I
107TH CONGRESS
1ST SESSION
H. R. 526
To amend the Public Health Service Act, the Employee Retirement Income
Security Act of 1974, and the Internal Revenue Code of 1986 to protect
consumers in managed care plans and other health coverage.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 8, 2001
Mr. GANSKE (for himself, Mr. DINGELL, Mr. LEACH, Mr. BERRY, Mrs. ROU-
KEMA, Mr. BROWN of Ohio, Mrs. MORELLA, Mr. JOHN, Mr. GILMAN, Mr.
ANDREWS, Mr. LATOURETTE, Mr. RANGEL, Mr. STENHOLM, Mr.
SANDLIN, Mr. STUPAK, Mr. PALLONE, Mr. TOWNS, Ms. ESHOO, Mrs.
CAPPS, Mr. GREEN of Texas, Mr. GORDON, Ms. MCCARTHY of Missouri,
Mr. ENGEL, Mr. MOORE, Mr. STICKLAND, Mr. MARKEY, Mr. SAWYER,
Mrs. DAVIS of California, Mr. BARRETT, Mr. WYNN, Mr. STARK, Mr.
WAXMAN, Mr. RUSH, Mr. BOUCHER, Mr. HALL of Texas, Mr. BISHOP,
Mr. TURNER, Ms. HARMAN, Mr. PASCRELL, Mrs. MCCARTHY of New
York, Mr. FRANK, Mr. MATSUI, Mr. COYNE, Mr. MCDERMOTT, Mr.
CARDIN, Mr. LEVIN, Mr. MCNULTY, Mr. JEFFERSON, Mr. BECERRA, Mr.
LEWIS of Georgia, Mr. KLECZKA, Mrs. THURMAN, Mr. BOSWELL, Mr.
CROWLEY, Mr. TIERNEY, Mr. HOEFFEL, and Mr. MEEHAN) introduced
the following bill; which was referred to the Committee on Energy and
Commerce, and in addition to the Committees on Education and the
Workforce, and Ways and Means, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To amend the Public Health Service Act, the Employee Re-
tirement Income Security Act of 1974, and the Internal
Revenue Code of 1986 to protect consumers in managed
care plans and other health coverage.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Bipartisan Patient Protection Act of 2001’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—IMPROVING MANAGED CARE
Subtitle A—Utilization Review; Claims; and Internal and External Appeals
Sec. 101. Utilization review activities.
Sec. 102. Procedures for initial claims for benefits and prior authorization de-
terminations.
Sec. 103. Internal appeals of claims denials.
Sec. 104. Independent external appeals procedures.
Subtitle B—Access to Care
Sec. 111. Consumer choice option.
Sec. 112. Choice of health care professional.
Sec. 113. Access to emergency care.
Sec. 114. Timely access to specialists.
Sec. 115. Patient access to obstetrical and gynecological care.
Sec. 116. Access to pediatric care.
Sec. 117. Continuity of care.
Sec. 118. Access to needed prescription drugs.
Sec. 119. Coverage for individuals participating in approved clinical trials.
Sec. 120. Required coverage for minimum hospital stay for mastectomies and
lymph node dissections for the treatment of breast cancer and
coverage for secondary consultations.
Subtitle C—Access to Information
Sec. 121. Patient access to information.
Subtitle D—Protecting the Doctor-Patient Relationship
Sec. 131. Prohibition of interference with certain medical communications.
Sec. 132. Prohibition of discrimination against providers based on licensure.
Sec. 133. Prohibition against improper incentive arrangements.
Sec. 134. Payment of claims.
Sec. 135. Protection for patient advocacy.
Subtitle E—Definitions
Sec. 151. Definitions.
Sec. 152. Preemption; State flexibility; construction.
Sec. 153. Exclusions.
Sec. 154. Coverage of limited scope plans.
Sec. 155. Regulations.
Sec. 156. Incorporation into plan or coverage documents.
TITLE II—APPLICATION OF QUALITY CARE STANDARDS TO
GROUP HEALTH PLANS AND HEALTH INSURANCE COVERAGE
UNDER THE PUBLIC HEALTH SERVICE ACT
Sec. 201. Application to group health plans and group health insurance cov-
erage.
Sec. 202. Application to individual health insurance coverage.
TITLE III—AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974
Sec. 301. Application of patient protection standards to group health plans and
group health insurance coverage under the Employee Retire-
ment Income Security Act of 1974.
Sec. 302. Availability of civil remedies.
Sec. 303. Limitations on actions.
TITLE IV—AMENDMENTS TO THE INTERNAL REVENUE CODE OF
1986
Subtitle A—Application of Patient Protection Provisions
Sec. 401. Application of requirements to group health plans under the Internal
Revenue Code of 1986.
Sec. 402. Conforming enforcement for women’s health and cancer rights.
Subtitle B—Health Care Coverage Access Tax Incentives
Sec. 411. Expanded availability of Archer MSAs.
Sec. 412. Deduction for 100 percent of health insurance costs of self-employed
individuals.
Sec. 413. Credit for health insurance expenses of small businesses.
Sec. 414. Certain grants by private foundations to qualified health benefit pur-
chasing coalitions.
Sec. 415. State grant program for market innovation.
TITLE V—EFFECTIVE DATES; COORDINATION IN
IMPLEMENTATION
Sec. 501. Effective dates.
Sec. 502. Coordination in implementation.
Sec. 503. Severability.
TITLE I—IMPROVING MANAGED
CARE
Subtitle 
A—Utilization 
Review;
Claims; and Internal and Exter-
nal Appeals
SEC. 101. UTILIZATION REVIEW ACTIVITIES.
(a) COMPLIANCE WITH REQUIREMENTS.—
(1) IN GENERAL.—A group health plan, and a
health insurance issuer that provides health 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 102.
(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 health care professionals, as deter-
mined by the plan, pursuant to the program.
Such criteria shall include written clinical re-
view criteria that are based on valid clinical evi-
dence where available and that are directed spe-
cifically at meeting the needs of at-risk popu-
lations and covered individuals with chronic
conditions or severe illnesses, including gender-
specific criteria and pediatric-specific criteria
where available and appropriate.
(B) CONTINUING USE OF STANDARDS IN
RETROSPECTIVE
REVIEW.—If a health care
service has been specifically pre-authorized or
approved for a participant, beneficiary, or en-
rollee under such a program, the program shall
not, pursuant to retrospective review, revise or
modify the specific standards, criteria, or proce-
dures used for the utilization review for proce-
dures, treatment, and services delivered to the
enrollee during the same course of treatment.
(C) REVIEW OF SAMPLE OF CLAIMS DENI-
ALS.—Such a program shall provide for a peri-
odic evaluation of the clinical appropriateness of
at least a sample of denials of claims for bene-
fits.
(c) CONDUCT OF PROGRAM ACTIVITIES.—
(1) ADMINISTRATION BY HEALTH CARE PRO-
FESSIONALS.—A utilization review program shall be
administered by qualified health care professionals
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 profes-
sional who is providing health care services to
an individual to perform utilization review ac-
tivities in connection with the health care serv-
ices 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. 102. 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, shall—
(A) make a determination on an initial
claim for benefits by a participant, beneficiary,
or enrollee (or authorized representative) re-
garding payment or coverage for items or serv-
ices under the terms and conditions of the plan
or coverage involved, including any cost-sharing
amount that the participant, beneficiary, or en-
rollee is required to pay with respect to such
claim for benefits; and
(B) notify a participant, beneficiary, or en-
rollee (or authorized representative) and the
treating health care professional involved re-
garding a determination on an initial claim for
benefits made under the terms and conditions
of the plan or coverage, including any cost-shar-
ing amounts that the participant, beneficiary,
or enrollee may be required to make with re-
spect to such claim for benefits, and of the
right of the participant, beneficiary, or enrollee
to an internal appeal under section 103.
(2) ACCESS TO INFORMATION.—
(A) TIMELY PROVISION OF NECESSARY IN-
FORMATION.—With respect to an initial claim
for benefits, the participant, beneficiary, or en-
rollee (or authorized representative) and the
treating health care professional (if any) shall
provide the plan or issuer with access to infor-
mation requested by the plan or issuer that is
necessary to make a determination relating to
the claim. Such access shall be provided not
later than 5 days after the date on which the
request for information is received, or, in a case
described in subparagraph (B) or (C) of sub-
section (b)(1), by such earlier time as may be
necessary to comply with the applicable timeline
under such subparagraph.
(B) LIMITED
EFFECT
OF
FAILURE
ON
PLAN
OR
ISSUER’S
OBLIGATIONS.—Failure of
the participant, beneficiary, or enrollee to com-
ply with the requirements of subparagraph (A)
shall not remove the obligation of the plan or
issuer to make a decision in accordance with
the medical exigencies of the case and as soon
as possible, based on the available information,
and failure to comply with the time limit estab-
lished by this paragraph shall not remove the
obligation of the plan or issuer to comply with
the requirements of this section.
(3) ORAL REQUESTS.—In the case of a claim
for benefits involving an expedited or concurrent de-
termination, a participant, beneficiary, or enrollee
(or authorized representative) may make an initial
claim for benefits orally, but a group health plan, or
health insurance issuer offering health insurance
coverage, may require that the participant, bene-
ficiary, or enrollee (or authorized representative)
provide written confirmation of such request in a
timely manner on a form provided by the plan or
issuer. In the case of such an oral request for bene-
fits, the making of the request (and the timing of
such request) shall be treated as the making at that
time of a claims for such benefits without regard to
whether and when a written confirmation of such re-
quest is made.
(b) TIMELINE FOR MAKING DETERMINATIONS.—
(1) PRIOR AUTHORIZATION DETERMINATION.—
(A) IN GENERAL.—A group health plan, or
health insurance issuer offering health insur-
ance coverage, shall make a prior authorization
determination on a claim for benefits (whether
oral or written) in accordance with the medical
exigencies of the case and as soon as possible,
but in no case later than 14 days from the date
on which the plan or issuer receives information
that is reasonably necessary to enable the plan
or issuer to make a determination on the 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, shall expedite a prior au-
thorization determination on a claim for bene-
fits described in such subparagraph when a re-
quest for such an expedited determination is
made by a participant, beneficiary, or enrollee
(or authorized representative) at any time dur-
ing the process for making a determination and
a health care professional certifies, with the re-
quest, that a determination under the proce-
dures described in subparagraph (A) would seri-
ously jeopardize the life or health of the partici-
pant, beneficiary, or enrollee or the ability of
the participant, beneficiary, or enrollee to main-
tain or regain maximum function. Such deter-
mination shall be made in accordance with the
medical exigencies of the case and as soon as
possible, but in no case later than 72 hours
after the time the request is received by the
plan or issuer under this subparagraph.
(C) ONGOING CARE.—
(i) CONCURRENT REVIEW.—
(I) IN
GENERAL.—Subject to
clause (ii), in the case of a concurrent
review of ongoing care (including 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 in accordance with the
medical exigencies of the case and as
soon as possible, with sufficient time
prior to the termination or reduction
to allow for an appeal under section
103(b)(3) to be completed before the
termination or reduction takes effect.
(II) CONTENTS
OF
NOTICE.—
Such notice shall include, with respect
to ongoing health care items and 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 requiring
plans or issuers to provide coverage of care
that would exceed the coverage limitations
for such care.
(2) 
RETROSPECTIVE
DETERMINATION.—A
group health plan, or health insurance issuer offer-
ing health insurance coverage, shall make a retro-
spective determination on a claim for benefits in ac-
cordance with the medical exigencies of the case and
as soon as possible, but not later than 30 days after
the date on which the plan or issuer receives infor-
mation that is reasonably necessary to enable the
plan or issuer to make a determination on the claim,
or, if earlier, 60 days after the date of receipt of the
claim for benefits.
(c) NOTICE OF A DENIAL OF A CLAIM FOR BENE-
FITS.—Written notice of a denial made under an initial
claim for benefits shall be issued to the participant, bene-
ficiary, or enrollee (or authorized representative) and the
treating health care professional in accordance with the
medical exigencies of the case and as soon as possible, but
in no case later than 2 days after the date of the deter-
mination (or, in the case described in subparagraph (B)
or (C) of subsection (b)(1), within the 72-hour or applica-
ble period referred 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, beneficiary, or en-
rollee 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 deter-
mination and instructions on how to initiate an ap-
peal in accordance with section 103.
(e) DEFINITIONS.—For purposes of this part:
(1) AUTHORIZED REPRESENTATIVE.—The term
‘‘authorized representative’’ means, with respect to
an individual who is a participant, beneficiary, or en-
rollee, any health care professional or other person
acting on behalf of the individual with the individ-
ual’s consent or without such consent if the indi-
vidual is medically unable to provide such consent.
(2) CLAIM FOR BENEFITS.—The term ‘‘claim
for benefits’’ means any request for coverage (in-
cluding authorization of coverage), for eligibility, or
for payment in whole or in part, for an item or serv-
ice under a group health plan or health insurance
coverage.
(3) DENIAL
OF
CLAIM
FOR
BENEFITS.—The
term ‘‘denial’’ means, with respect to a claim for
benefits, a denial (in whole or in part) of, or a fail-
ure to act on a timely basis upon, the claim for ben-
efits and includes a failure to provide benefits (in-
cluding items and services) required to be provided
under this title.
(4) TREATING HEALTH CARE PROFESSIONAL.—
The term ‘‘treating health care professional’’ means,
with respect to services to be provided to a partici-
pant, beneficiary, or enrollee, a health care profes-
sional who is primarily responsible for delivering
those services to the participant, beneficiary, or en-
rollee.
SEC. 103. INTERNAL APPEALS OF CLAIMS DENIALS.
(a) RIGHT TO INTERNAL APPEAL.—
(1) IN GENERAL.—A participant, beneficiary, or
enrollee (or authorized representative) may appeal
any denial of a claim for benefits under section 102
under the procedures described in this section.
(2) TIME FOR APPEAL.—
(A) IN GENERAL.—A group health plan, or
health insurance issuer offering health insur-
ance coverage, shall ensure that a participant,
beneficiary, or enrollee (or authorized represent-
ative) has a period of not less than 180 days
beginning on the date of a denial of a claim for
benefits under section 102 in which to appeal
such denial under this section.
(B) DATE OF DENIAL.—For purposes of
subparagraph (A), the date of the denial shall
be deemed to be the date as of which the partic-
ipant, beneficiary, or enrollee knew of the denial
of the claim for benefits.
(3) FAILURE TO ACT.—The failure of a plan or
issuer to issue a determination on a claim for bene-
fits under section 102 within the applicable timeline
established for such a determination under such sec-
tion is a denial of a claim for benefits for purposes
this subtitle as of the date of the applicable deadline.
(4) PLAN WAIVER OF INTERNAL REVIEW.—A
group health plan, or health insurance issuer offer-
ing health insurance coverage, may waive the inter-
nal review process under this section. In such case
the plan or issuer shall provide notice to the partici-
pant, beneficiary, or enrollee (or authorized rep-
resentative) involved, the participant, beneficiary, or
enrollee (or authorized representative) involved shall
be relieved of any obligation to complete the internal
review involved, and may, at the option of such par-
ticipant, beneficiary, enrollee, or representative pro-
ceed directly to seek further appeal through external
review under section 104 or otherwise.
(b) TIMELINES FOR MAKING DETERMINATIONS.—
(1) ORAL REQUESTS.—In the case of an appeal
of a denial of a claim for benefits under this section
that involves an expedited or concurrent determina-
tion, a participant, beneficiary, or enrollee (or au-
thorized representative) may request such appeal
orally. A group health plan, or health insurance
issuer offering health insurance coverage, may re-
quire that the participant, beneficiary, or enrollee
(or authorized representative) provide written con-
firmation of such request in a timely manner on a
form provided by the plan or issuer. In the case of
such an oral request for an appeal of a denial, the
making of the request (and the timing of such re-
quest) shall be treated as the making at that time
of a request for an appeal without regard to whether
and when a written confirmation of such request is
made.
(2) ACCESS TO INFORMATION.—
(A) TIMELY PROVISION OF NECESSARY IN-
FORMATION.—With respect to an appeal of a
denial of a claim for benefits, the participant,
beneficiary, or enrollee (or authorized represent-
ative) and the treating health care professional
(if any) shall provide the plan or issuer with ac-
cess to information requested by the plan or
issuer that is necessary to make a determina-
tion relating to the appeal. Such access shall be
provided not later than 5 days after the date on
which the request for information is received,
or, in a case described in subparagraph (B) or
(C) of paragraph (3), by such earlier time as
may be necessary to comply with the applicable
timeline under such subparagraph.
(B) LIMITED
EFFECT
OF
FAILURE
ON
PLAN
OR
ISSUER’S
OBLIGATIONS.—Failure of
the participant, beneficiary, or enrollee to com-
ply with the requirements of subparagraph (A)
shall not remove the obligation of the plan or
issuer to make a decision in accordance with
the medical exigencies of the case and as soon
as possible, based on the available information,
and failure to comply with the time limit estab-
lished by this paragraph shall not remove the
obligation of the plan or issuer to comply with
the requirements of this section.
(3) 
PRIOR
AUTHORIZATION
DETERMINA-
TIONS.—
(A) IN GENERAL.—A group health plan, or
health insurance issuer offering health insur-
ance coverage, shall make a determination on
an appeal of a denial of a claim for benefits
under this subsection in accordance with the
medical exigencies of the case and as soon as
possible, but in no case later than 14 days from
the date on which the plan or issuer receives
information that is reasonably necessary to en-
able the plan or issuer to make a determination
on the appeal and in no case later than 28 days
after the date the request for the appeal is re-
ceived.
(B) EXPEDITED
DETERMINATION.—Not-
withstanding subparagraph (A), a group health
plan, or health insurance issuer offering health
insurance coverage, shall expedite a prior au-
thorization determination on an appeal of a de-
nial of a claim for benefits described in sub-
paragraph (A), when a request for such an ex-
pedited determination is made by a participant,
beneficiary, or enrollee (or authorized represent-
ative) at any time during the process for mak-
ing a determination and a health care profes-
sional certifies, with the request, that a deter-
mination under the procedures described in sub-
paragraph (A) would seriously jeopardize the
life or health of the participant, beneficiary, or
enrollee or the ability of the participant, bene-
ficiary, or enrollee to maintain or regain max-
imum function. Such determination shall be
made in accordance with the medical exigencies
of the case and as soon as possible, but in no
case later than 72 hours after the time the re-
quest 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
102(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 in
accordance with the medical exigencies of
the case and as soon as possible, with suf-
ficient time prior to the termination or re-
duction to allow for an external appeal
under section 104 to be completed before
the termination or reduction takes effect.
(ii) RULE OF CONSTRUCTION.—Clause
(i) shall not be construed as requiring
plans or issuers to provide coverage of care
that would exceed the coverage limitations
for such care.
(4) 
RETROSPECTIVE
DETERMINATION.—A
group health plan, or health insurance issuer offer-
ing health insurance coverage, shall make a retro-
spective determination 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 infor-
mation that is reasonably necessary to enable the
plan or issuer to make a determination on the ap-
peal 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) REVIEW OF MEDICAL DECISIONS BY PHYSI-
CIANS.—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) with appropriate
expertise (including, in the case of a child, appro-
priate pediatric expertise) who was not involved 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, beneficiary, or enrollee (or authorized rep-
resentative) and the treating health care professional
in accordance with the medical exigencies of the case
and as soon as possible, but in no case later than
2 days after the date of completion of the review (or,
in the case described in subparagraph (B) or (C) of
subsection (b)(3), within the 72-hour or applicable
period referred to in such subparagraph).
(2) FINAL DETERMINATION.—The decision by a
plan or issuer under this section shall be treated as
the final determination of the plan or issuer on a de-
nial of a claim for benefits. The failure of a plan or
issuer to issue a determination on an appeal of a de-
nial of a claim for benefits under this section within
the applicable timeline established for such a deter-
mination shall be treated as a final determination on
an appeal of a denial of a claim for benefits for pur-
poses of proceeding to external review under section
104.
(3) REQUIREMENTS OF NOTICE.—With respect
to a determination made under this section, the no-
tice described in paragraph (1) shall be provided in
printed form and written in a manner calculated to
be understood by the average participant, bene-
ficiary, or enrollee and shall include—
(A) the specific reasons for the determina-
tion (including a summary of the clinical or sci-
entific evidence used in making the determina-
tion);
(B) the procedures for obtaining additional
information concerning the determination; and
(C) notification of the right to an inde-
pendent external review under section 104 and
instructions on how to initiate such a review.
SEC. 104. INDEPENDENT EXTERNAL APPEALS PROCE-
DURES.
(a) RIGHT TO EXTERNAL APPEAL.—A group health
plan, and a health insurance issuer offering health insur-
ance coverage, shall provide in accordance with this sec-
tion participants, beneficiaries, and enrollees (or author-
ized representatives) with access to an independent exter-
nal review for any denial of a claim for benefits.
(b) INITIATION OF THE INDEPENDENT EXTERNAL
REVIEW PROCESS.—
(1) TIME
TO
FILE.—A request for an 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, beneficiary,
or enrollee receives notice of the denial under section
103(d) or notice of waiver of internal review under
section 103(a)(4) or the date on which the plan or
issuer has failed to make a timely decision under
section 103(d)(2) and notifies the participant or
beneficiary that it has failed to make a timely deci-
sion and that the beneficiary must file an appeal
with an external review entity within 180 days if the
participant or beneficiary desires to file such an ap-
peal.
(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 subparagraph
(B)(i), require that a request for review be
in writing;
(ii) limit the filing of such a request
to the participant, beneficiary, or enrollee
involved (or an authorized representative);
(iii) except if waived by the plan or
issuer under section 103(a)(4), condition
access to an independent external review
under this section upon a final determina-
tion of a denial of a claim for benefits
under the internal review procedure under
section 103;
(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, ben-
eficiary, or enrollee (or authorized rep-
resentative) for the release of necessary
medical information or records of the par-
ticipant, beneficiary, or enrollee to the
qualified external review entity only for
purposes of conducting external review ac-
tivities.
(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,
beneficiary, or enrollee (or authorized rep-
resentative) provide written confirmation
of such request in a timely manner on a
form provided by the plan or issuer. Such
written confirmation shall be treated as a
consent for purposes of subparagraph
(A)(v). In the case of such an oral request
for such a review, the making of the re-
quest (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 appropriate Secretary) that the
participant, beneficiary, or enrollee is
indigent (as defined in such guide-
lines).
(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
103(a)(4).
(III) REFUNDING OF FEE.—The
filing fee paid under subparagraph
(A)(iv) shall be refunded if the deter-
mination under the independent exter-
nal review is to reverse or modify the
denial which is the subject of the re-
view.
(IV) COLLECTION
OF
FILING
FEE.—The failure to pay such a filing
fee shall not prevent the consideration
of a request for review but, subject to
the preceding provisions of this clause,
shall constitute a legal liability to pay.
(c) REFERRAL TO QUALIFIED EXTERNAL REVIEW
ENTITY UPON REQUEST.—
(1) IN GENERAL.—Upon the filing of a request
for independent external review with the group
health plan, or health insurance issuer offering
health insurance coverage, the plan or issuer shall
immediately refer such request, and forward the
plan or issuer’s initial decision (including the infor-
mation described in section 103(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, beneficiary, or enrollee (or
authorized representative), the plan or issuer, and
the treating health care professional (if any) shall
provide the external review entity with information
that is necessary to conduct a review under this sec-
tion, as determined and requested by the entity.
Such information shall be provided not later than 5
days after the date on which the request for infor-
mation is received, or, in a case described in clause
(ii) or (iii) of subsection (e)(1)(A), by such earlier
time as may be necessary to comply with the appli-
cable 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 benefits
does not involve a medically reviewable de-
cision under subsection (d)(2);
(iii) the denial of the claim for bene-
fits relates to a decision regarding whether
an individual is a participant, beneficiary,
or enrollee who is enrolled under the terms
and conditions of the plan or coverage (in-
cluding the applicability of any waiting pe-
riod 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 DETER-
MINATIONS.—In 
making 
determinations
under subparagraph (A), there shall be no
deference given to determinations made by
the plan or issuer or the recommendation
of a treating health care professional (if
any).
(ii) 
USE
OF
APPROPRIATE
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 to an inde-
pendent medical reviewer, the entity shall
provide notice to the plan or issuer, the
participant, beneficiary, or enrollee (or au-
thorized representative) filing the request,
and the treating health care professional
(if any) that the denial is not subject to
independent medical review. Such notice—
(I) shall be written (and, in addi-
tion, may be provided orally) in a
manner calculated to be understood
by an average participant or enrollee;
(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 indi-
vidual.
(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 reviewer, shall make a de-
termination within the overall timeline that
is applicable to the case under review as
described in subsection (e), except that if
the entity determines that a referral to an
independent medical reviewer is not re-
quired, the entity shall provide notice of
such determination to the participant, ben-
eficiary, or enrollee (or authorized rep-
resentative) within such timeline and with-
in 2 days of the date of such determina-
tion.
(d) INDEPENDENT MEDICAL REVIEW.—
(1) IN GENERAL.—If a qualified external review
entity determines under subsection (c) that a denial
of a claim for benefits is eligible for independent
medical review, the entity shall refer the denial in-
volved to an independent medical reviewer for the
conduct of an independent medical review under this
subsection.
(2) MEDICALLY
REVIEWABLE
DECISIONS.—A
denial of a claim for benefits is eligible for 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 reviewer under this section shall make a
new independent determination with respect to
whether or not the denial of a claim for a ben-
efit that is the subject of the review should be
upheld, reversed, or modified.
(B) STANDARD
FOR
DETERMINATION.—
The independent medical reviewer’s determina-
tion relating to the medical necessity and ap-
propriateness, or the experimental or investiga-
tion 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, beneficiary, or enrollee (including the
medical records of the participant, beneficiary,
or enrollee) and valid, relevant scientific evi-
dence and clinical evidence, including peer-re-
viewed medical literature or findings and in-
cluding expert opinion.
(C) NO COVERAGE FOR EXCLUDED BENE-
FITS.—Nothing in this subsection shall be con-
strued to permit an independent medical re-
viewer to require that a group health plan, or
health insurance issuer offering health insur-
ance coverage, provide coverage for items or
services for which benefits are specifically ex-
cluded or expressly limited under the plan or
coverage in the plain language of the plan docu-
ment (and which are disclosed under section
121(b)(1)(C)) except to the extent that the ap-
plication or interpretation of the exclusion or
limitation involves a determination described in
paragraph (2).
(D) EVIDENCE AND INFORMATION TO BE
USED IN MEDICAL REVIEWS.—In making a de-
termination under this subsection, the inde-
pendent medical reviewer shall also consider ap-
propriate 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 treat-
ing health care professional and the evi-
dence, guidelines, and rationale used by
the treating health care professional in
reaching such recommendation.
(iii) Additional relevant evidence or
information obtained by the reviewer or
submitted by the plan, issuer, participant,
beneficiary, or enrollee (or an authorized
representative), or treating health care
professional.
(iv) The plan or coverage document.
(E) INDEPENDENT
DETERMINATION.—In
making determinations under this subtitle, a
qualified external review entity and an inde-
pendent medical reviewer 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 REVIEWER.—An independent medical
reviewer shall, in accordance with the deadlines
described in subsection (e), prepare a written
determination to uphold, reverse, or modify the
denial under review. Such written determination
shall include—
(i) the determination of the reviewer;
(ii) the specific reasons of the re-
viewer for such determination, including a
summary of the clinical or scientific evi-
dence used in making the determination;
and
(iii) with respect to a determination to
reverse or modify the denial under review,
a timeframe within which the plan or
issuer must comply with such determina-
tion.
(G) NONBINDING NATURE OF ADDITIONAL
RECOMMENDATIONS.—In addition to the deter-
mination under subparagraph (F), the reviewer
may provide the plan or issuer and the treating
health care professional with additional rec-
ommendations in connection with such a deter-
mination, but any such recommendations shall
not affect (or be treated as part of) the deter-
mination and shall not be binding on the plan
or issuer.
(e) TIMELINES AND NOTIFICATIONS.—
(1) TIMELINES
FOR
INDEPENDENT
MEDICAL
REVIEW.—
(A) PRIOR
AUTHORIZATION
DETERMINA-
TION.—
(i) IN
GENERAL.—The independent
medical reviewer (or reviewers) shall make
a determination on a denial of a claim for
benefits that is referred to the reviewer
under subsection (c)(3) in accordance with
the medical exigencies of the case and as
soon as possible, but in no case later than
14 days after the date of receipt of infor-
mation under subsection (c)(2) if the re-
view involves a prior authorization of items
or services and in no case later than 21
days after the date the request for external
review is received.
(ii) EXPEDITED
DETERMINATION.—
Notwithstanding clause (i) and subject to
clause (iii), the independent medical re-
viewer (or reviewers) shall make an expe-
dited determination on a denial of a claim
for benefits described in clause (i), when a
request for such an expedited determina-
tion is made by a participant, beneficiary,
or enrollee (or authorized representative)
at any time during the process for making
a determination, and a health care profes-
sional certifies, with the request, that a de-
termination under the timeline described in
clause (i) would seriously jeopardize the
life or health of the participant, bene-
ficiary, or enrollee or the ability of the par-
ticipant, beneficiary, or enrollee to main-
tain or regain maximum function. Such de-
termination shall be made as soon in ac-
cordance with the medical exigencies of the
case and as soon as possible, but in no
case later than 72 hours after the time the
request for external review is received by
the qualified external review entity.
(iii) 
ONGOING
CARE
DETERMINA-
TION.—Notwithstanding clause (i), in the
case of a review described in such sub-
clause that involves a termination or reduc-
tion of care, the notice of the determina-
tion shall be completed not later than 24
hours after the time the request for exter-
nal review is received by the qualified ex-
ternal review entity and before the end of
the approved period of care.
(B) RETROSPECTIVE
DETERMINATION.—
The independent medical reviewer (or review-
ers) shall complete a review in the case of a ret-
rospective determination on an appeal of a de-
nial of a claim for benefits that is referred to
the reviewer under subsection (c)(3) in no case
later than 30 days after the date of receipt of
information under subsection (c)(2) and in no
case later than 60 days after the date the re-
quest for external review is received by the
qualified external review entity.
(2) NOTIFICATION
OF
DETERMINATION.—The
external review entity shall ensure that the plan or
issuer, the participant, beneficiary, or enrollee (or
authorized representative) and the treating health
care professional (if any) receives a copy of the writ-
ten determination of the independent medical re-
viewer prepared under subsection (d)(3)(F). Nothing
in this paragraph shall be construed as preventing
an entity or reviewer from providing an initial oral
notice of the reviewer’s determination.
(3) FORM
OF
NOTICES.—Determinations and
notices under this subsection shall be written in a
manner calculated to be understood by an average
participant.
(f) COMPLIANCE.—
(1) APPLICATION OF DETERMINATIONS.—
(A) EXTERNAL REVIEW DETERMINATIONS
BINDING ON PLAN.—The determinations of an
external review entity and an independent med-
ical reviewer under this section shall be binding
upon the plan or issuer involved.
(B) 
COMPLIANCE
WITH
DETERMINA-
TION.—If the determination of an independent
medical reviewer is to reverse or modify the de-
nial, the plan or issuer, upon the receipt of such
determination, shall authorize coverage to com-
ply with the medical reviewer’s determination in
accordance with the timeframe established by
the medical reviewer.
(2) FAILURE TO COMPLY.—
(A) IN GENERAL.—If a plan or issuer fails
to comply with the timeframe established under
paragraph (1)(B) with respect to a participant,
beneficiary, or enrollee, where such failure to
comply is caused by the plan or issuer, the par-
ticipant, beneficiary, or enrollee may obtain the
items or services involved (in a manner con-
sistent with the determination of the inde-
pendent external reviewer) from any provider
regardless of whether such provider is a partici-
pating provider under the plan or coverage.
(B) REIMBURSEMENT.—
(i) IN
GENERAL.—Where a partici-
pant, beneficiary, or enrollee obtains items
or services in accordance with subpara-
graph (A), the plan or issuer involved shall
provide for reimbursement of the costs of
such items or services. Such reimburse-
ment shall be made to the treating health
care professional or to the participant, ben-
eficiary, or enrollee (in the case of a partic-
ipant, beneficiary, or enrollee who pays for
the costs of such items or services).
(ii) AMOUNT.—The plan or issuer
shall fully reimburse a professional, partici-
pant, beneficiary, or enrollee under clause
(i) for the total costs of the items or serv-
ices provided (regardless of any plan limi-
tations that may apply to the coverage of
such items or services) so long as the items
or services were provided in a manner con-
sistent with the determination of the inde-
pendent medical reviewer.
(C) FAILURE
TO
REIMBURSE.—Where a
plan or issuer fails to provide reimbursement to
a professional, participant, beneficiary, or en-
rollee in accordance with this paragraph, the
professional, participant, beneficiary, or enrollee
may commence a civil action (or utilize other
remedies available under law) to recover only
the amount of any such reimbursement that is
owed by the plan or issuer and any necessary
legal costs or expenses (including attorney’s
fees) incurred in recovering such reimburse-
ment.
(D) AVAILABLE REMEDIES.—The remedies
provided under this paragraph are in addition
to any other available remedies.
(3) PENALTIES
AGAINST
AUTHORIZED
OFFI-
CIALS FOR REFUSING TO AUTHORIZE THE DETER-
MINATION OF AN EXTERNAL REVIEW ENTITY.—
(A) MONETARY PENALTIES.—
(i) IN
GENERAL.—In any case in
which the determination of an external re-
view entity is not followed by a group
health plan, or by a health insurance issuer
offering health insurance coverage, any
person who, acting in the capacity of au-
thorizing the benefit, causes such refusal
may, in the discretion in a court of com-
petent jurisdiction, be liable to an ag-
grieved participant, beneficiary, or enrollee
for a civil penalty in an amount of up to
$1,000 a day from the date on which the
determination was transmitted to the plan
or issuer by the external review entity until
the date the refusal to provide the benefit
is corrected.
(ii) ADDITIONAL PENALTY FOR FAIL-
ING TO FOLLOW TIMELINE.—In any case
in which treatment was not commenced by
the plan in accordance with the determina-
tion of an independent external reviewer,
the Secretary shall assess a civil penalty of
$10,000 against the plan and the plan
shall pay such penalty to the participant,
beneficiary, or enrollee involved.
(B) CEASE
AND
DESIST
ORDER
AND
ORDER OF ATTORNEY’S FEES.—In any action
described in subparagraph (A) brought by a
participant, beneficiary, or enrollee with respect
to a group health plan, or a health insurance
issuer offering health insurance coverage, in
which a plaintiff alleges that a person referred
to in such subparagraph has taken an action re-
sulting in a refusal of a benefit determined by
an external appeal entity to be covered, or has
failed to take an action for which such person
is responsible under the terms and conditions of
the plan or coverage and which is necessary
under the plan or coverage for authorizing a
benefit, the court shall cause to be served on
the 
defendant 
an 
order 
requiring 
the
defendant—
(i) to cease and desist from the al-
leged action or failure to act; and
(ii) to pay to the plaintiff a reasonable
attorney’s fee and other reasonable costs
relating to the prosecution of the action on
the charges on which the plaintiff prevails.
(C) ADDITIONAL CIVIL PENALTIES.—
(i) IN GENERAL.—In addition to any
penalty imposed under subparagraph (A)
or (B), the appropriate Secretary may as-
sess a civil penalty against a person acting
in the capacity of authorizing a benefit de-
termined by an external review entity for
one or more group health plans, or health
insurance issuers offering health insurance
coverage, for—
(I) any pattern or practice of re-
peated refusal to authorize a benefit
determined by an external appeal enti-
ty to be covered; or
(II) any pattern or practice of re-
peated violations of the requirements
of this section with respect to such
plan or coverage.
(ii) 
STANDARD
OF
PROOF
AND
AMOUNT OF PENALTY.—Such penalty shall
be payable only upon proof by clear and
convincing evidence of such pattern or
practice and shall be in an amount not to
exceed the lesser of—
(I) 25 percent of the aggregate
value of benefits shown by the appro-
priate Secretary to have not been pro-
vided, or unlawfully delayed, in viola-
tion of this section under such pattern
or practice; or
(II) $500,000.
(D) REMOVAL AND DISQUALIFICATION.—
Any person acting in the capacity of author-
izing benefits who has engaged in any such pat-
tern or practice described in subparagraph
(C)(i) with respect to a plan or coverage, upon
the petition of the appropriate Secretary, may
be removed by the court from such position,
and from any other involvement, with respect to
such a plan or coverage, and may be precluded
from returning to any such position or involve-
ment for a period determined by the court.
(4) PROTECTION OF LEGAL RIGHTS.—Nothing
in this subsection or subtitle shall be construed as
altering or eliminating any cause of action or legal
rights or remedies of participants, beneficiaries, en-
rollees, and others under State or Federal law (in-
cluding sections 502 and 503 of the Employee Re-
tirement Income Security Act of 1974), including
the right to file judicial actions to enforce rights.
(g) QUALIFICATIONS
OF INDEPENDENT MEDICAL
REVIEWERS.—
(1) IN GENERAL.—In referring a denial to 1 or
more individuals to conduct independent medical re-
view under subsection (c), the qualified external re-
view entity shall ensure that—
(A) each independent medical reviewer
meets the qualifications described in paragraphs
(2) and (3);
(B) with respect to each review at least 1
such reviewer meets the requirements described
in paragraphs (4) and (5); and
(C) compensation provided by the entity to
the reviewer is consistent with paragraph (6).
(2) LICENSURE AND EXPERTISE.—Each inde-
pendent medical reviewer shall be a physician
(allopathic or osteopathic) or health care profes-
sional 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 independent medical reviewer
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 an independent medical re-
viewer 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, beneficiary, or
enrollee (or authorized representative)
and neither party objects; and
(IV) the affiliated individual is
not an employee of the plan or issuer
and does not provide services 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 an independent medical reviewer
merely on the basis of such affiliation if
the affiliation is disclosed to the plan or
issuer and the participant, beneficiary, or
enrollee (or authorized representative), and
neither party objects; or
(iii) prohibit receipt of compensation
by an independent medical reviewer from
an entity if the compensation is provided
consistent with paragraph (6).
(4) PRACTICING HEALTH CARE PROFESSIONAL
IN SAME FIELD.—
(A) IN
GENERAL.—In a case involving
treatment, or the provision of items or
services—
(i) by a physician, a reviewer shall be
a practicing physician (allopathic or osteo-
pathic) of the same or similar specialty, as
a physician who typically treats the condi-
tion, makes the diagnosis, or provides the
type of treatment under review; or
(ii) by a health care professional
(other than a physician), a reviewer shall
be a practicing physician (allopathic or os-
teopathic) or, if determined appropriate by
the qualified external review entity, a prac-
ticing health care professional (other than
such a physician), of the same or similar
specialty as the health care professional
who typically treats the condition, makes
the diagnosis, or provides the type of treat-
ment under review.
(B) PRACTICING DEFINED.—For purposes
of this paragraph, the term ‘‘practicing’’ means,
with respect to an individual who is a physician
or other health care professional that the indi-
vidual provides health care services to individual
patients on average at least 2 days per week.
(5) PEDIATRIC EXPERTISE.—In the case of an
external review relating to a child, a reviewer shall
have expertise under paragraph (2) in pediatrics.
(6) LIMITATIONS
ON
REVIEWER
COMPENSA-
TION.—Compensation provided by a qualified exter-
nal review entity to an independent medical reviewer
in connection with a review under this section
shall—
(A) not exceed a reasonable level; and
(B) not be contingent on the decision 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, beneficiary, or en-
rollee, 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, beneficiary, or en-
rollee (or authorized 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 appropriate Secretary shall im-
plement procedures—
(i) to assure that the selection process
among qualified external review entities
will not create any incentives for external
review entities to make a decision in a bi-
ased manner; and
(ii) for auditing a sample of decisions
by such entities to assure that no such de-
cisions are made in a biased manner.
No such selection process under the procedures
implemented by the appropriate Secretary may
give either the patient or the plan or issuer any
ability to determine or influence the selection of
a qualified external review entity to review the
case of any participant, beneficiary, or enrollee.
(B) STATE AUTHORITY WITH RESPECT TO
QUALIFIED EXTERNAL REVIEW ENTITIES FOR
HEALTH INSURANCE ISSUERS.—With respect to
health insurance issuers offering health insur-
ance coverage in a State, the State may provide
for external review activities to be conducted by
a qualified external appeal entity that is des-
ignated 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 RE-
VIEW
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
appropriate Secretary shall establish to assure
there is no real or apparent conflict of interest
in the conduct of external review activities; and
(B) provide that the costs of the external
review process shall be borne by the plan or
issuer.
Subparagraph (B) shall not be construed as apply-
ing to the imposition of a filing fee under subsection
(b)(2)(A)(iv) or costs incurred by the participant,
beneficiary, or enrollee (or authorized representative)
or treating health care professional (if any) in sup-
port of the review, including the provision of addi-
tional 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 expertise and suf-
ficient staffing to carry out duties of a
qualified external review entity under this
section on a timely basis, including making
determinations under subsection (b)(2)(A)
and providing for independent medical re-
views 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 appropriate 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 de-
cision rendered by the entity or by
any independent medical reviewer.
(C) CERTIFICATION AND RECERTIFICATION
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 recog-
nized or approved by the appropriate
Secretary; or
(II) by a qualified private stand-
ard-setting organization that is ap-
proved by the appropriate Secretary
under clause (iii).
In taking action under subclause (I), the
appropriate Secretary shall give deference
to entities that are under contract with the
Federal Government or with an applicable
State authority to perform functions of the
type performed by qualified external review
entities.
(ii) PROCESS.—The appropriate Sec-
retary shall not recognize or approve a
process under clause (i)(I) unless the proc-
ess 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 of 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
appropriate Secretary may approve a quali-
fied private standard-setting organization
if such Secretary finds that the organiza-
tion only certifies (or recertifies) external
review entities that meet at least the
standards required for the certification (or
recertification) of external review entities
under clause (ii).
(iv) CONSIDERATIONS IN RECERTIFI-
CATIONS.—In conducting recertifications of
a qualified external review entity under
this paragraph, the appropriate Secretary
or organization conducting the recertifi-
cation shall review compliance of the entity
with the requirements for conducting ex-
ternal review activities under this section,
including the following:
(I) 
Provision 
of 
information
under subparagraph (D).
(II) 
Adherence 
to 
applicable
deadlines (both by the entity and by
independent medical reviewers it re-
fers cases to).
(III) Compliance with limitations
on compensation (with respect to both
the entity and independent medical re-
viewers it refers cases to).
(IV) Compliance with applicable
independence requirements.
(v) PERIOD OF CERTIFICATION OR RE-
CERTIFICATION.—A certification or recer-
tification provided under this paragraph
shall extend for a period not to exceed 2
years.
(vi) REVOCATION.—A certification or
recertification under this paragraph may
be revoked by the appropriate Secretary or
by the organization providing such certifi-
cation upon a showing of cause.
(vii) SUFFICIENT NUMBER OF ENTI-
TIES.—The appropriate Secretary shall
certify and recertify a number of external
review entities which is sufficient to ensure
the timely and efficient provision of review
services.
(D) PROVISION OF INFORMATION.—
(i) IN GENERAL.—A qualified external
review entity shall provide to the appro-
priate Secretary, in such manner and at
such times as such Secretary may require,
such information (relating to the denials
which have been referred to the entity for
the conduct of external review under this
section) as such Secretary determines 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 entity
of such denials, including the number
referred to a independent medical re-
viewer and the reasons for such dis-
positions (including the application of
exclusions), on a plan or issuer-spe-
cific basis and on a health care spe-
cialty-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 submitted
as a condition of certification with re-
spect to the entity’s performance of
external review activities.
(iii) INFORMATION TO BE PROVIDED
TO CERTIFYING ORGANIZATION.—
(I) IN GENERAL.—In the case of
a qualified external review entity
which is certified (or recertified)
under this subsection by a qualified
private standard-setting organization,
at the request of the organization, the
entity shall provide the organization
with the information provided to the
appropriate Secretary under clause
(i).
(II) 
ADDITIONAL
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.—Informa-
tion provided under this subparagraph may
be used by the appropriate Secretary and
qualified private standard-setting organiza-
tions to conduct oversight of qualified ex-
ternal review entities, including recertifi-
cation of such entities, and shall be made
available to the public in an appropriate
manner.
(E) LIMITATION ON LIABILITY.—No quali-
fied external review entity having a contract
with a plan or issuer, and no person who is em-
ployed by any such entity or who furnishes pro-
fessional services to such entity (including as an
independent medical reviewer), shall be held by
reason of the performance of any duty, func-
tion, 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 polit-
ical subdivision thereof) if there was no actual
malice or gross misconduct in the performance
of such duty, function, or activity.
Subtitle B—Access to Care
SEC. 111. CONSUMER CHOICE OPTION.
(a) IN GENERAL.—If—
(1) a health insurance issuer providing health
insurance coverage in connection with a group health
plan offers to enrollees health insurance coverage
which provides for coverage of services only if such
services are furnished through health care profes-
sionals and providers who are members of a network
of health care professionals and providers who have
entered into a contract with the issuer to provide
such services, or
(2) a group health plan offers to participants or
beneficiaries health benefits which provide for cov-
erage of services only if such services are furnished
through health care professionals and providers who
are members of a network of health care profes-
sionals and providers who have entered into a con-
tract with the plan to provide such services,
then the issuer or plan shall also offer or arrange to be
offered to such enrollees, participants, or beneficiaries (at
the time of enrollment and during an annual open season
as provided under subsection (c)) the option of health in-
surance coverage or health benefits which provide for cov-
erage of such services which are not furnished through
health care professionals and providers who are members
of such a network unless such enrollees, participants, or
beneficiaries are offered such non-network coverage
through another group health plan or through another
health insurance issuer in the group market.
(b) ADDITIONAL COSTS.—The amount of any addi-
tional premium charged by the health insurance issuer or
group health plan for the additional cost of the creation
and maintenance of the option described in subsection (a)
and the amount of any additional cost sharing imposed
under such option shall be borne by the enrollee, partici-
pant, or beneficiary unless it is paid by the health plan
sponsor or group health plan through agreement with the
health insurance issuer.
(c) OPEN SEASON.—An enrollee, participant, or ben-
eficiary, may change to the offering provided under this
section only during a time period determined by the health
insurance issuer or group health plan. Such time period
shall occur at least annually.
SEC. 112. CHOICE OF HEALTH CARE PROFESSIONAL.
(a) PRIMARY CARE.—If a group health plan, or a
health insurance issuer that offers health insurance cov-
erage, requires or provides for designation by a partici-
pant, beneficiary, or enrollee of a participating primary
care provider, then the plan or issuer shall permit each
participant, beneficiary, and enrollee to designate any par-
ticipating primary care provider who is available to accept
such individual.
(b) SPECIALISTS.—
(1) IN GENERAL.—Subject to paragraph (2), a
group health plan and a health insurance issuer that
offers health insurance coverage shall permit each
participant, beneficiary, or enrollee to receive medi-
cally necessary or appropriate specialty care, pursu-
ant to appropriate referral procedures, from any
qualified participating health care professional who
is available to accept such individual for such care.
(2) LIMITATION.—Paragraph (1) shall not
apply to specialty care if the plan or issuer clearly
informs participants, beneficiaries, and enrollees of
the limitations on choice of participating health care
professionals with respect to such care.
(3) CONSTRUCTION.—Nothing in this sub-
section shall be construed as affecting the applica-
tion of section 114 (relating to access to specialty
care).
SEC. 113. ACCESS TO EMERGENCY CARE.
(a) COVERAGE OF EMERGENCY SERVICES.—
(1) IN GENERAL.—If a group health plan, or
health insurance coverage offered by a health insur-
ance issuer, provides or covers any benefits with re-
spect to services in an emergency department of a
hospital, the plan or issuer shall cover emergency
services (as defined in paragraph (2)(B))—
(A) without the need for any prior author-
ization determination;
(B) whether the health care provider fur-
nishing such services is a participating provider
with respect to such services;
(C) in a manner so that, if such services
are provided to a participant, beneficiary, or
enrollee—
(i) by a nonparticipating health care
provider with or without prior authoriza-
tion, or
(ii) by a participating health care pro-
vider without prior authorization,
the participant, beneficiary, or enrollee is not
liable for amounts that exceed the amounts of
liability that would be incurred if the services
were provided by a participating health care
provider with prior authorization; and
(D) without regard to any other term or
condition of such coverage (other than exclusion
or coordination of benefits, or an affiliation or
waiting period, permitted under section 2701 of
the Public Health Service Act, section 701 of
the Employee Retirement Income Security Act
of 1974, or section 9801 of the Internal Rev-
enue Code of 1986, and other than applicable
cost-sharing).
(2) DEFINITIONS.—In this section:
(A) EMERGENCY
MEDICAL
CONDITION.—
The term ‘‘emergency medical condition’’ means
a medical condition manifesting itself by acute
symptoms of sufficient severity (including se-
vere pain) such that a prudent layperson, who
possesses an average knowledge of health and
medicine, could reasonably expect the absence
of immediate medical attention to result in a
condition described in clause (i), (ii), or (iii) of
section 1867(e)(1)(A) of the Social Security
Act.
(B) EMERGENCY
SERVICES.—The term
‘‘emergency services’’ means, with respect to an
emergency medical condition—
(i) a medical screening examination
(as required under section 1867 of the So-
cial Security Act) that is within the capa-
bility of the emergency department of a
hospital, including ancillary services rou-
tinely available to the emergency depart-
ment to evaluate such emergency medical
condition, and
(ii) within the capabilities of the staff
and facilities available at the hospital, such
further medical examination and treatment
as are required under section 1867 of such
Act to stabilize the patient.
(C) STABILIZE.—The term ‘‘to stabilize’’,
with respect to an emergency medical condition
(as defined in subparagraph (A)), has the
meaning give in section 1867(e)(3) of the Social
Security Act (42 U.S.C. 1395dd(e)(3)).
(b) REIMBURSEMENT FOR MAINTENANCE CARE AND
POST-STABILIZATION CARE.—A group health plan, and
health insurance coverage offered by a health insurance
issuer, must provide reimbursement for maintenance care
and post-stabilization care in accordance with the require-
ments of section 1852(d)(2) of the Social Security Act (42
U.S.C. 1395w–22(d)(2)). Such reimbursement shall be
provided in a manner consistent with subsection (a)(1)(C).
(c) COVERAGE OF EMERGENCY AMBULANCE SERV-
ICES.—
(1) IN GENERAL.—If a group health plan, or
health insurance coverage provided by a health in-
surance issuer, provides any benefits with respect to
ambulance services and emergency services, the plan
or issuer shall cover emergency ambulance services
(as defined in paragraph (2)) furnished under the
plan or coverage under the same terms and condi-
tions under subparagraphs (A) through (D) of sub-
section (a)(1) under which coverage is provided for
emergency services.
(2) EMERGENCY AMBULANCE SERVICES.—For
purposes of this subsection, the term ‘‘emergency
ambulance services’’ means ambulance services (as
defined for purposes of section 1861(s)(7) of the So-
cial Security Act) furnished to transport an indi-
vidual who has an emergency medical condition (as
defined in subsection (a)(2)(A)) to a hospital for the
receipt of emergency services (as defined in sub-
section (a)(2)(B)) in a case in which the emergency
services are covered under the plan or coverage pur-
suant to subsection (a)(1) and a prudent layperson,
with an average knowledge of health and medicine,
could reasonably expect that the absence of such
transport would result in placing the health of the
individual in serious jeopardy, serious impairment of
bodily function, or serious dysfunction of any bodily
organ or part.
SEC. 114. TIMELY ACCESS TO SPECIALISTS.
(a) TIMELY ACCESS.—
(1) IN
GENERAL.—A group health plan or
health insurance issuer offering health insurance
coverage shall ensure that participants, beneficiaries,
and enrollees receive timely access to specialists who
are appropriate to the condition of, and accessible
to, the participant, beneficiary, or enrollee, when
such specialty care is a covered benefit under the
plan or coverage.
(2) RULE
OF
CONSTRUCTION.—Nothing in
paragraph (1) shall be construed—
(A) to require the coverage under a group
health plan or health insurance coverage of ben-
efits or services;
(B) to prohibit a plan or issuer from in-
cluding providers in the network only to the ex-
tent necessary to meet the needs of the plan’s
or issuer’s participants, beneficiaries, or enroll-
ees; or
(C) to override any State licensure or
scope-of-practice law.
(3) ACCESS TO CERTAIN PROVIDERS.—
(A) IN
GENERAL.—With respect to spe-
cialty care under this section, if a participating
specialist is not available and qualified to pro-
vide such care to the participant, beneficiary, or
enrollee, the plan or issuer shall provide for cov-
erage of such care by a nonparticipating spe-
cialist.
(B) TREATMENT
OF
NONPARTICIPATING
PROVIDERS.—If a participant, beneficiary, or
enrollee receives care from a nonparticipating
specialist pursuant to subparagraph (A), such
specialty care shall be provided at no additional
cost to the participant, beneficiary, or enrollee
beyond what the participant, beneficiary, or en-
rollee would otherwise pay for such specialty
care if provided by a participating specialist.
(b) REFERRALS.—
(1) AUTHORIZATION.—A group health plan or
health insurance issuer may require an authorization
in order to obtain coverage for specialty services
under this section. Any such authorization—
(A) shall be for an appropriate duration of
time or number of referrals; and
(B) may not be refused solely because the
authorization involves services of a nonpartici-
pating 
specialist 
(described 
in 
subsection
(a)(3)).
(2) REFERRALS FOR ONGOING SPECIAL CONDI-
TIONS.—
(A) IN GENERAL.—A group health plan or
health insurance issuer shall permit a partici-
pant, beneficiary, or enrollee who has an ongo-
ing special condition (as defined in subpara-
graph (B)) to receive a referral to a specialist
for the treatment of such condition and such
specialist may authorize such referrals, proce-
dures, tests, and other medical services with re-
spect to such condition, or coordinate the care
for such condition, subject to the terms of a
treatment plan (if any) referred to in subsection
(c) with respect to the condition.
(B) ONGOING
SPECIAL
CONDITION
DE-
FINED.—In this subsection, the term ‘‘ongoing
special condition’’ means a condition or disease
that—
(i) is life-threatening, degenerative,
potentially disabling, or congenital; and
(ii) requires specialized medical care
over a prolonged period of time.
(c) TREATMENT PLANS.—
(1) IN
GENERAL.—A group health plan or
health insurance issuer may require that the spe-
cialty care be provided—
(A) pursuant to a treatment plan, but only
if the treatment plan—
(i) is developed by the specialist, in
consultation with the case manager or pri-
mary care provider, and the participant,
beneficiary, or enrollee, and
(ii) is approved by the plan or issuer
in a timely manner, if the plan or issuer
requires such approval; and
(B) in accordance with applicable quality
assurance and utilization review standards of
the plan or issuer.
(2) NOTIFICATION.—Nothing in paragraph (1)
shall be construed as prohibiting a plan or issuer
from requiring the specialist to provide the plan or
issuer with regular updates on the specialty care
provided, as well as all other reasonably necessary
medical information.
(d) SPECIALIST DEFINED.—For purposes of this sec-
tion, the term ‘‘specialist’’ means, with respect to the con-
dition of the participant, beneficiary, or enrollee, a health
care professional, facility, or center that has adequate ex-
pertise through appropriate training and experience (in-
cluding, in the case of a child, appropriate pediatric exper-
tise) to provide high quality care in treating the condition.
SEC. 115. PATIENT ACCESS TO OBSTETRIC AND GYNECO-
LOGICAL CARE.
(a) GENERAL RIGHTS.—
(1) DIRECT ACCESS.—A group health plan, or
health insurance issuer offering health insurance
coverage, described in subsection (b) may not re-
quire authorization or referral by the plan, issuer, or
any person (including a primary care provider de-
scribed in subsection (b)(2)) in the case of a female
participant, beneficiary, or enrollee who seeks cov-
erage for obstetrical or gynecological care provided
by a participating health care professional who spe-
cializes in obstetrics or gynecology.
(2) 
OBSTETRICAL
AND
GYNECOLOGICAL
CARE.—A group health plan or health insurance
issuer described in subsection (b) shall treat the pro-
vision of obstetrical and gynecological care, and the
ordering of related obstetrical and gynecological
items and services, pursuant to the direct access de-
scribed under paragraph (1), by a participating
health care professional who specializes in obstetrics
or gynecology as the authorization of the primary
care provider.
(b) APPLICATION OF SECTION.—A group health plan,
or health insurance issuer offering health insurance cov-
erage, described in this subsection is a group health plan
or coverage that—
(1) 
provides 
coverage 
for 
obstetric 
or
gynecologic care; and
(2) requires the designation by a participant,
beneficiary, or enrollee of a participating primary
care provider.
(c) CONSTRUCTION.—Nothing in subsection (a) shall
be construed to—
(1) waive any exclusions of coverage under the
terms and conditions of the plan or health insurance
coverage with respect to coverage of obstetrical or
gynecological care; or
(2) preclude the group health plan or health in-
surance issuer involved from requiring that the ob-
stetrical or gynecological provider notify the primary
health care professional or the plan or issuer of
treatment decisions.
SEC. 116. ACCESS TO PEDIATRIC CARE.
(a) PEDIATRIC CARE.—In the case of a person who
has a child who is a participant, beneficiary, or enrollee
under a group health plan, or health insurance coverage
offered by a health insurance issuer, if the plan or issuer
requires or provides for the designation of a participating
primary care provider for the child, the plan or issuer shall
permit such person to designate a physician (allopathic or
osteopathic) who specializes in pediatrics as the child’s pri-
mary care provider if such provider participates in the net-
work of the plan or issuer.
(b) CONSTRUCTION.—Nothing in subsection (a) shall
be construed to waive any exclusions of coverage under
the terms and conditions of the plan or health insurance
coverage with respect to coverage of pediatric care.
SEC. 117. CONTINUITY OF CARE.
(a) TERMINATION OF PROVIDER.—
(1) IN GENERAL.—If—
(A) a contract between a group health
plan, or a health insurance issuer offering
health insurance coverage, and a treating health
care provider is terminated (as defined in para-
graph (e)(4)), or
(B) benefits or coverage provided by a
health care provider are terminated because of
a change in the terms of provider participation
in such plan or coverage,
the plan or issuer shall meet the requirements of
paragraph (3) with respect to each continuing care
patient.
(2) TREATMENT
OF
TERMINATION
OF
CON-
TRACT
WITH
HEALTH
INSURANCE
ISSUER.—If a
contract for the provision of health insurance cov-
erage between a group health plan and a health in-
surance issuer is terminated and, as a result of such
termination, coverage of services of a health care
provider is terminated with respect to an individual,
the provisions of paragraph (1) (and the succeeding
provisions of this section) shall apply under the plan
in the same manner as if there had been a contract
between the plan and the provider that had been ter-
minated, but only with respect to benefits that are
covered under the plan after the contract termi-
nation.
(3) REQUIREMENTS.—The requirements of this
paragraph are that the plan or issuer—
(A) notify the continuing care patient in-
volved, or arrange to have the patient notified
pursuant to subsection (d)(2), on a timely basis
of the termination described in paragraph (1)
(or paragraph (2), if applicable) and the right
to elect continued transitional care from the
provider under this section;
(B) provide the patient with an oppor-
tunity to notify the plan or issuer of the pa-
tient’s need for transitional care; and
(C) subject to subsection (c), permit the
patient to elect to continue to be covered with
respect to the course of treatment by such pro-
vider with the provider’s consent during a tran-
sitional period (as provided for under subsection
(b)).
(4) CONTINUING CARE PATIENT.—For purposes
of this section, the term ‘‘continuing care patient’’
means a participant, beneficiary, or enrollee who—
(A) is undergoing a course of treatment
for a serious and complex condition from the
provider at the time the plan or issuer receives
or provides notice of provider, benefit, or cov-
erage termination described in paragraph (1)
(or paragraph (2), if applicable);
(B) is undergoing a course of institutional
or inpatient care from the provider at the time
of such notice;
(C) is scheduled to undergo non-elective
surgery from the provider at the time of such
notice;
(D) is pregnant and undergoing a course
of treatment for the pregnancy from the pro-
vider at the time of such notice; or
(E) is or was determined to be terminally
ill (as determined under section 1861(dd)(3)(A)
of the Social Security Act) at the time of such
notice, but only with respect to a provider that
was treating the terminal illness before the date
of such notice.
(b) TRANSITIONAL PERIODS.—
(1) SERIOUS AND COMPLEX CONDITIONS.—The
transitional period under this subsection with re-
spect to a continuing care patient described in sub-
section (a)(4)(A) shall extend for up to 90 days (as
determined by the treating health care professional)
from the date of the notice described in subsection
(a)(3)(A).
(2) INSTITUTIONAL OR INPATIENT CARE.—The
transitional period under this subsection for a con-
tinuing 
care 
patient 
described 
in 
subsection
(a)(4)(B) shall extend until the earlier of—
(A) the expiration of the 90-day period be-
ginning on the date on which the notice under
subsection (a)(3)(A) is provided; or
(B) the date of discharge of the patient
from such care or the termination of the period
of institutionalization, or, if later, the date of
completion of reasonable follow-up care.
(3) SCHEDULED
NON-ELECTIVE
SURGERY.—
The transitional period under this subsection for a
continuing care patient described in subsection
(a)(4)(C) shall extend until the completion of the
surgery involved and post-surgical follow-up care re-
lating to the surgery and occurring within 90 days
after the date of the surgery.
(4) 
PREGNANCY.—The 
transitional 
period
under this subsection for a continuing care patient
described in subsection (a)(4)(D) shall extend
through the provision of post-partum care directly
related to the delivery.
(5) TERMINAL ILLNESS.—The transitional pe-
riod under this subsection for a continuing care pa-
tient described in subsection (a)(4)(E) shall extend
for the remainder of the patient’s life for care that
is directly related to the treatment of the terminal
illness or its medical manifestations.
(c) PERMISSIBLE
TERMS
AND
CONDITIONS.—A
group health plan or health insurance issuer may condi-
tion coverage of continued treatment by a provider under
this section upon the provider agreeing to the following
terms and conditions:
(1) The treating health care provider agrees to
accept reimbursement from the plan or issuer and
continuing care patient involved (with respect to
cost-sharing) at the rates applicable prior to the
start of the transitional period as payment in full
(or, in the case described in subsection (a)(2), at the
rates applicable under the replacement plan or cov-
erage after the date of the termination of the con-
tract with the group health plan or health insurance
issuer) and not to impose cost-sharing with respect
to the patient in an amount that would exceed the
cost-sharing that could have been imposed if the
contract referred to in subsection (a)(1) had not
been terminated.
(2) The treating health care provider agrees to
adhere to the quality assurance standards of the
plan or issuer responsible for payment under para-
graph (1) and to provide to such plan or issuer nec-
essary medical information related to the care pro-
vided.
(3) The treating health care provider agrees
otherwise to adhere to such plan’s or issuer’s policies
and procedures, including procedures regarding re-
ferrals and obtaining prior authorization and pro-
viding services pursuant to a treatment plan (if any)
approved by the plan or issuer.
(d) RULES OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed—
(1) to require the coverage of benefits which
would not have been covered if the provider involved
remained a participating provider; or
(2) with respect to the termination of a con-
tract under subsection (a) to prevent a group health
plan or health insurance issuer from requiring that
the health care provider—
(A) notify participants, beneficiaries, or en-
rollees of their rights under this section; or
(B) provide the plan or issuer with the
name of each participant, beneficiary, or en-
rollee who the provider believes is a continuing
care patient.
(e) DEFINITIONS.—In this section:
(1) CONTRACT.—The term ‘‘contract’’ includes,
with respect to a plan or issuer and a treating
health care provider, a contract between such plan
or issuer and an organized network of providers that
includes the treating health care provider, and (in
the case of such a contract) the contract between the
treating health care provider and the organized net-
work.
(2) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ or ‘‘provider’’ means—
(A) any individual who is engaged in the
delivery of health care services in a State and
who is required by State law or regulation to be
licensed or certified by the State to engage in
the delivery of such services in the State; and
(B) any entity that is engaged in the deliv-
ery of health care services in a State and that,
if it is required by State law or regulation to be
licensed or certified by the State to engage in
the delivery of such services in the State, is so
licensed.
(3) SERIOUS AND COMPLEX CONDITION.—The
term ‘‘serious and complex condition’’ means, with
respect to a participant, beneficiary, or enrollee
under the plan or coverage—
(A) in the case of an acute illness, a condi-
tion that is serious enough to require special-
ized medical treatment to avoid the reasonable
possibility of death or permanent harm; or
(B) in the case of a chronic illness or con-
dition, is an ongoing special condition (as de-
fined in section 114(b)(2)(B)).
(4) TERMINATED.—The term ‘‘terminated’’ in-
cludes, with respect to a contract, the expiration or
nonrenewal of the contract, but does not include a
termination of the contract for failure to meet appli-
cable quality standards or for fraud.
SEC. 118. ACCESS TO NEEDED PRESCRIPTION DRUGS.
(a) IN GENERAL.—To the extent that a group health
plan, or health insurance coverage offered by a health in-
surance issuer, provides coverage for benefits with respect
to prescription drugs, and limits such coverage to drugs
included in a formulary, the plan or issuer shall—
(1) ensure the participation of physicians and
pharmacists in developing and reviewing such for-
mulary;
(2) provide for disclosure of the formulary to
providers; and
(3) in accordance with the applicable quality as-
surance and utilization review standards of the plan
or issuer, provide for exceptions from the formulary
limitation when a non-formulary alternative is medi-
cally necessary and appropriate and, in the case of
such an exception, apply the same cost-sharing re-
quirements that would have applied in the case of a
drug covered under the formulary.
(b) COVERAGE OF APPROVED DRUGS AND MEDICAL
DEVICES.—
(1) IN
GENERAL.—A group health plan (or
health insurance coverage offered in connection with
such a plan) that provides any coverage of prescrip-
tion drugs or medical devices shall not deny coverage
of such a drug or device on the basis that the use
is investigational, if the use—
(A) in the case of a prescription drug—
(i) is included in the labeling author-
ized by the application in effect for the
drug pursuant to subsection (b) or (j) of
section 505 of the Federal Food, Drug,
and Cosmetic Act, without regard to any
postmarketing 
requirements 
that 
may
apply under such Act; or
(ii) is included in the labeling author-
ized by the application in effect for the
drug under section 351 of the Public
Health Service Act, without regard to any
postmarketing 
requirements 
that 
may
apply pursuant to such section; or
(B) in the case of a medical device, is in-
cluded in the labeling authorized by a regula-
tion under subsection (d) or (3) of section 513
of the Federal Food, Drug, and Cosmetic Act,
an order under subsection (f) of such section, or
an application approved under section 515 of
such Act, without regard to any postmarketing
requirements that may apply under such Act.
(2) CONSTRUCTION.—Nothing in this sub-
section shall be construed as requiring a group
health plan (or health insurance coverage offered in
connection with such a plan) to provide any coverage
of prescription drugs or medical devices.
SEC. 119. COVERAGE FOR INDIVIDUALS PARTICIPATING IN
APPROVED CLINICAL TRIALS.
(a) COVERAGE.—
(1) IN GENERAL.—If a group health plan, or
health insurance issuer that is providing health in-
surance coverage, provides coverage to a qualified in-
dividual (as defined in subsection (b)), the plan or
issuer—
(A) may not deny the individual participa-
tion in the clinical trial referred to in subsection
(b)(2);
(B) subject to subsection (c), may not deny
(or limit or impose additional conditions on) the
coverage of routine patient costs for items and
services furnished in connection with participa-
tion in the trial; and
(C) may not discriminate against the indi-
vidual on the basis of the enrollee’s participa-
tion in such trial.
(2) EXCLUSION OF CERTAIN COSTS.—For pur-
poses of paragraph (1)(B), routine patient costs do
not include the cost of the tests or measurements
conducted primarily for the purpose of the clinical
trial involved.
(3) USE OF IN-NETWORK PROVIDERS.—If one
or more participating providers is participating in a
clinical trial, nothing in paragraph (1) shall be con-
strued as preventing a plan or issuer from requiring
that a qualified individual participate in the trial
through such a participating provider if the provider
will accept the individual as a participant in the
trial.
(b) QUALIFIED INDIVIDUAL DEFINED.—For pur-
poses of subsection (a), the term ‘‘qualified individual’’
means an individual who is a participant or beneficiary
in a group health plan, or who is an enrollee under health
insurance coverage, and who meets the following condi-
tions:
(1)(A) The individual has a life-threatening or
serious illness for which no standard treatment is ef-
fective.
(B) The individual is eligible to participate in
an approved clinical trial according to the trial pro-
tocol with respect to treatment of such illness.
(C) The individual’s participation in the trial
offers meaningful potential for significant clinical
benefit for the individual.
(2) Either—
(A) the referring physician is a partici-
pating health care professional and has con-
cluded that the individual’s participation in
such trial would be appropriate based upon the
individual meeting the conditions described in
paragraph (1); or
(B) the participant, beneficiary, or enrollee
provides medical and scientific information es-
tablishing that the individual’s participation in
such trial would be appropriate based upon the
individual meeting the conditions described in
paragraph (1).
(c) PAYMENT.—
(1) IN GENERAL.—Under this section a group
health plan or health insurance issuer shall provide
for payment for routine patient costs described in
subsection (a)(2) but is not required to pay for costs
of items and services that are reasonably expected
(as determined by the appropriate Secretary) to be
paid for by the sponsors of an approved clinical trial.
(2) PAYMENT RATE.—In the case of covered
items and services provided by—
(A) a participating provider, the payment
rate shall be at the agreed upon rate; or
(B) a nonparticipating provider, the pay-
ment rate shall be at the rate the plan or issuer
would normally pay for comparable services
under subparagraph (A).
(d) APPROVED CLINICAL TRIAL DEFINED.—
(1) IN
GENERAL.—In this section, the term
‘‘approved clinical trial’’ means a clinical research
study or clinical investigation approved and funded
(which may include funding through in-kind con-
tributions) by one or more of the following:
(A) The National Institutes of Health.
(B) A cooperative group or center of the
National Institutes of Health.
(C) The Food and Drug Administration.
(D) Either of the following if the condi-
tions described in paragraph (2) are met:
(i) The Department of Veterans Af-
fairs.
(ii) The Department of Defense.
(2) CONDITIONS
FOR
DEPARTMENTS.—The
conditions described in this paragraph, for a study
or investigation conducted by a Department, are
that the study or investigation has been reviewed
and approved through a system of peer review that
the appropriate Secretary determines—
(A) to be comparable to the system of peer
review of studies and investigations used by the
National Institutes of Health; and
(B) assures unbiased review of the highest
scientific standards by qualified individuals who
have no interest in the outcome of the review.
(e) CONSTRUCTION.—Nothing in this section shall be
construed to limit a plan’s or issuer’s coverage with re-
spect to clinical trials.
SEC. 120. REQUIRED COVERAGE FOR MINIMUM HOSPITAL
STAY FOR MASTECTOMIES AND LYMPH NODE
DISSECTIONS 
FOR 
THE 
TREATMENT 
OF
BREAST CANCER AND COVERAGE FOR SEC-
ONDARY CONSULTATIONS.
(a) INPATIENT CARE.—
(1) IN GENERAL.—A group health plan, and a
health insurance issuer providing health insurance
coverage, that provides medical and surgical benefits
shall ensure that inpatient coverage with respect to
the treatment of breast cancer is provided for a pe-
riod of time as is determined by the attending physi-
cian, in consultation with the patient, to be medi-
cally necessary and appropriate following—
(A) a mastectomy;
(B) a lumpectomy; or
(C) a lymph node dissection for the treat-
ment of breast cancer.
(2) EXCEPTION.—Nothing in this section shall
be construed as requiring the provision of inpatient
coverage if the attending physician and patient de-
termine that a shorter period of hospital stay is
medically appropriate.
(b) PROHIBITION ON CERTAIN MODIFICATIONS.—In
implementing the requirements of this section, a group
health plan, and a health insurance issuer providing health
insurance coverage, may not modify the terms and condi-
tions of coverage based on the determination by a partici-
pant, beneficiary, or enrollee to request less than the min-
imum coverage required under subsection (a).
(c) SECONDARY CONSULTATIONS.—
(1) IN GENERAL.—A group health plan, and a
health insurance issuer providing health insurance
coverage, that provides coverage with respect to
medical and surgical services provided in relation to
the diagnosis and treatment of cancer shall ensure
that full coverage is provided for secondary consulta-
tions by specialists in the appropriate medical fields
(including pathology, radiology, and oncology) to
confirm or refute such diagnosis. Such plan or issuer
shall ensure that full coverage is provided for such
secondary consultation whether such consultation is
based on a positive or negative initial diagnosis. In
any case in which the attending physician certifies in
writing that services necessary for such a secondary
consultation are not sufficiently available from spe-
cialists operating under the plan or coverage with re-
spect to whose services coverage is otherwise pro-
vided under such plan or by such issuer, such plan
or issuer shall ensure that coverage is provided with
respect to the services necessary for the secondary
consultation with any other specialist selected by the
attending physician for such purpose at no addi-
tional cost to the individual beyond that which the
individual would have paid if the specialist was par-
ticipating in the network of the plan or issuer.
(2) EXCEPTION.—Nothing in paragraph (1)
shall be construed as requiring the provision of sec-
ondary consultations where the patient determines
not to seek such a consultation.
(d) PROHIBITION ON PENALTIES OR INCENTIVES.—
A group health plan, and a health insurance issuer pro-
viding health insurance coverage, may not—
(1) penalize or otherwise reduce or limit the re-
imbursement of a provider or specialist because the
provider or specialist provided care to a participant,
beneficiary, or enrollee in accordance with this sec-
tion;
(2) provide financial or other incentives to a
physician or specialist to induce the physician or
specialist to keep the length of inpatient stays of pa-
tients following a mastectomy, lumpectomy, or a
lymph node dissection for the treatment of breast
cancer below certain limits or to limit referrals for
secondary consultations; or
(3) provide financial or other incentives to a
physician or specialist to induce the physician or
specialist to refrain from referring a participant,
beneficiary, or enrollee for a secondary consultation
that would otherwise be covered by the plan or cov-
erage involved under subsection (c).
Subtitle C—Access to Information
SEC. 121. PATIENT ACCESS TO INFORMATION.
(a) REQUIREMENT—
(1) DISCLOSURE.—
(A) IN GENERAL.—A group health plan,
and a health insurance issuer that provides cov-
erage in connection with health insurance cov-
erage, shall provide for the disclosure to partici-
pants, beneficiaries, and enrollees—
(i) of the information described in
subsection (b) at the time of the initial en-
rollment of the participant, beneficiary, or
enrollee under the plan or coverage;
(ii) of such information on an annual
basis—
(I) in conjunction with the elec-
tion period of the plan or coverage if
the plan or coverage has such an elec-
tion period; or
(II) in the case of a plan or cov-
erage that does not have an election
period, in conjunction with the begin-
ning of the plan or coverage year; and
(iii) of information relating to any
material reduction to the benefits or infor-
mation described in such subsection or
subsection (c), in the form of a notice pro-
vided not later than 30 days before the
date on which the reduction takes effect.
(B) PARTICIPANTS, BENEFICIARIES, AND
ENROLLEES.—The disclosure required under
subparagraph (A) shall be provided—
(i) jointly to each participant, bene-
ficiary, and enrollee who reside at the same
address; or
(ii) in the case of a beneficiary or en-
rollee who does not reside at the same ad-
dress as the participant or another en-
rollee, separately to the participant or
other enrollees and such beneficiary or en-
rollee.
(2) PROVISION OF INFORMATION.—Information
shall be provided to participants, beneficiaries, and
enrollees under this section at the last known ad-
dress maintained by the plan or issuer with respect
to such participants, beneficiaries, or enrollees, to
the extent that such information is provided to par-
ticipants, beneficiaries, or enrollees via the United
States Postal Service or other private delivery serv-
ice.
(b) REQUIRED INFORMATION.—The informational
materials to be distributed under this section shall include
for each option available under the group health plan or
health insurance coverage the following:
100
(1) BENEFITS.—A description of the covered
benefits, including—
(A) any in- and out-of-network benefits;
(B) specific preventive services covered
under the plan or coverage if such services are
covered;
(C) any specific exclusions or express limi-
tations 
of 
benefits 
described 
in 
section
104(b)(3)(C);
(D) any other benefit limitations, including
any annual or lifetime benefit limits and any
monetary limits or limits on the number of vis-
its, days, or services, and any specific coverage
exclusions; and
(E) any definition of medical necessity
used in making coverage determinations by the
plan, issuer, or claims administrator.
(2) COST SHARING.—A description of any cost-
sharing requirements, including—
(A) any premiums, deductibles, coinsur-
ance, copayment amounts, and liability for bal-
ance billing, for which the participant, bene-
ficiary, or enrollee will be responsible under
each option available under the plan;
101
(B) any maximum out-of-pocket expense
for which the participant, beneficiary, or en-
rollee may be liable;
(C) any cost-sharing requirements for out-
of-network benefits or services received from
nonparticipating providers; and
(D) any additional cost-sharing or charges
for benefits and services that are furnished
without meeting applicable plan or coverage re-
quirements, such as prior authorization or
precertification.
(3) SERVICE AREA.—A description of the plan
or issuer’s service area, including the provision of
any out-of-area coverage.
(4) PARTICIPATING PROVIDERS.—A directory of
participating providers (to the extent a plan or
issuer provides coverage through a network of pro-
viders) that includes, at a minimum, the name, ad-
dress, and telephone number of each participating
provider, and information about how to inquire
whether a participating provider is currently accept-
ing new patients.
(5) CHOICE OF PRIMARY CARE PROVIDER.—A
description of any requirements and procedures to
be used by participants, beneficiaries, and enrollees
102
in selecting, accessing, or changing their primary
care provider, including providers both within and
outside of the network (if the plan or issuer permits
out-of-network services), and the right to select a pe-
diatrician as a primary care provider under section
116 for a participant, beneficiary, or enrollee who is
a child if such section applies.
(6) PREAUTHORIZATION
REQUIREMENTS.—A
description of the requirements and procedures to be
used to obtain preauthorization for health services,
if such preauthorization is required.
(7) EXPERIMENTAL
AND
INVESTIGATIONAL
TREATMENTS.—A description of the process for de-
termining whether a particular item, service, or
treatment is considered experimental or investiga-
tional, and the circumstances under which such
treatments are covered by the plan or issuer.
(8) SPECIALTY CARE.—A description of the re-
quirements and procedures to be used by partici-
pants, beneficiaries, and enrollees in accessing spe-
cialty care and obtaining referrals to participating
and nonparticipating specialists, including any limi-
tations on choice of health care professionals re-
ferred to in section 112(b)(2) and the right to timely
103
access to specialists care under section 114 if such
section applies.
(9) CLINICAL TRIALS.—A description the cir-
cumstances and conditions under which participation
in clinical trials is covered under the terms and con-
ditions of the plan or coverage, and the right to ob-
tain coverage for approved clinical trials under sec-
tion 119 if such section applies.
(10) PRESCRIPTION DRUGS.—To the extent the
plan or issuer provides coverage for prescription
drugs, a statement of whether such coverage is lim-
ited to drugs included in a formulary, a description
of any provisions and cost-sharing required for ob-
taining on- and off-formulary medications, and a de-
scription of the rights of participants, beneficiaries,
and enrollees in obtaining access to access to pre-
scription drugs under section 118 if such section ap-
plies.
(11) EMERGENCY
SERVICES.—A summary of
the rules and procedures for accessing emergency
services, including the right of a participant, bene-
ficiary, or enrollee to obtain emergency services
under the prudent layperson standard under section
113, if such section applies, and any educational in-
104
formation that the plan or issuer may provide re-
garding the appropriate use of emergency services.
(12) CLAIMS AND APPEALS.—A description of
the plan or issuer’s rules and procedures pertaining
to claims and appeals, a description of the rights
(including deadlines for exercising rights) of partici-
pants, beneficiaries, and enrollees under subtitle A
in obtaining covered benefits, filing a claim for bene-
fits, and appealing coverage decisions internally and
externally (including telephone numbers and mailing
addresses of the appropriate authority), and a de-
scription of any additional legal rights and remedies
available under section 502 of the Employee Retire-
ment Income Security Act of 1974 and applicable
State law.
(13) ADVANCE DIRECTIVES AND ORGAN DONA-
TION.—A description of procedures for advance di-
rectives and organ donation decisions if the plan or
issuer maintains such procedures.
(14) INFORMATION ON PLANS AND ISSUERS.—
The name, mailing address, and telephone number
or numbers of the plan administrator and the issuer
to be used by participants, beneficiaries, and enroll-
ees seeking information about plan or coverage bene-
fits and services, payment of a claim, or authoriza-
105
tion for services and treatment. Notice of whether
the benefits under the plan or coverage are provided
under a contract or policy of insurance issued by an
issuer, or whether benefits are provided directly by
the plan sponsor who bears the insurance risk.
(15) TRANSLATION SERVICES.—A summary de-
scription of any translation or interpretation services
(including the availability of printed information in
languages other than English, audio tapes, or infor-
mation in Braille) that are available for non-English
speakers and participants, beneficiaries, and enroll-
ees with communication disabilities and a description
of how to access these items or services.
(16) ACCREDITATION INFORMATION.—Any in-
formation that is made public by accrediting organi-
zations in the process of accreditation if the plan or
issuer is accredited, or any additional quality indica-
tors (such as the results of enrollee satisfaction sur-
veys) that the plan or issuer makes public or makes
available to participants, beneficiaries, and enrollees.
(17) NOTICE OF REQUIREMENTS.—A descrip-
tion of any rights of participants, beneficiaries, and
enrollees that are established by the Bipartisan Pa-
tient Protection Act of 2001 (excluding those de-
scribed in paragraphs (1) through (16)) if such sec-
106
tions apply. The description required under this
paragraph may be combined with the notices of the
type described in sections 711(d), 713(b), or
606(a)(1) of the Employee Retirement Income Secu-
rity Act of 1974 and with any other notice provision
that the appropriate Secretary determines may be
combined, so long as such combination does not re-
sult in any reduction in the information that would
otherwise be provided to the recipient.
(18) AVAILABILITY OF ADDITIONAL INFORMA-
TION.—A statement that the information described
in subsection (c), and instructions on obtaining such
information (including telephone numbers and, if
available, Internet websites), shall be made available
upon request.
(c) ADDITIONAL INFORMATION.—The informational
materials to be provided upon the request of a participant,
beneficiary, or enrollee shall include for each option avail-
able under a group health plan or health insurance cov-
erage the following:
(1) STATUS OF PROVIDERS.—The State licen-
sure status of the plan or issuer’s participating
health care professionals and participating health
care facilities, and, if available, the education, train-
107
ing, specialty qualifications or certifications of such
professionals.
(2) COMPENSATION
METHODS.—A summary
description by category of the applicable methods
(such as capitation, fee-for-service, salary, bundled
payments, per diem, or a combination thereof) used
for compensating prospective or treating health care
professionals (including primary care providers and
specialists) and facilities in connection with the pro-
vision of health care under the plan or coverage.
(3) PRESCRIPTION DRUGS.—Information about
whether a specific prescription medication is in-
cluded in the formulary of the plan or issuer, if the
plan or issuer uses a defined formulary.
(4) EXTERNAL
APPEALS
INFORMATION.—Ag-
gregate information on the number and outcomes of
external medical reviews, relative to the sample size
(such as the number of covered lives) under the plan
or under the coverage of the issuer.
(d) MANNER OF DISCLOSURE.—The information de-
scribed in this section shall be disclosed in an accessible
medium and format that is calculated to be understood
by an average participant or enrollee.
(e) RULES OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to prohibit a group health plan,
108
or a health insurance issuer in connection with health in-
surance coverage, from—
(1) distributing any other additional informa-
tion determined by the plan or issuer to be impor-
tant or necessary in assisting participants, bene-
ficiaries, and enrollees in the selection of a health
plan or health insurance coverage; and
(2) complying with the provisions of this section
by providing information in brochures, through the
Internet or other electronic media, or through other
similar means, so long as—
(A) the disclosure of such information in
such form is in accordance with requirements
as the appropriate Secretary may impose, and
(B) in connection with any such disclosure
of information through the Internet or other
electronic media—
(i) the recipient has affirmatively con-
sented to the disclosure of such informa-
tion in such form,
(ii) the recipient is capable of access-
ing the information so disclosed on the re-
cipient’s individual workstation or at the
recipient’s home,
109
(iii) the recipient retains an ongoing
right to receive paper disclosure of such in-
formation and receives, in advance of any
attempt at disclosure of such information
to him or her through the Internet or
other electronic media, notice in printed
form of such ongoing right and of the
proper software required to view informa-
tion so disclosed, and
(iv) the plan administrator appro-
priately ensures that the intended recipient
is receiving the information so disclosed
and provides the information in printed
form if the information is not received.
Subtitle D—Protecting the Doctor-
Patient Relationship
SEC. 131. PROHIBITION OF INTERFERENCE WITH CERTAIN
MEDICAL COMMUNICATIONS.
(a) GENERAL RULE.—The provisions of any contract
or agreement, or the operation of any contract or agree-
ment, between a group health plan or health insurance
issuer in relation to health insurance coverage (including
any partnership, association, or other organization that
enters into or administers such a contract or agreement)
and a health care provider (or group of health care pro-
110
viders) shall not prohibit or otherwise restrict a health
care professional from advising such a participant, bene-
ficiary, or enrollee who is a patient of the professional
about the health status of the individual or medical care
or treatment for the individual’s condition or disease, re-
gardless of whether benefits for such care or treatment
are provided under the plan or coverage, if the professional
is acting within the lawful scope of practice.
(b) NULLIFICATION.—Any contract provision or
agreement that restricts or prohibits medical communica-
tions in violation of subsection (a) shall be null and void.
SEC. 132. PROHIBITION OF DISCRIMINATION AGAINST PRO-
VIDERS BASED ON LICENSURE.
(a) IN GENERAL.—A group health plan, and a health
insurance issuer with respect to health insurance coverage,
shall not discriminate with respect to participation or in-
demnification as to any provider who is acting within the
scope of the provider’s license or certification under appli-
cable State law, solely on the basis of such license or cer-
tification.
(b) CONSTRUCTION.—Subsection (a) shall not be
construed—
(1) as requiring the coverage under a group
health plan or health insurance coverage of a par-
ticular benefit or service or to prohibit a plan or
111
issuer from including providers only to the extent
necessary to meet the needs of the plan’s or issuer’s
participants, beneficiaries, or enrollees or from es-
tablishing any measure designed to maintain quality
and control costs consistent with the responsibilities
of the plan or issuer;
(2) to override any State licensure or scope-of-
practice law; or
(3) as requiring a plan or issuer that offers net-
work coverage to include for participation every will-
ing provider who meets the terms and conditions of
the plan or issuer.
SEC. 133. PROHIBITION AGAINST IMPROPER INCENTIVE
ARRANGEMENTS.
(a) IN GENERAL.—A group health plan and a health
insurance issuer offering health insurance coverage may
not operate any physician incentive plan (as defined in
subparagraph (B) of section 1876(i)(8) of the Social Secu-
rity Act) unless the requirements described in clauses (i),
(ii)(I), and (iii) of subparagraph (A) of such section are
met with respect to such a plan.
(b) APPLICATION.—For purposes of carrying out
paragraph (1), any reference in section 1876(i)(8) of the
Social Security Act to the Secretary, an eligible organiza-
tion, or an individual enrolled with the organization shall
112
be treated as a reference to the applicable authority, a
group health plan or health insurance issuer, respectively,
and a participant, beneficiary, or enrollee with the plan
or organization, respectively.
(c) CONSTRUCTION.—Nothing in this section shall be
construed as prohibiting all capitation and similar ar-
rangements or all provider discount arrangements.
SEC. 134. PAYMENT OF CLAIMS.
A group health plan, and a health insurance issuer
offering group health insurance coverage, shall provide for
prompt payment of claims submitted for health care serv-
ices or supplies furnished to a participant, beneficiary, or
enrollee with respect to benefits covered by the plan or
issuer, in a manner consistent with the provisions of sec-
tion 1842(c)(2) of the Social Security Act (42 U.S.C.
1395u(c)(2)).
SEC. 135. PROTECTION FOR PATIENT ADVOCACY.
(a) PROTECTION FOR USE OF UTILIZATION REVIEW
AND GRIEVANCE PROCESS.—A group health plan, and a
health insurance issuer with respect to the provision of
health insurance coverage, may not retaliate against a par-
ticipant, beneficiary, enrollee, or health care provider
based on the participant’s, beneficiary’s, enrollee’s or pro-
vider’s use of, or participation in, a utilization review proc-
ess or a grievance process of the plan or issuer (including
113
an internal or external review or appeal process) under
this title.
(b) PROTECTION
FOR
QUALITY
ADVOCACY
BY
HEALTH CARE PROFESSIONALS.—
(1) IN
GENERAL.—A group health plan or
health insurance issuer may not retaliate or dis-
criminate against a protected health care profes-
sional because the professional in good faith—
(A) discloses information relating to the
care, services, or conditions affecting one or
more participants, beneficiaries, or enrollees of
the plan or issuer to an appropriate public reg-
ulatory agency, an appropriate private accredi-
tation body, or appropriate management per-
sonnel of the plan or issuer; or
(B) initiates, cooperates, or otherwise par-
ticipates in an investigation or proceeding by
such an agency with respect to such care, serv-
ices, or conditions.
If an institutional health care provider is a partici-
pating provider with such a plan or issuer or other-
wise receives payments for benefits provided by such
a plan or issuer, the provisions of the previous sen-
tence shall apply to the provider in relation to care,
services, or conditions affecting one or more patients
114
within an institutional health care provider in the
same manner as they apply to the plan or issuer in
relation to care, services, or conditions provided to
one or more participants, beneficiaries, or enrollees;
and for purposes of applying this sentence, any ref-
erence to a plan or issuer is deemed a reference to
the institutional health care provider.
(2) GOOD
FAITH
ACTION.—For purposes of
paragraph (1), a protected health care professional
is considered to be acting in good faith with respect
to disclosure of information or participation if, with
respect to the information disclosed as part of the
action—
(A) the disclosure is made on the basis of
personal knowledge and is consistent with that
degree of learning and skill ordinarily possessed
by health care professionals with the same li-
censure or certification and the same experi-
ence;
(B) the professional reasonably believes the
information to be true;
(C) the information evidences either a vio-
lation of a law, rule, or regulation, of an appli-
cable accreditation standard, or of a generally
recognized professional or clinical standard or
115
that a patient is in imminent hazard of loss of
life or serious injury; and
(D) subject to subparagraphs (B) and (C)
of paragraph (3), the professional has followed
reasonable internal procedures of the plan,
issuer, or institutional health care provider es-
tablished for the purpose of addressing quality
concerns before making the disclosure.
(3) EXCEPTION AND SPECIAL RULE.—
(A) GENERAL EXCEPTION.—Paragraph (1)
does not protect disclosures that would violate
Federal or State law or diminish or impair the
rights of any person to the continued protection
of confidentiality of communications provided
by such law.
(B) NOTICE OF INTERNAL PROCEDURES.—
Subparagraph (D) of paragraph (2) shall not
apply unless the internal procedures involved
are reasonably expected to be known to the
health care professional involved. For purposes
of this subparagraph, a health care professional
is reasonably expected to know of internal pro-
cedures if those procedures have been made
available to the professional through distribu-
tion or posting.
116
(C) INTERNAL PROCEDURE EXCEPTION.—
Subparagraph (D) of paragraph (2) also shall
not apply if—
(i) the disclosure relates to an immi-
nent hazard of loss of life or serious injury
to a patient;
(ii) the disclosure is made to an ap-
propriate private accreditation body pursu-
ant to disclosure procedures established by
the body; or
(iii) the disclosure is in response to an
inquiry made in an investigation or pro-
ceeding of an appropriate public regulatory
agency and the information disclosed is
limited to the scope of the investigation or
proceeding.
(4) ADDITIONAL
CONSIDERATIONS.—It shall
not be a violation of paragraph (1) to take an ad-
verse action against a protected health care profes-
sional if the plan, issuer, or provider taking the ad-
verse action involved demonstrates that it would
have taken the same adverse action even in the ab-
sence of the activities protected under such para-
graph.
117
(5) NOTICE.—A group health plan, health in-
surance issuer, and institutional health care provider
shall post a notice, to be provided or approved by
the Secretary of Labor, setting forth excerpts from,
or summaries of, the pertinent provisions of this
subsection and information pertaining to enforce-
ment of such provisions.
(6) CONSTRUCTIONS.—
(A) DETERMINATIONS
OF
COVERAGE.—
Nothing in this subsection shall be construed to
prohibit a plan or issuer from making a deter-
mination not to pay for a particular medical
treatment or service or the services of a type of
health care professional.
(B) ENFORCEMENT OF PEER REVIEW PRO-
TOCOLS AND INTERNAL PROCEDURES.—Noth-
ing in this subsection shall be construed to pro-
hibit a plan, issuer, or provider from estab-
lishing and enforcing reasonable peer review or
utilization review protocols or determining
whether a protected health care professional has
complied with those protocols or from estab-
lishing and enforcing internal procedures for
the purpose of addressing quality concerns.
118
(C) RELATION TO OTHER RIGHTS.—Noth-
ing in this subsection shall be construed to
abridge rights of participants, beneficiaries, en-
rollees, and protected health care professionals
under other applicable Federal or State laws.
(7) PROTECTED HEALTH CARE PROFESSIONAL
DEFINED.—For purposes of this subsection, the
term ‘‘protected health care professional’’ means an
individual who is a licensed or certified health care
professional and who—
(A) with respect to a group health plan or
health insurance issuer, is an employee of the
plan or issuer or has a contract with the plan
or issuer for provision of services for which ben-
efits are available under the plan or issuer; or
(B) with respect to an institutional health
care provider, is an employee of the provider or
has a contract or other arrangement with the
provider respecting the provision of health care
services.
Subtitle E—Definitions
SEC. 151. DEFINITIONS.
(a) INCORPORATION OF GENERAL DEFINITIONS.—
Except as otherwise provided, the provisions of section
2791 of the Public Health Service Act shall apply for pur-
119
poses of this title in the same manner as they apply for
purposes of title XXVII of such Act.
(b) SECRETARY.—Except as otherwise provided, the
term ‘‘Secretary’’ means the Secretary of Health and
Human Services, in consultation with the Secretary of
Labor and the term ‘‘appropriate Secretary’’ means the
Secretary of Health and Human Services in relation to
carrying out this title under sections 2706 and 2751 of
the Public Health Service Act and the Secretary of Labor
in relation to carrying out this title under section 713 of
the Employee Retirement Income Security Act of 1974.
(c) ADDITIONAL DEFINITIONS.—For purposes of this
title:
(1) APPLICABLE AUTHORITY.—The term ‘‘ap-
plicable authority’’ means—
(A) in the case of a group health plan, the
Secretary of Health and Human Services and
the Secretary of Labor; and
(B) in the case of a health insurance issuer
with respect to a specific provision of this title,
the applicable State authority (as defined in
section 2791(d) of the Public Health Service
Act), or the Secretary of Health and Human
Services, if such Secretary is enforcing such
120
provision 
under 
section 
2722(a)(2) 
or
2761(a)(2) of the Public Health Service Act.
(3) ENROLLEE.—The term ‘‘enrollee’’ means,
with respect to health insurance coverage offered by
a health insurance issuer, an individual enrolled with
the issuer to receive such coverage.
(4) GROUP HEALTH PLAN.—The term ‘‘group
health plan’’ has the meaning given such term in
section 733(a) of the Employee Retirement Income
Security Act of 1974, except that such term includes
a employee welfare benefit plan treated as a group
health plan under section 732(d) of such Act or de-
fined as such a plan under section 607(1) of such
Act.
(5) HEALTH CARE PROFESSIONAL.—The term
‘‘health care professional’’ means an individual who
is licensed, accredited, or certified under State law
to provide specified health care services and who is
operating within the scope of such licensure, accredi-
tation, or certification.
(6) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ includes a physician or other
health care professional, as well as an institutional
or other facility or agency that provides health care
services and that is licensed, accredited, or certified
121
to provide health care items and services under ap-
plicable State law.
(7) NETWORK.—The term ‘‘network’’ means,
with respect to a group health plan or health insur-
ance issuer offering health insurance coverage, the
participating health care professionals and providers
through whom the plan or issuer provides health
care items and services to participants, beneficiaries,
or enrollees.
(8) 
NONPARTICIPATING.—The 
term 
‘‘non-
participating’’ means, with respect to a health care
provider that provides health care items and services
to a participant, beneficiary, or enrollee under group
health plan or health insurance coverage, a health
care provider that is not a participating health care
provider with respect to such items and services.
(9) PARTICIPATING.—The term ‘‘participating’’
means, with respect to a health care provider that
provides health care items and services to a partici-
pant, beneficiary, or enrollee under group health
plan or health insurance coverage offered by a
health insurance issuer, a health care provider that
furnishes such items and services under a contract
or other arrangement with the plan or issuer.
122
(10) 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.
(11) TERMS
AND
CONDITIONS.—The term
‘‘terms and conditions’’ includes, with respect to a
group health plan or health insurance coverage, re-
quirements imposed under this title with respect to
the plan or coverage.
SEC. 152. PREEMPTION; STATE FLEXIBILITY; CONSTRUC-
TION.
(a) CONTINUED APPLICABILITY
OF STATE LAW
WITH RESPECT TO HEALTH INSURANCE ISSUERS.—
(1) IN GENERAL.—Subject to paragraph (2),
this title shall not be construed to supersede any
provision of State law which establishes, implements,
or continues in effect any standard or requirement
solely relating to health insurance issuers (in connec-
tion with group health insurance coverage or other-
wise) except to the extent that such standard or re-
quirement prevents the application of a requirement
of this title.
(2) CONTINUED
PREEMPTION
WITH
RESPECT
TO GROUP HEALTH PLANS.—Nothing in this title
123
shall be construed to affect or modify the provisions
of section 514 of the Employee Retirement Income
Security Act of 1974 with respect to group health
plans.
(3) CONSTRUCTION.—In applying this section,
a State law that provides for equal access to, and
availability of, all categories of licensed health care
providers and services shall not be treated as pre-
venting the application of any requirement of this
title.
(b) APPLICATION OF SUBSTANTIALLY EQUIVALENT
STATE LAWS.—
(1) IN GENERAL.—In the case of a State law
that imposes, with respect to health insurance cov-
erage offered by a health insurance issuer and with
respect to a group health plan that is a non-Federal
governmental plan, a requirement that is substan-
tially equivalent (within the meaning of subsection
(c)) to a patient protection requirement (as defined
in paragraph (3)) and does not prevent the applica-
tion of other requirements under this Act (except in
the case of other substantially equivalent require-
ments), in applying the requirements of this title
under section 2707 and 2753 (as applicable) of the
124
Public Health Service Act (as added by title II),
subject to subsection (a)(2)—
(A) the State law shall not be treated as
being superseded under subsection (a); and
(B) the State law shall apply instead of the
patient protection requirement otherwise appli-
cable with respect to health insurance coverage
and non-Federal governmental plans.
(2) LIMITATION.—In the case of a group health
plan covered under title I of the Employee Retire-
ment Income Security Act of 1974, paragraph (1)
shall be construed to apply only with respect to the
health insurance coverage (if any) offered in connec-
tion with the plan.
(3) PATIENT PROTECTION REQUIREMENT DE-
FINED.—For purposes of this section, the term ‘‘pa-
tient protection requirement’’ means a requirement
under this title, and includes (as a single require-
ment) a group or related set of requirements under
a section or similar unit under this title.
(c) DETERMINATIONS
OF SUBSTANTIAL EQUIVA-
LENCE.—
(1) CERTIFICATION BY STATES.—A State may
submit to the Secretary a certification that a State
law provides for patient protections that are at least
125
substantially equivalent to one or more patient pro-
tection requirements. Such certification shall be ac-
companied by such information as may be required
to permit the Secretary to make the determination
described in paragraph (2)(A).
(2) REVIEW.—
(A) IN
GENERAL.—The Secretary shall
promptly review a certification submitted under
paragraph (1) with respect to a State law to de-
termine if the State law provides for at least
substantially equivalent and effective patient
protections to the patient protection require-
ment (or requirements) to which the law re-
lates.
(B) APPROVAL DEADLINES.—
(i) INITIAL REVIEW.—Such a certifi-
cation is considered approved unless the
Secretary notifies the State in writing,
within 90 days after the date of receipt of
the certification, that the certification is
disapproved (and the reasons for dis-
approval) or that specified additional infor-
mation is needed to make the determina-
tion described in subparagraph (A).
126
(ii) 
ADDITIONAL
INFORMATION.—
With respect to a State that has been noti-
fied by the Secretary under clause (i) that
specified additional information is needed
to make the determination described in
subparagraph (A), the Secretary shall
make the determination within 60 days
after the date on which such specified ad-
ditional information is received by the Sec-
retary.
(3) APPROVAL.—
(A) IN GENERAL.—The Secretary shall ap-
prove a certification under paragraph (1)
unless—
(i) the State fails to provide sufficient
information to enable the Secretary to
make a determination under paragraph
(2)(A); or
(ii) the Secretary determines that the
State law involved does not provide for pa-
tient protections that are at least substan-
tially equivalent to and as effective as the
patient protection requirement (or require-
ments) to which the law relates.
127
(B) STATE CHALLENGE.—A State that has
a certification disapproved by the Secretary
under subparagraph (A) may challenge such
disapproval in the appropriate United States
district court.
(4) CONSTRUCTION.—Nothing in this sub-
section shall be construed as preventing the certifi-
cation (and approval of certification) of a State law
under this subsection solely because it provides for
greater protections for patients than those protec-
tions otherwise required to establish substantial
equivalence.
(d) DEFINITIONS.—For purposes of this section:
(1) STATE
LAW.—The term ‘‘State law’’ in-
cludes all laws, decisions, rules, regulations, or other
State action having the effect of law, of any State.
A law of the United States applicable only to the
District of Columbia shall be treated as a State law
rather than a law of the United States.
(2) STATE.—The term ‘‘State’’ includes a
State, the District of Columbia, Puerto Rico, the
Virgin Islands, Guam, American Samoa, the North-
ern Mariana Islands, any political subdivisions of
such, or any agency or instrumentality of such.
128
SEC. 153. EXCLUSIONS.
(a) NO BENEFIT REQUIREMENTS.—Nothing in this
title shall be construed to require a group health plan or
a health insurance issuer offering health insurance cov-
erage to include specific items and services under the
terms of such a plan or coverage, other than those pro-
vided under the terms and conditions of such plan or cov-
erage.
(b) EXCLUSION FROM ACCESS TO CARE MANAGED
CARE PROVISIONS FOR FEE-FOR-SERVICE COVERAGE.—
(1) IN GENERAL.—The provisions of sections
111 through 117 shall not apply to a group health
plan or health insurance coverage if the only cov-
erage offered under the plan or coverage is fee-for-
service coverage (as defined in paragraph (2)).
(2) FEE-FOR-SERVICE
COVERAGE
DEFINED.—
For purposes of this subsection, the term ‘‘fee-for-
service coverage’’ means coverage under a group
health plan or health insurance coverage that—
(A) reimburses hospitals, health profes-
sionals, and other providers on a fee-for-service
basis without placing the provider at financial
risk;
(B) does not vary reimbursement for such
a provider based on an agreement to contract
129
terms and conditions or the utilization of health
care items or services relating to such provider;
(C) allows access to any provider that is
lawfully authorized to provide the covered serv-
ices and that agrees to accept the terms and
conditions of payment established under the
plan or by the issuer; and
(D) for which the plan or issuer does not
require prior authorization before providing for
any health care services.
SEC. 154. COVERAGE OF LIMITED SCOPE PLANS.
Only for purposes of applying the requirements of
this title under sections 2707 and 2753 of the Public
Health Service Act and section 714 of the Employee Re-
tirement 
Income 
Security 
Act 
of 
1974, 
section
2791(c)(2)(A), and section 733(c)(2)(A) of the Employee
Retirement Income Security Act of 1974 shall be deemed
not to apply.
SEC. 155. REGULATIONS.
The Secretaries of Health and Human Services and
Labor shall issue such regulations as may be necessary
or appropriate to carry out this title. Such regulations
shall be issued consistent with section 104 of Health In-
surance Portability and Accountability Act of 1996. Such
Secretaries may promulgate any interim final rules as the
130
Secretaries determine are appropriate to carry out this
title.
SEC. 156. INCORPORATION INTO PLAN OR COVERAGE DOC-
UMENTS.
The requirements of this title with respect to a group
health plan or health insurance coverage are deemed to
be incorporated into, and made a part of, such plan or
the policy, certificate, or contract providing such coverage
and are enforceable under law as if directly included in
the documentation of such plan or such policy, certificate,
or contract.
TITLE 
II—APPLICATION 
OF
QUALITY CARE STANDARDS
TO GROUP HEALTH PLANS
AND 
HEALTH 
INSURANCE
COVERAGE UNDER THE PUB-
LIC HEALTH SERVICE ACT
SEC. 201. APPLICATION TO GROUP HEALTH PLANS AND
GROUP HEALTH INSURANCE COVERAGE.
(a) IN GENERAL.—Subpart 2 of part A of title
XXVII of the Public Health Service Act is amended by
adding at the end the following new section:
‘‘SEC. 2707. PATIENT PROTECTION STANDARDS.
‘‘Each group health plan shall comply with patient
protection requirements under title I of the Bipartisan Pa-
131
tient Protection Act of 2001, and each health insurance
issuer shall comply with patient protection requirements
under such title with respect to group health insurance
coverage it offers, and such requirements shall be deemed
to be incorporated into this subsection.’’.
(b) 
CONFORMING
AMENDMENT.—Section
2721(b)(2)(A) of such Act (42 U.S.C. 300gg–21(b)(2)(A))
is amended by inserting ‘‘(other than section 2707)’’ after
‘‘requirements of such subparts’’.
SEC. 202. APPLICATION TO INDIVIDUAL HEALTH INSUR-
ANCE COVERAGE.
Part B of title XXVII of the Public Health Service
Act is amended by inserting after section 2752 the fol-
lowing new section:
‘‘SEC. 2753. PATIENT PROTECTION STANDARDS.
‘‘Each health insurance issuer shall comply with pa-
tient protection requirements under title I of the Bipar-
tisan Patient Protection Act of 2001 with respect to indi-
vidual health insurance coverage it offers, and such re-
quirements shall be deemed to be incorporated into this
subsection.’’.
132
TITLE 
III—AMENDMENTS 
TO
THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF
1974
SEC. 301. APPLICATION OF PATIENT PROTECTION STAND-
ARDS TO GROUP HEALTH PLANS AND GROUP
HEALTH INSURANCE COVERAGE UNDER THE
EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974.
Subpart B of part 7 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 is
amended by adding at the end the following new section:
‘‘SEC. 714. PATIENT PROTECTION STANDARDS.
‘‘(a) IN GENERAL.—Subject to subsection (b), a
group health plan (and a health insurance issuer offering
group health insurance coverage in connection with such
a plan) shall comply with the requirements of title I of
the Bipartisan Patient Protection Act of 2001 (as in effect
as of the date of the enactment of such Act), and such
requirements shall be deemed to be incorporated into this
subsection.
‘‘(b) PLAN SATISFACTION OF CERTAIN REQUIRE-
MENTS.—
‘‘(1) SATISFACTION
OF
CERTAIN
REQUIRE-
MENTS
THROUGH
INSURANCE.—For purposes of
133
subsection (a), insofar as a group health plan pro-
vides benefits in the form of health insurance cov-
erage through a health insurance issuer, the plan
shall be treated as meeting the following require-
ments of title I of the Bipartisan Patient Protection
Act of 2001 with respect to such benefits and not
be considered as failing to meet such requirements
because of a failure of the issuer to meet such re-
quirements so long as the plan sponsor or its rep-
resentatives did not cause such failure by the issuer:
‘‘(A) Section 111 (relating to consumer
choice option).
‘‘(B) Section 112 (relating to choice of
health care professional).
‘‘(C) Section 113 (relating to access to
emergency care).
‘‘(D) Section 114 (relating to timely access
to specialists).
‘‘(E) Section 115 (relating to patient ac-
cess to obstetrical and gynecological care).
‘‘(F) Section 116 (relating to access to pe-
diatric care).
‘‘(G) Section 117 (relating to continuity of
care), but only insofar as a replacement issuer
assumes the obligation for continuity of care.
134
‘‘(H) Section 118 (relating to access to
needed prescription drugs).
‘‘(I) Section 119 (relating to coverage for
individuals participating in approved clinical
trials).
‘‘(J) Section 120 (relating to required cov-
erage 
for 
minimum 
hospital 
stay 
for
mastectomies and lymph node dissections for
the treatment of breast cancer and coverage for
secondary consultations).
‘‘(K) Section 134 (relating to payment of
claims).
‘‘(2) INFORMATION.—With respect to informa-
tion required to be provided or made available under
section 121 of the Bipartisan Patient Protection Act
of 2001, in the case of a group health plan that pro-
vides benefits in the form of health insurance cov-
erage through a health insurance issuer, the Sec-
retary shall determine the circumstances under
which the plan is not required to provide or make
available the information (and is not liable for the
issuer’s failure to provide or make available the in-
formation), if the issuer is obligated to provide and
make available (or provides and makes available)
such information.
135
‘‘(3) INTERNAL APPEALS.—With respect to the
internal appeals process required to be established
under section 103 of such Act, in the case of a
group health plan that provides benefits in the form
of health insurance coverage through a health insur-
ance issuer, the Secretary shall determine the cir-
cumstances under which the plan is not required to
provide for such process and system (and is not lia-
ble for the issuer’s failure to provide for such proc-
ess and system), if the issuer is obligated to provide
for (and provides for) such process and system.
‘‘(4) EXTERNAL APPEALS.—Pursuant to rules
of the Secretary, insofar as a group health plan en-
ters into a contract with a qualified external appeal
entity for the conduct of external appeal activities in
accordance with section 104 of such Act, the plan
shall be treated as meeting the requirement of such
section and is not liable for the entity’s failure to
meet any requirements under such section.
‘‘(5) APPLICATION TO PROHIBITIONS.—Pursu-
ant to rules of the Secretary, if a health insurance
issuer offers health insurance coverage in connection
with a group health plan and takes an action in vio-
lation of any of the following sections of the Bipar-
tisan Patient Protection Act of 2001, the group
136
health plan shall not be liable for such violation un-
less the plan caused such violation:
‘‘(A) Section 131 (relating to prohibition of
interference with certain medical communica-
tions).
‘‘(B) Section 132 (relating to prohibition
of discrimination against providers based on li-
censure).
‘‘(C) Section 133 (relating to prohibition
against improper incentive arrangements).
‘‘(D) Section 135 (relating to protection
for patient advocacy).
‘‘(6) CONSTRUCTION.—Nothing in this sub-
section shall be construed to affect or modify the re-
sponsibilities of the fiduciaries of a group health
plan under part 4 of subtitle B.
‘‘(7) TREATMENT OF SUBSTANTIALLY EQUIVA-
LENT STATE LAWS.—For purposes of applying this
subsection, any reference in this subsection to a re-
quirement in a section or other provision in the Bi-
partisan Patient Protection Act of 2001 with respect
to a health insurance issuer is deemed to include a
reference to a requirement under a State law that is
substantially equivalent (as determined under section
137
152(c) of such Act) to the requirement in such sec-
tion or other provisions.
‘‘(8) APPLICATION TO CERTAIN PROHIBITIONS
AGAINST RETALIATION.—With respect to compliance
with the requirements of section 135(b)(1) of the Bi-
partisan Patient Protection Act of 2001, for pur-
poses of this subtitle the term ‘group health plan’ is
deemed to include a reference to an institutional
health care provider.
‘‘(c) ENFORCEMENT OF CERTAIN REQUIREMENTS.—
‘‘(1) COMPLAINTS.—Any protected health care
professional who believes that the professional has
been retaliated or discriminated against in violation
of section 135(b)(1) of the Bipartisan Patient Pro-
tection Act of 2001 may file with the Secretary a
complaint within 180 days of the date of the alleged
retaliation or discrimination.
‘‘(2) INVESTIGATION.—The Secretary shall in-
vestigate such complaints and shall determine if a
violation of such section has occurred and, if so,
shall issue an order to ensure that the protected
health care professional does not suffer any loss of
position, pay, or benefits in relation to the plan,
issuer, or provider involved, as a result of the viola-
tion found by the Secretary.
138
‘‘(d) CONFORMING REGULATIONS.—The Secretary
shall issue regulations to coordinate the requirements on
group health plans and health insurance issuers under this
section with the requirements imposed under the other
provisions of this title. In order to reduce duplication and
clarify the rights of participants and beneficiaries with re-
spect to information that is required to be provided, such
regulations shall coordinate the information disclosure re-
quirements under section 121 of the Bipartisan Patient
Protection Act of 2001 with the reporting and disclosure
requirements imposed under part 1, so long as such co-
ordination does not result in any reduction in the informa-
tion that would otherwise be provided to participants and
beneficiaries.’’.
(b) SATISFACTION OF ERISA CLAIMS PROCEDURE
REQUIREMENT.—Section 503 of such Act (29 U.S.C.
1133) is amended by inserting ‘‘(a)’’ after ‘‘SEC. 503.’’
and by adding at the end the following new subsection:
‘‘(b) In the case of a group health plan (as defined
in section 733) compliance with the requirements of sub-
title A of title I of the Bipartisan Patient Protection Act
of 2001, and compliance with regulations promulgated by
the Secretary, in the case of a claims denial shall be
deemed compliance with subsection (a) with respect to
such claims denial.’’.
139
(c) CONFORMING AMENDMENTS.—(1) Section 732(a)
of such Act (29 U.S.C. 1185(a)) is amended by striking
‘‘section 711’’ and inserting ‘‘sections 711 and 714’’.
(2) The table of contents in section 1 of such Act
is amended by inserting after the item relating to section
713 the following new item:
‘‘Sec. 714. Patient protection standards.’’.
(3) Section 502(b)(3) of such Act (29 U.S.C.
1132(b)(3)) is amended by inserting ‘‘(other than section
135(b))’’ after ‘‘part 7’’.
SEC. 302. AVAILABILITY OF CIVIL REMEDIES.
(a) AVAILABILITY OF FEDERAL CIVIL REMEDIES IN
CASES NOT INVOLVING MEDICALLY REVIEWABLE DECI-
SIONS.—
(1) IN GENERAL.—Section 502 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1132) is amended by adding at the end the following
new subsection:
‘‘(n) CAUSE OF ACTION RELATING TO PROVISION OF
HEALTH BENEFITS.—
‘‘(1) IN GENERAL.—In any case in which—
‘‘(A) a person who is a fiduciary of a
group health plan, a health insurance issuer of-
fering health insurance coverage in connection
with the plan, or an agent of the plan, issuer,
or plan sponsor—
140
‘‘(i) upon consideration of a claim for
benefits of a participant or beneficiary
under section 102 of the Bipartisan Pa-
tient Protection Act of 2001 (relating to
procedures for initial claims for benefits
and prior authorization determinations) or
upon review of a denial of such a claim
under section 103 of such Act (relating to
internal appeal of a denial of a claim for
benefits), fails to exercise ordinary care in
making a decision—
‘‘(I) regarding whether an item
or service is covered under the terms
and conditions of the plan or cov-
erage,
‘‘(II) regarding whether an indi-
vidual is a participant or beneficiary
who is enrolled under the terms and
conditions of the plan or coverage (in-
cluding the applicability of any wait-
ing period under the plan or cov-
erage), or
‘‘(III) as to the application of
cost-sharing requirements or the ap-
plication of a specific exclusion or ex-
141
press limitation on the amount, dura-
tion, or scope of coverage of items or
services under the terms and condi-
tions of the plan or coverage, or
‘‘(ii) otherwise fails to exercise ordi-
nary care in the performance of a duty
under the terms and conditions of the plan
with respect to a participant or beneficiary,
and
‘‘(B) such failure is a proximate cause of
personal injury to, or the death of, the partici-
pant or beneficiary,
such person shall be liable to the participant or ben-
eficiary (or the estate of such participant or bene-
ficiary) for economic and noneconomic damages (but
not exemplary or punitive damages) in connection
with such personal injury or death.
‘‘(2) CAUSE
OF
ACTION
MUST
NOT
INVOLVE
MEDICALLY REVIEWABLE DECISION.—
‘‘(A) IN GENERAL.—A cause of action is
established under paragraph (1)(A) only if the
decision referred to in clause (i) or the failure
described in clause (ii) does not include a medi-
cally reviewable decision.
142
‘‘(B) 
MEDICALLY
REVIEWABLE
DECI-
SION.—For purposes of subparagraph (A), the
term ‘medically reviewable decision’ means a de-
nial of a claim for benefits under the plan
which is described in section 104(d)(2) of the
Bipartisan Patient Protection Act of 2001 (re-
lating to medically reviewable decisions).
‘‘(3) DEFINITIONS.—For purposes of this sub-
section.—
‘‘(A) ORDINARY
CARE.—The term ‘ordi-
nary care’ means—
‘‘(i) with respect to a determination
on a claim for benefits, that degree of care,
skill, and diligence that a reasonable and
prudent individual would exercise in mak-
ing a fair determination on a claim for
benefits of like kind to the claim involved;
and
‘‘(ii) with respect to the performance
of a duty, that degree of care, skill, and
diligence that a reasonable and prudent in-
dividual would exercise in performing the
duty or a duty of like character.
‘‘(B) PERSONAL INJURY.—The term ‘per-
sonal injury’ means a physical injury and in-
143
cludes an injury arising out of the treatment
(or failure to treat) a mental illness or disease.
‘‘(C) CLAIM FOR BENEFITS; DENIAL.—The
terms ‘claim for benefits’ and ‘denial of a claim
for benefits’ have the meanings provided such
terms in section 102(e) of the Bipartisan Pa-
tient Protection Act of 2001.
‘‘(D) TERMS AND CONDITIONS.—The term
‘terms and conditions’ includes, with respect to
a group health plan or health insurance cov-
erage, requirements imposed under title I of the
Bipartisan Patient Protection Act of 2001 or
under part 6 or 7.
‘‘(E) GROUP HEALTH PLAN AND OTHER
RELATED TERMS.—The provisions of sections
732(d) and 733 apply for purposes of this sub-
section in the same manner as they apply for
purposes of part 7, except that the term ‘group
health plan’ includes a group health plan (as
defined in section 607(1)).
‘‘(4) EXCLUSION OF EMPLOYERS AND OTHER
PLAN SPONSORS.—
‘‘(A) CAUSES
OF
ACTION
AGAINST
EM-
PLOYERS AND PLAN SPONSORS PRECLUDED.—
Subject to subparagraph (B), paragraph (1)(A)
144
does not authorize a cause of action against an
employer or other plan sponsor maintaining the
plan (or against an employee of such an em-
ployer or sponsor acting within the scope of em-
ployment).
‘‘(B) CERTAIN
CAUSES
OF
ACTION
PER-
MITTED.—Notwithstanding subparagraph (A),
a cause of action may arise against an employer
or other plan sponsor (or against an employee
of such an employer or sponsor acting within
the scope of employment)—
‘‘(i) under clause (i) of paragraph
(1)(A), to the extent there was direct par-
ticipation by the employer or other plan
sponsor (or employee) in the decision of
the plan under section 102 of the Bipar-
tisan Patient Protection Act of 2001 upon
consideration of a claim for benefits or
under section 103 of such Act upon review
of a denial of a claim for benefits, or
‘‘(ii) under clause (ii) of paragraph
(1)(A), to the extent there was direct par-
ticipation by the employer or other plan
sponsor (or employee) in the failure de-
scribed in such clause.
145
‘‘(C) DIRECT PARTICIPATION.—
‘‘(i) DIRECT PARTICIPATION IN DECI-
SIONS.—For purposes of subparagraph
(B), the term ‘direct participation’ means,
in connection with a decision described in
clause (i) of paragraph (1)(A) or a failure
described in clause (ii) of such paragraph,
the actual making of such decision or the
actual exercise of control in making such
decision or in the conduct constituting the
failure.
‘‘(ii) RULES OF CONSTRUCTION.—For
purposes of clause (i), the employer or plan
sponsor (or employee) shall not be con-
strued to be engaged in direct participation
because of any form of decisionmaking or
other conduct that is merely collateral or
precedent to the decision described in
clause (i) of paragraph (1)(A) on a par-
ticular claim for benefits of a participant
or beneficiary or that is merely collateral
or precedent to the conduct constituting a
failure described in clause (ii) of paragraph
(1)(A) with respect to a particular partici-
146
pant or beneficiary, including (but not lim-
ited to)—
‘‘(I) any participation by the em-
ployer or other plan sponsor (or em-
ployee) in the selection of the group
health plan or health insurance cov-
erage involved or the third party ad-
ministrator or other agent;
‘‘(II) any engagement by the em-
ployer or other plan sponsor (or em-
ployee) in any cost-benefit analysis
undertaken in connection with the se-
lection of, or continued maintenance
of, the plan or coverage involved;
‘‘(III) any participation by the
employer or other plan sponsor (or
employee) in the process of creating,
continuing, modifying, or terminating
the plan or any benefit under the
plan, if such process was not substan-
tially focused solely on the particular
situation of the participant or bene-
ficiary 
referred 
to 
in 
paragraph
(1)(A); and
147
‘‘(IV) any participation by the
employer or other plan sponsor (or
employee) in the design of any benefit
under the plan, including the amount
of copayment and limits connected
with such benefit.
‘‘(iv) IRRELEVANCE OF CERTAIN COL-
LATERAL
EFFORTS
MADE
BY
EMPLOYER
OR PLAN SPONSOR.—For purposes of this
subparagraph, an employer or plan sponsor
shall not be treated as engaged in direct
participation in a decision with respect to
any claim for benefits or denial thereof in
the case of any particular participant or
beneficiary solely by reason of—
‘‘(I) any efforts that may have
been made by the employer or plan
sponsor to advocate for authorization
of coverage for that or any other par-
ticipant or beneficiary (or any group
of participants or beneficiaries), or
‘‘(II) any provision that may
have been made by the employer or
plan sponsor for benefits which are
not covered under the terms and con-
148
ditions of the plan for that or any
other participant or beneficiary (or
any group of participants or bene-
ficiaries).
‘‘(5) REQUIREMENT OF EXHAUSTION.—
‘‘(A) IN GENERAL.—Except as provided in
this paragraph, a cause of action may not be
brought under paragraph (1) in connection with
any denial of a claim for benefits of any indi-
vidual until all administrative processes under
sections 102 and 103 of the Bipartisan Patient
Protection Act of 2001 (if applicable) have been
exhausted.
‘‘(B) LATE MANIFESTATION OF INJURY.—
The requirements under subparagraph (A) for a
cause of action in connection with any denial of
a claim for benefits shall be deemed satisfied,
notwithstanding any failure to timely commence
review under section 103 with respect to the de-
nial, if the personal injury is first known (or
first reasonably should have been known) to the
individual (or the death occurs) after the latest
date by which the applicable requirements of
subparagraph (A) can be met in connection
with such denial.
149
‘‘(C) OCCURRENCE OF IMMEDIATE AND IR-
REPARABLE HARM OR DEATH PRIOR TO COM-
PLETION OF PROCESS.—
‘‘(i) IN GENERAL.—The requirements
of subparagraph (A) shall not apply if the
action involves an allegation that imme-
diate and irreparable harm or death was,
or would be, caused by the denial of a
claim for benefits prior to the completion
of the administrative processes referred to
in subparagraph (A) with respect to such
denial.
‘‘(ii) 
CONSTRUCTION.—Nothing 
in
clause (i) shall be construed to preclude—
‘‘(I) continuation of such proc-
esses to their conclusion if so moved
by any party, and
‘‘(II) consideration in such action
of the final decisions issued in such
processes.
‘‘(iii) DEFINITION.—In clause (i), the
term ‘irreparable harm’, with respect to an
individual, means an injury or condition
that, regardless of whether the individual
receives the treatment that is the subject
150
of the denial, cannot be repaired in a man-
ner that would restore the individual to the
individual’s pre-injured condition.
‘‘(D) RECEIPT OF BENEFITS DURING AP-
PEALS PROCESS.—Receipt by the participant or
beneficiary of the benefits involved in the claim
for benefits during the pendency of any admin-
istrative processes referred to in subparagraph
(A) or of any action commenced under this
subsection—
‘‘(i) shall not preclude continuation of
all such administrative processes to their
conclusion if so moved by any party, and
‘‘(ii) shall not preclude any liability
under subsection (a)(1)(C) and this sub-
section in connection with such claim.
The court in any action commenced under this
subsection shall take into account any receipt of
benefits during such administrative processes or
such action in determining the amount of the
damages awarded.
‘‘(6) STATUTORY DAMAGES.—
‘‘(A) IN
GENERAL.—The remedies set
forth in this subsection (n) shall be the exclu-
151
sive remedies for causes of action brought
under this subsection.
‘‘(B) ASSESSMENT OF CIVIL PENALTIES.—
In addition to the remedies provided for in
paragraph (1) (relating to the failure to provide
contract benefits in accordance with the plan),
a civil assessment, in an amount not to exceed
$5,000,000, payable to the claimant may be
awarded in any action under such paragraph if
the claimant establishes by clear and convincing
evidence that the alleged conduct carried out by
the defendant demonstrated bad faith and fla-
grant disregard for the rights of the participant
or beneficiary under the plan and was a proxi-
mate cause of the personal injury or death that
is the subject of the claim.
‘‘(7) LIMITATION OF ACTION.—Paragraph (1)
shall not apply in connection with any action com-
menced after 3 years after the later of—
‘‘(A) the date on which the plaintiff first
knew, or reasonably should have known, of the
personal injury or death resulting from the fail-
ure described in paragraph (1), or
‘‘(B) the date as of which the requirements
of paragraph (5) are first met.
152
‘‘(8) TOLLING PROVISION.—The statute of limi-
tations for any cause of action arising under State
law relating to a denial of a claim for benefits that
is the subject of an action brought in Federal court
under this subsection shall be tolled until such time
as the Federal court makes a final disposition, in-
cluding all appeals, of whether such claim should
properly be within the jurisdiction of the Federal
court. The tolling period shall be determined by the
applicable Federal or State law, whichever period is
greater.
‘‘(9) PURCHASE OF INSURANCE TO COVER LI-
ABILITY.—Nothing in section 410 shall be construed
to preclude the purchase by a group health plan of
insurance to cover any liability or losses arising
under a cause of action under subsection (a)(1)(C)
and this subsection.
‘‘(10) EXCLUSION
OF
DIRECTED
RECORD-
KEEPERS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), paragraph (1) shall not apply with
respect to a directed recordkeeper in connection
with a group health plan.
‘‘(B) 
DIRECTED
RECORDKEEPER.—For
purposes of this paragraph, the term ‘directed
153
recordkeeper’ means, in connection with a
group health plan, a person engaged in directed
recordkeeping activities pursuant to the specific
instructions of the plan or the employer or
other plan sponsor, including the distribution of
enrollment information and distribution of dis-
closure materials under this Act or title I of the
Bipartisan Patient Protection Act of 2001 and
whose duties do not include making decisions
on claims for benefits.
‘‘(C) 
LIMITATION.—Subparagraph 
(A)
does not apply in connection with any directed
recordkeeper to the extent that the directed rec-
ordkeeper fails to follow the specific instruction
of the plan or the employer or other plan spon-
sor.
‘‘(11) NO EFFECT ON STATE LAW.—No provi-
sion of State law (as defined in section 514(c)(1))
shall be treated as superseded or otherwise altered,
amended, modified, invalidated, or impaired by rea-
son of the provisions of subsection (a)(1)(C) and this
subsection.’’.
(2) 
CONFORMING
AMENDMENT.—Section
502(a)(1) of such Act (29 U.S.C. 1132(a)(1)) is
amended—
154
(A) by striking ‘‘or’’ at the end of subpara-
graph (A);
(B) in subparagraph (B), by striking
‘‘plan;’’ and inserting ‘‘plan, or’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(C) for the relief provided for in sub-
section (n) of this section.’’.
(b) RULES RELATING TO ERISA PREEMPTION.—
Section 514 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1144) is amended—
(1) by redesignating subsection (d) as sub-
section (f); and
(2) by inserting after subsection (c) the fol-
lowing new subsections:
‘‘(d) PREEMPTION NOT TO APPLY TO CAUSES OF
ACTION UNDER STATE LAW INVOLVING MEDICALLY RE-
VIEWABLE DECISION.—
‘‘(1) NON-PREEMPTION OF CERTAIN CAUSES OF
ACTION.—
‘‘(A) IN GENERAL.—Except as provided in
this subsection, nothing in this title (including
section 502) shall be construed to supersede or
otherwise alter, amend, modify, invalidate, or
impair any cause of action under State law of
155
a participant or beneficiary under a group
health plan (or the estate of such a participant
or beneficiary) to recover damages resulting
from personal injury or for wrongful death
against any person if such cause of action
arises by reason of a medically reviewable deci-
sion.
‘‘(B) 
MEDICALLY
REVIEWABLE
DECI-
SION.—For purposes of subparagraph (A), the
term ‘medically reviewable decision’ means a de-
nial of a claim for benefits under the plan
which is described in section 104(d)(2) of the
Bipartisan Patient Protection Act of 2001 (re-
lating to medically reviewable decisions).
‘‘(C) LIMITATION
ON
PUNITIVE
DAM-
AGES.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clauses (ii) and (iii), with respect
to a cause of action described in subpara-
graph (A) brought with respect to a partic-
ipant or beneficiary, State law is super-
seded insofar as it provides any punitive,
exemplary, or similar damages if, as of the
time of the personal injury or death, all
the requirements of the following sections
156
of the Bipartisan Patient Protection Act of
2001 were satisfied with respect to the
participant or beneficiary:
‘‘(I) Section 102 (relating to pro-
cedures for initial claims for benefits
and prior authorization determina-
tions).
‘‘(II) Section 103 of such Act
(relating to internal appeals of claims
denials).
‘‘(III) Section 104 of such Act
(relating to independent external ap-
peals procedures).
‘‘(ii) EXCEPTION
FOR
CERTAIN
AC-
TIONS FOR WRONGFUL DEATH.—Clause (i)
shall not apply with respect to an action
for wrongful death if the applicable State
law provides (or has been construed to pro-
vide) for damages in such an action which
are only punitive or exemplary in nature.
‘‘(iii) EXCEPTION
FOR
WILLFUL
OR
WANTON DISREGARD FOR THE RIGHTS OR
SAFETY OF OTHERS.—Clause (i) shall not
apply with respect to any cause of action
described in subparagraph (A) if, in such
157
action, the plaintiff establishes by clear
and convincing evidence that conduct car-
ried out by the defendant with willful or
wanton disregard for the rights or safety
of others was a proximate cause of the per-
sonal injury or wrongful death that is the
subject of the action.
‘‘(2) DEFINITIONS.—For purposes of this sub-
section and subsection (e)—
‘‘(A) GROUP HEALTH PLAN AND OTHER
RELATED TERMS.—The provisions of sections
732(d) and 733 apply for purposes of this sub-
section in the same manner as they apply for
purposes of part 7, except that the term ‘group
health plan’ includes a group health plan (as
defined in section 607(1)).
‘‘(B) PERSONAL INJURY.—The term ‘per-
sonal injury’ means a physical injury and in-
cludes an injury arising out of the treatment
(or failure to treat) a mental illness or disease.
‘‘(C) CLAIM FOR BENEFIT; DENIAL.—The
terms ‘claim for benefits’ and ‘denial of a claim
for benefits’ shall have the meaning provided
such terms under section 102(e) of the Bipar-
tisan Patient Protection Act of 2001.
158
‘‘(3) EXCLUSION OF EMPLOYERS AND OTHER
PLAN SPONSORS.—
‘‘(A) CAUSES
OF
ACTION
AGAINST
EM-
PLOYERS AND PLAN SPONSORS PRECLUDED.—
Subject to subparagraph (B), paragraph (1)
does not apply with respect to—
‘‘(i) any cause of action against an
employer or other plan sponsor maintain-
ing the plan (or against an employee of
such an employer or sponsor acting within
the scope of employment), or
‘‘(ii) a right of recovery, indemnity, or
contribution by a person against an em-
ployer or other plan sponsor (or such an
employee) for damages assessed against
the person pursuant to a cause of action to
which paragraph (1) applies.
‘‘(B) CERTAIN
CAUSES
OF
ACTION
PER-
MITTED.—Notwithstanding subparagraph (A),
paragraph (1) applies with respect to any cause
of action described in paragraph (1) maintained
by a participant or beneficiary against an em-
ployer or other plan sponsor (or against an em-
ployee of such an employer or sponsor acting
within the scope of employment)—
159
‘‘(i) in the case of any cause of action
based on a decision of the plan under sec-
tion 102 of the Bipartisan Patient Protec-
tion Act of 2001 upon consideration of a
claim for benefits or under section 103 of
such Act upon review of a denial of a claim
for benefits, to the extent there was direct
participation by the employer or other plan
sponsor (or employee) in the decision, or
‘‘(ii) in the case of any cause of action
based on a failure to otherwise perform a
duty under the terms and conditions of the
plan with respect to a claim for benefits of
a participant or beneficiary, to the extent
there was direct participation by the em-
ployer or other plan sponsor (or employee)
in the failure.
‘‘(C) DIRECT PARTICIPATION.—
‘‘(i) DIRECT PARTICIPATION IN DECI-
SIONS.—For purposes of subparagraph
(B), the term ‘direct participation’ means,
in connection with a decision described in
subparagraph (B)(i) or a failure described
in subparagraph (B)(ii), the actual making
of such decision or the actual exercise of
160
control in making such decision or in the
conduct constituting the failure.
‘‘(ii) RULES OF CONSTRUCTION.—For
purposes of clause (i), the employer or plan
sponsor (or employee) shall not be con-
strued to be engaged in direct participation
because of any form of decisionmaking or
other conduct that is merely collateral or
precedent to the decision described in sub-
paragraph (B)(i) on a particular claim for
benefits of a particular participant or bene-
ficiary or that is merely collateral or prece-
dent to the conduct constituting a failure
described in subparagraph (B)(ii) with re-
spect to a particular participant or bene-
ficiary, including (but not limited to)—
‘‘(I) any participation by the em-
ployer or other plan sponsor (or em-
ployee) in the selection of the group
health plan or health insurance cov-
erage involved or the third party ad-
ministrator or other agent;
‘‘(II) any engagement by the em-
ployer or other plan sponsor (or em-
ployee) in any cost-benefit analysis
161
undertaken in connection with the se-
lection of, or continued maintenance
of, the plan or coverage involved;
‘‘(III) any participation by the
employer or other plan sponsor (or
employee) in the process of creating,
continuing, modifying, or terminating
the plan or any benefit under the
plan, if such process was not substan-
tially focused solely on the particular
situation of the participant or bene-
ficiary 
referred 
to 
in 
paragraph
(1)(A); and
‘‘(IV) any participation by the
employer or other plan sponsor (or
employee) in the design of any benefit
under the plan, including the amount
of copayment and limits connected
with such benefit.
‘‘(iv) IRRELEVANCE OF CERTAIN COL-
LATERAL
EFFORTS
MADE
BY
EMPLOYER
OR PLAN SPONSOR.—For purposes of this
subparagraph, an employer or plan sponsor
shall not be treated as engaged in direct
participation in a decision with respect to
162
any claim for benefits or denial thereof in
the case of any particular participant or
beneficiary solely by reason of—
‘‘(I) any efforts that may have
been made by the employer or plan
sponsor to advocate for authorization
of coverage for that or any other par-
ticipant or beneficiary (or any group
of participants or beneficiaries), or
‘‘(II) any provision that may
have been made by the employer or
plan sponsor for benefits which are
not covered under the terms and con-
ditions of the plan for that or any
other participant or beneficiary (or
any group of participants or bene-
ficiaries).
‘‘(4) REQUIREMENT OF EXHAUSTION.—
‘‘(A) IN GENERAL.—Except as provided in
this paragraph, paragraph (1) shall not apply
with respect to a cause of action described in
such paragraph in connection with any denial of
a claim for benefits of any individual until all
administrative processes under sections 102,
103, and 104 of the Bipartisan Patient Protec-
163
tion Act of 2001 (if applicable) have been ex-
hausted.
‘‘(B) LATE MANIFESTATION OF INJURY.—
The requirements under subparagraph (A) for a
cause of action in connection with any denial of
a claim for benefits shall be deemed satisfied,
notwithstanding any failure to timely commence
review under section 103 or 104 with respect to
the denial, if the personal injury is first known
(or first should have been known) to the indi-
vidual (or the death occurs) after the latest
date by which the applicable requirements of
subparagraph (A) can be met in connection
with such denial.
‘‘(C) OCCURRENCE OF IMMEDIATE AN IR-
REPARABLE HARM OR DEATH PRIOR TO COM-
PLETION OF PROCESS.—
‘‘(i) IN GENERAL.—The requirements
of subparagraph (A) shall not apply if the
action involves an allegation that imme-
diate and irreparable harm or death was,
or would be, caused by the denial of a
claim for benefits prior to the completion
of the administrative processes referred to
164
in subparagraph (A) with respect to such
denial.
‘‘(ii) 
CONSTRUCTION.—Nothing 
in
clause (i) shall be construed to preclude—
‘‘(I) continuation of such proc-
esses to their conclusion if so moved
by any party, and
‘‘(II) consideration in such action
of the final decisions issued in such
processes.
‘‘(iii) DEFINITION.—In clause (i), the
term ‘irreparable harm’, with respect to an
individual, means an injury or condition
that, regardless of whether the individual
receives the treatment that is the subject
of the denial, cannot be repaired in a man-
ner that would restore the individual to the
individual’s pre-injured condition.
‘‘(D) RECEIPT OF BENEFITS DURING AP-
PEALS PROCESS.—Receipt by the participant or
beneficiary of the benefits involved in the claim
for benefits during the pendency of any admin-
istrative processes referred to in subparagraph
(A) or of any action commenced under this
subsection—
165
‘‘(i) shall not preclude continuation of
all such administrative processes to their
conclusion if so moved by any party, and
‘‘(ii) shall not preclude any liability
under subsection (a)(1)(C) and this sub-
section in connection with such claim.
‘‘(5) TOLLING PROVISION.—The statute of limi-
tations for any cause of action arising under section
502(n) relating to a denial of a claim for benefits
that is the subject of an action brought in State
court shall be tolled until such time as the State
court makes a final disposition, including all ap-
peals, of whether such claim should properly be
within the jurisdiction of the State court. The tolling
period shall be determined by the applicable Federal
or State law, whichever period is greater.
‘‘(6) 
EXCLUSION
OF
DIRECTED
RECORD-
KEEPERS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), paragraph (1) shall not apply with
respect to a directed recordkeeper in connection
with a group health plan.
‘‘(B) 
DIRECTED
RECORDKEEPER.—For
purposes of this paragraph, the term ‘directed
recordkeeper’ means, in connection with a
166
group health plan, a person engaged in directed
recordkeeping activities pursuant to the specific
instructions of the plan or the employer or
other plan sponsor, including the distribution of
enrollment information and distribution of dis-
closure materials under this Act or title I of the
Bipartisan Patient Protection Act of 2001 and
whose duties do not include making decisions
on claims for benefits.
‘‘(C) 
LIMITATION.—Subparagraph 
(A)
does not apply in connection with any directed
recordkeeper to the extent that the directed rec-
ordkeeper fails to follow the specific instruction
of the plan or the employer or other plan spon-
sor.
‘‘(7) CONSTRUCTION.—Nothing in this sub-
section shall be construed as—
‘‘(A) saving from preemption a cause of
action under State law for the failure to provide
a benefit for an item or service which is specifi-
cally excluded under the group health plan in-
volved, except to the extent that—
‘‘(i) the application or interpretation
of the exclusion involves a determination
described in section 104(d)(2) of the Bi-
167
partisan Patient Protection Act of 2001,
or
‘‘(ii) the provision of the benefit for
the item or service is required under Fed-
eral law or under applicable State law con-
sistent with subsection (b)(2)(B);
‘‘(B) preempting a State law which re-
quires an affidavit or certificate of merit in a
civil action;
‘‘(C) affecting a cause of action or remedy
under State law in connection with the provi-
sion or arrangement of excepted benefits (as de-
fined in section 733(c)), other than those de-
scribed in section 733(c)(2)(A); or
‘‘(D) affecting a cause of action under
State law other than a cause of action described
in paragraph (1)(A).
‘‘(8) PURCHASE OF INSURANCE TO COVER LI-
ABILITY.—Nothing in section 410 shall be construed
to preclude the purchase by a group health plan of
insurance to cover any liability or losses arising
under a cause of action described in paragraph
(1)(A).
168
‘‘(e) RULES
OF
CONSTRUCTION
RELATING
TO
HEALTH CARE.—Nothing in this title shall be construed
as—
‘‘(1) affecting any State law relating to the
practice of medicine or the provision of medical care,
or affecting any action based upon such a State law,
‘‘(2) superseding any State law permitted under
section 152(b)(1)(A) of the Bipartisan Patient Pro-
tection Act of 2001, or
‘‘(3) affecting any applicable State law with re-
spect to limitations on monetary damages.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to acts and omissions (from which
a cause of action arises) occurring on or after the date
of the enactment of this Act.
SEC. 303. LIMITATIONS ON ACTIONS.
Section 502 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1132) (as amended by sec-
tion 302(a)) is amended further by adding at the end the
following new subsection:
‘‘(o) LIMITATIONS ON ACTIONS RELATING TO GROUP
HEALTH PLANS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), no action may be brought under sub-
section (a)(1)(B), (a)(2), or (a)(3) by a participant
169
or beneficiary seeking relief based on the application
of any provision in section 101, subtitle B, or sub-
title D of title I of the Bipartisan Patient Protection
Act of 2001 (as incorporated under section 714).
‘‘(2) CERTAIN ACTIONS ALLOWABLE.—An ac-
tion may be brought under subsection (a)(1)(B),
(a)(2), or (a)(3) by a participant or beneficiary seek-
ing relief based on the application of section 101,
113, 114, 115, 116, 117, 118(a)(3), 119, or 120 of
the Bipartisan Patient Protection Act of 2001 (as
incorporated under section 714) to the individual
circumstances of that participant or beneficiary, ex-
cept that—
‘‘(A) such an action may not be brought or
maintained as a class action; and
‘‘(B) in such an action, relief may only
provide for the provision of (or payment of)
benefits, items, or services denied to the indi-
vidual participant or beneficiary involved (and
for attorney’s fees and the costs of the action,
at the discretion of the court) and shall not pro-
vide for any other relief to the participant or
beneficiary or for any relief to any other person.
170
‘‘(3) OTHER PROVISIONS UNAFFECTED.—Noth-
ing in this subsection shall be construed as affecting
subsections (a)(1)(C) and (n) or section 514(d).
‘‘(4) ENFORCEMENT
BY
SECRETARY
UNAF-
FECTED.—Nothing in this subsection shall be con-
strued as affecting any action brought by the Sec-
retary.’’.
TITLE IV—AMENDMENTS TO THE
INTERNAL 
REVENUE 
CODE
OF 1986
Subtitle A—Application of Patient
Protection Provisions
SEC. 401. APPLICATION TO GROUP HEALTH PLANS UNDER
THE INTERNAL REVENUE CODE OF 1986.
Subchapter B of chapter 100 of the Internal Revenue
Code of 1986 is amended—
(1) in the table of sections, by inserting after
the item relating to section 9812 the following new
item:
‘‘Sec. 9813. Standard relating to patients’ bill of rights.’’;
and
(2) by inserting after section 9812 the fol-
lowing:
171
‘‘SEC. 9813. STANDARD RELATING TO PATIENTS’ BILL OF
RIGHTS.
‘‘A group health plan shall comply with the require-
ments of title I of the Bipartisan Patient Protection Act
of 2001 (as in effect as of the date of the enactment of
such Act), and such requirements shall be deemed to be
incorporated into this section.’’.
SEC. 402. CONFORMING ENFORCEMENT FOR WOMEN’S
HEALTH AND CANCER RIGHTS.
Subchapter B of chapter 100 of the Internal Revenue
Code of 1986, as amended by section 401, is further
amended—
(1) in the table of sections, by inserting after
the item relating to section 9813 the following new
item:
‘‘Sec. 9814. Standard relating to women’s health and cancer
rights.’’;
and
(2) by inserting after section 9813 the fol-
lowing:
‘‘SEC. 9814. STANDARD RELATING TO WOMEN’S HEALTH
AND CANCER RIGHTS.
‘‘The provisions of section 713 of the Employee Re-
tirement Income Security Act of 1974 (as in effect as of
the date of the enactment of this section) shall apply to
group health plans as if included in this subchapter.’’.
172
Subtitle B—Health Care Coverage
Access Tax Incentives
SEC. 411. EXPANDED AVAILABILITY OF ARCHER MSAS.
(a) EXTENSION OF PROGRAM.—Paragraphs (2) and
(3)(B) of section 220(i) of the Internal Revenue Code of
1986 (defining cut-off year) are each amended by striking
‘‘2002’’ each place it appears and inserting ‘‘2004’’.
(b) INCREASE IN NUMBER OF PERMITTED ACCOUNT
PARTICIPANTS.—
(1) IN GENERAL.—Subsection (j) of section 220
of such Code is amended by redesignating para-
graphs (3), (4), and (5) as paragraphs (4), (5), and
(6) and by inserting after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) DETERMINATION OF WHETHER LIMIT EX-
CEEDED FOR YEARS AFTER 2001.—
‘‘(A) IN GENERAL.—The numerical limita-
tion for any year after 2001 is exceeded if the
sum of—
‘‘(i) the number of Archer MSA re-
turns filed on or before April 15 of such
calendar year for taxable years ending with
or within the preceding calendar year, plus
‘‘(ii) the Secretary’s estimate (deter-
mined on the basis of the returns described
173
in clause (i)) of the number of Archer
MSA returns for such taxable years which
will be filed after such date, exceeds
1,000,000. For purposes of the preceding
sentence, the term ‘Archer MSA return’
means any return on which any exclusion
is claimed under section 106(b) or any de-
duction is claimed under this section.
‘‘(B) ALTERNATIVE COMPUTATION OF LIM-
ITATION.—The numerical limitation for any
year after 2001 is also exceeded if the sum of—
‘‘(i) 90 percent of the sum determined
under subparagraph (A) for such calendar
year, plus
‘‘(ii) the product of 2.5 and the num-
ber of medical savings accounts established
during the portion of such year preceding
July 1 (based on the reports required
under paragraph (5)) for taxable years be-
ginning in such year,
exceeds 1,000,000’’.
(2) CONFORMING AMENDMENTS.—
(A) Clause (ii) of section 220(j)(2)(B) of
such Code is amended by striking ‘‘paragraph
(4)’’ and inserting ‘‘paragraph (5)’’.
174
(B) Subparagraph (A) of section 220(j)(4)
of such Code is amended by striking ‘‘and
2001’’ and inserting ‘‘2001, 2002, and 2003’’.
(c) INCREASE IN SIZE OF ELIGIBLE EMPLOYERS.—
Subparagraph (A) of section 220(c)(4) of such Code is
amended by striking ‘‘50 or fewer employees’’ and insert-
ing ‘‘100 or fewer employees’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
(e) GAO STUDY.—Not later than 1 year after the
date of the enactment of this Act, the Comptroller General
of the United States shall prepare and submit a report
to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the
Senate on the impact of Archer MSAs on the cost of con-
ventional insurance (especially in those areas where there
are higher numbers of such accounts) and on adverse se-
lection and health care costs.
SEC. 412. DEDUCTION FOR 100 PERCENT OF HEALTH IN-
SURANCE COSTS OF SELF-EMPLOYED INDI-
VIDUALS.
(a) IN GENERAL.—Paragraph (1) of section 162(l)
of the Internal Revenue Code of 1986 is amended to read
as follows:
175
‘‘(1) ALLOWANCE OF DEDUCTION.—In the case
of an individual who is an employee within the
meaning of section 401(c)(1), there shall be allowed
as a deduction under this section an amount equal
to 100 percent of the amount paid during the tax-
able year for insurance which constitutes medical
care for the taxpayer and the taxpayer’s spouse and
dependents.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 413. CREDIT FOR HEALTH INSURANCE EXPENSES OF
SMALL BUSINESSES.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business-related credits) is amended by
adding at the end the following:
‘‘SEC. 45E. SMALL BUSINESS HEALTH INSURANCE EX-
PENSES.
‘‘(a) GENERAL RULE.—For purposes of section 38,
in the case of a small employer, the health insurance credit
determined under this section for the taxable year is an
amount equal to the applicable percentage of the expenses
paid by the taxpayer during the taxable year for health
176
insurance coverage for such year provided under a new
health plan for employees of such employer.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
subsection (a), the applicable percentage is—
‘‘(1) in the case of insurance purchased as a
member of a qualified health benefit purchasing coa-
lition (as defined in section 9841), 30 percent, and
‘‘(2) in the case of insurance not described in
paragraph (1), 20 percent.
‘‘(c) LIMITATIONS.—
‘‘(1) PER
EMPLOYEE
DOLLAR
LIMITATION.—
The amount of expenses taken into account under
subsection (a) with respect to any employee for any
taxable year shall not exceed—
‘‘(A) $2,000 in the case of self-only cov-
erage, and
‘‘(B) $5,000 in the case of family coverage.
In the case of an employee who is covered by a new
health plan of the employer for only a portion of
such taxable year, the limitation under the preceding
sentence shall be an amount which bears the same
ratio to such limitation (determined without regard
to this sentence) as such portion bears to the entire
taxable year.
177
‘‘(2) PERIOD OF COVERAGE.—Expenses may be
taken into account under subsection (a) only with
respect to coverage for the 4-year period beginning
on the date the employer establishes a new health
plan.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) HEALTH
INSURANCE
COVERAGE.—The
term ‘health insurance coverage’ has the meaning
given such term by section 9832(b)(1).
‘‘(2) NEW HEALTH PLAN.—
‘‘(A) IN GENERAL.—The term ‘new health
plan’ means any arrangement of the employer
which provides health insurance coverage to em-
ployees if—
‘‘(i) such employer (and any prede-
cessor employer) did not establish or main-
tain such arrangement (or any similar ar-
rangement) at any time during the 2 tax-
able years ending prior to the taxable year
in which the credit under this section is
first allowed, and
‘‘(ii) 
such 
arrangement 
provides
health insurance coverage to at least 70
percent of the qualified employees of such
employer.
178
‘‘(B) QUALIFIED EMPLOYEE.—
‘‘(i) IN GENERAL.—The term ‘quali-
fied employee’ means any employee of an
employer if the annual rate of such em-
ployee’s compensation (as defined in sec-
tion 414(s)) exceeds $10,000.
‘‘(ii) TREATMENT
OF
CERTAIN
EM-
PLOYEES.—The term ‘employee’ shall in-
clude a leased employee within the mean-
ing of section 414(n).
‘‘(3) SMALL EMPLOYER.—The term ‘small em-
ployer’ has the meaning given to such term by sec-
tion 4980D(d)(2); except that only qualified employ-
ees shall be taken into account.
‘‘(e) SPECIAL RULES.—
‘‘(1) CERTAIN RULES MADE APPLICABLE.—For
purposes of this section, rules similar to the rules of
section 52 shall apply.
‘‘(2) AMOUNTS
PAID
UNDER
SALARY
REDUC-
TION ARRANGEMENTS.—No amount paid or incurred
pursuant to a salary reduction arrangement shall be
taken into account under subsection (a).
‘‘(f) TERMINATION.—This section shall not apply to
expenses paid or incurred by an employer with respect to
179
any arrangement established on or after January 1,
2010.’’.
(b) CREDIT TO BE PART OF GENERAL BUSINESS
CREDIT.—Section 38(b) of such Code (relating to current
year business credit) is amended by striking ‘‘plus’’ at the
end of paragraph (12), by striking the period at the end
of paragraph (13) and inserting ‘‘, plus’’, and by adding
at the end the following:
‘‘(14) in the case of a small employer (as de-
fined in section 45E(d)(3)), the health insurance
credit determined under section 45E(a).’’.
(c) NO CARRYBACKS.—Subsection (d) of section 39
of such Code (relating to carryback and carryforward of
unused credits) is amended by adding at the end the fol-
lowing:
‘‘(10) NO CARRYBACK OF SECTION 45E CREDIT
BEFORE EFFECTIVE DATE.—No portion of the un-
used business credit for any taxable year which is
attributable to the employee health insurance ex-
penses credit determined under section 45E may be
carried back to a taxable year ending before the date
of the enactment of section 45E.’’.
(d) DENIAL OF DOUBLE BENEFIT.—Section 280C of
such Code is amended by adding at the end the following
new subsection:
180
‘‘(d) CREDIT FOR SMALL BUSINESS HEALTH INSUR-
ANCE EXPENSES.—
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the expenses (otherwise al-
lowable as a deduction) taken into account in deter-
mining the credit under section 45E for the taxable
year which is equal to the amount of the credit de-
termined for such taxable year under section
45E(a).
‘‘(2) CONTROLLED
GROUPS.—Persons treated
as a single employer under subsection (a) or (b) of
section 52 shall be treated as 1 person for purposes
of this section.’’.
(e) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
of such Code is amended by adding at the end the fol-
lowing:
‘‘Sec. 45E. Small business health insurance expenses.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2001, for ar-
rangements established after the date of the enactment
of this Act.
181
SEC. 414. CERTAIN GRANTS BY PRIVATE FOUNDATIONS TO
QUALIFIED HEALTH BENEFIT PURCHASING
COALITIONS.
(a) IN GENERAL.—Section 4942 of the Internal Rev-
enue Code of 1986 (relating to taxes on failure to dis-
tribute income) is amended by adding at the end the fol-
lowing:
‘‘(k) CERTAIN QUALIFIED HEALTH BENEFIT PUR-
CHASING COALITION DISTRIBUTIONS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(g), sections 170, 501, 507, 509, and 2522, and this
chapter, a qualified health benefit purchasing coali-
tion distribution by a private foundation shall be
considered to be a distribution for a charitable pur-
pose.
‘‘(2) 
QUALIFIED
HEALTH
BENEFIT
PUR-
CHASING COALITION DISTRIBUTION.—For purposes
of paragraph (1)—
‘‘(A) IN
GENERAL.—The term ‘qualified
health benefit purchasing coalition distribution’
means any amount paid or incurred by a pri-
vate foundation to or on behalf of a qualified
health benefit purchasing coalition (as defined
in section 9841) for purposes of payment or re-
imbursement of amounts paid or incurred in
182
connection with the establishment and mainte-
nance of such coalition.
‘‘(B) EXCLUSIONS.—Such term shall not
include any amount used by a qualified health
benefit purchasing coalition (as so defined)—
‘‘(i) for the purchase of real property,
‘‘(ii) as payment to, or for the benefit
of, members (or employees or affiliates of
such members) of such coalition, or
‘‘(iii) for any expense paid or incurred
more than 48 months after the date of es-
tablishment of such coalition.
‘‘(3) TERMINATION.—This subsection shall not
apply—
‘‘(A) to qualified health benefit purchasing
coalition distributions paid or incurred after
December 31, 2009, and
‘‘(B) with respect to start-up costs of a co-
alition which are paid or incurred after Decem-
ber 31, 2010.’’.
(b) QUALIFIED HEALTH BENEFIT PURCHASING CO-
ALITION.—
(1) IN GENERAL.—Chapter 100 of such Code
(relating to group health plan requirements) is
183
amended by adding at the end the following new
subchapter:
‘‘Subchapter D—Qualified Health Benefit
Purchasing Coalition
‘‘Sec.
9841.
Qualified health benefit purchasing coalition.
‘‘SEC. 9841. QUALIFIED HEALTH BENEFIT PURCHASING CO-
ALITION.
‘‘(a) IN GENERAL.—A qualified health benefit pur-
chasing coalition is a private not-for-profit corporation
which—
‘‘(1) sells health insurance through State li-
censed health insurance issuers in the State in which
the employers to which such coalition is providing
insurance are located, and
‘‘(2) establishes to the Secretary, under State
certification procedures or other procedures as the
Secretary may provide by regulation, that such coali-
tion meets the requirements of this section.
‘‘(b) BOARD OF DIRECTORS.—
‘‘(1) IN GENERAL.—Each purchasing coalition
under this section shall be governed by a Board of
Directors.
‘‘(2) ELECTION.—The Secretary shall establish
procedures governing election of such Board.
184
‘‘(3) MEMBERSHIP.—The Board of Directors
shall—
‘‘(A) be composed of representatives of the
members of the coalition, in equal number, in-
cluding small employers and employee rep-
resentatives of such employers, but
‘‘(B) not include other interested parties,
such as service providers, health insurers, or in-
surance agents or brokers which may have a
conflict of interest with the purposes of the coa-
lition.
‘‘(c) MEMBERSHIP OF COALITION.—
‘‘(1) IN
GENERAL.—A purchasing coalition
shall accept all small employers residing within the
area served by the coalition as members if such em-
ployers request such membership.
‘‘(2) OTHER MEMBERS.—The coalition, at the
discretion of its Board of Directors, may be open to
individuals and large employers.
‘‘(3) VOTING.—Members of a purchasing coali-
tion shall have voting rights consistent with the rules
established by the State.
‘‘(d) DUTIES OF PURCHASING COALITIONS.—Each
purchasing coalition shall—
185
‘‘(1) enter into agreements with small employ-
ers (and, at the discretion of its Board, with individ-
uals and other employers) to provide health insur-
ance benefits to employees and retirees of such em-
ployers,
‘‘(2) where feasible, enter into agreements with
3 or more unaffiliated, qualified licensed health
plans, to offer benefits to members,
‘‘(3) offer to members at least 1 open enroll-
ment period of at least 30 days per calendar year,
‘‘(4) serve a significant geographical area and
market to all eligible members in that area, and
‘‘(5) carry out other functions provided for
under this section.
‘‘(e) LIMITATION ON ACTIVITIES.—A purchasing coa-
lition shall not—
‘‘(1) perform any activity (including certifi-
cation or enforcement) relating to compliance or li-
censing of health plans,
‘‘(2) assume insurance or financial risk in rela-
tion to any health plan, or
‘‘(3) perform other activities identified by the
State as being inconsistent with the performance of
its duties under this section.
186
‘‘(f) ADDITIONAL REQUIREMENTS FOR PURCHASING
COALITIONS.—As provided by the Secretary in regula-
tions, a purchasing coalition shall be subject to require-
ments similar to the requirements of a group health plan
under this chapter.
‘‘(g) RELATION TO OTHER LAWS.—
‘‘(1) 
PREEMPTION
OF
STATE
FICTITIOUS
GROUP LAWS.—Requirements (commonly referred to
as fictitious group laws) relating to grouping and
similar requirements for health insurance coverage
are preempted to the extent such requirements im-
pede the establishment and operation of qualified
health benefit purchasing coalitions.
‘‘(2) ALLOWING
SAVINGS
TO
BE
PASSED
THROUGH.—Any State law that prohibits health in-
surance issuers from reducing premiums on health
insurance coverage sold through a qualified health
benefit purchasing coalition to reflect administrative
savings is preempted. This paragraph shall not be
construed to preempt State laws that impose restric-
tions on premiums based on health status, claims
history, industry, age, gender, or other underwriting
factors.
‘‘(3) NO WAIVER OF HIPAA REQUIREMENTS.—
Nothing in this section shall be construed to change
187
the obligation of health insurance issuers to comply
with the requirements of title XXVII of the Public
Health Service Act with respect to health insurance
coverage offered to small employers in the small
group market through a qualified health benefit pur-
chasing coalition.
‘‘(h) DEFINITION OF SMALL EMPLOYER.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘small employer’
means, with respect to any calendar year, any em-
ployer if such employer employed an average of at
least 2 and not more than 50 qualified employees on
business days during either of the 2 preceding cal-
endar years. For purposes of the preceding sentence,
a preceding calendar year may be taken into account
only if the employer was in existence throughout
such year.
‘‘(2) EMPLOYERS NOT IN EXISTENCE IN PRE-
CEDING YEAR.—In the case of an employer which
was not in existence throughout the 1st preceding
calendar year, the determination under paragraph
(1) shall be based on the average number of quali-
fied employees that it is reasonably expected such
employer will employ on business days in the current
calendar year.’’.
188
(2) CONFORMING AMENDMENT.—The table of
subchapters for chapter 100 of such Code is amend-
ed by adding at the end the following item:
‘‘Subchapter D.
Qualified health benefit purchasing coalition.’’.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2001.
SEC. 415. STATE GRANT PROGRAM FOR MARKET INNOVA-
TION.
(a) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall establish a program (in this section referred
to as the ‘‘program’’) to award demonstration grants
under this section to States to allow States to demonstrate
the effectiveness of innovative ways to increase access to
health insurance through market reforms and other inno-
vative means. Such innovative means may include (and are
not limited to) any of the following:
(1) Alternative group purchasing or pooling ar-
rangements, such as a purchasing cooperatives for
small businesses, reinsurance pools, or high risk
pools.
(2) Individual or small group market reforms.
(3) Consumer education and outreach.
(4) Subsidies to individuals, employers, or both,
in obtaining health insurance.
189
(b) SCOPE; DURATION.—The program shall be lim-
ited to not more than 10 States and to a total period of
5 years, beginning on the date the first demonstration
grant is made.
(c) CONDITIONS FOR DEMONSTRATION GRANTS.—
(1) IN GENERAL.—The Secretary may not pro-
vide for a demonstration grant to a State under the
program unless the Secretary finds that under the
proposed demonstration grant—
(A) the State will provide for demonstrated
increase of access for some portion of the exist-
ing uninsured population through a market in-
novation (other than merely through a financial
expansion of a program initiated before the
date of the enactment of this Act);
(B) the State will comply with applicable
Federal laws;
(C) the State will not discriminate among
participants on the basis of any health status-
related factor (as defined in section 2791(d)(9)
of the Public Health Service Act), except to the
extent a State wishes to focus on populations
that otherwise would not obtain health insur-
ance because of such factors; and