SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Managed Care Plan
Accountability Act of 1997’’.
SEC. 2. IMPROVEMENTS IN ERISA ENFORCEMENT WITH RE-
SPECT TO MANAGED CARE GROUP HEALTH
PLANS.
(a) ADDITIONAL REMEDIES FOR COST-DRIVEN VIO-
LATIONS OF PLAN TERMS.—
(1) IN GENERAL.—Section 502(c) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1132(c)) is amended—
(A) by redesignating paragraph (6) as
paragraph (7); and
(B) by inserting after paragraph (5) the
following new paragraph:
‘‘(6)(A) In any case in which a group health plan,
or a health insurance issuer offering health insurance cov-
erage in connection with such plan, provides benefits
under such plan under managed care, and such plan or
issuer fails to provide any such benefit in accordance with
the terms of the plan or such coverage, insofar as such
failure occurs pursuant to a clinically or medically inap-
propriate decision or determination resulting from—
‘‘(i) the application of any cost containment
technique,
‘‘(ii) any utilization review directed at cost con-
tainment, or
‘‘(iii) any other medical care delivery policy de-
cision which restricts the ability of providers of med-
ical care from utilizing their full discretion for treat-
ment of patients,
each specified defendant shall be jointly and severally lia-
ble to any participant or beneficiary aggrieved by such
failure for actual damages (including compensatory and
consequential damages) proximately caused by such fail-
ure, and may, in the court’s discretion, be liable to such
participant or beneficiary for punitive damages.
‘‘(B) For purposes of this paragraph—
‘‘(i) a group health plan, or a health insurance
issuer offering health insurance coverage in connec-
tion with the plan, provides benefits under ‘managed
care’ if the plan or the issuer—
‘‘(I) provides or arranges for the provision
of the benefits to participants and beneficiaries
primarily through participating providers of
medical care, or
‘‘(II) provides financial incentives (such as
variable copayments and deductibles) to induce
participants and beneficiaries to obtain the ben-
efits primarily through participating providers
of medical care,
or both.
‘‘(ii) The term ‘specified defendant’ means, in
connection with any failure to provide any benefit, a
person who is—
‘‘(I) the plan sponsor, or
‘‘(II) a health insurance issuer offering
health insurance coverage in connection with
the plan,
insofar as an act or failure to act of such person
constitutes or contributes to the failure to so provide
such benefit.
‘‘(iii) The term ‘participating’ means, with re-
spect to a provider of medical care in relation to a
group health plan or health insurance coverage of-
fered in connection with a group health plan, a pro-
vider that furnishes the items and services compris-
ing medical care to participants and beneficiaries
under the plan under an agreement with the plan or
with a health insurance issuer offering the coverage.
‘‘(iv) The provisions of section 733 apply in the
same manner and to the same extent as they apply
for purposes of part 7.
‘‘(C) Remedies under this paragraph are in addition
to remedies otherwise provided under this section.’’.
(2) 
CONCURRENT
JURISDICTION.—Section
502(e)(1) of such Act (29 U.S.C. 1132(e)(1)) is
amended—
(A) in the first sentence, by inserting ‘‘and
except for actions under subsection (a)(1)(A) of
this section for the relief provided in subsection
(c)(6) of this section,’’ after ‘‘this section,’’; and
(B) in the last sentence, by inserting ‘‘and
under subsection (a)(1)(A) of this section for
the relief provided in subsection (c)(6) of this
section’’ after ‘‘this section’’.
(b) INDEMNIFICATION FOR LIABILITY OF PROVIDERS
BOUND BY PLAN RESTRICTIONS ON MEDICAL COMMU-
NICATIONS.—Section 502 of such Act (29 U.S.C. 1132)
is amended further by adding at the end the following new
subsection:
‘‘(n)(1) In any case in which a group health plan,
or a health insurance issuer offering health insurance cov-
erage in connection with such plan, provides benefits
under such plan under managed care, the plan shall pro-
vide for full indemnification of any participating provider
of medical care for any liability incurred by such provider
for any failure to provide any such benefit in accordance
with the terms of the plan or such coverage, if such failure
is the direct result of a plan restriction on medical commu-
nications under the plan.
‘‘(2) For purposes of this subsection—
‘‘(A) the term ‘plan restriction on medical com-
munications’ under a group health plan means a
provision of the plan, or of any health insurance cov-
erage offered in connection with the plan, which pro-
hibits, restricts, or interferes with any medical com-
munication as part of—
‘‘(i) a written contract or agreement with
a participating provider of medical care,
‘‘(ii) a written statement to a participating
provider of medical care, or
‘‘(iii) an oral communication to a partici-
pating provider of medical care.
‘‘(B) The term ‘medical communication’—
‘‘(i) means any communication made by
the provider of medical care—
‘‘(I) regarding the mental or physical
health care needs or treatment of a patient
and the provisions, terms, or requirements
of the group health plan or health insur-
ance coverage or another plan or coverage
relating to such needs or treatment, and
‘‘(II) between the provider and a cur-
rent, former, or prospective patient (or the
guardian or legal representative of a pa-
tient), between the provider and any em-
ployee or representative of the plan or is-
suer, or between the provider and any em-
ployee or representative of any State or
Federal authority with responsibility for
the licensing or oversight with respect to
the plan or issuer; and
‘‘(ii) includes communications concern-
ing—
‘‘(I) any tests, consultations, and
treatment options,
‘‘(II) any risks or benefits associated
with such tests, consultations, and options,
‘‘(III) variation among any providers
of medical care and any institutions pro-
viding such services in experience, quality,
or outcomes,
‘‘(IV) the basis or standard for the
decision of a managed care group health
plan, or a health insurance issuer offering
health insurance coverage in connection
with such a plan, to authorize or deny par-
ticular benefits consisting of medical care,
‘‘(V) the process used by the plan or
issuer to determine whether to authorize or
deny particular benefits consisting of medi-
cal care, and
‘‘(VI) any financial incentives or dis-
incentives provided by the plan or issuer to
a provider of medical care that are based
on service utilization.
‘‘(C) For purposes of this paragraph, the provi-
sions of subsection (c)(6)(B) apply in the same man-
ner and to the same extent as they apply for pur-
poses of subsection (c)(6), and the provisions of sec-
tion 733 apply in the same manner and to the same
extent as they apply for purposes of part 7.’’.
SEC. 3. EXCISE TAX FOR COST-DRIVEN VIOLATIONS OF
PLAN TERMS.
(a) IN GENERAL.—Chapter 100 of the Internal Reve-
nue Code of 1986 is amended by adding at the end the
following new subchapter:
‘‘Subchapter B—Failure To Provide Health
Benefits Due to Improper Cost-Driven
Delivery Policy Decisions
‘‘Sec. 9811. Failure to provide health benefits due to improper
cost-driven delivery policy decisions.
‘‘SEC. 9811. FAILURE TO PROVIDE HEALTH BENEFITS DUE
TO IMPROPER COST-DRIVEN DELIVERY POL-
ICY DECISIONS.
‘‘(a) GENERAL RULE.—In the case of a group health
coverage to which this section applies, there is a failure
to meet the requirements of this chapter if—
‘‘(1) the provider of such coverage fails to pro-
vide any benefit in accordance with the terms of the
coverage, and
‘‘(2) such failure occurs pursuant to a clinically
or medically inappropriate decision or determination
resulting from the application of—
‘‘(A) any cost containment technique,
‘‘(B) any utilization review directed at cost
containment, or
‘‘(C) any other medical care delivery policy
decision which restricts the ability of providers
of medical care from utilizing their full discre-
tion for treatment of patients.
‘‘(b) HEALTH COVERAGE PROVIDERS
TO WHICH
SECTION APPLIES.—This section shall apply to any group
health coverage which is provided under managed care.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) GROUP
HEALTH
COVERAGE.—The term
‘group health coverage’ means—
‘‘(A) coverage under any group health
plan, and
‘‘(B) health insurance coverage provided by
a health insurance issuer.
‘‘(2) MANAGED CARE.—Group health coverage
is provided under managed care if—
‘‘(A) such coverage is provided primarily
through participating providers of medical care,
or
‘‘(B) the provider of such coverage pro-
vides financial incentives (such as variable co-
payments and deductibles) to induce partici-
pants and beneficiaries to obtain the benefits
primarily through participating providers of
medical care,
or both.
‘‘(3) PROVIDER.—The term ‘provider’ means—
‘‘(A) the group health plan in the case of
coverage described in paragraph (2)(A), and
‘‘(B) the health insurance issuer in the
case of coverage described in paragraph (2)(B).
‘‘(4) OTHER DEFINITIONS.—The terms ‘group
health plan’, ‘health insurance coverage’, and ‘health
insurance issuer’ have the respective meanings given
such terms by section 9805.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subtitle K of such Code is amended by
striking all that precedes section 9801 and inserting
the following:
‘‘Subtitle K—Group Health Plan
Requirements
‘‘Chapter 100. Group health plan requirements.
‘‘CHAPTER 100—GROUP HEALTH PLAN
REQUIREMENTS
‘‘Subchapter A. Requirements relating to portability, access, and
renewability.
‘‘Subchapter B. Failure to provide health benefits due to improper
cost-driven delivery policy decisions.’’
(2) The table of subtitles for such Code is
amended by striking the item relating to subtitle K
and inserting the following new item:
‘‘Subtitle K. Group health plan requirements.’’
SEC. 4. EFFECTIVE DATE.
The amendments made by this Act shall apply with
respect to plan years beginning after on or after January
1, 1998.
Æ