I
107TH CONGRESS
1ST SESSION
H. R. 2367
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 accountability of health plans.
IN THE HOUSE OF REPRESENTATIVES
JUNE 28, 2001
Mr. SESSIONS (for himself and Mr. WELDON of Florida) introduced the fol-
lowing bill; which was referred to the Committee on Education and the
Workforce, and in addition to the Committees on Energy and Commerce,
and Ways and Means, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To amend the Employee Retirement Income Security Act
of 1974, the Public Health Service Act, and the Internal
Revenue Code of 1986 to provide for accountability of
health plans.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Patient Care Dispute Resolution Act of 2001’’.
(b) TABLE OF CONTENTS.—The table of contents is
as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Consideration by plans of claims for benefits and reviews by plans of
denials of such claims.
‘‘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. 503E. Effect of Federal review standards for group health plans on
availability of legal remedies under State law.
‘‘Sec. 503F. Definitions relating to group health plans.
Sec. 3. State flexibility in applying accountability rules to health insurance
issuers.
Sec. 4. Effective dates and related rules.
Sec. 5. Regulations; coordination.
Sec. 6. No benefit requirements.
Sec. 7. Severability.
SEC. 2. CONSIDERATION BY PLANS OF CLAIMS FOR BENE-
FITS AND REVIEWS BY PLANS OF DENIALS OF
SUCH CLAIMS.
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974.—
(1) 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
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 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.
‘‘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
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 or
coverage document, except to the extent that
the application or interpretation of the exclu-
sion or limitation involves a determination de-
scribed 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.
‘‘(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-
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) FAILURE
TO
COMPLY
WITH
TIMELINES
FOR REVIEW.—In any case in which a decision by a
medical review panel is not made within the applica-
ble timeline under subsection (e)(1), the Secretary
may assess a civil penalty against the plan or issuer
of up to $1,000 a day from the date on which such
action is required under such timeline and ending on
the date on which such action is taken, except that,
in any case in which such action is not taken within
7 business days following the date on which such ac-
tion is required, the Secretary may assess, in lieu of
such civil penalty, a civil penalty not to exceed
$500,000.
‘‘(2) 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.
‘‘(C) FAILURE TO COMPLY.—If a plan or
issuer fails to comply with the timeframe estab-
lished under subparagraph (B) with respect to
a participant or beneficiary, the Secretary may
assess a civil penalty against the plan or issuer
of up to $3,000,000.
‘‘(3) 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.
‘‘(4) TREATMENT OF AMOUNTS COLLECTED AS
ASSESSMENTS.—Amounts collected pursuant to any
assessment under this subsection shall be credited to
a special fund established in the Treasury of the
United States for assessments under this subsection.
The amounts so credited, to the extent and in the
amounts provided in advance in appropriations Acts,
shall be available to defray expenses incurred in car-
rying out this section. The amounts so credited shall
not be scored as receipts under section 252 of the
Balanced Budget and Emergency Deficit Control
Act of 1985, and the amounts so credited shall be
credited as a discretionary offset to discretionary
spending to the extent that the amounts so credited
are made available for expenditure in appropriations
Acts.
‘‘(5) EXEMPTION FROM LIABILITY FOR COMPLI-
ANCE WITH DECISIONS OF INDEPENDENT MEDICAL
REVIEW PANEL.—A health care provider shall not be
liable under any provision of law for any act or fail-
ure to act by such provider which is in compliance
with any requirement imposed by the decision of an
independent medical review panel under this section.
‘‘(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
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
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-
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
‘‘(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.—
‘‘(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.
‘‘(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.—
‘‘(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
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).
‘‘(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—
‘‘(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;
‘‘(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).
‘‘(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
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-
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
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-
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.
‘‘SEC. 503E. EFFECT OF FEDERAL REVIEW STANDARDS FOR
GROUP HEALTH PLANS ON AVAILABILITY OF
LEGAL REMEDIES UNDER STATE LAW.
‘‘(a) IN GENERAL.—Subject to subsection (b), in the
case of any denial of a claim for benefits under a group
health plan with respect to which external review has been
completed under section 503D, nothing in section 503A,
503B, 503C, or 503D shall be construed to alter, amend,
modify, invalidate, impair, or supersede any provision of
State law (as defined in section 514(c)(1)) to the extent
that such provision provides a legal remedy for injury or
wrongful death resulting from such denial.
‘‘(b) TREATMENT OF DELAYS BY EXTERNAL REVIEW
ENTITIES AND INDEPENDENT MEDICAL REVIEWERS.—
Notwithstanding subsection (a), this title supersedes any
provision of State law to the extent it provides for liability
for any violation of a timeline under section 503D applica-
ble to external review entities or independent medical re-
view panels (except with respect to any liability of any
such entity or any member of any such panel permitted
under section 503D(h)(4)(E)).
‘‘SEC. 503F. DEFINITIONS RELATING TO GROUP HEALTH
PLANS.
‘‘For purposes of this part—
‘‘(1) 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).
‘‘(2) 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.
‘‘(3) 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.
‘‘(4) 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.
‘‘(5) 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.
‘‘(6) 
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.
‘‘(7) 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.
‘‘(8) 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.
‘‘(9) 
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.’’.
(2) CONFORMING AMENDMENTS.—
(A) CAUSE OF ACTION TO COLLECT AS-
SESSMENTS.—Section 502(a)(6) of such Act
(29 U.S.C. 1132(a)(6)) is amended—
(i) by striking ‘‘or under’’ and insert-
ing ‘‘, under’’; and
(ii) by striking the period and insert-
ing the following: ‘‘, or under section
503D(f).’’.
(B) SATISFACTION OF ERISA CLAIMS PRO-
CEDURE 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-
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.’’.
(3) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of the Employee Retirement In-
come Security 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.
‘‘Sec. 503E. Effect of Federal review standards for group health plans on avail-
ability of legal remedies under State law.
‘‘Sec. 503F. Definitions relating to group health plans.’’.
(b) CONFORMING AMENDMENTS TO PUBLIC HEALTH
SERVICE ACT.—
(1) GROUP HEALTH PLANS.—Title XXVII of
the Public Health Service Act is amended by insert-
ing after section 2706 the following new section:
‘‘SEC. 2707. 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.’’.
(2) INDIVIDUAL HEALTH PLANS.—Title XXVII
of the Public Health Service Act is amended by in-
serting after section 2752 the following new section:
‘‘SEC. 2753. 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
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.’’.
(c) 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 plan accountability.’’;
and
(2) by inserting after section 9814 the fol-
lowing:
‘‘SEC. 9813. 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.’’.
SEC. 3. STATE FLEXIBILITY IN APPLYING ACCOUNTABILITY
RULES TO HEALTH INSURANCE ISSUERS.
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974.—Part 5 of subtitle B
of title I of the Employee Retirement Income Security Act
of 1974 (as amended by section 2) is amended further—
(1) by redesignating section 503F as section
503G; and
(2) by inserting after section 503E the fol-
lowing new section:
‘‘SEC. 503F. STATE FLEXIBILITY IN APPLYING ACCOUNT-
ABILITY 
RULES 
TO 
HEALTH 
INSURANCE
ISSUERS.
‘‘(a) STATE FLEXIBILITY.—The requirements of sec-
tion 503A, 503B, 503C, or 503D shall not apply with re-
spect to health insurance coverage (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, 2004; 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 (b)) that the State has in effect a State law
(as defined in section 2723(d)(1) of the Public
Health Service Act)—
‘‘(A) that provides rules relating to consid-
eration of claims for benefits or review of deni-
als of such claims under such section 503A,
503B, 503C, or 503D; and
‘‘(B) that—
‘‘(i) adopts the Federal rules under
such section with respect to the consider-
ation or review; or
‘‘(ii) is consistent with the purposes of
such section,
and the Board has not found such certification in-
valid 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, 2002, and no later than May 1, 2002.
‘‘(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
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.—
‘‘(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 subsection (a)(2)(B).
‘‘(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.
‘‘(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.—
‘‘(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 Acts,
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)).
‘‘(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 ap-
propriation Acts, the Board may pay reasonable
travel expenses to witnesses for travel incident
to hearings held by the Board. Nothing in this
subsection shall be construed as authorizing 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 2002, $500,000,
‘‘(B) for fiscal year 2003, $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
to affect or modify the provisions of section 514 with re-
spect to group health plans (insofar as they provide bene-
fits other than in the form of health insurance coverage).
‘‘(d) CONFORMING REGULATIONS.—The Secretary
may issue regulations to coordinate the requirements on
group health plans under sections 503A through 503D
with the requirements imposed under the other provisions
of this title.’’.
(2) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of such Act (as amended by sec-
tion 2) is amended further—
(A) in the item relating to section 503F,
by striking ‘‘Sec. 503F.’’ and inserting ‘‘Sec.
503G.’’; and
(B) by inserting after the item relating to
section 503E, the following:
‘‘Sec. 503F. State flexibility in applying accountability rules to health insurance
issuers.’’.
(b) STATE FLEXIBILITY
IN APPLYING ACCOUNT-
ABILITY RULES UNDER THE PUBLIC HEALTH SERVICE
ACT.—
(1) 
GROUP
HEALTH
PLANS
AND
GROUP
HEALTH
INSURANCE
COVERAGE.—Title XXVII of
the Public Health Service Act is amended—
(A) in section 2723(a)(1) (42 U.S.C.
300gg–23(a)(1)), by inserting ‘‘and section
2724’’ after ‘‘Subject to paragraph (2)’’; and
(B) by inserting after section 2723 the fol-
lowing new section:
‘‘SEC. 2724. STATE FLEXIBILITY IN APPLYING ACCOUNT-
ABILITY RULES.
‘‘(a) IN GENERAL.—The provisions of section 503F
of the Employee Retirement Income Security Act of 1974
apply with respect to the rules under section 2707 (only
as applied with respect to group health plans under section
2721(b)) in the same manner as such provisions apply to
comparable rules 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).’’.
(2) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—Title XXVII of the Public Health Service
Act is amended—
(A) in section 2762(a) (42 U.S.C. 300gg–
62(a)(1)), by inserting ‘‘and section 2762A’’
after ‘‘Subject to subsection (b)’’; and
(B) by inserting after section 2762 the fol-
lowing new section:
‘‘SEC. 2762A. STATE FLEXIBILITY IN APPLYING ACCOUNT-
ABILITY RULES.
‘‘The provisions of section 2724 apply in relation to
the rules under section 2755 (relating to accountability)
with respect to individual health insurance coverage in the
same manner as those provisions apply in relation to the
rules under section 2709, as applied to group health plans
under section 2721(b).’’.
SEC. 4. EFFECTIVE DATES AND RELATED RULES.
(a) IN GENERAL.—The provisions of this Act, includ-
ing the amendments made by this Act, shall apply—
(1) to group health plans, and health insurance
coverage offered in connection with such plans, on
the later of—
(A) plan years beginning on or after Janu-
ary 1 of the first calendar year that begins
more than 1 year after the date of the enact-
ment of this Act; or
(B) plan years beginning on or after 18
months after the date on which the Secretary of
Health and Human Services and the Secretary
of Labor issue final regulations, subject to the
notice and comment period required under sub-
chapter 2 of chapter 5 of title 5, United States
Code, necessary to carry out such provisions
and the amendments made by this Act; and
(2) to individual health insurance coverage be-
ginning on or after the effective date described in
paragraph (1)(A).
(b) 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 provisions of the amendments
made by this Act.
SEC. 5. 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
out the amendments made by this Act 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 Act 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 Act.
(d) LIMITATION ON ENFORCEMENT ACTIONS.—No
enforcement action shall be taken, pursuant to the amend-
ments made by this Act, against a group health plan or
health insurance issuer with respect to a violation of a re-
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. 6. NO BENEFIT REQUIREMENTS.
Nothing in the amendments made by this Act 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. 7. SEVERABILITY.
If any provision of this Act, an amendment made by
this Act, or the application of such provision or amend-
ment to any person or circumstance is held to be unconsti-
tutional, the remainder of this Act, the amendments made
by this Act, and the application of the provisions of such
to any person or circumstance shall not be affected there-
by.
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