‘‘(c) NO REPRISAL FOR EXERCISE OF RIGHTS.—A
health insurance issuer shall not take any action with re-
spect to an enrollee or a health care provider that is in-
tended to penalize the enrollee, a designee of the enrollee,
or the health care provider for discussing or exercising any
rights provided under this part (including the filing of a
complaint or appeal pursuant to this section).
‘‘SEC. 2785. PROVISIONS RELATING TO APPEALS OF UTILI-
ZATION REVIEW DETERMINATIONS AND SIMI-
LAR DETERMINATIONS.
‘‘(a) RIGHT OF APPEAL.—
‘‘(1) IN GENERAL.—An enrollee in health insur-
ance coverage offered by a health insurance issuer,
and any provider acting on behalf of the enrollee
with the enrollee’s consent, may appeal any appeal-
able decision (as defined in paragraph (2)) under the
procedures described in this section and (to the ex-
tent applicable) section 2784. Such enrollees and
providers shall be provided with a written expla-
nation of the appeal process upon the conclusion of
each stage in the appeal process and as provided in
section 2782(a)(5)
‘‘(2) APPEALABLE DECISION DEFINED.—In this
section, the term ‘appealable decision’ means any of
the following:
‘‘(A) An adverse determination under a
utilization review program under section 2781.
‘‘(B) Denial of access to specialty and
other care under section 2772.
‘‘(C) Denial of continuation of care under
section 2773.
‘‘(D) Denial of a choice of provider under
section 2774.
‘‘(E) Denial of coverage of routine patient
costs in connection with an approval clinical
trial under section 2775.
‘‘(F) Denial of access to needed drugs
under section 2776(3).
‘‘(G) The imposition of a limitation that is
prohibited under section 2789.
‘‘(H) Denial of payment for a benefit,
‘‘(b) INFORMAL INTERNAL APPEAL PROCESS (STAGE
1).—
‘‘(1) IN GENERAL.—Each issuer shall establish
and maintain an informal internal appeal process
(an appeal under such process in this section re-
ferred to as a ‘stage 1 appeal’) under which any en-
rollee or any provider acting on behalf of an enrollee
with the enrollee’s consent, who is dissatisfied with
any appealable decision has the opportunity to dis-
cuss and appeal that decision with the medical direc-
tor of the issuer or the health care professional who
made the decision.
‘‘(2) TIMING.—All appeals under this para-
graph shall be concluded as soon as possible in ac-
cordance with the medical exigencies of the cases,
and in no event later than 72 hours in the case of
appeals from decisions regarding urgent care and 5
days in the case of all other appeals.
‘‘(3) FURTHER REVIEW.—If the appeal is not
resolved to the satisfaction of the enrollee at this
level by the deadline under paragraph (2), the issuer
shall provide the enrollee and provider (if any) with
a written explanation of the decision and the right
to proceed to a stage 2 appeal under subsection (c).
‘‘(c) FORMAL INTERNAL APPEAL PROCESS (STAGE
2).—
‘‘(1) IN GENERAL.—Each issuer shall establish
and maintain a formal internal appeal process (an
appeal under such process in this section referred to
as a ‘stage 2 appeal’) under which any enrollee or
provider acting on behalf of an enrollee with the en-
rollee’s consent, who is dissatisfied with the results
of a stage 1 appeal has the opportunity to appeal
the results before a panel that includes a physician
or other health care professional (or professionals)
selected by the issuer who have not been involved in
the appealable decision at issue in the appeal.
‘‘(2) AVAILABILITY OF CLINICAL PEERS.—The
panel under subparagraph (A) shall have available
either 
clinical 
peers 
(as 
defined 
in 
section
2781(c)(2)(B)) who have not been involved in the
appealable decision at issue in the appeal or others
who are mutually agreed upon by the parties. If re-
quested by the enrollee or enrollee’s provider with
the enrollee’s consent, such a peer shall participate
in the panel’s review of the case.
‘‘(3) TIMELY ACKNOWLEDGMENT.—The issuer
shall acknowledge the enrollee or provider involved
of the receipt of a stage 2 appeals upon receipt of
the appeal.
‘‘(4) DEADLINE.—
‘‘(A) IN GENERAL.—The issuer shall con-
clude each stage 2 appeal as soon as possible
after the date of the receipt of the appeal in ac-
cordance with medical exigencies of the case in-
volved, but in no event later than 72 hours in
the case of appeals from decisions regarding ur-
gent care and (except as provided in subpara-
graph (B)) 20 business days in the case of all
other appeals.
‘‘(B) EXTENSION.—An issuer may extend
the deadline for an appeal that does not relate
to a decision regarding urgent or emergency
care up to an additional 20 business days where
it can demonstrate to the applicable State au-
thority reasonable cause for the delay beyond
its control and where it provides, within the
original deadline under subparagraph (A), a
written progress report and explanation for the
delay to such authority and to the enrollee and
provider involved.
‘‘(5) NOTICE.—If an issuer denies a stage 2 ap-
peal, the issuer shall provide the enrollee and pro-
vider involved with written notification of the denial
and the reasons therefore, together with a written
notification of rights to any further appeal
‘‘(d) DIRECT USE OF FURTHER APPEALS.—In the
event that the issuer fails to comply with any of the dead-
lines for completion of appeals under this section or in
the event that the issuer for any reason expressly waives
its rights to an internal review of an appeal under sub-
section (b) or (c), the enrollee and provider involved shall
be relieved of any obligation to complete the appeal stage
involved and may, at the enrollee’s or provider’s option,
proceed directly to seek further appeal through any appli-
cable external appeals process.
‘‘(e) EXTERNAL APPEAL PROCESS IN CASE OF USE
OF EXPERIMENTAL TREATMENT TO SAVE LIFE OF PA-
TIENT.—
‘‘(1) IN GENERAL.—In the case of an enrollee
described in paragraph (2), the health insurance is-
suer shall provide for an external independent review
process respecting the issuer’s decision not to cover
the experimental therapy (described in paragraph
(2)(B)(ii)).
‘‘(2) ENROLLEE DESCRIBED.—An enrollee de-
scribed in this paragraph is an enrollee who meets
the following requirements:
‘‘(A) The enrollee has a terminal condition
that is highly likely to cause death within 2
years.
‘‘(B) The enrollee’s physician certifies
that—
‘‘(i) there is no standard, medically
appropriate therapy for successfully treat-
ing such terminal condition, but
‘‘(ii) based on medical and scientific
evidence, there is a drug, device, proce-
dure, or therapy (in this section referred to
as the ‘experimental therapy’) that is more
beneficial than any available standard ther-
apy.
‘‘(C) The issuer has denied coverage of the
experimental therapy on the basis that it is ex-
perimental or investigational.
‘‘(3) DESCRIPTION
OF
PROCESS
AND
DECI-
SION.—The process under this subsection shall pro-
vide for a determination on a timely basis, by a
panel of independent, impartial physicians appointed
by a State authority or by an independent review or-
ganization certified by the State, of the medical ap-
propriateness of the experimental therapy. The deci-
sion of the panel shall be in writing and shall be ac-
companied by an explanation of the basis for the de-
cision. A decision of the panel that is favorable to
the enrollee may not be appealed by the issuer ex-
cept in the case of misrepresentation of a material
fact by the enrollee or a provider. A decision of the
panel that is not favorable to the enrollee may be
appealed by the enrollee.
‘‘(4) ISSUER COVERING PROCESS COSTS.—Di-
rect costs of the process under this subsection shall
be borne by the issuer, and not by the enrollee.
‘‘(f) OTHER
INDEPENDENT
OR
EXTERNAL
RE-
VIEW.—
‘‘(1) IN GENERAL.—In the case of appealable
decision described in paragraph (2), the health in-
surance issuer shall provide for—
‘‘(A) an external review process for such
decisions consistent with the requirements of
paragraph (3), or
‘‘(B) an internal independent review proc-
ess for such decisions consistent with the re-
quirements of paragraph (4).
‘‘(2) APPEALABLE DECISION DESCRIBED.—An
appealable decision described in this paragraph is
decision that does not involve a decision described in
subsection (e)(1) but involves—
‘‘(A) a claim for benefits involving costs
over a significant threshold, or
‘‘(B) assuring access to care for a serious
condition.
‘‘(3) EXTERNAL
REVIEW
PROCESS.—The re-
quirements of this subsection for an external review
process are as follows:
‘‘(A) The process is established under
State law and provides for review of decisions
on stage 2 appeals by an independent review or-
ganization certified by the State.
‘‘(B) If the process provides that decisions
in such process are not binding on issuers, the
process must provide for public methods of dis-
closing frequency of noncompliance with such
decisions and for sanctioning issuers that con-
sistently refuse to take appropriate actions in
response to such decisions.
‘‘(C) Results of all such reviews under the
process are disclosed to the public, along with
at least annual disclosure of information on is-
suer compliance.
‘‘(D) All decisions under the process shall
be in writing and shall be accompanied by an
explanation of the basis for the decision.
‘‘(E) Direct costs of the process shall be
borne by the issuer, and not by the enrollee.
‘‘(F) The issuer shall provide for publica-
tion at least annually of information on the
numbers of appeals and decisions considered
under the process.
‘‘(4) INTERNAL, INDEPENDENT REVIEW PROC-
ESS.—The requirements of this subsection for an in-
ternal, independent review process are as follows:
‘‘(A)(i) The process must provide for the
participation of persons who are independent of
the issuer in conducting reviews and (ii) the
Secretary must have found (through reviews
conducted no less often than biannually) the
process to be fair and impartial.
‘‘(B) If the process provides that decisions
in such process are not binding on issuers, the
process must provide for public methods of dis-
closing frequency of noncompliance with such
decisions and for sanctioning issuers that con-
sistently refuse to take appropriate actions in
response to such decisions.
‘‘(C) Results of all such reviews under the
process are disclosed to the public, along with
at least annual disclosure of information on is-
suer compliance.
‘‘(D) All decisions under the process shall
be in writing and shall be accompanied by an
explanation of the basis for the decision.
‘‘(E) Direct costs of the process shall be
borne by the issuer, and not by the enrollee.
‘‘(F) The issuer shall provide for publica-
tion at least annually of information on the
numbers of appeals and decisions considered
under the process.
The Secretary may delegate the authority under sub-
paragraph (A)(ii) to applicable State authorities.
‘‘(5) OVERSIGHT.—The Secretary (and applica-
ble State authorities in the case of delegation of Sec-
retarial authority under paragraph (4)) shall con-
duct reviews not less often than biannually of the
fairness and impartiality issuers who desired to use
an internal, independent review process described in
paragraph (4) to satisfy the requirement of para-
graph (1).
‘‘(6) REPORT.—The Secretary shall provide for
periodic reports on the effectiveness of this sub-
section in assuring fair and impartial reviews of
stage 2 appeals. Such reports shall include informa-
tion on the number of stage 2 appeals (and deci-
sions), for each of the types of review processes de-
scribed in paragraph (2), by health insurance cov-
erage.
‘‘(g) CONSTRUCTION.—Nothing in this part shall be
construed as removing any legal rights of enrollees under
State or Federal law, including the right to file judicial
actions to enforce rights.
‘‘SEC. 2786. STATE HEALTH INSURANCE OMBUDSMEN.
‘‘(a) IN GENERAL.—Each State that obtains a grant
under subsection (c) shall establish and maintain a Health
Insurance Ombudsman. Such Ombudsman may be part of
a independent, nonprofit entity, and shall be responsible
for at least the following:
‘‘(1) To assist consumers in the State in choos-
ing among health insurance coverage.
‘‘(2) To provide counseling and assistance to
enrollees dissatisfied with their treatment by health
insurance issuers in regard to such coverage and in
the filing of complaints and appeals regarding deter-
minations under such coverage.
‘‘(3) To investigate instances of poor quality or
improper treatment of enrollees by health insurance
issuers in regard to such coverage and to bring such
instances to the attention of the applicable State au-
thority.
‘‘(b) FEDERAL ROLE.—In the case of any State that
does not establish and maintain such an Ombudsman
under subsection (a), the Secretary shall provide for the
establishment and maintenance of such an official as will
carry out with respect to that State the functions other-
wise provided under subsection (a) by a Health Insurance
Ombudsman.
‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary such
amounts as may be necessary to provide for grants to
States to establish and operate Health Insurance Ombuds-
men under subsection (a) or for the operation of Ombuds-
men under subsection (b).
‘‘SUBPART 5—PROTECTION OF PROVIDERS AGAINST IN-
TERFERENCE
WITH
MEDICAL
COMMUNICATIONS
AND IMPROPER INCENTIVE ARRANGEMENTS
‘‘SEC. 2787. PROHIBITION OF INTERFERENCE WITH CER-
TAIN MEDICAL COMMUNICATIONS.
‘‘(a) PROHIBITION.—
‘‘(1) GENERAL RULE.—The provisions of any
contract or agreement, or the operation of any con-
tract or agreement, between a health insurance is-
suer in relation to health insurance coverage (includ-
ing any partnership, association, or other organiza-
tion that enters into or administers such a contract
or agreement) and a health care provider (or group
of health care providers) shall not prohibit or re-
strict the provider from engaging in medical commu-
nications with the provider’s patient.
‘‘(2) NULLIFICATION.—Any contract provision
or agreement described in paragraph (1) shall be
null and void.
‘‘(3) PROHIBITION ON PROVISIONS.—A contract
or agreement described in paragraph (1) shall not
include a provision that violates paragraph (1).
‘‘(b) RULES OF CONSTRUCTION.—Nothing in this
section shall be construed—
‘‘(1) to prohibit the enforcement, as part of a
contract or agreement to which a health care pro-
vider is a party, of any mutually agreed upon terms
and conditions, including terms and conditions re-
quiring a health care provider to participate in, and
cooperate with, all programs, policies, and proce-
dures developed or operated by a health insurance
issuer to assure, review, or improve the quality and
effective utilization of health care services (if such
utilization is according to guidelines or protocols
that are based on clinical or scientific evidence and
the professional judgment of the provider) but only
if the guidelines or protocols under such utilization
do not prohibit or restrict medical communications
between providers and their patients; or
‘‘(2) to permit a health care provider to mis-
represent the scope of benefits covered under health
insurance coverage or to otherwise require a health
insurance issuer to reimburse providers for benefits
not covered under the coverage.
‘‘(c) PROTECTION OF RELIGIOUS OR MORAL EX-
PRESSION.—
‘‘(1) IN GENERAL.—An health insurance issuer
may fully advise—
‘‘(A) licensed or certified health care pro-
viders at the time of their employment with the
issuer or at any time during such employment,
or
‘‘(B) enrollees at the time of their enroll-
ment for health insurance coverage with the is-
suer or at any time during which such enrollees
have such coverage,
of the coverage’s limitations on providing particular
medical services (including limitations on referrals
for care provided outside of the coverage) based on
the religious or moral convictions of the issuer.
‘‘(2) HEALTH
CARE
PROVIDERS.—Nothing in
this section shall be construed to alter the rights and
duties of a health care provider to determine what
medical communications are appropriate with re-
spect to each patient, except as provided for in sub-
section (a).
‘‘(d) MEDICAL COMMUNICATION DEFINED.—
‘‘(1) IN GENERAL.—In this section, the term
‘medical communication’ means any communication
made by a health care provider with a patient of the
health care provider (or the guardian or legal rep-
resentative of such patient) with respect to—
‘‘(A) the patient’s health status, medical
care, or treatment options;
‘‘(B) any utilization review requirements
that may affect treatment options for the pa-
tient; or
‘‘(C) any financial incentives that may af-
fect the treatment of the patient.
‘‘(2) MISREPRESENTATION.—The term ‘medical
communication’ does not include a communication
by a health care provider with a patient of the
health care provider (or the guardian or legal rep-
resentative of such patient) if the communication in-
volves a knowing or willful misrepresentation by
such provider.
‘‘SEC. 2788. PROHIBITION AGAINST TRANSFER OF INDEM-
NIFICATION OR IMPROPER INCENTIVE AR-
RANGEMENTS.
‘‘(a) PROHIBITION OF TRANSFER OF INDEMNIFICA-
TION.—No contract or agreement between a health insur-
ance issuer (or any agent acting on behalf of such an is-
suer) and a health care provider shall contain any clause
purporting to transfer to the health care provider by in-
demnification or otherwise any liability relating to activi-
ties, actions, or omissions of the issuer or agent (as op-
posed to the provider).
‘‘(b) PROHIBITION OF IMPROPER PHYSICIAN INCEN-
TIVE PLANS.—
‘‘(1) IN GENERAL.—A health insurance issuer
offering health insurance coverage may not operate
any physician incentive plan unless the following re-
quirements are met:
‘‘(A) No specific payment is made directly
or indirectly by the issuer to a physician or
physician group as an inducement to reduce or
limit medically necessary services provided with
respect to a specific individual enrolled with the
issuer.
‘‘(B) If the plan places a physician or phy-
sician group at substantial financial risk (as de-
termined by the Secretary) for services not pro-
vided by the physician or physician group, the
issuer—
‘‘(i) provides stop-loss protection for
the physician or group that is adequate
and appropriate, based on standards devel-
oped by the Secretary that take into ac-
count the number of physicians placed at
such substantial financial risk in the group
or under the plan and the number of indi-
viduals enrolled with the issuer who receive
services from the physician or the physi-
cian group, and
‘‘(ii) conducts periodic surveys of both
individuals enrolled and individuals pre-
viously enrolled with the issuer to deter-
mine the degree of access of such individ-
uals to services provided by the issuer and
satisfaction with the quality of such serv-
ices.
‘‘(C) The issuer provides the applicable
State authority (or the Secretary if such au-
thority is implementing this section) with de-
scriptive information regarding the plan, suffi-
cient to permit the authority (or the Secretary
in such case) to determine whether the plan is
in compliance with the requirements of this
paragraph.
‘‘(2) PHYSICIAN INCENTIVE PLAN DEFINED.—
In this section, the term ‘physician incentive plan’
means any compensation arrangement between a
health insurance issuer and a physician or physician
group that may directly or indirectly have the effect
of reducing or limiting services provided with respect
to individuals enrolled with the issuer.
‘‘(3) APPLICATION OF MEDICARE RULES.—The
Secretary shall provide for the application of rules
under this subsection that are substantially the same
as the rules established to carry out section
1876(i)(8) of the Social Security Act.
‘‘SUBPART 6—PROMOTING GOOD MEDICAL PRACTICE
AND PROTECTING THE DOCTOR-PATIENT RELATIONSHIP
‘‘SEC. 2789. PROMOTING GOOD MEDICAL PRACTICE.
‘‘(a) PROHIBITING
ARBITRARY
LIMITATIONS
OR
CONDITIONS
FOR
THE PROVISION
OF SERVICES.—A
health insurance issuer, in connection with the provision
of health insurance coverage, may not impose limits on
the manner in which particular services are delivered if
the services are medically necessary and appropriate for
the treatment or diagnosis of an illness or injury to the
extent that such treatment or diagnosis is otherwise a cov-
ered benefit.
‘‘(b) MEDICAL NECESSITY AND APPROPRIATENESS
DEFINED.—In subsection (a), the term ‘medically nec-
essary and appropriate’ means, with respect to a service
or benefit, a service or benefit determined by the treating
physician participating in the health insurance coverage
after consultation with the enrollee, to be required, accord-
ingly to generally accepted principles of good medical prac-
tice, for the diagnosis or direct care and treatment of an
illness or injury of the enrollee.
‘‘(c) CONSTRUCTION.—Subsection (a) shall not be
construed as requiring coverage of particular services the
coverage of which is otherwise not covered under the terms
of the coverage.’’.
(b) APPLICATION TO GROUP HEALTH INSURANCE
COVERAGE.—Subpart 2 of part A of title XXVII of the
Public Health Service Act is amended by adding at the
end the following new section:
‘‘SEC. 2706. PATIENT PROTECTION STANDARDS.
‘‘Each health insurance issuer shall comply with pa-
tient protection requirements under part C with respect
to group health insurance coverage it offers.’’.
(c) APPLICATION TO INDIVIDUAL HEALTH INSUR-
ANCE COVERAGE.—Part B of title XXVII of the Public
Health Service Act is amended by inserting after section
2751 the following new section:
‘‘SEC. 2752. PATIENT PROTECTION STANDARDS.
‘‘Each health insurance issuer shall comply with pa-
tient protection requirements under part C with respect
to individual health insurance coverage it offers.’’.
(d) MODIFICATION OF PREEMPTION STANDARDS.—
(1) GROUP HEALTH INSURANCE COVERAGE.—
Section 2723 of such Act (42 U.S.C. 300gg–23) is
amended—
(A) in subsection (a)(1), by striking ‘‘sub-
section (b)’’ and inserting ‘‘subsections (b) and
(c)’’;
(B) by redesignating subsections (c) and
(d) as subsections (d) and (e), respectively; and
(C) by inserting after subsection (b) the
following new subsection:
‘‘(c) SPECIAL RULES IN CASE OF PATIENT PROTEC-
TION REQUIREMENTS.—Subject to subsection (a)(2), the
provisions of section 2706 and part C (other than section
2771), and part D insofar as it applies to section 2706
or part C, shall not prevent a State from establishing re-
quirements relating to the subject matter of such provi-
sions (other than section 2771) so long as such require-
ments are at least as stringent on health insurance issuers
as the requirements imposed under such provisions. Sub-
section (a) shall apply to the provisions of section 2771
(and section 2706 insofar as it relates to such section).’’.
(2) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—Section 2762 of such Act (42 U.S.C.
300gg–62), as added by section 605(b)(3)(B) of
Public Law 104–204, is amended—
(A) in subsection (a), by striking ‘‘sub-
section (b), nothing in this part’’ and inserting
‘‘subsections (b) and (c)’’, and
(B) by adding at the end the following new
subsection:
‘‘(c) SPECIAL RULES IN CASE OF MANAGED CARE
REQUIREMENTS.—Subject to subsection (b), the provi-
sions of section 2752 and part C (other than section
2771), and part D insofar as it applies to section 2752
or part C, shall not prevent a State from establishing re-
quirements relating to the subject matter of such provi-
sions so long as such requirements are at least as strin-
gent on health insurance issuers as the requirements im-
posed under such section. Subsection (a) shall apply to
the provisions of section 2771 (and section 2752 insofar
as it relates to such section).’’.
(e) ADDITIONAL CONFORMING AMENDMENTS.—
(1) Section 2723(a)(1) of such Act (42 U.S.C.
300gg–23(a)(1)) is amended by striking ‘‘part C’’
and inserting ‘‘parts C and D’’.
(2) Section 2762(b)(1) of such Act (42 U.S.C.
300gg–62(b)(1)) is amended by striking ‘‘part C’’
and inserting ‘‘part D’’.
(f) EFFECTIVE DATES.—(1)(A) Subject to subpara-
graph (B), the amendments made by subsections (a), (b),
(d)(1), and (e) shall apply with respect to group health
insurance coverage for group health plan years beginning
on or after July 1, 1998 (in this subsection referred to
as the ‘‘general effective date’’) and also shall apply to
portions of plan years occurring on and after January 1,
1999.
(B) In the case of group health insurance coverage
provided pursuant to a group health plan maintained pur-
suant to 1 or more collective bargaining agreements be-
tween employee representatives and 1 or more employers
ratified before the date of enactment of this Act, the
amendments made by subsections (a), (b), (d)(1), and (e)
shall not apply to plan years beginning before the later
of—
(i) the date on which the last collective bargain-
ing agreements relating to the plan terminates (de-
termined without regard to any extension thereof
agreed to after the date of enactment of this Act),
or
(ii) the general effective date.
For purposes of clause (i), any plan amendment made pur-
suant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any re-
quirement added by subsection (a) or (b) shall not be
treated as a termination of such collective bargaining
agreement.
(2) The amendments made by subsections (a), (c),
(d)(2), and (e) 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 gen-
eral effective date.
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