(d)(2) of the 
                Patients' Bill of Rights Act of 2004 (relating to 
                medically reviewable decisions).
                    ``(C) Limitation on punitive damages.--
                            ``(i) In general.--Except as provided in 
                        clauses (ii) and (iii), with respect to a cause 
                        of action described in subparagraph (A) brought 
                        with respect to a participant or beneficiary, 
                        State law is superseded insofar as it provides 
                        any punitive, exemplary, or similar damages if, 
                        as of the time of the personal injury or death, 
                        all the requirements of the following sections 
                        of the Patients' Bill of Rights Act of 2004 
                        were satisfied with respect to the participant 
                        or beneficiary:
                                    ``(I) Section 102 (relating to 
                                procedures for initial claims for 
                                benefits and prior authorization 
                                determinations).
                                    ``(II) Section 103 of such Act 
                                (relating to internal appeals of claims 
                                denials).
                                    ``(III) Section 104 of such Act 
                                (relating to independent external 
                                appeals procedures).
                            ``(ii) Exception for certain actions for 
                        wrongful death.--Clause (i) shall not apply 
                        with respect to an action for wrongful death if 
                        the applicable State law provides (or has been 
                        construed to provide) for damages in such an 
                        action which are only punitive or exemplary in 
                        nature.
                            ``(iii) Exception for willful or wanton 
                        disregard for the rights or safety of others.--
                        Clause (i) shall not apply with respect to any 
                        cause of action described in subparagraph (A) 
                        if, in such action, the plaintiff establishes 
                        by clear and convincing evidence that conduct 
                        carried out by the defendant with willful or 
                        wanton disregard for the rights or safety of 
                        others was a proximate cause of the personal 
                        injury or wrongful death that is the subject of 
                        the action.
            ``(2) Definitions and related rules.--For purposes of this 
        subsection and subsection (e)--
                    ``(A) Treatment of excepted benefits.--Under 
                section 154(a) of the Patients' Bill of Rights Act of 
                2004, the provisions of this subsection do not apply to 
                certain excepted benefits.
                    ``(B) Personal injury.--The term `personal injury' 
                means a physical injury and includes an injury arising 
                out of the treatment (or failure to treat) a mental 
                illness or disease.
                    ``(C) Claim for benefit; denial.--The terms `claim 
                for benefits' and `denial of a claim for benefits' 
                shall have the meaning provided such terms under 
                section 102(e) of the Patients' Bill of Rights Act of 
                2004.
                    ``(D) Managed care entity.--
                            ``(i) In general.--The term `managed care 
                        entity' means, in connection with a group 
                        health plan and subject to clause (ii), any 
                        entity that is involved in determining the 
                        manner in which or the extent to which items or 
                        services (or reimbursement therefor) are to be 
                        provided as benefits under the plan.
                            ``(ii) Treatment of treating physicians, 
                        other treating health care professionals, and 
                        treating hospitals.--Such term does not include 
                        a treating physician or other treating health 
                        care professional (as defined in section 
                        502(n)(6)(B)(i)) of the participant or 
                        beneficiary and also does not include a 
                        treating hospital insofar as it is acting 
                        solely in the capacity of providing treatment 
                        or care to the participant or beneficiary. 
                        Nothing in the preceding sentence shall be 
                        construed to preempt vicarious liability of any 
                        plan, plan sponsor, health insurance issuer, or 
                        managed care entity.
            ``(3) Exclusion of employers and other plan sponsors.--
                    ``(A) Causes of action against employers and plan 
                sponsors precluded.--Subject to subparagraph (B), 
                paragraph (1) does not apply with respect to--
                            ``(i) any cause of action against an 
                        employer or other plan sponsor maintaining the 
                        plan (or against an employee of such an 
                        employer or sponsor acting within the scope of 
                        employment), or
                            ``(ii) a right of recovery, indemnity, or 
                        contribution by a person against an employer or 
                        other plan sponsor (or such an employee) for 
                        damages assessed against the person pursuant to 
                        a cause of action to which paragraph (1) 
                        applies.
                    ``(B) Certain causes of action permitted.--
                Notwithstanding subparagraph (A), paragraph (1) applies 
                with respect to any cause of action that is brought by 
                a participant or beneficiary under a group health plan 
                (or the estate of such a participant or beneficiary) to 
                recover damages resulting from personal injury or for 
                wrongful death against any employer or other plan 
                sponsor maintaining the plan (or against an employee of 
                such an employer or sponsor acting within the scope of 
                employment) if such cause of action arises by reason of 
                a medically reviewable decision, to the extent that 
                there was direct participation by the employer or other 
                plan sponsor (or employee) in the decision.
                    ``(C) Direct participation.--
                            ``(i) Direct participation in decisions.--
                        For purposes of subparagraph (B), the term 
                        `direct participation' means, in connection 
                        with a decision described in subparagraph (B), 
                        the actual making of such decision or the 
                        actual exercise of control in making such 
                        decision or in the conduct constituting the 
                        failure.
                            ``(ii) Rules of construction.--For purposes 
                        of clause (i), the employer or plan sponsor (or 
                        employee) shall not be construed to be engaged 
                        in direct participation because of any form of 
                        decisionmaking or other conduct that is merely 
                        collateral or precedent to the decision 
                        described in subparagraph (B) on a particular 
                        claim for benefits of a particular participant 
                        or beneficiary, including (but not limited 
                        to)--
                                    ``(I) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the selection of the group 
                                health plan or health insurance 
                                coverage involved or the third party 
                                administrator or other agent;
                                    ``(II) any engagement by the 
                                employer or other plan sponsor (or 
                                employee) in any cost-benefit analysis 
                                undertaken in connection with the 
                                selection of, or continued maintenance 
                                of, the plan or coverage involved;
                                    ``(III) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the process of creating, 
                                continuing, modifying, or terminating 
                                the plan or any benefit under the plan, 
                                if such process was not substantially 
                                focused solely on the particular 
                                situation of the participant or 
                                beneficiary referred to in paragraph 
                                (1)(A); and
                                    ``(IV) any participation by the 
                                employer or other plan sponsor (or 
                                employee) in the design of any benefit 
                                under the plan, including the amount of 
                                copayment and limits connected with 
                                such benefit.
                            ``(iv) Irrelevance of certain collateral 
                        efforts made by employer or plan sponsor.--For 
                        purposes of this subparagraph, an employer or 
                        plan sponsor shall not be treated as engaged in 
                        direct participation in a decision with respect 
                        to any claim for benefits or denial thereof in 
                        the case of any particular participant or 
                        beneficiary solely by reason of--
                                    ``(I) any efforts that may have 
                                been made by the employer or plan 
                                sponsor to advocate for authorization 
                                of coverage for that or any other 
                                participant or beneficiary (or any 
                                group of participants or 
                                beneficiaries), or
                                    ``(II) any provision that may have 
                                been made by the employer or plan 
                                sponsor for benefits which are not 
                                covered under the terms and conditions 
                                of the plan for that or any other 
                                participant or beneficiary (or any 
                                group of participants or 
                                beneficiaries).
            ``(4) Requirement of exhaustion.--
                    ``(A) In general.--Except as provided in 
                subparagraph (D), a cause of action may not be brought 
                under paragraph (1) in connection with any denial of a 
                claim for benefits of any individual until all 
                administrative processes under sections 102, 103, and 
                104 of the Patients' Bill of Rights Act of 2004 (if 
                applicable) have been exhausted.
                    ``(B) Late manifestation of injury.--
                            ``(i) In general.--A participant or 
                        beneficiary shall not be precluded from 
                        pursuing a review under section 104 of the 
                        Patients' Bill of Rights Act of 2004 regarding 
                        an injury that such participant or beneficiary 
                        has experienced if the external review entity 
                        first determines that the injury of such 
                        participant or beneficiary is a late 
                        manifestation of an earlier injury.
                            ``(ii) Definition.--In this subparagraph, 
                        the term `late manifestation of an earlier 
                        injury' means an injury sustained by the 
                        participant or beneficiary which was not known, 
                        and should not have been known, by such 
                        participant or beneficiary by the latest date 
                        that the requirements of subparagraph (A) 
                        should have been met regarding the claim for 
                        benefits which was denied.
                    ``(C) Exception for needed care.--A participant or 
                beneficiary may seek relief exclusively in Federal 
                court under subsection 502(a)(1)(B) prior to the 
                exhaustion of administrative remedies under sections 
                102, 103, or 104 of the Patients' Bill of Rights Act of 
                2004 (as required under subparagraph (A)) if it is 
                demonstrated to the court that the exhaustion of such 
                remedies would cause irreparable harm to the health of 
                the participant or beneficiary. Notwithstanding the 
                awarding of relief under subsection 502(a)(1)(B) 
                pursuant to this subparagraph, no relief shall be 
                available as a result of, or arising under, paragraph 
                (1)(A) unless the requirements of subparagraph (A) are 
                met.
                    ``(D) Failure to review.--
                            ``(i) In general.--If the external review 
                        entity fails to make a determination within the 
                        time required under section 104(e)(1)(A)(i), a 
                        participant or beneficiary may bring an action 
                        under section 514(d) after 10 additional days 
                        after the date on which such time period has 
                        expired and the filing of such action shall not 
                        affect the duty of the independent medical 
                        reviewer (or reviewers) to make a determination 
                        pursuant to section 104(e)(1)(A)(i).
                            ``(ii) Expedited determination.--If the 
                        external review entity fails to make a 
                        determination within the time required under 
                        section 104(e)(1)(A)(ii), a participant or 
                        beneficiary may bring an action under this 
                        subsection and the filing of such an action 
                        shall not affect the duty of the independent 
                        medical reviewer (or reviewers) to make a 
                        determination pursuant to section 
                        104(e)(1)(A)(ii).
                    ``(E) Receipt of benefits during appeals process.--
                Receipt by the participant or beneficiary of the 
                benefits involved in the claim for benefits during the 
                pendency of any administrative processes referred to in 
                subparagraph (A) or of any action commenced under this 
                subsection--
                            ``(i) shall not preclude continuation of 
                        all such administrative processes to their 
                        conclusion if so moved by any party, and
                            ``(ii) shall not preclude any liability 
                        under subsection (a)(1)(C) and this subsection 
                        in connection with such claim.
                    ``(F) Admissible.--Any determination made by a 
                reviewer in an administrative proceeding under section 
                104 of the Patients' Bill of Rights Act of 2004 shall 
                be admissible in any Federal or State court proceeding 
                and shall be presented to the trier of fact.
            ``(5) Tolling provision.--The statute of limitations for 
        any cause of action arising under section 502(n) relating to a 
        denial of a claim for benefits that is the subject of an action 
        brought in State court shall be tolled until such time as the 
        State court makes a final disposition, including all appeals, 
        of whether such claim should properly be within the 
        jurisdiction of the State court. The tolling period shall be 
        determined by the applicable Federal or State law, whichever 
        period is greater.
            ``(6) Exclusion of directed recordkeepers.--
                    ``(A) In general.--Subject to subparagraph (C), 
                paragraph (1) shall not apply with respect to a 
                directed recordkeeper in connection with a group health 
                plan.
                    ``(B) Directed recordkeeper.--For purposes of this 
                paragraph, the term `directed recordkeeper' means, in 
                connection with a group health plan, a person engaged 
                in directed recordkeeping activities pursuant to the 
                specific instructions of the plan or the employer or 
                other plan sponsor, including the distribution of 
                enrollment information and distribution of disclosure 
                materials under this Act or title I of the Patients' 
                Bill of Rights Act of 2004 and whose duties do not 
                include making decisions on claims for benefits.
                    ``(C) Limitation.--Subparagraph (A) does not apply 
                in connection with any directed recordkeeper to the 
                extent that the directed recordkeeper fails to follow 
                the specific instruction of the plan or the employer or 
                other plan sponsor.
            ``(7) Construction.--Nothing in this subsection shall be 
        construed as--
                    ``(A) saving from preemption a cause of action 
                under State law for the failure to provide a benefit 
                for an item or service which is specifically excluded 
                under the group health plan involved, except to the 
                extent that--
                            ``(i) the application or interpretation of 
                        the exclusion involves a determination 
                        described in section 104(d)(2) of the Patients' 
                        Bill of Rights Act of 2004, or
                            ``(ii) the provision of the benefit for the 
                        item or service is required under Federal law 
                        or under applicable State law consistent with 
                        subsection (b)(2)(B);
                    ``(B) preempting a State law which requires an 
                affidavit or certificate of merit in a civil action;
                    ``(C) affecting a cause of action or remedy under 
                State law in connection with the provision or 
                arrangement of excepted benefits (as defined in section 
                733(c)), other than those described in section 
                733(c)(2)(A); or
                    ``(D) affecting a cause of action under State law 
                other than a cause of action described in paragraph 
                (1)(A).
            ``(8) Purchase of insurance to cover liability.--Nothing in 
        section 410 shall be construed to preclude the purchase by a 
        group health plan of insurance to cover any liability or losses 
        arising under a cause of action described in paragraph (1)(A).
            ``(9) Relief from liability for employer or other plan 
        sponsor by means of designated decisionmaker.--
                    ``(A) In general.--Paragraph (1) shall not apply 
                with respect to any cause of action described in 
                paragraph (1)(A) under State law insofar as such cause 
                of action provides for liability with respect to a 
                participant or beneficiary of an employer or plan 
                sponsor (or an employee of such employer or sponsor 
                acting within the scope of employment), if with respect 
                to the employer or plan sponsor there is (or is deemed 
                under subparagraph (B) to be) a designated 
                decisionmaker that meets the requirements of section 
                502(o)(1) with respect to such participant or 
                beneficiary. Such paragraph (1) shall apply with 
                respect to any cause of action described in paragraph 
                (1)(A) under State law against the designated 
                decisionmaker of such employer or other plan sponsor 
                with respect to the participant or beneficiary.
                    ``(B) Automatic designation.--A health insurance 
                issuer shall be deemed to be a designated decisionmaker 
                for purposes of subparagraph (A) with respect to the 
                participants and beneficiaries of an employer or plan 
                sponsor, whether or not the employer or plan sponsor 
                makes such a designation, and shall be deemed to have 
                assumed unconditionally all liability of the employer 
                or plan sponsor under such designation in accordance 
                with subsection (o), unless the employer or plan 
                sponsor affirmatively enters into a contract to prevent 
                the service of the designated decisionmaker.
                    ``(C) Treatment of certain trust funds.--For 
                purposes of this paragraph, the terms `employer' and 
                `plan sponsor', in connection with the assumption by a 
                designated decisionmaker of the liability of employer 
                or other plan sponsor pursuant to this paragraph, shall 
                be construed to include a trust fund maintained 
                pursuant to section 302 of the Labor Management 
                Relations Act, 1947 (29 U.S.C. 186) or the Railway 
                Labor Act (45 U.S.C. 151 et seq.).
            ``(10) Previously provided services.--
                    ``(A) In general.--Except as provided in this 
                paragraph, a cause of action shall not arise under 
                paragraph (1) where the denial involved relates to an 
                item or service that has already been fully provided to 
                the participant or beneficiary under the plan or 
                coverage and the claim relates solely to the subsequent 
                denial of payment for the provision of such item or 
                service.
                    ``(B) Exception.--Nothing in subparagraph (A) shall 
                be construed to--
                            ``(i) prohibit a cause of action under 
                        paragraph (1) where the nonpayment involved 
                        results in the participant or beneficiary being 
                        unable to receive further items or services 
                        that are directly related to the item or 
                        service involved in the denial referred to in 
                        subparagraph (A) or that are part of a 
                        continuing treatment or series of procedures;
                            ``(ii) prohibit a cause of action under 
                        paragraph (1) relating to quality of care; or
                            ``(iii) limit liability that otherwise 
                        would arise from the provision of the item or 
                        services or the performance of a medical 
                        procedure.
            ``(11) Exemption from personal liability for individual 
        members of boards of directors, joint boards of trustees, 
        etc.--Any individual who is--
                    ``(A) a member of a board of directors of an 
                employer or plan sponsor; or
                    ``(B) a member of an association, committee, 
                employee organization, joint board of trustees, or 
                other similar group of representatives of the entities 
                that are the plan sponsor of plan maintained by two or 
                more employers and one or more employee organizations;
        shall not be personally liable under this subsection for 
        conduct that is within the scope of employment or of plan-
        related duties of the individuals unless the individual acts in 
        a fraudulent manner for personal enrichment.
            ``(12) Choice of law.--A cause of action brought under 
        paragraph (1) shall be governed by the law (including choice of 
        law rules) of the State in which the plaintiff resides.
            ``(13) Limitation on attorneys' fees.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, or any arrangement, agreement, or 
                contract regarding an attorney's fee, the amount of an 
                attorney's contingency fee allowable for a cause of 
                action brought under paragraph (1) shall not exceed \1/
                3\ of the total amount of the plaintiff's recovery (not 
                including the reimbursement of actual out-of-pocket 
                expenses of the attorney).
                    ``(B) Determination by court.--The last court in 
                which the action was pending upon the final 
                disposition, including all appeals, of the action may 
                review the attorney's fee to ensure that the fee is a 
                reasonable one.
                    ``(C) No preemption of state law.--Subparagraph (A) 
                shall not apply with respect to a cause of action under 
                paragraph (1) that is brought in a State that has a law 
                or framework of laws with respect to the amount of an 
                attorney's contingency fee that may be incurred for the 
                representation of a participant or beneficiary (or the 
                estate of such participant or beneficiary) who brings 
                such a cause of action.
    ``(e) Rules of Construction Relating to Health Care.--Nothing in 
this title shall be construed as--
            ``(1) affecting any State law relating to the practice of 
        medicine or the provision of, or the failure to provide, 
        medical care, or affecting any action (whether the liability is 
        direct or vicarious) based upon such a State law,
            ``(2) superseding any State law permitted under section 
        152(b)(1)(A) of the Patients' Bill of Rights Act of 2004, or
            ``(3) affecting any applicable State law with respect to 
        limitations on monetary damages.
    ``(f) No Right of Action for Recovery, Indemnity, or Contribution 
by Issuers Against Treating Health Care Professionals and Treating 
Hospitals.--In the case of any care provided, or any treatment decision 
made, by the treating health care professional or the treating hospital 
of a participant or beneficiary under a group health plan which 
consists of medical care provided under such plan, any cause of action 
under State law against the treating health care professional or the 
treating hospital by the plan or a health insurance issuer providing 
health insurance coverage in connection with the plan for recovery, 
indemnity, or contribution in connection with such care (or any 
medically reviewable decision made in connection with such care) or 
such treatment decision is superseded.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to acts and omissions (from which a cause of action arises) 
occurring on or after the applicable effective date under section 601.

SEC. 403. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Subpart C of part 7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1191 et seq.) is 
amended by adding at the end the following new section:

``SEC. 735. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    ``(a) Agreement With States.--A State may enter into an agreement 
with the Secretary for the delegation to the State of some or all of 
the Secretary's authority under this title to enforce the requirements 
applicable under title I of the Patients' Bill of Rights Act of 2004 
with respect to health insurance coverage offered by a health insurance 
issuer and with respect to a group health plan that is a non-Federal 
governmental plan.
    ``(b) Delegations.--Any department, agency, or instrumentality of a 
State to which authority is delegated pursuant to an agreement entered 
into under this section may, if authorized under State law and to the 
extent consistent with such agreement, exercise the powers of the 
Secretary under this title which relate to such authority.''.

        TITLE V--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

        Subtitle A--Application of Patient Protection Provisions

SEC. 501. APPLICATION TO GROUP HEALTH PLANS UNDER THE INTERNAL REVENUE 
              CODE OF 1986.

    Subchapter B of chapter 100 of the Internal Revenue Code of 1986 is 
amended--
            (1) in the table of sections, by inserting after the item 
        relating to section 9812 the following new item:

``9813. Standard relating to patients' bill of rights.'';
        and
            (2) by inserting after section 9812 the following:

``SEC. 9813. STANDARD RELATING TO PATIENTS' BILL OF RIGHTS.

    ``A group health plan shall comply with the requirements of title I 
of the Patients' Bill of Rights Act of 2004 (as in effect as of the 
date of the enactment of such Act), and such requirements shall be 
deemed to be incorporated into this section.''.

SEC. 502. CONFORMING ENFORCEMENT FOR WOMEN'S HEALTH AND CANCER RIGHTS.

    Subchapter B of chapter 100 of the Internal Revenue Code of 1986, 
as amended by section 501, is further amended--
            (1) in the table of sections, by inserting after the item 
        relating to section 9813 the following new item:

``9814. Standard relating to women's health and cancer rights.'';
        and
            (2) by inserting after section 9813 the following:

``SEC. 9814. STANDARD RELATING TO WOMEN'S HEALTH AND CANCER RIGHTS.

    ``The provisions of section 713 of the Employee Retirement Income 
Security Act of 1974 (as in effect as of the date of the enactment of 
this section) shall apply to group health plans as if included in this 
subchapter.''.

         Subtitle B--Health Care Coverage Access Tax Incentives

SEC. 511. CREDIT FOR HEALTH INSURANCE EXPENSES OF SMALL BUSINESSES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business-related 
credits) is amended by adding at the end the following:

``SEC. 45E. SMALL BUSINESS HEALTH INSURANCE EXPENSES.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
small employer, the health insurance credit determined under this 
section for the taxable year is an amount equal to the applicable 
percentage of the expenses paid by the taxpayer during the taxable year 
for health insurance coverage for such year provided under a new health 
plan for employees of such employer.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage is--
            ``(1) in the case of insurance purchased as a member of a 
        qualified health benefit purchasing coalition (as defined in 
        section 9841), 30 percent, and
            ``(2) in the case of insurance not described in paragraph 
        (1), 20 percent.
    ``(c) Limitations.--
            ``(1) Per employee dollar limitation.--The amount of 
        expenses taken into account under subsection (a) with respect 
        to any employee for any taxable year shall not exceed--
                    ``(A) $2,000 in the case of self-only coverage, and
                    ``(B) $5,000 in the case of family coverage.
        In the case of an employee who is covered by a new health plan 
        of the employer for only a portion of such taxable year, the 
        limitation under the preceding sentence shall be an amount 
        which bears the same ratio to such limitation (determined 
        without regard to this sentence) as such portion bears to the 
        entire taxable year.
            ``(2) Period of coverage.--Expenses may be taken into 
        account under subsection (a) only with respect to coverage for 
        the 4-year period beginning on the date the employer 
        establishes a new health plan.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning given such term by section 
        9832(b)(1).
            ``(2) New health plan.--
                    ``(A) In general.--The term `new health plan' means 
                any arrangement of the employer which provides health 
                insurance coverage to employees if--
                            ``(i) such employer (and any predecessor 
                        employer) did not establish or maintain such 
                        arrangement (or any similar arrangement) at any 
                        time during the 2 taxable years ending prior to 
                        the taxable year in which the credit under this 
                        section is first allowed, and
                            ``(ii) such arrangement provides health 
                        insurance coverage to at least 70 percent of 
                        the qualified employees of such employer.
                    ``(B) Qualified employee.--
                            ``(i) In general.--The term `qualified 
                        employee' means any employee of an employer if 
                        the annual rate of such employee's compensation 
                        (as defined in section 414(s)) exceeds $10,000.
                            ``(ii) Treatment of certain employees.--The 
                        term `employee' shall include a leased employee 
                        within the meaning of section 414(n).
            ``(3) Small employer.--The term `small employer' has the 
        meaning given to such term by section 4980D(d)(2); except that 
        only qualified employees shall be taken into account.
    ``(e) Special Rules.--
            ``(1) Certain rules made applicable.--For purposes of this 
        section, rules similar to the rules of section 52 shall apply.
            ``(2) Amounts paid under salary reduction arrangements.--No 
        amount paid or incurred pursuant to a salary reduction 
        arrangement shall be taken into account under subsection (a).
    ``(f) Termination.--This section shall not apply to expenses paid 
or incurred by an employer with respect to any arrangement established 
on or after January 1, 2013.''.
    (b) Credit to Be Part of General Business Credit.--Section 38(b) of 
such Code (relating to current year business credit) is amended by 
striking ``plus'' at the end of paragraph (12), by striking the period 
at the end of paragraph (13) and inserting ``, plus'', and by adding at 
the end the following:
            ``(14) in the case of a small employer (as defined in 
        section 45E(d)(3)), the health insurance credit determined 
        under section 45E(a).''.
    (c) No Carrybacks.--Subsection (d) of section 39 of such Code 
(relating to carryback and carryforward of unused credits) is amended 
by adding at the end the following:
            ``(10) No carryback of section 45e credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the employee health insurance 
        expenses credit determined under section 45E may be carried 
        back to a taxable year ending before the date of the enactment 
        of section 45E.''.
    (d) Denial of Double Benefit.--Section 280C of such Code is amended 
by adding at the end the following new subsection:
    ``(d) Credit for Small Business Health Insurance Expenses.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the expenses (otherwise allowable as a deduction) 
        taken into account in determining the credit under section 45E 
        for the taxable year which is equal to the amount of the credit 
        determined for such taxable year under section 45E(a).
            ``(2) Controlled groups.--Persons treated as a single 
        employer under subsection (a) or (b) of section 52 shall be 
        treated as 1 person for purposes of this section.''.
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following:

``45E. Small business health insurance expenses.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 2004, for arrangements established after the date of the 
enactment of this Act.

SEC. 512. CERTAIN GRANTS BY PRIVATE FOUNDATIONS TO QUALIFIED HEALTH 
              BENEFIT PURCHASING COALITIONS.

    (a) In General.--Section 4942 of the Internal Revenue Code of 1986 
(relating to taxes on failure to distribute income) is amended by 
adding at the end the following:
    ``(k) Certain Qualified Health Benefit Purchasing Coalition 
Distributions.--
            ``(1) In general.--For purposes of subsection (g), sections 
        170, 501, 507, 509, and 2522, and this chapter, a qualified 
        health benefit purchasing coalition distribution by a private 
        foundation shall be considered to be a distribution for a 
        charitable purpose.
            ``(2) Qualified health benefit purchasing coalition 
        distribution.--For purposes of paragraph (1)--
                    ``(A) In general.--The term `qualified health 
                benefit purchasing coalition distribution' means any 
                amount paid or incurred by a private foundation to or 
                on behalf of a qualified health benefit purchasing 
                coalition (as defined in section 9841) for purposes of 
                payment or reimbursement of amounts paid or incurred in 
                connection with the establishment and maintenance of 
                such coalition.
                    ``(B) Exclusions.--Such term shall not include any 
                amount used by a qualified health benefit purchasing 
                coalition (as so defined)--
                            ``(i) for the purchase of real property,
                            ``(ii) as payment to, or for the benefit 
                        of, members (or employees or affiliates of such 
                        members) of such coalition, or
                            ``(iii) for any expense paid or incurred 
                        more than 48 months after the date of 
                        establishment of such coalition.
            ``(3) Termination.--This subsection shall not apply--
                    ``(A) to qualified health benefit purchasing 
                coalition distributions paid or incurred after December 
                31, 2012, and
                    ``(B) with respect to start-up costs of a coalition 
                which are paid or incurred after December 31, 2013.''.
    (b) Qualified Health Benefit Purchasing Coalition.--
            (1) In general.--Chapter 100 of such Code (relating to 
        group health plan requirements) is amended by adding at the end 
        the following new subchapter:

     ``Subchapter D--Qualified Health Benefit Purchasing Coalition

``Sec. 9841. Qualified health benefit purchasing coalition.

``SEC. 9841. QUALIFIED HEALTH BENEFIT PURCHASING COALITION.

    ``(a) In General.--A qualified health benefit purchasing coalition 
is a private not-for-profit corporation which--
            ``(1) sells health insurance through State licensed health 
        insurance issuers in the State in which the employers to which 
        such coalition is providing insurance are located, and
            ``(2) establishes to the Secretary, under State 
        certification procedures or other procedures as the Secretary 
        may provide by regulation, that such coalition meets the 
        requirements of this section.
    ``(b) Board of Directors.--
            ``(1) In general.--Each purchasing coalition under this 
        section shall be governed by a Board of Directors.
            ``(2) Election.--The Secretary shall establish procedures 
        governing election of such Board.
            ``(3) Membership.--The Board of Directors shall--
                    ``(A) be composed of representatives of the members 
                of the coalition, in equal number, including small 
                employers and employee representatives of such 
                employers, but
                    ``(B) not include other interested parties, such as 
                service providers, health insurers, or insurance agents 
                or brokers which may have a conflict of interest with 
                the purposes of the coalition.
    ``(c) Membership of Coalition.--
            ``(1) In general.--A purchasing coalition shall accept all 
        small employers residing within the area served by the 
        coalition as members if such employers request such membership.
            ``(2) Other members.--The coalition, at the discretion of 
        its Board of Directors, may be open to individuals and large 
        employers.
            ``(3) Voting.--Members of a purchasing coalition shall have 
        voting rights consistent with the rules established by the 
        State.
    ``(d) Duties of Purchasing Coalitions.--Each purchasing coalition 
shall--
            ``(1) enter into agreements with small employers (and, at 
        the discretion of its Board, with individuals and other 
        employers) to provide health insurance benefits to employees 
        and retirees of such employers,
            ``(2) where feasible, enter into agreements with 3 or more 
        unaffiliated, qualified licensed health plans, to offer 
        benefits to members,
            ``(3) offer to members at least 1 open enrollment period of 
        at least 30 days per calendar year,
            ``(4) serve a significant geographical area and market to 
        all eligible members in that area, and
            ``(5) carry out other functions provided for under this 
        section.
    ``(e) Limitation on Activities.--A purchasing coalition shall not--
            ``(1) perform any activity (including certification or 
        enforcement) relating to compliance or licensing of health 
        plans,
            ``(2) assume insurance or financial risk in relation to any 
        health plan, or
            ``(3) perform other activities identified by the State as 
        being inconsistent with the performance of its duties under 
        this section.
    ``(f) Additional Requirements for Purchasing Coalitions.--As 
provided by the Secretary in regulations, a purchasing coalition shall 
be subject to requirements similar to the requirements of a group 
health plan under this chapter.
    ``(g) Relation to Other Laws.--
            ``(1) Preemption of state fictitious group laws.--
        Requirements (commonly referred to as fictitious group laws) 
        relating to grouping and similar requirements for health 
        insurance coverage are preempted to the extent such 
        requirements impede the establishment and operation of 
        qualified health benefit purchasing coalitions.
            ``(2) Allowing savings to be passed through.--Any State law 
        that prohibits health insurance issuers from reducing premiums 
        on health insurance coverage sold through a qualified health 
        benefit purchasing coalition to reflect administrative savings 
        is preempted. This paragraph shall not be construed to preempt 
        State laws that impose restrictions on premiums based on health 
        status, claims history, industry, age, gender, or other 
        underwriting factors.
            ``(3) No waiver of hipaa requirements.--Nothing in this 
        section shall be construed to change the obligation of health 
        insurance issuers to comply with the requirements of title 
        XXVII of the Public Health Service Act with respect to health 
        insurance coverage offered to small employers in the small 
        group market through a qualified health benefit purchasing 
        coalition.
    ``(h) Definition of Small Employer.--For purposes of this section--
            ``(1) In general.--The term `small employer' means, with 
        respect to any calendar year, any employer if such employer 
        employed an average of at least 2 and not more than 50 
        qualified employees on business days during either of the 2 
        preceding calendar years. For purposes of the preceding 
        sentence, a preceding calendar year may be taken into account 
        only if the employer was in existence throughout such year.
            ``(2) Employers not in existence in preceding year.--In the 
        case of an employer which was not in existence throughout the 
        1st preceding calendar year, the determination under paragraph 
        (1) shall be based on the average number of qualified employees 
        that it is reasonably expected such employer will employ on 
        business days in the current calendar year.''.
            (2) Conforming amendment.--The table of subchapters for 
        chapter 100 of such Code is amended by adding at the end the 
        following item:
    ``subchapter d. qualified health benefit purchasing coalition''.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2001.

SEC. 513. STATE GRANT PROGRAM FOR MARKET INNOVATION.

    (a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall establish a 
program (in this section referred to as the ``program'') to award 
demonstration grants under this section to States to allow States to 
demonstrate the effectiveness of innovative ways to increase access to 
health insurance through market reforms and other innovative means. 
Such innovative means may include (and are not limited to) any of the 
following:
            (1) Alternative group purchasing or pooling arrangements, 
        such as purchasing cooperatives for small businesses, 
        reinsurance pools, or high risk pools.
            (2) Individual or small group market reforms.
            (3) Consumer education and outreach.
            (4) Subsidies to individuals, employers, or both, in 
        obtaining health insurance.
    (b) Scope; Duration.--The program shall be limited to not more than 
10 States and to a total period of 5 years, beginning on the date the 
first demonstration grant is made.
    (c) Conditions for Demonstration Grants.--
            (1) In general.--The Secretary may not provide for a 
        demonstration grant to a State under the program unless the 
        Secretary finds that under the proposed demonstration grant--
                    (A) the State will provide for demonstrated 
                increase of access for some portion of the existing 
                uninsured population through a market innovation (other 
                than merely through a financial expansion of a program 
                initiated before the date of the enactment of this 
                Act);
                    (B) the State will comply with applicable Federal 
                laws;
                    (C) the State will not discriminate among 
                participants on the basis of any health status-related 
                factor (as defined in section 2791(d)(9) of the Public 
                Health Service Act), except to the extent a State 
                wishes to focus on populations that otherwise would not 
                obtain health insurance because of such factors; and
                    (D) the State will provide for such evaluation, in 
                coordination with the evaluation required under 
                subsection (d), as the Secretary may specify.
            (2) Application.--The Secretary shall not provide a 
        demonstration grant under the program to a State unless--
                    (A) the State submits to the Secretary such an 
                application, in such a form and manner, as the 
                Secretary specifies;
                    (B) the application includes information regarding 
                how the demonstration grant will address issues such as 
                governance, targeted population, expected cost, and the 
                continuation after the completion of the demonstration 
                grant period; and
                    (C) the Secretary determines that the demonstration 
                grant will be used consistent with this section.
            (3) Focus.--A demonstration grant proposal under section 
        need not cover all uninsured individuals in a State or all 
        health care benefits with respect to such individuals.
    (d) Evaluation.--The Secretary shall enter into a contract with an 
appropriate entity outside the Department of Health and Human Services 
to conduct an overall evaluation of the program at the end of the 
program period. Such evaluation shall include an analysis of 
improvements in access, costs, quality of care, or choice of coverage, 
under different demonstration grants.
    (e) Option to Provide for Initial Planning Grants.--Notwithstanding 
the previous provisions of this section, under the program the 
Secretary may provide for a portion of the amounts appropriated under 
subsection (f) (not to exceed $5,000,000) to be made available to any 
State for initial planning grants to permit States to develop 
demonstration grant proposals under the previous provisions of this 
section.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated $100,000,000 for each fiscal year to carry out this 
section. Amounts appropriated under this subsection shall remain 
available until expended.
    (g) State Defined.--For purposes of this section, the term 
``State'' has the meaning given such term for purposes of title XIX of 
the Social Security Act.

SEC. 514. GRANT PROGRAM TO FACILITATE HEALTH BENEFITS INFORMATION FOR 
              SMALL EMPLOYERS.

    (a) In General.--The Small Business Administration shall award 
grants to 1 or more States, local governments, and non-profit 
organizations for the purposes of--
            (1) demonstrating new and effective ways to provide 
        information about the benefits of health insurance to small 
        employers, including tax benefits, increased productivity of 
        employees, and decreased turnover of employees,
            (2) making employers aware of their current rights in the 
        marketplace under State and Federal health insurance reforms, 
        and
            (3) making employers aware of the tax treatment of 
        insurance premiums.
    (b) Authorization.--There is authorized to be appropriated 
$10,000,000 for each of the first 5 fiscal years beginning after the 
date of the enactment of this Act for grants under subsection (a).

SEC. 515. STATE GRANT PROGRAM FOR MARKET INNOVATION.

    (a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall establish a 
program (in this section referred to as the ``program'') to award 
demonstration grants under this section to States to allow States to 
demonstrate the effectiveness of innovative ways to increase access to 
health insurance through market reforms and other innovative means. 
Such innovative means may include (and are not limited to) any of the 
following:
            (1) Alternative group purchasing or pooling arrangements, 
        such as purchasing cooperatives for small businesses, 
        reinsurance pools, or high risk pools.
            (2) Individual or small group market reforms.
            (3) Consumer education and outreach.
            (4) Subsidies to individuals, employers, or both, in 
        obtaining health insurance.
    (b) Scope; Duration.--The program shall be limited to not more than 
10 States and to a total period of 5 years, beginning on the date the 
first demonstration grant is made.
    (c) Conditions for Demonstration Grants.--
            (1) In general.--The Secretary may not provide for a 
        demonstration grant to a State under the program unless the 
        Secretary finds that under the proposed demonstration grant--
                    (A) the State will provide for demonstrated 
                increase of access for some portion of the existing 
                uninsured population through a market innovation (other 
                than merely through a financial expansion of a program 
                initiated before the date of the enactment of this 
                Act);
                    (B) the State will comply with applicable Federal 
                laws;
                    (C) the State will not discriminate among 
                participants on the basis of any health status-related 
                factor (as defined in section 2791(d)(9) of the Public 
                Health Service Act), except to the extent a State 
                wishes to focus on populations that otherwise would not 
                obtain health insurance because of such factors; and
                    (D) the State will provide for such evaluation, in 
                coordination with the evaluation required under 
                subsection (d), as the Secretary may specify.
            (2) Application.--The Secretary shall not provide a 
        demonstration grant under the program to a State unless--
                    (A) the State submits to the Secretary such an 
                application, in such a form and manner, as the 
                Secretary specifies;
                    (B) the application includes information regarding 
                how the demonstration grant will address issues such as 
                governance, targeted population, expected cost, and the 
                continuation after the completion of the demonstration 
                grant period; and
                    (C) the Secretary determines that the demonstration 
                grant will be used consistent with this section.
            (3) Focus.--A demonstration grant proposal under section 
        need not cover all uninsured individuals in a State or all 
        health care benefits with respect to such individuals.
    (d) Evaluation.--The Secretary shall enter into a contract with an 
appropriate entity outside the Department of Health and Human Services 
to conduct an overall evaluation of the program at the end of the 
program period. Such evaluation shall include an analysis of 
improvements in access, costs, quality of care, or choice of coverage, 
under different demonstration grants.
    (e) Option to Provide for Initial Planning Grants.--Notwithstanding 
the previous provisions of this section, under the program the 
Secretary may provide for a portion of the amounts appropriated under 
subsection (f) (not to exceed $5,000,000) to be made available to any 
State for initial planning grants to permit States to develop 
demonstration grant proposals under the previous provisions of this 
section.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated $100,000,000 for each fiscal year to carry out this 
section. Amounts appropriated under this subsection shall remain 
available until expended.
    (g) State Defined.--For purposes of this section, the term 
``State'' has the meaning given such term for purposes of title XIX of 
the Social Security Act.

       TITLE VI--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

SEC. 601. EFFECTIVE DATES.

    (a) Group Health Coverage.--
            (1) In general.--Subject to paragraph (2) and subsection 
        (d), the amendments made by sections 201(a), 401, 501, and 502 
        (and title I insofar as it relates to such sections) shall 
        apply with respect to group health plans, and health insurance 
        coverage offered in connection with group health plans, for 
        plan years beginning on or after October 1, 2005 (in this 
        section referred to as the ``general effective date'').
            (2) Treatment of collective bargaining agreements.--In the 
        case of a group health plan maintained pursuant to one or more 
        collective bargaining agreements between employee 
        representatives and one or more employers ratified before the 
        date of the enactment of this Act, the amendments made by 
        sections 201(a), 401, 501, and 502 (and title I insofar as it 
        relates to such sections) shall not apply to plan years 
        beginning before the later of--
                    (A) the date on which the last collective 
                bargaining agreements relating to the plan terminates 
                (excluding any extension thereof agreed to after the 
                date of the enactment of this Act); or
                    (B) the general effective date;
        but shall apply not later than 1 year after the general 
        effective date. For purposes of subparagraph (A), any plan 
        amendment made pursuant to a collective bargaining agreement 
        relating to the plan which amends the plan solely to conform to 
        any requirement added by this Act shall not be treated as a 
        termination of such collective bargaining agreement.
    (b) Individual Health Insurance Coverage.--Subject to subsection 
(d), the amendments made by section 202 shall apply with respect to 
individual health insurance coverage offered, sold, issued, renewed, in 
effect, or operated in the individual market on or after the general 
effective date.
    (c) Treatment of Religious Nonmedical Providers.--
            (1) In general.--Nothing in this Act (or the amendments 
        made thereby) shall be construed to--
                    (A) restrict or limit the right of group health 
                plans, and of health insurance issuers offering health 
                insurance coverage, to include as providers religious 
                nonmedical providers;
                    (B) require such plans or issuers to--
                            (i) utilize medically based eligibility 
                        standards or criteria in deciding provider 
                        status of religious nonmedical providers;
                            (ii) use medical professionals or criteria 
                        to decide patient access to religious 
                        nonmedical providers;
                            (iii) utilize medical professionals or 
                        criteria in making decisions in internal or 
                        external appeals regarding coverage for care by 
                        religious nonmedical providers; or
                            (iv) compel a participant or beneficiary to 
                        undergo a medical examination or test as a 
                        condition of receiving health insurance 
                        coverage for treatment by a religious 
                        nonmedical provider; or
                    (C) require such plans or issuers to exclude 
                religious nonmedical providers because they do not 
                provide medical or other required data, if such data is 
                inconsistent with the religious nonmedical treatment or 
                nursing care provided by the provider.
            (2) Religious nonmedical provider.--For purposes of this 
        subsection, the term ``religious nonmedical provider'' means a 
        provider who provides no medical care but who provides only 
        religious nonmedical treatment or religious nonmedical nursing 
        care.
    (d) Transition for Notice Requirement.--The disclosure of 
information required under section 121 of this Act shall first be 
provided pursuant to--
            (1) subsection (a) with respect to a group health plan that 
        is maintained as of the general effective date, not later than 
        30 days before the beginning of the first plan year to which 
        title I applies in connection with the plan under such 
        subsection; or
            (2) subsection (b) with respect to an individual health 
        insurance coverage that is in effect as of the general 
        effective date, not later than 30 days before the first date as 
        of which title I applies to the coverage under such subsection.

SEC. 602. COORDINATION IN IMPLEMENTATION.

    The Secretary of Labor and the Secretary of Health and Human 
Services shall ensure, through the execution of an interagency 
memorandum of understanding among such Secretaries, that--
            (1) regulations, rulings, and interpretations issued by 
        such Secretaries relating to the same matter over which such 
        Secretaries have responsibility under the provisions of this 
        Act (and the amendments made thereby) are administered so as to 
        have the same effect at all times; and
            (2) coordination of policies relating to enforcing the same 
        requirements through such Secretaries in order to have a 
        coordinated enforcement strategy that avoids duplication of 
        enforcement efforts and assigns priorities in enforcement.

SEC. 603. SEVERABILITY.

    If any provision of this Act, an amendment made by this Act, or the 
application of such provision or amendment to any person or 
circumstance is held to be unconstitutional, the remainder of this Act, 
the amendments made by this Act, and the application of the provisions 
of such to any person or circumstance shall not be affected thereby.

                  TITLE VII--MISCELLANEOUS PROVISIONS

SEC. 701. NO IMPACT ON SOCIAL SECURITY TRUST FUND.

    (a) In General.--Nothing in this Act (or an amendment made by this 
Act) shall be construed to alter or amend the Social Security Act (or 
any regulation promulgated under that Act).
    (b) Transfers.--
            (1) Estimate of secretary.--The Secretary of the Treasury 
        shall annually estimate the impact that the enactment of this 
        Act has on the income and balances of the trust funds 
        established under section 201 of the Social Security Act (42 
        U.S.C. 401).
            (2) Transfer of funds.--If, under paragraph (1), the 
        Secretary of the Treasury estimates that the enactment of this 
        Act has a negative impact on the income and balances of the 
        trust funds established under section 201 of the Social 
        Security Act (42 U.S.C. 401), the Secretary shall transfer, not 
        less frequently than quarterly, from the general revenues of 
        the Federal Government an amount sufficient so as to ensure 
        that the income and balances of such trust funds are not 
        reduced as a result of the enactment of such Act.
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