I
106TH CONGRESS
1ST SESSION
H. R. 1133
To provide for comprehensive reform for managed health care plans.
IN THE HOUSE OF REPRESENTATIVES
MARCH 16, 1999
Mr. NADLER (for himself and Mr. FROST) introduced the following bill; which
was referred to the Committee on Ways and Means, and in addition to
the Committees on Commerce, and Education and the Workforce, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
A BILL
To provide for comprehensive reform for managed health
care plans.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Comprehensive Managed Health Care Reform Act of
1999’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec.
1. Short title; table of contents.
Sec.
2. Definitions.
Sec.
3. Enforcement of requirements.
Sec.
4. Assuring adequate access to covered services and providers.
Sec.
5. Assuring adequate scope of coverage.
Sec.
6. Assuring unbiased medical determinations by health care professionals
and providers.
Sec.
7. Nondiscrimination against enrollees and in the selection of partici-
pating providers; equitable access to networks.
Sec.
8. Disclosure of information.
Sec.
9. Grievance procedures and deadline for responding to requests for cov-
erage of services.
Sec. 10. Due process for health care professionals and providers.
Sec. 11. Requirements for quality improvement program and utilization review
programs.
Sec. 12. Minimum loss ratios; general consumer protections.
SEC. 2. DEFINITIONS.
(a) IN GENERAL.—For purposes of this Act:
(1) ENROLLEE.—The term ‘‘enrollee’’ means,
with respect to a managed care plan offered by a
managed care organization, an individual enrolled
with the organization for coverage under such a
plan.
(2) HEALTH CARE PROFESSIONAL.—The term
‘‘health care professional’’ means a physician or
other health care practitioner who is licensed under
State law with respect to the health care services the
practitioner furnishes.
(3) HEALTH PLAN.—The term ‘‘health plan’’
means a group health plan or health insurance cov-
erage offered by a health insurance issuer.
(4) MANAGED CARE ORGANIZATION.—The term
‘‘managed care organization’’ means any entity, in-
cluding a group health plan, health maintenance or-
ganization, or provider-sponsored organization, in re-
lation to its offering of a managed care plan, and in-
cludes any other entity that provides or manages the
coverage under such a plan under a contract or ar-
rangement with the entity.
(5) MANAGED CARE PLAN.—The term ‘‘man-
aged care plan’’ means a health plan offered by an
entity if the entity—
(A) provides or arranges for the provision
of health care items and services to enrollees in
the plan through participating health care pro-
fessionals and providers, or
(B) provides financial incentives (such as
variable copayments and deductibles) to induce
enrollees to obtain benefits through partici-
pating health care professionals and providers,
or both.
(6) PARTICIPATING.—The term ‘‘participating’’
means, with respect to a health care professional or
provider in relation to a health plan offered by an
entity, a physician or provider that furnishes health
care items and services to enrollees of the entity
under an agreement with the entity.
(7) PRIMARY CARE PROVIDER.—The term ‘‘pri-
mary care provider’’ means a health care profes-
sional who acts as a gatekeeper for the overall care
of an enrollee.
(8) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Health and Human Services .
(9) STATE.—The term ‘‘State’’ includes the
District of Columbia, Puerto Rico, the Virgin Is-
lands, Guam, American Samoa, and the Northern
Mariana Islands.
(b) INCORPORATION
OF
GENERAL
DEFINITIONS
FROM HEALTH INSURANCE PORTABILITY AND ACCOUNT-
ABILITY ACT.—For purposes of this Act, the definitions
contained in section 2791 of the Public Health Service Act
(42 U.S.C. 300gg–91) shall apply under this Act.
SEC. 3. ENFORCEMENT OF REQUIREMENTS.
(a) APPLICATION TO GROUP HEALTH PLANS.—
(1) PUBLIC HEALTH SERVICE ACT.—For pur-
poses of applying title XXVII of the Public Health
Service Act, the requirements of the succeeding sec-
tions of this Act shall be treated as though they
were included in the subpart 2 of part A of such
title (42 U.S.C. 300gg–4 et seq.).
(2) EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974.—For purposes of applying part 7 of
subtitle B of title I of the Employee Retirement In-
come Security Act of 1974, the requirements of the
succeeding sections of this Act shall be treated as
though they were included in subpart B of such part
(29 U.S.C. 1185 et seq.).
(3) INTERNAL REVENUE CODE OF 1986.—For
purposes of applying chapter 100 of the Internal
Revenue Code of 1986, the requirements of the suc-
ceeding sections of this Act shall be treated as
though they were included in subchapter B of such
chapter.
(b) APPLICATION TO INDIVIDUAL HEALTH INSUR-
ANCE COVERAGE.—For purposes of applying title XXVII
of the Public Health Service Act, the requirements of the
succeeding sections of this Act also shall be treated as
though they were part of subpart 2 of part B of such title
(42 U.S.C. 300gg–51 et seq.).
(c) MEDICARE.—The Secretary may not enter into
a contract under section 1857 of the Social Security Act
(42 U.S.C. 1395w–27) with a Medicare+Choice organiza-
tion that is a managed care organization unless the con-
tract contains assurances satisfactory to the Secretary
that the organization will comply with the applicable re-
quirements of the succeeding sections of this Act.
(d) MEDICAID.—Notwithstanding any other provision
of law, no funds shall be paid to a State under section
1903(a)(1) of the Social Security Act (42 U.S.C.
1396b(a)(1)) with respect to medical assistance provided
through payment to a Medicaid managed care organiza-
tion (as defined in section 1903(m)(1)(A) of such Act, 42
U.S.C. 1396b(m)(1)(A)) unless the contract with such or-
ganization contains assurances satisfactory to the Sec-
retary that the organization will comply with the applica-
ble requirements of the succeeding sections of this Act.
(e) SECRETARIAL ENFORCEMENT AUTHORITY.—
(1) IN GENERAL.—In addition to any other au-
thority provided under law, the Secretary shall es-
tablish sanctions, consistent with this subsection, for
the enforcement of the requirements of the suc-
ceeding sections of this Act.
(2) 
PROGRESSIVE
CIVIL
MONETARY
PEN-
ALTIES.—Such sanctions shall include the imposition
of civil monetary penalties for violations of such re-
quirements. The amount of such penalties shall in-
crease as the frequency or severity of the violations
by a managed care organization increases.
(3) OPPORTUNITY
FOR
CORRECTIVE
ACTION
PLAN.—The Secretary shall provide an opportunity
for a managed care organization to implement a cor-
rective action plan before imposing sanctions for vio-
lations of such requirements.
(4) DISQUALIFICATION
FROM
MEDICARE
AND
MEDICAID.—In cases of repeated or egregious viola-
tions of such requirements by such an organization
that has entered into a contract under title XVIII or
XIX of the Social Security Act—
(A) the Secretary initially shall prohibit
the organization from enrolling any additional
individuals under either such title, and
(B) if the Secretary finds that the viola-
tions continue, the Secretary shall terminate
the contracts with the organization under such
titles and require the termination of enrollment
of individuals enrolled with the organization
under either such title.
(5) PRINTING LIST OF VIOLATORS.—The Sec-
retary shall periodically publish a list of the organi-
zations which have been sanctioned under this sub-
section, the nature of such sanctions, and the viola-
tions for which such sanctions were imposed. The
Secretary may exclude from such list an organiza-
tion that, in lieu of imposition of a sanction, is im-
plementing (or has completed implementation of) a
corrective plan.
(f) ADDITIONAL LIABILITY FOR WITHHOLDING OF
MEDICALLY NECESSARY CARE.—If a managed care orga-
nization in connection with a managed care plan fails
(through the curtailment of a hospital stay, a limitation
on covered tests, a limitation on treatment, or otherwise)
to provide any such benefit in accordance with the terms
of the plan, insofar as such failure occurs pursuant to a
clinically or medically inappropriate decision or determina-
tion resulting from—
(1) the application of any cost containment
technique,
(2) any utilization review directed at cost con-
tainment, or
(3) any other medical care delivery policy deci-
sion which restricts the ability of providers of med-
ical care from utilizing their full discretion for treat-
ment of enrollees,
the organization, and any agent of the organization having
authority to make such decision or determination on be-
half of the organization, shall be jointly and severally lia-
ble to any enrollee aggrieved by such failure for actual
damages (including compensatory and consequential dam-
ages) proximately caused by such failure, and may, in the
court’s discretion, be liable to such enrollee for punitive
damages. The remedies under this subsection are in addi-
tion to remedies otherwise provided under this section.
(g) NO PREEMPTION OF STRICTER STATE LAW.—
(1) IN GENERAL.—Subject to paragraph (2),
this Act shall not be construed to supersede any pro-
vision of State law that provides protections in rela-
tion to health insurance coverage that are greater
than the protections provided under this Act.
(2) CONTINUED
PREEMPTION
WITH
RESPECT
TO
GROUP
HEALTH
PLANS.—Nothing in this Act
shall be construed to affect or modify the provisions
of section 514 of the Employee Retirement Income
Security Act of 1974 with respect to group health
plans.
(h) NULLIFICATION
OF CONTRARY CONTRACTUAL
PROVISIONS.—Any contract provision or agreement that
is in violation of any provision of this Act (or amendment
made by this Act) shall be null and void.
SEC. 4. ASSURING ADEQUATE ACCESS TO COVERED SERV-
ICES AND PROVIDERS.
(a) GENERAL ACCESS.—
(1) IN GENERAL.—Subject to paragraph (2), a
managed care organization offering a managed care
plan shall establish and maintain adequate arrange-
ments, as defined under regulations of the Secretary,
with a sufficient number, mix, and distribution of
health care professionals and providers to assure
that covered items and services are available and ac-
cessible to each enrollee under the plan—
(A) in the service area of the organization;
(B) in a variety of sites of service;
(C) with reasonable promptness (including
reasonable hours of operation and after-hours
services);
(D) with reasonable proximity to the resi-
dences and workplaces of enrollees; and
(E) in a manner that—
(i) takes into account the diverse
needs of enrollees, and
(ii) reasonably assures continuity of
care.
(2) TREATMENT OF ORGANIZATIONS SERVING
CERTAIN AREAS.—For a managed care organization
that serves a rural or medically underserved area,
the organization shall be treated as meeting the re-
quirement of paragraph (1) if the organization has
arrangements with a sufficient number, mix, and
distribution of health care professionals and pro-
viders having a history of serving such areas. The
use of telemedicine and other innovative means to
provide covered items and services by a managed
care organization that serves a rural or medically
underserved area shall also be considered in deter-
mining whether the requirement of such paragraph
is met.
(3) DEFINITIONS.—For purposes of paragraph
(1):
(A) MEDICALLY
UNDERSERVED
AREA.—
The term ‘‘medically underserved area’’ means
an area that is designated as a health profes-
sional shortage area under section 332 of the
Public Health Service Act (42 U.S.C. 254e) or
as a medically underserved area for purposes of
section 330 or 1302(7) of such Act (42 U.S.C.
254c, 300e–1(7)).
(B) RURAL AREA.—The term ‘‘rural area’’
means an area that is not within a Standard
Metropolitan Statistical Area or a New England
County Metropolitan Area (as defined by the
Office of Management and Budget).
(b) ACCESS TO SPECIALIZED SERVICES.—
(1) IN GENERAL.—A managed care organiza-
tion shall demonstrate that enrollees have access to
specialized treatment expertise when such treatment
is medically or clinically indicated in the professional
judgment of the treating health care professional, in
consultation with the enrollee.
(2) MEDICAL SPECIALISTS.—A managed care
organization shall develop a system to permit enroll-
ees to use a medical specialist primary care provider
as a primary care provider when the enrollee’s med-
ical conditions (including suffering from a chronic
disease or medical condition) warrant it.
(3) STANDING REFERRALS TO SPECIALISTS.—A
managed care organization shall provide for a stand-
ing referral to a medical specialist if the treating
primary care provider, in consultation with such spe-
cialists, determines such a referral is necessary to
provide adequate and continuous care for the pa-
tient.
(4) SPECIALIZED TREATMENT EXPERTISE DE-
FINED.—For purposes of this subsection, the term
‘‘specialized treatment expertise’’ means expertise in
diagnosing or treating—
(A) unusual diseases or conditions, or
(B) diseases and conditions that are un-
usually difficult to diagnose or treat.
(5) MEDICAL SPECIALIST DEFINED.—For pur-
poses of paragraph (2), the term ‘‘medical spe-
cialist’’ means, with respect to a managed care orga-
nization, a health care professional who is certified
by a national accreditation board (or pursuant to
State licensing authority) as possessing specialized
treatment expertise.
(c) USE OF GYNECOLOGISTS AS PRIMARY CARE PRO-
VIDERS.—A managed care organization may not require
an enrollee to obtain a referral from a physician in order
to obtain covered items and services from a physician who
specializes in obstetrics and gynecology.
(d) EMERGENCY AND URGENT CARE.—
(1) IN GENERAL.—A managed care organiza-
tion shall—
(A) assure the availability and accessibility
of medically or clinically necessary emergency
services and urgent care services within the
service area of the organization 24 hours a day,
7 days a week;
(B) require no prior authorization for
items and services furnished in a hospital emer-
gency department to an enrollee (without re-
gard to whether the health care professional or
hospital has a contractual or other arrangement
with the organization) with symptoms that
would 
reasonably 
suggest 
to 
a 
prudent
layperson that there is an emergency medical
condition (including items and services de-
scribed in subparagraph (C)(iii));
(C) cover (and make reasonable payments
for)—
(i) emergency services,
(ii) services that are not emergency
services but are described in subparagraph
(B),
(iii) medical screening examinations
and other ancillary services necessary to
diagnose, treat, and stabilize an emergency
medical condition, and
(iv) urgent care services,
without regard to whether the health care pro-
fessional or provider furnishing such services
has a contractual (or other) arrangement with
the organization; and
(D) make prior authorization determina-
tions for—
(i) services that are furnished in a
hospital emergency department (other than
services described in clauses (i) and (iii) of
subparagraph (C)), and
(ii) urgent care services,
within the time periods specified in (or pursu-
ant to) sections 9(c)(3) and 10(f).
(2) DEFINITIONS.—For purposes of this sub-
section:
(A) EMERGENCY
MEDICAL
CONDITION.—
The term ‘‘emergency medical condition’’ means
a medical condition (including emergency labor
and delivery) manifesting itself by acute symp-
toms of sufficient severity (including severe
pain) such that a prudent layperson, who pos-
sesses an average knowledge of health and med-
icine, could reasonably expect that the absence
of immediate medical attention might result
in—
(i) placing the patient’s health in seri-
ous jeopardy,
(ii) serious impairment to bodily func-
tions, or
(iii) serious dysfunction of any bodily
organ or part.
(B) EMERGENCY
SERVICES.—The term
‘‘emergency services’’ means health care items
and services that are necessary for the diag-
nosis, treatment, and stabilization of an emer-
gency medical condition.
(C) URGENT CARE SERVICES.—The term
‘‘urgent care services’’ means health care items
and services that are necessary for the treat-
ment of a condition that—
(i) is not an emergency medical condi-
tion,
(ii) requires prompt medical or clinical
treatment, and
(iii) poses a danger to the patient if
not treated in a timely manner, as defined
by the Secretary in consultation with rel-
evant treating health care professionals or
providers.
(e) RIGHT
TO REFERRAL
TO NONPARTICIPATING
PROVIDERS.—A managed care organization shall permit
an enrollee to obtain a referral to a nonparticipating pro-
vider if the organization does not have a participating pro-
vider with appropriate training and experience to meet the
enrollee’s needs and shall pay for care provided pursuant
to such a referral.
(f) ACCESS TO CENTERS OF EXCELLENCE FOR INDI-
VIDUALS REQUIRING SPECIALIZED CARE.—
(1) IN GENERAL.—Each managed care organi-
zation shall demonstrate that enrollees who have
chronic diseases or otherwise require specialized
services, as determined by the primary care provider
or treating specialist, have access through the orga-
nization to specialized treatment expertise at des-
ignated centers of excellence in order to provide ade-
quate and continuous care for such enrollees. Such
an organization shall demonstrate such access ac-
cording to standards developed by the Secretary, in-
cluding requirements relating to arrangements with
such centers and referral of enrollees to such cen-
ters.
(2) DESIGNATION
PROCESS.—The Secretary
shall establish a process for the designation of facili-
ties as centers of excellence for purposes of this sub-
section. A facility may not be designated unless the
facility is determined—
(A) to provide specialty care,
(B) to deliver care for complex cases re-
quiring specialized treatment or for individuals
with chronic diseases, and
(C) to meet other requirements that may
be established by the Secretary relating to spe-
cialized education and training of health care
professionals, participation in peer-reviewed re-
search, or treatment of patients from outside
the geographic area of the facility.
(g) PATIENT ACCESS TO CLINICAL STUDIES.—
(1) PERMITTING PARTICIPATION IN APPROVED
CLINICAL STUDIES.—A managed care organization
may not deny (or limit or impose additional condi-
tions on) coverage of items and services furnished to
an enrollee if—
(A) the enrollee is participating in an ap-
proved clinical study,
(B) the items and services are furnished
according to the design of the study or to treat
conditions resulting from participation in the
study, and
(C) the items and services would otherwise
be covered by the organization except for the
fact that they are provided in connection with
participation in such a study.
Such an organization may not discriminate against
an enrollee on the basis of the enrollee’s participa-
tion in such a study.
(2) CONSTRUCTION.—Nothing in paragraph (1)
shall be construed as requiring an organization to
provide for payment for items and services routinely
paid for as part of an approved clinical study.
(3) APPROVED
CLINICAL
STUDY
DEFINED.—
For purposes of this subsection, the term ‘‘approved
clinical study’’ means—
(A) a research study approved by the Sec-
retary, the Director of the National Institutes
of Health, the Commissioner of the Food and
Drug Administration, the Secretary of Veterans
Affairs, the Secretary of Defense, or a qualified
nongovernmental research entity (as defined in
guidelines of the National Institute of Health),
or
(B) a peer-reviewed and approved research
program, as defined by the Secretary, con-
ducted for the primary purpose of determining
whether or not a treatment is safe, efficacious,
or having any other characteristic of a treat-
ment which must be demonstrated in order for
the treatment to be medically necessary or ap-
propriate.
(h) ACCESS TO EXPERIMENTAL TREATMENTS.—A
managed care organization shall provide access to experi-
mental treatments in the case of enrollees who have a life-
threatening disease or condition, when determined to be
medically necessary and appropriate by the treating health
care provider in consultation with the enrollee.
(i) REQUIREMENTS REGARDING USE OF PRESCRIP-
TION DRUG FORMULARIES.—
(1) IN GENERAL.—A managed care organiza-
tion shall provide coverage for a prescribed drug, ap-
proved for dispensing by the Food and Drug Admin-
istration, whether or not such drug is on a prescrip-
tion drug formulary used by the organization if the
use of such drug is judged to be medically necessary
and appropriate by the prescribing health care pro-
fessional.
(2) NOT PERMITTING CHANGES IN PRESCRIP-
TIONS.—No pharmacist or health care facility shall
change the prescription prescribed by a health care
provider, or change the drug dispensed to carry out
a prescription for an enrollee of a managed care
plan unless—
(A) the prescribing health care provider
has approved the change, and
(B) the enrollee has been informed and
given consent to the change.
(3) USE OF GENERICS PERMITTED.—Nothing
in this subsection shall be construed as preventing a
managed care organization from using medically ap-
proved generic drugs.
SEC. 5. ASSURING ADEQUATE SCOPE OF COVERAGE.
(a) COVERAGE OF PRESCRIPTION DRUGS, PREVEN-
TIVE SERVICES, AND INPATIENT AND OUTPATIENT SERV-
dures, and medical services, provided on an out-
patient basis and related to the use of contra-
ceptive methods (including natural family plan-
ning) to prevent an unintended pregnancy).
(b) MENTAL HEALTH PARITY.—A managed care or-
ganization, in offering a managed care plan, may not dis-
tinguish in the amount, duration, or scope of coverage
under the plan among items and services based on whether
the items and services relate to mental health (or treat-
ment of mental illness or disease) or to physical health
(or treatment of physical illness or disease).
(c) COVERAGE OF SERVICES OF ESSENTIAL COMMU-
NITY PROVIDERS.—
(1) IN GENERAL.—The Secretary may require a
managed care organization to enter into agreements
with essential community providers serving the orga-
nization’s service area (in relation to the coverage)
to join the organization’s provider network if such
Secretary finds that such agreements are necessary
for the organization to make contracted for services
(A) available and accessible to each enrollee, within
the area served by the organization (in relation to
such coverage), with reasonable promptness and in
a manner which assures continuity, and (B) when
medically necessary, available and accessible 24
hours a day and 7 days a week.
(2) ESSENTIAL
COMMUNITY
PROVIDER
DE-
FINED.—For purposes of paragraph (1), the term
‘‘essential community provider’’ means a rural
health clinic (described in paragraph (2) of section
1861(aa) of the Social Security Act, 42 U.S.C.
1395x(aa)), a Federally qualified health center (de-
scribed in paragraph (4) of such section), and any
other provider meeting such standards as the Sec-
retary may require.
(d) COVERAGE OF EMERGENCY SERVICES.—A man-
aged care organization shall provide for coverage of emer-
gency services (as defined in section 4(d)(2)(B)), 24-hours
a day, 7-days-a-week, without the need for any prior ap-
proval for coverage of such services.
(e) REQUIREMENT
FOR POINT
OF SERVICE OP-
TION.—A managed care organization that offers a man-
aged care plan shall offer each enrollee an enrollment op-
tion under which the enrollee may receive benefits for serv-
ices provided by nonparticipating health care professionals
and providers. The organization may require that the en-
rollee pay a reasonable premium to reflect the cost of such
option.
(f) REQUIREMENT FOR CONTINUITY OF CARE.—A
managed care organization shall provide for continuity of
care following enrollment, including appropriate continuity
of care following termination of participation of a provider
that is providing a course of treatment to an enrollee at
the time of the termination.
(g) COVERAGE
OF CONSULTATION
FOR SECOND
OPINIONS.—A managed care organization shall provide
enrollees with access to a consultation for a second opinion
regarding treatment options.
SEC. 6. ASSURING UNBIASED MEDICAL DETERMINATIONS
BY HEALTH CARE PROFESSIONALS AND PRO-
VIDERS.
(a) REQUIRING
MEDICAL
DETERMINATIONS
BY
TREATING PROFESSIONAL.—A managed care organiza-
tion may not deny payment for services covered under a
managed care plan based upon the fact that the services
are not medically necessary or appropriate with respect
to an enrollee unless the determination is made solely by
the health care professional treating the enrollee.
(b) PROHIBITION OF CERTAIN INCENTIVE ARRANGE-
MENTS.—
(1) IN GENERAL.—No managed care organiza-
tion shall offer monetary rewards, penalties, or in-
ducements (including varying the amount of com-
pensation) to a health care professional or provider,
or condition the initial or continued participation of
such a professional or provider in a managed care
plan offered by the organization, on the basis of the
professional’s or provider’s decision (or decisions) to
reduce or limit the availability of appropriate med-
ical tests, services, or treatment, on the basis of any
utilization review decisions relating to the profes-
sional or provider, or the number of referrals, tests,
or other procedures ordered or performed by the
professional or provider.
(2) PENALTY.—Any managed care organiza-
tion, or executive of such an organization, that
knowingly offers a reward, penalty, or inducement in
violation of paragraph (1) shall be fined in accord-
ance with title 18, United States Code, imprisoned
for not more than 2 years, or both.
(c) PROHIBITION OF INTERFERENCE WITH CERTAIN
MEDICAL COMMUNICATIONS.—
(1) IN GENERAL.—The provisions of any con-
tract or agreement, or the operation of any contract
or agreement, between a managed care organization
and a health care professional shall not prohibit or
restrict the health care professional from engaging
in medical communications with a patient of the pro-
fessional.
(2) MEDICAL COMMUNICATION DEFINED.—For
purposes of this subsection, the term ‘‘medical com-
munication’’ means a communication made by a
health care professional with a patient of the health
care professional (or the guardian or legal represent-
ative of the patient) with respect to—
(A) the patient’s health status, medical
care, or treatment options;
(B) any utilization review requirements
that may affect treatment options for the pa-
tient; or
(C) any financial incentives that may af-
fect the treatment of the patient.
(d) WHISTLEBLOWER PROTECTION.—
(1) IN GENERAL.—No managed care organiza-
tion may discharge or otherwise discriminate against
any employee with respect to compensation, terms,
conditions, or privileges of employment because the
employee (or any person acting pursuant to the re-
quest of the employee) provided information to a
Federal or State official with any enforcement re-
sponsibility or authority concerning the provisions of
this Act regarding a possible violation of any provi-
sion of this Act, or any regulation under any such
provision, by the organization or any director, offi-
cer, or employee of the organization.
(2) ENFORCEMENT.—Any employee or former
employee who believes that such employee has been
discharged or discriminated against in violation of
paragraph (1) may file a civil action in the appro-
priate United States District Court before the end of
the 2-year period beginning on the date of such dis-
charge or discrimination.
(3) REMEDIES.—If the District Court deter-
mines that a violation has occurred, the court may
order 
the 
organization 
which 
committed 
the
violation—
(A) to reinstate the employee to the em-
ployee’s former position;
(B) to pay compensatory damages; or
(C) to take other appropriate actions to
remedy any past discrimination.
(4) LIMITATION.—The protections of this sub-
section shall not apply to any employee who—
(A) deliberately causes or participates in
the alleged violation of law or regulation; or
(B) knowingly or recklessly provides sub-
stantially false information to the Federal or
State official involved.
(e) PROTECTION
OF ADVOCACY FUNCTIONS.—No
managed care organization shall terminate, vary the com-
pensation or working conditions, or refuse to renew a con-
tract for participation with a health care professional be-
cause the professional has—
(1) advocated on behalf of an enrollee,
(2) filed a complaint against the organization,
(3) appealed a decision of the organization,
(4) provided information or filed a report with
an appropriate Federal or State official, or
(5) requested a hearing or review pursuant to
this Act.
SEC. 7. NONDISCRIMINATION AGAINST ENROLLEES AND IN
THE SELECTION OF PARTICIPATING PRO-
VIDERS; EQUITABLE ACCESS TO NETWORKS.
(a) NONDISCRIMINATION AGAINST ENROLLEES.—No
managed care organization may discriminate (directly or
through contractual arrangements) against any enrollee
on the basis of age, gender, disability, health status, ge-
netic information, or anticipated need for health services.
(b) NONDISCRIMINATION IN SELECTION OF PARTICI-
PATING HEALTH CARE PROFESSIONALS.—A managed
care organization shall not discriminate in selecting par-
ticipating health care professionals (or in establishing the
terms and conditions for such participation) on the basis
of—
(1) the race, national origin, gender, age, or
disability (other than a disability that impairs the
ability of an individual to provide health care serv-
ices or that may threaten the health of enrollees) of
the professional; or
(2) the professional’s lack of affiliation with, or
admitting privileges at, a hospital (unless such lack
of affiliation is a result of infractions of quality
standards and is not due to a professional’s type of
license).
(c) NONDISCRIMINATION
IN ACCESS
TO HEALTH
PLANS.—
(1) IN GENERAL.—Subject to paragraph (2), a
managed care organization shall not discriminate in
participation, reimbursement, or indemnification
against a health care professional, who is acting
within the scope of the professional’s license or cer-
tification under applicable State law, solely on the
basis of such license or certification.
(2) CONSTRUCTION.—Nothing in this sub-
section shall be construed as a requirement to in-
clude for participation every willing health care pro-
fessional who meets the terms and conditions of a
managed care organization.
SEC. 8. DISCLOSURE OF INFORMATION.
(a) PROVISION
OF INFORMATION
AND ORIENTA-
TION.—
(1) GENERAL REQUIREMENT.—A managed care
organization offering a managed care plan shall pro-
vide enrollees and, upon request, prospective enroll-
ees with written information concerning the terms
and conditions of the plan, including the information
described in subsection (c).
(2) INFORMATION UPON REQUEST.—In addition
to the information provided under subsection (c), a
managed care organization offering a managed care
plan shall provide, upon request of an enrollee or
prospective enrollee, the information described in
subsection (d).
(3) REQUIREMENT FOR INITIAL INFORMATION
SESSION.—
(A) IN GENERAL.—Within 30 days of en-
rolling an individual under a managed care
plan, the managed care organization shall pro-
vide for an in-person information session with
the enrollee for the purpose of outlining the in-
formation described in this section.
(B) PAYMENT.—Such a session shall be
held with an enrollee before the enrollee is re-
quired to pay for services. This subparagraph
shall not affect the coverage of items and serv-
ices under the plan immediately upon the effec-
tive date of enrollment.
(4) COMPARATIVE
FORM.—The information
provided under this section shall be in a form, speci-
fied by the Secretary, so that prospective enrollees
may compare the attributes of all such plans offered
within a coverage area.
(b) UNDERSTANDABILITY.—Information provided
under this section, whether written or oral shall be easily
understandable, truthful, linguistically appropriate and
objective with respect to the terms used.
(c) REQUIRED INFORMATION.—Information required
under subsection (a)(1) shall include information con-
cerning each of the following:
(1) COVERAGE AND BENEFITS.—Coverage pro-
visions, benefits, and any exclusions by category of
service or product, including 24-hour coverage of
emergency services without a requirement for prior
approval.
(2) PRIOR AUTHORIZATION REQUIREMENTS.—
Prior authorization requirements for coverage of
benefits.
(3) UTILIZATION
REVIEW
POLICIES.—Utiliza-
tion review procedures and policies (including
preauthorization review, concurrent review, post-
service review, post-payment review procedures that
may lead an enrollee to be denied coverage for or not
be provided a particular service or product), includ-
ing time frames for review decisions and enrollee
rights relating to notice, reconsideration, and appeal
of utilization review decisions, and including infor-
mation on the percentage of utilization review deter-
minations that disagree with the judgment of the
initial treating health care professional and the per-
centage of such determinations which are reversed
(whether internally or externally) on appeal.
(4) PAYMENT METHODS.—Types of methodolo-
gies used by the organization to reimburse types of
providers or for types of services.
(5) 
ENROLLEE
FINANCIAL
RESPONSIBIL-
ITIES.—Enrollees’ financial responsibility for serv-
ices, including any variation in the responsibility
based on whether the provider is a participating pro-
vider.
(6) GRIEVANCE PROCEDURES.—Grievance pro-
cedures.
(7) PROVIDER SELECTION PROCEDURES.—Pro-
cedures used by enrollees to select and change pri-
mary and specialty providers and to be referred to
nonparticipating providers and appropriate special-
ists, consistent with the requirements of this Act.
(8) ENROLLEE PARTICIPATION IN POLICY DE-
VELOPMENT.—Procedures which enrollees may use
to participate in development of policy of the organi-
zation.
(9) PROCEDURES
FOR
NON-ENGLISH
PRO-
FICIENT ENROLLEES.—Procedures which the organi-
zation has established to meet the needs of enrollees
who are not proficient in English.
(10) INFORMATION.—An address and phone
number at which enrollees and prospective enrollees
can obtain information about the organization and
managed care plans offered by the organization.
(11) LIST OF CONTRACT FACILITIES.—A list,
annually updated, of the facilities and providers, by
specialty, through which the organization provides
its benefits. For each such facility or provider the
list shall include the name, address, phone number,
and (in the case of a physician) board certification.
(12) NON-HEALTH
CARE
EXPENDITURES.—A
statement of the percentage of health-care related
revenues of the organization used for administration,
the percentage of such revenues used for marketing,
and the percentage of such revenues attributable to
profit.
(13) ENROLLEE SATISFACTION.—Statistics on
enrollee satisfaction, stated separately for those who
continue enrollment and those who discontinue en-
rollment, and on the proportion of enrollees who
disenroll.
(14) AVAILABILITY OF PROVIDERS; PROVIDER
INCENTIVES.—The characteristics and availability of
participating health care providers and professionals,
including a description of any financial or contrac-
tual arrangements with hospitals, utilization review
organizations, physicians, or other health care pro-
viders or professionals that would affect the services
offered, referral or treatment options, or providers’
fiduciary responsibility to patients, including any fi-
nancial or other incentives regarding the provision,
denial, or limitation of needed services.
(15) QUALITY
INDICATORS.—Indicators that
measure the quality of services provided by the orga-
nization and by participating health providers with
the organization, including population-based statis-
tics such as immunization rates and performance
measures such as survival after surgery, adjusted for
case mix.
(16) 
PHYSICIAN
CREDENTIALING
STAND-
ARDS.—Standards used by the organization in the
credentialing of participating physicians.
(17) FORMULARIES.—Information on prescrip-
tion drug formularies used by the organization, con-
sistent with section 4(i).
(18) LOSS-RATIO.—Its loss-ratio.
(d) INFORMATION SUPPLIED UPON REQUEST.—For
purposes of subsection (a)(2), the information described
in this subsection concerning a managed care organization
offering a managed care plan is as follows:
(1) ANNUAL
FINANCIAL
STATEMENT.—The
most recent annual financial statement of the orga-
nization.
(2) SUBSCRIBER
CONTRACT.—A copy of the
most recent individual, direct pay subscriber con-
tract, or, in the case of a group health plan, any
contract between the plan and a health insurance
issuer providing coverage under the plan.
(3) CONSUMER COMPLAINTS.—Information re-
lating to consumer complaints compiled pursuant to
insurance or other law.
(4) CHARGES AND BENEFITS FOR SERVICES.—
Information on the enrollee charges for all covered
items and services, including, for the point of service
option described in section 5(e), the amounts that
are payable with respect to items and services fur-
nished by nonparticipating health care professionals
and providers.
(5) 
CONFIDENTIALITY
OF
MEDICAL
RECORDS.—Information on the procedures used by
the organization to protect the confidentiality of
medical records maintained in relation to enrollees.
(6) QUALITY
ASSURANCE
PROGRAMS.—A de-
scription of quality assurance programs maintained
by the organization in relation to the plan.
(7) COVERAGE OF EXPERIMENTAL OR INVES-
TIGATIONAL
DRUGS.—A description of procedures
used by the organization to determine whether
drugs, devices, or treatments in clinical trials are ex-
perimental or investigational.
(8) PROVIDER AFFILIATIONS.—Information on
affiliations of participating health care professionals
with participating hospitals.
(9) CLINICAL REVIEW CRITERIA.—Upon written
request, a description of the specific clinical written
review criteria relating to a particular condition or
disease and how such criteria are used.
(10) PARTICIPATION PROCEDURES AND QUALI-
FICATIONS.—A description of the written application
procedures and qualification requirements for pro-
viders to be considered for participation under the
plan.
(11) OFFICIALS.—A list of the names, business
addresses, and official positions of the membership
of the board of directors, officers, or persons with an
ownership or control interest in the organization.
(e) NOTICE OF TERMINATION OF PROVIDERS.—A
managed care organization shall provide written notice to
each enrollee within 15 business days of the date that the
organization is aware that the participation of a health
care provider, that is currently in a course of treating the
enrollee, is being withdrawn or terminated. The organiza-
tion shall include in such notice the procedures under sec-
tion 5(f) for the enrollee to continue to receive care from
the provider.
SEC. 9. GRIEVANCE PROCEDURES AND DEADLINE FOR RE-
SPONDING TO REQUESTS FOR COVERAGE OF
SERVICES.
(a) GRIEVANCE PROCEDURES.—A managed care or-
ganization shall provide meaningful procedures for hear-
ing and resolving grievances between the organization (or
any entity or individual through which the organization
provides health care services) and its enrollees.
(b) DETAILS.—The procedures provided under sub-
section (a) shall include—
(1) recorded (written or otherwise) procedures
for registering and responding to complaints and
grievances in a timely manner;
(2) documentation concerning the substance of
complaints, grievances, and actions taken concerning
such complaints and grievances, which shall be in
writing;
(3) procedures to ensure a resolution of a com-
plaint or grievance;
(4) the compilation and analysis of complaint
and grievance data;
(5) procedures to expedite the complaint proc-
ess if the complaint involves a dispute about the cov-
erage of an immediately and urgently needed service;
and
(6) procedures to ensure that if an enrollee
orally notifies the organization about a complaint,
the organization (if requested) must send the en-
rollee a complaint form that includes the telephone
numbers and addresses of member services, and a
description of the organization’s grievance proce-
dure.
The Secretary may establish deadlines for the complaint
procedures under paragraph (5) in order to ensure timely
resolution of disputes involving immediately and urgently
needed services.
(c) APPEALS PROCESS.—Each managed care organi-
zation shall adopt an appeals process to enable enrollees
to appeal decisions that are adverse to them. Such a proc-
ess shall include—
(1) the right to a review by a grievance panel
composed of clinical peer professionals who are in
the same or similar specialty or field that would pro-
vide the item or service involved in the grievance;
(2) the right to a second review with a different
panel that is independent of the organization and
that is composed of clinical peer professionals who
are in the same or similar specialty or field that
would provide the item or service involved in the
grievance, or to a review through an impartial arbi-
tration process which shall be described in writing
by the organization;
(3) a process for completion of review in the
case of urgent or emergency care services within 24
hours; and
(4) covering the costs of all appeals and not im-
posing any such costs on an enrollee.
The Secretary shall develop guidelines for the structure
and requirements applicable to the independent review
panel and impartial arbitration process described in para-
graph (2).
(d) WRITTEN DECISION.—With respect to the com-
plaint, grievance, and appeals processes required under
this section, the organization shall, upon the request of
an enrollee, provide the enrollee a written decision con-
cerning a complaint, grievance, or appeal in a timely man-
ner consistent with subsections (c)(3) and (f).
(e) CONSTRUCTION.—The complaint, grievance, and
appeals processes established in accordance with this sec-
tion may not be used in any fashion to discourage or pre-
vent an enrollee from receiving medically necessary care
in a timely manner.
(f) PROMPT RESPONSE TO REQUESTS FOR SERV-
ICES.—In addition to the procedures available pursuant
to the previous provisions of this section, in the case of
the request of an enrollee with a managed care
organization—
(1) the organization shall respond to the re-
quest not later than 24 hours after the request is
made; and
(2) the organization shall hear and resolve the
enrollee’s appeal of a denial of coverage of such serv-
ices in accordance with a process meeting standards
established by the Secretary.
SEC. 10. DUE PROCESS FOR HEALTH CARE PROFESSIONALS
AND PROVIDERS.
(a) IN GENERAL.—A managed care organization
shall—
(1) allow all health care professionals and pro-
viders in its service area to apply to become a par-
ticipating health care professional or provider during
at least one period in each calendar year;
(2) provide reasonable notice to such health
care professionals and providers of the opportunity
to apply and of the period during which applications
are accepted;
(3) provide for review of each application by a
credentialing committee with appropriate representa-
tion of the category or type of health care profes-
sional or provider;
(4) select participating health care professionals
and providers based on objective standards of qual-
ity developed with the suggestions and advice of pro-
fessional associations, health care professionals, and
providers;
(5) make such selection standards available
to—
(A) those applying to become a partici-
pating provider or health care professional,
(B) health plan purchasers, and
(C) enrollees;
(6) when economic considerations are taken
into account in selecting participating health care
professionals and providers, use objective criteria
that are available to those applying to become a par-
ticipating provider or health care professional and
enrollees;
(7) adjust any economic profiling to take into
account patient characteristics (such as severity of
illness) that may result in atypical utilization of
services;
(8) make the results of such profiling available
to insurance purchasers, enrollees, and the health
care professional or provider involved;
(9) notify any health care professional or pro-
vider being reviewed under the process referred to in
paragraph (3) of any information indicating that the
health care professional or provider fails to meet the
standards of the organization;
(10) offer a health care professional or provider
receiving notice pursuant to the requirement of
paragraph (9) with an opportunity to—
(A) review the information referred to in
such paragraph, and
(B) submit supplemental or corrected in-
formation;
(11) not include in its contracts with partici-
pating health care professionals and providers a pro-
vision permitting the organization to terminate the
contract ‘‘without cause’’;
(12) provide a due process appeal that con-
forms to the process specified in section 412 of the
Health Care Quality Improvement Act of 1986 (42
U.S.C. 11112) for all determinations that are ad-
verse to a health care professional or provider; and
(13) unless a health care professional or pro-
vider poses an imminent harm to enrollees or an ad-
verse action by a governmental agency effectively im-
pairs the ability to provide health care items and
services, provide—
(A) reasonable notice of any decision to
terminate a health care professional or provider
‘‘for cause’’ (including an explanation of the
reasons for the determination),
(B) an opportunity to review and discuss
all of the information on which the determina-
tion is based, and
(C) an opportunity to enter into a correc-
tive action plan, before the determination be-
comes subject to appeal under the process re-
ferred to in paragraph (12).
(b) 
LIMITATION
ON
USE
OF
NON-COMPETE
CLAUSES.—A managed care organization may not (di-
rectly or indirectly) seek to enforce any contractual provi-
sion which prevents a health care professional or provider
whose contractual obligations to the organization for the
provision of services through the organization have ended
from joining or forming any competing managed care or-
ganization, whether or not the organization serves the
same geographic area.
(c) EQUAL COMPENSATION ARRANGEMENTS.—
(1) IN GENERAL.—Subject to paragraph (2), a
managed care organization shall provide for com-
parable payment for all health care professionals and
providers in the same field or specialty located in the
same geographic area.
(2) ADJUSTMENTS AUTHORIZED.—A managed
care organization may adjust the amount of com-
pensation among professionals and providers for ex-
perience and other relevant factors, including bonus
payments that reflect quality factors, such as en-
rollee satisfaction and medical chart reviews, unless
such payments are based solely on cost-effectiveness
of services provided.
(d) RULE OF CONSTRUCTION.—The requirements of
subsection (a) shall not be construed as preempting or su-
perseding any other reviews and appeals a managed care
organization is required by law to make available.
SEC. 11. REQUIREMENTS FOR QUALITY IMPROVEMENT
PROGRAM AND UTILIZATION REVIEW PRO-
GRAMS.
(a) QUALITY IMPROVEMENT PROGRAM.—
(1) IN GENERAL.—A managed care organiza-
tion shall establish a quality improvement program
(consistent with paragraph (2)) that systematically
and continuously assesses and improves—
(A) enrollee health status, patient out-
comes, processes of care, and enrollee satisfac-
tion associated with health care provided by the
organization; and
(B) the administrative and funding capac-
ity of the organization to support and empha-
size preventive care, utilization, access and
availability, cost effectiveness, acceptable treat-
ment modalities, specialists referrals, the peer
review process, and the efficiency of the admin-
istrative process.
(2) FUNCTIONS.—A quality improvement pro-
gram established pursuant to paragraph (1) shall—
(A) assess the performance of the organi-
zation and its participating health care profes-
sionals and providers and report the results of
such assessment to purchasers, participating
health care professionals and providers, and ad-
ministrative personnel;
(B) demonstrate measurable improvements
in clinical outcomes and plan performance
measured by identified criteria, including those
specified in paragraph (1)(A); and
(C) analyze quality assessment data to de-
termine specific interactions in the delivery sys-
tem (both the design and funding of the health
care coverage and the clinical provision of care)
that have an adverse impact on the quality of
care.
(b) UTILIZATION REVIEW.—The utilization review
program of a managed care organization shall—
(1) be developed (including any screening cri-
teria used by such program) with the involvement of
participating health professionals and providers;
(2) to the extent consistent with the protection
of proprietary business information (as defined for
purposes of section 552 of title 5, United States
Code) release, upon request, to affected health pro-
fessionals, providers, and enrollees the screening cri-
teria, weighting elements, and computer algorithms
used in reviews and a description of the method by
which they were developed;
(3) uniformly apply review criteria that are
based on sound scientific principles and the most re-
cent medical evidence;
(4) use licensed, accredited, or certified health
professionals to make review determinations (and for
services requiring specialized training for their deliv-
ery, use a health professional who is qualified
through equivalent specialized training and experi-
ence);
(5) subject to reasonable safeguards, disclose to
health professionals and providers, upon request, the
names and credentials of individuals conducting uti-
lization review;
(6) not compensate individuals conducting utili-
zation review for denials of payment or coverage of
benefits;
(7) comply with the requirement of section
4(d)(1) that prior authorization not be required for
emergency and related services furnished in a hos-
pital emergency department;
(8) make prior authorization determinations—
(A) in the case of services that are urgent
care services described in section 4(d)(2)(C),
within 30 minutes of a request for such deter-
mination, and
(B) in the case of other services, within 24
hours after the time of a request for determina-
tion;
(9) include in any notice of such determination
an explanation of the basis of the determination and
the right to an immediate appeal;
(10) treat a favorable prior authorization review
determination as a final determination for purposes
of making payment for a claim submitted for the
item or service involved unless such determination
was based on false information knowingly supplied
by the person requesting the determination;
(11) provide timely access, as defined by the
applicable State authority, to utilization review per-
sonnel and, if such personnel are not available,
waives any prior authorization that would otherwise
be required; and
(12) provide notice of an initial determination
on payment of a claim within 30 days after the date
the claim is submitted for such item or service, and
include in such notice an explanation of the reasons
for such determination and of the right to an imme-
diate appeal.
SEC. 12. MINIMUM LOSS RATIOS; GENERAL CONSUMER
PROTECTIONS.
(a) MINIMUM LOSS RATIO.—The loss-ratio (as de-
fined by the Secretary) for a managed care organization
shall not be less than 85 percent with respect to managed
care plans it offers.
(b) PARTICIPATION IN POLICY DEVELOPMENT.—A
managed care organization shall have a procedure whereby
enrollees may participate in the development of policies of
the organization.
(c) NEEDS OF NON-ENGLISH PROFICIENT ENROLL-
EES.—A managed care organization shall have procedures
for addressing the needs of enrollees who are not pro-
ficient in English.
Æ