I
106TH CONGRESS
2D SESSION
H. R. 5628
To amend the Employee Retirement Income Security Act of 1974, the Public
Health Service Act, and the Internal Revenue Code of 1986 to provide
for a patients’ bill of rights, patient access to information, and account-
ability of health plans, and to expand access to health care coverage
through tax incentives.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 3, 2000
Mr. SHADEGG (for himself, Mr. COBURN, Mr. SALMON, and Mr. ADERHOLT)
introduced the following bill; which was referred to the Committee on
Commerce, and in addition to the Committees on Education and the
Workforce, and Ways and Means, for a period to be subsequently deter-
mined 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 Employee Retirement Income Security Act
of 1974, the Public Health Service Act, and the Internal
Revenue Code of 1986 to provide for a patients’ bill
of rights, patient access to information, and account-
ability of health plans, and to expand access to health
care coverage through tax incentives.
Be it enacted by the Senate and House of Representa-
tives 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
‘‘Common Sense Patients’ Bill of Rights Act’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—PATIENTS’ BILL OF RIGHTS
Subtitle A—Right to Advice and Care
Sec. 101. Patient right to medical advice and care under ERISA.
‘‘SUBPART C—PATIENT RIGHT TO MEDICAL ADVICE AND CARE
‘‘Sec. 721. Access to emergency care.
‘‘Sec. 722. Offering of choice of coverage options.
‘‘Sec. 723. Patient access to obstetric and gynecological care.
‘‘Sec. 724. Access to pediatric care.
‘‘Sec. 725. Timely access to specialists.
‘‘Sec. 726. Continuity of care.
‘‘Sec. 727. Prohibition of interference with certain medical communica-
tions.
‘‘Sec. 728. Patient’s right to prescription drugs.
‘‘Sec. 729. Self-payment for behavioral health care services.
‘‘Sec. 730. Coverage for individuals participating in approved cancer clin-
ical trials.
‘‘Sec. 730A. Prohibition of discrimination against providers based on licen-
sure.
‘‘Sec. 730B. Prohibition against improper incentive arrangements.
‘‘Sec. 730C. Payment of clean claims.
‘‘Sec. 730D. Generally applicable provision.
‘‘Sec. 730E. Exclusion from access to managed care provisions for fee-for-
service coverage.
‘‘Sec. 730F. Additional definitions.
Sec. 102. Conforming amendments to the Public Health Service Act.
Sec. 103. Conforming amendments to the Internal Revenue Code of 1986.
Subtitle B—Right to Information About Plans and Providers
Sec. 111. Information about plans and coverage under ERISA.
‘‘Sec. 714. Patient access to information.
Sec. 112. Conforming amendments to Public Health Service Act.
Sec. 113. Conforming amendments to the Internal Revenue Code of 1986.
Subtitle C—Right to Hold Health Plans Accountable
Sec. 121. Amendments to Employee Retirement Income Security Act of 1974.
‘‘Sec. 503A. Utilization review activities.
‘‘Sec. 503B. Procedures for initial claims for benefits and prior authoriza-
tion determinations.
‘‘Sec. 503C. Internal appeals of claims denials.
‘‘Sec. 503D. Independent external appeals procedures.
Sec. 122. Conforming amendments to Public Health Service Act.
Sec. 123. Conforming amendments to the Internal Revenue Code of 1986.
Subtitle D—State Flexibility in Applying Requirements to Health Insurance
Issuers
Sec. 141. State flexibility in applying requirements to health insurance issuers
under ERISA; plan satisfaction of certain requirements.
Sec. 142. State flexibility in applying requirements to health insurance issuers
under the Public Health Service Act.
Subtitle E—Effective Dates; Coordination in Implementation; Miscellaneous
Provisions
Sec. 151. Effective dates.
Sec. 152. Regulations; coordination.
Sec. 153. No benefit requirements.
Sec. 154. Severability.
TITLE II—REMEDIES
Sec. 201. Availability of court remedies.
Sec. 202. Severability.
TITLE III—HEALTH CARE COVERAGE ACCESS TAX INCENTIVES
Sec. 301. Expanded availability of medical savings accounts.
Sec. 302. Deduction for 100 percent of health insurance costs of self-employed
individuals.
TITLE IV—HEALTH CARE PAPERWORK
Sec. 401. Health care paperwork simplification.
TITLE I—PATIENTS’ BILL OF
RIGHTS
Subtitle A—Right to Advice and
Care
SEC. 101. PATIENT RIGHT TO MEDICAL ADVICE AND CARE
UNDER ERISA.
(a) IN GENERAL.—Part 7 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1181 et seq.) is amended—
(1) by redesignating subpart C as subpart D;
and
(2) by inserting after subpart B the following:
‘‘Subpart C—Patient Right to Medical Advice and
Care
‘‘SEC. 721. 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 insur-
ance issuer in connection with such a plan, 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 au-
thorization determination;
‘‘(B) whether the health care provider fur-
nishing 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 or beneficiary—
‘‘(i) by a nonparticipating health care
provider with or without prior authoriza-
tion, or
‘‘(ii) by a participating health care
provider without prior authorization,
the participant or beneficiary is not liable for
amounts that exceed the amounts of liability
that would be incurred if the services were pro-
vided 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, 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 se-
vere 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
(42 U.S.C. 1395dd(e)(1)(A)).
‘‘(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 So-
cial Security Act) that is within the capa-
bility of the emergency department of a
hospital, including ancillary services rou-
tinely available to the emergency depart-
ment 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’
means, with respect to an emergency medical
condition, to provide such medical treatment of
the condition as may be necessary to assure,
within reasonable medical probability, that no
material deterioration of the condition is likely
to result from or occur during the transfer of
the individual from a facility.
‘‘(b) REIMBURSEMENT
FOR MAINTENANCE CARE
AND POST-STABILIZATION CARE.—If benefits are avail-
able under a group health plan, or under health insurance
coverage offered by a health insurance issuer in connection
with such a plan, with respect to maintenance care or
post-stabilization care covered under the guidelines estab-
lished under section 1852(d)(2) of the Social Security Act,
the plan or issuer shall provide for reimbursement with
respect to such services provided to a participant or bene-
ficiary other than through a participating health care pro-
vider in a manner consistent with subsection (a)(1)(C)
(and shall otherwise comply with such guidelines).
‘‘(c) COVERAGE OF EMERGENCY AMBULANCE SERV-
ICES.—
‘‘(1) IN GENERAL.—If a group health plan, or
health insurance coverage provided by a health in-
surance issuer in connection with such a plan, pro-
vides 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 subpara-
graphs (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 So-
cial Security Act) furnished to transport an indi-
vidual 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 sub-
section (a)(2)(B)) in a case in which the emergency
services are covered under the plan or coverage pur-
suant 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.
‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to prohibit a group health plan or
a health insurance issuer from negotiating reimbursement
rates with a nonparticipating provider for items or services
provided under this section.
‘‘SEC. 722. OFFERING OF CHOICE OF COVERAGE OPTIONS.
‘‘(a) REQUIREMENT.—If a group health plan provides
coverage for benefits only through a defined set of partici-
pating health care professionals, the plan shall offer each
participant the option to purchase point-of-service cov-
erage (as defined in subsection (b)) for all such benefits
for which coverage is otherwise so limited. Such option
shall be made available to the participant at the time of
enrollment under the plan and at such other times as the
plan offers the participant a choice of coverage options.
‘‘(b) POINT-OF-SERVICE COVERAGE DEFINED.—In
this section, the term ‘point-of-service coverage’ means,
with respect to benefits covered under a group health plan,
coverage of such benefits when provided by a nonpartici-
pating health care professional.
‘‘(c) SMALL EMPLOYER EXEMPTION.—
‘‘(1) IN GENERAL.—The requirement of sub-
section (a) shall not apply to a group health plan
with respect to a small employer if the employer
demonstrates that compliance with such requirement
would result in an increase in overall costs to the
employer.
‘‘(2) SMALL
EMPLOYER
DEFINED.—For pur-
poses of subparagraph (A), the term ‘small em-
ployer’ means, in connection with a group health
plan with respect to a calendar year and a plan year,
an employer who employed an average of fewer than
25 employees on days during the preceding calendar
year and fewer than 25 employees on the first day
of the plan year.
‘‘(3) DETERMINATION
OF
EMPLOYER
SIZE.—
For purposes of this subsection, the provisions of
subparagraph (C) of section 712(c)(1) shall apply in
determining employer size.
‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed—
‘‘(1) as requiring coverage for benefits for a
particular type of health care professional;
‘‘(2) as requiring an increase in the level of em-
ployer contributions or as permitting an employer to
comply with the requirements of this section by
means of reducing the level of employer contribu-
tions attributable to coverage with respect to any
participant or group of participants in relation to
the level that would otherwise be maintained if such
requirements did not apply;
‘‘(3) as preventing a group health plan from
imposing, on a participant who exercises the point-
of-service coverage option under subsection (a), the
additional cost of creation and maintenance of the
option as well as any additional other costs (includ-
ing additional cost-sharing) attributable to the op-
tion; or
‘‘(4) to require that a group health plan include
coverage of health care professionals that the plan
excludes because of fraud, quality of care, or other
similar reasons with respect to such professionals.
‘‘SEC. 723. PATIENT ACCESS TO OBSTETRIC AND GYNECO-
LOGICAL CARE.
‘‘(a) GENERAL RIGHTS.—
‘‘(1) DIRECT ACCESS.—A group health plan, or
health insurance coverage offered by a health insur-
ance issuer in connection with such a plan, described
in subsection (b) may not require authorization or
referral by the plan, issuer, or any other person, in-
cluding the primary care provider described in sub-
section (b)(2), in the case of a female participant or
beneficiary who seeks coverage for obstetric or gyne-
cological care provided by a participating physician
who specializes in obstetrics or gynecology.
‘‘(2) OBSTETRIC AND GYNECOLOGICAL CARE.—
Such a plan or issuer shall treat the provision of ob-
stetric and gynecological care, and the ordering of
related obstetric and gynecological items and serv-
ices, pursuant to the direct access described under
paragraph (1), by a participating physician who spe-
cializes in obstetrics or gynecology as the authoriza-
tion of the primary care provider.
‘‘(b) APPLICATION
OF SECTION.—A group health
plan, or health insurance coverage offered by a health in-
surance issuer in connection with such a plan, described
in this subsection is a plan or coverage that—
‘‘(1) 
provides 
coverage 
for 
obstetric 
or
gynecologic care; and
‘‘(2) requires the designation by a participant
or beneficiary of a participating primary care pro-
vider other than a physician who specializes in ob-
stetrics or gynecology.
‘‘(c) RULES OF CONSTRUCTION.—Nothing in this
section shall be construed—
‘‘(1) to require that a group health plan or
health insurance issuer approve or provide coverage
for—
‘‘(A) any items or services that are not
covered under the terms and conditions of the
group health plan or the health insurance cov-
erage;
‘‘(B) any items or services that are not
medically necessary and appropriate; or
‘‘(C) any items or services that are pro-
vided, ordered, or otherwise authorized under
‘‘(1) IN GENERAL.—A group health plan, and a
health insurance issuer that offers health insurance
coverage in connection with such a plan, shall ensure
that participants and beneficiaries receive timely
coverage for access to specialists who are appro-
priate to the medical condition of the participant or
beneficiary, 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 ben-
efits or services;
‘‘(B) to prohibit a plan or issuer from in-
cluding providers in the network only to the ex-
tent necessary to meet the needs of the plan’s
participants and beneficiaries; or
‘‘(C) to override any State licensure or
scope-of-practice law.
‘‘(3) ACCESS TO CERTAIN PROVIDERS.—
‘‘(A) PARTICIPATING
PROVIDERS.—Noth-
ing in this section shall be construed to prohibit
a group health plan or health insurance issuer
from requiring that a participant or beneficiary
obtain specialty care from a participating spe-
cialist.
‘‘(B) NONPARTICIPATING PROVIDERS.—
‘‘(i) IN
GENERAL.—With respect to
specialty care under this section, if a group
health plan or health insurance issuer de-
termines that a participating specialist is
not available to provide such care to the
participant or beneficiary, the plan or
issuer shall provide for coverage of such
care by a nonparticipating specialist.
‘‘(ii) TREATMENT
OF
NONPARTICI-
PATING
PROVIDERS.—If a group health
plan or health insurance issuer refers a
participant or beneficiary to a nonpartici-
pating specialist pursuant to clause (i),
such specialty care shall be provided at no
additional cost to the participant or bene-
ficiary beyond what the participant or ben-
eficiary would otherwise pay for such spe-
cialty care if provided by a participating
specialist.
‘‘(b) REFERRALS.—
‘‘(1) AUTHORIZATION.—Nothing in this section
shall be construed to prohibit a group health plan or
health insurance issuer from requiring an authoriza-
tion in order to obtain coverage for specialty services
so long as such authorization is for an appropriate
duration or number of referrals.
‘‘(2) SPECIALISTS AS GATEKEEPER FOR TREAT-
MENT OF ONGOING SPECIAL CONDITIONS.—
‘‘(A) IN GENERAL.—A group health plan,
or a health insurance issuer in connection with
the provision of group health insurance cov-
erage, shall have a procedure by which an indi-
vidual who is a participant or beneficiary and
who has an ongoing special condition (as de-
fined in subparagraph (C)) may request and re-
ceive a referral to a specialist for such condition
who shall be responsible for and capable of pro-
viding and coordinating the individual’s care
with respect to the condition. Under such proce-
dures if such an individual’s care would most
appropriately be coordinated by such a spe-
cialist, such plan or issuer shall refer the indi-
vidual to such specialist.
‘‘(B) TREATMENT FOR RELATED REFER-
RALS.—Such specialists shall be permitted to
treat the individual without a referral from the
individual’s primary care provider and may au-
thorize such referrals, procedures, tests, and
other medical services as the individual’s pri-
mary care provider would otherwise be per-
mitted to provide or authorize, subject to the
terms of the treatment (referred to in sub-
section (a)(3)(A)) with respect to the ongoing
special condition.
‘‘(C) ONGOING
SPECIAL
CONDITION
DE-
FINED.—In this paragraph, the term ‘ongoing
special condition’ means a condition or disease
that—
‘‘(i) is life-threatening, degenerative,
congenital, or disabling, and
‘‘(ii) requires specialized medical care
over a prolonged period of time.
‘‘(D) TERMS OF REFERRAL.—The provi-
sions of paragraphs (3) through (5) of sub-
section (a) apply with respect to referrals under
subparagraph (A) in the same manner as they
apply to referrals under subsection (a)(1).
‘‘(E) CONSTRUCTION.—Nothing in this
paragraph shall be construed as preventing an
individual who is a participant or beneficiary
and who has an ongoing special condition from
having the individual’s primary care physician
assume the responsibilities for providing and co-
ordinating care described in subparagraph (A).
‘‘(c) TREATMENT PLANS.—
‘‘(1) IN
GENERAL.—Nothing in this section
shall be construed to prohibit a group health plan or
health insurance issuer from requiring that specialty
care be provided pursuant to a treatment plan so
long as the treatment plan is—
‘‘(A) developed by the specialist, in con-
sultation with the case manager or primary
care provider, and the participant or bene-
ficiary;
‘‘(B) approved by the plan or issuer in a
timely manner if the plan requires such ap-
proval; and
‘‘(C) in accordance with the applicable
quality assurance and utilization review stand-
ards 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 necessary medical in-
formation.
‘‘(d) SPECIALIST DEFINED.—For purposes of this
section, the term ‘specialist’ means, with respect to the
medical condition of the participant or beneficiary, a
health care professional, facility, or center that has ade-
quate expertise (including age-appropriate expertise)
through appropriate training and experience or a physi-
cian pathologist who has adequate expertise through ap-
propriate training and experience.
‘‘SEC. 726. CONTINUITY OF CARE.
‘‘(a) TERMINATION OF PROVIDER.—If a contract be-
tween a group health plan, or health insurance issuer that
offers health insurance coverage in connection with such
a plan, and a treating health care provider is terminated
(as defined in paragraph (e)(4)), or 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, and an individual who is a participant
or beneficiary in the plan is undergoing an active course
of treatment for a serious and complex condition, institu-
tional care, pregnancy, or terminal illness from the pro-
vider at the time the plan or issuer receives or provides
notice of such termination, the plan or issuer shall—
‘‘(1) notify the individual, or arrange to have
the individual notified pursuant to subsection (d)(2),
on a timely basis of such termination;
‘‘(2) provide the individual with an opportunity
to notify the plan or issuer of the individual’s need
for transitional care; and
‘‘(3) subject to subsection (c), permit the indi-
vidual to elect to continue to be covered with respect
to the active course of treatment with the provider’s
consent during a transitional period (as provided for
under subsection (b)).
‘‘(b) TRANSITIONAL PERIOD.—
‘‘(1) SERIOUS
AND
COMPLEX
CONDITIONS.—
The transitional period under this section with re-
spect to a serious and complex condition shall extend
for up to 90 days from the date of the notice de-
scribed in subsection (a)(1) of the provider’s termi-
nation.
‘‘(2) INSTITUTIONAL OR INPATIENT CARE.—
‘‘(A) IN GENERAL.—The transitional pe-
riod under this section for institutional or non-
elective inpatient care from a provider shall ex-
tend until the earlier of—
‘‘(i) the expiration of the 90-day pe-
riod beginning on the date on which the
notice described in subsection (a)(1) of the
provider’s termination is provided; or
‘‘(ii) the date of discharge of the indi-
vidual from such care or the termination of
the period of institutionalization.
‘‘(B) SCHEDULED CARE.—The 90 day lim-
itation described in subparagraph (A)(i) shall
include post-surgical follow-up care relating to
non-elective surgery that has been scheduled be-
fore the date of the notice of the termination of
the provider under subsection (a)(1).
‘‘(3) PREGNANCY.—If—
‘‘(A) a participant or beneficiary was de-
termined to be pregnant at the time of a pro-
vider’s termination of participation, and
‘‘(B) the provider was treating the preg-
nancy before date of the termination,
the transitional period under this subsection with re-
spect to provider’s treatment of the pregnancy shall
extend through the provision of post-partum care di-
rectly related to the delivery.
‘‘(4) TERMINAL ILLNESS.—If—
‘‘(A) a participant or beneficiary was de-
termined to be terminally ill (as determined
under section 1861(dd)(3)(A) of the Social Se-
curity Act) at the time of a provider’s termi-
nation of participation; and
‘‘(B) the provider was treating the ter-
minal illness before the date of termination;
the transitional period under this subsection shall
extend for the remainder of the individual’s life for
care that is directly related to the treatment of the
terminal illness.
‘‘(c) PERMISSIBLE TERMS
AND CONDITIONS.—A
group health plan, and a health insurance issuer that of-
fers health insurance coverage in connection with such a
plan, 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
individual involved (with respect to cost-sharing) at
the rates applicable prior to the start of the transi-
tional period as payment in full (or at the rates ap-
plicable 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
individual in an amount that would exceed the cost-
sharing that could have been imposed if the contract
referred to in this section 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 para-
graph (1) (to the extent such quality assurance
standards meet the professionally accepted stand-
ards of care) 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 (to the extent such policies and pro-
cedures meet the professionally accepted standards
of care), including procedures regarding referrals
and obtaining prior authorization and providing
services pursuant to a treatment plan (if any) ap-
proved 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 con-
tract under subsection (a) to prevent a group health
plan or health insurance issuer from requiring that
the health care provider—
‘‘(A) notify participants or beneficiaries of
their rights under this section; or
‘‘(B) provide the plan or issuer with the
name of each participant or beneficiary who the
provider believes is eligible for transitional care
under this section.
‘‘(e) DEFINITIONS.—In this section:
‘‘(1) CONTRACT.—The term ‘contract between a
plan or issuer and a treating health care provider’
shall include a contract between such a plan or
issuer and an organized network of providers.
‘‘(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 de-
livery 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 en-
gage 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 re-
spect to a participant or beneficiary under the plan
or coverage, a condition that is medically deter-
minable and—
‘‘(A) in the case of an acute illness, is a
condition serious enough to require specialized
medical treatment to avoid the reasonable possi-
bility of death or permanent harm; or
‘‘(B) in the case of a chronic illness or con-
dition, is an illness or condition that—
‘‘(i) is complex and difficult to man-
age;
‘‘(ii) is disabling or life-threatening;
and
‘‘(iii) requires—
‘‘(I) frequent monitoring over a
prolonged period of time and requires
substantial on-going specialized med-
ical care; or
‘‘(II) frequent ongoing specialized
medical care across a variety of do-
mains of care.
‘‘(4) TERMINATED.—The term ‘terminated’ in-
cludes, with respect to a contract (as defined in
paragraph (1)), the expiration or nonrenewal of the
contract by the group health plan or the health in-
surance issuer, but does not include a termination of
the contract by the plan or issuer for failure to meet
applicable quality standards or for fraud.
SEC. 727. PROHIBITION OF INTERFERENCE WITH CERTAIN
MEDICAL COMMUNICATIONS.
(a) GENERAL RULE.—The provisions of any contract
or agreement, or the operation of any contract or agree-
ment, 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 pro-
viders) shall not prohibit or otherwise restrict a health
care professional from advising such a participant, bene-
ficiary, 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, re-
gardless 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 communica-
tions in violation of subsection (a) shall be null and void.
‘‘SEC. 728. PATIENT’S RIGHT TO PRESCRIPTION DRUGS.
‘‘To the extent that a group health plan, or health
insurance coverage offered by a health insurance issuer
in connection with such a plan, provides coverage for bene-
fits with respect to prescription drugs, and limits such cov-
erage to drugs included in a formulary, the plan or issuer
shall—
‘‘(1) ensure the participation of physicians and
pharmacists in developing and reviewing such for-
mulary;
‘‘(2) disclose the nature of such limits on such
coverage to providers whose services (or reimburse-
ment therefor) are included under the coverage of
the plan (in addition to disclosure to participants
and beneficiaries upon request in accordance with
section 714(c)(3)), and
‘‘(3) in accordance with the applicable quality
assurance and utilization review standards of the
plan or issuer, provide for exceptions from the for-
mulary limitation when a non-formulary alternative
is medically necessary and appropriate.
‘‘SEC. 729. SELF-PAYMENT FOR BEHAVIORAL HEALTH CARE
SERVICES.
‘‘(a) IN GENERAL.—A group health plan, and a
health insurance issuer in relation to its offering of health
insurance coverage in connection with such a plan, may
not—
‘‘(1) prohibit or otherwise discourage a partici-
pant or beneficiary from self-paying for behavioral
health care services once the plan or issuer has de-
nied coverage for such services; or
‘‘(2) terminate a health care provider because
such provider permits participants or beneficiaries to
self-pay for behavioral health care services—
‘‘(A) that are not otherwise covered under
the plan or coverage; or
‘‘(B) for which the group health plan or
coverage provides limited coverage, to the ex-
tent that the plan or issuer denies coverage of
the services.
‘‘(b) RULE
OF CONSTRUCTION.—Nothing in sub-
section (a)(2)(B) shall be construed as prohibiting a group
health plan or health insurance issuer from terminating
a contract with a health care provider for failure to meet
applicable quality standards or for fraud.
‘‘SEC. 730. COVERAGE FOR INDIVIDUALS PARTICIPATING IN
APPROVED CANCER CLINICAL TRIALS.
‘‘(a) COVERAGE.—
‘‘(1) IN GENERAL.—If a group health plan, or
a health insurance issuer offering health insurance
coverage in connection with such a plan, provides
coverage to a qualified individual (as defined in sub-
section (b)), the plan or issuer—
‘‘(A) may not deny the individual partici-
pation in the clinical trial referred to in sub-
section (b)(2);
‘‘(B) subject to subsections (b), (c), and
(d), may not deny (or limit or impose additional
conditions on) the coverage of routine patient
costs for items and services furnished in con-
nection with participation in the trial; and
‘‘(C) may not discriminate against the in-
dividual on the basis of the individual’s partici-
pation in such trial.
‘‘(2) EXCLUSION OF CERTAIN COSTS.—For pur-
poses 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 con-
strued 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 pur-
poses of subsection (a), the term ‘qualified individual’
means an individual who is a participant or beneficiary
in a group health plan who meets the following conditions:
‘‘(1)(A) The individual has been diagnosed with
cancer.
‘‘(B) The individual is eligible to participate in
an approved clinical trial according to the trial pro-
tocol 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 partici-
pating health care professional and has con-
cluded 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 individual provides medical and
scientific information establishing that the indi-
vidual’s participation in such trial would be ap-
propriate based upon the individual meeting the
conditions described in paragraph (1).
‘‘(c) PAYMENT.—
‘‘(1) IN GENERAL.—Under this section a group
health plan (or health insurance issuer offering
health insurance) shall provide for payment for rou-
tine patient costs described in subsection (a)(2) but
is not required to pay for costs of items and services
that are reasonably expected to be paid for by the
sponsors of an approved clinical trial.
‘‘(2) ROUTINE PATIENT CARE COSTS.—For pur-
poses of this section—
‘‘(A) IN GENERAL.—The term ‘routine pa-
tient care costs’ includes the costs associated
with the provision of items and services that—
‘‘(i) would otherwise be covered under
the group health plan if such items and
services were not provided in connection
with an approved clinical trial program;
and
‘‘(ii) are furnished according to the
protocol of an approved clinical trial pro-
gram.
‘‘(B) EXCLUSION.—Such term does include
the costs associated with the provision of—
‘‘(i) an investigational drug or device,
unless the Secretary has authorized the
manufacturer of such drug or device to
charge for such drug or device; or
‘‘(ii) any item or service supplied
without charge by the sponsor of the ap-
proved clinical trial program.
‘‘(3) 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 pay-
ment rate shall be at the rate the plan or issuer
would normally pay for comparable items or
services under subparagraph (A).
‘‘(d) APPROVED CLINICAL TRIAL DEFINED.—In this
section, the term ‘approved clinical trial’ means a cancer
clinical research study or cancer clinical investigation ap-
proved by an Institutional Review Board.
‘‘(e) CONSTRUCTION.—Nothing in this section shall
be construed to limit a plan’s or issuer’s coverage with
respect to clinical trials.
‘‘(f) PLAN SATISFACTION
OF CERTAIN REQUIRE-
MENTS; RESPONSIBILITIES OF FIDUCIARIES.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, 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 requirements of this section 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.
‘‘(2) CONSTRUCTION.—Nothing in this section
shall be construed to affect or modify the respon-
sibilities of the fiduciaries of a group health plan
under part 4 of subtitle B.
‘‘SEC. 730A. PROHIBITION OF DISCRIMINATION AGAINST
PROVIDERS BASED ON LICENSURE.
‘‘(a) IN GENERAL.—A group health plan, and a
health insurance issuer in relation to its offering of health
insurance coverage in connection with such a plan, shall
not discriminate with respect to participation or indem-
nification 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 certifi-
cation.
‘‘(b) CONSTRUCTION.—Subsection (a) shall not be
construed—
‘‘(1) as requiring the coverage under a group
health plan or health insurance coverage of a par-
ticular 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 partici-
pants or beneficiaries or from establishing any meas-
ure 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;
‘‘(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; or
‘‘(4) as prohibiting a family practice physician
with appropriate expertise from providing pediatric
or obstetric or gynecological care.
‘‘SEC. 730B. PROHIBITION AGAINST IMPROPER INCENTIVE
ARRANGEMENTS.
‘‘(a) IN GENERAL.—A group health plan and a health
insurance issuer offering health insurance coverage in con-
nection with such a plan may not operate any physician
incentive plan (as defined in subparagraph (B) of section
1876(i)(8) of the Social Security Act) unless the require-
ments described in clauses (i), (ii)(I), and (iii) of subpara-
graph (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 1876(i)(8) of the
Social Security Act to the Secretary, an eligible organiza-
tion, 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 or beneficiary with the plan or organiza-
tion, respectively.
‘‘(c) CONSTRUCTION.—Nothing in this section shall
be construed as prohibiting all capitation and similar ar-
rangements or all provider discount arrangements.
‘‘SEC. 730C. PAYMENT OF CLEAN CLAIMS.
‘‘A group health plan, and a health insurance issuer
offering group health insurance coverage, shall provide for
prompt payment of claims submitted for health care serv-
ices or supplies furnished to a participant or beneficiary
with respect to benefits covered by the plan or issuer, in
a manner consistent with the provisions of sections
1816(c)(2) and 1842(c)(2) of the Social Security Act (42
U.S.C. 1395h(c)(2) and 42 U.S.C. 1395u(c)(2)), except
that for purposes of this section, subparagraph (C) of sec-
tion 1816(c)(2) of the Social Security Act shall be treated
as applying to claims received from a participant or bene-
ficiary as well as claims referred to in such subparagraph.
‘‘SEC. 730D. GENERALLY APPLICABLE PROVISION.
‘‘In the case of a group health plan or health insur-
ance coverage that provides benefits under 2 or more cov-
erage options, the requirements of this subpart shall apply
separately with respect to each coverage option.
‘‘SEC. 730E. EXCLUSION FROM ACCESS TO MANAGED CARE
PROVISIONS 
FOR 
FEE-FOR-SERVICE 
COV-
ERAGE.
‘‘(a) IN GENERAL.—The provisions of sections 721
through 730D 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 subsection (b)).
‘‘(b) FEE-FOR-SERVICE COVERAGE DEFINED.—For
purposes of this section, the term ‘fee-for-service coverage’
means coverage under a group health plan or health insur-
ance coverage that—
‘‘(1) reimburses hospitals, health professionals,
and other providers on a fee-for-service basis without
placing the provider at financial risk;
‘‘(2) 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;
‘‘(3) allows access to any provider that is law-
fully 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
‘‘(4) for which the plan or issuer does not re-
quire prior authorization before providing for any
health care services.
‘‘SEC. 730F. ADDITIONAL DEFINITIONS.
‘‘For purposes of this subpart, section 714, and sec-
tions 503A through 503D:
‘‘(1) APPLICABLE AUTHORITY.—The term ‘ap-
plicable 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
subpart, the applicable State authority (as de-
fined 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) GROUP HEALTH PLAN.—The term ‘group
health plan’ has the meaning given such term in sec-
tion 733(a), except that such term includes a em-
ployee welfare benefit plan treated as a group health
plan under section 732(d) or defined as such a plan
under section 607(1).
‘‘(3) 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 op-
erating within the scope of such licensure, accredita-
tion, or certification.
‘‘(4) HEALTH
CARE
PROVIDER.—The term
‘health care provider’ includes an allopathic or osteo-
pathic physician or other health care professional, as
well as an institutional or other facility or agency
that provides health care services and that is li-
censed, accredited, or certified to provide health care
items and services under applicable State law.
‘‘(5) NETWORK.—The term ‘network’ means,
with respect to a group health plan or health insur-
ance 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 or bene-
ficiaries.
‘‘(6) 
NONPARTICIPATING.—The 
term 
‘non-
participating’ means, with respect to a health care
provider that provides health care items and services
to a participant or beneficiary under group health
plan or health insurance coverage, a health care pro-
vider that is not a participating health care provider
with respect to such items and services.
‘‘(7) PARTICIPATING.—The term ‘participating’
means, with respect to a health care provider that
provides health care items and services to a partici-
pant or beneficiary under group health plan or
health insurance coverage offered by a health insur-
ance issuer, a health care provider that furnishes
such items and services under a contract or other
arrangement with the plan or issuer.
‘‘(8) 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.
‘‘(9) TERMS
AND
CONDITIONS.—The term
‘terms and conditions’ includes, with respect to a
group health plan or health insurance coverage, re-
quirements imposed under this subpart (and section
714 and sections 503A through 503D) with respect
to the plan or coverage.’’.
(b) RULE WITH RESPECT TO CERTAIN PLANS.—
(1) IN GENERAL.—Notwithstanding any other
provision of law, health insurance issuers may offer,
and eligible individuals may purchase, high deduct-
ible health plans described in section 220(c)(2)(A) of
the Internal Revenue Code of 1986. Effective for the
5-year period beginning on the date of the enact-
ment of this Act, such health plans shall not be re-
quired to provide payment for any health care items
or services that are exempt from the plan’s deduct-
ible.
(2) EXISTING STATE LAWS.—A State law relat-
ing to payment for health care items and services in
effect on the date of enactment of this Act that is
preempted under paragraph (1), shall not apply to
high deductible health plans after the expiration of
the 5-year period described in such paragraph unless
the State reenacts such law after such period.
(c) CONFORMING AMENDMENT.—The table of con-
tents in section 1 of the Employee Retirement Income Se-
curity Act of 1974 is amended—
(1) in the item relating to subpart C of part 7
of subtitle B of title I, by striking ‘‘Subpart C’’ and
inserting ‘‘Subpart D’’; and
(2) by adding at the end of the items relating
to subpart B of part 7 of subtitle B of title I, the
following:
‘‘SUBPART C—PATIENT RIGHT TO MEDICAL ADVICE AND CARE
‘‘Sec. 721. Access to emergency medical care.
‘‘Sec. 722. Offering of choice of coverage options.
‘‘Sec. 723. Patient access to obstetric and gynecological care.
‘‘Sec. 724. Access to pediatric care.
‘‘Sec. 725. Timely access to specialists.
‘‘Sec. 726. Continuity of care.
‘‘Sec. 727. Protection of patient-provider communications.
‘‘Sec. 728. Patient’s right to prescription drugs.
‘‘Sec. 729. Self-payment for behavioral health care services.
‘‘Sec. 730. Coverage for individuals participating in approved cancer clinical
trials.
‘‘Sec. 730B. Prohibition against improper incentive arrangements.
‘‘Sec. 730C. Payment of clean claims.
‘‘Sec. 730D. Generally applicable provision.’’.
SEC. 102. CONFORMING AMENDMENTS TO THE PUBLIC
HEALTH SERVICE ACT.
(a) GROUP HEALTH PLANS.—Title XXVII of the
Public Health Service Act is amended by inserting after
section 2706 the following new section:
‘‘SEC. 2707. STANDARD RELATING TO PATIENTS’ BILL OF
RIGHTS.
‘‘Subject to section 2724, a group health plan, and
health insurance coverage offered in connection with a
group health plan, shall comply with the requirements of
subpart C of part 7 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (as in effect as
of the date of the enactment of such Act) and such re-
quirements shall be deemed to be incorporated into this
section.’’.
(b) INDIVIDUAL HEALTH PLANS.—Title XXVII of
the Public Health Service Act is amended by inserting
after section 2752 the following new section:
‘‘SEC. 2753. STANDARD RELATING TO PATIENTS’ BILL OF
RIGHTS.
‘‘The provisions of section 2706 shall apply to health
insurance coverage offered by a health insurance issuer
in the individual market for an enrollee in the same man-
ner as they apply to health insurance coverage offered by
a health insurance issuer in connection with a group
health plan for a participant or beneficiary in the small
or large group market and the requirements referred to
in such section shall be deemed to be incorporated into
this section.’’.
SEC. 103. CONFORMING AMENDMENTS TO 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:
‘‘Sec. 9813. Standard relating to patients’ bill of rights.’’;
and
(2) by inserting after section 9812 the fol-
lowing:
‘‘SEC. 9813. STANDARD RELATING TO PATIENTS’ BILL OF
RIGHTS.
‘‘A group health plan shall comply with the require-
ments of subpart C of part 7 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974 (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.’’.
Subtitle B—Right to Information
About Plans and Providers
SEC. 111. INFORMATION ABOUT PLANS AND COVERAGE
UNDER ERISA.
(a) 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
(29 U.S.C. 1185 et seq.) is amended by adding at the end
the following:
‘‘SEC. 714. PATIENT ACCESS TO INFORMATION.
‘‘(a) DISCLOSURE REQUIREMENT.—
‘‘(1) GROUP HEALTH PLANS.—A group health
plan shall—
‘‘(A) provide to participants and bene-
ficiaries at the time of initial coverage under
the plan (or the effective date of this section, in
the case of individuals who are participants or
beneficiaries as of such date), and at least an-
nually thereafter, the information described in
subsection (b);
‘‘(B) provide to participants and bene-
ficiaries, within a reasonable period (as speci-
fied by the Secretary) before or after the date
of significant changes in the information de-
scribed in subsection (b), information on such
significant changes; and
‘‘(C) upon request, make available to par-
ticipants and beneficiaries, the Secretary, and
prospective participants and beneficiaries, the
information described in subsection (b) or (c).
The plan may charge a reasonable fee for provision
in printed form of any of the information described
in subsection (b) or (c) more than once during any
plan year.
‘‘(2) HEALTH INSURANCE ISSUERS.—A health
insurance issuer in connection with the provision of
health insurance coverage in connection with a group
health plan shall—
‘‘(A) provide to participants and bene-
ficiaries enrolled under such coverage at the
time of enrollment, and at least annually there-
after, the information described in subsection
(b);
‘‘(B) provide to such participants and
beneficiaries, within a reasonable period (as
specified by the Secretary) before or after the
date of significant changes in the information
described in subsection (b), information in
printed form on such significant changes; and
‘‘(C) upon request, make available to the
Secretary, to individuals who are prospective
participants and beneficiaries, and to the public
the information described in subsection (b) or
(c).
‘‘(3) EMPLOYERS.—Effective 5 years after the
date this part first becomes effective, each employer
(other than an employer described in paragraph (1)
of subsection (d)) shall provide to each employee at
least annually information (consistent with such sub-
section) on the amount that the employer contrib-
utes on behalf of the employee (and any dependents
of the employee) for health benefits coverage.
‘‘(b) INFORMATION PROVIDED.—The information de-
scribed in this subsection with respect to a group health
plan or health insurance coverage offered by a health in-
surance issuer shall be provided to a participant or bene-
ficiary free of charge at least once a year and includes
the following:
‘‘(1) SERVICE AREA.—The service area of the
plan or issuer.
‘‘(2) BENEFITS.—Benefits offered under the
plan or coverage, including—
‘‘(A) those that are covered benefits, limits
and conditions on such benefits, and those ben-
efits that are explicitly excluded from coverage;
‘‘(B) cost sharing, such as deductibles, co-
insurance, and copayment amounts, including
any liability for balance billing, any maximum
limitations on out of pocket expenses, and the
maximum out of pocket costs for services that
are provided by nonparticipating providers or
that are furnished without meeting the applica-
ble utilization review requirements;
‘‘(C) the extent to which benefits may be
obtained from nonparticipating providers;
‘‘(D) the extent to which a participant or
beneficiary may select from among participating
providers and the types of providers partici-
pating in the plan or issuer network;
‘‘(E) process for determining experimental
coverage;
‘‘(F) use of a prescription drug formulary
(if any); and
‘‘(G) any definition of medical necessity
used in making coverage determinations by the
plan, issuer, or claims administrator.
‘‘(3) ACCESS.—A description of the following:
‘‘(A) The number, mix, and distribution of
providers under the plan or coverage.
‘‘(B) Out-of-network coverage (if any) pro-
vided by the plan or coverage.
‘‘(C) Any point-of-service option (including
any supplemental premium or cost-sharing for
such option).
‘‘(D) The procedures for participants and
beneficiaries to select, access, and change par-
ticipating primary and specialty providers.
‘‘(E) The rights and procedures for obtain-
ing referrals (including standing referrals) to
participating and nonparticipating providers.
‘‘(F) The name, address, and telephone
number of participating health care providers
and an indication of whether each such provider
is available to accept new patients.
‘‘(G) Any limitations imposed on the selec-
tion of qualifying participating health care pro-
viders, including any limitations imposed under
section 812(b)(2).
‘‘(4) 
OUT-OF-AREA
COVERAGE.—Out-of-area
coverage provided by the plan or issuer.
‘‘(5) EMERGENCY
COVERAGE.—Coverage of
emergency services, including—
‘‘(A) the appropriate use of emergency
services, including use of the 911 telephone sys-
tem or its local equivalent in emergency situa-
tions and an explanation of what constitutes an
emergency situation;
‘‘(B) the process and procedures of the
plan or issuer for obtaining emergency services;
and
‘‘(C) the locations of (i) emergency depart-
ments, and (ii) other settings, in which plan
physicians and hospitals provide emergency
services and post-stabilization care.
‘‘(6) PRIOR AUTHORIZATION RULES.—Rules re-
garding prior authorization or other review require-
ments that could result in noncoverage or non-
payment.
‘‘(7) GRIEVANCE AND APPEALS PROCEDURES.—
All appeal or grievance rights and procedures under
the plan or coverage, including the method for filing
grievances and the time frames and circumstances
for acting on grievances and appeals, who is the ap-
plicable authority with respect to the plan or issuer.
‘‘(8) ACCOUNTABILITY.—A description of the
legal recourse options available for participants and
beneficiaries under the plan including—
‘‘(A) the preemption that applies under
section 514 to certain actions arising out of the
provision of health benefits; and
‘‘(B) the extent to which coverage decisions
made by the plan are subject to internal review
or any external review and the proper time
frames under
‘‘(9) QUALITY
ASSURANCE.—Any information
made public by an accrediting organization in the
process of accreditation of the plan or issuer or any
additional quality indicators the plan or issuer
makes available.
‘‘(10) INFORMATION ON ISSUER.—Notice of ap-
propriate mailing addresses and telephone numbers
to be used by participants and beneficiaries in seek-
ing information or authorization for treatment.
‘‘(11) AVAILABILITY OF INFORMATION ON RE-
QUEST.—Notice that the information described in
subsection (c) is available upon request.
‘‘(c) INFORMATION MADE AVAILABLE UPON RE-
QUEST.—The information described in this subsection is
the following:
‘‘(1) UTILIZATION REVIEW ACTIVITIES.—A de-
scription of procedures used and requirements (in-
cluding circumstances, time frames, and appeal
rights) under any utilization review program under
section 801.
‘‘(2) GRIEVANCE
AND
APPEALS
INFORMA-
TION.—Information on the number of grievances
and appeals and on the disposition in the aggregate
of such matters.
‘‘(3) FORMULARY
RESTRICTIONS.—A descrip-
tion of the nature of any drug formulary restric-
tions.
‘‘(4) PARTICIPATING PROVIDER LIST.—A list of
current participating health care providers.
‘‘(d) EMPLOYER INFORMATION.—
‘‘(1) SMALL
EMPLOYER
EXEMPTION.—Sub-
section (a)(3) shall not apply to an employer that is
a 
small 
employer 
(as 
defined 
in 
section
712(c)(1)(B)) or would be such an employer if ‘100’
were substituted for ‘50’ in such section.
‘‘(2) COMPUTATION.—The amount described in
subsection (a)(3) may be computed on an average,
per employee basis, and may be based on rules simi-
lar to the rules applied in computing the applicable
premium under section 604.
‘‘(3) FORM OF DISCLOSURE.—The information
under subsection (a)(3) may be provided in any rea-
sonable form, including as part of the summary plan
description, a letter, or information accompanying a
W–2 form.
‘‘(e) CONSTRUCTION.—Nothing in this section shall
be construed as requiring public disclosure of individual
contracts or financial arrangements between a group
health plan or health insurance issuer and any provider.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 732(a) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1191a(a))
is amended by striking ‘‘section 711’’ and inserting
‘‘sections 711 and 714’’.
(2) The table of contents in section 1 of the
Employee Retirement Income Security Act of 1974
(29 U.S.C. 1001) is amended by inserting after the
item relating to section 713, the following:
‘‘Sec 714. Patient access to information.’’.
(3) Section 502(b)(3) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C.
1132(b)(3)) is amended by striking ‘‘733(a)(1))’’
and inserting ‘‘733(a)(1)), except with respect to the
requirements of section 714’’.
SEC. 112. CONFORMING AMENDMENTS TO PUBLIC HEALTH
SERVICE ACT.
(a) GROUP HEALTH PLANS.—Title XXVII of the
Public Health Service Act, as amended by section 102(a),
is amended by inserting after section 2707 the following
new section:
‘‘SEC. 2708. STANDARD RELATING TO PATIENT ACCESS TO
INFORMATION.
‘‘A group health plan, and health insurance coverage
offered in connection with a group health plan, shall com-
ply with the requirements of section 714 of the Employee
Retirement Income Security Act of 1974 (as in effect as
of the date of the enactment of such Act) and such re-
quirements shall be deemed to be incorporated into this
section.’’.
(b) INDIVIDUAL HEALTH PLANS.—Title XXVII of
the Public Health Service Act, as amended by section
102(b), is amended by inserting after section 2753 the fol-
lowing new section:
‘‘SEC. 2754. STANDARD RELATING TO PATIENT ACCESS TO
INFORMATION.
‘‘The provisions of section 2707 shall apply to health
insurance coverage offered by a health insurance issuer
in the individual market for an enrollee in the same man-
ner as they apply to health insurance coverage offered by
a health insurance issuer in connection with a group
health plan for a participant or beneficiary in the small
or large group market and the requirements referred to
in such section shall be deemed to be incorporated into
this section.’’.
SEC. 113. CONFORMING AMENDMENTS TO THE INTERNAL
REVENUE CODE OF 1986.
Subchapter B of chapter 100 of the Internal Revenue
Code of 1986, as amended by section 103, is amended—
(1) in the table of sections, by inserting after
the item relating to section 9813 the following new
item:
‘‘Sec. 9814. Standard relating to patient access to information.’’;
and
(2) by inserting after section 9812 the fol-
lowing:
‘‘SEC. 9814. STANDARD RELATING TO PATIENT ACCESS TO
INFORMATION.
‘‘A group health plan shall comply with the require-
ments of section 714 of the Employee Retirement Income
Security Act of 1974 (as in effect as of the day after the
date of the enactment of such Act) and such requirements
shall be deemed to be incorporated into this section.’’.
Subtitle C—Right to Hold Health
Plans Accountable
SEC. 121. AMENDMENTS TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.
(a) IN GENERAL.—Part 5 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974 is
amended by inserting after section 503 (29 U.S.C. 1133)
the following new sections:
‘‘SEC. 503A. UTILIZATION REVIEW ACTIVITIES.
‘‘(a) COMPLIANCE WITH REQUIREMENTS.—
‘‘(1) IN GENERAL.—A group health plan, and a
health insurance issuer that provides health insur-
ance coverage, shall conduct utilization review activi-
ties in connection with the provision of benefits
under such plan or coverage only in accordance with
a utilization review program that meets the require-
ments of this section and section 503B.
‘‘(2) USE
OF
OUTSIDE
AGENTS.—Nothing in
this section shall be construed as preventing a group
health plan or health insurance issuer from arrang-
ing through a contract or otherwise for persons or
entities to conduct utilization review activities on be-
half 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 pur-
poses 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 effi-
ciency of health care services, procedures or settings,
and includes prospective review, concurrent review,
second opinions, case management, discharge plan-
ning, 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 physicians or dentists, as determined
by the plan, pursuant to the program. Such cri-
teria 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 cri-
teria and pediatric-specific criteria where avail-
able 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 or beneficiary under
such a program, the program shall not, pursu-
ant to retrospective review, revise or modify the
specific standards, criteria, or procedures used
for the utilization review for procedures, treat-
ment, and services delivered to the participant
or beneficiary during the same course of treat-
ment.
‘‘(C) REVIEW OF SAMPLE OF CLAIMS DE-
NIALS.—Such a program shall provide for an
evaluation of the clinical appropriateness of at
least a sample of denials of claims for benefits.
‘‘(c) CONDUCT OF PROGRAM ACTIVITIES.—
‘‘(1) ADMINISTRATION BY PHYSICIANS OR DEN-
TISTS.—A utilization review program shall be ad-
ministered by qualified physicians or dentists who
shall oversee review decisions.
‘‘(2) USE OF QUALIFIED, INDEPENDENT PER-
SONNEL.—
‘‘(A) IN
GENERAL.—A utilization review
program shall provide for the conduct of utiliza-
tion 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 COM-
PENSATION ARRANGEMENTS.—Such a program
shall not, with respect to utilization review ac-
tivities, permit or provide compensation or any-
thing of value to its employees, agents, or con-
tractors in a manner that encourages denials of
claims for benefits.
‘‘(C) PROHIBITION OF CONFLICTS.—Such
a program shall not permit a health care pro-
fessional 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 pro-
gram shall provide that appropriate personnel per-
forming utilization review activities under the pro-
gram, including the utilization review administrator,
are reasonably accessible by toll-free telephone dur-
ing 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 or appropriate.
‘‘SEC. 503B. PROCEDURES FOR INITIAL CLAIMS FOR BENE-
FITS AND PRIOR AUTHORIZATION DETER-
MINATIONS.
‘‘(a) PROCEDURES OF INITIAL CLAIMS FOR BENE-
FITS.—
‘‘(1) IN GENERAL.—A group health plan, or
health insurance issuer offering health insurance
coverage in connection with a group health plan,
shall—
‘‘(A) make a determination on an initial
claim for benefits by a participant or bene-
ficiary (or authorized representative) regarding
payment or coverage for items or services under
the terms and conditions of the plan or cov-
erage involved, including any cost-sharing
amount that the participant or beneficiary is re-
quired to pay with respect to such claim for
benefits; and
‘‘(B) notify a participant or beneficiary (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 or beneficiary may
be required to make with respect to such claim
for benefits, and of the right of the participant
or beneficiary to an internal appeal under sec-
tion 503C.
‘‘(2) ACCESS TO INFORMATION.—With respect
to an initial claim for benefits, the participant or
beneficiary (or authorized representative) and the
treating health care professional (if any) shall pro-
vide the plan or issuer with access to information re-
quested by the plan or issuer that is necessary to
make a determination relating to the claim. Such ac-
cess shall be provided not later than 5 days after the
date on which the request for information is re-
ceived, 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.
‘‘(3) ORAL REQUESTS.—In the case of a claim
for benefits involving an expedited or concurrent de-
termination, a participant or beneficiary (or author-
ized representative) may make an initial claim for
benefits orally, but a group health plan, or health in-
surance issuer offering health insurance coverage,
may require that the participant or beneficiary (or
authorized representative) provide written confirma-
tion 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 re-
quest (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
DETERMINA-
TION.—
‘‘(A) IN GENERAL.—A group health plan,
or health insurance issuer offering health insur-
ance coverage in connection with a group health
plan, shall make a prior authorization deter-
mination on a claim for benefits (whether oral
or written) as soon as possible in accordance
with the medical exigencies of the case 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 re-
quest for prior authorization and in no case
later than 28 days after the date of the claim
for benefits is received.
‘‘(B) EXPEDITED DETERMINATION.—Not-
withstanding subparagraph (A), a group health
plan, or health insurance issuer offering health
insurance coverage in connection with a group
health plan, 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 partic-
ipant or beneficiary (or authorized representa-
tive) 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 or beneficiary or the ability of
the participant or beneficiary to maintain or re-
gain maximum function. Such determination
shall be made as soon as possible based on the
medical exigencies of the case involved and 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 hos-
pitalization), which results in a termi-
nation or reduction of such care, the
plan or issuer must provide by tele-
phone 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 as soon as possible in
accordance with the medical exigen-
cies of the case, with sufficient time
prior to the termination or reduction
to allow for an appeal under section
503C(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 serv-
ices, 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 requir-
ing plans or issuers to provide coverage of
care that would exceed the coverage limita-
tions for such care.
‘‘(2) 
RETROSPECTIVE
DETERMINATION.—A
group health plan, or health insurance issuer offer-
ing health insurance coverage in connection with a
group health plan, shall make a retrospective deter-
mination on a claim for benefits as soon as possible
in accordance with the medical exigencies of the case
but not later than 30 days after the date on which
the plan or issuer receives information that is rea-
sonably 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 bene-
fits.
‘‘(c) NOTICE OF A DENIAL OF A CLAIM FOR BENE-
FITS.—Written notice of a denial made under an initial
claim for benefits shall be issued to the participant or ben-
eficiary (or authorized representative) and the treating
health care professional as soon as possible in accordance
with the medical exigencies of the case and in no case later
than 2 days after the date of the determination (or, in
the case described in subparagraph (B) or (C) of sub-
section (b)(1), within the 72-hour or applicable period re-
ferred to in such subparagraph).
‘‘(d) REQUIREMENTS OF NOTICE OF DETERMINA-
TIONS.—The written notice of a denial of a claim for bene-
fits determination under subsection (c) shall be provided
in printed form and written in a manner calculated to be
understood by the average participant or beneficiary and
shall include—
‘‘(1) the specific reasons for the determination
(including a summary of the clinical or scientific evi-
dence used in making the determination);
‘‘(2) the procedures for obtaining additional in-
formation concerning the determination; and
‘‘(3) notification of the right to appeal the de-
termination and instructions on how to initiate an
appeal in accordance with section 503C.
‘‘(e) DEFINITIONS.—For purposes of this part:
‘‘(1) 
AUTHORIZED
REPRESENTATIVE.—The
term ‘authorized representative’ means, with respect
to an individual who is a participant or beneficiary,
any health care professional or other person acting
on behalf of the individual with the individual’s con-
sent 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 (includ-
ing 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 cov-
erage.
‘‘(3) DENIAL OF CLAIM FOR BENEFITS.—The
term ‘denial’ means, with respect to a claim for ben-
efits, 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
PROFES-
SIONAL.—The term ‘treating health care profes-
sional’ means, with respect to services to be provided
to a participant or beneficiary, a health care profes-
sional who is primarily responsible for delivering
those services to the participant or beneficiary.
‘‘SEC. 503C. INTERNAL APPEALS OF CLAIMS DENIALS.
‘‘(a) RIGHT TO INTERNAL APPEAL.—
‘‘(1) IN GENERAL.—A participant or beneficiary
of a group health plan (or authorized representative)
may appeal any denial of a claim for benefits under
section 503B under the procedures described in this
section.
‘‘(2) TIME FOR APPEAL.—
‘‘(A) IN GENERAL.—A group health plan,
or health insurance issuer offering health insur-
ance coverage in connection with a group health
plan, shall ensure that a participant or bene-
ficiary (or authorized representative) has a pe-
riod of not less than 180 days beginning on the
date of a denial of a claim for benefits under
section 503B 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 partic-
ipant or beneficiary 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 503B within the applicable
timeline established for such a determination under
such section is a denial of a claim for benefits for
purposes this section and section 503D as of the
date of the applicable deadline.
‘‘(4) PLAN WAIVER OF INTERNAL REVIEW.—A
group health plan, or health insurance issuer offer-
ing health insurance coverage in connection with a
group health plan, may waive the internal review
process under this section. In such case the plan or
issuer shall provide notice to the participant or bene-
ficiary (or authorized representative) involved, the
participant or beneficiary (or authorized representa-
tive) involved shall be relieved of any obligation to
complete the internal review involved, and may, at
the option of such participant, beneficiary, or rep-
resentative proceed directly to seek further appeal
through external review under section 503D or oth-
erwise.
‘‘(b) TIMELINES FOR MAKING DETERMINATIONS.—
‘‘(1) ORAL REQUESTS.—In the case of an ap-
peal of a denial of a claim for benefits under this
section that involves an expedited or concurrent de-
termination, a participant or beneficiary (or author-
ized representative) may request such appeal orally.
A group health plan, or health insurance issuer of-
fering health insurance coverage in connection with
a group health plan, may require that the partici-
pant or beneficiary (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 ap-
peal of a denial, the making of the request (and the
timing of such request) shall be treated as the mak-
ing 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.—With respect
to an appeal of a denial of a claim for benefits, the
participant or beneficiary (or authorized representa-
tive) 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 infor-
mation is received, or, in a case described in sub-
paragraph (B) or (C) of paragraph (3), by such ear-
lier time as may be necessary to comply with the ap-
plicable timeline under such subparagraph.
‘‘(3) 
PRIOR
AUTHORIZATION
DETERMINA-
TIONS.—
‘‘(A) IN GENERAL.—A group health plan,
or health insurance issuer offering health insur-
ance coverage in connection with a group health
plan, shall make a determination on an appeal
of a denial of a claim for benefits under this
subsection as soon as possible in accordance
with the medical exigencies of the case 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.—Not-
withstanding subparagraph (A), a group health
plan, or health insurance issuer offering health
insurance coverage in connection with a group
health plan, 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 de-
termination is made by a participant or bene-
ficiary (or authorized representative) at any
time during the process for making a deter-
mination and a health care professional cer-
tifies, with the request, that a determination
under the procedures described in subparagraph
(A) would seriously jeopardize the life or health
of the participant or beneficiary or the ability of
the participant or beneficiary to maintain or re-
gain maximum function. Such determination
shall be made as soon as possible based on the
medical exigencies of the case involved and 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 de-
termination 
described 
in 
section
503B(b)(1)(C)(i)(I), which results in a ter-
mination 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 as
soon as possible in accordance with the
medical exigencies of the case, with suffi-
cient time prior to the termination or re-
duction to allow for an external appeal
under section 503D to be completed before
the termination or reduction takes effect.
‘‘(ii) 
RULE
OF
CONSTRUCTION.—
Clause (i) shall not be construed as requir-
ing plans or issuers to provide coverage of
care that would exceed the coverage limita-
tions for such care.
‘‘(4) 
RETROSPECTIVE
DETERMINATION.—A
group health plan, or health insurance issuer offer-
ing health insurance coverage in connection with a
group health plan, shall make a retrospective deter-
mination on an appeal 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 con-
ducted by an individual with appropriate expertise
who was not involved in the initial determination.
‘‘(2) APPROPRIATE REVIEW OF MEDICAL DECI-
SIONS.—A review of an appeal of a denial of a claim
for benefits that is based on a lack of medical neces-
sity and appropriateness, or based on an experi-
mental or investigational treatment, or requires an
evaluation of medical facts, shall be made by a phy-
sician (allopathic or osteopathic) or dentist with ap-
propriate expertise (including, in the case of a child,
appropriate pediatric expertise) who was not in-
volved in the initial determination.
‘‘(d) NOTICE OF DETERMINATION.—
‘‘(1) IN GENERAL.—Written notice of a deter-
mination made under an internal appeal of a denial
of a claim for benefits shall be issued to the partici-
pant or beneficiary (or authorized representative)
and the treating health care professional as soon as
possible in accordance with the medical exigencies of
the case and in no case later than 2 days after the
date of completion of the review (or, in the case de-
scribed in subparagraph (B) or (C) of subsection
(b)(3), within the 72-hour or applicable period re-
ferred 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 determina-
tion on an appeal of a denial of a claim for benefits
for purposes of proceeding to external review under
section 503D.
‘‘(3) REQUIREMENTS
OF
NOTICE.—With re-
spect to a determination made under this section,
the notice described in paragraph (1) shall be pro-
vided in printed form and written in a manner cal-
culated to be understood by the average participant
or beneficiary and shall include—
‘‘(A) the specific reasons for the deter-
mination (including a summary of the clinical
or scientific evidence used in making the deter-
mination);
‘‘(B) the procedures for obtaining addi-
tional information concerning the determina-
tion; and
‘‘(C) notification of the right to an inde-
pendent external review under section 503D
and instructions on how to initiate such a re-
view.
‘‘SEC. 503D. INDEPENDENT EXTERNAL APPEALS PROCE-
DURES.
‘‘(a) RIGHT TO EXTERNAL APPEAL.—A group health
plan, and a health insurance issuer offering health insur-
ance coverage in connection with a group health plan, shall
provide in accordance with this section participants and
beneficiaries (or authorized representatives) with access to
an independent external review for any denial of a claim
for benefits in any case in which the amount involved ex-
ceeds $100.
‘‘(b) INITIATION OF THE INDEPENDENT EXTERNAL
REVIEW PROCESS.—
‘‘(1) TIME TO FILE.—A request for an inde-
pendent 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 or bene-
ficiary receives notice of the denial under section
503C(d) or notice of waiver of internal review under
section 503C(a)(4) or the date on which the plan or
issuer has failed to make a timely decision under
section 503C(d)(2).
‘‘(2) FILING OF REQUEST.—
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding provisions of this subsection, a group
health plan, and a health insurance issuer offer-
ing health insurance coverage, may—
‘‘(i) except as provided in subpara-
graph (B)(i), require that a request for re-
view be in writing;
‘‘(ii) limit the filing of such a request
to the participant or beneficiary involved
(or an authorized representative);
‘‘(iii) except if waived by the plan or
issuer under section 503C(a)(4), condition
access to an independent external review
under this section upon a final determina-
tion of a denial of a claim for benefits
under the internal review procedure under
section 503C;
‘‘(iv) except as provided in subpara-
graph (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 or
beneficiary (or authorized representative)
for the release of medical information or
records of the participant or beneficiary to
the qualified external review entity for the
sole purpose of conducting external review
activities.
‘‘(B) REQUIREMENTS AND EXCEPTION RE-
LATING TO GENERAL RULE.—
‘‘(i) ORAL REQUESTS PERMITTED IN
EXPEDITED OR CONCURRENT CASES.—In
the case of an expedited or concurrent ex-
ternal review as provided for under sub-
section (e), the request may be made oral-
ly. A group health plan, or health insur-
ance issuer offering health insurance cov-
erage, may require that the participant or
beneficiary (or authorized representative)
provide written confirmation of such re-
quest in a timely manner on a form pro-
vided 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 an external review without regard to
whether and when a written confirmation
of such request is made.
‘‘(ii) EXCEPTION TO FILING FEE RE-
QUIREMENT.—
‘‘(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 Secretary) that the participant or
beneficiary is indigent (as defined in
such guidelines).
‘‘(II) FEE NOT REQUIRED.—Pay-
ment of a filing fee shall not be re-
quired under subparagraph (A)(iv) if
the plan or issuer waives the internal
appeals 
process 
under 
section
503C(a)(4).
‘‘(III) REFUNDING
OF
FEE.—
The filing fee paid under subpara-
graph (A)(iv) shall be refunded if the
determination under the independent
external review is to reverse 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 re-
quest 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 infor-
mation described in section 503C(d)(3)(A)), to a
qualified external review entity selected in accord-
ance 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 or beneficiary (or authorized
representative), the plan or issuer, and the treating
health care professional (if any) shall provide the ex-
ternal review entity with information that is nec-
essary to conduct a review under this section, as de-
termined and requested by the entity. Such informa-
tion shall be provided not later than 5 days after the
date on which the request for information is re-
ceived, 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 re-
quest referred to a qualified external review en-
tity under paragraph (1) relating to a denial of
a claim for benefits, the entity shall refer such
request for the conduct of an independent med-
ical 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 bene-
fits does not involve a medically reviewable
decision under subsection (d)(2);
‘‘(iii) the denial of the claim for bene-
fits relates to a decision regarding whether
an individual is a participant or beneficiary
who is enrolled under the terms and condi-
tions 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 bene-
fits is a decision as to the application of
cost-sharing requirements or the applica-
tion of a specific exclusion or express limi-
tation on the amount, duration, or scope of
coverage of items or services under the
terms and conditions of the plan or cov-
erage unless the decision is a denial de-
scribed 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 eli-
gible for independent medical review under sub-
section (d), and shall provide notice in accord-
ance with subparagraph (C).
‘‘(B) PROCESS FOR MAKING DETERMINA-
TIONS.—
‘‘(i) NO
DEFERENCE
TO
PRIOR
DE-
TERMINATIONS.—In 
making 
determina-
tions under subparagraph (A), there shall
be no deference given to determinations
made by the plan or issuer or the rec-
ommendation of a treating health care pro-
fessional (if any).
‘‘(ii) USE
OF
APPROPRIATE
PER-
SONNEL.—A qualified external review enti-
ty shall use appropriately qualified per-
sonnel 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 para-
graph does not make a referral for the
conduct of an independent medical review,
the entity shall provide notice to the plan
or issuer, the participant or beneficiary (or
authorized representative) filing the re-
quest, and the treating health care profes-
sional (if any) that the denial is not sub-
ject to independent medical review. Such
notice—
‘‘(I) shall be written (and, in ad-
dition, may be provided orally) in a
manner calculated to be understood
by an average participant or bene-
ficiary;
‘‘(II) shall include the reasons for
the determination;
‘‘(III) include any relevant terms
and conditions of the plan or cov-
erage; and
‘‘(IV) include a description of
any further recourse available to the
individual.
‘‘(ii) GENERAL TIMELINE FOR DETER-
MINATIONS.—Upon receipt of information
under paragraph (2), the qualified external
review entity, and if required the inde-
pendent medical review panel conducting
independent medical review under sub-
section (d), shall make a determination
within the overall timeline that is applica-
ble to the case under review as described
in subsection (e), except that if the entity
determines that a referral to an inde-
pendent medical review panel is not re-
quired, the entity shall provide notice of
such determination to the participant or
beneficiary (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 re-
view entity determines under subsection (c) that a
denial of a claim for benefits is eligible for inde-
pendent medical review, the entity shall refer the de-
nial involved to an independent medical review panel
comprised of 3 members meeting the requirements
of subsection (g) 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 inde-
pendent medical review if the benefit for the item or
service for which the claim is made would be a cov-
ered benefit under the terms and conditions of the
plan or coverage but for one (or more) of the fol-
lowing determinations:
‘‘(A) DENIALS BASED ON MEDICAL NECES-
SITY 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 equiva-
lent terms.
‘‘(B) DENIALS BASED ON EXPERIMENTAL
OR
INVESTIGATIONAL
TREATMENT.—A deter-
mination that the item or service is not covered
because it is experimental or investigational or
based on the application of substantially equiva-
lent terms.
‘‘(C) DENIALS OTHERWISE BASED ON AN
EVALUATION
OF
MEDICAL
FACTS.—A deter-
mination 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 de-
termine the coverage and extent of coverage of
the item or service or condition.
‘‘(3) INDEPENDENT MEDICAL REVIEW DETER-
MINATION.—
‘‘(A) IN GENERAL.—An independent med-
ical review panel 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 review panel’s deter-
mination relating to the medical necessity and
appropriateness, or the experimental or inves-
tigation nature, or the evaluation of the medical
facts of the item, service, or condition shall be
based on the medical condition of the partici-
pant or beneficiary (including the medical
records of the participant or beneficiary) and
valid, relevant scientific evidence and clinical
evidence, including peer-reviewed medical lit-
erature or findings and including expert opin-
ion.
‘‘(C) NO COVERAGE FOR EXCLUDED BENE-
FITS.—Nothing in this subsection shall be con-
strued to permit an independent medical review
panel to require that a group health plan, or
health insurance issuer offering health insur-
ance coverage, provide coverage for items or
services for which benefits are specifically ex-
cluded or expressly limited under the plan or
coverage in the plain language of the plan docu-
ment (and which are disclosed under section
121(b)(1)(C)) except to the extent that the ap-
plication or interpretation of the exclusion or
limitation involves a determination described in
paragraph (2).
‘‘(D) EVIDENCE AND INFORMATION TO BE
USED IN MEDICAL REVIEWS.—In making a de-
termination under this subsection, the inde-
pendent medical review panel shall also consider
appropriate and available evidence and informa-
tion, 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 independent
medical review panel or submitted by the
plan, issuer, participant or beneficiary (or
an authorized representative), or treating
health care professional.
‘‘(iv) The plan or coverage document.
‘‘(E) INDEPENDENT DETERMINATION.—In
making determinations under this subtitle, a
qualified external review entity and an inde-
pendent medical review panel shall—
‘‘(i) consider the claim under review
without deference to the determinations
made by the plan or issuer or the rec-
ommendation 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 med-
ical necessity and appropriateness or ex-
perimental or investigational nature of the
treatment.
‘‘(F) DETERMINATION
OF
INDEPENDENT
MEDICAL
REVIEW
PANEL.—An independent
medical review panel shall, in accordance with
the deadlines described in subsection (e), pre-
pare a written determination to uphold or re-
verse the denial under review. Such written de-
termination shall include—
‘‘(i) the determination of the panel;
‘‘(ii) the specific reasons of the panel
for such determination, including a sum-
mary of the clinical or scientific evidence
used in making the determination; and
‘‘(iii) with respect to a determination
to reverse the denial under review, a time-
frame within which the plan or issuer must
comply with such determination.
‘‘(G) NONBINDING
NATURE
OF
ADDI-
TIONAL
RECOMMENDATIONS.—In addition to
the determination under subparagraph (F), the
independent medical review panel 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 DETERMINA-
TION.—
‘‘(i) IN GENERAL.—The independent
medical review panel shall make a deter-
mination under subsection (d) on a denial
of a claim for benefits in accordance with
the medical exigencies of the case but not
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 ex-
ternal review is received.
‘‘(ii) EXPEDITED DETERMINATION.—
Notwithstanding clause (i) and subject to
clause (iii), the independent medical review
panel shall make an expedited determina-
tion under subsection (d) on a denial of a
claim for benefits described in clause (i),
when a request for such an expedited de-
termination is made by a participant or
beneficiary (or authorized representative)
at any time during the process for making
a determination, and a health care profes-
sional certifies, with the request, that a de-
termination under the timeline described in
clause (i) would seriously jeopardize the
life or health of the participant or bene-
ficiary or the ability of the participant or
beneficiary to maintain or regain maximum
function. Such determination shall be
made as soon as possible based on the
medical exigencies of the case involved and
in no case later than 72 hours after the
time the request for external review is re-
ceived by the qualified external review enti-
ty.
‘‘(iii) ONGOING
CARE
DETERMINA-
TION.—Notwithstanding clause (i), in the
case of a review described in such sub-
clause that involves a termination or reduc-
tion of care, the notice of the determina-
tion shall be completed not later than 24
hours after the time the request for exter-
nal review is received by the qualified ex-
ternal review entity and before the end of
the approved period of care.
‘‘(B) RETROSPECTIVE DETERMINATION.—
The independent medical review panel shall
complete a review under subsection (d) in the
case of a retrospective determination concerting
a denial of a claim for benefits not 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 ex-
ternal review is received by the qualified exter-
nal review entity.
‘‘(2) NOTIFICATION OF DETERMINATION.—The
external review entity shall ensure that the plan or
issuer, the participant or beneficiary (or authorized
representative) and the treating health care profes-
sional (if any) receives a copy of the written deter-
mination of the independent medical review panel
prepared under subsection (d)(3)(F). Nothing in this
paragraph shall be construed as preventing an entity
or panel from providing an initial oral notice of the
determination.
‘‘(3) FORM OF NOTICES.—Determinations and
notices under this subsection shall be written in a
manner calculated to be understood by an average
participant.
‘‘(f) COMPLIANCE.—
‘‘(1) APPLICATION OF DETERMINATIONS.—
‘‘(A) EXTERNAL REVIEW DETERMINATIONS
BINDING ON PLAN.—The determinations of an
external review entity and an independent med-
ical review panel under this section shall be
binding upon the plan or issuer involved.
‘‘(B) 
COMPLIANCE
WITH
DETERMINA-
TION.—If the determination of an independent
medical review panel is to reverse the denial,
the plan or issuer, upon the receipt of such de-
termination, shall authorize coverage to comply
with the panel’s determination in accordance
with the timeframe established by the panel.
‘‘(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 par-
ticipant or beneficiary, where such failure to
comply is caused by the plan or issuer, the par-
ticipant or beneficiary may obtain the items or
services involved (in a manner consistent with
the determination of the independent external
review entity) from any provider regardless of
whether such provider is a participating pro-
vider under the plan or coverage.
‘‘(B) REIMBURSEMENT.—
‘‘(i) IN GENERAL.—Where a partici-
pant or beneficiary obtains items or serv-
ices 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 profes-
sional or to the participant or beneficiary
(in the case of a participant or beneficiary
who pays for the costs of such items or
services).
‘‘(ii) AMOUNT.—The plan or issuer
shall fully reimburse a professional, partici-
pant or beneficiary 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 med-
ical review panel.
‘‘(C) FAILURE TO REIMBURSE.—Where a
plan or issuer fails to provide reimbursement to
a professional, participant or beneficiary in ac-
cordance with this paragraph, the professional,
participant or beneficiary may commence a civil
action (or utilize other remedies available under
law) to recover only the amount of any such re-
imbursement that is owed by the plan or issuer
and any necessary legal costs or expenses (in-
cluding attorney’s fees) incurred in recovering
such reimbursement.
‘‘(D) AVAILABLE
REMEDIES.—The rem-
edies provided under this paragraph are in ad-
dition to any other available remedies.
‘‘(3) PENALTIES AGAINST AUTHORIZED OFFI-
CIALS FOR REFUSING TO AUTHORIZE THE DETER-
MINATION OF AN INDEPENDENT MEDICAL REVIEW
PANEL.—
‘‘(A) MONETARY PENALTIES.—
‘‘(i) IN
GENERAL.—In any case in
which the determination of an independent
medical review panel under this section 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
in a court of competent jurisdiction, be lia-
ble to an aggrieved participant or bene-
ficiary 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 FAIL-
ING TO FOLLOW TIMELINE.—In any case
in which treatment was not commenced by
the plan in accordance with the determina-
tion of an independent external review en-
tity, the Secretary shall assess a civil pen-
alty of $10,000 against the plan and the
plan shall pay such penalty to the partici-
pant or beneficiary involved.
‘‘(B) CEASE
AND
DESIST
ORDER
AND
ORDER OF ATTORNEY’S FEES.—In any action
described in subparagraph (A) brought by a
participant or beneficiary 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 result-
ing 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 al-
leged action or failure to act; and
‘‘(ii) to pay to the plaintiff a reason-
able attorney’s fee and other reasonable
costs relating to the prosecution of the ac-
tion 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 Secretary may assess a civil
penalty against a person acting in the ca-
pacity of authorizing a benefit determined
by an external review entity for one or
more group health plans, or health insur-
ance issuers offering health insurance cov-
erage, for—
‘‘(I) any pattern or practice of
repeated refusal to authorize a benefit
determined by an external appeal enti-
ty to be covered; or
‘‘(II) any pattern or practice of
repeated violations of the require-
ments 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 Sec-
retary to have not been provided, or
unlawfully delayed, in violation of this
section under such pattern or prac-
tice; or
‘‘(II) $500,000.
‘‘(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, and
others under State or Federal law (including sec-
tions 502 and 503), including the right to file judi-
cial actions to enforce rights.
‘‘(g) QUALIFICATIONS
OF
MEMBERS
OF
INDE-
PENDENT MEDICAL REVIEW PANELS.—
‘‘(1) IN GENERAL.—In referring a denial to an
independent medical review panel to conduct inde-
pendent medical review under subsection (c), the
qualified external review entity shall ensure that—
‘‘(A) each member of the panel meets the
qualifications described in paragraphs (2) and
(3);
‘‘(B) with respect to each review the re-
quirements described in paragraphs (4) and (5)
for the panel are met; and
‘‘(C) compensation provided by the entity
to each member of the panel is consistent with
paragraph (6).
‘‘(2) LICENSURE AND EXPERTISE.—Each mem-
ber of the independent medical review panel shall be
a physician (allopathic or osteopathic) or health care
professional who—
‘‘(A) is appropriately credentialed or li-
censed 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 subpara-
graph (B), each member of the independent
medical review panel in a case shall—
‘‘(i) not be a related party (as defined
in paragraph (7));
‘‘(ii) not have a material familial, fi-
nancial, 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 subpara-
graph (A) shall be construed to—
‘‘(i) prohibit an individual, solely on
the basis of affiliation with the plan or
100
issuer, from serving as a member of an
independent medical review panel 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 affili-
ation is disclosed to the plan or issuer
and the participant or beneficiary (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 exclu-
sively 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 serv-
ing as a member of an independent med-
ical review panel merely on the basis of
such affiliation if the affiliation is disclosed
to the plan or issuer and the participant or
101
beneficiary (or authorized representative),
and neither party objects; or
‘‘(iii) prohibit receipt of compensation
by a member of an independent medical re-
view panel from an entity if the compensa-
tion 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, the members of
an independent medical review panel shall
be practicing physicians (allopathic or os-
teopathic) of the same or similar specialty
as a physician who typically treats the con-
dition, makes the diagnosis, or provides the
type of treatment under review; or
‘‘(ii) by a health care professional
(other than a physician), at least two of
the members of an independent medical re-
view panel shall be practicing physicians
(allopathic or osteopathic) of the same or
similar specialty as the health care profes-
102
sional who typically treats the condition,
makes the diagnosis, or provides the type
of treatment under review, and, if deter-
mined appropriate by the qualified external
review entity, the third member of such
panel shall be a practicing health care pro-
fessional (other than such a physician) of
such a same or similar specialty.
‘‘(B) PRACTICING
DEFINED.—For pur-
poses 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 member of an
independent medical review panel shall have exper-
tise under paragraph (2) in pediatrics.
‘‘(6) LIMITATIONS
ON
REVIEWER
COMPENSA-
TION.—Compensation provided by a qualified exter-
nal review entity to a member of an independent
medical review panel in connection with a review
under this section shall—
‘‘(A) not exceed a reasonable level; and
103
‘‘(B) not be contingent on the decision ren-
dered 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 cov-
erage relating to a participant or beneficiary, any of
the following:
‘‘(A) The plan, plan sponsor, or issuer in-
volved, or any fiduciary, officer, director, or em-
ployee of such plan, plan sponsor, or issuer.
‘‘(B) The participant or beneficiary (or au-
thorized representative).
‘‘(C) The health care professional that pro-
vides the items or services involved in the de-
nial.
‘‘(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 serv-
ices 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.—
104
‘‘(1) SELECTION OF QUALIFIED EXTERNAL RE-
VIEW ENTITIES.—
‘‘(A) LIMITATION ON PLAN OR ISSUER SE-
LECTION.—The 
Secretary 
shall 
implement
procedures—
‘‘(i) to assure that the selection proc-
ess among qualified external review entities
will not create any incentives for external
review entities to make a decision in a bi-
ased manner; and
‘‘(ii) for auditing a sample of deci-
sions by such entities to assure that no
such decisions are made in a biased man-
ner.
‘‘(B) STATE
AUTHORITY
WITH
RESPECT
TO
QUALIFIED
EXTERNAL
REVIEW
ENTITIES
FOR HEALTH INSURANCE ISSUERS.—With re-
spect to health insurance issuers offering health
insurance coverage in a State, the State may
provide for external review activities to be con-
ducted 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.
105
‘‘(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 para-
graph (4)(A)).
‘‘(3) TERMS AND CONDITIONS OF CONTRACT.—
The terms and conditions of a contract under para-
graph (2) shall—
‘‘(A) be consistent with the standards the
Secretary shall establish to assure there is no
real or apparent conflict of interest in the con-
duct 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 apply-
ing to the imposition of a filing fee under subsection
(b)(2)(A)(iv) or costs incurred by the participant or
beneficiary (or authorized representative) or treating
health care professional (if any) in support of the re-
view, including the provision of additional evidence
or information.
‘‘(4) QUALIFICATIONS.—
106
‘‘(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 fol-
lowing requirements:
‘‘(i) The entity has (directly or
through contracts or other arrangements)
sufficient medical, legal, and other exper-
tise and sufficient staffing to carry out du-
ties of a qualified external review entity
under this section on a timely basis, in-
cluding making determinations under sub-
section (b)(2)(A) and providing for inde-
pendent 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 assur-
ances that it will conduct external review
activities consistent with the applicable re-
quirements of this section and standards
107
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 assur-
ances that it will provide information in a
timely manner under subparagraph (D).
‘‘(v) The entity meets such other re-
quirements as the Secretary provides by
regulation.
‘‘(B) INDEPENDENCE REQUIREMENTS.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), an entity meets the independence re-
quirements of this subparagraph with re-
spect to any case if the entity—
‘‘(I) is not a related party (as de-
fined in subsection (g)(7));
‘‘(II) does not have a material fa-
milial, financial, or professional rela-
tionship with such a party; and
‘‘(III) does not otherwise have a
conflict of interest with such a party
(as determined under regulations).
108
‘‘(ii) EXCEPTION
FOR
REASONABLE
COMPENSATION.—Nothing in clause (i)
shall be construed to prohibit receipt by a
qualified external review entity of com-
pensation 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 COM-
PENSATION.—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 review panel.
‘‘(C) 
CERTIFICATION
AND
RECERTIFI-
CATION PROCESS.—
‘‘(i) IN GENERAL.—The initial certifi-
cation and recertification of a qualified ex-
ternal review entity shall be made—
109
‘‘(I) under a process that is rec-
ognized or approved by the Secretary;
or
‘‘(II) by a qualified private
standard-setting organization that is
approved by the Secretary under
clause (iii).
In taking action under subclause (I), the
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 en-
tities.
‘‘(ii) PROCESS.—The 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 car-
ried out, in the case of recertification)
the responsibilities of such an entity
in accordance with this section, in-
cluding meeting applicable deadlines;
110
‘‘(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 recertifi-
cation) 
appropriate 
confidentiality
with respect to individually identifi-
able health information obtained in
the course of conducting external re-
view activities; and
‘‘(IV) in the case recertification,
shall review the matters described in
clause (iv).
‘‘(iii) APPROVAL OF QUALIFIED PRI-
VATE
STANDARD-SETTING
ORGANIZA-
TIONS.—For purposes of clause (i)(II), the
Secretary may approve a qualified private
standard-setting organization if such Sec-
retary finds that the organization only cer-
tifies (or recertifies) external review enti-
ties that meet at least the standards re-
quired for the certification (or recertifi-
cation) of external review entities under
clause (ii).
111
‘‘(iv) CONSIDERATIONS IN RECERTIFI-
CATIONS.—In conducting recertifications of
a qualified external review entity under
this paragraph, the Secretary or organiza-
tion conducting the recertification shall re-
view compliance of the entity with the re-
quirements 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 review panels it
refers cases to).
‘‘(III) Compliance with limita-
tions on compensation (with respect to
both the entity and independent med-
ical review panels it refers cases to).
‘‘(IV) Compliance with applicable
independence requirements.
‘‘(v) PERIOD
OF
CERTIFICATION
OR
RECERTIFICATION.—A certification or re-
certification provided under this paragraph
112
shall extend for a period not to exceed 2
years.
‘‘(vi) REVOCATION.—A certification or
recertification under this paragraph may
be revoked by the Secretary or by the or-
ganization 
providing 
such 
certification
upon a showing of cause.
‘‘(D) PROVISION OF INFORMATION.—
‘‘(i) IN GENERAL.—A qualified exter-
nal review entity shall provide to the Sec-
retary (or the State in the case of external
review activities provided for by a State
pursuant to paragraph (1)(B)), in such
manner and at such times as such Sec-
retary (or State) may require, such infor-
mation (relating to the denials which have
been referred to the entity for the conduct
of external review under this section) as
such Secretary (or State) determines ap-
propriate to assure compliance with the
independence and other requirements of
this section to monitor and assess the qual-
ity of its external review activities and lack
of bias in making determinations. Such in-
formation shall include information de-
113
scribed in clause (ii) but shall not include
individually identifiable medical informa-
tion.
‘‘(ii) 
INFORMATION
TO
BE
IN-
CLUDED.—The information described in
this subclause with respect to an entity is
as follows:
‘‘(I) The number and types of de-
nials for which a request for review
has been received by the entity.
‘‘(II) The disposition by the enti-
ty of such denials, including the num-
ber referred to an independent med-
ical review panel and the reasons for
such dispositions (including the appli-
cation of exclusions), on a plan or
issuer-specific basis and on a health
care specialty-specific basis.
‘‘(III) The length of time in mak-
ing determinations with respect to
such denials.
‘‘(IV) Updated information on
the information required to be sub-
mitted as a condition of certification
114
with respect to the entity’s perform-
ance 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
Secretary under clause (i).
‘‘(II) 
ADDITIONAL
INFORMA-
TION.—Nothing in this subparagraph
shall be construed as preventing such
an organization from requiring addi-
tional information as a condition of
certification or recertification of an
entity.
‘‘(iv) USE OF INFORMATION.—Infor-
mation provided under this subparagraph
may be used by the Secretary and qualified
private standard-setting organizations to
conduct oversight of qualified external re-
115
view 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 con-
tract 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
a member of an independent medical review
panel), shall be held by reason of the perform-
ance 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 mis-
conduct in the performance of such duty, func-
tion, or activity.’’.
(b) CONFORMING AMENDMENT.—The table of con-
tents in section 1 of the Employee Retirement Income Se-
curity Act of 1974 is amended by inserting after the item
relating to section 503 the following:
‘‘Sec. 503A. Utilization review activities.
‘‘Sec. 503B. Procedures for initial claims for benefits and prior authorization
determinations.
‘‘Sec. 503C. Internal appeals of claims denials.
‘‘Sec. 503D. Independent external appeals procedures.’’.
116
SEC. 122. CONFORMING AMENDMENTS TO PUBLIC HEALTH
SERVICE ACT.
(a) GROUP HEALTH PLANS.—Title XXVII of the
Public Health Service Act, as amended by sections 102(a)
and 112(a), is amended by inserting after section 2708
the following new section:
‘‘SEC. 2709. STANDARD RELATING TO ACCOUNTABILITY.
‘‘Subject to section 2724(c), a group health plan, and
health insurance coverage offered in connection with a
group health plan, shall comply with the requirements of
sections 503A through 503D of the Employee Retirement
Income Security Act of 1974 (as in effect as of the day
after the date of the enactment of such Act) and such re-
quirements shall be deemed to be incorporated into this
section. For purposes of this section, references in such
sections 503A through 503D to the Secretary shall be
deemed references to the Secretary of Health and Human
Services.’’.
(b) INDIVIDUAL HEALTH PLANS.—Title XXVII of
the Public Health Service Act, as amended by sections
102(b) and 112(b), is amended by inserting after section
2754 the following new section:
‘‘SEC. 2755. STANDARD RELATING TO ACCOUNTABILITY.
‘‘Subject to section 2762A(c), the provisions of sec-
tions 503A through 503D of the Employee Retirement In-
come Security Act of 1974 (as in effect as of the day after
117
the date of the enactment of such Act) shall apply to
health insurance coverage offered by a health insurance
issuer in the individual market for an enrollee in the same
manner as they apply to health insurance coverage offered
by a health insurance issuer for a participant or bene-
ficiary in connection with a group health plan in the small
or large group market and the requirements referred to
in such section shall be deemed to be incorporated into
this section. For purposes of this section, references in
such sections 503A through 503D to the Secretary shall
be deemed references to the Secretary of Health and
Human Services.’’.
SEC. 123. CONFORMING AMENDMENTS TO THE INTERNAL
REVENUE CODE OF 1986.
Subchapter B of chapter 100 of the Internal Revenue
Code of 1986, as amended by sections 103 and 113, is
amended—
(1) in the table of sections, by inserting after
the item relating to section 9814 the following new
item:
‘‘Sec. 9815. Standard relating to plan accountability.’’;
and
(2) by inserting after section 9814 the fol-
lowing:
118
‘‘SEC. 9815. STANDARD RELATING TO PLAN ACCOUNT-
ABILITY.
‘‘A group health plan shall comply with the require-
ments of sections 503A through 503D of the Employee
Retirement Income Security Act of 1974 (as in effect as
of the day after the date of the enactment of such Act)
and such requirements shall be deemed to be incorporated
into this section. For purposes of this section, references
in such sections 503A through 503D to the Secretary shall
be deemed references to the Secretary of the Treasury.’’.
Subtitle D—State Flexibility in Ap-
plying Requirements to Health
Insurance Issuers
SEC. 141. STATE FLEXIBILITY IN APPLYING REQUIRE-
MENTS TO HEALTH INSURANCE ISSUERS
UNDER ERISA; PLAN SATISFACTION OF CER-
TAIN REQUIREMENTS.
(a) IN GENERAL.—Section 731(a) of the Employee
Retirement Income Security Act of 1974 is amended—
(1) in section 731(a)(1) (29 U.S.C. 1191(a)),
by inserting ‘‘and section 731A’’ after ‘‘Subject to
paragraph (2)’’; and
(2) by inserting after section 731 the following
new section:
119
‘‘SEC. 731A. STATE FLEXIBILITY IN APPLYING PATIENTS’
BILL OF RIGHTS AND PATIENT ACCESS TO IN-
FORMATION REQUIREMENTS; PLAN SATIS-
FACTION OF CERTAIN REQUIREMENTS.
‘‘(a) STATE FLEXIBILITY.—The requirements of a
section of subpart C (relating to patients’ bill of rights)
and of section 714 (relating to patient access to informa-
tion) shall not apply with respect to health insurance cov-
erage (and to a group health plan insofar as it provides
benefits in the form of health insurance coverage) in a
State—
‘‘(1) before January 1, 2003; and
‘‘(2) on or after such date, during any period
for which the State certifies to the Patients’ Protec-
tion Certification Board (established under sub-
section (c)) that the State has in effect a State law
(as defined in section 2723(d)(1) of the Public
Health Service Act) that—
‘‘(A) addresses the patient protections or
access to information in such section; and
‘‘(B)(i) adopts the Federal standard
under such section with respect to the re-
quirements; or
‘‘(ii) is consistent with the purposes of
the section and the Board has not found
120
such certification invalid under subsection
(b)(2)(A).
‘‘(b) 
PATIENTS’ 
PROTECTION
CERTIFICATION
BOARD; CERTIFICATION REVIEW PROCESS.—
‘‘(1) ESTABLISHMENT OF BOARD.—
‘‘(A) IN GENERAL.—There is hereby estab-
lished in the Health Resources and Services Ad-
ministration of the Department of Health and
Human Services a Patients’ Protection Certifi-
cation Board (in this section referred to as the
‘Board’).
‘‘(B) COMPOSITION.—The Board shall be
composed of 13 members appointed by the
President, by and with the advice and consent
of the Senate, from among individuals who rep-
resent consumers and employers or have exper-
tise in law, medicine, insurance, employee bene-
fits, and related fields. Members shall first be
appointed to the Board not earlier than Feb-
ruary 1, 2001, and no later than May 1, 2001.
‘‘(C) TERMS.—The terms of members of
the Board shall be for 3 years except that for
the members first appointed the President shall
designate staggered terms of 3 years for 2
members, 2 years for 2 members, and 1 year
121
for one member. A vacancy in the Board shall
be filled in the same manner in which the origi-
nal appointment was made and a member ap-
pointed to fill a vacancy occurring before the
expiration of the term for which the member’s
predecessor was appointed shall be appointed
only for the remainder of that term.
‘‘(D) COMPENSATION.—To the extent pro-
vided in advance in appropriations Acts, while
serving on the business of the Board (including
travel time), each member of the Board—
‘‘(i) shall be entitled to receive com-
pensation at the daily equivalent of the an-
nual rate of basic pay provided for level IV
of the Executive Schedule under section
5315 of title 5, United States Code for
each day (including travel time) during
which the member is engaged in the actual
performance of duties as such a member;
and
‘‘(ii) while so serving away from home
and the member’s regular place of busi-
ness, may be allowed travel expenses, as
authorized by the Board.
‘‘(2) DUTIES.—
122
‘‘(A) REVIEW
OF
CERTIFICATIONS
SUB-
MITTED.—
‘‘(i) IN GENERAL.—The Board shall
review certifications submitted under sub-
section (a)(2).
‘‘(ii) DEFERENCE TO STATES.—Such
a certification submitted for a State law
with respect to the requirements of a sec-
tion is deemed valid unless, within 90 days
after the date of its submittal to the
Board, the Board finds that there is clear
and convincing evidence of substantial non-
compliance of the State law with the re-
quirements of such section.
‘‘(B) 
ANNUAL
CONGRESSIONAL
RE-
PORTS.—The Board shall submit to Congress
an annual report on its activities. The first an-
nual report shall focus specifically on the devel-
opment by the Board of criteria for the evalua-
tion of State laws and any other activities of
the Board during its first year of operation.
‘‘(3) ORGANIZATION.—
‘‘(A) CHAIR.—The Board shall elect a
member of the Board to serve as chair.
123
‘‘(B) MEETINGS.—The Board shall meet
at least quarterly and otherwise at the call of
the chair or upon the written request of a ma-
jority of its members.
‘‘(C) QUORUM.—Seven members of the
Board shall constitute a quorum thereof, but a
lesser number may hold hearings and take testi-
mony.
‘‘(4) DIRECTOR
AND
STAFF; EXPERTS
AND
CONSULTANTS.—To the extent provided in advance
in appropriations Acts, the Board may—
‘‘(A) employ and fix the compensation of
an Executive Director and such other personnel
as may be necessary to carry out the Board’s
duties, without regard to the provisions of title
5, United States Code, governing appointments
in the competitive service;
‘‘(B) procure temporary and intermittent
services under section 3109(b) of title 5, United
States Code; and
‘‘(C) provide transportation and subsist-
ence for persons serving the Board without
compensation.
‘‘(5) POWERS.—
‘‘(A) OBTAINING OFFICIAL DATA.—
124
‘‘(i) IN
GENERAL.—The Board may
secure directly from any department or
agency of the United States information
necessary to enable it to carry out its du-
ties.
‘‘(ii) REQUEST OF CHAIR.—Upon re-
quest of the chair, the head of that depart-
ment or agency shall furnish that informa-
tion to the Board on an agreed upon
schedule.
‘‘(B) AGENCY
ASSISTANCE.—The Board
may seek such assistance and support as may
be required in the performance of its duties
from the Secretary of Health and Human Serv-
ices, acting through the Health Resources and
Services Administration. Any employee of such
Administration may be detailed to the Board to
assist the Board in carrying out its duties.
‘‘(C) CONTRACT AUTHORITY.—To the ex-
tent provided in advance in appropriations Act,
the Board may enter into contracts or make
other arrangements for facilities and services as
may be necessary for the conduct of the work
of the Board (without regard to section 3709 of
the Revised Statutes (41 U.S.C. 5)).
125
‘‘(D) HEARINGS.—The Board may, for the
purpose of carrying out its duties, hold hear-
ings, sit and act at times and places, take testi-
mony, and receive evidence as the Board con-
siders appropriate. The Board may administer
oaths or affirmations to witnesses appearing be-
fore it. To the extent provided in advance in
appropriation Acts, the Board may pay reason-
able travel expenses to witnesses for travel inci-
dent to hearings held by the Board. Nothing in
this subsection shall be construed as author-
izing the issuance of subpoenas in support of
its duties.
‘‘(E) RULES.—The Board may prescribe
such rules and regulations as it deems nec-
essary to carry out this subsection.
‘‘(6) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated to carry out
this subsection—
‘‘(A) for fiscal year 2001, $500,000,
‘‘(B) for fiscal year 2002, $1,000,000, and
‘‘(C) for subsequent fiscal years, such
sums as may be necessary.
‘‘(c) RELATIONSHIP TO GROUP HEALTH PLAN RE-
QUIREMENTS.—Nothing in this section shall be construed
126
to affect or modify the provisions of section 514 with re-
spect to group health plans (insofar as it provides benefits
other than in the form of health insurance coverage).
‘‘(d) PLAN SATISFACTION OF CERTAIN REQUIRE-
MENTS.—
‘‘(1) SATISFACTION
OF
CERTAIN
REQUIRE-
MENTS THROUGH INSURANCE.—For purposes of this
part, insofar as a group health plan provides bene-
fits in the form of health insurance coverage through
a health insurance issuer and, under the arrange-
ment to offer such coverage, the issuer is legally re-
sponsible for compliance with any of the following
requirements of this subpart (or of section 714), the
plan shall be treated as meeting such requirements
and not be considered as failing to meet such re-
quirements 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 721 (relating to access to
emergency care).
‘‘(B) Section 722 (relating to offering of
choice of coverage options).
‘‘(C) Section 723 (relating to access to ob-
stetric and gynecological care).
127
‘‘(D) Section 724 (relating to access to pe-
diatric care).
‘‘(E) Section 725 (relating to access to
specialty care).
‘‘(F) Section 726(a)(1) (relating to con-
tinuity in case of termination of provider con-
tract) and section 726(a)(2) (relating to con-
tinuity in case of termination of issuer con-
tract), but only insofar as a replacement issuer
assumes the obligation for continuity of care.
‘‘(G) Section 728 (relating to access to
needed prescription drugs).
‘‘(H) Section 730 (relating to coverage for
individuals participating in approved clinical
trials.)
‘‘(I) Section 730C (relating to payment of
claims).
‘‘(J) Section 714 (relating to access to in-
formation).
‘‘(2) APPLICATION
TO
PROHIBITIONS.—If a
health insurance issuer offers health insurance cov-
erage in connection with a group health plan and
takes an action in violation of any of the following
sections, the group health plan shall not be liable for
such violation unless the plan caused such violation:
128
‘‘(A) Section 727 (relating to prohibition of
interference with certain medical communica-
tions).
‘‘(B) Section 729 (relating to self-payment
for behavioral health).
‘‘(C) Section 730A (relating to prohibition
of discrimination against providers based on li-
censure).
‘‘(D) Section 730B (relating to prohibition
against improper incentive arrangements).
‘‘(3) CONSTRUCTION.—Nothing in this sub-
section shall be construed to affect or modify the re-
sponsibilities of the fiduciaries of a group health
plan under part 4 of subtitle B.
‘‘(e) CONFORMING REGULATIONS.—The Secretary
may issue regulations to coordinate the requirements on
group health plans under subpart C, section 714, and sec-
tions 503A through 503D with the requirements imposed
under the other provisions of this title.’’.
(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 sec-
129
tions 503A through 503D in the case of a claims denial
shall be deemed compliance with subsection (a) with re-
spect to such claims denial.’’.
(c) CLERICAL AMENDMENT.—The table of contents
in section 1 of such Act (29 U.S.C. 1001) is amended by
inserting after the item relating to section 731, the fol-
lowing:
‘‘Sec. 731A. State flexibility in applying patients’ bill of rights and patient ac-
cess to information requirements; plan satisfaction of certain
requirements.’’.
SEC. 142. STATE FLEXIBILITY IN APPLYING REQUIRE-
MENTS UNDER THE PUBLIC HEALTH SERV-
ICE ACT.
(a) GROUP HEALTH PLANS AND GROUP HEALTH IN-
SURANCE COVERAGE.—Title XXVII of the Public Health
Service Act is amended—
(1) in section 2723(a)(1) (42 U.S.C. 300gg–
23(a)(1)), by inserting ‘‘and section 2724’’ after
‘‘Subject to paragraph (2)’’; and
(2) by inserting after section 2723 the following
new section:
‘‘SEC. 2724. STATE FLEXIBILITY IN APPLYING PATIENTS’
BILL OF RIGHTS, PATIENT ACCESS TO INFOR-
MATION, AND ACCOUNTABILITY REQUIRE-
MENTS.
‘‘(a) IN GENERAL.—The provisions of section 731A
of the Employee Retirement Income Security Act of 1974,
130
apply to the requirements of section 2707 (relating to pa-
tients’ bill of rights), section 2708 (relating to access to
information), and (only with respect to group health plans
as applied under section 2721(b)) section 2709 (relating
to accountability) in the same manner as such provisions
apply to comparable requirements with respect to health
insurance coverage provided in connection with a group
health plan.
‘‘(b) RELATIONSHIP TO GROUP HEALTH PLAN RE-
QUIREMENTS.—Nothing in this section 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 (insofar as it provides bene-
fits other than in the form of health insurance coverage).’’.
(b) INDIVIDUAL HEALTH INSURANCE COVERAGE.—
Title XXVII of the Public Health Service Act is
amended—
(1) in section 2762(a) (42 U.S.C. 300gg–
62(a)(1)), by inserting ‘‘and section 2762A’’ after
‘‘Subject to subsection (b)’’; and
(2) by inserting after section 2762 the following
new section:
131
‘‘SEC. 2762A. STATE FLEXIBILITY IN APPLYING PATIENTS’
BILL OF RIGHTS, PATIENT ACCESS TO INFOR-
MATION, AND ACCOUNTABILITY REQUIRE-
MENTS.
‘‘The provisions of section 2724 apply in relation to
the requirements of section 2753 (relating to patients’ bill
of rights), section 2754 (relating to access to information),
and section 2755 (relating to accountability) with respect
to individual health insurance coverage in the same man-
ner as those provisions apply in relation to the require-
ments of sections 2707, 2708, and 2709, respectively, as
applied to group health plans under section 2721(b).’’.
Subtitle E—Effective Dates; Coordi-
nation in Implementation; Mis-
cellaneous Provisions
SEC. 151. EFFECTIVE DATES.
(a) GROUP HEALTH COVERAGE.—
(1) IN
GENERAL.—Subject to paragraph (2)
and subsection (d), the amendments made by sec-
tions 101, 102(a), 103, 111, 112(a), 113, 121,
122(a), and 123 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 January 1, 2002 (in this sec-
tion referred to as the ‘‘general effective date’’) and
132
also shall apply to portions of plan years occurring
on and after such date.
(2) TREATMENT OF COLLECTIVE BARGAINING
AGREEMENTS.—In the case of a group health plan
maintained pursuant to one or more collective bar-
gaining agreements between employee representa-
tives and one or more employers ratified before the
date of the enactment of this Act, the amendments
made by the provisions referred to in paragraph (1)
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 ter-
minates (determined without regard to any ex-
tension thereof agreed to after the date of the
enactment of this Act); or
(B) the general effective date.
For purposes of subparagraph (A), any plan amend-
ment made pursuant to a collective bargaining
agreement relating to the plan which amends the
plan solely to conform to any requirement added by
this title 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 sec-
133
tion 102(b), 112(b), and 122(b) 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 PRO-
VIDERS.—
(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 of-
fering 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 cri-
teria 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 bene-
ficiary to undergo a medical examination
134
or test as a condition of receiving health
insurance coverage for treatment by a reli-
gious nonmedical provider; or
(C) require such plans or issuers to ex-
clude religious nonmedical providers because
they do not provide medical or other required
data, if such data is inconsistent with the reli-
gious nonmedical treatment or nursing care
provided by the provider.
(2) RELIGIOUS NONMEDICAL PROVIDER.—For
purposes of this subsection, the term ‘‘religious non-
medical provider’’ means a provider who provides no
medical care but who provides only religious non-
medical treatment or religious nonmedical nursing
care.
(d) TRANSITION FOR NOTICE REQUIREMENT.—The
disclosure of information required under the amendments
made by subtitle B of this title shall first be provided pur-
suant to—
(1) subsection (a) with respect to a group
health plan that is maintained as of the general ef-
fective date, not later than 30 days before the begin-
ning of the first plan year to which the amendments
made by such subtitle apply in connection with the
plan under such subsection; or
135
(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 the amendments made by
such subtitle apply to the coverage under such sub-
section.
(e) CONSTRUCTION.—In applying section 731(a) of
the Employee Retirement Income Security Act of 1974
and sections 2723(a) and 2762 of the Public Health Serv-
ice Act, a State law that provides for equal access to, and
availability of, all categories of licensed health care pro-
viders and services shall not be treated as preventing the
application of any requirement of either such Act.
(f) COVERAGE OF LIMITED SCOPE PLANS.—Section
2791(c)(2)(A) of the Public Health Service Act (42 U.S.C.
300gg–91(c)(2)(A)) and section 733(c)(2)(A) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1186(c)(2)(A)) shall be deemed not to apply for
purposes of applying the requirements imposed by the
amendments made by this title.
SEC. 152. REGULATIONS; COORDINATION.
(a) AUTHORITY.—The Secretaries of Health and
Human Services, Labor, and the Treasury shall issue such
regulations as may be necessary or appropriate to carry
136
out the amendments made by this title before the effective
date thereof.
(b) COORDINATION IN IMPLEMENTATION.—The Sec-
retary of Labor, the Secretary of Health and Human Serv-
ices, and the Secretary of the Treasury 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 mat-
ter over which such Secretaries have responsibility
under the amendments made by this title are admin-
istered 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.
(c) USE OF INTERIM FINAL RULES.—Such Secre-
taries may promulgate any interim final rules as the Sec-
retaries determine are appropriate to carry out this title.
(d) LIMITATION ON ENFORCEMENT ACTIONS.—No
enforcement action shall be taken, pursuant to the amend-
ments made by this title, against a group health plan or
health insurance issuer with respect to a violation of a re-
137
quirement imposed by such amendments before the date
of issuance of regulations issued in connection with such
requirement, if the plan or issuer has sought to comply
in good faith with such requirement.
SEC. 153. NO BENEFIT REQUIREMENTS.
Nothing in the amendments made by this title shall
be construed to require a group health plan or a health
insurance issuer offering health insurance coverage to in-
clude 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.
SEC. 154. SEVERABILITY.
If any provision of this title, an amendment made by
this title, or the application of such provision or amend-
ment to any person or circumstance is held to be unconsti-
tutional, the remainder of this title, the amendments made
by this title, and the application of the provisions of such
to any person or circumstance shall not be affected there-
by.
TITLE II—REMEDIES
SEC. 201. AVAILABILITY OF COURT REMEDIES.
(a) CAUSE OF ACTION RELATING TO MEDICALLY RE-
VIEWABLE DETERMINATIONS AND TIMELY REVIEW OF
CLAIMS.—Section 502 of the Employee Retirement In-
138
come Security Act of 1974 (29 U.S.C. 1132) is
amended—
(1) in subsection (a)(1), by striking ‘‘or’’ at the
end of subparagraph (A), by striking ‘‘plan;’’ in sub-
paragraph (B) and inserting ‘‘plan, or’’, and by add-
ing after subparagraph (B) the following new sub-
paragraph:
‘‘(C) in the case of a group health plan, for
the relief provided for in subsection (n) of this
section;’’; and
(2) by adding at the end the following:
‘‘(n) CAUSE OF ACTION RELATING TO MEDICALLY
REVIEWABLE DETERMINATIONS AND TIMELY REVIEW OF
CLAIMS.—
‘‘(1) IN GENERAL.—In any case in which—
‘‘(A) a person who is a designated health
care decision-maker of a group health plan
breaches the covenant of good faith and fair
dealing in—
‘‘(i) making a medically reviewable de-
termination regarding a benefit for items
or services under the plan, or
‘‘(ii) failing to ensure that—
‘‘(I) any denial of claim for bene-
fits, or
139
‘‘(II) any decision by the plan on
a request, made by a participant or
beneficiary under section 503C or
503D, for a reversal of an earlier de-
cision of the plan,
is made and issued to the participant or
beneficiary (in such form and manner as
may be prescribed in regulations of the
Secretary) before the end of the applicable
period specified in section 503B, 503C, or
503D, and
‘‘(B) such breach is the proximate cause of
substantial harm to, or wrongful death of, the
participant or beneficiary,
such person shall be liable to the participant or ben-
eficiary (or the estate of such participant or bene-
ficiary) for economic and noneconomic damages in
connection with such breach and such substantial
harm or death (subject to paragraphs (5) and (6)).
‘‘(2) DESIGNATED
HEALTH
CARE
DECISION-
MAKER.—
‘‘(A) IN GENERAL.—A group health plan
shall name a designated health care decision-
maker for purposes of paragraph (1) with re-
140
spect to any benefits that are not provided
through group health insurance coverage.
‘‘(B) DEFINITION.—For purposes of this
subsection, the term ‘designated health care de-
cision-maker’ means a person who—
‘‘(i) is named in the plan as the des-
ignated health care decision-maker,
‘‘(ii) agrees in writing to accept ap-
pointment as a designated health care deci-
sion-maker,
‘‘(iii) is any of the following:
‘‘(I) the plan sponsor,
‘‘(II) a health insurance issuer,
or
‘‘(III) any other person who can
satisfy requirements set forth in regu-
lations promulgated by the Secretary,
including the abilities specified in sub-
paragraph (C), and
‘‘(iv) is not the treating physician or
other health care professional in the case
involved.
‘‘(C) ABILITIES.—The abilities specified in
this subparagraph are the abilities to—
141
‘‘(i) carry out the responsibilities set
forth in the plan,
‘‘(ii) carry out the applicable require-
ments of this subsection, and
‘‘(iii) meet other applicable require-
ments, including any financial obligation
for liability under this subsection.
‘‘(D) GROUP
HEALTH
INSURANCE
COV-
ERAGE.—With respect to benefits provided
through group health insurance coverage, the
health insurance issuer providing the group
health insurance coverage shall be deemed the
designated health care decision-maker of the
plan.
‘‘(E) ABSENCE
OF
NAMED
DESIGNATED
HEALTH CARE DECISION-MAKER.—In any case
in which a designated health care decision-
maker is not named in the plan with respect to
benefits that are not provided through group
health insurance coverage, the plan sponsor
shall be treated as the designated health care
decision-maker for purposes of liability under
this section with respect to such benefits.
‘‘(3) DEFINITIONS.—For purposes of this
section—
142
‘‘(A) MEDICALLY
REVIEWABLE
DETER-
MINATION.—The term ‘medically reviewable de-
termination’ means a determination described
in section 503D(d)(2).
‘‘(B) SUBSTANTIAL
HARM.—The term
‘substantial harm’ means loss of life, loss or
significant impairment of limb, bodily, or men-
tal function, significant disfigurement, or severe
and chronic pain.
‘‘(C) CLAIM FOR BENEFITS; DENIAL.—The
terms ‘claim for benefits’ and ‘denial of a claim
for benefits’, in connection with a group health
plan or health insurance coverage, have the
meanings provided such terms in section
503B(e).
‘‘(D) TERMS AND CONDITIONS.—The term
‘terms and conditions’ includes, with respect to
a group health plan or health insurance cov-
erage, requirements imposed under section 714
and subpart C of part 7.
‘‘(E) GROUP HEALTH PLAN AND OTHER
RELATED TERMS.—The provisions of sections
732(d) and 733 apply for purposes of this sub-
section in the same manner as they apply for
purposes of part 7, except that the term ‘group
143
health plan’ includes a group health plan (as
defined in section 607(1)).
‘‘(F) ECONOMIC AND NONECONOMIC DAM-
AGES.—The terms ‘economic damages’ and
‘noneconomic damages’ do not include punitive
damages.
‘‘(4) REQUIREMENT
OF
EXHAUSTION
OF
AD-
MINISTRATIVE REMEDIES.—
‘‘(A) IN GENERAL.—In the case of a cause
of action described in paragraph (1)(A)(i),
paragraph (1) applies only if all remedies under
sections 503C and 503D with respect to such
cause of action have been exhausted.
‘‘(B) 
EXTERNAL
REVIEW
REQUIRED
WHERE AVAILABLE.—For purposes of subpara-
graph (A), all remedies described in subpara-
graph (A) shall be deemed not to be exhausted
until such remedies under section 503D (to the
extent they are available) have been elected and
are exhausted by issuance of a final determina-
tion by a qualified external review entity or an
independent medical reviewer under such sec-
tion.
‘‘(C) RECEIPT OF BENEFITS DURING AP-
PEALS PROCESS.—Receipt by the participant or
144
beneficiary of the benefits involved in the claim
for benefits during the pendency of any admin-
istrative 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 sub-
section 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) CONSIDERATION OF ADMINISTRATIVE
DETERMINATIONS.—Any determinations made
under section 503C or 503D regarding matters
before the court in an action under this section
shall be given due consideration by the court in
such action.
‘‘(5) LIMITATIONS
ON
RECOVERY
OF
DAM-
AGES.—
145
‘‘(A) MAXIMUM AWARD OF NONECONOMIC
DAMAGES.—The aggregate amount of liability
for noneconomic damages in an action under
paragraph (1) may not exceed $500,000.
‘‘(B) INCREASE IN AMOUNT.—The amount
referred to in subparagraph (A) shall be in-
creased or decreased, for each calendar year
that ends after December 31, 2001, by the
same percentage as the percentage by which the
Consumer Price Index for All Urban Con-
sumers (United States city average), published
by the Bureau of Labor Statistics, for Sep-
tember of the preceding calendar year has in-
creased or decreased from the such Index for
September of 2001.
‘‘(6) PROHIBITION
OF
AWARD
OF
PUNITIVE
DAMAGES.—
‘‘(A) GENERAL RULE.—Except as provided
in this paragraph, nothing in this subsection
shall be construed as authorizing a cause of ac-
tion for punitive, exemplary, or similar dam-
ages.
‘‘(B) EXCEPTION.—In addition other dam-
ages authorized under paragraph (1), punitive
damages are authorized in any case described
146
in such paragraph in which such other damages
are authorized and the plaintiff establishes by
clear and convincing evidence that conduct car-
ried out by the defendant with willful or wanton
disregard for the rights or safety of others was
the proximate cause of the substantial harm
that is the subject of the action.
‘‘(C) LIMITATION ON AMOUNT.—
‘‘(i) IN
GENERAL.—The aggregate
amount of liability for punitive damages in
an action under paragraph (1) may not ex-
ceed $5,000,000.
‘‘(ii) INCREASE
IN
AMOUNT.—The
amount referred to in clause (i) shall be in-
creased or decreased, for each calendar
year that ends after December 31, 2001,
by the same percentage as the percentage
by which the Consumer Price Index for All
Urban Consumers (United States city av-
erage), published by the Bureau of Labor
Statistics, for September of the preceding
calendar year has increased or decreased
from the such Index for September of
2001.
147
‘‘(D) NO PUNITIVE DAMAGES WHERE DE-
FENDANT’S POSITION PREVIOUSLY SUPPORTED
BY MEDICAL REVIEW PANEL UPON EXTERNAL
REVIEW.—In any case in which the court finds
the defendant to be liable in an action under
this subsection, to the extent that—
‘‘(i) such liability is based on a find-
ing by the court of a particular breach de-
scribed in paragraph (1), and
‘‘(ii) such finding is contrary to a de-
termination by a medical review panel in a
decision previously rendered under section
503D with respect to such defendant,
the defendant shall not be liable for punitive
damages under this subsection in connection
with such breach.
‘‘(7) LIMITATION OF ACTION.—Paragraph (1)
shall not apply in connection with any action com-
menced after 2 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 fail-
ure described in paragraph (1), or
‘‘(B) the date as of which the requirements
of paragraph (4), if applicable, are first met.
148
‘‘(8) PURCHASE OF INSURANCE TO COVER LI-
ABILITY.—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.
‘‘(9) 
EXCLUSION
OF
DIRECTED
RECORD-
KEEPERS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (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 dis-
closure materials under this title and whose du-
ties do not include making decisions on claims
for benefits.
‘‘(C) 
LIMITATION.—Subparagraph 
(A)
does not apply in connection with any directed
149
recordkeeper to the extent that the directed rec-
ordkeeper fails to follow the specific instruction
of the plan or the employer or other plan spon-
sor.
‘‘(10) CONSTRUCTION.—Nothing in this sub-
section shall be construed as authorizing a cause of
action for the failure to provide an item or service
which is not covered under the group health plan in-
volved.
‘‘(11) APPLICABILITY OF STATE LAW.—No pro-
vision of State law (as defined in section 514(c)(1))
relating to the regulation of quality of care shall be
treated as superseded, preempted, or modified by
reason of the provisions of subsection (a)(1)(C) and
this subsection, nor shall anything in this subsection
be construed to supersede, preempt, or modify sec-
tion 514 with respect to group health plans or the
preemptive effect of this section or section 503D
with respect to such plans.
‘‘(12) LIMITATION ON CLASS ACTION LITIGA-
TION.—A claim or cause of action under this sub-
section may not be maintained as a class action.’’.
(b) EXPANDED REMEDIES FOR EXISTING CAUSES OF
ACTION.—
150
(1) IN GENERAL.—Section 502 of such Act (as
amended by subsection (a)) is amended further—
(A) in subsection (a)(1)(B), by striking
‘‘or’’ before ‘‘to clarify’’ and by striking ‘‘plan;’’
and inserting ‘‘plan, or, in the case of a group
health plan, for the additional relief provided in
subsection (o);’’; and
(B) by adding after subsection (n) the fol-
lowing new subsection:
‘‘(o) EXPANDED REMEDIES RELATING TO GROUP
HEALTH PLAN DETERMINATIONS THAT ARE NOT MEDI-
CALLY REVIEWABLE.—In the case of any determination
under a group health plan constituting a denial of a claim
for benefits by a participant or beneficiary under the plan
which is not a medically reviewable determination, if such
determination is the proximate cause of substantial harm
to, or wrongful death of, the participant or beneficiary,
the relief for which the civil action may be brought under
subsection (a)(1)(B) shall include liability of the des-
ignated health care decision-maker of the plan for eco-
nomic and noneconomic damages in connection with such
determination and such substantial harm or death, except
that the aggregate amount of such liability for non-
economic damages may not exceed the maximum amount
allowable under subsection (n)(5).’’.
151
(2) SPECIAL
RULE.—Nothing in the amend-
ment made by paragraph (1) shall affect the stand-
ard of review applicable under section 502(a)(1)(B)
of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1132(a)(1)(B)).
(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 date
of the enactment of this Act.
SEC. 202. SEVERABILITY.
If any provision of this title, an amendment made by
this title, or the application of such provision or amend-
ment to any person or circumstance is held to be unconsti-
tutional, the remainder of this title, the amendments made
by this title, and the application of the provisions of such
to any person or circumstance shall not be affected there-
by.
TITLE III—HEALTH CARE COV-
ERAGE ACCESS TAX INCEN-
TIVES
SEC. 301. EXPANDED AVAILABILITY OF MEDICAL SAVINGS
ACCOUNTS.
(a) REPEAL OF LIMITATIONS ON NUMBER OF MED-
ICAL SAVINGS ACCOUNTS.—
152
(1) IN GENERAL.—Subsections (i) and (j) of
section 220 of the Internal Revenue Code of 1986
are hereby repealed.
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (1) of section 220(c) of
such Code is amended by striking subparagraph
(D).
(B) Section 138 of such Code is amended
by striking subsection (f).
(b) AVAILABILITY NOT LIMITED TO ACCOUNTS FOR
EMPLOYEES
OF
SMALL
EMPLOYERS
AND
SELF-EM-
PLOYED INDIVIDUALS.—
(1) IN GENERAL.—Section 220(c)(1)(A) of such
Code (relating to eligible individual) is amended to
read as follows:
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ means, with respect to any month, any
individual if—
‘‘(i) such individual is covered under a
high deductible health plan as of the 1st
day of such month, and
‘‘(ii) such individual is not, while cov-
ered under a high deductible health plan,
covered under any health plan—
153
‘‘(I) which is not a high deduct-
ible health plan, and
‘‘(II) which provides coverage for
any benefit which is covered under the
high deductible health plan.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 220(c)(1) of such Code is
amended by striking subparagraph (C).
(B) Section 220(c) of such Code is amend-
ed by striking paragraph (4) (defining small
employer) and by redesignating paragraph (5)
as paragraph (4).
(C) Section 220(b) of such Code is amend-
ed by striking paragraph (4) (relating to deduc-
tion limited by compensation) and by redesig-
nating paragraphs (5), (6), and (7) as para-
graphs (4), (5), and (6), respectively.
(c) INCREASE IN AMOUNT OF DEDUCTION ALLOWED
FOR CONTRIBUTIONS TO MEDICAL SAVINGS ACCOUNTS.—
(1) IN
GENERAL.—Paragraph (2) of section
220(b) of such Code is amended to read as follows:
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is the amount equal to 1⁄12 of
the annual deductible (as of the first day of such
154
month) of the individual’s coverage under the high
deductible health plan.’’.
(2) CONFORMING AMENDMENT.—Clause (ii) of
section 220(d)(1)(A) of such Code is amended by
striking ‘‘75 percent of’’.
(d) BOTH EMPLOYERS AND EMPLOYEES MAY CON-
TRIBUTE TO MEDICAL SAVINGS ACCOUNTS.—Paragraph
(4) of section 220(b) of such Code (as redesignated by
subsection (b)(2)(C)) is amended to read as follows:
‘‘(4) COORDINATION WITH EXCLUSION FOR EM-
PLOYER
CONTRIBUTIONS.—The limitation which
would (but for this paragraph) apply under this sub-
section to the taxpayer for any taxable year shall be
reduced (but not below zero) by the amount which
would (but for section 106(b)) be includible in the
taxpayer’s gross income for such taxable year.’’.
(e) REDUCTION
OF
PERMITTED
DEDUCTIBLES
UNDER HIGH DEDUCTIBLE HEALTH PLANS.—
(1) IN GENERAL.—Subparagraph (A) of section
220(c)(2) of such Code (defining high deductible
health plan) is amended—
(A) by striking ‘‘$1,500’’ in clause (i) and
inserting ‘‘$1,000’’; and
(B) by striking ‘‘$3,000’’ in clause (ii) and
inserting ‘‘$2,000’’.