I
105TH CONGRESS
2D SESSION
H. R. 4118
To amend title XXVII of the Public Health Service Act and part 7 of
subtitle B of title I of the Employee Retirement Income Security Act
of 1974 to establish standards for the health quality improvement of
children in managed care plans and other health plans.
IN THE HOUSE OF REPRESENTATIVES
JUNE 23, 1998
Mrs. MORELLA (for herself, Ms. ESHOO, Ms. SLAUGHTER, Mr. HILLIARD, Mr.
SERRANO, Mr. KLECZKA, Mr. BALDACCI, Mr. ROMERO-BARCELO´, and
Mr. NADLER) introduced the following bill; which was referred to the
Committee on Commerce, and in addition to the Committee on Education
and the Workforce, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To amend title XXVII of the Public Health Service Act
and part 7 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 to establish
standards for the health quality improvement of children
in managed care plans and other health plans.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Children’s Health In-
surance Accountability Act of 1998’’.
(6) More than 200 chronic conditions, disabil-
ities and diseases affect children, including asthma,
diabetes, sickle cell anemia, spina bifida, epilepsy,
autism, cerebral palsy, congenital heart disease,
mental retardation, and cystic fibrosis. These chil-
dren need the services of specialists who have in-
depth knowledge about their particular condition.
(7) Children’s patterns of illness, disability and
injury differ dramatically from adults.
(8) Children are dependent on adults and com-
munity institutions to promote their health and well-
being and so they are a particularly vulnerable popu-
lation.
(9) Children are smaller than adults, ranging in
size from very premature infants to adult-sized ado-
lescents. As a result, smaller children are vulnerable
to sudden shifts in conditions, medication must be
more finely calibrated, and procedures can be more
difficult.
(10) Children are our nation’s poorest popu-
lation and with that poverty often comes increased
vulnerability and reduced access to needed health
care services that are characterized by lack of con-
tinuity of care, delays in obtaining care, and limited
choices about where and from whom care may be re-
ceived.
(11) Children with special health care needs are
particularly vulnerable because only a very small
percentage of children have a major illness, injury,
or congenital condition, and private managed care
plans often have little experience in serving such
children.
(12) Children do not command a large amount
of influence in the health care marketplace; they ac-
count for less than 15 percent of national health
care spending.
(13) Research related to child and adolescent
health and development is underrepresented in com-
parison to our nation’s research commitment to
other national priorities.
(14) In comparison to children in other indus-
trialized nations, the health status of children in this
country continues to fall short in areas such as in-
fant mortality, death by injury or accident, and sui-
cide.
(15) An excellent delivery health care system
promoting improved pediatric health would be child
and family centered, accessible, continuous, com-
prehensive, coordinated, compassionate, offer spe-
cialized services, ensure quality assurance, and pro-
vide relevant data and information.
(16) Assuring that children receive what they
need from the health system is a special responsibil-
ity of adults—individually as parents and collectively
as a society—and problems found in the health care
system for children should be identified and cor-
rected quickly so that our children grow into healthy
and productive adults.
(b) PURPOSE.—It is the purpose of this Act to estab-
lish and implement quality standards for the protection
of children under group health plans and health insurance
coverage that are intended to supplement any consumer
protections intended to cover all individuals covered under
such plans or coverage.
SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE
ACT.
(a) IN GENERAL.—Title XXVII of the Public Health
Service Act is amended—
(1) by redesignating part C as part D; and
(2) by inserting after part B the following new
part:
‘‘PART C—CHILDREN’S HEALTH PROTECTION
STANDARDS
‘‘SEC. 2770. ACCESS TO CARE.
‘‘(a) ACCESS TO APPROPRIATE PRIMARY CARE PRO-
VIDERS.—
‘‘(1) IN GENERAL.—If a group health plan, or
a health insurance issuer, in connection with the
provision of health insurance coverage, requires or
provides for an enrollee to designate a participating
primary care provider for a child of such enrollee—
‘‘(A) the plan or issuer shall permit the en-
rollee to designate a physician who specializes
in pediatrics as the child’s primary care pro-
vider; and
‘‘(B) if such an enrollee has not designated
such a provider for the child, the plan or issuer
shall consider appropriate pediatric expertise in
mandatorily assigning such an enrollee to a pri-
mary care provider.
‘‘(2) CONSTRUCTION.—Nothing in paragraph
(1) shall waive any requirements of coverage relating
to medical necessity or appropriateness with respect
to coverage of services.
‘‘(b) ACCESS TO PEDIATRIC SPECIALTY SERVICES.—
‘‘(1) REFERRAL
TO
SPECIALITY
CARE
FOR
CHILDREN
REQUIRING
TREATMENT
BY
SPECIAL-
ISTS.—
‘‘(A) IN GENERAL.—In the case of a child
who is covered under a group health plan, or
under health insurance coverage offered by a
health insurance issuer, and who has a mental
or physical condition, disability, or disease of
sufficient seriousness and complexity to require
diagnosis, evaluation or treatment by a special-
ist, the plan or issuer shall make or provide for
a referral to a specialist who has extensive ex-
perience or training, and is available and acces-
sible to provide the treatment for such condition
or disease, including the choice of a nonprimary
care physician specialist participating in the
plan or a referral to a nonparticipating provider
as provided for under subparagraph (D) if such
a provider is not available within the plan.
‘‘(B) SPECIALIST DEFINED.—For purposes
of this subsection, the term ‘specialist’ means,
with respect to a condition, disability, or dis-
ease, a health care practitioner, facility, or cen-
ter (such as a center of excellence) that has ex-
tensive pediatric expertise through appropriate
training or experience to provide high quality
care in treating the condition, disability, or dis-
ease.
‘‘(C) REFERRALS TO PARTICIPATING PRO-
VIDERS.—A plan or issuer is not required under
subparagraph (A) to provide for a referral to a
specialist that is not a participating provider,
unless the plan or issuer does not have an ap-
propriate specialist that is available and acces-
sible to treat the enrollee’s condition and that
is a participating provider with respect to such
treatment.
‘‘(D) TREATMENT OF NONPARTICIPATING
PROVIDERS.—If a plan or issuer refers a child
enrollee to a nonparticipating specialist, services
provided pursuant to the referral shall be pro-
vided at no additional cost to the enrollee be-
yond what the enrollee would otherwise pay for
services received by such a specialist that is a
participating provider.
‘‘(E) SPECIALISTS AS PRIMARY CARE PRO-
VIDERS.—A plan or issuer shall have in place a
procedure under which a child who is covered
under the coverage provided by the plan or
issuer who has a condition or disease that re-
quires specialized medical care over a prolonged
period of time shall receive a referral to a pedi-
atric specialist affiliated with the plan or issuer,
or if not available within the plan or coverage,
to a nonparticipating provider for such condi-
tion and such specialist may be responsible for
and capable of providing and coordinating the
child’s primary and specialty care.
‘‘(2) STANDING REFERRALS.—
‘‘(A) IN GENERAL.—A group health plan,
or health insurance issuer in connection with
the provision of health insurance coverage, shall
have a procedure by which a child who is a par-
ticipant, beneficiary, or enrollee under the plan
or coverage and who has a condition, disability,
or disease that requires ongoing care from a
specialist may request and obtain a standing re-
ferral to such specialist for treatment of such
condition. If the primary care provider in con-
sultation with the medical director of the plan
or issuer and the specialist (if any), determines
that such a standing referral is appropriate, the
plan or issuer shall authorize such a referral to
such a specialist. Such standing referral shall
be consistent with a treatment plan.
‘‘(B) TREATMENT PLANS.—A group health
plan, or health insurance issuer, with the par-
ticipation of the family and the health care pro-
viders of the child, shall develop a treatment
plan for a child who requires ongoing care that
covers a specified period of time (but in no
event less than a 6-month period). Services pro-
vided for under the treatment plan shall not re-
quire additional approvals or referrals through
a gatekeeper.
‘‘(C) TERMS
OF
REFERRAL.—The provi-
sions of subparagraph (C) and (D) of para-
graph (1) shall apply with respect to referrals
under subparagraph (A) in the same manner as
they apply to referrals under paragraph (1)(A).
‘‘(c) ADEQUACY OF ACCESS.—For purposes of sub-
sections (a) and (b), a group health plan or health insur-
ance issuer in connection with health insurance coverage
shall ensure that a sufficient number, distribution, and va-
riety of qualified participating health care providers are
available so as to ensure that all covered health care serv-
ices, including specialty services, are available and acces-
sible to all enrollees who are children in a timely manner.
‘‘(d) COVERAGE OF EMERGENCY SERVICES.—
‘‘(1) IN GENERAL.—If a group health plan, or
health insurance coverage offered by a health insur-
ance issuer, provides any benefits for children with
respect to emergency services (as defined in para-
graph (2)(A)), the plan or issuer shall cover emer-
gency services furnished under the plan or coverage
to such enrollees—
‘‘(A) without the need for any prior au-
thorization determination;
‘‘(B) whether or not the physician or pro-
vider furnishing such services is a participating
physician or provider with respect to such serv-
ices; and
‘‘(C) without regard to any other term or
condition of such coverage (other than exclusion
of benefits, or an affiliation or waiting period,
permitted under section 2701).
‘‘(2) DEFINITIONS.—In this subsection:
‘‘(A) EMERGENCY
MEDICAL
CONDITION
BASED ON PRUDENT LAYPERSON STANDARD.—
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—
‘‘(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 an emergency medical
condition (as defined in subparagraph
(A)); 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.
‘‘(3) 
REIMBURSEMENT
FOR
MAINTENANCE
CARE
AND
POST-STABILIZATION
CARE.—A group
health plan, and health insurance issuer offering
health insurance coverage, shall provide, in covering
services other than emergency services for enrollees
who are children, for reimbursement with respect to
services which are otherwise covered and which are
provided to an enrollee other than through the plan
or issuer if the services are maintenance care or
post-stabilization care covered under the guidelines
established under section 1852(d) of the Social Se-
curity Act (relating to promoting efficient and timely
coordination of appropriate maintenance and post-
stabilization care of an enrollee after an enrollee has
been determined to be stable).
‘‘(e) PROHIBITION
ON FINANCIAL BARRIERS.—A
health insurance issuer in connection with the provision
of health insurance coverage may not impose any cost
sharing for pediatric specialty services provided under
such coverage to children who are enrollees in amounts
that exceed the cost-sharing required for other specialty
care under such coverage.
‘‘(f) CHILDREN
WITH
SPECIAL
HEALTH
CARE
NEEDS.—A health insurance issuer in connection with the
provision of health insurance coverage shall ensure that
such coverage provides special consideration for the provi-
sion of services to children with special health care needs
who are enrolled under the coverage. Appropriate proce-
dures shall be implemented to provide care for children
with special health care needs. The development of such
procedures shall include participation by the families of
such children.
‘‘(g) DEFINITIONS.—In this part:
‘‘(1) CHILD.—The term ‘child’ means an indi-
vidual who is under 19 years of age.
‘‘(2) CHILDREN WITH SPECIAL HEALTH CARE
NEEDS.—The term ‘children with special health care
needs’ means those children who have or are at ele-
vated risk for chronic physical, developmental, be-
havioral or emotional conditions and who also re-
quire health and related services of a type and
amount not usually required by other children.
‘‘SEC. 2771. CONTINUITY OF CARE.
‘‘(a) IN GENERAL.—If a contract between a health
insurance issuer, in connection with the provision of health
insurance coverage, and a health care provider is termi-
nated (other than by the issuer for failure to meet applica-
ble quality standards or for fraud) and an enrollee who
is a child is undergoing a course of treatment from the
provider at the time of such termination, the issuer shall—
‘‘(1) notify the parent or guardian of the en-
rollee of such termination, and
‘‘(2) subject to subsection (c), permit the en-
rollee to continue the course of treatment with the
provider during a transitional period (provided under
subsection (b)).
‘‘(b) TRANSITIONAL PERIOD.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) through (4), the transitional period under
this subsection shall extend for at least—
‘‘(A) 60 days from the date of the notice
to the enrollee’s parent or guardian of the pro-
vider’s termination in the case of a primary
care provider, or
‘‘(B) 120 days from such date in the case
of another provider.
‘‘(2) INSTITUTIONAL
CARE.—The transitional
period under this subsection for institutional or in-
patient care from a provider shall extend until the
discharge or termination of the period of institu-
tionalization and shall include reasonable follow-up
care related to the institutionalization and shall also
include institutional care scheduled prior to the date
of termination of the provider status.
‘‘(3) PREGNANCY.—If—
‘‘(A) an enrollee has entered the second
trimester of pregnancy at the time of a provid-
er’s termination of participation, and
‘‘(B) the provider was treating the preg-
nancy before date of the termination,
the transitional period under this subsection with re-
spect to provider’s treatment of the pregnancy shall
extend through the provision of post-partum care di-
rectly related to the delivery.
‘‘(4) TERMINAL ILLNESS.—
‘‘(A) IN GENERAL.—If—
‘‘(i) an enrollee was determined to be
terminally ill (as defined in subparagraph
(B)) at the time of a provider’s termi-
nation of participation, and
‘‘(ii) the provider was treating the ter-
minal illness before the date of termi-
nation,
the transitional period under this subsection
shall extend for the remainder of the enrollee’s
life for care directly related to the treatment of
the terminal illness.
‘‘(B) DEFINITION.—In subparagraph (A),
an enrollee is considered to be ‘terminally ill’ if
the enrollee has a medical prognosis that the
enrollee’s life expectancy is 6 months or less.
‘‘(c) PERMISSIBLE TERMS
AND CONDITIONS.—An
issuer may condition coverage of continued treatment by
a provider under subsection (a)(2) upon the provider
agreeing to the following terms and conditions:
‘‘(1) The provider agrees to continue to accept
reimbursement from the issuer at the rates applica-
ble prior to the start of the transitional period as
payment in full.
‘‘(2) The provider agrees to adhere to the
issuer’s quality assurance standards and to provide
to the issuer necessary medical information related
to the care provided.
‘‘(3) The provider agrees otherwise to adhere to
the issuer’s policies and procedures, including proce-
dures regarding referrals and obtaining prior au-
thorization and providing services pursuant to a
treatment plan approved by the issuer.
‘‘SEC. 2772. CONTINUOUS QUALITY IMPROVEMENT.
‘‘(a) IN GENERAL.—A group health plan that covers
children, and a health insurance issuer that offers health
insurance coverage for children, shall establish and main-
tain an ongoing, internal quality assurance program that
at a minimum meets the requirements of subsection (b)
with respect to the coverage of children.
‘‘(b) REQUIREMENTS.—The internal quality assur-
ance program of a plan or issuer under subsection (a)
shall—
‘‘(1) establish and measure a set of health care,
functional assessments, structure, processes and out-
comes, and quality indicators that are unique to chil-
dren and based on nationally accepted standards or
guidelines of care;
‘‘(2) maintain written protocols consistent with
recognized clinical guidelines or current consensus
on the pediatric field, to be used for purposes of in-
ternal utilization review, with periodic updating and
evaluation by pediatric specialists to determine effec-
tiveness in controlling utilization;
‘‘(3) provide for peer review by health care pro-
fessionals of the structure, processes, and outcomes
related to the provision of health services, including
pediatric review of pediatric cases;
‘‘(4) include in member satisfaction surveys,
questions on child and family satisfaction and expe-
rience of care, including care to children with special
needs;
‘‘(5) monitor and evaluate the continuity of
care with respect to children;
‘‘(6) include pediatric measures that are di-
rected at meeting the needs of children with special
health care needs, including at-risk children and
children with chronic conditions, disabilities and se-
vere illnesses;
‘‘(7) maintain written guidelines to ensure the
availability of medications appropriate to children;
‘‘(8) use focused studies of care received by
children with certain types of chronic conditions and
disabilities and focused studies of specialized services
used by children with chronic conditions and disabil-
ities;
‘‘(9) monitor access to pediatric specialty serv-
ices; and
‘‘(10) monitor child health care professional
satisfaction.
‘‘(c) UTILIZATION REVIEW ACTIVITIES.—
‘‘(1) COMPLIANCE WITH REQUIREMENTS.—
‘‘(A) IN GENERAL.—A group health plan
that covers children, and a health insurance
issuer that offers health insurance coverage for
children, shall conduct utilization review activi-
ties in connection with the provision of such
coverage only in accordance with a utilization
review program that meets at a minimum the
requirements of this subsection.
‘‘(B) DEFINITIONS.—In this subsection:
‘‘(i) CLINICAL
PEERS.—The term
‘clinical peer’ means, with respect to a re-
view, a physician or other health care pro-
fessional who holds a non-restricted license
in a State and in the same or similar spe-
cialty as typically manages the pediatric
medical condition, procedure, or treatment
under review.
‘‘(ii) HEALTH CARE PROFESSIONAL.—
The term ‘health care professional’ means
a physician or other health care practi-
tioner licensed or certified under State law
to provide health care services and who is
operating within the scope of such licen-
sure or certification.
‘‘(iii) 
UTILIZATION
REVIEW.—The
terms ‘utilization review’ and ‘utilization
review activities’ mean procedures used to
monitor or evaluate the clinical necessity,
appropriateness, efficacy, or efficiency of
health care services, procedures or settings
for children, and includes prospective re-
view, concurrent review, second opinions,
case management, discharge planning, or
retrospective review specific to children.
nal review process with respect to claims for children that
meets the following requirements:
‘‘(1) External appeal activities shall be con-
ducted through clinical peers, a physician or other
health care professional who is appropriately
credentialed in pediatrics with the same or similar
specialty and typically manages the condition, proce-
dure, or treatment under review or appeal.
‘‘(2) External appeal activities shall be con-
ducted through an entity that has sufficient pedi-
atric expertise, including subspecialty expertise, and
staffing to conduct external appeal activities on a
timely basis.
‘‘(3) Such a review process shall include an ex-
pedited procedure for appeals on behalf of a child in
which the time frame of a standard appeal would
jeopardize the life, health, or development of the
child.
‘‘SEC. 2774. ACCOUNTABILITY THROUGH DISTRIBUTION OF
INFORMATION.
‘‘(a) IN GENERAL.—A group health plan that covers
children and a health insurance issuer in connection with
the provision of health insurance coverage for children
shall submit to participants and enrollees (and prospective
participants and enrollees), and make available to the pub-
lic, in writing the health-related information described in
subsection (b).
‘‘(b) INFORMATION.—The health-related information
to be provided under subsection (a) shall include a descrip-
tion of the distinctions in the benefits, processes and out-
comes under the plan or coverage between adult partici-
pants, beneficiaries, and enrollees and child beneficiaries
and enrollees and shall include measures with respect to
outcomes that are specific to each such group.’’.
(b) APPLICATION TO GROUP HEALTH INSURANCE
COVERAGE.—
(1) 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. 2706. CHILDREN’S HEALTH ACCOUNTABILITY STAND-
ARDS.
‘‘(a) IN GENERAL.—Each group health plan, and
each health insurance issuer with respect to group health
insurance coverage it offers, shall comply with children’s
health accountability requirements under part C.
‘‘(b) ASSURING COORDINATION.—The Secretary of
Health and Human Services and the Secretary of Labor
shall ensure, through the execution of an interagency
memorandum of understanding between such Secretaries,
that—
‘‘(1) regulations, rulings, and interpretations
issued by such Secretaries relating to the same mat-
ter over which such Secretaries have responsibility
under part C (and this section) and section 713 of
the Employee Retirement Income Security Act of
1974 are administered so as to have the same effect
at all times; and
‘‘(2) coordination of policies relating to enforc-
ing the same requirements through such Secretaries
in order to have a coordinated enforcement strategy
that avoids duplication of enforcement efforts and
assigns priorities in enforcement.’’.
(2) CONFORMING AMENDMENT.—Section 2792
of the Public Health Service Act (42 U.S.C. 300gg–
92) is amended by inserting ‘‘and section 2706(b)’’
after ‘‘of 1996’’.
(c) APPLICATION TO INDIVIDUAL HEALTH INSUR-
ANCE COVERAGE.—Part B of title XXVII of the Public
Health Service Act is amended by inserting after section
2751 the following new section:
‘‘SEC. 2752. CHILDREN’S HEALTH ACCOUNTABILITY STAND-
ARDS.
‘‘Each health insurance issuer shall comply with chil-
dren’s health accountability requirements under part C
with respect to individual health insurance coverage it of-
fers.’’.
(d) MODIFICATION OF PREEMPTION STANDARDS.—
(1) GROUP HEALTH INSURANCE COVERAGE.—
Section 2723 of the Public Health Service Act (42
U.S.C. 300gg–23) is amended—
(A) in subsection (a)(1), by striking ‘‘sub-
section (b)’’ and inserting ‘‘subsection (b) and
(c)’’;
(B) by redesignating subsections (c) and
(d) as subsections (d) and (e), respectively; and
(C) by inserting after subsection (b) the
following new subsection:
‘‘(c) SPECIAL RULES
IN CASE
OF CHILDREN’S
HEALTH ACCOUNTABILITY REQUIREMENTS.—Subject to
subsection (a)(2), the provisions of section 2706 and part
C, and part D insofar as it applies to section 2706 or part
C, shall not prevent a State from establishing require-
ments relating to the subject matter of such provisions
so long as such requirements are at least as stringent on
health insurance issuers as the requirements imposed
under such provisions.’’.
(2) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—Section 2762 of the Public Health Service
Act (42 U.S.C. 300gg–62), as added by section
605(b)(3)(B) of Public Law 104–204, is amended—
(A) in subsection (a), by striking ‘‘sub-
section (b), nothing in this part’’ and inserting
‘‘subsections (b) and (c)’’, and
(B) by adding at the end the following new
subsection:
‘‘(c) SPECIAL RULES
IN CASE
OF CHILDREN’S
HEALTH ACCOUNTABILITY REQUIREMENTS.—Subject to
subsection (b), the provisions of section 2752 and part C,
and part D insofar as it applies to section 2752 or part
C, shall not prevent a State from establishing require-
ments relating to the subject matter of such provisions
so long as such requirements are at least as stringent on
health insurance issuers as the requirements imposed
under such section.’’.
SEC. 3. AMENDMENTS TO THE EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.
(a) IN GENERAL.—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 follow-
ing: