I
106TH CONGRESS
1ST SESSION
H. R. 2824
To amend title I of the Employee Retirement Income Security Act of 1974,
title XXVII of the Public Health Service Act, and the Internal Revenue
Code of 1986 to protect consumers in managed care plans and other
health coverage.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 9, 1999
Mr. COBURN (for himself, Mr. SHADEGG, Mr. COOKSEY, Mr. HILLEARY, Mr.
VITTER, Mrs. EMERSON, Mr. GILLMOR, Mr. REGULA, Mrs. CUBIN, Mr.
GRAHAM, Mr. CUNNINGHAM, and Mr. WELDON of Florida) introduced
the following bill; which was referred to the Committee on Commerce,
and in addition to the Committees on Education and the Workforce, and
Ways and Means, for a period to be subsequently determined by the
Speaker, in each case for consideration of sic provisions as fall within the
jurisdiction of the committee concerned
A BILL
To amend title I of the Employee Retirement Income Secu-
rity Act of 1974, title XXVII of the Public Health Serv-
ice Act, and the Internal Revenue Code of 1986 to pro-
tect 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
‘‘Health Care Quality and Choice Act of 1999’’.
(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—Grievances and Appeals
Sec. 101. Utilization review activities.
Sec. 102. Internal appeals procedures.
Sec. 103. External appeals procedures.
Sec. 104. Establishment of a grievance process.
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. Access to specialty care.
Sec. 115. Access to obstetrical and gynecological care.
Sec. 116. Access to pediatric care.
Sec. 117. Continuity of care.
Sec. 118. Network adequacy.
Sec. 119. Access to experimental or investigational prescription drugs.
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 clean claims.
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; coordination; application under different laws.
TITLE II—APPLICATION OF QUALITY 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. ERISA preemption not to apply to certain actions involving health in-
surance policyholders.
Sec. 303. Availability of binding arbitration.
TITLE IV—APPLICATION TO GROUP HEALTH PLANS UNDER THE
INTERNAL REVENUE CODE OF 1986
Sec. 401. Amendments to the Internal Revenue Code of 1986.
TITLE V—EFFECTIVE DATES; COORDINATION IN
IMPLEMENTATION
Sec. 501. Effective dates.
Sec. 502. Coordination in implementation.
TITLE VI—OTHER PROVISIONS
Sec. 601. Health care paperwork simplification.
Sec. 602. Protection for certain information.
Sec. 603. Medicare competitive pricing demonstration project.
TITLE I—IMPROVING MANAGED
CARE
Subtitle A—Grievance and 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.
(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 prac-
ticing physicians, as determined by the plan,
pursuant to the program. Such criteria shall in-
clude written clinical review criteria that are
based on valid clinical evidence where available
and that are directed specifically at meeting the
needs of at-risk populations and covered indi-
viduals with chronic conditions or severe ill-
nesses, including gender-specific criteria and pe-
diatric-specific criteria where available and ap-
propriate.
(B) CONTINUING USE OF STANDARDS IN
RETROSPECTIVE
REVIEW.—If a health care
service has been specifically pre-authorized or
approved for an enrollee under such a program,
the program shall not, pursuant to retrospective
review, revise or modify the specific standards,
criteria, or procedures used for the utilization
review for procedures, 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 an
evaluation of the clinical appropriateness of at
least a sample of denials of claims for benefits.
(c) CONDUCT OF PROGRAM ACTIVITIES.—
(1) ADMINISTRATION BY HEALTH CARE PRO-
FESSIONALS.—A utilization review program shall be
administered by appropriate physician specialists
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. This subparagraph shall not
preclude any capitation arrangements between
plans and providers.
(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.
(d) DEADLINE FOR DETERMINATIONS.—
(1) PRIOR AUTHORIZATION SERVICES.—
(A) IN GENERAL.—Except as provided in
paragraph (2), in the case of a utilization re-
view activity involving the prior authorization of
health care items and services for an individual,
the utilization review program shall make a de-
termination concerning such authorization, and
provide notice of the determination to the indi-
vidual or the individual’s designee and the indi-
vidual’s health care provider by telephone and
in printed form, as soon as possible in accord-
ance with the medical exigencies of the case,
and in no event later than the deadline specified
in subparagraph (B)
(B) DEADLINE.—
(i) IN GENERAL.—Subject to clauses
(ii) and (iii), the deadline specified in this
subparagraph is 14 days after the date of
receipt of the request for prior authoriza-
tion, and all appropriate information shall
be provided at the time of the request.
(ii) EXTENSION
PERMITTED
WHERE
NOTICE OF ADDITIONAL INFORMATION RE-
QUIRED.—If 
a 
utilization 
review
program—
(I) receives a request for a prior
authorization,
(II) determines that additional
information is necessary to complete
the review and make the determina-
tion on the request,
(III) notifies the requester, not
later than 5 business days after the
date of receiving the request, of the
need for such specified additional in-
formation, and
(IV) requires the requester to
submit specified information not later
than 2 business days after notifica-
tion,
the deadline specified in this subparagraph
is 14 days after the date the program re-
ceives the specified additional information,
but in no case later than 28 days after the
date of receipt of the request for the prior
authorization. This clause shall not apply
if the deadline is specified in clause (iii).
(iii) EXPEDITED CASES.—In the case
of 
a 
situation 
described 
in 
section
102(c)(1)(A), the deadline specified in this
subparagraph is 48 hours after the time of
the request for prior authorization.
(2) ONGOING CARE.—
(A) CONCURRENT REVIEW.—
(i) IN GENERAL.—Subject to subpara-
graph (B), in the case of a concurrent re-
view of ongoing care (including hospitaliza-
tion), which results in a termination or re-
duction of such care, the plan must provide
by telephone and in printed form notice of
the concurrent review determination to the
individual or the individual’s designee and
the individual’s health care provider as
soon as possible in accordance with the
medical exigencies of the case, with suffi-
cient time prior to the termination or re-
duction to allow for an appeal under sec-
tion 102(c)(1)(A) to be completed before
the termination or reduction takes effect.
(ii) CONTENTS OF NOTICE.—Such no-
tice shall include, with respect to ongoing
health care items and services, 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.
(B) EXCEPTION.—Subparagraph (A) shall
not be interpreted as requiring plans or issuers
to provide coverage of care that would exceed
the coverage limitations for such care.
(3) PREVIOUSLY PROVIDED SERVICES.—In the
case of a utilization review activity involving retro-
spective review of health care services previously pro-
vided for an individual, the utilization review pro-
gram shall make a determination concerning such
services, and provide notice of the determination to
the individual or the individual’s designee and the
individual’s health care provider by telephone and in
printed form, within 30 days of the date of receipt
of information that is reasonably necessary to make
such determination, but in no case later than 60
days after the date of receipt of the claim for bene-
fits.
(4) FAILURE TO MEET DEADLINE.—In a case
in which a group health plan or health insurance
issuer fails to make a determination on a claim for
benefit under paragraph (1), (2)(A), or (3) by the
applicable deadline established under the respective
paragraph, the failure shall be treated under this
subtitle as a denial of the claim as of the date of the
deadline.
(5) REFERENCE TO SPECIAL RULES FOR EMER-
GENCY SERVICES, MAINTENANCE CARE, POST-STA-
BILIZATION
CARE, AND
EMERGENCY
AMBULANCE
SERVICES.—For waiver of prior authorization re-
quirements in certain cases involving emergency
services, maintenance care and post-stabilization
care, and emergency ambulance services, see sub-
sections (a)(1), (b), and (c)(1) of section 113, re-
spectively.
(e) NOTICE OF DENIALS OF CLAIMS FOR BENE-
FITS.—
(1) IN GENERAL.—Notice of a denial of claims
for benefits under a utilization review program shall
be provided in printed form and written in a manner
calculated to be understood by the participant, bene-
ficiary, or enrollee and shall include—
(A) the reasons for the denial (including
the clinical rationale);
(B) instructions on how to initiate an ap-
peal under section 102; and
(C) notice of the availability, upon request
of the individual (or the individual’s designee)
of the clinical review criteria relied upon to
make such denial.
(2) SPECIFICATION OF ANY ADDITIONAL INFOR-
MATION.—Such a notice shall also specify what (if
any) additional necessary information must be pro-
vided to, or obtained by, the person making the de-
nial in order to make a decision on such an appeal.
(f) CLAIM FOR BENEFITS AND DENIAL OF CLAIM
FOR BENEFITS DEFINED.—For purposes of this subtitle:
(1) 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.
(2) DENIAL
OF
CLAIM
FOR
BENEFITS.—The
term ‘‘denial’’ means, with respect to a claim for
benefits, means a denial, or a failure to act on a
timely basis upon, in whole or in part, the claim for
benefits and includes a failure to provide benefits
(including items and services) required to be pro-
vided under this title.
SEC. 102. INTERNAL APPEALS PROCEDURES.
(a) RIGHT OF REVIEW.—
(1) IN GENERAL.—Each group health plan, and
each health insurance issuer offering health insur-
ance coverage—
(A) shall provide adequate notice in writ-
ing to any participant or beneficiary under such
plan, or enrollee under such coverage, whose
claim for benefits under the plan or coverage
has been denied (within the meaning of section
101(f)(2)), setting forth the specific reasons for
such denial of claim for benefits and rights to
any further review or appeal, written in lay-
man’s terms to be understood by the partici-
pant, beneficiary, or enrollee; and
(B) shall afford such a participant, bene-
ficiary, or enrollee (and any provider or other
person acting on behalf of such an individual
with the individual’s consent or without such
consent if the individual is medically unable to
provide such consent) who is dissatisfied with
such a denial of claim for benefits a reasonable
opportunity of not less than 180 days to re-
quest and obtain a full and fair review by a
named fiduciary (with respect to such plan) or
named appropriate individual (with respect to
such coverage) of the decision denying the
claim.
(2) TREATMENT OF ORAL REQUESTS.—The re-
quest for review under paragraph (1)(B) may be
made orally, but, in the case of an oral request, shall
be followed by a request in writing.
(b) INTERNAL REVIEW PROCESS.—
(1) CONDUCT OF REVIEW.—
(A) IN GENERAL.—A review of a denial of
claim under this section shall be made by an in-
dividual (who shall be a physician in a case in-
volving medical judgment) who has been se-
lected by the plan or issuer and who did not
make the initial denial in the internally appeal-
able decision, except that in the case of limited
scope coverage (as defined in subparagraph
(B)) an appropriate specialist shall review the
decision.
(B) 
LIMITED
SCOPE
COVERAGE
DE-
FINED.—For purposes of subparagraph (A), the
term ‘‘limited scope coverage’’ means a group
health plan or health insurance coverage the
only benefits under which are for benefits de-
scribed in section 2791(c)(2)(A) of the Public
Health Service Act (42 U.S.C. 300gg–91(c)(2)).
(2) TIME LIMITS FOR INTERNAL REVIEWS.—
(A) IN GENERAL.—Having received such a
request for review of a denial of claim, the plan
or issuer shall, in accordance with the medical
exigencies of the case but not later than the
deadline specified in subparagraph (B), com-
plete the review on the denial and transmit to
the participant, beneficiary, enrollee, or other
person involved a decision that affirms, re-
verses, or modifies the denial. If the decision
does not reverse the denial, the plan or issuer
shall transmit, in printed form, a notice that
sets forth the grounds for such decision and
that includes a description of rights to any fur-
ther appeal. Such decision shall be treated as
the final decision of the plan. Failure to issue
such a decision by such deadline shall be treat-
ed as a final decision affirming the denial of
claim.
(B) DEADLINE.—
(i) IN GENERAL.—Subject to clauses
(ii) and (iii), the deadline specified in this
subparagraph is 14 days after the date of
receipt of the request for internal review,
and all information shall be provided at the
time of the request.
(ii) EXTENSION
PERMITTED
WHERE
NOTICE OF ADDITIONAL INFORMATION RE-
QUIRED.—If a group health plan or health
insurance issuer—
(I) receives a request for internal
review,
(II) determines that additional
information is necessary to complete
the review and make the determina-
tion on the request,
(III) notifies the requester, not
later than 5 business days after the
date of receiving the request, of the
need for such specified additional in-
formation, and
(IV) requires the requester to
submit specified information not later
than 48 hours after notification,
the deadline specified in this subparagraph
is 14 days after the date the plan or issuer
receives the specified additional informa-
tion, but in no case later than 28 days
after the date of receipt of the request for
the internal review. This clause shall not
apply if the deadline is specified in clause
(iii).
(iii) EXPEDITED CASES.—In the case
of a situation described in subsection
(c)(1)(A), the deadline specified in this
subparagraph is 48 hours after the time of
the request for review.
(c) EXPEDITED REVIEW PROCESS.—
(1) IN GENERAL.—A group health plan, and a
health insurance issuer, shall establish procedures in
writing for the expedited consideration of requests
for review under subsection (b) in situations—
(A) in which, as determined by the plan or
issuer or as certified in writing by a treating
physician, the application of the normal time-
frame for making a determination could seri-
ously jeopardize the life or health of the partici-
pant, beneficiary, or enrollee or such an individ-
ual’s ability to regain maximum function; or
(B) described in section 101(d)(2) (relat-
ing to requests for continuation of ongoing care
which would otherwise be reduced or termi-
nated).
(2) PROCESS.—Under such procedures—
(A) the request for expedited review may
be submitted orally or in writing by an indi-
vidual or provider who is otherwise entitled to
request the review;
(B) all necessary information, including
the plan’s or issuer’s decision, shall be trans-
mitted between the plan or issuer and the re-
quester by telephone, facsimile, or other simi-
larly expeditious available method; and
(C) the plan or issuer shall expedite the re-
view in the case of any of the situations de-
scribed in subparagraph (A) or (B) of para-
graph (1).
(3) DEADLINE FOR DECISION.—The decision on
the expedited review must be made and commu-
nicated to the parties as soon as possible in accord-
ance with the medical exigencies of the case, and in
no event later than 48 hours after the time of re-
ceipt of the request for expedited review, except that
in a case described in paragraph (1)(B), the decision
must be made before the end of the approved period
of care.
(d) WAIVER OF PROCESS.—A plan or issuer may
waive its rights for an internal review under subsection
(b). In such case the participant, beneficiary, or enrollee
involved (and any designee or provider involved) shall be
relieved of any obligation to complete the review involved
and may, at the option of such participant, beneficiary,
enrollee, designee, or provider, proceed directly to seek
further appeal through any applicable external appeals
process.
SEC. 103. EXTERNAL APPEALS PROCEDURES.
(a) RIGHT TO EXTERNAL APPEAL.—
(1) IN GENERAL.—A group health plan, and a
health insurance issuer offering health insurance
coverage, shall provide for an external appeals proc-
ess that meets the requirements of this section in
the case of an externally appealable decision de-
scribed in paragraph (2), for which a timely appeal
is made either by the plan or issuer or by the partic-
ipant, beneficiary, or enrollee (and any provider or
other person acting on behalf of such an individual
with the individual’s consent or without such consent
if such an individual is medically unable to provide
such consent).
(2) EXTERNALLY APPEALABLE DECISION DE-
FINED.—
(A) IN GENERAL.—For purposes of this
section, the term ‘‘externally appealable deci-
sion’’ means a denial of claim for benefits (as
defined in section 101(f)(2)), if—
(i) the item or service involved is a
covered benefit,
(ii) the amount involved exceeds $100,
and
(iii) the requirements of subparagraph
(B) are met with respect to such denial.
Such term also includes a failure to meet an ap-
plicable deadline for internal review under sec-
tion 102 or such standards as are established
pursuant to section 118.
(B) REQUIREMENTS.—For purposes of
subparagraph (A)(iii), the requirements of this
subparagraph are met with respect to a denial
of a claim for benefits if—
(i) the denial is based in whole or in
part on a decision that the item or service
is not medically necessary or appropriate
or is investigational or experimental, or
(ii) in such denial, the decision as to
whether a benefit is covered involves a
medical judgment.
(C) EXCLUSIONS.—Such term does not
include—
(i) specific exclusions or express limi-
tations on the amount, duration, or scope
of coverage; or
(ii) a decision regarding eligibility for
any benefits.
(3) EXHAUSTION OF INTERNAL REVIEW PROC-
ESS.—Except as provided under section 102(d), a
plan or issuer may condition the use of an external
appeal process in the case of an externally appeal-
able decision upon a final decision in an internal re-
view under section 102, but only if the decision is
made in a timely basis consistent with the deadlines
provided under this subtitle.
(4) FILING FEE REQUIREMENT.—
(A) IN GENERAL.—A plan or issuer may
condition the use of an external appeal process
upon payment in advance to the plan or issuer
of a $25 filing fee.
(B) REFUNDING
FEE
IN
CASE
OF
SUC-
CESSFUL APPEALS.—The plan or issuer shall
refund payment of the filing fee under this
paragraph if the recommendation of the exter-
nal appeal entity is to reverse the denial of a
claim for benefits which is the subject of the
appeal.
(b) GENERAL ELEMENTS OF EXTERNAL APPEALS
PROCESS.—
(1) USE OF QUALIFIED EXTERNAL APPEAL EN-
TITY.—
(A) IN GENERAL.—Except as provided in
subparagraph (D), the external appeal process
under this section of a plan or issuer shall be
conducted between the plan or issuer and one
or more qualified external appeal entities (as
defined in subsection (c)).
(B) LIMITATION ON PLAN OR ISSUER SE-
LECTION.—The applicable authority shall im-
plement procedures—
(i) to assure that the selection process
among qualified external appeal entities
will not create any incentives for external
appeal 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.
(C) OTHER
TERMS
AND
CONDITIONS.—
The terms and conditions of this paragraph
shall be consistent with the standards the ap-
propriate Secretary shall establish to assure
there is no real or apparent conflict of interest
in the conduct of external appeal activities. All
costs of the process (except those incurred by
the participant, beneficiary, enrollee, or treating
professional in support of the appeal) shall be
paid by the plan or issuer, and not by the par-
ticipant, beneficiary, or enrollee. The previous
sentence shall not be construed as applying to
the imposition of a filing fee under subsection
(a)(4).
(D) STATE AUTHORITY WITH RESPECT TO
QUALIFIED
EXTERNAL
APPEAL
ENTITY
FOR
HEALTH INSURANCE ISSUERS.—With respect to
health insurance issuers in a State, the State
may provide for external review activities to be
conducted by a qualified external appeal entity
that is designated by the State or that is se-
lected by the State in a manner determined by
the State to assure an unbiased determination.
(2) ELEMENTS OF PROCESS.—An external ap-
peal process shall be conducted consistent with
standards established by the appropriate Secretary
that include at least the following:
(A) FAIR
AND
DE
NOVO
DETERMINA-
TION.—The process shall provide for a fair, de
novo determination described in subparagraph
(B) based on evidence described in subpara-
graphs (C) and (D). However, nothing in this
paragraph shall be construed as providing for
coverage of items and services for which bene-
fits are not covered under the plan or coverage.
(B) STANDARD OF REVIEW.—An external
appeal entity shall determine whether the plan’s
or issuer’s decision is appropriate for the med-
ical condition of the patient involved (as deter-
mined by the entity) taking into account as of
the time of the entity’s determination the pa-
tient’s medical condition and any relevant and
reliable evidence the entity obtains under sub-
paragraphs (C) and (D). If the entity deter-
mines the decision is appropriate for such con-
dition, the entity shall affirm the decision and
to the extent that the entity determines the de-
cision is not appropriate for such condition, the
entity shall reverse the decision. Nothing in this
subparagraph shall be construed as providing
for coverage of items or services not provided
or covered by the plan.
(C) REQUIRED
CONSIDERATION
OF
CER-
TAIN
MATTERS.—In making such determina-
tion, the external appeal entity shall consider,
but not be bound by—
(i) any language in the plan or cov-
erage document relating to the definitions
of the terms medical necessity, medically
necessary or appropriate, or experimental,
investigational, or related terms;
(ii) the decision made by the plan or
issuer upon internal review under section
102 and any guidelines or standards used
by the plan or issuer in reaching such deci-
sion; and
(iii) the opinion of the individual’s
treating physician or health care profes-
sional.
The entity also shall consider any personal
health and medical information supplied with
respect to the individual whose denial of claim
for benefits has been appealed.
(D) ADDITIONAL EVIDENCE.—Such entity
may also take into consideration but not be lim-
ited to the following evidence (to the extent
available):
(i) The results of studies that meet
professionally recognized standards of va-
lidity and replicability or that have been
published in peer-reviewed journals.
(ii) The results of professional con-
sensus conferences.
(iii) Practice and treatment policies.
(iv) Community standard of care and
generally accepted principles of profes-
sional medical practice.
(v) To the extent that the entity de-
termines it to be free of any conflict of in-
terest, the opinions of individuals who are
qualified as experts in one or more fields
of health care which are directly related to
the matters under appeal.
(vi) To the extent that the entity de-
termines it to be free of any conflict of in-
terest, the results of peer reviews con-
ducted by the plan or issuer involved.
(E) DETERMINATION CONCERNING EXTER-
NALLY
APPEALABLE
DECISIONS.—A qualified
external appeal entity shall determine—
(i) whether a denial of claim for bene-
fits is an externally appealable decision
(within the meaning of subsection (a)(2));
(ii) whether an externally appealable
decision involves an expedited appeal;
(iii) for purposes of initiating an ex-
ternal review, whether the internal review
process has been completed; and
(iv) whether the denial of claims is a
covered benefit.
(F) 
OPPORTUNITY
TO
SUBMIT
EVI-
DENCE.—Each party to an externally appeal-
able decision may submit evidence related to the
issues in dispute.
(G) PROVISION
OF
INFORMATION.—The
plan or issuer involved shall provide timely ac-
cess to the external appeal entity to information
and to provisions of the plan or health insur-
ance coverage relating to the matter of the ex-
ternally appealable decision, as determined by
the entity.
(H) TIMELY DECISIONS.—A determination
by the external appeal entity on the decision
shall—
(i) be made orally or in writing and,
if it is made orally, shall be supplied to the
parties in writing as soon as possible;
(ii) be made in accordance with the
medical exigencies of the case involved, but
in no event later than 21 days after the
date (or, in the case of an expedited ap-
peal, 48 hours after the time) of requesting
an external appeal of the decision;
(iii) state, in layperson’s language, the
basis for the determination, including, if
relevant, any basis in the terms or condi-
tions of the plan or coverage; and
(iv) inform the participant, bene-
ficiary, or enrollee of the individual’s rights
(including any limitation on such rights) to
seek binding arbitration or further review
by the courts (or other process) of the ex-
ternal appeal determination.
(I) COMPLIANCE WITH DETERMINATION.—
If the external appeal entity determines that a
denial of a claim for benefits was not reason-
able and reverses the denial, the plan or
issuer—
(i) shall (upon the receipt of the de-
termination) authorize benefits in accord-
ance with such determination;
(ii) shall take such actions as may be
necessary to provide benefits (including
items or services) in a timely manner con-
sistent with such determination; and
(iii) shall submit information to the
entity documenting compliance with the
entity’s determination and this subpara-
graph.
(c) QUALIFICATIONS OF EXTERNAL APPEAL ENTI-
TIES.—
(1) IN GENERAL.—For purposes of this section,
the term ‘‘qualified external appeal entity’’ means,
in relation to a plan or issuer, an entity that is cer-
tified under paragraph (2) as meeting the following
requirements:
(A) The entity meets the independence re-
quirements of paragraph (3).
(B) The entity conducts external appeal
activities through at least three clinical peers
who are practicing physicians.
(C) The entity has sufficient medical, legal,
and other expertise and sufficient staffing to
conduct external appeal activities for the plan
or issuer on a timely basis consistent with sub-
section (b)(2)(G).
(2) INITIAL CERTIFICATION OF EXTERNAL AP-
PEAL ENTITIES.—
(A) IN GENERAL.—In order to be treated
as a qualified external appeal entity with re-
spect to—
(i) a group health plan, the entity
must be certified (and, in accordance with
subparagraph (B), periodically recertified)
as meeting the requirements of paragraph
(1)—
(I) by the Secretary of Labor;
(II) under a process recognized
or approved by the Secretary of
Labor; or
(III) to the extent provided in
subparagraph (C)(i), by a qualified
private standard-setting organization
(certified under such subparagraph),
if elected by the entity; or
(ii) a health insurance issuer oper-
ating in a State, the entity must be cer-
tified (and, in accordance with subpara-
graph (B), periodically recertified) as
meeting such requirements—
(I) by the applicable State au-
thority (or under a process recognized
or approved by such authority); or
(II) if the State has not estab-
lished a certification and recertifi-
cation process for such entities, by the
Secretary of Health and Human Serv-
ices, under a process recognized or ap-
proved by such Secretary, or to the
extent 
provided 
in 
subparagraph
(C)(ii), by a qualified private stand-
ard-setting 
organization 
(certified
under such subparagraph), if elected
by the entity.
(B) RECERTIFICATION PROCESS.—The ap-
propriate Secretary shall develop standards for
the recertification of external appeal entities.
Such standards shall include a review of—
(i) the number of cases reviewed;
(ii) a summary of the disposition of
those cases;
(iii) the length of time in making de-
terminations on those cases;
(iv) updated information of what was
required to be submitted as a condition of
certification for the entity’s performance of
external appeal activities; and
(v) information necessary to assure
that the entity meets the independence re-
quirements (described in paragraph (3))
with respect to plans and issuers for which
it conducts external review activities.
(C) CERTIFICATION
OF
QUALIFIED
PRI-
VATE STANDARD-SETTING ORGANIZATIONS.—
(i) FOR EXTERNAL REVIEWS UNDER
GROUP HEALTH PLANS.—For purposes of
subparagraph (A)(i)(III), the Secretary of
Labor may provide for a process for certifi-
cation (and periodic recertification) of
qualified private standard-setting organiza-
tions which provide for certification of ex-
ternal appeal entities. Such an organiza-
tion shall only be certified if the organiza-
tion does not certify an external appeal en-
tity unless it meets standards at least as
stringent as the standards required for cer-
tification of such an entity by such Sec-
retary under subparagraph (A)(i)(I).
(ii) FOR
EXTERNAL
REVIEWS
OF
HEALTH
INSURANCE
ISSUERS.—For pur-
poses of subparagraph (A)(ii)(II), the Sec-
retary of Health and Human Services may
provide for a process for certification (and
periodic recertification) of qualified private
standard-setting organizations which pro-
vide for certification of external appeal en-
tities. Such an organization shall only be
certified if the organization does not certify
an external appeal entity unless it meets
standards as least as stringent as the
standards required for certification of such
an entity by such Secretary under subpara-
graph (A)(ii)(II).
(D) CONSTRUCTION.—Nothing in subpara-
graph (A)(i) shall be construed as permitting
the Secretary of Labor to delegate certification
authority under subclause (I) of such subpara-
graph to any person outside the Department of
Labor.
(3) INDEPENDENCE REQUIREMENTS.—
(A) IN GENERAL.—A clinical peer or other
entity meets the independence requirements of
this paragraph if—
(i) the peer or entity is not affiliated
with any related party;
(ii) any compensation received by such
peer or entity in connection with the exter-
nal review is reasonable and not contingent
on any decision rendered by the peer or en-
tity;
(iii) the plan and the issuer (if any)
have no recourse against the peer or entity
in connection with the external review; and
(iv) the peer or entity does not other-
wise have a conflict of interest with a re-
lated party.
(B) RELATED
PARTY.—For purposes of
this paragraph, the term ‘‘related party’’
means—
(i) with respect to—
(I) a group health plan or health
insurance coverage offered in connec-
tion with such a plan, the plan or the
health insurance issuer offering such
coverage, or
(II) individual health insurance
coverage, the health insurance issuer
offering such coverage,
or any plan sponsor, fiduciary, officer, di-
rector, or management employee of such
plan or issuer;
(ii) the health care professional that
provided the health care involved in the
coverage decision;
(iii) the institution at which the health
care involved in the coverage decision is
provided; or
(iv) the manufacturer of any drug or
other item that was included in the health
care involved in the coverage decision.
(C) AFFILIATED.—For purposes of this
paragraph, the term ‘‘affiliated’’ means, in con-
nection with any peer or entity, having a famil-
ial, financial, or fidicuary relationship with such
peer or entity.
(4) LIMITATION
ON
LIABILITY
OF
REVIEW-
ERS.—No qualified external appeal entity having a
contract with a plan or issuer under this part and
no person who is employed by any such entity or
who furnishes professional services to such entity,
shall be held by reason of the performance of any
duty, function, or activity required or authorized
pursuant to this section, to have violated any crimi-
nal law, or to be civilly liable under any law of the
United States or of any State (or political subdivi-
sion thereof) if due care was exercised in the per-
formance of such duty, function, or activity and
there was no actual malice or gross misconduct in
the performance of such duty, function, or activity.
(d) EXTERNAL APPEAL DETERMINATION BINDING
ON PLAN.—
(1) IN GENERAL.—The determination by an ex-
ternal appeal entity under this section shall be bind-
ing on the plan (and issuer, if any) involved in the
determination.
(2) PROTECTION OF LEGAL RIGHTS.—Nothing
in this subtitle shall be construed as removing any
legal rights of participants, beneficiaries, enrollees,
and others under State or Federal law, including the
right to file judicial actions to enforce rights.
(e) PENALTIES AGAINST AUTHORIZED OFFICIALS
FOR REFUSING TO AUTHORIZE THE DETERMINATION OF
AN EXTERNAL APPEAL ENTITY.—
(1) MONETARY
PENALTIES.—In any case in
which the determination of an external appeal entity
is not followed in a timely fashion by a group health
plan, or by a health insurance issuer offering health
insurance coverage, any person who, acting in the
capacity of authorizing the benefit, causes such re-
fusal may, in the discretion in a court of competent
jurisdiction, be liable to an aggrieved 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 appeal entity until the date
the refusal to provide the benefit is corrected.
(2) CEASE AND DESIST ORDER AND ORDER OF
ATTORNEY’S
FEES.—In any action described in
paragraph (1) 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 paragraph has taken an action
resulting in a refusal of a benefit determined by an
external appeal entity in violation of such terms of
the plan, coverage, or this subtitle, or has failed to
take an action for which such person is responsible
under the plan, coverage, or this title 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—
(A) to cease and desist from the alleged
action or failure to act; and
(B) to pay to the plaintiff a reasonable at-
torney’s fee and other reasonable costs relating
to the prosecution of the action on the charges
on which the plaintiff prevails.
(f) PROTECTION
OF LEGAL RIGHTS.—Nothing in
this subtitle shall be construed as removing or limiting any
legal rights of participants, beneficiaries, enrollees, and
others under State or Federal law (including section 502
of the Employee Retirement Income Security Act of
1974), including the right to file judicial actions to enforce
rights.
SEC. 104. ESTABLISHMENT OF A GRIEVANCE PROCESS.
(a) ESTABLISHMENT OF GRIEVANCE SYSTEM.—
(1) IN GENERAL.—A group health plan, and a
health insurance issuer in connection with the provi-
sion of health insurance coverage, shall establish and
maintain a system to provide for the presentation
and resolution of oral and written grievances
brought by individuals who are participants, bene-
ficiaries, or enrollees, or health care providers or
other individuals acting on behalf of an individual
and with the individual’s consent or without such
consent if the individual is medically unable to pro-
vide such consent, regarding any aspect of the plan’s
or issuer’s services.
(2) GRIEVANCE DEFINED.—In this section, the
term ‘‘grievance’’ means any question, complaint, or
concern brought by a participant, beneficiary or en-
rollee that is not a claim for benefits.