lished an adequate certification and recer-
tification process, by the Secretary of
Health and Human Services, or under a
process recognized or approved by such
Secretary).
‘‘(B) RECERTIFICATION
PROCESS.—The
Secretary shall develop standards for the recer-
tification of external appeal entities. Such
standards shall include a specification of—
‘‘(i) the information required to be
submitted as a condition of recertification
on the entity’s performance of external ap-
peal activities, which information shall in-
clude the number of cases reviewed, a sum-
mary of the disposition of those cases, the
length of time in making determinations
on those cases, and such information as
may be necessary to assure the independ-
ence of the entity from the plans or issuers
for which external appeal activities are
being conducted; and
‘‘(ii) the periodicity which recertifi-
cation will be required.
‘‘(3) CLINICAL PEER DEFINED.—For purposes
of this subsection, the term ‘clinical peer’ means,
with respect to an appeal, a physician (allopathic or
osteopathic) or other health care professional who
holds a non-restricted license in a State and who is
appropriately credentialed in the same or similar
specialty as typically manages the medical condition,
procedure, or treatment under appeal and includes a
pediatric specialist where appropriate.
‘‘(d) CONTINUING LEGAL RIGHTS OF ENROLLEES.—
Nothing in this section shall be construed as removing any
legal rights of participants, beneficiaries, enrollees, and
others under State or Federal law, including the right to
file judicial actions to enforce rights.
‘‘(e) NOTICE.—A group health plan under this part
shall comply with the notice requirement under section
713(e) of the Employee Retirement Income Security Act
of 1974 with respect to the requirements of this section
as if such section applied to such plan.’’.
(B) Section 2723(c) of such Act (42 U.S.C.
300gg–23(c)), as amended by section 604(b)(2) of
Public Law 104–204, is amended by striking ‘‘sec-
tion 2704’’ and inserting ‘‘sections 2704 and 2706’’.
(2) ERISA AMENDMENTS.—(A) Subpart B of
part 7 of subtitle B of title I of the Employee Re-
tirement Income Security Act of 1974 is amended by
adding at the end the following new section:
‘‘SEC. 713. EXTERNAL APPEALS OF ADVERSE DETERMINA-
TIONS.
‘‘(a) RIGHT TO EXTERNAL APPEAL.—
‘‘(1) IN GENERAL.—A group health plan, and a
health insurance issuer offering group health insur-
ance coverage, shall provide for an external appeals
process that meets the requirements of this section
in the case of an externally appealable decision de-
scribed in paragraph (2). The Secretary shall estab-
lish standards to carry out such requirements.
‘‘(2) EXTERNALLY APPEALABLE DECISION DE-
FINED.—For purposes of this section, the term ‘ex-
ternally appealable decision’ means a benefit denial,
reduction, or termination of, or failure to provide or
make, payment (in whole or in part) for, a benefit
(including a denial of choice of provider to the ex-
tent such a choice is permitted under a plan), if—
‘‘(A) the denial or failure involves a deter-
mination that a treatment is experimental or in-
vestigational in nature;
‘‘(B) the denial or failure is based on a de-
termination that services are not medically nec-
essary or appropriate and the amount involved
exceeds a significant threshold; or
‘‘(C) the patient’s life or health is jeopard-
ized as a consequence of the denial or failure.
Such term does not include a denial of (or failure to
provide) coverage for services that are specifically
stated in plan or coverage documents as an exclusion
from coverage.
‘‘(3) CONDITIONING APPEAL ON INTERNAL AP-
PEALS PROCESS.—A plan or issuer may condition
the use of an external appeal process in the case of
an externally appealable decision upon completion of
an internal review process but only if the internal re-
view process provides for a determination on the de-
cision in accordance with the medical exigencies of
the case involved, but in no event later than 15 busi-
ness days (or 72 hours in the case of a decision in-
volving emergency or urgent care)of the time of the
filing of the request for the internal review.
‘‘(b) GENERAL ELEMENTS OF PROCESS.—
‘‘(1) CONTRACT
WITH
QUALIFIED
EXTERNAL
APPEAL ENTITY.—
‘‘(A) CONTRACT
REQUIREMENT.—Subject
to subparagraph (B), the external appeal proc-
ess under this section of a plan or issuer shall
be conducted under a contract between the plan
or issuer and one or more qualified external ap-
peal entities (as defined in subsection (c)).
‘‘(B) RESTRICTIONS
ON
QUALIFIED
EX-
TERNAL APPEAL ENTITY.—
‘‘(i) BY STATE FOR HEALTH INSUR-
ANCE ISSUERS.—With respect to health in-
surance issuers 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 such a
manner as to assure an unbiased deter-
mination.
‘‘(ii) BY FEDERAL GOVERNMENT FOR
GROUP HEALTH PLANS.—With respect to
group health plans, the Secretary may ex-
ercise the same authority as a State may
exercise with respect to health insurance
issuers under clause (i). Such authority
may include requiring the use of the quali-
fied external appeal entity designated or
selected under such clause.
‘‘(iii) 
LIMITATION
ON
PLAN
OR
ISSUER SELECTION.—If a State or the Sec-
retary under this subparagraph permits
more than one entity to qualify as a quali-
fied external appeal entity with respect to
a group health plan or health insurance
issuer and the plan or issuer may select
among such qualified entities, the State or
Secretary shall assure that the selection
process will not create any incentives for
external appeal entities to make a decision
in a biased manner.
‘‘(C) OTHER TERMS AND CONDITIONS.—
The terms and conditions of a contract under
this paragraph shall be consistent with the
standards the Secretary shall establish to as-
sure there is no real or apparent conflict of in-
terest in the conduct of external appeal activi-
ties. Such contract shall provide that the direct
costs of the process (not including costs of rep-
resentation of a participant, beneficiary, or en-
rollee) shall be paid by the plan or issuer, and
not by the participant, beneficiary, or enrollee.
‘‘(2) ELEMENTS OF PROCESS.—An external ap-
peal process shall be conducted consistent with
standards established by the Secretary that include
at least the following:
‘‘(A) FAIR
PROCESS; DE
NOVO
DETER-
MINATION.—The process shall provide for a
fair, de novo determination.
‘‘(B) DETERMINATION
CONCERNING
EX-
TERNALLY APPEALABLE DECISIONS.—A quali-
fied external appeal entity shall determine
whether a decision is an externally appealable
decision and related decisions, including—
‘‘(i) whether such a decision involves
emergency or urgent care,
‘‘(ii) the appropriate deadlines for in-
ternal review process required due to medi-
cal exigencies in a case, and
‘‘(iii) whether such a process has been
completed.
‘‘(C) OPPORTUNITY TO SUBMIT EVIDENCE,
HAVE
REPRESENTATION, 
AND
MAKE
ORAL
PRESENTATION.—Each party to an externally
appealable decision—
‘‘(i) may submit and review evidence
related to the issues in dispute,
‘‘(ii) may use the assistance or rep-
resentation of one or more individuals (any
of whom may be an attorney), and
‘‘(iii) may make an oral presentation.
‘‘(D) PROVISION OF INFORMATION.—The
plan or issuer involved shall provide timely ac-
cess to all its records relating to the matter of
the externally appealable decision and to all
provisions of the plan or health insurance cov-
erage (including any coverage manual) relating
to the matter.
‘‘(E) TIMELY
DECISIONS.—A determina-
tion by the external appeal entity on the deci-
sion shall—
‘‘(i) be made orally or in writing and,
if it is made orally, shall be supplied to the
parties in writing as soon as possible;
‘‘(ii) be binding on the plan or issuer;
‘‘(iii) be made in accordance with the
medical exigencies of the case involved, but
in no event later than 60 days (or 72
hours in the case of an externally appeal-
able decision involving emergency or ur-
gent care) from the date of completion of
the filing of notice of external appeal of
the decision;
‘‘(iv) state, in layperson’s language,
the basis for the determination, including,
if relevant, any basis in the terms or condi-
tions of the plan or coverage; and
‘‘(v) inform the enrollee of the enroll-
ee’s rights to seek further review by the
courts (or other process) of the external
appeal determination.
‘‘(c) QUALIFICATIONS OF EXTERNAL APPEAL ENTI-
TIES.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified external appeal entity’
means, in relation to a plan or issuer, an entity
(which may be a governmental entity) that is cer-
tified under paragraph (2) as meeting the following
requirements:
‘‘(A) There is no real or apparent conflict
of interest that would impede the entity con-
ducting external appeal activities independent
of the plan or issuer.
‘‘(B) The entity conducts external appeal
activities through clinical peers.
‘‘(C) The entity has sufficient medical,
legal, and other expertise and sufficient staffing
to conduct external appeal activities for the
plan or issuer on a timely basis consistent with
subsection (b)(3)(E)(ii).
‘‘(D) The entity meets such other require-
ments as the Secretary may impose.
‘‘(2) CERTIFICATION
OF
EXTERNAL
APPEAL
ENTITIES.—
‘‘(A) IN GENERAL.—In order to be treated
as a qualified external appeal entity with re-
spect to—
‘‘(i) a group health plan, the entity
must be certified (and, in accordance with
subparagraph (B), periodically recertified)
as meeting the requirements of paragraph
(1) by the Secretary of Labor (or under a
process recognized or approved by the Sec-
retary of Labor); or
‘‘(ii) a health insurance issuer operat-
ing in a State, the entity must be certified
(and, in accordance with subparagraph
(B), periodically recertified) as meeting
such requirements by the applicable State
authority (or, if the States has not estab-
lished an adequate certification and recer-
tification process, by the Secretary of
Health and Human Services, or under a
process recognized or approved by such
Secretary).
‘‘(B) RECERTIFICATION
PROCESS.—The
Secretary shall develop standards for the recer-
tification of external appeal entities. Such
standards shall include a specification of—
‘‘(i) the information required to be
submitted as a condition of recertification
on the entity’s performance of external ap-
peal activities, which information shall in-
clude the number of cases reviewed, a sum-
mary of the disposition of those cases, the
length of time in making determinations
on those cases, and such information as
may be necessary to assure the independ-
ence of the entity from the plans or issuers
for which external appeal activities are
being conducted; and
‘‘(ii) the periodicity which recertifi-
cation will be required.
‘‘(3) CLINICAL PEER DEFINED.—For purposes
of this subsection, the term ‘clinical peer’ means,
with respect to an appeal, a physician (allopathic or
osteopathic) or other health care professional who
holds a non-restricted license in a State and who is
appropriately credentialed in the same or similar
specialty as typically manages the medical condition,
procedure, or treatment under appeal and includes a
pediatric specialist where appropriate.
‘‘(d) CONTINUING LEGAL RIGHTS OF ENROLLEES.—
Nothing in this section shall be construed as removing any
legal rights of participants, beneficiaries, enrollees, and
others under State or Federal law, including the right to
file judicial actions to enforce rights.
‘‘(e) NOTICE UNDER GROUP HEALTH PLAN.—The
imposition of the requirement of this section shall be treat-
ed as a material modification in the terms of the plan de-
scribed in section 102(a)(1), for purposes of assuring no-
tice of such requirements under the plan; except that the
summary description required to be provided under the
last sentence of section 104(b)(1) with respect to such
modification shall be provided by not later than 60 days
after the first day of the first plan year in which such
requirement apply.’’.
(B) Section 731(c) of such Act (29 U.S.C.
1191(c)) is amended by striking ‘‘section 711’’ and
inserting ‘‘sections 711 and 713’’.
(C) Section 732(a) of such Act (29 U.S.C.
1191a(a)) is amended by striking ‘‘section 711’’ and
inserting ‘‘sections 711 and 713’’.
(D) The table of contents in section 1 of such
Act is amended by inserting after the item relating
to section 712 the following new item:
‘‘Sec. 713. External appeals of adverse determinations.’’.
(3) 
INTERNAL
REVENUE
CODE
AMEND-
MENTS.—Subchapter B of chapter 100 of the Inter-
nal Revenue Code of 1986 (as amended by section
1531(a) of the Taxpayer Relief Act of 1997) is
amended—
(A) in the table of sections, by inserting
after the item relating to section 9812 the fol-
lowing new item:
‘‘Sec. 9813. External appeals of adverse determinations.’’;
and
(B) by inserting after section 9812 the fol-
lowing:
‘‘SEC. 9813. EXTERNAL APPEALS OF ADVERSE DETERMINA-
TIONS.
‘‘(a) RIGHT TO EXTERNAL APPEAL.—
‘‘(1) IN GENERAL.—A group health plan shall
provide for an external appeals process that meets
the requirements of this section in the case of an ex-
ternally appealable decision described in paragraph
(2). The Secretary shall establish standards to carry
out such requirements.
‘‘(2) EXTERNALLY APPEALABLE DECISION DE-
FINED.—For purposes of this section, the term ‘ex-
ternally appealable decision’ means a benefit denial,
reduction, or termination of, or failure to provide or
make, payment (in whole or in part) for, a benefit
(including a denial of choice of provider to the ex-
tent such a choice is permitted under a plan), if—
‘‘(A) the denial or failure involves a deter-
mination that a treatment is experimental or in-
vestigational in nature;
‘‘(B) the denial or failure is based on a de-
termination that services are not medically nec-
essary or appropriate and the amount involved
exceeds a significant threshold; or
‘‘(C) the patient’s life or health is jeopard-
ized as a consequence of the denial or failure.
Such term does not include a denial of (or failure to
provide) coverage for services that are specifically
stated in plan documents as an exclusion from cov-
erage.
‘‘(3) CONDITIONING APPEAL ON INTERNAL AP-
PEALS PROCESS.—A plan may condition the use of
an external appeal process in the case of an exter-
nally appealable decision upon completion of an in-
ternal review process but only if the internal review
process provides for a determination on the decision
in accordance with the medical exigencies of the case
involved, but in no event later than 15 business days
(or 72 hours in the case of a decision involving
emergency or urgent care) of the time of the filing
of the request for the internal review.
‘‘(b) GENERAL ELEMENTS OF PROCESS.—
‘‘(1) CONTRACT
WITH
QUALIFIED
EXTERNAL
APPEAL ENTITY.—
‘‘(A) CONTRACT
REQUIREMENT.—Subject
to subparagraph (B), the external appeal proc-
ess under this section of a plan shall be con-
ducted under a contract between the plan and
one or more qualified external appeal entities
(as defined in subsection (c)).
‘‘(B) RESTRICTIONS
ON
QUALIFIED
EX-
TERNAL APPEAL ENTITY.—
‘‘(i) IN
GENERAL.—The Secretary
may provide for external review activities
to be conducted by a qualified external ap-
peal entity that is designated by the Sec-
retary or that is selected by the Secretary
in such a manner as to assure an unbiased
determination.
‘‘(ii) LIMITATION
ON
PLAN
SELEC-
TION.—If the Secretary under this sub-
paragraph permits more than one entity to
qualify as a qualified external appeal entity
with respect to a group health plan and
the plan may select among such qualified
entities, the Secretary shall assure that the
selection process will not create any incen-
tives for external appeal entities to make a
decision in a biased manner.
‘‘(C) OTHER TERMS AND CONDITIONS.—
The terms and conditions of a contract under
this paragraph shall be consistent with the
standards the Secretary shall establish to as-
sure there is no real or apparent conflict of in-
terest in the conduct of external appeal activi-
ties. Such contract shall provide that the direct
costs of the process (not including costs of rep-
resentation of a participant or beneficiary) shall
be paid by the plan, and not by the participant
or beneficiary.
‘‘(2) ELEMENTS OF PROCESS.—An external ap-
peal process shall be conducted consistent with
standards established by the Secretary that include
at least the following:
‘‘(A) FAIR
PROCESS; DE
NOVO
DETER-
MINATION.—The process shall provide for a
fair, de novo determination.
‘‘(B) DETERMINATION
CONCERNING
EX-
TERNALLY APPEALABLE DECISIONS.—A quali-
fied external appeal entity shall determine
whether a decision is an externally appealable
decision and related decisions, including—
‘‘(i) whether such a decision involves
emergency or urgent care,
‘‘(ii) the appropriate deadlines for in-
ternal review process required due to medi-
cal exigencies in a case, and
‘‘(iii) whether such a process has been
completed.
‘‘(C) OPPORTUNITY TO SUBMIT EVIDENCE,
HAVE
REPRESENTATION, 
AND
MAKE
ORAL
PRESENTATION.—Each party to an externally
appealable decision—
‘‘(i) may submit and review evidence
related to the issues in dispute,
‘‘(ii) may use the assistance or rep-
resentation of one or more individuals (any
of whom may be an attorney), and
‘‘(iii) may make an oral presentation.
‘‘(D) PROVISION OF INFORMATION.—The
plan involved shall provide timely access to all
its records relating to the matter of the exter-
nally appealable decision and to all provisions of
the plan (including any coverage manual) relat-
ing to the matter.
‘‘(E) TIMELY
DECISIONS.—A determina-
tion by the external appeal entity on the deci-
sion shall—
‘‘(i) be made orally or in writing and,
if it is made orally, shall be supplied to the
parties in writing as soon as possible;
‘‘(ii) be binding on the plan;
‘‘(iii) be made in accordance with the
medical exigencies of the case involved, but
in no event later than 60 days (or 72
hours in the case of an externally appeal-
able decision involving emergency or ur-
gent care) from the date of completion of
the filing of notice of external appeal of
the decision;
‘‘(iv) state, in layperson’s language,
the basis for the determination, including,
if relevant, any basis in the terms or condi-
tions of the plan; and
‘‘(v) inform the participant, bene-
ficiary, or enrollee of the individual’s rights
to seek further review by the courts (or
other process) of the external appeal deter-
mination.
‘‘(c) QUALIFICATIONS OF EXTERNAL APPEAL ENTI-
TIES.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified external appeal entity’
means, in relation to a group health plan, an entity
(which may be a governmental entity) that is cer-
tified under paragraph (2) as meeting the following
requirements:
‘‘(A) There is no real or apparent conflict
of interest that would impede the entity con-
ducting external appeal activities independent
of the plan.
‘‘(B) The entity conducts external appeal
activities through clinical peers.
‘‘(C) The entity has sufficient medical,
legal, and other expertise and sufficient staffing
to conduct external appeal activities for the
plan on a timely basis consistent with sub-
section (b)(3)(E)(ii).
‘‘(D) The entity meets such other require-
ments as the Secretary may impose.
‘‘(2) CERTIFICATION
OF
EXTERNAL
APPEAL
ENTITIES.—
‘‘(A) IN GENERAL.—In order to be treated
as a qualified external appeal entity with re-
spect to a group health plan, the entity must be
certified (and, in accordance with subparagraph
(B), periodically recertified) as meeting the re-
quirements of paragraph (1) by the Secretary
of Labor (or under a process recognized or ap-
proved by the Secretary of Labor.
‘‘(B) RECERTIFICATION
PROCESS.—The
Secretary shall develop standards for the recer-
tification of external appeal entities. Such
standards shall include a specification of—
‘‘(i) the information required to be
submitted as a condition of recertification
on the entity’s performance of external ap-
peal activities, which information shall in-
clude the number of cases reviewed, a sum-
mary of the disposition of those cases, the
length of time in making determinations
on those cases, and such information as
may be necessary to assure the independ-
ence of the entity from the plans for which
external appeal activities are being con-
ducted; and
‘‘(ii) the periodicity which recertifi-
cation will be required.
‘‘(3) CLINICAL PEER DEFINED.—For purposes
of this subsection, the term ‘clinical peer’ means,
with respect to an appeal, a physician (allopathic or
osteopathic) or other health care professional who
holds a non-restricted license in a State and who is
appropriately credentialed in the same or similar
specialty as typically manages the medical condition,
procedure, or treatment under appeal and includes a
pediatric specialist where appropriate.’’
(b) INDIVIDUAL HEALTH INSURANCE.—(1) Part B
of title XXVII of the Public Health Service Act is amend-
ed by inserting after section 2751 the following new sec-
tion:
‘‘SEC. 2752. EXTERNAL REVIEW PROCESS.
‘‘(a) IN GENERAL.—The provisions of section 2706
(other than subsection (e)) shall apply to health insurance
coverage offered by a health insurance issuer in the indi-
vidual market in the same manner as they apply to health
insurance coverage offered by a health insurance issuer
in connection with a group health plan in the small or
large group market.
‘‘(b) NOTICE.—A health insurance issuer under this
part shall comply with the notice requirement under sec-
tion 713(3) of the Employee Retirement Income Security
Act of 1974 with respect to the requirements referred to
in subsection (a) as if such section applied to such issuer
and such issuer were a group health plan.’’.
(2) Section 2762(b)(2) of such Act (42 U.S.C.
300gg–62(b)(2)) is amended by striking ‘‘section 2751’’
and inserting ‘‘sections 2751 and 2752’’.
(c) AUTHORITY TO APPLY STANDARDS TO MEDI-
CARE
AND MEDICAID PROGRAMS.—The Secretary of
Health and Human Services may apply the requirements
of section 2706 of the Public Health Service Act to
Medicare+Choice organizations offering plans under part
C under title XVIII of the Social Security Act, eligible or-
ganizations offering coverage under section 1876 of such
Act, medicaid managed care organizations or managed
care entity offering coverage under section 1932 of such
Act, and similar organizations and entities offering cov-
erage under title XVIII or XIX of such Act, to the extent
that the Secretary finds that such requirements provide
greater protections for enrollees under such titles and do
not conflict directly with requirements otherwise imposed
by law relating to external review and appeals.
(d) EFFECTIVE DATES.—
(1) GROUP HEALTH PLANS.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the amendments made by subsection
(a) shall apply with respect to group health
plans for plan years beginning on or after Jan-
uary 1, 1999.
(B) RULE FOR CERTAIN COLLECTIVE BAR-
GAINING AGREEMENTS.—In the case of a group
health plan maintained pursuant to 1 or more
collective bargaining agreements between em-
ployee representatives and 1 or more employers
ratified before the date of enactment of this
Act, the amendments made by subsection (a)
shall not apply to plan years beginning before
the later of—
(i) the date on which the last collec-
tive bargaining agreements relating to the
plan terminates (determined without re-
gard to any extension thereof agreed to
after the date of enactment of this Act), or
(ii) January 1, 1999.
For purposes of clause (i), any plan amendment
made pursuant to a collective bargaining agree-
ment relating to the plan which amends the
plan solely to conform to any requirement
added by subsection (a) shall not be treated as
a termination of such collective bargaining
agreement.