I
104TH CONGRESS
1ST SESSION
H. R. 996
To improve portability, access, and fair rating for health insurance coverage
for individuals.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 21, 1995
Mr. FAWELL (for himself, Mr. GOODLING, Mr. PETRI, Mr. ROUKEMA, Mr.
BALLENGER, Mr. HOEKSTRA, Mr. MCKEON, Mrs. MEYERS of Kansas,
Mr. TALENT, Mr. GREENWOOD, Mr. HUTCHINSON, Mr. KNOLLENBERG,
Mr. GRAHAM, Mr. WELDON of Florida, and Mr. MCINTOSH) introduced
the following bill; which was referred to the Committee on Commerce
and, in addition, to the Committee on Economic and Educational Oppor-
tunity, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned
A BILL
To improve portability, access, and fair rating for health
insurance coverage for individuals.
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 ‘‘Targeted Individual
Health Insurance Reform Act of 1995’’.
TITLE I—DEFINITIONS AND
SPECIAL RULES
TABLE OF CONTENTS OF TITLE
Sec. 1001. General definitions.
Sec. 1002. General, catastrophic, and medisave coverage defined.
SEC. 1001. GENERAL DEFINITIONS.
(a) IN GENERAL.—For purposes of this Act:
(1) 
DEPENDENT.—The 
term 
‘‘dependent’’
means, with respect to any individual, any person
who is—
(A) the spouse or surviving spouse of the
individual, or
(B) a child (including an adopted child) of
such individual and—
(i) under 19 years of age, or
(ii) under 25 years of age and a full-
time student.
(2) EMPLOYER.—The term ‘‘employer’’ shall
have the meaning applicable under section 3(5) of
the Employee Retirement Income Security Act of
1974, except that such term includes the partnership
in relation to any partner.
(3) GROUP
HEALTH
PLAN; PLAN.—(A) The
term ‘‘group health plan’’ means a group health plan
(as defined in section 3(42) of the Employee Retire-
ment Income Security Act of 1974 (as added by
ERISA Targeted Health Insurance Reform Act of
1995)), but does not include any type of coverage
excluded from the definition of health insurance cov-
erage under paragraph (6)(B).
(B) The term ‘‘plan’’ means a group health
plan (including any such plan which is a multiem-
ployer plan (as defined in section 3(37) of the Em-
ployee Retirement Income Security Act of 1974))
and an exempted multiple employer health plan
(within the meaning of part 7 of the Employee Re-
tirement Income Security Act of 1974 (as added by
the ERISA Targeted Health Insurance Reform Act
of 1995)).
(4) HEALTH INSURANCE COVERAGE.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘‘health insurance
coverage’’ means any hospital or medical service
policy or certificate, hospital or medical service
plan contract, or health maintenance organiza-
tion group contract offered by an insurer.
(B) EXCEPTION.—Such term does not in-
clude any of the following:
(i) Coverage only for accident, dental,
vision, disability income, or long-term care
insurance, or any combination thereof.
(ii) Medicare supplemental health in-
surance.
(iii) Coverage issued as a supplement
to liability insurance.
(iv) Liability insurance, including gen-
eral liability insurance and automobile li-
ability insurance.
(v) Worker’s compensation or similar
insurance.
(vi) Automobile medical-payment in-
surance.
(vii) Coverage for a specified disease
or illness.
(viii) A hospital fixed indemnity policy
or other fixed indemnity policy.
(5) INDIVIDUAL MARKET.—The term ‘‘individ-
ual market’’ means the health insurance market
under which individuals obtain health insurance cov-
erage on behalf of themselves (and their dependents)
and not on the basis of employment.
(6) 
INSURER.—(A) 
The 
term 
‘‘insurer’’
means—
(i) an insurance company, insurance serv-
ice, or insurance organization licensed to en-
gage in the business of insurance in a State, or
(ii) a health maintenance organization (as
defined in subparagraph (B)) licensed to do
business in a State.
(B) HEALTH MAINTENANCE ORGANIZATION.—
The term ‘health maintenance organization’ means a
Federally qualified health maintenance organization
(as defined in section 1301(a) of the Public Health
Service Act), an organization recognized under State
law as a health maintenance organization, or a simi-
lar organization regulated under State law for sol-
vency in the same manner and to the same extent
as such a health maintenance organization.
(7) NAIC.—The term ‘‘NAIC’’ means the Na-
tional Association of Insurance Commissioners.
(8) NETWORK
PLAN.—The term ‘‘network
plan’’ includes, as defined in standards established
under section 2101, an arrangement of an insurer
under which health services are offered to be pro-
vided primarily through a defined set of providers
who have contracts with the insurer.
(9) STATE.—The term ‘‘State’’ means the 50
States, the District of Columbia, Puerto Rico, the
Virgin Islands, Guam, and American Samoa.
(10) STATE COMMISSIONER OF INSURANCE.—
The term ‘‘State commissioner of insurance’’ in-
cludes a State superintendent of insurance.
(b) APPLICATION OF ERISA DEFINITIONS.—Except
as otherwise provided in this Act, terms used in this Act
shall have the meanings applicable to such terms under
section 3 of the Employee Retirement Income Security Act
of 1974.
(c) SECRETARY.—For purposes of this Act, except
with respect to references specifically to the Secretary of
Labor, the term ‘‘Secretary’’ means the Secretary of
Health and Human Services.
SEC. 1002. GENERAL, CATASTROPHIC, AND MEDISAVE COV-
ERAGE DEFINED.
(a) GENERAL COVERAGE.—In this Act, the term
‘‘general coverage’’ means health insurance coverage that
meets the applicable standards provided for under section
2021 and that is not catastrophic coverage or medisave
coverage (as defined in this section).
(b) CATASTROPHIC COVERAGE.—In this Act, the
term ‘‘catastrophic coverage’’ means health insurance cov-
erage that meets the applicable standards provided for
under section 2101 and under which benefits are available
for a year only to the extent that expenses for covered
services in a year exceed a catastrophic deductible amount.
(c) MEDISAVE COVERAGE.—
(1) IN
GENERAL.—In this Act, the term
‘‘medisave coverage’’ means coverage that meets the
applicable standards provided for under section 2021
and—
(A) consists of—
(i) health insurance coverage under
which benefits are available for a year only
to the extent that expenses for covered
services in a year exceed a catastrophic de-
ductible amount; and
(ii) medisave cash benefit coverage
consistent with paragraph (2); and
(B) meets such standards as may be pre-
scribed under section 2101.
(2) MEDISAVE CASH BENEFIT COVERAGE.—
(A) IN GENERAL.—Medisave cash benefit
coverage is considered to be consistent with this
paragraph to the extent that, in addition to and
separate from the benefits from the health in-
surance 
coverage 
described 
in 
paragraph
(1)(A)—
(i) under the terms of such coverage
there is a fixed dollar amount of additional
benefits that does not exceed the cata-
strophic deductible amount for the cata-
strophic coverage described in paragraph
(1)(A);
(ii) subject to clause (iii), the dollar
amount may be used for deductibles, cost-
sharing, and other expenses, for items and
services specified under such catastrophic
coverage and medisave cash benefit cov-
erage;
(iii) any such amount of benefits not
so used shall be accumulated, shall remain
available to be applied against future
deductibles, cost-sharing, and other ex-
penses, and may be withdrawn for any
purpose, or used to pay for coverage de-
scribed in paragraph (1)(A)(i), to the ex-
tent that the dollar amount exceeds 150
percent of the catastrophic deductible
amount for the catastrophic coverage de-
scribed in paragraph (1)(A), shall be non-
forfeitable, and, upon the death of all bene-
ficiaries with respect to such benefits, shall
be payable in cash to the estate of the ben-
eficiary who dies last; and
(iv) the coverage meets the portability
rules established under subparagraph (B).
(B) PORTABILITY RULES.—In the case of
an individual who has medisave cash benefit
coverage with respect to which the requirements
of clauses (i), (ii), and (iii) of subparagraph (A)
are met in a year, who has accumulated an
amount of benefits under such coverage, and
who terminates such coverage (or terminates
enrollment under health insurance coverage
that contains medisave cash benefit coverage),
the coverage meets the portability rules of this
subparagraph if, under the terms of such cov-
erage, the individual is permitted (as elected by
the individual)—
(i) to have an amount equal to all or
some of the amount of benefits accumu-
lated under such coverage paid towards the
payment of premiums under any group
health plan or health insurance coverage
providing coverage for the individual, and
(ii) to have an amount equal to all or
some of the remaining balance transferred
to a plan which will provide medisave cash
benefit coverage for that individual in ac-
cordance with the requirements of this
paragraph (and such plan shall credit such
amount transferred towards Medisave cash
benefit coverage provided by such plan).
(d) CATASTROPHIC
DEDUCTIBLE
AMOUNT
DE-
FINED.—
(1) IN GENERAL.—For purposes of this section,
subject to paragraph (2), the term ‘‘catastrophic de-
ductible amount’’ means a deductible amount that is
at least $1,800 (or $3,600 if the coverage includes
family members).
(2) ADJUSTMENTS.—In the case of any cal-
endar year after the first year to which this title II
applies, each dollar amount in paragraph (1) shall
be increased by the percentage by which (A) the av-
erage of the monthly consumer price indexes for all
urban consumers for the previous year, exceeds (B)
the average of the monthly consumer price indexes
for all urban consumers for such first year. If any
increase under the preceding sentence does not re-
sult in an amount that is a multiple of $50, such in-
crease shall be rounded so that the amount is deter-
mined to the nearest multiple of $50.
TITLE II—ACCESS TO AND FAIR
RATING OF HEALTH INSUR-
ANCE COVERAGE FOR INDI-
VIDUALS
TABLE OF CONTENTS OF TITLE
Subtitle A—Increased Availability and Continuity of Health Insurance
Coverage for Individuals
PART 1—NONDISCRIMINATION, PORTABILITY, AND RENEWABILITY
STANDARDS
Sec. 2001. Nondiscrimination and limitations on preexisting condition exclu-
sions.
Sec. 2002. Portability.
Sec. 2003. Requirements relating to renewability generally.
PART 2—ENCOURAGEMENT OF STANDARDS-SETTING ORGANIZATIONS FOR
PROVIDER NETWORKS AND UTILIZATION REVIEW
Sec. 2011. Encouragement of standards-setting organizations for provider net-
works.
Sec. 2012. Encouragement of private standards-setting organizations for utili-
zation review.
PART 3—REQUIREMENTS FOR INSURERS PROVIDING HEALTH INSURANCE
COVERAGE IN THE INDIVIDUAL MARKET
Sec. 2021. Requirement for insurers to offer general, catastrophic, and optional
medisave coverage in the individual market.
Sec. 2022. Use of fair rating, uniform marketing materials, and miscellaneous
consumer protections.
Subtitle B—Establishment of Standards; Enforcement; Effective Dates
Sec. 2101. Establishment of standards.
Sec. 2102. Enforcement.
Sec. 2103. Preemption.
Sec. 2104. Effective date.
Subtitle A—Increased Availability
and Continuity of Health Insur-
ance Coverage for Individuals
PART 1—NONDISCRIMINATION, PORTABILITY,
AND RENEWABILITY STANDARDS
SEC. 2001. NONDISCRIMINATION AND LIMITATIONS ON
PREEXISTING CONDITION EXCLUSIONS.
(a) IN GENERAL.—Except as provided in subsection
(b), an insurer offering health insurance coverage in the
individual market may deny, or impose a limitation or ex-
clusion of, covered benefits relating to treatment of a con-
dition based on health status, based on claims experience
of an individual, based on receipt of health care by an indi-
vidual, based on the medical history of an individual, or
based on the fact that the condition preexisted the effec-
tive date of coverage of the individual, only if—
(1) the condition relates to a condition that was
diagnosed or treated within a period of not to exceed
6 months before the date of such coverage; and
(2) the limitation or exclusion extends over a
period of not to exceed 12 months after the date of
such coverage.
In the case of an individual who is eligible for coverage
but for a waiting period imposed by an insurer, in applying
paragraphs (1) and (2), the individual shall be treated as
having had such coverage as of the beginning of the wait-
ing period.
(b) SPECIAL RULE FOR HEALTH INSURANCE COV-
ERAGE OFFERED IN THE INDIVIDUAL MARKET.—Not-
withstanding subsection (a), an insurer may offer an indi-
vidual health insurance coverage in the individual market
which imposes a limitation or exclusion based on a pre-
existing condition but only if—
(1) the condition relates to a condition that was
not diagnosed or treated within a period (that ex-
ceeds 6 months but does not exceed 12 months) be-
fore the date of such coverage; and
(2) the limitation or exclusion extends over a
period that does not exceed 12 months after the date
of such coverage.
(c) NO COVERAGE OF SPECIFIC TREATMENT, PRO-
CEDURES, OR CLASSES REQUIRED.—Nothing in this sec-
tion may be construed to require the coverage of any spe-
cific procedure, treatment, or service as part of health in-
surance coverage under this Act or through regulation.
(d) APPLICATION OF RULES BY CERTAIN HEALTH
MAINTENANCE ORGANIZATIONS.—A health maintenance
organization that offers health insurance coverage shall
not be considered as failing to meet the requirements of
section 1301 of the Public Health Service Act notwith-
standing that it provides for an exclusion of the coverage
based on a preexisting condition consistent with the provi-
sions of this part so long as such exclusion is applied con-
sistent with the provisions of this part.
(e) APPLICABILITY TO LATE ENROLLMENT UNDER
ASSOCIATION COVERAGE.—In the case of association cov-
erage (as defined in section 2021(b)(4)(B)), this section
applies in the case of any individual with respect to whom
coverage is elected upon initially becoming eligible for cov-
erage or in connection with any subsequent enrollment pe-
riods.
(f) AFFILIATION PERIOD ALTERNATIVE
TO PRE-
EXISTING CONDITION LIMITATION.—An insurer offering
health insurance coverage in the individual market which
does not use the preexisting limitations allowed under this
section and section 2002 may impose an affiliation period.
For purposes of this subsection, the term ‘‘affiliation pe-
riod’’ means a period—
(1) not to exceed 90 days in the case of an indi-
vidual first becoming eligible under such coverage,
and
(2) not to exceed 180 days in the case of a later
election of coverage,
during which no contributions or premiums are required
or collected and which must expire before the coverage be-
comes effective.
SEC. 2002. PORTABILITY.
(a) IN GENERAL.—Each insurer offering health in-
surance coverage in the individual market shall provide
that if a covered individual is in a period of continuous
coverage (as defined in subsection (c)) as of a date upon
which coverage takes effect, any period of exclusion of cov-
erage from covered benefits with respect to a preexisting
condition (as permitted to be excluded under section 2001)
shall be reduced by at least 1 month for each month in
the period of continuous coverage. A covered individual
may be treated by an insurer as not being in a period
of continuous coverage if, upon the request of the insurer,
the covered individual does not present satisfactory docu-
mentation of such period of continuous coverage. The Sec-
retary may prescribe regulations defining standards for
satisfactory documentation for purposes of this subsection.
(b) NO PREEXISTING CONDITION FOR NEWBORNS
AND ADOPTED CHILDREN.—For purposes of this sub-
title—
(1) NEWBORNS.—A child who is covered at the
time of birth and remains in a period of continuous
coverage after such time shall not be considered to
have any preexisting condition beginning at the time
of birth.
(2) ADOPTED
CHILDREN.—An adopted child
who is covered at the time of adoption and remains
in a period of continuous coverage shall not be con-
sidered, beginning on the date of adoption, to have
any preexisting condition.
(c) PERIOD OF CONTINUOUS COVERAGE.—
(1) IN GENERAL.—In this part, the term ‘‘pe-
riod of continuous coverage’’ means the period—
(A) beginning on the date an individual be-
comes covered under a group health plan or
health insurance coverage (or coverage under a
public plan providing medical benefits), and
(B) ending on the date the individual does
not have such coverage for a continuous period
of more than 3 months,
if such period is documented in such form and man-
ner as may be prescribed in regulations of the Sec-
retary.
(2) SPECIAL
RULE.—For purposes of para-
graph (1), if the immediately preceding coverage for
an individual was obtained in the individual mar-
ket—
(A) the insurer may require that previous
coverage have provided for a period of at least
one year for such previous coverage to con-
stitute a period of continuous coverage; and
(B) an insurer may provide that the subse-
quent coverage under this section has a deduct-
ible which is not less than the deductible that
applied with respect to the immediately preced-
ing coverage.
SEC. 2003. REQUIREMENTS RELATING TO RENEWABILITY
GENERALLY.
(a) IN GENERAL.—An insurer may not cancel (or
deny renewal of) health insurance coverage in the individ-
ual market other than—
(1) for nonpayment of premiums,
(2) for fraud or other intentional misrepresen-
tation by the insured,
(3) for noncompliance with material plan provi-
sions, or
(4) subject to subsection (b), because the in-
surer is ceasing to provide any such coverage (or the
same type of coverage in the individual market) in
a State, or, in the case of an insurer that is a health
maintenance organization or that provides coverage
through a network plan in a geographic area.
(b) NOTICE REQUIREMENT FOR MARKET EXIT.—
Subsection (a)(4) shall not apply to an insurer ceasing to
provide coverage in the individual market unless the in-
surer provides notice of such termination to individuals
covered at least 180 days before the date of termination
of coverage.
(c) LIMITATION ON REENTRY IN INDIVIDUAL MAR-
KET.—If an insurer ceases to offer health insurance cov-
erage or a type of coverage in an area with respect to the
individual market, the insurer may not offer such coverage
(or type of coverage) in the area in such market until 5
years after the date of the termination.
(d) TYPE OF COVERAGE DEFINED.—In this section,
general coverage, catastrophic coverage, and medisave cov-
erage (as defined in section 1002) shall each be considered
to be separate types of health insurance coverage.
PART 2—ENCOURAGEMENT OF STANDARDS-SET-
TING ORGANIZATIONS FOR PROVIDER NET-
WORKS AND UTILIZATION REVIEW
SEC. 2011. ENCOURAGEMENT OF STANDARDS-SETTING OR-
GANIZATIONS FOR PROVIDER NETWORKS.
(a) REQUIREMENT TO MEET STANDARDS.—Each in-
surer offering health insurance coverage in the individual
market shall meet such standards as may be recognized
or established under this section.
(b) STANDARDS.—
(1) IN GENERAL.—If the Secretary of Health
and Human Services determines that a private en-
tity has established standards for provider networks
providing items and services covered under health
insurance coverage offered by insurers in the individ-
ual market, in consultation with appropriate parties
(including representatives of health care providers,
specialists, insurers, plan administrators, and other
experts), and provides for a process for the periodic
review and update of such standards, such standards
shall be the standards applied under this section.
(2) CONTINGENCY.—If the Secretary of Health
and Human Services makes a determination con-
trary to the determination described in paragraph
(1), such Secretary shall submit such determination
in writing to each House of the Congress.
(c) REQUIREMENTS FOR STANDARDS.—The stand-
ards established under subsection (a) shall consist only of
standards relating to—
(1) the extent to which individuals covered
under the plan are assured to have reasonably
prompt access, through the provider network, to all
items and services contained in any package of bene-
fits that may be provided under the provider net-
work, in a manner that assures the continuity of the
provision of such items and services,
(2) the extent to which emergency services are
provided to covered individuals (including trauma
services)—
(A) without regard to whether or not the
provider furnishing such services has a contrac-
tual (or other) arrangement with the entity to
provide items or services to covered individuals,
and
(B) in the case of services furnished for
the treatment of an emergency medical condi-
tion, without regard to prior authorization, and
(3) the extent to which—
(A) standards (including criteria for qual-
ity, efficiency, credentialing, and services) are
established by the provider network for entering
into contracts (other than a contract providing
for employment of an employee) with health
care providers with respect to the provider net-
work,
(B) such standards are established pursu-
ant to a mechanism which provides for receipt
and consideration of recommendations of the
providers who are members of the provider net-
work,
(C) written notification to the provider is
required to terminate or to refuse to renew the
agreement and, unless otherwise provided in the
agreement and if requested by the provider,
written notification to the provider of the rea-
sons for such termination or refusal is also re-
quired, and
(D) unless otherwise provided in the agree-
ment and if requested by the provider, internal
review of any such decision to terminate or to
refuse renewal is provided for under the pro-
vider network.
(d) PROVIDER NETWORK.—For purposes of this sec-
tion, the term ‘‘provider network’’ means, with respect to
health insurance coverage provided by an insurer in the
individual market, providers who have entered into an
agreement under which such providers are obligated to
provide covered items and services to covered individuals.
SEC. 2012. ENCOURAGEMENT OF PRIVATE STANDARDS-SET-
TING ORGANIZATIONS FOR UTILIZATION RE-
VIEW.
(a) REQUIRING REVIEW TO MEET STANDARDS.—An
insurer offering health insurance coverage in the individ-
ual market may not deny coverage of or payment for items
and services on the basis of a utilization review program
unless the program meets such standards as may be recog-
nized or established under this section.
(b) STANDARDS.—
(1) IN GENERAL.—If the Secretary of Health
and Human Services determines that a private en-
tity has established standards for utilization review
programs described in subsection (c), in consultation
with appropriate parties (including representatives
of health care providers, specialists, insurers, plan
administrators, and other experts), and provides for
a process for the periodic review and update of such
standards, such standards shall be the standards ap-
plied under this section.
(2) CONTINGENCY.—If the Secretary of Health
and Human Services makes a determination con-
trary to the determination described in paragraph
(1), such Secretary shall submit such determination
in writing to each House of the Congress.
(c) REQUIREMENTS FOR STANDARDS.—The stand-
ards established under subsection (a) shall consist only of
standards relating to—
(1) the extent to which individuals performing
utilization review may receive financial compensation
based upon the number of denials of coverage;
(2) the process under which a covered individ-
ual or provider may obtain timely review of a denial
of coverage, including the extent to which a review
must be conducted by a medical director of the in-
surer or a physician designated by the insurer;
(3) the extent to which utilization review is to
be conducted in accordance with uniformly applied
standards that are based on currently available med-
ical evidence; and
(4) the extent to which providers are to partici-
pate in the development of the utilization review pro-
gram.
PART 3—REQUIREMENTS FOR INSURERS PRO-
VIDING HEALTH INSURANCE COVERAGE IN
THE INDIVIDUAL MARKET
SEC. 2021. REQUIREMENT FOR INSURERS TO OFFER GEN-
ERAL, 
CATASTROPHIC, 
AND 
OPTIONAL
MEDISAVE COVERAGE IN THE INDIVIDUAL
MARKET.
(a) REQUIREMENT.—
(1) IN
GENERAL.—Each insurer that makes
available any health insurance coverage to individ-
uals in the individual market in a State—
(A) shall make available, to each eligible
individual in such market in the State, general
coverage (as defined in section 1002(a)), with a
fee-for-service option and, if the insurer makes
the option available in the State outside the in-
dividual market, a point-of-service option and a
managed care option,
(B) shall make available, to each eligible
individual in the individual market in the State,
catastrophic coverage (as defined in section
1002(b)), and
(C) may make available, to each eligible in-
dividual in the individual market in the State,
medisave coverage (as defined in section
1002(c)).
(2) SPECIAL RULE FOR HEALTH MAINTENANCE
ORGANIZATIONS.—The requirements of paragraph
(1)(A) (with regard to requiring a fee-for-service op-
tion) and paragraph (1)(B) shall not apply with re-
spect to health insurance coverage that is offered
by—
(A) a health maintenance organization, or
(B) any other entity if such other entity
does not provide for a fee-for-service option.
(3) COVERAGE OPTIONS.—For purposes of this
subsection—
(A) FEE-FOR-SERVICE
OPTION.—General
coverage is considered to provide a ‘‘fee-for-
service option’’ if benefits with respect to the
covered items and services in the coverage are
made available for such items and services pro-
vided through any lawful provider of such cov-
ered items and services.
(B) MANAGED
CARE
OPTION.—General
coverage is considered to provide a ‘‘managed
care option’’ if benefits with respect to the cov-
ered items and services in the coverage are
made available exclusively through a managed
care arrangement, except in the case of emer-
gency and urgent services and as otherwise re-
quired under law.
(C) POINT-OF-SERVICE
OPTION.—General
coverage is considered to provide a ‘‘point-of-
service option’’ if the benefits with respect to
covered items and services in the coverage are
made available principally through a managed
care arrangement, with the choice of the cov-
ered individual to obtain such benefits for items
and services provided through any lawful pro-
vider of such covered items and services. The
coverage may provide for different cost sharing
schedules based on whether the items and serv-
ices are provided through such an arrangement
or outside such an arrangement.
(4) CONSTRUCTION WITH RESPECT TO ASSOCIA-
TION COVERAGE.—Nothing in paragraph (1) or sub-
section (b)(1) shall be construed as requiring the
general, catastrophic, or medisave coverage made
available by an insurer in the individual market in
a State as association coverage (as defined in sub-
section (b)(4)(B)) to be the same as the general,
catastrophic, or medisave coverage offered in the
State in the individual market not as such associa-
tion coverage.
(b) ISSUANCE OF COVERAGE.—
(1) IN
GENERAL.—Subject to the succeeding
paragraphs of this subsection and subsection (a)(4),
each insurer that offers general, catastrophic, or
medisave coverage to an eligible individual in the in-
dividual market in a State must accept every such
individual in the State, to the extent so eligible, that
applies for such coverage.
(2) SPECIAL
RULES
FOR
HEALTH
MAINTE-
NANCE ORGANIZATIONS.—In the case of an insurer
that is an health maintenance organization or that
provides coverage through a network plan in the in-
dividual market, the insurer may—
(A) limit the individuals that may apply
for such coverage to those with individuals re-
siding in the service area of such organization
or plan; and
(B) within the service area of such organi-
zation or plan, deny such coverage to such indi-
viduals if the insurer demonstrates that—
(i) it will not have the capacity to de-
liver services adequately to additional indi-
viduals because of its obligations to exist-
ing group contract holders and enrollees,
(ii) it is applying this subparagraph
uniformly to all individuals without regard
to the health status, claims experience, or
duration of coverage, and
(iii) it will not offer coverage to such
individuals within such service area for a
period of at least 180 days after such cov-
erage is denied.
(3) SPECIAL RULE FOR FINANCIAL CAPACITY
LIMITS.—An insurer may deny health insurance cov-
erage to individuals if the insurer demonstrates
that—
(A) it does not have the financial reserves
necessary to underwrite additional coverage,
(B) it is applying this paragraph uniformly
to all individuals without regard to the health
status, claims experience, or duration of cov-
erage, and
(C) it shall not offer coverage to such indi-
viduals within such service area for a period of
at least 180 days after such coverage is denied.
(4) SPECIAL
RULE
FOR
ASSOCIATION
COV-
ERAGE.—
(A) IN GENERAL.—In the case of associa-
tion coverage (as defined in subparagraph (B))
in the individual market, an insurer may re-
strict the coverage to individuals who are bona
fide members in the association and who apply
for enrollment on a timely basis (consistent
with subparagraphs (B) through (F)).
(B) ASSOCIATION COVERAGE DEFINED.—
In this paragraph, the term ‘‘association cov-
erage’’ means coverage provided through an as-
sociation (such as a trade association, industry
association, or professional association) to its
members, but only if such association—
(i) has been (together with its imme-
diate predecessor, if any) organized and
maintained for a continuous period of not
less than 3 years before the date of the ini-
tiation of such coverage, and
(ii) is organized and maintained in
good faith, with a constitution and bylaws
specifically stating its purpose, for sub-
stantial purposes other than providing
such coverage.
(C) GENERAL INITIAL ENROLLMENT RE-
QUIREMENT.—Except as provided in subpara-
graphs (D) through (F), enrollment of an indi-
vidual for general, catastrophic, or medisave
coverage may be considered not to be timely if
the individual fails to enroll under such cov-
erage during an initial enrollment period, if
such period is at least 30 days long.
(D) ENROLLMENT DUE TO LOSS OF PRE-
VIOUS COVERAGE.—Enrollment under general,
catastrophic, or medisave coverage is considered
to be timely in the case of an individual who—
(i) was covered under a group health
plan or had other health insurance cov-
erage at the time of the individual’s initial
enrollment period,
(ii) stated at the time of the initial en-
rollment period that coverage under a
group health plan or other health insur-
ance coverage was the reason for declining
enrollment,
(iii) lost coverage under a group
health plan or other health insurance cov-
erage (as a result of the termination of the
coverage, termination of employment, re-
duction or hours of employment, or other
reason other than a reason described in
paragraph (1) or (2) of section 2003(a)),
and
(iv) requests enrollment within 30
days after termination of the coverage.
(E) REQUIREMENT APPLIES DURING OPEN
ENROLLMENT PERIODS.—Each insurer provid-
ing association coverage in the individual mar-
ket shall provide for at least one period (of not
less than 30 days) each year during which en-
rollment under such coverage shall be consid-
ered to be timely. A late enrollment penalty
may apply with respect to any subsequent pe-
riod (not to extend beyond the effective date of
the next such enrollment period).
(F) ENROLLMENT OF DEPENDENTS.—
(i) IN GENERAL.—If association cov-
erage includes coverage of dependents, en-
rollment of an individual who is a spouse
or child of a covered individual shall be
considered to be timely if a request for en-
rollment is made either—
(I) within 30 days of the date of
the marriage or of the date of the
birth or adoption of such child, if fam-
ily coverage is available as of such
date, or
(II) within 30 days of the date
family coverage is first made avail-
able.
(ii) COVERAGE.—If available associa-
tion coverage includes family coverage and
enrollment is made under such coverage on
a timely basis under clause (i)(I), the cov-
erage shall become effective not later than
the first day of the first month beginning
after the date the completed request for
enrollment is received.
(5) CONDITIONS OF COVERAGE APPLICABLE TO
CERTAIN INDIVIDUALS.—
(A) IN GENERAL.—An insurer may offer
or deny coverage under paragraph (1) with re-
spect to an individual who would be expected to
incur disproportionately high health care costs
and who is a resident of a State under terms
and conditions that may involve risk adjustment
mechanisms, high-risk pools, or other mecha-
nisms described in subparagraph (B).
(B) INSURANCE MECHANISMS.—The Sec-
retary shall request the NAIC to develop (in
consultation with the American Academy of Ac-
tuaries), within 12 months after the date of the
enactment of this Act, a definition of individ-
uals who would be expected to incur dispropor-
tionately high health care costs and mechanisms
relating to risk adjustment mechanisms, high-
risk pools, or other mechanisms to provide addi-
tional access to health insurance coverage for
such individuals. If the NAIC develops such a
definition and mechanisms within such period,
the Secretary shall review the definition and
mechanisms. Such review shall be completed
within 120 days after the date the definition
and mechanisms are developed. Unless the Sec-
retary determines within such period that such
definition and mechanisms do not meet the re-
quirements of this paragraph, such definition
and mechanisms shall serve as the definition
and mechanisms applicable under subparagraph
(A), with such amendments as the Secretary
deems necessary.
(c) DEFINITIONS.—In this section—
(1) the term ‘‘eligible individual’’, at the elec-
tion of the insurer, may exclude an individual eligi-
ble for coverage under a group health plan; and
(2) the term ‘‘group health plan’’ has the mean-
ing given such term under section 3(42) of the Em-
ployee Retirement Income Security Act of 1974.
SEC. 2022. USE OF FAIR RATING, UNIFORM MARKETING MA-
TERIALS, AND MISCELLANEOUS CONSUMER
PROTECTIONS.
(a) USE OF FAIR RATING.—
(1) IN GENERAL.—As a standard under section
2101(a), subject to the succeeding paragraphs of
this subsection, the premium rates established by an
insurer for general, catastrophic, or medisave cov-
erage in the individual market may not vary except
by the following:
(A) AGE.—By age.
(B) GEOGRAPHIC
AREA.—By geographic
area, based on 3-digit zip code or counties, as
identified by the Secretary in consultation with
the NAIC and the States involved.
(C) FAMILY
CLASS.—By family class,
based on classes of family coverage established
by the Secretary, in consultation with the NAIC
and the States.
(D) BENEFIT DESIGN.—By benefit design
of coverage, including by type of coverage, such
as general, catastrophic, and medisave coverage
and by type of coverage option (described in
section 2021(a)(3)) with respect to general cov-
erage.
(E) 12-MONTH SURCHARGE FOR LESS RE-
STRICTIVE
PRE-EXISTING
CONDITION
EXCLU-
SION.—By whether coverage is being provided
pursuant to section 2001(a) (relating to a less
restrictive pre-existing condition exclusion), and
which is not described in section 2001(b), but
only during the first 12 months in which such
coverage is provided.
(F) ADMINISTRATIVE
CATEGORIES.—By
permitted expense category, based on dif-
ferences in expenses among such categories,
consistent with subsection (b).
(2) TREATMENT
OF
ASSOCIATIONS
AS
SEPA-
RATE POOLS.—
(A) IN GENERAL.—At the election of an
insurer, the provisions of this section may be
applied separately with respect to all individuals
who are provided association coverage (as de-
fined in section 2021(b)(4)(B)).
(B) 5-YEAR RULE.—An election under sub-
paragraph (A) may not be made (or revoked)
more frequently than once every 5 years.
(3) TREATMENT OF PERMANENT HEALTH IN-
SURANCE POLICIES.—Paragraph (1) shall not apply
in connection with a permanent policy of health in-
surance existing on the effective date specified in
section 2104, if each individual covered under the
policy is given the option to convert the policy to a
policy of health insurance that is subject to this sub-
title and that meets the requirements of this section.
(4) ADDITIONAL VARIATIONS IN RENEWAL PRE-
MIUMS PERMITTED FOR CLAIMS EXPERIENCE WITH-
IN CLASS OF BUSINESS.—
(A) IN GENERAL.—Subject to the succeed-
ing provisions of this paragraph and unless an
alternative method is provided under standards
established under section 2021 with respect to
permissible variations for renewal premiums,
for a class of business of an insurer in the indi-
vidual market, with respect to individuals with
similar demographic and other similar objective
characteristics (not relating to claims experi-
ence, health status, occupation, or duration of
coverage since issue) for the same or similar
coverage, the insurer offering health insurance
coverage in the individual market may vary the
renewal premiums charged during a rating pe-
riod based on claims experience so long as the
highest rates which could be charged to such in-
dividuals under the rating system for that class
of business does not exceed the following per-
centage of the base premium rate for the class
of business for the rating period:
(i) For a rating (or portion thereof)
that occurs in the first 2 years in which
this section is in effect, 200 percent.
(ii) For a rating (or portion thereof)
that occurs in a succeeding year, a per-
centage specified in any regulation of the
Secretary that may be prescribed under
paragraph (6).
(B) LIMIT ON TRANSFER OF INDIVIDUALS
AMONG
CLASSES
OF
BUSINESS.—In carrying
out subparagraph (A), an insurer offering
health insurance coverage in the individual mar-
ket may not involuntarily transfer an individual
into or out of a class of business. An insurer
providing such coverage may not offer to trans-
fer an individual into or out of a class of busi-
ness unless such offer is made to transfer all in-
dividuals in the class of business without regard
to demographic characteristics, claim experi-
ence, health status, occupation, or duration
since issue.
(C) DEFINITIONS.—In this paragraph:
(i) BASE PREMIUM RATE.—The term
‘‘base premium rate’’ means, for each class
of business for each rating period, the low-
est premium rate charged or which could
have been charged under a rating system
for that class of business by the insurer to
individuals in the individual market with
similar demographic characteristics and
other similar objective characteristics (not
relating to claims experience, health status,
occupation, or duration of coverage since
issue) for the same or similar health insur-
ance coverage.
(ii) CLASS OF BUSINESS.—The term
‘‘class of business’’ means, with respect to
an insurer, all (or a distinct group of) indi-
viduals in the individual market as shown
on the records of the insurer.
(iii) 
RULES
FOR
ESTABLISHING
CLASSES OF BUSINESS.—For purposes of
clause (ii)—
(I) an insurer offering health in-
surance coverage in the individual
market may establish, subject to
subclause (II), a distinct group of in-
dividuals on the basis that the appli-
cable health insurance coverage either
is marketed and sold through individ-
uals and organizations which are not
participating in the marketing or sale
of other distinct groups of individuals
for the insurer or has been acquired
from another insurer as a distinct
group; and
(II) such an insurer may not es-
tablish more than 2 groupings under
each class of business based on the in-
surer’s use of managed-care tech-
niques if the techniques are expected
to produce substantial variation in
health care costs.
(iv) 
DEMOGRAPHIC
CHARACTERIS-
TICS.—The term ‘‘demographic character-
istics’’ means age (based upon classes es-
tablished under paragraph (1)(A)), gender,
geographic area (based upon areas identi-
fied under paragraph (1)(B)), and family
composition (based upon family classes es-
tablished under paragraph (1)(C)).
(5) ADDITIONAL VARIATIONS IN INITIAL PRE-
MIUMS
PERMITTED
FOR
UNDERWRITING
CHARAC-
TERISTICS.—
(A) IN GENERAL.—For a class of business
of an insurer, with respect to individuals in the
individual market with similar demographic and
other similar objective characteristics (not relat-
ing to claims experience, health status, occupa-
tion, or duration of coverage since issue), for
the same or similar coverage, the insurer offer-
ing health insurance coverage in such market
may vary the initial premiums charged on the
basis of prior claims experience, health status,
occupation, and other underwriting characteris-
tics so long as the highest rates which could be
charged to such individuals under the rating
system for that class of business does not ex-
ceed the following percentage of the base pre-
mium rate for the class of business for the rat-
ing period:
(i) For a rating (or portion thereof)
that occurs in the first 2 years in which
this section is in effect, 200 percent.
(ii) For a rating (or portion thereof)
that occurs in a succeeding year, a per-
centage specified in any regulation of the
Secretary that may be prescribed under
paragraph (6).
(B) DEFINITIONS.—In this paragraph:
(i) BASE PREMIUM RATE.—The term
‘‘base premium rate’’ means, for each class
of business, the lowest premium rate
charged or which could have been charged
under a rating system for that class of
business by the insurer to individuals in
the individual market with similar demo-
graphic characteristics and other similar
objective characteristics (not relating to
claims experience, health status, occupa-
tion, or duration of coverage since issue)
for the same or similar health insurance
coverage.
(ii) OTHER DEFINITIONS.—Clause (ii)
(relating to class of business), clause (iii)
(relating to rules for establishing classes of
business), and clause (iv) (relating to de-
mographic characteristics) of paragraph
(4)(C) shall also apply with respect to this
paragraph.
(6) GRADUATED
REDUCTION
IN
ALLOWABLE
PERCENTAGES OF BASE PREMIUM RATE.—The Sec-
retary shall request the NAIC to determine (in con-
sultation with the American Academy of Actuaries),
within 12 months after the date of the enactment of
this Act, whether model regulations that provide for
a schedule of graduated reductions in the percent-
ages of the base premium rates allowable under each
of paragraphs (4)(A)(ii) and (5)(A)(ii) can be devel-
oped without adversely affecting coverage rates and
affordability of coverage. If the NAIC makes such a
determination and develops such model regulations
providing for such schedules, the Secretary shall re-
view the schedules provided in such model regula-
tions. Such review shall be completed within 120
days after the date the regulations are developed.
Unless the Secretary determines within such period
that any schedule provided in such model regulations
for paragraph (4)(A)(ii) or (5)(A)(ii) does not meet
the requirements of this subsection, such schedule
shall serve as the schedule applicable under such
paragraph, with such amendments as the Secretary
deems necessary. The Secretary shall provide for
public comment in connection with the regulations
during such 120-day period and in advance of any
determination by the Secretary.
(b) ADMINISTRATIVE
VARIATIONS.—Expense cat-
egories shall be established under subsection (a)(1)(F) by
an insurer in a manner that only reflects differences based
on marketing, commissions, and similar expenses.
(c) FULL DISCLOSURE
OF APPLICABLE RATING
PRACTICES.—At the time an insurer offers health insur-
ance coverage in the individual market, the insurer shall
fully disclose to the individual, at the request of an individ-
ual, rating practices for health insurance coverage applica-
ble to that individual, including rating practices for dif-
ferent benefit designs offered to the individual.
(d) ACTUARIAL CERTIFICATION.—Each insurer that
offers health insurance coverage in the individual market
in a State shall file annually with the State commissioner
of insurance, to the extent required by such commissioner,
a written statement by a member of the American Acad-
emy of Actuaries (or other individual acceptable to the
commissioner) that, based upon an examination by the in-
dividual which includes a review of the appropriate records
and of the actuarial assumptions of the insurer and meth-
ods used by the insurer in establishing premium rates for
applicable health insurance coverage—
(1) the insurer is in compliance with the appli-
cable provisions of this section, and
(2) the rating methods are actuarially sound.
Each such insurer shall retain a copy of such statement
for examination at its principal place of business.
(e) REGISTRATION AND REPORTING.—Each insurer
that offers any health insurance coverage in the individual
market in a State shall be registered or licensed with the
State commissioner of insurance and shall comply with
any reporting requirements of the commissioner relating
to such coverage.
(f) MARKETING MATERIAL.—Each insurer that of-
fers any health insurance coverage in the individual mar-
ket in a State shall file with the State those marketing
materials relating to the offer and sale of health insurance
coverage to be used for distribution before the materials
are used. Such materials shall be in a uniform format,
as may be provided under standards established under sec-
tion 2101.
Subtitle 
B—Establishment 
of
Standards; Enforcement; Effec-
tive Dates
SEC. 2101. ESTABLISHMENT OF STANDARDS.
(a) ROLE OF NAIC.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall request the NAIC to develop,
within 12 months after the date of the enactment of
this Act, model regulations that specify standards
with respect to the requirements of subtitle A.
(2) REVIEW BY SECRETARY.—If the NAIC de-
velops recommended regulations specifying the
standards with respect to the requirements of sub-
title A within the 12-month period referred to in
paragraph (1), the Secretary shall review the stand-
ards. Such review shall be completed within 120
days after the date the regulations are developed.
(3) REQUIREMENTS.—Except with respect to
the requirements of section 2011 and 2012, unless
the Secretary determines within such 120-day period
that—
(A) the standards do not effectively provide
for the application of requirements of sections
2001, 2002, and 2003 to insurers in a manner
and to an extent equivalent in substance to the
manner and extent to which the requirements
apply to group health plans under section 821
of the Employee Retirement Income Security
Act of 1974 (as added by the ERISA Targeted
Health Insurance Reform Act of 1995), or
(B) the standards do not otherwise meet
the requirements of subtitle A,
such standards shall serve as the standards under
this section, with such amendments as the Secretary
deems necessary.
(4) REQUIREMENTS
RELATING
TO
MANAGED
CARE AND UTILIZATION REVIEW.—If the Secretary
determines under section 2011(b)(1) that a private
entity has established standards for provider net-
works consistent with section 2011(c), the standards
established under this section with respect to the re-
quirements of section 2011 shall consist of the
standards recognized or established under section
2011. If the Secretary determines under section
2012(b)(1) that a private entity has established
standards for utilization review programs that are
consistent with section 2012(c), the standards estab-
lished under this section with respect to the require-
ments of section 2012 shall consist of the standards
recognized or established under section 2012.
(5) PUBLIC
COMMENT.—The Secretary shall
provide for public comment in connection with the
standards during such 120-day period and in ad-
vance of any determination by the Secretary.
(b) CONTINGENCY.—If the NAIC does not develop
such model regulations within such period or the Secretary
makes the determination described in subsection (a), the
Secretary shall specify, within 24 months after the date
of the enactment of this Act, standards to carry out those
requirements.
(c) DEFINITIONS.—In this title, the term ‘‘section
2101 standards’’ means the standards established under
this section.
SEC. 2102. ENFORCEMENT.
(a) VOLUNTARY ENFORCEMENT BY STATES.—
(1) IN GENERAL.—Each State that desires to
enforce the section 2101 standards with respect to
insurers shall submit to the Secretary of Health and
Human Services, by the deadline specified in para-
graph (2), a report on the program the State has es-
tablished by such deadline and consistent with sec-
tion 2104 to implement and enforce such standards.
(2) DEADLINE.—
(A) 1 YEAR AFTER FINAL MODEL REGULA-
TIONS.—Subject to subparagraph (B), the
deadline under this paragraph is 1 year after
the date model regulations are established
under section 2101.
(B) EXCEPTION
FOR
LEGISLATION.—In
the case of a State which the Secretary of
Health and Human Services identifies, in con-
sultation with the NAIC, as—
(i) requiring State legislation (other
than legislation appropriating funds) in
order for insurers to meet the section 2101
standards provided under such model regu-
lations, but
(ii) having a legislature which is not
scheduled to meet in 1996 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after Janu-
ary 1, 1997. For purposes of the previous sen-
tence, in the case of a State that has a 2-year
legislative session, each year of such session
shall be deemed to be a separate regular session
of the State legislature.
(3) NO FEDERAL MANDATE ON STATES.—Noth-
ing in this subsection shall be construed as imposing
a requirement on a State. The establishment by a
State of an enforcement program under this sub-
section is voluntary.
(b) FEDERAL ROLE.—
(1) STATE ENFORCEMENT EXCLUSIVE OF FED-
ERAL ENFORCEMENT.—If the Secretary determines
that a State has submitted a report by the deadline
specified under subsection (a)(2) and finds that the
State has provided for implementation and enforce-
ment of the section 2101 standards, such implemen-
tation and enforcement shall be carried out exclu-
sively under State law.
(2) REVIEW
OF
STATE
ENFORCEMENT
PRO-
GRAMS.—If the Secretary determines that a State
has submitted a report by the deadline specified
under subsection (a)(2) but finds that the State pro-
gram does not provide for implementation and en-
forcement of the section 2101 standards, the Sec-
retary shall notify the State and provide the State
a period of 60 days in which to provide for changes
that assure such implementation and enforcement of
such standards.
(3) CONTINGENCY.—If the Secretary deter-
mines that a State has not submitted a report by
the deadline specified under subsection (a)(2) or, in
the case of a State described in paragraph (1), the
State has not provided for an implementation and
enforcement program after the period of 60 days
specified in such paragraph, the Secretary shall pro-
vide for such mechanism for the implementation and
enforcement of the section 2101 standards in the
State (including the application of civil money pen-
alties under paragraph (3)) as the Secretary deter-
mines to be appropriate. Any such implementation
and enforcement shall cease to be effective on the
date the Secretary finds that a State has established
an implementation and enforcement program de-
scribed in subsection (a)(1).
(3) APPLICATION
OF
CIVIL
MONEY
PENALTY
UNDER SECRETARIAL MECHANISM.—
(A) IN GENERAL.—If the Secretary is pro-
viding for implementation and enforcement of
section 2101 standards under paragraph (2)
and determines that an insurer has failed to
comply with such standards applicable to the
insurer, the Secretary may impose on the in-
surer a civil money penalty of not to exceed
$25,000 for each such failure. Under regula-
tions of the Secretary, provisions consistent and
coextensive with section 1128A of the Social Se-
curity Act (other than the first sentence of sub-
section (a) of such section and other than sub-
section (b) of such section) shall apply to a civil
money penalty under this paragraph in the
same manner as such section applies to a pen-
alty or proceeding under section 1128A(a) of
such Act.
(B) CORRECTIONS WITHIN 30 DAYS.—The
Secretary shall not impose a civil money penalty
under this paragraph by reason of any failure
if—
(i) such failure was due to reasonable
cause and not to willful neglect, and
(ii) such failure is corrected within the
30-day period beginning on the earliest
date the insurer knew, or exercising rea-
sonable diligence would have known, that
such failure existed.
(c) GOOD FAITH COMPLIANCE WITH REQUIRE-
MENT.—An insurer that complies in good faith with an
applicable requirement of subtitle A shall not be subject
to a penalty under this section for failure to meet such
requirement on the basis of its failure to meet section
2101 standards (or regulations to carry out such stand-
ards) for any failure that occurs before the date such
standards (or regulations) have been published and be-
come effective.
(d) TREATMENT OF POLICY APPROVAL BY DOMICILE
STATE.—If a particular policy or contract of health insur-
ance coverage offered by an insurer is approved in a State
that has adopted and is enforcing section 2101 standards
and that is the domicile State with respect to the insurer,
the policy or contract shall be deemed to meet such stand-
ards with respect to any other State but only if a copy
of the approval by the domicile State is filed by the insurer
with the applicable regulatory authority of such other
State at least 60 days before the date the policy or con-
tract is offered, sold, or issued in that other State.
SEC. 2103. PREEMPTION.
(a) IN GENERAL.—Except as provided in this section,
a State may not establish or enforce standards for insur-
ers or health insurance coverage offered in the individual
market with respect to the subject matter of this title that
are different from the standards established under this
title.
(b) TRANSITION
FOR MORE RESTRICTIVE STATE
STANDARDS.—Subsection (a) shall not apply to a State
establishing and enforcing more restrictive standards re-
lating to the matters under this title during the 3-year
period beginning on January 1, 1998, if such standards
have been established and are enforced by the State as
of February 1, 1995.
(c) PROHIBITION OF STATE BENEFIT MANDATES.—
(1) IN
GENERAL.—No provision of State or
local law shall apply that requires—
(A) health insurance coverage in the indi-
vidual market to provide coverage of one or
more specific benefits, services, or categories of
health care, or services of any class or type of
provider of health care; or
(B) an insurer (in relation to health insur-
ance coverage offered in the individual market)
to provide coverage of one or more specific ben-
efits, services, or categories of health care, or
services of any class or type of provider of
health care.
(2) EXCEPTION.—
(A) STATE
ENFORCEMENT
PROGRAMS.—
Paragraph (1) shall not apply a State enforce-
ment program under section 2102.
(B) CERTAIN POLICIES.—Notwithstanding
subsection (a), a State may require an insurer
(in relation to health insurance coverage offered
in the individual market) to provide coverage of
one or more specific benefits, services, or cat-
egories of health care, or services of any class
or type of provider of health care, but only with
respect to—
(i) not more than 2 policies or con-
tracts of health insurance coverage, one of
which provides less comprehensive coverage
than the other, and
(ii) policies for which the State pro-
vides subsidies to individuals to purchase
such coverage.
(d) PREEMPTION OF STATE ANTI-MANAGED CARE
LAWS.—
(1) PREEMPTION OF STATE LAW PROVISIONS.—
Subject to paragraph (2)(C), the following provisions
of State law are preempted and may not be en-
forced:
(A) RESTRICTIONS
ON
REIMBURSEMENT
RATES
OR
SELECTIVE
CONTRACTING.—Any
State law that—
(i) restricts the ability of an insurer
offering health insurance coverage in the
individual market to negotiate reimburse-
ment rates or forms of payments with pro-
viders,
(ii) restricts the ability of such an in-
surer to limit the number of participating
providers, or
(iii) requires standards inconsistent
with any standards established under sec-
tion 2011(b).
(B) RESTRICTIONS
ON
UTILIZATION
RE-
VIEW METHODS.—Any State law that, in rela-
tion to a health insurance coverage offered in
the individual market—
(i) prohibits utilization review of any
or all treatments and conditions (including
preadmission certification, application of
practice guidelines, continued stay review,
preauthorization of ambulatory procedures,
and retrospective review),
(ii) requires that such review be made
(I) by a resident of the State in which the
treatment is to be offered or by an individ-
ual licensed in such State, or (II) by a
physician in any particular specialty or
with any board certified specialty of the
same medical specialty as the provider
whose services are being reviewed,
(iii) requires the use of specified
standards of health care practice in such
reviews or requires the disclosure of the
specific criteria used in such reviews,
(iv) requires payments to providers for
the expenses of responding to utilization
review requests,
(v) imposes liability for delays in per-
forming such review, or
(vi) requires standards in addition to
or inconsistent with standards established
under section 2012(b).
SEC. 2104. EFFECTIVE DATE.
The requirements of subtitle A and the preemption
provisions of section 2103, shall apply with respect to in-
surers on January 1, 1998.
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